MODIFICATION AGREEMENT
This MODIFICATION AGREEMENT ("Modification Agreement") is entered
into as of this ___ day of November, 1996 by and among WELLPOINT HEALTH
NETWORKS INC., a California corporation ("WellPoint") (formerly Blue Cross of
California, a California nonprofit public benefit corporation ("Blue
Cross")), and CALIFORNIA HEALTHCARE FOUNDATION, a California nonprofit public
benefit corporation (the "Health Foundation") (formerly Western Health
Partnerships), with reference to the following facts:
A. WellPoint (then known as Blue Cross), WellPoint Health
Networks Inc., a Delaware corporation which merged with and into Blue Cross,
the Health Foundation, and Western Foundation for Health Improvement, a
California nonprofit public benefit corporation, entered into that certain
AMENDED AND RESTATED RECAPITALIZATION AGREEMENT dated as of March 31, 1995
(the "Recapitalization Agreement"), pursuant to which WellPoint, then known
as Blue Cross, donated and Health Foundation accepted, among other things,
all of Blue Cross' right, title and interest in and to certain issued and
outstanding shares of stock of BCCHolding Corporation ("BCC") and certain
issued and outstanding stock of Park Square Holdings, Inc. ("Holdings")
(other than twenty-five thousand (25,000) shares of Class B common stock
owned by United Way, Inc.). BCC and Holdings are referred to herein
collectively as the "Corporations", and the stock in the Corporations donated
to Health Foundation is hereafter referred to as the "Stock".
B. BCC owns shares of certain subsidiary entities, Park Square I,
Inc. ("PS I") and Park Square II, Inc. ("PS II"). PS I and PS II in turn are
general partners in a general partnership known as Park Square Partners (the
"Property Partnership") which owns the approximately 25.73 acre site (the
"Property") which surrounds the building WellPoint occupies (the "Woodland
Hills Building"), which property is commonly referred to as the "Donut
Parcel".
C. The Property Partnership is subject to a potential liability
of approximately Three Million Dollars ($3,000,000) pursuant to that certain
Entitlements Management Agreement between Park Square Partners and JMB/Urban
WC Limited Partnership ("JMB") entered into on or about September 2, 1992
("Entitlements Management Agreement").
D. The Property is subject to a parking easement ("Parking
Easement") for the benefit of WellPoint, as tenant of the Woodland Hills
Building under a long-term lease, pursuant to that PARKING EASEMENT AND
AGREEMENT dated February 7, 1989, and recorded as Document 89-1230325 with
the Recorder of Los Angeles County, California on August 1, 1989, as amended
by that certain FIRST AMENDMENT TO PARKING EASEMENT AND AGREEMENT dated as of
July 21, 1989, and recorded as Document 89-1314693 with the Recorder of Los
Angeles County, California on August 16, 1989, and as further amended by that
SECOND AMENDMENT TO PARKING EASEMENT AND AGREEMENT dated as of January 1,
1996, and recorded as Document 96-36955 with the Recorder of Los Angeles
County, California on January 8, 1996.
E. Based on, among other things, the potential liability pursuant
to the Entitlements Management Agreement and the restrictions imposed on the
Property under the Parking Easement, the parties hereto have determined that
it is in their respective best interests that as part of the transactions
contemplated by the Recapitalization Agreement, the donation of the Stock be
rescinded and that the amount of Seven Million Dollars ($7,000,000) be
donated to Health Foundation in lieu of the Stock of the Corporations, which
donation the Health Foundation has concluded will more effectively permit it
to carry out its nonprofit public benefit purposes than would its ownership
of the Stock of the Corporations.
NOW, THEREFORE, for good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties agree as
follows:
1. MODIFICATION OF DONATION. The parties agree that the donation
of the Stock of the Corporations to Health Foundation is hereby rescinded,
and in lieu thereof, WellPoint hereby donates to Health Foundation, and
Health Foundation hereby accepts, the amount of Seven Million Dollars
($7,000,000) in cash.
2. REPRESENTATIONS AND WARRANTIES OF HEALTH FOUNDATION. Health
Foundation represents and warrants that, except as contemplated hereby, or as
set forth in Schedule 2 hereto, or as set forth in the License Agreement
(Promenade Parking Lot) made the 13th day of September, 1996 by and between
WellPoint and Shopping Center Associates and the License Agreement (WellPoint
Parking Lot) made the 13th day of September, 1996 by and between WellPoint
and Shopping Center Associates:
(a) Health Foundation has not taken or suffered any action to
be taken with respect to the Stock, the Corporations, PS I, PS II, the
Property Partnership or the Property, including, without limitation,
the transfer of any right, title or interest in or to the Stock, the
Corporations, the Property or any other property of the Corporations,
PS I, PS II or the Property Partnership, and that the Stock is not
subject to any claims, liens or encumbrances as the result of the
Health Foundation's ownership of the Stock during the Interim Period
(as defined below); and
(b) During the interim period between the transfer of the
Stock to Health Foundation and the consummation of the rescission
contemplated by this Modification Agreement (the "Interim Period"),
neither the Corporations nor PS I, PS II, or the Property Partnership
have (i) modified title to the Property in any way, (ii) entered into
any agreements, (iii) granted any rights, (iv) acquired or disposed of
any assets, (v) made any distributions, or (vi) undertaken any
obligations with respect to the Stock or the Property.
The parties acknowledge that during the Interim Period, WellPoint
has continued to control the use of the Property and, accordingly, WellPoint
accepts the Property as an asset of the Corporations AS IS and without
warranty, except as to those representations of Health Foundation set forth
above. WellPoint further confirms that as a result of the rescission
contemplated hereby, Health Foundation shall have no responsibility for the
potential liability to JMB or any other party under the Entitlements
Management Agreement.
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3. REPRESENTATIONS AND WARRANTIES OF WELLPOINT. WellPoint
represents and warrants that it has been offered full access to the books and
records of the Corporations, PS I, PS II and the Property Partnership and has
utilized such access to the extent it deems necessary for the purpose of
obtaining information in addition to, or verifying information included in,
this Modification Agreement. WellPoint represents and warrants that it
intends to hold the Stock for investment purposes only, and not with a view
to, or for sale in connection with, any distribution.
4. DELIVERY OF STOCK CERTIFICATES AND DONATION. Upon the
execution of this Modification Agreement, Health Foundation shall deliver the
certificates evidencing the Stock, either endorsed or together with executed
Stock Assignments Separate From Certificate in favor of WellPoint, and
WellPoint shall deliver as a donation in lieu of the Stock the sum of Seven
Million Dollars ($7,000,000) by wire transfer of immediately available funds.
5. INDEMNITY.
(a) Health Foundation hereby agrees to indemnify, defend and
hold WellPoint harmless from any and all claims, demands, obligations,
losses, liabilities, damages, recoveries and deficiencies, including
interest, penalties and reasonable attorneys' fees, costs and expenses,
which WellPoint may suffer as a result of the untruth of any of the
representations or the breach of any of the warranties or covenants of
Health Foundation herein.
(b) WellPoint hereby agrees to indemnify, defend and hold
Health Foundation harmless from any and all claims, demands,
obligations, losses, liabilities, damages, recoveries and deficiencies,
including interest, penalties and reasonable attorneys' fees, costs and
expenses, which Health Foundation may suffer (i) as a result of the
untruth of any of the representations or breach of any of the
warranties or covenants of WellPoint herein, or (ii) arising out of the
Entitlements Management Agreement.
(c) In addition to the foregoing, each party hereby
represents and warrants to the other that other than an agreement
entered by Health Foundation with The Xxxx Xxxx Company, it has not
entered into any agreement which would bind either party to this
transaction to pay brokerage fees, commissions and/or finders' fees in
connection with this transaction. Each party to this Modification
Agreement hereby indemnifies the other party from any claims for
brokerage fees, commissions and/or finders' fees arising out of any
agreement made by the indemnifying party.
6. COVENANT. If Health Foundation should at any time after the
consummation of the transactions contemplated herein directly or indirectly
acquire the Woodland Hills Building, it covenants and agrees that it will
cooperate in removing all restrictions and extinguishing all rights of
approval which the owner of the Woodland Hills Building (including the Health
Foundation as owner) has with respect to the Property, other than those
rights which are reasonably required for the operation of the Woodland Hills
Building.
7. ATTORNEYS' FEES. In the event of a bringing of an action or
suit by a party hereto against the other party hereunder arising out of or
related to this Modification Agreement,
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including, without limitation, the indemnification provisions, the party in
whose favor final judgment is entered shall be entitled to have and recover
from the other party all Costs (as defined below), all of which shall be
deemed to have accrued upon the commencement of such action. Any judgment or
order entered in such action shall contain a specific provision providing for
the recovery of all Costs incurred in enforcing, perfecting, and executing
such judgment. For the purposes of this section, "Costs" shall include,
without limitation, attorneys' fees, costs and expenses, including such costs
and expenses incurred in the following: (i) postjudgment motions; (ii)
contempt proceedings; (iii) garnishment, levy and debtor and third party
examinations; (iv) discovery; and (v) bankruptcy litigation.
8. NOTICES. All notices or other communications required or
permitted hereunder shall be in writing, and shall be delivered or sent, as
the case may be, by any of the following methods: (1) personal delivery, (2)
overnight commercial carrier, (3) registered or certified mail, postage
prepaid, return receipt requested, or (4) telecopier. Any such notice or
other communication shall be deemed received and effective upon the earlier
of (A) if personally delivered, the date of delivery to the address of the
person to receive such notice, (B) if delivered by overnight commercial
carrier, one (1) day following the receipt of such communication by such
carrier from the sender, shown on the sender's delivery invoice from such
carrier, (C) if mailed, on the date of delivery as shown by the sender's
registry or certification receipt, (D) if given by telecopier, when sent.
Any notice or other communication sent by telecopier must also be confirmed
within forty-eight (48) hours by letter mailed or delivered in accordance
with the foregoing. Any such notice or other communication so served shall
be sent to the parties to be served as follows:
If to WellPoint: WellPoint Health Networks Inc.
00000 Xxxxxx Xxxxxx
Xxxxxxxx Xxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxx, Esq.
Facsimile No: (000) 000-0000
With a copy to: Allen, Matkins, Xxxx, Xxxxxx & Xxxxxxx LLP
000 Xxxxx Xxxxxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxx, Esq.
Facsimile No: (000) 000-0000
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If to Health Foundation: California HealthCare Foundation
00000 Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxx Xxxxx, Xxxxxxxxxx 00000
Attention: Chief Executive Officer
Facsimile No: (000) 000-0000
With a copy to: Xxxxxx, Xxxxxx & Xxxxx
000 Xxxxx Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: X'Xxxxxx X. Xxxxxx, Esq.
Facsimile No: (000) 000-0000
Either party hereto may, from time to time, by notice in accordance
with this Paragraph 8, designate a different mailing address to which all
notices or demands are thereafter to be addressed.
9. SUCCESSORS. This Modification Agreement shall bind and inure
to the benefit of the parties hereto and their respective heirs, successors
and assigns.
10. WAIVER; MODIFICATION. No provision of this Modification
Agreement may be waived, changed, modified or amended, or the termination or
discharge thereof agreed to or acknowledged, orally, but only an agreement in
writing signed by the party against whom the enforcement of any such waiver,
change, modification, amendment, termination of discharge is sought.
11. CONSTRUCTION. The headings of the sections hereof are included
herein solely for convenience or reference and are not intended to aid in the
construction of or to govern the terms and provisions of this Modification
Agreement. This Modification Agreement shall not be construed as if it had
been prepared by one of the parties, but rather as if all of the parties
hereto had prepared the same.
12. SURVIVAL. The representations, warranties and covenants herein
shall survive the consummation of the transactions contemplated hereunder.
13. COUNTERPARTS. This Modification Agreement may be executed in
one or more counterparts, each of which shall be deemed an original, but all
of which shall constitute one and the same instrument.
14. FURTHER ASSURANCES. The parties hereto agree to execute,
acknowledge and deliver such further assignments, conveyances or other
assurances, documents and instruments of transfer reasonably requested in
order to confirm further and assure consummation of the transactions
contemplated hereby, and the parties hereto will take such further action
consistent with the terms and provisions of this Modification Agreement which
may be reasonably requested by the other party hereto in connection therewith.
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15. GOVERNING LAW. The provisions of this Modification Agreement
shall be construed and enforced in accordance with the laws of the State of
California.
16. ENTIRE AGREEMENT. This Modification Agreement (including the
Schedule) contains the entire understanding between the parties hereto with
respect to the subject matter hereof, and this Modification Agreement
supersedes any prior or contemporaneous understandings, correspondence,
negotiations, or agreements among them respecting the subject matter hereof.
No alteration, modification, or interpretation hereof shall be binding unless
in writing and signed by the party to be charged.
17. AFFIRMATION OF RECAPITALIZATION AGREEMENT. Except as
hereinabove set forth, the Recapitalization Agreement remains unmodified and
continues in full force and effect.
IN WITNESS WHEREOF, the parties hereto have executed this
Modification Agreement as of the date and year set forth above.
WELLPOINT HEALTH NETWORKS INC.,a
California corporation
By: /s/ Xxxxxx X. Xxxxxxxxx
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Its: Executive Vice President
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CALIFORNIA HEALTHCARE FOUNDATION, a
California nonprofit public benefit
corporation
By: /s/ Xxxxxxx Xxxxxxxxx, Xx.
-------------------------------------
Its: Acting Chief Executive Officer
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SCHEDULE 2
Health Foundation supplements Section 2 of the Modification
Agreement to add the following as exceptions to the representations and
warranties made therein:
1. Certain taxes with respect to the Property, the Corporations, PS I,
PS II or the Property Partnership have accrued during the Interim
Period including, without limitation, property taxes and franchise
taxes.
2. The Health Foundation makes no representations as to whether or not
any party not controlled by it has taken any action which has or
could affect the Property. The Health Foundation represents and
warrants that it is not aware of any such action except as set forth
in the Modification Agreement.
3. The Property Partnership continues to be subject to the Entitlements
Management Agreement, and the Health Foundation makes no
representation as to whether or not any party not controlled by it
has taken any action which has or could affect the potential
liability to JMB thereunder.
4. The Health Foundation makes no representation as to the value of any
of the Corporations, PS I, PS II or the Property Partnership.
