CHANGE OF CONTROL AGREEMENT
AGREEMENT by and between Sea Pines Associates, Inc., a South Carolina corporation (the “Company”), and Michael E. Lawrence (the “Executive”), dated as of February 17, 2004.
WHEREAS, any potential Change of Control (as defined below) of the Company would create substantial uncertainty and anxiety among key executives concerning the possibility of adverse changes in position or loss of employment; and
WHEREAS, that uncertainty and anxiety would inevitably detract from the performance of the executive team and increase the risk of unwanted loss of key executives; and
WHEREAS, the Board of Directors of the Company (the “Board”) has determined that it is in the best interests of the Company and its shareholders to reduce the risk of those adverse consequences, and has adopted appropriate policies aimed at safeguarding the economic interests of key executives and the shareholders in the event of a Change of Control; and
WHEREAS, a Change of Control Agreement is to be executed with each key executive covered by these policies;
NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
1. Certain Definitions. As used in this Agreement, the following terms shall have the meanings set forth below:
(a) “AFR” shall mean the applicable Federal rate provided for in Section 7872(f)(2)(A) of the Code.
(b) “Board” shall have the meaning set forth in the recitals to this Agreement.
(c) “Business Combination” shall have the meaning set forth in Section 1(e)(iii).
(d) “Cause” shall mean the willful engaging by the Executive in illegal conduct or gross misconduct which is materially and demonstrably injurious to the Company. For purposes of this provision, no act, or failure to act, on the part of the Executive shall be considered “willful” unless it is done, or omitted to be done, by the Executive in bad faith or without reasonable belief that the Executive’s action or omission was in the best interests of the Company. Any act, or failure to act, based upon authority given pursuant to a resolution duly adopted by the Board or upon the instructions of a senior officer of the Company who is senior to the Executive or based upon the advice of counsel for the Company shall be conclusively presumed to be done, or omitted to be done, by the Executive in good faith and in the best interests of the Company. The cessation of employment of the Executive shall not be deemed to be for Cause unless and until there shall have been delivered to the Executive a copy of a resolution duly adopted by the affirmative vote of not less than three-quarters of the entire membership of the Board at a meeting of the Board called and held for such purpose (after reasonable notice is provided to the
Executive and the Executive is given an opportunity, together with counsel, to be heard before the Board), finding that, in the good faith opinion of the Board, the Executive is guilty of the conduct described above, and specifying the particulars thereof in detail.
(e) “Change of Control” shall mean:
(i) The acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) (a “Person”) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 50% or more of either (A) the then outstanding shares of common stock of the Company (the “Outstanding Company Common Stock”) or (B) the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the “Outstanding Company Voting Securities”); provided, however, that for purposes of this Section 1(e)(i), the following acquisitions shall not constitute a Change of Control: (W) any acquisition directly from the Company or any corporation controlled by the Company, (X) any acquisition by the Company or any corporation controlled by the Company, (Y) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company or (Z) any acquisition by any corporation pursuant to a transaction which complies with clauses (A), (B) and (C) of Section 1(e)(iii); or
(ii) That individuals who, as of the date hereof, constitute the Board (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to the date hereof whose election, or nomination for election by the Company’s shareholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board; or