Exhibit 10.29


  


EMPLOYMENT AGREEMENT


 


AGREEMENT made
effective as of July 1, 2014 (this “Agreement”), by and between THE COMMUNITY FINANCIAL CORPORATION, with
its principal place of business at 3035 Leonardtown Road, Waldorf, Maryland 20601 (the “Company”), COMMUNITY BANK
OF THE CHESAPEAKE, a wholly-owned subsidiary of the Company (the “Bank”) and MICHAEL L. MIDDLETON (the “Executive”).


 


WHEREAS, the
Company and the Bank desire to continue to provide for the Executive’s employment by the Company and the Bank.


 


NOW THEREFORE, in
consideration of the mutual covenants contained herein, the Company, the Bank and the Executive agree as follows:


 


1.          EMPLOYMENT.
The Executive shall serve as the Executive Chairman of the Boards of Directors of the Company and the Bank. In such positions,
the Executive shall have the duties, responsibilities, functions, and authority determined and designated from time to time by
the Boards of Directors of the Company and the Bank, including as set forth on Exhibit A to this Agreement. The Executive may also
agree to serve as an officer of one or more affiliates of the Company and the Bank upon such designation. The parties to this Agreement
do not intend for the Executive’s services as Executive Chairman of the Boards of Directors of the Company and the Bank to
have constituted a “separation of service,” as that term is used for purposes of Section 409A of the Internal Revenue
Code of 1986, as amended (the “Code”), from his prior positions with the Company and the Bank.


 


2.          EFFECTIVE
DATE AND TERM. The Company and the Bank agree to employ the Executive under this Agreement for a period of two (2) years beginning
on the date first above written (the “Effective Date”) and ending on the day before the second (2nd) anniversary
of the Effective Date (the “Term of Employment”). The last day of the term, as so extended from time to time, is herein
sometimes referred to as the “Expiration Date.”


 


3.          COMPENSATION
AND BENEFITS. The compensation and benefits payable to the Executive under this Agreement shall be as follows, it being understood
that (i) references to benefits offered by, or to officers of, the Company and the Bank are intended to include benefits offered
by, or to officers of, any affiliate of the Company or the Bank which employs the Executive and (ii) payments or benefits required
to be provided by the Company and the Bank may be provided by an affiliate:


 


3.1           SALARY.
For all services rendered by the Executive to the Company and the Bank, the Executive shall be entitled to receive a base salary
at an annual rate of$321,661, subject to increase from time to time in accordance with the usual practices of the Company and the
Bank with respect to review of compensation of its senior executives. Any increase in the Executive’s base salary shall become
the “base salary” for purposes of this Agreement. The Executive’s base salary shall be payable in periodic installments
in accordance with the Bank’s usual practice for its senior executives.


 


3.2           EMPLOYEE
BENEFITS. The Executive shall also be entitled to participate in any and all employee benefit plans, medical insurance plans,
disability income plans, retirement plans, bonus incentive plans, and other benefit plans from time to time in effect for senior
executives of the Company and the Bank. Such participation shall be subject to (i) the terms of the applicable plan documents,
(ii) generally applicable policies of the Company and the Bank and (iii) the discretion of the Boards of Directors of the Company
or the Bank or any administrative or other committee provided for in, or contemplated by, such plans.


 


3.3           INCENTIVE
COMPENSATION. The Executive shall be eligible to participate in any special incentive compensation or bonus program on such
terms as the Boards of Directors of the Company or the Bank may establish for the Executive’s participation.


 




    	 



    	 



    

 


3.4           BUSINESS
EXPENSES. The Company and the Bank shall provide for, or reimburse, the Executive’s reasonable travel and other business
expenses (including, without limitation, automobile and cellphone expenses) incurred by the Executive in the performance of the
Executive’s duties and responsibilities, subject to such reasonable requirements with respect to substantiation and documentation
as may be specified by the Company and the Bank.


 


3.5           LEAVE.
The Executive shall be entitled to leave (vacation, sick and personal) in accordance with the Company’s and the Bank’s
standard policies for senior executives; provided, however, that the Executive shall receive not less than five (5) weeks vacation
leave during each calendar year.


 


3.6           GENERAL.
Nothing paid to the Executive under any plan, policy or arrangement currently in effect or made available in the future shall be
deemed to be in lieu of other compensation to the Executive as described in this Agreement.


 


3.7           OTHER
EMPLOYEE BENEFITS. The Executive shall be entitled to participate in any compensatory plans, arrangements or programs the Company
or the Bank makes available to their senior executive officers, including, but not limited to, stock compensation programs, supplemental
retirement arrangements, or executive health or life insurance programs, subject to, and on a basis consistent with, the terms
and conditions of such plans, arrangements or programs. The Executive’s participation in such plans, arrangements or programs
shall not be deemed to be in lieu of other compensation to which the Executive is entitled under this Agreement.


 


4.          EXTENT
OF SERVICE. During the Term of Employment, the Executive shall devote at least 30 hours per week on activities related to the
Company and the Bank, as well as his best efforts and business judgment, skill and knowledge to the advancement of the Company’s
and the Bank’s interests and to the discharge of the Executive’s duties and responsibilities hereunder. The Executive
shall not engage in any other business activity, except as may be approved by the Boards of Directors of the Company and the Bank;
provided, however, that nothing herein shall be construed as preventing the Executive from:


 


(a)          investing
the Executive’s assets in such form or manner as shall not require any material services on the Executive’s part in
the operations or affairs of the companies or the other entities in which such investments are made, provided that the Executive
may not own any interest in any entity that competes with the Company or the Bank or any of their affiliates (other than up to
4.9% of the outstanding voting stock of such an entity that is a publicly traded entity); or


 


(b)          serving
on the board of directors of any company not in competition with the Company or the Bank or any of their affiliates, provided that
the Executive shall not render any material services with respect to the operations or affairs of any such company; or


 


(c)          engaging
in religious, charitable or other community or non-profit activities which do not impair the Executive’s ability to fulfill
his duties and responsibilities under this Agreement.


 


5.          TERMINATION
UPON DEATH. In the event of the Executive’s death during the Term of Employment, the Executive’s employment (and
the Term of Employment) shall terminate on the date of the Executive’s death. The Company or the Bank shall pay to the Executive’s
beneficiary, designated in writing to the Company and the Bank prior to the Executive’s death (or to the Executive’s
estate, if the Executive fails to make such designation), the sum of the base salary that would have been paid to the Executive
for the remaining term of the Agreement. The Company or the Bank will make this payment to the beneficiary in a lump sum within
thirty (30) days of the Executive’s death. The Company and the Bank shall also provide the beneficiary with any other compensation
and benefits as may be provided in accordance with the terms and provisions of any applicable plans and programs of the Company
or the Bank in which the Executive participated as of his date of death.


 




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6.          DISCHARGE
FOR CAUSE.


 


6.1           NOTICE
AND DETERMINATION OF CAUSE. The Company or the Bank may terminate the Executive’s employment during the Term of Employment
for Just Cause. A termination shall be deemed to have occurred for Just Cause only if:


 


(a)          the
Boards of Directors of the Company or the Bank, by a separate affirmative vote of at least three-fourths (3⁄4) of the entire
membership, determines that the Executive has (i) engaged in acts of personal dishonesty which have resulted in loss to the Company
or the Bank or their affiliates, (ii) become subject to the entry of a final cease and desist order which results in substantial
loss to the Company or the Bank or their affiliates, (iii) willfully breached the Company’s or the Bank’s code of conduct
and business ethics, or (iv) been disqualified or barred by any governmental or self-regulatory authority from serving in the Executive’s
then-current employment capacity. No act or failure to act on the part of the Executive shall be considered “willful”
unless it is done, or omitted to be done, by the Executive in bad faith or without reasonable belief that the Executive’s
action or omission was in the best interests of the Company or the Bank. Any act or failure to act that is based upon authority
given pursuant to a resolution duly adopted by the Boards of Directors of the Company or the Bank, or upon the advice of legal
counsel for the Company or the Bank, shall be conclusively presumed to be done, or omitted to be done, by the Executive in good
faith and in the best interests of the Company and the Bank; and


 


(b)          at
least ten (10) days prior to the vote contemplated by Section 6.1(a), the Company or the Bank has provided the Executive with notice
of intent of the Company or the Bank to discharge the Executive for Just Cause, detailing with particularity the facts and circumstances
which are alleged to constitute Just Cause (the “Notice of Intent to Discharge”); and


 


(c)          after
the giving of the Notice of Intent to Discharge and before the taking of the votes contemplated by Section 6.1(a), the Executive
(together with the Executive’s legal counsel, if the Executive so desires) is afforded a reasonable opportunity to make both
written and oral presentations before the Boards of Directors for the purpose of refuting the alleged grounds for Just Cause for
the Executive’s discharge; and


 


(d)          after
the vote contemplated by Section 6.1(a), the Company and the Bank have furnished to the Executive a notice of termination which
shall specify the effective date of the Executive’s termination of employment (which shall in no event be earlier than the
date on which such notice is deemed given) and include a copy of a resolution or resolutions adopted by the Boards of Directors
of the Company and the Bank authorizing the termination of the Executive’s employment for Just Cause and stating with particularity
the facts and circumstances found to constitute Just Cause for the Executive’s discharge (the “Final Discharge Notice”).


 




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6.2           SUSPENSION;
FINAL DISCHARGE. Following the giving of a Notice of Intent to Discharge, the Company and the Bank may temporarily suspend
the Executive’s duties and authority and, in such event, may also suspend the payment of salary and other cash compensation,
but not the Executive’s participation in retirement, insurance and other employee benefit plans. If the Executive is discharged
for Just Cause, all payments withheld during the period of suspension shall be deemed forfeited and shall not be payable to the
Executive. If the Company or the Bank does not give a Final Discharge Notice to the Executive within one hundred twenty (120) days
after giving a Notice of Intent to Discharge, the Notice of Intent to Discharge shall be deemed withdrawn and any future action
to discharge the Executive for Cause shall require the giving of a new Notice of Intent to Discharge.


 


6.3           EFFECT
OF TERMINATION. In the event of termination pursuant to this Section 6, the Term of Employment shall terminate and the Company
or the Bank shall pay to the Executive an amount equal to the sum of (i) base salary or other compensation earned through the date
of termination, plus (ii) any other compensation and benefits as may be provided in accordance with the terms and provisions of
any applicable plans and programs, if any, of the Company or the Bank. All other obligations of the Company and the Bank under
this Agreement shall terminate as of the date of termination.


 


7.          TERMINATION
BY THE EXECUTIVE.


 


7.1           TERMINATION
BY THE EXECUTIVE FOR GOOD REASON. 


 


(a)          The
Executive shall be entitled to terminate employment hereunder for or with Good Reason (as defined in Section 7.3). Upon any such
termination, the Executive shall be entitled to receive the benefits set forth in Section 9 of this Agreement. A termination of
employment by the Executive for Good Reason shall be effectuated by giving the Company and the Bank written notice (“Notice
of Termination for Good Reason”) of the termination, setting forth in reasonable detail the specific conduct of the Company
or the Bank that constitutes Good Reason and the specific provision(s) of this Agreement on which the Executive relies. A termination
of employment by the Executive for Good Reason shall be effective on the fifth (5th) business day following the date
when the Notice of Termination for Good Reason is given, unless the notice sets forth a later date (which date shall in no event
be later than thirty (30) days after the notice is given).


 


(b)          The
failure to set forth any fact or circumstance in a Notice of Termination for Good Reason shall not constitute a waiver of the right
to assert, and shall not preclude the Executive from asserting, such fact or circumstance in an attempt to enforce any right under
or provision of this Agreement.


 


7.2           OTHER
VOLUNTARY TERMINATION BY THE EXECUTIVE. During the Term of Employment, the Executive may effect, upon sixty (60) days prior
written notice to the Company and the Bank, a Voluntary Termination of employment hereunder and thereupon the Term of Employment
shall end. A “Voluntary Termination” shall mean a termination of employment by the Executive on the Executive’s
own initiative other than (i) a termination due to death or Disability (as defined in Section 11), (ii) a termination for Good
Reason (as defined in Section 7.3), or (iii) a termination as a result of the normal expiration of the full Term of Employment.
If, during the Term of Employment, the Executive’s employment is terminated due to a Voluntary Termination, the Term of Employment
shall thereupon end and the Company or the Bank shall pay to the Executive an amount equal to the sum of (A) base salary or other
compensation earned through the date of termination, plus (B) any other compensation and benefits as may be provided in accordance
with the terms and provisions of any applicable plans and programs, if any, of the Company and the Bank.


 


7.3           GOOD
REASON. For purposes of this Agreement, the term “Good Reason” shall mean any of the following:


 




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(i)          any
change in the duties, functions or responsibilities of the Executive that is inconsistent in any material and adverse respect with
the Executive’s duties, functions or responsibilities with the Company or the Bank at the Effective Date (including any material
and adverse diminution of such duties, functions or responsibilities);


 


(ii)         a
reduction of the Executive’s base salary other than in connection with an across-the-board reduction in base salary for all
similarly situated employees;


 


(iii)         the
relocation of the Executive’s office to a location more than thirty (30) miles from its location at the Effective Date; or


 


(iv)        the
taking of any action by the Company or the Bank or successors which would materially and adversely affect the Executive’s
overall compensation and benefits package, excluding (A) changes to the compensation and benefits package made on a non-discriminatory
basis to substantially all similarly-situated employees and (B) any isolated, insubstantial and inadvertent action not taken in
bad faith and which is remedied reasonably promptly after receipt of written notice thereof given by the Executive.


 


(v)         failure
to nominate or reelect the Executive as a member of the Boards of Directors of the Company or of the Bank.


 


(vi)        the
liquidation or complete dissolution of the Company or the Bank; or


 


(vii)       a
material breach of this Agreement by the Company or the Bank.


 


Notwithstanding anything in this
Agreement to the contrary, during the twenty-four (24) month period beginning on the effective date of a Change in Control (as
defined in Section 7.4, and continuing through the second anniversary of such date (but not beyond the Expiration Date), the Executive
may voluntarily terminate his employment for any reason and such termination shall constitute termination With Good Reason.


 


7.4           CHANGE
IN CONTROL. For purposes of this Agreement, a “Change in Control” shall be deemed to have occurred in any of the
following events:


 


(i)          individuals
who, on the date of this Agreement, constitute the Board of Directors of the Company (the “Incumbent Directors”) cease
for any reason to constitute at least half of the Board of Directors of the Company, provided that any person becoming a director
subsequent to such time, whose election or nomination for election was approved by a vote of at least two-thirds (2/3) of the Incumbent
Directors then on the Board of Directors of the Company (either by a specific vote or by approval of the proxy statement of the
Company in which such person is named as a nominee for director, without written objection to such nomination) shall be an Incumbent
Director; provided, however, that no individual initially elected or nominated as a director of the Company as a result of an actual
or threatened election contest with respect to directors or as a result of any other actual or threatened solicitation of proxies
or consents by or on behalf of any person other than the Board of Directors of the Company shall be deemed to be an Incumbent Director;


 




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(ii)         any
“person” (as such term is defined in Section 3(a)(9) of the Securities Exchange Act of 1934 (the “Exchange Act”)
and as used in Sections 13(d)(3) and 14(d)(2) of the Exchange Act) is or becomes a “beneficial owner” (as defined in
Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 25% or more of the combined
voting power of the Company’s then outstanding securities eligible to vote for the election of the Board of Directors of
the Company (the “Company Voting Securities”); provided, however, that the event described in this paragraph (ii) shall
not be deemed to be a Change in Control by virtue of any of the following acquisitions: (A) by the Company or any subsidiary, (B)
by any employee benefit plan (or related trust) sponsored or maintained by the Company or any subsidiary, (C) by any underwriter
temporarily holding securities pursuant to an offering of such securities or (D) a transaction (other than one described in (iii) below)
in which Company Voting Securities are acquired from the Company, if a majority of the Incumbent Directors approve a resolution
providing expressly that the acquisition pursuant to this clause (D) does not constitute a Change in Control under this paragraph
(ii);


 


(iii)        the
consummation of a merger, consolidation, statutory share exchange or similar form of corporate transaction involving the Company
or any of its subsidiaries that requires the approval of the Company’s stockholders, whether for such transaction or the
issuance of securities in the transaction (a “Business Combination”), unless immediately following such Business Combination:
(A) at least 50% of the total voting power of (x) the corporation resulting from such Business Combination (the “Surviving
Corporation”), or (y) if applicable, the ultimate parent corporation that directly or indirectly has beneficial ownership
of 100% of the voting securities eligible to elect directors of the Surviving Corporation (the “Parent Corporation”),
is represented by the Company Voting Securities that were outstanding immediately prior to such Business Combination (or, if applicable,
is represented by shares into which such Company Voting Securities were converted pursuant to such Business Combination), and such
voting power among (and only among) the holders thereof is in substantially the same proportion as the voting power of such Company
Voting Securities among the holders thereof immediately prior to the Business Combination, (B) no person (other than any employee
benefit plan (or related trust) sponsored or maintained by the Surviving Corporation or the Parent Corporation) is or becomes the
beneficial owner, directly or indirectly, of 25% or more of the total voting power of the outstanding voting securities eligible
to elect directors of the Parent Corporation (or, if there is no Parent Corporation, the Surviving Corporation) and (C) at least
50% of the members of the board of directors of the Parent Corporation (or, if there is no Parent Corporation, the Surviving Corporation)
following the consummation of the Business Combination were Incumbent Directors at the time of the Company Board’s approval
of the execution of the initial agreement providing for such Business Combination; or


 


(iv)        the
stockholders of the Company approve a plan of complete liquidation or dissolution of the Company or a sale of all or substantially
all of the Company’s assets.


 


Notwithstanding the foregoing,
a Change in Control shall not be deemed to occur solely because any person acquires beneficial ownership of more than 25% of Company
Voting Securities as a result of the acquisition of Company Voting Securities by the Company which reduces the number of Company
Voting Securities outstanding; provided, that if after such acquisition by the Company such person becomes the beneficial owner
of additional Company Voting Securities that increases the percentage of outstanding Company Voting Securities beneficially owned
by such person, a Change in Control of the Company shall then occur.


 


8.          TERMINATION
BY THE COMPANY WITHOUT CAUSE. The Executive’s employment with the Company or the Bank may be terminated without Just
Cause by the Boards of Directors of the Company or the Bank, provided, however, that the Company and the Bank shall have the obligation
upon any such termination to make the payments to the Executive provided for under Section 9 of this Agreement.


 




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9.          CERTAIN
TERMINATION BENEFITS. In the event of termination pursuant to Section 7.1 or 8, the Executive shall be entitled to each of
the following benefits:


 


9.1           EARNINGS
TO DATE OF TERMINATION. An amount equal to the sum of (i) base salary or other compensation earned through the date of termination,
plus (ii) any other compensation and benefits as may be provided in accordance with the terms and provisions of any applicable
plans and programs, if any, of the Company and the Bank.


 


9.2           LUMP
SUM PAYMENT. An unreduced lump sum severance benefit equal to the base salary (as provided for in Section 3.1 of this Agreement)
that would have been paid to the Executive (based on the base salary in effect on the date of the Executive’s termination
of employment) through the Expiration Date (including any amount which is contributed by the Company or the Bank on the Executive’s
behalf pursuant to a salary reduction agreement and which is not included in the Executive’s gross income under Sections
125, 132(f) or 402(e)(3) of the Internal Revenue Code of 1986, as amended).


 


Subject to Section 16.20, the
severance benefit payment under this Section 9.2 shall be made to the Executive in one lump sum within five (5) days of the date
of the Executive’s termination of employment.


 


9.3           BENEFIT
CONTINUATION. Continuation of the medical, dental and life insurance benefits described in Section 3.2 and existing on the
date of termination at the level in effect on, and at the same out-of-pocket premium cost to the Executive, as of the date of termination
until the Expiration Date.


 


9.4           VESTING
OF STOCK AWARDS AND OPTIONS. If the Executive’s termination of employment occurs on or after the effective date of a
Change in Control, there shall be an acceleration of all vesting provisions, so that as of the date of termination of the Executive’s
employment, all stock awards made by the Company or the Bank to the Executive, to the extent then unvested or forfeitable, shall
become immediately and fully vested and non-forfeitable, and all options to purchase common stock of the Company, to the extent
then not exercisable, shall become immediately and fully exercisable.


 


10.         ADJUSTMENT
FOR UNAVAILABILITY OF BENEFITS. If the medical, dental and life insurance benefits under any benefit plan or program provided
for under Section 3.2 or continued pursuant to Section 9.3 may not be provided under any such plan to the Executive or to the Executive’s
dependents, the Company or the Bank shall pay or provide for coverage on a comparable basis for the Executive and, where applicable,
the Executive’s dependents.


 


11.         DISABILITY.


 


11.1         TERMINATION
DUE TO DISABILITY. The Company and the Bank may terminate the Executive’s employment upon a determination, by vote of
a majority of the Boards of Directors of the Company and the Bank, acting in reliance on the written advice of a medical professional
acceptable to the Boards of Directors of the Company and the Bank, that the Executive is suffering from a physical or mental impairment
which, at the date of the determination, has prevented the Executive from performing the Executive’s assigned duties on the
required basis for a period of at least one hundred and eighty (180) days during the one-year period ending with the date of the
determination or is likely to result in death or prevent the Executive from performing the Executive’s assigned duties on
a basis substantially consistent with this agreement for a period of at least one hundred and eighty (180) days during the period
of one (1) year beginning with the date of the determination (such impairment, the “Disability”). Subject to Section
11 of this Agreement, in such event:


 




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(a)          The
Company or the Bank shall pay to the Executive an amount equal to the sum of (i) base salary or other compensation earned through
the date of termination, plus (ii) any other compensation and benefits as may be provided in accordance with the terms and provisions
of any applicable benefit plans and programs of the Company or the Bank.


 


(b)          In
addition to the amounts payable pursuant to Section 11.1(a), the Company or the Bank shall to pay the Executive the base salary
that would have been paid through the Expiration Date, reduced by any amounts to be paid to the Executive under any disability
program sponsored by the Company or the Bank during the same time period. The Company or the Bank shall make the payment in a single
lump sum within five (5) days of the Executive’s termination of employment.


 


11.2         EFFECTIVE
DATE OF TERMINATION. A termination of employment due to Disability under this Section 11 shall be effected by notice of termination
given to the Executive by the Company or the Bank and shall take effect on the later of the effective date of termination specified
in such notice or the date on which the notice of termination is deemed given to the Executive.


 


12.         EXCISE
TAXES.


 


12.1         COVERED
BENEFITS. “Covered Benefits” shall mean any payment or benefit paid or provided to the Executive by the Company
or the Bank or any affiliate or any successor in interest to the Company or the Bank (whether pursuant to this Agreement or otherwise)
that will be (or in the opinion of Tax Counsel (as defined below) might reasonably be expected to be) subject to any excise tax
(the “Excise Tax”) imposed under Section 4999 of the Code. In the event that at any time during or after the Term of
Employment the Executive shall receive any Covered Benefits, the Company shall pay to the Executive an additional amount (the “Gross-Up
Payment”) such that the net amount retained by the Executive from the Gross-Up Payment, after deduction of any federal, state
and local income taxes, Excise Tax, and FICA and Medicare withholding taxes on the Gross-Up Payment, shall be equal to the Excise
Tax on the Covered Benefits. For purposes of determining the amount of such Excise Tax on the Covered Benefits, the amount of the
Covered Benefits that shall be taken into account in calculating the Excise Tax shall be equal to (i) the Covered Benefits, less
(ii) the amount of such Covered Benefits that, in the opinion of tax counsel selected by the Company and reasonably acceptable
to the Executive (“Tax Counsel”), are not parachute payments (within the meaning of Section 280G(b)(1) of the Code).


 


12.2         CERTAIN
ASSUMPTIONS. For purposes of this Section 12, the Executive shall be deemed to pay federal income taxes at the highest marginal
rate of federal income taxation in the calendar year in which the Excise Tax is payable and state and local income taxes at the
highest marginal rate of taxation in the state and locality of the Executive’s residence on the effective date of the Executive’s
termination, net of the reduction in federal income taxes which could be obtained from deduction of such state and local taxes.
Except as otherwise provided herein, all determinations required to be made under this Section 12 shall be made by Tax Counsel,
which determinations shall be conclusive and binding on the Executive and Company, absent manifest error.


 




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12.3         TAX
INDEMNIFICATION. The Company shall indemnify and hold the Executive harmless from any and all losses, costs and expenses (including
without limitation, reasonable attorney’s fees, reasonable accountant’s fees, interest, fines and penalties of any
kind) which the Executive incurs as a result of any administrative or judicial review of the Executive’s liability under
Section 4999 of the Code by the Internal Revenue Service or any comparable state agency through and including a final judicial
determination or final administrative settlement of any dispute arising out of the Executive’s liability for the Excise Tax
or otherwise relating to the classification for purposes of Section 280G of the Code of any of the Covered Benefits or other payment
or benefit in the nature of compensation made or provided to the Executive by the Company. The Executive shall promptly notify
the Company in writing whenever the Executive receives notice of the commencement of any judicial or administrative proceeding,
formal or informal, in which the federal tax treatment under Section 4999 of the Code of any amount paid or payable under this
Agreement or otherwise is being reviewed or is in dispute (including a notice of audit or other inquiry concerning the reporting
of the Executive’s liability under Section 4999). The Company may assume control at its expense over all legal and accounting
matters pertaining to such federal or state tax treatment (except to the extent necessary or appropriate for the Executive to resolve
any such proceeding with respect to any matter unrelated to the Covered Benefits or other payment or benefit in the nature of compensation
made or provided to the Executive by the Company) and the Executive shall cooperate fully with the Company in any such proceeding.
The Executive shall not enter into any compromise or settlement or otherwise prejudice any rights the Company may have in connection
therewith without prior consent of the Company. In the event that the Company elects not to assume control over such matters, the
Company shall promptly reimburse the Executive for all expenses related thereto as and when incurred upon presentation of appropriate
documentation relating thereto.


 


13.         CONFIDENTIAL
INFORMATION. The Executive will not disclose to any other Person (as defined in Section 16.2) (except as required by applicable
law or in connection with the performance of the Executive’s duties and responsibilities hereunder), or use for the Executive’s
own benefit or gain, any confidential information of the Company or the Bank or any affiliate obtained by the Executive incident
to the Executive’s employment with the Company or the Bank or their affiliates. The term “Confidential Information”
includes, without limitation, financial information, business plans, prospects and opportunities (such as lending relationships,
financial product developments, or possible acquisitions or dispositions of business or facilities) which have been discussed or
considered by the management of the Company or the Bank or their affiliates but does not include any information which has become
part of the public domain by means other than the Executive’s failure to honor the obligations hereunder.


 


14.         NO
MITIGATION; NO OFFSET. In the event of any termination of employment under this Agreement, the Executive shall be under no
obligation to seek other employment or to mitigate damages, and there shall be no offset against any amounts due to the Executive
under this Agreement for any reason, including, without limitation, on account of any remuneration attributable to any subsequent
employment that the Executive may obtain. Any amounts due under this Agreement are in the nature of severance payments or liquidated
damages, or both, and are not in the nature of a penalty.


 


15.         INDEMNIFICATION
AND INSURANCE.


 


15.1         INDEMNIFICATION.
To the maximum extent permitted under applicable law, during the Term of Employment and for a period of six years thereafter, the
Company and the Bank shall indemnify the Executive against and hold the Executive harmless from any costs, liabilities, losses
and exposures to the fullest extent and on the most favorable terms and conditions that similar indemnification is offered to any
director or officer of the Company and the Bank or any affiliate thereof.


 


15.2         INSURANCE.
During the Term of Employment and for a period of six years thereafter, the Company and the Bank shall cause the Executive to be
covered by and named as an insured under any policy or contract of insurance obtained by the Company and the Bank to insure directors
and officers against personal liability for acts or omissions in connection with service as an officer or director of the Company
or the Bank or any of their affiliates service in other capacities at its request. The coverage provided to the Executive pursuant
to this Section 15 shall be of the same scope and on the same terms and conditions as the coverage (if any) provided to other officers
or directors of the Company and the Bank.


 




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16.         MISCELLANEOUS.


 


16.1         CONFLICTING
AGREEMENTS. The Executive hereby represents and warrants that the execution of this Agreement and the performance of the Executive’s
obligations hereunder will not breach or be in conflict with any other agreement to which the Executive is a party or is bound,
and that the Executive is not now subject to any covenants against competition or similar covenants which would affect the performance
of the Executive’s obligations hereunder.


 


16.2         DEFINITION
OF “PERSON”. For purposes of this Agreement, the term “PERSON” shall mean an individual, a corporation,
an association, a partnership, an estate, a trust and any other entity or organization.


 


16.3         WITHHOLDING.
All payments made under this Agreement shall be net of any tax or other amounts required to be withheld under applicable law.


 


16.4         ARBITRATION.
The Company and the Bank and the Executive agree that any claim, dispute or controversy arising under or in connection with this
Agreement (including, without limitation, any such claim, dispute or controversy arising under any federal, state or local statute,
regulation or ordinance or any of the Company’s or the Bank employee benefit plans, policies or programs) shall be resolved
solely and exclusively by binding arbitration. The arbitration shall be held in the County of Charles, Maryland (or at such other
location as shall be mutually agreed by the parties). The arbitration shall be conducted in accordance with the Commercial Arbitration
Rules (the “Rules”) of the American Arbitration Association (the “AAA”) in effect at the time of the arbitration,
except that the arbitrator shall be selected by alternatively striking from a list of five arbitrators supplied by the AAA. All
fees and expenses of the arbitration, excluding a transcript, shall be borne equally by the parties. Each party will pay for the
fees and expenses of its own attorneys, experts, witnesses, and preparation and presentation of proofs and post-hearing briefs
(unless the Executive prevails on a claim for which attorney’s fees are recoverable under the Agreement). Any action to enforce
or vacate the arbitrator’s award shall be governed by the Federal Arbitration Act, if applicable, and otherwise by applicable
state law. If either the Company or the Bank or the Executive pursues any claim, dispute or controversy against the other in a
proceeding other than the arbitration provided for herein, the responding party shall be entitled to dismissal or injunctive relief
regarding such action and recovery of all costs, losses and attorney’s fees related to such action. Notwithstanding the provisions
of this paragraph, either party may seek injunctive relief in a court of competent jurisdiction, whether or not the case is then
pending before the panel of arbitrators. Following the court’s determination of the injunction issue, the case shall continue
in arbitration as provided herein.


 


16.5         INDEMNIFICATION
FOR ATTORNEYS’ FEES. In the event any dispute or controversy arising under or in connection with Executive’s termination
or this Agreement is resolved in favor of the Executive, whether by judgment, arbitration or settlement, the Executive shall be
entitled to the payment of: (i) all legal fees and expenses incurred by the Executive in resolving such dispute or controversy,
and (ii) any back-pay, including salary, bonuses and any other cash compensation, fringe benefits and any compensation and benefits
due the Executive under this Agreement.


 


16.6         INTERPRETATION.
The recitals hereto constitute an integral part of this Agreement. References to Sections include subsections, which are part of
the related Section (e.g., a section numbered “Section 5.5” would be part of “Section 5” and references
to “Section 5” would also refer to material contained in the subsection described as “Section 5.5”).


 




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16.7         ASSIGNMENT;
SUCCESSORS AND ASSIGNS, ETC.


 


(a)          This
Agreement is personal to the Executive and, without the prior written consent of the Company or the Bank, shall not be assignable
by the Executive otherwise than by will or the laws of descent and distribution. This Agreement shall inure to the benefit of and
be enforceable by the Executive’s legal representatives.


 


(b)          This
Agreement shall inure to the benefit of and be binding upon the Company and the Bank and their successors and permitted assigns.


 


(c)          The
Company and the Bank may not assign this Agreement or any interest herein without the prior written consent of the Executive and
without such consent any attempted transfer or assignment shall be null and void and of no effect; provided, however, that the
Company and the Bank shall require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise)
to all or substantially all of the business and/or assets of the Company or the Bank expressly to assume and to agree to perform
this Agreement in the same manner and to the same extent that the Company and the Bank would have been required to perform it if
no such succession had taken place. As used in this Agreement, “the Company” and “the Bank” shall mean
each of the Company and the Bank, as defined above, and any successor that assumes and agrees to perform this Agreement, by operation
of law or otherwise.


 


16.8         ENFORCEABILITY.
If any portion or provision of this Agreement shall to any extent be declared illegal or unenforceable by a court of competent
jurisdiction, then the remainder of this Agreement, or the application of such portion or provision in circumstances other than
those as to which it is so declared illegal or unenforceable, shall not be affected thereby, and each portion and provision of
this Agreement shall be valid and enforceable to the fullest extent permitted by law.


 


16.9         REDUCTIONS;
REGULATORY REQUIREMENTS. Notwithstanding anything to the contrary contained in this Agreement, any and all payments and benefits
to be provided to the Executive hereunder are subject to reduction to the extent required by applicable statutes, regulations,
rules and directives of federal, state and other governmental and regulatory bodies having jurisdiction over the Company and the
Bank and their affiliates. The Executive confirms that the Executive is aware of the fact that the Federal Deposit Insurance Corporation
has the power to preclude the Company or the Bank or their affiliates from making payments to the Executive under this Agreement
under certain circumstances. The Executive agrees that neither the Company, the Bank nor their affiliates shall be deemed to be
in breach of this Agreement if they are precluded from making a payment otherwise payable hereunder by reason of regulatory requirements
binding on the Company or the Bank or their affiliates, as the case may be.


 


16.10         WAIVER.
No waiver of any provision hereof shall be effective unless made in writing and signed by the waiving party. The failure of any
party to require the performance of any term or obligation of this Agreement, or the waiver by any party of any breach of this
Agreement, shall not prevent any subsequent enforcement of such term or obligation or be deemed a waiver of any subsequent breach.


 


16.11         NOTICES.
Any notices, requests, demands and other communications provided for by this Agreement shall be sufficient if in writing and delivered
in person or sent by registered or certified mail, postage prepaid, and addressed to the Executive at the Executive’s last
known address on the books of the Company and the Bank or, in the case of the Company and the Bank, at their main office, attention
of the Chair of the Compensation Committee of the Boards of Directors of the Company and the Bank.


 




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16.12         ELECTION
OF REMEDIES. An election by the Executive to resign for Good Reason under the provisions of this Agreement shall not constitute
a breach by the Executive of any agreement the Executive may have with the Company and the Bank and shall not be deemed a voluntary
termination of employment by the Executive for the purpose of interpreting the provisions of any of the Company’s and the
Bank’s benefit plans, programs or policies.


 


16.13         AMENDMENT.
This Agreement may be amended or modified only by a written instrument signed by the Executive and a duly authorized representative
of the Company and the Bank.


 


16.14         NO
EFFECT ON LENGTH OF SERVICE. Nothing in this Agreement shall be deemed to prohibit the Company or the Bank from terminating
the Executive’s employment before the end of the Term of Employment with or without notice for any reason. This Agreement
shall determine the relative rights and obligations of the Company or the Bank and the Executive in the event of any such termination.
In addition, nothing in this Agreement shall require the termination of the Executive’s employment at the expiration of the
Term of Employment. Any continuation of the Executive’s employment beyond the expiration of the Term of Employment shall
be on an “at-will” basis, unless the Company and the Executive agree otherwise.


 


16.15         ALLOCATION
OF OBLIGATIONS AS BETWEEN THE COMPANY AND ITS AFFILIATES. The parties understand that the Executive will perform substantial
services for the Company and the Bank. Unless otherwise determined by the Boards of Directors of the Company and the Bank, the
Executive shall not be entitled to compensation in addition to the compensation set forth in Section 3 of this Agreement as a result
of the Executive’s serving as an officer of any affiliate of the Company or the Bank. The Company, the Bank and any affiliate
shall apportion between them the amounts to be paid under this Agreement, based upon the services rendered by the Executive to
each of entities, respectively. Any entitlement of the Executive to severance compensation or other termination benefits under
this Agreement shall be determined on the basis of the aggregate compensation payable to the Executive by the affiliates and the
Company and the Bank, and liability therefor shall be apportioned between the affiliates and the Company and the Bank in the same
manner as compensation paid to the Executive for services to each of them. It is the intent and purpose of this Section 16.15 that
the Executive have the same legal and economic rights that the Executive would have if all of the Executive’s services were
rendered to and all of the Executive’s compensation were paid by the Company and the Bank.


 


16.16         PAYMENTS
TO ESTATE OR BENEFICIARIES. In the event of the Executive’s death prior to the completion by the Company or the Bank
of all payments due the Executive under this Agreement, the Company or the Bank shall continue such payments (other than payments
which by their terms cease upon death) to the Executive’s beneficiary, as designated in writing by the Executive and provided
to the Company or the Bank prior to the Executive’s death (or to the Executive’s estate, if the Executive fails to
make such designation) and, as applicable, to the Executive’s surviving dependents.


 


16.17         ENTIRE
AGREEMENT; EFFECT ON PRIOR AGREEMENTS. This Agreement constitutes the entire agreement between the parties pertaining to its
subject matter and supersedes all prior and contemporaneous agreements, understandings, negotiations, prior draft agreements, and
discussions of the parties, whether oral or written.


 




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16.18         COUNTERPARTS
AND FACSIMILE SIGNATURES. This Agreement may be executed in two or more counterparts, all of which shall be considered one
and the same agreement and shall become effective when one or more counterparts have been signed by each party and delivered to
the other party, it being understood that all parties need not sign the same counterpart. This Agreement may be executed by facsimile
signatures.


 


16.19         GOVERNING
LAW. This is a Maryland contract and shall be construed under and be governed in all respects by the laws of the State of Maryland
without giving effect to its conflicts of law principles.


 


16.20         Section
409A of the Code.


 


(a)          This
Agreement is intended to comply with the requirements of Section 409A of the Code, and specifically, with the “short-term
deferral exception” under Treasury Regulation Section 1.409A-1(b)(4) and the “separation pay exception” under
Treasury Regulation Section 1.409A-1(b)(9)(iii), and shall in all respects be administered in accordance with Section 409A of the
Code. If any payment or benefit hereunder cannot be provided or made at the time specified herein without incurring sanctions on
the Executive under Section 409A of the Code, then such payment or benefit shall be provided in full at the earliest time thereafter
when such sanctions will not be imposed. For purposes of Section 409A of the Code, all payments to be made upon a termination of
employment under this Agreement may only be made upon a “separation from service” (within the meaning of such term
under Section 409A of the Code), each payment made under this Agreement shall be treated as a separate payment, the right to a
series of installment payments under this Agreement (if any) is to be treated as a right to a series of separate payments, and
if a payment is not made by the designated payment date under this Agreement, the payment shall be made by December 31 of the calendar
year in which the designated date occurs. To the extent that any payment provided for hereunder would be subject to additional
tax under Section 409A of the Code, or would cause the administration of this Agreement to fail to satisfy the requirements of
Section 409A of the Code, such provision shall be deemed null and void to the extent permitted by applicable law, and any such
amount shall be payable in accordance with (b) below. In no event shall the Executive, directly or indirectly, designate the calendar
year of payment.


 


(b)          If
when separation from service occurs the Executive is a “specified employee” within the meaning of Section 409A of the
Code, and if the cash severance payment under Section 4(b) or 5(c), (e) would be considered deferred compensation under Section
409A of the Code, and, finally, if an exemption from the six-month delay requirement of Section 409A(a)(2)(B)(i) of the Code is
not available (i.e., the “short-term deferral exception” under Treasury Regulations Section 1.409A-1(b)(4) or the “separation
pay exception” under Treasury Section 1.409A-1(b)(9)(iii)), the Company or the Bank will make the maximum severance payment
possible in order to comply with an exception from the six month requirement and make any remaining severance payment to the Executive
in a single lump sum without interest on the first payroll date that occurs after the date that is six (6) months after the date
on which the Executive separates from service.


 


(c)          References
in this Agreement to Section 409A of the Code include rules, regulations, and guidance of general application issued by the Department
of the Treasury under Internal Revenue Section 409A of the Code.


 




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IN WITNESS WHEREOF,
this Agreement has been executed as a sealed instrument by the Company and the Bank, by their duly authorized officer, and by the
Executive, as of the date first above written.


 


	THE
    COMMUNITY FINANCIALCORPORATION	 	EXECUTIVE
	 	 	 
	By: 	/s/ William J. Pasenelli	 	/s/ Michael L. Middleton
	Its: 	President	 	Michael L. Middleton


 


	Attest:	/s/ Christy Lombardi	 	Witness:	/s/ Christy Lombardi


 


COMMUNITY BANK OF THE CHESAPEAKE


 


	By: 	/s/ William J. Pasenelli	 
	Its: 	President	 
	 	 	 
	Attest: 	/s/ Christy Lombardi	 


 




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Executive
Chairman JOB DESCRIPTION AND RESPONSIBILITIES


 


Purpose


 


The Executive Chairman is responsible for ensuring that the
board of the Company is effective in setting and implementing the direction and strategy of the Company and its affiliates and
to act as the Company’s leading representative.


 


Reporting Line


 


The Executive Chairman reports to the Board of Directors of
the Company.


 


Areas of Responsibility


 


Leadership and strategic direction


 


		·	To lead the board, ensuring its effectiveness in all aspects of its
role



 


		·	To plan for and consider strategic matters for the Company and its
affiliates



 


		·	To take the chair at general meetings, board meetings and strategy
meetings



 


		·	To be a represent the Company and its affiliates



 


		·	To be a represent the Company to the government, regulatory authorities,
the media, shareholders and the general public



 


		·	To ensure that succession plans are in place for all key executives



 


		·	To oversee the formulation of and propose to the board for approval,
a corporate strategy for the Company and its affiliates which is directed towards the profitable growth and operation of the Company
and its affiliates



 


		·	To lead investor related activities and capital formation transactions



 


Delegation and oversight


 


		·	To ensure that the board sets appropriate levels of authority for
the Chief Executive Officer and other individual executives



 


		·	To provide mentoring and counsel to executive management through participation
in senior management meetings on a periodic basis 



 


		·	To regularly review operational performance and strategic direction
of the Company and its affiliates with executive management



 


		·	To periodically review the organizational structure of the Company
and its affiliates and make recommendations as appropriate



 


		·	To formalize the roles and responsibilities of the executive management
team, including clear delegation of authorities



 


		·	To be engaged in the Enterprise Risk Management process for the Bank
and Company 



 




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		·	To participate in Mergers and Acquisition process



 


Board composition


 


		·	Advise the governance committee on the composition of the board



 


		·	To ensure that processes are in place for the appointment, as well
as retirement, succession and, if necessary, removal of directors



 


Board performance


 


		·	To ensure that the board remains focused on its role and the achievement
of key tasks



 


		·	To establish a process for annual evaluations of the board, its members
and its committees



 


		·	To ensure that appropriate objectives are established for the Chief
Executive Officer and to monitor performance against those objectives



 


		·	To ensure that the board satisfactorily oversees and evaluates the
implementation of the strategy, policies and business plans of the Company and its affiliates



 


Support and development


 


		·	To provide support and advice to the Chief Executive Officer as appropriate
and ensure effective liaison and continuity of communication on developments occurring between formal board meetings



 


		·	To oversee the ongoing development needs of individual directors are
identified and met



 


Communication with shareholders


 


		·	To ensure effective communication with all shareholders and maintain
an effective shareholder relations process.



 


		·	Promote the goodwill and support of shareholders and relevant stakeholders



 


		·	To ensure, in conjunction with the Chief Executive Officer, that the
views of major shareholders are communicated to the board and that members of the board develop an understanding of those views



 


Business strategy and management


 


		·	To develop objectives and strategies that ensure the long term stability
of the business



 


		·	To monitor successful achievement of objectives and execution of strategy
as approved by the board.



 


		·	To provide oversight to the Company and Bank’s budget and planning
process



 


Investment and financing


 


		·	To identify and execute strategic acquisitions and disposals, advising
on major proposals or bids



 




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		·	To advise on geographic and revenue diversification initiatives



 


		·	To advise on new business opportunities



 


Risk management and controls


 


		·	Provide oversight of the Company and Bank’s risk profile, including
the safety and soundness of the business, in line with the risk parameters established by the board



 


Board committees


 


		·	To make recommendations to the Compensation Committee on compensation
policies, executive compensation and terms of employment of the senior executive team 



 


		·	To make recommendations to the Governance Committee on the role and
capabilities required of directors



 


Communication


 


		·	Provide a means for timely and accurate disclosure
of information to the Board



 




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