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                                                                EXHIBIT 10.37

                         WELLPOINT HEALTH NETWORKS INC.
                            1999 STOCK INCENTIVE PLAN

                      (AS AMENDED THROUGH DECEMBER 6, 2000)

                                   ARTICLE ONE
                               GENERAL PROVISIONS

1.1      ELIGIBILITY

         This WellPoint Health Networks Inc. 1999 Stock Incentive Plan ("PLAN"),
adopted effective May 11, 1999 ("EFFECTIVE DATE"), is intended to enable
WellPoint Health Networks Inc. ("COMPANY") to offer options, restricted stock,
performance shares, performance units, phantom stock and stock appreciation
rights to the following eligible individuals ("ELIGIBLE INDIVIDUALS"): Key
employees and officers and directors of the Company or of an affiliate
("AFFILIATE") linked to the Company by a 50% or greater chain of ownership or in
which the Company has a significant ownership interest, directly or indirectly
(as determined by the Committee, as defined below), and consultants and
independent contractors providing services to the Company or an Affiliate. In
addition to the aforementioned discretionary grants, this Plan provides for
automatic stock and option grants to non-employee members of the Board of
Directors of the Company ("BOARD").

         This Plan will serve as the successor to the Company's existing Stock
Option/Award Plan and Employee Stock Option Plan ("PREDECESSOR PLANS"), and no
further awards will be made under the Predecessor Plans from and after the
adoption of this Plan by the Company's stockholders on the Effective Date. All
outstanding awards under the Predecessor Plans on the Effective Date will be
incorporated into this Plan and will accordingly be treated as outstanding
awards under this Plan. However, each outstanding award so incorporated will
continue to be governed solely by the express terms and conditions of the
agreements evidencing such award, and no provision of this Plan shall be deemed
to affect or otherwise modify the rights or obligations of the holders of such
incorporated awards with respect to their acquisition of shares of the Company's
Common Stock ("COMMON STOCK") thereunder.

1.2      ADMINISTRATION OF THE PLAN

A.       COMMITTEE. The Plan will be administered by a committee or committees
         appointed by the Board and consisting of two or more members of the
         Board. The Board may delegate responsibility for administration of the
         Plan with respect to designated grant and award recipients to different
         committees, subject to such limitations as the Board deems appropriate.
         Members of a committee will serve for such term as the Board may
         determine, and may be removed by the Board at any time. The term
         "COMMITTEE," when used in this Plan, refers to the committee that has
         been delegated authority with respect to a matter.


         In determining the composition of any committee or subcommittee, the
         Board or committee, as the case may be, shall consider the desirability
         of compliance with the compositional requirements of (i) Rule 16b-3 of
         the Securities and Exchange

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         Commission with respect to award holders who are subject to the
         trading restrictions of Section 16(b) of the Securities and Exchange
         Act of 1934 ("1934 ACT") with respect to securities of the Company and
         (ii) Section 162(m) of the Internal Revenue Code ("CODE"), but shall
         not be bound by such compliance.

B.       AUTHORITY. Each Committee has full authority to administer the Plan
         within the scope of its delegated responsibilities, including authority
         to interpret and construe any relevant provision of the Plan, to adopt
         rules and regulations that it deems necessary, to determine which
         individuals are Eligible Individuals and which Eligible Individuals are
         to receive grants and/or awards under the Plan, to determine the amount
         and/or number of shares subject to such a grant or award, and to
         determine the terms of such a grant or award made under the Plan (which
         terms need not be identical). Decisions of a Committee made within the
         discretion delegated to it by the Board are final and binding on all
         persons.

1.3      STOCK SUBJECT TO THE PLAN

A.       NUMBER OF SHARES. Shares of the Company's Common Stock available for
         issuance under the Plan will be drawn from the Company's authorized but
         unissued shares of Common Stock or from reacquired shares of Common
         Stock, including shares repurchased by the Company on the open market.
         Subject to adjustment in accordance with the terms of the Plan, the
         number of shares of Common Stock that may be issued under the Plan will
         not exceed 3,200,000 shares plus the number of shares of Common Stock
         remaining for issuance on the Effective Date under the Predecessor
         Plans (whether or not subject to outstanding awards under the
         Predecessor Plans) Not more than 1,000,000 shares subject to adjustment
         as provided in Paragraph 1.3.C., may be subject to awards for which the
         Company shall receive no consideration.

B.       SHARE COUNTING. In determining whether the number of shares issued
         under the Plan exceeds the maximum number set forth in Paragraph
         1.3.A., only the net number of shares actually issued under an award
         shall count against the limit. Thus, if any outstanding grant or award
         under the Plan (including awards under the Predecessor Plans) expires,
         is terminated, is cancelled or is forfeited for any reason after the
         Effective Date but before the full number of shares governed by the
         grant or award are issued, those remaining shares will not be charged
         against the limit in Paragraph 1.3.A. above and will be available for
         subsequent grants and awards under the Plan. Shares issued under the
         Plan (or the Predecessor Plans) and subsequently forfeited to or
         repurchased by the Company pursuant to its forfeiture and repurchase
         rights under the Plan (or the Predecessor Plans) after the Effective
         Date will be available for subsequent grants and awards under this
         Plan. If shares held by an awardholder are delivered to the Company, or
         are withheld from shares otherwise issuable under the award, in payment
         of all or a portion of the exercise price or tax withholding
         obligations under the award (including awards incorporated into this
         Plan from the Predecessor Plans), only the net number of shares issued
         by the Company (i.e., the gross number less the shares delivered or
         withheld) shall be counted toward the limit of Paragraph 1.3.A.
         Similarly, shares for which a cash payment is made in lieu of payment
         in stock will be available for subsequent grants and awards under this
         Plan. Any shares issued or grants settled by the


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         Company pursuant to the assumption or substitution of outstanding
         grants or grant commitments from an acquired company or other entity
         (whether acquired through the acquisition of stock, assets or
         otherwise) shall not be counted against the limitations set forth in
         Paragraph 1.3.A.

         Similarly, any shares of Common Stock that are repurchased by the
         Company after May 11, 1999 (the "REPURCHASED SHARES") on the open
         market or in private transactions may be added to the aggregate number
         of shares available for issuance, so long as the aggregate price paid
         for the Repurchased Shares does not exceed the cumulative amount
         received in cash by the Company after May 11, 1999, for the exercise of
         options or issuance of awards granted under the Plan. In no event shall
         the number of additional shares issuable by reason of the adjustments
         described in the preceding sentence exceed 15,000,000 shares.

C.       ADJUSTMENTS. If any change is made to the Common Stock issuable under
         the Plan 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
         receipt of consideration, then appropriate adjustments will be made to
         (i) the maximum number and/or class of securities issuable under the
         Plan, (ii) the number and/or class of securities and, if applicable,
         price per share in effect under automatic option and stock grants to
         directors and each outstanding grant and award under the Plan, (iii)
         the maximum number of shares issuable to one individual pursuant to
         Paragraph 1.3.D., (iv) the maximum number of shares issuable without
         consideration pursuant to Paragraph 1.3.A. and (v) the maximum number
         of shares which may be added to the Plan upon repurchase pursuant to
         Paragraph 1.3.B. The purpose of these adjustments will be to preclude
         the enlargement or dilution of rights and benefits under the grants and
         awards.

D.       INDIVIDUAL LIMIT. No Eligible Individual will receive options,
         restricted stock, performance shares, performance units, phantom stock,
         stock appreciation rights or any combination of each under this Plan
         for more than 1,000,000 shares (subject in each case to adjustment as
         provided in Paragraph 1.3.C.) plus 5,000,000 shares issuable under
         options granted pursuant to Paragraph 2.1.D. during any consecutive
         twelve month period.

                                  ARTICLE TWO
                                     OPTIONS

2.1      TERMS AND CONDITIONS OF OPTIONS

A.       TYPE AND TERM. The Committee has full authority to determine whether
         options are to be incentive stock options ("INCENTIVE OPTIONS") that
         satisfy the requirements of Section 422 of the Internal Revenue Code or
         non-qualified options not intended to satisfy those requirements
         ("NON-QUALIFIED OPTIONS"), the time or times at which grants become
         exercisable, the maximum term for which grants remain outstanding and
         the remaining terms of options, subject to the remaining provisions of
         the Plan.


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B.       PRICE. The option price per share will be fixed by the Committee;
         provided, however, that in no event will the option price per share
         (other than with respect to an option granted in lieu of other
         compensation pursuant to Paragraph 5.9) be less than 100% of the Fair
         Market Value of a share of Common Stock on the date of the grant.

C.       EXERCISE AND PAYMENT. After any option granted under the Plan becomes
         exercisable, it may be exercised by notice to the Company, in such form
         as the Committee shall authorize, at any time before termination of the
         option. The option price will be payable in full in cash or check made
         payable to the Company; provided, however, that the Committee may,
         either at the time the option is granted or at any subsequent time, and
         subject to such limitations as it may determine, authorize payment of
         all or a portion of the option price in one or more of the following
         alternative forms:

                  (1) a promissory note authorized pursuant to Paragraph 5.3;

                  (2) in shares of Common Stock valued as of the Exercise Date
(defined below) and held for the requisite period to avoid a charge to earnings;
or

                  (3) through a sale and remittance procedure under which the
option holder delivers, in such form as the Committee shall authorize, an
exercise notice and irrevocable instructions to a broker to promptly deliver to
the Company the amount of sale proceeds to pay the option price.

For purposes of Subparagraph (2) immediately above, the "EXERCISE DATE" is the
date on which notice, in such form as the Committee shall authorize, of the
exercise of the option is delivered to the Company. In all other cases, the
Exercise Date is the date on which notice and actual payment is received by the
Company.

D.       An option may provide, to the extent subject to such terms as the
         Committee authorizes, that upon the exercise of the option, the holder
         will automatically be granted a new option covering that number of
         shares equal to (i) the number of shares delivered to the Company by
         the holder, or withheld from shares otherwise issuable to the holder
         upon exercise, in payment of the exercise price of the option or the
         tax withholding obligations attributable thereto and\or (ii) that
         number of shares with a then Fair Market Value equal to the amount of
         the withholding obligations paid in cash by the holder.

E.       STOCKHOLDER RIGHTS. An option holder will have no stockholder rights
         with respect to any shares covered by an option before the Exercise
         Date of the option, as defined in the immediately preceding Paragraph.

F.       SEPARATION FROM SERVICE. The Committee will determine and set forth in
         each option whether the option will continue to be exercisable, and the
         terms of such exercise, on and after the date that an optionee ceases
         to be employed by or to provide services to the Company or an
         Affiliate. The date of termination of an optionee's employment or
         services will be determined by the Committee, which determination will
         be final.

G.       INCENTIVE OPTIONS. Options granted under the Plan that are intended to
         be Incentive Options will be subject to the following additional terms:


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                  (1) DOLLAR LIMIT. To the extent that the aggregate fair market
value (determined as of the respective date or dates of grant) of shares with
respect to which options that would otherwise be Incentive Options are
exercisable for the first time by any individual during any calendar year under
the Plan (or any other plan of the Company, a parent or subsidiary corporation
or predecessor thereof) exceeds the sum of $100,000 (or a greater amount
permitted under the Internal Revenue Code), whether by reason of acceleration or
otherwise, those options will not be treated as Incentive Options. In making
this determination, options will be taken into account in the order in which
they were granted.

                  (2) 10% STOCKHOLDER. If any employee to whom an Incentive
Option is to be granted is, on the date of grant, the owner of stock (determined
using the attribution rules of Section 424(d) of the Internal Revenue Code)
possessing more than 10% of the total combined voting power of all classes of
stock of his or her employer corporation or of its parent or subsidiary ("10%
STOCKHOLDER"), then the following special provisions will apply to the option
granted to that individual:

                           (i) The option price per share of the stock subject
to that Incentive Option will not be less than 110% of the Fair Market Value of
the option shares on the date of grant; and

                           (ii) The option will not have a term in excess of 5
years from the date of grant.

                  (3) TERM. In no event will an Incentive Option be exercisable
after the expiration of ten (10) years from the date of grant of such option.

                  (4) EMPLOYEES. Incentive Options may only be granted to
employees of the Company or of a parent or subsidiary.

                  (5) PARENT AND SUBSIDIARY. For purposes of this Paragraph,
"parent" and "subsidiary" will have the meaning attributed to those terms, as
they are used in Section 422(b) of the Internal Revenue Code.

H.       TRANSFERABILITY. During the lifetime of the optionee, options will be
         exercisable only by the optionee and will not be assignable or
         transferable by the optionee otherwise than by will or by the laws of
         descent and distribution following the optionee's death. However, if
         and to the extent that the Committee so authorizes at the time an award
         is granted or amended, an option or other award may, in connection with
         a gift or a domestic relations order, be assigned in whole or in part
         during the grantee's lifetime to one or more members of the grantee's
         family or to a trust, foundation or other entity in which one or more
         such family members has more than fifty percent (50%) of the beneficial
         interest. Rights under the assigned portion may only be exercised by
         the person or persons who acquire a proprietary interest in the award
         pursuant to the assignment. The terms applicable to the assigned
         portion shall be the same as those in effect for the award immediately
         prior to such assignment and shall be set forth in such documents
         issued to the assignee as the Committee may deem appropriate.


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2.2      REPURCHASE RIGHTS

         The Committee may in its discretion determine that it shall be a term
and condition of one or more options exercised under the Plan that the Company
or its assigns will have the right, exercisable upon the optionee's separation
from service with the Company and/or its Affiliates, to repurchase any or all of
the shares of Common Stock previously acquired by the optionee upon the exercise
of that option. Any such repurchase right will be exercisable on such terms and
conditions (including the establishment of the appropriate vesting schedule and
other provisions for the expiration of the repurchase right in one or more
installments) as the Committee may specify in the instrument evidencing the
right. The Committee will also have full power and authority to provide for the
automatic termination of repurchase rights, in whole or in part, thereby
accelerating the vesting of any or all of the purchased shares.

                                 ARTICLE THREE
                RESTRICTED STOCK, PERFORMANCE SHARES, PERFORMANCE
               UNITS, PHANTOM STOCK AND STOCK APPRECIATION RIGHTS

3.1      RESTRICTED STOCK

         Restricted stock granted under the Plan consists of shares of Common
Stock (together with cash dividend equivalents if so determined by the
Committee), the retention and transfer of which is subject to such terms,
conditions and restrictions (whether based on performance standards or periods
of service or otherwise and including repurchase and/or forfeiture rights in
favor of the Company) as the Committee shall determine. The terms, conditions
and restrictions to which restricted stock is subject will be evidenced by such
instruments as the Committee may from time to time approve and may vary from
grant to grant. The Committee has the absolute discretion to determine whether
any consideration (other than the services of the potential award holder) is to
be received by the Company or its Affiliates as a condition precedent to the
issuance of restricted stock.

3.2      PERFORMANCE SHARES

         Performance shares granted under the Plan consist of the right, subject
to such terms, conditions and restrictions as the Committee may determine
(including, but not limited to continued employment and/or performance
standards), to receive a share of Common Stock. Performance shares will be
evidenced by such instruments as the Committee may from time to time approve.
The Committee has the absolute discretion to determine whether any consideration
(other than the services of the potential award holder) is to be received by the
Company or its Affiliates as a condition precedent to the issuance of shares
pursuant to performance shares. The terms, conditions and restrictions to which
performance shares are subject may vary from grant to grant.

3.3      PHANTOM STOCK

         Phantom stock granted under the Plan consists of the right to receive
an amount in cash equal to the Fair Market Value of one share of Common Stock on
the date of valuation of the phantom stock (together with cash dividend
equivalents if so determined by the Committee) less


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such amount, if any, as the Committee shall specify. Phantom stock will be
evidenced by such instruments as the Committee may from time to time approve.
The date of valuation and payment of cash under phantom stock and the
conditions, if any, to which such payment will be subject (whether based on
performance standards or periods of service or otherwise) will be determined by
the Committee.

3.4      PERFORMANCE UNITS


         Performance units granted under the Plan consist of the right to
receive cash, subject to such terms, conditions and restrictions (including, but
not limited to performance standards) as the Committee may determine.
Performance units will be evidenced by such instruments as the Committee may
from time to time approve. The terms, conditions and restrictions to which
performance units are subject may vary from grant to grant.

3.5       CASH PAYMENTS


         The Committee may provide award holders with an election, or require a
holder, to receive a portion of the total value of the Common Stock subject to
restricted stock or performance shares in the form of a cash payment, subject to
such terms, conditions and restrictions as the Committee may specify.

3.6      STOCK APPRECIATION RIGHTS


         The Committee may provide option holders, upon such terms and
conditions as the Committee may establish at the time of an option grant or at
any time thereafter, the right to surrender all or part of an unexercised option
in exchange for a distribution equal in amount to the difference between (i) the
Fair Market Value (at the date of surrender) of the shares for which the
surrendered option or portion thereof is at the time exercisable and (ii) the
aggregate option price payable for such shares. The distribution to which an
option holder becomes entitled under this Paragraph 3.6 may be made in shares of
Common Stock or restricted stock, valued at Fair Market Value at the date of
surrender, in cash, or partly in shares and partly in cash, as the Committee, in
its sole discretion, deems appropriate.

                                  ARTICLE FOUR
                   AUTOMATIC GRANTS TO NON-EMPLOYEE DIRECTORS

4.1      AUTOMATIC STOCK GRANTS


         On June 30, 1999 and each date thereafter on which annual grants are
made to officers of the Company subject to the short-swing profit liabilities of
Section 16 of the 1934 Act ("AUTOMATIC GRANT DATE"), each individual who is then
serving as a non-employee member of the Board ("ELIGIBLE INDEPENDENT DIRECTOR")
and has so served for at least six full calendar months will, in consideration
of his or her past services, automatically be granted 800 shares of Common Stock
("AUTOMATIC STOCK GRANTS"), subject to adjustment under Paragraph 1.3.C. of this
Plan. However, an Eligible Independent Director may elect, before the beginning
of the calendar year after 1999 in which an Automatic Stock Grant would
otherwise be made, to be granted in lieu thereof on such Automatic Grant Date an
option to acquire that number of shares of Common


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Stock equal to four times (or such other multiple as the Board may approve in
advance) the number of shares of Common Stock that he or she would have received
under such Automatic Stock Grant. The terms of such stock option shall be same
as the terms applicable to Automatic Options as set forth in Section 4.2.B.
below, except that the number of shares subject to such option shall be the
number set forth in the previous sentence and such stock option shall be
immediately exercisable for all shares of Common Stock subject to such option.

4.2      AUTOMATIC STOCK OPTION GRANTS

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

                  (1) On June 30, 1999, each individual then serving as an
Eligible Independent Director will receive an option to purchase 8000 shares of
Common Stock (an "AUTOMATIC OPTION"), subject to adjustment under Paragraph
1.3.C. of this Plan.

                  (2) Each individual who is first elected or appointed as an
Eligible Independent Director at any time after June 30, 1999 will receive, on
the date of such initial election or appointment, an Automatic Option to
purchase 8000 shares of Common Stock, subject to adjustment under Paragraph
1.3.C. of this Plan.

                  (3) On each Automatic Grant Date after June 30, 1999, each
individual who then serves as an Eligible Independent Director will receive an
Automatic Option to purchase 2000 shares of Common Stock, subject to adjustment
under Paragraph 1.3.C. of this Plan. There shall be no limit on the number of
such 2000-share Automatic Option Grants any one Eligible Independent Director
may receive over his or her period of Board service.

B.       TERMS AND CONDITIONS. The terms and conditions applicable to each
         Automatic Option will be as follows:

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

                  (2) TERMS. Each Automatic Option will have a term of ten (10)
years, measured from the date of grant.

                  (3) EXERCISE OF OPTIONS. Each initial 8000-share Automatic
Option will be immediately exercisable with respect to 2000 shares and shall
become exercisable with respect to 2000 additional shares on each of the first
three anniversaries of the date of grant (unless sooner exercisable pursuant to
the terms hereof). Each annual 2000-share Automatic Option will become
exercisable upon the optionee's completion of three (3) consecutive years of
Board service measured from the date of grant.

                  (4) PAYMENT. Upon exercise of the Automatic Option, the option
price for the purchased shares will become payable immediately in cash or in
shares of Common Stock that the optionee has held for at least six (6) months.
Payment may also be made through a sale and remittance procedure under which the
option holder delivers, in such form as the Committee shall authorize, an
exercise notice and irrevocable instructions to a broker to promptly deliver to
the Company the amount of sale proceeds to pay the option price. To the extent
that the exercise


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price of an Automatic Option (or any tax obligations attributable thereto) is
paid in shares of Common Stock (whether delivered to the Company by the holder
or withheld from shares otherwise issuable upon exercise), the holder will
automatically be granted a new Automatic Option covering the number of shares so
delivered or withheld; the terms of the new Automatic Option shall be the same
as the Automatic Option so exercised, except that the per share exercise price
of the new Automatic Option shall be the fair market value of one share of
Common Stock on the date of grant of the new Automatic Option and the term of
the New Automatic Option shall be equal to the remaining term of the Automatic
Option so exercised.

                  (5) CESSATION. In the event the optionee ceases to provide
services to the Company or its subsidiaries as a director, an employee, a
consultant or an independent contractor, for any reason other than death or
disability or the retirement of the optionee from the Board, the Automatic
Option may be exercised for the number of shares for which the Automatic Option
is exercisable at the time of the optionee's cessation of Board service, within
the term of the Automatic Option, for a period of twelve (12) months after the
date of such cessation. In the event the optionee ceases to provide services to
the Company or its subsidiaries as a director, an employee, a consultant or an
independent contractor by reason of the optionee's death or disability or
retirement from the Board, the Automatic Option may be exercised for any or all
of the shares at the time subject to the Automatic Option as fully-vested shares
of Common Stock, within the term of the Automatic Option. For purposes of the
Automatic Option, "retirement" shall mean the optionee ceasing to serve as a
director of the Company, for any reason other than the optionee's removal for
cause, after having served as a director of the Company for an aggregate of at
least five (5) full years. In the case of death, the Automatic Option may be
exercised within such period by the estate or heirs of the optionee.

                  (6) SPECIAL ACCELERATION AND TERMINATION OF OPTION.


         (a) CORPORATE TRANSACTION. In the event of the disposition of all or
substantially all of the assets or outstanding capital stock of the issuer of
Common Stock by means of a sale, merger, reorganization or liquidation (each, a
"CORPORATE TRANSACTION"), the Automatic Option shall, immediately prior to the
effective date of such Corporate Transaction, become immediately exercisable
with respect to all of the shares at the time subject to the Automatic Option.
However, if such Corporate Transaction does not also constitute a Change in
Control (as defined below), an outstanding Automatic Option shall not so
accelerate if and to the extent that such Automatic Option is assumed or
replaced by a comparable option pursuant to a written agreement by the successor
corporation or parent or subsidiary thereof. Each such Automatic Option shall
terminate upon consummation of the Corporate Transaction, except to the extent
assumed or replaced. Each Automatic Option which is assumed in connection with a
Corporate Transaction, shall be appropriately adjusted to apply to the number
and class of securities which would have been issuable to the optionee in
consummation of such Change in Control had the Automatic Option been exercised
immediately prior to such Corporate Transaction. Appropriate adjustments shall
also be made to the exercise price payable per share, provided the aggregate
exercise price shall remain the same.

                           (b) CHANGE IN CONTROL. Each Automatic Option shall
become immediately exercisable with respect to all of the shares at the time
subject to the Automatic Option upon a Change in Control.


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For purposes of the Automatic Options issued under this Plan, a "CHANGE IN
CONTROL" shall mean one or more of the following:

                  (i)   The acquisition, directly or indirectly by any person
or related group of persons (as such term is used in Sections 13(d) and 14(d)
of the 1934 Act), but other than the Company or a person that directly or
indirectly controls, is controlled by, or is under, control with the Company,
of beneficial ownership (as defined in Rule 13d-3 of the 1934 Act) of
securities of the Company that result in such person or related group of
persons beneficially owning securities representing 40% or more of the
combined voting power of the Company's then-outstanding securities; provided
that this provision shall not apply to an acquisition by the California
HealthCare Foundation that either:

                           (I) Is on or before May 20, 1996, or

                           (II) Is both (X) after May 20, 1996 but before the
                  first day thereafter, if any, that the California Healthcare
                  Foundation's beneficial ownership is less than 35% and (Y)
                  involves securities representing less than 50% (or, if lower,
                  the lowest percentage of beneficial ownership by the
                  California HealthCare Foundation on or after May 20, 1996 plus
                  10%) of the combined voting power of the Company's
                  then-outstanding securities;

                  (ii)  A merger or consolidation to which the Company is a
party, if (I) the beneficial owners of the Company's securities immediately
before the transaction, do not, immediately after the transaction, have
beneficial ownership of securities of the surviving entity or parent thereof
representing at least 50% of the combined voting power of the
then-outstanding securities of the surviving entity or parent, and (II) the
directors of the Company immediately prior to consummation of the transaction
do not constitute at least a majority of the board of directors of the
surviving entity or parent upon consummation of the transaction;

                  (iii) 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 (I) have been
Board members since the beginning of such period or (II) 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 (I) who were still in
office at the time the Board approved such election or nomination; or

                  (iv)  The sale, transfer or other disposition of all or
substantially all of the Company's assets in complete liquidation or
dissolution of the Company unless (I) the beneficial owners of the Company's
securities immediately before the transaction have, immediately after the
transaction , beneficial ownership of securities representing at least 50% of
the combined voting power of the then-outstanding securities of the entity
acquiring the Company's assets, and (II) the directors of the Company
immediately prior to consummation of the transaction constitute a majority of
the board of directors of the entity acquiring the Company's assets upon
consummation of the transaction.

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4.3      NO DISCRETION; EFFECT ON OTHER AWARDS

         No person will have any discretion to select which Eligible Independent
Directors will be granted automatic awards under this Article Four or to
determine the number of shares of Common Stock subject thereto. However, nothing
in this Plan will be construed to prevent an Eligible Independent Director from
either declining to receive an award under this Article 4 or to receive a
discretionary award under the Plan or any other compensatory plan or
arrangement. This Article 4 and the terms of awards granted thereunder may be
amended at any time by action of the Board of Directors, subject only to the
limitations of Paragraph 5.1

                                  ARTICLE FIVE
                                  MISCELLANEOUS

5.1      AMENDMENT

A.       BOARD ACTION. The Board may amend, suspend or discontinue the Plan in
         whole or in part at any time; provided, however, that (1) except to the
         extent necessary to qualify as Incentive Options any or all options
         granted under the Plan that are intended to so qualify, such action
         shall not adversely affect a holder's rights and obligations with
         respect to grants and awards at the time outstanding under the Plan and
         (2) certain amendments may, as determined by the Board in its sole
         discretion, require stockholder approval pursuant to applicable laws or
         regulations.

B.       MODIFICATION OF GRANTS AND AWARDS. The Committee has full power and
         authority to modify or waive any or all of the terms, conditions or
         restrictions applicable to any outstanding grant or award under the
         Plan, to the extent not inconsistent with the Plan; provided, however,
         that no such modification or waiver shall, without the consent of the
         holder of the grant or award, adversely affect the holder's rights
         thereunder; and provided further, subject to the provisions of
         Paragraph 1.3.C hereof, the Committee shall have no authority to
         reprice outstanding options, whether through amendment, cancellation or
         replacement grants .

C.       OTHER PROGRAMS. Nothing in this Plan shall prevent the Company from
         adopting any other compensation program, including programs involving
         equity compensation, for employees, directors or consultants. The
         adoption or amendment of any such program shall not be considered an
         amendment to this Plan.

5.2      TAX WITHHOLDING

A.       OBLIGATION. The Company's obligation to deliver shares or cash upon the
         exercise of grants and awards under the Plan is subject to the
         satisfaction of all applicable Federal, state and local income and
         employment tax withholding requirements.

B.       STOCK WITHHOLDING. The Committee may require or permit, in its
         discretion and upon such terms and conditions as it may deem
         appropriate (including the applicable safe-harbor provisions of SEC
         Rule 16b-3) any or all holders of outstanding grants or awards under
         the Plan to elect to have the Company withhold, from the shares of
         Common Stock


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<PAGE>

         otherwise issuable pursuant to such grant or award, one or more of such
         shares with an aggregate Fair Market Value equal to the Federal, State
         and local employment and income taxes ("TAXES") incurred in connection
         with the acquisition of such shares. Holders of grants or awards under
         the Plan may also be granted the right to deliver previously acquired
         shares of Common Stock held for the requisite period to avoid a charge
         to earnings in satisfaction of such Taxes. The withheld or delivered
         shares will be valued at Fair Market Value on the applicable
         determination date for such Taxes.

5.3      FINANCING

         In order to assist an award holder (including an employee who is an
officer or director of the Company) in the acquisition of shares of Common Stock
pursuant to an award granted under the Plan, the Committee may authorize, at
either the time of the grant of an award or the time of the acquisition of
Common Stock pursuant to the award (i) the extension of a loan to the award
holder by the Company, (ii) the payment by the award holder of the purchase
price, if any, of the Common Stock in installments or (iii) the guarantee by the
Company of a loan obtained by the award holder from a third party. The terms of
any loans, guarantees or installment payments, including the interest rate and
terms of repayment, will be subject to the discretion of the Committee. Loans,
installment payments and guarantees may be granted without security, the maximum
credit available being the purchase price, if any, of the Common Stock acquired
plus the maximum Federal and state income and employment tax liability that may
be incurred in connection with the acquisition.

5.4      VALUATION

         For all purposes under this Plan, the fair market value per share of
Common Stock on any relevant date under the Plan ("FAIR MARKET VALUE") will be
determined as follows:


                  (1) NATIONAL EXCHANGE. If the Common Stock is at the time
listed or admitted to trading on any national stock exchange, then the Fair
Market Value will be the closing selling price per share of Common Stock on the
day before the date in question on the stock exchange determined by the
Committee 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 reported sale of Common Stock on such exchange on the day before the
date in question, then the Fair Market Value will be the closing selling price
on the exchange on the last preceding date for which such quotation exists.

                  (2) NASDAQ. If the Common Stock is not at the time listed or
admitted to trading on any national stock exchange but is traded in the
over-the-counter market, the fair market value will be the mean between the
highest bid and lowest asked prices (or, if such information is available, the
closing selling price) per share of Common Stock on the date in question in the
over-the-counter market, as such prices are reported by the National Association
of Securities Dealers through its NASDAQ system or any successor system. If
there are no reported bid and asked prices (or closing selling price) for the
Common Stock on the date in question, then the mean between the highest bid
price and lowest asked price (or the closing


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<PAGE>

selling price) on the last preceding date for which such quotations exist will
be determinative of Fair Market Value.

                  (3) COMMITTEE. Notwithstanding the foregoing, if the Committee
determines that, as a result of circumstances existing on any date, the use of
the above rules is not a reasonable method of determining Fair Market Value on
that date or if Common Stock is not at the time listed or admitted to trading as
outlined above, the Committee may use such other method as, in its judgment, is
reasonable.

5.5      EFFECTIVE DATE AND TERM OF PLAN

A.       EFFECTIVE DATE.  This Plan became effective on the Effective Date.

B.       TERM. No options or other awards may be granted under the Plan after
         May 10, 2009 ("TERMINATION DATE"), the date ten years following
         approval of the Plan by the shareholders of the Company. Subject to
         this limit, the Committee may make grants and awards under the Plan at
         any time after the Effective Date of the Plan and before the
         Termination Date.

C.       APPROVALS.  The Plan was  approved by shareholders on May 11, 1999.

5.6      USE OF PROCEEDS

         Any cash proceeds received by the Company from the sale of shares
pursuant to grants and awards under the Plan will be used for general corporate
purposes.

5.7      NO EMPLOYMENT/SERVICE RIGHTS

         Neither the establishment of this Plan, nor any action taken under the
terms of this Plan, nor any provision of this Plan will be construed to grant
any individual the right to remain in the employ or service of the Company (or
any subsidiary or parent of the Company) for any period of specific duration,
and the Company (or any subsidiary or parent of the Company retaining the
services of such individual) may terminate such individual's employment or
service at any time and for any reason, with or without cause. Nothing contained
in this Plan or in any grant or award under this Plan will affect any
contractual rights of an employee or other service provider pursuant to a
written employment or service agreement executed by both parties.

5.8      DEFERRAL OF AWARDS

         The Committee may, subject to such terms as it shall determine, permit
the holder of an award under the Plan to elect to defer receipt of shares or
cash otherwise payable under the award.

5.9      ELECTIVE AND TANDEM AWARDS

         The Committee may award stock options, restricted stock, performance
shares, phantom stock, performance units and stock appreciation rights
independently of other compensation or in lieu of other compensation whether at
the election of the potential award holder or otherwise.


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<PAGE>

The number of shares subject to options or shares of restricted stock, phantom
stock, performance shares, performance units or stock appreciation rights to be
awarded in lieu of other compensation will be determined by the Committee in its
sole discretion and need not be equal to the foregone compensation in Fair
Market Value. In addition, stock options, restricted stock, performance shares,
phantom stock, performance units and stock appreciation rights may be awarded in
tandem, so that a portion of that award becomes payable or becomes free of
restrictions only if and to the extent that the tandem award is not exercised or
is forfeited, subject to such terms and conditions as the Committee may specify.

5.10     CORPORATE TRANSACTIONS


         The Committee may determine and set forth in each award, either at the
time of grant or by amendment thereafter, the effect, if any, that any sale of
stock or assets, merger, combination, spinoff, reorganization, or liquidation of
the Company will have upon the term, exercisability and/or vesting of
outstanding awards, provided that any awards that are continued, assumed or
replaced with comparable awards in connection with any transaction will be
adjusted as provided in Paragraph 1.3.C. The grant of awards under this Plan
will in no way affect the right of the issuer of Common Stock 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.

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