EX-99.2 3 0003.txt AMENDMENT NO. 1 TO RIGHTS AGREEMENT AMENDMENT NO. 1 TO RIGHTS AGREEMENT Amendment No. 1, dated as of January 31, 2001 ("Amendment No. 1"), between CBL & Associates Properties, Inc., a Delaware corporation (the "Company"), and SunTrust Bank, a Georgia corporation, as rights agent (the "Rights Agent"). WHEREAS, the Company and BankBoston, N.A. entered into that certain Rights Agreement, dated as of April 30, 1999 (the "Rights Agreement"); WHEREAS, SunTrust Bank, has succeeded BankBoston, N.A as rights agent under the Rights Agreement; WHEREAS, as of the date hereof the Distribution Date (as defined in the Rights Agreement) has not occurred; WHEREAS, the Company has entered into that certain Master Contribution Agreement, dated as September 25, 2000, as amended (the "Master Contribution Agreement"), with CBL & Associates Limited Partnership, a Delaware limited partnership, Jacobs Realty Investors Limited Partnership, a Delaware limited partnership ("JRI"), and the other parties thereto; WHEREAS, as contemplated under the Master Contribution Agreement, the Company's 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, has been further amended pursuant to a Certificate of Amendment, filed with the Secretary of State of the State of Delaware on the date hereof (such Certificate of Incorporation, as so supplemented and amended, the "Current Certificate of Incorporation"), a copy of which amendment is attached hereto as Exhibit A; WHEREAS, the Company has entered into that certain Share Ownership Agreement, dated as of the date hereof (the "Share Ownership Agreement"), with JRI and the other parties thereto, a copy of which Agreement is attached hereto as Exhibit B; and WHEREAS, in connection with the principal closing of the transaction contemplated under the Master Contribution Agreement, and as required under Section 4.10 of the Master Contribution Agreement, the Company desires to amend the Rights Agreement in accordance with Section 27 thereof, as further provided herein; NOW, THEREFORE, in consideration of the premises and mutual agreements set forth in the Rights Agreement and this Amendment No. 1, the parties hereby agree as follows: SECTION 1. Amendment to Definition of "Acquiring Person". The first sentence of Section 1(a) of the Rights Agreement is hereby deleted and replaced in its entirety with the following: (a) "Acquiring Person" shall mean any Person who or which, together with all Affiliates and Associates of such Person, shall be the Beneficial Owner of 15% or more of the shares of Common Stock then outstanding, but shall not include (i) the Company, (ii) any Subsidiary of the Company, (iii) any employee benefit plan of the Company or of any Subsidiary of the Company, (iv) any Person or entity holding shares of Common Stock for or pursuant to the terms of any such plan to the extent, and only to the extent, of such shares so held, (v) any member of the Lebovitz Group or (vi) the Jacobs Group or any of its members provided that such Person does not Beneficially Own or Constructively Own Equity Stock ("Beneficially Own", "Constructively Own" and "Equity Stock", for purposes of this clause (vi) only, as defined in the Current Certificate of Incorporation) in excess of the Jacobs Permitted Ownership Amount. SECTION 2. Amendment to Definition of "Distribution Date". Section 1(k) of the Rights Agreement is hereby deleted and replaced in its entirety with the following: (k) "Distribution Date" shall mean the earlier of (i) the Close of Business on the tenth day after the Stock Acquisition Date (or, if the tenth day after the Stock Acquisition Date occurs before the Record Date, the Close of Business on the Record Date), or (ii) the Close of Business on the tenth Business Day (or, if such tenth Business Day occurs before the Record Date, the Close of Business on the Record Date), or such specified or unspecified later date on or after the Record Date as may be determined by action of the Board prior to such time as any Person becomes an Acquiring Person, after the date that a tender or exchange offer by any Person (other than the Company, any Subsidiary of the Company or any employee benefit plan of the Company or of any Subsidiary of the Company or any Person or entity holding shares of Common Stock for or pursuant to the terms of any such plan or any member of the Lebovitz Group) is first published or sent or given within the meaning of Rule 14d-2(a) of the General Rules and Regulations under the Exchange Act, if (a) with respect to any Person other than the Jacobs Group or any of its members, upon consummation thereof, such Person would be the Beneficial Owner of 15% or more of the outstanding shares of Common Stock and (b) with respect to the Jacobs Group or any of its members, upon consummation thereof, such Person would Beneficially Own or Constructively Own Equity Stock ("Beneficially Own", "Constructively Own" and "Equity Stock", for purposes of this clause (b) only, as defined in the Current Certificate of Incorporation) in excess of the Jacobs Permitted Ownership Amount. SECTION 3. Amendment of Section 1 to Add Certain Definitions. Section 1 is hereby amended to add the following definitions: "Jacobs Family Member" shall mean each of Richard E. Jacobs, any spouse or lineal descendant of Richard E. Jacobs or David H. Jacobs, and any spouse or lineal descendant of any of the foregoing. "Jacobs Group" shall have the meaning set forth in the Current Certificate of Incorporation, except that the term "Jacobs Group" shall not be deemed to include any entity unless (i) at least 51% of the economic interests in such entity are beneficially owned (as defined in Rule 13d-3 of the General Rules and Regulations under the Exchange Act) by one or more Jacobs Family Members; and (ii) such entity is controlled exclusively by one or more Jacobs Family Members, provided however, that each of the Richard E. Jacobs Revocable Living Trust and the David H. Jacobs Marital Trust shall be deemed to be a member of the Jacobs Group so long as it satisfies the conditions of clause (i) above regardless of how it is controlled. "Jacobs Permitted Ownership Amount" shall have the meaning set forth in the Share Ownership Agreement. SECTION 4. Rights Agreement as Amended. The term "Agreement" as used in the Rights Agreement shall be deemed to refer to the Rights Agreement as amended hereby and shall be deemed to include the additional terms defined in this Amendment No. 1. The foregoing amendments shall be effective as of the date hereof and, except as set forth herein, the Rights Agreement shall remain in full force and effect and shall be otherwise unaffected hereby. SECTION 5. Acknowledgment. The Company hereby acknowledges its existing obligations under Section 4.10 of the Master Contribution Agreement with respect to any further amendments to the Rights Agreement as amended hereby. SECTION 6. Counterparts. This Amendment No. 1 may be executed in any number of counterparts, and each of such counterparts shall for all purposes be deemed an original and all such counterparts shall together constitute but one and same instrument. SECTION 7. Governing Law. This Amendment No. 1 shall be deemed to be a contract made under the laws of the State of Delaware and for all purposes shall be governed by and construed in accordance with the laws of such State applicable to contracts made and to be performed entirely within such State. SECTION 8. Descriptive Headings. Descriptive headings of this Amendment No. 1 are inserted for convenience only and shall not control or affect the meaning or construction of any of the provisions hereof. IN WITNESS WHEREOF, the parties hereto have caused this Amendment No. 1 to Rights Agreement to be duly executed as of the day and year first above written. CBL & ASSOCIATES PROPERTIES, INC. By: /s/ John N. Foy ------------------------------ Name: John N. Foy Title: Vice Chairman and Chief Financial Officer SUNTRUST BANK, as Rights Agent By: /s/ Sandra Benefield ------------------------------ Name: Sandra Benefield Title: Assistant Vice President EXHIBIT A CERTIFICATE OF AMENDMENT OF AMENDED AND RESTATED CERTIFICATE OF INCORPORATION OF CBL & ASSOCIATES PROPERTIES, INC. 1. The name of the corporation (which is hereinafter referred to as the "Corporation") is "CBL & Associates Properties, Inc." 2. The Amended and Restated Certificate of Incorporation of the Corporation, 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 "Amended and Restated Certificate of Incorporation") shall be further amended as provided below. 3. This Certificate of Amendment has been duly proposed by resolutions adopted and declared advisable by the Board of Directors of the Corporation, duly adopted by the stockholders of the Corporation and duly executed and acknowledged by the officers of the Corporation in accordance with the provisions of Sections 103 and 242 of the General Corporation Law of the state of Delaware. 4. The text of Article IV of the Amended and Restated Certificate of Incorporation of the Corporation is hereby amended as follows: ARTICLE IV 1. The definition of "Beneficial Ownership Limit" shall be amended to read as follows: "Beneficial Ownership Limit" shall mean (A) with respect to any Person other than a Family Group or a member thereof, 6% of the outstanding Equity Stock of the Corporation, (B) with respect to the Family Groups and their members in the aggregate, 37.99% of the outstanding Equity Stock of the Corporation, (C) with respect to the Lebovitz Group and its members in the aggregate, 25.4% of the outstanding Equity Stock of the Corporation, (D) with respect to any single member of the David Jacobs Group or the Richard Jacobs Group that is an Individual, 13.9% of the outstanding Equity Stock of the Corporation, (E) with respect to any two members of the David Jacobs Group or the Richard Jacobs Group that are Individuals, 19.9% of the outstanding Equity Stock of the Corporation and (F) with respect to Jacobs Group and its members in the aggregate, 19.9% of the outstanding Equity Stock of the Corporation; in each case, determined by number of shares outstanding, voting power (disregarding, in the case of the Jacobs Group and its members, any power to designate nominees to the Corporation's Board of Directors pursuant to the Voting and Standstill Agreement dated September 25, 2000 among the Corporation, CBL & Associates Limited Partnership, Jacobs Realty Investors Limited Partnership and others (the "Voting and Standstill Agreement")) or value (as determined by the Board of Directors), whichever produces the smallest holding of Equity Stock and computed taking into account all outstanding shares of Equity Stock and, to the extent provided by the Code in connection with the determination required by Section 856(a)(6) of the Code, all shares of Equity Stock issuable under existing Options and Exchange Rights that have not been exercised or Deferred Stock that has not vested; provided, however, that (i) in no event shall the Lebovitz Group or any Person composed of one or more members of the Lebovitz Group be treated as Beneficially Owning Equity Stock in excess of the limitations set forth in clauses (B) or (C) above to the extent that the Lebovitz Group Beneficially Owns not more than the Lebovitz Permitted Ownership Amount and (ii) in no event shall the Jacobs Group, the David Jacobs Group, the Richard Jacobs Group or any Person composed of one or more members of any such group be treated as Beneficially Owning Equity Stock in excess of the limitations set forth in clauses (B) or (F) above to the extent that the Jacobs Group Beneficially Owns not more than the Jacobs Permitted Ownership Amount. 2. The definition of "Constructive Ownership Limit" shall be amended to read as follows: "Constructive Ownership Limit" shall mean (A) with respect to any Person other than a Family Group or a member thereof, 6% of the outstanding Equity Stock of the Corporation and (B) with respect to the Family Groups and their members in the aggregate, 37.99% of the outstanding Equity Stock of the Corporation; in each case, determined by number of shares outstanding, voting power (disregarding, in the case of the Jacobs Group and its members, any power to designate nominees to the Corporation's Board of Directors pursuant to the Voting and Standstill Agreement) or value (as determined by the Board of Directors), whichever produces the smallest holding of Equity Stock and computed taking into account all outstanding shares of Equity Stock and, to the extent provided by the Code in connection with the determination required by Section 856(d)(2)(B) of the Code, all shares of Equity Stock issuable under existing Options and Exchange Rights that have not been exercised or Deferred Stock that has not vested; provided, however, that (I) except as provided in clause (II) hereof, (i) in no event shall the Lebovitz Group or any Person composed of one or more members of the Lebovitz Group be treated as Constructively Owning Equity Stock in excess of the Constructive Ownership Limit to the extent that the Lebovitz Group Constructively Owns not more than the Lebovitz Permitted Ownership Amount and (ii) in no event shall the Jacobs Group, the David Jacobs Group, the Richard Jacobs Group or any Person composed of one or more members of any such group be treated as Constructively Owning Equity Stock in excess of the Constructive Ownership Limit to the extent that the Jacobs Group and its members Constructively Own not more than the Jacobs Permitted Ownership Amount and (II) a member of the Lebovitz Group or the Jacobs Group (but not the Lebovitz Group or the Jacobs Group themselves) will be subject to a Constructive Ownership Limit of 9.9% of the outstanding Equity Stock of the Corporation at all times that (x) such member, together with other members of the Lebovitz Group or the Jacobs Group, as the case may be, each of whom Constructively Owns at least 10% of the outstanding Equity Stock of the Corporation, Constructively Own, in the aggregate (a) 10% or more of the total voting power, number of outstanding shares or value of the outstanding shares of any Tenant that is treated as a corporation for federal income tax purposes or (b) an interest of 10% or more in the assets or net profits of any Tenant that is not treated as a corporation for federal income tax purposes, (y) such member Constructively Owns an equity interest in such Tenant and (z) the aggregate amount of 2 gross income derived by the Corporation in its immediately preceding taxable year from the Tenants whose ownership is described in clause (x) (taking into account only ownership by such member and other members of the Group that includes such member) exceeded $750,000. 3. The definition of "Wolford Group" and all references thereto shall be deleted. 4. Subparagraph (D)(9) of Article IV is amended by substituting "result in violation of Section 856(h) of the Code or the receipt of nonqualified income under Section 856(d)(2)(B) of the Code" for "violate the applicable Ownership Limit" on the fourth-to-last line thereof. 5. The following definitions shall be added to Article IV(D)(1): "David Jacobs Group" shall mean (i) the widow of David Jacobs, (ii) the lineal descendants of David Jacobs and (iii) all Persons that would Constructively Own or Beneficially Own shares of Equity Stock Constructively Owned or Beneficially Owned by individuals described in (i) or (ii). "Family Groups" shall mean the Lebovitz Group, the David Jacobs Group and the Richard Jacobs Group. "Individuals" shall mean Persons that are treated as "individuals" for purposes of Section 542(a)(2) of the Code. "Jacobs Group" shall mean the David Jacobs Group, the Richard Jacobs Group and the members of such groups. "Jacobs Permitted Ownership Amount" shall be defined and adjusted as in the Share Ownership Agreement. "Lebovitz Permitted Ownership Amount" shall be defined and adjusted as in the Share Ownership Agreement. "Richard Jacobs Group" shall mean (i) Richard Jacobs and each member of his family for purposes of Section 318(a) or 544 of the Code and (ii) all Persons that would Constructively Own or Beneficially Own shares of Equity Stock Constructively Owned or Beneficially Owned by individuals described in (i). "Share Ownership Agreement" shall mean the Share Ownership Agreement, dated as of [January 31, 2001] by and between the Corporation, CBL & Associates, Inc., Charles B. Lebovitz, Stephen D. Lebovitz, Jacobs Realty Investors Limited Partnership, Richard E. Jacobs, solely as trustee for the Richard E. Jacobs Revocable Living Trust and Richard E. Jacobs, solely as trustee for the David H. Jacobs Marital Trust, as such may be amended from time to time by the parties thereto. 6. The following subparagraph is added to Article IV(D)(3): 3 (c) 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 the shares of Equity Stock that otherwise would be so Beneficially Owned or Constructively Owned shall be designated Shares-in-Trust hereunder and, in accordance with subparagraph E of this Article IV, transferred automatically and by operation of law to a Trust; provided, however, that this clause (c) 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 this Certificate of Incorporation. 7. A new subparagraph (D)(14) shall be added to read as follows: (14) No amendment to this Article IV or modification of the Ownership Limits pursuant to Article IV(D)(10) or any successor provision shall be effective if such amendment is adverse to the Jacobs Group or any of its members (unless Jacobs Realty Investors Limited Partnership, a Delaware limited partnership, consents) or to the Lebovitz Group or any of its members (unless LebFam, Inc., a Tennessee corporation, consents) and is not undertaken with unanimous prior approval of the Corporation's Board of Directors. For the avoidance of doubt, a decrease in the Standard Beneficial Ownership Limit or a modification of the Beneficial Ownership Limit in accordance with Article III of the Share Ownership Agreement shall not be treated as adversely affecting the Jacobs Group or its members or the Lebovitz Group or its members. References in this subparagraph (D)(14) to the Jacobs Group or any of its members shall be deemed deleted after the Share Ownership Agreement has terminated with respect to the Jacobs Group and its Members. References in this subparagraph (D)(14) to the Lebovitz Group or any of its members shall be deemed deleted after the Share Ownership Agreement has terminated with respect to the Lebovitz Group and its Members. 8. A new subparagraph (I) for Article IV shall be added to read as follows: I Furnishing Copies Copies of the Voting and Standstill Agreement and the Share Ownership Agreement will be furnished by the Corporation without charge to each shareholder who so requests. 4 IN WITNESS WHEREOF, the Corporation has caused this Certificate of Amendment to be signed by its Chairman of the Board and Chief Executive Officer and attested to by its Secretary this __ day of ________, 2001. CBL & ASSOCIATES PROPERTIES, INC. BY: ------------------------------ Charles B. Lebovitz Chairman of the Board and Chief Executive Officer Attest: ------------------------------ John N. Foy Secretary 5 EXHIBIT B SHARE OWNERSHIP AGREEMENT THIS SHARE OWNERSHIP AGREEMENT is made as of the 31st day of January, 2001, by and among CBL & Associates Properties, Inc., CBL & Associates, Inc., LebFam, Inc., Charles B. Lebovitz, Stephen D. Lebovitz, Jacobs Realty Investors Limited Partnership, Richard E. Jacobs, solely as trustee for the Richard E. Jacobs Revocable Living Trust, and Richard E. Jacobs, solely as trustee for the David H. Jacobs Marital Trust. WITNESSETH: ----------- WHEREAS, the Master Contribution Agreement dated September 25, 2000 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, as amended, (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)-2 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, in consideration of the premises and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the partie 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 -2- 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 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 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 Section 2.10 hereof, by the amount that the Jacobs Permitted Ownership Amount would but for this proviso otherwise have been reduced. -3- 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 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 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 25, 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 -4- 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 25, 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 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 25, 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 25, 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 ("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 -5- 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 25, 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 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 25, 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. -6- 2.12. Adjustments to the Lebovitz Permitted Ownership Amount and the Jacobs Permitted Ownership Amount under this Article II shall be computed from September 25, 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. (a) The Corporation and the other parties hereto agree that, except as explicitly permitted by Section 3.2(b) hereof or Section 3.2(e) hereof, in no event may (i) any of clauses (A) through (E) of the definition of "Beneficial Ownership Limit" in the Resolution be modified or amended or (ii) there be any modification to the definition of "Beneficial Ownership Limit" in the Certificate of Incorporation in any manner that, in either case, would either (x) reduce at any time the Jacobs Permitted Ownership Amount or otherwise limit in any way the right of the Jacobs Group and its members to acquire Beneficial Ownership of shares of Equity Stock or (y) reduce at any time the Lebovitz Permitted Ownership Amount or otherwise limit in any way the right of the Lebovitz Group and its members to acquire Beneficial Ownership of shares of Equity Stock. (b) An amendment or modification that would otherwise be prohibited by Section 3.2(a) hereof shall be permitted if all of the following requirements are satisfied: (i) the amendment or modification creates (x) an ownership limit that applies on an aggregate basis to (I) the Jacobs Group and its members, (II) the Lebovitz Group and its members and (III) an additional Person or group (such Person or group, the "Third Holder") to which shares of the Corporation's Equity Stock or Units are being issued by the Corporation or may be issued by the Corporation in exchange for or on the conversion of Units of CBL & Associates Limited Partnership or interests in another entity in which the Corporation or -7- CBL & Associates Limited Partnership has an interest, and (y) a "permitted ownership amount" with respect to the Third Holder; (ii) the amendment or modification would not limit in any manner or circumstance the ability of the Jacobs Group and its members to convert or exchange Units into a number of shares of Common Stock equal to the Jacobs Permitted Ownership Amount, except to the extent that the Jacobs Group or its members have acquired shares of Common Stock in a Jacobs Open Market Transaction prior to such conversion or exchange and such acquisitions have used ownership capacity under the Beneficial Ownership Limit that would otherwise have been used by such conversions or exchanges; (iii) the amendment or modification would not limit in any manner or circumstance the ability of the Lebovitz Group and its members to convert or exchange Units into a number of shares of Common Stock equal to the Lebovitz Permitted Ownership Amount, except to the extent that the Lebovitz Group or its members have acquired shares of Common Stock in a Lebovitz Open Market Transaction prior to such conversion or exchange and such acquisitions have used ownership capacity under the Beneficial Ownership Limit that would otherwise have been used by such conversions or exchanges; (iv) the amendment or modification (together with any prior amendments or modifications permitted by this Section 3.2) would not have the effect, in any circumstance, of restricting or limiting the ability of the Jacobs Group and its members to acquire Beneficial Ownership in a Jacobs Open Market Transaction (and assuming that immediately prior to such acquisition the Jacobs Group and its members Beneficially Owned no more than 50 shares of Common Stock) at least (i) 2,908,000 shares of Common Stock if the Charter Amendment has not been approved or (ii) 3,559,000 shares of Common Stock if the Charter Amendment has been approved; (v) the amendment or modification (together with any prior amendments or modifications permitted by this Section 3.2) would not have the effect, in any circumstance, of restricting or limiting the ability of the Lebovitz Group and its members to acquire Beneficial Ownership in a Lebovitz Open Market Transaction (and assuming that immediately prior to such acquisition the Lebovitz Group and its members Beneficially Owned no more than 2,187,000 shares of Common Stock) at least (i) 2,551,000 shares of Common Stock if the Charter Amendment has not been approved or (ii) 3,236,000 shares of Common Stock if the Charter Amendment has been approved; (vi) except as described in clause (viii) below, such amendment or modification (x) would not affect increases in the Jacobs Permitted Ownership -8- Amount and the Lebovitz Permitted Ownership Amount occurring as a result of an event described in Section 2.2 hereof (relating to the issuance of Common Stock by the Corporation) and (y) shall provide that, on the occurrence of an event described in Section 2.2 hereof (relating to an issuance of Common Stock by the Corporation) the permitted ownership amount (or equivalent concept) for the Third Holder shall increase by a number of shares of Common Stock equal to the product of (i) the percentage specified in the Standard Beneficial Ownership Limit and (ii) the number of shares of Common Stock issued in the event; (vii) except as provided in clause (ix) below, following such amendment or modification, upon an event described in Section 2.4 and Section 2.5 hereof (other than a repurchase by the Corporation of Common Stock Beneficially Owned by the Third Holder) the permitted ownership amount (or equivalent concept) of the Third Holder, the Jacobs Permitted Ownership Amount and the Lebovitz Permitted Ownership shall each be decreased by a percentage of the total number of shares repurchased that equals one-third of the percentage Beneficial Ownership Limit that applies on an aggregate basis to the Third Holder, the Jacobs Group and the Lebovitz Group; (viii) such amendment or modification provides that where, following an event described in Section 2.4 and 2.5 hereof, other than a repurchase of Common Stock Beneficially Owned by the Third Holder, (the "Reduction Event") as to which the Jacobs Permitted Ownership Amount and the Lebovitz Permitted Ownership Amount were decreased in the manner described in Section 3.2(b)(vii) above, an event described in Section 2.2 hereof occurs, the Jacobs Permitted Ownership Amount and the Lebovitz Permitted Ownership Amount will each be increased by a percentage of the shares of Common Stock issued by the Corporation that equals the percentage provided pursuant to Section 3.2(b)(vii), until each of the Jacobs Permitted Ownership Amount and the Lebovitz Permitted Ownership Amount equals what it was immediately before the Reduction Event, and subsequently Section 2.2 hereof shall be applied without regard to this Section 3.2(b)(viii); (ix) such amendment or modification provides that where, following an event described in Section 2.2 hereof (the "Increase Event") as to which the Jacobs Permitted Ownership Amount and Lebovitz Permitted Ownership Amounts were increased, an event described in Section 2.4 and Section 2.5 occurs (other than a repurchase of shares of Common Stock Beneficially Owned by the Third Holder), the Jacobs Permitted Ownership Amount and the Lebovitz Permitted Ownership Amount will each be decreased by a percentage of the shares of Common Stock repurchased by the Corporation that equals the percentage specified in Section 2.2, until each of the Jacobs Permitted Ownership Amount and the Lebovitz Permitted ownership Amount equals what it was -9- immediately before the Increase Event, and subsequently Sections 2.4 and 2.5 hereof shall be applied without regard to this Section 3.2(b)(ix); (x) such amendment or modification provides that in the event of a repurchase by the Corporation of Common Stock Beneficially Owned by the Third Holder, (I) the permitted ownership amount (or equivalent concept) of the Third Holder shall be reduced by a number of shares of Common Stock equal to the product of (i) the number of shares repurchased and (ii) the percentage specified in the aggregate Beneficial Ownership Limit applicable to the Jacobs Group and its members, the Lebovitz Group and its members and such Person or group and (II) there shall be no decrease in either the Jacobs Permitted Ownership Amount or the Lebovitz Permitted Ownership Amount; (xi) notwithstanding Section 2.6 hereof, such amendment or modification provides that 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 a number of shares of Common Stock equal to the product of (i) the number of shares repurchased and (ii) the percentage specified in the aggregate Beneficial Ownership Limit applicable to the Jacobs Group and its members, the Lebovitz Group and its members and the Third Holder; (xii) notwithstanding Section 2.7 hereof, such amendment or modification provides that 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 a number of shares of Common Stock equal to the product of (i) the number of shares repurchased and (ii) the percentage specified in the aggregate Beneficial Ownership Limit applicable to the Jacobs Group and its members, the Lebovitz Group and its members and the Third Holder; and (xiii) the amendment or modification complies with the restrictions imposed by Section 3.3 hereof. (c) The references to 2,908,000 and 3,559,000 shares of Common Stock in Section 3.2(b)(iv) and to 2,551,000 and 3,236,000 shares of Common Stock in Section 3.2(b)(v) hereof shall be appropriately adjusted to reflect stock splits, stock dividends, reverse stock splits, share issuances, share repurchases and similar events occurring after the date hereof. (d) In connection with an amendment or modification permitted by Section 3.2 hereof, the percentages referred to in Sections 2.4 and 2.5 may be amended, provided that in no event may the percentage referred to in Section 2.5 be less than the percentage referred to in Section 2.4. -10- (e) If an amendment or modification that would otherwise be prohibited by Section 3.2(a) hereof would satisfy all of the requirements of Section 3.2(b) hereof except for requirements relating to the Jacobs Group, the Jacobs Permitted Ownership Amount, or the ability of the Jacobs Group or any of its members to acquire Beneficial Ownership of Common Stock, either through conversions or exchanges of Units or otherwise, then such amendment or modification may be made notwithstanding that it otherwise fails to satisfy Section 3.2(b) hereof if and only if JRI has provided its prior written consent to such amendment. If an amendment or modification that would otherwise be prohibited by Section 3.2(a) hereof would satisfy all of the requirements of Section 3.2(b) hereof except for requirements relating to the Lebovitz Group, the Lebovitz Permitted Ownership Amount, or the ability of the Lebovitz Group or any of its members to acquire Beneficial Ownership of Common Stock, either through conversions or exchanges of Units or otherwise, then such amendment or modification may be made notwithstanding that it otherwise fails to satisfy Section 3.2(b) hereof if and only if LebFam has provided its prior written consent to such amendment. 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 clauses (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; (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., -11- 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 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 has 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: (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 -12- (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 25, 2000 as though the modifications set forth in Section 4.1 hereof had always been in effect. -13- 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. 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. ARTICLE IX -14- MISCELLANEOUS 9.1. The parties hereto agree that this Agreement shall in all respects be governed by and construed in accordance with the internal laws of the State of Delaware 9.2. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which shall constitute one and the same instrument. 9.3. If any provision hereof is held invalid or not enforceable to is fullest extent, such provision shall be enforced to the extent permitted by law, and the validity of the remaining provisions hereof shall not be affected thereby. [Remainder of page intentionally left blank] -15- IN WITNESS WHEREOF, the parties have executed this Agreement as of the 31st day of January, 2001. CBL & Associates Properties, Inc. By: ------------------------------ Name: Title: CBL & Associates, Inc. By: ------------------------------ Name: Title: LebFam, Inc. By: ------------------------------ Name: Title: -------------------------------- By: Charles B. Lebovitz ------------------------------- By: Stephen D. Lebovitz Jacobs Realty Investors Limited Partnership By: JG Realty Investors Corp., general partner By: ------------------------------ Name: -16- Title: ---------------------------------- By: Richard E. Jacobs, solely as trustee for the Richard E. Jacobs Revocable Living Trust ---------------------------------- By: Richard E. Jacobs, solely as trustee for the David H. Jacobs Marital Trust -17-