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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
________________________________________
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported) 6/12/98
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WellPoint Health Networks Inc.
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(Exact Name of Registrant as Specified in Charter)
Delaware 001-13803 95-4635504
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(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.
21555 Oxnard Street, Woodland Hills, California 91367
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (818) 703-4000
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Not applicable
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(Former Name or Former Address, if Changed Since Last Report)
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ITEM 5. OTHER EVENTS.
Effective as of June 12, 1998, WellPoint Health Networks Inc., a
Delaware corporation (the "Company" or "WellPoint"), has entered into an
amended and restated California Blue Cross License Addendum (as amended and
restated, the "Amended Addendum") between the Company, Blue Cross of
California and the Blue Cross Blue Shield Association (the "BCBSA"). The
Amended Addendum modifies in certain respects the terms of the Blue Cross
License Agreement dated as of August 4, 1997 (the "Primary License
Agreement") between the Company and the BCBSA. The California Blue Cross
License Addendum previously provided that the Primary License Agreement would
be subject to termination, among other things, if the Board of Directors of
the California HealthCare Foundation (the "Foundation") ceased to consist of
a majority of persons that served as directors of Blue Cross of California on
or before May 17, 1996 (the "Original Blue Cross Directors"). Pursuant to
the Amended Addendum, in the event that the number of Original Blue Cross
Directors becomes equal to the number of non-Original Blue Cross Directors
(such occurrence being known as the "Even Division Date"), the Foundation
will be required to immediately make deposits into the voting trust (the
"Voting Trust") established pursuant to the Amended and Restated Voting Trust
Agreement dated as of August 4, 1997 by and among the Company, the Foundation
and Wilmington Trust Company (the "Voting Trust Agreement") to reduce the
Foundation's holdings of WellPoint Common Stock outside the Voting Trust to
20% of the outstanding WellPoint Common Stock and to make additional deposits
into the Voting Trust within one year thereafter to reduce its holdings
outside of the Voting Trust to 5% of the WellPoint Common Stock. As of June
12, 1998, the Foundation owned approximately 25% of the Company's outstanding
Common Stock. The Foundation has indicated that an Even Division Date
occurred on June 12, 1998.
In addition to the Amended Addendum, the Company has also entered into
an amendment to the Voting Trust Agreement in order to reflect the changes in
the Amended Addendum.
Copies of the Amended Addendum and Amendment No. 1 to the Amended and
Restated Voting Trust Agreement are being filed as an exhibit to this Current
Report on Form 8-K and the description of the terms thereof contained above
is qualified in its entirety by reference to such exhibits.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(c) EXHIBITS
Exhibit No. Exhibit
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99.1 California Blue Cross License Addendum (Amended and Restated
as of June 12, 1998) by and among the Company, Blue Cross of
California and the BCBSA.
99.2 Amendment No. 1 dated as of June 12, 1998 to the Amended and
Restated Voting Trust Agreement by and among the Company,
the Foundation and Wilmington Trust Company.
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99.3 Amendment No. 1 dated as of June 12, 1998 to the Share
Escrow Agent Agreement by and between the Company and U.S.
Trust Company of California, N.A.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Dated: June 15, 1998
WELLPOINT HEALTH NETWORKS INC.
By: /s/ Thomas C. Geiser
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Name: Thomas C. Geiser
Title: Executive Vice President
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EXHIBIT 99.1
CALIFORNIA BLUE CROSS LICENSE ADDENDUM
AMENDED AND RESTATED AS OF JUNE 12, 1998
This License Addendum ("this Addendum") has been amended and restated as
of June 12, 1998 (the "date hereof") by the Blue Cross and Blue Shield
Association ("BCBSA"), WellPoint Health Networks Inc. ("WellPoint"), and the
corporation identified herein as "California Blue Cross." Capitalized terms
not otherwise defined herein shall have the meanings given them in Article
VII of WellPoint's Charter.
Whereas: It is fundamental to the integrity of the Blue Cross and Blue
Shield names and marks that each primary licensee remain independent of any
control or influence by any particular economic interest or other special
interest which might impair its ability to (i) exercise independent judgment
as to the programs which will best meet the needs of the communities in the
state or area for which it is responsible or (ii) function as an integral
part of the Blue Cross and Blue Shield national system of health benefits.
Whereas: WellPoint was incorporated in Delaware for the purpose of
becoming the ultimate parent corporation in an organization (the "WellPoint
Organization") which among other things provides health care plans and
related services in California under the "Blue Cross" name and under various
related marks.
Whereas: WellPoint has assumed its position as the ultimate parent in
the WellPoint Organization as a result of a number of inter-related actions
which are collectively called the "Reincorporation" in this Addendum. The
Reincorporation occurred effective as of August 4, 1997.
Whereas: Prior to the Reincorporation, the WellPoint Organization was
headed by a corporation incorporated in California which had the name
"WellPoint Health Networks Inc." (and which is called "California Blue Cross"
in this Addendum). As a result of the Reincorporation: (i) every share of
common stock issued by California Blue Cross and outstanding immediately
prior to the Reincorporation was converted into a share of common stock
issued by WellPoint; (ii) California Blue Cross became an indirect wholly
owned subsidiary of WellPoint; and (iii) the name of California Blue Cross
was changed to "Blue Cross of California."
Whereas: Prior to May 1996, California Blue Cross was organized as a
nonprofit public benefit corporation. In May 1996, California Blue Cross was
converted into a for-profit business stock corporation as part of a series of
interrelated actions which in this Addendum are collectively called the "1996
For-Profit Conversion." As part of the 1996 For-Profit Conversion,
California Blue Cross issued shares of its common stock to a California
nonprofit public benefit
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corporation which (i) then had the name "Western Health Partnerships," (ii)
now has the name "California HealthCare Foundation," and (iii) is called the
"Foundation" in this Addendum. The common shares issued to the Foundation
(i) represented a substantial majority of California Blue Cross's common
stock outstanding immediately after the 1996 For-Profit Conversion and (ii)
carried voting power significantly in excess of the amount which BCBSA's
licensing requirements allow to be concentrated in the hands of any single
shareholder of a primary licensee.
Whereas: To mitigate the risks and disadvantages of the concentration of
common stock in the hands of the Foundation (i) certain mechanisms and
covenants (the "Original Basic Protections") were incorporated in the
Articles of Incorporation and Bylaws governing California Blue Cross and in
agreements between California Blue Cross and the Foundation and (ii)
California Blue Cross entered into a License Addendum dated as of May 17,
1996 (the "Original Addendum") which provided among other things that the
primary Blue Cross license for the WellPoint Organization would automatically
terminate if there were any failure to comply with any of the Original Basic
Protections specified in the Original Addendum.
Whereas: In the Reincorporation, the common stock previously held by the
Foundation in California Blue Cross was converted on a share for share basis
to common stock issued by WellPoint in the Reincorporation. The Foundation
held the same percentage of WellPoint's common stock outstanding immediately
after the Reincorporation as the percentage of the outstanding common stock
which the Foundation held in California Blue Cross immediately prior to the
Reincorporation. The voting power attributable to the WellPoint common stock
held by the Foundation immediately after the Reincorporation was, and as of
the date hereof continues to be, significantly higher than the percentage
that BCBSA's licensing requirements allow to be concentrated in the hands of
any single shareholder of a primary licensee.
Whereas: In connection with the Reincorporation, WellPoint requested
that notwithstanding the concentration of its common stock in the hands of
the Foundation resulting from the Reincorporation, BCBSA issue the following
licenses (the "New Licenses"): a Primary Blue Cross License to WellPoint to
replace the primary license held prior to the Reincorporation by California
Blue Cross; a Controlled Affiliate License to California Blue Cross to
entitle it to conduct operations in California under the Blue Cross name; and
various other affiliate licenses to other WellPoint subsidiaries to enable
them to continue to conduct operations under the "Blue Cross" name and/or
related names.
Whereas: To induce BCBSA to issue the New Licenses, WellPoint: (i)
incorporated into its Certificate of Incorporation and Bylaws mechanisms
designed to protect WellPoint from being controlled by the Foundation (or any
other large shareholder which might emerge in the future) which are analogous
to the mechanisms previously incorporated into California Blue Cross'
governing instruments; (ii) agreed with the Foundation and California Blue
Cross to amend and restate the agreements previously made by California Blue
Cross with the Foundation to obtain for WellPoint the benefit of the
covenants in those agreements designed to protect WellPoint from
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being controlled by the Foundation; and (iii) entered into a new license
addendum dated August 4, 1997 (the "Delaware Addendum") to take the place of
the Original Addendum.
Whereas: The parties entered into an amendment and restatement of the
Delaware Addendum (which is dated as of December 30, 1997 and is herein
called the "12-30-97 Restatement") in order to, among other things, (i)
implement revised restrictions on beneficial ownership of WellPoint
securities embodied in Section 2.1(e) hereof, and (ii) modify the definition
of the term "Ownership Limit."
Whereas: The parties have executed this amendment and restatement of
the License Addendum in order, among other things, to reflect an amendment
dated the date hereof to the Voting Trust Agreement identified herein under
which the Foundation has the ability to decrease the proportion of Original
Blue Cross Directors (as defined in Section 2.7(c)) on its Board in exchange
for earlier contributions of its shares to the Voting Trust. Each of the
terms "License Addendum," "this Addendum," "herein," "hereof" and so forth as
used in this instrument refers to the Delaware Addendum as constituted after
giving effect to the amendment and restatement set forth in this instrument.
THE PARTIES HEREBY AMEND AND RESTATE THE LICENSE ADDENDUM TO READ AS FOLLOWS:
1. WAIVER. BCBSA hereby agrees that the ownership of WellPoint shares by
the Foundation in excess of the number permitted by the Primary Blue Cross
License will not be deemed to provide grounds for termination of the Primary
Blue Cross License so long as the conditions specified in Part 2 of this
Addendum are satisfied. BCBSA also consents to the amendment to the Voting
Trust Agreement dated the date hereof. In order to obtain the waiver and
consent in the preceding sentences, WellPoint agrees that its right to hold
and utilize the Primary Blue Cross License will at all times be subject to
the conditions in Part 2 of this Addendum and hereby covenants not to take or
allow any action which could provide grounds for termination of the Primary
Blue Cross License.
2. AUTOMATIC TERMINATION.
2.1 Except as otherwise expressly provided in this Part 2, WellPoint's
Primary Blue Cross License shall automatically terminate effective at the end
of the Applicable Interval following the occurrence of any of the following
events:
(a) Any of the provisions in Article VII of WellPoint's Charter or any of
the other Basic Protections identified in Section 3.5 shall expire or
be amended (other than to extend its term), eliminated or otherwise
impaired or any person shall be permitted, by the ruling of any court
or otherwise, to take any action contrary to the terms of any of the
Basic Protections without the written consent of BCBSA.
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(b) Any VA Shares (identified as prescribed in Section 3.8) shall not be
voted as prescribed by the terms of the Voting Agreement identified
in Section 3.5(b)(3).
(c) Subject to Section 2.7, at any time before May 20, 2001, the
Foundation's board of directors does not contain at least a majority
of Original Blue Cross Directors (determined as prescribed in Section
2.7(c)).
(d) The Foundation shall not be independent of all state governmental
authority over its affairs including any authority over the
composition and membership of its board of directors, other than
customary regulatory powers exercised by the California Attorney
General over similar situated entities and other than in accordance
with California Blue Cross' Undertakings to the California Department
of Corporations dated March 5, 1996 as provided to BCBSA prior to May
17, 1996.
(e) The Foundation Beneficially Owns WellPoint shares not on deposit in
the Voting Trust identified in Section 3.5(b)(4) representing:
(1) 50% or more of the voting power at any time between the date
hereof and May 20, 1999; or
(2) 20% or more of the voting power at any time from and including
May 20, 1999 to but not including May 20, 2001; or
(3) 5% or more of the voting power at any time on or after May 20,
2001.
(f) (i) any Institutional Investor shall become the Beneficial Owner of
WellPoint shares representing 10% or more of the voting power of
WellPoint (an "Excess Institutional Voter"), unless such Excess
Institutional Voter shall cease to be an Excess Institutional Voter
prior to the end of the Applicable Interval arising from such
Beneficial Ownership; or
(ii) any Noninstitutional Investor other than the Foundation shall
become the Beneficial Owner of WellPoint shares representing 5% or
more of the voting power of WellPoint (an "Excess Noninstitutional
Voter") unless such Excess Noninstitutional Voter shall cease to be
an Excess Noninstitutional Voter prior to the end of the Applicable
Interval arising from such Beneficial Ownership; or
(iii) any person other than the Foundation shall become the
Beneficial Owner of 20% or more of WellPoint's then-outstanding
common stock or other equity securities which (either by themselves
or in combination) represent an ownership interest of 20% or more
pursuant to determinations made under paragraph 2.6
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below (each, an "Excess Owner"), unless such Excess Owner shall
cease to be an Excess Owner prior to the end of the Applicable
Interval arising from such Beneficial Ownership; or
(iv) WellPoint consolidates with or merges with or into any person
or conveys, assigns, transfers or sells all or substantially all of
its assets to any person other than a merger in which WellPoint is
the surviving entity and immediately after which merger no person
is an Excess Institutional Voter, an Excess Noninstitutional Voter
or an Excess Owner.
For the purposes hereof, a person shall be deemed to be an
"Institutional Investor" if (but only if) (x) such person is an
entity or group identified in Rule 13d-1(b)(1)(ii) of the rules and
regulations promulgated under the Securities Exchange Act of 1934
(the "Exchange Act") as constituted on June 1, 1997, and (y) every
filing made by such person with the Securities and Exchange
Commission under Regulation 13D-G (or any successor Regulation)
under the Exchange Act with respect to such person's Beneficial
Ownership shall have contained a certification having substantially
identical terms to the one required by Item 10 of Schedule 13G as
constituted on June 1, 1997. For the purposes hereof, the term
"Noninstitutional Investor" means any person who is not an
Institutional Investor.
(g) Any shares on deposit in the Voting Trust identified in Section
3.5(b)(4) shall not be voted in accordance with the terms of the
Voting Trust Agreement identified in Section 3.5(b)(4).
(h) Any shares known by WellPoint to be Excess Shares shall not be voted
in accordance with the terms in Section 9 of Article VII of
WellPoint's Charter as constituted immediately after the
Reincorporation.
(i) Less than a majority of the positions on the WellPoint Board shall be
held by Independent Directors.
(j) WellPoint shall fail to comply with the requirements of Part 4 of this
Addendum.
2.2 APPLICABLE INTERVAL.
(a) The "Applicable Interval" with respect to any event specified in
clause (d) or (j) of Section 2.1 shall begin upon the occurrence of
that event and shall end on the 40th day after WellPoint shall first
learn of such event.
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(b) The "Applicable Interval" with respect to any event specified in
clause (f) (i), or (ii) or (iii) of Section 2.1 shall begin upon the
occurrence of that event and shall end on the 30th day after the
earlier of the time WellPoint shall first learn of such event or the
occurrence of a public filing with the Securities and Exchange
Commission disclosing such event.
(c) The "Applicable Interval" with respect to the event specified in
clause (c) shall be determined as prescribed in Section 2.7(b).
(d) The "Applicable Interval" with respect to any event specified in any
other clause of Section 2.1 shall begin upon the occurrence of that
event and shall end on the 10th day after WellPoint shall first learn
of such event.
2.3 WAIVER. WellPoint shall have the right to request any time prior
to the expiration of the Applicable Interval that any termination which would
otherwise be caused by the occurrence of any event listed in Section 2.1 or
Section 2.7(a) be waived. Once such request has been made by WellPoint to
BCBSA, the Primary Blue Cross License and any related controlled affiliate
license shall be deemed to remain in full force and effect until a
determination has been made by BCBSA. Such determination shall be made by
BCBSA's disinterested member plans and any requested waiver shall be deemed
to have been denied unless it shall be approved at the meeting called to
consider such waiver by the affirmative vote of a majority of the
disinterested BCBSA member plans and a majority of the then current weighted
vote of the disinterested BCBSA member plans. Any such waiver may be
conditioned upon such additional requirements (including but not limited to
requirements imposing new independent grounds for termination of the Primary
Blue Cross License) as shall be approved by such vote by the disinterested
BCBSA member plans.
2.4 NOTICE. WellPoint shall notify BCBSA in writing immediately after
WellPoint learns of (i) the occurrence of any event specified in Section 2.1
or Section 2.7(a) or (ii) any development or state of facts which it is
reasonably possible will lead to the occurrence of any event specified in
Section 2.1 or Section 2.7(a) or Section 2.7(a).
2.5 NO IMPLIED EXEMPTION FOR OTHER CHANGES. The references in the
definitions of "WellPoint's Charter," "WellPoint's Bylaws," "Voting
Agreement" and "Voting Trust Agreement" to possible future amendments thereto
or to instruments which may supersede such original instruments in the future
shall not be deemed to exempt any amendment or replacement of any such
instrument from the operation of Section 2.1 and Section 2.7(a) and any such
amendment or replacement shall be deemed to cause an automatic termination at
the end of the Applicable Interval if it changes or impacts any of the terms
of the Basic Protections in a manner which causes such termination under the
terms in Section 2.1 or Section 2.7(a).
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2.6 RESTRICTIONS ON ISSUANCE OF SECURITIES. WellPoint shall not issue
any class or series of securities other than (i) shares of common stock
having identical terms or options or derivatives of common stock; (ii)
non-voting, non-convertible debt securities; or (iii) such other securities
as WellPoint may approve, provided that BCBSA shall receive notice at least
30 days prior to the issuance of such securities, including a description of
the terms of such securities, and BCBSA shall have the authority to determine
how such securities will be counted in determining whether any person is an
Excess Institutional Voter, Excess Noninstitutional Voter or an Excess Owner.
2.7 EARLY CHANGES IN FOUNDATION BOARD.
(a) Notwithstanding the provisions of Section 2.1(c) above, if, at any
time prior to May 20, 2001, the Foundation's board of directors does
not contain at least a majority of directors who are Original Blue
Cross Directors, such event shall cause an automatic termination of
the Primary Blue Cross License at the end of the Applicable Interval
only if:
(1) at any time on or after the date on which the number of directors
that are not Original Blue Cross Directors first becomes equal to
the number of directors that are Original Blue Cross Directors
(the "Even Division Date"), the Foundation Beneficially Owns
WellPoint shares not on deposit in the Voting Trust identified in
Section 3.5(b)(4) representing 20% or more of the voting power;
or
(2) at any time on or after the earlier to occur of (i) the first
anniversary of the Even Division Date and (ii) the date on which
the number of directors that are not Original Blue Cross
Directors first becomes greater than the number of directors that
are Original Blue Cross Directors (the "Minority Date"), the
Foundation Beneficially Owns WellPoint shares not on deposit in
the Voting Trust identified in Section 3.5(b)(4) representing 5%
or more of the voting power.
(b) The "Applicable Interval" for purposes of Section 2.1(c) and Section
2.7(a) shall begin on whichever of the following shall earlier occur:
(1) the earliest date which shall occur on or after the Even Division
Date on which the Foundation shall Beneficially Own WellPoint
shares not on deposit in the Voting Trust identified in Section
3.5(b)(4) representing 20% or more of the voting power, or
(2) the earliest date as of which the Foundation shall Beneficially
Own WellPoint shares not on deposit in the Voting Trust
identified in Section
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3.5(b)(4) representing 5% or more of the voting power
which shall occur on or after the earlier of (i) the first
anniversary of the Even Division Date or (ii) the Minority
Date.
An Applicable Interval which shall begin pursuant to this Section
2.7(b) shall end on the 10th day after WellPoint shall first
learn of the events causing such Applicable Interval to begin.
(c) An individual shall be deemed an "Original Blue Cross Director" if
that individual served as a director of California Blue Cross prior to
May 17, 1996. In the event an Original Blue Cross Director shall
cease to be a Foundation director because of death or permanent
disability and the position on the Foundation Board left vacant by
such death or disability shall be filled with an individual approved
by a majority of the Original Blue Cross directors then remaining on
the Foundation's Board, then the individual so approved shall be
deemed to be an "Original Blue Cross Director." For purposes of
determining whether and when the Even Division Date or the Minority
Date shall have occurred, such vacant position shall be counted as if
it were held by an Original Blue Cross Director for a period beginning
when the vacancy arises and ending at the earliest of (i) 60 days
after such vacancy shall arise, (ii) the date such vacancy is filled
by an individual not approved by a majority of the Original Blue Cross
directors then remaining on the Foundation's Board or (iii) the
approval by the Foundation Board of any course of action which would
provide grounds for termination of the Primary Blue Cross License.
3. DEFINITIONS. The following terms shall have the following meanings as used
herein:
3.1 PRIMARY BLUE CROSS LICENSE. The term "Primary Blue Cross License"
means the license to use the Blue Cross name and all other rights granted
under or by reason of the Blue Cross License Agreement dated as of August 4,
1997 between BCBSA and WellPoint and under any amendments or supplements to,
or restatements or replacements of, that Agreement. The Primary Blue Cross
License shall at all times be subject to this Addendum and in the event of
any conflict between the Primary Blue Cross License and this Addendum, this
Addendum shall control. In the event the Primary Blue Cross License shall
terminate, such termination shall have the effect of terminating the right of
any WellPoint subsidiary to use the Blue Cross name and all other names or
rights licensed from BCBSA.
3.2 VOTING POWER. The WellPoint shares Beneficially Owned by any
particular person shall be deemed to represent a percentage of the voting
power equal to the percentage of all votes which could be cast in any
election of any WellPoint director which could be accounted for by the shares
Beneficially Owned by that particular person. If in connection with an
election for any particular position on the WellPoint Board, shares in
different classes or series are entitled
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to be voted together for purposes of such election, then in determining the
number of "all votes which could be cast" in the election for that particular
position for purposes of the preceding sentence, the number shall be equal to
the number of votes which would be cast in the election for that particular
position if all shares entitled to be voted in such election (regardless of
series or class) were in fact voted in such election. If WellPoint shall
issue any series or class of shares for which positions on the Board are
reserved or shall otherwise issue shares which have voting rights which can
arise or vary based upon terms governing that class or series, then the
percentage of the voting power represented by the WellPoint shares
Beneficially Owned by any particular person shall be the highest percentage
of the total votes which could be accounted for by those shares in any
election of any director.
3.3 WELLPOINT SHARE. The term "WellPoint share" designates and
includes a share of common stock and a share (or other basic unit) of any
class or series of any other equity security which WellPoint may at any time
issue or be authorized to issue.
3.4 BENEFICIAL OWNERSHIP:
(a) Except as otherwise provided in Section 3.4(b), any particular person
shall be deemed to Beneficially Own and to be the Beneficial Owner of:
(1) Any WellPoint share in which such person shall then have a direct
or indirect beneficial ownership interest;
(2) Any WellPoint share in which such person shall have the right to
acquire any direct or indirect beneficial ownership interest
pursuant to any option or other agreement (either immediately or
after the passage of time or the occurrence of any contingency);
(3) Any WellPoint share which such person shall have the right to
vote;
(4) Any WellPoint share (i) which constitutes an "Excess Share" under
Article VII of WellPoint's Charter or any successor to such
provision and (ii) of which such person is the "Purported Owner"
under such Article VII (or has an equivalent position under any
such successor provision);
(5) Any WellPoint share in which such person shall hold any other
interest which would count in determining whether such person
would be required to file a Schedule 13D; and
(6) Any WellPoint share which shall be Beneficially Owned (under the
concepts provided in the preceding clauses) by any affiliate or
associate of the particular person or by any other person with
whom the particular
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person or any such affiliate or associate has any agreement,
arrangement or understanding (other than customary agreements
with and between underwriters and selling group members with
respect to a bona fide public offering of securities or other
than that certain Amended and Restated Registration Rights
Agreement between WellPoint and the Foundation dated as of
August 4, 1997) relating to the acquisition, holding, voting
or disposing of any WellPoint shares. For purposes of this
Addendum, the terms "affiliate" and "associate" have the same
meanings they have under Rule 12b-2 under the Exchange Act as
such Rule is constituted and interpreted on June 1, 1997.
(b) Exceptions:
(1) A person shall not be deemed to "Beneficially Own" or have
"Beneficial Ownership" of any particular WellPoint shares by
reason of possessing the right to vote if (i) such right arises
solely from a revocable proxy or consent given to such person in
response to a public proxy or consent solicitation made pursuant
to, and in accordance with, the applicable rules and regulations
promulgated under the Exchange Act, and (ii) such person is not
the Purported Owner of any Excess Shares (as those terms are used
in Article VII of WellPoint's Charter), is not named as holding a
beneficial ownership interest in any WellPoint shares in any
filing on Schedule 13D, and is not an affiliate or associate of
any such Purported Owner or named person.
(2) A member of a national securities exchange or a registered
depository shall not be deemed to "Beneficially Own" or have
"Beneficial Ownership" of any particular WellPoint shares held
directly or indirectly by it on behalf of another person (and not
for its own account) solely because such member or depository is
the record holder of such WellPoint shares, and (in the case of
such member) pursuant to the rules of such exchange, such member
may direct the vote of those WellPoint shares without instruction
on matters which are uncontested and do not affect substantially
the rights or the privileges of the holders of the shares to be
voted, but is precluded by the rules of such exchange from voting
those particular WellPoint shares without instruction on either
contested matters or matters that may affect substantially the
rights or the privileges of the holders of the WellPoint shares
to be voted.
(3) A person who in the ordinary course of business is a pledgee of
WellPoint shares under a written pledge agreement shall not be
deemed to "Beneficially Own" or have "Beneficial Ownership" of
those pledged
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WellPoint shares solely by reason of such pledge until the
pledgee has taken all formal steps which are necessary to
declare a default or has otherwise acquired the power to vote
or to direct the vote of such pledged WellPoint shares,
provided that:
(A) The pledge agreement is bona fide and was not entered
into with the purpose nor with the effect of changing or
influencing the control of WellPoint, nor in connection
with any transaction having such purpose or effect,
including any transaction subject to Rule 13d-3(b)
promulgated under the Exchange Act as constituted on June
1, 1997; and
(B) The pledge agreement does not grant to the pledgee the
right to vote or to direct the vote of such pledged
WellPoint shares prior to the time the pledgee has taken
all formal steps which are necessary to declare a default.
(4) A person engaged in business as an underwriter or a placement
agent for securities who enters into an agreement to acquire or
acquires any particular WellPoint shares solely by reason of its
participation in good faith and in the ordinary course of its
business in the capacity of underwriter or placement agent in any
underwriting or agent representation registered under the
Securities Act of 1933, as amended and as constituted on the date
hereof (the "Securities Act"), a bona fide private placement, a
resale under Rule 144A promulgated under the Securities Act or in
any foreign or other offering exempt from the registration
requirements under the Securities Act shall not be deemed to
"Beneficially Own" or have "Beneficial Ownership" of those
particular WellPoint shares until the expiration of forty (40)
days after the date of such acquisition so long as (i) such
person does not vote such WellPoint shares during such period and
(ii) such participation is not with the purpose or with the
effect of changing or influencing control of WellPoint, nor in
connection with or facilitating any transaction having such
purpose or effect, including any transaction subject to
Rule 13d-3(b) promulgated under the Exchange Act as such Rule is
constituted on June 1, 1997.
(5) If WellPoint shall sell shares in a transaction not involving any
public offering, then each purchaser in such offering shall be
deemed to obtain Beneficial Ownership in such offering of the
shares purchased by such purchaser but no particular purchaser
shall be deemed to have acquired Beneficial Ownership in such
offering of shares purchased by any other purchaser solely by
reason of the fact that all such purchasers are parties
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to customary agreements relating to the purchase of equity
securities directly from WellPoint in a transaction not involving
a public offering, provided that:
(A) All the purchasers are persons specified in Rule
13d-1(b)(1)(ii) promulgated under the Exchange Act as such
Rule is constituted on June 1, 1997;
(B) The purchase is in the ordinary course of each
purchaser's business and not with the purpose nor with the
effect of changing or influencing control of WellPoint, nor
in connection with or as a participant in any transaction
having such purpose or effect, including any transaction
subject to Rule 13d-3(b) promulgated under the Exchange Act
as such Rule is constituted on June 1, 1997;
(C) There is no agreement among or between any purchasers to
act together with respect to WellPoint or any WellPoint
shares except for the purpose of facilitating the specific
purchase involved; and
(D) The only actions among or between any purchasers with
respect to WellPoint or its securities subsequent to the
closing date of the nonpublic offering are those which are
necessary to conclude ministerial matters directly related
to the completion of the offer or sale of the WellPoint
shares sold in such offering.
3.5 BASIC PROTECTIONS:
(a) The term "Basic Protections" designates and includes the following
provisions in WellPoint's Charter: Section 1 of Article IV; all
provisions in Article VII and Article IX; and the provision is Article
XI which requires the affirmative vote of at least 75% of each class
of WellPoint shares, represented and voting at a duly held meeting at
which a quorum is present, voting by class to amend any of the
provisions cited in this sentence or to amend Sections 2, 6, 8 or 10
in Article IV of WellPoint's Charter. (The term "WellPoint's Charter"
as used in this Addendum means WellPoint's Restated Certificate of
Incorporation as in effect from time to time after the
Reincorporation. In the event WellPoint's Charter shall be replaced
by another governing instrument as a result of a merger, a
reorganization or other similar event, if any, then the term
"WellPoint's Charter" shall thereafter refer to such other governing
instrument and the citations and terms used in this agreement shall be
deemed adjusted to refer to the appropriate provisions in such
subsequent instrument.)
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(b) Until the Diversity Goal (identified in Section 3.6) is achieved, the
term "Basic Protections" also means:
(1) Sections 2, 6, 8, and 10 in Article IV in WellPoint's Charter.
(2) The following provisions in WellPoint's Bylaws: Sections 2 and 3
of Article III; and Section 2 of Article IV. (The term
"WellPoint's Bylaws" as used in this Addendum means WellPoint's
Bylaws as in effect from time to time after the Reincorporation.
In the event WellPoint's Bylaws shall be replaced by another
governing instrument as a result of a merger, a reorganization or
other similar event, if any, then the term "WellPoint's Bylaws"
shall thereafter refer to such other governing instrument and the
citations and terms used in this agreement shall be deemed
adjusted to refer to the appropriate provisions in such
subsequent instrument.)
(3) The Voting Agreement. (The term "Voting Agreement" whenever it
is used in this Addendum means the Amended and Restated Voting
Agreement dated as of August 4, 1997 between WellPoint,
California Blue Cross and the Foundation as in effect from time
to time after the Reincorporation. In the event the Voting
Agreement shall be replaced by another agreement as a result of a
merger, a reorganization or other similar event, if any, then the
term "Voting Agreement" shall thereafter refer to that
replacement agreement and the citations and terms used in this
agreement shall be deemed adjusted to refer to the appropriate
provisions in that replacement agreement.)
(4) The Voting Trust Agreement. (The term "Voting Trust Agreement"
whenever it is used in this Addendum means the Amended and
Restated Voting Trust Agreement dated as of August 4, 1997
between the Foundation and Wilmington Trust Company as
constituted after giving effect to the amendment thereto dated
the date hereof. In the event the agreement in the preceding
sentence shall be amended after the dated hereof, then the term
"Voting Trust Agreement" shall thereafter mean that agreement as
so amended. In the event the Voting Trust Agreement shall be
replaced by another agreement as a result of a merger, a
reorganization or other similar event, if any, then the term
"Voting Trust Agreement" shall thereafter refer to that
replacement agreement and the citations and terms used in this
agreement shall be deemed adjusted to refer to the appropriate
provisions in that replacement agreement. The term "Voting
Trust" whenever it is used in this Addendum means the voting
trust governed by the Voting Trust Agreement.)
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(5) Section 12 of the Amended and Restated Registration Rights
Agreement among WellPoint, California Blue Cross and the
Foundation.
3.6 DIVERSITY GOAL. The Foundation's Diversity Goal shall be deemed to be
achieved when the Foundation shall Beneficially Own WellPoint shares
representing less than 5% of the voting power and shall not be an Excess Owner.
3.7 INDEPENDENT DIRECTOR. Any particular individual shall be deemed to be
a "Independent Director" if (but not unless) such individual
(a) either (i) is David R. Banks, W. Toliver Besson, Roger E. Birk, Sheila
P. Burke, Stephen L. Davenport, Julie A. Hill, Elizabeth A. Sanders,
or Leonard D. Schaeffer or (ii) was elected to the Board after the
date hereof with the approval of two thirds of the directors then in
office who then constituted Independent Directors
and
(b) does not Beneficially Own WellPoint shares which represent more than
5% of the voting power,
and
(c) was not nominated by a person who Beneficially Owns WellPoint shares
representing more than 5% of the voting power or who is an "Excess
Owner" and, prior to such individual's election, did not have any
agreement, arrangement or understanding with any such Beneficial Owner
with respect to any action to be taken by such individual as a
director.
3.8 VA SHARES. All WellPoint shares which shall be Beneficially Owned
by the Foundation at any particular time shall be deemed to be "VA Shares"
except that (i) WellPoint shares which are held in the voting trust created
by the Voting Trust Agreement and are voted as required by the terms of the
Voting Trust Agreement shall not be deemed VA Shares so long as they are so
held and voted and (ii) the Foundation shall be entitled to Beneficially Own
at any particular time WellPoint shares representing up to 5% of the voting
power free of (and without being subject in any way to) the voting
requirements in either the Voting Trust Agreement or the Voting Agreement and
none of the WellPoint shares Beneficially Owned by the Foundation at or below
this 5% limit shall be deemed VA Shares. Without limiting by implication the
generality of the preceding sentence, so long as the only Capital Stock
outstanding is Common Stock, any share of Common Stock which shall be
Beneficially Owned by the Foundation at any particular time in excess of 5%
of the number of shares of Common Stock then outstanding shall
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<PAGE>
be deemed a VA Share unless at that particular time it is on deposit in the
voting trust created by the Voting Trust Agreement and is required to be
voted in accordance with the terms of the Voting Trust Agreement.
3.9 EXCHANGE ACT. The term "Exchange Act" means the Securities
Exchange Act of 1934 as amended or supplemented at the time as of which the
term shall be applied and any other federal law which BCBSA shall reasonably
judge to have replaced or supplemented the coverage of the Securities
Exchange Act of 1934 as in effect on the date hereof.
3.10 SCHEDULE 13D. The term "Schedule 13D" means a report on Schedule
13D under Regulation 13D under the Exchange Act as constituted on the date
hereof and any report which may be required in the future under any
requirement which BCBSA shall reasonably judge to have any of the purposes
served by Schedule 13D on the date hereof.
3.11 OWNERSHIP LIMIT.
(a) From and after the date hereof, the term "Ownership Limit" defined in
Article VII of WellPoint's Restated Certificate of Incorporation shall
for all purposes mean the following:
(1) For all stockholders that are Noninstitutional Investors (as
defined herein), that number of shares of Capital Stock one share
lower than the number of shares of Capital Stock which would
represent 5% of the Voting Power (as defined in the Restated
Certificate of Incorporation); and
(2) For all stockholders that are Institutional Investors (as defined
herein), that number of shares of Capital Stock one share lower
than the number of shares of Capital Stock which would represent
10% of the Voting Power.
(b) The parties hereto intend that the revisions contained herein to the
definition of the term "Ownership Limit" shall constitute an agreement
in writing between the parties hereto within the meaning of
Section 14(f)(2) of Article VII of WellPoint's Restated Certificate of
Incorporation and as such shall apply to the interpretation of such
term for all purposes under WellPoint's Restated Certificate of
Incorporation.
4. COMMITMENT TO USE BLUE CROSS MARKS.
4.1 WellPoint covenants that all Relevant Businesses conducted in the
State of California by WellPoint or any of its affiliates will be conducted
after the date hereof under the name "Blue Cross of California" and will be
conducted utilizing the Blue Cross name and marks in identifying such
business. The term "Relevant Businesses" means all health care benefits
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<PAGE>
businesses which were conducted on February 13, 1996 by California Blue Cross
or its subsidiary which then had the name "CaliforniaCare Health Plans" and
the businesses in California which may develop or evolve from those
businesses after February 13, 1996. The term "Relevant Businesses" shall not
include (except as provided in Section 4.2) the business acquired by
California Blue Cross from Massachusetts Mutual Life Insurance Company on
March 31, 1996 (the "MassMutual Business") and shall not include the workers'
compensation business conducted by WellPoint's subsidiary UniCARE Insurance
Company.
4.2 The MassMutual Business comprised of accounts with California
headquarters ("California Accounts") shall be transitioned to being offered
by WellPoint, California Blue Cross, or BC Life & Health Insurance Company
on or prior to May 17, 2001 and after such transition shall use the Blue
Cross name and marks to the extent required by this Part 4 for businesses
operated by those companies. No new California Accounts shall become part of
the MassMutual Business after May 17, 1996, but rather all new accounts with
California headquarters arising after May 17, 1996 shall be offered by
WellPoint, California Blue Cross, or BC Life & Health Insurance Company and
shall use the Blue Cross name and marks to the extent required by this Part 4
for businesses operated by those companies.
4.3 BC Life & Health Insurance Company and WellPoint shall take the
actions necessary so that BC Life & Health Insurance Company (i) continuously
meets all qualifications necessary to hold a controlled affiliate license
from BCBSA, (ii) utilizes the Blue Cross of California name and Blue Cross
marks in marketing materials, (iii) identifies its products in marketing
materials as being brought to its subscribers by "Blue Cross of California,"
and (iv) shall identify itself in marketing materials as an affiliate of Blue
Cross of California.
4.4 Transfers of businesses from WellPoint or California Blue Cross to
BC Life & Health Insurance Company after January 13, 1997 (the "Transferred
Businesses") shall not violate this Part 4 if, on or prior to May 17, 2001,
the Transferred Businesses do not comprise in excess of 50% of the Relevant
Businesses, based on relative annual premium revenues, and such Transferred
Businesses are marketed under the Blue Cross of California name and Blue
Cross marks.
4.5 The covenants in this Part 4 are in addition to and distinct from
WellPoint's obligations under the Primary Blue Cross License. For purposes
of this Part 4 only, the term "affiliate" does not include the Foundation.
5. NO OTHER WAIVER. Nothing herein shall constitute a waiver of BCBSA's
rights to terminate the Primary Blue Cross License for any reason allowed
under the Primary Blue Cross License other than the reason expressly waived
in Part 1 of this Addendum. All agreements, understandings or other
circumstances which were made or arose prior to the issuance of the Primary
Blue Cross License granting WellPoint, California Blue Cross or any of their
respective subsidiaries or predecessors licenses or rights in the Blue Cross
name or other rights licensed by
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BCBSA are hereby terminated effective as of the issuance of the Primary Blue
Cross License, and neither WellPoint nor California Blue Cross nor any of
their respective affiliates shall have any rights under or by reason of such
earlier agreements, understandings or other circumstances. The rights of
WellPoint, California Blue Cross and their respective subsidiaries to use the
Blue Cross name and other rights licensed by BCBSA shall instead be derived
from the date of issuance of the Primary Blue Cross License exclusively from
the Primary Blue Cross License and related written agreements granted on or
after the time of the issuance of the Primary Blue Cross License. The
Delaware Addendum shall govern during the period from the issuance of the
Primary Blue Cross License to but not including December 30, 1997; the terms
of the 12-30-97 Restatement shall govern from and including December 30,1997
to but not including the date hereof, and the terms of this amendment and
restatement of the License Addendum shall govern from and after the date
hereof.
6. MISCELLANEOUS
6.1 WellPoint shall not assign its rights or obligations under this
Addendum to any other person without the prior written consent of BCBSA.
BCBSA shall have the right to assign its rights under this Addendum to any
corporation or other entity which shall assume any of its responsibility for
the Blue Cross name or other rights licensed under the Primary Blue Cross
License Agreement. This Addendum and the provisions hereof shall be binding
upon each of the parties, and their successors and assigns, and shall inure
to the benefit of each party's successors and permitted assignees.
6.2 Any term or provision of this Addendum may be amended, and the
observance of any term of this Addendum may be waived (either generally or in
a particular instance and either retroactively or prospectively) only by a
writing signed by the party to be bound thereby. Without limiting by
implication the generality of the preceding sentence, every time any event
listed in Section 2.1 or Section 2.7(a) shall occur, it shall constitute a
separate and self-sufficient cause for automatic termination of the Primary
Blue Cross License regardless of whether any prior occurrence of such event
or any other event shall have been waived absolutely or conditionally. The
failure of any party to enforce any of the provisions hereof shall not be
construed to be a waiver of the right of such party thereafter to enforce
such provisions.
6.3 Each of the parties acknowledges that the other party will be
irreparably harmed and that there will be no adequate remedy at law for a
violation of any of the covenants of the other party set forth herein.
Therefore, it is agreed that, in addition to any other remedies that may be
available to either party to this Addendum in connection with any such
violation or prospective violation, such party shall have the right to
enforce such covenant by specific performance, by injunctive relief or by any
other means available to such party at law or in equity.
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6.4 WellPoint warrants to BCBSA that: (i) the Merger identified in the
proxy statement issued on May 9, 1997 by California Blue Cross has become
effective in Delaware and California on the terms and with the effect
described in that proxy statement; (ii) WellPoint provided BCBSA prior to
August 4, 1997 with complete and accurate copies of WellPoint's Charter,
WellPoint's Bylaws, the Voting Agreement, the Voting Trust Agreement and the
Registration Rights Agreement as constituted immediately after the
Reincorporation; (iii) there has been no change to any of the things cited in
clause (ii) except for the amendment to the Voting Trust Agreement dated the
date hereof and WellPoint provided a complete and accurate copy of that
amendment to BCBSA prior to the date hereof; (iv) the Foundation has executed
and delivered the Voting Agreement, the Voting Trust Agreement, the amendment
to the Voting Trust Agreement dated the date hereof, and the Registration
Rights Agreement; (iv) on the date hereof, the Foundation Beneficially Owns
approximately 25.6% of WellPoint's common stock outstanding; and (v) no
person other than the Foundation Beneficially Owns WellPoint shares
representing more than 5% of the voting power.
6.5 The internal laws of the State of Illinois (irrespective of its
choice of law principles) shall govern all issues concerning the validity of
this Addendum, the construction of its terms, and the interpretation and
enforcement of the rights and duties of the parties.
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Each of the parties has executed this amendment and restatement of the
New Addendum to evidence its agreement to be bound by all of its terms.
BLUE CROSS AND BLUE SHIELD ASSOCIATION
BY: /s/ MARK A. ORLOFF
--------------------------------------
NAME: Mark A. Orloff
TITLE:
WELLPOINT HEALTH NETWORKS INC.
(a Delaware corporation identified herein as
"WellPoint")
BY: /s/ THOMAS C. GEISER
--------------------------------------
NAME: Thomas C. Geiser
TITLE: Executive Vice President
BLUE CROSS OF CALIFORNIA
(a California corporation identified herein as
"California Blue Cross")
BY: /s/ THOMAS C. GEISER
--------------------------------------
NAME: Thomas C. Geiser
TITLE: Secretary
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AMENDMENT NO. 1 TO
AMENDED AND RESTATED VOTING TRUST AGREEMENT
This Amendment No. 1 (the "Amendment") to the Amended and Restated Voting
Trust Agreement dated as of August 4, 1997 (the "Voting Trust Agreement") is
made and entered into by and between Wilmington Trust Company, a Delaware
corporation, as trustee (hereinafter, with any successor trustee, referred to as
the "Trustee") and the California HealthCare Foundation, a California nonprofit
public benefit corporation (the "Beneficiary"), as of the 12th day of June,
1998.
WITNESSETH:
WHEREAS, the parties hereto have previously entered into the Voting Trust
Agreement, requiring the Beneficiary to maintain certain shares of the
outstanding equity securities of the Company owned by the Beneficiary subject to
the voting trust (the "Voting Trust") established by the Voting Trust Agreement;
WHEREAS, such Voting Trust has been implemented in order to satisfy certain
requirements of the Blue Cross Blue Shield Association (the "BCBSA") which has
licensed the Company to use the Blue Cross name and marks in the state of
California;
WHEREAS, such BCBSA requirements include the Company maintaining certain
Basic Protections (as defined in the California Blue Cross License Addendum
dated as of December 30, 1997 by and between the Company and the BCBSA (the
"License Addendum")) which are intended by the BCBSA to enable the Company to
remain independent of the Beneficiary and any other stockholder which may in the
future acquire Capital Stock (as defined in the Voting Trust Agreement) in the
Company in excess of the Ownership Limit (as defined in the Voting Trust
Agreement); and
WHEREAS, one of the Basic Protections of the License Addendum is that the
Beneficiary Board of Directors at all times prior to May 20, 2001 must contain
at least a majority of directors who served as directors of Blue Cross of
California, a California nonprofit public benefit corporation ("California Blue
Cross"), prior to May 17, 1996;
WHEREAS, the Beneficiary has asked the BCBSA to waive such Basic Protection
so that under certain circumstances the Beneficiary Board of Directors may
contain a majority of directors that did not previously serve as directors of
California Blue Cross prior to May 17, 1996;
WHEREAS, the BCBSA has agreed to waive such Basic Protection on the
condition that, should the Beneficiary's Board of Directors at any time not
contain at least a majority of directors who served as directors of California
Blue Cross prior to May 17, 1996 (the "Original Blue Cross Directors"), the
Contribution Timetable set forth in the Voting Trust Agreement shall be amended
as set forth herein;
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NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
hereinafter set forth and other good and valuable consideration, the receipt and
sufficiency which are hereby acknowledged, the parties hereto hereby agree that
the Voting Trust Agreement shall be amended as of the date hereof as follows:
1. The second, third and fourth paragraphs appearing on Page 2 of the
Voting Trust Agreement shall be deleted in their entirety and replaced with the
following:
(i) a requirement that the Beneficiary make such deposits into
the voting trust established by this Agreement (the "Voting Trust") as
may be necessary to maintain the shares of Capital Stock Beneficially
Owned (as defined below) by the Beneficiary outside the Voting Trust
at a level which does not exceed 50% of the voting power of the
Company's outstanding Capital Stock at any time after May 20, 1996;
(ii) at any time on or after the earlier of May 20, 1999 or the
date on which the number of directors that are not Original Blue Cross
Directors first becomes equal to the number of directors that are
Original Blue Cross Directors (the "Even Division Date"), a
requirement that the Beneficiary make such deposits into the Voting
Trust as may be necessary to maintain the shares of Capital Stock
Beneficially Owned by the Beneficiary outside the Voting Trust at a
level which does not exceed 20% of the voting power of the Company's
outstanding Capital Stock on and at all times after the earlier to
occur of such dates;
(iii) at any time on or after the earliest to occur of (A) the
first anniversary of the Even Division Date, (B) the date on which the
number of directors that are not Original Blue Cross Directors first
becomes greater than the number of directors that are Original Blue
Cross Directors (the "Minority Date") and (C) May 20, 2001, a
requirement that the Beneficiary make such additional deposits into
the Voting Trust as may be necessary to prevent the Beneficiary from
having Beneficial Ownership outside the Voting Trust of any shares of
Capital Stock in excess of the Ownership Limit on and at all times
after the earliest to occur of such dates.
(iv) Notwithstanding the preceding two paragraphs, in the event
an Original Blue Cross Director shall cease to be a director of the
Beneficiary because of death or permanent disability and the position
on the board of Beneficiary left vacant by such death or disability
shall be filled with an individual approved by a majority of the
Original Blue Cross Directors then remaining on the Beneficiary's
Board, then the individual so approved shall be deemed to be an
"Original Blue Cross Director." For purposes of determining whether
and when the Even Division Date or the Minority Date shall have
occurred, such vacant position shall be counted as if it were held by
an Original Blue Cross Director for a period beginning when the
vacancy arises and ending at the earliest of (A) 60 days after such
vacancy shall arise, (B) the date such vacancy is filled by an
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individual not approved by a majority of the Original Blue Cross
Directors then remaining on the Beneficiary's Board or (C) the
approval by a Beneficiary of any course of action which would provide
grounds for termination of the License Agreement dated as of August 4,
1997 by and among the BCBSA, the Company and Blue Cross of California.
2. The following sentence shall be added at the end of Section 7.9(c) of
the Voting Trust Agreement:
For purposes of applying this term, the Beneficiary shall be deemed to
be a Non-institutional Investor.
3. Except as amended by this Amendment, the Voting Trust Agreement shall
remain unmodified and in full force and effect.
[Document continues on following page]
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4. This Amendment may be executed in two counterparts, each of which
shall be considered an original, but all of which together shall constitute one
and the same instrument.
IN WITNESS WHEREOF, the Trustee and the Beneficiary have executed this
Amendment as of the day and year first above written.
WILMINGTON TRUST COMPANY CALIFORNIA HEALTHCARE FOUNDATION
By: /s/ JOSEPH B. FEIL By: /s/ CRAIG ZIEGLER
---------------------------- --------------------------
Its: Financial Services Officer Its: Chief Financial Officer
--------------------------- -------------------------
WellPoint Health Networks Inc., hereby consents to the foregoing Amendment
No. 1 to Amended and Restated Voting Trust Agreement, pursuant to Section 7.7 of
the Voting Trust Agreement.
WELLPOINT HEALTH NETWORKS INC.
By: /s/ ROBERT A. KELLY
--------------------------
Its: Assistant Secretary
-------------------------
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AMENDMENT NO. 1 TO
AMENDED AND RESTATED SHARE ESCROW AGENT AGREEMENT
This Amendment No. 1 (the "Amendment") to the Amended and Restated Share
Escrow Agent Agreement dated as of August 4, 1997 (the "Share Escrow
Agreement") is made and entered into by and between WellPoint Health Networks
Inc., a Delaware corporation (the "Corporation" or "WellPoint Delaware"), and
U.S. Trust Company of California, N.A., a national association, as share
escrow agent (the "Share Escrow Agent"), as of the ___ day of June, 1998.
Capitalized terms used herein and not defined shall have the meanings given
to such terms in the Share Escrow Agreement.
WHEREAS, the parties hereto have previously entered into the Share
Escrow Agreement, which provides for the Share Escrow Agent to act as share
escrow agent for the Corporation in connection with any Excess Shares that
may be created from time to time pursuant to the Corporation's Restated
Certificate of Incorporation;
WHEREAS, the parties hereto desire to amend the Share Escrow Agreement
in the manner set forth herein;
NOW, THEREFORE, the parties hereto agree that the Share Escrow Agreement
shall be amended as follows:
1. Section 1 of the Share Escrow Agreement shall be deleted in its
entirety and replaced with the following:
1. EXCESS SHARES ESCROW. If the Corporation at any time determines
that a Transfer has taken place such that a person Beneficially Owns
shares of Capital Stock in excess of the Ownership Limit, that a
Purported Owner intends to acquire or has attempted to acquire
Beneficial Ownership of any shares of Capital Stock in excess of the
Ownership Limit or that there has occurred any event that would cause
any Person to exceed the Ownership Limit, the Corporation shall take
such action as it deems advisable to refuse to give effect or prevent
such Transfer or in light of the occurrence of such event, including
without limitation, by causing such Excess Shares to be transferred
immediately to the Share Escrow Agent, which Excess Shares shall be
held by the Share Escrow Agent until such time as the Excess Shares
are transferred to a Person whose acquisition thereof will not violate
the Ownership Limit (a "Permitted Transferee").
2. Except as hereby amended, the Share Escrow Agent Agreement shall
remain unchanged and in full force and effect.
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3. This Amendment No. 1 may be executed in counterparts, each of which
shall be deemed an original and all of which shall constitute one in the same
instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed by the respective duly authorized officers, as of the date first
above written at Los Angeles, California.
U.S. TRUST COMPANY OF CALIFORNIA, N.A.
By: /s/ SANDEE PARKS
----------------------------------
Its: Authorized Officer
WELLPOINT HEALTH NETWORKS INC.,
a Delaware corporation
By: /s/ ROBERT A. KELLY
----------------------------------
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