UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
DC 20549
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of the Securities Exchange Act of
1934
Date
of
Report (Date of earliest event reported): December
3, 2008
SANDY
SPRING BANCORP, INC.
(Exact
name of registrant as specified in its charter)
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Maryland
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000-19065
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52-1532952
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(State
or other jurisdiction
of
incorporation)
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(Commission
File Number)
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(IRS
Employer
Identification
No.)
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17801
Georgia Avenue, Olney, Maryland 20832
(Address
of principal executive offices, including zip code)
Registrant’s
telephone number, including area code: (301) 774-6400
Not
Applicable
(Former
name or former address, if changed since last report)
Check
the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions:
[
]
Written communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
[
]
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
[
]
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange
Act
(17 CFR 240.14d-2(b))
[
]
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange
Act
(17 CFR 240.13e-4(c))
Item 1.01. Entry
into a Material Definitive Agreement.
On
December 5, 2008, as part of the Troubled Asset Relief Program (“TARP”) Capital
Purchase Program, Sandy Spring Bancorp, Inc. (the “Company”) entered into a
Letter Agreement, and the related Securities Purchase Agreement - Standard
Terms (collectively,
the “Purchase Agreement”), with the United States Department of the Treasury
(“Treasury”), pursuant to which the Company issued (i) 83,094 shares of
Fixed Rate Cumulative Perpetual Preferred Stock, Series A, liquidation
preference $1,000 per share (“Series A preferred stock”), and (ii) a
warrant to purchase 651,547 shares
of
the Company’s common stock, par value $1.00 per share, for an aggregate purchase
price of $83,094,000 in cash. The Purchase Agreement is attached as Exhibit
10.1
hereto and is incorporated herein by reference.
The
Series A preferred stock will qualify as Tier 1 capital and will pay cumulative
dividends at a rate of 5% per annum until February 15, 2014. Beginning
February 16, 2014, the dividend rate will increase to 9% per annum. On and
after February 15, 2012, the Company may, at its option, redeem shares of Series
A preferred stock, in whole or in part, at any time and from time to time,
for
cash at a per share amount equal to the sum of the liquidation preference per
share plus any accrued and unpaid dividends to but excluding the redemption
date. Prior to February 15, 2012, the Company may redeem shares of Series A
preferred stock only if it has received aggregate gross proceeds of not less
than $
20,773,500
from one
or more qualified equity offerings, and the aggregate redemption price may
not
exceed the net proceeds received by the Company from such offerings. The
redemption of the Series A preferred stock requires prior regulatory approval.
The restrictions on redemption are set forth in the Articles Supplementary
to
the Company’s Articles of Incorporation (the “Articles Supplementary”) described
in Item 5.03 below.
The
warrant is exercisable at $19.13 per share at any time on or before December
5,
2018. The number of shares of common stock issuable upon exercise of the warrant
and the exercise price per share will be adjusted if specific events
occur. The
warrant is attached as Exhibit 4.3 hereto and is incorporated herein by
reference. Treasury has agreed not to exercise voting power with respect to
any
shares of common stock issued upon exercise of the warrant.
The
Series A preferred stock and the warrant were issued in a transaction exempt
from registration pursuant to Section 4(2) of the Securities Act of 1933,
as amended. The Company has agreed to register the Series A preferred stock,
the
warrant, and the shares of common stock underlying the warrant (the “warrant
shares”) as soon as practicable after the date of the issuance of the Series A
preferred stock and the warrant. Neither the Series A preferred stock nor the
warrant will be subject to any contractual restrictions on transfer, except
that
Treasury may not transfer a portion of the warrant with respect to, or exercise
the warrant for, more than one-half of the warrant shares prior to the earlier
of (a) the date on which the Company has received aggregate gross proceeds
of
not less than $83,094,000 form one or more qualified equity offerings and (b)
December 31, 2009.
The
Purchase Agreement also subjects the Company to certain of the executive
compensation limitations included in the Emergency Economic Stabilization Act
of
2008 (the “EESA”). As a condition to the closing of the transaction, Hunter R.
Hollar, Daniel J. Schrider, Philip J. Mantua, Frank H. Small, and R. Louis
Caceres (the Company’s Senior Executive Officers, as defined in the Purchase
Agreement) each: (i) voluntarily waived any claim against the Treasury or
the Company for any changes to such Senior Executive Officer’s compensation or
benefits that are required to comply with the regulation issued by the Treasury
under the TARP Capital Purchase Program as published in the Federal Register
on
October 20, 2008 and acknowledging that the regulation may require
modification of the compensation, bonus, incentive and other benefit plans,
arrangements and policies and agreements (including so-called “golden parachute”
agreements) as they relate to the period the Treasury holds any equity or debt
securities of the Company acquired through the TARP Capital Purchase Program;
and (ii) entered into an amendment to the Senior Executive Officer’s
employment agreement that provides that any severance payments made to the
Senior Executive Officer will be reduced, as necessary, so as to comply with
the
requirements of the TARP Capital Purchase Program.
Item 3.02. Unregistered
Sales of Equity Securities.
The
information set forth under “Item 1.01 Entry into a Material Definitive
Agreement” is incorporated by reference into this Item 3.02.
Item 3.03. Material
Modification to Rights of Security Holders.
Pursuant
to the terms of the Purchase Agreement, prior to the earlier of (i) December
5,
2011 or (ii) the date on which the Series A preferred stock has been redeemed
in
full or Treasury has transferred all of the Series A preferred stock to
non-affiliates, the Company cannot increase its quarterly cash dividend above
$0.24 or repurchase any shares of its common stock or other capital stock or
equity securities or trust preferred securities without the consent of Treasury.
In
addition, pursuant to the Articles Supplementary, so long as any shares of
Series A preferred stock remain outstanding, the Company may not declare or
pay
any dividends or distributions on the Company’s common stock or any class or
series of the Company’s equity securities ranking junior, as to dividends and
upon liquidation, to the Series A preferred stock (“junior stock”) (other than
dividends payable solely in shares of common stock) or on any other class or
series of the Company’s equity securities ranking, as to dividends and upon
liquidation, on a parity with the Series A preferred stock (“parity stock”), and
may not repurchase or redeem any common stock, junior stock or parity stock,
unless all accrued and unpaid dividends for past dividend periods, including
the
latest completed dividend period, have been paid or have been declared and
a
sufficient sum has been set aside for the benefit of the holders of the Series
A
preferred stock.
The
repurchase restrictions described above do not apply in certain limited
circumstances, including the repurchase of common stock in connection with
the
administration of any employee benefit plan in the ordinary course of business
and consistent with past practice, but only to offset the increase in the number
of diluted shares outstanding resulting from the grant, vesting or exercise
of
equity-based compensation.
| Item
5.02. |
Departure
of Directors or Certain Officers; Election of
Directors; Appointment
of Certain Officers; Compensation Arrangements of Certain
Officers.
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The
information concerning executive compensation set forth under “Item 1.01 Entry
into a Material Definitive Agreement” is incorporated by reference into this
Item 5.02.
Item
5.03. Amendment
to Articles of Incorporation or Bylaws; Change in Fiscal
Year.
On
December 3, 2008, the Company filed Articles Supplementary with the Maryland
State Department of Assessments and Taxation for the purpose of amending its
Articles of Incorporation to fix the designations, preferences, limitations
and
relative rights of the Series A preferred stock. The Articles Supplementary
are
attached hereto as Exhibit 4.1 and are incorporated by reference herein.
Item
8.01. Other
Information.
On
December 5, 2008, the Company issued a press release announcing the issuance
of
the Series A preferred stock and the warrant to Treasury pursuant to the
Purchase Agreement. The press release is furnished as Exhibit 99.1 and
incorporated by reference herein.
Item
9.01. Financial
Statements and Exhibits.
The
following exhibits are filed herewith:
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Exhibit
No.
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Description
of Exhibit
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4.1
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Articles
Supplementary establishing Fixed Rate Cumulative Perpetual Preferred
Stock, Series A, of Sandy Spring Bancorp, Inc.
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4.2
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Form
of stock certificate for Fixed Rate Cumulative Perpetual Preferred
Stock,
Series A
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4.3
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Warrant
to Purchase 651,547 Shares
of Common Stock of Sandy Spring Bancorp, Inc.
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10.1
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Letter
Agreement and related Securities Purchase Agreement - Standard Terms,
dated December 5, 2008, between Sandy Spring Bancorp, Inc. and United
States Department of the Treasury
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10.2
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Form
of Waiver executed by each of Hunter R. Hollar, Daniel J. Schrider,
Philip
J. Mantua, Frank H. Small, and R. Louis Caceres
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99.1
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Press
Release dated December 5, 2008
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SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant
has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
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SANDY
SPRING BANCORP, INC.
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(Registrant)
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Date:
December 5, 2008
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By:
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/s/
Daniel J. Schrider
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Daniel
J. Schrider
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President
and Chief Revenue Officer
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