EMPLOYMENT AGREEMENT

Exhibit 10.7

EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT (this “Agreement”), dated as of December 31, 2003, among Mortgage Capital Investors, Inc. (the “Employer”), a Virginia corporation and direct wholly-owned subsidiary of Union Bank & Trust Company (“Union Bank”), Union Bankshares Corporation, a Virginia corporation (“UBSH”), and Philip E. Buscemi (the “Executive”).

WITNESSETH

WHEREAS, the Executive has heretofore been employed and currently is rendering services to the Employer as President and Chief Executive Officer of the Employer;

WHEREAS, UBSH and the Employer consider the continued availability of the Executive’s services to be important to the management and conduct of the Employer’s business and desire to secure for themselves the continued availability of the Executive’s services; and

WHEREAS, the Executive is willing to make his services available to the Employer and UBSH on the terms and subject to the conditions set forth herein.

NOW THEREFORE, in consideration of the premises and the mutual agreements herein contained, the parties hereby agree as follows:

1. Employment . The Executive shall be employed as President and Chief Executive Officer of the Employer. The Executive shall have such duties and responsibilities as are commensurate with such positions and shall also render such other services and duties as may be reasonably assigned to him from time to time by the Employer and UBSH, consistent with his positions as President and Chief Executive Officer of the Employer. The Executive hereby accepts and agrees to such employment.

2. Term of Employment . The term of employment shall begin on the date hereof (the “Commencement Date”) and continue through December 31, 2006; provided that beginning on January 1, 2007 and on each January 1 ^st thereafter (each such January 1 ^st is referred to as the “Renewal Date”), the term of this Agreement will be extended automatically for an additional year from such Renewal Date. This Agreement will not, however, be extended if the Employer gives written notice to the Executive of its intent not to renew at least 180 days before the Renewal Date (the initial and any extended term of this Agreement is referred to as the “Employment Period”). The last day of such term as so extended is referred to herein as the “Expiration Date.”

3. Compensation and Benefits .

(a) Base Salary . For all services rendered by the Executive under this Agreement, the Employer shall pay the Executive an annual base salary of $150,000 (the “Base Salary”), which may be increased each year by an amount to be determined by the Board of Directors. The Executive’s salary shall be payable in accordance with payroll practices of the Employer applicable to officers of the company.

(b) Incentive Payments .

(i) Incentive Bonus . The Employer will pay the Executive with respect to each calendar year during the term of this Agreement incentive compensation in an amount equal to four percent (4.0%) of the Employer’s net income during such calendar year (the “Incentive Bonus”); provided, however, that the Employer must earn at least $400,000 in net

income for such year before the Executive is entitled to receive an Incentive Bonus. The Employer will cause to be prepared after the end of each calendar year audited financial statements showing the Employer’s net income. Subject to Section 4 below, the Executive will be paid the Incentive Bonus within ninety (90) days after the end of the calendar year to which the Incentive Bonus relates.

(ii) Commissions . The Executive shall be paid a commission for each loan that he originates, which commission shall be paid according to the Employer’s standard commission schedule in effect at the time that each such loan is originated. All commissions paid to the Executive under this Section 3(b) shall be paid at such intervals as the Employer shall determine.

(iii) Definition of Net Income . For purposes of this Agreement, “net income” shall mean the Employer’s aggregate earnings net of losses from operations after deduction of all appropriate expenses, charges and reserves, including the Incentive Bonus and federal and state income taxes. Net income will be determined by Union Bank in accordance with generally accepted accounting principles (“GAAP”) consistently applied and as included in the financial statements prepared by the CPA firm designated by the Employer; provided, however, that in determining such net income:

(c) Benefits . During the term of the Agreement, the Executive shall be entitled to participate in and receive the benefits of any pension or other retirement benefit plan, profit sharing, stock option, employee stock ownership, or other plans, benefits and privileges given to executives of the Employer, to the extent commensurate with his then duties and responsibilities as fixed by the Board of Directors of the Employer. The Employer reserves the right to modify, add or eliminate benefits for its employees as it deems appropriate.

(d) Business Expenses . The Employer shall reimburse the Executive or otherwise provide for or pay for all reasonable expenses incurred by the Executive in furtherance of, or in connection with the business of the Employer, including, but not by way of limitation, travel expenses, car allowance of not less than $800 per month, and memberships in professional organizations, subject to such reasonable documentation and other limitations as may be established by the Board of Directors of the Employer.

4. Termination and Termination Benefits .

(a) Termination for Cause . The Executive’s employment may be terminated for Cause at any time without further liability on the part of the Employer. Only the following shall constitute “Cause” for such termination:

-2-

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

(ii) gross incompetence, gross negligence, willful misconduct in office or breach of a material fiduciary duty owed to the Employer or any Affiliate (as defined in Section 6(b));

(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 Employer or any Affiliate;

(iv) any breach by the Executive of a material term of this Agreement, 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 Employer;

(v) dishonesty of the Executive with respect to the Employer or any Affiliate; or

(vi) the willful engaging by the Executive in conduct that is demonstrably and materially injurious to the Employer or any Affiliate, monetarily or otherwise, or any conduct deemed by the Board of Directors of the Employer to be immoral or which may bring embarrassment or disrepute to the Employer or any Affiliate.

(b) Termination as a Consequence of Death or Disability . If the Executive dies or becomes disabled during the Employment Period, the Employer will pay the Executive or his estate his Base Salary through the end of the calendar month in which his death or disability occurs. In addition, the Executive and/or his estate shall be entitled to the following:

(i) the Employer shall pay the Executive or his estate commissions for any loans originated by the Executive prior to his death or disability, regardless of their closing date, together with information indicating the manner and basis upon which such commissions were calculated; and

(ii) the Employer shall pay the Executive or his estate any bonuses that would have been paid to the Executive for a period of six (6) months following his death or disability, together with information indicating the manner and basis upon which such bonuses were calculated.

For purposes of this Section 4, the Executive is “disabled” if he is unable to perform the essential functions of his duties and responsibilities hereunder for 120 consecutive days or 180 days during any twelve month period (as determined by the opinion of an independent physician selected by the Board of Directors of the Employer). The Executive must submit to a reasonable number of examinations by the medical doctor making the determination of disability, and the Executive hereby authorizes the disclosure and release to the Employer of such determination and all supporting medical records.

(c) Termination by the Executive . The Executive may terminate his employment hereunder with or without Good Reason (as defined below) by written notice to the Board of Directors of the Employer effective thirty (30) days after receipt of such notice by the Board of Directors. In the event the Executive terminates his employment hereunder for Good Reason, the Executive shall be entitled to the

-3-

benefits specified in Section 4(d) and the Executive shall not be required to render any further services to the Employer. Upon termination of employment by the Executive without Good Reason, the Executive shall be entitled to no further compensation or benefits under this Agreement. “Good Reason” shall be: (i) the failure by the Employer to comply with the provisions of Section 3 or material breach by the Employer of any other material provision of this Agreement, which failure or breach shall continue for more than sixty (60) days after the date on which the Board of Directors of the Employer receives such written notice; or (ii) the assignment of the Executive without his written 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.

(d) Certain Termination Benefits . In the event of termination by the Employer without Cause, or by the Executive with Good Reason, the Executive shall be entitled to the following benefits:

(i) For the period subsequent to the date of termination until the Expiration Date, the Employer shall continue to pay the Executive his Base Salary 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 Executive had his employment not been terminated, unless the Employer elects to make a lump sum severance payment in an equivalent amount within thirty (30) days of the date of termination.

(ii) Notwithstanding the foregoing, in the event of termination by the Employer without Cause or by the Executive with Good Reason after a Change of Control (as defined in Section 15) of UBSH or after the Employer ceases to be a direct or indirect wholly-owned subsidiary of UBSH, the Executive shall receive a lump sum severance payment within thirty (30) days of the date of termination in an amount equal to the greater of (A) his then current Base Salary for the period subsequent to the date of termination until the Expiration Date, or (B) his then current Base Salary for two years.

(iii) The Employer shall pay the Executive commissions for any loans originated by the Executive prior to the date of termination, regardless of their closing date, together with information indicating the manner and basis upon which such commissions were calculated.

(iv) For the period subsequent to the date of termination until the Expiration Date, the Employer shall pay the Executive for each calendar year beginning for the year during which his termination occurs and continuing through the Expiration Date (which payment shall be prorated for the year in which the Expiration Date occurs if less than a full year) a