EX-2.1 AGREEMENT AND PLAN OF MERGER

Agreement and Plan of Merger

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Title: EX-2.1 AGREEMENT AND PLAN OF MERGER
Governing Law: Mississippi Date: 8/11/2005
Industry: Regional Banks Law Firm: Waller Lansden Dortch & Davis, PLLC; Dover Dixon Horne PLLC Sector: Financial

EX-2.1 AGREEMENT AND PLAN OF MERGER, Parties: bancorpsouth inc , bancorpsouth bank , american state bank corporation , american state bank

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EXHIBIT 2.1

AGREEMENT AND PLAN OF MERGER

BY AND AMONG

BANCORPSOUTH, INC.

BANCORPSOUTH BANK

AMERICAN STATE BANK CORPORATION

AND

AMERICAN STATE BANK

DATED AS OF AUGUST 9, 2005

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TABLE OF CONTENTS

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ARTICLE I THE MERGER.................................................................................................... 1

1.1 The Merger..................................................................................................... 1

1.2 Effective Time................................................................................................. 2

1.3 Effects of the Merger.......................................................................................... 2

1.4 Conversion of ASB Bancorp Common Stock......................................................................... 2

1.5 Stock Options.................................................................................................. 5

1.6 Tax Matters.................................................................................................... 5

1.7 BancorpSouth Common Stock...................................................................................... 6

1.8 Articles of Incorporation...................................................................................... 6

1.9 Bylaws......................................................................................................... 7

1.10 Directors and Officers......................................................................................... 7

ARTICLE II EXCHANGE OF SHARES............................................................................................ 7

2.1 BancorpSouth to Make Shares and Cash Available................................................................. 7

2.2 Exchange of Shares; Payment of Cash Consideration.............................................................. 7

ARTICLE III DISCLOSURE SCHEDULES; STANDARDS FOR REPRESENTATIONS

AND WARRANTIES................................................................................................. 9

3.1 Disclosure Schedules........................................................................................... 9

3.2 Standards...................................................................................................... 10

ARTICLE IV REPRESENTATIONS AND WARRANTIES OF ASB BANCORP................................................................. 10

4.1 Corporate Organization......................................................................................... 11

4.2 Capitalization................................................................................................. 12

4.3 Authority; No Violation........................................................................................ 13

4.4 Consents and Approvals......................................................................................... 13

4.5 Reports........................................................................................................ 14

4.6 Financial Statements........................................................................................... 14

4.7 Broker's Fees.................................................................................................. 14

4.8 Absence of Certain Changes or Events........................................................................... 15

4.9 Legal Proceedings.............................................................................................. 15

4.10 Taxes.......................................................................................................... 15

4.11 Employees...................................................................................................... 16

4.12 ASB Bancorp Information........................................................................................ 19

4.13 Compliance with Applicable Law................................................................................. 20

4.14 Certain Contracts.............................................................................................. 20

4.15 Agreements with Regulatory Agencies............................................................................ 20

4.16 Business Combination Provision; Takeover Laws.................................................................. 21

4.17 Environmental Matters.......................................................................................... 21

4.18 Approvals...................................................................................................... 21

4.19 Insurance...................................................................................................... 21

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4.20 Loan Portfolio................................................................................................. 22

4.21 Property....................................................................................................... 22

4.22 Certain Transactions........................................................................................... 22

4.23 Business and Relationships..................................................................................... 23

4.24 Books and Records.............................................................................................. 23

4.25 Reorganization................................................................................................. 23

4.26 Accuracy of Statements......................................................................................... 23

ARTICLE V REPRESENTATIONS AND WARRANTIES OF BANCORPSOUTH................................................................ 23

5.1 Corporate Organization......................................................................................... 23

5.2 Capitalization................................................................................................. 24

5.3 Authority; No Violation........................................................................................ 24

5.4 Consents and Approvals......................................................................................... 25

5.5 Reports........................................................................................................ 25

5.6 Reorganization................................................................................................. 25

5.7 Financial Statements; SEC Reports.............................................................................. 25

5.8 Absence of Certain Changes or Events........................................................................... 26

5.9 BancorpSouth Information....................................................................................... 26

5.10 Approvals...................................................................................................... 26

ARTICLE VI COVENANTS RELATING TO CONDUCT OF BUSINESS..................................................................... 26

6.1 Covenants of ASB Bancorp....................................................................................... 26

6.2 Covenants of BancorpSouth...................................................................................... 29

ARTICLE VII ADDITIONAL AGREEMENTS....................................................................................... 29

7.1 Regulatory Matters............................................................................................. 29

7.2 Access to Information.......................................................................................... 30

7.3 Shareholder Meeting............................................................................................ 31

7.4 Legal Conditions to Merger..................................................................................... 31

7.5 Affiliates..................................................................................................... 31

7.6 NYSE Listing................................................................................................... 31

7.7 Employee Benefit Plans; Existing Agreements.................................................................... 31

7.8 Consents and Approvals......................................................................................... 32

7.9 Additional Agreements.......................................................................................... 32

7.10 Reasonable Best Efforts........................................................................................ 32

7.11 Tax-Free Qualification......................................................................................... 32

7.12 National Independence Trust Company............................................................................ 32

7.13 Indemnification of ASB Bancorp Directors and Officers.......................................................... 32

ARTICLE VIII CONDITIONS PRECEDENT........................................................................................ 33

8.1 Conditions to Each Party's Obligation To Effect the Merger..................................................... 33

8.2 Conditions to Obligations of BancorpSouth...................................................................... 34

8.3 Conditions to Obligations of ASB Bancorp....................................................................... 35

ARTICLE IX TERMINATION AND AMENDMENT..................................................................................... 36

9.1 Termination.................................................................................................... 36

9.2 Effect of Termination.......................................................................................... 36

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9.3 Amendment...................................................................................................... 37

9.4 Extension; Waiver.............................................................................................. 37

ARTICLE X GENERAL PROVISIONS............................................................................................ 37

10.1 Closing........................................................................................................ 37

10.2 Nonsurvival of Representations, Warranties and Agreements...................................................... 37

10.3 Expenses....................................................................................................... 37

10.4 Notices........................................................................................................ 37

10.5 Interpretation................................................................................................. 38

10.6 Defined Terms.................................................................................................. 39

10.7 Counterparts................................................................................................... 39

10.8 Entire Agreement............................................................................................... 39

10.9 Governing Law.................................................................................................. 39

10.10 Enforcement of Agreement....................................................................................... 39

10.11 Severability................................................................................................... 39

10.12 Publicity...................................................................................................... 39

10.13 Assignment; Third Party Beneficiaries.......................................................................... 40

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AGREEMENT AND PLAN OF MERGER

THIS AGREEMENT AND PLAN OF MERGER, dated as of August 9, 2005

("Agreement"), by and among BANCORPSOUTH, INC., a Mississippi corporation

("BancorpSouth"), BANCORPSOUTH BANK, a Mississippi banking corporation

("BancorpSouth Bank"), AMERICAN STATE BANK CORPORATION, an Arkansas corporation

("ASB Bancorp," and collectively with BancorpSouth, the "Holding Companies"),

and AMERICAN STATE BANK, an Arkansas banking corporation ("ASB Bank").

RECITALS:

WHEREAS, BancorpSouth is the parent corporation of BancorpSouth Bank;

WHEREAS, ASB Bancorp is the sole shareholder of ASB Bank;

WHEREAS, BancorpSouth and ASB Bancorp have determined that it is in the

best interests of their respective companies and their shareholders to

consummate the business combination transactions provided for herein in which

(i) ASB Bancorp will merge with and into BancorpSouth (the "Holding Company

Merger") and (ii) ASB Bank will merge with and into BancorpSouth Bank (the "Bank

Merger"), each subject to the terms and conditions set forth herein (the Holding

Company Merger and the Bank Merger, collectively, the "Merger");

WHEREAS, the parties intend that the Merger shall qualify as a

reorganization under the provisions of Section 368(a) of the Internal Revenue

Code of 1986, as amended (the "Code"), and the rules and regulations promulgated

thereunder; and

WHEREAS, the parties desire to make certain representations, warranties

and agreements in connection with the Merger and also to prescribe certain

conditions to the Merger.

NOW, THEREFORE, in consideration of the mutual covenants, representations,

warranties and agreements contained herein, the receipt and sufficiency of which

is hereby acknowledged, and intending to be legally bound hereby, the parties

agree as follows:

ARTICLE I. THE MERGER

1.1 The Merger.

(a) Subject to the terms and conditions of this Agreement, in accordance

with the Mississippi Business Corporation Act (the "MBCA") and the Arkansas

Business Corporation Act (the "ABCA"), at the Effective Time (as defined in

Section 1.2), ASB Bancorp shall merge with and into BancorpSouth. BancorpSouth

shall be the surviving corporation (hereinafter sometimes called the "Surviving

Corporation") in the Holding Company Merger, and shall continue its corporate

existence under the laws of the State of Mississippi. The name of the Surviving

Corporation shall continue to be "BancorpSouth, Inc." Upon consummation of the

Holding Company Merger, the separate corporate existence of ASB Bancorp shall

terminate.

(b) Subject to the terms and conditions of this Agreement, in accordance

with the Mississippi Banking Act (the "MBA") and the Arkansas Banking Act (the

"ABA"), as applicable, at the Effective Time, ASB Bank shall merge with and into

BancorpSouth Bank. BancorpSouth Bank shall be the surviving banking corporation

(hereinafter sometimes called the "Surviving Bank") in the Bank Merger,

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and shall continue its corporate existence under the laws of the State of

Mississippi. The name of the Surviving Bank shall continue to be "BancorpSouth

Bank." Upon consummation of the Bank Merger, the separate corporate existence of

ASB Bank shall terminate.

1.2 Effective Time.

(a) The Holding Company Merger shall become effective as set forth in the

articles of merger (the "Holding Company Articles of Merger") which shall be

filed on the Closing Date (as defined in Section 10.1) with the Secretary of

State of the State of Mississippi (the "Mississippi Secretary") and the

Secretary of State of the State of Arkansas (the "Arkansas Secretary") with

respect to the Holding Company Merger.

(b) The Bank Merger shall become effective as set forth in the articles of

merger (the "Bank Articles of Merger," and together with the Holding Company

Articles of Merger, the "Articles of Merger") which shall be filed on the

Closing Date (as defined in Section 10.1) with the Mississippi Department of

Banking and Consumer Finance (the "Mississippi Department"), the Arkansas State

Bank Department (the "Arkansas Department"), but shall occur immediately after

the Holding Company Merger.

becomes effective, as set forth in the Articles of Merger.

1.3 Effects of the Merger.

(a) At and after the Effective Time, the Holding Company Merger shall have

the effects set forth in Section 79-4-11.06 of the MBCA and Section 4-26-1006 of

the ABCA.

(b) At and after the Effective Time, the Bank Merger shall have the

effects set forth in, as applicable, Section 81-5-85 of the MBA and Section

23-48-505 of the ABA.

1.4 Conversion of ASB Bancorp Common Stock.

(a) At the Effective Time, each share of the common stock, $0.01 par value

per share, of ASB Bancorp (the "ASB Bancorp Common Stock") issued and

outstanding immediately prior to the Effective Time (other than ASB Bancorp

Dissenting Shares (as defined below) and shares of ASB Bancorp Common Stock held

directly or indirectly by BancorpSouth or ASB Bancorp or any of their respective

Subsidiaries as defined in Section 3.2(d) hereof (as adjusted below), other than

Trust Account Shares and DPC shares as such terms are defined in this Section

below) shall be converted, at the election of the holder thereof, into the right

to receive the following, without interest:

(i) for each share of ASB Bancorp Common Stock (other than ASB Dissenting

Shares) with respect to which an election to receive cash has been made (a "Cash

Election"), the right to receive in cash an amount equal to $93.9226 (the "Cash

Consideration", and collectively, the "Cash Election Shares");

(ii) for each share of ASB Bancorp Common Stock with respect to which an

election to receive common stock, par value $2.50 per share, of BancorpSouth

(the "BancorpSouth Common Stock") together with the number of BancorpSouth

Rights (as defined in Section 5.2 hereof) associated therewith, has been made (a

"Stock Election"), the right to receive from BancorpSouth the number of shares

of BancorpSouth Common Stock as is equal to the Exchange Ratio (as defined in

Section 1.4(b)) (the "Stock Consideration", and collectively, the "Stock

Election Shares");

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(iii) Holders of more than one share of ASB Bancorp Common Stock may elect

a combination of both cash and shares of BancorpSouth Common Stock (with such

election referred to as a "Mixed Election"). For purposes of this Agreement,

Cash Consideration, Stock Consideration and any combination thereof shall be

collectively referred to herein as "Merger Consideration"; and

(iv) for each share of ASB Bancorp Common Stock other than ASB Bancorp

Dissenters' Shares and shares as to which a Cash Election or a Stock Election

has been effectively made (collectively, "Non-Election Shares"), the right to

receive from BancorpSouth such Stock Consideration and/or Cash Consideration as

is determined in accordance with Section 1.4(d).

(b) Certain Definitions. For purposes of this Agreement, the following

terms shall have the following meanings:

(i) "Aggregate BancorpSouth Share Amount" shall be a number of shares of

BancorpSouth Common Stock calculated by multiplying (x) 0.50 by (y) the product

of the total number of then outstanding shares of ASB Common Stock multiplied by

the Exchange Ratio.

(ii) "Aggregate Cash Election Amount" means the amount calculated by

multiplying the Cash Consideration by the sum of (x) the aggregate number of

Cash Election Shares and (y) the aggregate number of Non-Election Shares being

converted into the right to receive the Cash Consideration.

(iii) "Average BancorpSouth Common Stock Price" means the average of the

closing price per share of BancorpSouth Common Stock on the New York Stock

Exchange (the "NYSE") at the end of the regular session as reported on the

Consolidated Tape, Network A, for the ten consecutive trading days ending on the

fifth trading day immediately preceding the day upon which the Shareholders of

ASB Common Stock shall meet to approve the transactions herein.

(iv) "Exchange Ratio" shall be equal (rounded to the nearest

ten-thousandth) to (x) 2.1769, if the Average BancorpSouth Common Stock Price is

less than or equal to $21.5729, (y) 1.8731, if the Average BancorpSouth Common

Stock Price is greater than or equal to $25.0712, or (z) if the Average

BancorpSouth Common Stock Price is between $21.5729 and $25.0712, the result

obtained by dividing $46.96 by the Average BancorpSouth Common Stock Price.

Common Stock to be converted into Stock Consideration (the "Stock Conversion

Number") shall be equal to the quotient obtained by dividing (x) the Aggregate

BancorpSouth Share Amount by (y) the Exchange Ratio. All of the other shares of

ASB Bancorp Common Stock shall be converted into Cash Consideration (in each

case, excluding shares of ASB Bancorp Common Stock to be cancelled pursuant to

Subsection (e) below).

(d) As promptly as possible after the Election Deadline (as defined

below), BancorpSouth shall cause the Exchange Agent (as defined in Section 2.1)

to effect the allocation among holders of ASB Bancorp Common Stock of rights to

receive the Cash Consideration and the Stock Consideration as follows:

(i) If the aggregate number of shares of ASB Bancorp Common Stock with

respect to which Stock Elections shall have been made (the "Stock Election

Number") exceeds the Stock Conversion Number, then all Cash Election Shares and

all Non-Election Shares of each holder thereof shall be converted into the right

to receive the Cash Consideration, and Stock Election Shares of each holder

thereof will be converted into the right to receive the Stock Consideration in

respect of that number of Stock Election Shares equal to the product obtained by

multiplying (x) the number of Stock Election Shares held by such holder by (y) a

fraction, the numerator of which is the Stock Conversion Number and

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the denominator of which is the Stock Election Number, with the remaining number

of such holder's Stock Election Shares being converted into the right to receive

the Cash Consideration; and

(ii) If the Stock Election Number is less than the Stock Conversion Number

(the amount by which the Stock Conversion Number exceeds the Stock Election

Number being referred to herein as the "Shortfall Number"), then all Stock

Election Shares shall be converted into the right to receive the Stock

Consideration and the Non-Election Shares and Cash Election Shares shall be

treated in the following manner:

(A) If the Shortfall Number is less than or equal to the number of

Non-Election Shares, then all Cash Election Shares shall be converted into

the right to receive the Cash Consideration and the Non-Election Shares of

each holder thereof shall convert into the right to receive the Stock

Consideration in respect of that number of Non-Election Shares equal to

the product obtained by multiplying (x) the number of Non-Election Shares

held by such holder by (y) a fraction, the numerator of which is the

Shortfall Number and the denominator of which is the total number of

Non-Election Shares, with the remaining number of such holder's

Non-Election Shares being converted into the right to receive the Cash

Consideration; or

(B) If the Shortfall Number exceeds the number of Non-Election Shares,

then all Non-Election Shares shall be converted into the right to receive

the Stock Consideration and Cash Election Shares of each holder thereof

shall convert into the right to receive the Stock Consideration in respect

of that number of Cash Election Shares equal to the product obtained by

multiplying (x) the number of Cash Election Shares held by such holder by

(y) a fraction, the numerator of which is the amount by which (1) the

Shortfall Number exceeds (2) the total number of Non-Election Shares and

the denominator of which is the total number of Cash Election Shares, with

the remaining number of such holder's Cash Election Shares being converted

into the right to receive the Cash Consideration.

(e) At the Effective Time, all shares of ASB Bancorp Common Stock that are

owned directly or indirectly by BancorpSouth or ASB Bancorp or any of their

respective Subsidiaries, other than shares of ASB Bancorp Common Stock (i) held

directly or indirectly in trust accounts, managed accounts and the like or

otherwise held in a fiduciary capacity for the benefit of third parties (any

such shares, and shares of BancorpSouth Common Stock which are similarly held,

whether held directly or indirectly by BancorpSouth or ASB Bancorp, as the case

may be, being referred to herein as "Trust Account Shares") and (ii) held by

BancorpSouth or ASB Bancorp or any of their respective Subsidiaries in respect

of a debt previously contracted (any such shares of ASB Bancorp Common Stock,

and shares of BancorpSouth Common Stock which are similarly held, whether held

directly or indirectly by BancorpSouth or ASB Bancorp, being referred to herein

as "DPC Shares"), shall be canceled and shall cease to exist, and no stock of

BancorpSouth or other consideration shall be delivered in exchange therefor. All

shares of BancorpSouth Common Stock that are owned by ASB Bancorp or any of its

Subsidiaries (other than Trust Account Shares and DPC Shares) shall become

treasury stock of BancorpSouth.

(f) Each share of ASB Bancorp Common Stock converted into BancorpSouth

Common Stock pursuant to this Article I shall no longer be outstanding and shall

automatically be canceled and shall cease to exist, and each certificate (each a

"Certificate") previously representing any such shares of ASB Bancorp Common

Stock shall thereafter only represent the right to receive (i) the number of

whole shares of BancorpSouth Common Stock into which such share is convertible

pursuant to Section 1.4(a) and (ii) the cash in lieu of fractional shares into

which the shares of ASB BANCORP Common Stock represented by such Certificate

have been converted pursuant to Section 1.4(a) and Section 2.2(e) hereof, and

(iii) Cash Consideration pursuant to Section 1.4(a) hereof. Certificates

previously representing shares of ASB Bancorp Common Stock shall be exchanged

for certificates representing whole shares of BancorpSouth Common Stock and cash

in lieu of fractional shares issued in consideration therefor and

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Cash Consideration upon the surrender of such Certificates in accordance with

Section 2.2 hereof, without any interest thereon. If, between the date of this

Agreement and the Effective Time, the shares of BancorpSouth Common Stock shall

be changed into a different number or class of shares by reason of any

reclassification, recapitalization, split-up, combination, exchange of shares or

readjustment, or a stock dividend thereon shall be declared with a record date

within said period (any such event, an "Anti-Dilution Event"), the Exchange

Ratio and the Merger Consideration shall be adjusted to result in the same

aggregate consideration being delivered to ASB Bancorp's shareholders as would

have been received had such Anti-Dilution Event not occurred.

(g) Notwithstanding anything in this Agreement to the contrary, shares of

ASB Bancorp Common Stock which are outstanding immediately prior to the

Effective Time and with respect to which dissenters' rights shall have been

properly demanded in accordance with Sections 4-27-1323, et. seq. of the ABCA

("ASB Bancorp Dissenting Shares") shall not be converted into the right to

receive, or be exchangeable for, Merger Consideration or cash in lieu of

fractional shares but, instead, the holders thereof shall be entitled to payment

of the appraised value of such ASB Bancorp Dissenting Shares in accordance with

the provisions of Sections of the ABCA; provided, however, that (i) if any

holder of ASB Bancorp Dissenting Shares shall subsequently deliver a written

withdrawal of his demand for appraisal of such shares, or (ii) if any holder

fails to establish his entitlement to dissenters' rights as provided in Sections

4-27-1323, et. sec. of the ABCA, such holder or holders (as the case may be)

shall forfeit the right to appraisal of such shares of ASB Bancorp Common Stock

and each of such shares shall thereupon be deemed to have been converted into

the right to receive, and to have become exchangeable for, as of the Effective

Time, Stock Consideration and/or cash in lieu of fractional shares and/or Cash

Consideration, without any interest thereon, as provided in Sections 1.4(a) and

1.4(c) and Article II hereof.

(h) At the Effective Time, all shares of ASB Bank common stock shall be

canceled and shall cease to exist and no stock of BancorpSouth or BancorpSouth

Bank or other consideration shall be delivered in exchange therefor.

1.5 Stock Options. Immediately prior to the Effective Time, each option to

purchase shares of ASB Bancorp Common Stock (the "ASB Options") granted to any

person (each an "Option Holder") outstanding and unexercised immediately prior

thereto, including those options granted under the Amended and Restated Stock

Option Agreements by and between ASB Bancorp and Frank Oldham, Steve Gramling,

David Dudley and Judy Dacus dated December 30, 2002 and referenced in the

employment agreements for such executives, shall be automatically exercised

through the cashless exercise arrangement described in this Section 1.5. Upon

exercise of the ASB Options, each Option Holder will receive a number of whole

and fractional shares of ASB Bancorp Common Stock equal to the aggregate spread

value (i.e., the excess of the Cash Consideration over the exercise price) of

such Option Holder's options divided by the Cash Consideration. Following such

cashless exercise, the Option Holders shall be entitled to the conversion rights

described in Section 1.4 with respect to the shares of ASB Bancorp Common Stock

received upon such option exercise. Upon the Effective Time, any unexercised ASB

Options shall not be exchanged for options to purchase BXS Common Stock or any

other right to receive BXS Common Stock.

1.6 Tax Matters. Notwithstanding any other provision contained in this

Agreement, it is intended that the Holding Company Merger shall qualify as a

reorganization within the meaning of Section 368(a) of the Code and that this

Agreement shall constitute a "plan of reorganization" for purposes of Sections

354 and 361 of the Code.

(a) In order that the Holding Company Merger will not fail to satisfy the

continuity of interest requirements under applicable federal income tax

principles relating to reorganizations under Section 368(a) of the Code, if the

aggregate value of the shares of BancorpSouth Common Stock to be

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issued in connection with the Holding Company Merger, based upon the closing

price per share of BancorpSouth Common Stock on NYSE at the end of the regular

session as reported on the Consolidated Tape, Network A, for the trading day

immediately prior to the Effective Time (the "Aggregate BancorpSouth Share Value

Consideration"), would be less than 45% of the sum of (i) the Aggregate

BancorpSouth Share Value Consideration and (ii) the Aggregate Cash Value

Consideration (as defined below), then BancorpSouth may, in its sole discretion,

increase the Stock Consideration and decrease the Cash Consideration so that,

after such adjustment, the aggregate value of the shares of BancorpSouth Common

Stock to be issued to the holders of ASB Bancorp Common Stock in connection with

the Holding Company Merger, as determined based upon the closing price per share

of BancorpSouth Common Stock on NYSE at the end of the regular session as

reported on the Consolidated Tape, Network A, for the trading day immediately

prior to the Effective Time, is at least 45% of the sum of (i) the aggregate

value of the shares of BancorpSouth Common Stock to be issued to the holders of

ASB Bancorp Common Stock in connection with the Holding Company Merger, as

determined based upon the closing price per share of BancorpSouth Common Stock

on NYSE at the end of the regular session as reported on the Consolidated Tape,

Network A, for the trading day immediately prior to the Effective Time, and (ii)

the Aggregate Cash Value Consideration. In the event that the Stock

Consideration and Cash Consideration are adjusted as provided for in this

Section 1.6(a), all references in this Agreement to the "Stock Consideration"

and the "Cash Consideration" shall refer to the Stock Consideration and Cash

Consideration as adjusted in this Section 1.6(a). For purposes of this

Agreement, the "Aggregate Cash Value Consideration" shall be an amount, as

determined by BancorpSouth, equal to the sum of (A) Aggregate Cash Election

Amount, (B) the product of the number of ASB Bancorp Dissenting Shares (except

to the extent that the holder of such ASB Bancorp Dissenting Shares, as of the

Closing Date, has effectively withdrawn or lost his right to dissent from the

Merger under the ABCA) and the Cash Consideration, (C) the amount of cash to be

issued to holders of ASB Bancorp Common Stock in lieu of fractional shares of

BancorpSouth Common Stock and (D) any other amounts received by a holder of ASB

Bancorp Common Stock prior to the Merger, either in a redemption of ASB Bancorp

stock or in a distribution with respect to ASB Bancorp stock (but only to the

extent such amount is treated as other property or money received in the

exchange for purposes of Section 356 of the Code, or would be so treated if the

ASB Bancorp shareholder also had received stock of BancorpSouth in exchange for

stock owned by the shareholder in ASB Bancorp).

(b) The parties agree that BancorpSouth may at any time change the method

of effecting the combination of BancorpSouth and ASB Bancorp or the Bank Merger,

including, without limitation, by merging ASB Bancorp with a direct wholly-owned

subsidiary of BancorpSouth, and ASB Bancorp shall cooperate in such efforts,

including by entering into an appropriate amendment to this Agreement (to the

extent such amendment only changes the method of effecting the business

combination and does not substantively affect this Agreement or the rights and

obligations of the parties or their respective shareholders hereunder);

provided, however, that any such subsidiary shall become a party to, and shall

agree to be bound by, the terms of this Agreement, and that any such change

shall not (i) alter or change the kind or amount of Merger Consideration to be

provided to holders of ASB Bancorp Common Stock as provided for in this

Agreement, (ii) adversely affect the rights of holders of ASB Bancorp Options

(hereinafter defined) or (iii) materially impede or delay consummation of the

transactions contemplated by this Agreement.

1.7 BancorpSouth Common Stock. Except for shares of BancorpSouth Common Stock

owned by ASB Bancorp or any of its Subsidiaries (other than Trust Account Shares

and DPC Shares), which shall be converted into authorized but unissued stock of

BancorpSouth as contemplated by Section 1.4 hereof, the shares of BancorpSouth

Common Stock issued and outstanding immediately prior to the Effective Time

shall be unaffected by the Merger and such shares shall remain issued and

outstanding.

1.8 Articles of Incorporation. At the Effective Time, the Amended and Restated

Articles of Incorporation of BancorpSouth, as in effect at the Effective Time,

shall be the articles of incorporation of

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the Surviving Corporation. At the Effective Time, the Amended and Restated

Articles of Association of BancorpSouth Bank, as in effect at the Effective

Time, shall be the articles of association of the Surviving Bank.

1.9 Bylaws. At the Effective Time, the Bylaws of BancorpSouth, as in effect

immediately prior to the Effective Time, shall be the bylaws of the Surviving

Corporation until thereafter amended in accordance with applicable law and the

articles of incorporation of the Surviving Corporation. At the Effective Time,

the Bylaws of BancorpSouth Bank, as in effect immediately prior to the Effective

Time, shall be the bylaws of the Surviving Bank until thereafter amended in

accordance with applicable law and the articles of association of the Surviving

Bank.

1.10 Directors and Officers. The directors and officers of BancorpSouth

immediately prior to the Effective Time shall be the directors and officers of

the Surviving Corporation, each to hold office in accordance with the articles

of incorporation and bylaws of the Surviving Corporation until their respective

successors are duly elected or appointed and qualified. The directors and

officers of BancorpSouth Bank immediately prior to the Effective Time shall be

the directors and officers of the Surviving Bank, each to hold office in

accordance with the articles of association and bylaws of the Surviving Bank

until their respective successors are duly elected or appointed and qualified.

ARTICLE II. EXCHANGE OF SHARES

2.1 BancorpSouth to Make Shares and Cash Available. At or prior to the Effective

Time, BancorpSouth shall deposit, or shall cause to be deposited, with SunTrust

Bank, Atlanta, N.A. or another bank or trust company (the "Exchange Agent")

selected by BancorpSouth and reasonably satisfactory to ASB Bancorp, for the

benefit of the holders of Certificates, for exchange in accordance with this

Article II, the Cash Consideration, certificates representing the shares of

BancorpSouth Common Stock constituting the Stock Consideration and the cash in

lieu of fractional shares (such cash and certificates for shares of BancorpSouth

Common Stock, together with any dividends or distributions with respect thereto,

being hereinafter referred to as the "Exchange Fund") to be issued pursuant to

Section 1.4 and paid pursuant to Section 2.2(a) in exchange for outstanding

shares of ASB Bancorp Common Stock.

2.2 Exchange of Shares; Payment of Cash Consideration.

(a) At the time of the mailing of the Proxy Statement and Prospectus

described in Section 7.1 hereof, BancorpSouth will cause the Exchange Agent to

send to each holder of record of shares of ASB Bancorp Common Stock on the

record date for the meeting of the shareholders of ASB Bancorp a letter of

transmittal and cash election form (collectively, the "Election Form") and other

appropriate materials providing for such holder, subject to the provisions of

Section 1.4 hereof, to make a Stock Election, Cash Election, Mixed Election, or

No Election. As of the Election Deadline (as defined below), any shares of ASB

Bancorp Common Stock with respect to which there shall not have been such

election by submission to the Exchange Agent of an effective, properly completed

Election Form shall be deemed to be No Election Shares.

(i) Any Cash Election, Stock Election or Mixed Election shall have

been validly made only if the Exchange Agent shall have received an Election

Form properly completed by 5:00 p.m., Central Time, on the second business day

immediately preceding the meeting of shareholders of ASB Bancorp described in

Section 7.1 hereof (the "Election Deadline"). An election by a holder of shares

of ASB Bancorp Common Stock shall be validly made only if the Exchange Agent

shall have received an Election Form properly completed and executed (with the

signature or signatures thereon guaranteed if required by the Election Form) by

such holder of shares of ASB Bancorp Common Stock. An Election Form shall be

deemed properly completed only if accompanied by one or more Certificates (or

customary affidavits and, if required by BancorpSouth, indemnification regarding

the loss or destruction of such

<PAGE>

Certificates or the guaranteed delivery of such Certificates) representing all

shares of ASB Bancorp Common Stock covered by such Election Form, together with

duly executed transmittal materials included with the Election Form.

BancorpSouth shall have the right to make reasonable determinations and to

establish reasonable procedures (not inconsistent with the terms of this

Agreement) in guiding the Exchange Agent in its determination as to the validity

of Election Forms and of any revision, revocation or withdrawal thereof.

(ii) Two or more holders of shares of ASB Bancorp Common Stock who

are determined to constructively own shares owned by each other by virtue of

Section 318(a) of the Code and who so certify to BancorpSouth's satisfaction,

and any single holder of shares of ASB Bancorp Common Stock who holds such

shares in two or more different names and who so certifies to BancorpSouth's

satisfaction, may submit a joint Election Form covering the aggregate shares of

ASB Bancorp Common Stock owned by all such holders or by such single holder, as

the case may be. For all purposes of this Agreement, each such group of holders

which, and each such single holder who, submits a joint Election Form shall be

treated as a single holder of shares of ASB Bancorp Common Stock.

(iii) Each holder of record of shares of ASB Bancorp Common Stock

who holds such shares as nominee, trustee or in other representative capacities

(each, a "Representative") may submit multiple Election Forms, provided that

such Representative certifies that each such Election Form covers all shares of

ASB Bancorp Common Stock held by that Representative for a particular beneficial

owner.

(iv) Any holder of shares of ASB Bancorp Common Stock who has made

an election by submitting an Election Form to the Exchange Agent may at any time

prior to the Election Deadline change such holder's election by submitting a

revised Election Form, properly completed and signed, that is received by the

Exchange Agent prior to the Election Deadline. Any holder of shares of ASB

Bancorp Common Stock may at any time prior to the Election Deadline revoke such

holder's election by written notice to the Exchange Agent received at any time

prior to the Election Deadline.

(b) As soon as practicable after the Election Deadline (the "Allocation

Date"), the Exchange Agent shall effectuate the allocation among the holders of

shares of ASB Bancorp Common Stock of rights to receive the Stock Consideration,

the Cash Consideration or a combination of both the Stock Consideration and the

Cash Consideration in the Merger in accordance with the terms of this Section.

As more fully set forth in Section 1.4 above, the aggregate number of shares of

ASB Bancorp Common Stock to be converted in the Merger into the right to receive

Cash Consideration may not exceed 50.0% of the outstanding shares of ASB Bancorp

Common Stock, and the aggregate number of shares of ASB Bancorp Common Stock to

be converted in the Merger into the right to receive Stock Consideration may not

exceed 50.0% of the total number of outstanding shares of ASB Bancorp Common

Stock.

with respect to BancorpSouth Common Stock and payable to the holders of record

thereof shall be paid to the holder of any unsurrendered Certificate until the

holder thereof shall surrender such Certificate in accordance with this Article

II. After the surrender of a Certificate in accordance with this Article II, the

record holder thereof shall be entitled to receive any such dividends or other

distributions, without any interest thereon, which theretofore had become

payable with respect to shares of BancorpSouth Common Stock represented by such

Certificate.

(d) If any certificate representing shares of BancorpSouth Common Stock is

to be issued in a name other than that in which the Certificate surrendered in

exchange therefor is registered, it shall be a condition of the issuance thereof

that the Certificate so surrendered shall be properly endorsed (or accompanied

by an appropriate instrument of transfer) and otherwise in proper form for

transfer, and that the person requesting such exchange shall pay to the Exchange

Agent in advance any transfer or other taxes required by reason of the issuance

of a certificate representing shares of BancorpSouth Common

<PAGE>

Stock in any name other than that of the registered holder of the Certificate

surrendered, or required for any other reason, or shall establish to the

satisfaction of the Exchange Agent that such tax has been paid or is not

payable.

(e) After the Effective Time, there shall be no transfers on the stock

transfer books of ASB Bancorp of the shares of ASB Bancorp Common Stock which

were issued and outstanding immediately prior to the Effective Time. If, after

the Effective Time, Certificates representing such shares are presented for

transfer to the Exchange Agent, they shall be canceled and exchanged for

certificates representing shares of BancorpSouth Common Stock as provided in

this Article II.

(f) Notwithstanding anything to the contrary contained herein, no

certificates or scrip representing fractional shares of BancorpSouth Common

Stock shall be issued upon the surrender for exchange of Certificates, no

dividend or distribution with respect to BancorpSouth Common Stock shall be

payable on or with respect to any fractional share, and such fractional share

interests shall not entitle the owner thereof to vote or to any other rights of

a shareholder of BancorpSouth. In lieu of the issuance of any such fractional

share, BancorpSouth shall pay to each former shareholder of ASB Bancorp who

otherwise would be entitled to receive a fractional share of BancorpSouth Common

Stock an amount in cash equal to the product of (x) the closing price per share

of BancorpSouth Common Stock on NYSE at the end of the regular session as

reported on the Consolidated Tape, Network A, for the trading day immediately

prior to the Effective Time and (y) the fraction of a share of BancorpSouth

Common Stock which such holder would otherwise be entitled to receive pursuant

to Article I hereof.

(g) Any portion of the Exchange Fund that remains unclaimed by the

shareholders of ASB Bancorp for 12 months after the Effective Time shall be paid

to BancorpSouth. Any shareholders of ASB Bancorp who have not theretofore

complied with this Article II shall thereafter look only to BancorpSouth for

payment of their portion of the Cash Consideration and their shares of

BancorpSouth Common Stock, cash in lieu of fractional shares and unpaid

dividends and distributions on BancorpSouth Common Stock deliverable in respect

of each share of ASB Bancorp Common Stock such shareholder holds as determined

pursuant to this Agreement, in each case, without any interest thereon.

Notwithstanding the foregoing, none of BancorpSouth, ASB Bancorp, the Exchange

Agent or any other person shall be liable to any former holder of shares of ASB

Bancorp Common Stock for any amount properly delivered to a public official

pursuant to applicable abandoned property, escheat or similar laws.

(h) In the event any Certificate shall have been lost, stolen or

destroyed, upon the making of an affidavit of that fact by the person claiming

such Certificate to be lost, stolen or destroyed and, if required by

BancorpSouth, the posting by such person of a bond in such amount as is

customarily required by BancorpSouth and Exchange Agent for other shareholders

of BancorpSouth as indemnity against any claim that may be made against it with

respect to such Certificate, the Exchange Agent will issue in exchange for such

lost, stolen or destroyed Certificate the shares of BancorpSouth Common Stock

and cash in lieu of fractional shares deliverable in respect thereof pursuant to

this Agreement.

ARTICLE III. DISCLOSURE SCHEDULES; STANDARDS FOR

REPRESENTATIONS AND WARRANTIES

3.1 Disclosure Schedules. On or prior to the date hereof, each of BancorpSouth

and ASB Bancorp has delivered to the other party a schedule (in the case of ASB

Bancorp, the "ASB Bancorp Disclosure Schedule," and in the case of BancorpSouth,

the "BancorpSouth Disclosure Schedule," and, generally, a "Disclosure Schedule")

setting forth, among other things, items the disclosure of which is necessary or

appropriate either in response to an express disclosure requirement contained in

a provision hereof or as an exception to one or more of such party's

representations or warranties contained in Article IV, in the case of ASB

Bancorp, or Article V, in the case of BancorpSouth, or to one or more of such

party's covenants contained in Article VI; provided, however, that the mere

inclusion of an item in a Disclosure

<PAGE>

Schedule as an exception to a representation or warranty shall not be deemed an

admission by a party that such item represents a material exception or material

fact, event or circumstance or that such item has had or could be reasonably

expected to have a Material Adverse Effect (as defined in Section 3.2 below)

with respect to either ASB Bancorp or BancorpSouth, respectively.

3.2 Standards.

(a) As used in this Agreement, the term "Material Adverse Effect" means,

with respect to ASB Bancorp, an event affecting or a change with respect to ASB

Bancorp or its Subsidiaries which, (i) individually or in the aggregate has

resulted or is reasonably expected by BancorpSouth, to result in losses,

damages, liabilities, costs, expenses, judgments or fines in an amount of

$750,000 or greater; or (ii) is materially adverse to (A) the business,

condition, assets, properties, rights, prospects or results of operations of ASB

Bancorp and its Subsidiaries or (B) the ability of ASB Bancorp and its

Subsidiaries to consummate the transactions contemplated hereby; provided that,

for purposes of clauses (i) and (ii), Material Adverse Effect shall specifically

exclude any adverse effect attributable to or resulting from (1) any change in

banking laws, rules or regulations of general applicability or interpretations

thereof by courts or governmental authorities, (2) any change in generally

accepted accounting principles ("GAAP") or regulatory accounting principles

applicable to banks or their holding companies generally, (3) any action or

omission of ASB Bancorp or any Subsidiary of ASB Bancorp taken with the express

prior written consent of BancorpSouth, (4) any out of pocket expenses incurred

by ASB Bancorp where such expenses are contemplated by or reasonably incurred in

connection with this Agreement or the transactions contemplated hereby, or (5)

any changes in general economic conditions or changes affecting the banking

industry generally, including adverse changes in the banking or financial

markets (provided such changes do not affect ASB Bancorp in a disproportionate

manner).

(b) As used in this Agreement, the term "Material Adverse Effect" means,

with respect to BancorpSouth, a material adverse effect on (i) the business,

condition, assets, properties, rights, prospects or results of operations of

BancorpSouth and its Subsidiaries taken as a whole or (ii) the ability of

BancorpSouth and its Subsidiaries to consummate the transactions contemplated

hereby; provided that Material Adverse Effect shall specifically exclude any

adverse effect attributable to or resulting from (A) any change in banking laws,

rules or regulations of general applicability, (B) any change in GAAP or

regulatory accounting principles applicable to banks or their holding companies

generally or interpretations thereof by courts or governmental authorities, (C)

any action or omission of BancorpSouth or any Subsidiary of BancorpSouth taken

with the express prior written consent of ASB Bancorp, (D) any expenses incurred

by BancorpSouth where such expenses are contemplated by or reasonably incurred

in connection with this Agreement or the transactions contemplated hereby, or

(E) any changes in general economic conditions or changes affecting the banking

industry generally, including adverse changes in the banking or financial

markets (provided such changes do not affect BancorpSouth in a disproportionate

manner). Changes in the market price of BancorpSouth Common Stock shall not be

considered Material Adverse Effects or otherwise considered a material change or

circumstance for any purpose.

respect to any party means any corporation, partnership, limited liability

company or other person, entity or organization, whether incorporated or

unincorporated, with respect to which such party owns, directly or indirectly,

50% or more of the equity or ownership interests, or an amount of voting

securities or ownership interests sufficient to elect at least a majority of its

board of directors or other governing body.

ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF ASB BANCORP

ASB Bancorp hereby represents and warrants to BancorpSouth as follows:

<PAGE>

4.1 Corporate Organization.

(a) ASB Bancorp is a corporation duly organized, validly existing and in

good standing under the laws of the State of Arkansas. ASB Bancorp has the

corporate power and authority to own or lease all of its properties and assets

and to carry on its business as it is now being conducted. ASB Bancorp is duly

licensed or qualified to do business in each jurisdiction in which the nature of

the business conducted by it or the character or location of the properties and

assets owned or leased by it makes such licensing or qualification necessary,

except where failure to obtain such license or qualification would not have a

Material Adverse Effect on ASB Bancorp. ASB Bancorp is duly registered as a

financial holding company under the Bank Holding Company Act of 1956, as amended

(the "BHC Act"). The Charter and Bylaws of ASB Bancorp, copies of which have

previously been provided to BancorpSouth, are true and correct copies of such

documents as currently in effect. ASB Bancorp has no Subsidiaries other than ASB

Bank, American State Trust I, Inc. ("ASB Trust") and American State Trust and

Financial Services, Inc. ("ASB Financial"). ASB Bancorp does not own (other than

in a bona fide fiduciary capacity or in satisfaction of a debt previously

contracted) beneficially, directly or indirectly (other than as set forth in

Section 4.1(a) of the ASB Bancorp Disclosure Schedule), any shares of capital

stock or any equity securities or similar interests of any person, or any

interest in a partnership or joint venture of any kind.

(b) ASB Bank is a Arkansas state bank duly organized, validly existing and

in good standing under the laws of the State of Arkansas. The deposit accounts

of ASB Bank are insured by the Federal Deposit Insurance Corporation (the

"FDIC") through the Bank Insurance Fund (the "BIF") to the fullest extent

permitted by law, and all premiums and assessments required to be paid in

connection therewith have been paid when due. ASB Bank has the corporate power

and authority to own or lease all of its properties and assets and to carry on

its business as it is now being conducted. ASB Bank is duly licensed or

qualified to do business in each jurisdiction in which the nature of the

business conducted by it or the character or the location of the properties and

assets owned or leased by it makes such licensing or qualification necessary,

except where failure to obtain such license or qualification would not have a

Material Adverse Effect on ASB Bank. The Charter and Bylaws of ASB Bank, copies

of which have previously been provided to BancorpSouth, are true and correct

copies of such documents as currently in effect. ASB Bank has no Subsidiaries

and does not own beneficially, directly or indirectly, any shares of any equity

securities or similar interests of any person, or any interest in a partnership

or joint venture of any kind.

good standing under the laws of the State of Arkansas. ASB Financial has the

corporate power and authority to own or lease all of its properties and assets

and to carry on its business as it is now being conducted. ASB Financial is duly

licensed or qualified to do business in each jurisdiction in which the nature of

the business conducted by it or the character or the location of the properties

and assets owned or leased by it makes such licensing or qualification

necessary, except where failure to obtain such license or qualification would

not have a Material Adverse Effect on ASB Bancorp. The governing documents of

ASB Financial, copies of which have previously been provided to BancorpSouth,

are true and correct copies of such documents as currently in effect. ASB

Financial has no Subsidiaries and does not own (other than in a bona fide

fiduciary capacity or in satisfaction of a debt previously contracted)

beneficially, directly or indirectly, any shares of any equity securities or

similar interests of any person, or any interest in a partnership or joint

venture of any kind.

(d) ASB Trust is a corporation duly organized, validly existing and in

good standing under the laws of the State of Arkansas. ASB Trust has the

corporate power and authority to own or lease all of its properties and assets

and to carry on its business as it is now being conducted. ASB Trust is duly

licensed or qualified to do business in each jurisdiction in which the nature of

the business conducted by it or the character or the location of the properties

and assets owned or leased by it makes such licensing

<PAGE>

or qualification necessary, except where failure to obtain such license or

qualification would not have a Material Adverse Effect on ASB Bancorp. The

governing documents of ASB Trust, copies of which have previously been provided

to BancorpSouth, are true and correct copies of such documents as currently in

effect. ASB Trust has no Subsidiaries and does not own (other than in a bona

fide fiduciary capacity or in satisfaction of a debt previously contracted)

beneficially, directly or indirectly, any shares of any equity securities or

similar interests of any person, or any interest in a partnership or joint

venture of any kind.

(e) The minute books of ASB Bancorp and each of its direct and indirect

Subsidiaries contain true and correct records of all meetings and other

corporate actions held or taken of their respective shareholders and Boards of

Directors (including committees of their respective Boards of Directors).

4.2 Capitalization.

(a) The authorized capital stock of ASB Bancorp consists of 1,250,000

shares of ASB Bancorp Common Stock, $0.01 par value. There are 472,266 shares of

ASB Bancorp Common Stock issued and outstanding and 0 shares of ASB Bancorp

Common Stock held by ASB Bancorp as treasury stock. There are no shares of ASB

Bancorp Common Stock reserved for issuance upon exercise of outstanding stock

options or otherwise. All of the issued and outstanding shares of ASB Bancorp

Common Stock have been duly authorized and validly issued and are fully paid,

nonassessable, and were issued in compliance with and are currently free of all

preemptive rights, with no personal liability attaching to the ownership

thereof. Except for options to be outstanding to purchase a total of 106,260

shares of ASB Bancorp Common Stock (the "Options"), ASB Bancorp does not have

and is not bound by any outstanding subscriptions, options, warrants, calls,

commitments or agreements of any character calling for the purchase or issuance

of any shares of ASB Bancorp Common Stock or ASB Bancorp Preferred Stock or any

other equity security or capital stock of ASB Bancorp or any securities

representing the right to purchase or otherwise receive any shares of ASB

Bancorp Common Stock or any other equity security or capital stock of ASB

Bancorp. Upon the cashless exercise of the Options pursuant to Section 1.5

herein, the Option Holders will receive a total of 60,088 shares of ASB Bancorp

Common Stock in the aggregate, so that the total number of shares of ASB Bancorp

Common Stock outstanding as of the Effective Time shall be 532,354. Set forth in

Section 4.2(a) of the ASB Bancorp Disclosure Schedule is a complete and correct

list, for each of the Options, of the names of the optionees, the date of grant,

the number of shares subject to each such option, the expiration date of each

such option, and the price at which each such option may be exercised.

(b) The authorized capital stock of ASB Bank consists of 4,000 shares of

Bank Common Stock, $25.00 par value. Except as set forth in Section 4.2(b) of

the ASB Bancorp Disclosure Schedule, ASB Bancorp owns, directly or indirectly,

all of the issued and outstanding shares of the capital stock, membership

interests or other equity securities of each of ASB Bancorp's Subsidiaries, free

and clear of all liens, charges, encumbrances and security interests whatsoever,

and all of such shares, membership interests or other equity interests are duly

authorized and validly issued and are fully paid, nonassessable (except as

otherwise provided by applicable federal law) and free of preemptive rights,

with no personal liability attaching to the ownership thereof. ASB Bancorp's

Subsidiaries are not bound by any outstanding subscriptions, options, warrants,

calls, commitments or agreements of any character calling for the purchase or

issuance of any shares of capital stock or any other equity security of any of

ASB Bancorp's Subsidiaries or any securities representing the right to purchase

or otherwise receive any shares of capital stock or any other equity security of

any of ASB Bancorp's Subsidiaries. There are no outstanding subscriptions,

options, warrants, calls, commitments or agreements of any character by which

ASB Bancorp or any of its Subsidiaries will be bound calling for the purchase or

issuance of any shares of the capital stock, membership interests or other

equity securities of any of ASB Bancorp's Subsidiaries.

<PAGE>

4.3 Authority; No Violation.

(a) ASB Bancorp has full corporate power and authority to execute and

deliver this Agreement and, upon the receipt of requisite approval by the

shareholders of ASB Bancorp of this Agreement, to consummate the transactions

contemplated hereby. The execution and delivery of this Agreement and the

consummation of the transactions contemplated hereby have been duly and validly

approved by the Board of Directors of ASB Bancorp and the Board of Directors of

ASB Bank. The Board of Directors of ASB Bancorp has directed that this Agreement

and the transactions contemplated hereby be submitted to ASB Bancorp's

shareholders for approval at a meeting of such shareholders. ASB Bancorp has

approved this Agreement and the transactions contemplated hereby, and the Board

of Directors of ASB Bancorp has directed officers of ASB Bancorp to so approve

this Agreement and the transactions contemplated herein in its capacity as the

sole shareholder of ASB Bank. Except for the adoption of this Agreement by the

requisite vote of ASB Bancorp's shareholders, no other proceedings on the part

of ASB Bancorp or its Subsidiaries are necessary to approve this Agreement and

to consummate the transactions contemplated hereby. This Agreement has been duly

and validly executed and delivered by ASB Bancorp, and this Agreement

constitutes a valid and binding obligation of ASB Bancorp, enforceable against

ASB Bancorp in accordance with its terms, except as enforcement may be limited

by general principles of equity whether applied in a court of law or a court of

equity and by bankruptcy, insolvency and similar laws affecting creditors'

rights and remedies generally.

(b) Neither the execution and delivery of this Agreement, nor the

consummation by ASB Bancorp of the transactions contemplated hereby, nor

compliance by ASB Bancorp with any of the terms or provisions hereof or thereof,

will (i) violate any provision of the Charter or Bylaws of ASB Bancorp or the

articles of incorporation, bylaws or similar governing documents of any of ASB

Bancorp's Subsidiaries, or (ii) assuming that the consents and approvals

referred to in Section 4.4 hereof are duly obtained, (A) violate any statute,

code, ordinance, rule, regulation, judgment, order, writ, decree or injunction

applicable to ASB Bancorp or any of its Subsidiaries, or any of their respective

properties or assets, or (B) violate, conflict with, result in a breach of any

provision of or the loss of any benefit under, constitute a default (or an event

which, with notice or lapse of time, or both, would constitute a default) under,

result in the termination of or a right of termination or cancellation under,

accelerate the performance required by, or result in the creation of any lien,

pledge, security interest, charge or other encumbrance upon any of the

respective properties or assets of ASB Bancorp or any of its Subsidiaries under,

any of the terms, conditions or provisions of any note, bond, mortgage,

indenture, deed of trust, license, lease, agreement or other instrument or

obligation to which ASB Bancorp or any of its Subsidiaries is a party, or by

which they or any of their respective properties or assets may be bound or

affected unless, with respect to (ii) above, such violation, conflict, or breach

would not have a Material Adverse Effect on ASB Bancorp.

4.4 Consents and Approvals. Except for (a) the filing of applications and

notices, as applicable, with the Board of Governors of the Federal Reserve

System (the "Federal Reserve Board"), the FDIC, the Federal Trade Commission

(the "FTC") and the Department of Justice ("DoJ"), and approval of such

applications and notices, (b) the filing of such applications, filings,

authorizations, orders and approvals as may be required under applicable state

law, (c) the filing with, and declaration of effectiveness by, the United States

Securities and Exchange Commission ("SEC") of a registration statement on Form

S-4 (such registration statement and any post-effective amendment thereto

relating to this transaction, or any other registration statement on Form S-4

used in connection with the Merger, the "S-4") in which will be included as a

prospectus a definitive proxy statement relating to the meeting of shareholders

of ASB Bancorp to be held in connection with this Agreement and the transactions

contemplated herein (the "Proxy Statement"), (d) the approval of this Agreement

by the requisite vote of the shareholders of ASB Bancorp, (e) the filing of the

Articles of Merger with, as applicable, the Mississippi Secretary, the Arkansas

Secretary, the Mississippi Department and the Arkansas Department and (f)

approval for listing of BancorpSouth Common Stock to be issued in the Merger on

the NYSE, no consents or approvals of or

<PAGE>

filings or registrations with any court, administrative agency or commission or

other governmental authority or instrumentality (each a "Governmental Entity")

or with any third party are necessary in connection with (i) the execution and

delivery by ASB Bancorp of this Agreement and (ii) the consummation by ASB

Bancorp and its Subsidiaries of the Merger and the other transactions

contemplated hereby.

4.5 Reports. ASB Bancorp and each of its Subsidiaries have timely filed all

reports, registrations and statements, together with any amendments required to

be made with respect thereto, that they were required to file since December 31,

1998 with (i) the Federal Reserve Board, (ii) the FDIC, (iii) any Federal

Reserve Bank, (iv) any state banking commissions, including without limitation

the Arkansas Department or any other state regulatory authority (each a "State

Regulator") and (v) any self-regulatory organization (collectively, the

"Regulatory Agencies"), and have paid all fees and assessments due and payable

in connection therewith. Except for normal examinations conducted by a

Regulatory Agency in the regular course of the business of ASB Bancorp and its

Subsidiaries, no Regulatory Agency has initiated any proceeding or, to the

knowledge of ASB Bancorp, investigation into the business or operations of ASB

Bancorp or any of its Subsidiaries since December 31, 1998. There is no

unresolved outstanding violation, criticism, or exception by any Regulatory

Agency with respect to any report or statement relating to any examinations of

ASB Bancorp or any of its Subsidiaries.

4.6 Financial Statements.

(a) The audited consolidated financial statements of ASB Bancorp and its

Subsidiaries for the fiscal years ended December 31, 2004, 2003 and 2002, and

the unaudited financial statements of ASB Bancorp for the three-month period

ended December 31, 2004 (collectively, the "ASB Bancorp Financial Statements"),

including consolidated statements of condition, statements of earnings, changes

in shareholders' equity and cash flows and related notes, copies of which have

been previously provided to BancorpSouth, fairly present in all material

respects the consolidated financial position of ASB Bancorp and its Subsidiaries

as of the respective dates thereof, and fairly present (subject, in the case of

the unaudited statements, to recurring audit adjustments normal in nature and

amount) the results of the consolidated operations and consolidated financial

position of ASB Bancorp and its Subsidiaries for the respective fiscal periods

or as of the respective dates therein set forth; and each of such ASB Bancorp

Financial Statements (including the related notes, where applicable) has been

prepared in accordance with GAAP consistently applied during the periods

involved, except as indicated in the notes thereto. The books and records of ASB

Bancorp and its Subsidiaries have been, and are being, maintained in accordance

with GAAP and any other applicable legal and accounting requirements.

(b) Neither ASB Bancorp nor any of its Subsidiaries (or any of its or

their assets) are subject to any liability or obligation whatsoever, whether

absolute, accrued, contingent, known, unknown, matured or unmatured, that is not

reflected and adequately reserved against in the most recent balance sheet

included in the ASB Bancorp Financial Statements.

4.7 Broker's Fees. Except for consulting fees to be paid to Stephens, Inc. by

ASB Bancorp (the "Stephens Payment"), neither ASB Bancorp nor any of its

Subsidiaries, nor any of their respective officers or directors, has employed

any broker or finder or incurred any liability for any broker's fees,

commissions or finder's fees in connection with any of the transactions

contemplated by this Agreement.

<PAGE>

4.8 Absence of Certain Changes or Events.

(a) Except as set forth in Section 4.8(a) of the ASB Bancorp Disclosure

Schedule, since December 31, 2004, there has been no change or development or

combination of changes or developments which, individually or in the aggregate,

has had or is reasonably likely to have a Material Adverse Effect with respect

to ASB Bancorp.

(b) Except as set forth in Section 4.8(b) of the ASB Bancorp Disclosure

Schedule, since December 31, 2004, ASB Bancorp and its Subsidiaries have carried

on their respective businesses in the ordinary course consistent with their past

practices.

true and correct list of all stock options granted since December 31, 2004.

Since December 31, 2004, except as set forth in Section 4.8(c) of the ASB

Bancorp Disclosure Schedule, neither ASB Bancorp nor any of its Subsidiaries has

increased the wages, salaries, compensation, pension, or other fringe benefits

or perquisites payable to any executive officer, employee, or director from the

amount thereof in effect as of December 31, 2004, granted any severance or

termination pay, entered into any contract to make or grant any severance or

termination pay, or paid any bonus (except for salary increases and bonus

payments made in cash and in the ordinary course of business consistent with

past practices) or granted any stock option.

4.9 Legal Proceedings. Section 4.9 of the ASB Bancorp Disclosure Schedule lists

all pending or, to ASB Bancorp's knowledge, threatened, legal, administrative,

arbitral or other proceedings, claims, actions or governmental or regulatory

investigations of any nature against ASB Bancorp or any of its Subsidiaries or

challenging the validity or propriety of the transactions contemplated by this

Agreement, other than regularly scheduled examinations and similar routine

investigations made by bank regulatory officials in the course of their

supervision of ASB Bancorp or any of its Subsidiaries. Neither ASB Bancorp nor

any of its Subsidiaries is a party to any, and there are no pending or, to ASB

Bancorp's knowledge, threatened, leg

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