Document:

Exhibit 10.1

 

LYDALL, INC.

ANNUAL INCENTIVE PERFORMANCE PROGRAM

 

(Effective January 1, 2012)

 

 

 

This Annual Incentive Performance
Program (this “AIP Program”) sets forth the terms and conditions under which designated employees of Lydall, Inc. and
its subsidiaries (collectively, “Lydall” or the “Company”) may receive cash incentive payments based on
the annual financial performance of the Company.

 

		1.	Purpose. The purpose of this AIP Program is to retain and incentivize Participating Employees
(as defined below) by providing annual cash bonus opportunities to reward them when specified performance metrics are achieved.

 

		2.	Effective Date. This AIP Program is effective as of January 1, 2012 and shall continue indefinitely
until terminated by the Compensation Committee (the “Compensation Committee”) of the Board of Directors (the “Board”)
of Lydall, Inc.

 

		3.	Eligibility. Only Participating Employees are eligible to participate in this AIP Program.
“Participating Employees” are officers of Lydall, Inc. and Senior Vice Presidents of Lydall subsidiaries (“Group
A Participating Employees”) and other employees of Lydall who are designated by the Chief Executive Officer (“Group
B Participating Employees”).

 

		4.	Program Elements. The following elements and defined terms apply to this AIP Program:

 

		a.	Program Year. A “Program Year” is the calendar year.

 

		b.	Base Salary. “Base Salary” is the Participating Employee’s regular earnings
as indicated on his or her final paycheck of the Program Year, plus any separately recorded holiday and vacation pay. Base Salary
is reduced by earnings attributed to any leave of absence.

 

		c.	Target Bonus Percentage. “Target Bonus Percentage” is a specified percentage
of a Participating Employee’s Base Salary that is assigned as part of his or her compensation package. Target Bonus Percentages
may change from year-to-year based upon approval of the Chief Executive Officer or, in the case of the Chief Executive Officer
and his/her direct reports, based upon approval by the Compensation Committee.

 

		d.	Target Bonus Amount. “Target Bonus Amount” for each Participating Employee is
the product obtained by multiplying his or her Base Salary by his or her Target Bonus Percentage.

 

		e.	Performance Metrics. “Performance Metrics” are the following designated measures
of financial performance for any given Program Year for Lydall on a consolidated basis or for a Business Unit (as defined below):

 

		(i)	Operating Income (or “OI”) — defined as operating income from continuing operations.

 

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		(ii)	Free Cash Flow (or “FCF”)
— defined as Operating Income, plus depreciation/amortization, plus/minus changes in working capital, minus capital
spending. For purposes of the foregoing, working capital is defined as trade accounts receivable, plus inventory minus accounts
payable, provided that, in making such calculation, the accounts payable opening balance will be calculated as the average of
the month-ending balances for September, October, November and December for the preceding Program Year and the accounts payable
closing balance will be calculated as the average of the month-ending balances for September, October, November and December for
the current Program Year.

 

		(iii)	Gross Margin (or “GM”) — defined as the percentage resulting from: (A)
the excess, if any, of net sales from continuing operations over cost of sales from continuing operations; (B) divided by net sales
from continuing operations.

 

 

		f.	Performance Targets. “Performance Targets” are the specific measures of financial
performance (expressed with reference to consolidated and Business Unit Performance Metrics) that are established and approved
by the Compensation Committee for each Program Year.

 

		g.	Business Units. Performance Targets may be established for such business units of the Company
as may be determined by the Compensation Committee from time-to-time (each, a “Business Unit” and, collectively, the
“Business Units”).

 

 

		h.	Applicability and Relative Weight of Performance Metrics. The applicable Performance Metrics
and the relative weight of each such Performance Metric (the “Performance Metric Weight”) for the respective Participating
Employees are set forth below:

 

	Participating
    Employee 

Employed At:	Consolidated
    OI	Business
    Unit OI	Consolidated
    FCF	Business
    Unit FCF	Consolidated
    GM  	Business
    Unit GM
	Corporate
    Headquarters*	50%	N/A	25%	N/A	25%	N/A
	Business
    Unit*	N/A	50%	N/A	25%	N/A	25%

*
Includes both Group A and Group B Participating Employees.

 

		5.	AIP Program Operation. This AIP Program shall operate as set forth below: 

 

		a.	Establishment of Performance Targets. No later than March 31 of each Program Year, the Compensation
Committee shall establish the consolidated and Business Unit Performance Targets for such Program Year. All Performance Targets
and actual performance with respect to those targets are subject to adjustment by the Compensation Committee, in its discretion,
if determined necessary or appropriate to adjust for the effects of extraordinary items, unusual or non-recurring events, changes
in accounting principles, realized investment gains or losses, discontinued operations, acquisitions, divestitures, material restructuring
or impairment charges and other similar items.

 

		b.	Determination of Cash Bonus Factors for OI and FCF. Cash bonus awards with respect to the
OI and FCF Performance Metrics are determined based upon the achievement of the Performance Targets with reference to the applicable
cash bonus factor set forth in the following table (hereinafter, the “OI and FCF Cash Bonus Factor”):

 

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	% of Performance Target Achieved for 

OI and FCF	OI and FCF Cash Bonus Factor
	80 or less	0
	81	.05
	82	.10
	83	.15
	84	.20
	85	.25
	86	.30
	87	.35
	88	.40
	89	.45
	90	.50
	91	.55
	92	.60
	93	.65
	94	.70
	95	.75
	96	.80
	97	.85
	98	.90
	99	.95
	100	1.00

  

		c.	Determination of Cash Bonus Factor for GM Achieved
At Or Below Target. Cash bonus awards with respect to the GM Performance Metric for performance achieved at or below the Performance
Target are determined on a linear basis upon the achievement of the Performance Targets with reference to the applicable cash
bonus factor set forth in the following table (hereinafter, the “GM Cash Bonus Factor”):

  

	GM Basis Points Below Relative to Target	GM Cash Bonus Factor (for both Group A 

and Group B)
	-100 or less	0
	-90	.10
	-80	.20
	-70	.30
	-60	.40
	-50	.50
	-40	.60
	-30	.70
	-20	.80
	-10	.90
	Target	1.00

 

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		d.	Determination of Actual Financial Performance. As soon as practicable following the completion
of each Program Year and the availability of Lydall’s audited consolidated financial statements for such Program Year, the
Compensation Committee shall: (i) determine the consolidated and Business Unit Operating Income, Free Cash Flow and Gross Margin
achieved for the Program Year (each “Performance Metric Achieved”); and (ii) certify in writing the extent to which
the Performance Target for each has been achieved, if at all (such certification is referred to as the “Committee Certification”).
If, in determining and certifying the achievement of any Performance Targets for the Program Year, the Compensation Committee determines
that it is necessary or appropriate to make adjustments by virtue of the authority set forth in paragraph (a) above, the Committee
Certification shall include a brief statement setting forth the amount of the adjustment and the reasons therefor.

 

		e.	Determination of Cash Bonus Amount. Each Participating Employee shall be entitled to receive
a cash bonus equal to the product of his or her: (i) Target Bonus Amount, (ii) Performance Metric Weight for the applicable Performance
Metric, and (iii) Cash Bonus Factor for the applicable Performance Metric Achieved (as set forth in Committee Certification) for
the applicable Program Year.

 

		f.	Exceeding Consolidated Performance Targets for OI and FCF. If Lydall achieves financial
results in excess of the consolidated OI and FCF Performance Targets for a given Program Year, the following shall apply:

 

		(i)	Creation of Additional Bonus Pools and Eligibility to Participate. For the consolidated
OI and FCF Performance Metrics, thirty percent of the amount, if any, which the consolidated Performance Metric Achieved (as set
forth in the Committee Certification) exceeds the corresponding consolidated Performance Target shall be allocated to a separate
bonus pool (each, an “Additional Bonus Pool” and, collectively, the “Additional Bonus Pools”). All Participating
Employees employed at corporate headquarters are eligible to participate in each of the Additional Bonus Pools. Participating Employees
employed by a Business Unit are eligible to participate in an Additional Bonus Pool only if their respective Business Unit achieves
at least 100% of the Business Unit Performance Target corresponding to the respective Additional Bonus Pool for the Program Year.

 

		(ii)	Distribution of Additional Bonus Pool Amounts. Subject to the limitation set forth in Section
5(e)(iii) below, amounts allocated to each Additional Bonus Pool shall be distributed as follows: each Participating Employee eligible
to share in the respective Additional Bonus Pool shall receive a payment determined by the ratio of such Participating Employee’s
Target Bonus Amount with respect to the relevant Performance Metric (whether consolidated or Business Unit) to the aggregate Target
Bonus Amounts with respect to such Performance Metric (both consolidated and Business Unit) for all Participating Employees eligible
to share in each such Additional Bonus Pool.

 

		(iii)	Limitation on Payments from Each Additional Bonus Pool. Notwithstanding any other provision
of this AIP Program, the following limitations shall apply with respect to the amount of the additional bonus that may be paid
to any Participating Employee from any Additional Bonus Pool: (A) the amount of any additional bonus paid to any Group A Participating
Employee from any Additional Bonus Pool shall not exceed 100% of the Target Bonus Amount of such Group A Participating Employee
for the Performance Metric corresponding to each such pool; and (B) the amount of any additional bonus paid to any Group B Participating
Employee from any Additional Bonus Pool shall not exceed 50% of the Target Bonus Amount of such Group B Participating Employee
for the Performance Metric corresponding to each such pool.

 

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		g.	Exceeding Consolidated Performance Targets for GM. If Lydall achieves financial results
in excess of the consolidated GM Performance Target for a given Program Year, cash bonus awards with respect to the GM Performance
Metric are determined on a linear basis with reference to the GM Cash Bonus Factor set forth in the following table, provided that
Participating Employees employed by a Business Unit are eligible to receive a GM Cash Bonus Factor in excess of 1.00 only if their
respective Business Unit achieves its GM Performance Target for the Program Year.

 

	GM Basis Points Below Relative to Target	GM Cash Bonus Factor
	 	Group A Participating Employees	Group B Participating Employees
	+10	1.025	1.0125
	+20	1.05	1.025
	+40	1.10	1.05
	+80	1.20	1.10
	+120	1.30	1.15
	+160	1.40	1.20
	+200	1.50	1.25
	+240	1.60	1.30
	+280	1.70	1.35
	+320	1.80	1.40
	+360	1.90	1.45
	+400 (or above)	2.00	1.50

 

		6.	General Terms and Conditions

 

		a.	Plan Administration. The Compensation Committee shall be responsible for overseeing the
administration and interpretation of this AIP Program and for overseeing the implementation of its provisions. The Compensation
Committee reserves the right, in its sole discretion, to modify, amend or terminate this AIP Program at any time. All decisions
of the Compensation Committee regarding the interpretation, construction, implementation and administration of this AIP Program
shall be final and binding.

 

		b.	Repayment of Bonus.  The
following shall apply with respect to the repayment of bonuses paid under this AIP Program: 

 

		(i)	To the extent not required to be repaid by the other provisions to this Section 6 (b), if, at any
time, the Compensation Committee, in its sole discretion, determines that any action or omission by a Participating Employee constituted
(i) wrongdoing that contributed to any material misstatement in or omission from any report or statement filed by the Company with
the U.S. Securities and Exchange Commission; (ii) intentional misconduct or gross misconduct; (iii) a breach of a fiduciary duty
to the Company or its shareholders; or (iv) fraud, then in each such case, commencing with the first Program Year during which
such action or omission occurred, the Participating Employee committing such act or omission shall be terminated from participation
in this AIP Program and such Participating Employee shall immediately repay to the Company, upon notice to the Participating Employee
by the Company, up to 100% (as determined by the Company) of the gross amount paid to the Participating Employee pursuant to this
AIP Program during and after such Program Year.

 

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		(ii)	To the extent not required to be repaid by the other provisions to this Section 6 (b), any bonus
paid pursuant to this AIP Program also shall be subject to recoupment in accordance with the applicable provisions of any law,
government regulation or stock exchange listing requirement (and any policy adopted by the Company pursuant to any such law, government
regulation or stock exchange listing requirement).

 

Additionally, at the
discretion of the Compensation Committee, if the Company is required to restate any of its financial statements filed with the
U.S. Securities and Exchange Commission, other than restatements due solely to facts external to the Company and its affiliates
such as a change in accounting principles or a change in securities laws or regulations with retroactive effect, Participating
Employees may be required to disgorge and repay to the Company any bonus paid pursuant to this AIP Program to the extent such bonus
exceeded the amount that would have been paid for such Program Year if it had been based upon the restated financial statements.

 

		c.	Payment. All cash bonuses shall be paid after issuance of the Committee Certification.

 

		d.	Active Employment Condition. To be eligible to receive a bonus payout under this AIP Program,
a Participating Employee must be an employee in good standing as of the date the cash bonus is actually paid by Lydall, except
as otherwise specifically agreed to by the Board or the Compensation Committee.

 

		e.	No Guarantee That Cash Bonuses Will Be Paid. Lydall and the Compensation Committee reserve
the right to withhold, reduce or deny payment of a cash bonus otherwise payable under the AIP Program subject to any limitations
that may be imposed by applicable law.

 

		f.	Not an ERISA Regulated Program. This is not an ERISA regulated program.

 

		g.	Nonassignability. No rights of any Participating
Employee may be sold, exchanged, transferred, assigned, pledged or otherwise disposed of (including through the use of any cash-settled
instrument), either voluntarily or involuntarily by operation of law, other than by will or by the laws of descent and distribution.

		h.	Program Creates No Employment Rights. Nothing
in this AIP Program shall confer upon any Participating Employee a right to continue in the employ of Lydall or affect any right
which Lydall may have to terminate such employment.

 

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		i.	Program Unfunded. This AIP Program is unfunded
and nothing in the program shall be construed to create a trust or to establish or evidence any Participating Employee’s
claim of any right to payment of a cash bonus other than as a general unsecured creditor.

		j.	Governing Law. All rights and obligations under
this AIP Program shall be governed by and construed in accordance with the laws of the State of Delaware, without regard to principles
of conflict of laws.

		k.	Tax Withholding. All payments hereunder shall
be subject to applicable income, employment and other tax withholding as may be required by law.

		l.	Section 409A of the Code. Lydall intends that
cash payments under this AIP Program shall be exempt from Section 409A of the Internal Revenue Code (the “Code”) as
short-term deferrals and shall not constitute “deferred compensation” within the meaning of Section 409A of the Code
(absent a valid deferral election under the terms of another plan or arrangement maintained by Lydall). This AIP Program shall
be interpreted, construed and administered in accordance with the foregoing intent. Notwithstanding the foregoing, Lydall shall
have no liability to any Participating Employee or otherwise if this AIP Program or any cash bonus award paid or payable hereunder
is subject to the additional tax and penalties under Section 409A of the Code.

		m.	No Effect on Benefits. Awards and payments under
this AIP Program shall constitute special incentive payments to the Participating Employee and shall not be required to be taken
into account in computing the amount of salary or compensation of the Participating Employee for the purpose of determining any
contributions to or any benefits under any pension, retirement, profit-sharing, bonus, life insurance, severance or other benefit
plan of Lydall or under any agreement with a Participating Employee, unless Lydall has elected to implement a different arrangement
or practice.

 

    	-7-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
(the “Bank”) and R. Louis Caceres (the “Officer").

 

WITNESSETH:

 

WHEREAS,
the Officer is employed by the Bank as Executive Vice President for Wealth Management, Insurance, Mortgage, and Marketing;
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:

 

R.
Louis Caceres

15801
Thistlebridge Drive

Rockville,
MD 20853

 

		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.

 

    	5

    	 

    
 

 

(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]

 

    	6

    	 

    

 

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/ R. Louis Caceres	 
	 	R. Louis Caceres	 

 

    	7

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