EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT (“Agreement”) is made, entered into and effective as   of January 1, 2009 (“Effective Date”) by, between and among SANDY SPRING BANCORP, INC. , a Maryland corporation and registered bank holding company (“Bancorp”), SANDY SPRING BANK , a Maryland corporation and registered trust company and commercial bank and a wholly-owned subsidiary of Bancorp (“Bank”), and DANIEL J. SCHRIDER, (“Executive”).  Bancorp and the Bank are sometimes referred to in this Agreement individually and together as the “Employers.”

WHEREAS, Executive currently serves in a position of substantial responsibility with Bancorp and the Bank; and

WHEREAS , Bancorp and the Bank wish to set forth the terms of the Executive’s continued employment in a position of substantial responsibility; and

WHEREAS, Executive is willing and desires to serve in this position with Bancorp and the Bank.

NOW THEREFORE, in consideration of these premises, the mutual covenants contained herein, and other good and valuable consideration the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows.

1.1            Employment . Bancorp and Bank hereby employ the Executive to serve as President and Chief Executive Officer of Bancorp and the Bank, each according to the terms and conditions of this Agreement and for the period stated in Section 1.3 of this Agreement.  The Executive hereby accepts employment according to the terms and conditions of this Agreement and for the period stated in Section 1.3 of this Agreement.

1.2            Duties . As President and Chief Executive Officer   of Bancorp and the Bank,   the Executive shall serve under the direction and control of said boards.  The Executive shall report directly to the boards of directors. The Executive shall serve the Employers faithfully, diligently, competently, and to the best of the Executive’s ability.  The Executive shall exclusively devote full working time, energy, and attention to the business of the Employers and to the promotion of the interests of the Employers throughout the term of this Agreement.  Without the prior written consent of the board of directors of Bancorp and the Bank, during the term of this Agreement, the Executive shall not render services to or for any person, firm, corporation, or other entity or organization in exchange for compensation, regardless of the form in which the compensation is paid and regardless of whether it is paid directly or indirectly to the Executive.  Nothing in this Section 1.2 shall prevent the Executive from managing personal investments and affairs, provided that doing so does not interfere with the proper performance of the Executive’s duties and responsibilities under this Agreement.

1.3            Service on the Boards of Directors .   The Executive shall serve as a member of the board of directors of Bancorp and the Bank.  The board of directors of Bancorp and the Bank shall undertake every lawful effort to ensure that the Executive continues throughout the term of his employment to be reelected as a director of Bancorp and the Bank.  Notwithstanding anything in this Agreement to the contrary, unless otherwise agreed to by the parties, the Executive shall be deemed to have resigned as a director of Bancorp and the Bank effective immediately after termination of the Executive’s employment under Article 3 of this Agreement, regardless of whether the Executive submits a formal, written resignation as director.

1.4            Term .

(a)           The term of this Agreement shall include: (i) the initial term, consisting of the period commencing on the Effective Date and ending on the third anniversary of the Effective Date, plus (ii) any and all extensions of the initial term made pursuant to this Section 1.4.

(b)           Commencing on the first anniversary of the Effective Date and continuing on each anniversary of the Effective Date thereafter, the disinterested members of the boards of directors may extend the Agreement term for an additional year, so that the remaining term of the Agreement again becomes thirty-six (36) months, unless the Executive elects not to extend the term of this Agreement by giving proper written notice to the Employers at least 60 days prior to the anniversary date of the Effective Date.  The boards of directors will review the Agreement and the Executive’s performance annually (during the period of time 61-90 days prior to the anniversary of the Effective Date) for purposes of determining whether to extend the Agreement term.  The boards of directors will notify Executive as soon as possible after each annual review (but not later than 60 days prior to the anniversary of the Effective Date) whether they have determined to extend the Agreement.

2.1            Base Salary . In consideration of the Executive’s performance of the obligations under this Agreement, the Employers shall pay or cause to be paid to the Executive a salary at the annual rate of not less than Four Hundred and Fifty Thousand Dollars ($450,000.00) , payable according to the regular payroll practices of the Bank. The Executive’s salary shall be subject to annual review.  The Executive’s salary, as the same may be modified from time to time, is referred to in this Agreement as the “Base Salary.” All compensation under this Agreement shall be subject to customary income tax withholding and such other employment taxes as are imposed by law.

2.2            Benefit Plans and Perquisites . For as long as the Executive is employed by the Employers, the Executive shall be eligible (i) to participate in any and all officer or employee compensation, incentive compensation and benefit plans in effect from time to time, including without limitation plans providing retirement, medical, dental, disability, and group life benefits and including stock-based compensation, incentive, or bonus plans existing on the date of this Agreement or adopted after the date of this Agreement, provided that the Executive satisfies the eligibility requirements for any the plans or benefits, and (ii) to receive any and all other fringe and other benefits provided from time to time, including the specific items described in (a)-(d) below.

(a)            Club dues .   In addition to any other compensation provided for under this Agreement, the Employers shall pay the Executive an amount sufficient, on an after-tax basis, to maintain a membership at the Manor Country Club or similar club of the Executive’s choice.

(b)            Reimbursement of business expenses .   The Executive shall be entitled to reimbursement for all reasonable business expenses incurred while performing his obligations under this Agreement, including but not limited to all reasonable business travel and entertainment expenses incurred while acting at the request of or in the service of the Employers and reasonable expenses for attendance at annual and other periodic meetings of trade associations.  Expenses will be reimbursed if they are submitted in accordance with the Employers’ policies and procedures.

(c)            Automobile .   The Employers shall provide the Executive with, and the Executive shall have the primary use of, an automobile owned or leased by the Employers. The Employers shall pay (or reimburse the Executive) for all expenses of insurance, registration, operation and maintenance of the automobile.  The Executive shall comply with reasonable reporting and expense limitations on the use of such automobile, as the Employers may establish from time to time, and the Employers shall annually include on the Executive’s Form W-2 any amount attributable to the Executive’s personal use of such automobile.

(d)            Facilities .   The Employers will furnish the Executive with the working facilities and staff customary for executive officers with the comparable titles and duties of the Executive as set forth in Sections 1.1 and 1.2 of this Agreement and as are necessary for the Executive to perform his duties.  The location of such facilities and staff shall be at the principal administrative offices of the Bancorp.

2.3            Vacation; Paid Time Off, Other Leave . The Executive shall be entitled to at least thirty (30) days of combined sick leave, paid annual vacation and other paid time off in accordance with policies established from time to time by the Employers.  In addition to paid vacations and other leave, the boards of directors may grant the Executive a leave or leaves of absence, with or without pay, at such time or times and upon such terms and conditions as the boards of directors may determine.

2.4            Insurance . The Employers shall maintain or cause to be maintained liability insurance in the form of directors and officers insurance and such other forms of insurance as may be provided covering the Executive throughout the term of this Agreement.

3.1            Termination Because of Death or Disability .

(a)            Death . The Executive’s employment shall terminate automatically at the Executive’s death. If the Executive dies in active service to the Employers, the Executive’s estate shall receive any sums due to the Executive as base salary and reimbursement of expenses through the end of the calendar month in which his death occurred.

(b)            Disability . By delivery of written notice thirty (30) days in advance to the Executive, the Employers may terminate the Executive’s employment if the Executive is disabled.  For purposes of this Agreement the Executive shall be considered “disabled” if an independent physician selected by the Employers and reasonably acceptable to the Executive or the Executive’s legal representative determines that, because of illness or accident, the Executive is unable to perform the Executive’s duties and will be unable to perform the Executive’s duties for a period of ninety (90) consecutive days.  The Executive shall not be considered disabled, however, if the Executive returns to work on a full-time basis within thirty (30) days after the Employers gives notice of termination due to disability.  If the Executive is terminated by either of the Bancorp or the Bank because of disability, the Executive’s employment with the other shall also terminate at the same time.  During the period of incapacity leading up to the termination of the Executive’s employment under this provision, the Employers shall continue to pay the full Base Salary at the rate then in effect and all perquisites and other benefits (other than bonus) until the Executive becomes eligible for benefits under any disability plan or insurance program maintained by the Employers, provided that the amount of the payments by the Employers to the Executive under this Section 3.1(b) shall be reduced by the sum of the amounts, if any, payable to the Executive for the same period under any disability benefit or pension plan covering the Executive.

3.2            Involuntary Termination with Just Cause . The Employers may terminate the Executive’s employment for Just Cause.  If the Executive’s employment terminates for Just Cause, the Executive shall receive the Base Salary through the date on which termination becomes effective and reimbursement of expenses to which the Executive is entitled when termination becomes effective.  If the Executive is terminated for Just Cause by either of the Bancorp or the Bank, the Executive shall be deemed also to have been terminated for Just Cause by the other.  The Executive shall not be deemed to have been terminated for Just Cause under this Agreement unless and until there is delivered to the Executive a copy of a resolution adopted at a meeting of the board(s) of directors called and held for the purpose, which resolution shall (x) contain findings that the Executive has committed an act constituting Just Cause, and (y) specify the particulars thereof.  The resolution of the boards of directors shall be deemed to have been duly adopted if and only if it is adopted by the affirmative vote of a majority of the directors of the Bancorp then in office or a majority of the directors of the Bank then in office, in either case excluding the Executive.  Notice of the meeting and the proposed termination for Just Cause shall be given to the Executive a reasonable time before the meeting of the board of directors.  The Executive and the Executive’s counsel (if the Executive chooses to have counsel present) shall have a reasonable opportunity to be heard by the board of directors at the meeting. For purposes of this Agreement “Just Cause” means any of the following:

3.3            Voluntary Termination by the Executive Without Good Reason . If the Executive terminates employment without Good Reason, the Executive shall receive the Base Salary and expense reimbursement to which the Executive is entitled through the date on which termination becomes effective.

3.4            Involuntary Termination Without Just Cause and Voluntary Termination with Good Reason . With written notice to the Executive thirty (30) days in advance, the Employers may terminate the Executive’s employment without Just Cause.  If the Executive is terminated without Just Cause by either of the Bancorp or the Bank, the Executive shall be deemed also to have been terminated without Just Cause by the other.  Termination shall take effect at the end of the thirty (30) day period.  With advance written notice to the Employers as provided in clause (y), the Executive may terminate employment for Good Reason.  If the Executive’s employment terminates involuntarily without Just Cause or voluntarily but with Good Reason, the Executive shall be entitled to the payments and benefits specified in Article 4 of this Agreement.  For purposes of this Agreement a voluntary termination by the Executive shall be considered a voluntary termination with Good Reason if the conditions stated in both clauses (x) and (y) of this Section 3.4 are satisfied:

(x)           a voluntary termination by the Executive shall be considered a voluntary termination with Good Reason if any of the following occur without the Executive’s written consent, and the term Good Reason shall mean the occurrence of any of the following without the Executive’s written consent:

(1)          a material diminution of the Executive’s Base Salary,

(y)           the Executive must give notice to the Employers of the existence of one or more of the conditions described in clause (x) within sixty (60) days after the initial existence of the condition, and the Employers shall have thirty (30) days thereafter to remedy the condition.  In addition, the Executive’s voluntary termination because of the existence of one or more of the conditions described in clause (x) must occur within six (6) months after the initial existence of the condition.

4.1           Cash Severance after Termination Without Just Cause or Termination for Good Reason .

(a)           Subject to the possibility that cash severance after employment termination might be delayed under Section 4.1(b), if the Executive’s employment terminates involuntarily but without Just Cause or if the Executive voluntarily terminates employment with Good Reason, the Executive shall for the unexpired term of this Agreement and in accordance with the Employers’ regular pay practices continue to receive the Base Salary in effect at employment.  However, the Employers and the Executive acknowledge and agree that the compensation and benefits under this Section 4.1 shall not be payable if compensation and benefits are payable or shall have been paid to the Executive under Article 5 of this Agreement.

(b)           If when employment termination occurs the Executive is a “specified employee” within the meaning of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”) if the cash severance payment under Section 4.1(a) would be considered deferred compensation under Section 409A of the Code, and if an exemption from the six-month delay requirement of Section 409A(a)(2)(B)(i) of the Code is not available, the Executive’s continued Base Salary under Section 4.1(a) for the first six months after employment termination shall be paid to the Executive in a single lump sum without interest on the first payroll date of the seventh (7 ^th ) month after the month in which the Executive’s employment terminates. References in this Agreement to Section 409A of the Code include rules, regulations, and guidance of general application issued by the Department of the Treasury under Internal Revenue Section 409A of the Code.

4.2           Post-Termination Insurance Coverage .

(a)           If the Executive’s employment terminates involuntarily but without Just Cause or voluntarily but with Good Reason, or because of disability, the Employers shall continue or cause to be continued at the Employers’ expense medical insurance benefits for the Executive and any of his dependents covered at the time of his termination.  The medical insurance benefits shall continue until the first to occur of (w) the Executive’s return to employment with the Employers or another employer, (x) the Executive’s attainment of age 65, (y) the Executive’s death, or (z) the end of the term remaining under this Agreement when the Executive’s employment terminates.

(b)           If (x) under the terms of the applicable policy or policies for the insurance benefits specified in section 4.2(a) it is not possible to continue coverage for the Executive and his dependents, or (y) when employment termination occurs the Executive is a “specified employee” within the meaning of Section 409A of the Code, if any of the continued insurance coverage benefits specified in Section 4.2(a) would be considered deferred compensation under Section 409A of the Code, and if an exemption from the six-month delay requirement of Section 409A(a)(2)(B)(i) of the Code is not available for that particular insurance benefit, the Employers shall pay to the Executive in a single lump sum an amount in cash equal to the present value of the Employers’ projected cost to maintain that particular insurance benefit (and associated income tax gross-up benefit, if applicable) had the Executive’s employment not terminated, assuming continued coverage for 36 months. The lump-sum payment shall be made thirty (30) days after employment termination or, if Section 4.1(b) applies, on the first payroll date of the seventh (7 ^th ) month after the month in which the Executive’s employment terminates.