TRI-COUNTY FINANCIAL CORPORATION

--------------------------------------------------------------------------------

                               Guaranty Agreement

--------------------------------------------------------------------------------

     THIS AGREEMENT is entered into this 28th day of March, 2001 (the "Effective
Date"),  by and between  Tri-County  Financial  Corporation  (the "Company") and
William J. Pasenelli (the "Employee").

     WHEREAS,  the Employee has  heretofore  been employed by Community  Bank of
Tri-County  (the "Bank") as its Executive  Vice  President  and Chief  Financial
Officer, and has entered into an agreement (the "Bank Agreement") restated as of
March ______, 2001, with the Employee; and

     WHEREAS, the Board of Directors (the "Board") of the Company believes it is
in the best  interests  of the  Company  to enter into this  Agreement  with the
Employee  in  order  to  assure  continuity  of  management  of the  Bank and to
reinforce and encourage the long-term retention of the Employee; and

     WHEREAS,  the  parties  desire by this  writing to set forth the  Company's
commitment to guarantee the Bank's obligations under the Bank Agreement with the
Employee.

     NOW, THEREFORE, it is AGREED as follows:

     1.  Consideration from company:  Joint and Several  Liability.  The Company
         ---------------------------------------------------------
hereby  agrees  that to the extent  permitted  by law,  it shall be jointly  and
severally liable with the Bank for the payment of all amounts due under the Bank
Agreement,  provided that the paragraphs of the Bank Agreement that appear under
the heading  "Termination or Suspension under Federal Law" shall be inapplicable
to this  Agreement.  The Board may in its discretion at any time during the term
of this Agreement agree to pay the Employee a base salary for the remaining term
of this  Agreement.  If the Board  agrees to pay such  salary,  the Board  shall
thereafter  review,  not less often than  annually,  the rate of the  Employee's
salary, and in its sole discretion may decide to increase his salary.

     2. Discretionary  Bonuses:  Participation in Retirement,  Medical and Other
        ------------------------------------------------------------------------
Plans.  The Employee  shall  participate  in an equitable  manner with all other
-----
senior  management  employees of the company in  discretionary  bonuses that the
Board may award from time to time to the company's senior management  employees,
as well as in (i) any of the  following  plans or programs  that the Company may
now  or in the  future  maintain:  group  hospitalization,  disability,  health,
dental,  sick leave,  life  insurance,  travel and/or accident  insurance,  auto
allowance/auto  lease,  retirement,  pension,  and/or  other  present  or future
qualified plans provided by the Company,  generally  which benefits,  taken as a
whole,  must be at least as favorable as those in effect on the Effective  Date;
and (ii) any fringe benefits which are or may become  available to the Company's
senior  management  employees,  including  for

                                      -1-
<PAGE>

example:  any  stock  option  or  incentive  compensation  plans,  and any other
benefits which are commensurate  with the  responsibilities  and functions to be
performed by the Employee under this Agreement.

     3.  Indemnification.  The Company  agrees that its Bylaws shall continue to
         ---------------
provide for indemnification of directors,  officers, employees and agents of the
Company,  including the Employee, during the full term of this Agreement, and to
at all times provide adequate insurance for such purposes.

     4. Successors and Assigns.
        ----------------------

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

     (b)  Attachment.  Except as required  by law, no right to receive  payments
          ----------
under this Agreement shall be subject to anticipation,  commutation, alienation,
sale, assignment, encumbrance, charge, pledge, or hypothecation or to exclusion,
attachment,  levy or similar  process or assignment by operation of law, and any
attempt, voluntary or involuntary, to effect any such action shall be null, void
and of no effect.

     5. Amendments. No amendments or additions to the Agreement shall be binding
        ----------
unless  made in  writing  and  signed  by all of the  parties,  except as herein
otherwise specifically provided.

     6. Applicable Law. Except to the extent  preempted by Federal law, the laws
        --------------
of the State of Maryland shall govern this Agreement in all respects, whether as
to its validity, construction, capacity, performance or otherwise.

     7. Severability. The provisions of this Agreement shall be deemed severable
        ------------
and the  invalidity or  unenforceability  of any provision  shall not affect the
validity or enforceability of the other provisions hereof.

     8. Entire  Agreement.  This Agreement,  together with any  understanding or
        -----------------
modifications  thereof as agreed to in writing by the parties,  shall constitute
the entire agreement between the parties hereto.


                                      -2-
<PAGE>

         IN WITNESS WHEREOF, the parties have executed this Agreement on the day
and year first hereinabove written.


ATTEST:                             TRI-COUNTY FINANCIAL CORPORTION


/s/ H. Beaman Smith                 By  /s/ Michael L. Middleton
---------------------------            ----------------------------------------
Secretary                              Its Chairman of the Board


WITNESS:



/s/ Christy M. Lombardi                /s/ William J. Pasenelli
--------------------------             -----------------------------------------
                                       William J. Pasenelli


                                      -3-