Exhibit
      10.1:

    


    Employment
      Agreement

    


    This
      Employment
      Agreement
      is
      entered into effective as of this 4th
      day of
June,
      2008,
      by and among Southern Community Financial Corporation, a North Carolina
      corporation, Southern Community Bank and Trust, a North Carolina-chartered
      bank
      and wholly owned subsidiary of Southern Community Financial Corporation (the
      “Bank”),
      and
James
      Hastings,
      Executive Vice President of the Bank (the “Executive”).
      For
      convenience, Southern Community Financial Corporation and the Bank are referred
      to in this Employment Agreement individually or together as the “Employer.”

    


    Whereas,
      the
      Executive is the Executive Vice President of the Bank, possessing unique skills,
      knowledge, and experience relating to the Employer’s business, and the Executive
      has made and is expected to continue to make major contributions to the
      profitability, growth, and financial strength of the Employer and
      affiliates,

    


    Whereas,
      the
      Employer and the Executive desire to set forth in this Employment Agreement
      the
      terms and conditions of the Executive’s employment, and

     

    Whereas,
      none of
      the conditions or events included in the definition of the term “golden
      parachute payment” that is set forth in Section 18(k)(4)(A)(ii) of the Federal
      Deposit Insurance Act [12 U.S.C. 1828(k)(4)(A)(ii)] and in Federal Deposit
      Insurance Corporation Rule 359.1(f)(1)(ii) [12 CFR 359.1(f)(1)(ii)] exists
      or,
      to the best knowledge of the Employer, is contemplated insofar as the Bank
      or
      any affiliates are concerned.

    


    Now
      Therefore,
      in
      consideration of these premises, the mutual covenants contained herein, and
      other good and valuable consideration the receipt and sufficiency of which
      are
      hereby acknowledged, the parties hereto agree as follows.

    


    Article
      1

    Employment

    


    1.1
      Employment.
      Effective on the date and for the term specified in section 1.3, the Employer
      hereby employs the Executive to serve as Executive Vice President of the Bank
      according to the terms and conditions of this Employment Agreement. The
      Executive hereby accepts employment according to the terms and conditions of
      this Employment Agreement.


    
      
        
        

      

      
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    1.2
      Duties.
      As
      Executive Vice President, the Executive shall serve in accordance with the
      Employer’s Articles of Incorporation and Bylaws, as each may be amended or
      restated from time to time. He shall serve the Employer faithfully, diligently,
      competently, and to the best of his ability, and he shall exclusively devote
      his
      full working time, energy, and attention to the business of the Employer and
      to
      the promotion of the Employer’s interests throughout the term of this Employment
      Agreement. Without the written consent of the board of directors of each of
      Southern Community Financial Corporation and the Bank, during the term of this
      Employment Agreement the Executive shall not render services to or for any
      person, firm, corporation, or other entity or organization in exchange for
      compensation, regardless of the form in which the compensation is paid and
      regardless of whether it is paid directly or indirectly to the Executive.
      Nothing in this Article 2 shall prevent the Executive from managing his personal
      investments and affairs, provided that doing so does not interfere with the
      proper performance of his duties and responsibilities as Executive Vice
      President.

    


    1.3
      Term
      of Employment.
      The
      initial term of employment under this Employment Agreement shall be for the
      period commencing upon the 4th
      day
      of
June,
      2008
      effective date of this Employment Agreement and ending three calendar years
      from
      the effective date of this Employment Agreement. On each anniversary of the
      effective date of this Employment Agreement, the term of this Employment
      Agreement shall automatically be extended for one additional year period beyond
      the then-effective expiration date unless written notice from the Employer
      or
      the Executive is received 90 days prior to an anniversary date advising the
      other that this Employment Agreement shall not be further extended. If the
      board
      decides not to extend the term of this Employment Agreement, this Employment
      Agreement shall nevertheless remain in force until its then-current three-year
      term expires. The board’s decision not to extend the term of this Employment
      Agreement shall not - by itself - give the Executive any rights under this
      Employment Agreement to claim an adverse change in his position, compensation,
      or circumstances or otherwise to claim entitlement to severance benefits under
      Articles 4 or 5 of this Employment Agreement, absent some other reason that
      entitles Executive to such benefits pursuant to either or both of such Articles.
      References herein to the term of this Employment Agreement shall refer to the
      initial term, as the same may be extended. Unless sooner terminated, the
      Executive’s employment and the term of this Employment Agreement shall terminate
      when the Executive attains age 65.

    


    Article
      2

    Compensation
      and Other Benefits

    


    2.1
      Base
      Salary.
      In
      consideration of the Executive’s performance of his obligations under this
      Employment Agreement, the Bank shall pay or cause to be paid to the Executive
      a
      salary at the annual rate of not less than $225,000.00,
      payable
      in equal or approximately equal monthly installments. The Executive’s salary
      shall be reviewed annually by the Employer’s board of directors or by the board
      committee having jurisdiction over executive compensation. The Executive’s
      salary shall be increased no less frequently than annually to account for cost
      of living increases. The Executive’s salary also may be increased beyond the
      amount necessary to account for cost of living increases at the discretion
      of
      the committee having jurisdiction over executive compensation. However, the
      Executive’s salary shall not be reduced. The Executive’s salary, as the same may
      be increased from time to time, is referred to in this Employment Agreement
      as
      the “Base
      Salary.”


    
      
        
        

      

      
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    2.2
      Benefit
      Plans and Perquisites.
      The
      Executive shall be entitled throughout the term of this Employment Agreement
      to
      participate in any and all officer or employee compensation, bonus, incentive,
      and benefit plans in effect from time to time, including without limitation
      plans providing pension, retirement, medical, dental, disability, and group
      life
      benefits, and to receive any and all other fringe benefits provided from time
      to
      time, provided that the Executive satisfies the eligibility requirements for
      the
      plans or benefits. Without limiting the generality of the foregoing
      -

    


    (a)
      Participation
      in Stock Plans.
      The
      Executive shall be eligible to participate in any stock-based compensation,
      incentive, bonus, or purchase plans existing on the date of this Employment
      Agreement or adopted during the term of this Employment Agreement.

    


    (b)
      Club
      Dues.
      During
      the term of this Employment Agreement, the Employer shall pay or cause to be
      paid the Executive’s membership assessments and dues in civic clubs. Without
      limiting the generality of the foregoing, the Executive shall be reimbursed
      for
      assessments, dues, and expenses associated with his membership in and use of
      the
      private country club of his choice in Forsyth or Davie County.

    


    (c)
      Disability
      Insurance.
      The
      Employer shall reimburse the Executive for the Executive’s cost to purchase and
      maintain disability insurance coverage on himself during the term of this
      Employment Agreement. The amount reimbursed by the Employer shall be grossed
      up
      to compensate the Executive for federal and state income taxes imposed as a
      result of the Employer’s reimbursement of the Executive’s cost. The disability
      insurance policy shall be owned by the Executive exclusively.

    


    (d)
      Reimbursement
      of Business Expenses.
      Upon
      submission of appropriate documentation by the Executive and approval by the
      board of directors or by a board committee appointed for such purpose, the
      Employer agrees to reimburse the Executive for all out-of-pocket expenses
      incurred performing his obligations under this Employment Agreement, including
      but not limited to all reasonable business travel and entertainment expenses
      incurred while acting at the request of or in the service of the Employer and
      reasonable expenses for attendance at annual and other periodic meetings of
      trade associations. Except for club dues under section 2.2(b), to be
      reimbursable each expense must be of a nature qualifying it as a proper
      deduction on the Employer’s income tax returns as a business expense rather than
      deductible compensation to the Executive. The records and other documentary
      evidence submitted by the Executive to the Employer with each request for
      reimbursement shall be in the form required by applicable statutes and
      regulations issued by appropriate taxing authorities for the substantiation
      of
      expenditures as deductible business expenses of the Employer rather than
      deductible compensation to the Executive.

    


    2.3
      Vacation.
      The
      Executive shall be entitled to paid annual vacation and sick leave in accordance
      with the policies established from time to time by the Employer. The Executive
      shall not be entitled to any additional compensation for failure to use allotted
      vacation or sick leave, nor shall the Executive be allowed to carry over unused
      vacation allowance from one calendar year to the next. The Executive shall
      be
      entitled to accumulate unused sick leave from one year to the next for use
      solely in the case of actual illness.


    
      
        
        

      

      
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    2.4
      Taxes.
      All
      compensation of the Executive shall be subject to withholding and other
      employment taxes imposed by federal, state, and local law.

    


    2.5
      Indemnification
      and Insurance.
      (a)
Indemnification.
      The
      Employer shall indemnify the Executive or cause the Executive to be indemnified
      with respect to his activities as a director, officer, employee, or agent of
      the
      Employer or as a person who is serving or has served at the request of the
      Employer (a “representative”)
      as a
      director, officer, employee, agent, or trustee of an affiliated corporation,
      joint venture trust or other enterprise, domestic or foreign, in which the
      Employer has a direct or indirect ownership interest against expenses (including
      without limitation attorneys’ fees, judgments, fines, and amounts paid in
      settlement) actually and reasonably incurred by him (“Expenses”)
      in
      connection with any claim against the Executive that is the subject of any
      threatened, pending, or completed action, suit, or other type of proceeding,
      whether civil, criminal, administrative, investigative, or otherwise and whether
      formal or informal (a “Proceeding”),
      to
      which the Executive was, is, or is threatened to be made a party by reason
      of
      the Executive being or having been such a director, officer, employee, agent,
      or
      representative.

    


    The
      indemnification provided herein shall not be exclusive of any other
      indemnification or right to which the Executive may be entitled and shall
      continue after the Executive has ceased to occupy a position as an officer,
      director, employee, agent or representative with respect to Proceedings relating
      to or arising out of the Executive’s acts or omissions during his service in
      such position. The indemnification provided to the Executive under this
      Employment Agreement for the Executive’s service as a representative shall be
      payable if and only if and only to the extent that reimbursement to the
      Executive by the affiliated entity with which the Executive has served as a
      representative, whether pursuant to agreement, applicable law, articles of
      incorporation or association, by-laws or regulations of the entity, or insurance
      maintained by such affiliated entity, is insufficient to compensate the
      Executive for Expenses actually incurred and otherwise payable by the Employer
      under this Employment Agreement. Any payments for such Expenses in fact made
      to
      or on behalf of the Executive directly or indirectly by the affiliated entity
      with which the Executive served as a representative shall reduce the obligation
      of the Employer hereunder.

    


    (b)
      Exclusions.
      Anything herein to the contrary notwithstanding, however, nothing in this
      Section 2.5 requires indemnification, reimbursement, or payment by the Employer,
      and the Executive shall not be entitled to demand indemnification,
      reimbursement, or payment -

    


    (1)
      if
      and to the extent indemnification, reimbursement, or payment constitutes a
      “prohibited indemnification payment” within the meaning of Federal Deposit
      Insurance Corporation Rule 359.1(l)(1) [12 CFR 359.1(l)(1)], or

    


    (2)
      for
      any claim or any part thereof as to which the Executive shall have been
      determined by a court of competent jurisdiction, from which no appeal is or
      can
      be taken, by clear and convincing evidence, to have acted with deliberate intent
      to cause injury to the Employer or with reckless disregard for the best
      interests of the Employer, or


    
      
        
        

      

      
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       (3)
      for
      any claim or any part thereof arising under Section 16(b) of the Securities
      Exchange Act of 1934 as a result of which the Executive is required to pay
      any
      penalty, fine, settlement, or judgment, or

    


       (4)
      for
      any obligation of the Executive based upon or attributable to the Executive
      gaining in fact any personal gain, profit, or advantage to which he was not
      entitled, or

    


       (5)
      any
      proceeding initiated by the Executive without the consent or authorization
      of
      the Employer’s board of directors, but this exclusion shall not apply with
      respect to any claims brought by the Executive (a) to enforce his rights under
      this Employment Agreement, or (b) in any Proceeding initiated by another person
      or entity whether or not such claims were brought by the Executive against
      a
      person or entity who was otherwise a party to such proceeding.

    


    (c)
      Insurance.
      The
      Employer shall maintain or cause to be maintained fidelity and Directors &
Officers’ liability insurance covering the Executive throughout the term of this
      Employment Agreement.

    


    Article
      3

    Termination
      of Employment

    


    3.1
      Termination
      by the Employer.
      (a)
Death
      or Disability.
      The
      Executive’s employment shall terminate automatically on the date of the
      Executive’s death. If the Executive dies in active service to the Employer, for
      twelve months after the Executive’s death the Employer shall provide the
      Executive’s family with and pay the premiums for continuing health care coverage
      under COBRA substantially identical to that provided for the Executive before
      his death.

    


    By
      delivery of written notice 30 days in advance to the Executive, the Employer
      may
      terminate the Executive’s employment if the Executive is disabled. For purposes
      of this Employment Agreement, the Executive shall be considered “disabled”
if
      for
      health or medical-related reasons he is unable to and does not perform his
      duties hereunder for a period of 90 consecutive days. The Executive shall not
      be
      considered disabled, however, if he returns to work on a full-time basis within
      30 days after the Employer gives him notice of termination due to
      disability.

    


    (b)
      Termination
      Without Cause.
      With
      written notice to the Executive 60 days in advance, the Employer may terminate
      the Executive’s employment without Cause. Upon such event, the compensation and
      benefits after termination provisions of Sections 4.4 and 4.5 shall apply,
      in
      addition to any other applicable post-termination payments or benefits provided
      for in this Employment Agreement.


    
      
        
        

      

      
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    (c)
      Termination
      with Cause.
      The
      Employer may terminate the Executive’s employment with Cause. Upon such event,
      the Executive shall not be entitled to any further compensation or other
      benefits beyond his effective termination date in accordance with Section 4.1,
      except such benefits which by the terms of their plan document continue after
      such termination or except as may be otherwise provided for in this Employment
      Agreement. The term “Cause”
means
      any of the following -

    


       (1)
      an
      intentional act of fraud, embezzlement, or theft by the Executive in the course
      of his employment. For purposes of this Employment Agreement, no act or failure
      to act on the part of the Executive shall be deemed to have been intentional
      if
      it was due primarily to an error in judgment or negligence. An act or failure
      to
      act on the Executive’s part shall be considered intentional if it is not in good
      faith and if it is without a reasonable belief that the action or failure to
      act
      is in the best interests of the Employer, or

    


       (2)
      intentional violation of any law or significant policy of the Employer committed
      in connection with the Executive’s employment, which in the Employer’s judgment
      has a material adverse effect on the Employer, or

    


       (3)
      the
      Executive’s gross negligence or gross neglect of duties in the performance of
      his duties to the Employer, or

    


       (4)
      intentional wrongful damage by the Executive to the business or property of
      the
      Employer, including without limitation the reputation of the Employer, which
      in
      the Employer’s sole judgment causes material harm to the Employer,
      or

    


       (5)
      a
      breach by the Executive of his fiduciary duties as an officer or director of
      the
      Employer or misconduct involving dishonesty, in either case whether in his
      capacity as an officer or as a director of the Bank or Southern Community
      Financial Corporation, or

    


       (6)
      a
      breach by the Executive of this Employment Agreement that, in the sole judgment
      of the Employer, is a material breach, which breach is not corrected by the
      Executive within 30 days after receiving written notice of the breach which
      the
      Employer shall provide, or

    


       (7)
      removal of the Executive from office or permanent prohibition of the Executive
      from participating in the Bank’s affairs by an order issued under section
      8(e)(4) or (g)(1) of the Federal Deposit Insurance Act, 12 U.S.C. 1818(e)(4)
      or
      (g)(1), or


    
      
        
        

      

      
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       (8)
      conviction of the Executive for or plea of nolo
      contendere
      to a
      felony or conviction of or plea of nolo
      contendere
      to a
      misdemeanor involving moral turpitude, or the actual incarceration of the
      Executive.

    


    3.2
      Termination
      by the Executive.
      The
      Executive may terminate his employment with written notice to the Employer
      60
      days in advance, whether with or without Good Reason. If the Executive
      terminates with Good Reason, the termination will take effect at the conclusion
      of the 60-day period unless the event or circumstance constituting Good Reason
      is cured by the Employer or unless the notice of termination for Good Reason
      is
      revoked by the Executive within the 60-day period. Upon such event, the
      compensation and benefits after termination provisions of Sections 4.4 and
      4.5
      shall apply, in addition to any other applicable post-termination payments
      or
      benefits provided for in this Employment Agreement. For purposes of this
      Employment Agreement, “Good
      Reason”
means
      any of the following events occur without the Executive’s written consent
      -

    


    (a)
      Reduced
      Base Salary:
      reduction of the Executive’s Base Salary, or

    


    (b)
      Participation
      in Benefit Plans Reduced or Terminated:
      reduction of the Executive’s bonus, incentive, or other compensation award
      opportunities under the Employer’s benefit plans, unless a company-wide
      reduction of all officers’ award opportunities occurs simultaneously, or
      termination of the Executive’s participation in any officer or employee benefit
      plan maintained by the Employer, unless the plan is terminated because of
      changes in law or loss of tax deductibility to the Employer for contributions
      to
      the plan, or unless the plan is terminated as a matter of policy applied equally
      to all participants in the plan, or

    


    (c)
      Reduced
      Responsibilities or Status:
      assignment to the Executive of duties that are materially inconsistent with
      the
      Executive’s position as the Bank’s Executive Vice President or that represent a
      reduction of his authority, or

    


    (d)
      Failure
      to Obtain Assumption Agreement:
      failure
      to obtain an assumption of the Employer’s obligations under this Employment
      Agreement by any successor to the Employer, regardless of whether the entity
      becomes a successor to the Employer as a result of a merger, consolidation,
      sale
      of assets, or other form of purchase, sale or reorganization, or

    


    (e)
      Material
      Breach:
      a
      material breach of this Employment Agreement by the Employer that is not
      corrected within 30 days after receiving written notice of the breach from
      the
      Executive, or

    


    (f)
      Relocation
      of the Executive:
      relocation of the Bank’s principal executive offices, or requiring the Executive
      to change his principal work location, to any location that is more than 30
      miles from the location of the Bank’s principal executive offices on the date of
      this Employment Agreement.


    
      
        
        

      

      
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    3.3
      Notice.
      Any
      purported termination by the Employer or by the Executive shall be communicated
      by written notice of termination to the other. The notice must state the
      specific termination provision of this Employment Agreement relied upon. The
      notice must also state the date on which termination shall become effective,
      which shall be a date not earlier than the date of the termination notice.
      If
      termination is for Cause or with Good Reason, the notice must state in
      reasonable detail the facts and circumstances forming the basis for termination
      of the Executive’s employment.

    


    Article
      4

    Compensation
      and Benefits After Termination

    


    4.1
      Cause.
      If the
      Executive’s employment terminates for Cause, the Executive shall receive the
      salary to which he is entitled through the date on which termination becomes
      effective and any other benefits to which he may be entitled under the
      Employer’s benefit plans and policies in effect on the date of
      termination.

    


    4.2
      Termination
      by the Executive Other than for Good Reason.
      If the
      Executive terminates employment other than for Good Reason, the Executive shall
      receive the salary to which he is entitled through the date on which his
      termination becomes effective and any other benefits to which he may be entitled
      under the Employer’s benefit plans and policies.

    


    4.3
      Continued
      Salary in the Case of Termination Because of Disability.
      If the
      Executive’s employment terminates because of disability, the Executive shall
      receive the salary earned through the date on which termination becomes
      effective, any unpaid bonus or incentive compensation due to the Executive
      for
      the calendar year preceding the calendar year in which the termination becomes
      effective, any payments the Executive is eligible to receive under any
      disability insurance program in which the Executive participates, and such
      other
      benefits to which he may be entitled under the Employer’s benefit plans,
      policies, and agreements.

    


    4.4
      Termination
      Without Cause and Termination for Good Reason.
      If the
      Employer terminates the Executive’s employment without Cause or if the Executive
      terminates employment for Good Reason, the Executive shall continue to receive
      his most recent Base Salary level for the unexpired term of this Employment
      Agreement, but he shall not be entitled to continued participation in the
      Employer’s or a subsidiary’s retirement plans or any stock-based plans unless
      the terms of any applicable plan document allow such participation. The Employer
      and the Executive acknowledge and agree that the compensation and benefits
      under
      this Section 4.4 shall not be payable if compensation and benefits are payable
      or shall have been paid previously to the Executive under Article 5 of this
      Employment Agreement.

    


    4.5
      Post-Termination
      Insurance and Medical Coverage.
      If the
      Executive’s employment terminates involuntarily but without Cause or voluntarily
      but with Good Reason, or if the Executive’s employment terminates because of
      disability, the Employer shall continue or cause to be continued at the
      Employer’s expense life, health, and disability insurance benefits in effect
      during the two years preceding the date of the Executive’s termination. The
      life, health, and disability insurance benefits shall continue until the first
      to occur of (a) the Executive’s return to employment with the Employer or
      another employer, (b) the Executive’s attainment of age 65, (c) the Executive’s
      death, or (d) the end of the term remaining under this Employment Agreement
      at
      the time of the Executive’s termination.


    
      
        
        

      

      
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    4.6
      Salary
      Continuation Agreement.
      The
      Bank and the Executive shall use their best efforts to finalize and enter into
      a
      Salary Continuation Agreement and Endorsement Split Dollar Agreement. The Salary
      Continuation Agreement shall provide for an annual benefit payable to the
      Executive in equal monthly installments for his lifetime, beginning after his
      termination of service with the Bank on or after attaining age 65. Unless the
      Salary Continuation Agreement or Endorsement Split Dollar Agreement explicitly
      provides otherwise, whether benefits are properly payable to the Executive
      under
      the Salary Continuation Agreement or the Endorsement Split Dollar Agreement
      shall be determined solely by reference to those agreements, except that the
      Executive shall forfeit all benefits under the Salary Continuation Agreement
      and
      Endorsement Split Dollar Agreement for violation of the covenant against
      competition in Section 7.3 of this Employment Agreement.

    


    Article
      5

    Change
      in Control Benefits

    


    5.1
      Change
      in Control Benefits.
      (a) If
      a Change in Control occurs during the term of this Employment Agreement and
      if
      within 24 months thereafter the Executive’s employment terminates involuntarily
      but without Cause or voluntarily but with Good Reason, the Employer shall make
      or cause to be made a lump-sum payment to the Executive in an amount in cash
      equal to three times the Executive’s annual compensation. For this purpose,
      annual compensation means (1) the Executive’s Base Salary when the Change in
      Control occurs plus (2) any bonus or incentive compensation earned for the
      calendar year ended immediately before the year in which the Change in Control
      occurred, regardless of when the bonus or incentive compensation earned for
      the
      preceding calendar year is paid and regardless of whether all or part of the
      bonus or incentive compensation is subject to elective deferral. Annual
      compensation shall be calculated without regard to any deferrals under qualified
      or nonqualified plans, but annual compensation shall not include interest or
      other earnings credited to the Executive under qualified or nonqualified plans.
      The amount payable to the Executive hereunder shall not be reduced to account
      for the time value of money or discounted to present value. The payment required
      under this paragraph (a) is payable no later than five business days after
      termination of employment. If the Executive is removed from office or if his
      employment terminates before a Change in Control occurs but after discussions
      with a third party regarding a Change in Control commence, and if those
      discussions ultimately conclude with a Change in Control, then for purposes
      of
      this Employment Agreement the removal of the Executive or termination of his
      employment shall be deemed to have occurred after the Change in
      Control.


    
      
        
        

      

      
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    (b)
      Benefit
      Plans:
      In
      addition to insurance and medical benefits under Section 4.5 of this Employment
      Agreement and any benefits to which the Executive may be entitled under the
      Salary Continuation Agreement and Endorsement Split Dollar Agreement referred
      to
      in Section 4.6 of this Employment Agreement, if a Change in Control occurs
      during the term of this Employment Agreement and if within 24 months thereafter
      the Executive’s employment terminates involuntarily but without Cause or
      voluntarily but with Good Reason the Employer shall (1) cause the Executive
      to
      become fully vested in any qualified and non-qualified plans, programs, or
      arrangements in which the Executive participated if the plan, program, or
      arrangement does not address the effect of a change in control, and (2)
      contribute or cause to be contributed to the Executive’s 401(k) plan account, if
      any, the matching and profit-sharing contributions, if any, that the Executive
      is entitled to based upon all W-2 income earned by the Executive for the plan
      year.

    


    5.2
      Definition
      of Change in Control.
      For
      purposes of this Employment Agreement, “Change
      in Control”
means
      any one or more of the following events occurs with regard to Southern Community
      Financial Corporation:

    


    (a)
      Change
      in ownership
      - A
      change in ownership of Southern Community Financial Corporation occurs on the
      date any one person or group of persons accumulates ownership of Southern
      Community Financial Corporation’s stock constituting more than 50% of the total
      fair market value or total voting power of Southern Community Financial
      Corporation’s stock,

    


    (b)
      Change
      in effective control - A
      change
      in effective control occurs when either (i) any one person or more than one
      person acting as a group acquires within a 12-month period ownership of stock
      of
      Southern Community Financial Corporation possessing 35% or more of the total
      voting power of Southern Community Financial Corporation’s stock, or (ii) a
      majority of Southern Community Financial Corporation’s Board of Directors is
      replaced during any 12-month period by Directors whose appointment or election
      is not endorsed in advance by a majority of Southern Community Financial
      Corporation’s Board of Directors before the date of appointment or election,
      or

    


    (c)
      Change
      in ownership of a substantial portion of assets -
      A
      change in the ownership of a substantial portion of Southern Community Financial
      Corporation’s assets occurs if in a 12-month period any one person or more than
      one person acting as a group acquires assets from Southern Community Financial
      Corporation having a total gross fair market value equal to or exceeding 40%
      of
      the total gross fair market value of all of the assets of Southern Community
      Financial Corporation immediately before the acquisition or acquisitions. For
      this purpose, “gross fair market value” means the value of Southern Community
      Financial Corporation’s assets, or the value of the assets being disposed of,
      determined without regard to any liabilities associated with the
      assets.

    


    5.3
      No
      Multiple Severance Payments.
      If the
      Executive receives payment under Section 5.1 he shall not be entitled to any
      benefits under Section 4.4 of this Employment Agreement.

     

    
      
        
        

      

      
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    Article
      6

    Confidentiality
      and Creative Work

    


    6.1
      Non-disclosure.
      The
      Executive covenants and agrees that he will not reveal to any person, firm,
      or
      corporation any confidential information of any nature concerning the Employer
      or its business, or anything connected therewith. As used in this Article 6,
      the
      term “confidential
      information”
means
      all of the Employer’s and its affiliates’ confidential and proprietary
      information and trade secrets in existence on the date hereof or existing at
      any
      time during the term of this Employment Agreement, including but not limited
      to
      -

    


       (a)
      the
      whole or any portion or phase of any business plans, financial information,
      purchasing data, supplier data, accounting data, or other financial
      information,

    


       (b)
      the
      whole or any portion or phase of any research and development information,
      design procedures, algorithms or processes, or other technical
      information,

    


       (c)
      the
      whole or any portion or phase of any marketing or sales information, sales
      records, customer lists, prices, sales projections, or other sales information,
      and

    


       (d)
      trade
      secrets, as defined from time to time by the laws of the State of North
      Carolina.

    


    Notwithstanding
      the foregoing, confidential information excludes information that - as of the
      date hereof or at any time after the date hereof - is published or disseminated
      without obligation of confidence or that becomes a part of the public domain
      (1)
      by or through action of the Employer, or (2) otherwise than by or at the
      direction of the Executive. This Section 6.1 does not prohibit disclosure
      required by an order of a court having jurisdiction or a subpoena from an
      appropriate governmental agency or disclosure made by the Executive in the
      ordinary course of business and within the scope of his authority.

    


    6.2
       Return
      of Materials.
      The
      Executive agrees to deliver or return to the Employer upon termination, upon
      expiration of this Employment Agreement, or as soon thereafter as possible,
      all
      written information and any other similar items furnished by the Employer or
      prepared by the Executive in connection with his services hereunder. The
      Executive will retain no copies thereof after termination of this Employment
      Agreement or termination of the Executive’s employment.

    


    6.3
      Creative
      Work.
      The
      Executive agrees that all creative work and work product, including but not
      limited to all technology, business management tools, processes, software,
      patents, trademarks, and copyrights developed by the Executive during the term
      of this Employment Agreement and in the course and scope of his duties
      hereunder, regardless of when or where such work or work product was produced,
      constitutes work made for hire, all rights of which are owned by the Employer.
      The Executive hereby assigns to the Employer all rights, title, and interest,
      whether by way of copyrights, trade secret, trademark, patent, or otherwise,
      in
      all such work or work product, regardless of whether the same is subject to
      protection by patent, trademark, or copyright laws.

     

    
      
        
        

      

      
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    6.4
      Injunctive
      Relief.
      The
      Executive acknowledges that it is impossible to measure in money the damages
      that will be suffered by the Employer if the Executive fails to observe the
      obligations imposed on him by this Article 6. Accordingly, if the Bank
      institutes an action to enforce the provisions hereof, the Executive hereby
      waives the claim or defense that an adequate remedy at law is available to
      the
      Employer and the Executive agrees not to urge in any such action the claim
      or
      defense that an adequate remedy at law exists.

    


    6.5
      Affiliates’
      Confidential Information is Covered; Confidentiality Obligation Survives
      Termination.
      For
      purposes of this Employment Agreement, the term “affiliate”
      includes Southern Community Financial Corporation, the Bank, and any entity
      that
      directly or indirectly through one or more intermediaries controls, is
      controlled by, or is under common control with Southern Community Financial
      Corporation or the Bank. The rights and obligations set forth in this Article
      6
      shall survive termination of this Employment Agreement.

    


    Article
      7

    Competition
      After Employment Termination

    


    7.1
      Covenant
      Not to Solicit Employees.
      The
      Executive agrees not to solicit the services of any officer or employee of
      the
      Employer for one year after the Executive’s employment termination.

    


    7.2
      Covenant
      Not to Compete.
      (a) In
      consideration for the agreement by Southern Community Financial Corpration
      to
      grant the Executive 10,000 options to purchase shares of its common stock,” the
      Executive covenants and agrees that he will not, without advance written consent
      of the Employer, compete directly or indirectly with the Employer for two years
      after termination of his employment, plus any period during which the Executive
      is in violation of this covenant not to compete and any period during which
      the
      Employer seeks by litigation to enforce this covenant not to compete. For
      purposes of this section -

    


    (1) the
      term
“compete” means

     

    
      	 	 	
               

            	
              
                (a)
                  providing financial products or services on behalf of any financial
                  institution for any person residing in the
                  territory,

              

            


    

    


    
      	 	 	
               

            	
              
                (b)
                  assisting (other than through the performance of ministerial or
                  clerical
                  duties) any financial institution in providing financial products
                  or
                  services to any person residing in the territory,
                  or

              

            


    

    


    
      	 	 	
               

            	
              
                (c)
                  inducing or attempting to induce any person who was a customer
                  of the
                  Employer at the date of the Executive’s termination of employment to seek
                  financial products or services from another financial
                  institution.

              

            


    


    
      
        
        

      

      
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    (2) the
      words
“directly or indirectly” means -

    


    
      	 	 	
               

            	
              
                (a)
                  acting as a consultant, officer, director, independent contractor,
                  or
                  employee of any financial institution in competition with the Employer
                  in
                  the territory, or

              

            


    

    


    
      	 	 	
               

            	
              
                (b)
                  communicating to such financial institution the names or addresses
                  or any
                  financial information concerning any person who was a customer
                  of the
                  Employer at the Executive’s termination of
                  employment.

              

            


    

    


    
      	 	
               

            	
              
                (3) the
                  term “customer” means any person to whom the Employer is providing
                  financial products or services on the date of the Executive’s termination
                  of employment.

              

            


    

    


    
      	 	
               

            	
              (4)
                the term “financial institution” means any bank, savings association, or
                bank or savings association holding company, or any other institution,
                the
                business of which is engaging in activities that are financial in
                nature
                or incidental to such financial activities as described in section
                4(k) of
                the Bank Holding Company Act of 1956, other than the Employer or
                one of
                its affiliated corporations.

            


    

    


    
      	 	
               

            	
              (5)
                “financial product or service” means any product or service that a
                financial institution or a financial holding company could offer
                by
                engaging in any activity that is financial in nature or incidental
                to such
                a financial activity under section 4(k) of the Bank Holding Company
                Act of
                1956 and that is offered by the Employer or an affiliate on the date
                of
                the Executive’s employment termination, including but not limited to
                banking activities and activities that are closely related and a
                proper
                incident to banking.

            


    

    


    
      	
               

            	
              (6)
                the term “person” means any individual or individuals, corporation,
                partnership, fiduciary or
                association.

            


    

    


    
      	
               

            	
              (7)
                the term “territory” means all of Forsyth, Guilford, Iredell, Rockingham,
                Stokes, Surry, and Yadkin Counties in North Carolina and the area
                within a
                15-mile radius of any full-service banking office of the Bank at
                the date
                of the Executive’s termination of
                employment.

            


    

    


    (b) If
      any
      provision of this section or any word, phrase, clause, sentence or other portion
      thereof (including, without limitation, the geographical and temporal
      restrictions contained therein) is held to be unenforceable or invalid for
      any
      reason, the unenforceable or invalid provision or portion shall be modified
      or
      deleted so that the provisions hereof, as modified, are legal and enforceable
      to
      the fullest extent permitted under applicable law.


    
      
        
        

      

      
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    7.3
      Remedies.
      Because
      of the unique character of the services to be rendered by the Executive
      hereunder, the Executive understands that the Employer would not have an
      adequate remedy at law for the material breach or threatened breach by the
      Executive of any one or more of the Executive’s covenants set forth in this
      Article 7. Accordingly, the Executive agrees that the Employer’s remedies for a
      material breach or threatened breach of this Article 7 include but are not
      limited to (a) forfeiture of any money representing accrued salary, contingent
      payments, or other fringe benefits due and payable to the Executive, (b)
      forfeiture of any severance benefits under Sections 4.4 and 4.5 of this
      Employment Agreement, (c) forfeiture of benefits under the Salary Continuation
      Agreement and Endorsement Split Dollar Agreement referred to in Section 4.6
      of
      this Agreement, and (d) a suit in equity by the Employer to enjoin the Executive
      from the breach or threatened breach of such covenants. The Executive hereby
      waives the claim or defense that an adequate remedy at law is available to
      the
      Employer and the Executive agrees not to urge in any such action the claim
      or
      defense that an adequate remedy at law exists. Nothing herein shall be construed
      to prohibit the Employer from pursuing any other remedies for the breach or
      threatened breach.

    


    7.4 Article
      7 Survives Termination But Is Void After a Change in
      Control.
      The
      rights and obligations set forth in this Article 7 shall survive termination
      of
      this Employment Agreement. However, Article 7 shall become null and void
      effective immediately upon a Change in Control.

    


    Article
      8

    Miscellaneous

    


    8.1
      Successors
      and Assigns.
      (a)
This
      Employment Agreement Is Binding on The Employer’s Successors.
      This
      Employment Agreement shall be binding upon the Employer and any successor to
      the
      Employer, including any persons acquiring directly or indirectly all or
      substantially all of the business or assets of the Employer by purchase, merger,
      consolidation, reorganization, or otherwise. But this Employment Agreement
      and
      the Employer’s obligations under this Employment Agreement are not otherwise
      assignable, transferable, or delegable by the Employer. By agreement in form
      and
      substance satisfactory to the Executive, the Employer shall require any
      successor to all or substantially all of the business or assets of the Employer
      to expressly assume and agree to perform this Employment Agreement in the same
      manner and to the same extent the Employer would be required to perform if
      no
      such succession had occurred.

    


    (b)
      This
      Employment Agreement Is Enforceable by the Executive and His
      Heirs.
      This
      Employment Agreement will inure to the benefit of and be enforceable by the
      Executive’s personal or legal representatives, executors, administrators,
      successors, heirs, distributees, and legatees.


    
      
        
        

      

      
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    (c)
      This
      Employment Agreement Is Personal in Nature and Is Not
      Assignable.
      This
      Employment Agreement is personal in nature. Without written consent of the
      other
      parties, no party shall assign, transfer, or delegate this Employment Agreement
      or any rights or obligations under this Employment Agreement except as expressly
      provided herein. Without limiting the generality or effect of the foregoing,
      the
      Executive’s right to receive payments hereunder is not assignable or
      transferable, whether by pledge, creation of a security interest, or otherwise,
      except for a transfer by the Executive’s will or by the laws of descent and
      distribution. If the Executive attempts an assignment or transfer that is
      contrary to this Section 8.1, the Employer shall have no liability to pay any
      amount to the assignee or transferee.

    


    8.2
      Governing
      Law, Jurisdiction, and Forum.
      This
      Employment Agreement shall be construed under and governed by the internal
      laws
      of the State of North Carolina, without giving effect to any conflict of laws
      provision or rule (whether of the State of North Carolina or any other
      jurisdiction) that would cause the application of the laws of any jurisdiction
      other than the State of North Carolina. By entering into this Employment
      Agreement, the Executive acknowledges that he is subject to the jurisdiction
      of
      both the federal and state courts in the State of North Carolina. Any actions
      or
      proceedings instituted under this Employment Agreement shall be brought and
      tried solely in courts located in Forsyth County, North Carolina or in the
      federal court having jurisdiction in Winston-Salem, North Carolina. The
      Executive expressly waives his rights to have any such actions or proceedings
      brought or tried elsewhere.

    


    8.3
      Entire
      Agreement.
      This
      Employment Agreement sets forth the entire agreement of the parties concerning
      the employment of the Executive. Any oral or written statements,
      representations, agreements, or understandings made or entered into prior to
      or
      contemporaneously with the execution of this Employment Agreement are hereby
      rescinded, revoked, and rendered null and void by the parties. 

    


    8.4
      Notices.
      All
      notices, requests, demands, and other communications hereunder shall be in
      writing and shall be deemed to have been duly given if delivered by hand or
      mailed, certified or registered mail, return receipt requested, with postage
      prepaid. Unless otherwise changed by notice, notice shall be properly addressed
      to the Executive if addressed to the address of the Executive on the books
      and
      records of the Employer at the time of the delivery of notice, and properly
      addressed to the Employer if addressed to the Board of Directors, Southern
      Community Financial Corporation, 4605 Country Club Road, Winston-Salem, North
      Carolina 27104.

     

    8.5
      Severability.
      In the
      case of conflict between any provision of this Employment Agreement and any
      statute, regulation, or judicial precedent, the latter shall prevail, but the
      affected provisions of this Employment Agreement shall be curtailed and limited
      solely to the extent necessary to bring them within the requirements of law.
      If
      any provision of this Employment Agreement is held by a court of competent
      jurisdiction to be indefinite, invalid, void or voidable, or otherwise
      unenforceable, the remainder of this Employment Agreement shall continue in
      full
      force and effect unless that would clearly be contrary to the intentions of
      the
      parties or would result in an injustice.


    
      
        
        

      

      
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    8.6
      Captions
      and Counterparts.
      The
      captions in this Employment Agreement are solely for convenience. The captions
      in no way define, limit, or describe the scope or intent of this Employment
      Agreement. This Employment Agreement may be executed in several counterparts,
      each of which shall be deemed to be an original but all of which together shall
      constitute one and the same instrument.

    


    8.7
      No
      Duty to Mitigate.
      The
      Employer hereby acknowledges that it will be difficult and could be impossible
      (a) for the Executive to find reasonably comparable employment after his
      employment terminates, and (b) to measure the amount of damages the Executive
      may suffer as a result of termination. Additionally, the Employer acknowledges
      that its general severance pay plans do not provide for mitigation, offset,
      or
      reduction of any severance payment received thereunder. Accordingly, the
      Employer further acknowledges that the payment of severance benefits under
      this
      Employment Agreement is reasonable and shall be liquidated damages. The
      Executive shall not be required to mitigate the amount of any payment provided
      for in this Employment Agreement by seeking other employment. Moreover, the
      amount of any payment provided for in this Employment Agreement shall not be
      reduced by any compensation earned or benefits provided as the result of
      employment of the Executive or as a result of the Executive being self-employed
      after termination of his employment.

    


    8.8
      Amendment
      and Waiver.
      This
      Employment Agreement may not be amended, released, discharged, abandoned,
      changed, or modified in any manner, except by an instrument in writing signed
      by
      each of the parties hereto. The failure of any party hereto to enforce at any
      time any of the provisions of this Employment Agreement shall not be construed
      to be a waiver of any such provision, nor affect the validity of this Employment
      Agreement or any part thereof or the right of any party thereafter to enforce
      each and every such provision. No waiver or any breach of this Employment
      Agreement shall be held to be a waiver of any other or subsequent
      breach.


    
      
        
        

      

      
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    8.9
      Payment
      of Legal Fees.
      The
      Employer is aware that after a Change in Control management could cause or
      attempt to cause the Employer to refuse to comply with its obligations under
      this Employment Agreement, or could institute or cause or attempt to cause
      the
      Employer to institute litigation seeking to have this Employment Agreement
      declared unenforceable, or could take or attempt to take other action to deny
      Executive the benefits intended under this Employment Agreement. In these
      circumstances, the purpose of this Employment Agreement would be frustrated.
      It
      is the Employer’s intention that the Executive not be required to incur the
      expenses associated with the enforcement of his rights under this Employment
      Agreement, whether by litigation or other legal action, because the cost and
      expense thereof would substantially detract from the benefits intended to be
      granted to the Executive hereunder. It is the Employer’s intention that the
      Executive not be forced to negotiate settlement of his rights under this
      Employment Agreement under threat of incurring expenses. Accordingly, if after
      a
      Change in Control occurs it appears to the Executive that (a) the Employer
      has
      failed to comply with any of its obligations under this Employment Agreement,
      or
      (b) the Employer or any other person has taken any action to declare this
      Employment Agreement void or unenforceable, or instituted any litigation or
      other legal action designed to deny, diminish, or to recover from the Executive
      the benefits intended to be provided to the Executive hereunder, the Employer
      irrevocably authorizes the Executive from time to time to retain counsel of
      his
      choice, at the Employer’s expense as provided in this Section 8.9, to represent
      the Executive in connection with the initiation or defense of any litigation
      or
      other legal action, whether by or against the Employer or any director, officer,
      stockholder, or other person affiliated with the Employer, in any jurisdiction.
      Notwithstanding any existing or previous attorney-client relationship between
      the Employer and any counsel chosen by the Executive under this Section 8.9,
      the
      Employer irrevocably consents to the Executive entering into an attorney-client
      relationship with that counsel, and the Employer and the Executive agree that
      a
      confidential relationship shall exist between the Executive and that counsel.
      The fees and expenses of counsel selected from time to time by the Executive
      as
      provided in this section shall be paid or reimbursed to the Executive by the
      Employer on a regular, periodic basis upon presentation by the Executive of
      a
      statement or statements prepared by such counsel in accordance with such
      counsel’s customary practices, up to a maximum aggregate amount of $200,000,
      whether suit be brought or not, and whether or not incurred in trial,
      bankruptcy, or appellate proceedings. The Employer’s obligation to pay the
      Executive’s legal fees provided by this Section 8.9 operates separately from and
      in addition to any legal fee reimbursement obligation the Employer may have
      with
      the Executive under any separate severance or other agreement. Anything in
      this
      Section 8.9 to the contrary notwithstanding however, the Employer shall not
      be
      required to pay or reimburse Executive’s legal expenses if doing so would
      violate section 18(k) of the Federal Deposit Insurance Act [12 U.S.C. 1828(k)]
      and Rule 359.3 of the Federal Deposit Insurance Corporation [12 CFR
      359.3].

    


    8.10
      Consultation
      with Counsel and Interpretation of this Employment
      Agreement.
      The
      Executive acknowledges and agrees that he has had the assistance of counsel
      of
      his choosing in the negotiation of this Employment Agreement, or he has chosen
      not to have the assistance of his own counsel. Both the Employer and the
      Executive have participated in the negotiation and drafting of this Employment
      Agreement, and they hereby agree that there shall not be strict interpretation
      against either party in connection with any review of this Employment Agreement
      in which interpretation thereof is an issue.

    


    8.11
      Compliance
      with Internal Revenue Code Section 409A.
      The
      Employer and the Executive intend that their exercise of authority or discretion
      under this Employment Agreement shall comply with section 409A of the Internal
      Revenue Code of 1986. If when the Executive’s employment terminates the
      Executive is a specified employee, as defined in section 409A of the Internal
      Revenue Code of 1986, and if any payments under this Employment Agreement,
      including Articles 4 or 5, will result in additional tax or interest to the
      Executive because of section 409A, then despite any provision of this Employment
      Agreement to the contrary the Executive will not be entitled to the payments
      until the earliest of (a) the date that is at least six months after termination
      of the Executive’s employment for reasons other than the Executive’s death, (b)
      the date of the Executive’s death, or (c) any earlier date that does not result
      in additional tax or interest to the Executive under section 409A. As promptly
      as possible after the end of the period during which payments are delayed under
      this provision, the entire amount of the delayed payments shall be paid to
      the
      Executive in a single lump sum. If any provision of this Employment Agreement
      does not satisfy the requirements of section 409A, such provision shall
      nevertheless be applied in a manner consistent with those requirements. If
      any
      provision of this Employment Agreement would subject the Executive to additional
      tax or interest under section 409A, the Employer shall reform the provision.
      However, the Employer shall maintain to the maximum extent practicable the
      original intent of the applicable provision without subjecting the Executive
      to
      additional tax or interest, and the Employer shall not be required to incur
      any
      additional compensation expense as a result of the reformed provision.
      References in this Employment Agreement to section 409A of the Internal Revenue
      Code of 1986 include rules, regulations, and guidance of general application
      issued by the Department of the Treasury under Internal Revenue Code section
      409A.


    
      
        
        

      

      
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      remainder of this page is left blank intentionally]


    
      
        
        

      

      
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    In
      Witness Whereof,
      the
      parties have executed this Employment Agreement as of the date first written
      above.

    


    
      	
              Executive

            	
              Southern
                Community Bank and Trust

            
	 	 	 
	
               /s/
                James Hastings

            	
              By:

            	
              /s/
                Jeff T. Clark

            
	 	 	 
	
              June
                17, 2008

            	
              Its:
                

            	
              President
                

            
	
              Date

            	 	 
	 	 	 
	 	
              Southern
                Community Financial Corporation

            
	 	 	 
	 	
              By:
                

            	
              /s/
                F. Scott Bauer

            
	 	 	 
	 	
              Its:
                

            	
              CEO

            


    

     

    
      
        
        

      

      
        20