SCHEDULE 14A
(RULE 14A-101)

INFORMATION REQUIRED IN PROXY STATEMENT

SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )

Filed by the Registrant [X]

Filed by a Party other than the Registrant [ ]

Check the appropriate box:

[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12

BANCORPSOUTH, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)

- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

[X] No fee required.

[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

(1) Title of each class of securities to which transaction applies:

(2) Aggregate number of securities to which transaction applies:

(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):

(4) Proposed maximum aggregate value of transaction:

(5) Total fee paid:

[ ] Fee paid previously with preliminary materials:

[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.

(1) Amount Previously Paid:

(2) Form, Schedule or Registration Statement No.:

(3) Filing Party:

(4) Date Filed:
2

(BANCORPSOUTH LOGO)

ONE MISSISSIPPI PLAZA
TUPELO, MISSISSIPPI 38801

March 24, 1998

TO THE SHAREHOLDERS OF
BANCORPSOUTH, INC.

On Tuesday, April 21, 1998, at 7:00 p.m. (Central Time), the annual meeting
of shareholders of BancorpSouth, Inc. will be held at the Ramada Inn Convention
Center, 854 North Gloster Street, Tupelo, Mississippi. Dinner will be served. I
trust that you will make every effort to attend and participate in the business
of the meeting.

Please read our enclosed Annual Report to Shareholders and Proxy Statement
for the 1998 annual meeting of shareholders. Sign, date and return the enclosed
proxy, which is being solicited by the Board of Directors of the Company, as
soon as possible. If you attend the meeting, you may withdraw your proxy and
vote your shares personally.

If you plan to attend the dinner portion of the meeting, please be sure to
complete and return the enclosed reservation card.

Sincerely,

/s/ AUDREY B. PATTERSON
AUBREY B. PATTERSON
Chairman of the Board
and Chief Executive Officer

Enclosures:
1. Proxy Card and Business Reply Envelope
2. Meeting Reservation Card
3. Annual Report

IMPORTANT . . . SEND IN YOUR PROXY

DATE, FILL IN AND SIGN THE ENCLOSED PROXY
AND RETURN IT PROMPTLY.
3

(BANCORPSOUTH LOGO)

ONE MISSISSIPPI PLAZA
TUPELO, MISSISSIPPI 38801

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

TO BE HELD APRIL 21, 1998

TO THE SHAREHOLDERS
OF BANCORPSOUTH, INC.

The annual meeting of shareholders of BancorpSouth, Inc. (the "Company")
will be held on Tuesday, April 21, 1998, at 7:00 p.m. (Central Time) at the
Ramada Inn Convention Center, 854 North Gloster Street, Tupelo, Mississippi, for
the following purposes:

(1) To elect two Class III directors;

(2) To approve certain amendments and restatements of the Company's 1994
Stock Incentive Plan and 1995 Non-Qualified Stock Option Plan for
Non-Employee Directors;

(3) To ratify the appointment of the accounting firm of KPMG Peat Marwick
LLP as independent auditors of the Company and its subsidiaries for the
year 1998; and

(4) To transact such other business as may properly come before the meeting
or any adjournment thereof.

The Board of Directors has fixed the close of business on March 6, 1998 as
the record date for determining shareholders entitled to notice of and to vote
at the meeting.

By order of the Board of Directors

/s/ AUDREY B. PATTERSON
AUBREY B. PATTERSON
Chairman of the Board
and Chief Executive Officer

March 24, 1998

IMPORTANT

WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING IN PERSON, TO ASSURE THE
PRESENCE OF A QUORUM, PLEASE COMPLETE, DATE, SIGN AND MAIL THE ENCLOSED PROXY AS
SOON AS POSSIBLE. IF YOU ATTEND THE MEETING AND WISH TO VOTE YOUR SHARES
PERSONALLY, YOU MAY DO SO AT ANY TIME BEFORE THE PROXY IS EXERCISED.
4

(BANCORPSOUTH LOGO)

ONE MISSISSIPPI PLAZA
TUPELO, MISSISSIPPI 38801

PROXY STATEMENT

This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of BancorpSouth, Inc. (the "Company"), to be
voted at the Company's annual meeting of shareholders to be held at the Ramada
Inn Convention Center, 854 North Gloster Street, Tupelo, Mississippi, on April
21, 1998, at 7:00 p.m. (Central Time), for the purposes set forth in the
accompanying notice, and at any adjournment thereof. This Proxy Statement and
the accompanying form of proxy are first being sent to shareholders on or about
March 24, 1998.

If the enclosed proxy is properly executed, returned and not revoked, it
will be voted in accordance with the instructions, if any, given by the
shareholder, and if no instructions are given, it will be voted (a) for the
election as directors of the nominees described in this Proxy Statement, (b) to
approve proposed amendments and restatements of the Company's 1994 Stock
Incentive Plan and 1995 Non-Qualified Stock Option Plan for Non-Employee
Directors, (c) to ratify the appointment of the firm of KPMG Peat Marwick LLP as
independent auditors of the Company and its subsidiaries for 1998, and (d) for
the recommendations of the Board of Directors on any other proposal that may
properly come before the meeting.

Shareholders who sign proxies have the right to revoke them by written
request to the Company at any time before they are voted, and the giving of the
proxy will not affect the right of any shareholder to attend the meeting and
vote in person.

The close of business on March 6, 1998 has been fixed as the record date
for the determination of shareholders entitled to notice of and to vote at this
year's annual meeting. As of such date, the Company had 500,000,000 authorized
shares of common stock, $2.50 par value (the "Common Stock"), of which
22,329,777 shares were outstanding and entitled to vote. The Common Stock is the
Company's only outstanding voting stock.

PROPOSAL 1: ELECTION OF DIRECTORS

INTRODUCTION

The Articles of Incorporation of the Company provide that the Board of
Directors shall be divided into three classes of as nearly equal size as
possible. Approximately one-third of the directors are elected each year. The
Board of Directors has nominated the two individuals named below under the
caption "Class III Nominees" for election as directors to serve until the annual
meeting of shareholders in 2001 or until their earlier retirement in accordance
with the policy of the Board of Directors. The policy provides that a director
shall retire at age 65 unless he or she continues to be actively engaged in his
or her primary occupation, in which event he or she shall retire at age 70. Each
nominee has consented to be a candidate and to serve, if elected.

In addition to the two Class III nominees named below, Frank A. Riley and
J. Louis Griffin, Jr. currently serve as Class III directors of the Company.
Messrs. Riley and Griffin are both retiring from the Board of Directors upon
expiration of their current terms at this year's annual meeting.

Directors are elected by a plurality of the votes cast by the shares
entitled to vote in the election at a meeting at which a quorum is present. The
holders of Common Stock do not have cumulative voting rights with respect to the
election of directors. Consequently, each shareholder may cast one vote per
share for each nominee.

Unless a proxy shall specify otherwise, the persons named in the proxy
shall vote the shares covered thereby for the nominees designated by the Board
of Directors listed below. Should any nominee become
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unavailable for election, shares covered by a proxy will be voted for a
substitute nominee selected by the current Board of Directors.

CLASS III NOMINEES

The following table shows the names, ages, principal occupations and
certain directorships of the nominees to become Class III directors and the year
in which each nominee was first elected to the Board of Directors.

DIRECTOR
NAME AGE PRINCIPAL OCCUPATION/OTHER DIRECTORSHIPS SINCE
---- --- ---------------------------------------- --------

Aubrey B. Patterson 55 Chairman of the Board, President and Chief Executive 1983
Officer of the Company and BancorpSouth Bank
Andrew R. Townes, D.D.S. 66 Doctor of Dental Surgery, Grenada, Mississippi 1971

CONTINUING DIRECTORS

The persons named below will continue to serve as directors until the
annual meeting of shareholders in the year indicated. Shareholders are not
voting on the election of the Class I and Class II directors. The following
table shows the names, ages, principal occupations and other directorships of
each continuing director, and the year in which each was first elected to the
Board of Directors.

DIRECTOR
NAME AGE PRINCIPAL OCCUPATION/OTHER DIRECTORSHIPS SINCE
---- --- ---------------------------------------- --------

CLASS II -- 1999
W. G. Holliman, Jr. 60 President and Chief Executive Officer, Furniture 1994
Brands International, Inc., St. Louis, Missouri
and Tupelo, Mississippi (furniture manufacturer)
A. Douglas Jumper 66 President, S&J Steel Builders, Inc., Booneville, 1972
Mississippi; Director, Cavalier Homes, Inc.,
Addison, Alabama (mobile home manufacturer);
Director, River Oaks Furniture, Inc., Fulton,
Mississippi (furniture manufacturer)
Turner O. Lashlee 61 Chairman of the Board and President, Lashlee-Rich, 1992
Inc., Humboldt, Tennessee (general construction
and retail building materials supplier)
Alan W. Perry 50 Attorney at Law, Forman, Perry, Watkins, Krutz & 1994
Tardy, Jackson, Mississippi
CLASS I -- 2000
Shed H. Davis 65 Managing Partner, Davis Farms Partnership, Bruce, 1955
Mississippi (farming)
Hassell H. Franklin 62 Chief Executive Officer, Franklin Corp., Houston, 1974
Mississippi (furniture manufacturer)
Fletcher H. Goode, M.D. 68 Ophthalmologist, Millington, Tennessee 1996
Travis E. Staub 65 Vice Chairman, JESCO, Inc., Fulton, Mississippi 1975
(construction)
Lowery A. Woodall 68 Management Consultant, Forrest General Hospital, 1994
Hattiesburg, Mississippi

Each of the nominees and continuing directors has had the principal
occupation indicated for more than five years.

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MEETINGS OF THE BOARD OF DIRECTORS AND COMMITTEES

During 1997, the Board of Directors of the Company held seven meetings.
Each director attended at least 75% of the meetings of the Board of Directors
and all committees on which such director served.

The Board of Directors has established the standing committees described
below. Mr. Patterson serves as an ex officio member of each committee other than
the Audit and Loan Review Committee and Stock Incentive Committee, in addition
to being Chairman of the Executive Committee.

The Executive Committee acts on behalf of the Board of Directors on all
matters concerning the management and conduct of the business and affairs of the
Company except those matters which cannot by law be delegated by the Board.
Generally, the Executive Committee meets monthly. The Executive Committee held
12 meetings during 1997. The current members of the Executive Committee are
Messrs. Patterson (Chairman), Franklin, Jumper, Riley and Staub.

The Audit and Loan Review Committee is responsible for determining the
effectiveness of internal controls and operational procedures, compliance with
applicable policies, regulations and laws, the engagement of the independent
auditors for the Company and supervision of the annual audit. This committee
also serves as the Audit and Loan Review Committee for BancorpSouth Bank, the
Company's bank subsidiary. The Audit and Loan Review Committee is currently
composed of Messrs. Townes (Chairman), Goode and Perry. This committee met 12
times during 1997.

The Human Resources and Marketing Committee reviews and approves the
salaries, benefits and other compensation of the employees of the Company and
its subsidiaries. The current members of this committee are Messrs. Woodall
(Chairman), Griffin, Holliman and Lashlee. The committee met 12 times during
1997.

The Stock Incentive Committee administers the Company's 1990 and 1994 Stock
Incentive Plans (together, the "Stock Incentive Plans"). The current members of
this committee are Messrs. Staub (Chairman), Holliman and Woodall. This
committee met one time during 1997.

The Nominating Committee recommends to the Board of Directors nominees for
election to the Board. The current members of this committee are Messrs.
Franklin (Chairman), Jumper, Patterson, Riley and Staub. The Nominating
Committee met five times during 1997.

Shareholders may make recommendations for nominees for the Board of
Directors to the Nominating Committee by submitting written notice to the Chief
Executive Officer of the Company at least 90 days prior to the annual meeting.
This written notice must contain, to the extent known by the nominating
shareholder, the name, address and the principal occupation of each proposed
nominee and the name, residential address and the number of shares owned by the
notifying shareholder.

COMPENSATION OF DIRECTORS

Directors who are employees of the Company receive no additional
compensation for serving on the Board of Directors or any committee thereof.
Directors receive an annual retainer of $3,600, and are paid a meeting fee of
$400 for each regular or special meeting attended. Members of the Executive
Committee receive a fee of $1,000 for each committee meeting attended. Chairmen
of standing or special committees of the Board of Directors receive an annual
fee of $1,200 for serving as such. Members of other standing committees receive
$500 for each committee meeting attended. In addition, each of the Company's
directors serves on the Board of Directors of BancorpSouth Bank. Each director
of BancorpSouth Bank who is not an employee of BancorpSouth Bank is paid $1,000
for each regular or special meeting of the Board of Directors of BancorpSouth
Bank attended. Directors are reimbursed for necessary travel expenses and are
insured under the Company's group life insurance plan for amounts of $15,000 to
age 65 and $9,750 from age 65 until reaching age 70.

Directors may defer receipt of all or a portion of these fees by entering
into a compensation deferral agreement with the Company. Beginning in 1999,
however, at least 50% of the director fees will be paid in the form of Common
Stock pursuant to the Company's Director Stock Plan (the "Stock Plan"),
established on February 14, 1998 by the Board of Directors. Under the Stock
Plan, each director will automatically receive
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50% of the director fee payable to such director in the form of Common Stock.
Each director may elect to receive the remaining portion of the fee in cash or
Common Stock, or defer the receipt of the cash fee through a compensation
deferral arrangement.

Each non-employee director of the Company also participates in the
Company's 1995 Non-Qualified Stock Option Plan For Non-Employee Directors (the
"Directors Plan"). The Directors Plan provides for the grant of certain stock
incentives to participating directors on May 1 of each year. Prior to 1998, the
participating directors each have received annually options to purchase a pro
rata share of 24,000 shares of Common Stock. For 1997, the 11 participating
directors each were granted options to purchase 2,181 shares of Common Stock.
Options can be exercised at any time after the date of the annual meeting of
shareholders that follows the date of grant, provided that the director
continuously serves during that term. The exercise price of an option is the
fair market value of the Common Stock on the date of grant. Options expire upon
the earlier of ten years after the date of grant or termination of service as a
director. Through 1997, each option grant included an award of stock
appreciation rights ("SARs") equal to 50% of the number of shares of Common
Stock subject to the related option. SARs entitle each optionee to receive cash
payments from the Company based on the excess of the fair market value per share
of Common Stock on the date on which an SAR is exercised over the purchase price
per share of the underlying option. SARs are exercisable only to the extent that
the underlying option is exercisable and shall terminate when the option
terminates. The provisions permitting the future grant of SARs were eliminated
effective January 1, 1998, and the annual award of options were modified as
follows: (i) on May 1, 1998, each participating director will receive 400 shares
of restricted Common Stock, one-third of such shares will vest upon the annual
meeting of shareholders of the Company during each of the three years
immediately following the date of grant, and options to purchase 600 shares of
Common Stock; (ii) on May 1, 1999 and each year thereafter, each participating
director will receive options to purchase 1,800 shares of Common Stock. Such
options become fully vested at the annual meeting of shareholders following the
date of grant. The Directors Plan is administered by the Board of Directors or a
committee comprised of members of the Board of Directors who are designated for
this purpose, which may not deviate from the express annual awards provided for
in the Directors Plan. A total of 192,000 shares of Common Stock have been
reserved for issuance under the Directors Plan. Options to purchase 71,982
shares of Common Stock have previously been granted under the Directors Plan, of
which options to purchase 13,962 shares have been exercised.

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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth certain information, as of January 31, 1998,
with respect to the beneficial ownership of the Company's Common Stock by (i)
each person known by the Company to be the beneficial owner of more than 5% of
the Company's Common Stock, (ii) all directors and nominees, (iii) each of the
executive officers of the Company named in the Summary Compensation Table set
forth below under the caption "EXECUTIVE COMPENSATION," and (iv) all directors
and executive officers of the Company as a group.

SHARES
BENEFICIALLY PERCENT
OWNED(1) OF CLASS
------------ --------

BancorpSouth, Inc. Amended and Restated Salary Deferral
Profit Sharing Employee Stock Ownership Plan,............. 2,168,162 9.71%
One Mississippi Plaza,
Tupelo, Mississippi 38801
Harry R. Baxter............................................. 33,502 *
Shed H. Davis............................................... 115,488(2) *
Hassell H. Franklin......................................... 306,815 1.37
Fletcher H. Goode, M.D...................................... 29,634 *
J. Louis Griffin, Jr. ...................................... 21,811(3) *
W. G. Holliman, Jr. ........................................ 180,793(4) *
A. Douglas Jumper........................................... 213,983(5) *
Turner O. Lashlee........................................... 24,343 *
Charles J. McKee............................................ 24,081 *
Aubrey B. Patterson......................................... 230,388(6) 1.03
Alan W. Perry............................................... 15,822 *
Frank A. Riley.............................................. 36,642(7) *
Michael L. Sappington....................................... 53,721 *
Travis E. Staub............................................. 37,897(8) *
Andrew R. Townes, D.D.S. ................................... 55,316 *
Michael W. Weeks............................................ 57,538(9) *
Lowery A. Woodall........................................... 24,530(10) *
All directors and executive officers as a group (21
persons).................................................. 1,566,915 7.02

- ---------------

* Less than 1%
(1) Beneficial ownership is deemed to include shares of the Company's Common
Stock which an individual has a right to acquire within 60 days of the date
of this Proxy Statement upon the exercise of options, including options
granted under the Stock Incentive Plans and the Directors Plan. These
shares are deemed to be outstanding for the purposes of computing the
percentage ownership of that individual, but are not deemed outstanding for
the purposes of computing the percentage of any other person. Information
in the table for individuals also includes shares held in the Company's
Amended and Restated Salary Deferral Profit Sharing Employee Stock
Ownership Plan (the "401(k) Plan") and in individual retirement accounts
for which the shareholder can direct the vote.
(2) Includes 1,600 shares held as custodian for Mr. Davis' grandchildren,
30,328 shares owned by Mr. Davis' wife and 41,400 shares held in a trust of
which Mr. Davis is the beneficiary.
(3) Includes 4,058 shares owned by Mr. Griffin's wife.
(4) Includes 10,176 shares owned by Mr. Holliman's wife.
(5) Includes 200,767 shares held in a trust of which Mr. Jumper is the
beneficiary and co-trustee.
(6) Includes 1,793 shares owned by Mr. Patterson's mother, of which Mr.
Patterson disclaims beneficial ownership, and 35,000 shares beneficially
owned by Mr. Patterson pursuant to a Stock Bonus Agreement with the
Company, dated January 30, 1998 (the "1998 Stock Bonus Agreement"), over
which he exercises voting power.
(7) Includes 502 shares owned by Mr. Riley's wife.
(8) Includes 5,204 shares owned by Mr. Staub's wife.

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(9) Includes 545 shares owned by Mr. Weeks' minor daughter, 3,016 owned by Mr.
Weeks' wife and 24,000 shares beneficially owned by Mr. Weeks pursuant to a
Stock Bonus Agreement, dated as of January 17, 1995 (the "1995 Stock Bonus
Agreement"), between the Company and Mr. Weeks, over which he exercises
voting power.
(10) Includes 486 shares owned by Mr. Woodall's wife.

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's directors and executive officers, and
persons who own more than 10% of a registered class of the Company's equity
securities, to file with the Securities and Exchange Commission (the "SEC")
initial reports of ownership and reports of changes in ownership of Common Stock
and other equity securities of the Company. These officers, directors and
greater than 10% shareholders of the Company are required to furnish the Company
with copies of all Section 16(a) forms they file. There are specific due dates
for these reports, and the Company is required to report in this Proxy Statement
any failure to file reports as required during 1997.

Based solely upon a review of the copies of reports furnished to the
Company and written representations that no other reports were required, the
Company believes that these reporting and filing requirements were complied with
during 1997, except that the Company has been advised that A. Douglas Jumper
inadvertently failed to report timely the acquisition of 99,359 shares in May
1997. This acquisition was subsequently reported.

PROPOSAL 2: AMENDMENTS AND RESTATEMENTS OF THE
COMPANY'S 1994 STOCK INCENTIVE PLAN AND 1995 NON-QUALIFIED
STOCK OPTION PLAN FOR NON-EMPLOYEE DIRECTORS

The Company's Board of Directors has adopted amendments and restatements of
the Company's 1994 Stock Incentive Plan (the "1994 Plan") and the Directors
Plan. As further described below, the primary purposes of these amendments are
to eliminate the grant of SARs and to conform the plans to recent changes in
federal securities and tax laws. In addition, the 1994 Plan is amended to
increase the number of shares of Common Stock reserved for issuance under the
1994 Plan, and the Directors Plan is amended to modify the formula for grants of
awards under the Directors Plan. These amendments are separately explained
below. These descriptions and explanations are qualified in their entirety by
reference to the full text of the amended and restated 1994 Plan, which is
attached hereto as Appendix A, and the amended and restated Directors Plan,
which is attached hereto as Appendix B.

DESCRIPTION OF THE AMENDMENT TO THE 1994 PLAN

Prior to the amendment and restatement of the 1994 Plan, 458,000 shares of
Common Stock had been reserved for issuance thereunder, of which 454,000 shares
are either subject to outstanding awards or have been issued pursuant to the
1994 Plan. Prior to the amendment, the 1994 Plan permitted awards of (i)
"incentive stock options" ("ISOs") described in Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code"), (ii) non-qualified stock options
which are not qualified as ISOs under the Code ("NQSOs"), and (iii) SARs
(collectively, "Awards"). The 1994 Plan is administered by the Stock Incentive
Committee and was designed to comply with Rule 16b-3 under the Exchange Act
("Rule 16b-3").

EXPLANATION OF CHANGES

The material terms of the changes effected by the amendment and restatement
of the 1994 Plan are as follows:

Increase in Shares. Under the amendment to the 1994 Plan, an additional
1,000,000 shares of Common Stock are available for issuance, for a total of
1,004,000 shares. Without this increase, the Company would be extremely limited
in its ability to offer Awards. The Board of Directors believes that Awards are
an essential part of the Company's compensation program and provide meaningful
inducements to employees to contribute

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to the Company's growth and financial performance. The 1994 Plan has been a
useful tool in achieving the Company's business development goals by helping to
attract and retain highly qualified employees. The Company believes that
continuation of Awards is necessary in the current economic environment to
attract and retain qualified individuals.

Limit on Individual Awards. No employee of the Company or its subsidiaries
may receive Awards with respect to more than 60,000 shares of Common Stock
during any year. The 1994 Plan contained no limits on individual Awards prior to
the amendment. This modification is needed due to recent changes to the Code.
Section 162(m) of the Code limits the ability of the Company to deduct
compensation expenses on payments to certain officers. This limit does not apply
to stock options that qualify as "performance-based compensation" under Section
162(m). The annual 60,000 share limit is required for compensation realized upon
exercise of ISOs and NQSOs to qualify as performance-based compensation.

Elimination of SARs; Addition of Restricted Stock. The Company, acting
through the Stock Incentive Committee, retains the right to grant ISOs and
NQSOs, but the ability to grant SARs has been eliminated. The amended 1994 Plan
instead provides for awards of shares of Common Stock that are subject to
transfer restrictions ("Restricted Stock"). This feature is limited so that only
46,800 shares, which is less than 5% of the shares available under the 1994
Plan, may be awarded as Restricted Stock. The Board of Directors has determined
that the calculation of compensation expenses for grants of Restricted Stock is
more predictable than with SARs. The amendment and restatement of the 1994 Plan
does not terminate SARs that are currently outstanding under the 1994 Plan. The
right to award Restricted Stock is limited because the Company's long-term
strategy for incentive compensation is more reliant upon ISO and NQSO awards.

Shareholder Approval Requirements. Under the 1994 Plan as amended,
shareholder approval is required for amendments that (i) increase the number of
shares available under the 1994 Plan, (ii) increase the number of shares subject
to an Award that may be granted to any person during a year, (iii) increase the
period during which Awards may be granted or exercised, or (iv) change the class
of employees eligible to receive ISOs. Prior to the amendment, shareholder
approval was also required for amendments that could materially increase
benefits accruing under Awards to officers of the Company. In many situations,
the broad definition of "material" would necessitate approval for amendments
that are purely administrative. The Board of Directors believes that the cost
and time required to obtain shareholder approval so frequently far outweighs any
value shareholders may derive from reviewing such amendments. The current
restrictions preserve shareholder rights to review amendments on matters that
are of most significance to shareholders. These changes are possible because
Rule 16b-3 has been revised to eliminate shareholder approval as a requirement.
The shareholder approval provisions in the amended 1994 Plan reflect the
requirements of the Code and the listing requirements of the New York Stock
Exchange.

Award Transfer Restrictions. Prior to the amendment, a recipient was not
permitted to transfer Awards at any time prior to death. The 1994 Plan retains
this transfer restriction as a general rule, but allows for transfers of NQSOs
and Restricted Stock in individual situations that are approved by the Stock
Incentive Committee. This flexibility on transfers is possible due to the recent
amendments to Rule 16b-3. The Board of Directors believes that there are
relatively few situations in which Award transfers should be permitted, but
recommends this change so that it may be possible to provide Award recipients
with flexibility in financial, estate and tax planning. The restriction on
transferring ISOs has been retained because it is still required by the Code.

Vesting Limitation. Prior to the amendment, all Awards would become fully
vested if the Company were to experience a change in corporate control. This
vesting feature is modified so that Awards will be only partially vested in
situations in which an individual would realize less net income under the Award
after payment of "golden parachute" excise taxes under Section 4999 of the Code.
Without this modification, individuals who become liable for excise taxes under
Section 4999 on the occurrence of a change in corporate control may realize less
net after-tax income and the Company would lose the ability to deduct these
payments from its income pursuant to Section 280G of the Code. This change is
primarily a matter of tax planning and is necessary to minimize the potentially
negative tax impact on both the Company and the individual in the event that the
Company undergoes a change in corporate control.

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Termination of Plan. Prior to the amendment, the 1994 Plan could be
terminated by the Board of Directors, and would automatically terminate in 2004.
The amended 1994 Plan has no set termination date except that Common Stock that
is available for Awards and is approved by shareholders under this proposal
cannot be used for purposes of granting ISOs after February 14, 2008. Shares
approved in 1994 will similarly expire for purposes of granting ISOs on December
28, 2004. Otherwise, the 1994 Plan will continue until the Board of Directors
terminates it. The ten-year period is necessitated by Section 422 of the Code so
that options can qualify as ISOs. However, this Code provision does not require
termination of the 1994 Plan. The prior practice of terminating an option plan
and establishing a new plan every ten years creates significant administrative
complexities and does not protect any significant shareholder interest.
Therefore, the Company believes that this change is an important enhancement to
the administration of the 1994 Plan.

GENERAL DESCRIPTION OF THE AMENDED AND RESTATED 1994 PLAN

The purpose of the 1994 Plan is to provide a performance incentive to
employees and others who perform services that enhance the value of
shareholders' equity. The Stock Incentive Committee is authorized to administer
the 1994 Plan and to grant awards to Company employees and to certain others who
provide significant services to the Company. The 1994 Plan provides for the
award of ISOs, NQSOs and Restricted Stock. ISOs may be granted only to employees
of the Company and its subsidiaries. As of February 20, 1998, the Company
employed approximately 2,100 people. The 1994 Plan will continue indefinitely
until terminated by the Board of Directors.

The Stock Incentive Committee determines which individuals are to receive
awards under the 1994 Plan, the type of award to be granted (i.e., ISOs, NQSOs
or Restricted Stock) and the exercise prices and vesting dates of each Award.
The exercise price of ISOs may not be less than 100% of the fair market value of
the Common Stock on the date of grant (110% for individuals who own more than
10% of the total outstanding Common Stock). These and other terms are set forth
in a written agreement between the Company and the individual receiving the
award. The aggregate fair market value of Common Stock with regard to which ISOs
are exercisable by an individual for the first time during any calendar year may
not exceed $100,000. No award shall be exercisable after the expiration of ten
years from the date it is granted (five years for ISOs granted to individuals
who own more than 10% of the total outstanding shares of Common Stock).

The Company currently has options outstanding to purchase 377,053 shares of
Common Stock under the 1994 Plan. The exercise price under which options have
been granted has been the fair market value of the Company's Common Stock on the
date of grant. No SARs were awarded in 1997 under the 1994 Plan. However,
130,001 SARs that were previously granted are outstanding as of the date hereof.
The amendment and restatement of the 1994 Plan does not terminate these SARs. To
date, no Restricted Stock has been awarded. Based upon the closing sale price of
the Common Stock on March 6, 1998, the aggregate market value of the 377,053
shares of Common Stock underlying outstanding options granted pursuant to the
1994 Plan was approximately $16.0 million.

Once an option has become exercisable, the individual may purchase shares
of Common Stock from the Company by paying the exercise price in cash, shares of
Common Stock or in other consideration acceptable to the Stock Incentive
Committee. Subject to limitations on "golden parachute" payments described in
Sections 280G and 4999 of the Code, Awards become fully vested upon the
occurrence of a merger or certain other corporate events in which the control of
the Company is changed.

8
12

The amount of any Award under the 1994 Plan is subject to the discretion of
the Stock Incentive Committee and, therefore, cannot be determined in advance.
Similarly, the dollar value of such Awards cannot be determined prior to their
grant. The table below provides information for 1997 regarding the dollar value
and the number of shares of Common Stock underlying Awards granted under the
1994 Plan:

1994 INCENTIVE STOCK PLAN BENEFITS

DOLLAR VALUE OF SHARES NUMBER OF SHARES
UNDERLYING UNDERLYING STOCK
NAME AND POSITION STOCK OPTIONS(1) OPTIONS
- ----------------- ---------------------- ----------------

Aubrey B. Patterson Chairman of the Board, President and
Chief Executive Officer of the Company and BancorpSouth
Bank................................................... -- 28,309
Michael W. Weeks Executive Vice President of the Company
and Vice Chairman of BancorpSouth Bank................. -- 5,000
Michael L. Sappington Vice Chairman of BancorpSouth
Bank................................................... -- 7,000
Charles J. McKee Vice Chairman of BancorpSouth Bank...... -- --
Harry R. Baxter Executive Vice President of the Company
and Vice Chairman of BancorpSouth Bank................. -- 6,000
Executive Group (8 persons).............................. -- 64,309
Non-Executive Director Group (11 persons)................ N/A N/A
Non-Executive Officer Employee Group (2,092 persons)..... -- 48,000

- ---------------
(1) Based upon the closing sale price of the Company's Common Stock of $42.4375
per share as reported on the New York Stock Exchange on March 6, 1998, which
was less than $44.00, the exercise price of each of the options granted.

FEDERAL INCOME TAX CONSEQUENCES

Tax consequences to the Company and to individuals receiving Awards will
vary with the type of Award. Generally, a participant will not recognize income,
and the Company is not entitled to take a deduction, upon the grant of an ISO,
NQSO or Restricted Stock under the 1994 Plan. An individual who exercises an ISO
will not recognize income on its exercise if he or she does not sell the shares
of Common Stock acquired thereby for at least two years after the date of grant
and one year after exercising the ISO. Any gain or loss on the sale of the
Common Stock after these statutory holding periods will be subject to capital
gains treatment. The exercise price of the ISO is the basis for purposes of
determining capital gains. Reduced capital gains rates apply if the Common Stock
is held for at least 18 months after the date of exercise of the ISO.

An individual who disposes of the Common Stock before the statutory holding
periods are satisfied will have engaged in a "disqualifying disposition" and
will recognize ordinary compensation income on the difference between the
exercise price of the ISO and the fair market value of the Common Stock at the
time the ISO was exercised. The individual's basis in the Common Stock after a
disqualifying disposition is its fair market value at the time of exercise. The
individual will also be subject to tax on capital gain, if any, upon the sale of
the Common Stock on the amount realized in excess of the basis.

Generally, the Company is not entitled to a tax deduction upon the grant of
an option or the exercise of an ISO under the 1994 Plan. However, if the
individual engaged in a disqualifying disposition, the Company may take a tax
deduction for the amount of ordinary income recognized by the individual.

9
13

Upon exercise of a NQSO, the individual recognizes ordinary income on the
difference between the fair market value of the Common Stock and the exercise
price paid under the NQSO. Unless an individual makes an election under Section
83(b) of the Code to be taxed at the time of grant, he or she will recognize
ordinary income on the fair market value of the Common Stock at the time shares
of Restricted Stock become vested. In either case, the Company is generally
entitled to deduct the amount recognized by the individual for tax purposes. The
individual is also subject to capital gains treatment on the subsequent sale of
the Common Stock acquired through an Award. For this purpose, the individual's
basis in the Common Stock is its fair market value at the time the NQSO is
exercised or the Restricted Stock is vested (or transferred, if an election
under Section 83(b) is made).

REGISTRATION UNDER THE SECURITIES ACT OF 1933

The Company intends to register the additional shares of Common Stock
authorized for issuance under the 1994 Plan under the Securities Act of 1933 on
a Registration Statement on Form S-8 as soon as practicable after approval of
amendment and restatement of the 1994 Plan by the shareholders of the Company.

DESCRIPTION OF THE AMENDMENT TO THE DIRECTORS PLAN

Currently, 192,000 shares of Common Stock are reserved for issuance under
the Directors Plan, of which 71,982 shares are either subject to outstanding
awards or have been issued pursuant to the Directors Plan since its effective
date. The amendment does not increase the number of shares reserved for issuance
under the Directors Plan. Prior to its amendment, the Directors Plan permitted
awards of NQSOs and SARs. The Directors Plan is administered by the Board of
Directors. The Directors Plan was designed to comply with Rule 16b-3.

EXPLANATION OF CHANGES

The relevant administrative modifications to the Directors Plan are similar
to amendments to the 1994 Plan, as described above. The material terms of the
changes effected by the amendment and restatement of the Directors Plan are as
follows:

Elimination of SARs; Addition of Restricted Stock. The Directors Plan
continues to provide for the grant of NQSOs, but the availability of SARs has
been eliminated. The amended Directors Plan instead provides for awards of
Restricted Stock. This feature is limited so that only 4,000 shares may be
awarded as Restricted Stock, which is the total number of shares of Restricted
Stock expected to be awarded in 1998 under the automatic grant formula described
below. The Board of Directors has determined that the calculation of
compensation expenses for grants of Restricted Stock is more predictable than
with SARs. The amendment and restatement of the Directors Plan does not
terminate SARs that are currently outstanding under the Directors Plan.

Modified Automatic Grant Formula. Prior to the amendment, the Directors
Plan provided an automatic grant on May 1 of each year of NQSOs to each
non-employee director of the Company. The number of NQSOs was determined by
dividing the number of eligible directors on the grant date into 24,000. A
number of SARs equal to 50% of the number of NQSOs would also be awarded on each
grant date. Awards would become vested on the date of the annual meeting of
shareholders held one year after the date of grant. The exercise price was the
fair market value of Common Stock on the date of grant. Eleven individuals were
eligible to participate in 1997, so each director received NQSOs to purchase
2,181 shares of Common Stock for that year. During 1997, 1,090 SARs were awarded
to each non-employee director. The amendment provides that on May 1, 1998 each
director will receive 400 shares of Restricted Stock, as well as NQSOs to
purchase 600 shares of Common Stock. Beginning May 1, 1999, each year directors
will receive NQSOs to purchase 1,800 shares of Common Stock. The formula for
determining the NQSO exercise price and Award vesting schedule has not changed.
The Board of Directors has concluded that the modified award formula is more
appropriate than the amounts provided under the prior formula grant. This
conclusion was based on

10
14

market surveys and other analysis provided to the Board of Directors by a
professional compensation consulting firm.

Shareholder Approval Requirements. Shareholder approval was, and continues
to be, required for amendments to the Directors Plan that increase the number of
shares of Common Stock available under the Directors Plan. Prior to the
amendment, shareholder approval was also required for amendments that could
materially increase benefits accruing under Awards pursuant to the Directors
Plan. In many situations, the broad definition of "material" would necessitate
approval for amendments that are purely administrative. The Board of Directors
believes that the cost and time required to obtain shareholder approval so
frequently far outweigh any value shareholders may derive from reviewing such
amendments. The current restrictions preserve shareholder rights to review
amendments on matters that are of most significance to shareholders. These
changes are possible because Rule 16b-3 has been revised to eliminate
shareholder approval as a requirement. The shareholder approval provisions in
the amended Directors Plan reflect the listing requirements of the New York
Stock Exchange.

Award Transfer Restrictions. Prior to the amendment, a recipient was not
permitted to transfer Awards at any time prior to death. The Directors Plan
retains this transfer restriction as a general rule, but allows for transfers of
Awards in individual situations that are approved by the Board of Directors.
This flexibility on transfers is possible due to the recent amendments to Rule
16b-3. The Board of Directors believes that there are relatively few situations
in which Award transfers should be permitted, but recommends this change so that
it may be possible to provide Award recipients with flexibility in financial,
estate and tax planning.

Termination of Plan. Prior to the amendment, the Directors Plan could be
terminated by the Board of Directors, and would automatically terminate in 2005.
The amended Directors Plan has no set termination date and will continue until
it is terminated by the Board of Directors. There is no legal requirement for
the ten year termination period. The prior practice of terminating an option
plan and establishing a new plan every ten years creates significant
administrative complexities and does not protect any significant shareholder
interest. Therefore, the Company believes that this change is an important
enhancement to the administration of the Directors Plan.

GENERAL DESCRIPTION OF DIRECTORS PLAN

The purpose of the Directors Plan is to maintain the Company's ability to
attract and retain the services of experienced and highly qualified non-employee
directors and to enhance long-term shareholder value by more closely aligning
the interests of non-employee directors with those of the shareholders. Each
eligible director, who was not an employee but is serving as a director of the
Company on May 1, 1998, will receive a grant of 400 shares of Restricted Stock
and NQSOs to purchase 600 shares of Common Stock. Thereafter, the Directors Plan
provides for the annual grant of NQSOs to each eligible non-employee director of
the Company to purchase 1,800 shares of Common Stock. Restricted Stock awards
become vested in one-third increments upon each of the annual meetings of
shareholders in the three years following the date of grant, provided the
individual has remained a director until that time. NQSOs become vested under
the same conditions, except that full vesting occurs at the annual meeting
following the date of grant. The exercise price of all NQSOs is the fair market
value of Common Stock on the grant date. Each NQSO will expire ten years after
the grant date, unless canceled sooner as a result of termination of service or
death.

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15

The Company currently has options outstanding to purchase 58,020 shares of
Common Stock under the Directors Plan. The exercise price under which options
have been granted has been the fair market value of the Company's Common Stock
on the date of grant. A total of 11,995 SARs were granted in 1997 under the
Directors Plan. A total of 29,010 SARs granted under the Directors Plan are
outstanding as of the date hereof. The amendment and restatement of the
Directors Plan does not terminate these SARs. To date, no Restricted Stock has
been awarded. Based upon the closing sales price of the Common Stock on March 6,
1998, the aggregate market value of the 58,020 shares of Common Stock underlying
outstanding options granted pursuant to the Directors Plan was approximately
$2.46 million.

Once an NQSO has become exercisable, the individual may purchase shares of
Common Stock from the Company by paying the exercise price in cash, shares of
Common Stock or in other consideration acceptable to the Board of Directors.
Subject to limitations on "golden parachute" payments described in Sections 280G
and 4999 of the Code, Awards become fully vested upon the occurrence of a merger
or certain other corporate events in which the control of the Company is
changed.

The dollar value of Awards under the Directors Plan cannot be determined
prior to grant. Below is a table setting forth information regarding Awards
which would have been received by or allocated to non-employee directors as a
group under the Directors Plan during 1997 if the amendment and restatement of
the Directors Plan had been in effect during such year:

1995 NON-QUALIFIED STOCK OPTION PLAN FOR NON-EMPLOYEE DIRECTORS BENEFITS

DOLLAR VALUE OF
RESTRICTED STOCK AND NUMBER OF SHARES NUMBER OF SHARES
SHARES UNDERLYING OF RESTRICTED UNDERLYING STOCK
NAME AND POSITION STOCK OPTIONS(1) STOCK OPTIONS
- ----------------- -------------------- ---------------- ----------------

Non-Executive Director Group (11 persons)..... $286,962 4,400 6,600

- ---------------
(1) The dollar value of the shares of Restricted Stock is based upon the closing
sale price of the Company's Common Stock of $42.4375 per share as reported
on the New York Stock Exchange on March 6, 1998, and the dollar value of
shares underlying the stock options is based upon such closing sale price
less $27.25, which represents the exercise price of each of the options
assuming they were granted on May 1, 1997.

FEDERAL INCOME TAX CONSEQUENCES

Tax consequences to the Company and to individuals receiving Awards will
vary with the type of Award. Generally, an individual will not recognize any
income, and the Company will not be entitled to any deduction, upon the grant of
NQSOs or Restricted Stock under the Directors Plan. Upon the exercise of an
NQSO, an individual will recognize ordinary income in an amount equal to the
excess of the fair market value of the Common Stock above the exercise price of
the NQSO on the date of exercise. The Company will then be entitled to a tax
deduction in an amount equal to the ordinary income recognized by the
individual. An individual will have a tax basis in the shares equal to the fair
market value of the shares at the time of exercise. Any additional gain or loss
realized by the individual on disposition of the Common Stock will be capital
gain or loss to the individual and will not result in any additional tax
deduction to the Company. Reduced capital gains rates apply to Common Stock that
is held for at least 18 months.

Upon exercise of a NQSO, the individual recognizes ordinary income on the
difference between the fair market value of the Common Stock and the exercise
price paid under the NQSO. Unless an individual makes an election under Section
83(b) of the Code to be taxed at the time of grant, he or she will recognize
ordinary income on the fair market value of the Common Stock at the time shares
of Restricted Stock become vested. In either case, the Company is generally
entitled to deduct the amount recognized by the individual amount for tax
purposes. The individual is also subject to capital gains treatment on the
subsequent sale of the Common Stock acquired through an Award. For this purpose,
the individual's basis in the Common Stock is its fair market value at the time
the NQSO is exercised or the Restricted Stock is vested (or transferred, if an
election under Section 83(b) is made).

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16

REQUIRED VOTE

Approval of the amendments and restatements of the 1994 Plan and the
Directors Plan requires the affirmative vote of the holders of a majority of the
votes cast (in person or by proxy) at the Annual Meeting. The amendments and
restatements of the two plans are not being voted on separately.

THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR APPROVAL OF
THE AMENDMENTS AND RESTATEMENTS OF THE COMPANY'S 1994 STOCK INCENTIVE PLAN AND
THE
1995 NON-QUALIFIED STOCK OPTION PLAN FOR NON-EMPLOYEE DIRECTORS.

PROPOSAL 3: SELECTION OF AUDITORS

Upon the recommendation of the Audit and Loan Review Committee, the Board
of Directors has appointed the firm of KPMG Peat Marwick LLP as independent
auditors of the Company and its subsidiaries for 1998, subject to the approval
of the shareholders of the Company. This accounting firm has served as the
independent auditors of the Company or BancorpSouth Bank since 1973.
Representatives of this firm will be at the meeting and will have an opportunity
to make a statement if they desire and will be available to respond to
appropriate questions.

The affirmative vote of a majority of the shares represented at the meeting
and entitled to vote is needed to ratify the appointment of KPMG Peat Marwick
LLP as auditors of the Company for the year 1998. If the appointment is not
approved, the matter will be referred to the Audit and Loan Review Committee for
further review.

THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR
RATIFICATION OF THE APPOINTMENT OF KPMG PEAT MARWICK LLP.

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17

EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE

The following table sets forth certain information concerning compensation
paid or accrued by the Company and its subsidiaries for each of the last three
years with respect to (a) the chief executive officer and (b) the four most
highly compensated executive officers of the Company whose total salary and
bonus for 1997 exceeded $100,000 (the "Named Executive Officers"). All share
amounts and share prices have been adjusted to give effect to a two-for-one
stock split effected in the form of a stock dividend paid on November 20, 1995
(the "1995 Stock Split").

SUMMARY COMPENSATION TABLE

LONG TERM
COMPENSATION AWARDS
---------------------------
AWARDS
---------------------------
ANNUAL COMPENSATION RESTRICTED
NAME AND --------------------- OTHER ANNUAL STOCK OPTIONS/ ALL OTHER
PRINCIPAL POSITION YEAR SALARY($) BONUS($) COMPENSATION($) AWARDS($) SARS(#)(1) COMPENSATION($)(2)
------------------ ---- --------- --------- --------------- ---------- ------------- ------------------

Aubrey B. Patterson........... 1997 $385,000 $144,760 -- -- (4) 28,309/0 $8,000
Chairman, President and 1996 360,000 125,280 -- -- (4) 20,000/10,000 7,500
Chief
Executive Officer of the 1995 330,000 133,650 $498,430(3) -- (4) 20,000/10,000 7,500
Company and BancorpSouth
Bank
Michael W. Weeks.............. 1997 $196,613 $ 36,964 -- -- (5) 5,000/0 $8,000
Executive Vice President 1996 187,250 43,442 -- -- (5) 9,000/4,500 4,681
of the Company and Vice 1995 175,000 47,250 -- $1,042,500(5) 40,000/20,000 --
Chairman of BancorpSouth
Bank
Michael L. Sappington......... 1997 $172,537 $ 32,437 -- -- 7,000/0 $8,000
Vice Chairman of 1996 156,852 36,389 -- -- 9,000/4,500 7,500
BancorpSouth Bank 1995 135,975 36,713 -- -- 8,000/4,000 6,837
Charles J. McKee(6)........... 1997 $172,012 $ 32,338 $ 33,984(7) -- -- $7,806
Vice Chairman of 1996 163,821 38,006 25,021(7) -- -- 7,500
BancorpSouth Bank 1995 155,280 41,926 21,166(7) -- 10,000/5,000 7,500
Harry R. Baxter............... 1997 $142,830 $ 26,852 -- -- 6,000/0 $7,124
Executive Vice President 1996 129,845 30,124 -- -- 8,000/4,000 3,188
of the Company and Vice 1995 110,968 29,962 -- -- 6,000/3,000 3,143
Chairman of BancorpSouth
Bank

- ---------------

(1) SARs are exercisable only with the related option. There are no freestanding
SARs.
(2) These amounts represent matching contributions by the Company under the
401(k) Plan.
(3) Represents a cash payment to reimburse Mr. Patterson for federal and state
income and employment tax liabilities incurred as a result of the issuance
of shares of restricted Common Stock.
(4) Pursuant to the terms of a Stock Bonus Agreement, dated November 6, 1987
(the "1987 Stock Bonus Agreement"), between the Company and Mr. Patterson,
34,500 shares of Common Stock were awarded to Mr. Patterson subject to
release of 3,450 shares on each April 1 if the Company achieved certain
performance goals for the preceding year. Prior to their distribution, Mr.
Patterson was entitled to receive all cash dividends paid on the shares in
escrow under such Stock Bonus Agreement. At December 31, 1997, no shares
remained restricted.
(5) Based upon the closing price per share of Common Stock on January 17, 1995
of $34.75, as reported on the Nasdaq Stock Market. Pursuant to the terms of
the 1995 Stock Bonus Agreement, 30,000 shares of Common Stock were awarded
to Mr. Weeks on January 17, 1995 subject to release of 3,000 shares on each
April 1 if the Company achieved certain performance goals for the preceding
year. Prior to their distribution, Mr. Weeks is entitled to receive all cash
dividends paid on such shares. At December 31, 1997, 24,000 shares remained
restricted subject to achievement of performance goals. At December 31,
1997, the value of the restricted shares under the 1995 Stock Bonus
Agreement (based upon the closing sale price of the Common Stock on that
date of $47.25) was $1,134,000.
(6) Mr. McKee retired from the Company as of December 31, 1997.
(7) Of the 1997 amount, $31,352 represents accrued supplemental retirement
benefits, and the balance represents the cost of an annual physical
examination and the personal use of a Company automobile. Of the 1996
amount, $23,354 represents accrued supplemental retirement benefits, and the
balance represents the personal use of a Company automobile. Of the 1995
amount, $19,260 represents accrued supplemental retirement benefits, and the
balance represents the personal use of a Company automobile.

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18

STOCK OPTION GRANTS

The following table sets forth certain information regarding grants of
stock options and SARs made to the Named Executive Officers during 1997. All
share amounts and share prices have been adjusted to give effect to the 1995
Stock Split.

OPTIONS/SAR GRANTS IN LAST FISCAL YEAR

INDIVIDUAL GRANTS POTENTIAL REALIZABLE
------------------------------------------------------- VALUE AT ASSUMED
PERCENT OF ANNUAL RATES OF
TOTAL STOCK PRICE
SECURITIES OPTIONS/SARS EXERCISE APPRECIATION FOR
UNDERLYING GRANTED TO OF OPTION TERM(3)
OPTIONS/SARS EMPLOYEES IN BASE PRICE EXPIRATION ---------------------
NAME GRANTED(#)(1) FISCAL YEAR ($/SH)(2) DATE 5%($) 10%($)
---- ------------- ------------ ----------- ---------- -------- ----------

Aubrey B. Patterson.......... 28,309/0 25.21% $44.00 12-16-07 $783,343 $1,985,156
Michael W. Weeks............. 5,000/0 4.45 44.00 12-16-07 138,356 350,623
Michael L. Sappington........ 7,000/0 6.23 44.00 12-16-07 193,698 490,872
Charles J. McKee............. -- -- -- -- -- --
Harry R. Baxter.............. 6,000/0 5.34 44.00 12-16-07 166,026 420,747

- ---------------

(1) Options become exercisable in three equal annual installments beginning on
the first anniversary of the date of grant. In the event of termination of
employment or death, the options terminate three months after the
termination of employment or 12 months after death and in any event, upon
their expiration date. Any unexercisable options become fully exercisable in
the event of a change in corporate control of the Company.
(2) Represents the fair market value on date of grant. The exercise price for
options is payable in cash or by delivery of shares of or options to
purchase Common Stock with a fair market value equal to the exercise price
for the shares purchased.
(3) Amounts represent hypothetical gains that could be achieved for the
respective options if exercised at the end of the option term and based upon
assumed rates of appreciation in the market price of the Common Stock of 5%
and 10% compounded annually from the date of grant to the expiration date.
Actual gains, if any, upon the exercise of stock options will depend on the
future performance of the Common Stock and the date on which the options are
exercised.

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19

OPTION/SAR EXERCISES AND YEAR-END VALUES

The following table provides certain information, with respect to the Named
Executive Officers, concerning the exercise of options during 1997 and with
respect to unexercised options and SARs at December 31, 1997. All share amounts
and share prices have been adjusted to give effect to the 1995 Stock Split.

AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUES

VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED IN-THE-MONEY
SHARES OPTIONS/SARS AT FISCAL OPTIONS/SARS AT
ACQUIRED YEAR-END(#)(1) FISCAL YEAR-END($)(2)
ON VALUE --------------------------- ---------------------------
NAME EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ----------- ----------- ------------- ----------- -------------

Aubrey B. Patterson........ -- -- 140,398 58,311 $4,238,866 $ 758,300
Michael W. Weeks........... -- -- 32,499 46,001 886,850 1,142,025
Michael L. Sappington...... -- -- 37,801 20,001 1,069,722 310,025
Charles J. McKee........... 39,499 $423,123 5,000 5,000 125,625 125,625
Harry R. Baxter............ 12,650 235,392 21,500 17,001 576,511 260,896

- ---------------

(1) Prior to 1997, options represented two-thirds of annual awards and SARs
represented one-third. There were no SARs granted during 1997. There are no
freestanding SARs.
(2) Based upon the closing sale price of the Company's Common Stock of $47.25
per share, as reported on the New York Stock Exchange on December 31, 1997,
less the exercise price for the options/SARs.

PENSION PLANS

The Company maintains a tax-qualified, non-contributory, defined benefit
retirement plan for its employees and those of its subsidiaries who have reached
the age of 21 and have completed one year of service (the "Retirement Plan").
Benefits under the Retirement Plan are based primarily on average final
compensation, years of service and year of retirement. For 1997, the maximum
annual benefit limitation under the Code with respect to the Retirement Plan was
$125,000 and the maximum amount of considered annual compensation was $160,000.

The Company also has adopted a non-qualified, unfunded supplemental pension
program for certain officers and key executives (the "Deferred Compensation
Plan"), which provides retirement benefits for key salaried employees in excess
of the maximum benefit accruals for qualified plans which are permitted under
the Code. The benefits under the Deferred Compensation Plan are provided by the
Company on a non-contributory basis. The Company has not funded or provided a
means to fund these supplemental retirement benefits other than accruing a
liability in the amount of the actuarially determined present value of the
retirement benefits.

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20

The following table illustrates the total combined estimated annual pension
benefits payable to an eligible participant at normal retirement age (age 65)
under the Retirement Plan and the Deferred Compensation Plan (including a
restoration plan amendment which became effective on January 1, 1994), based on
compensation that is covered under the plans and years of service with the
Company and its subsidiaries.

RETIREMENT PLAN AND DEFERRED COMPENSATION PLAN

AVERAGE YEARS OF SERVICE AT RETIREMENT
ANNUAL ----------------------------------------------------
REMUNERATION 15 20 25 30 35
------------ -------- -------- -------- -------- --------

$125,000........................... $ 40,268 $ 47,440 $ 54,613 $ 61,786 $ 68,958
150,000........................... 48,893 57,690 66,488 75,286 84,083
175,000........................... 57,518 67,940 78,363 88,786 99,208
200,000........................... 66,143 78,190 90,238 102,286 114,333
225,000........................... 74,768 88,440 102,113 115,786 129,458
250,000........................... 83,393 98,690 113,988 129,286 144,583
300,000........................... 100,643 119,190 137,738 156,286 174,833
350,000........................... 117,893 139,690 161,488 183,286 205,083
400,000........................... 135,143 160,190 185,238 210,286 235,333
450,000........................... 152,393 180,690 208,988 237,286 265,583
500,000........................... 169,643 201,190 232,738 264,286 295,833

A participant's annual retirement benefits payable under the Retirement
Plan are based upon the average monthly base rate of compensation for the five
years immediately preceding the employee's retirement. Benefits payable under
the Deferred Compensation Plan are based upon the average of the total annual
base salary paid to the covered employee for the 36 months immediately before
his or her retirement and are paid to the retired employee (or upon his or her
death, to his or her designated beneficiary) in equal monthly installments over
a period of ten years. Benefits under the Retirement Plan are computed as
straight life annuity amounts, although other forms of payment, including a lump
sum benefit, are offered under the plan. Benefits under each of the Retirement
Plan and the Deferred Compensation Plan are not subject to any deduction for
Social Security or any other offsets.

The compensation for each of the Named Executive Officers covered by the
Retirement Plan and Deferred Compensation Plan as of December 31, 1997 was: Mr.
Patterson, $385,000; Mr. Weeks, $196,613; Mr. Sappington, $172,537; Mr. McKee,
$172,012; and Mr. Baxter, $142,830. The estimated credited years of service for
each Named Executive Officer is currently: Mr. Patterson, 25 years; Mr. Weeks, 3
years; Mr. Sappington, 20 years; Mr. McKee, 29 years; and Mr. Baxter, 29 years.

EMPLOYMENT CONTRACTS AND CHANGE-IN-CONTROL ARRANGEMENTS

The Company has no employment agreements with any of the Named Executive
Officers and there are no compensatory plans or arrangements which might result
in payments to any of the Named Executive Officers upon their resignation or
retirement, or from a change-in-control of the Company, except as described
below.

Under the 1998 Stock Bonus Agreement between Mr. Patterson and the Company
and the 1995 Stock Bonus Agreement between Mr. Weeks and the Company, if there
is a change-in-control of the Company, Mr. Patterson and Mr. Weeks can each
terminate his agreement and receive all shares of Common Stock still remaining
in escrow for his benefit. In the event that Mr. Patterson becomes subject to an
excise tax under Section 4999 of the Code as a result of such payments, the
Company will provide additional payments to Mr. Patterson to make him whole with
respect to such excise tax. Generally, a change-in-control is deemed to occur
with respect to these agreements in the event that the shareholders of the
Company approve a merger of the Company or a sale of substantially all of the
Company's assets, a change occurs in a majority of the membership of the
Company's Board of Directors during a two-year period or any person acquires
more than 25% of the voting power represented by the Company's outstanding
securities. In addition, all unexercisable

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options granted under the Company's stock option plans, including options
granted to the Named Executive Officers, become exercisable immediately upon a
change-in-control, as defined in the plans.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

During 1997, the committee of the Board of Directors which performed the
functions of a compensation committee was the Human Resources and Marketing
Committee (the "Compensation Committee"). The members of this committee during
1997 were three non-employee directors, Lowery A. Woodall (Chairman), W. G.
Holliman, Jr. and T. O. Lashlee, and one employee director, J. Louis Griffin,
Jr. From March 31, 1995 to December 13, 1996, Mr. Griffin was the President and
Chief Executive Officer of the Company's subsidiary, Laurel Federal Savings and
Loan Association, which as of December 13, 1996 was merged into BancorpSouth
Bank. As of January 2, 1998, Mr. Griffin retired from the Company but continues
to serve as the Chairman of the local Community Bank Board of BancorpSouth Bank
in Laurel, Mississippi. In addition, the Stock Incentive Committee, which in
1997 consisted of Travis E. Staub (Chairman), W. G. Holliman, Jr. and Lowery A.
Woodall, has approved stock option grants under the 1994 Plan. None of the other
members of the Compensation Committee or Stock Incentive Committee has at any
time been an officer or employee of the Company or any of its subsidiaries, nor
has any member had any relationship requiring disclosure by the Company except
for banking relationships in the ordinary course of business with the Company's
subsidiaries. See "CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS." There are no
relationships among the Company's executive officers and any entity affiliated
with any of the members of the Compensation Committee or Stock Incentive
Committee that require disclosure under applicable SEC rules.

COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION

This report is submitted by the Compensation Committee pursuant to rules
adopted by the SEC which require disclosure with respect to compensation
policies applicable to the Company's executive officers (including the Named
Executive Officers) and with respect to the basis for the compensation of Aubrey
B. Patterson, as the Company's Chief Executive Officer, for 1997. The
Compensation Committee generally is responsible for establishing and
administering the Company's executive compensation policies and programs within
the framework of the Company's compensation philosophy. Most decisions by the
Compensation Committee with respect to the compensation of the Company's
executive officers are reviewed by the full Board of Directors (excluding those
who are employees). A number of factors, including growth, asset quality,
competitive position and profitability were compared by the Compensation
Committee with those of a peer group of other comparably sized banks within
Mississippi and certain adjoining states in determining executive compensation
for 1997. Such peer group consists of the Company's direct competitors.

COMPENSATION POLICY

The Company's compensation strategy seeks to have the management
compensation program contribute to the achievement of the Company's objectives.
It is intended that this will occur by providing (i) total compensation at a
level designed to attract and retain qualified managers, (ii) incentive
compensation opportunities that will motivate managers to achieve both the
Company's short-term and long-term objectives, (iii) compensation that
differentiates pay on the basis of performance, and (iv) protection of
shareholder interests by requiring successful Company results before
above-average compensation is earned. The three primary components of executive
compensation are base salary, annual bonuses and grants of stock options and
restricted stock. Although prior to 1997 the Company granted SARs in tandem with
stock options, the Company currently does not intend to grant SARs in the
future.

Base Salary. The Company believes that base salary ranges should reflect
the competitive employment market and the relative internal responsibilities of
the executive's position, with an executive's position within a salary range
being based upon his or her performance. In connection with the annual budget
process, the Compensation Committee considers salaries for executive officers
within the context of an external survey of executive compensation by a peer
group of comparably sized banks in Mississippi and certain adjoining states.
Individual increases in salary are based upon an assessment of the peer group
average salary and its

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relationship to the executive officer's salary, the executive's performance and
the salary budget for the Company. The Company's base salaries are generally
within the range of comparable average salaries in the peer group.

Annual Incentive Compensation. The Company believes that incentive
programs should provide meaningful opportunities for additional compensation
linked to attaining annual performance objectives. The Committee assigns to each
executive's position a target bonus award opportunity that ranges from 15% of
base salary for department/division managers to 40% of base salary for the Chief
Executive Officer. The actual award may be greater or less than a target award
depending upon the Company's actual performance relative to goals.

In 1984, the Company, in conjunction with independent compensation
consultants, created a bonus incentive plan, which is based upon the Company
achieving targeted levels of average deposits and return on average assets
approved by the Compensation Committee at the beginning of each year. The bonus
plan includes a statistical matrix in which various average deposit levels are
compared to various returns on average assets. Employees eligible to receive
bonuses will receive bonuses based on the results achieved. No employee may
receive a bonus greater than 150% of that employee's target award. In 1997, the
Company achieved 100.9% of its targeted average deposits and 96.9% of its
targeted return on average assets which entitled each eligible employee to 94%
of the employee's target bonus.

Long-Term Incentive Compensation. The Board of Directors believes that the
availability of options under the Company's Stock Incentive Plans gives
executives a long-term stake in the Company by providing an estate-building
opportunity in return for outstanding long-term performance. Awards under the
Stock Incentive Plans are not made by the Compensation Committee but by the
separate Stock Incentive Committee consisting of three non-employee directors.
Awards are made under these plans to executive officers who are responsible for
long-term investment, operating or policy decisions and to those executives who
are instrumental in implementing them. In determining the total number of
options to be granted, the Company considers the available number of shares
under its option plans, but has no fixed formula for determining the total
number of options to be granted, nor does it consider the number of options
granted by its peer group of banks. In selecting the recipients of options and
the number of options granted, the Stock Incentive Committee considers (i) the
present scope of responsibility of the executive; (ii) the degree to which the
units influenced by that executive contribute to the Company's profits; (iii)
the degree to which asset quality and other risk decisions are influenced by
that executive's direction; and (iv) the long-term management potential of the
executive. The committee does not weigh any one factor more heavily that any
other factor. The number of options currently held is also considered by the
committee. Generally, options awarded under these plans become exercisable in
three equal installments, beginning one year after the date of grant. Since the
exercise price of options under the Stock Incentive Plans is the fair market
value on the date of grant, executives will realize a gain through the award of
stock options only if the value of the Common Stock increases over the period
that options become exercisable.

The Company has included the grant of restricted shares of Common Stock as
a component of its compensation strategy. In 1987 and 1998, the Company entered
into the 1987 and 1998 Stock Bonus Agreements, respectively, with Mr. Patterson,
pursuant to which the Company awarded Mr. Patterson 34,500 and 35,000 shares of
Common Stock, respectively, with 10% of such shares subject to release from
escrow on each April 1 during the subsequent ten-year period if the Company
achieved certain performance goals for the preceding year. In 1995, the Company
entered into the 1995 Stock Bonus Agreement with Mr. Weeks, pursuant to which
the Company awarded Mr. Weeks 30,000 shares of Common Stock, with 3,000 of such
shares subject to release from escrow on each April 1 during the subsequent
ten-year period if the Company achieved certain performance goals for the
preceding year.

Section 162(m) of the Code generally limits the corporate tax deduction to
$1 million for compensation paid to executive officers named in the Summary
Compensation Table in the Proxy Statement. However, compensation that is paid
under a "performance based" pay plan, including qualifying stock option plans,
is fully deductible without regard to the general $1 million limit. The
Compensation Committee carefully considered the impact of this new tax code
provision upon its enactment. The Company has taken action to

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conform certain of its compensation plans with the provisions of Section 162(m),
so that amounts paid thereunder will be fully deductible by the Company (see the
discussion above regarding amendments and restatements of the 1994 Plan and the
Directors Plan).

COMPENSATION OF THE CHIEF EXECUTIVE OFFICER IN 1997

In establishing the compensation for Mr. Patterson, the Company's Chairman
of the Board, President and Chief Executive Officer, the basic approach was that
of the compensation policies applicable to all executive officers. Generally, in
considering Mr. Patterson's salary, the Compensation Committee has reviewed the
published compensation of chief executive officers of other bank holding
companies in Mississippi, Tennessee and certain other adjoining states, giving
due regard to differences in asset size, asset quality, growth, competitive
position and profitability. Mr. Patterson's salary for 1997 was established at
the beginning of the year and represented a 6.94% increase over his salary for
1996. Mr. Patterson's 1996 salary was determined to be below the average of the
banks in the peer group considered in determining all executive compensation. As
Chief Executive Officer, Mr. Patterson is eligible to earn a bonus of 40% of his
base salary. Based on the Company's performance described above, Mr. Patterson's
bonus of $144,760 represented 94% of his target award, the same percentage as
all other executive officers entitled to bonuses.

The long-term component of Mr. Patterson's compensation for 1997 was
provided through the grant in December 1997 of options to purchase 28,309 shares
of Common Stock. The determination was made using the same criteria used for all
other executive officers.

Human Resources and Marketing Committee: Stock Incentive Committee:
Lowery A. Woodall (Chairman) Travis E. Staub (Chairman)
J. Louis Griffin, Jr. W. G. Holliman, Jr.
W. G. Holliman, Jr. Lowery A. Woodall
T. O. Lashlee

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COMPARATIVE PERFORMANCE GRAPH

The SEC requires the Company to include in this Proxy Statement a line
graph which compares the yearly percentage change in cumulative total
shareholder return on the Common Stock with (i) the performance of a broad
equity market indicator, and (ii) the performance of a published industry index
or peer group. Set forth below is a line graph comparing the yearly percentage
change in the cumulative total stockholder return on the Common Stock against
the cumulative total return of (i) the CRSP Index for Nasdaq Stock Markets (U.S.
Companies) and the CRSP Index for Bank Stocks, and (ii) the S&P 500 Index and
the SNL Southeast Bank Index for the period of five years. The Common Stock was
quoted on the Nasdaq Stock Market until May 15, 1997, when the Common Stock was
listed for trading on the New York Stock Exchange. Because of the May 15, 1997
listing of the Common Stock on the New York Stock Exchange, the Company is
required to use a broad-based index which includes companies listed on the New
York Stock Exchange. Pursuant to SEC requirements, the graph has been prepared
to compare the performance of the Common Stock to the CRSP Index for Nasdaq
Stock Markets (U.S. Companies) and the CRSP Index for Bank Stocks used in the
Company's 1997 Proxy Statement. In addition, the graph compares the performance
of the Common Stock to the S&P 500 and the SNL Southeast Bank Index. The Company
has chosen the S&P 500 Index, a New York Stock Exchange based index, as the
broad equity market index and the SNL Southeast Bank Index as its published
industry index for use in this Proxy Statement. The Company believes that the
S&P 500 Index is the most appropriate broad market indicator because the S&P 500
Index generally is considered the leading New York Stock Exchange-based index.
The SNL Southeast Bank Index is prepared by SNL Securities and consists of 279
publicly-traded banks and bank holding companies located in the southeastern
United States, some of which are listed on the New York Stock Exchange. The
Company believes that the SNL Southeast Bank Index is the most appropriate
published industry index because it is representative of publicly-traded banks
and bank holding companies, including some listed on the New York Stock
Exchange, with operations in the same general geographic region as the Company.
The graph below assumes the investment on December 31, 1992 of $100 and that all
dividends were reinvested at the time they were paid.

COMPARISON OF FIVE YEAR-CUMULATIVE TOTAL RETURNS

CRSP INDEX
FOR NASDAQ
STOCK
MARKETS CRSP INDEX SNL
MEASUREMENT PERIOD BANCORPSOUTH, (U.S. FOR BANK SOUTHEAST
(FISCAL YEAR COVERED) INC. S&P 500 COMPANIES) STOCKS BANK INDEX

12/31/92 100 100 100 100 100
12/31/93 115.09 110.08 114.80 114.04 105.04
12/31/94 120.90 111.53 112.21 113.63 105.27
12/31/95 150.83 153.44 158.70 169.22 157.89
12/31/96 212.82 188.52 195.19 223.41 216.73
12/31/97 371.06 251.44 239.53 377.44 328.55

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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

BancorpSouth Bank has had, and expects to have in the future, banking
transactions in the ordinary course of business with officers and directors of
the Company and their associates, on the same terms, including interest rates
and collateral on loans, as those prevailing at the time for comparable
transactions with others and which do not involve more than the normal risk of
collectibility or present other unfavorable features. During the year ended
December 31, 1997, the maximum aggregate amount of extensions of credit
outstanding to directors and executive officers of the Company and their
associates was $18,792,087 (5.21% of equity capital on December 31, 1997). As of
January 31, 1998, the aggregate amount of extensions of credit to these persons
was $18,845,818.

BancorpSouth Bank makes available to all of its employees individual loans
of up to $25,000, based upon credit worthiness. Loans were made during 1997 at
rates ranging from 7.75% to 8.0% per annum. All loans to employees in excess of
$25,000 are made at the prevailing rate.

Riley, Ford, Caldwell & Cork, P.A., a law firm of which Frank A. Riley, a
director of the Company, is the President and a shareholder, was paid $490,392
in legal fees by the Company during 1997.

Forman, Perry, Watkins, Krutz & Tardy, a law firm of which Alan W. Perry, a
director of the Company, is a member, was paid $76,719 in legal fees by the
Company during 1997.

Lashlee-Rich, Inc., of which Turner O. Lashlee, a director of the Company,
is the Chairman of the Board and President, was paid $1,332,696 by the Company
during 1997 for construction of a bank branch in Jackson, Tennessee for
BancorpSouth Bank.

Staub, Robison, Williams Architects, P.A., of which the brother of Travis
E. Staub, a director of the Company, is a principal, was paid approximately
$203,262 by the Company during 1997 for services rendered with respect to the
Company's facilities.

GENERAL INFORMATION
COUNTING OF VOTES

All matters specified in this Proxy Statement that are to be voted on at
the Annual Meeting will be by written ballot. Inspectors of election will be
appointed, among other things, to determine the number of shares outstanding,
the shares represented at the Annual Meeting, the existence of a quorum and the
authenticity, validity and effect of proxies, to receive votes of ballots, to
hear and determine all challenges and questions in any way arising in connection
with the right to vote, to count and tabulate all votes and to determine the
result. Each item presented herein to be voted on at the Annual Meeting must be
approved by the affirmative vote of the holders of the number of shares
described under each such item. The inspectors of election will treat shares
represented by proxies that reflect abstentions as shares that are present and
entitled to vote for purposes of determining the presence of a quorum.
Abstentions, however, do not constitute a vote "for" or "against" any matter and
thus will be disregarded in the calculation of a plurality or of "votes cast."

Inspectors of election will treat shares referred to as "broker non-votes"
(i.e., shares held by brokers or nominees as to which instructions have not been
received from the beneficial owners or persons entitled to vote that the broker
or nominee does not have discretionary power to vote on a particular matter) as
shares that are present and entitled to vote for purposes of determining the
presence of a quorum. However, for purposes of determining the outcome of any
matter as to which the broker has physically indicated on the proxy that it does
not have discretionary authority to vote, those shares will be treated as not
present and not entitled to vote with respect to that matter (even though those
shares are considered entitled to vote for quorum purposes and may be entitled
to vote on other matters).

MISCELLANEOUS

The Company will bear the cost of printing, mailing and other expenses in
connection with this solicitation of proxies and will also reimburse brokers and
other persons holding shares in their names or in the names of nominees for
their expenses in forwarding this proxy material to the beneficial owners of
such shares.
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26

Certain of the directors, officers and employees of the Company may, without any
additional compensation, solicit proxies in person or by telephone.

Management of the Company is not aware of any matters other than those
described above which may be presented for action at the meeting. If any other
matters properly come before the meeting, it is intended that the proxies will
be voted with respect thereto in accordance with the judgment of the person or
persons voting such proxies subject to the direction of the Board of Directors.

Shareholder proposals intended to be presented at the 1999 annual meeting
of shareholders must be received by the Company at its executive offices at One
Mississippi Plaza, Tupelo, Mississippi 38801 not later than December 1, 1998 in
order to be included in the proxy statement and proxy for that meeting.

A copy of the Company's Annual Report for the year ended December 31, 1997
has been mailed to all shareholders entitled to notice of and to vote at this
meeting.

BANCORPSOUTH, INC.

/s/ AUBREY B. PATTERSON
AUBREY B. PATTERSON
Chairman of the Board
and Chief Executive Officer

March 24, 1998

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APPENDIX A

BANCORPSOUTH, INC.

1994 STOCK INCENTIVE PLAN

AMENDED AND RESTATED EFFECTIVE FEBRUARY 14, 1998
28

BANCORPSOUTH, INC.

1994 STOCK INCENTIVE PLAN
AS AMENDED AND RESTATED

PREAMBLE

WHEREAS, BancorpSouth, Inc. (the "Company") previously established the
BancorpSouth, Inc. 1994 Stock Incentive Plan through which the Company could
award options to purchase the common stock of the Company, $2.50 par value
("Stock"), to officers, employees and consultants of the Company and its
affiliates;

WHEREAS, the Company desires to amend and restate this Plan in order to:
(i) conform with the requirements for a "performance based compensation" plan
within the meaning of section 162(m)(4)(C); (ii) conform to changes to the
Securities and Exchange Commission Rule 16b-3; (iii) prospectively eliminate the
award of stock appreciation rights under the Plan and to permit the award of
restricted shares of Stock; and (iv) provide for certain administrative
modifications that are intended to simplify Plan administration;

NOW, THEREFORE, the Company hereby amends and restates the BancorpSouth,
Inc. 1994 Stock Incentive Plan (the "Plan"), effective February 14, 1998:

ARTICLE I

DEFINITIONS

1.1 Affiliate. A "parent corporation," as defined in section 424(e) of
the Code, or "subsidiary corporation," as defined in section 424(f) of the Code,
of the Company.

1.2 Agreement. A written agreement (including any amendment or supplement
thereto) between the Company or Affiliate and a Participant specifying the terms
and conditions of an Award granted to such Participant.

1.3 Award. A right that is granted under the Plan to a Participant by the
Company, which may be in the form of Options or Restricted Stock.

1.4 Board. The board of directors of the Company.

1.5 Code. The Internal Revenue Code of 1986, as amended.

1.6 Committee. A committee composed of at least two individuals (or such
number that satisfies section 162(m)(4)(C) of the Code and Rule 16b-3 of the
Exchange Act) who are members of the Board and are not employees of the Company
or an Affiliate, and who are designated by the Board as the "stock incentive
committee" or are otherwise designated to administer the Plan.

1.7 Company. BancorpSouth, Inc. and its successors.

1.8 Date of Exercise. The date that the Company accepts tender of the
exercise price of an Option.

1.9 Exchange Act. The Securities Exchange Act of 1934, as amended.

1.10 Fair Market Value. On any given date, Fair Market Value shall be the
applicable description below (unless, where appropriate, the Committee
determines in good faith the fair market value of the Stock to be otherwise):

(a) If the Stock is reported on the New York Stock Exchange or the
American Stock Exchange, then Fair Market Value shall be the closing price of
the Stock on such exchange on which such Stock is traded on the trading day as
of which Fair Market Value is being determined, or on the next preceding day on
which such Stock is traded if no Stock was traded on such trading day.

(b) If the Stock is not reported on the New York Stock Exchange or the
American Stock Exchange but is reported on the Nasdaq National Market System or
another Nasdaq automated quotation system, and market information is published
on a regular basis, then Fair Market Value shall be the closing price of the
29

Stock, as so published, on the trading day as of which Fair Market Value is
being determined, or the closing price on the next preceding trading day on
which such prices were published if no Stock was traded on such trading day.

(c) If market information is not so published on a regular basis, then
Fair Market Value shall be the average of the high bid and low asked prices of
the Stock in the over-the-counter market over a period of trading days that is
reasonably representative of the normal trading of the Stock for the date on
which Fair Market Value is being determined, as reported by a generally accepted
reporting service.

(d) If the Stock is not publicly traded, Fair Market Value shall be the
value determined in good faith by the Committee or the Board. However, such
determination shall not take into account any restriction on the stock, except
for a restriction which by its terms will never lapse.

1.11 Incentive Option. An Option that is intended to qualify as an
"incentive stock option" within the meaning of section 422 of the Code. An
Incentive Option, or a portion thereof, shall not be invalid for failure to
qualify under section 422 of the Code, but shall be treated as a Nonqualified
Option.

1.12 Nonqualified Option. An Option that is not an Incentive Option.

1.13 Option. The right that is granted hereunder to a Participant to
purchase from the Company a stated number of shares of Stock at the price set
forth in an Agreement. As used herein, an Option includes both Incentive Options
and Nonqualified Options.

1.14 Participant. An officer, employee or consultant of the Company or of
an Affiliate who either satisfies the requirements of Article IV and is selected
by the Committee to receive an Award, or receives an Award pursuant to grant
specified in this Plan.

1.15 Plan. The BancorpSouth, Inc. 1994 Stock Incentive Plan.

1.16 Restricted Stock. A grant of Stock that is subject to restrictions
on transfer and/or a risk of forfeiture by and to the Participant, as described
in Section 4.5. Shares of Stock that are subject to any such restrictions or
risks of forfeiture shall cease to be Restricted Stock at the time that such
restrictions and risks of forfeiture lapse in accordance with the terms of the
Agreement or Plan.

1.17 Stock. The common stock of the Company, $2.50 par value.

1.18 Ten Percent Shareholder. An individual who owns more than 10% of the
total combined voting power of all classes of stock of the Company or an
Affiliate at the time he is granted an Incentive Option. For the purpose of
determining if an individual is a Ten Percent Shareholder, he shall be deemed to
own any voting stock owned (directly or indirectly) by or for his brothers and
sisters (whether by whole or half blood), spouse, ancestors or lineal
descendants and shall be considered to own proportionately any voting stock
owned (directly or indirectly) by or for a corporation, partnership, estate or
trust of which such individual is a shareholder, partner or beneficiary.

ARTICLE II

PURPOSE OF PLAN

The purpose of the Plan is to provide a performance incentive to, and to
encourage stock ownership by, officers, employees and other persons providing
services to the Company and its Affiliates, and to align the interests of such
individuals with those of the Company, its Affiliates and its shareholders. It
is intended that Participants may acquire or increase their proprietary
interests in the Company and be encouraged to remain in the employ of the
Company or of its Affiliates. The proceeds received by the Company from the sale
of Stock pursuant to this Plan may be used for general corporate purposes.

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ARTICLE III

ADMINISTRATION

3.1 Administration of Plan. The Plan shall be administered by the
Committee. 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. Any
decision made or action taken by the Committee to administer the Plan shall be
final and conclusive. No member of the Committee shall be liable for any act
done in good faith with respect to this Plan or any Agreement or Award. The
Company shall bear all expenses of Plan administration. In addition to all other
authority vested with the Committee under the Plan, the Committee shall have
complete authority to:

(a) Interpret all provisions of this Plan;

(b) Prescribe the form of any Agreement and notice and manner for
executing or giving the same;

(d) Adopt, amend and rescind rules for Plan administration; and

(e) Make all determinations it deems advisable for the administration
of this Plan.

3.2 Authority to Grant Awards. The Committee shall have authority to
grant Awards upon such terms the Committee deems appropriate and that are not
inconsistent with the provisions of this Plan. Such terms may include conditions
on the exercise of all or any part of an Award.

3.3 Persons Subject to Section 16(b). Notwithstanding anything in the
Plan to the contrary, the Committee, in its absolute discretion, may bifurcate
the Plan so as to restrict, limit or condition the use of any provision of the
Plan to participants who are officers subject to section 16(b) of the Exchange
Act, without so restricting, limiting or conditioning the Plan with respect to
other Participants.

ARTICLE IV

ELIGIBILITY AND LIMITATIONS ON GRANTS

4.1 Participation. The Committee may from time to time designate
officers, employees and other persons providing services to the Company and its
Affiliates to whom Awards are to be granted and are eligible to become
Participants. Such designation shall specify the number of shares of Stock, if
any, subject to each Award. All Awards granted under this Plan shall be
evidenced by Agreements which shall be subject to applicable provisions of this
Plan or such other provisions as the Committee may adopt that are not
inconsistent with the Plan.

4.2 Grant of Awards. An Award shall be deemed to be granted to a
Participant at the time that the Committee designates in a writing that is
adopted by the Committee as the grant of an Award, and that makes reference to
the Participant and the number of shares of Stock that are subject to the Award.
Accordingly, an Award may be deemed to be granted prior to the approval of this
Plan by the shareholders of the Company and prior to the time that an Agreement
is executed by the Participant and the Company.

4.3 Limitations on Grants. A person who is not an employee of the Company
or an Affiliate is not eligible to receive an Incentive Option. No person may
receive Awards with respect to more than 60,000 shares of Stock (subject to
increases and adjustments as provided in Article VIII) in any one-year period.

4.4 Limitation on Incentive Options. To the extent that the aggregate
Fair Market Value of Stock with respect to which Incentive Options are
exercisable for the first time by a Participant during any calendar year (under
all stock incentive plans of the Company and its Affiliates) exceeds $100,000
(or the amount specified in section 422 of the Code), determined as of the date
an Incentive Option is granted, such Options shall be treated as Nonqualified
Options. This provision shall be applied by taking Incentive Options into
account in the order in which they were granted.

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4.5 Restricted Stock. An award of Restricted Stock to a Participant is a
grant of Stock that is subject to forfeiture and/or restrictions on transfer
that are identified in an Agreement. The Committee may grant Restricted Stock to
a Participant as a part of a "deposit share," "performance award" or any other
arrangement established by the Committee and specified in an Agreement. A
Participant who receives Restricted Stock shall be treated as a shareholder of
the Company for all purposes, except that the rights of the Participant may be
limited under the terms of the Agreement. Unless otherwise specified in an
Agreement, Participants shall be entitled to receive dividends on and exercise
voting rights with respect to shares of Restricted Stock.

ARTICLE V

STOCK SUBJECT TO PLAN

5.1 Source of Shares. Upon the exercise of an Option or the grant of an
Award of Restricted Stock, the Company shall deliver to the Participant
authorized but previously unissued Stock or Stock that is held by the Company as
treasury stock.

5.2 Maximum Number of Shares. Effective February 14, 1998, the maximum
aggregate number of shares of Stock that may be issued pursuant to the exercise
of Awards is increased by 1,000,000 shares to 1,458,000 shares, subject to
increases and adjustments as provided in Article VIII. Provided, however, that
the portion of this aggregate limit that may be issued pursuant to Awards that
are Restricted Stock is limited to 46,800 shares of Stock.

5.3 Forfeitures. If any Award granted hereunder expires or terminates for
any reason without having been exercised in full, the shares of Stock subject
thereto shall again be available for issuance of an Award under this Plan.

ARTICLE VI

EXERCISE OF AWARDS

6.1 Exercise Price. The exercise price of an Incentive Option shall not
be less than 100% of the Fair Market Value of a share of Stock on the date the
Incentive Option is granted. In the case of a Ten Percent Shareholder, however,
the exercise price of an Incentive Option shall not be less than 110% of the
Fair Market Value of a share of Stock on the date the Incentive Option is
granted. The exercise price of a Nonqualified Option shall not be less than 85%
of the Fair Market Value of a share of stock on the date the Nonqualified Option
is granted. If the exercise price of an Option is changed after the date it is
granted, such change shall be deemed to be a termination of the existing Option
and the issuance of a new Option.

6.2 Right to Exercise. An Award shall be exercisable on any date
established by the Committee or provided for in an Agreement, provided, however,
that Options shall not be exercisable and Restricted Stock shall not be
transferable until at least six months after the Award is granted. A Participant
must exercise an Incentive Option while he is an employee of the Company or an
Affiliate or within the periods that may be specified in the Agreement after
termination of employment, death, disability or a "change of control" (as
defined in any change of control agreement to which the Company and any such
Participant are parties).

6.3 Maximum Exercise Period. The maximum period in which an Award may be
exercised shall be determined by the Committee on the date of grant except that
no Incentive Option shall be exercisable after the expiration of 10 years (five
years in the case of Incentive Options granted to a Ten Percent Shareholder)
from the date it was granted. The terms of any Award may provide that it is
exercisable for a shorter period. All Incentive Options shall terminate on the
date the Participant's employment with the Company terminates, except as
otherwise provided in the Agreement with respect to termination of employment,
death, disability or a "change of control" (as defined in any change of control
agreement to which the Company and any such Participant are parties).

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6.4 Transferability. Generally, any Award granted under this Plan shall
not be transferable except by will or by the laws of descent and distribution,
and shall be exercisable during the lifetime of the Participant only by the
Participant. However, a Nonqualified Option or Restricted Stock granted under
this Plan may be transferable to the extent provided in an Agreement. Provided,
further, that no right or interest of a Participant in any Award shall be liable
for, or subject to, any lien, obligation or liability of such Participant.

6.5 Employee Status. The Committee shall determine the extent to which a
leave of absence for military or government service, illness, temporary
disability, or other reasons shall be treated as a termination or interruption
of employment for purposes of determining questions of forfeiture and exercise
of an Award after termination of employment; provided, however, that if the
period treated as employment with respect to an Incentive Option exceeds three
months, such Option shall be deemed a Nonqualified Option.

ARTICLE VII

METHOD OF EXERCISE

7.1 Exercise. An Option granted hereunder shall be deemed to have been
exercised on the Date of Exercise. Subject to the provisions of Articles VI and
IX, an Option may be exercised in whole or in part at such times and in
compliance with such requirements as the Committee shall determine.

7.2 Payment. Unless otherwise provided by the Agreement, payment of the
Option price shall be made in cash (including an exercise involving the pledge
of shares and a loan through a broker described in Securities Exchange
Commission Regulation T) or, to the extent approved by the Committee, Stock that
was acquired prior to the exercise of the Option, other consideration acceptable
to the Committee or a combination thereof.

7.3 Federal Withholding Tax Requirements. Upon exercise of a Nonqualified
Option by a Participant who is an employee of the Company or an Affiliate, the
Participant shall, upon notification of the amount due and prior to or
concurrently with the delivery of the certificates representing the shares, pay
to the Company amounts necessary to satisfy applicable federal, state and local
withholding tax requirements or shall otherwise make arrangements satisfactory
to the Company for such requirements. Such withholding requirements shall not
apply to the exercise of an Incentive Option, or to a disqualifying disposition
of Stock that is acquired with an Incentive Option, unless the Committee gives
the Participant notice that withholding described in this Section is required.

7.4 Shareholder Rights. No Participant shall have any rights as a
stockholder with respect to shares subject to Options prior to the Date of
Exercise of such Option. However, a Participant shall enjoy the rights to
receive dividends and to vote shares of Restricted Stock beginning on the date
that Restricted Stock is awarded.

7.5 Issuance and Delivery of Shares. Shares of Stock issued pursuant to
the exercise of Options hereunder shall be delivered to Participants by the
Company (or its transfer agent) as soon as administratively feasible after a
Participant receives an award of Restricted Stock or exercises an Option
hereunder and executes any applicable shareholder agreement or agreement
described in Section 9.2 that the Company requires at the time of exercise.

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ARTICLE VIII

ADJUSTMENT UPON CORPORATE CHANGES

8.1 Adjustments to Shares. The maximum number of shares of stock with
respect to which Options hereunder may be granted and which are the subject of
outstanding Options, and the exercise price thereof, shall be adjusted as the
Committee determines (in its sole discretion) to be appropriate, in the event
that:

(a) the Company or an Affiliate effects one or more stock dividends,
stock splits, reverse stock splits, subdivisions, consolidations or other
similar events;

(b) the Company or an Affiliate engages in a transaction to which
section 424 of the Code applies; or

Provided, however, that if an event described in paragraph (a) or (b) occurs,
the Committee shall make adjustments to the limits on Awards specified in
Sections 4.3 and 5.2 that are proportionate to the modifications of the Stock
that are on account of such corporate changes. Notwithstanding the foregoing,
the Committee may not modify the Plan or the terms of any Awards then
outstanding or to be granted hereunder to provide for the issuance under the
Plan of a different class of stock or kind of securities.

8.2 Substitution of Awards on Merger or Acquisition. The Committee may
grant Awards in substitution for stock awards, stock options, stock appreciation
rights or similar awards held by an individual who becomes an employee of the
Company or an Affiliate in connection with a transaction to which section 424(a)
of the Code applies. The terms of such substituted Awards shall be determined by
the Committee in its sole discretion, subject only to the limitations of Article
V.

8.3 Effect of Certain Transactions. The provisions of this Section 8.3
shall apply to the extent that an Agreement does not otherwise expressly address
the matters contained herein. If the Company experiences an event which results
in a "Change in Control," as defined in Section 8.3(a), then, whether or not the
vesting requirements set forth in any Agreement have been satisfied, (i) all
shares of Restricted Stock that are outstanding at the time of the Change in
Control shall become fully vested immediately prior to the Change in Control
event, and (ii) all Options that are outstanding at the time of the Change in
Control shall become fully vested and exercisable immediately prior to the
Change in Control event.

(a) A Change in Control will be deemed to have occurred for purposes
hereof, if:

(1) any "person" as such term is used in Sections 13(d) and 14(d) of
the Exchange Act, other than a trustee or other fiduciary holding
securities under an employee benefit plan of the Company or a corporation
controlling the Company or owned directly or indirectly by the shareholders
of the Company in substantially the same proportions as their ownership of
stock of the Company, becomes the "beneficial owner" (as defined in Rule
13d-3 under said Act), directly or indirectly, of securities of the Company
representing more than 25% of the total voting power represented by the
Company's then outstanding Voting Securities (as defined below), or

(2) during any period of two consecutive years, individuals who at the
beginning of such period constitute the Board and any new director whose
election by the Board or nomination for election by the Company's
shareholders was approved by a vote of at least two-thirds of the directors
then still in office who either were directors at the beginning of the
period or whose election or nomination for election was previously so
approved, cease for any reason to constitute a majority thereof, or

(3) the shareholders of the Company approve a merger or consolidation
of the Company with any other corporation, other than a merger or
consolidation which would result in the Voting Securities of the Company
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into Voting Securities of the
surviving entity) more than 65% of the total voting power represented by
the Voting Securities of the Company or such surviving entity outstanding
immediately after such merger or consolidation, or

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(4) the shareholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or disposition by
the Company of all or substantially all of its assets.

For purposes of this Section 8.3(a), "Voting Securities" of an entity shall mean
any securities of the entity which vote generally in the election of its
directors.

(b) If, as a result of the Change in Control, the Company is not the
surviving entity after the transaction, or survives only as a subsidiary that is
controlled by another entity, all Options that are held by the Participant
immediately after the Change in Control shall be assumed by the entity which is
the survivor of the transaction, or converted into options to purchase the
common stock of the surviving entity, in a transaction to which section 424(a)
of the Code applies.

(c) Notwithstanding the foregoing, a portion of the acceleration of vesting
described in this Section shall not occur with respect to an Award to the extent
such acceleration of vesting would cause the Participant or holder of such Award
to realize less income, net of taxes, after deducting the amount of excise taxes
that would be imposed pursuant to section 4999 of the Code, than if accelerated
vesting of that portion of the Award did not occur. This Section 8.3(c) shall
not apply to Awards that were granted prior to the February 14, 1998 amendment
and restatement of this Plan.

8.4 No Adjustment Upon Certain Transactions. The issuance by the Company
of shares of stock of any class, or securities convertible into shares of stock
of any class, for cash or property, or for labor or services rendered, either
upon direct sale or upon the exercise of rights or warrants to subscribe
therefor, or upon conversion of shares or obligations of the Company convertible
into such shares or other securities, shall not affect, and no adjustment by
reason thereof shall be made with respect to, outstanding Awards.

8.5 Fractional Shares. Only whole shares of Stock may be acquired through
the exercise of an Award. Any amounts tendered in the exercise of an Award
remaining after the maximum number of whole shares have been purchased will be
returned to the Participant in the form of cash.

ARTICLE IX

COMPLIANCE WITH LAW AND REGULATORY APPROVAL

9.1 General. No Award shall be exercisable, no Stock shall be issued, no
certificates for shares of Stock shall be delivered and no payment shall be made
under this Plan except in compliance with all federal or state laws and
regulations (including, without limitation, withholding tax requirements),
federal and state securities laws and regulations and the rules of all
securities exchanges or self-regulatory organizations on which the Company's
shares may be listed. The Company shall have the right to rely on an opinion of
its counsel as to such compliance. Any certificate issued to evidence shares of
Stock for which an Award is exercised may bear such legends and statements as
the Committee upon advice of counsel may deem advisable to assure compliance
with federal or state laws and regulations.

9.2 Representations by Participants. As a condition to the exercise of an
Award, the Company may require a Participant to represent and warrant at the
time of any such exercise that the shares are being purchased only for
investment and without any present intention to sell or distribute such shares,
if, in the opinion of counsel for the Company, such representation is required
by any relevant provision of the laws referred to in Section 9.1. At the option
of the Company, a stop transfer order against any shares of stock may be placed
on the official stock books and records of the Company, and a legend indicating
that the stock may not be pledged, sold or otherwise transferred unless an
opinion of counsel was provided (concurred in by counsel for the Company) and
stating that such transfer is not in violation of any applicable law or
regulation may be stamped on the stock certificate in order to assure exemption
from registration. The Committee may also require such other action or agreement
by the Participants as may from time to time be necessary to comply with federal
or state securities laws. This provision shall not obligate the Company or any
Affiliate to undertake registration of options or stock hereunder.

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ARTICLE X

GENERAL PROVISIONS

10.1 Effect on Employment. Neither the amendment and restatement of this
Plan, nor its operation, nor any documents describing or referring to this Plan
(or any part thereof) shall confer upon any employee any right to continue in
the employ of the Company or an Affiliate or in any way affect any right and
power of the Company or an Affiliate to terminate the employment of any employee
at any time with or without assigning a reason therefor.

10.2 Unfunded Plan. The Plan, insofar as it provides for grants, shall be
unfunded, and the Company shall not be required to segregate any assets that may
at any time be represented by grants under this Plan. Any liability of the
Company to any person with respect to any grant under this Plan shall be based
solely upon contractual obligations that may be created hereunder. No such
obligation of the Company shall be deemed to be secured by any pledge of, or
other encumbrance on, any property of the Company.

10.3 Rules of Construction. Headings are given to the articles and
sections of this Plan solely as a convenience to facilitate reference. The
masculine gender when used herein refers to both masculine and feminine. The
reference to any statute, regulation or other provision of law shall be
construed to refer to any amendment to or successor of such provision of law.

10.4 Governing Law. The laws of the State of Mississippi shall apply to
all matters arising under this Plan, to the extent that federal law does not
otherwise apply or preempt Mississippi law.

10.5 Compliance With Section 16 of the Exchange Act. With respect to
persons subject to liability under section 16 of the Exchange Act, transactions
under this Plan are intended to comply with all applicable conditions of Rule
16b-3 (or successor provisions) under the Exchange Act. To the extent any
provision of this Plan or action by Committee fails to so comply, it shall be
deemed null and void to the extent permitted by law and deemed advisable by the
Committee.

10.6 Amendment. The Board may amend or terminate this Plan at any time;
provided, however, an amendment that would have a material adverse effect on the
rights of a Participant under an outstanding Award is not valid with respect to
such Award without the Participant's consent, except as necessary for Incentive
Options to maintain qualification under the Code; and provided, further, that
the shareholders of the Company must approve, in general meeting:

(a) 12 months before or after the date of adoption, any amendment that
increases the aggregate number of shares of Stock that may be issued under
Incentive Options or changes the employees (or class of employees) eligible to
receive Incentive Options;

(b) before the effective date thereof, any amendment that changes the
number of shares in the aggregate which may be issued pursuant to Awards granted
under the Plan or the maximum number of shares with respect to which any
individual may receive options in any calendar year; and

(c) before the effective date thereof, any amendment that increases the
period during which Awards may be granted or exercised.

10.7 Duration of Plan. This Plan shall continue until it is terminated by
the Board pursuant to Section 10.6. However, no Incentive Option may be granted
under this Plan with respect to the additional shares of Stock that are reserved
for grant effective February 14, 1998, pursuant to Section 5.2, after February
13, 2008, which is 10 years after the date that this amendment and restatement
of the Plan is adopted by the Board. No Incentive Option may be granted under
this Plan after December 27, 2004, with respect to shares of Stock that were
originally reserved for grant effective December 28, 1994. Incentive Options
granted before such dates shall remain valid in accordance with their terms.

10.8 Effective Date of Plan. This Plan was first adopted by the Board on
December 28, 1994, was thereafter approved by the shareholders of the Company
and was amended and restated effective February 14, 1998. All Awards granted
hereunder shall be governed by the terms of this amended and restated Plan;
provided, however, that the terms of the Plan prior to this amendment shall
apply to the extent that the terms
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of this restated Plan would have a material adverse effect on the rights of a
Participant under an outstanding Award, unless the Participant has given consent
to the change, or would modify the vesting rights and rights to exercise an
outstanding Award.

IN WITNESS WHEREOF, the undersigned officer has executed this amendment and
restatement of the Plan on this the day of , 1998, but to be
effective as provided in Section 10.8.

BANCORPSOUTH, INC.

By:
-----------------------------------

Its:
----------------------------------

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APPENDIX B

BANCORPSOUTH, INC.

1995 NON-QUALIFIED STOCK OPTION PLAN FOR

NON-EMPLOYEE DIRECTORS

AMENDED AND RESTATED AS OF FEBRUARY 14, 1998
38

BANCORPSOUTH, INC.

1995 NON-QUALIFIED STOCK OPTION PLAN FOR
NON-EMPLOYEE DIRECTORS

PREAMBLE

WHEREAS, effective January 24, 1995, BancorpSouth, Inc. (the "Company")
previously established the BancorpSouth, Inc. 1995 Non-Qualified Stock Option
Plan for Non-Employee Directors (the "Plan"), in order to provide for the award
of options to purchase the common stock of the Company ("Stock") to non-
employee directors of the Company; and

WHEREAS, the Company desires to amend and restate this Plan to conform with
changes to the Securities and Exchange Commission Rule 16b-3 and to provide for
certain administrative modifications;

NOW, THEREFORE, the Company hereby amends and restates the Plan, effective
February 14, 1998.

ARTICLE I

DEFINITIONS

1.1 Affiliate. A "parent corporation," as defined in section 424(e) of
the Code, or "subsidiary corporation," as defined in section 424(f) of the Code,
of the Company.

1.3 Award. A right that is granted under the Plan to a Participant by the
Company, which may be in the form of Options or Restricted Stock.

1.4 Board. The board of directors of the Company.

1.5 Code. The Internal Revenue Code of 1986, as amended.

1.6 Committee. The Board or a committee of two or more Board members who
are designated by the Board to administer the Plan. In the absence of a
designation of a Committee by the Board, the Board shall be the Committee.

1.7 Company. BancorpSouth, Inc. and its successors.

1.8 Date of Exercise. The date that the Company accepts tender of the
exercise price of an Option.

1.9 Exchange Act. The Securities Exchange Act of 1934, as amended.

(b) If the Stock is not reported on the New York Stock Exchange or the
American Stock Exchange, but is reported on the Nasdaq National Market System or
another Nasdaq automated quotation system, and market information is published
on a regular basis, then Fair Market Value shall be the closing price of the
Stock, as so published, on the trading day as of which Fair Market Value is
being determined, or the closing price on the next preceding trading day on
which such prices were published if no Stock was traded on such trading day.
39

1.11 Option. The right that is granted hereunder to a Participant to
purchase from the Company a stated number of shares of Stock at the price set
forth in an Agreement. As used herein, an Option includes only options not
qualified under section 422 of the Code.

1.12 Participant. A person who has been granted an Award pursuant to
Article IV.

1.13 Plan. The BancorpSouth, Inc. 1995 Non-Qualified Stock Option Plan
for Non-Employee Directors.

1.14 Restricted Stock. A grant of Stock that is subject to forfeiture
and/or restrictions on transfer that are identified in an Agreement. Shares of
Stock that are subject to any such restrictions or risks of forfeiture shall
cease to be Restricted Stock at the time that such restrictions and risks of
forfeiture lapse in accordance with the terms of the Agreement or Plan.

1.15 Stock. The common stock of the Company, $2.50 par value.

ARTICLE II

PURPOSE OF PLAN

The purpose of the Plan is to maintain the Company's ability to attract and
retain the services of experienced and highly-qualified non-employee directors
and to encourage stock ownership by such directors, and to align the interests
of such individuals with those of the Company, its Affiliates and its
shareholders. It is intended that Participants may acquire or increase their
proprietary interests in the Company and be encouraged to remain in the
directorship of the Company. The proceeds received by the Company from the sale
of Stock pursuant to this Plan may be used for general corporate purposes.

ARTICLE III

ADMINISTRATION

3.1 Administration of Plan. The Plan shall be administered by the
Committee. 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. Any
decision made or action taken by the Committee to administer the Plan shall be
final and conclusive. No member of the Committee shall be liable for any act
done in good faith with respect to this Plan or any Agreement or Option. The
Company shall bear all expenses of Plan administration. In addition to all other
authority vested with the Committee under the Plan, the Committee shall have
complete authority to:
(a) Interpret all provisions of this Plan;

(b) Prescribe the form of any Agreement and notice and manner for
executing or giving the same;

(d) Adopt, amend and rescind rules for Plan administration; and

(e) Make all determinations it deems advisable for the administration
of this Plan.

3.2 Authority to Grant Options. The Committee shall have authority to
grant Options upon such terms the Committee deems appropriate and that are not
inconsistent with the provisions of this Plan. Such terms may include conditions
on the exercise of all or any part of an Option.

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ARTICLE IV

ELIGIBILITY AND LIMITATIONS ON GRANTS

4.1 Participation. Options shall be granted initially as of May 1, 1995
to each non-employee director serving the Company as a director on such date
(i.e., a "Participant"). Thereafter on each May 1 during the term of the Plan,
Options shall be granted automatically to each individual who is a director of
the Company on such date but is not an employee of the Company or an Affiliate.
The date of grant of an Option pursuant to the Plan shall be referred to
hereinafter as the "Grant Date" of such Option. Notwithstanding anything herein
to the contrary, the Board may revoke, on or prior to each Grant Date, the next
automatic grant of Options otherwise provided for by the Plan if no options have
been granted to employees since the preceding Grant Date under the Company's
1994 Stock Incentive Plan or any other employee stock option plan that the
Company might adopt hereafter.

(a) Number. On each Grant Date prior to May 1, 1998, each Participant
shall be granted an Option to purchase the number of shares of Stock rounded
down to the nearest number of whole shares equal to 24,000 shares divided by the
number of Participants on such Grant Date. On the Grant Date that occurs on May
1, 1998, each Participant shall receive an Option to purchase 600 shares of
Stock. On each Grant Date that occurs after May 1, 1998, each Participant shall
receive an Option to purchase 1,800 shares of Stock. The formula set forth above
will not be affected by any decision of the Board to revoke an automatic grant.
If, on any Grant Date during the term of the Plan, there are not sufficient
shares of Stock that remain available pursuant to Section 5.2 to provide this
automatic grant on such date, then the number of shares that can be purchased
under the Option that is granted on that date shall be determined by dividing
the number of shares of Stock which remain available pursuant to Section 5.2 by
the number of Participants who are eligible to receive an Option on such Grant
Date, with fractional shares rounded down to the nearest number of whole shares.
All references to numbers of shares in this Section are subject to adjustment in
accordance with Article VIII.

(b) Price. The price at which each share of Stock covered by an Option
shall be the Fair Market Value of Stock on the Grant Date of such Option.

(c) Option Period. The period within which each Option may be exercised
shall commence upon the date of the first annual shareholders meeting of the
Company that follows the Grant Date by at least six months (the "Annual
Meeting") and shall expire, in all cases, ten years from the Grant Date of such
Option (the "Option Period"), unless terminated sooner pursuant to Section
4.1(d).

(d) Termination of Service, Death, Etc. Notwithstanding the term of an
Option stated under Section 4.1(c), each Agreement shall provide for earlier
termination of an Option under the following conditions:

(1) If the directorship of the Participant is terminated within the
Option Period on account of fraud, dishonesty or other acts detrimental to
the interests of the Company or any direct or indirect majority-owned
subsidiary of the Company, the Option shall automatically terminate as of
the date of such termination.

(2) If the Participant shall die prior to the end of the Option Period
while a director of the Company, or during the additional three-month
period provided by Section 4.1(d)(3), the Option may be exercised, to the
extent that the Participant was entitled to exercise it at the date of the
Participant's death, within one year after such date (if otherwise within
the Option Period), but not thereafter, by the executor or administrator of
the estate of the Participant, or by person or persons who shall have
acquired the Option directly from the Participant by bequest or
inheritance.

(3) If the directorship of a Participant is terminated for any reason
(other than because of normal retirement or the circumstances otherwise
specified by this Section 4.1(d) within the Option Period, the Option may
be exercised, to the extent the Participant was able to do so at the date
of termination of the directorship, within three months after such
termination (if otherwise within the Option Period), but not thereafter.
Upon a Participant's retirement in accordance with the Company's normal
retirement policies, all Options and Rights then outstanding shall remain
in effect in accordance with their terms.

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4.2 Restricted Stock. On the Grant Date that occurs on May 1, 1998, each
Participant shall be awarded 400 shares of Restricted Stock (subject to
adjustment in accordance with Article VIII). Thereafter, no further awards of
Restricted Stock will be made. Except for the restrictions described in this
Section or in an Agreement, a Participant who receives Restricted Stock shall be
treated as a shareholder of the Company with respect to such shares for all
purposes. Unless otherwise specified in an Agreement, Participants shall be
entitled to receive dividends on and exercise voting rights with respect to
shares of Restricted Stock.

(a) Vesting of Restricted Stock. Except as otherwise expressly provided
herein, Restricted Stock awarded hereunder shall be forfeited to the Company to
the extent that it is not vested on the date that the directorship of a
Participant is terminated. For this purpose, the shares of Restricted Stock
awarded to each Participant on May 1, 1998 shall become vested on the following
dates:

(1) 133 shares on May 1, 1999.

(2) An additional 133 shares on May 1, 2000.

(3) An additional 134 shares on May 1, 2001.

(b) Retirement, Death, Etc. Prior to the occurrence of a forfeiture
described in Section 4.2(a), all shares of Restricted Stock shall become fully
vested if the Participant dies while a director of the Company or retires in
accordance with the Company's normal retirement policies.

4.3 Agreements. All Awards granted under this Plan shall be evidenced by
Agreements which shall be subject to applicable provisions of this Plan and such
other provisions as the Committee may adopt that are not inconsistent with the
Plan.

ARTICLE V

STOCK SUBJECT TO PLAN

5.1 Source of Shares. Upon the exercise of an Option or the grant of
Restricted Stock, the Company shall transfer to the Participant authorized but
previously unissued Stock or, if determined by the Board, shares of Stock that
are held in treasury.

5.2 Maximum Number of Shares. The maximum aggregate number of shares of
Stock that may be issued pursuant to this Plan is 192,000 shares, subject to
increases and adjustments as provided in Article VIII. From this limit, no more
than 4,000 shares of Stock may be issued as Restricted Stock.

5.3 Forfeitures. If any Award granted hereunder is forfeited, expires or
terminates for any reason, in part or whole, the shares of Stock subject thereto
which are not issued pursuant to that Award shall again be available for
issuance of an Award under this Plan.

ARTICLE VI

EXERCISE OF OPTIONS

6.1 Restriction on Exercise. Options shall not be exercisable and
Restricted Stock shall not be transferable until at least six months after an
Award is granted.

6.2 Maximum Exercise Period. The maximum period in which an Option may be
exercised shall be 10 years after the date it is granted.

6.3 Transferability. An Option granted under this Plan may be
transferable to the extent provided in an Agreement. Provided, however, that no
right or interest of a Participant in any Option or Restricted Stock shall be
liable for, or subject to, any lien, obligation or liability of such
Participant.

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ARTICLE VII

METHOD OF EXERCISE

7.3 Federal Withholding Tax Requirements. Upon exercise of an Option, the
Participant shall, upon notification of the amount due and prior to or
concurrently with the delivery of the certificates representing the shares, pay
to the Company amounts necessary to satisfy applicable federal, state and local
withholding tax requirements or shall otherwise make arrangements satisfactory
to the Company for such requirements.

7.4 Shareholder Rights. No Participant shall have any rights as a
shareholder with respect to shares subject to Options prior to the Date of
Exercise of such Option.

7.5 Issuance and Delivery of Shares. Shares of Stock issued pursuant to
the exercise of Options hereunder shall be delivered to Participants by the
Company (or its transfer agent) as soon as administratively feasible after a
Participant exercises an Option hereunder and executes any applicable
shareholder agreement or agreement described in Section 9.2 that the Company
requires at the time of exercise.

ARTICLE VIII

ADJUSTMENT UPON CORPORATE CHANGES

(a) the Company or an Affiliate effects one or more stock dividends,
stock splits, reverse stock splits, subdivisions, consolidations or other
similar events;

(b) the Company or an Affiliate engages in a transaction to which
section 424 of the Code applies; or

Provided, however, that if an event described in paragraph (a) or (b) occurs,
the Committee shall make adjustments to the limits on Options specified in
Section 5.2 that are proportionate to the modifications of the Stock that are on
account of such corporate changes. Notwithstanding the foregoing, the Committee
may not modify the Plan or the terms of any Options then outstanding or to be
granted hereunder to provide for the issuance under the Plan of a different
class of stock or kind of securities.

8.2 Effect of Certain Transactions. The provisions of this Section 8.2
shall apply to the extent that an Agreement does not otherwise expressly address
the matters contained herein. If the Company experiences an event which results
in a "Change in Control," as defined in Section 8.2(a), then, whether or not the
vesting requirements set forth in any Agreement have been satisfied, (i) all
shares of Restricted Stock that are outstanding at the time of the Change in
Control shall become fully vested immediately prior to the Change in Control
event, and (ii) all Options that are outstanding at the time of the Change in
Control shall become fully vested and exercisable immediately prior to the
Change in Control event.

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(a) A Change in Control will be deemed to have occurred for purposes
hereof, if:

(4) the shareholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or disposition by
the Company of all or substantially all of its assets.

For purposes of this Section 8.2(a), "Voting Securities" of an entity shall mean
any securities of the entity which vote generally in the election of its
directors.

(c) Notwithstanding the foregoing, a portion of the acceleration of vesting
described in this Section shall not occur with respect to an Award to the extent
such acceleration of vesting would cause the Participant or holder of such Award
to realize less income, net of taxes, after deducting the amount of excise taxes
that would be imposed pursuant to section 4999 of the Code, than if accelerated
vesting of that portion of the Award did not occur. This Section 8.2(c) shall
not apply to Awards that were granted prior to the February 14, 1998 amendment
and restatement of this Plan.

8.3 No Adjustment Upon Certain Transactions. The issuance by the Company
of shares of stock of any class, or securities convertible into shares of stock
of any class, for cash or property, or for labor or services rendered, either
upon direct sale or upon the exercise of rights or warrants to subscribe
therefor, or upon conversion of shares or obligations of the Company convertible
into such shares or other securities, shall not affect, and no adjustment by
reason thereof shall be made with respect to, outstanding Options.

8.4 Fractional Shares. Only whole shares of Stock may be acquired through
the exercise of an Option. Any amounts tendered in the exercise of an Option
remaining after the maximum number of whole shares have been purchased will be
returned to the Participant in the form of cash.

ARTICLE IX

COMPLIANCE WITH LAW AND REGULATORY APPROVAL

9.1 General. No Option shall be exercisable, no Stock shall be issued, no
certificates for shares of Stock shall be delivered and no payment shall be made
under this Plan except in compliance with all federal
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or state laws and regulations (including, without limitation, withholding tax
requirements), federal and state securities laws and regulations and the rules
of all securities exchanges or self-regulatory organizations on which the
Company's shares may be listed. The Company shall have the right to rely on an
opinion of its counsel as to such compliance. Any certificate issued to evidence
shares of Stock for which an Option is exercised may bear such legends and
statements as the Committee upon advice of counsel may deem advisable to assure
compliance with federal or state laws and regulations.

9.2 Representations by Participants. As a condition to the exercise of an
Option, the Company may require a Participant to represent and warrant at the
time of any such exercise that the shares are being purchased only for
investment and without any present intention to sell or distribute such shares,
if, in the opinion of counsel for the Company, such representation is required
by any relevant provision of the laws referred to in Section 9.1. At the option
of the Company, a stop transfer order against any shares of stock may be placed
on the official stock books and records of the Company, and a legend indicating
that the stock may not be pledged, sold or otherwise transferred unless an
opinion of counsel was provided (concurred in by counsel for the Company) and
stating that such transfer is not in violation of any applicable law or
regulation may be stamped on the stock certificate in order to assure exemption
from registration. The Committee may also require such other action or agreement
by the Participants as may from time to time be necessary to comply with federal
or state securities laws. This provision shall not obligate the Company or any
Affiliate to undertake registration of options or stock hereunder.

ARTICLE X

GENERAL PROVISIONS

10.1 Unfunded Plan. The Plan, insofar as it provides for grants, shall be
unfunded, and the Company shall not be required to segregate any assets that may
at any time be represented by grants under this Plan. Any liability of the
Company to any person with respect to any grant under this Plan shall be based
solely upon contractual obligations that may be created hereunder. No such
obligation of the Company shall be deemed to be secured by any pledge of, or
other encumbrance on, any property of the Company.

10.2 Rules of Construction. Headings are given to the articles and
sections of this Plan solely as a convenience to facilitate reference. The
masculine gender when used herein refers to both masculine and feminine. The
reference to any statute, regulation or other provision of law shall be
construed to refer to any amendment to or successor of such provision of law.

10.3 Governing Law. The internal laws of the State of Mississippi shall
apply to all matters arising under this Plan, except to the extent that federal
law does not otherwise apply or preempt Mississippi law.

10.4 Compliance With Section 16 of the Exchange Act. Transactions under
this Plan are intended to comply with all applicable conditions of Rule 16b-3
(or successor provisions) under the Exchange Act. To the extent any provision of
this Plan or action by Committee fails to so comply, it shall be deemed null and
void to the extent permitted by law and deemed advisable by the Committee.

10.5 Amendment. The Board may amend or terminate this Plan at any time;
provided, however, an amendment that would have a material adverse effect on the
rights of a Participant under an outstanding Option is not valid with respect to
such Option without the Participant's consent; and provided, further, that the
shareholders of the Company must approve, in general meeting, before the
effective date thereof, any amendment that changes the number of shares in the
aggregate which may be issued pursuant to Options granted under the Plan.

10.6 Duration of Plan. This Plan shall continue until it is terminated by
the Board pursuant to Section 10.5.

10.7 Effective Date of Plan. This Plan was first adopted by the Board on
January 24, 1995, and was thereafter approved by the shareholders of the
Company. Effective February 14, 1998, all Awards granted hereunder shall be
governed by the terms of this amended and restated Plan; provided, however, that
the terms of the Plan prior to this amendment shall apply to the extent that the
terms of this restated Plan would have a
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material adverse effect on the rights of a Participant under an outstanding
Award, unless the Participant has given consent to the change, or would modify
the vesting rights and rights to exercise an outstanding Award.

IN WITNESS WHEREOF, the undersigned officer has executed this restated and
amended Plan on this the day of , 1998, but to be effective as
of the dates specified in Section 10.7.

BANCORPSOUTH, INC.

By:
-----------------------------------

Its:
----------------------------------

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APPENDIX C

PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

BANCORPSOUTH, INC.
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS

The undersigned hereby appoints Fletcher H. Goode, M.D., A. Douglas Jumper
and Travis E. Staub, or any of them, as proxies, with full power of substitution
and resubstitution, to vote all of the shares of Common Stock which the
undersigned is entitled to vote at the annual meeting of shareholders of
BancorpSouth, Inc., to be held at the Ramada Inn Convention Center, 854 North
Gloster Street, Tupelo, Mississippi, on Tuesday, April 21, 1998, at 7:00 p.m.
(Central Time), and at any adjournment thereof.

In their discretion, the proxies are authorized to vote upon such other
matters as may properly come before the meeting or any adjournment thereof.

THIS PROXY IS BEING SOLICITED BY THE BOARD OF DIRECTORS AND WILL BE VOTED AS
SPECIFIED. IF NOT OTHERWISE SPECIFIED, THE ABOVE NAMED PROXIES WILL VOTE (A) FOR
THE ELECTION AS CLASS III DIRECTORS OF THE NOMINEES NAMED ON THE BACK OF THIS
CARD, (B) FOR APPROVAL OF THE AMENDMENTS AND RESTATEMENTS OF THE COMPANY'S 1994
STOCK INCENTIVE PLAN AND 1995 NON-QUALIFIED STOCK OPTION PLAN FOR NON-EMPLOYEE
DIRECTORS, (C) FOR THE RATIFICATION OF THE APPOINTMENT OF KPMG PEAT MARWICK LLP
AS THE COMPANY'S AUDITORS, AND (D) IN ACCORDANCE WITH THE RECOMMENDATION OF THE
BOARD OF DIRECTORS ON ANY OTHER MATTER THAT MAY PROPERLY COME BEFORE THE
MEETING.

1. Election of Class III Directors.

[ ] FOR all nominees listed [ ] WITHHOLD AUTHORITY to vote for all
(except marked to the contrary) nominees listed

Nominees: Aubrey B. Patterson
Andrew R. Townes, D.D.S.

INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, WRITE
HIS NAME ON THE FOLLOWING SPACE:

2. Proposal to approve the amendments and restatements of the Company's 1994
Stock Incentive Plan and 1995 Non-Qualified Stock Option Plan for Non-Employee
Directors.

FOR AGAINST ABSTAIN
[ ] [ ] [ ]

3. Proposal to ratify the appointment of KPMG Peat Marwick LLP as the
independent auditors of the Company and its subsidiaries for 1998.

FOR AGAINST ABSTAIN
[ ] [ ] [ ]

The undersigned instructs that
this Proxy be voted as marked.

Dated: , 1998
-------------------

-------------------------------
Signature of Shareholder

-------------------------------
Signature if held jointly

Please sign your name as it
appears on this Proxy. In case
of multiple or joint ownership,
all should sign. When signing
as attorney, executor,
administrator, trustee or
guardian, give full title as
such.