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: 9/20/2004
Industry: Regional Banks Law Firm: Waller Lansden Dortch & Davis, PLLC;Corerro Fishman Haygood Phelps Walmsley & Casteix, L.L.P. Sector: Financial

EX-2.1 AGREEMENT AND PLAN OF MERGER, Parties: bancorpsouth inc , business holding corporation

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EXHIBIT 2.1

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AGREEMENT AND PLAN OF MERGER

BETWEEN

BANCORPSOUTH, INC.

AND

BUSINESS HOLDING CORPORATION

DATED AS OF SEPTEMBER 17, 2004

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AGREEMENT AND PLAN OF MERGER

THIS AGREEMENT AND PLAN OF MERGER, dated as of September 17, 2004

("Agreement"), between BANCORPSOUTH, INC., a Mississippi corporation

("BancorpSouth"), and BUSINESS HOLDING CORPORATION, INC., a Louisiana

corporation ("BHC," and collectively with BancorpSouth, the "Holding

Companies").

RECITALS:

WHEREAS, BancorpSouth is the parent corporation of BancorpSouth Bank, a

Mississippi banking corporation ("BancorpSouth Bank");

WHEREAS, BHC is the sole shareholder of The Business Bank, a Louisiana

banking corporation (the "Bank");

WHEREAS, BancorpSouth and BHC 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) BHC will

merge into BancorpSouth (the "Holding Company Merger") and (ii) the Bank will

merge 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

Louisiana Business Corporation Law (the "LBCL"), at the Effective Time (as

defined in Section 1.2), BHC shall merge 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 BHC shall terminate.

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

accordance with the Mississippi Banking Act (the "MBA") and the Louisiana

Banking Law (the "LBL"), as applicable, at the Effective Time, the 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, and shall continue its corporate existence under the laws of the

State of Mississippi. The name of the

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Surviving Bank shall continue to be "BancorpSouth Bank." Upon consummation of

the Bank Merger, the separate corporate existence of the 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 Louisiana (the "Louisiana 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 Louisiana

Office of Financial Institutions (the "Louisiana Department") and the Louisiana

Secretary with respect to the Bank Merger, but shall occur immediately after the

Holding Company Merger.

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 112 of

the LBCL.

(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 355

of the LBL.

1.4 Conversion of BHC Common Stock.

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

$1.00 per share, of BHC (the "BHC Common Stock") issued and outstanding

immediately prior to the Effective Time (other than BHC Dissenting Shares (as

defined below) and shares of Business Holding Corporation Common Stock held

directly or indirectly by BancorpSouth or BHC 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 BHC Common Stock 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 $26.00 (the "Cash Consideration"), and (collectively,

the "Cash Election Shares");

(ii) for each share of BHC 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"); and

(iii) Holders of more than one share of BHC Common Stock may elect a

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

election referred to as a "Mixed Election").

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For purposes of this Agreement, Cash Consideration, Stock Consideration and any

combination thereof shall be collectively referred to herein as "Merger

Consideration."

(iv) for each share of BHC Common Stock other than BHC Dissenters'

Shares and shares as to which a Cash Election or a Stock Election has been

effectively made (collectively, the "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 equal to a number of

shares of BancorpSouth Common Stock calculated by multiplying (x) the Applicable

Percentage (as defined below) by (y) the product of the total number of then

outstanding shares of BHC Common Stock (including shares issued upon exercise of

a BHC Option) multiplied by the Exchange Ratio. For the purposes of this

section, "Applicable Percentage" shall be the percentage of shares of BHC Common

Stock for which a Stock Election is made, provided that the Applicable

Percentage shall be deemed to be at least 0.51 and no more than 0.60 in the

event that the actual percentage of shares of BHC Common Stock for which a Stock

Election is made is below or above that range, respectively.

(ii) "Aggregate Cash Amount" means $26.00 multiplied by the product of

(x) the total number of then outstanding shares of BHC Common Stock (including

shares issued upon exercise of a BHC Option) multiplied by (y) 1.0 minus the

Applicable Percentage.

(iii) "Aggregate Cash Election Amount" is 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.

(iv) "Exchange Ratio" means 1.14175.

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

BHC Common Stock shall be converted into Cash Consideration (in each case,

excluding shares of BHC 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 BHC Common Stock of rights to receive

the Cash Consideration and the Stock Consideration as follows:

(i) If the aggregate number of shares of BHC 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 the

denominator of which is the Stock Election Number, with such holder's Stock

Election Shares that are not converted into the Stock Consideration pursuant to

this paragraph being converted into the right to receive the Cash Consideration;

and

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(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 BHC Common Stock that are

owned directly or indirectly by BancorpSouth or BHC or any of their respective

Subsidiaries, other than shares of BHC 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 BHC, as the case may be, being

referred to herein as "Trust Account Shares") and (ii) held by BancorpSouth or

BHC or any of their respective Subsidiaries in respect of a debt previously

contracted (any such shares of BHC Common Stock, and shares of BancorpSouth

Common Stock which are similarly held, whether held directly or indirectly by

BancorpSouth or BHC, 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 BHC or any of its Subsidiaries

(other than Trust Account Shares and DPC Shares) shall become treasury stock of

BancorpSouth.

(f) Each share of BHC 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 BHC 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 BHC 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 BHC 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 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,

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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 BHC'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 BHC 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 131 of the LBCL ("BHC 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 BHC

Dissenting Shares in accordance with the provisions of Sections of the LBCL;

provided, however, that (i) if any holder of BHC 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 Section 12:131 of the LBCL, such holder or holders (as the

case may be) shall forfeit the right to appraisal of such shares of BHC 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 the 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. At the Effective Time, each option granted by BHC to purchase

shares of BHC Common Stock which is outstanding and unexercised immediately

prior thereto (each, a "BHC Option") shall, by virtue of the Merger and without

any further action by the holder thereof, cease to represent a right to acquire

shares of BHC Common Stock and shall be promptly replaced by a fully vested

exercisable option (the "New Option") issued under and subject to the

appropriate stock option plan of BancorpSouth to purchase shares of BancorpSouth

Common Stock in an amount and at an exercise price determined as provided below:

(a) The number of shares of BancorpSouth Common Stock to be subject to

the New Option shall be equal to the number of shares of BancorpSouth Common

Stock to which the holder of the BHC Option would have been entitled under

Section 1.4(a) of this Agreement had the BHC Option been exercised in full

immediately prior to the Effective Time and had such holder received only Stock

Consideration in the Merger, provided that any fractional shares of BancorpSouth

Common Stock resulting from such multiplication shall be rounded to the nearest

whole share; and

(b) The exercise price per share of BancorpSouth Common Stock under the

New Option shall be equal to the aggregate exercise price for the shares of BHC

Common Stock otherwise purchasable under the BHC Option divided by the number of

shares of BancorpSouth Common Stock issuable under the New Option pursuant to

Section 1.5(a). All New Options shall be fully exercisable by the holder

thereof.

corporate action necessary to reserve for issuance a sufficient number of shares

of BancorpSouth Common Stock for delivery upon exercise of the New Options.

BancorpSouth shall take such action as is necessary to ensure that a

registration statement on Form S-8, S-4 or other applicable form is effective at

or before the Effective Time to cover the shares of BancorpSouth Common Stock

subject to the New Options.

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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 issued in

connection with the Holding Company Merger, based upon the closing price of

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

session on the business day immediately preceding 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 the aggregate value of the shares of BancorpSouth Common

Stock to be issued to the holders of BHC Common Stock in connection with the

Holding Company Merger, as determined based upon the closing price of

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

session on the business day immediately preceding the Effective Time, is equal

to 45% of the sum of (i) the aggregate value of the shares of BancorpSouth

Common Stock to be issued to the holders of BHC Common Stock in connection with

the Holding Company Merger, as determined based upon the closing price of

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

session on the business day immediately preceding 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 equal to

the sum of (x) Aggregate Cash Election Amount, (y) the product of the number of

BHC Dissenting Shares (except to the extent that the holder of such BHC

Dissenting Shares, as of the Closing Date, has effectively withdrawn or lost his

right to dissent from the Merger under the LBCL) and the Cash Consideration and

(z) any other amounts received by a holder of BHC Common Stock prior to the

Merger, either in a redemption of BHC stock or in a distribution with respect to

BHC 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 BHC shareholder also had received stock of BancorpSouth in

exchange for stock owned by the shareholder in BHC).

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

method of effecting the combination of BancorpSouth and BHC or the Bank Merger,

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

subsidiary of BancorpSouth, and BHC 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 BHC

Common Stock as provided for in this Agreement, (ii) adversely affect the rights

of holders of BHC 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 BHC 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

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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 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 BHC, 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

BHC 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 BHC Common Stock on the record date

for the meeting of the shareholders of BHC 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 BHC 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.

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

have been validly made only if the Exchange Agent shall have received (i) an

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

business day immediately preceding the meeting of shareholders of BHC described

in Section 7.1 hereof (the "Election Deadline") and (ii) 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 BHC

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 Certificates or the guaranteed delivery of such Certificates) representing

all shares of BHC 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 BHC 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 BHC 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 BHC 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 BHC Common Stock.

(iii) Each holder of record of shares of BHC 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

BHC Common Stock held by that Representative for a particular beneficial owner.

(iv) Any holder of shares of BHC 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 BHC

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 BHC 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 BHC

Common Stock to be converted in the Merger into the right to receive Cash

Consideration may not exceed 49.0% of the outstanding shares of BHC Common

Stock, and the aggregate number of shares of BHC Common Stock to be converted in

the Merger into the right to receive Stock Consideration may not exceed 60.0% of

the total number of outstanding shares of BHC Common Stock.

Time 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.

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(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 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 BHC of the shares of BHC 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 BHC who otherwise

would be entitled to receive a fractional share of BancorpSouth Common Stock an

amount in cash equal to the product of (x) $22.772 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 BHC for 12 months after the Effective Time shall be paid to

BancorpSouth. Any shareholders of BHC 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 BHC Common

Stock such shareholder holds as determined pursuant to this Agreement, in each

case, without any interest thereon. Notwithstanding the foregoing, none of

BancorpSouth, BHC, the Exchange Agent or any other person shall be liable to any

former holder of shares of BHC 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 BHC has delivered to the other party a schedule (in the case of BHC, the

"BHC Disclosure Schedule," and in the case of BancorpSouth, the "BancorpSouth

Disclosure Schedule," and,

<PAGE>

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 BHC, 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 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 BHC or

BancorpSouth, respectively.

3.2 Standards.

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

means, with respect to BHC, (i) a change in the business or properties of BHC or

its Subsidiaries which, 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

or results of operations of BHC and its Subsidiaries or (B) the ability of BHC

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,

(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 BHC or any Subsidiary of BHC taken with

the express prior written consent of BancorpSouth, (4) any expenses incurred by

BHC 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 BHC 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 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, (C) any action or omission of BancorpSouth or any Subsidiary of

BancorpSouth taken with the express prior written consent of BHC, (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.

<PAGE>

ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF BHC

BHC hereby represents and warrants to BancorpSouth as follows:

4.1 Corporate Organization.

(a) BHC is a corporation duly organized, validly existing and in good

standing under the laws of the State of Louisiana. BHC 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. BHC 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

BHC. BHC is duly registered as a bank holding company under the Bank Holding

Company Act of 1956, as amended (the "BHC Act"). The Articles of Incorporation

and Bylaws of BHC, copies of which have previously been provided to

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

effect. BHC has no Subsidiaries other than the Bank. BHC 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 BHC 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) The Bank is a Louisiana state bank duly organized, validly existing

and in good standing under the laws of the State of Louisiana. The deposit

accounts of the 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. The 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. The 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 the Bank. The Articles of Association and Bylaws of

the Bank, copies of which have previously been provided, are true and correct

copies of such documents as currently in effect. Except for the BHC Mortgage and

Services Company, LLC (the "Mortgage Subsidiary") and the BHC Financial Benefits

and Planning, L.L.C. (the "Insurance Subsidiary"), the Bank has no Subsidiaries

and does not own beneficially, directly or indirectly (other than as set forth

in Section 4.1(b) of the BHC Disclosure Schedule), any shares of any equity

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

or joint venture of any kind.

organized, validly existing and in good standing under the laws of the State of

Louisiana. The Mortgage Subsidiary has the limited liability company 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. The Mortgage Subsidiary 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 BHC. The governing documents of the Mortgage

Subsidiary, copies of which have previously been provided to BancorpSouth, are

true and correct copies of such documents as currently in effect. The Mortgage

Subsidiary 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.

<PAGE>

(d) The Insurance Subsidiary is a limited liability company duly

organized, validly existing and in good standing under the laws of the State of

Louisiana. The Insurance Subsidiary has the limited liability company 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. The Insurance Subsidiary 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 BHC. The governing documents of the Insurance

Subsidiary, copies of which have previously been provided to BancorpSouth, are

true and correct copies of such documents as currently in effect. The Insurance

Subsidiary 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 BHC and each of its direct and indirect

Subsidiaries contain true and correct records of all meetings and other

corporate actions held or taken since December 31, 1998 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 BHC consists of 8,000,000 shares of

BHC Common Stock, $1.00 par value and 2,000,000 shares of BHC Preferred Stock,

no par value. There are 1,310,491 shares of BHC Common Stock issued and

outstanding and no shares of BHC Common Stock held by BHC as treasury stock.

There are no shares of BHC Common Stock reserved for issuance upon exercise of

outstanding stock options or otherwise. There are no shares of BHC Preferred

Stock issued or outstanding, held in BHC's treasury or reserved for issuance

upon exercise of outstanding stock options or otherwise. All of the issued and

outstanding shares of BHC 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 outstanding to purchase a

total of 4,800 shares of BHC Common Stock (the "Options"), BHC 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 BHC Common Stock or BHC Preferred Stock or any other equity

security or capital stock of BHC or any securities representing the right to

purchase or otherwise receive any shares of BHC Common Stock or any other equity

security or capital stock of BHC. Set forth in Section 4.2(a) of the BHC

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 the Bank consists of 1,000,000

shares of Bank Common Stock, par value $1.00. Except as set forth in Section

4.2(b) of the BHC Disclosure Schedule, BHC owns, directly or indirectly, all of

the issued and outstanding shares of the capital stock, membership interests or

other equity securities of each of BHC'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. BHC'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 BHC'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 BHC's

Subsidiaries. There are no outstanding subscriptions, options, warrants, calls,

commitments or agreements of any character by which BHC or any of its

Subsidiaries will be bound

<PAGE>

calling for the purchase or issuance of any shares of the capital stock,

membership interests or other equity securities of any of BHC's Subsidiaries.

4.3 Authority; No Violation.

(a) BHC has full corporate power and authority to execute and deliver

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

of BHC 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 BHC. The Board of Directors of BHC has directed that this

Agreement and the transactions contemplated hereby be submitted to BHC's

shareholders for approval at a meeting of such shareholders. BHC has approved

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

Directors of BHC has directed officers of BHC to so approve this Agreement and

the transactions contemplated herein in its capacity as the sole shareholder of

the Bank. Except for the adoption of this Agreement by the requisite vote of

BHC's shareholders, no other proceedings on the part of BHC 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 BHC, and this Agreement constitutes a valid and binding obligation

of BHC, enforceable against BHC 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 BHC of the transactions contemplated hereby, nor compliance by

BHC with any of the terms or provisions hereof or thereof, will (i) violate any

provision of the Articles of Incorporation or Bylaws of BHC or the articles of

incorporation, bylaws or similar governing documents of any of BHC'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 BHC

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, except as

provided in Section 4.14, 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 (except as provided in Section 4.14), 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 BHC 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 BHC 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 BHC.

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 BHC 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 BHC, (e) the filing of the Articles

of Merger with, as applicable, the Mississippi Secretary, the Louisiana

Secretary, the Mississippi Department and the Louisiana

<PAGE>

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 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 BHC of this Agreement and (ii) the consummation by BHC and its Subsidiaries

of the Merger and the other transactions contemplated hereby.

4.5 Reports. BHC 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

Louisiana 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 BHC and its

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

knowledge of BHC, investigation into the business or operations of BHC 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 BHC or any of its

Subsidiaries.

4.6 Financial Statements.

(a) The audited consolidated financial statements of BHC and its

Subsidiaries for the fiscal years ended December 31, 2003, 2002 and 2001, and

the unaudited financial statements of BHC for the six-month period ended June

30, 2004 (collectively, the "BHC Financial Statements"), including consolidated

statements of condition and statements of earnings, copies of which have been

previously provided to BancorpSouth, fairly present in all material respects the

consolidated financial position of BHC 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

BHC and its Subsidiaries for the respective fiscal periods or as of the

respective dates therein set forth; each of such BHC Financial Statements

(including the related notes, where applicable) complies with applicable

accounting requirements with respect thereto; and, except as set forth in

Section 4.6(a) of the BHC Disclosure Schedule, each of such BHC 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 BHC and its

Subsidiaries have been, and are being, maintained in accordance with GAAP and

any other applicable legal and accounting requirements.

(b) Except as set forth in Section 4.6(b) of the BHC Disclosure

Schedule, neither BHC 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

BHC Financial Statements.

4.7 Broker's Fees. Except as set forth in Section 4.7 of the BHC Disclosure

Schedule, neither BHC 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.

4.8 Absence of Certain Changes or Events.

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

Schedule, since December 31, 2003, there has been no change or development or

combination of changes or

<PAGE>

developments which, individually or in the aggregate, has had or is reasonably

likely to have a Material Adverse Effect with respect to BHC.

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

Schedule, since December 31, 2003, BHC and its Subsidiaries have carried on

their respective businesses in the ordinary course consistent with their past

practices.

correct list of all stock options granted since December 31, 2003. Since June

30, 2004, except as set forth in Section 4.8(c) of the BHC Disclosure Schedule,

neither BHC 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

June 30, 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 BHC Disclosure Schedule lists all

pending or, to BHC's knowledge, threatened, legal, administrative, arbitral or

other proceedings, claims, actions or governmental or regulatory investigations

of any nature against BHC 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 BHC or any of its

Subsidiaries. Neither BHC nor any of its Subsidiaries is a party to any, and

there are no pending or, to BHC's knowledge, threatened, legal, administrative,

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

investigations of any nature 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 BHC or any of its Subsidiaries,

which has had, or could reasonably be expected to have, a Material Adverse

Effect with respect to BHC. There is no injunction, order, judgment, decree or

unique regulatory restriction imposed upon BHC, any of its Subsidiaries or the

assets of BHC or any of its Subsidiaries.

4.10 Taxes.

(a) (i) Each of BHC and its Subsidiaries has duly and timely filed

(including applicable extensions granted) all Tax Returns (as defined in this

Section below) that it was required to file, and all such Tax Returns are true,

complete and accurate in all material respects; (ii) except as disclosed in

Section 4.10(a) of the BHC Disclosure Schedule, BHC and its Subsidiaries have

timely paid all Taxes (as defined in this Section below) due and owing (whether

or not shown on any Tax Return) and have adequately reserved in the financial

statements of BHC in accordance with GAAP for all Taxes (whether or not shown on

any Tax Return) that have accrued but are not yet due or owing as of the dates

thereof; (iii) there are no pending or, to the knowledge of BHC, threatened

audits, examinations, investigations, deficiencies, claims or other proceedings

in respect of Taxes relating to BHC or any Subsidiary of BHC; (iv) there are no

liens for Taxes upon the assets of BHC or any Subsidiary of BHC, other than

liens for current Taxes not yet due; (v) neither BHC nor any of its Subsidiaries

has requested any extension of time within which to file any Tax Returns in

respect of any taxable year which have not subsequently been filed when due

(pursuant to such extension), nor provided or been requested to provide any

waivers of the time to assess any Taxes that are pending or outstanding; (vi)

with respect to each taxable period of BHC and its Subsidiaries, the federal and

state income Tax Returns of BHC and its Subsidiaries have either been audited by

the Internal Revenue Service (the "IRS") or appropriate state tax authorities or

the time for assessing and collecting income Tax with respect to such taxable

period has closed and such taxable period is not subject to review, except as

disclosed in Section 4.10(a) of the BHC Disclosure Schedule; (vii) neither BHC

nor any of its Subsidiaries (a) has ever been a member of an affiliated group

(within the

<PAGE>

meaning of Section 1504(a) of the Code) filing a consolidated federal income Tax

Return (other than a group the common parent of which was BHC), (b) has ever

been a party to any Tax sharing, indemnification or allocation agreement, (c)

has any liability for the Taxes of any person (other than BHC or any of its

Subsidiaries) under Treasury Regulation Section 1.1502-6 (or any similar

provision of state, local or foreign law), as a transferee or successor, by

contract or agreement, or otherwise and (d) is a party to any joint venture,

partnership or other arrangement that is being treated as a partnership for

federal income Tax purposes; (viii) neither BHC nor any of its Subsidiaries has

been, at any time, a "United States Real Property Holding Corporation" within

the meaning of Section 897(c)(2) of the Code; (ix) neither BHC nor any of its

Subsidiaries has constituted either a "distributing corporation" or a

"controlled corporation" in a distribution of stock intended to qualify for

tax-free treatment under Section 355 of the Code (A) in the two (2) years prior

to the date of this Agreement or (B) in a distribution which could otherwise

constitute part of a "plan" or "series of related transactions" (within the

meaning of Section 355(e) of the Code) in conjunction with the Merger; (x) BHC

and each of its Subsidiaries have withheld with respect to its Employees all

federal, state and foreign income taxes and social security charges and similar

fees, Federal Insurance Contribution Act, Federal Unemployment Tax Act and other

Taxes required to be withheld, and have timely paid such taxes withheld over to

the appropriate authorities; (xi) neither BHC nor any of its Subsidiaries has

been a party to any "reportable transaction" as defined in Treasury Regulation

Section 1.6011-4(b) and (xii) no Tax is required to be withheld pursuant to

Section 1445 of the Code as a result of the transfer contemplated by this

Agreement.

(b) For the purposes of this Agreement, "Taxes" shall mean (i) all

taxes, charges, fees, levies, penalties or other assessments imposed by any

federal, state, local or foreign taxing authority, including, but not limited to

income, excise, property, sales, transfer, franchise, payroll, withholding,

social security or other taxes, including any interest, penalties or additions

attributable thereto and (ii) any liability for Taxes described in clause (i)

under Treasury Regulation Section 1.1502-6 (or any similar provision of state,

local or foreign law). For purposes of this Agreement, "Tax Return" shall mean

any return, report or similar statement (including any related or supporting

information) required to be filed with respect to any Taxes, including any

information return, claim for refund, amended return or declaration of estimated

Taxes.

4.11 Employees.

(a) Section 4.11(a) of the BHC Disclosure Schedule sets forth a true,

complete and correct list (all of which are collectively referred to as the

"Employee Plans") of all "employee benefit plans" as defined by section 3(3) of

the Employee Retirement Income Security Act of 1974, as amended, and the rules

and regulations promulgated thereunder (collectively, "ERISA"), all specified

fringe benefit plans as defined in section 6039D of the Code, and all other

bonus, incentive compensation, deferred compensation, profit sharing, stock

option, stock appreciation right, stock bonus, stock purchase, employee stock

ownership, savings, severance, supplemental unemployment, layoff, salary

continuation, retirement, pension, health, life insurance, disability, group

insurance, vacation, holiday, sick leave, fringe benefit, or welfare plan, or

employment, consulting, change in control, independent contractor, professional

services, confidentiality, or non-competition agreement or any other similar

plan, agreement, policy or understanding (whether written or oral, qualified or

nonqualified), and any trust, escrow or other agreement related thereto, which

(i) is now or was for the last five (5) years maintained or contributed to by

BHC or an ERISA Affiliate (as hereinafter defined), or (ii) with respect to

which BHC or any ERISA Affiliate has any obligations to any current or former

officer, Employee, service provider, or the dependents of any thereof,

regardless of whether funded, or (iii) which could result in the imposition of

any liability or obligation of any kind or nature, whether accrued, absolute,

contingent, direct, indirect, known or unknown, perfected or inchoate or

otherwise, and whether or not now due or to become due to BHC or any ERISA

Affiliate.

(b) BHC has heretofore provided to BancorpSouth, with respect to

each of the Employee Plans, true and correct copies of each of the following

documents, as applicable: (i) the Employee Plan

<PAGE>

document, (ii) the actuarial report, if any, for such Employee Plan for each of

the last three (3) years, (iii) the most recent determination letter from the

IRS for such Employee Plan, (iv) the IRS Form 5500 annual reports for such

Employee Plan for each of the last three (3) years, and (v) the most recent

summary plan description and related summaries of material modifications.

contributions to a Plan that is subject to section 412 of the Code, section 302

of ERISA and/or Title IV of ERISA.

(d) The form and operation of all Employee Plan

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