PEOPLES HOLDING CO
STUART JOHNSON EMPLOYMENT CONTRACT
<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>3
<FILENAME>stuartjohnsoncontract.txt
<DESCRIPTION>STUART JOHNSON EMPLOYMENT CONTRACT
<TEXT>
Exhibit 10.8
                           THE PEOPLES HOLDING COMPANY

                              EMPLOYMENT AGREEMENT

This  Agreement  ("Agreement")  has been entered into this 10th day of February,
1998,  by and between The Peoples  Holding  Company  ("Company"),  and Stuart R.
Johnson, an individual ("Executive").

                                    RECITALS

The Board of Directors of the Company ("Board") has determined that it is in the
best interest of the Company and its stockholders to reinforce and encourage the
continued  attention and  dedication of the Executive to the Company as a member
of management of the Company or as a member of management of a subsidiary of the
Company,  and to assure that the Company will have the  continued  dedication of
the  Executive,  notwithstanding  the  possibility,  threat,  or occurrence of a
Change in Control (as defined below) of the Company.  The Board believes that it
is imperative to diminish the inevitable  distraction of the Executive by virtue
of the  personal  uncertainties  and risks  created by a pending  or  threatened
Change in Control and to encourage the Executive's full attention and dedication
to the Company or a subsidiary  currently and in the event of any  threatened or
pending  Change in Control  which  ensures  that the  compensation  and  benefit
expectations of the Executive will be satisfied and which are  competitive  with
those of other corporations. Therefore, in order to accomplish these objectives,
the Board has caused the Company to enter into this Agreement.

                            IT IS AGREED AS FOLLOWS:

Section 1: Definitions and Construction.

1.1  Definitions.  For  purposes  of this  Agreement,  the  following  words and
     phrases, whether or not capitalized, shall have the meaning specified below
     unless the context plainly requires a different meaning.

     (a)  "Board" means the Board of Directors of the Company.

     (b)  "Change in Control" means any liquidation, dissolution,  consolidation
          or merger of the Company in which the Company is not a  continuing  or
          surviving corporation.

     (c)  "Change in Control Date" shall mean the date of the change in control.

     (d)  "Code" shall mean the Internal Revenue Code of 1986, as amended.

     (e)  "Company"   means  The  Peoples   Holding   Company,   a   Mississippi
          Corporation, for the purpose of determining if a change in control has
          occurred. For the purpose of an employment  relationship,  it includes
          any subsidiary or successor of The Peoples Holding Company.

     (f)  "Effective Date" shall mean February 10, 1998.

     (g)  "Exchange  Act" means the  Securities  and  Exchange  Act of 1934,  as
          amended.

     (h)  "Person"  means any "person"  within the meaning of Section  13(d) and
          14(d) of the Exchange Act.


                                       1
<PAGE>

     (i)  "Term" means the period that begins on the effective  date and ends on
          the anniversary of the effective  date,  unless prior thereto a Change
          in Control  shall have  occurred.  This contract  shall  automatically
          renew for  additional  one- (1) year terms  unless  either party shall
          give the other party at least ninety (90) days' advance written notice
          of said  party's  intention  not to  renew  said  contract;  provided,
          however, the Company shall not be able to give notice of its intention
          not to renew the  contract  following  a Change in Control or if it is
          involved in any  negotiations,  whether  formal or informal,  that may
          result in a Change in Control.

1.2  Gender and Number. When appropriate,  pronouns herein used in the masculine
     gender  include the  feminine  gender,  words in the  singular  include the
     plural, and words in the plural include the singular.

1.3  Headings. All headings herein are included solely for ease of reference and
     do not bear on the interpretation of the text. Accordingly, as used herein,
     the  terms  "Article"  and  "Section"  mean the text that  accompanies  the
     specified Article or Section hereof.

1.4  Applicable  Law.  This  agreement  shall be  governed by and  construed  in
     accordance with the laws of the State of Mississippi  without  reference to
     its conflicts of law principles.

Section 2: Terms and Conditions of Employment.

2.1  Severance  Benefits.  In order to  induce  the  Executive  to remain in the
     employ of the Company and in consideration  of the Executive's  agreeing to
     remain in the employ of the  Company,  subject to the terms and  conditions
     set forth herein,  this Agreement  sets forth the severance  benefits which
     the  Company  agrees will be  provided  to the  Executive  in the event the
     Executive's  employment  with the  Company is  terminated  subsequent  to a
     Change in Control under the circumstances described herein.

2.2  Positions  and  Duties.  Prior  to  the  receipt  of  benefits  under  this
     Agreement,  the Executive  shall serve as an officer of the Company or of a
     subsidiary thereof,  subject to the reasonable  directions of the Board and
     the immediate superior of the Executive. During the term of this Agreement,
     Executive  agrees that Executive will not  voluntarily  leave the employ of
     the Company  except as may be provided  hereunder.  Any  violation  of this
     Section 2.2 by the Executive prior to a Change in Control shall result in a
     termination  hereof,  and  the  Executive  shall  have no  other  liability
     hereunder for such action.  In  consideration  of this,  the Company agrees
     that following a Change in Control, the Executive's  authority,  duties and
     responsibilities  shall be at least  commensurate in all material  respects
     with those assigned to, or held and exercised by, the Executive immediately
     preceding the date on which a Change in Control occurs. Notwithstanding the
     foregoing,  the Company may  terminate  the  Executive's  employment at any
     time,  subject to  providing  the  benefits  hereinafter  specified  and in
     accordance with the terms hereof.


                                       2
<PAGE>

2.3  Situs of  Employment.  Following a Change in Control,  the new entity shall
     make a good faith effort to provide the Executive with the type and kind of
     employment  described  herein  at the  location  where  the  Executive  was
     providing his services prior to the Change of Control.  However, if the new
     entity decides it must transfer or relocate the Executive,  it will provide
     the Executive the following benefits:  (a) purchase the Executive's home at
     its  average  appraised  value  plus at least  10% of the  appraised  value
     (appraised value being the average of an appraised value by a duly licensed
     and qualified  appraiser  selected by the Executive and the appraised value
     of a duly licensed and qualified  appraiser  selected by Company);  (b) pay
     all reasonable  cost and expenses  incurred by the Executive in moving to a
     new location; (c) provide the Executive an immediate increase in his annual
     income  of at least  6%;  (d)  require  no  transfer  or  relocation  of an
     Executive who has school age children until the end of the school year; (e)
     pay to Executive  seventy-five  percent (75%),  not to exceed Five Thousand
     Dollars  ($5,000.00) per child per year, of the tuition of a private school
     if Executive  has a school child or children and the  Executive  reasonably
     determines  it to be in the best  interest  of such  child or  children  to
     attend a private school at the new situs of employment.

2.4  Compensation.

     (a)  Annual Base Salary. The Annual Base Salary ("Annual Base Salary")shall
          be an amount equal to the salary the Executive  was  receiving  during
          the month  immediately  preceding  a Change in Control  computed on an
          annualized basis.

     (b)  Incentive Bonuses.  Incentive Bonuses  ("Incentive  Bonus") shall mean
          any bonuses provided through any incentive  compensation plan, subject
          to the provisions of such plan.

     (c)  Welfare  Benefit Plans.  Welfare  benefit plans shall mean  practices,
          policies  and  programs  provided by the Company  (including,  without
          limitation,   medical,   prescription,   dental,  disability,   salary
          continuance,  employee life,  group life,  accidental death and travel
          accident  insurance  plans and programs),  subject to the provision of
          such welfare benefit plans.

Section 3: Termination of Employment.

3.1  Death. The Executive's  employment shall terminate  automatically  upon the
     Executive's  death  during  the  Term  of this  Agreement  and  prior  to a
     termination of employment by the Executive.

3.2  Disability.  Following a Change in Control,  if the Company  determines  in
     good faith that a Disability of the Executive has occurred (pursuant to the
     definition  of  Disability  set forth  below),  the Company may give to the
     Executive written notice in accordance with Section 7.1 of the intention of
     the Company to terminate the  Executive's  employment.  In such event,  the
     Executive's  employment with the Company shall  terminate  effective on the
     thirtieth  (30th) day after  receipt of such notice by the  Executive  (the
     "Disability  Effective  Date"),  provided that, within the thirty (30) days
     after such  receipt,  the  Executive  shall not have  returned to full-time
     performance  of the  Executive's  duties.  For purposes of this  Agreement,
     "Disability"  shall mean that the  Executive has been unable to perform the
     services  required of the  Executive  hereunder on a full-time  basis for a
     period of one hundred-eighty (180) consecutive business days by reason of a
     physical  and/or mental  condition.  "Disability"  shall be deemed to exist
     when  certified by a physician  selected by the Company or its insurers and
     acceptable to the Executive or the Executive's legal  representative  (such
     agreement  as to  acceptability  not  to  be  withheld  unreasonably).  The
     Executive will submit to such medical or psychiatric examinations and tests
     as  such   physician   deems   necessary   to  make  any  such   Disability
     determination.


                                       3
<PAGE>

3.3  Termination  for Cause.  Following  a Change in  Control,  the  Company may
     terminate  the  Executive's   employment  for  "Cause,"  which  shall  mean
     termination  based upon: (a) the Executive's  willful and continued failure
     to perform the Executive's  duties with the Company (other than as a result
     of  incapacity  due to  physical or mental  condition),  after a demand for
     substantial  performance  is  delivered  to  the  Executive  by  the  Chief
     Executive  Officer of the  Company  or the  Chairman  of the  Board,  which
     specifically   identifies  the  manner  in  which  the  Executive  has  not
     substantially performed the Executive's duties, (b) the Executive's willful
     commission  of  misconduct  which is  materially  injurious to the Company,
     monetarily  or otherwise,  or (c) the  Executive's  material  breach of any
     provision  of this  Agreement.  For purposes of this  paragraph,  no act or
     failure to act on the Executive's part shall be considered "willful" unless
     done,  or omitted to be done,  without  good faith and  without  reasonable
     belief that the act or omission  was in the best  interests of the Company.
     Notwithstanding  the foregoing,  the Executive  shall not be deemed to have
     been  terminated  for Cause unless and until (a) the  Executive  receives a
     notice of Termination  (as defined in Section 3.5) from the Chief Executive
     Officer of the Company or the Chairman of the Board,  (b) the  Executive is
     given the opportunity,  with counsel, to be heard before the Board, and (c)
     the Board finds,  in its good faith opinion,  that the Executive was guilty
     of the conduct set forth in the Notice of Termination.

3.4  Good Reason.  Following a Change in Control,  the  Executive  may terminate
     employment with the Company for "Good Reason," which shall mean termination
     based upon:

     (a)  the  assignment  to the  Executive of any duties  inconsistent  in any
          respect  with  the   Executive's   position,   authority,   duties  or
          responsibilities as contemplated by Section 2.2 or any other action by
          the Company which results in a material  diminution in such  position,
          authority, duties or responsibilities,  excluding for this purpose any
          action  not taken in bad faith and which is  remedied  by the  Company
          promptly after notice thereof given by the Executive;

     (b)  (i) the  failure by the  Company to  continue in effect any benefit or
          compensation  plan, stock ownership plan, life insurance plan,  health
          and  accident  plan or  disability  plan in  which  the  Executive  is
          participating  as  specified  in Section  2.4(b) or 2.4(c) or (ii) the
          taking of any action by the Company which would  adversely  affect the
          Executive's  participation  in,or  materially  reduce the  Executive's
          benefits  under,  any plans  described in Section  2.4(b) or 2.4(c),or
          deprive the Executive of any material  fringe  benefit  enjoyed by the
          Executive as described in Section 2.4(b) or 2.4(c);

     (c)  a material breach by the Company of any provision hereof;

     (d)  any termination by the Company of the Executive's employment otherwise
          than as expressly permitted by this Agreement;

     (e)  within a period  ending at the close of business on the date three (3)
          years after the Change in Control Date,  any failure by the Company to
          comply with and satisfy  Section 6.2 on or after the Change in Control
          Date.


                                       4
<PAGE>

3.5  Notice  of  Termination.  Any  termination  by the  Company  for  Cause  or
     Disability,  or by the Executive for Good Reason,  shall be communicated by
     Notice of Termination to the other party,  given in accordance with Section
     7.1.  For purposes of this  Agreement,  a "notice of  Termination"  means a
     written  notice  which (a)  indicates  the specific  termination  provision
     herein relied upon, (b) to the extent applicable,  sets forth in reasonable
     detail  the  facts  and  circumstances  claimed  to  provide  a  basis  for
     termination of the Executive's employment under the provision so indicated,
     and (c) if the Date of  Termination  (as  defined  below) is other than the
     date of receipt of such notice,  specifies the termination date (which date
     shall be not more than thirty  [30] days after the giving of such  notice).
     The failure by the  Executive  or the Company to set forth in the Notice of
     Termination any fact or circumstance which contributes to a showing of Good
     Reason or Cause shall not waive any right of the  Executive  or the Company
     hereunder or preclude the Executive or the Company from asserting such fact
     or  circumstance  in enforcing  the  Executive's  or the  Company's  rights
     hereunder.

3.6  Date of  Termination.  "Date of  Termination"  means (a) if the Executive's
     employment is terminated  by the Company with or without  Cause,  or by the
     Executive  for Good Reason,  the date of  Termination  shall be the date of
     receipt of the Notice of Termination  or any later date specified  therein,
     as the case may be, or (b) if the  Executive's  employment is terminated by
     reason of death or Disability, the Date of Termination shall be the date of
     death of the Executive or the  Disability  Effective  Date, as the case may
     be.

Section 4: Certain Benefits Upon Termination of Employment.

4.1  Termination after a Change in Control. If a Change in Control occurs during
     the Term of this  Agreement and within three (3) years after such Change in
     Control,  either the Company  shall  terminate the  Executive's  employment
     without Cause, or the Executive shall terminate employment with the Company
     for Good  Reason,  then the  Executive  shall be entitled  to the  benefits
     provided  below for the three year  period  after  Change in Control or the
     remaining  portion  of  said  three  year  period  following  the  date  of
     termination.

     (a)  "Accrued Obligations":  On the tenth (10th) business day following the
          Date of Termination, the Company shall pay to the Executive the sum of
          (i) the Executive's  Annual Base Salary  prorated  through the Date of
          Termination  to the extent not  previously  paid, and (ii) any accrued
          vacation pay to the extent not previously paid.

     (b)  "Severance Amount": The "Severance Amount" shall be an amount equal to
          2.99  times  the  Executive's  Annual  Base  Salary  in  effect on the
          business  day prior to the Date of  Termination  plus  2.99  times the
          average annual  incentive  bonus for the two years prior to the Change
          in Control.  The  Company  shall set aside this amount in escrow for a
          period of three years and the Escrow Agent shall pay to the Executive,
          beginning  on the tenth  (10th)  business  day  following  the Date of
          Termination,  a  monthly  amount  of  one-thirty-sixth  (1/36)  of the
          severance  amount  less any  monthly  W-2,  Schedule  C or  Schedule F
          earnings  reportable on Internal  Revenue  Service Form 1040 which are
          received  by the  Executive  from his  present  employer or any future
          employer or  employers  for a period of 36 months or until the earlier
          exhaustion of the entire  severance amount plus interest  thereon.


                                       5
<PAGE>

          In the event of the Executive's  death after a termination for which a
          "Severance Amount" is payable,  the Escrow Agent shall continue to pay
          to the  Executive's  spouse or other named  beneficiary  the remaining
          obligation owed the Executive under the terms of this contract and the
          Escrow Agreement.  The Company may, however,  at its option,  elect to
          pay the  Severance  Amount  to the  Executive,  or in the event of his
          death,  his  spouse  or  other  named  beneficiary,  in the  form of a
          lump-sum cash payment on or before the date the first monthly  payment
          is due; or the Company,  at its option,  at anytime during the term of
          the  Escrow  Agreement,  can  direct  the  Escrow  Agent  to  pay  the
          Executive,  the Executive's spouse, or named beneficiary,  as the case
          may be, the then remaining balance of the severance  amount,  plus any
          accrued and accumulated  interest  thereon,  in the form of a lump-sum
          cash payment, and the rights and obligations of all parties under both
          the Employment Agreement and Escrow Agreement shall be terminated.

          In the event,  subsequent  to the  Change in  Control,  the  Executive
          becomes an employee of any competing  commercial  bank,  savings bank,
          savings   and  loan   association,   or   credit   union   ("financial
          institution")  in the defined market area of the Employer prior to the
          Change in Control,  then any  obligation  of the  Employer  under this
          Section is terminated,  and the Executive shall not be entitled to any
          further benefits under this Agreement.

          The severance  amount set aside in escrow shall be invested  according
          to the provisions of the escrow agreement  attached hereto as "Exhibit
          A" and the  interest  earned  included  in the  amount  payable to the
          Executive.  Any severance  amounts not paid to the Executive  shall be
          returned to the Company at the end of the 36-month  escrow period,  or
          sooner  should  the  Executive  accept  employment  with  a  competing
          "financial  institution" as defined above.  All interest earned on the
          account shall be paid to the Executive  following the final  severance
          payment.

     (c)  "Other Benefits":  To the extent not previously provided,  the Company
          shall timely pay or provide to the  Executive  and/or the  Executive's
          family any other  amounts or benefits  required to be paid or provided
          for which the Executive  and/or the Executive's  family is eligible to
          receive  pursuant  hereto  and  under  any  plan,  program,  policy or
          practice  or contract or  agreement  of the Company as those  provided
          generally  to other  peer  executives  and their  families  during the
          ninety (90) day period immediately preceding the Effective Date or, if
          more favorable to the Executive, as those provided generally after the
          Effective  Date to other  peer  executives  of the  Company  and their
          families.

     (d)  If  termination  of the  Executive  occurs less than three years after
          such Change in Control,  then the benefits  provided by this Agreement
          shall be pro rated on the ratio of the remaining portion of said three
          year period to the full three year period following Change in Control.


                                       6
<PAGE>

     (e)  "Excess   Parachute   Payment":   Anything   herein  to  the  contrary
          notwithstanding,  in the event that an  independent  accountant  shall
          determine  that any payment or  distribution  by the Company to or for
          the benefit of Executive  (whether paid or payable or  distributed  or
          distributable pursuant to the terms hereof or otherwise) (a "Payment")
          would be  nondeductible by the Company for Federal income tax purposes
          because of Code Section 280G or would constitute an "excess  parachute
          payment" (as defined in Code Section 280G), then the aggregate present
          value of amounts payable or distributable to or for the benefit of the
          Executive  pursuant hereto or pursuant to any other agreement with the
          company  because  of the  occurrence  of a  Change  in  Control  (such
          payments or  distributions  are hereinafter  referred to as "Agreement
          Payments")  shall be  reduced  (but  not  below  zero) to the  Reduced
          Amount. For purposes of this paragraph,  the "Reduced Amount" shall be
          an amount  expressed in present  value which  maximizes  the aggregate
          present value of Agreement  Payments without causing any payment to be
          nondeductible  by the Company  because of Code Section 280G or without
          causing  any  portion  of the  Payment to be subject to the excise tax
          imposed by Code Section 4999.

          If the  independent  accountant  determines  that any Payment would be
          nondeductible  by the Company because of Code Section 280G or that any
          portion of the  Payment  would be subject to the excise tax imposed by
          Code Section 4999, the Company shall promptly give Executive notice to
          that effect.  The  Executive may then  elect,in the  Executive's  sole
          discretion,  which  and how much of the  Agreement  Payments  shall be
          eliminated  or reduced (as long as after such  election the  aggregate
          present value of the Agreement Payments equals the Reduced Amount, and
          shall advise the Company in writing of the Executive's election within
          ten (10) days after the Executive's receipt of such notice. If no such
          election is made by the  Executive  within such  ten-day  period,  the
          Company may elect which and how much of the Agreement  Payments  shall
          be eliminated or reduced (as long as after such election the aggregate
          present value of the Agreement Payments equals the Reduced Amount) and
          shall notify the Executive promptly of such election.  For purposes of
          this  paragraph,  present value shall be determined in accordance with
          Code Section  280G(d)(4).  All determinations  made by the independent
          accountant  under this paragraph shall be binding upon the Company and
          the  Executive  and  shall  be  made  within  sixty  (60)  days  of  a
          termination of employment of the Executive. As promptly as practicable
          following such determination and the elections hereunder,  the Company
          shall pay to or distribute to or for the benefit of the Executive such
          amounts as are then due to the Executive  hereunder and shall promptly
          pay to or  distribute  for the benefit of the  Executive in the future
          such amounts as become due to the Executive hereunder.


                                       7
<PAGE>

          As a result of the uncertainty in the application of Code Section 280G
          and 4999 at the time of the initial  determination  by the independent
          accountant  hereunder,  it is possible that Agreement Payments will be
          made by the Company which should not have been made ("Overpayment") or
          that  additional  Agreement  Payments  which have not been made by the
          Company  should  have  been  made  ("Underpayment"),   in  each  case,
          consistent  with the calculation of the Reduced Amount  hereunder.  In
          the event that the independent accountant, based upon the assertion of
          a deficiency by the Internal  Revenue  Service  against the Company or
          the Executive  which the  independent  accountant  believes has a high
          probability of success,  determines that an Overpayment has been made,
          any such  Overpayment  shall be treated for all  purposes as a loan to
          the Executive which the Executive shall repay to the Company, together
          with  interest at the  applicable  Federal  rate  provided for in Code
          Section 7872(f)(2); provided, however, that no amount shall be payable
          by the  Executive  to the  Company if and to the extent  such  payment
          would not reduce the amount  which is subject to  taxation  under Code
          Section 4999 or if the period of  limitations  for  assessment  of tax
          under Code Section 4999 against the Executive  shall have expired.  If
          the Executive is required to repay an amount under this  Section,  the
          Executive  shall repay such amount over a period of time not to exceed
          one (1) year for each twenty-five thousand dollars ($25,000) which the
          Executive must repay to the Company. In the event that the independent
          accountant,  based  upon  controlling  precedent,  determines  that an
          Underpayment  has occurred,  any such  Underpayment  shall be promptly
          paid by the  Company to or for the benefit of the  Executive  together
          with  interest at the  applicable  Federal  rate  provided for in Code
          Section 7872(f)(2)(A).

4.2  Death.  If the  Executive's  employment  is  terminated  by  reason  of the
     Executive's  death during the Term hereof  (either prior or subsequent to a
     Change  in  Control  but  prior  to a  termination  of  employment  by  the
     Executive),  this Agreement shall terminate  without further  obligation to
     the Executive's legal representatives hereunder.

4.3  Disability.  If the  Executive's  employment is terminated by reason of the
     Executive's  Disability  during the Term hereof  subsequent  to a Change in
     Control,  this Agreement shall terminate without further obligations to the
     Executive.

4.4  Termination for Cause;  Executive's  Termination Other Than for Good Reason
     After  a  Change  in  Control.  If  the  Executive's  employment  shall  be
     terminated  for Cause during the Term hereof (either prior to or subsequent
     to a Change in Control),  this Agreement  shall  terminate  without further
     obligations to the Executive.  If the Executive terminates  employment with
     the  Company  during the Term hereof  (other  than for Good Reason  after a
     Change  in  Control),   this  Agreement  shall  terminate  without  further
     obligations to the Executive.

4.5  Non-Exclusivity  of  Rights.  Nothing  herein  shall  prevent  or limit the
     Executive's continuing or future participation in any plan, program, policy
     or  practice  provided  by the  Company  and for  which the  Executive  may
     qualify, nor shall anything herein limit or otherwise affect such rights as
     the  Executive  may have under any contract or agreement  with the Company.
     Amounts  which are vested  benefits  of which the  Executive  is  otherwise
     entitled to receive under any plan, policy, practice or program of , or any
     contract or agreement  with,  the Company at or  subsequent  to the Date of
     Termination,  shall be  payable  in  accordance  with  such  plan,  policy,
     practice or program or contract or agreement except as explicitly  modified
     by this Agreement.


                                       8
<PAGE>

4.6  Full Settlement. The Company's obligation to make the payments provided for
     herein and  otherwise  to perform its  obligations  hereunder  shall not be
     affected by any set-off, counterclaim,  recoupment, defense or other claim,
     right or action which the Company may have against the Executive or others,
     other  than for the  repayment  of any debt  owed the  Company  which is in
     default or to receive  reimbursement of funds determined to have been taken
     through  malfeasance.  In no event shall the Executive be obligated to seek
     other  employment  or take any  other  action by way of  mitigation  of the
     amount  payable to the Executive  under any of the provisions  hereof.  The
     Company agrees, only on and after a Change in Control Date, to pay promptly
     as incurred all reasonable  legal fees and expenses which the Executive may
     reasonably incur as a result of any unsuccessful  contest by the Company or
     successful   contest   by   the   Executive,    his   heirs,    agents   or
     attorneys-in-fact,  of the  validity  or  enforceability  of, or  liability
     under, any provision hereof or any guarantee of performance  thereof,  plus
     in each case interest on any delayed payment at the applicable Federal rate
     provided for in Code Section  7872(f)(2)(A).  If Executive  commits acts of
     malfeasance  during his  employment  which result in the conviction of said
     Executive of a crime, Executive shall be entitled to no benefits under this
     agreement from and after the date of such conviction.

4.7  Resolution of Disputes.  If there shall be any dispute  between the Company
     and the Executive (a) in the event of any  termination  of the  Executive's
     employment by the Company,  whether or not such  termination was for Cause,
     or (b) in the event of any  termination  of  employment  by the  Executive,
     whether Good Reason existed,  then, the entire amount payable under Section
     4.1 of this  agreement  shall  be held in  escrow  until  there  is a final
     nonappealable  judgment  by a  court  of  competent  jurisdiction.  If said
     judgment  declares  that such  termination  was  without  Cause or that the
     determination  by the Executive of the existence of Good Reason was made in
     good faith,  the Escrow Agent shall,  only on and after a Change in Control
     Date, pay all amounts,  including any interest  earned on any funds held in
     escrow,  and provide all benefits,  to the Executive and/or the Executive's
     family or other  beneficiaries,  as the case may be, that the Company would
     be  required  to pay or  provide  pursuant  to Section  4.1 as though  such
     termination were by the Company without Cause or by the Executive with Good
     Reason.  In the event,  however,  that the Company shall not be required to
     pay any disputed  amounts  pursuant to this paragraph,  such funds shall be
     payable to the Company.

     During the period of time the funds are held in  escrow,  the Escrow  Agent
     shall pay to the Executive,  the Executive's  spouse, or named beneficiary,
     as the case may be, a monthly  amount of 1/36 of the severance  amount less
     any monthly W-2,  Schedule C or Schedule F earnings  reportable on Internal
     Revenue  Service  Form 1040 which are  received by the  Executive  from his
     present employer, or any future employer or employers, until the earlier of
     36 months or the  exhaustion of the entire  severance  amount plus interest
     thereon.

     The severance amount set aside in escrow shall be invested according to the
     provisions of the escrow  agreement  attached hereto as "Exhibit A" and the
     interest earned included in the Amount payable to the Executive.

     As a condition of placing the  severance  amount in escrow,  the  Executive
     shall execute an agreement which shall be binding on Executive's  spouse or
     other  beneficiaries  to repay all such  amounts to which the  Executive is
     ultimately adjudged by such court not to be entitled.


                                       9
<PAGE>

Section 5: Confidential Information.

     The  Executive  shall hold in a fiduciary  capacity  for the benefit of the
     Company all secret or confidential information,  knowledge or data relating
     to the Company  and its or their  respective  businesses,  which shall have
     been obtained by the  Executive  during the  Executive's  employment by the
     Company and which shall not be or become  public  knowledge  (other than by
     acts of the Executive or  representatives  of the Executive in violation of
     this Agreement).  After termination of the Executive's  employment with the
     Company,  the Executive shall not, without the prior written consent of the
     Company,  or as  may  otherwise  be  required  by  law  or  legal  process,
     communicate  or divulge any such  information,  knowledge or data to anyone
     other than the  Company  and those  designated  by it. In no event shall an
     asserted violation of the provisions of this Section constitute a basis for
     deferring or  withholding  any amounts  otherwise  payable to the Executive
     under this Agreement.

Section 6: Successors.

6.1  Successors of Executive.  This  Agreement is personal to the Executive and,
     without the prior written  consent of the Company,  shall not be assignable
     by the  Executive  otherwise  than  by  will or the  laws  of  descent  and
     distribution.  This  Agreement  shall  inure  to  the  benefit  of  and  be
     enforceable by the Executive's legal representatives.

6.2  Successors  of Company.  The Company  will require any  successor  (whether
     direct or indirect, by purchase, merger, consolidation or otherwise) to all
     or substantially all of the business and/or assets of the Company to assume
     expressly and agree to perform this Agreement in the same manner and to the
     same  extent  that the  Company  would be required to perform it if no such
     succession had taken place. Failure of the Company to obtain such agreement
     upon the  effectiveness of any such succession shall be a breach hereof and
     shall entitle the  Executive to terminate  under the terms of the Agreement
     at the  Executive's  option on or after  the  Change  in  Control  for Good
     Reason.  As used herein,  "Company"  shall mean the Company as hereinbefore
     defined and any  successor to its business  and/or assets which assumes and
     agrees to perform this Agreement by operation of law, or otherwise.

Section 7: Miscellaneous.

7.1  Notice.   For   purposes   of  this   Agreement,   notices  and  all  other
     communications  provided for herein shall be in writing and shall be deemed
     to have been duly given when delivered or mailed by certified or registered
     mail, return receipt requested,postage prepaid, addressed to the respective
     addresses  as set forth  below;  provided  that all  notices to the Company
     shall be  directed  to the  attention  of the  Chairman of the Board of the
     Company with copies to the Chief Executive Officer and the Secretary of the
     Company,  or to such other  address as one party may have  furnished to the
     other in writing in  accordance  herewith,  except that notice of change of
     address shall be effective only upon receipt.

     Notice to Executive:

     Stuart R. Johnson
     2803 Confederate Avenue
     Tupelo, MS   38801


     Notice to Company:

     The Peoples Holding Company
     209 Troy Street
     P. O. Box 709
     Tupelo, MS 38802-0709


                                       10
<PAGE>

7.2  Validity.  The invalidity or unenforceability of any provision hereof shall
     not affect the  validity  or  enforceability  of any other  portion of this
     Agreement.

7.3  Withholding.  The Company may withhold from any amounts  payable  hereunder
     such  federal,  state,  or local  taxes as shall be required to be withheld
     pursuant to any applicable law or regulation.

7.4  Waiver.  The  Executive's or the Company's  failure to insist upon a strict
     compliance with any provision  hereof or any other provision  hereof or the
     failure  to  assert  any  right  the  Executive  or the  Company  may  have
     hereunder,  including,  without  limitation,the  right of the  Executive to
     terminate  employment for Good Reason  pursuant to Section 3.4 shall not be
     deemed to be a waiver of such provision or right or any other  provision or
     right hereof.

7.5  Effect on Other Employment Agreements. The terms hereof shall supersede all
     other employment or other agreements with respect to severance entered into
     by and between the  Executive  and the Company,  or the  Executive  and any
     other employer, and this Agreement shall constitute the governing agreement
     pursuant to which the Company shall have  obligations to the Executive upon
     the  termination of the  Executive's  relationship  with the Company or any
     subsidiary.

IN WITNESS WHEREOF, the Executive and the Company, pursuant to the authorization
from its Board,  have  caused this  Agreement  to be executed in its name on its
behalf,all as of the day and year first above written.



                                           By : /s/ Stuart R. Johnson
                                                ----------------------
                                                  Stuart R. Johnson
                                                     EXECUTIVE


       ATTEST                               THE PEOPLES HOLDING COMPANY

By : /s/ Martha Webb                       By : /s/ E. Robinson McGraw
     ----------------------                     ----------------------
        Martha Webb                               E. Robinson McGraw
         Secretary                       President and Chief Executive Officer




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</TEXT>
</DOCUMENT>
