CHANGE OF CONTROL AGREEMENT

CHANGE OF CONTROL AGREEMENT

THIS AGREEMENT is entered into as of the 24 ^th day of September, 2008 (the "Effective Date") by and between Community Financial Corporation ("CFC"), a Virginia corporation, and JOHN HOWERTON (the "Executive").

WITNESSETH:

WHEREAS, CFC owns 100% of the outstanding stock of Community Bank (the "Bank"), a federally chartered savings bank;

WHEREAS, Executive is the Senior Vice President/Director of Retail Banking of the Bank, and as such is a key officer whose continued dedication, availability, advice and counsel to the Bank is deemed important to the Boards of Directors of CFC and the Bank and to their respective stockholders;

WHEREAS, CFC and the Bank wish to retain the services of Executive free from any distractions or conflicts that could arise as a result of a change in control of CFC or the Bank.

NOW, THEREFORE, to assure the Bank and CFC of Executive's continued dedication, the availability of his advice and counsel to the Board of Directors of the Bank and CFC free of any distractions resulting from a change of control, and for other good and valuable consideration, the receipt and adequacy whereof each party hereby acknowledges, CFC and Executive hereby agree as follows:

1.            TERM OF AGREEMENT : This Agreement shall remain in effect until cancelled by either party hereto, upon not less than 24 months prior written notice to the other party. The execution of this Agreement shall automatically cancel and void any severance agreement which otherwise might be in effect between Executive and Bank.

2.            CHANGE OF CONTROL : If there is a Change of Control of the Bank or of CFC during the term of this Agreement, Executive shall be entitled to a severance payment in the event the Executive suffers an Involuntary Termination within six (6) months preceding or 24 months after the Change in Control, unless such termination is for Cause. The amount of such severance payment shall equal twenty-four (24) months of Executive's then current salary.

3.            LIMITATION OF BENEFITS : It is the intention of the parties that no payment be made or benefit provided to the Executive that would constitute an "excess parachute payment" within the meaning of Section 280G of the Code and any regulations thereunder, thereby resulting in a loss of an income tax deduction by CFC or the imposition of an excise tax on the Executive under Section 4999 of the Code. If the independent accountants serving as auditors for CFC immediately prior to the date of a Change of Control determine that some or all of the payments or benefits scheduled under this Agreement, when combined with any other payments or benefits provided to the Executive on a Change of Control by CFC, the Bank and any affiliate of CFC or the Bank required to be aggregated with CFC or the Bank under Section 280G of the Code, would constitute nondeductible excess parachute payments by CFC under Section 280G of the Code, then the payments or benefits scheduled under this Agreement will be reduced to one dollar less than the maximum amount which may be paid or provided without causing any such payments or benefits scheduled under this Agreement or otherwise provided on a Change of Control to be nondeductible. The determination made as to the reduction of benefits or payments required hereunder by the independent accountants shall be binding on the parties. The Executive shall have the right to designate within a reasonable period which payments or benefits scheduled under this Agreement will be reduced; provided, however, that if no direction is received from the Executive, CFC shall implement the reductions under this Agreement in its discretion.

4.            LITIGATION - OBLIGATIONS - SUCCESSORS :

(a)           If litigation shall be brought or arbitration commenced to challenge, enforce or interpret any provision of this Agreement, and such litigation or arbitration does not end with judgment in favor of CFC, CFC hereby agrees to indemnify the Executive for his reasonable attorney's fees and disbursements incurred in such litigation or arbitration.

(b)           CFC's obligation to pay the Executive the compensation and benefits and to make the arrangements provided herein shall be absolute and unconditional and shall not be affected by any circumstances, including, without limitation, any set-off, counterclaim, recoupment, defense or other right which CFC may have against him or anyone else. All amounts payable by CFC hereunder shall be paid without notice or demand. The Executive shall not be required to mitigate the amount of any payment provided for in this Agreement by seeking other employment or otherwise.

(c)           CFC will 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 CFC, by agreement in form and substance satisfactory to the Executive, to expressly assume and agree to perform this Agreement in its entirety. Failure of CFC to obtain such agreement prior to the effectiveness of any such succession shall be a breach of this Agreement and shall entitle the Executive to the compensation described in Section 2. As used in this Agreement, "CFC" shall mean Community Financial Corporation and any successor to its business and/or assets as aforesaid which executes and delivers the agreement provided for in this Section 4 or which otherwise becomes bound by all the terms and provisions of this Agreement by operation of law.

5.            NOTICES : For the purposes of this Agreement, notices and all other communications provided for in the Agreement shall be in writing and shall be deemed to have been duly given when delivered or mailed by United States registered or certified mail, return receipt requested, postage prepaid, addressed as follows:

or at such other address as any party may have furnished to the other in writing in accordance herewith, except that notices of change of address shall be effective only upon receipt.

6.            MODIFICATION - WAIVERS - APPLICABLE LAW : No provisions of this Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing, signed by the Executive and on behalf of CFC by such officer as may be specifically designated by the Board of Directors of CFC. No waiver