2005 STOCK AND INCENTIVE COMPENSATION PLAN

 

                                                                    Exhibit 10-a

 

                              TRUSTMARK CORPORATION

                   2005 STOCK AND INCENTIVE COMPENSATION PLAN

 

 

                                    ARTICLE I

                        Establishment, Purpose and Duration

 

1.1 Establishment of the Plan. Trustmark Corporation (hereinafter referred to as

the   "Company"),   a Mississippi   corporation,   hereby   establishes   an incentive

compensation   plan to be known as the   "2005   Stock and   Incentive   Compensation

Plan"   (hereinafter   referred to as the "Plan"),   as set forth in this document.

Unless otherwise   defined herein,   all capitalized terms shall have the meanings

set forth in Section 2.1 herein.   The Plan permits the grant of Incentive   Stock

Options,    Non-Qualified    Stock   Options   (including   Reload   Options),    Stock

Appreciation Rights, Restricted Stock, Restricted Stock Units and/or Performance

Units to Key Associates and Directors.

 

The Plan was adopted by the Board of   Directors of the Company on March 8, 2005,

to become effective (the "Effective Date") as of May 10, 2005 if approved at the

May   10,   2005   annual   meeting   of   the   Company's    shareholders   by   vote   of

shareholders   of   the   Company   in   accordance   with   applicable   laws   and   any

applicable   rules of any   national   securities   exchange   or system on which the

Stock is then listed or reported.   Except for   Performance   Unit Awards   payable

only in cash (with payment also   contingent on shareholder   approval of the 2005

Plan), Awards may not be granted under the Plan prior to shareholder approval of

the Plan.

 

1.2   Purpose of the Plan.   The   purpose of the Plan is to promote the success of

the Company and its   Subsidiaries by providing   incentives to Key Associates and

Directors that will promote the   identification   of their personal interest with

the long term   financial   success of the Company and with growth in   shareholder

value. The Plan is designed to provide flexibility to the Company in its ability

to motivate,   attract,   and retain the services of Key   Associates and Directors

upon whose judgment,   interest, and special effort the successful conduct of its

operation is largely dependent.

 

In addition,   the Plan permits the grant of a Reload   Option in order to restore

an Option   opportunity on the number of shares of Stock   surrendered to exercise

an Option to encourage a Participant   to maximize his ownership   interest in the

Company without reducing the percentage interests of shareholders.

 

1.3 Duration of the Plan.   The Plan shall   commence on the   Effective   Date,   as

described   in Section 1.1   herein,   and shall   remain in effect,   subject to the

right of the Board of Directors to   terminate   the Plan at any time   pursuant to

Article XII herein,   until May 9, 2015, at which time it shall terminate   except

with respect to Awards (including any outstanding Reload Option obligation) made

prior to, and   outstanding   on, that date which shall remain valid in accordance

with their terms.

 

                                    ARTICLE II

                                   Definitions

 

2.1   Definitions.   Except as otherwise   defined in the Plan, the following terms

shall have the meanings set forth below:

 

(a)   "Agreement" means a written agreement   implementing the grant of each Award

     signed by an authorized officer of the Company and by the Participant.

 

(b)   "Award"   means,   individually   or   collectively,   a grant under the Plan of

     Incentive   Stock Options,   Non-Qualified   Stock Options   (including   Reload

     Options),   Stock Appreciation   Rights,   Restricted Stock,   Restricted Stock

     Units and/or Performance Units.

 

(c)   "Award   Date" or "Grant   Date"   means the date on which an Award is made by

     the Committee under the Plan.

 

(d)   "Board"   or   "Board of   Directors"   means   the   Board of   Directors   of the

     Company.

 

(e)   "Change in Control"   shall be deemed to have occurred if the conditions set

     forth in any one of the following paragraphs shall have been satisfied:

 

     (i)   the   acquisition   of ownership of,   holding or power to vote more than

          20% of the Company's   voting   stock;   or

 

     (ii) the   acquisition   of the ability to control the election of a majority

          of the Company's Board; or

 

      (iii)the   acquisition   of a controlling   influence   over the   management or

          policies   of the   Company   by any   person   or by   persons   acting as a

          "group" (within the meaning of Section 13(d) of the Exchange Act); or

 

     (iv) during   any   period   of   two   consecutive    years,    individuals   (the

          "Continuing Directors") who at the beginning of such period constitute

          the Board (the "Existing Board") cease for any reason to constitute at

          least two-thirds thereof,   provided that any individual whose election

          or   nomination   for   election   as a member of the   Existing   Board was

          approved by a vote of at least two-thirds of the Continuing   Directors

          then in office shall be considered a Continuing Director.

 

     Notwithstanding   the foregoing,   in the case of (i), (ii) and (iii) hereof,

     ownership   or   control   of the   Company's   voting   stock   by the   Trustmark

     National   Bank (the "Bank") or any employee   benefit plan   sponsored by the

     Company or the Bank shall not constitute a Change in Control.   For purposes

     of this   paragraph   only,   the term   "person"   refers to an individual or a

     corporation,    partnership,    trust,   association,    joint   venture,   pool,

     syndicate,   sole proprietorship,   unincorporated   organization of any other

     form of entity not specifically listed herein.

 

(f)   "Code"   means the Internal   Revenue   Code of 1986,   as amended from time to

     time.

 

(g)   "Committee"   means the committee of the Board   appointed to administer   the

     Plan   pursuant to Article III herein,   all of the members of which shall be

     "non-employee   directors" as defined in Rule 16b-3,   as amended,   under the

     Exchange   Act, or any similar or successor   rule,   and "outside   directors"

     within the meaning of Section 162(m)(4)(C)(i) of the Code. Unless otherwise

     determined by the Board, the Human Resources Committee of the Board, or any

     successor    committee    responsible   for   executive    compensation,    shall

     constitute the Committee.

 

(h)   "Company" means Trustmark Corporation, or any successor thereto as provided

     in Article XIV herein.

 

(i)   "Director" means a director of the Company or any Subsidiary thereof, which

     term shall not include an advisory or honorary director.

 

(j)   "Exchange Act" means the   Securities   Exchange Act of 1934, as amended from

     time to time.

 

(k)   "Fair   Market   Value" of a Share   means the mean   between   the high and low

     sales price of the Stock on the relevant   date if it is a trading   date, or

     if not, on the most recent date on which the Stock was traded prior to such

     date,   as   reported by the NASDAQ   National   Market   System,   or if, in the

     opinion of the Committee,   this method is inapplicable or inappropriate for

     any reason,   the fair market value as   determined   pursuant to a reasonable

     method adopted by the Committee in good faith for such purpose.

 

(l)   "Incentive   Stock   Option"   or "ISO"   means an   option to   purchase   Stock,

     granted under Article VI herein,   which is designated as an incentive stock

     option and is intended to meet the requirements of Section 422 of the Code.

 

(m)   "Key   Associate"   means an officer or other key associate of the Company or

     its   Subsidiaries   who, in the   opinion of the   Committee,   can   contribute

     significantly   to the growth and   profitability   of, or perform services of

     major   importance to, the Company and its   Subsidiaries.   "Key   Associates"

     includes    Directors   who   are   also   associates   of   the   Company   or   its

     Subsidiaries.

 

(n)   "Non-Qualified   Stock Option" or "NQSO" means an option to purchase   Stock,

     granted under   Article VI herein,   which is not intended to be an Incentive

     Stock Option.

 

(o)   "Option" means an Incentive Stock Option or a Non-Qualified Stock Option.

 

(p)   "Option   Price" means the exercise   price per share of Stock   covered by an

     Option.

 

(q)   "Participant"   means a Key   Associate or a Director who has been granted an

     Award under the Plan and whose Award remains outstanding.

 

(r)   "Performance-Based   Compensation Award" means any Award for which exercise,

     full   enjoyment or receipt   thereof by the   Participant   is   contingent   on

      satisfaction or achievement of the Performance Goal applicable   thereto. If

     a Performance-Based Compensation Award is intended to be "performance-based

     compensation"   within the meaning of Section   162(m)(4)(C) of the Code, the

     grant of the Award, the   establishment of the Performance   Goal, the making

     of any   modifications or adjustments and the   determination of satisfaction

     or achievement of the   Performance   Goal shall be made during the period or

     periods   required under and in conformity with the   requirements of Section

     162(m)   of   the   Code    therefor.    The   terms   and    conditions    of   each

     Performance-Based   Compensation   Award,   including the Performance Goal and

     Performance   Period,   shall be set forth in an Agreement or in a subplan of

     the Plan which is incorporated by reference into an Agreement.

 

(s)   "Performance   Goal" means one or more performance   measures or goals set by

     the   Committee   in its   discretion   for each   grant of a   Performance-Based

     Compensation Award. The extent to which such performance   measures or goals

     are met   will   determine   the   amount   or   value   of the   Performance-Based

     Compensation Award to which a Participant is entitled to exercise,   receive

     or retain. Performance Goals may be particular to a Participant, may relate

     to the performance of the Subsidiary,   division, strategic business unit or

     line of business   which employs him, or may be based on the   performance of

     the   Company   generally.   Performance   Goals may be based on Stock value or

     increases   therein,   earnings per share or earnings per share   growth,   net

     earnings,   earnings   or   earnings   growth   (before   or after one or more of

     taxes,   interest,   depreciation   and/or   amortization),   operating   profit,

     operating cash flow,   operating or other   expenses,   operating   efficiency,

     return on equity,   assets,   capital or   investment,   sales or   revenues   or

     growth   thereof,   deposits,   loan and/or equity   levels or growth   thereof,

     working capital targets or cost control   measures,   regulatory   compliance,

     gross,    operating   or   other   margins,    efficiency   ratio   (as   generally

     recognized   and used for bank financial   reporting and analysis),   interest

     income,    non-interest   income,   credit   quality,   net   charge-offs   and/or

     non-performing   assets   (excluding such loans or classes of loans as may be

     designated    for    exclusion),     productivity,     customer    satisfaction,

     satisfactory internal or external audits, improvement of financial ratings,

     achievement   of   balance   sheet or   income   statement   objectives,   quality

     measures,   and any component or   components   of the   foregoing   (including,

     without   limitation,   determination   thereof   with or without the effect of

     discontinued     operations    and    dispositions    of    business    segments,

     non-recurring items, material extraordinary items that are both unusual and

     infrequent, special charges, and/or accounting changes), or implementation,

     management   or completion   of critical   projects or processes.   Performance

     Goals may include a threshold   level of performance   below which no payment

     or vesting may occur,   levels of performance at which specified payments or

     specified   vesting will occur,   and a maximum   level of   performance   above

     which no additional payment or vesting will occur. Performance Goals may be

     absolute in their terms or measured   against or in relationship to a market

     index,   a group of   other   companies   comparably,   similarly   or   otherwise

     situated,   or a   combination   thereof.   The Committee   shall   determine the

     Performance   Period   during   which the   Performance   Goal must be met;   and

     attainment of Performance   Goals shall be subject to   certification   by the

     Committee.   Each   of the   Performance   Goals   shall   be   determined,   where

     applicable   and except as provided   above,   in   accordance   with   generally

     accepted accounting principles.

 

(t)   "Performance   Period"   means the time period   during which the   Performance

     Goal must be met in connection with a Performance-Based Compensation Award.

     Such time period shall be set by the Committee.

 

(u)   "Performance   Unit"   means an   Award,   designated   as a   performance   unit,

     granted to a Participant pursuant to Article X herein and valued as a fixed

     dollar amount.

 

(v)   "Period of   Restriction"   means the period   during   which the   transfer   of

     Shares of Restricted Stock is restricted, pursuant to Article VIII herein.

 

(w)   "Plan"   means   the    Trustmark    Corporation    2005   Stock   and    Incentive

     Compensation   Plan, as herein   described and as hereafter from time to time

     amended.

 

(x)   "Related Option" means an Option with respect to which a Stock Appreciation

     Right has been granted.

 

(y)   "Reload   Option" means a   Non-Qualified   Stock Option   granted   pursuant to

     Section   6.9 in the event   the   Participant   exercises   all or a part of an

     Option by paying the Option   Price   pursuant   to Section   6.6 with Stock in

     order to   restore   an Option   opportunity   on the number of shares of Stock

     surrendered to exercise an Option.

 

(z)   "Restricted   Stock"   means   an   Award of   Stock   granted   to a   Participant

     pursuant   to Article   VIII   herein   which is subject   to   restrictions   and

     forfeiture    until   the    designated    conditions   for   the   lapse   of   the

     restrictions are satisfied.

 

(aa) "Restricted Stock Unit" or "RSU" means an Award, designated as a Restricted

     Stock   Unit,   granted to a   Participant   pursuant   to Article IX herein and

     valued   by   reference   to   Stock,   which is   subject   to   restrictions   and

     forfeiture    until   the    designated    conditions   for   the   lapse   of   the

     restrictions are satisfied.

 

(bb) "Stock" or "Shares" means the common stock of the Company.

 

(cc) "Stock Appreciation   Right" or "SAR" means an Award,   designated as a stock

     appreciation   right,   granted to a   Participant   pursuant   to   Article   VII

     herein.

 

(dd) "Subsidiary"   means any   subsidiary   corporation   of the Company within the

     meaning of Section 424(f) of the Code.

 

                                    ARTICLE III

                                 Administration

 

3.1 Administration of the Plan by the Committee.   The Plan shall be administered

by the   Committee   which shall have all powers   necessary or desirable   for such

administration.   The   express   grant   in the Plan of any   specific   power to the

Committee   shall not be   construed   as limiting   any power or   authority   of the

Committee. In addition to any other powers and, subject to the provisions of the

Plan, the Committee shall have the following   specific powers:   (i) to determine

the terms and conditions   upon which the Awards may be made and exercised;   (ii)

to   determine   all terms and   conditions   of each   Agreement,   which need not be

identical;   (iii) to construe and interpret the Agreements and the Plan; (iv) to

establish,   amend or waive rules or regulations   for the Plan's   administration;

(v) to   accelerate   the   exercisability   of any Award,   the end of a Performance

Period or termination of any Period of Restriction or other restrictions imposed

under the Plan;   and (vi) to make all   other   determinations   and take all other

actions necessary or advisable for the administration of the Plan.

 

The   Chairman of the   Committee   and such other   directors   and   officers of the

Company as shall be designated by the Committee are hereby authorized to execute

Agreements   on behalf of the   Company and to cause them to be   delivered   to the

recipients of Awards.

 

For   purposes   of   determining   the   applicability   of   Section   422 of the Code

(relating to   Incentive   Stock   Options),   or in the event that the terms of any

Award   provide that it may be   exercised   only during   employment   or service or

within a specified   period of time after   termination   of employment or service,

the Committee may decide to what extent   leaves of absence for   governmental   or

military service,   illness,   temporary disability, or other reasons shall not be

deemed   interruptions   of   employment   or service or   continuous   employment   or

service.

 

Subject to limitations   under applicable law, the Committee is authorized in its

discretion to issue Awards and/or accept   notices,   elections,   consents   and/or

other forms or   communications   by   Participants by electronic or similar means,

including,   without   limitation,    transmissions   through   e-mail,   voice   mail,

recorded   messages   on   electronic   telephone   systems,   and   other   permissible

methods, on such basis and for such purposes as it determines from time to time.

 

A majority of the entire Committee shall constitute a quorum and the action of a

majority of the members   present at any meeting at which a quorum is present (in

person or as otherwise permitted by applicable law), or acts approved in writing

by a majority of the Committee without a meeting,   shall be deemed the action of

the Committee.

 

3.2 Selection of   Participants.   The Committee shall have the authority to grant

Awards   under   the   Plan,   from   time to   time,   to such Key   Associates   and/or

Directors   as may be   selected   by it.   Each   Award   shall   be   evidenced   by an

Agreement.

 

3.3 Decisions Binding. All determinations and decisions made by the Board or the

Committee pursuant to the provisions of the Plan shall be final,   conclusive and

binding.

 

3.4   Requirements of Rule 16b-3 and Section 162(m) of the Code.   Notwithstanding

any other   provision   of the Plan,   the Board or the   Committee   may impose such

conditions   on any   Award,   and amend the Plan in any such   respects,   as may be

required to satisfy the requirements of Rule 16b-3, as amended (or any successor

or similar rule), under the Exchange Act.

 

Any   provision   of the Plan to the contrary   notwithstanding,   and except to the

extent that the Committee   determines   otherwise:   (i)   transactions by and with

respect to   officers   and   directors   of the   Company who are subject to Section

16(b) of the Exchange Act   (hereafter,   "Section 16 Persons")   shall comply with

any applicable   conditions of SEC Rule 16b-3;   (ii) transactions with respect to

persons whose remuneration is subject to the provisions of Section 162(m) of the

Code shall conform to the requirements of Section   162(m)(4)(C) of the Code; and

(iii)   every   provision   of the Plan   shall be   administered,   interpreted,   and

construed to carry out the foregoing provisions of this sentence.

 

Notwithstanding any provision of the Plan to the contrary,   the Plan is intended

to   give   the    Committee    the   authority   to   grant   Awards   that   qualify   as

performance-based compensation under Section 162(m)(4)(C) of the Code as well as

Awards   that   do   not   so   qualify.    Every   provision   of   the   Plan   shall   be

administered,   interpreted,   and construed to carry out such intention,   and any

provision that cannot be so   administered,   interpreted,   and construed shall to

that extent be disregarded;   and any provision of the Plan that would prevent an

Award that the Committee   intends to qualify as   performance-based   compensation

under Section 162(m)(4)(C) of the Code from so qualifying shall be administered,

interpreted,   and construed to carry out such intention,   and any provision that

cannot be so   administered,   interpreted,   and construed shall to that extent be

disregarded.

 

3.5   Indemnification   of   Committee.    In   addition   to   such   other   rights   of

indemnification   as they may have as directors   or as members of the   Committee,

the   members   of the   Committee   shall be   indemnified   by the   Company   against

reasonable expenses, including attorneys' fees, actually and reasonably incurred

in   connection   with   the   defense   of any   action,   suit or   proceeding,   or in

connection with any appeal therein,   to which they or any of them may be a party

by reason of any action taken or failure to act under or in connection   with the

Plan or any Award granted or made hereunder,   and against all amounts reasonably

paid by them in settlement thereof or paid by them in satisfaction of a judgment

in any such action, suit or proceeding,   if such members acted in good faith and

in a manner which they believed to be in, and not opposed to, the best interests

of the Company and its Subsidiaries.

 

                                   ARTICLE IV

                            Stock Subject to the Plan

 

4.1 Number of Shares.   Subject to   adjustment as provided in Section 4.4 herein,

the maximum   aggregate   number of Shares   that may be issued   pursuant to Awards

made under the Plan shall not   exceed   the sum of (i)   6,000,000   plus (ii) that

number of Shares   represented   by   options   under the Second   Amended   Trustmark

Corporation   1997   Long   Term   Incentive   Plan   which   expire   or are   otherwise

terminated or forfeited at any time after the Effective Date of the Plan. Except

as provided in Sections 4.2 and 4.3 herein, the issuance of Shares in connection

with the   exercise   of, or as other   payment   for   Awards,   under the Plan shall

reduce the number of Shares available for future Awards under the Plan.

 

Stock that may be issued   under the Plan may either be   authorized   but unissued

Shares,   Shares held in treasury,   or Shares held in a grantor   trust created by

the Company.

 

The Company,   during the term of the Plan and thereafter   during the term of any

outstanding   Award   which   may be   settled   in   Stock,   shall   reserve   and keep

available a number of Shares sufficient to satisfy the requirements of the Plan.

 

4.2 Lapsed   Awards or   Forfeited   Shares.   If any Award   granted   under the Plan

terminates,   expires,   or lapses for any reason other than by virtue of exercise

of the Award,   or if Shares issued   pursuant to Awards are forfeited,   any Stock

subject to such Award again shall be   available   for the grant of an Award under

the Plan, subject to Section 7.3.

 

4.3 Delivery of Shares as Payment.   In the event a   Participant   pays the Option

Price for Shares pursuant to the exercise of an Option with previously   acquired

Shares, the number of Shares available for future Awards under the Plan shall be

reduced   only by the net number of new Shares   issued   upon the   exercise of the

Option. In addition,   in determining the number of shares of Stock available for

Awards,   if Stock has been   delivered or exchanged by a   Participant   as full or

partial   payment to the   Company   for payment of   withholding   taxes,   or if the

number of shares of Stock otherwise   deliverable has been reduced for payment of

withholding   taxes,   the   number of   shares of Stock   exchanged   as   payment   in

connection   with the   withholding tax or so reduced shall again be available for

purpose of Awards under the Plan.

 

4.4   Capital   Adjustments.   The   number   and   class of   Shares   subject   to each

outstanding   Award,   the   Option   Price and the annual   limits on and   aggregate

number of Shares   for which   Awards   thereafter   may be made shall be subject to

such   adjustment,   if   any,   as the   Committee   in   its   sole   discretion   deems

appropriate    to   reflect   such   events   as   stock    dividends,    stock   splits,

recapitalizations,   mergers,   consolidations   or   reorganizations   of or by   the

Company.

 

                                    ARTICLE V

                                    Eligibility

 

Persons   eligible to   participate   in the Plan include (i) all associates of the

Company   and   its   Subsidiaries   (including   any   corporation   which   becomes   a

Subsidiary   after the   adoption of the Plan by the Board) who, in the opinion of

the Committee, are Key Associates and (ii) all Directors.

 

Multiple   grants of Awards under the Plan may be made in any calendar   year to a

Participant,   provided,   however,   that Awards of Options and SARs (disregarding

any Tandem SARs as defined in Section 7.1)   granted in any calendar   year to any

one Participant   shall not provide for the issuance of, and/or cash payment with

respect to, more than 90,000 Shares in the aggregate,   that Awards of Restricted

Stock   and   Restricted   Stock   Units   granted   in any   calendar   year to any one

Participant   shall not provide for the   issuance   of,   and/or cash   payment with

respect to, more than 50,000 Shares in the aggregate, and that Performance Units

granted in any calendar   year to any one   Participant   shall not provide for the

payment of more than $1,000,000 in the aggregate.

 

                                   ARTICLE VI

                                  Stock Options

 

6.1 Grant of Options.   Subject to the terms a