EXHIBIT 10b

                        THIRD AMENDMENT TO LOAN AGREEMENT

         This Third  Amendment to Loan  Agreement  ("Amendment")  is dated March
______, 1998 and is effective as of March 8, 1998, by and between  SMITH-MIDLAND
CORPORATION,  a  Virginia  corporation,  SMITH-MIDLAND  CORPORATION,  a Delaware
corporation,  EASI-SET INDUSTRIES, INC., a Virginia corporation,  SMITH-CAROLINA
CORPORATION,  a North Carolina  Corporation,  CONCRETE SAFETY  SYSTEMS,  INC., a
Virginia   corporation,   MIDLAND  ADVERTISING  AND  DESIGN,  INC.,  a  Virginia
corporation (collectively,  "Borrower"), and RIGGS BANK N.A., a national banking
association ("Lender").



                                 R E C I T A L S



         This Amendment is made with reference to the following facts:

         A. Borrower is indebted to Lender in the original principal sum of Nine
Hundred Fifty  Thousand and No/100  Dollars  ($950,000.00)  (the "Loan"),  which
indebtedness is evidenced by that certain  Promissory  Note, dated July 22, 1996
executed by Borrower,  as maker, to the order of Lender (together with any prior
amendments,  a First Amendment  dated August 15, 1997, a Second  Amendment dated
December 30, 1997, and a Third Amendment of even date herewith,  the "Promissory
Note")

         B.  Repayment  of the  Promissory  Note  is  secured  by  that  certain
Commercial Security Agreement, dated July 22, 1996, and an additional Commercial
Security Agreements dated December 30, 1997, (the "Security Agreements").

         C.  Advances  of moneys  under the Loan are  governed  by the terms and
conditions of that certain Loan Agreement, dated July 22, 1996, between Borrower
and Lender (together with any prior  amendments,  a First Amendment dated August
15, 1997, and a Second Amendment dated December 30, 1997 the "Agreement").

         D. Borrower has  requested  that Lender extend the maturity date of the
Promissory  Note until July 8, 1998,  and Lender has so  extended  the  maturity
date,  upon and subject to the terms and  conditions  set forth in that  certain
Third Amendment to Promissory Note of even date herewith.

         E.  Borrower  and  Lender  desire to amend the  Agreement  as set forth
herein.

         F. Terms  defined in the Agreement  and not  otherwise  defined  herein
shall have the meanings set forth in the Agreement.


NOW,  THEREFORE,  in consideration of the foregoing,  Borrower and Lender hereby
agree as follows:

         1. As a condition  precedent to the effectiveness of this Amendment and
the extension of the maturity date, Rodney Smith, as Guarantor, shall consent to
this Third Amendment to Loan Agreement and to the Third Amended Promissory Note.

         2. Borrower affirms that the Security  Agreements continue in force and
effect.

         3.  Borrower  hereby  agrees that  Lender may, at its sole  discretion,
require a  collateral  audit to be  performed by a third party at the expense of
Borrower.

         4. Borrower  agrees to pay all costs and expenses of Lender incident to
the  preparation  hereof  and the  consummation  of the  transactions  specified
herein,  including  without  limitation,  fees and expenses of Lender's in-house
legal counsel of $300.

         5. Borrower hereby reaffirms the Agreement as amended hereby and agrees
that  in all  respects  except  as  explicitly  modified  by the  terms  of this
Amendment that the Agreement shall remain in full force and effect.

         6.  In  consideration  of  the  Amendment  contained  herein,  Borrower
represents,  warrants  and  agrees  that (i) there are no  claims,  defenses  or
set-offs with respect to the Agreement, any Loan or any Note, or with respect to
the indebtedness  evidenced or secured thereby or with respect to the collection
or  enforcement  of any of them or with respect to the  collateral,  (and to the
extent any claim,  set-off or defense  exists  they are each  hereby  waived and
relinquished  in their  entirety),  (ii) no Event of Default,  as defined in the
Agreement,  the Note or any other  Loan  Document,  and no event  which with the
lapse of time or the giving of notice or both would  constitute such an Event of
Default, has occurred;  (iii) Lender has made no representations or commitments,
oral or written, or undertaken any obligations other than as expressly set forth
in the  Agreement,  the  Loan  Documents  and this  Amendment,  (iv)  except  as
otherwise   previously   disclosed  in  writing  to  the  Lender,  each  of  the
representations  and warranties  contained in the Agreement are true and correct
as of the date  hereof and shall be deemed to be  restated  and remade as of the
date of this  Amendment  as if set out  herein  in their  entirety;  and (v) the
making,  delivery  and  performance  by the Borrower of this  Amendment  and all
instruments,  documents and notes executed contemporaneously herewith, have been
duly authorized by all necessary  corporate action, and constitute the valid and
binding obligations of the Borrower enforceable in accordance with their terms.

         7. All capitalized  terms not otherwise defined in this Amendment shall
have the meanings ascribed thereto in the Agreement. Each and every of the terms
and  provisions of this  Amendment  shall be binding upon and shall inure to the
benefit of the parties hereto and their respective heirs,  successors,  personal
representatives and assigns.

         BORROWER  EXPRESSLY  REPRESENTS  AND WARRANTS TO LENDER THAT IT (A) HAS
READ  EACH AND  EVERY  PROVISION  OF THIS  INSTRUMENT;  (B) HAS BEEN  GIVEN  THE
OPPORTUNITY TO HAVE THIS  INSTRUMENT  REVIEWED BY COMPETENT LEGAL COUNSEL OF ITS
OWN CHOOSING; AND (C) UNDERSTANDS, AGREES TO AND ACCEPTS THE PROVISIONS HEREOF.



                            [CONTINUED ON NEXT PAGE]

<PAGE>


              IN WITNESS WHEREOF, this Amendment has been executed as of the day
first above written.


Attest:                                     BORROWER:
                                            SMITH-MIDLAND CORPORATION (Virginia)

By:  _______________________        By:     ____________________________ (SEAL)
                                            Name:    ___________________________
                                            Title:   ___________________________

                                            SMITH-MIDLAND CORPORATION (Delaware)

By:  _______________________        By:     ____________________________ (SEAL)
                                            Name:    ___________________________
                                            Title:   ___________________________


                            EASI-SET INDUSTRIES, INC.

By:  _______________________        By:     ____________________________ (SEAL)
                                            Name:    ___________________________
                                            Title:   ___________________________


                           SMITH-CAROLINA CORPORATION

By:  _______________________        By:     ____________________________ (SEAL)
                                            Name:    ___________________________
                                            Title:   ___________________________


                             CONCRETE SAFETY SYSTEMS

By:  _______________________        By:     ____________________________ (SEAL)
                                            Name:    ___________________________
                                            Title:   ___________________________


                                            MIDLAND ADVERTISING & DESIGN, INC.

By:  _______________________        By:     ____________________________ (SEAL)
                                            Name:    ___________________________
                                            Title:   ___________________________


                                            LENDER:
                                            RIGGS BANK N.A.

By:  _______________________        By:     ____________________________ (SEAL)
                                            Name:    ___________________________
                                            Title:   ___________________________



                       THIRD AMENDMENT TO PROMISSORY NOTE



         This Third  Amendment To Promissory  Note (this  "Amendment")  is dated
March  ______,  1998  and is  effective  as of  March 8,  1998,  by and  between
SMITH-MIDLAND CORPORATION, a Virginia corporation,  SMITH-MIDLAND CORPORATION, a
Delaware  corporation,   EASI-SET  INDUSTRIES,  INC.,  a  Virginia  corporation,
SMITH-CAROLINA  CORPORATION,  a  North  Carolina  Corporation,  CONCRETE  SAFETY
SYSTEMS,  INC., a Virginia corporation,  MIDLAND ADVERTISING AND DESIGN, INC., a
Virginia corporation (collectively, "Borrower"), and RIGGS BANK N.A., a national
banking association ("Holder").

                                 R E C I T A L S

         This Amendment is made with reference to the following facts:

         A. Borrower is indebted to Holder in the original principal sum of Nine
Hundred Fifty  Thousand and No/100  Dollars  ($950,000.00)  (the "Loan"),  which
indebtedness is evidenced by that certain  Promissory  Note, dated July 22, 1996
executed by Borrower,  as maker, to the order of Holder (together with any prior
amendments,  a First  Amendment  dated August 15, 1997,  and a Second  Amendment
dated December 30, 1997, the "Promissory Note")

         B.  Repayment  of the  Promissory  Note  is  secured  by  that  certain
Commercial  Security  Agreement,  dated July 22, 1996  (together  with any prior
amendments),  and an additional Commercial Security Agreement dated December 30,
1997 (the "Security Agreement").

         C.  Advances  of moneys  under the Loan are  governed  by the terms and
conditions of that certain Loan Agreement, dated July 22, 1996, between Borrower
and Holder (together with any prior  amendments,  a First Amendment dated August
15, 1997, a Second  Amendment dated December 30,. 1997, and a Third Amendment of
even date herewith, the "Loan Agreement").

         D. Borrower has  requested  that Holder extend the maturity date of the
Promissory  Note  until  July 8,  1998,  and  Holder is willing so to extend the
maturity date, upon and subject to the terms and conditions set forth herein.

         NOW, THEREFORE, in consideration of the foregoing,  Borrower and Holder
hereby agree as follows:

         1. The  Promissory  Note is hereby amended to provide that the maturity
date thereof shall be July 8, 1998.

         2. The  Promissory  Note is hereby  further  amended to provide that in
addition to the regular monthly payments of interest, Borrower shall pay monthly
principal payments,  payable on the last business day of each month,  commencing
April 30, 1998,  in the amount of  $2,000.00  per month.  In addition,  Borrower
hereby agrees to make a principal  curtailment  of $7,500.00  upon  execution of
this Amendment.

         3. An  executed  copy of this Third  Amendment  shall be affixed to the
Promissory Note.

         4. All of the terms,  covenants and conditions of the  Promissory  Note
shall  continue in full force and effect as modified  herein.  This Amendment is
not intended to be, and shall not constitute,  a substitution or novation of the
Promissory  Note or of any of the  instruments  securing  the  repayment  of the
Promissory Note.

         5.  Borrower  hereby  renews  its  covenant  and  agreement  to pay the
indebtedness  evidenced by the Promissory  Note in accordance with the terms and
provisions thereof,  as modified by this Amendment.  Borrower further renews its
covenant and agreement to perform, comply with and be bound by each and every of
the other  terms and  provisions  of the  Promissory  Note,  as modified by this
Amendment,  and each and  every of the  terms  and  provisions  of the  Security
Agreement.  Borrower hereby reaffirms all of the  representations and warranties
made to the  Holder  at the time the Loan was made and  declares  the same to be
true and correct as of such date and as of the date hereof.

         6.  Borrower  represents,  warrants  and  agrees  that (i) there are no
claims,  defenses or set-offs with respect to the Promissory Note, as amended by
the terms of this Amendment,  or with respect to the Security Agreement, or with
respect to the indebtedness  evidenced or secured thereby or with respect to the
collection  or  enforcement  of any of the same  (ii) no event  of  default  has
occurred and is continuing under the Loan Documents,  (iii) no claim, set-off or
defense exists for the benefit of Borrower against Holder in connection with the
Loan or under the Loan  Documents  (and to the  extent  any  claim,  set-off  or
defense exists they are each hereby waived and  relinquished in their entirety),
(iv) Holder has made no  representations  or  commitments,  oral or written,  or
undertaken  any  obligations  other  than as  expressly  set  forth  in the Loan
Documents and this  Amendment,  and (v) each and every of the  provisions of the
Promissory Note, as modified by the terms of this Amendment,  and each and every
of the  provisions of the Security  Agreement and the other Loan  Documents are,
and shall remain in full force and effect and lawful and binding  obligations of
Borrower,  duly authorized by all necessary corporate action, and enforceable in
accordance with their respective terms.

         7. Each and every of the terms and provisions of this  Amendment  shall
be binding  upon and shall inure to the benefit of the parties  hereto and their
respective  heirs,  successors,   personal  representatives  and  assigns.  This
Amendment  shall be governed by and construed in accordance with the laws of the
Commonwealth of Virginia,  without reference to its conflict of laws principles.
As used  herein,  the  singular  shall  include the plural and vice  versa,  and
masculine,  feminine, and neuter pronouns shall be fully interchangeable,  where
the context so requires.

         BORROWER  EXPRESSLY  REPRESENTS  AND WARRANTS TO HOLDER THAT IT (A) HAS
READ  EACH AND  EVERY  PROVISION  OF THIS  INSTRUMENT;  (B) HAS BEEN  GIVEN  THE
OPPORTUNITY TO HAVE THIS  INSTRUMENT  REVIEWED BY COMPETENT LEGAL COUNSEL OF ITS
OWN CHOOSING; AND (C) UNDERSTANDS, AGREES TO AND ACCEPTS THE PROVISIONS HEREOF.

         This  Amendment  may be executed in  multiple  counterparts,  no one of
which  needs to be  executed by all the parties  hereto,  which  together  shall
constitute a single instrument and,  regardless of whether it is executed by all
parties, shall be binding upon all parties who have executed a counterpart.

                            [continued on next page]

<PAGE>


                  IN WITNESS WHEREOF, this Amendment has been executed as of the
day first above written.


Attest:                                     BORROWER:
                                            SMITH-MIDLAND CORPORATION (Virginia)

By:  _______________________        By:     ____________________________ (SEAL)
                                            Name:    ___________________________
                                            Title:   ___________________________

                                            SMITH-MIDLAND CORPORATION (Delaware)

By:  _______________________        By:     ____________________________ (SEAL)
                                            Name:    ___________________________
                                            Title:   ___________________________


                            EASI-SET INDUSTRIES, INC.

By:  _______________________        By:     ____________________________ (SEAL)
                                            Name:    ___________________________
                                            Title:   ___________________________


                           SMITH-CAROLINA CORPORATION

By:  _______________________        By:     ____________________________ (SEAL)
                                            Name:    ___________________________
                                            Title:   ___________________________


                             CONCRETE SAFETY SYSTEMS

By:  _______________________        By:     ____________________________ (SEAL)
                                            Name:    ___________________________
                                            Title:   ___________________________


                                            MIDLAND ADVERTISING & DESIGN, INC.

By:  _______________________        By:     ____________________________ (SEAL)
                                            Name:    ___________________________
                                            Title:   ___________________________


                                            HOLDER:
                                            RIGGS BANK N.A.

By:  _______________________        By:     ____________________________ (SEAL)
                                            Name:    ___________________________
                                            Title:   ___________________________

                             UNCONDITIONAL GUARANTY

         This Unconditional  Guaranty (this  "Guaranty"),  dated August 15, 1997
and  effective  as of July 8, 1997 is made by RODNEY I.  SMITH  (whether  one or
more, the "Guarantor") to and for the benefit of RIGGS BANK N.A.
("Lender"), a national banking association.

                                 R E C I T A L S

         This Guaranty is made with reference to the following facts:

         A.  Borrower is indebted to Lender in the principal sum of Nine Hundred
Fifty Thousand and No/100 Dollars ($950,000.00) (the "Loan"), which indebtedness
is evidenced by that certain  Promissory  Note,  dated July 22, 1996 executed by
Borrower,  as maker, to the order of Lender  (together with any prior amendments
and an amendment of even date herewith, the "Promissory Note")

         B.  Repayment  of the  Promissory  Note  is  secured  by  that  certain
Commercial  Security  Agreement,  dated July 22, 1996  (together  with any prior
amendments, the "Security Agreement").

         C.  Advances  of moneys  under the Loan are  governed  by the terms and
conditions of that certain Loan Agreement, dated July 22, 1996, between Borrower
and Lender  (together  with any prior  amendments  and an amendment of even date
herewith, the "Loan Agreement").

         D. Borrower has  requested  that Lender extend the maturity date of the
Promissory  Note until November 8, 1997, and Lender has so extended the maturity
date,  upon and subject to the terms and  conditions  set forth in that  certain
Amendment to Promissory Note and Amendment to Loan Agreement,  each of even date
herewith.

         E. Lender is unwilling to extend the  maturity  date of the  Promissory
Note unless the Guarantor executes and delivers this Guaranty.

         In order to induce Lender to extend and continue to extend  credit,  to
make and continue to make loans and advances  and/or to forbear from  exercising
any rights  Lender may have to require  repayment  of or  security  for any such
loans and advances  heretofore made by Lender, to SMITH-MIDLAND  CORPORATION,  a
Virginia  corporation,   SMITH-MIDLAND   CORPORATION,  a  Delaware  corporation,
EASI-SET INDUSTRIES, INC., a Virginia corporation, SMITH-CAROLINA CORPORATION, a
North  Carolina   Corporation,   CONCRETE  SAFETY  SYSTEMS,   INC.,  a  Virginia
corporation,  and MIDLAND ADVERTISING AND DESIGN,  INC., a Virginia  corporation
(the "Borrower(s)"), the Guarantor:

         (1) Guaranty of Payment.  Unconditionally and absolutely guarantees the
punctual  payment  when due  (whether at stated  maturity,  by  acceleration  of
maturity or otherwise) of all obligations of the  Borrower(s)  arising under the
Promissory  Note, the Loan Agreement and the Security  Agreement,  and any other
documents and instruments  executed by the Borrower(s) pursuant thereto, and all
renewals,  extensions  and  modifications  thereof,  such  obligations  and  the
interest  thereon and all other sums payable with respect thereto being referred
to herein as the  "Indebtedness"  and all documents and instruments  executed by
the Borrower(s) or any of them in connection  therewith being referred to as the
"Loan  Documents." This is a guaranty of payment and not of collection and shall
be binding  upon the  Guarantor  irrespective  of the  genuineness,  validity or
enforceability  of any underlying  obligations of the Borrower(s) or any of them
or the  existence,  validity,  enforceability  or  perfection  of  any  security
therefor, it being the intention of the Guarantor that this Guaranty be absolute
and  unconditional  in all  events  and not  dischargeable  or  affected  by any
circumstances which may constitute a legal or equitable discharge. This Guaranty
shall continue to be effective or be  reinstated,  as the case may be, if at any
time any payment of the  Indebtedness  or any part  thereof is rescinded or must
otherwise   be   returned  by  Lender  upon  the   insolvency,   bankruptcy   or
reorganization  of any Borrower or Guarantor,  or otherwise,  all as though such
payment had not been made.

         (2)  Waivers by  Guarantor.  Waives  diligence,  presentment,  protest,
notice of dishonor, demand for payment,  extension of time of payment, notice of
acceptance of this Guaranty, non-payment at maturity and indulgences and notices
of every kind,  and consent to any and all  forbearances  and  extensions of the
time of payment of the  Indebtedness,  and to any and all  changes in the terms,
agreements and conditions of the Indebtedness or any part thereof hereafter made
or granted, and to any and all substitutions and exchanges or releases of all or
any part of any  collateral  security given therefor and any and all releases of
any other party who is or may be liable upon any of the Indebtedness.

         (3) No Subrogation. Agrees that no payment by any Guarantor pursuant to
any provision of this Guaranty or other satisfaction of Guarantor's  obligations
under this Guaranty  shall entitle  Guarantor,  by  subrogation to the rights of
Lender,  by  right of  contribution  or  indemnity  or under  any  agreement  or
otherwise,  to any payment by the Borrower(s) or by any other party obligated to
Lender for payment of the  Indebtedness  or out of the assets of the Borrower(s)
or any such other party, except after payment in full of the Indebtedness.

         (4) No Waiver By Lender;  Remedies Cumulative.  Agrees that no delay on
the part of Lender  in the  exercise  of any  rights  hereunder  or  failure  to
exercise the same shall  operate as a waiver of such rights,  and that no notice
to or demand on the maker of any promissory  note shall be deemed to be a waiver
of the  obligation  of the  Guarantor  or of the right of Lender to take further
action  without  notice or demand as provided  herein.  Each right,  power,  and
remedy of Lender against  Borrower(s) or Guarantor arising hereunder or pursuant
to any of the Loan Documents or by law shall be cumulative and  concurrent.  The
exercise  of any right,  power or remedy or the  failure or  forbearance  in the
exercise thereof against  Borrower(s) or Guarantor shall not preclude or require
the exercise of any other right, power or remedy.

         (5) No Suit or Claim  Required.  Agrees that it shall not be  necessary
for Lender,  to enforce  this  contract of  Guaranty,  to first  institute  suit
against the Borrower(s) or any of them to recover the amount of the Indebtedness
or any part thereof. Lender shall not be obligated to file any claim relating to
the Indebtedness in the event that the Borrower(s) or any of them become subject
to a bankruptcy, reorganization or similar proceeding, and the failure of Lender
so to file shall not affect the Guarantor's obligations hereunder.

         (6)  Expenses  and  Attorneys'  Fees.  Agrees that the  Guarantor  will
reimburse  Lender  for all  costs and  expenses  incurred  by Lender  (including
reasonable  attorneys'  fees) in  enforcing  any  rights  under  this  Guaranty,
collecting any of the  Indebtedness or protecting or realizing on any collateral
therefor.  Attorneys'  fees  shall  include,  in the  case of a  staff  attorney
employed by Lender,  the cost to Lender of the services of such attorney,  on an
hourly basis, as determined by Lender.

         (7) Representations of Guarantor.  Represents and warrants and shall be
deemed to  represent  and  warrant on each day that any of the  Indebtedness  is
outstanding  that (a) all  statements  and  information  heretofore or hereafter
provided by the Guarantor in connection  with this Guaranty or the  Indebtedness
are and will be true and correct in all  material  respects  and do not and will
not omit to state any material fact, (b)  Guarantor,  if a corporation,  is duly
organized  and validly  existing as such under the laws of its  jurisdiction  of
incorporation  or  organization,  (c)  Guarantor has full power and authority to
execute,  deliver and perform this  Guaranty and this Guaranty  constitutes  the
legal, valid and binding obligation of Guarantor  enforceable  against Guarantor
in  accordance  with its terms,  (d) except as otherwise  disclosed to Lender in
writing, there is no suit, action,  proceeding or investigation pending in which
an adverse decision could materially adversely affect the financial condition of
Guarantor,  and (e) Guarantor  has made its own credit  analysis with respect to
the  Borrower(s)  and the  Indebtedness  and has not  relied on  Lender  for any
information with respect thereto.

         (8)  Acceleration  of  Maturity.  Agrees  that  upon  (a) a  breach  by
Guarantor of any of its agreements,  representations  and warranties  hereunder,
(b) a denial by Guarantor of its liability hereunder, (c) a failure by Guarantor
to pay or perform when due any other obligations of Guarantor to Lender, (d) the
death, declaration of legal incompetence, dissolution, termination of existence,
change of ownership or control, insolvency, business failure or appointment of a
receiver of any part of the  property  of,  commencement  of any  bankruptcy  or
insolvency proceeding by or against, assignment for the benefit of creditors by,
default  under a material  obligation by or issuance of an  attachment,  levy or
execution against the property of,  Guarantor,  or (e) occurrence of a change in
the operations,  prospects,  business or financial  condition of Guarantor which
change,  in the sole  judgment of the Bank, is  materially  adverse,  all of the
Indebtedness,  regardless  of its terms,  shall be deemed for  purposes  of this
Guaranty to have become  matured and the  Guarantor,  at the election of Lender,
shall promptly pay to Lender all of the Indebtedness.

         (9)  Subordination.  Agrees  (a) that  all of the  present  and  future
indebtedness  of the  Borrower(s)  or any of them to the Guarantor  shall be and
hereby is  subordinated  to,  assigned and transferred to Lender and pledged and
made  security  for the  payment  of the  Indebtedness,  (b) that the  Guarantor
contemporaneously  herewith  and from time to time  hereafter  shall on  request
execute such further  endorsement's,  assignments  or other proper  transfers as
Lender may request further to evidence the assignment hereby agreed to and made,
and (c) that Guarantor  hereby  appoints  Lender and each of its Vice Presidents
Guarantor's  attorney  to  demand  and  enforce  payment  in  any  way  of  said
indebtedness,  to prove all claims,  receive all interest or dividends  and take
all other action, either in the name of Lender or of Guarantor,  with respect to
said indebtedness in any liquidation or any proceedings whatsoever affecting the
Borrower(s) or any of them or their  respective  properties under any bankruptcy
or other laws,  now or  hereafter  in effect for the relief of  debtors,  and in
general  to do any act or take any action in regard to said  indebtedness  which
Guarantor might otherwise do.

         (10) Set Off. Agrees that,  without limiting any other right of Lender,
whenever  Lender  has  the  right  to  declare  any  of the  Indebtedness  to be
immediately due and payable (whether or not it has so declared),  Lender and any
branch or affiliate  acting on its behalf is hereby  authorized  at any time and
from time to time, to the fullest extent  permitted by law, to set off and apply
any and all deposits (general or special, time or demand,  provisional or final,
but  excluding  any third party  funds held in escrow or in trust by  Guarantor,
which funds have been identified to Lender as such escrow or trust funds) at any
time held and other  indebtedness  at any time  owing by Lender or any branch or
affiliate of Lender  acting on its behalf to or for the credit or the account of
Guarantor  against  any  and  all of the  obligations  of the  Guarantor  now or
hereafter  existing under this Guaranty,  irrespective  of whether or not Lender
shall have made any demand under this Guaranty and although such obligations may
be unmatured.  Lender agrees promptly to notify Guarantor after any such set-off
and  application,  provided,  that,  the failure to give such  notice  shall not
affect the validity of such set-off and application.  Although Lender may in its
discretion take any act to confirm,  indicate,  or otherwise evidence a set-off,
such act shall  not be deemed to be  necessary  for an  effective  set-off.  The
rights of Lender  under  this  paragraph  are in  addition  to other  rights and
remedies (including,  without limitation,  other rights of set-off) which Lender
may have.

         (11) Property in Possession of Lender.  Agrees that Lender shall have a
lien  on and a  continuing  security  interest  in all  instruments,  documents,
securities,  cash,  property and the proceeds of any of the foregoing,  owned by
the Guarantor or in which the Guarantor has an interest,  which now or hereafter
are at any time in  possession  or  control  of Lender or in  transit by mail or
carrier to or from  Lender or in the  possession  of any third  party  acting on
behalf of Lender,  without regard to whether Lender received the same in pledge,
for safekeeping, as agent for collection or transmission or otherwise or whether
Lender had  conditionally  released  the same,  all of which  shall at all times
constitute  additional  security for the Indebtedness and the obligations of the
Guarantor hereunder.

         (12)  Books and  Records,  etc.  Agrees  that the books and  records of
Lender or any schedule,  certificate or statement  provided for in any agreement
between Lender and the Borrower(s) or any of them showing the amount owed by the
Borrower(s)  or any of them to Lender  from time to time or the rate of interest
on such amount shall be admissible in any action or proceeding against Guarantor
hereunder and shall be binding upon the Guarantor to the same extent as upon the
Borrower(s) or any of them pursuant to any of the Loan Documents.

         (13)  Financial  Information.   Agrees  to  provide  Lender  with  such
financial  statements  and  other  information  with  respect  to the  financial
condition of Guarantor as Lender may from time to time request and notify Lender
promptly  of  any  substantial  change  in  such  financial   condition  or  the
commencement of any material litigation by or against Guarantor.

         (14)  Successors and Assigns.  Agrees that this Guaranty shall inure to
the benefit of and may be enforced by Lender, its successors and assigns and any
assignee  from  Lender of the  Indebtedness  or any part  thereof,  and shall be
binding upon and  enforceable  upon the Guarantor and the  successors,  personal
representatives and assigns of the Guarantor including (a) any successor person,
association,  partnership or corporation  acquiring all or a substantial part of
the assets of Guarantor,  (b) any successor partnership created by reason of the
admission  of a new partner or the  dissolution  of an existing  partnership  by
reason of the death,  resignation or other withdrawal of a partner,  and (c) any
corporation   into  which  Guarantor  shall  have  been  merged,   consolidated,
reorganized or otherwise absorbed.

         (15)  Governing Law;  Jurisdiction.  Agrees that this Guaranty shall be
deemed to be a contract  under the laws of the District of Columbia  (except for
the conflict of law provisions  thereof) and shall be governed by, and construed
in accordance with, the laws of such jurisdiction, except to the extent that the
rights and  remedies of Lender with respect to  collateral  located in any other
jurisdiction  are governed by the laws of such  jurisdiction  and except that in
any legal proceeding in any other jurisdiction,  Lender shall be entitled to the
benefit of all legal  remedies  available  under the laws of such  jurisdiction.
Wherever  possible each  provision of this Guaranty shall be interpreted in such
manner as to be effective and valid under  applicable  law, but if any provision
of this  Guaranty  shall be  prohibited  by or  invalid  under  such  law,  such
provision shall be ineffective to the extent of such  prohibition or invalidity,
without invalidating the remainder of such provision or the remaining provisions
of this  Guaranty.  If any action  arising out of this  Guaranty is commenced by
Lender in any  District  of  Columbia  court,  or Federal  court  located in the
District of Columbia,  Guarantor hereby consents to the jurisdiction of any such
court in any such action and to the laying of venue in the District of Columbia.
Any process in any such action shall be duly served upon  Guarantor if mailed by
registered mail,  postage  prepaid,  to Guarantor at its last known residence or
business  address  as shown by the  records  of  Lender or  otherwise  served in
accordance with law. The pleading of any statute of limitations and any right of
Guarantor  to TRIAL BY JURY in any suit,  action  or  proceeding  in  connection
herewith are hereby expressly WAIVED.

         (16) Other  Guarantors.  Agrees  that  unless the context in which used
clearly indicates otherwise,  "Guarantor" shall mean the guarantors hereunder or
any one of them,  and the use of any gender shall be  applicable to all genders.
The obligations of such guarantors hereunder, if there be more than one, are and
shall be joint  and  several.  The  obligations  and  liabilities  of  Guarantor
hereunder shall not be reduced or limited by reason of any similar or dissimilar
guaranty  executed  in favor of Lender by any other  person or entity,  and this
Guaranty shall be  enforceable  against  Guarantor  without regard to such other
guaranty or guaranties.

         (17)  Counterparts.  Agrees  that  this  Guaranty  may be  executed  in
multiple  counterparts,  no  one of  which  needs  to be  executed  by  all  the
guarantors  hereunder,  which together shall constitute a single instrument and,
regardless of whether all guarantors have executed a counterpart  hereof,  shall
be binding on all guarantors who have executed a counterpart.


         IN WITNESS WHEREOF,  the Guarantor has executed this instrument the day
and year first above written.


Witness:                                    GUARANTOR:

_____________________________       __________________________________(SEAL)
                                             RODNEY I. SMITH