Exhibit 10.1

CONSULTING AGREEMENT
 

THIS AGREEMENT (“AGREEMENT”) is made as of February 15, 2016 (the “Effective
Date”), by and between Highlands Bankshares, Inc. (the “Corporation”) and Samuel
L. Neese (the “Consultant”).

WHEREAS, on November 11, 2015, Consultant retired as Chief Executive Officer of
the Corporation, a position which he had held since 1995; and

WHEREAS, Consultant retired as an employee of the Corporation on February 5,
2016; and

WHEREAS, Consultant possesses certain valuable knowledge, professional skills
and expertise which will contribute to the continued success of the business of
the Corporation and its affiliates; and

WHEREAS, the Corporation and Consultant desire to set forth, in writing, the
terms and conditions of their agreements and understandings;

NOW, THEREFORE, in consideration of the mutual promises herein contained, and of
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties, intending legally to be bound, agree as
follows:

 
Section 1.
Scope of Services; Term.

(a) The Corporation hereby engages the Consultant to provide business consulting
services to the Corporation.  Consultant shall perform only such consulting
services as are reasonably requested of him by the Corporation’s President and
Chief Executive Officer including, but not limited to, advising on business
development matters with existing and prospective customers of the Corporation,
and providing assistance to transition existing customers of the Corporation
through changes in the Corporation’s management.  Although Consultant is solely
responsible for determining his schedule and hours worked, it is anticipated
that Consultant shall not be required to devote more than twenty (20) hours per
month to providing consulting services under this Agreement.

(b) As long as he is receiving compensation from the Corporation under this
Agreement Consultant shall not perform services in Washington County, Virginia
for any bank or other depository institution as an employee or independent
contractor.

(c)           The Corporation and Consultant agree that Consultant shall furnish
services as an independent contractor and not as an employee of the
Corporation.  As an independent contractor, Consultant will determine the
method, details, and means of providing the consulting services.  Consultant has
no power or authority to act for, represent, or bind the Corporation in any
matter, including but not limited to, entering into contracts or agreements.  As
an independent contractor, Consultant will have no supervisory or management
level control over Corporation employees.  Consultant acknowledges that, as an
independent contractor, the compensation that he receives shall not be
considered “wages” for purposes of income tax withholding, FICA, and
unemployment taxes.  Consultant further acknowledges that he is solely
responsible for any tax liability arising from payments made under this
Agreement, and he agrees to indemnify the Corporation from any and all liability
that may be assessed against the Corporation for his failure to pay taxes on
such compensation.

(d)           This Agreement will terminate on December 31, 2016, but may be
terminated with five (5) days notice by either party in the event of a breach by
the other.

(e)           Consultant acknowledges that he is entering into this Agreement of
his own free will and that he has had the benefit of the advice of, and is
relying solely upon the advice of, independent counsel of his own choice.
 
 
 
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Section 2.
Compensation.

(a) So long as he observes his obligations under this Agreement Consultant shall
be paid a fee of Six Thousand Six Hundred Sixty-Seven Dollars ($6,667.00) each
month on the last day of the month.

(b)           Notwithstanding the termination or expiration of this Agreement,
the parties shall be required to carry out any provisions of this Agreement
which contemplate performance by them after such termination, expiration or
nonrenewal, including, but not limited to, Consultant’s obligations under
Section 3.

 
Section 3.
Confidentiality; Non-Disparagement.

(a)           Except in connection with the provision of services pursuant to
this Agreement or as may be required by law or public policy, Consultant agrees
that during the term of this Agreement and at all times thereafter Consultant
will hold in strictest confidence and will not use, or otherwise disseminate,
Confidential Information, without express written consent from the
Corporation.  As used in this Agreement, “Confidential Information” means data
and information relating to the Corporation’s business of which the Consultant
became aware as a consequence of his former employment with the Corporation or
his work under this Agreement which has value to the Company and is not
generally known to its competitors and information which is received from a
third party and which is subject to a duty on the Corporation’s part to maintain
as confidential.  Without limiting the foregoing, Confidential Information shall
include:

(1)           all items of information that could be classified as a trade
secret pursuant to Virginia law;

(2)           the names, addresses and banking requirements of the customers of
the Corporation and the nature and amount of business done with such Customers,
including loan terms, expiration or renewal dates on investments, fee schedules,
proposals to Customers or Prospects to provide products or services;

(3)           information regarding the skills and compensation of Executives of
the Corporation;

(4)           information provided by third parties that is subject to a duty on
the Corporation’s part to maintain the confidentiality of such information and
to use it only for certain limited purposes;

(5)           application, operating system, communication and other computer
software and derivatives thereof, including access codes, data bases and manuals
of the Corporation;

(6)           strategic plans and forecasts, marketing plans and forecasts,
accounting, budget and financial information regarding the Corporation’s
operations, marketing techniques and plans for future product development,
budgets, pricing policies, loan policies, quoting procedures, and the identity
of prospective customers, internal publications and memoranda.

Confidential Information shall not include any data or information that has been
voluntarily disclosed to the public by the Corporation (except where such public
disclosure has been made by Consultant without authorization) or that has been
independently developed and disclosed by others outside of the Corporation, or
that otherwise enters the public domain through lawful means.

(b)           Consultant agrees not to make any derogatory statement with regard
to the performance, character, or reputation of the Corporation or assert that
the Corporation or any of its affiliates has acted improperly or unlawfully with
respect to Consultant or any other Consultant of the Corporation.  Nothing
contained herein shall limit Consultant’s communications with his counsel or, to
the extent necessary to respond to inquiries initiated by regulators of the
Corporation or any of its related companies, subsidiaries, or affiliates, his
communications with such regulators.

(c)           The Parties specifically agree that nothing in this Agreement
prohibits Consultant from reporting possible violations of federal law or
regulation to any governmental agency or entity, from participating in
investigations by any governmental agency or entity, or from making other
disclosures that are protected under the whistleblower provisions of federal law
or regulation.
 
 
 
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(d)           The parties agree that irreparable damage would occur in the event
that any of the provisions of this Section 3 of this Agreement were not
performed in accordance with their specific terms or were otherwise
breached.  The parties accordingly agree that each of the parties to this
Agreement shall be entitled to an injunction or injunctions to prevent breaches
of this Section 3 of this Agreement and to enforce specifically the terms and
provisions of this Section 3, and that such injunctive relief shall be in
addition to any other remedy to which any party is entitled at law or in equity.
 
(e)           The existence of any claim or cause of action of Consultant
against the Corporation, whether predicated on this Agreement or not, shall not
constitute a defense to the enforcement by the Corporation of the
confidentiality provisions set forth in this Section 3.

 
Section 4.
Regulatory Requirements.

Notwithstanding anything in this Agreement to the contrary, the Corporation
shall not be required to make any payment under this Agreement to the extent
such payment is prohibited by the Board of Governors of the Federal Reserve
System or the Federal Deposit Insurance Corporation pursuant to the terms of
those regulations presently found at 12 C.F.R. Part 359. If this Agreement is
alleged to be in violation of the foregoing by the Board of Governors of the
Federal Reserve System or the Federal Deposit Insurance Corporation, any payment
alleged to have been made in violation of the foregoing shall be immediately
returned by Consultant to the Corporation.

 
Section 5.
Invalid Provisions.

The invalidity or unenforceability of any provision of this Agreement shall not
affect the validity or enforceability of any other provision of this Agreement,
which shall remain in full force and effect.  To the extent permitted by
applicable law and public policy, any provision in this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be valid and enforceable to the fullest extent permitted by law without
invalidating or affecting the remaining provisions hereof, and any such
prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.

 
Section 6.
Governing Law.

Except where preempted by federal law, this Agreement shall be subject to and
construed in accordance with the laws of the Commonwealth of Virginia.

 
Section 7.
Entire Agreement; Amendment.

This Agreement contains the entire agreement between the Corporation and
Consultant with respect to the subject matter of this Agreement, and this
Agreement may not be amended, waived, changed, modified or discharged except by
an instrument in writing executed by the Corporation and Consultant.
 
 
 
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Section 8.
Assignability.

 
The services of Consultant under this Agreement are personal in nature, and the
Corporation may not assign this Agreement nor the rights or obligations of the
Corporation under this Agreement, whether by operation of law or otherwise,
without Consultant’s prior written consent.  This Agreement shall be binding
upon, and inure to the benefit of, the Corporation and its permitted successors
and assigns under this Agreement.  Consultant may not assign this Agreement
without the Corporation’s prior written consent, but Consultant’s benefits under
this Agreement shall inure to the benefit of Consultant’s heirs, executors,
administrators and legal representatives to the extent this Agreement expressly
provides.
 

 
Section 9.
Captions.

The captions used in this Agreement are intended for descriptive and reference
purposes only and are not intended to affect the meaning of any Section
hereunder.

 
Section 10.
Section 409A.

This Agreement is intended to comply with Section 409A to the extent Section
409A is applicable.  This Agreement shall be interpreted and administered
accordingly.

[Signatures on next page]

 
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IN WITNESS WHEREOF, the parties have executed this Agreement on the 15th day of
February, 2016.
 
 

   
HIGHLANDS BANKSHARES, INC.
           
/s/ Samuel L. Neese
 
By:
 /s/ Karen White
 
Samuel L. Neese
   
Name: Karen White
       
Title: Director, Human Resources
 

 
 
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