WARRANT
      TO PURCHASE COMMON STOCK

     

    THE
      SECURITIES REPRESENTED BY THIS INSTRUMENT HAVE NOT BEEN REGISTERED UNDER THE
      SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND
      MAY
      NOT BE TRANSFERRED, SOLD OR OTHERWISE DISPOSED OF EXCEPT WHILE A REGISTRATION
      STATEMENT RELATING THERETO IS IN EFFECT UNDER SUCH ACT AND APPLICABLE STATE
      SECURITIES LAWS OR PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT
      OR
      SUCH LAWS. THIS INSTRUMENT IS ISSUED SUBJECT TO THE RESTRICTIONS ON TRANSFER
      AND
      OTHER PROVISIONS OF A SECURITIES PURCHASE AGREEMENT BETWEEN THE ISSUER OF THESE
      SECURITIES AND THE INVESTOR REFERRED TO THEREIN, A COPY OF WHICH IS ON FILE
      WITH
      THE ISSUER. THE SECURITIES REPRESENTED BY THIS INSTRUMENT MAY NOT BE SOLD OR
      OTHERWISE TRANSFERRED EXCEPT IN COMPLIANCE WITH SAID AGREEMENT. ANY SALE OR
      OTHER TRANSFER NOT IN COMPLIANCE WITH SAID AGREEMENT WILL BE VOID.

     

    WARRANT

    to
      purchase

    651,547

    Shares
      of Common Stock 

    of
      Sandy Spring Bancorp, Inc.

     

    


    Issue
      Date: December 5, 2008

     

    1. Definitions.
      Unless
      the context otherwise requires, when used herein the following terms shall
      have
      the meanings indicated.

     

    “Affiliate”
has
      the
      meaning ascribed to it in the Purchase Agreement.

     

    “Appraisal
      Procedure”
means
      a
      procedure whereby two independent appraisers, one chosen by the Company and
      one
      by the Original Warrantholder, shall mutually agree upon the determinations
      then
      the subject of appraisal. Each party shall deliver a notice to the other
      appointing its appraiser within 15 days after the Appraisal Procedure is
      invoked. If within 30 days after appointment of the two appraisers they are
      unable to agree upon the amount in question, a third independent appraiser
      shall
      be chosen within 10 days thereafter by the mutual consent of such first two
      appraisers. The decision of the third appraiser so appointed and chosen shall
      be
      given within 30 days after the selection of such third appraiser. If three
      appraisers shall be appointed and the determination of one appraiser is
      disparate from the middle determination by more than twice the amount by which
      the other determination is disparate from the middle determination, then the
      determination of such appraiser shall be excluded, the remaining two
      determinations shall be averaged and such average shall be binding and
      conclusive upon the

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    Company
      and the Original Warrantholder; otherwise, the average of all three
      determinations shall be binding upon the Company and the Original Warrantholder.
      The costs of conducting any Appraisal Procedure shall be borne by the
      Company.

     

    “Board
      of Directors”
means
      the board of directors of the Company, including any duly authorized committee
      thereof.

     

    “Business
      Combination”
means
      a
      merger, consolidation, statutory share exchange or similar transaction that
      requires the approval of the Company’s stockholders.

     

    “business
      day”
means
      any day except Saturday, Sunday and any day on which banking institutions in
      the
      State of New York generally are authorized or required by law or other
      governmental actions to close.

     

    “Capital
      Stock”
means
      (A) with respect to any Person that is a corporation or company, any and all
      shares, interests, participations or other equivalents (however designated)
      of
      capital or capital stock of such Person and (B) with respect to any Person
      that
      is not a corporation or company, any and all partnership or other equity
      interests of such Person.

     

    “Charter”
means,
      with respect to any Person, its certificate or articles of incorporation,
      articles of association, or similar organizational document.

     

    “Common
      Stock”
has
      the
      meaning ascribed to it in the Purchase Agreement.

     

    “Company”
means
      the Person whose name, corporate or other organizational form and jurisdiction
      of organization is set forth in Item 1 of Schedule A hereto.

     

    “conversion”
has
      the
      meaning set forth in Section 13(B).

     

    “convertible
      securities”
has
      the
      meaning set forth in Section 13(B).

     

    “CPP”
has
      the
      meaning ascribed to it in the Purchase Agreement.

     

    “Exchange
      Act”
means
      the Securities Exchange Act of 1934, as amended, or any successor statute,
      and
      the rules and regulations promulgated thereunder.

     

    “Exercise
      Price”
means
      the amount set forth in Item 2 of Schedule A hereto.

     

    “Expiration
      Time”
has
      the
      meaning set forth in Section 3.

     

    “Fair
      Market Value”
means,
      with respect to any security or other property, the fair market value of such
      security or other property as determined by the Board of Directors, acting
      in
      good faith or, with respect to Section 14, as determined by the Original
      Warrantholder acting in good faith. For so long as the Original Warrantholder
      holds this Warrant or any portion thereof, it may object in writing to the
      Board
      of Director’s calculation of fair market value within 10 days of receipt of
      written notice thereof. If the Original Warrantholder and the Company are unable
      to agree on fair market value during the 10-day period following the delivery
      of
      the Original Warrantholder’s objection, the Appraisal Procedure may be invoked
      by either party to determine Fair Market Value by delivering written
      notification thereof not later than the 30th
      day
      after delivery of the Original Warrantholder’s objection.

     

    
      
         

      

      
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    “Governmental
      Entities”
has
      the
      meaning ascribed to it in the Purchase Agreement.

     

    “Initial
      Number”
has
      the
      meaning set forth in Section 13(B).

     

    “Issue
      Date”
      means
      the date set forth in Item 3 of Schedule A hereto.

     

    “Market
      Price”
means,
      with respect to a particular security, on any given day, the last reported
      sale
      price regular way or, in case no such reported sale takes place on such day,
      the
      average of the last closing bid and ask prices regular way, in either case
      on
      the principal national securities exchange on which the applicable securities
      are listed or admitted to trading, or if not listed or admitted to trading
      on
      any national securities exchange, the average of the closing bid and ask prices
      as furnished by two members of the Financial Industry Regulatory Authority,
      Inc.
      selected from time to time by the Company for that purpose. “Market Price” shall
      be determined without reference to after hours or extended hours trading. If
      such security is not listed and traded in a manner that the quotations referred
      to above are available for the period required hereunder, the Market Price
      per
      share of Common Stock shall be deemed to be (i) in the event that any portion
      of
      the Warrant is held by the Original Warrantholder, the fair market value per
      share of such security as determined in good faith by the Original Warrantholder
      or (ii) in all other circumstances, the fair market value per share of such
      security as determined in good faith by the Board of Directors in reliance
      on an
      opinion of a nationally recognized independent investment banking corporation
      retained by the Company for this purpose and certified in a resolution to the
      Warrantholder. For the purposes of determining the Market Price of the Common
      Stock on the “trading day” preceding, on or following the occurrence of an
      event, (i) that trading day shall be deemed to commence immediately after the
      regular scheduled closing time of trading on the New York Stock Exchange or,
      if
      trading is closed at an earlier time, such earlier time and (ii) that trading
      day shall end at the next regular scheduled closing time, or if trading is
      closed at an earlier time, such earlier time (for the avoidance of doubt, and
      as
      an example, if the Market Price is to be determined as of the last trading
      day
      preceding a specified event and the closing time of trading on a particular
      day
      is 4:00 p.m. and the specified event occurs at 5:00 p.m. on that day, the Market
      Price would be determined by reference to such 4:00 p.m. closing
      price).

     

    “Ordinary
      Cash Dividends”
means
      a
      regular quarterly cash dividend on shares of Common Stock out of surplus or
      net
      profits legally available therefor (determined in accordance with generally
      accepted accounting principles in effect from time to time), provided
      that
      Ordinary Cash Dividends shall not include any cash dividends paid subsequent
      to
      the Issue Date to the extent the aggregate per share dividends paid on the
      outstanding Common Stock in any quarter exceed the amount set forth in Item
      4 of
      Schedule A hereto, as adjusted for any stock split, stock dividend, reverse
      stock split, reclassification or similar transaction.

     

    “Original
      Warrantholder”
means
      the United States Department of the Treasury. Any actions specified to be taken
      by the Original Warrantholder hereunder may only be taken by such Person and
      not
      by any other Warrantholder.

     

    
      
         

      

      
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    “Permitted
      Transactions”
has
      the
      meaning set forth in Section 13(B).

     

    “Person”
has
      the
      meaning given to it in Section 3 (a)(9) of the Exchange Act and as used in
      Sections 13(d)(3) and 14(d)(2) of the Exchange Act.

     

    “Per
      Share Fair Market Value”
has
      the
      meaning set forth in Section 13(C).

     

    “Preferred
      Shares”
means
      the perpetual preferred stock issued to the Original Warrantholder on the Issue
      Date pursuant to the Purchase Agreement.

     

    “Pro
      Rata Repurchases”
means
      any purchase of shares of Common Stock by the Company or any Affiliate thereof
      pursuant to (A) any tender offer or exchange offer subject to Section 13(e)
      or
      14(e) of the Exchange Act or Regulation 14E promulgated thereunder or (B) any
      other offer available to substantially all holders of Common Stock, in the
      case
      of both (A) or (B), whether for cash, shares of Capital Stock of the Company,
      other securities of the Company, evidences of indebtedness of the Company or
      any
      other Person or any other property (including, without limitation, shares of
      Capital Stock, other securities or evidences of indebtedness of a subsidiary),
      or any combination thereof, effected while this Warrant is outstanding. The
      “Effective
      Date”
of
      a
      Pro Rata Repurchase shall mean the date of acceptance of shares for purchase
      or
      exchange by the Company under any tender or exchange offer which is a Pro Rata
      Repurchase or the date of purchase with respect to any Pro Rata Repurchase
      that
      is not a tender or exchange offer.

     

    “Purchase
      Agreement”
means
      the Securities Purchase Agreement - Standard Terms incorporated into the Letter
      Agreement, dated as of the date set forth in Item 5 of Schedule A hereto, as
      amended from time to time, between the Company and the United States Department
      of the Treasury (the “Letter
      Agreement”),
      including all annexes and schedules thereto.

     

    “Qualified
      Equity Offering”
has
      the
      meaning ascribed to it in the Purchase Agreement.

     

    “Regulatory
      Approvals”
with
      respect to the Warrantholder, means, to the extent applicable and required
      to
      permit the Warrantholder to exercise this Warrant for shares of Common Stock
      and
      to own such Common Stock without the Warrantholder being in violation of
      applicable law, rule or regulation, the receipt of any necessary approvals
      and
      authorizations of, filings and registrations with, notifications to, or
      expiration or termination of any applicable waiting period under, the
      Hart-Scott--Rodino Antitrust Improvements Act of 1976, as amended, and the
      rules
      and regulations thereunder.

     

    “SEC”
means
      the U.S. Securities and Exchange Commission.

     

    “Securities
      Act”
means
      the Securities Act of 1933, as amended, or any successor statute, and the rules
      and regulations promulgated thereunder.

     

    “Shares”
has
      the
      meaning set forth in Section 2.

     

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

    “trading
      day”
      means
      (A) if the shares of Common Stock are not traded on any national or regional
      securities exchange or association or over-the-counter market, a business day
      or
      (B) if the shares of Common Stock are traded on any national or regional
      securities exchange or association or over-the-counter market, a business day
      on
      which such relevant exchange or quotation system is scheduled to be open for
      business and on which the shares of Common Stock (i) are not suspended from
      trading on any national or regional securities exchange or association or
      over-the-counter market for any period or periods aggregating one half hour
      or
      longer; and (ii) have traded at least once on the national or regional
      securities exchange or association or over-the-counter market that is the
      primary market for the trading of the shares of Common Stock.

     

    “U.S.
      GAAP”
means
      United States generally accepted accounting principles. “Warrantholder”
has
      the
      meaning set forth in Section 2.

     

    “Warrant”
means
      this Warrant, issued pursuant to the Purchase Agreement.

     

    2. Number
      of Shares; Exercise Price.
      This
      certifies that, for value received, the United States Department of the Treasury
      or its permitted assigns (the “Warrantholder”)
      is
      entitled, upon the terms and subject to the conditions hereinafter set forth,
      to
      acquire from the Company, in whole or in part, after the receipt of all
      applicable Regulatory Approvals, if any, up to an aggregate of the number of
      fully paid and nonassessable shares of Common Stock set forth in Item 6 of
      Schedule A hereto, at a purchase price per share of Common Stock equal to the
      Exercise Price. The number of shares of Common Stock (the “Shares”)
      and
      the Exercise Price are subject to adjustment as provided herein, and all
      references to “Common Stock,” “Shares” and “Exercise Price” herein shall be
      deemed to include any such adjustment or series of adjustments.

     

    3. Exercise
      of Warrant; Term.
      Subject
      to Section 2, to the extent permitted by applicable laws and regulations, the
      right to purchase the Shares represented by this Warrant is exercisable, in
      whole or in part by the Warrantholder, at any time or from time to time after
      the execution and delivery of this Warrant by the Company on the date hereof,
      but in no event later than 5:00 p.m., New York City time on the tenth
      anniversary of the Issue Date (the “Expiration
      Time”),
      by
      (A) the surrender of this Warrant and Notice of Exercise annexed hereto, duly
      completed and executed on behalf of the Warrantholder, at the principal
      executive office of the Company located at the address set forth in Item 7
      of
      Schedule A hereto (or such other office or agency of the Company in the United
      States as it may designate by notice in writing to the Warrantholder at the
      address of the Warrantholder appearing on the books of the Company), and (B)
      payment of the Exercise Price for the Shares thereby purchased:

     

    (i) by
      having
      the Company withhold, from the shares of Common Stock that would otherwise
      be
      delivered to the Warrantholder upon such exercise, shares of Common stock
      issuable upon exercise of the Warrant equal in value to the aggregate Exercise
      Price as to which this Warrant is so exercised based on the Market Price of
      the
      Common Stock on the trading day on which this Warrant is exercised and the
      Notice of Exercise is delivered to the Company pursuant to this Section 3,
      or

     

    (ii) with
      the
      consent of both the Company and the Warrantholder, by tendering in cash, by
      certified or cashier’s check payable to the order of the Company, or by wire
      transfer of immediately available funds to an account designated by the
      Company.

     

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

    If
      the
      Warrantholder does not exercise this Warrant in its entirety, the Warrantholder
      will be entitled to receive from the Company within a reasonable time, and
      in
      any event not exceeding three business days, a new warrant in substantially
      identical form for the purchase of that number of Shares equal to the difference
      between the number of Shares subject to this Warrant and the number of Shares
      as
      to which this Warrant is so exercised. Notwithstanding anything in this Warrant
      to the contrary, the Warrantholder hereby acknowledges and agrees that its
      exercise of this Warrant for Shares is subject to the condition that the
      Warrantholder will have first received any applicable Regulatory
      Approvals.

     

    4. Issuance
      of Shares; Authorization; Listing.
      Certificates for Shares issued upon exercise of this Warrant will be issued
      in
      such name or names as the Warrantholder may designate and will be delivered
      to
      such named Person or Persons within a reasonable time, not to exceed three
      business days after the date on which this Warrant has been duly exercised
      in
      accordance with the terms of this Warrant. The Company hereby represents and
      warrants that any Shares issued upon the exercise of this Warrant in accordance
      with the provisions of Section 3 will be duly and validly authorized and issued,
      fully paid and nonassessable and free from all taxes, liens and charges (other
      than liens or charges created by the Warrantholder, income and franchise taxes
      incurred in connection with the exercise of the Warrant or taxes in respect
      of
      any transfer occurring contemporaneously therewith). The Company agrees that
      the
      Shares so issued will be deemed to have been issued to the Warrantholder as
      of
      the close of business on the date on which this Warrant and payment of the
      Exercise Price are delivered to the Company in accordance with the terms of
      this
      Warrant, notwithstanding that the stock transfer books of the Company may then
      be closed or certificates representing such Shares may not be actually delivered
      on such date. The Company will at all times reserve and keep available, out
      of
      its authorized but unissued Common Stock, solely for the purpose of providing
      for the exercise of this Warrant, the aggregate number of shares of Common
      Stock
      then issuable upon exercise of this Warrant at any time. The Company will (A)
      procure, at its sole expense, the listing of the Shares issuable upon exercise
      of this Warrant at any time, subject to issuance or notice of issuance, on
      all
      principal stock exchanges on which the Common Stock is then listed or traded
      and
      (B) maintain such listings of such Shares at all times after issuance. The
      Company will use reasonable best efforts to ensure that the Shares may be issued
      without violation of any applicable law or regulation or of any requirement
      of
      any securities exchange on which the Shares are listed or traded.

     

    5. No
      Fractional Shares or Scrip.
      No
      fractional Shares or scrip representing fractional Shares shall be issued upon
      any exercise of this Warrant. In lieu of any fractional Share to which the
      Warrantholder would otherwise be entitled, the Warrantholder shall be entitled
      to receive a cash payment equal to the Market Price of the Common Stock on
      the
      last trading day preceding the date of exercise less the pro-rated Exercise
      Price for such fractional share.

     

    6. No
      Rights as Stockholders; Transfer Books.
      This
      Warrant does not entitle the Warrantholder to any voting rights or other rights
      as a stockholder of the Company prior to the date of exercise hereof. The
      Company will at no time close its transfer books against transfer of this
      Warrant in any manner which interferes with the timely exercise of this
      Warrant.

     

    
      
         

      

      
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    7. Charges,
      Taxes and Expenses.
      Issuance of certificates for Shares to the Warrantholder upon the exercise
      of
      this Warrant shall be made without charge to the Warrantholder for any issue
      or
      transfer tax or other incidental expense in respect of the issuance of such
      certificates, all of which taxes and expenses shall be paid by the
      Company.

     

    8. Transfer/Assignment.

     

    (A) Subject
      to compliance with clause (B) of this Section 8, this Warrant and all rights
      hereunder are transferable, in whole or in part, upon the books of the Company
      by the registered holder hereof in person or by duly authorized attorney, and
      a
      new warrant shall be made and delivered by the Company, of the same tenor and
      date as this Warrant but registered in the name of one or more transferees,
      upon
      surrender of this Warrant, duly endorsed, to the office or agency of the Company
      described in Section 3. All expenses (other than stock transfer taxes) and
      other
      charges payable in connection with the preparation, execution and delivery
      of
      the new warrants pursuant to this Section 8 shall be paid by the
      Company.

     

    (B) The
      transfer of the Warrant and the Shares issued upon exercise of the Warrant
      are
      subject to the restrictions set forth in Section 4.4 of the Purchase Agreement.
      If and for so long as required by the Purchase Agreement, this Warrant shall
      contain the legends as set forth in Sections 4.2(a) and 4.2(b) of the Purchase
      Agreement.

     

    9. Exchange
      and Registry of Warrant.
      This
      Warrant is exchangeable, upon the surrender hereof by the Warrantholder to
      the
      Company, for a new warrant or warrants of like tenor and representing the right
      to purchase the same aggregate number of Shares. The Company shall maintain
      a
      registry showing the name and address of the Warrantholder as the registered
      holder of this Warrant. This Warrant may be surrendered for exchange or exercise
      in accordance with its terms, at the office of the Company, and the Company
      shall be entitled to rely in all respects, prior to written notice to the
      contrary, upon such registry.

     

    10. Loss,
      Theft, Destruction or Mutilation of Warrant.
      Upon
      receipt by the Company of evidence reasonably satisfactory to it of the loss,
      theft, destruction or mutilation of this Warrant, and in the case of any such
      loss, theft or destruction, upon receipt of a bond, indemnity or security
      reasonably satisfactory to the Company, or, in the case of any such mutilation,
      upon surrender and cancellation of this Warrant, the Company shall make and
      deliver, in lieu of such lost, stolen, destroyed or mutilated Warrant, a new
      Warrant of like tenor and representing the right to purchase the same aggregate
      number of Shares as provided for in such lost, stolen, destroyed or mutilated
      Warrant.

     

    11. Saturdays,
      Sundays, Holidays, etc.
      If the
      last or appointed day for the taking of any action or the expiration of any
      right required or granted herein shall not be a business day, then such action
      may be taken or such right may be exercised on the next succeeding day that
      is a
      business day.

     

    12. Rule
      144 Information.
      The
      Company covenants that it will use its reasonable best efforts to timely file
      all reports and other documents required to be filed by it under the Securities
      Act and the Exchange Act and the rules and regulations promulgated by the SEC
      thereunder (or, if the Company is not required to file such reports, it will,
      upon the request of any Warrantholder, make publicly available such information
      as necessary to permit sales pursuant to Rule 144 under the Securities Act),
      and
      it will use reasonable best efforts to take such further action as any
      Warrantholder may reasonably request, in each case to the extent required from
      time to time to enable such holder to, if permitted by the terms of this Warrant
      and the Purchase Agreement, sell this Warrant without registration under the
      Securities Act within the limitation of the exemptions provided by (A) Rule
      144
      under the Securities Act, as such rule may be amended from time to time, or
      (B)
      any successor rule or regulation hereafter adopted by the SEC. Upon the written
      request of any Warrantholder, the Company will deliver to such Warrantholder
      a
      written statement that it has complied with such requirements.

     

    
      
         

      

      
        7

        
          

        

      

      
         

      

    

    13. Adjustments
      and Other Rights.
      The
      Exercise Price and the number of Shares issuable upon exercise of this Warrant
      shall be subject to adjustment from time to time as follows; provided,
      that if
      more than one subsection of this Section 13 is applicable to a single event,
      the
      subsection shall be applied that produces the largest adjustment and no single
      event shall cause an adjustment under more than one subsection of this Section
      13 so as to result in duplication:

     

    (A) Stock
      Splits, Subdivisions, Reclassifications or Combinations.
      If the
      Company shall (i) declare and pay a dividend or make a distribution on its
      Common Stock in shares of Common Stock, (ii) subdivide or reclassify the
      outstanding shares of Common Stock into a greater number of shares, or (iii)
      combine or reclassify the outstanding shares of Common Stock into a smaller
      number of shares, the number of Shares issuable upon exercise of this Warrant
      at
      the time of the record date for such dividend or distribution or the effective
      date of such subdivision, combination or reclassification shall be
      proportionately adjusted so that the Warrantholder after such date shall be
      entitled to purchase the number of shares of Common Stock which such holder
      would have owned or been entitled to receive in respect of the shares of Common
      Stock subject to this Warrant after such date had this Warrant been exercised
      immediately prior to such date. In such event, the Exercise Price in effect
      at
      the time of the record date for such dividend or distribution or the effective
      date of such subdivision, combination or reclassification shall be adjusted
      to
      the number obtained by dividing (x) the product of (1) the number of Shares
      issuable upon the exercise of this Warrant before such adjustment and (2) the
      Exercise Price in effect immediately prior to the record or effective date,
      as
      the case may be, for the dividend, distribution, subdivision, combination or
      reclassification giving rise to this adjustment by (y) the new number of Shares
      issuable upon exercise of the Warrant determined pursuant to the immediately
      preceding sentence.

     

    (B) Certain
      Issuances of Common Shares or Convertible Securities.
      Until
      the earlier of (i) the date on which the Original Warrantholder no longer holds
      this Warrant or any portion thereof and (ii) the third anniversary of the Issue
      Date, if the Company shall issue shares of Common Stock (or rights or warrants
      or other securities exercisable or convertible into or exchangeable
      (collectively, a “conversion”)
      for
      shares of Common Stock) (collectively, “convertible
      securities”)
      (other
      than in Permitted Transactions (as defined below) or a transaction to which
      subsection (A) of this Section 13 is applicable) without consideration or at
      a
      consideration per share (or having a conversion price per share) that is less
      than 90% of the Market Price on the last trading day preceding the date of
      the
      agreement on pricing such shares (or such convertible securities) then, in
      such
      event:

     

    
      
         

      

      
        8

        
          

        

      

      
         

      

    

    (A)
      the
      number of Shares issuable upon the exercise of this Warrant immediately prior
      to
      the date of the agreement on pricing of such shares (or of such convertible
      securities) (the “Initial
      Number”)
      shall
      be increased to the number obtained by multiplying the Initial Number by a
      fraction (A) the numerator of which shall be the sum of (x) the number of shares
      of Common Stock of the Company outstanding on such date and (y) the number
      of
      additional shares of Common Stock issued (or into which convertible securities
      may be exercised or convert) and (B) the denominator of which shall be the
      sum
      of (I) the number of shares of Common Stock outstanding on such date and (II)
      the number of shares of Common Stock which the aggregate consideration
      receivable by the Company for the total number of shares of Common Stock so
      issued (or into which convertible securities may be exercised or convert) would
      purchase at the Market Price on the last trading day preceding the date of
      the
      agreement on pricing such shares (or such convertible securities);
      and

     

    (B)
      the
      Exercise Price payable upon exercise of the Warrant shall be adjusted by
      multiplying such Exercise Price in effect immediately prior to the date of
      the
      agreement on pricing of such shares (or of such convertible securities) by
      a
      fraction, the numerator of which shall be the number of shares of Common Stock
      issuable upon exercise of this Warrant prior to such date and the denominator
      of
      which shall be the number of shares of Common Stock issuable upon exercise
      of
      this Warrant immediately after the adjustment described in clause (A)
      above.

     

    For
      purposes of the foregoing, the aggregate consideration receivable by the Company
      in connection with the issuance of such shares of Common Stock or convertible
      securities shall be deemed to be equal to the sum of the net offering price
      (including the Fair Market Value of any non-cash consideration and after
      deduction of any related expenses payable to third parties) of all such
      securities plus the minimum aggregate amount, if any, payable upon exercise
      or
      conversion of any such convertible securities into shares of Common Stock;
      and
“Permitted
      Transactions”
shall
      mean issuances (i) as consideration for or to fund the acquisition of businesses
      and/or related assets, (ii) in connection with employee benefit plans and
      compensation related arrangements in the ordinary course and consistent with
      past practice approved by the Board of Directors, (iii) in connection with
      a
      public or broadly marketed offering and sale of Common Stock or convertible
      securities for cash conducted by the Company or its affiliates pursuant to
      registration under the Securities Act or Rule 144A thereunder on a basis
      consistent with capital raising transactions by comparable financial
      institutions and (iv) in connection with the exercise of preemptive rights
      on
      terms existing as of the Issue Date. Any adjustment made pursuant to this
      Section 13(B) shall become effective immediately upon the date of such
      issuance.

     

    (C) Other
      Distributions.
      In case
      the Company shall fix a record date for the making of a distribution to all
      holders of shares of its Common Stock of securities, evidences of indebtedness,
      assets, cash, rights or warrants (excluding Ordinary Cash Dividends, dividends
      of its Common Stock and other dividends or distributions referred to in Section
      13(A)), in each such case, the Exercise Price in effect prior to such record
      date shall be reduced immediately thereafter to the price determined by
      multiplying the Exercise Price in effect immediately prior to the reduction
      by
      the quotient of (x) the Market Price of the Common Stock on the last trading
      day
      preceding the first date on which the Common Stock trades regular way on the
      principal national securities exchange on which the Common Stock is listed
      or
      admitted to trading without the right to receive such distribution, minus the
      amount of cash and/or the Fair Market Value of the securities, evidences of
      indebtedness, assets, rights or warrants to be so distributed in respect of
      one
      share of Common Stock (such amount and/or Fair Market Value, the “Per
      Share Fair Market Value”)
      divided by (y) such Market Price on such date specified in clause (x); such
      adjustment shall be made successively whenever such a record date is fixed.
      In
      such event, the number of Shares issuable upon the exercise of this Warrant
      shall be increased to the number obtained by dividing (x) the product of (1)
      the
      number of Shares issuable upon the exercise of this Warrant before such
      adjustment, and (2) the Exercise Price in effect immediately prior to the
      distribution giving rise to this adjustment by (y) the new Exercise Price
      determined in accordance with the immediately preceding sentence. In the case
      of
      adjustment for a cash dividend that is, or is coincident with, a regular
      quarterly cash dividend, the Per Share Fair Market Value would be reduced by
      the
      per share amount of the portion of the cash dividend that would constitute
      an
      Ordinary Cash Dividend. In the event that such distribution is not so made,
      the
      Exercise Price and the number of Shares issuable upon exercise of this Warrant
      then in effect shall be readjusted, effective as of the date when the Board
      of
      Directors determines not to distribute such shares, evidences of indebtedness,
      assets, rights, cash or warrants, as the case may be, to the Exercise Price
      that
      would then be in effect and the number of Shares that would then be issuable
      upon exercise of this Warrant if such record date had not been
      fixed.

    
      
         

      

      
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    (D) Certain
      Repurchases of Common Stock.
      In case
      the Company effects a Pro Rata Repurchase of Common Stock, then the Exercise
      Price shall be reduced to the price determined by multiplying the Exercise
      Price
      in effect immediately prior to the Effective Date of such Pro Rata Repurchase
      by
      a fraction of which the numerator shall be (i) the product of (x) the number
      of
      shares of Common Stock outstanding immediately before such Pro Rata Repurchase
      and (y) the Market Price of a share of Common Stock on the trading day
      immediately preceding the first public announcement by the Company or any of
      its
      Affiliates of the intent to effect such Pro Rata Repurchase, minus (ii) the
      aggregate purchase price of the Pro Rata Repurchase, and of which the
      denominator shall be the product of (i) the number of shares of Common Stock
      outstanding immediately prior to such Pro Rata Repurchase minus the number
      of
      shares of Common Stock so repurchased and (ii) the Market Price per share of
      Common Stock on the trading day immediately preceding the first public
      announcement by the Company or any of its Affiliates of the intent to effect
      such Pro Rata Repurchase. In such event, the number of shares of Common Stock
      issuable upon the exercise of this Warrant shall be increased to the number
      obtained by dividing (x) the product of (1) the number of Shares issuable upon
      the exercise of this Warrant before such adjustment, and (2) the Exercise Price
      in effect immediately prior to the Pro Rata Repurchase giving rise to this
      adjustment by (y) the new Exercise Price determined in accordance with the
      immediately preceding sentence. For the avoidance of doubt, no increase to
      the
      Exercise Price or decrease in the number of Shares issuable upon exercise of
      this Warrant shall be made pursuant to this Section 13(D).

     

    (E) Business
      Combinations.
      In case
      of any Business Combination or reclassification of Common Stock (other than
      a
      reclassification of Common Stock referred to in Section 13(A)), the
      Warrantholder’ s right to receive Shares upon exercise of this Warrant shall be
      converted into the right to exercise this Warrant to acquire the number of
      shares of stock or other securities or property (including cash) which the
      Common Stock issuable (at the time of such Business Combination or
      reclassification) upon exercise of this Warrant immediately prior to such
      Business Combination or reclassification would have been entitled to receive
      upon consummation of such Business Combination or reclassification; and in
      any
      such case, if necessary, the provisions set forth herein with respect to the
      rights and interests thereafter of the Warrantholder shall be appropriately
      adjusted so as to be applicable, as nearly as may reasonably be, to the
      Warrantholder’ s right to exercise this Warrant in exchange for any shares of
      stock or other securities or property pursuant to this paragraph. In determining
      the kind and amount of stock, securities or the property receivable upon
      exercise of this Warrant following the consummation of such Business
      Combination, if the holders of Common Stock have the right to elect the kind
      or
      amount of consideration receivable upon consummation of such Business
      Combination, then the consideration that the Warrantholder shall be entitled
      to
      receive upon exercise shall be deemed to be the types and amounts of
      consideration received by the majority of all holders of the shares of common
      stock that affirmatively make an election (or of all such holders if none make
      an election).

     

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

    (F) Rounding
      of Calculations; Minimum Adjustments.
      All
      calculations under this Section 13 shall be made to the nearest one-tenth
      (1/10th) of a cent or to the nearest one-hundredth (1/100th) of a share, as
      the
      case may be. Any provision of this Section 13 to the contrary notwithstanding,
      no adjustment in the Exercise Price or the number of Shares into which this
      Warrant is exercisable shall be made if the amount of such adjustment would
      be
      less than $0.01 or one-tenth (1/10th) of a share of Common Stock, but any such
      amount shall be carried forward and an adjustment with respect thereto shall
      be
      made at the time of and together with any subsequent adjustment which, together
      with such amount and any other amount or amounts so carried forward, shall
      aggregate $0.01 or 1/10th of a share of Common Stock, or more.

     

    (G) Timing
      of Issuance of Additional Common Stock Upon Certain Adjustments.
      In any
      case in which the provisions of this Section 13 shall require that an adjustment
      shall become effective immediately after a record date for an event, the Company
      may defer until the occurrence of such event (i) issuing to the Warrantholder
      of
      this Warrant exercised after such record date and before the occurrence of
      such
      event the additional shares of Common Stock issuable upon such exercise by
      reason of the adjustment required by such event over and above the shares of
      Common Stock issuable upon such exercise before giving effect to such adjustment
      and (ii) paying to such Warrantholder any amount of cash in lieu of a fractional
      share of Common Stock; provided,
      however,
      that
      the Company upon request shall deliver to such Warrantholder a due bill or
      other
      appropriate instrument evidencing such Warrantholder’s right to receive such
      additional shares, and such cash, upon the occurrence of the event requiring
      such adjustment.

     

    (H) Completion
      of Qualified Equity Offering.
      In the
      event the Company (or any successor by Business Combination) completes one
      or
      more Qualified Equity Offerings on or prior to December 31, 2009 that result
      in
      the Company (or any such successor ) receiving aggregate gross proceeds of
      not
      less than 100% of the aggregate liquidation preference of the Preferred Shares
      (and any preferred stock issued by any such successor to the Original
      Warrantholder under the CPP), the number of shares of Common Stock underlying
      the portion of this Warrant then held by the Original Warrantholder shall be
      thereafter reduced by a number of shares of Common Stock equal to the product
      of
      (i) 0.5 and (ii) the number of shares underlying the Warrant on the Issue Date
      (adjusted to take into account all other theretofore made adjustments pursuant
      to this Section 13).

     

    
      
         

      

      
        11

        
          

        

      

      
         

      

    

    (I) Other
      Events.
      For so
      long as the Original Warrantholder holds this Warrant or any portion thereof,
      if
      any event occurs as to which the provisions of this Section 13 are not strictly
      applicable or, if strictly applicable, would not, in the good faith judgment
      of
      the Board of Directors of the Company, fairly and adequately protect the
      purchase rights of the Warrants in accordance with the essential intent and
      principles of such provisions, then the Board of Directors shall make such
      adjustments in the application of such provisions, in accordance with such
      essential intent and principles, as shall be reasonably necessary, in the good
      faith opinion of the Board of Directors, to protect such purchase rights as
      aforesaid. The Exercise Price or the number of Shares into which this Warrant
      is
      exercisable shall not be adjusted in the event of a change in the par value
      of
      the Common Stock or a change in the jurisdiction of incorporation of the
      Company.

     

    (J) Statement
      Regarding Adjustments.
      Whenever the Exercise Price or the number of Shares into which this Warrant
      is
      exercisable shall be adjusted as provided in Section 13, the Company shall
      forthwith file at the principal office of the Company a statement showing in
      reasonable detail the facts requiring such adjustment and the Exercise Price
      that shall be in effect and the number of Shares into which this Warrant shall
      be exercisable after such adjustment, and the Company shall also cause a copy
      of
      such statement to be sent by mail, first class postage prepaid, to each
      Warrantholder at the address appearing in the Company’s records.

     

    (K) Notice
      of Adjustment Event.
      In the
      event that the Company shall propose to take any action of the type described
      in
      this Section 13 (but only if the action of the type described in this Section
      13
      would result in an adjustment in the Exercise Price or the number of Shares
      into
      which this Warrant is exercisable or a change in the type of securities or
      property to be delivered upon exercise of this Warrant), the Company shall
      give
      notice to the Warrantholder, in the manner set forth in Section 13(J), which
      notice shall specify the record date, if any, with respect to any such action
      and the approximate date on which such action is to take place. Such notice
      shall also set forth the facts with respect thereto as shall be reasonably
      necessary to indicate the effect on the Exercise Price and the number, kind
      or
      class of shares or other securities or property which shall be deliverable
      upon
      exercise of this Warrant. In the case of any action which would require the
      fixing of a record date, such notice shall be given at least 10 days prior
      to
      the date so fixed, and in case of all other action, such notice shall be given
      at least 15 days prior to the taking of such proposed action. Failure to give
      such notice, or any defect therein, shall not affect the legality or validity
      of
      any such action.

     

    (L) Proceedings
      Prior to Any Action Requiring Adjustment.
      As a
      condition precedent to the taking of any action which would require an
      adjustment pursuant to this Section 13, the Company shall take any action which
      may be necessary, including obtaining regulatory, New York Stock Exchange,
      NASDAQ Stock Market or
      other
      applicable national securities exchange or
      stockholder approvals or exemptions, in order that the Company may thereafter
      validly and legally issue as fully paid and nonassessable all shares of Common
      Stock that the Warrantholder is entitled to receive upon exercise of this
      Warrant pursuant to this Section 13.

     

    
      
         

      

      
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    (M) Adjustment
      Rules.
      Any
      adjustments pursuant to this Section 13 shall be made successively whenever
      an
      event referred to herein shall occur. If an adjustment in Exercise Price made
      hereunder would reduce the Exercise Price to an amount below par value of the
      Common Stock, then such adjustment in Exercise Price made hereunder shall reduce
      the Exercise Price to the par value of the Common Stock.

     

    14. Exchange.
      At any
      time following the date on which the shares of Common Stock of the Company
      are
      no longer listed or admitted to trading on a national securities exchange (other
      than in connection with any Business Combination), the Original Warrantholder
      may cause the Company to exchange all or a portion of this Warrant for an
      economic interest (to be determined by the Original Warrantholder after
      consultation with the Company) of the Company classified as permanent equity
      under U.S. GAAP having a value equal to the Fair Market Value of the portion
      of
      the Warrant so exchanged. The Original Warrantholder shall calculate any Fair
      Market Value required to be calculated pursuant to this Section 14, which shall
      not be subject to the Appraisal Procedure.

     

    15. No
      Impairment.
      The
      Company will not, by amendment of its Charter or through any reorganization,
      transfer of assets, consolidation, merger, dissolution, issue or sale of
      securities or any other voluntary action, avoid or seek to avoid the observance
      or performance of any of the terms to be observed or performed hereunder by
      the
      Company, but will at all times in good faith assist in the carrying out of
      all
      the provisions of this Warrant and in taking of all such action as may be
      necessary or appropriate in order to protect the rights of the
      Warrantholder.

     

    16. Governing
      Law.
      This
      Warrant will be governed by and construed in accordance with the federal law
      of
      the United States if and to the extent such law is applicable, and otherwise
      in
      accordance with the laws of the State of New York applicable to contracts made
      and to be performed entirely within such State. Each of the Company and the
      Warrantholder agrees (a) to submit to the exclusive jurisdiction and venue
      of
      the United States District Court for the District of Columbia for any civil
      action, suit or proceeding arising out of or relating to this Warrant or the
      transactions contemplated hereby, and (b) that notice may be served upon the
      Company at the address in Section 20 below and upon the Warrantholder at the
      address for the Warrantholder set forth in the registry maintained by the
      Company pursuant to Section 9 hereof. To the extent permitted by applicable
      law,
      each of the Company and the Warrantholder hereby unconditionally waives trial
      by
      jury in any civil legal action or proceeding relating to the Warrant or the
      transactions contemplated hereby or thereby.

     

    17. Binding
      Effect.
      This
      Warrant shall be binding upon any successors or assigns of the
      Company.

     

    18. Amendments.
      This
      Warrant may be amended and the observance of any term of this Warrant may be
      waived only with the written consent of the Company and the
      Warrantholder.

     

    19. Prohibited
      Actions.
      The
      Company agrees that it will not take any action which would entitle the
      Warrantholder to an adjustment of the Exercise Price if the total number of
      shares of Common Stock issuable after such action upon exercise of this Warrant,
      together with all shares of Common Stock then outstanding and all shares of
      Common Stock then issuable upon the exercise of all outstanding options,
      warrants, conversion and other rights, would exceed the total number of shares
      of Common Stock then authorized by its Charter.

     

    
      
         

      

      
        13

        
          

        

      

      
         

      

    

     

    20. Notices.
      Any
      notice, request, instruction or other document to be given hereunder by any
      party to the other will be in writing and will be deemed to have been duly
      given
      (a) on the date of delivery if delivered personally, or by facsimile, upon
      confirmation of receipt, or (b) on the second business day following the date
      of
      dispatch if delivered by a recognized next day courier service. All notices
      hereunder shall be delivered as set forth in Item 8 of Schedule A hereto, or
      pursuant to such other instructions as may be designated in writing by the
      party
      to receive such notice.

     

    21. Entire
      Agreement.
      This
      Warrant, the forms attached hereto and Schedule A hereto (the terms of which
      are
      incorporated by reference herein), and the Letter Agreement (including all
      documents incorporated therein), contain the entire agreement between the
      parties with respect to the subject matter hereof and supersede all prior and
      contemporaneous arrangements or undertakings with respect thereto.

     

     

    [Remainder
      of page intentionally left blank]

     

    
 

    
      
         

      

      
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    [Form
      of Notice of Exercise] 

    Date:
      _______

     

    TO: Sandy
      Spring Bancorp, Inc.

     

    RE: Election
      to Purchase Common Stock

     

    The
      undersigned, pursuant to the provisions set forth in the attached Warrant,
      hereby agrees to subscribe for and purchase the number of shares of the Common
      Stock set forth below covered by such Warrant. The undersigned, in accordance
      with Section 3 of the Warrant, hereby agrees to pay the aggregate Exercise
      Price
      for such shares of Common Stock in the manner set forth below. A new warrant
      evidencing the remaining shares of Common Stock covered by such Warrant, but
      not
      yet subscribed for and purchased, if any, should be issued in the name set
      forth
      below.

     

    Number
      of
      Shares of Common Stock _______________________

     

    Method
      of
      Payment of Exercise Price (note if cashless exercise pursuant to Section 3(i)
      of
      the Warrant or cash exercise pursuant to Section 3(ii) of the Warrant, with
      consent of the Company and the Warrantholder) _______________________

     

    Aggregate
      Exercise Price: _______________________

     

    Holder:
      _______________________

    By:
       _______________________

    Name:
       _______________________

    Title: _______________________

    


     

    
      
         

      

      
        15

        
          

        

      

      
         

      

    


    IN
      WITNESS WHEREOF, the Company has caused this Warrant to be duly executed by
      a
      duly authorized officer. 

     

    Dated: December
      5, 2008

     

    
      	
              SANDY
                SPRING BANCORP, INC.

            
	 	 
	 	 
	
              By:

            	
              /s/
                Daniel J. Schrider

            
	 	
              Name:
                Daniel J. Schrider

            
	 	
              Title:
                President

            
	 	 
	 	 
	Attest:
	 	 
	 	 
	
              By:

            	
              /s/
                Ronald E. Kuykendall

            
	 	
              Name:
                Ronald E. Kuykendall

            
	 	
              Title:
                Executive Vice President, General Counsel and
                Secretary

            


    

    


    


    [Signature
      Page to Warrant]

     

    


    
      
         

      

      
        16

        
          

        

      

      
         

      

    


    SCHEDULE
      A

    


    Item
      1

    Name:
      Sandy Spring Bancorp, Inc.

    Corporate
      or other organizational form: corporation

    Jurisdiction
      of organization: Maryland

    


    Item
      2

    Exercise
      Price: $19.13

    


    Item
      3

    Issue
      Date: December 5, 2008

    


    Item
      4

    Amount
      of
      last dividend declared prior to the Issue Date: $0.24

    


    Item
      5

    Date
      of
      Letter Agreement between the Company and the United States Department of the
      Treasury: December 5, 2008

    


    Item
      6

    Number
      of
      shares of Common Stock: 651,547

    


    Item
      7

    Company’s
      address: 17801
      Georgia Avenue, Olney, MD 20832 

    


    Item
      8

    Notice
      information:

    


    Sandy
      Spring Bancorp, Inc.

    17801
      Georgia Avenue

    Olney,
      MD
      20832 

    Attention:
      General Counsel

    Facsimile:
      301-774-8434