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                                                                    EXHIBIT 10.3

                              EMPLOYMENT AGREEMENT

      THIS AGREEMENT is made effective as of May 18, 2006 by and between
MOUNTAIN NATIONAL BANK and MOUNTAIN NATIONAL BANCSHARES, INC. (the "Bank"),
Sevierville, Tennessee; and G. Devon McKinzie (the "Executive").

      WHEREAS, the Bank wishes to assure itself of the services of Executive for
the period provided in the Agreement; and

      WHEREAS, the Executive is willing to serve in the employment of the Bank
on a full-time basis for said period.

      NOW, THEREFORE, in consideration of the mutual covenants herein contained,
and upon the other terms and conditions hereinafter provided, the parties hereby
agree as follows:

1. POSITION AND RESPONSIBILITIES

      During the period of her employment hereunder, Executive agrees to serve
as Executive Vice President and Chief Lending Officer of the Bank.

2. TERMS AND DUTIES.

      (a) The term of this Agreement shall be deemed to have commenced as of the
date first above written and shall continue for a period of thirty-six (36) full
calendar months thereafter.

      (b) During the period of her employment hereunder, except for periods of
absence occasioned by illness, vacation periods, and leaves of absence,
Executive shall devote substantially all her business time, attention, skill,
and efforts to the faithful performance of her duties hereunder including
activities and services related to the organization, operation and management of
the Bank; provided, however; that, subject to the terms of this Agreement, from
time to time, Executive may serve, or continue to serve, on the boards of
directors of, and hold any other offices or positions in, companies or
organizations, which will not materially affect the performance of Executive's
duties pursuant to this Agreement.

3. COMPENSATION AND REIMBURSEMENT

      (a) The compensation specified under this Agreement shall constitute the
salary and benefits paid for the duties described in Sections 1 and 2. The Bank
shall pay Executive as compensation a salary of One Hundred Twelve Thousand
Dollars ($112,000) per year ("Base Salary"). Such Base Salary shall be payable
in accordance with the customary payroll practices of the Bank. During the
period of this Agreement, Executive's Base Salary shall be reviewed at least
annually; the first such review will be made no later than one year from the
date of this Agreement. Such review shall be conducted by President/CEO of the
Bank, and the President/CEO may increase Executive's Base Salary. In addition to
the Base Salary provided in this Section 3(a), the Bank shall provide to
Executive at no additional cost to Executive all such other benefits as are
provided to regular full-time employees of the Bank.

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      (b) Executive will be entitled to participate in or receive benefits under
any employee benefit plans including, but not limited to, stock options,
retirement plans, supplemental retirement plans, pension plans, profit-sharing
plans, health-and-accident plans, medical coverage or any other employee benefit
plan or arrangement made available by the Bank in the future to its key
management employees, subject to, and on a basis consistent with, the terms,
conditions and overall administration of such plans and arrangements. Executive
will be entitled to incentive compensation and bonuses as provided in any plan,
or pursuant to any arrangement of the Bank, in which Executive is eligible to
participate. Nothing paid to the Executive under any such plan or arrangement
will be deemed to be in lieu of other compensation to which the Executive is
entitled under this Agreement, except as provided under Section 5(e).

      (c) Executive will be reimbursed for reasonable travel and entertainment
expenses.

4. PAYMENTS TO EMPLOYEE UPON AN EVENT OF TERMINATION

      (a) Upon the occurrence of an Event of Termination (as herein defined)
during the Executive's term of employment under this Agreement, the provisions
of this Section shall apply. As used in this Agreement, an "Event of
Termination" shall mean and include any one or more of the following: (i) the
termination by the Bank of Executive's full-time employment hereunder for any
reason other than Cause, as defined in Section 8 hereof; Disability, as defined
in Section 6(a) hereof; death; or Retirement, as defined in Section 7 hereof; or
(ii) Executive's resignation from the Bank's employment, upon not less than
thirty (30) days prior written notice to the Bank.

      (b) Upon the occurrence of an Event of Termination, the Bank shall pay
Executive, or, in the event of her subsequent death, her beneficiary or
beneficiaries, or her estate, as the case may be, as severance pay or liquidated
damages, or both, a lump sum payment equal to twelve (12) months Base Salary;
provided, however, that such lump sum payment shall equal only six (6) months
Base Salary in the event that the Event of Termination is the result of
Executive's resignation from employment as provided in Section 4(a)(ii).

      (c) Upon the occurrence of an Event of Termination, the Bank will cause to
be continued life, medical, dental and disability coverage substantially
identical to the coverage maintained by the Bank for Executive prior to her
termination for a period of twelve (12) months at the Bank's expense; provided,
however, that such coverage shall be continued for a period of only six (6)
months in the event that the Event of Termination is the result of Executive's
resignation from employment as provided in Section 4(a)(ii). A COBRA notice will
be issued upon the date of termination. The period during which the Bank pays
for the Executive's COBRA-mandated coverage shall run concurrently with the
applicable COBRA-mandated coverage period. The Executive shall be solely
responsible for any premiums for any COBRA-mandated coverage periods beyond the
first twelve (12) months or six (6) months of coverage, as the case may be. The
Executive's failure to pay such premiums shall result in a cancellation of such
coverage during the remaining period.

5. CHANGE IN CONTROL.

      (a) No benefit shall be paid under this Section 5 unless there shall have
occurred a

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Change in Control of the Bank. For purposes of this Agreement, a "Change in
Control" of the Bank shall be deemed to occur if and when:

            (i) there occurs an acquisition in one of more transactions of at
      least 15 percent but less than 25 percent of the Common Stock by any
      Person, or by two or more Persons acting as a group (excluding officers
      and directors of the Bank), and the adoption by the Board of Directors of
      a resolution declaring that a change in control of the Bank has occurred;
      or

            (ii) there occurs a merger, consolidation, reorganization,
      recapitalization or similar transaction involving the securities of the
      Bank upon the consummation of which more than 50 percent in voting power
      of the voting securities of the surviving corporation(s) is held by
      Persons other than former shareholders of the Bank; or

            (iii) 25 percent or more of the directors elected by shareholders of
      the Bank to the Board of Directors are persons who were not listed as
      nominees in the Bank's then most recent proxy statement.

      (b) If any of the events described in Section 5(a) hereof constituting a
Change in Control have occurred or the Board of the Bank has determined that a
Change in Control has occurred, Executive shall be entitled to the benefits
provided in paragraphs (c), (d) and (e) of this Section 5, in lieu of any
benefits under Section 4(b) or (c), upon her subsequent involuntary termination
of employment at any time during the term of this Agreement other than for
Cause, Disability, death or Retirement or voluntary termination following a
Change of Control following any demotion, loss of title, office or significant
authority, reduction in her annual compensation or benefits, or relocation of
her principal place of employment by more than 50 miles from its location
immediately prior to the Change in Control.

      (c) Upon the occurrence of a Change in Control followed by the termination
of Executive's employment in the manner set forth in Section 5(b), the Bank
shall pay Executive, or in the event of her subsequent death, her beneficiary or
beneficiaries, or her estate, as the case may be, as severance pay or liquidated
damages, or both, a sum equal to 2.99 times the Executive's "base amount,"
within the meaning of 280G(b)(3) of the Internal Revenue Code of 1986 ("Code"),
as amended. Such payment shall be made in thirty-six equal monthly installments
beginning on the first day of the month following the month in which the
Executive is terminated and thereafter payable on the first day of each month
thereafter until paid in full.

      (d) Upon the occurrence of a Change in Control followed by the termination
of Executive's employment in the manner set forth in Section 5(b), the Bank will
cause to be continued life, medical, dental and disability coverage
substantially identical to the coverage maintained by the Bank for Executive
prior to her severance for a period of three years from such Date of
Termination; provided, however, that Executive shall no longer be entitled to
receive such benefits if Executive competes with the Bank or the surviving
financial institution in the manner prohibited by Section 11 during such
three-year period. In addition, Executive shall be entitled to receive the value
of employer contributions that would have been made on the Executive's behalf
over the remaining term of the agreement to any tax-qualified retirement plan
sponsored by the Bank as of the Date of Termination.

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      (e) Upon the occurrence of a Change in Control, the Executive shall be
entitled to receive benefits due to her under, or contributed by the Bank on her
behalf, pursuant to any retirement, incentive, profit sharing, bonus,
performance, disability or other employee benefit plan maintained by the Bank on
the Executive's behalf to the extent that such benefits are not otherwise paid
to the Executive upon a Change in Control.

      (f) Notwithstanding the preceding paragraphs of this Section 5, in the
event that the aggregate payments or benefits to be made or afforded to the
Executive under this Section would be deemed to include an "excess parachute
payment" under 280G of the Code, such payments or benefits shall be payable or
provided to Executive in equal monthly installments over the minimum period
necessary to reduce the present value of such payments or benefits to an amount
which is one dollar ($1.00) less than three (3) times the Executive's "base
amount" under 280G(b)(3) of the Code.

      (g) Upon the occurrence of a Change in Control followed by the termination
of Executive's employment for any reason other than Cause, the Executive agrees
that she will not compete with the Bank or the surviving financial institution
for the longer of (i) the period of time during which she is receiving benefits
pursuant to Section 4(b) or (c); or (ii) the period of time during which
Executive is accepting benefits pursuant to Section 5(d) hereof, in each case in
any city or town in which the Bank operates a branch or main office. For
purposes of this paragraph, the term "compete" shall have the same meaning as
more fully defined in Section 11, Non-Competition.

6. TERMINATION FOR DISABILITY.

      (a) If the Executive shall become disabled as defined in the Bank's then
current disability plan (or, if no such plan is then in effect, if the Executive
is disabled within the meaning of Section 409(A)(a)(2)(c) of the Code as
determined by a physician designated by the Board), the Bank may terminate
Executive's employment for "Disability."

      (b) Upon the Executive's termination of employment for Disability, the
Bank will pay Executive, as disability pay, a bi-weekly payment equal to
two-thirds (2/3) of Executive's biweekly rate of Base Salary on the effective
date of such termination. These disability payments shall commence on the
effective date of Executive's termination and will end on the earlier of (i) the
date Executive returns to the full-time employment of the Bank in the same
capacity as she was employed prior to her termination for Disability and
pursuant to an employment agreement between Executive and the Bank; (ii)
Executive's full-time employment by another employer; (iii) Executive attaining
the normal expected retirement age or age 65 if the Executive so elects; or (iv)
Executive's death. The disability pay shall be reduced by the amount, if any,
paid to the Executive under any plan of the Bank providing disability benefits
to the Executive.

      (c) The Bank will cause to be continued life, medical, dental and
disability coverage substantially identical to the coverage maintained by the
Bank for Executive prior to her termination for Disability. This coverage and
payments shall cease upon the earlier of (i) the date Executive returns to the
full-time employment of the Bank, in the same capacity as she was employed prior
to her termination for Disability and pursuant to an employment agreement

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between Executive and the Bank; (ii) Executive's full-time employment by another
employer; (iii) Executive's attaining normal retirement age or age 65 if the
Executive so elects; or (iv) the Executive's death.

      (d) Notwithstanding the foregoing, there will be no reduction in the
compensation otherwise payable to Executive during any period during which
Executive is incapable of performing her duties hereunder by reason of temporary
disability.

      (e) Executive agrees that she will not compete with the Bank in any city
or town in which the Bank operates a branch or main office for a period of
twelve (12) months following her termination for "Disability" from her
employment by the Bank. For purposes of this paragraph, the term "compete" shall
have the same meaning as more fully defined in Section 11, Non-Competition.

7. TERMINATION UPON RETIREMENT, DEATH OF EXECUTIVE.

      Termination by the Bank of Executive based on "Retirement" shall mean
termination at age 65 or such other age determined in accordance with any
retirement arrangement established with Executive's consent with respect to her.
Upon termination of Executive upon Retirement, Executive shall be entitled to
all benefits under any retirement plan of the Bank and other plans to which
Executive is a party. Upon the death of the Executive during the term of this
Agreement, the Bank shall pay to Executive's estate, within ten (10) days of the
end of such month, the compensation due to the Executive through the last day of
the calendar month in which her death occurred.

8. TERMINATION FOR CAUSE.

      For purposes of this Agreement, "Termination for Cause" shall include
termination because of the Executive's personal dishonesty, incompetence,
willful misconduct, breach of fiduciary duty involving personal profit,
intentional failure to perform stated duties, willful violation of any law,
rule, or regulation which negatively impacts the Bank (other than traffic
violations or similar offenses) or final cease-and-desist order, or material
breach of any provision of this Agreement. For purposes of this Section, the
term "willful" is defined to include any act or omission which demonstrates an
intentional or reckless disregard for the duties and responsibilities owed to
the business of the Bank by Executive. Notwithstanding the foregoing, Executive
shall not be deemed to have been terminated for Cause unless and until there
shall have been delivered to her a copy of a resolution duly adopted by the
affirmative vote of not less than three-fourths of the members of the Board at a
meeting of the Board called and held for that purpose, finding that in the good
faith opinion of the Board, Executive was guilty of conduct justifying
termination for Cause and specifying the reasons thereof. The Executive shall
not have the right to receive any compensation or other benefits, including
those provided for herein, for any period after the Date of Termination for any
Termination for Cause. Any stock options granted to Executive under any stock
option plan or any unvested awards granted under any other stock benefit plan of
the Bank, or any subsidiary or affiliate thereof, shall become null and void
effective upon Executive's receipt of Notice of Termination for Cause pursuant
to Section 9 hereof, and shall not be exercisable by Executive at any time
subsequent to such Termination for Cause.

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9. SIX MONTH DELAY OF CERTAIN PAYMENTS.

      Notwithstanding any other provision of this Agreement, in the event that
the receipt of amounts payable pursuant to Sections 4, 5, 6 or 10 of this
Agreement within six months of the Date of Termination would cause Executive to
incur any penalty under Section 409A of the Code then payment of such amounts
shall be delayed until the date that is six months following Executive's Date of
Termination (the "Earliest Payment Date"). If this provision becomes applicable,
it is anticipated that payments that would have been made prior to the Earliest
Payment Date in the absence of this provision would be paid as a lump sum on the
Earliest Payment Date and the remaining severance benefits or other payments
would be paid according to the schedule otherwise applicable to the payments.

10. NOTICE.

      (a) Any purported termination by the Bank or by Executive shall be
communicated by Notice of Termination to the other party hereto For purposes of
this Agreement, a "Notice of Termination" shall mean a written notice which
shall indicate the specific termination provision in this Agreement relied upon
and shall set forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of Executive's employment under the provision so
indicated.

      (b) "Date of Termination" shall mean (A) if Executive's employment is
terminated for Disability, thirty (30) days after a Notice of Termination is
given (provided that she shall not have returned to the performance of her
duties on a full-time basis during such thirty (30) day period); and (B) if her
employment is terminated for any other reason, the date specified in the Notice
of Termination.

      (c) The Executive and the Bank shall resolve any claim, controversy or
dispute arising out of or in connection with this Agreement, or relating to or
arising out of Executive's employment with the Bank, by compulsory, binding
arbitration in Knoxville, Tennessee. Any such arbitration shall be conducted
according to the Commercial Arbitration Rules of the AAA. Notwithstanding the
provisions of this Section 10(c), the Bank may seek and obtain appropriate
restraining orders and temporary or permanent injunctions in a court proceeding
without engaging in arbitration with respect to any alleged violation of the
covenants contained in Section 11. The Executive shall invoke her right to
arbitrate any claim, controversy or dispute with or against the Bank only after
first attempting to resolve it through the exhaustion of the employee problem
solving mechanism contained in the Bank's Employee Handbook without first
obtaining results satisfactory to the Executive, in her reasonable discretion.

      (d) In any dispute which is finally resolved through arbitration, the
prevailing party (as defined below) shall be entitled to reimbursement for all
reasonable attorneys' fees, witness expenses and all fees and expenses of the
arbitrators. The "prevailing party" shall be determined by the arbitrator.

      (e) Any payments under this Agreement which are delayed due to a dispute
hereunder must be paid to the Executive (if so determined to be due and owing to
the Executive as provided above) during the first calendar year in which the
Executive and the Bank enter into

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a legally binding settlement of such dispute, the Bank concedes that such
disputed amount is payable to the Executive or the Bank is required to make such
payment as a result of any determination of an arbitrator in any binding
arbitration required by Section 10(c) hereof.

11. NON-COMPETITION.

      Upon any termination of Executive's employment hereunder pursuant to an
Event of Termination as provided in Section 4 hereof, Executive agrees not to
compete with the Bank for a period of twelve months following such Date of
Termination in any city or town in which the Bank operates a branch or main
office, determined as of the Date of Termination. Executive agrees that during
such period and within such cities or towns, Executive shall not work for or
advise, consult or otherwise serve with, directly or indirectly, any entity
whose business materially competes with the depository, lending or other
business activities of the Bank. The parties hereto, recognizing that
irreparable injury will result to the Bank, its business and property in the
event of Executive's breach of this Section 11, agree that, notwithstanding
anything to the contrary in this Agreement, in the event of any such breach by
Executive, the Bank will be entitled, in addition to any other remedies and
damages available, to an injunction to restrain the violation hereof by
Executive, Executive's partners, agents, servants, employers, employees and all
persons acting for or with Executive. Executive represents and admits that in
the event of the termination of her employment pursuant to Section 8 hereof,
Executive's experience and capabilities are such that Executive can obtain
employment in a business engaged in other lines and/or of a different nature
than the Bank, and that the enforcement of a remedy by way of injunction will
not prevent Executive from earning a livelihood. Nothing herein will be
construed as prohibiting the Bank from pursuing any other remedies available to
the Bank for such breach or threatened breach, including the recovery of damages
from Executive.

12. SOURCE OF PAYMENTS.

      All payments provided in this Agreement shall be timely paid in cash or
check from the general funds of the Bank.

13. EFFECT ON PRIOR AGREEMENTS AND EXISTING BENEFITS PLANS.

      This Agreement contains the entire understanding between the parties
hereto and supersedes any prior employment agreement between the Bank or any
predecessor of the Bank and Executive, except that this Agreement shall not
affect or operate to reduce any benefit or compensation inuring to the Executive
of a kind elsewhere provided. No provision of this Agreement shall be
interpreted to mean that Executive is subject to receiving fewer benefits than
those available to her without reference to this Agreement.

14. NO ATTACHMENT; SUCCESSORS AND ASSIGNS.

      (a) Except as required by law, no right to receive payments under this
Agreement shall be subject to anticipation, commutation, alienation, sale,
assignment, encumbrance, charge, pledge, or hypothecation, or to execution,
attachment, levy, or similar process or assignment by operation of law, and any
attempt, voluntary or involuntary, to affect any such action shall be null,
void, and of no effect.

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      (b) This Agreement shall be binding upon, and inure to the benefit of,
Executive and the Bank and their respective successors, heirs, executors and
assigns.

15. MODIFICATION AND WAIVER.

      (a) This Agreement may not be modified or amended except by an instrument
in writing signed by the parties hereto.

      (b) No term or condition of this Agreement shall be deemed to have been
waived, nor shall there by any estoppel against the enforcement of any provision
of this Agreement, except by written instrument of the party charged with such
waiver or estoppel. No such written waiver shall be deemed a continuing waiver
unless specifically stated therein, and each such waiver shall operate only as
to the specific term or condition waived and shall not constitute a waiver of
such term or condition for the future as to any act other than that specifically
waived.

16. SEVERABILITY.

      If, for any reason, any provision of this Agreement, or any part of any
provision, is held invalid, such invalidity shall not affect any other provision
of this Agreement or any part of such provision not held so invalid, and each
such other provision and part thereof shall to the full extent consistent with
the law continue in full force and effect.

17. HEADINGS FOR REFERENCE ONLY.

      The headings of sections and paragraphs herein are included solely for
convenience of reference and shall not control the meaning or interpretation of
any of the provisions of this Agreement.

18. GOVERNING LAW.

      This Agreement shall be governed by the substantive laws and procedural
provisions of the State of Tennessee, unless otherwise specified herein;
provided, however, that in the event of a conflict between the terms of this
Agreement and any applicable federal or state law or regulation, the provisions
of such law or regulation shall prevail.

19. PAYMENT OF LEGAL FEES.

      All reasonable legal fees paid or incurred by the Bank or the Executive
pursuant to any dispute or question of interpretation relating to this Agreement
shall be paid or reimbursed by the prevailing party in such judgment,
arbitration or settlement.

20. INDEMNIFICATION.

      The Bank shall provide Executive with coverage under a standard director's
and officers' liability insurance policy at its expense, or in lieu thereof,
shall indemnify Executive to the fullest extent permitted under applicable
Tennessee and federal law and the Bank's Articles of Association against all
expenses and liabilities reasonably incurred by her in connection with or
arising out of any action, suit or proceeding in which she may be involved by
reason of her

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having been a director or officer of the Bank (whether or not she continues to
be a director or officer at the time of incurring such expenses or liabilities),
such expenses and liabilities to include, but not be limited to, judgment, court
costs and attorneys' fees and the cost of reasonable settlements.

21. SUCCESSOR TO THE BANK.

      The Bank shall require any successor or assignee, whether direct or
indirect, by purchase, merger, consolidation or otherwise, to all or
substantially all the business or assets of the Bank, expressly and
unconditionally to assume and agree to perform the Bank's obligations under this
Agreement, in the same manner and to the same extent that the Bank would be
required to perform if no such succession or assignment had taken place.

                          (Next Page is Signature Page)

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      IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and their seal to be affixed hereunto by a duly authorized officer or
director, and Executive has signed this Agreement, all on the 18th day of May,
2006.

ATTEST:                               MOUNTAIN NATIONAL BANCSHARES, INC.

_______________________________       By:    ___________________________________

                    (SEAL)
                                      Name:  Charlie R. Johnson

                                      Title: Chairman of the Board of Directors

WITNESS:

_______________________________       EXECUTIVE: _______________________________
                                                 G. Devon McKinzie

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