CHANGE IN CONTROL
AGREEMENT


 


THIS AGREEMENT
(the "Agreement") made as of this 9th day of March, 2012 (the "Effective Date") by, between, and among
Sandy Spring Bancorp, Inc., a registered bank holding company and a Maryland Corporation (“Bancorp”), Sandy
Spring Bank, a Maryland corporation and wholly owned subsidiary of Bancorp with its headquarters in Olney, Maryland
and Jeffrey A. Welch  (the “Officer").


 


WITNESSETH:


 


WHEREAS,
the Officer is employed by the Bank as Executive Vice President and Chief Credit Officer; and


 


WHEREAS,
the Bank and the Officer each desire that the Officer be provided with certain benefits in the event of a Change
in Control, as defined below.


 


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


 


		1.	Definitions:



a.
Change in Control. A "Change in Control" shall be deemed to occur on the earliest of any of the following events
after the date of this Agreement:


 


i. 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 Exchange Act of 1934, of more than
25% of the outstanding capital stock of Bancorp or the Bank entitled to vote generally for the election of 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 Directors ("Board")
of Bancorp or the Board of the Bank (the "Continuing Directors") cease for any reason to constitute at least two-thirds
of such Board, 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 of such Board then in office shall be considered a Continuing Director.


 


b. Covered Period. The
"Covered Period" shall mean the period beginning six months before a Change in Control and ending at the end of the term
specified in Section 2 hereof.


c. Good Reason. "Good
Reason" shall be deemed to exist at the time that any of the following events occurs without the Officers express written
consent:


 






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i.
A material reduction in the Officer's responsibilities or authority in connection with his employment by Bancorp or the Bank;


 


ii.
Assignment to the Officer of duties of a non-executive nature or duties for which the officer is not reasonably equipped by the
Officer’s skills and experience;


 


iii.
A reduction in salary or material reduction in benefits;


 


iv.
A requirement that the Officer’s principal business office or 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


 


v.
Failure to provide office facilities, secretarial services, and other administrative services to Officer that are substantially
equivalent to the facilities and services provided to the Officer immediately after the Effective Date (excluding brief periods
during which office facilities may be temporarily unavailable due to fire, natural disaster, or other calamity).


 


vi.
The Officer’s resignation for any reason during the first sixty (60) days immediately following the first six (6) months
after the closing date of a definitive purchase and assumption agreement, the execution of which brought about the Change in Control.


 


Notwithstanding
the foregoing, 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 plan or plans prior to such 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 to receive benefits on a fair and nondiscriminatory basis.


 


Notwithstanding
the foregoing, it is expected that Bancorp and the Bank will perform all duties and agreements to be performed herein, and they
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 that the Officer describes and alleges to be Good Reason, comply with the requirements
of such notice, and further if they 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 Bank
shall not commence to comply with such period and thereafter proceed to completion with due diligence) the Officer shall have
the right to proceed with notice of a “Good Reason” termination as specified above.


 


d.
Just Cause. Termination for "Just Cause" shall mean termination of employment by reason of the Officer's:


 


		i.	Personal dishonesty;



 


		ii.	Willful misconduct;



 


		iii.	Breach of fiduciary duty involving personal profit;



 


		iv.	Intentional failure to perform duties; or



 


		v.	Willful violation of any law, rule, or regulation (other than traffic violations or similar offenses) or final cease-and-desist
order.



 


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 that Bancorp or the Bank describes and alleges to be Just cause, 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 a “Just Cause” termination as described above.






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The Bank shall determine if Just Cause exists with
respect to its employment of the Officer in the exercise of its good faith discretion.


 


e.  Total Annual Compensation.
For purposes of this Agreement, Total Annual Compensation shall mean:


 


i. One-year's
base salary at the highest rate in effect in the period beginning six months before the last Change in Control to occur before
termination of the Officer's employment; plus


 


ii. Other compensation, including,
without limitation, bonus payments, at the rate paid for (i) the calendar year preceding such Change in Control, or (ii) the calendar
year preceding termination of the Officer's employment, whichever is greater, but shall not include the value of benefits that
are not subject to current federal income taxation to the Officer. Such other compensation for a calendar year shall be annualized
on a monthly basis based upon the number of months in the calendar year in which the Officer was employed.


 


		2.	Term. The term of this Agreement shall be the period commencing on the Effective Date and
ending on the last moment of the second anniversary of the Effective Date. 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 his desire that the term not be extended.



 


		3.	Termination in Connection with a Change in Control.



a. If, within the Covered Period,
the Bank shall terminate the Officer's employment without Just Cause or the Officer shall terminate his 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 him equal
to 2.99 times his Total Annual Compensation.


b. Also in the event of such
a termination, 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 (including medical and dental), life and 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.


 


		4.	Adjustment of Certain Payments and Benefits.



a. In the event that payments
pursuant to this Agreement (including, without limitation, any payment under any plan, program, or arrangement referred to in Section
3 hereof) would result in the imposition of a penalty tax pursuant to Section 28OG of the Internal Revenue Code, such payments
shall be reduced to equal the maximum amount that may be paid under such Section 28OG without exceeding such limits. In the event
any such reduction in payments is necessary, the Officer may determine, in his sole discretion, which categories of payments (including,
without limitation, the value of benefits, acceleration of vesting, or receipt of benefits or amounts) are to be reduced or eliminated.


b. Payments made to the Officer
pursuant to this Agreement or otherwise, are subject to and conditioned upon their compliance with Section I (W) of the Federal
Deposit Insurance Act ("FDIA"), relating to "golden parachute" and indemnification payments and certain other
benefits.


 


		5.	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 therefore 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.







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



 


		7.	Successors and Assigns.



a. This Agreement shall inure
to the benefit of and be binding upon any corporate or other successor of the Bank that shall acquire, directly or indirectly,
by merger, consolidation, purchase or otherwise, all or substantially all of the assets or stock of the Bank.


b. Since the Bank is contracting
for the unique and personal skills of the Officer, the Officer shall be precluded from assigning or delegating his rights or duties
hereunder without first obtaining the written consent of the Bank.


 


		8.	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.



 


		9.	No Plan Created. The Officer 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 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 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 or on whose behalf such assertion was made.



 


		10.	No Additional Rights: Third Party Beneficiary.



a. This Agreement does
not confer any right to employment or any other right not specifically stated herein. Any assertion in any judicial or administrative
filing, hearing, or process by or on behalf of the Officer or the Bank that it does so shall be deemed a material breach of this
Agreement by the party making such an assertion or on whose behalf such assertion was made.


 


b. Bancorp is a third
party beneficiary, with notice thereof, to Section 5 of this Agreement. This Agreement is for the benefit of the parties hereto,
and, except as expressly stated herein with respect to Bancorp, is not intended to be for the benefit of, or to be enforceable
by, any other person.


 


		11.	Certain Regulatory Events.



a. 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 FDIA, 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.


 






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b. 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.


 


c. If a notice served under Sections
8(e)(3) or 8(g)(1) of the FDIA 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
that were suspended.


 


The occurrence
of any of the events described in paragraphs a, b, and c above may be considered by the Bank in connection with a termination for
Just Cause.


 


		12.	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 the Bank:



 


Sandy
Spring Bank


17801
Georgia Avenue


Olney,
Maryland 20832


Attention:
Daniel J. Schrider, President


 


		b.	If to the Officer:



 


Jeffrey
A. Welch


2803
Green Bower Way


Ellicott
City, MD 21042


 


		13.	Amendments. No amendments or additions to this
Agreement shall be binding unless made in writing and signed by all of the parties.



 


		14.	Applicable Law. Except to the extent preempted
by Federal law, the laws of the State of Maryland, without regard to its conflict of laws principles, shall govern this Agreement
in all respects, whether as to its validity, construction, capacity, performance or otherwise.



 


		15.	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.



 


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



 


		17.	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.



 


		18.	Section 409A



(i)       The
Officer will be deemed to have a termination of employment for purposes of determining the timing of any payments that are classified
as deferred compensation only upon a “separation from service” within the meaning of Section 409A.


 






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(ii)      If
at the time of the Officer’s separation from service, (a) the Officer is a “specified employee” (within
the meaning of Section 409A and using the methodology selected by the Bank) and (b) the Bank makes a good faith determination
that an amount payable or the benefits to be provided hereunder constitutes deferred compensation (within the meaning of Section 409A),
the payment of which is required to be delayed pursuant to the six-month delay rule of Section 409A in order to avoid
taxes or penalties under Section 409A, then the Bank will not pay the entire amount on the otherwise scheduled payment date
but will instead pay on the scheduled payment date the maximum amount permissible in order to comply with Section 409A (i.e.,
any amount that satisfies an exception under the Section 409A rules from being categorized as deferred compensation) and will
pay the remaining amount (if any) in a lump sum on the first business day after such six month period.


 


(iii)     To
the extent the Officer would be subject to an additional 20% tax imposed on certain deferred compensation arrangements pursuant
to Section 409A as a result of any provision of this Agreement, such provision shall be deemed amended to the minimum extent
necessary to avoid application of such tax and the parties shall promptly execute any amendment reasonably necessary to implement
this Section 17.  The Officer and the Bank agree to cooperate to make such amendment to the terms of this Agreement
as may be necessary to avoid the imposition of penalties and taxes under Section 409A; provided, however, that the Officer
agrees that any such amendment shall provide the Officer with economically equivalent payments and benefits, and the Officer agrees
that any such amendment will not materially increase the cost to, or liability of, the Bank with respect to any payment.


 


(iv)For purposes of the this
Agreement, Section 409A shall refer to Section 409A of the Internal Revenue Code of 1986, as amended, and the Treasury regulations
and any other authoritative guidance issued thereunder.


 


 


 


[SIGNATURE PAGE TO FOLLOW]


 


 



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


 














	 	SANDY SPRING BANCORP, INC.	 
	 	 	 
	 	 	 
	 	/s/ Daniel J. Schrider	 
	 	Daniel J. Schrider, President and Chief Executive Officer	 
	 	 	 
	 	 	 
	 	SANDY SPRING BANK	 
	 	 	 
	 	 	 
	 	/s/ Daniel J. Schrider	 
	 	Daniel J. Schrider, President and Chief Executive Officer	 
	 	 	 
	 	 	 
	 	OFFICER	 
	 	 	 
	 	/s/ Jeffrey
A. Welch	 
		Jeffrey
A. Welch	 







 


 


 


 



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