This Executive Compensation Plan Agreement involves
Title: SANDY SPRING BANK EXECUTIVE INCENTIVE RETIREMENT PLAN (as amended)
Governing Law: Maryland Date: 9/2/2011
Industry: Regional Banks Sector: Financial
SANDY SPRING BANK
EXECUTIVE INCENTIVE RETIREMENT PLAN
The purpose of the Sandy Spring Bank Executive Incentive Retirement Plan is to assist Sandy Spring Bank (the “Bank”) in retaining and attracting officers of exceptional ability and to provide supplemental executive retirement benefits in lieu of benefits previously provided under the Sandy Spring Bank Supplemental Executive Retirement Agreements entered into with certain executive officers of the Bank.
For the purposes of this Plan, the following words and phrases shall have the meanings indicated, unless the context clearly indicates otherwise:
“Bank” means Sandy Spring Bank, Olney, Maryland.
“Beneficiary” means the person, persons or entity designated by the Participant to receive benefits payable under the Plan.
“Board of Directors” means the Board of Directors of the Bank.
“Just Cause” shall mean termination because of the Participant’s personal dishonesty, willful misconduct, breach of fiduciary duty involving personal profit, intentional failure to perform stated duties, continuing material failure to perform assigned duties, willful violation of any law, rule or regulation (other than traffic violations or similar infractions) or a final cease-and-desist order, or a material breach of any provision of an employment agreement to which the Bank and the Participant are parties.
“Change in Control” means the earliest of:
(a) The acquisition by any entity, person or group (other than the acquisition by a tax-qualified retirement plan sponsored by Sandy Spring Bancorp, Inc. (“Bancorp”) or the Bank) of beneficial ownership, as that term is defined in Rule 13d-3 under the Securities and Exchange Act of 1934, of more than 25% of the outstanding capital stock of Bancorp or the Bank entitled to vote for the election of directors (“Voting Stock”);
(b) The commencement by any entity, person, or group (other than Bancorp or the Bank, a subsidiary of Bancorp or the Bank, or a tax-qualified retirement plan sponsored by Bancorp or the Bank) of a tender offer or an exchange offer for more than 20% of the outstanding Voting Stock of Bancorp of the Bank;
(c) The effective time of (i) a merger or consolidation of Bancorp or the Bank with one or more other corporations as a result of which the holders of the outstanding Voting Stock of Bancorp or the Bank immediately prior to such merger exercise voting control over less than 80% of the Voting Stock of the surviving or resulting corporation, or (ii) a transfer of substantially all of the property of the Bancorp or the Bank other than to an entity of which Bancorp or the Bank owns at least 80% of the Voting Stock;
(d) Upon the acquisition by any entity, person, or group of the control of the election of a majority of the Bank’s or Bancorp’s directors; or
(e) At such time that, during any period of two consecutive years, individuals who at the beginning of such period constitute the Board of Bancorp or Bank (the “Continuing Directors”) cease for any reason to constitute at least two-thirds thereof, provided that any individual whose election or nomination for election as a member of the Board was approved by a vote of at least two-thirds of the Continuing Directors then in office shall be considered a Continuing Director.
“Declared Rate” the greater of (i) five (5) percent or (ii) the prime rate as published in the Wall Street Journal plus two (2) percentage points. Notwithstanding anything in this Plan to the contrary, the Declared Rate shall not exceed ten (10) percent. The formula used to establish the Declared Rate may be amended by a resolution of the Board of Directors on a prospective basis.
“Deferral Bonus” means an award pursuant to Section 3.2 of the Plan.
“Deferred Benefit Account” means the account maintained on the books of the Bank for each Participant pursuant to Article IV. A Participant’s Deferred Benefit Account shall be utilized solely as a device for the measurement and determination of the amounts to be paid to the Participant pursuant to this Plan. A Participant’s Deferred Benefit Account shall not constitute or be treated as a trust fund of any kind.
“Designation of Form for Payment” means the agreement filed by a Participant designating the manner in which the Participant’s Deferred Benefit Account balance shall be paid to the Participant or his beneficiary.
“Determination Date” means the date on which the amount of a Participant’s Deferred Benefit Account is determined as provided in Article IV hereof. The last day of each Plan Year shall be the Determination Date.
“Disability” means a physical or mental condition which constitutes a disability within the meaning of Section 22(e)(3) of the Internal Revenue Code of 1986, as amended.
“Participant” means any officer of the Bank who is designated as a Participant by the Board of Directors.
“Plan Year” means a twelve month period commencing January 1st and ending the following December 31st. The first Plan Year shall commence on January 1, 2008 and end on December 31, 2008.
“Separation from Service” means a termination of a Participant’s services (whether as an employee or as an independent contractor) to the Bank. Whether a Separation from Service has occurred shall be determined in accordance with the requirements of Section 409A of the Code based on whether the facts and circumstances indicate that the Bank and the Participant reasonably anticipated that no further services would be performed after a certain date or that the level of bona fide services the Participant would perform after such date (whether as an employee or as an independent contractor) would permanently decrease to no more than twenty percent (20%) of the average level of bona fide services performed (whether as an employee or an independent contractor) over the immediately preceding thirty-six (36) month period.
Participation and Benefits
Section 3.1 Participation .
Participation in the Plan shall be limited to those officers of the Bank designated as Participants by resolution of the Board of Directors. The Board of Directors may, upon designation of an officer as a Participant, establish such terms and conditions of participation as it deems appropriate, including, but not limited to, the rate at which Deferral Bonus Awards shall vest with respect to such Participant. The initial Participants, and the period over which Deferred Benefit Accounts of such initial Participants shall vest, are identified in Appendix A to this Plan. The Board of Directors may terminate an officer’s status as a Participant on a prospective basis, provided, however, that such termination shall not affect a Participant’s previously accrued benefits.
Section 3.2 Amount of Deferral Bonus .
For every Plan Year, a guaranteed minimum Deferral Bonus equal to 3% of a Participant’s base salary paid during the Plan Year shall be credited to the Participant’s Deferred Benefit Account. For any Plan Year, a Participant’s increased Deferral Bonus, if any, shall be determined by reference to the attainment of criteria established by the Board of Directors on an annual basis. Such criteria shall relate to the financial performance of the Bank and shall be subject to adjustment for extraordinary items to the extent deemed appropriate by the Board of Directors. For any Plan Year after the initial Plan Year, the Board of Directors shall, by resolution, establish such criteria not later than March 31 of such year. For the initial Plan Year, the criteria and related awards for the initial Participants are set forth in Appendix B of this Plan. A Deferral Bonus may be expressed as a percentage of the Participant’s cash compensation or as otherwise determined by the Board of Directors. The Deferral Bonus shall be credited to a Participant’s Deferred Benefit Account as of the last day of the Plan Year to which the award relates.
Section 3.3 Accelerated Vesting of Deferral Bonus Awards .
Unless otherwise determined by the Board of Directors at the time an officer is designated as a Participant, a Participant’s Deferral Bonus Awards shall automatically vest upon (i) the Participant’s death or Disability or (ii) upon the occurrence of a Change in Control.
Deferred Benefit Account
Section 4.1 Determination of Account .
Each Participant’s Deferred Benefit Account as of each Determination Date shall consist of the balance of the Participant’s Deferred Benefit Account as of the immediately preceding Determination Date plus the Participant’s Deferral Bonus, if any, awarded since the immediately preceding Determination Date. The Deferred Benefit Account of each Participant shall be reduced by the amount of all distributions, if any, made from such Deferred Benefit Account since the preceding Determination Date. The Bank shall initially credit the Deferred Benefit Account of each Participant listed on Appendix A to this Plan with an amount equal to the “Accrued Benefit” under his Supplemental Executive Retirement Agreement, as amended, as of December 31, 2007 (as that term is defined in the Supplemental Executive Retirement Agreement).
Section 4.2 Crediting of Account .
As of each Determination Date, the Participant’s Deferred Benefit Account shall be increased by the amount of interest earned since the preceding Determination Date. Interest shall be based upon the Declared Rate, which shall be adjusted annually on the first business day of the Plan Year to apply during such Plan Year. Interest shall be based upon the average daily balance of the Participant’s Deferred Benefit Account since the last preceding Determination Date, but after