SHARE OWNERSHIP AGREEMENT
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WHEREAS, the Master Contribution Agreement dated September 25, 2000 between
among Jacobs Realty Investors Limited Partnership, Richard E. Jacobs, solely as
Trustee for the Richard E. Jacobs Revocable Living Trust, Richard E. Jacobs,
solely as Trustee for the David H. Jacobs Marital Trust, CBL & Associates, Inc.
and CBL & Associates Limited Partnership (the "Master Contribution Agreement")
requires that the Board of Directors of CBL & Associates Properties, Inc. (the
"Corporation") adopt a Resolution in the form set forth in Schedule 4.15(b)-1 to
the Master Contribution Agreement (the "Resolution");
WHEREAS, the Master Contribution Agreement requires that the Corporation
seek to have its Amended and Restated Certificate of Incorporation, dated
November 2, 1993, as amended by the Certificate of Amendment to the Amended and
Restated Certificate of Incorporation, dated May 2, 1996, as supplemented by the
Certificate of Designation, dated June 25, 1998, and the Certificate of
Designation, dated April 30, 1999 (the "Certificate of Incorporation") further
amended in the manner set forth in Schedule 4.15(b)-1 to the Master Contribution
Agreement (the "Charter Amendment");
WHEREAS, the Resolution and the Charter Amendment provide that if the
Lebovitz Group or a member thereof or the Jacobs Group or a member thereof would
otherwise Beneficially Own or Constructively Own shares of Capital Stock in
excess of the Lebovitz Permitted Ownership Amount, in the case of the Lebovitz
Group and its members, or the Jacobs Permitted Ownership Amount, in the case of
the Jacobs Group and its members, then such excess shares of Equity Stock shall
be designated Shares-in-trust and, in accordance with subparagraph E of Article
IV of the Certificate of Incorporation, transferred automatically and by
operation of law to a Trust; provided, however, that such rule will not apply
where the Beneficial and Constructive Ownership of shares of Equity Stock by the
Jacobs Group and its members, or the Lebovitz Group and its members, as the case
may be, would not violate the limitations that would be imposed upon such group
and its members if there were no special references to such group and its
members in the Certificate of Incorporation or the Resolution;
WHEREAS, the parties hereto desire, for purposes of the Resolution and the
Charter Amendment, to specify the initial Lebovitz Permitted Ownership Amount
and Jacobs Permitted Ownership Amount and to specify how such amounts shall be
adjusted;
NOW THEREFORE, the parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
1.1. The following terms shall have the following meanings when used in
this Agreement.
"Jacobs Permitted Ownership Amount" shall mean 4,690,000 shares of Common
Stock, as adjusted pursuant to the provisions of Article II hereof.
"Lebovitz Permitted Ownership Amount" shall mean 6,300,000 shares of Common
Stock, as adjusted pursuant to the provisions of Article II hereof.
"Standard Beneficial Ownership Limit" shall mean the percentage of the
outstanding Equity Stock of the Corporation referred to in clause (A) of the
definition of "Beneficial Ownership Limit" set forth in the Certificate of
Incorporation.
"Units" shall mean interests in CBL & Associates Limited Partnership, or
any successor thereto, or any similar entity, which interests are, by their
terms or the terms of the governing instruments of such entity, convertible into
or exchangeable for shares of Common Stock of the Corporation.
1.2. Terms used but not defined in this Agreement have the meanings given
such terms in the Resolution and Charter Amendment or, if no meaning is given
such terms in the Resolution or Charter Amendment, the meanings given such term
in the Corporation's Certificate of Incorporation as of the date hereof.
ARTICLE II
ADJUSTMENTS
2.1. The Jacobs Permitted Ownership Amount and the Lebovitz Permitted
Ownership Amount shall be increased as appropriate to reflect stock splits and
similar changes to the Common Stock and shall be decreased as appropriate to
reflect reverse stock splits and similar changes to the Common Stock.
2.2. In the event of an issuance of Common Stock by the Corporation other
than an issuance of Common Stock (i) to the extent described in Section 2.3
below or (ii) to a member of the Lebovitz Group or the Jacobs Group upon the
conversion or exchange of Units, the Jacobs Permitted Ownership Amount and the
Lebovitz Permitted Ownership Amount will each be increased by 15.995% of the
number of shares of Common Stock issued.
2.3. The Jacobs Permitted Ownership Amount and the Lebovitz Permitted
Ownership Amount shall not be increased in the event of an issuance of Common
Stock other than for cash, to the extent that (i) in connection with such
issuance (or the earlier issuance of Units or securities convertible into Common
Stock) the Corporation agrees that the Person (who is not a member of the Jacobs
Group or the Lebovitz Group) to whom the Common Stock is issued shall be subject
to a Beneficial Ownership Limit in excess of the Standard Beneficial Ownership
Limit, (ii) such special Beneficial Ownership Limit is necessary to permit the
Person to Beneficially Own at such times as may be agreed all of the shares of
Common Stock issued or to be issued to such Person (treating all Units held by
such Person as converted or exchanged for shares of Common Stock) and (iii) the
increases in the Jacobs Permitted Ownership Amount and
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the Lebovitz Permitted Ownership Amount that would otherwise be required by
Section 2.2 would have precluded the creation of such special Beneficial
Ownership Limit.
2.4. In the event of a repurchase of Common Stock by the Corporation other
than from a member of the Lebovitz Group or Jacobs Group, the Jacobs Permitted
Ownership Amount shall be reduced by 15.995% of the number of shares of Common
Stock repurchased; provided that if prior to such repurchase a portion of the
Jacobs Permitted Ownership Amount has been reallocated to the Lebovitz Permitted
Ownership Amount pursuant to subparagraph Section 2.10 hereof, then the
repurchase will not result in a reduction of the Jacobs Permitted Ownership
Amount to the extent that the Jacobs Permitted Ownership Amount would otherwise
have been reduced below an amount equal to the lesser of 4,690,000 shares of
Common Stock or the total number of shares of Common Stock Beneficially Owned or
Constructively Owned by the Jacobs Group at the time of the repurchase (treating
all Units Beneficially or Constructively Owned by the Jacobs Group as exchanged
for shares of the Corporation's Common Stock), but instead the repurchase will
cause a reduction in the Lebovitz Permitted Ownership Amount in an amount, not
to exceed the capacity previously reallocated to the Lebovitz Permitted
Ownership Amount pursuant to subparagraph 2.10 hereof, by the amount that the
Jacobs Permitted Ownership Amount would but for this proviso otherwise have been
reduced.
2.5. In the event of a repurchase of Common Stock by the Corporation other
than from a member of the Jacobs Group or Lebovitz Group, the Lebovitz Permitted
Ownership Amount shall be reduced by 15.995% of the number of shares of Common
Stock repurchased; provided that if prior to such repurchase a portion of the
Lebovitz Permitted Ownership Amount has been reallocated to the Jacobs Permitted
Ownership Amount pursuant to subparagraph Section 2.11 hereof, then the
repurchase will not result in a reduction of the Lebovitz Permitted Ownership
Amount to the extent that the Lebovitz Permitted Ownership Amount would
otherwise have been reduced below an amount equal to the lesser of 6,300,000
shares of Common Stock or the total number of shares of Common Stock
Beneficially or Constructively Owned by the Lebovitz Group at the time of the
repurchase (treating all Units Beneficially Owned or Constructively Owned by the
Lebovitz Group as exchanged for shares of the Corporation's Common Stock), but
instead the repurchase will cause a reduction in the Jacobs Permitted Ownership
Amount in an amount, not to exceed the capacity previously reallocated to the
Jacobs Permitted Ownership Amount pursuant to Section 2.11 hereof, by the amount
that the Lebovitz Permitted Ownership Amount would but for this proviso
otherwise have been reduced.
2.6. In the event of a repurchase of Common Stock by the Corporation from a
member of the Jacobs Group, the Jacobs Permitted Ownership Amount shall be
reduced by 31.99% of the number of shares of Common Stock repurchased.
2.7. In the event of a repurchase of Common Stock by the Corporation from a
member of the Lebovitz Group, the Lebovitz Permitted Ownership Amount shall be
reduced by 31.99% of the number of shares of Common Stock repurchased.
2.8. If Beneficial Ownership or Constructive Ownership by the Jacobs Group
of shares of Common Stock equal to the Jacobs Permitted Ownership Amount would
otherwise result in either (i) a violation of clause (A) or clause (E) of the
definition of "Beneficial
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Ownership Limit" in the Resolution or (ii) a violation of the definition of
"Constructive Ownership Limit" in the Resolution, then, to the extent that such
result would not occur but for acquisitions of Beneficial Ownership or
Constructive Ownership of Equity Shares by the Lebovitz Group or its members
pursuant to a transaction or event occurring after September [ ], 2000 that did
not result in an increase in the number of shares of Equity Stock deemed
outstanding for purposes of applying Section 856(a)(6) of the Code ("Lebovitz
Open Market Transactions"), the Lebovitz Permitted Ownership Amount shall be
reduced to the extent necessary to permit Beneficial Ownership by the Jacobs
Group of the Jacobs Permitted Ownership Amount without violating the Beneficial
Ownership Limit or the Constructive Ownership Limit in the manner described
above. The reduction in the Lebovitz Permitted Ownership Amount described in the
preceding sentence shall be deemed to occur immediately before the acquisition
by the Jacobs Group or a member thereof of Beneficial Ownership or Constructive
Ownership of Common Stock that would otherwise have violated the limitations
described above. The number of shares of Equity Stock which the Lebovitz Group
shall be treated as having acquired in Lebovitz Open Market Transactions for
purposes of this Section 2.8 shall be reduced to reflect transactions and other
events occurring after September [ ], 2000 which decrease the number of shares
of Equity Stock Beneficially or Constructively Owned by the Lebovitz Group and
its members.
2.8A. If Beneficial Ownership or Constructive Ownership by the Jacobs Group
of shares of Common Stock equal to the Jacobs Permitted Ownership Amount would
result in either (i) a violation of clause (B) or clause (F) of the definition
of "Beneficial Ownership Limit" in the Certificate of Incorporation but for the
proviso set forth in the such definition or (ii) a violation of clause (B) of
the definition of "Constructive Ownership Limit" but for the proviso set forth
in such definition, then, to the extent that such result would not have occurred
but for Lebovitz Open Market Transactions, the Lebovitz Permitted Ownership
Amount shall be reduced to the extent necessary to permit Beneficial Ownership
by the Jacobs Group of the Jacobs Permitted Ownership Amount without violating
the Beneficial Ownership Limit or the Constructive Ownership Limit in the manner
described above. The reduction in the Lebovitz Permitted Ownership Amount
described in the preceding sentence shall be deemed to occur immediately before
the acquisition by the Jacobs Group or a member thereof of Beneficial Ownership
or Constructive Ownership of Common Stock that would otherwise have violated the
limitations described above. The number of shares of Equity Stock which the
Lebovitz Group shall be treated as having acquired in Lebovitz Open Market
Transactions for purposes of this Section 2.8A shall be reduced to reflect
transactions and other events occurring after September [ ], 2000 which decrease
the number of shares of Equity Stock Beneficially or Constructively Owned by the
Lebovitz Group and its members.
2.9. If Beneficial Ownership or Constructive Ownership by the Lebovitz
Group of shares of Common Stock equal to the Lebovitz Permitted Ownership Amount
would otherwise result in either (i) a violation of clause (A) or clause (B) of
the definition of "Beneficial Ownership Limit" in the Resolution or (ii) a
violation of the definition of "Constructive Ownership Limit" in the Resolution,
then, to the extent that such result would not occur but for acquisitions of
Beneficial Ownership or Constructive Ownership of Equity Shares by the Jacobs
Group or its members pursuant to a transaction or event occurring after
September [ ], 2000 that did not result in an increase in the number of shares
of Equity Stock deemed outstanding for
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purposes of applying Section 856(a)(6) of the Code ("Jacobs Open Market
Transactions"), the Jacobs Permitted Ownership Amount shall be reduced to the
extent necessary to permit Beneficial Ownership by the Lebovitz Group of the
Lebovitz Permitted Ownership Amount without violating the Beneficial Ownership
Limit or the Constructive Ownership Limit in the manner described above. The
reduction in the Jacobs Permitted Ownership Amount described in the preceding
sentence shall be deemed to occur immediately before the acquisition by the
Lebovitz Group or a member thereof of Beneficial Ownership or Constructive
Ownership of Common Stock that would otherwise have violated the limitations
described above. The number of shares of Equity Stock which the Jacobs Group
shall be treated as having acquired in Jacobs Open Market Transactions for
purposes of this Section 2.9 shall be reduced to reflect transactions and other
events occurring after September [ ], 2000 which decrease the number of shares
of Equity Stock Beneficially or Constructively Owned by the Jacobs Group and its
members.
2.9A. If Beneficial Ownership or Constructive Ownership by the Lebovitz
Group of shares of Common Stock equal to the Lebovitz Permitted Ownership Amount
would result in either (i) a violation of clause (B) or clause (C) of the
definition of "Beneficial Ownership Limit" in the Certificate of Incorporation
but for the proviso set forth in the such definition or (ii) a violation of
clause (B) of the definition of "Constructive Ownership Limit" but for the
proviso set forth in such definition, then, to the extent that such result would
not have occurred but for Jacobs Open Market Transactions, the Jacobs Permitted
Ownership Amount shall be reduced to the extent necessary to permit Beneficial
Ownership by the Lebovitz Group of the Lebovitz Permitted Ownership Amount
without violating the Beneficial Ownership Limit or the Constructive Ownership
Limit in the manner described above. The reduction in the Jacobs Permitted
Ownership Amount described in the preceding sentence shall be deemed to occur
immediately before the acquisition by the Lebovitz Group or a member thereof of
Beneficial Ownership or Constructive Ownership of Common Stock that would
otherwise have violated the limitations described above. The number of shares of
Equity Stock which the Jacobs Group shall be treated as having acquired in
Jacobs Open Market Transactions for purposes of this Section 2.9A shall be
reduced to reflect transactions and other events occurring after September [ ],
2000 which decrease the number of shares of Equity Stock Beneficially or
Constructively Owned by the Jacobs Group and its members.
2.10. To the extent that the Jacobs Permitted Ownership Amount exceeds the
total number of shares of Common Stock Beneficially Owned or Constructively
Owned by the members of the Jacobs Group, treating all Units Beneficially or
Constructively Owned by such members as exchanged for shares of the
Corporation's Common Stock, then the Jacobs Permitted Ownership Amount will be
reduced by the amount of such excess and there shall be a corresponding increase
in the Lebovitz Permitted Ownership Amount.
2.11. To the extent that the Lebovitz Permitted Ownership Amount exceeds
the total number of shares of Common Stock Beneficially Owned or Constructively
Owned by the members of the Lebovitz Group, treating all Units Beneficially or
Constructively Owned by such members as exchanged for shares of the
Corporation's Common Stock, and such excess has existed for at least one year,
then the Lebovitz Permitted Ownership Amount will be reduced by the amount of
such excess and there shall be a corresponding increase in the Jacobs Permitted
Ownership Amount.
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2.12. Adjustments to the Lebovitz Permitted Ownership Amount and the Jacobs
Permitted Ownership Amount under this Article II shall be computed from
September [ ], 2000.
2.13. Notwithstanding anything in this Article II to the contrary, in no
event shall any adjustment hereunder result in the Lebovitz Permitted Ownership
Amount being less than that permitted by the Standard Beneficial Ownership Limit
and in no event shall any adjustment hereunder result in the Jacobs Permitted
Ownership Amount being less than 200% of the Standard Beneficial Ownership
Limit.
ARTICLE III
MODIFICATIONS
3.1. The Corporation and the other parties agree that Clauses (A) through
(E) of the definition of "Beneficial Ownership Limit" in the Resolution may be
modified by the Board of Directors of the Corporation pursuant to subparagraph
D(10) of Article IV of the Certificate of Incorporation without the consent of
the parties hereto only in accordance with the restrictions set forth in this
Article III.
3.2. The Corporation and the other parties hereto agree that in no event
may any of clauses (A) through (E) of the definition of "Beneficial Ownership
Limit" in the Resolution be modified, or there be any modification to the
definition of "Beneficial Ownership Limit" in the Certificate of Incorporation
in such a manner that, immediately following such modification and assuming that
any Person or group added to a joint ownership limit with the Jacobs Group or
the Lebovitz Group Beneficially or Constructively Owns the maximum amount of
shares of Common Stock they are permitted to Beneficially or Constructively Own
(or would be allowed to Constructively Own or Beneficially Own if such Person or
group converted the Units that such Person or members of such group Beneficially
or Constructively Owned), the Lebovitz Group and the Jacobs Group together or
either the Lebovitz Group or members thereof or the Jacobs Group or members
thereof would be in violation of such modified limit if the Lebovitz Group and
the members thereof Beneficially Owned shares of Common Stock equal to the
Lebovitz Permitted Ownership Amount and the Jacobs Group and the members thereof
Beneficially Owned shares of Common Stock equal to the Jacobs Permitted
Ownership Amount.
3.3. The Corporation agrees that where modifications to clauses (A) through
(E) of the definition of "Beneficial Ownership Limit" in the Resolution are
permitted by Section 3.2 above, such modifications shall be made only in
accordance with the following restrictions:
(i) the decrease in the percentage referred to in clause (A) shall be
split equally in decreasing the percentages referred to in clause (B) and
(E);
(ii) the percentage referred to in clause (C) will always be less than
the percentage referred to in clause (D) by an amount equal to the amount
of the Standard Beneficial Ownership Limit;
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(iii) the percentage referred to in clause (E) may never be higher
than the percentage referred to in clause (B); and
(iv) the percentage referred to in clause (A) may never be less than
300% of the Standard Beneficial Ownership Limit, the percentages referred
to in clauses (B) and (E) may never be less than 200% of the Standard
Beneficial Ownership Limit, the percentage referred to in clause (C) may
never be less than the Standard Beneficial Ownership Limit and the
percentage referred to in clause (D) may never be less than 200% of the
Standard Beneficial Ownership Limit.
3.4. The Corporation agrees that no modification of the definition of
"Constructive Ownership Limit" adverse to the Jacobs Group or its members or the
Lebovitz Group or its members will be permitted without the consent of Jacobs
Realty Investors Limited partnership, a Delaware limited partnership ("JRI") and
LebFam, Inc., a Tennessee corporation ("LebFam"); provided that the Equity Stock
ownership percentage referred in the definition of "Constructive Ownership
Limit" may be modified so that such percentage is the same as or greater than
the percentage referred to in clause (A) of the definition of "Beneficial
Ownership Limit" in the Resolution.
3.5. Notwithstanding anything in the foregoing to the contrary, the
Beneficial Ownership Limit and the Constructive Ownership Limit under the
Certificate of Incorporation or the Resolution (including, without limitation,
clauses (A) through (E) of the definition of "Beneficial Ownership Limit" may be
modified by the Corporation's Board of Directors pursuant to subparagraph
(D)(10) of Article IV of the Certificate of Incorporation with the prior written
consent of JRI, on behalf of the Jacobs Group and its members, and LebFam, on
behalf of the Lebovitz Group and its members.
3.6. The Corporation agrees not to initiate or endorse any proposal to
shareholders to amend, in a manner adverse to the Jacobs Group or any member
thereof or the Lebovitz Group or any member thereof, any of the provisions or
definitions in (i) the amendment to its Certificate of Incorporation approved at
the shareholders meeting contemplated under Section 4.15 of the Master
Contribution Agreement dated September __, 2000 among JRI, Richard E. Jacobs,
solely as Trustee for the Richard E. Jacobs Revocable Living Trust, Richard E.
Jacobs, solely as Trustee for the David H. Jacobs Marital Trust, the Corporation
and CBL & Associates Limited Partnership or (ii) the Resolution except with the
prior written consent of JRI, on behalf of the Jacobs Group and its members, and
LebFam, on behalf of the Lebovitz Group and its members.
ARTICLE IV
ADOPTION OF CHARTER AMENDMENT
4.1. Once the Charter Amendment been approved by the requisite vote of the
Corporation's stockholders and has been adopted and become effective, the
following references in this Agreement will be modified as follows:
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(i) references to "15.995%" shall become references to 18.995%;
(ii) references to "31.99%" shall become references to "37.99%";
(iii) references to 4,690,000 shall become references to 6,350,000;
(iv) references to 6,300,000 shall become references to 7,960,000;
(v) references to clauses (A), (B), (C), (D) and (E) of the definition
of "Beneficial Ownership Limit" in the Resolution shall become references
to clauses (B) through (F) of the definition of "Beneficial Ownership
Limit" in the Certificate of Incorporation; and
(vi) references to the "Constructive Ownership Limit" in the
Resolution shall become references to the "Constructive Ownership Limit" as
set forth in the Certificate of Incorporation.
4.2. For periods prior to the adoption of the Charter Amendment, Sections
2.8 and 2.9 (and not Sections 2.8A and 2.9A) hereof shall be effective.
Following the adoption of the Charter Amendment, Sections 2.8A and 2.9A (and not
Sections 2.8 and 2.9) shall be effective.
4.3. For periods following the adoption of the Charter Amendment, the
Jacobs Permitted Ownership Amount and the Lebovitz Permitted Ownership Amount
shall be calculated from September [ ], 2000 as though the modifications set
forth in Section 4.1 hereof had always been in effect.
ARTICLE V
AMENDMENTS
5.1. This Agreement may not be amended or modified other than in writing
executed by JRI on behalf of the Jacobs Group and its members and by LebFam on
behalf of the Lebovitz Group and its members.
ARTICLE VI
ACKNOWLEDGMENT
6.1. The parties hereto acknowledge and agree that Paragraph 5 of the
Resolution shall have the effect of causing shares Beneficially or
Constructively Owned by (i) the Lebovitz Group or its members in excess of the
Lebovitz Permitted Ownership Amount or (ii) the Jacobs Group or its members in
excess of the Jacobs Permitted Ownership Amount to become Shares-in-Trust
pursuant to Article V of the Certificate of Incorporation.
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ARTICLE VII
THIRD PARTY BENEFICIARIES
7.1. The members of the Jacobs Group and the Lebovitz Group shall be third
party beneficiaries of the agreements set forth in Article III hereof.
ARTICLE VIII
TERMINATION
8.1. This Agreement will terminate with respect the Lebovitz Group and its
members, or the Jacobs Group and its members, at such time as such group and its
members Beneficially Own and Constructively Own shares of the Company's Equity
Stock (treating all Units held by such group and its members as converted or
exchanged) representing, in the aggregate, less than the Standard Beneficial
Ownership Amount.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the [ ]
day of _______, 200[1].
CBL & Associates Properties, Inc.
By:
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Name:
Title:
CBL & Associates, Inc.
By:
------------------------------
Name:
Title:
-----------------------------
Charles B. Lebovitz
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Stephen D. Lebovitz
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Jacobs Realty Investors Limited
Partnership
By: JG Realty Investors Corp.
By:
------------------------------
Name:
Title:
-----------------------------
Richard E. Jacobs, solely as trustee for
the Richard E. Jacobs Revocable Living
Trust
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Richard E. Jacobs, solely as trustee for
the David H. Jacobs Marital Trust
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