Document:

The Smith & Nephew 2001 UK Unapproved Share Option Plan

  
 Exhibit 4 (c) (vii)

  
 SMITH & NEPHEW PLC 
  

  
 THE SMITH & NEPHEW 2001 UK 
 UNAPPROVED SHARE OPTION PLAN 

 

  
 This is a copy of the rules of 
 The Smith & Nephew 2001 UK Unapproved
Share Option Plan 
 as amended from time to time 
  
 ____________________ 
 Chairman 
 

 
  
  

 INDEX 
  

					
	Clause

	  	 	  	Page

	1.	  	 This Plan
	  	1
			
	2.	  	 Grant of Options
	  	6
			
	3.	  	 Exercise Price
	  	7
			
	4.	  	 Optionholder to Bear Cost of Employer’s NICs on Option Gains
	  	7
			
	5.	  	 Relationship with Contract of Employment
	  	8
			
	6.	  	 Non-Transferability of Options
	  	8
			
	7.	  	 Performance Targets
	  	9
			
	8.	  	 Overall Limits on the Granting of Options
	  	9
			
	9.	  	 Individual Limits on the Granting of Options
	  	10
			
	10.	  	 Exercise of Options
	  	10
			
	11.	  	 Manner of Exercise of Options
	  	13
			
	12.	  	 Demerger
	  	15
			
	13.	  	 Statutory Reconstruction of the Company
	  	15
			
	14.	  	 Winding-up of the Company
	  	15
			
	15.	  	 Voluntary Arrangement
	  	15
			
	16.	  	 Administration Order
	  	15
			
	17.	  	 Change of Control
	  	16
			
	18.	  	 Variation of Share Capital
	  	16
			
	19.	  	 Alteration of the Plan
	  	17
			
	20.	  	 Service of Documents
	  	18
			
	21.	  	 Miscellaneous
	  	18
			
	22.	  	 Jurisdiction
	  	19
			
	23.	  	 Data Protection
	  	19
			
	24.	  	 Third Party Rights
	  	19

  

  
 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: 

  

			
	 “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
		
	 “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

  

 1 

			
	“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, 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

  

 2 

			
	 	  	 (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
		
	 “ITEPA”
	  	the Income Tax (Earnings and Pensions) Act 2003
		
	 “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
		
	 “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

  

 3 

			
	 “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
		
	 “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

  

 4 

			
	 “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
		
	 “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.

  

 5 

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

  

	 	(a)	references to an Option vesting or being or becoming vested in respect of any number or proportion of the Shares over which it subsists are to be read as references to the Option
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. 

  

	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. 

  

 6 

	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.  

  

	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 

  

 7 

	 	(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. 

  

	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. 

  

 8 

	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. 

  

	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

  

 9 

	 	(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: 

  

	 	(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 

  

 10 

	 	 
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
(or, if the Committee so decides, such longer period not exceeding 18 months as the Committee may determine) beginning with the date of cessation or, if later, the third anniversary of the Date of Grant, be exercised in respect of:

  

	 	(a)	Shares in respect of which the Option was vested immediately before the Optionholder so ceased to hold office or employment within the Group (or if, in the case of a Performance
Option, the Optionholder so ceases after the end of the Performance Period but before the date on which the Optionholder is notified as mentioned in rule 7.6, such of the Option Shares in respect of which the Option becomes vested when such
notification is given); and 

  

	 	(b)	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 

  

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

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

  

 11 

 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 ceasing to hold office or employment within the Group, his Personal Representatives may exercise his Option:- 

  

	 	10.10.1	within the period of 12 months beginning with the date of death in respect of such of the Option Shares over which it could have been exercised immediately before the Optionholder
died; or 

  
 if, in relation to a Performance
Option, the Optionholder dies before the end of the Performance Period, and the Option was not, immediately before his death, capable of exercise in respect of any of the Option Shares 
  

	 	10.10.2	within the period of 12 months beginning with the date of death, but only in respect of:- 

  

	 	(i)	a proportion, corresponding to such proportion of the Performance Period as fell before the date of such cessation, of such of the Option Shares in respect of which the Option is
deemed to be vested at the date of death; and 

  

	 	(ii)	if, in the exercise of their discretion, the Directors (with the consent of the Grantor, where appropriate) so determine, such additional number, or additional proportion, of such
of the Option Shares in respect of which the Option is deemed to be vested at the date of death. 

  
 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 10.10, 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 of death, 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. 

  

 12 

	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. 
  

	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 

  

 13 

	 	 
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.

  

	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. 

  

 14 

	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 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 

  

 15 

 
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 

  
 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 

  

 16 

 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 

  

	 	(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. 

  

 17 

	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.

  

	20.2 	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. 

  

 18 

	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. 

  

	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. 
  

 19 

 [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 

  

	(iv)	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 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 

  

 20 

 
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 

  

 21 

 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. 

  

	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. 

  

 22 

							
	 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. 
  

 23 

 [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 £                         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. 

  

 24 

	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 

  

 25Rules of The Smith & Nephew International Sharesave Plan (2002)

 Exhibit 4 (c) (x) 
  

RULES OF 
  
 THE SMITH & NEPHEW INTERNATIONAL SHARESAVE PLAN (2002) 
  

  
 This is a copy of the rules of 
 The Smith & Nephew International Sharesave Plan (2002) 
 established by resolution of shareholders of 
 the Company at its Annual General Meeting on

 3 April 2002 and adopted by the Company Secretary 
 pursuant to the authority delegated upon him by the 
 board of directors on 31 July 2002 and amended
on 3 
 August 2004 by the Remuneration Committee pursuant to 
 the authority delegated to it. 
  

  
  

  
 CONTENTS 

 

					
	Rule

	  	 	  	Page

	1.	  	 Interpretation
	  	3
			
	2.	  	 Issue of Invitations
	  	8
			
	3.	  	 Applications for Options
	  	9
			
	4.	  	 Grant of Options
	  	10
			
	5.	  	 Monthly contributions
	  	11
			
	6.	  	 Exercise Price
	  	11
			
	7.	  	 Limitation on Grant of Subscription Options
	  	11
			
	8.	  	 Exercise of an Option
	  	12
			
	9.	  	 Manner of Exercise of an Option
	  	13
			
	10.	  	 Non-Transferability and Lapse of Options
	  	14
			
	11.	  	 Relationship with Employment Contract
	  	15
			
	12.	  	 Demerger, Reconstruction or Winding-up of the Company
	  	16
			
	13.	  	 Take-over of the Company
	  	16
			
	14.	  	 Variation of Share Capital
	  	17
			
	15.	  	 Alteration of this Plan
	  	17
			
	16.	  	 Service of Documents
	  	18
			
	17.	  	 Applicable Law
	  	19
			
	18.	  	 Third Party Rights
	  	19
			
	19.	  	 Protection of Personal Data
	  	19
			
	20.	  	 Miscellaneous
	  	19

  

  
 RULES OF 

THE SMITH & NEPHEW INTERNATIONAL SHARESAVE PLAN (2002) 
  

	1.	INTERPRETATION 

  

	1.1	Words and expressions used in this Plan shall have the meanings respectively given below: 

  

			
	“Acquisition Cost”	  	 in relation to the exercise of an Option on any occasion, an amount in pounds sterling equal to the product of:
  
 (a)    the maximum number of
Shares in respect of which that Option is then exercised in accordance with rule 8.5; and
  
 (b)    the Exercise Price

		
	“the Administrator”	  	Computershare Investor Services plc or such other person who is for the time being appointed by the Company to administer this Plan
		
	“Announcement Date”	  	the date of notification to the London Stock Exchange of the annual or half year results of the Company
		
	“Applicant”	  	a person who, in response to an Invitation, submits an Application
		
	“Application”	  	an application for the grant of an Option made in accordance with rule 3
		
	“Application Date”	  	in relation to any Invitation such date as is specified in accordance with rule 2.5.5 to be the last day on which an Application may be submitted in response to Invitations issued on any
occasion
		
	“Approval Date”	  	the date of the close of the Annual General Meeting of the Company held in 2002
		
	“Associated Company”	  	any company which, in relation to the Company, is an associated company as that term is defined by 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”
		
	“Auditors”	  	the auditors for the time being of the Company or if there are joint auditors, such one of them as the Directors may decide
		
	“Companies Act 1985”	  	the UK Companies Act 1985
		
	“the Company”	  	Smith & Nephew plc (registered in England no 324357)

  

 3 

			
	“control”	  	the meaning given in section 840 of the Taxes Act
		
	“Daily Official List”	  	the daily official list of the London Stock Exchange
		
	“Date of Grant”	  	in relation to any Option, the date on which such Option was granted
		
	“Dealing Day”	  	a day on which the London Stock Exchange is open for business
		
	“Directors”	  	the board of directors for the time being of the Company or a duly constituted committee of that board
		
	“Electronic Communication”	  	has the meaning given in section 15 of the UK Electronic Communications Act 2000 (but excluding mobile telephone text messages)
		
	“Eligible Employee”	  	 an Employee who either:
  
 (a)    has held employment within the Group for such continuous period as the Directors have determined;
or
  
 (b)    is
nominated by the Directors

		
	“Employee”	  	an employee of a Participating Company
		
	“Employer Company”	  	in relation to an Applicant or an Optionholder at any time, the member of the Group or Associated Company with which such Applicant or Optionholder then holds or, if he has ceased to hold
employment within the Group or with any Associated Company, last held office or employment
		
	“Exchange Rate”	  	in relation to a conversion of currency on any day, the rate to be applied in making such conversion being such published exchange rate as the Directors shall determine for the preceding day or,
if that preceding day is not a Dealing Day, the last preceding Dealing Day
		
	“the Exercise Date”	  	 in relation to an Optionholder’s Savings:
  
 (a)    where the Optionholder has a 3-year Option, the third anniversary of the date on which his first
Monthly Contribution is received by the Savings Body; and
  
 (b)    where the Optionholder has a 5-year Option, the fifth anniversary of the date on which his first Monthly Contribution is received by the Savings Body.

		
	“the Exercise Price”	  	in relation to Shares subject to any Option, the price per Share in pounds sterling payable for the acquisition of such Shares upon the exercise of that Option as determined in rule
6

  

 4 

			
	“Grantor”	  	in relation to an Option, the Company or the Relevant Trustee which has granted or proposes to grant such Option
		
	“the Group”	  	the Company and every other company which is for the time being a Subsidiary
		
	“the Individual Share Limit”	  	in relation to any Option, the amount of the Notional Sterling Repayment Value divided by the Exercise Price
		
	“Initial Market Value”	  	in relation to a Share subject to any Option, the average of the middle market quotations of a Share as derived from the Daily Official List for the 3 consecutive Dealing Days immediately
preceding the Invitation Date
		
	“Invitation”	  	an invitation to apply for the grant of an Option issued in accordance with rule 2
		
	“Invitation Date”	  	in relation to an Option, the date on which the Invitation was issued
		
	“Jointly Owned Company”	  	a company (and any subsidiary as defined in section 736 of the Companies Act 1985 of such a company) of which the whole of the issued ordinary share capital is jointly owned by a member of the
Group and another person (not being a member of the Group) but which is not a Subsidiary and is not under the control of such other person
		
	“Local Currency”	  	the local currency of legal tender in the relevant jurisdiction
		
	“Local Currency Equivalent”	  	in relation to an amount in pounds sterling on a given day, the equivalent value (or as nearly as may be) in Local Currency of such sterling amount after conversion at the Exchange Rate on that
day
		
	“the London Stock Exchange”	  	London Stock Exchange plc
		
	“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
		
	“Monthly Contribution”	  	in relation to any Eligible Employee, the fixed amount (in Local Currency) of each of the 36 (or, in the case of a 5-year Option, 60) monthly savings contributions which that Employee undertakes
to make in his Application

  

 5 

			
	“Net Pay”	  	in relation to an Optionholder, the amount of his earnings for a given month, being earnings from the Optionholder’s employment with any one or more members of the Group and any
Associated Company, after any deductions have been made by the payer of or on account of any tax or social security contributions and after any other deductions (other than a deduction of a Monthly Contribution) which the payer has made under any
legal obligation or pursuant to any authority duly given by the Optionholder
		
	“Notional Sterling Repayment Value”	  	 in relation to any Application, the aggregate amount in pounds sterling (converted from Local Currency using the Exchange Rate on the Invitation
Date) of:
  
 (a)    in the case of a 3-year Option, 38 Monthly Contributions; and
  
 (b)    in the case of a 5-year Option, 66.2 Monthly Contributions
  
 or, in either case, such other number of Monthly Contributions as the Directors may
determine in relation to Options granted on any occasion so as to be consistent with the bonus rates payable on a certified contractual savings scheme within the meaning of section 326 of the Taxes Act

		
	“Option”	  	 a right to acquire Shares which:
  
 (a)    is granted pursuant to, and is exercisable only in accordance with, this Plan and which is a 3-year
Option or a 5-year Option; and
  
 (b)    has neither been exercised nor ceased to be exercisable

		
	“Option Certificate”	  	a certificate issued by the Grantor evidencing the grant of an Option
		
	“Option Shares”	  	in relation to an Option, the Shares over which that Option subsists
		
	“Option Tax Liability”	  	in relation to an Optionholder, any liability of any member or former member of the Group or any Associated Company or former Associated Company or any Relevant Trustee to account to any tax
authority or other body for any amount of, or representing, income tax or social security contributions or any other tax charge levy or other sum which the Optionholder is charged upon or in consequence of the grant, vesting, exercise, assignment or
release of an Option or the acquisition of Shares or cash under this Plan

  

 6 

			
	“Optionholder”	  	in relation to any Option, the person to whom that Option has been granted or, if that person has died, his legal personal representatives
		
	“Ordinary Share Capital”	  	issued share capital of the Company other than fixed-rate preference shares
		
	“Participating Company”	  	a member of the Group to which the Directors have determined that this Plan shall extend for the time being
		
	“Personal Data”	  	has the meaning it bears for the purposes of the UK Data Protection Act 1998
		
	“Personal Representatives”	  	in relation to an Optionholder the legal personal representatives of the Optionholder who have satisfied the Company or the Administrator of their appointment as such
		
	“this Plan”	  	The Smith & Nephew International Sharesave Plan (2002) (approved by shareholders of the Company on the Approval Date) as set out in these rules and as amended from time to
time
		
	“Relevant Trustee”	  	the meaning given in article 71(6) of the UK Financial Services and Markets Act 2000 (Regulated Activities) Order 2001
		
	“Savings”	  	in relation to an Optionholder at any time, the aggregate amount of that Optionholder’s Monthly Contributions held by the Savings Body together with any accrued interest
thereon
		
	“Savings Body”	  	such bank(s) and/or other savings institution(s) as may from time to time be approved by the Company for the purposes of this Plan
		
	“Shares”	  	fully-paid ordinary shares in the capital of the Company
		
	“Subscription Options”	  	Options which are rights granted by the Company to subscribe for Shares
		
	“Subsidiary”	  	a subsidiary (as defined in section 736 of the UK Companies Act 1985) of the Company and which is under the control of the Company
		
	“Taxes Act”	  	the UK Income and Corporation Taxes Act 1988
		
	“UK”	  	the United Kingdom
		
	“UK Listing Authority”	  	the Financial Services Authority in its capacity as the competent authority for the purposes of Part VI of the UK Financial Services and Markets Act 2000
		
	“year”	  	a financial year of the Company.

  

 7 

	1.2	References to any statutory provision shall be read and construed as references to such provision as amended and re-enacted from time to time and no account should be taken of the
rule headings which have been inserted for ease of reference only. 

  

	1.3	If any question, dispute or disagreement arises as to the interpretation of this Plan, the decision of the Directors shall (except as regards any matter required to be determined by
the Auditors hereunder) be final and binding upon all persons. 

  

	1.4	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 UK Arbitration Act of 1996 shall not
apply in relation to any such matter. 

  

	1.5	Words denoting the masculine gender shall include the feminine. 

  

	1.6	Words denoting the singular shall include the plural and vice versa. 

  

	2.	ISSUE OF INVITATIONS 

  

	2.1	Subject to the following provisions of this rule 2, the Company may from time to time issue, or procure the issue by the Administrator, to all persons who are or are expected to be
Eligible Employees, invitations to apply for the grant of Options. 

  

	2.2	Invitations may be issued: 

  

	 	2.2.1	in the period of 42 days after the Approval Date, and thereafter, 

  

	 	2.2.2	in the period of 42 days beginning with the fourth Dealing Day following an Announcement Date 

  
 or, if the Company 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 issuing invitations in any such period, at any time in the period of 42 days beginning with the date on which such restriction is removed; and 
  

	 	2.2.3	at any other time if the Directors consider the circumstances to be exceptional unless the Company is or would then be so restricted from issuing invitations at that time.

  

	2.3	Invitations issued to Eligible Employees in a given jurisdiction shall be issued at the same time and be on the same terms. 

  

	2.4	Invitations may be issued in writing or by Electronic Communication or in the form of notices, advertisements, circulars or otherwise for the general attention of Employees and to
which the particular attention of individual Employees is drawn by notices issued with pay and salary advice slips SAVE THAT an invitation may not be issued to an Eligible Employee by Electronic Communication unless that person is known by
his Employer Company to have personal access during his normal business hours to information sent to him by Electronic Communication. 

  

	2.5	Each invitation shall: 

  

	 	2.5.1	identify the Savings Body; 

  

	 	2.5.2	 state that it is a condition of the grant of an Option that the Employee must first undertake to make 36 or 60 consecutive monthly savings contributions (by way of
deductions from net payments of salary or by such other arrangement 

  

 8 

	 	 
as may be permitted by the Directors in a specific country) in Local Currency to an account with the Savings Body; 

  

	 	2.5.3	specify the maximum and minimum amounts of such monthly savings contributions; 

  

	 	2.5.4	invite the person to whom it is addressed to apply for an Option in respect of such whole number of Shares as shall be as nearly as may be equal to, but shall not exceed, the
Individual Share Limit (or such lesser number of Shares as the Company may determine); 

  

	 	2.5.5	specify the last day on which an Application may be made 

  
 and shall otherwise be in such form as the Grantor shall determine. 
  

	2.6	On any occasion on which invitations are issued, the Directors may in their discretion (and acting with the consent of the Grantor where appropriate) determine and announce the
maximum number of Shares in respect of which Options will be granted in response to Applications made pursuant to such Invitations. 

  

	2.7	The amount of an Employee’s Monthly Contribution shall be not less than the Local Currency equivalent of £5 and not greater than the Local Currency equivalent of
£250 or, in either case, such other sum as the Directors may from time to time determine. 

  

	2.8	No invitation may be issued after 3 April 2012. 

  

	3.	APPLICATIONS FOR OPTIONS 

  

	3.1	Any Eligible Employee to whom an Invitation has been issued may apply for an Option by submitting to the person specified in the Invitation an application in writing which:

  

	 	3.1.1	is received at such address as shall be stated in the Invitation not later than the Application Date; 

  

	 	3.1.2	specifies the amount of the monthly contributions proposed to be paid by the Employee and authorises his Employer Company to deduct such amount (or such lower amount as may be
determined by the Directors having regard to the limitations imposed by the Plan) from his pay; 

  

	 	3.1.3	if the terms of the Invitation so permit, indicates whether the Employee wishes to be granted a 3-year Option or a 5-year Option; 

  

	 	3.1.4	includes an undertaking by the Employee to his Employer Company to make 36 or, in the case of a 5-year Option, 60 consecutive monthly savings contributions (in Local Currency) to a
Savings Body; 

  

	 	3.1.5	otherwise complies with such terms and conditions as may have been specified in the Invitation; 

  

	 	3.1.6	is subject to the Employee continuing to hold employment with a Participating Company until the Date of Grant; 

  

	 	3.1.7	authorises the transfer and processing of the Applicant’s Personal Data for the purposes of the administration of this Plan; 

  

	 	3.1.8	provides that the Applicant agrees to accept and be bound by the rules of the Plan; 

  

 9 

	 	3.1.9	is duly completed and signed by the Applicant 

  
 and is otherwise in such form as the Directors may determine. 
  

	3.2	If an Applicant has indicated in his Invitation that he wishes to be granted a 5-year Option, the Directors may, if it is necessary to ensure compliance with rule 7 or any such
limit as has been determined as mentioned in rule 2.6, treat such Application as if the Applicant had indicated that he wishes to be granted a 3-year Option. 

  

	3.3	No Eligible Employee shall make more than one Application nor be granted more than one Option in response to the issue of an Invitation on any occasion. 

  

	4.	GRANT OF OPTIONS 

  

	4.1	An Option may be granted by the Company or, if the Company has agreed, a Relevant Trustee. 

  

	4.2	An Option shall not be granted to any person who is not an Eligible Employee at the Date of Grant. 

  

	4.3	The maximum number of Shares in respect of which an Option shall be granted in response to any Application shall not in any event exceed the Individual Share Limit.

  

	4.4	Subject to rule 4.3, the Directors shall have an absolute discretion as to whether, and in respect of how many Shares, any Option should be granted. 

  

	4.5	Options for which Invitations have been issued on any occasion shall be granted within the period of 30 days beginning with the first of the 3 days by reference to which the Initial
Market Value of a Share is determined on that occasion PROVIDED THAT if on any occasion it is necessary to reduce the number of Shares over which Options are granted (so as to avoid exceeding the limit set out in rule 7 or otherwise) in one
or more countries, the Directors may grant such Options at any time within the period of 42 days beginning with such date. 

  

	4.6	As soon as reasonably practicable after the Date of Grant, the Grantor shall, or shall procure the, issue to each Optionholder of an Option Certificate which specifies:

  

	 	4.6.1	the Grantor; 

  

	 	4.6.2	the Date of Grant; 

  

	 	4.6.3	the number of Shares in respect of which the Option is granted; 

  

	 	4.6.4	the Exercise Price; 

  

	 	4.6.5	the earliest date on which the Option will normally become exercisable; and 

  

	 	4.6.6	that it is a term of the Option that the Optionholder shall (to the extent permitted by law) be responsible for any Option Tax Liability which may arise 

  
 and shall otherwise be in such form as the Grantor shall determine from time
to time. 
  

 10 

	5.	MONTHLY CONTRIBUTIONS 

  

	5.1	Subject to rule 5.3, a Monthly Contribution may be made by: 

  

	 	5.1.1	the Optionholder’s Employer Company deducting the whole amount from the Optionholder’s Net Pay for the relevant month and paying such amount (on the Optionholder’s
behalf) to an account with the Savings Body; or 

  

	 	5.1.2	the Optionholder entering into such other arrangement as may be permitted by the Employer Company for the Monthly Contribution to be paid to an account with the Savings Body.

  

	5.2	An Optionholder’s Savings shall be deposited with the Savings Body and shall at all times remain the property of the Optionholder so that none of the Company, the
Optionholder’s Employer, the Administrator or any Relevant Trustee shall have any interest in such Savings. 

  

	5.3	If in any month, and in consequence of an Optionholder being absent from work by reason of maternity leave, military service (or such other reason which is, in the Directors’
opinion an equivalent circumstance or event resulting in a period of temporary suspension in employment), the amount of such Optionholder’s Net Pay is insufficient to allow for the deduction in full of his Monthly Contribution for, or in
respect of, that month, the Optionholder may make other arrangements for payment to the Savings Body of the whole, or any balance remaining, of such Monthly Contribution, provided that the full amount of such Monthly Contribution is paid to the
Savings Body not later than 30 days after the end of the relevant month. 

  

	5.4	An Option shall not lapse and cease to be exercisable by reason only that the Optionholder has failed to make not more than six Monthly Contributions (whether by reason of any
insufficiency of Net Pay or otherwise). 

  

	5.5	An Option shall immediately lapse and cease to be exercisable if, after six of the Optionholder’s Monthly Contributions have not been made, a seventh Monthly Contribution is
not made by the due date for payment. 

  

	6.	EXERCISE PRICE 

  

	6.1	Subject to rule 14, the Company shall determine the price per Share payable upon the exercise of Options granted on the same day to Eligible Employees in the same jurisdiction, but
this shall not be less than: 

  

	 	6.1.1	80% of the Initial Market Value (rounded up to the nearest whole penny); or, if greater 

  

	 	6.1.2	in the case of a Subscription Option, the nominal value of a Share. 

  

	7.	LIMITATION ON GRANT OF SUBSCRIPTION OPTIONS 

  

	7.1	The Company may issue Shares to a Relevant Trustee for the purpose of enabling the Relevant Trustee to satisfy its obligation to transfer Shares to Optionholders upon the exercise
of Options. 

  

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

  

	 	7.2.1	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

  

	 	7.2.2	 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, 

  

 11 

	 	 
nor ceased to be exercisable) pursuant to any other employee share option or share incentive plan 

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

	7.3	To the extent that a Relevant Trustee has purchased Shares to be transferred to Optionholders in satisfaction of any Subscription Options, the Shares over which such Options are
held shall be left out of account for the purposes of this rule 7. 

  

	8.	EXERCISE OF AN OPTION 

  

	8.1	Subject to the following provisions of this rule 8 and rules 12 and 13, an Option shall only be exercisable within the period of 6 months beginning with the Exercise Date and, if
not then exercised, shall lapse and cease to be exercisable at the end of that period. 

  

	8.2	If an Optionholder dies, his Personal Representatives may exercise that Option to the extent permitted by rule 8.5: 

  

	 	8.2.1	if he dies before the Exercise Date, during the period of 12 months commencing on the date of his death; or 

  

	 	8.2.2	if he dies within the period of 6 months beginning on or after the Exercise Date, during the period of 12 months beginning on the Exercise Date 

  
 and if it is not then exercised that Option shall lapse and cease to be
exercisable at the end of such 12-month period. 
  

	8.3	An Option may be exercised to the extent permitted by rule 8.5 within the period of 6 months following the date upon which the Optionholder ceases to hold employment within the
Group by reason of: 

  

	 	8.3.1	injury, ill-health or disability (evidenced to the satisfaction of the directors of his Employer Company); 

  

	 	8.3.2	dismissal by reason of redundancy and, in South Africa only, dismissal by reason of the Employer Company’s operational requirements; 

  

	 	8.3.3	retirement at or after his normal retirement age; 

  

	 	8.3.4	the company by which the Optionholder is employed becoming neither a member of the Group nor an Associated Company nor a Jointly Owned Company; or 

  

	 	8.3.5	the fact that the Optionholder’s employment with a member of the Group or an Associated Company relates to a business or part of a business which is transferred to a person
which is neither a member of the Group nor an Associated Company nor a Jointly Owned Company. 

  

	8.4	If at any time before the Exercise Date an Optionholder ceases to hold employment with a member of the Group or an Associated Company or a Jointly Owned Company for any reason other
than those mentioned in rules 8.2 and 8.3, all Options granted to him shall immediately lapse and cease to be exercisable. 

  

 12 

	8.5	An Option may only ever be exercised: 

  

	 	8.5.1	subject to the Optionholder not having failed to make any Monthly Contributions, pursuant to rules 8.1 and 8.2.2 in respect of all of the Option Shares; or 

 

	 	8.5.2	pursuant to rules 8.2.1, 8.3, 12 or 13 (or pursuant to rules 8.1 and 8.2.2 if the Optionholder has failed to make one or more Monthly Contributions), in respect of such number of
Shares as is equal to: 

  

									
	 (a)
	  	in the case of a 3-year Option,	  	C	  	x	  	D
	 	  	 	  	 	  	 	  	36
					
	 (b)
	  	in the case of a 5-year Option,	  	C	  	x	  	D
	 	  	 	  	 	  	 	  	60

  
 where: 

 
 C is the number of Option Shares; and 
  
 D is the number of Monthly Contributions actually made by the Optionholder
before the date of exercise of the Option 
  
 or, in either case,
such lesser number of Option Shares as the Optionholder may specify in the notice of exercise given pursuant to rule 9.1. 
  

	8.6	For the purposes of this rule 8, an Optionholder shall not be treated as ceasing to hold employment within the Group until he no longer holds any office as a director or any
employment with any member of the Group or any Associated Company or any Jointly Owned Company. 

  

	8.7	An Option may not be exercised more than once. 

  

	8.8	In deciding whether and when to exercise an Option, an Optionholder shall have regard to the Model Code. 

  

	9.	MANNER OF EXERCISE OF AN OPTION 

  

	9.1	An Option shall be exercised only by the Optionholder giving notice in writing to the Grantor or, if so directed by the Company, the Administrator, which: 

 

	 	9.1.1	is given at any time when the Option is exercisable; 

  

	 	9.1.2	specifies the number of Shares in respect of which the Option is exercised in accordance with rule 8.5; 

  

	 	9.1.3	is accompanied by payment of an amount in pounds sterling equal to the Acquisition Cost; 

  

	 	9.1.4	unless the Grantor otherwise permits, is accompanied by the Option Certificate, 

  
 and is otherwise in such form as the Grantor may from time to time determine and notify to the Optionholder. 
  

 13 

	9.2	Within 30 days after the date on which the Grantor (or the Administrator) shall have received a valid notice of exercise of an Option the Grantor shall procure that:

  

	 	9.2.1	the monies accompanying that notice are applied in payment of the Acquisition Cost for the number of Shares in respect of which the Option is then exercised; and

  

	 	9.2.2	subject to rules 9.3 and 9.6, the number of Shares in respect of which the Option is then exercised are allotted and issued or transferred to or to the order of the Optionholder.

  

	9.3	The Grantor shall not be obliged to issue, transfer or procure the transfer of any Shares or any interest in any Shares upon the exercise of an Option unless and until the
Optionholder has paid to the Grantor such sum as, in the opinion of the Company, is sufficient to indemnify any existing or former member of the Group or any existing or former Associated Company or any Relevant Trustee in full against any Option
Tax Liability or has made such other arrangement as, in the opinion of the Company, will ensure that the Optionholder will satisfy his liability under such indemnity. 

  

	9.4	As soon as reasonably practicable after allotting or transferring any Shares as mentioned in rule 9.2.2, the Grantor shall procure: 

  

	 	9.4.1	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 

  

	 	9.4.2	if at that time the Shares are listed on the Daily Official List, that any Shares so allotted are admitted to the Daily Official List. 

  

	9.5	If after an Option has been exercised, the Grantor is restricted from issuing, transferring or procuring the transfer of Shares to the Optionholder by reason of any statutory,
regulatory or other legal provision, rule or the Model Code or any other requirement or guidance which is issued by the UK Listing Authority or any other body on behalf of institutional investors in the Company relating to dealings in Shares by
directors or employees of 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 but shall do so within the period
of 30 days thereafter. 

  

	9.6	The allotment or transfer of any Shares upon the exercise of an Option 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 overseas) under any enactments or regulations from time to time in force and it shall be the responsibility of the Optionholder to do all such things as may be necessary to
obtain or obviate the necessity of any such consent. 

  

	9.7	All Shares allotted or transferred upon the exercise of any Option 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. 

  

	9.8	The costs of stamp duty and dealing costs and commissions incurred when Shares are purchased upon the exercise of an Option shall be borne by the Company. 

 

	10.	NON-TRANSFERABILITY AND LAPSE OF OPTIONS 

  

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

  

 14 

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

  

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

  

	 	10.2.2	the Optionholder becomes bankrupt or makes, or proposes to make, a voluntary arrangement with all or any of his creditors in accordance with any applicable laws relating to personal
insolvency; 

  

	 	10.2.3	the Optionholder is not or ceases for any other reason (except his death) to be the sole legal and beneficial owner of the Option free from encumbrances or would not, upon the
exercise of the Option, be the sole legal and beneficial owner of the Shares thereby acquired, free from encumbrances; 

  

	 	10.2.4	(unless in any individual case the Company otherwise determines) the Optionholder, whilst remaining in employment with a member of the Group or an Associated Company or a Jointly
Owned Company, instructs his Employer Company to cease deducting Monthly Contributions from his salary; 

  

	 	10.2.5	if, after six of the Optionholder’s Monthly Contributions have not been made for any reason, a seventh Monthly Contribution is not made on the due date for payment; or

  

	 	10.2.6	(unless in any individual case the Company otherwise determines) an Optionholder obtains repayment of any of his savings contributions (or interest on such contributions) unless
such Option is then immediately exercisable pursuant to rules 8.2, 8.3, 12 or 13. 

  

	10.3	Save as mentioned in rule 8.2.2, an Option shall in any event lapse and cease to be exercisable at the end of the period of 6 months beginning with the Exercise Date.

  

	11.	RELATIONSHIP WITH EMPLOYMENT CONTRACT 

  

	11.1	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 shall the existence of a
contract of employment between any person and any present or past member of the Group or Associated Company or Jointly Owned Company, give such person any right entitlement or expectation 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 or that he will be invited to apply for the grant of an Option whether subject to any conditions or at all. 

  

	11.2	Neither the existence of this Plan nor the fact that an individual has on any occasion been granted an Option (or been invited to apply for the grant of an Option) shall give such
individual any right entitlement or expectation that he has or will in future have any such right entitlement or expectation to participate in this Plan by being granted an Option (or invited to apply for the grant of an Option) on any other
occasion. 

  

	11.3	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 any present or past member of the Group or Associated Company or Jointly Owned Company for any reason whatsoever (whether or not such termination is ultimately held to be wrongful or unfair).

  

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

  

 15 

	11.5	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 whole or
in part in consequence of the loss or termination of his office or employment with any present or past member of the Group or Associated Company or Jointly Owned Company for any reason whatsoever (whether or not such termination is ultimately held
to be wrongful or unfair). 

  

	12.	DEMERGER, RECONSTRUCTION OR WINDING-UP OF THE COMPANY 

  

	12.1	If notice is given to shareholders of the Company of a proposed demerger of the Company or of any Subsidiary the Company may give notice to Optionholders that Options may then be
exercised within such period (not exceeding 30 days) as the Company 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 Company that the
interests of Optionholders would or might be substantially prejudiced if before the proposed demerger has effect Optionholders could not exercise their Options and be registered as the holders of the Shares thereupon acquired.

  

	12.2	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 UK Companies Act 1985 the Optionholder shall be entitled to exercise his Option during the period of 6 months commencing on the date on which the court sanctions the compromise or arrangement, and thereafter the Option shall lapse
and cease to be exercisable. 

  

	12.3	If notice is given to the shareholders of the Company of a resolution for the voluntary winding-up of the Company, notice of the same shall be given to all Optionholders and each
Optionholder shall be entitled to exercise his Option at any time within the period of 6 months commencing on the date on which the resolution is passed. 

  

	12.4	All Options shall immediately lapse and cease to be exercisable upon the commencement of a winding-up of the Company. 

  

	13.	TAKE-OVER OF THE COMPANY 

  

	13.1	If, as a result of either: 

  

	 	13.1.1	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 

  

	 	13.1.2	a general offer to acquire all the shares in the Company of the same class as the Shares 

  
 the Company shall come under the control of another person or persons, an Optionholder shall be entitled to exercise his
Option to the extent permitted by rule 8.5 within the period of 6 months beginning with 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. To the
extent that the Option is not then exercised, it shall lapse and cease to be exercisable at the end of such period. 
  

	13.2	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 an Optionholder shall be
entitled to exercise his Option to the extent permitted by rule 8.5 at any time when that person remains so entitled or bound. To the extent that the Option is not then exercised, it shall lapse and cease to be exercisable at the end of such period.

  

 16 

	13.3	For the purposes of the preceding provisions of this rule 13 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. 

  

	14.	VARIATION OF SHARE CAPITAL 

  

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

  

	 	14.1	to the aggregate number of Shares subject to any Option; 

  

	 	14.2	to the Exercise Price; and/or 

  

	 	14.3	if an Option has been exercised but no Shares have been allotted or transferred, to the number of Shares which may be so allotted or transferred and the Acquisition Cost relating to
such Shares 

  
 PROVIDED THAT: 
  

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

  

	 	(b)	the aggregate Acquisition Cost payable by an Optionholder on the exercise of all of his Options shall not be materially altered; 

  

	 	(c)	except insofar as the Directors, on behalf of the Company, may then agree to capitalise the Company’s reserves and apply the same in paying up the difference between the
Exercise Price and the nominal value of the Shares at the time of exercise, the Exercise Price in relation to a Subscription Option is not reduced below the nominal value of those Shares; 

  

	 	(d)	the number of Shares as so adjusted shall be rounded down to the nearest whole number and the Exercise Price as so adjusted shall be rounded up to the nearest whole penny; and

  

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

  

	14.2	As soon as reasonably practicable after making any adjustment pursuant to rule 14.1 the Grantor shall give notice in writing thereof to every Optionholder affected thereby and may
call in any Option Certificates for endorsement or replacement. 

  

	15.	ALTERATION OF THIS PLAN 

  

	15.1	The Directors may at any time (with the prior consent of the Grantor) by resolution in writing alter or add to any of the provisions of this Plan in any respect PROVIDED
THAT: 

  

	 	15.1.1	 no such alteration or addition shall be made to the advantage of existing or new Optionholders to the provisions relating to eligibility to participate, basis of
determining entitlement to Optionholders’ rights to acquire shares, exercise price, overall and individual limitations on the grant of options under this Plan and the adjustment of such rights in the event of a variation of Ordinary Share
Capital without the prior approval by ordinary resolution of the shareholders of the Company in general meeting SAVE THAT this provision shall not apply to 

  

 17 

	 	 
the extent that such alteration or addition is in the opinion of the Directors a minor amendment which is necessary or appropriate:

  

	 	(a)	to benefit the administration of this Plan; 

  

	 	(b)	to take account of a change in legislation; or 

  

	 	(c)	to obtain or maintain favourable tax, exchange control or regulatory treatment for participants in the Plan or for the Company or any member of the Group in any jurisdiction;

  

	 	15.1.2	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; and

  

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

  

	16.	SERVICE OF DOCUMENTS 

  

	16.1	Except as otherwise provided in this Plan, any notice or document to be given by, or on behalf of, the Company or other Grantor or the Administrator to any person in accordance or
in connection with this Plan shall be duly given: 

  

	 	16.1.1	by sending it through the post in a pre-paid envelope to the address last known to the Company to be his address and, if so sent, it shall be deemed to have been duly given on the
date of posting; or 

  

	 	16.1.2	if he holds office or employment with any member of the Group or any Associated Company, by delivering it to him at his place of work or by sending to him a facsimile transmission
or Electronic Communication addressed to him at his place of work and if so sent it shall be deemed to have been duly given at the time of transmission SAVE THAT a notice or document shall not be duly given by Electronic Communication unless
that person is known by his Employer Company to have personal access during his normal business hours to information sent to him by Electronic Communication. 

  

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

  

	16.3	Any notice in writing or document to be submitted or given by an Optionholder to the Grantor, the Company or the Administrator in accordance or in connection with this Plan may be
delivered, sent by post, facsimile transmission or Electronic Communication but shall not in any event be duly given unless: 

  

	 	16.3.1	it is actually received (or, in the case of an Electronic Communication, opened) by the secretary of the Company or such other individual as may from time to time be nominated by
the Company and whose name and address is notified to Optionholders; and 

  

	 	16.3.2	if given by Electronic Communication (and is so required by the Company), it includes a digitally encrypted signature of the Optionholder. 

  

 18 

	16.4	For the purposes of this Plan, an Electronic Communication shall be treated as not having been duly made or received if the recipient of such Electronic Communication notifies the
sender that it has not been opened because it contains, or is accompanied by a warning or caution that it could contain or be subject to, a virus or other computer programme which could alter damage or interfere with any computer software or
Electronic Communication. 

  

	17.	APPLICABLE LAW 

  

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

  

	17.2	In applying for the grant of an Option an Eligible Employee shall be deemed to submit to the exclusive jurisdiction of the English courts as regards any claim legal action or
proceedings arising out of this Plan and to 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.

  

	18.	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 pursuant to this Plan. 
  

	19.	PROTECTION OF PERSONAL DATA 

  

	19.1	By accepting the grant of an Option the Optionholder shall agree and consent to: 

  

	 	19.1.1	the collection, use and processing by any member of the Group, the Administrator and any Relevant Trustee of Personal Data relating to the Optionholder, for all purposes reasonably
connected with the administration of this Plan and the subsequent registration of the Optionholder or any other person as a holder of Shares acquired pursuant to the exercise of an Option; 

  

	 	19.1.2	any member of the Group, the Administrator and any Relevant Trustee transferring Personal Data to or between any of such persons for all purposes reasonably connected with the
administration of the Plan; 

  

	 	19.1.3	the use of such Personal Data by any such person for such purposes; and 

  

	 	19.1.4	the transfer to and retention of such Personal Data by any third party for such purposes. 

  

	20.	MISCELLANEOUS 

  

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

  

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

  

	20.3	 The Directors may from time to time make and vary such rules and regulations not inconsistent herewith and establish such procedures for the administration and

  

 19 

	 	 
implementation of this Plan as they think fit. In the event of any 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 Directors shall (except as regards any matter required to be determined by the Auditors hereunder) be final and binding upon all
persons. 

  

	20.4	The Company shall not be obliged to provide Optionholders with copies of any notices, circulars or other documents sent to holders of Shares. 

  

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

  

	20.6	The issue of an Invitation on any occasion is made at the Company’s discretion. No entitlement to the issue of an Invitation, the grant of an Option and/or the issue of Shares
in the future shall thereby be created on the grounds that such Invitations were issued or Options were granted in the past nor on the grounds that Options may previously have been granted over a particular number of Shares at a certain price. Even
the repeated grant of Options and/or the issue of Shares shall not create future entitlements to receive Options and/or Shares at all or to be granted Options over a specific number of Shares or at a specific price. 

  

	20.7	If any provision of this Plan is held invalid, illegal or unenforceable for any reason by any court of competent jurisdiction, such provision shall be severed and the remainder of
the provisions of this Plan shall continue in full force and effect as if this Plan had been established with the invalid, illegal or unenforceable provision eliminated. 

  

	21.	SHARE AWARD OR CASH ALTERNATIVE 

  

	21.1	The Directors may determine that an Option will not be satisfied by the acquisition of Shares at the time of exercise but instead will be satisfied either by:

  

	 	21.1.1	The transfer to him of Shares with a value equal to the Gain or will apply such value in the subscription of Shares for him; or 

  

	 	21.1.2	The payment to him in cash in his Local Currency of the Gain. 

  
 In these circumstances the Acquisition Cost shall not be payable, and if already paid, will be repaid to the Optionholder. 
  
 The Directors may make this determination at the time the invitations are
made, at the Date of Grant, or afterwards, to take account of local legal and tax requirements. 
  

	21.2	For the purpose of this clause, the Gain means the amount by which the middle market quotation of a Share, as derived from the Daily Official List, for the 3 consecutive Dealing
Days immediately preceding the Exercise Date, or such other date as determined by the Directors, less the Exercise Price. The number of shares available or cash paid under this clause will be after the deduction of any Option Tax Liability.

  

 20

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