content: UNITED STATES
  
                 SECURITIES AND EXCHANGE COMMISSION
                                  
                        WASHINGTON, DC  20549
                                  
                 ----------------------------------
                                  
                              FORM 8-K
                                  
                                  
                           CURRENT REPORT
                                  
                                  
                   Pursuant to Section 13 or 15(d)
                               of the
                   Securities Exchange Act of 1934
  
  
  Date of Report (Date earliest event reported): November 12, 1998
                                                 -----------------
  
  
                      PARKWAY PROPERTIES, INC.
  -----------------------------------------------------------------
        (Exact name of Registrant as specified in its charter)
  
  
  
  Maryland                    1-11533                   74-2123597
  ------------------------------------------------------------------
  (State or other     (Commission File Number)       (IRS Employer
  jurisdiction of                                    Identification
  incorporation)                                     Number)
  
  One Jackson Place Suite 1000
    188 East Capitol Street
        P. O. Box 24647
       Jackson,  Mississippi                                 39225-
  4647
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  (Address of principal executive offices)               (Zip Code)
  
  
  Registrant's telephone number, including area code (601) 948-4091
                                                     ---------------
  
  
  ------------------------------------------------------------------
    (Former name or former address, if changed since last report)
  
  
                              FORM 8-K
                                  
                      PARKWAY PROPERTIES, INC.
  
  
  Item 5.   Other Events.
  
  On  October 7, 1998, Parkway Properties, Inc. closed a three-year
  $150,000,000  unsecured credit facility with a consortium  of  14
  banks  arranged by Chase Securities, Inc.  The interest  rate  on
  the  new  line  of credit is equal to LIBOR plus 112.5  to  137.5
  basis  points depending upon overall company leverage,  with  the
  current rate set at LIBOR plus 125 basis points, or 6.625%.   The
  new  credit  facility  reflects a 15 basis  point  interest  rate
  reduction (based on current leverage) and a $50,000,000  increase
  over  the  previous lines of credit, which were secured lines  of
  credit.  The lead agent for the credit facility is Chase Bank  of
  Texas,  which  is  joined by a syndicate of banks  including  PNC
  Bank,  serving  as documentation agent, Wells Fargo  Bank,  First
  Union   National  Bank,  SouthTrust  Bank,  AmSouth  Bank,  First
  National  Bank  of Commerce, Compass Bank, First Tennessee  Bank,
  Hibernia National Bank, First American National Bank operating as
  Deposit Guaranty National Bank, Comerica Bank, Trustmark National
  Bank, and Bancorp South Bank.
  
  Item 7.        Financial Statements and Exhibits
  
       (c)  Exhibits
  
                 (99)(a)      Credit   Agreement   among    Parkway
                 Properties  LP,  Chase  Bank  of  Texas,  National
                 Association,  and  PNC Bank, National  Association
                 and   the  Lenders.   Parkway  agrees  to  furnish
                 supplementally  to  the  Securities  and  Exchange
                 Commission  on  request  a  copy  of  any  omitted
                 schedule or exhibit to this agreement.
  
                 (99)(b)   Form of Note by Parkway Properties LP as
                 maker   and   Chase   Bank  of   Texas,   National
                 Association as agent.  Parkway agrees  to  furnish
                 supplementally  to  the  Securities  and  Exchange
                 Commission  on  request  a  copy  of  any  omitted
                 schedule or exhibit to this agreement.
  
  
  
  
  
                              FORM 8-K
                                  
                      PARKWAY PROPERTIES, INC.
                                  
                                  
                             SIGNATURES
  
  
  Pursuant  to the requirements of the Securities Exchange  Act  of
  1934, the Registrant has duly caused this report to be signed  on
  its behalf by the undersigned hereunto duly authorized.
  
  DATE:  November 12, 1998           PARKWAY PROPERTIES, INC.
  
                                     BY:  /s/Sarah P. Clark
                                          Sarah P. Clark
                                          Senior Vice President,
                                          Chief Financial Officer,
                                          Treasurer and Secretary
  
  
  
                                  
                                  
                                  
                                  
                          CREDIT AGREEMENT
  
                                Dated
  
                           October 7, 1998
  
                                among
  
                        PARKWAY PROPERTIES LP
  
  
             CHASE BANK OF TEXAS, NATIONAL ASSOCIATION,
                       as Administrative Agent
  
                   PNC BANK, NATIONAL ASSOCIATION
                       as Documentation Agent
  
                                 and
  
                             the Lenders
  
  
  
  
                          TABLE OF CONTENTS
  
  
  1.   Definitions                                              1
  
  2.   The Loans                                               14
       2.1  Advances                                           14
       2.2  Payments                                           15
       2.3  Pro Rata Treatment                                 16
       2.4  Non-Receipt of Funds by the Agent                  16
       2.5  Sharing of Payments, Etc.                          17
       2.6  Fees                                               17
  
  3.   Conditions                                              18
       3.1  All Loans                                          18
       3.2  First Loan                                         18
       3.3  Options Available                                  18
       3.4  Designation and Conversion                         19
       3.5  Special Provisions Applicable to Eurodollar Rate
            Borrowings                                         19
       3.6  Funding Offices; Adjustments Automatic             22
       3.7  Funding Sources, Payment Obligations               22
       3.8  Mitigation, Non-Discrimination                     22
  
  4.   Representations and Warranties                          23
       4.1. Organization                                       23
       4.2  Financial Statements                               23
       4.3  Enforceable Obligations; Authorization             24
       4.4  Other Debt                                         24
       4.5  Litigation                                         24
       4.6  Taxes                                              24
       4.7  Regulation U                                       24
       4.8  Subsidiaries                                       24
       4.9  Securities Act of 1933                             24
       4.10 No Contractual or Corporate Restrictions           25
       4.11 Investment Company Act Not Applicable              25
       4.12 Public Utility Holding Company Act Not Applicable  25
       4.13 ERISA Not Applicable                               25
  
  5.   Affirmative Covenants                                   25
       5.1  Taxes, Existence, Regulations, Property, etc.      26
       5.2  Financial Statements and Information               26
       5.3  Financial Tests                                    26
       5.4  Inspection                                         27
       5.5  Further Assurances                                 27
       5.7  Insurance                                          27
       5.8  Notice of Certain Matters                          27
       5.9  Use of Proceeds                                    27
       5.10 Expenses of and Claims Against the Agent and the
            Lenders                                            27
       5.11 Legal Compliance; Indemnification                  28
       5.12 Obligors' Performance                              28
       5.13 Professional Services                              29
       5.14 Capital Adequacy                                   29
       5.15 Property Pool                                      30
  
  6.   Negative Covenants                                      31
       6.1  Indebtedness                                       31
       6.2  Mergers, Consolidations and Acquisitions of Assets 31
       6.3  Redemption                                         31
       6.4  Nature of Business; Management                     31
       6.5  Transactions with Related Parties                  31
       6.6  Loans and Investments                              31
       6.7  Limiting Agreements                                32
       6.8  Restricted Payments                                33
  
  7.   Events of Default and Remedies                          33
       7.1. Events of Default                                  33
       7.2  Remedies Cumulative                                35
  
  8.   The Agent                                               35
       8.1  Appointment, Powers and Immunities                 35
       8.2  Reliance                                           36
       8.3  Defaults                                           37
       8.4  Rights as a Lender                                 37
       8.5  Indemnification                                    37
       8.6  Non-Reliance on Agent and Other Lenders            38
       8.7  Failure to Act                                     38
       8.8  Resignation of Agent                               39
       8.9  No Partnership                                     39
  
  9.   Miscellaneous                                           39
       9.1  No Waiver, Amendments                              39
       9.2  Notices                                            40
       9.3  Venue                                              40
       9.4  Choice of Law                                      41
       9.5  Survival; Parties Bound; Successors and Assigns    41
       9.6  Counterparts                                       42
       9.7  Usury Not Intended; Refund of Any Excess Payments  42
       9.8  Captions                                           42
       9.9  Severability                                       42
       9.10 Disclosures                                        43
       9.11 Entire Agreement                                   43
  
  
  
  
  EXHIBITS
  Schedule I - Rating Tables
  Schedule II - Approved Markets
  A - Officer's Certificate
  B - Request for Loan
  C - Note
  D - Legal Opinion
  
  
  
                          CREDIT AGREEMENT
  
  
       THIS CREDIT AGREEMENT (the "Agreement") is made and entered
  into as of October 7, 1998, by and among PARKWAY PROPERTIES LP, a
  Delaware limited partnership (the "Borrower"), the financial
  institutions (including Chase, the "Lenders") which are now or
  may hereafter become signatories hereto, CHASE BANK OF TEXAS,
  NATIONAL ASSOCIATION, a national banking association ("Chase"),
  as Administrative Agent for Lenders (in such capacity, "Agent"),
  and PNC BANK, NATIONAL ASSOCIATION, as Documentation Agent for
  Lenders.
  
  1.   Definition
  
       Unless a particular word or phrase is otherwise defined or
  the context otherwise requires, capitalized words and phrases
  used in Credit Documents have the meanings provided below.
  
       Adjusted Eurodollar Interbank Rate shall mean, with respect
  to each Interest Period applicable to a Eurodollar Rate
  Borrowing, a rate per annum equal to the quotient, expressed as a
  percentage, of (a) the Eurodollar Interbank Rate with respect to
  such Interest Period divided by (b) 1.0000 minus the Eurodollar
  Reserve Requirement in effect on each day during such Interest
  Period.
  
       Affiliate shall mean any Person controlling, controlled by
  or under common control with any other Person.  For purposes of
  this definition, "control" (including "controlled by" and "under
  common control with") means the possession, directly or
  indirectly, of the power to direct or cause the direction of the
  management and policies of such Person, whether through the own
  ership of voting securities or otherwise.
  
       Annual Audited Financial Statements shall mean the annual
  financial statements of a Person, including all notes thereto,
  which statements shall include a balance sheet as of the end of
  such fiscal year and an income statement and a statement of cash
  flows, all setting forth in comparative form the corresponding
  figures from the previous fiscal year, all prepared in conformity
  with Generally Accepted Accounting Principles and accompanied by
  a report and opinion of independent certified public accountants
  satisfactory to the Agent, which shall state that such financial
  statements, in the opinion of such accountants, present fairly
  the financial position of such Person as of the date thereof and
  the results of its operations for the period covered thereby in
  conformity with Generally Accepted Accounting Principles.  Such
  statements shall be accompanied by a certificate of such
  accountants that in making the appropriate audit and/or
  investigation in connection with such report and opinion, such
  accountants did not become aware of any Default or, if in the
  opinion of such accountant any such Default exists, a description
  of the nature and status thereof.  The Annual Audited Financial
  Statements shall be prepared on a consolidated basis in
  accordance with Generally Accepted Accounting Principles.
  
       Applicable Margin shall mean (a) whenever and for so long as
  the Borrower has not received an S&P Rating and a Moody's Rating,
  the percentage which will be in effect whenever and for so long
  as the corresponding Total Liabilities to Total Asset Value Ratio
  reflected in Table 1 on Schedule I attached hereto and hereby
  made a part hereof, is in effect; and (b) whenever and for so
  long as the Borrower has received an S&P Rating and a Moody's
  Rating, the percentage which will be in effect whenever and for
  so long as the Borrower has received the corresponding S&P Rating
  or Moody's Rating, whichever is lower, reflected in Table 2 on
  Schedule I attached hereto.
  
       Approved Market shall mean each of the cities described on
  Schedule II attached hereto and hereby made a part hereof.
  
       Base Rate shall mean for any day a rate per annum equal to
  the Applicable Margin on that day plus the greater on a daily
  basis of (a) the Prime Rate for that day, or (b) the Federal
  Funds Effective Rate for that day plus one-half of one percent
  (1/2%).
  
       Base Rate Borrowing shall mean that portion of the principal
  balance of the Loans at any time bearing interest at the Base
  Rate.     Business Day shall mean a day other than (a) a day when
  the main office of the Agent is not open for business, or (b) a
  day that is a federal banking holiday in the United States of
  America.
  
       Calculation Date shall mean the beginning of the first full
  calendar quarter after a Property has been acquired by the
  Borrower.
  
       Capital Expenditures shall mean, as to any Person, for any
  period, the aggregate of all expenditures (whether payable in
  cash or other Property or accrued as a liability (but without
  duplication)) during such period that, in conformity with
  Generally Accepted Accounting Principles, are required to be
  included in or reflected by the Borrower's or any of its
  Subsidiaries' fixed asset accounts as reflected in any of their
  respective balance sheets; provided, however, Capital
  Expenditures shall include the sum of all expenditures by the
  Borrower for tenant improvements, leasing commissions, property
  level capital expenditures (e.g., roof replacement, parking lot
  repairs, etc., but not capital expenditures in connection with
  expansions) but shall exclude upgrade capital expenditures
  budgeted at the time of, and made within the first twelve (12)
  months after, the acquisition of a Property.  Capital
  Expenditures shall be calculated on a consolidated basis in
  accordance with Generally Accepted Accounting Principles and
  shall include (without duplication) the Equity Percentage of
  Capital Expenditures for the Borrower's Unconsolidated
  Affiliates.
  
       Ceiling Rate shall mean, on any day, the maximum nonusurious
  rate of interest permitted for that day by whichever of
  applicable federal or Texas laws permits the higher interest
  rate, stated as a rate per annum.  On each day, if any, that
  Texas law establishes the Ceiling Rate, the Ceiling Rate shall be
  the "weekly ceiling" (as defined in Chapter 303 of the Texas
  Finance Code (the "Texas Finance Code") and Chapter 1D of Title
  79, Tex.Rev.Civ. Stats. 1925 ("Chapter 1D"), as amended,
  respectively) for that day.  The Agent may from time to time, as
  to current and future balances, implement any other ceiling under
  the Texas Finance Code or Chapter 1D by notice to the Borrower,
  if and to the extent permitted by the Texas Finance Code or
  Chapter 1D.  Without notice to the Borrower or any other person
  or entity, the Ceiling Rate shall automatically fluctuate upward
  and downward as and in the amount by which such maximum
  nonusurious rate of interest permitted by applicable law fluctu
  ates.
  
       Change of Control means a change resulting when (a) any
  Person or Persons acting together which would constitute a Group
  together with any Affiliates thereof shall at any time either (i)
  Beneficially Own more than 50% of the aggregate voting power of
  all classes of Voting Stock of Parkway Properties, Inc. or (ii)
  succeed in having sufficient of its or their nominees elected to
  the Board of Directors of Parkway Properties, Inc. such that such
  nominees, when added to any existing directors remaining on the
  Board of Directors of Parkway Properties, Inc. after such
  election who is an Affiliate of such Person or Group, shall
  constitute a majority of the Board of Directors of Parkway
  Properties, Inc.; or (b) Parkway Properties, Inc. ceases to own,
  directly, at least fifty-one percent (51%) of the evidence of
  ownership of the Borrower.  As used herein (1) "Beneficially Own"
  means "beneficially own" as defined in Rule 13d-3 of the
  Securities Exchange Act of 1934, as amended, or any successor
  provision thereto; provided, however, that, for purposes of this
  definition, a Person shall not be deemed to Beneficially Own
  securities tendered pursuant to a tender or exchange offer made
  by or on behalf of such Person or any of such Person's Affiliates
  until such tendered securities are accepted for purchase or
  exchange; (2) "Group" means a "group" for purposes of Section
  13(d) of the Securities Exchange Act of 1934, as amended; and
  (3)"Voting Stock" of any Person shall mean capital stock of such
  Person which ordinarily has voting power for the election of
  directors (or persons performing similar functions) of such
  Person, whether at all times or only so long as no senior class
  of securities has such voting power by reason of any contingency.
  
       Code shall mean the Internal Revenue Code of 1986, as
  amended, as now or hereafter in effect, together with all regula
  tions, rulings and interpretations thereof or thereunder by the
  Internal Revenue Service.
  
       Commitment shall mean the commitment of the Lenders to lend
  funds under Section 2.1 of this Agreement.
  
       Credit Documents shall mean this Agreement, the Notes, the
  Guaranties, all instruments, certificates and agreements now or
  hereafter executed or delivered to the Agent or the Lenders
  pursuant to any of the foregoing, and all amendments,
  modifications, renewals, extensions, increases and rearrangements
  of, and substitutions for, any of the foregoing.
  
       EBITDA shall mean an amount derived from (a) net earnings,
  plus (b) depreciation, amortization, interest expense and income
  taxes, plus or minus (c) any losses or gains resulting from
  sales, write-downs, write-ups, write-offs or other valuation
  adjustments of assets or liabilities, in each case, as determined
  on a consolidated basis in accordance with Generally Accepted
  Accounting Principles, and including (without duplication) the
  Equity Percentage of EBITDA for the Borrower's Unconsolidated
  Affiliates.
  
       Eligible Ground Lease shall mean a lease either expressly
  approved by Agent in writing or a lease meeting at least the
  following requirements: (a) a remaining term (including renewal
  options exercisable at lessee's sole option) of at least forty
  (40) years, (b) the leasehold interest is transferable and
  assignable without the landlord's prior consent, (c) the ground
  lease is financeable in that, among other things, it provides or
  allows for, without further consent from the landlord, (i) notice
  and right to cure to lessee's lender, (ii) a pledge and mortgage
  of the leasehold interest, (iii) recognition of a foreclosure of
  the leasehold interest including entering into a new lease with
  the lender, and (iv) no right of landlord to terminate without
  consent of lessee's lender.
  
       Eligible Institution shall mean a commercial bank or a
  finance company, insurance company or other financial institution
  which is regularly engaged in making, purchasing or investing in
  loans and which has base capital of at least $500,000,000.00, but
  shall not include any Person which is an Affiliate of any
  Obligor.
  
       Equity Percentage shall mean the aggregate ownership
  percentage of Borrower in each Unconsolidated Affiliate.
  
       Eurodollar Business Day shall mean a Business Day on which
  transactions in United States dollar deposits between banks may
  be carried on in the London interbank dollar market.
  
       Eurodollar Interbank Rate shall mean, for each Interest
  Period, the rate of interest per annum, rounded, if necessary, to
  the next highest whole multiple of one-sixteenth percent (1/16%),
  quoted by Agent at or before 11:00 a.m., London time (or as soon
  thereafter as practicable), on the date two (2) Eurodollar
  Business Days before the first day of such Interest Period, to be
  the arithmetic average of the prevailing rates per annum at the
  time of determination and in accordance with the then existing
  practice in the London interbank dollar market, for the offering
  to Agent by one or more prime banks selected by Agent in its sole
  discretion, in the London interbank dollar market, of deposits in
  United States dollars for delivery on the first day of such
  Interest Period and having a maturity equal to the length of such
  Interest Period and in an amount equal (or as nearly equal as may
  be) to the Eurodollar Rate Borrowing to which such Interest
  Period relates.  Each determination by Agent of the Eurodollar
  Interbank Rate shall be prima facie evidence thereof.
  
       Eurodollar Rate shall mean for any day a rate per annum
  equal to the sum of the Applicable Margin for that day plus the
  Adjusted Eurodollar Interbank Rate in effect on the first day of
  the Interest Period for the applicable Eurodollar Rate Borrowing.
  Each Eurodollar Rate is subject to adjustments for reserves,
  insurance assessments and other matters as provided for in
  Section 3.5 hereof.
  
       Eurodollar Rate Borrowing shall mean that portion of the
  principal balance of the Loans at any time bearing interest at a
  Eurodollar Rate.
  
       Eurodollar Reserve Requirement shall mean, on any day, that
  percentage (expressed as a decimal fraction and rounded, if
  necessary, to the next highest one ten thousandth) which is in
  effect on such day for determining all reserve requirements
  (including, without limitation, basic, supplemental, marginal and
  emergency reserves) applicable to "Eurocurrency liabilities," as
  currently defined in Regulation D, all as specified by any
  Governmental Authority, including but not limited to those
  imposed under Regulation D.  Each determination of the Eurodollar
  Reserve Requirement by Agent shall be prima facie evidence
  thereof.
  
       Event of Default shall mean any of the events specified as
  an event of default in Section 7 of this Agreement, and Default
  shall mean any of such events, whether or not any requirement for
  notice, grace or cure has been satisfied.
  
       Federal Funds Effective Rate shall to the extent necessary
  be determined by the Agent separately for each day and shall for
  each such day be a rate per annum equal to the weighted average
  of the rates on overnight Federal funds transactions with members
  of the Federal Reserve System arranged by Federal funds brokers,
  as published for each such day (or if any such day is not a
  Business Day, for the next immediately preceding Business Day) by
  the Federal Reserve Bank of New York, or if the weighted average
  of such rates is not so published for any such day which is a
  Business Day, the average of the quotations for any such day on
  such transactions received by the Agent from three Federal funds
  brokers of recognized standing selected by the Agent.
  
       Fixed Charge Coverage Ratio shall mean the ratio of (a) the
  Borrower's EBITDA for the immediately preceding four (4) calendar
  quarters less an amount equal to the greater of actual Capital
  Expenditures for such period, or the Square Footage Unit Capital
  Expenditures for such period, to (b) all of the principal payable
  and principal paid on the Borrower's Indebtedness plus all of the
  Borrower's Interest Expense, in each case for the period used to
  calculate EBITDA.
  
       Funds Available for Distribution shall mean Funds From
  Operations, less adjustments for straight line rents and Capital
  Expenditures.
  
       Funds From Operations shall mean net income of the Borrower
  determined in accordance with Generally Accepted Accounting
  Principles, plus depreciation and amortization; provided, that
  there shall not be included in such calculation any gain or loss
  from debt restructuring and sales of Property.  Funds From
  Operations will be calculated, on an annualized basis, on the
  four (4) calendar quarters immediately preceding the date of the
  calculation.  Funds From Operations shall be calculated on a
  consolidated basis in accordance with Generally Accepted
  Accounting Principles, and including (without duplication) the
  Equity Percentage of Funds From Operations for the Borrower's
  Unconsolidated Affiliates.
       Funding Loss shall mean, with respect to (a) Borrower's
  payment or prepayment of principal of a Eurodollar Rate Borrowing
  on a day other than the last day of the applicable Interest
  Period; (b) Borrower's failure to borrow a Eurodollar Rate
  Borrowing on the date specified by Borrower; (c) Borrower's
  failure to make any prepayment of the Loans (other than Base Rate
  Borrowings) on the date specified by Borrower, or (d) any
  cessation of a Eurodollar Rate to apply to the Loans or any part
  thereof pursuant to Section 3.5, in each case whether voluntary
  or involuntary, any direct loss, expense, penalty, premium or
  liability incurred by any Lender (including but not limited to
  any loss or expense incurred by reason of the liquidation or
  reemployment of deposits or other funds acquired by a Lender to
  fund or maintain a Loan).
  
       Generally Accepted Accounting Principles shall mean, as to a
  particular Person, such accounting practice as, in the opinion of
  the independent accountants of recognized national standing regu
  larly retained by such Person and acceptable to the Agent,
  conforms at the time to generally accepted accounting principles,
  consistently applied.  Generally Accepted Accounting Principles
  means those principles and practices (a) which are recognized as
  such by the Financial Accounting Standards Board, (b) which are
  applied for all periods after the date hereof in a manner con
  sistent with the manner in which such principles and practices
  were applied to the most recent audited financial statements of
  the relevant Person furnished to the Lenders or where a change
  therein has been concurred in by such Person's independent
  auditors, and (c) which are consistently applied for all periods
  after the date hereof so as to reflect properly the financial
  condition, and results of operations and changes in financial
  position, of such Person.
  
       Governmental Authority shall mean any foreign governmental
  authority, the United States of America, any State of the United
  States and any political subdivision of any of the foregoing, and
  any agency, department, commission, board, bureau, court or other
  tribunal having jurisdiction over the Agent, any Lender or any
  Obligor or their respective Property.
  
       Guarantors (whether one or more) shall mean Parkway
  Properties, Inc., Parkway Properties General Partners, Inc.,
  Parkway Lamar LLC, Parkway Jackson LLC, and 111 Capitol Building
  Limited Partnership.
  
       Guaranties (whether one or more) shall mean the Guaranties
  executed by the Guarantors and delivered to the Agent in
  accordance with this Agreement.
  
       Historical Value shall mean the purchase price of Property
  (including improvements) and ordinary related purchase
  transaction costs, plus the cost of subsequent capital
  improvements made by the Borrower, less any provision for losses,
  all determined in accordance with Generally Accepted Accounting
  Principles.  If the Property is purchased as a part of a group of
  properties, the Historical Value shall be calculated based upon a
  reasonable allocation of the aggregate purchase price by the
  Borrower for all purposes, and consistent with Generally Accepted
  Accounting Principles.
  
       Indebtedness shall mean and include, without duplication
  (1) all obligations for borrowed money,  letter of credit
  reimbursement obligations, preferred stock redeemable at the
  option of the stockholder, (2) all obligations evidenced by
  bonds, debentures, notes or other similar agreements, (3) all
  obligations to pay the deferred purchase price of Property or
  services, except trade accounts payable arising in the ordinary
  course of business (unless included in (6) below), (4) all guar
  anties, endorsements, and other contingent obligations in respect
  of, or any obligations to purchase or otherwise acquire, Total
  Liabilities of others (but not including contracts to purchase
  real property and assume related liabilities which are not yet
  consummated if the buyer has the ability to terminate the
  contract at its option), (5) all Total Liabilities secured by any
  Lien existing on any interest of the Person with respect to which
  Indebtedness is being determined in Property owned subject to
  such Lien whether or not the Total Liabilities secured thereby
  shall have been assumed, (6) accounts payable, dividends of any
  kind or character or other proceeds payable with respect to any
  stock and accrued expenses, and (7) payments received in
  consideration for sale of ownership interests in a Person when
  the amount of ownership interest so sold is determined, and the
  date of delivery, is more than one (1) month after receipt of
  such payment. Indebtedness shall be calculated on a consolidated
  basis in accordance with Generally Accepted Accounting
  Principles, and including (without duplication) the Equity
  Percentage of Indebtedness for the Borrower's Unconsolidated
  Affiliates.
  
       Interest Coverage Ratio shall mean the ratio of (a) the
  Borrower's EBITDA for the immediately preceding four (4) calendar
  quarters to all of the Borrower's Interest Expense for the period
  used to calculate EBITDA.
  
       Interest Expense shall mean all of a Person's paid, accrued
  or capitalized interest expense on such Person's Indebtedness
  (whether direct, indirect or contingent, and including, without
  limitation, interest on all convertible debt), and including
  (without duplication) the Equity Percentage of Interest Expense
  for the Borrower's Unconsolidated Affiliates.
  
       Interest Options shall mean the Base Rate and the Eurodollar
  Rate, and "Interest Option" means either of them.
  
       Interest Payment Dates shall mean (a) the first (1st) day of
  each calendar month and the Maturity Date, for Base Rate
  Borrowings and (b) the last day of each Interest Period and, if
  the Interest Period is longer than three (3) months, at the end
  of each three (3) months, and the Maturity Date, for Eurodollar
  Rate Borrowings.
  
       Interest Period shall mean, for each Eurodollar Rate
  Borrowing, a period commencing on the date such Eurodollar Rate
  Borrowing was made and ending on the numerically corresponding
  day which is, subject to availability, one (1), two (2), three
  (3) or six (6) months thereafter; provided, (v) any Interest
  Period which would otherwise end on a day which is not a
  Eurodollar Business Day shall be extended to the next succeeding
  Eurodollar Business Day, unless such Eurodollar Business Day
  falls in another calendar month, in which case such Interest
  Period shall end on the next preceding Eurodollar Business Day;
  (w) any Interest Period which begins on the last Eurodollar
  Business Day of a calendar month (or on a day for which there is
  no numerically corresponding day in the calendar month at the end
  of such Interest Period) shall end on the last Eurodollar
  Business Day of the appropriate calendar month; (x) no Interest
  Period shall ever extend beyond the Maturity Date; and
  (y) Interest Periods shall be selected by Borrower in such a
  manner that the Interest Period with respect to any portion of
  the Loans which shall become due shall not extend beyond such due
  date.
  
       Legal Requirement shall mean any law, statute, ordinance,
  decree, requirement, order, judgment, rule, regulation (or inter
  pretation of any of the foregoing) of, and the terms of any
  license or permit issued by, any Governmental Authority.
  
       Lender Commitment means, for any Lender, the amount set
  forth opposite such Lender's name on its signature page of this
  Agreement, or as may hereafter become a signatory hereto.
  
       Lien shall mean any mortgage, pledge, charge, encumbrance,
  security interest, collateral assignment or other lien or
  restriction of any kind, whether based on common law,
  constitutional provision, statute or contract, and shall include
  reservations, exceptions, encroachments, easements, rights of
  way, covenants, conditions, restrictions, leases and other title
  exceptions.
  
       Limiting Agreements shall mean any agreement, instrument or
  transaction, including, without limitation, an Obligor's
  Organizational Documents, which has or may have the effect of
  prohibiting or limiting any Obligor's ability to pledge assets in
  the Pool to Agent as security for the Loans.
  
       Loans shall mean the Loans described in Sections 2.1 and 2.2
  hereof.  Loan shall mean any such Loan.
  
       Majority Lenders shall mean the Lenders with an aggregate
  amount of at least sixty-six and 67/100 percent (66.67%) of the
  amount of the Commitment then outstanding.
  
       Material Adverse Change shall mean a change which could
  reasonably be expected to have a Material Adverse Effect.
  
       Material Adverse Effect means a material adverse effect on
  (a) the financial condition, or results of operations of Borrower
  and its Subsidiaries taken as a whole, (b) the ability of an
  Obligor to perform its material obligations under the Credit
  Documents to which it is a party taken as a whole, (c) the
  validity or enforceability of such Credit Documents taken as a
  whole, or (d) the material rights and remedies of Lenders and
  Agent under the Credit Documents taken as a whole.
  
       Maturity Date shall mean three (3) years after the date of
  this Agreement, as the same may hereafter be accelerated pursuant
  to the provisions of any of the Credit Documents.
  
       Moody's Rating shall mean the senior unsecured debt rating
  from time to time received by the Borrower from Moody's Investors
  Service, Inc.
  
       Net Operating Income shall mean, for any income producing
  operating Property, the difference between (a) any cash rentals,
  proceeds and other income received from such Property (but
  excluding security or other deposits, late fees, early lease
  termination or other penalties, or other income of a non-
  recurring nature) during the determination period, less (b) an
  amount equal to all  costs and expenses (excluding interest
  expense and any expenditures that are capitalized in accordance
  with Generally Accepted Accounting Principles) incurred as a
  result of, or in connection with, or properly allocated to, the
  operation or leasing of such Property during the determination
  period; provided, however, that the amount for the expenses for
  the management of a Property included in clause (b) above shall
  be the greater of the management fee, the expenses that would be
  covered by a management fee, or three percent (3%) of the amount
  provided in clause (a) above. Net Operating Income shall be
  calculated on a consolidated basis in accordance with Generally
  Accepted Accounting Principles, and including (without
  duplication) the Equity Percentage of Net Operating Income for
  the Borrower's Unconsolidated Affiliates.
  
       Net Worth shall mean Tangible Net Worth, plus intangibles
  deducted in determining Tangible Net Worth.  Net Worth shall be
  calculated on a consolidated basis in accordance with Generally
  Accepted Accounting Principles.
  
       Non-recourse Debt shall mean any Indebtedness the payment of
  which the Borrower or any of its Subsidiaries is not obligated to
  make other than to the extent of any security therefor.
  
       Notes shall mean the promissory notes of the Borrower
  described in Section 2.1 hereof, any and all renewals, exten
  sions, modifications, rearrangements and replacements thereof and
  any and all substitutions therefor, and Note shall mean any one
  of them.
  
       Obligations shall mean, as at any date of determination
  thereof, the sum of (a) the aggregate amount of Loans outstanding
  hereunder plus (b) all other liabilities, obligations and
  Indebtedness of any Parties under any Credit Document.
  
       Obligors means any Person now or hereafter primarily or
  secondarily obligated to pay all or any part of the Obligations,
  including Borrower and Guarantors.
  
       Occupancy Level shall mean the occupancy level of a Property
  that is leased to bona fide tenants not Affiliates of any Obligor
  or the subject property manager (or any of their respective
  Affiliates) paying rent under written leases, based on the
  occupancy level at the time of determination.
  
       Officer's Certificate shall mean a certificate in the form
  attached hereto as Exhibit A.
  
       Organizational Documents shall mean, with respect to a
  corporation, the certificate of incorporation, articles of
  incorporation and bylaws of such corporation; with respect to a
  partnership, the partnership agreement establishing such
  partnership; with respect to a joint venture, the joint venture
  agreement establishing such joint venture, and with respect to a
  trust, the instrument establishing such trust; in each case
  including any and all modifications thereof as of the date of the
  Credit Document referring to such Organizational Document and any
  and all future modifications thereof which are consented to by
  the Lenders.
  
       Opinion Letters shall mean the opinion letters of
  independent counsel for the Obligors, each in Proper Form.
  
       Parties shall mean all Persons other than the Agent, or any
  Lender executing any Credit Document.
  
       Past Due Rate shall mean, on any day, a rate per annum equal
  to the Ceiling Rate for that day, or only if applicable law
  imposes no maximum nonusurious rate of interest for that day,
  then the Past Due Rate for that day shall be a rate per annum
  equal to the Base Rate plus an additional five percent (5%) per
  annum, but in any event not to exceed the Ceiling Rate.
  
       Percentage shall mean the amount, expressed as a percentage,
  of each Lender Commitment as compared to the Commitment, set
  forth opposite the Lender's name on its signature page of this
  Agreement, or as may hereafter become signatory hereto.
  
       Permitted Encumbrances shall mean (a) encumbrances
  consisting of zoning restrictions, easements, or other
  restrictions on the use of real property, provided that such
  items do not materially impair the use of such property for the
  purposes intended and none of which is violated in any material
  respect by existing or proposed structures or land use; (b) the
  following:  (i) Liens for taxes not yet due and payable, or being
  diligently contested in good faith; or (ii) materialmen's,
  mechanic's, warehousemen's and other like Liens arising in the
  ordinary course of business, securing payment of Total
  Liabilities whose payment is not yet due, or that are being
  contested in good faith by appropriate proceedings diligently
  conducted, and for or against which the Property owner has
  established adequate reserves in accordance with Generally
  Accepted Accounting Principles; (c) Liens for taxes, assessments
  and governmental charges or assessments that are being contested
  in good faith by appropriate proceedings diligently conducted,
  and for or against which the Property owner has established
  adequate reserves in accordance with Generally Accepted
  Accounting Principles; (d) Liens on real property which are
  insured around or against by title insurance; (e) Liens securing
  assessments or charges payable to a property owner association or
  similar entity which assessments are not yet due and payable or
  are being diligently contested in good faith; and (f) Liens
  securing this Agreement and Indebtedness hereunder, if any.
  
       Person shall mean any individual, corporation, trust, unin
  corporated organization, Governmental Authority or any other form
  of entity.
  
       Prime Rate shall mean, as of a particular date, the prime
  rate of interest per annum most recently determined by the Agent,
  automatically fluctuating upward or downward with and at the time
  specified in each such determination without notice to Borrower
  or any other Person; each change in the Prime Rate shall be
  effective on the date such change is determined; which Prime Rate
  may not necessarily represent the Agent's lowest or best rate
  actually charged to a customer.
  
       Proper Form shall mean in form and substance reasonably
  satisfactory to the Agent and the Majority Lenders.
  
       Property shall mean any interest in any kind of property or
  asset, whether real, leasehold, personal or mixed, tangible or
  intangible.
  
       Quarterly Unaudited Financial Statements shall mean the
  quarterly financial statements of a Person, including all notes
  thereto, which statements shall include a balance sheet as of the
  end of such quarter and an income statement for such fiscal
  quarter, and for the fiscal year to date, a statement of cash
  flows for such quarter and for the fiscal year to date, subject
  to normal year-end adjustments, all setting forth in comparative
  form the corresponding figures for the corresponding fiscal
  period of the preceding year (or, in the case of the balance
  sheet, the end of the preceding fiscal year), prepared in
  accordance with Generally Accepted Accounting Principles except
  that the Quarterly Unaudited Financial Statements may contain
  condensed footnotes as permitted by regulations of the United
  States Securities and Exchange Commission, and containing  a
  detailed listing of the Borrower's Property and the Historical
  Value thereof, and certified as true and correct by a managing
  director, senior vice president, or vice president of Borrower.
  The Quarterly Unaudited Financial Statements shall be prepared on
  a consolidated basis in accordance with Generally Accepted
  Accounting Principles.
  
       Rate Designation Date shall mean 12:00 noon, Houston, Texas
  time, on the date three (3) Eurodollar Business Days preceding
  the first day of any proposed Interest Period.
  
       Regulation D shall mean Regulation D of the Board of
  Governors of the Federal Reserve System from time to time in
  effect and shall include any successor or other regulation
  relating to reserve requirements applicable to member lenders of
  the Federal Reserve System.
  
       Request for Loan shall mean a written request substantially
  in the form of Exhibit B.
       S&P Rating shall mean the senior unsecured debt rating from
  time to time received by the Borrower from Standard & Poor's
  Rating Services.
  
       Secured Debt shall mean the Indebtedness of the Borrower
  secured by a Lien, and any Indebtedness of any of the Borrower's
  Subsidiaries owed to a Person not an Affiliate of the Borrower or
  such Subsidiary.
  
       Secured Debt to Total Asset Value Ratio shall mean the ratio
  (expressed as a percentage) of Secured Debt to Total Asset Value.
  
       Square Footage Capital Expenditure shall mean, on an annual
  basis, an amount equal to (a) for use in the Fixed Charged
  Coverage Ratio, the product of (i) the daily average aggregate
  number of gross square feet contained in each completed,
  operating Property owned by Borrower or any Subsidiary during the
  immediately preceding four (4) calendar quarters, multiplied by
  (ii) $1.00; and (b) for use in defining Value, the product of (i)
  the aggregate number of gross square feet contained in each
  completed, operating Property owned by Borrower or any Subsidiary
  as of the last day of the immediately preceding calendar quarter,
  multiplied by (ii) $1.00 .
  
       Stated Rate shall, on any day, mean whichever of the Base
  Rate or the Eurodollar Rate has been designated and provided
  pursuant to this Agreement; provided that, if on any day such
  rate shall exceed the Ceiling Rate for that day, the Stated Rate
  shall be fixed at the Ceiling Rate on that day and on each day
  thereafter until the total amount of interest accrued at the
  Stated Rate on the unpaid principal balance of the Notes equals
  the total amount of interest which would have accrued if there
  had been no Ceiling Rate.  If the Notes mature (or are prepaid)
  before such equality is achieved, then, in addition to the unpaid
  principal and accrued interest then owing pursuant to the other
  provisions of the Credit Documents, Borrower promises to pay on
  demand to the order of the holders of the Notes interest in an
  amount equal to the excess (if any) of (a) the lesser of (i) the
  total interest which would have accrued on the Notes if the
  Stated Rate had been defined as equal to the Ceiling Rate from
  time to time in effect and (ii) the total interest which would
  have accrued on the Notes if the Stated Rate were not so
  prohibited from exceeding the Ceiling Rate, over (b) the total
  interest actually accrued on the Notes to such maturity (or
  prepayment) date.
  
       Subsidiary shall mean, as to a particular parent entity, any
  entity of which more than fifty percent (50%) of the indicia of
  voting equity or ownership rights (whether outstanding capital
  stock or otherwise) is at the time directly or indirectly owned
  by, such parent entity, or by one or more of its other
  Subsidiaries.
  
       Tangible Net Worth shall mean total assets based on book
  value, and including the book value of equity investments in each
  Unconsolidated Affiliate multiplied by the Equity Percentage for
  that Unconsolidated Affiliate), less (1) all intangibles and
  (2) all liabilities (including contingent and indirect
  liabilities), all determined in accordance with Generally
  Accepted Accounting Principles.  The term "intangibles" shall
  include, without limitation, (i) deferred charges, (ii) the
  amount of any write-up in the book value of any assets contained
  in any balance sheet resulting from revaluation thereof or any
  write-up in excess of the cost of such assets acquired, and
  (iii) the aggregate of all amounts appearing on the assets side
  of any such balance sheet for franchises, licenses, permits,
  patents, patent applications, copyrights, trademarks, trade
  names, goodwill, treasury stock, experimental or organizational
  expenses and other like intangibles.  The term "liabilities"
  shall include, without limitation, (i) Total Liabilities secured
  by Liens on Property of the Person with respect to which Tangible
  Net Worth is being computed whether or not such Person is liable
  for the payment thereof, (ii) deferred liabilities, and
  (iii) obligations under leases which have been capitalized.
  Tangible Net Worth shall be calculated on a consolidated basis in
  accordance with Generally Accepted Accounting Principles.
  
       Taxes shall mean any tax, levy, impost, duty, charge or fee.
  
       Total Asset Value shall mean the sum of (without
  duplication) (a) the aggregate Value of all of Borrower's
  operating real estate assets, plus (b) the amount of  any cash
  and cash equivalents, excluding tenant security and other
  restricted deposits of the Borrower, plus (c) investments in
  Unconsolidated Affiliates that are engaged primarily in the
  business of investment in and operation of office and industrial
  office buildings, valued at an amount equal to the Value of each
  Unconsolidated Affiliate's operating real estate assets
  multiplied by the Equity Percentage for that Unconsolidated
  Affiliate (subject to the maximum investment limitation contained
  in Section 6.6(f)), plus (d) investments in readily marketable
  securities of another Person, not an Affiliate of any Obligor,
  traded on a national trading exchange, that is a real estate
  investment trust under Section 856(c)(1) of the Code, or that is
  a real estate operating company (subject to the maximum
  investment limitation contained in Section 6.6(i)), plus (e)
  investments in real estate assets that are being constructed or
  developed to be office or industrial buildings, but are not yet
  in operation (subject to the maximum investment and cost
  limitation contained in Section 6.6(k)).  Total Asset Value shall
  be calculated on a consolidated basis in accordance with
  Generally Accepted Accounting Principles.
  
       Total Liabilities shall mean and include, without
  duplication, the sum of (a) Indebtedness and (b) all other items
  which in accordance with Generally Accepted Accounting Principles
  would be included on the liability side of a balance sheet on the
  date as of which Total Liabilities is to be determined (excluding
  capital stock, surplus, surplus reserves and deferred credits),
  and including (without duplication) the Equity Percentage of
  Total Liabilities of the Borrower's Unconsolidated Affiliates.
  
       Total Liabilities to Total Asset Value Ratio shall mean the
  ratio (expressed as a percentage) of Total Liabilities to Total
  Asset Value, with Total Asset Value based on the immediately
  preceding calendar quarter.
  
       Unconsolidated Affiliate shall mean, in respect of any
  Person, any other Person (other than a Person whose stock is
  traded on a national trading exchange) in whom such Person holds
  a voting equity or ownership interest and whose financial results
  would not be consolidated under Generally Accepted Accounting
  Principles with the financial results of such Person on the
  consolidated financial statements of such Person.
  
       Unencumbered Interest Coverage Ratio shall mean the ratio of
  (a) the Net Operating Income for Property that is not subject to
  any Lien for the immediately preceding four (4) calendar
  quarters, to (b) an amount equal to the greater of (i) the
  Borrower's Interest Expense on all of the Borrower's Indebtedness
  other than Secured Debt, or (ii) interest on the Borrower's
  Indebtedness other than Secured Debt calculated at seven and one-
  half (7.50%) per annum, in each case for the period used to
  calculate Net Operating Income.
  
       Value shall mean the sum of (a) for Property that has
  reached the Calculation Date and that Borrower has owned for the
  full determination period, the result of dividing (i) the
  aggregate Net Operating Income of the subject Property based on
  the immediately preceding calendar quarter and multiplied by four
  (4), less the aggregate Square Footage Capital Expenditure for
  such Property, by (ii) nine and one-fourth percent (9.25%); plus
  (b) for Property that has not reached the Calculation Date or
  that has not been owned by Borrower for the full determination
  period, the aggregate Historical Value of the subject Property.
  
       The following terms shall have the respective meanings
  ascribed to them in the Uniform Commercial Code as enacted and in
  force in the State of Texas on the date hereof:
  
       accessions, continuation statement, fixtures, general
       intangibles, proceeds, security interest and security
       agreement.
  
  2.   The Loans.
  
       2.1  Advances.  (a)  Subject to the terms and conditions of
  this Agreement, each Lender severally agrees to make Loans prior
  to the Maturity Date to the Borrower not to exceed an amount (in
  the aggregate, the "Commitment") at any one time outstanding
  equal to the Lender's Lender Commitment.  Each such request for a
  Loan by Borrower shall be deemed a request for a Loan from each
  Lender equal to such Lender's Percentage of the aggregate amount
  so requested, and such aggregate amount shall be in an amount at
  least equal to $1,000,000.00 and equal to a multiple of
  $250,000.00, or the difference between the Commitment and the
  aggregate principal balance of the Notes, whichever is less.
  Each repayment of the Loans shall be deemed a repayment of each
  Lender's Loan equal to such Lender's Percentage of the amount so
  repaid.  The obligations of the Lenders hereunder are several and
  not joint, and the preceding two sentences will give rise to
  certain inappropriate results if special provisions are not made
  to accommodate the failure of a Lender to fund a Loan as and when
  required by this Agreement; therefore, notwithstanding anything
  herein to the contrary, (A) no Lender shall be required to make
  Loans at any one time outstanding in excess of such Lender's
  Percentage of the Commitment and (B) if a Lender fails to make a
  Loan as and when required hereunder and Borrower subsequently
  makes a repayment on the Loans, such repayment shall be divided
  among the non-defaulting Lenders ratably in accordance with their
  respective Percentages until each Lender has its Percentage of
  all of the outstanding Loans, and the balance of such repayment
  shall be divided among all of the Lenders in accordance with
  their respective Percentages.  The Loans shall be evidenced by
  the Notes substantially in the form of Exhibit C attached hereto.
  The Borrower, the Agent and the Lenders agree that Chapter 346 of
  the Texas Finance Code shall not apply to this Agreement, the
  Notes or any Loan.
  
       (b)  The Borrower shall give the Agent notice of each
  borrowing to be made hereunder as provided in Section 3.1 hereof,
  and the Agent shall deliver same to each Lender promptly
  thereafter.  Not later than 11:00 a.m., Houston, Texas time, on
  the date specified for each such borrowing hereunder, each Lender
  shall make available the amount of the Loan, if any, to be made
  by it on such date to the Agent at the Agent's principal office
  in Houston, Texas, in immediately available funds, for the
  account of the Borrower.  Such amounts received by the Agent will
  be held in Agent's general ledger account.  The amounts so
  received by the Agent shall, subject to the terms and conditions
  of this Agreement, be made available to the Borrower by wiring or
  otherwise transferring, in immediately available funds not later
  than 12:00 noon, Houston, Texas time, such amount to an account
  designated by the Borrower and maintained with Chase in Houston,
  Texas or any other account or accounts which the Borrower may
  from time to time designate to the Agent by a written notice as
  the account or accounts to which borrowings hereunder are to be
  wired or otherwise transferred.
  
       2.2  Payments. (a)  Except to the extent otherwise provided
  herein, all payments of principal, interest and other amounts to
  be made by the Borrower hereunder, under the Notes and under the
  other Credit Documents shall be made in immediately available
  funds to the Agent, for the account of the Lenders, at its
  principal office in Houston, Texas (or in the case of a successor
  Agent, at the principal office of such successor Agent in the
  United States), not later than 12:00 noon Houston, Texas time on
  the date on which such payment shall become due (each such
  payment made after such time on such due date to be deemed to
  have been made on the next succeeding Business Day).
  
       (b)  The Borrower may, at the time of making each payment
  hereunder, under any Note or under any other Credit Document,
  specify to the Agent the Loans or other amounts payable by the
  Borrower hereunder or thereunder to which such payment is to be
  applied, which must be pro rata on the basis of each Lender's
  Percentage (and in the event that it fails so to specify, such
  payment shall be applied to the Loans or, if no Loans are
  outstanding, to other amounts then due and payable, provided that
  if no Loans or other amounts are then due and payable or an Event
  of Default has occurred and is continuing, the Agent may apply
  such payment to the Obligations in such order as it may elect in
  its sole discretion, but subject to the other terms and
  conditions of this Agreement, including without limitation
  Section 2.3 hereof).  Each payment received by the Agent
  hereunder, under any Note or under any other Credit Document for
  the account of a Lender shall be paid promptly to such Lender, in
  immediately available funds.  If the Agent receives a payment for
  the account of a Lender prior to 12:00 noon Houston, Texas time,
  such payment must be delivered to the Lender on that same day and
  if it is not so delivered due to the fault of the Agent, the
  Agent shall pay to the Lender entitled to the payment the
  interest accrued on the amount of the payment pursuant to said
  Lender's Note and this Agreement from the date the Agent receives
  the payment to the date the Lender received the payment.
  
        (c)  If the due date of any payment hereunder or under  any
  Note  falls  on a day which is not a Business Day or a Eurodollar
  Business  Day, as the case may be, the due date for such payments
  shall  be  extended  to  the  next  succeeding  Business  Day  or
  Eurodollar  Business  Day, respectively, and  interest  shall  be
  payable  for  any principal so extended for the  period  of  such
  extension;  provided,  however, that with respect  to  Eurodollar
  Rate  Borrowings  if  such extension would cause  the  Eurodollar
  Business  Day of payment to fall in another calendar  month,  the
  payment  shall  be  due  on  the  Eurodollar  Business  Day  next
  preceding the due date of the payment.
  
        (d)   The  Borrower shall give the Agent at least  one  (1)
  Business  Day's prior written notice of the Borrower's intent  to
  make  any  payment  of  principal or interest  under  the  Credit
  Documents  not  scheduled to be paid under the Credit  Documents.
  Any such notification of payment shall be irrevocable after it is
  made  by  the  Borrower.   Upon receipt  by  the  Agent  of  such
  notification  of  payment, it shall deliver  same  to  the  other
  Lenders.
  
       2.3  Pro Rata Treatment.  Except to the extent otherwise
  provided herein:  (a) each borrowing from the Lenders under
  Section 2.1(a) hereof shall be made ratably from the Lenders on
  the basis of their respective Percentages, each payment of the
  Fee (hereinafter defined) shall be made for the account of the
  Lenders, and shall be applied, pro rata, according to the
  Lenders' respective Lender Commitment;  and (b) each payment by
  the Borrower of principal or interest on the Loans or any other
  sums advanced by the Lenders pursuant to the Credit Documents,
  and of any other amount owed to the Lenders other than the Fee,
  or any other sums designated by this Agreement as being owed to a
  particular Lender, shall be made to the Agent for the account of
  the Lenders pro rata in accordance with the respective unpaid
  principal amounts of the Loans held by the Lenders.
  
       2.4  Non-Receipt of Funds by the Agent.  Unless the Agent
  shall have been notified by a Lender or the Borrower (the
  "Payor") prior to the date on which such Lender is to make
  payment to the Agent of the proceeds of a Loan to be made by it
  hereunder or the Borrower is to make a payment to the Agent for
  the account of one or more of the Lenders, as the case may be
  (such payment being herein called the "Required Payment"), which
  notice shall be effective upon receipt, that the Payor does not
  intend to make the Required Payment to the Agent, the Agent may
  assume that the Required Payment has been made and may, in
  reliance upon such assumption (but shall not be required to),
  make the amount thereof available to the intended recipient on
  such date and, if the Payor has not in fact made the Required
  Payment to the Agent, the recipient of such payment shall, on
  demand, pay to the Agent the amount made available by the Agent
  together with interest thereon in respect of the period
  commencing on the date such amount was so made available by the
  Agent until the date the Agent recovers such amount at a rate per
  annum equal to (a) the Past Due Rate for such period if the
  recipient returning a Required Payment is the Borrower, or (b)
  the Federal Funds Effective Rate for such period if the recipient
  returning a Required Payment is the Agent or a Lender.
  
       2.5  Sharing of Payments, Etc.   The Borrower agrees that,
  in addition to (and without limitation of) any right of set-off,
  bankers' lien or counterclaim a Lender may otherwise have, each
  Lender shall be entitled, at its option, to offset balances held
  by it for the account of the Borrower at any of its offices,
  against any principal of or interest on any of such Lender's
  Loans to the Borrower hereunder, or other Obligations of the
  Borrower hereunder, which is not paid (regardless of whether such
  balances are then due to the Borrower), in which case it shall
  promptly notify the Borrower and the Agent thereof, provided that
  such Lender's failure to give such notice shall not affect the
  validity thereof.  If a Lender shall obtain payment of any
  principal of or interest on any Loan made by it under this
  Agreement or other Obligation then due to such Lender hereunder,
  through the exercise of any right of set-off, banker's lien,
  counterclaim or similar right, or otherwise, it shall promptly
  purchase from the other Lenders portions of the Loans made or
  other Obligations held by the other Lenders in such amounts, and
  make such other adjustments from time to time as shall be
  equitable to the end that all the Lenders shall share the benefit
  of such payment (net of any expenses which may be incurred by
  such Lender in obtaining or preserving such benefit) pro rata in
  accordance with the unpaid principal and interest on the
  Obligations then due to each of them.  To such end all the
  Lenders shall make appropriate adjustments among themselves (by
  the resale of participations sold or otherwise) if such payment
  is rescinded or must otherwise be restored.  Nothing contained
  herein shall require any Lender to exercise any such right or
  shall affect the right of any Lender to exercise, and retain the
  benefits of exercising, any such right with respect to any other
  indebtedness or obligation of the Borrower.
  
       2.6  Fees.  The Borrower shall pay to the Agent for the
  account of each Lender fees (collectively, the "Fee") equal to an
  amount payable as a commitment fee by the Borrower to the Agent
  for the account of each Lender equal to the portion of the daily
  unused amount of the Commitment multiplied by the rate per annum
  corresponding to (a) the Total Liabilities to Total Asset Value
  Ratio reflected in Table 1 on Schedule I attached hereto (as
  determined as of the last day of each of the Borrower's fiscal
  quarters) whenever and for so long as the Borrower has not
  received an S&P Rating and a Moody's Rating; and (b) the S&P
  Rating or Moody's Rating, whichever is lower, reflected in Table
  2 on Schedule I attached hereto, as same is in effect from time
  to time, whenever and for so long as the Borrower has received an
  S&P Rating and a Moody's Rating; such commitment fee to be
  payable in arrears on or before the tenth (10th) day of each
  April, July, October and January.  The Fee shall not be
  refundable. Any portion of the Fee which is not paid by the
  Borrower when due shall bear interest at the Past Due Rate from
  the date due until the date paid by the Borrower.  The Fee shall
  be calculated on the actual number of days elapsed in a year
  deemed to consist of 360 days.
  3.   Conditions.
  
       3.1  All Loans.  The obligation of any Lender to make any
  Loan is subject to the accuracy of all representations and
  warranties of the Borrower on the date of such Loan, to the
  performance by the Borrower of its obligations under the Credit
  Documents and to the satisfaction of the following further
  conditions:  (a) the Agent shall have received the following, all
  of which shall be duly executed and in Proper Form: (1) a Request
  for Loan (i) by 11:00 a.m., Houston, Texas time, one (1) Business
  Day before the date (which shall also be a Business Day) of the
  proposed Loan which is to be a Base Rate Borrowing, or (ii) by
  the Rate Designation Date of the proposed Loan which is to be a
  Eurodollar Rate Borrowing; and (2) such other documents as the
  Agent may reasonably require to satisfy itself or the request of
  any Lender; (b) no Default or Event of Default shall have
  occurred and be continuing; (c) the making of the Loan shall not
  be prohibited by any Legal Requirement; and (d) the Borrower
  shall have paid all legal fees and expenses of the type described
  in Section 5.10 hereof through the date of such Loan.
  
       3.2  First Loan.  In addition to the matters described in
  Section 3.1 hereof, the obligation of the Lenders to make the
  first Loan under this Agreement is subject to the receipt by the
  Lenders of each of the following, in Proper Form: (a) the Notes,
  executed by the Borrower; (b) a certificate executed by the
  Secretary or Assistant Secretary of each Obligor dated as of the
  date hereof as to the resolutions of such Person authorizing the
  execution of the Credit Documents and as to the incumbency of the
  officers of such Person; (c) a certificate from the Secretary of
  State or other appropriate public official of the state of
  organization of each Obligor  as to the continued existence and
  good standing of such Obligor; (d) a certificate from the
  appropriate public official of every state where the location of
  the Obligor's Property requires it to be qualified to do business
  as to the due qualification and good standing of such Obligor;
  (e) a legal opinion from independent counsel for the Obligors as
  to the matters set forth on Exhibit D acceptable to the Lenders;
  and (f) an Officer's Certificate in the form of Exhibit A; and to
  the further condition that, at the time of the initial Loan, all
  legal matters incident to the transactions herein contemplated
  shall be satisfactory to Liddell, Sapp, Zivley, Hill & LaBoon,
  L.L.P., counsel for the Agent.
  
       3.3  Options Available.  The outstanding principal balance
  of the Notes shall bear interest at the Base Rate; provided, that
  (1) all past due amounts, both principal and accrued interest,
  shall bear interest at the Past Due Rate, and (2) subject to the
  provisions hereof, Borrower shall have the option of having all
  or any portion of the principal balance of the Notes from time to
  time outstanding bear interest at a Eurodollar Rate.  The records
  of the Lenders with respect to Interest Options, Interest Periods
  and the amounts of Loans to which they are applicable shall be
  prima facie evidence thereof.  Interest on the Loans shall be
  calculated at the Base Rate except where it is expressly provided
  pursuant to this Agreement that a Eurodollar Rate is to apply.
  
       3.4  Designation and Conversion.  Borrower shall have the
  right to designate or convert its Interest Options in accordance
  with the provisions hereof.  Provided no Event of Default has
  occurred and is continuing and subject to the provisions of
  Section 3.5, Borrower may elect to have a Eurodollar Rate apply
  or continue to apply to all or any portion of the principal
  balance of the Notes. Each change in Interest Options shall be a
  conversion of the rate of interest applicable to the specified
  portion of the Loans, but such conversion shall not change the
  respective outstanding principal balance of the Notes.  The
  Interest Options shall be designated or converted in the manner
  provided below:
  
        (a)   Borrower shall give Agent a Request for  Loan.   Each
  such written notice shall specify the amount of Loan which is the
  subject of the designation, if any; the amount of borrowings into
  which  such  borrowings  are  to be converted  or  for  which  an
  Interest  Option  is  designated;  the  proposed  date  for   the
  designation  or  conversion  and the  Interest  Period,  if  any,
  selected  by Borrower.  The Request for Loan shall be irrevocable
  and  shall  be  given to Agent no later than the applicable  Rate
  Designation  Date.  The Agent shall promptly deliver the  Request
  for Loan to the Lenders.
  
        (b)   No more than five (5) Eurodollar Rate Borrowings with
  five (5) Interest Periods shall be in effect at any time.
  
        (c)   Each  designation or conversion of a Eurodollar  Rate
  Borrowing shall occur on a Eurodollar Business Day.
  
       (d)  Except as provided in Section 3.5 hereof, no Eurodollar
  Rate Borrowing shall be converted on any day other than the last
  day of the applicable Interest Period.
  
        (e)   Unless a Request for Loan to the contrary is received
  as  provided  in  this Agreement, each Eurodollar Rate  Borrowing
  will convert to a Base Rate Borrowing after the expiration of the
  Interest Period.
  
       3.5  Special Provisions Applicable to Eurodollar Rate
  Borrowings.
  
       (a)  Options Unlawful.  If the adoption of any applicable
  Legal Requirement or any change in any applicable Legal Require
  ment or in the interpretation or administration thereof by any
  Governmental Authority or compliance by the Lenders with any
  request or directive (whether or not having the force of law) of
  any central bank or other Governmental Authority shall at any
  time make it unlawful or impossible for any Lender to permit the
  establishment of or to maintain any Eurodollar Rate Borrowing,
  the commitment of the Lenders to establish or maintain such
  Eurodollar Rate Borrowing shall forthwith be suspended until such
  condition shall cease to exist and Borrower shall forthwith, upon
  demand by Agent to Borrower, (1) convert the Eurodollar Rate
  Borrowing with respect to which such demand was made to a Base
  Rate Borrowing; (2) pay all accrued and unpaid interest to date
  on the amount so converted; and (3) pay any amounts required to
  compensate the Lenders for any additional cost or expense which
  the Lenders may incur as a result of such adoption of or change
  in such Legal Requirement or in the interpretation or
  administration thereof and any Funding Loss which the Lenders may
  incur as a result of such conversion.  If, when Agent so notifies
  Borrower, Borrower has given a Request for Loan specifying a
  Eurodollar Rate Borrowing but the selected Interest Period has
  not yet begun, such Request for Loan shall be deemed to be of no
  force and effect, as if never made, and the balance of the Loans
  specified in such Request for Loan shall bear interest at the
  Base Rate until a different available Interest Option shall be
  designated in accordance herewith.
  
       (b)  Increased Cost of Borrowings.  If the adoption of any
  applicable Legal Requirement or any change in any applicable
  Legal Requirement or in the interpretation or administration
  thereof by any Governmental Authority or compliance by any Lender
  with any request or directive of general applicability (whether
  or not having the force of law) of any central bank or
  Governmental Authority shall at any time as a result of any
  portion of the principal balance of the Notes being maintained on
  the basis of a Eurodollar Rate:
  
       (1)  subject any Lender (or make it apparent that any
            Lender is subject) to any Taxes, or any deduction
            or withholding for any Taxes, on or from any
            payment due under any Eurodollar Rate Borrowing or
            other amount due hereunder, other than income and
            franchise taxes of the United States and its
            political subdivisions; or
  
       (2)  change the basis of taxation of payments due from
            Borrower to any Lender under any Eurodollar Rate
            Borrowing (otherwise than by a change in the rate
            of taxation of the overall net income of a
            Lender); or
  
       (3)  impose, modify, increase or deem applicable any
            reserve requirement (excluding that portion of any
            reserve requirement included in the calculation of
            the applicable Eurodollar Rate), special deposit
            requirement or similar requirement (including, but
            not limited to, state law requirements and
            Regulation D) imposed, modified, increased or
            deemed applicable by any Governmental Authority
            against assets held by any Lender, or against
            deposits or accounts in or for the account of any
            Lender, or against loans made by any Lender, or
            against any other funds, obligations or other
            property owned or held by any Lender; or
  
       (4)  impose on any Lender any other condition regarding
            any Eurodollar Rate Borrowing;
  
       and the result of any of the foregoing is to increase
       the cost to any Lender of agreeing to make or of
       making, renewing or maintaining such Eurodollar Rate
       Borrowing, or reduce the amount of principal or
       interest received by any Lender, then, upon demand by
       Agent, Borrower shall pay to such Lender, from time to
       time as specified by such Lender, additional amounts
       which shall compensate such Lender for such increased
       cost or reduced amount.  Agent will promptly notify
       Borrower in writing of any event which will entitle any
       Lender to additional amounts pursuant to this para
       graph.  A Lender's determination of the amount of any
       such increased cost, increased reserve requirement or
       reduced amount shall be prima facie evidence thereof.
       Borrower shall have the right, if it receives from
       Agent any notice referred to in this paragraph, upon
       three Business Days' notice to Agent, either (i) to
       repay in full (but not in part) any borrowing with
       respect to which such notice was given, together with
       any accrued interest thereon, or (ii) to convert the
       Eurodollar Rate Borrowing which is the subject of the
       notice to a Base Rate Borrowing; provided, that any
       such repayment or conversion shall be accompanied by
       payment of (x) the amount required to compensate a
       Lender for the increased cost or reduced amount
       referred to in the preceding paragraph; (y) all accrued
       and unpaid interest to date on the amount so repaid or
       converted, and (z) any Funding Loss which any Lender
       may incur as a result of such repayment or conversion.
  
       (c)  Inadequacy of Pricing and Rate Determination.  If
       for any reason with respect to any Interest Period
       Agent shall have determined (which determination shall
       be prima facie evidence thereof) that:
  
       (1)  Agent is unable through its customary general
            practices to determine any applicable Eurodollar
            Rate, or
  
       (2)  by reason of circumstances affecting the
            applicable market generally, Agent is not being
            offered deposits in United States dollars in such
            market, for the applicable Interest Period and in
            an amount equal to the amount of any applicable
            Eurodollar Rate Borrowing requested by Borrower,
            or
  
       (3)  any applicable Eurodollar Rate will not adequately
            and fairly reflect the cost to the Lenders of
            making and maintaining such Eurodollar Rate
            Borrowing hereunder for any proposed Interest
            Period,
  
       then Agent shall give Borrower notice thereof and
       thereupon, (A) any Request for Loan previously given by
       Borrower designating the applicable Eurodollar Rate
       Borrowing which has not commenced as of the date of
       such notice from Agent shall be deemed for all purposes
       hereof to be of no force and effect, as if never given,
       and (B) until Agent shall notify Borrower that the
       circumstances giving rise to such notice from Agent no
       longer exist, each Request for Loan requesting the
       applicable Eurodollar Rate shall be deemed a request
       for a Base Rate Borrowing, and any applicable
       Eurodollar Rate Borrowing then outstanding shall be
       converted, without any notice to or from Borrower, upon
       the termination of the Interest Period then in effect
       with respect to it, to a Base Rate Borrowing.
  
       (d)  Funding Losses.  Borrower shall indemnify the Agent and
  each Lender against and hold the Agent and each Lender harmless
  from any Funding Loss.  This agreement shall survive the payment
  of the Notes.  A certificate as to any additional amounts payable
  pursuant to this subsection and setting forth the reasons for the
  Funding Loss submitted by Agent to Borrower shall be prima facie
  evidence thereof.
  
       3.6  Funding Offices; Adjustments Automatic.  Any Lender
  may, if it so elects, fulfill its obligation as to any Eurodollar
  Rate Borrowing by causing a branch or affiliate of such Lender to
  make such Loan and may transfer and carry such Loan at, to, or
  for the account of, any branch office or affiliate of such
  Lender; provided, that in such event for the purposes of this
  Agreement such Loan shall be deemed to have been made by such
  Lender and the obligation of Borrower to repay such Loan shall
  nevertheless be to such Lender and shall be deemed held by it for
  the account of such branch or affiliate.  Without notice to
  Borrower or any other person or entity, each rate required to be
  calculated or determined under this Agreement shall automatically
  fluctuate upward and downward in accordance with the provisions
  of this Agreement.
  
       3.7  Funding Sources, Payment Obligations.  Notwithstanding
  any provision of this Agreement to the contrary, each Lender
  shall be entitled to fund and maintain its funding of all or any
  part of the Loans in any manner it sees fit, it being understood,
  however, that for the purposes of this Agreement all
  determinations hereunder shall be made as if each Lender had
  actually funded and maintained each Eurodollar Rate Borrowing
  during each Interest Period through the purchase of deposits
  having a maturity corresponding to such Interest Period and
  bearing an interest rate equal to the Eurodollar Rate for such
  Interest Period.  Notwithstanding the foregoing, Funding Losses,
  increased costs and other obligations relating to Eurodollar Rate
  Borrowings described in Section 3.5 of this Agreement will only
  be paid by the Borrower as and when actually incurred by the
  Lenders.
  
       3.8  Mitigation, Non-Discrimination.  (a)  Each Lender will
  notify the Borrower through the Agent of any event occurring
  after the date of this Agreement which will require or enable
  such Lender to take the actions described in Sections 3.5(a) or
  (b) of this Agreement as promptly as practicable after it obtains
  knowledge thereof and determines to request such action, and (if
  so requested by the Borrower through the Agent) will designate a
  different lending office of such Lender for the applicable
  Eurodollar Rate Borrowing or will take such other action as the
  Borrower reasonably requests if such designation or action is
  consistent with the internal policy of such Lender and legal and
  regulatory restrictions, can be undertaken at no additional cost,
  will avoid the need for, or reduce the amount of, such action and
  will not, in the sole opinion of such Lender, be disadvantageous
  to such Lender (provided that such Lender will have no obligation
  to designate a different lending office which is located in the
  United States of America).
  
       (b)  None of the Lenders shall be able to pass through to
  the Borrower charges and costs under Sections 3.5 or 5.14 of this
  Agreement on a discriminating basis, such that such charges and
  costs are not also passed through by each Lender to other
  customers of such Lender similarly situated where such customer
  is subject to documents providing for such pass through.
  
       (c)  If any Lender elects under Section 3.5 of this
  Agreement to suspend or terminate the availability of Eurodollar
  Rate Borrowings for any material period of time, and the event
  giving rise to such election is not generally applicable to all
  of the Lenders, the Borrower may within sixty (60) days after
  notification of such Lender's election, and so long as no Event
  of Default is then in existence, either (i) demand that such
  Lender, and upon such demand, such Lender shall promptly, assign
  its Lender Commitment to another financial institution subject to
  and in accordance with the provisions of Section 9.5 of this
  Agreement for a purchase price equal to the unpaid balance of
  principal, accrued interest, the unpaid balance of the Fee and
  expenses owing to such Lender pursuant to this Agreement, or (ii)
  pay such Lender the unpaid balance of principal, accrued
  interest, the unpaid balance of the Fee and expenses owing to
  such Lender pursuant to this Agreement, whereupon, such Lender
  shall no longer be a party to this Agreement or have any rights
  or obligations hereunder or under any other Credit Documents, and
  the Commitment shall immediately and permanently be reduced by an
  amount equal to the Lender Commitment of such Lender.
  
  4.   Representations and Warranties.
  
        To  induce the Lenders to enter into this Agreement and  to
  make the Loans, the Borrower represents and warrants to the Agent
  and the Lenders as follows:
  
       4.1  Organization.  Each Obligor is duly organized, validly
  existing and in good standing  under the laws of the state of its
  organization; has all power and authority to conduct its business
  as presently conducted; and is duly qualified to do business and
  in good standing in every state where the location of its
  Property requires it to be qualified to do business, unless the
  failure to be so qualified would not reasonably be expected to
  have a Material Adverse Effect.
  
       4.2  Financial Statements.  The financial statements
  delivered to the Agent fairly present, in accordance with
  Generally Accepted Accounting Principles (provided, however, that
  the Quarterly Unaudited Financial Statements are subject to
  normal year-end adjustments and may contain condensed footnotes
  as permitted by regulations of the United States Securities and
  Exchange Commission), the financial condition and the results of
  operations of the Borrower and of Parkway Properties, Inc. as at
  the dates and for the periods indicated.  No Material Adverse
  Change has occurred since the dates of such financial statements.
  No Obligor is subject to any instrument or agreement which would
  materially prevent it from conducting its business as it is now
  conducted or as it is contemplated to be conducted.
  
       4.3  Enforceable Obligations; Authorization.  The Credit
  Documents are legal, valid and binding obligations of the
  Parties, enforceable in accordance with their respective terms,
  except as may be limited by bankruptcy, insolvency and other laws
  affecting creditors' rights generally and by general equitable
  principles.  The execution, delivery and performance of the
  Credit Documents have all been duly authorized by all necessary
  action; are within the power and authority of the Parties; do not
  and will not contravene or violate any Legal Requirement or the
  Organizational Documents of the Parties; do not and will not
  result in the breach of, or constitute a default under, any
  agreement or instrument by which the Parties or any of their
  respective Property may be bound or affected; and do not and will
  not result in the creation of any Lien upon any Property of any
  of the Parties except as expressly contemplated therein.  All
  necessary permits, registrations and consents for such making and
  performance have been obtained.
  
       4.4  Other Debt.  No Obligor  is in default in the payment
  of any other Total Liabilities or under any agreement, mortgage,
  deed of trust, security agreement or lease to which it is a
  party.
  
       4.5  Litigation.  There is no litigation or administrative
  proceeding pending or, to the knowledge of the Borrower,
  threatened against, or any outstanding judgment, order or decree
  affecting, the Obligors before or by any Governmental Authority
  which is not adequately covered by insurance.  No Obligor is in
  default with respect to any judgment, order or decree of any
  Governmental Authority.
  
       4.6  Taxes.  Each Obligor has filed all tax returns required
  to have been filed and paid all taxes shown thereon to be due,
  except those for which extensions have been obtained, those which
  are being contested in good faith.
  
       4.7  Regulation U.  None of the proceeds of any Loan will be
  used for the purpose of purchasing or carrying directly or
  indirectly any margin stock or for any other purpose that would
  constitute this transaction a "purpose credit" within the meaning
  of Regulation U of the Board of Governors of the Federal Reserve
  System.
  
       4.8  Subsidiaries.  The Borrower has no Subsidiaries
  (excluding wholly-owned Subsidiaries which have executed a
  Guaranty) which individually or in the aggregate own more than
  ten percent (10%) in value of the Borrower's and the
  Subsidiaries' consolidated assets determined in accordance with
  Generally Accepted Accounting Principles.  Each of the Borrower's
  Subsidiaries is a "qualified REIT subsidiary" under Section 856
  of the Code.
  
       4.9  Securities Act of 1933.  Other than the Agent's efforts
  in syndicating the Loans (for which the Agent is responsible)
  neither the Borrower nor any agent acting for it has offered the
  Notes or any similar obligation of the Borrower for sale to or
  solicited any offers to buy the Notes or any similar obligation
  of the Borrower from any Person other than the Agent or any
  Lender, and neither the Borrower nor any agent acting for it will
  take any action which would subject the sale of the Note to the
  provisions of Section 5 of the Securities Act of 1933, as
  amended.
  
       4.10 No Contractual or Corporate Restrictions.  No Obligor
  is a party to, or bound by, any contract, agreement or charter or
  other corporate restriction materially and adversely affecting
  its business, Property, assets, operations  or condition,
  financial or otherwise.
  
       4.11 Investment Company Act Not Applicable.  The Borrower is
  not an "investment company", or a company  "controlled" by an
  "investment company", within the meaning of the Investment
  Company Act of 1940, as amended.
  
       4.12 Public Utility Holding Company Act Not Applicable.  The
  Borrower is not a "holding company", or a "subsidiary company" of
  a "holding company", or an "affiliate" of a "holding company", or
  an affiliate of a "subsidiary company" of a "holding company", as
  such terms are defined in the Public Utility Holding Company Act
  of 1935, as amended.
  
       4.13 ERISA Not Applicable.  No Obligor is subject to any
  requirements of the Employee Retirement Income Security Act of
  1974 as amended from time to time, or any rules, regulations,
  rulings or interpretations adopted by the Internal Revenue
  Service or the Department of Labor thereunder.
  
       4.14 Year 2000.  Any reprogramming required to permit the
  proper functioning, in and following the year 2000 as it relates
  to the two digit issues associated therewith, of (a) the
  Borrower's computer systems and (b) equipment containing
  embedded microchips (including systems and equipment supplied by
  others or with which Borrower's systems interface) and the
  testing of all such systems and equipment, as so reprogrammed,
  will be completed by January 1, 1999.  The cost to the Borrower
  of such reprogramming and testing and of the reasonably
  foreseeable consequences of year 2000 to the Borrower (including,
  without limitation, reprogramming errors and the failure of
  others' systems or equipment) will not result in a Default or a
  Material Adverse Effect.  Except for such of the reprogramming
  referred to in the preceding sentence as may be necessary, the
  computer and management information systems of the Borrower and
  its Subsidiaries are and, with ordinary course upgrading and
  maintenance, will continue for the term of this Agreement to be,
  sufficient to permit the Borrower to conduct its business without
  Material Adverse Effect.
  
  5.   Affirmative Covenants.
  
        The  Borrower covenants and agrees with the Agent  and  the
  Lenders  that prior to the termination of this Agreement  it  and
  each of the other Obligors will do, and if necessary cause to  be
  done, each and all of the following:
  
       5.1  Taxes, Existence, Regulations, Property, etc.   At all
  times (a) pay when due all taxes and governmental charges of
  every kind upon it or against its income, profits or Property,
  unless and only to the extent that the same shall be contested in
  good faith and reserves which are adequate under Generally
  Accepted Accounting Principles have been established therefor;
  (b) do all things necessary to preserve its existence,
  qualifications, rights and franchises in all States where such
  qualification is necessary or desirable, except where failure to
  obtain the same could not reasonably be expected to have a
  Material Adverse Effect; (c) comply with all applicable Legal
  Requirements in respect of the conduct of its business and the
  ownership of its Property; and (d) cause its Property to be
  protected, maintained and kept in good repair (reasonable wear
  and tear excepted) and make all replacements and additions to its
  Property as may be reasonably necessary to conduct its business.
  
       5.2  Financial Statements and Information.  Furnish to the
  Agent each of the following: (a) as soon as available and in any
  event within 90 days after the end of each respective fiscal year
  of the Borrower and of Parkway Properties, Inc., Annual Audited
  Financial Statements of the Borrower and of Parkway Properties,
  Inc. (which shall include an unaudited statement of Funds From
  Operations); (b) as soon as available and in any event within 45
  days after the end of each quarter (except the last quarter) of
  each respective fiscal year of the Borrower and of Parkway
  Properties, Inc., Quarterly Unaudited Financial Statements of the
  Borrower and of Parkway Properties, Inc. (which shall include a
  statement of Funds From Operations); (c) within forty-five (45)
  days after the end of the calendar quarter and concurrently with
  the financial statements provided for in Subsections 5.2(a) and
  (b) hereof, an Officer's Certificate, together with such
  schedules, computations and other information (including, without
  limitation, information as to Unconsolidated Affiliates of the
  Borrower), in reasonable detail, as may be required by the Agent
  to demonstrate compliance with the covenants set forth herein or
  reflecting any non-compliance therewith as of the applicable
  date, all certified as true, correct and complete by a managing
  director, vice president or senior vice president, of Borrower;
  (d) promptly after the filing thereof, all reports to or filings
  made by Parkway Properties, Inc., the Borrower or any of their
  respective Subsidiaries with the Securities and Exchange
  Commission, including, without limitation, registration
  statements and reports on Forms 10-K, 10-Q and 8-K (or their
  equivalents); (e) within two (2) Business Days after the receipt
  thereof, a copy of the notification to the Borrower of the
  Borrower's  S&P Rating or Moody's Rating, or change therein, and
  (f) such other information relating to the financial condition
  and affairs of the Borrower as from time to time may be
  reasonably requested by any Lender.  The Agent will send to each
  Lender the information received by the Agent pursuant to this
  Section 5.2 promptly after the receipt thereof by Agent.
  
       5.3  Financial Tests.  The Borrower shall have and maintain,
  on a consolidated basis in accordance with Generally Accepted
  Accounting Principles: (a) a Secured Debt to Total Asset Value
  Ratio no greater than (i) forty percent (40%) at all times
  through and including March 31, 2000, and (ii) thirty-five
  percent (35%) at all times thereafter; (b) an Interest Coverage
  Ratio of not less than 2.25:1.0 at all times; (c) a Fixed Charge
  Coverage Ratio of not less than 1.75:1.00 at all times; (d) a
  Tangible Net Worth of at least Three Hundred Twenty-Five Million
  Dollars ($325,000,000.00), plus ninety percent (90%) of the net
  proceeds (gross proceeds less reasonable and customary costs of
  sale and issuance paid to Persons not Affiliates of any Obligor)
  received by the Borrower at any time from the issuance of an
  ownership interest in the Borrower, at all times; (e) an
  Unencumbered Interest Coverage Ratio of not less than 2.00:1.00
  at all times; and (f) a Total Liabilities to Total Asset Value
  Ratio no greater than fifty-five percent (55%) at all times.
  
       5.4  Inspection.  In order to permit the Agent to ascertain
  compliance with the Credit Documents, during normal business
  hours permit the Agent to inspect its Property, to examine its
  files, books and records and make and take away copies thereof,
  and to discuss its affairs with its officers and accountants, all
  at such times and intervals and to such extent as a Lender may
  reasonably desire.
  
       5.5  Further Assurances.  Promptly execute and deliver any
  and all other and further instruments which may be reasonably
  requested by the Agent to cure any defect in the execution and
  delivery of any Credit Document or more fully to describe
  particular aspects of the Borrower's agreements set forth in the
  Credit Documents or so intended to be.
  
       5.6  Books and Records.  Maintain books of record and
  account in accordance with Generally Accepted Accounting
  Principles.
  
       5.7  Insurance.  Maintain insurance with such insurers, on
  such of its properties, in such amounts and against such risks as
  is consistent with insurance maintained by businesses of
  comparable type and size in the industry, and furnish the Agent
  satisfactory evidence thereof promptly upon request.
  
       5.8  Notice of Certain Matters.  Notify the Agent promptly
  upon acquiring knowledge of the occurrence of any of the
  following: the institution or threatened institution of any
  lawsuit or administrative proceeding affecting any Obligor in
  which the claim exceeds $1,000,000.00; when the Borrower believes
  that there has been a Material Adverse Change; or the occurrence
  of any Event of Default or any Default.  The Borrower will notify
  the Agent in writing at least thirty (30) Business Days prior to
  the date that any Obligor changes its name or the location of its
  chief executive office or principal place of business or the
  place where it keeps its books and records.
  
       5.9  Use of Proceeds .  The proceeds of the Loans will be
  used for general business purposes.  Notwithstanding the
  foregoing, none of the proceeds of the Loans will be used to
  finance, fund or complete any hostile acquisition of any Person.
  
       5.10 Expenses of and Claims Against the Agent and the
  Lenders .  To the extent not prohibited by applicable law, the
  Borrower will pay all reasonable costs and expenses incurred to
  third parties and reimburse the Agent and each Lender, as the
  case may be, for any and all reasonable expenditures of every
  character incurred or expended from time to time, in connection
  with (a) regardless of whether a Default or Event of Default
  shall have occurred, the Agent's preparation, negotiation and
  completion of the Credit Documents, and (b) during the
  continuance of an Event of Default, all costs and expenses
  relating to the Agent's and such Lender's exercising any of its
  rights and remedies under this or any other Credit Document,
  including, without limitation, attorneys' fees, legal expenses,
  and court costs; provided, that no rights or option granted by
  the Borrower to the Agent or any Lender or otherwise arising
  pursuant to any provision of this or any other instrument shall
  be deemed to impose or admit a duty on the Agent or any Lender to
  supervise, monitor or control any aspect of the character or
  condition of any property or any operations conducted in
  connection with it for the benefit of the Borrower or any other
  person or entity other than the Agent or such Lender.
  
       5.11 Legal Compliance; Indemnification .  (a) The Obligors
  shall operate their respective Property and businesses in full
  compliance with all Legal Requirements.  Parkway Properties, Inc.
  will comply with all Legal Requirements to maintain, and will at
  all times qualify as and maintain, its status as a real estate
  investment trust under Section 856(c)(1) of the Code.
  
            (b)  The Borrower shall indemnify the Agent and each
  Lender, their directors, officers, employees and shareholders
  (the "Indemnified Parties") for and defend and hold the
  Indemnified Parties harmless against any and all claims, demands,
  liabilities, causes of action, penalties, obligations, damages,
  judgments, deficiencies, losses, costs or expenses (including,
  without limitation, interest, penalties, attorneys' fees, and
  amounts paid in settlement) threatened or incurred by reason of,
  arising out of or in any way related to any failure of any
  Obligor to so comply with the provisions of any Legal
  Requirement, this Agreement or the other Credit Documents, and
  any and all matters arising out of any act, omission, event or
  circumstance, regardless of whether the act, omission, event or
  circumstance constituted a violation of any such Legal
  Requirement, this Agreement or the other Credit Documents at the
  time of its existence or occurrence.  THE BORROWER SHALL
  INDEMNIFY THE AGENT AND EACH LENDER PURSUANT TO THIS SECTION
  REGARDLESS OF WHETHER THE ACT, OMISSION, FACTS, CIRCUMSTANCES OR
  CONDITIONS GIVING RISE TO SUCH INDEMNIFICATION WERE CAUSED IN
  WHOLE OR IN PART BY THE AGENT'S OR SUCH LENDER'S NEGLIGENCE
  (SIMPLE, BUT NOT GROSS NEGLIGENCE OR WILLFUL MISCONDUCT).
  
       5.12 Obligors' Performance .  If any Obligor should fail to
  comply with any of the agreements, covenants or obligations
  required of it under this Agreement or any other Credit Document,
  then the Agent (in the Obligor's name or in Agent's name) may
  perform them or cause them to be performed for the account of the
  said Obligor and at the sole expense, but shall not be obligated
  to do so.  Any and all expenses thus incurred or paid by the
  Agent and by any Lender shall be the Borrower's demand
  obligations to the Agent or such Lender and shall bear interest
  from the date of demand therefor until the date that the Obligor
  repays it to the Agent or the applicable Lender at the Past Due
  Rate.  Upon making any such payment or incurring any such
  expense, the Agent or the applicable Lender shall be fully
  subrogated to all of the rights of the Person receiving such
  payment.  Any amounts owing by any Obligor to the Agent or any
  Lender pursuant to this provision or any other provision of this
  Agreement shall automatically and without notice be secured by
  any collateral provided by the Credit Documents.  The amount and
  nature of any such expense and the time when paid shall, absent
  manifest error, be fully established by the affidavit of the
  Agent or the applicable Lender or any of the Agent's or the
  applicable Lender's officers or agents.
  
       5.13 Professional Services .  Promptly upon the Agent's
  request to satisfy itself or the request of any Lender, the
  Borrower, at the Borrower's sole cost and expense, shall:  (a)
  allow an inspection and/or appraisal of the Obligors' Property to
  be made by a Person approved by the Agent in its sole discretion;
  and (b) whenever the Agent or such other Lender has reasonable
  cause to believe that a potential Default may exist, cause to be
  conducted or prepared any other written report, summary, opinion,
  inspection, review, survey, audit or other professional service
  relating to the Obligors' Property or any operations in
  connection with it (all as designated in the Agent's request),
  including, without limitation, any accounting, architectural,
  consulting, engineering, design, legal, management, pest control,
  surveying, title abstracting or other technical, managerial or
  professional service relating to such property or its operations.
  
       5.14 Capital Adequacy .  (a) If after the date of this
  Agreement, the Agent or any Lender shall have determined that the
  adoption or effectiveness of any applicable law, rule or
  regulation regarding capital adequacy of general applicability,
  or any change therein, or any change in the interpretation or
  administration thereof by any Governmental Authority, central
  bank or comparable agency charged with the interpretation or
  administration thereof, or compliance by the Agent or any Lender
  with any request or directive regarding capital adequacy of
  general applicability (whether or not having the force of law) of
  any such Governmental Authority, central bank or comparable
  agency, has or would have the effect of reducing the rate of
  return on the Agent's or any Lender's capital as a consequence of
  its obligations hereunder to a level below that which the Agent
  or such Lender could have achieved but for such adoption, change
  or compliance (taking into consideration the Agent's or such
  Lender's policies with respect to capital adequacy) by an amount
  deemed by the Agent or such Lender to be material, then from time
  to time, the Borrower shall pay to the Agent or such Lender such
  additional amount or amounts as will compensate the Agent or such
  Lender for such reduction.
  
            (b)  A certificate of the Agent or such Lender setting
  forth such amount or amounts as shall be necessary to compensate
  the Agent or such Lender as specified in Section 5.14(a) hereof
  and making reference to the applicable law, rule or regulation
  shall be delivered as soon as practicable to the Borrower and
  shall be prima facie evidence thereof.  The Borrower shall pay
  the Agent or such Lender the amount shown as due on any such
  certificate within fourteen (14) Business Days after the Agent or
  such Lender delivers such certificate.  In preparing such
  certificate, the Agent or such Lender may employ such assumptions
  and allocations of costs and expenses as it shall in good faith
  deem reasonable and may use any reasonable averaging and
  attribution method.  Section 3.8(b) hereof shall apply to the
  costs assessed under this Section.
  
       5.15 Property Pool .  A.  The Borrower will at all times own
  (in fee simple title, through an Eligible Ground Lease, or in a
  wholly-owned Subsidiary of Borrower, and including the leasehold
  interest in the Morgan Keegan Tower in Memphis, Tennessee) a pool
  (the "Pool") of assets that are not mortgaged, pledged,
  hypothecated, or encumbered in any manner, other than Permitted
  Encumbrances, with an aggregate Value (calculated based on the
  immediately preceding  calendar quarter, and annualized) equal to
  at least two hundred percent (200%) of the Borrower's
  Indebtedness other than Secured Debt outstanding from time to
  time, with the following characteristics:  (a) assets in the Pool
  shall be completed income producing office buildings with net
  rentable area of not less than 50,000 square feet and not more
  than 500,000 square feet (except that the Pavilion Center in
  Atlanta, Georgia need not meet the minimum square footage
  requirement), with parking sufficient to meet all Legal
  Requirements and consistent with market conditions that will
  accommodate full occupancy of the building; (b) each individual
  Property must have an Occupancy Level of at least seventy percent
  (70%); (c) assets in the Pool must be located in Approved
  Markets, except that no more than twenty percent (20%) of  the
  Value of the Pool can be located in any one Approved Market other
  than Memphis, Tennessee, where no more than twenty-five percent
  (25%) of the Value of the Pool can be located, (d) the Borrower
  must have received from third party independent consultants,
  written assessments (including, without limitation, Phase I
  environmental reports) for each Property in, or to be added to,
  the Pool that do not disclose any material environmental
  conditions, structural defects or title defects, or other
  material risks related to such Property, (e) the Property is not
  subject to or affected by any Limiting Agreement, and (f) the
  Occupancy Level of the Pool in the aggregate must be at least
  eighty percent (80%).  If requested by the Agent, the Borrower
  will provide to the Agent written assessments from third party
  independent environmental consultants for all Pool properties
  acquired after the date of this Agreement.  If the Agent
  determines that there are material environmental conditions
  existing on or risks to such properties, the properties will be
  excluded from the Pool.
  
       B.   Notwithstanding the foregoing, the maximum value of the
  Pool that consists of Eligible Ground Leases is ten percent (10%)
  of the value of the Pool.
  
        C.   If any Property to be included in the Pool is owned by
  a  wholly-owned Subsidiary of Borrower, it may be included in the
  Pool only if the owner thereof executes a Guaranty in Proper Form
  of  the  Obligations and delivers it to the Agent, and thereafter
  during  the  time such Guaranty remains in full force and  effect
  without any default existing hereunder.
  
       D.   If the Borrower requests inclusion of assets in the
  Pool that do not meet the requirements of this Section 5.15, then
  such assets may only be included in the Pool upon the prior
  written approval of the Majority Lenders.
  
  6.   Negative Covenants.
  
       The Borrower covenants and agrees with the Agent and the
  Lenders that prior to the termination of this Agreement it will
  not (without consent given in accordance with Section 9.1) do any
  of the following:
  
       6.1  Indebtedness .  Create, incur, suffer or permit to
  exist, or assume or guarantee, directly or indirectly,
  contingently or otherwise, or become or remain liable with
  respect to any Secured Debt except Non-recourse Debt, and except
  for liabilities customarily excepted from nonrecourse mortgage
  financing, such as fraud, criminal activity and misapplication of
  funds.
  
       6.2  Mergers, Consolidations and Acquisitions of Assets .
  In any single transaction or series of related transactions,
  directly or indirectly: (a) liquidate or dissolve; (b) other than
  a merger or consolidation in which the Borrower is the surviving
  entity and the value of the assets of the other party to such
  merger or consolidation is less than fifteen percent (15%) of the
  value of the assets of the Borrower on a consolidated basis (in
  accordance with Generally Accepted Accounting Principles) after
  such merger or consolidation, be a party to any merger or
  consolidation; (c) other than an acquisition in which the
  Borrower acquires all or substantially all of the assets of
  another Person and the value of the assets acquired is less than
  fifteen percent (15%) of the value of the assets of the Borrower
  on a consolidated basis (in accordance with Generally Accepted
  Accounting Principles) after such acquisition, acquire all or
  substantially all of the assets of any Person; or (d) except for
  sales or leases executed in the ordinary course of business,
  sell, convey or lease all or any substantial part of its assets.
  
       6.3  Redemption .  Neither the Borrower nor Parkway
  Properties, Inc., shall at any time buy back, redeem, retire or
  otherwise acquire, directly or indirectly, any shares of its
  capital stock if such action would cause the Borrower to not be
  in compliance with this Agreement, and so long as the aggregate
  market value of such stock when acquired shall not exceed, from
  the date of this Agreement through December 31, 1998, and during
  any calendar year thereafter, fifteen percent (15%) of Borrower's
  Net Worth.
  
       6.4  Nature of Business; Management .  Change the nature of
  its business or enter into any business which is substantially
  different from the business in which it is presently engaged.
  
       6.5  Transactions with Related Parties .  Enter into any
  transaction or agreement with any officer, director, or holder of
  more than five percent (5%) (based on voting rights) of the
  issued and outstanding capital stock of the Borrower (or any
  Affiliate of the Borrower), unless the same is upon terms
  substantially similar to those obtainable from qualified wholly
  unrelated sources.
  
       6.6  Loans and Investments .  Make  any loan, advance,
  extension of credit or capital contribution to, or make or have
  any investment in, any Person, or make any commitment to make any
  such extension of credit or investment, except (a) travel
  advances in the ordinary course of business to officers,
  employees and agents; (b) readily marketable securities issued or
  fully guaranteed by the United States of America (or investments
  or money market accounts consisting of the same); (c) commercial
  paper rated "Prime 1" by Moody's Investors Service, Inc. or A-1
  by Standard and Poor's Corporation (or investments or money
  market accounts consisting of the same); (d) certificates of
  deposit or repurchase certificates issued by financial
  institutions acceptable to the Agent (or investments or money
  market accounts consisting of the same), all of the foregoing b,
  c and d not having a maturity of more than one (1) year from the
  date of issuance thereof; (e) investments in Subsidiaries through
  which the Borrower invests in real estate assets permitted by
  this Agreement; (f)  investments in Unconsolidated Affiliates
  that are engaged primarily in the business of investment in and
  operation of office or industrial buildings (valued at an amount
  equal to the Value of each Unconsolidated Affiliate's operating
  real estate assets multiplied by the Equity Percentage for that
  Unconsolidated Affiliate), so long as the aggregate amount of
  such investments described in this clause (f) does not exceed ten
  percent (10%) of the Total Asset Value after giving effect to
  such investments; (g) loans, advances, and extensions of credit
  to Persons (who are not Affiliates of any Obligor) secured by
  valid and enforceable first priority liens on real estate so long
  as the aggregate amount does not exceed three and one-half
  percent (3-1/2%) of Total Asset Value, after giving effect to
  such investments, (h) undeveloped land, so long as the aggregate
  Historical Value of such land does not exceed three and one-half
  percent (3-1/2%) of Total Asset Value, after giving effect to
  such investments; (i) investments in readily marketable
  securities (valued at the lower of cost or then market price) of
  another Person, not an Affiliate of any Obligor, traded on a
  national trading exchange, that is a real estate investment trust
  under Section 856(c)(1) of the Code, or that is a real estate
  operating company, so long as the aggregate amount of such
  investments does not exceed seven and one-half percent (7-1/2%)
  of Total Asset Value, after giving effect to such investments;
  (j) investments in office or industrial buildings; (k)
  investments in real estate assets that are being constructed or
  developed to be office or industrial buildings, but are not yet
  in operation, so long as the total actual and budgeted cost of
  construction or development, in the aggregate, at that time does
  not exceed seven and one-half percent (7-1/2%) of the Total Asset
  Value after giving effect to such investments; and (l) unsecured
  loans to Persons (who are not Affiliates of any Obligor) engaged
  primarily in the business of investment in and operation of
  office or industrial buildings, so long as the aggregate amount
  outstanding at any one time does not exceed $10,000,000.00. The
  Borrower will not mortgage, pledge, hypothecate or encumber in
  any manner the loans, advances or extensions of credit made
  pursuant to Section 6.6(g) or the securities held pursuant to
  Section 6.6(i).  The calculations in this Section will be made
  without duplication if a loan or investment is within more than
  one category described in this Section.
  
       6.7  Limiting Agreements .  Neither Borrower nor any of its
  Subsidiaries has entered into, and after the date hereof, neither
  Borrower nor any of its Subsidiaries shall enter into, any
  Limiting Agreements.
  
       6.8  Restricted Payments .  Parkway Properties, Inc. will
  not make any Restricted Payment during any calendar quarter
  which, when added to all Restricted Payments made during the
  three (3) immediately preceding calendar quarters, (a) exceeds
  eighty-five percent (85%) of the Funds From Operations during the
  immediately preceding four (4) calendar quarters, or (b) exceeds
  ninety-five percent (95%) of the Funds Available for Distribution
  during the immediately preceding four (4) calendar quarters;
  provided that the foregoing shall not prohibit Parkway
  Properties, Inc. from (x) making the minimum amount of Restricted
  Payments required to be made in order for Parkway Properties,
  Inc. to comply with the provisions of Section 5.11, or (y)
  issuing stock in Parkway Properties, Inc. to a transferor (not an
  Affiliate of any Obligor) of Property to the Borrower as a result
  of said transferor's election to convert partnership interests in
  the Borrower to stock in Parkway Properties, Inc. pursuant to
  agreements with said transferor allowing said conversion as a
  portion of the consideration for the transfer.  For purposes of
  this provision "Restricted Payment" means (i) any dividend or
  other distribution on any shares of a Person's capital stock
  (except dividends payable solely in shares of its capital stock
  or in rights to subscribe for or purchase shares of its capital
  stock) or (ii) any payment on account of the purchase,
  redemption, retirement or acquisition of (x) any shares of a
  Person's capital stock or (y) any option, warrant or other right
  to acquire shares of a Person's capital stock.
  
  7.   Events of Default and Remedies.
  
       7.1  Events of Default .  If any of the following events
  shall occur, then, as to the events described in Sections 7.1(b),
  (c), and (d), if the event has not been waived, cured or remedied
  within twenty (20) days after the Agent gives the Borrower
  written notice of such event, at any time thereafter, and as to
  all of the other events described herein, at any time, the Agent
  may do any or all of the following:  (1) without notice to the
  Borrower, declare the Notes to be, and thereupon the Notes shall
  forthwith become, immediately due and payable, together with all
  accrued interest thereon, without notice of any kind, notice of
  acceleration or of intention to accelerate, presentment and
  demand or protest, all of which are hereby expressly waived;
  (2) without notice to the Borrower, terminate the Commitment;
  (3) exercise, as may any other Lender, its rights of offset
  against each account and all other Property of the Borrower in
  the possession of the Agent or any such Lender, which right is
  hereby granted by the Borrower to the Agent and each Lender; and
  (4) exercise any and all other rights pursuant to the Credit
  Documents:
  
            (a)  The Borrower shall fail to pay or prepay any
       principal of or interest on the Notes or any fee or any
       other obligation hereunder when due; or
       
            (b)  Any Obligor shall fail to pay when due, or within
       any applicable period of grace, any principal of or interest
       on any other Indebtedness in excess of $5,000,000.00, or
  
            (c)  Any written representation or warranty made in any
       Credit Document by or on behalf of any Obligor, when taken
       as a whole shall prove to have been incorrect, false or
       misleading in any material respect; or
  
            (d)  Default shall occur in the punctual and complete
       performance of any covenant of the Borrower or any other
       Person other than the Agent or the Lenders contained in any
       Credit Document not specifically set forth in this Section;
       or
  
            (e)  A final judgment or judgments in the aggregate for
       the payment of money in excess of $5,000,000.00 shall be
       rendered against any Obligor and the same shall remain
       undischarged for a period of thirty (30) days during which
       execution shall not be effectively stayed; or
  
            (f)  Any order shall be entered in any proceeding
       against any Obligor decreeing the dissolution, liquidation
       or split-up thereof, and such order shall remain in effect
       for more than thirty (30) days; or
  
            (g)  Any Obligor shall make a general assignment for
       the benefit of creditors or shall petition or apply to any
       tribunal for the appointment of a trustee, custodian,
       receiver or liquidator of all or any substantial part of its
       business, estate or assets or shall commence any proceeding
       under any bankruptcy, reorganization, arrangement,
       insolvency, readjustment of debt, dissolution or liquidation
       law of any jurisdiction, whether now or hereafter in effect;
       or
  
            (h)  Any such petition or application shall be filed or
       any such proceeding shall be commenced against any Obligor
       and such Person by any act or omission shall indicate
       approval thereof, consent thereto or acquiescence therein,
       or an order shall be entered appointing a trustee,
       custodian, receiver or liquidator of all or any substantial
       part of the assets of any Obligor or granting relief to any
       Obligor or approving the petition in any such proceeding,
       and such order shall remain in effect for more than ninety
       (90) days; or
  
            (i)  Any Obligor shall fail generally to pay its debts
       as they become due or suffer any writ of attachment or
       execution or any similar process to be issued or levied
       against it or any substantial part of its Property which is
       not released, stayed, bonded or vacated within thirty (30)
       days after its issue or levy; or
  
            (j)  Any Obligor shall have concealed, removed, or
       permitted to be concealed or removed, any part of its
       Property, with intent to hinder, delay or defraud its
       creditors or any of them, or made or suffered a transfer of
       any of its Property which may be fraudulent under any
       bankruptcy, fraudulent conveyance or similar law; or shall
       have made any transfer of its Property to or for the benefit
       of a creditor at a time when other creditors similarly
       situated have not been paid; or
  
            (k)  Any Change of Control shall occur.
  
       7.2  Remedies Cumulative .  No remedy, right or power
    conferred upon the Agent or the Lenders is intended to be
    exclusive of any other remedy, right or power given hereunder or
    now or hereafter existing at law, in equity, or otherwise, and
    all such remedies, rights and powers shall be cumulative.
  
  8.   The Agent.
  
       8.1  Appointment, Powers and Immunities .   Each Lender
  hereby irrevocably appoints and authorizes the Agent to act as
  its agent hereunder and under the other Credit Documents with
  such powers as are specifically delegated to the Agent by the
  terms hereof and thereof, together with such other powers as are
  reasonably incidental thereto.  The Agent (i) shall not have any
  duties or responsibilities except those expressly set forth in
  this Agreement and the other Credit Documents, and shall not by
  reason of this Agreement or any other Credit Document be a
  trustee for any Lender; (ii) shall not be responsible to any
  Lender for any recitals, statements, representations or
  warranties contained in this Agreement or any other Credit
  Document, or in any certificate or other document referred to or
  provided for in, or received by any of them under, this Agreement
  or any other Credit Document, or for the value, validity,
  effectiveness, genuineness, enforceability, execution, filing,
  registration, collectibility, recording, perfection, existence or
  sufficiency of this Agreement or any other Credit Document or any
  other document referred to or provided for herein or therein or
  any property covered thereby or for any failure by any Party or
  any other Person to perform any of its obligations hereunder or
  thereunder, and shall not have any duty to inquire into or pass
  upon any of the foregoing matters; (iii) shall not be required to
  initiate or conduct any litigation or collection proceedings
  hereunder or any other Credit Document except to the extent
  requested by the Majority Lenders; (iv) SHALL NOT BE RESPONSIBLE
  FOR ANY MISTAKE OF LAW OR FACT OR ANY ACTION TAKEN OR OMITTED TO
  BE TAKEN BY IT HEREUNDER OR UNDER ANY OTHER CREDIT DOCUMENT OR
  ANY OTHER DOCUMENT OR INSTRUMENT REFERRED TO OR PROVIDED FOR
  HEREIN OR THEREIN OR IN CONNECTION HEREWITH OR THEREWITH,
  INCLUDING, WITHOUT LIMITATION, PURSUANT TO ITS OWN NEGLIGENCE,
  BUT NOT INCLUDING AND EXCEPT FOR THE GROSS NEGLIGENCE OR WILLFUL
  MISCONDUCT OF THE AGENT; (v) shall not be bound by or obliged to
  recognize any agreement among or between the Borrower, the Agent,
  and any Lender other than this Agreement and the other Credit
  Documents, regardless of whether the Agent has knowledge of the
  existence of any such agreement or the terms and provisions
  thereof; (vi) shall not be charged with notice or knowledge of
  any fact or information not herein set out or provided to the
  Agent in accordance with the terms of this Agreement or any other
  Credit Document; (vii) shall not be responsible for any delay,
  error, omission or default of any mail, telegraph, cable or
  wireless agency or operator, and (viii) shall not be responsible
  for the acts or edicts of any Governmental Authority.  The Agent
  may employ agents and attorneys-in-fact and shall not be
  responsible for the negligence or misconduct of any such agents
  or attorneys-in-fact selected by it with reasonable care.
  
        (b)  Without the prior written consent of Agent and all  of
  the  Lenders, Agent shall not (i) modify or amend in any  respect
  whatsoever  the interest rate provisions of the Credit Documents,
  (ii)  increase the Commitment above $150,000,000.00, (iii) extend
  the  Maturity  Date  other than in accordance  with  the  express
  provisions of the Credit Documents, (iv) extend or reduce the due
  date for or the amount of the scheduled payments of principal  or
  interest  on  the Loans or the Fee, (v) amend the  definition  of
  Majority Lenders or any requirement that certain actions be taken
  only  with the consent of a certain number of the Lenders,   (vi)
  release  any Guarantor or any collateral for the Loans, or  (vii)
  modify or amend any provision of any Credit Document which by its
  terms  requires the consent of all of the Lenders for  amendment.
  From time to time upon Agent's request, each Lender shall execute
  and  deliver such documents and instruments as may be  reasonably
  necessary  to enable Agent to effectively administer and  service
  the  Loan in its capacity as Agent and in the manner contemplated
  by  the  provisions of this Agreement.  No amendment or agreement
  shall  increase the Lender Commitment of any Lender  without  the
  written consent of such Lender.
  
       (c)  All information provided to the Agent under or pursuant
  to  the  Credit Documents, and all rights of the Agent to receive
  or  request  information, or to inspect information or  Property,
  shall  be  by the Agent on behalf of the Lenders.  If any  Lender
  requests  that it be able to receive or request such information,
  or  make  such inspections, in its own right rather than  through
  the  Agent, the Borrower will cooperate with the Agent  and  such
  Lender  in  order  to  obtain  such  information  or  make   such
  inspection as such Lender may reasonably require.
  
        (d)   The Borrower shall be entitled to rely upon a written
  notice or a written response from the Agent as being pursuant  to
  concurrence  or consent of the Majority Lenders unless  otherwise
  expressly stated in the Agent's notice or response.
  
       8.2  Reliance.  The Agent shall be entitled to rely upon any
  certification, notice or other communication (including any
  thereof by telephone, telex, telecopy, telegram or cable)
  reasonably believed by it to be genuine and correct and to have
  been signed or sent by or on behalf of the proper Person or
  Persons, and upon advice and statements of legal counsel (which
  may be counsel for the Borrower), independent accountants and
  other experts selected by the Agent.  The Agent shall not be
  required in any way to determine the identity or authority of any
  Person delivering or executing the same.  As to any matters not
  expressly provided for by this Agreement or any other Credit
  Document, the Agent shall in all cases be fully protected in
  acting, or in refraining from acting, hereunder and thereunder in
  accordance with instructions of the Majority Lenders, and any
  action taken or failure to act pursuant thereto shall be binding
  on all of the Lenders.  If any order, writ, judgment or decree
  shall be made or entered by any court affecting the rights,
  duties and obligations of the Agent under this Agreement or any
  other Credit Document, then and in any of such events the Agent
  is authorized, in its sole discretion, to rely upon and comply
  with such order, writ, judgment or decree which it is advised by
  legal counsel of its own choosing is binding upon it under the
  terms of this Agreement, the relevant Credit Document or
  otherwise; and if the Agent complies with any such order, writ,
  judgment or decree, then it shall not be liable to any Lender or
  to any other Person by reason of such compliance even though such
  order, writ, judgment or decree may be subsequently reversed,
  modified, annulled, set aside or vacated.
  
       8.3  Defaults.  The Agent shall not be deemed to have
  constructive knowledge of the occurrence of a Default (other than
  the non-payment of principal of or interest on Loans) unless it
  has received notice from a Lender or the Borrower specifying such
  Default and stating that such notice is a "Notice of Default".
  In the event that the Agent receives such a notice of the
  occurrence of a Default, or whenever the Agent has actual
  knowledge of the occurrence of a Default, the Agent shall give
  prompt written notice thereof to the Lenders (and shall give each
  Lender prompt notice of each such non-payment).  The Agent shall
  (subject to Section 8.7 hereof) take such action with respect to
  such Default as shall be directed by the Majority Lenders and
  within its rights under the Credit Documents and at law or in
  equity, provided that, unless and until the Agent shall have
  received such directions, the Agent may (but shall not be
  obligated to) take such action, or refrain from taking such
  action, permitted hereby with respect to such Default as it shall
  deem advisable in the best interests of the Lenders and within
  its rights under the Credit Documents in order to preserve,
  protect or enhance the collectibility of the Loans, at law or in
  equity.  Provided, however, that if there is an occurrence of an
  Event of Default, then in no event or under any circumstances
  shall any of the actions described in Sections 8.1(b)(i) through
  (vii) of this Agreement be taken, without in each instance the
  written consent of Agent and all of the Lenders.
  
       8.4  Rights as a Lender.  With respect to the Commitment and
  the Loans made, Agent, in its capacity as a Lender hereunder
  shall have the same rights and powers hereunder as any other
  Lender and may exercise the same as though it were not acting in
  its agency capacity, and the term "Lender" or "Lenders" shall,
  unless the context otherwise indicates, include the Agent in its
  individual capacity.  The Agent may (without having to account
  therefor to any other Lender) as a Lender, and to the same extent
  as any other Lender, accept deposits from, lend money to and
  generally engage in any kind of banking, trust, letter of credit,
  agency or other business with the Borrower (and any of its
  Affiliates) as if it were not acting as the Agent but solely as a
  Lender.  The Agent may accept fees and other consideration from
  the Borrower (in addition to the fees heretofore agreed to
  between the Borrower and the Agent) for services in connection
  with this Agreement or otherwise without having to account for
  the same to the Lenders.
  
       8.5  Indemnification.  The Lenders agree to indemnify the
  Agent, its officers, directors, agents and Affiliates, ratably in
  accordance with each Lender's respective Percentage, for any and
  all liabilities, obligations, losses, damages, penalties,
  actions, judgments, suits, costs, expenses or disbursements of
  any kind and nature whatsoever (INCLUDING BUT NOT LIMITED TO, THE
  CONSEQUENCES OF THE NEGLIGENCE OF THE AGENT) which may be imposed
  on, incurred by or asserted against the Agent in any way relating
  to or arising out of this Agreement or any other Credit Document
  or any other documents contemplated by or referred to herein or
  therein, or the transactions contemplated hereby or thereby
  (including, without limitation, interest, penalties, reasonable
  attorneys' fees and amounts paid in settlement in accordance with
  the terms of this Section 8, but excluding, unless a Default has
  occurred and is continuing, normal administrative costs and
  expenses incident to the performance of its agency duties
  hereunder) or the enforcement of any of the terms hereof or
  thereof or of any such other documents, INCLUDING BUT NOT LIMITED
  TO THE NEGLIGENCE OF THE AGENT, provided that no Lender shall be
  liable for any of the foregoing to the extent they arise from the
  gross negligence or willful misconduct of the party to be
  indemnified, or from the Agent's default in the express
  obligations of the Agent to the Lenders provided for in this
  Agreement.  The obligations of the Lenders under this Section 8.5
  shall survive the termination of this Agreement and the repayment
  of the Obligations.
  
       8.6  Non-Reliance on Agent and Other Lenders.  Each Lender
  agrees that it has received current financial information with
  respect to the Obligors and that it has, independently and
  without reliance on the Agent or any other Lender and based on
  such documents and information as it has deemed appropriate, made
  its own credit analysis of the Obligors and decision to enter
  into this Agreement and that it will, independently and without
  reliance upon the Agent or any other Lender, and based on such
  documents and information as it shall deem appropriate at the
  time, continue to make its own analysis and decisions in taking
  or not taking action under this Agreement or any of the other
  Credit Documents.  The Agent shall not be required to keep itself
  informed as to the performance or observance by any Party of this
  Agreement or any of the other Credit Documents or any other
  document referred to or provided for herein or therein or to
  inspect the properties or books of the Borrower or any Party
  except as specifically required by the Credit Documents.  Except
  for notices, reports and other documents and information
  expressly required to be furnished to the Lenders by the Agent
  hereunder or the other Credit Documents, the Agent shall not have
  any duty or responsibility to provide any Lender with any credit
  or other information concerning the affairs, financial condition
  or business of the Borrower or any other Party (or any of their
  affiliates) which may come into the possession of the Agent.
  Each Lender assumes all risk of loss in connection with its
  Percentage in the Loans to the full extent of its Percentage
  therein.  The Agent assumes all risk of loss in connection with
  its Percentage in the Loans to the full extent of its Percentage
  therein.
  
       8.7  Failure to Act.  Except for action expressly required
  of the Agent, as the case may be, hereunder, or under the other
  Credit Documents, the Agent shall in all cases be fully justified
  in failing or refusing to act hereunder and thereunder unless it
  shall receive further assurances to its satisfaction by the
  Lenders of their indemnification obligations under Section 8.5
  hereof against any and all liability and expense which may be
  incurred by it by reason of taking or continuing to take any such
  action.
  
       8.8  Resignation of Agent.  Subject to the appointment and
  acceptance of a successor Agent as provided below, the Agent may
  resign at any time by giving notice thereof to the Lenders and
  the Borrower.  Upon any such resignation, (i) the Majority
  Lenders without the consent of the Borrower shall have the right
  to appoint a successor Agent so long as such successor Agent is
  also a Lender at the time of such appointment and (ii) the
  Majority Lenders shall have the right to appoint a successor
  Agent that is not a Lender at the time of such appointment so
  long as the Borrower (if no Event of Default is then in
  existence) consents to such appointment (which consent shall not
  be unreasonably withheld).  If no successor Agent shall have been
  so appointed by the Majority Lenders and accepted such
  appointment within 30 days after the retiring Agent's giving of
  notice of resignation, then the retiring Agent may, on behalf of
  the Lenders, and with the consent of the Borrower which shall not
  be unreasonably withheld, appoint a successor Agent.  Any
  successor Agent shall be an Eligible Institution.  Upon the
  acceptance of any appointment as Agent hereunder by a successor
  Agent, such successor Agent shall thereupon succeed to and become
  vested with all the rights, powers, privileges and duties of the
  retiring Agent, and the retiring Agent shall be discharged from
  its duties and obligations as Agent thereafter arising hereunder
  and under any other Credit Documents, but shall not be discharged
  from any liabilities for its actions as Agent prior to the date
  of discharge.  Such successor Agent shall promptly specify by
  notice to the Borrower its principal office referred to in
  Section 2.1 and Section 2.2 hereof.  After any retiring Agent's
  resignation hereunder as Agent, the provisions of this Section 8
  shall continue in effect for its benefit in respect of any
  actions taken or omitted to be taken by it while it was acting as
  the Agent.
  
       8.9  No Partnership.  Neither the execution and delivery of
  this Agreement nor any of the other Credit Documents nor any
  interest the Lenders, the Agent or any of them may now or
  hereafter have in all or any part of the Obligations shall create
  or be construed as creating a partnership, joint venture or other
  joint enterprise between the Lenders or among the Lenders and the
  Agent.  The relationship between the Lenders, on the one hand,
  and the Agent, on the other, is and shall be that of principals
  and agent only, and nothing in this Agreement or any of the other
  Credit Documents shall be construed to constitute the Agent as
  trustee or other fiduciary for any Lender or to impose on the
  Agent any duty, responsibility or obligation other than those
  expressly provided for herein and therein.
  
  9.   Miscellaneous.
  
       9.1  No Waiver, Amendments.  No waiver of any Default shall
  be deemed to be a waiver of any other Default.  No failure to
  exercise or delay in exercising any right or power under any
  Credit Document shall operate as a waiver thereof, nor shall any
  single or partial exercise of any such right or power preclude
  any further or other exercise thereof or the exercise of any
  other right or power. Except as may be prohibited by Section 8.1
  hereof, no amendment, modification or waiver of any provision of
  any Credit Document shall be effective unless the same is in
  writing and signed by the Borrower and the Majority Lenders.  No
  notice to or demand on the Borrower or any other Person shall
  entitle the Borrower or any other Person to any other or further
  notice or demand in similar or other circumstances.
  
       9.2  Notices.  All notices under the Credit Documents shall
  be in writing and either (i) delivered against receipt therefor,
  or (ii) mailed by registered or certified mail, return receipt
  requested, in each case addressed as set forth herein, or to such
  other address as a party may designate.  Notices shall be deemed
  to have been given (whether actually received or not) when
  delivered (or, if mailed, on the next Business Day).  Provided,
  however, that as between the Agent and the Lenders and among the
  Lenders, notice may be given by telecopy or facsimile effective
  upon the earlier of actual receipt or confirmation of receipt by
  telephone.
  
       9.3  Venue.  HARRIS COUNTY, TEXAS SHALL BE A PROPER PLACE OF
  VENUE TO ENFORCE PAYMENT OR PERFORMANCE OF THIS AGREEMENT AND THE
  OTHER CREDIT DOCUMENTS, UNLESS THE AGENT SHALL GIVE ITS PRIOR
  WRITTEN CONSENT TO A DIFFERENT VENUE.  THE BORROWER HEREBY
  IRREVOCABLY SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF THE STATE
  AND FEDERAL COURTS IN THE STATE OF TEXAS AND AGREES AND CONSENTS
  THAT SERVICE OF PROCESS MAY BE MADE UPON IT IN ANY PROCEEDING
  ARISING OUT OF ANY OF THE CREDIT DOCUMENTS BY SERVICE OF PROCESS
  AS PROVIDED BY TEXAS LAW.  THE BORROWER HEREBY IRREVOCABLY
  WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION
  WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY
  SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO ANY OF
  THE CREDIT DOCUMENTS IN THE DISTRICT COURTS OF HARRIS COUNTY,
  TEXAS, OR IN THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN
  DISTRICT OF TEXAS, HOUSTON DIVISION, AND HEREBY FURTHER
  IRREVOCABLY WAIVES ANY CLAIMS THAT ANY SUCH SUIT, ACTION OR
  PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN
  INCONVENIENT FORUM.  THE BORROWER (A) AGREES TO DESIGNATE AND
  MAINTAIN AN AGENT FOR SERVICE OF PROCESS IN THE STATE OF TEXAS IN
  CONNECTION WITH ANY SUCH SUIT, ACTION OR PROCEEDING AND TO
  DELIVER TO THE AGENT EVIDENCE THEREOF AND (B) IRREVOCABLY
  CONSENTS TO THE SERVICE OF PROCESS OUT OF ANY OF THE
  AFOREMENTIONED COURTS IN ANY SUCH SUIT, ACTION OR PROCEEDING BY
  NOTICE GIVEN AS PROVIDED FOR IN THIS AGREEMENT.  NOTHING HEREIN
  SHALL AFFECT THE RIGHT OF THE AGENT OR THE LENDERS TO COMMENCE
  LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST THE BORROWER IN
  ANY JURISDICTION OR TO SERVE PROCESS IN ANY MANNER PERMITTED BY
  APPLICABLE LAW.  THE BORROWER HEREBY IRREVOCABLY AGREES THAT ANY
  LEGAL ACTION OR PROCEEDING AGAINST THE AGENT OR ANY LENDER
  ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT OR THE OTHER
  CREDIT DOCUMENTS SHALL BE BROUGHT AND MAINTAINED IN THE DISTRICT
  COURTS OF HARRIS COUNTY, TEXAS, OR THE UNITED STATES DISTRICT
  COURT FOR THE SOUTHERN DISTRICT OF TEXAS, HOUSTON DIVISION.
  
       9.4  Choice of Law.  THIS AGREEMENT, THE NOTES AND THE OTHER
  CREDIT DOCUMENTS HAVE BEEN NEGOTIATED, EXECUTED AND DELIVERED IN
  THE STATE OF TEXAS AND SHALL BE GOVERNED BY, AND CONSTRUED AND
  INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS,
  INCLUDING ALL APPLICABLE FEDERAL LAW, FROM TIME TO TIME IN FORCE
  IN THE STATE OF TEXAS.
  
       9.5  Survival; Parties Bound; Successors and Assigns.
  (a) All representations, warranties, covenants and agreements
  made by or on behalf of the Borrower in connection herewith shall
  survive the execution and delivery of the Credit Documents, shall
  not be affected by any investigation made by any Person, and
  shall bind the Borrower and its successors, trustees, receivers
  and assigns and inure to the benefit of the successors and
  assigns of the Agent and the Lenders; provided, however, that the
  Borrower may not assign or transfer any of its rights or
  obligations hereunder without the prior written consent of the
  Agent and all of the Lenders, and any such assignment or transfer
  without such consent shall be null and void.
  
            (b)  Subject to Sections 9.5(d) and (e) of this
  Agreement, a Lender may assign part of its Lender Commitment to
  an Eligible Institution so long as such assignment shall (1)
  include the voting rights and all other rights and obligations
  attributable thereto, and include a written assumption by the
  assignee of the assigning Lender's obligations under the Credit
  Documents, (2) require the written consent of the Borrower (so
  long as no Event of Default is then in existence) and the Agent,
  such consent not to be unreasonably withheld, (3) be in a minimum
  amount of $5,000,000.00 if assigned to a Person not already a
  Lender, (4) not reduce the Lender's Lender Commitment to an
  amount less than $5,000,000.00, and (5) include payment to the
  Agent by the Lender of a service fee for each assignment equal to
  $3,000.00.
  
            (c)  Subject to Section 9.5(d) and (e) of this
  Agreement, a Lender may sell participating interests in any of
  its Loans to an Eligible Institution so long as such
  participation shall (1) limit the voting rights of the
  participant, if any, to the ability to vote for changes in the
  amount of the Commitment, the interest rate on the Loans, the
  amount of the Fee, the requirements for Guaranties and for
  collateral, and the Maturity Date, and (2) require written notice
  to the Agent and the Borrower but not any consent of the Agent,
  the Borrower or any other Lender.  In connection with any sale of
  a participating interest made in compliance with this Agreement,
  (i) the participating Lender shall continue to be liable for its
  Lender Commitment and its other obligations under the Credit
  Documents, (ii) the Agent, the Borrower and the other Lenders
  shall continue to deal solely and directly with the participating
  Lender in connection with such Lender's rights and obligations
  under the Credit Documents, and (iii) the participant may not
  require the participating Lender to take or refrain from taking
  any action under the Credit Documents that is in conflict with
  the terms and provisions of the Credit Documents.
  
          (d)      A Lender may assign all or any part of its Loans
  or  its  Lender Commitment to an Affiliate of the Lender  without
  written consent of the Agent and the Borrower.
  
            (e)  Notwithstanding any provision hereof to the
  contrary, any Lender may assign and pledge all or any portion of
  its Lender Commitment and Loans to a Federal Reserve Bank;
  provided, however, that any such assignment or pledge shall not
  relieve such Lender from its obligations under the Credit
  Documents.
  
          (f)      The  term of this Agreement shall be  until  the
  final  maturity of the Notes and the payment of all  amounts  due
  under the Credit Documents.
  
       9.6  Counterparts.  This Agreement may be executed in
  several identical counterparts, and by the parties hereto on
  separate counterparts, and each counterpart, when so executed and
  delivered, shall constitute an original instrument, and all such
  separate counterparts shall constitute but one and the same
  instrument.
  
       9.7  Usury Not Intended; Refund of Any Excess Payments.  It
  is the intent of the parties in the execution and performance of
  this Agreement to contract in strict compliance with the usury
  laws of the State of Texas and the United States of America from
  time to time in effect.  In furtherance thereof, the Agent, the
  Lenders and the Borrower stipulate and agree that none of the
  terms and provisions contained in this Agreement or the other
  Credit Documents shall ever be construed to create a contract to
  pay for the use, forbearance or detention of money with interest
  at a rate in excess of the Ceiling Rate and that for purposes
  hereof "interest" shall include the aggregate of all charges
  which constitute interest under such laws that are contracted
  for, reserved, taken, charged or received under this Agreement.
  In determining whether or not the interest paid or payable, under
  any specific contingency, exceeds the Ceiling Rate, the Borrower,
  the Agent and the Lenders shall, to the maximum extent permitted
  under applicable law, (a) characterize any nonprincipal payment
  as an expense, fee or premium rather than as interest,
  (b) exclude voluntary prepayments and the effects thereof, and
  (c) "spread" the total amount of interest throughout the entire
  contemplated term of the Loans.  The provisions of this paragraph
  shall control over all other provisions of the Credit Documents
  which may be in apparent conflict herewith.
  
       9.8  Captions.  The headings and captions appearing in the
  Credit Documents have been included solely for convenience and
  shall not be considered in construing the Credit Documents.
  
       9.9  Severability.  If any provision of any Credit
  Documents shall be invalid, illegal or unenforceable in any
  respect under any applicable law, the validity, legality and
  enforceability of the remaining provisions shall not be affected
  or impaired thereby.
  
       9.10 Disclosures.  Every reference in the Credit Documents
  to disclosures of the Borrower to the Agent and the Lenders in
  writing, to the extent that such references refer to disclosures
  at or prior to the execution of this Agreement, shall be deemed
  strictly to refer only to written disclosures delivered to the
  Agent and the Lenders in an orderly manner concurrently with the
  execution hereof.
  
       9.11 Entire Agreement.  THIS AGREEMENT AND THE OTHER CREDIT
  DOCUMENTS TOGETHER CONSTITUTE A WRITTEN AGREEMENT AND REPRESENT
  THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE
  CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT
  ORAL AGREEMENTS OF THE PARTIES.  THERE ARE NO UNWRITTEN ORAL
  AGREEMENTS BETWEEN THE PARTIES.
  
       IN WITNESS WHEREOF, the parties hereto have executed this
  Agreement as of the date set forth above.
  
                           PARKWAY PROPERTIES LP,
                           a Delaware limited partnership
                           
                           By: Parkway Properties General Partners,
                           Inc., General Partner
                           
                           
                           
                           By:     Steven G. Rogers
                           Name:   Steven G. Rogers
                           Title:  CEO & President
                           
                           
                           
                           By:     Sarah P. Clark
                           Name:   Sarah P. Clark
                           Title:  Sr. VP, CFO, Treasurer & Secy.
                           
                           
                           
                           Address:
                           188 E.Capitol St., Ste. 1000
                           Jackson, Mississippi 39201
                           Attention:  Chief Financial Officer
                           
  Parkway Properties, Inc. executes this Agreement solely to
  acknowledge and agree to Sections 5.2, 5.11(a), 6.3 and 6.8.
                           PARKWAY PROPERTIES, INC.
  
                           By:     Steven G. Rogers
                           Name:   Steven G. Rogers
                           Title:  CEO & President
  
  
                           By:     Sarah P. Clark
                           Name:   Sarah P. Clark
                           Title:  Sr. VP, CFO, Treasurer & Secy.
  Lender Commitment: $15,000,000.00  CHASE BANK OF TEXAS, NA
  Percentage: 10.000000000%          as Agent and as a Lender
  
                                     By:     Susan M. Tate
                                     Name:   Susan M. Tate
                                     Title:  Vice President
                                                         Address:
                                     712 Main Street
                                     Houston, Texas  77002
                                     Attention:  Manager, Real
                                     Estate Group
  
                                     Telephone No.: 713-216-1511
                                     Telecopy No.:  713-216-7713
  
  
  
  Lender Commitment: $15,000,000.00  PNC BANK, NA
  Percentage: 10.000000000%               Documentation Agent and
                                     as a Lender
  
                                     By:      Maureen A. Dunne
                                     Name:    Maureen A. Dunne
                                     Title:   Vice President
  
                                     By:
                                     Name:
                                     Title:
                                     Address:
                                     201 East Fifth St., 8th Floor
                                     Commercial Real Estate
                                     Cincinnati, Ohio 45201
                                     Attention: Maureen Dunne
  
                                     Telephone No.:  Maureen Dunne
                                                     513-651-8697
                                     Telecopy No:    513-651-8931
  
  
  Lender Commitment: $13,000,000.00  AMSOUTH BANK
  Percentage: 8.666666667%
                                     By:     Terry W. Howard
                                     Name:   Terry W. Howard
                                     Title:  Vice President
  
  
                                     Address:
                                     1900 Fifth Avenue North
                                     Commercial Real Estate, AST9
                                     Birmingham, Alabama  35201
                                     Attention:  Terry Howard
                                     Telephone No.:  Terry Howard
                                                     205-326-5651
                                     Telecopy No.:   205-326-4075
  
  
  
  Lender Commitment: $13,000,000.00  FIRST NATIONAL BANK OF
  Percentage: 8.666666667%           COMMERCE
  
  
                                     By:     Susan B. Bell
                                     Name:   Susan B. Bell
                                     Title:  Vice President
  
  
  
  
                                     Address:
                                     201 Saint Charles Avenue
                                     28th Floor
                                     New Orleans, Louisiana  70170
                                     Attention:  Cate Raymond
                                     Telephone No.:  Cate Raymond
                                                     504-623-1577
                                     Telecopy No.:   504-623-3616
  
  
  
  Lender Commitment: $13,000,000.00  FIRST UNION NATIONAL BANK
  Percentage: 8.666666667%
                                     By:     Rex E. Rudy      Name:
  Rex E. Rudy
                                     Title:  Vice President
  
  
                                     Address:
                                     One First Union Center, TW6
                                     Charlotte, NC  28288
                                     Attention: Rex Rudy
                                     Telephone No.:  Rex Rudy
                                                     704-383-6506
                                     Telecopy No.:   704-383-6205
  
  
  
  Lender Commitment: $13,000,000.00  SOUTHTRUST BANK, NA
  Percentage: 8.666666667%
                                     By:      Sam Boroughs
                                     Name:    Sam Boroughs
                                     Title:   Assistant VP
  
  
                                     Address:
                                     420 N. 20th Street
                                     Corporate Banking, 11th Floor
                                     Birmingham, Alabama  35203
                                     Attention: Sam Boroughs
  
                                     Telephone No.:  Sam Boroughs
                                                     205-254-5039
                                     Telecopy No.:   205-254-5022
  
  
  
  
  Lender Commitment: $13,000,000.00  WELLS FARGO BANK, NA
  Percentage: 8.666666667%
  
                                     By:     Samuel Wammock
                                     Name:   Samuel Wammock
                                     Title:  Vice President
  
                                                         Address:
                                     2859 Paces Ferry Rd Ste 1805
                                     Atlanta, Georgia  30339
                                     Attention:  Sam Wammock
  
                                     Telephone No.: Sam Wammock
                                                    770-435-3800
                                     Telecopy No.:  770-435-2262
  Lender Commitment: $10,000,000.00  COMPASS BANK
  Percentage: 6.666666667%
                                     By:      Randy S. Baker
                                     Name:    Randy S. Baker
                                     Title:   Vice President
  
  
                                     Address:
                                     15 S. 20th St., Ste. 1500
                                     Birmingham, Alabama  35233
                                     Attention: Jo Paley
                                          Telephone No.:  Jo Paley
                                                     205-933-3851
                                     Telecopy No:    205-715-7994
  
  
  Lender Commitment: $10,000,000.00  FIRST TENNESSEE BANK NA
  Percentage: 6.666666667%
                                     By:     Daniel B. Neuschaefer
                                     Name:   Daniel B. Neuschaefer
                                     Title:  Vice President
  
  
  
                                     Address:
                                     Commercial Real Estate
                                     165 Madison Avenue, 1st Floor
                                     Memphis, Tennessee  38103
                                     Attention: Dan Neuschaefer
  
                                     Telephone No.: 901-523-4049
                                                    DanNeuschaefer
                                     Telecopy No:   901-523-4032
  
  Lender Commitment: $10,000,000.00  HIBERNIA NATIONAL BANK
  Percentage: 6.666666667%
  
                                     By:     Yancey Jones
                                     Name:   Yancey Jones
                                     Title:  Assistant V.P.
  
  
  
  
                                     By:
                                     Name:
                                     Title:
  
  
  
                                     Address:
                                     313 Carondelet
                                     New Orleans, Louisiana  70130
                                     Attention:  Yancey Jones
  
                                     Telephone No.:  Yancey Jones
                                                     504-533-5087
                                     Telecopy No:    504-533-2042
  
  
  Lender Commitment: $7,500,000.00   COMERICA BANK
  Percentage: 5.000000000%
  
                                     By:      Charles L. Weddell
                                     Name:    Charles L. Weddell
                                     Title:   Vice President
  
  
  
                                     Address:
                                     500 Woodward Avenue, MC3256
                                     Detroit, Michigan  48226
                                     Attention:  Charles Weddell
                                     Telephone No.: 313-222-3323
                                                   Charles Weddell
                                     Telecopy No:   313-222-9295
  
  
  Lender Commitment: $7,500,000.00   FIRST AMERICAN NATIONAL BANK,
  Percentage: 5.000000000%           operating as DEPOSIT GUARANTY
                                     NATIONAL BANK
  
  
  
                                     By:     Mark W. McDowell
                                     Name:   Mark W. McDowell
                                     Title:  Vice President
  
  
  
                                     Address:
                                     1 Jackson Place, Suite 250
                                     188 E. Capital Street
                                     Jackson, Mississippi  39201
                                     Attention:  Mark McDowell
                                     Telephone No.: 601-968-4945
                                                    Mark McDowell
                                     Telecopy No:   601-354-8035
  
  
  Lender Commitment: $6,000,000.00   TRUSTMARK NATIONAL BANK
  Percentage: 4.000000000%
  
                                     By:     Monica Day
                                     Name:   Monica Day
                                     Title:  Vice President
  
  
  
                                     Address:
                                     248 East Capitol, Suite 814
                                     Jackson, Mississippi  39205
                                     Attention:
                                     George Gunn/Monica Day
                                     Telephone No.:
                                     George Gunn/Monica Day
                                     601-949-6793/6735
                                     Telecopy No:   601-949-6823
  
  
  Lender Commitment: $4,000,000.00   BANCORPSOUTH BANK
  Percentage: 2.666666667%
  
  
                                     By:     Kenneth E. Farmer
                                     Name:   Kenneth E. Farmer
                                     Title:  Sr. Vice President
       
       
       
                                     Address:
                                     525 E. Capitol St., Ste. 300
                                     Jackson, MS 39215-1605
                                     Attention:   Ken Farmer
                                     Telephone No.:  Ken Farmer
                                                     601-944-3727
                                     Telecopy No:    601-944-3605
  
  
  
  
  
                             SCHEDULE I
  
  
                               TABLE 1
  
                       APPLICABLE MARGIN   
   TOTAL LIABILITIES                                          
    TO TOTAL ASSET       EURODOLLAR RATE     BASE RATE        
      VALUE RATIO           BORROWING        BORROWING    FEE RATE
  Less than 35%              1.125%              0          .20%
  Greater than or            1.250%              0          .25%
  equal to 35% but
  less than 45%
  Greater than or            1.375%              0          .25%
  equal to 45%
                                  
  
  
  
  
  
                               TABLE 2
  
                       APPLICABLE MARGIN   
      S&P RATING/        EURODOLLAR RATE     BASE RATE        
    MOODY'S RATING          BORROWING        BORROWING    FEE RATE
  BBB+/Baal                  0.875%              0          .15%
  BBB/Baa2                   1.000%              0          .15%
  BBB-/Baa3                  1.125%              0          .20%
  Worse than BBB-            1.375%              0          .25%
  /Baa3
                                  
  
                             SCHEDULE II
  
                          APPROVED MARKETS
  
  Houston, Texas
  Jackson, Mississippi
  Atlanta, Georgia
  Knoxville, Tennessee
  Memphis, Tennessee
  Columbia, South Carolina
  Norfolk, Virginia
  Richmond, Virginia
  Winston-Salem, North Carolina
  Fairfax County, Virginia and Tysons Corner, McLean and
  Springfield, Virginia
  Ft. Lauderdale, Florida
  St. Petersburg, Florida
  Charlotte, North Carolina
  Little Rock, Arkansas
  Greenville, South Carolina
  Birmingham, Alabama
  Indianapolis, Indiana
  
                                  
                                  
                                  
                            FORM OF NOTE
                                  
                              EXHIBIT C
  
  ______________________                  _____________7, 1998
  
  
       FOR VALUE RECEIVED PARKWAY PROPERTIES LP, a Delaware limited
  partnership (herein called "Maker") promises to pay to the order
  of ____________________, a _______________ ("Payee"), at the
  offices of Chase Bank of Texas, National Association, a national
  banking association, as "Agent" under the Credit Agreement, at
  712 Main Street, Houston, Texas 77002, or at such other place as
  the holder (the "Holder", whether or not Payee is such holder) of
  this note may hereafter designate in writing, in immediately
  available funds and in lawful money of the United States of
  America, the principal sum of _______________________________
  Dollars (________________) (or the unpaid balance of all
  principal advanced against this note, if that amount is less),
  together with interest on the unpaid principal balance of this
  note from time to time outstanding at the Stated Rate and
  interest on all past due amounts, both principal and accrued
  interest, at the Past Due Rate; provided, that for the full term
  of this note the interest rate produced by the aggregate of all
  sums paid or agreed to be paid to the Holder of this note for the
  use, forbearance or detention of the debt evidenced hereby
  (including, but not limited to, all interest on this note at the
  Stated Rate) shall not exceed the Ceiling Rate.
  
  1.        Definitions.  Any terms not defined herein shall have
  the meaning given to them in the Credit Agreement dated of even
  date herewith among the Maker, the Agent and certain other
  Lenders (as the same may be amended or modified the "Credit
  Agreement").
  
  2.        Rates Change Automatically and Without Notice.  Without
  notice to Maker or any other person or entity and to the full
  extent allowed by applicable law from time to time in effect, the
  Prime Rate and the Ceiling Rate shall each automatically
  fluctuate upward and downward as and in the amount by which
  Agent's said prime rate, and such maximum nonusurious rate of
  interest permitted by applicable law, respectively, fluctuate.
  
  3.        Calculation of Interest.  Interest shall be computed
  for the actual number of days elapsed in a year (up to 365, or
  366 in a leap year) deemed to consist of 360 days, unless the
  Ceiling Rate would thereby be exceeded, in which event, to the
  extent necessary to avoid exceeding the Ceiling Rate, interest
  shall be computed on the basis of the actual number of days
  elapsed in the applicable calendar year in which it accrued.
  
  4.        Excess Interest Will be Refunded or Credited.  If, for
  any reason whatever, the interest paid or received on this note
  during its full term produces a rate which exceeds the Ceiling
  Rate, the Holder of this note shall refund to the payor or, at
  the Holder's option, credit against the principal of this note
  such portion of that interest as shall be necessary to cause the
  interest paid on this note to produce a rate equal to the Ceiling
  Rate.
  
  5.        Interest Will be Spread.  All sums paid or agreed to be
  paid to the Holder of this note for the use, forbearance or
  detention of the indebtedness evidenced hereby, to the extent
  permitted by applicable law and to the extent necessary to avoid
  violating applicable usury laws, shall be amortized, prorated,
  allocated and spread in equal parts throughout the full term of
  this note, so that the interest rate is uniform throughout the
  full term of this note.
  
  6.        Payment Schedule.  The principal of this note shall be
  due and payable on the Maturity Date.  Accrued and unpaid
  interest shall be due and payable on each Interest Payment Date.
  All payments shall be applied first to accrued interest, the
  balance to principal.
  
  7.        Prepayment.  Maker may prepay this note only as
  provided in the Credit Agreement.
  
  8.   Revolving Credit.  Upon and subject to the terms and
  conditions of the Credit Agreement and the other provisions of
  this note, Maker may borrow, repay and reborrow against this note
  at any time unless and until a default (however designated) or
  event (an "Event of Potential Default") which, if not cured after
  notice or before the lapse of time (or both) would develop into a
  default under this note, the Credit Agreement or any other Credit
  Documents has occurred which the Holder has not declared to have
  been fully cured or waived, and (except as the Credit Agreement
  or any of the other Credit Documents may otherwise provide) there
  is no limit on the number of advances against this note so long
  as the total unpaid principal of this note at any time
  outstanding does not exceed the Payee's Lender Commitment.
  Interest on the amount of each advance against this note shall be
  computed on the amount of the unpaid balance of that advance from
  the date it is made until the date it is repaid.  If Maker's
  right (if any) to borrow against this note shall ever lapse
  because of the occurrence of any default, it shall not be
  reinstated (or construed from any course of conduct or otherwise
  to have been reinstated) unless and until the Holder shall
  declare in a signed writing that it has been cured or waived.
  The unpaid principal balance of this note at any time shall be
  the total of all principal lent against this note to Maker or for
  Maker's account less the sum of all principal payments and
  permitted prepayments on this note received by the Holder.
  Absent manifest error, the Holder's computer records shall on any
  day conclusively evidence the unpaid balance of this note and its
  advances and payments history posted up to that day.  All loans
  and advances and all payments and permitted prepayments made on
  this note may be (but are not required to be) endorsed by the
  Holder on the schedule attached hereto (which is hereby made a
  part hereof for all purposes) or otherwise recorded in the
  Holder's computer or manual records; provided, that any Holder's
  failure to make notation of (a) any principal advance or accrual
  of interest shall not cancel, limit or otherwise affect Maker's
  obligations or any Holder's rights with respect to that advance
  or accrual, or (b) any payment or permitted prepayment of
  principal or interest shall not cancel, limit or otherwise affect
  Maker's entitlement to credit for that payment as of the date of
  its receipt by the Holder.  Maker and Payee expressly agree, as
  expressly allowed by Chapter 346 of the Texas Finance Code, that
  Chapter 346 (which relates to open-end line of credit revolving
  loan accounts) shall not apply to this note or to any loan
  evidenced by this note and that neither this note nor any such
  loan shall be governed by Chapter 346 or subject to its
  provisions in any manner whatsoever.
  
  9.   Credit Agreement.  This note has been issued pursuant to the
  terms of the Credit Agreement, to which reference is made for all
  purposes.  Advances against this note by Payee or other Holder
  hereof shall be governed by the Credit Agreement.  Payee is
  entitled to the benefits of the Credit Agreement.  As additional
  security for this note, Maker hereby grants to Payee and all
  other present and future Holders an express lien against,
  security interest in and contractual right of setoff in and to,
  all property and any and all deposits (general or special, time
  or demand, provisional or final) at any time held by the Payee or
  other Holder for any Maker's credit or account.
  
  10.  Defaults and Remedies.  Time is of the essence.  Maker's
  failure to pay any principal or accrued interest owing on this
  note when due and after expiration of any applicable period for
  notice and right to cure such a default which is specifically
  provided for in the Credit Agreement or any other provision of
  this note, or the occurrence of any default under the Credit
  Agreement or any other Credit Documents shall constitute default
  under this note, whereupon the Holder may elect to exercise any
  or all rights, powers and remedies afforded (a) under the Credit
  Agreement and all other papers related to this note and (b) by
  law, including the right to accelerate the maturity of this
  entire note.
  
       In addition to and cumulative of such rights, the Holder is
  hereby authorized at any time and from time to time after any
  such default, at Holder's option, without notice to Maker or any
  other person or entity (all rights to any such notice being
  hereby waived), to set off and apply any and all of any Maker's
  deposits at any time held by the Holder, and any other debt at
  any time owing by the Holder to or for the credit or account of
  any Maker, against the outstanding balance of this note, in such
  order and manner as Holder may elect in its sole discretion.
  
       The Holder's right to accelerate this note on account of any
  late payment or other default shall not be waived or deemed
  waived by the Holder by reason of the Holder's having previously
  accepted one or more late payments or by reason of any Holder's
  otherwise not accelerating this note or exercising other remedies
  for any default, and no Holder shall ever be obligated or deemed
  obligated to notify Maker or any other person that Holder is
  requiring strict compliance with this note or any papers securing
  or otherwise relating to it before such Holder may accelerate
  this note or exercise any other remedy.
  
  11.  Legal Costs.  If any Holder of this note retains an attorney
  in connection with any such default or to collect, enforce or
  defend this note or any papers intended to secure or guarantee it
  in any lawsuit or in any probate, reorganization, bankruptcy or
  other proceeding, or if Maker sues any Holder in connection with
  this note or any such papers and does not prevail, then Maker
  agrees to pay to each such Holder, in addition to principal and
  interest, all reasonable costs and expenses incurred by such
  Holder in trying to collect this note or in any such suit or
  proceeding, including reasonable attorneys' fees.
  
  12.  Waivers.  Except only for any notices which are specifically
  required by the Credit Agreement, Maker and any and all co-
  makers, endorsers, guarantors and sureties severally waive notice
  (including, but not limited to, notice of intent to accelerate
  and notice of acceleration, notice of protest and notice of
  dishonor), demand, presentment for payment, protest, diligence in
  collecting and the filing of suit for the purpose of fixing
  liability and consent that the time of payment hereof may be
  extended and re-extended from time to time without notice to any
  of them.  Each such person agrees that his, her or its liability
  on or with respect to this note shall not be affected by any
  release of or change in any guaranty or security at any time
  existing or by any failure to perfect or maintain perfection of
  any lien against or security interest in any such security or the
  partial or complete unenforceability of any guaranty or other
  surety obligation, in each case in whole or in part, with or
  without notice and before or after maturity.
  
  13.  Rate of Return Maintenance Covenant.  If at any time after
  the date of this note, any Holder determines that (a) any
  applicable law, rule or regulation regarding capital adequacy of
  general applicability has been adopted or changed, or (b) its
  interpretation or administration by any governmental authority,
  central bank or comparable agency has changed, and determines
  that such change or the Holder's compliance with any request or
  directive regarding capital adequacy of general applicability
  (whether or not having the force of law) of any such authority,
  central bank or comparable agency, has or would have the effect
  of reducing the rate of return on the Holder's capital as a
  consequence of its obligations under this note or any related
  papers to a level below that which the Holder could have achieved
  but for such adoption, change or compliance (taking into
  consideration the Holder's own capital adequacy policies) by an
  amount the Holder deems to be material, then Maker promises to
  pay from time to time to the order of the Holder such additional
  amount or amounts as will compensate the Holder for such
  reduction.  A certificate of any Holder setting forth the amount
  or amounts necessary to compensate the Holder as specified above
  shall be given to Maker as soon as practicable after the Holder
  has made such determination and shall be conclusive and binding,
  absent manifest error.  Maker shall pay the Holder the amount
  shown as due on any such certificate within 15 days after the
  Holder gives it.  In preparing such certificate, the Holder may
  employ such assumptions and make such allocations of costs and
  expenses as the Holder in good faith deems reasonable and may use
  any reasonable averaging and attribution method.  Section 3.8(b)
  of the Credit Agreement shall apply to the charges assessed under
  this Section.
  
  14.  Governing Law, Jurisdiction and Venue.  THIS NOTE SHALL BE
  GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
  STATE OF TEXAS AND THE UNITED STATES OF AMERICA FROM TIME TO TIME
  IN EFFECT.
  
  15.  General Purpose of Loan.  Maker warrants and represents to
  Payee and all other Holders that all loans evidenced by this note
  are and will be for business, commercial, investment or other
  similar purpose and not primarily for personal, family, household
  or agricultural use, as such terms are used in Chapter One.
  
  16.  Participations and Assignments.  Payee and each other Holder
  reserves the right to sell participations, assign interests or
  both, in all or any part of this note or the debt evidenced by
  this note, in accordance with the Credit Agreement.
  
                                     PARKWAY PROPERTIES LP, 
                                     a Delaware limited
                                     partnership
       
                                     By:  Parkway Properties
                                     General Partners, Inc.,
                                     General Partner
  
                                     By:
                                     Name:
                                     Title:
  
  
                                     By:
                                     Name:
                                     Title:
metadata_documents: [{"type": "8-K", "sequence": "1", "secsgml_size_bytes": 173244}]
metadata_filer: {"company-data": {"conformed-name": "PARKWAY PROPERTIES INC", "cik": "0000729237", "assigned-sic": "6512", "irs-number": "742123597", "state-of-incorporation": "MD", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "8-K", "act": "34", "file-number": "001-11533", "film-number": "98745559"}, "business-address": {"street1": "ONE JACKSON PL", "street2": "188 E CAPITOL ST STE 1000", "city": "JACKSON", "state": "MS", "zip": "39225-4647", "phone": "6019484091"}, "mail-address": {"street1": "P O BOX 22728", "street2": "P O BOX 22728", "city": "JACKSON", "state": "MS", "zip": "39201"}, "former-company": {"former-conformed-name": "PARKWAY CO", "date-changed": "19951018"}}
text: UNITED STATES
  
                 SECURITIES AND EXCHANGE COMMISSION
                                  
                        WASHINGTON, DC  20549
                                  
                 ----------------------------------
                                  
                              FORM 8-K
                                  
                                  
                           CURRENT REPORT
                                  
                                  
                   Pursuant to Section 13 or 15(d)
                               of the
                   Securities Exchange Act of 1934
  
  Date of Report (Date earliest event reported): November 12, 1998
                                                 -----------------
  
                      PARKWAY PROPERTIES, INC.
  -----------------------------------------------------------------
        (Exact name of Registrant as specified in its charter)
  
  Maryland                    1-11533                   74-2123597
  ------------------------------------------------------------------
  (State or other     (Commission File Number)       (IRS Employer
  jurisdiction of                                    Identification
  incorporation)                                     Number)
  
  One Jackson Place Suite 1000
    188 East Capitol Street
        P. O. Box 24647
       Jackson,  Mississippi                                 39225-
  4647
  ------------------------------------------------------------------
  (Address of principal executive offices)               (Zip Code)
  
  Registrant's telephone number, including area code (601) 948-4091
                                                     ---------------
  
  ------------------------------------------------------------------
    (Former name or former address, if changed since last report)
  
                              FORM 8-K
                                  
                      PARKWAY PROPERTIES, INC.
  
  Item 5.   Other Events.
  
  On  October 7, 1998, Parkway Properties, Inc. closed a three-year
  $150,000,000  unsecured credit facility with a consortium  of  14
  banks  arranged by Chase Securities, Inc.  The interest  rate  on
  the  new  line  of credit is equal to LIBOR plus 112.5  to  137.5
  basis  points depending upon overall company leverage,  with  the
  current rate set at LIBOR plus 125 basis points, or 6.625%.   The
  new  credit  facility  reflects a 15 basis  point  interest  rate
  reduction (based on current leverage) and a $50,000,000  increase
  over  the  previous lines of credit, which were secured lines  of
  credit.  The lead agent for the credit facility is Chase Bank  of
  Texas,  which  is  joined by a syndicate of banks  including  PNC
  Bank,  serving  as documentation agent, Wells Fargo  Bank,  First
  Union   National  Bank,  SouthTrust  Bank,  AmSouth  Bank,  First
  National  Bank  of Commerce, Compass Bank, First Tennessee  Bank,
  Hibernia National Bank, First American National Bank operating as
  Deposit Guaranty National Bank, Comerica Bank, Trustmark National
  Bank, and Bancorp South Bank.
  
  Item 7.        Financial Statements and Exhibits
  
       (c)  Exhibits
  
                 (99)(a)      Credit   Agreement   among    Parkway
                 Properties  LP,  Chase  Bank  of  Texas,  National
                 Association,  and  PNC Bank, National  Association
                 and   the  Lenders.   Parkway  agrees  to  furnish
                 supplementally  to  the  Securities  and  Exchange
                 Commission  on  request  a  copy  of  any  omitted
                 schedule or exhibit to this agreement.
  
                 (99)(b)   Form of Note by Parkway Properties LP as
                 maker   and   Chase   Bank  of   Texas,   National
                 Association as agent.  Parkway agrees  to  furnish
                 supplementally  to  the  Securities  and  Exchange
                 Commission  on  request  a  copy  of  any  omitted
                 schedule or exhibit to this agreement.
  
                              FORM 8-K
                                  
                      PARKWAY PROPERTIES, INC.
                                  
                                  
                             SIGNATURES
  
  Pursuant  to the requirements of the Securities Exchange  Act  of
  1934, the Registrant has duly caused this report to be signed  on
  its behalf by the undersigned hereunto duly authorized.
  
  DATE:  November 12, 1998           PARKWAY PROPERTIES, INC.
  
                                     BY:  /s/Sarah P. Clark
                                          Sarah P. Clark
                                          Senior Vice President,
                                          Chief Financial Officer,
                                          Treasurer and Secretary
  
                                  
                                  
                                  
                                  
                          CREDIT AGREEMENT
  
                                Dated
  
                           October 7, 1998
  
                                among
  
                        PARKWAY PROPERTIES LP
  
             CHASE BANK OF TEXAS, NATIONAL ASSOCIATION,
                       as Administrative Agent
  
                   PNC BANK, NATIONAL ASSOCIATION
                       as Documentation Agent
  
                                 and
  
                             the Lenders
  
                          TABLE OF CONTENTS
  
  1.   Definitions                                              1
  
  2.   The Loans                                               14
       2.1  Advances                                           14
       2.2  Payments                                           15
       2.3  Pro Rata Treatment                                 16
       2.4  Non-Receipt of Funds by the Agent                  16
       2.5  Sharing of Payments, Etc.                          17
       2.6  Fees                                               17
  
  3.   Conditions                                              18
       3.1  All Loans                                          18
       3.2  First Loan                                         18
       3.3  Options Available                                  18
       3.4  Designation and Conversion                         19
       3.5  Special Provisions Applicable to Eurodollar Rate
            Borrowings                                         19
       3.6  Funding Offices; Adjustments Automatic             22
       3.7  Funding Sources, Payment Obligations               22
       3.8  Mitigation, Non-Discrimination                     22
  
  4.   Representations and Warranties                          23
       4.1. Organization                                       23
       4.2  Financial Statements                               23
       4.3  Enforceable Obligations; Authorization             24
       4.4  Other Debt                                         24
       4.5  Litigation                                         24
       4.6  Taxes                                              24
       4.7  Regulation U                                       24
       4.8  Subsidiaries                                       24
       4.9  Securities Act of 1933                             24
       4.10 No Contractual or Corporate Restrictions           25
       4.11 Investment Company Act Not Applicable              25
       4.12 Public Utility Holding Company Act Not Applicable  25
       4.13 ERISA Not Applicable                               25
  
  5.   Affirmative Covenants                                   25
       5.1  Taxes, Existence, Regulations, Property, etc.      26
       5.2  Financial Statements and Information               26
       5.3  Financial Tests                                    26
       5.4  Inspection                                         27
       5.5  Further Assurances                                 27
       5.7  Insurance                                          27
       5.8  Notice of Certain Matters                          27
       5.9  Use of Proceeds                                    27
       5.10 Expenses of and Claims Against the Agent and the
            Lenders                                            27
       5.11 Legal Compliance; Indemnification                  28
       5.12 Obligors' Performance                              28
       5.13 Professional Services                              29
       5.14 Capital Adequacy                                   29
       5.15 Property Pool                                      30
  
  6.   Negative Covenants                                      31
       6.1  Indebtedness                                       31
       6.2  Mergers, Consolidations and Acquisitions of Assets 31
       6.3  Redemption                                         31
       6.4  Nature of Business; Management                     31
       6.5  Transactions with Related Parties                  31
       6.6  Loans and Investments                              31
       6.7  Limiting Agreements                                32
       6.8  Restricted Payments                                33
  
  7.   Events of Default and Remedies                          33
       7.1. Events of Default                                  33
       7.2  Remedies Cumulative                                35
  
  8.   The Agent                                               35
       8.1  Appointment, Powers and Immunities                 35
       8.2  Reliance                                           36
       8.3  Defaults                                           37
       8.4  Rights as a Lender                                 37
       8.5  Indemnification                                    37
       8.6  Non-Reliance on Agent and Other Lenders            38
       8.7  Failure to Act                                     38
       8.8  Resignation of Agent                               39
       8.9  No Partnership                                     39
  
  9.   Miscellaneous                                           39
       9.1  No Waiver, Amendments                              39
       9.2  Notices                                            40
       9.3  Venue                                              40
       9.4  Choice of Law                                      41
       9.5  Survival; Parties Bound; Successors and Assigns    41
       9.6  Counterparts                                       42
       9.7  Usury Not Intended; Refund of Any Excess Payments  42
       9.8  Captions                                           42
       9.9  Severability                                       42
       9.10 Disclosures                                        43
       9.11 Entire Agreement                                   43
  
  EXHIBITS
  Schedule I - Rating Tables
  Schedule II - Approved Markets
  A - Officer's Certificate
  B - Request for Loan
  C - Note
  D - Legal Opinion
  
                          CREDIT AGREEMENT
  
       THIS CREDIT AGREEMENT (the "Agreement") is made and entered
  into as of October 7, 1998, by and among PARKWAY PROPERTIES LP, a
  Delaware limited partnership (the "Borrower"), the financial
  institutions (including Chase, the "Lenders") which are now or
  may hereafter become signatories hereto, CHASE BANK OF TEXAS,
  NATIONAL ASSOCIATION, a national banking association ("Chase"),
  as Administrative Agent for Lenders (in such capacity, "Agent"),
  and PNC BANK, NATIONAL ASSOCIATION, as Documentation Agent for
  Lenders.
  
  1.   Definition
  
       Unless a particular word or phrase is otherwise defined or
  the context otherwise requires, capitalized words and phrases
  used in Credit Documents have the meanings provided below.
  
       Adjusted Eurodollar Interbank Rate shall mean, with respect
  to each Interest Period applicable to a Eurodollar Rate
  Borrowing, a rate per annum equal to the quotient, expressed as a
  percentage, of (a) the Eurodollar Interbank Rate with respect to
  such Interest Period divided by (b) 1.0000 minus the Eurodollar
  Reserve Requirement in effect on each day during such Interest
  Period.
  
       Affiliate shall mean any Person controlling, controlled by
  or under common control with any other Person.  For purposes of
  this definition, "control" (including "controlled by" and "under
  common control with") means the possession, directly or
  indirectly, of the power to direct or cause the direction of the
  management and policies of such Person, whether through the own
  ership of voting securities or otherwise.
  
       Annual Audited Financial Statements shall mean the annual
  financial statements of a Person, including all notes thereto,
  which statements shall include a balance sheet as of the end of
  such fiscal year and an income statement and a statement of cash
  flows, all setting forth in comparative form the corresponding
  figures from the previous fiscal year, all prepared in conformity
  with Generally Accepted Accounting Principles and accompanied by
  a report and opinion of independent certified public accountants
  satisfactory to the Agent, which shall state that such financial
  statements, in the opinion of such accountants, present fairly
  the financial position of such Person as of the date thereof and
  the results of its operations for the period covered thereby in
  conformity with Generally Accepted Accounting Principles.  Such
  statements shall be accompanied by a certificate of such
  accountants that in making the appropriate audit and/or
  investigation in connection with such report and opinion, such
  accountants did not become aware of any Default or, if in the
  opinion of such accountant any such Default exists, a description
  of the nature and status thereof.  The Annual Audited Financial
  Statements shall be prepared on a consolidated basis in
  accordance with Generally Accepted Accounting Principles.
  
       Applicable Margin shall mean (a) whenever and for so long as
  the Borrower has not received an S&P Rating and a Moody's Rating,
  the percentage which will be in effect whenever and for so long
  as the corresponding Total Liabilities to Total Asset Value Ratio
  reflected in Table 1 on Schedule I attached hereto and hereby
  made a part hereof, is in effect; and (b) whenever and for so
  long as the Borrower has received an S&P Rating and a Moody's
  Rating, the percentage which will be in effect whenever and for
  so long as the Borrower has received the corresponding S&P Rating
  or Moody's Rating, whichever is lower, reflected in Table 2 on
  Schedule I attached hereto.
  
       Approved Market shall mean each of the cities described on
  Schedule II attached hereto and hereby made a part hereof.
  
       Base Rate shall mean for any day a rate per annum equal to
  the Applicable Margin on that day plus the greater on a daily
  basis of (a) the Prime Rate for that day, or (b) the Federal
  Funds Effective Rate for that day plus one-half of one percent
  (1/2%).
  
       Base Rate Borrowing shall mean that portion of the principal
  balance of the Loans at any time bearing interest at the Base
  Rate.     Business Day shall mean a day other than (a) a day when
  the main office of the Agent is not open for business, or (b) a
  day that is a federal banking holiday in the United States of
  America.
  
       Calculation Date shall mean the beginning of the first full
  calendar quarter after a Property has been acquired by the
  Borrower.
  
       Capital Expenditures shall mean, as to any Person, for any
  period, the aggregate of all expenditures (whether payable in
  cash or other Property or accrued as a liability (but without
  duplication)) during such period that, in conformity with
  Generally Accepted Accounting Principles, are required to be
  included in or reflected by the Borrower's or any of its
  Subsidiaries' fixed asset accounts as reflected in any of their
  respective balance sheets; provided, however, Capital
  Expenditures shall include the sum of all expenditures by the
  Borrower for tenant improvements, leasing commissions, property
  level capital expenditures (e.g., roof replacement, parking lot
  repairs, etc., but not capital expenditures in connection with
  expansions) but shall exclude upgrade capital expenditures
  budgeted at the time of, and made within the first twelve (12)
  months after, the acquisition of a Property.  Capital
  Expenditures shall be calculated on a consolidated basis in
  accordance with Generally Accepted Accounting Principles and
  shall include (without duplication) the Equity Percentage of
  Capital Expenditures for the Borrower's Unconsolidated
  Affiliates.
  
       Ceiling Rate shall mean, on any day, the maximum nonusurious
  rate of interest permitted for that day by whichever of
  applicable federal or Texas laws permits the higher interest
  rate, stated as a rate per annum.  On each day, if any, that
  Texas law establishes the Ceiling Rate, the Ceiling Rate shall be
  the "weekly ceiling" (as defined in Chapter 303 of the Texas
  Finance Code (the "Texas Finance Code") and Chapter 1D of Title
  79, Tex.Rev.Civ. Stats. 1925 ("Chapter 1D"), as amended,
  respectively) for that day.  The Agent may from time to time, as
  to current and future balances, implement any other ceiling under
  the Texas Finance Code or Chapter 1D by notice to the Borrower,
  if and to the extent permitted by the Texas Finance Code or
  Chapter 1D.  Without notice to the Borrower or any other person
  or entity, the Ceiling Rate shall automatically fluctuate upward
  and downward as and in the amount by which such maximum
  nonusurious rate of interest permitted by applicable law fluctu
  ates.
  
       Change of Control means a change resulting when (a) any
  Person or Persons acting together which would constitute a Group
  together with any Affiliates thereof shall at any time either (i)
  Beneficially Own more than 50% of the aggregate voting power of
  all classes of Voting Stock of Parkway Properties, Inc. or (ii)
  succeed in having sufficient of its or their nominees elected to
  the Board of Directors of Parkway Properties, Inc. such that such
  nominees, when added to any existing directors remaining on the
  Board of Directors of Parkway Properties, Inc. after such
  election who is an Affiliate of such Person or Group, shall
  constitute a majority of the Board of Directors of Parkway
  Properties, Inc.; or (b) Parkway Properties, Inc. ceases to own,
  directly, at least fifty-one percent (51%) of the evidence of
  ownership of the Borrower.  As used herein (1) "Beneficially Own"
  means "beneficially own" as defined in Rule 13d-3 of the
  Securities Exchange Act of 1934, as amended, or any successor
  provision thereto; provided, however, that, for purposes of this
  definition, a Person shall not be deemed to Beneficially Own
  securities tendered pursuant to a tender or exchange offer made
  by or on behalf of such Person or any of such Person's Affiliates
  until such tendered securities are accepted for purchase or
  exchange; (2) "Group" means a "group" for purposes of Section
  13(d) of the Securities Exchange Act of 1934, as amended; and
  (3)"Voting Stock" of any Person shall mean capital stock of such
  Person which ordinarily has voting power for the election of
  directors (or persons performing similar functions) of such
  Person, whether at all times or only so long as no senior class
  of securities has such voting power by reason of any contingency.
  
       Code shall mean the Internal Revenue Code of 1986, as
  amended, as now or hereafter in effect, together with all regula
  tions, rulings and interpretations thereof or thereunder by the
  Internal Revenue Service.
  
       Commitment shall mean the commitment of the Lenders to lend
  funds under Section 2.1 of this Agreement.
  
       Credit Documents shall mean this Agreement, the Notes, the
  Guaranties, all instruments, certificates and agreements now or
  hereafter executed or delivered to the Agent or the Lenders
  pursuant to any of the foregoing, and all amendments,
  modifications, renewals, extensions, increases and rearrangements
  of, and substitutions for, any of the foregoing.
  
       EBITDA shall mean an amount derived from (a) net earnings,
  plus (b) depreciation, amortization, interest expense and income
  taxes, plus or minus (c) any losses or gains resulting from
  sales, write-downs, write-ups, write-offs or other valuation
  adjustments of assets or liabilities, in each case, as determined
  on a consolidated basis in accordance with Generally Accepted
  Accounting Principles, and including (without duplication) the
  Equity Percentage of EBITDA for the Borrower's Unconsolidated
  Affiliates.
  
       Eligible Ground Lease shall mean a lease either expressly
  approved by Agent in writing or a lease meeting at least the
  following requirements: (a) a remaining term (including renewal
  options exercisable at lessee's sole option) of at least forty
  (40) years, (b) the leasehold interest is transferable and
  assignable without the landlord's prior consent, (c) the ground
  lease is financeable in that, among other things, it provides or
  allows for, without further consent from the landlord, (i) notice
  and right to cure to lessee's lender, (ii) a pledge and mortgage
  of the leasehold interest, (iii) recognition of a foreclosure of
  the leasehold interest including entering into a new lease with
  the lender, and (iv) no right of landlord to terminate without
  consent of lessee's lender.
  
       Eligible Institution shall mean a commercial bank or a
  finance company, insurance company or other financial institution
  which is regularly engaged in making, purchasing or investing in
  loans and which has base capital of at least $500,000,000.00, but
  shall not include any Person which is an Affiliate of any
  Obligor.
  
       Equity Percentage shall mean the aggregate ownership
  percentage of Borrower in each Unconsolidated Affiliate.
  
       Eurodollar Business Day shall mean a Business Day on which
  transactions in United States dollar deposits between banks may
  be carried on in the London interbank dollar market.
  
       Eurodollar Interbank Rate shall mean, for each Interest
  Period, the rate of interest per annum, rounded, if necessary, to
  the next highest whole multiple of one-sixteenth percent (1/16%),
  quoted by Agent at or before 11:00 a.m., London time (or as soon
  thereafter as practicable), on the date two (2) Eurodollar
  Business Days before the first day of such Interest Period, to be
  the arithmetic average of the prevailing rates per annum at the
  time of determination and in accordance with the then existing
  practice in the London interbank dollar market, for the offering
  to Agent by one or more prime banks selected by Agent in its sole
  discretion, in the London interbank dollar market, of deposits in
  United States dollars for delivery on the first day of such
  Interest Period and having a maturity equal to the length of such
  Interest Period and in an amount equal (or as nearly equal as may
  be) to the Eurodollar Rate Borrowing to which such Interest
  Period relates.  Each determination by Agent of the Eurodollar
  Interbank Rate shall be prima facie evidence thereof.
  
       Eurodollar Rate shall mean for any day a rate per annum
  equal to the sum of the Applicable Margin for that day plus the
  Adjusted Eurodollar Interbank Rate in effect on the first day of
  the Interest Period for the applicable Eurodollar Rate Borrowing.
  Each Eurodollar Rate is subject to adjustments for reserves,
  insurance assessments and other matters as provided for in
  Section 3.5 hereof.
  
       Eurodollar Rate Borrowing shall mean that portion of the
  principal balance of the Loans at any time bearing interest at a
  Eurodollar Rate.
  
       Eurodollar Reserve Requirement shall mean, on any day, that
  percentage (expressed as a decimal fraction and rounded, if
  necessary, to the next highest one ten thousandth) which is in
  effect on such day for determining all reserve requirements
  (including, without limitation, basic, supplemental, marginal and
  emergency reserves) applicable to "Eurocurrency liabilities," as
  currently defined in Regulation D, all as specified by any
  Governmental Authority, including but not limited to those
  imposed under Regulation D.  Each determination of the Eurodollar
  Reserve Requirement by Agent shall be prima facie evidence
  thereof.
  
       Event of Default shall mean any of the events specified as
  an event of default in Section 7 of this Agreement, and Default
  shall mean any of such events, whether or not any requirement for
  notice, grace or cure has been satisfied.
  
       Federal Funds Effective Rate shall to the extent necessary
  be determined by the Agent separately for each day and shall for
  each such day be a rate per annum equal to the weighted average
  of the rates on overnight Federal funds transactions with members
  of the Federal Reserve System arranged by Federal funds brokers,
  as published for each such day (or if any such day is not a
  Business Day, for the next immediately preceding Business Day) by
  the Federal Reserve Bank of New York, or if the weighted average
  of such rates is not so published for any such day which is a
  Business Day, the average of the quotations for any such day on
  such transactions received by the Agent from three Federal funds
  brokers of recognized standing selected by the Agent.
  
       Fixed Charge Coverage Ratio shall mean the ratio of (a) the
  Borrower's EBITDA for the immediately preceding four (4) calendar
  quarters less an amount equal to the greater of actual Capital
  Expenditures for such period, or the Square Footage Unit Capital
  Expenditures for such period, to (b) all of the principal payable
  and principal paid on the Borrower's Indebtedness plus all of the
  Borrower's Interest Expense, in each case for the period used to
  calculate EBITDA.
  
       Funds Available for Distribution shall mean Funds From
  Operations, less adjustments for straight line rents and Capital
  Expenditures.
  
       Funds From Operations shall mean net income of the Borrower
  determined in accordance with Generally Accepted Accounting
  Principles, plus depreciation and amortization; provided, that
  there shall not be included in such calculation any gain or loss
  from debt restructuring and sales of Property.  Funds From
  Operations will be calculated, on an annualized basis, on the
  four (4) calendar quarters immediately preceding the date of the
  calculation.  Funds From Operations shall be calculated on a
  consolidated basis in accordance with Generally Accepted
  Accounting Principles, and including (without duplication) the
  Equity Percentage of Funds From Operations for the Borrower's
  Unconsolidated Affiliates.
       Funding Loss shall mean, with respect to (a) Borrower's
  payment or prepayment of principal of a Eurodollar Rate Borrowing
  on a day other than the last day of the applicable Interest
  Period; (b) Borrower's failure to borrow a Eurodollar Rate
  Borrowing on the date specified by Borrower; (c) Borrower's
  failure to make any prepayment of the Loans (other than Base Rate
  Borrowings) on the date specified by Borrower, or (d) any
  cessation of a Eurodollar Rate to apply to the Loans or any part
  thereof pursuant to Section 3.5, in each case whether voluntary
  or involuntary, any direct loss, expense, penalty, premium or
  liability incurred by any Lender (including but not limited to
  any loss or expense incurred by reason of the liquidation or
  reemployment of deposits or other funds acquired by a Lender to
  fund or maintain a Loan).
  
       Generally Accepted Accounting Principles shall mean, as to a
  particular Person, such accounting practice as, in the opinion of
  the independent accountants of recognized national standing regu
  larly retained by such Person and acceptable to the Agent,
  conforms at the time to generally accepted accounting principles,
  consistently applied.  Generally Accepted Accounting Principles
  means those principles and practices (a) which are recognized as
  such by the Financial Accounting Standards Board, (b) which are
  applied for all periods after the date hereof in a manner con
  sistent with the manner in which such principles and practices
  were applied to the most recent audited financial statements of
  the relevant Person furnished to the Lenders or where a change
  therein has been concurred in by such Person's independent
  auditors, and (c) which are consistently applied for all periods
  after the date hereof so as to reflect properly the financial
  condition, and results of operations and changes in financial
  position, of such Person.
  
       Governmental Authority shall mean any foreign governmental
  authority, the United States of America, any State of the United
  States and any political subdivision of any of the foregoing, and
  any agency, department, commission, board, bureau, court or other
  tribunal having jurisdiction over the Agent, any Lender or any
  Obligor or their respective Property.
  
       Guarantors (whether one or more) shall mean Parkway
  Properties, Inc., Parkway Properties General Partners, Inc.,
  Parkway Lamar LLC, Parkway Jackson LLC, and 111 Capitol Building
  Limited Partnership.
  
       Guaranties (whether one or more) shall mean the Guaranties
  executed by the Guarantors and delivered to the Agent in
  accordance with this Agreement.
  
       Historical Value shall mean the purchase price of Property
  (including improvements) and ordinary related purchase
  transaction costs, plus the cost of subsequent capital
  improvements made by the Borrower, less any provision for losses,
  all determined in accordance with Generally Accepted Accounting
  Principles.  If the Property is purchased as a part of a group of
  properties, the Historical Value shall be calculated based upon a
  reasonable allocation of the aggregate purchase price by the
  Borrower for all purposes, and consistent with Generally Accepted
  Accounting Principles.
  
       Indebtedness shall mean and include, without duplication
  (1) all obligations for borrowed money,  letter of credit
  reimbursement obligations, preferred stock redeemable at the
  option of the stockholder, (2) all obligations evidenced by
  bonds, debentures, notes or other similar agreements, (3) all
  obligations to pay the deferred purchase price of Property or
  services, except trade accounts payable arising in the ordinary
  course of business (unless included in (6) below), (4) all guar
  anties, endorsements, and other contingent obligations in respect
  of, or any obligations to purchase or otherwise acquire, Total
  Liabilities of others (but not including contracts to purchase
  real property and assume related liabilities which are not yet
  consummated if the buyer has the ability to terminate the
  contract at its option), (5) all Total Liabilities secured by any
  Lien existing on any interest of the Person with respect to which
  Indebtedness is being determined in Property owned subject to
  such Lien whether or not the Total Liabilities secured thereby
  shall have been assumed, (6) accounts payable, dividends of any
  kind or character or other proceeds payable with respect to any
  stock and accrued expenses, and (7) payments received in
  consideration for sale of ownership interests in a Person when
  the amount of ownership interest so sold is determined, and the
  date of delivery, is more than one (1) month after receipt of
  such payment. Indebtedness shall be calculated on a consolidated
  basis in accordance with Generally Accepted Accounting
  Principles, and including (without duplication) the Equity
  Percentage of Indebtedness for the Borrower's Unconsolidated
  Affiliates.
  
       Interest Coverage Ratio shall mean the ratio of (a) the
  Borrower's EBITDA for the immediately preceding four (4) calendar
  quarters to all of the Borrower's Interest Expense for the period
  used to calculate EBITDA.
  
       Interest Expense shall mean all of a Person's paid, accrued
  or capitalized interest expense on such Person's Indebtedness
  (whether direct, indirect or contingent, and including, without
  limitation, interest on all convertible debt), and including
  (without duplication) the Equity Percentage of Interest Expense
  for the Borrower's Unconsolidated Affiliates.
  
       Interest Options shall mean the Base Rate and the Eurodollar
  Rate, and "Interest Option" means either of them.
  
       Interest Payment Dates shall mean (a) the first (1st) day of
  each calendar month and the Maturity Date, for Base Rate
  Borrowings and (b) the last day of each Interest Period and, if
  the Interest Period is longer than three (3) months, at the end
  of each three (3) months, and the Maturity Date, for Eurodollar
  Rate Borrowings.
  
       Interest Period shall mean, for each Eurodollar Rate
  Borrowing, a period commencing on the date such Eurodollar Rate
  Borrowing was made and ending on the numerically corresponding
  day which is, subject to availability, one (1), two (2), three
  (3) or six (6) months thereafter; provided, (v) any Interest
  Period which would otherwise end on a day which is not a
  Eurodollar Business Day shall be extended to the next succeeding
  Eurodollar Business Day, unless such Eurodollar Business Day
  falls in another calendar month, in which case such Interest
  Period shall end on the next preceding Eurodollar Business Day;
  (w) any Interest Period which begins on the last Eurodollar
  Business Day of a calendar month (or on a day for which there is
  no numerically corresponding day in the calendar month at the end
  of such Interest Period) shall end on the last Eurodollar
  Business Day of the appropriate calendar month; (x) no Interest
  Period shall ever extend beyond the Maturity Date; and
  (y) Interest Periods shall be selected by Borrower in such a
  manner that the Interest Period with respect to any portion of
  the Loans which shall become due shall not extend beyond such due
  date.
  
       Legal Requirement shall mean any law, statute, ordinance,
  decree, requirement, order, judgment, rule, regulation (or inter
  pretation of any of the foregoing) of, and the terms of any
  license or permit issued by, any Governmental Authority.
  
       Lender Commitment means, for any Lender, the amount set
  forth opposite such Lender's name on its signature page of this
  Agreement, or as may hereafter become a signatory hereto.
  
       Lien shall mean any mortgage, pledge, charge, encumbrance,
  security interest, collateral assignment or other lien or
  restriction of any kind, whether based on common law,
  constitutional provision, statute or contract, and shall include
  reservations, exceptions, encroachments, easements, rights of
  way, covenants, conditions, restrictions, leases and other title
  exceptions.
  
       Limiting Agreements shall mean any agreement, instrument or
  transaction, including, without limitation, an Obligor's
  Organizational Documents, which has or may have the effect of
  prohibiting or limiting any Obligor's ability to pledge assets in
  the Pool to Agent as security for the Loans.
  
       Loans shall mean the Loans described in Sections 2.1 and 2.2
  hereof.  Loan shall mean any such Loan.
  
       Majority Lenders shall mean the Lenders with an aggregate
  amount of at least sixty-six and 67/100 percent (66.67%) of the
  amount of the Commitment then outstanding.
  
       Material Adverse Change shall mean a change which could
  reasonably be expected to have a Material Adverse Effect.
  
       Material Adverse Effect means a material adverse effect on
  (a) the financial condition, or results of operations of Borrower
  and its Subsidiaries taken as a whole, (b) the ability of an
  Obligor to perform its material obligations under the Credit
  Documents to which it is a party taken as a whole, (c) the
  validity or enforceability of such Credit Documents taken as a
  whole, or (d) the material rights and remedies of Lenders and
  Agent under the Credit Documents taken as a whole.
  
       Maturity Date shall mean three (3) years after the date of
  this Agreement, as the same may hereafter be accelerated pursuant
  to the provisions of any of the Credit Documents.
  
       Moody's Rating shall mean the senior unsecured debt rating
  from time to time received by the Borrower from Moody's Investors
  Service, Inc.
  
       Net Operating Income shall mean, for any income producing
  operating Property, the difference between (a) any cash rentals,
  proceeds and other income received from such Property (but
  excluding security or other deposits, late fees, early lease
  termination or other penalties, or other income of a non-
  recurring nature) during the determination period, less (b) an
  amount equal to all  costs and expenses (excluding interest
  expense and any expenditures that are capitalized in accordance
  with Generally Accepted Accounting Principles) incurred as a
  result of, or in connection with, or properly allocated to, the
  operation or leasing of such Property during the determination
  period; provided, however, that the amount for the expenses for
  the management of a Property included in clause (b) above shall
  be the greater of the management fee, the expenses that would be
  covered by a management fee, or three percent (3%) of the amount
  provided in clause (a) above. Net Operating Income shall be
  calculated on a consolidated basis in accordance with Generally
  Accepted Accounting Principles, and including (without
  duplication) the Equity Percentage of Net Operating Income for
  the Borrower's Unconsolidated Affiliates.
  
       Net Worth shall mean Tangible Net Worth, plus intangibles
  deducted in determining Tangible Net Worth.  Net Worth shall be
  calculated on a consolidated basis in accordance with Generally
  Accepted Accounting Principles.
  
       Non-recourse Debt shall mean any Indebtedness the payment of
  which the Borrower or any of its Subsidiaries is not obligated to
  make other than to the extent of any security therefor.
  
       Notes shall mean the promissory notes of the Borrower
  described in Section 2.1 hereof, any and all renewals, exten
  sions, modifications, rearrangements and replacements thereof and
  any and all substitutions therefor, and Note shall mean any one
  of them.
  
       Obligations shall mean, as at any date of determination
  thereof, the sum of (a) the aggregate amount of Loans outstanding
  hereunder plus (b) all other liabilities, obligations and
  Indebtedness of any Parties under any Credit Document.
  
       Obligors means any Person now or hereafter primarily or
  secondarily obligated to pay all or any part of the Obligations,
  including Borrower and Guarantors.
  
       Occupancy Level shall mean the occupancy level of a Property
  that is leased to bona fide tenants not Affiliates of any Obligor
  or the subject property manager (or any of their respective
  Affiliates) paying rent under written leases, based on the
  occupancy level at the time of determination.
  
       Officer's Certificate shall mean a certificate in the form
  attached hereto as Exhibit A.
  
       Organizational Documents shall mean, with respect to a
  corporation, the certificate of incorporation, articles of
  incorporation and bylaws of such corporation; with respect to a
  partnership, the partnership agreement establishing such
  partnership; with respect to a joint venture, the joint venture
  agreement establishing such joint venture, and with respect to a
  trust, the instrument establishing such trust; in each case
  including any and all modifications thereof as of the date of the
  Credit Document referring to such Organizational Document and any
  and all future modifications thereof which are consented to by
  the Lenders.
  
       Opinion Letters shall mean the opinion letters of
  independent counsel for the Obligors, each in Proper Form.
  
       Parties shall mean all Persons other than the Agent, or any
  Lender executing any Credit Document.
  
       Past Due Rate shall mean, on any day, a rate per annum equal
  to the Ceiling Rate for that day, or only if applicable law
  imposes no maximum nonusurious rate of interest for that day,
  then the Past Due Rate for that day shall be a rate per annum
  equal to the Base Rate plus an additional five percent (5%) per
  annum, but in any event not to exceed the Ceiling Rate.
  
       Percentage shall mean the amount, expressed as a percentage,
  of each Lender Commitment as compared to the Commitment, set
  forth opposite the Lender's name on its signature page of this
  Agreement, or as may hereafter become signatory hereto.
  
       Permitted Encumbrances shall mean (a) encumbrances
  consisting of zoning restrictions, easements, or other
  restrictions on the use of real property, provided that such
  items do not materially impair the use of such property for the
  purposes intended and none of which is violated in any material
  respect by existing or proposed structures or land use; (b) the
  following:  (i) Liens for taxes not yet due and payable, or being
  diligently contested in good faith; or (ii) materialmen's,
  mechanic's, warehousemen's and other like Liens arising in the
  ordinary course of business, securing payment of Total
  Liabilities whose payment is not yet due, or that are being
  contested in good faith by appropriate proceedings diligently
  conducted, and for or against which the Property owner has
  established adequate reserves in accordance with Generally
  Accepted Accounting Principles; (c) Liens for taxes, assessments
  and governmental charges or assessments that are being contested
  in good faith by appropriate proceedings diligently conducted,
  and for or against which the Property owner has established
  adequate reserves in accordance with Generally Accepted
  Accounting Principles; (d) Liens on real property which are
  insured around or against by title insurance; (e) Liens securing
  assessments or charges payable to a property owner association or
  similar entity which assessments are not yet due and payable or
  are being diligently contested in good faith; and (f) Liens
  securing this Agreement and Indebtedness hereunder, if any.
  
       Person shall mean any individual, corporation, trust, unin
  corporated organization, Governmental Authority or any other form
  of entity.
  
       Prime Rate shall mean, as of a particular date, the prime
  rate of interest per annum most recently determined by the Agent,
  automatically fluctuating upward or downward with and at the time
  specified in each such determination without notice to Borrower
  or any other Person; each change in the Prime Rate shall be
  effective on the date such change is determined; which Prime Rate
  may not necessarily represent the Agent's lowest or best rate
  actually charged to a customer.
  
       Proper Form shall mean in form and substance reasonably
  satisfactory to the Agent and the Majority Lenders.
  
       Property shall mean any interest in any kind of property or
  asset, whether real, leasehold, personal or mixed, tangible or
  intangible.
  
       Quarterly Unaudited Financial Statements shall mean the
  quarterly financial statements of a Person, including all notes
  thereto, which statements shall include a balance sheet as of the
  end of such quarter and an income statement for such fiscal
  quarter, and for the fiscal year to date, a statement of cash
  flows for such quarter and for the fiscal year to date, subject
  to normal year-end adjustments, all setting forth in comparative
  form the corresponding figures for the corresponding fiscal
  period of the preceding year (or, in the case of the balance
  sheet, the end of the preceding fiscal year), prepared in
  accordance with Generally Accepted Accounting Principles except
  that the Quarterly Unaudited Financial Statements may contain
  condensed footnotes as permitted by regulations of the United
  States Securities and Exchange Commission, and containing  a
  detailed listing of the Borrower's Property and the Historical
  Value thereof, and certified as true and correct by a managing
  director, senior vice president, or vice president of Borrower.
  The Quarterly Unaudited Financial Statements shall be prepared on
  a consolidated basis in accordance with Generally Accepted
  Accounting Principles.
  
       Rate Designation Date shall mean 12:00 noon, Houston, Texas
  time, on the date three (3) Eurodollar Business Days preceding
  the first day of any proposed Interest Period.
  
       Regulation D shall mean Regulation D of the Board of
  Governors of the Federal Reserve System from time to time in
  effect and shall include any successor or other regulation
  relating to reserve requirements applicable to member lenders of
  the Federal Reserve System.
  
       Request for Loan shall mean a written request substantially
  in the form of Exhibit B.
       S&P Rating shall mean the senior unsecured debt rating from
  time to time received by the Borrower from Standard & Poor's
  Rating Services.
  
       Secured Debt shall mean the Indebtedness of the Borrower
  secured by a Lien, and any Indebtedness of any of the Borrower's
  Subsidiaries owed to a Person not an Affiliate of the Borrower or
  such Subsidiary.
  
       Secured Debt to Total Asset Value Ratio shall mean the ratio
  (expressed as a percentage) of Secured Debt to Total Asset Value.
  
       Square Footage Capital Expenditure shall mean, on an annual
  basis, an amount equal to (a) for use in the Fixed Charged
  Coverage Ratio, the product of (i) the daily average aggregate
  number of gross square feet contained in each completed,
  operating Property owned by Borrower or any Subsidiary during the
  immediately preceding four (4) calendar quarters, multiplied by
  (ii) $1.00; and (b) for use in defining Value, the product of (i)
  the aggregate number of gross square feet contained in each
  completed, operating Property owned by Borrower or any Subsidiary
  as of the last day of the immediately preceding calendar quarter,
  multiplied by (ii) $1.00 .
  
       Stated Rate shall, on any day, mean whichever of the Base
  Rate or the Eurodollar Rate has been designated and provided
  pursuant to this Agreement; provided that, if on any day such
  rate shall exceed the Ceiling Rate for that day, the Stated Rate
  shall be fixed at the Ceiling Rate on that day and on each day
  thereafter until the total amount of interest accrued at the
  Stated Rate on the unpaid principal balance of the Notes equals
  the total amount of interest which would have accrued if there
  had been no Ceiling Rate.  If the Notes mature (or are prepaid)
  before such equality is achieved, then, in addition to the unpaid
  principal and accrued interest then owing pursuant to the other
  provisions of the Credit Documents, Borrower promises to pay on
  demand to the order of the holders of the Notes interest in an
  amount equal to the excess (if any) of (a) the lesser of (i) the
  total interest which would have accrued on the Notes if the
  Stated Rate had been defined as equal to the Ceiling Rate from
  time to time in effect and (ii) the total interest which would
  have accrued on the Notes if the Stated Rate were not so
  prohibited from exceeding the Ceiling Rate, over (b) the total
  interest actually accrued on the Notes to such maturity (or
  prepayment) date.
  
       Subsidiary shall mean, as to a particular parent entity, any
  entity of which more than fifty percent (50%) of the indicia of
  voting equity or ownership rights (whether outstanding capital
  stock or otherwise) is at the time directly or indirectly owned
  by, such parent entity, or by one or more of its other
  Subsidiaries.
  
       Tangible Net Worth shall mean total assets based on book
  value, and including the book value of equity investments in each
  Unconsolidated Affiliate multiplied by the Equity Percentage for
  that Unconsolidated Affiliate), less (1) all intangibles and
  (2) all liabilities (including contingent and indirect
  liabilities), all determined in accordance with Generally
  Accepted Accounting Principles.  The term "intangibles" shall
  include, without limitation, (i) deferred charges, (ii) the
  amount of any write-up in the book value of any assets contained
  in any balance sheet resulting from revaluation thereof or any
  write-up in excess of the cost of such assets acquired, and
  (iii) the aggregate of all amounts appearing on the assets side
  of any such balance sheet for franchises, licenses, permits,
  patents, patent applications, copyrights, trademarks, trade
  names, goodwill, treasury stock, experimental or organizational
  expenses and other like intangibles.  The term "liabilities"
  shall include, without limitation, (i) Total Liabilities secured
  by Liens on Property of the Person with respect to which Tangible
  Net Worth is being computed whether or not such Person is liable
  for the payment thereof, (ii) deferred liabilities, and
  (iii) obligations under leases which have been capitalized.
  Tangible Net Worth shall be calculated on a consolidated basis in
  accordance with Generally Accepted Accounting Principles.
  
       Taxes shall mean any tax, levy, impost, duty, charge or fee.
  
       Total Asset Value shall mean the sum of (without
  duplication) (a) the aggregate Value of all of Borrower's
  operating real estate assets, plus (b) the amount of  any cash
  and cash equivalents, excluding tenant security and other
  restricted deposits of the Borrower, plus (c) investments in
  Unconsolidated Affiliates that are engaged primarily in the
  business of investment in and operation of office and industrial
  office buildings, valued at an amount equal to the Value of each
  Unconsolidated Affiliate's operating real estate assets
  multiplied by the Equity Percentage for that Unconsolidated
  Affiliate (subject to the maximum investment limitation contained
  in Section 6.6(f)), plus (d) investments in readily marketable
  securities of another Person, not an Affiliate of any Obligor,
  traded on a national trading exchange, that is a real estate
  investment trust under Section 856(c)(1) of the Code, or that is
  a real estate operating company (subject to the maximum
  investment limitation contained in Section 6.6(i)), plus (e)
  investments in real estate assets that are being constructed or
  developed to be office or industrial buildings, but are not yet
  in operation (subject to the maximum investment and cost
  limitation contained in Section 6.6(k)).  Total Asset Value shall
  be calculated on a consolidated basis in accordance with
  Generally Accepted Accounting Principles.
  
       Total Liabilities shall mean and include, without
  duplication, the sum of (a) Indebtedness and (b) all other items
  which in accordance with Generally Accepted Accounting Principles
  would be included on the liability side of a balance sheet on the
  date as of which Total Liabilities is to be determined (excluding
  capital stock, surplus, surplus reserves and deferred credits),
  and including (without duplication) the Equity Percentage of
  Total Liabilities of the Borrower's Unconsolidated Affiliates.
  
       Total Liabilities to Total Asset Value Ratio shall mean the
  ratio (expressed as a percentage) of Total Liabilities to Total
  Asset Value, with Total Asset Value based on the immediately
  preceding calendar quarter.
  
       Unconsolidated Affiliate shall mean, in respect of any
  Person, any other Person (other than a Person whose stock is
  traded on a national trading exchange) in whom such Person holds
  a voting equity or ownership interest and whose financial results
  would not be consolidated under Generally Accepted Accounting
  Principles with the financial results of such Person on the
  consolidated financial statements of such Person.
  
       Unencumbered Interest Coverage Ratio shall mean the ratio of
  (a) the Net Operating Income for Property that is not subject to
  any Lien for the immediately preceding four (4) calendar
  quarters, to (b) an amount equal to the greater of (i) the
  Borrower's Interest Expense on all of the Borrower's Indebtedness
  other than Secured Debt, or (ii) interest on the Borrower's
  Indebtedness other than Secured Debt calculated at seven and one-
  half (7.50%) per annum, in each case for the period used to
  calculate Net Operating Income.
  
       Value shall mean the sum of (a) for Property that has
  reached the Calculation Date and that Borrower has owned for the
  full determination period, the result of dividing (i) the
  aggregate Net Operating Income of the subject Property based on
  the immediately preceding calendar quarter and multiplied by four
  (4), less the aggregate Square Footage Capital Expenditure for
  such Property, by (ii) nine and one-fourth percent (9.25%); plus
  (b) for Property that has not reached the Calculation Date or
  that has not been owned by Borrower for the full determination
  period, the aggregate Historical Value of the subject Property.
  
       The following terms shall have the respective meanings
  ascribed to them in the Uniform Commercial Code as enacted and in
  force in the State of Texas on the date hereof:
  
       accessions, continuation statement, fixtures, general
       intangibles, proceeds, security interest and security
       agreement.
  
  2.   The Loans.
  
       2.1  Advances.  (a)  Subject to the terms and conditions of
  this Agreement, each Lender severally agrees to make Loans prior
  to the Maturity Date to the Borrower not to exceed an amount (in
  the aggregate, the "Commitment") at any one time outstanding
  equal to the Lender's Lender Commitment.  Each such request for a
  Loan by Borrower shall be deemed a request for a Loan from each
  Lender equal to such Lender's Percentage of the aggregate amount
  so requested, and such aggregate amount shall be in an amount at
  least equal to $1,000,000.00 and equal to a multiple of
  $250,000.00, or the difference between the Commitment and the
  aggregate principal balance of the Notes, whichever is less.
  Each repayment of the Loans shall be deemed a repayment of each
  Lender's Loan equal to such Lender's Percentage of the amount so
  repaid.  The obligations of the Lenders hereunder are several and
  not joint, and the preceding two sentences will give rise to
  certain inappropriate results if special provisions are not made
  to accommodate the failure of a Lender to fund a Loan as and when
  required by this Agreement; therefore, notwithstanding anything
  herein to the contrary, (A) no Lender shall be required to make
  Loans at any one time outstanding in excess of such Lender's
  Percentage of the Commitment and (B) if a Lender fails to make a
  Loan as and when required hereunder and Borrower subsequently
  makes a repayment on the Loans, such repayment shall be divided
  among the non-defaulting Lenders ratably in accordance with their
  respective Percentages until each Lender has its Percentage of
  all of the outstanding Loans, and the balance of such repayment
  shall be divided among all of the Lenders in accordance with
  their respective Percentages.  The Loans shall be evidenced by
  the Notes substantially in the form of Exhibit C attached hereto.
  The Borrower, the Agent and the Lenders agree that Chapter 346 of
  the Texas Finance Code shall not apply to this Agreement, the
  Notes or any Loan.
  
       (b)  The Borrower shall give the Agent notice of each
  borrowing to be made hereunder as provided in Section 3.1 hereof,
  and the Agent shall deliver same to each Lender promptly
  thereafter.  Not later than 11:00 a.m., Houston, Texas time, on
  the date specified for each such borrowing hereunder, each Lender
  shall make available the amount of the Loan, if any, to be made
  by it on such date to the Agent at the Agent's principal office
  in Houston, Texas, in immediately available funds, for the
  account of the Borrower.  Such amounts received by the Agent will
  be held in Agent's general ledger account.  The amounts so
  received by the Agent shall, subject to the terms and conditions
  of this Agreement, be made available to the Borrower by wiring or
  otherwise transferring, in immediately available funds not later
  than 12:00 noon, Houston, Texas time, such amount to an account
  designated by the Borrower and maintained with Chase in Houston,
  Texas or any other account or accounts which the Borrower may
  from time to time designate to the Agent by a written notice as
  the account or accounts to which borrowings hereunder are to be
  wired or otherwise transferred.
  
       2.2  Payments. (a)  Except to the extent otherwise provided
  herein, all payments of principal, interest and other amounts to
  be made by the Borrower hereunder, under the Notes and under the
  other Credit Documents shall be made in immediately available
  funds to the Agent, for the account of the Lenders, at its
  principal office in Houston, Texas (or in the case of a successor
  Agent, at the principal office of such successor Agent in the
  United States), not later than 12:00 noon Houston, Texas time on
  the date on which such payment shall become due (each such
  payment made after such time on such due date to be deemed to
  have been made on the next succeeding Business Day).
  
       (b)  The Borrower may, at the time of making each payment
  hereunder, under any Note or under any other Credit Document,
  specify to the Agent the Loans or other amounts payable by the
  Borrower hereunder or thereunder to which such payment is to be
  applied, which must be pro rata on the basis of each Lender's
  Percentage (and in the event that it fails so to specify, such
  payment shall be applied to the Loans or, if no Loans are
  outstanding, to other amounts then due and payable, provided that
  if no Loans or other amounts are then due and payable or an Event
  of Default has occurred and is continuing, the Agent may apply
  such payment to the Obligations in such order as it may elect in
  its sole discretion, but subject to the other terms and
  conditions of this Agreement, including without limitation
  Section 2.3 hereof).  Each payment received by the Agent
  hereunder, under any Note or under any other Credit Document for
  the account of a Lender shall be paid promptly to such Lender, in
  immediately available funds.  If the Agent receives a payment for
  the account of a Lender prior to 12:00 noon Houston, Texas time,
  such payment must be delivered to the Lender on that same day and
  if it is not so delivered due to the fault of the Agent, the
  Agent shall pay to the Lender entitled to the payment the
  interest accrued on the amount of the payment pursuant to said
  Lender's Note and this Agreement from the date the Agent receives
  the payment to the date the Lender received the payment.
  
        (c)  If the due date of any payment hereunder or under  any
  Note  falls  on a day which is not a Business Day or a Eurodollar
  Business  Day, as the case may be, the due date for such payments
  shall  be  extended  to  the  next  succeeding  Business  Day  or
  Eurodollar  Business  Day, respectively, and  interest  shall  be
  payable  for  any principal so extended for the  period  of  such
  extension;  provided,  however, that with respect  to  Eurodollar
  Rate  Borrowings  if  such extension would cause  the  Eurodollar
  Business  Day of payment to fall in another calendar  month,  the
  payment  shall  be  due  on  the  Eurodollar  Business  Day  next
  preceding the due date of the payment.
  
        (d)   The  Borrower shall give the Agent at least  one  (1)
  Business  Day's prior written notice of the Borrower's intent  to
  make  any  payment  of  principal or interest  under  the  Credit
  Documents  not  scheduled to be paid under the Credit  Documents.
  Any such notification of payment shall be irrevocable after it is
  made  by  the  Borrower.   Upon receipt  by  the  Agent  of  such
  notification  of  payment, it shall deliver  same  to  the  other
  Lenders.
  
       2.3  Pro Rata Treatment.  Except to the extent otherwise
  provided herein:  (a) each borrowing from the Lenders under
  Section 2.1(a) hereof shall be made ratably from the Lenders on
  the basis of their respective Percentages, each payment of the
  Fee (hereinafter defined) shall be made for the account of the
  Lenders, and shall be applied, pro rata, according to the
  Lenders' respective Lender Commitment;  and (b) each payment by
  the Borrower of principal or interest on the Loans or any other
  sums advanced by the Lenders pursuant to the Credit Documents,
  and of any other amount owed to the Lenders other than the Fee,
  or any other sums designated by this Agreement as being owed to a
  particular Lender, shall be made to the Agent for the account of
  the Lenders pro rata in accordance with the respective unpaid
  principal amounts of the Loans held by the Lenders.
  
       2.4  Non-Receipt of Funds by the Agent.  Unless the Agent
  shall have been notified by a Lender or the Borrower (the
  "Payor") prior to the date on which such Lender is to make
  payment to the Agent of the proceeds of a Loan to be made by it
  hereunder or the Borrower is to make a payment to the Agent for
  the account of one or more of the Lenders, as the case may be
  (such payment being herein called the "Required Payment"), which
  notice shall be effective upon receipt, that the Payor does not
  intend to make the Required Payment to the Agent, the Agent may
  assume that the Required Payment has been made and may, in
  reliance upon such assumption (but shall not be required to),
  make the amount thereof available to the intended recipient on
  such date and, if the Payor has not in fact made the Required
  Payment to the Agent, the recipient of such payment shall, on
  demand, pay to the Agent the amount made available by the Agent
  together with interest thereon in respect of the period
  commencing on the date such amount was so made available by the
  Agent until the date the Agent recovers such amount at a rate per
  annum equal to (a) the Past Due Rate for such period if the
  recipient returning a Required Payment is the Borrower, or (b)
  the Federal Funds Effective Rate for such period if the recipient
  returning a Required Payment is the Agent or a Lender.
  
       2.5  Sharing of Payments, Etc.   The Borrower agrees that,
  in addition to (and without limitation of) any right of set-off,
  bankers' lien or counterclaim a Lender may otherwise have, each
  Lender shall be entitled, at its option, to offset balances held
  by it for the account of the Borrower at any of its offices,
  against any principal of or interest on any of such Lender's
  Loans to the Borrower hereunder, or other Obligations of the
  Borrower hereunder, which is not paid (regardless of whether such
  balances are then due to the Borrower), in which case it shall
  promptly notify the Borrower and the Agent thereof, provided that
  such Lender's failure to give such notice shall not affect the
  validity thereof.  If a Lender shall obtain payment of any
  principal of or interest on any Loan made by it under this
  Agreement or other Obligation then due to such Lender hereunder,
  through the exercise of any right of set-off, banker's lien,
  counterclaim or similar right, or otherwise, it shall promptly
  purchase from the other Lenders portions of the Loans made or
  other Obligations held by the other Lenders in such amounts, and
  make such other adjustments from time to time as shall be
  equitable to the end that all the Lenders shall share the benefit
  of such payment (net of any expenses which may be incurred by
  such Lender in obtaining or preserving such benefit) pro rata in
  accordance with the unpaid principal and interest on the
  Obligations then due to each of them.  To such end all the
  Lenders shall make appropriate adjustments among themselves (by
  the resale of participations sold or otherwise) if such payment
  is rescinded or must otherwise be restored.  Nothing contained
  herein shall require any Lender to exercise any such right or
  shall affect the right of any Lender to exercise, and retain the
  benefits of exercising, any such right with respect to any other
  indebtedness or obligation of the Borrower.
  
       2.6  Fees.  The Borrower shall pay to the Agent for the
  account of each Lender fees (collectively, the "Fee") equal to an
  amount payable as a commitment fee by the Borrower to the Agent
  for the account of each Lender equal to the portion of the daily
  unused amount of the Commitment multiplied by the rate per annum
  corresponding to (a) the Total Liabilities to Total Asset Value
  Ratio reflected in Table 1 on Schedule I attached hereto (as
  determined as of the last day of each of the Borrower's fiscal
  quarters) whenever and for so long as the Borrower has not
  received an S&P Rating and a Moody's Rating; and (b) the S&P
  Rating or Moody's Rating, whichever is lower, reflected in Table
  2 on Schedule I attached hereto, as same is in effect from time
  to time, whenever and for so long as the Borrower has received an
  S&P Rating and a Moody's Rating; such commitment fee to be
  payable in arrears on or before the tenth (10th) day of each
  April, July, October and January.  The Fee shall not be
  refundable. Any portion of the Fee which is not paid by the
  Borrower when due shall bear interest at the Past Due Rate from
  the date due until the date paid by the Borrower.  The Fee shall
  be calculated on the actual number of days elapsed in a year
  deemed to consist of 360 days.
  3.   Conditions.
  
       3.1  All Loans.  The obligation of any Lender to make any
  Loan is subject to the accuracy of all representations and
  warranties of the Borrower on the date of such Loan, to the
  performance by the Borrower of its obligations under the Credit
  Documents and to the satisfaction of the following further
  conditions:  (a) the Agent shall have received the following, all
  of which shall be duly executed and in Proper Form: (1) a Request
  for Loan (i) by 11:00 a.m., Houston, Texas time, one (1) Business
  Day before the date (which shall also be a Business Day) of the
  proposed Loan which is to be a Base Rate Borrowing, or (ii) by
  the Rate Designation Date of the proposed Loan which is to be a
  Eurodollar Rate Borrowing; and (2) such other documents as the
  Agent may reasonably require to satisfy itself or the request of
  any Lender; (b) no Default or Event of Default shall have
  occurred and be continuing; (c) the making of the Loan shall not
  be prohibited by any Legal Requirement; and (d) the Borrower
  shall have paid all legal fees and expenses of the type described
  in Section 5.10 hereof through the date of such Loan.
  
       3.2  First Loan.  In addition to the matters described in
  Section 3.1 hereof, the obligation of the Lenders to make the
  first Loan under this Agreement is subject to the receipt by the
  Lenders of each of the following, in Proper Form: (a) the Notes,
  executed by the Borrower; (b) a certificate executed by the
  Secretary or Assistant Secretary of each Obligor dated as of the
  date hereof as to the resolutions of such Person authorizing the
  execution of the Credit Documents and as to the incumbency of the
  officers of such Person; (c) a certificate from the Secretary of
  State or other appropriate public official of the state of
  organization of each Obligor  as to the continued existence and
  good standing of such Obligor; (d) a certificate from the
  appropriate public official of every state where the location of
  the Obligor's Property requires it to be qualified to do business
  as to the due qualification and good standing of such Obligor;
  (e) a legal opinion from independent counsel for the Obligors as
  to the matters set forth on Exhibit D acceptable to the Lenders;
  and (f) an Officer's Certificate in the form of Exhibit A; and to
  the further condition that, at the time of the initial Loan, all
  legal matters incident to the transactions herein contemplated
  shall be satisfactory to Liddell, Sapp, Zivley, Hill & LaBoon,
  L.L.P., counsel for the Agent.
  
       3.3  Options Available.  The outstanding principal balance
  of the Notes shall bear interest at the Base Rate; provided, that
  (1) all past due amounts, both principal and accrued interest,
  shall bear interest at the Past Due Rate, and (2) subject to the
  provisions hereof, Borrower shall have the option of having all
  or any portion of the principal balance of the Notes from time to
  time outstanding bear interest at a Eurodollar Rate.  The records
  of the Lenders with respect to Interest Options, Interest Periods
  and the amounts of Loans to which they are applicable shall be
  prima facie evidence thereof.  Interest on the Loans shall be
  calculated at the Base Rate except where it is expressly provided
  pursuant to this Agreement that a Eurodollar Rate is to apply.
  
       3.4  Designation and Conversion.  Borrower shall have the
  right to designate or convert its Interest Options in accordance
  with the provisions hereof.  Provided no Event of Default has
  occurred and is continuing and subject to the provisions of
  Section 3.5, Borrower may elect to have a Eurodollar Rate apply
  or continue to apply to all or any portion of the principal
  balance of the Notes. Each change in Interest Options shall be a
  conversion of the rate of interest applicable to the specified
  portion of the Loans, but such conversion shall not change the
  respective outstanding principal balance of the Notes.  The
  Interest Options shall be designated or converted in the manner
  provided below:
  
        (a)   Borrower shall give Agent a Request for  Loan.   Each
  such written notice shall specify the amount of Loan which is the
  subject of the designation, if any; the amount of borrowings into
  which  such  borrowings  are  to be converted  or  for  which  an
  Interest  Option  is  designated;  the  proposed  date  for   the
  designation  or  conversion  and the  Interest  Period,  if  any,
  selected  by Borrower.  The Request for Loan shall be irrevocable
  and  shall  be  given to Agent no later than the applicable  Rate
  Designation  Date.  The Agent shall promptly deliver the  Request
  for Loan to the Lenders.
  
        (b)   No more than five (5) Eurodollar Rate Borrowings with
  five (5) Interest Periods shall be in effect at any time.
  
        (c)   Each  designation or conversion of a Eurodollar  Rate
  Borrowing shall occur on a Eurodollar Business Day.
  
       (d)  Except as provided in Section 3.5 hereof, no Eurodollar
  Rate Borrowing shall be converted on any day other than the last
  day of the applicable Interest Period.
  
        (e)   Unless a Request for Loan to the contrary is received
  as  provided  in  this Agreement, each Eurodollar Rate  Borrowing
  will convert to a Base Rate Borrowing after the expiration of the
  Interest Period.
  
       3.5  Special Provisions Applicable to Eurodollar Rate
  Borrowings.
  
       (a)  Options Unlawful.  If the adoption of any applicable
  Legal Requirement or any change in any applicable Legal Require
  ment or in the interpretation or administration thereof by any
  Governmental Authority or compliance by the Lenders with any
  request or directive (whether or not having the force of law) of
  any central bank or other Governmental Authority shall at any
  time make it unlawful or impossible for any Lender to permit the
  establishment of or to maintain any Eurodollar Rate Borrowing,
  the commitment of the Lenders to establish or maintain such
  Eurodollar Rate Borrowing shall forthwith be suspended until such
  condition shall cease to exist and Borrower shall forthwith, upon
  demand by Agent to Borrower, (1) convert the Eurodollar Rate
  Borrowing with respect to which such demand was made to a Base
  Rate Borrowing; (2) pay all accrued and unpaid interest to date
  on the amount so converted; and (3) pay any amounts required to
  compensate the Lenders for any additional cost or expense which
  the Lenders may incur as a result of such adoption of or change
  in such Legal Requirement or in the interpretation or
  administration thereof and any Funding Loss which the Lenders may
  incur as a result of such conversion.  If, when Agent so notifies
  Borrower, Borrower has given a Request for Loan specifying a
  Eurodollar Rate Borrowing but the selected Interest Period has
  not yet begun, such Request for Loan shall be deemed to be of no
  force and effect, as if never made, and the balance of the Loans
  specified in such Request for Loan shall bear interest at the
  Base Rate until a different available Interest Option shall be
  designated in accordance herewith.
  
       (b)  Increased Cost of Borrowings.  If the adoption of any
  applicable Legal Requirement or any change in any applicable
  Legal Requirement or in the interpretation or administration
  thereof by any Governmental Authority or compliance by any Lender
  with any request or directive of general applicability (whether
  or not having the force of law) of any central bank or
  Governmental Authority shall at any time as a result of any
  portion of the principal balance of the Notes being maintained on
  the basis of a Eurodollar Rate:
  
       (1)  subject any Lender (or make it apparent that any
            Lender is subject) to any Taxes, or any deduction
            or withholding for any Taxes, on or from any
            payment due under any Eurodollar Rate Borrowing or
            other amount due hereunder, other than income and
            franchise taxes of the United States and its
            political subdivisions; or
  
       (2)  change the basis of taxation of payments due from
            Borrower to any Lender under any Eurodollar Rate
            Borrowing (otherwise than by a change in the rate
            of taxation of the overall net income of a
            Lender); or
  
       (3)  impose, modify, increase or deem applicable any
            reserve requirement (excluding that portion of any
            reserve requirement included in the calculation of
            the applicable Eurodollar Rate), special deposit
            requirement or similar requirement (including, but
            not limited to, state law requirements and
            Regulation D) imposed, modified, increased or
            deemed applicable by any Governmental Authority
            against assets held by any Lender, or against
            deposits or accounts in or for the account of any
            Lender, or against loans made by any Lender, or
            against any other funds, obligations or other
            property owned or held by any Lender; or
  
       (4)  impose on any Lender any other condition regarding
            any Eurodollar Rate Borrowing;
  
       and the result of any of the foregoing is to increase
       the cost to any Lender of agreeing to make or of
       making, renewing or maintaining such Eurodollar Rate
       Borrowing, or reduce the amount of principal or
       interest received by any Lender, then, upon demand by
       Agent, Borrower shall pay to such Lender, from time to
       time as specified by such Lender, additional amounts
       which shall compensate such Lender for such increased
       cost or reduced amount.  Agent will promptly notify
       Borrower in writing of any event which will entitle any
       Lender to additional amounts pursuant to this para
       graph.  A Lender's determination of the amount of any
       such increased cost, increased reserve requirement or
       reduced amount shall be prima facie evidence thereof.
       Borrower shall have the right, if it receives from
       Agent any notice referred to in this paragraph, upon
       three Business Days' notice to Agent, either (i) to
       repay in full (but not in part) any borrowing with
       respect to which such notice was given, together with
       any accrued interest thereon, or (ii) to convert the
       Eurodollar Rate Borrowing which is the subject of the
       notice to a Base Rate Borrowing; provided, that any
       such repayment or conversion shall be accompanied by
       payment of (x) the amount required to compensate a
       Lender for the increased cost or reduced amount
       referred to in the preceding paragraph; (y) all accrued
       and unpaid interest to date on the amount so repaid or
       converted, and (z) any Funding Loss which any Lender
       may incur as a result of such repayment or conversion.
  
       (c)  Inadequacy of Pricing and Rate Determination.  If
       for any reason with respect to any Interest Period
       Agent shall have determined (which determination shall
       be prima facie evidence thereof) that:
  
       (1)  Agent is unable through its customary general
            practices to determine any applicable Eurodollar
            Rate, or
  
       (2)  by reason of circumstances affecting the
            applicable market generally, Agent is not being
            offered deposits in United States dollars in such
            market, for the applicable Interest Period and in
            an amount equal to the amount of any applicable
            Eurodollar Rate Borrowing requested by Borrower,
            or
  
       (3)  any applicable Eurodollar Rate will not adequately
            and fairly reflect the cost to the Lenders of
            making and maintaining such Eurodollar Rate
            Borrowing hereunder for any proposed Interest
            Period,
  
       then Agent shall give Borrower notice thereof and
       thereupon, (A) any Request for Loan previously given by
       Borrower designating the applicable Eurodollar Rate
       Borrowing which has not commenced as of the date of
       such notice from Agent shall be deemed for all purposes
       hereof to be of no force and effect, as if never given,
       and (B) until Agent shall notify Borrower that the
       circumstances giving rise to such notice from Agent no
       longer exist, each Request for Loan requesting the
       applicable Eurodollar Rate shall be deemed a request
       for a Base Rate Borrowing, and any applicable
       Eurodollar Rate Borrowing then outstanding shall be
       converted, without any notice to or from Borrower, upon
       the termination of the Interest Period then in effect
       with respect to it, to a Base Rate Borrowing.
  
       (d)  Funding Losses.  Borrower shall indemnify the Agent and
  each Lender against and hold the Agent and each Lender harmless
  from any Funding Loss.  This agreement shall survive the payment
  of the Notes.  A certificate as to any additional amounts payable
  pursuant to this subsection and setting forth the reasons for the
  Funding Loss submitted by Agent to Borrower shall be prima facie
  evidence thereof.
  
       3.6  Funding Offices; Adjustments Automatic.  Any Lender
  may, if it so elects, fulfill its obligation as to any Eurodollar
  Rate Borrowing by causing a branch or affiliate of such Lender to
  make such Loan and may transfer and carry such Loan at, to, or
  for the account of, any branch office or affiliate of such
  Lender; provided, that in such event for the purposes of this
  Agreement such Loan shall be deemed to have been made by such
  Lender and the obligation of Borrower to repay such Loan shall
  nevertheless be to such Lender and shall be deemed held by it for
  the account of such branch or affiliate.  Without notice to
  Borrower or any other person or entity, each rate required to be
  calculated or determined under this Agreement shall automatically
  fluctuate upward and downward in accordance with the provisions
  of this Agreement.
  
       3.7  Funding Sources, Payment Obligations.  Notwithstanding
  any provision of this Agreement to the contrary, each Lender
  shall be entitled to fund and maintain its funding of all or any
  part of the Loans in any manner it sees fit, it being understood,
  however, that for the purposes of this Agreement all
  determinations hereunder shall be made as if each Lender had
  actually funded and maintained each Eurodollar Rate Borrowing
  during each Interest Period through the purchase of deposits
  having a maturity corresponding to such Interest Period and
  bearing an interest rate equal to the Eurodollar Rate for such
  Interest Period.  Notwithstanding the foregoing, Funding Losses,
  increased costs and other obligations relating to Eurodollar Rate
  Borrowings described in Section 3.5 of this Agreement will only
  be paid by the Borrower as and when actually incurred by the
  Lenders.
  
       3.8  Mitigation, Non-Discrimination.  (a)  Each Lender will
  notify the Borrower through the Agent of any event occurring
  after the date of this Agreement which will require or enable
  such Lender to take the actions described in Sections 3.5(a) or
  (b) of this Agreement as promptly as practicable after it obtains
  knowledge thereof and determines to request such action, and (if
  so requested by the Borrower through the Agent) will designate a
  different lending office of such Lender for the applicable
  Eurodollar Rate Borrowing or will take such other action as the
  Borrower reasonably requests if such designation or action is
  consistent with the internal policy of such Lender and legal and
  regulatory restrictions, can be undertaken at no additional cost,
  will avoid the need for, or reduce the amount of, such action and
  will not, in the sole opinion of such Lender, be disadvantageous
  to such Lender (provided that such Lender will have no obligation
  to designate a different lending office which is located in the
  United States of America).
  
       (b)  None of the Lenders shall be able to pass through to
  the Borrower charges and costs under Sections 3.5 or 5.14 of this
  Agreement on a discriminating basis, such that such charges and
  costs are not also passed through by each Lender to other
  customers of such Lender similarly situated where such customer
  is subject to documents providing for such pass through.
  
       (c)  If any Lender elects under Section 3.5 of this
  Agreement to suspend or terminate the availability of Eurodollar
  Rate Borrowings for any material period of time, and the event
  giving rise to such election is not generally applicable to all
  of the Lenders, the Borrower may within sixty (60) days after
  notification of such Lender's election, and so long as no Event
  of Default is then in existence, either (i) demand that such
  Lender, and upon such demand, such Lender shall promptly, assign
  its Lender Commitment to another financial institution subject to
  and in accordance with the provisions of Section 9.5 of this
  Agreement for a purchase price equal to the unpaid balance of
  principal, accrued interest, the unpaid balance of the Fee and
  expenses owing to such Lender pursuant to this Agreement, or (ii)
  pay such Lender the unpaid balance of principal, accrued
  interest, the unpaid balance of the Fee and expenses owing to
  such Lender pursuant to this Agreement, whereupon, such Lender
  shall no longer be a party to this Agreement or have any rights
  or obligations hereunder or under any other Credit Documents, and
  the Commitment shall immediately and permanently be reduced by an
  amount equal to the Lender Commitment of such Lender.
  
  4.   Representations and Warranties.
  
        To  induce the Lenders to enter into this Agreement and  to
  make the Loans, the Borrower represents and warrants to the Agent
  and the Lenders as follows:
  
       4.1  Organization.  Each Obligor is duly organized, validly
  existing and in good standing  under the laws of the state of its
  organization; has all power and authority to conduct its business
  as presently conducted; and is duly qualified to do business and
  in good standing in every state where the location of its
  Property requires it to be qualified to do business, unless the
  failure to be so qualified would not reasonably be expected to
  have a Material Adverse Effect.
  
       4.2  Financial Statements.  The financial statements
  delivered to the Agent fairly present, in accordance with
  Generally Accepted Accounting Principles (provided, however, that
  the Quarterly Unaudited Financial Statements are subject to
  normal year-end adjustments and may contain condensed footnotes
  as permitted by regulations of the United States Securities and
  Exchange Commission), the financial condition and the results of
  operations of the Borrower and of Parkway Properties, Inc. as at
  the dates and for the periods indicated.  No Material Adverse
  Change has occurred since the dates of such financial statements.
  No Obligor is subject to any instrument or agreement which would
  materially prevent it from conducting its business as it is now
  conducted or as it is contemplated to be conducted.
  
       4.3  Enforceable Obligations; Authorization.  The Credit
  Documents are legal, valid and binding obligations of the
  Parties, enforceable in accordance with their respective terms,
  except as may be limited by bankruptcy, insolvency and other laws
  affecting creditors' rights generally and by general equitable
  principles.  The execution, delivery and performance of the
  Credit Documents have all been duly authorized by all necessary
  action; are within the power and authority of the Parties; do not
  and will not contravene or violate any Legal Requirement or the
  Organizational Documents of the Parties; do not and will not
  result in the breach of, or constitute a default under, any
  agreement or instrument by which the Parties or any of their
  respective Property may be bound or affected; and do not and will
  not result in the creation of any Lien upon any Property of any
  of the Parties except as expressly contemplated therein.  All
  necessary permits, registrations and consents for such making and
  performance have been obtained.
  
       4.4  Other Debt.  No Obligor  is in default in the payment
  of any other Total Liabilities or under any agreement, mortgage,
  deed of trust, security agreement or lease to which it is a
  party.
  
       4.5  Litigation.  There is no litigation or administrative
  proceeding pending or, to the knowledge of the Borrower,
  threatened against, or any outstanding judgment, order or decree
  affecting, the Obligors before or by any Governmental Authority
  which is not adequately covered by insurance.  No Obligor is in
  default with respect to any judgment, order or decree of any
  Governmental Authority.
  
       4.6  Taxes.  Each Obligor has filed all tax returns required
  to have been filed and paid all taxes shown thereon to be due,
  except those for which extensions have been obtained, those which
  are being contested in good faith.
  
       4.7  Regulation U.  None of the proceeds of any Loan will be
  used for the purpose of purchasing or carrying directly or
  indirectly any margin stock or for any other purpose that would
  constitute this transaction a "purpose credit" within the meaning
  of Regulation U of the Board of Governors of the Federal Reserve
  System.
  
       4.8  Subsidiaries.  The Borrower has no Subsidiaries
  (excluding wholly-owned Subsidiaries which have executed a
  Guaranty) which individually or in the aggregate own more than
  ten percent (10%) in value of the Borrower's and the
  Subsidiaries' consolidated assets determined in accordance with
  Generally Accepted Accounting Principles.  Each of the Borrower's
  Subsidiaries is a "qualified REIT subsidiary" under Section 856
  of the Code.
  
       4.9  Securities Act of 1933.  Other than the Agent's efforts
  in syndicating the Loans (for which the Agent is responsible)
  neither the Borrower nor any agent acting for it has offered the
  Notes or any similar obligation of the Borrower for sale to or
  solicited any offers to buy the Notes or any similar obligation
  of the Borrower from any Person other than the Agent or any
  Lender, and neither the Borrower nor any agent acting for it will
  take any action which would subject the sale of the Note to the
  provisions of Section 5 of the Securities Act of 1933, as
  amended.
  
       4.10 No Contractual or Corporate Restrictions.  No Obligor
  is a party to, or bound by, any contract, agreement or charter or
  other corporate restriction materially and adversely affecting
  its business, Property, assets, operations  or condition,
  financial or otherwise.
  
       4.11 Investment Company Act Not Applicable.  The Borrower is
  not an "investment company", or a company  "controlled" by an
  "investment company", within the meaning of the Investment
  Company Act of 1940, as amended.
  
       4.12 Public Utility Holding Company Act Not Applicable.  The
  Borrower is not a "holding company", or a "subsidiary company" of
  a "holding company", or an "affiliate" of a "holding company", or
  an affiliate of a "subsidiary company" of a "holding company", as
  such terms are defined in the Public Utility Holding Company Act
  of 1935, as amended.
  
       4.13 ERISA Not Applicable.  No Obligor is subject to any
  requirements of the Employee Retirement Income Security Act of
  1974 as amended from time to time, or any rules, regulations,
  rulings or interpretations adopted by the Internal Revenue
  Service or the Department of Labor thereunder.
  
       4.14 Year 2000.  Any reprogramming required to permit the
  proper functioning, in and following the year 2000 as it relates
  to the two digit issues associated therewith, of (a) the
  Borrower's computer systems and (b) equipment containing
  embedded microchips (including systems and equipment supplied by
  others or with which Borrower's systems interface) and the
  testing of all such systems and equipment, as so reprogrammed,
  will be completed by January 1, 1999.  The cost to the Borrower
  of such reprogramming and testing and of the reasonably
  foreseeable consequences of year 2000 to the Borrower (including,
  without limitation, reprogramming errors and the failure of
  others' systems or equipment) will not result in a Default or a
  Material Adverse Effect.  Except for such of the reprogramming
  referred to in the preceding sentence as may be necessary, the
  computer and management information systems of the Borrower and
  its Subsidiaries are and, with ordinary course upgrading and
  maintenance, will continue for the term of this Agreement to be,
  sufficient to permit the Borrower to conduct its business without
  Material Adverse Effect.
  
  5.   Affirmative Covenants.
  
        The  Borrower covenants and agrees with the Agent  and  the
  Lenders  that prior to the termination of this Agreement  it  and
  each of the other Obligors will do, and if necessary cause to  be
  done, each and all of the following:
  
       5.1  Taxes, Existence, Regulations, Property, etc.   At all
  times (a) pay when due all taxes and governmental charges of
  every kind upon it or against its income, profits or Property,
  unless and only to the extent that the same shall be contested in
  good faith and reserves which are adequate under Generally
  Accepted Accounting Principles have been established therefor;
  (b) do all things necessary to preserve its existence,
  qualifications, rights and franchises in all States where such
  qualification is necessary or desirable, except where failure to
  obtain the same could not reasonably be expected to have a
  Material Adverse Effect; (c) comply with all applicable Legal
  Requirements in respect of the conduct of its business and the
  ownership of its Property; and (d) cause its Property to be
  protected, maintained and kept in good repair (reasonable wear
  and tear excepted) and make all replacements and additions to its
  Property as may be reasonably necessary to conduct its business.
  
       5.2  Financial Statements and Information.  Furnish to the
  Agent each of the following: (a) as soon as available and in any
  event within 90 days after the end of each respective fiscal year
  of the Borrower and of Parkway Properties, Inc., Annual Audited
  Financial Statements of the Borrower and of Parkway Properties,
  Inc. (which shall include an unaudited statement of Funds From
  Operations); (b) as soon as available and in any event within 45
  days after the end of each quarter (except the last quarter) of
  each respective fiscal year of the Borrower and of Parkway
  Properties, Inc., Quarterly Unaudited Financial Statements of the
  Borrower and of Parkway Properties, Inc. (which shall include a
  statement of Funds From Operations); (c) within forty-five (45)
  days after the end of the calendar quarter and concurrently with
  the financial statements provided for in Subsections 5.2(a) and
  (b) hereof, an Officer's Certificate, together with such
  schedules, computations and other information (including, without
  limitation, information as to Unconsolidated Affiliates of the
  Borrower), in reasonable detail, as may be required by the Agent
  to demonstrate compliance with the covenants set forth herein or
  reflecting any non-compliance therewith as of the applicable
  date, all certified as true, correct and complete by a managing
  director, vice president or senior vice president, of Borrower;
  (d) promptly after the filing thereof, all reports to or filings
  made by Parkway Properties, Inc., the Borrower or any of their
  respective Subsidiaries with the Securities and Exchange
  Commission, including, without limitation, registration
  statements and reports on Forms 10-K, 10-Q and 8-K (or their
  equivalents); (e) within two (2) Business Days after the receipt
  thereof, a copy of the notification to the Borrower of the
  Borrower's  S&P Rating or Moody's Rating, or change therein, and
  (f) such other information relating to the financial condition
  and affairs of the Borrower as from time to time may be
  reasonably requested by any Lender.  The Agent will send to each
  Lender the information received by the Agent pursuant to this
  Section 5.2 promptly after the receipt thereof by Agent.
  
       5.3  Financial Tests.  The Borrower shall have and maintain,
  on a consolidated basis in accordance with Generally Accepted
  Accounting Principles: (a) a Secured Debt to Total Asset Value
  Ratio no greater than (i) forty percent (40%) at all times
  through and including March 31, 2000, and (ii) thirty-five
  percent (35%) at all times thereafter; (b) an Interest Coverage
  Ratio of not less than 2.25:1.0 at all times; (c) a Fixed Charge
  Coverage Ratio of not less than 1.75:1.00 at all times; (d) a
  Tangible Net Worth of at least Three Hundred Twenty-Five Million
  Dollars ($325,000,000.00), plus ninety percent (90%) of the net
  proceeds (gross proceeds less reasonable and customary costs of
  sale and issuance paid to Persons not Affiliates of any Obligor)
  received by the Borrower at any time from the issuance of an
  ownership interest in the Borrower, at all times; (e) an
  Unencumbered Interest Coverage Ratio of not less than 2.00:1.00
  at all times; and (f) a Total Liabilities to Total Asset Value
  Ratio no greater than fifty-five percent (55%) at all times.
  
       5.4  Inspection.  In order to permit the Agent to ascertain
  compliance with the Credit Documents, during normal business
  hours permit the Agent to inspect its Property, to examine its
  files, books and records and make and take away copies thereof,
  and to discuss its affairs with its officers and accountants, all
  at such times and intervals and to such extent as a Lender may
  reasonably desire.
  
       5.5  Further Assurances.  Promptly execute and deliver any
  and all other and further instruments which may be reasonably
  requested by the Agent to cure any defect in the execution and
  delivery of any Credit Document or more fully to describe
  particular aspects of the Borrower's agreements set forth in the
  Credit Documents or so intended to be.
  
       5.6  Books and Records.  Maintain books of record and
  account in accordance with Generally Accepted Accounting
  Principles.
  
       5.7  Insurance.  Maintain insurance with such insurers, on
  such of its properties, in such amounts and against such risks as
  is consistent with insurance maintained by businesses of
  comparable type and size in the industry, and furnish the Agent
  satisfactory evidence thereof promptly upon request.
  
       5.8  Notice of Certain Matters.  Notify the Agent promptly
  upon acquiring knowledge of the occurrence of any of the
  following: the institution or threatened institution of any
  lawsuit or administrative proceeding affecting any Obligor in
  which the claim exceeds $1,000,000.00; when the Borrower believes
  that there has been a Material Adverse Change; or the occurrence
  of any Event of Default or any Default.  The Borrower will notify
  the Agent in writing at least thirty (30) Business Days prior to
  the date that any Obligor changes its name or the location of its
  chief executive office or principal place of business or the
  place where it keeps its books and records.
  
       5.9  Use of Proceeds .  The proceeds of the Loans will be
  used for general business purposes.  Notwithstanding the
  foregoing, none of the proceeds of the Loans will be used to
  finance, fund or complete any hostile acquisition of any Person.
  
       5.10 Expenses of and Claims Against the Agent and the
  Lenders .  To the extent not prohibited by applicable law, the
  Borrower will pay all reasonable costs and expenses incurred to
  third parties and reimburse the Agent and each Lender, as the
  case may be, for any and all reasonable expenditures of every
  character incurred or expended from time to time, in connection
  with (a) regardless of whether a Default or Event of Default
  shall have occurred, the Agent's preparation, negotiation and
  completion of the Credit Documents, and (b) during the
  continuance of an Event of Default, all costs and expenses
  relating to the Agent's and such Lender's exercising any of its
  rights and remedies under this or any other Credit Document,
  including, without limitation, attorneys' fees, legal expenses,
  and court costs; provided, that no rights or option granted by
  the Borrower to the Agent or any Lender or otherwise arising
  pursuant to any provision of this or any other instrument shall
  be deemed to impose or admit a duty on the Agent or any Lender to
  supervise, monitor or control any aspect of the character or
  condition of any property or any operations conducted in
  connection with it for the benefit of the Borrower or any other
  person or entity other than the Agent or such Lender.
  
       5.11 Legal Compliance; Indemnification .  (a) The Obligors
  shall operate their respective Property and businesses in full
  compliance with all Legal Requirements.  Parkway Properties, Inc.
  will comply with all Legal Requirements to maintain, and will at
  all times qualify as and maintain, its status as a real estate
  investment trust under Section 856(c)(1) of the Code.
  
            (b)  The Borrower shall indemnify the Agent and each
  Lender, their directors, officers, employees and shareholders
  (the "Indemnified Parties") for and defend and hold the
  Indemnified Parties harmless against any and all claims, demands,
  liabilities, causes of action, penalties, obligations, damages,
  judgments, deficiencies, losses, costs or expenses (including,
  without limitation, interest, penalties, attorneys' fees, and
  amounts paid in settlement) threatened or incurred by reason of,
  arising out of or in any way related to any failure of any
  Obligor to so comply with the provisions of any Legal
  Requirement, this Agreement or the other Credit Documents, and
  any and all matters arising out of any act, omission, event or
  circumstance, regardless of whether the act, omission, event or
  circumstance constituted a violation of any such Legal
  Requirement, this Agreement or the other Credit Documents at the
  time of its existence or occurrence.  THE BORROWER SHALL
  INDEMNIFY THE AGENT AND EACH LENDER PURSUANT TO THIS SECTION
  REGARDLESS OF WHETHER THE ACT, OMISSION, FACTS, CIRCUMSTANCES OR
  CONDITIONS GIVING RISE TO SUCH INDEMNIFICATION WERE CAUSED IN
  WHOLE OR IN PART BY THE AGENT'S OR SUCH LENDER'S NEGLIGENCE
  (SIMPLE, BUT NOT GROSS NEGLIGENCE OR WILLFUL MISCONDUCT).
  
       5.12 Obligors' Performance .  If any Obligor should fail to
  comply with any of the agreements, covenants or obligations
  required of it under this Agreement or any other Credit Document,
  then the Agent (in the Obligor's name or in Agent's name) may
  perform them or cause them to be performed for the account of the
  said Obligor and at the sole expense, but shall not be obligated
  to do so.  Any and all expenses thus incurred or paid by the
  Agent and by any Lender shall be the Borrower's demand
  obligations to the Agent or such Lender and shall bear interest
  from the date of demand therefor until the date that the Obligor
  repays it to the Agent or the applicable Lender at the Past Due
  Rate.  Upon making any such payment or incurring any such
  expense, the Agent or the applicable Lender shall be fully
  subrogated to all of the rights of the Person receiving such
  payment.  Any amounts owing by any Obligor to the Agent or any
  Lender pursuant to this provision or any other provision of this
  Agreement shall automatically and without notice be secured by
  any collateral provided by the Credit Documents.  The amount and
  nature of any such expense and the time when paid shall, absent
  manifest error, be fully established by the affidavit of the
  Agent or the applicable Lender or any of the Agent's or the
  applicable Lender's officers or agents.
  
       5.13 Professional Services .  Promptly upon the Agent's
  request to satisfy itself or the request of any Lender, the
  Borrower, at the Borrower's sole cost and expense, shall:  (a)
  allow an inspection and/or appraisal of the Obligors' Property to
  be made by a Person approved by the Agent in its sole discretion;
  and (b) whenever the Agent or such other Lender has reasonable
  cause to believe that a potential Default may exist, cause to be
  conducted or prepared any other written report, summary, opinion,
  inspection, review, survey, audit or other professional service
  relating to the Obligors' Property or any operations in
  connection with it (all as designated in the Agent's request),
  including, without limitation, any accounting, architectural,
  consulting, engineering, design, legal, management, pest control,
  surveying, title abstracting or other technical, managerial or
  professional service relating to such property or its operations.
  
       5.14 Capital Adequacy .  (a) If after the date of this
  Agreement, the Agent or any Lender shall have determined that the
  adoption or effectiveness of any applicable law, rule or
  regulation regarding capital adequacy of general applicability,
  or any change therein, or any change in the interpretation or
  administration thereof by any Governmental Authority, central
  bank or comparable agency charged with the interpretation or
  administration thereof, or compliance by the Agent or any Lender
  with any request or directive regarding capital adequacy of
  general applicability (whether or not having the force of law) of
  any such Governmental Authority, central bank or comparable
  agency, has or would have the effect of reducing the rate of
  return on the Agent's or any Lender's capital as a consequence of
  its obligations hereunder to a level below that which the Agent
  or such Lender could have achieved but for such adoption, change
  or compliance (taking into consideration the Agent's or such
  Lender's policies with respect to capital adequacy) by an amount
  deemed by the Agent or such Lender to be material, then from time
  to time, the Borrower shall pay to the Agent or such Lender such
  additional amount or amounts as will compensate the Agent or such
  Lender for such reduction.
  
            (b)  A certificate of the Agent or such Lender setting
  forth such amount or amounts as shall be necessary to compensate
  the Agent or such Lender as specified in Section 5.14(a) hereof
  and making reference to the applicable law, rule or regulation
  shall be delivered as soon as practicable to the Borrower and
  shall be prima facie evidence thereof.  The Borrower shall pay
  the Agent or such Lender the amount shown as due on any such
  certificate within fourteen (14) Business Days after the Agent or
  such Lender delivers such certificate.  In preparing such
  certificate, the Agent or such Lender may employ such assumptions
  and allocations of costs and expenses as it shall in good faith
  deem reasonable and may use any reasonable averaging and
  attribution method.  Section 3.8(b) hereof shall apply to the
  costs assessed under this Section.
  
       5.15 Property Pool .  A.  The Borrower will at all times own
  (in fee simple title, through an Eligible Ground Lease, or in a
  wholly-owned Subsidiary of Borrower, and including the leasehold
  interest in the Morgan Keegan Tower in Memphis, Tennessee) a pool
  (the "Pool") of assets that are not mortgaged, pledged,
  hypothecated, or encumbered in any manner, other than Permitted
  Encumbrances, with an aggregate Value (calculated based on the
  immediately preceding  calendar quarter, and annualized) equal to
  at least two hundred percent (200%) of the Borrower's
  Indebtedness other than Secured Debt outstanding from time to
  time, with the following characteristics:  (a) assets in the Pool
  shall be completed income producing office buildings with net
  rentable area of not less than 50,000 square feet and not more
  than 500,000 square feet (except that the Pavilion Center in
  Atlanta, Georgia need not meet the minimum square footage
  requirement), with parking sufficient to meet all Legal
  Requirements and consistent with market conditions that will
  accommodate full occupancy of the building; (b) each individual
  Property must have an Occupancy Level of at least seventy percent
  (70%); (c) assets in the Pool must be located in Approved
  Markets, except that no more than twenty percent (20%) of  the
  Value of the Pool can be located in any one Approved Market other
  than Memphis, Tennessee, where no more than twenty-five percent
  (25%) of the Value of the Pool can be located, (d) the Borrower
  must have received from third party independent consultants,
  written assessments (including, without limitation, Phase I
  environmental reports) for each Property in, or to be added to,
  the Pool that do not disclose any material environmental
  conditions, structural defects or title defects, or other
  material risks related to such Property, (e) the Property is not
  subject to or affected by any Limiting Agreement, and (f) the
  Occupancy Level of the Pool in the aggregate must be at least
  eighty percent (80%).  If requested by the Agent, the Borrower
  will provide to the Agent written assessments from third party
  independent environmental consultants for all Pool properties
  acquired after the date of this Agreement.  If the Agent
  determines that there are material environmental conditions
  existing on or risks to such properties, the properties will be
  excluded from the Pool.
  
       B.   Notwithstanding the foregoing, the maximum value of the
  Pool that consists of Eligible Ground Leases is ten percent (10%)
  of the value of the Pool.
  
        C.   If any Property to be included in the Pool is owned by
  a  wholly-owned Subsidiary of Borrower, it may be included in the
  Pool only if the owner thereof executes a Guaranty in Proper Form
  of  the  Obligations and delivers it to the Agent, and thereafter
  during  the  time such Guaranty remains in full force and  effect
  without any default existing hereunder.
  
       D.   If the Borrower requests inclusion of assets in the
  Pool that do not meet the requirements of this Section 5.15, then
  such assets may only be included in the Pool upon the prior
  written approval of the Majority Lenders.
  
  6.   Negative Covenants.
  
       The Borrower covenants and agrees with the Agent and the
  Lenders that prior to the termination of this Agreement it will
  not (without consent given in accordance with Section 9.1) do any
  of the following:
  
       6.1  Indebtedness .  Create, incur, suffer or permit to
  exist, or assume or guarantee, directly or indirectly,
  contingently or otherwise, or become or remain liable with
  respect to any Secured Debt except Non-recourse Debt, and except
  for liabilities customarily excepted from nonrecourse mortgage
  financing, such as fraud, criminal activity and misapplication of
  funds.
  
       6.2  Mergers, Consolidations and Acquisitions of Assets .
  In any single transaction or series of related transactions,
  directly or indirectly: (a) liquidate or dissolve; (b) other than
  a merger or consolidation in which the Borrower is the surviving
  entity and the value of the assets of the other party to such
  merger or consolidation is less than fifteen percent (15%) of the
  value of the assets of the Borrower on a consolidated basis (in
  accordance with Generally Accepted Accounting Principles) after
  such merger or consolidation, be a party to any merger or
  consolidation; (c) other than an acquisition in which the
  Borrower acquires all or substantially all of the assets of
  another Person and the value of the assets acquired is less than
  fifteen percent (15%) of the value of the assets of the Borrower
  on a consolidated basis (in accordance with Generally Accepted
  Accounting Principles) after such acquisition, acquire all or
  substantially all of the assets of any Person; or (d) except for
  sales or leases executed in the ordinary course of business,
  sell, convey or lease all or any substantial part of its assets.
  
       6.3  Redemption .  Neither the Borrower nor Parkway
  Properties, Inc., shall at any time buy back, redeem, retire or
  otherwise acquire, directly or indirectly, any shares of its
  capital stock if such action would cause the Borrower to not be
  in compliance with this Agreement, and so long as the aggregate
  market value of such stock when acquired shall not exceed, from
  the date of this Agreement through December 31, 1998, and during
  any calendar year thereafter, fifteen percent (15%) of Borrower's
  Net Worth.
  
       6.4  Nature of Business; Management .  Change the nature of
  its business or enter into any business which is substantially
  different from the business in which it is presently engaged.
  
       6.5  Transactions with Related Parties .  Enter into any
  transaction or agreement with any officer, director, or holder of
  more than five percent (5%) (based on voting rights) of the
  issued and outstanding capital stock of the Borrower (or any
  Affiliate of the Borrower), unless the same is upon terms
  substantially similar to those obtainable from qualified wholly
  unrelated sources.
  
       6.6  Loans and Investments .  Make  any loan, advance,
  extension of credit or capital contribution to, or make or have
  any investment in, any Person, or make any commitment to make any
  such extension of credit or investment, except (a) travel
  advances in the ordinary course of business to officers,
  employees and agents; (b) readily marketable securities issued or
  fully guaranteed by the United States of America (or investments
  or money market accounts consisting of the same); (c) commercial
  paper rated "Prime 1" by Moody's Investors Service, Inc. or A-1
  by Standard and Poor's Corporation (or investments or money
  market accounts consisting of the same); (d) certificates of
  deposit or repurchase certificates issued by financial
  institutions acceptable to the Agent (or investments or money
  market accounts consisting of the same), all of the foregoing b,
  c and d not having a maturity of more than one (1) year from the
  date of issuance thereof; (e) investments in Subsidiaries through
  which the Borrower invests in real estate assets permitted by
  this Agreement; (f)  investments in Unconsolidated Affiliates
  that are engaged primarily in the business of investment in and
  operation of office or industrial buildings (valued at an amount
  equal to the Value of each Unconsolidated Affiliate's operating
  real estate assets multiplied by the Equity Percentage for that
  Unconsolidated Affiliate), so long as the aggregate amount of
  such investments described in this clause (f) does not exceed ten
  percent (10%) of the Total Asset Value after giving effect to
  such investments; (g) loans, advances, and extensions of credit
  to Persons (who are not Affiliates of any Obligor) secured by
  valid and enforceable first priority liens on real estate so long
  as the aggregate amount does not exceed three and one-half
  percent (3-1/2%) of Total Asset Value, after giving effect to
  such investments, (h) undeveloped land, so long as the aggregate
  Historical Value of such land does not exceed three and one-half
  percent (3-1/2%) of Total Asset Value, after giving effect to
  such investments; (i) investments in readily marketable
  securities (valued at the lower of cost or then market price) of
  another Person, not an Affiliate of any Obligor, traded on a
  national trading exchange, that is a real estate investment trust
  under Section 856(c)(1) of the Code, or that is a real estate
  operating company, so long as the aggregate amount of such
  investments does not exceed seven and one-half percent (7-1/2%)
  of Total Asset Value, after giving effect to such investments;
  (j) investments in office or industrial buildings; (k)
  investments in real estate assets that are being constructed or
  developed to be office or industrial buildings, but are not yet
  in operation, so long as the total actual and budgeted cost of
  construction or development, in the aggregate, at that time does
  not exceed seven and one-half percent (7-1/2%) of the Total Asset
  Value after giving effect to such investments; and (l) unsecured
  loans to Persons (who are not Affiliates of any Obligor) engaged
  primarily in the business of investment in and operation of
  office or industrial buildings, so long as the aggregate amount
  outstanding at any one time does not exceed $10,000,000.00. The
  Borrower will not mortgage, pledge, hypothecate or encumber in
  any manner the loans, advances or extensions of credit made
  pursuant to Section 6.6(g) or the securities held pursuant to
  Section 6.6(i).  The calculations in this Section will be made
  without duplication if a loan or investment is within more than
  one category described in this Section.
  
       6.7  Limiting Agreements .  Neither Borrower nor any of its
  Subsidiaries has entered into, and after the date hereof, neither
  Borrower nor any of its Subsidiaries shall enter into, any
  Limiting Agreements.
  
       6.8  Restricted Payments .  Parkway Properties, Inc. will
  not make any Restricted Payment during any calendar quarter
  which, when added to all Restricted Payments made during the
  three (3) immediately preceding calendar quarters, (a) exceeds
  eighty-five percent (85%) of the Funds From Operations during the
  immediately preceding four (4) calendar quarters, or (b) exceeds
  ninety-five percent (95%) of the Funds Available for Distribution
  during the immediately preceding four (4) calendar quarters;
  provided that the foregoing shall not prohibit Parkway
  Properties, Inc. from (x) making the minimum amount of Restricted
  Payments required to be made in order for Parkway Properties,
  Inc. to comply with the provisions of Section 5.11, or (y)
  issuing stock in Parkway Properties, Inc. to a transferor (not an
  Affiliate of any Obligor) of Property to the Borrower as a result
  of said transferor's election to convert partnership interests in
  the Borrower to stock in Parkway Properties, Inc. pursuant to
  agreements with said transferor allowing said conversion as a
  portion of the consideration for the transfer.  For purposes of
  this provision "Restricted Payment" means (i) any dividend or
  other distribution on any shares of a Person's capital stock
  (except dividends payable solely in shares of its capital stock
  or in rights to subscribe for or purchase shares of its capital
  stock) or (ii) any payment on account of the purchase,
  redemption, retirement or acquisition of (x) any shares of a
  Person's capital stock or (y) any option, warrant or other right
  to acquire shares of a Person's capital stock.
  
  7.   Events of Default and Remedies.
  
       7.1  Events of Default .  If any of the following events
  shall occur, then, as to the events described in Sections 7.1(b),
  (c), and (d), if the event has not been waived, cured or remedied
  within twenty (20) days after the Agent gives the Borrower
  written notice of such event, at any time thereafter, and as to
  all of the other events described herein, at any time, the Agent
  may do any or all of the following:  (1) without notice to the
  Borrower, declare the Notes to be, and thereupon the Notes shall
  forthwith become, immediately due and payable, together with all
  accrued interest thereon, without notice of any kind, notice of
  acceleration or of intention to accelerate, presentment and
  demand or protest, all of which are hereby expressly waived;
  (2) without notice to the Borrower, terminate the Commitment;
  (3) exercise, as may any other Lender, its rights of offset
  against each account and all other Property of the Borrower in
  the possession of the Agent or any such Lender, which right is
  hereby granted by the Borrower to the Agent and each Lender; and
  (4) exercise any and all other rights pursuant to the Credit
  Documents:
  
            (a)  The Borrower shall fail to pay or prepay any
       principal of or interest on the Notes or any fee or any
       other obligation hereunder when due; or
       
            (b)  Any Obligor shall fail to pay when due, or within
       any applicable period of grace, any principal of or interest
       on any other Indebtedness in excess of $5,000,000.00, or
  
            (c)  Any written representation or warranty made in any
       Credit Document by or on behalf of any Obligor, when taken
       as a whole shall prove to have been incorrect, false or
       misleading in any material respect; or
  
            (d)  Default shall occur in the punctual and complete
       performance of any covenant of the Borrower or any other
       Person other than the Agent or the Lenders contained in any
       Credit Document not specifically set forth in this Section;
       or
  
            (e)  A final judgment or judgments in the aggregate for
       the payment of money in excess of $5,000,000.00 shall be
       rendered against any Obligor and the same shall remain
       undischarged for a period of thirty (30) days during which
       execution shall not be effectively stayed; or
  
            (f)  Any order shall be entered in any proceeding
       against any Obligor decreeing the dissolution, liquidation
       or split-up thereof, and such order shall remain in effect
       for more than thirty (30) days; or
  
            (g)  Any Obligor shall make a general assignment for
       the benefit of creditors or shall petition or apply to any
       tribunal for the appointment of a trustee, custodian,
       receiver or liquidator of all or any substantial part of its
       business, estate or assets or shall commence any proceeding
       under any bankruptcy, reorganization, arrangement,
       insolvency, readjustment of debt, dissolution or liquidation
       law of any jurisdiction, whether now or hereafter in effect;
       or
  
            (h)  Any such petition or application shall be filed or
       any such proceeding shall be commenced against any Obligor
       and such Person by any act or omission shall indicate
       approval thereof, consent thereto or acquiescence therein,
       or an order shall be entered appointing a trustee,
       custodian, receiver or liquidator of all or any substantial
       part of the assets of any Obligor or granting relief to any
       Obligor or approving the petition in any such proceeding,
       and such order shall remain in effect for more than ninety
       (90) days; or
  
            (i)  Any Obligor shall fail generally to pay its debts
       as they become due or suffer any writ of attachment or
       execution or any similar process to be issued or levied
       against it or any substantial part of its Property which is
       not released, stayed, bonded or vacated within thirty (30)
       days after its issue or levy; or
  
            (j)  Any Obligor shall have concealed, removed, or
       permitted to be concealed or removed, any part of its
       Property, with intent to hinder, delay or defraud its
       creditors or any of them, or made or suffered a transfer of
       any of its Property which may be fraudulent under any
       bankruptcy, fraudulent conveyance or similar law; or shall
       have made any transfer of its Property to or for the benefit
       of a creditor at a time when other creditors similarly
       situated have not been paid; or
  
            (k)  Any Change of Control shall occur.
  
       7.2  Remedies Cumulative .  No remedy, right or power
    conferred upon the Agent or the Lenders is intended to be
    exclusive of any other remedy, right or power given hereunder or
    now or hereafter existing at law, in equity, or otherwise, and
    all such remedies, rights and powers shall be cumulative.
  
  8.   The Agent.
  
       8.1  Appointment, Powers and Immunities .   Each Lender
  hereby irrevocably appoints and authorizes the Agent to act as
  its agent hereunder and under the other Credit Documents with
  such powers as are specifically delegated to the Agent by the
  terms hereof and thereof, together with such other powers as are
  reasonably incidental thereto.  The Agent (i) shall not have any
  duties or responsibilities except those expressly set forth in
  this Agreement and the other Credit Documents, and shall not by
  reason of this Agreement or any other Credit Document be a
  trustee for any Lender; (ii) shall not be responsible to any
  Lender for any recitals, statements, representations or
  warranties contained in this Agreement or any other Credit
  Document, or in any certificate or other document referred to or
  provided for in, or received by any of them under, this Agreement
  or any other Credit Document, or for the value, validity,
  effectiveness, genuineness, enforceability, execution, filing,
  registration, collectibility, recording, perfection, existence or
  sufficiency of this Agreement or any other Credit Document or any
  other document referred to or provided for herein or therein or
  any property covered thereby or for any failure by any Party or
  any other Person to perform any of its obligations hereunder or
  thereunder, and shall not have any duty to inquire into or pass
  upon any of the foregoing matters; (iii) shall not be required to
  initiate or conduct any litigation or collection proceedings
  hereunder or any other Credit Document except to the extent
  requested by the Majority Lenders; (iv) SHALL NOT BE RESPONSIBLE
  FOR ANY MISTAKE OF LAW OR FACT OR ANY ACTION TAKEN OR OMITTED TO
  BE TAKEN BY IT HEREUNDER OR UNDER ANY OTHER CREDIT DOCUMENT OR
  ANY OTHER DOCUMENT OR INSTRUMENT REFERRED TO OR PROVIDED FOR
  HEREIN OR THEREIN OR IN CONNECTION HEREWITH OR THEREWITH,
  INCLUDING, WITHOUT LIMITATION, PURSUANT TO ITS OWN NEGLIGENCE,
  BUT NOT INCLUDING AND EXCEPT FOR THE GROSS NEGLIGENCE OR WILLFUL
  MISCONDUCT OF THE AGENT; (v) shall not be bound by or obliged to
  recognize any agreement among or between the Borrower, the Agent,
  and any Lender other than this Agreement and the other Credit
  Documents, regardless of whether the Agent has knowledge of the
  existence of any such agreement or the terms and provisions
  thereof; (vi) shall not be charged with notice or knowledge of
  any fact or information not herein set out or provided to the
  Agent in accordance with the terms of this Agreement or any other
  Credit Document; (vii) shall not be responsible for any delay,
  error, omission or default of any mail, telegraph, cable or
  wireless agency or operator, and (viii) shall not be responsible
  for the acts or edicts of any Governmental Authority.  The Agent
  may employ agents and attorneys-in-fact and shall not be
  responsible for the negligence or misconduct of any such agents
  or attorneys-in-fact selected by it with reasonable care.
  
        (b)  Without the prior written consent of Agent and all  of
  the  Lenders, Agent shall not (i) modify or amend in any  respect
  whatsoever  the interest rate provisions of the Credit Documents,
  (ii)  increase the Commitment above $150,000,000.00, (iii) extend
  the  Maturity  Date  other than in accordance  with  the  express
  provisions of the Credit Documents, (iv) extend or reduce the due
  date for or the amount of the scheduled payments of principal  or
  interest  on  the Loans or the Fee, (v) amend the  definition  of
  Majority Lenders or any requirement that certain actions be taken
  only  with the consent of a certain number of the Lenders,   (vi)
  release  any Guarantor or any collateral for the Loans, or  (vii)
  modify or amend any provision of any Credit Document which by its
  terms  requires the consent of all of the Lenders for  amendment.
  From time to time upon Agent's request, each Lender shall execute
  and  deliver such documents and instruments as may be  reasonably
  necessary  to enable Agent to effectively administer and  service
  the  Loan in its capacity as Agent and in the manner contemplated
  by  the  provisions of this Agreement.  No amendment or agreement
  shall  increase the Lender Commitment of any Lender  without  the
  written consent of such Lender.
  
       (c)  All information provided to the Agent under or pursuant
  to  the  Credit Documents, and all rights of the Agent to receive
  or  request  information, or to inspect information or  Property,
  shall  be  by the Agent on behalf of the Lenders.  If any  Lender
  requests  that it be able to receive or request such information,
  or  make  such inspections, in its own right rather than  through
  the  Agent, the Borrower will cooperate with the Agent  and  such
  Lender  in  order  to  obtain  such  information  or  make   such
  inspection as such Lender may reasonably require.
  
        (d)   The Borrower shall be entitled to rely upon a written
  notice or a written response from the Agent as being pursuant  to
  concurrence  or consent of the Majority Lenders unless  otherwise
  expressly stated in the Agent's notice or response.
  
       8.2  Reliance.  The Agent shall be entitled to rely upon any
  certification, notice or other communication (including any
  thereof by telephone, telex, telecopy, telegram or cable)
  reasonably believed by it to be genuine and correct and to have
  been signed or sent by or on behalf of the proper Person or
  Persons, and upon advice and statements of legal counsel (which
  may be counsel for the Borrower), independent accountants and
  other experts selected by the Agent.  The Agent shall not be
  required in any way to determine the identity or authority of any
  Person delivering or executing the same.  As to any matters not
  expressly provided for by this Agreement or any other Credit
  Document, the Agent shall in all cases be fully protected in
  acting, or in refraining from acting, hereunder and thereunder in
  accordance with instructions of the Majority Lenders, and any
  action taken or failure to act pursuant thereto shall be binding
  on all of the Lenders.  If any order, writ, judgment or decree
  shall be made or entered by any court affecting the rights,
  duties and obligations of the Agent under this Agreement or any
  other Credit Document, then and in any of such events the Agent
  is authorized, in its sole discretion, to rely upon and comply
  with such order, writ, judgment or decree which it is advised by
  legal counsel of its own choosing is binding upon it under the
  terms of this Agreement, the relevant Credit Document or
  otherwise; and if the Agent complies with any such order, writ,
  judgment or decree, then it shall not be liable to any Lender or
  to any other Person by reason of such compliance even though such
  order, writ, judgment or decree may be subsequently reversed,
  modified, annulled, set aside or vacated.
  
       8.3  Defaults.  The Agent shall not be deemed to have
  constructive knowledge of the occurrence of a Default (other than
  the non-payment of principal of or interest on Loans) unless it
  has received notice from a Lender or the Borrower specifying such
  Default and stating that such notice is a "Notice of Default".
  In the event that the Agent receives such a notice of the
  occurrence of a Default, or whenever the Agent has actual
  knowledge of the occurrence of a Default, the Agent shall give
  prompt written notice thereof to the Lenders (and shall give each
  Lender prompt notice of each such non-payment).  The Agent shall
  (subject to Section 8.7 hereof) take such action with respect to
  such Default as shall be directed by the Majority Lenders and
  within its rights under the Credit Documents and at law or in
  equity, provided that, unless and until the Agent shall have
  received such directions, the Agent may (but shall not be
  obligated to) take such action, or refrain from taking such
  action, permitted hereby with respect to such Default as it shall
  deem advisable in the best interests of the Lenders and within
  its rights under the Credit Documents in order to preserve,
  protect or enhance the collectibility of the Loans, at law or in
  equity.  Provided, however, that if there is an occurrence of an
  Event of Default, then in no event or under any circumstances
  shall any of the actions described in Sections 8.1(b)(i) through
  (vii) of this Agreement be taken, without in each instance the
  written consent of Agent and all of the Lenders.
  
       8.4  Rights as a Lender.  With respect to the Commitment and
  the Loans made, Agent, in its capacity as a Lender hereunder
  shall have the same rights and powers hereunder as any other
  Lender and may exercise the same as though it were not acting in
  its agency capacity, and the term "Lender" or "Lenders" shall,
  unless the context otherwise indicates, include the Agent in its
  individual capacity.  The Agent may (without having to account
  therefor to any other Lender) as a Lender, and to the same extent
  as any other Lender, accept deposits from, lend money to and
  generally engage in any kind of banking, trust, letter of credit,
  agency or other business with the Borrower (and any of its
  Affiliates) as if it were not acting as the Agent but solely as a
  Lender.  The Agent may accept fees and other consideration from
  the Borrower (in addition to the fees heretofore agreed to
  between the Borrower and the Agent) for services in connection
  with this Agreement or otherwise without having to account for
  the same to the Lenders.
  
       8.5  Indemnification.  The Lenders agree to indemnify the
  Agent, its officers, directors, agents and Affiliates, ratably in
  accordance with each Lender's respective Percentage, for any and
  all liabilities, obligations, losses, damages, penalties,
  actions, judgments, suits, costs, expenses or disbursements of
  any kind and nature whatsoever (INCLUDING BUT NOT LIMITED TO, THE
  CONSEQUENCES OF THE NEGLIGENCE OF THE AGENT) which may be imposed
  on, incurred by or asserted against the Agent in any way relating
  to or arising out of this Agreement or any other Credit Document
  or any other documents contemplated by or referred to herein or
  therein, or the transactions contemplated hereby or thereby
  (including, without limitation, interest, penalties, reasonable
  attorneys' fees and amounts paid in settlement in accordance with
  the terms of this Section 8, but excluding, unless a Default has
  occurred and is continuing, normal administrative costs and
  expenses incident to the performance of its agency duties
  hereunder) or the enforcement of any of the terms hereof or
  thereof or of any such other documents, INCLUDING BUT NOT LIMITED
  TO THE NEGLIGENCE OF THE AGENT, provided that no Lender shall be
  liable for any of the foregoing to the extent they arise from the
  gross negligence or willful misconduct of the party to be
  indemnified, or from the Agent's default in the express
  obligations of the Agent to the Lenders provided for in this
  Agreement.  The obligations of the Lenders under this Section 8.5
  shall survive the termination of this Agreement and the repayment
  of the Obligations.
  
       8.6  Non-Reliance on Agent and Other Lenders.  Each Lender
  agrees that it has received current financial information with
  respect to the Obligors and that it has, independently and
  without reliance on the Agent or any other Lender and based on
  such documents and information as it has deemed appropriate, made
  its own credit analysis of the Obligors and decision to enter
  into this Agreement and that it will, independently and without
  reliance upon the Agent or any other Lender, and based on such
  documents and information as it shall deem appropriate at the
  time, continue to make its own analysis and decisions in taking
  or not taking action under this Agreement or any of the other
  Credit Documents.  The Agent shall not be required to keep itself
  informed as to the performance or observance by any Party of this
  Agreement or any of the other Credit Documents or any other
  document referred to or provided for herein or therein or to
  inspect the properties or books of the Borrower or any Party
  except as specifically required by the Credit Documents.  Except
  for notices, reports and other documents and information
  expressly required to be furnished to the Lenders by the Agent
  hereunder or the other Credit Documents, the Agent shall not have
  any duty or responsibility to provide any Lender with any credit
  or other information concerning the affairs, financial condition
  or business of the Borrower or any other Party (or any of their
  affiliates) which may come into the possession of the Agent.
  Each Lender assumes all risk of loss in connection with its
  Percentage in the Loans to the full extent of its Percentage
  therein.  The Agent assumes all risk of loss in connection with
  its Percentage in the Loans to the full extent of its Percentage
  therein.
  
       8.7  Failure to Act.  Except for action expressly required
  of the Agent, as the case may be, hereunder, or under the other
  Credit Documents, the Agent shall in all cases be fully justified
  in failing or refusing to act hereunder and thereunder unless it
  shall receive further assurances to its satisfaction by the
  Lenders of their indemnification obligations under Section 8.5
  hereof against any and all liability and expense which may be
  incurred by it by reason of taking or continuing to take any such
  action.
  
       8.8  Resignation of Agent.  Subject to the appointment and
  acceptance of a successor Agent as provided below, the Agent may
  resign at any time by giving notice thereof to the Lenders and
  the Borrower.  Upon any such resignation, (i) the Majority
  Lenders without the consent of the Borrower shall have the right
  to appoint a successor Agent so long as such successor Agent is
  also a Lender at the time of such appointment and (ii) the
  Majority Lenders shall have the right to appoint a successor
  Agent that is not a Lender at the time of such appointment so
  long as the Borrower (if no Event of Default is then in
  existence) consents to such appointment (which consent shall not
  be unreasonably withheld).  If no successor Agent shall have been
  so appointed by the Majority Lenders and accepted such
  appointment within 30 days after the retiring Agent's giving of
  notice of resignation, then the retiring Agent may, on behalf of
  the Lenders, and with the consent of the Borrower which shall not
  be unreasonably withheld, appoint a successor Agent.  Any
  successor Agent shall be an Eligible Institution.  Upon the
  acceptance of any appointment as Agent hereunder by a successor
  Agent, such successor Agent shall thereupon succeed to and become
  vested with all the rights, powers, privileges and duties of the
  retiring Agent, and the retiring Agent shall be discharged from
  its duties and obligations as Agent thereafter arising hereunder
  and under any other Credit Documents, but shall not be discharged
  from any liabilities for its actions as Agent prior to the date
  of discharge.  Such successor Agent shall promptly specify by
  notice to the Borrower its principal office referred to in
  Section 2.1 and Section 2.2 hereof.  After any retiring Agent's
  resignation hereunder as Agent, the provisions of this Section 8
  shall continue in effect for its benefit in respect of any
  actions taken or omitted to be taken by it while it was acting as
  the Agent.
  
       8.9  No Partnership.  Neither the execution and delivery of
  this Agreement nor any of the other Credit Documents nor any
  interest the Lenders, the Agent or any of them may now or
  hereafter have in all or any part of the Obligations shall create
  or be construed as creating a partnership, joint venture or other
  joint enterprise between the Lenders or among the Lenders and the
  Agent.  The relationship between the Lenders, on the one hand,
  and the Agent, on the other, is and shall be that of principals
  and agent only, and nothing in this Agreement or any of the other
  Credit Documents shall be construed to constitute the Agent as
  trustee or other fiduciary for any Lender or to impose on the
  Agent any duty, responsibility or obligation other than those
  expressly provided for herein and therein.
  
  9.   Miscellaneous.
  
       9.1  No Waiver, Amendments.  No waiver of any Default shall
  be deemed to be a waiver of any other Default.  No failure to
  exercise or delay in exercising any right or power under any
  Credit Document shall operate as a waiver thereof, nor shall any
  single or partial exercise of any such right or power preclude
  any further or other exercise thereof or the exercise of any
  other right or power. Except as may be prohibited by Section 8.1
  hereof, no amendment, modification or waiver of any provision of
  any Credit Document shall be effective unless the same is in
  writing and signed by the Borrower and the Majority Lenders.  No
  notice to or demand on the Borrower or any other Person shall
  entitle the Borrower or any other Person to any other or further
  notice or demand in similar or other circumstances.
  
       9.2  Notices.  All notices under the Credit Documents shall
  be in writing and either (i) delivered against receipt therefor,
  or (ii) mailed by registered or certified mail, return receipt
  requested, in each case addressed as set forth herein, or to such
  other address as a party may designate.  Notices shall be deemed
  to have been given (whether actually received or not) when
  delivered (or, if mailed, on the next Business Day).  Provided,
  however, that as between the Agent and the Lenders and among the
  Lenders, notice may be given by telecopy or facsimile effective
  upon the earlier of actual receipt or confirmation of receipt by
  telephone.
  
       9.3  Venue.  HARRIS COUNTY, TEXAS SHALL BE A PROPER PLACE OF
  VENUE TO ENFORCE PAYMENT OR PERFORMANCE OF THIS AGREEMENT AND THE
  OTHER CREDIT DOCUMENTS, UNLESS THE AGENT SHALL GIVE ITS PRIOR
  WRITTEN CONSENT TO A DIFFERENT VENUE.  THE BORROWER HEREBY
  IRREVOCABLY SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF THE STATE
  AND FEDERAL COURTS IN THE STATE OF TEXAS AND AGREES AND CONSENTS
  THAT SERVICE OF PROCESS MAY BE MADE UPON IT IN ANY PROCEEDING
  ARISING OUT OF ANY OF THE CREDIT DOCUMENTS BY SERVICE OF PROCESS
  AS PROVIDED BY TEXAS LAW.  THE BORROWER HEREBY IRREVOCABLY
  WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION
  WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY
  SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO ANY OF
  THE CREDIT DOCUMENTS IN THE DISTRICT COURTS OF HARRIS COUNTY,
  TEXAS, OR IN THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN
  DISTRICT OF TEXAS, HOUSTON DIVISION, AND HEREBY FURTHER
  IRREVOCABLY WAIVES ANY CLAIMS THAT ANY SUCH SUIT, ACTION OR
  PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN
  INCONVENIENT FORUM.  THE BORROWER (A) AGREES TO DESIGNATE AND
  MAINTAIN AN AGENT FOR SERVICE OF PROCESS IN THE STATE OF TEXAS IN
  CONNECTION WITH ANY SUCH SUIT, ACTION OR PROCEEDING AND TO
  DELIVER TO THE AGENT EVIDENCE THEREOF AND (B) IRREVOCABLY
  CONSENTS TO THE SERVICE OF PROCESS OUT OF ANY OF THE
  AFOREMENTIONED COURTS IN ANY SUCH SUIT, ACTION OR PROCEEDING BY
  NOTICE GIVEN AS PROVIDED FOR IN THIS AGREEMENT.  NOTHING HEREIN
  SHALL AFFECT THE RIGHT OF THE AGENT OR THE LENDERS TO COMMENCE
  LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST THE BORROWER IN
  ANY JURISDICTION OR TO SERVE PROCESS IN ANY MANNER PERMITTED BY
  APPLICABLE LAW.  THE BORROWER HEREBY IRREVOCABLY AGREES THAT ANY
  LEGAL ACTION OR PROCEEDING AGAINST THE AGENT OR ANY LENDER
  ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT OR THE OTHER
  CREDIT DOCUMENTS SHALL BE BROUGHT AND MAINTAINED IN THE DISTRICT
  COURTS OF HARRIS COUNTY, TEXAS, OR THE UNITED STATES DISTRICT
  COURT FOR THE SOUTHERN DISTRICT OF TEXAS, HOUSTON DIVISION.
  
       9.4  Choice of Law.  THIS AGREEMENT, THE NOTES AND THE OTHER
  CREDIT DOCUMENTS HAVE BEEN NEGOTIATED, EXECUTED AND DELIVERED IN
  THE STATE OF TEXAS AND SHALL BE GOVERNED BY, AND CONSTRUED AND
  INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS,
  INCLUDING ALL APPLICABLE FEDERAL LAW, FROM TIME TO TIME IN FORCE
  IN THE STATE OF TEXAS.
  
       9.5  Survival; Parties Bound; Successors and Assigns.
  (a) All representations, warranties, covenants and agreements
  made by or on behalf of the Borrower in connection herewith shall
  survive the execution and delivery of the Credit Documents, shall
  not be affected by any investigation made by any Person, and
  shall bind the Borrower and its successors, trustees, receivers
  and assigns and inure to the benefit of the successors and
  assigns of the Agent and the Lenders; provided, however, that the
  Borrower may not assign or transfer any of its rights or
  obligations hereunder without the prior written consent of the
  Agent and all of the Lenders, and any such assignment or transfer
  without such consent shall be null and void.
  
            (b)  Subject to Sections 9.5(d) and (e) of this
  Agreement, a Lender may assign part of its Lender Commitment to
  an Eligible Institution so long as such assignment shall (1)
  include the voting rights and all other rights and obligations
  attributable thereto, and include a written assumption by the
  assignee of the assigning Lender's obligations under the Credit
  Documents, (2) require the written consent of the Borrower (so
  long as no Event of Default is then in existence) and the Agent,
  such consent not to be unreasonably withheld, (3) be in a minimum
  amount of $5,000,000.00 if assigned to a Person not already a
  Lender, (4) not reduce the Lender's Lender Commitment to an
  amount less than $5,000,000.00, and (5) include payment to the
  Agent by the Lender of a service fee for each assignment equal to
  $3,000.00.
  
            (c)  Subject to Section 9.5(d) and (e) of this
  Agreement, a Lender may sell participating interests in any of
  its Loans to an Eligible Institution so long as such
  participation shall (1) limit the voting rights of the
  participant, if any, to the ability to vote for changes in the
  amount of the Commitment, the interest rate on the Loans, the
  amount of the Fee, the requirements for Guaranties and for
  collateral, and the Maturity Date, and (2) require written notice
  to the Agent and the Borrower but not any consent of the Agent,
  the Borrower or any other Lender.  In connection with any sale of
  a participating interest made in compliance with this Agreement,
  (i) the participating Lender shall continue to be liable for its
  Lender Commitment and its other obligations under the Credit
  Documents, (ii) the Agent, the Borrower and the other Lenders
  shall continue to deal solely and directly with the participating
  Lender in connection with such Lender's rights and obligations
  under the Credit Documents, and (iii) the participant may not
  require the participating Lender to take or refrain from taking
  any action under the Credit Documents that is in conflict with
  the terms and provisions of the Credit Documents.
  
          (d)      A Lender may assign all or any part of its Loans
  or  its  Lender Commitment to an Affiliate of the Lender  without
  written consent of the Agent and the Borrower.
  
            (e)  Notwithstanding any provision hereof to the
  contrary, any Lender may assign and pledge all or any portion of
  its Lender Commitment and Loans to a Federal Reserve Bank;
  provided, however, that any such assignment or pledge shall not
  relieve such Lender from its obligations under the Credit
  Documents.
  
          (f)      The  term of this Agreement shall be  until  the
  final  maturity of the Notes and the payment of all  amounts  due
  under the Credit Documents.
  
       9.6  Counterparts.  This Agreement may be executed in
  several identical counterparts, and by the parties hereto on
  separate counterparts, and each counterpart, when so executed and
  delivered, shall constitute an original instrument, and all such
  separate counterparts shall constitute but one and the same
  instrument.
  
       9.7  Usury Not Intended; Refund of Any Excess Payments.  It
  is the intent of the parties in the execution and performance of
  this Agreement to contract in strict compliance with the usury
  laws of the State of Texas and the United States of America from
  time to time in effect.  In furtherance thereof, the Agent, the
  Lenders and the Borrower stipulate and agree that none of the
  terms and provisions contained in this Agreement or the other
  Credit Documents shall ever be construed to create a contract to
  pay for the use, forbearance or detention of money with interest
  at a rate in excess of the Ceiling Rate and that for purposes
  hereof "interest" shall include the aggregate of all charges
  which constitute interest under such laws that are contracted
  for, reserved, taken, charged or received under this Agreement.
  In determining whether or not the interest paid or payable, under
  any specific contingency, exceeds the Ceiling Rate, the Borrower,
  the Agent and the Lenders shall, to the maximum extent permitted
  under applicable law, (a) characterize any nonprincipal payment
  as an expense, fee or premium rather than as interest,
  (b) exclude voluntary prepayments and the effects thereof, and
  (c) "spread" the total amount of interest throughout the entire
  contemplated term of the Loans.  The provisions of this paragraph
  shall control over all other provisions of the Credit Documents
  which may be in apparent conflict herewith.
  
       9.8  Captions.  The headings and captions appearing in the
  Credit Documents have been included solely for convenience and
  shall not be considered in construing the Credit Documents.
  
       9.9  Severability.  If any provision of any Credit
  Documents shall be invalid, illegal or unenforceable in any
  respect under any applicable law, the validity, legality and
  enforceability of the remaining provisions shall not be affected
  or impaired thereby.
  
       9.10 Disclosures.  Every reference in the Credit Documents
  to disclosures of the Borrower to the Agent and the Lenders in
  writing, to the extent that such references refer to disclosures
  at or prior to the execution of this Agreement, shall be deemed
  strictly to refer only to written disclosures delivered to the
  Agent and the Lenders in an orderly manner concurrently with the
  execution hereof.
  
       9.11 Entire Agreement.  THIS AGREEMENT AND THE OTHER CREDIT
  DOCUMENTS TOGETHER CONSTITUTE A WRITTEN AGREEMENT AND REPRESENT
  THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE
  CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT
  ORAL AGREEMENTS OF THE PARTIES.  THERE ARE NO UNWRITTEN ORAL
  AGREEMENTS BETWEEN THE PARTIES.
  
       IN WITNESS WHEREOF, the parties hereto have executed this
  Agreement as of the date set forth above.
  
                           PARKWAY PROPERTIES LP,
                           a Delaware limited partnership
                           
                           By: Parkway Properties General Partners,
                           Inc., General Partner
                           
                           
                           
                           By:     Steven G. Rogers
                           Name:   Steven G. Rogers
                           Title:  CEO & President
                           
                           
                           
                           By:     Sarah P. Clark
                           Name:   Sarah P. Clark
                           Title:  Sr. VP, CFO, Treasurer & Secy.
                           
                           
                           
                           Address:
                           188 E.Capitol St., Ste. 1000
                           Jackson, Mississippi 39201
                           Attention:  Chief Financial Officer
                           
  Parkway Properties, Inc. executes this Agreement solely to
  acknowledge and agree to Sections 5.2, 5.11(a), 6.3 and 6.8.
                           PARKWAY PROPERTIES, INC.
  
                           By:     Steven G. Rogers
                           Name:   Steven G. Rogers
                           Title:  CEO & President
  
                           By:     Sarah P. Clark
                           Name:   Sarah P. Clark
                           Title:  Sr. VP, CFO, Treasurer & Secy.
  Lender Commitment: $15,000,000.00  CHASE BANK OF TEXAS, NA
  Percentage: 10.000000000%          as Agent and as a Lender
  
                                     By:     Susan M. Tate
                                     Name:   Susan M. Tate
                                     Title:  Vice President
                                                         Address:
                                     712 Main Street
                                     Houston, Texas  77002
                                     Attention:  Manager, Real
                                     Estate Group
  
                                     Telephone No.: 713-216-1511
                                     Telecopy No.:  713-216-7713
  
  Lender Commitment: $15,000,000.00  PNC BANK, NA
  Percentage: 10.000000000%               Documentation Agent and
                                     as a Lender
  
                                     By:      Maureen A. Dunne
                                     Name:    Maureen A. Dunne
                                     Title:   Vice President
  
                                     By:
                                     Name:
                                     Title:
                                     Address:
                                     201 East Fifth St., 8th Floor
                                     Commercial Real Estate
                                     Cincinnati, Ohio 45201
                                     Attention: Maureen Dunne
  
                                     Telephone No.:  Maureen Dunne
                                                     513-651-8697
                                     Telecopy No:    513-651-8931
  
  Lender Commitment: $13,000,000.00  AMSOUTH BANK
  Percentage: 8.666666667%
                                     By:     Terry W. Howard
                                     Name:   Terry W. Howard
                                     Title:  Vice President
  
                                     Address:
                                     1900 Fifth Avenue North
                                     Commercial Real Estate, AST9
                                     Birmingham, Alabama  35201
                                     Attention:  Terry Howard
                                     Telephone No.:  Terry Howard
                                                     205-326-5651
                                     Telecopy No.:   205-326-4075
  
  Lender Commitment: $13,000,000.00  FIRST NATIONAL BANK OF
  Percentage: 8.666666667%           COMMERCE
  
                                     By:     Susan B. Bell
                                     Name:   Susan B. Bell
                                     Title:  Vice President
  
                                     Address:
                                     201 Saint Charles Avenue
                                     28th Floor
                                     New Orleans, Louisiana  70170
                                     Attention:  Cate Raymond
                                     Telephone No.:  Cate Raymond
                                                     504-623-1577
                                     Telecopy No.:   504-623-3616
  
  Lender Commitment: $13,000,000.00  FIRST UNION NATIONAL BANK
  Percentage: 8.666666667%
                                     By:     Rex E. Rudy      Name:
  Rex E. Rudy
                                     Title:  Vice President
  
                                     Address:
                                     One First Union Center, TW6
                                     Charlotte, NC  28288
                                     Attention: Rex Rudy
                                     Telephone No.:  Rex Rudy
                                                     704-383-6506
                                     Telecopy No.:   704-383-6205
  
  Lender Commitment: $13,000,000.00  SOUTHTRUST BANK, NA
  Percentage: 8.666666667%
                                     By:      Sam Boroughs
                                     Name:    Sam Boroughs
                                     Title:   Assistant VP
  
                                     Address:
                                     420 N. 20th Street
                                     Corporate Banking, 11th Floor
                                     Birmingham, Alabama  35203
                                     Attention: Sam Boroughs
  
                                     Telephone No.:  Sam Boroughs
                                                     205-254-5039
                                     Telecopy No.:   205-254-5022
  
  Lender Commitment: $13,000,000.00  WELLS FARGO BANK, NA
  Percentage: 8.666666667%
  
                                     By:     Samuel Wammock
                                     Name:   Samuel Wammock
                                     Title:  Vice President
  
                                                         Address:
                                     2859 Paces Ferry Rd Ste 1805
                                     Atlanta, Georgia  30339
                                     Attention:  Sam Wammock
  
                                     Telephone No.: Sam Wammock
                                                    770-435-3800
                                     Telecopy No.:  770-435-2262
  Lender Commitment: $10,000,000.00  COMPASS BANK
  Percentage: 6.666666667%
                                     By:      Randy S. Baker
                                     Name:    Randy S. Baker
                                     Title:   Vice President
  
                                     Address:
                                     15 S. 20th St., Ste. 1500
                                     Birmingham, Alabama  35233
                                     Attention: Jo Paley
                                          Telephone No.:  Jo Paley
                                                     205-933-3851
                                     Telecopy No:    205-715-7994
  
  Lender Commitment: $10,000,000.00  FIRST TENNESSEE BANK NA
  Percentage: 6.666666667%
                                     By:     Daniel B. Neuschaefer
                                     Name:   Daniel B. Neuschaefer
                                     Title:  Vice President
  
                                     Address:
                                     Commercial Real Estate
                                     165 Madison Avenue, 1st Floor
                                     Memphis, Tennessee  38103
                                     Attention: Dan Neuschaefer
  
                                     Telephone No.: 901-523-4049
                                                    DanNeuschaefer
                                     Telecopy No:   901-523-4032
  
  Lender Commitment: $10,000,000.00  HIBERNIA NATIONAL BANK
  Percentage: 6.666666667%
  
                                     By:     Yancey Jones
                                     Name:   Yancey Jones
                                     Title:  Assistant V.P.
  
                                     By:
                                     Name:
                                     Title:
  
                                     Address:
                                     313 Carondelet
                                     New Orleans, Louisiana  70130
                                     Attention:  Yancey Jones
  
                                     Telephone No.:  Yancey Jones
                                                     504-533-5087
                                     Telecopy No:    504-533-2042
  
  Lender Commitment: $7,500,000.00   COMERICA BANK
  Percentage: 5.000000000%
  
                                     By:      Charles L. Weddell
                                     Name:    Charles L. Weddell
                                     Title:   Vice President
  
                                     Address:
                                     500 Woodward Avenue, MC3256
                                     Detroit, Michigan  48226
                                     Attention:  Charles Weddell
                                     Telephone No.: 313-222-3323
                                                   Charles Weddell
                                     Telecopy No:   313-222-9295
  
  Lender Commitment: $7,500,000.00   FIRST AMERICAN NATIONAL BANK,
  Percentage: 5.000000000%           operating as DEPOSIT GUARANTY
                                     NATIONAL BANK
  
                                     By:     Mark W. McDowell
                                     Name:   Mark W. McDowell
                                     Title:  Vice President
  
                                     Address:
                                     1 Jackson Place, Suite 250
                                     188 E. Capital Street
                                     Jackson, Mississippi  39201
                                     Attention:  Mark McDowell
                                     Telephone No.: 601-968-4945
                                                    Mark McDowell
                                     Telecopy No:   601-354-8035
  
  Lender Commitment: $6,000,000.00   TRUSTMARK NATIONAL BANK
  Percentage: 4.000000000%
  
                                     By:     Monica Day
                                     Name:   Monica Day
                                     Title:  Vice President
  
                                     Address:
                                     248 East Capitol, Suite 814
                                     Jackson, Mississippi  39205
                                     Attention:
                                     George Gunn/Monica Day
                                     Telephone No.:
                                     George Gunn/Monica Day
                                     601-949-6793/6735
                                     Telecopy No:   601-949-6823
  
  Lender Commitment: $4,000,000.00   BANCORPSOUTH BANK
  Percentage: 2.666666667%
  
                                     By:     Kenneth E. Farmer
                                     Name:   Kenneth E. Farmer
                                     Title:  Sr. Vice President
       
       
       
                                     Address:
                                     525 E. Capitol St., Ste. 300
                                     Jackson, MS 39215-1605
                                     Attention:   Ken Farmer
                                     Telephone No.:  Ken Farmer
                                                     601-944-3727
                                     Telecopy No:    601-944-3605
  
                             SCHEDULE I
  
                               TABLE 1
  
                       APPLICABLE MARGIN   
   TOTAL LIABILITIES                                          
    TO TOTAL ASSET       EURODOLLAR RATE     BASE RATE        
      VALUE RATIO           BORROWING        BORROWING    FEE RATE
  Less than 35%              1.125%              0          .20%
  Greater than or            1.250%              0          .25%
  equal to 35% but
  less than 45%
  Greater than or            1.375%              0          .25%
  equal to 45%
                                  
  
                               TABLE 2
  
                       APPLICABLE MARGIN   
      S&P RATING/        EURODOLLAR RATE     BASE RATE        
    MOODY'S RATING          BORROWING        BORROWING    FEE RATE
  BBB+/Baal                  0.875%              0          .15%
  BBB/Baa2                   1.000%              0          .15%
  BBB-/Baa3                  1.125%              0          .20%
  Worse than BBB-            1.375%              0          .25%
  /Baa3
                                  
  
                             SCHEDULE II
  
                          APPROVED MARKETS
  
  Houston, Texas
  Jackson, Mississippi
  Atlanta, Georgia
  Knoxville, Tennessee
  Memphis, Tennessee
  Columbia, South Carolina
  Norfolk, Virginia
  Richmond, Virginia
  Winston-Salem, North Carolina
  Fairfax County, Virginia and Tysons Corner, McLean and
  Springfield, Virginia
  Ft. Lauderdale, Florida
  St. Petersburg, Florida
  Charlotte, North Carolina
  Little Rock, Arkansas
  Greenville, South Carolina
  Birmingham, Alabama
  Indianapolis, Indiana
  
                                  
                                  
                                  
                            FORM OF NOTE
                                  
                              EXHIBIT C
  
  ______________________                  _____________7, 1998
  
       FOR VALUE RECEIVED PARKWAY PROPERTIES LP, a Delaware limited
  partnership (herein called "Maker") promises to pay to the order
  of ____________________, a _______________ ("Payee"), at the
  offices of Chase Bank of Texas, National Association, a national
  banking association, as "Agent" under the Credit Agreement, at
  712 Main Street, Houston, Texas 77002, or at such other place as
  the holder (the "Holder", whether or not Payee is such holder) of
  this note may hereafter designate in writing, in immediately
  available funds and in lawful money of the United States of
  America, the principal sum of _______________________________
  Dollars (________________) (or the unpaid balance of all
  principal advanced against this note, if that amount is less),
  together with interest on the unpaid principal balance of this
  note from time to time outstanding at the Stated Rate and
  interest on all past due amounts, both principal and accrued
  interest, at the Past Due Rate; provided, that for the full term
  of this note the interest rate produced by the aggregate of all
  sums paid or agreed to be paid to the Holder of this note for the
  use, forbearance or detention of the debt evidenced hereby
  (including, but not limited to, all interest on this note at the
  Stated Rate) shall not exceed the Ceiling Rate.
  
  1.        Definitions.  Any terms not defined herein shall have
  the meaning given to them in the Credit Agreement dated of even
  date herewith among the Maker, the Agent and certain other
  Lenders (as the same may be amended or modified the "Credit
  Agreement").
  
  2.        Rates Change Automatically and Without Notice.  Without
  notice to Maker or any other person or entity and to the full
  extent allowed by applicable law from time to time in effect, the
  Prime Rate and the Ceiling Rate shall each automatically
  fluctuate upward and downward as and in the amount by which
  Agent's said prime rate, and such maximum nonusurious rate of
  interest permitted by applicable law, respectively, fluctuate.
  
  3.        Calculation of Interest.  Interest shall be computed
  for the actual number of days elapsed in a year (up to 365, or
  366 in a leap year) deemed to consist of 360 days, unless the
  Ceiling Rate would thereby be exceeded, in which event, to the
  extent necessary to avoid exceeding the Ceiling Rate, interest
  shall be computed on the basis of the actual number of days
  elapsed in the applicable calendar year in which it accrued.
  
  4.        Excess Interest Will be Refunded or Credited.  If, for
  any reason whatever, the interest paid or received on this note
  during its full term produces a rate which exceeds the Ceiling
  Rate, the Holder of this note shall refund to the payor or, at
  the Holder's option, credit against the principal of this note
  such portion of that interest as shall be necessary to cause the
  interest paid on this note to produce a rate equal to the Ceiling
  Rate.
  
  5.        Interest Will be Spread.  All sums paid or agreed to be
  paid to the Holder of this note for the use, forbearance or
  detention of the indebtedness evidenced hereby, to the extent
  permitted by applicable law and to the extent necessary to avoid
  violating applicable usury laws, shall be amortized, prorated,
  allocated and spread in equal parts throughout the full term of
  this note, so that the interest rate is uniform throughout the
  full term of this note.
  
  6.        Payment Schedule.  The principal of this note shall be
  due and payable on the Maturity Date.  Accrued and unpaid
  interest shall be due and payable on each Interest Payment Date.
  All payments shall be applied first to accrued interest, the
  balance to principal.
  
  7.        Prepayment.  Maker may prepay this note only as
  provided in the Credit Agreement.
  
  8.   Revolving Credit.  Upon and subject to the terms and
  conditions of the Credit Agreement and the other provisions of
  this note, Maker may borrow, repay and reborrow against this note
  at any time unless and until a default (however designated) or
  event (an "Event of Potential Default") which, if not cured after
  notice or before the lapse of time (or both) would develop into a
  default under this note, the Credit Agreement or any other Credit
  Documents has occurred which the Holder has not declared to have
  been fully cured or waived, and (except as the Credit Agreement
  or any of the other Credit Documents may otherwise provide) there
  is no limit on the number of advances against this note so long
  as the total unpaid principal of this note at any time
  outstanding does not exceed the Payee's Lender Commitment.
  Interest on the amount of each advance against this note shall be
  computed on the amount of the unpaid balance of that advance from
  the date it is made until the date it is repaid.  If Maker's
  right (if any) to borrow against this note shall ever lapse
  because of the occurrence of any default, it shall not be
  reinstated (or construed from any course of conduct or otherwise
  to have been reinstated) unless and until the Holder shall
  declare in a signed writing that it has been cured or waived.
  The unpaid principal balance of this note at any time shall be
  the total of all principal lent against this note to Maker or for
  Maker's account less the sum of all principal payments and
  permitted prepayments on this note received by the Holder.
  Absent manifest error, the Holder's computer records shall on any
  day conclusively evidence the unpaid balance of this note and its
  advances and payments history posted up to that day.  All loans
  and advances and all payments and permitted prepayments made on
  this note may be (but are not required to be) endorsed by the
  Holder on the schedule attached hereto (which is hereby made a
  part hereof for all purposes) or otherwise recorded in the
  Holder's computer or manual records; provided, that any Holder's
  failure to make notation of (a) any principal advance or accrual
  of interest shall not cancel, limit or otherwise affect Maker's
  obligations or any Holder's rights with respect to that advance
  or accrual, or (b) any payment or permitted prepayment of
  principal or interest shall not cancel, limit or otherwise affect
  Maker's entitlement to credit for that payment as of the date of
  its receipt by the Holder.  Maker and Payee expressly agree, as
  expressly allowed by Chapter 346 of the Texas Finance Code, that
  Chapter 346 (which relates to open-end line of credit revolving
  loan accounts) shall not apply to this note or to any loan
  evidenced by this note and that neither this note nor any such
  loan shall be governed by Chapter 346 or subject to its
  provisions in any manner whatsoever.
  
  9.   Credit Agreement.  This note has been issued pursuant to the
  terms of the Credit Agreement, to which reference is made for all
  purposes.  Advances against this note by Payee or other Holder
  hereof shall be governed by the Credit Agreement.  Payee is
  entitled to the benefits of the Credit Agreement.  As additional
  security for this note, Maker hereby grants to Payee and all
  other present and future Holders an express lien against,
  security interest in and contractual right of setoff in and to,
  all property and any and all deposits (general or special, time
  or demand, provisional or final) at any time held by the Payee or
  other Holder for any Maker's credit or account.
  
  10.  Defaults and Remedies.  Time is of the essence.  Maker's
  failure to pay any principal or accrued interest owing on this
  note when due and after expiration of any applicable period for
  notice and right to cure such a default which is specifically
  provided for in the Credit Agreement or any other provision of
  this note, or the occurrence of any default under the Credit
  Agreement or any other Credit Documents shall constitute default
  under this note, whereupon the Holder may elect to exercise any
  or all rights, powers and remedies afforded (a) under the Credit
  Agreement and all other papers related to this note and (b) by
  law, including the right to accelerate the maturity of this
  entire note.
  
       In addition to and cumulative of such rights, the Holder is
  hereby authorized at any time and from time to time after any
  such default, at Holder's option, without notice to Maker or any
  other person or entity (all rights to any such notice being
  hereby waived), to set off and apply any and all of any Maker's
  deposits at any time held by the Holder, and any other debt at
  any time owing by the Holder to or for the credit or account of
  any Maker, against the outstanding balance of this note, in such
  order and manner as Holder may elect in its sole discretion.
  
       The Holder's right to accelerate this note on account of any
  late payment or other default shall not be waived or deemed
  waived by the Holder by reason of the Holder's having previously
  accepted one or more late payments or by reason of any Holder's
  otherwise not accelerating this note or exercising other remedies
  for any default, and no Holder shall ever be obligated or deemed
  obligated to notify Maker or any other person that Holder is
  requiring strict compliance with this note or any papers securing
  or otherwise relating to it before such Holder may accelerate
  this note or exercise any other remedy.
  
  11.  Legal Costs.  If any Holder of this note retains an attorney
  in connection with any such default or to collect, enforce or
  defend this note or any papers intended to secure or guarantee it
  in any lawsuit or in any probate, reorganization, bankruptcy or
  other proceeding, or if Maker sues any Holder in connection with
  this note or any such papers and does not prevail, then Maker
  agrees to pay to each such Holder, in addition to principal and
  interest, all reasonable costs and expenses incurred by such
  Holder in trying to collect this note or in any such suit or
  proceeding, including reasonable attorneys' fees.
  
  12.  Waivers.  Except only for any notices which are specifically
  required by the Credit Agreement, Maker and any and all co-
  makers, endorsers, guarantors and sureties severally waive notice
  (including, but not limited to, notice of intent to accelerate
  and notice of acceleration, notice of protest and notice of
  dishonor), demand, presentment for payment, protest, diligence in
  collecting and the filing of suit for the purpose of fixing
  liability and consent that the time of payment hereof may be
  extended and re-extended from time to time without notice to any
  of them.  Each such person agrees that his, her or its liability
  on or with respect to this note shall not be affected by any
  release of or change in any guaranty or security at any time
  existing or by any failure to perfect or maintain perfection of
  any lien against or security interest in any such security or the
  partial or complete unenforceability of any guaranty or other
  surety obligation, in each case in whole or in part, with or
  without notice and before or after maturity.
  
  13.  Rate of Return Maintenance Covenant.  If at any time after
  the date of this note, any Holder determines that (a) any
  applicable law, rule or regulation regarding capital adequacy of
  general applicability has been adopted or changed, or (b) its
  interpretation or administration by any governmental authority,
  central bank or comparable agency has changed, and determines
  that such change or the Holder's compliance with any request or
  directive regarding capital adequacy of general applicability
  (whether or not having the force of law) of any such authority,
  central bank or comparable agency, has or would have the effect
  of reducing the rate of return on the Holder's capital as a
  consequence of its obligations under this note or any related
  papers to a level below that which the Holder could have achieved
  but for such adoption, change or compliance (taking into
  consideration the Holder's own capital adequacy policies) by an
  amount the Holder deems to be material, then Maker promises to
  pay from time to time to the order of the Holder such additional
  amount or amounts as will compensate the Holder for such
  reduction.  A certificate of any Holder setting forth the amount
  or amounts necessary to compensate the Holder as specified above
  shall be given to Maker as soon as practicable after the Holder
  has made such determination and shall be conclusive and binding,
  absent manifest error.  Maker shall pay the Holder the amount
  shown as due on any such certificate within 15 days after the
  Holder gives it.  In preparing such certificate, the Holder may
  employ such assumptions and make such allocations of costs and
  expenses as the Holder in good faith deems reasonable and may use
  any reasonable averaging and attribution method.  Section 3.8(b)
  of the Credit Agreement shall apply to the charges assessed under
  this Section.
  
  14.  Governing Law, Jurisdiction and Venue.  THIS NOTE SHALL BE
  GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
  STATE OF TEXAS AND THE UNITED STATES OF AMERICA FROM TIME TO TIME
  IN EFFECT.
  
  15.  General Purpose of Loan.  Maker warrants and represents to
  Payee and all other Holders that all loans evidenced by this note
  are and will be for business, commercial, investment or other
  similar purpose and not primarily for personal, family, household
  or agricultural use, as such terms are used in Chapter One.
  
  16.  Participations and Assignments.  Payee and each other Holder
  reserves the right to sell participations, assign interests or
  both, in all or any part of this note or the debt evidenced by
  this note, in accordance with the Credit Agreement.
  
                                     PARKWAY PROPERTIES LP, 
                                     a Delaware limited
                                     partnership
       
                                     By:  Parkway Properties
                                     General Partners, Inc.,
                                     General Partner
  
                                     By:
                                     Name:
                                     Title:
  
                                     By:
                                     Name:
                                     Title: