Exhibit
10.31

    


    WAIVER
AGREEMENT AND ACKNOWLEDGEMENT

    


    This Waiver Agreement and
Acknowledgement (the “Waiver Agreement”) is executed as of December 5, 2008 by
and among Southern Community Financial Corporation (the “Corporation”), Southern
Community Bank and Trust (the “Bank”) and the undersigned officer (“Officer”)
and in consideration of the benefits to all parties derived by the execution of
that certain Letter Agreement (including the Schedules thereto), and a
Securities Purchase Agreement – Standard Terms (including the Annexes thereto),
dated December 5, 2008 (together referred to herein as the “Purchase Agreement”)
between the Corporation and the United States Department of the Treasury (the
“Investor”), the receipt and sufficiency of which are hereby acknowledged by all
parties, the parties agree as follows:

    


    1.           Pursuant
to the terms of the Purchase Agreement, the Corporation, Bank and Officer hereby
agree to amend any and all compensation, bonus, incentive and other benefit
plans, arrangements and agreements (including golden parachute, severance and
employment agreements) (collectively, the “Benefit Plans”) between the Officer
and the Corporation and/or the Bank in such manner as may be necessary and
determined in the good faith discretion of the Corporation, during the period
that the Investor owns any debt or equity securities of the Corporation acquired
pursuant to the Purchase Agreement or the Warrant, in order to comply with
Section 111(b) of the Emergency Economic Stabilization Act of 2008, as
implemented by guidance or regulation thereunder that has been issued and is in
effect as of the Closing Date.  Terms not otherwise defined herein
shall have the same meaning ascribed to them in the Purchase
Agreement.

    


    2.           Officer
acknowledges and agrees that by executing this Waiver Agreement, he waives all
of his right to the receipt and objection to any recovery of any compensation,
bonus, incentive or other benefits (including golden parachute or severance
payments) as may be necessary, during the period that the Investor owns any debt
or equity securities of the Corporation acquired pursuant to the Purchase
Agreement or the Warrant, in order for the Corporation to comply with Section
111(b) of the Emergency Economic Stabilization Act of 2008 as implemented by
guidance or regulation thereunder that has been issued and is in effect as of
the Closing Date.  All other terms of the Benefit Plans will remain in
full force and effect after the date of this Agreement.

    


    3.           This
Waiver Agreement constitutes the valid, legal and binding obligation of the
Corporation, the Bank and Officer enforceable against each of them in accordance
with its terms.  This Agreement shall inure to the benefit of and be
binding upon any corporate successor of the Corporation or the
Bank.  This Agreement shall be governed by and construed in accordance
with the laws of the State of North Carolina.

    


    IN
WITNESS WHEREOF, the undersigned has executed this Waiver Agreement as of the
date first above written.

    


    
      
        
          
            
              	
                      OFFICER

                    
	 
      
	
                      Signature:

                    	
                      /s/ James
      Hastings

                    


            

          

        

      

    

    
      
        
          	
                  Name:

                	
                  James
Hastings

                


        

      

    

    
      
        
          	 
      
	
                  SOUTHERN
      COMMUNITY FINANCIAL CORPORATION

                
	 
      
	
                  By:

                	
                  /s/ F. Scott Bauer

                
	 
      	
                   Authorized
      Officer

                
	 
      
	
                  SOUTHERN
      COMMUNITY BANK AND TRUST

                
	 
      
	
                  By:

                	
                  /s/ Jeff T. Clark

                
	
                  Authorized
      Officer