EXHIBIT 10.2
UNION BANKSHARES, INC.
2014 EQUITY INCENTIVE PLAN - TABLE OF CONTENTS
ARTICLE 1
 
 
PURPOSE
3
 
1.1

 
General
3
ARTICLE 2
 
 
DEFINITIONS
3
 
2.1

 
Definitions
3
ARTICLE 3
 
 
EFFECTIVE TERM OF PLAN
7
 
3.1

 
Effective Date
7
 
3.2

 
Termination of Plan
7
ARTICLE 4
 
 
ADMINISTRATION
7
 
4.1

 
Committee
7
 
4.2

 
Action and Interpretations by the Committee
7
 
4.3

 
Authority of Committee
8
 
4.4

 
Award Certificates
8
 
4.5

 
Indemnification
8
ARTICLE 5
 
 
SHARES SUBJECT TO THE PLAN
8
 
5.1

 
Number of Shares
8
 
5.2

 
Share Counting
8
 
5.3

 
Stock Distributed
9
 
5.4

 
Limitation on Awards
9
ARTICLE 6
 
 
ELIGIBILITY
9
 
6.1

 
General
9
 
6.2

 
Special Rule for Incentive Stock Options
9
ARTICLE 7
 
 
STOCK OPTIONS
10
 
7.1

 
General
10
 
7.2

 
Incentive Stock Options
10
ARTICLE 8
 
 
RESTRICTED STOCK and RESTRICTED STOCK UNITS
11
 
8.1

 
Grant of Restricted Stock and Restricted Stock Units
11
 
8.2

 
Issuance and Restrictions
11
 
8.3

 
Dividends on Restricted Stock
11
 
8.4

 
Grant of Dividend Equivalents
11
 
8.5

 
Restrictions on Transfer
11
 
8.6

 
Termination and Forfeiture
11
 
8.7

 
Delivery of Restricted Stock
12
ARTICLE 9
 
 
PERFORMANCE AWARDS
12
 
9.1

 
Grant of Performance Awards
12
 
9.2

 
Performance Goals
12
 
9.3

 
Grant of Performance Awards to Covered Employees
14
 
9.4

 
Certification of Performance Goals
14
ARTICLE 10
 
 
PROVISIONS APPLICABLE TO AWARDS
14
 
10.1

 
Term of Award
14
 
10.2

 
Form of Payment for Awards
14
 
10.3

 
Limitations on Transfer
14
 
10.4

 
Beneficiaries
14
 
10.5

 
Stock Trading Restrictions
14
 
10.6

 
Acceleration upon Death or Disability
15
 
10.7

 
Effect of a Change in Control
15
 
10.8

 
Acceleration for Other Reasons
16
 
10.9

 
Forfeiture Events; Recoupment
16

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10.10

 
Substitute Awards
16
   ARTICLE 11
 
 
CHANGES IN CAPITAL STRUCTURE
16
 
11.1

 
Mandatory Adjustments
16
 
11.2

 
Discretionary Adjustments
17
 
11.3

 
General
17
   ARTICLE 12
 
 
AMENDMENT, MODIFICATION AND TERMINATION
17
 
12.1

 
Amendment, Modification and Termination
17
 
12.2

 
Modification of Outstanding Awards
17
 
12.3

 
Compliance Amendments
18
   ARTICLE 13
 
 
GENERAL PROVISIONS
18
 
13.1

 
No Enlargement of Rights
18
 
13.2

 
Withholding
18
 
13.3

 
Special Provisions Related to Code Section 409A
18
 
13.4

 
Unfunded Status of Awards
19
 
13.5

 
Relationship to Other Benefits
19
 
13.6

 
Expenses
19
 
13.7

 
Titles and Headings
19
 
13.8

 
Gender and Number
19
 
13.9

 
Fractional Shares
19
 
13.10

 
No Liability of Company
20
 
13.11

 
Governing Law
20
 
13.12

 
Additional Provisions
20
 
13.13

 
No Limitations on Rights of Company
20

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UNION BANKSHARES, INC.
2014 EQUITY INCENTIVE PLAN

ARTICLE 1
PURPOSE

1.1.    GENERAL.  The purpose of the Union Bankshares, Inc. 2014 Equity
Incentive Plan (the “Plan”) is to promote the success, and enhance the value, of
Union Bankshares, Inc. (the “Company”), by linking the personal interests of
officers and directors of the Company or any Affiliate (as defined below) to
those of Company stockholders and by providing such persons with an incentive
for outstanding performance.  The Plan is further intended to provide
flexibility to the Company in its ability to motivate, attract, hire and retain
the services of officers and directors upon whose judgment, interest, and
special effort the successful operation of the Company’s business is largely
dependent.  Accordingly, the Plan permits the grant of incentive awards from
time to time to selected officers, non-employee directors and certain
prospective employees of the Company and its Affiliates.

ARTICLE 2
DEFINITIONS

2.1.    DEFINITIONS.  When a word or phrase appears in this Plan with the
initial letter capitalized, and the word or phrase does not commence a sentence,
the word or phrase shall generally be given the meaning ascribed to it in this
Section or in Section 1.1 unless a clearly different meaning is required by the
context.  The following words and phrases shall have the following meanings:

•“Affiliate” means (i) any Subsidiary or Parent, or (ii) an entity that directly
or through one or more intermediaries controls, is controlled by, or is under
common control with, the Company, as determined by the Committee.

•“Award” means any Option, Restricted Stock, Restricted Stock Unit or Dividend
Equivalent granted to a Participant under the Plan.

•“Award Certificate” means a written document, in such form as the Committee
prescribes from time to time, setting forth the terms and conditions of an
Award.  Award Certificates may be in the form of individual award agreements or
certificates or a program document describing the terms and provisions of an
Award or series of Awards under the Plan.  The Committee may provide for the use
of electronic, internet or other nonpaper Award Certificates, and the use of
electronic, internet or other nonpaper means for the acceptance thereof and
actions thereunder by a Participant.

•“Beneficial Owner” shall have the meaning given such term in Rule 13d-3 of the
General Rules and Regulations under the 1934 Act.

•“Board” means the Board of Directors of the Company.

•“Cause” as a reason for a Participant’s termination of employment shall have
the meaning assigned such term in the employment, severance, change in control,
or similar agreement, if any, between such Participant and the Company or an
Affiliate, provided, however that if there is no such employment, severance,
change in control, or similar agreement in which such term is defined, and
unless otherwise defined in the applicable Award Certificate, “Cause” shall mean
any of the following acts by the Participant, as determined by the Committee:
gross neglect of duty; prolonged absence from duty without the consent of the
Company; material breach by the Participant of any published Company or
Affiliate personnel policy, code of conduct or code of ethics; or willful
misconduct, misfeasance or malfeasance of duty which is reasonably determined to
be detrimental to the Company; or conviction of a felony or entering of a plea
of nolo contendere to a felony. With respect to a Participant’s termination of
directorship, “Cause” means an act or failure to act that constitutes cause for
removal of a director under applicable Vermont law.  The determination of the
Committee as to the existence of “Cause” shall be conclusive on the Participant
and the Company.

•“Change in Control” means and includes the occurrence of any one of the
following events:

(i)    individuals who, on the Effective Date, constitute the Board of Directors
of the Company (the “Incumbent Directors”) cease for any reason to constitute at
least a majority of such Board, provided that any person becoming a director
after the Effective Date and whose election or nomination for election was
approved

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by a vote of at least a majority of the Incumbent Directors then on the Board
shall be deemed an Incumbent Director; provided, however, that no individual
initially elected or nominated as a director of the Company as a result of an
actual or threatened election contest with respect to the election or removal of
directors (“Election Contest”) or other actual or threatened solicitation of
proxies or consents by or on behalf of any Person other than the Board (“Proxy
Contest”), including by reason of any agreement intended to avoid or settle any
Election Contest or Proxy Contest, shall be deemed an Incumbent Director; or

(ii)    if any Person, or group of Persons acting in concert, is or becomes a
“beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly
or indirectly, of Company Voting Securities representing more than fifty percent
(50%) of the combined voting power of the Company Voting Securities; provided,
however, that notwithstanding the foregoing, a Change in Control shall not be
deemed to have occurred by virtue of any of the following acquisitions of
Company Voting Securities: (A) by the Company or any Affiliate; (B) by any
employee benefit plan or trust sponsored, maintained or created by the Company
or any Affiliate; (C) by any underwriter temporarily holding Company Voting
Securities pursuant to an offering of such securities; (D) by any beneficial
owner whose increase in the percentage ownership of outstanding Company Voting
Securities is as a result of a repurchase of securities by the Company; or (E)
pursuant to a transaction in which Company Voting Securities are acquired from
the Company in a transaction approved by a majority of the Incumbent Directors;
or

(iii)    consummation of a merger, consolidation share exchange or similar form
of corporate transaction involving the Parent or a Subsidiary (a
“Reorganization”), unless immediately following such Reorganization, all three
of the following conditions are satisfied: (A) immediately following the
consummation of the Reorganization more than fifty percent (50%) of the total
voting power of the resulting corporation (the “Surviving Corporation”) or, if
applicable, its ultimate parent corporation (the “Surviving Parent Corporation”)
is held by Persons who were the holders of Company Voting Securities outstanding
immediately prior to such Reorganization; (B) no person (other than any employee
benefit plan or trust sponsored, maintained or created by the Surviving
Corporation or the Surviving Parent Corporation) is or becomes the beneficial
owner, directly or indirectly, of thirty percent (30%) or more of the total
voting power of the outstanding voting securities of the Surviving Parent
Corporation (or, if there is no Surviving Parent Corporation, the Surviving
Corporation); and (C) at least a majority of the members of the board of
directors of the Surviving Parent Corporation (or, if there is no Surviving
Parent Corporation, the Surviving Corporation) are individuals who were
Incumbent Directors of the Company at the time of the Company Reorganization
Board’s approval of the execution of the initial agreement providing for such
Reorganization; or

(iv)    consummation of the sale, directly or indirectly, of all or
substantially all of the banking assets of the Company to an entity not owned or
controlled (directly or indirectly) by the Company’s stockholders; or

(v)    approval by the stockholders of the Company of a complete liquidation or
dissolution of the Company.

•“Code” means the Internal Revenue Code of 1986, as amended from time to
time.  For purposes of this Plan, references to sections of the Code shall be
deemed to include references to any applicable regulations thereunder and any
successor or similar provision.

•“Committee” means the Compensation Committee of the Board.

•“Company” means Union Bankshares, Inc., a Vermont corporation, or any successor
corporation.

•“Company Voting Securities” means securities of the Company eligible to vote in
the election of directors of the Company.

•“Continuous Status as a Participant” means the absence of any interruption or
termination of service as an officer or director of the Company or any
Affiliate, as applicable; provided, however, that for purposes of an Incentive
Stock Option “Continuous Status as a Participant” means the absence of any
interruption or termination of service as an employee of the Company or any
Parent or Subsidiary, as applicable, pursuant to applicable tax
regulations.  Continuous Status as a Participant shall not be considered
interrupted in the following cases: (i) a Participant transfers employment
between the Company and an Affiliate or between Affiliates; or (ii) in the
discretion of the Committee as specified at or prior to such occurrence, in the
case of a spin-off, sale or disposition of the Participant’s employer from

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the Company or any Affiliate; or (iii) any leave of absence authorized in
writing by the Company prior to its commencement; provided, however, that for
purposes of Incentive Stock Options, no such leave may exceed 90 days, unless
reemployment upon expiration of such leave is guaranteed by statute or
contract.  If reemployment upon expiration of a leave of absence approved by the
Company is not so guaranteed, on the 91st day of such leave any Incentive Stock
Option held by the Participant shall cease to be treated as an Incentive Stock
Option and shall be treated for tax purposes as a Non-Qualified Stock
Option.  Whether military, government or other service or other leave of absence
shall constitute a termination of Continuous Status as a Participant shall be
determined in each case by the Committee at its discretion, and any
determination by the Committee shall be final and conclusive.

•“Covered Employee” means a covered employee as defined in Code Section
162(m)(3).

•“Disability” of a Participant means any mental or physical condition with
respect to which the grantee qualified for and receives benefits under a
long-term disability plan of the Company or Subsidiary, or in the absence of
such a long-term disability plan or coverage under such plan, “Disability” shall
mean a physical or mental condition which, in the sole discretion of the
Committee, is reasonably expected to be of indefinite duration and to
substantially prevent the grantee from fulfilling his or her duties or
responsibilities to the Company or a Subsidiary. If an Award is determined to be
subject to Code Section 409A, then notwithstanding anything else herein to the
contrary “Disability” or “Disabled” shall mean that the Participant (i) is
unable to engage in any substantial gainful activity by reason of any medically
determinable physical or mental impairment which can be expected to result in
death or can be expected to last for a continuous period of not less than 12
months; (ii) is, by reason of any medically determinable physical or mental
impairment which can be expected to result in death or can be expected to last
for a continuous period of not less than 12 months, receiving income replacement
benefits for a period of not less than three months under an accident and health
plan covering employees of the Participant’s employer; or (iii) is determined to
be totally disabled by the Social Security Administration.  If the determination
of Disability relates to an Incentive Stock Option, Disability means Permanent
and Total Disability as defined in Code Section 22(e)(3).  Except to the extent
prohibited (if applicable) by Code Section 409A, in the event of a dispute, the
determination of whether a Participant is Disabled will be made by the Committee
and may be supported by the advice of a physician competent in the area to which
such Disability relates.

•“Dividend Equivalent” means a right granted to a Participant under section 8.4
in conjunction with the grant of Restricted Stock Units.

•“Effective Date” has the meaning assigned such term in Section 3.1.

•“Eligible Person” means an officer or Nonemployee director of the Company or
any Affiliate, or any prospective employee of the Company or any Affiliate who
will be an officer upon his or her date of hire..

•“Exchange” means The NASDAQ Stock Market or any other national securities
exchange on which the Stock may from time to time be listed or traded.

•“Fair Market Value,” on any date, means (i) if the Stock is listed on an
Exchange, the closing sales price on such Exchange or over such system on such
date or, in the absence of reported sales on such date, the closing sales price
on the immediately preceding date on which sales were reported, or (ii) if the
Stock is not listed on an Exchange, the mean between the bid and offered prices
as quoted by the applicable interdealer quotation system for such date, provided
that if the Stock is not quoted on such interdealer quotation system or it is
determined that the fair market value is not properly reflected by such
quotations, Fair Market Value will be determined by such other method as the
Committee determines in good faith to be reasonable and in compliance with Code
Sections 409A and 162(m).

•“Full Value Award” means an Award of Restricted Stock or an award of a
Restricted Stock Unit which is or may be settled by the issuance of Stock (or at
the discretion of the Committee, settled in cash valued by reference to Stock
value).

•“Good Reason” (or a similar term denoting constructive termination) has the
meaning, if any, assigned such term in the employment, severance, change in
control or similar agreement, if any, in effect at the time of such constructive
termination between a Participant and the Company or an Affiliate; provided,
however, that if there is no such employment, severance, change in control or
similar agreement in which such term is defined, “Good Reason” shall have the
meaning, if any, given such term in the applicable Award Certificate.  If not
defined in either such document, the term “Good Reason” as used herein shall not
apply to a particular Award.

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•“Grant Date” of an Award means the first date on which all necessary corporate
action has been taken to approve the grant of the Award as provided in this
Plan, or such later date as is determined and specified as part of that
authorization process.  Notice of the grant shall be a provided to the
Participant within a reasonable time after the Grant Date.

•“Incentive Stock Option” means an Option that is intended to be an incentive
stock option and meets the requirements of Code Section 422 or any successor
provision.

•“Incumbent Directors” has the meaning specified above in the definition of
“Change in Control.”

•“Independent Directors” means those members of the Board of Directors who
qualify at any given time as (i) “independent” directors under Nasdaq Stock
Market Rule 5605(a)(2), (ii) “nonemployee” directors under Rule 16b-3 of the
1934 Act, and (iii) “outside” directors under Code Section 162(m).

•“Nonemployee Director” means a director of the Company or an Affiliate who is
not a common law employee of the Company or an Affiliate.

•“Non-Qualified Stock Option” means an Option that is not an Incentive Stock
Option.

•“Option” means a right granted to a Participant under Article 7 of the Plan to
purchase Stock at a specified price during specified time periods.  An Option
may be either an Incentive Stock Option or a Non-Qualified Stock Option.

•“Parent” means a corporation, limited liability company, partnership or other
entity which owns of record or beneficially a majority of the outstanding voting
stock or voting power of the Company. Notwithstanding the above, with respect to
an Incentive Stock Option, Parent shall have the meaning set forth in Code
Section 424(e).

• “Participant” means a person who, as an officer or director of the Company or
any Affiliate, or as a prospective employee of the Company or an Affiliate, has
been granted an Award under the Plan; provided, however, that in the case of the
death of a Participant, the term “Participant” refers to a beneficiary
designated pursuant to Section 10.4 or the legal guardian or other legal
representative acting in a fiduciary capacity on behalf of the Participant under
applicable state law and court supervision.

•“Performance Award” means any award granted under the Plan pursuant to Article
9.

• “Person” means any individual, entity or group, within the meaning of Section
3(a)(9) of the 1934 Act and as used in Section 13(d)(3) or 14(d)(2) of the 1934
Act.

• “Plan” means the Union Bankshares, Inc. 2014 Equity Incentive Plan, as amended
from time to time.

•“Restricted Stock” means Stock granted to a Participant under Article 8 that is
subject to such restrictions as are specified in the related Award Certificate,
and to risk of forfeiture.

•“Restricted Stock Unit” means a right granted to a Participant under Article 8
to receive shares of Stock (or the equivalent value in cash if the Committee so
provides) in the future, which right is subject to such restrictions as are
specified in the related Award Certificate, and to risk of forfeiture.

•“Retirement” means a Participant’s voluntary termination of employment with the
Company or an Affiliate after attaining any normal retirement age specified in
any pension, profit sharing or other retirement program sponsored by the Company
or an Affiliate, or, in the event of the inapplicability thereof with respect to
the Participant in question, after attaining age 65 with at least five years of
service with the Company or its Affiliates.

•“Section 162(m) Exemption” means the exemption from the limitation on
deductibility imposed by Section 162(m) of the Code that is set forth in Code
Section 162(m)(c) or any successor provision.

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•“Substitute Award” has the meaning assigned to such term in Section 10.10.

•“Shares” means shares of the Company’s Stock.  If there has been an adjustment
or substitution pursuant to Section 11.1, the term “Shares” shall also include
any shares of stock or other securities that are substituted for Shares or into
which Shares are adjusted pursuant to Section 11.1.

•“Stock” means the $2.00 par value common stock of the Company and such other
securities of the Company as may be substituted for Stock pursuant to Section
11.1.

•“Subsidiary” means any corporation, limited liability company, partnership or
other entity of which a majority of the outstanding voting stock or voting power
is beneficially owned directly or indirectly by the Company. Notwithstanding the
above, with respect to an Incentive Stock Option, Subsidiary shall have the
meaning set forth in Code Section 424(f).

•“1933 Act” means the federal Securities Act of 1933, as amended from time to
time.

•“1934 Act” means the federal Securities Exchange Act of 1934, as amended from
time to time.

ARTICLE 3
EFFECTIVE TERM OF PLAN

3.1.    EFFECTIVE DATE.  The Plan shall be effective as of the date it is
approved by the stockholders of the Company (the “Effective Date”). No Award
shall be made prior to the Effective Date.

3.2.    TERMINATION OF PLAN.  The Plan shall terminate on the tenth anniversary
of the Effective Date unless earlier terminated as provided herein.  The
termination of the Plan on such date shall not affect the validity of any Award
outstanding on the date of termination, which shall continue to be governed by
the applicable terms and conditions of this Plan.  Notwithstanding the
foregoing, no Incentive Stock Options may be granted more than ten (10) years
after the earlier of (i) adoption of this Plan by the Board, or (ii) the
Effective Date.

ARTICLE 4
ADMINISTRATION

4.1.    COMMITTEE.  The Plan shall be administered by the Compensation Committee
appointed by the Board, which shall consist of at least three directors, each of
whom shall be an Independent Director. In its discretion, the Board may reserve
to itself any or all of the authority and responsibility of the Committee under
the Plan or may act as administrator of the Plan for any and all purposes.  To
the extent the Board has reserved any authority and responsibility or during any
time that the Board is acting as administrator of the Plan, (i) only those
members of the Board who qualify as Independent Directors shall participate in
any determinations or votes relating to the administration of the Plan
(including the granting of any Award); and (ii) the Board (acting through its
Independent Directors) shall have all the powers of the Committee hereunder, and
any reference herein to the Committee (other than in this Section 4.1) shall
include the Board.  The mere fact that a Committee member or Board member shall
fail to qualify as an Independent Director or shall fail to abstain from any
action in administering the Plan shall not invalidate any Award made hereunder
which is otherwise validly made under the Plan. To the extent any action of the
Board under the Plan conflicts with actions taken by the Committee, the actions
of the Board shall control.

4.2.    ACTION AND INTERPRETATIONS BY THE COMMITTEE.  For purposes of
administering the Plan, the Committee may from time to time adopt rules,
regulations, guidelines and procedures for carrying out the provisions and
purposes of the Plan and make such other determinations, not inconsistent with
the Plan, as the Committee may deem appropriate.  The Committee’s interpretation
of the Plan, any Awards granted under the Plan, any Award Certificate and all
decisions and determinations by the Committee with respect to the Plan are
final, binding, and conclusive on all parties.  Each member of the Committee is
entitled to, in good faith, rely or act upon any report or other information
furnished to that member by any officer or other employee of the Company or any
Affiliate, the Company’s or an Affiliate’s independent certified public
accountants, Company counsel or any executive compensation consultant or other
professional retained by the Company to assist in the administration of the
Plan.

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4.3.    AUTHORITY OF COMMITTEE.  Except as provided in Section 4.1, the
Committee shall have the exclusive power, authority and discretion to:

(a)
Grant Awards;

(b)
Designate Participants from among Eligible Persons;

(c)
Determine the type or types of Awards to be granted to each Participant;

 
(d)
Determine the number of Awards to be granted and the number of Shares or dollar
amount to which an Award will relate;

(e)
Determine the terms and conditions of any Award granted under the Plan;

(f)
Prescribe the form of each Award Certificate, which need not be identical for
each Participant;

(g)
Decide all other matters that must be determined in connection with an Award;

(h)
Establish, adopt or revise any rules, regulations, guidelines or procedures as
it may deem necessary or advisable to administer the Plan;

(i)
Make all other decisions, determinations and interpretations that may be
required under the Plan or as the Committee deems necessary or advisable to
administer the Plan; and

(j)
Amend the Plan or any Award Certificate as provided herein; and

4.4.    AWARD CERTIFICATES.  Each Award shall be evidenced by an Award
Certificate.  Each Award Certificate shall include such provisions, not
inconsistent with the Plan, as may be specified by the Committee.

4.5.    INDEMNIFICATION.  Each person who is or shall have been a member of the
Committee, or of the Board, or an officer of the Company to whom authority was
delegated in accordance with Article 4 shall be indemnified and held harmless by
the Company against and from any loss, cost, liability, or expense that may be
imposed upon or reasonably incurred by him or her in connection with or
resulting from any claim, action, suit, or proceeding to which he or she may be
a party or in which he or she may be involved by reason of any action taken or
failure to act under the Plan and against and from any and all amounts paid by
him or her in settlement thereof, with the Company’s approval, or paid by him or
her in satisfaction of any judgment in any such action, suit, or proceeding
against him or her, provided he or she shall give the Company an opportunity, at
its own expense, to handle and defend the same before he or she undertakes to
handle and defend it on his or her own behalf, unless such loss, cost,
liability, or expense is a result of his or her own willful misconduct or except
as expressly provided by statute.  The foregoing right of indemnification shall
not be exclusive of any other rights of indemnification to which such persons
may be entitled under the Company’s charter or bylaws, as a matter of law, or
otherwise, or any power that the Company may have to indemnify them or hold them
harmless.

ARTICLE 5
SHARES SUBJECT TO THE PLAN

5.1.    NUMBER OF SHARES.  Subject to adjustment as provided in Sections 5.2 and
Section 11.1, the aggregate number of Shares reserved and available for issuance
pursuant to Awards granted under the Plan shall be 50,000. It is intended that
upon the Effective Date (i) no further Awards shall be made under the Company’s
2008 Incentive Stock Option Plan; (ii) any Awards of Incentive Stock Options
made on or after such Effective Date shall be deemed to be made under this Plan;
and (iii) any outstanding awards of incentive stock options granted under the
2008 Incentive Stock Option Plan shall continue to be governed by the terms of
such plan.

5.2.    SHARE COUNTING.  Shares covered by an Award shall be subtracted from the
Plan share reserve as of the date of grant, but shall be added back to the Plan
share reserve in accordance with the following provisions:

(a)
To the extent that an Award is canceled, terminates, expires, is forfeited or
lapses for any reason, any unissued or forfeited Shares subject to the Award
will be added back to the Plan share reserve and will again be available for
issuance pursuant to Awards granted under the Plan.

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(b)
Shares subject to Awards settled in cash will be added back to the Plan share
reserve and will again be available for issuance pursuant to Awards granted
under the Plan.

(c)
Shares withheld from an Award or delivered by a Participant to satisfy minimum
tax withholding requirements will be added back to the Plan share reserve and
will again be available for issuance pursuant to Awards granted under the Plan.

(d)
If the Participant pays the exercise price of an Option by delivering Shares to
the Company (by either actual delivery or attestation), the number of Shares so
delivered by the Participant shall be added back to the Plan share reserve and
will again be available for issuance pursuant to awards granted under the Plan.

(e)
To the extent that the full number of Shares subject to an Option is not issued
upon exercise of the Option for any reason, including by reason of
net-settlement of the Award, only the number of Shares issued and delivered upon
exercise of the Option shall be subtracted from the Plan share reserve.

(f)
To the extent that the full number of Shares subject to an Award other than an
Option is not issued or does not vest for any reason, including by reason of
failure to achieve performance goals in whole or in part, only the number of
Shares that have vested shall be considered for purposes of determining the
number of Shares remaining available for issuance pursuant to Awards granted
under the Plan and any shares forfeited will again be available for issuance
pursuant to Awards granted under the Plan.

(g)
Substitute Awards granted pursuant to Section 10.10 of the Plan shall not count
against the Shares otherwise available for issuance under the Plan under Section
5.1.

5.3.    STOCK DISTRIBUTED.  Any Stock distributed pursuant to an Award may
consist, in whole or in part, of authorized and unissued Stock, treasury Stock
or Stock purchased on the open market.

5.4.    LIMITATION ON AWARDS.  Notwithstanding any provision in the Plan to the
contrary (but subject to adjustment as provided in Section 11.1):

(a)
Grants of Options.  The maximum aggregate number of Shares subject to Options
granted under the Plan in any 12-month period to any one Participant shall be
7,000.

(b)
Grants of Restricted Stock or Restricted Stock Units.  The maximum aggregate
number of Shares underlying of Awards of Restricted Stock and Restricted Stock
Units granted under the Plan in any 12-month period to any one Participant shall
be 5,000.

(c)
Exercise of Incentive Stock Options. The maximum number of Shares that may be
issued upon exercise of Incentive Stock Options granted under the Plan shall be
50,000

ARTICLE 6
ELIGIBILITY

6.1.    GENERAL.  Awards may be granted only to Eligible Persons who are
selected by the Committee from time to time.  

6.2.    SPECIAL RULE FOR INCENTIVE STOCK OPTIONS. Notwithstanding anything in
this Plan to the contrary, (i) Incentive Stock Options may be granted only to
Eligible Persons who are employees of the Company or a Parent or Subsidiary as
defined in Code Sections 424(e) and (f); and (ii) Eligible Persons who are
service providers to an Affiliate may be granted Options under this Plan only if
the Affiliate qualifies as an “eligible issuer of service recipient stock”
within the meaning of §1.409A-1(b)(5)(iii)(E) of the final regulations under
Code Section 409A.

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ARTICLE 7
STOCK OPTIONS

7.1.    GENERAL.  Options granted under the Plan shall be in such form as the
Committee may from time to time approve. Options granted under the Plan may be
either Incentive Stock Options or Non-Qualified Stock Options. Stock Options
granted pursuant to the Plan shall be subject to the following terms and
conditions and shall contain such additional terms and conditions, not
inconsistent with the terms of the Plan, as the Committee shall deem desirable:

(a)
Exercise Price.  The exercise price per Share under an Option shall be
determined by the Committee, provided, however, that the exercise price for any
Option (other than an Option issued as a Substitute Award pursuant to Section
10.10) shall not be less than the Fair Market Value of the underlying stock as
of the Grant Date. If the Participant owns or is deemed to own (by reason of the
attribution rules of Code Section 424(d)) more than 10 percent of the combined
voting power of all classes of stock of the Company or any Parent or Subsidiary
and an Incentive Stock Option is granted to Participant, the option price of
such Incentive Stock Option shall be not less than 110 percent of the Fair
Market Value on the Grant Date.

(b)
Prohibition on Repricing.  Except as otherwise provided in Section 11.1, the
exercise price of an Option may not be reduced, directly or indirectly by
cancellation and regrant or otherwise, without the prior approval of the
stockholders of the Company.

(c)
Time and Conditions of Exercise.  The Committee shall determine the time or
times at which an Option may be exercised in whole or in part, subject to
Section 7.1(e).  The Committee shall also determine the performance or other
conditions, if any, that must be satisfied before all or part of an Option may
be exercised or vested. If the Option is intended to qualify as an Incentive
Stock Option under Code Section 422, the aggregate Fair Market Value (determined
as of the Grant Date) of the shares of Stock with respect to which Incentive
Stock Options granted under this Plan and any other plan of the Company or its
Affiliates become exercisable for the first time by a Participant during any
calendar year shall not exceed $100,000. To the extent that any Option exceeds
this limitation, it shall be deemed to constitute a Non-Qualified Stock Option.

(d)
Exercise and Payment.  The Committee shall determine the methods by which the
exercise price of an Option may be paid, the form of payment, including, without
limitation, cash, Shares, or other property, and the methods by which Shares
shall be delivered or deemed to be delivered to Participants. Any Shares
surrendered or withheld in full or partial payment of the exercise price of an
Option, or in payment of tax withholdings shall be valued at their Fair Market
Value on the date of exercise.

(e)
Exercise Term.   No Option granted under the Plan shall be exercisable for more
than ten years from the Grant Date, provided, however, that if the Option is
intended to qualify as an Incentive Stock Option and the Participant owns or is
deemed to own (by reason of the attribution rules of Code Section 424(d)) more
than 10 percent of the combined voting power of all classes of stock of the
Company or any Parent or Subsidiary, the term of such Option shall be no more
than five (5) years from the Grant Date.

(f)
No Deferral Feature.  No Option shall provide for any feature for the deferral
of compensation other than the deferral of recognition of income until the
exercise or disposition of the Option.

(g)
No Dividends or Dividend Equivalents.  No Option shall provide for Dividends or
Dividend Equivalents.

7.2.    INCENTIVE STOCK OPTIONS.  

(a)
General. The terms of any Incentive Stock Options granted under the Plan must
comply with the requirements of Code Section 422.  To the extent that an Option
does not satisfy all of the requirements of Code Section 422, such Option shall
be deemed a Non-Qualified Stock Option. No Incentive Stock Option shall be
granted after March 19, 2024.

(b)
Termination of Continuous Service. Without limiting the generality of the
foregoing, an Incentive Stock Option shall be subject to the following
provisions:

(i)
Termination for Reasons Other Than Cause, Death, Disability. If the
Participant’s Continuous Service is terminated for any reason other than Cause,
death or Disability, the Participant may exercise the

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Option, but only within such period of time ending on the earlier of: (a) the
date three (3) months
following the termination of the Participant’s Continuous Service or (b) the
Option expiration date.

(ii)
Termination for Cause. If the Participant’s Continuous Service is terminated for
Cause, the Option (whether vested or unvested) shall immediately terminate and
cease to be exercisable.

(iii)
Termination Due to Disability. If the Participant’s Continuous Service
terminates as a result of the Participant’s Disability, the Participant may
exercise the Option, but only within such period of time ending on the earlier
of (a) the date twelve (12) months following the Participant’s termination of
Continuous Service or (b) the Option expiration date.

(iv)
Termination Due to Death. If the Participant’s Continuous Service terminates as
a result of the Participant’s death, the Option may be exercised by the
Participant’s estate, by a person who acquired the right to exercise the Option
by bequest or inheritance by the person designated to exercise the Option upon
the Participant’s death during the time period ending on the Option expiration
date, or such shorter period (if any) specified in the Award Certificate.

ARTICLE 8
RESTRICTED STOCK AND RESTRICTED STOCK UNITS

8.1.    GRANT OF RESTRICTED STOCK AND RESTRICTED STOCK UNITS.  The Committee is
authorized to make Awards of Restricted Stock and Restricted Stock Units to
Participants in such amounts and subject to such terms and conditions as may be
determined by the Committee in its discretion.  An Award of Restricted Stock or
Restricted Stock Units shall be evidenced by an Award Certificate setting forth
the terms, conditions, and restrictions applicable to the Award.

8.2.    ISSUANCE AND RESTRICTIONS.  Restricted Stock or Restricted Stock Units
shall be subject to such restrictions on transferability and other restrictions
as the Committee may impose (including, without limitation, limitations on the
right to vote Restricted Stock or the right to receive dividends on the
Restricted Stock).  These restrictions may lapse separately or in combination at
such times, under such circumstances, in such installments, upon the
satisfaction of performance goals, time-based vesting restrictions or otherwise,
as the Committee determines at the time of the grant of the Award. Restricted
Stock Awards granted hereunder are intended to comply with Code Section 83 and
are intended to be exempt from the application of Code Section 409A.  Except as
otherwise provided herein or in an Award Certificate, the Participant shall have
all of the rights of a stockholder with respect to any Award of the Restricted
Stock, including voting rights, and the Participant shall have none of the
rights of a stockholder with respect to Restricted Stock Units until such time
as Shares of Stock are issued to the Participant in settlement of the Restricted
Stock Units following satisfaction of any vesting and other conditions specified
in the Award Certificate.  

8.3.    DIVIDENDS ON RESTRICTED STOCK. Unless otherwise provided in the
applicable Award Certificate, Awards of Restricted Stock will be entitled to
full dividend rights and any cash or stock dividends paid thereon will be paid
or distributed to the Participant when and as paid to the stockholders
generally, and in no event later than the 15th day of the third month following
the end of the calendar year in which the dividends are paid to stockholders.

8.4.    GRANT OF DIVIDEND EQUIVALENTS.  The Committee is authorized to grant
Dividend Equivalents with respect to Awards of Restricted Stock Units granted
hereunder, subject to such terms and conditions, including vesting, as may be
determined by the Committee.  Dividend Equivalents shall entitle the Participant
to receive payments equal to dividends with respect to all or a portion of the
number of Shares subject to an Award of Restricted Stock Units, as determined by
the Committee.   Dividend Equivalents shall vest and be distributed when and to
the extent the underlying Restricted Stock Unit Award vests. The Committee may
provide in the Award Certificate that prior to vesting, Dividend Equivalents
shall accrue and be deemed to have been reinvested in additional Shares, or
otherwise reinvested.   Unless otherwise provided in the applicable Award
Certificate, Dividend Equivalents will be paid or distributed no later than the
15th day of the third month following the later of (i) the end of the calendar
year in which the corresponding dividends were paid to stockholders, or (ii) the
end of the first calendar year during which the Participant’s right to such
Dividends Equivalents is no longer subject to a substantial risk of forfeiture.

8.5.    RESTRICTIONS ON TRANSFER. Neither Restricted Stock nor Restricted Stock
Units may be sold, assigned, transferred, pledged or otherwise encumbered or
disposed of during the applicable restriction period.

8.6.    TERMINATION AND FORFEITURE.  Except as otherwise determined by the
Committee at the time of the grant of the Award or thereafter or as otherwise
provided in this Plan, upon termination of Continuous Status as a Participant
during the applicable restriction period or upon failure to satisfy applicable
performance goals during the applicable restriction period,

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Restricted Stock and Restricted Stock Units that are at that time subject to
such restrictions shall be forfeited. Any Restricted Stock forfeited by a
Participant shall be redeemed and cancelled by the Company, without payment of
consideration to the Participant, and the escrow agent shall be authorized to
deliver the certificates representing such Shares to the Company for
cancellation.

8.7.    DELIVERY OF RESTRICTED STOCK.  Shares of Restricted Stock shall be
delivered to the Participant at the time of grant either by book-entry
registration or by delivering to the Participant, or a custodian or escrow agent
(including, without limitation, the Company, an Affiliate or one or more
employees of the Company or Affiliate) designated by the Committee, a stock
certificate or certificates registered in the name of the Participant.  Unless
otherwise determined by the Committee, the Participant shall deposit the
certificates representing the Shares awarded as Restricted Stock that have not
yet vested, together with stock powers or other instruments of transfer approved
by the Committee, appropriately endorsed in blank, with the Trust Department of
Union Bank as the Company’s agent and such Shares shall be released from escrow
and delivered to the Participant only upon authorization of the Committee upon
vesting of the Shares. Certificates representing shares of Restricted Stock may
bear such restrictive legends as the Committee deems appropriate.

ARTICLE 9
PERFORMANCE AWARDS

9.1.    GRANT OF PERFORMANCE AWARDS.  The Committee is authorized to grant any
Award under this Plan, with performance-based vesting criteria, on such terms
and conditions as may be selected by the Committee.  Any such Awards with
performance-based vesting criteria are sometimes referred to herein as
Performance Awards. The Committee shall have the complete discretion to
determine the number of Performance Awards granted to each Participant, subject
to Section 5.4, and to designate the provisions of such Performance Awards as
provided in Section 4.3.  All Performance Awards shall be evidenced by an Award
Certificate.

9.2.    PERFORMANCE GOALS.  

(a)
Business Criteria. The Committee may establish performance goals for Performance
Awards which may be based on any one or more of the following criteria, as
selected by the Committee:

•basic earnings per share;
•basic cash earnings per share;
•diluted earnings per share;
•core earnings per share;
•diluted cash earnings per share;
•net income;
•cash earnings;
•net interest income;
•noninterest income;
•general and administrative expense to average assets ratio;
•cash general and administrative expense to average assets ratio;
•efficiency ratio;
•cash efficiency ratio;
•return on average assets;
•core return on average assets;
•cash return on average assets;
•return on average stockholders’ equity;
•cash return on average stockholders’ equity;
•core return on equity;
•return on average tangible stockholders’ equity;
•cash return on average tangible stockholders’ equity;
•core earnings;
•operating income;

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•operating efficiency ratio;
•net interest margin;
•growth in assets, loans (including home equity lines of credit), or deposits;
•loan production volume;
•nonperforming loans;
•cash flow;
•capital preservation (core or risk-based);
•interest rate risk exposure-net portfolio value;
•interest rate risk-sensitivity;
•liquidity parameters;
•
strategic business objectives, consisting of one or more objectives based upon
meeting specified cost targets, business expansion goals, and goals relating to
acquisitions or divestitures, or goals relating to capital raising and capital
management;

•stock price (including, but not limited to, growth measures and total
stockholder return);
•operating expense as a percentage of average assets;
•core deposits as a percentage of total deposits;
•net charge-off percentage;
•average percentage past due;
•classified assets to total assets;
•compliance/audit exam findings;
•capital ratio;
•revenue growth;
•tangible book value per diluted share;
•management achievement of strategic plan goals;
•system knowledge & utilization of core applications;
•customer service survey; or
•any combination of the foregoing.

Performance goals may be based on the performance of the Company as a whole or
on any one or more Subsidiaries or business units of the Company or a Subsidiary
and may be measured relative to a peer group, an index, or a business plan. In
establishing any performance measures, the Committee may provide for the
exclusion of the effects of the following items, to the extent identified in the
audited financial statements of the Company, including footnotes, or in the
Management’s Discussion and Analysis section of the Company’s annual report: (i)
extraordinary, unusual, and/or nonrecurring items of gain or loss; (ii) gains or
losses on the disposition of a business; (iii) changes in tax laws or accounting
principles, regulations or laws; or (iv) mergers or acquisitions. To the extent
not specifically excluded, such effects shall be included in any applicable
performance measure. 

(b)
Adjustments. Pursuant to this Section 9.2, in certain circumstances the
Committee may adjust performance measures under outstanding Awards; provided,
however, that notwithstanding anything herein to the contrary, no adjustment may
be made with respect to an Award to a Covered Employee that is intended to be
performance-based compensation within the meaning of Code Section 162(m) as
contemplated in Section 9.3, except to the extent the Committee exercises such
negative discretion as is permitted under applicable law for purposes of an
exception under Code Section 162(m). If the Committee determines that a change
in the business, operations, corporate structure or capital structure of the
Company or the manner in which the Company or an Affiliate conducts its
business, or other events or circumstances render performance goals to be
unsuitable, the Committee may modify such performance goals in whole or in part,
as the Committee deems appropriate.  If a Participant is promoted, demoted or
transferred to a different business unit or function during a performance
period, the Committee may determine that the performance goals or performance
period are no longer appropriate and may (i) adjust, change or eliminate the
performance goals or the applicable performance period as it deems appropriate
to make such goals and period comparable to the initial goals and period, or
(ii) make a cash payment to the participant in an amount determined by the
Committee.

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9.3.    GRANT OF PERFORMANCE AWARDS TO COVERED EMPLOYEES. With respect to each
Performance Award granted to a Covered Employee that is intended by the
Committee to qualify as a “performance-based award” under Code Section 162(m),
the Committee shall select, within the first 90 days of a performance period
(or, if shorter, within the maximum period allowed under Section 162(m) of the
Code) the performance criteria for such grant from among those criteria
enumerated in Section 9.2, and the achievement targets with respect to each
performance criterion (including a threshold level of performance below which no
amount will become payable with respect to such Award). Each such Performance
Award will specify the amount payable, or the formula for determining the amount
payable, upon achievement of the various applicable performance targets. The
performance criteria established by the Committee may be (but need not be)
different for each performance period and different goals may be applicable to
Performance Awards to different Covered Employees. Maximum Awards to Covered
Employees are subject to the limitations in Section 4.2 of this Plan.
Notwithstanding anything herein to the contrary, no Award that is intended by
the Committee to be considered performance-based compensation under Code Section
162(m) shall be granted under terms that will permit its accelerated vesting
upon Retirement or other termination of service (other than death or Disability
or a Change in Control).

9.4.    CERTIFICATION OF PERFORMANCE GOALS. Any payment of a Performance Award
to a Covered Employee granted pursuant to Section 9.3 shall be conditioned on
the written certification of the Committee in each case that the performance
goals and any other material conditions were satisfied.  Except as specifically
provided in Section 9.3, no Performance Award to a Covered Employee under
Section 9.3 or by an employee who in the reasonable judgment of the Committee
may be a Covered Employee on the date of payment, may be amended, nor may the
Committee exercise any discretionary authority it may otherwise have under the
Plan with respect to such Award, in any manner to waive the achievement of the
applicable performance goal or to increase the amount payable pursuant thereto
or the value thereof, or otherwise in a manner that would cause such Performance
Award to cease to qualify as performance-based compensation under Code Section
162(m).

ARTICLE 10
PROVISIONS APPLICABLE TO AWARDS

10.1.    TERM OF AWARD.  Subject to Section 7.1(e) with respect to Options, the
term of each Award shall be for the period as determined by the Committee and
specified in the applicable Award Certificate.

10.2.    FORM OF PAYMENT FOR AWARDS.  At the discretion of the Committee,
payment of Awards may be made in cash, Stock, a combination of cash and Stock,
or any other form of property as the Committee shall determine.  In addition,
payment of Awards may include such terms, conditions, restrictions and/or
limitations, if any, as the Committee deems appropriate, including, in the case
of Awards paid in the form of Stock, restrictions on transfer and forfeiture
provisions.  Further, payment of Awards may be made in the form of a lump sum,
or in installments, as determined by the Committee.

10.3.    LIMITATIONS ON TRANSFER.  No right or interest of a Participant in any
unexercised or unvested restricted Award may be assigned, transferred, pledged,
encumbered, or hypothecated to or in favor of any party other than the Company
or an Affiliate, or shall be subject to any lien, obligation, or liability of
such Participant to any other party other than the Company or an Affiliate.  No
unexercised or restricted Award shall be assignable or transferable by a
Participant other than by will or the laws of descent and distribution or,
except in the case of an Incentive Stock Option, pursuant to a domestic
relations order that would satisfy Code Section 414(p)(1)(A) if such Section
applied to an Award under the Plan; provided, however, that the Committee may
(but need not) permit other transfers (other than transfers for value) where the
Committee concludes that such transferability (i) does not result in accelerated
taxation, (ii) does not cause any Option intended to be an Incentive Stock
Option to fail to be described in Code Section 422(b), and (iii) is otherwise
appropriate and desirable, taking into account any factors deemed relevant,
including without limitation, state or federal tax or securities laws applicable
to transferable Awards.

10.4.    BENEFICIARIES.  Notwithstanding Section 10.3, a Participant may, in the
manner determined by the Committee, designate a beneficiary to exercise the
rights of the Participant and to receive any distribution with respect to any
Award upon the Participant’s death.  A beneficiary, legal guardian, legal
representative, or other person claiming any rights under the Plan is subject to
all terms and conditions of the Plan and any Award Certificate applicable to the
Participant, except to the extent the Plan and Award Certificate otherwise
provide, and to any additional restrictions deemed necessary or appropriate by
the Committee.  If no beneficiary has been designated or survives the
Participant, payment shall be made to the Participant’s estate.  Subject to the
foregoing, a Participant may change or revoke a beneficiary designation at any
time provided the change or revocation is filed with the Committee.

10.5.    STOCK TRADING RESTRICTIONS.  All Stock issuable under the Plan shall be
subject to any stop-transfer orders and other restrictions as the Committee
deems necessary or advisable to comply with federal or state securities laws,
rules and regulations and the rules of any national securities exchange or
automated quotation system on which the Stock is listed, quoted,

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or traded.  The Committee may place legends on any Stock certificate or issue
instructions to the transfer agent to reference restrictions applicable to the
Stock.

10.6.    ACCELERATION UPON DEATH OR DISABILITY.  Except as otherwise provided in
the Award Certificate, or in Section 10.8 with respect to Awards of Restricted
Stock and Restricted Stock Units, upon the termination of a person’s Continuous
Status as a Participant by reason of death or Disability:

(i)    all of that Participant’s outstanding Options shall become fully
exercisable, and shall thereafter remain exercisable for the applicable period
specified in Section 7.2;
 
            (ii)    all time-based vesting restrictions on that Participant’s
outstanding Awards shall lapse, and the Awards shall be deemed to vest as of the
date of termination; and

(iii)    all performance criteria under all of that Participant’s outstanding
performance-based Awards shall be deemed to have been satisfied as of the date
of termination, as follows:

(A)    if the date of termination occurs during the first half of the applicable
performance period, all relevant performance goals will be deemed to have been
achieved at the “target” level, and

(B)    if the date of termination occurs during the second half of the
applicable performance period, the actual level of achievement of all relevant
performance goals against target will be measured as of the end of the calendar
quarter immediately preceding the date of termination, and

(C)    in either such case, there shall be a prorata payout to the Participant
or his or her estate within sixty (60) days following the date of termination
(unless a later date is required by Section 13.3 hereof), based upon the length
of time within the performance period that has elapsed prior to the date of
termination.

To the extent that this provision causes Incentive Stock Options to exceed the
dollar limitation set forth in Code Section 422(d), the excess Options shall be
deemed to be Non-Qualified Stock Options.

10.7.    EFFECT OF A CHANGE IN CONTROL.  The provisions of this Section 10.7
shall apply in the case of a Change in Control, unless otherwise provided in the
Award Certificate or any separate agreement with a Participant governing an
Award.

(a)    Awards not Assumed or Substituted by Surviving Entity.  Upon the
occurrence of a Change in Control, and except with respect to any Awards assumed
by the Surviving Entity or otherwise equitably converted or substituted in
connection with the Change in Control in a manner approved by the Committee or
the Board: (i) outstanding Options shall become fully exercisable, (ii)
time-based vesting restrictions on outstanding Awards shall lapse, and (iii) the
target payout opportunities attainable under outstanding Performance Awards
shall be deemed to have been fully earned as of the effective date of the Change
in Control based upon (A) an assumed achievement of all relevant performance
goals at the “target” level if the Change in Control occurs during the first
half of the applicable performance period, or (B) the actual level of
achievement of all relevant performance goals against target measured as of the
date of the Change in Control, if the Change in Control occurs during the second
half of the applicable performance period, and, in either such case, subject to
Section 13.3, there shall be a prorata payout to Participants within sixty (60)
days following the Change in Control (unless a later date is required by Section
13.3 hereof), based upon the length of time within the performance period that
has elapsed prior to the Change in Control.  Any Awards shall thereafter
continue or lapse in accordance with the other provisions of the Plan and the
Award Certificate.  To the extent that this provision causes Incentive Stock
Options to exceed the dollar limitation set forth in Code Section 422(d), the
excess Options shall be deemed to be Non-Qualified Stock Options.

(b)    Awards Assumed or Substituted by Surviving Entity.  With respect to
Awards assumed by the Surviving Entity or otherwise equitably converted or
substituted in connection with a Change in Control: if within two years after
the effective date of the Change in Control, a Participant’s employment is
terminated without Cause or the Participant resigns for Good Reason, then (i)
all of that Participant’s outstanding Options and other Awards in the nature of
rights that may be exercised shall become fully exercisable, (ii) all time-based
vesting restrictions on the his or her outstanding Awards shall lapse, and (iii)
the target payout opportunities attainable under all outstanding Performance
Awards of that Participant shall be deemed to have been fully earned as of the
date of termination based upon (A) an assumed achievement of all relevant
performance goals at the “target” level if the date of termination occurs during
the first half of the applicable performance period, or (B) the actual level of
achievement of all relevant performance goals against target, if the date of
termination occurs during the second half of the applicable performance period,
and, in either such case, there shall

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be a prorata payout to such Participant within sixty (60) days following the
date of termination of employment (unless a later date is required by Section
13.3 hereof), based upon the length of time within the performance period that
has elapsed prior to the date of termination of employment.  With regard to each
Award, a Participant shall not be considered to have resigned for Good Reason
unless either (i) the Award Certificate includes such provision or (ii) the
Participant is party to an employment, severance, change in control or similar
agreement with the Company or an Affiliate that includes provisions in which the
Participant is permitted to resign for Good Reason.  Any Awards shall thereafter
continue or lapse in accordance with the other provisions of the Plan and the
Award Certificate.  To the extent that this provision causes Incentive Stock
Options to exceed the dollar limitation set forth in Code Section 422(d), the
excess Options shall be deemed to be Non-Qualified Stock Options.

10.8.    ACCELERATION FOR OTHER REASONS.  Regardless of whether an event has
occurred as described in Sections 10.6 or 10.7 above, the Committee may in its
sole discretion at any time determine that, upon the termination of service of a
Participant, or the occurrence of a Change in Control, all or a portion of such
Participant’s Options shall become fully or partially exercisable, that all or a
part of the restrictions on all or a portion of the Participant’s outstanding
Awards of Restricted Stock or Restricted Stock Units shall lapse, and/or that
any performance-based criteria with respect to any Awards held by that
Participant shall be deemed to be wholly or partially satisfied, in each case,
as of such date as the Committee may, in its sole discretion, declare.  In
exercising its discretion pursuant to this Section 10.8, the Committee may
provide for nonuniform treatment among Participants (whether or not similarly
situated) and among Awards granted to a Participant. Notwithstanding anything
herein to the contrary, the Committee may not waive any performance-based
criteria with respect to an Award to a Covered Employee intended to qualify as
performance-based compensation under Code Seciton 162(m), nor shall satisfaction
of such criteria be deemed to have been accelerated, other than in connection
with such Covered Employee’s death or Disability or a Change in Control.

10.9.    FORFEITURE EVENTS; RECOUPMENT.  

(a)    Forfeiture. The Committee may specify in an Award Certificate that the
Participant’s rights, payments and benefits with respect to an Award shall be
subject to reduction, cancellation, forfeiture or recoupment upon the occurrence
of certain specified events, in addition to any otherwise applicable vesting or
performance conditions of an Award. Such events may include, but shall not be
limited to, termination of employment for Cause, violation of material Company
or Affiliate policies, breach of noncompetition, confidentiality or other
restrictive covenants that may apply to the Participant, or other conduct by the
Participant that is detrimental to the business or reputation of the Company or
any Affiliate.

(b)    Recoupment. All Awards (including Awards that have vested in accordance
with the Award Certificate) shall be subject to the terms and conditions, if
applicable, of any recoupment policy adopted by the Company from time to time or
recoupment requirement imposed under applicable laws, rules or regulations or
any applicable securities exchange listing standards.

10.10.    SUBSTITUTE AWARDS.  The Committee may grant Awards under the Plan in
substitution for stock and stock-based awards held by employees of another
entity who become employees of the Company or an Affiliate as a result of a
merger or consolidation of the former employing entity with the Company or an
Affiliate or the acquisition by the Company or an Affiliate of property or stock
of the former employing corporation.  The Committee may direct that the
Substitute Awards be granted on such terms and conditions as the Committee
considers appropriate in the circumstances.

ARTICLE 11
CHANGES IN CAPITAL STRUCTURE

11.1.    MANDATORY ADJUSTMENTS.  In the event of an internal reorganization,
recapitalization, reclassification, stock dividend, stock split, reverse stock
split, spin-off, rights offering, or large nonrecurring cash dividend or similar
extraordinary event affecting the Stock, the authorization limitations under
Sections 5.1 and 5.4 shall be adjusted proportionately, and the Committee shall
make such adjustments to the Plan and Awards as it deems necessary, in its sole
discretion, to prevent dilution or enlargement of rights immediately resulting
from such event.  Action by the Committee may include: (i) adjustment of the
number and kind of shares that may be delivered under the Plan; (ii) adjustment
of the number and kind of shares subject to outstanding Awards; (iii) adjustment
of the exercise price of outstanding Awards or the performance goals or other
measures to be used to determine the amount of the benefit payable on an Award;
and (iv) any other adjustments that the Committee determines to be
equitable.  Notwithstanding the foregoing, the Committee shall not make any
adjustments to outstanding Options that would constitute a modification or
substitution of the stock right under Treas. Reg. Sections 1.409A-1(b)(5)(v)
that would be treated as the grant of a new stock right or change in the form of
payment for purposes of Code Section 409A.  Without limiting the foregoing,

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in the event of a subdivision of the outstanding Stock (stock-split), a
declaration of a dividend payable in Shares, or a combination or consolidation
of the outstanding Stock into a lesser number of Shares, the authorization
limitations under Sections 5.1 and 5.4 shall automatically be adjusted
proportionately, the Shares then subject to each Award and the exercise price of
each outstanding Option shall automatically, without the necessity for any
additional action by the Committee, be adjusted proportionately. Any adjustment
under this Section to the number of Shares subject to an Award may provide for
the number of Shares to be rounded up or down to the next whole Share, as the
Committee may determine in its discretion.

11.2.    DISCRETIONARY ADJUSTMENTS.  Upon the occurrence or in anticipation of
any corporate event or transaction involving the Company (including, without
limitation, any merger, combination or exchange of shares), the Committee may,
in its sole discretion, provide (i) that Awards will be settled in cash rather
than Stock, (ii) that Awards will become immediately vested and exercisable and
will expire after a designated period of time to the extent not then exercised,
(iii) that Awards will be assumed by another party to a transaction or otherwise
be equitably converted or substituted in connection with such transaction, (iv)
that outstanding Awards may be settled by payment in cash or cash equivalents
equal to the excess of the Fair Market Value of the underlying Stock, as of a
specified date associated with the transaction, over the exercise price of the
Award, or (vi) any combination of the foregoing.  The Committee’s determination
need not be uniform and may be different for different Participants whether or
not such Participants are similarly situated.

11.3.    GENERAL.  Any discretionary adjustments made pursuant to this Article
11 shall be subject to the provisions of Section 12.2.  To the extent that any
adjustments made pursuant to this Article 11 cause Incentive Stock Options to
cease to qualify as Incentive Stock Options, such Options shall be deemed to be
Non-Qualified Stock Options (Again).

ARTICLE 12
AMENDMENT, MODIFICATION AND TERMINATION

12.1.    AMENDMENT, MODIFICATION AND TERMINATION.  The Board or the Committee
may, at any time and from time to time, amend, modify or terminate the Plan
without stockholder approval; provided, however, that if an amendment to the
Plan would, in the reasonable opinion of the Board or the Committee, either (i)
materially increase the number of Shares available under the Plan; (ii) expand
the types of awards under the Plan, (iii) materially expand the class of
participants eligible to participate in the Plan; (iv) materially extend the
term of the Plan, or (v) otherwise constitute a material change requiring
stockholder approval under applicable laws, policies or regulations or the
applicable listing or other requirements of an Exchange, then such amendment
shall be subject to stockholder approval; and provided, further, that the Board
or Committee may condition any other amendment or modification on the approval
of stockholders of the Company for any reason, including by reason of such
approval being necessary or deemed advisable (i) to comply with the listing or
other requirements of an Exchange, or (ii) to satisfy any other tax, securities
or other applicable laws, policies or regulations.

12.2.    MODIFICATION OF OUTSTANDING AWARDS.  At any time and from time to time,
the Committee may amend, modify or terminate any outstanding Award without
approval of the Participant; provided, however:

(a)    Subject to the terms of the applicable Award Certificate, such amendment,
modification or termination shall not, without the Participant’s consent, reduce
or diminish the value of such Award determined as if the Award had been
exercised, vested, cashed in or otherwise settled on the date of such amendment
or termination (with the per-share value of an Option for this purpose being
calculated as the excess, if any, of the Fair Market Value as of the date of
such amendment or termination over the exercise or base price of such Award);

(b)    The original term of an Option may not be extended without the prior
approval of the stockholders of the Company;

(c)    Except as otherwise provided in Section 11.1, the exercise price of an
Option may not be reduced, directly or indirectly, without the prior approval of
the stockholders of the Company; and

(d)    No termination, amendment, or modification of the Plan shall adversely
affect any Award previously granted under the Plan, without the written consent
of the Participant affected thereby.  An outstanding Award shall not be deemed
to be “adversely affected” by a Plan amendment if such amendment would not
reduce or diminish the value of such Award determined as if the Award had been
exercised, vested, cashed in or otherwise settled on the date of such amendment
(with the per-share value of an Option for this purpose being calculated as the
excess, if any, of the Fair Market Value as of the date of such amendment over
the exercise or base price of such Award).

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12.3.    COMPLIANCE AMENDMENTS.  Notwithstanding anything in the Plan or in any
Award Certificate to the contrary, the Board may amend the Plan or an Award
Certificate, to take effect retroactively or otherwise, as deemed necessary or
advisable for the purpose of conforming the Plan or Award Certificate to any
present or future law relating to plans of this or similar nature (including,
but not limited to, Sections 409A and 162(m) of the Code), and to the
administrative regulations and rulings promulgated thereunder.  By accepting an
Award under this Plan, a Participant agrees to any amendment made pursuant to
this Section 12.3 to any Award granted under the Plan without further
consideration or action.

ARTICLE 13
GENERAL PROVISIONS

13.1.    NO ENLARGEMENT OF RIGHTS.

(a)    No Participant or any Eligible Person shall have any claim to be granted
any Award under the Plan.  Neither the Company, its Affiliates nor the Committee
is obligated to treat Participants or Eligible Persons uniformly, and
determinations made under the Plan may be made by the Committee selectively
among Eligible Persons who receive, or are eligible to receive, Awards (whether
or not such Eligible Persons are similarly situated).

(b)    Nothing in the Plan, any Award Certificate or any other document or
statement made with respect to the Plan, shall interfere with or limit in any
way the right of the Company or any Affiliate to terminate any Participant’s
employment or status as an officer, or any Participant’s service as a director,
at any time, nor confer upon any Participant any right to continue as an
employee, officer, or director of the Company or any Affiliate, whether for the
duration of a Participant’s Award or otherwise.

(c)    Neither an Award nor any benefits arising under this Plan shall
constitute an employment contract with the Company or any Affiliate and,
accordingly, subject to Article 12, this Plan and the benefits hereunder may be
terminated at any time in the sole and exclusive discretion of the Committee
without giving rise to any liability on the part of the Company or an of its
Affiliates.

(d)    No Award shall be deemed to give a Participant any of the rights of a
stockholder of the Company unless and until Shares are in fact issued to such
person in connection with such Award.

13.2.    WITHHOLDING.  The Company or any Affiliate shall have the authority and
the right to deduct or withhold, or require a Participant to remit to the
Company, an amount sufficient to satisfy federal, state, and local taxes
(including the Participant’s FICA obligation) required by law to be withheld
with respect to any exercise, lapse of restriction or other taxable event
arising as a result of the Plan.  With respect to withholding required upon any
taxable event under the Plan, the Committee may, at the time the Award is
granted or thereafter, require or permit that any such withholding requirement
be satisfied, in whole or in part, by withholding from the Award Shares having a
Fair Market Value on the date of withholding equal to the minimum amount (and
not any greater amount) required to be withheld for tax purposes, all in
accordance with such procedures as the Committee establishes.  All such
elections shall be subject to any restrictions or limitations that the
Committee, in its sole discretion, deems appropriate.

13.3.    SPECIAL PROVISIONS RELATED TO CODE SECTION 409A.

(a)    General. It is intended that the payments and benefits provided under the
Plan and any Award shall either be exempt from the application of, or comply
with, the requirements of Code Section 409A.  The Plan and all Award
Certificates shall be construed in a manner that effects such
intent.  Nevertheless, the tax treatment of the benefits provided under the Plan
or any Award is not warranted or guaranteed.  Neither the Company, its
Affiliates nor their respective directors, officers or employees (other than in
his or her capacity as a Participant) shall be held liable for any taxes,
interest, penalties or other monetary amounts owed by any Participant or other
taxpayer as a result of the Plan or any Award.

(b)    Definitional Restrictions. Notwithstanding anything in the Plan or in any
Award Certificate to the contrary, to the extent that any amount or benefit that
would constitute nonexempt “deferred compensation” for purposes of Code
Section 409A would otherwise be payable or distributable, or a different form of
payment (e.g., lump sum or installment) would be effected, under the Plan or any
Award Certificate by reason of the occurrence of a Change in Control, or the
Participant’s Disability or separation from service, such amount or benefit will
not be payable or distributable to the Participant, and/or such different form
of payment will not be effected, by reason of such circumstance unless the
circumstances giving rise to such Change in Control, Disability or separation
from service meet any description

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or definition of “change in control event”, “disability” or “separation from
service”, as the case may be, in Code Section 409A and applicable regulations
(without giving effect to any elective provisions that may be available under
such definition).  This provision does not prohibit the vesting of any Award
upon a Change in Control, Disability or separation from service, however
defined.  If this provision prevents the payment or distribution of any amount
or benefit, such payment or distribution shall be made on the next earliest
payment or distribution date or event specified in the Award Certificate that is
permissible under Code Section 409A.  If this provision prevents the application
of a different form of payment of any amount or benefit, such payment shall be
made in the same form as would have applied absent such designated event or
circumstance.

(c)    Allocation among Possible Exemptions. If any one or more Awards granted
under the Plan to a Participant could qualify for any separation pay exemption
described in Treas. Reg. Section 1.409A-1(b)(9), but such Awards in the
aggregate exceed the dollar limit permitted for the separation pay exemptions,
the Company (acting through the Committee) shall determine which Awards or
portions thereof will be subject to such exemptions.

(d)    Six-Month Delay in Certain Circumstances. Notwithstanding anything in the
Plan or in any Award Certificate to the contrary, if any amount or benefit that
would constitute nonexempt “deferred compensation” for purposes of Code Section
409A would otherwise be payable or distributable under this Plan or any Award
Certificate by reason of a Participant’s separation from service during a period
in which the Participant is a Specified Employee (as defined below), then,
subject to any permissible acceleration of payment by the Committee under Treas.
Reg. Section 1.409A-3(j)(4)(ii) (domestic relations order), (j)(4)(iii)
(conflicts of interest), or (j)(4)(vi) (payment of employment taxes):

(i)    the amount of such nonexempt deferred compensation that would otherwise
be payable during the six-month period immediately following the Participant’s
separation from service will be accumulated through and paid or provided on the
first day of the seventh month following the Participant’s separation from
service (or, if the Participant dies during such period, within 30 days after
the Participant's death) (in either case, the “Required Delay Period”); and

(ii)    the normal payment or distribution schedule for any remaining payments
or distributions will resume at the end of the Required Delay Period.

For purposes of this Plan, the term “Specified Employee” has the meaning given
such term in Code Section 409A and the final regulations thereunder, provided,
however, that, as permitted in such final regulations, the Company’s Specified
Employees and its application of the six-month delay rule of Code Section
409A(a)(2)(B)(i) shall be determined in accordance with rules adopted by the
Board or any committee of the Board, which shall be applied consistently with
respect to all nonqualified deferred compensation arrangements of the Company,
including this Plan.

13.4.    UNFUNDED STATUS OF AWARDS.  The Plan is intended to be an “unfunded”
plan for incentive and deferred compensation.  With respect to any payments not
yet made to a Participant pursuant to an Award, nothing contained in the Plan or
any Award Certificate shall give the Participant any rights that are greater
than those of a general creditor of the Company or any Affiliate.  This Plan is
not intended to be subject to ERISA.

13.5.    RELATIONSHIP TO OTHER BENEFITS.  No Award under the Plan shall be taken
into account in determining any benefits under any pension, retirement, savings,
profit sharing, group insurance, welfare or benefit plan of the Company or any
Affiliate unless provided otherwise in such other plan.

13.6.    EXPENSES.  The expenses of administering the Plan shall be borne by the
Company and its Affiliates.

13.7.    TITLES AND HEADINGS.  The titles and headings of the Sections in the
Plan are for convenience of reference only, and in the event of any conflict,
the text of the Plan, rather than such titles or headings, shall control.

13.8.    GENDER AND NUMBER.  Except where otherwise indicated by the context,
any masculine term used herein also shall include the feminine; the plural shall
include the singular and the singular shall include the plural.

13.9.    FRACTIONAL SHARES.  No fractional Shares shall be issued and the
Committee shall determine, in its discretion, whether cash shall be given in
lieu of fractional Shares or whether such fractional Shares shall be eliminated
by rounding up or down.

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13.10.    NO LIABILITY OF COMPANY. The Company and any Affiliate which is in
existence or hereafter comes into existence shall not be liable to a
Participant, beneficiary or any other person as to: (a) the nonissuance or sale
of Shares as to which the Company has been unable to obtain, from any regulatory
body having jurisdiction over the matter, the authority deemed by the Company’s
counsel to be necessary to the lawful issuance and sale of any Shares hereunder;
(b) any tax consequence to any Participant, beneficiary or other person
including, without limitation, due to the receipt, vesting, exercise or
settlement of any Award granted hereunder; or (c) any provision of law or legal
restriction that prohibits or restricts the transfer of Shares issued pursuant
to any Award.

13.11.    GOVERNING LAW.  To the extent not governed by federal law, the Plan
and all Award Certificates shall be construed in accordance with and governed by
the laws of the State of Vermont.

13.12.    ADDITIONAL PROVISIONS.  Each Award Certificate may contain such other
terms and conditions as the Committee may determine; provided that such other
terms and conditions are not inconsistent with the provisions of the Plan.

13.13.    NO LIMITATIONS ON RIGHTS OF COMPANY.  The grant of any Award shall not
in any way affect the right or power of the Company to make adjustments,
reclassifications or changes in its capital or business structure or to merge,
consolidate, dissolve, liquidate, sell or transfer all or any part of its
business or assets.  The Plan shall not restrict the authority of the Company,
for proper corporate purposes, to issue or assume awards, other than under the
Plan, to or with respect to any person.  If the Committee so directs, the
Company may issue or transfer Shares to an Affiliate, for such lawful
consideration as the Committee may specify, upon the condition or understanding
that the Affiliate will transfer such Shares to a Participant in accordance with
the terms of an Award granted to such Participant and specified by the Committee
pursuant to the provisions of the Plan.

The foregoing is hereby acknowledged as being the Union Bankshares, Inc. 2014
Equity Incentive Plan as adopted by the Board on March 19, 2014 and by the
stockholders on _____________, 2014.

UNION BANKSHARES, INC.
By:
 
 
 
 
 
Its:
 
 

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