Document:

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.

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

    

    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.

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

    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.

              

            

    

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

    

    (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.

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

    

    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.

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

    

    (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.

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

    

    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.

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

    

    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.

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

    

    

    [The
      remainder of this page is left blank intentionally]

    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

    

    

    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

            

    

     

    
      
        
        

      

      
        20Exhibit
      10.2:

    

    SOUTHERN
      COMMUNITY BANK AND TRUST 

    Salary
      Continuation Agreement of 

    James
      Hastings

    

    This
      Salary
      Continuation Agreement
      (this
“Agreement”) is entered into as of this 4th
      day
      of
June,
      2008,
      by and between Southern
      Community Bank and Trust,
      a North
      Carolina-chartered bank (the “Bank”), and James
      Hastings
      its
Executive
      Vice President/Chief Financial Officer (the
      “Executive”).

    

    WHEREAS,
      the
      Executive has contributed substantially to the success of the Bank and the
      Bank
      desires that the Executive continue in its employ;

    

    WHEREAS,
      to
      encourage the Executive to remain in the employment of the Bank, the Bank is
      willing to provide salary continuation benefits to the Executive under this
      Agreement, payable from the Bank’s general assets; 

    

    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 [12U.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 Bank, are contemplated insofar as the Bank is
      concerned;

    

    WHEREAS,
      the
      parties hereto intend that this Agreement shall be considered an unfunded
      arrangement maintained primarily to provide supplemental retirement benefits
      for
      the Executive, and to be considered a non-qualified benefit plan for purposes
      of
      the Employee Retirement Income Security Act of 1974, as amended (“ERISA”). The
      Executive is fully advised of the Bank’s financial status and understands that
      he is a general creditor of the Bank;

    

    NOW
      THEREFORE,
      in
      consideration of these premises and other good and valuable consideration,
      the
      receipt and sufficiency of which are hereby acknowledged, the Executive and
      the
      Bank hereby agree as follows.

    

    ARTICLE
      1 

    DEFINITIONS

    

    The
      following words and phrases used in this Agreement have the meanings specified.
      

    

    
      	
              1.1

            	
              “Accrual
                Balance”
                means the liability that should be accrued by the Bank under generally
                accepted accounting principles (“GAAP”) for the Bank’s obligation to the
                Executive under this Agreement, applying Accounting Principles Board
                Opinion No. 12 as amended by Statement of Financial Accounting Standards
                No. 106. The Accrual Balance shall be calculated using a Discount
                Rate
                determined by the Plan Administrator, resulting in an Accrual Balance
                at
                the Executive’s Normal Retirement Age that is equal to the present value
                of the normal retirement benefits assuming commencement at Normal
                Retirement Date of August 1,
                2017.

            

    

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

    

    The
      “Discount
      Rate”
      means
      the rate used by the Plan Administrator for determining the Accrual Balance.
      If
      required by its outside auditors, the Plan Administrator may adjust the Discount
      Rate to maintain the rate within reasonable standards according to GAAP. Unless
      otherwise changed by the Plan Administrator the Discount Rate shall be seven
      percent (7%). Any change in the Discount Rate shall not cause the Executive’s
      Account Balance to be reduced, but would only affect the future accounting
      accrual. 

    

    
      	
              1.2
                

            	
              “Actuarial
                (Actuarially) Equivalent”
                means a benefit of equivalent value differing in timing, payment
                period,
                or manner of payment to the Normal Annuity Form determined by generally
                accepted actuarial principles. The actuarial equivalent is calculated
                for
                different purposes, as follows:

            

    

    

    
      	 	
              (a)

            	
              For
                Benefits Not Paid as a Lump Sum:
                All alternate forms of distributions shall be Actuarially Equivalent
                to
                the Normal Annuity Form of distribution at a Participant’s Normal
                Retirement Date. The alternative form of payment shall be based on
                the
                1983
                Group Annuity Male Mortality Table,
                with an interest assumption of
                7.0%.

            

    

    

    
      	 	
              (b)

            	
              For
                Benefits Paid in a Lump Sum:
                Any lump sum payment (a form of benefit differing in time, period,
                or
                manner of payment from a specific benefit provided under this Agreement)
                shall be computed using the “1983 Group Annuity Male Mortality Table” and
                the “Applicable Interest Rate” where the “Applicable Interest Rate” shall
                mean the greater of either (i) seven percent (7%), or (ii) the 30
                Year US
                Treasury Bond Rate in effect as of the first of the month preceding
                the
                month of payment. 

            

    

    

    
      	
              1.3
                

            	
              “Beneficiary”
                means each designated person, or the estate of the deceased Executive,
                entitled to benefits, if any, upon the death of the Executive, determined
                according to Article 4. 

            

    

    

    
      	
              1.4
                

            	
              “Change
                in Control”
                shall mean a change in control as defined in Internal Revenue Code
                Section
                409A and rules, regulations, and guidance of general application
                thereunder issued by the Department of the Treasury, including –
                

            

    

    

    
      	
            	(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, or

            

    

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    

    
      	
            	(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.
                

            

    

    

    
      	
              1.5

            	
               “Code”
                means the Internal Revenue Code of 1986, as amended, and rules,
                regulations, and guidance of general application issued thereunder
                by the
                Department of the Treasury. 

            

    

    

    
      
        
          	1.6	
                  “Disability”
                    means that a Participant is either:

                

        

      

    

    

    
      	 	
              (a)
                

            	
              Unable
                to engage in any substantial gainful activity by reason of any medically
                determinable physical or mental impairment which can be expected
                to result
                in death or can be expected to last for a continuous period of not
                less
                than 12 months, or

            

    

    

    
      	
            	(b)	
              By
                reason of any medically determinable physical or mental impairment
                (which
                can be expected to result in death or can be expected to last for
                a
                continuous period of not less than 12 months) receiving income replacement
                benefits for a period of three (3) or more months under an accident
                and
                health plan covering employees of the
                Employer.

            

    

    

    
      	
              1.7
                

            	
              “Early
                Termination”
                means Separation from Service before Normal Retirement Age for reasons
                other than death, Disability, Termination for Cause, or after a Change
                in
                Control. 

            

    

    

    
      	1.8	
              “Effective
                Date”
                means July 1, 2008.

            

    

    

    
      	
              1.9

            	
               “Intentional,”
                for purposes of this 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 Bank.
                

            

    

    

    
      	1.10	
              “Normal
                Retirement Age”
                means August 1, 2017.

            

      	 	The Participant’s date of birth is July 21,
              1952.

    

     

    
      	1.11	
              “Plan
                Administrator”
                or “Administrator”
                means the plan administrator described in Article
                8. 

            

    

    

    
      	
              1.12
                

            	
              “Plan
                Year”
                means a twelve-month period commencing on January 1 and ending on
                December
                31 of each year. The initial Plan Year shall commence on July 1,
                2008 and
                end December 31, 2008.

            

    

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

    

    
      	
              1.13
                

            	
              “Separation
                from Service”
                means the Executive’s service (as an executive and/or independent
                contractor to the Bank and any member of a controlled group, as defined
                in
                Code Section 414), terminates for any reason, other than because
                of a
                leave of absence approved by the Bank or the Executive’s death. For
                purposes of this Agreement, if there is a dispute about the employment
                status of the Executive or the date of the Executive’s Separation from
                Service, the Bank shall have the sole and absolute right to decide
                the
                dispute unless a Change in Control shall have occurred.
                

            

    

    

    
      	
              1.14
                

            	
              “Termination
                for Cause”
                and “Cause”
                shall have the same meaning specified in any effective Severance
                or
                Employment Agreement existing on the date hereof or hereafter entered
                into
                between the Executive and the Bank. If the Executive is not a party
                to a
                severance or employment agreement containing a definition of “termination
                for cause”, then Termination
                for Cause
                shall mean the Bank terminated the Executive’s employment because of any
                of the following reasons: 

            

    

    

    
      	 	
              (a)
                

            	
              the
                Executive’s gross negligence or gross neglect of duties or intentional and
                material failure to perform stated duties after written notice thereof,
                or
                

            

    

    

    
      	 	
              (b)

            	
              disloyalty
                or dishonesty by the Executive in the performance of the Executive’s
                duties, or a breach of the Executive’s fiduciary duties for personal
                profit, in any case whether in the Executive’s capacity as a director or
                officer, or 

            

    

    

    
      	 	
              (c)
                

            	
              intentional
                wrongful damage by the Executive to the business or property of the
                Bank
                or its affiliates, including without limitation the reputation of
                the
                Bank, which in the judgment of the Bank causes material harm to the
                Bank
                or affiliates, or 

            

    

    

    
      	 	
              (d)
                

            	
              a
                willful violation by the Executive of any applicable law or significant
                policy of the Bank or an affiliate that, in the Bank’s judgment, results
                in an adverse effect on the Bank or any affiliate, regardless of
                whether
                the violation leads to criminal prosecution or conviction. For purposes
                of
                this Agreement, applicable laws include any statute, rule, regulatory
                order, statement of policy, or final cease-and-desist order of any
                governmental agency or body having regulatory authority over the
                Bank, or
                

            

    

    

    
      	 	
              (e)

            	
              the
                Executive is removed from office or permanently prohibited from
                participating in the Bank’s affairs by an order issued under Section
                8(e)(4) or Section 8(g)(1) of the Federal Deposit Insurance Act,
                12 U.S.C.
                1818(e)(4) or (g)(1), or 

            

    

    

    
      	 	
              (f)

            	
              conviction
                of the Executive for or plea of no contest to a felony or conviction
                of or
                plea of no contest to a misdemeanor involving moral turpitude, or
                the
                actual incarceration of the Executive.

            

    

    

    
      	
              1.15
                

            	
              Year
                of Vesting Service.
                Shall mean each calendar year in which the Executive completes 1,000
                or
                more hours of service in the employ of the Bank.
                

            

    

     

    
      
        ARTICLE
          2     LIFETIME
          BENEFITS

      

    

    

    
      	
              2.1
                

            	
              Normal
                Retirement Benefit.
                Unless a Separation
                from Service
                or
                a Change
                in Control
                occurs before Normal Retirement Age, when the Executive attains his
                Normal
                Retirement Age the Bank shall pay to the Executive the benefit described
                in this Section 2.1(a) instead of any other benefit under this
                Agreement

            

    

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

    

    
      	 	
              (a)

            	
              Amount
                of Normal Form of benefit.
                The annual Normal Retirement benefit under this Section 2.1 is $40,000,
                which shall be paid in monthly installments in the monthly amount
                of
                $3,333.33 for the Life of the Executive (Normal Form is a Life Annuity).
                

            

    

    

    
      	 	
              (b)

            	
              Payment
                of benefit.
                Subject to the six month delay provision in Section 2.7 herein, the
                Bank
                shall pay the annual benefit to the Executive in 12 equal monthly
                installments payable on the first day of each month, beginning with
                the
                month immediately after the month in which the Executive attains
                the
                Normal Retirement Age. The Normal Retirement monthly benefit as provided
                in Section 2.1(a) above, shall be paid to the Executive for the
                Executive’s lifetime with the last payment ceasing as of the first day of
                the month preceding the Executive’s death.

            

    

    .
      

    
      	 	
              (c)

            	
              Alternative
                Forms of Payment. Executive
                may elect to receive his Normal Retirement Benefit payable under
                this
                Agreement payable in a Form other than a Life Annuity (as provided
                above
                in Section 2.1(a) above), provided he elects to do so either on his
                initial Election Form or a Change of Election Form. Any Change of
                Election
                Form must be in accordance with IRC 409A and such Change of Election
                Form
                must be received by the Plan Administrator at least 12 months prior
                to the
                date payment of benefits are to other commence under this Agreement.
                

            

    

    

    Accordingly,
      a Participant may elect, in lieu of a Life Annuity, to receive his Normal
      Retirement Benefit in one of the following Alternative Forms of
      Payment:

    

    
      	 	
              (i)

            	
              Life
                Annuity with either a 120 or 180 guaranteed monthly
                payments;

            

    

    
      	 	
              (ii)

            	
              Joint
                and 50% (or 100%) Survivor Annuity.

            

    

    

    Any
      Alternative Form of Payment provide herein shall be the Actuarial Equivalent
      of
      the Normal Form (Life Annuity) of payment. 

    

    
      	
               

            	
              If
                the Executive’s Separation
                from Service
                thereafter is a Termination
                for Cause
                or
                if this Agreement terminates under Article 5, no further benefits
                shall be
                paid.

            

    

    

    
      	
              2.2
                

            	
              Early
                Termination Benefit.
                Upon Early Termination as defined in Section 1.7, the Bank shall
                pay to
                the Executive the benefit described in this Section 2.2(a) instead
                of any
                other benefit under this Agreement.

            

    

    

    
      	 	
              (a)

            	
              Amount
                of benefit.
                The Executive’s vested Accrual Balance as of the end of the month
                preceding his Early Termination shall be converted (without discounting
                for the time value of money) as of his Normal Retirement Date into
                a Life
                Annuity (or other Alternative Form of Payment as provided in Section
                2.1(c) above), based on the Actuarial Equivalent of his vested Accrual
                Balance as of such date.

            

    

    
      	 	 	 

    

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

    

    
      	
            	(b)	
              Payment
                of benefit.
                The Bank shall commence payment of the monthly retirement benefit
                as
                computed in Section 2.2 above beginning with the later
                of
                (i)
                the seventh month after the Executive’s Separation from Service, or
                (ii)
                the month immediately after the month in which the Executive attains
                his
                Normal Retirement Age. The monthly benefit shall be paid to the Executive
                for the Executive’s lifetime, subject to any Alternative Form of Payment
                the Executive may have elected in accordance with Section 2.1(c)
                herein.
                

            

    

    

    
      	 	
              (c)

            	 	
              Vesting
                of Accrued Balance.
                The Vested amount of a Executive’s Accrued Balance shall be determined on
                the basis of the Executive’s number of Years of Vesting Service according
                to the following schedule:

            

    

    

      
        	
                Vesting Schedule

              	 
	
                Years of Vesting Service 

              	 	
                Percent Vested

              	 
	
                Less
                  than 3

              	 	 	
                0

              	
                %

              
	
                3

              	 	 	
                33
                  1/3

              	
                %

              
	
                4

              	 	 	
                66
                  2/3

              	
                %

              
	
                5
                  or more years

              	 	 	
                100

              	
                %

              

      

    

    

    
      	
              2.3
                

            	
              Disability
                Benefit.
                Upon Separation from Service because of Disability before Normal
                Retirement Age, the Bank shall pay to the Executive the benefit described
                in this Section 2.3(a) instead of any other benefit under this
                Agreement.

            

    

    

    
      	 	
              (a)

            	
              Amount
                of benefit.
                The Executive’s vested Accrual Balance as of the end of the month
                preceding the date of his Disability shall be converted (without
                discounting for the time value of money) as of his Normal Retirement
                Date
                into a Life Annuity (or other Alternative Form of Payment as provided
                in
                Section 2.1(c) above), based on the Actuarial Equivalent of his vested
                Accrual Balance as of such date. 

            

    

    

    
      	 	
              (b)
                

            	
              Payment
                of benefit.
                The Bank shall pay the Disability benefit to the Executive in 12
                equal
                monthly installments on the first day of each month beginning with
                the
                later
                of
                (i)
                the seventh month after the Executive’s Separation from Service, or (ii)
                the month immediately after the month in which the Executive attains
                his
                Normal Retirement Age. 

            

    

     

    
      	
              2.4
                

            	
              Change-in-Control
                Benefit.
                If a Change
                in Control
                occurs after the Effective Date of this Agreement but before the
                Executive’s Normal Retirement Age and before his Separation from Service,
                the Bank shall pay to the Executive the benefit described in this
                Section
                2.4(a) instead of any other benefit under this
                Agreement.

            

    

    

    
      	 	
              (a)
                

            	
              Amount
                of benefit:
                The benefit under this Section 2.4 is the Accrual Balance existing
                when
                the Change of Control occurs.

            

    

    

    
      	 	
              (b)
                

            	
              Payment
                of benefit:
                The Bank shall pay the Change-in-Control benefit under Section 2.4
                of this
                Agreement to the Executive in a single lump sum within ten (10) days
                after
                the Change in Control. If the Executive receives the benefit under
                this
                Section 2.4 because of the occurrence of a Change in Control, the
                Executive shall not be entitled to claim additional benefits under
                Section
                2.4 if an additional Change in Control occurs thereafter.
                

            

    

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

    

    
      	
              2.5
                

            	
              Occurrence
                of a Change in Control: Lump-sum Payment of Normal Retirement Benefit,
                Early Termination Benefit, or Disability Benefit Being Paid.
                If
                a Change in Control occurs at any time during the salary continuation
                benefit payment period and if when the Change in Control occurs the
                Executive is receiving or is entitled to receive at his Normal Retirement
                Age the benefit provided by Sections 2.1(b), 2.2(b), or 2.3(c), the
                Bank
                shall pay in a lump sum the present value of the Actuarial Equivalent
                of
                any remaining salary continuation benefits to the Executive in a
                single
                lump sum within ten (10) days after the Change in Control.
                

            

    

    

    
      	
              2.6
                

            	
              Contradiction
                Between this Agreement and Schedule A.
                If there is a contradiction between this Agreement and Schedule
                A
                attached hereto concerning the amount of a particular benefit due
                the
                Executive under Sections 2.2, 2.3, or 2.4 hereof, then the amount
                of the
                benefit determined under this Agreement shall control. If the Plan
                Administrator changes the Discount Rate employed for purposes of
                calculating the Accrual Balance, the Plan Administrator shall prepare
                or
                cause to be prepared a revised Schedule A, which shall supersede
                and
                replace any and all Schedules A previously prepared under or attached
                to
                this Agreement. However, any
                change in the Discount Rate shall not cause the Executive’s Account
                Balance to be reduced, but would only affect the future accounting
                accrual.

            

    

    

    
      	
              2.7 

            	
              Savings
                Clause Relating to Compliance with Code Section 409A.
                Despite any contrary provision of this Agreement, if when the Executive’s
                employment terminates the Executive is a Specified
                Employee,
                as defined in Code Section 409A, and if any payments under Article
                2 of
                this Agreement will result in additional tax or interest to the Executive
                because of Section 409A, the Executive will not be entitled to the
                payments under Article 2 until the earliest
                of:

            

    

    

    
      	 	
              (i)

            	
              the
                date that is at least six (6) months after termination of the Executive’s
                employment for reasons other than the Executive’s death,
                or

            

    

    

    
      	
            	(ii)	
              the
                date of the Executive’s death, or

            

    

    

    
      	
            	(iii)	
              any
                earlier date that does not result in additional tax or interest to
                the
                Executive under Section 409A. 

            

    

    

    If
      any
      provision of this Agreement would subject the Executive to additional tax or
      interest under Section 409A of the Code or result in a violation of Section
      409A
      of Code, the Bank shall reform such provision. However, the Bank 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 Bank shall not be required to incur any additional compensation expense
      as a
      result of the reformed provision. References in this Agreement to Section 409A
      of the Code include rules, regulations, and guidance of general application
      issued by the Department of the Treasury under Code Section 409A.

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

    

    
      	
              2.8

            	
              One
                Benefit Only.
                Despite anything to the contrary in this Agreement, the Executive
                and
                Beneficiary are entitled to one benefit only under this Agreement,
                which
                shall be determined by the first event to occur that is dealt with
                by this
                Agreement. Except as provided in Section 2.5 or Article 3, subsequent
                occurrence of events dealt with by this Agreement shall not entitle
                the
                Executive or Beneficiary to other or additional benefits under this
                Agreement.

            

    

    

    ARTICLE
      3   DEATH BENEFITS

    

    
      	
              3.1
                

            	
              Death
                During Active Service.
                If the Executive dies before a Separation
                from Service,
                at the death of the Executive, the Executive’s Beneficiary shall be
                entitled to an amount payable in a lump sum amount equal to the Accrual
                Balance existing at the time of the Executive’s death, unless the
                Change-in-Control benefit shall have previously been paid to the
                Executive.

            

    

    

    No
      benefit shall be paid to the Beneficiary under the above paragraph, if the
      Change-in-Control benefit shall have previously been paid to the Executive.
      If a
      benefit is payable to the Executive’s Beneficiary under the paragraph above, the
      benefit shall be paid in a single lump sum 90 days after the Executive’s death.
      However, no benefits under this Agreement shall be paid or payable to the
      Executive or the Executive’s Beneficiary if this Agreement is terminated under
      Article 5. 

    

    
      	
              3.2

            	
              Death
                after Separation from Service.
                If the Executive dies after a Separation
                from Service
                and
                if such Separation from Service was not as a result of a Termination
                for
                Cause, at the Executive’s death the Executive’s Beneficiary shall be
                entitled to a monthly payment based on the Alternative Form of Payment
                the
                Executive elected in accordance with Section 2.1(c), provided he
                elected a
                Alternative Form of Payment in lieu of the Normal Annuity Form which
                is a
                Life Annuity. However, no payment shall be made to a Beneficiary
                under
                this Section 3.2 if a lump sum payment has previously been made under
                the
                Change-in-Control benefit payable under Section 2.5 above. However,
                no
                benefits under this Agreement shall be paid or payable to the Executive
                or
                the Executive’s Beneficiary if this Agreement is terminated under Article
                5. 

            

    

    

    ARTICLE
      4   BENEFICIARIES

    

    
      	
              4.1
                

            	
              Beneficiary
                Designations.
                The Executive shall have the right to designate at any time a Beneficiary
                to receive any benefits payable under this Agreement upon the death
                of the
                Executive. The Beneficiary designated under this Agreement may be
                the same
                as, or different from, the beneficiary designation under any other
                benefit
                plan of the Bank in which the Executive participates.
                

            

    

    

    
      	
              4.2 

            	
              Beneficiary
                Designation: Change.
                The Executive shall designate a Beneficiary by completing and signing
                the
                Beneficiary Designation Form and delivering it to the Plan Administrator
                or its designated agent. The Executive’s Beneficiary designation shall be
                deemed automatically revoked if the Beneficiary predeceases the Executive
                or if the Executive names a spouse as Beneficiary and the marriage
                is
                subsequently dissolved. The Executive shall have the right to change
                a
                Beneficiary by completing, signing, and otherwise complying with
                the terms
                of the Beneficiary Designation Form and the Plan Administrator’s rules and
                procedures, as in effect from time to time. Upon the acceptance by
                the
                Plan Administrator of a new Beneficiary Designation Form, all Beneficiary
                designations previously filed shall be cancelled. The Plan Administrator
                shall be entitled to rely on the last Beneficiary Designation Form
                filed
                by the Executive and accepted by the Plan Administrator before the
                Executive’s death.

            

    

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

    

    
      	
              4.3
                

            	
              Acknowledgment.
                No designation or change in designation of a Beneficiary shall be
                effective until received, accepted, and acknowledged in writing by
                the
                Plan Administrator or its designated agent.

            

    

    

    
      	
              4.4
                

            	
              No
                Beneficiary Designation.
                If the Executive dies without a valid beneficiary designation, or
                if all
                designated Beneficiaries predecease the Executive, then the Executive’s
                spouse shall be the designated Beneficiary. If the Executive has
                no
                surviving spouse, the benefits shall be made to the personal
                representative of the Executive’s estate.

            

    

    

    
      	
              4.5
                

            	
              Facility
                of Payment.
                If a benefit is payable to a minor, to a person declared incapacitated,
                or
                to a person incapable of handling the disposition of his or her property,
                the Bank may pay such benefit to the guardian, legal representative,
                or
                person having the care or custody of the minor, incapacitated person,
                or
                incapable person. The Bank may require proof of incapacity, minority,
                or
                guardianship as it may deem appropriate before distribution of the
                benefit. Distribution shall completely discharge the Bank from all
                liability for the benefit. 

            

    

    

    ARTICLE
      5   GENERAL LIMITATIONS

    

    
      	
              5.1
                

            	
              Termination
                for Cause.
                Despite any contrary provision of this Agreement, the Bank shall
                not pay
                any benefit under this Agreement and this Agreement shall terminate
                if a
                Separation
                from Service
                is
                the result of Termination
                for Cause

            

    

    

    
      	
              5.2

            	
              Suicide
                or Misstatement. The
                Bank shall not pay any benefit under this Agreement and the Beneficiary
                shall be entitled to no benefits if the Executive commits suicide
                within
                two years after the date of this Agreement or if the Executive makes
                any
                material misstatement of fact on any application or resume provided
                to the
                Bank or on any life insurance application for benefits which death
                benefits would be payable to the Bank.

            

    

    

    
      	
              5.3

            	
              Removal.
                If the Executive is removed from office or permanently prohibited
                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), all obligations of the Bank under this Agreement
                shall terminate as of the effective date of the order.
                

            

    

    

    
      	
              5.4

            	
              Default.
                Notwithstanding any provision of this Agreement to the contrary,
                if the
                Bank is in “default” or “in danger of default,” as those terms are defined
                in Section 3(x) of the Federal Deposit Insurance Act, 12 U.S.C. 1813(x),
                all obligations under this Agreement shall
                terminate.

            

    

    

    
      	
              5.5

            	
              FDIC
                Open-Bank Assistance.
                All obligations under this Agreement shall terminate, except to the
                extent
                determined that continuation of the contract is necessary for the
                continued operation of the Bank, when the Federal Deposit Insurance
                Corporation enters into an agreement to provide assistance to or
                on behalf
                of the Bank under the authority contained in Federal Deposit Insurance
                Act
                Section 13(c). 12 U.S.C.
                1823(c).

            

    

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

    

    However,
      rights of the parties that have already vested in accordance with Section 2.2(c)
      shall not be affected by such action. 

    

    ARTICLE
      6  CLAIMS
      AND REVIEW PROCEDURES

    

    
      	
              6.1
                

            	
              Claims
                Procedure.
                A
                person or beneficiary (“claimant”) who has not received benefits under
                this Agreement that he or she believes should be paid may make a
                claim for
                such benefits as follows –

            

    

    

    
      	 	
              (a)

            	
              Initiation
                – written claim.
                The claimant initiates a claim by submitting to the Administrator
                a
                written claim for the benefits. If the claim relates to the contents
                of a
                notice received by the claimant, the claim must be made within 60
                days
                after the notice was received by the claimant. All other claims must
                be
                made within 180 days after the date of the event that caused the
                claim to
                arise. The claim must state with particularity the determination
                desired
                by the claimant.

            

    

    

    
      	 	
              (b)
                

            	
              Timing
                of Bank response.
                The Bank shall respond to the claimant within 90 days after receiving
                the
                claim. If the Bank determines that special circumstances require
                additional time for processing the claim, the Bank may extend the
                response
                period by an additional 90 days by notifying the claimant in writing
                before the end of the initial 90-day period that an additional period
                is
                required. The notice of extension must state the special circumstances
                and
                the date by which the Bank expects to render its
                decision.

            

    

    

    
      	 	
              (c)

            	
              Notice
                of decision.
                If the Bank denies part or all of the claim, the Bank shall notify
                the
                claimant in writing of the denial. The Bank shall write the notification
                in a manner calculated to be understood by the claimant. The notification
                shall set forth – 

            

    

    

    
      	
            	(i)	
              the
                specific reasons for the denial, 

            

    

     

    
      	
            	(ii)	
              a
                reference to the specific provisions of the Agreement on which the
                denial
                is based, 

            

    

    

    
      
        
          	
                	(iii)	
                  a
                    description of any additional information or material necessary
                    for the
                    claimant
                    to perfect the claim and an explanation of why it is needed,
                    

                

        

      

    

    

    
      	 	
              (iv)
                

            	
              an
                explanation of the Agreement’s review procedures and the time limits
                applicable to such procedures, and 

            

    

    

    
      	 	
              (v)
                

            	
              a
                statement of the claimant’s right to bring a civil action under ERISA
                Section 502(a) following an adverse benefit determination on review.
                

            

    

    

    
      	
              6.2 

            	
              Review
                Procedure.
                If the Bank denies part or all of the claim, the claimant shall have
                the
                opportunity for a full and fair review by the Bank of the denial,
                as
                follows – 

            

    

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

    

    
      	
            	(a)	
              Initiation
                – written request.
                To initiate the review, the claimant, within 60 days after
                receiving the Bank’s notice of denial, must file with the Bank a written
                request
                for review.

            

    

    

    
      	 	
              (b)
                

            	
              Additional
                submissions – information access.
                The claimant shall then have the opportunity to submit written comments,
                documents, records, and other information relating to the claim.
                The Bank
                shall also provide the claimant, upon request and free of charge,
                reasonable access to and copies of all documents, records, and other
                information relevant (as defined in applicable ERISA regulations)
                to the
                claimant’s claim for benefits.

            

    

    

    
      	 	
              (c)

            	
              Considerations
                on review.
                In considering the review, the Bank shall take into account all materials
                and information the claimant submits relating to the claim, without
                regard
                to whether the information was submitted or considered in the initial
                benefit determination.

            

    

    

    
      	 	
              (d)

            	
               Timing
                of Bank response.
                The Bank shall respond in writing to the claimant within 60 days
                after
                receiving the request for review. If the Bank determines that special
                circumstances require additional time for processing the claim, the
                Bank
                may extend the response period by an additional 60 days by notifying
                the
                claimant in writing before the end of the initial 60-day period that
                an
                additional period is required. The notice of extension must state
                the
                special circumstances and the date by which the Bank expects to render
                its
                decision.

            

    

    

    
      	 	
              (e)

            	
              Notice
                of decision.
                The Bank shall notify the claimant in writing of its decision on
                review.
                The Bank shall write the notification in a manner calculated to be
                understood by the claimant. The notification shall set forth -
                

            

    

    

    
      	
            	(i)	
              the
                specific reason for the denial, 

            

    

    

    
      	 	
              (ii)
                

            	
              a
                reference to the specific provisions of the Agreement on which the
                denial
                is based, 

            

    

    

    
      	 	
              (iii)
                

            	
              a
                statement that the claimant is entitled to receive, upon request
                and free
                of charge, reasonable access to and copies of all documents, records,
                and
                other information relevant (as defined in applicable ERISA regulations)
                to
                the claimant’s claim for benefits, and

            

    

    

    
      	 	
              (iv)
                

            	
              a
                statement of the claimant’s right to bring a civil action under ERISA
                Section 502(a). 

            

    

    

    
      	
              6.3
                

            	
              Reimbursement
                of Expenses.
                If the claimant prevails at the conclusion of the claims and review
                procedure outlined in this Article 6, including any civil action
                brought
                by the claimant under ERISA Section 502(a), the Bank shall reimburse
                the
                claimant for all legal expenses incurred by the claimant in the claims
                and
                review procedure. 

            

    

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

    

    ARTICLE
      7   MISCELLANEOUS

     

    
      	
              7.1
                

            	
              Amendments
                and Termination.
                Subject to Section 7.15 of this Agreement, this Agreement may be
                amended
                solely by a written agreement signed by the Bank and by the Executive;
                and
                except for termination occurring under Article 5, this Agreement
                may be
                terminated solely by a written agreement signed by the Bank and by
                the
                Executive.

            

    

     

    
      	
              7.2
                

            	
              Binding
                Effect.
                This Agreement shall bind the Executive, the Bank, and their
                Beneficiaries, survivors, executors, successors, administrators,
                and
                transferees. 

            

    

    

    
      	
              7.3

            	
              No
                Guarantee of Employment.
                This Agreement is not an employment policy or contract. It does not
                give
                the Executive the right to remain an employee of the Bank nor does
                it
                interfere with the Bank’s right to discharge the Executive. It also does
                not require the Executive to remain an employee or interfere with
                the
                Executive’s right to terminate employment at any
                time.

            

    

     

    
      	
              7.4
                

            	
              Non-Transferability.
                Benefits under this Agreement cannot be sold, transferred, assigned,
                pledged, attached, or encumbered in any
                manner.

            

    

     

    
      	
              7.5
                

            	
              Successors;
                Binding Agreement.
                By an assumption agreement in form and substance satisfactory to
                the
                Executive, the Bank shall require any successor (whether direct or
                indirect, by purchase, merger, consolidation, or otherwise) to all
                or
                substantially all of the business or assets of the Bank to expressly
                assume and agree to perform this Agreement in the same manner and
                to the
                same extent that the Bank would be required to perform this Agreement
                if
                no such succession had occurred.

            

    

     

    
      	
              7.6
                

            	
              Tax
                Withholding.
                The Bank shall withhold any taxes that are required to be withheld
                from
                the benefits provided under this
                Agreement.

            

    

     

    
      	
              7.7
                

            	
              Applicable
                Law.
                This Agreement and all rights hereunder shall be governed by the
                laws of
                the State of North Carolina, except to the extent preempted by the
                laws of
                the United States of America. 

            

    

    

    
      	
              7.8
                

            	
              Unfunded
                Arrangement.
                The Executive and Beneficiary are general unsecured creditors of
                the Bank
                for the payment of benefits under this Agreement. The benefits represent
                the mere promise by the Bank to pay the benefits. Rights to benefits
                are
                not subject in any manner to anticipation, alienation, sale, transfer,
                assignment, pledge, encumbrance, attachment, or garnishment by creditors.
                Any insurance on the Executive’s life is a general asset of the Bank to
                which the Executive and Beneficiary have no preferred or secured
                claim.
                

            

    

    

    
      	
              7.9
                

            	
              Entire
                Agreement.
                This Agreement constitutes the entire agreement between the Bank
                and the
                Executive concerning the subject matter. No rights are granted to
                the
                Executive under this Agreement other than those specifically set
                forth.
                

            

    

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

    

    
      	
              7.10
                

            	
              Severability.
                If any provision of this Agreement is held invalid, such invalidity
                shall
                not affect any other provision of this Agreement not held invalid,
                and
                each such other provision shall continue in full force and effect
                to the
                full extent consistent with law. If any provision of this Agreement
                is
                held invalid in part, such invalidity shall not affect the remainder
                of
                the provision not held invalid, and the remainder of such provision
                together with all other provisions of this Agreement shall continue
                in
                full force and effect to the full extent consistent with law.
                

            

    

    

    
      	
              7.11
                

            	
              Headings.
                Caption headings and subheadings herein are included solely for
                convenience of reference and shall not affect the meaning or
                interpretation of any provision of this Agreement.
                

            

    

    

    
      	
              7.12

            	
              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, to the following addresses or to such other
                address
                as either party may designate by like notice. If to the Bank, notice
                shall
                be given to:

            

    

    

    Board
      of
      Directors 

    Southern
      Community Bank and Trust 

    4605
      Country Club Road 

    Winston-Salem,
      North Carolina 27104 

    

    or
      to
      such other or additional person or persons as the Bank shall have designated
      to
      the Executive in writing. If to the Executive, notice shall be given to the
      Executive at the Executive’s address appearing on the Bank’s records, or to such
      other or additional person or persons as the Executive shall have designated
      to
      the Bank in writing. 

    

    
      	
              7.13

            	
              Payment
                of Legal Fees.
                The Bank is aware that after a Change
                in Control
                management of the Bank could cause or attempt to cause the Bank to
                refuse
                to comply with its obligations under this Agreement, or could institute
                or
                cause or attempt to cause the Bank to institute litigation seeking
                to have
                this Agreement declared unenforceable, or could take or attempt to
                take
                other action to deny Executive the benefits intended under this Agreement.
                In these circumstances the purpose of this Agreement would be
                frustrated.

            

    

    

    It
      is the
      intention of the Bank that the Executive not be required to incur the expenses
      associated with the enforcement of rights under this 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 intention of the Bank that the Executive not be forced
      to
      negotiate settlement of rights under this Agreement under threat of incurring
      expenses. Accordingly, if after a Change
      in Control
      occurs
      it appears to the Executive that:

    

    
      	 	
              (i)

            	
              the
                Bank has failed to comply with any of its obligations under this
                Agreement, or

            

    

    

    
      	 	
              (ii)

            	
              the
                Bank or any other person has taken any action to declare this 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,
                

            

    

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

    

    the
      Bank
      irrevocably authorizes the Executive from time to time to retain counsel of
      the
      Executive’s choice (at the Bank’s expense as provided in this Section 7.13) to
      represent the Executive in the initiation or defense of any litigation or other
      legal action, whether by or against the Bank or any director, officer,
      stockholder, or other person affiliated with the Bank, in any jurisdiction.
      

    

    Despite
      any existing or previous attorney-client relationship between the Bank and
      any
      counsel chosen by the Executive under this Section 7.13, the Bank irrevocably
      consents to the Executive entering into an attorney-client relationship with
      that counsel, and the Bank 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 Bank 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 $250,000, whether suit be brought or not, and whether or
      not
      incurred in trial, bankruptcy, or appellate proceedings.

    

    The
      Bank’s obligation to pay the Executive’s legal fees provided by this Section
      7.13 operates separately from and in addition to any legal fee reimbursement
      obligation the Bank may have with the Executive under any separate employment,
      severance, or other agreement between the Executive and the Bank. Despite any
      contrary provision in this Section 7.13 however, the Bank shall not be required
      to pay or reimburse the 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].

     

    
      	
              7.14

            	
              Termination
                or Modification of Agreement Because of Changes in Law, Rules or
                Regulations.
                The Bank is entering into this Agreement on the assumption that certain
                existing tax laws, rules, and regulations will continue in effect
                in their
                current form. If that assumption materially changes and the change
                has a
                material detrimental effect on this Agreement, then the Bank reserves
                the
                right to terminate or modify this Agreement accordingly, subject
                to the
                written consent of the Executive, which shall not be unreasonably
                withheld. This Section 7.14 shall become null and void effective
                immediately upon an event that is considered a Change in Control.
                

            

    

    

    ARTICLE
      8 ADMINISTRATION OF AGREEMENT

    

    
      	
              8.1
                

            	
              Plan
                Administrator Duties.
                This Agreement shall be administered by a Plan Administrator consisting
                of
                the Bank’s Board of Directors or such Committee or person(s) as the Board
                shall appoint. The Executive may be a member of the Plan Administrator.
                The Plan Administrator shall also have the discretion and authority
                to
                (i)
                make, amend, interpret, and enforce all appropriate rules and regulations
                for the administration of this Agreement and (ii)
                decide or resolve any and all questions, including interpretations
                of this
                Agreement, as may arise in connection with the Agreement.
                

            

    

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

    

    
      	
              8.2
                

            	
              Agents.
                In the administration of this Agreement, the Plan Administrator may
                employ
                agents and delegate to them such administrative duties as it sees
                fit
                (including acting through a duly appointed representative) and may
                from
                time to time consult with counsel, who may be counsel to the Bank.
                

            

    

    

    
      	
              8.3
                

            	
              Binding
                Effect of Decisions.
                The decision or action of the Plan Administrator with respect to
                any
                question arising out of or in connection with the administration,
                interpretation, and application of the Agreement and the rules and
                regulations promulgated hereunder shall be final and conclusive and
                binding upon all persons having any interest in the Agreement. No
                Executive or Beneficiary shall be deemed to have any right, vested
                or
                non-vested, regarding the continued use of any previously adopted
                assumptions, including but not limited to the Discount Rate and
                calculation method described in Section 1.1.

            

    

    

    
      	
              8.4
                

            	
              Indemnity
                of Plan Administrator.
                The Bank shall indemnify and hold harmless the members of the Plan
                Administrator against any and all claims, losses, damages, expenses,
                or
                liabilities arising from any action or failure to act with respect
                to this
                Agreement, except in the case of willful misconduct by the Plan
                Administrator or any of its members.

            

    

    

    
      	
              8.5

            	
              Bank
                Information.
                To enable the Plan Administrator to perform its functions, the Bank
                shall
                supply full and timely information to the Plan Administrator on all
                matters relating to the date and circumstances of the retirement,
                Disability, death, or Separation from Service of the Executive and
                such
                other pertinent information as the Plan Administrator may reasonably
                require. 

            

    

    

    ARTICLE
      9   AGREEMENT NOT TO COMPETE

    

    
      	
              9.1 

            	
              Covenant
                Not to Compete.
                

            

    

    

    
      	 	
              (a)

            	
              Without
                advance written consent of the Bank, the Executive shall not compete
                directly or indirectly with the Bank for two years after Separation
                from
                Service, plus any period during which the Executive is in violation
                of
                this covenant not to compete and any period during which the Bank
                seeks by
                litigation to enforce this covenant not to
                compete.

            

    

    

    
      	 	
              (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.

            

    

    

    
      	 	
              (c)

            	
              Definitions:
                For purposes of this Section the following definitions shall
                apply:

            

    

    

    (1) “compete”
shall
      mean: 

     

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

            

    

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

    

    
      	 	
              (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 Bank
                at the
                date of the Executive’s termination of employment to seek financial
                products or services from another financial
                institution.

            

    

    

    
      	 	
              (2)

            	
              “directly
                or indirectly”
                shall mean:

            

    

    

    
      	 	
              (a)

            	
              acting
                as a consultant, officer, director, independent contractor, or employee
                of
                any financial institution in competition with the Bank 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 Bank
                at the
                date of the Executive’s Separation from
                Service.

            

    

    

    
      	 	
              (3)

            	
              “customer”
                shall mean any person to whom the Bank is providing financial products
                or
                services at the date of the Executive’s Separation from
                Service.

            

    

    

    
      	 	
              (4)

            	
              “financial
                institution”
                shall mean any bank, savings association, or bank or savings association
                hold 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 Bank or one of its affiliated
                corporations.

            

    

    

    
      	
            	(5)	
              “financial
                product or service” shall
                mean 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 firm’s activity under Section 4(k) of
                the Bank Holding Company Act of 1956 and that is offered by the Bank
                or
                any affiliate on the date of the Executive’s Separation from Service,
                including but not limited to banking activities that are closely
                related
                and a proper incident to banking. 

            

    

    

    
      	 	
              (6)

            	
              “person”
                shall mean any individual or individuals, corporation, partnership,
                fiduciary or association.

            

    

    

    
      	 	
              (7)

            	
              “territory”
                shall mean all of Forsyth, Guilford, Iredell, Rockingham, Surry,
                Stokes,
                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 Executive’s
                Separation from Service.

            

    

    

    
      	
              9.2
                

            	
              Remedies.
                Because of the unique character of the services to be rendered by
                the
                Executive hereunder, the Executive understands that the Bank 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 9. Accordingly, the Executive agrees that
                the
                Bank’s remedies for a material breach or threatened breach of this Article
                9 include but are not limited to forfeiture of benefits under this
                Agreement and a suit in equity by the Bank 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 Bank 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 Bank from pursuing any other remedies for
                the
                breach or threatened breach. 

            

    

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

    

    
      	
              9.3
                

            	
              Article
                9 Survives Termination But Is Void After a Change in
                Control.
                The rights and obligations set forth in this Article 9 shall survive
                termination of this Agreement. However, Article 9 shall become null
                and
                void effective immediately upon a Change in Control.
                

            

    

    

    IN
      WITNESS WHEREOF,
      the
      Executive and a duly authorized officer of the Bank have executed this Salary
      Continuation Agreement as of this 17
      day
      of
June,
      2008.

    

    
      	
              EXECUTIVE:

            	 	
              Southern
                Community Bank and Trust:

            
	 	 	 	 	 
	
              
                x

              

            	
              /s/
                James
                Hastings 

            	 	
              By:

            	
              /s/
                Jeff T. Clark

            
	 	
               
                James Hastings 

            	 	 	 

    

     

    
      	 	 	 	
              Corporate Title:

            	
              President

            

    

     

    
      
        
        

      

      
        17

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