EXHIBIT 10.18

EMPLOYMENT AGREEMENT

THIS AGREEMENT is entered into as of April 16, 2007, by and between SOUTHERN
COMMUNITY BANK AND TRUST, a North Carolina banking corporation (hereinafter
referred to as the “Bank”) and JAMES C. MONROE of North Carolina (hereinafter
referred to as the “Officer”).

For and in consideration of their mutual promises, covenants and conditions
hereinafter set forth, and other good and valuable consideration, the receipt
and sufficiency of which hereby is acknowledged, the parties agree as follows:

1.    Employment. The Bank agrees to employ the Officer and the Officer agrees
to accept employment upon the terms and conditions stated herein as a Senior
Vice President of the Bank. The Officer shall render such administrative and
management services to the Bank as are customarily performed by persons situated
in a similar capacity. The Officer shall promote the business of the Bank,
including being active in at least two civic or community organizations in
Forsyth County, and perform such other duties as shall, from time to time, be
reasonably assigned by the Chief Executive Officer of the Bank. Upon the request
of the Chief Executive Officer, the Officer shall disclose all business
activities or commercial pursuits in which Officer is engaged, other than Bank
duties.

2.    Compensation. The Bank shall pay the Officer during the term of this
Agreement, as compensation for all services rendered by him to the Bank, a base
salary at the rate of $175,000 per annum, payable in cash not less frequently
than monthly. The rate of such salary shall be reviewed by the Bank not less
often than annually and if increased, shall not be decreased during the term of
this Agreement. Such rate of salary, or increased rate of salary, as the case
may be, may be further increased from time to time in such amounts as the Bank,
in its discretion, may decide. In determining salary increases, the Bank shall
compensate the Officer for increases in the cost of living and may also provide
for performance or merit increases. Participation in the Bank’s incentive
compensation, deferred compensation, discretionary bonus, profit-sharing,
retirement and other employee benefit plans and participation in any fringe
benefits shall not reduce the salary payable to the Officer under this
Paragraph. In the event of a Change in Control (as defined in Paragraph 10), the
Officer’s rate of salary shall be increased not less than five percent annually
during the term of this Agreement. Any payments made under this Agreement shall
be subject to such deductions as are required by law or regulation or as may be
agreed to by the Bank and the Officer.

3.    Discretionary Bonuses. During the term of this Agreement, the Officer
shall be entitled, in an equitable manner with all other key management
personnel of the Bank, to such discretionary bonuses as may be authorized,
declared and paid by the Bank to key management employees. No other compensation
provided for in this Agreement shall be deemed a substitute for the Officer’s
right to such discretionary bonuses when and as declared by the Bank.

4.    Participation in Retirement and Employee Benefit Plans; Fringe Benefits.
The Officer shall be entitled to participate in any plan relating to deferred
compensation, stock options, stock purchases, pension, thrift, profit sharing,
group life insurance, medical coverage, disability coverage, education, or other
retirement or employee benefits that the Bank has adopted, or may, from time to
time adopt, for the benefit of its senior officers and for employees generally,
subject to the eligibility rules of such plans.
 
The Officer shall also be entitled to participate in any other fringe benefits
which are now or may be or become applicable to the Bank’s senior officers,
including the payment of reasonable expenses for continuing education to
maintain professional designations, and any other benefits which are
commensurate with the duties and responsibilities to be performed by the Officer
under this Agreement. Additionally, the Officer shall be entitled to such
vacation and sick leave as shall be established under uniform employee policies
promulgated by the Bank. The Bank shall reimburse the Officer for all
out-of-pocket reasonable and necessary business expenses that the Officer may
incur in connection with his services on behalf of the Bank.

--------------------------------------------------------------------------------

5.    Term. The initial term of employment under this Agreement shall be for the
period commencing upon the effective date of this Agreement and ending two
calendar years from the effective date of this Agreement. On each anniversary of
the effective date of this Agreement, the term of this Agreement shall
automatically be extended for an additional one year period beyond the then
effective expiration date unless written notice from the Bank or the Officer is
received 90 days prior to an anniversary date advising the other that this
Agreement shall not be further extended; provided that the Chief Executive
Officer shall review the Officer’s performance annually and make a specific
determination pursuant to such review to renew this Agreement prior to the 90
days’ notice.

6.    Loyalty; Noncompetition.
(a)    The Officer shall devote his full efforts and entire business time to the
performance of his duties and responsibilities under this Agreement.
(b)    For and in consideration of the agreement by the parent corporation of
the Bank, Southern Community Financial Corporation, to grant the Officer 10,000
options to purchase shares of its common stock during the term of this
Agreement, or any renewals thereof, and for a period of two years after
termination, the Officer agrees he will not, within the “Restricted Area,”
directly or indirectly, engage in any business that competes with the Bank or
any of its subsidiaries without the prior written consent of the Bank; provided,
however, that the provisions of this Paragraph shall not apply in the event the
Officer’s employment is unilaterally terminated by the Bank for Cause, (as such
term is defined in Paragraph 8(c) hereof) or in the event the Officer terminates
his employment with the Bank after the occurrence of a “Termination Event” (as
such term is defined in Paragraph 10(b) hereof) following a “Change of Control”
(as such term is defined in Paragraph 10(d) hereof). The Restricted Area covers
the following divisible list of territories: Forsyth, Guilford, Iredell,
Rockingham, Stokes, Surry and Yadkin Counties, North Carolina, and within 15
miles of any Bank office operated during the term of this Agreement. The
two-year restricted period, however, does not include any period of violation or
period of time required for litigation to enforce the Officer’s agreement not to
compete against the Bank. Notwithstanding the foregoing, the Officer shall be
free, without such consent, to purchase or hold as an investment or otherwise,
up to five percent of the outstanding stock or other security of any corporation
that has its securities publicly traded on any recognized securities exchange or
in any over-the counter market.
(c)    The Officer agrees he will hold in confidence all knowledge or
information of a confidential nature with respect to the business of the Bank or
any subsidiary received by him during the term of this Agreement and will not
disclose or make use of such information without the prior written consent of
the Bank. The Officer agrees that he will be liable to the Bank for any damages
caused by unauthorized disclosure of such information. Upon termination of his
employment, the Officer agrees to return all records or copies thereof of the
Bank or any subsidiary in his possession or under his control, which relate to
the activities of the Bank or any subsidiary.
(d)    The Officer acknowledges that it would not be possible to ascertain the
amount of monetary damages in the event of a breach by the Officer under the
provisions of this Paragraph 6. The Officer agrees that, in the event of a
breach of this Paragraph 6, injunctive relief enforcing the terms of this
Paragraph 6 is an appropriate remedy. If the scope of any restriction contained
in this Paragraph 6 is determined to be too broad by any court of competent
jurisdiction, then such restriction shall be enforced to the maximum extent
permitted by law and the Officer consents that the scope of this restriction may
be modified judicially.

7.    Standards. The Officer shall perform his duties and responsibilities under
this Agreement in accordance with such reasonable standards expected of
employees with comparable positions in comparable organizations and as may be
established from time to time by the Chief Executive Officer. The Bank will
provide the Officer with the working facilities and staff customary for similar
executives and necessary for him to perform his duties.

8.    Termination and Termination Pay.
(a)    The Officer’s employment under this Agreement shall be terminated upon
the death of the Officer during the term of this Agreement, in which event, the
Officer’s estate shall be entitled to receive the compensation due the Officer
through the last day of the calendar month in which his death shall have
occurred and for a period of one month thereafter.
(b)    The Officer’s employment under this Agreement may be terminated at any
time by the Officer upon 60 days’ written notice to the Bank. Upon such
termination, the Officer shall be entitled to receive compensation through the
effective date of such termination.
(c)    The Bank may terminate the Officer’s employment at any time, but any
termination by the Bank, other than termination for Cause, shall not prejudice
the Officer’s right to compensation or

--------------------------------------------------------------------------------

other benefits under this Agreement. The Bank shall provide written notice
specifying the grounds for termination for Cause. The Officer shall have no
right to receive compensation or other benefits for any period after termination
for Cause. Termination for Cause shall include termination because of the
Officer’s personal dishonesty, incompetence, willful misconduct, breach of
fiduciary duty involving personal profit, failure to perform stated duties,
willful violation of any law, rule, or regulation (other than traffic violations
or similar offenses) or final cease-and-desist order, or material breach of any
provision of this Agreement. Notwithstanding such termination, the obligations
under Paragraph 6(c) shall survive any termination of employment.
(d)    Subject to the Bank’s obligations and the Officer’s rights under (i)
Title I of the Americans with Disabilities Act, §504 of the Rehabilitation Act,
and the Family and Medical Leave Act, and to (ii) the vacation leave, disability
leave, sick leave and any other leave policies of the Bank, the Officer’s
employment under this Agreement automatically shall be terminated in the event
the Officer becomes disabled during the term of this Agreement and it is
determined by the Bank that the Officer is unable to perform the essential
functions of his job under this Agreement for sixty (60) business days or more
during any 12-month period. Upon any such termination, the Officer shall be
entitled to receive any compensation the Officer shall have earned prior to the
date of termination but which remains unpaid, and shall be entitled to any
payments provided under any disability income plan of the Bank which is
applicable to the Officer.
In the event of any disagreement between the Officer and the Bank as to whether
the Officer is physically or mentally incapacitated such as will result in the
termination of the Officer’s employment pursuant to this Paragraph 8(d), the
question of such incapacity shall be submitted to an impartial physician
licensed to practice medicine in North Carolina for determination and who will
be selected by mutual agreement of the Officer and the Bank, or failing such
agreement, by two (2) physicians (one (1) of whom shall be selected by the Bank
and the other by the Officer), and such determination of the question of such
incapacity by such physician or physicians shall be final and binding on the
Officer and the Bank. The Bank shall pay the reasonable fees and expenses of
such physician or physicians in making any determination required under this
Paragraph 8(d).

9.    Additional Regulatory Requirements. Notwithstanding anything contained in
this Agreement to the contrary, it is understood and agreed that the Bank (or
any of its successors in interest) shall not be required to make any payment or
take any action under this Agreement if:
(a)    the Bank is declared by any governmental agency having jurisdiction over
the Bank (hereinafter referred to as “Regulatory Authority”) to be insolvent, in
default or operating in an unsafe or unsound manner; or,
(b)    in the opinion of counsel to the Bank, such payment or action (i) would
be prohibited by or would violate any provision of state or federal law
applicable to the Bank, including, without limitation, the Federal Deposit
Insurance Act as now in effect or hereafter amended, (ii) would be prohibited by
or would violate any applicable rules, regulations, orders or statements of
policy, whether now existing or hereafter promulgated, of any Regulatory
Authority, or (iii) otherwise would be prohibited by any Regulatory Authority.

10.    Change in Control.
(a)    In the event of a termination of the Officer’s employment in connection
with, or within twenty-four (24) months after, a “Change in Control” (as defined
in Subparagraph (d) below) of the Bank other than for Cause (as defined in
Paragraph 8), the Officer shall be entitled to receive the payment set forth in
Subparagraph (c) below. Said sum shall be payable as provided in Subparagraph
(e) below.
(b)    In addition to any rights the Officer might have to terminate this
Agreement contained in Paragraph 8, the Officer shall have the right to
terminate this Agreement upon the occurrence of any of the following events (the
“Termination Events”) within twenty-four months following a Change in Control of
the Bank:
(i)    Officer is assigned any duties and/or responsibilities that are
inconsistent with or constitute a demotion or reduction in his position, duties,
responsibilities or status at the time of the Change in Control or with his
reporting responsibilities or titles with the Bank in effect at such time,
regardless of Officer's resulting position; or
(ii)    Officer’s annual base salary rate is reduced below the annual amount in
effect as of the effective date of a Change in Control or as the same shall have
been increased from time to time following such effective date; or

--------------------------------------------------------------------------------

(iii)    Officer’s life insurance, medical or hospitalization insurance,
disability insurance, stock options plans, stock purchase plans, deferred
compensation plans, management retention plans, retirement plans or similar
plans or benefits being provided by the Bank to the Officer as of the effective
date of the Change in Control are reduced in their level, scope or coverage, or
any such insurance, plans or benefits are eliminated, unless such reduction or
elimination applies proportionately to all salaried employees of the Bank who
participated in such benefits prior to such Change in Control; or
(iv)    Officer is transferred to a location, which is more than 35 miles from
his current principal work location without the Officer’s express written
consent.
A Termination Event shall be deemed to have occurred on the date such action or
event is implemented or takes effect.
(c)    In the event that the Officer terminates this Agreement pursuant to this
Paragraph 10, the Bank will be obligated to pay or cause to be paid to Officer
liquidated damages in an amount equal to two (2) times the Officer’s “base
amount” as defined in Section 280G(b)(3) of the Internal Revenue Code of 1986,
as amended (the “Code”).
(d)    For the purposes of this Agreement, the term Change in Control shall mean
any of the following events:
(i)    After the effective date of this Agreement, any “person” (as such term is
defined in Section 7(j)(8)(A) of the Change in Bank Control Act of 1978),
directly or indirectly, acquires beneficial ownership of voting stock, or
acquires beneficial ownership of voting stock, or acquires irrevocable proxies
or any combination of voting stock and irrevocable proxies, representing
twenty-five percent (25%) or more of any class of voting securities of the Bank,
or acquires control of, in any manner, the election of a majority of the Board
of Directors of the Bank; or
(ii)    The Bank consolidates or merges with or into another corporation,
association or entity, or is otherwise reorganized, where the Bank is not the
surviving corporation in such transaction; or
(iii)    All, or substantially all, of the assets of the Bank are sold or
otherwise transferred to or are acquired by any other corporation, association
or other person, entity or group.
Notwithstanding the other provisions of this Paragraph 10, a transaction or
event shall not be considered a Change in Control if, prior to the consummation
or occurrence of such transaction or event, Officer and Bank agree in writing
that the same shall not be treated as a Change in Control for purposes of this
Agreement.
(e)    Such amounts payable pursuant to this Paragraph 10 shall be paid, at the
option of the Officer, either in one lump sum or in equal monthly payments
following termination of this Agreement.
(f)    Following a Termination Event, which gives rise to Officer’s rights
hereunder, the Officer shall have twelve (12) months from the date of occurrence
of the Termination Event to terminate this Agreement pursuant to this Paragraph
10. Any such termination shall be deemed to have occurred only upon delivery to
the Bank (or to any successor corporation) of written notice of termination that
describes the Change in Control and the Termination Event. If Officer does not
so terminate this Agreement within such twelve-month period, he shall thereafter
have no further rights hereunder with respect to that Termination Event, but
shall retain rights, if any, hereunder with respect to any other Termination
Event as to which such period has not expired.
(g)    It is the intent of the parties hereto that all payments made pursuant to
this Agreement be deductible by the Bank for federal income tax purposes and not
result in the imposition of an excise tax on the Officer. Notwithstanding
anything contained in this Agreement to the contrary, any payments to be made to
or for the benefit of the Officer which are deemed to be “parachute payments” as
that term is defined in Section 280G of the Code, shall be modified or reduced
to the extent deemed to be necessary by the Bank to avoid the imposition of
excise taxes on the Officer under Section 4999 of the Code or the disallowance
of a deduction to the Bank under Section 280(a) of the Code.
(h)    In the event any dispute shall arise between the Officer and the Bank as
to the terms or interpretation of this Agreement, including this Paragraph 10,
whether instituted by formal legal proceedings or otherwise, including any
action taken by the Officer to enforce the terms of this Paragraph 10 or in
defending against any action taken by the Bank, the Bank shall reimburse the
Officer for all costs and expenses, proceedings or actions, in the event the
Officer prevails in any such action.
 

--------------------------------------------------------------------------------

 
11.    Successors and Assigns.
(a)    This Agreement shall inure to the benefit of and be binding upon any
corporate or other successor of the Bank which shall acquire, directly or
indirectly, by conversion, merger, purchase or otherwise, all or substantially
all of the assets of the Bank.
(b)    Since the Bank is contracting for the unique and personal skills of the
Officer, the Officer shall be precluded from assigning or delegating his rights
or duties hereunder without first obtaining the written consent of the Bank.

12.    Modification; Waiver; Amendments. No provision 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 on behalf of the Bank by such
officer as may be specifically designated by the Chief Executive Officer. No
waiver by either party hereto, at any time, of any breach by the 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. No amendment or addition to this Agreement shall be binding unless in
writing and signed by both parties, except as herein otherwise provided.

13.    Applicable Law. This Agreement shall be governed in all respects whether
as to validity, construction, capacity, performance or otherwise, by the laws of
North Carolina, except to the extent that federal law shall be deemed to apply.

14.    Severability. The provisions of this Agreement shall be deemed severable
and the invalidity or unenforceability of any provision shall not affect the
validity or enforceability of the other provisions hereof.

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

       
SOUTHERN COMMUNITY BANK AND TRUST
 
   
   
    By:   /s/ F. Scott Bauer  

--------------------------------------------------------------------------------

F. Scott Bauer   Chief Executive Officer           OFFICER    
  /s/ James C. Monroe, Jr.  

--------------------------------------------------------------------------------

James C. Monroe

 

--------------------------------------------------------------------------------