EMPLOYMENT AND NON SOLICITATION AGREEMENT

Exhibit 10.10

EMPLOYMENT AND NON SOLICITATION AGREEMENT

        THIS AGREEMENT made on the 23rd day of April, 2004, between STATE NATIONAL BANCSHARES, INC., a Texas corporation and registered bank holding company with its principal offices in Lubbock, Texas (the "Employer"), and DOUGLAS TERRY, who resides in Fort Worth, Texas (the "Employee").

        1.     TERM OF EMPLOYMENT .    

        1.01  Primary Term . Employer hereby employs Employee for the purpose of rendering services to State National Bank or its successor (the "Bank"), and Employee hereby accepts employment, for a period beginning on the effective date of the acquisition of Mercantile Bank Texas by Employer pursuant to the terms of the Agreement and Plan of Reorganization dated April 12, 2004 between Employer and Mercantile Bank Texas and continuing through the eighteen month anniversary of the effective date of such acquisition ("Primary Term"); provided, however, this Agreement may be terminated earlier as hereinafter provided in Section 5.

        1.02  Extension of Term . The term of this Agreement may be extended after expiration of the Primary Term hereof, upon the written mutual consent of Employer and Employee. The Primary Term of this Agreement plus the period of any extensions mutually agreed to by Employer and Employee shall be the "Term" of this Agreement.

        2.     DUTIES OF EMPLOYEE .    

        2.01.  General Duties . During the Term of this Agreement, Employee agrees, at a minimum, to (i) serve as Executive Vice President—Real Estate of the Bank, and (ii) attend such officer committee meetings as Employer requests. Employee further agrees to use his diligent and good-faith efforts to (i) promote Employer's and Bank's goodwill, (ii) retain customers and clients of the Bank for Employer's and the Bank's benefit, and (iii) maintain, promote and develop customer relations for Employer and the Bank. Employee shall also be available for any other projects mutually agreed upon between Employer or the Bank and Employee. Employee's principal office during the Term of this Agreement shall be in Tarrant County, Texas unless otherwise mutually agreed by Employer and Employee.

        2.02.  Engaging in Other Employment . During the Term of this Agreement, Employee shall devote his full business time and best efforts in carrying out his duties as an officer of the Bank and shall not have other employment during the term of this Agreement without the consent of Employer.

        2.03.  Performance by Employee . The Employee covenants and agrees that he will at all times faithfully and industriously perform his duties under this Agreement.

        3.     COMPENSATION.     

        3.01.  Basic Compensation . As compensation for services rendered under this Agreement, Employee shall be entitled to receive from the Bank a salary equivalent to One Hundred Forty-Eight Thousand Dollars ($148,000) per year (which annual amount shall be pro rated for any partial year), payable in equal semimonthly installments of Six Thousand One Hundred and Sixty-Six Dollars and Sixty-Seven Cents ($6,166.67), payable on such days as the Bank normally pays its employees, prorated for any partial employment period.

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        3.02.  Additional Alternative Compensation . Employee has been offered the following additional compensation alternatives, one (1) of which must be selected by the Employee not later than May 15, 2004, by placing an "X" in one (1) of the following boxes:

        3.03.  Insurance Benefits . During the Term of this Agreement, Employer shall provide or cause the Bank to provide to Employee, his spouse and dependants insurance coverage providing benefits for sickness and hospitalization in such amounts and on such terms as generally available to all similarly situated officers of the Bank as approved from time to time. Further, Employer shall provide or cause the Bank to provide to Employee insurance coverage benefits for disability in such amount and on such terms as are generally available to the officers of the Bank.

        3.04.  Bank Automobile . During the Term of this Agreement, Employee shall continue to have the use of his existing Bank automobile until Employee desires to replace such automobile. Employer will continue to be responsible for expenses of operation and maintenance for the automobile consistent with past practices of the Bank. At that time, Employee shall have the option to purchase his Bank automobile from the Bank for book value which shall reasonably approximate market value, and he will thereafter receive an automobile allowance comparable to that provided for comparable officers of Employer and the Bank.

        3.05.  Supplemental Executive Retirement Plan ("SERP") . In the event Employer and Employee elect to extend the Term of this Agreement past the Primary Term set out in Section 1.01, Employee shall be entitled to participate in Employer's SERP following the end of the Primary Term.

        3.06.  Employee Benefits and Bonuses . During the Term of this Agreement, Employee shall receive such additional fringe benefits and bonuses as allowed under the Bank's stated policies as may be determined from time to time in the sole discretion of the Employer.

        3.07.  Bank's 401(k) Plan . During the Term of this Agreement, Employee shall be entitled to participate in the Bank's 401(k) Plan so long as a 401(k) Plan is available to the employees of the Bank. Employer shall make or cause the Bank to make such contributions for Employee as made for other officers of the Bank.

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        4.     NON-SOLICITATION AND NON-DISCLOSURE.     

        4.01.  Non Solicitation Covenants . Employee agrees that for a period of one year after the earlier to occur of (i) the expiration of the first six months of the Primary Term of this Agreement or (ii) the termination of Employee's employment with Employer (the "Non-Solicitation Period"), Employee shall not, directly or indirectly, individually or as an employee, consultant, partner, officer, director or shareholder or in any other capacity whatsoever:

• (i)

  solicit the banking business of any customers except those customers who became customers after the earlier of the expiration of the Primary Term of this agreement or the termination of the Employee's employment with Bank; or
  
  

  (ii)

  recruit, hire, assist others in recruiting or hiring, discuss employment with, or refer others concerning employment, any person who is, or within the preceding twelve (12) months was, an employee of the Bank; provided, however, that nothing in this Section 4.01(ii) shall apply to employment other than with a financial institution.
  
  

  
  

  If Employee has selected Option No. 2 provided for in Section 3.02 hereof, and Employee terminates his employment with Bank under Section 5.04 hereof, then Employer shall pay to Employee over the Non-Solicitation Period, an amount equal to $74,000.00 per year, prorated if necessary if the Non-Solicitation Period is less than one (1) year, payable in equal semi-monthly installments of $3,083.33 each, payable on the same dates as Bank normally pays its employees. By way of example, if Employee terminates his employment twelve (12) months after the commencement of the Primary Term, then Employee shall be entitled to receive payment for the six (6) month Non-Solicitation Period, an amount equal to $37,000.00. In exchange for such payment, Employee shall be subject to the non-solicitation covenants set forth in Section 4.01.

        4.02  Judicial Limitation . If any court of competent jurisdiction should determine that any term or terms of non solicitation covenants are too broad in terms of time, lines of commerce or otherwise, such court shall modify and revise any such