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                                                                   EXHIBIT 10.19

                               GUIDANT CORPORATION

                1996 NONEMPLOYEE DIRECTORS STOCK PLAN, AS AMENDED

                                    ARTICLE I

                                     PURPOSE

         1.1 This Guidant Corporation 1996 Nonemployee Directors Stock Plan is
intended to advance the interests of Guidant Corporation and its shareholders by
attracting, retaining and motivating the performance of nonemployee directors of
Guidant Corporation and to encourage and enable such directors to acquire and
retain a proprietary interest in Guidant Corporation by ownership of its stock.

                                   ARTICLE II

                                   DEFINITIONS

         2.1 "Board" means the Board of Directors of the Company.

         2.2 "Code" means the Internal Revenue Code of 1986, as amended.

         2.3 "Common Stock" means the Company's common stock.

         2.4 "Company" means Guidant Corporation.

         2.5 "Date of Grant" means the date on which an option is granted in
accordance with Section 3.3 or Section 5.1 hereof or a Restricted Stock Award is
granted in accordance with Section 6.1 hereof.

         2.6 "Disability" means a permanent and total disability within the
meaning of Section 22(e)(3) of the Code.

         2.7 "Exchange Act" means the Securities Exchange Act of 1934, as
amended.

         2.8 "Fair Market Value" means the average of the highest and lowest
sale prices of a share of Common Stock on the New York Stock Exchange (NYSE) on
the date as of which fair market value is to be determined or, in the absence of
any reported sales of Common Stock on such date, on the first preceding date on
which any such sale shall have been reported. If Common Stock is not listed on
the NYSE on the date as of which fair market value is to be determined, the
Board shall determine in good faith the fair market value in whatever manner it
considers appropriate.

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         2.9 "Grant" means the Options and Restricted Stock Awards granted to a
Grantee under the Plan.

         2.10 "Grantee" means a person to whom an Option or a Restricted Stock
Award has been granted under the Plan.

         2.11 "Nonemployee Director" means any member of the Board who is not an
employee of the Company.

         2.12 "Option" means a stock option granted under the Plan.

         2.13 "Option Price" means the price at which each share of Common Stock
subject to an Option may be purchased, determined in accordance with Section 3.3
or Section 5.2 hereof.

         2.14 "Plan" means this Guidant Corporation 1996 Nonemployee Directors
Stock Plan, as amended.

         2.15 "Restricted Stock Award" means an award of Common Stock granted
under the Plan and subject to the restrictions set forth herein.

         2.16 "Restricted Stock Notice" means a notification by the Company to a
Grantee pursuant to which Common Stock will be issued or transferred to a
Grantee under the Plan.

         2.17 "Rule 16b-3" means Rule 16b-3 under the Securities Exchange Act of
1934, as amended.

         2.18 "Stock Option Notice" means a notification by the Company to a
Grantee pursuant to which a Grantee may purchase Common Stock under the Plan.

                                   ARTICLE III

                             ADMINISTRATION; GRANTS

         3.1 Board Authority. Subject to the express provisions of the Plan, the
Board shall have discretionary authority to interpret the Plan, to prescribe,
amend and rescind rules and regulations relating to it, to determine the details
and provisions of each Stock Option Notice and Restricted Stock Notice, and to
make all the determinations necessary or advisable in the administration of the
Plan. All such actions and determinations by the Board shall be conclusively
binding for all purposes and upon all persons. The Board shall not be liable for
any action or determination made in good faith with respect to the Plan, any
Option or Restricted Stock Award or any Stock Option Notice or Restricted Stock
Notice entered into hereunder.

         3.2 Annual Retainer Grants. Commencing with the 2003 annual meeting of
the Company's shareholders and on the date of each annual meeting thereafter,
each Nonemployee Director who is a member of the Board immediately following
each such

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annual meeting shall receive, as determined by the Board, a grant of (i) an
Option to purchase shares of Common Stock in accordance with the provisions of
Article V hereof and (ii) a Restricted Stock Award in accordance with the
provisions of Article VI hereof.

         3.3 Discretionary Option Grants. The Board may make discretionary
Grants of Options to any Nonemployee Director in accordance with the provisions
of this Section 3.3. The Board shall select the persons who will receive Options
under this Section 3.3 from among the Nonemployee Directors and determine the
number of shares subject to any particular Option. The Option Price of each
share of Common Stock subject to an Option under this Section 3.3 shall be 100
percent of the Fair Market Value of a share of Common Stock on the Date of
Grant. The Board shall determine the exercise period of each Option granted
under this Section 3.3, which shall not exceed ten years from the Date of Grant.
Such exercise period shall be set forth in the related Stock Option Notice which
shall be prepared and delivered as provided in the last sentence of Section 5.1
hereof. A Grantee may exercise an Option granted under this Section 3.3 in the
manner and in accordance with the provisions set forth in Section 5.5 hereof.

                                   ARTICLE IV

                         SHARES OF STOCK SUBJECT TO PLAN

         4.1 Number of Shares. Subject to adjustment pursuant to the provisions
of this Article IV, the maximum number of shares of Common Stock which may be
issued and sold hereunder shall be 250,000(1) shares. Shares of Common Stock
issued and sold under the Plan may be either authorized but unissued shares or
shares held in the Company's treasury. Shares of Common Stock covered by an
Option that shall have been exercised shall not again be available for grant. If
an Option shall terminate for any reason without being wholly exercised, the
number of shares to which such Option termination relates shall again be
available for grant hereunder. Shares of Common Stock covered by a Restricted
Stock Award for which the restrictions have lapsed shall not again be available
for grant. If a Restricted Stock Award shall terminate for any reason prior to
the time its restrictions shall have lapsed, the number of shares to which such
Restricted Stock Award relates shall again be available for grant hereunder.

         4.2 Antidilution. If any subdivision or combination of shares of Common
Stock or any stock dividend, reorganization, recapitalization, or consolidation
or merger with the Company as the surviving corporation occurs, or if additional
shares or new or different shares or other securities of the Company or any
other issuer are distributed with respect to the shares of Common Stock through
a spin-off, exchange offer, or other extraordinary distribution, the Board shall
make such adjustments as it determines appropriate in the number of shares of
Common Stock that may be issued or transferred in the future under Articles III,
V and VI. The Board shall also adjust as it determines appropriate the number of
shares and Option Price in outstanding Grants made before the event.

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(1) This is the original number of shares authorized for the Plan in 1996. It
does not reflect subsequent stock splits.

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                                    ARTICLE V

                             ANNUAL RETAINER OPTIONS

         5.1 Grant of Option. Commencing with the 2003 annual meeting of the
Company's shareholders and on the date of each annual meeting thereafter, each
Nonemployee Director who is a member of the Board immediately following each
such annual meeting shall receive a grant of an Option to purchase Common Stock
as determined in accordance with Section 3.2 hereof. The Company shall deliver
to the Grantee a Stock Option Notice which shall set forth such terms and
conditions of the Option as may be determined by the Board to be consistent with
the Plan, and which may include additional provisions and restrictions that are
not inconsistent with the Plan.

         5.2 Option Price. The Option Price of each share of Common Stock
subject to an Option shall be 100 percent of the Fair Market Value of a share of
Common Stock on the Date of Grant.

         5.3 Vesting; Term of Option. An Option granted under Section 5.1 hereof
shall vest and become fully exercisable on the first date following the Date of
Grant on which is held the annual meeting of the shareholders of the Company,
provided that the Grantee is a member of the Board immediately preceding such
annual meeting. In the event of the Grantee's death or Disability, an Option
shall become fully vested and immediately exercisable. The period during which a
vested Option may be exercised shall be ten years from the Date of Grant,
subject to Section 5.4 hereof.

         5.4 Termination of Option. A vested Option granted under Section 5.1
hereof may be exercised prior to the Termination Date. The Termination Date
shall be the earliest to occur of (i) ten years from the Date of Grant; (ii) the
day of resignation or removal from the Board, except by reason of (a) death, (b)
retirement from the Board, or (c) Disability; (iii) the corresponding calendar
day in the sixtieth month following (a) the date the Grantee retires from the
Board or (b) the day on which the Grantee's seat on the Board is terminated by
reason of Disability, or on the last day of that sixtieth month if there is no
corresponding day in that month; or (iv) the corresponding calendar day in the
sixtieth month following the date of death of the Grantee while an active member
of the Board or on the last day of that sixtieth month if there is no
corresponding day in that month.

         5.5 Option Exercise. A Grantee may exercise an Option by delivering
notice of exercise to the Company or its representative as designated by the
Board, either with or without accompanying payment of the Option Price. The
notice of exercise, once delivered, shall be irrevocable. The Grantee shall pay
or cause to be paid the Option Price in cash, or with the Board's permission, by
delivering shares of Common Stock already owned by the Grantee and having a fair
market value on the date of exercise equal to the Option Price, or a combination
of cash and shares. In addition, the Board may permit the exercise of an Option
by delivery of written notice, subject to the Company's receipt of a third-party
payment in full in cash for the Option Price prior to the issuance of Common
Stock, in the manner and subject to the procedures as may be established by the
Board. Unless the Board establishes a

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shorter period which is set forth in the Stock Option Notice, the Grantee shall
pay the Option Price not later than 30 days after the date of a statement from
the Company following exercise setting forth the Option Price, fair market value
of Common Stock on the exercise date, the number of shares of Common Stock that
may be delivered in payment of the Option Price, and the amount of withholding
tax due, if any. If the Grantee fails to pay the Option Price within the
specified period, the Board shall have the right to take whatever action it
deems appropriate, including voiding the Option exercise. The Company shall not
issue or transfer shares of Common Stock upon exercise of an Option until the
Option Price is fully paid.

                                   ARTICLE VI

                             RESTRICTED STOCK AWARDS

         6.1 Restricted Stock Award. Commencing with the 2003 annual meeting of
the Company's shareholders and on the date of each annual meeting thereafter,
each Nonemployee Director who is a member of the Board immediately following
each such annual meeting shall receive a grant of a Restricted Stock Award
determined in accordance with Section 3.2 hereof. The Company shall deliver to
the Grantee a Restricted Stock Notice which shall set forth such terms and
conditions of the Restricted Stock Award as may be determined by the Board to be
consistent with the Plan, and which may include additional provisions and
restrictions that are not inconsistent with the Plan. Upon the issuance or
transfer of a Restricted Stock Award, the Grantee shall be entitled to vote the
shares and to receive any dividends paid thereon.

         6.2 Restriction Period. The rights of a Grantee in respect of a
Restricted Stock Award shall be subject to a "Restriction Period" (after which
restrictions shall lapse), which shall mean a period commencing on the Date of
Grant and ending on the first date following the Date of Grant on which is held
the annual meeting of the shareholders of the Company, provided that the Grantee
is a member of the Board immediately preceding such annual meeting.

         6.3 Requirement of Service. If the Grantee's service as a member of the
Board is terminated for any reason during the Restriction Period, the Restricted
Stock Award shall terminate and the shares of Common Stock must be returned
immediately to the Company; provided, however, the Restriction Period for any
Restricted Stock Award shall expire and all restrictions shall lapse upon the
Grantee's death or Disability.

         6.4 Restrictions on Transfer and Legend on Stock Certificate. During
the Restriction Period, a Grantee may not sell, assign, transfer, pledge, or
otherwise dispose of the shares of Common Stock except in accordance with
Section 9.1 hereof. Each certificate for shares issued or transferred under a
Restricted Stock Award shall be held in escrow by the Company until the
expiration of the Restriction Period.

         6.5 Lapse of Restrictions. All restrictions imposed under the
Restricted Stock Award shall lapse (i) upon the expiration of the Restriction
Period if all conditions stated in

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Sections 6.3 and 6.4 have been met or (ii) as provided under Section 7.1(b). The
Grantee shall then be entitled to delivery of the certificate.

                                   ARTICLE VII

                                CHANGE OF CONTROL

         7.1 Effect of Grants. Unless the Board shall otherwise expressly
provide in the agreement relating to a Grant, upon the occurrence of a Change of
Control (as defined below):

                  (a) Each outstanding Option that is not then fully exercisable
         shall automatically become immediately and fully exercisable and shall
         remain exercisable until the termination of the Option exercise period
         applicable to the Option under Section 3.3 or Article V as the case may
         be; and

                  (b) The Restriction Period on an outstanding Restricted Stock
         Award shall automatically expire and all restrictions imposed under
         such Restricted Stock Award shall immediately lapse.

         7.2 Change of Control. For purposes of the Plan, a Change of Control
shall mean the happening of any of the following events:

                  (a) The acquisition by any "person," as that term is used in
         Sections 13(d) and 14(d) of the Exchange Act (other than (i) the
         Company, (ii) any subsidiary of the Company, (iii) any employee or
         directors' benefit plan or stock plan of the Company or a subsidiary of
         the Company, or any trustee or fiduciary with respect to any such plan
         when acting in that capacity, or (iv) any person who acquires such
         shares pursuant to a transaction or series of transactions approved
         prior to such transaction(s) by the Board) of "beneficial ownership,"
         as defined in Rule 13d-3 under the Exchange Act, directly or
         indirectly, of 20% or more of the shares of the Company's capital
         stock, the holders of which have general voting power under ordinary
         circumstances to elect at least a majority of the Board (or which would
         have such voting power but for the application of the Indiana Control
         Share Statute) ("Voting Stock");

                  (b) the first day on which less than two-thirds of the total
         membership of the Board shall be Continuing Directors (as that term is
         defined in Article 6(f) of the Company's Amended and Restated Articles
         of Incorporation);

                  (c) approval by the shareholders of the Company of a merger,
         share exchange, or consolidation of the Company (a "Transaction"),
         other than a Transaction which would result in the Voting Stock of the
         Company outstanding immediately prior thereto continuing to represent
         (either by remaining outstanding or by being converted into voting
         securities of the surviving entity) more than 50% of the Voting Stock
         of the Company or such surviving entity immediately after such
         Transaction; or

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                  (d) approval by the shareholders of the Company of a complete
         liquidation of the Company or a sale or disposition of all or
         substantially all the assets of the Company.

For purposes hereof, the term "subsidiary" means a corporation of which the
Company owns directly or indirectly 50% or more of the voting power.

                                  ARTICLE VIII

                    EFFECTIVE DATE, TERMINATION AND AMENDMENT

         8.1 Effective Date. The Plan shall become effective after its adoption
by the Board and on the date of its approval by the affirmative votes of the
shareholders of the Company present, or represented, and entitled to vote at a
meeting duly held in accordance with applicable state law and the Articles of
Incorporation and By-laws of the Company.

         8.2 Termination. The Plan shall terminate on the date following the
date of the 2006 Annual Meeting of Shareholders of the Company. The Board may,
in its sole discretion and at any earlier date, terminate the Plan.
Notwithstanding the foregoing, no termination of the Plan shall in any manner
affect any Grant theretofore granted without the consent of the Grantee or the
permitted transferee of the Grant.

         8.3 Amendment. The Board may at any time and from time to time and in
any respect, amend or modify the Plan; provided, however, that, solely to the
extent necessary to comply with Rule 16b-3 (i) the Board may not act more than
once every six months to amend the provisions of the Plan relating to the
determination of the amount, price or timing of any Grant under the Plan; and
(ii) the approval of the Company's shareholders will be required for any
amendment that (a) changes the class of persons eligible for the Grants, (b)
increases (other than as described in Section 4.2 hereof) the maximum number of
shares of Common Stock subject to grant under the Plan, as specified in Section
4.1 hereof, or (c) materially increases the benefits accruing to Grantees under
the Plan, within the meaning of Rule 16b-3. Any such approval shall be by the
affirmative votes of the shareholders of the Company present, or represented,
and entitled to vote at a meeting duly held in accordance with applicable state
law and the Articles of Incorporation and By-laws of the Company.
Notwithstanding the foregoing, no amendment or modification of the Plan shall in
any manner affect any Grant theretofore granted without the consent of the
Grantee or the permitted transferee of the Grant.

                                   ARTICLE IX

                                  MISCELLANEOUS

         9.1 Nontransferability of Grant. No Grant shall be transferred by a
Grantee other than by will or the laws of descent and distribution. No transfer
of a Grant by the Grantee by will or by laws of descent and distribution shall
be effective to bind the Company unless the Company shall have been furnished
with written notice thereof and an authenticated copy of

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the will and/or such other evidence as the Board may deem necessary to establish
the validity of the transfer. During the lifetime of the Grantee, the Grant
shall be exercisable only by such Grantee, except that, in the case of a Grantee
who is legally incapacitated, the Grant shall be exercisable by the Grantee's
guardian or legal representative.

         9.2 Rights as Shareholder. A Grantee or the permitted transferee of a
Grant shall have no rights as a shareholder with respect to any shares subject
to such Grant prior to the purchase of such shares by exercise of an Option, or
with respect to a Restricted Stock Award prior to the lapse of the restrictions,
except as provided herein or in the applicable Stock Option Notice or Restricted
Stock Notice. Nothing contained herein, or in the Stock Option Notice or
Restricted Stock Notice relating to any Grant shall create an obligation on the
part of the Company to repurchase any shares of Common Stock purchased
hereunder.

         9.3 Service on Board. Nothing in the Plan, in the grant of any Option
or Restricted Stock Award or in any Stock Option Notice or Restricted Stock
Notice shall confer upon any Nonemployee Director the right to continue service
as a member of the Board.

         9.4 Compliance with Law. The Plan, the exercise of Grants, and the
obligations of the Company to issue or transfer shares of Common Stock under
Grants shall be subject to all applicable laws and regulations and to approvals
by any governmental or regulatory agency as may be required. The Board may
revoke any Grant if it is contrary to law or modify a Grant to bring it into
compliance with any valid and mandatory law or government regulation.

         9.5 Section 83(b) Election. If a Grantee shall make an election
pursuant to Section 83(b) of the Code with respect to a Restricted Stock Award,
the Grantee shall, within 30 days following the Date of Grant, furnish to the
Company a copy of such election.

         9.6 Plan Binding on Successors. The Plan shall be binding upon the
Company, its successors and assigns, and the Grantee, the Grantee's executor,
administrator and permitted transferee.

         9.7 Construction and Interpretation. Whenever used herein, nouns in the
singular shall include the plural, and the masculine pronoun shall include the
feminine gender. Headings of Articles and Sections hereof are inserted for
convenience and reference and constitute no part of the Plan.

         9.8 Severability. If any provision of the Plan or any Stock Option
Notice or Restricted Stock Notice shall be determined to be illegal or
unenforceable by any court of law in any jurisdiction, the remaining provisions
hereof and thereof shall be severable and enforceable in accordance with their
terms, and all provisions shall remain enforceable in any other jurisdiction.

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         9.9 Governing Law. The validity and construction of this Plan and of
any Stock Option Notice or Restricted Stock Notice shall be governed by the laws
of the State of Indiana.

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                                                                   EXHIBIT 10.20

                               GUIDANT CORPORATION

                           1998 STOCK PLAN, AS AMENDED

         The Guidant Corporation 1998 Stock Plan, as amended, ("1998 Plan")
authorizes the Management Development and Compensation Committee ("Committee")
of the Board of Directors of Guidant Corporation to provide employees and
consultants of Guidant Corporation and its subsidiaries with certain rights to
acquire shares of Guidant Corporation common stock ("Guidant Stock"). The
Company believes that this incentive program will benefit the Company's
shareholders by allowing the Company to attract, motivate, and retain employees
and consultants and by causing employees and consultants, through stock-based
incentives, to contribute materially to the growth and success of the Company.
For purposes of the 1998 Plan, the term "Company" shall mean Guidant Corporation
and its subsidiaries, unless the context requires otherwise.

1. ADMINISTRATION.

         The 1998 Plan shall be administered and interpreted by the Committee
consisting of not less than three persons appointed by the Board of Directors of
the Company from among its members. A person may serve on the Committee only if
he or she (i) is a nonemployee director as defined in Rule 16b-3(b)(3) under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and (ii)
satisfies the requirements of an "outside director" for purposes of Section
162(m) of the Internal Revenue Code of 1986, as amended (the "Code"). The
Committee shall determine the fair market value of Guidant Stock for purposes of
the 1998 Plan. The Committee may, subject to the provisions of the 1998 Plan,
from time to time establish such rules and regulations as it deems appropriate
for the proper administration of the Plan. The Committee's decisions shall be
final, conclusive, and binding with respect to the interpretation and
administration of the 1998 Plan and any Grant made under it. Except to the
extent expressly prohibited by the 1998 Plan or applicable law, the Committee
may delegate to one or more of its members, or to one or more agents, such
responsibility or duties as it deems desirable.

2. GRANTS.

         Incentives under the 1998 Plan shall consist of incentive stock
options, nonqualified stock options, performance awards, and restricted stock
grants (collectively, "Grants"). All Grants shall be subject to the terms and
conditions set out herein and to such other terms and conditions which are not
inconsistent with the 1998 Plan as the Committee deems appropriate. The
Committee shall approve the form and provisions of each Grant. Grants under a
particular section of the 1998 Plan need not be uniform and Grants under two or
more sections may be combined in one instrument.

3. ELIGIBILITY FOR GRANTS.

         Grants may be made to any employee (including any officer) or
consultant of the Company ("Eligible Person"). The Committee shall select the
persons to receive Grants ("Grantees") from among the Eligible Persons and
determine the number of shares subject to any particular Grant.

4. SHARES AVAILABLE FOR GRANT.

         (a) Shares Subject to Issuance or Transfer. Subject to adjustment as
provided in Section 4(b), the aggregate number of shares of Guidant Stock that
may be issued or transferred under the 1998 Plan is

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22,500,000(1); provided, however, that the aggregate number of such shares that
may be issued or transferred as Restricted Stock Grants under the 1998 Plan is
5,000,000. The shares may be authorized but unissued shares or treasury shares.
The number of shares available for Grants at any given time shall be 22,500,000
(5,000,000 in the case of Restricted Stock Grants), reduced by the aggregate of
all shares previously issued or transferred and of shares which may become
subject to issuance or transfer under then-outstanding Grants. Payment in cash
in lieu of shares shall be deemed to be an issuance of the shares for purposes
of determining the number of shares available for Grants under the 1998 Plan as
a whole or to any individual Grantee.

         (b) Adjustment Provisions. If any subdivision or combination of shares
of Guidant Stock or any stock dividend, reorganization, recapitalization, or
consolidation or merger with Guidant Corporation as the surviving corporation
occurs, or if additional shares or new or different shares or other securities
of the Company or any other issuer are distributed with respect to the shares of
Guidant Stock through a spin-off, exchange offer, or other extraordinary
distribution, the Committee shall make such adjustments as it determines
appropriate in the number of shares of Guidant Stock that may be issued or
transferred in the future under Sections 4(a), 5(f) and 6(f). The Committee
shall also adjust as it determines appropriate the number of shares and Option
Price in outstanding Grants made before the event.

5. STOCK OPTIONS.

         The Committee may grant options qualifying as incentive stock options
under the Code ("Incentive Stock Options"), and nonqualified options
(collectively, "Stock Options"). The following provisions are applicable to
Stock Options:

            (a) Option Price. The Committee shall determine the price at which
         Guidant Stock may be purchased by the Grantee under a Stock Option
         ("Option Price") which, except in the case of substitute grants as
         described in Section 11(b), shall be not less than the fair market
         value of Guidant Stock on the date the Stock Option is granted (the
         "Grant Date"). In the Committee's discretion, the Grant Date of a Stock
         Option may be established as the date on which Committee action
         approving the Stock Option is taken or any later date specified by the
         Committee.

            (b) Option Exercise Period. The Committee shall determine the option
         exercise period of each Stock Option. The period shall not exceed ten
         years from the Grant Date.

            (c) Exercise of Option. A Grantee may exercise a Stock Option by
         delivering a notice of exercise to the Company or its representative as
         designated by the Committee, either with or without accompanying
         payment of the Option Price. The notice of exercise, once delivered,
         shall be irrevocable.

            (d) Satisfaction of Option Price. The Grantee shall pay or cause to
         be paid the Option Price in cash, or with the Committee's permission,
         by delivering shares of Guidant Stock already owned by the Grantee and
         having a fair market value on the date of exercise equal to the Option
         Price, or a combination of cash and shares. In addition, the Committee
         may permit the exercise of an option by delivery of written notice,
         subject to the Company's receipt of a third-party payment in full in
         cash for the Option Price prior to the issuance of shares of Guidant
         Stock, in the manner and subject to the procedures as may be
         established by the Committee. Unless the Committee establishes a
         shorter period which is set forth in the Stock Option, the Grantee
         shall pay the Option Price not later than 30 days after the date of a
         statement from the Company following

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(1) Numbers presented are as originally authorized and do not reflect the
subsequent adjustments made pursuant to Section 4(b) for stock splits and
similar events.

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         exercise setting forth the Option Price, fair market value of Guidant
         Stock on the exercise date, the number of shares of Guidant Stock that
         may be delivered in payment of the Option Price, and the amount of
         withholding tax due, if any. If the Grantee fails to pay the Option
         Price within the specified period, the Committee shall have the right
         to take whatever action it deems appropriate, including voiding the
         option exercise. The Company shall not issue or transfer shares of
         Guidant Stock upon exercise of a Stock Option until the Option Price
         and any required withholding tax are fully paid.

            (e) Share Withholding. With respect to any nonqualified option, the
         Committee may, in its discretion and subject to such rules as the
         Committee may adopt, permit or require the Grantee to satisfy, in whole
         or in part, any withholding tax obligation which may arise in
         connection with the exercise of the nonqualified option by having the
         Company withhold shares of Guidant Stock having a fair market value
         equal to the amount of the withholding tax.

            (f) Limits on Individual Grants. No individual Grantee may be
         granted Stock Options under the 1998 Plan for more than 700,000 shares
         of Guidant Stock during any one calendar year.

            (g) Limits on Incentive Stock Options. The aggregate fair market
         value of the stock covered by Incentive Stock Options granted under the
         1998 Plan or any other stock option plan of the Company or any
         subsidiary or parent of the Company that become exercisable for the
         first time by any employee in any calendar year shall not exceed
         $100,000. The aggregate fair market value will be determined at the
         Grant Date. An Incentive Stock Option shall not be granted to any
         Eligible Person who, on the Grant Date, owns stock possessing more than
         10% of the total combined voting power of all classes of stock of the
         Company or any subsidiary or parent of the Company.

6. PERFORMANCE AWARDS.

         The Committee may grant Performance Awards which shall be denominated
at the time of grant either in shares of Guidant Stock ("Stock Performance
Awards") or in dollar amounts ("Dollar Performance Awards"). Payment under a
Stock Performance Award or a Dollar Performance Award shall be made, at the
discretion of the Committee, in shares of Guidant Stock ("Performance Shares"),
or in cash or in any combination thereof, if the financial performance of the
Company or any subsidiary, division, or other unit of the Company ("Business
Unit") selected by the Committee meets certain financial goals established by
the Committee for the Award Period (as defined below). Performance Awards may be
granted by the Committee in a manner designed to qualify for exemption under
Section 162(m) of the Code ("Section 162(m) Awards") or in a manner that is not
intended to so qualify. The following provisions are applicable to Performance
Awards:

            (a) Award Period. The Committee shall determine and include in the
         Grant the period of time (which shall be four or more consecutive
         fiscal quarters) for which a Performance Award is made ("Award
         Period"). Grants of Performance Awards need not be uniform with respect
         to the length of the Award Period. Award Periods for different Grants
         may overlap. A Performance Award may not be granted for a given Award
         Period after one half (1/2) or more of such period has elapsed, except
         as provided in Section 6(g).

            (b) Performance Criteria and Payment. Before a Grant is made, the
         Committee shall establish objectives with respect to designated
         business performance criteria ("Performance Criteria") that must be met
         by the Business Unit during the Award Period as a condition to payment
         being made under the Performance Award. The Performance Criteria and
         the applicable goals with respect to such criteria shall be set out in
         the Grant. In the case of Section 162(m) Awards, the Performance

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         Criteria shall be limited to earnings per share, return on assets,
         return on shareholders' equity, divisional income, net income, total
         shareholder return, stock price goals, cash flow, operating earnings,
         return on capital, or economic value added, in each case as may be
         applied on an absolute or relative to peer group basis. In the case of
         non-Section 162(m) Awards, the Performance Criteria may include any of
         the foregoing or any other financial measurement established by the
         Committee. The Committee shall also set forth in the Grant the number
         of Performance Shares or the amount of payment to be made under a
         Performance Award if the Performance Criteria are met or exceeded,
         including the fixing of a maximum payment, subject to Section 6(f).

            (c) Computation of Payment. After an Award Period, the financial
         performance of the Business Unit during the period shall be measured
         against the Performance Criteria. If the Performance Criteria are not
         met, no payment shall be made under a Performance Award. If the
         Performance Criteria are met or exceeded, the Committee shall certify
         that fact in writing prior to payment of the Performance Award and
         shall determine the number of Performance Shares or the amount of
         payment to be made under a Performance Award in accordance with the
         Grant for each Grantee. The Committee, in its sole discretion, may
         elect to pay part or all of the Performance Award in cash in lieu of
         issuing or transferring Performance Shares. The cash payment shall be
         based on the fair market value of Guidant Stock on the date of payment.
         The Company shall promptly notify each Grantee of the number of
         Performance Shares and the amount of cash, if any, he or she is to
         receive.

            (d) Revisions for Significant Events. At any time before payment is
         made, the Committee may revise the Performance Criteria and the
         computation of payment if unforeseen events occur during an Award
         Period which have a substantial effect on the Performance Criteria and
         which in the sole discretion of the Committee make the application of
         the Performance Criteria unfair unless a revision is made; provided,
         however, that any such revision that would result in an increase in the
         amount payable under Section 162(m) Awards shall be made only on a
         non-discretionary basis upon the occurrence of objective events
         specified in the Grant.

            (e) Requirement of Employment. To be entitled to receive payment
         under a Performance Award, a Grantee who is an employee of the Company
         must remain in the employment of the Company through the date of the
         award payment, except that the Committee may provide for partial or
         complete exceptions to this requirement as it deems equitable in its
         sole discretion.

            (f) Maximum Payment. In case of a Performance Award that is
         designated as a Section 162(m) Award, no individual may receive
         Performance Award payments in respect of Stock Performance Awards in
         excess of 30,000 shares of Guidant Stock in any calendar year or
         payments in respect of Dollar Performance Awards in excess of
         $2,000,000 in any calendar year. For purposes of determining the
         maximum payment under this subsection, payment in cash of all or part
         of a Stock Performance Award will be deemed an issuance of the number
         of shares with respect to which such cash payment is made. No
         individual may receive both a Stock Performance Award and a Dollar
         Performance Award for the same Award Period.

            (g) Section 162(m) Requirements. In the case of a Performance Award
         that is designated as a Section 162(m) Award, the Committee shall make
         all determinations necessary to establish the Performance Award within
         90 days of the beginning of the Award Period, including, without
         limitation, the designation of the Participants to whom Performance
         Awards are made, the Performance Criteria applicable to the Grant and
         the performance goals that relate to such criteria, and the dollar
         amounts or number of shares of Guidant Stock payable upon achieving the
         applicable performance goals. As and to the extent required by Section
         162(m) of the Code, the

                                       4

<PAGE>

         terms of a Section 162(m) Award must state, in terms of an objective
         formula or standard, the method of computing the amount of compensation
         payable under the Performance Award and must preclude discretion to
         increase the amount of compensation payable under the Performance
         Award.

7. RESTRICTED STOCK GRANTS.

            The Committee may issue or transfer shares of Guidant Stock to a
Grantee under a Restricted Stock Grant. Upon the issuance or transfer, the
Grantee shall be entitled to vote the shares and to receive any dividends paid.
The following provisions are applicable to Restricted Stock Grants:

            (a) Requirement of Employment. If the employment of a Grantee who is
         an employee of the Company terminates during the period designated in
         the Grant as the "Restriction Period," the Restricted Stock Grant
         terminates and the shares of Guidant Stock must be returned immediately
         to the Company. However, the Committee may provide for partial or
         complete exceptions to this requirement as it deems equitable.

            (b) Restrictions on Transfer and Legend on Stock Certificate. During
         the Restriction Period, a Grantee may not sell, assign, transfer,
         pledge, or otherwise dispose of the shares of Guidant Stock except to a
         Successor Grantee under Section 11(a). Each certificate for shares
         issued or transferred under a Restricted Stock Grant shall contain a
         restricted legend or be held in escrow by the Company until the
         expiration of the Restriction Period.

            (c) Lapse of Restrictions. All restrictions imposed under the
         Restricted Stock Grant shall lapse (i) upon the expiration of the
         Restriction Period if all conditions, including those stated in
         Sections 7(a) and (b) have been met or (ii) as provided under Section
         9(a)(ii). The Grantee shall then be entitled to delivery of the
         certificate.

8. AMENDMENT AND TERMINATION OF THE 1998 PLAN.

            (a) Amendment. The Board may at any time and from time to time and
in any respect, amend or modify the Plan; provided, however, that no amendment
or modification of the 1998 Plan shall be effective without the consent of the
Company's shareholders that would: (i) change the class of Eligible Persons
under the 1998 Plan, (ii) increase the number of shares of Guidant Stock
available for Grants or for Restricted Stock Grants, as provided in Section
4(a), (iii) allow the grant of Stock Options at an exercise price below fair
market value, or (iv) allow the re-pricing of Stock Options. In addition, the
Board may seek the approval of any amendment or modification by the Company's
shareholders to the extent it deems necessary or advisable in its sole
discretion for purposes of compliance with Section 162(m) or Section 422 of the
Code, the listing requirements of the New York Stock Exchange or for any other
purpose. No amendment or modification of the 1998 Plan shall in any manner
affect any outstanding Grant without the consent of the Grantee or the permitted
transferee of the Grant.

            (b) Termination of 1998 Plan. The 1998 Plan shall terminate on May
31, 2007, unless terminated earlier by the Board or unless extended by the
Board.

            (c) Termination and Amendment of Outstanding Grants. A termination
or amendment of the 1998 Plan that occurs after a Grant is made shall not result
in the termination or amendment of the Grant unless the Grantee consents or
unless the Committee acts under Section 11(e). The termination of the 1998 Plan
shall not impair the power and authority of the Committee with respect to
outstanding Grants. Whether or not the 1998 Plan has terminated, an outstanding
Grant may be terminated or amended under Section 11(e) or may be amended (i) by
agreement of the Company and the Grantee consistent with the

                                       5

<PAGE>

1998 Plan or (ii) by action of the Committee provided that the amendment is
consistent with the 1998 Plan and is found by the Committee not to materially
impair the rights of the Grantee under the Grant.

9. CHANGE OF CONTROL.

            (a) Effect on Grants. Unless the Committee shall otherwise expressly
provide in the agreement relating to a Grant, upon the occurrence of a Change of
Control (as defined below):

            (i) In the case of Stock Options, each outstanding Stock Option that
         is not then fully exercisable shall automatically become fully
         exercisable;

            (ii) The Restriction Period on all outstanding Restricted Stock
         Grants shall automatically expire and all restrictions imposed under
         such Restricted Stock Grants shall immediately lapse; and

            (iii) Each Grantee of a Performance Award for an Award Period that
         has not been completed at the time of the Change of Control shall be
         deemed to have earned a Performance Award equal to such Grantee's
         maximum award opportunity during such Award Period for such Performance
         Award.

            (b) Change of Control. For purposes of the 1998 Plan, a Change of
Control shall mean the happening of any of the following events:

            (i) The acquisition by any "person," as that term is used in
         Sections 13(d) and 14(d) of the Exchange Act (other than (A) the
         Company, (B) any subsidiary of the Company, (C) any employee or
         directors' benefit plan or stock plan of the Company or a subsidiary of
         the Company, or any trustee or fiduciary with respect to any such plan
         when acting in that capacity, or (D) any person who acquires such
         shares pursuant to a transaction or series of transactions approved
         prior to such transaction(s) by the Board of Directors of the Company)
         of "beneficial ownership" as defined in Rule 13d-3 under the Exchange
         Act, directly or indirectly, of 20% or more of the shares of the
         Company's capital stock the holders of which have general voting power
         under ordinary circumstances to elect at least a majority of the Board
         of Directors of the Company (or which would have such voting power but
         for the application of the Indiana Control Share Statute) (Voting
         Stock);

            (ii) the first day on which less than two-thirds of the total
         membership of the Board of Directors of the Company shall be Continuing
         Directors (as that term is defined in Article 6(f) of the Company's
         Articles of Incorporation;

            (iii) approval by the shareholders of the Company of a merger, share
         exchange, or consolidation of the Company (a "Transaction"), other than
         a Transaction which would result in the Voting Stock of the Company
         outstanding immediately prior thereto continuing to represent (either
         by remaining outstanding or by being converted into voting securities
         of the surviving entity) more than 50% of the Voting Stock of the
         Company or such surviving entity immediately after such Transaction; or

            (iv) approval by the shareholders of the Company of a complete
         liquidation of the Company or a sale or disposition of all or
         substantially all the assets of the Company.

                                       6

<PAGE>

10. ELIGIBLE PERSONS RESIDENT OUTSIDE THE UNITED STATES.

         The following provisions shall apply to each Eligible Person who is
resident outside the United States:

            (a) Determination of Eligible Locations. The Committee shall
         determine whether it is feasible or desirable under local law, custom
         and practice to make Grants at each location outside the United States.
         In making this determination as of any Grant Date, the Committee may
         differentiate among classes of individuals (including expatriates,
         third country nationals or international assignees) and locations
         within a particular country.

            (b) Special Terms Applicable to Grants. In order to facilitate the
         making of Grants under this Section 10, the Committee may provide for
         such special terms for Grants to Grantees who are foreign nationals or
         who are employed outside the United States as the Committee may
         consider necessary or desirable to accommodate differences in local
         law, policy or custom, or to take advantage of special tax or social
         insurance regimes applicable in a particular jurisdiction. The
         Committee may approve such supplements, restatements or alternate
         versions of the Plan as it may consider necessary or desirable for such
         purposes, without thereby affecting the terms of the Plan as in effect
         for any other purpose. Without limiting the generality of the
         foregoing, the Committee may adopt special sub-plans applicable to
         individuals in particular jurisdictions (e.g., French or U.K. qualified
         plans), may provide for accelerated vesting with restrictions on the
         shares received under a Grant, and may condition Grants on
         acknowledgments or agreements by Grantees tailored to local law.

            (c) No Acquired Rights. Nothing in the 1998 Plan or in this Section
         10 shall confer upon any individual in any country the right to receive
         (or to continue to receive) any Grant, any form of Grant or to receive
         any benefit in lieu of a Grant hereunder, nor to have any special tax
         treatment apply to any Grant.

11. GENERAL PROVISIONS.

            (a) Transfer of Grants. Only a Grantee or his or her authorized
legal representative or valid transferee may exercise rights under a Grant. Such
persons may not transfer those rights. Except as set forth below, the rights
under a Grant may not be disposed of by transfer, alienation, pledge,
encumbrance, assignment, or any other means, whether voluntary, involuntary, or
by operation of law, and any such attempted disposition shall be void.
Notwithstanding the foregoing and solely to the extent permitted by the
Committee in an agreement relating to a Grant, rights under a Grant (other than
pursuant to an Incentive Stock Option) may be transferred to members of a
Grantee's immediate family, charitable institutions, or trusts or partnership
whose beneficiaries are any of the foregoing, or to such other persons or
entities as may be approved by the Committee, in each case subject to the
condition that the Committee be satisfied that such transfer is being made for
estate or tax planning purposes or for donative purposes without consideration
being received therefor. In addition, when a Grantee dies, the personal
representative or other person entitled to succeed to the rights of the Grantee
may exercise the rights. A successor to the rights under a Grant pursuant to the
foregoing ("Successor Grantee") must furnish proof satisfactory to the Company
of his or her right to receive the Grant, whether as a result of a transfer from
the Grantee, under the Grantees will or under the applicable laws of descent and
distribution.

            (b) Substitute Grants. The Committee may make a Grant to an employee
of another corporation who becomes an Eligible Person by reason of a corporate
merger, consolidation, acquisition of stock or property, reorganization or
liquidation involving the Company in substitution for a stock option,
performance award, or restricted stock grant granted by such other corporation
("Substituted Stock

                                       7

<PAGE>

Incentive"). The terms and conditions of the substitute Grant may vary from the
terms and conditions required by the 1998 Plan and from those of the Substituted
Stock Incentives. The Committee shall prescribe the exact provisions of the
substitute Grants, preserving to the extent the Committee deems practical the
provisions of the Substituted Stock Incentives. The Committee shall also
determine the number of shares of Guidant Stock to be taken into account under
Section 4.

         (c) Subsidiaries. The term "subsidiary" means a corporation of which
Guidant owns directly or indirectly 50% or more of the voting power.

         (d) Fractional Shares. Fractional shares shall not be issued or
transferred under a Grant, but the Committee may pay cash in lieu of a fraction
or round the fraction.

         (e) Compliance with Law. The 1998 Plan, the exercise of Grants, and the
obligations of the Company to issue or transfer shares of Guidant Stock under
Grants shall be subject to all applicable laws and regulations and to approvals
by any governmental or regulatory agency as may be required. The Committee may
revoke any Grant if it is contrary to law or modify a Grant to bring it into
compliance with any valid and mandatory law or governmental regulation. The
Committee may also adopt rules regarding the withholding of taxes on payment to
Grantees.

         (f) Ownership of Stock. A Grantee or Successor Grantee shall have no
rights as a stockholder of the Company with respect to any shares of Guidant
Stock covered by a Grant until the shares are issued or transferred to the
Grantee or Successor Grantee on the Company's books.

         (g) No Right to Employment. The 1998 Plan and the Grants under it shall
not confer upon any Grantee the right to continue in the employment of the
Company or affect in any way the right of the Company to terminate the
employment of a Grantee at any time, with or without notice or cause.

         (h) Foreign Jurisdictions. The Committee may adopt, amend, and
terminate such arrangements, not inconsistent with the intent of the 1998 Plan,
as it may deem necessary or desirable to make available tax or other benefits of
the laws of foreign jurisdictions to Grantees who are subject to such laws.

         (i) Governing Law. The 1998 Plan and all Grants made under it shall be
governed by and interpreted in accordance with the laws of the State of Indiana,
regardless of the laws that might otherwise govern under applicable Indiana
conflict-of-laws principles.

         (j) Effective Date of the 1998 Plan. The 1998 Plan shall become
effective upon approval by the Company's shareholders.

                                       8

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