<PAGE>


                                  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;

<PAGE>

               (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;

                                       2

<PAGE>

               (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__.

         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,

                                       3

<PAGE>

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

                                       4

<PAGE>

               (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

                                       5

<PAGE>

               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:

                                       6

<PAGE>

               (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 the excess of (a) 2.99 times
his Average Annual Compensation over (b) the aggregate present value, as
determined for federal income tax purposes, of all other payments to the
Employee in the nature of compensation that are treated for federal income tax
purposes as contingent on the Change in Control, 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
Employee's average annual taxable compensation paid by the Employer during the
most recent five (5) taxable years ending before the date the Change in Control
occurs (or such portion of such period during which the Employee was employed by
the Employer.


         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.

                                       7

<PAGE>

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.

                                       8

<PAGE>

         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

                                       9

<PAGE>

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.

                                       10

<PAGE>

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

                                       11

<PAGE>

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.

<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

                                       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.

                                       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.

                                       4