PEOPLES HOLDING CO
DIRECTORS DEFERRED FEE PLAN B
<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>7
<FILENAME>phcdirectsdeferredfeeplanb.txt
<DESCRIPTION>DIRECTORS DEFERRED FEE PLAN B
<TEXT>
Exhibit 10.4



                                   DIRECTORS'


                              DEFERRED FEE PLAN - B


                                       OF


                        THE PEOPLES BANK & TRUST COMPANY


<PAGE>



                        DIRECTORS' DEFERRED FEE PLAN - B

                        THE PEOPLES BANK & TRUST COMPANY

                                TABLE OF CONTENTS



            Article                 Subject                                 Page

            I                       Definitions and Constructi                 1

            II                      Eligibility and Participation              2

            III                     Death Benefit                              3

            IV                      Retirement Benefit                         4

             V                      Beneficiary                                6

            VI                      Source of Benefit                          6

            VII                     Termination of Relationship                7

           VIII                     Termination of Participation               7

            IX                      Termination, Amendment,
                                    Modification, or Supplement
                                    of Plan                                    7

             X                      Other Benefits and Agreements              8

            XI                      Restrictions on Alienation
                                    of Benefits                                8

            XII                     Administration of the Plan                 8

           XIII                     Adoption of Plan by Subsidiary,
                                    Parent, Affiliated or Associated
                                    Companies                                  9

            XIV                     Reorganization                            10

            XV                      Miscellaneous                             10


                                    Plan Agreement                           I-1


<PAGE>




                              DEFERRED FEE PLAN - B

                                       OF

                        THE PEOPLES BANK & TRUST COMPANY


                           PURPOSE AND EFFECTIVE DATE

The purpose of the Directors'  Deferred Fee Plan - B of The Peoples Bank & Trust
Company is to provide specified benefits to Directors who contribute  materially
to the continued growth,  development and future business success of The Peoples
Bank & Trust  Company.  It is the  intention of The Peoples Bank & Trust Company
that this program and the individual plans established hereunder be administered
as unfunded  welfare  benefit plans  established  for Directors of the Bank. The
effective date of this Plan is January 1, 1989.

                                    ARTICLE I

                          DEFINITIONS AND CONSTRUCTION

1.1  Definitions. For purpose of this Plan, the following phrases or terms shall
     have the following  indicated  meanings unless  otherwise  clearly apparent
     from the context:

     (a)  "Beneficiary"  shall  mean  the  person,   persons,  or  estate  of  a
          Participant,  entitled to receive any benefits subsequent to the death
          of a  Participant  under a Plan  Agreement  entered into in accordance
          with the terms of this Plan.

     (b)  "Beneficiary  Designation"  shall mean the form of written  agreement,
          attached  hereto  as Annex  II,  by which  the  Participant  names the
          Beneficiary(ies) of the Plan.

     (c)  "Board of Directors"  shall mean the Board of Directors of The Peoples
          Bank &  Trust  Company  unless  otherwise  indicated  or  the  context
          otherwise requires.

     (d)  "Committee"  shall  mean the  Administrative  Committee  appointed  to
          manage and  administer  the Plan and  individual  Plan  Agreements  in
          accordance with the provisions of Article XII hereof.

     (e)  "Bank" shall mean The Peoples Bank & Trust Company and any  Subsidiary
          and Parent  that duly  adopts  the Plan as  provided  in Article  XIII
          hereof. Where the  context  dictates,  the term "Bank" as used herein
          refers to the  particular  Bank that has entered into a Plan Agreement
          with a particular Participant.

     (f)  "Moody's  Average  Corporate Bond Rate" shall mean the Monthly Average
          of the  Composite  Yield on Seasoned  Corporate  Bonds as published by
          Moody's  Investors  Services,  Inc. or its successor as stated for the
          month of October  preceding  December 31 of each year. Such rate as it
          applies  to the  provisions  of this Plan  shall  than be used for one
          year.

                                       1
<PAGE>

          If the above mentioned  "Monthly  Average" is no longer  published,  a
          substantially similar average will be used.

     (g)  "Early   Retirement  Date"  shall  be  the  date  of  a  Participant's
          Retirement prior to his or her Normal  Retirement Date which may occur
          on the  first  day of any  month  following  the  month in  which  the
          Participant  attains  his  or her  fifty-fifth  (55th)  birthday,  has
          completed  ten (10)  years of  service  on the  Board,  and has been a
          Participant in the Plan for four (4) full years.

     (h)  "Director"  shall mean any person who is associated as a Director with
          the Bank.

     (i)  "Normal Retirement Date" shall be March 31 following the Participant's
          attaining  his  or  her  seventy   second  (72nd)   birthday  and  the
          Participant has completed ten (10) continuous full years in the Plan.

     (j)  "Participant"  shall mean a  Director  who is  selected  and elects to
          participate  in the Plan through the execution of a Plan  Agreement in
          accordance with the provisions of Article II.

     (k)  "Plan" shall mean the Directors'  Deferred Fee Plan - B of The Peoples
          Bank & Trust Company as amended from time to time.

     (l)  "Plan  Agreement" shall mean the form of written  agreement,  attached
          hereto  as Annex I,  which is  entered  into  from time to time by and
          between the Bank and a Director  selected to become a Participant as a
          condition to participation  in the Plan. Each Plan Agreement  executed
          by a  Participant  shall provide for the entire  estimated  benefit to
          which  such  Participant  is  entitled  under the  Plan,  and the Plan
          Agreement bearing the latest date shall govern such entitlement.

     (m)  "Retirement"  and "Retire" shall mean severance of  relationship  with
          the Bank at or after the  attainment  of his or her Normal  Retirement
          Date  or,  with  the  consent  of the  Bank,  on or  after  the  Early
          Retirement Date.

     (n)  "Subsidiary" shall mean any business organization in which The Peoples
          Bank & Trust  Company,  directly  or  indirectly,  owns  an  interest,
          excluding  ownership  interests  The Peoples Bank & Trust  Company may
          hold in their  fiduciary  capacities as trustee or otherwise,  and any
          other business  organization that the Board of Directors designates as
          a Subsidiary for purposes of this Plan.

     (o)  "Parent" shall mean The Peoples Holding Company.

1.2  Construction.  The  masculine  gender when used  herein  shall be deemed to
     include the feminine gender, and the singular may include the plural unless
     the  context  clearly  indicates  to  the  contrary.  The  words  "hereof",
     "herein", "hereunder", and other similar compounds of the word "here" shall
     mean and refer to the entire Plan and not to any  particular  provision  or
     section.  Whenever the words  "Article" or "Section" are used in this Plan,
     or a  cross-reference  to an "Article" or "Section" is made, the Article or
     Section  referred  to shall be an Article  or  Section of this Plan  unless
     otherwise specified.

                                       2
<PAGE>

                                   ARTICLE II

                          ELIGIBILITY AND PARTICIPATION

2.1  Eligibility.  In order to be  eligible  for  participation  in the Plan,  a
     Director must be selected by the  Committee in the year  preceding the year
     in which the  Director is eligible to  participate  and in each  succeeding
     year  thereafter as hereinafter  provided.  The Committee,  in its sole and
     absolute  discretion,  shall  determine  eligibility for  participation  in
     accordance with the purposes of the Plan.

2.2  Participation. After being selected by the Committee to participate in this
     Plan, a Director shall, as a condition  precedent to participation  herein,
     complete  and  return  to the  Committee  a duly  executed  Plan  Agreement
     electing to  participate  herein and  agreeing to the terms and  conditions
     thereof,  and by the execution of such Plan  Agreement a Participant  shall
     agree that all amounts deferred  thereby shall be irrevocably  deferred and
     that in lieu  thereof  the  Participant  shall be  entitled  solely  to the
     benefits  provided under this Plan.  Such Plan Agreement shall be completed
     and returned to the  committee  at the time  specified  thereby,  but in no
     event  subsequent to December 31st of the year  preceding the year to which
     the Plan Agreement relates.

                                   ARTICLE III

                                  DEATH BENEFIT

3.1. Amount  and  Payment  of  Death  Benefit.  If  a  Participant  dies  before
     Retirement  and the Plan is in  effect at that  time,  the Bank will pay or
     cause to be paid a Death  Benefit to such  Participant's  Beneficiary.  The
     said Death  Benefit  shall be paid  monthly  for the next one  hundred  and
     eighty (180) months as set forth in the Plan Agreement. Such payments shall
     commence effective the first day of the month following the date of death.

     Notwithstanding  the immediately  preceding  paragraph of this Section 3.1,
     the Bank will pay or cause to be paid the Death Benefit  specified  therein
     only if:

     (a)  At the time of the  Participant's  death prior to attaining his or her
          Normal  Retirement  Date, such  Participant was a Director and had not
          Retired,  and  all  required  deferrals  required  to be  made by such
          Participant under Sections 3.2 et. seq. have been made,

     (b)  The Participant's Plan Agreement had been kept in force throughout the
          period commencing on the date of such Plan Agreement and ending on the
          date of his or her death; and

     (c)  The  Participant's  death was due to causes other than suicide  within
          two (2) years of the date of his or her  original  Plan  Agreement  or
          within two (2) years of the date of any  amendment  to his or her Plan
          Agreement or any subsequent  Plan Agreement  resulting from additional
          Death Benefits granted;  but the  Participant's  suicide shall relieve
          the Bank  only of its  obligation  to pay that  portion  of the  Death
          Benefit  that was  granted  within two (2) years  prior to the date of
          such suicide; and

     (d)  The  Participant's  death is  determined  not to be from a  bodily  or
          mental  cause or causes,  information  about  which was  withheld,  or
          knowingly  concealed,  or falsely  provided  by the  Participant  when
          requested  by the Bank to furnish  evidence  of good  health  upon the
          Participant's  enrolling  in the  Plan or upon an  application  for an
          increase in Death Benefits; and

                                       3
<PAGE>

     (e)  Proof of death in such form as determined  acceptable by the Committee
          is furnished.

3.2  Amount of Participant  Deferral.  Each Participant shall defer an amount of
     his or her  compensation  in such  amounts  and at such  times  as shall be
     determined  by the  Committee,  and the  Committee may change the amount of
     such  deferral in  connection  with  changes in the level of  participation
     selected by a Participant. A Participant's obligation to defer an amount of
     his or her compensation in accordance with this Section 3.2, shall commence
     on the date his or her Plan Agreement becomes effective, and shall continue
     thereafter  during  the term of his or her  Plan  Agreement  or  until  the
     earlier of such Participant's  death,  Retirement,  or attainment of his or
     her Normal  Retirement Date. A Participant shall have the right to increase
     or decrease the amount of his or her  participation  initially  selected by
     him or her by amending  his or her Plan  Agreement in  accordance  with the
     rules adopted by the Committee for this purpose.

3.3  Time and Manner of Deferring or Making  Payments.  A Participant  shall, in
     his or her Plan  Agreement,  authorize  the Bank to defer an amount of such
     Participant's  compensation  equal  to the  amount  specified  pursuant  to
     Section 3.2.

3.4  Participant  Deferrals  -  Use  and  Forfeitability.  The  amount  of  each
     Participant's  compensation deferred pursuant to Sections 3.2 and 3.3 shall
     be and remain solely the property of the Bank, and a Participant shall have
     no right  thereto,  nor shall the Bank be  obligated to use such amounts in
     any specific  manner.  Except as provided in Article IV, if a Participant's
     death occurs under circumstances other than those specified in Section 3.1,
     no benefit shall be payable hereunder or under his or her Plan Agreement to
     his or her  Beneficiary or any other person or entity on his or her behalf,
     and any payments made by such Participant  under Sections 3.2 and 3.3 shall
     be forfeited.

                                   ARTICLE IV

                               RETIREMENT BENEFIT

4.1  Normal  Retirement.  If a Participant  has remained a Director until his or
     her Normal  Retirement Date and shall then retire,  and if the Plan and his
     or her Plan Agreement have been kept in force,  the Bank shall pay or cause
     to be paid to such Participant, as a Retirement Benefit (herein so called),
     the amount per month  specified  as a Retirement  Benefit.  Payment of such
     monthly amount shall commence on the  Participant's  Normal Retirement Date
     and shall  continue  for one  hundred  and  eighty  (180)  months.  If such
     Participant  shall die  before  receiving  one  hundred  and  eighty  (180)
     payments,  the  Retirement  Benefit will be continued to the  Participant's
     Beneficiary as set forth in the Beneficiary  Designation  until the balance
     of the one hundred and eighty (180) payments have been made.

     The amount of the Retirement  Benefit will be determined by multiplying the
     total  deferrals made by Participant  times the Moody's  Average  Corporate
     Bond Rate as  compounded  on an annual  basis  until  Participant's  Normal
     Retirement.  That  result  will then be  improved  by the  Moody's  Average
     Corporate  Bond  Rate  being  used at the  time  of  Normal  Retirement  as
     compounded  on an annual  basis  until the time the  Retirement  Benefit is
     completed.

4.2  Early Retirement.  The Committee, in its sole and absolute discretion,  may
     permit a Participant to receive an Early Retirement  Benefit  commencing as
     of  the  first  day  of  any  month   coincident   with  or  following  the
     Participant's  Early  Retirement  Date, but before the attainment of his or

                                       4
<PAGE>

     her Normal Retirement Date. In such event, the Participant's  monthly Early
     Retirement  Benefit  shall  be the  amount  accumulated  on  behalf  of the
     Participant as set forth in Section 4.1, with such amount being  calculated
     from the date of entry  until  Participant's  Early  Retirement  Date.  The
     amount  will be  improved by the  Moody's  Average  Corporate  Bond Rate as
     compounded  on an annual  basis being used at the time of Early  Retirement
     and will be payable in one hundred and eighty (180)  installments and shall
     be the only benefit to which such  Participant is entitled.  If Participant
     shall die before receiving one hundred and eighty (180)  installments after
     commencement of the Early Retirement Benefit, said amount will be continued
     to  Participant's  Beneficiary as set forth in the Beneficiary  Designation
     until the balance of one hundred and eighty (180) payments have been made.

4.3  Post Retirement  Death Benefit.  If a Participant dies after Retirement but
     before  the  applicable  Retirement  Benefit  is paid in full,  the  unpaid
     Retirement  Benefit  payments to which such  Participant  is entitled shall
     continue and be paid to that Participant's Beneficiary. Such payments shall
     be made  in  accordance  with  the  payment  schedule  to that  Participant
     pursuant to Sections 4.1 and 4.2 of the Plan.

4.4  Exclusivity of Post Retirement  Death Benefit.  No Death Benefit as defined
     in Article III shall be paid to the  Beneficiary of a Participant  who dies
     after retirement.

4.5  Accrual of Retirement  Benefit.  A Participant who ceases to be a Director,
     except as a result of death or  retirement  shall  not be  entitled  to any
     benefits hereunder and the Bank shall have no obligation  hereunder to such
     Participant, except as outlined in Section 4.6.

4.6  Deferred  Termination  Benefit.  A Participant  who ceases to be a Director
     shall  receive  a   termination   benefit  upon  the  earlier  of  (i)  the
     Participant's  death or (ii) attainment of his or her Early Retirement Date
     or (iii) at the time said Director  ceases his or her  relationship if such
     date is later than his or her Early  Retirement Date. Said benefit shall be
     determined by improving the Participant's deferrals by seventy five percent
     (75%) of the Moody's Average Corporate Bond Rate as compounded on an annual
     basis if said  Participant has been a Director for less than ten (10) years
     or if the relationship is discontinued for cause and by the Moody's Average
     Corporate  Bond Rate as compounded  on an annual basis if said  Participant
     has been a  Director  for ten (10) or more years  with such  amounts  being
     computed from the date of entry to the termination date of Participant.

     For those  Participants  whose  relationship  is terminated  other than for
     cause after ten (10) years of service,  the resulting vested amount payable
     in one hundred and eighty (180)  installments  will then be improved by the
     Moody's Average  Corporate Bond Rate as compounded on an annual basis being
     used at the time  Participant  ceases to be a Director until the completion
     of payment of the vested  amount and will be the only benefit to which such
     Participant is entitled.

     For those  Participants  whose  relationship  is terminated  other than for
     cause with less than ten (10) years of service, the resulting vested amount
     payable in one hundred and eighty (180)  installments will then be improved
     by seventy five percent (75%) of the Moody's Average Corporate Bond Rate as
     compounded on an annual basis being used at the time Participant  ceases to
     be a Director until the completion of payment of the vested amount and will
     be the only benefit to which such Participant is entitled.

     For those  Participants  whose  relationship  is terminated for cause,  the
     resulting vested amount will be divided by one hundred and eighty (180) and

                                       5
<PAGE>

     such amount will be paid in one hundred and eighty (180)  installments  and
     will be the only benefit to which such Participant is entitled.

     If  Participant  shall die before  receiving  one hundred and eighty  (180)
     installments of said amount,  the amount will be continued to Participant's
     Beneficiary as set forth in the Beneficiary  Designation  until the balance
     of one hundred and eighty (180) payments have been made.

     For those  Participants who have been Directors for ten (10) or more years,
     who cease his or her relationship  other than for cause, and who die before
     benefits have been initiated, the Participant's Beneficiary as set forth in
     the Beneficiary Designation will receive the greater of the above mentioned
     accrued  benefits as of the date of death or the Death Benefit as described
     in Article III.

                                    ARTICLE V

                                   BENEFICIARY

A Participant  shall designate his or her Beneficiary to receive  benefits under
the  Plan  and  his  or  her  Plan  Agreement  by  completing  the   Beneficiary
Designation. If more than one Beneficiary is named, the shares and/or precedence
of each Beneficiary  shall be indicated.  A Participant  shall have the right to
change  the  Beneficiary  by  submitting  to  the  Committee  a new  Beneficiary
Designation.  The  Beneficiary  Designation  must be  approved in writing by the
Bank; however, upon the Bank's acknowledgment of approval, the effective date of
the  Beneficiary   Designation  shall  be  the  date  it  was  executed  by  the
Participant.  If the Bank has any doubt as to the proper  Beneficiary to receive
payments hereunder,  it shall have the right to withhold such payments until the
matter is finally adjudicated. Any payment made by the Bank in good faith and in
accordance with the provisions of this Plan and a  Participant's  Plan Agreement
and  Beneficiary  Designation  shall fully  discharge  the Bank from all further
obligations with respect to such payment.

                                   ARTICLE VI

                               SOURCE OF BENEFITS

6.1  Benefits  Payable from General Assets.  Amounts payable  hereunder shall be
     paid  exclusively  from the  general  assets  of the  Bank,  and no  person
     entitled  to  payment  hereunder  shall  have any  claim,  right,  security
     interest,  or other interest in any fund, trust, account, or other asset of
     the Bank that may be looked to for such payment.  The Bank's  liability for
     the payment of benefits  hereunder shall be evidenced only by this Plan and
     each Plan Agreement entered into between the Bank and a Participant.

6.2  Investments  to  Facilitate  Payment of Benefits.  Although the Bank is not
     obligated to invest in any  specific  asset or fund in order to provide the
     means for the  payment of any  liabilities  under  this Plan,  the Bank may
     elect to do so and, in such event,  no Participant  shall have any interest
     whatever  in such asset or fund.  As a  condition  precedent  to the Bank's
     obligation  to provide any  benefits,  including  incremental  increases in
     benefits,  under this Plan, the  Participant  shall, if so requested by the
     Bank, provide evidence of insurability at standard and other rates, in such
     amounts,  and with  such  insurance  carrier  or  carriers  as the Bank may
     require,  including  the results  and  reports of  previous  Bank and other
     insurance carrier physical  examinations,  taking such additional  physical
     examinations as the Bank may request,  and taking any other action that the
     Bank may request.  If a Participant  is requested to and does not or cannot
     provide evidence of insurability as specified in the immediately  preceding

                                       6
<PAGE>

     sentence,   then  the  Bank  shall  have  no  further  obligation  to  such
     Participant  under this Plan, and such  Participant's  Plan Agreement shall
     terminate,  except as to benefits previously  granted.  Notwithstanding the
     foregoing,  if a Participant  cannot provide  evidence of  insurability  at
     standard rates or for the amounts initially contemplated in connection with
     his or her  participation  in the Plan,  the Bank may,  at its  discretion,
     permit the  Participant  to  participate  herein for such benefits and upon
     such  deferral  of his or her  compensation  as the Bank  may,  in its sole
     discretion, deem appropriate.

6.3  Bank Obligation. The Bank shall have no obligation of any nature whatsoever
     to a Participant under this Plan or a Participant's Plan Agreement,  except
     otherwise expressly provided herein and in such Plan Agreement.

6.4  Withholding of  Information,  Etc. If, in connection  with a  Participant's
     enrolling in or applying for incremental  benefit increases under the Plan,
     the Bank requests the Participant to furnish evidence of insurability,  the
     Participant  dies,  and it is  determined  that the  Participant  withheld,
     knowingly  concealed,  or knowingly  provided false  information  about the
     bodily or mental  condition  or  conditions  that caused the  Participant's
     death, the Bank shall have no obligation to provide the benefits contracted
     for on the basis of such withholding, concealment, or false information.

                                   ARTICLE VII

                           TERMINATION OF RELATIONSHIP

Neither  this  Plan  nor  a  Participant's  Plan  Agreement,  either  singly  or
collectively,  in any way obligate the Bank to continue  the  relationship  of a
Participant  with the Bank nor does  either  limit  the right of the Bank at any
time and for any reason to terminate the Participant's relationship. Termination
of a Participant's  relationship with the Bank for any reason, whether by action
of the Bank, shall  immediately  terminate his or her participation in this Plan
and his or her Plan  Agreement,  and all  further  obligations  of either  party
thereunder,  except as may be  provided  in Section  4.6. In no event shall this
Plan or a Plan  Agreement,  either  singly or  collectively,  by their  terms or
implications  constitute an employment contract of any nature whatsoever between
the Bank and a Participant.

                                  ARTICLE VIII

                          TERMINATION OF PARTICIPATION

8.1  Termination of Participation - General. A Participant reserves the right to
     terminate  his or her  participation  in  this  Plan  and  his or her  Plan
     Agreement  at his or her  election  at any  time by  giving  the  Committee
     written  notice  of such  termination  not  less  than 30 days  prior to an
     anniversary  date of the date of execution of his or her Plan Agreement.  A
     Participant's  termination  shall be effective as soon as  administratively
     convenient after such anniversary date.

8.2  Rights  After  Termination  of  Participation.  Participants  who  elect to
     terminate  participation in the Plan but before  eligibility for Retirement
     will be entitled to the same benefits as a  Participant  who ceases to be a
     Director as described in Section 4.6.

                                       7
<PAGE>

                                   ARTICLE IX

                    TERMINATIONS, AMENDMENTS, MODIFICATION OR

                               SUPPLEMENT OF PLAN

9.1  Termination,  Amendment,  Etc. The Bank  reserves  the right to  terminate,
     amend,  modify or supplement this Plan, wholly or partially,  and from time
     to time, at any time.  The Bank  likewise  reserves the right to terminate,
     amend, modify, or supplement any Plan Agreement,  wholly or partially, from
     time to time.  Such right to terminate,  amen,  modify,  or supplement this
     Plan  or any  Plan  Agreement  shall  be  exercised  for  the  Bank  by the
     Committee; provided, however, that:

     (a)  No action to terminate  this Plan or a Plan  Agreement  shall be taken
          except upon written notice to each Participant to be affected thereby,
          which  notice  shall be  given  not  less  than 30 days  prior to such
          action; and

     (b)  The  Committee  shall take no action to terminate  this Plan or a Plan
          Agreement  with  respect to a  Participant  or his or her  Beneficiary
          after the payment of any  benefit has  commenced  in  accordance  with
          Article III or Article IV but has not been completed.

9.2  Rights and Obligations Upon Termination.  Upon the termination of this Plan
     or any  Plan  Agreement,  by  either  the  Committee  or a  Participant  in
     accordance with the provisions for such termination,  neither this Plan nor
     the Plan Agreement  shall be of any further force and effect,  and no party
     shall  have any  further  obligation  under  either  this  Plan or any Plan
     Agreement so terminated except as may be provided for in Section 4.6 or the
     preceding provisions of this Article IX.

                                    ARTICLE X

                          OTHER BENEFITS AND AGREEMENTS

The benefits provided for a Participant and his or her Beneficiary hereunder and
under such  Participant's  Plan  Agreement are in addition to any other benefits
available to such  Participant  under any other  program or plan of the Bank for
its Directors, and, except as may otherwise be expressly provided for, this Plan
and Plan  Agreements  entered  into  hereunder  shall  supplement  and shall not
supersede,  modify,  or  amend  any  other  program  or  plan  of the  Bank or a
Participant. Moreover, benefits under this Plan and Plan Agreements entered into
hereunder  shall not be  considered  compensation  for the purpose of  computing
deferrals or benefits  under any plan  maintained  by the Bank that is qualified
under Section 401 (a) of the Internal Revenue Code of 1954, as amended.

                                   ARTICLE XI

                     RESTRICTIONS ON ALIENATION OF BENEFITS

No right or  benefit  under  this Plan or a Plan  Agreement  shall be subject to
anticipation,  alienation, sale, assignment, pledge, encumbrance, or charge, and
any attempt to anticipate,  alienate,  sell, assign, pledge, encumber, or charge
the same  shall  be  void.  No right  or  benefit  hereunder  or under  any Plan
Agreement  shall in any manner be liable for or subject to the debts,  contract,
liabilities, or torts of the person entitled to such benefit. If any Participant
or  Beneficiary  under this Plan or a Plan Agreement  should become  bankrupt or
attempt to anticipate,  alienate,  sell, assign, pledge, encumber, or charge any
right to a benefit  hereunder  or under any Plan  Agreement,  then such right or
benefit  shall,  in the  discretion of the  Committee,  terminate,  and, in such

                                       8
<PAGE>

event,  the  Committee  shall hold or apply the same or any part thereof for the
benefit of such  Participant or  Beneficiary,  his or her spouse,  children,  or
other  dependents,  or any of them,  in such  manner and in such  portion as the
Committee, in its sole and absolute discretion, may deem proper.

                                   ARTICLE XII

                           ADMINISTRATION OF THIS PLAN

12.1 Appointment of Committee.  The general administration of this Plan, and any
     Plan  Agreements   executed   hereunder,   as  well  as  construction   and
     interpretation  thereof,  shall be vested in the Committee,  the number and
     members of which shall be designated  and  appointed  from time to time by,
     and shall serve at the pleasure of, the Board of Directors. Any such member
     of the  Committee  may resign by notice in writing filed with the secretary
     of the  Committee.  Vacancies  shall be  filled  promptly  by the  Board of
     Directors,  but any  vacancies  remaining  unfilled  for ninety days may be
     filled by a majority vote of the remaining  members of the Committee.  Each
     person  appointed  a  member  of the  Committee  shall  signify  his or her
     acceptance  by  filing  a  written  acceptance  with the  Secretary  of the
     Committee.

12.2 Committee  Officials.  The board of Directors  shall  designate  one of the
     members of the Committee as chairman and shall appoint a secretary who need
     not be a member of the Committee.  The Secretary  shall keep minutes of the
     Committee's proceedings and all data, records and documents relating to the
     Committee's  administration  of this Plan and any Plan Agreements  executed
     hereunder.  The  Committee  may appoint from its number such  subcommittees
     with such powers as the Committee  shall determine and may authorize one or
     more of its  members or any agent to execute or deliver any  instrument  or
     make any payment on behalf of the Committee.

12.3 Committee  Action.  All resolutions or other actions taken by the Committee
     shall be by the vote of a majority of those present at a meeting at which a
     majority of the members  are  present,  or in writing by all the members at
     the time in office if they act without a meeting.

12.4 Committee  Rules and Powers - General.  Subject to the  provisions  of this
     Plan, the Committee  shall from time to time establish  rules,  forms,  and
     procedures for the  administration  of this Plan. Such decisions,  actions,
     and records of the Committee  shall be conclusive and binding upon the Bank
     and all  persons  having or  claiming  to have any right or  interest in or
     under this Plan.

12.5 Reliance  on  Certificate,  etc..  The  members  of the  Committee  and the
     officers  and  directors  of the  Bank  shall  be  entitled  to rely on all
     certificates and reports made by any duly appointed accountants, and on all
     opinions given by any duly appointed legal counsel.  Such legal counsel may
     be counsel for the Bank.

12.6 Liability of Committee.  No member of the Committee shall be liable for any
     act or omission  of any other  member of the  Committee,  or for any act or
     omission  on his or her own  part,  excepting  only his or her own  willful
     misconduct.  The Bank shall  indemnify and save harmless each member of the
     Committee  against any and all expenses and liabilities  arising out of his
     or her membership on the Committee, excepting only expenses and liabilities
     arising out of his or her own willful misconduct.  Expenses against which a
     member of the  Committee  shall be  indemnified  hereunder  shall  include,
     without  limitation,  the  amount of any  settlement  or  judgment,  costs,
     counsel fees and related charges  reasonably  incurred in connection with a
     claim asserted or a proceeding brought or settlement thereof. The foregoing

                                       9
<PAGE>

     right of indemnification  shall be in addition to any other rights to which
     any such member may be entitled as a matter of law.

12.7 Determination of Benefits. In addition to the powers hereinabove specified,
     the Committee shall have the power to compute and certify,  under this Plan
     and any Plan  Agreement,  the amount and kind of benefits from time to time
     payable to  Participants  and their  Beneficiaries,  and to  authorize  all
     disbursements for such purposes.

12.8 Information to Committee. To enable the Committee to perform its functions,
     the Bank shall supply full and timely  information  to the Committee on all
     matters relating to the compensation of all Participants, their retirement,
     death or other  cause  for  termination  of  relationship,  and such  other
     pertinent facts as the Committee may require.

12.9 Manner and time of Payment of Benefits. The Committee shall have the power,
     in its sole and  absolute  discretion,  to change  the  manner  and time of
     payment of benefits to be made to a Participant  or his or her  Beneficiary
     from that set forth in the Participant's  Plan Agreement if requested to do
     so by such Participant or Beneficiary.

                                  ARTICLE XIII

                     ADOPTION OF PLAN BY SUBSIDIARY, PARENT

                       AFFILIATED OR ASSOCIATED COMPANIES

Any  corporation  that is a Subsidiary  or Parent may,  with the approval of the
Board of  Directors,  adopt this Plan and thereby come within the  definition of
Bank in Article I hereof.




                                   ARTICLE XIV

                                 REORGANIZATION

In  the  event  the  Bank  shall  be  merged,   consolidated,   reorganized,  or
substantially  sells all of its assets to another  corporation,  firm, or person
and such corporation,  firm, or person takes such action to terminate this Plan,
the  Participants  will be  entitled  to a minimum  of a benefit  payable at the
earlier of (i) the  Participant's  death or (ii)  attainment of his or her Early
Retirement  Date  or  (iii)  at  the  time  said  Director  ceases  his  or  her
relationship  or the Plan is  terminated  if such date is later  than his or her
Early  Retirement  Date.  Said Benefit  shall be  determined  by  improving  the
Participant's deferrals by the Moody's Average Corporate Bond Rate as compounded
on an annual basis with such amounts  being  computed  from the date of entry to
the  termination  date of Participant  and/or the  termination of the Plan. This
resulting  amount  payable in one hundred  and eighty  (180)  installments  will
continue to be improved by the Moody's Average Corporate Bond Rate as compounded
on an annual  basis at the time of the  termination  of  Participant  and/or the
termination  of the Plan  until the  Benefit is  completed  and will be the only
benefit to which such Participant is entitled.

                                   ARTICLE XV

                                  MISCELLANEOUS

15.1 Execution  of Receipts  and  Releases.  Any payment to any  Participant,  a
     Participant's legal  representative,  or Beneficiary in accordance with the
     provisions of this Plan or Plan Agreement  executed hereunder shall, to the
     extent thereof, be in full satisfaction of all claims hereunder against the
     Bank.  The Bank may require  such  Participant,  legal  representative,  or
     Beneficiary, as a condition precedent to such payment, to execute a receipt
     and release therefore in such form as it may determine.

                                       10
<PAGE>

15.2 No Guarantee of  Interests.  Neither the  Committee  nor any of its members
     guarantees  the  payment of any  amounts  which may be or become due to any
     person or entity under this Plan or any Plan Agreement executed  hereunder.
     The  liability of the Bank to make any payment  under this Plan or any Plan
     Agreement executed hereunder is limited to the then available assets of the
     Bank.

15.3 Bank  Records.  Records  of the  Bank as to a  Participant's  relationship,
     termination of relationship and the reason therefore  authorized  leaves of
     absence,  and compensation shall be conclusive on all persons and entities,
     unless determined to be incorrect.

15.4 Evidence.  Evidence  required  of  anyone  under  this  Plan  and any  Plan
     Agreement executed hereunder may be by certificate, affidavit, document, or
     other  information  which  the  person or  entity  acting  on it  considers
     pertinent and reliable,  and signed, made, or presented by the proper party
     or parties.

15.5 Notice. Any notice which shall be or may be given under this Plan or a Plan
     Agreement  executed  hereunder  shall be in writing  and shall be mailed by
     United States mail, postage prepaid.  If notice is to be given to the Bank,
     such notice shall be addressed to the Bank at:

                        The Peoples Bank & Trust Company
                                     Box 709
                              Tupelo, MS 38802-0709

     marked  to  the  attention  of  the  Secretary,  Administrative  Committee,
     Deferred Fee Plan; or, if notice to a Participant, addressed to the address
     shown on such Participant's Plan Agreement.

15.6 Change of Address.  Any party may, from time to time, change the address to
     which notices shall be mailed by giving written notice of such new address.

15.7 Effect of Provisions. The provisions of this Plan and of any Plan Agreement
     executed  hereunder  shall be binding upon the Bank and its  successors and
     assigns, and upon a Participant,  his or her Beneficiary,  assigns,  heirs,
     executors, and administrators.

15.8 Headings. The titles and headings of Articles and Sections are included for
     convenience  of  reference  only  and  are  not  to be  considered  in  the
     construction  of the  provisions  hereof  or any  Plan  Agreement  executed
     hereunder.

15.9 Governing Law. All questions arising with respect to this Plan and any Plan
     Agreement  executed  hereunder shall be determined by reference to the laws
     of the State of Mississippi, as in effect at the time of their adoption and
     execution, respectively.

                                    COMPLETE


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