If you take a lump sum distribution from the Plan you may elect to have your vested 2% subaccount that is invested in the Stryker Stock Fund distributed in shares of stock instead of in cash. To qualify for the election, the value of the Stryker common stock in your vested 2% subaccount must be at least $1,000. Fractional shares of Stryker common stock, and the part of your vested 2% subaccount that is not invested in Stryker common stock, will be distributed in cash. Hardship withdrawals and withdrawals after age 59-1/2 while you are still an employee do not qualify for the election.

If you make the election to receive shares of Stryker common stock as part of your lump sum distribution, you may have the option of not paying tax on the "net unrealized appreciation" of the stock until you sell it. Net unrealized appreciation generally is the increase in the value of the Stryker common stock while it was held by the Plan. If, for example, Stryker common stock was contributed to your account when it was worth $1,000, but the stock is worth $1,200 when you receive it, you would not have to pay tax on the $200 increase in value until you later sell the stock.

You may instead elect not to use the special net unrealized appreciation rule. In that case the net unrealized appreciation will be taxed in the year you receive the stock unless you roll over the stock.

If you receive a distribution of both cash and Stryker common stock in a payment that can be rolled over, the 20% withholding will be based on the entire taxable amount paid to you (including the value of the Stryker common stock determined by excluding the net unrealized appreciation). However, the amount withheld will be taken from (and limited to) the cash part of the distribution.