Exhibit 10.2

Restricted Shares Award

Award Date: September 6, 2016

HIGHLANDS BANKSHARES, INC.

RESTRICTED STOCK AWARD AGREEMENT

THIS RESTRICTED STOCK AWARD AGREEMENT (this “Agreement”), effective as of
September 6, 2016 (“Award Date”), is made by and between Highlands Bankshares,
Inc., a Virginia corporation (“Company”), and Timothy K. Schools (“Grantee”).

RECITALS

WHEREAS, the Company has adopted the Highlands Bankshares, Inc. 2006 Equity
Compensation Plan (the “Plan”) pursuant to which awards of Restricted Shares may
be granted; and

WHEREAS, Company desires to grant to Grantee, in consideration for Grantee’s
service as President and Chief Executive Officer of Company and the wholly owned
bank subsidiary of Company (“Bank”), and Grantee desires to accept, the number
of shares of restricted shares provided herein.

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

Section 1. Grant of Restricted Stock Award. Pursuant to Article VIII of the
Plan, Company hereby issues to Grantee on the Award Date a Restricted Stock
Award (the “Award”) of 86,667 shares (the “Restricted Shares”) of common stock,
$0.625 par value, of Company (the “Company Stock”) on the terms and conditions
set forth in this Agreement in consideration of the services to be rendered by
Grantee to Company and/or its Affiliate(s). The term “Affiliate” shall mean a
corporation or other entity that, directly or through one or more
intermediaries, controls, is controlled by, or is under common control with,
Company.

Section 2. Terms and Conditions of Award. The grant of Restricted Shares
provided for in Section 1 hereof shall be subject to the following terms,
conditions and restrictions:

(a) Ownership of Shares. Until such time as the restrictions on ownership lapse
in accordance with Section 2(e) hereof, Grantee shall possess no incidents of
ownership of the Restricted Shares granted hereunder, and Grantee shall have no
right to vote such Restricted Shares and no rights to receive dividends with
respect to such Restricted Shares.

(b) [intentionally omitted]

(c) Restrictions. Neither the Restricted Shares nor any interest therein may be
sold, assigned, transferred, pledged, hypothecated or otherwise encumbered or
disposed of, except by will or the laws of descent and distribution, during the
period prior to the date on which the Restricted Shares vest and the
restrictions thereon are removed. Any attempt to encumber or dispose of any of
the Restricted Shares in contravention of the above restriction shall be null
and void and without effect and shall result in forfeiture of the Restricted
Shares.

(d) Book Entry Form. Company shall issue the Restricted Shares in book entry
form, registered in the name of Grantee, with restrictive notations referring to
the terms, conditions and restrictions applicable to the Award.

 

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(e) Lapse of Restrictions. Except as otherwise provided herein, provided that
the Grantee remains in Continuous Service (as defined below) through the
applicable vesting date, the Restricted Shares will vest 50% on the first
anniversary of the Award Date and 50% on the second anniversary of the Award
Date, in accordance with the following schedule:

 

Vesting Date

   September 6,
2017    September 6,
2018

Shares of common stock subject to vesting

   43,333    43,334

The term “Continuous Service” shall mean that the Grantee’s service with Company
or an Affiliate, whether as an employee, consultant or director, is not
interrupted or terminated. The Grantee’s Continuous Service shall not be deemed
to have terminated merely because of a change in the capacity in which the
Grantee renders service to Company or an Affiliate as an employee, consultant,
or director or a change in the entity for which the Grantee renders such
service, provided that there is no interruption or termination of the Grantee’s
Continuous Service; provided further that this sentence shall only be given
effect to the extent consistent with Section 409A of the Code. The board of
directors of Company or its designee, in its sole discretion, may determine
whether Continuous Service shall be considered interrupted in the case of any
leave of absence approved by that party, including sick leave, military leave or
any other personal or family leave of absence.

(f) Accelerated Vesting. Notwithstanding Section 2(e) hereof, in the event of
the termination of Grantee’s Continuous Service as a result of the death or
Disability (as defined below) of Grantee and prior to the lapse of restrictions
on any Restricted Shares granted hereunder, all such Restricted Shares shall
fully vest and all restrictions thereon shall be removed or lapse as of the date
of such termination. “Disability” means that the Grantee is unable to engage in
any substantial gainful activity by reason of any medically determinable
physical or mental impairment. The determination of whether an individual has a
Disability shall be determined under procedures established by the board of
directors or its designee.

(g) Corporate Transactions. The following provisions shall apply to the
corporate transactions described herein: (i) in the event of a proposed
dissolution or liquidation of Company, the Award will terminate and be forfeited
immediately prior to the consummation of such proposed transaction, unless
otherwise provided by the board of directors, and (ii) in the event of a Change
in Control of Company (as defined below) subsequent to the Award Date, the Award
shall be assumed or substituted with an equivalent award by any successor
entity, or a parent or subsidiary of such successor entity; provided, however,
that the board of directors or its designee may determine, in the exercise of
its sole discretion, that, in lieu of such assumption or substitution, the Award
shall fully vest and be non-forfeitable and that any conditions or restrictions
on the Award shall lapse, as to all or any part of the Award, including
Restricted Shares as to which the Award would not otherwise be non-forfeitable.

“Change in Control” shall mean: (x) the acquisition by one person or entity (a
“Person”) (or more than one Person acting as a group) of ownership of stock of
the Company that, together with the stock held by such Person or group,
constitutes more than 50% of the total fair market value or total voting power
of the stock of the Company; provided, that, a Change in Control shall not occur
if any Person (or more than one Person acting as a group) owns more than 50% of
the total fair market value or total voting power of the Company’s stock and
acquires additional stock; (y) the replacement of a majority of the members of
the board of directors of the Company during any 12-month period by directors
whose appointment or election is not endorsed by a majority of the board of
directors before the date of

 

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appointment or election; or (z) the acquisition (or series of acquisitions
within a 12-month period) by one Person (or more than one Person acting as a
group) of assets from the Company that have a total gross fair market value
equal to or more than 40% of the total gross fair market value of all of the
assets of the Company immediately before such acquisition(s).

(h) Tax Liability and Withholding. Grantee shall be required to pay to Company,
and Company shall have the right to deduct from any compensation paid to
Grantee, the amount of any required withholding taxes in respect of the
Restricted Shares and to take all such other action as the Committee deems
necessary to satisfy all obligations for the payment of such withholding taxes.
The Committee may permit Grantee to satisfy any federal, state or local tax
withholding by any of the following means, or by a combination of such means:
(A) tendering a cash payment; (B) authoring Company to withhold shares of
Company Stock from the shares of Company Stock otherwise issuable or deliverable
to Grantee as a result of the vesting of the Restricted Shares, provided that no
shares of Company Stock with a value exceeding the minimum amount of tax
required to be withhold by law shall be withheld; and/or (C) delivering to
Company previously owned and unencumbered shares of Company Stock.

(i) Section 83(b) Election. Grantee hereby acknowledges that Grantee may file an
election pursuant to Section 83(b) of the Code to be taxed currently on the Fair
Market Value of the Restricted Shares (less the purchase price paid for the
Restricted Shares, if any), provided that such election must be filed with the
Internal Revenue Service no later than 30 days after the award date. This time
period cannot be extended. Grantee acknowledges that timely filing of a
Section 83(b) election is Grantee’s sole responsibility. Grantee will seek the
advice of Grantee’s own tax advisors as to the advisability of making such a
Section 83(b) election, the potential consequences of making such an election,
the requirements for making such an election, and the other tax consequences of
the Award under federal, state, and any other laws that may be applicable.
Company and its Affiliates, and each of their respective agents, have not and
will not provide any tax advice to Grantee. If Grantee elects to make a
Section 83(b) election, Grantee shall promptly provide Company with a copy of
the executed Section 83(b) election and evidence satisfactory to Company of the
filing of the executed Section 83(b) election with the Internal Revenue Service.

(j) Clawback. Any shares of Company Stock awarded to Grantee in settlement of
this Award shall be subject to clawback to the extent required by law,
government regulation, or national stock exchange listing requirements (or any
policy adopted by Company pursuant to any such law, government regulation or
national stock exchange listing requirements). In addition, if Company is
required to prepare an accounting restatement due to the material noncompliance
of Company with any financial reporting requirement under applicable securities
laws, the Committee, in its sole discretion, may require Grantee to surrender a
portion or all of the shares of Company Stock received in settlement of this
Award.

(k) Excess Parachute Payment Limitation. Notwithstanding any other provision of
this Agreement, if the sum of the value of the vesting of the Award and payments
to Grantee described in this Agreement and in any other agreement, program, or
plan between Company or any of its Affiliates and Grantee attributable to the
same Change in Control constitute “excess parachute payments,” as defined in
Section 280G(b)(1) of the Code, then Company shall reduce the amounts otherwise
payable to Grantee under this Agreement so that Grantee’s total “parachute
payment,” as defined in Section 280G(b)(2)(A) of the Code, under this Agreement
and any other agreements, programs, or plans shall be $1,000 less than the
amount that would be an “excess parachute payment.”

Section 4. Acceptance. By Grantee’s signature on this Agreement, Grantee accepts
the Award set out in this Agreement and irrevocably agrees, on behalf of Grantee
and Grantee’s successors, permitted assigns, heirs, beneficiaries, executors and
administrators, to the terms and conditions of this

 

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Agreement. By entering into this Agreement and accepting the Award, Grantee
acknowledges that: (a) Grantee’s receipt of the Award is voluntary; (b) the
value of the Award is an extraordinary item that is outside the scope of any
employment contract with Grantee; (c) the Award is not part of normal or
expected compensation for any purposes, including without limitation for
purposes of calculating any benefits, severance, resignation, termination,
redundancy, or end of service payments, bonuses, long-service awards, pension,
or retirement benefits or similar payments, and Grantee will not be entitled to
compensation or damages as a consequence of Grantee’s forfeiture of any unvested
portion of the Award as a result of the termination of Grantee’s Continuous
Service; and (d) in the event Grantee is not a direct employee of Company or any
Affiliate of Company, the grant of the Award will not be interpreted to form an
employment relationship or contract between Grantee and Company or any Affiliate
thereof. Company will be under no obligation whatsoever to advise Grantee of the
existence, maturity or termination of any of Grantee’s rights hereunder, and
Grantee shall be responsible for familiarizing himself or herself with all
matters contained herein.

Section 5. Miscellaneous.

(a) Notices. Any and all notices and other communications provided for herein
shall be given in writing. Any such notice or other communication provided to
Company shall be delivered personally to the chief executive officer or chief
financial officer of Company or sent by registered or certified United States
mail, postage prepaid, addressed to both the chief executive officer and the
chief financial officer of Company at the principal office of Company. Any such
notice or other communication provided to Grantee shall be delivered personally
to Grantee or sent by registered or certified United States mail, postage
prepaid, to Grantee’s address appearing on the books and records of Company.

(b) No Right to Continued Service. Nothing in this Agreement shall confer upon
Grantee any right to continue in the service of Company or any Affiliate
thereof, as a director or otherwise, or shall interfere with or restrict in any
way the right of Company or any Affiliate thereof, which right is hereby
expressly reserved, to remove, terminate or discharge Grantee at any time for
any reason whatsoever, with or without Cause and with or without advance notice.

(c) Compliance with Law. The issuance and transfer of shares of Company Stock in
connection with this Award shall be subject to compliance by Company and Grantee
with all applicable requirements of federal and state securities laws and with
all applicable requirements of any national stock exchange on which the Company
Stock may be listed. No shares of Company Stock shall, in connection with this
Award, be issued or transferred unless and until any then applicable
requirements of state and federal laws and regulatory agencies have been fully
complied with to the satisfaction of Company and its counsel.

(d) Regulatory Requirements. Notwithstanding anything in this Agreement to the
contrary, to the extent that the Board of Governors of the Federal Reserve
System or any other bank or bank holding company regulatory agency or authority
determines that any change to the Plan and/or this Agreement is required,
necessary, advisable or appropriate to improve the risk sensitivity of the
Award, then this Agreement shall be automatically amended to incorporate such
change, without further action of Grantee. In such event, Company shall provide
Grantee with notice thereof.

(e) Adverse Tax Consequences. Notwithstanding anything contained in this
Agreement to the contrary, to the extent that either the board of directors, its
designee, or the United States government (including, without limitation, any
agency thereof) determines that the Award granted to Grantee pursuant to this
Agreement is prohibited or substantially restricted by, or subjects Company to
any material adverse tax consequences that Company is not otherwise subject to
on the Award Date because of any current or future United States law, rule,
regulation, or other authority, then this Agreement shall automatically

 

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terminate effective as of the Award Date and the Award shall automatically be
cancelled as of the Award Date without further action on the part of Company or
Grantee and without any compensation to Grantee for such termination and
cancellation. Company shall provide notice to Grantee of any such termination
and cancellation.

(f) Section 409A. The intent of the parties is that benefits under this
Agreement will be exempt from the provisions of Section 409A of the Code, and,
accordingly, to the maximum extent permitted, this Agreement shall be
interpreted to be limited and construed in accordance with such intent. In no
event whatsoever shall Company be liable for any additional tax, interest or
penalties that may be imposed on Grantee by Section 409A of the Code or any
damages for failing to comply with Section 409A of the Code.

(g) Imposition of Other Requirements. If Grantee relocates to another country
after the Award Date, Company reserves the right to impose other requirements on
the Award, to the extent Company determines it is necessary or advisable in
order to comply with local law and to require Grantee to sign any additional
agreements or undertakings that may be necessary to accomplish the foregoing.

(h) Successors. Company may assign any of its rights and/or delegate any of its
obligations under this Agreement without the consent of or notice to Grantee.
Except as otherwise expressly permitted by the Plan or this Agreement, Grantee
may not assign any of Grantee’s rights and/or delegate any of Grantee’s
obligations under this Agreement without the prior written consent of Company.
The terms of this Agreement shall be binding upon and inure to the benefit of
Company, its successors and assigns, and Grantee and the beneficiaries,
executors, administrators, heirs, and permitted assigns of Grantee.

(i) Invalid Provision. The invalidity or unenforceability of any particular
provision of this Agreement shall not affect the other provisions thereof or
hereof, and this Agreement shall be construed in all respects as if such invalid
or unenforceable provision had been omitted.

(j) No Waiver. The failure of Company to enforce any provision of this Agreement
at any time shall in no way constitute a waiver of such provision or of any
other provision hereof.

(k) Entire Agreement. This Agreement constitutes the entire agreement between
Grantee and Company and supersedes and cancels any other agreement,
representation or communication, whether oral or in writing, between the parties
hereto relating to the subject matter hereof.

(l) Amendment. The board of directors of Company, in its sole discretion, may
hereafter amend the terms of this Agreement; provided, that, except as expressly
set forth herein, no such amendment shall be made which would materially impair
the rights of Grantee without Grantee’s consent. No such amendment shall be
valid unless in writing.

(m) Governing Law. This Agreement and the rights and obligations of the parties
hereunder shall be construed and determined in accordance with the statutory
laws and procedural provisions of the Commonwealth of Virginia, including such
state’s law of privilege, without giving effect to its conflict of law
principles.

(n) Headings. The headings and captions contained in this Agreement are provided
for convenience only and are not to serve as a basis for interpretation or
construction and shall not constitute a part of this Agreement.

 

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(o) Counterparts. This Agreement may be executed in counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument. A signed copy of this Agreement delivered by facsimile,
e-mail, or other means of electronic transmission shall be deemed to have the
same legal effect as delivery of an original signed copy of this Agreement.

(p) Discretionary Nature of Award. The grant of the Award in this Agreement does
not create any contractual or other right to receive other awards of Restricted
Shares, qualified or non-qualified stock options, or other types of equity or
cash awards in the future. Future awards or grants, if any, will be at the sole
discretion of Company. Any amendment, modification, or termination of the Plan
shall not constitute a change of, or impair the terms and conditions of,
Grantee’s service to Company or any of its Affiliates.

(signature page follows)

 

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By Grantee’s signature and the signature of Company’s representative below, this
Agreement shall be deemed to have been executed and delivered by the parties
hereto as of the Award Date set forth on the first page of this Agreement.

 

HIGHLANDS BANKSHARES, INC.     GRANTEE

/s/ Dr. James D. Moore, Jr.

    /s/ Timothy K. Schools Dr. James D. Moore, Jr.     Timothy K. Schools
Chairman    

 

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