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                                  EXHIBIT 10.1

                              EMPLOYMENT AGREEMENT

     THIS EMPLOYMENT AGREEMENT (the "Agreement") is made as of the      day of
                                                                   ----
January, 2003, between Chesapeake Bank of Maryland (the "Bank"), a capital stock
federal savings bank chartered by the United States, and Banks of the
Chesapeake, Inc. (the "Company"), the holding company of the Bank (the Bank and
the Company collectively, the "Employer"), and R. THOMAS JEFFERSON, a resident
of the State of Maryland (the "Employee").

                                    RECITALS:

     The Employer desires to employ the Employee as the President and Chief
Executive Officer of the Employer and the Employee desires to accept such
employment.

     In consideration of the above premises and the mutual agreements
hereinafter set forth, the parties hereby agree as follows:

1. DEFINITIONS. Whenever used in this Agreement, the following terms and their
variant forms will have the meaning set forth below:

     1.1 "Agreement" means this Agreement and any exhibits incorporated herein
together with any amendments hereto made in the manner described in this
Agreement.

     1.2 "Affiliate" means any business entity which controls the Employer, is
controlled by or is under common control with the Employer.

     1.3 "Area" means the geographic area within a radius of 20 miles of any
office or facility maintained by the Employer. It is the express intent of the
parties that the Area as defined herein is the area where the Employee performs
or performed services on behalf of the Employer under this Agreement as of, or
within a reasonable time prior to, the termination of the Employee's employment
hereunder.

     1.4 "Board" means the board of directors of the Bank.

     1.5 "Business of the Employer" means the business conducted by the
Employer, which is community banking.

     1.6 "Cause" means, any of the following events or conduct preceding a
termination of employment initiated by the Employer:

          (a) any act that constitutes, on the part of the Employee, fraud or
     dishonesty toward the Employer;

          (b) the conviction of the Employee of a felony or crime involving
     moral turpitude;

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          (c) the Employee's entering into any transaction or contractual
     relationship with, or diversion of business opportunity from, the Employer
     (other than on behalf of the Employer or with the prior written consent of
     the Board); provided, however, that in the case of this Clause (c), such
     conduct will not constitute Cause unless the Board delivers to the Employee
     notice setting forth (1) the conduct deemed to qualify as Cause, (2)
     reasonable remedial action that might remedy such objection, and (3) a
     reasonable time (not less than thirty (30) days) within which the Employee
     may take such remedial action, and the Employee has not taken the specified
     remedial action with the specified reasonable time;

          (d) the Employee breaches the covenants contained in Sections 6, 7 or
     8 hereof;

          (e) conduct by the Employee that results in removal from the
     Employee's position as an officer or employee of the Employer pursuant to a
     written order by any regulatory agency with authority or jurisdiction over
     the Employer; or

     1.7 "Company Information" means Confidential Information and Trade Secrets.

     1.8 "Confidential Information" means data and information relating to the
business of the Employer (which does not rise to the status of a Trade Secret)
which is or has been disclosed to the Employee or of which the Employee became
aware as a consequence of or through the Employee's relationship to the Employer
and which has value to the Employer and is not generally known to its
competitors. Confidential Information does not include any data or information
that has been voluntarily disclosed to the public by the Employer (except where
such public disclosure has been made by the Employee without authorization) or
that has been independently developed and disclosed by others, or that otherwise
enters the public domain through lawful means.

     1.9 "Change in Control" means any one of the following events first to
occur after the completion of the initial public offering of the common stock of
the Company:

          (a) the acquisition by any person or persons acting in concert of the
     then outstanding voting securities of either the Bank or the Company, if,
     after the transaction, the acquiring person (or persons) owns, controls or
     holds with power to vote twenty-five percent (25%) or more of any class of
     voting securities of the Bank or the Company, as the case may be, or such
     other transaction as may be described under 12 C.F.R. Section 225.41(b)(1)
     or any successor thereto;

          (b) within any twelve-month period (beginning on or after the
     Effective Date) the persons who were directors of either the Bank or the
     Company immediately before the beginning of such twelve-month period (the
     "Incumbent Directors") cease to constitute at least a majority of such
     board of directors; provided that any director who was not a director as of
     the Effective Date will be deemed to be an Incumbent Director if that
     director was elected to such board of directors by, or on the
     recommendation of or with the approval of, at least two-thirds of the
     directors who then qualified as Incumbent Directors;

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          (c) the approval by the stockholders of either the Bank or the Company
     of a reorganization, merger or consolidation, with respect to which persons
     who were the stockholders of either the Bank or the Company, as the case
     may be, immediately prior to such reorganization, merger or consolidation
     do not, immediately thereafter, own more than fifty percent (50%) of the
     combined voting power entitled to vote in the election of directors of the
     reorganized, merged or consolidated company's then outstanding voting
     securities; or

          (d) the sale, transfer or assignment of all or substantially all of
     the assets of the Company or the Bank to any third party.

     1.10 "Effective Date" means         , 200  .
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     1.11 "Good Reason" means, any of the following events or conduct preceding
a termination of employment initiated by the Employee:

          (a) a material diminution in the powers, responsibilities or duties of
     the Employee hereunder or a material change as to whom Employee reports and
     who reports to Employee;

          (b) the failure of the Board to elect the Employee as the President
     and Chief Executive Officer of the Bank and the Company;

          (c) a material breach of the terms of this Agreement by the Employer;

          (d) the failure of the Board to nominate the Employee for re-election
     following expiration of each of the Employee's terms of service on the
     Board that arises during the Term (as defined below);

          (e) a change in the location of the principal office of Employee more
     than thirty five (35) miles from its existing location.

provided, however, that no termination of employment which is triggered by any
conduct or event described in this Section 1.11 shall not constitute a
termination of employment for Good Reason unless the Employee has first provided
the Employer with the opportunity to cure the event or conduct by giving the
Employer a written notice describing in sufficient detail the Employee's belief
that a Good Reason exists and the Employee defers resigning until the expiration
of a thirty (30) day cure period, beginning with the date such notice is
received by the Employer.

     1.12 "Permanent Disability" means the total inability of the Employee to
perform the Employee's duties under this Agreement for a period of ninety (90)
consecutive days as certified by a physician chosen by the Employer and
reasonably acceptable to the Employee.

     1.13 "Trade Secrets" means information including, but not limited to,
technical or nontechnical data, formulas, patterns, compilations, programs,
devices, methods, techniques,

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drawings, processes, financial data, financial plans, product plans or lists of
actual or potential customers or suppliers which:

          (a) derives economic value, actual or potential, from not being
     generally known to, and not being readily ascertainable by proper means by,
     other persons who can obtain economic value from its disclosure or use; and

          (b) is the subject of efforts that are reasonable under the
     circumstances to maintain its secrecy.

2. DUTIES.

     2.1 The Employee is employed as the President and Chief Executive Officer
of the Bank and the Company, subject to the direction of the Board or its
designee, must perform and discharge well and faithfully the duties which may be
assigned to him from time to time by the Employer in connection with the conduct
of its business. The duties and responsibilities of the Employee are set forth
on Exhibit A attached hereto.

     2.2 In addition to the duties and responsibilities specifically assigned to
the Employee pursuant to Section 2.1 hereof, the Employee must:

          (a) devote substantially all of the Employee's time, energy and skill
     during regular business hours to the performance of the duties of the
     Employee's employment (reasonable vacations and reasonable absences due to
     illness excepted) and faithfully and industriously perform such duties;

          (b) diligently follow and implement all management policies and
     decisions communicated to him by the Board; and

          (c) timely prepare and forward to the Board all reports and accounting
     as may be requested of the Employee.

     2.3 The Employee must devote the Employee's entire business, time,
attention and energies to the Business of the Employer and must not during the
Term of this Agreement be engaged (whether or not during normal business hours)
in any other business or professional activity, whether or not such activity is
pursued for gain, profit or other pecuniary advantage; but this will not be
construed as preventing the Employee from:

          (a) investing the Employee's personal assets in businesses which are
     not in competition with the Business of the Employer and which will not
     require any services on the part of the Employee in their operation or
     affairs and in which the Employee's participation is solely that of an
     investor;

          (b) purchasing securities in any corporation whose securities are
     regularly traded provided that such purchase will not result in him
     collectively owning beneficially at any time five percent (5%) or more of
     the equity securities of any business in competition with the Business of
     the Employer; and

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          (c) participating in civic and professional affairs and organizations
     and conferences, preparing or publishing papers or books or teaching so
     long as the Board approves of such activities prior to the Employee's
     engaging in them.

     2.4 Directorship. Employee will also be appointed to and serve as a member
of the Board of Directors of the Bank.

3. TERM AND TERMINATION.

     3.1 Term. The term of this Agreement will initially be set at three (3)
years commencing on the date hereof and will automatically renew each day after
the date hereof so that the term of this Agreement remains a three (3) year
term; provided however that the automatic renewals as set forth in this
paragraph 3.1 may be terminated by either party hereto giving notice to the
other party of such termination, in which event, the term will end on the third
anniversary of the thirtieth (30th) day following the date the written notice is
received (as so calculated, the "Term").

     3.2 Termination. The employment of the Employee under this Agreement may be
terminated prior to the expiration of the Term only as follows, subject to the
conditions set forth below:

          3.2.1 By the Employer:

               (a) for Cause at any time, upon written notice to the Employee,
          in which event the Employer will have no further obligation to the
          Employee except for the payment of any amounts due and owing under
          Section 4 on the effective date of the termination; or

               (b) without Cause or upon the Permanent Disability of Employee at
          any time, provided that the Employer gives the Employee sixty (60)
          days' prior written notice of its intent to terminate, in which event
          the Employer will be required to make the termination payments under
          Section 3.7.

          3.2.2 By the Employee:

               (a) for Good Reason at any time, in which event the Employer will
          be required to make the termination payments under Section 3.7; or

               (b) without Good Reason or upon the Permanent Disability of the
          Employee, provided that the Employee gives the Employer sixty (60)
          days' prior written notice of the Employee's intent to terminate, in
          which event the Employer will have no further obligation to the
          Employee except for future payment of any amounts due and owing under
          Section 4 on the effective date of the termination.

          3.2.3 By the Employee:

               (a) within six (6) months following a Change in Control; provided
          that the Employee gives at least thirty (30) days' prior written
          notice to the Employer of

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          the Employee's intention to terminate this Agreement with such
          resignation to be effective immediately, in which event the Employer
          will be required to make a termination payment under Section 3.7; or

               (b) prior to the date on which a Change in Control occurs if the
          Employee can demonstrate that a third party has taken steps reasonably
          calculated to effect a Change in Control or in connection with or
          anticipation of a Change in Control, in which event the Employer will
          be required to make a termination payment under Section 3.7.

          3.2.4 At any time upon mutual, written agreement of the parties, in
          which event the Employer will have no further obligation to the
          Employee except for the payment of any amounts due and owing under
          Section 4 on the effective date of termination unless otherwise set
          forth in the written agreement.

          3.2.5 Immediately upon the Employee's death, in which event the
          Employer will have no further obligation to the Employee except for
          the payment of any amounts due and owing under Section 4 on the
          effective date of termination.

     3.3 Effect of Termination. Termination of the employment of the Employee
pursuant to Section 3.2 will be without prejudice to any right or claim which
may have previously accrued to either the Employer or the Employee hereunder and
will not terminate, alter, supersede or otherwise affect the terms and covenants
and the rights and duties prescribed in this Agreement.

     3.4 Suspension With Pay. Nothing contained herein will preclude the
Employer from releasing the Employee of the Employee's normal duties and
suspending Employee, with pay, during the pendency of any investigation or
examination to determine whether or not Cause exists for termination of
employee.

     3.5 Suspension Without Pay. If Employee is suspended and/or temporarily
prohibited from participating in the conduct of the Employer's affairs by a
notice served under Section 8(e)(3) or (g)(1) of the Federal Deposit Insurance
Act, the Employer's obligations under this Agreement will be suspended as of the
date of service thereof, unless stayed by appropriate proceedings. If the
charges in such notice are dismissed, the Employer may in its discretion:

          (a) pay Employee all or part of the compensation withheld while its
     contract obligations were suspended; and/or

          (b) reinstate (in whole or in part) any of its obligations which were
     suspended.

     3.6 Other Regulatory Requirements. If the Bank is in default, as defined in
Section (3)(x)(1) of the Federal Deposit Insurance Act, all obligations under
this Agreement will terminate as the date of such default, but no vested rights
of the Employee will be affected. Further, all obligations under this Agreement
will be terminated, except, to the extent determined that continuation of the
Agreement is necessary for the continued operation of the Bank:

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          (a) by the Director of the Office of Thrift Supervision (the
     "Director") or his or her designee, at the time the FDIC enters into an
     agreement to provide assistance to or on behalf of the Bank under the
     authority of the Federal Deposit Insurance Act; or

          (b) by the Director or his or her designee, at the time the Director
     or his or her designee approves a supervisory merger to resolve problems
     relating to the operation of the Bank or when the Bank is determined by the
     Director to be in an unsafe or unsound condition.

     3.7 Termination Payments. In the event this Agreement is terminated by the
Employer pursuant to Section 3.2.1(b) or by the Employee pursuant to Section
3.2.2(a) and a Change in Control has not occurred, then commencing with the
first payroll date immediately following the effective date of such termination,
the Employer will pay to the Employee as severance pay and liquidated damages an
amount equal to the Average Annual Compensation (as defined below) for a period
equal to the remaining Term. In the event a Change in Control has occurred or in
anticipation thereof and this Agreement is terminated by Employer or by Employee
pursuant to Section 3.2.3, the Employee shall be entitled to a lump sum payment
equal to 2.99 times his average annual compensation and shall be paid such lump
sum payment by Employer within 24 hours of the effective date of termination of
this Agreement as used herein, the term "Average Annual Compensation" means the
greater of (1) the Employee's Base Salary for the prior year, or (2) the average
of Base Salary and incentive bonus as described in Section 4.1(b) with respect
to the most recent three (3) consecutive twelve-month periods during which the
Employee was employed by the Employer (or if the Employer has been employed for
fewer periods, such lesser number of periods) immediately prior to the effective
date of the Agreement's termination that produced the highest average.

     Notwithstanding any other provisions to this Agreement to the contrary, if
the aggregate of the payments provided for in this Agreement and other payments
and benefits which the Employee has the right to receive from the Employer (the
"Total Payments") would constitute a "parachute payment," as defined in Section
280G(b)(2) of the Internal Revenue Code, the Employee shall receive the Total
Payments unless (a) the after-tax amount that would be retained by the Employee
(after taking into account all federal, state and local income taxes payable by
the Employee and the amount of any excise taxes payable by the Employee under
Section 4999 of the Internal Revenue Code that would be payable by the Employee
(the "Excise Taxes")) if the Employee were to receive the Total Payments has an
aggregate value less than (b) the after-tax amount that would be retained by the
Employee (after taking into account all federal, state and local income taxes
payable by the Employee) if the Employee were to receive the Total Payments
reduced to the largest amount as would result in no portion of the Total
Payments being subject to Excise Taxes (the "Reduced Payments"), in which case
the Employee shall be entitled only to the Reduced Payments. If the Employee is
to receive the Reduced Payments, the Employee shall be entitled to determine
which of the Total Payments, and the relative portions of each, are to be
reduced.

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4. COMPENSATION AND BENEFITS.

     4.1 Compensation. The Employee will receive the following salary and
benefits:

          (a) Base Salary. During the Term, the Employee will receive a base
     salary at the rate of $160,000 per annum, payable in substantially equal
     installments in accordance with the Bank's regular payroll practices ("Base
     Salary"). The Employee's Base Salary will be reviewed by the Board
     annually, and the Employee will be entitled to receive annually an increase
     in such amount, if any, as may be determined by the Board.

          (b) Incentive Compensation.

               (i) In addition to Employee's Base Salary under Section 4.1(a),
          within ninety (90) days following the end of each fiscal year of the
          Employer's operations, the Employer will pay the Employee a bonus as
          determined each year by the Compensation Committee of the Board
          provided certain performance criteria (to be determined annually by
          the Board) are satisfied.

               (ii) The Employee will also be entitled to participate in such
          other bonus, incentive and other executive compensation programs as
          are made available to senior management of the Employer from time to
          time.

     The bonus amounts which may be payable to the Employee pursuant to this
Section 4.1(b) is referred to herein as "Incentive Compensation".

     4.2 Compensation as a Director. The Employee will be compensated for
attendance at regular and special Board meetings at the rate established for
Board members.

     4.3 Automobile. The Bank will make available to the Employee an automobile
equivalent in value to the vehicle provided to Employee immediately prior to the
date of this Agreement to be utilized by Employee for business and personal use
as is customary for heads of financial institutions in the Area.

     4.4 Business Expenses; Memberships. The Employer specifically agrees to
reimburse the Employee for (a) reasonable business (including travel) expenses
incurred by the Employee in the performance of the Employee's duties hereunder,
as approved from time to time by the Board, and (b) the dues and business
related expenditures, including initiation fees, associated with membership in a
country club and in professional associations which are commensurate with the
Employee's position; provided, however, that the Employee must, as a condition
of reimbursement, submit verification of the nature and amount of such expenses
in accordance with reimbursement policies from time to time adopted by the
Employer and in sufficient detail to comply with rules and regulations
promulgated by the Internal Revenue Service.

     4.5 Vacation. On a non-cumulative basis the Employee will be entitled to
vacation in each year of this Agreement in accordance with the Bank's vacation
policy as then in effect, during which the Employee's Base Salary will be paid
in full.

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     4.6 Benefits. In addition to the Base Salary and Incentive Compensation,
the Employee will be entitled to such benefits as may be available from time to
time for executives of the Employer similarly situated to the Employee. All such
benefits will be awarded and administered in accordance with the Employer's
standard policies and practices. Such benefits may include, by way of example
only, profit-sharing plans, retirement, life and disability insurance benefits
and such other benefits as the Employer deems appropriate.

     4.7 Withholding. The Employer may deduct from each payment of compensation
hereunder all amounts required to be deducted and withheld in accordance with
applicable federal and state income, FICA and other withholding requirements.

5. COMPANY INFORMATION.

     5.1 Ownership of Information. All Company Information received or developed
by the Employee while employed by the Employer will remain the sole and
exclusive property of the Employer.

     5.2 Obligations of the Employee. The Employee agrees (a) to hold Company
Information in strictest confidence, and (b) not to use, duplicate, reproduce,
distribute, disclose or otherwise disseminate Company Information or any
physical embodiments thereof and may in no event take any action causing or fail
to take any action necessary in order to prevent any Company Information from
losing its character or ceasing to qualify as Confidential Information or a
Trade Secret. In the event that the Employee is required by law to disclose any
Company Information, the Employee will not make such disclosure unless (and then
only to the extent that) the Employee has been advised by the Company's legal
counsel that such disclosure is required by law and then only after prior
written notice is given to the Employer when the Employee becomes aware that
such disclosure has been requested and is required by law. This Section 5 will
survive the termination of this Agreement with respect to Confidential
Information for so long as it remains Confidential Information, but for no
longer than three (3) years following termination of this Agreement, and this
Section 5 will survive termination of this Agreement with respect to Trade
Secrets for so long as is permitted by the then-current Maryland Trade Secrets
Act.

     5.3 Delivery upon Request or Termination. Upon request by the Employer, and
in any event upon termination of employment with the Employer, the Employee will
promptly deliver to the Employer all property belonging to the Employer,
including without limitation, all Company Information then in the Employee's
possession or control.

6. NON-COMPETITION. The Employee agrees that during the Term hereunder and, in
the event of the Employee's termination of employment for any reason, thereafter
for a period equal to the greater of (a) six (6) months; or (b) the period
during which the Employee is to be paid monthly termination payments, if any, in
accordance with Section 3.7 hereof, the Employee will not (except on behalf of
or with the prior written consent of the Employer), within the Area, either
directly or indirectly, on the Employee's own behalf or in the service or on
behalf of others, as a principal, partner, officer, director, manager,
supervisor, administrator, consultant, executive employee or in any other
capacity which involves duties and responsibilities similar to

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those undertaken for the Employer, engage in any business which is the same as
or essentially the same as the Business of the Employer.

7. NON-SOLICITATION OF CUSTOMERS. The Employee agrees that during the Term
hereunder and, in the event of the Employee's termination of employment for any
reason, thereafter for a period equal to the greater of (a) twelve (12) months;
or (b) the period during which the Employee is to be paid monthly termination
payments, if any, in accordance with Section 3.7 hereof, the Employee will not
(except on behalf of or with the prior written consent of the Employer), within
the Area, on the Employee's own behalf or in the service or on behalf of others,
solicit, divert or appropriate or attempt to solicit, divert or appropriate,
directly or by assisting others, any business from any of the Employer's
customers, including actively sought prospective customers, with whom the
Employee has or had material contact during the last two (2) years of the
Employee's employment, for purposes of providing products or services that are
competitive with those provided by the Employer.

8. NON-SOLICITATION OF EMPLOYEES. The Employee agrees that during the Term
hereunder and, in the event of the Employee's termination of employment for any
reason, thereafter for a period equal to the greater of (a) twelve (12) months;
or (b) the period during which the Employee is to be paid monthly termination
payments, if any, in accordance with Section 3.7 hereof, the Employee will not,
except for Employee's Administrative Assistant, within the Area, on the
Employee's own behalf or in the service or on behalf of others, solicit, recruit
or hire away or attempt to solicit, recruit or hire away, directly or by
assisting others, any employee of the Employer or its Affiliates, whether or not
such employee is a full-time employee or a temporary employee of the Employer or
its Affiliates and whether or not such employment is pursuant to written
agreement and whether or not such employment is for a determined period or is at
will.

9. REMEDIES. The Employee agrees that the covenants contained in Sections 5
through 8 of this Agreement are of the essence of this Agreement; that each of
the covenants is reasonable and necessary to protect the business, interests and
properties of the Employer; and that irreparable loss and damage will be
suffered by the Employer should the Employee breach any of the covenants.
Therefore, the Employee agrees and consents that, in addition to all the
remedies provided by law or in equity, the Employer will be entitled to a
temporary restraining order and temporary and permanent injunctions to prevent a
breach or contemplated breach of any of the covenants. The Employer and the
Employee agree that all remedies available to the Employer or the Employee, as
applicable, will be cumulative.

10. SEVERABILITY. The parties agree that each of the provisions included in this
Agreement is separate, distinct and severable from the other provisions of this
Agreement and that the invalidity or unenforceability of any Agreement provision
will not affect the validity or enforceability of any other provision of this
Agreement. Further, if any provision of this Agreement is ruled invalid or
unenforceable by a court of competent jurisdiction because of a conflict between
the provision and any applicable law or public policy, the provision will be
redrawn to make the provision consistent with and valid and enforceable under
the law or public policy.

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11. NO SET-OFF BY THE EMPLOYEE. The existence of any claim, demand, action or
cause of action by the Employee against the Employer, or any Affiliate of the
Employer, whether predicated upon this Agreement or otherwise, will not
constitute a defense to the enforcement by the Employer of any of its rights
hereunder.

12. NOTICE. All notices and other communications required or permitted under
this Agreement will be in writing and, if mailed by prepaid first-class mail or
certified mail, return receipt requested, will be deemed to have been received
on the earlier of the date shown on the receipt or three (3) business days after
the postmarked date thereof. In addition, notices hereunder may be delivered by
hand, facsimile transmission or overnight courier, in which event the notice
will be deemed effective when delivered or transmitted. All notices and other
communications under this Agreement must be given to the parties hereto at the
following addresses:

               (i)  If to the Employer, to it at:

                    2001 E. Joppa Road
                    Baltimore, Maryland 21234-2896
                    Attn: Chairman of the Board

               (ii) If to the Employee, to the Employee at:

                    4417 Hershy Way
                    Baltimore, Maryland 21236

13. ASSIGNMENT. Neither party hereto may assign or delegate this Agreement or
any of its rights and obligations hereunder without the written consent of the
other party hereto.

14. WAIVER. A waiver by the Employer of any breach of this Agreement by the
Employee will not be effective unless in writing, and no waiver will operate or
be construed as a waiver of the same or another breach on a subsequent occasion.

15. ARBITRATION. Any controversy or claim arising out of or relating to this
Agreement, or the breach thereof, will be settled by binding arbitration in
accordance with the Commercial Arbitration Rules of the American Arbitration
Association. The decision of the arbitration panel will be final and binding on
the parties, and judgment upon the award rendered by the arbitration panel may
be entered by any court having jurisdiction thereof.

16. ATTORNEYS' FEES. In the event that the parties have complied with this
Agreement with respect to arbitration of disputes and litigation ensues between
the parties concerning the enforcement of an arbitration award and the Employee
must employ separate legal counsel, the Employer shall advance to the Employee,
within thirty (30) days after receiving copies of invoices submitted by
Employee, any and all reasonable attorneys' fees and expenses incurred with
preparing, investigating and litigating such action, proceeding or suit. The
Employee must reimburse the Employer for any and all advances that exceed the
first $5,000 advanced to the Employee for such legal expenses only if and to the
extent that a final decision by a court of

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competent jurisdiction has determined that the Employee is not entitled to
receive any amounts due or to enforce any of the rights under this Agreement.

17. APPLICABLE LAW. This Agreement will be construed and enforced under and in
accordance with the laws of the State of Maryland. The parties agree that any
appropriate state court located in Baltimore County, Maryland, will have
jurisdiction of any case or controversy arising under or in connection with this
Agreement and will be a proper forum in which to adjudicate such case or
controversy. The parties consent to the jurisdiction of such courts.

18. INTERPRETATION. Words importing the singular form shall include the plural
and vice versa. The terms "herein", "hereunder", "hereby", "hereto", "hereof"
and any similar terms refer to this Agreement. Any captions, titles or headings
preceding the text of any article, section or subsection herein are solely for
convenience of reference and will not constitute part of this Agreement or
affect its meaning, construction or effect.

19. ENTIRE AGREEMENT. This Agreement embodies the entire and final agreement of
the parties on the subject matter stated in the Agreement. No amendment or
modification of this Agreement will be valid or binding upon the Employer or the
Employee unless made in writing and signed by both parties. All prior
understandings and agreements relating to the subject matter of this Agreement
are hereby expressly terminated.

20. RIGHTS OF THIRD PARTIES. Nothing herein expressed is intended to or will be
construed to confer upon or give to any person, firm or other entity, other than
the parties hereto and their permitted assigns, any rights or remedies under or
by reason of this Agreement.

21. SURVIVAL. The obligations of the Employee pursuant to Sections 5, 6, 7, 8
and 9 will survive the termination of the employment of the Employee hereunder
for the period designated under each of those respective sections.

22. JOINT AND SEVERAL. The obligation of the Bank and the Company to Employee
hereunder will be joint and several.

                                       12

<PAGE>

     IN WITNESS WHEREOF, the Employer and the Employee have executed and
delivered this Agreement as of the date first shown above.

                                              THE EMPLOYER:

                                              CHESAPEAKE BANK OF MARYLAND


                                              By:
                                                  ------------------------------
                                              Name: H. Allen Becker
                                              Title: Chairman


                                              BANKS OF THE CHESAPEAKE, INC.


                                              By:
                                                  ------------------------------
                                              Name: H. Allen Becker
                                              Title: Chairman


                                              THE EMPLOYEE:


                                              By:
                                                  ------------------------------
                                              Name: R. Thomas Jefferson

                                       13

<PAGE>

                                    Exhibit A

                           CHESAPEAKE BANK OF MARYLAND
                                 JOB DESCRIPTION

JOB TITLE:     PRESIDENT/CHIEF EXECUTIVE OFFICER
FSLA:          EXEMPT
REPORTS TO:    BOARD OF DIRECTORS

SUMMARY:

Plans, develops, and establishes policies and objectives of business
organization in accordance with Board directives and corporation charter by
performing the following duties personally or through subordinate managers.

ESSENTIAL DUTIES AND RESPONSIBILITIES: The primary duty and responsibility of
this position is quality service to both internal and external customers.
Specific duties are listed below. Other duties may be assigned.

Confers with corporate managers to plan business objectives, to develop
organizational policies, to coordinate functions and operations between
divisions and departments, and to establish responsibilities and procedures for
attaining objectives.

Provides leadership representations for the bank and holding company board of
directors and its committees. Contributes to the effective, profitable operation
of the corporation by participation in Liquidity and Asset/Liability Management,
Loan Committee, Public Relations /Marketing Committee, and Asset Review
Committee activities.

Ensures that the spirit and intent of regulatory and supervisory trusts and
concerns are met or exceeded.

Keeps the Board informed concerning major developments and consults with same
regarding major decisions affecting the bank or holding company.

Represents the bank and provides leadership in key community activities,
including business, charitable, civic, and social organizations to maintain a
proper responsible citizen stature for the bank.

Reviews activity reports and financial statements to determine progress and
status in attaining objectives and revises objectives and plans in accordance
with current conditions.

                                      A-1

<PAGE>

Directs and coordinates formulation of financial programs to provide funding for
new or continuing operations to maximize returns on investments and to increase
productivity.

Plans and develops labor and public relations policies designed to improve
company's image and relations with customers, employees, and the public.

Evaluates performance of executives for compliance with established policies and
objectives of bank.

SUPERVISORY RESPONSIBILITY:

Manages subordinate supervisors in the Lending/Deposit function, Finance and
Operations function, Human Resources, and Quality Services and Sales function.
Also, responsible for the direct supervision of the Corporate Secretary. Is
responsible for the overall direction, coordination, and evaluation of these
units.

Provides direct guidance on personnel activities which affect the key bank
management team, including salary administration, management incentive,
performance objectives, and compliance with established policies to ensure solid
team efforts toward the attainment of department, bank, and corporation goals.

Carries out supervisory responsibilities in accordance with the organization's
policies and applicable laws. Responsibilities include interviewing, hiring, and
training employees; planning, assigning, and directing work; appraising
performance; rewarding and disciplining employees; and addressing complaints and
resolving problems.

CRA REQUIREMENT:

Expected to understand the bank's obligations under the Community Reinvestment
Act and how to fulfill them. Expected to cooperate with and support the bank's
CRA program. Will be held accountable for any lack of cooperation that weakens
the bank's CRA performance, as reflected in internal audits, agency
examinations, and/or community projects.

PRODUCT AND KNOWLEDGE REQUIREMENT:

Should know and understand the products and services that are provided by
Chesapeake Bank of Maryland and give quality service at all times to our
customers.

QUALIFICATION REQUIREMENTS:

To perform this job successfully, an individual must be able to perform each
essential duty satisfactorily. The requirements listed below are representative
of the knowledge, skill, and/or

                                      A-2

<PAGE>

ability required. Reasonable accommodations may be made to enable individuals
with disabilities to perform the essential functions.

     EDUCATION AND/OR EXPERIENCE:

     College graduate and graduate of recognized graduate banking school or
     equivalent; ten years related experience and/or training; or equivalent
     combination of education and experience.

     LANGUAGE SKILLS:

     Ability to read, analyze, and interpret common technical journals,
     financial reports, and legal documents. Ability to respond to common
     inquiries or complaints from customers, regulatory agencies, or members of
     the community. A high level of interpersonal skills to effectively
     communicate policies, procedures, staff objectives, and information to top
     management, public groups, and/or boards of directors.

     ANALYTICAL SKILLS:

     A high level of analytical, mathematical and reasoning skills to assess and
     evaluate the operation of subordinate areas of responsibility, participate
     in establishing bank-wide financial goals, and draft operational reports to
     the board.

PHYSICAL DEMANDS:

Reasonable accommodations may be made to enable individuals with disabilities to
perform the essential functions.

WORK ENVIRONMENT:

Good. There is little discomfort from noise, heat, dust, or other adverse
factors.

PERFORMANCE EXPECTATIONS:

     ORGANIZATIONAL EXPECTATIONS:

     Understands that the position exists to ultimately serve the customer
     either directly or indirectly through assisting front-line personnel to
     answer customer inquiries quickly.

                                      A-3

<PAGE>

     Practices a high degree of professionalism and sets an example for others
     to follow.

     Demonstrates commitment to and understanding of continuous quality
     improvement. Uses creativity and initiative to recommend quality
     enhancements when relevant and appropriate.

     Has satisfactory attendance within policy guidelines and is punctual.

     Manages time effectively. Completes assigned duties within required
     deadlines.

     FINANCIAL EXPECTATIONS:

     Makes recommendations to the Board of Directors concerning budgetary needs
     of the bank.

     Within parameters of job, uses good judgment related to Bank income
     opportunities and expense control.

     Is financially responsible.

     RELATIONSHIP EXPECTATIONS:

     Conducts in-bank and public relationships in a manner that enhances the
     image and marketing efforts of the Bank.

     Participates in community organizations, activities, and projects.

     Contributes to an overall team effort by being an effective team player.

This job description is not intended to be and should not be construed as an
all-inclusive list of the responsibilities, skills, or working conditions
associated with the position. While this job description is intended to
accurately reflect the position's activities and requirements, management
reserves the right to modify, add, or remove duties and assign other duties as
necessary.

                                      A-4