EXHIBIT 10.1

EMPLOYMENT AGREEMENT

This Employment Agreement (this “Agreement”) is made as of May 1, 2006, by and
between Union Bank and Trust Company, a Virginia banking corporation (the
“Bank”), and John C. Neal (the “Officer”), and to which Union Bankshares
Corporation, a Virginia corporation and parent company of the Bank (the
“Company”), is made a party.

The parties, intending to be legally bound, agree as follows:

1. Employment and Acceptance. The Officer shall be employed as President and
Chief Executive Officer of the Bank. The Officer shall have the duties and
responsibilities that are commensurate with his position and shall also render
such other services and duties as may be reasonably assigned to him from time to
time by the Bank, consistent with his positions as President and Chief Executive
Officer of the Bank. The Officer hereby accepts and agrees to such employment
and agrees to carry out his duties and responsibilities to the best of his
ability in a competent, efficient and businesslike manner.

2. Term of Employment. This Agreement is effective May 1, 2006 (the
“Commencement Date”) and will end on the second anniversary of the Commencement
Date, unless sooner terminated as provided herein (the “Employment Period”).
Beginning on the day following the Commencement Date, and on each day
thereafter, the Employment Period shall automatically be extended an additional
day, unless prior to such extension the Bank gives written notice to the Officer
that the Employment Period will not thereafter be extended. The last day of the
Employment Period, as extended from time to time, is sometimes referred to as
the “Expiration Date.”

3. Compensation and Benefits.

(a) Base Salary. The Bank shall pay the Officer an annual base salary of
$232,540 (the “Base Salary”), which will be payable in accordance with the
payroll practices of the Bank applicable to all officers. The Base Salary will
be reviewed annually by the Board of Directors and may be adjusted upward or
downward in the sole discretion of the Board of Directors. In no event, however,
will the Base Salary be less than $232,540.

(b) Annual Bonus. The Officer may be entitled to receive annual cash bonus
payments in such amounts as may be determined in accordance with the terms and
conditions of the applicable management incentive plan as may be adopted on an
annual basis by the Board of Directors of the Company.

(c) Stock Compensation. The Officer may be entitled to receive stock awards
under the Company’s 2003 Stock Incentive Plan, or any successor plan, in such
amounts and subject to such terms and conditions as determined under the
applicable management incentive plan as may be adopted on an annual basis by the
Board of Directors of the Company.

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(d) Benefits. The Officer will be entitled to participate in and receive the
benefits of any pension or other retirement benefit plan, life insurance, profit
sharing, employee stock ownership, and other plans, benefits and privileges of
the Bank that may be in effect from time to time, to the extent the Officer is
eligible under the terms of those plans and programs, provided, however, that
Officer and Company agree that Officer shall not be eligible to receive or claim
any benefits under the Union Bankshares Corporation Severance Pay Plan effective
as of October 1, 1999, as amended.

(e) Business Expenses. The Bank will reimburse Officer or otherwise provide for
or pay for all reasonable expenses incurred by Officer in furtherance of, or in
connection with, the business of the Bank, including, but not by way of
limitation, travel expenses, country club dues, car allowance, and memberships
in professional organizations, subject to such reasonable documentation and
other limitations as may be established by the Board of Directors of the Bank.

(t) Vacation. The Officer will be entitled to five weeks of vacation per year
after the Officer completes twenty years of employment with the Bank, to be
taken at such times and intervals as shall be determined by the Officer with the
approval of the Bank, which approval shall not be unreasonably withheld.

(g) Deferred Compensation Benefits. The Bank may enter into a deferred
compensation arrangement with the Officer to provide for certain supplemental
nonqualified cash benefits in such amounts and on such terms and conditions as
the parties may agree.

4. Termination and Termination Benefits. Notwithstanding the provisions of
Section 2, the Officer’s employment hereunder shall terminate under the
following circumstances and shall be subject to the following provisions:

(a) Death. If the Officer dies while employed by the Bank, the Bank will pay his
estate his Base Salary through the end of the calendar month in which his death
occurs.

(b) Disability. The Officer’s employment hereunder may be terminated at any time
because of the Officer’s inability to perform his duties with the Bank on a full
time basis for 180 consecutive days or a total of at least 240 days in any
twelve month period as a result of the Officer’s incapacity due to physical or
mental illness as determined pursuant to the Bank’s long term disability policy;
provided, however, that the Bank shall provide continued medical insurance in
the Bank’s health plan for the benefit of the Officer for a period of twelve
months after the date of such termination.

(c) Termination by the Bank for Cause. The Officer’s employment may be
terminated at any time without further liability on the part of the Bank or the
Company effective immediately by written notice to the Officer setting forth in
reasonable detail the nature of such Cause. Only the following shall constitute
“Cause” for such termination:

(i) continued failure by the Officer for reasons other than disability to follow
reasonable instructions or policies of the Board of Directors of the Bank after
being advised in writing of such failure, including specific actions or inaction
on the part of the Officer and the particular instruction or policy involved,
and being given a reasonable opportunity and period (as determined by the Chief
Executive Officer of the Company) to remedy such failure;

 

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(ii) gross incompetence, gross negligence, willful misconduct in office or
breach of a material fiduciary duty owed to the Company, the Bank, or any
subsidiary or affiliate thereof;

(iii) conviction of a felony or a crime of moral turpitude (or a plea of nolo
contendere thereto) or commission of an act of embezzlement or fraud against the
Company, the Bank, or any subsidiary or affiliate thereof;

(iv) any breach by the Officer of a material term of this Agreement or violation
in any material respect of any code or standard of conduct generally applicable
to officers of the Company and the Bank, including without limitation material
failure to perform a substantial portion of his duties and responsibilities
hereunder as established from time to time by the Board of Directors of the
Bank, after being advised in writing of such breach, violation, or failure and
being given a reasonable opportunity and period (as determined by the Chief
Executive Officer of the Company) to remedy such breach, violation, or failure;

(v) dishonesty of the Officer with respect to the Company, the Bank, or any
subsidiary or affiliate thereof; or

(vi) the willful engaging by the Officer in conduct that is demonstrably and
materially injurious to the Company or the Bank, monetarily or otherwise, or any
conduct deemed by the Board of Directors of the Bank to be immoral or which may
bring embarrassment or disrepute to the Company, the Bank and their respective
good names or status.

(d) Termination by the Bank without Cause. The Officer’s employment may be
terminated without Cause effective immediately by written notice to the Officer.
In the event of termination without Cause, the Officer shall be entitled to the
benefits specified in Section 4(f).

(e) Termination by the Officer. The Officer may terminate his employment
hereunder with or without Good Reason (as defined below) by written notice to
the Board of Directors of the Bank effective thirty days after receipt of such
notice by the Board of Directors. In the event the Officer terminates his
employment hereunder for Good Reason, the Officer shall be entitled to the
benefits specified in Section 4(f). The Officer shall not be required to render
any further services to the Bank. Upon termination of employment by the Officer
without Good Reason, the Officer shall be entitled to no further compensation

 

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or benefits under this Agreement. “Good Reason” shall be (i) the failure by the
Bank to comply with the provisions of Section 3 or material breach by the Bank
of any other provision of this Agreement, which failure or breach shall continue
for more than thirty days after the date on which the Board of Directors of the
Bank receives notice of such failure or breach from the Officer, (ii) the
assignment of the Officer without his consent to a position, responsibilities,
or duties of a materially lesser status or degree of responsibility than his
position, responsibilities, or duties at the Commencement Date other than as a
direct result of the change in control of the Company (which is otherwise
addressed herein), or (iii) the requirement by the Bank that the Officer be
based at any office that is greater than fifty miles from where the Officer’s
office is located at the Commencement Date.

(f) Certain Termination Benefits. In the event of termination by the Bank
without Cause and other than for death or disability, or by the Officer with
Good Reason, the Officer shall be entitled to the following benefits, subject to
the provisions of Section 5(c)(for purposes of this subsection (f), the term
“Company” shall include the Bank as may be applicable):

(i) Subject to subsection (iii) below, for a two-year period immediately
following the date of termination the Bank shall continue to pay the Officer his
Base Salary (not including any bonus other than any unpaid bonus relating to a
fiscal year of the Company completed prior to the date of termination) at the
rate in effect on the date of termination, such payments to be made on the same
periodic dates as salary payments would have been made to the Officer had he not
been terminated. The Company and the Officer will use their best efforts to
accelerate the vesting of any nonvested benefits of the Officer under any
employee stock-based or other benefit plan or arrangement to the extent
permitted by the terms of such plan or arrangement.

(ii) Subject to subsection (iv) below, for a two-year period immediately
following the date of termination the Officer shall continue to receive medical
and life insurance benefits pursuant to plans made available by the Bank to its
employees at the expense of the Company to substantially the same extent the
Officer received such benefits on the date of termination (it being acknowledged
that the post-termination plans may be different from the plans in effect on the
date of termination). For purposes of application of such benefits, the Officer
shall be treated as if he had remained in the employ of the Bank, with a Base
Salary at the rate in effect on the date of termination.

(iii) During the twelve month period that begins on the first anniversary date
of the termination of employment and ends on the second anniversary date, the
Bank’s obligation to continue to pay the Base Salary to the Officer pursuant to
subsection 4(f)(i) during such second twelve month period shall terminate thirty
days after the Officer obtains full-time employment with another employer that
provides an annualized base salary that is at least equal to 75% of the Base
Salary being paid by the Bank.

 

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(iv) The Company’s obligation to provide the Officer with medical and life
insurance benefits pursuant to subsection 4(f)(ii) hereof shall terminate in the
event the Officer obtains new employment and is eligible to participate in
substantially comparable medical and life insurance programs made available to
him and similarly situated employees by or through his new employer. If only one
type of insurance (e.g., medical) is made available to the Officer and similarly
situated employees, the Company will continue to provide the Officer with the
other insurance coverage for the remainder of the two year period or until such
type of insurance is made available to him and similarly situated employees by
his new employer, whichever occurs sooner.

(v) During the two-year period following the date of termination, the Officer
shall provide the Company with at least ten days written notice before the
starting date of any employment, identifying the prospective employer and its
affiliated companies and the job description, including a description of the
proposed geographic market area associated with the new position. The Officer
shall notify in writing any new employer of the existence of the restrictive
covenants set forth in Section 5 of this Agreement.

5. Covenants of the Officer.

(a) Noncompetition. The Officer agrees that during the Employment Period and for
a one-year period following the termination of his employment for any reason
during the Employment Period, the Officer will not directly or indirectly, as a
principal, agent, employee, employer, investor, co-partner or in any other
individual or representative capacity whatsoever, engage in a Competitive
Business anywhere in the Market Area (as such terms are defined below) in any
capacity that includes any of the significant responsibilities held or
significant activities engaged in by the Officer on behalf of the Bank, the
Company, and any of its Affiliates during the Employment Period. Notwithstanding
the foregoing, the Officer may purchase or otherwise acquire up to (but not more
than) 1% of any class of securities of any business enterprise (but without
otherwise participating in the activities of such enterprise) that engages in a
Competitive Business in the Market Area and whose securities are listed on any
national or regional securities exchange or have been registered under
Section 12 of the Securities Exchange Act of 1934.

(b) Nonsolicitation. The Officer further agrees that during the Employment
Period and for a two-year period following the termination of his employment for
any reason, he will not directly or indirectly: (i) solicit, induce or attempt
to solicit or induce any customer or client of the Company or its Affiliates
with whom the Officer had direct contact or whose identity the Officer learned
as a result of his employment with the Bank, to terminate, diminish, or
materially alter in a manner harmful to the Bank the relationship of such
customer or client with the Bank, the Company, or its Affiliates; (ii) solicit,
induce, encourage, or participate in soliciting, inducing, or encouraging any
employee to terminate his or her employment with the Bank, the

 

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Company, or any of its Affiliates; or (iii) hire, employ, or engage in business
with or attempt to hire, employ, or engage in business with any person employed
by the Bank, the Company, or any of its Affiliates or who has left the
employment of the Bank, the Company, or any of its Affiliates within the
preceding three months.

(c) Nonrenewal of the Agreement. In the event the Bank elects not to renew this
Agreement in accordance with Section 2, the provisions of Sections 5(a) and
(b) shall not apply after the Expiration Date, unless the Officer shall
otherwise be entitled to receive payments from the Bank as a result of his
termination without Cause or for Good Reason pursuant to Section 4(f).

(d) Definitions. As used in this Agreement, the term “Competitive Business”
means the financial services business, which includes one or more of the
following businesses: consumer and commercial banking, residential and
commercial mortgage lending, securities brokerage and asset management, and any
other business in which the Company or any of its Affiliates are engaged at the
time of termination of the Officer’s employment; the term “Market Area” means
the area within a ten mile radius of any banking office or a loan production
office (excluding for purposes of this Agreement an office providing residential
mortgage loans) that the Company has established and is continuing to operate at
the time of termination of the Officer’s employment; the term “Affiliate” means
a Person that directly or indirectly through one or more intermediaries,
controls, or is controlled by, or is under common control with, the Company; and
the term “Person” means any person, partnership, corporation, company, group or
other entity.

(e) Confidentiality. During the Employment Period and thereafter, and except as
required by any court, supervisory authority or administrative agency or as may
be otherwise required by applicable law, the Officer shall not, without the
written consent of a person duly authorized by the Bank, disclose to any person
(other than his personal attorney, or an employee of the Bank or an Affiliate,
or a person to whom disclosure is reasonably necessary or appropriate in
connection with the performance by the Officer of his duties as an employee of
the Bank) or utilize in conducting a business any confidential information
obtained by him while in the employ of the Bank, unless such information has
become a matter of public knowledge at the time of such disclosure.

(f) Acknowledgment; Enforcement. The covenants contained in this Section 5 shall
be construed and interpreted in any proceeding to permit their enforcement to
the maximum extent permitted by law. The Officer agrees that the restraints
imposed herein are necessary for the reasonable and proper protection of the
Company and its Affiliates, and that each and every one of the restraints is
reasonable in respect to length of time, geographic area and activities
restricted. If, however, the time, geographic and/or scope of activity
restrictions set forth in Section 5 are found by an arbitrator or court to be
unenforceable because the restrictions are overbroad, the arbitrator or court,
as applicable, is empowered and directed to modify the restriction(s) to the
extent necessary to make them enforceable. The Officer further acknowledges that
damages at law would not be a measurable or adequate remedy for breach of the
covenants contained in this Section 5

 

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and, accordingly, the Officer agrees to submit to the equitable jurisdiction of
any court of competent jurisdiction in connection with any action to enjoin the
Officer from violating any such covenants. In any legal, equitable or
arbitration action against the Officer in connection with the enforcement of the
covenants included in this Section 5, each party will bear its own costs,
including its attorneys’ fees. All the provisions of this Section 5 will survive
termination and expiration of this Agreement.

(g) Change in Control. Notwithstanding anything to the contrary contained in
this Agreement, in the event of a change in control of the Company (as such term
is defined in the Management Continuity Agreement, dated November 1, 2003,
between the Company and the Officer) the restrictions imposed by Sections 5(a)
and (b) shall not apply to the Officer after he ceases to be employed by the
Bank.

6. Change in Control of the Company. This Agreement will terminate in the event
there is a change in control of the Company, and the Management Continuity
Agreement, dated November 1, 2003, as it may hereafter be amended, between the
Company and the Officer will become effective and any termination benefits will
be determined and paid solely pursuant to such Management Continuity Agreement.

7. Mitigation; Exclusivity of Benefits.

(a) The Officer shall not be required to mitigate the amount of any benefits
hereunder by seeking other employment or otherwise.

(b) The specific arrangements referred to herein are not intended to exclude any
other benefits which may be available to the Officer upon a termination of
employment with the Bank pursuant to employee benefit plans of the Bank or
otherwise.

8. Withholding. All payments required to be made by the Bank hereunder to the
Officer shall be subject to the withholding of such amounts, if any, relating to
tax and other payroll deductions as the Bank may reasonably determine should be
withheld pursuant to any applicable law or regulation.

9. Assignability. The Bank may assign this Agreement and its rights and
obligations hereunder in whole, but not in part, to any corporation, company or
other entity with or into which the Bank may hereafter merge or consolidate or
to which the Bank may transfer all or substantially all of its assets, if in any
such case said corporation, company or other entity shall by operation of law or
expressly in writing assume all obligations of the Bank hereunder as fully as if
it had been originally made a party here to, to the extent that any such
transaction does not trigger the operation of Section 5 above. The Officer may
not assign or transfer this Agreement or any rights or obligations hereunder.

10. Notices. For the purposes of this Agreement, notices and all other
communications provided for in this Agreement shall be in writing and shall be
deemed to

 

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have been duly given when delivered or mailed by certified or registered mail,
return receipt requested, postage prepaid, addressed to the respective addresses
set forth below:

 

To the Bank:    Chairman of the Board    Union Bank and Trust Company    P. O.
Box 446    211 North Main Street    Bowling Green, Virginia 22427    And at the
Chairman’s home address as shown on the records of the Bank. To the Officer:   
John C. Neal    5517 River Road    Fredericksburg, Virginia 22407

11. Amendment; Waiver. No provisions of this Agreement may be modified, waived
or discharged unless such waiver, modification or discharge is agreed to in
writing signed by the Officer and such officer or officers as maybe specifically
designated by the Board of Directors of the Bank to sign on their behalf. No
waiver by any party hereto at any time of any breach by any other party hereto
of, or compliance with, any condition or provision of this Agreement to be
performed by such other party shall be deemed a waiver of similar or dissimilar
provisions or conditions at the same or at any prior or subsequent time.

12. Entire Agreement. This Agreement, together with the Management Continuity
Agreement, dated November 1, 2003, and as it may hereafter be amended, entered
into between the parties hereto, constitutes the entire agreement between the
parties with respect to the subject matter hereof and no agreements or
representations, oral or otherwise, express or implied, with respect to the
subject matter hereof have been made by either party which are not expressly set
forth in this Agreement or in the Management Continuity Agreement. For purposes
of this Agreement, the term “Company” includes any subsidiaries of the Company.

13. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of Virginia.

14. Nature of Obligations. Nothing contained herein shall create or require the
Bank to create a trust of any kind to fund any benefits which may be payable
hereunder, and to the extent that the Officer acquires a right to receive
benefits from the Bank hereunder, such right shall be no greater than the right
of any unsecured general creditor of the Bank.

15. Headings. The section headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement.

 

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16. Validity. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other
provisions of this Agreement, which shall remain in full force and effect.

17. Counterparts. This Agreement may be executed in one or more counterparts,
each of which shall be deemed to be an original but all of which together will
constitute one and the same instrument.

IN WITNESS WHEREOF, this Agreement has been executed as of the date first above
written.

 

COMPANY: UNION BANKSHARES CORPORATION By:  

/s/ Ronald L. Hicks

  Ronald L. Hicks   Chairman of the Board

Date signed: July 27, 2006

 

BANK: UNION BANK AND TRUST COMPANY By:  

/s/ Daniel I. Hansen

  Daniel I. Hansen   Chairman of the Board

Date signed: July 27, 2006

 

OFFICER:

/s/ John C. Neal

John C. Neal Date signed: July 27, 2006

 

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