EXHIBIT 10(ii)

1998 Stock Option Plan

of

STRYKER CORPORATION

_____________

 

As Amended through July 23, 2008

and As Adjusted for the two-for-one stock splits effective May 12, 2000 and May
14, 2004

_____________

            1.         Purpose.  The purpose of the 1998 Stock Option Plan of
Stryker Corporation (the "Plan") is to advance the interests of Stryker
Corporation (the "Company") and its subsidiaries by providing a larger personal
and financial interest in the success of the Company and its subsidiaries to
employees and directors upon whose judgment, interest and special efforts the
Company and its subsidiaries are dependent for the successful conduct of its and
their operations and to enable the Company and its subsidiaries to compete
effectively with others for the services of new employees and directors as may
be needed for the continued improvement of the enterprise.  It is believed that
the acquisition of such interest will stimulate the efforts of such employees
and directors on behalf of the Company and its subsidiaries and strengthen their
desire to continue to serve the Company and its subsidiaries.

            2.         Grantees.  Options may be granted under this Plan to any
employee or director of the Company and its subsidiaries.  The employees and
directors of the Company and its subsidiaries to whom options are granted and
the terms of such options shall be determined by the Compensation Committee
appointed pursuant to Section 10 hereof, except that the full Board of
Directors, acting by affirmative vote of a majority of the directors then in
office, shall make such determinations in the case of directors who are not also
employees of the Company or any subsidiary ("Non-Employee Directors".  A grantee
may hold more than one option.  The number of shares of Common Stock, par value
$.10 per share (the "Common Stock"), of the Company subject to options that may
be granted under this Plan in any calendar year to any employee or director
shall not exceed 2,000,000 (the "Annual Limit").  To the extent required by
Section 162(m) of the Internal Revenue Code of 1986, as amended (the "Code"),
shares subject to options that are canceled shall continue to be counted against
the Annual Limit.

            Nothing contained in this Plan, nor in any option granted pursuant
to this Plan, shall confer upon any employee or director any right to the
continuation of his or her employment or directorship nor limit in any way the
right of the Company or its subsidiaries to terminate such employment or
directorship at any time.

            As used herein, the term "subsidiary" shall mean any present or
future entity that is controlled by the Company, directly or through one or more
intermediaries.

            3.         Effectiveness and Termination of Plan.  This Plan shall
become effective upon approval thereof by the holders of a majority of the votes
cast at a meeting held, among other things, for such purpose, provided that the
total vote cast on the proposal represents over 50% in

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interest of the Common Stock entitled to vote at the meeting.  The date of the
meeting at which such approval is given shall be the adoption date of this
Plan.  This Plan shall terminate on the earliest of (i) ten (10) years from its
adoption date (ii) when all shares of Common Stock that may be issued under this
Plan shall have been issued through exercise of options granted under this Plan
or (iii) at any earlier time that the Board of Directors may determine.

            Any option outstanding under this Plan at the time of its
termination shall remain in effect in accordance with its terms and conditions
and those of this Plan.

            4.         The Common Stock.  The aggregate number of shares of
Common Stock of the Company that may be issued under this Plan shall consist of
40,000,000 shares, subject to further adjustment as provided in Section 7
hereof.  Such number of shares may be set aside out of the authorized but
unissued shares of Common Stock of the Company not reserved for any other
purpose or out of shares of Common Stock held in or acquired for the treasury of
the Company.  All or any shares of Common Stock subjected under this Plan to an
option that, for any reason, is canceled, terminates, lapses or expires
unexercised as to such shares may again be subjected to an option under this
Plan.  If a grantee pays the purchase price for an option by surrendering
previously owned shares of Common Stock to the Company (either by actual
delivery or attestation to the ownership) in accordance with the provisions of
Section 5(b)(i)(B) herein or pursuant to a net exercise arrangement in
accordance with the provisions of Section 5(b)(i)(C) herein or satisfies any tax
withholding requirement with respect to any option by having the Company
withhold shares of Common Stock or by surrendering shares of Common Stock in
accordance with Section 9 herein, then such shares surrendered or withheld to
pay the purchase price or used to satisfy such tax withholding requirement shall
count against the aggregate number of shares of Common Stock that may be issued
under this Plan set forth above in this Section 4.

5.         Types of Options and Terms and Conditions.

            (a)        Options granted under this Plan shall be in the form of
(i) incentive stock options as defined in Section 422 of the Code ("incentive
stock options") or (ii) options not qualifying under said Section ("nonstatutory
stock options").

            (b)        Options may be granted at any time and from time to time
prior to the termination of this Plan.  Except as hereinafter provided, all
options granted pursuant to this Plan shall be subject to the following terms
and conditions:

            (i)         Price.  The purchase price of the shares of Common Stock
issuable upon exercise of options granted under this Plan shall be not less than
100% of the fair market value of the Common Stock on the date of the grant of
the option.  For purposes of this Plan, "fair market value" of the Common Stock
shall mean the closing sales price of the Common Stock (or the closing bid, if
no sales were reported) as reported on the New York Stock Exchange-Composite
Transactions for the last market trading day prior to the time of determination
or, if the Common Stock is not then listed on the New York Stock Exchange, the
price determined in good faith by the Compensation Committee (or the Board of
Directors in the case of options granted to Non-Employee Directors).  The
purchase price shall be paid in full at the time of exercise by any combination
of the

                                                                                                   

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methods set forth below.  The Compensation Committee (or the Board of Directors
in the case of options granted to Non-Employee Directors) shall have the
authority to grant options that do not entitle the grantee to use all methods or
that require prior written consent of the Company to use certain of the
methods.  The methods of payment of the purchase price are:  (A) cash, (B) by
surrender to the Company (either by actual delivery or attestation to the
ownership) of shares of Common Stock with an aggregate fair market value on the
date of purchase that does not exceed the aggregate purchase price and payment
of cash to the extent of any remaining balance of the aggregate purchase price
or, (C) by a net exercise arrangement pursuant to which the Company will reduce
the number of shares of Common Stock issued upon exercise by the largest whole
number of shares of the Common Stock  with an aggregate fair market value on the
date of purchase that does not exceed the aggregate purchase price and will
receive from the grantee cash to the extent of any remaining balance of the
aggregate purchase price .  The purchase price shall be subject to adjustment,
but only as provided in Section 7 hereof.

 

            (ii)        Duration and Exercise of Options.  Options may be
granted for terms of up to but not exceeding ten (10) years from the date the
particular option is granted.  Options shall be exercisable as provided by the
Compensation Committee (or the Board of Directors in the case of options granted
to Non-Employee Directors) at the time of grant thereof.

 

[Note:  The lead in to Section 5(b)(iii) and the paragraphs entitled
"Retirement," "Disability or Death" and "Other Reasons" as set forth below apply
to options granted on or after February 7, 2006.  See the relevant terms and
conditions of each option grant for the termination provisions applicable with
respect to options granted before that date.]

 

            (iii)       Termination of Employment or Service as a Director. 
Upon the termination of the grantee's employment or service as a director,
except as otherwise provided under terms of a particular grant, his or her
rights to exercise an option shall be as follows:

 

Retirement.  If a grantee's employment or service as a director terminates by
reason of retirement, the grantee or the grantee's estate (in the event of death
after such termination) may, at any time prior to the fixed termination date
provided in the option, exercise the option with respect to all or any part of
the shares of Common Stock subject thereto, regardless of whether the right to
purchase such shares had accrued on or before the last day on which the grantee
was either an employee or director of the Company or any subsidiary.  Anything
in this Plan to the contrary notwithstanding, if a grantee were eligible for
retirement but ceased to be an employee or director by reason of disability,
death or any other reason before such grantee retired, his or her rights to
exercise an option shall be as if such grantee's employment or service as a
director ceased by reason of retirement.  If an incentive stock option is
exercised after the exercise period that is applicable for purposes of Section
422 of the Code, such option shall be treated as a nonstatutory stock option. 
For purposes of this

                                                                                                    

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Plan, "retirement" means termination of employment with or service as a director
of the Company and/or its subsidiaries on or after the grantee's 65th birthday
or the grantee's 60th birthday if the grantee has completed or is otherwise
credited with ten (10) years of service as an employee or director of the
Company and/or its subsidiaries.

Disability or Death.  If a grantee's employment or service as a director of the
Company and/or its subsidiaries terminates by reason of disability or death, the
grantee or the grantee's estate may, within one year following such termination,
exercise the option with respect to all or any part of the shares of Common
Stock subject thereto, regardless of whether the right to purchase such shares
had accrued on or before the date of such termination.  If an incentive stock
option is exercised after the exercise period that is applicable for purposes of
Section 422 of the Code, such option shall be treated as a nonstatutory stock
option.  For purposes of this Plan, "disability" means (i) when used in the
context of an option other than an incentive stock option, a physical or mental
condition that qualifies as a disability under the long-term disability pay plan
of the Company and/or its subsidiaries then in effect for United States
employees (irrespective of whether the grantee is eligible to participate in
such plan), which disability has, in the case of an employee prevented such
employee from being in the full-time, active service of the Company and/or its
subsidiaries for the entire period of one hundred-eighty (180) days immediately
preceding termination of employment; and (ii) when used in the context of an
incentive stock option, a physical or mental condition that qualifies as a
disability within the meaning of Code Section 22(e)(3).

Other Reasons.  If a grantee's employment or service as a director of the
Company and/or its subsidiaries terminates for any reason other than retirement,
disability or death, the grantee or the grantee's estate (in the event of the
grantee's death after such termination) may, within thirty (30) days following
such termination, exercise the option with respect to only such number of shares
of Common Stock as to which the right of exercise had accrued on or before the
termination date unless the Compensation Committee (or the Board of Directors in
the case of options granted to Non-Employee Directors) determines that the
option shall be exercisable as to a greater portion thereof.  Except as
otherwise provided in the following sentence, for purposes of the preceding
sentence, the termination date means the effective date of termination of a
grantee's employment or service as a director.  If a grantee is employed outside
the United States, the termination date shall be the earliest of (i) the date on
which notice of termination of employment is provided to the grantee, (ii) the
last day of the grantee's active service with the Company or a subsidiary, or
(iii) the last day on which the grantee is an employee of the Company or any
subsidiary, as determined in each case without including any required advance
notice period and irrespective of the status of the termination under local
labor or employment laws.

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General.  Notwithstanding the foregoing, no option shall be exercisable in whole
or in part (A) after the termination date provided in the option, or (B) except
as provided in the fourth paragraph of Section 10 or in the event of termination
of employment or service as a director because of disability, retirement or
death, unless the grantee shall have continued in the employ of, or to serve as
a director of, the Company or one of its subsidiaries for one year following the
date the option was granted.  A grantee's "estate" shall mean the grantee's
legal representatives upon the grantee's death or any person who acquires the
right under the laws of descent and distribution to exercise an option by reason
of the grantee's death.  The Board of Directors or the Compensation Committee
may determine that the transfer of employment of one or more employees at the 
Company's request or with its permission to an entity that has a contractual
relation with the Company or one or more of its subsidiaries shall not be deemed
a termination of employment for purposes of this Section 5(b)(iii).  In the case
of a person who is both an employee and a director of the Company, the
provisions of this Section 5(b)(iii) shall not apply until such time as such
person is neither an employee nor a director of the Company.

            (iv)       Transferability of Option.  Except as otherwise provided
herein, options shall be transferable only by will or the laws of descent and
distribution and shall be exercisable during the grantee's lifetime only by him
or her.  A grantee may transfer any nonstatutory stock option granted under this
Plan to members of his or her immediate family (defined as a spouse, children
and/or grandchildren) or to one or more trusts for the benefit of such family
members if the instrument evidencing such option expressly so provides and the
grantee does not receive any consideration for the transfer; provided, however,
that any such transferred option shall continue to be subject to the same terms
and conditions that were applicable to such option immediately prior to its
transfer (except that such transferred option may not be further transferred by
the transferee during the transferee's lifetime).  An option and all rights
thereunder shall terminate immediately if the holder attempts to or does sell,
assign, transfer, pledge, hypothecate or otherwise dispose of the option or any
rights thereunder to any person except as permitted herein.

            (v)        Surrender of Options.  The Compensation Committee (or the
Board of Directors in the case of options granted to Non-Employee Directors) may
require the surrender of outstanding options as a condition precedent to the
grant of new options.  Upon each such surrender, the option or options
surrendered shall be canceled and the shares of Common Stock of the Company
previously subject to the option or options under this Plan shall thereafter be
available for the grant of options under this Plan.

            (vi)       Other Terms and Conditions.  Options may also contain
such other provisions, which shall not be inconsistent with any of the foregoing
terms, as the Compensation Committee (or the Board of Directors in the case of
options granted to Non-Employee Directors) shall deem appropriate.

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            (c)        Incentive stock options granted pursuant to this Plan
shall be subject to all the terms and conditions included in subsection (b) and
to the following terms and conditions:

            (i)         No incentive stock option shall be granted to an
individual who is not an employee of the Company or a "subsidiary corporation"
as defined in Section 424(f) of the Code;

            (ii)        No incentive stock option shall be granted to an
employee who owns stock possessing more than 10% of the total combined voting
power of all classes of stock of the Company; and

            (iii)       No incentive stock option may be granted under this Plan
if such grant, together with any applicable prior grants that are incentive
stock options within the meaning of Section 422(b) of the Code, would exceed any
maximum established under the Code for incentive stock options that may be
granted to an individual employee.

            6.         Rights of a Shareholder.  A recipient of an option shall
have no rights as a shareholder with respect to any shares issuable or
transferable upon exercise thereof until the date of issuance of a stock
certificate for such shares.  Except as otherwise provided pursuant to Section 7
hereof, no adjustment shall be made for dividends or other rights for which the
record date is prior to the date of such stock certificate.

            7.         Adjustment of and Changes in Common Stock.  In the event
that the shares of Common Stock of the Company, as presently constituted, shall
be changed into or exchanged for a different number or kind of shares of stock
or other securities of the Company or of another corporation (whether by reason
of merger, consolidation, recapitalization, reclassification, split-up,
combination of shares, or otherwise) or if the number of such shares of Common
Stock shall be increased through the payment of a stock dividend or a dividend
on the shares of Common Stock of rights or warrants to purchase securities of
the Company shall be made, then there shall be substituted for or added to each
share of Common Stock theretofore appropriated or thereafter subject or that may
become subject to an option under this Plan, the number and kind of shares of
stock or other securities into which each outstanding share of Common Stock of
the Company shall be so changed, or for which each such share shall be
exchanged, or to which each such share shall be entitled, as the case may be,
and references herein to the Common Stock shall be deemed to be references to
any such stock or other securities as appropriate.  Outstanding options shall
also be appropriately amended as to price and other terms as may be necessary to
reflect the foregoing events.  In the event there shall be any other change in
the number or kind of the outstanding shares of the Common Stock of the Company,
or of any stock or other securities into which such Common Stock shall have been
changed or for which it shall have been exchanged, then if the Board of
Directors shall, in its sole discretion, determine that such change equitably
requires an adjustment in any option theretofore granted or that may be granted
under this Plan, such adjustments shall be made in accordance with such
determination.  Fractional shares resulting from any adjustment in options
pursuant to this Section 7 may be settled in cash or otherwise as the Board of
Directors shall determine.  Notice of any adjustment shall be given by the
Company to each holder of an option that shall have been so adjusted and such
adjustment (whether or not such notice is given) shall be effective and binding
for all purposes of this Plan.

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            8.         Securities Act Requirements.  No option granted pursuant
to this Plan shall be exercisable in whole or in part, and the Company shall not
be obligated to sell any shares of Common Stock subject to any such option, if
such exercise and sale would, in the opinion of counsel for the Company, violate
the Securities Act of 1933 (or other Federal or State statutes having similar
requirements), as in effect at that time.  Each option shall be subject to the
further requirement that, if at any time the Board of Directors shall determine
in its discretion that the listing or qualification of the shares of Common
Stock subject to such option under any securities exchange requirements or under
any applicable law, or the consent or approval of any governmental regulatory
body, is necessary or desirable as a condition of, or in connection with, the
issue of shares thereunder, such option may not be exercised in whole or in part
unless such listing, qualification, consent or approval shall have been effected
or obtained free of any conditions not acceptable to the Board of Directors.

            9.         Withholding.  Appropriate provision, which may include
the election by the grantee to have the  Company withhold from the Common Stock
to be issued upon exercise of an option a number of shares having an aggregate
fair market value that would satisfy the tax withholding amount due based on a
rate no higher than the statutory minimum tax withholding rate or to surrender
to the Company (either by actual delivery or attestation to the ownership) of
shares of Common Stock already owned having an aggregate fair market value to
satisfy the desired withholding amount, shall be made for all taxes required to
be withheld from shares of Common Stock issued under this Plan under the
applicable laws or other regulations of any governmental authority, whether
federal, state or local, and domestic or foreign.  To that end, the Company may
at any time take such steps as it may deem necessary or appropriate (including
sale or retention of shares) to provide for payment of such taxes.

            10.       Administration and Amendment of Plan.  The Board of
Directors shall appoint a Compensation Committee composed of two or more
directors.  The Board of Directors (but not the Compensation Committee) may from
time to time remove members from such Committee or add members thereto, and
vacancies in such Committee, however caused, shall be filled by the Board.  The
Compensation Committee (or the Board of Directors in the case of options granted
to Non-Employee Directors) from time to time may adopt rules and regulations for
carrying out this Plan.  The interpretation and construction by the Compensation
Committee (or the Board of Directors in the case of options granted to
Non-Employee Directors) of any provision of this Plan or any option granted
pursuant hereto shall be final and conclusive.  No member of the Compensation
Committee or the Board of Directors shall be liable for any action or
determination made in good faith with respect to this Plan or any option granted
pursuant thereto.  Subject to the terms and conditions of this Plan, the
Compensation Committee (or the Board of Directors in the case of options granted
to Non-Employee Directors) may modify, extend or renew outstanding options
granted under this Plan, or accept the surrender of outstanding options (to the
extent not already exercised) and grant new options in substitution of them (to
the extent not already exercised).  The Compensation Committee (or the Board of
Directors in the case of options granted to Non-Employee Directors) will not,
however, modify any outstanding option so as to specify a lower purchase price
or cancel any outstanding option and issue a new option in its place with a
lower purchase price, without the approval of the Company's shareholders. 
Notwithstanding the foregoing, no modification of an option will materially
alter or impair any right or obligation under any option already granted under
this Plan, without the prior written consent of the grantee.

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            Subject to the terms of this Plan and terms and limitations as the
Compensation Committee shall determine, the Compensation Committee may delegate
its authority to grant options to employees to the Company's Chief Executive
Officer, subject to an annual limit per employee of 10,000 shares of Common
Stock of the Company subject to options, except that no such delegation may be
made in the case of options granted to persons who are subject to the provisions
of Section 16 of the Exchange Act or in the case of option grants intended to be
qualified under Section 162(m) of the Code.  The annual limit described in the
preceding sentence shall be subject to adjustment as provided in Section 7.  To
the extent that the Compensation Committee delegates its authority as provided
by this Section 10, all references in this Plan to the Compensation Committee's
authority to grant options shall be deemed to include the Chief Executive
Officer.

            The Board of Directors (but not the Compensation Committee) may from
time to time make such changes in and additions to this Plan as it may deem
proper and in the best interests of the Company, without further action on the
part of the shareholders of the Company except as required by law, regulation or
by the rules of the principal trading market of the Company's Common Stock at
that time; provided, however, that, unless the shareholders of the Company shall
have first approved thereof (i) except as provided in Section 7 hereof, the
total number of shares of Common Stock subject to this Plan and the Annual Limit
shall not be increased and the minimum purchase price shall not be changed, (ii)
no option shall be exercisable more than ten (10) years after the date it is
granted and (iii) the expiration date of this Plan shall not be extended.

            The Board of Directors shall have the power, in the event of any
disposition of substantially all of the assets of the Company, its dissolution
or of any consolidation or merger of the Company with or into any other
corporation, to amend all outstanding options to permit the exercise of all such
options prior to the effectiveness of any such transaction and to terminate such
options as of such effectiveness.  If the Board of Directors shall exercise such
power, all options then outstanding and subject to such requirement shall be
deemed to have been amended to permit the exercise thereof in whole or in part
by the grantee at any time or from time to time as determined by the Board of
Directors prior to the effectiveness of such transaction and such options shall
be deemed to terminate upon such effectiveness.

11.       Breach of Restrictive Covenants.  The terms of an option grant may
provide that, notwithstanding any other provision of this Plan to the contrary,
if the grantee breaches any noncompetition, nonsolicitation or nondisclosure
provision or provision as to the Company's ownership of inventions contained in
the grant or otherwise required as a condition to a grant, whether during or
after termination of employment or service as a director of the Company or any
of its subsidiaries, the grantee will forfeit such option or the shares issued
upon exercise thereof (in which case the Company will repay the lesser of the
option price or the then fair market value of a share of Common Stock) or pay to
the Company any gain realized as a result of the disposition of shares of Common
Stock issued upon exercise, all as provided in the terms of a particular grant.

 

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