EXHIBIT 10.3
                                                          ------------

                           UNION BANKSHARES, INC.
                            MORRISVILLE, VERMONT
                  DEFERRED COMPENSATION PLAN AND AGREEMENT

      THIS AGREEMENT is made effective the first day of _________, 199__ by
and between Union Bankshares, Inc. (hereinafter the "Company"), and its
subsidiary Union Bank (hereinafter "Subsidiary") with a principal office in
Morrisville in the County of Lamoille and State of Vermont (together
hereinafter the "Bank") and __________________ of _____________ in the
County of ____________ and State of Vermont (hereinafter called
"Executive").

      WHEREAS the Executive presently serves the Bank in the capacity of
director or officer in which capacity his services have significantly
contributed to the successful operation of the Bank, and

      WHEREAS, the Bank has determined that it is in the best interests of
the Bank to provide inducements to the Executive to continue his services
with the Bank, and

      WHEREAS, the parties wish to enter into an agreement relating to the
Executive's services to the Bank upon the terms and conditions set forth
herein, and

      WHEREAS, by this instrument the Bank has determined to amend and
supersede its prior existing nonqualified deferred compensation plan.

      NOW THEREFORE, in consideration of the mutual agreements and
undertakings hereinafter set forth and other good and valuable
consideration, IT IS AGREED:

      1.  The Plan.  The Bank establishes the Deferred Compensation Plan
and Agreement (hereinafter the "Plan" or "Agreement") for the benefit of
(i) participating members of the board of directors of the Company and the
Subsidiary; and (ii) participating officers of the Company and the
Subsidiary.  A participating Executive may elect to defer receipt of all or
part of his salary or his director's compensation and fees, as the case may
be, beginning with amounts earned in the first calendar quarter commencing
after the effective date of such election.  For purposes of the Plan,
"salary" shall mean the participating Executive's base salary or
compensation, including any bonuses or other special payments, for services
rendered to the Bank as an officer; and director's compensation and fees
shall mean any compensation or fees payable to a director for services
rendered to the Bank in that capacity, including any compensation or fees
payable for services as a member of any committee of the board or
directors.  This Agreement amends and supersedes the Bank's prior existing
nonqualified deferred compensation plan.

      2.  Election by Participating Executive.  An election to defer
receipt of salary or directors' compensation and fees shall be made in
writing and shall become effective upon filing with, and acceptance by, the
Bank.  The terms of such written election shall be as set forth on Exhibit
A attached hereto.  An election shall remain in effect unless the
participant terminates the election by a notice in writing filed with, and
accepted by, the Bank.  Any termination of an election shall be applicable
only respectively to salary or directors' compensations and fees earned
during the calendar quarters following date of filing with, and acceptance
by, the Bank, and shall not affect amounts previously deferred.

      3.  Benefit Date.  The Executive may elect in writing to terminate
the election to defer as set forth in Paragraph 2 hereof and to commence
receiving his deferred compensation benefit as hereinafter defined on the
first day of any calendar month following the month in which he attains age
Fifty-Five (55).

      4.  Deferred Compensation Benefit.  Beginning with the first day of
the month in which the Executive has designated by the election as set
forth in Paragraph 3 hereof (and on that date each year thereafter) or as
soon thereafter as is reasonably practicable, the Bank will pay to the
Executive an annual benefit for the period and in the amounts set forth on
Exhibit B attached hereto.  The payment of the deferred compensation
benefits under this paragraph shall not in any manner disqualify the
Executive from receiving any benefits to which the Executive may be
entitled under any other pension, retirement, profit sharing or other
similar employee benefit plans arising out of the Executive's services or
employment with the Bank, nor is it intended to disqualify the Executive
from receiving payment of any social security benefit to which the
Executive may be entitled.

      5.  Death after Attaining Age 55.  In the event that the Executive
shall die after the commencement of the payments provided for in Paragraph
4 hereof, and before the total number of annual payments as therein
prescribed have been received (Exhibit B), the Bank shall pay the remainder
of said annual payments to the Executive's beneficiary as hereinafter
designated.  In the event that the Executive shall die before the
commencement of the payments provided for in Paragraph 4 hereof, the Bank
shall pay to the Executive's beneficiary as hereinafter designated an
annual benefit for the period and in the amounts set forth in Exhibit C
attached hereto.  In the event that there shall be no designated
beneficiary qualified to receive payments, the remaining computed value of
any said annual payments discounted at seven (7%) percent shall be paid in
one sum to the estate of the Executive.  In the event that there shall be
no designated beneficiary eligible to receive monthly payments at any time
after payments are commenced to a designated beneficiary, the remaining
commuted value of said payments discounted at seven (7%) percent shall be
paid in one sum to the estate of the Executive. "Remaining commuted value
of said payment discounted at 7%" as used in this paragraph and elsewhere
in this Agreement shall be defined as set forth on Exhibit E attached
hereto.

      6.  Death Before Attaining Age 55.  In the event that the Executive
shall die before attaining age 55 as herein provided, the Bank shall make
annual payments as in the amount specified and for a period as set forth in
Exhibit C attached hereto to the Executive's beneficiary hereinafter
designated.  In the event that there shall be no designated beneficiary
eligible to receive payments, the Bank shall pay the remaining computed
value of such payment discounted a seven (7%) percent in one sum to the
Executive's estate.  In the event that after commencement of annual
payments to a designated beneficiary there shall at any time be no
designated beneficiary eligible to receive monthly payments, the remaining
commuted value of such payments designated at seven (7%) percent shall be
paid in one sum to the estate of the Executive.

      7.  Termination of Relationship.  Notwithstanding any paragraph in
the Agreement to the contrary, in the event that the Executive's
relationship with the Bank as a director or officer shall terminate for any
reason except for death as set forth in Paragraph 6, prior to his attaining
age Fifty-Five (55), or in the event the Executive shall commit suicide
(suicide shall be determined by any policy or the life of the Executive) at
any time within a period of two (2) years after the later of the date of
signing the Agreement or the effective date of any life insurance policy
owned by the Bank covering the Executive, the Executive shall then be
entitled to receive only the amounts as set forth on Exhibit C-1 attached
hereto (and not as otherwise provided under this Agreement).  The payment
set forth on Exhibit D shall be paid in a lump sum as soon as practicable
after the event of termination or suicide.  In the event that the Executive
shall die prior to payment of all benefits due under Exhibit C-1, such
remaining unpaid benefits set forth on Exhibit C-1 shall be paid to the
Executive's beneficiary hereinafter designated.  In the event that there
shall at any time be no designated beneficiary eligible to receive the
payments set forth on Exhibit C-1, the remaining payments shall be paid in
a lump sum of the estate of the Executive.

      8.  Life Insurance.  The Bank may, but shall not be required to,
obtain life insurance coverage on the life on the Executive in order to
provide funds to make some or all of the benefit payments required by this
Agreement.  Any such life insurance coverage shall be the sole property of
the Bank and the Executive shall have no interest whatever in said coverage
by way of security or assurance that the payments provided for in this
agreement shall be made.  Bank has relied, in entering into this Agreement,
on information supplied by the Executive to the Bank (or to insurer
designated by the Bank to provide the Bank with sufficient funds to satisfy
its obligations under the Agreement).  The Executive warrants that all
information supplied is accurate and complete in all material respects.  In
the event that the Executive makes any material misrepresentations or
omissions in the information and Bank is unable to realize on the life
insurance coverage on the life of the Executive then no payments shall be
due and payable by the Bank to the Executive, his estate, or to his
designated beneficiary hereunder.

      9.  Inalienability.  Neither the Executive nor any designated
beneficiary hereunder shall have any right to anticipate any payments to be
made hereunder or to sell, assign, pledge, encumber or otherwise charge any
of the payments to be made hereunder and the Bank shall not be answerable
to any claim, demand or order as a result of any such alienation,
assignment or transfer.

      10.  Assignability.  All of the rights, privileges and benefits
hereunder shall be personal to the Executive (or the Executive's estate)
and any designated beneficiary or such Executive and shall not be
assignable or transferable to any other persons.  The obligations hereunder
and contained herein shall survive and shall be binding upon the successors
in effect and assigns of the Bank including, but not limited to, any sale,
transfer or other disposition of the stock or assets of the Bank.

      11.  Not An Employment Contract.  This Agreement shall not be
construed as an employment contract between the Bank and the Executive,
shall not give the Executive any rights to continued employment by the Bank
or the right to continue as a director or officer of the Bank, and it shall
not in any manner restrict the right of the Bank acting through its Board
of Directors to terminate its relationship with the Executive at any time
subject, however, to the provision of Paragraph 7.

      12.  Amendment or Revocation.  This Agreement may be amended or
revoked at any time during the lifetime of the Executive only by an
instrument in writing executed by both parties with the same formalities as
this Agreement.

      13.  Required Action.  Any required action of the Bank shall be by
resolution of a simple majority of the board of directors of the Bank.

      14.  Variation in Pronouns.  All pronouns and any variations thereof
refer to the masculine, feminine or neuter, singular or plural, as the
identity of the person or persons may require.

      15.  Notice.  Any notice to be given hereunder shall be in writing
and shall be deemed given when delivered to, when deposited in the United
States mails, postage prepaid, by registered or certified mail with return
receipt requests, addressed as follows:

      If to the Bank:       Union Bank
                            PO Box 667
                            Morrisville, VT 05661

      If to the Executive:  _______________________
                            _______________________
                            _______________________

      16.  Designation of Beneficiary.  The designation of beneficiary by
the Executive shall be as set forth on Exhibit D attached hereto.

      17.  Tax Effect.  It is intended that this Agreement represents a
mere contractual  obligation for the Executive to receive a benefit from
the Bank at a later date (pursuant to the Agreement), and shall not result
in actual or constructive receipt of income or economic benefit to the
Executive and shall not be subject to tax until the benefit is actually
paid to the Executive pursuant to the Agreement.  This Agreement
constitutes a nonqualified deferred compensation plan for tax purposes.

IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first above written.

                                  UNION BANK


_____________________________     BY:_______________________________
Attest
                                  EXECUTIVE


_____________________________     BY:_______________________________
Attest

STATE OF VERMONT

COUNTY OF LAMOILLE

As of the day and year first above written, before me personally
appeared_______________, to me known, who, being by me duly sworn, did
depose and say that he resided at ___________________; that he is the
___________________ of Union Bank, the Corporation described in and which
executed the foregoing instrument; that he knows the seal of said
corporation; that the seal affixed to said instrument is such corporate
seal; that it was so affixed by order of the Board of Directors of said
corporation, and that he signed his name thereto by like order.

                                  Before me ________________________
                                            Notary Public

STATE OF VERMONT

COUNTY OF LAMOILLE

As of the day and year first above written, before me personally came
________________, to me known, who, being by me duly sworn, did depose and
say that he resided at ___________________; that he is the
___________________ of Union Bank, the Corporation described in and which
executed the foregoing instrument; that he knows the seal of said
corporation; that the seal affixed to said instrument is such corporate
seal; that it was so affixed by order of the Board of Directors of said
corporation, and that he signed his name thereto by like order.

                                  Before me ________________________
                                            Notary Public


                                  EXHIBIT A

                    ELECTION BY PARTICIPATING EXECUTIVE

                  DEFERRED COMPENSATION PLAN AND AGREEMENT

                                 UNION BANK

Date:

Union Bank
PO Box 667
Morrisville, VT 05661

Gentlemen:

In accordance with the Deferred Compensation Plan and Agreement of Union
Bankshares, Inc. and Union Bank (the "Plan"), I hereby elect to defer
receipt of $___________ of my annual fees and compensation for serving as a
Director or Officer of Union Bankshares, Inc. (the "Company") and/or Union
Bank (the "Bank") effective with respect to fees and compensation to be
earned effective _____________.

This election shall remain effective as set forth in paragraph 2 of the
Plan.

Sincerely,


_____________________________

Accepted by:

BY: _________________________
    Duly Authorized Agent

Date:


Exhibit B:

Summary of Retirement Benefits Under Union Bankshares/Union Bank's Deferred
Compensation Plan:
      (Numbers in 000's)

<TABLE>
<CAPTION>

Participant       On      If deposits stop and benefit begins at age:
                Payout

                           65      64      63      62      61      60      59      58      57      56      55


             <c>       <c>     <c>     <c>     <c>     <c>     <c>     <c>     <c>     <c>     <c>     <c>
W. Kinney       $29.5

P. Haslam       $23.1

R. Rollins      $60.9

W. Smith        $55.2

K. Spaulding    $ 3.6

F. Melcher      $11.0

K. Gibbons                $48     44      40.5    37      33.5    30      26.5    23      19.5    16      12.5

M. Mongeon                $30     28      26.5    24.5    22.5    21      19.5    18      16      14.5    12.5

R. Schwartz               $10      9.3     8.5     7.8     7       6.4     5.5     4.7     4       3.3     2.5

C. Borck                  $33.7   31.7    29.7    27.7    25.7    23.6    21.6    19.8    17.5    15.5    13.5
</TABLE>

These amounts are approximations based upon current factors including
dividends, interest rates and tax laws.

The amount of the annual deferred compensation benefit available for
payment shall be determined in a reasonable manner by the Company.

The annual deferred compensation benefit shall be paid for a period of 15
years.


Exhibit C

Union Bankshares/Union Bank Deferred Compensation Plan
Pre-Retirement Benefit:

<TABLE>
<CAPTION>

                    Annual Benefit to Beneficiary
                    -----------------------------


                            <c>
K. Gibbons                     $20,135

M. Mongeon                     $10,225

R. Schwartz                    $ 7,350

C. Borck                       $32,500
</TABLE>


Exhibit C-1

Union Bankshares/Union Bank Deferred Compensation Plan
Paragraph 7

An amount equal to the cash surrender value of any life insurance policies
acquired by the Bank on the life of the Executive pursuant to Paragraph 8.


Exhibit D

Union Bankshares/Union Bank Deferred Compensation Plan
Designation of Beneficiary

Terms and Conditions

      The designation of beneficiary hereunder is made upon the following
terms and conditions:

      1)    If more than one beneficiary is designated to receive payments
            jointly or in common with any other beneficiary, the word
            beneficiary under the designation and under the agreement shall
            be construed to include such beneficiaries jointly or in
            common.

      2)    If at any time a designated individual beneficiary in prior
            preferred order or designation shall die, the annual payments
            shall be made to the next designated beneficiary in preferred
            order unless the estate of the prior designated beneficiary
            shall be indicated.

      3)    If two or more individuals are designated to receive annual
            payments as beneficiaries either in common or jointly the
            annual payments shall be made equally to each individual
            beneficiary unless otherwise designated.   If two or more
            beneficiary are designated to receive annual payments as
            members of a described class, each shall receive an equal
            portion of such annual payments unless otherwise designated.
            If two or more persons are designated to receive annual
            payments either in common, jointly and an individual shall die,
            the payments shall be made equally to the remaining individuals
            or in whole to the remaining individual unless otherwise
            designated.  If a member of a described class shall die, the
            annual payments shall be made equally to the remaining members
            of the class or in whole to the remaining member unless
            otherwise designated.

      4)    If any annual payments are designated to be made to a trust or
            trusts, the bank shall not be responsible or liable to see to
            the application of the payments by any Trustee and the Bank may
            accept the receipt of any trustee designated hereunder.

The Designation is made in duplicate and shall not be valid unless
acknowledged by the bank and one acknowledged copy thereof is filed with
the Bank.  This designation shall remain full force and effect until a
subsequent designation of beneficiary shall be executed in duplicate,
acknowledged and filed as herein prescribed.