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                                                                    EXHIBIT 10.3

                          AMENDMENT AND RESTATEMENT OF
                     EXECUTIVE SUPPLEMENTAL INCOME AGREEMENT

         This Agreement, effective as of October 1, 2002 (The "Effective Date"),
is made by and between The Peoples Bank, a state-chartered commercial bank with
its principal office located in Biloxi, Mississippi (hereinafter referred to as
the "Company"), and Chevis C. Swetman (hereinafter referred to as the
"Executive"). This Agreement hereby amends and restates, in its entirety, a
prior agreement, with an initial effective date of January 1, 1988 (hereinafter
the "Prior Agreement"), made by and between the Company and the Executive.

                                  INTRODUCTION

         The Company and the Executive entered into the Prior Agreement in order
to provide certain benefits to the Executive as an officer of the Company upon
the Executive's retirement.

         The Company and the Executive, by this current Agreement, desire to
amend and desire to restate the Prior Agreement, in its entirety, to include and
reflect the terms set forth herein and to incorporate the benefit accumulated to
date by the Executive under Prior Agreement.

         Therefore, in order to encourage the Executive to remain an employee of
the Company, the Company is willing to provide salary continuation benefits to
the Executive. The Company will pay the benefits from its general assets.

                                    AGREEMENT

         The Executive and the Company agree as follows:

                                    ARTICLE 1
                                   DEFINITIONS

         1.1      Definitions. Whenever used in this Agreement, the following
words and phrases shall have the meanings specified:

                  1.1.1    "Change of Control" means:

                  (a)      a change in the ownership of the capital stock of the
         Company or Peoples Financial Corporation (the "Holding Company"),
         whereby a corporation, person or group acting in concert (a "Person")
         as described in Section 14(d)(2) of the Securities Exchange Act of
         1934, as amended (the "Exchange Act"), holds or acquires, directly or
         indirectly, beneficial ownership (within the meaning of Rule 13d-3
         promulgated under the Exchange Act) of a number of shares of capital
         stock of the Company or Holding Company which constitutes fifty percent
         (50%) or more of the combined voting power of the Company's or Holding
         Company's outstanding capital stock then entitled to vote generally in
         the election of directors; or

                  (b)      the persons who were members of the Board of
         Directors of the Company or Holding Company immediately prior to a
         tender offer, exchange offer, contested election or any combination of
         the foregoing, cease to constitute a majority of such Board of
         Directors; or

                  (c)      the adoption by the Board of Directors of the Company
         or of the Holding Company of a merger, consolidation or reorganization
         plan involving the Company or Holding Company in which the Company or
         the Holding Company is not the surviving entity, or a sale of all or
         substantially all of the assets of the Company or Holding Company. For
         purposes of this Agreement, a sale of all or substantially all of the
         assets of the Company or Holding Company shall be deemed to occur if
         any Person acquires (or during the 12-month period ending on the date
         of the most recent acquisition by such Person, has acquired) gross
         assets of the Company or Holding Company that have an aggregate fair
         market value equal to fifty percent (50%) of the fair market value of
         all of the respective gross assets of the Company or Holding Company
         immediately prior to such acquisition or acquisitions; or

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                  (d)      a tender offer or exchange offer is made by any
         Person which, if successfully completed, would result in such Person
         beneficially owning (within the meaning of Rule 13d-3 promulgated under
         the Exchange Act) either fifty percent (50%) or more of the Company's
         or Holding Company's outstanding shares of Common Stock or shares of
         capital stock having fifty percent (50%) or more the combined voting
         power of the Company's or Holding Company's then outstanding capital
         stock (other than an offer made by the Company or the Holding Company),
         and sufficient shares are acquired under the offer to cause such person
         to own fifty percent (50%) or more of the voting power; or

                  (e)      any other transactions or series of related
         transactions occurring which have substantially the same effect as the
         transactions specified in any of the preceding clauses of this
         Subsection (1.1.1).

                           1.1.1.1  "Permitted Transfers" means that a
                  Shareholder, as hereinafter defined in Subsection 1.1.10 may
                  make the following transfers and such transfers shall be
                  deemed not to be a Change of Control under Subsection 1.1.1:

                                    (a)      To any trust, company, or
                                             partnership created solely for the
                                             benefit of any Shareholder or any
                                             spouse of or any lineal descendant
                                             of any Shareholder;

                                    (b)      To any individual or entity by bona
                                             fide gift;

                                    (c)      To any spouse or former spouse of
                                             any Shareholder pursuant to the
                                             terms of a decree of divorce;

                                    (d)      To any officer or employee of the
                                             Company pursuant to any incentive
                                             stock option plan established by
                                             the Shareholder;

                                    (e)      To any family member of any
                                             Shareholder;

                                    (f)      After receipt of any necessary
                                             regulatory approvals, to any
                                             company or partnership, including,
                                             but not limited to, a family
                                             limited partnership, a majority of
                                             the stock or interests of which
                                             company or partnership are owned by
                                             any of the Shareholder; or

                                    (g)      To any existing Shareholder as of
                                             the Effective Date.

                  1.1.2    "Code" means the Internal Revenue Code of 1986, as
amended. References to a Code section shall be deemed to be to that section as
it now exists and to any successor provision.

                  1.1.3    "Disability" means the Executive's suffering a
sickness, accident or injury which has been determined by the carrier of any
individual or group long-term disability insurance policy carried by the Company
covering the Executive, or, if no such long-term disability policy exists, then
as determined by the Social Security Administration, to be a disability
rendering the Executive totally and permanently disabled. The Executive must
submit proof to the Company of the carrier's or Social Security Administration's
determination upon the request of the Company.

                  1.1.4    "Discount Rate" means eight percent (8%).

                  1.1.5    "Early Retirement Date" means the date the
Executive: (i) attains at least age fifty-five (55); (ii) attains at least his
fifteen (15) year anniversary of employment at the Company; and, (iii) has
participated in the Prior Agreement, including this amendment and restatement of
the Prior Agreement, for five (5) years.

                  1.1.6    "Executive Benefit Accrual" means the amount accrued
as a liability to the Executive by the Company by virtue of the terms of the
Prior Agreement through the Effective Date and by virtue of the terms of this
Agreement under Generally Accepted Accounting Principles (GAAP).

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                  1.1.7    "Normal Retirement Date" means the date the Executive
attains age sixty-five (65).

                  1.1.8    "Plan Year" means each twelve (12) consecutive month
period commencing on the Effective Date. For example, the twelve month period
commencing on the date the Company and the Executive execute this Agreement
shall constitute then first Plan Year. The twelve month period following the
first Plan Year shall constitute the second Plan Year and so on.

                  1.1.9    "Salary" means the base annual amount, without bonus
or other benefits, paid to the Executive by the Company as of the earlier to
occur of: (i) Termination of Employment; or, (ii) the Company' termination of
the Agreement under Section 7.3.

                  1.1.10   "Shareholder" means the existing owners of all issued
and outstanding stock of the Company or Holding Company as of the date this
Agreement is signed.

                  1.1.11   "Termination of Employment" or "Terminates
Employment" means the Executive's ceasing to be employed by the Company for any
reason whatsoever, voluntary or involuntary, other than by reason of an approved
leave of absence.

                                    ARTICLE 2
                                LIFETIME BENEFITS

         2.1      Normal Retirement Benefit. If Termination of Employment occurs
on or after the Normal Retirement Date, the Company shall pay to the Executive
the benefit described in this Section 2.1.

                  2.1.1    Amount of Benefit. The benefit under this Section 2.1
         is sixty-seven percent (67%) of the Executive's Salary.

                  2.1.2    Payment of Benefit. The Company shall pay the annual
         benefit determined under subsection 2.1.1 for a period of fifteen (15)
         years, payable monthly (one-twelfth [1/12th] of the annual benefit)
         beginning on the last day of the month commencing with the month
         following Termination of Employment. The monthly payments under this
         subsection 2.1.2 shall total one hundred eighty (180) substantially
         equal payments over a period of one hundred eighty (180) months.

         2.2      Early Retirement Benefit. If Termination of Employment occurs
on or after the Early Retirement Date and prior to the Normal Retirement Date,
the Company shall pay to the Executive the benefit described in this Section 2.2
in lieu of any other benefit under this Agreement.

                  2.2.1    Amount of Benefit. The benefit under this Section 2.2
         is the annual benefit set forth in subsection 2.1.1 reduced by one-half
         of a percent (0.5%) for each month or partial month between Termination
         of Employment and the Normal Retirement Date. By way of example, assume
         the Executive elects to retire at age 59 1/2, which is 66 months prior
         to the Normal Retirement Date. Assume further the annual benefit under
         subsection 2.1.1 equals thirty percent (30%) of Salary. Based on these
         assumptions the percentage of Salary payable under this subsection
         2.2.1 would equal 30% times 67% (100% minus the product of 66 times
         0.5%). The resulting annual benefit under this subsection 2.2.1, based
         on the assumptions in this example, would equal 20.10% (30% multiplied
         by 67%) of Salary.

                  2.2.2    Payment of Benefit. The Company shall pay the annual
         benefit determined under subsection 2.2.1 for a period of fifteen (15)
         years, payable monthly (one-twelfth [1/12th] of the annual benefit)
         beginning on the last day of the month commencing with the month
         following Termination of Employment. The monthly payments under this
         subsection 2.2.2 shall total one hundred eighty (180) substantially
         equal payments over a period of one hundred eighty (180) months.

         2.3      Termination of Employment Prior to the Early Retirement Date
or Prior to the Normal Retirement Date. Subject to the provisions of Section
2.5, if Termination of Employment occurs, for reasons other than death or
Disability, before either the Early Retirement Date or prior to the Normal
Retirement Date, the Company shall

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pay to the Executive the benefit described in this Section 2.3.

                  2.3.1    Amount of Benefit. The benefit under this Section 2.3
         is the Executive Benefit Accrual as of Termination of Employment.

                  2.3.2    Payment of Benefit. The Company shall pay to the
         Executive the benefit set forth in subsection 2.3.1, in lieu of any
         other benefit under this Agreement, in a single lump-sum within sixty
         (60) days of Termination of Employment.

         2.4      Disability Benefit. If Termination of Employment due to a
Disability occurs prior to the Normal Retirement Date, the Company shall pay to
the Executive the benefit described in this Section 2.4.

                  2.4.1    Amount of Benefit. Subject to the provisions of
         Section 2.6 and Section 5.3, the annual benefit under this Section 2.4
         is the annual benefit set forth in subsection 2.1.1.

                  2.4.2    Payment of Benefit. The Company shall pay the annual
         benefit determined under subsection 2.4.1, in lieu of any other benefit
         under this Agreement, for a period of fifteen (15) years, payable
         monthly (one-twelfth [1/12th] of the annual benefit) beginning on the
         last day of the month commencing with the month following the
         Executive's Normal Retirement Date. The monthly payments under this
         subsection 2.4.2 shall total one hundred eighty (180) substantially
         equal payments over a period of one hundred eighty (180) months.

                  2.4.3    Death During Disability. In the event the Executive
         dies subsequent to Termination of Employment due to Disability and
         prior to receiving any payment under this Agreement, the Company shall
         pay the Executive's designated beneficiary the annual benefit set forth
         in subsection 3.1.1 and in the manner set forth in Section 3.1.2 in
         lieu of any other benefit under this Agreement.

         2.5      Change of Control Benefit. Upon a Change of Control prior to
Termination of Employment, the Company, subject to the provisions of Section 2.6
and Section 5.3, shall pay to the Executive the benefit described in this
Section 2.5 in lieu of any other benefit under this Agreement.

                  2.5.1    Amount of Benefit. The benefit under this Section 2.5
         is the present value of the payments under Section 2.1, assuming, for
         purposes of determining present value under this subsection 2.5.1 only,
         that the Executive was entitled to benefit payments under Section 2.1
         at Termination of Employment. In determining this present value the
         Company shall utilize the Discount Rate.

                  2.5.2    Payment of Benefit. The Company shall pay to the
         Executive the benefit set forth in subsection 2.5.1, in lieu of any
         other benefit under this Agreement, in a single lump-sum within sixty
         (60) days of Termination of Employment.

         2.6      Excess Parachute Payment. Notwithstanding any provision of
this Agreement to the contrary, the Company shall not pay any benefit under this
Agreement to the extent the benefit would be a non-deductible parachute payment
under Section 280G of the Code.

                                    ARTICLE 3
                                 DEATH BENEFITS

         3.1.     Death During Active Service. The Company shall pay to the
Executive's beneficiary the benefit described in this Section 3.1 if the
Executive dies: (i) while employed by the Company; or, (ii) after Termination of
Employment due to Disability prior to the Normal Retirement Date.

                  3.1.1.   Amount of Benefit. The annual benefit under this
         Section 3.1 is the annual benefit set forth in Section 2.1.1.

                  3.1.2.   Payment of Benefit. The Company shall pay the annual
         benefit determined under

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         subsection 3.1.1, in lieu of any other benefit under this Agreement,
         for a period of fifteen (15) years, payable monthly (one-twelfth
         [1/12th] of the annual benefit) beginning on the last day of the month
         commencing with the month following the Executive's death. The monthly
         payments under this subsection 3.1.2 shall total one hundred eighty
         (180) substantially equal payments over a period of one hundred eighty
         (180) months.

         3.2.     Death During Benefit Period. If the Executive dies after
benefit payments have commenced under section of this Agreement, but before
receiving all such payments, the Company shall pay the remaining benefits to the
Executive's beneficiary at the same time and in the same amounts that would have
been paid to the Executive had the Executive survived. If the Executive's
designated beneficiary dies after benefit payments have commenced under this
Agreement but before receiving all such payments, the Company shall pay the
present value of the remaining benefits due under this Agreement, utilizing the
a discount rate of seven and one-half percent (7.5%) to determine the present
value of the remaining payments, to the estate of the Executive's designated
beneficiary in a single lump sum within sixty (60) days of the death of the
Executive's designated beneficiary.

                                    ARTICLE 4
                                  BENEFICIARIES

         4.1      Beneficiary Designations. The Executive shall designate a
beneficiary by filing with the Company a written designation of beneficiary on a
form substantially similar to the form attached as Exhibit A. The Executive may
revoke or modify the designation at any time by filing a new designation.
However, designations will only be effective if signed by the Executive and
accepted by the Company during the Executive's lifetime. The Executive's
beneficiary designation shall be deemed automatically revoked if the beneficiary
predeceases the Executive, or if the Executive names a spouse as beneficiary and
the marriage is subsequently dissolved. If the Executive dies without a valid
beneficiary designation, all payments shall be made to the Executive's surviving
spouse, if any, and if none, to the Executive's surviving children and the
descendants of any deceased child by right of representation, and if no children
or descendants survive, to the Executive's estate.

         4.2      Facility of Payment. If a benefit is payable to a minor, to a
person declared incompetent, or to a person incapable of handling the
disposition of his or her property, the Company may pay such benefit to the
guardian, legal representative or person having the care or custody of such
minor, incompetent person or incapable person, or to a custodian selected by the
Company under the Mississippi Uniform Transfers to Minors Act for the benefit of
such minor. The Company may require proof of incompetency, minority or
guardianship as it may deem appropriate prior to distribution of the benefit.
Such distribution shall completely discharge the Company from all liability with
respect to such benefit.

                                    ARTICLE 5
                               GENERAL LIMITATIONS

         Notwithstanding any provision of this Agreement to the contrary, the
Company shall not pay any benefit under this Agreement if any of the following
occur:

         5.1      Termination for Cause. If the Company terminates the
Executive's employment for any of the following reasons:

                  5.1.1    Conviction in a court of competent jurisdiction of a
         felony; or

                  5.1.2    Fraud, dishonesty, or embezzlement. Also, any willful
         violation of any law or willful violation of a significant Company
         policy committed in connection with the Executive's employment, with
         either resulting in an adverse effect on the Company.

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         5.2      Suicide. No benefits shall be payable if the Executive commits
suicide within two (2) years after the date of this Agreement, or if the
Executive has made any material misstatement of fact on any application for life
insurance purchased by the Company.

         5.3      Golden Parachute Payment. Notwithstanding any provision of
this Agreement to the contrary, the Company shall not be required to pay any
benefit under this Agreement if, upon the advice of counsel, the Company
determines that the payment of such benefit would be prohibited by 12 C.F.R.
Part 359 or any successor regulations regarding employee compensation
promulgated by any regulatory agency having jurisdiction over the Company or its
affiliates or to the extent the benefit would be a non-deductible excess
parachute payment under Section 280G of the Code. To the extent possible, such
benefit payment shall be proportionately reduced to allow payment within the
fullest extent permissible under applicable law.

                                    ARTICLE 6
                          CLAIMS AND REVIEW PROCEDURES

         6.1      Claims Procedure. Any individual ("Claimant") who has not
received benefits under the Plan that he or she believes should be paid shall
make a claim for such benefits as follows:

                  6.1.1    Initiation - Written Claim. The Claimant initiates a
         claim by submitting to the Company a written claim for the benefits.

                  6.1.2    Timing of Company Response. The Company shall respond
         to such Claimant within 90 days after receiving the claim. If the
         Company determines that special circumstances require additional time
         for processing the claim, the Company can extend the response period by
         an additional 90 days by notifying the Claimant in writing, prior to
         the end of the initial 90-day period, that an additional period is
         required. The notice of extension must set forth the special
         circumstances and the date by which the Company expects to render its
         decision.

                  6.1.3    Notice of Decision. If the Company denies part or all
         of the claim, the Company shall notify the Claimant in writing of such
         denial. The Company shall write the notification in a manner calculated
         to be understood by the Claimant. The notification shall set forth:

                           (a)      The specific reasons for the denial,

                           (b)      A reference to the specific provisions of
                  the Plan on which the denial is based,

                           (c)      A description of any additional information
                  or material necessary for the Claimant to perfect the claim
                  and an explanation of why it is needed,

                           (d)      An explanation of the Plan's review
                  procedures and the time limits applicable to such procedures,
                  and

                           (e)      A statement of the Claimant's right to bring
                  a civil action under ERISA Section 502(a) following an adverse
                  benefit determination on review.

         6.2      Review Procedure. If the Company denies part or all of the
claim, the Claimant shall have the opportunity for a full and fair review by the
Company of the denial, as follows:

                  6.2.1    Initiation - Written Request. To initiate the review,
         the Claimant, within 60 days after receiving the Company's notice of
         denial, must file with the Company a written request for review.

                  6.2.2    Additional Submissions - Information Access. The
         Claimant shall then have the opportunity to submit written comments,
         documents, records and other information relating to the claim. The
         Company shall also provide the Claimant, upon request and free of
         charge, reasonable access to, and copies of, all documents, records and
         other information relevant (as defined in applicable ERISA regulations)
         to the Claimant's claim for benefits.

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                  6.2.3    Considerations on Review. In considering the review,
         the Company shall take into account all materials and information the
         Claimant submits relating to the claim, without regard to whether such
         information was submitted or considered in the initial benefit
         determination.

                  6.2.4    Timing of Company Response. The Company shall respond
         in writing to such Claimant within 60 days after receiving the request
         for review. If the Company determines that special circumstances
         require additional time for processing the claim, the Company can
         extend the response period by an additional 60 days by notifying the
         Claimant in writing, prior to the end of the initial 60-day period,
         that an additional period is required. The notice of extension must set
         forth the special circumstances and the date by which the Company
         expects to render its decision.

                  6.2.5    Notice of Decision. The Company shall notify the
         Claimant in writing of its decision on review. The Company shall write
         the notification in a manner calculated to be understood by the
         Claimant. The notification shall set forth:

                           (a)      The specific reasons for the denial,

                           (b)      A reference to the specific provisions of
                  the Plan on which the denial is based,

                           (c)      A statement that the Claimant is entitled to
                  receive, upon request and free of charge, reasonable access
                  to, and copies of, all documents, records and other
                  information relevant (as defined in applicable ERISA
                  regulations) to the Claimant's claim for benefits, and

                           (d)      A statement of the Claimant's right to bring
                  a civil action under ERISA Section 502(a).

                                    ARTICLE 7
                           AMENDMENTS AND TERMINATION

         7.1      Amendment or Termination of Agreement. This Agreement may be
amended or terminated only by at a written agreement signed by the Company and
the Executive.

         7.2      Termination by Operation of Law. Notwithstanding the previous
paragraph in this Article 7, the Company may amend or terminate this Agreement
at any time if, pursuant to legislative, judicial or regulatory action,
continuation of the Agreement would (i) cause benefits to be taxable to the
Executive prior to actual receipt, or (ii) result in significant financial
penalties or other significantly detrimental ramifications to the Company (other
than the financial impact of paying the benefits). In the event of a termination
of the Agreement under this Section 7.2, the Company shall pay to the Executive
a single lump-sum payment equaling one hundred percent (100%) of the Executive
Benefit Accrual one hundred eighty (180) days from termination of the Agreement.

         7.3      Termination by Company. The Company may terminate this
Agreement at any time. In the event the Company terminates this Agreement, for
reasons other than those set forth in Section 7.1 or Section 7.2, the Company,
subject to Section 2.6 and Section 5.3, shall pay the Executive the benefit
provided in subsection Section 2.5, assuming, for purposes of this Section 7.3
only, that upon Termination of the Agreement by the Company under this Section
7.3 Termination of Employment occurred, even if the Executive continues
employment with the Company after Termination of the Agreement under this
Section 7.3.

                                    ARTICLE 8
                                  MISCELLANEOUS

         8.1      Binding Effect. This Agreement shall bind the Executive and
the Company, and their beneficiaries, survivors, executors, administrators and
permitted transferees.

         8.2      No Guaranty of Employment. This Agreement is not an employment
policy or contract. It does not give the Executive the right to remain an
employee of the Company, nor does it interfere with the Company's

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right to discharge the Executive. It also does not require the Executive to
remain an employee nor interfere with the Executive's right to terminate
employment at any time.

         8.3      Non-Transferability. Benefits under this Agreement cannot be
sold, transferred, assigned, pledged, attached or encumbered in any manner,
except in accordance with Article 4 with respect to designation of
beneficiaries.

         8.4      Tax Withholding. The Company shall withhold any taxes that are
required to be withheld from the benefits provided under this Agreement.

         8.5      Applicable Law. The Agreement and all rights hereunder shall
be governed by the laws of the State of Mississippi, except to the extent
preempted by the laws of the United States of America.

         8.6      Unfunded Arrangement. The Executive and beneficiary are
general unsecured creditors of the Company for the payment of benefits under
this Agreement. The benefits represent the mere promise by the Company to pay
such benefits. The rights to benefits are not subject in any manner to
anticipation, alienation, sale, transfer, assignment, pledge, encumbrance,
attachment, or garnishment by creditors. Any insurance on the Executive's life
is a general asset of the Company to which the Executive and beneficiary have no
preferred or secured claim.

         8.7      Severability. Without limitation of any other section
contained herein, in case any one or more provisions contained in this Agreement
shall for any reason be held to be invalid, illegal or unenforceable in any
other respect, such invalidity, illegality or unenforceability shall not affect
the other provisions of this Agreement. In the event any one or more of the
provisions found in the Agreement shall be held to be invalid, illegal or
unenforceable by any governmental regulatory agency or court of competent
jurisdiction, this Agreement shall be construed as if such invalid, illegal or
unenforceable provision had never been a part of this Agreement and such
provision shall be deemed substituted by such other provisions as will most
nearly accomplish the intent of the parties to the extent permitted by
applicable law.

         8.8      Administration. The Company shall have powers which are
necessary to administer this Agreement, including but not limited to:

                  (a)      Interpreting the provisions of the Agreement;

                  (b)      Establishing and revising the method of accounting
         for the Agreement;

                  (c)      Maintaining a record of benefit payments; and

                  (d)      Establishing rules and prescribing any forms
         necessary or desirable to administer the Agreement.

         8.9      Named Fiduciary. The Company shall be the named fiduciary and
plan administrator under this Agreement. It may delegate to others certain
aspects of the management and operational responsibilities including the
employment of advisors and the delegation of ministerial duties to qualified
individuals.

         8.10     Full Obligation. Notwithstanding any provision to the
contrary, when the Company has paid either a Lifetime Benefit or a Death Benefit
as appropriate under any section of the Agreement, the Company has completed its
obligation to the Executive.

         IN WITNESS WHEREOF, the Executive and a duly authorized Company officer
have signed this Agreement as of the date indicated below.

COMPANY:                                             EXECUTIVE:
THE PEOPLES BANK

By: _________________________________       __________________________________

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                                                     CHEVIS C. SWETMAN

Its: _________________________________

Date: _________________                              Date:    _________________

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                                    EXHIBIT A
                             BENEFICIARY DESIGNATION

I, _____________________________, designate the following as beneficiary of any
death benefits payable under the Amendment and Restatement of Executive
Supplemental Income Agreement between myself and The Peoples Bank:

Primary Beneficiary

Name                                       Relationship

Address

Contingent Beneficiary

Name                                       Relationship

Address

NOTE: TO NAME A TRUST AS BENEFICIARY, PLEASE PROVIDE THE NAME OF THE TRUSTEE AND
THE EXACT DATE OF THE TRUST AGREEMENT.

I understand that I may change these beneficiary designations by filing a new
written designation with the Company. I further understand that the designations
will be automatically revoked if the beneficiary predeceases me, or, if I have
named my spouse as beneficiary, in the event of the dissolution of our marriage.

                                                            Date

Accepted by the Company this _____ day of _____________, 20___

By:

Title:

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                          AMENDMENT AND RESTATEMENT OF
                     EXECUTIVE SUPPLEMENTAL INCOME AGREEMENT

         This Agreement, effective as of October 1, 2002 (The "Effective Date"),
is made by and between The Peoples Bank, a state-chartered commercial bank with
its principal office located in Biloxi, Mississippi (hereinafter referred to as
the "Company"), and Ira W. Carpenter, Jr. (hereinafter referred to as the
"Executive"). This Agreement hereby amends and restates, in its entirety, a
prior agreement, with an initial effective date of January 1, 1988 (hereinafter
the "Prior Agreement"), made by and between the Company and the Executive.

                                  INTRODUCTION

         The Company and the Executive entered into the Prior Agreement in order
to provide certain benefits to the Executive as an officer of the Company upon
the Executive's retirement.

         The Company and the Executive, by this current Agreement, desire to
amend and desire to restate the Prior Agreement, in its entirety, to include and
reflect the terms set forth herein and to incorporate the benefit accumulated to
date by the Executive under Prior Agreement.

         Therefore, in order to encourage the Executive to remain an employee of
the Company, the Company is willing to provide salary continuation benefits to
the Executive. The Company will pay the benefits from its general assets.

                                    AGREEMENT

         The Executive and the Company agree as follows:

                                    ARTICLE 1
                                   DEFINITIONS

         1.1      Definitions. Whenever used in this Agreement, the following
words and phrases shall have the meanings specified:

                  1.1.1    "Change of Control" means:

                  (a)      a change in the ownership of the capital stock of the
         Company or Peoples Financial Corporation (the "Holding Company"),
         whereby a corporation, person or group acting in concert (a "Person")
         as described in Section 14(d)(2) of the Securities Exchange Act of
         1934, as amended (the "Exchange Act"), holds or acquires, directly or
         indirectly, beneficial ownership (within the meaning of Rule 13d-3
         promulgated under the Exchange Act) of a number of shares of capital
         stock of the Company or Holding Company which constitutes fifty percent
         (50%) or more of the combined voting power of the Company's or Holding
         Company's outstanding capital stock then entitled to vote generally in
         the election of directors; or

                  (b)      the persons who were members of the Board of
         Directors of the Company or Holding Company immediately prior to a
         tender offer, exchange offer, contested election or any combination of
         the foregoing, cease to constitute a majority of such Board of
         Directors; or

                  (c)      the adoption by the Board of Directors of the Company
         or of the Holding Company of a merger, consolidation or reorganization
         plan involving the Company or Holding Company in which the Company or
         the Holding Company is not the surviving entity, or a sale of all or
         substantially all of the assets of the Company or Holding Company. For
         purposes of this Agreement, a sale of all or substantially all of the
         assets of the Company or Holding Company shall be deemed to occur if
         any Person acquires (or during the 12-month period ending on the date
         of the most recent acquisition by such Person, has acquired) gross
         assets of the Company or Holding Company that have an aggregate fair
         market value equal to fifty percent (50%) of the fair market value of
         all of the respective gross assets of the Company or Holding Company
         immediately prior to such acquisition or acquisitions; or

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<PAGE>

                  (d)      a tender offer or exchange offer is made by any
         Person which, if successfully completed, would result in such Person
         beneficially owning (within the meaning of Rule 13d-3 promulgated under
         the Exchange Act) either fifty percent (50%) or more of the Company's
         or Holding Company's outstanding shares of Common Stock or shares of
         capital stock having fifty percent (50%) or more the combined voting
         power of the Company's or Holding Company's then outstanding capital
         stock (other than an offer made by the Company or the Holding Company),
         and sufficient shares are acquired under the offer to cause such person
         to own fifty percent (50%) or more of the voting power; or

                  (e)      any other transactions or series of related
         transactions occurring which have substantially the same effect as the
         transactions specified in any of the preceding clauses of this
         Subsection (1.1.1).

                           1.1.1.1  "Permitted Transfers" means that a
                  Shareholder, as hereinafter defined in Subsection 1.1.10 may
                  make the following transfers and such transfers shall be
                  deemed not to be a Change of Control under Subsection 1.1.1:

                                    (a)      To any trust, company, or
                                             partnership created solely for the
                                             benefit of any Shareholder or any
                                             spouse of or any lineal descendant
                                             of any Shareholder;

                                    (b)      To any individual or entity by bona
                                             fide gift;

                                    (c)      To any spouse or former spouse of
                                             any Shareholder pursuant to the
                                             terms of a decree of divorce;

                                    (d)      To any officer or employee of the
                                             Company pursuant to any incentive
                                             stock option plan established by
                                             the Shareholder;

                                    (e)      To any family member of any
                                             Shareholder;

                                    (f)      After receipt of any necessary
                                             regulatory approvals, to any
                                             company or partnership, including,
                                             but not limited to, a family
                                             limited partnership, a majority of
                                             the stock or interests of which
                                             company or partnership are owned by
                                             any of the Shareholder; or

                                    (g)      To any existing Shareholder as of
                                             the Effective Date.

         1.1.2    "Code" means the Internal Revenue Code of 1986, as amended.
References to a Code section shall be deemed to be to that section as it now
exists and to any successor provision.

         1.1.3    "Disability" means the Executive's suffering a sickness,
accident or injury which has been determined by the carrier of any individual or
group long-term disability insurance policy carried by the Company covering the
Executive, or, if no such long-term disability policy exists, then as determined
by the Social Security Administration, to be a disability rendering the
Executive totally and permanently disabled. The Executive must submit proof to
the Company of the carrier's or Social Security Administration's determination
upon the request of the Company.

         1.1.4    "Discount Rate" means eight percent (8%).

         1.1.5    "Early Retirement Date" means the date the Executive: (i)
attains at least age fifty-five (55); (ii) attains at least his fifteen (15)
year anniversary of employment at the Company; and, (iii) has participated in
the Prior Agreement, including this amendment and restatement of the Prior
Agreement, for five (5) years.

         1.1.6    "Executive Benefit Accrual" means the amount accrued as a
liability to the Executive by the Company by virtue of the terms of the Prior
Agreement through the Effective Date and by virtue of the terms of this
Agreement under Generally Accepted Accounting Principles (GAAP).

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         1.1.7    "Normal Retirement Date" means the date the Executive attains
age sixty-five (65).

         1.1.8    "Plan Year" means each twelve (12) consecutive month period
commencing on the Effective Date. For example, the twelve month period
commencing on the date the Company and the Executive execute this Agreement
shall constitute then first Plan Year. The twelve month period following the
first Plan Year shall constitute the second Plan Year and so on.

         1.1.9    "Salary" means the base annual amount, without bonus or other
benefits, paid to the Executive by the Company as of the earlier to occur of:
(i) Termination of Employment; or, (ii) the Company' termination of the
Agreement under Section 7.3.

         1.1.10   "Shareholder" means the existing owners of all issued and
outstanding stock of the Company or Holding Company as of the date this
Agreement is signed.

         1.1.11   "Termination of Employment" or "Terminates Employment" means
the Executive's ceasing to be employed by the Company for any reason whatsoever,
voluntary or involuntary, other than by reason of an approved leave of absence.

                                    ARTICLE 2
                                LIFETIME BENEFITS

         2.1      Normal Retirement Benefit. If Termination of Employment occurs
on or after the Normal Retirement Date, the Company shall pay to the Executive
the benefit described in this Section 2.1.

                  2.1.1    Amount of Benefit. The benefit under this Section 2.1
         is fifty-eight percent (58%) of the Executive's Salary.

                  2.1.2    Payment of Benefit. The Company shall pay the annual
         benefit determined under subsection 2.1.1 for a period of fifteen (15)
         years, payable monthly (one-twelfth [1/12th] of the annual benefit)
         beginning on the last day of the month commencing with the month
         following Termination of Employment. The monthly payments under this
         subsection 2.1.2 shall total one hundred eighty (180) substantially
         equal payments over a period of one hundred eighty (180) months.

         2.2      Early Retirement Benefit. If Termination of Employment occurs
on or after the Early Retirement Date and prior to the Normal Retirement Date,
the Company shall pay to the Executive the benefit described in this Section 2.2
in lieu of any other benefit under this Agreement.

                  2.2.1    Amount of Benefit. The benefit under this Section 2.2
         is the annual benefit set forth in subsection 2.1.1 reduced by one-half
         of a percent (0.5%) for each month or partial month between Termination
         of Employment and the Normal Retirement Date. By way of example, assume
         the Executive elects to retire at age 59 -1/2, which is 66 months prior
         to the Normal Retirement Date. Assume further the annual benefit under
         subsection 2.1.1 equals thirty percent (30%) of Salary. Based on these
         assumptions the percentage of Salary payable under this subsection
         2.2.1 would equal 30% times 67% (100% minus the product of 66 times
         0.5%). The resulting annual benefit under this subsection 2.2.1, based
         on the assumptions in this example, would equal 20.10% (30% multiplied
         by 67%) of Salary.

                  2.2.2    Payment of Benefit. The Company shall pay the annual
         benefit determined under subsection 2.2.1 for a period of fifteen (15)
         years, payable monthly (one-twelfth [1/12th] of the annual benefit)
         beginning on the last day of the month commencing with the month
         following Termination of Employment. The monthly payments under this
         subsection 2.2.2 shall total one hundred eighty (180) substantially
         equal payments over a period of one hundred eighty (180) months.

         2.3      Termination of Employment Prior to the Early Retirement Date
or Prior to the Normal Retirement Date. Subject to the provisions of Section
2.5, if Termination of Employment occurs, for reasons other than death or
Disability, before either the Early Retirement Date or prior to the Normal
Retirement Date, the Company shall

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pay to the Executive the benefit described in this Section 2.3.

                  2.3.1    Amount of Benefit. The benefit under this Section 2.3
         is the Executive Benefit Accrual as of Termination of Employment.

                  2.3.2    Payment of Benefit. The Company shall pay to the
         Executive the benefit set forth in subsection 2.3.1, in lieu of any
         other benefit under this Agreement, in a single lump-sum within sixty
         (60) days of Termination of Employment.

         2.4      Disability Benefit. If Termination of Employment due to a
Disability occurs prior to the Normal Retirement Date, the Company shall pay to
the Executive the benefit described in this Section 2.4.

                  2.4.1    Amount of Benefit. Subject to the provisions of
         Section 2.6 and Section 5.3, the annual benefit under this Section 2.4
         is the annual benefit set forth in subsection 2.1.1.

                  2.4.2    Payment of Benefit. The Company shall pay the annual
         benefit determined under subsection 2.4.1, in lieu of any other benefit
         under this Agreement, for a period of fifteen (15) years, payable
         monthly (one-twelfth [1/12th] of the annual benefit) beginning on the
         last day of the month commencing with the month following the
         Executive's Normal Retirement Date. The monthly payments under this
         subsection 2.4.2 shall total one hundred eighty (180) substantially
         equal payments over a period of one hundred eighty (180) months.

                  2.4.3    Death During Disability. In the event the Executive
         dies subsequent to Termination of Employment due to Disability and
         prior to receiving any payment under this Agreement, the Company shall
         pay the Executive's designated beneficiary the annual benefit set forth
         in subsection 3.1.1 and in the manner set forth in Section 3.1.2 in
         lieu of any other benefit under this Agreement.

         2.5      Change of Control Benefit. Upon a Change of Control prior to
Termination of Employment, the Company, subject to the provisions of Section 2.6
and Section 5.3, shall pay to the Executive the benefit described in this
Section 2.5 in lieu of any other benefit under this Agreement.

                  2.5.1    Amount of Benefit. The benefit under this Section 2.5
         is the present value of the payments under Section 2.1, assuming, for
         purposes of determining present value under this subsection 2.5.1 only,
         that the Executive was entitled to benefit payments under Section 2.1
         at Termination of Employment. In determining this present value the
         Company shall utilize the Discount Rate.

                  2.5.2    Payment of Benefit. The Company shall pay to the
         Executive the benefit set forth in subsection 2.5.1, in lieu of any
         other benefit under this Agreement, in a single lump-sum within sixty
         (60) days of Termination of Employment.

         2.6      Excess Parachute Payment. Notwithstanding any provision of
this Agreement to the contrary, the Company shall not pay any benefit under this
Agreement to the extent the benefit would be a non-deductible parachute payment
under Section 280G of the Code.

                                    ARTICLE 3
                                 DEATH BENEFITS

         3.1.     Death During Active Service. The Company shall pay to the
Executive's beneficiary the benefit described in this Section 3.1 if the
Executive dies: (i) while employed by the Company; or, (ii) after Termination of
Employment due to Disability prior to the Normal Retirement Date.

                  3.1.1.   Amount of Benefit. The annual benefit under this
         Section 3.1 is the annual benefit set forth in Section 2.1.1.

                  3.1.2.   Payment of Benefit. The Company shall pay the annual
         benefit determined under

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<PAGE>

         subsection 3.1.1, in lieu of any other benefit under this Agreement,
         for a period of fifteen (15) years, payable monthly (one-twelfth
         [1/12th] of the annual benefit) beginning on the last day of the month
         commencing with the month following the Executive's death. The monthly
         payments under this subsection 3.1.2 shall total one hundred eighty
         (180) substantially equal payments over a period of one hundred eighty
         (180) months.

         3.2.     Death During Benefit Period. If the Executive dies after
benefit payments have commenced under section of this Agreement, but before
receiving all such payments, the Company shall pay the remaining benefits to the
Executive's beneficiary at the same time and in the same amounts that would have
been paid to the Executive had the Executive survived. If the Executive's
designated beneficiary dies after benefit payments have commenced under this
Agreement but before receiving all such payments, the Company shall pay the
present value of the remaining benefits due under this Agreement, utilizing the
a discount rate of seven and one-half percent (7.5%) to determine the present
value of the remaining payments, to the estate of the Executive's designated
beneficiary in a single lump sum within sixty (60) days of the death of the
Executive's designated beneficiary.

                                    ARTICLE 4
                                  BENEFICIARIES

         4.1      Beneficiary Designations. The Executive shall designate a
beneficiary by filing with the Company a written designation of beneficiary on a
form substantially similar to the form attached as Exhibit A. The Executive may
revoke or modify the designation at any time by filing a new designation.
However, designations will only be effective if signed by the Executive and
accepted by the Company during the Executive's lifetime. The Executive's
beneficiary designation shall be deemed automatically revoked if the beneficiary
predeceases the Executive, or if the Executive names a spouse as beneficiary and
the marriage is subsequently dissolved. If the Executive dies without a valid
beneficiary designation, all payments shall be made to the Executive's surviving
spouse, if any, and if none, to the Executive's surviving children and the
descendants of any deceased child by right of representation, and if no children
or descendants survive, to the Executive's estate.

         4.2      Facility of Payment. If a benefit is payable to a minor, to a
person declared incompetent, or to a person incapable of handling the
disposition of his or her property, the Company may pay such benefit to the
guardian, legal representative or person having the care or custody of such
minor, incompetent person or incapable person, or to a custodian selected by the
Company under the Mississippi Uniform Transfers to Minors Act for the benefit of
such minor. The Company may require proof of incompetency, minority or
guardianship as it may deem appropriate prior to distribution of the benefit.
Such distribution shall completely discharge the Company from all liability with
respect to such benefit.

                                    ARTICLE 5
                               GENERAL LIMITATIONS

         Notwithstanding any provision of this Agreement to the contrary, the
Company shall not pay any benefit under this Agreement if any of the following
occur:

         5.1      Termination for Cause. If the Company terminates the
Executive's employment for any of the following reasons:

                  5.1.1    Conviction in a court of competent jurisdiction of a
         felony; or

                  5.1.2    Fraud, dishonesty, or embezzlement. Also, any willful
         violation of any law or willful violation of a significant Company
         policy committed in connection with the Executive's employment, with
         either resulting in an adverse effect on the Company.

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<PAGE>

         5.2      Suicide. No benefits shall be payable if the Executive commits
suicide within two (2) years after the date of this Agreement, or if the
Executive has made any material misstatement of fact on any application for life
insurance purchased by the Company.

         5.3      Golden Parachute Payment. Notwithstanding any provision of
this Agreement to the contrary, the Company shall not be required to pay any
benefit under this Agreement if, upon the advice of counsel, the Company
determines that the payment of such benefit would be prohibited by 12 C.F.R.
Part 359 or any successor regulations regarding employee compensation
promulgated by any regulatory agency having jurisdiction over the Company or its
affiliates or to the extent the benefit would be a non-deductible excess
parachute payment under Section 280G of the Code. To the extent possible, such
benefit payment shall be proportionately reduced to allow payment within the
fullest extent permissible under applicable law.

                                    ARTICLE 6
                          CLAIMS AND REVIEW PROCEDURES

         6.1      Claims Procedure. Any individual ("Claimant") who has not
received benefits under the Plan that he or she believes should be paid shall
make a claim for such benefits as follows:

                  6.1.1    Initiation - Written Claim. The Claimant initiates a
         claim by submitting to the Company a written claim for the benefits.

                  6.1.2    Timing of Company Response. The Company shall respond
         to such Claimant within 90 days after receiving the claim. If the
         Company determines that special circumstances require additional time
         for processing the claim, the Company can extend the response period by
         an additional 90 days by notifying the Claimant in writing, prior to
         the end of the initial 90-day period, that an additional period is
         required. The notice of extension must set forth the special
         circumstances and the date by which the Company expects to render its
         decision.

                  6.1.3    Notice of Decision. If the Company denies part or all
         of the claim, the Company shall notify the Claimant in writing of such
         denial. The Company shall write the notification in a manner calculated
         to be understood by the Claimant. The notification shall set forth:

                           (a)      The specific reasons for the denial,

                           (b)      A reference to the specific provisions of
                  the Plan on which the denial is based,

                           (c)      A description of any additional information
                  or material necessary for the Claimant to perfect the claim
                  and an explanation of why it is needed,

                           (d)      An explanation of the Plan's review
                  procedures and the time limits applicable to such procedures,
                  and

                           (e)      A statement of the Claimant's right to bring
                  a civil action under ERISA Section 502(a) following an adverse
                  benefit determination on review.

         6.2      Review Procedure. If the Company denies part or all of the
claim, the Claimant shall have the opportunity for a full and fair review by the
Company of the denial, as follows:

                  6.2.1    Initiation - Written Request. To initiate the review,
         the Claimant, within 60 days after receiving the Company's notice of
         denial, must file with the Company a written request for review.

                  6.2.2    Additional Submissions - Information Access. The
         Claimant shall then have the opportunity to submit written comments,
         documents, records and other information relating to the claim. The
         Company shall also provide the Claimant, upon request and free of
         charge, reasonable access to, and copies of, all documents, records and
         other information relevant (as defined in applicable ERISA regulations)
         to the Claimant's claim for benefits.

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<PAGE>

                  6.2.3    Considerations on Review. In considering the review,
         the Company shall take into account all materials and information the
         Claimant submits relating to the claim, without regard to whether such
         information was submitted or considered in the initial benefit
         determination.

                  6.2.4    Timing of Company Response. The Company shall respond
         in writing to such Claimant within 60 days after receiving the request
         for review. If the Company determines that special circumstances
         require additional time for processing the claim, the Company can
         extend the response period by an additional 60 days by notifying the
         Claimant in writing, prior to the end of the initial 60-day period,
         that an additional period is required. The notice of extension must set
         forth the special circumstances and the date by which the Company
         expects to render its decision.

                  6.2.5    Notice of Decision. The Company shall notify the
         Claimant in writing of its decision on review. The Company shall write
         the notification in a manner calculated to be understood by the
         Claimant. The notification shall set forth:

                           (a)      The specific reasons for the denial,

                           (b)      A reference to the specific provisions of
                  the Plan on which the denial is based,

                           (c)      A statement that the Claimant is entitled to
                  receive, upon request and free of charge, reasonable access
                  to, and copies of, all documents, records and other
                  information relevant (as defined in applicable ERISA
                  regulations) to the Claimant's claim for benefits, and

                           (d)      A statement of the Claimant's right to bring
                  a civil action under ERISA Section 502(a).

                                    ARTICLE 7
                           AMENDMENTS AND TERMINATION

         7.1      Amendment or Termination of Agreement. This Agreement may be
amended or terminated only by at a written agreement signed by the Company and
the Executive.

         7.2      Termination by Operation of Law. Notwithstanding the previous
paragraph in this Article 7, the Company may amend or terminate this Agreement
at any time if, pursuant to legislative, judicial or regulatory action,
continuation of the Agreement would (i) cause benefits to be taxable to the
Executive prior to actual receipt, or (ii) result in significant financial
penalties or other significantly detrimental ramifications to the Company (other
than the financial impact of paying the benefits). In the event of a termination
of the Agreement under this Section 7.2, the Company shall pay to the Executive
a single lump-sum payment equaling one hundred percent (100%) of the Executive
Benefit Accrual one hundred eighty (180) days from termination of the Agreement.

         7.3      Termination by Company. The Company may terminate this
Agreement at any time. In the event the Company terminates this Agreement, for
reasons other than those set forth in Section 7.1 or Section 7.2, the Company,
subject to Section 2.6 and Section 5.3, shall pay the Executive the benefit
provided in subsection Section 2.5, assuming, for purposes of this Section 7.3
only, that upon Termination of the Agreement by the Company under this Section
7.3 Termination of Employment occurred, even if the Executive continues
employment with the Company after Termination of the Agreement under this
Section 7.3.

                                    ARTICLE 8
                                  MISCELLANEOUS

         8.1      Binding Effect. This Agreement shall bind the Executive and
the Company, and their beneficiaries, survivors, executors, administrators and
permitted transferees.

         8.2      No Guaranty of Employment. This Agreement is not an employment
policy or contract. It does not give the Executive the right to remain an
employee of the Company, nor does it interfere with the Company's

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<PAGE>

right to discharge the Executive. It also does not require the Executive to
remain an employee nor interfere with the Executive's right to terminate
employment at any time.

         8.3      Non-Transferability. Benefits under this Agreement cannot be
sold, transferred, assigned, pledged, attached or encumbered in any manner,
except in accordance with Article 4 with respect to designation of
beneficiaries.

         8.4      Tax Withholding. The Company shall withhold any taxes that are
required to be withheld from the benefits provided under this Agreement.

         8.5      Applicable Law. The Agreement and all rights hereunder shall
be governed by the laws of the State of Mississippi, except to the extent
preempted by the laws of the United States of America.

         8.6      Unfunded Arrangement. The Executive and beneficiary are
general unsecured creditors of the Company for the payment of benefits under
this Agreement. The benefits represent the mere promise by the Company to pay
such benefits. The rights to benefits are not subject in any manner to
anticipation, alienation, sale, transfer, assignment, pledge, encumbrance,
attachment, or garnishment by creditors. Any insurance on the Executive's life
is a general asset of the Company to which the Executive and beneficiary have no
preferred or secured claim.

         8.7      Severability. Without limitation of any other section
contained herein, in case any one or more provisions contained in this Agreement
shall for any reason be held to be invalid, illegal or unenforceable in any
other respect, such invalidity, illegality or unenforceability shall not affect
the other provisions of this Agreement. In the event any one or more of the
provisions found in the Agreement shall be held to be invalid, illegal or
unenforceable by any governmental regulatory agency or court of competent
jurisdiction, this Agreement shall be construed as if such invalid, illegal or
unenforceable provision had never been a part of this Agreement and such
provision shall be deemed substituted by such other provisions as will most
nearly accomplish the intent of the parties to the extent permitted by
applicable law.

         8.8      Administration. The Company shall have powers which are
necessary to administer this Agreement, including but not limited to:

                  (a)       Interpreting the provisions of the Agreement;

                  (b)       Establishing and revising the method of accounting
                            for the Agreement;

                  (c)       Maintaining a record of benefit payments; and

                  (d)       Establishing rules and prescribing any forms
                            necessary or desirable to administer the Agreement.

         8.9      Named Fiduciary. The Company shall be the named fiduciary and
plan administrator under this Agreement. It may delegate to others certain
aspects of the management and operational responsibilities including the
employment of advisors and the delegation of ministerial duties to qualified
individuals.

         8.10     Full Obligation. Notwithstanding any provision to the
contrary, when the Company has paid either a Lifetime Benefit or a Death Benefit
as appropriate under any section of the Agreement, the Company has completed its
obligation to the Executive.

         IN WITNESS WHEREOF, the Executive and a duly authorized Company officer
have signed this Agreement as of the date indicated below.

COMPANY:                                          EXECUTIVE:
THE PEOPLES BANK

By: _________________________________        ___________________________________

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                                                        IRA W. CARPENTER, JR.

Its: _________________________________

Date: _________________                                 Date: __________________

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<PAGE>

                                    EXHIBIT A
                             BENEFICIARY DESIGNATION

I, _____________________________, designate the following as beneficiary of any
death benefits payable under the Amendment and Restatement of Executive
Supplemental Income Agreement between myself and The Peoples Bank:

Primary Beneficiary

  Name                                                Relationship

  Address

Contingent Beneficiary

  Name                                                Relationship

  Address

NOTE: TO NAME A TRUST AS BENEFICIARY, PLEASE PROVIDE THE NAME OF THE TRUSTEE AND
THE EXACT DATE OF THE TRUST AGREEMENT.

I understand that I may change these beneficiary designations by filing a new
written designation with the Company. I further understand that the designations
will be automatically revoked if the beneficiary predeceases me, or, if I have
named my spouse as beneficiary, in the event of the dissolution of our marriage.

                                                        Date

Accepted by the Company this _____ day of _____________, 20___

By:

Title:

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<PAGE>

                          AMENDMENT AND RESTATEMENT OF
                     EXECUTIVE SUPPLEMENTAL INCOME AGREEMENT

         This Agreement, effective as of October 1, 2002 (The "Effective Date"),
is made by and between The Peoples Bank, a state-chartered commercial bank with
its principal office located in Biloxi, Mississippi (hereinafter referred to as
the "Company"), and Jeannette E. Romero (hereinafter referred to as the
"Executive"). This Agreement hereby amends and restates, in its entirety, a
prior agreement, with an initial effective date of January 1, 1988 (hereinafter
the "Prior Agreement"), made by and between the Company and the Executive.

                                  INTRODUCTION

         The Company and the Executive entered into the Prior Agreement in order
to provide certain benefits to the Executive as an officer of the Company upon
the Executive's retirement.

         The Company and the Executive, by this current Agreement, desire to
amend and desire to restate the Prior Agreement, in its entirety, to include and
reflect the terms set forth herein and to incorporate the benefit accumulated to
date by the Executive under Prior Agreement.

         Therefore, in order to encourage the Executive to remain an employee of
the Company, the Company is willing to provide salary continuation benefits to
the Executive. The Company will pay the benefits from its general assets.

                                    AGREEMENT

         The Executive and the Company agree as follows:

                                    ARTICLE 1
                                   DEFINITIONS

         1.1      Definitions. Whenever used in this Agreement, the following
words and phrases shall have the meanings specified:

                  1.1.1    "Change of Control" means:

                  (a)      a change in the ownership of the capital stock of the
         Company or Peoples Financial Corporation (the "Holding Company"),
         whereby a corporation, person or group acting in concert (a "Person")
         as described in Section 14(d)(2) of the Securities Exchange Act of
         1934, as amended (the "Exchange Act"), holds or acquires, directly or
         indirectly, beneficial ownership (within the meaning of Rule 13d-3
         promulgated under the Exchange Act) of a number of shares of capital
         stock of the Company or Holding Company which constitutes fifty percent
         (50%) or more of the combined voting power of the Company's or Holding
         Company's outstanding capital stock then entitled to vote generally in
         the election of directors; or

                  (b)      the persons who were members of the Board of
         Directors of the Company or Holding Company immediately prior to a
         tender offer, exchange offer, contested election or any combination of
         the foregoing, cease to constitute a majority of such Board of
         Directors; or

                  (c)      the adoption by the Board of Directors of the Company
         or of the Holding Company of a merger, consolidation or reorganization
         plan involving the Company or Holding Company in which the Company or
         the Holding Company is not the surviving entity, or a sale of all or
         substantially all of the assets of the Company or Holding Company. For
         purposes of this Agreement, a sale of all or substantially all of the
         assets of the Company or Holding Company shall be deemed to occur if
         any Person acquires (or during the 12-month period ending on the date
         of the most recent acquisition by such Person, has acquired) gross
         assets of the Company or Holding Company that have an aggregate fair
         market value equal to fifty percent (50%) of the fair market value of
         all of the respective gross assets of the Company or Holding Company
         immediately prior to such acquisition or acquisitions; or

1
<PAGE>

                  (d)      a tender offer or exchange offer is made by any
         Person which, if successfully completed, would result in such Person
         beneficially owning (within the meaning of Rule 13d-3 promulgated under
         the Exchange Act) either fifty percent (50%) or more of the Company's
         or Holding Company's outstanding shares of Common Stock or shares of
         capital stock having fifty percent (50%) or more the combined voting
         power of the Company's or Holding Company's then outstanding capital
         stock (other than an offer made by the Company or the Holding Company),
         and sufficient shares are acquired under the offer to cause such person
         to own fifty percent (50%) or more of the voting power; or

                  (e)      any other transactions or series of related
         transactions occurring which have substantially the same effect as the
         transactions specified in any of the preceding clauses of this
         Subsection (1.1.1).

                           1.1.1.1  "Permitted Transfers" means that a
                  Shareholder, as hereinafter defined in Subsection 1.1.10 may
                  make the following transfers and such transfers shall be
                  deemed not to be a Change of Control under Subsection 1.1.1:

                                    (a)      To any trust, company, or
                                             partnership created solely for the
                                             benefit of any Shareholder or any
                                             spouse of or any lineal descendant
                                             of any Shareholder;

                                    (b)      To any individual or entity by bona
                                             fide gift;

                                    (c)      To any spouse or former spouse of
                                             any Shareholder pursuant to the
                                             terms of a decree of divorce;

                                    (d)      To any officer or employee of the
                                             Company pursuant to any incentive
                                             stock option plan established by
                                             the Shareholder;

                                    (e)      To any family member of any
                                             Shareholder;

                                    (f)      After receipt of any necessary
                                             regulatory approvals, to any
                                             company or partnership, including,
                                             but not limited to, a family
                                             limited partnership, a majority of
                                             the stock or interests of which
                                             company or partnership are owned by
                                             any of the Shareholder; or

                                    (g)      To any existing Shareholder as of
                                             the Effective Date.

         1.1.2    "Code" means the Internal Revenue Code of 1986, as amended.
References to a Code section shall be deemed to be to that section as it now
exists and to any successor provision.

         1.1.3    "Disability" means the Executive's suffering a sickness,
accident or injury which has been determined by the carrier of any individual or
group long-term disability insurance policy carried by the Company covering the
Executive, or, if no such long-term disability policy exists, then as determined
by the Social Security Administration, to be a disability rendering the
Executive totally and permanently disabled. The Executive must submit proof to
the Company of the carrier's or Social Security Administration's determination
upon the request of the Company.

         1.1.4    "Discount Rate" means eight percent (8%).

         1.1.5    "Early Retirement Date" means the date the Executive: (i)
attains at least age fifty-five (55); (ii) attains at least her fifteen (15)
year anniversary of employment at the Company; and, (iii) has participated in
the Prior Agreement, including this amendment and restatement of the Prior
Agreement, for five (5) years.

         1.1.6    "Executive Benefit Accrual" means the amount accrued as a
liability to the Executive by the Company by virtue of the terms of the Prior
Agreement through the Effective Date and by virtue of the terms of this
Agreement under Generally Accepted Accounting Principles (GAAP).

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         1.1.7    "Normal Retirement Date" means the date the Executive attains
age sixty-five (65).

         1.1.8    "Plan Year" means each twelve (12) consecutive month period
commencing on the Effective Date. For example, the twelve month period
commencing on the date the Company and the Executive execute this Agreement
shall constitute then first Plan Year. The twelve month period following the
first Plan Year shall constitute the second Plan Year and so on.

         1.1.9    "Salary" means the base annual amount, without bonus or other
benefits, paid to the Executive by the Company as of the earlier to occur of:
(i) Termination of Employment; or, (ii) the Company' termination of the
Agreement under Section 7.3.

         1.1.10   "Shareholder" means the existing owners of all issued and
outstanding stock of the Company or Holding Company as of the date this
Agreement is signed.

         1.1.11   "Termination of Employment" or "Terminates Employment" means
the Executive's ceasing to be employed by the Company for any reason whatsoever,
voluntary or involuntary, other than by reason of an approved leave of absence.

                                    ARTICLE 2
                                LIFETIME BENEFITS

         2.1      Normal Retirement Benefit. If Termination of Employment occurs
on or after the Normal Retirement Date, the Company shall pay to the Executive
the benefit described in this Section 2.1.

                  2.1.1    Amount of Benefit. The benefit under this Section 2.1
         is fifty percent (50%) of the Executive's Salary.

                  2.1.2    Payment of Benefit. The Company shall pay the annual
         benefit determined under subsection 2.1.1 for a period of fifteen (15)
         years, payable monthly (one-twelfth [1/12th] of the annual benefit)
         beginning on the last day of the month commencing with the month
         following Termination of Employment. The monthly payments under this
         subsection 2.1.2 shall total one hundred eighty (180) substantially
         equal payments over a period of one hundred eighty (180) months.

         2.2      Early Retirement Benefit. If Termination of Employment occurs
on or after the Early Retirement Date and prior to the Normal Retirement Date,
the Company shall pay to the Executive the benefit described in this Section 2.2
in lieu of any other benefit under this Agreement.

                  2.2.1    Amount of Benefit. The benefit under this Section 2.2
         is the annual benefit set forth in subsection 2.1.1 reduced by one-half
         of a percent (0.5%) for each month or partial month between Termination
         of Employment and the Normal Retirement Date. By way of example, assume
         the Executive elects to retire at age 59 -1/2, which is 66 months prior
         to the Normal Retirement Date. Assume further the annual benefit under
         subsection 2.1.1 equals thirty percent (30%) of Salary. Based on these
         assumptions the percentage of Salary payable under this subsection
         2.2.1 would equal 30% times 67% (100% minus the product of 66 times
         0.5%). The resulting annual benefit under this subsection 2.2.1, based
         on the assumptions in this example, would equal 20.10% (30% multiplied
         by 67%) of Salary.

                  2.2.2    Payment of Benefit. The Company shall pay the annual
         benefit determined under subsection 2.2.1 for a period of fifteen (15)
         years, payable monthly (one-twelfth [1/12th] of the annual benefit)
         beginning on the last day of the month commencing with the month
         following Termination of Employment. The monthly payments under this
         subsection 2.2.2 shall total one hundred eighty (180) substantially
         equal payments over a period of one hundred eighty (180) months.

         2.3      Termination of Employment Prior to the Early Retirement Date
or Prior to the Normal Retirement Date. Subject to the provisions of Section
2.5, if Termination of Employment occurs, for reasons other than death or
Disability, before either the Early Retirement Date or prior to the Normal
Retirement Date, the Company shall

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pay to the Executive the benefit described in this Section 2.3.

                  2.3.1    Amount of Benefit. The benefit under this Section 2.3
         is the Executive Benefit Accrual as of Termination of Employment.

                  2.3.2    Payment of Benefit. The Company shall pay to the
         Executive the benefit set forth in subsection 2.3.1, in lieu of any
         other benefit under this Agreement, in a single lump-sum within sixty
         (60) days of Termination of Employment.

         2.4      Disability Benefit. If Termination of Employment due to a
Disability occurs prior to the Normal Retirement Date, the Company shall pay to
the Executive the benefit described in this Section 2.4.

                  2.4.1    Amount of Benefit. Subject to the provisions of
         Section 2.6 and Section 5.3, the annual benefit under this Section 2.4
         is the annual benefit set forth in subsection 2.1.1.

                  2.4.2    Payment of Benefit. The Company shall pay the annual
         benefit determined under subsection 2.4.1, in lieu of any other benefit
         under this Agreement, for a period of fifteen (15) years, payable
         monthly (one-twelfth [1/12th] of the annual benefit) beginning on the
         last day of the month commencing with the month following the
         Executive's Normal Retirement Date. The monthly payments under this
         subsection 2.4.2 shall total one hundred eighty (180) substantially
         equal payments over a period of one hundred eighty (180) months.

                  2.4.3    Death During Disability. In the event the Executive
         dies subsequent to Termination of Employment due to Disability and
         prior to receiving any payment under this Agreement, the Company shall
         pay the Executive's designated beneficiary the annual benefit set forth
         in subsection 3.1.1 and in the manner set forth in Section 3.1.2 in
         lieu of any other benefit under this Agreement.

         2.5      Change of Control Benefit. Upon a Change of Control prior to
Termination of Employment, the Company, subject to the provisions of Section 2.6
and Section 5.3, shall pay to the Executive the benefit described in this
Section 2.5 in lieu of any other benefit under this Agreement.

                  2.5.1    Amount of Benefit. The benefit under this Section 2.5
         is the present value of the payments under Section 2.1, assuming, for
         purposes of determining present value under this subsection 2.5.1 only,
         that the Executive was entitled to benefit payments under Section 2.1
         at Termination of Employment. In determining this present value the
         Company shall utilize the Discount Rate.

                  2.5.2    Payment of Benefit. The Company shall pay to the
         Executive the benefit set forth in subsection 2.5.1, in lieu of any
         other benefit under this Agreement, in a single lump-sum within sixty
         (60) days of Termination of Employment.

         2.6      Excess Parachute Payment. Notwithstanding any provision of
this Agreement to the contrary, the Company shall not pay any benefit under this
Agreement to the extent the benefit would be a non-deductible parachute payment
under Section 280G of the Code.

                                    ARTICLE 3
                                 DEATH BENEFITS

         3.1.     Death During Active Service. The Company shall pay to the
Executive's beneficiary the benefit described in this Section 3.1 if the
Executive dies: (i) while employed by the Company; or, (ii) after Termination of
Employment due to Disability prior to the Normal Retirement Date.

                  3.1.1.   Amount of Benefit. The annual benefit under this
         Section 3.1 is the annual benefit set forth in Section 2.1.1.

                  3.1.2.   Payment of Benefit. The Company shall pay the annual
         benefit determined under

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<PAGE>

         subsection 3.1.1, in lieu of any other benefit under this Agreement,
         for a period of fifteen (15) years, payable monthly (one-twelfth
         [1/12th] of the annual benefit) beginning on the last day of the month
         commencing with the month following the Executive's death. The monthly
         payments under this subsection 3.1.2 shall total one hundred eighty
         (180) substantially equal payments over a period of one hundred eighty
         (180) months.

         3.2.     Death During Benefit Period. If the Executive dies after
benefit payments have commenced under section of this Agreement, but before
receiving all such payments, the Company shall pay the remaining benefits to the
Executive's beneficiary at the same time and in the same amounts that would have
been paid to the Executive had the Executive survived. If the Executive's
designated beneficiary dies after benefit payments have commenced under this
Agreement but before receiving all such payments, the Company shall pay the
present value of the remaining benefits due under this Agreement, utilizing the
a discount rate of seven and one-half percent (7.5%) to determine the present
value of the remaining payments, to the estate of the Executive's designated
beneficiary in a single lump sum within sixty (60) days of the death of the
Executive's designated beneficiary.

                                    ARTICLE 4
                                  BENEFICIARIES

         4.1      Beneficiary Designations. The Executive shall designate a
beneficiary by filing with the Company a written designation of beneficiary on a
form substantially similar to the form attached as Exhibit A. The Executive may
revoke or modify the designation at any time by filing a new designation.
However, designations will only be effective if signed by the Executive and
accepted by the Company during the Executive's lifetime. The Executive's
beneficiary designation shall be deemed automatically revoked if the beneficiary
predeceases the Executive, or if the Executive names a spouse as beneficiary and
the marriage is subsequently dissolved. If the Executive dies without a valid
beneficiary designation, all payments shall be made to the Executive's surviving
spouse, if any, and if none, to the Executive's surviving children and the
descendants of any deceased child by right of representation, and if no children
or descendants survive, to the Executive's estate.

         4.2      Facility of Payment. If a benefit is payable to a minor, to a
person declared incompetent, or to a person incapable of handling the
disposition of his or her property, the Company may pay such benefit to the
guardian, legal representative or person having the care or custody of such
minor, incompetent person or incapable person, or to a custodian selected by the
Company under the Mississippi Uniform Transfers to Minors Act for the benefit of
such minor. The Company may require proof of incompetency, minority or
guardianship as it may deem appropriate prior to distribution of the benefit.
Such distribution shall completely discharge the Company from all liability with
respect to such benefit.

                                    ARTICLE 5
                               GENERAL LIMITATIONS

         Notwithstanding any provision of this Agreement to the contrary, the
Company shall not pay any benefit under this Agreement if any of the following
occur:

         5.1      Termination for Cause. If the Company terminates the
Executive's employment for any of the following reasons:

                  5.1.1    Conviction in a court of competent jurisdiction of a
         felony; or

                  5.1.2    Fraud, dishonesty, or embezzlement. Also, any willful
         violation of any law or willful violation of a significant Company
         policy committed in connection with the Executive's employment, with
         either resulting in an adverse effect on the Company.

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<PAGE>

         5.2      Suicide. No benefits shall be payable if the Executive commits
suicide within two (2) years after the date of this Agreement, or if the
Executive has made any material misstatement of fact on any application for life
insurance purchased by the Company.

         5.3      Golden Parachute Payment. Notwithstanding any provision of
this Agreement to the contrary, the Company shall not be required to pay any
benefit under this Agreement if, upon the advice of counsel, the Company
determines that the payment of such benefit would be prohibited by 12 C.F.R.
Part 359 or any successor regulations regarding employee compensation
promulgated by any regulatory agency having jurisdiction over the Company or its
affiliates or to the extent the benefit would be a non-deductible excess
parachute payment under Section 280G of the Code. To the extent possible, such
benefit payment shall be proportionately reduced to allow payment within the
fullest extent permissible under applicable law.

                                    ARTICLE 6
                          CLAIMS AND REVIEW PROCEDURES

         6.1      Claims Procedure. Any individual ("Claimant") who has not
received benefits under the Plan that he or she believes should be paid shall
make a claim for such benefits as follows:

                  6.1.1    Initiation - Written Claim. The Claimant initiates a
         claim by submitting to the Company a written claim for the benefits.

                  6.1.2    Timing of Company Response. The Company shall respond
         to such Claimant within 90 days after receiving the claim. If the
         Company determines that special circumstances require additional time
         for processing the claim, the Company can extend the response period by
         an additional 90 days by notifying the Claimant in writing, prior to
         the end of the initial 90-day period, that an additional period is
         required. The notice of extension must set forth the special
         circumstances and the date by which the Company expects to render its
         decision.

                  6.1.3    Notice of Decision. If the Company denies part or all
         of the claim, the Company shall notify the Claimant in writing of such
         denial. The Company shall write the notification in a manner calculated
         to be understood by the Claimant. The notification shall set forth:

                           (a)      The specific reasons for the denial,

                           (b)      A reference to the specific provisions of
                  the Plan on which the denial is based,

                           (c)      A description of any additional information
                  or material necessary for the Claimant to perfect the claim
                  and an explanation of why it is needed,

                           (d)      An explanation of the Plan's review
                  procedures and the time limits applicable to such procedures,
                  and

                           (e)      A statement of the Claimant's right to bring
                  a civil action under ERISA Section 502(a) following an adverse
                  benefit determination on review.

         6.2      Review Procedure. If the Company denies part or all of the
claim, the Claimant shall have the opportunity for a full and fair review by the
Company of the denial, as follows:

                  6.2.1    Initiation - Written Request. To initiate the review,
         the Claimant, within 60 days after receiving the Company's notice of
         denial, must file with the Company a written request for review.

                  6.2.2    Additional Submissions - Information Access. The
         Claimant shall then have the opportunity to submit written comments,
         documents, records and other information relating to the claim. The
         Company shall also provide the Claimant, upon request and free of
         charge, reasonable access to, and copies of, all documents, records and
         other information relevant (as defined in applicable ERISA regulations)
         to the Claimant's claim for benefits.

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<PAGE>

                  6.2.3    Considerations on Review. In considering the review,
         the Company shall take into account all materials and information the
         Claimant submits relating to the claim, without regard to whether such
         information was submitted or considered in the initial benefit
         determination.

                  6.2.4    Timing of Company Response. The Company shall respond
         in writing to such Claimant within 60 days after receiving the request
         for review. If the Company determines that special circumstances
         require additional time for processing the claim, the Company can
         extend the response period by an additional 60 days by notifying the
         Claimant in writing, prior to the end of the initial 60-day period,
         that an additional period is required. The notice of extension must set
         forth the special circumstances and the date by which the Company
         expects to render its decision.

                  6.2.5    Notice of Decision. The Company shall notify the
         Claimant in writing of its decision on review. The Company shall write
         the notification in a manner calculated to be understood by the
         Claimant. The notification shall set forth:

                           (a)      The specific reasons for the denial,

                           (b)      A reference to the specific provisions of
                  the Plan on which the denial is based,

                           (c)      A statement that the Claimant is entitled to
                  receive, upon request and free of charge, reasonable access
                  to, and copies of, all documents, records and other
                  information relevant (as defined in applicable ERISA
                  regulations) to the Claimant's claim for benefits, and

                           (d)      A statement of the Claimant's right to bring
                  a civil action under ERISA Section 502(a).

                                    ARTICLE 7
                           AMENDMENTS AND TERMINATION

         7.1      Amendment or Termination of Agreement. This Agreement may be
amended or terminated only by at a written agreement signed by the Company and
the Executive.

         7.2      Termination by Operation of Law. Notwithstanding the previous
paragraph in this Article 7, the Company may amend or terminate this Agreement
at any time if, pursuant to legislative, judicial or regulatory action,
continuation of the Agreement would (i) cause benefits to be taxable to the
Executive prior to actual receipt, or (ii) result in significant financial
penalties or other significantly detrimental ramifications to the Company (other
than the financial impact of paying the benefits). In the event of a termination
of the Agreement under this Section 7.2, the Company shall pay to the Executive
a single lump-sum payment equaling one hundred percent (100%) of the Executive
Benefit Accrual one hundred eighty (180) days from termination of the Agreement.

         7.3      Termination by Company. The Company may terminate this
Agreement at any time. In the event the Company terminates this Agreement, for
reasons other than those set forth in Section 7.1 or Section 7.2, the Company,
subject to Section 2.6 and Section 5.3, shall pay the Executive the benefit
provided in subsection Section 2.5, assuming, for purposes of this Section 7.3
only, that upon Termination of the Agreement by the Company under this Section
7.3 Termination of Employment occurred, even if the Executive continues
employment with the Company after Termination of the Agreement under this
Section 7.3.

                                    ARTICLE 8
                                  MISCELLANEOUS

         8.1      Binding Effect. This Agreement shall bind the Executive and
the Company, and their beneficiaries, survivors, executors, administrators and
permitted transferees.

         8.2      No Guaranty of Employment. This Agreement is not an employment
policy or contract. It does not give the Executive the right to remain an
employee of the Company, nor does it interfere with the Company's

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<PAGE>

right to discharge the Executive. It also does not require the Executive to
remain an employee nor interfere with the Executive's right to terminate
employment at any time.

         8.3      Non-Transferability. Benefits under this Agreement cannot be
sold, transferred, assigned, pledged, attached or encumbered in any manner,
except in accordance with Article 4 with respect to designation of
beneficiaries.

         8.4      Tax Withholding. The Company shall withhold any taxes that are
required to be withheld from the benefits provided under this Agreement.

         8.5      Applicable Law. The Agreement and all rights hereunder shall
be governed by the laws of the State of Mississippi, except to the extent
preempted by the laws of the United States of America.

         8.6      Unfunded Arrangement. The Executive and beneficiary are
general unsecured creditors of the Company for the payment of benefits under
this Agreement. The benefits represent the mere promise by the Company to pay
such benefits. The rights to benefits are not subject in any manner to
anticipation, alienation, sale, transfer, assignment, pledge, encumbrance,
attachment, or garnishment by creditors. Any insurance on the Executive's life
is a general asset of the Company to which the Executive and beneficiary have no
preferred or secured claim.

         8.7      Severability. Without limitation of any other section
contained herein, in case any one or more provisions contained in this Agreement
shall for any reason be held to be invalid, illegal or unenforceable in any
other respect, such invalidity, illegality or unenforceability shall not affect
the other provisions of this Agreement. In the event any one or more of the
provisions found in the Agreement shall be held to be invalid, illegal or
unenforceable by any governmental regulatory agency or court of competent
jurisdiction, this Agreement shall be construed as if such invalid, illegal or
unenforceable provision had never been a part of this Agreement and such
provision shall be deemed substituted by such other provisions as will most
nearly accomplish the intent of the parties to the extent permitted by
applicable law.

         8.8      Administration. The Company shall have powers which are
necessary to administer this Agreement, including but not limited to:

                  (a)      Interpreting the provisions of the Agreement;

                  (b)      Establishing and revising the method of accounting
         for the Agreement;

                  (c)      Maintaining a record of benefit payments; and

                  (d)      Establishing rules and prescribing any forms
         necessary or desirable to administer the Agreement.

         8.9      Named Fiduciary. The Company shall be the named fiduciary and
plan administrator under this Agreement. It may delegate to others certain
aspects of the management and operational responsibilities including the
employment of advisors and the delegation of ministerial duties to qualified
individuals.

         8.10     Full Obligation. Notwithstanding any provision to the
contrary, when the Company has paid either a Lifetime Benefit or a Death Benefit
as appropriate under any section of the Agreement, the Company has completed its
obligation to the Executive.

         IN WITNESS WHEREOF, the Executive and a duly authorized Company officer
have signed this Agreement as of the date indicated below.

COMPANY:                                             EXECUTIVE:
THE PEOPLES BANK

By: _________________________________       ____________________________________

8
<PAGE>

                                            JEANNETTE E. ROMERO

Its: _________________________________

Date: _________________                     Date: ______________________

9
<PAGE>

                                    EXHIBIT A
                             BENEFICIARY DESIGNATION

I, _____________________________, designate the following as beneficiary of any
death benefits payable under the Amendment and Restatement of Executive
Supplemental Income Agreement between myself and The Peoples Bank:

Primary Beneficiary

Name                                          Relationship

Address

Contingent Beneficiary

Name                                          Relationship

Address

NOTE: TO NAME A TRUST AS BENEFICIARY, PLEASE PROVIDE THE NAME OF THE TRUSTEE AND
THE EXACT DATE OF THE TRUST AGREEMENT.

I understand that I may change these beneficiary designations by filing a new
written designation with the Company. I further understand that the designations
will be automatically revoked if the beneficiary predeceases me, or, if I have
named my spouse as beneficiary, in the event of the dissolution of our marriage.

                                              Date

Accepted by the Company this _____ day of _____________, 20___

By:

Title:

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<PAGE>

                          AMENDMENT AND RESTATEMENT OF
                     EXECUTIVE SUPPLEMENTAL INCOME AGREEMENT

         This Agreement, effective as of October 1, 2002 (The "Effective Date"),
is made by and between The Peoples Bank, a state-chartered commercial bank with
its principal office located in Biloxi, Mississippi (hereinafter referred to as
the "Company"), and Lauri A. Wood (hereinafter referred to as the "Executive").
This Agreement hereby amends and restates, in its entirety, a prior agreement,
with an initial effective date of January 1, 1992 (hereinafter the "Prior
Agreement"), made by and between the Company and the Executive.

                                  INTRODUCTION

         The Company and the Executive entered into the Prior Agreement in order
to provide certain benefits to the Executive as an officer of the Company upon
the Executive's retirement.

         The Company and the Executive, by this current Agreement, desire to
amend and desire to restate the Prior Agreement, in its entirety, to include and
reflect the terms set forth herein and to incorporate the benefit accumulated to
date by the Executive under Prior Agreement.

         Therefore, in order to encourage the Executive to remain an employee of
the Company, the Company is willing to provide salary continuation benefits to
the Executive. The Company will pay the benefits from its general assets.

                                    AGREEMENT

         The Executive and the Company agree as follows:

                                    ARTICLE 1
                                   DEFINITIONS

         1.1      Definitions. Whenever used in this Agreement, the following
words and phrases shall have the meanings specified:

                  1.1.1    "Change of Control" means:

                  (a)      a change in the ownership of the capital stock of the
         Company or Peoples Financial Corporation (the "Holding Company"),
         whereby a corporation, person or group acting in concert (a "Person")
         as described in Section 14(d)(2) of the Securities Exchange Act of
         1934, as amended (the "Exchange Act"), holds or acquires, directly or
         indirectly, beneficial ownership (within the meaning of Rule 13d-3
         promulgated under the Exchange Act) of a number of shares of capital
         stock of the Company or Holding Company which constitutes fifty percent
         (50%) or more of the combined voting power of the Company's or Holding
         Company's outstanding capital stock then entitled to vote generally in
         the election of directors; or

                  (b)      the persons who were members of the Board of
         Directors of the Company or Holding Company immediately prior to a
         tender offer, exchange offer, contested election or any combination of
         the foregoing, cease to constitute a majority of such Board of
         Directors; or

                  (c)      the adoption by the Board of Directors of the Company
         or of the Holding Company of a merger, consolidation or reorganization
         plan involving the Company or Holding Company in which the Company or
         the Holding Company is not the surviving entity, or a sale of all or
         substantially all of the assets of the Company or Holding Company. For
         purposes of this Agreement, a sale of all or substantially all of the
         assets of the Company or Holding Company shall be deemed to occur if
         any Person acquires (or during the 12-month period ending on the date
         of the most recent acquisition by such Person, has acquired) gross
         assets of the Company or Holding Company that have an aggregate fair
         market value equal to fifty percent (50%) of the fair market value of
         all of the respective gross assets of the Company or Holding Company
         immediately prior to such acquisition or acquisitions; or

1

<PAGE>

                  (d)      a tender offer or exchange offer is made by any
         Person which, if successfully completed, would result in such Person
         beneficially owning (within the meaning of Rule 13d-3 promulgated under
         the Exchange Act) either fifty percent (50%) or more of the Company's
         or Holding Company's outstanding shares of Common Stock or shares of
         capital stock having fifty percent (50%) or more the combined voting
         power of the Company's or Holding Company's then outstanding capital
         stock (other than an offer made by the Company or the Holding Company),
         and sufficient shares are acquired under the offer to cause such person
         to own fifty percent (50%) or more of the voting power; or

                  (e)      any other transactions or series of related
         transactions occurring which have substantially the same effect as the
         transactions specified in any of the preceding clauses of this
         Subsection (1.1.1).

                           1.1.1.1  "Permitted Transfers" means that a
                  Shareholder, as hereinafter defined in Subsection 1.1.10 may
                  make the following transfers and such transfers shall be
                  deemed not to be a Change of Control under Subsection 1.1.1:

                                    (a)      To any trust, company, or
                                             partnership created solely for the
                                             benefit of any Shareholder or any
                                             spouse of or any lineal descendant
                                             of any Shareholder;

                                    (b)      To any individual or entity by bona
                                             fide gift;

                                    (c)      To any spouse or former spouse of
                                             any Shareholder pursuant to the
                                             terms of a decree of divorce;

                                    (d)      To any officer or employee of the
                                             Company pursuant to any incentive
                                             stock option plan established by
                                             the Shareholder;

                                    (e)      To any family member of any
                                             Shareholder;

                                    (f)      After receipt of any necessary
                                             regulatory approvals, to any
                                             company or partnership, including,
                                             but not limited to, a family
                                             limited partnership, a majority of
                                             the stock or interests of which
                                             company or partnership are owned by
                                             any of the Shareholder; or

                                    (g)      To any existing Shareholder as of
                                             the Effective Date.

         1.1.2    "Code" means the Internal Revenue Code of 1986, as amended.
References to a Code section shall be deemed to be to that section as it now
exists and to any successor provision.

         1.1.3    "Disability" means the Executive's suffering a sickness,
accident or injury which has been determined by the carrier of any individual or
group long-term disability insurance policy carried by the Company covering the
Executive, or, if no such long-term disability policy exists, then as determined
by the Social Security Administration, to be a disability rendering the
Executive totally and permanently disabled. The Executive must submit proof to
the Company of the carrier's or Social Security Administration's determination
upon the request of the Company.

         1.1.4    "Discount Rate" means eight percent (8%).

         1.1.5    "Early Retirement Date" means the date the Executive: (i)
attains at least age fifty-five (55); (ii) attains at least her fifteen (15)
year anniversary of employment at the Company; and, (iii) has participated in
the Prior Agreement, including this amendment and restatement of the Prior
Agreement, for five (5) years.

         1.1.6    "Executive Benefit Accrual" means the amount accrued as a
liability to the Executive by the Company by virtue of the terms of the Prior
Agreement through the Effective Date and by virtue of the terms of this
Agreement under Generally Accepted Accounting Principles (GAAP).

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         1.1.7    "Normal Retirement Date" means the date the Executive attains
age sixty-five (65).

         1.1.8    "Plan Year" means each twelve (12) consecutive month period
commencing on the Effective Date. For example, the twelve month period
commencing on the date the Company and the Executive execute this Agreement
shall constitute then first Plan Year. The twelve month period following the
first Plan Year shall constitute the second Plan Year and so on.

         1.1.9    "Salary" means the base annual amount, without bonus or other
benefits, paid to the Executive by the Company as of the earlier to occur of:
(i) Termination of Employment; or, (ii) the Company' termination of the
Agreement under Section 7.3.

         1.1.10   "Shareholder" means the existing owners of all issued and
outstanding stock of the Company or Holding Company as of the date this
Agreement is signed.

         1.1.11   "Termination of Employment" or "Terminates Employment" means
the Executive's ceasing to be employed by the Company for any reason whatsoever,
voluntary or involuntary, other than by reason of an approved leave of absence.

                                    ARTICLE 2
                                LIFETIME BENEFITS

         2.1      Normal Retirement Benefit. If Termination of Employment occurs
on or after the Normal Retirement Date, the Company shall pay to the Executive
the benefit described in this Section 2.1.

                  2.1.1    Amount of Benefit. The benefit under this Section 2.1
         is fifty percent (50%) of the Executive's Salary.

                  2.1.2    Payment of Benefit. The Company shall pay the annual
         benefit determined under subsection 2.1.1 for a period of fifteen (15)
         years, payable monthly (one-twelfth [1/12th] of the annual benefit)
         beginning on the last day of the month commencing with the month
         following Termination of Employment. The monthly payments under this
         subsection 2.1.2 shall total one hundred eighty (180) substantially
         equal payments over a period of one hundred eighty (180) months.

         2.2      Early Retirement Benefit. If Termination of Employment occurs
on or after the Early Retirement Date and prior to the Normal Retirement Date,
the Company shall pay to the Executive the benefit described in this Section 2.2
in lieu of any other benefit under this Agreement.

                  2.2.1    Amount of Benefit. The benefit under this Section 2.2
         is the annual benefit set forth in subsection 2.1.1 reduced by one-half
         of a percent (0.5%) for each month or partial month between Termination
         of Employment and the Normal Retirement Date. By way of example, assume
         the Executive elects to retire at age 59 -1/2, which is 66 months prior
         to the Normal Retirement Date. Assume further the annual benefit under
         subsection 2.1.1 equals thirty percent (30%) of Salary. Based on these
         assumptions the percentage of Salary payable under this subsection
         2.2.1 would equal 30% times 67% (100% minus the product of 66 times
         0.5%). The resulting annual benefit under this subsection 2.2.1, based
         on the assumptions in this example, would equal 20.10% (30% multiplied
         by 67%) of Salary.

                  2.2.2    Payment of Benefit. The Company shall pay the annual
         benefit determined under subsection 2.2.1 for a period of fifteen (15)
         years, payable monthly (one-twelfth [1/12th] of the annual benefit)
         beginning on the last day of the month commencing with the month
         following Termination of Employment. The monthly payments under this
         subsection 2.2.2 shall total one hundred eighty (180) substantially
         equal payments over a period of one hundred eighty (180) months.

         2.3      Termination of Employment Prior to the Early Retirement Date
or Prior to the Normal Retirement Date. Subject to the provisions of Section
2.5, if Termination of Employment occurs, for reasons other than death or
Disability, before either the Early Retirement Date or prior to the Normal
Retirement Date, the Company shall

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pay to the Executive the benefit described in this Section 2.3.

                  2.3.1    Amount of Benefit. The benefit under this Section 2.3
         is the Executive Benefit Accrual as of Termination of Employment.

                  2.3.2    Payment of Benefit. The Company shall pay to the
         Executive the benefit set forth in subsection 2.3.1, in lieu of any
         other benefit under this Agreement, in a single lump-sum within sixty
         (60) days of Termination of Employment.

         2.4      Disability Benefit. If Termination of Employment due to a
Disability occurs prior to the Normal Retirement Date, the Company shall pay to
the Executive the benefit described in this Section 2.4.

                  2.4.1    Amount of Benefit. Subject to the provisions of
         Section 2.6 and Section 5.3, the annual benefit under this Section 2.4
         is the annual benefit set forth in subsection 2.1.1.

                  2.4.2    Payment of Benefit. The Company shall pay the annual
         benefit determined under subsection 2.4.1, in lieu of any other benefit
         under this Agreement, for a period of fifteen (15) years, payable
         monthly (one-twelfth [1/12th] of the annual benefit) beginning on the
         last day of the month commencing with the month following the
         Executive's Normal Retirement Date. The monthly payments under this
         subsection 2.4.2 shall total one hundred eighty (180) substantially
         equal payments over a period of one hundred eighty (180) months.

                  2.4.3    Death During Disability. In the event the Executive
         dies subsequent to Termination of Employment due to Disability and
         prior to receiving any payment under this Agreement, the Company shall
         pay the Executive's designated beneficiary the annual benefit set forth
         in subsection 3.1.1 and in the manner set forth in Section 3.1.2 in
         lieu of any other benefit under this Agreement.

         2.5      Change of Control Benefit. Upon a Change of Control prior to
Termination of Employment, the Company, subject to the provisions of Section 2.6
and Section 5.3, shall pay to the Executive the benefit described in this
Section 2.5 in lieu of any other benefit under this Agreement.

                  2.5.1    Amount of Benefit. The benefit under this Section 2.5
         is the present value of the payments under Section 2.1, assuming, for
         purposes of determining present value under this subsection 2.5.1 only,
         that the Executive was entitled to benefit payments under Section 2.1
         at Termination of Employment. In determining this present value the
         Company shall utilize the Discount Rate.

                  2.5.2    Payment of Benefit. The Company shall pay to the
         Executive the benefit set forth in subsection 2.5.1, in lieu of any
         other benefit under this Agreement, in a single lump-sum within sixty
         (60) days of Termination of Employment.

         2.6      Excess Parachute Payment. Notwithstanding any provision of
this Agreement to the contrary, the Company shall not pay any benefit under this
Agreement to the extent the benefit would be a non-deductible parachute payment
under Section 280G of the Code.

                                    ARTICLE 3
                                 DEATH BENEFITS

         3.1.     Death During Active Service. The Company shall pay to the
Executive's beneficiary the benefit described in this Section 3.1 if the
Executive dies: (i) while employed by the Company; or, (ii) after Termination of
Employment due to Disability prior to the Normal Retirement Date.

                  3.1.1.   Amount of Benefit. The annual benefit under this
         Section 3.1 is the annual benefit set forth in Section 2.1.1.

                  3.1.2.   Payment of Benefit. The Company shall pay the annual
         benefit determined under

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<PAGE>

         subsection 3.1.1, in lieu of any other benefit under this Agreement,
         for a period of fifteen (15) years, payable monthly (one-twelfth
         [1/12th] of the annual benefit) beginning on the last day of the month
         commencing with the month following the Executive's death. The monthly
         payments under this subsection 3.1.2 shall total one hundred eighty
         (180) substantially equal payments over a period of one hundred eighty
         (180) months.

         3.2.     Death During Benefit Period. If the Executive dies after
benefit payments have commenced under section of this Agreement, but before
receiving all such payments, the Company shall pay the remaining benefits to the
Executive's beneficiary at the same time and in the same amounts that would have
been paid to the Executive had the Executive survived. If the Executive's
designated beneficiary dies after benefit payments have commenced under this
Agreement but before receiving all such payments, the Company shall pay the
present value of the remaining benefits due under this Agreement, utilizing the
a discount rate of seven and one-half percent (7.5%) to determine the present
value of the remaining payments, to the estate of the Executive's designated
beneficiary in a single lump sum within sixty (60) days of the death of the
Executive's designated beneficiary.

                                    ARTICLE 4
                                  BENEFICIARIES

         4.1      Beneficiary Designations. The Executive shall designate a
beneficiary by filing with the Company a written designation of beneficiary on a
form substantially similar to the form attached as Exhibit A. The Executive may
revoke or modify the designation at any time by filing a new designation.
However, designations will only be effective if signed by the Executive and
accepted by the Company during the Executive's lifetime. The Executive's
beneficiary designation shall be deemed automatically revoked if the beneficiary
predeceases the Executive, or if the Executive names a spouse as beneficiary and
the marriage is subsequently dissolved. If the Executive dies without a valid
beneficiary designation, all payments shall be made to the Executive's surviving
spouse, if any, and if none, to the Executive's surviving children and the
descendants of any deceased child by right of representation, and if no children
or descendants survive, to the Executive's estate.

         4.2      Facility of Payment. If a benefit is payable to a minor, to a
person declared incompetent, or to a person incapable of handling the
disposition of his or her property, the Company may pay such benefit to the
guardian, legal representative or person having the care or custody of such
minor, incompetent person or incapable person, or to a custodian selected by the
Company under the Mississippi Uniform Transfers to Minors Act for the benefit of
such minor. The Company may require proof of incompetency, minority or
guardianship as it may deem appropriate prior to distribution of the benefit.
Such distribution shall completely discharge the Company from all liability with
respect to such benefit.

                                    ARTICLE 5
                               GENERAL LIMITATIONS

         Notwithstanding any provision of this Agreement to the contrary, the
Company shall not pay any benefit under this Agreement if any of the following
occur:

         5.1      Termination for Cause. If the Company terminates the
Executive's employment for any of the following reasons:

                  5.1.1    Conviction in a court of competent jurisdiction of a
         felony; or

                  5.1.2    Fraud, dishonesty, or embezzlement. Also, any willful
         violation of any law or willful violation of a significant Company
         policy committed in connection with the Executive's employment, with
         either resulting in an adverse effect on the Company.

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<PAGE>

         5.2      Suicide. No benefits shall be payable if the Executive commits
suicide within two (2) years after the date of this Agreement, or if the
Executive has made any material misstatement of fact on any application for life
insurance purchased by the Company.

         5.3      Golden Parachute Payment. Notwithstanding any provision of
this Agreement to the contrary, the Company shall not be required to pay any
benefit under this Agreement if, upon the advice of counsel, the Company
determines that the payment of such benefit would be prohibited by 12 C.F.R.
Part 359 or any successor regulations regarding employee compensation
promulgated by any regulatory agency having jurisdiction over the Company or its
affiliates or to the extent the benefit would be a non-deductible excess
parachute payment under Section 280G of the Code. To the extent possible, such
benefit payment shall be proportionately reduced to allow payment within the
fullest extent permissible under applicable law.

                                    ARTICLE 6
                          CLAIMS AND REVIEW PROCEDURES

         6.1      Claims Procedure. Any individual ("Claimant") who has not
received benefits under the Plan that he or she believes should be paid shall
make a claim for such benefits as follows:

                  6.1.1    Initiation - Written Claim. The Claimant initiates a
         claim by submitting to the Company a written claim for the benefits.

                  6.1.2    Timing of Company Response. The Company shall respond
         to such Claimant within 90 days after receiving the claim. If the
         Company determines that special circumstances require additional time
         for processing the claim, the Company can extend the response period by
         an additional 90 days by notifying the Claimant in writing, prior to
         the end of the initial 90-day period, that an additional period is
         required. The notice of extension must set forth the special
         circumstances and the date by which the Company expects to render its
         decision.

                  6.1.3    Notice of Decision. If the Company denies part or all
         of the claim, the Company shall notify the Claimant in writing of such
         denial. The Company shall write the notification in a manner calculated
         to be understood by the Claimant. The notification shall set forth:

                           (a)      The specific reasons for the denial,

                           (b)      A reference to the specific provisions of
                  the Plan on which the denial is based,

                           (c)      A description of any additional information
                  or material necessary for the Claimant to perfect the claim
                  and an explanation of why it is needed,

                           (d)      An explanation of the Plan's review
                  procedures and the time limits applicable to such procedures,
                  and

                           (e)      A statement of the Claimant's right to bring
                  a civil action under ERISA Section 502(a) following an adverse
                  benefit determination on review.

         6.2      Review Procedure. If the Company denies part or all of the
claim, the Claimant shall have the opportunity for a full and fair review by the
Company of the denial, as follows:

                  6.2.1    Initiation - Written Request. To initiate the review,
         the Claimant, within 60 days after receiving the Company's notice of
         denial, must file with the Company a written request for review.

                  6.2.2    Additional Submissions - Information Access. The
         Claimant shall then have the opportunity to submit written comments,
         documents, records and other information relating to the claim. The
         Company shall also provide the Claimant, upon request and free of
         charge, reasonable access to, and copies of, all documents, records and
         other information relevant (as defined in applicable ERISA regulations)
         to the Claimant's claim for benefits.

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<PAGE>

                  6.2.3    Considerations on Review. In considering the review,
         the Company shall take into account all materials and information the
         Claimant submits relating to the claim, without regard to whether such
         information was submitted or considered in the initial benefit
         determination.

                  6.2.4    Timing of Company Response. The Company shall respond
         in writing to such Claimant within 60 days after receiving the request
         for review. If the Company determines that special circumstances
         require additional time for processing the claim, the Company can
         extend the response period by an additional 60 days by notifying the
         Claimant in writing, prior to the end of the initial 60-day period,
         that an additional period is required. The notice of extension must set
         forth the special circumstances and the date by which the Company
         expects to render its decision.

                  6.2.5    Notice of Decision. The Company shall notify the
         Claimant in writing of its decision on review. The Company shall write
         the notification in a manner calculated to be understood by the
         Claimant. The notification shall set forth:

                           (a)      The specific reasons for the denial,

                           (b)      A reference to the specific provisions of
                  the Plan on which the denial is based,

                           (c)      A statement that the Claimant is entitled to
                  receive, upon request and free of charge, reasonable access
                  to, and copies of, all documents, records and other
                  information relevant (as defined in applicable ERISA
                  regulations) to the Claimant's claim for benefits, and

                           (d)      A statement of the Claimant's right to bring
                  a civil action under ERISA Section 502(a).

                                    ARTICLE 7
                           AMENDMENTS AND TERMINATION

         7.1      Amendment or Termination of Agreement. This Agreement may be
amended or terminated only by at a written agreement signed by the Company and
the Executive.

         7.2      Termination by Operation of Law. Notwithstanding the previous
paragraph in this Article 7, the Company may amend or terminate this Agreement
at any time if, pursuant to legislative, judicial or regulatory action,
continuation of the Agreement would (i) cause benefits to be taxable to the
Executive prior to actual receipt, or (ii) result in significant financial
penalties or other significantly detrimental ramifications to the Company (other
than the financial impact of paying the benefits). In the event of a termination
of the Agreement under this Section 7.2, the Company shall pay to the Executive
a single lump-sum payment equaling one hundred percent (100%) of the Executive
Benefit Accrual one hundred eighty (180) days from termination of the Agreement.

         7.3      Termination by Company. The Company may terminate this
Agreement at any time. In the event the Company terminates this Agreement, for
reasons other than those set forth in Section 7.1 or Section 7.2, the Company,
subject to Section 2.6 and Section 5.3, shall pay the Executive the benefit
provided in subsection Section 2.5, assuming, for purposes of this Section 7.3
only, that upon Termination of the Agreement by the Company under this Section
7.3 Termination of Employment occurred, even if the Executive continues
employment with the Company after Termination of the Agreement under this
Section 7.3.

                                    ARTICLE 8
                                  MISCELLANEOUS

         8.1      Binding Effect. This Agreement shall bind the Executive and
the Company, and their beneficiaries, survivors, executors, administrators and
permitted transferees.

         8.2      No Guaranty of Employment. This Agreement is not an employment
policy or contract. It does not give the Executive the right to remain an
employee of the Company, nor does it interfere with the Company's

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<PAGE>

right to discharge the Executive. It also does not require the Executive to
remain an employee nor interfere with the Executive's right to terminate
employment at any time.

         8.3      Non-Transferability. Benefits under this Agreement cannot be
sold, transferred, assigned, pledged, attached or encumbered in any manner,
except in accordance with Article 4 with respect to designation of
beneficiaries.

         8.4      Tax Withholding. The Company shall withhold any taxes that are
required to be withheld from the benefits provided under this Agreement.

         8.5      Applicable Law. The Agreement and all rights hereunder shall
be governed by the laws of the State of Mississippi, except to the extent
preempted by the laws of the United States of America.

         8.6      Unfunded Arrangement. The Executive and beneficiary are
general unsecured creditors of the Company for the payment of benefits under
this Agreement. The benefits represent the mere promise by the Company to pay
such benefits. The rights to benefits are not subject in any manner to
anticipation, alienation, sale, transfer, assignment, pledge, encumbrance,
attachment, or garnishment by creditors. Any insurance on the Executive's life
is a general asset of the Company to which the Executive and beneficiary have no
preferred or secured claim.

         8.7      Severability. Without limitation of any other section
contained herein, in case any one or more provisions contained in this Agreement
shall for any reason be held to be invalid, illegal or unenforceable in any
other respect, such invalidity, illegality or unenforceability shall not affect
the other provisions of this Agreement. In the event any one or more of the
provisions found in the Agreement shall be held to be invalid, illegal or
unenforceable by any governmental regulatory agency or court of competent
jurisdiction, this Agreement shall be construed as if such invalid, illegal or
unenforceable provision had never been a part of this Agreement and such
provision shall be deemed substituted by such other provisions as will most
nearly accomplish the intent of the parties to the extent permitted by
applicable law.

         8.8      Administration. The Company shall have powers which are
necessary to administer this Agreement, including but not limited to:

                  (a)      Interpreting the provisions of the Agreement;

                  (b)      Establishing and revising the method of accounting
                           for the Agreement;

                  (c)      Maintaining a record of benefit payments; and

                  (d)      Establishing rules and prescribing any forms
                           necessary or desirable to administer the Agreement.

         8.9      Named Fiduciary. The Company shall be the named fiduciary and
plan administrator under this Agreement. It may delegate to others certain
aspects of the management and operational responsibilities including the
employment of advisors and the delegation of ministerial duties to qualified
individuals.

         8.10     Full Obligation. Notwithstanding any provision to the
contrary, when the Company has paid either a Lifetime Benefit or a Death Benefit
as appropriate under any section of the Agreement, the Company has completed its
obligation to the Executive.

         IN WITNESS WHEREOF, the Executive and a duly authorized Company officer
have signed this Agreement as of the date indicated below.

COMPANY:                                             EXECUTIVE:
THE PEOPLES BANK

By: _________________________________        __________________________________

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                                                  LAURI A. WOOD

Its: _________________________________

Date: _________________                           Date: _________________

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<PAGE>

                                    EXHIBIT A
                             BENEFICIARY DESIGNATION

I, _____________________________, designate the following as beneficiary of any
death benefits payable under the Amendment and Restatement of Executive
Supplemental Income Agreement between myself and The Peoples Bank:

Primary Beneficiary

Name                                                           Relationship

Address

Contingent Beneficiary

Name                                                           Relationship

Address

NOTE: TO NAME A TRUST AS BENEFICIARY, PLEASE PROVIDE THE NAME OF THE TRUSTEE AND
THE EXACT DATE OF THE TRUST AGREEMENT.

I understand that I may change these beneficiary designations by filing a new
written designation with the Company. I further understand that the designations
will be automatically revoked if the beneficiary predeceases me, or, if I have
named my spouse as beneficiary, in the event of the dissolution of our marriage.

                                                      Date

Accepted by the Company this _____ day of _____________, 20___

By:

Title:

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<PAGE>

                          AMENDMENT AND RESTATEMENT OF
                     EXECUTIVE SUPPLEMENTAL INCOME AGREEMENT

         This Agreement, effective as of October 1, 2002 (The "Effective Date"),
is made by and between The Peoples Bank, a state-chartered commercial bank with
its principal office located in Biloxi, Mississippi (hereinafter referred to as
the "Company"), and M.O. Lawrence, III (hereinafter referred to as the
"Executive"). This Agreement hereby amends and restates, in its entirety, a
prior agreement, with an initial effective date of January 1, 1988 (hereinafter
the "Prior Agreement"), made by and between the Company and the Executive.

                                  INTRODUCTION

         The Company and the Executive entered into the Prior Agreement in order
to provide certain benefits to the Executive as an officer of the Company upon
the Executive's retirement.

         The Company and the Executive, by this current Agreement, desire to
amend and desire to restate the Prior Agreement, in its entirety, to include and
reflect the terms set forth herein and to incorporate the benefit accumulated to
date by the Executive under Prior Agreement.

         Therefore, in order to encourage the Executive to remain an employee of
the Company, the Company is willing to provide salary continuation benefits to
the Executive. The Company will pay the benefits from its general assets.

                                    AGREEMENT

         The Executive and the Company agree as follows:

                                    ARTICLE 1
                                   DEFINITIONS

         1.1      Definitions. Whenever used in this Agreement, the following
words and phrases shall have the meanings specified:

                  1.1.1    "Change of Control" means:

                  (a)      a change in the ownership of the capital stock of the
         Company or Peoples Financial Corporation (the "Holding Company"),
         whereby a corporation, person or group acting in concert (a "Person")
         as described in Section 14(d)(2) of the Securities Exchange Act of
         1934, as amended (the "Exchange Act"), holds or acquires, directly or
         indirectly, beneficial ownership (within the meaning of Rule 13d-3
         promulgated under the Exchange Act) of a number of shares of capital
         stock of the Company or Holding Company which constitutes fifty percent
         (50%) or more of the combined voting power of the Company's or Holding
         Company's outstanding capital stock then entitled to vote generally in
         the election of directors; or

                  (b)      the persons who were members of the Board of
         Directors of the Company or Holding Company immediately prior to a
         tender offer, exchange offer, contested election or any combination of
         the foregoing, cease to constitute a majority of such Board of
         Directors; or

                  (c)      the adoption by the Board of Directors of the Company
         or of the Holding Company of a merger, consolidation or reorganization
         plan involving the Company or Holding Company in which the Company or
         the Holding Company is not the surviving entity, or a sale of all or
         substantially all of the assets of the Company or Holding Company. For
         purposes of this Agreement, a sale of all or substantially all of the
         assets of the Company or Holding Company shall be deemed to occur if
         any Person acquires (or during the 12-month period ending on the date
         of the most recent acquisition by such Person, has acquired) gross
         assets of the Company or Holding Company that have an aggregate fair
         market value equal to fifty percent (50%) of the fair market value of
         all of the respective gross assets of the Company or Holding Company
         immediately prior to such acquisition or acquisitions; or

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<PAGE>

                  (d)      a tender offer or exchange offer is made by any
         Person which, if successfully completed, would result in such Person
         beneficially owning (within the meaning of Rule 13d-3 promulgated under
         the Exchange Act) either fifty percent (50%) or more of the Company's
         or Holding Company's outstanding shares of Common Stock or shares of
         capital stock having fifty percent (50%) or more the combined voting
         power of the Company's or Holding Company's then outstanding capital
         stock (other than an offer made by the Company or the Holding Company),
         and sufficient shares are acquired under the offer to cause such person
         to own fifty percent (50%) or more of the voting power; or

                  (e)      any other transactions or series of related
         transactions occurring which have substantially the same effect as the
         transactions specified in any of the preceding clauses of this
         Subsection (1.1.1).

                           1.1.1.1  "Permitted Transfers" means that a
                  Shareholder, as hereinafter defined in Subsection 1.1.10 may
                  make the following transfers and such transfers shall be
                  deemed not to be a Change of Control under Subsection 1.1.1:

                                    (a)     To any trust, company, or
                                            partnership created solely for the
                                            benefit of any Shareholder or any
                                            spouse of or any lineal descendant
                                            of any Shareholder;

                                    (b)     To any individual or entity by bona
                                            fide gift;

                                    (c)     To any spouse or former spouse of
                                            any Shareholder pursuant to the
                                            terms of a decree of divorce;

                                    (d)     To any officer or employee of the
                                            Company pursuant to any incentive
                                            stock option plan established by the
                                            Shareholder;

                                    (e)     To any family member of any
                                            Shareholder;

                                    (f)     After receipt of any necessary
                                            regulatory approvals, to any company
                                            or partnership, including, but not
                                            limited to, a family limited
                                            partnership, a majority of the stock
                                            or interests of which company or
                                            partnership are owned by any of the
                                            Shareholder; or

                                    (g)     To any existing Shareholder as of
                                            the Effective Date.

         1.1.2    "Code" means the Internal Revenue Code of 1986, as amended.
References to a Code section shall be deemed to be to that section as it now
exists and to any successor provision.

         1.1.3    "Disability" means the Executive's suffering a sickness,
accident or injury which has been determined by the carrier of any individual or
group long-term disability insurance policy carried by the Company covering the
Executive, or, if no such long-term disability policy exists, then as determined
by the Social Security Administration, to be a disability rendering the
Executive totally and permanently disabled. The Executive must submit proof to
the Company of the carrier's or Social Security Administration's determination
upon the request of the Company.

         1.1.4    "Discount Rate" means eight percent (8%).

         1.1.5    "Early Retirement Date" means the date the Executive: (i)
attains at least age fifty-five (55); (ii) attains at least his fifteen (15)
year anniversary of employment at the Company; and, (iii) has participated in
the Prior Agreement, including this amendment and restatement of the Prior
Agreement, for five (5) years.

         1.1.6    "Executive Benefit Accrual" means the amount accrued as a
liability to the Executive by the Company by virtue of the terms of the Prior
Agreement through the Effective Date and by virtue of the terms of this
Agreement under Generally Accepted Accounting Principles (GAAP).

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         1.1.7    "Normal Retirement Date" means the date the Executive attains
age sixty-five (65).

         1.1.8    "Plan Year" means each twelve (12) consecutive month period
commencing on the Effective Date. For example, the twelve month period
commencing on the date the Company and the Executive execute this Agreement
shall constitute then first Plan Year. The twelve month period following the
first Plan Year shall constitute the second Plan Year and so on.

         1.1.9    "Salary" means the base annual amount, without bonus or other
benefits, paid to the Executive by the Company as of the earlier to occur of:
(i) Termination of Employment; or, (ii) the Company' termination of the
Agreement under Section 7.3.

         1.1.10   "Shareholder" means the existing owners of all issued and
outstanding stock of the Company or Holding Company as of the date this
Agreement is signed.

         1.1.11   "Termination of Employment" or "Terminates Employment" means
the Executive's ceasing to be employed by the Company for any reason whatsoever,
voluntary or involuntary, other than by reason of an approved leave of absence.

                                    ARTICLE 2
                                LIFETIME BENEFITS

         2.1      Normal Retirement Benefit. If Termination of Employment occurs
on or after the Normal Retirement Date, the Company shall pay to the Executive
the benefit described in this Section 2.1.

                  2.1.1    Amount of Benefit. The benefit under this Section 2.1
         is fifty percent (50%) of the Executive's Salary.

                  2.1.2    Payment of Benefit. The Company shall pay the annual
         benefit determined under subsection 2.1.1 for a period of fifteen (15)
         years, payable monthly (one-twelfth [1/12th] of the annual benefit)
         beginning on the last day of the month commencing with the month
         following Termination of Employment. The monthly payments under this
         subsection 2.1.2 shall total one hundred eighty (180) substantially
         equal payments over a period of one hundred eighty (180) months.

         2.2      Early Retirement Benefit. If Termination of Employment occurs
on or after the Early Retirement Date and prior to the Normal Retirement Date,
the Company shall pay to the Executive the benefit described in this Section 2.2
in lieu of any other benefit under this Agreement.

                  2.2.1    Amount of Benefit. The benefit under this Section 2.2
         is the annual benefit set forth in subsection 2.1.1 reduced by one-half
         of a percent (0.5%) for each month or partial month between Termination
         of Employment and the Normal Retirement Date. By way of example, assume
         the Executive elects to retire at age 59 -1/2, which is 66 months prior
         to the Normal Retirement Date. Assume further the annual benefit under
         subsection 2.1.1 equals thirty percent (30%) of Salary. Based on these
         assumptions the percentage of Salary payable under this subsection
         2.2.1 would equal 30% times 67% (100% minus the product of 66 times
         0.5%). The resulting annual benefit under this subsection 2.2.1, based
         on the assumptions in this example, would equal 20.10% (30% multiplied
         by 67%) of Salary.

                  2.2.2    Payment of Benefit. The Company shall pay the annual
         benefit determined under subsection 2.2.1 for a period of fifteen (15)
         years, payable monthly (one-twelfth [1/12th] of the annual benefit)
         beginning on the last day of the month commencing with the month
         following Termination of Employment. The monthly payments under this
         subsection 2.2.2 shall total one hundred eighty (180) substantially
         equal payments over a period of one hundred eighty (180) months.

         2.3      Termination of Employment Prior to the Early Retirement Date
or Prior to the Normal Retirement Date. Subject to the provisions of Section
2.5, if Termination of Employment occurs, for reasons other than death or
Disability, before either the Early Retirement Date or prior to the Normal
Retirement Date, the Company shall

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pay to the Executive the benefit described in this Section 2.3.

                  2.3.1    Amount of Benefit. The benefit under this Section 2.3
         is the Executive Benefit Accrual as of Termination of Employment.

                  2.3.2    Payment of Benefit. The Company shall pay to the
         Executive the benefit set forth in subsection 2.3.1, in lieu of any
         other benefit under this Agreement, in a single lump-sum within sixty
         (60) days of Termination of Employment.

         2.4      Disability Benefit. If Termination of Employment due to a
Disability occurs prior to the Normal Retirement Date, the Company shall pay to
the Executive the benefit described in this Section 2.4.

                  2.4.1    Amount of Benefit. Subject to the provisions of
         Section 2.6 and Section 5.3, the annual benefit under this Section 2.4
         is the annual benefit set forth in subsection 2.1.1.

                  2.4.2    Payment of Benefit. The Company shall pay the annual
         benefit determined under subsection 2.4.1, in lieu of any other benefit
         under this Agreement, for a period of fifteen (15) years, payable
         monthly (one-twelfth [1/12th] of the annual benefit) beginning on the
         last day of the month commencing with the month following the
         Executive's Normal Retirement Date. The monthly payments under this
         subsection 2.4.2 shall total one hundred eighty (180) substantially
         equal payments over a period of one hundred eighty (180) months.

                  2.4.3    Death During Disability. In the event the Executive
         dies subsequent to Termination of Employment due to Disability and
         prior to receiving any payment under this Agreement, the Company shall
         pay the Executive's designated beneficiary the annual benefit set forth
         in subsection 3.1.1 and in the manner set forth in Section 3.1.2 in
         lieu of any other benefit under this Agreement.

         2.5      Change of Control Benefit. Upon a Change of Control prior to
Termination of Employment, the Company, subject to the provisions of Section 2.6
and Section 5.3, shall pay to the Executive the benefit described in this
Section 2.5 in lieu of any other benefit under this Agreement.

                  2.5.1    Amount of Benefit. The benefit under this Section 2.5
         is the present value of the payments under Section 2.1, assuming, for
         purposes of determining present value under this subsection 2.5.1 only,
         that the Executive was entitled to benefit payments under Section 2.1
         at Termination of Employment. In determining this present value the
         Company shall utilize the Discount Rate.

                  2.5.2    Payment of Benefit. The Company shall pay to the
         Executive the benefit set forth in subsection 2.5.1, in lieu of any
         other benefit under this Agreement, in a single lump-sum within sixty
         (60) days of Termination of Employment.

         2.6      Excess Parachute Payment. Notwithstanding any provision of
this Agreement to the contrary, the Company shall not pay any benefit under this
Agreement to the extent the benefit would be a non-deductible parachute payment
under Section 280G of the Code.

                                    ARTICLE 3
                                 DEATH BENEFITS

         3.1.     Death During Active Service. The Company shall pay to the
Executive's beneficiary the benefit described in this Section 3.1 if the
Executive dies: (i) while employed by the Company; or, (ii) after Termination of
Employment due to Disability prior to the Normal Retirement Date.

                  3.1.1.   Amount of Benefit. The annual benefit under this
         Section 3.1 is the annual benefit set forth in Section 2.1.1.

                  3.1.2.   Payment of Benefit. The Company shall pay the annual
         benefit determined under

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         subsection 3.1.1, in lieu of any other benefit under this Agreement,
         for a period of fifteen (15) years, payable monthly (one-twelfth
         [1/12th] of the annual benefit) beginning on the last day of the month
         commencing with the month following the Executive's death. The monthly
         payments under this subsection 3.1.2 shall total one hundred eighty
         (180) substantially equal payments over a period of one hundred eighty
         (180) months.

         3.1.     Death During Benefit Period. If the Executive dies after
benefit payments have commenced under section of this Agreement, but before
receiving all such payments, the Company shall pay the remaining benefits to the
Executive's beneficiary at the same time and in the same amounts that would have
been paid to the Executive had the Executive survived. If the Executive's
designated beneficiary dies after benefit payments have commenced under this
Agreement but before receiving all such payments, the Company shall pay the
present value of the remaining benefits due under this Agreement, utilizing the
a discount rate of seven and one-half percent (7.5%) to determine the present
value of the remaining payments, to the estate of the Executive's designated
beneficiary in a single lump sum within sixty (60) days of the death of the
Executive's designated beneficiary.

                                    ARTICLE 4
                                  BENEFICIARIES

         4.1      Beneficiary Designations. The Executive shall designate a
beneficiary by filing with the Company a written designation of beneficiary on a
form substantially similar to the form attached as Exhibit A. The Executive may
revoke or modify the designation at any time by filing a new designation.
However, designations will only be effective if signed by the Executive and
accepted by the Company during the Executive's lifetime. The Executive's
beneficiary designation shall be deemed automatically revoked if the beneficiary
predeceases the Executive, or if the Executive names a spouse as beneficiary and
the marriage is subsequently dissolved. If the Executive dies without a valid
beneficiary designation, all payments shall be made to the Executive's surviving
spouse, if any, and if none, to the Executive's surviving children and the
descendants of any deceased child by right of representation, and if no children
or descendants survive, to the Executive's estate.

         4.2      Facility of Payment. If a benefit is payable to a minor, to a
person declared incompetent, or to a person incapable of handling the
disposition of his or her property, the Company may pay such benefit to the
guardian, legal representative or person having the care or custody of such
minor, incompetent person or incapable person, or to a custodian selected by the
Company under the Mississippi Uniform Transfers to Minors Act for the benefit of
such minor. The Company may require proof of incompetency, minority or
guardianship as it may deem appropriate prior to distribution of the benefit.
Such distribution shall completely discharge the Company from all liability with
respect to such benefit.

                                    ARTICLE 5
                               GENERAL LIMITATIONS

         Notwithstanding any provision of this Agreement to the contrary, the
Company shall not pay any benefit under this Agreement if any of the following
occur:

         5.1      Termination for Cause. If the Company terminates the
Executive's employment for any of the following reasons:

                  5.1.1    Conviction in a court of competent jurisdiction of a
         felony; or

                  5.1.2    Fraud, dishonesty, or embezzlement. Also, any willful
         violation of any law or willful violation of a significant Company
         policy committed in connection with the Executive's employment, with
         either resulting in an adverse effect on the Company.

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<PAGE>

         5.2      Suicide. No benefits shall be payable if the Executive commits
suicide within two (2) years after the date of this Agreement, or if the
Executive has made any material misstatement of fact on any application for life
insurance purchased by the Company.

         5.3      Golden Parachute Payment. Notwithstanding any provision of
this Agreement to the contrary, the Company shall not be required to pay any
benefit under this Agreement if, upon the advice of counsel, the Company
determines that the payment of such benefit would be prohibited by 12 C.F.R.
Part 359 or any successor regulations regarding employee compensation
promulgated by any regulatory agency having jurisdiction over the Company or its
affiliates or to the extent the benefit would be a non-deductible excess
parachute payment under Section 280G of the Code. To the extent possible, such
benefit payment shall be proportionately reduced to allow payment within the
fullest extent permissible under applicable law.

                                    ARTICLE 6
                          CLAIMS AND REVIEW PROCEDURES

         6.1      Claims Procedure. Any individual ("Claimant") who has not
received benefits under the Plan that he or she believes should be paid shall
make a claim for such benefits as follows:

                  6.1.1    Initiation - Written Claim. The Claimant initiates a
         claim by submitting to the Company a written claim for the benefits.

                  6.1.2    Timing of Company Response. The Company shall respond
         to such Claimant within 90 days after receiving the claim. If the
         Company determines that special circumstances require additional time
         for processing the claim, the Company can extend the response period by
         an additional 90 days by notifying the Claimant in writing, prior to
         the end of the initial 90-day period, that an additional period is
         required. The notice of extension must set forth the special
         circumstances and the date by which the Company expects to render its
         decision.

                  6.1.3    Notice of Decision. If the Company denies part or all
         of the claim, the Company shall notify the Claimant in writing of such
         denial. The Company shall write the notification in a manner calculated
         to be understood by the Claimant. The notification shall set forth:

                           (a)      The specific reasons for the denial,

                           (b)      A reference to the specific provisions of
                  the Plan on which the denial is based,

                           (c)      A description of any additional information
                  or material necessary for the Claimant to perfect the claim
                  and an explanation of why it is needed,

                           (d)      An explanation of the Plan's review
                  procedures and the time limits applicable to such procedures,
                  and

                           (e)      A statement of the Claimant's right to bring
                  a civil action under ERISA Section 502(a) following an adverse
                  benefit determination on review.

         6.2      Review Procedure. If the Company denies part or all of the
claim, the Claimant shall have the opportunity for a full and fair review by the
Company of the denial, as follows:

                  6.2.1    Initiation - Written Request. To initiate the review,
         the Claimant, within 60 days after receiving the Company's notice of
         denial, must file with the Company a written request for review.

                  6.2.2    Additional Submissions - Information Access. The
         Claimant shall then have the opportunity to submit written comments,
         documents, records and other information relating to the claim. The
         Company shall also provide the Claimant, upon request and free of
         charge, reasonable access to, and copies of, all documents, records and
         other information relevant (as defined in applicable ERISA regulations)
         to the Claimant's claim for benefits.

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<PAGE>

                  6.2.3    Considerations on Review. In considering the review,
         the Company shall take into account all materials and information the
         Claimant submits relating to the claim, without regard to whether such
         information was submitted or considered in the initial benefit
         determination.

                  6.2.4    Timing of Company Response. The Company shall respond
         in writing to such Claimant within 60 days after receiving the request
         for review. If the Company determines that special circumstances
         require additional time for processing the claim, the Company can
         extend the response period by an additional 60 days by notifying the
         Claimant in writing, prior to the end of the initial 60-day period,
         that an additional period is required. The notice of extension must set
         forth the special circumstances and the date by which the Company
         expects to render its decision.

                  6.2.5    Notice of Decision. The Company shall notify the
         Claimant in writing of its decision on review. The Company shall write
         the notification in a manner calculated to be understood by the
         Claimant. The notification shall set forth:

                           (a)      The specific reasons for the denial,

                           (b)      A reference to the specific provisions of
                  the Plan on which the denial is based,

                           (c)      A statement that the Claimant is entitled to
                  receive, upon request and free of charge, reasonable access
                  to, and copies of, all documents, records and other
                  information relevant (as defined in applicable ERISA
                  regulations) to the Claimant's claim for benefits, and

                           (d)      A statement of the Claimant's right to bring
                  a civil action under ERISA Section 502(a).

                                    ARTICLE 7
                           AMENDMENTS AND TERMINATION

         7.1      Amendment or Termination of Agreement. This Agreement may be
amended or terminated only by at a written agreement signed by the Company and
the Executive.

         7.2      Termination by Operation of Law. Notwithstanding the previous
paragraph in this Article 7, the Company may amend or terminate this Agreement
at any time if, pursuant to legislative, judicial or regulatory action,
continuation of the Agreement would (i) cause benefits to be taxable to the
Executive prior to actual receipt, or (ii) result in significant financial
penalties or other significantly detrimental ramifications to the Company (other
than the financial impact of paying the benefits). In the event of a termination
of the Agreement under this Section 7.2, the Company shall pay to the Executive
a single lump-sum payment equaling one hundred percent (100%) of the Executive
Benefit Accrual one hundred eighty (180) days from termination of the Agreement.

         7.3      Termination by Company. The Company may terminate this
Agreement at any time. In the event the Company terminates this Agreement, for
reasons other than those set forth in Section 7.1 or Section 7.2, the Company,
subject to Section 2.6 and Section 5.3, shall pay the Executive the benefit
provided in subsection Section 2.5, assuming, for purposes of this Section 7.3
only, that upon Termination of the Agreement by the Company under this Section
7.3 Termination of Employment occurred, even if the Executive continues
employment with the Company after Termination of the Agreement under this
Section 7.3.

                                    ARTICLE 8
                                  MISCELLANEOUS

         8.1      Binding Effect. This Agreement shall bind the Executive and
the Company, and their beneficiaries, survivors, executors, administrators and
permitted transferees.

         8.2      No Guaranty of Employment. This Agreement is not an employment
policy or contract. It does not give the Executive the right to remain an
employee of the Company, nor does it interfere with the Company's

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<PAGE>

right to discharge the Executive. It also does not require the Executive to
remain an employee nor interfere with the Executive's right to terminate
employment at any time.

         8.3      Non-Transferability. Benefits under this Agreement cannot be
sold, transferred, assigned, pledged, attached or encumbered in any manner,
except in accordance with Article 4 with respect to designation of
beneficiaries.

         8.4      Tax Withholding. The Company shall withhold any taxes that are
required to be withheld from the benefits provided under this Agreement.

         8.5      Applicable Law. The Agreement and all rights hereunder shall
be governed by the laws of the State of Mississippi, except to the extent
preempted by the laws of the United States of America.

         8.6      Unfunded Arrangement. The Executive and beneficiary are
general unsecured creditors of the Company for the payment of benefits under
this Agreement. The benefits represent the mere promise by the Company to pay
such benefits. The rights to benefits are not subject in any manner to
anticipation, alienation, sale, transfer, assignment, pledge, encumbrance,
attachment, or garnishment by creditors. Any insurance on the Executive's life
is a general asset of the Company to which the Executive and beneficiary have no
preferred or secured claim.

         8.7      Severability. Without limitation of any other section
contained herein, in case any one or more provisions contained in this Agreement
shall for any reason be held to be invalid, illegal or unenforceable in any
other respect, such invalidity, illegality or unenforceability shall not affect
the other provisions of this Agreement. In the event any one or more of the
provisions found in the Agreement shall be held to be invalid, illegal or
unenforceable by any governmental regulatory agency or court of competent
jurisdiction, this Agreement shall be construed as if such invalid, illegal or
unenforceable provision had never been a part of this Agreement and such
provision shall be deemed substituted by such other provisions as will most
nearly accomplish the intent of the parties to the extent permitted by
applicable law.

         8.8      Administration. The Company shall have powers which are
necessary to administer this Agreement, including but not limited to:

                  (a)     Interpreting the provisions of the Agreement;

                  (b)     Establishing and revising the method of accounting for
                          the Agreement;

                  (c)     Maintaining a record of benefit payments; and

                  (d)     Establishing rules and prescribing any forms necessary
                          or desirable to administer the Agreement.

         8.9      Named Fiduciary. The Company shall be the named fiduciary and
plan administrator under this Agreement. It may delegate to others certain
aspects of the management and operational responsibilities including the
employment of advisors and the delegation of ministerial duties to qualified
individuals.

         8.10     Full Obligation. Notwithstanding any provision to the
contrary, when the Company has paid either a Lifetime Benefit or a Death Benefit
as appropriate under any section of the Agreement, the Company has completed its
obligation to the Executive.

         IN WITNESS WHEREOF, the Executive and a duly authorized Company officer
have signed this Agreement as of the date indicated below.

COMPANY:                                             EXECUTIVE:
THE PEOPLES BANK

By: _________________________________       __________________________________

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<PAGE>

                                                     M.O. LAWRENCE, III

Its: _________________________________

Date: _________________                              Date:    _________________

9
<PAGE>

                                    EXHIBIT A
                             BENEFICIARY DESIGNATION

I, _____________________________, designate the following as beneficiary of any
death benefits payable under the Amendment and Restatement of Executive
Supplemental Income Agreement between myself and The Peoples Bank:

Primary Beneficiary

Name                                        Relationship

Address

Contingent Beneficiary

Name                                        Relationship

Address

NOTE: TO NAME A TRUST AS BENEFICIARY, PLEASE PROVIDE THE NAME OF THE TRUSTEE AND
THE EXACT DATE OF THE TRUST AGREEMENT.

I understand that I may change these beneficiary designations by filing a new
written designation with the Company. I further understand that the designations
will be automatically revoked if the beneficiary predeceases me, or, if I have
named my spouse as beneficiary, in the event of the dissolution of our marriage.

                                            Date

Accepted by the Company this _____ day of _____________, 20___

By:

Title:

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<PAGE>

                          AMENDMENT AND RESTATEMENT OF
                     EXECUTIVE SUPPLEMENTAL INCOME AGREEMENT

         This Agreement, effective as of October 1, 2002 (The "Effective Date"),
is made by and between The Peoples Bank, a state-chartered commercial bank with
its principal office located in Biloxi, Mississippi (hereinafter referred to as
the "Company"), and Robert M. Tucei (hereinafter referred to as the
"Executive"). This Agreement hereby amends and restates, in its entirety, a
prior agreement, with an initial effective date of January 1, 1988 (hereinafter
the "Prior Agreement"), made by and between the Company and the Executive.

                                  INTRODUCTION

         The Company and the Executive entered into the Prior Agreement in order
to provide certain benefits to the Executive as an officer of the Company upon
the Executive's retirement.

         The Company and the Executive, by this current Agreement, desire to
amend and desire to restate the Prior Agreement, in its entirety, to include and
reflect the terms set forth herein and to incorporate the benefit accumulated to
date by the Executive under Prior Agreement.

         Therefore, in order to encourage the Executive to remain an employee of
the Company, the Company is willing to provide salary continuation benefits to
the Executive. The Company will pay the benefits from its general assets.

                                    AGREEMENT

         The Executive and the Company agree as follows:

                                    ARTICLE 1
                                   DEFINITIONS

         1.1      Definitions. Whenever used in this Agreement, the following
words and phrases shall have the meanings specified:

                  1.1.1 "Change of Control" means:

                  (a)      a change in the ownership of the capital stock of the
         Company or Peoples Financial Corporation (the "Holding Company"),
         whereby a corporation, person or group acting in concert (a "Person")
         as described in Section 14(d)(2) of the Securities Exchange Act of
         1934, as amended (the "Exchange Act"), holds or acquires, directly or
         indirectly, beneficial ownership (within the meaning of Rule 13d-3
         promulgated under the Exchange Act) of a number of shares of capital
         stock of the Company or Holding Company which constitutes fifty percent
         (50%) or more of the combined voting power of the Company's or Holding
         Company's outstanding capital stock then entitled to vote generally in
         the election of directors; or

                  (b)      the persons who were members of the Board of
         Directors of the Company or Holding Company immediately prior to a
         tender offer, exchange offer, contested election or any combination of
         the foregoing, cease to constitute a majority of such Board of
         Directors; or

                  (c)      the adoption by the Board of Directors of the Company
         or of the Holding Company of a merger, consolidation or reorganization
         plan involving the Company or Holding Company in which the Company or
         the Holding Company is not the surviving entity, or a sale of all or
         substantially all of the assets of the Company or Holding Company. For
         purposes of this Agreement, a sale of all or substantially all of the
         assets of the Company or Holding Company shall be deemed to occur if
         any Person acquires (or during the 12-month period ending on the date
         of the most recent acquisition by such Person, has acquired) gross
         assets of the Company or Holding Company that have an aggregate fair
         market value equal to fifty percent (50%) of the fair market value of
         all of the respective gross assets of the Company or Holding Company
         immediately prior to such acquisition or acquisitions; or

1

<PAGE>

                  (d)      a tender offer or exchange offer is made by any
         Person which, if successfully completed, would result in such Person
         beneficially owning (within the meaning of Rule 13d-3 promulgated under
         the Exchange Act) either fifty percent (50%) or more of the Company's
         or Holding Company's outstanding shares of Common Stock or shares of
         capital stock having fifty percent (50%) or more the combined voting
         power of the Company's or Holding Company's then outstanding capital
         stock (other than an offer made by the Company or the Holding Company),
         and sufficient shares are acquired under the offer to cause such person
         to own fifty percent (50%) or more of the voting power; or

                  (e)      any other transactions or series of related
         transactions occurring which have substantially the same effect as the
         transactions specified in any of the preceding clauses of this
         Subsection (1.1.1).

                           1.1.1.1  "Permitted Transfers" means that a
                  Shareholder, as hereinafter defined in Subsection 1.1.10 may
                  make the following transfers and such transfers shall be
                  deemed not to be a Change of Control under Subsection 1.1.1:

                                    (a)      To any trust, company, or
                                             partnership created solely for the
                                             benefit of any Shareholder or any
                                             spouse of or any lineal descendant
                                             of any Shareholder;

                                    (b)      To any individual or entity by bona
                                             fide gift;

                                    (c)      To any spouse or former spouse of
                                             any Shareholder pursuant to the
                                             terms of a decree of divorce;

                                    (d)      To any officer or employee of the
                                             Company pursuant to any incentive
                                             stock option plan established by
                                             the Shareholder;

                                    (e)      To any family member of any
                                             Shareholder;

                                    (f)      After receipt of any necessary
                                             regulatory approvals, to any
                                             company or partnership, including,
                                             but not limited to, a family
                                             limited partnership, a majority of
                                             the stock or interests of which
                                             company or partnership are owned by
                                             any of the Shareholder; or

                                    (g)      To any existing Shareholder as of
                                             the Effective Date.

         1.1.2    "Code" means the Internal Revenue Code of 1986, as amended.
References to a Code section shall be deemed to be to that section as it now
exists and to any successor provision.

         1.1.3    "Disability" means the Executive's suffering a sickness,
accident or injury which has been determined by the carrier of any individual or
group long-term disability insurance policy carried by the Company covering the
Executive, or, if no such long-term disability policy exists, then as determined
by the Social Security Administration, to be a disability rendering the
Executive totally and permanently disabled. The Executive must submit proof to
the Company of the carrier's or Social Security Administration's determination
upon the request of the Company.

         1.1.4    "Discount Rate" means eight percent (8%).

         1.1.5    "Early Retirement Date" means the date the Executive: (i)
attains at least age fifty-five (55); (ii) attains at least his fifteen (15)
year anniversary of employment at the Company; and, (iii) has participated in
the Prior Agreement, including this amendment and restatement of the Prior
Agreement, for five (5) years.

         1.1.6    "Executive Benefit Accrual" means the amount accrued as a
liability to the Executive by the Company by virtue of the terms of the Prior
Agreement through the Effective Date and by virtue of the terms of this
Agreement under Generally Accepted Accounting Principles (GAAP).

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<PAGE>

         1.1.7    "Normal Retirement Date" means the date the Executive attains
age sixty-five (65).

         1.1.8    "Plan Year" means each twelve (12) consecutive month period
commencing on the Effective Date. For example, the twelve month period
commencing on the date the Company and the Executive execute this Agreement
shall constitute then first Plan Year. The twelve month period following the
first Plan Year shall constitute the second Plan Year and so on.

         1.1.9    "Salary" means the base annual amount, without bonus or other
benefits, paid to the Executive by the Company as of the earlier to occur of:
(i) Termination of Employment; or, (ii) the Company' termination of the
Agreement under Section 7.3.

         1.1.10   "Shareholder" means the existing owners of all issued and
outstanding stock of the Company or Holding Company as of the date this
Agreement is signed.

         1.1.11   "Termination of Employment" or "Terminates Employment" means
the Executive's ceasing to be employed by the Company for any reason whatsoever,
voluntary or involuntary, other than by reason of an approved leave of absence.

                                    ARTICLE 2
                                LIFETIME BENEFITS

         2.1      Normal Retirement Benefit. If Termination of Employment occurs
on or after the Normal Retirement Date, the Company shall pay to the Executive
the benefit described in this Section 2.1.

                  2.1.1    Amount of Benefit. The benefit under this Section 2.1
         is fifty percent (50%) of the Executive's Salary.

                  2.1.2    Payment of Benefit. The Company shall pay the annual
         benefit determined under subsection 2.1.1 for a period of fifteen (15)
         years, payable monthly (one-twelfth [1/12th] of the annual benefit)
         beginning on the last day of the month commencing with the month
         following Termination of Employment. The monthly payments under this
         subsection 2.1.2 shall total one hundred eighty (180) substantially
         equal payments over a period of one hundred eighty (180) months.

                  2.2      Early Retirement Benefit. If Termination of
         Employment occurs on or after the Early Retirement Date and prior to
         the Normal Retirement Date, the Company shall pay to the Executive the
         benefit described in this Section 2.2 in lieu of any other benefit
         under this Agreement.

                           2.2.1    Amount of Benefit. The benefit under this
                  Section 2.2 is the annual benefit set forth in subsection
                  2.1.1 reduced by one-half of a percent (0.5%) for each month
                  or partial month between Termination of Employment and the
                  Normal Retirement Date. By way of example, assume the
                  Executive elects to retire at age 59 -1/2, which is 66 months
                  prior to the Normal Retirement Date. Assume further the annual
                  benefit under subsection 2.1.1 equals thirty percent (30%) of
                  Salary. Based on these assumptions the percentage of Salary
                  payable under this subsection 2.2.1 would equal 30% times 67%
                  (100% minus the product of 66 times 0.5%). The resulting
                  annual benefit under this subsection 2.2.1, based on the
                  assumptions in this example, would equal 20.10% (30%
                  multiplied by 67%) of Salary.

                           2.2.2    Payment of Benefit. The Company shall pay
                  the annual benefit determined under subsection 2.2.1 for a
                  period of fifteen (15) years, payable monthly (one-twelfth
                  [1/12th] of the annual benefit) beginning on the last day of
                  the month commencing with the month following Termination of
                  Employment. The monthly payments under this subsection 2.2.2
                  shall total one hundred eighty (180) substantially equal
                  payments over a period of one hundred eighty (180) months.

                  2.3      Termination of Employment Prior to the Early
         Retirement Date or Prior to the Normal Retirement Date. Subject to the
         provisions of Section 2.5, if Termination of Employment occurs, for
         reasons other than death or Disability, before either the Early
         Retirement Date or prior to the Normal Retirement Date, the Company
         shall

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         pay to the Executive the benefit described in this Section 2.3.

                           2.3.1    Amount of Benefit. The benefit under this
                  Section 2.3 is the Executive Benefit Accrual as of Termination
                  of Employment.

                           2.3.2    Payment of Benefit. The Company shall pay to
                  the Executive the benefit set forth in subsection 2.3.1, in
                  lieu of any other benefit under this Agreement, in a single
                  lump-sum within sixty (60) days of Termination of Employment.

                  2.4      Disability Benefit. If Termination of Employment due
         to a Disability occurs prior to the Normal Retirement Date, the Company
         shall pay to the Executive the benefit described in this Section 2.4.

                           2.4.1    Amount of Benefit. Subject to the provisions
                  of Section 2.6 and Section 5.3, the annual benefit under this
                  Section 2.4 is the annual benefit set forth in subsection
                  2.1.1.

                           2.4.2    Payment of Benefit. The Company shall pay
                  the annual benefit determined under subsection 2.4.1, in lieu
                  of any other benefit under this Agreement, for a period of
                  fifteen (15) years, payable monthly (one-twelfth [1/12th] of
                  the annual benefit) beginning on the last day of the month
                  commencing with the month following the Executive's Normal
                  Retirement Date. The monthly payments under this subsection
                  2.4.2 shall total one hundred eighty (180) substantially equal
                  payments over a period of one hundred eighty (180) months.

                           2.4.3    Death During Disability. In the event the
                  Executive dies subsequent to Termination of Employment due to
                  Disability and prior to receiving any payment under this
                  Agreement, the Company shall pay the Executive's designated
                  beneficiary the annual benefit set forth in subsection 3.1.1
                  and in the manner set forth in Section 3.1.2 in lieu of any
                  other benefit under this Agreement.

                  2.5      Change of Control Benefit. Upon a Change of Control
         prior to Termination of Employment, the Company, subject to the
         provisions of Section 2.6 and Section 5.3, shall pay to the Executive
         the benefit described in this Section 2.5 in lieu of any other benefit
         under this Agreement.

                           2.5.1    Amount of Benefit. The benefit under this
                  Section 2.5 is the present value of the payments under Section
                  2.1, assuming, for purposes of determining present value under
                  this subsection 2.5.1 only, that the Executive was entitled to
                  benefit payments under Section 2.1 at Termination of
                  Employment. In determining this present value the Company
                  shall utilize the Discount Rate.

                           2.5.2    Payment of Benefit. The Company shall pay to
                  the Executive the benefit set forth in subsection 2.5.1, in
                  lieu of any other benefit under this Agreement, in a single
                  lump-sum within sixty (60) days of Termination of Employment.

                  2.6      Excess Parachute Payment. Notwithstanding any
         provision of this Agreement to the contrary, the Company shall not pay
         any benefit under this Agreement to the extent the benefit would be a
         non-deductible parachute payment under Section 280G of the Code.

                                    ARTICLE 3
                                 DEATH BENEFITS

                  3.1.     Death During Active Service. The Company shall pay to
         the Executive's beneficiary the benefit described in this Section 3.1
         if the Executive dies: (i) while employed by the Company; or, (ii)
         after Termination of Employment due to Disability prior to the Normal
         Retirement Date.

                           3.1.1.   Amount of Benefit. The annual benefit under
                  this Section 3.1 is the annual benefit set forth in Section
                  2.1.1.

                           3.1.2.   Payment of Benefit. The Company shall pay
                  the annual benefit determined under

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                  subsection 3.1.1, in lieu of any other benefit under this
                  Agreement, for a period of fifteen (15) years, payable monthly
                  (one-twelfth [1/12th] of the annual benefit) beginning on the
                  last day of the month commencing with the month following the
                  Executive's death. The monthly payments under this subsection
                  3.1.2 shall total one hundred eighty (180) substantially equal
                  payments over a period of one hundred eighty (180) months.

                  3.1.     Death During Benefit Period. If the Executive dies
         after benefit payments have commenced under section of this Agreement,
         but before receiving all such payments, the Company shall pay the
         remaining benefits to the Executive's beneficiary at the same time and
         in the same amounts that would have been paid to the Executive had the
         Executive survived. If the Executive's designated beneficiary dies
         after benefit payments have commenced under this Agreement but before
         receiving all such payments, the Company shall pay the present value of
         the remaining benefits due under this Agreement, utilizing the a
         discount rate of seven and one-half percent (7.5%) to determine the
         present value of the remaining payments, to the estate of the
         Executive's designated beneficiary in a single lump sum within sixty
         (60) days of the death of the Executive's designated beneficiary.

                                    ARTICLE 4
                                  BENEFICIARIES

                  4.1      Beneficiary Designations. The Executive shall
         designate a beneficiary by filing with the Company a written
         designation of beneficiary on a form substantially similar to the form
         attached as Exhibit A. The Executive may revoke or modify the
         designation at any time by filing a new designation. However,
         designations will only be effective if signed by the Executive and
         accepted by the Company during the Executive's lifetime. The
         Executive's beneficiary designation shall be deemed automatically
         revoked if the beneficiary predeceases the Executive, or if the
         Executive names a spouse as beneficiary and the marriage is
         subsequently dissolved. If the Executive dies without a valid
         beneficiary designation, all payments shall be made to the Executive's
         surviving spouse, if any, and if none, to the Executive's surviving
         children and the descendants of any deceased child by right of
         representation, and if no children or descendants survive, to the
         Executive's estate.

                  4.2      Facility of Payment. If a benefit is payable to a
         minor, to a person declared incompetent, or to a person incapable of
         handling the disposition of his or her property, the Company may pay
         such benefit to the guardian, legal representative or person having the
         care or custody of such minor, incompetent person or incapable person,
         or to a custodian selected by the Company under the Mississippi Uniform
         Transfers to Minors Act for the benefit of such minor. The Company may
         require proof of incompetency, minority or guardianship as it may deem
         appropriate prior to distribution of the benefit. Such distribution
         shall completely discharge the Company from all liability with respect
         to such benefit.

                                    ARTICLE 5
                               GENERAL LIMITATIONS

                  Notwithstanding any provision of this Agreement to the
         contrary, the Company shall not pay any benefit under this Agreement if
         any of the following occur:

                  5.1      Termination for Cause. If the Company terminates the
         Executive's employment for any of the following reasons:

                           5.1.1    Conviction in a court of competent
                  jurisdiction of a felony; or

                           5.1.2    Fraud, dishonesty, or embezzlement. Also,
                  any willful violation of any law or willful violation of a
                  significant Company policy committed in connection with the
                  Executive's employment, with either resulting in an adverse
                  effect on the Company.

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<PAGE>

                  5.2      Suicide. No benefits shall be payable if the
         Executive commits suicide within two (2) years after the date of this
         Agreement, or if the Executive has made any material misstatement of
         fact on any application for life insurance purchased by the Company.

                  5.3      Golden Parachute Payment. Notwithstanding any
         provision of this Agreement to the contrary, the Company shall not be
         required to pay any benefit under this Agreement if, upon the advice of
         counsel, the Company determines that the payment of such benefit would
         be prohibited by 12 C.F.R. Part 359 or any successor regulations
         regarding employee compensation promulgated by any regulatory agency
         having jurisdiction over the Company or its affiliates or to the extent
         the benefit would be a non-deductible excess parachute payment under
         Section 280G of the Code. To the extent possible, such benefit payment
         shall be proportionately reduced to allow payment within the fullest
         extent permissible under applicable law.

                                    ARTICLE 6
                          CLAIMS AND REVIEW PROCEDURES

                  6.1      Claims Procedure. Any individual ("Claimant") who has
         not received benefits under the Plan that he or she believes should be
         paid shall make a claim for such benefits as follows:

                           6.1.1    Initiation - Written Claim. The Claimant
                  initiates a claim by submitting to the Company a written claim
                  for the benefits.

                           6.1.2    Timing of Company Response. The Company
                  shall respond to such Claimant within 90 days after receiving
                  the claim. If the Company determines that special
                  circumstances require additional time for processing the
                  claim, the Company can extend the response period by an
                  additional 90 days by notifying the Claimant in writing, prior
                  to the end of the initial 90-day period, that an additional
                  period is required. The notice of extension must set forth the
                  special circumstances and the date by which the Company
                  expects to render its decision.

                           6.1.3    Notice of Decision. If the Company denies
                  part or all of the claim, the Company shall notify the
                  Claimant in writing of such denial. The Company shall write
                  the notification in a manner calculated to be understood by
                  the Claimant. The notification shall set forth:

                                    (a)      The specific reasons for the
                           denial,

                                    (b)      A reference to the specific
                           provisions of the Plan on which the denial is based,

                                    (c)      A description of any additional
                           information or material necessary for the Claimant to
                           perfect the claim and an explanation of why it is
                           needed,

                                    (d)      An explanation of the Plan's review
                           procedures and the time limits applicable to such
                           procedures, and

                                    (e)      A statement of the Claimant's right
                           to bring a civil action under ERISA Section 502(a)
                           following an adverse benefit determination on review.

                  6.2      Review Procedure. If the Company denies part or all
         of the claim, the Claimant shall have the opportunity for a full and
         fair review by the Company of the denial, as follows:

                           6.2.1    Initiation - Written Request. To initiate
                  the review, the Claimant, within 60 days after receiving the
                  Company's notice of denial, must file with the Company a
                  written request for review.

                           6.2.2    Additional Submissions - Information Access.
                  The Claimant shall then have the opportunity to submit written
                  comments, documents, records and other information relating to
                  the claim. The Company shall also provide the Claimant, upon
                  request and free of charge, reasonable access to, and copies
                  of, all documents, records and other information relevant (as
                  defined in applicable ERISA regulations) to the Claimant's
                  claim for benefits.

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<PAGE>

                           6.2.3    Considerations on Review. In considering the
                  review, the Company shall take into account all materials and
                  information the Claimant submits relating to the claim,
                  without regard to whether such information was submitted or
                  considered in the initial benefit determination.

                           6.2.4    Timing of Company Response. The Company
                  shall respond in writing to such Claimant within 60 days after
                  receiving the request for review. If the Company determines
                  that special circumstances require additional time for
                  processing the claim, the Company can extend the response
                  period by an additional 60 days by notifying the Claimant in
                  writing, prior to the end of the initial 60-day period, that
                  an additional period is required. The notice of extension must
                  set forth the special circumstances and the date by which the
                  Company expects to render its decision.

                           6.2.5    Notice of Decision. The Company shall notify
                  the Claimant in writing of its decision on review. The Company
                  shall write the notification in a manner calculated to be
                  understood by the Claimant. The notification shall set forth:

                                    (a)      The specific reasons for the
                           denial,

                                    (b)      A reference to the specific
                           provisions of the Plan on which the denial is based,

                                    (c)      A statement that the Claimant is
                           entitled to receive, upon request and free of charge,
                           reasonable access to, and copies of, all documents,
                           records and other information relevant (as defined in
                           applicable ERISA regulations) to the Claimant's claim
                           for benefits, and

                                    (d)      A statement of the Claimant's right
                           to bring a civil action under ERISA Section 502(a).

                                    ARTICLE 7
                           AMENDMENTS AND TERMINATION

                  7.1      Amendment or Termination of Agreement. This Agreement
         may be amended or terminated only by at a written agreement signed by
         the Company and the Executive.

                  7.2      Termination by Operation of Law. Notwithstanding the
         previous paragraph in this Article 7, the Company may amend or
         terminate this Agreement at any time if, pursuant to legislative,
         judicial or regulatory action, continuation of the Agreement would (i)
         cause benefits to be taxable to the Executive prior to actual receipt,
         or (ii) result in significant financial penalties or other
         significantly detrimental ramifications to the Company (other than the
         financial impact of paying the benefits). In the event of a termination
         of the Agreement under this Section 7.2, the Company shall pay to the
         Executive a single lump-sum payment equaling one hundred percent (100%)
         of the Executive Benefit Accrual one hundred eighty (180) days from
         termination of the Agreement.

                  7.3      Termination by Company. The Company may terminate
         this Agreement at any time. In the event the Company terminates this
         Agreement, for reasons other than those set forth in Section 7.1 or
         Section 7.2, the Company, subject to Section 2.6 and Section 5.3, shall
         pay the Executive the benefit provided in subsection Section 2.5,
         assuming, for purposes of this Section 7.3 only, that upon Termination
         of the Agreement by the Company under this Section 7.3 Termination of
         Employment occurred, even if the Executive continues employment with
         the Company after Termination of the Agreement under this Section 7.3.

                                    ARTICLE 8
                                  MISCELLANEOUS

                  8.1      Binding Effect. This Agreement shall bind the
         Executive and the Company, and their beneficiaries, survivors,
         executors, administrators and permitted transferees.

                  8.2      No Guaranty of Employment. This Agreement is not an
         employment policy or contract. It does not give the Executive the right
         to remain an employee of the Company, nor does it interfere with the
         Company's

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<PAGE>

         right to discharge the Executive. It also does not require the
         Executive to remain an employee nor interfere with the Executive's
         right to terminate employment at any time.

                  8.3      Non-Transferability. Benefits under this Agreement
         cannot be sold, transferred, assigned, pledged, attached or encumbered
         in any manner, except in accordance with Article 4 with respect to
         designation of beneficiaries.

                  8.4      Tax Withholding. The Company shall withhold any taxes
         that are required to be withheld from the benefits provided under this
         Agreement.

                  8.5      Applicable Law. The Agreement and all rights
         hereunder shall be governed by the laws of the State of Mississippi,
         except to the extent preempted by the laws of the United States of
         America.

                  8.6      Unfunded Arrangement. The Executive and beneficiary
         are general unsecured creditors of the Company for the payment of
         benefits under this Agreement. The benefits represent the mere promise
         by the Company to pay such benefits. The rights to benefits are not
         subject in any manner to anticipation, alienation, sale, transfer,
         assignment, pledge, encumbrance, attachment, or garnishment by
         creditors. Any insurance on the Executive's life is a general asset of
         the Company to which the Executive and beneficiary have no preferred or
         secured claim.

                  8.7      Severability. Without limitation of any other section
         contained herein, in case any one or more provisions contained in this
         Agreement shall for any reason be held to be invalid, illegal or
         unenforceable in any other respect, such invalidity, illegality or
         unenforceability shall not affect the other provisions of this
         Agreement. In the event any one or more of the provisions found in the
         Agreement shall be held to be invalid, illegal or unenforceable by any
         governmental regulatory agency or court of competent jurisdiction, this
         Agreement shall be construed as if such invalid, illegal or
         unenforceable provision had never been a part of this Agreement and
         such provision shall be deemed substituted by such other provisions as
         will most nearly accomplish the intent of the parties to the extent
         permitted by applicable law.

                  8.8      Administration. The Company shall have powers which
         are necessary to administer this Agreement, including but not limited
         to:

                           (a)      Interpreting the provisions of the
                                    Agreement;

                           (b)      Establishing and revising the method of
                                    accounting for the Agreement;

                           (c)      Maintaining a record of benefit payments;
                                    and

                           (d)      Establishing rules and prescribing any forms
                                    necessary or desirable to administer the
                                    Agreement.

                  8.9      Named Fiduciary. The Company shall be the named
         fiduciary and plan administrator under this Agreement. It may delegate
         to others certain aspects of the management and operational
         responsibilities including the employment of advisors and the
         delegation of ministerial duties to qualified individuals.

                  8.10     Full Obligation. Notwithstanding any provision to the
         contrary, when the Company has paid either a Lifetime Benefit or a
         Death Benefit as appropriate under any section of the Agreement, the
         Company has completed its obligation to the Executive.

                  IN WITNESS WHEREOF, the Executive and a duly authorized
         Company officer have signed this Agreement as of the date indicated
         below.

COMPANY:                                             EXECUTIVE:
THE PEOPLES BANK

By: _________________________________       __________________________________

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                                                     ROBERT M. TUCEI

Its: _________________________________

Date: _________________                              Date:    _________________

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<PAGE>

                                    EXHIBIT A
                             BENEFICIARY DESIGNATION

I, _____________________________, designate the following as beneficiary of any
death benefits payable under the Amendment and Restatement of Executive
Supplemental Income Agreement between myself and The Peoples Bank:

 Primary Beneficiary

 Name                                                           Relationship

 Address

Contingent Beneficiary

 Name                                                           Relationship

 Address

NOTE: TO NAME A TRUST AS BENEFICIARY, PLEASE PROVIDE THE NAME OF THE TRUSTEE AND
THE EXACT DATE OF THE TRUST AGREEMENT.

I understand that I may change these beneficiary designations by filing a new
written designation with the Company. I further understand that the designations
will be automatically revoked if the beneficiary predeceases me, or, if I have
named my spouse as beneficiary, in the event of the dissolution of our marriage.

                                                              Date

Accepted by the Company this _____ day of _____________, 20___

By:

Title:

10

<PAGE>

                          AMENDMENT AND RESTATEMENT OF
                     EXECUTIVE SUPPLEMENTAL INCOME AGREEMENT

         This Agreement, effective as of October 1, 2002 (The "Effective Date"),
is made by and between The Peoples Bank, a state-chartered commercial bank with
its principal office located in Biloxi, Mississippi (hereinafter referred to as
the "Company"), and Thomas J. Sliman (hereinafter referred to as the
"Executive"). This Agreement hereby amends and restates, in its entirety, a
prior agreement, with an initial effective date of January 1, 1988 (hereinafter
the "Prior Agreement"), made by and between the Company and the Executive.

                                  INTRODUCTION

         The Company and the Executive entered into the Prior Agreement in order
to provide certain benefits to the Executive as an officer of the Company upon
the Executive's retirement.

         The Company and the Executive, by this current Agreement, desire to
amend and desire to restate the Prior Agreement, in its entirety, to include and
reflect the terms set forth herein and to incorporate the benefit accumulated to
date by the Executive under Prior Agreement.

         Therefore, in order to encourage the Executive to remain an employee of
the Company, the Company is willing to provide salary continuation benefits to
the Executive. The Company will pay the benefits from its general assets.

                                    AGREEMENT

         The Executive and the Company agree as follows:

                                    ARTICLE 1
                                   DEFINITIONS

         1.1      Definitions. Whenever used in this Agreement, the following
words and phrases shall have the meanings specified:

                  1.1.1    "Change of Control" means:

                  (a)      a change in the ownership of the capital stock of the
         Company or Peoples Financial Corporation (the "Holding Company"),
         whereby a corporation, person or group acting in concert (a "Person")
         as described in Section 14(d)(2) of the Securities Exchange Act of
         1934, as amended (the "Exchange Act"), holds or acquires, directly or
         indirectly, beneficial ownership (within the meaning of Rule 13d-3
         promulgated under the Exchange Act) of a number of shares of capital
         stock of the Company or Holding Company which constitutes fifty percent
         (50%) or more of the combined voting power of the Company's or Holding
         Company's outstanding capital stock then entitled to vote generally in
         the election of directors; or

                  (b)      the persons who were members of the Board of
         Directors of the Company or Holding Company immediately prior to a
         tender offer, exchange offer, contested election or any combination of
         the foregoing, cease to constitute a majority of such Board of
         Directors; or

                  (c)      the adoption by the Board of Directors of the Company
         or of the Holding Company of a merger, consolidation or reorganization
         plan involving the Company or Holding Company in which the Company or
         the Holding Company is not the surviving entity, or a sale of all or
         substantially all of the assets of the Company or Holding Company. For
         purposes of this Agreement, a sale of all or substantially all of the
         assets of the Company or Holding Company shall be deemed to occur if
         any Person acquires (or during the 12-month period ending on the date
         of the most recent acquisition by such Person, has acquired) gross
         assets of the Company or Holding Company that have an aggregate fair
         market value equal to fifty percent (50%) of the fair market value of
         all of the respective gross assets of the Company or Holding Company
         immediately prior to such acquisition or acquisitions; or

1

<PAGE>

                  (d)      a tender offer or exchange offer is made by any
         Person which, if successfully completed, would result in such Person
         beneficially owning (within the meaning of Rule 13d-3 promulgated under
         the Exchange Act) either fifty percent (50%) or more of the Company's
         or Holding Company's outstanding shares of Common Stock or shares of
         capital stock having fifty percent (50%) or more the combined voting
         power of the Company's or Holding Company's then outstanding capital
         stock (other than an offer made by the Company or the Holding Company),
         and sufficient shares are acquired under the offer to cause such person
         to own fifty percent (50%) or more of the voting power; or

                  (e)      any other transactions or series of related
         transactions occurring which have substantially the same effect as the
         transactions specified in any of the preceding clauses of this
         Subsection (1.1.1).

                           1.1.1.1  "Permitted Transfers" means that a
                  Shareholder, as hereinafter defined in Subsection 1.1.10 may
                  make the following transfers and such transfers shall be
                  deemed not to be a Change of Control under Subsection 1.1.1:

                                    (a)     To any trust, company, or
                                            partnership created solely for the
                                            benefit of any Shareholder or any
                                            spouse of or any lineal descendant
                                            of any Shareholder;

                                    (b)     To any individual or entity by bona
                                            fide gift;

                                    (c)     To any spouse or former spouse of
                                            any Shareholder pursuant to the
                                            terms of a decree of divorce;

                                    (d)     To any officer or employee of the
                                            Company pursuant to any incentive
                                            stock option plan established by the
                                            Shareholder;

                                    (e)     To any family member of any
                                            Shareholder;

                                    (f)     After receipt of any necessary
                                            regulatory approvals, to any company
                                            or partnership, including, but not
                                            limited to, a family limited
                                            partnership, a majority of the stock
                                            or interests of which company or
                                            partnership are owned by any of the
                                            Shareholder; or

                                    (g)     To any existing Shareholder as of
                                            the Effective Date.

         1.1.2    "Code" means the Internal Revenue Code of 1986, as amended.
References to a Code section shall be deemed to be to that section as it now
exists and to any successor provision.

         1.1.3    "Disability" means the Executive's suffering a sickness,
accident or injury which has been determined by the carrier of any individual or
group long-term disability insurance policy carried by the Company covering the
Executive, or, if no such long-term disability policy exists, then as determined
by the Social Security Administration, to be a disability rendering the
Executive totally and permanently disabled. The Executive must submit proof to
the Company of the carrier's or Social Security Administration's determination
upon the request of the Company.

         1.1.4    "Discount Rate" means eight percent (8%).

         1.1.5    "Early Retirement Date" means the date the Executive: (i)
attains at least age fifty-five (55); (ii) attains at least his fifteen (15)
year anniversary of employment at the Company; and, (iii) has participated in
the Prior Agreement, including this amendment and restatement of the Prior
Agreement, for five (5) years.

         1.1.6    "Executive Benefit Accrual" means the amount accrued as a
liability to the Executive by the Company by virtue of the terms of the Prior
Agreement through the Effective Date and by virtue of the terms of this
Agreement under Generally Accepted Accounting Principles (GAAP).

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<PAGE>

         1.1.7    "Normal Retirement Date" means the date the Executive attains
age sixty-five (65).

         1.1.8    "Plan Year" means each twelve (12) consecutive month period
commencing on the Effective Date. For example, the twelve month period
commencing on the date the Company and the Executive execute this Agreement
shall constitute then first Plan Year. The twelve month period following the
first Plan Year shall constitute the second Plan Year and so on.

         1.1.9    "Salary" means the base annual amount, without bonus or other
benefits, paid to the Executive by the Company as of the earlier to occur of:
(i) Termination of Employment; or, (ii) the Company' termination of the
Agreement under Section 7.3.

         1.1.10   "Shareholder" means the existing owners of all issued and
outstanding stock of the Company or Holding Company as of the date this
Agreement is signed.

         1.1.11   "Termination of Employment" or "Terminates Employment" means
the Executive's ceasing to be employed by the Company for any reason whatsoever,
voluntary or involuntary, other than by reason of an approved leave of absence.

                                    ARTICLE 2
                                LIFETIME BENEFITS

         2.1      Normal Retirement Benefit. If Termination of Employment occurs
on or after the Normal Retirement Date, the Company shall pay to the Executive
the benefit described in this Section 2.1.

                  2.1.1    Amount of Benefit. The benefit under this Section 2.1
         is fifty percent (50%) of the Executive's Salary.

                  2.1.2    Payment of Benefit. The Company shall pay the annual
         benefit determined under subsection 2.1.1 for a period of fifteen (15)
         years, payable monthly (one-twelfth [1/12th] of the annual benefit)
         beginning on the last day of the month commencing with the month
         following Termination of Employment. The monthly payments under this
         subsection 2.1.2 shall total one hundred eighty (180) substantially
         equal payments over a period of one hundred eighty (180) months.

         2.2      Early Retirement Benefit. If Termination of Employment occurs
on or after the Early Retirement Date and prior to the Normal Retirement Date,
the Company shall pay to the Executive the benefit described in this Section 2.2
in lieu of any other benefit under this Agreement.

                  2.2.1    Amount of Benefit. The benefit under this Section 2.2
         is the annual benefit set forth in subsection 2.1.1 reduced by one-half
         of a percent (0.5%) for each month or partial month between Termination
         of Employment and the Normal Retirement Date. By way of example, assume
         the Executive elects to retire at age 59 1/2, which is 66 months prior
         to the Normal Retirement Date. Assume further the annual benefit under
         subsection 2.1.1 equals thirty percent (30%) of Salary. Based on these
         assumptions the percentage of Salary payable under this subsection
         2.2.1 would equal 30% times 67% (100% minus the product of 66 times
         0.5%). The resulting annual benefit under this subsection 2.2.1, based
         on the assumptions in this example, would equal 20.10% (30% multiplied
         by 67%) of Salary.

                  2.2.2    Payment of Benefit. The Company shall pay the annual
         benefit determined under subsection 2.2.1 for a period of fifteen (15)
         years, payable monthly (one-twelfth [1/12th] of the annual benefit)
         beginning on the last day of the month commencing with the month
         following Termination of Employment. The monthly payments under this
         subsection 2.2.2 shall total one hundred eighty (180) substantially
         equal payments over a period of one hundred eighty (180) months.

         2.3      Termination of Employment Prior to the Early Retirement Date
or Prior to the Normal Retirement Date. Subject to the provisions of Section
2.5, if Termination of Employment occurs, for reasons other than death or
Disability, before either the Early Retirement Date or prior to the Normal
Retirement Date, the Company shall

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<PAGE>

pay to the Executive the benefit described in this Section 2.3.

                  2.3.1    Amount of Benefit. The benefit under this Section 2.3
         is the Executive Benefit Accrual as of Termination of Employment.

                  2.3.2    Payment of Benefit. The Company shall pay to the
         Executive the benefit set forth in subsection 2.3.1, in lieu of any
         other benefit under this Agreement, in a single lump-sum within sixty
         (60) days of Termination of Employment.

         2.4      Disability Benefit. If Termination of Employment due to a
Disability occurs prior to the Normal Retirement Date, the Company shall pay to
the Executive the benefit described in this Section 2.4.

                  2.4.1    Amount of Benefit. Subject to the provisions of
         Section 2.6 and Section 5.3, the annual benefit under this Section 2.4
         is the annual benefit set forth in subsection 2.1.1.

                  2.4.2    Payment of Benefit. The Company shall pay the annual
         benefit determined under subsection 2.4.1, in lieu of any other benefit
         under this Agreement, for a period of fifteen (15) years, payable
         monthly (one-twelfth [1/12th] of the annual benefit) beginning on the
         last day of the month commencing with the month following the
         Executive's Normal Retirement Date. The monthly payments under this
         subsection 2.4.2 shall total one hundred eighty (180) substantially
         equal payments over a period of one hundred eighty (180) months.

                  2.4.3    Death During Disability. In the event the Executive
         dies subsequent to Termination of Employment due to Disability and
         prior to receiving any payment under this Agreement, the Company shall
         pay the Executive's designated beneficiary the annual benefit set forth
         in subsection 3.1.1 and in the manner set forth in Section 3.1.2 in
         lieu of any other benefit under this Agreement.

         2.5      Change of Control Benefit. Upon a Change of Control prior to
Termination of Employment, the Company, subject to the provisions of Section 2.6
and Section 5.3, shall pay to the Executive the benefit described in this
Section 2.5 in lieu of any other benefit under this Agreement.

                  2.5.1    Amount of Benefit. The benefit under this Section 2.5
         is the present value of the payments under Section 2.1, assuming, for
         purposes of determining present value under this subsection 2.5.1 only,
         that the Executive was entitled to benefit payments under Section 2.1
         at Termination of Employment. In determining this present value the
         Company shall utilize the Discount Rate.

                  2.5.2    Payment of Benefit. The Company shall pay to the
         Executive the benefit set forth in subsection 2.5.1, in lieu of any
         other benefit under this Agreement, in a single lump-sum within sixty
         (60) days of Termination of Employment.

         2.6      Excess Parachute Payment. Notwithstanding any provision of
this Agreement to the contrary, the Company shall not pay any benefit under this
Agreement to the extent the benefit would be a non-deductible parachute payment
under Section 280G of the Code.

                                    ARTICLE 3
                                 DEATH BENEFITS

         3.1.     Death During Active Service. The Company shall pay to the
Executive's beneficiary the benefit described in this Section 3.1 if the
Executive dies: (i) while employed by the Company; or, (ii) after Termination of
Employment due to Disability prior to the Normal Retirement Date.

                  3.1.1.   Amount of Benefit. The annual benefit under this
         Section 3.1 is the annual benefit set forth in Section 2.1.1.

                  3.1.2.   Payment of Benefit. The Company shall pay the annual
         benefit determined under

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<PAGE>

         subsection 3.1.1, in lieu of any other benefit under this Agreement,
         for a period of fifteen (15) years, payable monthly (one-twelfth
         [1/12th] of the annual benefit) beginning on the last day of the month
         commencing with the month following the Executive's death. The monthly
         payments under this subsection 3.1.2 shall total one hundred eighty
         (180) substantially equal payments over a period of one hundred eighty
         (180) months.

         3.2.     Death During Benefit Period. If the Executive dies after
benefit payments have commenced under section of this Agreement, but before
receiving all such payments, the Company shall pay the remaining benefits to the
Executive's beneficiary at the same time and in the same amounts that would have
been paid to the Executive had the Executive survived. If the Executive's
designated beneficiary dies after benefit payments have commenced under this
Agreement but before receiving all such payments, the Company shall pay the
present value of the remaining benefits due under this Agreement, utilizing the
a discount rate of seven and one-half percent (7.5%) to determine the present
value of the remaining payments, to the estate of the Executive's designated
beneficiary in a single lump sum within sixty (60) days of the death of the
Executive's designated beneficiary.

                                    ARTICLE 4
                                  BENEFICIARIES

         4.1      Beneficiary Designations. The Executive shall designate a
beneficiary by filing with the Company a written designation of beneficiary on a
form substantially similar to the form attached as Exhibit A. The Executive may
revoke or modify the designation at any time by filing a new designation.
However, designations will only be effective if signed by the Executive and
accepted by the Company during the Executive's lifetime. The Executive's
beneficiary designation shall be deemed automatically revoked if the beneficiary
predeceases the Executive, or if the Executive names a spouse as beneficiary and
the marriage is subsequently dissolved. If the Executive dies without a valid
beneficiary designation, all payments shall be made to the Executive's surviving
spouse, if any, and if none, to the Executive's surviving children and the
descendants of any deceased child by right of representation, and if no children
or descendants survive, to the Executive's estate.

         4.2      Facility of Payment. If a benefit is payable to a minor, to a
person declared incompetent, or to a person incapable of handling the
disposition of his or her property, the Company may pay such benefit to the
guardian, legal representative or person having the care or custody of such
minor, incompetent person or incapable person, or to a custodian selected by the
Company under the Mississippi Uniform Transfers to Minors Act for the benefit of
such minor. The Company may require proof of incompetency, minority or
guardianship as it may deem appropriate prior to distribution of the benefit.
Such distribution shall completely discharge the Company from all liability with
respect to such benefit.

                                    ARTICLE 5
                               GENERAL LIMITATIONS

         Notwithstanding any provision of this Agreement to the contrary, the
Company shall not pay any benefit under this Agreement if any of the following
occur:

         5.1      Termination for Cause. If the Company terminates the
Executive's employment for any of the following reasons:

                  5.1.1    Conviction in a court of competent jurisdiction of a
         felony; or

                  5.1.2    Fraud, dishonesty, or embezzlement. Also, any willful
         violation of any law or willful violation of a significant Company
         policy committed in connection with the Executive's employment, with
         either resulting in an adverse effect on the Company.

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<PAGE>

         5.2      Suicide. No benefits shall be payable if the Executive commits
suicide within two (2) years after the date of this Agreement, or if the
Executive has made any material misstatement of fact on any application for life
insurance purchased by the Company.

         5.3      Golden Parachute Payment. Notwithstanding any provision of
this Agreement to the contrary, the Company shall not be required to pay any
benefit under this Agreement if, upon the advice of counsel, the Company
determines that the payment of such benefit would be prohibited by 12 C.F.R.
Part 359 or any successor regulations regarding employee compensation
promulgated by any regulatory agency having jurisdiction over the Company or its
affiliates or to the extent the benefit would be a non-deductible excess
parachute payment under Section 280G of the Code. To the extent possible, such
benefit payment shall be proportionately reduced to allow payment within the
fullest extent permissible under applicable law.

                                    ARTICLE 6
                          CLAIMS AND REVIEW PROCEDURES

         6.1      Claims Procedure. Any individual ("Claimant") who has not
received benefits under the Plan that he or she believes should be paid shall
make a claim for such benefits as follows:

                  6.1.1    Initiation - Written Claim. The Claimant initiates a
         claim by submitting to the Company a written claim for the benefits.

                  6.1.2    Timing of Company Response. The Company shall respond
         to such Claimant within 90 days after receiving the claim. If the
         Company determines that special circumstances require additional time
         for processing the claim, the Company can extend the response period by
         an additional 90 days by notifying the Claimant in writing, prior to
         the end of the initial 90-day period, that an additional period is
         required. The notice of extension must set forth the special
         circumstances and the date by which the Company expects to render its
         decision.

                  6.1.3    Notice of Decision. If the Company denies part or all
         of the claim, the Company shall notify the Claimant in writing of such
         denial. The Company shall write the notification in a manner calculated
         to be understood by the Claimant. The notification shall set forth:

                           (a)      The specific reasons for the denial,

                           (b)      A reference to the specific provisions of
                  the Plan on which the denial is based,

                           (c)      A description of any additional information
                  or material necessary for the Claimant to perfect the claim
                  and an explanation of why it is needed,

                           (d)      An explanation of the Plan's review
                  procedures and the time limits applicable to such procedures,
                  and

                           (e)      A statement of the Claimant's right to bring
                  a civil action under ERISA Section 502(a) following an adverse
                  benefit determination on review.

         6.2      Review Procedure. If the Company denies part or all of the
claim, the Claimant shall have the opportunity for a full and fair review by the
Company of the denial, as follows:

                  6.2.1    Initiation - Written Request. To initiate the review,
         the Claimant, within 60 days after receiving the Company's notice of
         denial, must file with the Company a written request for review.

                  6.2.2    Additional Submissions - Information Access. The
         Claimant shall then have the opportunity to submit written comments,
         documents, records and other information relating to the claim. The
         Company shall also provide the Claimant, upon request and free of
         charge, reasonable access to, and copies of, all documents, records and
         other information relevant (as defined in applicable ERISA regulations)
         to the Claimant's claim for benefits.

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<PAGE>

                  6.2.3    Considerations on Review. In considering the review,
         the Company shall take into account all materials and information the
         Claimant submits relating to the claim, without regard to whether such
         information was submitted or considered in the initial benefit
         determination.

                  6.2.4    Timing of Company Response. The Company shall respond
         in writing to such Claimant within 60 days after receiving the request
         for review. If the Company determines that special circumstances
         require additional time for processing the claim, the Company can
         extend the response period by an additional 60 days by notifying the
         Claimant in writing, prior to the end of the initial 60-day period,
         that an additional period is required. The notice of extension must set
         forth the special circumstances and the date by which the Company
         expects to render its decision.

                  6.2.5    Notice of Decision. The Company shall notify the
         Claimant in writing of its decision on review. The Company shall write
         the notification in a manner calculated to be understood by the
         Claimant. The notification shall set forth:

                           (a)      The specific reasons for the denial,

                           (b)      A reference to the specific provisions of
                  the Plan on which the denial is based,

                           (c)      A statement that the Claimant is entitled to
                  receive, upon request and free of charge, reasonable access
                  to, and copies of, all documents, records and other
                  information relevant (as defined in applicable ERISA
                  regulations) to the Claimant's claim for benefits, and

                           (d)      A statement of the Claimant's right to bring
                  a civil action under ERISA Section 502(a).

                                    ARTICLE 7
                           AMENDMENTS AND TERMINATION

         7.1      Amendment or Termination of Agreement. This Agreement may be
amended or terminated only by at a written agreement signed by the Company and
the Executive.

         7.2      Termination by Operation of Law. Notwithstanding the previous
paragraph in this Article 7, the Company may amend or terminate this Agreement
at any time if, pursuant to legislative, judicial or regulatory action,
continuation of the Agreement would (i) cause benefits to be taxable to the
Executive prior to actual receipt, or (ii) result in significant financial
penalties or other significantly detrimental ramifications to the Company (other
than the financial impact of paying the benefits). In the event of a termination
of the Agreement under this Section 7.2, the Company shall pay to the Executive
a single lump-sum payment equaling one hundred percent (100%) of the Executive
Benefit Accrual one hundred eighty (180) days from termination of the Agreement.

         7.3      Termination by Company. The Company may terminate this
Agreement at any time. In the event the Company terminates this Agreement, for
reasons other than those set forth in Section 7.1 or Section 7.2, the Company,
subject to Section 2.6 and Section 5.3, shall pay the Executive the benefit
provided in subsection Section 2.5, assuming, for purposes of this Section 7.3
only, that upon Termination of the Agreement by the Company under this Section
7.3 Termination of Employment occurred, even if the Executive continues
employment with the Company after Termination of the Agreement under this
Section 7.3.

                                    ARTICLE 8
                                  MISCELLANEOUS

         8.1      Binding Effect. This Agreement shall bind the Executive and
the Company, and their beneficiaries, survivors, executors, administrators and
permitted transferees.

         8.2      No Guaranty of Employment. This Agreement is not an employment
policy or contract. It does not give the Executive the right to remain an
employee of the Company, nor does it interfere with the Company's

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<PAGE>

right to discharge the Executive. It also does not require the Executive to
remain an employee nor interfere with the Executive's right to terminate
employment at any time.

         8.3      Non-Transferability. Benefits under this Agreement cannot be
sold, transferred, assigned, pledged, attached or encumbered in any manner,
except in accordance with Article 4 with respect to designation of
beneficiaries.

         8.4      Tax Withholding. The Company shall withhold any taxes that are
required to be withheld from the benefits provided under this Agreement.

         8.5      Applicable Law. The Agreement and all rights hereunder shall
be governed by the laws of the State of Mississippi, except to the extent
preempted by the laws of the United States of America.

         8.6      Unfunded Arrangement. The Executive and beneficiary are
general unsecured creditors of the Company for the payment of benefits under
this Agreement. The benefits represent the mere promise by the Company to pay
such benefits. The rights to benefits are not subject in any manner to
anticipation, alienation, sale, transfer, assignment, pledge, encumbrance,
attachment, or garnishment by creditors. Any insurance on the Executive's life
is a general asset of the Company to which the Executive and beneficiary have no
preferred or secured claim.

         8.7      Severability. Without limitation of any other section
contained herein, in case any one or more provisions contained in this Agreement
shall for any reason be held to be invalid, illegal or unenforceable in any
other respect, such invalidity, illegality or unenforceability shall not affect
the other provisions of this Agreement. In the event any one or more of the
provisions found in the Agreement shall be held to be invalid, illegal or
unenforceable by any governmental regulatory agency or court of competent
jurisdiction, this Agreement shall be construed as if such invalid, illegal or
unenforceable provision had never been a part of this Agreement and such
provision shall be deemed substituted by such other provisions as will most
nearly accomplish the intent of the parties to the extent permitted by
applicable law.

         8.8      Administration. The Company shall have powers which are
necessary to administer this Agreement, including but not limited to:

                  (a)      Interpreting the provisions of the Agreement;

                  (b)      Establishing and revising the method of accounting
         for the Agreement;

                  (c)      Maintaining a record of benefit payments; and

                  (d)      Establishing rules and prescribing any forms
         necessary or desirable to administer the Agreement.

         8.9      Named Fiduciary. The Company shall be the named fiduciary and
plan administrator under this Agreement. It may delegate to others certain
aspects of the management and operational responsibilities including the
employment of advisors and the delegation of ministerial duties to qualified
individuals.

         8.10     Full Obligation. Notwithstanding any provision to the
contrary, when the Company has paid either a Lifetime Benefit or a Death Benefit
as appropriate under any section of the Agreement, the Company has completed its
obligation to the Executive.

         IN WITNESS WHEREOF, the Executive and a duly authorized Company officer
have signed this Agreement as of the date indicated below.

COMPANY:                                   EXECUTIVE:
THE PEOPLES BANK

By: _________________________________      __________________________________

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<PAGE>

                                           THOMAS J. SLIMAN

Its: _________________________________

Date: _________________                    Date:_________________

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<PAGE>

                                    EXHIBIT A
                             BENEFICIARY DESIGNATION

I, _____________________________, designate the following as beneficiary of any
death benefits payable under the Amendment and Restatement of Executive
Supplemental Income Agreement between myself and The Peoples Bank:

Primary Beneficiary

Name                                    Relationship

Address

Contingent Beneficiary

Name                                    Relationship

Address

NOTE: TO NAME A TRUST AS BENEFICIARY, PLEASE PROVIDE THE NAME OF THE TRUSTEE AND
THE EXACT DATE OF THE TRUST AGREEMENT.

I understand that I may change these beneficiary designations by filing a new
written designation with the Company. I further understand that the designations
will be automatically revoked if the beneficiary predeceases me, or, if I have
named my spouse as beneficiary, in the event of the dissolution of our marriage.

                                                       Date

Accepted by the Company this _____ day of _____________, 20___

By:

Title:

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<PAGE>

                          AMENDMENT AND RESTATEMENT OF
                     EXECUTIVE SUPPLEMENTAL INCOME AGREEMENT

         This Agreement, effective as of October 1, 2002 (The "Effective Date"),
is made by and between The Peoples Bank, a state-chartered commercial bank with
its principal office located in Biloxi, Mississippi (hereinafter referred to as
the "Company"), and A. Wes Fulmer (hereinafter referred to as the "Executive").
This Agreement hereby amends and restates, in its entirety, a prior agreement,
with an initial effective date of January 1, 1995 (hereinafter the "Prior
Agreement"), made by and between the Company and the Executive.

                                  INTRODUCTION

         The Company and the Executive entered into the Prior Agreement in order
to provide certain benefits to the Executive as an officer of the Company upon
the Executive's retirement.

         The Company and the Executive, by this current Agreement, desire to
amend and desire to restate the Prior Agreement, in its entirety, to include and
reflect the terms set forth herein and to incorporate the benefit accumulated to
date by the Executive under Prior Agreement.

         Therefore, in order to encourage the Executive to remain an employee of
the Company, the Company is willing to provide salary continuation benefits to
the Executive. The Company will pay the benefits from its general assets.

                                    AGREEMENT

         The Executive and the Company agree as follows:

                                    ARTICLE 1
                                   DEFINITIONS

         1.1      Definitions. Whenever used in this Agreement, the following
words and phrases shall have the meanings specified:

                  1.1.1    "Change of Control" means:

                  (a)      a change in the ownership of the capital stock of the
         Company or Peoples Financial Corporation (the "Holding Company"),
         whereby a corporation, person or group acting in concert (a "Person")
         as described in Section 14(d)(2) of the Securities Exchange Act of
         1934, as amended (the "Exchange Act"), holds or acquires, directly or
         indirectly, beneficial ownership (within the meaning of Rule 13d-3
         promulgated under the Exchange Act) of a number of shares of capital
         stock of the Company or Holding Company which constitutes fifty percent
         (50%) or more of the combined voting power of the Company's or Holding
         Company's outstanding capital stock then entitled to vote generally in
         the election of directors; or

                  (b)      the persons who were members of the Board of
         Directors of the Company or Holding Company immediately prior to a
         tender offer, exchange offer, contested election or any combination of
         the foregoing, cease to constitute a majority of such Board of
         Directors; or

                  (c)      the adoption by the Board of Directors of the Company
         or of the Holding Company of a merger, consolidation or reorganization
         plan involving the Company or Holding Company in which the Company or
         the Holding Company is not the surviving entity, or a sale of all or
         substantially all of the assets of the Company or Holding Company. For
         purposes of this Agreement, a sale of all or substantially all of the
         assets of the Company or Holding Company shall be deemed to occur if
         any Person acquires (or during the 12-month period ending on the date
         of the most recent acquisition by such Person, has acquired) gross
         assets of the Company or Holding Company that have an aggregate fair
         market value equal to fifty percent (50%) of the fair market value of
         all of the respective gross assets of the Company or Holding Company
         immediately prior to such acquisition or acquisitions; or

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<PAGE>

                  (d)      a tender offer or exchange offer is made by any
         Person which, if successfully completed, would result in such Person
         beneficially owning (within the meaning of Rule 13d-3 promulgated under
         the Exchange Act) either fifty percent (50%) or more of the Company's
         or Holding Company's outstanding shares of Common Stock or shares of
         capital stock having fifty percent (50%) or more the combined voting
         power of the Company's or Holding Company's then outstanding capital
         stock (other than an offer made by the Company or the Holding Company),
         and sufficient shares are acquired under the offer to cause such person
         to own fifty percent (50%) or more of the voting power; or

                  (e)      any other transactions or series of related
         transactions occurring which have substantially the same effect as the
         transactions specified in any of the preceding clauses of this
         Subsection (1.1.1).

                           1.1.1.1  "Permitted Transfers" means that a
                  Shareholder, as hereinafter defined in Subsection 1.1.10 may
                  make the following transfers and such transfers shall be
                  deemed not to be a Change of Control under Subsection 1.1.1:

                                    (a)      To any trust, company, or
                                             partnership created solely for the
                                             benefit of any Shareholder or any
                                             spouse of or any lineal descendant
                                             of any Shareholder;

                                    (b)      To any individual or entity by bona
                                             fide gift;

                                    (c)      To any spouse or former spouse of
                                             any Shareholder pursuant to the
                                             terms of a decree of divorce;

                                    (d)      To any officer or employee of the
                                             Company pursuant to any incentive
                                             stock option plan established by
                                             the Shareholder;

                                    (e)      To any family member of any
                                             Shareholder;

                                    (f)      After receipt of any necessary
                                             regulatory approvals, to any
                                             company or partnership, including,
                                             but not limited to, a family
                                             limited partnership, a majority of
                                             the stock or interests of which
                                             company or partnership are owned by
                                             any of the Shareholder; or

                                    (g)      To any existing Shareholder as of
                                             the Effective Date.

         1.1.2    "Code" means the Internal Revenue Code of 1986, as amended.
References to a Code section shall be deemed to be to that section as it now
exists and to any successor provision.

         1.1.3    "Disability" means the Executive's suffering a sickness,
accident or injury which has been determined by the carrier of any individual or
group long-term disability insurance policy carried by the Company covering the
Executive, or, if no such long-term disability policy exists, then as determined
by the Social Security Administration, to be a disability rendering the
Executive totally and permanently disabled. The Executive must submit proof to
the Company of the carrier's or Social Security Administration's determination
upon the request of the Company.

         1.1.4    "Discount Rate" means eight percent (8%).

         1.1.5    "Early Retirement Date" means the date the Executive: (i)
attains at least age fifty-five (55); (ii) attains at least his fifteen (15)
year anniversary of employment at the Company; and, (iii) has participated in
the Prior Agreement, including this amendment and restatement of the Prior
Agreement, for five (5) years.

         1.1.6    "Executive Benefit Accrual" means the amount accrued as a
liability to the Executive by the Company by virtue of the terms of the Prior
Agreement through the Effective Date and by virtue of the terms of this
Agreement under Generally Accepted Accounting Principles (GAAP).

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         1.1.7    "Normal Retirement Date" means the date the Executive attains
age sixty-five (65).

         1.1.8    "Plan Year" means each twelve (12) consecutive month period
commencing on the Effective Date. For example, the twelve month period
commencing on the date the Company and the Executive execute this Agreement
shall constitute then first Plan Year. The twelve month period following the
first Plan Year shall constitute the second Plan Year and so on.

         1.1.9    "Salary" means the base annual amount, without bonus or other
benefits, paid to the Executive by the Company as of the earlier to occur of:
(i) Termination of Employment; or, (ii) the Company' termination of the
Agreement under Section 7.3.

         1.1.10   "Shareholder" means the existing owners of all issued and
outstanding stock of the Company or Holding Company as of the date this
Agreement is signed.

         1.1.11   "Termination of Employment" or "Terminates Employment" means
the Executive's ceasing to be employed by the Company for any reason whatsoever,
voluntary or involuntary, other than by reason of an approved leave of absence.

                                    ARTICLE 2
                                LIFETIME BENEFITS

         2.1      Normal Retirement Benefit. If Termination of Employment occurs
on or after the Normal Retirement Date, the Company shall pay to the Executive
the benefit described in this Section 2.1.

                  2.1.1    Amount of Benefit. The benefit under this Section 2.1
         is fifty percent (50%) of the Executive's Salary.

                  2.1.2    Payment of Benefit. The Company shall pay the annual
         benefit determined under subsection 2.1.1 for a period of fifteen (15)
         years, payable monthly (one-twelfth [1/12th] of the annual benefit)
         beginning on the last day of the month commencing with the month
         following Termination of Employment. The monthly payments under this
         subsection 2.1.2 shall total one hundred eighty (180) substantially
         equal payments over a period of one hundred eighty (180) months.

         2.2      Early Retirement Benefit. If Termination of Employment occurs
on or after the Early Retirement Date and prior to the Normal Retirement Date,
the Company shall pay to the Executive the benefit described in this Section 2.2
in lieu of any other benefit under this Agreement.

                  2.2.1    Amount of Benefit. The benefit under this Section 2.2
         is the annual benefit set forth in subsection 2.1.1 reduced by one-half
         of a percent (0.5%) for each month or partial month between Termination
         of Employment and the Normal Retirement Date. By way of example, assume
         the Executive elects to retire at age 59 1/2, which is 66 months prior
         to the Normal Retirement Date. Assume further the annual benefit under
         subsection 2.1.1 equals thirty percent (30%) of Salary. Based on these
         assumptions the percentage of Salary payable under this subsection
         2.2.1 would equal 30% times 67% (100% minus the product of 66 times
         0.5%). The resulting annual benefit under this subsection 2.2.1, based
         on the assumptions in this example, would equal 20.10% (30% multiplied
         by 67%) of Salary.

                  2.2.2    Payment of Benefit. The Company shall pay the annual
         benefit determined under subsection 2.2.1 for a period of fifteen (15)
         years, payable monthly (one-twelfth [1/12th] of the annual benefit)
         beginning on the last day of the month commencing with the month
         following Termination of Employment. The monthly payments under this
         subsection 2.2.2 shall total one hundred eighty (180) substantially
         equal payments over a period of one hundred eighty (180) months.

         2.3      Termination of Employment Prior to the Early Retirement Date
or Prior to the Normal Retirement Date. Subject to the provisions of Section
2.5, if Termination of Employment occurs, for reasons other than death or
Disability, before either the Early Retirement Date or prior to the Normal
Retirement Date, the Company shall

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<PAGE>

pay to the Executive the benefit described in this Section 2.3.

                  2.3.1    Amount of Benefit. The benefit under this Section 2.3
         is the Executive Benefit Accrual as of Termination of Employment.

                  2.3.2    Payment of Benefit. The Company shall pay to the
         Executive the benefit set forth in subsection 2.3.1, in lieu of any
         other benefit under this Agreement, in a single lump-sum within sixty
         (60) days of Termination of Employment.

         2.4      Disability Benefit. If Termination of Employment due to a
Disability occurs prior to the Normal Retirement Date, the Company shall pay to
the Executive the benefit described in this Section 2.4.

                  2.4.1    Amount of Benefit. Subject to the provisions of
         Section 2.6 and Section 5.3, the annual benefit under this Section 2.4
         is the annual benefit set forth in subsection 2.1.1.

                  2.4.2    Payment of Benefit. The Company shall pay the annual
         benefit determined under subsection 2.4.1, in lieu of any other benefit
         under this Agreement, for a period of fifteen (15) years, payable
         monthly (one-twelfth [1/12th] of the annual benefit) beginning on the
         last day of the month commencing with the month following the
         Executive's Normal Retirement Date. The monthly payments under this
         subsection 2.4.2 shall total one hundred eighty (180) substantially
         equal payments over a period of one hundred eighty (180) months.

                  2.4.3    Death During Disability. In the event the Executive
         dies subsequent to Termination of Employment due to Disability and
         prior to receiving any payment under this Agreement, the Company shall
         pay the Executive's designated beneficiary the annual benefit set forth
         in subsection 3.1.1 and in the manner set forth in Section 3.1.2 in
         lieu of any other benefit under this Agreement.

         2.5      Change of Control Benefit. Upon a Change of Control prior to
Termination of Employment, the Company, subject to the provisions of Section 2.6
and Section 5.3, shall pay to the Executive the benefit described in this
Section 2.5 in lieu of any other benefit under this Agreement.

                  2.5.1    Amount of Benefit. The benefit under this Section 2.5
         is the present value of the payments under Section 2.1, assuming, for
         purposes of determining present value under this subsection 2.5.1 only,
         that the Executive was entitled to benefit payments under Section 2.1
         at Termination of Employment. In determining this present value the
         Company shall utilize the Discount Rate.

                  2.5.2    Payment of Benefit. The Company shall pay to the
         Executive the benefit set forth in subsection 2.5.1, in lieu of any
         other benefit under this Agreement, in a single lump-sum within sixty
         (60) days of Termination of Employment.

         2.6      Excess Parachute Payment. Notwithstanding any provision of
this Agreement to the contrary, the Company shall not pay any benefit under this
Agreement to the extent the benefit would be a non-deductible parachute payment
under Section 280G of the Code.

                                    ARTICLE 3
                                 DEATH BENEFITS

         3.1.     Death During Active Service. The Company shall pay to the
Executive's beneficiary the benefit described in this Section 3.1 if the
Executive dies: (i) while employed by the Company; or, (ii) after Termination of
Employment due to Disability prior to the Normal Retirement Date.

                  3.1.1.   Amount of Benefit. The annual benefit under this
         Section 3.1 is the annual benefit set forth in Section 2.1.1.

                  3.1.2.   Payment of Benefit. The Company shall pay the annual
         benefit determined under

4
<PAGE>

         subsection 3.1.1, in lieu of any other benefit under this Agreement,
         for a period of fifteen (15) years, payable monthly (one-twelfth
         [1/12th] of the annual benefit) beginning on the last day of the month
         commencing with the month following the Executive's death. The monthly
         payments under this subsection 3.1.2 shall total one hundred eighty
         (180) substantially equal payments over a period of one hundred eighty
         (180) months.

                  3.2.     Death During Benefit Period. If the Executive dies
after benefit payments have commenced under section of this Agreement, but
before receiving all such payments, the Company shall pay the remaining benefits
to the Executive's beneficiary at the same time and in the same amounts that
would have been paid to the Executive had the Executive survived. If the
Executive's designated beneficiary dies after benefit payments have commenced
under this Agreement but before receiving all such payments, the Company shall
pay the present value of the remaining benefits due under this Agreement,
utilizing the a discount rate of seven and one-half percent (7.5%) to determine
the present value of the remaining payments, to the estate of the Executive's
designated beneficiary in a single lump sum within sixty (60) days of the death
of the Executive's designated beneficiary.

                                    ARTICLE 4
                                  BENEFICIARIES

         4.1      Beneficiary Designations. The Executive shall designate a
beneficiary by filing with the Company a written designation of beneficiary on a
form substantially similar to the form attached as Exhibit A. The Executive may
revoke or modify the designation at any time by filing a new designation.
However, designations will only be effective if signed by the Executive and
accepted by the Company during the Executive's lifetime. The Executive's
beneficiary designation shall be deemed automatically revoked if the beneficiary
predeceases the Executive, or if the Executive names a spouse as beneficiary and
the marriage is subsequently dissolved. If the Executive dies without a valid
beneficiary designation, all payments shall be made to the Executive's surviving
spouse, if any, and if none, to the Executive's surviving children and the
descendants of any deceased child by right of representation, and if no children
or descendants survive, to the Executive's estate.

         4.2      Facility of Payment. If a benefit is payable to a minor, to a
person declared incompetent, or to a person incapable of handling the
disposition of his or her property, the Company may pay such benefit to the
guardian, legal representative or person having the care or custody of such
minor, incompetent person or incapable person, or to a custodian selected by the
Company under the Mississippi Uniform Transfers to Minors Act for the benefit of
such minor. The Company may require proof of incompetency, minority or
guardianship as it may deem appropriate prior to distribution of the benefit.
Such distribution shall completely discharge the Company from all liability with
respect to such benefit.

                                    ARTICLE 5
                               GENERAL LIMITATIONS

         Notwithstanding any provision of this Agreement to the contrary, the
Company shall not pay any benefit under this Agreement if any of the following
occur:

         5.1      Termination for Cause. If the Company terminates the
Executive's employment for any of the following reasons:

                  5.1.1    Conviction in a court of competent jurisdiction of a
         felony; or

                  5.1.2    Fraud, dishonesty, or embezzlement. Also, any willful
         violation of any law or willful violation of a significant Company
         policy committed in connection with the Executive's employment, with
         either resulting in an adverse effect on the Company.

5
<PAGE>

         5.2      Suicide. No benefits shall be payable if the Executive commits
suicide within two (2) years after the date of this Agreement, or if the
Executive has made any material misstatement of fact on any application for life
insurance purchased by the Company.

         5.3      Golden Parachute Payment. Notwithstanding any provision of
this Agreement to the contrary, the Company shall not be required to pay any
benefit under this Agreement if, upon the advice of counsel, the Company
determines that the payment of such benefit would be prohibited by 12 C.F.R.
Part 359 or any successor regulations regarding employee compensation
promulgated by any regulatory agency having jurisdiction over the Company or its
affiliates or to the extent the benefit would be a non-deductible excess
parachute payment under Section 280G of the Code. To the extent possible, such
benefit payment shall be proportionately reduced to allow payment within the
fullest extent permissible under applicable law.

                                    ARTICLE 6
                          CLAIMS AND REVIEW PROCEDURES

         6.1      Claims Procedure. Any individual ("Claimant") who has not
received benefits under the Plan that he or she believes should be paid shall
make a claim for such benefits as follows:

                  6.1.1    Initiation - Written Claim. The Claimant initiates a
         claim by submitting to the Company a written claim for the benefits.

                  6.1.2    Timing of Company Response. The Company shall respond
         to such Claimant within 90 days after receiving the claim. If the
         Company determines that special circumstances require additional time
         for processing the claim, the Company can extend the response period by
         an additional 90 days by notifying the Claimant in writing, prior to
         the end of the initial 90-day period, that an additional period is
         required. The notice of extension must set forth the special
         circumstances and the date by which the Company expects to render its
         decision.

                  6.1.3    Notice of Decision. If the Company denies part or all
         of the claim, the Company shall notify the Claimant in writing of such
         denial. The Company shall write the notification in a manner calculated
         to be understood by the Claimant. The notification shall set forth:

                           (a)      The specific reasons for the denial,

                           (b)      A reference to the specific provisions of
                                    the Plan on which the denial is based,

                           (c)      A description of any additional information
                                    or material necessary for the Claimant to
                                    perfect the claim and an explanation of why
                                    it is needed,

                           (d)      An explanation of the Plan's review
                                    procedures and the time limits applicable to
                                    such procedures, and

                           (e)      A statement of the Claimant's right to bring
                                    a civil action under ERISA Section 502(a)
                                    following an adverse benefit determination
                                    on review.

         6.2      Review Procedure. If the Company denies part or all of the
claim, the Claimant shall have the opportunity for a full and fair review by the
Company of the denial, as follows:

                  6.2.1    Initiation - Written Request. To initiate the review,
         the Claimant, within 60 days after receiving the Company's notice of
         denial, must file with the Company a written request for review.

                  6.2.2    Additional Submissions - Information Access. The
         Claimant shall then have the opportunity to submit written comments,
         documents, records and other information relating to the claim. The
         Company shall also provide the Claimant, upon request and free of
         charge, reasonable access to, and copies of, all documents, records and
         other information relevant (as defined in applicable ERISA regulations)
         to the Claimant's claim for benefits.

6
<PAGE>

                  6.2.3    Considerations on Review. In considering the review,
         the Company shall take into account all materials and information the
         Claimant submits relating to the claim, without regard to whether such
         information was submitted or considered in the initial benefit
         determination.

                  6.2.4    Timing of Company Response. The Company shall respond
         in writing to such Claimant within 60 days after receiving the request
         for review. If the Company determines that special circumstances
         require additional time for processing the claim, the Company can
         extend the response period by an additional 60 days by notifying the
         Claimant in writing, prior to the end of the initial 60-day period,
         that an additional period is required. The notice of extension must set
         forth the special circumstances and the date by which the Company
         expects to render its decision.

                  6.2.5    Notice of Decision. The Company shall notify the
         Claimant in writing of its decision on review. The Company shall write
         the notification in a manner calculated to be understood by the
         Claimant. The notification shall set forth:

                           (a)      The specific reasons for the denial,

                           (b)      A reference to the specific provisions of
                                    the Plan on which the denial is based,

                           (c)      A statement that the Claimant is entitled to
                                    receive, upon request and free of charge,
                                    reasonable access to, and copies of, all
                                    documents, records and other information
                                    relevant (as defined in applicable ERISA
                                    regulations) to the Claimant's claim for
                                    benefits, and

                           (d)      A statement of the Claimant's right to bring
                                    a civil action under ERISA Section 502(a).

                                    ARTICLE 7
                           AMENDMENTS AND TERMINATION

         7.1      Amendment or Termination of Agreement. This Agreement may be
amended or terminated only by at a written agreement signed by the Company and
the Executive.

         7.2      Termination by Operation of Law. Notwithstanding the previous
paragraph in this Article 7, the Company may amend or terminate this Agreement
at any time if, pursuant to legislative, judicial or regulatory action,
continuation of the Agreement would (i) cause benefits to be taxable to the
Executive prior to actual receipt, or (ii) result in significant financial
penalties or other significantly detrimental ramifications to the Company (other
than the financial impact of paying the benefits). In the event of a termination
of the Agreement under this Section 7.2, the Company shall pay to the Executive
a single lump-sum payment equaling one hundred percent (100%) of the Executive
Benefit Accrual one hundred eighty (180) days from termination of the Agreement.

         7.3      Termination by Company. The Company may terminate this
Agreement at any time. In the event the Company terminates this Agreement, for
reasons other than those set forth in Section 7.1 or Section 7.2, the Company,
subject to Section 2.6 and Section 5.3, shall pay the Executive the benefit
provided in subsection Section 2.5, assuming, for purposes of this Section 7.3
only, that upon Termination of the Agreement by the Company under this Section
7.3 Termination of Employment occurred, even if the Executive continues
employment with the Company after Termination of the Agreement under this
Section 7.3.

                                    ARTICLE 8
                                  MISCELLANEOUS

         8.1      Binding Effect. This Agreement shall bind the Executive and
the Company, and their beneficiaries, survivors, executors, administrators and
permitted transferees.

         8.2      No Guaranty of Employment. This Agreement is not an employment
policy or contract. It does not give the Executive the right to remain an
employee of the Company, nor does it interfere with the Company's

7
<PAGE>

right to discharge the Executive. It also does not require the Executive to
remain an employee nor interfere with the Executive's right to terminate
employment at any time.

         8.3      Non-Transferability. Benefits under this Agreement cannot be
sold, transferred, assigned, pledged, attached or encumbered in any manner,
except in accordance with Article 4 with respect to designation of
beneficiaries.

         8.4      Tax Withholding. The Company shall withhold any taxes that are
required to be withheld from the benefits provided under this Agreement.

         8.5      Applicable Law. The Agreement and all rights hereunder shall
be governed by the laws of the State of Mississippi, except to the extent
preempted by the laws of the United States of America.

         8.6      Unfunded Arrangement. The Executive and beneficiary are
general unsecured creditors of the Company for the payment of benefits under
this Agreement. The benefits represent the mere promise by the Company to pay
such benefits. The rights to benefits are not subject in any manner to
anticipation, alienation, sale, transfer, assignment, pledge, encumbrance,
attachment, or garnishment by creditors. Any insurance on the Executive's life
is a general asset of the Company to which the Executive and beneficiary have no
preferred or secured claim.

         8.7      Severability. Without limitation of any other section
contained herein, in case any one or more provisions contained in this Agreement
shall for any reason be held to be invalid, illegal or unenforceable in any
other respect, such invalidity, illegality or unenforceability shall not affect
the other provisions of this Agreement. In the event any one or more of the
provisions found in the Agreement shall be held to be invalid, illegal or
unenforceable by any governmental regulatory agency or court of competent
jurisdiction, this Agreement shall be construed as if such invalid, illegal or
unenforceable provision had never been a part of this Agreement and such
provision shall be deemed substituted by such other provisions as will most
nearly accomplish the intent of the parties to the extent permitted by
applicable law.

         8.8      Administration. The Company shall have powers which are
necessary to administer this Agreement, including but not limited to:

                  (a)      Interpreting the provisions of the Agreement;

                  (b)      Establishing and revising the method of accounting
                           for the Agreement;

                  (c)      Maintaining a record of benefit payments; and

                  (d)      Establishing rules and prescribing any forms
                           necessary or desirable to administer the Agreement.

         8.9      Named Fiduciary. The Company shall be the named fiduciary and
plan administrator under this Agreement. It may delegate to others certain
aspects of the management and operational responsibilities including the
employment of advisors and the delegation of ministerial duties to qualified
individuals.

         8.10     Full Obligation. Notwithstanding any provision to the
contrary, when the Company has paid either a Lifetime Benefit or a Death Benefit
as appropriate under any section of the Agreement, the Company has completed its
obligation to the Executive.

         IN WITNESS WHEREOF, the Executive and a duly authorized Company officer
have signed this Agreement as of the date indicated below.

COMPANY:                                             EXECUTIVE:
THE PEOPLES BANK

By: ___________________________             _________________________________

8
<PAGE>

                                                  A. WES FULMER

Its: _________________________________

Date: _________________________                   Date: ____________________

9
<PAGE>

                                    EXHIBIT A
                             BENEFICIARY DESIGNATION

I, _____________________________, designate the following as beneficiary of any
death benefits payable under the Amendment and Restatement of Executive
Supplemental Income Agreement between myself and The Peoples Bank:

Primary Beneficiary

Name                                   Relationship

Address

Contingent Beneficiary

Name                                   Relationship

Address

NOTE: TO NAME A TRUST AS BENEFICIARY, PLEASE PROVIDE THE NAME OF THE TRUSTEE AND
THE EXACT DATE OF THE TRUST AGREEMENT.

I understand that I may change these beneficiary designations by filing a new
written designation with the Company. I further understand that the designations
will be automatically revoked if the beneficiary predeceases me, or, if I have
named my spouse as beneficiary, in the event of the dissolution of our marriage.

                                                 Date

Accepted by the Company this _____ day of _____________, 20___

By:

Title:

10<PAGE>

                                                                    EXHIBIT 10.4

                                THE PEOPLES BANK
                             SPLIT DOLLAR AGREEMENT

         THIS AGREEMENT, effective January 1, 2003 (the "Effective Date"), is
made by and between The Peoples Bank, a state-chartered commercial bank with its
principal office located in Biloxi, Mississippi (the "Company"), and Chevis C.
Swetman (the "Executive"), a key officer employed by the Company and a director
of the Company.

                                  INTRODUCTION

         WHEREAS, the Executive has contributed substantially to the success and
profitability of the Company and it is expected that the Executive will continue
to contribute substantially to the success and profitability of the Company;

         WHEREAS, as a result of these contributions and to ensure that the
Executive maintains his relationship with the Company, the Company is willing to
divide the death proceeds of a life insurance policy on the Executive's life.
The Company will pay for its portion of the life insurance premiums from its
general assets; and,

         WHEREAS, in order to encourage the Executive to continue his
relationship with the Company, to remain employed by the Company until his
retirement or death, the Company agrees to provide the aforementioned benefit to
the Executive as a current benefit that will continue beyond the date the
Executive's service to the Company ends;

                                    AGREEMENT

         The Executive and the Company agree as follows:

                                    ARTICLE 1
                               GENERAL DEFINITIONS

The following terms shall have the meanings specified:

         1.1      "Change of Control" means:

                  (a)      a change in the ownership of the capital stock of the
         Company or Peoples Financial Corporation (the "Holding Company"),
         whereby a corporation, person or group acting in concert (a "Person")
         as described in Section 14(d)(2) of the Securities Exchange Act of
         1934, as amended (the "Exchange Act"), holds or acquires, directly or
         indirectly, beneficial ownership (within the meaning of Rule 13d-3
         promulgated under the Exchange Act) of a number of shares of capital
         stock of the Company or Holding Company which constitutes fifty percent
         (50%) or more of the combined voting power of the Company's

<PAGE>

         or Holding Company's outstanding capital stock then entitled to vote
         generally in the election of directors; or

                  (b)      the persons who were members of the Board of
         Directors of the Company or Holding Company immediately prior to a
         tender offer, exchange offer, contested election or any combination of
         the foregoing, cease to constitute a majority of such Board of
         Directors; or

                  (c)      the adoption by the Board of Directors of the Company
         or of the Holding Company of a merger, consolidation or reorganization
         plan involving the Company or Holding Company in which the Company or
         the Holding Company is not the surviving entity, or a sale of all or
         substantially all of the assets of the Company or Holding Company. For
         purposes of this Agreement, a sale of all or substantially all of the
         assets of the Company or Holding Company shall be deemed to occur if
         any Person acquires (or during the 12-month period ending on the date
         of the most recent acquisition by such Person, has acquired) gross
         assets of the Company or Holding Company that have an aggregate fair
         market value equal to fifty percent (50%) of the fair market value of
         all of the respective gross assets of the Company or Holding Company
         immediately prior to such acquisition or acquisitions; or

                  (d)      a tender offer or exchange offer is made by any
         Person which, if successfully completed, would result in such Person
         beneficially owning (within the meaning of Rule 13d-3 promulgated under
         the Exchange Act) either fifty percent (50%) or more of the Company's
         or Holding Company's outstanding shares of Common Stock or shares of
         capital stock having fifty percent (50%) or more the combined voting
         power of the Company's or Holding Company's then outstanding capital
         stock (other than an offer made by the Company or the Holding Company),
         and sufficient shares are acquired under the offer to cause such person
         to own fifty percent (50%) or more of the voting power; or

                  (e)      any other transactions or series of related
         transactions occurring which have substantially the same effect as the
         transactions specified in any of the preceding clauses of this
         Subsection (1.1.1).

                           1.1.1.1  "Permitted Transfers" means that a
                  Shareholder, as hereinafter defined in Subsection 1.1.8 may
                  make the following transfers and such transfers shall be
                  deemed not to be a Change of Control under Subsection 1.1.1:

                                    (a)      To any trust, company, or
                                             partnership created solely for the
                                             benefit of any Shareholder or any
                                             spouse of or any lineal descendant
                                             of any Shareholder;

                                    (b)      To any individual or entity by bona
                                             fide gift;

                                       2

<PAGE>

                                    (c)      To any spouse or former spouse of
                                             any Shareholder pursuant to the
                                             terms of a decree of divorce;

                                    (d)      To any officer or employee of the
                                             Company pursuant to any incentive
                                             stock option plan established by
                                             the Shareholder;

                                    (e)      To any family member of any
                                             Shareholder;

                                    (f)      After receipt of any necessary
                                             regulatory approvals, to any
                                             company or partnership, including,
                                             but not limited to, a family
                                             limited partnership, a majority of
                                             the stock or interests of which
                                             company or partnership are owned by
                                             any of the Shareholder; or

                                    (g)      To any existing Shareholder as of
                                             the Effective Date.

         1.2      "Disability" means the Executive's suffering a sickness,
accident or injury which has been determined by the carrier of any individual or
group long-term disability insurance policy carried by the Company covering the
Executive, or, if no such long-term disability policy exists, then as determined
by the Social Security Administration, to be a disability rendering the
Executive totally and permanently disabled. The Executive must submit proof to
the Company of the carrier's or Social Security Administration's determination
upon the request of the Company.

         1.3      "Insurer" means Massachusetts Mutual Life Insurance Company.

         1.4      "Policy" means insurance policy number XXXXX issued by
Massachusetts Mutual Life Insurance Company.

         1.5      "Insured" means the Executive.

         1.6      "Net Death Proceeds" means the total death proceeds of the
Policy minus the cash surrender value of the Policy. The Net Death Proceeds in
this case equals One Hundred Fifty Thousand and No/100 Dollars ($150,000.00).

         1.7      "Shareholder" means the existing owners of all issued and
outstanding stock of the Company or Holding Company as of the date this
Agreement is signed.

         1.8      "Termination of Employment" means the Executive ceasing to be
employed by the Company for any reason whatsoever, other than by reason of an
approved leave of absence.

                                       3

<PAGE>

                                    ARTICLE 2
                           POLICY OWNERSHIP/INTERESTS

         2.1      Company Ownership. The Company is the sole owner of the Policy
and shall have the right to exercise all incidents of ownership. The Company
shall be the beneficiary of the cash surrender value of the Policy. The Company
shall receive this amount upon either the surrender of the Policy or upon the
death of the Executive.

         2.2      Executive's Interest. The Executive shall have the right to
designate the beneficiary of the Net Death Proceeds. The Executive shall also
have the right to elect and change settlement options that may be permitted. The
Company and the Executive agree that the Executive shall have all rights or
interests in the Policy with respect to the Net Death Proceeds designated in
this Section 2.2 upon the Executive's Termination of Employment, and that the
Executive shall maintain all of the powers and interests described in this
Section 2.2 until the death of the Executive.

         2.3      Option to Purchase. The Company shall not sell, surrender or
transfer ownership of the Policy while this Agreement is in effect without first
giving the Executive or the Executive's transferee the option to purchase the
Policy for a period of ninety (90) days from written notice of such intention.
The purchase price shall be an amount equal to the cash surrender value of the
Policy. This provision shall not impair the right of the Company to terminate
this Agreement.

         2.4      Comparable Coverage. Upon execution of this Agreement, the
Company shall maintain the Policy in full force and effect and in no event shall
the Company amend, terminate or otherwise abrogate the Executive's interest in
the Policy, unless the Company replaces the Policy with a comparable insurance
policy to cover the benefit provided under this Agreement. The Policy or any
comparable policy shall be subject to the claims of the Company's creditors.

         2.5      Change of Control. Upon Change of Control, the Company shall
maintain the Policy in full force and effect and in no event shall the Company
amend, terminate or otherwise abrogate the Executive's interest in the Policy,
unless the Company replaces the Policy with a comparable insurance policy to
cover the benefit provided under this Agreement, unless a written agreement
between the Executive and the Company provides otherwise.

                                    ARTICLE 3
                                    PREMIUMS

         3.1      Premium Payment. The Company shall pay any premiums due on the
Policy.

         3.2      Economic Benefit. The Company shall determine the economic
benefit attributable to the Executive based on the amount of the current term
rate for the Executive's age multiplied by the aggregate death benefit payable
to the Executive's designated beneficiary, as determined in accordance with
applicable Internal Revenue Service rules and regulations. The

                                       4

<PAGE>

Company shall notify the Executive of the Economic Benefit determined under this
Section 3.2 each Plan Year.

         3.3      Imputed Income. On an annual basis the Company shall impute to
the Executive in an amount equal to the Economic Benefit.

                                    ARTICLE 4
                                   ASSIGNMENT

         The Executive may assign without consideration all interests in the
Policy and in this Agreement to any person, entity or trust. In the event the
Executive transfers all of the Executive's interest in the Policy, then all of
the Executive's interest in the Policy and in the Agreement shall be vested in
the Executive's transferee, who shall be substituted as a party hereunder and
the Executive shall have no further interest in the Policy or in this Agreement.

                                    ARTICLE 5
                                     INSURER

         The Insurer shall be bound only by the terms of the Policy. Any
payments the Insurer makes or actions it takes in accordance with the Policy
shall fully discharge it from all claims, suits and demands of all entities or
persons. The Insurer shall not be bound by or be deemed to have notice of the
provisions of this Agreement.

                                    ARTICLE 6
                                CLAIMS PROCEDURE

         6.1      Claims Procedure. Any individual ("Claimant") who has not
received benefits under the Plan that he or she believes should be paid shall
make a claim for such benefits as follows:

                  6.1.1    Initiation - Written Claim. The Claimant initiates a
         claim by submitting to the Company a written claim for the benefits.

                  6.1.2    Timing of Company Response. The Company shall respond
         to such Claimant within 90 days after receiving the claim. If the
         Company determines that special circumstances require additional time
         for processing the claim, the Company can extend the response period by
         an additional 90 days by notifying the Claimant in writing, prior to
         the end of the initial 90-day period, that an additional period is
         required. The notice of extension must set forth the special
         circumstances and the date by which the Company expects to render its
         decision.

                                       5

<PAGE>

                  6.1.3    Notice of Decision. If the Company denies part or all
         of the claim, the Company shall notify the Claimant in writing of such
         denial. The Company shall write the notification in a manner calculated
         to be understood by the Claimant. The notification shall set forth:

                           (a)      The specific reasons for the denial,

                           (b)      A reference to the specific provisions of
                  the Plan on which the denial is based,

                           (c)      A description of any additional information
                  or material necessary for the Claimant to perfect the claim
                  and an explanation of why it is needed,

                           (d)      An explanation of the Plan's review
                  procedures and the time limits applicable to such procedures,
                  and

                           (e)      A statement of the Claimant's right to bring
                  a civil action under ERISA Section 502(a) following an adverse
                  benefit determination on review.

         6.2      Review Procedure. If the Company denies part or all of the
claim, the Claimant shall have the opportunity for a full and fair review by the
Company of the denial, as follows:

                  6.2.1    Initiation - Written Request. To initiate the review,
         the Claimant, within 60 days after receiving the Company's notice of
         denial, must file with the Company a written request for review.

                  6.2.2    Additional Submissions - Information Access. The
         Claimant shall then have the opportunity to submit written comments,
         documents, records and other information relating to the claim. The
         Company shall also provide the Claimant, upon request and free of
         charge, reasonable access to, and copies of, all documents, records and
         other information relevant (as defined in applicable ERISA regulations)
         to the Claimant's claim for benefits.

                  6.2.3    Considerations on Review. In considering the review,
         the Company shall take into account all materials and information the
         Claimant submits relating to the claim, without regard to whether such
         information was submitted or considered in the initial benefit
         determination.

                  6.2.4    Timing of Company Response. The Company shall respond
         in writing to such Claimant within 60 days after receiving the request
         for review. If the Company determines that special circumstances
         require additional time for processing the claim, the Company can
         extend the response period by an additional 60 days by notifying the
         Claimant in writing, prior to the end of the initial 60-day period,
         that an additional period is required. The notice of extension must set
         forth the special circumstances and the date by which the Company
         expects to render its decision.

                                       6

<PAGE>

                  6.2.5    Notice of Decision. The Company shall notify the
         Claimant in writing of its decision on review. The Company shall write
         the notification in a manner calculated to be understood by the
         Claimant. The notification shall set forth:

                           (a)      The specific reasons for the denial,

                           (b)      A reference to the specific provisions of
                  the Plan on which the denial is based,

                           (c)      A statement that the Claimant is entitled to
                  receive, upon request and free of charge, reasonable access
                  to, and copies of, all documents, records and other
                  information relevant (as defined in applicable ERISA
                  regulations) to the Claimant's claim for benefits, and,

                           (d)      A statement of the Claimant's right to bring
                  a civil action under ERISA Section 502(a).

                                    ARTICLE 7
                           AMENDMENTS AND TERMINATION

         This Agreement may be amended or terminated only by a written agreement
signed by the Company and the Executive.

                                    ARTICLE 8
                                  MISCELLANEOUS

         8.1      Binding Effect. This Agreement shall bind the Executive and
the Company and their beneficiaries, survivors, executors, administrators and
transferees, and any Policy beneficiary.

         8.2      No Guarantee of Service or of Employment. This Agreement is
not a contract for services or employment. It does not give the Executive the
right to remain in the service of the Company, to remain in employment with the
Company, nor does it interfere with the shareholders' rights to replace the
Executive. It also does not require the Executive to remain in the service or
employment of the Company nor interfere with the Executive's right to terminate
services or employment at any time.

         8.3      Applicable Law. The Agreement and all rights hereunder shall
be governed by and construed according to the laws of Mississippi, except to the
extent preempted by the laws of the United States of America.

                                       7

<PAGE>

         8.4      Reorganization. The Company shall not merge or consolidate
into or with another company, or reorganize, or sell substantially all of its
assets to another company, firm or person unless such succeeding or continuing
company, firm or person agrees to assume and discharge the obligations of the
Company.

         8.5      Notice. Any notice, consent or demand required or permitted to
be given under the provisions of this Split Dollar Agreement by one party to
another shall be in writing, shall be signed by the party giving or making the
same, and may be given either by delivering the same to such other party
personally, or by mailing the same, by United States certified mail, postage
prepaid, to such party, addressed to his or her last known address as shown on
the records of the Company. The date of such mailing shall be deemed the date of
such mailed notice, consent or demand.

         8.6      Entire Agreement. This Agreement constitutes the entire
agreement between the Company and the Executive as to the subject matter hereof.
No rights are granted to the Executive by virtue of this Agreement other than
those specifically set forth herein.

         8.7      Administration. The Company shall have powers which are
necessary to administer this Agreement, including but not limited to:

                  (a)      Interpreting the provisions of the Agreement;

                  (b)      Establishing and revising the method of accounting
         for the Agreement;

                  (c)      Maintaining a record of benefit payments; and

                  (d)      Establishing rules and prescribing any forms
         necessary or desirable to administer the Agreement.

         8.8      Named Fiduciary. The Company shall be the named fiduciary and
plan administrator under the Agreement. The named fiduciary may delegate to
others certain aspects of the management and operation responsibilities of the
plan including the employment of advisors and the delegation of ministerial
duties to qualified individuals

         IN WITNESS WHEREOF, the parties have executed this Agreement the day
and year first above written.

EXECUTIVE:                                 THE PEOPLES BANK

____________________________               BY: _____________________________
CHEVIS C. SWETMAN

                                           TITLE: ____________________________

                                        8
<PAGE>

                       SPLIT DOLLAR POLICY ENDORSEMENT TO
                     THE PEOPLES BANK SPLIT DOLLAR AGREEMENT
                         ATTACHED TO POLICY NUMBER XXXXX
                        ON THE LIFE OF CHEVIS C. SWETMAN

         The undersigned Owner requests that the above-referenced policy issued
by Massachusetts Mutual Life Insurance Company ("Insurer") shall provide for the
following beneficiary designation and limited contract ownership rights to the
Insured:

         1. Upon the death of the insured, proceeds shall be paid in one sum to
the Owner, its successors or assigns, to the extent of its interest in the
policy. It is hereby provided that the Insurer may rely solely upon a statement
from the Owner as to the amount of proceeds it is entitled to receive under this
paragraph.

         2. Any proceeds at the death of the Insured in excess of the amount
paid under the provisions of the preceding paragraph shall be paid in one sum to

________________________________________________________________________________
            PRIMARY BENEFICIARY, RELATIONSHIP/SOCIAL SECURITY NUMBER

_______________________________________________________________________________.
           CONTINGENT BENEFICIARY, RELATIONSHIP/SOCIAL SECURITY NUMBER

The exclusive right to change the beneficiary for the proceeds payable under
this paragraph, to elect any optional method of settlement for the proceeds paid
under this paragraph which are available under the terms of the policy and to
assign all rights and interests granted under this paragraph is hereby granted
to the Insured. The sole signature of the Insured shall be sufficient to
exercise said rights. The Owner retains all contract rights not granted to the
Insured under this paragraph.

         3. It is agreed by the undersigned that this designation and limited
assignment of rights shall be subject in all respects to the contractual terms
of the policy.

         4. Any payment directed by the Owner under this endorsement shall be a
full discharge of the Insurer, and such discharge shall be binding on all
parties claiming any interest under the policy.

The undersigned for the Owner is signing in a representative capacity and
warrants that he or she has the authority to bind the entity on whose behalf
this document is being executed.

This endorsement rescinds and supercedes any/all prior endorsements for this
policy. Signed at Biloxi, Mississippi, on this _____ day of ____________, 200__.

                                    OWNER:
INSURED:                            THE PEOPLES BANK

___________________________         By________________________________
CHEVIS C. SWETMAN

                                    Title ____________________________
<PAGE>

                                THE PEOPLES BANK
                             SPLIT DOLLAR AGREEMENT

         THIS AGREEMENT, effective January 1, 2003 (the "Effective Date"), is
made by and between The Peoples Bank, a state-chartered commercial bank with its
principal office located in Biloxi, Mississippi (the "Company"), and Ira W.
Carpenter, Jr. (the "Executive"), a key officer employed by the Company and a
director of the Company.

                                  INTRODUCTION

         WHEREAS, the Executive has contributed to the success and profitability
of the Company; and

         WHEREAS, as a result of these contributions, the Company is willing to
divide the death proceeds of a life insurance policy or policies on the
Executive's life. The Company will pay for its portion of the life insurance
premiums from its general assets; and,

         WHEREAS, the Company agrees to provide the aforementioned benefit to
the Executive that will continue beyond the date the Executive's service to the
Company ends;

                                    AGREEMENT

         The Executive and the Company agree as follows:

                                    ARTICLE 1
                               GENERAL DEFINITIONS

The following terms shall have the meanings specified:

         1.1 "Change of Control" means:

                  (a) a change in the ownership of the capital stock of the
         Company or Peoples Financial Corporation (the "Holding Company"),
         whereby a corporation, person or group acting in concert (a "Person")
         as described in Section 14(d)(2) of the Securities Exchange Act of
         1934, as amended (the "Exchange Act"), holds or acquires, directly or
         indirectly, beneficial ownership (within the meaning of Rule 13d-3
         promulgated under the Exchange Act) of a number of shares of capital
         stock of the Company or Holding Company which constitutes fifty percent
         (50%) or more of the combined voting power of the Company's or Holding
         Company's outstanding capital stock then entitled to vote generally in
         the election of directors; or

                  (b) the persons who were members of the Board of Directors of
         the Company or Holding Company immediately prior to a tender offer,
         exchange offer, contested

<PAGE>

         election or any combination of the foregoing, cease to constitute a
         majority of such Board of Directors; or

                  (c) the adoption by the Board of Directors of the Company or
         of the Holding Company of a merger, consolidation or reorganization
         plan involving the Company or Holding Company in which the Company or
         the Holding Company is not the surviving entity, or a sale of all or
         substantially all of the assets of the Company or Holding Company. For
         purposes of this Agreement, a sale of all or substantially all of the
         assets of the Company or Holding Company shall be deemed to occur if
         any Person acquires (or during the 12-month period ending on the date
         of the most recent acquisition by such Person, has acquired) gross
         assets of the Company or Holding Company that have an aggregate fair
         market value equal to fifty percent (50%) of the fair market value of
         all of the respective gross assets of the Company or Holding Company
         immediately prior to such acquisition or acquisitions; or

                  (d) a tender offer or exchange offer is made by any Person
         which, if successfully completed, would result in such Person
         beneficially owning (within the meaning of Rule 13d-3 promulgated under
         the Exchange Act) either fifty percent (50%) or more of the Company's
         or Holding Company's outstanding shares of Common Stock or shares of
         capital stock having fifty percent (50%) or more the combined voting
         power of the Company's or Holding Company's then outstanding capital
         stock (other than an offer made by the Company or the Holding Company),
         and sufficient shares are acquired under the offer to cause such person
         to own fifty percent (50%) or more of the voting power; or

                  (e) any other transactions or series of related transactions
         occurring which have substantially the same effect as the transactions
         specified in any of the preceding clauses of this Subsection (1.1.1).

                           1.1.1.1 "Permitted Transfers" means that a
                  Shareholder, as hereinafter defined in Subsection 1.1.8 may
                  make the following transfers and such transfers shall be
                  deemed not to be a Change of Control under Subsection 1.1.1:

                                    (a)      To any trust, company, or
                                             partnership created solely for the
                                             benefit of any Shareholder or any
                                             spouse of or any lineal descendant
                                             of any Shareholder;

                                    (b)      To any individual or entity by bona
                                             fide gift;

                                    (c)      To any spouse or former spouse of
                                             any Shareholder pursuant to the
                                             terms of a decree of divorce;

                                    (d)      To any officer or employee of the
                                             Company pursuant to any incentive
                                             stock option plan established by
                                             the Shareholder;

                                       2
<PAGE>

                                    (e)      To any family member of any
                                             Shareholder;

                                    (f)      After receipt of any necessary
                                             regulatory approvals, to any
                                             company or partnership, including,
                                             but not limited to, a family
                                             limited partnership, a majority of
                                             the stock or interests of which
                                             company or partnership are owned by
                                             any of the Shareholder; or

                                    (g)      To any existing Shareholder as of
                                             the Effective Date.

         1.2 "Disability" means the Executive's suffering a sickness, accident
or injury which has been determined by the carrier of any individual or group
long-term disability insurance policy carried by the Company covering the
Executive, or, if no such long-term disability policy exists, then as determined
by the Social Security Administration, to be a disability rendering the
Executive totally and permanently disabled. The Executive must submit proof to
the Company of the carrier's or Social Security Administration's determination
upon the request of the Company.

         1.3 "Insurer" means New York Life Insurance and Annuity Corporation.

         1.4 "Policy" or "Policies" means Policy number XXXXXXXX issued by New
York Life Insurance and Annuity Corporation and Policy number XXXXXXXX issued by
New York Life Insurance and Annuity Corporation.

         1.5 "Insured" means the Executive.

         1.6 "Net Death Proceeds" means an amount of One Hundred Thousand and
No/100 Dollars ($100,000.00) from Policy number XXXXXXXX and an amount of Fifty
Thousand and No/100 Dollars ($50,000.00) from Policy number XXXXXXXX.

         1.7 "Shareholder" means the existing owners of all issued and
outstanding stock of the Company or Holding Company as of the date this
Agreement is signed.

         1.8 "Termination of Employment" means the Executive ceasing to be
employed by the Company for any reason whatsoever, other than by reason of an
approved leave of absence.

                                    ARTICLE 2
                           POLICY OWNERSHIP/INTERESTS

         2.1 Company Ownership. The Company is the sole owner of the Policies
and shall have the right to exercise all incidents of ownership. The Company
shall be the beneficiary of the cash surrender value of the Policies. The
Company shall receive this amount upon either the surrender of the Policies or
upon the death of the Executive.

                                       3
<PAGE>

         2.2 Executive's Interest. The Executive shall have the right to
designate the beneficiary of the Net Death Proceeds. The Executive shall also
have the right to elect and change settlement options that may be permitted. The
Company and the Executive further agree that the Executive shall have all rights
or interests in the Policies with respect to the Net Death Proceeds designated
in this Section 2.2 upon the Executive's Termination of Employment, and that the
Executive shall maintain all of the powers and interests described in this
Section 2.2 until the death of the Executive.

         2.3 Option to Purchase. The Company shall not sell, surrender or
transfer ownership of the Policies while this Agreement is in effect without
first giving the Executive or the Executive's transferee the option to purchase
the Policies for a period of ninety (90) days from written notice of such
intention. The purchase price shall be an amount equal to the cash surrender
value of the Policies. This provision shall not impair the right of the Company
to terminate this Agreement.

         2.4 Comparable Coverage. Upon execution of this Agreement, the Company
shall maintain the Policies in full force and effect and in no event shall the
Company amend, terminate or otherwise abrogate the Executive's interest in the
Policies, unless the Company replaces a Policy with a comparable insurance
policy to cover the benefit provided under this Agreement. The Policies or any
comparable policies shall be subject to the claims of the Company's creditors.

         2.5 Change of Control. Upon Change of Control, the Company shall
maintain the Policies in full force and effect and in no event shall the Company
amend, terminate or otherwise abrogate the Executive's interest in the Policies,
unless the Company replaces a Policy with a comparable insurance policy to cover
the benefit provided under this Agreement, unless a written agreement between
the Executive and the Company provides otherwise.

                                    ARTICLE 3
                                    PREMIUMS

         3.1 Premium Payment. The Company shall pay any premiums due on the
Policies.

         3.2 Economic Benefit. The Company shall determine the economic benefit
attributable to the Executive based on the amount of the current term rate for
the Executive's age multiplied by the aggregate death benefit payable to the
Executive's designated beneficiary, as determined in accordance with applicable
Internal Revenue Service rules and regulations. The Company shall notify the
Executive of the Economic Benefit determined under this Section 3.2 each Plan
Year.

         3.3 Imputed Income. On an annual basis the Company shall impute to the
Executive in an amount equal to the Economic Benefit.

                                       4
<PAGE>

                                    ARTICLE 4
                                   ASSIGNMENT

         The Executive may assign without consideration all interests in the
Policies and in this Agreement to any person, entity or trust. In the event the
Executive transfers all of the Executive's interest in the Policies, then all of
the Executive's interest in the Policies and in the Agreement shall be vested in
the Executive's transferee, who shall be substituted as a party hereunder and
the Executive shall have no further interest in the Policies or in this
Agreement.

                                    ARTICLE 5
                                     INSURER

         The Insurer shall be bound only by the terms of the Policies. Any
payments the Insurer makes or actions it takes in accordance with the Policies
shall fully discharge it from all claims, suits and demands of all entities or
persons. The Insurer shall not be bound by or be deemed to have notice of the
provisions of this Agreement.

                                    ARTICLE 6
                                CLAIMS PROCEDURE

         6.1 Claims Procedure. Any individual ("Claimant") who has not received
benefits under the Plan that he or she believes should be paid shall make a
claim for such benefits as follows:

                  6.1.1 Initiation - Written Claim. The Claimant initiates a
         claim by submitting to the Company a written claim for the benefits.

                  6.1.2 Timing of Company Response. The Company shall respond to
         such Claimant within 90 days after receiving the claim. If the Company
         determines that special circumstances require additional time for
         processing the claim, the Company can extend the response period by an
         additional 90 days by notifying the Claimant in writing, prior to the
         end of the initial 90-day period, that an additional period is
         required. The notice of extension must set forth the special
         circumstances and the date by which the Company expects to render its
         decision.

                  6.1.3 Notice of Decision. If the Company denies part or all of
         the claim, the Company shall notify the Claimant in writing of such
         denial. The Company shall write the notification in a manner calculated
         to be understood by the Claimant. The notification shall set forth:

                           (a) The specific reasons for the denial,

                                       5
<PAGE>

                           (b) A reference to the specific provisions of the
                  Plan on which the denial is based,

                           (c) A description of any additional information or
                  material necessary for the Claimant to perfect the claim and
                  an explanation of why it is needed,

                           (d) An explanation of the Plan's review procedures
                  and the time limits applicable to such procedures, and

                           (e) A statement of the Claimant's right to bring a
                  civil action under ERISA Section 502(a) following an adverse
                  benefit determination on review.

         6.2 Review Procedure. If the Company denies part or all of the claim,
the Claimant shall have the opportunity for a full and fair review by the
Company of the denial, as follows:

                  6.2.1 Initiation - Written Request. To initiate the review,
         the Claimant, within 60 days after receiving the Company's notice of
         denial, must file with the Company a written request for review.

                  6.2.2 Additional Submissions - Information Access. The
         Claimant shall then have the opportunity to submit written comments,
         documents, records and other information relating to the claim. The
         Company shall also provide the Claimant, upon request and free of
         charge, reasonable access to, and copies of, all documents, records and
         other information relevant (as defined in applicable ERISA regulations)
         to the Claimant's claim for benefits.

                  6.2.3 Considerations on Review. In considering the review, the
         Company shall take into account all materials and information the
         Claimant submits relating to the claim, without regard to whether such
         information was submitted or considered in the initial benefit
         determination.

                  6.2.4 Timing of Company Response. The Company shall respond in
         writing to such Claimant within 60 days after receiving the request for
         review. If the Company determines that special circumstances require
         additional time for processing the claim, the Company can extend the
         response period by an additional 60 days by notifying the Claimant in
         writing, prior to the end of the initial 60-day period, that an
         additional period is required. The notice of extension must set forth
         the special circumstances and the date by which the Company expects to
         render its decision.

                  6.2.5 Notice of Decision. The Company shall notify the
         Claimant in writing of its decision on review. The Company shall write
         the notification in a manner calculated to be understood by the
         Claimant. The notification shall set forth:

                           (a) The specific reasons for the denial,

                                       6
<PAGE>

                           (b) A reference to the specific provisions of the
                  Plan on which the denial is based,

                           (c) A statement that the Claimant is entitled to
                  receive, upon request and free of charge, reasonable access
                  to, and copies of, all documents, records and other
                  information relevant (as defined in applicable ERISA
                  regulations) to the Claimant's claim for benefits, and,

                           (d) A statement of the Claimant's right to bring a
                  civil action under ERISA Section 502(a).

                                    ARTICLE 7
                           AMENDMENTS AND TERMINATION

         This Agreement may be amended or terminated only by a written agreement
signed by the Company and the Executive.

                                    ARTICLE 8
                                  MISCELLANEOUS

         8.1 Binding Effect. This Agreement shall bind the Executive and the
Company and their beneficiaries, survivors, executors, administrators and
transferees, and any Policy beneficiary.

         8.2 No Guarantee of Service or of Employment. This Agreement is not a
contract for services or employment. It does not give the Executive the right to
remain in the service of the Company, to remain in employment with the Company,
nor does it interfere with the shareholders' rights to replace the Executive. It
also does not require the Executive to remain in the service or employment of
the Company nor interfere with the Executive's right to terminate services or
employment at any time.

         8.3 Applicable Law. The Agreement and all rights hereunder shall be
governed by and construed according to the laws of Mississippi, except to the
extent preempted by the laws of the United States of America.

         8.4 Reorganization. The Company shall not merge or consolidate into or
with another company, or reorganize, or sell substantially all of its assets to
another company, firm or person unless such succeeding or continuing company,
firm or person agrees to assume and discharge the obligations of the Company.

         8.5 Notice. Any notice, consent or demand required or permitted to be
given under the provisions of this Split Dollar Agreement by one party to
another shall be in writing, shall be signed by the party giving or making the
same, and may be given either by delivering the same to

                                       7
<PAGE>

such other party personally, or by mailing the same, by United States certified
mail, postage prepaid, to such party, addressed to his or her last known address
as shown on the records of the Company. The date of such mailing shall be deemed
the date of such mailed notice, consent or demand.

         8.6 Entire Agreement. This Agreement constitutes the entire agreement
between the Company and the Executive as to the subject matter hereof. No rights
are granted to the Executive by virtue of this Agreement other than those
specifically set forth herein.

         8.7 Administration. The Company shall have powers which are necessary
to administer this Agreement, including but not limited to:

                  (a) Interpreting the provisions of the Agreement;

                  (b) Establishing and revising the method of accounting for the
         Agreement;

                  (c) Maintaining a record of benefit payments; and

                  (d) Establishing rules and prescribing any forms necessary or
         desirable to administer the Agreement.

         8.8 Named Fiduciary. The Company shall be the named fiduciary and plan
administrator under the Agreement. The named fiduciary may delegate to others
certain aspects of the management and operation responsibilities of the plan
including the employment of advisors and the delegation of ministerial duties to
qualified individuals

         IN WITNESS WHEREOF, the parties have executed this Agreement the day
and year first above written.

EXECUTIVE:                                   THE PEOPLES BANK

____________________________                 BY:  ______________________________
IRA W. CARPENTER, JR.

                                             TITLE: ____________________________

                                       8
<PAGE>

                       SPLIT DOLLAR POLICY ENDORSEMENT TO
                     THE PEOPLES BANK SPLIT DOLLAR AGREEMENT
                       ATTACHED TO POLICY NUMBER XXXXXXXX
                      ON THE LIFE OF IRA W. CARPENTER, JR.

         The undersigned Owner requests that the above-referenced policy issued
by New York Life Insurance and Annuity Corporation ("Insurer") shall provide for
the following beneficiary designation and limited contract ownership rights to
the Insured:

         1. Upon the death of the insured, proceeds shall be paid in one sum to
the Owner, its successors or assigns, to the extent of its interest in the
policy. It is hereby provided that the Insurer may rely solely upon a statement
from the Owner as to the amount of proceeds it is entitled to receive under this
paragraph.

         2. Any proceeds at the death of the Insured in excess of the amount
paid under the provisions of the preceding paragraph shall be paid in one sum
to:

________________________________________________________________________________
            PRIMARY BENEFICIARY, RELATIONSHIP/SOCIAL SECURITY NUMBER

_______________________________________________________________________________.
           CONTINGENT BENEFICIARY, RELATIONSHIP/SOCIAL SECURITY NUMBER

The exclusive right to change the beneficiary for the proceeds payable under
this paragraph, to elect any optional method of settlement for the proceeds paid
under this paragraph which are available under the terms of the policy and to
assign all rights and interests granted under this paragraph is hereby granted
to the Insured. The sole signature of the Insured shall be sufficient to
exercise said rights. The Owner retains all contract rights not granted to the
Insured under this paragraph.

         3. It is agreed by the undersigned that this designation and limited
assignment of rights shall be subject in all respects to the contractual terms
of the policy.

         4. Any payment directed by the Owner under this endorsement shall be a
full discharge of the Insurer, and such discharge shall be binding on all
parties claiming any interest under the policy.

The undersigned for the Owner is signing in a representative capacity and
warrants that he or she has the authority to bind the entity on whose behalf
this document is being executed.

This endorsement rescinds and supercedes any/all prior endorsements for this
policy. Signed at Biloxi, Mississippi, on this _____ day of ____________, 200__.

                                    OWNER:
INSURED:                            THE PEOPLES BANK

___________________________         By _________________________________
IRA W. CARPENTER, JR.

                                    Title ______________________________

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