SECURITIES AND EXCHANGE COMMISSION
Washington, DC 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): June 27, 2005
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Sandy Spring Bancorp, Inc.
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(Exact name of registrant as specified in its charter)
Maryland 0-19065 52-1532952
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(State or other jurisdiction (Commission file (IRS Employer
of incorporation) number) Identification Number)
17801 Georgia Avenue, Olney, Maryland 20832
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (301) 774-6400
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Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act
(17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b)) [ ] Pre-commencement communications
pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 1.01. Entry into a Material Definitive Agreement.
Sandy Spring Bancorp, Inc. ("Bancorp") has established the Sandy Spring
Bancorp 2005 Omnibus Stock Plan (the "2005 Stock Plan"), which was approved by
shareholders at Bancorp's 2005 annual meeting on April 20, 2005. The 2005 Stock
Plan authorizes awards for up to 1,800,000 shares of Bancorp common stock over
its ten-year term. No awards have yet been granted under the Stock Plan, and no
person yet has any rights under the Stock Plan enforceable against Bancorp.
The Stock Plan replaces the Sandy Spring Bancorp, Inc. 1999 Stock
Option Plan, as amended (the "1999 Plan").Options issued under the 1999 Plan and
Bancorp's 1992 Stock Option Plan continue in effect and will be subject to the
requirements of those plans, but no new options will be granted under them.
The 2005 Stock Plan is administered by a committee (the "Committee") of
at least three members. All members of the Committee must be independent
directors. In the absence at any time of a duly appointed Committee, the Plan
shall be administered by the members of the Board who are independent directors,
acting as the Committee. Subject to the terms of the 2005 Stock Plan, the
Committee has the authority to select participants and to grant options and
other awards under the 2005 Stock Plan, to determine the terms of those awards,
and otherwise to administer and interpret the 2005 Stock Plan. Decisions of the
Committee are final and conclusive. The Board currently intends to administer
the Plan directly with the advice of the Human Resources Committee.
The Committee may grant options that qualify as incentive stock options
under the Internal Revenue Code ("ISO's"), other stock options ("Non-ISO's"),
stock appreciation rights ("SARs"), and restricted stock under the 2005 Stock
Plan to directors and key employees designated by the Committee. The amount and
value of awards that may be made in the future to directors and named executive
officers are not yet determinable.
The 2005 Stock Plan reserves authorized but unissued shares of common
stock for issuance upon the exercise of options SARs, or the grant of restricted
stock. In the event of any merger, consolidation, recapitalization,
reorganization, reclassification, stock dividend, split-up, combination of
shares or similar event in which the number or kind of shares is changed without
receipt or payment of consideration by Bancorp, the number and kind of shares of
stock as to which options, SARs and restricted stock may be awarded under the
2005 Stock Plan, the affected terms of all outstanding options, SARs and shares
of restricted stock, and the aggregate number of shares of common stock
remaining available for grant under the 2005 Stock Plan will be adjusted.
Generally, the number of shares as to which SARs are granted are charged against
the aggregate number of shares available for grant under the 2005 Stock Plan,
provided that, in the case of an SAR granted in conjunction with an option,
under circumstances in which the exercise of the SAR results in termination of
the option and vice versa, only the number of shares of common stock subject to
the option shall be charged against the aggregate number of shares of common
stock remaining available under the 2005 Stock Plan. If awards should expire,
become unexercisable, or be forfeited for any reason without having been
exercised or become vested in full, the shares of common stock subject to such
awards shall, unless the 2005 Stock Plan shall have been terminated, be
available for the grant of additional awards under the 2005 Stock Plan.
The 2005 Stock Plan has a term of 10 years from the date of its
approval by Shareholders, after which date no awards may be granted. The maximum
term for an award is ten years from the date of grant, except that the maximum
term of an ISO (and an SAR granted in tandem with an ISO) may not exceed five
years if the optionee owns more than 10% of the common stock on the date of
grant. The expiration of the 2005 Stock Plan, or its termination by the
Committee, will not affect any award then outstanding.
No awards under the 2005 Stock Plan may be repriced or exchanged for
awards with lower exercise prices without the approval of shareholders.
The exercise price of options may not be less than 100% of the fair
market value of the common stock on the date of grant. In the case of an
optionee who owns more than 10% of the outstanding common stock on the date of
grant, the option price may not be less than 110% of fair market value of the
shares. As required by federal tax laws, to the extent that the aggregate fair
market value (determined when an ISO is granted) of the common stock with
respect to which ISOs are exercisable by an optionee for the first time during
any calendar year (under all stock plans of Bancorp and of any subsidiary)
exceeds $100,000, the options will be treated as Non-ISOs, and not as ISOs.
An SAR may be granted in tandem with all or part of any option granted
under the 2005 Stock Plan or without any relationship to any option. An SAR
granted in tandem with an ISO must expire no later than the ISO, must have the
same exercise price as the ISO and may be exercised only when the ISO is
exercisable and when the fair market value of the shares subject to the ISO
exceeds the exercise price of the ISO. For SARs granted in tandem with options,
the optionee's exercise of the SAR cancels his right to exercise the option, and
vice versa. Regardless of whether an SAR is granted in tandem with an option,
exercise of the SAR will entitle the optionee to receive, as the Committee
prescribes in the grant, all or a percentage of the difference between (i) the
fair market value of the shares of common stock subject to the SAR at the time
of its exercise, and (ii) the fair market value of such shares at the time the
SAR was granted (or, in the case of SARs granted in tandem with options, the
exercise price). This difference is payable in cash or common stock or a
combination of cash and stock as determined by the Committee. The exercise price
as to any particular SAR shall not be less than the fair market value of the
optioned shares on the date of grant.
The exercise of options and SARs will be subject to the terms and
conditions established by the Committee in a written agreement between the
Committee and the optionee. In the absence of Committee action to the contrary:
(A) an otherwise unexpired ISO shall cease to be exercisable upon (i) an
employee's termination of employment for "just cause" (as defined in the 2005
Stock Plan), (ii) the date three months after an employee terminates service for
a reason other than just cause, death, or disability, or (iii) the date one year
after an employee terminates service due to disability, or two years after
termination of such service due to his death; (B) an unexpired Non-ISO shall
cease to be exercisable upon (i) an employee's termination of employment for
"just cause" (as defined in the 2005 Stock Plan), (ii) a director's removal from
the board of Bancorp or Sandy Spring Bank, (iii) the date three months after an
employee or director terminates service for a reason other than just cause,
removal, death, or disability, or (iv) the date one year after an employee
terminates service due to disability, or two years after termination of such
service due to his death. Notwithstanding the provisions of any option which
provides for its exercise in installments as designated by the Committee, such
option shall become immediately exercisable upon the optionee's death or
permanent and total disability. Although directors and executive officers of
Bancorp generally would be prohibited from profiting from certain purchases and
sales of shares within any six-month period under the federal securities laws,
they generally will not be prohibited by such laws from exercising options and
immediately selling the shares they receive, provided at least six months
elapses between the grant of the option and the sale of the common stock
purchased on exercise of the option. As a result, officers, like Bancorp's and
its affiliates' other participating employees, generally will be permitted to
benefit in the event the market price for the shares exceeds the exercise price
of their options, without being subject to loss in the event the market price
falls below the exercise price.
An otherwise exercisable SAR may be exercised only during the period
beginning on the third business day following the release for publication of
Bancorp's quarterly or annual financial information, and ending on the twelfth
business day following such date. In no event, however, will any option or SAR
be exercisable after its expiration date, as to fractional shares of common
stock, or prior to the optionee's satisfaction of any income tax withholding
requirements.
A participant may exercise options or SARs, subject to provisions
relative to their termination and limitations on their exercise, only by (i)
written notice of intent to exercise the option or SAR with respect to a
specified number of shares of common stock, and (ii) in the case of options,
payment to Bancorp (contemporaneously with delivery of such notice) in cash, in
common stock, or a combination of cash and common stock, of the amount of the
exercise price for the number of shares with respect to which the option is then
being exercised, provided that Common Stock acquired by exercise of stock
options within the preceding six months, or restricted stock Awards that have
vested within such period, may not be delivered in payment of the exercise price
of an option. Common stock utilized in full or partial payment of the exercise
price for options shall be valued at its market value at the date of exercise.
The Committee has discretion at the time of making a restricted stock
grant to determine a period of up to five years during which the shares granted
will be subject to restrictions, and the conditions that must be satisfied in
order for the shares of restricted stock to become unrestricted (i.e., vested
and nonforfeitable). For example, the Committee may condition vesting upon a
grantee's continued employment or upon the grantee's attainment of specific
corporate, divisional, or individual performance standards or goals. However,
the minimum vesting period for restricted stock is three years if the vesting is
based solely on the passage of time and continued employment, although vesting
may occur ratably over such period; and the minimum measurement date for vesting
of restricted stock based upon performance criteria is one year.
The Committee shall determine the percentage of the award of restricted
stock which shall vest in the event of death, disability, or retirement prior to
the expiration of the restriction period or the satisfaction of the restrictions
applicable to an award of restricted stock. Neither Stock Option Committee nor
the Board will have the authority, without shareholder approval, to accelerate
the vesting period of restricted stock other than in the event of a change in
control of Bancorp or the death, disability, retirement, or termination of
employment of the participant.
Until a grantee's interest vests, his or her restricted stock is
nontransferable and forfeitable. Nevertheless, the grantee is entitled to vote
the restricted stock and to receive dividends and other distributions made with
respect to the restricted stock. To the extent that a grantee becomes vested in
his or her restricted stock at any time during the restriction period and has
satisfied applicable income tax withholding obligations, Bancorp will deliver
unrestricted shares of common stock to the grantee. At the end of the
restriction period, the grantee will forfeit to Bancorp any shares of restricted
stock as to which he or she did not earn a vested interest during the
restriction period.
Upon a change in control, all options and SARs are immediately
exercisable and fully vested, and all shares of restricted stock become fully
vested. At that time, the Committee may grant the optionee the right to receive
a cash payment in an amount equal to the excess of the market value of the
shares subject to an option over the exercise price of the option. If there is
(i) a liquidation or dissolution of Bancorp, (ii) a merger or consolidation in
which Bancorp is not the surviving entity; or (iii) the sale or disposition of
all or substantially all of Bancorp's assets, then all of the outstanding
options must be surrendered in return for options for shares of the acquiring
company, shares of the acquiring company with a market value equal to the excess
of the market value of the shares subject to option on the date of the
transaction over the exercise price of the option, or cash equal to the excess
of the market value of the shares subject to option on the date of the
transaction over the exercise price of the option, as determined by the
Committee. In no event, however, may an option be exchanged for cash or an SAR
exercised within the six-month period following the date of its grant.
A change in control under the 2005 Stock Plan means any one of the
following events: (1) the acquisition of ownership or control of 25% or more of
any class of voting securities of Bancorp or Sandy Spring Bank; (2) the exercise
of a controlling influence over the management or policies of Sandy Spring Bank
or Bancorp by any person or by persons acting as a group within the meaning of
Section 13(d) of the Securities Exchange Act of 1934, or (3) the failure of
Continuing Directors to constitute at least two-thirds of the Board of Bancorp
or Sandy Spring Bank during any period of two consecutive years. A change in
control does not include acquisition of ownership or control of voting
securities of Bancorp by an employee benefit plan sponsored by Bancorp or Sandy
Spring Bank; acquisition of voting securities by Bancorp through share
repurchase or otherwise; or acquisition by an exchange of voting securities with
a successor to Bancorp in a reorganization, such as a re-incorporation, that
does not have the purpose or effect of significantly changing voting power or
control. Continuing directors are those individuals who were directors at the
Effective Date of the 2005 Stock Plan and those other individuals whose election
or nomination for election as a director was approved by a vote of at least
two-thirds of the continuing directors then in office. An offer to effect a
change in control means any offer to buy or acquire, solicitation of an offer to
sell, tender offer for, or request of invitation for tenders of, 25% or more of
any class of voting securities of Bancorp for value. The decision of the
Committee as to whether a change in control has occurred or an offer to effect a
change in control has been received is conclusive and binding.
ISOs may not be sold, pledged, assigned, hypothecated, transferred or
disposed of in any manner other than by will or by the laws of descent and
distribution, or pursuant to the terms of a qualified domestic relations order.
Other awards may not be sold, pledged, assigned, hypothecated, transferred or
disposed of in any manner other than by will or by the laws of descent and
distribution, pursuant to the terms of a qualified domestic relations order, or,
in the sole discretion of the Committee, in connection with a transfer for
estate or retirement planning purposes to a trust established for such purposes.
The Committee has the authority to impose restrictions on shares issued
under the 2005 Stock Plan that it deems appropriate or desirable, including the
authority to impose a right of first refusal or to establish repurchase rights
or both of these restrictions. The Committee may not issue shares unless the
issuance complies with applicable securities laws, and to that end may require
that an optionee or grantee make certain representations or warranties. In
addition, no shares that have been acquired upon exercise of an option may be
sold or otherwise disposed of (except by gift or upon death) before the end of a
six-month period that begins on the date the option was granted.
The Board may from time to time amend the terms of the 2005 Stock Plan
and, with respect to any shares at the time not subject to options, suspend or
terminate the 2005 Stock Plan. Shareholder approval is required for an amendment
that would increase the number of shares subject to the 2005 Stock Plan or that
would extend the term of the 2005 Stock Plan. No amendment, suspension or
termination of the 2005 Stock Plan will, without the consent of any affected
holders of an option, alter or impair any rights or obligations under the
option.
Item 9.01 Financial Statements and Exhibits.
Exhibit 10.1 Sandy Spring Bancorp, Inc. and Sandy Spring Bank 2005
Omnibus Stock Plan
Signatures
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.
SANDY SPRING BANCORP, INC.
By: Hunter R. Hollar
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Hunter R. Hollar
President and
Chief Executive Officer
Dated: June 27, 2005