reduced earnings due to higher credit losses generally and specifically because losses in the sectors of our loan portfolio secured by real estate are greater than expected due to economic factors, including declining real estate values, increasing interest rates, increasing unemployment, or changes in payment behavior or other factors

Exhibit 10.6

RETIREMENT AND TRANSITION AGREEMENT

     This RETIREMENT AND TRANSITION AGREEMENT (“this Agreement”) is made and entered into by and between William A. Long, Sr. (“Long”) of Statesville, North Carolina, on the one hand, and Yadkin Valley Financial Corporation, a North Carolina corporation (the “Company”) and Yadkin Valley Bank and Trust (the “Bank”), a North Carolina state bank and wholly owned subsidiary of the Company (the Company and the Bank collectively referred to herein as the “Employer”), on the other hand.

     WHEREAS, Long is employed by Employer under the terms of an Amended and Restated Employment Agreement dated December 31, 2008 (the “Employment Agreement”).

     WHEREAS the Employment Agreement was amended by letter agreements dated January 16, 2009 and July 24, 2009, which were executed by Long and the Company in connection with the Company’s participation in the United States Department of Treasury’s Capital Purchase Program (“CPP”) as part of the federal Troubled Asset Relief Program (“TARP”) established pursuant to the Emergency Economic Stabilization Act of 2008, as amended (the “TARP Waiver Agreements”).

     WHEREAS, Long desires to retire from his employment with Employer on July 31, 2011 (the “Retirement Date”).

     WHEREAS, Employer desires that Long remain engaged to assist with the transition of his duties to his successor.

     WHEREAS, Employer and Long have agreed to certain changes in his position and duties to be effective from the date of this Agreement until the Retirement Date.

     WHEREAS, Long and Employer wish to memorialize their agreement and to resolve any and all claims, disputes and other matters that may exist between them, if any, whether they have been raised or not.

     NOW, THEREFORE, the parties, intending to be legally bound and for and in consideration of the promises and agreements contained herein, hereby stipulate and agree as follows:

1. Retirement and Transition. In connection with Long’s retirement and the transition of his duties to his successor, the parties agree that:

(a) Long shall retire from his employment with Employer on the Retirement Date.

(b) Long hereby resigns as Chief Executive Officer of the Company, as a director of the Bank, as a director of the Company and as an officer or director of any other subsidiary or affiliate of the Company, all of which resignations are effective immediately.

(c) Long shall continue to serve as Chief Executive Officer of the Bank until the Retirement Date. From the date of this Agreement until the Retirement Date (the “Transition Period”), Long shall serve as senior advisor to Joseph H. Towell, successor Chief Executive Officer of the Bank and of the Company, and shall work to transition his knowledge, duties and responsibility to Mr. Towell. Additionally, Long shall have such appropriate transition, customer relations, investor relations and capital development duties as may be assigned by the Board of Directors from time to time.

(d) During the Transition Period, Long shall continue to receive base salary at his current rate and shall continue to receive his current benefits (subject to any generally applicable changes the Company may make during the Transition Period); provided, however, (i) with respect to Long’s membership expenses associated with Statesville Country Club, The Point Country Club, one civic club, and family membership in a health facility, Employer will continue to pay for membership and dues only, but will not pay for associated personal charges and expenses; and (ii) Long will have continued use of the current automobile provided by Employer, the 2008 Lexus. During the Transition Period, Long will not be eligible to receive any bonuses. Long will not be entitled to any severance or any special separation pay upon or following his retirement. The Bank will continue to cover Long under its directors and officers liability insurance policy during the Transition Period. After Long’s retirement, Long will have the same coverage under this policy (or successor policies) and the same entitlement to corporate indemnification as other retired officers and directors. The benefits and payments Long receives under this Agreement are conditioned upon (A) his employment through the Retirement Date not being terminated by Long for any reason or by the Bank for Cause (as such term is defined by the Employment Agreement) and (B) Long’s performance of and compliance with the terms of this Agreement and any continued post-employment obligations under the Employment Agreement as provided in Section 4 of this Agreement.

2. Release. In exchange for the Company’s release of Long from his post-employment noncompetition obligations as set forth in Section 4 below and the promises of continued compensation and benefits by Employer set forth in Section 1 above, which release, promises, compensation and benefits are beyond any to which Long is presently entitled, Long agrees to release and forever discharge Employer, its shareholders, successors, predecessors, parents, subsidiaries, affiliates, assigns, directors, officers, agents, attorneys, employees and former employees, insurers, and all persons, corporations or other entities who might be claimed to be jointly and severally liable with them (collectively, “the Released Parties”), from any and all claims at law or in equity based upon, arising from, or relating to Long’s employment relationship with Employer or the conclusion of that relationship, whether or not Long knows of the potential existence of the claim, from the beginning of time to the date of execution of this Agreement. This release shall include, but is not limited to, claims under the Age Discrimination in Employment Act, Title VII of the Civil Rights Act of 1964, the Employee Retirement Income Security Act of 1974, the Americans With Disabilities Act, the Family and Medical Leave Act, claims of wrongful discharge, constructive discharge, breach of contract, tortious interference with contract, negligent misrepresentation, negligent or intentional infliction of emotional distress, retaliatory discharge, and any other state or federal statutory or common law theories, including any claim for attorneys’ fees and costs, which Long or anyone claiming by, through or under him in any way might have or could claim against the Released Parties. This release by Long is specifically intended to release Employer from any and all obligations under the

Employment Agreement. In addition, Long knowingly and intentionally waives any rights to any additional recovery that might be sought on his behalf against any one or more of the Released Parties by any other person, entity, local, state or federal government or agency thereof. This release is not intended to and shall not be construed to release any vested retirement/401(k) benefits or rights to continuation of health coverage under COBRA.

3. Additional Representations. Long represents and warrants that as of the date of this Agreement, he has been permitted by Employer to take all leave to which he has been entitled, that he has been reimbursed for all allowances and expenses properly incurred on behalf of Employer, that he has been properly paid for all time worked to date during his employment by Employer and that he has received all benefits to which he was or is entitled. Long acknowledges, agrees and hereby reaffirms that he is subject to the valid and enforceable noncompetition and confidentiality obligations contained in the Employment Agreement that placed certain reasonable and necessary restrictions on his actions following his employment with Employer and that, except as otherwise provided in Section 4 below, such restrictions are currently and at all times have been fully enforceable.

4. Release of Certain Post-Employment Obligations. Effective July 31, 2011, the Company agrees that Long is released from his existing post-employment noncompetition obligation contained in Section 6(b) of the Employment Agreement which restricts Long from certain competitive activities for one year after termination of employment; provided, however, nothing contained in this Section 4 will affect Long’s noncompetition obligations during his continued employment with the Bank, or the obligations or remedies contained in Section 6(a), (c) or (d) of the Employment Agreement and such obligations and remedies shall be deemed continuing beyond the Retirement Date.

5. No Admission of Liability. Nothing contained in this Agreement shall be construed as an admission of any liability or violation of any federal, state or local statute, regulation, common law, or of any duty owed by Long, Employer or any of the Released Parties. As stated above, the forbearance, promises and compensation provided in consideration of the above release and the obligations contained herein are intended to resolve any and all claims, disputes and other matters that may exist between the parties, whether they are known or unknown and whether they have been raised or not.

6. Non-disparagement; No Encouragement of Claims. Long agrees to refrain from any disparagement, criticism, defamation, slander or libel of Employer, any of the Released Parties or products, services or businesses. In addition, Long agrees that he shall not initiate or participate in any contact or communications with any person or entity, including but not limited to current or former employees, vendors, investors and customers of Employer or any of the Released Parties, which has the effect of disrupting the orderly operations of or damaging the reputation of Employer or any of the Released Parties, employees, products, services or their businesses, unless required by law. Similarly, Long shall not, directly or indirectly, encourage or assist any person or entity who may file or who has filed a lawsuit, charge, claim or complaint against any Released Party; provided, however, nothing herein shall prevent Long from responding to a lawful subpoena, reporting to a government agency or complying with any other legal obligation. If Long receives any subpoena or becomes subject to any legal obligation that implicates this Section 6, Long will provide prompt written notice of that fact to the Employer

(consistent with the notice provisions of this Agreement), and enclose a copy of the subpoena and any other documents describing the legal obligation. Employer agrees to instruct the following individuals, Jan H. Hollar, Joseph H. Towell, F. Spencer Cosby, Patricia H. Wooten, T. Michele Russell, William Mark DeMarcus, Edwin H. Shuford, Kristi A. Eller, Laura Blalock, Rick Patterson, Joe K. Johnson, Edward L. Marxen, Dan W. Hill III, J.T. Alexander, Jr., James L. Poindexter, Larry S. Helms, James A. Harrell, Jr., Thomas J. Hall, James N. Smoak, Dr. Ralph L. Bentley, Harry C. Spell, Nolan G. Brown, Alison J. Smith, Morris L. Shambley, Harry M. Davis, and C. Kenneth Wilcox, that that they shall refrain from any disparagement, criticism, defamation, slander or libel of Long; provided, however, nothing herein shall prevent such individuals from responding to a lawful subpoena, reporting to a government agency or complying with any other legal obligation.

7. Remedies. It is stipulated that a breach by Long of the provisions of this Agreement or Long’s continuing obligations under the Employment Agreement, as described in Section 4 above, would cause irreparable damage to Employer and/or the Released Parties. In the event Long breaches any of the obligations, representations or warranties contained in this Agreement or in the Employment Agreement, the Company, the Bank or any of the Released Parties, as applicable, shall be entitled to all remedies at law or in equity. If the Company, the Bank or any of the Released Parties are required to employ attorneys and/or pursue litigation against Long for the breach or enforcement of this Agreement or Long’s continuing obligations under the Employment Agreement, they shall be entitled to recover from Long any attorneys’ fees and litigation expenses incurred in connection with such efforts. In addition, Employer expressly reserves the right to seek injunctive relief in the event of a breach or threatened breach of the obligations contained in this Agreement or the Employment Agreement.

8. ADEA Waiver Acknowledgment. Long acknowledges that: (a) he has at least twenty-one (21) days to consider this Agreement; (b) he has read and understands the terms of this Agreement and its effect; (c) he has been advised to consult and has had the opportunity to consult with an attorney prior to executing this Agreement; (d) he has signed this Agreement voluntarily and knowingly in exchange for the consideration described herein, which he acknowledges as adequate and more than he is otherwise entitled to receive; (e) this Agreement will become effective seven (7) days after its signature by Long and will not be enforceable or effective until after that seven (7) day period has expired (the “Effective Date”); (f) within seven (7) days of signature, Long may revoke this Agreement by providing written notice of revocation to Laura Blalock at 204 S. Elm Street, Statesville, NC 28687, before 12:01 a.m. Eastern Time of the Effective Date; and (g) no attempted revocation after the expiration of the seven (7) day period shall have any effect on the terms of this Agreement.

9. Cooperation. Long agrees that, on appropriate advance notice, he will, if so requested by either Employer or any of the Released Parties, provide assistance or information related to any claim, investigation, proceeding or litigation (threatened or pending) involving Employer or any of the Released Parties and will freely cooperate and assist Employer or any of the Released Parties in good faith and to the best of his ability. Further, Long agrees that, on appropriate advance notice, he will, if so requested by either Employer or one of the Released Parties, provide information and assistance as to any matter related to Long’s duties and responsibilities under the Employment Agreement. The Employer agrees to reimburse Long for all of his reasonable expenses associated with such cooperation, including travel expenses.

10. Return of Company Property. Long agrees to return to Employer, within five (5) days of the Retirement Date, any and all documents, materials and information (whether in hard copy, on electronic media or otherwise) and all keys, access cards, credit cards, computer hardware and software, telephones and telephone-related equipment and all other property of Employer or the Released Parties in his possession or control. Further, Long shall not retain any copy of documents, materials or information (whether in hard copy, on electronic media or otherwise) belonging to Employer or any of the Released Parties.

11. Acknowledgment of Reasonableness. Long has carefully read and considered the provisions of this Agreement, has had the opportunity to consult with an attorney of Long’s choice and agrees that the restrictions set forth in this Agreement and in the Employment Agreement are reasonably required for the protection of Employer and the Released Parties. In the event that any provision relating to the scope of the restrictions contained in this Agreement or the Employment Agreement shall be declared by a court of competent jurisdiction to exceed the maximum scope that such court deems reasonable and enforceable under applicable law, such scope of restriction held reasonable and enforceable by the court shall thereafter be the scope of the Employment Agreement and/or this Agreement as may be applicable.

12. Tax Liability. Long understands and agrees that to the extent any tax liability may now or hereafter become due because of this Agreement, such liability shall be his sole responsibility. On behalf of himself, his heirs, executors, administrators, successors and assigns, he agrees to pay any taxes, penalties or interest that may be determined to be due and payable, other than such taxes as may be withheld from Long’s compensation during the Transition Period. In addition, on behalf of himself, his heirs, executors, administrators, successors and assigns, Long agrees to indemnify and hold Employer harmless for any and all taxes, penalties, interest or other costs and expenses that may be or become due as a result of this Agreement, other than such taxes as may be withheld from Long’s compensation during the Transition Period.

13. Notices. Any notice contemplated, required, or permitted under this Agreement shall be sufficient if in writing and shall be deemed given when delivered personally or mailed by registered or certified mail, return receipt requested, to the addresses listed below:

		(a) To Long:		William A. Long, Sr. 125 Wickersham Dr. Statesville, NC 28265
		(b) To the Company:		Yadkin Valley Financial Corporation 204 South Elm Street Statesville, NC 28687 Attn: Laura Nelson Blalock
		(c) To the Bank:		Yadkin Valley Bank and Trust 204 South Elm Street Statesville, NC 28687 Attn: Laura Nelson Blalock

14. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of North Carolina, without regard to its conflicts of laws provisions.

15. Severability. Each provision of this Agreement is intended to be severable. If any term or provision other than Section 2 of this Agreement is held to be invalid, void or unenforceable by a court of competent jurisdiction for any reason whatsoever, such ruling shall not affect the remainder of this Agreement.

16. Voluntary Execution. The parties, intending to be legally bound, apply their signatures voluntarily and with full understanding of the contents of this Agreement and after having had ample time to review and study this Agreement.

17. Affirmation of TARP Waiver Agreements. For purposes of clarity, nothing in this Agreement or in any other agreement, plan, program or arrangement will entitle Long to any payments, rights or benefits to the extent they are prohibited as a result of the Company’s participation in the CPP under TARP. To that end, Long expressly reaffirms the TARP Waiver Agreements executed by him on January 16, 2009 and July 24, 2009 as a condition of the Company’s participation in the CPP.

18. Entire Agreement. This Agreement constitutes the entire agreement between Long and Employer as of the date hereof with respect to the subject matter hereof and supersedes any previous understandings, representations, statements and agreements, whether oral or written, between or among the parties with respect to the subject matter hereof; provided, however, the provisions contained in this Agreement shall be in addition to and not in lieu of any obligations of confidentiality or noncompetition contained in the Employment Agreement. This Agreement shall not be modified or changed in any way except by a writing executed by both parties hereto or as otherwise set forth herein this Agreement.

ATTEST:				YADKIN VALLEY FINANCIAL CORPORATION
By:	/s/ Patricia H. Wooten			By:	/s/ Ralph L. Bentley
	Name:	Patricia H. Wooten			Ralph L. Bentley, Chairman of the Board
				Date: 2/14/2011
ATTEST:				YADKIN VALLEY BANK AND TRUST
By:	/s/ Patricia H. Wooten			By:	/s/ Ralph L. Bentley
	Name:	Patricia H. Wooten			Ralph L. Bentley, Chairman of the Board
				Date: 2/14/2011