Exhibit 10.52


 


Employment Agreement


 


This Employment
Agreement is entered into effective as of this 28th day of April, 2006, 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 Merle B. Andrews, 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 and 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,


 


Whereas,
the Executive and the Bank are parties to an Employment Agreement dated as of January 12, 2004, but the Executive and the Bank
intend that this Employment Agreement supersede and replace the previous employment agreement in its entirety, 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.


 


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. She shall serve the Employer faithfully, diligently, competently, and to
the best of her ability, and she shall exclusively devote her 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 the 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 April 28, 2006 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.


 






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Article 2


Compensation
and Other Benefits


 


2.1 Base
Salary. In consideration of the Executive’s performance of her 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 $170,000, 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.”


 


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 County or Surry 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.






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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 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.


 


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 her (“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 her 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


 


(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.


 


 



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(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 her 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 she is unable to and does not perform her 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.


 


(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






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(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


 


(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 her 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 15 miles from the location of the Bank’s principal executive offices on the date of this Employment
Agreement.


 


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 she is entitled through
the date on which termination becomes effective and any other benefits to which she may be entitled under the Employer’s
benefit plans and policies in effect on the date of termination.


 






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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 she is entitled through the date on which his termination becomes effective and any
other benefits to which she 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 her most recent Base Salary
level for the unexpired term of this Employment Agreement, but she 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.


 


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 her 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 her 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 her 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 –


 


(a) Merger. Southern Community Financial
Corporation merges into or consolidates with another corporation, or merges another corporation into Southern Community Financial
Corporation, and as a result less than a majority of the combined voting power of the resulting corporation immediately after the
merger or consolidation is held by persons who were holders of Southern Community Financial Corporation’s voting securities
immediately before the merger or consolidation. For purposes of this Employment Agreement, the term “person”
means an individual, corporation, partnership, trust, association, joint venture, pool, syndicate, sole proprietorship, unincorporated
organization, or other entity,


 


(b) Acquisition of Significant Share
Ownership. after the date of this Employment Agreement a report on Schedule 13D, Schedule TO, or another form or schedule (other
than Schedule 13G) is filed or is required to be filed under Sections 13(d) or 14(d) of the Securities Exchange Act of 1934, if
the schedule discloses that the filing person or persons acting in concert has or have become the beneficial owner of 25% or more
of the combined voting power of Southern Community Financial Corporation’s voting securities outstanding (but this paragraph
(b) shall not apply to beneficial ownership of voting shares held by the Employer in a fiduciary capacity or beneficial ownership
of voting shares held by an employee benefit plan of the Employer),


 


(c) Change in Board Composition.
during any period of two consecutive years, individuals who constitute Southern Community Financial Corporation’s board of
directors at the beginning of the two-year period cease for any reason to constitute at least a majority thereof; provided,
however, that – for purposes of this paragraph (c) – each director who is first elected by the board (or first
nominated by the board for election by stockholders) by a vote of at least two-thirds (2/3) of the directors who were directors
at the beginning of the period shall be deemed to have been a director at the beginning of the two-year period, or


 


(d) Sale of Assets. Southern Community
Financial Corporation sells to a third party all or substantially all of Southern Community Financial Corporation’s assets.
For this purpose, sale of all or substantially all of Southern Community Financial Corporation’s assets includes, but is
not limited to, sale of the Bank alone.


 


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


 


Article 6


Confidentiality and
Creative Work


 


6.1 Non-disclosure.
The Executive covenants and agrees that she 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,


 


 



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(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 her 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 her 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.


 


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.


 






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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) The Executive covenants and agrees that she will not, without advance written consent of the Employer,
compete directly or indirectly with the Employer for two years after termination of her 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.



 


		(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.



 






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(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.


 


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.


 


7.4Article
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 Her 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.


 


(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 she 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.






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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. Without
limiting the generality of the foregoing, the parties hereto acknowledge and agree that this Employment Agreement supersedes in
its entirety the Employment Agreement dated as of January 12, 2004, entered into by the Executive and the Bank, as amended or supplemented.
The January 12, 2004 Employment Agreement shall hereafter be void and of no force or effect.


 


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.


 


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 her 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.


 


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 her 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].


 






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8.10 Consultation
with Counsel and Interpretation of this Employment Agreement. The Executive acknowledges and agrees that she has had
the assistance of counsel of her choosing in the negotiation of this Employment Agreement, or she has chosen not to have the assistance
of her 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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In
Witness Whereof, the parties have executed this Employment Agreement as of the date first written above.





 





	EXECUTIVE	SOUTHERN COMMUNITY BANK AND TRUST
	 	 
	 	 
	/s/ Merle B. Andrews	By:	/s/ F. Scott Bauer
	Merle B. Andrews	 	F. Scott Bauer
	 	Its:	Chief Executive Officer
	 	 	 
	 	 	 
	 	SOUTHERN COMMUNITY FINANCIAL CORPORATION
	 	 
	 	By:	/s/ F. Scott Bauer
	 	 	F. Scott Bauer
	 	Its:	Chief Executive Officer







 


 






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