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Exhibit 10(o)



EMPLOYMENT AGREEMENT



     THIS AGREEMENT (the “Agreement”), made as of this 16th day of December,
2002, by and among Sandy Spring Bancorp, Inc., a registered bank holding
company (“Bancorp”), Sandy Spring Bank, a Maryland corporation and wholly owned
subsidiary of Bancorp with its main office in Olney, Maryland (the “Bank”), and
Frank H. Small (the “Officer”).


W I T N E S S E T H



     WHEREAS, the Officer is employed as the Executive Vice President of
Bancorp and Executive Vice President and Chief Operating Officer of the Bank,
subject to a certain Employment Agreement made January 30, 1997 (as amended,
the “1997 Agreement”).


     WHEREAS, as a result of the skill, knowledge, and experience of the
Officer, the Board of Directors of the Bank (the “Board”) desires to retain the
services of the Officer.


     WHEREAS, the Officer desires to continue to serve as the Executive Vice
President of Bancorp and Executive Vice President and Chief Operating Officer
of the Bank.


     WHEREAS, the Officer and the Board and the Board of Directors of Bancorp
desire to enter into an Agreement setting forth the terms of conditions of the
continuing employment of the Officer and the related rights and obligations of
each of the parties.


     NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, it is agreed as follows:


1.     Employment. The Officer is employed as the Executive Vice President of
Bancorp and Executive Vice President and Chief Operating Officer of the Bank.
The Officer shall perform all duties and shall have all powers which are
commonly incident to the office of Executive Vice President or which,
consistent with that office, are assigned to the Officer. In addition to the
major job accountabilities set forth in the job description maintained by the
Human Resources Division, the Officer’s duties include, but are not limited to:



	 	a.	 	Making recommendations concerning the strategies, policies, and
tactics of the Bank;
	 
	 	b.	 	Management oversight of the day-to-day activities of Bancorp and the
Bank, including management oversight of the Risk Management Group,
Retail Services, Administration and Planning Group, Relationship
Acquisition Group, Technology Group, Finance and Merger and
Acquisitions Group, Capital Markets Group, and



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	 	 	 	Commercial and Credit Services Group and supervision of the officers and
employees engaged in these functions;
	 
	 	c.	 	Promoting the Bank and its services;
	 
	 	d.	 	Managing the efforts of the Bank to comply with applicable
laws and regulations related to the activities of Bancorp and the
Bank; and
	 
	 	e.	 	Providing complete, timely, and accurate reports, as
required, regarding the activities of Bancorp and the Bank.



2.     Location and Facilities. The Officer will be furnished with the working
facilities and staff customary for executive officers with the title and duties
set forth in Section 1 and as are necessary for the Officer to perform the
duties of the position. The location of such facilities and staff shall be at
the principal administrative offices of the Bank, or at such other site or
sites customary for such offices.


3.     Term



	 	a.	 	The term of this Agreement shall be (i) the initial term,
consisting of the period commencing on the date of this
Agreement (the “Effective Date”) and ending immediately
prior to the second anniversary of the Effective Date, plus
(ii) any and all extensions of the initial term made
pursuant to this Section 3.
	 
	 	b.	 	On each anniversary of the Effective Date prior to a
termination of the Agreement, the term under this Agreement
shall be extended for an additional one-year period beyond
the then effective expiration date without action by any
party, provided that neither the Bank nor the Officer shall
have given written notice at least sixty (60) days prior to
such anniversary date of its or the Officer’s desire that
the term not be extended. The Officer’s performance and the
advisability of extending the term of this Agreement shall
be reviewed by the Human Resources Committee (the
“Committee”) of the Board, and the Board shall, based on
such review, determine whether or not to extend the term of
this Agreement at a meeting or meetings at least ninety (90)
days prior to each anniversary date.
	 
	 	c.	 	At the Effective Date, this Agreement shall supersede any
prior Agreement, which shall be deemed terminated by agreement of
the parties immediately prior to the Effective Date.



4.     Base Compensation.



	 	a.	 	Bancorp and the Bank agrees to pay the Officer during
the term of this Agreement a



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	 	 	 	salary at the rate of $225,000 per annum, payable in cash not less frequently
than monthly, as may be adjusted in accordance with this Section 4.
	 
	 	b.	 	The Human Resources Committee shall perform an annual analysis of the
Officer’s performance and of the compensation of officers performing
similar functions at independent financial institutions of comparable
assets and performance, and based upon this review, the
recommendations of the Executive Vice President and Chief Operating
Officer and the President and Chief Executive Officer, and on such
other factors as it deems pertinent, shall recommend to the Board the
annual salary rate to be paid to the Officer following such review.
The Board, based upon this recommendation of the Committee and other
factors they deem relevant, may maintain, increase or decrease the
Officer’s salary, provided that no such action shall (i) reduce the
rate of salary below the amount set forth in Section 4.a. or (ii)
reduce the rate of salary paid to the Officer for any months prior to
the month in which notice of the reduction is provided in writing to
the Officer.
	 
	 	c.	 	In the absence of action by the Board, the Officer shall continue to
receive salary at the amount set forth in Section 4.a. specified
herein or, if another rate has been established under the provisions
of this Section 4, the rate last properly established by action of the
Board under the provisions of this Section 4 .



5.     Bonuses. Unless the Officer agrees otherwise, the Officer shall be
entitled to participate in discretionary bonuses that the Board may award from
time to time to senior management employees pursuant to bonus plans or
otherwise. The Officer also shall participate in any other fringe benefits
which are or may become available to senior management employees of the Bank,
including for example: any stock option or incentive compensation plans and any
other benefits that are commensurate with the responsibilities and functions to
be performed by the Officer under this Agreement. No other compensation
provided for in this Agreement shall be deemed a substitute for the Officer’s
right to participate in such discretionary bonuses or fringe benefits.


6.     Benefit Plans. The Officer shall be entitled to participate in such life
insurance, medical, dental, pension, profit sharing, and retirement plans and
other programs and arrangements as may be approved from time to time by Bancorp
or the Bank for the benefit of the employees of the Bank. In addition, the
Officer shall be entitled to participate in a nonstatutory supplemental
retirement plan or arrangement (“SERP”) established for the Officer, in the
Executive Health Expense Reimbursement and Insurance Plans (together, the
“HERP”), or a successor plan or plans that provide the same or greater level of
benefits as those provided to participants under the HERP as in effect on the
Effective Date, and in the Group Term Replacement Plan (“GTRP”) established for
the Officer.


7.     Paid Time Off.


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	 	a.	 	The Officer shall be entitled to twenty-eight working
days of paid time off, as defined in the Bank’s personnel
policies, during each consecutive twelve-month period
commencing on January 1, 2002 and each January 1
thereafter during the term of this Agreement, to be taken
at reasonable times and in reasonable periods as the
Officer and Bancorp and the Bank shall mutually
determine, and provided that no paid time off shall
interfere with the duties required to be rendered by the
Officer hereunder. Any paid time off not used during a
twelve-month period shall carry over and be useable
during the succeeding twelve-month period, but not
thereafter. The Officer shall not receive any additional
compensation from the Bank on account of the Officer’s
failure to take paid time off.
	 
	 	b.	 	In addition to paid time off, the Officer shall be
entitled, without loss of pay, to voluntarily take time
off from work for such additional periods of time and
for such valid and legitimate reasons as the President
and Chief Executive Officer may in his discretion
determine. Further, the Officer may request and be
granted a leave or leaves of absence, with or without
pay, at such time or times and upon such terms and
conditions as the President and Chief Executive Officer
in his discretion may determine.



8.     Expense Payments and Reimbursements. The Officer shall be reimbursed for all
reasonable out-of-pocket business expenses incurred in connection with the
Officer’s services under this Agreement upon substantiation of such expenses in
accordance with applicable policies of Bancorp and the Bank.


9.     Loyalty and Confidentiality.



	 	a.	 	During the term of this Agreement the Officer: (i) shall devote all the Officer’s time, attention,
skill, and efforts to the faithful performance of the Officer’s duties hereunder; provided, however,
that from time to time, the Officer may serve on the boards of directors of, and hold any other offices
or positions in, companies or organizations which will not present any conflict of interest with
Bancorp or the Bank or any of their subsidiaries or affiliates, unfavorably affect the performance of
Officer’s duties pursuant to this Agreement, or violate any applicable statute or regulation; and (ii)
shall not engage in any business or activity contrary to the business affairs or interests of Bancorp
or the Bank.
	 
	 	b.	 	Nothing contained in this Agreement shall prevent or limit the Officer’s right to invest in the capital
stock or other securities of any business dissimilar from that of Bancorp and the Bank, or, solely as a
passive, minority investor, in any business.
	 
	 	c.	 	The Officer agrees to maintain the confidentiality of any and all information



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	 	 	 	concerning the operation or financial status of Bancorp and the Bank; the names
or addresses of any of their borrowers, depositors and other customers;
any information concerning or obtained from such customers; and any other
information concerning Bancorp or the Bank to which the Officer may be
exposed during the course of employment. The Officer further agrees that,
unless required by law or specifically permitted by Bancorp or the Bank in
writing, the Officer will not disclose to any person or entity, either
during or subsequent to the officer’s employment, any of the
above-mentioned information which is not generally known to the public,
nor shall the Officer employ such information in any way other than for
the benefit of Bancorp and the Bank.



10.     Termination and Termination Pay. Subject to Section 11 of this Agreement,
the Officer’s employment under this Agreement may be terminated in the
following circumstances:



	 	a.	 	Death. The Officer’s employment under this Agreement shall terminate
upon the Officer’s death during the term of this Agreement, in which
event the Officer’s estate shall be entitled to receive the
compensation due to the Officer through the last day of the calendar
month in which the Officer’s death occurred.
	 
	 	b.	 	Retirement. This Agreement shall be terminated upon the normal or
early retirement of the Officer under the retirement benefit plan or
plans in which the Officer participates pursuant to Section 6 of this
Agreement.
	 
	 	c.	 	Disability. The Bank or the Officer may terminate the Officer’s
employment after having established the Officer’s Disability. For
purposes of this Agreement, “Disability” means a physical or mental
infirmity that impairs the Officer’s ability to substantially perform
duties assigned to the Officer under this Agreement and that results
in the Officer’s becoming eligible for long-term disability benefits
under Bancorp’s or the Bank’s long-term disability plan (or, if
Bancorp or the Bank has no such plan in effect, that impairs the
Officer’s ability to substantially perform duties assigned to the
Officer under this Agreement for a period of one-hundred-eighty
consecutive days). In the event of such Disability, the Officer’s
obligation to perform services under this Agreement will terminate. In
the event of such termination, the Officer shall be entitled to
receive the following:




	 	i.	 	The compensation and benefits provided for
under this Agreement for any period during
the term of this Agreement and prior to the
date of termination pursuant to this Section
10.c. during which the Officer is unable to
work due to physical or mental infirmity
(less any amounts which the Officer receives
under any disability insurance maintained by
Bancorp or the Bank with respect to such
period);



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	 	ii.	 	For the period beginning upon the date of
termination pursuant to this Section 10.c.
and continuing for the remaining term of
this Agreement, (A) salary at the highest
rate paid pursuant to Section 4 of this
Agreement during the twelve months prior to
the establishment of such disability under
this Section 10.c., reduced by any payments
received by the Officer during such period
following termination under a long term
disability plan or policy maintained by
Bancorp or the Bank, and (B) benefits
pursuant to Section 6 of this Agreement.




		
	 	     The Board shall determine whether or not the Officer is and
continues to be permanently disabled for purposes of this Agreement in
good faith, based upon competent medical advice and other factors that it
reasonably believes to be relevant. As a condition to any benefits, such
Board may require the Officer to submit to such physical or mental
evaluations and tests as it deems reasonably appropriate.




	 	d.	 	Just Cause.




	 	i.	 	The Board may, by written notice to the Officer in the form and manner specified in
this paragraph, immediately terminate the Officer’s employment with the Bank at any
time for Just Cause. The Officer shall have no right to receive compensation or
other benefits for any period after termination for Just Cause. Termination for
“Just Cause” shall mean termination because of, in the good faith determination of
the Board, the Officer’s:




	 	(1)	 	Personal dishonesty;
	 
	 	(2)	 	Willful misconduct;
	 
	 	(3)	 	Breach of fiduciary duty involving personal profit;
	 
	 	(4)	 	Intentional failure to perform duties under this Agreement;
	 
	 	(5)	 	Other, continuing material failure to
perform duties assigned to the Officer under this
Agreement after reasonable notification (which shall be
stated in writing and given at least fifteen days prior
to termination) by the Board of such failure;
	 
	 	(6)	 	Willful violation of any law, rule or
regulation (other than traffic violations or similar
offenses) or final cease-and-desist order; or
	 
	 	(7)	 	Material breach by the Officer of any
provision of this Agreement.




	 	ii.	 	Notwithstanding the foregoing, the Officer shall
not be deemed to have been terminated for Just Cause unless
there shall have been delivered to the Officer a copy of a
resolution duly adopted by the affirmative vote of not less
than a majority of the entire membership of the Board at a
meeting called and held for the purpose (after reasonable
notice to the Officer and an opportunity for the Officer to be
heard before the Board), finding that in the good faith
opinion of the Board the Officer was guilty of conduct
described



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	 	 	 	above and specifying the particulars thereof.
	 
	 	iii.	 	Notwithstanding the foregoing, it is expected
that Officer will perform all duties and agreements to be
performed herein, and Officer shall have the right to cure
non-performance, to the extent such performance is reasonably
capable of being cured, and shall promptly upon receipt of
written notice of non-performance, comply with the
requirements of such notice, and further if Officer shall not
comply with such notice to the satisfaction of the Bank within
forty-eight (48) hours after delivery thereof, (except if such
compliance cannot be reasonably completed within forty-eight
(48) hours, if Officer shall not commence to comply within
such period and thereafter proceed to completion with due
diligence) the Bank shall have the right to proceed with the
Board meeting specified in the preceding paragraph.




	 	e.	 	Certain Regulatory Events.




	 	i.	 	If the Officer is removed and/or permanently
prohibited from participating in the conduct of the
Bank’s affairs by an order issued under Sections
8(e)(4) or 8(g)(1) of the Federal Deposit Insurance
Act (“FDIA”) (12 U.S.C. §§ 1818(e)(4) and (g)(1)),
all obligations of the Bank under this Agreement
shall terminate as of the effective date of the
order, but vested rights of the parties shall not
be affected.
	 
	 	ii.	 	If the Bank is in default (as defined in Section
3(x)(1) of FDIA), all obligations of the Bank under
this Agreement shall terminate as of the date of
default, but vested rights of the parties shall not
be affected.
	 
	 	iii.	 	If a notice served under Sections 8(e)(3) or (g)(1)
of the FDIA (12 U.S.C. §§ 1818(e)(3) and (g)(1))
suspends and/or temporarily prohibits the Officer
from participating in the conduct of the Bank’s
affairs, the Bank’s obligations under this
Agreement shall be suspended as of the date of such
service, unless stayed by appropriate proceedings.
If the charges in the notice are dismissed, the
Bank may, in its discretion, (i) pay the Officer
all or part of the compensation withheld while its
contract obligations were suspended, and (ii)
reinstate (in whole or in part) any of its
obligations which were suspended.




		
	 	     The occurrence of any of the events described in paragraphs i, ii,
and iii above may be considered by the Board in connection with a
termination for Just Cause.




	 	f.	 	Voluntary Termination by Officer. In addition to the
Officer’s other rights to terminate under this
Agreement, the Officer may voluntarily terminate
employment with the Bank and Bancorp during the term of
this Agreement upon at least sixty days’ prior written
notice to the Bank, in which case the Officer shall
receive only compensation, vested rights



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	 	 	 	and employee benefits up to the date of termination.
	 
	 	g.	 	Without Just Cause or With Good Reason.




	 	i.	 	In addition to termination
pursuant to Section 10.a.
through 10.f.: the Board may,
by written notice to the
Officer, immediately
terminate the Officer’s
employment with the Bank at
any time for a reason other
than Just Cause (a
termination “Without Just
Cause”); and the Officer may,
by written notice to the
Board, immediately terminate
this Agreement at any time
within ninety days following
an event of “Good Reason” as
defined below (a termination
“With Good Reason”).
	 
	 	ii.	 	Subject to Section 11 hereof,
in the event of termination
under this Section 10.g., the
Officer shall be entitled to
receive the salary for the
remaining term of the
Agreement, including any
renewals or extensions
thereof, at the highest
annual rate in effect
pursuant to Section 4 of this
Agreement for any of the
twelve months immediately
preceding the date of such
termination, plus annual cash
bonuses for each year
(prorated in the event of
partial years) remaining
under such term at the amount
received by the Officer in
the calendar year preceding
the termination. The sum due
under this Section 10.g.
shall be paid in one lump sum
within ten calendar days of
such termination.
	 
	 	iii.	 	“Good Reason” shall exist if,
without the Officer’s express
written consent, Bancorp or
the Bank materially breach
any of its respective
obligations under this
Agreement. Without
limitation, such a material
breach shall be deemed to
occur upon any of the
following:




	 	(1)	 	A material reduction in the Officer’s
responsibilities or authority in connection with the
Officer’s employment with Bancorp or the Bank;
	 
	 	(2)	 	Assignment to the Officer of duties
of a nonexecutive nature or duties for which the Officer
is not reasonably equipped by the Officer’s skills and
experience;
	 
	 	(3)	 	A reduction in salary or benefits
contrary to the terms of this Agreement, or, following a
Change in Control as defined in Section 11 of this
Agreement, any reduction in salary or material reduction
in benefits below the amounts to which the Officer was
entitled prior to the Change in Control;
	 
	 	(4)	 	Termination of incentive and benefit
plans, programs, or arrangements, or reduction of the
Officer’s participation to such an extent as to
materially reduce their aggregate value below their
aggregate value as of the Effective Date;
	 
	 	(5)	 	A requirement that the Officer’s
principal business office or



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	 	 	 	principal place of residence be relocated outside any county in which the Bank
has its main office, its branches, or its deposit taking Automatic Teller
Machines; or the assignment to the Officer of duties that would reasonably
require such a relocation;
	 
	 	(6)	 	A requirement that the Officer spend
more than thirty normal working days away from any
county in which the Bank has its main office, its
branches, or its deposit taking Automatic Teller
Machines during any consecutive twelve-month period; or
	 
	 	(7)	 	Failure to provide office facilities,
secretarial services, and other administrative services
to Officer which are substantially equivalent to the
facilities and services provided to the Officer on the
Effective Date (excluding brief periods during which
office facilities may be temporarily unavailable due to
fire, natural disaster, or other calamity).
	 
	 	(8)	 	In the event of a Change in Control as defined in Section 11
of this Agreement, Officer shall have the right to resign for any
reason during the first sixty (60) days immediately following the
first six months after the closing date of a definitive purchase and
assumption agreement (as defined in such agreement), the execution
of which brought about a Change in Control.




	 	 	 	Notwithstanding the foregoing, it is expected that the Bank
will perform all agreements on its part to be performed
herein, and the Bank shall have the right to cure
non-performance, to the extent such performance is reasonably
capable of being cured, and shall promptly upon receipt of
written notice of non-performance, comply with the
requirement of such notice, and further if Bank shall not
comply with such notice to the satisfaction of the Officer
within forty-eight (48) hours after delivery thereof, (except
if such compliance cannot be reasonably completed within
forty-eight (48) hours, if the Bank shall not commence to
comply within such period and thereafter proceed to
completion with due diligence) the Officer shall have the
right to proceed with notice of a “with Good Reason”
termination as specified above.
	 
	 	iv.	 	Notwithstanding the foregoing: (A) a reduction or
elimination of the Officer’s benefits under one or more
benefit plans maintained by Bancorp or the Bank as part of a
good faith, overall reduction or elimination of such plan or
plans or benefits thereunder applicable to all participants in
a manner that does not discriminate against the Officer
(except as such discrimination may be necessary to comply with
law) shall not constitute an event of Good Reason or a
material breach of this Agreement, provided that benefits of
the type or to the general extent as those offered under such
plans prior to such



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	 	 	 	reduction or elimination are not available to other officers of Bancorp or the
Bank or any company that controls either of them under a plan or plans in
or under which the Officer is not entitled to participate, and receive
benefits, on a fair and nondiscriminatory basis; and (B) a requirement
that the Officer report to and be subject to the direction or supervision
of a senior officer of Bancorp or the Bank other than the President and
Chief Executive Officer shall not constitute an event of Good Reason or a
material breach of this Agreement.




	 	h.	 	Continuing Covenant not to Compete or Interfere with Relationships.
Regardless of anything herein to the contrary, following a termination (i)
upon retirement pursuant to Section 10.b., (ii) due to Disability pursuant
to Section 10.c., (iii) for Just Cause pursuant to Section 10.d., or (iv)
by the Officer pursuant to Section 10.f.:




	 	i.	 	The Officer’s obligations under Section 9.c. of this Agreement
will continue in effect; and
	 
	 	ii.	 	During the remaining term of this Agreement (determined
immediately before such termination), the Officer shall not serve as an
officer or director or employee of any bank holding company, bank, savings
association, savings and loan holding company, or mortgage company (any of
which, a “Financial Institution”), which Financial Institution offers
products or services competing with those offered by Bancorp or the Bank
from offices in any county in the State of Maryland or of any other State
in which the Bank, Bancorp or any of their subsidiaries has a branch, and
shall not interfere with the relationship of Bancorp or the Bank and any
of its employees, agents, or representatives; provided, however, that the
provisions of this noncompetition clause shall only apply to termination
of the Officer “before” a Change in Control as defined in Section 11. (It
being the intent of the parties that the noncompetition clause shall not
apply to terminations resulting from or due to a Change in Control.)



11.     Termination in Connection with a Change in Control.



	 	a.	 	For purposes of this Agreement, a “Change in Control” shall be deemed to
occur on the earliest of:




	 	i.	 	The acquisition by any entity, person or group (other than the
acquisition by a tax-qualified retirement plan sponsored by Bancorp or the
Bank) of beneficial ownership, as that term is defined in Rule 13d-3 under
the Securities 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



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	 	 	 	directors (“Voting Stock”);
	 
	 	ii.	 	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 or the Bank;
	 
	 	iii.	 	The effective time of (a) 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 (b) a transfer
of substantially all of the property of Bancorp or the Bank other than to
an entity of which Bancorp or the Bank owns at least 80% of the Voting
Stock;
	 
	 	iv.	 	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,
	 
	 	v.	 	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 the 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.




	 	b.	 	Termination. If within the period beginning six months prior to and ending
two years after a Change in Control, (i) the Bank shall terminate the
Officer’s employment Without Just Cause, or (ii) the Officer shall
voluntarily terminate employment With Good Reason, the Bank shall, within
ten calendar days of the termination of Officer’s employment, make a
lump-sum cash payment to the Officer equal to 2.99 times the sum of (x)
the Officer’s annual salary at the highest annual rate in effect for any
of the twelve months immediately preceding the date of such termination,
plus (y) the amount of other compensation received by the Officer during
the calendar year preceding the Change in Control. This cash payment is
subject to adjustment pursuant to Section 14 of this Agreement, and shall
be made in lieu of any payment also required under section 10.g. of this
Agreement because of a termination in such period. The Officer’s rights
under Section 10.g. are not otherwise affected by this Section 11. Also,
in such event, the Officer shall, for three calendar years following the
Officer’s termination of employment, continue to participate in any
benefit plans of Bancorp and the Bank that provide health



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	 	 	 	(including medical and dental), life or disability insurance, or similar coverage upon terms no less favorable than the most
favorable terms provided to executive officers of the Bank during such period.
	 
	 	c.	 	Funding of Trust upon Change in Control. In order to assure payment to the
Officer of amounts that may become payable by Bancorp or the Bank pursuant
to this Section, unless and to the extent the Officer has previously
provided a written release of any claims under Section 11 of this
Agreement, not later than ten business days after a Change in Control,
Bancorp or the Bank shall (i) establish a valid trust under the law of the
State of Maryland with an independent trustee that has or may be granted
corporate trust powers under Maryland law, (ii) deposit in such trust an
amount equal to 2.99 times the Officer’s “base amount” as defined in
Section 280G(b)(3) of the Code and regulations promulgated thereunder
(Section 280G and related regulations hereinafter referred to as Section
280G”) plus such amounts deemed adequate to cover Bancorp and the Bank’s
obligations under Section 14 of this Agreement, at the time of the Change
of Control, and (iii) provide the trustee of the trust with a written
direction to hold said amount and any investment return thereon in a
segregated account, and to pay such amounts as demanded by the Officer
from the trust upon written demand from the Officer stating the amount of
the payment demanded from the trust and the basis for the Officer’s rights
to such payment under Section 11 of this Agreement. Upon the earlier of
the final payment of all amounts demanded by the Officer under this
Section 11 or the date thirty-six months after the Change in Control, the
trustee of the trust shall pay to Bancorp or the Bank, as applicable, the
entire balance remaining in the trust. Payments from the trust to the
Officer shall be considered payments made by Bancorp or the Bank for
purposes of this Agreement. Payment of such amounts to the Officer from
the trust, however, shall not relieve Bancorp or the Bank from any
obligation to pay amounts in excess of those paid from the trust, or from
any obligation to take actions or refrain from taking actions otherwise
required by this Agreement. Unless and until a termination of or by the
Officer as described in Section 11.b.(i) or (ii), the Officer’s rights
under this Agreement shall be those of a general, unsecured creditor, the
Officer shall have no claim against the assets of the trust, and the
assets of the trust shall remain subject to the claims of creditors of
Bancorp or the Bank. Upon the termination of the trust as specified
herein, the Officer shall have no further interest in the trust.



12.     Indemnification and Liability Insurance.



	 	a.	 	Indemnification. Bancorp and the Bank agree to indemnify the Officer (and
the Officer’s heirs, executors, and administrators) to the fullest extent
permitted under applicable law and regulations against any and all
expenses and liabilities reasonably incurred by the Officer in connection
with or arising out of any action,



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	 	 	 	suit, or proceeding in which the Officer may be involved by reason of having
been a director or officer of the Bank or any of their subsidiaries
(whether or not the Officer continues to be a director or officer at the
time of incurring any such expenses or liabilities) such expenses and
liabilities to include, but not be limited to, judgments, court costs and
attorney’s fees and the cost of reasonable settlements, such settlements
to be approved by the Board of Bancorp or the Bank, if such action is
brought against the Officer in the Officer’s capacity as an officer or
director of Bancorp or the Bank or any of their subsidiaries.
Indemnification for expense shall not extend to matters for which the
Officer has been terminated for Just Cause. Nothing contained herein shall
be deemed to provide indemnification prohibited by applicable law or
regulation. Notwithstanding anything herein to the contrary, the
obligations of this Section 12 shall survive the term of this Agreement by
a period of seven years.
	 
	 	b.	 	Insurance. During the period in which indemnification of the
Officer is required under this Section, Bancorp or the Bank shall
provide the Officer (and the Officer’s heirs, executors, and
administrators) with coverage under a directors’ and officers’
liability policy at the expense of Bancorp or the Bank, at least
equivalent to such coverage provided to directors and senior
officers of Bancorp or the Bank, whichever is more favorable to the
Officer.



13.     Reimbursement of Officer’s Expenses to Enforce this Agreement. Bancorp or
the Bank shall reimburse the Officer for all out-of-pocket expenses, including,
without limitation, reasonable attorney’s fees, incurred by the Officer in
connection with successful enforcement by the Officer of the obligations of
Bancorp or the Bank to the Officer under this Agreement. Successful enforcement
shall mean the grant of an award of money or the requirement that Bancorp or
the Bank take some action specified by this Agreement (i) as a result of court
order; or (ii) otherwise by Bancorp or the Bank following an initial failure of
Bancorp or the Bank to pay such money or take such action promptly after
written demand therefor from the Officer stating the reason that such money or
action was due under this Agreement at or prior to the time of such demand.


14.     Adjustment of Certain Payments and Benefits.


     Bancorp and the Bank shall indemnify and hold the Officer harmless from
any and all loss, expense, or liability that the Officer may ever incur under
Code § 4999, or any successor provision, as the result of payments or benefits
that the Officer receives from Bancorp or the Bank or any successor to any of
its interests. Bancorp and the Bank shall have this obligation with respect to
any excise taxes (and any federal, state, and local income taxes on those
excise taxes) for which the Officer is liable under Code § 4999, or any
successor provision, pursuant to a tax return on which the Officer reports such
excise tax liability based on a reasonable analysis (that the Officer need not
file with the return) prepared by the Officer’s legal counsel. This paragraph
shall survive termination or expiration of this Agreement for any reason.


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15.     Injunctive Relief. If there is a breach or threatened breach of Section
10.h. of this Agreement or the prohibitions upon disclosure contained in
Section 9.c. of this Agreement, Bancorp or the Bank and the Officer agree that
there is no adequate remedy at law for such breach, and that Bancorp and the
Bank each shall be entitled to injunctive relief restraining the Officer from
such breach or threatened breach, but such relief shall not be the exclusive
remedy hereunder for such breach. The parties hereto likewise agree that the
Officer shall be entitled to injunctive relief to enforce the obligations of
Bancorp and the Bank under Section 11 of this Agreement.


16.     Successors and Assigns.



	 	a.	 	This Agreement shall inure to the benefit of and be
binding upon any corporate or other successor of
Bancorp or the Bank which shall acquire, directly or
indirectly, by merger, consolidation, purchase or
otherwise, all or substantially all of the assets or
stock of Bancorp or the Bank.
	 
	 	b.	 	Since the Bank and Bancorp are contracting for the
unique and personal skills of the Officer, the
Officer’s rights or duties hereunder shall be
precluded from assignment or delegation without
first obtaining the written consent of the Bank and
Bancorp.



17.     No Mitigation. The Officer shall not be required to mitigate the amount of
any payment provided for in this Agreement by seeking other employment or
otherwise and no such payment shall be offset or reduced by the amount of any
compensation or benefits provided to the Officer in any subsequent employment.


18.     Notices. All notices, requests, demands and other communications in
connection with this Agreement shall be made in writing and shall be deemed to
have been given when delivered by hand or 48 hours after mailing at any general
or branch United States Post Office, by registered or certified mail, postage
prepaid, addressed as follows, or to such other address as shall have been
designated in writing by the addressee:



	 	a.	 	If to Bancorp or the Bank:

Sandy Spring Bancorp, Inc.

Sandy Spring Bank

17801 Georgia Avenue

Olney, Maryland 20832

Attention: R. E. Kuykendall, General Counsel
	 
	 	b.	 	If to the Officer:

Frank H. Small

939 Main Street

Deale, Maryland 20751



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19.     Joint and Severally Liability; Payments by Bancorp and the Bank. To the
extent permitted by law, except as otherwise provided herein, Bancorp and the
Bank shall be jointly and severally liable for the payment of all amounts due
under this Agreement. Bancorp hereby agrees that it shall be jointly and
severally liable with the Bank for the payment of all amounts due under this
Agreement and shall guarantee the performance of the Bank’s obligations
thereunder, provided that Bancorp shall not be required by this Agreement to
pay to the Officer a salary or any bonuses or any other cash payments, except
in the event that the Bank does not fulfill the obligations to the Officer
hereunder for such payments. Bancorp may, however, pay salary and bonuses as
deemed appropriate by its Board in the exercise of its discretion.


20.     No Plan Created by this Agreement. The Officer, Bancorp and the Bank
expressly declare and agree that this Agreement was negotiated among them and
that no provision or provisions of this Agreement are intended to, or shall be
deemed to, create any plan for purposes of the Employee Retirement Income
Security Act or any other law or regulation, and, Bancorp the Bank and the
Officer each expressly waives any right to assert the contrary. Any assertion
in any judicial or administrative filing, hearing, or process by or on behalf
of the Officer or Bancorp or the Bank that such a plan was so created by this
Agreement shall be deemed a material breach of this Agreement by the party
making such an assertion.


21.     Amendments. No amendments or additions to this Agreement shall be binding
unless made in writing and signed by all of the parties, except as herein
otherwise specifically provided.


22.     Applicable Law. Except to the extent preempted by Federal law, the laws of
the State of Maryland shall govern this Agreement in all respects, whether as
to its validity, construction, capacity, performance or otherwise.


23.     Severability. The provisions of this Agreement shall be deemed severable
and the invalidity or unenforceability of any provision shall not affect the
validity or enforceability of the other provisions hereof.


24.     Headings. Headings contained herein are for convenience of reference only.


25.     Entire Agreement. This Agreement, together with any understanding or
modifications thereof as agreed to in writing by the parties, shall constitute
the entire agreement among the parties hereto with respect to the subject
matter hereof, other than written agreements with respect to specific plans,
programs, or arrangements described in Sections 5 and 6, and supersedes all
prior agreements other than with respect to such specific plans, programs, or
arrangements.


     IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
date first set forth above.



	 	SANDY SPRING BANK



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	 	By: /s/ Hunter R. Hollar
Title: President





	 	SANDY SPRING BANCORP, INC.

By: /s/ Hunter R. Hollar
Title: President





	 	OFFICER




	 	/s/ Frank H. Small
Frank H. Small




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