SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. ___)
Filed by the Registrant x
----
Filed by a Party other than the Registrant ___
Check the appropriate box:
x Preliminary Proxy Statement Confidential, for Use of the
- ----- Definitive Proxy Statement --- Commission Only (as
- ----- Definitive Additional Materials permitted by Rule 14a-6(e)(2))
Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
SANDY SPRING BANCORP, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
x No fee required.
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--- Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
1. Title of each class of securities to which transaction applies:
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2. Aggregate number of securities to which transaction applies:
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3. Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
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4. Proposed maximum aggregate value of transaction:
5. Total Fee Paid:
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Fee paid previously with preliminary materials:
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Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1. Amount Previously Paid:
2. Form, Schedule or Registration Statement No.:
3. Filing Party:
4. Date Filed:
SANDY SPRING BANCORP, INC. [PRELIMINARY]
17801 GEORGIA AVENUE
OLNEY, MARYLAND 20832
(301) 774-6400
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON APRIL 18, 2001
The 2001 Annual Meeting of Shareholders (the "Annual Meeting") of Sandy
Spring Bancorp, Inc. ("Bancorp") will be held on Wednesday, April 18, 2001, at
3:00 p.m. Eastern Time at the Indian Spring Country Club, 13501 Layhill Road,
Silver Spring, Maryland.
A Proxy for the Annual Meeting is enclosed. A Proxy Statement for the
Annual Meeting and the Form 10-K Annual Report follow this notice. The Proxy
Statement and Proxy are being furnished to you in connection with the
solicitation of proxies by Bancorp's Board of Directors for use at the Annual
Meeting.
The Annual Meeting is for the purpose of considering and acting upon:
(1) The election of five directors of Bancorp;
(2) An amendment to Bancorp's Articles of Incorporation to
increase the number of shares of capital stock authorized to
be issued from 15,000,000 to 50,000,000;
(3) Bancorp's 2001 Employee Stock Purchase Plan and issuance of
shares under the plan; and
(4) Such other business as may properly come before the Annual
Meeting or any adjournments thereof.
The Board of Directors is not aware of any other business to come
before the Annual Meeting.
The Board of Directors has fixed the close of business on March 5,
2001, as the record date for determination of the shareholders entitled to vote
at the Annual Meeting. Only holders of record of Bancorp's Common Stock at the
close of business on that date will be entitled to notice of the Annual Meeting
and to vote at the Annual Meeting or any adjournments thereof.
In the event that there are not sufficient votes to conduct the
election of directors or to approve other business properly before the Annual
Meeting, the Annual Meeting may be adjourned in order to permit further
solicitation of proxies by Bancorp.
You are requested to fill in and sign the enclosed form of proxy and to
mail it in the enclosed envelope. The proxy will not be used if you attend and
choose to vote in person at the Annual Meeting.
By Order of the Board of Directors
/S/ RONALD E. KUYKENDALL
Ronald E. Kuykendall
Corporate Secretary
Olney, Maryland
March 15, 2001
IT IS IMPORTANT THAT THE PROXIES BE RETURNED PROMPTLY. WHETHER OR NOT YOU PLAN
TO BE PRESENT IN PERSON AT THE ANNUAL MEETING, PLEASE SIGN, DATE, AND COMPLETE
THE ENCLOSED PROXY AND RETURN IT IN THE ENCLOSED ENVELOPE. NO POSTAGE IS
REQUIRED IF THIS ENVELOPE IS MAILED IN THE UNITED STATES.
PROXY STATEMENT [PRELIMINARY]
TABLE OF CONTENTS
Solicitation, Voting, and Revocability of Proxies............................................................1
Election of Directors........................................................................................2
Corporate Governance and Other Matters.......................................................................4
Stock Ownership of Directors and Executive Officers..........................................................5
Executive Compensation.......................................................................................7
Stock Performance Comparisons...............................................................................14
Amendment of Articles of Incorporation to Increase Authorized Capital Stock.................................15
Approval of the 2001 Employee Stock Purchase Plan...........................................................16
Transactions and Relationships with Management..............................................................18
Shareholder Proposals.......................................................................................19
Compliance with Section 16(a) of the Securities Exchange Act of 1934........................................19
Independent Auditors........................................................................................19
Report of the Audit Committee...............................................................................20
Approval of Minutes ........................................................................................20
Annex A: Audit Committee Charter...........................................................................A-1
Annex B: 2001 Employee Stock Purchase Plan.................................................................B-1
SANDY SPRING BANCORP, INC. [PRELIMINARY]
17801 GEORGIA AVENUE
OLNEY, MARYLAND 20832
(301) 774-6400
--------------------
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
APRIL 18, 2001
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SOLICITATION, VOTING, AND REVOCABILITY OF PROXIES
This Proxy Statement is furnished in connection with the solicitation
of proxies by the Board of Directors of Sandy Spring Bancorp, Inc. ("Bancorp")
to be used at the 2001 Annual Meeting of Shareholders. The Annual Meeting will
be held on Wednesday, April 18, 2001, at 3:00 p.m. Eastern Time at the Indian
Spring Country Club, 13501 Layhill Road, Silver Spring, Maryland. The Notice of
Annual Meeting, the form of proxy, and this Proxy Statement are being first
mailed together on or about March 15, 2001, to shareholders of record as of the
close of business on March 5, 2001.
If the enclosed form of proxy is properly executed and returned to
Bancorp in time to be voted at the Annual Meeting, the shares represented by it
will be voted in accordance with the instructions marked on the form. EXECUTED
BUT UNMARKED PROXIES WILL BE VOTED FOR PROPOSAL I TO ELECT THE FIVE NOMINEES OF
BANCORP'S BOARD OF DIRECTORS AS DIRECTORS ; FOR PROPOSAL II TO AMEND THE
ARTICLES OF INCORPORATION OF BANCORP TO INCREASE THE NUMBER OF SHARES OF CAPITAL
STOCK THAT BANCORP IS AUTHORIZED TO ISSUE FROM 15,000,000 SHARES TO 50,000,000
SHARES; AND FOR PROPOSAL III TO APPROVE THE 2001 EMPLOYEE STOCK PURCHASE PLAN
AND ISSUANCE OF SHARES UNDER THE PLAN. Proxies marked as abstentions and shares
held in street name that have been designated by brokers on proxies as not voted
will not be counted as votes cast, but will be counted for purposes of
determining a quorum at the Annual Meeting. Bancorp does not know of any other
matters that are to come before the Annual Meeting except for incidental,
procedural matters. If any other matters are properly brought before the Annual
Meeting, the persons named in the accompanying proxy will vote the shares
represented by each proxy on such matters as determined by a majority of the
Board of Directors.
The presence of a shareholder at the Annual Meeting will not
automatically revoke that shareholder's proxy. However, shareholders may revoke
a proxy at any time prior to its exercise by filing with the Corporate Secretary
of Bancorp, Ronald E. Kuykendall, a written notice of revocation; by delivering
to Bancorp a duly executed proxy bearing a later date; or by attending the
Annual Meeting and voting in person.
The cost of soliciting proxies will be borne by Bancorp. In addition to
the solicitation of proxies by mail, Bancorp also may solicit proxies personally
or by telephone or telegraph through its directors, officers and regular
employees. Bancorp also will request persons, firms, and corporations holding
shares in their names or in the name of nominees that are beneficially owned by
others to send proxy materials to and obtain proxies from those beneficial
owners and will reimburse the holders for their reasonable expenses in doing so.
The securities that can be voted at the Annual Meeting consist of
shares of common stock, par value $1.00 per share (the "Common Stock"), of
Bancorp. Each share entitles its owner to one vote on all matters. The close of
business on March 5, 2001 has been fixed by the Board of Directors as the record
date for determination of shareholders entitled to vote at the Annual Meeting.
There were approximately 2,300 record holders of the Common Stock as of that
record date. The number of shares outstanding on March 5, 2001 was [9,641,975].
The presence, in person or by proxy, of at least a majority of the total number
of outstanding shares of Common Stock is necessary to constitute a quorum at the
Annual Meeting.
A COPY OF THE ANNUAL REPORT ON FORM 10-K FOR ITS YEAR ENDED DECEMBER
31, 2000 AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ("SEC"), BUT
EXCLUDING EXHIBITS, IS PROVIDED WITH THIS PROXY STATEMENT. SHAREHOLDERS MAY
OBTAIN, FREE OF CHARGE, A COPY OF THE EXHIBITS TO THE ANNUAL REPORT ON FORM 10-K
BY WRITING RONALD E. KUYKENDALL, CORPORATE SECRETARY, AT SANDY SPRING BANCORP,
INC., 17801 GEORGIA AVENUE, OLNEY, MARYLAND 20832. SHAREHOLDERS ALSO MAY ACCESS
A COPY OF THE FORM 10-K INCLUDING EXHIBITS ON THE SEC WEB SITE AT
HTTP://WWW.SEC.GOV.
1
ELECTION OF DIRECTORS
(PROPOSAL I)
The Board of Directors has set the total number of directors at
thirteen, in accordance with Bancorp's Articles of Incorporation and Bylaws.
Bancorp's Articles of Incorporation divide the directors into three classes, as
nearly equal in number as possible. In general, the term of office of only one
class of directors expires in each year, and their successors are elected for
terms of three years and until their successors are elected and qualified. At
the Annual Meeting a total of five director-nominees will be elected for
three-year terms. With respect to the election of directors, each shareholder of
record on the record date is entitled to one vote for each share of Common Stock
held. A plurality of all the votes cast at the Annual Meeting will be sufficient
to elect a nominee as a director.
INFORMATION AS TO NOMINEES AND CONTINUING DIRECTORS
The following table sets forth the names of the Board of Directors'
five nominees for election as directors. Also shown is certain other
information, some of which has been obtained from Bancorp's records and some of
which has been supplied by the nominees and continuing directors, with respect
to their principal occupations during at least the past five years, their ages
at December 31, 2000, the periods during which they have served as directors,
and the positions they currently hold with Bancorp. It is the intention of the
persons named in the proxy to vote the shares represented by each properly
executed proxy for the election as directors of the five nominees listed below
for terms of three years, unless otherwise directed by the shareholder. The
Board of Directors believes that each of the nominees will stand for election
and will serve if elected as director. If any person nominated by the Board of
Directors fails to stand for election or is unable to accept election, the
proxies will be voted for the election of such other person or persons as the
Board of Directors may recommend.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH OF THE NOMINEES
NAMED BELOW AS A DIRECTOR OF BANCORP.
MEMBER TERM
POSITION(S) HELD OF BOARD CURRENTLY
NAME AGE WITH BANCORP SINCE (1) EXPIRES
- ---- --- ---------------- --------- --------
DIRECTOR-NOMINEES FOR TERMS TO EXPIRE AT
THE 2004 ANNUAL MEETING
Solomon Graham 57 Director 1994 2001
Gilbert L. Hardesty 60 Director 1997 2001
Charles F. Mess 62 Director 1987 2001
Lewis R. Schumann 57 Director 1994 2001
W. Drew Stabler 63 Chairman of the 1986 2001
Board of Directors
2
MEMBER TERM
POSITION(S) HELD OF BOARD CURRENTLY
NAME AGE WITH BANCORP SINCE (1) EXPIRES
- ---- --- ---------------- --------- --------
CONTINUING DIRECTORS
John Chirtea 63 Director 1990 2002
Joyce R. Hawkins 67 Director 1995 2002
Hunter R. Hollar 52 President, Chief 1990 2002
Executive Officer and
Director
Thomas O. Keech 67 Director 1995 2002
Susan D. Goff 55 Director 1994 2003
Robert L. Mitchell 64 Director 1991 2003
Robert L. Orndorff, Jr. 44 Director 1991 2003
David E. Rippeon 51 Director 1997 2003
(1) The Boards of Directors of Bancorp and its principal subsidiary, Sandy
Spring National Bank of Maryland (the "Bank"), are composed of the same
persons. Includes term of office as a director of the Bank prior to the
formation of Bancorp as the holding company for the Bank in January
1988.
The principal occupation(s) and business experience of each nominee and
director of Bancorp for at least the last five years are shown below.
DIRECTOR-NOMINEES:
SOLOMON GRAHAM is founder, President, and Chief Executive Officer of
Quality Biological, Inc., a biotechnology firm providing reagents for medical
research.
GILBERT L. HARDESTY is a retired bank executive, having served as
President of Crestar Bank - Annapolis from June 1994 to June 1997 and as
President of Annapolis Federal Savings Bank from April 1986 to June 1994.
CHARLES F. MESS, M.D. is in the practice of general orthopedics.
LEWIS R. SCHUMANN is a partner in the law firm of Miller, Miller and
Canby, Chtd.
W. DREW STABLER is a partner in Pleasant Valley Farm, a crop and
livestock operation.
CONTINUING DIRECTORS:
JOHN CHIRTEA is a real estate consultant who is retired from LCOR, a
national real estate development company. In prior years, Mr. Chirtea was a
partner in the Linpro Co., the predecessor company of LCOR.
JOYCE R. HAWKINS is a realtor with Weichert Realtors.
HUNTER R. HOLLAR is President and Chief Executive Officer of Bancorp
and the Bank. From 1990 through 1993, Mr. Hollar served as President of Bancorp
and President and Chief Operating Officer of the Bank.
THOMAS O. KEECH retired as Vice President of Bancorp and Executive Vice
President of the Bank effective December 31, 1995. Mr. Keech previously served
as Vice President and Treasurer of Bancorp and Executive Vice President and
Chief Financial Officer of the Bank.
3
SUSAN D. GOFF is President of M.D. IPA, Inc., a vice president of
Optimum Choice, Inc., and a senior vice president of the parent holding company,
Mid-Atlantic Medical Services, Inc., a health maintenance organization.
ROBERT L. MITCHELL is Chairman and Chief Executive Officer of Mitchell
and Best Group, LLC, which is engaged in homebuilding and real estate
development.
ROBERT L. ORNDORFF, JR. is President of RLO Contractors, Inc., an
excavating contractor.
DAVID E. RIPPEON is President and Chief Executive Officer of
Gaithersburg Farmers Supply, Inc., a tractor and equipment dealership.
CORPORATE GOVERNANCE AND OTHER MATTERS
During 2000, each of Bancorp's and the Bank's Boards of Directors held
12 regular meetings.
The average attendance was 90% for meetings of Bancorp's and the Bank's
Boards of Directors. All incumbent directors attended 75% or more of the
aggregate of (a) the total number of meetings of the Boards of Directors and (b)
the total number of meetings held by all committees on which they served during
the period of their service during the year, except for Robert L. Mitchell who
attended 67%. Mr. Mitchell served as President of the National Homebuilders
Association during 2000. Mr. Mitchell's travels as President of the National
Homebuilders Association made his attendance at a number of meetings
impractical.
Bank directors who are not employed by the Bank receive an annual
retainer of $5,000 and fees of $500 ($600 for the Chairman) for attendance at
each meeting of the Board of Directors, $500 for each Executive Committee
meeting, and $400 for other committee meetings. Bancorp directors who are not
employed by Bancorp do not receive any additional compensation (beyond
compensation received for service as bank directors) except as follows. Such
directors receive fees of $500 ($600 in the case of the Chairman) for attendance
at each meeting of the Board of Directors not held in conjunction with a meeting
of the Bank's Board of Directors and fees of $400 for each meeting of Bancorp's
Audit and Nominating Committees. Beginning in 2000, directors were granted
non-qualifying stock options for Bancorp common stock based upon attendance at
meetings of the board and committees of the board. Options for 11,573 shares
were granted to the twelve directors who are not employed by Bancorp or the Bank
on December 13, 2000, pertaining to meeting attendance over the period May 1999
through November 2000. Bancorp directors also are eligible to receive
non-incentive stock options under Bancorp's 1999 Stock Option Plan. In December
2000, options for 11,753 shares were granted under this plan to directors who
were not employees of Bancorp or any of its subsidiaries, based upon their
meeting attendance, at an exercise price of $21.8125 per share, the market price
on the date of grant. These options have a term of 10 years.
Directors of the Bank are eligible to defer all or a portion of their
fees under Director Fee Deferral Agreements between the Bank and individual
directors. Amounts deferred accrue interest at the prime rate. Except in the
case of death or financial emergency, deferred fees and accrued interest are
payable only following termination of a director's service on the board. The
Director Fee Deferral Agreements also provide for benefits that may exceed
deferred fees and accrued interest in the event a party dies while a director of
the Bank, but only to the extent the Bank owns an insurance policy in effect on
the director's life at the time of death that pays a greater amount than the
total of deferred fees and accrued interest.
Bancorp's Board of Directors has standing Audit and Nominating
Committees. The Bank has a standing Human Resources Committee that performs the
functions of a compensation committee. The functions, composition, and number of
meetings for these committees in 2000 were as follows:
AUDIT COMMITTEE - The Audit Committee is composed of John Chirtea,
Chairman, Solomon Graham, Gilbert L. Hardesty, Joyce R. Hawkins, Thomas O.
Keech, and David E. Rippeon. The Audit Committee is appointed by the Board to
assist the Board in monitoring the integrity of the financial statements,
compliance with legal and regulatory requirements and the independence and
performance of internal and external auditors. The members of the Audit
Committee are neither officers nor employees of Bancorp or the Bank and are
independent, as defined in Rule 4200(a)(15) of the National Association of
Securities Dealers Listing Standards. The Committee has adopted a written
charter, which has been approved by the Board of Directors. A copy of this
charter is attached as Annex A. During 2000, four meetings were held.
NOMINATING COMMITTEE - The Nominating Committee is composed of W. Drew
Stabler, Chairman, Solomon Graham, John Chirtea, Hunter R. Hollar, and Charles
F. Mess. The Nominating Committee makes recommendations
4
to the Board of Directors with respect to nominees for election as directors.
While the Nominating Committee will consider nominees recommended by
shareholders, it has not actively solicited recommendations by Bancorp's
shareholders for nominees nor has it established any procedures for this purpose
other than as set forth in the Bylaws. See "Shareholder Proposals." During 2000,
no meetings were held.
HUMAN RESOURCES (COMPENSATION) COMMITTEE - The Human Resources
Committee is composed of Robert L. Orndorff, Jr., Chairman, John Chirtea, Susan
D. Goff, Charles F. Mess, Robert L. Mitchell and W. Drew Stabler. The Human
Resources Committee recommends salaries and other compensation for executive
officers, conducts an annual review of the salary budget, considers other
compensation plans and makes recommendations to the Board, deals with matters of
personnel policy and, with the Stock Option Committee, administers the 1999,
1992, and 1982 Stock Option Plans. During 2000, two meetings were held.
STOCK OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth information as of [March 5, 2001], with
respect to the shares of Common Stock and Trust Preferred Securities
beneficially owned by each director continuing in office and nominee for
director of Bancorp, by certain executive officers of Bancorp, and by all
directors and executive officers of Bancorp as a group. This information is
based upon the most recent report of beneficial ownership of securities filed
with the Securities and Exchange Commission. To the knowledge of management, no
person beneficially owns more than 5% of the outstanding shares of Common Stock.
AMOUNT AND PERCENTAGE OF TRUST PERCENTAGE OF TRUST
NATURE OF BENEFICIAL COMMON STOCK PREFERRED PREFERRED SECURITIES
NAME OWNERSHIP(1)(2)(3) OUTSTANDING SECURITIES(4) OUTSTANDING
---- -------------------- ------------- ------------- -----------
John Chirtea 21,108 * *
Susan D. Goff 673 * *
Solomon Graham 6,348 * *
Gilbert L. Hardesty 3,093 * *
Joyce R. Hawkins 35,653 * 7,000 *
Hunter R. Hollar 64,005 * *
Thomas O. Keech 70,653 * 400 *
Charles F. Mess 6,557 * *
Robert L. Mitchell 11,271 * *
Robert L. Orndorff, Jr. 112,657 1.18% 3,500 *
David E. Rippeon 8,604 * *
Lewis R. Schumann 58,139 * 347 *
W. Drew Stabler 35,642 * *
James H. Langmead 19,277 * *
Lawrence T. Lewis 32,667 * 1,000 *
Frank H. Small 15,291 * *
Stanley L. Merson 30,735 * *
All directors and executive officers
as a group (20 persons) 561,435 5.79% 12,247 *
* Less than 1%.
(1) Under the rules of the SEC, an individual is considered to
"beneficially own" any share of Common Stock which he or she, directly
or indirectly, through any contract, arrangement, understanding,
relationship, or otherwise, has or shares: (1) voting power, which
includes the power to vote, or to direct the voting of, such security;
and/or (2) investment power, which includes the power to dispose, or to
direct the disposition, of such security. In addition, an individual is
deemed to be the beneficial owner of any share of Common Stock of which
he or she has the right to acquire voting or investment power within 60
days of March 5, 2001. Includes 141,962 shares of Common Stock subject
to outstanding options which are exercisable within 60 days of March 5,
2001, of which Hunter R. Hollar, James H. Langmead, Lawrence T. Lewis,
Frank H. Small, and Stanley L. Merson ("Named Executive Officers") hold
options to purchase 55,001 shares, 16,667 shares, 13,167 shares, 13,667
shares, and 22,901 shares of Common Stock, respectively. Directors and
executive
5
officers who are not Named Executive Officers hold options for 3,923
shares and 16,636 shares, respectively. Also includes 514 shares,
1,633 shares, 1,422 shares, 1,624 shares, and 2,900 shares of Common
Stock owned by Mr. Hollar, Mr. Langmead, Mr. Lewis, Mr. Small, and
Mr. Merson, respectively, and 6,976 shares of Common Stock owned by
executive officers who are not Named Executive Officers, as
participants in Bancorp's Cash and Deferred Profit Sharing Plan.
(2) Includes shares owned directly by directors and executive officers of
Bancorp as well as shares held by their spouses and minor children and
trusts of which certain directors are trustees. Also includes 51,656
shares held by a trust for which Mr. Schumann is trustee, but in which
he has no pecuniary interest.
(3) Only whole shares appear in the table. Fractional shares that may arise
from participation in the dividend reinvestment plan are not shown.
(4) 9.375% Cumulative Trust Preferred Securities issued by Sandy Spring
Capital Trust I, a wholly owned subsidiary of Bancorp.
6
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth the cash and noncash compensation for
each of the last three years awarded to or earned by (i) the Chief Executive
Officer, and (ii) each of the four other most highly compensated executive
officers of Bancorp whose salary and bonus earned in 2000 exceeded $100,000 (the
"Named Executive Officers").
Long-Term
Compensation
Annual Compensation ------------
Name and Principal -------------------- Stock Option All Other
Position in 2000 Year Salary Bonus Grants (Shares) Compensation(*)
- ----------------- ---- -------- ------- --------------- ---------------
Hunter R. Hollar 2000 $297,192 $60,017 20,800 $6,375
President and Chief Executive 1999 276,000 75,979 10,600 3,872
Officer of Bancorp and the Bank 1998 224,750 80,536 3,000 4,960
James H. Langmead 2000 178,269 33,735 8,000 6,375
Vice President and Treasurer 1999 160,000 42,416 4,500 3,872
of Bancorp and Executive Vice 1998 137,025 46,674 1,500 4,241
President and Chief Financial
Officer of the Bank
Lawrence T. Lewis 2000 177,217 33,277 8,000 4,250
Executive Vice President 1999 160,000 42,416 4,500 3,872
of the Bank 1998 136,500 46,482 1,500 4,223
Frank H. Small 2000 155,962 29,243 8,000 3,899
Executive Vice President 1999 145,000 38,439 4,500 2,339
of the Bank 1998 120,450 41,038 1,500 3,729
Stanley L. Merson 2000 147,308 27,519 2,500 5,504
Senior Vice President 1999 140,000 31,472 1,600 3,388
of the Bank 1998 122,375 40,435 1,500 3,788
(*) Amounts shown in this column pertain to deferred compensation under
Bancorp's Cash and Deferred Profit Sharing Plan. The amount of indirect
compensation in the form of personal benefits received in 2000 by
Messrs. Hollar, Langmead, Lewis, Merson and Small did not exceed 10% of
the annual compensation paid to each such executive officer.
7
STOCK OPTION PLANS. Bancorp maintains stock option plans to attract,
retain, and motivate key officers of Bancorp and the Bank by providing them with
a stake in the success of Bancorp as measured by the value of its shares. The
following information has been adjusted to give retroactive effect to a 2-for-1
stock split declared on January 28, 1998.
The 1999 Stock Option Plan (the "1999 Option Plan"), which was approved
by the shareholders at the 1999 Annual Meeting of Shareholders, authorizes the
issuance of up to 400,000 shares of Common Stock, subject to certain adjustments
for changes in Bancorp's capital structure. The 1999 Option Plan has a term of
10 years from its effective date (February 24, 1999) after which date no stock
options may be granted. As of March 5, 2001, options for 207,553 shares were
outstanding under the 1999 Option Plan. The 1999 Option Plan replaced a plan
adopted in 1992 (the "1992 Option Plan"), which was terminated except with
respect to options that were outstanding on the plan's termination date. As of
March 5, 2001, options for 119,950 shares were outstanding under the 1992 Option
Plan. The 1992 Option Plan replaced a plan adopted in 1982 (the "1982 Option
Plan"), which was terminated except with respect to options that were
outstanding on the plan's termination date. As of March 5, 2001, options for
12,000 shares were outstanding under the 1982 Option Plan. The 1999 Option Plan,
the 1992 Option Plan, and the 1982 Option Plan are referred to below as the
"Option Plans."
The Option Plans provide for the grant of "incentive options" as
defined in Section 422 of the Code. The 1999 Option Plan also provides for the
grant of "non-incentive options" to directors, officers and non-officer
employees on terms and conditions established by the Stock Option Committee,
which administers the Option Plans. The Stock Option Committee is comprised of
all disinterested (outside) directors (i.e., all directors other than Mr.
Hollar).
Prior to 2000, options had been granted under the Option Plans only to
key employees of Bancorp and its subsidiaries. In 2000, options were granted to
key employees and also, for the first time, to the Company's non-employee
directors. The options granted to the non-employee directors were non-incentive
options. Under the Option Plans, the maximum option term is 10 years from the
date of grant. Options granted under the Option Plans prior to 1996 were
immediately exercisable upon grant. Options granted from 1996 through 2000 were
exercisable as follows: one-third upon the date of grant, one-third upon the
first anniversary of the date of grant, and one-third upon the second
anniversary of the date of grant. The exercise price of a stock option may not
be less than 100% of the fair market value of the Common Stock on the date of
grant. The exercise price of stock options must be paid for in full in cash or
shares of Common Stock, or a combination of both. The Stock Option Committee has
the discretion when making a grant of stock options under the 1999 Plan to
impose restrictions on the shares to be purchased in exercise of such options.
The Committee also has the authority to cancel stock options
outstanding under the 1992 Option Plan and the 1999 Option Plan with the consent
of the optionee and to grant new options at a lower exercise price in the event
that the fair market value of the Common Stock at any time prior to the exercise
of the outstanding stock options falls below the exercise price of such option.
8
OPTION GRANTS IN 2000
The following table contains information concerning the grant of stock
options under the Option Plans to the Chief Executive Officer and each of the
other Named Executive Officers. The Option Plans do not provide for the grant of
stock appreciation rights.
Individual Grants
- --------------------------------------------------------------------------------
Potential Realizable
% of Value at Assumed
Total Annual Rates of Stock
Options Options Exercise Price Appreciation
Granted Granted to or for Option Term
(Number Employees Base Price Expiration ---------------------------
Name of Shares)(1) in Year ($ per Share)(2) Date 5% 10%
- ---- ------------------------ ---------------- ------------- --------- --------
Hunter R. Hollar 20,800 14.68% $21.8125 12/13/2010 $285,329 $723,081
James H. Langmead 8,000 5.65 21.8125 12/13/2010 109,742 278,108
Lawrence T. Lewis 8,000 5.65 21.8125 12/13/2010 109,742 278,108
Frank H. Small 8,000 5.65 21.8125 12/13/2010 109,742 278,108
Stanley L. Merson 2,500 1.76 21.8125 12/13/2010 34,294 86,909
(1) Options granted during 2000 are exercisable as follows: one-third upon
the date of grant, one-third upon the first anniversary of the date of
grant, and one-third upon the second anniversary of the date of grant.
(2) In each case, the exercise price is equal to the fair market value of
the Common Stock on the date of grant.
AGGREGATED OPTION EXERCISES IN
2000 AND YEAR END OPTION VALUES
The following table shows that the Chief Executive Officer and the
other Named Executive Officers did not exercise any options during 2000. Also
presented are the value of options held by these individuals at December 31,
2000.
Value of
Number of Unexercised
Unexercised Options In-the-Money
at Year End Options
------------------ at Year End(1)
Shares Acquired Exercisable -------------
on Exercise Unexercisable Exercisable/
Name (Number of Shares) Value Realized(1) (Number of Shares) Unexercisable
- ---- ------------------ ----------------- ------------------ -------------
Hunter R. Hollar -0- $ -0- 55,001/17,399 $360,744/$11,266
James H. Langmead -0- -0- 16,667/ 6,833 50,534/ 4,333
Lawrence T. Lewis -0- -0- 13,167/ 6,833 17,722/ 4,333
Frank H. Small -0- -0- 13,667/ 6,833 19,409/ 4,333
Stanley L. Merson -0- -0- 22,901/ 2,199 180,295/ 1,354
(1) The difference between the fair market value of the underlying securities
at exercise or year-end and the exercise or base price.
9
PENSION PLAN TABLE
The table below shows estimated annual benefits payable upon retirement
to persons in the specified remuneration and years-of-service categories if such
retirement had occurred on December 31, 2000. The benefits listed are provided
on a 10-year certain-and-life basis and are not subject to deduction for Social
Security or other offset amounts.
Years of Credited Service at Retirement
Highest 5-Year -------------------------------------------------------
Average Earnings 15 20 25 30 35 40 and above
- ---------------- --------- --------- --------- --------- --------- ------------
$ 25,000 $ 5,625 $ 7,500 $ 9,375 $ 11,250 $ 13,125 $ 15,000
75,000 16,875 22,500 28,125 33,750 39,275 45,000
125,000 28,125 37,500 46,875 56,250 65,625 75,000
150,000 33,750 45,000 56,250 67,500 78,750 90,000
160,000 and more 36,000 48,000 60,000 72,000 84,000 96,000
Earnings covered by the Pension Plan are total wages, including
elective pre-tax contributions under Section 401(k) of the Internal Revenue
Code, overtime pay, bonuses, and other cash compensation, which for the named
executives correspond, in general, to the total of the amounts in the "Salary"
and "Bonus" columns in the Summary Compensation Table, up to a total of
$160,000. Prior to January 1, 20001, benefits were computed on a monthly basis
at the rate of 1.5% of highest five-year average monthly earnings multiplied by
years of service up to 40 years for eligible persons retiring at age 65. The
table above reflects the calculations on that basis. For periods beginning
January 1, 2001, benefit calculations are changed and are calculated based upon
1.75% of career average compensation, and total benefits are the sum of a past
service benefit equal to the accrued benefit as of December 31, 2000; plus a
future service benefit equal to 1.75% of each year's pay earned after December
31, 2000. Early retirement is also permitted by the Pension Plan at age 55 after
at least 10 years of service. As of February 25, 2001, Bancorp's executive
officers shown in the compensation table had accumulated the following years of
credited service toward retirement: Mr. Hollar - 10 years, Mr. Langmead - 9
years, Mr. Lewis - 5 years, Mr. Small - 10 years, and Mr. Merson - 18 years.
SUPPLEMENTAL EXECUTIVE RETIREMENT AGREEMENTS. The Bank, upon the
recommendation of the Human Resources Committee, has entered into individual
Supplemental Executive Retirement Agreements ("SERA's") with certain executives
of the Bank, including Mr. Hollar and each of the Named Executive Officers. The
SERAs are designed to provide certain post-retirement benefits to enable a
targeted level of covered retirement income to be met and to provide certain
pre-retirement death and disability benefits should the executive die or become
disabled prior to retirement age. The annual post-retirement deferred
compensation benefit is designed to replace between 65% and 70% of the
executive's projected final average pay at retirement date in conjunction with
the Bank's Pension Plan and Deferred Profit Sharing Plan, Social Security
retirement benefits, and any benefits payable to the executive under a prior
employer's pension plan. Normal retirement benefits are payable in equal monthly
payments over 15 years or until the death of the executive, whichever is longer.
Using a 70% income replacement target for Mr. Hollar, an annual amount of
$285,168 per year has been projected to be paid over a 15-year period at age 65.
Executives who reach age sixty with ten years of service are eligible for
reduced benefits upon early retirement, payable over 15 years. Reduced benefits
also are available in the event of disability, voluntary termination, or
termination by the Bank without just cause. Benefits payable by reason of the
death of the executive are based upon accrued retirement benefits or, if
greater, the approximate value of payments received by the Bank under insurance
coverage obtained by the Bank on the executive's life, and are payable over 15
years.
Change-in-Control Benefits. If within six months prior to, or two years
after, a change-in-control, the Bank terminates the employment of an executive
who is a party to a SERA without just cause, or the executive voluntarily
terminates employment for good reason, the executive is eligible for normal
retirement or early retirement benefits, at his or her election. These benefits
are payable beginning at the retirement (or early retirement) age if the change
in control has been approved by a majority of the directors of the Bank who were
directors prior to the change in control, or otherwise beginning in the month
following the executive's termination.
10
EMPLOYMENT AGREEMENTS. In December 1990, Bancorp and the Bank entered
into an Employment Agreement (the "1990 Agreement") with Hunter R. Hollar (the
"Executive"). The Agreement provided for automatic one-year extensions on each
January 1 after its initial term ended on December 31, 1993, provided that
neither Bancorp nor Mr. Hollar had given written notice at least 90 days prior
to a renewal date of intention not to renew the Agreement. The 1990 Agreement,
as renewed, was in effect until January 30, 1997, when the 1990 Agreement was
replaced with a new employment agreement (the "Agreement").
The Boards of Directors of Bancorp and the Bank believe that the
Agreement assures fair treatment of the Executive in relation to his career with
Bancorp by assuring him of some financial security. The Agreement also protects
the shareholders by encouraging the Executive to continue his attention to his
duties without distraction in a potential merger or takeover circumstance and by
helping to maintain the Executive's objectivity in considering any proposals to
acquire Bancorp.
The Agreement has an initial term of three years, and is subject to
automatic one-year extensions of such term on each January 30, provided that
neither Bancorp nor the Executive has given written notice at least 60 days
prior to the renewal date of intention not to renew. The Agreement provides for
the payment of cash and other benefits to the Executive, including a fixed
salary, reviewed annually and subject to increase or decrease at the Board of
Directors' discretion, provided that the salary may not be less than $190,000.
The Executive also is entitled to participate in bonus and fringe benefit,
incentive compensation, life insurance, medical, profit sharing and retirement
plans, and to continued participation in a supplemental retirement arrangement.
The Executive is entitled to reimbursement of reasonable business expenses, the
use of an automobile (with reimbursement for expenses), and membership dues at a
country club located in the Olney, Maryland area. With minor exceptions, the
Agreement terminates, and there are no additional payments due under it, upon
termination based upon death, retirement, or just cause (as defined) by Bancorp,
or upon voluntary termination by the Executive without good reason (as defined).
Upon termination for disability, the Executive is entitled to receive his salary
through the term of the Agreement, reduced by payments under any disability plan
maintained by Bancorp, plus regular employee benefits. Upon termination of the
Executive without just cause by Bancorp, or with good reason by the Executive,
the Executive is entitled to salary and bonuses for the remaining term of the
Agreement, payable in a lump sum based upon prior year compensation levels. The
Executive is prohibited from conflicts of interest, and must maintain the
confidentiality of nonpublic information regarding Bancorp and its customers.
The Executive also is bound by a covenant not to compete and not to interfere
with other employees of Bancorp if the Executive is terminated for just cause,
disability, or retirement or resigns without good reason.
Change in Control Benefits. In the event of a change-in-control of
Bancorp, the Executive is entitled to payment of certain benefits. If within six
months prior to, or two years after, a change-in-control, Bancorp terminates the
Executive's employment without good cause, or the Executive voluntarily
terminates employment for good reason (as defined in the Agreement), then
Bancorp, or its successor, is required to make a lump-sum cash payment to the
Executive equal to 2.99 times the sum of the Executive's annual salary at the
highest rate in effect during the preceding twelve months and bonuses for the
preceding calendar year. The Executive also is entitled to continued
participation for a three-year period in certain Bancorp-sponsored health and
welfare plans. These payments and benefits, are limited, however, so as not to
exceed the amount allowable as a deduction under Section 280G of the Internal
Revenue Code. As of December 31, 2000, if a change-in-control had occurred and
the Executive had terminated employment with good reason or had been terminated
from employment without just cause, then $1,091,401 would have been payable to
the Executive under the change-in-control provisions of the Agreement, after
application of the limitations of Section 280G of the Code. Bancorp does not
believe that payment of this amount would have a material adverse affect on the
financial or operating condition of Bancorp or the Bank.
Agreements with Other Named Executive Officers. The other Named
Executive Officers also entered into employment agreements with Bancorp. The
material terms and conditions of each of these agreements are similar to those
of the Current Agreement entered by Mr. Hollar, except that (a) each of them is
for an initial term of two years, and (b) the compensation and duties, and
provisions relating to duties, are different in each agreement. Under the
agreements, the other Named Executive Officers are not entitled to club
memberships or use of an automobile. The agreements call for the employment of
Mr. Langmead, Mr. Lewis, Mr. Merson, and Mr. Small at Bancorp and the Bank at
minimum base salaries of $110,000, $110,000, $100,000, and $95,000,
respectively.
11
REPORT OF THE HUMAN RESOURCES COMMITTEE
As members of the Human Resources Committee, it is our duty to review
compensation policies applicable to executive officers; to consider the
relationship of corporate performance to that compensation; to recommend salary
and bonus levels and stock option grants for executive officers for
consideration by the Boards of Directors of Bancorp and the Bank or their
committees, as appropriate; and to administer various incentive plans of Bancorp
and the Bank.
Under the compensation policy of Bancorp, which is endorsed by the
Human Resources Committee, compensation is paid based on both the executive
officers' performance and the performance of the entire company. In assessing
the performance of Bancorp and the Bank for purposes of compensation decisions,
the Human Resources Committee considers a number of factors, including salaries
paid by financial services companies with characteristics similar to Bancorp's
to officers with similar responsibilities, profits of Bancorp and the Bank
during the past year relative to their profit plans, reports of federal
regulatory examinations of Bancorp and the Bank, growth, business plans for
future periods, regulatory capital levels, and changes in the value of Bancorp's
stock. The Human Resources Committee assesses individual executive performance
based upon the executive's responsibilities and the Committee's determination of
the executive's contributions to the performance of Bancorp and the
accomplishment of Bancorp's strategic goals. In assessing performance for
purposes of establishing base salaries, the members of the Committee do not make
use of a mechanical formula, but instead weigh the factors described above as
they deem appropriate in the circumstances. The 1999 salary levels of Bancorp's
executive officers were established consistent with this compensation policy.
Mr. Hollar became Chief Executive Officer of Bancorp and the Bank
effective January 1, 1994. During 2000 , the level of Mr. Hollar's annual salary
was subject to the terms of an employment agreement with Bancorp and the Bank
dated January 30, 1997. Under this agreement, Mr. Hollar's annual salary is
reviewed annually and is subject to increase at the discretion of the Board of
Directors.
The Committee conducted a review of executive officer base compensation
in December 1999. Changes in base compensation for 2000 were effective on
January 1, 2000. In its review, the Committee determined that the performance of
Mr. Hollar was excellent, based upon the 1999 financial performance of Bancorp,
including the growth in assets, income, and capitalization during 1999; the
financial performance trends for 1999 and the preceding four years, which
include growth in assets and net operating income in each year; the results of
confidential regulatory examinations; , the completion of the acquisition of
deposits and loans associated with seven branch offices during 1999, Bancorp's
planned levels of financial performance for 2000; Mr. Hollar's continued
involvement in community affairs in the communities served by Bancorp; and a
general level of satisfaction with the management of Bancorp and its
subsidiaries. As a result of this review, which included a comparison of Mr.
Hollar's compensation with compensation paid to officers of comparable
institutions, Mr. Hollar's salary was increased by $21,192 to $297,192.
Executive officers of Bancorp and the Bank have been granted incentive
stock options under Bancorp's Stock Option Plans. The purposes of the Stock
Option Plans are to attract, retain, and motivate key officers of Bancorp and
the Bank by providing them with a stake in the success of Bancorp as measured by
the value of its shares. Options are granted at exercise prices equal to the
fair market value of the shares on the dates of grant. The Stock Option
Committee, which consists of the disinterested directors of Bancorp, has general
responsibility for granting stock options to key employees and administering the
plans. The Human Resources Committee recommends to the Stock Option Committee
the recipients and the amounts and other terms of options to be granted. During
2000, incentive stock options for 47,300 shares were granted to Named Executive
Officers at an exercise price of $21.8125 per share, including options for
20,800 shares granted to Mr. Hollar, 8,000 shares each granted to Mr. Langmead,
Mr. Lewis, and Mr. Small, and 2,500 shares granted to Mr. Merson.
The Human Resources Committee recommends to the Board of Directors the
amount to be contributed each year to the Bank's Cash and Deferred Profit
Sharing Plan. Under this Plan, each participant receives an allocation based
upon the participant's compensation for the year. Each executive officer of
Bancorp participates in the Plan. In 1995, the Human Resources Committee adopted
a formula to establish the amount of aggregate contribution to the profit
sharing plan. This formula uses measures of loan and deposit growth,
profitability, asset quality, and productivity ratios compared with those
measures for the prior year and target levels established for the Bank. For
2000, the Human Resources Committee recommended, and the Board of Directors of
the Bank approved, an aggregate contribution of approximately $707,000 or 3.75%
of annual compensation of eligible participants, which was based upon the
results of the formula.
12
The Bank also awards cash bonuses to participants, including executive
officers, based upon the performance of the Bank or business units, and annual
bonuses for executive officers based solely on Bank performance, in each case
using the formula described above. Performance bonuses of $48,952, $27,050,
$26,668, $23,394, and $22,015 were awarded to Mr. Hollar, Mr. Langmead, Mr.
Lewis, Mr. Small, and Mr. Merson, respectively, in 2000.
No member of the Human Resources Committee is a former or current
officer or employee of Bancorp or the Bank.
[February , 2001] HUMAN RESOURCES COMMITTEE
Robert L. Orndorff, Chairman
John Chirtea
Susan D. Goff
Charles F. Mess
Robert L. Mitchell
W. Drew Stabler
13
STOCK PERFORMANCE COMPARISONS
The following graph and table show the cumulative total return on the
Common Stock of Bancorp over the last five years, compared with the cumulative
total return of a broad stock market index, the Standard and Poor's 500 Index
("S&P 500"), and a narrower index of Mid-Atlantic bank holding company peers
with assets of from $1 billion to $3 billion. The cumulative total return on the
stock or the index equals the total increase in value since December 31, 1995,
assuming reinvestment of all dividends paid into the stock or the index. The
graph and table were prepared assuming that $100 was invested on December 31,
1995, in the Common Stock and the securities included in the indexes.
[Chart goes here.]
------------------------------------------------------------------------------------------
1995 1996 1997 1998 1999 2000
---- ---- ---- ---- ---- ----
Sandy Spring Bancorp, Inc. $100.0 $101.7 $162.7 $200.0 $184.3 $161.3
S&P 500 Index 100.0 120.3 157.6 199.6 238.5 214.4
Peer Group Index 100.0 112.5 179.8 171.4 151.1 143.5
------------------------------------------------------------------------------------------
The Peer Group index includes the sixteen publicly-traded bank holding
companies other than Bancorp headquartered in the states of Maryland, Virginia,
Pennsylvania, New Jersey, and West Virginia (the Mid-Atlantic Region) with
assets at December 31, 2000, of at least $1 billion and not more than $3
billion. The institutions included in this index are City Holding Co., Community
Banks, Inc., F&M Bancorp MD, Harleysville National Corp., Main Street Bancorp,
Inc., National Penn Bancshares, Inc., Omega Financial Corp., Patriot Bank Corp.,
Promistar Financial Corp., S&T Bancorp, Inc., Sterling Financial Corp., Sun
Bancorp, Inc., United National Bancorp, US Bancorp, Inc., Wesbanco, Inc., and
Yardville National Bancorp. Returns are weighted according to the issuer's stock
market capitalization at the beginning of each year shown.
14
AMENDMENT TO ARTICLES OF INCORPORATION
TO INCREASE AUTHORIZED CAPITAL STOCK
FROM 15,000,000 SHARES TO 50,000,000 SHARES
(PROPOSAL II)
The Board of Directors is seeking shareholder approval of an amendment
to Bancorp's Articles of Incorporation to increase the authorized capital stock
from 15,000,000 shares to 50,000,000 shares. The Board of Directors is proposing
the amendment to ensure that a sufficient amount of capital stock is available
for issuance in the future by the Board of Directors. The Board of Directors
believes that the proposed increase in the authorized capital stock is in the
best interest of Bancorp and unanimously recommends a vote FOR the proposed
amendment.
DESCRIPTION OF THE AMENDMENT
The Board of Directors proposes to amend the first sentence of Article
V of the Articles of Incorporation to read in its entirety as follows:
The aggregate number of shares of all classes of capital stock which
the corporation has authority to issue is 50,000,000 shares of capital stock,
$1.00 par value per share, amounting in aggregate par value to $50,000,000.
PURPOSE OF AMENDMENT
The Articles of Incorporation currently authorizes the issuance of up
to 15,000,000 shares of capital stock. All of the authorized shares are
initially classified as common stock. As of the record date, the Company had
[9,641,975] shares of common stock outstanding and [ ] shares of Common Stock
reserved for issuance to directors, officers, employees and shareholders under
various compensation and benefit plans and Bancorp's Dividend Reinvestment Plan,
which leaves [ ] authorized, unissued and unreserved shares available for stock
dividends, stock splits or for other corporate purposes. In the future, Bancorp
may issue capital stock in connection with, among other things, corporate
acquisitions and other transactions, stock splits, stock dividends, and existing
and future benefit plans. While Bancorp currently does not have any plans to
issue additional capital stock (other than pursuant to various compensation and
benefit plans currently in existence), the Board of Directors may determine that
the issuance of additional stock in the future, either in connection with a
corporate acquisition or otherwise, is in the best interests of Bancorp. In that
event, Bancorp could need a substantial amount of capital stock available for
issuance, and the [ ] shares available as of the record date could be
insufficient. As a result, the Board is proposing an amendment of the Articles
of Incorporation to increase the authorized capital stock from 15,000,000 to
50,000,000 shares, which would increase the authorized, unissued and unreserved
capital stock available for issuance from [ ] to [ ] shares. Authorized,
unissued and unreserved capital stock may be issued from time to time for any
proper purpose without further action of the shareholders, except as required by
the Articles of Incorporation and applicable law. Although the newly authorized
shares initially will be classified as common stock, Bancorp's Articles of
Incorporation authorizes the Board of Directors to reclassify any unissued
shares of capital stock by setting or changing in any one or more respects the
preferences, conversion or other rights, voting powers, restrictions,
limitations as to distributions and dividends, qualifications or terms or
conditions of redemption of such stock.
Each share of common stock authorized for issuance has the same rights
as, and is identical in all respects to, each other share of common stock. The
newly authorized shares of capital stock will not affect the rights, such as
voting and liquidation rights, of the shares of common stock currently
outstanding. Shareholders will not have preemptive rights to purchase any
subsequently issued shares of capital stock. Bancorp has no current plans to
issue the newly authorized shares of capital stock.
The ability of the Board of Directors to issue additional shares of
capital stock without additional shareholder approval may be deemed to have an
anti-takeover effect, since unissued and unreserved shares of capital stock
could be issued by the Board of Directors in circumstances that may have the
effect of deterring takeover bids. The Board of Directors does not intend to
issue any additional shares of capital stock except on terms which it deems in
the best interests of Bancorp and its shareholders.
15
VOTE REQUIRED AND RECOMMENDATION OF BOARD OF DIRECTORS
In accordance with Maryland General Corporation Law and the Articles of
Incorporation, the proposed amendment to the Articles of Incorporation must be
approved by two-thirds of the outstanding stock entitled to vote thereon. It is
expected that substantially all of the [561,435] shares, or [5.79]%, of the
common stock outstanding as of the record date over which directors and
executive officers of Bancorp exercise voting power will be voted for the
proposed amendment. The Board of Directors unanimously recommends that
shareholders vote FOR the proposed amendment.
APPROVAL OF THE SANDY SPRING BANCORP, INC.
2001 EMPLOYEE STOCK PURCHASE PLAN AND THE
ISSUANCE OF SHARES UNDER THE PLAN
(PROPOSAL III)
The Board of Directors has adopted the Sandy Spring Bancorp 2000
Employee Stock Purchase Plan (the "Purchase Plan"), subject to approval by
Bancorp's shareholders. The Purchase Plan, which is intended to qualify under
section 423 of the Internal Revenue Code of 1986, as amended (the "Code"),
permits eligible employees to purchase Common Stock at a discount through
payroll deductions. The Purchase Plan is attached as Annex B, and should be
consulted for additional information.
PURPOSE OF THE PURCHASE PLAN. The purpose of the Purchase Plan is to advance the
interests of Bancorp by providing employees of Bancorp and its subsidiaries with
an opportunity to purchase Common Stock through accumulated payroll deductions.
Bancorp seeks to attract, retain, and motivate the best available personnel; to
provide additional incentive to employees of Bancorp, the Bank, and their
affiliates to promote the success of the business as measured by the value of
its shares; and generally to increase the commonality of interests among
employees, and other shareholders.
Bancorp intends to qualify the Purchase Plan as an "employee stock
purchase plan" under section 423 of the Code. Accordingly, the provisions of the
Purchase Plan will be construed so as to extend and limit participation in a
manner consistent with the requirements of that section of the Code.
ADMINISTRATION. The Purchase Plan is administered by a committee (the
"Committee") of at least three directors appointed by the Board of Directors.
Decisions of the Committee are final, conclusive and binding on all parts to the
full extend permitted by law. Members of the Committee will be indemnified to
the full extent permissible under Bancorp's Articles of Incorporation and Bylaws
in connection with any claims or other actions relating to any action taken
under the Purchase Plan. At the date of this Proxy Statement, the Committee
consists of the Human Resources Committee of the Board of Directors.
OFFERING PERIODS. Bancorp has implemented the Purchase Plan with an initial
monthly offering period commencing on July 1, 2001, subject to the approval of
the Purchase Plan by shareholders at the Annual Meeting. Thereafter, the
Purchase Plan will have consecutive monthly offering periods.
PURCHASE PRICE. The purchase price per share of the shares offered under the
Purchase Plan in a given offering period will be the lower of 85% of the fair
market value of a share of Common Stock on the first day of the monthly option
period or 85% of the fair market value of a share of Common Stock on the
exercise date. The fair market value of the Common Stock on a given date will be
the closing sale price of a share of Common Stock for such date as reported by
the Nasdaq National Market. The shares of Common Stock purchased pursuant to the
Purchase Plan will represent newly-issued shares.
ELIGIBILITY. All employees of Bancorp and its subsidiaries are eligible to
participate, except individuals who have been employed for less than ninety
days, individuals who customarily work less than 20 hours per week, individuals
who customarily work for Bancorp for not more than five months per year and
individuals who would own 5% or more of the Common Stock, taking outstanding
options and shares owned by certain related parties into account. Eligible
employees may become a participant by completing an enrollment form authorizing
payroll deductions and filing it with Bancorp's Human Resources Department prior
to the applicable enrollment date.
16
PAYROLL DEDUCTIONS. The purchase price for the shares of Common Stock is
accumulated by payroll deductions during the offering period in amounts elected
by the participants. A participant may discontinue his or her participation in
the Purchase Plan at any time during the offering period. Payroll deductions
will commence on the first payday following the enrollment date, and will end on
the exercise date of the offering period unless sooner terminated as provided in
the Purchase Plan. Payroll deductions for any month may not be less than 1% or
more than 10% of the employee's cash compensation paid in the month.
GRANT AND EXERCISE OF OPTIONS. The maximum number of shares placed under option
to a participant in an offering is that number determined by dividing the amount
of the participant's total payroll deductions to be accumulated prior to an
exercise date by the lower of 85% of the fair market value of the Common Stock
at the beginning of the offering period or on the exercise date. Unless a
participant withdraws from the Purchase Plan, such participant's option for the
purchase of shares of Common Stock will be exercised automatically on each
exercise date for the maximum number of whole shares of Common Stock at the
applicable price. Notwithstanding the foregoing, no employee will be permitted
to subscribe for shares of Common Stock under the Purchase Plan if, immediately
after the grant of the option, the employee would own 5% or more of the voting
power or value of all classes of stock of Bancorp or of any of its subsidiaries
(including stock which may be purchased under the Purchase Plan or pursuant to
any other options), nor will any employee be granted an option that would permit
the employee to buy under all employee stock purchase plans of Bancorp more than
$25,000 worth of stock (determined at the fair market value of the shares of
Common Stock at the time the option is granted) in any calendar year. In
addition, the shares of Common Stock received by an employee upon the exercise
of an option may not be disposed of by the employee for a period of six months
from the date of exercise, except upon death or by gift.
WITHDRAWAL; TERMINATION OF EMPLOYMENT. Employees may end their participation in
the offering at any time during the offering period, and participation ends
automatically on termination of employment with Bancorp or a subsidiary of
Bancorp. A participant will be required to withdraw all of the payroll
deductions credited to such participant's account and not yet used and must give
written notice of such withdrawal to Bancorp. Employees may not participate in
the Purchase Plan for at least six months after withdrawal from the Purchase
Plan.
TRANSFERABILITY. No rights or accumulated payroll deductions of a participant
under the Purchase Plan may be assigned, transferred, pledged or otherwise
disposed of in any way (other than by will, the laws of descent and distribution
or by designation of a beneficiary as provided in the Purchase Plan) and any
such attempt may be treated by Bancorp as an election to withdraw from the
Purchase Plan.
AMENDMENT AND TERMINATION. Bancorp's Board of Directors may at any time and for
any reason terminate, suspend, or amend the Purchase Plan. Except as provided in
the Purchase Plan, no such termination will affect options previously granted,
provided that an offering period may be terminated by the Board of Directors on
any exercise date if the Board determines that the termination of the Purchase
Plan is in the best interests of Bancorp and its shareholder. Except as provided
in the Purchase Plan, no amendment may make any change in any previously granted
option that adversely affects the rights of any participant. Bancorp will obtain
shareholder approval of any amendment to the Purchase Plan to the extent
necessary to comply with section 423 of the Code (or any successor rule or
provision or any other applicable law or regulation), in such a manner and to
such a degree as required. Unless terminated sooner, the Purchase Plan will
terminate on July 1, 2011.
SHARES AVAILABLE FOR ISSUANCE. The Purchase Plan reserves 300,000 authorized but
unissued shares of Common Stock for purchase upon the exercise of options
granted under the plan.. 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 Committee
will adjust both the number and kind of shares of stock as to which options may
be granted under the Purchase Plan, the affected terms of all outstanding
options, and the aggregate number of shares of Common Stock remaining available
for issuance under the Purchase Plan. If options expire, become unexercisable,
or are forfeited for any reason without having been exercised, the shares of
Common Stock subject to such options will be available for the grant of
additional options under the Purchase Plan, unless the Purchase Plan has been
terminated.
FEDERAL TAX INFORMATION FOR THE PURCHASE PLAN. The Purchase Plan and the rights
of participants to make purchases under the Purchase Plan are intended to
qualify under the provisions of sections 421 and 423 of the Code. Under these
provisions, no income will be taxable to a participant until the shares
purchased under the Plan are sold or otherwise disposed of. Upon sale or other
disposition of the shares of Common Stock, the participant will
17
generally be subject to tax, and the amount of the tax will depend upon the
holding period. If the shares of Common Stock are sold or otherwise disposed of
more than two years from the first day of the offering period, the participant
will recognize ordinary income measured as the lesser of (a) the excess of the
fair market value of the shares of Common Stock at the time of such sale or
disposition over the purchase price, or (b) an amount equal to 15% of the fair
market value of the shares of Common Stock as of the first day of the offering
period. Any additional gain will be treated as long-term capital gain. If the
shares of Common Stock are sold or otherwise disposed of before the expiration
of this holding period, the participant will recognize ordinary income generally
measured as the excess of the fair market value of the shares of Common Stock on
the date the shares are purchased over the purchase price. Any additional gain
or loss on such sale or disposition will be long-term or short-term capital gain
or loss, depending on the holding period. Bancorp is not entitled to a deduction
for amounts taxed as ordinary income or capital gain to a participant except to
the extent of ordinary income recognized by participants upon a sale or
disposition of shares of Common Stock prior to the expiration of the holding
period(s) described above. The foregoing is only a summary of the effect of
federal income taxation upon the participant and Bancorp with respect to the
shares of Common Stock purchased under the Purchase Plan. Reference should be
made to the application provisions of the Code. In addition, the summary does
not discuss the tax consequences of a participant's death or the income tax laws
of any state in which the participant may reside.
BANCORP POLICIES. Bancorp polices on insider trading under the federal
securities laws prohibit employees who are in possession of material nonpublic
information with respect to Bancorp and its subsidiaries from making investment
decisions regarding Bancorp Common Stock, including decisions to enroll in the
Purchase Plan, to change the amount of payroll deductions under the Purchase
Plan, or to withdraw from the Purchase Plan. Executive officers of Bancorp and
its subsidiaries are subject to other polices and federal securities laws that
restrict their purchases and sales of Bancorp Common Stock.
FINANCIAL EFFECTS. Bancorp will receive no monetary consideration for the
granting of options under the Purchase Plan. It will receive no monetary
consideration other than the option price for shares of Common Stock issued to
optionees upon the exercise of their options. Under current accounting standards
applicable to Bancorp, recognition of compensation expense is not required when
stock options qualified under Section 423 of the Code are granted.
As of the date of the Annual Meeting, no offering period under the Purchase Plan
has begun, no options have been granted to any person under the Purchase Plan
and the options to be received by Mr. Hollar, all current executive officers as
a group, and all employees, including all current officers who are not executive
officers, as a group cannot be determined at this time.
RECOMMENDATION AND VOTE REQUIRED
The Board of Directors has determined that the Purchase Plan is
desirable, cost effective, and produces incentives that will benefit Bancorp and
its shareholders. The Board of Directors is seeking shareholder approval of the
Purchase Plan in order to satisfy the requirements of the Code for favorable tax
treatment of the Purchase.
Approval of the Purchase Plan requires the favorable vote of a majority
of the votes represented at the Annual Meeting (assuming a quorum of a majority
of the outstanding shares of Common Stock is present). THE BOARD OF DIRECTORS
RECOMMENDS A VOTE "FOR" APPROVAL OF THE PURCHASE PLAN.
TRANSACTIONS AND RELATIONSHIPS WITH MANAGEMENT
Bancorp and the Bank have had in the past, and expect to have in the
future, banking transactions with directors and executive officers in the
ordinary course of business on substantially the same terms, including interest
rates and collateral on loans, as those prevailing at the same time for
comparable transactions with other persons. In the opinion of management, these
transactions do not and will not involve more than the normal risk of
collectibility or present other unfavorable features.
Director Lewis R. Schumann is a partner in the law firm of Miller,
Miller and Canby, Chtd., which Bancorp and the Bank have retained during 2000
and expect to retain during the current year as corporate counsel. The law firm
provides legal services on matters such as routine litigation, personnel
policies and practices, customer account forms and issues, and Bank properties.
18
SHAREHOLDER PROPOSALS
From time to time, individual shareholders may wish to submit proposals
that they believe should be voted upon by the shareholders. The Securities and
Exchange Commission has adopted regulations that govern the inclusion of such
proposals in Bancorp's annual proxy materials. Shareholder proposals intended to
be presented at the 2002 Annual Meeting of Shareholders may be eligible for
inclusion in Bancorp's proxy materials for that Annual Meeting if received by
Bancorp at its executive offices not later than November 16, 2001.
In addition, Bancorp's Bylaws require that to be properly brought
before an annual meeting, shareholder proposals for new business must be
delivered to or mailed and received by Bancorp not less than thirty nor more
than ninety days prior to the date of the meeting; provided, however, that if
less than forty-five days notice of the date of the meeting is given to
shareholders, such notice by a shareholder must be received not later than the
fifteenth day following the date on which notice of the date of the meeting was
mailed to shareholders or two days before the date of the meeting, whichever is
earlier. Each such notice given by a shareholder must set forth certain
information specified in the Bylaws concerning the shareholder and the business
proposed to be brought before the meeting.
Shareholders also may nominate candidates for director, provided that
such nominations are made in writing and received by Bancorp at its executive
offices not later than December 15, 2001. The nomination should be sent to the
attention of Bancorp's Corporate Secretary and must include, concerning the
director nominee, the following information: full name, age, date of birth,
educational background and business experience, including positions held for at
least the preceding five years, home and office addresses and telephone numbers,
and a signed representation to timely provide all information requested by
Bancorp for preparation of its disclosures regarding the solicitation of proxies
for election of directors. The name of each such candidate for director must be
placed in nomination at the Annual Meeting by a shareholder present in person.
The nominee must also be present in person at the Annual Meeting. A vote for a
person who has not been duly nominated pursuant to these requirements will be
deemed to be void.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires Bancorp's
executive officers and directors, and any persons who own more than ten percent
of a registered class of Bancorp's equity securities, to file reports of
ownership and changes in ownership on Forms 3, 4, and 5 with the Securities and
Exchange Commission. Executive officers, directors and greater than ten percent
stockholders are required by applicable regulations to furnish Bancorp with
copies of all Forms 3, 4, and 5 they file.
Based solely on Bancorp's review of the copies of such forms it has
received and written representations from certain reporting persons, Bancorp
believes that all its executive officers and directors complied with all filing
requirements applicable to them with respect to transactions during 2000.
INDEPENDENT AUDITORS
The Board of Directors anticipates the selection of Stegman & Company,
certified public accountants, to audit the books and accounts of Bancorp for the
year ending December 31, 2001. Stegman & Company has served as independent
auditors for Bancorp and its subsidiary and predecessor, Sandy Spring National
Bank of Maryland, without interruption for many years. Stegman & Company has
advised Bancorp that neither the accounting firm nor any of its members or
associates has any direct financial interest in or any connection with Bancorp
and its subsidiaries other than as independent public auditors. A representative
of Stegman & Company will be present at the Annual Meeting, will have the
opportunity to make a statement, and will be available to respond to appropriate
questions.
AUDIT FEES. Stegman & Company billed a total of $46,750 for the audit
of Bancorp's financial statements included in the annual report on Form 10-K for
the year-ended December 31, 2000, and the review of quarterly reports on Forms
10-Q filed during that year.
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OTHER FEES. Stegman & Company billed a total of $28,108 for other
services for the year ended December 31, 2000, including $13,100 in audit
related services for Bancorp, its subsidiaries, and employee benefit plans
sponsored by Bancorp.
REPORT OF THE AUDIT COMMITTEE
Bancorp's audit committee is appointed by the Board of Directors to
assist the Board in monitoring the integrity of the financial statements,
compliance with legal and regulatory requirements, and the independence and
performance of the internal and the external, independent auditors. The
committee (1) has reviewed and discussed the audited financial statements
included in Bancorp's 2000 Annual Report and Form 10-K with management; (2) has
discussed with the independent auditors the matters required to be discussed by
Statement of Auditing Standards 61; and (3) has received the written disclosures
and the letter from the independent auditors required by Independence Standards
Board Standard No. 1 and discussed independence with the independent auditors.
Based upon this review, discussion, disclosures, and materials described in (1)
through (3), the committee recommended to the Board of Directors that the
audited financial statements be included in the 2000 Annual Report and Form
10-K. The committee also has considered whether the amount and nature of
non-audit services rendered by the independent accountant are consistent with
its independence.
February [ ], 2001 AUDIT COMMITTEE
John Chirtea, Chairman
Solomon Graham
Gilbert L. Hardesty
Joyce R. Hawkins
Thomas O. Keech
David E. Rippeon
APPROVAL OF MINUTES
Action taken at the Annual Meeting to approve the minutes of the 2000
Annual Meeting of Shareholders does not constitute approval or disapproval of
any of the matters referred to in those minutes.
By order of the Board of Directors
/S/ RONALD E. KUYKENDALL
Ronald E. Kuykendall
Corporate Secretary
Dated: March 15, 2001
20
ANNEX A
SANDY SPRING BANCORP, INC.
SANDY SPRING NATIONAL BANK OF MARYLAND
JOINT AUDIT COMMITTEE CHARTER
The Audit Committee is appointed by the Board to assist the Board in monitoring
(1) the integrity of the financial statements, (2) compliance with legal and
regulatory requirements and (3) the independence and performance of internal and
external auditors.
The members of the Audit Committee shall meet the independence and experience
requirements of NASDAQ, the Securities and Exchange Commission, and the Federal
Deposit Insurance Act. The members of the Audit Committee shall be appointed by
the Board.
The Audit Committee shall have the authority to retain special legal, accounting
or other consultants to advise the Committee. The Audit Committee may request
any officer or employee of the Bancorp, its subsidiaries, outside counsel or
independent auditor to attend a meeting of the Committee or to meet with any
members of, or consultants to, the Committee.
The Audit Committee shall make regular reports to the Board.
The Audit Committee shall:
1. Review and reassess the adequacy of this Charter annually and recommend
any proposed changes to the Board for approval.
2. Review the annual audited financial statements with management, including
major issues regarding accounting and auditing principles and practices
as well as the adequacy of internal controls that could significantly
affect the financial statements.
3. Review an analysis prepared by management and the independent auditor of
significant financial reporting issues and judgments made in connection
with the preparation of the financial statements.
4. Meet periodically with management to review the organization's major
financial risk exposures and the steps management has taken to monitor
and control such exposures.
5. Review major changes to auditing and accounting principles and practices
as suggested by the independent auditor, internal auditors or management.
6. Recommend to the Board the appointment of the independent auditor.
7. Approve the fees to be paid to the independent auditor.
8. Receive periodic reports from the independent auditor regarding the
auditor's independence as required by Independence Standards Board
Standard No. 1 and discuss those reports with the independent auditor.
9. Review the provision of non-audit services by the independent auditors,
and consider whether the provision of such services is compatible with
the auditor's independence.
10. Review the appointment and replacement of the senior internal auditor.
11. Review the significant reports to management prepared by the internal
auditing department and management's responses.
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12. Obtain from the independent auditor assurance that Section 10A of the
Private Securities Litigation Reform Act of 1995 has not been implicated.
13. Discuss with independent auditor the matters required to be discussed by
Statement on Auditing Standards No. 61 relating to the conduct of the
audit.
14. Review with the independent auditor any problems or difficulties the
auditor may have encountered and any management letter provided by the
auditor and management's response to that letter.
15. Prepare the report required by the rules of the Securities and Exchange
Commission to be included in the annual proxy statement.
16. Recommend to the Board whether the financial statements should be
included in Bancorp's annual report on Form 10-K based upon the reviews
and discussions referred to in paragraphs 2, 8 and 13.
17. Advise the Board with respect to policies and procedures regarding
compliance with applicable laws and regulations and with the Code of
Conduct.
18. Review with the General Counsel legal matters that may have a material
impact on the financial statements, compliance policies and any material
reports or inquiries received from regulators or governmental agencies.
While the Audit Committee has the responsibilities and powers set forth in this
Charter, it is not the duty of the Audit Committee to plan or conduct audits or
to determine that the financial statements are complete and accurate and are in
accordance with generally accepted accounting principles. This is the
responsibility of management and the independent auditor. Nor is it the duty of
the Audit committee to conduct investigations, to resolve disagreements, if any,
between management and the independent auditor or to assure compliance with laws
and regulations and the Code of Conduct.
The audit committee will consist of at least three directors, all of whom have
no relationship to the Bancorp or its subsidiaries that may interfere with the
exercise of their independence from management. All directors must be able to
read and understand fundamental financial statements, including a balance sheet,
income statement, and cash flow statement. At least one director must have past
employment experience in finance or accounting or other comparable experience or
background, including a current or past position as a chief executive or
financial officer or other senior officer with financial oversight
responsibilities.
The Committee will establish reasonable rules for the conduct of meetings and
required notice of meetings, subject to oversight by the Board of Directors. The
Committee may meet by conference call or in person. Minutes of the Committee are
not required, but may be kept. Reports and recommendations to the Board of
Directors will be written. Meetings of the Company and Bank Committees may be
held jointly. Each Board has authority with respect to its Committee. The
Committees and the Boards are referred to in the singular in this charter from
time to time for convenience.
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ANNEX B
SANDY SPRING BANCORP, INC.
2001 EMPLOYEE STOCK PURCHASE PLAN
1. PURPOSE OF THE PLAN.
The purpose of the Sandy Spring Bancorp, Inc. Employee Stock Purchase
Plan is to make available to eligible employees of Sandy Spring
Bancorp, Inc. (the "Company"), and certain related companies a means of
purchasing shares of the Company's Common Stock through voluntary,
regular payroll deductions. The Plan is not subject to the provisions
of the Employee Retirement Income Security Act of 1974, but is intended
to qualify as an "Employee Stock Purchase Plan" under Section 423 of
the Internal Revenue Code of 1986, as amended (the "Code"). The Plan
shall be administered, interpreted and construed so as to extend and
limit participation in a manner consistent with Section 423 of the
Code. Participation in the Plan is entirely voluntary, and the Company
makes no recommendations to employees as to whether they should or
should not participate in the Plan. The Plan has been adopted by the
Board and is effective July 1, 2001, but no Options to purchase shares
may be exercised or deemed exercised unless this Plan is approved by
the Company's shareholders in the manner required by section 423(b)(2)
of the Code and Treasury Regulation section 1.423-2(c).
2. DEFINITIONS.
(a) "Administrator" means the entity or person designated to act as
Administrator of the Plan pursuant to Section 6.(b).
(b) "Affiliate" means any (i) "parent corporation" or "subsidiary
corporation" of the Company as such terms are defined in Section
424(e) and (f), respectively, of the Code, that (ii) is designated
as a participating employer in this Plan by the Board.
(c) "Bank" means the Sandy Spring National Bank of Maryland.
(d) "Base Compensation" means gross compensation for the relevant pay
period, including overtime pay, but excluding all bonuses,
severance pay, extraordinary pay, expense allowances or
reimbursements, moving expenses and income from the exercise of
nonqualified stock options, the disposition of incentive stock
options or from restricted stock or stock option awards. For these
purposes, gross compensation includes any amount that would be
included in taxable income but for the fact that it was
contributed to a qualified plan pursuant to an elective deferral
under Section 401(k) of the Code or contributed under a salary
reduction agreement pursuant to Section 125 of the Code.
(e) "Board" means the Board of Directors of the Company.
(f) "Broker" means a duly licensed securities dealer, broker or agent
designated to act as Broker pursuant to Section 6(c).
(g) "Code" means the Internal Revenue Code of 1986, as amended.
(h) "Committee" means the Employee Stock Purchase Plan Committee
appointed by the Board in accordance with section 6(a) hereof.
(i) "Common Stock" means the Company's Common Stock, par value $1.00
per share.
(j) "Company" means Sandy Spring Bancorp, Inc.
(k) "Eligible Employee" means any employee of any Employer, excluding
any employee (i) who has been employed by the Employer for less
than ninety calendar days, (ii) whose customary employment with
the employee's Employer is 20 hours or less per week, (iii) whose
customary employment with the employee's Employer is not for more
than five months in any calendar year, or (iv) who immediately
after the grant of an option under this Plan to the employee would
(in accordance with the provisions of Sections 423 and 424(d) of
the Code) own stock possessing 5% or more of the total combined
voting power or value of all classes of stock of the "employer
corporation" or of its "Parent Corporations" or "Subsidiary
Corporations," as defined in Section 424 of the Code.
(l) "Employer" means, with respect to any Participant, the Company or
Affiliate of which the Participant is an Eligible Employee.
B-1
(m) "Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time, and any successor thereto.
(n) "Fair Market Value" means, with respect to a share of Common
Stock, the last sales price (or average of the quoted closing bid
and asked prices if there is no closing sales price reported) of a
share of Common Stock as reported by the Nasdaq National Market
(or by the principal national stock exchange on which the Nasdaq
Common Stock is then listed) on the date of valuation, if such
date is a business day, or the immediately preceding business day,
if such date is not a business day. In the absence of an
established market for Common Stock, the Fair Market Value of a
share of Common Stock shall be determined in good faith by the
Board.
(o) "Indemnified Person" has the meaning set forth in Section 9(c).
(p) "Option" means an option granted pursuant to this Plan at the
beginning of each Option Period to acquire Common Stock.
(q) "Option Exercise Date" means the last day of each Option Period.
(r) "Option Period" means each calendar month during the period
beginning on the Plan Start Date and ending on June 30, 2011,
unless the Plan is terminated earlier.
(s) "Payroll Deduction Account" means, with respect to each
Participant, the amounts credited to the Participant's account
from the payroll deductions made by the Participant under this
Plan, less any amounts withdrawn from such account (for payment of
Common Stock, payment to the Participant, payment of withholding
and other taxes or amounts or payment of other obligations or
amounts).
(t) "Participant" has the meaning set forth in Section 2(t).
(u) "Plan" means the Sandy Spring the Company, Inc. Employee Stock
Purchase Plan.
(v) "Plan Start Date" means July 1, 2001.
(w) "Rule 16b-3" means Rule 16b-3 under the Exchange Act.
(x) "Stock Account" means, with respect to each Participant, the
number of whole shares of Common Stock credited under this Plan to
the Participant's account. Dividends with respect to shares of
Common Stock credited to a Participant's Stock Account shall be
paid to the Participant and shall not beheld in either the
Participant's Stock Account or Payroll Deduction Account.
(y) "Transaction" means (i) the liquidation or dissolution of the
Company, (ii) a merger or consolidation in which the Company is
not the surviving entity; or (iii) the sale or disposition of all
or substantially all of the Company's assets.
3. PARTICIPATION
(a) ELIGIBLE EMPLOYEES. Subject to Article 8, all Eligible Employees
as of the beginning of each Option Period may participate in the
Plan for such Option Period at their election.
(b) PARTICIPATION PROCEDURES. If an Eligible Employee does not
otherwise have an election to become a Participant in effect, each
Eligible Employee choosing to participate in the Plan (herein
called a "Participant") during an Option Period shall enroll as a
Participant in the Plan by filing with the Participant's Employer
a completed enrollment form (authorized by the Administrator)
prior to the beginning of any Option Period.
(c) EMPLOYEE CONTRIBUTIONS. Subject to other limitations provided in
this Plan, a Participant may contribute under the Plan any portion
of Participant's Base Compensation which is a whole dollar amount,
with a minimum of 2% of Participant's Base Compensation and a
maximum of 10% of the Participant's Base Compensation.
Contributions may be made only through regular payroll deductions,
net of any tax or other withholdings. An enrollment form and
payroll deduction authorization will remain effective for each
successive Option Period until terminated in writing
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by a Participant or until the Participant is no longer eligible
to participate in the Plan. The payroll deduction authorization
may be reduced or terminated at anytime by the Participant's
written request submitted to the Participant's Employer;
provided, however, that (i) a Participant may not recommence
payroll deductions prior to the seventh Option Period following
the date of any termination of his or her deduction
authorization; (ii) a Participant may not increase payroll
deductions for an Option Period during that Option Period; and
(iii) a Participant may not make more than one revision of the
Participant's payroll deduction authorization in any Option
Period. Termination of deductions shall constitute withdrawal
from the Plan as set forth in Section 3(e) and cancellation of
any outstanding Options of the Participant. Reduction or
termination of deductions will become effective as soon as
practicable after a Participant's written request is received by
the Participant's Employer.
(d) PARTICIPANT RESTRICTION. Notwithstanding any provisions of this
Plan to the contrary, no Participant will be granted an Option
under this Plan which would permit the Participant's rights to
purchase shares of stock pursuant to all employee stock purchase
plans under section 423 of the Code sponsored by the Company and
"parent corporations" and "subsidiary corporations" (within the
meaning of Section 424 of the Code) to accrue at a rate which
exceeds $25,000 of the Fair Market Value of such stock determined
at the time each Option is "granted" (within the meaning of Code
Section 423(b)(8)) for each calendar year during which any Option
granted to such Participant is outstanding at any time, as
provided in Sections 423 and 424(d) of the Code.
(e) WITHDRAWAL FROM PLAN. A Participant may withdraw from the Plan
(thereby canceling all Options then in existence) at any time by
giving written notice to the Participant's Employer and to the
Administrator. The Administrator shall, as soon as practicable
after receiving request from the withdrawn Participant therefor,
cause to be delivered to the withdrawn Participant (i) a
certificate issued in the name of the Participant representing the
number of full shares of Common Stock held in the Participant's
Stock Account and (ii) a check representing any funds held to the
credit of the Participant's Payroll Deduction Account. A
Participant who has withdrawn from the Plan may thereafter reenter
the Plan by following the procedure described under Section 3(b).
(f) TERMINATION OF PARTICIPANT'S EMPLOYMENT. Upon termination of a
Participant's employment from the Employers for any reason,
including death or disability, the Participant's Stock Account and
Payroll Deduction Account in the Plan shall be closed, and all
existing Options held by the Participant shall be canceled. The
Administrator shall, as soon as practicable after termination of a
Participant's employment, cause to be delivered to the Participant
or the Participant's estate or the Participant's designated
beneficiary as provided below, as applicable, (i) a certificate
issued in the name of the Participant representing the number of
full shares of Common Stock in the Participant's Stock Account,
and (ii) a check representing any funds held to the credit of the
Participant's Payroll Deduction Account. In the event of a
Participant's death, the Participant's Common Stock and Payroll
Deduction Account shall be delivered and paid to the estate of
such Participant or to a beneficiary designated by the Participant
in writing on a form approved by the Administrator.
4. OPTIONS TO PURCHASE STOCK; MAXIMUM SHARES AVAILABLE
(a) MAXIMUM SHARES. The maximum number of shares which shall be issued
under the Plan, subject to adjustment upon changes in Common Stock
under Article 7, shall be 300,000 shares. If, on a given Option
Exercise Date, the number of shares with respect to which Options
are to be exercised exceeds the number of shares available under
the Plan, the Company shall make a pro rata allocation of the
shares remaining available for purchase in as uniform a manner as
shall be practicable and it shall determine to be equitable, and
the balance of the Payroll Deduction Account of each Participant
shall be returned to the Participant as promptly as possible.
(b) OFFERINGS. Subject to Article 8, the Company shall make
consecutive offerings on the beginning of each Option Period to
Participants to purchase Common Stock as long as shares authorized
remain available for issuance. Each offering as of the beginning
of each Option Period shall be the
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total number of shares authorized under Section 4(a), less the
number of shares issued by purchases of Common Stock under Section
5(e) in prior Option Periods.
5. PURCHASE OF STOCK PURSUANT TO OPTIONS
(a) PAYROLL DEDUCTION ACCOUNTS. Each Employer will deduct from its
Participants' paychecks such amounts as have been authorized by
the Participants and, promptly after the end of each month, remit
to the Administrator all amounts so deducted during the month,
together with a report showing each Participant and the amounts
allocable to the Payroll Deduction Account of each Participant.
The Administrator shall credit each Participant's Payroll
Deduction Account with the amount of such deposits, and shall
reduce the Participant's Payroll Deduction Account by the purchase
price of all Common Stock purchased by the Participant under this
Plan and by any other withdrawals from the Participant's Payroll
Deduction Account. The Plan, through its Administrator, shall
purchase for the Stock Accounts of the Participants shares of
Common Stock with funds received under the Plan.
(b) STOCK ACCOUNTS. The Administrator will open and maintain a Stock
Account in the name of each Participant to which will be credited
all shares of Common Stock purchased for the Participant's
benefit. All shares held under the Plan will be registered in the
name of the Plan, the Administrator or the Administrator's
nominee, and will remain so registered until the shares are
delivered to the Participant. The Participant shall have the right
to sell all or any part of the shares held in the Participant's
Stock Account, pursuant to procedures established by the
Administrator.
(c) GRANT OF OPTIONS AND PURCHASE. Subject to Article 8, each person
who is a Participant on the first day of an Option Period will as
of the first day of such Option Period be deemed to have been
granted an Option for such period. Such Option will be for the
number of whole shares of Common Stock to be determined by
dividing (a) the balance in the Participant's Payroll Deduction
Account on the Option Exercise Date, by (b) the purchase price per
share of Common Stock determined under Section 5(d); provided,
however, that the quotient in this Section 5(c) shall be rounded
down to a whole number. The number of shares of Common Stock
receivable by each Participant upon exercise of an Option for an
Option Period shall be reduced, on a substantially proportionate
basis, in the event that the number of shares then available under
the Plan is otherwise insufficient.
(d) PURCHASE PRICE. The purchase price of each share of Common Stock
sold pursuant to the exercise of an Option shall be 0.85
multiplied by the Fair Market Value of the Common Stock on the
first day or last day of the Option Period, whichever is lower.
(e) EXERCISE OF OPTIONS. Each person who is a Participant in the Plan
on the Option Exercise Date will be deemed to have exercised on
the Option Exercise Date the Option granted to the Participant for
that Option Period. Upon such exercise, the balance of the
Participant's Payroll Deduction Account shall be applied to the
purchase of the number of whole shares of Common Stock determined
under Section 5(c), and the amount of shares of Common Stock
purchased shall be credited to the Participant's Stock Account. In
the event that the balance of the Participant's Payroll Deduction
Account following an Option Period is in excess of the total
purchase price of the shares of Common Stock so sold, the balance
of the Payroll Deduction Account shall be returned to the
Participant; provided, however, that if the balance in the Payroll
Deduction Account consists solely of an amount equal to the value
of a fractional share it will be retained in the Payroll Deduction
Account and carried over to the next Option Period. No fractional
shares shall be issued hereunder. Notwithstanding anything herein
to the contrary, the Company's obligation to sell and deliver
shares of Common Stock under the Plan is subject to the approval
required of any governmental authority in connection with the
authorization, issuance, sale or transfer of such shares, to any
requirements of Nasdaq or any national securities exchange
applicable thereto, and to compliance by the Company with other
applicable legal requirements in effect from time to time,
including without limitation any applicable tax withholding
requirements.
B-4
(f) NO ASSIGNMENT OF PARTICIPANT'S INTEREST IN PLAN. A Participant may
not assign, sell, transfer, pledge, hypothecate or alienate any
Options or other interests (including Participant's Payroll
Deduction Account) in or rights under the Plan. Options under the
Plan are exercisable by a Participant during the Participant's
lifetime only by the Participant. All employees shall have the
same rights and privileges under the Plan. Participants shall have
no interest or voting rights in shares of Common Stock covered by
his or her Option until such Option has been exercised.
(g) VESTING. Each Participant will immediately acquire full ownership
of all shares of Common Stock at the time such shares are credited
to the Participant's Stock Account.
(h) DELIVERY OF STOCK. A Participant may instruct the Administrator,
in writing, at any time to deliver to the Participant a
certificate, issued in the name of the Participant, representing
any or all of the full shares of Common Stock held in the
Participant's Stock Account. As soon as practicable after
receiving such instructions, the Administrator shall cause the
certificate to be mailed to the Participant. Such instruction to
the Administrator, requesting delivery of a certificate, will not
affect the Participant's status under the Plan unless the
Participant also terminates the payroll deduction authorization.
(i) DIVIDENDS, SPLITS AND DISTRIBUTIONS. Any stock dividends or stock
splits in respect of shares held in the Participant's Stock
Account will be credited to the Participant's account without
charge. Any distributions to holders of Common Stock or other
securities or rights to subscribe for additional shares of Common
Stock will be sold and the proceeds will be handled in the same
manner as a cash dividend, unless the Participant instructs the
Administrator to the contrary.
(j) VOTING RIGHTS. The Administrator will deliver to each Participant
as promptly as practicable, by mail or otherwise, all notices of
meetings, proxy statements and other material distributed by the
Company to its stockholders. The full shares of Common Stock in
each Participant's Stock Account will be voted in accordance with
the Participant's signed proxy instructions duly delivered to the
Administrator or pursuant to any other method of voting available
to holders of Common Stock. There will be no charge to the
Participant for the Administrator's retention or delivery of stock
certificates, or in connection with notices, proxies or other such
material.
(k) NO INTEREST TO BE PAID. No interest will be paid to or credited to
the Payroll Deduction Accounts or Stock Accounts of the
Participants.
(l) DESIGNATION OF BENEFICIARY. A Participant may file a written
designation of a beneficiary who is to receive any shares and
cash, if any, from the Participant's accounts under the Plan in
the event of such Participant's death. If a Participant is married
and the designated beneficiary is not the spouse, spousal consent
shall be required for such designation to be effective. Such
designation of beneficiary may be changed by Participant at any
time by written notice. In the event of death of the Participant
and in the absence of a beneficiary validly designated under the
Plan who is living at the time of such Participant's death, the
Company shall deliver such shares and/or cash in Participant's
accounts to the personal representative, executor or administrator
of the estate of the Participant, or if no personal
representative, executor or administrator has been appointed (to
the knowledge of the Company), the Company, in its discretion, may
deliver such shares and/or cash in the Participant's accounts to
the spouse or to any one or more dependents or relatives of such
Participant or if no spouse, dependent or relative is known by the
Company, then to such other person as the Company may designate.
(m) CONDITIONS UPON ISSUANCE OF COMMON STOCK. Shares of Common Stock
shall not be issued with respect to an Option unless the exercise
of such Option and the issuance and delivery of such shares
pursuant thereto shall comply with all applicable provisions of
law, domestic or foreign, including, without limitation, the
Securities Act of 1933, as amended, the Securities Exchange Act of
1934, as amended (the "Exchange Act"), the rules and regulations
promulgated thereunder and the requirements of any stock exchange
upon which shares may be listed and shall be further subject to
the approval of counsel for the Company with respect to such
compliance. As a condition to the exercise of an Option, the
Company may require the person exercising the Option
B-5
to represent and warrant at the time of such exercise that the
shares are being purchased only for investment and without any
present intention to sell or distribute such shares if, in the
opinion of counsel of the Company, such representation is
appropriate under any of the afore-mentioned applicable
provisions of law. The terms and conditions of Options granted
under the Plan, and the repurchase of shares by, persons subject
to section 16 of the Exchange Act shall comply with all
applicable provisions of Rule 16b-3 under the Exchange Act. The
Plan and each Option shall be deemed to contain, and the shares
issued upon exercise thereof shall be subject to, such additional
conditions and restrictions as may be required by Rule 16b-3
under the Exchange Act to qualify for the maximum exemption from
section 16 of the Exchange Act with respect to Plan transactions.
In addition to the restrictions described in the first paragraph
of this Section 5(m), the shares of Common Stock received by any
person upon exercise of Option may not be sold, assigned,
transferred, pledged, or otherwise disposed of for a period of
six months from the date of such exercise. The shares of the
Common Stock received upon the exercise of such Option may bear a
legend to such effect and the Company may require the person
receiving such shares to execute an agreement to such effect.
(n) TAX WITHHOLDING. At the time an Option is exercised, in whole or
in part, or at the time some or all of Common Stock issued the
Plan is disposed of, the Participant must make adequate provision
for the Company's federal, state or other tax withholding
obligations, if any, that may arise upon exercise of the Option
or the disposition of the shares of Common Stock. At any time,
the Company may, but shall not be obligated to withhold from a
Participant's Compensation the amount necessary for the Company
to meet applicable withholding obligations, including, any
withholding required to make available to the Company any tax
deductions attributed to the sale or early disposition of Common
Stock by the Participant
6. ADMINISTRATION OF PLAN
(a) THE COMMITTEE. The Plan shall be administered by the Committee,
which shall consist of not less than three (3) Directors
appointed by the Board. Members of the Committee may be Employee
Directors or Non-Employee Directors within the meaning of Rule
16b-3, and shall serve at the pleasure of the Board. A majority
of the entire Committee shall constitute a quorum and the action
of a majority of the members present at any meeting at which a
quorum is present, or acts approved in writing by a majority of
the Committee without a meeting, shall be deemed the action of
the Committee. In the absence at any time of a duly appointed
Committee, the Plan shall be administered by the Board. The
Committee shall be entitled to adopt and apply guidelines and
procedures consistent with the purposes of the Plan. In order to
effectuate the purposes of the Plan, the Committee shall have the
discretionary authority to construe and interpret the Plan, to
supply any omissions therein, to reconcile and correct any errors
or inconsistencies, to decide any questions in the administration
and application of the Plan, and to make equitable adjustments
for any mistakes or errors made in the administration of the
Plan, and all such actions or determinations made by the
Committee, and the application of rules and regulations to a
particular case or issue by the Committee, in good faith, shall
not be subject to review by anyone, but shall be final, binding
and conclusive on all persons ever interested hereunder.
(b) THE ADMINISTRATOR. To carry out the purposes of the Plan, the
Committee shall appoint an Administrator. The Administrator may
be any company or individual that the Committee deems qualified,
including the Company. The Administrator shall be responsible for
the implementation of the Plan, including allocation of funds and
stock to the Payroll Deduction Accounts and Stock Accounts and
keeping adequate and accurate records for the Participants.
(c) BROKER. The Administrator may, in its discretion, with the
consent and approval of the Committee, appoint a Broker. The
Broker may be any company or individual that the Committee deems
qualified; provided, however, that the Broker shall be a licensed
security dealer, broker, or agent authorized to make purchases
and sales of Common Stock.
B-6
(d) REPORTING TO PARTICIPANTS. The Administrator will send to each
Participant a statement at the end of each calendar quarter (or
such other period as determined by the Committee in its sole
discretion). Each such statement shall contain information
concerning transactions in the Participant's Payroll Deduction
Account and Stock Account during the relevant period and reflect
the balance in the Participant's Payroll Deduction Account and
Stock Account at the end of such period.
(e) USE OF FUNDS. All payroll deductions received or held by the
Company under the Plan in all Payroll Deduction Accounts may be
used by the Company for any corporate purpose. The Company shall
not be obligated to segregate such payroll deductions.
7. ADJUSTMENT UPON CHANGES IN COMMON STOCK
(a) CHANGES IN COMMON STOCK. If any change is made in the Common
Stock (through merger, consolidation, reorganization,
recapitalization, stock dividend, dividend in property other than
cash, stock split, revise stock split, liquidating dividend,
combination of shares, exchange of shares, change incorporate
structure or otherwise), the Administrator may make appropriate
adjustments in (a) the number of shares and price per share of
Common Stock subject to the Plan or to any Option granted under
the Plan, (b) the number of shares of Common Stock that have been
authorized under the Plan but not yet placed under Option, and
(c) the maximum number of shares each Participant may purchase.
(b) DISSOLUTION; MERGER; CAPITAL REORGANIZATION; ETC. In the event of
a Transaction, the Plan shall terminate, unless another
corporation assumes the responsibility of continuing the
operation of the Plan or the Committee determines in its
discretion that the Plan shall nevertheless continue in full
force and effect. If the Committee elects to terminate the Plan,
the Administrator shall send to each Participant a stock
certificate representing the number of whole shares to which the
Participant is entitled. In addition, the Administrator shall
send checks drawn on the Plan's account to each Participant in an
amount equal to the funds held to the credit of such
Participant's Payroll Deduction Account.
(c) COMPANY'S RIGHT TO RESTRUCTURE, ETC. The grant of any right to a
Participant pursuant to the Plan shall not affect in any way the
right or power of the Company to make adjustments,
reclassifications, reorganizations or changes of its capital or
business structure or to merge or to consolidate or to dissolve,
liquidate or sell, or transfer all or any part of its business or
assets.
8. AMENDMENT, SUSPENSION, OR TERMINATION OF PLAN
(a) AMENDMENT AND TERMINATION. The Company, acting through the
Committee, reserves the right to amend, suspend, or terminate the
Plan at any time or times; provided, however, any amendment that
would require the consent of stockholders under applicable law,
rule or regulation (including, without limitation, the Code, the
Exchange Act or any self regulatory organization such as a
national securities exchange), will not be made unless such
stockholders' consent is obtained. In addition, the Plan shall
terminate automatically on the tenth anniversary of the Plan
Start Date, or on any Option Exercise Date when Participants
become entitled to purchase a number of shares greater than the
number of reserved shares remaining available for purchase,
subject to the allocation of remaining shares pursuant to the
last sentence of Section 5(c). Upon termination of the Plan, all
amounts held in the Payroll Deduction Accounts shall, to the
extent not used to purchase shares of Common Stock, be refunded
to the Participants entitled thereto.
9. MISCELLANEOUS
(a) EXPENSES OF PLAN. The Broker's brokerage commissions, if any,
incurred in connection with transactions in Common Stock under
the Plan, and the Administrator's administrative charges for
maintaining Participants' accounts relating to purchases of
securities and all other expenses of administering or maintaining
the Plan will be paid by the Company. If the Company is acting as
Administrator, no expenses will be charged to the Participants.
B-7
(b) RESERVATION OF SHARES. During the term of the Plan, the Company
will reserve and keep available a number of shares sufficient to
satisfy the requirements of the Plan.
(c) INDEMNIFICATION. In the event and to the extent not insured
against under any contract of insurance with an insurance
company, the Company shall indemnify and hold harmless each
"Indemnified Person," as defined below, against any and all
claims, demands, suits, proceedings, losses, damages, interest,
penalties, expenses (specifically including, but not limited to,
counsel fees to the extent approved by the Board or otherwise
provided by law, court costs and other reasonable expenses of
litigation), and liability of every kind, including amounts paid
in settlement, with the approval of the Board, arising from any
action or cause of action related to the Indemnified Person's act
or acts or failure to act. Such indemnity shall apply regardless
of whether such claims, demands, suits, proceedings, losses,
damages, interest, penalties, expenses and liability arise in
whole or in part from (a) the negligence or other fault of the
Indemnified Person, or (b) from the imposition on such
Indemnified Person of any civil penalties or excise taxes
pursuant to the Code or any other applicable laws; except when
the same is judicially determined to be due to gross negligence,
fraud, recklessness, or willful or intentional misconduct of such
Indemnified Person. "Indemnified Person" shall mean each member
of the Board, the Administrator, each member of the Committee and
each other employee of any Employer who is allocated fiduciary
responsibility hereunder.
(d) NO CONTRACT OF EMPLOYMENT INTENDED. The granting of any rights to
an Eligible Employee under this Plan shall not constitute an
agreement or understanding, express or implied, on the part of
any Employer, to employ such Eligible Employee for any specified
period.
(e) GOVERNING LAW. The Plan shall be governed by and construed in
accordance with the laws of the State of Maryland, except to the
extent that federal law shall be deemed to apply.
(f) SEVERABILITY OF PROVISIONS. If any provision of this Plan is
determined to be invalid, illegal or unenforceable, such
invalidity, illegality or unenforceability shall not affect the
remaining provisions of this Plan, but such invalid, illegal or
unenforceable provisions shall be fully severable, and the Plan
shall be construed and enforced as if such provision had never
been inserted herein.
(g) NO LIABILITY. Neither the Company, its directors, officers,
employees, or agents, the Committee, the Administrator nor any
Affiliate which is in existence or hereafter comes into
existence, shall be liable to any Participant or other person if
it is determined for any reason by the Internal Revenue Service
or any court having jurisdiction that the Plan does not qualify
under Section 423 of the Code.
(h) SUCCESSORS AND ASSIGNS. The Plan shall be binding upon the
Company's successors and assigns.
* * *
B-8
KENNEDY, BARIS & LUNDY, L.L.P.
ATTORNEYS AT LAW
SUITE P-15
4701 SANGAMORE ROAD
TEXAS OFFICE: BETHESDA, MD 20816 WASHINGTON, DC OFFICE:
SUITE 1775 (301) 229-3400 SEVENTH FLOOR
112 EAST PECAN STREET FAX: (301) 229-2443 1225 - 19TH STREET, NW
SAN ANTONIO, TX 78205 WASHINGTON, DC 20036
(210) 228-9500 (202) 835-0313
FAX: (210) 228-0781 FAX: (202) 835-0319
February 20, 2001
VIA EDGAR
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Sandy Spring Bancorp, Inc.
Olney, Maryland
Commission File No. 0-19065
Annual Report on Form 10-K
Gentlemen:
Enclosed, on behalf of Sandy Spring Bancorp, Inc., is its
Preliminary Proxy Statement for the 2001 Annual Meeting and a related form of
proxy. No fee is required. The Registrant intends to begin mailing proxy
materials on March 15, 2001, but must finalize the text of materials in advance
of that date to provide time for printing and mailing..
Very truly yours
/s/ James I. Lundy, III
James I. Lundy, III
[Preliminary]
REVOCABLE PROXY
SANDY SPRING BANCORP, INC.
ANNUAL MEETING OF SHAREHOLDERS
APRIL 18, 2001
The undersigned hereby constitutes and appoints _______________ and
_______________ and each of them the proxies of the undersigned, with full power
of substitution, to attend the annual meeting of shareholders (the "Annual
Meeting") of Sandy Spring Bancorp, Inc. ("Bancorp") to be held at the Indian
Spring Country Club, 13501 Layhill Road, Silver Spring, Maryland on Wednesday,
April 18, 2001 at 3:00 p.m. Eastern Time, or at any adjournment thereof, and to
vote all the shares of stock of Bancorp that the undersigned may be entitled to
vote, upon the following matters:
For Withhold
1. The election as directors of all nominees [__] [__]
listed below (except as marked to the
contrary below).
Solomon Graham
Gilbert L. Hardesty
Charles F. Mess
Lewis R. Schumann
W. Drew Stabler
INSTRUCTION: To withhold authority to vote for any individual nominee,
print the nominee's name on the line below:
-----------------------------------------------------------------------
For Against Abstain
II. Approval of an amendment to [__] [__] [__]
Bancorp's Articles of Incorporation to
increase the number of shares of capital
stock authorized to be issued by Bancorp
from 15,000,000 to 50,000,000 shares.
For Against Abstain
III. Approval of the Sandy Spring Bancorp [__] [__] [__]
2001 Employee Stock Purchase Plan
and issuance of shares under the plan..
IV. The transaction of such other business as may properly come before
the Annual Meeting or any adjournment thereof.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF ALL
DIRECTOR NOMINEES AS SHOWN IN ITEM I, "FOR" THE AMENDMENT TO THE ARTICLES OF
INCORPORATION OF BANCORP AS SHOWN IN ITEM II; AND "FOR" APPROVAL OF THE 2001
EMPLOYEE STOCK PURCHASE PLAN AND ISSUANCE OF SHARES UNDER THE PLAN AS SHOWN IN
ITEM III.
THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE INSTRUCTIONS MARKED
HEREIN. IF NO INSTRUCTIONS TO THE CONTRARY ARE MARKED HEREIN, THIS PROXY WILL BE
VOTED FOR THE ELECTION OF DIRECTORS, FOR AMENDMENT OF THE ARTICLES OF
INCORPORATION, AND FOR APPROVAL OF THE SANDY SPRING BANCORP 2001 EMPLOYEE STOCK
PURCHASE PLAN, AND AS DETERMINED BY A MAJORITY OF THE BOARD OF DIRECTORS AS TO
OTHER MATTERS.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS.
The undersigned shareholder hereby acknowledges receipt of a copy of
the accompanying Notice of Annual Meeting of Shareholders and Proxy Statement
and hereby revokes any proxy or proxies previously given. This proxy may be
revoked at any time prior to its exercise.
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Signature Date
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Signature Date
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Signature Date
Please sign exactly as your name appears above. When signing as
attorney, executor, administrator, trustee or guardian, etc., please give your
full title. If the shareholder is a corporation, please provide the full name of
the corporation and the name and title of the signing, duly appointed officer.
If shares are held jointly, each holder should sign
PLEASE COMPLETE, DATE, SIGN AND MAIL THIS PROXY PROMPTLY IN THE
ENCLOSED POSTAGE-PREPAID ENVELOPE.