<PAGE>

                                                                    EXHIBIT 10.1

                        ANTHEM 2001 STOCK INCENTIVE PLAN

1.    PURPOSE

      The purpose of this Anthem 2001 Stock Incentive Plan is to further the
long term stability and financial success of Anthem, Inc. (the "Company"), and
its Subsidiaries, by attracting and retaining employees through the use of cash
and stock incentives and to encourage ownership in the Company by non-employee
members of the Board of Directors of the Company. It is believed that ownership
of Company Stock and the use of cash incentives will stimulate the efforts of
those employees upon whose judgment and interests the Employers are and will be
dependent for the successful conduct of their business. It is also believed that
Incentive Awards granted to such employees under this Plan will strengthen their
desire to remain employed with the Employers and will further the identification
of those employees' interests with those of the Company's shareholders. Finally,
it is believed that Options granted to non-employee members of the Board of
Directors of the Company will promote long-term shareholder value and will
provide non-employee members of the Board of Directors of the Company with an
incentive to continue as directors of the Company. The Plan is intended to
operate in compliance with the provisions of Rule 16b-3.

2.    DEFINITIONS

As used in the Plan, the following terms have the meanings indicated:

      (a) "Act" means the Securities Exchange Act of 1934, as amended.

      (b) "Annual Meeting" means the annual meeting of shareholders at which
members of the Board are routinely elected.

      (c) "Applicable Withholding Taxes" means the aggregate amount of federal,
state and local income, payroll and other withholding taxes that an Employer is
required to withhold in connection with any Performance Award, any lapse of
restrictions on Restricted Stock, any grant of Performance Stock, or any
exercise of a Nonstatutory Stock Option or Stock Appreciation Right.

      (d) "Beneficial Ownership" has the meaning in Rule 13d-3 promulgated under
the Act.

      (e) "Board" means the Board of Directors of the Company.

      (f) "Change of Control" means any of the following events:

          (i)  the acquisition by a Group of Beneficial Ownership of 20% or
      more of the Company Stock, but excluding for this purpose any acquisition
      by the Company (or a Subsidiary) or an employee benefit plan of the
      Company;



<PAGE>

          (ii)  the Incumbent Board ceases to constitute at least a majority of
      the Board, provided that any director whose nomination was approved by a
      majority of the Incumbent Board shall be considered a member of the
      Incumbent Board;

          (iii) consummation of a reorganization, merger or consolidation, in
      each case, in which the owners of the Company Stock do not, following such
      reorganization, merger or consolidation, beneficially own, directly or
      indirectly, more than 50% of the stock of the corporation resulting from
      such reorganization, merger or consolidation; or

          (iv)  a complete liquidation or dissolution of the Company, or the
      sale or other disposition of all or substantially all of the assets of the
      Company;

      provided, however, that neither the Conversion nor the Initial Public
Offering shall constitute a Change of Control for purposes of this Plan.

      (g) "Code" means the Internal Revenue Code of 1986, as amended or any
subsequently enacted federal revenue law.

      (h) "Committee" means the Compensation Committee of the Board, provided
that, if any member of the Committee does not qualify as both an outside
director for purposes of Code section 162(m) and a non-employee director for
purposes of Rule 16b-3, the remaining members of the Committee (but not less
than two members) shall be constituted as a subcommittee of the Committee to act
as the Committee for purposes of the Plan.

      (i) "Company" means Anthem, Inc., an Indiana corporation, and any
successor by merger, consolidation or otherwise.

      (j) "Company Stock" means common stock of the Company. In the event of a
change in the capital structure of the Company (as provided in Section 16), the
shares resulting from such a change shall be deemed to be Company Stock within
the meaning of the Plan.

      (k) "Conversion" means the transaction pursuant to which the Company's
sole shareholder at the time of approval of this Plan, Anthem Insurance
Companies, Inc., converts from a mutual insurance company to a stock insurance
company in accordance with Indiana Code Section 27-15 et. seq. and, as a part of
that same transaction, establishes the Company as the parent company of Anthem
Insurance Companies, Inc.

      (l) "Date of Grant" means, with respect to eligible employees, the date on
which an Incentive Award is granted by the Committee (or, in the case of Options
granted in connection with the Initial Public Offering, the first day the
Company Stock trades on the New York Stock Exchange) and, with respect to
Eligible Directors, the date on which a director is awarded an Option pursuant
to Section 11.

      (m) "Disability" or "Disabled" means, as to an Incentive Stock Option, a
Disability within the meaning of Code section 22(e)(3). As to all other
Incentive Awards, the Committee shall determine whether a Disability exists and
such determination shall be conclusive.

                                       2
<PAGE>

      (n) "Effective Date" means the date the Plan is adopted by shareholders of
the Company.

      (o) "Eligible Director" means a member of the Board who is not an employee
of the Company or any Subsidiary.

      (p) "Employer" means the Company, and each Subsidiary that employs one or
more Participants.

      (q) "Fair Market Value" means the closing trading price of a share of
Company Stock, as reported on the New York Stock Exchange as of the last day on
which Company Stock is traded preceding the Date of Grant or preceding any other
date for which the value of Company Stock must be determined under the Plan, or
with respect to grants of Incentive Awards made as of the first day the Company
Stock trades on the New York Stock Exchange, the price at which shares of the
Company Stock are offered to the public in the Initial Public Offering.

      (r) "Fees" means all amounts payable to an Eligible Director for services
rendered as a director, including meeting fees, and committee fees, but
excluding travel and other out of pocket expense reimbursements and excluding
Retainer Fees.

      (s) "Group" means any individual, entity or group within the meanings of
Sections 13(d)(3) or 14(d)(2) of the Act.

      (t) "Incentive Award" means, collectively, a Performance Award or the
award of Restricted Stock, Performance Stock, an Option, or a Stock Appreciation
Right under the Plan.

      (u) "Incentive Stock Option" means an Option intended to meet the
requirements of and qualify for favorable federal income tax treatment under
Code section 422.

      (v) "Incumbent Board" means individuals who constitute the Board on the
date of approval of this Plan by shareholders.

      (w) "Initial Public Offering" means the registered public offering of the
Company Stock that will be conducted by the Company in connection with the
Conversion.

      (x) "Mature Shares" means shares of Company Stock for which the holder
thereof has good title, free and clear of all liens and encumbrances and which
such holder either (i) has held for at least six months or (ii) has purchased on
the open market.

      (y) "Nonstatutory Stock Option" means an Option that does not meet the
requirements of Code section 422, or, even if meeting the requirements of Code
section 422, is not intended to be an Incentive Stock Option and is so
designated.

                                       3
<PAGE>

      (z)  "Option" means a right to purchase Company Stock granted under the
Plan, at a price determined in accordance with the Plan.

      (aa) "Participant" means any employee of the Company or any Subsidiary who
receives an Incentive Award under the Plan.

      (bb) "Performance Award" means an Incentive Award made pursuant to Section
6.

      (cc) "Performance Criteria" means any of the following areas of
performance of the Company, or any Subsidiary, as determined under generally
accepted accounting principles or as publicly reported by the Company: asset
growth; combined net worth; debt to equity ratio; earnings per share; revenues;
investment performance; operating income (with or without investment income or
income taxes); operating cash flow; operating margins; net income, before or
after taxes; earnings before interest, taxes, depreciation and/or amortization;
return on total capital, equity, revenue or assets; medical loss ratio; or
number of policyholders or insured. Any Performance Criteria may be used with or
without adjustment for extraordinary items or nonrecurring items.

      (dd) "Performance Goal" means an objectively determinable performance goal
established by the Committee with respect to a given Performance Award or grant
of Restricted Stock that, if the Performance Award or grant of Restricted Stock
is intended to comply with the requirements of Code Section 162(m), relates to
one or more Performance Criteria.

      (ee) "Performance Stock" means Company Stock awarded when performance
goals are achieved pursuant to an award as provided in Section 8.

      (ff) "Plan" means this "Anthem 2001 Stock Incentive Plan," as set forth
herein and as amended from time to time.

      (gg) "Plan Year" means the period on the date of an Annual Meeting and
ending on the day before the next Annual Meeting.

      (hh) "Restricted Stock" means Company Stock awarded upon the terms and
subject to the restrictions set forth in Section 7.

      (ii) "Retainer Fees" means all retainer fees paid to an Eligible Director
to retain that Eligible Director to perform services as a director.

      (jj) "Rule 16b-3" means Rule 16b-3 of the Securities and Exchange
Commission promulgated under the Act. A reference in the Plan to Rule 16b-3
shall include a reference to any corresponding rule (or number redesignation) of
any amendments to Rule 16b-3 enacted after the effective date of the Plan's
adoption.

      (kk) "Stock Appreciation Right" means a right to receive amounts from the
Employer granted under Section 10.

                                       4
<PAGE>

      (ll) "Subsidiary" means any corporation (other than the Company) in an
unbroken chain of corporations beginning with the Company if, as of the Date of
Grant, each of the corporations other than the last corporation in the unbroken
chain owns stock possessing 50% or more of the total combined voting power of
all classes of stock in one of the other corporations in such chain.

      (mm) "Taxable Year" means the fiscal period used by the Company for
reporting taxes on income under the Code.

3.    GENERAL

      The following types of Incentive Awards may be granted to eligible
employees under the Plan: Performance Awards, Restricted Stock, Performance
Stock, Options or Stock Appreciation Rights. Options granted to eligible
employees under the Plan may be Incentive Stock Options or Nonstatutory Stock
Options. The following type of Incentive Award may be granted to Eligible
Directors under the Plan: Options. Options granted to Eligible Directors under
the Plan shall be Nonstatutory Stock Options.

4.    STOCK

      Subject to Section 16 of the Plan, there shall be reserved for issuance
under the Plan an aggregate of 7,000,000 shares of Company Stock which shall be
authorized but unissued shares. This 7,000,000 shares shall include (a) an
aggregate of 5,000,000 shares of Company Stock for the grant of Incentive Awards
to eligible employees and Eligible Directors; and (b) an aggregate of 2,000,000
shares of Company Stock for the grant of Options (i) to substantially all
eligible employees of the Company or any Subsidiary and (ii) to new eligible
employees of the Company and its Subsidiaries, including employees of any
business acquired by the Company or a Subsidiary.

      Shares allocable to Options, Restricted Stock or portions thereof granted
under the Plan that expire, are forfeited, or otherwise terminate unexercised
may again be subjected to an Incentive Award under the Plan.

      Until after the date six months following the effective date of the
Conversion, no Company Stock or Option may be made to any Participant under this
Plan who, as of either the effective date of the Conversion or the date of grant
of Company Stock or Option, is: (a) a member of the Board; (b) a member of the
Board of Directors of Anthem Insurance Companies, Inc.; or (c) a participant in
the Company's or its Subsidiaries' long term incentive plan.

                                       5
<PAGE>

5.    ELIGIBILITY

      (a) All present and future employees of the Company or any Subsidiary
(whether now existing or hereafter created or acquired) whom the Committee
determines to have contributed or who are expected to contribute to the Company
or any Subsidiary shall be eligible to receive Incentive Awards under the Plan.
The Committee shall have the power and complete discretion, as provided in
Section 17, to select eligible employees to receive Incentive Awards and to
determine for each employee the nature of the award and the terms and conditions
of each Incentive Award.

      (b) The grant of an Incentive Award shall not obligate an Employer to pay
an employee any particular amount of remuneration, to continue the employment of
the employee after the grant or to make further grants to the employee at any
time thereafter.

      (c) Each Eligible Director who was not an employee of the Company or any
Subsidiary for at least one year before the Date of Grant of an Option under the
Plan shall be eligible to receive Nonstatutory Stock Options under Section 11.
Each Eligible Director shall be eligible to receive Company Stock in lieu of
Fees and Retainer Fees under Section 11 and to elect to defer receipt of Company
Stock under Section 11.

6.    PERFORMANCE AWARDS

      (a) Each Performance Award shall be evidenced by an agreement (an "Award
Agreement") setting forth the Performance Goals for the award, including, if the
Performance Award is intended to comply with the requirements of Code Section
162(m), the Performance Criteria, the minimum, target and maximum amounts
payable and such other terms and conditions as are applicable to the Performance
Award. In the event of any conflict between an Award Agreement and the Plan, the
terms of the Plan shall govern.

      (b) The Committee shall establish for each Performance Award the amount of
cash or Company Stock payable at specified levels of performance, based on the
Performance Goal. Any Performance Award shall be made not later than 90 days
after the start of the period for which the Performance Award relates and shall
be made prior to the completion of 25% of such period. All determinations
regarding the achievement of any Performance Goals will be made by the
Committee. The Committee may not increase during a Plan Year the amount of cash
or Company Stock that would otherwise be payable upon achievement of the
Performance Goal(s) but may reduce or eliminate the payments as provided in a
Performance Award.

      (c) The actual payments to a Participant under a Performance Award will be
calculated by applying the achievement of a Performance Criteria (if such
Performance Award is intended to comply with Code Section 162(m)) or other
financial criteria to the Performance Goal as established in the Award
Agreement. All calculations of actual payments shall be verified by the
Committee and the Committee shall certify in writing the extent, if any, to
which the Performance Goals have been met.

      (d) Performance Awards will be paid in cash, Company Stock or both, at
such time or times as are provided in the Award Agreement. The Committee may
provide in the Award

                                       6
<PAGE>

Agreement that the Participant may make a prior election to defer the payment
under a Performance Award subject to such terms and conditions as the Committee
may determine.

      (e) Nothing contained in the Plan will be deemed in any way to limit or
restrict any Employer or the Committee from making any award or payment to any
person under any other plan, arrangement or understanding, whether now existing
or hereafter in effect.

      (f) A Participant who receives a Performance Award payable in Company
Stock shall have no rights as a shareholder until the Company Stock is issued
pursuant to the terms of the Performance Award. The Company Stock may be issued
without cash consideration.

      (g) A Participant's interest in a Performance Award may not be sold,
assigned, transferred, pledged, hypothecated, or otherwise encumbered.

      (h) Whenever payments under a Performance Award are to be made in cash,
the Employer will withhold therefrom an amount sufficient to satisfy any
Applicable Withholding Taxes. Each Participant shall agree, as a condition of
receiving a Performance Award payable in the form of Company Stock, to pay to
the Employer, or make arrangements satisfactory to the Employer regarding the
payment to the Employer of, Applicable Withholding Taxes. Until such amount has
been paid or arrangements satisfactory to the Employer have been made, no stock
certificate shall be issued to such Participant. As an alternative to making a
cash payment to the Employer to satisfy Applicable Withholding Taxes, if the
Award Agreement so provides or the Committee subsequently authorizes, the
Participant may elect (i) to deliver Mature Shares (valued at their Fair Market
Value) or (ii) to have the Employer retain that number of shares of Company
Stock (valued at their Fair Market Value) that would satisfy all or a specified
portion of the Applicable Withholding Taxes.

7.    RESTRICTED STOCK AWARDS

      (a) The Committee may make grants of Restricted Stock to Participants.
Whenever the Committee deems it appropriate to grant Restricted Stock, notice
shall be given to the Participant stating the number of shares of Restricted
Stock granted and the terms and conditions to which the Restricted Stock is
subject. This notice, when accepted by the Participant shall become an award
agreement between the Employer and the Participant. Restricted Stock may be
awarded by the Committee in its discretion without cash consideration.

      (b) No shares of Restricted Stock may be sold, assigned, transferred,
pledged, hypothecated, or otherwise encumbered or disposed of until the
restrictions on such shares as set forth in the Participant's award agreement
have lapsed or been removed pursuant to paragraph (d) or (e) below.

      (c) Upon the acceptance by a Participant of an award of Restricted Stock,
such Participant shall, subject to the restrictions set forth in paragraph (b)
above, have all the rights of a shareholder with respect to such shares of
Restricted Stock, including, but not limited to, the right to vote such shares
of Restricted Stock and the right to receive all dividends and other
distributions paid thereon. Certificates representing Restricted Stock shall be
held by the

                                       7
<PAGE>

Company until the restrictions lapse and the Participant shall provide the
Company with appropriate stock powers endorsed in blank.

      (d) The Committee shall establish as to each award of Restricted Stock the
terms and conditions upon which the restrictions set forth in paragraph (b)
above shall lapse. The terms and conditions may include the achievement of a
Performance Goal which shall be governed by the provisions of Section 6 to the
extent that the award is intended to comply with the requirements of Code
section 162(m). Such terms and conditions may also include, without limitation,
the lapsing of such restrictions as a result of the Disability, death or
retirement of the Participant or the occurrence of a Change of Control.

      (e) Notwithstanding the provisions of paragraph (b) above, the Committee
may at any time, in its sole discretion, accelerate the time at which any or all
restrictions will lapse or remove any and all such restrictions, subject to the
restrictions of Section 6 as to any Performance Goal if the award is intended to
comply with the requirements of Code section 162(m).

      (f) Each Participant shall agree, at the time his or her Restricted Stock
is granted, and as a condition thereof, to pay to the Employer, or make
arrangements satisfactory to the Employer regarding the payment to the Employer
of, Applicable Withholding Taxes. Until such amount has been paid or
arrangements satisfactory to the Employer have been made, no stock certificate
shall be issued to such Participant. As an alternative to making a cash payment
to the Employer to satisfy Applicable Withholding Taxes, if the Participant's
award agreement so provides or the Committee subsequently authorizes, the
Participant may elect (i) to deliver Mature Shares (valued at their Fair Market
Value) or (ii) to have the Employer retain that number of shares of Company
Stock (valued at their Fair Market Value) that would satisfy all or a specified
portion of the Applicable Withholding Taxes.

8.    PERFORMANCE STOCK AWARDS

      (a) The Committee may make grants of Performance Stock to Participants.
Whenever the Committee deems it appropriate to grant Performance Stock, notice
shall be given to the Participant stating the number of shares of Performance
Stock granted and the terms and conditions to which the Performance Stock is
subject. This notice, when accepted by the Participant, shall become an award
agreement between the Employer and the Participant.

      (b) Performance Stock may be issued pursuant to the Plan from time to time
by the Committee when performance criteria established by the Committee have
been achieved and certified by the Committee.

      (c) Whenever the Committee deems it appropriate, the Committee may
establish a performance criteria for an award of Performance Stock and notify
Participants of their receipt of an award of Performance Stock. More than one
award of Performance Stock may be established by the Committee for a Participant
and the awards may operate concurrently or for varied periods of time.
Performance Stock will be issued only subject to the award and the Plan and
consistent with meeting the goal or goals set by the Committee in the award. A
Participant shall have no rights as a shareholder until the Committee has
certified that the performance objectives

                                       8
<PAGE>

of the Performance Stock award have been met and the Performance Stock is
issued. Performance Stock may be issued without cash consideration.

      (d) A Participant's interest in a Performance Stock award may not be sold,
assigned, transferred, pledged, hypothecated, or otherwise encumbered.

      (e) The Committee may at any time, in its sole discretion, remove or
revise any and all performance criteria for an award of Performance Stock.

      (f) Each Participant shall agree, at the time of receiving an award of
Performance Stock, and as a condition thereof, to pay to the Employer, or make
arrangements satisfactory to the Employer regarding the payment to the Employer
of, Applicable Withholding Taxes. Until such amount has been paid or
arrangements satisfactory to the Employer have been made, no stock certificate
shall be issued to such Participant. As an alternative to making a cash payment
to the Employer to satisfy Applicable Withholding Taxes, if the Participant's
award agreement so provides or the Committee subsequently authorizes, the
Participant may elect (i) to deliver Mature Shares (valued at their Fair Market
Value) or (ii) to have the Employer retain that number of shares of Company
Stock (valued at their Fair Market Value) that would satisfy all or a specified
portion of the Applicable Withholding Taxes.

9.    STOCK OPTIONS

      (a) The Committee may make grants of Options to Participants. Whenever the
Committee deems it appropriate to grant Options, notice shall be given to the
Participant stating the number of shares for which Options are granted, the
Option price per share, whether the Options are Incentive Stock Options or
Nonstatutory Stock Options, the extent to which Stock Appreciation Rights are
granted (as provided in Section 10), and the conditions to which the grant and
exercise of the Options are subject. This notice, when duly accepted by the
Participant, shall become a stock option agreement (the "Stock Option
Agreement").

      (b) The exercise price of shares of Company Stock covered by an Option
shall be not less than 100% of the Fair Market Value of such shares on the Date
of Grant.

      (c) Options may be exercised in whole or in part at such times as may be
specified by the Committee in the Participant's Stock Option Agreement; provided
that (A) an Option shall not be exercisable more than 10 years after the Date of
Grant, and (B) the exercise provisions for Incentive Stock Options shall in all
events not be more favorable than the following provisions:

          (i)  No Incentive Stock Option may be exercised before the Plan is
      approved by the shareholders of the Company in the manner prescribed by
      Code section 422 and the Company Stock under the Plan is registered with
      the Securities and Exchange Commission and after the first to occur of (x)
      ten years from the Date of Grant, (y) three months following the date of
      the Participant's retirement or termination of employment with all
      Employers for reasons other than Disability or death, or (z) one year
      following the date of the Participant's termination of employment on
      account of Disability or death.

                                       9
<PAGE>

          (ii)  An Incentive Stock Option by its terms, shall be exercisable in
      any calendar year only to the extent that the aggregate Fair Market Value
      (determined at the Date of Grant) of the Company Stock with respect to
      which Incentive Stock Options are exercisable for the first time during
      the calendar year does not exceed $100,000 (the "Limitation Amount").
      Incentive Stock Options granted under the Plan and all other plans of any
      Employer shall be aggregated for purposes of determining whether the
      Limitation Amount has been exceeded. The Committee granting the Option may
      impose such conditions as it deems appropriate on an Incentive Stock
      Option to ensure that the foregoing requirement is met. If Incentive Stock
      Options that first become exercisable in a calendar year exceed the
      Limitation Amount, the excess Options will be treated as Nonstatutory
      Stock Options to the extent permitted by law.

      (d) Notwithstanding any other provision herein contained, no employee of
the Company or any Subsidiary may receive an Incentive Stock Option under the
Plan if such employee, on the Date of Grant, owns (as defined in Code section
424(d)) Company Stock possessing more than 10% of the total combined voting
power of all classes of stock of the Company or any Subsidiary, unless the
exercise price for such Incentive Stock Option is at least 110% of the Fair
Market Value (determined at the Date of Grant) and such Incentive Stock Option
is not exercisable after the date five (5) years from the Date of Grant.

10.   STOCK APPRECIATION RIGHTS

      (a) Whenever the Committee deems it appropriate, Stock Appreciation Rights
may be granted in connection with all or any part of an Option to a Participant
or in a separate Incentive Award.

      (b) The following provisions apply to all Stock Appreciation Rights that
are granted in connection with Options:

          (i)   Stock Appreciation Rights shall entitle the Participant, upon
      exercise of all or any part of the Stock Appreciation Rights, to surrender
      to the Employer unexercised that portion of the underlying Option relating
      to the same number of shares of Company Stock as is covered by the Stock
      Appreciation Rights (or the portion of the Stock Appreciation Rights so
      exercised) and to receive in exchange from the Employer an amount equal to
      the excess of (x) the Fair Market Value on the date of exercise of the
      Company Stock covered by the surrendered portion of the underlying Option
      over (y) the exercise price of the Company Stock covered by the
      surrendered portion of the underlying Option. The Committee may limit the
      amount that the Participant will be entitled to receive upon exercise of
      Stock Appreciation Rights.

          (ii)  Upon the exercise of a Stock Appreciation Right and surrender
      of the related portion of the underlying Option, the Option, to the extent
      surrendered, shall not thereafter be exercisable.

          (iii) Subject to any further conditions upon exercise imposed by the
      Board, a Stock Appreciation Right shall be exercisable only to the extent
      that the related Option is

                                       10
<PAGE>

      exercisable and a Stock Appreciation Right shall expire no later than the
      date on which the related Option expires.

            (iv) A Stock Appreciation Right may only be exercised at a time when
      the Fair Market Value of the Company Stock covered by the Stock
      Appreciation Right exceeds the exercise price of the Company Stock covered
      by the underlying Option.

      (c) The following provisions apply to all Stock Appreciation Rights that
are not granted in connection with Options:

          (i) Stock Appreciation Rights shall entitle the Participant, upon
      exercise of all or any part of the Stock Appreciation Rights, to receive
      in exchange from the Employer an amount equal to the excess of (x) the
      Fair Market Value on the date of exercise of the Company Stock covered by
      the surrendered Stock Appreciation Right over (y) the price of the Company
      Stock on the Date of Grant of the Stock Appreciation Right. The Committee
      may limit the amount that the Participant will be entitled to receive upon
      exercise of Stock Appreciation Rights.

          (ii) A Stock Appreciation Right may only be exercised at a time when
      the Fair Market Value of the Company Stock covered by the Stock
      Appreciation Right exceeds the Fair Market Value of the Company Stock on
      the Date of Grant of the Stock Appreciation Right.

      (d) The manner in which the Employer's obligation arising upon the
exercise of a Stock Appreciation Right shall be paid shall be determined by the
Committee and shall be set forth in the Incentive Award. The Incentive Award may
provide for payment in Company Stock or cash, or a fixed combination of Company
Stock or cash, or the Committee may reserve the right to determine the manner of
payment at the time the Stock Appreciation Right is exercised. Shares of Company
Stock issued upon the exercise of a Stock Appreciation Right shall be valued at
their Fair Market Value on the date of exercise.

11.   NON-EMPLOYEE DIRECTOR OPTIONS

      (a) GENERAL. Each Eligible Director may receive grants of Options pursuant
to this Section 11 of the Plan. All Options granted under this Section 11 of the
Plan shall be Nonstatutory Stock Options and shall not be entitled to special
tax treatment under Internal Revenue Code section 422.

      (b) OPTIONS. Each Option granted under this Section 11 of the Plan shall
be evidenced by an agreement in such form as the Board shall from time to time
approve, which agreement shall comply with and be subject to the following terms
and conditions:

          (i) AWARD OF OPTION. Options for the purchase of shares of Company
      Stock may be awarded to Eligible Directors upon the satisfaction of each
      of the following: (A) after the date the Plan is approved by the Board,
      (B) after the date the Plan is approved by the shareholders in the manner
      prescribed by Code section 422, and

                                       11
<PAGE>

      (C) after the date the Company Stock under the Plan is registered with the
      Securities and Exchange Commission. The time of the award and the number
      of shares awarded shall be determined by the Board. If at any time under
      the Plan there are not sufficient shares of Company Stock available to
      permit fully the Option grants to the Eligible Directors described in this
      paragraph, the Option grants shall be reduced pro rata (to zero if
      necessary) so as not to exceed the number of shares of Company Stock
      available.

            (ii) OPTION EXERCISE PRICE. The Option exercise price shall be the
      Fair Market Value of the Company Stock on the Date of Grant.

            (iii) EXERCISE OF OPTIONS. Subject to Section 11(b)(v) below, all
      Options shall become exercisable as follows: one-third on the day before
      the first annual meeting of shareholders after the Date of Grant;
      one-third on the day before the second annual meeting after the Date of
      Grant; and the remainder on the day before the third annual meeting of
      shareholders after the Date of Grant. Once exercisable, all or any portion
      of an Option may be exercised until the earlier of:

                  (1) thirty-six months of the date the Eligible Director ceases
            to be a director of the Company for any reason, including death or
            disability; or

                  (2) the expiration of ten (10) years from the Date of Grant.

            (iv) METHOD OF EXERCISE. An Option may be exercised in the manner
      described in Section 12.

            (v) CHANGE OF CONTROL. Options granted to Eligible Directors shall
      become fully vested and exercisable upon a Change of Control.

      (c)  RECEIPT OF FEES IN STOCK

                  (i) The Board may elect to pay an Eligible Director up to 100%
            of his or her Retainer Fees in shares of Company Stock. The amount
            of Retainer Fees to be paid to an Eligible Director during each
            calendar quarter shall be determined on the last day of the quarter.
            The number of shares of Company Stock to be issued as Retainer Fees
            shall be determined by multiplying the applicable percentage of
            Retainer Fees that the Board has elected to pay an Eligible Director
            in Company Stock times the Retainer Fees otherwise payable for the
            quarter and dividing the product by the Fair Market Value of the
            Company Stock on the last day of the quarter. If this formula
            produces a fractional share, the Eligible Director may be paid in
            cash the Fair Market Value of the fractional share.

                  (ii) An Eligible Director may elect to receive up to 100% of
            his or her Fees in shares of Company Stock (a "Stock Election"). A
            Stock Election must be in writing and shall be delivered to the
            Corporate Secretary of the Company prior to the Annual Meeting for
            the Plan Year to which the Stock Election pertains. Except as
            provided in this Section 11, a Stock Election may be revoked prior
            to

                                       12
<PAGE>

            the last day of any calendar quarter for all calendar quarters
            beginning after the revocation. A Stock Election must specify the
            applicable percentage of the Fees that the Eligible Director wishes
            to receive in shares of Company Stock (the "Designated Percentage").
            If a Stock Election is made, the amount of Fees to be paid to an
            Eligible Director during each calendar quarter shall be determined
            on the last day of the quarter. The number of shares of Company
            Stock to be issued in lieu of the Fees shall be determined by
            multiplying the Designated Percentage times the Fees otherwise
            payable for the quarter and dividing that product by the Fair Market
            Value of the Company Stock on the last day of the quarter. If this
            formula produces a fractional share, the Eligible Director may be
            paid in cash the Fair Market Value of the fractional share.

      (d)   DEFERRALS OF STOCK. An Eligible Director may elect to defer the
payment of some or all of the shares of Company Stock otherwise payable under
Section 11(c) pursuant to and in accordance with the Board of Directors Deferred
Compensation Plan, as now in effect or as hereinafter amended and restated,
which plan is incorporated herein by reference.

      (e)   WITHHOLDING. If at any time it is determined that the Company is
obligated to withhold income taxes upon the transfer of Company Stock as a
result of the exercise of an Option or the receipt of Retainer Fees or Fees in
Company Stock by an Eligible Director, the Company shall have the right to
retain or sell without notice shares of Company Stock having a Fair Market Value
sufficient on such date or dates as may be determined by the Board (but not more
than five business days prior to the date on which such shares would otherwise
have been delivered) to cover the amount of any federal or state income tax if
required to be withheld or otherwise deducted and paid with respect to such
payment and/or the exercise of the Option, remitting any balance to the Eligible
Director; provided, however, that the Eligible Director shall have the right to
make other arrangements satisfactory to the Company or to provide the Company
with the funds to enable it to pay such tax. Notwithstanding the foregoing, the
Company shall not sell shares of Company Stock if such sale will cause the
Eligible Director to incur a liability under section 16b of the Act.

      (f)   TRANSFERABILITY. An Option granted under this Section 11 shall not
be transferable by the Eligible Director otherwise than by will, or by the laws
of descent and distribution, and shall be exercised during the lifetime of the
Eligible Director only by him or her; provided that an Eligible Director may
transfer any Option to members of the Eligible Directors' immediate family or
trusts or family partnerships for the benefit of such persons, subject to such
terms and conditions as may be established by the Board. Except as specifically
provided in an written option agreement, no Option or interest therein may be
transferred, assigned, pledged or hypothecated by the Eligible Director during
his or her lifetime, whether by operation of law or otherwise, or be made
subject to execution, attachment or similar process.

      (g)   ADMINISTRATION. This Section 11 of the Plan shall be administered by
the Board. The Board shall have all powers necessary to administer this Section
11 of the Plan, including, without limitation, the authority (within the
limitations described herein) to prescribe the form of the agreement embodying
awards of Options under this Section 11 of the Plan, to construe this Section 11
of the Plan, to determine all questions arising under this Section 11 of

                                       13
<PAGE>

the Plan, and to adopt and amend rules and regulations for the administration of
this Section 11 of the Plan as it may deem desirable. Any decision of the Board
in the administration of this Section 11 of the Plan shall be final and
conclusive. The Board may act only by a majority of its members in office,
except that members thereof may authorize any one or more of their number or any
officer of the Company to execute and deliver documents on behalf of the Board.
No member of the Board shall be liable for anything done or omitted to be done
by him or any other member of the Board in connection with this Section 11 of
the Plan, except for his or her own willful misconduct or as expressly provided
by statute.

      (h) MODIFICATION, EXTENSION AND RENEWAL OF OPTIONS. Except for the terms
of an Option contained in Section 11, the Board shall have the power to modify,
extend or renew outstanding Options and to authorize the grant of new Options in
substitution therefore, provided that any such action may not have the effect of
altering, enhancing or impairing any rights or obligations of any person under
any Option previously granted without the consent of the Eligible Director.

      (i) LIMITATION OF RIGHTS

            (i) NO RIGHT TO CONTINUE AS A DIRECTOR. Neither the Plan nor the
      granting of an Option nor any other action taken pursuant to the Plan,
      shall constitute or be evidence of any agreement or understanding, express
      or implied, that the Company will retain any person as a director for any
      period of time.

            (ii) NO SHAREHOLDERS RIGHTS UNDER OPTIONS. An Eligible Director
      shall have no rights as a shareholder with respect to Shares covered by
      his or her Options until the date of exercise of the Option, and, except
      as provided in Section 16, no adjustment will be made for dividends or
      other rights for which the record date is prior to the date of such
      exercise.

12.   METHOD OF EXERCISE OF OPTIONS AND STOCK APPRECIATION RIGHTS

      (a) Options and Stock Appreciation Rights may be exercised by the
Participant giving notice of the exercise to the Employer stating the number of
shares the Participant has elected to purchase under the Option or the number of
Stock Appreciation Rights the Participant has elected to exercise. In the case
of the purchase of shares under an Option, such notice shall be effective only
if accompanied by the exercise price in full in cash; provided, however, that if
the terms of an Option so permit, the Participant may (i) deliver Mature Shares
(valued at their Fair Market Value) in satisfaction of all or any part of the
exercise price, (ii) cause to be withheld from the Option shares, shares of
Company Stock (valued at their Fair Market Value) in satisfaction of all or any
part of the exercise price, (iii) deliver a properly executed exercise notice
together with irrevocable instructions to a broker to deliver promptly to the
Employer, from the sale or loan proceeds with respect to the sale of Company
Stock or a loan secured by Company Stock, the amount necessary to pay the
exercise price, or (iv) deliver an interest bearing promissory note, payable to
the Company, in payment of all or part of the exercise price together with such
collateral as may be required by the Committee at the time of exercise. The
interest rate under any such promissory note shall be established by the
Committee and shall be

                                       14
<PAGE>

at least equal to the minimum interest rate required at the time to avoid
imputed interest under the Code.

      (b) The Company may place on any certificate representing Company Stock
issued upon the exercise of an Option or a Stock Appreciation Right any legend
deemed desirable by the Company's counsel to comply with federal or state
securities laws, and the Company may require a customary written indication of
the Participant's investment intent. Until the Participant has made any required
payment, including any Applicable Withholding Taxes, and has had issued a
certificate for the shares of Company Stock acquired, he or she shall possess no
shareholder rights with respect to the shares of Company Stock.

      (c) Each Participant shall agree, as a condition of the exercise of an
Option or a Stock Appreciation Right, to pay to the Employer, or make
arrangements satisfactory to the Employer regarding the payment to the Employer
of, Applicable Withholding Taxes. Until such amount has been paid or
arrangements satisfactory to the Employer have been made, no stock certificate
shall be issued upon the exercise of an Option or cash paid upon the exercise of
a Stock Appreciation Right.

      (d) As an alternative to making a cash payment to the Employer to satisfy
Applicable Withholding Taxes, if the Option or Stock Appreciation Rights
agreement so provides or the Committee subsequently authorizes, the Participant
may elect (i) to deliver Mature Shares (valued at their Fair Market Value) or
(ii) to have the Employer retain that number of shares of Company Stock (valued
at their Fair Market Value) that would satisfy all or a specified portion of the
Applicable Withholding Taxes.

13.   NONTRANSFERABILITY OF OPTIONS AND STOCK APPRECIATION RIGHTS

      Options (other than Incentive Stock Options) and Stock Appreciation Rights
by their terms, shall be transferable to the extent specifically provided in the
Incentive Award. Incentive Stock Options granted to Participants, by their
terms, shall not be transferable except by will or by the laws of descent and
distribution and shall be exercisable, during the Participant's lifetime, only
by the Participant. The transferability of Options granted to Eligible Directors
shall be governed by Section 11 of this Plan.

14.   EFFECTIVE DATE OF THE PLAN

      The Plan was approved by the Company's board of directors and shareholders
on July 30, 2001 and the effective date of the Plan is July 30, 2001. Until the
requirements of any applicable Federal or State securities laws have been met,
no Company Stock in connection with a Performance Award, Restricted Stock or
Performance Stock shall be awarded that is not contingent on these events and no
Option or Stock Appreciation Right granted shall be exercisable.

                                       15
<PAGE>

15.   TERMINATION, MODIFICATION, CHANGE

      If not sooner terminated by the Board, this Plan shall terminate at the
close of business on July 29, 2011. No Incentive Awards shall be made under the
Plan after its termination. The Board may amend or terminate the Plan in such
respects as it shall deem advisable; provided that, if and to the extent
required by the Code, no change shall be made that increases the total number of
shares of Company Stock reserved for issuance pursuant to Incentive Awards
granted under the Plan (except pursuant to Section 16), materially modifies the
requirements as to eligibility for participation in the Plan, or materially
increases the benefits accruing to Participants under the Plan, unless such
change is authorized by the shareholders of the Company. Notwithstanding the
foregoing, the Board may unilaterally amend the Plan and Incentive Awards with
respect to Participants as it deems appropriate to ensure compliance with Rule
16b-3 and to cause Incentive Stock Options to meet the requirements of the Code
and regulations thereunder. Except as provided in the preceding two sentences, a
termination or amendment of the Plan shall not, without the consent of the
Participant, adversely affect a Participant's rights under an Incentive Award
previously granted to him or her.

16.   CHANGE IN CAPITAL STRUCTURE

      (a) In the event of a stock dividend, stock split or combination of
shares, recapitalization or merger in which the Company is the surviving
corporation or other change in the Company's capital stock (including, but not
limited to, the creation or issuance to shareholders generally of rights,
options or warrants for the purchase of common stock or preferred stock of the
Company), the number and kind of shares of stock or securities of the Company to
be subject to the Plan and to Options then outstanding or to be granted
thereunder, the maximum number of shares or securities which may be delivered
under the Plan, the exercise price, the terms of Incentive Awards and other
relevant provisions shall be appropriately adjusted by the Committee, whose
determination shall be binding on all persons. If the adjustment would produce
fractional shares with respect to any unexercised Option, the Committee may
adjust appropriately the number of shares covered by the Option so as to
eliminate the fractional shares.

      (b) If the Company is a party to a consolidation or a merger in which the
Company is not the surviving corporation, a transaction that results in the
acquisition of substantially all of the Company's outstanding stock by a single
person or entity, or a sale or transfer of substantially all of the Company's
assets, the Committee may take such actions with respect to outstanding
Incentive Awards as the Committee deems appropriate.

      (c) Notwithstanding anything in the Plan to the contrary, the Committee
may take the foregoing actions without the consent of any Participant, and the
Committee's determination shall be conclusive and binding on all persons for all
purposes.

                                       16
<PAGE>

17.   ADMINISTRATION OF THE PLAN

      Except as provided in Section 11(g), the Plan shall be administered by the
Committee. The Committee shall have general authority to impose any limitation
or condition upon an Incentive Award the Committee deems appropriate to achieve
the objectives of the Incentive Award and the Plan and, without limitation and
in addition to powers set forth elsewhere in the Plan, shall have the following
specific authority:

      (a) The Committee shall have the power and complete discretion to
determine (i) which eligible employees shall receive Incentive Awards and the
nature of each Incentive Award, (ii) the terms and conditions of any Performance
Award, (iii) whether all or any part of an Incentive Award shall be accelerated
upon a Change of Control; provided, however, that unless the respective award
agreement states otherwise, all Incentive Awards shall be accelerated upon a
Change in Control, (iv) the number of shares of Company Stock to be covered by
each Incentive Award, (v) whether Options shall be Incentive Stock Options or
Nonstatutory Stock Options, (vi) when, whether and to what extent Stock
Appreciation Rights shall be granted, (vii) the time or times when an Incentive
Award shall be granted, (viii) whether an Incentive Award shall become vested
over a period of time and when it shall be fully vested, (ix) when Options and
Stock Appreciation Rights may be exercised, (x) whether a Disability exists,
(xi) the manner in which payment will be made upon the exercise of Options or
Stock Appreciation Rights, (xii) conditions relating to the length of time
before disposition of Company Stock received upon the exercise of Options or
Stock Appreciation Rights is permitted, (xiii) whether to authorize a
Participant (A) to deliver Mature Shares to satisfy Applicable Withholding Taxes
or (B) to have the Employer withhold from the shares to be issued upon the
exercise of an Incentive Award (other than an Incentive Option) the number of
shares necessary to satisfy Applicable Withholding Taxes, (xiv) the terms and
conditions applicable to Restricted Stock awards, (xv) the terms and conditions
on which restrictions upon Restricted Stock shall lapse, (xvi) whether to
accelerate the time at which any or all restrictions with respect to Restricted
Stock will lapse or be removed, (xvii) the terms and conditions applicable to
Performance Stock awards, (xviii) notice provisions relating to the sale of
Company Stock acquired under the Plan, and (xix) any additional requirements
relating to Incentive Awards that the Committee deems appropriate.
Notwithstanding the foregoing, no "tandem stock options" (where two stock
options are issued together and the exercise of one option affects the right to
exercise the other option) may be issued in connection with Incentive Stock
Options. The Committee shall have the power to amend the terms of previously
granted Incentive Awards so long as the terms as amended are consistent with the
terms of the Plan and provided that the consent of the Participant is obtained
with respect to any amendment that would be detrimental to him or her, except
that such consent will not be required if such amendment is for the purpose of
complying with Rule 16b-3 or any requirement of the Code applicable to the
Incentive Award.

      (b) The Committee may adopt rules and regulations for carrying out the
Plan with respect to Participants. The interpretation and construction of any
provision of the Plan by the Committee shall be final and conclusive as to any
Participant. The Committee may consult with counsel, who may be counsel to the
Employer, and shall not incur any liability for any action taken in good faith
in reliance upon the advice of counsel.

                                       17
<PAGE>

      (c) A majority of the members of the Committee shall constitute a quorum,
and all actions of the Committee shall be taken by a majority of the members
present. Any action may be taken by a written instrument signed by all of the
members, and any action so taken shall be fully effective as if it had been
taken at a meeting.

18.   NOTICE

      All notices and other communications required or permitted to be given
under this Plan shall be in writing or other form approved by the Committee and
shall be deemed to have been duly given as follows (a) if to an Employer then
delivered personally to the stock plan administrator of the Company or mailed
first class, postage prepaid at the principal business address of the Company to
the attention of the stock plan administrator at the Company; or (b) if to any
Participant then delivered personally, mailed first class, postage prepaid at
the last address of the Participant known to the sender at the time the notice
or other communication is sent or delivered, or by e-mail, interoffice mail,
intranet or other means of office communication determined by the Committee.

19.   INTERPRETATION

      The terms of this Plan are subject to all present and future regulations
and rulings of the Secretary of the Treasury or his or her delegate relating to
the qualification of Incentive Stock Options under the Code. If any provision of
the Plan conflicts with any such regulation or ruling, then that provision of
the Plan shall be void and of no effect. The terms of this Plan shall be
governed by the laws of the State of Indiana.

20.   LEGENDS

      In its sole and complete discretion, the Committee may elect to legend
certificates representing Company Stock sold or awarded under the Plan to make
appropriate references to the restrictions imposed on such Company Stock.

21.   TAX BENEFIT

      The Committee may, in its sole discretion, include a provision in any
Nonstatutory Stock Option agreement that provides for an additional cash payment
from the Company to the grantee of the Nonstatutory Stock Option as soon as
practicable after the exercise date of such Nonstatutory Stock Option equal to
all or a portion of the tax benefit to be received by the Company attributable
to its federal income tax deduction resulting from the exercise of such
Nonstatutory Stock Option.

                                       18