EXHIBIT 10.1

                                BAY NATIONAL BANK
                              EMPLOYMENT AGREEMENT
                              --------------------

         THIS EMPLOYMENT AGREEMENT (this "Agreement") dated as of September 14,
1999, is entered by and between Bay National Bank, a national bank (the "Bank")
and Hugh W. Mohler ("Employee").

         The Bank and Employee, in consideration of the mutual promises set
forth herein and for other valuable consideration the sufficiency of which is
hereby acknowledged and intending to be legally bound, agree as follows:

         1. Employment. The Bank agrees to employ Employee, and Employee agrees
to accept employment with the Bank. Employee agrees to perform his duties and
responsibilities in accordance with the terms and conditions set forth herein.

         1.1.(a) Employment Term. The term of this Agreement (the "Employment
Term") shall be for three years and commence on September 14, 1999 and, unless
previously terminated in accordance with Section 7 of this Agreement or extended
by mutual agreement of the parties, shall terminate on September 14, 2002 (the
third anniversary of such date) upon 90 days prior written notice by either
party. If neither party gives prior written notice of termination, this
Agreement shall automatically renew for a one-year term and successive one-year
terms thereafter until such time as one party gives 90 days prior written notice
by either party of a termination.

         1.1.(b) Effective Date. The effective date of this Agreement is
September 14, 1999.

         1.2. Duties and Responsibilities.

         (a) During the Employment Term, Employee shall serve as President of
the Bank and shall perform in a satisfactory manner all duties and accept all
responsibilities incidental to such position or as may be assigned to him from
time to time by the Bank's Board of Directors. Employee shall devote his
productive time, ability, attention, and energies to the fulfillment of said
duties during the Employment Term. During such time, the Employee shall not
directly or indirectly render any services of a business, commercial, or
professional nature to any other person or organization except for entities
affiliated with the Bank, whether or not for compensation, without the prior
written consent of the Bank.

         (b) Employee represents to the Bank that he is not subject or a party
to any employment, non-competition, non-disclosure or other agreement, covenant,
understanding or restriction which would prohibit Employee from executing this
Agreement and performing fully his duties and responsibilities hereunder, or
which would in any manner, directly or indirectly, limit or affect the duties
and responsibilities which may now or in the future be assigned to Employee by
the Bank.


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         1.3(a) Compensation. The Bank shall pay Employee a base salary at the
annual rate of $154,000.

The Bank agrees that the Employee's base salary will be reviewed annually by the
Bank's Board of Directors to determine, in light of the performance of Employee
and the Bank, if an increase is appropriate. Such increases shall be in the sole
discretion of the Bank's Board of Directors. All compensation under this
Agreement shall be paid less withholding required by law or agreed to by
Employee, and shall be payable as determined by the Board of Directors of the
Bank. The Bank also agrees to reimburse Employee for reasonable business
expenses incurred by Employee in the discharge of his duties.

         1.3(b). Bank and Employee agree that the Bank will offer Employee an
incentive compensation plan, the terms of which to be agreed upon by the
parties.

         2. Other Benefits.
         ------------------

         2.1. Vacation. For the duration of the Employment Term, Employee shall
be entitled to vacation per the policies of the Bank as applicable to
executive-level employees. Earned but unused vacation will be forfeited at the
end of each calendar year.

         2.2. Plan Benefits. The Bank shall provide Employee the following
benefits: family health, dental and vision insurance, life insurance equal to
three year's base salary and officers and directors liability insurance. The
foregoing benefits shall be provided to Employee at the same cost as such
benefits are provided to other employees of the Bank. Employee shall be eligible
to participate in any exclusive stock option plan offered by the Bank or Bay
National Corporation as may be applicable. Employee shall receive long-term and
short-term disability insurance as such is provided to other Bank management
employees.

         3. Non-Disclosure of Confidential Information and Records.
         ----------------------------------------------------------

         3.1. During the term of his employment, Employee will have access to
the Bank's proprietary information or information which is entrusted to the
Bank, including information relating to business plans and to business as
conducted or anticipated to be conducted, and to past, current or anticipated
products, employees, and services ("Confidential Information").

         3.2. In further consideration of Employee's employment and continued
employment, and other benefits provided to Employee by the Bank, Employee agrees
as follows: (i) except as required by Employee's duties to the Bank, not to at
any time directly or indirectly disclose to or use for others or appropriate for
his own personal use or cause to be used by others any Confidential Information
without first obtaining the written consent of the Board of Directors of the
Bank to do so; (ii) all records and other writings of Confidential Information
prepared by Employee, or which come into his possession or control, or which he
has access to, are and shall remain the exclusive property of the Bank, and upon
notice of termination of Employee's employment, Employee will not remove any
such records or copies thereof, but all shall be left with the Bank, and any
such records or copies not with the Bank in an Employee's possession


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or control, shall be, upon notice of termination of employment, immediately
returned to the Bank along with any other property of the Bank.

         3.3. The requirements of this Section 3 shall apply during the time of
Employee's employment with the Bank and thereafter with no time limitation,
unless it can be demonstrated conclusively that such Confidential Information
has through no act or fault of Employee become part of the public domain.

         4. Non-Competition.
         -------------------

         4.1. During the Employment Term and for a period of six (6) months
after employment of the Employee by the Bank or any of its affiliates has ended
(whether or not such employment was pursuant to this Agreement), Employee will
not, unless acting pursuant thereto or with the prior written consent of the
Board of Directors of the Bank, directly or indirectly, own, manage, operate,
join, control, finance or participate in the ownership, management, operation,
control or financing of, or be connected as an officer, director, employee,
partner, principal, agent, representative, consultant or otherwise with or use
or permit his name to be used in connection with, any federally-chartered or
state-chartered bank, bank holding company, savings and loan, thrift, savings
and loan holding company or other financial institution offices which are
located in the Bank's market area (the "Area").

         4.2. The foregoing restriction shall not be construed to prohibit the
ownership by Employee of not more than five percent (5%) of any class of
securities of any corporation which is engaged in the business of banking having
a class of securities registered pursuant to the Securities Exchange Act of
1934, provided that such ownership represents a passive investment and that
neither Employee nor any group of persons, including Employee in any way, either
directly or indirectly, manages or exercises control of any such corporation,
guarantees any of its financial obligations, otherwise takes any part in its
business, other than exercising his rights as a shareholder, or seeks to do any
of the foregoing.

         4.3. This covenant not to compete is an inducement to cause the Bank to
execute this Agreement and is a condition to, and consideration for, such
employment and continued employment, raises, promotions, severance, and other
benefits provided to Employee by the Bank.

         5. No Solicitation. Employee agrees that, for a period of one (1) year
after the employment of the Employee by the Bank or any of its affiliates has
ended (whether or not such employment is pursuant to this Agreement), he will
not either directly or indirectly, (i) call on or solicit any person,
institution, corporation, trust or other entity who or which at the time of such
termination was, or within one (1) year prior thereto had been, a customer of
the Bank or any of its affiliates or (ii) solicit the employment of any person
who was employed by the Bank or any of its affiliates on a full or part-time
basis at the time of Employee's termination of employment, unless such person
(a) was involuntarily discharged by the Bank or such affiliates, or (b)
voluntarily terminated his relationship with the Bank or such affiliate prior to
Employee's termination of employment.

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         6. Equitable Relief.
         --------------------

         6.1. Employee acknowledges that the restrictions contained in Sections
3, 4 and 5 are reasonable and necessary to protect the legitimate interests of
the Bank and its affiliates, that the Bank would not have entered into this
Agreement in the absence of such restrictions and that any violation of any
provision of these Sections will result in irreparable injury to the Bank and
its affiliates. Employee further represents and acknowledges that (i) he has
been advised by the Bank to consult his own legal counsel in respect of this
Agreement, and (ii) that he has had full opportunity, prior to execution of this
Agreement, to review thoroughly this Agreement with his counsel.

         6.2. Employee agrees that the Bank's remedy at law for a breach of
paragraphs 3, 4, and 5 would be inadequate and that the Bank shall be entitled
to preliminary and permanent injunctive relief, without the necessity of
providing actual damages, as well as an equitable accounting of all earnings,
profits and other benefits arising from any violation of Sections 3, 4, or 5,
which rights shall be cumulative and in addition to any other rights or remedies
to which the Bank may be entitled. In the event that any of the provisions of
Sections 3, 4, or 5 should ever be adjudicated to exceed the time, geographic or
other limitations permitted by applicable law in any jurisdiction, then such
provisions shall be deemed reformed in such jurisdiction to the maximum time,
geographic or other limitations permitted by applicable law.

         6.3. Employee irrevocably and unconditionally (i) agrees that any suit,
action or other legal proceeding arising out of this Agreement, including
without limitation, any action commenced by the Bank for preliminary and
permanent injunctive relief and other equitable relief, may be brought in the
United States District Court for the District of Maryland, or if such court does
not have jurisdiction or will not accept jurisdiction, in any court of general
jurisdiction in Baltimore County, Maryland, (ii) consents to the non-exclusive
jurisdiction of any such court in any such suit, action or proceeding, and (iii)
waives any objection which Employee may have to the laying of venue of any such
suit. Employee also irrevocably and unconditionally consents to the service of
any process, pleadings, notices or other papers in a manner permitted by the
notice provisions of Section 12 of this Agreement.

         6.4. Employee agrees that he will provide, and that the Bank may
similarly provide, a copy of Sections 3, 4, and 5 of this Agreement to any
business or enterprise (i) which he may directly or indirectly own, manage,
operate, finance, join, control or participate in the ownership, management,
operation, financing, or control of, or (ii) with which he may be connected as
an officer, director, employee, partner, principal, agent, representative,
consultant or otherwise, or in connection with which he may use or permit his
name to be used; provided, however, that this provision shall not apply in
respect of Section 5 of this Agreement after expiration of the time periods set
forth therein.

         7. Termination. This Agreement shall terminate prior to the expiration
of its term set forth in Section 1.1 above, upon the occurrence of any one of
the following events:

         7.1. Disability. In the event that Employee becomes unable to perform
his duties hereunder for a period of six (6) consecutive months or otherwise is
deemed to be


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disabled within the meaning of the Bank's then existing disability benefit
program, this Agreement may be terminated by the Bank and the Bank shall have no
further liability or obligation to Employee for compensation; provided, however,
that if the Employee becomes disabled during the Employment Term, the Bank shall
pay to him or his legal representatives an amount equal to the installment of
his salary set forth in Section 1.3 hereof for the month in which he becomes
disabled which have been earned but not yet paid. This Section shall be
interpreted in compliance with the Family Medical Leave Act to the extent that
the provisions of that law would apply.

         7.2. Death. In the event that Employee dies during the Employment Term,
the Bank shall pay to his executors, legal representatives or administrators an
amount equal to the installment of his salary set forth in Section 1.3 hereof
for the month in which he dies, and thereafter, except as otherwise provided in
this Agreement, the Bank shall have no further liability or obligation hereunder
to his executors, legal representatives, administrators, heirs or assigns or any
other person claiming under or through him, provided, however, that Employee's
estate or designated beneficiaries shall be entitled to receive the payments
described for such recipients under any death benefit plan which may be in
effect for executive-level employees of the Bank and in which Employee
participated.

         7.3. Termination by Bank For Cause. Nothing in this Agreement shall be
construed to prevent its termination by the Bank at any time for "cause" without
prior notice. For purposes of this Agreement, "cause" shall mean the failure of
Employee to perform or observe any of the terms or provisions of this Agreement
or to comply fully with the lawful directives of the Directors of the Bank,
dishonesty, misconduct, conviction of a crime or otherwise causing embarrassment
to the Bank and its public reputation, substance abuse, misappropriation of
funds, disparagement of the Bank or failure to comply with Bank policy.

         7.4. Termination by the Bank Without Cause. This Agreement may be
terminated by the Bank for any reason whatsoever, by giving 30 days' prior
written notice of termination to the other party. If Employee is terminated
without cause pursuant to this Section 7.4, Employee shall be entitled to the
base salary earned prior to the date of termination as provided for in this
Agreement, computed pro-rata up to and including the date of termination plus a
continued monthly base salary (at the then current rate) for a period of six (6)
months from the date of termination. Notwithstanding the foregoing, such right
to a continued salary shall terminate at such time as the Employee has found
other employment comparable with Employee's employment with the Bank. Employee
shall use his best efforts to obtain such employment.

         7.5. Nonrenewal of the Agreement by the Bank. In the event the Bank
gives the notice to the Employee contemplated by Section 1.1(a) that this
Agreement will not be renewed, the Bank shall pay to the Employee the monthly
base salary Employee would otherwise be entitled had he remained as an employee
of the Bank for the three (3) month period following the date of termination,
such payment to be paid on such future dates as the base salary would have
otherwise been payable hereunder.


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         7.6. Effect of Termination at Employee's Election. In the event of the
termination of this Agreement by Employee prior to the completion of the
Employment Term, Employee shall provide the Bank with thirty (30) days prior
written notice and shall be entitled to the base compensation earned prior to
the date of termination as provided for in this Agreement under Section 1.3,
computed pro-rata up to and including the date of termination. The Employee
shall be entitled to no other compensation.

         8. Change of Control.
         ---------------------

         8.1 For purposes of this Agreement, a "Change of Control" shall mean:

         (a) The acquisition by any individual, entity or group (a "Person") of
beneficial ownership (within the meaning of the Federal Securities Laws) of
forty percent (40%) or more of either (i) the then outstanding shares of common
stock of the Bank or Bay National Corporation (the "Company") or (ii) the
combined voting power of the then outstanding voting securities of the Bank or
the Company entitled to vote generally in the election of directors provided,
however, that all transactions engaged in by the Company and/or the Bank in
connection with its formation activities, including, but not limited to the
Company's initial public offering and the Bank's sales of shares of its capital
stock to the Company, shall not constitute a "Change of Control"; or

         (b) If the individuals who, as of the date hereof, constitute the Board
of Directors of the Bank (the "Incumbent Board"), cease for any reason to
constitute at least a majority of the Board; provided, however, that any
individual becoming a director subsequent to the date hereof whose election, or
nomination for election by the Bank's stockholders, was approved by a majority
of the directors then comprising the Incumbent Board or a committee appointed by
a majority of the directors then comprising the Incumbent Board, shall be
considered as though such individual were a member of the Incumbent Board; or

         (c) the approval by the stockholders of the Bank or the Company of a
reorganization, merger or consolidation, in each case, with respect to which
persons who were the stockholders of the Bank or the Company immediately prior
to such reorganization, merger or consolidation do not, immediately thereafter,
own, directly or indirectly, more than forty percent (40%) of the combined
voting power entitled to vote generally in the election of directors of the
reorganized, merged or consolidated company's then outstanding voting
securities, or of a liquidation or dissolution of the Bank or the Company or of
the sale or other disposition of all or substantially all of the assets of the
Bank or the Company.

         8.2. Change of Control Payments.

         (a) For purposes of this Section 8, the "Change of Control Date" shall
mean the first date on which a Change of Control occurs. Notwithstanding
anything to the contrary in this Agreement, if a Change of Control occurs and if
the Employee's employment with the Bank is terminated prior to the date on which
the Change of Control occurs, and if it is reasonably demonstrated by the
Employee that such termination of employment (i) was at the request of a third
party who has taken steps reasonably calculated to effect the Change of Control
or (ii) otherwise arose in


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connection with or anticipation of the Change of Control, then for all purposes
of this Agreement the "Change of Control Date" shall mean the date immediately
prior to the date of such termination of employment.

         (b) Upon a Change of Control, if Employee is employed by the Bank on
the Change of Control Date, the Bank shall pay Employee two hundred ninety
percent (290%) of Employee's "base amount" as such term is defined in Section
280(b)(3) of the Internal Revenue Code of 1986, as amended, at Employee's
option, either (i) in a lump sum payment within five (5) days of the Change of
Control Date; (ii) in substantially equal bi-weekly payments over a period of
one (1) year, the first such payment commencing within five (5) days of the
Change of Control Date; or (iii) in substantially equal bi-weekly payments over
a period of two (2) full years, the first such payment commencing within five
(5) days of the Change of Control Date.

         9. Survival. Notwithstanding the termination of employment under this
Agreement for any reason, the Employee's obligations under Sections 3 and 5
hereof shall survive and remain in full force and effect for the periods therein
provided, and the provisions for equitable relief in Section 6 of the Agreement
shall continue in force.

         10. Governing Law. This Agreement shall be governed by and interpreted
under the laws of the State of Maryland without giving effect to any conflict of
laws provisions.

         11. Litigation Expenses. In the event of a lawsuit by either party to
enforce the provisions of this Agreement, the prevailing party shall be entitled
to recover reasonable costs, expenses and attorney's fees from the other party.
Disputes arising under Section 7 of the Agreement shall be submitted to an
arbitrator (who is agreeable to both parties). The decision of the arbitrator
shall be binding on both parties and the fees (including legal fees) and cost
attributable to that arbitration process will be assessed as part of that
process by the arbitrator. Such arbitration shall be held in the Baltimore
metropolitan area and shall be conducted by the American Arbitration Association
(or other mutually selected arbitrators) ("AAA") by an arbitrator selected using
the AAA's procedures.

         12. Notices. All notices and other communications required or permitted
hereunder or necessary or convenient in connection herewith shall be in writing
and shall be deemed to have been given when hand delivered or mailed by
registered or certified mail, as follows (provided that notice of change of
address shall be deemed given only when received);

                  If to the Bank, to:       John DiPietro, Vice President
                                            Bay National Bank
                                            Suite 120
                                            2328 W. Joppa Road
                                            Baltimore, Maryland 21093

                  copy to:                  Frank C. Bonaventure, Jr., Esquire
                                            Ober, Kaler, Grimes & Shriver
                                            120 East Baltimore Street


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                                            Baltimore, Maryland 21202

                  If to Employee, to:       Hugh W. Mohler
                                            Bay National Bank
                                            Suite 120
                                            2328 W. Joppa Road
                                            Baltimore, Maryland 21093

or to such other names and addresses as the Bank or Employee, as the case may
be, shall designate by notice to each other person entitled to receive notices
in the manner specified in this Section.

         13. Contents of Agreement; Amendment and Assignment.
         ----------------------------------------------------

         13.1. This Agreement supersedes all prior agreements and sets forth the
entire understanding among the parties with respect to the subject matter hereof
and cannot be changed, modified, extended or terminated except upon written
amendment approved by the Board of Directors of the Bank. Without limitation,
nothing in this Agreement shall be construed as giving Employee any right to be
retained in the employ of the Bank beyond the expiration of the Employment Term
and Employee specifically acknowledges that he shall be an employee-at-will of
the Bank thereafter, and thus subject to discharge by the Bank with or without
cause and without compensation of any nature unless a new Agreement is executed
by both parties (or employment is continued at will).

         13.2. All of the terms and provisions of this Agreement shall be
binding upon and inure to the benefit of and be enforceable by the respective
heirs, executors, administrators, legal representatives, successors and assigns
of the parties, except that the duties and responsibilities of Employee
hereunder are of a personal nature and shall not be assignable or delegatable in
whole or in part by Employee.

         14. Severability. If any provision of this Agreement or application
thereof to anyone or under any circumstance is adjudicated to be invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall not
affect any other provision or application of this Agreement which can be given
effect without the invalid or unenforceable provision or application and shall
not invalidate or render unenforceable such provision or application in any
other jurisdiction.

         15. Remedies Cumulative; No Waiver. No remedy conferred upon the
parties by this Agreement is intended to be exclusive of any other remedy, and
each and every remedy shall be cumulative and shall be in addition to any other
remedy given hereunder or now or hereafter existing at law or in equity. No
delay or omission by the parties in exercising any right, remedy or power
hereunder or existing at law or in equity shall be construed as a waiver
thereof, and any such right, remedy or power may be exercised by the parties
from time to time and as often as may be deemed expedient or necessary by such
party in its sole discretion.

         16. Miscellaneous. All section headings are for convenience only. This
Agreement may be executed in several counterparts, each of which is an original.


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It shall not be necessary in marking proof of this Agreement or any counterpart
to produce or account for any of the other counterparts.

         IN WITNESS WHEREOF, the undersigned, intending to be legally bound,
have executed this Agreement as of the date first above written.


Attest:                                 BAY NATIONAL BANK


/s/ John S. DiPietro           By: Carroll A. Bodie
--------------------           --------------------
Secretary                               Name: Carroll A. Bodie, Chair
                                        Title: Compensation Committee of the
                                                 Board of Directors

Witness:

/s/ Lucy Mohler                         /s/ Hugh W. Mohler
---------------                         ------------------
                                        Hugh W. Mohler


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