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                                HEARTPORT, INC.
                             1996 STOCK OPTION PLAN
                   (Restated October 21, 1996 and May 7, 1999)



                                   ARTICLE ONE
                               GENERAL PROVISIONS

I.       PURPOSE OF THE PLAN

                  This 1996 Stock Option Plan is intended to promote the
interests of Heartport, Inc., a Delaware corporation, by providing eligible
persons with the opportunity to acquire a proprietary interest, or otherwise
increase their proprietary interest, in the Corporation as an incentive for
them to remain in the service of the Corporation.

                  Capitalized terms shall have the meanings assigned to such
terms in the attached Appendix.

II.      STRUCTURE OF THE PLAN

         A.  The Plan shall be divided into two separate equity programs:

                                (i)      the Discretionary Option Grant Program
         under which eligible persons may, at the discretion of the Plan
         Administrator, be granted options to purchase shares of Common Stock,
         and

                                (ii)     the Automatic Option Grant Program
         under which Eligible Directors shall automatically receive option
         grants at periodic intervals to purchase shares of Common Stock.

         B.  The provisions of Articles One and Four shall apply to all
equity programs under the Plan and shall accordingly govern the interests of
all persons under the Plan.

III.     ADMINISTRATION OF THE PLAN

         A.  The Primary Committee shall have authority to administer the
Discretionary Option Grant Program with respect to Section 16 Insiders.
Administration of the Discretionary Option Grant Program with respect to all
other persons eligible to participate in that program may, at the Board's
discretion, be vested in the Primary Committee or a Secondary Committee. In
addition, the Board may retain the power to administer the Plan with respect
to all persons. The members of the Secondary Committee may be Board members
who are Employees eligible to receive discretionary option grants under the
Plan or any stock option, stock appreciation, stock bonus or other stock plan
of the Corporation (or any Parent or Subsidiary).
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         B.  Members of the Primary Committee or any Secondary Committee shall
serve for such period of time as the Board may determine and shall be subject
to removal by the Board at any time. The Board may also at any time terminate
the functions of any committee and reassume all powers and authority
previously delegated to such committee.

         C.  The Plan Administrator shall, within the scope of its
administrative functions under the Plan, have full power and authority to
establish such rules and regulations as it may deem appropriate for proper
administration of the Discretionary Option Grant Program and to make such
determinations under, and issue such interpretations of, the provisions of
such program and any outstanding options thereunder as it may deem necessary
or advisable. Decisions of the Plan Administrator within the scope of its
administrative functions under the Plan shall be final and binding on all
parties who have an interest in the Discretionary Option Grant Program under
its jurisdiction or any option thereunder.

         D.  Service on the Primary Committee or the Secondary Committee shall
constitute service as a Board member, and members of each such committee
shall accordingly be entitled to full indemnification and reimbursement as
Board members for their service on such committee. No member of the Primary
Committee or the Secondary Committee shall be liable for any act or omission
made in good faith with respect to the Plan or any option grants made under
the Plan.

         E.  Administration of the Automatic Option Grant Program shall be
self-executing in accordance with the terms of that program. However, the
Plan Administrator (other than the Secondary Committee) shall exercise any
discretionary functions with respect to option grants made thereunder as it
deems advisable.

IV.      ELIGIBILITY

         A.  The persons eligible to participate in the Discretionary Option
Grant Program are as follows:

                                (i)      Employees,

                                (ii)     non-employee members of the Board or
         of the board of directors of any Parent or Subsidiary, and

                                (iii)    consultants and other independent
         advisors who provide services to the Corporation (or any Subsidiary).

         B.  The Plan Administrator shall, within the scope of its
administrative jurisdiction under the Plan, have full authority (subject to
the provisions of the Plan) to determine, with respect to the option grants
under the Discretionary Option Grant Program, which eligible persons are to
receive option grants, the time or times when such option grants are to be
made, the number of shares to be covered by each such grant, the status of
the granted option as either an Incentive Option or a Non-Statutory Option,
the time or times at which each option is to


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become exercisable and the vesting schedule (if any) applicable to the option
shares and the maximum term for which the option is to remain outstanding.

         C.  The individuals eligible to receive option grants under the
Automatic Option Grant Program shall be (i) those individuals who are serving
as non-employee Board members on the Automatic Option Grant Program Effective
Date or who are first elected or appointed as non-employee Board members
after such date, whether through appointment by the Board or election by the
Corporation's stockholders, and (ii) those individuals who continue to serve
as non-employee Board members after one or more Annual Stockholders Meetings
held after the Automatic Option Grant Program Effective Date. A non-employee
Board member who has previously been in the employ of the Corporation (or any
Parent or Subsidiary) shall not be eligible to receive an option grant under
the Automatic Option Grant Program on the Automatic Option Grant Program
Effective Date or at the time he or she first becomes a non-employee Board
member, but such individual shall be eligible to receive periodic option
grants under the Automatic Option Grant Program upon his or her continued
service as a non-employee Board member following one or more Annual
Stockholders Meetings. A non-employee Board member shall not be eligible for
an initial grant or annual grant if at the time a grant would be made
pursuant to the terms of the Automatic Option Grant Program he or she is
receiving remuneration from the Corporation. Such remuneration may take the
form of continued vesting of options previously granted by the Corporation
(excluding options granted pursuant to the Automatic Option Grant Program),
severance pay, or salary or consulting fees (excluding director fees).

V.       STOCK SUBJECT TO THE PLAN

         A.  The stock issuable under the Plan shall be shares of authorized
but unissued or reacquired Common Stock, including shares repurchased by the
Corporation on the open market. The maximum number of shares of Common Stock
which may be issued over the term of the Plan shall not exceed 5,500,000
shares.

         B.  No one person participating in the Plan may receive options or
separately exercisable stock appreciation rights for more than One Million
(1,000,000) shares of Common Stock over the term of the Plan, exclusive of
any option grants received prior to January 1, 1996.

         C.  Shares of Common Stock subject to outstanding options shall be
available for subsequent issuance under the Plan to the extent (i) the
options (including any options incorporated from the Predecessor Plan) expire
or terminate for any reason prior to exercise in full or (ii) the options are
canceled in accordance with the cancellation-regrant provisions of Article
Two. All shares issued under the Plan (including shares issued upon exercise
of options incorporated from the Predecessor Plan), whether or not those
shares are subsequently repurchased by the Corporation pursuant to its
repurchase rights under the Plan, shall reduce on a share-for-share basis the
number of shares of Common Stock available for subsequent issuance under the
Plan. In addition, should the exercise price of an option under the Plan
(including any option incorporated from the Predecessor Plan) be paid with
shares of Common Stock or should shares of Common Stock otherwise issuable
under the Plan be withheld by the Corporation in


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satisfaction of the withholding taxes incurred in connection with the
exercise of an option under the Plan, then the number of shares of Common
Stock available for issuance under the Plan shall be reduced by the gross
number of shares for which the option is exercised, and not by the net number
of shares of Common Stock issued to the holder of such option.

         D.  Should any change be made to the Common Stock by reason of any
stock split, stock dividend, recapitalization, combination of shares,
exchange of shares or other change affecting the outstanding Common Stock as
a class without the Corporation's receipt of consideration, appropriate
adjustments shall be made to (i) the maximum number and/or class of
securities issuable under the Plan, (ii) the number and/or class of
securities for which any one person may be granted options and separately
exercisable stock appreciation rights per calendar year or over the term of
the Plan, (iii) the number and/or class of securities for which automatic
option grants are to be subsequently made per Eligible Director under the
Automatic Option Grant Program and (iv) the number and/or class of securities
and the exercise price per share in effect under each outstanding option
(including any option incorporated from the Predecessor Plan) in order to
prevent the dilution or enlargement of benefits thereunder. The adjustments
determined by the Plan Administrator shall be final, binding and conclusive.


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<PAGE>

                                  ARTICLE TWO
                       DISCRETIONARY OPTION GRANT PROGRAM

I.       OPTION TERMS

              Each option shall be evidenced by one or more documents in the
form approved by the Plan Administrator; PROVIDED, however, that each such
document shall comply with the terms specified below. Each document
evidencing an Incentive Option shall, in addition, be subject to the
provisions of the Plan applicable to such options.

         A.  EXERCISE PRICE.

             1.  The exercise price per share shall be fixed by the Plan
Administrator but shall not be less than eighty-five percent (85%) of the
Fair Market Value per share of Common Stock on the option grant date.

             2.  The exercise price shall become immediately due upon
exercise of the option and shall, subject to the provisions of Section I of
Article Four and the documents evidencing the option, be payable in one or
more of the forms specified below:

                                (i)   cash or check made payable to the
         Corporation,

                                (ii)   shares of Common Stock held for the
         requisite period necessary to avoid a charge to the Corporation's
         earnings for financial reporting purposes and valued at Fair Market
         Value on the Exercise Date, or

                                (iii) to the extent the option is exercised for
         vested shares, through a special sale and remittance procedure pursuant
         to which the Optionee shall concurrently provide irrevocable written
         instructions to (a) a Corporation-designated brokerage firm to effect
         the immediate sale of the purchased shares and remit to the
         Corporation, out of the sale proceeds available on the settlement date,
         sufficient funds to cover the aggregate exercise price payable for the
         purchased shares plus all applicable Federal, state and local income
         and employment taxes required to be withheld by the Corporation by
         reason of such exercise and (b) the Corporation to deliver the
         certificates for the purchased shares directly to such brokerage firm
         in order to complete the sale.

                  Except to the extent such sale and remittance procedure is
utilized, payment of the exercise price for the purchased shares must be made
on the Exercise Date.

         B.  EXERCISE AND TERM OF OPTIONS. Each option shall be exercisable
at such time or times, during such period and for such number of shares as
shall be determined by the Plan Administrator and set forth in the documents
evidencing the option. However, no option shall have a term in excess of ten
(10) years measured from the option grant date.


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         C.  EFFECT OF TERMINATION OF SERVICE.

             1. The following provisions shall govern the exercise of any
options held by the Optionee at the time of cessation of Service or death:

                                (i)     Any option outstanding at the time of
         the Optionee's cessation of Service for any reason shall remain
         exercisable for such period of time thereafter as shall be determined
         by the Plan Administrator and set forth in the documents evidencing the
         option, but no such option shall be exercisable after the expiration of
         the option term.

                                (ii)    Any option exercisable in whole or in
         part by the Optionee at the time of death may be subsequently exercised
         by the personal representative of the Optionee's estate or by the
         person or persons to whom the option is transferred pursuant to the
         Optionee's will or in accordance with the laws of descent and
         distribution.

                                (iii)    During the applicable post-Service
         exercise period, the option may not be exercised in the aggregate for
         more than the number of vested shares for which the option is
         exercisable on the date of the Optionee's cessation of Service. Upon
         the expiration of the applicable exercise period or (if earlier) upon
         the expiration of the option term, the option shall terminate and cease
         to be outstanding for any vested shares for which the option has not
         been exercised. However, the option shall, immediately upon the
         Optionee's cessation of Service, terminate and cease to be outstanding
         to the extent it is not exercisable for vested shares on the date of
         such cessation of Service.

                                (iv)     Should the Optionee's Service be
         terminated for Misconduct, then all outstanding options held by the
         Optionee shall terminate immediately and cease to be outstanding.

                                (v)      In the event of a Corporate
         Transaction, the provisions of Section III of this Article Two shall
         govern the period for which the outstanding options are to remain
         exercisable following the Optionee's cessation of Service and shall
         supersede any provisions to the contrary in this section.

         2.  The Plan Administrator shall have the discretion, exercisable
either at the time an option is granted or at any time while the option
remains outstanding, to:

                                (i)      extend the period of time for which the
         option is to remain exercisable following the Optionee's cessation of
         Service from the period otherwise in effect for that option to such
         greater period of time as the Plan Administrator shall deem
         appropriate, but in no event beyond the expiration of the option term,
         and/or

                                (ii)     permit the option to be exercised,
         during the applicable post-Service exercise period, not only with
         respect to the number of vested shares of


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         Common Stock for which such option is exercisable at the time of the
         Optionee's cessation of Service but also with respect to one or more
         additional installments in which the Optionee would have vested under
         the option had the Optionee continued in Service.

         D.  STOCKHOLDER RIGHTS. The holder of an option shall have no
stockholder rights with respect to the shares subject to the option until
such person shall have exercised the option, paid the exercise price and
become a holder of record of the purchased shares.

         E.  REPURCHASE RIGHTS. The Plan Administrator shall have the
discretion to grant options which are exercisable for unvested shares of
Common Stock. Should the Optionee cease Service while holding such unvested
shares, the Corporation shall have the right to repurchase, at the exercise
price paid per share, any or all of those unvested shares. The terms upon
which such repurchase right shall be exercisable (including the period and
procedure for exercise and the appropriate vesting schedule for the purchased
shares) shall be established by the Plan Administrator and set forth in the
document evidencing such repurchase right.

         F.  LIMITED TRANSFERABILITY OF OPTIONS. During the lifetime of the
Optionee, the option shall be exercisable only by the Optionee and shall not
be assignable or transferable other than by will or by the laws of descent
and distribution following the Optionee's death. However, a Non-Statutory
Option may be assigned (i) to a member of the immediate family of the
optionee or to a trust established for the benefit of one or more members of
the immediate family of the optionee, provided that the assignment shall not
be effective until written notice of the assignment is received by the Plan
Administrator, or (ii) in accordance with terms approved in advance by the
Plan Administrator. The terms applicable to the assigned option (or portion
thereof) shall be the same as those in effect for the option immediately
prior to such assignment and shall be set forth in such documents issued to
the assignee as the Plan Administrator may deem appropriate.

II.      INCENTIVE OPTIONS

                  The terms specified below shall be applicable to all Incentive
Options. Except as modified by the provisions of this Section II, all the
provisions of Articles One, Two and Four shall be applicable to Incentive
Options. Options which are specifically designated as Non-Statutory Options when
issued under the Plan shall NOT be subject to the terms of this Section II.

         A.  ELIGIBILITY.  Incentive Options may only be granted to Employees.

         B.  EXERCISE PRICE. The exercise price per share shall not be less
than one hundred percent (100%) of the Fair Market Value per share of Common
Stock on the option grant date.

         C.  DOLLAR LIMITATION. To the extent required by Code Section 422,
the aggregate Fair Market Value of the shares of Common Stock (determined as
of the respective date or dates of grant) for which one or more options
granted to any Employee under the Plan (or any other option plan of the
Corporation or any Parent or Subsidiary) may for the first time become
exercisable as Incentive Options during any one (1) calendar year shall not
exceed the sum of


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One Hundred Thousand Dollars ($100,000). To the extent the Employee holds two
(2) or more such options which become exercisable for the first time in the
same calendar year, the foregoing limitation on the exercisability of such
options as Incentive Options shall be applied on the basis of the order in
which such options are granted.

         D.  10% STOCKHOLDER. If any Employee to whom an Incentive Option is
granted is a 10% Stockholder, to the extent required by Code Section 422,
then the exercise price per share shall not be less than one hundred ten
percent (110%) of the Fair Market Value per share of Common Stock on the
option grant date, and the option term shall not exceed five (5) years
measured from the option grant date.

III.     CORPORATE TRANSACTION/CHANGE IN CONTROL

         A.  In the event of any Corporate Transaction, each outstanding
option shall automatically accelerate so that each such option shall,
immediately prior to the effective date of the Corporate Transaction, become
fully exercisable for all of the shares of Common Stock at the time subject
to such option and may be exercised for any or all of those shares as
fully-vested shares of Common Stock. However, an outstanding option shall NOT
so accelerate if and to the extent: (i) such option is, in connection with
the Corporate Transaction, either to be assumed by the successor corporation
(or parent thereof) or to be replaced with a comparable option to purchase
shares of the capital stock of the successor corporation (or parent thereof),
(ii) such option is to be replaced with a cash incentive program of the
successor corporation which preserves the spread existing on the unvested
option shares at the time of the Corporate Transaction and provides for
subsequent payout in accordance with the same vesting schedule applicable to
such option or (iii) the acceleration of such option is subject to other
limitations imposed by the Plan Administrator at the time of the option
grant. The determination of option comparability under clause (i) above shall
be made by the Plan Administrator, and its determination shall be final,
binding and conclusive.

         B.  All outstanding repurchase rights shall also terminate
automatically, and the shares of Common Stock subject to those terminated
rights shall immediately vest in full, in the event of any Corporate
Transaction, except to the extent: (i) those repurchase rights are to be
assigned to the successor corporation (or parent thereof) in connection with
such Corporate Transaction or (ii) such accelerated vesting is precluded by
other limitations imposed by the Plan Administrator at the time the
repurchase right is issued.

         C.  The Plan Administrator shall have the discretion, exercisable
either at the time the option is granted or at any time while the option
remains outstanding, to provide for the automatic acceleration of one or more
outstanding options (and the automatic termination of one or more outstanding
repurchase rights with the immediate vesting of the shares of Common Stock
subject to those rights) upon the occurrence of a Corporate Transaction,
whether or not those options are to be assumed or replaced (or those
repurchase rights are to be assigned) in the Corporate Transaction.


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<PAGE>

         D.  Immediately following the consummation of the Corporate
Transaction, all outstanding options shall terminate and cease to be
outstanding, except to the extent assumed by the successor corporation (or
parent thereof).

         E.  Each option which is assumed in connection with a Corporate
Transaction shall be appropriately adjusted, immediately after such Corporate
Transaction, to apply to the number and class of securities which would have
been issuable to the Optionee in consummation of such Corporate Transaction
had the option been exercised immediately prior to such Corporate
Transaction. Appropriate adjustments shall also be made to (i) the number and
class of securities available for issuance under the Plan on both an
aggregate and per Optionee basis following the consummation of such Corporate
Transaction and (ii) the exercise price payable per share under each
outstanding option, PROVIDED the aggregate exercise price payable for such
securities shall remain the same.

         F.  Any options which are assumed or replaced in the Corporate
Transaction and do not otherwise accelerate at that time, shall automatically
accelerate (and any of the Corporation's outstanding repurchase rights which
do not otherwise terminate at the time of the Corporate Transaction shall
automatically terminate and the shares of Common Stock subject to those
terminated rights shall vest) in the event the Optionee's Service should
subsequently terminate by reason of an Involuntary Termination within twelve
(12) months following the effective date of such Corporate Transaction. Any
options so accelerated (and any of the Corporation's outstanding repurchase
rights so terminated) shall vest, as if the Optionee's Service continued for
an additional twelve (12) months following the Involuntary Termination and
shall remain exercisable for all of the shares which are then exercisable
and/or vested until the EARLIER of (i) the expiration of the option term or
(ii) the expiration of the one (1)-year period measured from the effective
date of the Involuntary Termination.

         G.  The Plan Administrator shall have the discretion, exercisable
either at the time the option is granted or at any time while the option
remains outstanding, to (i) provide for the automatic acceleration of one or
more outstanding options (and the automatic termination of one or more
outstanding repurchase rights with the immediate vesting of the shares of
Common Stock subject to those rights) upon the occurrence of a Change in
Control or (ii) condition any such option acceleration (and the termination
of any outstanding repurchase rights) upon the subsequent Involuntary
Termination of the Optionee's Service within a specified period following the
effective date of such Change in Control. Any options accelerated in
connection with a Change in Control shall remain fully exercisable until the
expiration or sooner termination of the option term.

         H.  The portion of any Incentive Option accelerated in connection
with a Corporate Transaction or Change in Control shall remain exercisable as
an Incentive Option only to the extent the applicable One Hundred Thousand
Dollar limitation is not exceeded. To the extent such dollar limitation is
exceeded, the accelerated portion of such option shall be exercisable as a
Non-Statutory Option under the Federal tax laws.


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<PAGE>

         I.  The grant of options under the Discretionary Option Grant
Program shall in no way affect the right of the Corporation to adjust,
reclassify, reorganize or otherwise change its capital or business structure
or to merge, consolidate, dissolve, liquidate or sell or transfer all or any
part of its business or assets.

IV.      STOCK APPRECIATION RIGHTS

         A.  The Plan Administrator shall have full power and authority to
grant to selected Optionees tandem stock appreciation rights.

         B.  The following terms shall govern the grant and exercise of
tandem stock appreciation rights:

                                (i)      One or more Optionees may be granted
         the right, exercisable upon such terms as the Plan Administrator may
         establish, to elect between the exercise of the underlying option for
         shares of Common Stock and the surrender of that option in exchange for
         a distribution from the Corporation in an amount equal to the excess of
         (A) the Fair Market Value (on the option surrender date) of the number
         of shares in which the Optionee is at the time vested under the
         surrendered option (or surrendered portion thereof) over (B) the
         aggregate exercise price payable for such shares.

                                (ii)     No such option surrender shall be
         effective unless it is approved by the Plan Administrator. If the
         surrender is so approved, then the distribution to which the Optionee
         shall be entitled may be made in shares of Common Stock valued at Fair
         Market Value on the option surrender date, in cash, or partly in shares
         and partly in cash, as the Plan Administrator shall in its sole
         discretion deem appropriate.

                                (iii)    If the surrender of an option is
         rejected by the Plan Administrator, then the Optionee shall retain
         whatever rights the Optionee had under the surrendered option (or
         surrendered portion thereof) on the option surrender date and may
         exercise such rights at any time prior to the LATER of (A) five (5)
         business days after the receipt of the rejection notice or (B) the last
         day on which the option is otherwise exercisable in accordance with the
         terms of the documents evidencing such option, but in no event may such
         rights be exercised more than ten (10) years after the option grant
         date.


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                                 ARTICLE THREE
                         AUTOMATIC OPTION GRANT PROGRAM

I.       OPTION TERMS

         A.  GRANT DATES.  Option grants shall be made on the dates specified
below:

             1.  Each Eligible Director who is first elected or appointed as
a non-employee Board member after the Automatic Option Grant Program
Effective Date shall automatically be granted on the date of such initial
election or appointment (as the case may be), a Non-Statutory Option to
purchase thirty-two thousand (32,000) shares of Common Stock.

             2.  On the date of each Annual Stockholders Meeting, beginning
with the first Annual Meeting after the Corporation's initial public
offering, each individual who was an Eligible Director on the Automatic
Option Grant Program Effective Date and continues to serve as an Eligible
Director after such meeting, shall automatically be granted, whether or not
such individual is standing for re-election as a Board member at that Annual
Meeting, a Non-Statutory Option to purchase an additional six thousand four
hundred (6,400) shares of Common Stock. On the date of each Annual
Stockholders Meeting, each Eligible Director who is elected or appointed as a
non-employee Board member after the Automatic Option Grant Program Effective
Date and continues to serve as an Eligible Director after such meeting, shall
automatically be granted, whether or not such individual is standing for
re-election as a Board member at that Annual Meeting, a Non-Statutory Option
to purchase an additional six thousand four hundred (6,400) shares of Common
Stock, beginning on the first anniversary of the grant date of such Eligible
Director's initial automatic option grant. There shall be no limit on the
number of such 6,400-share option grants any one Eligible Director may
receive over his or her period of Board service.

         B.  EXERCISE PRICE.

             1.  The exercise price per share shall be equal to one hundred
percent (100%) of the Fair Market Value per share of Common Stock on the
option grant date.

             2.  The exercise price shall be payable in one or more of the
alternative forms authorized under the Discretionary Option Grant Program.
Except to the extent the sale and remittance procedure specified thereunder
is utilized, payment of the exercise price for the purchased shares must be
made on the Exercise Date.

         C.   OPTION TERM. Each option shall have a term of ten (10) years
measured from the option grant date.

         D.  EXERCISE AND VESTING OF OPTIONS. Each option granted under this
Article Three on or after May 7, 1999 shall become exercisable in full on the
fourth anniversary of the date on which such annual grant was made,
regardless of whether the optionee remains a Board member. Each initial
option granted after October 21, 1996 shall become exercisable in a series of
five (5)


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<PAGE>

equal and successive annual installments over the Optionee's period of
continued service as a Board member, with the first such installment to
become exercisable upon the Optionee's completion of one (1) year of Board
service measured from the option grant date. Each subsequent annual automatic
option grant shall become fully exercisable on the fifth anniversary of the
date on which such annual grant was made.

         E.  EFFECT OF TERMINATION OF BOARD SERVICE. Each option granted
under this Article Three on or after May 7, 1999 shall remain outstanding and
exercisable in full until the date that is twelve (12) months following the
fourth anniversary of the date on which such annual grant was made,
regardless of whether the optionee remains a Board member. The provisions of
subsections (i) and (ii) shall govern the exercise of any options granted
before May 7, 1999 and held by the Optionee at the time the Optionee ceases
to serve as a Board member:

                                (i)    The Optionee (or, in the event of
         Optionee's death, the personal representative of the Optionee's estate
         or the person or persons to whom the option is transferred pursuant to
         the Optionee's will or in accordance with the laws of descent and
         distribution) shall have a twelve (12)-month period following the date
         of such cessation of Board service in which to exercise each such
         option.

                                (ii)   During the twelve (12)-month exercise
         period, the option may not be exercised in the aggregate for more than
         the number of vested shares of Common Stock for which the option is
         exercisable at the time of the Optionee's cessation of Board service.

                                (iii)  Should the Optionee cease to serve as a
         Board member by reason of death or Permanent Disability, then each
         option granted on or after May 7, 1999 shall become exercisable as if
         twelve (12) additional months had elapsed from the date of grant.
         Should the Optionee cease to serve as a Board member by reason of death
         or Permanent Disability, then each option granted before May 7, 1999
         shall become exercisable and shares at the time subject to the option
         shall immediately vest as if the Optionee had continued to serve as a
         Board member for an additional twelve (12) month period following the
         Optionee's cessation of Board service, so that such option may, during
         the twelve (12)-month exercise period following such cessation of Board
         service, be exercised for all or any portion of such shares of Common
         Stock to the extent so vested and exercisable.

                                (iv)   In no event shall any option granted
         under this Article Three remain exercisable after the expiration of the
         option term. Upon the expiration of the twelve (12)-month exercise
         period or (if earlier) upon the expiration of the option term, the
         option shall terminate and cease to be outstanding for any vested
         shares for which the option has not been exercised. However, each
         option granted before May 7, 1999 shall, immediately upon the
         Optionee's cessation of Board service, terminate and cease to be
         outstanding to the extent it is not exercisable for vested shares on
         the date of such cessation of Board service.


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<PAGE>

II.      CORPORATE TRANSACTION/CHANGE IN CONTROL/HOSTILE TAKE-OVER

         A.  In the event of any Corporate Transaction, the shares of Common
Stock at the time subject to each outstanding option but not otherwise vested
shall automatically vest so that each such option shall, immediately prior to
the effective date of the Corporate Transaction, be exercisable for an
additional number of vested shares of Common Stock subject to such option as
if the Board member continued to serve as a Board member for an additional
twelve (12) months and may be exercised for all or any portion of such shares
of Common Stock to the extent so vested. Immediately following the
consummation of the Corporate Transaction, each automatic option grant shall
terminate and cease to be outstanding, except to the extent assumed by the
successor corporation (or parent thereof).

         B.  In connection with any Change in Control, the shares of Common
Stock at the time subject to each outstanding option but not otherwise vested
shall automatically vest so that each such option shall, immediately prior to
the effective date of the Change in Control, be exercisable for an additional
number of vested shares of Common Stock as if the Board member continued to
serve as a Board member for an additional twelve (12) months and may be
exercised for all or any portion of such shares of Common Stock to the extent
so vested. Each such option shall remain exercisable for such option shares
so vested until the expiration or sooner termination of the option term or
the surrender of the option in connection with a Hostile Take-Over.

         C.  Upon the occurrence of a Hostile Take-Over, each automatic
option granted before October 21, 1996 and held by the Optionee for a period
of at least six (6) months shall be automatically canceled. The Optionee
shall in return be entitled to a cash distribution from the Corporation in an
amount equal to the excess of (i) the Take-Over Price of the shares of Common
Stock at the time subject to the canceled option (to the extent such option
is vested) over (ii) the aggregate exercise price payable for such shares.
Such cash distribution shall be paid within five (5) days following the
cancellation of the option by the Corporation. No approval or consent of the
Board shall be required in connection with such option cancellation and cash
distribution.

         D.  The grant of options under the Automatic Option Grant Program
shall in no way affect the right of the Corporation to adjust, reclassify,
reorganize or otherwise change its capital or business structure or to merge,
consolidate, dissolve, liquidate or sell or transfer all or any part of its
business or assets.

III.     REMAINING TERMS

             The remaining terms of each option granted under the Automatic
Option Grant Program shall be the same as the terms in effect for option
grants made under the Discretionary Option Grant Program.


                                       13
<PAGE>

                                  ARTICLE FOUR
                                  MISCELLANEOUS

I.       FINANCING

         A.  The Plan Administrator may permit any Optionee to pay the option
exercise price under the Plan by delivering a promissory note payable in one
or more installments. The terms of any such promissory note (including the
interest rate and the terms of repayment) shall be established by the Plan
Administrator in its sole discretion. Promissory notes may be authorized with
or without security or collateral. In all events, the maximum credit
available to the Optionee may not exceed the sum of (i) the aggregate option
exercise price payable for the purchased shares plus (ii) any Federal, state
and local income and employment tax liability incurred by the Optionee in
connection with the option exercise.

         B.  The Plan Administrator may, in its discretion, determine that
one or more such promissory notes shall be subject to forgiveness by the
Corporation in whole or in part upon such terms as the Plan Administrator may
deem appropriate.

II.      CANCELLATION AND REGRANT OF OPTIONS

             The Plan Administrator shall have the authority to effect, at
any time and from time to time, with the consent of the affected option
holders, the cancellation of any or all outstanding options under the Plan
(including outstanding options incorporated from the Predecessor Plan) and to
grant in substitution new options covering the same or different number of
shares of Common Stock but with an exercise price per share based on the Fair
Market Value per share of Common Stock on the new option grant date.

III.     TAX WITHHOLDING

         A.  The Corporation's obligation to deliver shares of Common Stock
upon the exercise of options or stock appreciation rights under the Plan
shall be subject to the satisfaction of all applicable Federal, state and
local income and employment tax withholding requirements.

         B.  The Plan Administrator may, in its discretion, provide any or
all holders of Non-Statutory Options under the Plan with the right to use
shares of Common Stock in satisfaction of all or part of the Taxes incurred
by such holders in connection with the exercise of their options. Such right
may be provided to any such holder in either or both of the following formats:

                                (i)     STOCK WITHHOLDING: The election to have
         the Corporation withhold, from the shares of Common Stock otherwise
         issuable upon the exercise of such Non-Statutory Option, a portion of
         those shares with an aggregate Fair Market Value equal to the
         percentage of the Taxes (not to exceed one hundred percent (100%))
         designated by the holder.


                                       14
<PAGE>

                                (ii)     STOCK DELIVERY: The election to deliver
         to the Corporation, at the time the Non-Statutory Option is exercised,
         one or more shares of Common Stock previously acquired by such holder
         (other than in connection with the option exercise triggering the
         Taxes) with an aggregate Fair Market Value equal to the percentage of
         the Taxes (not to exceed one hundred percent (100%)) designated by the
         holder.

IV.      EFFECTIVE DATE AND TERM OF THE PLAN

         A.  The Discretionary Option Grant Program became effective on April
25, 1996, the Plan Effective Date and options may be granted under the
Discretionary Option Grant Program from and after the Plan Effective Date.
The Automatic Option Grant Program became effective on April 25, 1996, the
Automatic Option Grant Program Effective Date and the initial option grants
under the Automatic Option Grant Program shall be made to the Eligible
Directors at that time. On October 21, 1996, the Plan was amended to increase
the number of shares issuable thereunder to 5,500,000 shares and to make
certain other amendments and to delete provisions no longer required by
Section 16 of the 1934 Act as a result of the SEC's revision of Rule 16b-3.
The Plan was amended on May 7, 1999 to provide for the grant of fully-vested
options under the Automatic Option Grant Program subject to a deferral of
exercisability.

         B.  The Plan shall serve as the successor to the Predecessor Plan,
and no further option grants shall be made under the Predecessor Plan after
the Plan Effective Date. All options outstanding under the Predecessor Plan
as of such date shall, immediately upon approval of the Plan by the
Corporation's stockholders, be incorporated into the Plan and treated as
outstanding options under the Plan. However, each outstanding option so
incorporated shall continue to be governed solely by the terms of the
documents evidencing such option, and no provision of the Plan shall be
deemed to affect or otherwise modify the rights or obligations of the holders
of such incorporated options with respect to their acquisition of shares of
Common Stock.

         C.  The option/vesting acceleration provisions of Article Two
relating to Corporate Transactions and Changes in Control may, in the Plan
Administrator's discretion, be extended to one or more options incorporated
from the Predecessor Plan which do not otherwise provide for such
acceleration.

         D.  The Plan shall terminate upon the EARLIEST of (i) February 28,
2006, (ii) the date on which all shares available for issuance under the Plan
shall have been issued pursuant to the exercise of the options under the Plan
or (iii) the termination of all outstanding options in connection with a
Corporate Transaction. Upon such Plan termination, all options outstanding on
such date shall thereafter continue to have force and effect in accordance
with the provisions of the documents evidencing such options.

V.       AMENDMENT OF THE PLAN

         A.  The Board shall have complete and exclusive power and authority
to amend or modify the Plan in any or all respects. However, no such
amendment or modification shall adversely affect the rights and obligations
with respect to options or stock appreciation rights at


                                       15
<PAGE>

the time outstanding under the Plan unless the Optionee consents to such
amendment or modification. Notwithstanding the foregoing clause, the Plan
Administrator may amend an outstanding option to reduce the number of option
shares previously granted to an optionee provided the reduction applies
solely to unvested shares or shares which have not yet become exercisable as
of the date of the amendment. In addition, the Board shall not, without the
approval of the Corporation's stockholders, (i) materially increase the
maximum number of shares issuable under the Plan, the number of shares for
which options may be granted under the Automatic Option Grant Program or the
maximum number of shares for which any one person may be granted options or
separately exercisable stock appreciation rights in the aggregate over the
term of the Plan, except for permissible adjustments in the event of certain
changes in the Corporation's capitalization, or (ii) materially modify the
eligibility requirements for Plan participation.

         B.  Options to purchase shares of Common Stock may be granted under
the Plan that are in excess of the number of shares then available for
issuance under the Plan, provided any excess shares actually issued under the
Plan are held in escrow until there is obtained stockholder approval of an
amendment sufficiently increasing the number of shares of Common Stock
available for issuance under the Plan. If such stockholder approval is not
obtained within twelve (12) months after the date the first such excess
issuances are made, then (i) any unexercised options granted on the basis of
such excess shares shall terminate and cease to be outstanding and (ii) the
Corporation shall promptly refund to the Optionees the exercise price paid
for any excess shares issued under the Plan and held in escrow, together with
interest (at the applicable Short Term Federal Rate) for the period the
shares were held in escrow, and such shares shall thereupon be automatically
canceled and cease to be outstanding.

VI.      USE OF PROCEEDS

             Any cash proceeds received by the Corporation from the sale of
shares of Common Stock under the Plan shall be used for general corporate
purposes.

VII.     REGULATORY APPROVALS

         A.  The implementation of the Plan, the granting of any option or
stock appreciation right under the Plan and the issuance of any shares of
Common Stock upon the exercise of any option or stock appreciation right
shall be subject to the Corporation's procurement of all approvals and
permits required by regulatory authorities having jurisdiction over the Plan,
the options and stock appreciation rights granted under it and the shares of
Common Stock issued pursuant to it.

         B.  No shares of Common Stock or other assets shall be issued or
delivered under the Plan unless and until there shall have been compliance
with all applicable requirements of Federal and state securities laws,
including the filing and effectiveness of the Form S-8 registration statement
for the shares of Common Stock issuable under the Plan, and all applicable
listing requirements of any stock exchange (or the Nasdaq National Market, if
applicable) on which Common Stock is then listed for trading.


                                       16
<PAGE>

VIII.    NO EMPLOYMENT/SERVICE RIGHTS

             Nothing in the Plan shall confer upon the Optionee any right to
continue in Service for any period of specific duration or interfere with or
otherwise restrict in any way the rights of the Corporation (or any Parent or
Subsidiary employing or retaining such person) or of the Optionee, which
rights are hereby expressly reserved by each, to terminate such person's
Service at any time for any reason, with or without cause.


                                       17
<PAGE>

                                    APPENDIX


             The following definitions shall be in effect under the Plan:

         A.  AUTOMATIC OPTION GRANT PROGRAM shall mean the automatic option
grant program in effect under the Plan.

         B.  AUTOMATIC OPTION GRANT PROGRAM EFFECTIVE DATE shall mean the
Section 12(g) Registration Date.

         C.  BOARD shall mean the Corporation's Board of Directors.

         D.  CHANGE IN CONTROL shall mean a change in ownership or control of
the Corporation effected through either of the following transactions:

                                (i)  the acquisition, directly or indirectly, by
         any person or related group of persons (other than the Corporation or a
         person that directly or indirectly controls, is controlled by, or is
         under common control with, the Corporation), of beneficial ownership
         (within the meaning of Rule 13d-3 of the 1934 Act) of securities
         possessing more than fifty percent (50%) of the total combined voting
         power of the Corporation's outstanding securities pursuant to a tender
         or exchange offer made directly to the Corporation's stockholders which
         the Board does not recommend such stockholders to accept, or

                                (ii) a change in the composition of the Board
         over a period of thirty-six (36) consecutive months or less such that
         a majority of the Board members ceases, by reason of one or more
         contested elections for Board membership, to be comprised of
         individuals who either (A) have been Board members continuously since
         the beginning of such period or (B) have been elected or nominated for
         election as Board members during such period by at least a majority of
         the Board members described in clause (A) who were still in office at
         the time the Board approved such election or nomination.

         E.  CODE shall mean the Internal Revenue Code of 1986, as amended.

         F.  COMMON STOCK shall mean the Corporation's common stock.

         G.  CORPORATE TRANSACTION shall mean either of the following
stockholder-approved transactions to which the Corporation is a party:

                               (i)  a merger or consolidation in which
         securities possessing more than fifty percent (50%) of the total
         combined voting power of the Corporation's outstanding securities are
         transferred to a person or persons different from the persons holding
         those securities immediately prior to such transaction; or


                                       A-1
<PAGE>

                                (ii) the sale, transfer or other disposition of
         all or substantially all of the Corporation's assets in complete
         liquidation or dissolution of the Corporation.

         H.  CORPORATION shall mean Heartport, Inc., a Delaware corporation.

         I.  DISCRETIONARY OPTION GRANT PROGRAM shall mean the discretionary
option grant program in effect under the Plan.

         J.  ELIGIBLE DIRECTOR shall mean a non-employee Board member
eligible to participate in the Automatic Option Grant Program in accordance
with the eligibility provisions of Article One.

         K.  EMPLOYEE shall mean an individual who is in the employ of the
Corporation (or any Parent or Subsidiary), subject to the control and
direction of the employer entity as to both the work to be performed and the
manner and method of performance.

         L.  EXERCISE DATE shall mean the date on which the Corporation shall
have received written notice of the option exercise.

         M.  FAIR MARKET VALUE per share of Common Stock on any relevant date
shall be determined in accordance with the following provisions:

                                (i)  If the Common Stock is at the time traded
         on the Nasdaq National Market, then the Fair Market Value shall be the
         closing selling price per share of Common Stock on the date in
         question, as such price is reported by the National Association of
         Securities Dealers on the Nasdaq National Market or any successor
         system. If there is no closing selling price for the Common Stock on
         the date in question, then the Fair Market Value shall be the closing
         selling price on the last preceding date for which such quotation
         exists.

                                (ii) If the Common Stock is at the time listed
         on any Stock Exchange, then the Fair Market Value shall be the closing
         selling price per share of Common Stock on the date in question on the
         Stock Exchange determined by the Plan Administrator to be the primary
         market for the Common Stock, as such price is officially quoted in the
         composite tape of transactions on such exchange. If there is no closing
         selling price for the Common Stock on the date in question, then the
         Fair Market Value shall be the closing selling price on the last
         preceding date for which such quotation exists.

                                (iii) For purposes of option grants made on the
         date the Underwriting Agreement is executed and the initial public
         offering price of the Common Stock is established, the Fair Market
         Value shall be deemed to be equal to the established initial offering
         price per share. For purposes of option grants made prior to such date,
         the Fair Market Value shall be determined by the Plan Administrator
         after taking into account such factors as the Plan Administrator shall
         deem appropriate.


                                       A-2
<PAGE>

         N.  HOSTILE TAKE-OVER shall mean a change in ownership of the
Corporation effected through the following transaction:

                                (i)  the acquisition, directly or indirectly, by
         any person or related group of persons (other than the Corporation or a
         person that directly or indirectly controls, is controlled by, or is
         under common control with, the Corporation) of beneficial ownership
         (within the meaning of Rule 13d-3 of the 1934 Act) of securities
         possessing more than fifty percent (50%) of the total combined voting
         power of the Corporation's outstanding securities pursuant to a tender
         or exchange offer made directly to the Corporation's stockholders which
         the Board does not recommend such stockholders to accept, AND

                                (ii) more than fifty percent (50%) of the
         securities so acquired are accepted from persons other than Section 16
         Insiders.

         O.  INCENTIVE OPTION shall mean an option which satisfies the
requirements of Code Section 422.

         P.  INVOLUNTARY TERMINATION shall mean the termination of the
Service of any individual which occurs by reason of:

                                (i)  such individual's involuntary dismissal or
         discharge by the Corporation for reasons other than Misconduct, or

                                (ii) such individual's voluntary resignation
         following (A) a change in his or her position with the Corporation
         which materially reduces his or her level of responsibility, (B) a
         reduction in his or her level of compensation (including base salary,
         fringe benefits and participation in corporate-performance based bonus
         or incentive programs) by more than fifteen percent (15%) or (C) a
         relocation of such individual's place of employment by more than fifty
         (50) miles, provided and only if such change, reduction or relocation
         is effected by the Corporation without the individual's consent.

         Q.  MISCONDUCT shall mean the commission of any act of fraud,
embezzlement or dishonesty by the Optionee, any unauthorized use or
disclosure by such person of confidential information or trade secrets of the
Corporation (or any Parent or Subsidiary), or any other intentional
misconduct by such person adversely affecting the business or affairs of the
Corporation (or any Parent or Subsidiary) in a material manner. The foregoing
definition shall not be deemed to be inclusive of all the acts or omissions
which the Corporation (or any Parent or Subsidiary) may consider as grounds
for the dismissal or discharge of any Optionee or other person in the Service
of the Corporation (or any Parent or Subsidiary).

         R.  1934 ACT shall mean the Securities Exchange Act of 1934, as
amended.


                                       A-3
<PAGE>

         S.  NON-STATUTORY OPTION shall mean an option not intended to
satisfy the requirements of Code Section 422.

         T.  OPTIONEE shall mean any person to whom an option is granted
under the Discretionary Option Grant or Automatic Option Grant Program.

         U.  PARENT shall mean any corporation (other than the Corporation)
in an unbroken chain of corporations ending with the Corporation, provided
each corporation in the unbroken chain (other than the Corporation) owns, at
the time of the determination, stock possessing fifty percent (50%) or more
of the total combined voting power of all classes of stock in one of the
other corporations in such chain.

         V.  PERMANENT DISABILITY OR PERMANENTLY DISABLED shall mean the
inability of the Optionee to engage in any substantial gainful activity by
reason of any medically determinable physical or mental impairment expected
to result in death or to be of continuous duration of twelve (12) months or
more.

         W.  PLAN shall mean the Corporation's 1996 Stock Option Plan, as set
forth in this document.

         X.  PLAN ADMINISTRATOR shall mean the particular entity, whether the
Primary Committee, the Board or the Secondary Committee, which is authorized
to administer the Discretionary Option Grant Program with respect to one or
more classes of eligible persons, to the extent such entity is carrying out
its administrative functions under those programs with respect to the persons
under its jurisdiction.

         Y.  PLAN EFFECTIVE DATE shall mean the Section 12(g) Registration Date.

         Z.  PREDECESSOR PLAN shall mean the Corporation's existing 1993
Stock Option Plan.

         AA. PRIMARY COMMITTEE shall mean the committee of two (2) or more
non-employee Board members appointed by the Board to administer the
Discretionary Option Grant Program with respect to Section 16 Insiders.

         BB. SECONDARY COMMITTEE shall mean a committee of one (1) or more
Board members appointed by the Board or Primary Committee to administer the
Discretionary Option Grant Program with respect to eligible persons other
than Section 16 Insiders.

         CC. SECTION 16 INSIDER shall mean an officer or director of the
Corporation subject to the short-swing profit liabilities of Section 16 of
the 1934 Act.

         DD. SECTION 12(g) REGISTRATION DATE shall mean the first date on
which the Common Stock is registered under Section 12(g) of the 1934 Act.

         EE. SERVICE shall mean the provision of services to the Corporation
(or any Parent or Subsidiary) by a person in the capacity of an Employee, a
non-employee member of the board of


                                       A-4
<PAGE>

directors or a consultant or independent advisor, except to the extent
otherwise specifically provided in the documents evidencing the option grant.

         FF. STOCK EXCHANGE shall mean either the American Stock Exchange or
the New York Stock Exchange.

         GG. SUBSIDIARY shall mean any corporation (other than the
Corporation) in an unbroken chain of corporations beginning with the
Corporation, provided each corporation (other than the last corporation) in
the unbroken chain owns, at the time of the determination, stock possessing
fifty percent (50%) or more of the total combined voting power of all classes
of stock in one of the other corporations in such chain.

         HH. TAKE-OVER PRICE shall mean the GREATER of (i) the Fair Market
Value per share of Common Stock on the date the option is surrendered to the
Corporation in connection with a Hostile Take-Over or (ii) the highest
reported price per share of Common Stock paid by the tender offeror in
effecting such Hostile Take-Over. However, if the surrendered option is an
Incentive Option, the Take-Over Price shall not exceed the clause (i) price
per share.

         II. TAXES shall mean the Federal, state and local income and
employment tax liabilities incurred by the holder of Non-Statutory Options or
unvested shares of Common Stock in connection with the exercise of those
options or the vesting of those shares.

         JJ. STOCKHOLDER shall mean the owner of stock (as determined under
Code Section 424(d)) possessing more than ten percent (10%) of the total
combined voting power of all classes of stock of the Corporation (or any
Parent or Subsidiary).

         KK. UNDERWRITING AGREEMENT shall mean the agreement between the
Corporation and the underwriter or underwriters managing the initial public
offering of the Common Stock.


                                       A-5