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):   July 1, 1998
                                                ------------------
  
  
  
  PARKWAY PROPERTIES, INC.
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        (Exact name of Registrant as specified in its charter)
  
  
  
  Maryland                      1-11533                   74-2123597 
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  (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
  ------------------------------------------------------------------
  
  Registrant's telephone number, including area code: (601) 948-4091
                                                      --------------
  
  
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     (Former name or former address, if changed since last report)
  
  
  
  
  
  FORM 8-K
  
  PARKWAY PROPERTIES, INC.
  
  Item 2.  Acquisition or Disposition of Assets.
  
  	On July 1, 1998, Parkway Properties, Inc. ("Parkway") closed 
  on the previously announced sale of its investment portfolio of 
  four office properties located in Dallas, Texas for $53,250,000 
  in cash to Triad Properties Corporation, a Huntsville, Alabama-
  based private real estate investment and operating company.  The 
  properties contain approximately 534,400 net rentable square 
  feet. The Company expects to record a gain for financial 
  reporting purposes of approximately $3.3 million on the sale in 
  the third quarter.  The Company anticipates that the taxable gain 
  from this transaction will be deferred through a Section 1031 
  like-kind exchange and, accordingly, no special dividend of the 
  capital gain will be required.  Approximately $25,000,000 of the 
  sale proceeds will be held in trust under the like-kind exchange 
  rules, pending the purchase of replacement properties.   
  
  Item 5.	Other Events.
  
  	On June 30, 1998, the Company closed on a $97 million fixed 
  rate loan at a rate of 6.945% from Teachers Insurance and Annuity 
  Association of America. Proceeds of $78.9 million were funded on 
  June 30, 1998 with additional proceeds of $18.1 million to be 
  funded in July 1998.  The loan will amortize over a 15-year term 
  and matures on July 1, 2008.  The loan is secured by certain 
  properties of the Company.  The loan contains a conversion 
  feature that gives the Company an option to unsecure all or part 
  of the loan upon receipt of an investment grade credit rating 
  from two of the major rating agencies during the first 24 months 
  of the loan.  Proceeds of the loan were used to repay existing 
  variable rate debt.
  
  	On July 1, 1998, the Company purchased a partnership owning 
  the 171,800 square foot 111 East Capitol Building in Jackson, 
  Mississippi for $11,350,000 in the Company's first UPREIT 
  transaction.  The Company assumed existing debt on the property 
  of $5,647,000 at a rate of 8%.  The building was constructed in 
  1983 and includes an attached 200-space two-level parking garage.  
  The 111 East Capitol Building is located in the Central Business 
  District of Jackson and was 83% occupied at June 30, 1998.
  
  
  
  
  
  
  Item 7.   Financial Statements and Exhibits.
  
  	(b)  Pro Forma Consolidated Financial Statements
  
       The following unaudited Pro Forma Consolidated Financial 
  Statements are attached hereto.
                                                               Page
                                                               ----
  Pro Forma Consolidated Financial Statements (Unaudited)	5
  Pro Forma Consolidated Balance Sheet (Unaudited) -
    March 31, 1998	7
  Pro Forma Consolidated Statement of Income (Unaudited) -
    For the Year Ended December 31, 1997	8
  Pro Forma Consolidated Statement of Income (Unaudited) -
    For the Three Months ended March 31, 1998	9
  Notes to Pro Forma Consolidated Financial
    Statements (Unaudited)	10
  
  	(c)  Exhibits
  
  (10)	(a) Purchase and Sale Agreement between Parkway 
  Properties LP and Triad Properties Corporation is 
  incorporated by reference to the Registrant's Form 8-K 
  dated and filed April 22, 1998. Parkway agrees to 
  furnish supplementally to the Securities and Exchange 
  Commission on request a copy of any omitted schedule or 
  exhibit to this agreement.
  
  (10) (b) Purchase and Sale Agreement between Parkway 
  Portfolio I LLC and Triad Properties Corporation, and 
  Parkway Properties LP, a Delaware limited partnership 
  is incorporated by reference to the Registrant's Form 
  8-K dated and filed April 22, 1998. 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)	(a)	Amended and Restated Agreement of Limited 
  Partnership of Parkway Properties LP, including Amended 
  and Restated Exhibit A of the Amended and Restated 
  Agreement of Limited Partnership. 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)	Admission Agreement between Parkway Properties LP 
  and Lane N. Meltzer. 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)	(c)	Promissory Note between Parkway Properties LP and 
  Teachers Insurance and Annuity Association of America.  
  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)	(d)	Form of Mortgage, Assignment of Leases and Rents 
  Security Agreement and Fixture Filing Statement by 
  Parkway Properties LP as borrower for the benefit of 
  Teachers Insurance and Annuity Association of America 
  as lender.  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)	(e)	Conversion and Note Agreement between Parkway 
  Properties LP Parkway Properties, Inc. and Teachers 
  Insurance and Annuity Association of America. Parkway 
  agrees to furnish supplementally to the Securities and 
  Exchange Commission on request a copy of any omitted 
  schedule or exhibit to this agreement.
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  PARKWAY PROPERTIES, INC.
  
             Pro Forma Consolidated Financial Statements
                             (Unaudited)
  
       The following unaudited pro forma consolidated balance sheet 
  as of March 31, 1998 and pro forma consolidated statements of 
  income of Parkway Properties, Inc. ("Parkway") for the year ended 
  December 31, 1997 and the three months ended March 31, 1998 give 
  effect to the recent purchases of Parkway listed below for the 
  periods stated as well as the sale of the four office buildings 
  owned by Parkway in Dallas, Texas (the "Dallas Portfolio"). The 
  pro forma consolidated financial statements have been prepared by 
  management of Parkway based upon the historical financial 
  statements of Parkway and the adjustments and assumptions in the 
  accompanying notes to the pro forma consolidated financial 
  statements.
  
       The pro forma consolidated balance sheet sets forth the 
  effect of Parkway's sale of the Dallas Portfolio, as if it had 
  been consummated on March 31, 1998.
  
       The pro forma consolidated statements of income sets forth 
  the effects of Parkway's purchases of the buildings listed below 
  as if they had been consummated on January 1, 1997.  
  
  
  BUILDING                            DATE OF PURCHASE
  
  SouthTrust Bank Building                03/31/98
  Brookdale Portfolio                     02/25/98
  Schlumberger Building                   01/21/98
  Greenbrier Towers                       11/25/97
  Raytheon Building                       11/17/97
  First Little Rock Plaza                 11/07/97
  Hightower Centre                        10/01/97
  Morgan Keegan Tower                     09/30/97
  First Tennessee Plaza                   09/18/97
  Fairway Plaza                           08/12/97
  NationsBank Tower                       07/31/97
  Lakewood II                             07/10/97
  Sugar Grove                             05/01/97
  Vestavia Centre                         04/04/97
  Meridian                                03/31/97
  Charlotte Park Executive Center         03/18/97
  Courtyard at Arapaho                    03/06/97
  Ashford II                              01/28/97          
  Forum II & III                          01/07/97
  
  	In addition to the purchases listed above, the pro forma 
  consolidated statement of income sets forth the effect of the sale 
  of 1,750,000 shares of Common Stock on January 22, 1997, 262,500 
  shares of Common Stock on February 19, 1997, 3,000,000 shares of 
  Common Stock on September 24, 1997, 450,000 shares of Common Stock 
  On October 6, 1997, 451,128 shares of Common Stock on February 3, 
  1998 and 855,900 shares of Common Stock on March 11, 1998, as well 
  as the sale of the Dallas Portfolio as if these transactions had 
  occurred January 1, 1997.
  
  	These pro forma consolidated financial statements may not be 
  indicative of the results that actually would have occurred if the 
  purchases, sales and/or financings had been in effect on the dates 
  indicated or which may be obtained in the future.  The pro forma 
  consolidated financial statements should be read in conjunction 
  with the consolidated financial statements and notes of Parkway 
  included in its annual report on Form 10-K for the year ended 
  December 31, 1997.
  
  
  PARKWAY PROPERTIES, INC. AND SUBSIDIARIES
  	PRO FORMA CONSOLIDATED BALANCE SHEET
  	MARCH 31, 1998
  	(Unaudited)
  
                                             Pro Forma     
                                 Historical  Adjustments  Pro Forma
  						----------  -----------  ---------
                                            (In thousands)
   Assets                                     
   Real estate related investments:
     Office buildings.............$507,477    $      -     $507,477
     Office buildings held
       for sale...................  48,864     (48,864)           -
     Land held for development....   1,721           -        1,721
     Accumulated depreciation..... (16,238)          -      (16,238)
                                  --------    --------     --------
                                   541,824     (48,864)     492,960
   
   Land held for sale...........     5,341           -        5,341
   Mortgage loans...............     1,115           -        1,115
   Real estate partnership......       322           -          322
                                  --------    --------     --------
                                   548,602     (48,864)     499,738
   Interest, rents receivable 
     and other assets.............   9,755           -        9,755
   Cash and cash equivalents......   1,060      25,000       26,060
                                  --------    --------     --------
                                  $559,417    $(23,864)    $535,553
                                  ========    ========     ========
  Liabilities
  Notes payable to banks..........$152,404    $(27,164)    $125,240
  Mortgage notes payable
    without recourse.............. 104,157           -      104,157
  Accounts payable and other 
    liabilities...................  15,057           -       15,057
                                  --------    --------     --------
                                  $271,618     (27,164)    $244,454
                                  --------    --------     --------
  Stockholders' Equity
  Common stock, $0.001 par value, 
    70,000,000 shares authorized, 
    11,085,823 shares issued 
    and outstanding...............      11           -           11
  Additional paid-in capital...... 254,828           -      254,828
  Retained earnings...............  32,960       3,300       36,260
                                  --------    --------     --------
                                   287,799       3,300      291,099
                                  --------    --------     --------
                                  $559,417    $(23,864)    $535,553
                                  ========    ========     ========
  
  
  See accompanying notes 
  PARKWAY PROPERTIES, INC. AND SUBSIDIARIES
               PRO FORMA CONSOLIDATED STATEMENT OF INCOME
  FOR THE YEAR ENDED DECEMBER 31, 1997
                               (Unaudited)
                                            Pro Forma    
                                Historical Adjustments(1-2)Pro Forma
                                ---------- --------------  ---------
                               (In thousands, except per share data)
  Revenues 
  Income from office properties...$45,799    $38,745 (a)    $84,544
  Income from other real estate 
    properties....................    722          -            722
  Interest on mortgage loans......     63          -             63
  Management company income.......    539          -            539
  Interest on investments.........    373       (373)(d)          -
  Dividend income.................    388          -            388
  Deferred gains and other income.    203          -            203
                                  -------    -------        -------
                                   48,087     38,372         86,459
                                  -------    -------        -------
  Expenses
  Office properties                                  
    Operating expense............. 19,697     16,879 (a)     36,576
    Interest expense:
      Contractual.................  5,486      2,849 (c)      8,335
      Amortization of loan cost...     95          -             95
    Depreciation and amortization.  6,033      6,039 (a)     12,072
    Minority interest.............     59          -             59 
  Other real estate properties
    Operating expense.............    462          -            462
  Interest expense on bank notes:
    Contractual...................    810      5,624 (d)      6,434
    Amortization of loan costs....    187          -            187
  Management company expense......    362          -            362
  General and administrative......  3,312          -          3,312
                                  -------    -------        -------
                                   36,503     31,391         67,894 
                                  -------    -------        -------
  Income before gains............. 11,584      6,981         18,565
                                  -------    -------        -------
  Gain on sales
  Gain on real estate held for 
    sale and mortgage loans.......  2,907          -          2,907
                                  -------    -------        -------
  Net income......................$14,491    $ 6,981        $21,472
                                  =======    =======        =======
  Net income per share:           
    Basic.........................$  2.05                  $ 1.94(3)
    Diluted.......................$  2.01                  $ 1.92(3)      
  Weighted average shares 
    outstanding:                  
    Basic.........................  7,078                  11,072(3)
    Diluted.......................  7,214                  11,208(3)
  See accompanying notes
  
  PARKWAY PROPERTIES, INC. AND SUBSIDIARIES
               PRO FORMA CONSOLIDATED STATEMENT OF INCOME
  FOR THE THREE MONTHS ENDED MARCH 31, 1998
                               (Unaudited)
                                            Pro Forma    
                                Historical Adjustments(1-2)Pro Forma
                                ---------- --------------  ---------
                               (In thousands, except per share data)
  Revenues 
  Income from office properties...$19,644    $ 2,759 (b)    $22,403
  Income from other real estate 
    properties....................      -          -              -
  Interest on mortgage loans......     24          -             24
  Management company income.......    129          -            129
  Interest on investments.........      7          -              7
  Dividend income.................      -          -              -
  Deferred gains and other income.    110          -            110
                                  -------    -------        -------
                                   19,914      2,759         22,673
                                  -------    -------        -------
  Expenses
  Office properties                                  
    Operating expense.............  8,244      1,293 (b)      9,537
    Interest expense:
      Contractual.................  2,043          -          2,043
      Amortization of loan cost...     25          -             25
    Depreciation and amortization.  2,591        673 (b)      3,264
    Minority interest.............      -          -              - 
  Other real estate properties
    Operating expense.............     30          -             30
  Interest expense on bank notes:
    Contractual...................  1,122        353 (d)      1,475
    Amortization of loan costs....    234          -            234
  Management company expense......    105          -            105
  General and administrative......    902          -            902
                                  -------    -------        -------
                                   15,296      2,319         17,615
                                  -------    -------        -------
  Income before gains.............  4,618        440          5,058
                                  -------    -------        -------
  Gain on sales
  Gain on real estate held for 
    sale and mortgage loans.......    952          -            952
                                  -------    -------        -------
  Net income......................$ 5,570        440        $ 6,010
                                  =======    =======        =======
  Net income per share:           
    Basic.........................$   .55                   $   .54(3)
    Diluted.......................$   .54                   $   .54(3)          
  Weighted average shares 
    outstanding:                  
    Basic......................... 10,156                    11,078(3)
    Diluted....................... 10,301                    11,223(3)
  See accompanying notes
  
  
   PARKWAY PROPERTIES, INC.
       
         Notes to Pro Forma Consolidated Financial Statements
                           (Unaudited)
  
  1. On July 1, the Company sold the four-building Dallas 
  Portfolio for $53,250,000. The Company expects to record a 
  gain for financial purposes of approximately $3.3 million on 
  the sale. Approximately $25,000,000 of the sale proceeds 
  will be held in trust under the like-kind exchange rules, 
  pending the purchase of replacement properties.
  
  2.	The pro forma adjustments to the historical Consolidated  
  Statement of Income for the year ended December 31, 1997 and 
  the three months ended March 31, 1998 set forth the effects 
  of Parkway's purchases of the following buildings as if they 
  had been consummated on January 1, 1997.  
  
  BUILDING                            DATE OF PURCHASE
       
  	SouthTrust Bank Building                03/31/98
  	Brookdale Portfolio                     02/25/98
  	Schlumberger Building                   01/21/98
  	Greenbrier Towers                       11/25/97
  	Raytheon Building                       11/17/97
  	First Little Rock Plaza                 11/07/97
  	Hightower Centre                        10/01/97
       Morgan Keegan Tower                     09/30/97
  First Tennessee Plaza                   09/18/97
  Fairway Plaza                           08/12/97
  NationsBank Tower                       07/31/97
  Lakewood II                             07/10/97
  Sugar Grove                             05/01/97
  Vestavia Centre                         04/04/97
  Meridian                                03/31/97
  Charlotte Park Executive Center         03/18/97
  Courtyard at Arapaho                    03/06/97
  Ashford II                              01/28/97
  Forum II & III                          01/07/97
  
  (a)  The pro forma adjustments to the Consolidated Statement of 
  Income are detailed below by property for the year ended 
  December 31, 1997.
  
  					Revenue              Expenses
                         -----------   ---------------------------
                         Income From         Real Estate Owned
                         Real Estate    Operating     Depreciation
                         Properties      Expense        Expense*
                         -----------   ------------   ------------
  Purchases:
     Charlotte Park      $    505,000    $   208,000    $    69,000
     Ashford II                54,000         37,000          4,000
     Courtyard at
  	Arapaho                366,000        164,000         58,000
     Meridian                 354,000        123,000         59,000
     Vestavia                 240,000         91,000         26,000
     Sugar Grove              309,000        165,000         43,000
     Lakewood II              977,000        447,000        129,000
     NationsBank Tower      2,392,000      1,003,000        271,000
     Fairway Plaza            859,000        379,000         94,000
     First Tennessee
  	Plaza                4,253,000      2,080,000        477,000
     Morgan Keegan
  	Tower                3,327,000      1,665,000        618,000
     Hightower Centre         833,000        333,000        113,000
     Raytheon Building      2,417,000      1,072,000        315,000
     First Little Rock      1,298,000        517,000        191,000
     Greenbrier Towers      1,913,000        835,000        330,000
     Schlumberger           2,260,000        817,000        275,000
     Brookdale Portfolio   20,543,000      9,108,000      3,668,000
     SouthTrust Bank Bldg.  2,751,000      1,205,000        392,000
  Sale of Dallas Portfolio (6,906,000)    (3,370,000)    (1,093,000)
                          -----------    -----------    -----------
  	                   $38,745,000    $16,879,000    $ 6,039,000
  	                   ===========    ===========    ===========
  
  	*Depreciation is provided by the straight-line method over 
  the estimated useful lives of the buildings (40 years).
  
  (b)  The pro forma adjustments to the Consolidated Statement of 
  Income are detailed below by property for the three months 
  ended March 31, 1998.
  
  					 Revenue              Expenses
                          -----------   ---------------------------
                          Income From         Real Estate Owned
                          Real Estate    Operating     Depreciation
                          Properties      Expense        Expense*
                          -----------   ------------   ------------
  Purchases:
  Schlumberger            $   125,000   $     45,000     $   15,000
  Brookdale Portfolio       3,139,000      1,392,000        560,000
  SouthTrust Bank Building    720,000        335,000         98,000
  Sale of Dallas Portfolio (1,225,000)      (479,000)             -
                          -----------   ------------   ------------
  	                   $ 2,759,000   $  1,293,000     $  673,000
  	                   ===========   ============   ============
  
  	*Depreciation is provided by the straight-line method over 
  the estimated useful lives of the buildings (40 years).
  
  (c)	Pro forma interest expense on real estate owned reflects the 
  non-recourse debt placed on certain buildings acquired in 
  1996 and 1997 and debt assumed upon purchase at the actual 
  amounts and rates by property as if in place January 1, 1997 
  and is detailed below.
  
       Property/Placement 			  Year Ended
  	    Date/Rate          Debt       12/31/97
  	------------------  -----------  ---------- 
  	Lakewood II*
  	  7/97 8.08%       $ 6,910,000    $ 294,000
  
       BB&T
         11/97 7.3%        15,000,000      958,000
  
       Raytheon Building*
         11/97 8.125%       7,958,000      566,000
  
  	First Tennessee
  	  Plaza
         12/97 7.17%       15,000,000    1,031,000
                                        ----------
                                        $2,849,000
                                        ==========
  	*Assumed in purchase.
  
  (d) The pro forma effect of the building purchases, the 
  placement of non-recourse debt, the sales of Common 
  Stock and the proposed sale of the Dallas portfolio on 
  interest expense on notes payable to banks was 
  $5,624,000 for the year ended December 31, 1997 and 
  $353,000 for the three months ended March 31, 1998.
   
   3.  The pro forma basic and diluted earnings per share for the 
  year ended December 31, 1997 reflect the sale of 1,750,000 
  shares of Common Stock on January 22, 1997, 262,500 shares of 
  Common Stock on February 19, 1997, 3,000,000 shares of Common 
  Stock on September 24, 1997, 450,000 shares of Common Stock 
  on October 6, 1997, 451,128 shares of Common Stock on 
  February 23, 1998 and 855,900 shares of Common Stock on March 
  11, 1998.
  
   4.	No income tax expenses were provided because of the Company's 
  net operating loss carryover and status as a REIT.
  
   
  
  
  
  
  
  
  
  
  
  
  
  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:  July 15, 1998			PARKWAY PROPERTIES, INC.
  
  
  
  							BY:	/s/Steven G. Rogers
  								President and CEO
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP
  
  OF
  
  PARKWAY PROPERTIES LP
  
  January 1, 1998
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP
  
  OF
  
  PARKWAY PROPERTIES LP
  
  
  TABLE OF CONTENTS
  
  
  	PAGE
  
  
  
  ARTICLE 1
  DEFINED TERMS		1
  	Section 1.1	DEFINITIONS	  1
  
  ARTICLE 2
  ORGANIZATIONAL MATTERS	 16
  	Section 2.1	ORGANIZATION	 16
  	Section 2.2	NAME	 16
  	Section 2.3	RESIDENT AGENT; PRINCIPAL OFFICE	 16
  	Section 2.4	POWER OF ATTORNEY	 17
  	Section 2.5	TERM	 18
  
  ARTICLE 3
  PURPOSE		 18
  	Section 3.1	PURPOSE AND BUSINESS	 18
  	Section 3.2	POWERS	 18
  	Section 3.3	PARTNERSHIP ONLY FOR PURPOSES SPECIFIED	 19
  	Section 3.4	REPRESENTATIONS AND WARRANTIES BY THE PARTIES	 19
  
  ARTICLE 4
  CAPITAL CONTRIBUTIONS	 21
  	Section 4.1	CAPITAL CONTRIBUTIONS OF THE PARTNERS	 21
  	Section 4.2	LOANS BY THIRD PARTIES	 22
  	Section 4.3	ADDITIONAL FUNDING AND CAPITAL CONTRIBUTIONS	 22
  					(a)	GENERAL	 22
  					(b)	GENERAL PARTNER LOANS	 22
  					(c)	ISSUANCE OF ADDITIONAL PARTNERSHIP
  					 	INTERESTS	 22
  					(d)	ISSUANCE OF REIT SHARES OR OTHER
  						SECURITIES BY THE COMPANY	 23
  					(e)	PERCENTAGE INTEREST ADJUSTMENTS IN THE
  						CASE OF CAPITAL CONTRIBUTIONS FOR
  						PARTNERSHIP UNITS	 23
  	Section 4.4	STOCK PLAN	 24
  	Section 4.5	NO THIRD PARTY BENEFICIARY	 24
  	Section 4.6	OTHER CONTRIBUTION PROVISIONS	 24
  
  ARTICLE 5
  DISTRIBUTIONS		 25
  	Section 5.1	REQUIREMENT AND CHARACTERIZATION OF
  			DISTRIBUTIONS	 25
  	Section 5.2	DISTRIBUTIONS IN KIND	 25
  	Section 5.3	DISTRIBUTIONS UPON LIQUIDATION	 25
  	Section 5.4	DISTRIBUTIONS TO REFLECT ISSUANCE OF 
  			ADDITIONAL PARTNERSHIP INTERESTS	 26
  
  ARTICLE 6
  ALLOCATIONS		 26
  	Section 6.1	TIMING AND AMOUNT OF ALLOCATIONS OF NET INCOME 
  			AND NET LOSS	 26
  	Section 6.2	GENERAL ALLOCATIONS	 26
  						(a)IN GENERAL	 26
  						(b)	ALLOCATIONS TO REFLECT ISSUANCE OF	
  	 							ADDITIONAL PARTNERSHIP INTERESTS	 26
  	Section 6.3	ADDITIONAL ALLOCATION PROVISIONS	 26
  						(a)REGULATORY ALLOCATIONS	 26
  	Section 6.4	TAX ALLOCATIONS	 29
  						(a)IN GENERAL	 29
  						(b)ALLOCATIONS RESPECTING SECTION 704(C)
  						 REVALUATIONS	 29
  
  ARTICLE 7
  MANAGEMENT AND OPERATIONS OF BUSINESS	 29
  	Section 7.1	MANAGEMENT	 29
  	Section 7.2	CERTIFICATE OF LIMITED PARTNERSHIP	 33
  	Section 7.3	RESTRICTIONS ON GENERAL PARTNER'S AUTHORITY	 33
  	Section 7.4	REIMBURSEMENT OF THE GENERAL PARTNER	 36
  	Section 7.5	CONTRACTS WITH AFFILIATES	 36
  	Section 7.6	INDEMNIFICATION	 37
  	Section 7.7	LIABILITY OF THE GENERAL PARTNER	 39
  	Section 7.8	OTHER MATTERS CONCERNING THE GENERAL PARTNER	 40
  	Section 7.9	TITLE TO PARTNERSHIP ASSETS	 40
  	Section 7.10	RELIANCE BY THIRD PARTIES	 41
  
  ARTICLE 8
  RIGHTS AND OBLIGATIONS OF LIMITED PARTNER	 41
  	Section 8.1	LIMITATION OF LIABILITY	 41
  	Section 8.2	MANAGEMENT OF BUSINESS	 42
  	Section 8.3	OUTSIDE ACTIVITIES OF LIMITED PARTNERS	 42
  	Section 8.4	RETURN OF CAPITAL	 42
  	Section 8.5	RIGHTS OF LIMITED PARTNERS RELATING TO THE 
  			PARTNERSHIP	 43
  	Section 8.6	REDEMPTION RIGHTS	 43
  
  ARTICLE 9
  BOOKS, RECORDS, ACCOUNTING AND REPORTS	 46
  	Section 9.1	RECORDS AND ACCOUNTING	 46
  	Section 9.2	FISCAL YEAR	 46
  	Section 9.3	REPORTS	 47
  
  ARTICLE 10
  TAX MATTERS		 47
  	Section 10.1	PREPARATION OF TAX RETURNS	 47
  	Section 10.2	TAX ELECTIONS	 47
  	Section 10.3	TAX MATTERS PARTNER	 47
  	Section 10.4	ORGANIZATIONAL EXPENSES	 49
  	Section 10.5	WITHHOLDING	 49
  
  ARTICLE 11
  TRANSFERS AND WITHDRAWALS	 50
  	Section 11.1	TRANSFER	 50
  	Section 11.2	TRANSFER OF GENERAL PARTNER'S PARTNERSHIP 
  			INTEREST	 50
  	Section 11.3	LIMITED PARTNERS' RIGHTS TO TRANSFER	 52
  						(i)GENERAL PARTNER RIGHT OF FIRST REFUSAL	 52
  						(ii)QUALIFIED TRANSFEREE	 53
  	Section 11.4	SUBSTITUTED LIMITED PARTNERS	 54
  	Section 11.5	ASSIGNEES	 55
  	Section 11.6	GENERAL PROVISIONS	 55
  
  ARTICLE 12
  ADMISSION OF PARTNERS	 57
  	Section 12.1	ADMISSION OF SUCCESSOR GENERAL PARTNER	 57
  	Section 12.2	ADMISSION OF ADDITIONAL LIMITED PARTNERS	 57
  	Section 12.3	AMENDMENT OF AGREEMENT AND CERTIFICATE OF 
  LIMITED PARTNERSHIP	 58
  
  ARTICLE 13
  DISSOLUTION AND LIQUIDATION	 58
  	Section 13.1	DISSOLUTION	 58
  	Section 13.2	WINDING UP	 59
  	Section 13.3	COMPLIANCE WITH TIMING REQUIREMENTS OF 
  			REGULATIONS	 60
  	Section 13.4	RIGHTS OF LIMITED PARTNERS	 61
  	Section 13.5	NOTICE OF DISSOLUTION	 61
  	Section 13.6	CANCELLATION OF CERTIFICATE OF LIMITED 
  PARTNERSHIP	 61
  	Section 13.7	REASONABLE TIME FOR WINDING UP	 61
  	Section 13.8	WAIVER OF PARTITION	 62
  
  ARTICLE 14
  AMENDMENT OF PARTNERSHIP AGREEMENT; CONSENTS	 62
  	Section 14.1	AMENDMENTS	 62
  	Section 14.2	ACTION BY THE PARTNERS	 62
  
  ARTICLE 15
  GENERAL PROVISIONS	 63
  	Section 15.1	ADDRESSES AND NOTICE	 63
  	Section 15.2	TITLES AND CAPTIONS	 63
  	Section 15.3	PRONOUNS AND PLURALS	 63
  	Section 15.4	FURTHER ACTION	 64
  	Section 15.5	BINDING EFFECT	 64
  	Section 15.6	CREDITORS	 64
  	Section 15.7	WAIVER	 64
  	Section 15.8	COUNTERPARTS	 64
  	Section 15.9	APPLICABLE LAW	 64
  	Section 15.10	INVALIDITY OF PROVISIONS	 64
  	Section 15.11	LIMITATION TO PRESERVE REIT STATUS	 65
  	Section 15.12	ENTIRE AGREEMENT	 65
  	Section 15.13	NO RIGHTS AS STOCKHOLDERS	 66
  
  EXHIBIT A
  Partners, Contributions and Partnership Interests	 67
  
  EXHIBIT B
  Notice of Redemption	 68
  
  EXHIBIT C
  Schedule of Partners' Ownership with Respect to Tenants	 69
  
  EXHIBIT D
  Schedule of REIT Shares Actually or
  Constructively Owned by Limited Partners Other
  than those Acquired Pursuant to an Exchange	 70
  
  
  
  
  
  
  
  
  AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP
  OF
  PARKWAY PROPERTIES LP
  
  
  	THIS AMENDED AND RESTATED AGREEMENT OF LIMITED 
  PARTNERSHIP, dated as of January 1, 1998, is entered into by and 
  among Parkway Properties Inc., a Maryland corporation (the 
  "Company"), Parkway Properties General Partners Inc. ("PPGP"), 
  together with any other Persons who become Partners in the 
  Partnership as provided herein.
  
  	WHEREAS, the limited partnership was formed pursuant to 
  the Revised Uniform Limited Partnership Act of the State of 
  Delaware by filing a certificate of limited partnership on 
  January 6, 1997;
  
  	WHEREAS, the Agreement of Limited Partnership of 
  Parkway Properties LP was executed on January 3, 1997 with PPGP 
  as the original general partner and the Company as the original 
  Limited Partner, and amended on November 1, 1997; 
  
  	WHEREAS, the Company proposes to restructure its 
  operations by contributing substantially all of its assets and 
  properties to the Partnership in exchange for additional Limited 
  Partnership interests; 
  
  	NOW, THEREFORE, BE IT RESOLVED, that for good and 
  adequate consideration, the receipt of which is hereby 
  acknowledged, the parties hereto agree as follows:
  
  
  ARTICLE 1
  DEFINED TERMS
  
  	Section 1.1	DEFINITIONS
  
  	The following definitions shall be for all purposes, 
  unless otherwise clearly indicated to the contrary, applied to 
  the terms used in this Agreement:
  
  	"ACT" means the Delaware Revised Uniform Limited 
  Partnership Act, as it may be amended from time to time, and any 
  successor to such statute.
  
  	"ADDITIONAL FUNDS" shall have the meaning set forth in 
  Section 4.3(a).
  
  	"ADDITIONAL LIMITED PARTNER" means a Person admitted to 
  the Partnership as a Limited Partner pursuant to Section 12.2 
  hereof and who is shown as such on the books and records of the 
  Partnership.
  
  	"ADJUSTED CAPITAL ACCOUNT DEFICIT" means, with respect 
  to any Partner, the deficit balance, if any, in such Partner's 
  Capital Account as of the end of the relevant fiscal year, after 
  giving effect to the following adjustments:
  
  	(a)	decrease such deficit by any amounts which such 
  Partner is obligated, or is treated as obligated, to restore 
  pursuant to this Agreement or is deemed to be obligated to 
  restore pursuant to Regulations Section 1.704-1(b)(2)(ii)(c) or 
  the penultimate sentence of each of Regulations Sections 
  1.704-2(i)(5) and 1.704-2(g)(1); and
  
  	(b)	increase such deficit by the items described in 
  Regulations Section 1.704-1(b)(2)(ii)(d)(4), (5) and (6).
  
  	The foregoing definition of Adjusted Capital Account 
  Deficit is intended to comply with the provisions of Regulations 
  Section 1.704-1(b)(2)(ii)(d) and
  shall be interpreted consistently therewith.
  
  	"ADJUSTMENT DATE" means, with respect to any Capital 
  Contribution, the close of business on the Business Day last 
  preceding the date of the Capital Contribution, PROVIDED THAT, if 
  such Capital Contribution is being made by the Company in respect 
  of the proceeds from the issuance of REIT Shares (or the issuance 
  of the Company's securities exercisable for, convertible into or 
  exchangeable for REIT Shares), then the Adjustment Date shall be 
  as of the close of business on the Business Day last preceding 
  the date of the issuance of such securities.
  
  	"AFFILIATE" means, with respect to any Person, any 
  Person directly or indirectly controlling, controlled by or under 
  common control with such Person.
  
  	"AGENT" shall have the meaning set forth in Section 
  7.7(a).
  
  	"AGREED VALUE" means (i) in the case of any Contributed 
  Property set forth in Exhibit A and as of the time of its 
  contribution to the Partnership, the Agreed Value of such 
  property as set forth in Exhibit A; (ii) in the case of any 
  Contributed Property not set forth in Exhibit A and as of the 
  time of its contribution to the Partnership, the fair market 
  value of such property or other consideration as determined by 
  the General Partner, reduced by any liabilities either assumed by 
  the Partnership upon such contribution or to which such property 
  is subject when contributed; and (iii) in the case of any 
  property distributed to a Partner by the Partnership, the fair 
  market value of such property as determined by the General 
  Partner at the time such property is distributed, reduced by any 
  liabilities either assumed by such Partner upon such distribution 
  or to which such property is subject at the time of the 
  distribution as determined under Section 752 of the Code and the 
  Regulations thereunder.
  
  	"AGREEMENT" means this Amended and Restated Agreement 
  of Limited Partnership, as it may be amended, supplemented or 
  restated from time to time.
  
  	"APPRAISAL" means, with respect to any assets, the 
  opinion of an independent third party experienced in the 
  valuation of similar assets, selected by the General Partner in 
  good faith; such opinion may be in the form of an opinion by such 
  independent third party that the value for such property or asset 
  as set by the General Partner is fair, from a financial point of 
  view, to the Partnership.
  
  	"ASSIGNEE" means a Person to whom one or more 
  Partnership Units have been transferred in a manner permitted 
  under this Agreement, but who has not become a Substituted 
  Limited Partner, and who has the rights set forth in Section 
  11.5.
  
  	"AVAILABLE CASH" means, with respect to any period for 
  which such calculation is being made,
  
  	(a)	the sum of:
  
  		(i)		the Partnership's Net Income or Net Loss 
  (as the case may be) for such period,
  
  		(ii)		Depreciation and all other noncash 
  charges deducted in determining Net Income or Net Loss for such 
  period,
  
  		(iii)	the amount of any reduction in reserves 
  of the Partnership referred to in clause (b)(vi) below 
  (including, without limitation, reductions resulting because the 
  General Partner determines such amounts are no longer necessary),
  
  		(iv)		the excess of the net proceeds from the 
  sale, exchange, disposition, or refinancing of Partnership 
  property for such period over the gain (or loss, as the case may 
  be) recognized from any such sale, exchange, disposition, or 
  refinancing during such period (excluding Terminating Capital 
  Transactions), and
  
  		(v)		all other cash received by the 
  Partnership for such period that was not included in determining 
  Net Income or Net Loss for such period;
  
  	(b)	less the sum of:
  
  		(vi)		all principal debt payments made during 
  such period by the Partnership,
  
  		(vii)	capital expenditures made by the 
  Partnership during such period,
  
  		(viii)	investments in any entity (including 
  loans made thereto) to the extent that such investments are not 
  otherwise described in clause (vi) or (vii),
  
  		(ix)		all other expenditures and payments not 
  deducted in determining Net Income or Net Loss for such period,
  
  		(x)		any amount included in determining Net 
  Income or Net Loss for such period that was not received by the 
  Partnership during such period,
  
  		(xi)		the amount of any increase in reserves 
  established during such period which the General Partner 
  determines are necessary or appropriate in its sole and absolute 
  discretion, and
  
  		(xii)	the amount of any working capital 
  accounts and other cash or similar balances which the General 
  Partner determines to be necessary or appropriate in its sole and 
  absolute discretion.
  
  	Notwithstanding the foregoing, Available Cash shall not 
  include any cash received or reductions in reserves, or take into 
  account any disbursements made or reserves, established, after 
  commencement of the dissolution and liquidation of the 
  Partnership.
  
  	"BUSINESS DAY" means any day except a Saturday, Sunday 
  or other day on which commercial banks in New York, New York are 
  authorized or required by law to be closed.
  
  	"CAPITAL ACCOUNT" means, with respect to any Partner, 
  the Capital Account maintained for such Partner in accordance 
  with the following provisions:
  
  	(a)	To each Partner's Capital Account there shall be 
  added such Partner's Capital Contributions, such Partner's share 
  of Net Income and any items in the nature of income or gain which 
  are specially allocated pursuant to Section 0 hereof, and the 
  amount of any Partnership liabilities assumed by such Partner or 
  which are secured by any property distributed to such Partner.
  
  	(b)	From each Partner's Capital Account there shall be 
  subtracted the amount of cash and the Gross Asset Value of any 
  property distributed to such Partner pursuant to any provision of 
  this Agreement, such Partner's distributive share of Net Losses 
  and any items in the nature of expenses or losses which are 
  specially allocated pursuant to Section 0 hereof, and the amount 
  of any liabilities of such Partner assumed by the Partnership or 
  which are secured by any property contributed by such Partner to 
  the Partnership.
  
  	(c)	In the event any interest in the Partnership is 
  transferred in accordance with the terms of this Agreement (which 
  does not result in a termination of the Partnership for federal 
  income tax purposes), the transferee shall succeed to the Capital 
  Account of the transferor to the extent it relates to the 
  transferred interest.
  
  	(d)	In determining the amount of any liability for 
  purposes of subsections (a) and (b) hereof, there shall be taken 
  into account Code section 752(c) and any other applicable 
  provisions of the Code and Regulations. 
  
  	(e)	The foregoing provisions and the other provisions 
  of this Agreement relating to the maintenance of Capital Accounts 
  are intended to comply with Regulations Sections 1.704-1(b) and 
  1.704-2, and shall be interpreted and applied in a manner 
  consistent with such Regulations.  In the event the General 
  Partner shall determine that it is prudent to modify the manner 
  in which the Capital Accounts, or any debits or credits thereto 
  (including, without limitation, debits or credits relating to 
  liabilities which are secured by contributed or distributed 
  property or which are assumed by the Partnership, the General 
  Partner, or the Limited Partners) are computed in order to comply 
  with such Regulations, the General Partner may make such 
  modification, PROVIDED THAT it is not likely to have a material 
  effect on the amounts distributable to any Person pursuant to 
  Article 13 of the Agreement upon the dissolution of the 
  Partnership.  The General Partner also shall (i) make any 
  adjustments that are necessary or appropriate to maintain 
  equality between the Capital Accounts of the Partners and the 
  amount of Partnership capital reflected on the Partnership's 
  balance sheet, as computed for book purposes, in accordance with 
  Regulations Section 1.704-1(b)(2)(iv)(q), and (ii) make any 
  appropriate modifications in the event unanticipated events might 
  otherwise cause this Agreement not to comply with Regulations 
  Section 1.704-1(b) or Section 1.704-2.
  
  	"CAPITAL CONTRIBUTION" means, with respect to any 
  Partner, the amount of money and the initial Gross Asset Value of 
  any property (other than money) contributed to the Partnership by 
  such Partner.
  
  	"CASH AMOUNT" means, with respect to any Partnership 
  Units subject to a Redemption, an amount of cash equal to the 
  Deemed Partnership Interest Value attributable to such 
  Partnership Units.
  
  	"CERTIFICATE" means the Certificate of Limited 
  Partnership relating to the Partnership filed in the office of 
  the Secretary of State of Delaware, as amended from time to time 
  in accordance with the terms hereof and the Act.
  
  	"CHARTER" means the Articles of Incorporation of the 
  Company filed with the Maryland State Department of Assessments 
  and Taxation on May 17, 1996, as amended or restated from time to 
  time.
  
  	"CODE" means the Internal Revenue Code of 1986, as 
  amended from time to time or any successor statute thereto, as 
  interpreted by the applicable regulations thereunder.  Any 
  reference herein to a specific section or sections of the Code 
  shall be deemed to include a reference to any corresponding 
  provision of future law.
  
  	"CONSENT" means the consent to, approval of, or vote on 
  a proposed action by a Partner given in accordance with Article 
  14 hereof.
  
  	"CONSENT OF THE LIMITED PARTNERS" means the Consent of 
  a Majority In Interest of the Limited Partners, which Consent 
  shall be obtained prior to the taking of any action for which it 
  is required by this Agreement and may be given or withheld by a 
  Majority in Interest of the Limited Partners, unless otherwise 
  expressly provided herein, in their sole and absolute discretion. 
  
  	"CONSENT OF THE PARTNERS" means the Consent of Partners 
  holding Percentage Interests that, in the aggregate are equal to 
  or greater than 66 2/3% of the aggregate Percentage Interests of 
  all Partners, which Consent shall be obtained prior to the taking 
  of any action for which it is required by this Agreement and may 
  be given or withheld by such Partners, in their sole and absolute 
  discretion.
  
  	"CONSENT OF THE SUPER MAJORITY LIMITED PARTNERS" means 
  the consent of Limited Partners (other than the General Partner 
  and any Limited Partner 50% or more of whose equity is owned, 
  directly or indirectly, by the General Partner) holding 
  Percentage Interests that, in the aggregate are equal to or 
  greater than 66 2/3% of the aggregate Percentage Interests of all 
  Limited Partners (other than the General Partner and any Limited 
  Partner 50% or more of whose equity is owned, directly or 
  indirectly, by the General Partner), which Consent shall be 
  obtained prior to the taking of any action for which it is 
  required by this Agreement and may be given or withheld by such 
  Limited Partners, in their sole and absolute discretion.
  
  	"CONSTRUCTIVELY OWN" means ownership under the 
  constructive ownership rules of Section 856(d)(5) of the Code.
  
  	"CONTRIBUTED PROPERTY" means each property or other 
  asset, in such form as may be permitted by the Act, but excluding 
  cash, contributed or deemed contributed to the Partnership (or, 
  to the extent provided in applicable regulations, deemed 
  contributed to the Partnership on termination and reconstitution 
  thereof pursuant to Section 708 of the Code).
  
  	"DEBT" means, as to any Person, as of any date of 
  determination, (i) all indebtedness of such Person for borrowed 
  money or for the deferred purchase price of property or services; 
  (ii) all amounts owed by such Person to banks or other Persons in 
  respect to reimbursement obligations under letters of credit, 
  surety bonds and other similar instruments guaranteeing payment 
  or other performance of obligations by such Person; (iii) all 
  indebtedness for borrowed money or for the deferred purchase 
  price of property or services secured by any lien on any property 
  owned by such Person, to the extent attributable to such Person's 
  interest in such property, even though such Person has not 
  assumed or become liable for the payment thereof; and (iv) lease 
  obligations of such Person which, in accordance with generally 
  accepted accounting principles, should be capitalized.
  
  	"DEEMED PARTNERSHIP INTEREST VALUE" means, as of any 
  date with respect to any class of Partnership Interests, the 
  Deemed Value of the Partnership Interests of such class 
  multiplied by the applicable Partner's Percentage Interest of 
  such class.
  
  	"DEEMED VALUE OF THE PARTNERSHIP INTERESTS" means, as 
  of any date with respect to any class of Partnership Interests, 
  (i) the total number of shares of capital stock of the Company 
  corresponding to the Percentage Interest of the Company in such 
  class of Partnership Interests issued and outstanding as of the 
  close of business on such date (excluding any treasury shares) 
  multiplied by the Fair Market Value of a share of such capital 
  stock on such date; (ii) DIVIDED BY the Percentage Interest of 
  the General Partner in such class of Partnership Interests on 
  such date.
  
  	"DEPRECIATION" means, for each fiscal year or other 
  period, an amount equal to the depreciation, amortization or 
  other cost recovery deduction allowable with respect to an asset 
  for such year or other period, except that if the Gross Asset 
  Value of an asset differs from its adjusted basis for federal 
  income tax purposes at the beginning of such year or other 
  period, Depreciation shall be an amount which bears the same 
  ratio to such beginning Gross Asset Value as the federal income 
  tax depreciation, amortization or other cost recovery deduction 
  for such year or other period bears to such beginning adjusted 
  tax basis; PROVIDED, HOWEVER, that if the federal income tax 
  depreciation, amortization or other cost recovery deduction for 
  such year is zero, Depreciation shall be determined with 
  reference to such beginning Gross Asset Value using any 
  reasonable method selected by the General Partner.
  
  	"EFFECTIVE DATE" means the date upon which 
  contributions set forth on Exhibit A shall become completed.
  
  	"ERISA" means the Employee Retirement Income Security 
  Act of 1974, as amended, or any successor statute.
  
  	"FAIR MARKET VALUE" means, with respect to any REIT 
  Share, the average of the daily market price for the ten (10) 
  consecutive trading days immediately preceding the date with 
  respect to which "Fair Market Value" must be determined hereunder 
  or, if such date is not a Business Day, the immediately preceding 
  Business Day.  The market price for each such trading day shall 
  be: (i) if such shares are listed or admitted to trading on any 
  securities exchange or the Nasdaq National Market, the closing 
  price, regular way, on such day, or if no such sale takes place 
  on such day, the average of the closing bid and asked prices on 
  such day, (ii) if such shares are not listed or admitted to 
  trading on any securities exchange or the Nasdaq National Market, 
  the last reported sale price on such day or, if no sale takes 
  place on such day, the average of the closing bid and asked 
  prices on such day, as reported by a reliable quotation source 
  designated by the Company, or (iii) if such shares are not listed 
  or admitted to trading on any securities exchange or the Nasdaq 
  National Market and no such last reported sale price or closing 
  bid and asked prices are available, the average of the reported 
  high bid and low asked prices on such day, as reported by a 
  reliable quotation source designated by the Company, or if there 
  shall be no bid and asked prices on such day, the average of the 
  high bid and low asked prices, as so reported, on the most recent 
  day (not more than 10 days prior to the date in question) for 
  which prices have been so reported; PROVIDED THAT, if there are 
  no bid and asked prices reported during the 10 days prior to the 
  date in question, the Fair Market Value of such shares shall be 
  determined by the General Partner acting in good faith on the 
  basis of such quotations and other information as it considers, 
  in its reasonable judgment, appropriate.  In the event the REIT 
  Shares Amount for such shares includes rights that a holder of 
  such shares would be entitled to receive, then the Fair Market 
  Value of such rights shall be determined by the General Partner 
  acting in good faith on the basis of such quotations and other 
  information as it considers, in its reasonable judgment, 
  appropriate; and PROVIDED FURTHER THAT, in connection with 
  determining the Deemed Value of the Partnership Interests for 
  purposes of determining the number of additional Partnership 
  Units issuable upon a Capital Contribution funded by an 
  underwritten public offering of shares of capital stock of the 
  Company, the Fair Market Value of such shares shall be the public 
  offering price per share of such class of capital stock sold.
  
  	"FUNDING DEBT" means the incurrence of any Debt by or 
  on behalf of the General Partner for the purpose of providing 
  funds to the Partnership.
  
  	"GENERAL PARTNER" means Parkway Properties General 
  Partners, Inc. or its successors as general partner of the 
  Partnership.
  
  	"GENERAL PARTNER INTEREST" means a Partnership Interest 
  held by the General Partner.  A General Partner Interest may be 
  expressed as a number of Partnership Units.
  
  	"GENERAL PARTNER LOAN" shall have the meaning set forth 
  in Section 4.3(b).
  
  	"GENERAL PARTNER PAYMENT" shall have the meaning set 
  forth in Section 15.11.
  
  	"GROSS ASSET VALUE" means, with respect to any asset, 
  the asset's adjusted basis for federal income tax purposes, 
  except as follows:
  
  	(a)	The initial Gross Asset Value of any asset 
  contributed by a Partner to the Partnership shall be the gross 
  fair market value of such asset, as determined by the 
  contributing Partner and the General Partner (as set forth on 
  Exhibit A attached hereto, as such Exhibit may be amended from 
  time to time); PROVIDED THAT, if the contributing Partner is the 
  General Partner then, except with respect to the General 
  Partner's initial Capital Contribution which shall be determined 
  as set forth on Exhibit A, or capital contributions of cash, REIT 
  Shares or other shares of capital stock of the General Partner, 
  the determination of the fair market value of the contributed 
  asset shall be determined by the price paid by the General 
  Partner if the asset is acquired by the General Partner 
  contemporaneously with its contribution to the Partnership.
  
  	(b)	As of the times listed below, the Gross Asset 
  Values of all Partnership assets shall be adjusted to equal their 
  respective gross fair market values, as determined by the General 
  Partner using such reasonable method of valuation as it may 
  adopt, PROVIDED, HOWEVER, that for such purpose, the net value of 
  all of the Partnership assets, in the aggregate, shall be equal 
  to the Deemed Value of the Partnership Interests of all classes 
  of Partnership Interests then outstanding, regardless of the 
  method of valuation adopted by the General Partner:
  
  		(i)		the acquisition of an additional 
  interest in the Partnership by a new or existing Partner in 
  exchange for more than a de minimis Capital Contribution, if the 
  General Partner reasonably determines that such adjustment is 
  necessary or appropriate to reflect the relative economic 
  interests of the Partners in the Partnership;
  	
  		(ii)		the distribution by the Partnership to a 
  Partner of more than a de minimis amount of Partnership property 
  as consideration for an interest in the Partnership if the 
  General Partner reasonably determines that such adjustment is 
  necessary or appropriate to reflect the relative economic 
  interests of the Partners in the Partnership;
  
  		(iii)	the liquidation of the Partnership 
  within the meaning of Regulations Section 1.704-1(b)(2)(ii)(g); 
  and
  
  		(iv)	at such other times as the General Partner 
  shall reasonably determine necessary or advisable in order to 
  comply with Regulations Sections 1.704-1(b) and 1.704-2.
  
  	(c)	The Gross Asset Value of any Partnership asset 
  distributed to a Partner shall be the gross fair market value of 
  such asset (taking Section 7701(g) of the Code into account), 
  without reduction for liabilities, on the date of distribution as 
  determined by the distributee and the General Partner, or if the 
  distributee and the General Partner cannot agree on such a 
  determination, by Appraisal.
  
  	(d)	The Gross Asset Values of Partnership assets shall 
  be increased (or decreased) to reflect any adjustments to the 
  adjusted basis of such assets pursuant to Code Section 734(b) or 
  Code Section 743(b), but only to the extent that such adjustments 
  are taken into account in determining Capital Accounts pursuant 
  to Regulations Section 1.704-1(b)(2)(iv)(m); PROVIDED, HOWEVER, 
  that Gross Asset Values shall not be adjusted pursuant to this 
  subparagraph (d) to the extent that the General Partner 
  reasonably determines that an adjustment pursuant to subparagraph 
  (b) is necessary or appropriate in connection with a transaction 
  that would otherwise result in an adjustment pursuant to this 
  subparagraph (d).
  
  	(e)	If the Gross Asset Value of a Partnership asset 
  has been determined or adjusted pursuant to subparagraph (a), (b) 
  or (d), such Gross Asset Value shall thereafter be adjusted by 
  the Depreciation taken into account with respect to such asset 
  for purposes of computing Net Income and Net Losses.
  
  	"HOLDER" means either the Partner or Assignee owning a 
  Partnership Unit.
  
  	"IMMEDIATE FAMILY" means, with respect to any natural 
  Person, such natural Person's estate or heirs or current spouse, 
  parents, parents-in-law, children, siblings and grandchildren and 
  any trust or estate, all of the beneficiaries of which consist of 
  such Person or such Person's current spouse, parents, 
  parents-in-law, children, siblings or grandchildren.
  
  	"INCAPACITY" or "INCAPACITATED" means, (i) as to any 
  individual Partner, death, total physical disability or entry by 
  a court of competent jurisdiction adjudicating him or her 
  incompetent to manage his or her Person or his or her estate; 
  (ii) as to any corporation which is a Partner, the filing of a 
  certificate of dissolution, or its equivalent, for the 
  corporation or the revocation of its charter; (iii) as to any 
  partnership which is a Partner, the dissolution and commencement 
  of winding up of the partnership; (iv) as to any estate which is 
  a Partner, the distribution by the fiduciary of the estate's 
  entire interest in the Partnership; (v) as to any trustee of a 
  trust which is a Partner, the termination of the trust (but not 
  the substitution of a new trustee); or (vi) as to any Partner, 
  the bankruptcy of such Partner. For purposes of this definition, 
  bankruptcy of a Partner shall be deemed to have occurred when (a) 
  the Partner commences a voluntary proceeding seeking liquidation, 
  reorganization or other relief under any bankruptcy, insolvency 
  or other similar law now or hereafter in effect, (b) the Partner 
  is adjudged as bankrupt or insolvent, or a final and 
  nonappealable order for relief under any bankruptcy, insolvency 
  or similar law now or hereafter in effect has been entered 
  against the Partner, (c) the Partner executes and delivers a 
  general assignment for the benefit of the Partner's creditors, 
  (d) the Partner files an answer or other pleading admitting or 
  failing to contest the material allegations of a petition filed 
  against the Partner in any proceeding of the nature described in 
  clause (b) above, (e) the Partner seeks, consents to or 
  acquiesces in the appointment of a trustee, receiver or 
  liquidator for the Partner or for all or any substantial part of 
  the Partner's properties, (f) any proceeding seeking liquidation, 
  reorganization or other relief under any bankruptcy, insolvency 
  or other similar law now or hereafter in effect has not been 
  dismissed within 120 days after the commencement thereof, (g) the 
  appointment without the Partner's consent or acquiescence of a 
  trustee, receiver or liquidator has not been vacated or stayed 
  within 90 days of such appointment, or (h) an appointment 
  referred to in clause (g) is not vacated within 90 days after the 
  expiration of any such stay.
  
  	"INDEMNITEE" means (i) any Person subject to a claim or 
  demand or made or threatened to be made a party to, or involved 
  or threatened to be involved in, a proceeding by reason of his or 
  her status as (A) the General Partner or (B) a director or 
  officer of the Partnership or the General Partner, and (ii) such 
  other Persons (including Affiliates of the General Partner or the 
  Partnership) as the General Partner may designate from time to 
  time, in its sole and absolute discretion.
  
  	"INDEPENDENT TRUST MANAGER" means a member of the 
  General Partner's or the Company's Board of Directors who is not 
  an officer of the General Partner or the Company.
  
  	"IRS" means the Internal Revenue Service, which 
  administers the internal revenue laws of the United States.
  
  	"LIMITED PARTNER" means any Person named as a Limited 
  Partner in Exhibit A attached hereto, as such Exhibit may be 
  amended from time to time, or any Substituted Limited Partner or 
  Additional Limited Partner, in such Person's capacity as a 
  Limited Partner in the Partnership.
  
  	"LIMITED PARTNERSHIP INTEREST" means a Partnership 
  Interest of a Limited Partner representing a fractional part of 
  the Partnership Interests of all Limited Partners and includes 
  any and all benefits to which the holder of such a Partnership 
  Interest may be entitled as provided in this Agreement, together 
  with all obligations of such Person to comply with the terms and 
  provisions of this Agreement.  A Limited Partnership Interest may 
  be expressed as a number of Partnership Units.
  
  	"LIQUIDATING EVENTS" shall have the meaning set forth 
  in Section 13.1.
  
  	"LIQUIDATOR" shall have the meaning set forth in 
  Section 13.2(a).
  
  	"MAJORITY IN INTEREST OF THE LIMITED PARTNERS" means 
  Limited Partners (other than the General Partner and any Limited 
  Partner 50% or more of whose equity is owned, directly or 
  indirectly, by the General Partner) holding Percentage Interests 
  that in the aggregate are greater than fifty percent (50%) of the 
  aggregate Percentage Interests of all Limited Partners (other 
  than the General Partner and any Limited Partner 50% or more of 
  whose equity is owned, directly or indirectly, by the General 
  Partner).
  
  	"MAJORITY OF REMAINING PARTNERS" means Partners other 
  than the General Partner owning (i) greater than fifty percent 
  (50%) of the profits interests in the Partnership held by all 
  Partners other than the General Partner, determined and allocated 
  based on any reasonable estimate of profits from the relevant 
  date to the projected termination of the Partnership and taking 
  into account present and future allocations of profits under this 
  Agreement as it is in effect on the relevant date, and (ii) 
  greater than fifty percent (50%) of the capital interests in the 
  Partnership, determined as of the relevant date under this 
  Agreement, owned by all the Partners other than the General 
  Partner.
  
  	"NET INCOME" or "NET LOSS" means, for each fiscal year 
  of the Partnership, an amount equal to the Partnership's taxable 
  income or loss for such fiscal year, determined in accordance 
  with Code Section 703(a) (for this purpose, all items of income, 
  gain, loss, or deduction required to be stated separately 
  pursuant to Code Section 703(a)(1) shall be included in taxable 
  income or loss), with the following adjustments:
  
  	(a)	Any income of the Partnership that is exempt from 
  federal income tax and not otherwise taken into account in 
  computing Net Income or Net Loss pursuant to this definition of 
  Net Income or Net Loss shall be added to such taxable income or 
  loss;
  
  	(b)	Any expenditures of the Partnership described in 
  Code Section 705(a)(2)(B) or treated as Code Section 705(a)(2)(B) 
  expenditures pursuant to Regulations Section 1.704-1(b)(2)(iv)(i) 
  and not otherwise taken into account in computing Net Income or 
  Net Loss pursuant to this definition of Net Income or Net Loss 
  shall be subtracted from such taxable income or loss;
  
  	(c)	In the event the Gross Asset Value of any 
  Partnership asset is adjusted pursuant to subparagraph (b) or 
  subparagraph (c) of the definition of Gross Asset Value, the 
  amount of such adjustment shall be taken into account as gain or 
  loss from the disposition of such asset for purposes of computing 
  Net Income or Net Loss;
  
  	(d)	Gain or loss resulting from any disposition of 
  property with respect to which gain or loss is recognized for 
  federal income tax purposes shall be computed by reference to the 
  Gross Asset Value of the property disposed of, notwithstanding 
  that the adjusted tax basis of such property differs from its 
  Gross Asset Value;
  
  	(e)	In lieu of the depreciation, amortization, and 
  other cost recovery deductions taken into account in computing 
  such taxable income or loss, there shall be taken into account 
  Depreciation for such fiscal year;
  
  	(f)	To the extent an adjustment to the adjusted tax 
  basis of any Partnership asset pursuant to Code Section 734(b) or 
  Code Section 743(b) is required pursuant to Regulations Section 
  1.704-1(b)(2)(iv)(m)(4) to be taken into account in determining 
  Capital Accounts as a result of a distribution other than in 
  liquidation of a Partner's interest in the Partnership, the 
  amount of such adjustment shall be treated as an item of gain (if 
  the adjustment increases the basis of the asset) or loss (if the 
  adjustment decreases the basis of the asset) from the disposition 
  of the asset and shall be taken into account for purposes of 
  computing Net Income or Net Loss; and
  
  	(g)	Notwithstanding any other provision of this 
  definition of Net Income or Net Loss, any items which are 
  specially allocated pursuant to Section 6.3 hereof shall not be 
  taken into account in computing Net Income or Net Loss.  The 
  amounts of the items of Partnership income, gain, loss, or 
  deduction available to be specially allocated pursuant to Section 
  6.3 hereof shall be determined by applying rules analogous to 
  those set forth in this definition of Net Income or Net Loss.
  
  	"NEW SECURITIES" means (i) any rights, options, 
  warrants or convertible or exchangeable securities having the 
  right to subscribe for or purchase REIT Shares or other shares of 
  capital stock of the Company, excluding grants under any Stock 
  Plan, or (ii) any Debt issued by the Company that provides any of 
  the rights described in clause (i).
  
  	"NONRECOURSE DEDUCTIONS" shall have the meaning set 
  forth in Regulations Section 1.704-2(b)(1), and the amount of 
  Nonrecourse Deductions for a Partnership Year shall be determined 
  in accordance with the rules of Regulations Section 1.704-2(c).
  
  	"NONRECOURSE LIABILITY" shall have the meaning set 
  forth in Regulations Section 1.752-1(a)(2).
  
  	"NOTICE OF REDEMPTION" means the Notice of Redemption 
  substantially in the form of Exhibit B to this Agreement.
  
  	"PARTNER" means a General Partner or a Limited Partner, 
  and "PARTNERS" means the General Partner and the Limited 
  Partners.
  
  	"PARTNER MINIMUM GAIN" means an amount, with respect to 
  each Partner Nonrecourse Debt, equal to the Partnership Minimum 
  Gain that would result if such Partner Nonrecourse Debt were 
  treated as a Nonrecourse Liability, determined in accordance with 
  Regulations Section 1.704-2(i)(3).
  
  	"PARTNER NONRECOURSE DEBT" shall have the meaning set 
  forth in Regulations Section 1.704-2(b)(4).
  
  	"PARTNER NONRECOURSE DEDUCTIONS" shall have the meaning 
  set forth in Regulations Section 1.704-2(i)(2), and the amount of 
  Partner Nonrecourse Deductions with respect to a Partner 
  Nonrecourse Debt for a Partnership Year shall be determined in 
  accordance with the rules of Regulations Section 1.704-2(i)(2).
  
  	"PARTNERSHIP" means the limited partnership formed 
  under the Act and pursuant to this Agreement, and any successor 
  thereto.
  
  	"PARTNERSHIP INTEREST" means an ownership interest in 
  the Partnership of either a Limited Partner or the General 
  Partner and includes any and all benefits to which the holder of 
  such a Partnership Interest may be entitled as provided in this 
  Agreement, together with all obligations of such Person to comply 
  with the terms and provisions of this Agreement.  There may be 
  one or more classes of Partnership Interests as provided in 
  Section 4.3.  A Partnership Interest may be expressed as a number 
  of Partnership Units.  Unless otherwise expressly provided for by 
  the General Partner at the time of the original issuance of any 
  Partnership Interests, all Partnership Interests (whether of a 
  Limited Partner or a General Partner) shall be of the same class.
  
  	"PARTNERSHIP MINIMUM GAIN" shall have the meaning set 
  forth in Regulations Section 1.704-2(b)(2), and the amount of 
  Partnership Minimum Gain, as well as any net increase or decrease 
  in Partnership Minimum Gain, for a Partnership Year shall be 
  determined in accordance with the rules of Regulations Section 
  1.704-2(d).
  
  	"PARTNERSHIP RECORD DATE" means the record date 
  established by the General Partner for the distribution of 
  Available Cash pursuant to Section 5.1 hereof which record date 
  shall be the same as the record date established by the General 
  Partner for a distribution to its stockholders of some or all of 
  its portion of such distribution.
  
  	"PARTNERSHIP UNIT" means, with respect to any class of 
  Partnership Interest, a fractional, undivided share of such class 
  of Partnership Interest issued pursuant to Sections 4.1 and 4.3.  
  The ownership of Partnership Units may be evidenced by a 
  certificate for units substantially as the General Partner may 
  determine with respect to any class of Partnership Units issued 
  from time to time under Sections 4.1 and 4.3.
  
  	"PARTNERSHIP YEAR" means the fiscal year of the 
  Partnership, which shall be the calendar year.
  
  	"PERCENTAGE INTEREST" means, as to a Partner holding a 
  class of Partnership Interests, its interest in the Partnership 
  as determined by dividing the Partnership Units of such class 
  owned by such Partner by the total number of Partnership Units of 
  such class then outstanding as specified in Exhibit A attached 
  hereto, as such Exhibit may be amended from time to time.  If the 
  Partnership issues more than one class of Partnership Interest, 
  the interest in the Partnership among the classes of Partnership 
  Interests shall be determined as set forth in the amendment to 
  the Partnership Agreement setting forth the rights and privileges 
  of such additional classes of Partnership Interest, if any, as 
  contemplated by Section 4.3(c) hereof.
  
  	"PERSON" means an individual or a corporation, 
  partnership, limited liability company, trust, unincorporated 
  organization, association or other entity.
  
  	"PLEDGE" shall have the meaning set forth in Section 
  11.3(a).
  
  	"PROPERTIES" means such interests in real property and 
  personal property including, without limitation, fee interests, 
  interests in ground leases, interests in joint ventures, 
  interests in mortgages, and Debt instruments, as the Partnership 
  may hold from time to time.
  
  	"QUALIFIED REIT SUBSIDIARY" means any Subsidiary of the 
  Company that is a "qualified REIT subsidiary" within the meaning 
  of Section 856(i) of the Code.
  
  	"QUALIFIED TRANSFEREE" means an "Accredited Investor" 
  as defined in Rule 501 promulgated under the Securities Act.
  
  	"REDEMPTION" shall have the meaning set forth in 
  Section 8.6(a).
  
  	"REGULATIONS" means the Income Tax Regulations 
  promulgated under the Code, as such regulations may be amended 
  from time to time (including corresponding provisions of 
  succeeding regulations).
  
  	"REGULATORY ALLOCATIONS" shall have the meaning set 
  forth in Section 6.3(a)(vii) of this Agreement.
  
  	"REIT" means a real estate investment trust under 
  Section 856 of the Code.
  
  	"REIT REQUIREMENTS" shall have the meaning set forth in 
  Section 5.1.
  
  	"REIT SHARE" means a share of common stock of the 
  Company.
  
  	"REIT SHARES AMOUNT" means, as of any date, (i) with 
  respect to Tendered Units, an aggregate number of REIT Shares 
  equal to the number of such Tendered Units, as adjusted pursuant 
  to Section 8.6(h) (in the event the Company acquires material 
  assets, other than on behalf of the Partnership) and for stock 
  dividends and distributions, stock splits and subdivisions, 
  reverse stock splits and combinations, distributions of rights, 
  warrants or options, and distributions of evidences of 
  indebtedness or assets received by the Company pursuant to a 
  distribution by the Partnership other than a pro rata 
  distribution to all Partners based on their respective Percentage 
  Interests, and (ii) with respect to Partnership Units in any 
  other context, the amount of REIT Shares determined in accordance 
  with clause (i) assuming for such purpose that all such 
  Partnership Units are Tendered Units.
  
  	"SECURITIES ACT" means the Securities Act of 1933, as 
  amended, and the rules and regulations of the Securities and 
  Exchange Commission promulgated thereunder.
  
  	"SECURITIES EXCHANGE ACT" means the Securities Act of 
  1934, as amended, and the rules and regulations of the Securities 
  and Exchange Commission promulgated thereunder.
  
  	"SPECIFIED REDEMPTION DATE" means the day of receipt by 
  the General Partner of a Notice of Redemption.
  
  	"STOCK PLAN" means any stock incentive, stock option, 
  stock ownership or employee benefits plan of the Company.
  
  	"SUBSIDIARY" means, with respect to any Person, any 
  corporation or other entity of which a majority of (i) the voting 
  power of the voting equity securities or (ii) the outstanding 
  equity interests is owned, directly or indirectly, by such 
  Person.
  
  	"SUBSIDIARY PARTNERSHIP" means any partnership that is 
  a Subsidiary of the Partnership.
  
  	"SUBSTITUTE GENERAL PARTNER" means a Person who is 
  admitted as a successor General Partner to the Partnership 
  pursuant to Section 11.2(a).
  
  	"SUBSTITUTED LIMITED PARTNER" means a Person who is 
  admitted as a Limited Partner to the Partnership pursuant to 
  Section 11.4.
  
  	"TAX ITEMS" shall have the meaning set forth in Section 
  6.4(a).
  
  	"TENANT" means any tenant from which the Company 
  derives rent either directly or indirectly through partnerships, 
  including the Partnership.
  
  	"TENDERED UNITS" shall have the meaning set forth in 
  Section 8.6(a).
  
  	"TENDERING PARTNER" shall have the meaning set forth in 
  Section 8.6(a).
  
  	"TERMINATING CAPITAL TRANSACTION" means any sale or 
  other disposition of all or substantially all of the assets of 
  the Partnership or a related series of transactions that, taken 
  together, result in the sale or other disposition of all or 
  substantially all of the assets of the Partnership.
  
  ARTICLE 2
  ORGANIZATIONAL MATTERS
  
  	Section 2.1	ORGANIZATION
  
  	The Partnership is a limited partnership formed 
  pursuant to the provisions of the Act and upon the terms and 
  conditions set forth in this Agreement.  Except as expressly 
  provided herein, the rights and obligations of the Partners and 
  the administration and termination of the Partnership shall be 
  governed by the Act.  The Partnership Interest of each Partner 
  shall be personal property for all purposes.
  
  	Section 2.2	NAME
  
  	The name of the Partnership is Parkway Properties LP.  
  The Partnership's business may be conducted under any other name 
  or names deemed advisable by the General Partner, including the 
  name of the General Partner or any Affiliate thereof.  The words 
  "Limited Partnership," "L.P.," "Ltd." or similar words or letters 
  shall be included in the Partnership's name where necessary for 
  the purposes of complying with the laws of any jurisdiction that 
  so requires.  The General Partner in its sole and absolute 
  discretion may change the name of the Partnership at any time and 
  from time to time and shall notify the Limited Partners of such 
  change in the next regular communication to the Limited Partners.
  
  	Section 2.3	RESIDENT AGENT; PRINCIPAL OFFICE
  
  	The name and address of the resident agent of the 
  Partnership in the State of Delaware shall be United Corporate 
  Services, Inc., 15 Corporation Trust Center, 1209 Charge Street, 
  Wilmington, New Castle County, Delaware 19801 or such other 
  person as the General Partner may select in its sole discretion.  
  The registered office of the Partnership in the State of Delaware 
  shall be United Corporate Services, Inc. at such address or such 
  other location as the General Partner may select in its sole 
  discretion.  The Partnership may maintain offices at such other 
  place or places within or outside the State of Delaware as the 
  General Partner deems advisable.
  
  	Section 2.4	POWER OF ATTORNEY
  
  	(a)	Each Limited Partner and each Assignee constitutes 
  and appoints the General Partner, any Liquidator, and authorized 
  officers and attorneys-in-fact of each, and each of those acting 
  singly, in each case with full power of substitution, as its true 
  and lawful agent and attorney-in-fact, with full power and 
  authority in its name, place and stead to:
  
  		(i)	execute, swear to, acknowledge, deliver, file 
  and record in the appropriate public offices (a) all 
  certificates, documents and other instruments (including, without 
  limitation, this Agreement and the Certificate and all amendments 
  or restatements thereof) that the General Partner or the 
  Liquidator deems appropriate or necessary to form, qualify or 
  continue the existence or qualification of the Partnership as a 
  limited partnership (or a partnership in which the Limited 
  Partners have limited liability) in the State of Delaware and in 
  all other jurisdictions in which the Partnership may conduct 
  business or own property; (b) all instruments that the General 
  Partner or any Liquidator deems appropriate or necessary to 
  reflect any amendment, change, modification or restatement of 
  this Agreement in accordance with its terms; (c) all conveyances 
  and other instruments or documents that the General Partner or 
  any Liquidator deems appropriate or necessary to reflect the 
  dissolution and liquidation of the Partnership pursuant to the 
  terms of this Agreement, including, without limitation, a 
  certificate of cancellation; (d) all instruments relating to the 
  admission, withdrawal, removal or substitution of any Partner 
  pursuant to, or other events described in, Article 11, 12 or 13 
  hereof or the Capital Contribution of any Partner; and (e) all 
  certificates, documents and other instruments relating to the 
  determination of the rights, preferences and privileges of 
  Partnership Interests; and
  
  		(ii)	execute, swear to, acknowledge and file all 
  ballots, consents, approvals, waivers, certificates and other 
  instruments appropriate or necessary, in the sole and absolute 
  discretion of the General Partner or any Liquidator, to make, 
  evidence, give, confirm or ratify any vote, consent, approval, 
  agreement or other action which is made or given by the Partners 
  hereunder or is consistent with the terms of this Agreement or 
  appropriate or necessary, in the sole discretion of the General 
  Partner or any Liquidator, to effectuate the terms or intent of 
  this Agreement.
  
  	Nothing contained herein shall be construed as 
  authorizing the General Partner or any Liquidator to amend this 
  Agreement except in accordance with Article 14 hereof or as may 
  be otherwise expressly provided for in this Agreement.
  
  	(b)	The foregoing power of attorney is hereby declared 
  to be irrevocable and a power coupled with an interest, in 
  recognition of the fact that each of the Partners will be relying 
  upon the power of the General Partner and any Liquidator to act 
  as contemplated by this Agreement in any filing or other action 
  by it on behalf of the Partnership, and it shall survive and not 
  be affected by the subsequent Incapacity of any Limited Partner 
  or Assignee and the transfer of all or any portion of such 
  Limited Partner's or Assignee's Partnership Units and shall 
  extend to such Limited Partner's or Assignee's heirs, successors, 
  assigns and personal representatives.  Each such Limited Partner 
  or Assignee hereby agrees to be bound by any representation made 
  by the General Partner or any Liquidator, acting in good faith 
  pursuant to such power of attorney; and each such Limited Partner 
  or Assignee hereby waives any and all defenses which may be 
  available to contest, negate or disaffirm the action of the 
  General Partner or any Liquidator, taken in good faith under such 
  power of attorney and in accordance with the provisions of this 
  Agreement.  Each Limited Partner or Assignee shall execute and 
  deliver to the General Partner or any Liquidator, within 15 days 
  after receipt of the General Partner's or Liquidator's request 
  therefor, such further designation, powers of attorney and other 
  instruments as the General Partner or the Liquidator, as the case 
  may be, deems necessary to effectuate this Agreement and the 
  purposes of the Partnership.
  
  	Section 2.5	TERM
  
  	The term of the Partnership commenced on January 6, 
  1997 and shall continue until December 31, 2057 unless it is 
  dissolved sooner pursuant to the provisions of Article 13 or as 
  otherwise provided by law.
  
  
  ARTICLE 3
  PURPOSE
  
  	Section 3.1	PURPOSE AND BUSINESS
  
  	The purpose and nature of the business to be conducted 
  by the Partnership is (i) to conduct any business that may be 
  lawfully conducted by a limited partnership organized pursuant to 
  the Act, PROVIDED, HOWEVER, that such business shall be limited 
  to and conducted in such a manner as to permit the Company at all 
  times to be classified as a REIT for federal income tax purposes, 
  unless the Company ceases to qualify as a REIT for reasons other 
  than the conduct of the business of the Partnership, (ii) to 
  enter into any partnership, joint venture or other similar 
  arrangement to engage in any business described in the foregoing 
  clause (i) or to own interests in any entity engaged, directly or 
  indirectly, in any such business and (iii) to do anything 
  necessary or incidental to the foregoing.  In connection with the 
  foregoing, and without limiting the Company's right in its sole 
  discretion to cease qualifying as a REIT, the Partners 
  acknowledge that the Company's current status as a REIT inures to 
  the benefit of all the Partners and not solely the Company.
  
  	Section 3.2	POWERS
  
  	The Partnership is empowered to do any and all acts and 
  things necessary, appropriate, proper, advisable, incidental to 
  or convenient for the furtherance and accomplishment of the 
  purposes and business described herein and for the protection and 
  benefit of the Partnership, including, without limitation, full 
  power and authority, directly or through its ownership interest 
  in other entities, to enter into, perform and carry out contracts 
  of any kind, borrow money and issue evidences of indebtedness, 
  whether or not secured by mortgage, deed of trust, pledge or 
  other lien, acquire and develop real property, and manage, lease, 
  sell, transfer and dispose of real property; PROVIDED, HOWEVER, 
  that the Partnership shall not take, or refrain from taking, any 
  action which, in the judgment of the General Partner, in its sole 
  and absolute discretion, (i) could adversely affect the ability 
  of the Company to continue to qualify as a REIT, (ii) could 
  subject the Company to any taxes under Section 857 or Section 
  4981 of the Code, or (iii) could violate any law or regulation of 
  any governmental body or agency having jurisdiction over the 
  Company or its securities, unless any such action (or inaction) 
  under (i), (ii) or (iii) shall have been specifically consented 
  to by the Company in writing.
  
  	Section 3.3	PARTNERSHIP ONLY FOR PURPOSES SPECIFIED
  
  	The Partnership shall be a partnership only for the 
  purposes specified in Section 3.1 hereof, and this Agreement 
  shall not be deemed to create a partnership among the Partners 
  with respect to any activities whatsoever other than the 
  activities within the purposes of the Partnership as specified in 
  Section 3.1 hereof.  Except as otherwise provided in this 
  Agreement, no Partner shall have any authority to act for, bind, 
  commit or assume any obligation or responsibility on behalf of 
  the Partnership, its properties or any other Partner.  No 
  Partner, in its capacity as a Partner under this Agreement, shall 
  be responsible or liable for any indebtedness or obligation of 
  another Partner, nor shall the Partnership be responsible or 
  liable for any indebtedness or obligation of any Partner, 
  incurred either before or after the execution and delivery of 
  this Agreement by such Partner, except as to those 
  responsibilities, liabilities, indebtedness or obligations 
  incurred pursuant to and as limited by the terms of this 
  Agreement and the Act.
  
  	Section 3.4	REPRESENTATIONS AND WARRANTIES BY THE 
  PARTIES
  
  	(a)	Each Partner that is an individual represents and 
  warrants to each other Partner that (i) such Partner has, in the 
  case of any Person other than an individual, the power and 
  authority, and in the case of an individual, the legal capacity 
  to enter into this Agreement and perform such Partner's 
  obligations hereunder, (ii) the consummation of the transactions 
  contemplated by this Agreement to be performed by such Partner 
  will not result in a breach or violation of, or a default under, 
  any agreement by which such Partner or any of such Partner's 
  property is or are bound, or any statute, regulation, order or 
  other law to which such Partner is subject, (iii) such Partner is 
  neither a "foreign person" within the meaning of Section 1445(f) 
  of the Code nor a "foreign partner" within the meaning of Section 
  1446(e) of the Code, and (iv) this Agreement has been duly 
  executed and delivered by such Partner and is binding upon, and 
  enforceable against, such Partner in accordance with its terms.
  
  	(b)	Each Partner that is not an individual represents 
  and warrants to each other Partner that (i) it has the requisite 
  corporate or other power and authority to enter into this 
  Agreement, (ii) its execution and delivery of this Agreement, and 
  performance of all transactions contemplated by this Agreement to 
  be performed by it, have been duly authorized by all necessary 
  action, including, without limitation, that of its general 
  partner(s), committee(s), trustee(s), beneficiaries, directors 
  and/or stockholder(s), as the case may be, as required, (iii) the 
  consummation of such transactions shall not result in a breach or 
  violation of, or a default under, its certificate of limited 
  partnership, partnership agreement, trust agreement, limited 
  liability company operating agreement, charter, by-laws or other 
  organizational documents, as the case may be, any agreement by 
  which such Partner or any of such Partner's properties or any of 
  its partners, beneficiaries, trustees or stockholders, as the 
  case may be, is or are bound, or any statute, regulation, order 
  or other law to which such Partner or any of its partners, 
  trustees, beneficiaries or stockholders, as the case may be, is 
  or are subject, (iv) such Partner is neither a "foreign person" 
  within the meaning of Section 1445(f) of the Code nor a "foreign 
  partner" within the meaning of Section 1446(e) of the Code, and 
  (v) this Agreement has been duly executed and delivered by such 
  Partner and is binding upon, and enforceable against, such 
  Partner in accordance with its terms.
  
  	(c)	Each Partner represents, warrants and agrees that 
  it has acquired and continues to hold its interest in the 
  Partnership for its own account for investment only and not for 
  the purpose of, or with a view toward, the resale or distribution 
  of all or any part thereof, nor with a view toward selling or 
  otherwise distributing such interest or any part thereof at any 
  particular time or under any predetermined circumstances.  Each 
  Partner further represents and warrants that it is a 
  sophisticated investor, able and accustomed to handling 
  sophisticated financial matters for itself, particularly real 
  estate investments, and that it has a sufficiently high net worth 
  that it does not anticipate a need for the funds it has invested 
  in the Partnership in what it understands to be a highly 
  speculative and illiquid investment.
  
  	(d)	Each Partner further represents, warrants and 
  agrees as follows:
  
  		(i)	Except as provided in Exhibit C, it does not 
  and will not, without the prior written consent of the General 
  Partner, actually own or Constructively Own (a) with respect to 
  any Tenant that is a corporation, any stock of such Tenant, and 
  (b) with respect to any Tenant that is not a corporation, any 
  interests in either the assets or net profits of such Tenant; 
  PROVIDED, HOWEVER, that so long as there are fewer than 20 
  Partners, each partner may own or Constructively Own (x) with 
  respect to any Tenant that is a corporation, stock of such Tenant 
  possessing up to, but not more than, one-half of one percent 
  (0.5%) of the total combined voting power of all classes of stock 
  entitled to vote and one-half of one percent (0.5%) of the total 
  number of shares of all classes of stock of such Tenant and (y) 
  with respect to any Tenant that is not a corporation, interests 
  in such Tenant representing up to, but not more than, one-half of 
  one percent (0.5%) of the assets and one-half of one percent 
  (0.5%) of the net profits of such Tenant, so long as such actual 
  or Constructive Ownership otherwise permitted under clause (x) or 
  (y) would not cause the General Partner to receive amounts 
  described in Section 856(d)(2)(B) of the Code.
  
  		(ii)	Except as provided in Exhibit D, it does not, 
  and agrees that it will not without the prior written consent of 
  the General Partner, actually own or Constructively Own, any 
  stock in the Company, other than any REIT Shares or other shares 
  of capital stock of the Company such Partner may acquire (a) as a 
  result of an exchange of Tendered Units pursuant to Section 8.6 
  or (b) upon the exercise of options granted or delivery of REIT 
  Shares pursuant to any Stock Plan, or (c) in open market 
  transactions, in each case subject to the ownership limitations 
  set forth in the Charter.
  
  		(iii)	Upon request of the General Partner, it 
  will disclose to the General Partner the amount of REIT Shares or 
  other shares of capital stock of the Company that it actually 
  owns or Constructively Owns.
  
  		(iv)	It understands that if, for any reason, (a) 
  the representations, warranties or agreements set forth in d(i) 
  or (ii) above are violated, or (b) the Partner's actual or 
  Constructive ownership of REIT Shares or other shares of capital 
  stock of the Company violates the limitations set forth in the 
  Charter, then (1) some or all of the Redemption rights of the 
  Partners may become non-exercisable, and (2) some or all of the 
  REIT Shares owned by the Partners may be automatically converted 
  to Excess Shares, as provided in the Charter.
  
  	(e)	The representations and warranties contained in 
  Sections 3.4(a) - 3.4(d) hereof shall survive the execution and 
  delivery of this Agreement by each Partner and the dissolution 
  and windup of the Partnership.
  
  	(f)	Each Partner hereby acknowledges that no 
  representations as to potential profit, cash flows, funds from 
  operations or yield, if any, in respect of the Partnership or the 
  General Partner have been made by any Partner or any employee or 
  representative or Affiliate of any Partner, and that projections 
  and any other information, including, without limitation, 
  financial and descriptive information and documentation, which 
  may have been in any manner submitted to such Partner shall not 
  constitute any representation or warranty of any kind or nature, 
  express or implied.
  
  
  ARTICLE 4
  CAPITAL CONTRIBUTIONS
  
  	Section 4.1	CAPITAL CONTRIBUTIONS OF THE PARTNERS
  
  	The Partners confirm that they have made the Capital 
  Contributions as set forth in Exhibit A to this Agreement.  The 
  Partners shall own Partnership Units of the class and in the 
  amounts set forth in Exhibit A and shall have a Percentage 
  Interest in the Partnership as set forth in Exhibit A, which 
  Percentage Interest shall be adjusted in Exhibit A from time to 
  time by the General Partner to the extent necessary to reflect 
  accurately exchanges, redemptions, Capital Contributions, the 
  issuance of additional Partnership Units or similar events having 
  an effect on a Partner's Percentage Interest.  Except as required 
  by law or as otherwise provided in Sections 4.3, 4.4, and  10.5, 
  no Partner shall be required or permitted to make any additional 
  Capital Contributions or loans to the Partnership.  Unless 
  otherwise specified by the General Partner at the time of the 
  creation of any class of Partnership Interests, the corresponding 
  class of capital stock for any Partnership Units issued shall be 
  REIT Shares. 
  
  	Section 4.2	LOANS BY THIRD PARTIES
  
  	Subject to Section 4.3, the Partnership may incur Debt, 
  or enter into other similar credit, guarantee, financing or 
  refinancing arrangements for any purpose (including, without 
  limitation, in connection with any further acquisition of 
  Properties) with any Person that is not the General Partner upon 
  such terms as the General Partner determines appropriate.
  
  	Section 4.3	ADDITIONAL FUNDING AND CAPITAL 
  CONTRIBUTIONS
  
  	(a)	GENERAL.  The General Partner may, at any time and 
  from time to time, determine that the Partnership requires 
  additional funds ("Additional Funds") for the acquisition of 
  additional Properties or for such other Partnership purposes as 
  the General Partner may determine.  Additional Funds may be 
  raised by the Partnership, at the election of the General 
  Partner, in any manner provided in, and in accordance with, the 
  terms of this Section 4.3.  No Person shall have any preemptive, 
  preferential or similar right or rights to subscribe for or 
  acquire any Partnership Interest.
  
  	(b)	GENERAL PARTNER LOANS.  The General Partner or an 
  Affiliate may enter into a Funding Debt, including, without 
  limitation, a Funding Debt that is convertible into REIT shares, 
  and lend the Additional Funds to the Partnership (a "General 
  Partner Loan").  If the General Partner enters into such a 
  Funding Debt, the General Partner Loan will consist of the net 
  proceeds from such Funding Debt and will be on comparable terms 
  and conditions, including principal amount, interest rate, 
  repayment schedule and costs and expenses, as shall be applicable 
  with respect to or incurred in connection with such Funding Debt.
  
  	(c)	ISSUANCE OF ADDITIONAL PARTNERSHIP INTERESTS.  The 
  General Partner, in its sole and absolute discretion, may raise 
  all or any portion of the Additional Funds by accepting 
  additional Capital Contributions, including, without limitation, 
  the issuance of Partnership Units for interests in real property. 
  In connection with any such additional Capital Contributions (of 
  cash or property), the General Partner is hereby authorized to 
  cause the Partnership from time to time to issue to Partners 
  (including the General Partner or the Company) or other persons 
  (including, without limitation, in connection with the 
  contribution of property to the Partnership) additional 
  Partnership Units or other Partnership Interests in one or more 
  classes, or one or more series of any of such classes, with such 
  designations, preferences and relative, participating, optional 
  or other special rights, powers, and duties, including rights, 
  powers, and duties senior to then existing Limited Partnership 
  Interests, all as shall be determined by the General Partner in 
  its sole and absolute discretion subject to Delaware law, and as 
  set forth in an amendment to this Agreement, including, without 
  limitation, (i) the allocations of items of Partnership income, 
  gain, loss, deduction, and credit to such class or series of 
  Partnership Interests; (ii) the right of each such class or 
  series of Partnership Interests to share in Partnership 
  distributions; (iii) the rights of each such class or series of 
  Partnership Interests upon dissolution and liquidation of the 
  Partnership; and (iv) the right to vote; PROVIDED THAT no such 
  additional Partnership Units or other Partnership Interests shall 
  be issued to the Company unless either (a) the additional 
  Partnership Interests are issued in connection with the grant, 
  award, or issuance of shares of the Company pursuant to Section 
  4.3(d) below, which shares have designations, preferences, and 
  other rights (except voting rights) such that the economic 
  interests attributable to such shares are substantially similar 
  to the designations, preferences and other rights of the 
  additional Partnership Interests issued to the Company in 
  accordance with this Section 4.3(c), (b) the additional 
  Partnership Interests are issued to all Partners holding 
  Partnership Interests in the same class in proportion to their 
  respective Percentage Interests in such class or (c) pursuant to 
  Section 4.4; PROVIDED FURTHER, that no such additional 
  Partnership Units or Partnership Interests shall be issued if 
  such issuance would cause, or in the opinion of counsel selected 
  by the General Partner, could cause (i) the Partnership to 
  become, with respect to any employee benefit plan subject to 
  Title I of ERISA or Section 4975 of the Code, a "party in 
  interest" (as defined in Section 3(14) of ERISA) or a 
  "disqualified person" (as defined in Section 4975(e) of the 
  Code); and (ii) any portion of the assets of the Partnership to 
  constitute assets of any employee benefit plan pursuant to 
  Section 2510.3-101 of the regulations of the United States 
  Department of Labor.  In the event that the Partnership issues 
  additional Partnership Units or Partnership Interests pursuant to 
  this Section 4.3(c), the General Partner shall make such 
  revisions to this Agreement (including but not limited to the 
  revisions described in Section 5.4, Section 6.2(d), and Section 
  8.6) as it determines are necessary to reflect the issuance of 
  such additional Partnership Interests.
  
  	(d)	ISSUANCE OF REIT SHARES OR OTHER SECURITIES BY THE 
  COMPANY.  Except as contemplated by Section 4.4, the Company 
  shall not issue any additional REIT Shares (other than REIT 
  Shares issued pursuant to Section 8.6 hereof or pursuant to a 
  dividend or distribution (including any stock split) of REIT 
  Shares to all of its stockholders), other shares of capital stock 
  of the Company or New Securities unless the Company shall make a 
  Capital Contribution of the net proceeds from the issuance of 
  such additional REIT Shares, other shares of capital stock or New 
  Securities, as the case may be, and from the exercise of the 
  rights contained in such additional New Securities, as the case 
  may be.  The Company's Capital Account shall be increased by the 
  amount of cash so contributed.
  
  	(e)	PERCENTAGE INTEREST ADJUSTMENTS IN THE CASE OF 
  CAPITAL CONTRIBUTIONS FOR PARTNERSHIP UNITS.  Upon the acceptance 
  of additional Capital Contributions in exchange for Partnership 
  Units, the Percentage Interest related to such Partnership Units 
  shall be equal to a fraction, the numerator of which is equal to 
  the amount of cash and the Agreed Value of the Property 
  contributed as of the Business Day immediately preceding the date 
  on which the additional Capital Contributions are made (an 
  "Adjustment Date") and the denominator of which is equal to the 
  sum of (i) the Deemed Value of the Partnership Interests of such 
  class (computed as of the Business Day immediately preceding the 
  Adjustment Date) and (ii) the aggregate amount of additional 
  Capital Contributions contributed to the Partnership on such 
  Adjustment Date in respect of such class of Partnership 
  Interests.  The Percentage Interest of each other Partner holding 
  Partnership Interests of such class not making a full pro rata 
  Capital Contribution shall be adjusted to equal a fraction, the 
  numerator of which is equal to the sum of (i) the Deemed 
  Partnership Interest Value of such Limited Partner of such class 
  (computed as of the Business Day immediately preceding the 
  Adjustment Date) and (ii) the amount of additional Capital 
  Contributions made by such Partner to the Partnership in respect 
  of such class of Partnership Interests as of such Adjustment 
  Date, and the denominator of which is equal to the sum of (i) the 
  Deemed Value of the Partnership Interests of such class (computed 
  as of the Business Day immediately preceding the Adjustment 
  Date), and (ii) the aggregate amount of additional Capital 
  Contributions contributed to the Partnership on such Adjustment 
  Date in respect of such class. Notwithstanding the foregoing, 
  solely for purposes of calculating a Partner's Percentage 
  Interest pursuant to this Section 4.3(e), cash Capital 
  Contributions by the Company will be deemed to equal the cash 
  contributed by the Company plus, in the case of cash 
  contributions funded by an offering of any capital stock of the 
  Company, the offering costs attributable to the cash contributed 
  to the Partnership.
  
  	Section 4.4	STOCK PLAN
  
  	If at any time or from time to time the Company sells 
  or issues REIT Shares pursuant to any Stock Plan, the Company 
  shall contribute any proceeds therefrom to the Partnership as an 
  additional Capital Contribution and shall receive an amount of 
  additional Partnership Units equal to the number of REIT Shares 
  so sold or issued.  The Company's Capital Account shall be 
  increased by the amount of cash so contributed.
  
  	Section 4.5	NO THIRD PARTY BENEFICIARY
  
  	No creditor or other third party having dealings with 
  the Partnership shall have the right to enforce the right or 
  obligation of any Partner to make Capital Contributions or loans 
  or to pursue any other right or remedy hereunder or at law or in 
  equity, it being understood and agreed that the provisions of 
  this Agreement shall be solely for the benefit of, and may be 
  enforced solely by, the parties hereto and their respective 
  successors and assigns.  None of the rights or obligations of the 
  Partners herein set forth to make Capital Contributions or loans 
  to the Partnership shall be deemed an asset of the Partnership 
  for any purpose by any creditor or other third party, nor may 
  such rights or obligations be sold, transferred or assigned by 
  the Partnership or pledged or encumbered by the Partnership to 
  secure any debt or other obligation of the Partnership or of any 
  of the Partners.
  
  	Section 4.6	OTHER CONTRIBUTION PROVISIONS
  
  	In the event that any Partner is admitted to the 
  Partnership and is given a Capital Account in exchange for 
  services rendered to the Partnership, such transaction shall be 
  treated by the Partnership and the affected Partner as if the 
  Partnership had compensated such Partner in cash, and the Partner 
  had contributed such cash to the capital of the Partnership.  In 
  addition, with the consent of the General Partner, one or more 
  Limited Partners may enter into contribution agreements with the 
  Partnership which have the effect of providing a guarantee of 
  certain obligations of the Partnership.
  
  
  ARTICLE 5
  DISTRIBUTIONS
  
  	Section 5.1	REQUIREMENT AND CHARACTERIZATION OF 
  DISTRIBUTIONS
  
  	The General Partner shall cause the Partnership to 
  distribute quarterly all, or such portion as the General Partner 
  may in its discretion determine, of Available Cash generated by 
  the Partnership during such quarter to the Partners who are 
  Partners on the Partnership Record Date with respect to such 
  quarter, (1) first, with respect to any Partnership Interests 
  that are entitled to any preference in distribution, in 
  accordance with the rights of such class of Partnership Interests 
  (and within such class, pro rata in proportion to the respective 
  Percentage Interests on such Partnership Record Date), and, (2) 
  second, with respect to Partnership Interests that are not 
  entitled to any preference in distribution, pro rata to each such 
  class in accordance with the terms of such class (and within each 
  such class, pro rata in proportion with the respective Percentage 
  Interests on such Partnership Record Date).  Unless otherwise 
  expressly provided for herein or in an agreement at the time a 
  new class of Partnership Interests is created in accordance with 
  Article 4 hereof, no Partnership Interest shall be entitled to a 
  distribution in preference to any other Partnership Interest.  
  The General Partner shall take such reasonable efforts, as 
  determined by it in its sole and absolute discretion, and 
  consistent with the qualification of the Company as a REIT, to 
  cause the Partnership to distribute sufficient amounts to enable 
  the Company to pay stockholder dividends that will (a) satisfy 
  the requirements for qualifying as a REIT under the Code and 
  Regulations ("REIT Requirements"), and (b) avoid any federal 
  income or excise tax liability of the Company.
  
  	Section 5.2	DISTRIBUTIONS IN KIND
  
  	No right is given to any Partner to demand and receive 
  property other than cash.  The General Partner may determine, in 
  its sole and absolute discretion, to make a distribution in kind 
  to the Partners of Partnership assets, and such assets shall be 
  distributed in such a fashion as to ensure that the fair market 
  value is distributed and allocated in accordance with Articles 5, 
  6 and 10.
  
  	Section 5.3	DISTRIBUTIONS UPON LIQUIDATION
  
  	Proceeds from a Terminating Capital Transaction shall 
  be distributed to the Partners in accordance with Section 13.2.
  
  	Section 5.4	DISTRIBUTIONS TO REFLECT ISSUANCE OF 
  ADDITIONAL PARTNERSHIP INTERESTS
  
  	In the event that the Partnership issues additional 
  Partnership Interests to the General Partner, the Company, or any 
  Additional Limited Partner pursuant to Section 4.3(c) or 4.4 
  hereof, the General Partner shall make such revisions to this 
  Article 5 as it determines are necessary to reflect the issuance 
  of such additional Partnership Interests.
  
  
  ARTICLE 6
  ALLOCATIONS
  
  	Section 6.1	TIMING AND AMOUNT OF ALLOCATIONS OF NET 
  INCOME AND NET LOSS
  
  	Net Income and Net Loss of the Partnership shall be 
  determined and allocated with respect to each fiscal year of the 
  Partnership as of the end of each such year.  Subject to the 
  other provisions of this Article 6, an allocation to a Partner of 
  a share of Net Income or Net Loss shall be treated as an 
  allocation of the same share of each item of income, gain, loss 
  or deduction that is taken into account in computing Net Income 
  or Net Loss.
  
  	Section 6.2	GENERAL ALLOCATIONS
  
  	(a)	IN GENERAL.  Except as otherwise provided in this 
  Article 6, Net Income and Net Loss shall be allocated to each of 
  the Partners holding the same class of Partnership Interests in 
  accordance with their respective Percentage Interest of such 
  class.
  
  	(b)	ALLOCATIONS TO REFLECT ISSUANCE OF ADDITIONAL 
  PARTNERSHIP INTERESTS.  In the event that the Partnership issues 
  additional Partnership Interests to the General Partner, the 
  Company, or any Additional Limited Partner pursuant to Section 
  4.3 or 4.4 hereof, the General Partner shall make such revisions 
  to this Section 6.2 as it determines are necessary to reflect the 
  terms of the issuance of such additional Partnership Interests, 
  including making preferential allocations to certain classes of 
  Partnership Interests.
  
  	Section 6.3	ADDITIONAL ALLOCATION PROVISIONS
  
  	Notwithstanding the foregoing provisions of this 
  Article 6:
  
  	(a)	REGULATORY ALLOCATIONS.
  
  		(i)	MINIMUM GAIN CHARGEBACK.  Except as otherwise 
  provided in Regulations Section 1.704-2(f), notwithstanding the 
  provisions of Section 6.2 of the Agreement, or any other 
  provision of this Article 6, if there is a net decrease in 
  Partnership Minimum Gain during any fiscal year, each Partner 
  shall be specially allocated items of Partnership income and gain 
  for such year (and, if necessary, subsequent years) in an amount 
  equal to such Partner's share of the net decrease in Partnership 
  Minimum Gain, as determined under Regulations Section 1.704-2(g).  
  Allocations pursuant to the previous sentence shall be made in 
  proportion to the respective amounts required to be allocated to 
  each Partner pursuant thereto.  The items to be allocated shall 
  be determined in accordance with Regulations Sections 
  1.704-2(f)(6) and 1.704-2(j)(2).  This Section 6.3(a)(i) is 
  intended to qualify as a "minimum gain chargeback" within the 
  meaning of Regulation Section 1.704-2(f) which shall be 
  controlling in the event of a conflict between such Regulation 
  and this Section 6.3(a)(i).
  
  		(ii)	PARTNER MINIMUM GAIN CHARGEBACK.  Except as 
  otherwise provided in Regulations Section 1.704-2(i)(4), and 
  notwithstanding the provisions of Section 6.2 of the Agreement, 
  or any other provision of this Article 6 (except Section 
  6.3(a)(i)), if there is a net decrease in Partner Minimum Gain 
  attributable to a Partner Nonrecourse Debt during any fiscal 
  year, each Partner who has a share of the Partner Minimum Gain 
  attributable to such Partner Nonrecourse Debt, determined in 
  accordance with Regulations Section 1.704-2(i)(5), shall be 
  specially allocated items of Partnership income and gain for such 
  year (and, if necessary, subsequent years) in an amount equal to 
  such Partner's share of the net decrease in Partner Minimum Gain 
  attributable to such Partner Nonrecourse Debt, determined in 
  accordance with Regulations Section 1.704-2(i)(4).  Allocations 
  pursuant to the previous sentence shall be made in proportion to 
  the respective amounts required to be allocated to each General 
  Partner and Limited Partner pursuant thereto.  The items to be so 
  allocated shall be determined in accordance with Regulations 
  Sections 1.704-2(i)(4) and 1.704-2(j)(2).  This Section 
  6.3(a)(ii) is intended to qualify as a "chargeback of partner 
  nonrecourse debt minimum gain" within the meaning of Regulation 
  Section 1.704-2(i) which shall be controlling in the event of a 
  conflict between such Regulation and this Section 6.3(a)(ii).
  
  		(iii)	NONRECOURSE DEDUCTIONS AND PARTNER 
  NONRECOURSE DEDUCTIONS.  Any Nonrecourse Deductions for any 
  fiscal year shall be specially allocated to the Partners in 
  accordance with their Percentage Interests.  Any Partner 
  Nonrecourse Deductions for any fiscal year shall be specially 
  allocated to the Partner(s) who bears the economic risk of loss 
  with respect to the Partner Nonrecourse Debt to which such 
  Partner Nonrecourse Deductions are attributable, in accordance 
  with Regulations Sections 1.704-2(b)(4) and 1.704-2(i).
  
  		(iv)	QUALIFIED INCOME OFFSET.  If any Partner 
  unexpectedly receives an adjustment, allocation or distribution 
  described in Regulations Section 1.704-1(b)(2)(ii)(d)(4), (5) or 
  (6), items of Partnership income and gain shall be allocated, in 
  accordance with Regulations Section 1.704-1(b)(2)(ii)(d), to the 
  Partner in an amount and manner sufficient to eliminate, to the 
  extent required by such Regulations, the Adjusted Capital Account 
  Deficit of the Partner as quickly as possible provided that an 
  allocation pursuant to this Section 6.3(a)(iv) shall be made if 
  and only to the extent that such Partner would have an Adjusted 
  Capital Account Deficit after all other allocations provided in 
  this Article 6 have been tentatively made as if this Section 
  6.3(a)(iv) were not in the Agreement.  It is intended that this 
  Section 6.3(a)(iv) qualify and be construed as a "qualified 
  income offset" within the meaning of Regulations 
  1.704-1(b)(2)(ii)(d), which shall be controlling in the event of 
  a conflict between such Regulations and this Section 6.3(a)(iv).
  
  		(v)	GROSS INCOME ALLOCATION.  In the event any 
  Partner has a deficit Capital Account at the end of any fiscal 
  year which is in excess of the sum of (1) the amount (if any) 
  such Partner is obligated to restore to the Partnership, and (2) 
  the amount such Partner is deemed to be obligated to restore 
  pursuant to Regulations Section 1.704-1(b)(2)(ii)(c) or the 
  penultimate sentences of Regulations Sections 1.704-2(g)(1) and 
  1.704-2(i)(5), each such Partner shall be specially allocated 
  items of Partnership income and gain in the amount of such excess 
  as quickly as possible, PROVIDED THAT an allocation pursuant to 
  this Section 6.3(a)(v) shall be made if and only to the extent 
  that such Partner would have a deficit Capital Account in excess 
  of such sum after all other allocations provided in this Article 
  6 have been tentatively made as if this Section 6.3(a)(v) and 
  Section 6.3(a)(iv) were not in the Agreement.
  
  		(vi)	LIMITATION ON ALLOCATION OF NET LOSS.  To the 
  extent any allocation of Net Loss would cause or increase an 
  Adjusted Capital Account Deficit as to any Partner, such 
  allocation of Net Loss shall be reallocated among the other 
  Partners in accordance with their respective Percentage 
  Interests, subject to the limitations of this Section 6.3(a)(vi).
  
  		(vii)	SECTION 754 ADJUSTMENT.  To the extent 
  an adjustment to the adjusted tax basis of any Partnership asset 
  pursuant to Code Section 734(b) or Code Section 743(b) is 
  required, pursuant to Regulations Section 1.704-1(b)(2)(iv)(m)(2) 
  or Regulations Section 1.704-1(b)(2)(iv)(m)(4), to be taken into 
  account in determining Capital Accounts as the result of a 
  distribution to a Partner in complete liquidation of his interest 
  in the Partnership, the amount of such adjustment to the Capital 
  Accounts shall be treated as an item of gain (if the adjustment 
  increases the basis of the asset) or loss (if the adjustment 
  decreases such basis) and such gain or loss shall be specially 
  allocated to the Partners in accordance with their interests in 
  the Partnership in the event that Regulations Section 
  1.704-1(b)(2)(iv)(m)(2) applies, or to the Partners to whom such 
  distribution was made in the event that Regulations Section 
  1.704-1(b)(2)(iv)(m)(4) applies.
  
  		(viii)	CURATIVE ALLOCATION.  The allocations 
  set forth in Sections 6.3(a)(i), (ii), (iii), (iv), (v), (vi), 
  and (vii) (the "Regulatory Allocations") are intended to comply 
  with certain regulatory requirements, including the requirements 
  of Regulations Sections 1.704-1(b) and 1.704-2.  Notwithstanding 
  the provisions of Sections 6.1 and 6.2, the Regulatory 
  Allocations shall be taken into account in allocating other items 
  of income, gain, loss and deduction among the Partners so that, 
  to the extent possible, the net amount of such allocations of 
  other items and the Regulatory Allocations to each Partner shall 
  be equal to the net amount that would have been allocated to each 
  such Partner if the Regulatory Allocations had not occurred.
  
  	Section 6.4	TAX ALLOCATIONS
  
  	(a)	IN GENERAL.  Except as otherwise provided in this 
  Section 6.4, for income tax purposes each item of income, gain, 
  loss and deduction (collectively, "Tax Items") shall be allocated 
  among the Partners in the same manner as its correlative item of 
  "book" income, gain, loss or deduction is allocated pursuant to 
  Sections 6.2 and 6.3.
  
  	(b)	ALLOCATIONS RESPECTING SECTION 704(C) 
  REVALUATIONS. Notwithstanding Section 6.4(a), Tax Items with 
  respect to Partnership property that is contributed to the 
  Partnership by a Partner shall be shared among the Partners for 
  income tax purposes pursuant to Regulations promulgated under 
  Section 704(c) of the Code, so as to take into account the 
  variation, if any, between the basis of the property to the 
  Partnership and its initial Gross Asset Value.  With respect to 
  Partnership property that is initially contributed to the 
  Partnership upon its formation pursuant to Section 4.1, such 
  variation between basis and initial Gross Asset Value shall be 
  taken into account under the "traditional without curative 
  allocations method" of Regulations Section 1.704-3.  With respect 
  to properties subsequently contributed to the Partnership, the 
  Partnership shall account for such variation under any method 
  approved under Section 704(c) of the Code and the applicable 
  regulations as chosen by the General Partner.  In the event the 
  Gross Asset Value of any Partnership asset is adjusted pursuant 
  to subparagraph (b) of the definition of Gross Asset Value 
  (provided in Article 1 of this Agreement), subsequent allocations 
  of Tax Items with respect to such asset shall take account of the 
  variation, if any, between the adjusted basis of such asset and 
  its Gross Asset Value in the same manner as under Section 704(c) 
  of the Code and the applicable regulations consistent with the 
  requirements of Regulations Section 1.704-1(b)(2)(iv)(g) using 
  any method approved under 704(c) of the Code and the applicable 
  regulations as chosen by the General Partner.
  
  
  ARTICLE 7
  MANAGEMENT AND OPERATIONS OF BUSINESS
  
  	Section 7.1	MANAGEMENT
  
  	(a)	Except as otherwise expressly provided in this 
  Agreement, all management powers over the business and affairs of 
  the Partnership are exclusively vested in the General Partner, 
  and no Limited Partner shall have any right to participate in or 
  exercise control or management power over the business and 
  affairs of the Partnership.  The General Partner may not be 
  removed by the Limited Partners with or without cause, except 
  with the consent of the General Partner.  In addition to the 
  powers now or hereafter granted a General Partner of a limited 
  partnership under applicable law or which are granted to the 
  General Partner under any other provision of this Agreement, the 
  General Partner, subject to the other provisions hereof including 
  Section 7.3, shall have full power and authority to do all things 
  deemed necessary or desirable by it to conduct the business of 
  the Partnership, to exercise all powers set forth in Section 3.2 
  hereof and to effectuate the purposes set forth in Section 3.1 
  hereof, including, without limitation:
  
  		(i)	the making of any expenditures, the lending 
  or borrowing of money (including, without limitation, making 
  prepayments on loans and borrowing money to permit the 
  Partnership to make distributions to its Partners in such amounts 
  as will permit the Company (so long as the Company has determined 
  to qualify as a REIT) to avoid the payment of any federal income 
  tax (including, for this purpose, any excise tax pursuant to 
  Section 4981 of the Code) and to make distributions to its 
  stockholders sufficient to permit the Company to maintain REIT 
  status), the assumption or guarantee of, or other contracting 
  for, indebtedness and other liabilities, the issuance of 
  evidences of indebtedness (including the securing of same by 
  mortgage, deed of trust or other lien or encumbrance on all or 
  any of the Partnership's assets) and the incurring of any 
  obligations it deems necessary for the conduct of the activities 
  of the Partnership;
  
  		(ii)	the making of tax, regulatory and other 
  filings, or rendering of periodic or other reports to 
  governmental or other agencies having jurisdiction over the 
  business or assets of the Partnership;
  
  		(iii)	the acquisition, disposition, mortgage, 
  pledge, encumbrance, hypothecation or exchange of any assets of 
  the Partnership or the merger or other combination of the 
  Partnership with or into another entity;
  
  		(iv)	the mortgage, pledge, encumbrance or 
  hypothecation of all or any assets of the Partnership, and the 
  use of the assets of the Partnership (including, without 
  limitation, cash on hand) for any purpose consistent with the 
  terms of this Agreement and on any terms it sees fit, including, 
  without limitation, the financing of the conduct or the 
  operations of the General Partner, the Company, or the 
  Partnership, the lending of funds to other Persons (including, 
  without limitation, the General Partner or the Company (if 
  necessary to permit the financing or capitalization of a 
  subsidiary of the General Partner, the Company, or the 
  Partnership) or any Subsidiaries of the Partnership) and the 
  repayment of obligations of the Partnership, the Company, any of 
  its Subsidiaries and any other Person in which it has an equity 
  investment;
  
  		(v)	the negotiation, execution, and performance 
  of any contracts, leases, conveyances or other instruments that 
  the General Partner considers useful or necessary to the conduct 
  of the Partnership's operations or the implementation of the 
  General Partner's powers under this Agreement;
  
  		(vi)	the distribution of Partnership cash or other 
  Partnership assets in accordance with this Agreement;
  
  		(vii)	the selection and dismissal of employees 
  of the Partnership (including, without limitation, employees 
  having titles such as "president," "vice president," "secretary" 
  and "treasurer"), and agents, outside attorneys, accountants, 
  consultants and contractors of the Partnership, the determination 
  of their compensation and other terms of employment or hiring, 
  including waivers of conflicts of interest and the payment of 
  their expenses and compensation out of the Partnership's assets;
  
  		(viii)	the maintenance of such insurance for 
  the benefit of the Partnership and the Partners as it deems 
  necessary or appropriate;
  
  		(ix)	the formation of, or acquisition of an 
  interest in, and the
  contribution of property to, any further limited or general 
  partnerships, joint ventures or other relationships that it deems 
  desirable (including, without limitation, the acquisition of 
  interests in, and the contributions of property to any Subsidiary 
  and any other Person in which it has an equity investment from 
  time to time); PROVIDED THAT, as long as the Company has 
  determined to continue to qualify as a REIT, the Partnership may 
  not engage in any such formation, acquisition or contribution 
  that would cause the Company to fail to qualify as a REIT;
  
  		(x)	the control of any matters affecting the 
  rights and obligations of the Partnership, including the conduct 
  of litigation and the incurring of legal expense and the 
  settlement of claims and litigation, and the indemnification of 
  any Person against liabilities and contingencies to the extent 
  permitted by law;
  
  		(xi)	the undertaking of any action in connection 
  with the Partnership's direct or indirect investment in any 
  Person (including, without limitation, contributing or loaning 
  Partnership funds to, incurring indebtedness on behalf of, or 
  guarantying the obligations of any such Persons);
  
  		(xii)	subject to the other provisions in this 
  Agreement, the determination of the fair market value of any 
  Partnership property distributed in kind using such reasonable 
  method of valuation as it may adopt, PROVIDED THAT such methods 
  are otherwise consistent with requirements of this Agreement;
  
  		(xiii)	the management, operation, leasing, 
  landscaping, repair, alteration, demolition or improvement of any 
  real property or improvements owned by the Partnership or any 
  Subsidiary of the Partnership or any Person in which the 
  Partnership has made a direct or indirect equity investment;
  
  		(xiv)	holding, managing, investing and 
  reinvesting cash and other assets of the Partnership;
  
  		(xv)	the collection and receipt of revenues and 
  income of the Partnership;
  
  		(xvi)	the exercise, directly or indirectly 
  through any attorney-in-fact acting under a general or limited 
  power of attorney, of any right, including the right to vote, 
  appurtenant to any asset or investment held by the Partnership;
  
  		(xvii)	the exercise of any of the powers of the 
  General Partner enumerated in this Agreement on behalf of or in 
  connection with any Subsidiary of the Partnership or any other 
  Person in which the Partnership has a direct or indirect 
  interest, or jointly with any such Subsidiary or other Person;
  
  		(xviii)	the exercise of any of the powers of the 
  General Partner enumerated in this Agreement on behalf of any 
  Person in which the Partnership does not have an interest 
  pursuant to contractual or other arrangements with such Person; 
  and
  
  		(xix)	the making, execution and delivery of 
  any and all deeds, leases, notes, deeds to secure debt, 
  mortgages, deeds of trust, security agreements, conveyances, 
  contracts, guarantees, warranties, indemnities, waivers, releases 
  or legal instruments or agreements in writing necessary or 
  appropriate in the judgment of the General Partner for the 
  accomplishment of any of the powers of the General Partner 
  enumerated in this Agreement.
  
  	(b)	Each of the Limited Partners agrees that the 
  General Partner is authorized to execute, deliver and perform the 
  above-mentioned agreements and transactions on behalf of the 
  Partnership without any further act, approval or vote of the 
  partners, notwithstanding any other provisions of this Agreement 
  (except as provided in Section 7.3), the Act or any applicable 
  law, rule or regulation.  The execution, delivery or performance 
  by the General Partner or the Partnership of any agreement 
  authorized or permitted under this Agreement shall not constitute 
  a breach by the General Partner of any duty that the General 
  Partner may owe the Partnership or the Limited Partners or any 
  other Persons under this Agreement or of any duty stated or 
  implied by law or equity.
  
  	(c)	At all times from and after the date hereof, the 
  General Partner may cause the Partnership to obtain and maintain 
  (i) casualty, liability and other insurance on the properties of 
  the Partnership and (ii) liability insurance for the Indemnitees 
  hereunder.
  
  	(d)	At all times from and after the date hereof, the 
  General Partner may cause the Partnership to establish and 
  maintain working capital and other reserves in such amounts as 
  the General Partner, in it sole and absolute discretion, deems 
  appropriate and reasonable from time to time.
  
  	(e)	Other than as set forth in the following sentence, 
  and subject to Section 11.2(d), in exercising its authority under 
  this Agreement, the General Partner may, but shall be under no 
  obligation to, take into account the tax consequences to any 
  Partner (including the General Partner or the Company) of any 
  action taken by it.  The General Partner, on behalf of the 
  Partnership, shall use commercially reasonable efforts to 
  cooperate with the Limited Partners to minimize any taxes payable 
  in connection with any repayment, refinancing, replacement or 
  restructuring of Debt, or any sale, exchange or any other 
  disposition of assets, of the Partnership, including, without 
  limitation, amending this Agreement to provide obligations on the 
  part of any affected Partner to restore deficit balances in their 
  Capital Accounts as of the time of liquidation of the Partnership 
  and to maintain a corresponding level of recourse debt to match 
  such obligations or maintaining a level of non-recourse debt that 
  can be allocated to, and included in the Partnership tax basis 
  of, such Partners, pursuant to the regulations under Section 752 
  of the Code.  The General Partner and the Partnership shall not 
  have liability to a Limited Partner under any circumstances as a 
  result of an income tax liability incurred by such Limited 
  Partner as a result of an action (or inaction) by the General 
  Partner pursuant to its authority under this Agreement.
  
  	(f)	Except as otherwise provided herein, to the extent 
  the duties of the
  General Partner require expenditures of funds to be paid to third 
  parties, the General Partner shall not have any obligations 
  hereunder except to the extent that Partnership funds are 
  reasonably available to it for the performance of such duties, 
  and nothing herein contained shall be deemed to authorize or 
  require the General Partner, in its capacity as such, to expend 
  its individual funds for payment to third parties or to undertake 
  any individual liability or obligation on behalf of the 
  Partnership.
  
  	Section 7.2	CERTIFICATE OF LIMITED PARTNERSHIP
  
  	To the extent that such action is determined by the 
  General Partner to be reasonable and necessary or appropriate, 
  the General Partner shall file amendments to and restatements of 
  the Certificate and do all the things to maintain the Partnership 
  as a limited partnership (or a partnership in which the limited 
  partners have limited liability) under the laws of the State of 
  Delaware and each other state, the District of Columbia or other 
  jurisdiction, in which the Partnership may elect to do business 
  or own property.  Subject to the terms of Section 8.5(a)(i) 
  hereof, the General Partner shall not be required, before or 
  after filing, to deliver or mail a copy of the Certificate or any 
  amendment thereto to any Limited Partner.  The General Partner 
  shall use all reasonable efforts to cause to be filed such other 
  certificates or documents as may be reasonable and necessary or 
  appropriate for the formation, continuation, qualification and 
  operation of a limited partnership (or a partnership in which the 
  limited partners have limited liability) in the State of 
  Delaware, any other state, the District of Columbia or other 
  jurisdiction, in which the Partnership may elect to do business 
  or own property.
  
  	Section 7.3	RESTRICTIONS ON GENERAL PARTNER'S 
  AUTHORITY
  
  	(a)	The General Partner may not take any action in 
  contravention of an
  express prohibition or limitation of this Agreement, including, 
  without limitation:
  
  		(i)		take any action that would make it 
  impossible to carry on the ordinary business of the Partnership, 
  except as otherwise provided in this Agreement;
  
  		(ii)		possess Partnership property, or assign 
  any rights in specific Partnership property, for other than a 
  Partnership purpose except as otherwise provided in this 
  Agreement;
  
  		(iii)	admit a Person as a Partner, except as 
  otherwise provided in this Agreement;
  
  		(iv)	perform any act that would subject a Limited 
  Partner to liability as a general partner in any jurisdiction or 
  any other liability except as provided herein or under the Act; 
  or
  
  		(v)		enter into any contract, mortgage, loan 
  or other agreement that expressly prohibits or restricts, or has 
  the effect of limiting or restricting, the ability of a Limited 
  Partner to exercise its rights to a Redemption in full, except 
  with the written consent of such Limited Partner.
  
  	(b)	The General Partner shall not, without the prior 
  Consent of the Partners, undertake, on behalf of the Partnership, 
  any of the following actions or enter into any transaction which 
  would have the effect of such actions:
  
  		(i)		except as provided in Section 7.3(e), 
  amend, modify or terminate this Agreement other than to reflect 
  the admission, substitution, termination or withdrawal of 
  partners pursuant to Article 12 hereof;
  
  		(ii)		make a general assignment for the 
  benefit of creditors or appoint or acquiesce in the appointment 
  of a custodian, receiver or trustee for all or substantially all 
  of the assets of the Partnership;
  
  		(iii)	institute any proceeding for bankruptcy 
  on behalf of the Partnership; or
  	
  		(iv)		confess a judgment against the 
  Partnership.
  
  	(c)	The General Partner shall not, without the prior 
  Consent of the Super Majority Limited Partners, undertake, on 
  behalf of the Partnership, any of the following actions or enter 
  into any transaction which would have the effect of such actions:
  
  		(i)		approve or acquiesce to the transfer of 
  the Partnership Interest of the General Partner to any Person 
  other than the Partnership or an Affiliate of the General 
  Partner; or
  
  		(ii)		admit into the Partnership any 
  Additional or Substitute General Partners, other than Affiliates 
  of the General Partner.
  
  	(d)	Notwithstanding Sections 7.3(b), and 7.3(c) 
  hereof, the General Partner shall have the exclusive power to 
  amend this Agreement as may be required to facilitate or 
  implement any of the following purposes:
  
  		(i)		to add to the obligations of the General 
  Partner or surrender any right or power granted to the General 
  Partner or any Affiliate of the General Partner for the benefit 
  of the Limited Partners;
  
  		(ii)		to reflect the issuance of additional 
  Partnership Interests pursuant to Section 4.3(c) or 4.4 or the 
  admission, substitution, termination, or withdrawal of Partners 
  in accordance with this Agreement;
  
  		(iii)	to reflect a change that is of an 
  inconsequential nature and does not adversely affect the Limited 
  Partners in any material respect, or to cure any ambiguity, 
  correct or supplement any provision in this Agreement not 
  inconsistent with law or with other provisions, or make other 
  changes with respect to matters arising under this Agreement that 
  will not be inconsistent with law or with the provisions of this 
  Agreement;
  
  		(iv)		to satisfy any requirements, conditions, 
  or guidelines contained in any order, directive, opinion, ruling 
  or regulation of a federal or state agency or contained in 
  federal or state law;
  
  		(v)		to reflect such changes as are 
  reasonably necessary for the Company to maintain status as a 
  REIT, including changes which may be necessitated due to a change 
  in applicable law (or an authoritative interpretation thereof) or 
  a ruling of the IRS; and
  
  		(vi)		to modify, as set forth in the 
  definition of "Capital Account," the manner in which Capital 
  Accounts are computed.
  
  	The General Partner will provide notice to the Limited 
  Partners when any action under this Section 7.3(d) is taken.
  
  	(e)	Notwithstanding Sections 7.3(b), 7.3(c) and 7.3(d) 
  hereof, this Agreement shall not be amended with respect to any 
  Partner adversely affected, and no action may be taken by the 
  General Partner, without the Consent of such Partner adversely 
  affected if such amendment or action would (i) convert a Limited 
  Partner's interest in the Partnership into a general partner's 
  interest (except as the result of the General Partner acquiring 
  such interest), (ii) modify the limited liability of a Limited 
  Partner, (iii) alter rights of the Partner to receive 
  distributions pursuant to Article 5 or Section 13.2(a)(i), or the 
  allocations specified in Article 6 (except as permitted pursuant 
  to Section 4.3 and Section 7.3(d)(iii) hereof), (iv) materially 
  alter or modify the rights to a Redemption or the REIT Shares 
  Amount as set forth in Section 8.6, and related definitions 
  hereof or (v) amend this Section 7.3(e).  Further, no amendment 
  may alter the restrictions on the General Partner's authority set 
  forth elsewhere in this Section 7.3 without the Consent specified 
  in such section.  In addition, notwithstanding Sections 7.3(b), 
  7.3(c) and 7.3(e) hereof, Section 11.2 of this Agreement shall 
  not be amended, and no action in contravention of Section 11.2 
  hereof shall be taken, without the Consent of the Limited 
  Partners.  This Section 7.3(e) does not require unanimous consent 
  of all Partners adversely affected unless the amendment is to be 
  effective against all Partners adversely affected.
  
  	Section 7.4	REIMBURSEMENT OF THE GENERAL PARTNER
  
  	(a)	Except as provided in this Section 7.4 and 
  elsewhere in this Agreement (including the provisions of Articles 
  5 and 6 regarding distributions, payments and allocations to 
  which it may be entitled), the General Partner shall not be 
  compensated for its services as general partner of the 
  Partnership.
  
  	(b)	Subject to Section 15.11, the General Partner 
  shall be reimbursed on a monthly basis, or such other basis as 
  the General Partner may determine in its sole and absolute 
  discretion, for all expenses it incurs relating to the ownership 
  of interests in and operation of, or for the benefit of, the 
  Partnership.  The General Partner shall not, however, be 
  reimbursed for expenses it incurs relating to the organization of 
  the Partnership or any public offerings of REIT Shares, other 
  shares of capital stock or Funding Debt by the General Partner, 
  but shall be reimbursed for expenses it incurs with respect to 
  any other issuance of additional Partnership Interests pursuant 
  to the provisions hereof.  Such reimbursements shall be in 
  addition to any reimbursement to the General Partner as a result 
  of indemnification pursuant to Section 7.7 hereof.
  
  	(c)	If and to the extent any reimbursements to the 
  General Partner pursuant
  to this Section 7.4 constitute gross income of the General 
  Partner (as opposed to the repayment of advances made by the 
  General Partner on behalf of the Partnership), such amounts shall 
  constitute guaranteed payments within the meaning of Section 
  707(c) of the Code, shall be treated consistently therewith by 
  the Partnership and all Partners, and shall not be treated as 
  distributions for purposes of computing the Partners' Capital 
  Accounts.
  
  	Section 7.5	CONTRACTS WITH AFFILIATES
  
  	(a)	The Partnership may lend or contribute to Persons 
  in which it has an equity investment, and such Persons may borrow 
  funds from the Partnership, on terms and conditions established 
  in the sole and absolute discretion of the General Partner.  The 
  foregoing authority shall not create any right or benefit or 
  favor of any Person.
  
  	(b)	Except as provided in Section 7.5(a), the 
  Partnership may transfer assets to joint ventures, other 
  partnerships, corporations, limited liability companies or other 
  business entities in which it is or thereby becomes a participant 
  upon such terms and subject to such conditions consistent with 
  this Agreement and applicable law.
  
  	(c)	The General Partner, in its sole and absolute 
  discretion and without the approval of the Limited Partners, may 
  propose and adopt on behalf of the Partnership employee benefit 
  plans funded by the Partnership for the benefit of employees of 
  the General Partner, the Partnership, Subsidiaries of the 
  Partnership or any Affiliate of any of them in respect of 
  services performed, directly or indirectly, for the benefit of 
  the Partnership, the General Partner, or any of the Partnership's 
  Subsidiaries.  The General Partner also is expressly authorized 
  to cause the Partnership to issue to it Partnership Units 
  corresponding to REIT Shares issued by the Company pursuant to 
  any Stock Plan or any similar or successor plan and to repurchase 
  such Partnership Units from the Company to the extent necessary 
  to permit the General Partner to repurchase such REIT Shares in 
  accordance with such plan.
  
  	(d)	The General Partner is expressly authorized to 
  enter into, in the name and on behalf of the Partnership, a right 
  of first opportunity arrangement and other conflict avoidance 
  agreements with various Affiliates of the Partnership and the 
  General Partner, on such terms as the General Partner, in its 
  sole and absolute discretion, believes are advisable.
  
  	Section 7.6	INDEMNIFICATION
  
  	(a)	The Partnership shall indemnify an Indemnitee from 
  and against any and all losses, claims, damages, liabilities, 
  joint or several, expenses (including legal fees and expenses), 
  judgments, fines, settlements, and other amounts arising from any 
  and all claims, demands, actions, suits or proceedings, civil, 
  criminal, administrative or investigative, including, without 
  limitation, reasonable attorneys' fees and expenses, that relate 
  to the operations of the Partnership as set forth in this 
  Agreement in which any Indemnitee may be involved, or is 
  threatened to be involved, as a party or otherwise, unless it is 
  established that: (i) the act or omission of the Indemnitee was 
  material to the matter giving rise to the proceeding and either 
  was committed in bad faith or was the result of active and 
  deliberate dishonesty; (ii) the Indemnitee actually received an 
  improper personal benefit in money, property or services; or 
  (iii) in the case of any criminal proceeding, the Indemnitee had 
  reasonable cause to believe that the act or omission was 
  unlawful.  Except as otherwise specifically provided in writing 
  to the contrary, without limitation, the foregoing indemnity 
  shall extend to any liability of any Indemnitee, pursuant to a 
  loan guaranty or otherwise, for any indebtedness of the 
  Partnership or any Subsidiary of the Partnership (including, 
  without limitation, any indebtedness which the Partnership or any 
  Subsidiary of the Partnership has assumed or taken subject to), 
  and the General Partner is hereby authorized and empowered, on 
  behalf of the Partnership, to enter into one or more indemnity 
  agreements consistent with the provisions of this Section 7.6 in 
  favor of any Indemnitee having or potentially having liability 
  for any such indebtedness.  The termination of any proceeding by 
  judgment, order or settlement does not create a presumption that 
  the Indemnitee did not meet the requisite standard of conduct set 
  forth in this Section 7.6(a).  The termination of any proceeding 
  by conviction or upon a plea of nolo contendere or its 
  equivalent, or any entry of an order of probation prior to 
  judgment, creates a rebuttable presumption that the Indemnitee 
  acted in a manner contrary to that specified in this Section 
  7.6(a) with respect to subject matter of such proceeding.  Any 
  indemnification pursuant to this Section 7.6 shall be made only 
  out of the assets of the Partnership.
  
  	(b)	Reasonable expenses incurred by an Indemnitee in 
  connection with any proceeding which are otherwise indemnifiable 
  under this Section 7.6 may be paid or reimbursed by the 
  Partnership in advance of the final disposition of the proceeding 
  upon receipt by the Partnership of (i) a written affirmation by 
  the Indemnitee of the Indemnitee's good faith belief that the 
  standard of conduct necessary for indemnification by the 
  Partnership as authorized in this Section 7.6 has been met, and 
  (ii) a written undertaking by or on behalf of the Indemnitee to 
  repay the amount if it shall ultimately be determined that the 
  standard of conduct has not been met.
  
  	(c)	The indemnification provided by this Section 7.6 
  shall be in addition to any other rights to which an Indemnitee 
  or any other Person may be entitled under any agreement, pursuant 
  to any vote of the Partners, as a matter of law or otherwise, and 
  shall continue as to an Indemnitee who has ceased to serve in 
  such capacity.
  
  	(d)	The Partnership may purchase and maintain 
  insurance, on behalf of the Indemnitees and such other Persons as 
  the General Partner shall determine, against any liability that 
  may be asserted against or expenses that may be incurred by such 
  Person in connection with the Partnership's activities, 
  regardless of whether the Partnership would have the power to 
  indemnify such Person against such liability under the provisions 
  of this Agreement.
  
  	(e)	For purposes of this Section 7.6, the Partnership 
  shall be deemed to have requested an Indemnitee to serve as 
  fiduciary of an employee benefit plan whenever the performance by 
  it of its duties to the Partnership also imposes duties on, or 
  otherwise involves services by, it to the plan or participants or 
  beneficiaries of the plan; excise taxes assessed on an Indemnitee 
  with respect to an employee benefit plan pursuant to applicable 
  law shall constitute fines within the meaning of Section 7.6; and 
  actions taken or omitted by the Indemnitee with respect to an 
  employee benefit plan in the performance of its duties for a 
  purpose reasonably believed by it to be in the interest of the 
  participants and beneficiaries of the plan shall be deemed to be 
  for a purpose which is not opposed to the best interests of the 
  Partnership.
  
  	(f)	In no event may an Indemnitee subject the Limited 
  Partners to personal liability by reason of the indemnification 
  provisions set forth in this Agreement.
  
  	(g)	An Indemnitee shall not be denied indemnification 
  in whole or in part under this Section 7.6 because the Indemnitee 
  had an interest in the transaction with respect to which the 
  indemnification applies if the transaction was otherwise 
  permitted by the terms of this Agreement.
  
  	(h)	The provisions of this Section 7.6 are for the 
  benefit of the Indemnitees, their heirs, successors, assigns and 
  administrators and shall not be deemed to create any rights for 
  the benefit of any other Persons.  Any amendment, modification or 
  repeal of this Section 7.6 or any provision hereof shall be 
  prospective only and shall not in any way affect the limitations 
  on the Partnership's liability to any Indemnitee under this 
  Section 7.6 as in effect immediately prior to such amendment, 
  modification or repeal with respect to claims arising from or 
  relating to matters occurring, in whole or in part, prior to such 
  amendment, modification or repeal, regardless of when such claims 
  may arise or be asserted.
  
  	(i)	If and to the extent any reimbursements to the 
  General Partner pursuant to this Section 7.6 constitute gross 
  income of the General Partner (as opposed to the repayment of 
  advances made by the General Partner on behalf of the 
  Partnership) such amounts shall constitute guaranteed payments 
  within the meaning of Section 707(c) of the Code, shall be 
  treated consistently therewith by the Partnership and all 
  Partners, and shall not be treated as distributions for purposes 
  of computing the Partners' Capital Accounts.
  
  	(j)	Any indemnification hereunder is subject to, and 
  limited by, the provisions of Section 17-108 of the Act.
  
  	(k)	In the event the Partnership is made a party to 
  any litigation or otherwise incurs any loss or expenses as a 
  result of or in connection with any Partner's personal 
  obligations or liabilities unrelated to Partnership business, 
  such Partner shall indemnify and reimburse the Partnership for 
  all such loss and expense incurred, including legal fees, and the 
  Partnership Interest of such Partner may be charged therefor.  
  The liability of a Partner under this Section 7.6(k) shall not be 
  limited to such Partner's Partnership Interest, but shall be 
  enforceable against such Partner personally.
  
  	Section 7.7	LIABILITY OF THE GENERAL PARTNER
  
  	(a)	Notwithstanding anything to the contrary set forth 
  in this Agreement, neither the General Partner nor any director, 
  officer, employee or agent of the Partnership or the General 
  Partner (each, an "Agent") shall be liable or accountable in 
  damages or otherwise to the Partnership, any Partners or any 
  Assignees for losses sustained, liabilities incurred or benefits 
  not derived as a result of errors in judgment or mistakes of fact 
  or law or any act or omission if such Person acted in good faith.
  
  	(b)	The Limited Partners expressly acknowledge that 
  the General Partner is acting for the benefit of the Partnership, 
  the Limited Partners and the Company's stockholders collectively, 
  that the General Partner is under no obligation to give priority 
  to the separate interests of the Limited Partners or the 
  Company's stockholders (including, without limitation, the tax 
  consequences to Limited Partners or Assignees or to stockholders) 
  in deciding whether to cause the Partnership to take (or decline 
  to take) any actions and that the General Partner shall not be 
  liable to the Partnership or to any Limited Partner for monetary 
  damages for losses sustained, liabilities incurred, or benefits 
  not derived by Limited Partners in connection with such 
  decisions, PROVIDED THAT the General Partner has acted in good 
  faith.
  
  	(c)	Subject to its obligations and duties as General 
  Partner set forth in Section 7.1(a) hereof, the General Partner 
  may exercise any of the powers granted to it by this Agreement 
  and perform any of the duties imposed upon it hereunder either 
  directly or by or through its Agents.  The General Partner shall 
  not be responsible for any misconduct or negligence on the part 
  of any such Agent appointed by it in good faith.
  
  	(d)	Any amendment, modification or repeal of this 
  Section 7.7 or any provision hereof shall be prospective only and 
  shall not in any way affect the limitations on the General 
  Partner's or any Agent's liability to the Partnership and the 
  Limited Partners under this Section 7.7 as in effect immediately 
  prior to such amendment, modification or repeal with respect to 
  claims arising from or relating to matters occurring, in whole or 
  in part, prior to such amendment, modification or repeal, 
  regardless of when such claims may arise or be asserted.
  
  	Section 7.8	OTHER MATTERS CONCERNING THE GENERAL 
  PARTNER
  
  	(a)	The General Partner and any Agent may rely and 
  shall be protected in
  acting or refraining from acting upon any resolution, 
  certificate, statement, instrument, opinion, report, notice, 
  request, consent, order, bond, debenture, or other paper or 
  document believed by it to be genuine and to have been signed or 
  presented by the proper party or parties. 
  
  	(b)	The General Partner and any Agent may consult with 
  legal counsel, accountants, appraisers, management consultants, 
  investment bankers and other consultants and advisers selected by 
  it, and any act taken or omitted to be taken in reliance upon the 
  opinion of such Persons as to matters which such General Partner 
  or Agent reasonably believes to be within such Person's 
  professional or expert competence shall be conclusively presumed 
  to have been done or omitted in good faith and in accordance with 
  such opinion.
  
  	(c)	The General Partner shall have the right, in 
  respect of any of its powers or obligations hereunder, to act 
  through any of its duly authorized officers and a duly appointed 
  attorney or attorneys-in-fact.  Each such attorney shall, to the 
  extent provided by the General Partner in the power of attorney, 
  have full power and authority to do and perform all and every act 
  and duty which is permitted or required to be done by the General 
  Partner hereunder.
  
  	(d)	Notwithstanding any other provisions of this 
  Agreement or any non-mandatory provision of the Act, any action 
  of the General Partner on behalf of the Partnership or any 
  decision of the General Partner to refrain from acting on behalf 
  of the Partnership, undertaken in the good faith belief that such 
  action or omission is necessary or advisable in order (i) to 
  protect the ability of the Company to continue to qualify as a 
  REIT or (ii) to avoid the Company incurring any taxes under 
  Section 857 or Section 4981 of the Code, is expressly authorized 
  under this Agreement and is deemed approved by all of the Limited 
  Partners.
  
  	Section 7.9	TITLE TO PARTNERSHIP ASSETS
  
  	Title to Partnership assets, whether real, personal or 
  mixed and whether tangible or intangible, shall be deemed to be 
  owned by the Partnership as an entity, and no Partners, 
  individually or collectively, shall have any ownership interest 
  in such Partnership assets or any portion thereof.  Title to any 
  or all of the Partnership assets may be held in the name of the 
  Partnership, the General Partner or one or more nominees, as the 
  General Partner may determine, including Affiliates of the 
  General Partner.  The General Partner hereby declares and 
  warrants that any Partnership assets for which legal title is 
  held in the name of the General Partner or any nominee or 
  Affiliate of the General Partner shall be deemed held by the 
  General Partner or such nominee or Affiliate for the use and 
  benefit of the Partnership in accordance with the provisions of 
  this Agreement; PROVIDED, HOWEVER, that the General Partner shall 
  use its best efforts to cause beneficial and record title to such 
  assets to be vested in the Partnership as soon as reasonably 
  practicable.  All Partnership assets shall be recorded as the 
  property of the Partnership in its books and records, 
  irrespective of the name in which legal title to such Partnership 
  assets is held.
  
  	Section 7.10	RELIANCE BY THIRD PARTIES
  
  	Notwithstanding anything to the contrary in this 
  Agreement, any Person dealing with the Partnership shall be 
  entitled to assume that the General Partner has full power and 
  authority to encumber, sell or otherwise use in any manner any 
  and all assets of the Partnership and to enter into any contracts 
  on behalf of the Partnership, and such Person shall be entitled 
  to deal with the General Partner as if it were the Partnership's 
  sole party in interest, both legally and beneficially.  Each 
  Limited Partner hereby waives any and all defenses or other 
  remedies which may be available against such Person to contest, 
  negate or disaffirm any action of the General Partner in 
  connection with any such dealing.  In no event shall any Person 
  dealing with the General Partner or its representatives be 
  obligated to ascertain that the terms of this Agreement have been 
  complied with or to inquire into the necessity or expedience of 
  any act or action of the General Partner or its representatives. 
  Each and every certificate, document or other instrument executed 
  on behalf of the Partnership by the General Partner or its 
  representatives shall be conclusive evidence in favor of any and 
  every Person relying thereon or claiming thereunder that (i) at 
  the time of the execution and delivery of such certificate, 
  document or instrument, this Agreement was in full force and 
  effect, (ii) the Person executing and delivering such 
  certificate, document or instrument was duly authorized and 
  empowered to do so for and on behalf of the Partnership and (iii) 
  such certificate, document or instrument was duly executed and 
  delivered in accordance with the terms and provisions of this 
  Agreement and is binding upon the Partnership.
  
  
  ARTICLE 8
  RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS
  
  	Section 8.1	LIMITATION OF LIABILITY
  
  	The Limited Partners shall have no liability under this 
  Agreement except as expressly provided in this Agreement or under 
  the Act.
  
  	Section 8.2	MANAGEMENT OF BUSINESS
  
  	No Limited Partner or Assignee (other than the General 
  Partner, any of its Affiliates or any officer, director, 
  employee, partner (other than a Limited Partner), agent or 
  trustee of the General Partner, the Partnership or any of their 
  Affiliates, in their capacity as such) shall take part in the 
  operations, management or control (within the meaning of the Act) 
  of the Partnership's business, transact any business in the 
  Partnership's name or have the power to sign documents for or 
  otherwise bind the Partnership.  The transaction of any such 
  business by the General Partner, any of its Affiliates or any 
  officer, director, employee, partner (other than a Limited 
  Partner), agent or trustee of the General Partner, the 
  Partnership or any of their Affiliates, in their capacity as 
  such, shall not affect, impair or eliminate the limitations on 
  the liability of the Limited Partners or Assignees under this 
  Agreement.
  
  	Section 8.3	OUTSIDE ACTIVITIES OF LIMITED PARTNERS
  
  	Subject to any agreements entered into by a Limited 
  Partner or its Affiliates with the General Partner, Partnership 
  or a Subsidiary thereof, any Limited Partner and any officer, 
  director, employee, agent, trustee, Affiliate or stockholder of 
  any Limited Partner shall be entitled to and may have business 
  interests and engage in business activities in addition to those 
  relating to the Partnership, including business interests and 
  activities in direct competition with the Partnership or that are 
  enhanced by the activities of the Partnership.  Neither the 
  Partnership nor any Partners shall have any rights by virtue of 
  this Agreement in any business ventures, or the income or profits 
  derived therefrom, of any Limited Partner or Assignee.  Subject 
  to such agreements, none of the Limited Partners nor any other 
  Person shall have any rights by virtue of this Agreement or the 
  partnership relationship established hereby in any business 
  ventures of any other Person, other than the Limited Partners 
  benefitting from the business conducted by the General Partner, 
  and such Person shall have no obligation pursuant to this 
  Agreement to offer any interest in any such business ventures to 
  the Partnership, any Limited Partner or any such other Person, 
  even if such opportunity is of a character which, if presented to 
  the Partnership, any Limited Partner or such other Person, could 
  be taken by such other Person.
  
  	Section 8.4	RETURN OF CAPITAL
  
  	Except pursuant to the rights of Redemption set forth 
  in Section 8.6, no Limited Partner shall be entitled to the 
  withdrawal or return of his or her Capital Contribution, except 
  to the extent of distributions made pursuant to this Agreement or 
  upon termination of the Partnership as provided herein.  Except 
  as otherwise expressly set forth in this Agreement, no Limited 
  Partner or Assignee shall have priority over any other Limited 
  Partner or Assignee either as to the return of Capital 
  Contributions or as to profits, losses, distributions or credits.
  
  	Section 8.5	RIGHTS OF LIMITED PARTNERS RELATING TO 
  THE PARTNERSHIP
  
  	(a)	In addition to other rights provided by this 
  Agreement or by the Act, and except as limited by Section 8.5(b) 
  hereof, each Limited Partner shall have the right, for a purpose 
  reasonably related to such Limited Partner's interest as a 
  limited partner in the Partnership, upon written demand with a 
  statement of the purpose of such demand and at the Partnership's 
  expense:
  
  		(i)		to obtain a copy of the most recent 
  annual and quarterly reports filed with the Securities and 
  Exchange Commission by the Company pursuant to the Securities 
  Exchange Act, and each communication sent to the stockholders of 
  the Company;
  
  		(ii)		to obtain a copy of the Partnership's 
  federal, state and local income tax returns for each Partnership 
  Year;
  
  		(iii)	to obtain a copy of this Agreement and 
  the Certificate and all amendments thereto, together with 
  executed copies of all powers of attorney pursuant to which this 
  Agreement, the Certificate and all amendments thereto have been 
  executed; and
  
  		(iv)		to obtain true and full information 
  regarding the amount of cash and a description and statement of 
  any other property or services contributed by each Partner and 
  which each Partner has agreed to contribute in the future, and 
  the date on which each became a Partner.
  
  	(b)	Notwithstanding any other provision of this 
  Section 8.5, the General Partner may keep confidential from the 
  Limited Partners, for such period of time as the General Partner 
  determines in its sole and absolute discretion to be reasonable, 
  any information that (i) the General Partner believes to be in 
  the nature of trade secrets or other information the disclosure 
  of which the General Partner in good faith believes is not in the 
  best interests of the Partnership or (ii) the Partnership or the 
  General Partner is required by law or by agreements with 
  unaffiliated third parties to keep confidential.
  
  	Section 8.6	REDEMPTION RIGHTS
  
  	(a)	On or after December 31, 1999, each Limited 
  Partner shall have the right (subject to the terms and conditions 
  set forth herein), but not the obligation, to require the 
  Partnership to redeem all or a portion of the Partnership Units 
  held by such Limited Partner (such Partnership Units being 
  hereafter referred to as "Tendered Units") in exchange for the 
  Cash Amount (a "Redemption"); provided that the terms of such 
  Partnership Units do not provide that such Partnership Units are 
  not entitled to a right of Redemption.  Unless otherwise 
  expressly provided in this Agreement or in a separate agreement 
  entered into between the Partnership and the holders of such 
  Partnership Units, all Partnership Units shall be entitled to a 
  right of Redemption hereunder.  Any Redemption shall be exercised 
  pursuant to a Notice of Redemption delivered to the General 
  Partner and the Company, by the Limited Partner who is exercising 
  the right (the "Tendering Partner").  The Cash Amount shall be 
  delivered as a certified check payable to the Tendering Partner 
  within ten (10) days of the Specified Redemption Date in 
  accordance with the instructions set forth in the Notice of 
  Redemption.
  
  	(b)	Notwithstanding Section 8.6(a) above, if a Limited 
  Partner has delivered to the General Partner a Notice of 
  Redemption, then the Company may, in its sole and absolute 
  discretion (subject to the limitations on ownership and transfer 
  of REIT Shares set forth in the Charter), elect to acquire some 
  or all of the Tendered Units from the Tendering Partner in 
  exchange for the REIT Shares Amount (as of the Specified 
  Redemption Date) and, if the Company so elects, the Tendering 
  Partner shall sell the Tendered Units to the Company in exchange 
  for the REIT Shares Amount.  In such event, the Tendering Partner 
  shall have no right to cause the Partnership to redeem such 
  Tendered Units.  The Company shall promptly give the General 
  Partner and the Tendering Partner written notice of its election, 
  and the Tendering Partner may elect by written notice to the 
  Partnership to withdraw its redemption request at any time prior 
  to the acceptance of the Cash Amount or REIT Shares Amount by 
  such Tendering Partner.
  
  	(c)	The REIT Shares Amount, if applicable, shall be 
  delivered as duly authorized, validly issued, fully paid and 
  nonassessable REIT Shares and, if applicable, free of any pledge, 
  lien, encumbrance or restriction, other than those provided in 
  the Charter, the Bylaws of the Company, the Securities Act, 
  relevant state securities or blue sky laws and any applicable 
  registration rights agreement with respect to such REIT Shares 
  entered into by the Tendering Partner.  The REIT Shares Amount 
  shall be registered in the name and otherwise delivered as set 
  forth in the Notice of Redemption.  Notwithstanding any delay in 
  such delivery (but subject to Section 8.6(e), the Tendering 
  Partner shall be deemed the owner of such REIT Shares for all 
  purposes, including without limitation, rights to vote or 
  consent, and receive dividends, as of the Specified Redemption 
  Date.  Each Limited Partner covenants and agrees with the General 
  Partner and the Company that all Tendered Units shall be 
  delivered to the General Partner free and clear of all liens, 
  claims and encumbrances whatsoever and should any such liens, 
  claims and/or encumbrances exist or arise with respect to such 
  Tendered Units, the General Partner and the Company shall be 
  under no obligation to acquire the same.  Each Limited Partner 
  further agrees that, in the event any state or local property 
  transfer tax is payable as a result of the transfer of its 
  Tendered Units, such Limited Partner shall assume and pay such 
  transfer tax.  Each Limited Partner further agrees that it shall 
  enter into such documentation with respect to a Redemption for 
  cash or an exchange for REIT Shares as the Partnership, the 
  Company, or the General Partner shall reasonably request.
  
  	(d)	Each Limited Partner covenants and agrees with the 
  General Partner and the Company, as the case may be, that all 
  Tendered Units shall be delivered to the General Partner or the 
  Company free and clear of all liens, claims and encumbrances 
  whatsoever and should any such liens, claims and/or encumbrances 
  exist or arise with respect to such Tendered Units, the General 
  Partner and the Company shall be under no obligation to acquire 
  the same.  Each Limited Partner further agrees that, in the event 
  any state or local property transfer tax is payable as a result 
  of the transfer of its Tendered Units to the General Partner or 
  the Company (or the designee), such Limited Partner shall assume 
  and pay such transfer tax.
  
  	(e)	Notwithstanding the provisions of Section 8.6(a), 
  8.6(b), 8.6(c) or any other provision of this Agreement, a 
  Limited Partner (i) shall not be entitled to effect a Redemption 
  for cash or an exchange for REIT Shares to the extent the 
  ownership or right to acquire REIT Shares pursuant to such 
  exchange by such Partner on the Specified Redemption Date would 
  cause such Partner or another Person, or, in the opinion of 
  counsel selected by the General Partner, may cause such Partner 
  or any other Person, to violate the restrictions on ownership and 
  transfer of REIT Shares set forth in the Charter and (ii) shall 
  have no rights under this Agreement to acquire REIT Shares which 
  would otherwise be prohibited under the Charter.  To the extent 
  any attempted Redemption or exchange for REIT Shares would be in 
  violation of this Section 8.6(e), it shall be null and void AB 
  INITIO and such Limited Partner shall not acquire any rights or 
  economic interest in the cash otherwise payable upon such 
  Redemption or the REIT Shares otherwise issuable upon such 
  exchange.
  
  	(f)	Notwithstanding anything herein to the contrary 
  (but subject to Section
  8.6(e), with respect to any Redemption or exchange for REIT 
  Shares pursuant to this Section 8.6:
  
  		(i)		All Partnership Units acquired by the 
  General Partner pursuant thereto shall automatically, and without 
  further action required, be converted into and deemed to be 
  General Partner Interests comprised of the same number and class 
  of Partnership Units.
  
  		(ii)		All Partnership Units acquired by the 
  Company shall maintain their status as Limited Partnership 
  Interests of the same number and class as the Partnership Units 
  so acquired.
  
  		(iii)	Without the consent of the General 
  Partner, each Limited Partner may not effect a Redemption for 
  less than 500 Partnership Units or, if the Limited Partner holds 
  less than 500 Partnership Units, all of the Partnership Units 
  held by such Limited Partner.
  
  		(iv)		Without the consent of the General 
  Partner, each Limited Partner may not effect a Redemption during 
  the period after the Partnership Record Date with respect to a 
  distribution and before the record date established by the 
  Company for a distribution to its stockholders of some or all of 
  its portion of such distribution.
  
  		(v)		The consummation of any Redemption or 
  exchange for REIT Shares shall be subject to the expiration or 
  termination of the applicable waiting period, if any, under the 
  Hart-Scott-Redino Antitrust Improvements Act of 1976, as amended.
  		
  		(vi)		Each Tendering Partner shall continue to 
  own all Partnership Units subject to any Redemption or exchange 
  for REIT Shares, and be treated as a Limited Partner with respect 
  to such Partnership Units for all purposes of this Agreement, 
  until such Partnership Units are transferred to the General 
  Partner or the Company, as the case may be, and paid for or 
  exchanged on the Specified Redemption Date.  Until a Specified 
  Redemption Date, the Tendering Partner shall have no rights as a 
  stockholder of the Company with respect to such Tendering 
  Partner's Partnership Units.
  
  	(g)	In the event that the Partnership issues 
  additional Partnership Interests to any Additional Limited 
  Partner pursuant to Section 4.3(c) hereof, the General Partner 
  shall make such revisions to this Section 8.6 as it determines 
  are necessary to reflect the issuance of such additional 
  Partnership Interests.
  
  	(h)	If, at any time, the General Partner acquires 
  material assets (other than on behalf of the Partnership) the 
  definition of "REIT Shares Amount" shall be adjusted, as 
  reasonably agreed to by the General Partner and a Majority in 
  Interest of the Limited Partners, to reflect the relative Fair 
  Market Value of a share of capital stock of the General Partner 
  relative to the Deemed Partnership Interest Value of the related 
  Partnership Unit.
  
  	(i)	The Partnership shall notify each Limited Partner 
  in writing of any adjustment made in the calculation of the REIT 
  Shares Amount within 10 Business Days of the date such change 
  becomes effective.
  
  
  ARTICLE 9
  BOOKS, RECORDS, ACCOUNTING AND REPORTS
  
  	Section 9.1	RECORDS AND ACCOUNTING
  
  	The General Partner shall keep or cause to be kept at 
  the principal office of the Partnership appropriate books and 
  records with respect to the Partnership's business, including 
  without limitation, all books and records necessary to provide to 
  the Limited Partners any information, lists and copies of 
  documents required to be provided pursuant to Section 9.3 or 
  8.5(a)(i) hereof.  Any records maintained by or on behalf of the 
  Partnership in the regular course of its business may be kept on, 
  or be in the form of, punch cards, magnetic tape, photographs, 
  micrographics or any other information storage device, PROVIDED 
  THAT the records so maintained are convertible into clearly 
  legible written form within a reasonable period of time.  The 
  books of the Partnership shall be maintained, for financial and 
  tax reporting purposes, on an accrual basis in accordance with 
  generally accepted accounting principles.
  
  	Section 9.2	FISCAL YEAR
  
  	The fiscal year of the Partnership shall be the 
  calendar year.
  
  	Section 9.3	REPORTS
  
  	As soon as practicable, but in no event later than 105 
  days after the close of each Partnership Year, or such earlier 
  date as they are filed with the Securities and Exchange 
  Commission, the General Partner shall cause to be mailed to each 
  Limited Partner as of the close of the Partnership Year, an 
  annual report containing financial statements of the Partnership, 
  or of the General Partner if such statements are prepared solely 
  on a consolidated basis with the General Partner, for such 
  Partnership Year, presented in accordance with generally accepted 
  accounting principles, such statements to be audited by a 
  nationally recognized firm of independent public accountants 
  selected by the General Partner.
  
  
  ARTICLE 10
  TAX MATTERS
  
  	Section 10.1	PREPARATION OF TAX RETURNS
  
  	The General Partner shall arrange for the preparation 
  and timely filing of all returns of the Partnership and, to the 
  extent applicable, Subsidiary Partnership income, gains, 
  deductions, losses and other items required of the Partnership 
  for federal and state income tax purposes and shall use all 
  reasonable efforts to furnish, within 90 days of the close of 
  each taxable year, the tax information reasonably required by 
  Limited Partners for federal and state income tax reporting 
  purposes.
  
  	Section 10.2	TAX ELECTIONS
  
  	Except as otherwise provided herein, the General 
  Partner shall, in its sole and absolute discretion, determine 
  whether to make any available election pursuant to the Code, 
  including the election under Section 754 of the Code.  The 
  General Partner shall have the right to seek to revoke any such 
  election (including without limitation, any election under 
  Section 754 of the Code) upon the General Partner's determination 
  in its sole and absolute discretion that such revocation is in 
  the best interests of the Partners.
  
  	Section 10.3	TAX MATTERS PARTNER
  
  	(a)	The General Partner shall be the "tax matters 
  partner" of the Partnership for federal income tax purposes.  
  Pursuant to Section 6223(c) of the Code, upon receipt of notice 
  from the IRS of the beginning of an administrative proceeding 
  with respect to the Partnership, the tax matters partner shall 
  furnish the IRS with the name, address and profit interest of 
  each of the Limited Partners and Assignees; PROVIDED, HOWEVER, 
  that such information is provided to the Partnership by the 
  Limited Partners and Assignees.
  
  	(b)	The tax matters partner is authorized, but not 
  required:
  
  		(i)		to enter into any settlement with the 
  IRS with respect to any administrative or judicial proceedings 
  for the adjustment of Partnership items required to be taken into 
  account by a Partner for income tax purposes (such administrative 
  proceedings being referred to as a "tax audit" and such judicial 
  proceedings being referred to as "judicial review"), and in the 
  settlement agreement the tax matters partner may expressly state 
  that such agreement shall bind all Partners, except that such 
  settlement agreement shall not bind any Partner (i) who (within 
  the time prescribed pursuant to the Code and Regulations) files a 
  statement with the IRS providing that the tax matters partner 
  shall not have the authority to enter into a settlement agreement 
  on behalf of such Partner or (ii) who is a "notice partner" (as 
  defined in Section 6231 of the Code) or a member of a "notice 
  group" (as defined in Section 6223(b)(2) of the Code);
  
  		(ii)		in the event that a notice of a final 
  administrative adjustment at the Partnership level of any item 
  required to be taken into account by a Partner for tax purposes 
  (a "final adjustment") is mailed to the tax matters partner, to 
  seek judicial review of such final adjustment, including the 
  filing of a petition for readjustment with the Tax Court or the 
  United States Claims Court, or the filing of a complaint for 
  refund with the District Court of the United States for the 
  district in which the Partnership's principal place of business 
  is located;
  
  		(iii)	to intervene in any action brought by 
  any other Partner for judicial review of a final adjustment;
  
  		(iv)		to file a request for an administrative 
  adjustment with the IRS at any time and, if any part of such 
  request is not allowed by the IRS, to file an appropriate 
  pleading (petition or complaint) for judicial review with respect 
  to such request;
  
  		(v)		to enter into an agreement with the IRS 
  to extend the period for assessing any tax which is attributable 
  to any item required to be taken into account by a Partner for 
  tax purposes, or an item affected by such item; and
  
  		(vi)		to take any other action on behalf of 
  the Partners of the Partnership in connection with any tax audit 
  or judicial review proceeding to the extent permitted by 
  applicable law or regulations.
  
  	The taking of any action and the incurring of any 
  expense by the tax matters partner in connection with any such 
  proceeding, except to the extent required by law, is a matter in 
  the sole and absolute discretion of the tax matters partner and 
  the provisions relating to indemnification of the General Partner 
  set forth in Section 7.7 of this Agreement shall be fully 
  applicable to the tax matters partner in its capacity as such.
  
  	(c)	The tax matters partner shall receive no 
  compensation for its services.  All third party costs and 
  expenses incurred by the tax matters partner in performing its 
  duties as such (including legal and accounting fees) shall be 
  borne by the Partnership.  Nothing herein shall be construed to 
  restrict the Partnership from engaging an accounting firm to 
  assist the tax matters partner in discharging its duties 
  hereunder, so long as the compensation paid by the Partnership 
  for such services is reasonable.
  
  	Section 10.4	ORGANIZATIONAL EXPENSES
  
  	The Partnership shall elect to deduct expenses, if any, 
  incurred by it in organizing the Partnership ratably over a 
  60-month period as provided in Section 709 of the Code.
  
  	Section 10.5	WITHHOLDING
  
  	Each Limited Partner hereby authorizes the Partnership 
  to withhold from or pay on behalf of or with respect to such 
  Limited Partner any amount of federal, state, local, or foreign 
  taxes that the General Partner determines that the Partnership is 
  required to withhold or pay with respect to any amount 
  distributable or allocable to such Limited Partner pursuant to 
  this Agreement, including, without limitation, any taxes required 
  to be withheld or paid by the Partnership pursuant to Section 
  1441, 1442, 1445 or 1446 of the Code.  Any amount paid on behalf 
  of or with respect to a Limited Partner shall constitute a loan 
  by the Partnership to such Limited Partner, which loan shall be 
  repaid by such Limited Partner within 15 days after notice from 
  the General Partner that such payment must be made unless (i) the 
  Partnership withholds such payment from a distribution which 
  would otherwise be made to the Limited Partner or (ii) the 
  General Partner determines, in its sole and absolute discretion, 
  that such payment may be satisfied out of the available funds of 
  the Partnership which would, but for such payment, be distributed 
  to the Limited Partner.  Any amounts withheld pursuant to the 
  foregoing clauses (i) or (ii) shall be treated as having been 
  distributed to such Limited Partner. Each Limited Partner hereby 
  unconditionally and irrevocably grants to the Partnership a 
  security interest in such Limited Partner's Partnership Interest 
  to secure such Limited Partner's obligation to pay to the 
  Partnership any amounts required to be paid pursuant to this 
  Section 10.5.  In the event that a Limited Partner fails to pay 
  any amounts owed to the Partnership pursuant to this Section 10.5 
  when due, the General Partner may, in its sole and absolute 
  discretion, elect to make the payment to the Partnership on 
  behalf of such defaulting Limited Partner, and in such event 
  shall be deemed to have loaned such amount to such defaulting 
  Limited Partner and shall succeed to all rights and remedies of 
  the Partnership as against such defaulting Limited Partner 
  (including, without limitation, the right to receive 
  distributions and the holding of a security interest in such 
  Limited Partner's Partnership Interest).  Any amounts payable by 
  a Limited Partner hereunder shall bear interest at the base rate 
  on corporate loans at large United States money center commercial 
  banks, as published from time to time in the WALL STREET JOURNAL, 
  plus two percentage points (but not higher than the maximum 
  lawful rate) from the date such amount is due (i.e., 15 days 
  after demand) until such amount is paid in full.  Each Limited 
  Partner shall take such actions as the Partnership or the General 
  Partner shall request in order to perfect or enforce the security 
  interest created hereunder.
  
  
  ARTICLE 11
  TRANSFERS AND WITHDRAWALS
  
  	Section 11.1	TRANSFER
  
  	(a)	The term "transfer," when used in this Article 11 
  with respect to a Partnership Interest, shall be deemed to refer 
  to a transaction by which the General Partner purports to assign 
  all or any portion of its General Partner Interest to another 
  person or by which a Limited Partner purports to assign all or 
  any portion of its Limited Partnership Interest to another 
  Person, and includes a sale, assignment, gift (outright or in 
  trust), pledge, encumbrance, hypothecation, mortgage, exchange or 
  any other disposition by law or otherwise.  The term "transfer" 
  when used in this Article 11 does not include any Redemption or 
  exchange for REIT Shares pursuant to Section 8.6.  No part of the 
  interest of a Limited Partner shall be subject to the claims of 
  any creditor, any spouse for alimony or support, or to legal 
  process, and may not be voluntarily or involuntarily alienated or 
  encumbered except as may be specifically provided for in this 
  Agreement.
  
  	(b)	No Partnership Interest shall be transferred, in 
  whole or in part, except in accordance with the terms and 
  conditions set forth in this Article 11.  Any transfer or 
  purported transfer of a Partnership Interest not made in 
  accordance with this Article 0 shall be null and void.
  
  	Section 11.2	TRANSFER OF GENERAL PARTNER'S 
  PARTNERSHIP INTEREST
  
  		(a)	The General Partner shall not withdraw from the 
  Partnership and shall not transfer all or any portion of its 
  interest in the Partnership (whether by sale, statutory merger or 
  consolidation, liquidation or otherwise) without the Consent of 
  the Majority in Interest of the Limited Partners, which may be 
  given or withheld by each Limited Partner in its sole and 
  absolute discretion, and only, in the case of a purported 
  transfer of all of the General Partner's General Partner 
  Interest, upon the appointment and admission of a successor 
  General Partner  pursuant to Section 12.1 and 13.1(b).  Upon any 
  transfer of all of the General Partner's General Partner Interest 
  in accordance with the provisions of this Section 11.2, the 
  transferee shall become a Substitute General Partner for all 
  purposes herein, and shall be vested with the powers and rights 
  of the transferor General Partner, and shall be liable for all 
  obligations and responsible for all duties of the General 
  Partner, once such transferee has executed such instruments as 
  may be necessary to effectuate such admission and to confirm the 
  agreement of such transferee to be bound by all the terms and 
  provisions of this Agreement with respect to the Partnership 
  Interest so acquired.  It is a condition to any transfer 
  otherwise permitted hereunder that the transferee assumes, by 
  operation of law or express agreement, all of the obligations of 
  the transferor General Partner under this Agreement with respect 
  to such transferred Partnership Interest, and no such transfer 
  (other than pursuant to a statutory merger or consolidation 
  wherein all obligations and liabilities of the transferor General 
  Partner are assumed by a successor corporation by operation of 
  law) shall relieve the transferor General Partner of its 
  obligations under this Agreement without the Consent of the Super 
  Majority Limited Partners, in their reasonable discretion.  
  Subject to Section 7.3(c), in the event the General Partner 
  withdraws from the Partnership, in violation of this Agreement or 
  otherwise, or otherwise dissolves or terminates, or upon the 
  Incapacity of the General Partner, all of the remaining Partners 
  may elect to continue the Partnership business by selecting a 
  Substitute General Partner in accordance with the Act.
  
  	(a)	Except as otherwise provided in Section 11.2(c), 
  the General Partner shall not engage in any merger, consolidation 
  or other combination with or into another person, sale of all or 
  substantially all of its assets or any reclassification, 
  recapitalization or change of its outstanding equity interests 
  (each, a "Termination Transaction"), unless the Termination 
  Transaction has been approved by a Consent of the Partners and in 
  connection with which all Limited Partners either will receive, 
  or will have the right to elect to receive, for each Partnership 
  Unit an amount of cash, securities or other property equal to the 
  product of the REIT Shares Amount and the greatest amount of 
  cash, securities or other property paid to a holder of one REIT 
  Share in consideration of one REIT Share pursuant to the terms of 
  the Termination Transaction; PROVIDED THAT, if, in connection 
  with the Termination Transaction, a purchase, tender or exchange 
  offer shall have been made to and accepted by the holders of more 
  than thirty-three and one-third percent (33 1/3%) of the 
  outstanding REIT Shares, each holder of Partnership Units shall 
  receive, or shall have the right to elect to receive, the 
  greatest amount of cash, securities, or other property which such 
  holder would have received had it exercised its right to 
  Redemption (as set forth in Section 8.6) and received REIT Shares 
  in exchange for its Partnership Units immediately prior to the 
  expiration of such purchase, tender or exchange offer and had 
  thereupon accepted such purchase, tender or exchange offer.
  
  	(b)	Notwithstanding Section 11.2(b), the General 
  Partner may merge, or otherwise combine its assets, with another 
  entity if: (i) immediately after such merger or other 
  combination, substantially all of the assets directly or 
  indirectly owned by the surviving entity, other than Partnership 
  Units held by such General Partner, are owned directly or 
  indirectly by the Partnership or another limited partnership or 
  limited liability company which is the survivor of a merger, 
  consolidation or combination of assets with the Partnership (in 
  each case, the "Surviving Partnership"); (ii) the Limited 
  Partners own a percentage interest of the Surviving Partnership 
  based on the relative fair market value of the net assets of the 
  Partnership (as determined pursuant to Section 11.2(e) and the 
  other net assets of the Surviving Partnership (as determined 
  pursuant to Section 11.2(e)) immediately prior to the 
  consummation of such transaction; (iii) the rights, preferences 
  and privileges of the Limited Partners in the Surviving 
  Partnership are at least as favorable as those in effect 
  immediately prior to the consummation of such transaction and as 
  those applicable to any other limited partners or non-managing 
  members of the Surviving Partnership; and (iv) such rights of the 
  Limited Partners include the right to exchange their interests in 
  the Surviving Partnership for at least one of: (a) the 
  consideration available to such Limited Partners pursuant to 
  Section 11.2(b) or (b) if the ultimate controlling person of the 
  Surviving Partnership has publicly traded common equity 
  securities, such common equity securities, with an exchange ratio 
  based on the relative fair market value of such securities (as 
  determined pursuant to Section 11.2(e)) and the REIT Shares.
  
  	(c)	In connection with any transaction permitted by 
  Section 11.2(b) or Section 11.2(c) hereof, the General Partner 
  shall use its commercially reasonable efforts to structure such 
  Termination Transaction to avoid causing the Limited Partners to 
  recognize gain for federal income tax purposes by virtue of the 
  occurrence of or their participation in such Termination 
  Transaction.  The sole remedy for a breach by the General Partner 
  of this Section 11.2(d) shall be a claim for damages.
  
  	(d)	In connection with any transaction permitted by 
  Section 11.2(b) or 11.2(c), the relative fair market values shall 
  be reasonably determined by the General Partner as of the time of 
  such transaction and, to the extent applicable, shall be no less 
  favorable to the Limited Partners than the relative values 
  reflected in the terms of such transaction.
  
  	Section 11.3	LIMITED PARTNERS' RIGHTS TO TRANSFER
  
  	(a)	Prior to December 31, 1999, no Limited Partner 
  shall transfer all or any portion of its Partnership Interest to 
  any transferee without the consent of the General Partner, which 
  consent is to be exercised by its Independent Trust Managers and 
  may be withheld in its sole and absolute discretion; PROVIDED, 
  HOWEVER, that any Limited Partner may, at any time, without the 
  consent of the General Partner, (i) transfer all or any portion 
  of its Partnership Interest to the General Partner, (ii) transfer 
  all or any portion of its Partnership Interest to an Affiliate of 
  such Limited Partner, another original Limited Partner or to an 
  Immediate Family member, subject to the provisions of Section 
  11.6, (iii) transfer all or any portion of its Partnership 
  Interest to a trust for the benefit of a charitable beneficiary 
  or to a charitable foundation, subject to the provisions of 
  Section 11.6, and (iv) subject to the provisions of Section 11.6, 
  pledge (a "Pledge") all or any portion of its Partnership 
  Interest to a lending institution, which is not an Affiliate of 
  such Limited Partner, as collateral or security for a bona fide 
  loan or other extension of credit, and transfer such pledged 
  Partnership Interest to such lending institution in connection 
  with the exercise of remedies under such loan or extension or 
  credit, and the transfer of such pledged Partnership Interest by 
  the lender to any transferee.  Each Limited Partner or Assignee 
  (resulting from a transfer made pursuant to clauses (i)-(iv) of 
  the proviso of the preceding sentence) shall have the right to 
  transfer all or any portion of its Partnership Interest, subject 
  to the satisfaction of each of the following conditions (in 
  addition to the right of each such Limited Partner or Assignee to 
  continue to make any such transfer permitted by clauses (i)-(iv) 
  of such proviso without satisfying either of the following 
  conditions):
  
  		(i)	GENERAL PARTNER RIGHT OF FIRST REFUSAL.  The 
  transferring Partner shall give written notice of the proposed 
  transfer to the General Partner, which notice shall state (i) the 
  identity of the proposed transferee, and (ii) the amount and type 
  of consideration proposed to be received for the transferred 
  Partnership Units.  The General Partner shall have ten (10) days 
  upon which to give the transferring Partner notice of its 
  election to acquire the Partnership Units on the proposed terms.  
  If it so elects, it shall purchase the Partnership Units on such 
  terms within ten (10) days after giving notice of such election.  
  If it does not so elect, the transferring Partner may transfer 
  such Partnership Units to such third party, on economic terms no 
  more favorable to the transferee than the proposed terms, subject 
  to the other conditions of this Section 11.3, for a period of 
  ninety (90) days, after which such transfer shall again be 
  subject to compliance herewith.
  
  		(ii)	QUALIFIED TRANSFEREE.  Any transfer of a 
  Partnership Interest shall be made only to Qualified Transferees.  
  It is a condition to any transfer otherwise permitted hereunder 
  that the transferee assumes by operation of law or express 
  agreement all of the obligations of the transferor Limited 
  Partner under this Agreement with respect to such transferred 
  Partnership Interest and no such transfer (other than pursuant to 
  a statutory merger or consolidation wherein all obligations and 
  liabilities of the transferor Partner are assumed by a successor 
  corporation by operation of law) shall relieve the transferor 
  Partner of its obligations under this Agreement without the 
  approval of the General Partner, in its reasonable discretion.  
  Notwithstanding the foregoing, any transferee of any transferred 
  Partnership Interest shall be subject to any and all ownership 
  limitations contained in the Charter and the representations in 
  Section 3.4(d).  Any transferee, whether or not admitted as a 
  Substituted Limited Partner, shall take subject to the 
  obligations of the transferor hereunder.  Unless admitted as a 
  Substituted Limited Partner, no transferee, whether by a 
  voluntary transfer, by operation of law or otherwise, shall have 
  rights hereunder, other than the rights of an Assignee as 
  provided in Section11.5.
  	(b)	If a Limited Partner is subject to Incapacity, the 
  executor, administrator, trustee, committee, guardian, 
  conservator, or receiver of such Limited Partner's estate shall 
  have all the rights of a Limited Partner, but not more rights 
  than those enjoyed by other Limited Partners, for the purpose of 
  settling or managing the estate, and such power as the 
  Incapacitated Limited Partner possessed to transfer all or any 
  part of his or its interest in the Partnership.  The Incapacity 
  of a Limited Partner, in and of itself, shall not dissolve or 
  terminate the Partnership.
  
  	(c)	The General Partner may prohibit any transfer 
  otherwise permitted under Section 11.3 by a Limited Partner of 
  such Limited Partner's Partnership Units if, in the opinion of 
  legal counsel to the Partnership, such transfer would require the 
  filing of a registration statement under the Securities Act by 
  the Partnership or would otherwise violate any federal or state 
  securities laws or regulations applicable to the Partnership or 
  the Partnership Units.
  
  	(d)	No transfer by a Limited Partner of such Limited 
  Partner's Partnership Units (including any Redemption or exchange 
  for REIT Shares pursuant to Section 8.6) may be made to any 
  person if (i) in the opinion of legal counsel for the 
  Partnership, it would result in the Partnership being treated as 
  an association taxable as a corporation, or (ii) such transfer is 
  effectuated through an "established securities market" or a 
  "secondary market (or the substantial equivalent thereof)" within 
  the meaning of Section 7704 of the Code.
  
  	(e)	No transfer of any Partnership Units may be made 
  to a lender to the Partnership or any Person who is related 
  (within the meaning of Section 1.752-4(b) of the Regulations) to 
  any lender to the Partnership whose loan constitutes a 
  Nonrecourse Liability, without the consent of the General 
  Partner, in its sole and absolute discretion; PROVIDED THAT, as a 
  condition to such consent, the lender will be required to enter 
  into an arrangement with the Partnership and the General Partner 
  to redeem or exchange for the REIT Shares Amount any Partnership 
  Units in which a security interest is held simultaneously with 
  the time at which such lender would be deemed to be a partner in 
  the Partnership for purposes of allocating liabilities to such 
  lender under Section 752 of the Code.
  
  	(f)	In addition to any other restrictions on transfer 
  contained in this Agreement, in no event may any transfer of any 
  Partnership Units by any Partner be made if such transfer would 
  cause, or in the opinion of counsel selected by the General 
  Partner, could cause (i) the Partnership to become, with respect 
  to any employee benefit plan subject to Title I of ERISA or 
  Section 4975 of the Code, a "party-in-interest" (as defined in 
  Section 3(14) of ERISA) or a "disqualified person" (as defined in 
  Section 4975(c) of the Code); or (ii) any portion of the assets 
  of the Partnership to constitute assets of any employee benefit 
  plan pursuant to Section 2510.3-101 of the regulations of the 
  United States Department of Labor.
  
  	Section 11.4	SUBSTITUTED LIMITED PARTNERS
  
  	(a)	No Limited Partner shall have the right to 
  substitute a transferee as a Limited Partner in such Limited 
  Partner's place (including any transferee permitted by Section 
  11.3).  The General Partner shall, however, have the right to 
  consent to the admission of a transferee permitted under Section 
  11.3 of the interest of a Limited Partner as a Substituted 
  Limited Partner pursuant to this Section 11.4, which consent may 
  be given or withheld by the General Partner in its sole and 
  absolute discretion.  The General Partner's failure or refusal to 
  permit a transferee of any such interests to become a Substituted 
  Limited Partner shall not give rise to any cause of action 
  against the Partnership or any Partner.
  
  	(b)	A transferee who has been admitted as a 
  Substituted Limited Partner in accordance with this Article 11 
  shall have all the rights and powers and be subject to all the 
  restrictions and liabilities of a Limited Partner under this 
  Agreement.  The admission of any transferee as a Substituted 
  Limited Partner shall be subject to the transferee executing and 
  delivering to the Partnership an acceptance of all of the terms 
  and conditions of this Agreement (including, without limitation, 
  the provisions of Section 2.4 and such other documents or 
  instruments as may be required in the discretion of the General 
  Partner to effect the admission, each in form and substance 
  satisfactory to the General Partner) and the acknowledgment by 
  such transferee that each of the representations and warranties 
  set forth in Section 3.4 hereof are true and correct with respect 
  to such transferee as of the date of the transfer of the 
  Partnership Interest to such transferee.
  
  	(c)	Upon the admission of a Substituted Limited 
  Partner, the General Partner shall amend Exhibit A to reflect the 
  name, address, number of Partnership Units, and Percentage 
  Interest of such Substituted Limited Partner and to eliminate or 
  adjust, if necessary, the name, address and interest of the 
  predecessor of such Substituted Limited Partner.
  
  	Section 11.5	ASSIGNEES
  
  	If the General Partner, in its sole and absolute 
  discretion, does not consent to the admission of any permitted 
  transferee under Section 11.3 as a Substituted Limited Partner, 
  as described in Section 11.4, such transferee shall be considered 
  an Assignee for purposes of this Agreement.  An Assignee shall be 
  entitled to all the rights of an assignee of a limited 
  partnership interest under the Act, including the right to 
  receive distributions from the Partnership and the share of Net 
  Income, Net Losses, gain and loss attributable to the Partnership 
  Units assigned to such transferee, the rights to transfer the 
  Partnership Units provided in this Article 11, and the right of 
  Redemption provided in Section 8.6, but shall not be deemed to be 
  a holder of Partnership Units for any other purpose under this 
  Agreement, and shall not be entitled to effect a Consent with 
  respect to such Partnership Units on any matter presented to the 
  Limited Partners for approval (such Consent remaining with the 
  transferor Limited Partner).  In the event any such transferee 
  desires to make a further assignment of any such Partnership 
  Units, such transferee shall be subject to all the provisions of 
  this Article 11 to the same extent and in the same manner as any 
  Limited Partner desiring to make an assignment of Partnership 
  Units.
  
  	Section 11.6	GENERAL PROVISIONS
  
  	(a)	No Limited Partner may withdraw from the 
  Partnership other than as a result of (i) a permitted transfer of 
  all of such Limited Partner's Partnership Units in accordance 
  with this Article 11 and the transferee(s) of such Units being 
  admitted to the Partnership as a Substituted Limited Partner or 
  (ii) pursuant to a Redemption or exchange for REIT Shares of all 
  of such Limited Partner's Partnership Units under Section 8.6.
  
  	(b)	Any Limited Partner who shall transfer all of such 
  Limited Partner's Partnership Units in a transfer permitted 
  pursuant to this Article 11 where such transferee was admitted as 
  a Substituted Limited Partner or pursuant to a Redemption or 
  exchange for REIT Shares of all of such Limited Partner's 
  Partnership Units under Section 8.6 shall cease to be a Limited 
  Partner.
  
  	(c)	Transfers pursuant to this Article 11 may only be 
  made on the first day of a fiscal quarter of the Partnership, 
  unless the General Partner otherwise agrees.
  
  	(d)	If any Partnership Interest is transferred or 
  assigned during any quarterly segment of the Partnership's fiscal 
  year in compliance with the provisions of this Article 11 or 
  transferred or redeemed pursuant to Section 8.6, on any day other 
  than the first day of a Partnership Year, then Net Income, Net 
  Losses, each item thereof and all other items attributable to 
  such Partnership Interest for such fiscal year shall be divided 
  and allocated between the transferor Partner and the transferee 
  Partner by taking into account their varying interests during the 
  fiscal year in accordance with Section 706(d) of the Code, using 
  the pro-ration of items method.  Except as otherwise required by 
  Section 706(d) of the Code, solely for purposes of making such 
  allocations, each of such items for the calendar quarter in which 
  the transfer, assignment or redemption occurs shall be allocated 
  to the Person who is a Partner as of midnight on the Partnership 
  Record Date and none of such items for the calendar quarter in 
  which a redemption occurs will be allocated to the redeeming 
  Partner.  All distributions of Available Cash with respect to 
  which the Partnership Record Date is before the date of such 
  transfer, assignment or redemption shall be made to the 
  transferor Partner, and all distributions of Available Cash 
  thereafter, in the case of a transfer or assignment other than a 
  redemption, shall be made to the transferee Partner.
  
  	(e)	In addition to any other restrictions on transfer 
  herein contained, including without limitation the provisions of 
  this Article 11, in no event may any transfer or assignment of a 
  Partnership Interest by any Partner (including by way of a 
  Redemption) be made (i) to any person or entity who lacks the 
  legal right, power or capacity to own a Partnership Interest; 
  (ii) in violation of applicable law; (iii) of any component 
  portion of a Partnership Interest, such as the Capital Account, 
  or rights to distributions, separate and apart from all other 
  components of a Partnership Interest; (iv) if in the opinion of 
  legal counsel to the Partnership such transfer would cause a 
  termination of the Partnership for federal or state income tax 
  purposes (except as a result of the Redemption or exchange for 
  REIT Shares of all Partnership Units held by all Limited Partners 
  or pursuant to a Termination Transaction expressly permitted 
  under Section 11.2); (v) if in the opinion of counsel to the 
  Partnership such transfer would cause the Partnership to cease to 
  be classified as a partnership for federal or state income tax 
  purposes (except as a result of the Redemption or exchange for 
  REIT Shares of all Partnership Units held by all Limited 
  Partners); (vi) if such transfer requires the registration of 
  such Partnership Interest pursuant to any applicable federal or 
  state securities laws; (vii) if such transfer is effectuated 
  through an "established securities market" or a "secondary 
  market" (or the substantial equivalent thereof) within the 
  meaning of Section 7704 of the Code or such transfer causes the 
  Partnership to become a "Publicly Traded Partnership," as such 
  term is defined in Sections 469(k)(2) or 7704(b) of the Code; 
  (viii) if such transfer subjects the Partnership to be regulated 
  under the Investment Company Act of 1940, the Investment Advisors 
  Act of 1940 or the Employee Retirement Income Security Act of 
  1974, each as amended; (ix) if the transferee or assignee of such 
  Partnership Interest is unable to make the representations set 
  forth in Section 3.4(d) or such transfer could otherwise 
  adversely affect the ability of the Company to remain qualified 
  as a REIT; or (x) if in the opinion of legal counsel for the 
  Partnership such transfer would adversely affect the ability of 
  the Company to continue to qualify as a REIT or subject the 
  Company to any additional taxes under Section 857 or Section 4981 
  of the Code.
  
  	(f)	The General Partner shall monitor the transfers of 
  interests in the Partnership to determine (i) if such interests 
  are being traded on an "established securities market" or a 
  "secondary market (or the substantial equivalent thereof)" within 
  the meaning of Section 7704 of the Code, and (ii) whether 
  additional transfers of interests would result in the Partnership 
  being unable to qualify for at least one of the "safe harbors" 
  set forth in regulations Section 1.7704-1 (or such other guidance 
  subsequently published by the IRS setting forth safe harbors 
  under which interests will not be treated as "readily tradable on 
  a secondary market (or the substantial equivalent thereof)" 
  within the meaning of Section 7704 of the Code) (the "Safe 
  Harbors").  The General Partner shall take all steps reasonably 
  necessary or appropriate to prevent any trading of interests or 
  any recognition by the Partnership of transfers made on such 
  markets and, except as otherwise provided herein, to insure that 
  at least one of the Safe Harbors is met.
  
  
  ARTICLE 12
  ADMISSION OF PARTNERS
  
  	Section 12.1	ADMISSION OF SUCCESSOR GENERAL PARTNER
  
  	A successor to all of the General Partner's General 
  Partner Interest pursuant to Section 11.2 hereof who is proposed 
  to be admitted as a successor General Partner shall be admitted 
  to the Partnership as the General Partner, effective upon such 
  transfer.  Any such transferee shall carry on the business of the 
  Partnership without dissolution.  In each case, the admission 
  shall be subject to the successor General Partner executing and 
  delivering to the Partnership an acceptance of all of the terms 
  and conditions of this Agreement and such other documents or 
  instruments as may be required to effect the admission.  In the 
  case of such admission on any day other than the first day of a 
  Partnership Year, all items attributable to the General Partner's 
  Partnership Interest for such Partnership Year shall be allocated 
  between the transferring General Partner and such successor as 
  provided in Article 11 hereof.
  
  	Section 12.2	ADMISSION OF ADDITIONAL LIMITED PARTNERS
  
  	(a)	After the admission to the Partnership of the 
  Limited Partner on the date hereof, a Person who makes a Capital 
  Contribution to the Partnership in accordance with this Agreement 
  shall be admitted to the Partnership as an Additional Limited 
  Partner only upon furnishing to the General Partner (i) evidence 
  of acceptance in form satisfactory to the General Partner of all 
  of the terms and conditions of this Agreement, including, without 
  limitation, the power of attorney granted in Section 2.4 hereof 
  and (ii) such other documents or instruments as may be required 
  in the discretion of the General Partner in order to effect such 
  Person's admission as an Additional Limited Partner.
  
  	(b)	Notwithstanding anything to the contrary in this 
  Section 12.2, no Person shall be admitted as an Additional 
  Limited Partner without the consent of the General Partner, which 
  consent may be given or withheld in the General Partner's sole 
  and absolute discretion. The admission of any Person as an 
  Additional Limited Partner shall become effective on the date 
  upon which the name of such Person is recorded on the books and 
  records of the Partnership, following the receipt of the Capital 
  Contribution in respect of such Limited Partner, the documents 
  and instruments described in Section 12.2(a) and the consent of 
  the General Partner to such admission.  If any Additional Limited 
  Partner is admitted to the Partnership on any day other than the 
  first day of a Partnership Year, then Net Income, Net Losses, 
  each item thereof and all other items allocable among Partners 
  and Assignees for such Partnership Year shall be allocated among 
  such Additional Limited Partner and all other Partners and 
  Assignees by taking into account their varying interests during 
  the Partnership Year in accordance with Section 706(d) of the 
  Code, using the interim closing of the books method unless the 
  General Partner, in its sole and absolute discretion, elects to 
  adopt another reasonable method permitted by law.  Solely for 
  purposes of making such allocations, each of such items for the 
  calendar month in which an admission of an Additional Limited 
  Partner occurs shall be allocated among all the Partners and 
  Assignees including such Additional Limited Partner.  All 
  distributions of Available Cash with respect to which the 
  Partnership Record Date is before the date of such admission 
  shall be made solely to Partners and Assignees other than the 
  Additional Limited Partner (other than in its capacity as an 
  Assignee) and, except as otherwise agreed to by the Additional 
  Limited Partners and the General Partner, all distributions of 
  Available Cash thereafter shall be made to all Partners and 
  Assignees including such Additional Limited Partner.
  
  	Section 12.3	AMENDMENT OF AGREEMENT AND CERTIFICATE 
  OF LIMITED PARTNERSHIP
  
  	For the admission to the Partnership of any Partner, 
  the General Partner shall take all steps necessary and 
  appropriate under the Act to amend the records of the Partnership 
  and, if necessary, to prepare as soon as practical an amendment 
  of this Agreement (including an amendment of Exhibit A) and, if 
  required by law, shall prepare and file an amendment to the 
  Certificate and may for this purpose exercise the power of 
  attorney granted pursuant to Section 2.4 hereof.
  
  
  ARTICLE 13
  DISSOLUTION AND LIQUIDATION
  
  	Section 13.1	DISSOLUTION
  
  	The Partnership shall not be dissolved by the admission 
  of Substituted Limited Partners or Additional Limited Partners or 
  by the admission of a successor General Partner in accordance 
  with the terms of this Agreement.  Upon the withdrawal of the 
  General Partner, any successor General Partner (selected as 
  described in Section 13.1(b) below) shall continue the business 
  of the Partnership.  The Partnership shall dissolve, and its 
  affairs shall be wound up, upon the first to occur of any of the 
  following ("Liquidating Events"):
  
  	(a)	the expiration of its term as provided in Section 
  2.5 hereof;
  
  	(b)	an event of withdrawal of the General Partner, as 
  defined in the Act, unless, within 90 days after the withdrawal, 
  all of the remaining Partners agree in writing, in their sole and 
  absolute discretion, to continue the business of the Partnership 
  and to the appointment, effective as of the date of withdrawal, 
  of a successor General Partner;
  
  	(c)	an election to dissolve the Partnership made by 
  the General Partner;
  
  	(d)	entry of a decree of judicial dissolution of the 
  Partnership pursuant to the provisions of the Act;
  
  	(e)	the sale of all or substantially all of the assets 
  and properties of the Partnership for cash or marketable 
  securities;
  
  	(f)	the Incapacity of the General Partner, unless all 
  of the remaining Partners in their sole and absolute discretion 
  agree in writing to continue the business of the Partnership and 
  to the appointment, effective as of a date prior to the date of 
  such Incapacity, of a substitute General Partner; or
  
  	(g)	the Redemption or exchange for REIT Shares of all 
  Partnership Units (other than those of the General Partner).
  
  	Section 13.2	WINDING UP
  
  	(a)	Upon the occurrence of a Liquidating Event, the 
  Partnership shall continue solely for the purposes of winding up 
  its affairs in an orderly manner, liquidating its assets, and 
  satisfying the claims of its creditors and Partners.  No Partner 
  shall take any action that is inconsistent with, or not necessary 
  to or appropriate for, the winding up of the Partnership's 
  business and affairs.  The General Partner (or, in the event 
  there is no remaining General Partner, any Person elected by a 
  Majority in Interest of the Limited Partners) (the "Liquidator") 
  shall be responsible for overseeing the winding up and 
  dissolution of the Partnership and shall take full account of the 
  Partnership's liabilities and assets and the Partnership property 
  shall be liquidated as promptly as is consistent with obtaining 
  the fair value thereof, and the proceeds therefrom (which may, to 
  the extent determined by the General Partner, include shares of 
  stock of the General Partner) shall be applied and distributed in 
  the following order:
  
  		(i)		First, to the payment and discharge of 
  all of the Partnership's debts and liabilities to creditors other 
  than the Partners;
  
  		(ii)		Second, to the payment and discharge of 
  all of the Partnership's debts and liabilities to the General 
  Partner;
  
  		(iii)	Third, to the payment and discharge of 
  all of the Partnership's debts and liabilities to the other 
  Partners; and
  
  		(iv)		The balance, if any, to the General 
  Partner and Limited Partners in accordance with their positive 
  Capital Account balances, determined after taking into account 
  all Capital Account adjustments for the Partnership taxable year 
  during which the liquidation occurs (other than those made as a 
  result of the liquidating distribution set forth in this Section 
  13.2(a)(iv).
  
  	The General Partner shall not receive any additional 
  compensation for any services performed pursuant to this Article 
  13 other than reimbursement of its expenses as provided in 
  Section 7.4.
  
  	(b)	Notwithstanding the provisions of Section 13.2(a) 
  hereof, but subject to the order of priorities set forth therein, 
  if prior to or upon dissolution of the Partnership the Liquidator 
  determines that an immediate sale of part or all of the 
  Partnership's assets would be impractical or would cause undue 
  loss to the Partners, the Liquidator may, in its sole and 
  absolute discretion, defer for a reasonable time the liquidation 
  of any assets except those necessary to satisfy liabilities of 
  the Partnership (including to those Partners as creditors) and/or 
  distribute to the Partners, in lieu of cash, as tenants in common 
  and in accordance with the provisions of Section 13.2(a) hereof, 
  undivided interests in such Partnership assets as the Liquidator 
  deems not suitable for liquidation.  Any such distributions in 
  kind shall be made only if, in the good faith judgment of the 
  Liquidator, such distributions in kind are in the best interest 
  of the Partners, and shall be subject to such conditions relating 
  to the disposition and management of such properties as the 
  Liquidator deems reasonable and equitable and to any agreements 
  governing the operation of such properties at such time.  The 
  Liquidator shall determine the fair market value of any property 
  distributed in kind using such reasonable method of valuation as 
  it may adopt.
  
  
  	Section 13.3	COMPLIANCE WITH TIMING REQUIREMENTS OF 
  REGULATIONS
  
  	In the event the Partnership is "liquidated" within the 
  meaning of Regulations Section 1.704-1(b)(2)(ii)(g), 
  distributions shall be made pursuant to this Article 13 to the 
  General Partner and Limited Partners who have positive Capital 
  Accounts in compliance with Regulations Section 
  1.704-1(b)(2)(ii)(b)(2).  If any Partner has a deficit balance in 
  his or her Capital Account (after giving effect to all 
  contributions, distributions and allocations for the taxable 
  years, including the year during which such liquidation occurs), 
  such Partner shall have no obligation to make any contribution to 
  the capital of the Partnership with respect to such deficit, and 
  such deficit shall not be considered a debt owed to the 
  Partnership or to any other Person for any purpose whatsoever.  
  In the discretion of the Liquidator, a pro rata portion of the 
  distributions that would otherwise be made to the General Partner 
  and Limited Partners pursuant to this Article 13 may be:
  
  	(a)	distributed to a trust established for the benefit 
  of the Partners for the purposes of liquidating Partnership 
  assets, collecting amounts owed to the Partnership, and paying 
  any contingent or unforeseen liabilities or obligations of the 
  Partnership or of the General Partner arising out of or in 
  connection with the Partnership.  The assets of any such trust 
  shall be distributed to the Partners from time to time, in the 
  reasonable discretion of the Liquidator, in the same proportions 
  and the amount distributed to such trust by the Partnership would 
  otherwise have been distributed to the General Partner and 
  Limited Partners pursuant to this Agreement; or
  
  	(b)	withheld to provide a reasonable reserve for 
  Partnership liabilities (contingent or otherwise) and to reflect 
  the unrealized portion of any installment obligations owed to the 
  Partnership, PROVIDED THAT when the Liquidator determines that 
  the withheld amounts are no longer appropriate, such withheld 
  amounts shall be distributed to the Partners as soon as 
  practicable in the manner and order of priority set forth in 
  Section 13.2.
  
  	Section 13.4	RIGHTS OF LIMITED PARTNERS
  
  	Except as otherwise provided in this Agreement, each 
  Limited Partner shall look solely to the assets of the 
  Partnership for the return of such Limited Partner's Capital 
  Contribution and shall have no right or power to demand or 
  receive property from the General Partner.  Except as otherwise 
  provided in this Agreement, no Limited Partner shall have 
  priority over any other Limited Partner as to the return of his 
  Capital Contributions, distributions or allocations.
  
  	Section 13.5	NOTICE OF DISSOLUTION
  
  	In the event a Liquidating Event occurs or an event 
  occurs that would, but for provisions of Section 13.1, result in 
  a dissolution of the Partnership, the General Partner shall, 
  within 30 days thereafter, provide written notice thereof to each 
  of the Partners and to all other parties with whom the 
  Partnership regularly conducts business (as determined in the 
  discretion of the General Partner) and shall publish notice 
  thereof in a newspaper of general circulation in each place in 
  which the Partnership regularly conducts business (as determined 
  in the discretion of the General Partner).
  
  	Section 13.6	CANCELLATION OF CERTIFICATE OF LIMITED 
  PARTNERSHIP
  
  	Upon the completion of the liquidation of the 
  Partnership cash and property as provided in Section 13.2 hereof, 
  the Partnership shall be terminated and the Certificate and all 
  qualifications of the Partnership as a foreign limited 
  partnership in jurisdictions other than the State of Delaware 
  shall be canceled and such other actions as may be necessary to 
  terminate the Partnership shall be taken.
  
  	Section 13.7	REASONABLE TIME FOR WINDING UP
  
  	A reasonable time shall be allowed for the orderly 
  winding up of the business and affairs of the Partnership and the 
  liquidation of its assets pursuant to Section 13.2 hereof, in 
  order to minimize any losses otherwise attendant upon such 
  winding up, and the provisions of this Agreement shall remain in 
  effect between the Partners during the period of liquidation.
  
  	Section 13.8	WAIVER OF PARTITION
  
  	Each Partner hereby waives any right to partition of 
  the Partnership property.
  
  
  ARTICLE 14
  AMENDMENT OF PARTNERSHIP AGREEMENT; CONSENTS
  
  	Section 14.1	AMENDMENTS
  
  	(a)	The actions requiring consent or approval of the 
  Partners or of the Limited Partners pursuant to this Agreement, 
  including Section 7.3, or otherwise pursuant to applicable law, 
  are subject to the procedures in this Article 14.
  
  	(b)	Amendments to this Agreement requiring the consent 
  or approval of Limited Partners may be proposed by the General 
  Partner or by Limited Partners who hold 25% or more of the 
  Partnership Interests held by Limited Partners.  Following such 
  proposal, the General Partner shall submit any proposed amendment 
  to the Partners or the Limited Partners, as applicable.  The 
  General Partner shall seek the written consent or approval of the 
  Partners or Limited Partners on the proposed amendment or shall 
  call a meeting to vote thereon and to transact any other business 
  that it may deem appropriate.  For purposes of obtaining a 
  written consent, the General Partner may require a response 
  within a reasonable specified time, but not less than 15 days, 
  and failure to respond in such time period shall constitute a 
  consent which is consistent with the General Partner's 
  recommendation (if so recommended) with respect to the proposal; 
  PROVIDED THAT, an action shall become effective at such time as 
  requisite consents are received even if prior to such specified 
  time.
  
  	Section 14.2	ACTION BY THE PARTNERS
  
  	(a)	Meetings of the Partners may be called by the 
  General Partner and shall be called upon the receipt by the 
  General Partner of a written request by Limited Partners holding 
  twenty-five percent (25%) or more of the Partnership Interests 
  held by Limited Partners.  The call shall state the nature of the 
  business to be transacted.  Notice of any such meeting shall be 
  given to all Partners not less than seven days nor more than 30 
  days prior to the date of such meeting.  Partners may vote in 
  person or by proxy at such meeting.  Whenever the vote or consent 
  of the Limited Partners or of the Partners is permitted or 
  required under this Agreement, such vote or Consent may be given 
  at a meeting of Partners or may be given in accordance with the 
  procedure prescribed in Section 14.1 hereof.
  
  	(b)	Any action required or permitted to be taken at a 
  meeting of the Partners may be taken without a meeting if a 
  written consent setting forth the action so taken is signed by 
  the percentage as is expressly required by this Agreement for the 
  action in question.  Such consent may be in one instrument or in 
  several instruments, and shall have the same force and effect as 
  a vote of the Percentage Interests of the Partners (expressly 
  required by this Agreement).  Such consent shall be filed with 
  the General Partner.  An action so taken shall be deemed to have 
  been taken at a meeting held on the effective date so certified.
  
  	(c)	Each Limited Partner may authorize any Person or 
  Persons to act for him by proxy on all matters in which a Limited 
  Partner is entitled to participate, including waiving notice of 
  any meeting, or voting or participating at a meeting.  Every 
  proxy must be signed by the Limited Partner or his 
  attorney-in-fact.  No proxy shall be valid after the expiration 
  of 11 months from the date thereof unless otherwise provided in 
  the proxy.  Every proxy shall be revocable at the pleasure of the 
  Limited Partner executing it.
  
  	(d)	Each meeting of Partners shall be conducted by the 
  General Partner or
  such other Person as the General Partner may appoint pursuant to 
  such rules for the conduct of the meeting as the General Partner 
  or such other Person deems appropriate.
  
  
  ARTICLE 15
  GENERAL PROVISIONS
  
  	Section 15.1	ADDRESSES AND NOTICE
  
  	Any notice, demand, request or report required or 
  permitted to be given or made to a Partner or Assignee under this 
  Agreement shall be in writing and shall be deemed given or made 
  when delivered in person or when sent by certified first-class 
  United States mail, nationally recognized overnight delivery 
  service or facsimile transmission to the Partner or Assignee at 
  the address set forth in Exhibit A or such other address as the 
  Partners shall notify the General Partner in writing.
  
  	Section 15.2	TITLES AND CAPTIONS
  
  	All article or Section titles or captions in this 
  Agreement are for convenience only.  They shall not be deemed 
  part of this Agreement and in no way define, limit, extend or 
  describe the scope or intent of any provisions hereof.  Except as 
  specifically provided otherwise, references to "Articles" and 
  "Sections" are to Articles and Sections of this Agreement.
  
  	Section 15.3	PRONOUNS AND PLURALS
  
  	Whenever the context may require, any pronoun used in 
  this Agreement shall include the corresponding masculine, 
  feminine or neuter forms, and the singular form of nouns, 
  pronouns and verbs shall include the plural and vice versa.
  
  	Section 15.4	FURTHER ACTION
  
  	The parties shall execute and deliver all documents, 
  provide all information and take or refrain from taking action as 
  may be necessary or appropriate to achieve the purposes of this 
  Agreement.
  
  	Section 15.5	BINDING EFFECT
  
  	This Agreement shall be binding upon and inure to the 
  benefit of the parties hereto and their heirs, executors, 
  administrators, successors, legal representatives and permitted 
  assigns.
  
  	Section 15.6	CREDITORS
  
  	Other than as expressly set forth herein with respect 
  to Indemnitees, none of the provisions of this Agreement shall be 
  for the benefit of, or shall be enforceable by, any creditor of 
  the Partnership.
  
  	Section 15.7	WAIVER
  
  	No failure or delay by any party to insist upon the 
  strict performance of any covenant, duty, agreement or condition 
  of this Agreement or to exercise any right or remedy consequent 
  upon any breach thereof shall constitute waiver of any such 
  breach or any other covenant, duty, agreement or condition.
  
  	Section 15.8	COUNTERPARTS
  
  	This Agreement may be executed in counterparts, all of 
  which together shall constitute one agreement binding on all the 
  parties hereto, notwithstanding that all such parties are not 
  signatories to the original or the same counterpart.  Each party 
  shall become bound by this Agreement immediately upon affixing 
  its signature hereto.
  
  	Section 15.9	APPLICABLE LAW
  
  	This Agreement shall be construed in accordance with 
  and governed by the laws of the State of Delaware, without regard 
  to the principles of conflicts of law.
  
  	Section 15.10	INVALIDITY OF PROVISIONS
  
  	If any provision of this Agreement is or becomes 
  invalid, illegal or unenforceable in any respect, the validity, 
  legality and enforceability of the remaining provisions contained 
  herein shall not be affected thereby.
  
  	Section 15.11	LIMITATION TO PRESERVE REIT STATUS
  
  	To the extent that any amount paid or credited to the 
  General Partner or its officers, directors, employees or agents 
  pursuant to Section 7.4 or Section 7.7 would constitute gross 
  income to the Company for purposes of Sections 856(c)(2) or 
  856(c)(3) of the Code (a "General Partner Payment") then, 
  notwithstanding any other provision of this Agreement, the amount 
  of such General Partner Payments for any fiscal year shall not 
  exceed the lesser of:
  
  	(a)	an amount equal to the excess, if any, of (a) 
  5.00% of the General Partner's total gross income (but not 
  including the amount of any General Partner Payments) for the 
  fiscal year which is described in subsections (A) through (H) of 
  Section 856(c)(2) of the Code over (b) the amount of gross income 
  (within the meaning of Section 856(c)(2) of the Code) derived by 
  the General Partner from sources other than those described in 
  subsections (A) through (H) of Section 856(c)(2) of the Code (but 
  not including the amount of any General Partner Payments); or
  
  	(b)	an amount equal to the excess, if any, of (a) 25% 
  of the General Partner's total gross income (but not including 
  the amount of any General Partner Payments) for the fiscal year 
  which is described in subsections (A) through (I) of Section 
  856(c)(3) of the Code over (b) the amount of gross income (within 
  the meaning of Section 856(c)(3) of the Code) derived by the 
  General Partner from sources other than those described in 
  subsections (A) through (I) of Section 856(c)(3) of the Code (but 
  not including the amount of any General Partner Payments); 
  PROVIDED, HOWEVER, that General Partner Payments in excess of the 
  amounts set forth in subparagraphs (i) and (ii) above may be made 
  if the General Partner, as a condition precedent, obtains an 
  opinion of tax counsel that the receipt of such excess amounts 
  would not adversely affect the Company's ability to qualify as a 
  REIT.  To the extent General Partner Payments may not be made in 
  a year due to the foregoing limitations, such General Partner 
  Payments shall carry over and be treated as arising in the 
  following year, PROVIDED, HOWEVER, that such amounts shall not 
  carry over for more than five years, and if not paid within such 
  five-year period, shall expire; PROVIDED FURTHER, that (i) as 
  General Partner Payments are made, such payments shall be applied 
  first to carryover amounts outstanding, if any, and (ii) with 
  respect to carryover amounts for more than one Partnership Year, 
  such payments shall be applied to the earliest Partnership Year 
  first.
  
  	Section 15.12	ENTIRE AGREEMENT
  
  	This Agreement contains the entire understanding and 
  agreement among the Partners with respect to the subject matter 
  hereof and supersedes any other prior written or oral 
  understandings or agreements among them with respect thereto.
  
  	Section 15.13	NO RIGHTS AS STOCKHOLDERS
  
  	Nothing contained in this Agreement shall be construed 
  as conferring upon the holders of Partnership Units any rights 
  whatsoever as stockholders of the Company including without 
  limitation any right to receive dividends or other distributions 
  made to stockholders of the Company or to vote or to consent or 
  to receive notice as stockholders in respect of any meeting of 
  stockholders for the election of directors of the Company or any 
  other matter.
  
  	IN WITNESS WHEREOF, the parties hereto have executed 
  this Agreement as of the date first written above.
  
  
  
  PARKWAY PROPERTIES, INC.
  
  
  
  BY:
  	Name:
  	Title:
  
  
  
  PARKWAY PROPERTIES GENERAL PARTNERS, INC.
  
  
  
  By:
  	Name:
  	Title:
  
  
  306886
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  EXHIBIT A
  Partners, Contributions and Partnership Interests
  
  
  	Partner
  	Initial Contribution
  	Partnership Interest
  Parkway Properties, 
  Inc.
  $9,900           
  99% Limited 
  Partnership Interest 
  consisting of 
  9,670,080 Units.
  Parkway Properties 
  General Partners, 
  Inc.
  $100          
  1% General 
  Partnership Interest 
  consisting of 97,678 
  Units.
  
  EXHIBIT B
  Notice of Redemption
  
  
  	The undersigned hereby irrevocably (i) redeems 
  Partnership Units in Parkway Properties LP in accordance with the 
  terms of the Amended and Restated Limited Partnership Agreement 
  of Parkway Properties LP and the Redemption Right referred to 
  therein, (ii) surrenders such Limited Partnership Units and all 
  right, title and interest therein, and (iii) directs that the 
  Cash Amount or REIT Shares Amount (as determined by the General 
  Partner and/or the Company) deliverable upon exercise of the 
  Redemption Right be delivered to the address specified below, and 
  if REIT Shares are to be delivered, such REIT Shares be 
  registered or placed in the name(s) and at the address(es) 
  specified below.  The undersigned hereby represents, warrants, 
  and certifies, that the undersigned (a) has marketable, and 
  unencumbered title to the Partnership Units, free and clear of 
  the rights of or interests of any other person or entity; (b) has 
  the full right, power and authority to redeem and surrender such 
  Partnership Units as provided herein; and (c) has obtained the 
  consent or approval of all persons or entities, if any, having 
  the right to consult or approve such redemption and surrender.
  
  Dated:
  
  Name of Limited Partner:
  
  (Signature of Limited Partner)
  
  (Street Address)
  
  	(City)		(State)		(Zip Code)
  
  Signature Guaranteed by:
  
  If REIT Shares are to be issued, issue to:
  
  Name:
  
  Please insert social security or identifying number:
  
  EXHIBIT C
  Schedule of Partners' Ownership with Respect to Tenants
  
  
  
  
  	NONE
  
  EXHIBIT D
  Schedule of REIT Shares Actually or
  Constructively Owned by Limited Partners Other
  than those Acquired Pursuant to an Exchange
  
  
  	NONE
  
  
  
  
  	PARKWAY PROPERTIES LP
  
  	AMENDMENT TO EXHIBIT A
  
  	OF THE
  
  	AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP
  
  
  
  
  	Exhibit A of the Amended and Restated Agreement of Limited 
  Partnership of Parkway Properties LP, is hereby amended in its entirety 
  to read as follows:
  
  
  	Partner
  	Contribution
  Partnership Interest
  
  Parkway Properties, Inc.
  $9,900 plus those 
  properties 
  contributed 
  subsequent to the 
  Effective Date
  
  98.988108% Limited 
  Partnership Interest 
  consisting of 
  10,974,965 Class A 
  Common Limited 
  Partnership Units
  Lane N. Meltzer
  47.5% General 
  Partnership 
  Interest in and to 
  the 111 Capitol 
  Building Limited 
  Partnership
   .0118876% Limited 
  Partnership Interest 
  consisting of 1318 
  Class A Common 
  Limited Partnership 
  Units
  Parkway Properties General 
  Partners, Inc.
  $100 plus those 
  properties 
  contributed 
  subsequent to the 
  Effective Date
  1.0000044% General 
  Partnership Interest 
  consisting of 
  110,858 Class A 
  Common General 
  Partnership Units
  Parkway Properties, Inc.
  $63,631,250  
  2,650,000 units of 
  Series A Preferred 
  Limited Partnership 
  Interests
  
  
  
  	The following is a description of the preferences, 
  conversion and other rights, voting powers, restrictions, limitations 
  as to distribution, qualifications and terms and conditions of 
  redemption of the Series A Preferred Limited Partnership Interests of 
  the Limited Partnership:
  
  1.	Designation and Amount.
  
  		The designation of Series A Preferred Limited 
  Partnership Interests shall be 8.75% Series A Cumulative 
  Preferred Limited Partnership Interests, par value $.001 per 
  unit.  The number of units of Series A Preferred Limited 
  Partnership Interests to be issued shall be 2,650,000.
  
  	2.	Distribution Provisions.
  
  		(a)	Subject to the rights of any series of 
  Partnership Interests which may from time to time come into 
  existence, holders of Series A Preferred Limited Partnership 
  Interests shall be entitled to receive, when and as declared by 
  the General Partner, out of funds legally available for the 
  payment of distributions, cumulative preferential cash 
  distributions at the rate of 8.75% per annum of the Liquidation 
  Preference (as herein defined) per unit (equivalent to a fixed 
  amount of $2.1875 per unit.  Such distribution shall be 
  cumulative from the date of original issue and shall be payable 
  quarterly in arrears on the 15th day of each of January, April, 
  July and October or, if not a business day, the next succeeding 
  business day (each, a "Distribution Payment Date").  The first 
  distribution, which will be due on July 15, 1998, will be for 
  less than a full quarter.  Such first distribution and any 
  distribution payable on Series A Preferred Limited Partnership 
  Interests for any partial distribution period will be computed on 
  the basis of a 360-day year consisting of twelve 30-day months.  
  Distributions will be payable to holders of record as they appear 
  in the records of the Partnership at the close of business on the 
  last business day of March, June, September and December, 
  respectively, or on such date designated by the General Partner 
  of the Partnership for the payment of distributions that is not 
  more than 30 nor less than 10 days prior to such Distribution 
  Payment Date (each a "Distribution Record Date").
  
  		(b)	Distributions on Series A Preferred Limited 
  Partnership Interests will accrue whether or not the Partnership 
  has earnings, whether or not there are funds legally available 
  for the payment of such distributions and whether or not such 
  distributions are declared.  No interest, or sum of money in lieu 
  of interest, shall be payable in respect of any distribution 
  payment or payments on Series A Preferred Limited Partnership 
  Interests which may be in arrears.
  
  		(c)	Capital gains shall be allocable to holders 
  of Series A Preferred Limited Partnership Interests in the same 
  proportion that the total distributions paid or made available to 
  the holders of Series A Preferred Limited Partnership Interests 
  for the Fiscal Year bears to the total distributions paid or made 
  available for the Fiscal Year to holders of all classes of 
  Partnership Interests.
  
  		(d)	Pursuant to section 6.2(b) of the Partnership 
  Agreement, income or gain for the Fiscal Year, if any, shall be 
  specially allocated to the holders of Series A Preferred Limited 
  Partnership Interests in proportion to and to the extent of the 
  excess, if any, of (i) the cumulative Distributions each has 
  received pursuant to this section 2 from the initial issuance of 
  the Series A Preferred Limited Partnership Interests to a date 
  thirty (30) days after the end of such Fiscal Year, over (ii) the 
  cumulative items of income and gain allocated to such holders 
  pursuant to this section 2(d) for all prior Fiscal Years.
  
  		(e)	If any units of Series A Preferred Limited 
  Partnership Interests are outstanding, no full distributions 
  (other than in units of Common Partnership Interests or other 
  Partnership Interests ranking junior to Series A Preferred 
  Limited Partnership Interests as to distributions and upon 
  liquidation) shall be declared or paid or set apart for payment 
  on any units of series of Partnership Interests of the 
  Partnership ranking, as to distributions, on a parity with or 
  junior to Series A Preferred Limited Partnership Interest for any 
  period unless full cumulative distributions have been or 
  contemporaneously are declared and paid or declared and a sum 
  sufficient for the payment thereof set apart for such payments on 
  units of Series A Preferred Limited Partnership Interests for all 
  past distribution periods and the then current distribution 
  period.  When distributions are not paid in full (or a sum 
  sufficient for such full payment is not set apart) upon the units 
  of Series A Preferred Limited Partnership Interests and the units 
  of any other series of Partnership Interests ranking on parity as 
  to distributions with units of Series A Preferred Limited 
  Partnership Interests, all distributions declared upon units of 
  Series A Preferred Limited Partnership Interests and any other 
  series of Partnership Interests ranking on a parity as to 
  distributions with Series A Preferred Limited Partnership 
  Interests shall be declared pro rata so that the amount of 
  distributions declared per unit on Series A Preferred Limited 
  Partnership Interests and such other series of Partnership 
  Interests shall in all cases bear to each other the same ratio 
  that accrued distributions per unit on Series A Preferred Limited 
  Partnership Interests and such other series of Partnership 
  Interests bear to each other.
  
  		(f)	Except as provided in Section 2(e), unless 
  full cumulative distributions on units of Series A Preferred 
  Limited Partnership Interests have been or contemporaneously are 
  declared and paid or declared and a sum sufficient for the 
  payment thereof set apart for payment for all past distribution 
  periods and the then current distribution period, no 
  distributions (other than in shares of Common Partnership 
  Interests or other Partnership Interests ranking junior to Series 
  A Preferred Limited Partnership Interests as to distributions and 
  upon liquidation) shall be declared or paid or set aside for 
  payment or other distribution shall be declared or made upon the 
  units of Common Partnership Interests or any other Partnership 
  Interests of the Partnership ranking junior to or on a parity 
  with Series A Preferred Limited Partnership Interests as to 
  distributions or upon liquidation, not shall any units of Common 
  Partnership Interests or any other Partnership Interest of the 
  Partnership ranking junior to or on a parity with Series A 
  Preferred Limited Partnership Interest as to distributions or 
  upon liquidation be redeemed, purchased or otherwise acquired for 
  any consideration (or any moneys be paid to or made available for 
  a sinking fund for the redemption of any such Partnership 
  Interests) by the Partnership (except by conversion into or 
  exchange for other Partnership Interests of the Partnership 
  ranking junior to Series A Preferred Partnership Interests as to 
  distributions and amounts upon liquidation or redemption for the 
  purpose of preserving the Company's status as a REIT.
  
  	(g)	Any distribution payment made on units of Series A 
  Preferred Limited Partnership Interests shall first be credited 
  against the earliest accrued but unpaid distribution due with 
  respect to units of Series A Preferred Limited Partnership 
  Interests which remains payable.
  
  	3.	Liquidation Rights.
  
  		(a)	Subject to the rights of series of 
  Partnership Interests which may from time to time come into 
  existence, upon any voluntary or involuntary liquidation, 
  dissolution or winding up of the affairs of the Partnership, 
  then, before any distribution or payment shall be made to the 
  holders of any units of Common Partnership Interest or any other 
  class or series of Partnership Interests of the Partnership 
  ranking junior to Series A Preferred Limited Partnership 
  Interests in the distribution of assets upon any liquidation, 
  dissolution or winding up of the affairs of the Partnership, the 
  holders of units of Series A Preferred Limited Partnership 
  Interests shall be entitled to receive out of assets of the 
  Partnership legally available for distribution to partners, 
  liquidation distributions in the amount of the liquidation 
  preference of $25.00 per unit, plus an amount equal to all 
  distributions accrued and unpaid thereon (the "Liquidation 
  Preference").  Holders of Series A Preferred Limited Partnership 
  Interests will be entitled to written notice of any event 
  triggering the right to receive such Liquidation Preference.  
  After payment of the full amount of the liquidating distributions 
  to which they are entitled, the holders of units of Series A 
  Preferred Limited Partnership Interests will have no right or 
  claim to any of the remaining assets of the Partnership.  In the 
  event that, upon any such voluntary or involuntary liquidation, 
  dissolution or winding up of the affairs of the Partnership, the 
  available assets of the Partnership are insufficient to pay the 
  amount of the liquidation distributions on all outstanding shares 
  of Series A Preferred Limited Partnership Interests and the 
  corresponding amounts payable on all shares of other classes or 
  series of Partnership Interests of the Partnership ranking on a 
  parity with Series A Preferred Limited Partnership Interests in 
  the distribution of assets upon any liquidation, dissolution or 
  winding up of the affairs of the Partnership ("Parity Units"), 
  then the holders of units of Series A Preferred Limited 
  Partnership Interests and Parity Units shall share ratably in any 
  such distribution of assets in proportion to the full liquidating 
  distributions to which they would otherwise be respectively 
  entitled.
  
  	4.	Redemption.
  
  		(a)	Units of Series A Preferred Limited 
  Partnership Interests are not redeemable prior to April 23, 2003 
  except that each unit of Series A Preferred Limited Partnership 
  Interest is redeemable to the same extent that shares of Series A 
  Preferred Stock of the Company is redeemable as provided in 
  Article V of the Charter of the Company.  On and after April 23, 
  2003, the Partnership at its option upon not less than 30 nor 
  more than 60 days' written notice, may redeem outstanding units 
  of Series A Preferred Limited Partnership Interests, in whole or 
  in part, at any time or from time to time, for cash at a 
  redemption price of $25.00 per unit, plus an amount equal to all 
  distributions accrued and unpaid thereon to the date fixed for 
  redemption, without interest.  The redemption price of units of 
  Series A Preferred Limited Partnership Interests (other than the 
  portion thereof consisting of accrued and unpaid distributions) 
  is payable solely out of proceeds from the sale of other capital 
  stock of the Company and contributed to the Partnership for 
  purposes of such redemption, which may include common stock, 
  preferred stock, depository shares, interests, participations or 
  other ownership interests in the Company however designated 
  (other than debt securities converted into or exchangeable for 
  capital stock) and any rights, warrants or options to purchase 
  any thereof.  Holders of units of Series A Preferred Limited 
  Partnership Interests to be redeemed shall surrender such units 
  of Series A Preferred Limited Partnership Interests at the place 
  designated in such notice and shall be entitled to the redemption 
  price and any accrued and unpaid distributions payable upon such 
  redemption following such surrender.  If fewer than all of the 
  outstanding units of Series A Preferred Limited Partnership 
  Interests are to be redeemed, the number of units to be redeemed 
  will be determined by the Partnership and such units may be 
  redeemed pro rata from the holders of record of such units in 
  proportion to the number of such units held by such holders (with 
  adjustments to avoid redemption of fractional units) or by lot in 
  a manner determined by the Partnership.
  
  		(b)	Unless full cumulative distributions on all 
  units of Series A Preferred Limited Partnership Interests and 
  Parity Units shall have been or contemporaneously are declared 
  and paid or declared and a sum sufficient for the payment thereof 
  set apart for payment for all past distribution periods and the 
  then current distribution period, no units of Series A Preferred 
  Limited Partnership Interests or Parity Units shall be redeemed 
  unless all outstanding units of Series A Preferred Limited 
  Partnership Interests and Parity Units are simultaneously 
  redeemed; provided, however,  that the foregoing shall not 
  prevent redemption to the same extent shares of Series A 
  Preferred stock of the Company are redeemable in accordance with 
  Article V of the Charter of the Company or the purchase or 
  acquisition of units of Series A Preferred Limited Partnership 
  Interests or Parity Units pursuant to a purchase or exchange 
  offer made on the same terms to holders of all outstanding units 
  of Series A Preferred Limited Partnership Interests or Parity 
  Stock, as the case may be.  Furthermore, unless full cumulative 
  distributions on all outstanding units of Series A Preferred 
  Limited Partnership Interests and Parity Units have been or 
  contemporaneously are declared and paid or declared and a sum 
  sufficient for the payment thereof set apart for payment for all 
  past distribution periods and the then current distribution 
  period, the Partnership shall not purchase or otherwise acquire 
  directly or indirectly any units of Series A Preferred Limited 
  partnership Interests or Parity Units (except by conversion into 
  or exchange for units of Partnership Interests of the Partnership 
  ranking junior to Series A Preferred Limited Partnership 
  Interests and Parity Units as to distributions and upon 
  liquidation).
  
  		(c)	Notice of redemption will be mailed at least 
  30 days but not more than 60 days before the redemption date to 
  each holder of record of units of Series A Preferred Limited 
  Partnership Interests at the address shown on the books of the 
  Partnership.  Each notice shall state (i)  the redemption date; 
  (ii)  the number of units of Series A Preferred Limited 
  Partnership Interests to be redeemed; (iii)  the redemption price 
  per share; (iv)  the place or places for payment of the 
  redemption price; and (v)  that distributions of units of Series 
  A Preferred Limited Partnership Interests will cease to accrue on 
  such redemption date.  If fewer than all units of Series A 
  Preferred Limited Partnership Interests are to be redeemed, the 
  notice mailed to each such holder thereof shall also specify the 
  number of units of Series A Preferred Limited Partnership 
  Interests to be redeemed from each such holder.  If notice of 
  redemption of any units of Series A Preferred Limited Partnership 
  Interests has been given and if the funds necessary for such 
  redemption have been set aside by the Partnership in trust for 
  the benefit of the holders of units of Series A Preferred Limited 
  Partnership Interests so called for redemption, then from and 
  after the redemption date, distributions will cease to accrue on 
  such units of Series A Preferred Limited Partnership Interests, 
  such units of Series A Limited Partnership Interests shall no 
  longer be deemed outstanding and all rights of the holders of 
  such units will terminate, except the right to receive the 
  redemption price.
  
  		(d)	The holders of units of Series A Preferred 
  Limited Partnership Interests at the close of business on a 
  Distribution Record Date will be entitled to receive the 
  distribution payable with respect to such units of Series A 
  Preferred Limited Partnership Interests on the corresponding 
  Distribution Payment Date notwithstanding the redemption thereof 
  between such Distribution Record Date and the corresponding 
  Distribution Payment Date or the Partnership's default in the 
  payment of the distribution due.  Except as provided above, the 
  Partnership will make no payment or allowance for unpaid 
  distributions, whether or not in arrears, on units of Series A 
  Preferred Limited Partnership Interests which have been called 
  for redemption.
  
  		(e)	Series A Preferred Limited Partnership 
  Interests will not be subject to any sinking fund or mandatory 
  redemption, except to the same extent that Series A Preferred 
  Stock of the Company are subject to sinking fund or mandatory 
  redemption as provided in Article V of the Charter of the 
  Company.
  
  	5.	Voting Rights.
  
  		(a)	Except as otherwise from time to time 
  required by applicable law, the holders of units of Series A 
  Preferred Limited Partnership Interests will have no voting 
  rights.
  
  		(b)	So long as any units of Series A Preferred 
  Limited Partnership Interests remain outstanding, the Partnership 
  will not, without the affirmative vote or consent of the holders 
  of at least two-thirds of units of the Series A Preferred Limited 
  Partnership Interests outstanding at the time, given in person or 
  by proxy, either in writing or at a meeting (voting separately as 
  a class), (a) authorize or create, or increase the authorized or 
  issued amount of any class or series or Partnership Interests 
  ranking senior to the Series A Preferred Limited partnership 
  Interests with respect to payment of distributions or the 
  distribution of assets upon liquidation, dissolution or winding 
  up or reclassify any existing Partnership Interests of the 
  Partnership into such units or create, authorize or issue any 
  obligation or security convertible into or evidencing the right 
  to purchase any such units; or (b) amend, alter or repeal the 
  provisions of the Partnership Agreement whether by merger, 
  consolidation or otherwise (an "Event"), so as to materially and 
  adversely affect any right, preference, privilege or voting power 
  of the Series A Preferred Limited Partnership Interests or the 
  holders thereof; provided, however, with respect to the 
  occurrence of any Event set forth in (b) above, so long as the 
  Series A Preferred Limited Partnership Interests remains 
  outstanding with the terms thereof materially unchanged taking 
  into account that upon the occurrence of an Event the partnership 
  may not be the surviving entity, the occurrence of any such Event 
  shall not be deemed to materially and adversely affect such 
  rights, preferences, privileges or voting power of holders of the 
  Series A Preferred Limited Partnership Interests and provided 
  further that (i) any increase in the amount of the authorized 
  Series A Preferred Limited Partnership Interests or the creation 
  or issuance of any other series of Preferred Partnership 
  Interests or (ii) any increase in the amount of authorized units 
  of such series in each case ranking on a parity with or junior to 
  the Series A Preferred Limited Partnership Interests with respect 
  to payment of distributions or the distribution of assets upon 
  liquidation, dissolution or winding up shall not been deemed to 
  materially and adversely affect such rights, preferences, 
  privileges or voting powers.
  
  		(c)	Except as provided above and as required by 
  law, the holders of Series A Preferred Limited Partnership 
  Interests are not entitled to vote on any merger or consolidation 
  involving the Partnership, on any Partnership Interest exchange 
  or on a sale of all or substantially all of the assets of the 
  Partnership.
  
  	6.	Conversion.
  
  		The units of Series A Preferred Limited 
  Partnership Interests are not convertible into or exchangeable 
  for any other property or securities of the Partnership.
  
  	Dated the 1st day of July, 1998.
  
  
  		PARKWAY PROPERTIES GENERAL
  		PARTNERS, INC.
  
  
  
  					By 	
  
  
  316440
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  	ADMISSION AGREEMENT
  
  
  
  
  
  	This Admission Agreement dated as of July 1, 1998 
  between PARKWAY PROPERTIES LP, a Delaware limited partnership 
  having its principal place of business in Jackson, Mississippi 
  ("Partnership") and LANE N. MELTZER, 316 South Rampart Street, 
  New Orleans, Louisiana 70112 ("Meltzer").
  
  
  	RECITALS
  
  	1.	Partnership and Meltzer, among others, executed a 
  certain contribution agreement dated April __, 1998, 
  ("Contribution Agreement") providing for the contribution of all 
  partnership interests of the 111 Capitol Building Limited 
  Partnership ("Capitol") to Partnership  and Parkway Jackson LLC, 
  a Mississippi limited liability company wholly owned by 
  Partnership.
  
  	2.	Pursuant to Section 2.2 of the Contribution 
  Agreement, Meltzer has elected to receive units of partnership 
  interest in Partnership in exchange for the contribution of his 
  partnership interest in Capitol.
  
  	3.	The parties desire to, pursuant to the 
  Contribution Agreement, admit Meltzer to the Partnership and 
  specify his rights and obligations with respect thereto;
  
  	NOW, THEREFORE, for good and valuable consideration, 
  the receipt of which is hereby acknowledged, the parties agree as 
  follows:
  
  	1.	Partnership hereby issues to Meltzer ______ 
  Class A Common Limited Partnership Units.
  
  	2.	Meltzer agrees to be admitted as a Limited Partner 
  to the Partnership effective the date hereof, and hereby further 
  agrees to be bound by all the provisions of the Amended and 
  Restated Agreement of Limited Partnership of Parkway Properties 
  LP ("Partnership Agreement"), as amended and restated through the 
  date hereof.
  
  	3.	Partnership through Parkway Properties General 
  Partners, Inc., its General Partner, hereby consents to the 
  admission of Meltzer as a Limited Partner in Partnership.
  
  	4.	Restoration Obligation.  Notwithstanding anything 
  contained in the Partnership Agreement, in the event Meltzer's 
  Capital Account is less than zero after giving effect to all 
  distributions, all contributions, and all allocations for all 
  periods, Meltzer shall contribute cash to the capital of the 
  Partnership in the amount necessary to restore his Capital 
  Account to zero in compliance with Treasury Regulation Section 
  1.704-1(b)(2)(ii)(b)(3), and the amount so contributed shall be 
  treated as proceeds from the liquidation of partnership assets 
  for purposes of, and shall be distributed pursuant to, 
  Section 13.2(a)(iv) of the Partnership Agreement.  Meltzer waives 
  any rights he may have against Partnership, the General Partner 
  or any Limited Partner which might otherwise arise from the 
  restoration of such negative Capital Account.
  
  
  
  
  						
  					Lane N. Meltzer
  
  
  
  					PARKWAY PROPERTIES LP
  					by:	Parkway Properties General
  						Partners, Inc., its
  						General Partner
  
  
  
  					By 	
  						Sarah P. Clark, 			
  						Senior Vice President and
  						Chief Financial Officer
  
  
  
  
  
  TIAA Appl. # FL-889;  M-000441900
  TIAA Appl. # NC-190;  M-000448000
  TIAA Appl. # SC-74;   M-000442200
  TIAA Appl. # TN-145;  M-000442100
  TIAA Appl. # TX-899;  M-000440000
  TIAA Appl. # VA-387;  M-000442000
  
  
  PROMISSORY NOTE
  
  $97,000,000.00					New York, New York
  							Dated:  June 30, 1998
  
  		FOR VALUE RECEIVED, Parkway Properties LP ("Borrower"), 
  a Delaware limited partnership having its principal place of 
  business at c/o Parkway Properties, Inc., 188 East Capitol 
  Street, Suite 1000, Jackson, Mississippi  39201-2195, promises to 
  pay to TEACHERS INSURANCE AND ANNUITY ASSOCIATION OF AMERICA 
  ("Lender"), a New York corporation, or order, at Lender's offices 
  at 730 Third Avenue, New York, New York  10017 or at such other 
  place as Lender designates in writing, the principal sum of 
  NINETY-SEVEN MILLION AND 00/100ths DOLLARS ($97,000,000) (the 
  principal sum or so much of the principal sum as may be advanced 
  and outstanding from time to time, the "Principal"), in lawful 
  money of the United States of America, with interest on the 
  Principal from the date of this Promissory Note (this "Note") 
  through and including July 1, 2008 (the "Maturity Date") at the 
  fixed rate of Six and Nine Hundred Forty-Five Thousandths percent 
  (6.945%) per annum (the "Fixed Interest Rate").
  
  		This Note is secured by, among other things, thirteen 
  (13) Mortgages and/or Deeds of Trust, Assignment of Leases and 
  Rents and Security Agreement, (each, a "Mortgage", collectively, 
  the "Mortgages") dated the date of this Note made by Borrower for 
  the benefit of Lender as security for the Loan.  All capitalized 
  terms not expressly defined in this Note will have the 
  definitions set forth in the Mortgages.		
  
  	Section 1.  Payments of Principal and Fixed Interest.
  
  	(a)  Borrower will make monthly installment payments ("Debt 
  Service Payments") as follows:
  
  (i)  On July 1, 1998, a payment of accrued interest on the 
  Principal at the Fixed Interest Rate; and
  
  (ii)  On August 1, 1998 and on the first day of each 
  succeeding calendar month through and including June 1, 
  2008, payments in the amount of Eight Hundred Sixty-Eight 
  Thousand Eight Hundred Eighty Three and 48/100ths Dollars 
  ($868,883.48), each of which will be applied first to 
  interest on the Principal at the Fixed Interest Rate and 
  then to the Principal.
  
  	(b)  On the Maturity Date, Borrower will pay the Principal 
  in full together with accrued interest at the Fixed Interest Rate 
  and all other amounts due under the Loan Documents. 
  
  	Section 2.  Prepayment Provisions.  
  
  	(a)  The following definitions apply:
  
  "Discount Rate" means the yield on a U.S. Treasury issue selected 
  by Lender, as published in the Wall Street Journal, two weeks 
  prior to prepayment, having a maturity date corresponding (or 
  most closely corresponding, if not identical) to the Maturity 
  Date, and a coupon rate corresponding (or most closely 
  corresponding, if not identical) to the Fixed Interest Rate.
  
  "Default Discount Rate" means the Discount Rate less 300 basis 
  points.
  
  "Discounted Value" means the Discounted Value of a Note Payment 
  based on the following formula:
  
  	      NP   
  	(1 + R/12)n  =  Discounted Value
  
  	NP	=	Amount of Note Payment
  
  
  	R	=	Discount Rate or Default Discount Rate 
  as the case may be.
  
  	n	=	The number of months between the date of 
  prepayment and the scheduled date of the Note 
  Payment being discounted rounded to the nearest 
  integer.
  
  "Note Payments" means (i) the scheduled Debt Service Payments for 
  the period from the date of prepayment through the Maturity Date 
  and (ii) the scheduled repayment of Principal, if any, on the 
  Maturity Date.
  
  "Prepayment Date Principal" means the Principal on the date of 
  prepayment.
  
  	(b) This Note may not be prepaid in full or in part before 
  July 1, 2003.  Commencing on July 1, 2003, provided there is no 
  Event of Default, Borrower may prepay this Note in full only, but 
  not in part (except to the extent expressly provided to the 
  contrary in any Loan Document), on the first day of any calendar 
  month, upon 90 days prior notice to Lender and upon payment in 
  full of the Debt which will include a payment (the "Prepayment 
  Premium") equal to the  greater of (i) an amount equal to the 
  product of 1% times the Prepayment Date Principal and (ii) the 
  amount by which the sum of the Discounted Values of Note 
  Payments, calculated at the Discount Rate, exceeds the Prepayment 
  Date Principal.  Provided there is no Event of Default, this Note 
  may be prepaid in full without payment of the Prepayment Premium 
  during the last 90 days of the Term.  This Note may not be 
  prepaid without simultaneous prepayment in full of any other 
  notes secured by the Loan Documents.  Notwithstanding anything 
  contained herein to the contrary, if Borrower is entitled to 
  Proceeds in accordance with the provisions of the Mortgages and 
  either Borrower or Lender elect not to apply the proceeds to 
  Restoration in accordance with the Loan Documents, the Loan may 
  be partially prepaid to the extent of the Proceeds without 
  payment of the Prepayment Premium.
  
  	(c)  After an Acceleration or upon any other prepayment not 
  permitted by the Loan Documents, any tender of payment of the 
  amount necessary to satisfy the Debt accelerated, any decree of 
  foreclosure, any statement of the amount due at the time of 
  foreclosure (including foreclosure by power of sale) and any 
  tender of payment made during any redemption period after 
  foreclosure, will include a payment (the "Evasion Premium") equal 
  to the greater of (i) an amount equal to the product of 4% times 
  the Prepayment Date Principal, and (ii) the amount by which the 
  sum of the Discounted Values of the Note Payments, calculated at 
  the Default Discount Rate, exceeds the Prepayment Date Principal.
  
  	(d)  Borrower acknowledges that:
  
  (i)	a prepayment will cause damage to Lender;
  	
  (ii)	the Evasion Premium is intended to compensate Lender 
  for the loss of its investment and the expense incurred and 
  time and effort associated with making the Loan, which will 
  not be fully repaid if the Loan is prepaid;
  
  (iii) it will be extremely difficult and impractical to 
  ascertain the extent of Lender's damages caused by a 
  prepayment after an Event of Default or any other prepayment 
  not permitted by the Loan Documents; and
  
  (iv)	the Evasion Premium represents Lender and Borrower's 
  reasonable estimate of Lender's damages for the prepayment 
  and is not a penalty.
   
  	Section 3.  Events of Default:
  
  
  	(a)	It is an "Event of Default" under this Note:
  
  (i)	if Borrower fails to pay any amount due, as and when 
  required, under this Note or any other Loan Document and the 
  failure continues for a period of 5 days; or
  
  (ii)	if an Event of Default occurs under any other Loan 
  Document.
  
  	(b)	If an Event of Default occurs, Lender may declare all 
  or any portion of the Debt immediately due and payable 
  ("Acceleration") and exercise any of the other Remedies.
  
  	Section 4.  Default Rate.  Interest on the Principal will 
  accrue at the Default Interest Rate from the date an Event of 
  Default occurs until such Event of Default is cured.
  
  	Section 5.  Late Charges.
  
  	(a)  If Borrower fails to pay any Debt Service Payment when 
  due and the failure continues for a period of 5 days or more or 
  fails to pay any amount due under the Loan Documents on the 
  Maturity Date, Borrower agrees to pay to Lender an amount (a 
  "Late Charge") equal to five cents ($.05) for each one dollar 
  ($1.00) of the delinquent payment.
  
  	(b)  Borrower acknowledges that:
  
  (i)	 a delinquent payment will cause damage to Lender;
  
  (ii)	 the Late Charge is intended to compensate Lender for 
  loss of use of the delinquent payment and the expense 
  incurred and time and effort associated with recovering the 
  delinquent payment;
  
  (iii) it will be extremely difficult and impractical to 
  ascertain the extent of Lender's damages caused by the 
  delinquency; and
  
  (iv)	 the Late Charge represents Lender and Borrower's 
  reasonable estimate of Lender's damages from the delinquency 
  and is not a penalty.
  
  	Section 6.  Limitation of Liability.   This Note is subject 
  to the limitations on liability set forth in the Article of the 
  Mortgage entitled "Limitation of Liability". 
  
  	Section 7.  WAIVERS.   IN ADDITION TO THE WAIVERS SET FORTH 
  IN THE ARTICLE OF THE MORTGAGES ENTITLED "WAIVERS", BORROWER 
  WAIVES PRESENTMENT FOR PAYMENT, DEMAND, DISHONOR AND, EXCEPT AS 
  EXPRESSLY SET FORTH IN THE LOAN DOCUMENTS, NOTICE OF ANY OF THE 
  FOREGOING.  BORROWER FURTHER WAIVES ANY PROTEST, LACK OF 
  DILIGENCE OR DELAY IN COLLECTION OF THE DEBT OR ENFORCEMENT OF 
  THE LOAN DOCUMENTS.  BORROWER AND ALL INDORSERS, SURETIES AND 
  GUARANTORS OF THE OBLIGATIONS CONSENT TO ANY EXTENSIONS OF TIME, 
  RENEWALS, WAIVERS AND MODIFICATIONS THAT LENDER MAY GRANT WITH 
  RESPECT TO THE OBLIGATIONS AND TO THE RELEASE OF ANY SECURITY FOR 
  THIS NOTE AND AGREE THAT ADDITIONAL MAKERS MAY BECOME PARTIES TO 
  THIS NOTE AND ADDITIONAL INDORSERS, GUARANTORS OR SURETIES MAY BE 
  ADDED WITHOUT NOTICE AND WITHOUT AFFECTING THE LIABILITY OF THE  
  ORIGINAL MAKER OR ANY ORIGINAL INDORSER, SURETY OR GUARANTOR.
  
  	Section 8.  Commercial Loan.  The Loan is made for the 
  purpose of carrying on a business or commercial activity or 
  acquiring real or personal property as an investment or carrying 
  on an investment activity and not for personal or household 
  purposes. 
  
  	Section 9.  Usury Limitations.  Borrower and Lender intend 
  to comply with all Laws with respect to the charging and 
  receiving of interest.  Any amounts charged or received by Lender 
  for the use or forbearance of the Principal to the extent 
  permitted by Law, will be amortized and spread throughout the 
  Term until payment in full so that the rate or amount of interest 
  charged or received by Lender on account the Principal does not 
  exceed the Maximum Interest Rate.  If any amount charged or 
  received under the Loan Documents that is deemed to be interest 
  is determined to be in excess of the amount permitted to be 
  charged or received at the Maximum Interest Rate, the excess will 
  be deemed to be a prepayment of Principal when paid, without 
  premium, and any portion of the excess not capable of being so 
  applied will be refunded to Borrower.  If during the Term the 
  Maximum Interest Rate, if any, is eliminated, then for purposes 
  of the Loan, there will be no Maximum Interest Rate.
  
  	Section 10.  Applicable Law.  This Note was negotiated in 
  the State of New York, made by Borrower and accepted by Lender in 
  the State of New York, and the proceeds of this Note were 
  delivered and were disbursed from the State of New York.  This 
  Note is governed by and will be construed in accordance with the 
  Laws of the State of New York including, without limitation,Code 5-
  1401 of the New York General Obligations Law.  To the fullest 
  extent permitted by law, Maker hereby unconditionally and 
  irrevocably waives any claim or right to assert that the law of 
  any other jurisdiction governs this Note.
  
  	Section 11.  Time of the Essence.  Time is of the essence 
  with respect to the payment and performance of the Obligations.
  	Section 12.  Cross-Default.  A default under any other note 
  now or hereafter secured by the Loan Documents or under any loan 
  document related to such other note constitutes a default under 
  this Note and under the other Loan Documents.  When the default 
  under the other note constitutes an Event of Default under that 
  note or the related loan document, an Event of Default also will 
  exist under this Note and the other Loan Documents.
   
  	Section 13.  Construction.  Unless expressly provided 
  otherwise in this Note, this Note will be construed in accordance 
  with the Exhibit attached to the Mortgages entitled "Rules of 
  Construction".
  
  	Section 14.  Mortgage Provisions Incorporated.   To the 
  extent not otherwise set forth in this Note, the provisions of 
  the Articles of the Mortgages entitled "Expenses and Duty to 
  Defend", "Waivers", "Notices", "Miscellaneous" and "Jurisdicition 
  and Venue" are applicable to this Note and deemed incorporated by 
  reference as if set forth at length in this Note.
  
  	Section 15.  Joint and Several Liability; Successors and 
  Assigns.   If Maker consists of more than one entity, the 
  obligations and liabilities of each such entity will be joint and 
  several.  This Note binds Borrower and successors, assigns, 
  heirs, administrators, executors, agents and representatives and 
  inures to the benefit of Lender and its successors, assigns, 
  heirs, administrators, executors, agents and representatives.
  
  	Section 16.  Absolute Obligation.  Except for the Section of 
  this Note entitled "Limitation of Liability", no reference in 
  this Note to the other Loan Documents and no other provision of 
  this Note or of the other Loan Documents will impair or alter the 
  obligation of Borrower, which is absolute and unconditional, to 
  pay the Principal, interest at the Fixed Interest Rate and any 
  other amounts due and payable under this Note, as and when 
  required.
  
  
  balance of page is intentionally blank]
  
  	IN WITNESS WHEREOF, Borrower has executed and delivered this 
  Note as of the date first set forth above.
  
  
  	PARKWAY PROPERTIES LP, a Delaware 
  limited partnership
  
  					
  	By:	Parkway Properties General 
  Partners, Inc., its sole general 
  partner, a Delaware corporation
  
  	
  		     			By:_______________________
  		 			   Name:  James M. Ingram
                                   Title: Senior Vice 
       President
  
  
                      By:_______________________
  						   Name:  Sarah P. Clark
  					       Title:	Senior Vice President, 
  CFO, Treasurer & 
  Secretary
  
  
  Completion Notes on "Promissory Note":
  
  Signatures needed
  
  Copies to be made after signature
  
  Original on safety paper
  	
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  Form Mortgage [Modify state-by-state]
  
  
   
  
  MORTGAGE, ASSIGNMENT OF LEASES AND RENTS
  SECURITY AGREEMENT AND FIXTURE FILING STATEMENT
  
  
  by 
  
  
  
  PARKWAY PROPERTIES LP,
  as Borrower
  
  for the benefit of
  
  
  TEACHERS INSURANCE AND ANNUITY ASSOCIATION 
  OF AMERICA, 
                             as Lender
  
  
  
  
  
  
  			
  
  
  
  Property Known As
  	
  
  ****
  
  
  
  
  
  This Mortgage Was Prepared By
  And After Recordation This Mortgage Should Be Returned To:
  
  
  Jack Edelbrock, Esq.
  c/o Mayer, Brown & Platt
  190 South LaSalle Street
  Chicago, Illinois 60603-3441
  
  TABLE OF CONTENTS
  
  Page
  
  
  RECITALS	1
  
  ARTICLE I		DEFINITIONS AND RULES OF CONSTRUCTION	1
  Section 1.1.	Definitions	1
  Section 1.2.	Rules of Construction	2
  
  ARTICLE II	GRANTING CLAUSES	2
  Section 2.1.  	Encumbered Property	2
  Section 2.2.	Habendum Clause	4
  Section 2.3.	Security Agreement	5
  Section 2.4.  	Conditions to Grant	6
  
  ARTICLE III	OBLIGATIONS SECURED	6
  Section 3.1.	The Obligations	6
  	Section 3.2.	Future Advances	6
  
  ARTICLE IV	TITLE AND AUTHORITY	6
  Section 4.1.  	Title to the Property	6
  Section 4.2.  	Authority	7
  Section 4.3.	No Foreign Person	7
  Section 4.4.  	Litigation	7
  
  ARTICLE V		PROPERTY STATUS, MAINTENANCE AND LEASES	8
  Section 5.1.  	Status of the Property	8
  Section 5.2.  	Maintenance of the Property	8
  Section 5.3.  	Change in Use	9
  Section 5.4.  	Waste	9
  Section 5.5.  	Inspection of the Property	9
  Section 5.6.  	Leases and Rents	9
  Section 5.7.  	Parking	10
  Section 5.8.	Separate Tax Lot	10
  Section 5.9.	Changes in Zoning or Restrictive 
  				Covenants 	10
  Section 5.10.	Lender's Right to Appear	10
  
  ARTICLE VI	IMPOSITIONS AND ACCUMULATIONS	10
  Section 6.1.  	Impositions	10
  Section 6.2.  	Accumulations	11
  Section 6.3.	Changes in Tax Laws	13
  Section 6.4.	Reserves	13
  
  ARTICLE VII	INSURANCE, CASUALTY, CONDEMNATION		AND 
  RESTORATION	13
  Section 7.1.	Insurance Coverages	13
  Section 7.2.	Casualty and Condemnation	15
  Section 7.3.	Application of Proceeds	15
  Section 7.4.  	Conditions to Availability of Proceeds for 	
  			
  				Restoration	16
  Section 7.5.	Restoration	17
  
  ARTICLE VIII	COMPLIANCE WITH LAW AND AGREEMENTS	19
  Section 8.1.  	Compliance with Law	19
  Section 8.2.  	Compliance with Agreements	19
  Section 8.3.  	ERISA Compliance	20
  Section 8.4.  	Section 6045(e) Filing	20
  
  ARTICLE IX	ENVIRONMENTAL 	21
  Section 9.1.  	Environmental Representations and 
  				Warranties 	21
  Section 9.2.  	Environmental Covenants	21
  
  ARTICLE X		FINANCIAL REPORTING	23
  Section 10.1.  Fiscal Year; Financial Statements; 
  Reports of Parkway Properties, Inc. (the 
  "Company") and Borrower; SEC and Other 
  Reports; Officer's Certificate	23
  
  ARTICLE XI	EXPENSES AND DUTY TO DEFEND	24
  Section 11.1.  Payment of Expenses	24
  Section 11.2.	Duty to Defend	24
  
  ARTICLE XII	TRANSFERS LIENS AND ENCUMBRANCES	25
  Section 12.1.  Prohibitions on Transfers, Liens and 		
  				Encumbrances 	25
  Section 12.2.  Permitted Transfers	25
  Section 12.3.  Right to Contest Liens	26
  Section 12.4.  Release Rights	27
  [Section 12.5.	Substitution of Collateral.  [For Loudoun 
  				mortgage only][Additional Edits Needed]	28
  
  ARTICLE XIII	ADDITIONAL REPRESENTATIONS, WARRANTIES AND
  			 COVENANTS	30
  Section 13.1.  Further Assurances	30
  Section 13.2.  Estoppel Certificates	30
  
  ARTICLE XIV	DEFAULTS AND REMEDIES 	31
  Section 14.1.  Events of Default	31
  Section 14.2.  Remedies.	32
  Section 14.3.	General Provisions Pertaining to 
  				Remedies 	33
  Section 14.4.	Foreclosure by Power of Sale	34
  Section 14.5.	General Provisions Pertaining to 
  				Mortgagee-in-Possession or Receiver	34
  Section 14.6.  General Provisions Pertaining to 
  				Foreclosures and the Power of Sale	36
  Section 14.7.  Application of Proceeds	36
  Section 14.8.  Power of Attorney.	37
  Section 14.9.  Tenant at Sufferance	37
  Section 14.10.	State Laws Pertaining to Remedies	37
  
  ARTICLE XV	LIMITATION OF LIABILITY	37
  
  Section 15.1.  Limitation of Liability	37
  
  ARTICLE XVI	WAIVERS	39
  
  SECTION 16.1	WAIVER OF NOTICE	39
  SECTION 16.2.  WAIVER OF MARSHALLING AND OTHER MATTERS	39
  SECTION 16.3.  WAIVER OF TRIAL BY JURY	40
  SECTION 16.4.	WAIVER OF JUDICIAL NOTICE AND HEARING	40
  SECTION 16.5.	WAIVER OF SUBROGATION	40
  SECTION 16.6.  GENERAL WAIVER	40
  
  ARTICLE XVII	NOTICES 	40
  
  Section 17.1.  Notices	40
  Section 17.2.	Change in Borrower's Name or Place of
  				Business	42
  
  ARTICLE XVIII	MISCELLANEOUS 	42
  
  Section 18.1.	Applicable Law	42
  Section 18.2.  Usury Limitations	42
  Section 18.3.  Lender's Discretion	42
  Section 18.4.  Unenforceable Provisions	42
  Section 18.5.  Survival of Borrower's Obligations	43
  Section 18.6.  Relationship Between Borrower and Lender; 
  				No Third Party Beneficiaries	43
  Section 18.7.  Partial Releases; Extensions; Waivers	43
  Section 18.8.  Service of Process	44
  Section 18.9.  Entire Agreement	44
  Section 18.10. No Oral Amendment	44
  Section 18.11.	Severability	44
  Section 18.12. Covenants Run with the Land	44
  Section 18.13. Time of the Essence	45
  Section 18.14. Subrogation	45
  Section 18.15.	Joint and Several Liability	45
  Section 18.16. Successors and Assigns	45
  Section 18.17. Duplicates and Counterparts	45
  
  ARTICLE XIX	ADDITIONAL PROVISIONS PERTAINING TO STATE 
  			LAWS 	45
  
  
  
  
  		MORTGAGE, ASSIGNMENT OF LEASES AND RENTS,
  SECURITY AGREEMENT AND FIXTURE FILING
  
  
  
  		THIS MORTGAGE, ASSIGNMENT OF LEASES AND RENTS AND 
  SECURITY AGREEMENT made this 30th day of June, 1998, by PARKWAY 
  PROPERTIES LP ("Borrower"), a Delaware limited partnership, 
  having its principal place of business c/o Parkway Properties, 
  Inc., 188 East Capitol Street, Suite 1000, Jackson, Mississippi 
  39201-2195, Attn: Sarah P. Clark for the benefit of TEACHERS 
  INSURANCE AND ANNUITY ASSOCIATION OF AMERICA ("Lender"), a New 
  York corporation, having an address at 730 Third Avenue, New 
  York, New York 10017.
  
  
  RECITALS:
  
  
  		A.  Lender agreed to make and Borrower agreed to accept 
  a loan (the "Loan") in the maximum principal amount of 
  $97,000,000.00.
  
  		B.  To evidence the Loan, Borrower executed and 
  delivered to Lender a promissory note (the "Note"), dated the 
  date of this Mortgage, in the principal amount of Ninety Seven 
  Million and 00/100ths Dollars ($97,000,000.00) (that amount or so 
  much as is outstanding from time to time is referred to as the 
  "Principal"), promising to pay the Principal with interest 
  thereon to the order of Lender as set forth in the Note and with 
  the balance, if any, of the Debt being due and payable on July 1, 
  2008 (the "Maturity Date").
  
  ****
  		C.  To secure the Note, this Mortgage encumbers, among 
  other things, Borrower's fee interest in the real property 
  located in the City of _____________, County of ___________, 
  [State] [Commonwealth] of _________________, more particularly 
  described in Exhibit A (the "Land").	
  
  
  ARTICLE I
  
  DEFINITIONS AND RULES OF CONSTRUCTION
  
  
  	Section 1.1.	Definitions.  Capitalized terms used in this 
  Mortgage are defined in Exhibit B or in the text with a cross-
  reference in Exhibit B.
  	Section 1.2.	Rules of Construction.  This Mortgage will be 
  interpreted in accordance with the rules of construction set 
  forth in Exhibit C.
  
  
  ARTICLE II
  
  GRANTING CLAUSES
  
  
  	Section 2.1.  Encumbered Property.  Borrower irrevocably 
  grants, mortgages, warrants, conveys, assigns and pledges to 
  Lender, and grants to Lender a security interest in, the 
  following property, rights, interests and estates now or in the 
  future owned or held by Borrower (the "Property") for the uses 
  and purposes set forth in this Mortgage forever: 
  
  (i)	the Land;
  
  (ii)  all buildings and improvements located on the Land 
  (the "Improvements");
  
  (iii)  all easements; rights of way or use, including any 
  rights of ingress and egress; streets, roads, ways, 
  sidewalks, alleys and passages; strips and gores; sewer 
  rights; water, water rights, water courses, riparian rights 
  and drainage rights; air rights and development rights; oil 
  and mineral rights; and tenements, hereditaments and 
  appurtenances, in each instance adjoining or otherwise 
  appurtenant to or benefitting the Land or the Improvements;
  
  (iv)  all materials intended for construction, re-
  construction, alteration or repair of the Improvements, such 
  materials to be deemed included in the Land and the 
  Improvements immediately on delivery to the Land; all 
  fixtures and personal property that are attached to, 
  contained in or used solely in connection with the Land or 
  the Improvements (excluding personal property owned by 
  tenants), including: furniture; furnishings; machinery; 
  motors; elevators; fittings; microwave ovens; refrigerators; 
  office systems and equipment; plumbing, heating, ventilating 
  and air conditioning systems and equipment; maintenance and 
  landscaping equipment; lighting, cooking, laundry, dry 
  cleaning, refrigerating, incinerating and sprinkler systems 
  and equipment; telecommunications systems and equipment; 
  computer or word processing systems and equipment; security 
  systems and equipment; the items listed on Schedule 1 
  hereto; and equipment leases for any of the property 
  described in this subsection (the "Fixtures and Personal 
  Property");
  
  (v)  all agreements, ground leases, grants of easements or 
  rights-of-way, permits, declarations of covenants, 
  conditions and restrictions, disposition and development 
  agreements, planned unit development agreements, 
  cooperative, condominium or similar ownership or conversion 
  plans, management, leasing, brokerage or parking agreements 
  or other material documents affecting the Land, Borrower's 
  interest in the Property, the Improvements or the Fixtures 
  and Personal Property, including the documents described on 
  Exhibit D but expressly excluding the Leases (the "Property 
  Documents");
  
  (vi)  all inventory (including all goods, merchandise, raw 
  materials, incidentals, office supplies and packaging 
  materials) held for sale, lease or resale or furnished or to 
  be furnished under contracts of service, or used or consumed 
  in the ownership, use or operation of the Land, the 
  Improvements or the Fixtures and Personal Property, all 
  documents of title evidencing any part of any of the 
  foregoing and all returned or repossessed goods arising from 
  or relating to any sale or disposition of such inventory;
  
  (vii)  all intangible personal property relating to the 
  Land, the Improvements or the Fixtures and Personal 
  Property, including choses in action and causes of action 
  (except those personal to Borrower), corporate and other 
  business records, inventions, designs, promotional 
  materials, blueprints, plans, specifications, patents, 
  patent applications, trademarks, trade names, trade secrets, 
  goodwill, copyrights, registrations, licenses, franchises, 
  claims for refunds or rebates of taxes, insurance surpluses, 
  refunds or rebates of taxes and any letter of credit, 
  guarantee, claim, security interest or other security held 
  by or granted to Borrower to secure payment by an account 
  debtor of any of the accounts of Borrower arising out of the 
  ownership, use or operation of the Land, the Improvements or 
  the Fixtures and Personal Property, and documents covering 
  all of the foregoing; all accounts, accounts receivable, 
  documents, instruments, money, deposit accounts, funds 
  deposited in accounts established with a bank, savings and 
  loan association, trust company or other financial 
  institution in connection with the ownership, use or 
  operation of the Land, the Improvements or the Fixtures and 
  Personal Property, including any reserve accounts or escrow 
  accounts, and all investments of the funds and all other 
  general intangibles;
   
  (viii)  all awards and other compensation paid after the 
  date of this Mortgage for any Condemnation (the 
  "Condemnation Awards");
   
  (ix)  all proceeds of and all unearned premiums on the 
  Policies (the "Insurance Proceeds");
  
  (x)  all licenses, certificates of occupancy, contracts, 
  management agreements, operating agreements, operating 
  covenants, franchise agreements, permits and variances 
  relating to the Land, the Improvements or the Fixtures and 
  Personal Property;
  
  (xi)  all books, records and other information, wherever 
  located, which are in Borrower's possession, custody or 
  control or to which Borrower is entitled at law or in equity 
  and which are related exclusively to the Property, including 
  all computer or other equipment used to record, store, 
  manage, manipulate or access the information; 
  
  (xii)  all deposits held from time to time by the 
  Accumulations Depositary to provide reserves for Taxes and 
  Assessments together with interest thereon, if any (the 
  "Accumulations");
  
  (xiii)  all after-acquired title to or remainder or 
  reversion in any of the property described in this Section; 
  all additions, accessions and extensions to, improvements of 
  and substitutions or replacements for any of such property; 
  all products and all cash and non-cash proceeds, immediate 
  or remote, of any sale or other disposition of any of such 
  property, excluding sales or other dispositions of inventory 
  in the ordinary course of the business of operating the Land 
  and the Improvements; and all additional lands, estates, 
  interests, rights or other property acquired by Borrower 
  after the date of this Mortgage for use in connection with 
  the Land or the Improvements, all without the need for any 
  additional mortgage, assignment, pledge or conveyance to 
  Lender but Borrower will execute and deliver to Lender, upon 
  Lender's request, any documents reasonably requested by 
  Lender to further evidence the foregoing; and
  
  (xiv)  all deposits for reserves held from time to time by 
  an escrow holder in accordance with the Tax Agreement 
  described in the Section entitled "Reserves" and all 
  accounts established to maintain the deposits together with 
  investments thereof and interest thereon.
  
  	Section 2.2.	Habendum Clause.  The Property is conveyed to 
  Lender to have and to hold forever in fee simple.
  
  	Section 2.3.	Security Agreement.  
  
  	(a)  The Property includes both real and personal property 
  and this Mortgage is a real property mortgage and also a 
  "security agreement" and a "financing statement" within the 
  meaning of the Uniform Commercial Code.  By executing and 
  delivering this Mortgage, Borrower grants to Lender, as security 
  for the Obligations, a security interest in the Property to the 
  full extent that any of the Property may be subject to the 
  Uniform Commercial Code.
  
  	(b)  This Mortgage constitutes a fixture financing statement 
  under the Laws of the state or commonwealth in which the Property 
  is located and/or the purpose, the following information is set 
  forth:
  
  	(a)	Name and address of Debtor:
  
  		Parkway Properties L P
  c/o Parkway Properties, Inc.
  188 East Capitol Street, Suite 1000
  Jackson, Mississippi 39201-2195
  
  	(b)	Name and address of Secured Party:
  
  		Teachers Insurance and Annuity Association of America
  730 Third Avenue
  New York, New York 10017
  Attn:	Managing Director
  Mortgage and Real Estate Division
  Region:	Northeast/South/International
  
  	(c)	Description of the types (or items) of
  		property covered by this Financing Statement:
  		all of the property described in section ii-xiv of 
  the Section entitled "Encumbered Property" described or 
  referred to herein and included as part of the 
  Premises.
  
  	(d)	Description of real estate to which collateral is 
  attached or upon which it is located:  Described in 
  Exhibit A.
  
  (e)	Federal Taxpayer Identification Number of the Debtor:  
  72-1344324
  
  	Lender may file this Mortgage, or a reproduction thereof, in 
  the real estate records or other appropriate index, as a 
  financing statement for any of the items specified above as part 
  of the Property.  Any reproduction of this Mortgage or of any 
  other security agreement or financing statement is sufficient as 
  a financing statement.
  
  	Section 2.4.  Conditions to Grant.  This Mortgage is made on 
  the express condition that if Borrower pays and performs the 
  Obligations in full in accordance with the Loan Documents, then, 
  unless expressly provided otherwise in the Loan Documents, the 
  Loan Documents will be released at Borrower's expense.
  
  
  ARTICLE III
  
  OBLIGATIONS SECURED
  
  
  	Section 3.1.  The Obligations.  This Mortgage secures the 
  Principal, the Interest, the Late Charges (as defined in the 
  Note), the Prepayment Premiums (as defined in the Note), the 
  Expenses, any additional advances made by Lender in connection 
  with the Property or the Loan and all other amounts payable under 
  the Loan Documents (the "Debt") and also secures both the timely 
  payment of the Debt as and when required and the timely 
  performance of all other obligations and covenants to be 
  performed under the Loan Documents (the "Obligations"), provided 
  that the foregoing does not limit, qualify or affect in any way 
  the present, absolute nature of the Assignment.
  
  	Section 3.2.  Future Advances.  It is agreed that this 
  Mortgage shall also secure such future or additional advances for 
  construction, improvements, preservation, maintenance and 
  operation of the Property and the security for the Obligations as 
  may be made by Lender, whether such future advances are 
  obligatory or are to be made at Lender's option to Borrower, or 
  its successor in title, for any purpose [add additional state - 
  specific provisions as required].
  
  
  ARTICLE IV
  
  TITLE AND AUTHORITY
  
  
  	Section 4.1.  Title to the Property.  
  
  	(a)  Borrower has and will continue to have good and 
  marketable title in fee simple absolute to the Land and the 
  Improvements and good and marketable title to the Fixtures and 
  Personal Property, all free and clear of liens, encumbrances and 
  charges except the Permitted Exceptions.  To Borrower's 
  knowledge, there are no facts or circumstances that might give 
  rise to a lien, encumbrance or charge on the Property.
  
  	(b)  Borrower owns and will continue to own all of the other 
  Property free and clear of all liens, encumbrances and charges 
  except the Permitted Exceptions.  
  
  	(c)  This Mortgage is and will remain a valid and 
  enforceable first lien on and security interest in the Property, 
  subject only to the Permitted Exceptions.
  
  	Section 4.2.  Authority.  
  
  	(a)  Borrower is and will continue to be (i) duly organized, 
  validly existing and in good standing under the Laws of the state 
  or commonwealth in which it was organized or incorporated and 
  (ii) duly qualified to conduct business, in good standing, in the 
  state or commonwealth where the Property is located.  
  
  	(b)  Borrower has and will continue to have all 
  approvals required by Law or otherwise and full right, power and 
  authority to (i) own and operate the Property and carry on 
  Borrower's business as now conducted or as proposed to be 
  conducted; (ii) execute and deliver the Loan Documents; (iii) 
  grant, mortgage, warrant the title to, convey, assign and pledge 
  the Property to Lender pursuant to the provisions of this 
  Mortgage; and (iv) perform the Obligations.  
  
  	(c)  The execution and delivery of the Loan Documents and 
  the performance of the Obligations do not and will not conflict 
  with or result in a default under any Laws or any Leases or 
  Property Documents and do not and will not conflict with or 
  result in a default under any agreement binding upon any party to 
  the Loan Documents.
  
  	(d)  The Loan Documents constitute and will continue to 
  constitute legal, valid and binding obligations of all parties to 
  the Loan Documents enforceable in accordance with their 
  respective terms.
  
  	(e)	Borrower and each of Borrower's constituent entities 
  executing this Mortgage on behalf of Borrower have the requisite 
  power and authority under their respective organizational 
  documents to execute and deliver this Mortgage, to perform 
  Borrower's obligations under this Mortgage and to consummate the 
  transaction contemplated by this Mortgage and have taken any 
  necessary action to authorize the execution and delivery of this 
  Mortgage, the performance of Borrower's obligations under this 
  Mortgage and the consummation of the transaction contemplated by 
  this Mortgage.
  
  	Section 4.3.	No Foreign Person.  Borrower is not a 
  "foreign person" within the meaning of Section 1445(f)(3) of the 
  Code.
  
  	Section 4.4.  Litigation.  There are no Proceedings or, to 
  Borrower's knowledge, investigations against or affecting 
  Borrower or the Property and, to Borrower's knowledge, there are 
  no facts or circumstances that might give rise to a Proceeding or 
  an investigation against or affecting Borrower or the Property 
  which could have a material adverse effect on the Borrower or the 
  Property or Lender's Security interest in the Property.  Borrower 
  will give Lender prompt notice of the commencement of any 
  Proceeding or investigation against or affecting the Property or 
  Borrower which could have a material adverse effect on the 
  Property or on Lender's interests in the Property or under the 
  Loan Documents.  Borrower also will deliver to Lender such 
  additional information relating to the Proceeding or 
  investigation as Lender may request from time to time.
  
  
  ARTICLE V
  
  PROPERTY STATUS, MAINTENANCE AND LEASES
  
  
  	Section 5.1.  Status of the Property.
  
  	(a)  Borrower has obtained and will maintain in full force 
  and effect all certificates, licenses, permits and approvals that 
  are issued or required by Law or by any entity having 
  jurisdiction over the Property or over Borrower or that are 
  necessary for the Permitted Use, for occupancy and operation of 
  the Property, for the granting of this Mortgage or for the 
  conduct of Borrower's business on the Property in accordance with 
  the Permitted Use.  
  
  	(b)  The Property is and will continue to be serviced by all 
  public utilities required for the Permitted Use of the Property.
  
   	(c)  All roads and streets necessary for service of and 
  access to the Property for the current or contemplated use of the 
  Property have been completed and are serviceable, physically open 
  and dedicated to and accepted by the Government for use by the 
  public.
  
  	(d)  The Property is free from damage caused by a Casualty.
  
  	(e)  To Borrower's knowledge, all costs and expenses of 
  labor, materials, supplies and equipment used in the construction 
  of the Improvements have been paid in full.
  		
  	Section 5.2.  Maintenance of the Property.  Borrower will 
  maintain the Property in thorough repair and good and safe 
  condition, suitable for the Permitted Use, including, to the 
  extent necessary, replacing the Fixtures and Personal Property 
  with property at least equal in quality and condition to that 
  being replaced.  Borrower will not erect any new buildings, 
  building additions or other structures on the Land or, except for 
  tenant and common area improvements undertaken in the ordinary 
  course of business, otherwise materially alter the Improvements 
  (except for tenant improvements made in accordance with Leases 
  approved or not requiring approval of Lender) without Lender's 
  prior consent which may be withheld in Lender's sole discretion.  
  The Property will be managed by an Affiliate of Borrower or an 
  independent property manager, satisfactory to Lender pursuant to 
  a management agreement satisfactory to Lender and terminable by 
  Borrower upon 30 days notice to the property  manager. 
  
  	Section 5.3.  Change in Use.  Borrower will use and permit 
  the use of the Property for the Permitted Use and for no other 
  purpose.  
  
  	Section 5.4.  Waste.  Borrower will not commit or permit any 
  waste (including economic and non-physical waste), impairment or 
  deterioration of the Property or, except for tenant and common 
  area improvements undertaken in the ordinary course of business, 
  any alteration, demolition or removal of any of the Property 
  without Lender's prior consent which may be withheld in Lender's 
  sole discretion.
  
  	Section 5.5.  Inspection of the Property.  Subject to the 
  rights of tenants under the Leases, Lender has the right to enter 
  and inspect the Property on reasonable prior notice, except 
  during the existence of an Event of Default, when no prior notice 
  is necessary.  Lender has the right to engage an independent 
  expert to review and report on Borrower's compliance with 
  Borrower's obligations under this Mortgage to maintain the 
  Property, comply with Law and refrain from waste, impairment or 
  deterioration of the Property and the alteration, demolition or 
  removal of any of the Property except as may be permitted by the 
  provisions of this Mortgage.  If the independent expert's report 
  discloses material failure to comply with such obligations or if 
  Lender engages the independent expert after the occurrence of an 
  Event of Default, then the independent experts review and report 
  will be at Borrower's expense, payable on demand.
  
  	Section 5.6.  Leases and Rents.  
  
  	(a)  Borrower assigns the Leases and the Rents to Lender 
  absolutely and not merely as additional collateral or security 
  for the payment and performance of the Obligations, but subject 
  to a license back to Borrower of the right to collect the Rents 
  unless and until an Event of Default occurs at which time the 
  license will terminate automatically, all as more particularly 
  set forth in the Assignment, the provisions of which are 
  incorporated in this Mortgage by reference.
  
  	(b) Upon an Event of Default, Borrower appoints Lender as 
  Borrower's attorney-in-fact to execute unilaterally and record, 
  at Lender's election, a document subordinating this Mortgage to 
  the Leases, provided that the subordination will not affect (i) 
  the priority of Lender's entitlement to Insurance Proceeds or 
  Condemnation Awards or (ii) the priority of this Mortgage over 
  intervening liens or liens arising under or with respect to the 
  Leases.
  
  	Section 5.7.  Parking.  Borrower will provide, maintain and 
  light parking areas within the Property, including any sidewalks, 
  aisles, streets, driveways, sidewalk cuts and rights-of-way to 
  and from the adjacent public streets, in a manner consistent with 
  the Permitted Use and sufficient to accommodate the greatest of: 
  (i) the number of parking spaces required by Law; (ii) the number 
  of parking spaces required by the Leases and the Property 
  Documents; or (iii) ______ parking spaces.  The parking areas 
  will be reserved and used exclusively for ingress, egress and 
  parking for Borrower and the tenants under the Leases and their 
  respective employees, customers and invitees and in accordance 
  with the Leases and the Property Documents.
  
  	Section 5.8.	Separate Tax Lot.  The Property is and will 
  remain assessed for real estate tax purposes as one or more 
  wholly independent tax lots, separate from any property that is 
  not part of the Property.
  		
  	Section 5.9.	Changes in Zoning or Restrictive Covenants.   
  Borrower will not (i) initiate, join in or consent to any change 
  in any Laws pertaining to zoning, any restrictive covenant or 
  other restriction which would restrict the Permitted Uses for the 
  Property; (ii) permit the Property to be used to fulfil any 
  requirements of Law for the construction or maintenance of any 
  improvements on property that is not part of the Property; (iii) 
  permit the Property to be used for any purpose not included in 
  the Permitted Use; or (iv) impair the integrity of the Property 
  as a single, legally subdivided zoning lot separate from all 
  other property.
  
  	Section 5.10.	Lender's Right to Appear.  Lender has the 
  right to appear in and defend any Proceeding brought regarding 
  the Property and to bring any Proceeding, in the name and on 
  behalf of Borrower or in Lender's name, which Lender, in its sole 
  discretion, determines should be brought to protect Lender's 
  interest in the Property.
  
  
  ARTICLE VI
  
  IMPOSITIONS AND ACCUMULATIONS
  
  		
  	Section 6.1.  Impositions.
  
  	(a)  Borrower will pay or cause the Escrow Holder to pay 
  each Imposition at least 10 days before the date (the "Imposition 
  Penalty Date") that is the earlier of (i) the date on which the 
  Imposition becomes delinquent and (ii) the date on which any 
  penalty, interest or charge for non-payment of the Imposition 
  accrues.
  
  	(b)  At least 10 days before each Imposition Penalty Date, 
  Borrower will deliver or cause Escrow Holder to deliver to Lender 
  a receipted bill or other evidence of payment.
  
  	(c)  Borrower, at its own expense, may contest any Taxes or 
  Assessments, provided that the following conditions are met:
  
  (i)  not less than 30 days prior to the Imposition Penalty 
  Date, Borrower delivers to Lender notice of the proposed 
  contest;
  
  (ii) the contest is by a Proceeding promptly initiated and 
  conducted diligently and in good faith; 
  
  (iii) there is no Event of Default; 
  
  (iv)  the Proceeding suspends the collection of the 
  contested Taxes or Assessments or a bond is furnished by 
  Borrower to Lender, satisfactory to Lender in its sole 
  discretion; 
  
  (v)  the Proceeding is permitted under and is conducted in 
  accordance with the Leases and the Property Documents;
  
  (vi)  the Proceeding precludes imposition of criminal or 
  civil penalties and sale or forfeiture of the Property and 
  Lender will not be subject to any civil suit; and 
  
  (vii)  Borrower either deposits with the Accumulations 
  Depositary reserves or furnishes a bond or other security 
  satisfactory to Lender, in either case in an amount 
  sufficient to pay the contested Taxes or Assessments, 
  together with all interest and penalties or Borrower pays 
  all of the contested Taxes or Assessments under protest. 
  
  	(d)  Installment Payments.  If any Assessment is payable in 
  installments, Borrower will nevertheless pay the Assessment in 
  its entirety on the day the first installment becomes due and 
  payable or a lien, unless Lender approves payment of the 
  Assessment in installments or such installment payments will not 
  result in a lien, or trigger any interest or penalty. 
  
  	Section 6.2.  Accumulations.
  
  	(a)  Borrower made an initial deposit with either Lender or 
  a mortgage servicer or financial institution designated or 
  approved by Lender from time to time to receive, hold and 
  disburse the Accumulations in accordance with this Section (the 
  "Accumulations Depositary").  The initial Accumulation Depositary 
  is identified in the Tax Agreement.  On the first day of each 
  calendar month during the Term Borrower will deposit with the 
  Accumulations Depositary an amount equal to one-twelfth (1/12) of 
  the annual Taxes and Assessments as determined by Lender or its 
  designee.  At least 30 days before each Imposition Penalty Date, 
  or as soon thereafter as received by Borrower, Borrower will 
  deliver to the Accumulations Depositary any bills and other 
  documents that are necessary to pay the Taxes and Assessments.
  
  	(b)  The Accumulations will be applied to the payment of 
  Taxes and Assessments.  Any excess Accumulations after payment of 
  Taxes and Assessments will be returned to Borrower or credited 
  against future payments of the Accumulations, at Lender's 
  election or as required by Law.  If the Accumulations are not 
  sufficient to pay Taxes and Assessments, Borrower will pay the 
  deficiency to the Accumulations Depositary within 5 days of 
  demand.  At any time after an Event of Default occurs, Lender may 
  apply the Accumulations as a credit against any portion of the 
  Debt selected by Lender in its sole discretion.
  
  	(c)  The Accumulations Depositary will hold the 
  Accumulations as additional security for the Obligations until 
  applied in accordance with the provisions of this Mortgage and 
  the Tax Agreement.  If Lender is not the Accumulations 
  Depositary, the Accumulations Depositary will deliver the 
  Accumulations to Lender upon Lender's demand at any time after an 
  Event of Default.
   		
  	(d)  The Accumulations Depositary has deposited the initial 
  deposit and will deposit the monthly deposits into a separate 
  interest bearing account in the name of Lender as secured party, 
  all in accordance with the Tax Agreement.
  
  	(e)  Lender has the right to pay, or to direct the  
  Accumulations Depositary to pay, any Taxes or Assessments unless 
  Borrower is contesting the Taxes or Assessments in accordance 
  with the provisions of this Mortgage, in which event any payment 
  of the contested Taxes or Assessments will be made under protest 
  in the manner prescribed by Law or, at Lender's election, will be 
  withheld.
  
  	(f)  If Lender assigns this Mortgage, Lender will pay, or 
  cause the Accumulations Depositary to pay, the unapplied balance 
  of the Accumulations to or at the direction of the assignee in 
  accordance with the Tax Agreement.  Simultaneously with the 
  payment, Lender and the Accumulations Depositary will be released 
  from all liability with respect to the Accumulations and Borrower 
  will look solely to the assignee with respect to the 
  Accumulations.  When the Obligations have been fully satisfied, 
  any unapplied balance of the Accumulations will be returned to 
  Borrower.
  
  	Section 6.3.	Changes in Tax Laws.  If a Law requires the 
  deduction of the Debt from the value of the Property for the 
  purpose of taxation or imposes a tax, either directly or 
  indirectly, on the Debt, any Loan Document or Lender's interest 
  in the Property, Borrower will pay the tax with interest and 
  penalties, if any.  If Lender determines that Borrower's payment 
  of the tax may be unlawful, unenforceable, usurious or taxable to 
  Lender, the Debt will become immediately due and payable on 60 
  days' prior notice unless the tax must be paid within the 60-day 
  period, in which case, the Debt will be due and payable within 
  the lesser period.
  
  	Section 6.4.	Reserves.	Borrower made an initial deposit 
  and will make monthly deposits into an account established as 
  additional security for the payment and performance of the 
  Obligations, to be held and disbursed in accordance with the Tax 
  Agreement.
  
  
  			ARTICLE VII
  
  INSURANCE, CASUALTY, CONDEMNATION
  AND RESTORATION
  
  
  	Section 7.1.  Insurance Coverages.
  
  	(a)  Borrower will maintain such insurance coverages and 
  endorsements in form and substance and in amounts as Lender may 
  require in its sole discretion, from time to time.  Until Lender 
  notifies Borrower of changes in Lender's requirements, Borrower 
  will maintain not less than the insurance coverages and 
  endorsements Lender required for closing of the Loan.
  
  	(b)  The insurance, including renewals, required under this 
  Section will be issued on valid and enforceable policies and 
  endorsements satisfactory to Lender (the "Policies").	Each 
  Policy will contain a standard waiver of subrogation and a 
  replacement cost endorsement and will provide that Lender will 
  receive not less than 30 days' prior written notice of any 
  cancellation, termination or non-renewal of a Policy or any 
  material change other than an increase in coverage and that 
  Lender will be named under a standard mortgage endorsement as 
  loss payee.
  
  	(c)  The insurance companies issuing the Policies (the 
  "Insurers") must be authorized to do business in the State or 
  Commonwealth where the Property is located, must have been in 
  business for at least 5 years, must carry an A.M. Best Company, 
  Inc. policy holder rating of A or better and an A.M. Best 
  Company, Inc. financial category rating of Class X or better and 
  must be otherwise satisfactory to Lender.  Lender may select an 
  alternative credit rating agency and may impose different credit 
  rating standards for the Insurers.  Notwithstanding Lender's 
  right to approve the Insurers and to establish credit rating 
  standards for the Insurers, Lender will not be responsible for 
  the solvency of any Insurer.
  
  	(d)  Notwithstanding Lender's rights under this Article, 
  Lender will not be liable for any loss, damage or injury 
  resulting from the inadequacy or lack of any insurance coverage.
  
  	(e)  Borrower will comply with the provisions of the 
  Policies and with the requirements, notices and demands imposed 
  by the Insurers and applicable to Borrower or the Property.
  
  	(f)  Borrower will pay the Insurance Premiums for each 
  Policy not less than 30 days before the expiration date of the 
  Policy being replaced or renewed and will deliver to Lender an 
  original or, if a blanket policy, a certificate evidencing 
  coverage under the Policies marked "Paid" not less than 15 days 
  prior to the expiration date of the Policy being replaced or 
  renewed.  Borrower shall provide a certified copy of each Policy 
  promptly upon receipt thereof.
  
  	(g)  Borrower will not carry separate insurance concurrent 
  in kind or form or contributing in the event of loss with any 
  other insurance carried by Borrower.
  
  	(h)  Borrower will not carry any of the insurance required 
  under this Section on a blanket or umbrella policy without in 
  each instance Lender's prior approval which may be withheld in 
  Lender's sole discretion.  If Lender approves, Borrower will 
  deliver to Lender a certified copy of the blanket policy which 
  will allocate to the Property the amount of coverage required 
  under this Section and otherwise will provide the same coverage 
  and protection as would a separate policy insuring only the 
  Property.
  	(i) If required by the Policy, Borrower will give the 
  Insurers prompt notice of any change in ownership or occupancy of 
  the Property.  This subsection does not abrogate the prohibitions 
  on transfers set forth in this Mortgage.
  
  	Section 7.2.  Casualty and Condemnation.
  
  	(a)  Borrower will give Lender notice of any Casualty 
  immediately after it occurs and will give Lender notice of any 
  Proceeding in Condemnation immediately after Borrower receives 
  notice of commencement or notice that such a Proceeding will be 
  commencing.  Borrower immediately will deliver to Lender copies 
  of all documents Borrower delivers or receives relating to the 
  Casualty or the Proceeding, as the case may be.
  
  	(b) Upon the occurrence and continuance of an Event of 
  Default, Borrower authorizes Lender, at Lender's option, to act 
  on Borrower's behalf to collect, adjust and compromise any claims 
  for loss, damage or destruction under the Policies on such terms 
  as Lender determines in Lender's sole discretion.  Borrower 
  authorizes Lender to act, at Lender's option, on Borrower's 
  behalf in connection with any Condemnation Proceeding.  Borrower 
  will execute and deliver to Lender all documents requested by 
  Lender and all documents as may be required by Law to confirm 
  such authorizations.  Nothing in this Section will be construed 
  to limit or prevent Lender from joining with Borrower either as a 
  co-defendant or as a co-plaintiff in any Condemnation Proceeding.  
  	(c)  If Lender elects not to act on Borrower's behalf as 
  provided in this Section, then Borrower promptly will file and 
  prosecute all claims (including Lender's claims) relating to the  
  Casualty and will prosecute or defend (including defense of 
  Lender's interest) any Condemnation Proceeding.  Borrower will 
  have the authority to settle or compromise the claims or 
  Proceeding, as the case may be, provided that Lender has approved 
  in Lender's sole discretion any compromise or settlement that 
  exceeds $750,000.00.  Any check for Insurance Proceeds or 
  Condemnation Awards, as the case may be (the "Proceeds") will be 
  made payable to Lender and Borrower.  Borrower will endorse the 
  check to Lender immediately upon Lender presenting the check to 
  Borrower for endorsement or if Borrower receives the check first, 
  will endorse the check immediately upon receipt and forward it to 
  Lender.  If any Proceeds are paid to Borrower, Borrower 
  immediately will deposit the Proceeds with Lender, to be applied 
  or disbursed in accordance with the provisions of this Mortgage.  
  Lender will be responsible for only the Proceeds actually 
  received by Lender.
  
  	Section 7.3.  Application of Proceeds.  After deducting the 
  costs incurred by Lender in collecting the Proceeds, Lender may, 
  in its sole discretion, (i) apply the Proceeds as a credit 
  against any portion of the Debt selected by Lender in its sole 
  discretion; (ii) apply the Proceeds to restore the Improvements, 
  provided that Lender will not be obligated to see to the proper 
  application of the Proceeds and provided further that any amounts 
  released for Restoration will not be deemed a payment on the 
  Debt; or (iii) deliver the Proceeds to Borrower.
  
  	Section 7.4.  Conditions to Availability of Proceeds for 
  Restoration.  Notwithstanding the preceding Section, after a 
  Casualty or a Condemnation (a "Destruction Event"), Lender will 
  make the Proceeds (less any costs incurred by Lender in 
  collecting the Proceeds) available for Restoration in accordance 
  with the conditions for disbursements set forth in the Section 
  entitled "Restoration", provided that the following conditions 
  are met:
  
  (i)  Parkway Properties LP or the transferee under a 
  Permitted Transfer, if any, continues to be Borrower at the 
  time of the Destruction Event and at all times thereafter 
  until the Proceeds have been fully disbursed; 
  
  (ii)  no default under the Loan Documents exists at the time 
  of the Destruction Event and no Event of Default has 
  occurred which remains uncured during the 12 months prior to 
  the Destruction Event;  
  
  (iii)  all Major Leases in effect immediately prior to the 
  Destruction Event and all Property Documents in effect 
  immediately prior to the Destruction Event that are 
  essential to the use and operation of the Property continue 
  in full force and effect notwithstanding the Destruction 
  Event;
  
  (iv)  if the Destruction Event is a Condemnation, Borrower 
  delivers to Lender evidence satisfactory to Lender that the 
  Improvements can be restored to an economically and 
  architecturally viable unit;
  
  (v)  Borrower delivers to Lender evidence satisfactory to 
  Lender that the Proceeds are sufficient to complete 
  Restoration or if the Proceeds are insufficient to complete 
  Restoration, Borrower first deposits with Lender funds 
  ("Additional Funds") that when added to the Proceeds will be 
  sufficient to complete Restoration;
  			
  (vi)  if the Destruction Event is a Casualty, Borrower 
  delivers to Lender evidence satisfactory to Lender that the 
  Insurer under each affected Policy has not denied liability 
  under the Policy as to Borrower or the insured under the 
  Policy;
  
  (vii)  Lender is satisfied that the proceeds of any business 
  interruption insurance in effect together with other 
  available gross revenues from the Property are sufficient to 
  pay Debt Service Payments after paying the Impositions, 
  Insurance Premiums, reasonable and customary operating 
  expenses and capital expenditures until Restoration is 
  complete;
  
  (viii)  Lender is satisfied that Restoration will be 
  completed on or before the date (the "Restoration Completion 
  Date") that is the earliest of:  (A) 12 months prior to the 
  Maturity Date; (B) 12 months after the Destruction Event; 
  (C) the earliest date required for completion of Restoration 
  under any Major Lease or any material Property Document; or 
  (D) any date required by Law; and
  
  (ix)  the annual Rents (excluding security deposits) under 
  Leases in effect on the date of the Destruction Event are 
  providing debt service coverage for the annual Debt Service 
  Payments of 1.15 after payment of annual Insurance Premiums, 
  Impositions and operating expenses of the Property 
  (including ground rent, if any), provided that if the Rents 
  do not provide such debt service coverage, then Borrower 
  expressly authorizes and directs Lender to apply an amount 
  from the Proceeds to reduction of Principal without 
  Prepayment Premium in order to reduce the annual Debt 
  Service Payments sufficiently for such debt service coverage 
  to be achieved.  The reduced debt service payments will be 
  calculated using the Fixed Interest Rate and an amortization 
  schedule that will achieve the same proportionate 
  amortization of the reduced Principal over the then 
  remaining Term as would have been achieved if the Principal 
  and the originally scheduled Debt Service Payments had not 
  been reduced.  Borrower will execute any documentation that 
  Lender deems reasonably necessary to evidence the reduced 
  Principal and debt service payments.
  
  	Section 7.5.	Restoration.
  
  	(a)  If the total Proceeds for any Destruction Event do not 
  exceed $750,000.00 and Lender elects or is obligated by Law or 
  under this Article to make the Proceeds available for 
  Restoration, Lender will disburse to Borrower the entire amount 
  received by Lender and Borrower will commence Restoration 
  promptly after the Destruction Event and complete Restoration not 
  later than the Restoration Completion Date.
  
  	(b)  If the Proceeds for any Destruction Event exceed 
  $750,000.00 and Lender elects or is obligated by Law or under 
  this Article to make the Proceeds available for Restoration, 
  Lender will disburse the Proceeds and any Additional Funds (the 
  "Restoration Funds") upon Borrower's request as Restoration 
  progresses, generally in accordance with normal construction 
  lending practices for disbursing funds for construction costs and 
  provided that the following conditions are met:
  
  	(i)	Borrower commences Restoration promptly after the 
  Destruction Event and completes Restoration on or 
  before the Restoration Completion Date;
  
  	(ii)	if Lender requests, Borrower delivers to Lender 
  prior to commencing Restoration, for Lender's approval, 
  plans and specifications and detailed budget for the 
  Restoration;
  
  (iii)Borrower delivers to Lender satisfactory evidence 
  of the costs of Restoration incurred prior to the date 
  of the request, and such other documents as Lender may 
  request including mechanic's liens, waivers and title 
  insurance endorsements;
  
  	(iv)	Borrower pays all costs of Restoration whether or 
  not the Restoration Funds are sufficient and, if at any 
  time during Restoration, Lender determines that the 
  undisbursed balance of the Restoration Funds is 
  insufficient to complete Restoration, Borrower deposits 
  with Lender, as part of the Restoration Funds, an 
  amount equal to the deficiency within 30 days of 
  receiving notice of the deficiency from Lender; and  
  
  	(v)	there is no default under the Loan Documents at 
  the time Borrower requests funds or at the time Lender 
  disburses funds.
  
  	(c)  If an Event of Default occurs at any time after the 
  Destruction Event, then Lender will have no further obligation to 
  make any remaining Proceeds available for Restoration and may 
  apply any remaining Proceeds as a credit against any portion of 
  the Debt selected by Lender in its sole discretion.
  
  	(d)  Lender may elect at any time prior to commencement of 
  Restoration or while work is in progress to retain, at Borrower's 
  expense, an independent engineer or other consultant to review 
  any plans and specifications required by Lender, to inspect the 
  work as it progresses and to provide reports.  If any matter 
  included in a report by the engineer or consultant is 
  unsatisfactory to Lender, Lender may suspend disbursement of the 
  Restoration Funds until the unsatisfactory matters contained in 
  the report are resolved to Lender's satisfaction.
  
  	(e)  If Borrower fails to commence and complete Restoration 
  in accordance with the terms of this Article, then in addition to 
  the Remedies, Lender may elect to restore the Improvements on 
  Borrower's behalf and reimburse itself out of the Restoration 
  Funds for costs and expenses incurred by Lender in restoring the 
  Improvements, or Lender may apply the Restoration Funds as a 
  credit against any portion of the Debt selected by Lender in its 
  sole discretion.
  	
  	(f)	Lender shall deposit the Restoration Funds in escrow 
  with a duly licensed title insurance company as an escrow agent, 
  pursuant to an escrow agreement providing, among other things, 
  that such escrow account shall be an interest-bearing account for 
  the benefit of Borrower and otherwise shall be in form and 
  substance reasonably satisfactory to Lender.
  
  	(g)  Borrower will pay all of Lender's expenses incurred in 
  connection with a Destruction Event or Restoration.  If Borrower 
  fails to do so, then in addition to the Remedies, Lender may from 
  time to time reimburse itself out of the Restoration Funds.
  
  	(h)  If any excess Proceeds remains after Restoration, 
  Lender may elect, in its sole discretion either to apply the 
  excess as a credit against any portion of the Debt, without 
  Prepayment Premium as selected by Lender in its sole discretion 
  or to deliver the excess to Borrower.
  
  
  ARTICLE VIII
  
  COMPLIANCE WITH LAW AND AGREEMENTS
  
  
  	Section 8.1.  Compliance with Law.  Borrower, the Property 
  and the use of the Property comply and will continue to comply 
  with Law and with all agreements and conditions necessary to 
  preserve and extend all rights, licenses, permits, privileges, 
  franchises and concessions (including zoning variances, special 
  exceptions and non-conforming uses) relating to the Property or 
  Borrower.  Borrower will notify Lender of the commencement of any 
  investigation or Proceeding relating to a possible violation of 
  Law immediately after Borrower receives notice thereof and will 
  deliver promptly to Lender copies of all documents Borrower 
  receives or delivers in connection with the investigation or 
  Proceeding.  Borrower will not alter the Property in any manner 
  that would increase Borrower's responsibilities for compliance 
  with Law. 
  
  	Section 8.2.  Compliance with Agreements.  There are no 
  defaults, events of defaults or events which, with the passage of 
  time or the giving of notice, would constitute an event of 
  default under the Property Documents.  Borrower will pay and 
  perform all of its obligations under the Property Documents as 
  and when required by the Property Documents.  Borrower will cause 
  all other parties to the Property Documents to pay and perform 
  their obligations under the Property Documents as and when 
  required by the Property Documents.  Borrower will not amend or 
  waive any provisions of the Property Documents; exercise any 
  options under the Property Documents; give any approval required 
  or permitted under the Property Documents that would adversely 
  affect the Property or Lender's rights and interests under the 
  Loan Documents; cancel or surrender any of the Property Documents 
  that would adversely affect the Property or Lender's rights and 
  interests under the Loan Documents; or release or discharge or 
  permit the release or discharge of any party to or entity bound 
  by any of the Property Documents, without, in each instance, 
  Lender's prior approval (excepting therefrom all service 
  contracts or other agreements entered into in the normal course 
  of business that are cancelable upon not more than 30 days 
  notice).  Borrower promptly will deliver to Lender copies of any 
  notices of default or of termination that Borrower receives or 
  delivers relating to any Property Document.
  
  	Section 8.3.  ERISA Compliance.
  
  	(a)  Borrower is not and will continue not to be an 
  "employee benefit plan" as defined in Section 3(3) of the 
  Employee Retirement Income Security Act of 1974 ("ERISA") that is 
  subject to Title I of ERISA or a "plan" as defined in Section 
  4975(e)(1) of the Code that is subject to Section 4975 of the 
  Code, and Borrower's assets do not and will not constitute "plan 
  assets" of one or more such plans for purposes of Title I of 
  ERISA or Section 4975 of the Code.
  
  	(b)	Borrower will not engage in any transaction which would 
  cause any obligation or any action under the Loan Documents, 
  including Lender's exercise of the Remedies, to be a non-exempt 
  prohibited transaction under ERISA.
  
  	Section 8.4.  Section 6045(e) Filing.  Borrower will supply 
  or cause to be supplied to Lender either (i) a copy of a 
  completed Form 1099-B, Statement for Recipients of Proceeds from 
  Real Estate, Broker and Barter Exchange Proceeds prepared by 
  Borrower's attorney or other person responsible for the 
  preparation of the form, together with a certificate from the 
  person who prepared the form to the effect that the form has, to 
  the best of the preparer's knowledge, been accurately prepared 
  and that the preparer will timely file the form; or (ii) a 
  certification from Borrower that the Loan is a refinancing of the 
  Property or is otherwise not required to be reported to the 
  Internal Revenue Service pursuant to Section 6045(e) of the Code.  
  Under no circumstances will Lender or Lender's counsel be 
  obligated to file the reports or returns.
  
  ARTICLE IX
  
  ENVIRONMENTAL
  
  	Section 9.1.  Environmental Representations and Warranties.  
  Except as disclosed in the Environmental Report and to Borrower's 
  knowledge as of the date of this Mortgage:
  
  	(i)	no Environmental Activity has occurred or is 
  occurring on the Property other than the use, storage, 
  and disposal of Hazardous Materials which (A) is in the 
  ordinary course of business consistent with the 
  Permitted Use; (B) is in compliance with all 
  Environmental Laws and (C) has not resulted in material 
  environmental contamination of the Property; and
  
  (ii)	no Environmental Activity has occurred or is 
  occurring on any property in the vicinity of the 
  Property which has resulted in material environmental 
  contamination of the Property.
  
  	Section 9.2.  Environmental Covenants.
  
  	(a)  Borrower will not cause or permit any Material 
  environmental contamination of the Property.
  
  	(b)  No Environmental Activity will occur on the Property 
  other than the use, storage and disposal of Hazardous Materials 
  which (A) is in the ordinary course of business consistent with 
  the Permitted Use; (B) is in compliance with all Environmental 
  Laws; and (C) does not create a risk of material environmental 
  contamination of the Property.
  
  	(c)  Borrower will notify Lender immediately upon Borrower 
  becoming aware of (i) any material environmental contamination of 
  the Property or (ii) any Environmental Activity with respect to 
  the Property that is not in accordance with the preceding 
  subsection (b).  Borrower promptly will deliver to Lender copies 
  of all documents delivered to or received by Borrower regarding 
  the matters set forth in this subsection, including notices of 
  Proceedings or investigations concerning any material 
  environmental contamination of the Property or Environmental 
  Activity or concerning Borrower's status as a potentially 
  responsible party (as defined in the Environmental Laws).  
  Borrower's notification of Lender in accordance with the 
  provisions of this subsection will not be deemed to excuse any 
  default under the Loan Documents resulting from the violation of 
  Environmental Laws or the material environmental contamination of 
  the Property or Environmental Activity that is the subject of the 
  notice.  If Borrower receives notice of a suspected violation of 
  Environmental Laws in the vicinity of the Property that poses a 
  risk of material environmental contamination of the Property, 
  Borrower will give Lender notice and copies of any documents 
  received relating to such suspected violation.  
  
  	(d)  From time to time at Lender's request, Borrower will 
  deliver to Lender any information known and documents available 
  to Borrower relating to the environmental condition of the 
  Property.
  
  	(e)  Lender may perform or engage an independent consultant 
  to perform an assessment of the environmental condition of the 
  Property and of Borrower's compliance with this Section on an 
  annual basis or at any time for reasonable cause or after an 
  Event of Default.  In connection with the assessment:  (i) Lender 
  or consultant may enter and inspect the Property and perform 
  tests of the air, soil, ground water and building materials; (ii) 
  Borrower will cooperate and use commercially reasonable efforts 
  to cause tenants and other occupants of the Property to cooperate 
  with Lender or consultant; (iii) Borrower will receive a copy of 
  any final report prepared after the assessment, to be delivered 
  to Borrower not more than 10 days after Borrower requests a copy 
  and executes Lender's standard confidentiality and waiver of 
  liability letter; (iv) Borrower will accept custody of and 
  arrange for lawful disposal of any Hazardous Materials required 
  to be disposed of as a result of the tests; (v) Lender will not 
  have liability to Borrower with respect to the results of the 
  assessment; and (vi) Lender will not be responsible for any 
  damage to the Property resulting from the tests described in this 
  subsection and Borrower will look solely to the consultants to 
  reimburse Borrower for any such damage.  Lender shall cause such 
  consultant to provide evidence of insurance satisfactory to 
  Borrower and, if available, name Borrower as an additional 
  insured on consultant's liability insurance at Borrower's 
  expense.  The consultant's assessment and reports will be at 
  Borrower's expense (i) if the reports disclose any material 
  adverse change in the environmental condition of the Property 
  from that disclosed in the Environmental Report; (ii) if Lender 
  engaged the consultant when Lender had reasonable cause to 
  believe Borrower was not in compliance with the terms of this 
  Article and, after written notice from Lender, Borrower failed to 
  provide promptly reasonable evidence that Borrower is in 
  compliance; or (iii) if Lender engaged the consultant after the 
  occurrence of an Event of Default.
  
  	(f)  If Lender has reasonable cause to believe that there is 
  Environmental Activity at the Property, Lender may elect in its 
  sole discretion to release from the lien of this Mortgage any 
  portion of the Property affected by the Environmental Activity 
  and Borrower will accept the release.
  
  
  ARTICLE X
  
  FINANCIAL REPORTING
  
  
  	Section 10.1. Fiscal Year; Financial Statements; Reports of 
  Parkway Properties, Inc. (the "Company") and Borrower; SEC and 
  Other Reports; Officer's Certificate.  The Company and the 
  Borrower shall each maintain its fiscal year as a calendar year 
  at all times.  Borrower shall deliver the following submissions 
  to Lender with respect to the Company, and the Borrower shall 
  make identical submissions for itself (except for those relating 
  to Securities and Exchange Commission requirements) at the times 
  required pursuant to clauses (a), (b), (d) and (e) below for the 
  appropriate period:
  
  	(a)	Quarterly Statements -- within 45 days after the 
  end of each quarterly fiscal period in each fiscal year of 
  the Company (other than the last quarterly fiscal period of 
  each such fiscal year), duplicate copies of,
  
  	(A)	a consolidated balance sheet of the Company 
  and its Consolidated Subsidiaries as at the end of such 
  quarter, and
  
  	(B)	consolidated statements of income, changes in 
  shareholders' equity and cash flows of the Company and 
  its Consolidated Subsidiaries, for such quarter and (in 
  the case of the second and third quarters) for the 
  portion of the fiscal year ending with such quarter,
  
  setting forth in each case in comparative form the figures 
  for the corresponding periods in the previous fiscal year, 
  all in reasonable detail, prepared in accordance with GAAP 
  applicable to quarterly financial statements generally, and 
  certified by a financial officer of the Company as fairly 
  presenting, in all material respects, the financial position 
  of the companies being reported on and their results of 
  operations and cash flows, subject to changes resulting from 
  year-end adjustments, provided that delivery within the time 
  period specified above of copies of the Company's Quarterly 
  Report on Form 10-Q prepared in compliance with the 
  requirements therefor and filed with the Securities and 
  Exchange Commission shall be deemed to satisfy the 
  requirements of this Section 10.1(a);
  
  	(b)	Annual Statements -- within 90 days after the end 
  of each fiscal year of the Company, duplicate copies of,
  
  	(A)	a consolidated balance sheet of the Company 
  and its Consolidated Subsidiaries, as at the end of 
  such year, and
  
  	(B)	consolidated statements of income, changes in 
  shareholders' equity and cash flows of the Company and 
  its Consolidated Subsidiaries, for each such year,
  
  setting forth in each case in comparative form the figures 
  for the previous fiscal year, all in reasonable detail, 
  prepared in accordance with GAAP, and accompanied by:
  
  	(1)	an opinion thereon of independent certified 
  public accountants of recognized national standing, 
  which opinion shall state that such financial 
  statements present fairly, in all material respects, 
  the financial position of the companies being reported 
  upon and their results of operations and cash flows and 
  have been prepared in conformity with GAAP, and that 
  the examination of such accountants in connection with 
  such financial statements has been made in accordance 
  with generally accepted auditing standards, and that 
  such audit provides a reasonable basis for such opinion 
  in the circumstances, and 
  
  	(2)	upon request of Lender, but only if a default 
  shall exist or if the Unsecured Note (as defined in 
  that certain Note and Conversion Agreement [the "Note 
  Agreement"] of even date herewith among Borrower, 
  Lender and Existing Limited Partner) shall have a lower 
  rating than that specified in Section 2.01(b) of the 
  Note Agreement at the time of such request, a 
  certificate of such accountants stating that they have 
  reviewed this Agreement and the certificate of a 
  financial officer of the Company provided pursuant to 
  Section 10.1(d) in connection with such financial 
  statements, and stating further whether, in making 
  their audit, they have become aware of any condition or 
  event that then constitutes a breach of any covenant 
  contained in Article Four, and, if they are aware that 
  any such condition or event then exists, specifying the 
  nature and period of the existence thereof (it being 
  understood that such accountants shall not be liable, 
  directly or indirectly, for any failure to obtain 
  knowledge of any such breach unless such accountants 
  should have obtained knowledge thereof in making an 
  audit in accordance with generally accepted auditing 
  standards or did not make such an audit),
  
  provided that the delivery within the time period specified 
  above of the Company's Annual Report on Form 10-K for such 
  fiscal year (together with the Company's annual report to 
  shareholders, if any, prepared pursuant to Rule 14a-3 under 
  the Exchange Act) prepared in accordance with the 
  requirements therefor and filed with the Securities and 
  Exchange Commission, together with the accountant's 
  certificate described in clause (2) above, shall be deemed 
  to satisfy the requirements of this Section 10.1(b);
  
  	(c)	Promptly upon their becoming available, one copy 
  of (A) each financial statement, report, notice or proxy 
  statement sent by the Company or any of its Subsidiaries to 
  public securities holders generally, and (B) each regular or 
  periodic report, each registration statement (without 
  exhibits except as expressly requested by Lender), and each 
  prospectus and all amendments thereto filed by the Company 
  or any such Subsidiary with the Securities and Exchange 
  Commission and of all press releases and other statements 
  made available generally by the Company or any such 
  Subsidiary to the public concerning developments that are 
  material;
  
  	(d)	Each set of financial statements delivered to 
  Lender pursuant to Section 10.1(a) or Section 10.1(b) hereof 
  shall be accompanied by a certificate of a financial officer 
  of the Company, in his or her capacity as such officer and 
  without personal liability other than for fraudulent 
  statements or omissions, setting forth:
  
  	(A)	Covenant Compliance -- the information 
  (including detailed calculations) required in order to 
  establish whether the Company was in compliance with 
  the requirements of Section 4.01 Note and Conversion 
  Agreement and whether the Borrower was in compliance 
  with the requirements of Section 4.02 of the Note and 
  Conversion Agreement, during the quarterly or annual 
  period covered by the statements then being furnished 
  (including with respect to such Section, where 
  applicable, the calculations of the maximum or minimum 
  amount, ratio or percentage, as the case may be, 
  permissible under the terms of such Sections, and the 
  calculation of the amount, ratio or percentage then in 
  existence), provided that the foregoing shall only be 
  required after the Conversion Option (as defined in the 
  Note Agreement) shall have been exercised; and
  
  	(B)	Event of Default -- a statement that such 
  officer has reviewed the relevant terms hereof and has 
  made, or caused to be made, under his or her 
  supervision, a review of the transactions and 
  conditions of the Company, the Borrower, and the 
  Company's other Subsidiaries from the beginning of the 
  quarterly or annual period covered by the statements 
  then being furnished to the date of the certificate and 
  that such review shall not have disclosed the existence 
  during such period of any condition or event that 
  constitutes a Default or an Event of Default or, if any 
  such condition or event existed or exists, specifying 
  the nature and period of existence thereof and what 
  action the Company or Borrower (as applicable) shall 
  have taken or proposes to take with respect thereto;
  
  	(e)	Promptly after Lender shall so request, such other 
  reports and information as Lender shall reasonably request 
  from time to time.
  
  
  ARTICLE XI
  
  EXPENSES AND DUTY TO DEFEND
  
  
  	Section 11.1.  Payment of Expenses.  
  
  	(a)  Borrower is obligated to pay all fees and expenses (the 
  "Expenses") incurred by Lender or that are otherwise payable in 
  connection with the Loan or the Property, including attorneys' 
  fees and expenses and any fees and expenses relating to (i) the 
  preparation, execution, acknowledgment, delivery and recording or 
  filing of the Loan Documents; (ii) except as otherwise provided 
  herein, any Proceeding or other claim asserted against Lender; 
  (iii) except as otherwise provided herein, any inspection, 
  assessment, survey and test permitted under the Loan Documents; 
  (iv) any Destruction Event; (v) the preservation of Lender's 
  security and the exercise of any rights or remedies available at 
  Law, in equity or otherwise; and (vi) the Leases and the Property 
  Documents.  
  
  	(b)  Borrower will pay the Expenses immediately on demand, 
  together with any applicable interest, premiums or penalties.  If 
  Lender pays any of the Expenses, Borrower will reimburse Lender 
  the amount paid by Lender immediately upon demand, together with 
  interest on such amount at the Default Interest Rate from the 
  date Lender paid the Expenses through and including the date 
  Borrower reimburses Lender.  The Expenses together with any 
  applicable interest, premiums or penalties constitute a portion 
  of the Debt secured by this Mortgage.
  
  	Section 11.2.	Duty to Defend.  If Lender or any of its 
  trustees, officers, participants, employees or affiliates is a 
  party in any Proceeding relating to the Property, Borrower or the 
  Loan, Borrower will indemnify and hold harmless the party and 
  will defend the party with attorneys and other professionals 
  retained by Borrower and approved by Lender.  Lender may elect to 
  engage its own attorneys and other professionals, at Borrower's 
  expense, to defend or to assist in the defense of the party.  In 
  all events, case strategy will be determined by Lender if Lender 
  so elects and no Proceeding will be settled without Lender's 
  prior approval which may be withheld in Lender's reasonable 
  discretion.  
  
  
  ARTICLE XII
  
  TRANSFERS LIENS AND ENCUMBRANCES
  
  
  	Section 12.1.  Prohibitions on Transfers, Liens and 
  Encumbrances.	 
  
  	(a)  Borrower acknowledges that in making the Loan, Lender 
  is relying to a material extent on the business expertise and net 
  worth of Borrower and Borrower's general partners, members or 
  principals and on the continuing interest that each of them has, 
  directly or indirectly, in the Property.  Accordingly, except as 
  specifically set forth in this Mortgage, Borrower (i) will not, 
  and will not permit its partners, members or principals to, 
  effect a Transfer without Lender's prior approval, which may be 
  withheld in Lender's sole discretion and (ii) will keep the 
  Property free from all liens and encumbrances other than the lien 
  of this Mortgage and the Permitted Exceptions.  A "Transfer" is 
  defined as any sale, grant, lease (other than bona fide third-
  party space leases with tenants), conveyance, assignment or other 
  transfer of, or any encumbrance or pledge against, the Property, 
  any interest in the Property, or any change in Borrower's 
  composition, in each instance whether voluntary or involuntary, 
  direct or indirect, by operation of law or otherwise and 
  including the grant of an option or the execution of an agreement 
  relating to any of the foregoing matters.  	
  
  	(b)  Borrower represents, warrants and covenants that 
  Borrower is a Delaware limited partnership whose sole general 
  partner is Parkway Properties General Partners, Inc., a Delaware 
  corporation ("Existing General Partner").  Existing General 
  Partner owns 1% of the partnership interests in Borrower and 
  Borrower's sole remaining limited partner is Parkway Properties, 
  Inc., a Delaware corporation ("Existing Limited Partner").  
  Existing Limited Partner owns 99% of the partnership interests in 
  Borrower, which interest may be reduced to not less than a fifty-
  one percent (51%) in each class of limited partnership interests 
  in Borrower pursuant to one or more UPREIT Transactions (as 
  defined in the Note Agreement).  The Existing General Partner is 
  a wholly owned subsidiary of the Existing Limited Partner.
  
  	Section 12.2.  Permitted Transfers.  
  
  	(a)	Notwithstanding the prohibitions regarding Transfers, 
  there is no restriction on (i) transfers of stock in Existing 
  Limited Partner or (ii) transfers of limited partnership 
  interests in Borrower by limited partners in Borrower other than 
  Existing Limited Partner.
  
  	(b)  Notwithstanding the prohibitions regarding Transfers, a 
  Permitted Transfer may occur without Lender's prior consent, 
  provided that the following conditions are met:
  
  (i)   at least 30 days prior to the proposed Permitted 
  Transfer, Borrower delivers to Lender a notice that is 
  sufficiently detailed to enable Lender to determine that the 
  proposed Permitted Transfer complies with the terms of this 
  Section; 
  
  (ii)	 there is no default under the Loan Documents either 
  when Lender receives the notice or when the proposed 
  Permitted Transfer occurs; 
  
  (iii)  the proposed Permitted Transfer will not result in a 
  violation of any of the covenants contained in the Section 
  entitled, "ERISA Compliance" and Borrower will deliver to 
  Lender such documentation of compliance as Lender requests 
  in its sole discretion;
  
  (iv)	Borrower pays all of Lender's expenses relating to the 
  Transfer, including Lender's attorneys' fees; and
  
  (v)	Lender is satisfied that the Property will continue to 
  be managed by a property manager satisfactory to Lender.
  
  	(c)	Upon compliance with the conditions set forth in the 
  preceding subsection, the following Transfers (the "Permitted 
  Transfers") may occur without Lender's prior consent:
  
  (i)	Transfers of limited partnership interests in Borrower 
  by the Existing Limited Partner provided that subsequent to 
  the Transfer, Existing General Partner remains as sole 
  general partner, Existing General Partner remains a wholly 
  owned subsidiary of Parkway Properties, Inc. and Existing 
  Limited Partner retains not less than 51% in each class of 
  limited partnership interests in Borrower (including its 
  interest in Existing General Partner); and
  
  (ii) A pledge by Borrower of its ownership interest(s) in 
  any wholly-owned subsidiary of Borrower.
  
  	Section 12.3.  Right to Contest Liens.  Borrower, at its own 
  expense, may contest the amount, validity or application, in 
  whole or in part, of any mechanic's, materialmen's or 
  environmental liens in which event Lender will refrain from 
  exercising any of the Remedies, provided that the following 
  conditions are met: 
  
  (i)   Borrower delivers to Lender notice of the proposed 
  contest not more than 30 days after the lien is filed;
  
  (ii)  the contest is by a Proceeding promptly initiated and 
  conducted in good faith and with due diligence; 
  
  (iii)  there is no Event of Default other than the Event of 
  Default arising from the filing of the lien; 
  
  (iv)  the Proceeding suspends enforcement of collection of 
  the lien, imposition of criminal or civil penalties and sale 
  or forfeiture of the Property or Borrower has posted a bond 
  with such effect satisfactory to Lender in its sole 
  discretion and Lender will not be subject to any civil suit;
  
  (v)  the Proceeding is permitted under and is conducted in 
  accordance with the Leases and the Property Documents;
   
  (vi)  Borrower sets aside reserves or furnishes a bond or 
  other security satisfactory to Lender, in either case in an 
  amount sufficient to pay the claim giving rise to the lien, 
  together with all interest and penalties, or Borrower pays 
  the contested lien under protest; and  
  
  (vii)  with respect to an environmental lien, Borrower is 
  using reasonable efforts to mitigate or prevent any 
  deterioration of the Property resulting from the alleged 
  violation of any Environmental Laws or the alleged 
  Environmental Activity.
  
  	Section 12.4.  Release Rights.  Notwithstanding the 
  prohibitions regarding Transfers, Borrower may obtain the release 
  of the Property in whole, but not in part, provided that the 
  following conditions are met:
  
  (i)  no release shall occur before July 1, 2003;
  
  (ii) the release is solely (A) for the purpose of a transfer 
  of the Property to an unaffiliated, bona fide, third party 
  purchaser or (B) for the purpose of subjecting the Property 
  to the lien of a first mortgage in favor of an unaffiliated, 
  bona fide, third party mortgagee in connection with a 
  refinancing of the Property;
   
  (iii)  not less than 90 days prior to the date of the 
  release, Borrower delivers to Lender a notice setting forth 
  (A) the date of the release; (B) the name of the proposed 
  transferee or mortgagee and (C) data necessary for Lender to 
  determine whether the proposed release satisfies the 
  criteria set forth in this Section;
   	
  (iv)  on the date Borrower delivers to Lender notice of the 
  proposed release and on the date of the release, there is no 
  default under the Loan Documents;
  
  (v)  Borrower pays to Lender the entire sales proceeds or 
  refinancing proceeds less actual transaction costs actually 
  paid by Borrower to unaffiliated third parties in connection 
  with such transfer or refinance (provided that Borrower 
  shall not be entitled to deduct from such payment to Lender 
  Borrower's attorney's fees or, in the case of a refinance, 
  any loan fee or "points" paid to the new Lender) which shall 
  be applied by Lender in accordance with the Loan Documents;
  
  (vi)  Borrower pays to Lender a Prepayment Premium as to 
  such amount paid to Lender calculated in accordance with 
  Section 2 of the Note;
  
  (vii)  after giving effect to the release and the partial 
  repayment of the Loan, the Debt Service Coverage Ratio, 
  calculated for the Loan in the aggregate, for the 12 months 
  next ensuing (as evidenced by documentation satisfactory to 
  Lender in its sole discretion) will be equal to or greater 
  than 1.2 and the Loan to Value Ratio will not be greater 
  than 50%.
  
  (viii)  Borrower pays all expenses relating to the release, 
  including Lender's attorneys' fees; 
  
  (ix) Borrower delivers to Lender copies of the approved 
  final, executed and delivered documents evidencing the 
  transfer or refinancing of the Property; and
  
  (x)  Borrower delivers to Lender any other information, 
  approvals and documents reasonably required by Lender 
  relating to the release. 
  
  	[Section 12.5.	Substitution of Collateral.	[For Loudoun 
  mortgage only]
  
  	Notwithstanding the prohibitions regarding Transfers, 
  Borrower may sell the Property to a bona fide, unaffiliated third 
  party, and Lender will release the Property from the lien of this 
  Mortgage and the Assignment provided that simultaneously with 
  such sale Borrower substitutes collateral property (the 
  "Substitute Collateral") and provided further that in each 
  instance the following conditions are met:
  
  (i) there is no default under the Loan Documents or Event of 
  Default;
  
  (ii) the Substitute Collateral is a Class A office 
  building(s), with at least the same number of rentable 
  square feet as the Property and is located in either the 
  States of Georgia, Florida, Virginia, North Carolina, South 
  Carolina, Tennessee, Mississippi or Texas;
  
  (iii)  the Substitute Collateral will have been built not 
  earlier than the date the Property shall have been built;
  
  (iv)  the appraised value (as determined by reference to an 
  appraisal satisfactorily performed on behalf of Lender, at 
  the expense of Borrower) of the Substitute Collateral will 
  be equal to or greater than the greater of (i) the appraised 
  value of the Property, determined at the time of the closing 
  of the Loan, or (ii) the appraised value of the Property at 
  the time of such substitution;
  
  (v)	after the substitution, the Debt Service Coverage Ratio 
  (computed for purposes of this provision by reference to the 
  Net Operating Income derived from the Substitute Collateral 
  and the Debt Service Payments associated with that portion 
  of the Debt reasonably allocated by Lender to the Substitute 
  Collateral) shall be greater than or equal to the Debt 
  Service Coverage Ratio computed with respect to the Property 
  immediately prior to the substitution, but in no event shall 
  such Debt Service Coverage Ratio be less than 1.20;
  
  (vi)  the Substitute Collateral shall satisfy each of the 
  Borrower's Covenants and Conditions to Closing set forth in 
  paragraphs 11 and 12 of the Commitment that would have been 
  applicable to the Substitute Collateral had such Substitute 
  Collateral been a property thereunder;
  
  (vii)  the Substitute Collateral shall be fully cross-
  defaulted and cross-collateralized with all other property 
  securing the Debt, pursuant to documentation satisfactory to 
  Lender in its sole discretion;
  
  (viii) the Substitute Collateral shall conform in all 
  respects to such underwriting standards and criteria as well 
  as such other appraisal, legal, business, environmental, 
  engineering, diversification, leasing and title 
  requirements, all as Lender may determine in its sole 
  discretion; and
  
  (ix)  Borrower shall have paid all costs and expenses of 
  Lender relating to the substitution, including Lender's 
  attorneys' fees.
  
  
  ARTICLE XIII
  
  ADDITIONAL REPRESENTATIONS, WARRANTIES AND COVENANTS
  
  
  	Section 13.1.  Further Assurances.  
  
  	(a)  Borrower will execute, acknowledge and deliver to 
  Lender, or to any other entity Lender designates, any additional 
  or replacement documents and perform any additional actions that 
  Lender determines are reasonably necessary to evidence, perfect 
  or protect Lender's first lien on and prior security interest in 
  the Property or to carry out the intent or facilitate the 
  performance of the provisions of the Loan Documents.		
  
  	(b)  Borrower appoints Lender as Borrower's attorney-in-fact 
  to perform, at Lender's election, any actions and to execute and 
  record any of the additional or replacement documents referred to 
  in this Section, in each instance only at Lender's election and 
  only to the extent Borrower has failed to comply with the terms 
  of this Section within 10 days after notice from Lender. 
  
  	Section 13.2.  Estoppel Certificates.  
  
  	(a)  Within 10 days of Lender's request, Borrower will 
  deliver to Lender, or to any entity Lender designates, a 
  certificate certifying (i) the original principal amount of the 
  Note; (ii) the unpaid principal amount of the Note; (iii) the 
  Fixed Interest Rate; (iv) the amount of the then current Debt 
  Service Payments; (v) the Maturity Date; (vi) the date a Debt 
  Service Payment was last made; (vii) that, except as may be 
  disclosed in the statement, there are no defaults or events 
  which, with the passage of time or the giving of notice, would 
  constitute an Event of Default; and (viii) there are no offsets 
  or defenses against any portion of the Obligations except as may 
  be disclosed in the statement.
  
  	(b)  If Lender requests, Borrower promptly will deliver to 
  Lender or to any entity Lender designates a certificate from each 
  party to any Property Document excluding operating service 
  agreements, certifying that the Property Document is in full 
  force and effect with no defaults or events which, with the 
  passage of time or the giving of notice, would constitute an 
  event of default under the Property Document and that there are 
  no defenses or offsets against the performance of its obligations 
  under the Property Document.
  	(c)  If Lender requests, Borrower promptly will deliver to 
  Lender, or to any entity Lender designates, a certificate from 
  each tenant under a Major Lease, and any the tenant under any 
  other Lease then affecting the Property if requested by Lender, 
  certifying to any facts regarding the Lease as Lender may 
  require, including that the Lease is in full force and effect 
  with no defaults or events which, with the passage of time or the 
  giving of notice, would constitute an event of default under the 
  Lease by any party, that the rent has not been paid more than one 
  month in advance and that the tenant claims no defense or offset 
  against the performance of its obligations under the Lease.
  
  
  ARTICLE XIV
  
  DEFAULTS AND REMEDIES
  
  
  	Section 14.1.  Events of Default.	The term "Event of 
  Default" means the occurrence of any of the following events:
  
  (i)  if Borrower fails to pay any amount due, as and when 
  required, under any Loan Document and the failure continues 
  for a period of 5 days;
  
  (ii)  if Borrower makes a general assignment for the benefit 
  of creditors or generally is not paying, or is unable to 
  pay, or admits in writing its inability to pay, its debts as 
  they become due; or if Borrower or any other party commences 
  any Proceeding (A) relating to bankruptcy, insolvency, 
  reorganization, conservatorship or relief of debtors, in 
  each instance with respect to Borrower; (B) seeking to have 
  an order for relief entered with respect to Borrower; (C) 
  seeking attachment, distraint or execution of a judgment 
  with respect to Borrower or the Property and having a 
  material adverse effect thereon; (D) seeking to adjudicate 
  Borrower as bankrupt or insolvent; (E) seeking 
  reorganization, arrangement, adjustment, winding-up, 
  liquidation, dissolution, composition or other relief with 
  respect to Borrower or Borrower's debts; or (F) seeking 
  appointment of a Receiver, trustee, custodian, conservator 
  or other similar official for Borrower or for all or any 
  substantial part of Borrower's assets, provided that if the 
  Proceeding is commenced by a party other than Borrower or 
  any of Borrower's general partners or members, Borrower will 
  have 120 days to have the Proceeding dismissed or discharged 
  before an Event of Default occurs;  
  
  (iii)  if Borrower is in default beyond any applicable grace 
  and cure period under any other mortgage, deed of trust, 
  deed to secure debt or other security agreement encumbering 
  the Property whether junior or senior to the lien of this 
  Mortgage;
  
  (iv)  if there is a default beyond any applicable grace and 
  cure period under any guaranty in favor of Lender delivered 
  to Lender in connection with the Loan or in connection with 
  any loan cross-collateralized with the Loan;
  
  (v)  if Borrower is in default beyond any applicable grace 
  and cure period under any other Loan Documents evidencing 
  and securing the Loan including those Mortgages and/or Deeds 
  of Trusts granted by Borrower to or for the benefit of 
  Lender, encumbering those certain properties identified on 
  Exhibit D hereto;
  
  (vi)  if a Transfer occurs except in accordance with the 
  provisions of this Mortgage or the other Loan Documents;  
  
  (vii)  if Borrower abandons the Property or ceases to 
  conduct its business at the Property; or
  
  (viii)  if there is a default in the performance of any 
  other provision of any Loan Document or if there is any 
  inaccuracy or falsehood in any representation or warranty 
  contained in any Loan Document which is not remedied within 
  15 days after Borrower receives notice thereof, provided 
  that if the default, inaccuracy or falsehood is of a nature 
  that it cannot be cured within the 15-day period and during 
  that period Borrower commences to cure, and thereafter 
  diligently continues to cure, the default, inaccuracy or 
  falsehood, then the 15-day period will be extended for a 
  reasonable period not to exceed 120 days after the notice to 
  Borrower.
  
  	Section 14.2.  Remedies.   
  
  	(a)  If an Event of Default occurs, Lender may take any of 
  the following actions (the "Remedies") without notice to 
  Borrower:
  
  (i)  declare all or any portion of the Debt immediately due 
  and payable ("Acceleration");
  
  (ii)  pay or perform any Obligation;
  
  (iii)  institute a Proceeding for the specific performance 
  of any Obligation;
  
  (iv)  apply for the appointment of a Receiver to be vested 
  with the fullest powers permitted by Law, without bond being 
  required, which appointment may be made ex parte, as a 
  matter of right and without regard to the value of the 
  Property, the amount of the Debt or the solvency of Borrower 
  or any other person liable for the payment or performance of 
  any portion of the Obligations; 
  
  (v)  directly, by its agents or representatives or through a 
  Receiver appointed by a court of competent jurisdiction, 
  enter on the Land and Improvements, take possession of the 
  Property, dispossess Borrower and exercise Borrower's rights 
  with respect to the Property, either in Borrower's name or 
  otherwise;  
  
  (vi)  institute a Proceeding for the foreclosure of this 
  Mortgage or, if applicable, sell by power of sale, all or 
  any portion of the Property;
  
  (vii)  institute proceedings for the partial foreclosure of 
  this Mortgage for the portion of the Debt then due and 
  payable, subject to the continuing lien of this Mortgage for 
  the balance of the Debt not then due;
  
  (viii)  exercise any and all rights and remedies granted to 
  a secured party under the Uniform Commercial Code; and
  
  (ix)  pursue any other right or remedy available to Lender 
  at Law, in equity or otherwise.
  
  	(b)  If an Event of Default occurs, the license granted to 
  Borrower in the Loan Documents to collect Rents will terminate 
  automatically without any action required of Lender.
  
  	Section 14.3.	General Provisions Pertaining to Remedies.  
  	
  	(a)  The Remedies are cumulative and may be pursued 
  concurrently or otherwise, at such time and in such order as 
  Lender may determine in its sole discretion and without 
  presentment, demand, protest or further notice of any kind, all 
  of which are expressly waived by Borrower.
  	
  	(b) The enumeration in the Loan Documents of specific rights 
  or powers will not be construed to limit any general rights or 
  powers or impair Lender's rights with respect to the Remedies.
  	
  	(c)  If Lender exercises any of the Remedies, Lender will 
  not be deemed a mortgagee-in-possession unless Lender has elected 
  affirmatively to be a mortgagee-in-possession.
  
  	(d)  Lender will not be liable for any act or omission of 
  Lender in connection with the exercise of the Remedies.  
  	
  	(e)  Lender's right to exercise any Remedy will not be 
  impaired by any delay in exercising or failure to exercise the 
  Remedy and the delay or failure will not be construed as 
  extending any cure period or constitute a waiver of the default 
  or Event of Default. 
  	
  	(f)  If an Event of Default occurs, Lender's payment or 
  performance or acceptance of payment or performance will not be 
  deemed a waiver or cure of the Event of Default.
  
  	(g)  Lender's acceptance of partial payment or receipt of 
  Rents will not:  extend or affect any grace period, constitute a 
  waiver of a default or Event of Default or constitute a recision 
  of Acceleration.
  
  	Section 14.4.	Foreclosure by Power of Sale.
  
  Insert State Provisions
  
  	Section 14.5.	General Provisions Pertaining to Mortgagee-
  in-Possession or Receiver.  
  
  	(a)  If an Event of Default occurs, any court of competent 
  jurisdiction will, upon application by Lender, appoint a Receiver 
  as designated in the application and issue an injunction 
  prohibiting Borrower from interfering with the Receiver, 
  collecting Rents, disposing of any Rents or any part of the 
  Property, committing waste or doing any other act that will tend 
  to affect the preservation of the Leases, the Rents and the 
  Property and Borrower approves the appointment of the designated 
  Receiver or any other Receiver appointed by the court.  Borrower 
  agrees that the appointment may be made ex parte and as a matter 
  of right to Lender, either before or after sale of the Property, 
  without further notice, and without regard to the solvency or 
  insolvency, at the time of application for the Receiver, of the 
  person or persons, if any, liable for the payment of any portion 
  of the Debt and the performance of any portion of the Obligations 
  and without regard to the value of the Property or whether the 
  Property is occupied as a homestead and without bond being 
  required of the applicant.  
  	
  	(b)  The Receiver will be vested with the fullest powers 
  permitted by Law including all powers necessary or usual in 
  similar cases for the protection, possession and operation of the 
  Property and all the powers and duties of Lender as a mortgagee-
  in-possession as provided in this Mortgage and may continue to 
  exercise all the usual powers and duties until the Receiver is 
  discharged by the court.
  	
  	(c)  In addition to the Remedies and all other available 
  rights, Lender or the Receiver may take any of the following 
  actions:
  
  (i)  take exclusive possession, custody and control of the 
  Property and manage the Property so as to prevent waste;
   
  (ii)  require Borrower to deliver to Lender or the Receiver 
  all keys, security deposits, operating accounts, prepaid 
  Rents, past due Rents, the Books and Records and all 
  original counterparts of the Leases and the Property 
  Documents; 
  
  (iii)  collect, sue for and give receipts for the Rents and, 
  after paying all expenses of collection, including 
  reasonable receiver's, broker's and attorney's fees, apply 
  the net collections to any portion of the Debt selected by 
  Lender in its sole discretion;
  
  (iv)  enter into, modify, extend, enforce, terminate, renew 
  or accept surrender of Leases and evict tenants except that 
  in the case of a Receiver, such actions may be taken only 
  with the written consent of Lender as provided in this 
  Mortgage and in the Assignment;
  
  (v)  enter into, modify, extend, enforce, terminate or renew 
  Property Documents except that in the case of a Receiver, 
  such actions may be taken only with the written consent of 
  Lender as provided in this Mortgage and in the Assignment;
  		
  (vi)  appear in and defend any Proceeding brought in 
  connection with the Property and bring any Proceeding to 
  protect the Property as well as Borrower's and Lender's 
  respective interests in the Property (unless any such 
  Proceeding has been assigned previously to Lender in the 
  Assignment, or if so assigned, Lender has not expressly 
  assigned such Proceeding to the Receiver and consented to 
  such appearance or defense by the Receiver); and
  	
  (vii)  perform any act in the place of Borrower 
  that Lender or the Receiver deems necessary (A) to preserve 
  the value, marketability or rentability of the Property; (B) 
  upon consent by Lender, to increase the gross receipts from 
  the Property; or (C) otherwise to protect Borrower's and 
  Lender's respective interests in the Property. 
  	
  	(d)	Borrower upon the occurrence of an Event of Default 
  appoints Lender as Borrower's attorney-in-fact, at Lender's 
  election, to perform any actions and to execute and record any 
  instruments necessary to effectuate the actions described in this 
  Section, in each instance only at Lender's election and only to 
  the extent Borrower has failed to comply with the provisions of 
  this Section.   
  
  	Section 14.6.  General Provisions Pertaining to Foreclosures 
  and the Power of Sale.  The following provisions will apply to 
  any Proceeding to foreclose and to any sale of the Property by 
  power of sale or pursuant to a judgment of foreclosure and sale:
  	
  (i)  Lender's right to institute a Proceeding to foreclose 
  or to sell by power of sale will not be exhausted by a 
  Proceeding or a sale that is defective or not completed;
  
  (ii)  a sale pursuant to a judgment of foreclosure and sale 
  may be postponed or adjourned by public announcement at the 
  time and place appointed for the sale without further 
  notice;
  	
  (iii)  with respect to sale pursuant to a judgment of 
  foreclosure and sale, the Property may be sold as an 
  entirety or in parcels, at one or more sales, at the time 
  and place, on terms and in the order that Lender deems 
  expedient in its sole discretion;
  	
  (iv)  if a portion of the Property is sold pursuant to this 
  Article, the Loan Documents will remain in full force and 
  effect with respect to any unmatured portion of the Debt and 
  this Mortgage will continue as a valid and enforceable first 
  lien on and security interest in the remaining portion of 
  the Property, subject only to the Permitted Exceptions, 
  without loss of priority and without impairment of any of 
  Lender's rights and remedies with respect to the unmatured 
  portion of the Debt; 
  
  (v)  Lender may bid for and acquire the Property at a sale 
  and, in lieu of paying cash, may credit the amount of 
  Lender's bid against any portion of the Debt selected by 
  Lender in its sole discretion after deducting from the 
  amount of Lender's bid the expenses of the sale, costs of 
  enforcement and other amounts that Lender is authorized to 
  deduct at Law, in equity or otherwise; and
  	
  (vi)  Lender's receipt of the proceeds of a sale will be 
  sufficient consideration for the portion of the Property 
  sold and Lender will apply the proceeds as set forth in this 
  Mortgage.
  		
  	Section 14.7.  Application of Proceeds.   Lender may apply 
  the proceeds of any sale of the Property by power of sale or 
  pursuant to a judgment of foreclosure and sale and any other 
  amounts collected by Lender in connection with the exercise of 
  the Remedies to payment of the Debt in such priority and 
  proportions as Lender may determine in its sole discretion or in 
  such priority and proportions as required by Law.
  
  	Section 14.8.  Power of Attorney.  Borrower appoints Lender 
  as Borrower's attorney-in-fact to perform any actions necessary 
  and incidental to exercising the Remedies. 
  
  	Section 14.9.  Tenant at Sufferance.  If Lender or a 
  Receiver enters the Property in the exercise of the Remedies and 
  Borrower is allowed to remain in occupancy of the Property, 
  Borrower will pay to Lender or the Receiver, as the case may be, 
  in advance, a reasonable rent for the Property occupied by 
  Borrower.  If Borrower fails to pay the rent, Borrower may be 
  dispossessed by the usual Proceedings available against  
  defaulting tenants.  
  
  	Section 14.10.	 State Laws Pertaining to Remedies.
  
  
  
  ARTICLE XV
  
  LIMITATION OF LIABILITY
  
  
  	Section 15.1.  Limitation of Liability.  
  
  	(a)  Notwithstanding any provision in the Loan Documents to 
  the contrary, except as set forth in subsections (b) and (c), if 
  Lender seeks to enforce the collection of the Debt, Lender will 
  foreclose this Mortgage instead of instituting suit on the Note.  
  If a lesser sum is realized from a foreclosure of this Mortgage 
  and sale of the Property than the then outstanding Debt, Lender 
  will not institute any Proceeding against Borrower or Borrower's 
  general partners, if any, for or on account of the deficiency, 
  except as set forth in subsections (b) and (c).  
  
  	(b)  The limitation of liability in subsection (a) will not 
  affect or impair (i) the lien of this Mortgage or Lender's other 
  rights and Remedies under the Loan Documents, including Lender's 
  right as mortgagee or secured party to commence an action to 
  foreclose any lien or security interest Lender has under the Loan 
  Documents; (ii) the validity of the Loan Documents or the 
  Obligations; or (iii) Lender's right to present and collect on 
  any letter of credit or other credit enhancement document held by 
  Lender in connection with the Obligations.
  
  	(c)  The following are excluded and excepted from the 
  limitation of liability in subsection (a) and Lender may recover 
  personally against Borrower and its general partners, if any, for 
  the following:
  (i)  all losses suffered and liabilities and expenses 
  incurred by Lender relating to any fraud or intentional 
  misrepresentation or intentional omission by Borrower or any 
  of Borrower's partners, members, officers, directors, 
  shareholders or principals in connection with (A) the 
  performance of any of the conditions to Lender making the 
  Loan; (B) any inducements to Lender to make the Loan; (C) 
  the execution and delivery of the Loan Documents; (D) any 
  certificates, representations or warranties given in 
  connection with the Loan; or (E) Borrower's performance of 
  the Obligations;
  
  (ii)  all Rents derived from the Property after a default 
  under the Loan Documents and all moneys that, on the date a 
  default occurs, are on deposit in one or more accounts used 
  by or on behalf of Borrower relating to the operation of the 
  Property, except to the extent properly applied to payment 
  of Debt Service Payments, Impositions, Insurance Premiums, 
  and any reasonable and customary expenses incurred by 
  Borrower in the operation, maintenance and leasing of the 
  Property or delivered to Lender; 
  
  (iii)  the cost of remediation of any Environmental Activity 
  affecting the Property, any diminution in the value of the 
  Property arising from any Environmental Activity affecting 
  the Property (but only to the extent attributable to the 
  Environmental Activity) and any other losses suffered and 
  liabilities and expenses incurred by Lender relating to a 
  default under the Article entitled "Environmental";
  
  (iv)  all security deposits collected by Borrower or any of 
  Borrower's predecessors and not refunded to Tenants in 
  accordance with their respective Leases, applied in 
  accordance with the Leases or Law or delivered to Lender, 
  and all advance rents collected by Borrower or any of 
  Borrower's predecessors and not applied in accordance with 
  the Leases or delivered to Lender; 
  
  (v)  the replacement cost of any Fixtures or Personal 
  Property removed from the Property after a default occurs;
  
  (vi)  all losses suffered and liabilities and expenses 
  incurred by Lender relating to any acts or omissions by 
  Borrower that result in waste (including economic and non-
  physical waste) on the Property;
  
  (vii)  all protective advances and other payments made by 
  Lender pursuant to express provisions of the Loan Documents 
  to protect Lender's security interest in the Property or to 
  protect the assignment of the property described in and 
  effected by the Assignment, but only to the extent that the 
  Rents would have been sufficient to permit Borrower to make 
  the payment and Borrower failed to do so;
  
  (viii)  all mechanic's or similar liens relating to work 
  performed on or materials delivered to the Property prior to 
  a foreclosure sale of the Property, but only to the extent 
  Lender had advanced funds to pay for the work or materials; 
  
  (ix)  all Proceeds that are not applied in accordance with 
  this Mortgage or not paid to Lender as required under this 
  Mortgage; 
  
  (x)  all losses suffered and liabilities and expenses 
  incurred by Lender relating to a Transfer that is not 
  permitted under the Section entitled "Permitted Transfers".
  
  (xi)  all losses suffered and liabilities and expenses 
  incurred by Lender relating to forfeiture or threatened 
  forfeiture of the Property to the Government; and 
  
  (xii)  all losses suffered and liabilities and expenses 
  incurred by Lender relating to any default by Borrower under 
  any of the provisions of this Mortgage relating to ERISA, 
  including the prohibition on any Transfer that results in a 
  violation of ERISA.
  
  	(d)  Nothing under subparagraph (a) above will be deemed to 
  be a waiver of any right which Lender may have under Section 
  506(a), 506(b), 1111(b) or any other provisions of the Bankruptcy 
  Code or under any other Law relating to bankruptcy or insolvency 
  to file a claim for the full amount of the Debt or to require 
  that all collateral will continue to secure all of the 
  Obligations in accordance with the Loan Documents.
  
  
  ARTICLE XVI
  
  WAIVERS
  
  
  	SECTION 16.1. WAIVER OF NOTICE.  BORROWER WAIVES THE RIGHT 
  TO RECEIVE ANY NOTICE FROM LENDER WITH RESPECT TO THE LOAN 
  DOCUMENTS EXCEPT FOR THOSE NOTICES THAT LENDER IS EXPRESSLY 
  REQUIRED TO DELIVER PURSUANT TO THE LOAN DOCUMENTS.
  
  	SECTION 16.2.  WAIVER OF MARSHALLING AND OTHER MATTERS.  
  BORROWER WAIVES THE BENEFIT OF ANY RIGHTS OF MARSHALLING OR ANY 
  OTHER RIGHT TO DIRECT THE ORDER IN WHICH ANY OF THE PROPERTY WILL 
  BE (i) SOLD; OR (ii) MADE AVAILABLE TO ANY ENTITY IF THE PROPERTY 
  IS SOLD BY POWER OF SALE OR PURSUANT TO A JUDGMENT OF FORECLOSURE 
  AND SALE.  BORROWER ALSO WAIVES THE BENEFIT OF ANY LAWS RELATING 
  TO APPRAISEMENT, VALUATION, STAY, EXTENSION, REINSTATEMENT, 
  MORATORIUM, HOMESTEAD AND EXEMPTION RIGHTS OR A SALE IN INVERSE 
  ORDER OF ALIENATION.
  
  	SECTION 16.3.  WAIVER OF TRIAL BY JURY.  BORROWER WAIVES 
  TRIAL BY JURY IN ANY PROCEEDING BROUGHT BY OR AGAINST, OR 
  COUNTERCLAIM OR CROSS-COMPLAINT ASSERTED BY OR AGAINST, LENDER 
  RELATING TO THE LOAN, THE PROPERTY DOCUMENTS OR THE LEASES.
  
  	SECTION 16.4.	WAIVER OF JUDICIAL NOTICE AND HEARING.  
  BORROWER WAIVES ANY RIGHT BORROWER MAY HAVE UNDER LAW TO NOTICE 
  OR TO A JUDICIAL HEARING PRIOR TO THE EXERCISE OF ANY RIGHT OR 
  REMEDY PROVIDED BY THE LOAN DOCUMENTS TO LENDER AND BORROWER 
  WAIVES THE RIGHTS, IF ANY, TO SET ASIDE OR INVALIDATE ANY SALE 
  DULY CONSUMMATED IN ACCORDANCE WITH THE PROVISIONS OF THE LOAN 
  DOCUMENTS ON THE GROUND (IF SUCH BE THE CASE) THAT THE SALE WAS 
  CONSUMMATED WITHOUT A PRIOR JUDICIAL HEARING.
  
  	SECTION 16.5.	WAIVER OF SUBROGATION.  BORROWER WAIVES ALL 
  RIGHTS OF SUBROGATION TO LENDER'S RIGHTS OR CLAIMS RELATED TO OR 
  AFFECTING THE PROPERTY OR ANY OTHER SECURITY FOR THE LOAN UNTIL 
  THE LOAN IS PAID IN FULL AND ALL FUNDING OBLIGATIONS UNDER THE 
  LOAN DOCUMENTS HAVE BEEN TERMINATED.
  
  	SECTION 16.6.  GENERAL WAIVER.  BORROWER ACKNOWLEDGES THAT 
  (A) BORROWER AND BORROWER'S PARTNERS, MEMBERS OR PRINCIPALS, AS 
  THE CASE MAY BE, ARE KNOWLEDGEABLE BORROWERS OF COMMERCIAL FUNDS 
  AND EXPERIENCED REAL ESTATE DEVELOPERS OR INVESTORS WHO 
  UNDERSTAND FULLY THE EFFECT OF THE ABOVE PROVISIONS; (B) LENDER 
  WOULD NOT MAKE THE LOAN WITHOUT THE PROVISIONS OF THIS ARTICLE; 
  (C) THE LOAN IS A COMMERCIAL OR BUSINESS LOAN UNDER THE LAWS OF 
  THE STATE OR COMMONWEALTH WHERE THE PROPERTY IS LOCATED, 
  NEGOTIATED BY LENDER AND BORROWER AND THEIR RESPECTIVE ATTORNEYS 
  AT ARMS LENGTH; AND (D) ALL WAIVERS BY BORROWER IN THIS ARTICLE 
  HAVE BEEN MADE VOLUNTARILY, INTELLIGENTLY AND KNOWINGLY, AFTER 
  BORROWER FIRST HAS BEEN INFORMED BY COUNSEL OF BORROWER'S OWN 
  CHOOSING AS TO POSSIBLE ALTERNATIVE RIGHTS, AND HAVE BEEN MADE AS 
  AN INTENTIONAL RELINQUISHMENT AND ABANDONMENT OF A KNOWN RIGHT 
  AND PRIVILEGE. THE FOREGOING ACKNOWLEDGMENT IS MADE WITH THE 
  INTENT THAT LENDER AND ANY SUBSEQUENT HOLDER OF THE NOTE WILL 
  RELY ON THE ACKNOWLEDGMENT.
  
  
  I. ARTICLE XVII
  
  NOTICES
  
  
  	Section 17.1.  Notices.  All acceptances, approvals, 
  consents, demands, notices, requests, waivers and other 
  communications (the "Notices") required or permitted to be given 
  under the Loan Documents must be in writing and (a) delivered 
  personally by a process server providing a sworn declaration 
  evidencing the date of service, the individual served, and the 
  address where the service was made; (b) sent by certified mail, 
  return receipt requested; or (c) delivered by nationally 
  recognized overnight delivery service providing evidence of the 
  date of delivery, with all charges prepaid, addressed to the 
  appropriate party at its address listed below:
  
  If to Lender:			Teachers Insurance and Annuity   		
  	               Association of America
  					730 Third Avenue
  					New York, New York  10017
  					Attention:  Director Portfolio
                                       Management   
    Mortgage and 
    Real Estate
  					Region: Northeast/South/Int'L
  					Application # TX-899
  					Mortgage 	  #000440000
  
  with a courtesy
  copy to:	Teachers Insurance and Annuity 
  Association of America
  					730 Third Avenue
  					New York, New York  10017
  					Attention:  Vice President and
                                       Chief Counsel
                                       Mortgage and 
                                       Real Estate Law
  					Application # TX-899
  					Mortgage 	  #000440000
  
  If to Borrower:		Parkway Properties LP
  					c/o Parkway Properties, Inc.
  					188 East Capitol Street
  					Suite 1000
  					Jackson, Mississippi  39201
  					Attention:  Sarah P. Clark
  					TIAA Appl. # TX-899
  					Mortgage   #000440000
  
  with a courtesy
  copy to:	Forman Perry Watkins
  					Krutz & Tardy, PLLC
  					188 East Capitol Street
  					Suite 1200
  					Jackson, Mississippi  39201
  					Attention:  Steven M. Hendrix 
                                       Esquire
  					TIAA Appl. # TX-899
  					Mortgage   #000440000
  
  Lender and Borrower each may change from time to time the address 
  to which Notices must be sent, by notice given in accordance with 
  the provisions of this Section.  All Notices given in accordance 
  with the provisions of this Section will be deemed to have been 
  given on the earliest of (i) actual receipt; (ii) Borrower's 
  rejection of delivery; or (iii) 3 Business Days after having been 
  deposited in any mail depository regularly maintained by the 
  United States postal service, if sent by certified mail, or 1 
  Business Day after having been deposited with a nationally 
  recognized overnight delivery service, if sent by overnight 
  delivery or on the date of personal service, if served by a 
  process server.
  
  	Section 17.2.	Change in Borrower's Name or Place of 
  Business.  Borrower will immediately notify Lender in writing of 
  any change in Borrower's name or the place of business set forth 
  in the beginning of this Mortgage.
  
  
  ARTICLE XVIII
  
  MISCELLANEOUS
  
  
  	Section 18.1.	Applicable Law.  This Mortgage is to be  
  governed by and to be construed in accordance with the Laws of 
  the State or Commonwealth in which the Property is located 
  without regard to conflict of law provisions.
  
  	Section 18.2.  Usury Limitations.  Borrower and Lender 
  intend to comply with all Laws with respect to the charging and 
  receiving of interest.  Any amounts charged or received by Lender 
  for the use or forbearance of the Principal to the extent 
  permitted by Law, will be amortized and spread throughout the 
  Term until payment in full so that the rate or amount of interest 
  charged or received by Lender on account of the Principal does 
  not exceed the Maximum Interest Rate.  If any amount charged or 
  received under the Loan Documents that is deemed to be interest 
  is determined to be in excess of the amount permitted to be 
  charged or received at the Maximum Interest Rate, the excess will 
  be deemed to be a prepayment of Principal when paid, without 
  premium, and any portion of the excess not capable of being so 
  applied will be refunded to Borrower.  If during the Term the 
  Maximum Interest Rate, if any, is eliminated, then for the 
  purposes of the Loan, there will be no Maximum Interest Rate.
  
  	Section 18.3.  Lender's Discretion.  Wherever under the Loan 
  Documents any matter is required to be satisfactory to Lender, 
  Lender has the right to approve or determine any matter or Lender 
  has an election, Lender's approval, determination or election 
  will be made in Lender's reasonable discretion unless expressly 
  provided to the contrary.
  
  	Section 18.4.  Unenforceable Provisions.  If any provision 
  in the Loan Documents is found to be illegal or unenforceable or 
  would operate to invalidate any of the Loan Documents, then the 
  provision will be deemed expunged and the Loan Documents will be 
  construed as though the provision was not contained in the Loan 
  Documents and the remainder of the Loan Documents will remain in 
  full force and effect.
  
  	Section 18.5.  Survival of Borrower's Obligations.  Unless 
  expressly released by Lender, Borrower's representations, 
  warranties and covenants contained in the Loan Documents will 
  continue in full force and effect and survive (i) satisfaction of 
  the Obligations; (ii) release of the lien of this Mortgage; (iii) 
  assignment or other transfer of all or any portion of Lender's 
  interest in the Loan Documents or the Property; (iv) Lender's 
  exercise of any of the Remedies or any of Lender's other rights 
  under the Loan Documents; (v) a Transfer; (vi) amendments to the 
  Loan Documents; and (vii) any other act or omission that might 
  otherwise be construed as a release or discharge of Borrower.
  
  	Section 18.6.  Relationship Between Borrower and Lender; No 
  Third Party Beneficiaries.  
  
  	(a)	Lender is not a partner of or joint venturer with 
  Borrower or any other entity as a result of the Loan or Lender's 
  rights under the Loan Documents; the relationship between Lender 
  and Borrower is strictly that of creditor and debtor.  Each Loan 
  Document is an agreement between the parties to that Loan 
  Document for the mutual benefit of the parties and no entities 
  other than the parties to that Loan Document will be a third 
  party beneficiary or will have any claim against Lender or 
  Borrower by virtue of the Loan Document.  As between Lender and 
  Borrower, any actions taken by Lender under the Loan Documents 
  will be taken for Lender's protection only, and Lender has not 
  and will not be deemed to have assumed any responsibility to 
  Borrower or to any other entity by virtue of Lender's actions.
  
  	(b)	All conditions to Lender's performance of its 
  obligations under the Loan Documents are imposed solely for the 
  benefit of Lender.  No entity other than Lender will have 
  standing to require satisfaction of the conditions in accordance 
  with their provisions or will be entitled to assume that Lender 
  will refuse to perform its obligations in the absence of strict 
  compliance with any of the conditions.
  
  	Section 18.7.  Partial Releases; Extensions; Waivers.  
  Lender may: (i) release any part of the Property or any entity 
  obligated for any of the Obligations; (ii) extend the time for 
  payment or performance of any of the Obligations or otherwise 
  amend the provisions for payment or performance by agreement with 
  any entity that is obligated for the Obligations or that has an 
  interest in the Property; (iii) accept additional security for 
  the payment and performance of the Obligations; and (iv) waive 
  any entity's performance of an Obligation, release any entity or 
  individual now or in the future liable for the performance of the 
  Obligation or waive the exercise of any Remedy or option.  Lender 
  may exercise any of the foregoing rights without notice, without 
  regard to the amount of any consideration given, without 
  affecting the priority of the Loan Documents, without releasing 
  any entity not specifically released from its obligations under 
  the Loan Documents, without releasing any guarantor(s) or 
  surety(ies) of any of the Obligations, without effecting a 
  novation of the Loan Documents and, with respect to a waiver, 
  without waiving future performance of the Obligation or exercise 
  of the Remedy waived.
  
  	Section 18.8.  Service of Process.  Borrower irrevocably 
  consents to service of process by registered or certified mail, 
  postage prepaid, return receipt requested, to Borrower at its 
  address set forth in the Article entitled "Notices".
  
  	Section 18.9.  Entire Agreement.  Oral agreements or 
  commitments between Borrower and Lender to lend money, to extend 
  credit or to forbear from enforcing repayment of a debt, 
  including promises to extend or renew the debt, are not 
  enforceable.  Any agreements between Borrower and Lender relating 
  to the Loan are contained in the Loan Documents, which contain 
  the complete and exclusive statement of the agreements between 
  Borrower and Lender, except as Borrower and Lender may later 
  agree in writing to amend the Loan Documents.  The language of 
  each Loan Document will be construed as a whole according to its 
  fair meaning and will not be construed against the draftsman.
  
  	Section 18.10.  No Oral Amendment.  The Loan Documents may 
  not be amended, waived or terminated orally or by any act or 
  omission made individually by Borrower or Lender but may be 
  amended, waived or terminated only by a written document signed 
  by the party against which enforcement of the amendment, waiver 
  or termination is sought.
  
  	Section 18.11.  Severability.  The invalidity, illegality or 
  unenforceability of any provision of any of the Loan Documents 
  will not affect any other provisions of the Loan Documents, which 
  will be construed as if the invalid, illegal or unenforceable 
  provision never had been included.
  
  	Section 18.12.  Covenants Run with the Land.  Subject to the 
  restrictions on transfer contained in the Article entitled 
  "TRANSFERS, LIENS AND ENCUMBRANCES", all of the covenants of this 
  Mortgage and the Assignment run with the Land, will bind all 
  parties hereto and all tenants and subtenants of the Land or the 
  Improvements and their respective heirs, executors, 
  administrators, successors and assigns, and all occupants and 
  subsequent owners of the Property, and will inure to the benefit 
  of Lender and all subsequent holders of the Note and this 
  Mortgage.
  
  	Section 18.13.  Time of the Essence.  Time is of the essence 
  with respect to Borrower's payment and performance of the 
  Obligations.
  
  	Section 18.14.  Subrogation.  If the Principal or any other 
  amount advanced by Lender is used directly or indirectly to pay 
  off, discharge or satisfy all or any part of an encumbrance 
  affecting the Property, then Lender is subrogated to the 
  encumbrance and to any security held by the holder of the 
  encumbrance, all of which will continue in full force and effect 
  in favor of Lender as additional security for the Obligations.
  
  	Section 18.15.	 Joint and Several Liability.  If Borrower 
  consists of more than one person or entity, the obligations and 
  liabilities of each such person or entity under this Mortgage are 
  joint and several.  
  
  	Section 18.16.  Successors and Assigns.  The Loan Documents 
  bind the parties to the Loan Documents and their respective 
  successors, assigns, heirs, administrators, executors, agents and 
  representatives and inure to the benefit of Lender and its 
  successors, assigns, heirs, administrators, executors, agents and 
  representatives.
  
  	Section 18.17.  Duplicates and Counterparts.  Duplicate  
  counterparts of any Loan Documents, other than the Note, may be 
  executed and together will constitute a single original document.  
  ARTICLE XIX
  
  ADDITIONAL PROVISIONS PERTAINING TO STATE LAWS
  
  
  
  
  
  	IN WITNESS WHEREOF, Borrower has executed and delivered this 
  Mortgage as of the date first set forth above.
  
  
  	PARKWAY PROPERTIES LP, a Delaware limited partnership
  
  By: Parkway Properties General Partners, 
  Inc. a Delaware corporation, its 
  sole general partner, a Delaware 
  corporation
  
  
  					By:	
  					Name:   James M. Ingram
  				     Title:  Senior Vice President
  
  					By:	
  					     Name:   Sarah P. Clark
                                Title:  Senior Vice President,
  							   CFO, Treasurer & 
  							   Secretary
  
  
  
  Appropriate witnesses
  and acknowledgments to be attached
  
  Exhibit A
  
  LEGAL DESCRIPTION
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  Exhibit B
  
  DEFINITIONS
  
  
  "Acceleration" is defined in Section 14.2(a)(i).
  
  "Accumulations" is defined in Section 2.1(xii).
  
  "Accumulations Depositary" is defined in Section 6.2(a).
  
  "Additional Funds" is defined in Section 7.4(v).
  
  "Allocated Loan Value" is defined as that portion of the 
  Principal allocated by Lender to the Property, as set forth in 
  Exhibit E hereto, as the same may be modified from time to time 
  by Lender to reflect releases, substitutions and repayments.
  
  "Assessments" is defined as all assessments now or hereafter 
  levied, assessed or imposed against the Property.
  
  "Assignment" is defined as the Assignment of Leases and Rents 
  dated of even date with this Mortgage made by Borrower for the 
  benefit of Lender.
  
  "Bankruptcy Code" means Title 11 of the United States Code.
  
  "Borrower" is defined in the introductory paragraph.
  
  "Business Days" is defined as any day on which commercial banks 
  are not authorized or required by Law to close in New York, New 
  York.
  
  "Casualty" is defined as damage to or destruction of the Property 
  by fire or other casualty.
  
  "Code" is defined as the Internal Revenue Code of 1986 and the 
  regulations promulgated thereunder.
  
  "Commitment" is defined as that certain Loan Application and 
  Commitment Agreement between Borrower and Lender, as the same may 
  be amended in writing from time to time.
  
  "Company" is defined in Section 10.1.
  
  "Condemnation" is defined as the permanent or temporary taking of 
  all or any portion of the Property, or any interest therein or 
  right accruing thereto, by the exercise of the right of eminent 
  domain (including any transfer in lieu of or in anticipation of 
  the exercise of the right), inverse condemnation or any similar 
  injury or damage to or decrease in the value of the Property, 
  including severance and change in the grade of any streets 
  
  "Condemnation Awards" is defined in Section 2.1(viii).
  
  "Condemnation Proceeding" is defined as a Proceeding that could 
  result in a Condemnation.
  
  "Consolidated Subsidiary" of a Person shall mean, at any time, 
  any Subsidiary or other entity the accounts of which would in 
  accordance with GAAP be consolidated with those of such Person in 
  its consolidated financial statements as of such time
  
  "CPA" is defined as an independent certified public accountant 
  satisfactory to Lender.
  
  "Debt" is defined in Section 3.1.
  
  "Debt Service Coverage Ratio" means the Net Operating Income of 
  the Property divided by the scheduled annual Debt Service 
  Payments.
  
  "Debt Service Payments" is defined as that portion of the monthly 
  installments of principal and interest payable by Borrower to 
  Lender, as set forth in the Note, allocated to the Property based 
  upon the ratio of the Allocated Loan Value to the Principal.
  
  "Default Interest Rate" is defined as the lower of 11.945% per 
  annum or the Maximum Interest Rate, if any.
  
  "Destruction Event" is defined in Section 7.4.
  
  "Environmental Activity" is defined as any actual, suspected or 
  threatened abatement, cleanup, disposal, generation, handling, 
  manufacture, possession, release, remediation, removal, storage, 
  transportation, treatment or use of any Hazardous Material.  The 
  actual, suspected or threatened presence of any Hazardous 
  Material or the actual, suspected or threatened noncompliance 
  with any Environmental Laws, will be deemed Environmental 
  Activity.
  
  "Environmental Laws" is defined as all Laws pertaining to health, 
  safety, protection of the environment, natural resources, 
  conservation, wildlife, waste management, Environmental 
  Activities and pollution.
  
  "Environmental Report" is defined as the report prepared by 
  ___________, dated __________, as amended.
  
  "ERISA" is defined in Section 8.3(a).
  
  "Event of Default" is defined in Section 14.1.
  
  "Existing General Partner" is defined in Section 12.1(b).
  
  "Existing Limited Partners" is defined in Section 12.1(b).
  
  "Expenses" is defined in Section 11.1(a).
  
  "Financial Books and Records" is defined as detailed accounts of 
  the income and expenses of the Property and of Borrower and all 
  other data, records and information that either are specifically 
  referred to in the Article entitled "FINANCIAL REPORTING" or are 
  necessary to the preparation of any of the statements, reports or 
  certificates required under such Article and includes all 
  supporting schedules prepared or used by the CPA in auditing the 
  financial statements required to be delivered pursuant to Article 
  10 hereof or in issuing its opinion.
  
  "Fiscal Year" is defined as any calendar year or partial calendar 
  year during the Term.
  
  "Fixed Interest Rate" is defined as 6.945% per annum.
  
  "Fixtures and Personal Property" is defined in Section 2.1(iv).
  
  "Government" is defined as any federal, state or municipal 
  governmental or quasi-governmental authority including any 
  executive, legislative or judicial branch and any division, 
  subdivision or agency of any of them and any entity to which any 
  of them has delegated authority.
  
  "Hazardous Materials" is defined as any by-product, chemical, 
  compound, contaminant, pollutant, product, substance, waste or 
  other material (i) that is hazardous or toxic or (ii) the 
  abatement, cleanup, discharge, disposal, emission, exposure to, 
  generation, handling, manufacture, possession, presence, release, 
  removal, remediation, storage, transportation, treatment or use 
  of which is controlled, prohibited or regulated by any 
  Environmental Laws, including asbestos, petroleum and petroleum 
  products and polychlorinated biphenyls.
  
  "Imposition Penalty Date" is defined in Section 6.1(a). 
  
  "Impositions" is defined as all Taxes, Assessments, ground rent, 
  if any, water and sewer rents, fees and charges, levies, permit, 
  inspection and license fees and other dues, charges or 
  impositions, including all charges and license fees for the use 
  of vaults, chutes and similar areas adjoining the Land, 
  maintenance and similar charges and charges for utility services, 
  in each instance whether now or in the future, directly or 
  indirectly, levied, assessed or imposed on the Property or 
  Borrower and whether levied, assessed or imposed as excise, 
  privilege or property taxes. 
  
  "Improvements" is defined in Section 2.1(ii).
  
  "Insurance Premiums" is defined as all present and future 
  premiums and other charges due and payable on policies of fire, 
  rental value and other insurance covering the Property and 
  required pursuant to the provisions of this Mortgage.
  
  "Insurance Proceeds" is defined in Section 2.1(ix).
  
  "Insurers" is defined in Section 7.1(c).
  
  "Institutional Investor" is defined as any bank, savings 
  institution, charitable foundation, insurance company, real 
  estate investment trust, pension fund or investment advisor 
  registered under the Investment Advisors Act of 1940, as amended, 
  and acting as trustee or agent.
  
  "Interest" is defined as the fixed interest payable under the 
  Note at the Fixed Interest Rate and any other sums which are 
  deemed to be interest under Law, including, without limitation, 
  interest at the Default Interest Rate, to the extent applicable.
  
  "Land" is defined in the Recitals.
  
  "Law" is defined as all present and future codes, constitutions, 
  cases, opinions, rules, manuals, regulations, determinations, 
  laws, orders, ordinances, requirements and statutes, as amended, 
  of any Government that affect or that may be interpreted to 
  affect the Property, Borrower or the Loan, including amendments 
  and all guidance documents and publications promulgated 
  thereunder.
  
  "Leases" is defined as all present and future leases, subleases, 
  licenses, and other agreements for the use and occupancy of the 
  Land and Improvements, any related guarantees and any use and 
  occupancy arrangements created pursuant to Section 365(h) of the 
  Bankruptcy Code or otherwise in connection with the commencement 
  or continuation of any bankruptcy, reorganization, arrangement, 
  insolvency, dissolution, receivership or similar Proceedings, or 
  any assignment for the benefit of creditors, in respect of any 
  tenant or other occupant of the Land and Improvements.
  
  "Lender" is defined in the introductory paragraph.
  
  "Loan" is defined in the Recitals.
  
  "Loan Documents" is defined as the Note, this Mortgage, the 
  Assignment and all documents now or hereafter executed by 
  Borrower or held by Lender relating to the Loan, including all 
  amendments and including that certain Conversion and Note 
  Agreement of even date herewith between Borrower and Lender.
  
  "Loan to Value Ratio" is defined as the ratio, expressed as a 
  decimal number, of the outstanding principal of the Loan at the 
  time of determination to the aggregate of the values of all real 
  property collateral securing the Loan at the time of 
  determination established by the appraisal (complying with the 
  Lender's appraisal requirements) most recently delivered to 
  Lender.
  
  "Major Lease" is defined as:  (i) a lease of any full floor in a 
  building; (ii) a lease to any one of the following Tenants:  
  ___________; (iii) a lease demising, in the aggregate, 25,000 
  square feet or more of rentable square feet; (iv) a lease 
  representing 10% or more of rentable square feet of a building or 
  50% or more of the gross revenues of any building.
  
  "Maturity Date" is defined in the Recitals.
  
  "Maximum Interest Rate" is defined as the maximum rate of 
  interest, if any, permitted by Law as of the date of this 
  Mortgage to be charged with respect to the Loan.
  
  "Mortgage" is defined as this Mortgage, Assignment of Leases and 
  Rents, Security Agreement and Fixture Filing Statement.
  
  "Net Operating Income" means (a) the total annual gross rental 
  income as determined by the most recent rent roll of the 
  Property, plus other income received during the most recent 12 
  month period, less (b) actual operating expenses for the most 
  recent 12 month period, including a management fee not to exceed 
  3% of total annual gross revenue, and excluding depreciation and 
  capital expenditures.
  
  "Note" is defined in the Recitals.
  
  "Note Agreement" is defined in Section 10.1(b).
  
  "Note Payments" is defined in the Note.
  
  "Notices" is defined in Section 17.1.
  
  "Obligations" is defined in Section 3.1.
  
  "Permitted Exceptions" is defined as the matters shown in 
  Schedule B, Part 1 and 2 of the title insurance policy insuring 
  the lien of this Mortgage.
  
  "Permitted Transfers" is defined in Section 12.2(b).
  "Permitted Use" is defined as use as a first-class commercial 
  office building and uses incidentally and directly related to 
  such use.
  
  "Person" shall mean natural persons, corporations, limited 
  partnerships, general partnerships, limited liability companies, 
  joint stock companies, joint ventures, associations, companies, 
  trusts, banks, trust companies, land trusts, business trusts or 
  other organizations, whether or not legal entities, and 
  governments and agencies and political subdivisions thereof
  
  "Policies" is defined in Section 7.1(b).
  
  "Principal" is defined in the Recitals.
  
  "Proceeding" is defined as a pending or threatened action, claim 
  or litigation before a legal, equitable or administrative 
  tribunal having proper jurisdiction.
  
  "Proceeds" is defined in Section 7.2(c).
  
  "Property" is defined in Section 2.1.
  
  "Property Documents" is defined in Section 2.1(v). 
  
  "Receiver" is defined as a receiver, custodian, trustee, 
  liquidator or conservator of the Property.
  
  "Remedies" is defined in Section 14.2(a).
  
  "Rents" is defined as all rents, prepaid rents, percentage, 
  participation or contingent rents, issues, profits, proceeds, 
  revenues and other consideration accruing under the Leases or 
  otherwise derived from the use and occupancy of the Land or the 
  Improvements, including tenant contributions to expenses, 
  security deposits, royalties and contingent rent, if any, all 
  other fees or payments paid to or for the benefit of Borrower and 
  any payments received pursuant to Section 502(b) of the 
  Bankruptcy Code or otherwise in connection with the commencement 
  or continuance of any bankruptcy, reorganization, arrangement, 
  insolvency, dissolution, receivership or similar proceedings, or 
  any assignment for the benefit of creditors, in respect of any 
  tenant or other occupant of the Land or the Improvements and all 
  claims as a creditor in connection with any of the foregoing.
  
  "Reserves" is defined in Section 2.1(xiv).
  
  "Restoration" is defined as the restoration of the Property after 
  a Destruction Event to substantially its condition immediately 
  prior to the Destruction Event, in accordance with the plans and 
  specifications, in a first-class workmanlike manner using 
  materials substantially equivalent in quality and character to 
  those used for the original improvements, in accordance with Law 
  and free and clear of all liens, encumbrances or other charges 
  other than this Mortgage and the Permitted Exceptions.
  
  "Restoration Completion Date" is defined in Section 7.4(viii).  
  
  "Subsidiary" shall mean, with respect to any Person, any 
  corporation, association or other business entity of which more 
  than 50% of the total voting power of shares of stock (or 
  equivalent ownership or controlling interest) entitled (without 
  regard to the occurrence of any contingency) to vote in the 
  election of directors, managers or trustees thereof is at the 
  time owned or controlled, directly or indirectly, by that Person 
  or one or more of the other Subsidiaries of that Person or a 
  combination thereof.
  
  "Substitute Collateral" is defined in Section 12.5.
  
  "Tax Agreement" is defined as that certain Real Estate Tax Escrow 
  and Security Agreement of even date herewith among Borrower, 
  Lender and Deposit Guaranty National Bank as "Escrowee".
  
  "Taxes" is defined as all present and future real estate taxes 
  levied, assessed or imposed against the Property.
  
  "Term" is defined as the scheduled term of this Mortgage 
  commencing on the date Lender makes the first disbursement of the 
  Loan and terminating on the Maturity Date.
  
  "Transfer" is defined in Section 12.1(a).
  
  "Uniform Commercial Code" is defined as the Uniform Commercial 
  Code in effect in the jurisdiction where the Land is located.
  
  
  
  
  Exhibit C
  
  RULES OF CONSTRUCTION
  
  
  	(a)  References in any Loan Document to numbered Articles or 
  Sections are references to the Articles and Sections of that Loan 
  Document.  References in any Loan Document to lettered Exhibits 
  are references to the Exhibits attached to that Loan Document, 
  all of which are incorporated in and constitute a part of that 
  Loan Document.  Article, Section and Exhibit captions used in any 
  Loan Document are for reference only and do not describe or limit 
  the substance, scope or intent of that Loan Document or the 
  individual Articles, Sections or Exhibits of that Loan Document.
  
  	(b)  The terms "include", "including" and similar terms are 
  construed as if followed by the phrase "without limitation".
  
  	(c)  The terms "Land", "Improvements", "Fixtures and 
  Personal Property", "Condemnation Awards", "Insurance Proceeds" 
  and "Property" are construed as if followed by the phrase "or any 
  part thereof".
  
  	(d)  Any agreement by or duty imposed on Borrower in any 
  Loan Document to perform any obligation or to refrain from any 
  act or omission constitutes a covenant running with the ownership 
  or occupancy of the Land and the Improvements, which will bind 
  all parties hereto and their respective successors and assigns, 
  and all lessees, subtenants and assigns of same, and all 
  occupants and subsequent owners of the Property, and will inure 
  to the benefit of Lender and all subsequent holders of the Note 
  and this Mortgage and includes a covenant by Borrower to cause 
  its partners, members, principals, agents, representatives and 
  employees to perform the obligation or to refrain from the act or 
  omission in accordance with the Loan Documents.  Any statement or 
  disclosure contained in any Loan Document about facts or 
  circumstances relating to the Property, Borrower or the Loan 
  constitutes a representation and warranty by Borrower made as of 
  the date of the Loan Document in which the statement or 
  disclosure is contained.
  
  	(e)  The term "to Borrower's knowledge" is construed as 
  meaning to the best of Borrower's knowledge after diligent 
  inquiry.
  
  	(f)  The singular of any word includes the plural and the 
  plural includes the singular.  The use of any gender includes all 
  genders.
  
  	(g)  The terms "person", "party" and "entity" include 
  natural persons, firms, partnerships, limited liability companies 
  and partnerships, corporations and any other public or private 
  legal entity.
  
  	(h)  The term "provisions" includes terms, covenants, 
  conditions, agreements and requirements.
  
  	(i)  The term "amend" includes modify, supplement, renew, 
  extend, replace or substitute and the term "amendment" includes 
  modification, supplement, renewal, extension, replacement and 
  substitution.
  
  	(j)  Reference to any specific Law or to any document or 
  agreement, including the Note, this Mortgage, any of the other 
  Loan Documents, the Leases and the Property Documents includes 
  any future amendments to the Law, document or agreement, as the 
  case may be.
  
  	(k)  No inference in favor of or against a party with 
  respect to any provision in any Loan Document may be drawn from 
  the fact that the party drafted the Loan Document.
  
  	(l)  The term "certificate" means the sworn, notarized 
  statement of the entity giving the certificate, made by a duly 
  authorized person satisfactory to Lender affirming the truth and 
  accuracy of every statement in the certificate.  Any document 
  that is "certified" means the document has been appended to a 
  certificate of the entity certifying the document that affirms 
  the truth and accuracy of everything in the document being 
  certified.  In all instances the entity issuing a certificate 
  must be satisfactory to Lender.
  
  	(m)	Any appointment of Lender as Borrower's attorney-in-
  fact is irrevocable and coupled with an interest.  Lender may 
  appoint a substitute attorney-in-fact.  Borrower ratifies all 
  actions taken by the attorney-in-fact but, nevertheless, if 
  Lender requests, Borrower will specifically ratify any action 
  taken by the attorney-in-fact by executing and delivering to the 
  attorney-in-fact or to any entity designated by the attorney-in-
  fact all documents necessary to effect the ratification.
  
  	(n)  Any document, instrument or agreement to be delivered 
  by Borrower will be in form and content satisfactory to Lender.
  
  	(o)  All obligations, rights, remedies and waivers contained 
  in the Loan Documents will be construed as being limited only to 
  the extent required to be enforceable under the Law.
  
  	(p)  The unmodified word "days" means calendar days.
  
  Exhibit D
  
  Property Documents
  
  
  	Those documents set forth within the policy of title 
  insurance for the Property issued to Lender in connection with 
  the granting of the Loan.
  
  	Management and leasing agreements between the Borrower and 
  various affiliates of Borrower, which may be canceled upon 30 
  days notice or less.
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  Exhibit E
  
  Allocated Loan Values
  
  
  Appl. #
  
  Mortgage #
  
  Property
  
  Location
  Allocated
  Loan Amount
  TX-899
  000440000
  One Sugar Creek Ctr.
  One Commerce Green
  Houston, TX
  Houston, TX
  $14,343,000
   20,912,000
  $35,255,000
  FL-899
  000441900
  Hillsboro 5
  Hillsboro 1-4
  Ft. Lauderdale, FL
  Ft. Lauderdale, FL
     8,710,000
    5,525,000 
  $14,235,000
  VA-387
  000442000
  Glen Forest Building
  Moorefield II
  Moorefield III
  Lynwood Plaza
  Loudoun Plaza One
  Greenbrier Towers I & II
  Richmond, VA
  Richmond, VA
  Richmond, VA
  Virginia Beach, VA
  Sterling, VA
  Greenbrier, VA
     4,745,000
     2,672,000
     3,109,000
     5,154,000
     5,427,000
    10,529,000
   $31,636,000
  TN-145
  000442100
  Executive Tower I
  Knoxville, TN
     5,384,000
  SC-74
  000442200
  The Provident Building
  Greenville, SC
     2,885,000
  NC-190
  000448000
  Charlotte Park Exec. Ctr.
  Charlotte, NC
     7,605,000
  
  
       TOTAL PORTFOLIO
  
   $97,000,000
  
  
  
  
  
  
  
  
  
  
  Schedule 1
  
  Personal Property
  
  
  
  [See Attached]
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  TIAA Appl. # FL-889;	M-000441900
  TIAA Appl. # NC-190;  	M-000448000
  TIAA Appl. # SC-74;  	M-000442200
  TIAA Appl. # TN-145;  	M-000442100			
  TIAA Appl. # TX-899;  	M-000440000
  TIAA Appl. # VA-387;  	M-000442000		
  
  
  
  CONVERSION AND NOTE AGREEMENT
  
  	This CONVERSION AND NOTE AGREEMENT (the "Agreement") dated 
  as of June 30, 1998, between PARKWAY PROPERTIES LP, a Delaware 
  limited partnership (the "Borrower"), PARKWAY PROPERTIES, INC., a 
  Maryland corporation (the "Company") and TEACHERS INSURANCE AND 
  ANNUITY ASSOCIATION OF AMERICA, a New York corporation 
  ("Lender");
  
  W I T N E S S E T H:
  
  	WHEREAS, pursuant to that certain Loan Application and 
  Commitment Agreement between Borrower, Company and Lender (as 
  amended from time to time, the "Commitment"), Lender has agreed 
  to make a loan to Borrower in the amount of $97,000,000 subject 
  to the terms and conditions set forth in the Commitment (the 
  "Loan");
  
  	WHEREAS, the Borrower has executed and delivered to Lender a 
  promissory note (the "Note"), dated the date hereof in the amount 
  of $97,000,000, which Note is secured by first priority liens on 
  those certain projects commonly known as; One Sugar Creek Center, 
  Sugar Land, TX, One Commerce Green, Houston, TX, Greenbrier I and 
  II, Chesapeake, VA, Charlotte Park Executive Center, Charlotte,  
  NC, Hillsboro 1-4, Deerfield Beach, FL, Hillsboro Center 5, 
  Deerfield Beach, FL, Glen Forest Building, Richmond, VA, 
  Moorefield II, Richmond, VA, Moorefield III, Richmond, VA, 
  Loudoun Plaza One, Sterling, VA, Executive Tower I, Knoxville, 
  TN, Healthsource Building, Greenville, SC, Lynnwood Plaza, 
  Virginia Beach, VA, (collectively, the "Properties");
  
  	WHEREAS, in order to secure the payment of the Note, 
  interest on the Note and all other indebtedness owed by Borrower 
  to Lender, as evidenced by the Note, Borrower has executed and 
  delivered to Lender certain mortgages, deeds of trust and deeds 
  to secure debt (collectively, the "Mortgages") encumbering the 
  Properties;
  
  	WHEREAS, pursuant to the Commitment and this Agreement, 
  Borrower has the one-time right, subject to certain terms and 
  conditions, to convert the Loan (or one-half of the Loan as 
  determined in accordance with Section 2.02 hereof) to an 
  unsecured obligation of Borrower (the "Conversion Option"); and
  
  	WHEREAS, Borrower and Lender desire to set forth the terms 
  and conditions of the Conversion Option and the Company and 
  Borrower are willing to make the representations, warranties and 
  covenants set forth herein and the Company, under the 
  circumstances specified in Section 10.01, is willing to become 
  liable, jointly and severally with Borrower, for the amounts 
  outstanding in respect of the Unsecured Note (as described in 
  Article Two hereof); 
  
  	NOW THEREFORE, the parties hereto hereby agree as follows:
  
  
  ARTICLE ONE
  
  Section 1.01. Certain Defined Terms.  The following terms used in 
  this Agreement shall have the following meanings:
  
  (a) 		"Affiliate" shall mean, as to any Person, any 
  other Person (other than Lender): (a) directly or indirectly 
  controlling, controlled by, or under common control with, such 
  first Person; (b) directly or indirectly owning or holding ten 
  percent (10%) or more of any equity interest in such first 
  Person; or (c) ten percent (10%) or more of whose voting stock or 
  other equity interest is directly or indirectly owned or held by 
  such first Person.  For purposes of this definition, "control" 
  (including with correlative meanings, the terms "controlling", 
  "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 a Person, whether 
  through the ownership of voting securities or by contract or 
  otherwise.
  
  (a) 		"Business Day" means any day excluding Saturday, 
  Sunday and any day which is a legal holiday under the laws of the 
  State of New York, or is a day on which national banking 
  institutions located in such State are closed.
  
  (a) 		"CADS" (Cash Available for Debt Service) of a 
  Person for any period shall be calculated based upon the 
  consolidated financial statements of such Person, prepared in 
  accordance with GAAP, and shall be equal to net income (loss) 
  before adjustment for minority interest and extraordinary items 
  of such Person for such period, adjusted by the following items 
  as reflected in such consolidated financial statements:
  
  		(i)		Add interest expense as reflected 
  in such Person's consolidated financial 
  statements;
  
  		(ii)		Add depreciation and amortization;
  
    	(iii)	Add non-recurring losses and less 
  non-recurring gains, identified as such in such 
  Person's consolidated financial statements, 
  without duplication;
  
  		(iv)		Less capital expenditures made to 
  existing properties (except capitalized capital 
  expenditures anticipated at the time of the 
  purchase of a Property) not funded from 
  reserves;
  
  		(v)		Less cash deposits to required 
  reserves not otherwise expensed; and
  
  		(vi)		Less net revenue from any 
  cancelable service contracts with third-parties.
  
  (a) 		"Consolidated Net Worth" of a Person at any time 
  shall mean the aggregate of accumulated depreciation and 
  accumulated amortization and all amounts that would be included 
  under shareholders' or partners' equity and minority interests on 
  a consolidated balance sheet of such Person prepared in 
  accordance with GAAP.
  
  (a) 		"Consolidated Subsidiary" of a Person shall mean, 
  at any time, any Subsidiary or other entity the accounts of which 
  would in accordance with GAAP be consolidated with those of such 
  Person in its consolidated financial statements as of such time.
  
  (a) 		"Debt" of a Person at any time shall mean total 
  debt (not to include minority interests) shown on such Person's 
  consolidated financial statements as prepared and classified in 
  accordance with GAAP.
  
  (a) 		"Debt Service" of a Person shall mean the maximum 
  amount of interest on, and required amortization of principal of, 
  Debt of such Person which, in accordance with the instruments 
  evidencing the same, is scheduled to become payable (not to 
  include interest payable from a reserve, the funding of which was 
  reflected in the calculation of CADS of such Person) in the 
  period of 12 consecutive calendar months following the date for 
  which it is being determined.  For purposes of this calculation, 
  the applicable interest rates shall take into account any 
  interest rate swap, cap or other interest rate management 
  agreement in effect. Interest on floating rate debt shall be 
  calculated at its then current rate, increasing at the rate of 
  0.5% per quarter during the period for which the calculation of 
  Debt Service is being performed, not to exceed any interest rate 
  cap in place during the twelve-month period.  The amounts payable 
  for amortization shall include the amount of any sinking fund or 
  other analogous fund for the retirement of Debt of such Person, 
  and the amount payable on account of principal on any such Debt 
  which matures serially other than at the final maturity of such 
  Debt.
  
  (a) 		"Default" shall mean an event which, with notice 
  or lapse of time or both, would constitute an Event of Default if 
  that event or condition were not cured or removed within any 
  applicable grace period.
  
  (a) 		"Encumbrance" means any mortgage, lien (excluding 
  ad valorem taxes that are not yet due and payable), charge, 
  pledge, encumbrance or security interest.
  
  (a) 		"Environmental Law" means any present or future 
  federal, state or local law, rule, regulation or order relating 
  to pollution, waste, disposal or the protection of human health 
  or safety, plant life or animal life, natural resources or the 
  environment. 
  
  (a) 		"Event of Default" shall have the meaning provided 
  in Section 6.01.
  
  (a) 		"Exchange Act" means the Securities and Exchange 
  Act of 1934, as amended.
  
  (a) 		"GAAP" shall mean generally accepted accounting 
  principles, consistently applied, set forth in the opinions and 
  pronouncements of the Accounting Principles Board of the American 
  Institute of Certified Public Accountants and statements and 
  pronouncements of the Financial Accounting Standards Board that 
  are applicable to the circumstances as of the date of 
  determination.
  
  (a) 		"Hazardous Material" means all or any of the 
  following: (a) substances that are defined or listed in, or 
  otherwise classified pursuant to, any Environmental Laws or 
  regulations as "hazardous substances," "hazardous materials," 
  "hazardous wastes," "toxic substances" or any other formulation 
  intended to define, list or classify substances by reason of 
  deleterious properties such as ignitability, corrosivity, 
  reactivity, carcinogenicity, reproductive toxicity or "EP 
  toxicity"; (b) oil, petroleum or petroleum derived substances, 
  natural gas, natural gas liquids or synthetic gas and drilling 
  fluids, produced waters and other wastes associated with the 
  exploration, development or production of crude oil, natural gas 
  or geothermal resources; (c) any flammable substances or 
  explosives or any radioactive materials; and (d) asbestos in any 
  form or electrical equipment which contains any oil or dielectric 
  fluid containing levels of polychlorinated biphenyls in excess of 
  fifty parts per million.
  
  (a) 		"Loan Documents" shall mean,  the Note, the 
  Mortgages, the Assignments of Leases and Rents relating to the 
  Properties, and all other documents now or hereafter executed by 
  Borrower or held by Lender relating to the Loan, including all 
  amendments, but excluding this Agreement and the Unsecured Note 
  described in Article Two below.
  
  (a) 		"Loan Parties" shall mean the Borrower and the 
  Company, and "Loan Party" shall mean the Borrower or the Company.
  
  (a) 		"Material Adverse Effect" shall mean a material 
  adverse effect upon the ability of any Loan Party to perform its 
  obligations under this Agreement or the Unsecured Note or upon 
  the ability of Lender to enforce or collect any of the 
  Obligations. 
  
  (a) 		"Obligations" shall mean all obligations, 
  liabilities and indebtedness of every nature of each Loan Party 
  from time to time owed to Lender, including the principal amount 
  of all debts, claims and indebtedness, accrued and unpaid 
  interest and all fees, costs and expenses, whether primary, 
  secondary, direct, contingent, fixed or otherwise, heretofore, 
  now and/or from time to time hereafter owing, due or payable, 
  under the Loan Documents, this Agreement and the Unsecured Note.
  (b) 		"Person" shall mean natural persons, corporations, 
  limited partnerships, general partnerships, limited liability 
  companies, joint stock companies, joint ventures, associations, 
  companies, trusts, banks, trust companies, land trusts, business 
  trusts or other organizations, whether or not legal entities, and 
  governments and agencies and political subdivisions thereof.
  
  (a) 		"Secured Debt" of a Person at any time shall mean 
  any debt, liability or other obligation of such Person which is 
  included in Debt or Total Liabilities of such Person at such time 
  and is secured by any Encumbrance.
  
  (a) 		"Subsidiary" shall mean, with respect to any 
  Person, any corporation, association or other business entity of 
  which more than 50% of the total voting power of shares of stock 
  (or equivalent ownership or controlling interest) entitled 
  (without regard to the occurrence of any contingency) to vote in 
  the election of directors, managers or trustees thereof is at the 
  time owned or controlled, directly or indirectly, by that Person 
  or one or more of the other Subsidiaries of that Person or a 
  combination thereof.
  
  (a) 		"Total Capitalization" of a Person at any time 
  shall mean the aggregate of such Person's Consolidated Net Worth 
  and Total Liabilities at such time.
  
  (a) 		"Total Liabilities" of a Person at any time shall 
  mean, without duplication:
  
  		(1)	Total liabilities (not to include minority 
  interests) as shown on such Person's consolidated 
  financial statements as prepared and classified in 
  accordance with GAAP;
  
  		(2)	All obligations of such Person evidenced or 
  secured by debentures, notes, deeds of trust, 
  mortgages, liens, pledges, charges, encumbrances, 
  security interests or other similar instruments 
  (including Debt);
  
  		(3)	All obligations of such Person to pay the deferred 
  purchase price of property or services;
  
  		(4)	All obligations of such Person as lessee that are 
  required to be capitalized in accordance with 
  GAAP;
  
  		(5)	All obligations of such Person incurred in 
  connection with acquisition of property, assets or 
  businesses;
  
  		(6)	Every currently due reimbursement obligation of 
  such Person with respect to a letter of credit or 
  bankers' acceptance or similar facility issued for 
  the account of such Person;
  
  		(7)	Any shares of stock (common or preferred), units, 
  minority interests or other beneficial ownership 
  interests of such Person which are convertible to 
  Debt of such Person or to an obligation of such 
  Person;
  
  		(8)	Any obligation of such Person to be liable for, or 
  to pay, as obligor, guarantor or otherwise, 
  indebtedness or other liability of another Person 
  (other than Borrower or Company, as applicable, or 
  a Consolidated Subsidiary), which, in management's 
  opinion would be reportable as a liability in such 
  Person's financial statements in accordance with 
  GAAP (other than for purposes of collection in the 
  ordinary course of business), it being understood 
  that debt or a liability shall be deemed to be 
  incurred by such Person whenever such Person or 
  such Person's Consolidated Subsidiary shall 
  create, assume or guarantee such indebtedness or 
  liability or otherwise become liable in respect 
  thereof.
  
  (a) 		"Unencumbered Assets" of a Person at any time 
  shall mean total undepreciated assets of such Person not subject 
  to any Encumbrance, excluding restricted cash, accounts 
  receivable and intangibles, as shown on such Person's 
  consolidated financial statements as prepared and classified in 
  accordance with GAAP.
  
  (a) 		"Unsecured Debt" of a Person at any time shall 
  mean any obligation which is included in Debt of such Person at 
  such time which is not secured by any Encumbrance.
  
  (a) 		"Unsecured Note" shall have the meaning provided 
  in Section 2.01.
  
  (a) 		"Unsecured Note Base Rate" shall mean 7.095% per 
  annum.
  
  Capitalized terms which are used in this Agreement but not 
  defined herein shall be defined as they are defined in the 
  Mortgage or other Loan Documents, and the rules of construction 
  stated in the Mortgage shall apply in this Agreement.
  
  Section 1.02.  Accounting Matters.  
  
  	For purposes of this Agreement, all accounting terms not 
  otherwise defined herein shall have the meanings assigned to such 
  terms in conformity with GAAP.  The terms "Consolidated Net 
  Worth," "Debt," "Debt Service," "Secured Debt," "Total 
  Liabilities," "Total Capitalization," "Unencumbered Assets" and 
  "Unsecured Debt" shall be calculated for the Company and its 
  Consolidated Subsidiaries and for the Borrower and its 
  Consolidated Subsidiaries in accordance with GAAP.  Financial 
  statements and other information furnished to Lender pursuant to 
  Article Five shall be prepared in accordance with GAAP (as in 
  effect at the time of such preparation). 
  
  
  ARTICLE TWO
  
  Section 2.01. Conversion Option.
  
  	If all of the conditions of Section 2.02 hereof are 
  fulfilled when required, Borrower may, at its option, exercisable 
  (a) only one time, (b) not later than two years from the date of 
  the Note and (c) upon not less than ninety (90) days' prior 
  written notice to Lender (the "Conversion Notice"), convert the 
  Loan into an unsecured obligation of Borrower to be evidenced by 
  a note substantially in the form of Exhibit A hereof and 
  satisfying all other requirements of this Article Two (the 
  "Unsecured Note") in the amount of the then outstanding principal 
  balance of the Note, or of half of that amount, as determined in 
  accordance with Section 2.02(a) below (the "Unsecured Note 
  Amount").  The date on which such conversion (the "Conversion") 
  shall become effective, which shall be the first day of a 
  calendar month, is hereinafter referred to as the "Conversion 
  Date."  
  
  Section 2.02. Conditions Precedent to Conversion.
  
  	The right of the Borrower to convert the entire Loan, or 
  half of the Loan, to the Unsecured Note in the Unsecured Note 
  Amount is subject to satisfaction of the following conditions 
  precedent:
  
  	(a)	On or prior to the Conversion Date, in order to convert 
  the entire Loan, the proposed Unsecured Note shall have received 
  (based on the assumption that the lien of all or certain of the 
  Mortgages will be released in accordance with Section 2.06) two 
  of the following: (i) a rating of at least BBB from Standard & 
  Poor's Ratings Group ("S&P"), (ii) a rating of at least Baa2 from 
  Moody's Investors Service, Inc. ("Moody's") or (iii) a rating at 
  least equivalent to the aforesaid ratings from a nationally 
  recognized rating agency acceptable to Lender (a "Nationally 
  Recognized Rating Agency").  On or prior to the Conversion Date, 
  in order to convert one-half of the Loan, the proposed Unsecured 
  Note shall have received (based on the assumption that the lien 
  of certain of the Mortgages will be released in accordance with 
  Section 2.06) two of the following: (i) a rating of at least BBB- 
  from S&P, (ii) a rating of at least Baa3 from Moody's, or (iii) a 
  rating at least equivalent to the aforesaid from a Nationally 
  Recognized Rating Agency.  If the proposed Unsecured Note shall 
  not have received at least two of the three ratings described 
  above, Borrower will not have any right to convert either the 
  Loan or one-half of the Loan.  Such ratings shall be in effect on 
  the Conversion Date, and Lender shall have received evidence 
  satisfactory to it of such rating.  The Unsecured Note shall be 
  subject to and comply with any covenants required by and 
  acceptable to any applicable rating agency for its ratings, 
  provided that in no event may those covenants be less restrictive 
  than or contravene the Financial Covenants contained in Article 
  Four.
  
  	(b)	At the time of delivery of the Conversion Notice and at 
  all times thereafter to and including the Conversion Date, the 
  following statements shall be true and correct, and Lender shall 
  have received on the Conversion Date certificates as of that date 
  from an executive officer of the Company certifying on behalf of 
  the Company and of the general partner of Borrower certifying on 
  behalf of Borrower to that effect:
  
  		(i)		The representations and warranties 
  contained in Section 3.01 and 3.02 hereof are 
  true and correct;
  
  		(ii)		No default or Event of Default 
  under the Loan Documents or this Agreement has 
  occurred and is continuing;
  
  		(iii)		Neither Borrower nor the 
  Company is in default under any of its Debt; and
  
  		(iv)		After giving effect to the 
  Conversion, and without giving effect to any 
  otherwise applicable grace periods or notice 
  requirements, (i) the Company is in compliance 
  with the covenants set forth in Section 4.01, 
  and is in accordance with such covenants able to 
  incur at least $1.00 of Debt, (ii) Borrower is 
  in compliance with the covenants set forth in 
  Section 4.02, and is in accordance with such 
  covenants able to incur at least $1.00 of Debt 
  and (iii) each Loan Party is in compliance with 
  the covenants set forth in Article Five.
  
  	(c)	On the Conversion Date, Lender shall have received a 
  favorable opinion of counsel for Borrower and Company in all 
  relevant jurisdictions reasonably satisfactory to Lender, in such 
  form as may be reasonably satisfactory to Lender and as to such 
  matters as are described in Exhibit  B annexed hereto.
  
  	(d)	On or prior to the Conversion Date, Borrower shall have 
  paid or caused to be paid (i) all principal of the Loan that 
  shall have become due and payable pursuant to the Loan Documents, 
  (ii) all unpaid interest on the Loan accrued to but not including 
  the Conversion Date, (iii) all accrued fees and expenses payable 
  to Lender pursuant to the Loan Documents and (iv) all reasonable 
  fees and expenses of outside counsel to Lender incurred in 
  connection with the preparation, execution and delivery of all 
  documents relating to the Conversion Option and in connection 
  with the exercise thereof, whether or not the Conversion is 
  effected.
  
  	(e)	On the Conversion Date, Borrower shall have executed 
  and delivered to Lender the Unsecured Note either (i) in the 
  amount of the then outstanding principal balance of the Note or 
  (ii) in one-half of that amount, as determined in accordance with 
  Sections 2.02(a), substantially in the form of Exhibit A hereto, 
  appropriately completed.
  
  	(f)	On or prior to the Conversion Date, a Private Placement 
  number issued by Standard & Poor's CUSIP Service Bureau (in 
  cooperation with the Securities Valuation Office of the National 
  Association of Insurance Commissioners) shall have been obtained 
  for the Unsecured Note.
  
  	(g)	Unless previously approved by Lender, neither Borrower 
  nor Company shall after the date of this Agreement have been a 
  party to any consolidation or merger unless the Borrower or the 
  Company, as the case may be, is the surviving entity and at the 
  time of such consolidation or merger and after giving effect 
  thereto, no default or Event of Default shall exist under the 
  Loan Documents or this Agreement and the Borrower and the 
  Company, as the case may be, may without causing a default under 
  this Agreement incur at least $1 of Debt. 
  
  	(h)	On the Conversion Date the issuance to Lender of the 
  Unsecured Note shall (A) not violate any applicable law or 
  regulation, which law or regulation was not in effect as of the 
  date of this Agreement, and (B) not subject the Lender to any tax 
  under or pursuant to any applicable law or regulation, which law 
  or regulation was not in effect as of the date of this Agreement; 
  provided that, if Lender shall be subject to any such tax, the 
  condition specified in this clause (B) shall be deemed satisfied 
  if Borrower shall on or prior to the Conversion Date deliver a 
  written undertaking, satisfactory in form and substance to Lender 
  (which undertaking, if so delivered, shall for all purposes be 
  deemed an obligation of Borrower under this Agreement), (i) to 
  pay, before delinquency and before any penalty for non-payment 
  attaches thereto, all such taxes and any related interest; and 
  (ii) to deliver to Lender, at least ten (10) days before 
  delinquency, receipted bills evidencing such payment.  If 
  requested by Lender, Lender shall have received a certification 
  from an officer of the Company, or an officer of a general 
  partner of the Borrower, as to such matters of fact as Lender may 
  reasonably specify to enable Lender to determine whether such 
  issuance of the Unsecured Note is so permitted.
  
  	(i)	Subject to the provisions of this subparagraph (i), 
  Borrower shall have no right to convert any portion of the Loan 
  to an unsecured obligation unless and until the entire amount of 
  the Loan, as set forth in the first Recital of this Agreement, 
  shall have been disbursed by Lender pursuant to that certain 
  Holdback Agreement of even date herewith between Borrower and 
  Lender (the "Holdback Agreement").  Notwithstanding the 
  foregoing, if, through no fault of the Borrower or the Company,  
  the entire amount of the Loan is not funded pursuant to the 
  Holdback Agreement on or before September 30, 1998, the parties 
  hereto agree that they will enter into good faith negotiations to 
  modify this Agreement to effect a conversion to an unsecured 
  obligation of such lesser amount of the Loan as the parties shall 
  reasonably agree.
  
  Section 2.03.  Interest.
  
  	Borrower shall pay interest on the unpaid principal amount 
  of the Unsecured Note until the principal amount thereof shall be 
  paid in full, at a rate per annum equal to the Unsecured Note 
  Base Rate, subject to the terms of the Unsecured Note providing 
  for an increase in such rate after the occurrence of an Event of 
  Default.
  
  Section 2.04.  Repayment of Unsecured Note.
  
  	Borrower shall repay the principal and interest on the 
  Unsecured Note:
  
  	(a)	Commencing on the first day of the calendar month 
  following the calendar month in which the Conversion Date occurs 
  and continuing on the first day of each month to, but excluding 
  July 1, 2008 (the "Maturity Date"), Borrower shall pay 
  installments of principal and interest in the amount shown on 
  Exhibit C, which amount shall be set forth in the Unsecured Note, 
  each of which installments shall be applied first to the payment 
  of interest on the outstanding principal and the balance to the 
  payment of principal.   In the event the entire Loan is not 
  funded on or before July 31, 1998 pursuant to the Holdback 
  Agreement, the Lender shall revise Exhibit C to reflect a revised 
  amortization and payment schedule based upon the amount of 
  principal anticipated to be outstanding under the Note on the 
  Conversion Date.
  
  	(b)	On the Maturity Date, Borrower shall pay the entire 
  unpaid principal balance of the Unsecured Note, together with all 
  accrued and unpaid interest on the Unsecured Note and all other 
  sums due thereunder.
  
  Section 2.05.	Prepayment.
  
  	Borrower shall have no right to prepay the principal balance 
  on the Unsecured Note in whole or in part, except as set forth in 
  this Section 2.05 and in the Unsecured Note.
  
  	(a)	Prepayment Premium.  Commencing on July 1, 2003, 
  Borrower may prepay the Unsecured Note on the first day of any 
  calendar month in whole but not in part, together with accrued 
  and unpaid interest on the principal being repaid, provided that 
  Borrower shall simultaneously pay to Lender a prepayment premium 
  (the "Prepayment Premium") in an amount equal to the greater of:  
  (i) one (1%) percent (the "Prepayment Percentage") multiplied by 
  the principal amount being prepaid and (ii) the amount by which 
  the sum of the Discounted Values (as hereinafter defined) of all 
  Note Payments (as hereinafter defined) with respect to the 
  Unsecured Note from the date of prepayment to and including the 
  Maturity Date, calculated at the Discount Rate (as hereinafter 
  defined), exceeds the principal amount being prepaid.  Borrower 
  shall give Lender at least ninety (90) days' prior notice of its 
  intention to prepay the Unsecured Note.
  
  	(b)	Evasion of Prepayment Premium.  In the event that the 
  outstanding principal of the Unsecured Note shall, in accordance 
  with Section 6.02, have become due and payable prior to the 
  Maturity Date, or Lender shall receive any payment or tender of 
  payment of principal of the Unsecured Note in any manner not in 
  accordance with the terms of Section 2.04, 2.05(a) or 2.05(d), 
  then, in each case, to the extent permitted by applicable law, 
  there shall also be due and payable by Borrower to Lender a 
  premium (the "Evasion of Prepayment Premium") in an amount equal 
  to the greater of (i) an amount equal to the product of (A) the 
  sum of the Prepayment Percentage plus 300 basis points multiplied 
  by (B) the outstanding principal balance of the Unsecured Note 
  immediately prior to Lender's receipt of such payment (the 
  "Applicable Principal Amount") and (ii) the amount by which the 
  sum of the Discounted Values of Note Payments for the Unsecured 
  Note, calculated at the Default Discount Rate, exceeds the 
  Applicable Principal Amount.
  
  	(c)	Definitions.  As used in this Section 2.05, the 
  following terms shall have the respective meanings set forth 
  below:
  
  		(i)		"Default Discount Rate"  means the 
  Discount Rate less 300 basis points.
  
  		(ii)		"Discount Rate" means the yield on 
  a U.S. Treasury issue selected by Lender, as 
  published in The Wall Street Journal two weeks 
  prior to prepayment, having a maturity date 
  corresponding (or most closely corresponding, if 
  not identical) to the scheduled maturity date of 
  the Unsecured Note, and a coupon rate 
  corresponding (or most closely corresponding, if 
  not identical) to the interest rate on the 
  Unsecured Note.
  
  		(iii)		"Discounted Value" means the 
  Discounted Value of a Note Payment based on the 
  following formula:
  
  			     NP         
  				(1 + R/12)n 	= 	Discounted Value
  
  						NP 	= 	Amount of Note Payment
  				R 	= 	Discount Rate or Default 
  Discount Rate,
  								as the case may be
  
  n 	=	The number of months between 
  the date of prepayment and the 
  scheduled date of the Note 
  Payment in question rounded to 
  the nearest integer.
  
  		(iv)		"Note Payments" means (A) the 
  scheduled payments of monthly debt service on 
  the Unsecured Note for the period between the 
  date of prepayment and the scheduled maturity 
  date of the Unsecured Note; and (B) the 
  scheduled repayment of the outstanding principal 
  balance of the Unsecured Note at the scheduled 
  maturity date.
  
  	(d)	Prepayment During Final 90 Days of Term.  
  Notwithstanding anything herein to the contrary, (i) during the 
  ninety (90) day period immediately preceding the Maturity Date, 
  Borrower shall have the right to voluntarily prepay the Unsecured 
  Note in whole or in part, without any Prepayment Premium, Evasion 
  of Prepayment Premium or any other prepayment premium.
  
  
  Section 2.06. Release of Lien.
  
  	Upon compliance with the conditions precedent set forth in 
  Section 2.02 and the effectiveness of the Conversion, Lender 
  shall, concurrently with the delivery of the Unsecured Note, (a) 
  if the Unsecured Note is in the entire amount of the outstanding 
  principal balance of the Loan, release the Properties from the 
  lien of the Mortgages on the Conversion Date and return to 
  Borrower the Note and any and all collateral held by Lender as 
  security for the Loan, and (b) if the Unsecured Note is in the 
  amount of one-half of the outstanding principal balance of the 
  Loan, then release Properties from the lien of the Mortgages on 
  the Conversion Date such that (i) the Properties remaining 
  subject to Mortgages shall have a Loan to Value Ratio and Debt 
  Service Coverage (as such terms are defined in the Mortgages) in 
  the same proportions as existed at the disbursement of the Loan, 
  and (ii) the number and identity of such Properties remaining 
  subject to Mortgages shall be approved by Lender in its sole 
  reasonable discretion.
  
  
  ARTICLE THREE
  
  Section 3.01.  Representations and Warranties of the Borrower.
  
  	Borrower makes the following representations and warranties 
  to Lender.  These representations and warranties shall be true 
  and correct as of the Conversion Date.  These representations 
  shall also be true and correct, as a condition precedent to 
  Conversion under Section 2.02(b), at the time of the delivery of 
  the Conversion Notice and at all times thereafter to and 
  including the Conversion Date.
  
  	(a)	Borrower is a limited partnership, duly and validly 
  organized and in good standing under the laws of Delaware, and 
  the sole general partner of Borrower is Parkway Properties 
  General Partners, Inc., a Delaware corporation ("GP").  GP holds 
  a one percent (1%) general partnership interest in Borrower.  The 
  Company is a limited partner of Borrower, holding a ninety-nine 
  percent (99%) limited partnership interest in Borrower which may 
  be decreased (but to not less than a fifty-one percent (51%) 
  interest in each class of limited partnership interest in 
  Borrower) by one or more UPREIT transactions, as hereinafter 
  defined (an "UPREIT Transaction").  An UPREIT Transaction is a 
  transaction in which Borrower in acquiring a property from a 
  third party transferor provides as consideration to the 
  transferor partnership interests in Borrower convertible to 
  shares in the Company, and in which transferor may later convert 
  such partnership interests to shares or cash, provided that 
  Borrower shall comply with the provisions of Section 4.02(d).  
  Borrower is duly qualified to do business in each jurisdiction in 
  which the nature of its business or other ownership of its 
  property requires such qualification.  Borrower has all requisite 
  power and authority to own and operate its properties and to 
  carry on its business as now conducted.  
  
  	(b)	Borrower has all necessary legal power and authority to 
  enter into this Agreement, the Unsecured Note and the Loan 
  Documents and the transactions contemplated hereby and thereby 
  and has taken all necessary action to authorize the execution, 
  delivery, and performance of this Agreement, the Unsecured Note 
  and the Loan Documents.  This Agreement
  
  and each of the Loan Documents have been duly and validly 
  executed and delivered by the Borrower, and this Agreement and 
  each of the Loan Documents constitute, and upon execution by the 
  Borrower, the Unsecured Note will constitute, the legal, valid, 
  and binding obligations of the Borrower enforceable against the 
  Borrower in accordance with their respective terms, except as 
  enforceability may be limited by applicable bankruptcy, 
  insolvency, reorganization, or similar laws affecting the rights 
  of creditors generally and by equitable principles of general 
  application.
  
  	(c)	The execution and delivery of this Agreement, the Loan 
  Documents and the Unsecured Note by the Borrower, and the 
  performance by Borrower of its obligations hereunder and under 
  the Loan Documents and the Unsecured Note, will not violate or 
  conflict with any law, rule, or regulation applicable to the 
  Borrower, any provision of the organizational documents of the 
  Borrower, any order, judgment, or decree of any court, arbitrator 
  or governmental agency applicable to the Borrower or any of its 
  assets, or any agreement binding on the Borrower, or result in 
  the creation or imposition of a lien on any properties or 
  revenues of the Borrower, except for liens created by the Loan 
  Documents.
  
  	(d)	There is not presently pending, or to the knowledge of 
  the Borrower threatened, any action, claim, proceeding, or 
  investigation, at law or in equity or by or before any court or 
  arbitrator or any governmental, public, or regulatory authority, 
  against, affecting, or involving the Borrower or any employee 
  thereof which questions the right, power, legal capacity, or 
  permissibility of the Borrower to execute, deliver, and perform 
  its obligations under this Agreement or the Unsecured Note or the 
  Loan Documents, or wherein any unfavorable decision, ruling, or 
  finding could have a Material Adverse Effect.  As of the date of 
  this Agreement, there is no existing matter of a character that 
  would require disclosure to Lender pursuant to Section 5.01(h).
  
  	(e)	No consent or authorization of, filing with, or other 
  act by or in respect of, any governmental authority and no 
  consent of any party is required in connection with the 
  execution, delivery or performance by the Borrower of this 
  Agreement and the Loan Documents and the Unsecured Note or the 
  enforceability thereof against the Borrower, other than any such 
  consent, authorization, filing or other act which has been 
  identified in a notice to Lender, has been obtained or effected, 
  is in full force and effect, and is not the subject of any 
  pending or threatened attack by direct or collateral proceeding.
  
  	(f)	The Borrower has filed all tax returns that are 
  required to have been filed in any jurisdiction, and has paid all 
  taxes shown to be due and payable on such returns and all other 
  taxes and assessments levied upon the Borrower or its properties, 
  assets, income and franchises, to the extent such taxes and 
  assessments have become due and payable and before they have 
  become delinquent, except for any taxes and assessments (i) the 
  amount of which is not individually or in the aggregate material 
  or (ii) the amount, applicability or validity of which is 
  currently being contested in good faith by appropriate 
  proceedings and with respect to which the Borrower has 
  established adequate reserves in accordance with GAAP.
  
  	(g)	The Borrower is not in violation of any law, ordinance, 
  rule, regulation, order, policy, guideline or other requirement 
  of any domestic or foreign government or any instrumentality or 
  agency thereof, having jurisdiction over the conduct of its 
  business or the ownership of its properties, including, without 
  limitation, any violation relating to any use, release, storage, 
  transport or disposal of any Hazardous Material, which violation 
  would subject the Borrower or any of its Subsidiaries to criminal 
  liability or have a Material Adverse Effect, and, to the best 
  knowledge of the Borrower, no such violation has been alleged.  
  As of the date of this Agreement, there is no existing matter of 
  a character that would require disclosure to Lender pursuant to 
  Section 5.01(a).
  
  	(h)	The Borrower does not have any knowledge of any claim, 
  and has not received any notice of any claim, and no proceeding 
  has been instituted raising any claim, against the Borrower or 
  any of its real properties or other assets now or formerly owned, 
  leased or operated by it, alleging any damage to the environment 
  or violation of any Environmental Laws, except, in each case, 
  such as could not reasonably be expected to have a Material 
  Adverse Effect.
  
  	(i)	The Unsecured Note will constitute the senior unsecured 
  obligation of the Borrower, ranking equally with the Borrower's 
  existing and future senior unsecured and unsubordinated 
  indebtedness.  Borrower shall use the proceeds of the Unsecured 
  Note for proper business purposes consistent with all applicable 
  laws, statutes, rules and regulations.  No portion of the 
  proceeds of the Unsecured Note shall be used by Borrower in any 
  manner that might cause the borrowing or the application of such 
  proceeds to violate Regulation U, Regulation T or Regulation X or 
  any other regulation of the Board of Governors of the Federal 
  Reserve System or to violate the Exchange Act.
  
  	(j)	Borrower is not an "employee benefit plan" as defined 
  in Section 3(3) of the Employee Retirement Income Security Act of 
  1974, as amended ("ERISA") that is subject to Title I of ERISA, 
  or a "plan" as defined in Section 4975(e)(1) of the Internal 
  Revenue Code of 1986, as amended (the "Code") that is subject to 
  Section 4975 of the Code, and Borrower's assets do not constitute 
  "plan assets" of one or more such plans for purposes of Title I 
  of ERISA or Section 4975 of the Code.  Borrower is not a 
  "governmental plan" within the meaning of Section 3(3) of ERISA 
  and transactions by or with Borrower are not subject to any laws 
  regulating investments of and fiduciary obligations with respect 
  to governmental plans.
  
  	(k)	Borrower is not, nor after giving effect to any loan 
  will be, subject to regulation under the Public Utility Holding 
  Company Act of 1935, the Federal Power Act or the Investment 
  Company Act of 1940 or to any federal or state statute or 
  regulation limiting its ability to incur indebtedness for 
  borrowed money.
  
  Section 3.02.  Representations and Warranties of the Company.
  
  	The Company makes the following representations and 
  warranties to Lender.  These representations and warranties shall 
  be true and correct as of the Conversion Date.  These 
  representations shall also be true and correct, as a condition 
  precedent to Conversion under Section 2.02(b), at the time of the 
  delivery of the Conversion Notice and at all times thereafter to 
  and including the Conversion Date.
  
  	(a)	The Company is a corporation duly and validly organized 
  and in good standing under the laws of Maryland.  GP is a 
  corporation, duly and validly organized and in good standing 
  under the laws of Delaware.  GP is duly qualified to do business 
  in each jurisdiction in which the nature of its business or the 
  ownership of its properties requires such qualification.  The 
  Company holds, beneficially and of record, one hundred percent 
  (100%) of each class of the outstanding capital stock of GP.   No 
  partnership interest in the Borrower held by the Company or GP is 
  subject to any Encumbrance.
  
  	(b)	The Company has all necessary legal power and authority 
  to enter into this Agreement and the transactions contemplated 
  hereby and has taken all necessary action to authorize the 
  execution, delivery, and performance of this Agreement.  This 
  Agreement has been duly and validly executed and delivered by the 
  Company, and this Agreement and, if applicable, the Unsecured 
  Note, constitutes the legal, valid, and binding obligation of the 
  Company enforceable against the Company in accordance with its 
  terms, except as enforceability may be limited by applicable 
  bankruptcy, insolvency, reorganization, or similar laws affecting 
  the rights of creditors generally and by equitable principles of 
  general application.  The Company has all requisite power and 
  authority to carry on its business as now conducted.
  
  	(c)	The execution and delivery of this Agreement by the 
  Company, and the performance by the Company of its obligations 
  hereunder and, if applicable, under the Unsecured Note, will not 
  violate or conflict with any law, rule, or regulation applicable 
  to the Company, any provision of the organizational documents of 
  the Company, any order, judgment, or decree of any court, 
  arbitrator or governmental agency applicable to the Company or 
  any of its assets, or any agreement binding on the Company, or 
  result in the creation or imposition of a lien on any properties 
  or revenues of the Company.
  
  	(d)	There is not presently pending, or to the knowledge of 
  the Company threatened, any action, claim, proceeding, or 
  investigation, at law or in equity or by or before any court or 
  arbitrator or any governmental, public, or regulatory authority, 
  against, affecting, or involving the Company or any employee 
  thereof which questions the right, power, legal capacity, or 
  permissibility of the Company to execute, deliver, and perform 
  its obligations under this Agreement or, to the extent 
  applicable, the Unsecured Note, or wherein any unfavorable 
  decision, ruling, or finding could have a Material Adverse 
  Effect.  As of the date of this Agreement, there is no existing 
  matter of a character that would require disclosure to Lender 
  pursuant to Section 5.01(h).
  
  	(e)	No consent or authorization of, filing with, or other 
  act by or in respect of, any governmental authority and no 
  consent of any party is required in connection with the 
  execution, delivery or performance by the Company of this 
  Agreement and, if applicable, the Unsecured Note or the 
  enforceability thereof against the Company, other than any such 
  consent, authorization, filing or other act which has been 
  identified in a notice to Lender, has been obtained or effected, 
  is in full force and effect, and is not the subject of any 
  pending or threatened attack by direct or collateral proceeding.
  
  	(f)	The Company has filed all tax returns that are required 
  to have been filed in any jurisdiction, and has paid all taxes 
  shown to be due and payable on such returns and all other taxes 
  and assessments levied upon the Company or the Company's 
  properties, assets, income and franchises, to the extent such 
  taxes and assessments have become due and payable and before they 
  have become delinquent, except for any taxes and assessments (i) 
  the amount of which is not individually or in the aggregate 
  material or (ii) the amount, applicability or validity of which 
  is currently being contested in good faith by appropriate 
  proceedings and with respect to which the Company has established 
  adequate reserves in accordance with GAAP.
  
  	(g)	The audited consolidated financial statements of the 
  Company for the years 1996 and  1997 delivered to Lender in 
  connection with the Loan are complete and correct in all material 
  respects and present fairly the combined financial condition and 
  results of operations of the Company on a consolidated basis, as 
  at the dates thereof and for the periods indicated.  The most 
  recent financial statements of Company delivered to Lender 
  pursuant to the Loan Documents are complete and correct in all 
  material respects and present fairly the combined financial 
  condition and results of operations of Company on a consolidated 
  basis as at the dates thereof and for the periods indicated.  As 
  of the current date, there has been no material adverse change 
  since the date of the 1997 audited consolidated financial 
  statements of the Company in the business, operations, 
  properties, assets, condition (financial or otherwise) or 
  prospects of the Company on a consolidated basis.
  
  	(h)	The Company is not in violation of any law, ordinance, 
  rule, regulation, order, policy, guideline or other requirement 
  of any domestic or foreign government or any instrumentality or 
  agency thereof, having jurisdiction over the conduct of its 
  business or the ownership of its properties, which violation 
  would subject the Company or any of its Subsidiaries to criminal 
  liability or have a Material Adverse Effect, and, to the best 
  knowledge of the Company, no such violation has been alleged.  As 
  of the date of this Agreement, there is no existing matter of a 
  character that would require disclosure to Lender pursuant to 
  Section 5.01(a).
  
  	(i)	The Company does not have any knowledge of any claim, 
  and has not received any notice of any claim, and no proceeding 
  has been instituted raising any claim, against the Company or any 
  of its assets, except, in each case, such as could not reasonably 
  be expected to have a Material Adverse Effect.
  
  
  ARTICLE FOUR
  
  Section 4.01.  Financial Covenants of the Company.
  
  	The Company covenants and agrees with Lender as follows.  
  Such covenants and agreements shall apply, as a condition 
  precedent to the Conversion, at the Conversion Date and shall 
  continue to apply at all times thereafter until payment in full 
  of all Obligations.
  
  	(a)	Ratio of Total Liabilities to Total Capitalization.  
  The Company shall not, and shall not permit any of its 
  Consolidated Subsidiaries to, incur any debt or liability (which 
  if incurred would be included in the definition of Debt or Total 
  Liabilities) if, immediately after giving effect to the 
  incurrence of such debt or liability, the ratio of the Company's 
  Total Liabilities to the Company's Total  Capitalization would 
  exceed sixty percent (60%).
  
  	(b)	Ratio of CADS to Debt Service.  The Company shall not, 
  and shall not permit any of its Consolidated Subsidiaries to, 
  incur any debt (which if incurred would be included in the 
  definition of Debt) if, for the four most recent consecutive 
  calendar quarters ended prior to the date on which such debt is 
  to be incurred (determined in accordance with the financial 
  statements of the Company provided pursuant to Section 5.01(g) 
  hereof), the ratio of CADS to Debt Service of the Company, on a 
  pro-forma basis (if the debt to be incurred is for the purchase 
  or development of a property, then CADS shall be adjusted to 
  reflect such property's projected contribution to CADS during the 
  same period for which Debt Service is being calculated; likewise, 
  such pro-forma calculation shall take into account reductions in 
  CADS resulting from sales of property occurring in the prior four 
  quarters) as if the debt were incurred, is less than 1.5 to 1.
  
  	(c)	Minimum Consolidated Net Worth.  The Company shall not 
  permit its Consolidated Net Worth at any time to be less than 
  $250,000,000.
  
  	(d)	Restricted Payments.  The Company shall not incur any 
  debt or liability (other than short-term borrowings in respect of 
  unsecured lines of credit used in the Company's normal and 
  ongoing cash management which will be repaid within ninety (90) 
  days) in order to declare, pay, make or distribute any dividend 
  or other distribution on account of any shares of stock (common 
  or preferred), units, minority interests or other beneficial 
  ownership interests in the Company.  The Company shall not, and 
  shall not permit any of its Consolidated Subsidiaries to, incur 
  any debt or liability (other than short-term borrowings in 
  respect of unsecured lines of credit used in the Company's normal 
  and ongoing cash management which will be repaid within ninety 
  (90) days) to purchase, redeem, retire or acquire any shares of 
  stock (common or preferred), units, minority interests or other 
  beneficial ownership interests in the Company or in any of its 
  Affiliates.  During the continuance of any Default or Event of 
  Default, the Company shall not (i) declare, pay, make or 
  distribute any dividend or other distribution on account of any 
  shares of stock (common or preferred), units, minority interests 
  or other beneficial ownership interests in the Company or (ii) 
  purchase, redeem, retire or acquire any shares of stock (common 
  or preferred), units, minority interests or other beneficial 
  ownership interests in the Company or in any of its Affiliates, 
  provided that this sentence shall not prohibit the Company (x) 
  after the exhaustion of other sources of funds from declaring or 
  paying any dividend or other distribution to the extent required 
  for the Company to satisfy the provisions of Section 857(a)(1) of 
  the Code or (y) from issuing stock in the Company to a third 
  party transferor as a result of transferor's election to convert 
  partnership interests in Borrower to stock in the Company in 
  connection with an UPREIT Transaction.
  
  	(e)	Ratio of Secured Debt to Total Capitalization.  The 
  Company shall not, and shall not permit any of its Consolidated 
  Subsidiaries to, incur any Secured Debt, if, immediately after 
  giving effect to the incurrence of such Secured Debt, the ratio 
  of the Secured Debt of the Company and its Consolidated 
  Subsidiaries to Total Capitalization of the Company would exceed 
  forty percent (40%).
  
  	(f)	Unencumbered Assets.  Unencumbered Assets of the 
  Company and its Consolidated Subsidiaries shall at all times be 
  equal to or greater than 150% of the aggregate outstanding 
  principal amount of Unsecured Debt of the Company and its 
  Consolidated Subsidiaries.
  
  	(g)	Unsecured Debt by Subsidiaries of Company.  The Company 
  shall not permit any of its Subsidiaries other than Borrower to 
  incur any Unsecured Debt at any time.
  
  	(h)	Restricted Transactions.  The Company shall not, and 
  shall not permit its Consolidated Subsidiaries to, enter into any 
  transaction with any unconsolidated Affiliate of the Company or 
  such Subsidiary unless such transaction is approved by a majority 
  of the Company's outside trustees or is on market terms and 
  otherwise on terms not more favorable to such Affiliate than 
  would have been obtained in a comparable arm's length transaction 
  between the Company or such Subsidiary and an unaffiliated third 
  party.
  
  	(i)	Status of Company.  The Company shall at all times 
  remain (1) a listed company on the New York Stock Exchange or 
  American Stock Exchange and (2) qualified as a real estate 
  investment trust (REIT) under the Code.  The Company shall at all 
  times have as its sole business purpose to directly or indirectly 
  purchase, hold, lease, manage, develop, construct upon, 
  subdivide, finance and improve and sell or exchange, real 
  property and interests in real property and in entities owning 
  real property, and to conduct all activities incidental or 
  related thereto.
  
  	(j)	Organizational Documents of Company.  The Company shall 
  not make a material change to its organizational documents which 
  would have an adverse effect on the Lender without the prior 
  written consent of Lender.
  
  	(k)	Assets of Company.  The Company's only assets (other 
  than cash held for distribution) shall at all times remain its 
  limited partnership interest in Borrower and its existing 100% 
  ownership interest in GP, and GP's sole interest shall be its 1% 
  general partnership interest in Borrower.  All assets acquired, 
  owned or held after the date of this Agreement shall be held by 
  Borrower, or by a wholly owned Subsidiary of Borrower.  Each 
  Subsidiary of Borrower shall at all times remain a Consolidated 
  Subsidiary of the Company.
  
  	(l)	Consolidation or Merger. Without the previous approval 
  of the Lender, the Company shall not be a party to any 
  consolidation or merger unless the Company is the surviving 
  entity, and at the time of such consolidation or merger and after 
  giving effect thereto no default or Event of Default shall exist 
  and the Company shall be able to incur in accordance with the 
  terms of this Agreement at least one dollar ($1.00) of Debt.
  
  	(m)	Sale of Assets.  During any twelve (12) month period 
  commencing on or after the Conversion Date, the Company shall 
  not, and shall not permit any of its Consolidated Subsidiaries 
  to, sell or transfer assets owned by the Company or any of its 
  Consolidated Subsidiaries which in total have an undepreciated 
  book value of more than fifteen percent (15%) of the 
  undepreciated book value of the sum of (i) all of the assets of 
  the Company and its Consolidated Subsidiaries prior to the first 
  such sale or transfer during the applicable twelve (12) month 
  period, plus (ii) all of the assets of the Company and its 
  Consolidated Subsidiaries acquired or developed during such 
  twelve (12) month period.  The Company shall not, and shall not 
  permit any of its Consolidated Subsidiaries to, sell or transfer 
  any assets unless, at the time of such sale or transfer, and 
  after giving effect thereto, no Default or Event of Default shall 
  exist and the Company shall be able to incur in accordance with 
  the terms of this Agreement at least one dollar ($1.00) of Debt.
  
  Section 4.02.  Financial Covenants of Borrower.
  
  	The Borrower covenants and agrees with Lender as follows.  
  Such covenants and agreements shall apply as a condition 
  precedent to Conversion under Section 2.02(b), at the Conversion 
  Date and shall continue to apply at all times thereafter until 
  payment in full of all Obligations.
  
  	(a)	Ratio of Total Liabilities to Total Capitalization.  
  The Borrower shall not incur, and shall not permit any of its 
  Consolidated Subsidiaries to incur, any debt or liability (which 
  if incurred would be included in the definition of Debt or Total 
  Liabilities) if, immediately after giving effect to the 
  incurrence of such debt or liability, the ratio of Borrower's 
  Total Liabilities to Borrower's Total Capitalization would exceed 
  sixty percent (60%).
  
  	(b)	Ratio of CADS to Debt Service.  The Borrower shall not 
  incur, and shall not permit any of its Consolidated Subsidiaries 
  to incur, any debt (which if incurred would be included in the 
  definition of Debt) if, for the four most recent consecutive 
  calendar quarters ended prior to the date on which such debt is 
  to be incurred (determined in accordance with the financial 
  statements provided pursuant to Section 5.01(j) hereof), the 
  ratio of CADS to Debt Service of Borrower, on a pro-forma basis 
  (if the debt to be incurred is for the purchase or development of 
  a property, then CADS shall be adjusted to reflect such 
  property's projected contribution to CADS during the same period 
  for which Debt Service is being calculated; likewise, such pro-
  forma calculation shall take into account reductions in CADS 
  resulting from sales of property occurring in the prior four 
  quarters) as if the debt were incurred, is less than 1.5 to 1.
  
  	(c)	Minimum Consolidated Net Worth.  Borrower shall not 
  permit its Consolidated Net Worth at any time to be less than 
  $250,000,000.
  
  	(d)	Restricted Payments.  The Borrower shall not incur, and 
  shall not permit any of its Consolidated Subsidiaries to incur, 
  any debt or liability (other than short-term borrowings in 
  respect of unsecured lines of credit used in the Borrower's 
  normal and ongoing cash management which will be repaid within 
  ninety (90) days) in order to declare, pay, make or distribute 
  any dividend or other distribution on account of any partnership 
  or other beneficial ownership interests in the Borrower.  The 
  Borrower shall not incur, and shall not permit any of its 
  Consolidated Subsidiaries to incur, any debt or liability (other 
  than short-term borrowings in respect of unsecured lines of 
  credit used in the Borrower's normal and ongoing cash management 
  which will be repaid within ninety (90) days) to purchase, 
  redeem, retire or acquire any partnership or other beneficial 
  ownership interests in the Borrower or in any of its Affiliates.  
  During the continuance of any Default or Event of Default, the 
  Borrower shall not (i) declare, pay, make or distribute any 
  dividend or other distribution on account of any shares of stock 
  (common or preferred), units, minority interests or other 
  beneficial ownership interests in the Borrower or (ii) purchase, 
  redeem, retire or acquire any shares of stock (common or 
  preferred), units, minority interests or other beneficial 
  ownership interests in the Borrower or in any of its Affiliates, 
  provided that this sentence shall not preclude the Borrower from 
  declaring or paying any distribution to the extent necessary to 
  permit the Company (after the exhaustion of other sources of 
  funds) to make such distributions as are required for the Company 
  to satisfy the provisions of Section 857(a)(1) of the Code.
  
  	(e)	Ratio of Secured Debt to Total Capitalization.  The 
  Borrower shall not incur, or permit any of its Consolidated 
  Subsidiaries to incur, any Secured Debt at any time if, 
  immediately after giving effect to the incurrence of such Secured 
  Debt, the ratio of the Secured Debt of Borrower and its 
  Consolidated Subsidiaries to Total Capitalization of Borrower 
  would exceed forty percent (40%).
  
  	(f)	Unencumbered Assets.  Unencumbered Assets of Borrower 
  and its Consolidated Subsidiaries shall at all times be equal to 
  or greater than 150% of the aggregate outstanding principal 
  amount of Unsecured Debt of the Borrower and its Consolidated 
  Subsidiaries.
  
  	(g)	Unsecured Debt by Subsidiaries of Borrower.  The 
  Borrower shall not permit any of its Subsidiaries to incur any 
  Unsecured Debt at any time.
  
  	(h)	Restricted Transactions.  The Borrower shall not enter 
  into, or permit any of its Subsidiaries to enter into, any 
  transaction with any unconsolidated Affiliate of the Borrower or 
  any of its Subsidiaries or the Company unless such transaction is 
  on market terms and otherwise on terms not more favorable to the 
  Affiliate than would be obtained in a comparable arm's length 
  transaction between the Borrower or such Subsidiary and an 
  unaffiliated third party.
  	(i)	Borrower's Organizational Documents.  The Borrower will 
  not make a material change to its partnership agreement or other 
  organizational documents which would have an adverse effect on 
  Lender, without the prior written consent of Lender.
  
  	(j)	Consolidation or Merger.  Neither Borrower, nor any of 
  its Consolidated Subsidiaries, shall be a party to any 
  consolidation or merger unless the Borrower or such Consolidated 
  Subsidiary is the surviving entity, and at the time of such 
  consolidation or merger and after giving effect thereto no 
  Default or Event of Default shall exist and the Borrower shall be 
  able to incur in accordance with the terms of this Agreement at 
  least at least one dollar ($1.00) of Debt.
  
  	(k)	Sale of Assets.  During any twelve (12) month period 
  commencing on or after the Conversion Date, the Borrower shall 
  not, and shall not permit any of its Consolidated Subsidiaries 
  to, sell or transfer assets owned by the Borrower or any of its 
  Consolidated Subsidiaries which in total have an undepreciated 
  book value of more than fifteen percent (15%) of the 
  undepreciated book value of the sum of (i) all of the assets of 
  the Borrower and its Consolidated Subsidiaries prior to the first 
  such sale or transfer during the applicable twelve (12) month 
  period, plus (ii) all of the assets of the Borrower and its 
  Consolidated Subsidiaries acquired or developed during such 
  twelve (12) month period.  The Borrower shall not sell or 
  transfer, or permit any of its Consolidated Subsidiaries to sell 
  or transfer, any assets unless, at the time of such sale or 
  transfer, and after giving effect thereto, no Default or Event of 
  Default shall exist and Borrower shall be able to incur in 
  accordance with the terms of this Agreement at least one dollar 
  ($1.00) of Debt.
  
  
  ARTICLE FIVE
  
  Section 5.01. Additional Affirmative Covenants.
  
  	Each Loan Party covenants and agrees with Lender as follows.  
  Such covenants and agreements shall apply as of the Conversion 
  Date and at all times thereafter.   Such covenants and agreements 
  shall also apply as a condition precedent to Conversion under 
  Section 2.02(b), at the time of the delivery of the Conversion 
  Notice, to the extent applicable, and at all times thereafter to 
  and including the Conversion Date.
  
  	(a)	Compliance with Laws.  Each Loan Party shall, and shall 
  cause each of its Consolidated Subsidiaries to, comply with the 
  requirements of all applicable laws, rules, regulations and 
  orders of any governmental authority, including any Environmental 
  Law, as now in effect and which may be imposed in the future in 
  all jurisdictions in which such Loan Party is now doing business 
  or may hereafter be doing business, other than those applicable 
  laws, rules, regulations and orders of any governmental 
  authority, the noncompliance with which would not, individually 
  or in the aggregate, have a Material Adverse Effect.  Each Loan 
  Party shall promptly notify Lender of any noncompliance with the 
  requirements of all applicable laws, rules, regulations and 
  orders of any governmental authority, including but not limited 
  to any Environmental Law, as now in effect and which may be 
  imposed in the future in all jurisdictions in which such Loan 
  Party is now doing business or may hereafter be doing business, 
  and provide such other information as may be reasonably available 
  to it to enable Lender and its counsel to evaluate such matter.
  
  	(b)	Maintenance of Properties; Insurance.  Each Loan Party 
  shall, and shall cause each of its Consolidated Subsidiaries to, 
  maintain or cause to be maintained in good repair, working order 
  and condition all material properties used in the business of 
  such Person and shall make or cause to be made all appropriate 
  repairs, renewals and replacements thereof.  Each Loan Party 
  shall maintain, and shall cause each of its Consolidated 
  Subsidiaries to maintain, or cause to be maintained, with 
  financially sound and reputable insurers, public liability and 
  property damage insurance with respect to its business and 
  properties against loss or damage of the kinds customarily 
  carried or maintained by corporations of established reputation 
  engaged in similar businesses and in amounts acceptable to 
  Lender.  
  
  	(c)	Keeping of Books.   Each Loan Party shall keep proper 
  books of record and account for itself and all of its 
  Consolidated Subsidiaries, in which full and correct entries 
  shall be made of all financial transactions and the assets and 
  business of such Person in conformity with GAAP.
  
  	(d)	Corporate or Partnership Existence.  Except as 
  permitted in Section 4.01 and 4.02, each Loan Party shall, and 
  shall cause each of its Consolidated Subsidiaries to, at all 
  times preserve and keep in full force and effect its corporate or 
  partnership existence (as the case may be) and all rights and 
  franchises material to its business.  Each Loan Party will 
  promptly notify Lender of any change (i) in its or its 
  Consolidated Subsidiaries' corporate or partnership structure or 
  (ii) to its organizational documents. 
  
  	(e)	Inspection.  Each Loan Party shall, at any reasonable 
  time and from time to time, upon reasonable prior notice, during 
  regular business hours permit Lender (and any authorized 
  representatives designated by Lender) to (1) examine and make 
  copies of and abstracts from the records (other than records 
  subject to attorney-client privilege or confidentiality 
  agreements) and books of account of such Loan Party, (2) to visit 
  and, subject to the rights of tenants, inspect any of the 
  properties of such Loan Party and its Subsidiaries, (3) discuss 
  the affairs, finances and accounts of such Loan Party and its 
  Subsidiaries with the executive officers of the Company, and (4) 
  communicate directly, in the presence of representatives of  such 
  Loan Party, with such Loan  Party's independent public 
  accountants at such reasonable times during normal business hours 
  and as often as may be reasonably requested.  Lender's expenses 
  associated with such inspection, shall be paid by Lender, except 
  during the continuance of any Event of Default, in which event 
  the reasonable expenses of Lender associated with such inspection 
  shall be paid by such Loan Party.
  
  	(f)	Payment of Taxes and Claims.  Each Loan Party shall, 
  and shall cause its Consolidated Subsidiaries to, file all tax 
  returns required to be filed in any jurisdiction and to pay and 
  discharge all taxes shown to be due and payable on such returns 
  and all other taxes, assessments, governmental charges, or levies 
  imposed on such Person or its properties, assets, income or 
  franchises, provided that such Person need not pay any such tax 
  or assessment or claims if the amount, applicability or validity 
  thereof is contested by such Person on a timely basis in good 
  faith and in appropriate proceedings, and such Person has 
  established adequate reserves therefor on its books in accordance 
  with GAAP.
  
  	(g)	Events of Default, Etc.  Promptly, and in any event 
  within five (5) days after any Loan Party shall obtain knowledge 
  of any of the following events or conditions, such Loan Party 
  shall deliver copies of all notices given or received by such 
  Loan Party with respect to any such event or condition and a 
  certificate of an authorized party on behalf of such Loan Party 
  specifying the nature and period of existence of such event or 
  condition and what action of such Loan Party has taken, is taking 
  and proposes to take with respect thereto: (i) any condition or 
  event that constitutes a Default or an Event of Default; or (ii) 
  any event or condition that could reasonably be expected to 
  result in any Material Adverse Effect.
  
  	(h)	Litigation.  Promptly upon any officer of any Loan 
  Party obtaining knowledge of (1) the institution of any action, 
  suit, proceeding, governmental investigation or arbitration 
  against or affecting any Loan Party, (2) any material development 
  in any action, suit, proceeding, governmental investigation or 
  arbitration at any time pending against or affecting any Loan 
  Party or any property of any Loan Party, or (3) the assertion of 
  any claim, or the institution of any proceeding raising any 
  claim, against any Loan Party or any of its real properties now 
  or formerly owned, leased or operated by it or other assets of 
  it, alleging any damage to the environment or violation of any 
  Environmental Laws, that in any such case could reasonably be 
  expected to have a Material Adverse Effect or a material adverse 
  effect upon the business, operations, properties, assets, 
  condition (financial or otherwise) or prospects of any Loan Party 
  on an individual basis or taken as a whole, such Loan Party will 
  give notice thereof to Lender and provide such other information 
  as may be reasonably available to it to enable Lender and its 
  counsel to evaluate such matter.
  
  	(i)	Other Indebtedness Notices.   Each Loan Party shall 
  promptly deliver copies of all notices given or received by such 
  Loan Party with respect to noncompliance with any term or 
  condition related to any Debt in excess of $1,000,000 with 
  respect to a single item or $3,000,000 in the aggregate, and 
  shall promptly notify Lender of any potential or actual event of 
  default with respect to any such Debt.
  
  	(j)	Fiscal Year; Financial Statements; Reports of the 
  Company and Borrower; SEC and Other Reports; Officer's 
  Certificate.  Each Loan Party shall maintain its fiscal year as a 
  calendar year at all times.  The Company shall deliver the 
  following submissions to Lender, and the Borrower shall make 
  identical submissions (except for those relating to Securities 
  and Exchange Commission requirements) at the times required for 
  submissions from Company pursuant to clauses (i), (ii), (iv) and 
  (v) below for the appropriate period:
  
  	(i)	Quarterly Statements -- within 45 days after the 
  end of each quarterly fiscal period in each fiscal year of 
  the Company (other than the last quarterly fiscal period of 
  each such fiscal year), duplicate copies of,
  
  	(A)	a consolidated balance sheet of the Company 
  and its Consolidated Subsidiaries as at the end of such 
  quarter, and
  
  	(B)	consolidated statements of income, changes in 
  shareholders' equity and cash flows of the Company and 
  its Consolidated Subsidiaries, for such quarter and (in 
  the case of the second and third quarters) for the 
  portion of the fiscal year ending with such quarter,
  
  setting forth in each case in comparative form the figures 
  for the corresponding periods in the previous fiscal year, 
  all in reasonable detail, prepared in accordance with GAAP 
  applicable to quarterly financial statements generally, and 
  certified by a financial officer of the Company as fairly 
  presenting, in all material respects, the financial position 
  of the companies being reported on and their results of 
  operations and cash flows, subject to changes resulting from 
  year-end adjustments, provided that delivery within the time 
  period specified above of copies of the Company's Quarterly 
  Report on Form 10-Q prepared in compliance with the 
  requirements therefor and filed with the Securities and 
  Exchange Commission shall be deemed to satisfy the 
  requirements of this Section 5.01(j)(i);
  
  	(ii)	Annual Statements -- within 90 days after the end 
  of each fiscal year of the Company, duplicate copies of,
  
  	(A)	a consolidated balance sheet of the Company 
  and its Consolidated Subsidiaries, as at the end of 
  such year, and
  
  	(B)	consolidated statements of income, changes in 
  shareholders' equity and cash flows of the Company and 
  its Consolidated Subsidiaries, for each such year,
  
  setting forth in each case in comparative form the figures 
  for the previous fiscal year, all in reasonable detail, 
  prepared in accordance with GAAP, and accompanied by:
  
  	(1)	an opinion thereon of independent certified 
  public accountants of recognized national standing, 
  which opinion shall state that such financial 
  statements present fairly, in all material respects, 
  the financial position of the companies being reported 
  upon and their results of operations and cash flows and 
  have been prepared in conformity with GAAP, and that 
  the examination of such accountants in connection with 
  such financial statements has been made in accordance 
  with generally accepted auditing standards, and that 
  such audit provides a reasonable basis for such opinion 
  in the circumstances, and 
  	(2)	upon request of Lender, but only if a default 
  shall exist or if the Unsecured Note shall have a lower 
  rating than that specified in Section 2.01(b) hereof at 
  the time of such request, a certificate of such 
  accountants stating that they have reviewed this 
  Agreement and the certificate of a financial officer of 
  the Company provided pursuant to Section 5.01(j)(iv) in 
  connection with such financial statements, and stating 
  further whether, in making their audit, they have 
  become aware of any condition or event that then 
  constitutes a breach of any covenant contained in 
  Article Four, and, if they are aware that any such 
  condition or event then exists, specifying the nature 
  and period of the existence thereof (it being 
  understood that such accountants shall not be liable, 
  directly or indirectly, for any failure to obtain 
  knowledge of any such breach unless such accountants 
  should have obtained knowledge thereof in making an 
  audit in accordance with generally accepted auditing 
  standards or did not make such an audit),
  
  provided that the delivery within the time period specified 
  above of the Company's Annual Report on Form 10-K for such 
  fiscal year (together with the Company's annual report to 
  shareholders, if any, prepared pursuant to Rule 14a-3 under 
  the Exchange Act) prepared in accordance with the 
  requirements therefor and filed with the Securities and 
  Exchange Commission, together with the accountant's 
  certificate described in clause (2) above, shall be deemed 
  to satisfy the requirements of this Section 5.01(j)(ii);
  
  	(iii)	Promptly upon their becoming available, one copy 
  of (A) each financial statement, report, notice or proxy 
  statement sent by the Company or any of its Subsidiaries to 
  public securities holders generally, and (B) each regular or 
  periodic report, each registration statement (without 
  exhibits except as expressly requested by Lender), and each 
  prospectus and all amendments thereto filed by the Company 
  or any such Subsidiary with the Securities and Exchange 
  Commission and of all press releases and other statements 
  made available generally by the Company or any such 
  Subsidiary to the public concerning developments that are 
  material;
  
  	(iv)	Each set of financial statements delivered to 
  Lender pursuant to Section 5.01(j)(i) or Section 5.01(j)(ii) 
  hereof shall be accompanied by a certificate of a financial 
  officer of the Company, in his or her capacity as such 
  officer and without personal liability other than for 
  fraudulent statements or omissions, setting forth:
  
  	(A)	Covenant Compliance -- the information 
  (including detailed calculations) required in order to 
  establish whether the Company was in compliance with 
  the requirements of Section 4.01 hereof and whether the 
  Borrower was in compliance with the requirements of 
  Section 4.02 hereof, during the quarterly or annual 
  period covered by the statements then being furnished 
  (including with respect to such Section, where 
  applicable, the calculations of the maximum or minimum 
  amount, ratio or percentage, as the case may be, 
  permissible under the terms of such Sections, and the 
  calculation of the amount, ratio or percentage then in 
  existence); and
  	(B)	Event of Default -- a statement that such 
  officer has reviewed the relevant terms hereof and has 
  made, or caused to be made, under his or her 
  supervision, a review of the transactions and 
  conditions of the Company, the Borrower, and the 
  Company's other Subsidiaries from the beginning of the 
  quarterly or annual period covered by the statements 
  then being furnished to the date of the certificate and 
  that such review shall not have disclosed the existence 
  during such period of any condition or event that 
  constitutes a Default or an Event of Default or, if any 
  such condition or event existed or exists, specifying 
  the nature and period of existence thereof and what 
  action the Company or Borrower (as applicable) shall 
  have taken or proposes to take with respect thereto;
  
  	(v)	Promptly after Lender shall so request, such other 
  reports and information as Lender shall reasonably request 
  from time to time.
  
  
  ARTICLE SIX
  
  Section 6.01.  Events of Default.
  
  	(a)	From and after the Conversion Date, each of the 
  following shall constitute an Event of Default for purposes of 
  this Agreement:
  
  		(i)		Borrower shall fail to pay (A) any 
  installment or mandatory prepayment of principal 
  of or Prepayment Premium or the Evasion of 
  Prepayment Premium, if any, on the Unsecured 
  Note, (B) any interest on the Unsecured Note or 
  (C) any fee or other amount payable hereunder or 
  under the Unsecured Note, in each case when the 
  same becomes due and payable, whether at 
  maturity or otherwise, and such failure 
  continues for five (5) days after the same 
  becomes due and payable; or 
  
  		(ii)		Any representation or warranty made 
  by either Loan Party herein, or in any writing 
  furnished to Lender in connection with the 
  transactions contemplated by this Agreement, 
  shall prove to have been incorrect in any 
  material respect when made or deemed made; or 
  
  		(iii)		Borrower or the Company shall 
  fail to perform or observe any term, covenant or 
  agreement contained in this Agreement (other 
  than as specified in clause (i) above), and such 
  failure shall remain unremedied for forty-five 
  (45) days; or 
  
  		(iv)		Any recourse obligation of either 
  Loan Party or any of their respective 
  Consolidated Subsidiaries (other than the 
  Unsecured Note) shall have been declared (or one 
  or more Persons is entitled to declare any such 
  obligation) due and payable prior to its 
  scheduled maturity, or any payment in respect of 
  such obligations shall be past due beyond any 
  applicable grace period; or
  
  		(v)		There shall be an Event of Default 
  under any of the Loan Documents; or
  
  		(vi)		Either Loan Party, GP or any of 
  their respective Consolidated Subsidiaries shall 
  commence a voluntary case or other proceeding 
  seeking liquidation, reorganization or other 
  relief with respect to itself or its debts under 
  any bankruptcy, insolvency or other similar law 
  now or hereafter in effect or seeking the 
  appointment of a trustee, receiver, liquidator, 
  custodian or other similar official of its or 
  any substantial part of its property, or shall 
  consent to any such relief or to the appointment 
  of or taking possession by any such official in 
  an involuntary case or other proceeding 
  commenced against it, or shall make a general 
  assignment for the benefit of creditors, or 
  shall fail generally to pay its debts as they 
  become due, or shall take any corporate action 
  to authorize any of the foregoing; or
  
  		(vii)		an involuntary case or other 
  proceeding shall be commenced against either 
  Loan Party, GP or any of their respective 
  Consolidated Subsidiaries, seeking liquidation, 
  reorganization or other relief with respect to 
  it or its debts under any bankruptcy, insolvency 
  or other similar law now or hereafter in effect 
  or seeking the appointment of a trustee, 
  receiver, liquidator, custodian or other similar 
  official of it or any substantial part of its 
  property, and such involuntary case or other 
  proceeding shall remain undismissed and unstayed 
  for a period of 90 days; or an order for relief 
  shall be entered against either Loan Party, GP 
  or any of their respective Consolidated 
  Subsidiaries, under the federal bankruptcy laws 
  as now or hereafter in effect; or
  
  		(viii)		a final judgment or judgments 
  for the payment of money are rendered against 
  one or more of the Company, GP or any of their 
  respective Consolidated Subsidiaries, and which 
  judgments are not adequately covered by 
  insurance satisfactory to Lender in its sole 
  discretion, or within 60 days after entry 
  thereof, bonded, discharged or stayed pending 
  appeal, or are not discharged within 60 days 
  after the expiration of such stay.
  
  Section 6.02. Remedies Upon Default.
  
  	Upon the occurrence of an Event of Default described in 
  Section 6.01(b)(vi) or (vii), the entire principal sum evidenced 
  by the Unsecured Note together with accrued interest and all 
  other amounts due under this Agreement and the Unsecured Note 
  (including the Evasion of Prepayment Premium) shall become 
  immediately due and payable without any declaration or other act 
  on the part of Lender.  Upon the occurrence of any other Event of 
  Default, Lender may, upon notice to Borrower, in addition to such 
  other and further rights and remedies provided by law, the 
  Unsecured Note, or any other agreement entered into by Borrower 
  with respect to the Loan, declare the entire principal sum 
  evidenced by the Unsecured Note due and payable, together with 
  accrued interest thereon and all other amounts due under this 
  Agreement and the Unsecured Note, whereupon the Unsecured Note, 
  plus the applicable Evasion of Prepayment Premium, if any, and 
  all such interest and all such amounts shall become due and 
  payable without presentment, demand, protest or further notice of 
  any kind, all of which are hereby expressly waived by Borrower.  
  If an Event of Default has occurred and is continuing, and 
  irrespective of whether the Unsecured Note has become or has been 
  declared immediately due and payable under this Section 6.02, the 
  Lender may proceed to protect and enforce the rights of Lender by 
  an action at law, suit in equity or other appropriate proceeding, 
  whether for the specific performance of any agreement contained 
  herein or in the Unsecured Note, or for an injunction against a 
  violation of any of the terms hereof or thereof, or in aid of the 
  exercise of the power granted hereby or thereby or by law or 
  otherwise.
  
  Section 6.03. No Waivers or Election of Remedies; Expenses, etc.
  
  	No delay on the part of Lender in exercising any right, 
  power or remedy following the occurrence of an Event of Default 
  and no course of dealing shall operate as a waiver thereof or 
  otherwise prejudice Lender's rights, powers or remedies.  No 
  right, power or remedy conferred by this Agreement or the 
  Unsecured Note shall be exclusive of any other right, power or 
  remedy referred to herein or therein or now or hereafter 
  available at law, in equity, by statute or otherwise, including 
  any right, power or remedy of Lender under any of the Loan 
  Documents.  Without limiting the obligations of Borrower set 
  forth elsewhere herein, Borrower will pay to Lender on demand 
  such further amount as shall be sufficient to cover all costs and 
  expenses of Lender incurred in any enforcement or collection 
  under this Article 6, including attorneys' fees, expenses and 
  disbursements.
  
  
  ARTICLE SEVEN
  
  Section 7.01.  Amendments and Waivers.
  
  	This Agreement may be amended, superseded, canceled, renewed 
  or extended, and the terms hereof may be waived, only by a 
  written instrument signed by the parties hereto or, in the case 
  of a waiver, by the party waiving compliance.  Borrower shall pay 
  all costs and expenses (including attorneys' fees) incurred by 
  Lender in connection with any amendments, waivers or consents 
  requested by Borrower under or in respect of this Agreement or 
  the Unsecured Note (whether or not such amendment, waiver or 
  consent becomes effective).
  
  Section 7.02.  Notices.  Unless otherwise specifically provided 
  herein, all notices shall be in writing addressed to the 
  respective party as set forth below and may be personally served, 
  sent by overnight courier service for next business day delivery 
  or United States mail and shall be deemed to have been given: (a) 
  if delivered in person, when delivered; (b) if delivered by 
  overnight courier, on the next succeeding Business Day after 
  delivery to such courier properly addressed; or (c) if by U.S. 
  Mail, four Business Days after depositing in the United States 
  mail, with postage prepaid and properly addressed:
  
  	If to Borrower		Parkway Properties LP
  	or Company:			c/o Parkway Properties, Inc.
  						188 East Capitol Street
  						Suite 1000
  						Jackson, MS 39201
  						Attn.: Sarah P. Clark
  
  						TIAA Appl. # FL-889;  M-000441900
  						TIAA Appl. # NC-190;  M-000448000
  						TIAA Appl. # SC-74;  M-000442200
  						TIAA Appl. # TN-145;  M-000442100								TIAA Appl. # TX-899;  M-000440000
  						TIAA Appl. # VA-387;  M-000442000		
  	
  	with a copy to:	Forman Perry Watkins
  						Krutz & Tardy, PLLC
  						188 East Capitol Street
  						Suite 1200
  						Jackson, MS 39201
  						Attn.:  Steven M. Hendrix, Esq.
  
  						TIAA Appl. # FL-889;  M-000441900
  						TIAA Appl. # NC-190;  M-000448000
  						TIAA Appl. # SC-74;  M-000442200
  						TIAA Appl. # TN-145;  M-000442100								TIAA Appl. # TX-899;  M-000440000
  						TIAA Appl. # VA-387;  M-000442000		
  
  	If to Lender:		Teachers Insurance and Annuity 
  Association of America
  						730 Third Avenue
  						New York, New York  10017
  						Attn:	Managing Director
  						Mortgage and Real Estate Division
  						Region: Northeast/South/Int'l
  
  						TIAA Appl. # FL-889;  M-000441900
  						TIAA Appl. # NC-190;  M-000448000
  						TIAA Appl. # SC-74;  M-000442200
  						TIAA Appl. # TN-145;  M-000442100								TIAA Appl. # TX-899;  M-000440000
  						TIAA Appl. # VA-387;  M-000442000		
  
  	with a copy to:	Teachers Insurance and Annuity 
  Association of America
  						730 Third Avenue
  						New York, New York  10017
  						Attn:	Vice President and Chief 
  Counsel in charge of Mortgage 
  and Real Estate Law
  
  						TIAA Appl. # FL-889;  M-000441900
  						TIAA Appl. # NC-190;  M-000448000
  						TIAA Appl. # SC-74;  M-000442200
  						TIAA Appl. # TN-145;  M-000442100								TIAA Appl. # TX-899;  M-000440000
  						TIAA Appl. # VA-387;  M-000442000		
  
  or to such other address as the party addressed shall have 
  previously designated by written notice to the serving party, 
  given in accordance with this subsection.
  
  Section 7.03.  Governing Law.
  
  	This Agreement shall be governed and construed in accordance 
  with, and the rights of the parties shall be governed by, the 
  laws of the State of New York excluding choice-of-law principles 
  of the law of such State that would require the application of 
  the laws of a jurisdiction other than such State.
  
  Section 7.04.  Execution in Counterparts.
  
  	This Agreement may be executed by the parties hereto in 
  separate counterparts, each of which when so executed and 
  delivered shall be an original, but all such counterparts shall 
  together constitute one and the same instrument.  Each 
  counterpart may consist of a number of copies hereof each signed 
  by less than all, but together signed by all, of the parties 
  hereto.
  
  Section 7.05.  Exhibits.
  
  The Exhibits hereto shall constitute a part of this Agreement as 
  if fully set forth herein.
  
  Section 7.06.  Severability.
  
  	Any provision of this Agreement that is prohibited or 
  unenforceable in any jurisdiction shall, as to such jurisdiction, 
  be ineffective to the extent of such prohibition or 
  unenforceability without invalidating the remaining provisions 
  hereof, and any such prohibition or unenforceability in any 
  jurisdiction shall (to the full extent permitted by law) not 
  invalidate or render unenforceable such provision in any other 
  jurisdiction.
  
  Section 7.07.  Survival of Representations and Warranties.
  
  	All representations and warranties contained in this 
  Agreement or made in writing by or on behalf of Borrower or the 
  Company in connection with the transactions contemplated hereby 
  shall survive the execution and delivery of this Agreement and 
  the Unsecured Note and the sale of the Unsecured Note, regardless 
  of any investigation made at any time by or on behalf of Lender.
  
  Section 7.08.  Successors and Assigns.
  
  	All covenants and other agreements contained in this 
  Agreement by or on behalf of any of the parties hereto bind and 
  inure to the benefit of their respective successors and assigns 
  whether so expressed or not.
  
  Section 7.09.  The Meaning of "Including".
  
  	The word "including" or other forms of the word "include" 
  shall mean "without limitation".
  
  
  ARTICLE EIGHT
  
  Section 8.01.	Payment on Unsecured Note.
  
  	(a)	Each payment to be made by Borrower hereunder and under 
  the Unsecured Note shall be made not later than 12:00 noon (New 
  York City time) on the day when due, in U.S. dollars, to Lender 
  at its account address set forth below (or at such other account 
  address as Lender shall have previously designated by written 
  notice to Borrower) in immediately available funds without 
  set-off or counterclaim:
  
  				Chase Manhattan Bank
  				New York, NY
  				ABA #021000021
  				Account #910-2-766467
  Credit to Teachers Insurance and Annuity 
  Association of America
  
  						TIAA Appl. # FL-889;  M-000441900
  						TIAA Appl. # NC-190;  M-000448000
  						TIAA Appl. # SC-74;  M-000442200
  						TIAA Appl. # TN-145;  M-000442100							
       	TIAA Appl. # TX-899;  M-000440000
  						TIAA Appl. # VA-387;  M-000442000		
  
  	(b)	Whenever any payment hereunder or under the Unsecured 
  Note shall be stated to be due on a day other than a Business 
  Day, such payment shall be made on the next succeeding Business 
  Day, and such extension of time shall in such case be included in 
  the computation of payment of interest or fee, as the case may 
  be.
  
  
  ARTICLE NINE
  
  Section 9.01.  Registration of the Unsecured Note.
  
  	The Borrower shall keep at its principal executive office, 
  and at its own expense, a register for the registration and 
  registration of transfer of the Unsecured Note.  The names and 
  addresses of the holder of the Unsecured Note, the transfer 
  thereof and the names and addresses of the transferees of the 
  Unsecured Note shall be registered in such note register.  
  Borrower may deem and treat the person in whose name the 
  Unsecured Note is registered as the owner and holder thereof for 
  all purposes and shall not be affected by any notice to the 
  contrary, until due presentment of such Unsecured Note for 
  registration of transfer as provided in this Article Nine.  
  Neither Borrower nor Company may register or otherwise represent 
  the Unsecured Note as a public instrument.
  
  Section 9.02. Transfer and Exchange of the Unsecured Note.
  
  	Upon surrender of the Unsecured Note at the principal 
  executive office of the Borrower for registration of transfer or 
  exchange, Borrower shall execute and deliver, at Borrower's 
  expense, a new Unsecured Note of the same series (as requested by 
  the holder thereof) in exchange therefor, in an aggregate 
  principal amount equal to the unpaid principal amount of the 
  surrendered Unsecured Note.  Each such new Unsecured Note shall 
  be dated and bear interest from the date to which interest shall 
  have been paid on the surrendered Unsecured Note or dated the 
  date of the surrendered Unsecured Note if no interest shall have 
  been paid thereon.
  
  	Every Unsecured Note surrendered for registration of 
  transfer shall be duly endorsed, or be accompanied by a written 
  instrument of transfer duly executed, by the holder of such 
  Unsecured Note or by his or her attorney duly authorized in 
  writing.  Borrower may condition its issuance of any new 
  Unsecured Note in connection with a transfer by any holder on the 
  receipt of customary representations from any transferee of any 
  Unsecured Note as to securities law matters and on payment to 
  Borrower of a sum sufficient to cover any stamp tax or other 
  governmental charge imposed in respect of such transfer.
  
  Section 9.03.  Lost, Stolen or Mutilated Notes.
  
  	Upon receipt by the Borrower of evidence reasonably 
  satisfactory to it of the ownership of and the loss, theft, 
  destruction or mutilation of any Unsecured Note (which evidence 
  shall be, in the case of Lender or other institutional investor, 
  notice from Lender or such other institutional investor, of such 
  ownership and such loss, theft, destruction or mutilation), and
  
  	(a)	in the case of loss, theft or destruction, of an 
  indemnity in such form or amount as shall be reasonably 
  satisfactory to Borrower (provided that if the holder of the 
  Unsecured Note is, or is a nominee for, Lender or another 
  institutional investor, such Person's unsecured agreement of 
  indemnity shall conclusively be deemed to be satisfactory so 
  long as such Person (other than Lender or any nominee of 
  Lender) has a net worth at least equal to the greater of the 
  outstanding principal amount of the lost, stolen or 
  destroyed Unsecured Note or $50,000,000), or
  
  	(b)	in the case of mutilation, upon surrender and 
  cancellation thereof,
  
  Borrower at its own expense shall execute and deliver, in lieu 
  thereof, a new Unsecured Note, dated and bearing interest from 
  the date to which interest shall have been paid on such lost, 
  stolen, destroyed or mutilated Unsecured Note or dated the date 
  of such lost, stolen, destroyed or mutilated Unsecured Note if no 
  interest shall have been paid thereon.
  
  
  ARTICLE TEN
  
  Section 10.01.  Contingent Liability of the Company in Respect of 
  the Unsecured Note.
  
  	The Company shall have no liability whatsoever for the 
  Unsecured Note unless and until the Company shall fail to perform 
  or observe its obligations under Section 4.01(k), in which event 
  the Company shall become jointly and severally liable to Lender, 
  as fully as if the Company were named together with the Borrower 
  in the Unsecured Note, for the Obligations thereunder outstanding 
  as of the date of such failure by the Company or incurred 
  thereafter.
  
  
  [balance of page is intentionally blank]
  
  	IN WITNESS WHEREOF, the parties hereto have executed this 
  Agreement on the date first above written.
  
  
  					BORROWER:
  
  PARKWAY PROPERTIES LP, a Delaware limited 
  partnership
  
  	By:	Parkway Properties General 
  Partners, Inc.,its sole general partner, 
  a Delaware corporation
  
  
  						By:
  						Name:  James M. Ingram
  						Title: Senior Vice President
  
  
  						By:
  							Name:  Sarah P. Clark
  						  	Title: Senior Vice President,
  								  CFO, Treasurer & 
  							   	  Secretary
  
  
  					 
  					COMPANY:
  
  PARKWAY PROPERTIES, INC., a Maryland 
  corporation
  
  					
  						By:
   							Name:   James M. Ingram
  							Title:  Senior Vice President
  
  						By:
  							Name:   Sarah P. Clark
  							Title:  Senior Vice President,  
  								   CFO, Treasurer &
  								   Secretary
  
  
  [Signatures Continued on Following Page]
  
  [Signatures Continued From Previous Page]
  
  
  
  					LENDER:
  
  					TEACHERS INSURANCE AND ANNUITY
  					ASSOCIATION OF AMERICA
  
  
  	 By:
  						 Name:   William A. Welcher
  						 Title:  Associate Director 
    							    and Assistant 
  							    Secretary
  
  
  
  Exhibit A
  
  
  UNSECURED NOTE
  
  
  $_____________[ ]	__________, _________
  _______ __, ____
  PPN [_________________]
  
  
  	FOR VALUE RECEIVED, the undersigned, PARKWAY PROPERTIES LP, 
  a Delaware limited partnership (herein, together with its 
  successors and assigns, "Maker"), having an address c/o Parkway 
  Properties, Inc., 188 East Capitol Street, Suite 1000, Jackson, 
  MS 39201, Attn.: Sarah P. Clark promises to pay to the order of 
  TEACHERS INSURANCE AND ANNUITY ASSOCIATION OF AMERICA (herein, 
  together with its successors and assigns, "Holder") during 
  regular business hours at its offices at 730 Third Avenue, New 
  York, New York 10017, or at such other place as may be designated 
  from time to time in writing by Holder, the principal sum of 
  _________ MILLION ________________________ AND ____/100 
  ($______________) DOLLARS, together with interest at the rate of 
  seven and 95/1000 (7.095%) percent per annum (the "Unsecured Note 
  Base Rate") thereon on so much thereof as is from time to time 
  outstanding and unpaid in the manner hereinafter more 
  specifically set forth, in lawful money of the United States of 
  America which will at that time be deemed to be legal tender in 
  payment of all debts and dues, public and private, such principal 
  and interest to be paid in installments as follows:
  
  
  		1.	Principal and accrued interest in the amount of 
  $____________[ ] shall be due and payable on the first day of the 
  calendar month following the Conversion Date and on the first day 
  of each month thereafter but excluding August 1, 2008 (the 
  "Maturity Date"). 
  
  		2.	On the Maturity Date, the entire unpaid principal 
  balance together with accrued and unpaid interest and all other 
  sums due hereunder and under the Conversion and Note Agreement 
  (as hereinafter defined) shall be due and payable.
  
  
  
  	Maker acknowledges that the monthly installments of 
  principal and interest provided in Paragraph [1] above will not 
  fully repay the principal of this Note and that a balloon payment 
  of the 
  entire unpaid principal balance, together with accrued and unpaid 
  interest thereon, will be due on the Maturity Date.  Holder has 
  made no agreement to make financing available to Maker in 
  connection with such balloon payment.
  
  	The indebtedness evidenced by this Note may not be prepaid, 
  in whole or in part, except on the terms and conditions and in 
  the amounts and with the premiums, if any, set forth in the 
  Conversion and Note Agreement.
  
  	This Unsecured Note of the Maker in the aggregate principal 
  amount of $___________ is issued under and pursuant to the 
  Conversion and Note Agreement dated as of _________, 1998 (the 
  "Conversion and Note Agreement") and entered into by Maker, 
  Parkway Properties, Inc., a Maryland corporation (the "Company"), 
  and Holder, and the holder of this Note is entitled to all the 
  benefits provided for thereby or referred to therein, to which 
  Conversion and Note Agreement reference is hereby made for the 
  statement thereof.
  
  	Upon the occurrence of an Event of Default (as defined in 
  the Conversion and Note Agreement), the entire principal balance 
  of this Note together with accrued interest and all other sums 
  due under the Conversion and Note Agreement will become or may be 
  declared to be immediately due and payable, without any notice or 
  demand whatsoever, notice of exercise of such option being waived 
  by Maker.  Holder's failure to exercise its option to accelerate 
  will not constitute a waiver of the right to exercise such option 
  at a later date (provided the Event of Default continues) or upon 
  the occurrence of a subsequent Event of Default.
  
  	Maker hereby waives and renounces for itself, and all its 
  successors and assigns, all right to the benefit of any 
  moratorium, reinstatement, forbearance, stay and extension now 
  provided, or which hereafter may be provided, by the Constitution 
  and laws of the United States of America and of any state 
  thereof, as to itself and in and to all of its property, real and 
  personal, against the enforcement and collection of the 
  obligations evidenced by this Note.
  	In the event of an Event of Default under the Conversion and 
  Note Agreement, interest will accrue thereafter on the unpaid 
  principal balance of this Note at the rate of five percent (5%) 
  per annum plus the Unsecured Note Base Rate.
  
  	In addition to the foregoing, if Maker shall fail to timely 
  make any payment of interest or principal beyond any grace period 
  provided in the Conversion and Note Agreement, time being of the 
  essence, including payments due on maturity, then a late charge 
  by way of damages will be immediately due and payable.  Maker 
  recognizes that a default by Maker in making the payments under 
  this Note and under the Conversion and Note Agreement on or 
  before the due date thereof will result in Holder incurring 
  additional expense in servicing the loan evidenced by this 
  Unsecured Note outstanding under the Conversion and Note 
  Agreement, in a loss to Holder of the use of the money due and in 
  frustration to Holder in meeting its loan commitments.  Maker 
  agrees that if, for any reason, Maker fails to pay the amounts 
  due under this Note or under the Conversion and Note Agreement on 
  or before the due date thereof and such failure continues beyond 
  any such grace period, Holder will be entitled to damages for the 
  detriment caused thereby, but that it is extremely 
  difficult and impractical to ascertain the extent of such 
  damages.  Maker therefore agrees that a sum equal to five cents 
  ($.05) for each dollar ($1.00) of each payment which becomes and 
  remains delinquent is a reasonable estimate of the damages to 
  Holder, which sum Maker agrees to pay on demand.
  
  	If any suit or action is instituted to collect this Note or 
  any part thereof, or if it is placed in the hands of an attorney 
  for collection, Maker promises and agrees to pay reasonable 
  attorneys' fees, court costs and fees of Holder or any agent of 
  Holder.
  
  	Maker and all endorsers or guarantors hereof and all others 
  who may become liable for all or any part of this obligation 
  agree hereby to be jointly and severally bound, and they jointly 
  and severally waive and renounce, to the extent permitted by law, 
  demand, protest, notice of nonpayment (other than for such 
  notices as are expressly set forth in the Conversion and Note 
  Agreement) and any and all lack of diligence or delays in 
  collection or enforcement thereof, and expressly consent to any 
  extension of time, release of any party liable for this 
  obligation, or any other indulgence or forbearance whatsoever.  
  Any such extension, release, indulgence or forbearance may be 
  made without notice to such party and without in any way 
  affecting the liability of such party.
  
  	Presentment for payment, demand, protest and notice of 
  demand, notice of dishonor and notice of non-payment, and all 
  other notices not expressly provided for herein or in the 
  Conversion and Note Agreement, are hereby waived by Maker.
  
  	No failure to accelerate the debt evidenced hereby by reason 
  of an Event of Default, acceptance of a past due installment, or 
  indulgence granted from time to time will be construed (i) as a 
  novation of this Note or as a reinstatement of the indebtedness 
  evidenced hereby or as a waiver of such right of acceleration or 
  of the right of Holder thereafter to insist upon strict 
  compliance with the terms of this Note, or (ii) to prevent the 
  exercise of such right of acceleration or of any other right 
  granted hereunder by the laws of the State of New York.  Maker 
  hereby expressly waives the benefit of any statute or rule of law 
  or equity now provided, or which may hereafter be provided, which 
  would produce a result contrary to or in conflict with the 
  foregoing.  No extension of time for the payment of this Note or 
  any installment due hereunder, made by agreement with any person 
  now or hereafter liable for the payment of this Note, will 
  operate to release, discharge, modify, change or affect the 
  original liability, if any, of Maker under this Note, either in 
  whole or in part.  This Note may not be changed orally but only 
  by an agreement in writing signed by the party against whom 
  enforcement of any waiver, change, modification or discharge is 
  sought.
  
  	Notwithstanding any provision herein or in the Conversion 
  and Note Agreement to the contrary, it is not the intention of 
  Holder to charge or collect, nor shall there at any time be 
  charged or become due and payable hereunder any interest (whether 
  based on the Unsecured Note Base Rate or otherwise) which would 
  result in a rate of interest being charged which is in excess of 
  the maximum rate, if any, now permitted by law for this 
  transaction to be charged; and in the event that any sum in 
  excess of the maximum rate of interest is paid or charged, the 
  same shall be deemed to have been a prepayment of principal 
  (which prepayment shall be permitted, and be without Prepayment 
  Premium or penalty) when paid, and all payments made thereafter 
  shall be appropriately applied to interest and principal to give 
  such effect to the maximum rate permitted by law, and after such 
  application, any excess payment shall be immediately refunded to 
  Maker.
  
  	If during the term of this Note the maximum rate of 
  interest, if any, now permitted by law for this transaction to be 
  charged should be increased, then for so long as such increase is 
  in effect, the applicable maximum rate permitted to be charged as 
  referred to in the paragraph immediately preceding will be deemed 
  to be such increased rate.  If such maximum rate of interest, if 
  any, now permitted by law to be charged for this transaction 
  should be deleted so that there would be no such maximum rate, 
  then for purposes of this Note there will thereafter be no 
  maximum rate limiting the amount that can be charged.
  
  	This Note is intended as a contract under, and will be 
  construed and enforced in accordance with, the laws of the State 
  of New York or the laws of the United States of America, when and 
  where applicable (including, without limitation, any federal 
  usury ceiling or other federal law preempting state usury laws, 
  which law, from time to time, may be applicable to the 
  indebtedness evidenced hereby), as Holder may elect.
  
  	As used herein, the terms "Maker" and "Holder" will be 
  deemed to include their respective successors, legal 
  representatives and assigns, whether by voluntary action by the 
  parties or by the operation of law.
  
  	Any and all notices, demands or requests provided for or 
  permitted to be given pursuant to this Note will be given in the 
  manner described in Section 7.02 of the Conversion and Note 
  Agreement.
  
  * * * *
  
  
  	IN WITNESS WHEREOF, the undersigned has duly executed and 
  delivered this Note as of the date first above written.
  
  
  					MAKER:
  
  					PARKWAY PROPERTIES LP, a Delaware 
  limited partnership
  
  II. By: 	Parkway Properties General
  	Partners, Inc., a Delaware 
  	corporation, its sole 
  	general partner
  
  
  	By:
  				     	Name: ____________________
  					Title: _____________________
  
  	By:
  						Name: ____________________
  						Title: ____________________
  
  
  
  Exhibit B
  FORM OF LEGAL OPINION
  
  	The opinion of Forman Perry Watkins Krutz & Tardy, PLLC and 
  other counsel, as counsel for the Loan Parties and GP, shall be 
  to the effect that:
  
  	1.	The Borrower is a limited partnership, duly 
  incorporated and in good standing under the laws of 
  Delaware.  The Borrower has all requisite power and 
  authority to own and operate its properties and to 
  carry on its business as now conducted and proposed 
  to be conducted.
  
  	2.	The Company is a  ____________________ duly 
  incorporated and in good standing under the laws of 
  ________.  The Company has all requisite power and 
  authority to carry on its business as now conducted 
  and proposed to be conducted.  The Company holds, 
  beneficially and of record, one hundred percent 
  (100%) of each class of the outstanding capital stock 
  of GP, and owns a ____ limited partnership interest 
  in the Borrower.
  
  	3.	GP is a corporation, duly incorporated and in good 
  standing under the laws of ____________.
  
  	4.	GP is the sole general partner of Borrower.
  
  	5.	The Borrower has all necessary legal power and 
  authority to enter into and to perform its 
  obligations under the Conversion and Note Agreement 
  and the Unsecured Note and has taken all necessary 
  action to authorize the execution and delivery of, 
  and the performance of its obligations under, the 
  Conversion and Note Agreement and the Unsecured Note.  
  The Conversion and Note Agreement and the Unsecured 
  Note have been duly and validly executed and 
  delivered by the Borrower, and constitute the legal, 
  valid, and binding joint and several obligations of 
  the Borrower enforceable against the Borrower in 
  accordance with their respective terms, except as 
  enforceability may be limited by applicable 
  bankruptcy, insolvency, reorganization, or similar 
  laws affecting the rights of creditors generally and 
  by equitable principles of general application.
  
  	6.	The Company has all necessary legal power and 
  authority to enter into and to perform its 
  obligations under the Conversion and Note Agreement 
  and has taken all necessary action to authorize the 
  execution and delivery of, and the performance of its 
  obligations under, the Conversion and Note Agreement.  
  The Conversion and Note Agreement has been duly and 
  validly executed and delivered by the Company, and 
  constitutes the legal, valid, and binding obligation 
  of the Company enforceable against the Company in 
  accordance with its terms, except as enforceability 
  may be limited by applicable bankruptcy, insolvency, 
  reorganization, or similar laws affecting the rights 
  of creditors generally and by equitable principles of 
  general application.
  
  	7.	The execution and delivery of the Conversion and Note 
  Agreement by the respective Loan Parties and of the 
  Unsecured Note by the Borrower, and the performance 
  by each Loan Party of its obligations under the 
  Conversion and Note Agreement and, in the case of the 
  Borrower and, if applicable the Company, under the 
  Unsecured Note, will not violate or conflict with any 
  law, rule, or regulation applicable to either Loan 
  Party, any provision of the organizational documents 
  of either Loan Party or, to such counsel's knowledge 
  after due inquiry, (i) any order, judgment, or decree 
  of any court, arbitrator or governmental agency 
  applicable to either Loan Party or any of its assets, 
  or (ii) any agreement binding on either Loan Party 
  or, to such counsel's knowledge after due inquiry, 
  result in the creation or imposition of a lien on any 
  properties or revenues of either Loan Party.
  
  	8.	No consent or authorization of, filing with, or other 
  act by or in respect of, any governmental authority 
  and no consent of any party is required in connection 
  with the execution, delivery or performance by either 
  Loan Party of the Conversion and Note Agreement and 
  the Unsecured Note or the enforceability thereof 
  against each Loan Party.
  
  	9.	To such counsel's knowledge after due inquiry, there 
  is not presently pending or threatened any action, 
  claim, proceeding, or investigation, at law or in 
  equity or by or before any court or arbitrator or any 
  governmental, public, or regulatory authority, 
  against, affecting, or involving either Loan Party or 
  any employee thereof which questions the right, 
  power, legal capacity, or permissibility of either 
  Loan Party to execute and deliver, and to perform its 
  obligations under, the Conversion and Note Agreement 
  or the Unsecured Note, or wherein any unfavorable 
  decision, ruling, or finding could have a Material 
  Adverse Effect.
  
  	10.	Borrower is not an "employee benefit plan" as defined 
  in Section 3(3) of the Employee Retirement Income 
  Security Act of 1974, as amended ("ERISA") that is 
  subject to Title I of ERISA, or a "plan" as defined 
  in Section 4975(e)(1) of the Internal Revenue Code of 
  1986, as amended (the "Code") that is subject to 
  Section 4975 of the Code, and Borrower's assets do 
  not constitute "plan assets" of one or more such 
  plans for purposes of Title I of ERISA or Section 
  4975 of the Code.  Borrower is not a "governmental 
  plan" within the meaning of Section 3(3) of ERISA and 
  transactions by or with Borrower are not subject to 
  any laws regulating investments of and fiduciary 
  obligations with respect to governmental plans.
  
  	11.	Borrower is not, nor after giving effect to any loan 
  will be, subject to regulation under the Public 
  Utility Holding Company Act of 1935, the Federal 
  Power Act or the Investment Company Act of 1940 or to 
  any federal or state statute or regulation limiting 
  its ability to incur indebtedness for borrowed money.
  
  	12.	Neither the purchase of the Unsecured Note nor the 
  use by the Borrower of all or any portion of the 
  proceeds of the sale of the Unsecured Note will 
  violate Regulation U, Regulation T or Regulation X or 
  any other regulation of the Board of Governors of the 
  Federal Reserve System or the Securities Exchange Act 
  of 1934, as amended.
  
  	13.	The issuance, delivery and sale of the Unsecured Note 
  do not require registration under the Securities Act 
  of 1933, as amended, or the qualification of an 
  indenture under the Trust Indenture Act of 1939, as 
  amended.
  
  With respect to matters of fact on which such opinion is based, 
  such counsel shall be entitled to rely on appropriate 
  certificates of public officials and officers of either Loan 
  Party or GP, and with respect to matters governed by the laws of 
  any jurisdiction in which such counsel is not admitted to 
  practice, such counsel may rely upon the opinions of counsel 
  deemed (and stated in their opinion to be deemed) by them to be 
  competent and reliable, which counsel shall be reasonably 
  satisfactory to Lender
  
  Exhibit C
  
  
  Amo
  rti
  zat
  ion
  Paym
  ent
  Numb
  er
  
  Due Date
  Outstanding
  Principal Amt 
  of Secured 
  Loan (1)
  Amount of
  Unsecured loan
  w/100% 
  Conversion
  P & I 
  Payment
  for 
  unsecured
  Loan @ 
  7.095%
  Amount of
  Unsecured 
  loan
  w/50% 
  Conversion
  P&I 
  Payment
  for  
  unsecured
  component 
  @7.095%
  P&I payment
  for secured
  component 
  @6.945%
  179
  1
  01-Aug-98
  96,692,504.02
  96,692,504.02
  876,987.25
  48,346,252.01
  438,493.63
  434,441.74
  178
  2
  01-Sept-98
  96,383,228.40
  96,383,228.40
  876,951.01
  48,191,614.20
  438,475.51
  434,441.74
  177
  3
  01-Oct-98
  96,072,162.86
  96,072,162.86
  876,914.68
  48,036,081.43
  438,457.34
  434,441.74
  176
  4
  01-Nov-98
  95,759,297.02
  95,759,297.02
  876,878.26
  47,879,648.51
  438,439.13
  434,441.74
  175
  5
  01-Dec-98
  95,444,620.47
  95,444,620.47
  876,841.74
  47,722,310.23
  438,420.87
  434,441.74
  174
  6
  01-Jan-99
  95,128,122.73
  95,128,122.73
  876,805.13
  47,564,061.36
  438,402.57
  434,441.74
  173
  7
  01-Feb-99
  94,809,793.25
  94,809,793.25
  876,768.42
  47,404,896.63
  438,384.21
  434,441.74
  172
  8
  01-Mar-99
  94,489,621.45
  94,489,621.45
  876,731.62
  47,244,810.73
  438,365.81
  434,441.74
  171
  9
  01-Apr-99
  94,167,596.65
  94,167,596.65
  876,694.72
  47,083,798.33
  438,347.36
  434,441.74
  170
  10
  01-May-99
  93,843,708.14
  93,843,708.14
  876,657.73
  46,921,854.07
  438,328.87
  434,441.74
  169
  11
  01-Jun-99
  93,517,945.12
  93,517,945.12
  876,620.65
  46,758,972.56
  438,310.33
  434,441.74
  168
  12
  01-Jul-99
  93,190,296.74
  93,190,296.74
  876,583.47
  46,595,148.37
  438,291.74
  434,441.74
  167
  13
  01-Aug-99
  92,860,752.10
  92,860,752.10
  876,546.19
  46,430,376.05
  438,273.10
  434,441.74
  166
  14
  01-Sep-99
  92,529,300.22
  92,529,300.22
  876,508.82
  46,264,650.11
  438,254.41
  434,441.74
  165
  15
  01-Oct-99
  92,195,930.07
  92,195,930.07
  876,471.36
  46,097,965.03
  438,235.68
  434,441.74
  164
  16
  01-Nov-99
  91,860,630.53
  91,860,630.53
  876,433.80
  45,930,315.27
  438,216.90
  434,441.74
  163
  17
  01-Dec-99
  91,523,390.45
  91,523,390.45
  876,396.15
  45,761,695.22
  438,198.08
  434,441.74
  162
  18
  01-Jan-2000
  91,184,198.59
  91,184,198.59
  876,358.40
  45,592,099.30
  438,179.20
  434,441.74
  161
  19
  01-Feb-2000
  90,843,043.66
  90,843,043.66
  876,320.55
  45,421,521.83
  438,160.28
  434,441.74
  160
  20
  01-Mar-2000
  90,499,914.29
  90,499,914.29
  876,282.61
  45,249,957.15
  438,141.31
  434,441.74
  159
  21
  01-Apr-2000
  90,154,799.06
  90,154,799.06
  876,244.58
  45,077,399.53
  438,122.29
  434,441.74
  158
  22
  01-May-2000
  89,807,686.48
  89,807,686.48
  876,206.45
  44,903,843.24
  438,103.23
  434,441.74
  157
  23
  01-Jun-2000
  89,458,564.99
  89,458,564.99
  876,168.22
  44,729,282.49
  438,084.11
  434,441.74
  156
  24
  01-Jul-2000
  89,107,422.95
  89,107,422.95
  876,129.90
  44,553,711.47
  438,064.95
  434,441.74
  (1) Assumes that no conversion has occurred and that all scheduled principal
  and interest payments were made on the first day of the respective calendar 
  month
  
  Completion Notes for Note and Conversion Agreement:
  
  Attach Signature Pages
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  /	The amount of the Unsecured Note will be determined according to 
  Sections 2.01 and 2.02(a) of the 
  Conversion and Note Agreement.
  
  
  /	This amount will be determined in accordance with Exhibit A.
metadata_documents: [{"type": "8-K", "sequence": "1", "secsgml_size_bytes": 513716}]
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": "98666965"}, "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):   July 1, 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
  ------------------------------------------------------------------
  
  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 2.  Acquisition or Disposition of Assets.
  
  	On July 1, 1998, Parkway Properties, Inc. ("Parkway") closed 
  on the previously announced sale of its investment portfolio of 
  four office properties located in Dallas, Texas for $53,250,000 
  in cash to Triad Properties Corporation, a Huntsville, Alabama-
  based private real estate investment and operating company.  The 
  properties contain approximately 534,400 net rentable square 
  feet. The Company expects to record a gain for financial 
  reporting purposes of approximately $3.3 million on the sale in 
  the third quarter.  The Company anticipates that the taxable gain 
  from this transaction will be deferred through a Section 1031 
  like-kind exchange and, accordingly, no special dividend of the 
  capital gain will be required.  Approximately $25,000,000 of the 
  sale proceeds will be held in trust under the like-kind exchange 
  rules, pending the purchase of replacement properties.   
  
  Item 5.	Other Events.
  
  	On June 30, 1998, the Company closed on a $97 million fixed 
  rate loan at a rate of 6.945% from Teachers Insurance and Annuity 
  Association of America. Proceeds of $78.9 million were funded on 
  June 30, 1998 with additional proceeds of $18.1 million to be 
  funded in July 1998.  The loan will amortize over a 15-year term 
  and matures on July 1, 2008.  The loan is secured by certain 
  properties of the Company.  The loan contains a conversion 
  feature that gives the Company an option to unsecure all or part 
  of the loan upon receipt of an investment grade credit rating 
  from two of the major rating agencies during the first 24 months 
  of the loan.  Proceeds of the loan were used to repay existing 
  variable rate debt.
  
  	On July 1, 1998, the Company purchased a partnership owning 
  the 171,800 square foot 111 East Capitol Building in Jackson, 
  Mississippi for $11,350,000 in the Company's first UPREIT 
  transaction.  The Company assumed existing debt on the property 
  of $5,647,000 at a rate of 8%.  The building was constructed in 
  1983 and includes an attached 200-space two-level parking garage.  
  The 111 East Capitol Building is located in the Central Business 
  District of Jackson and was 83% occupied at June 30, 1998.
  
  Item 7.   Financial Statements and Exhibits.
  
  	(b)  Pro Forma Consolidated Financial Statements
  
       The following unaudited Pro Forma Consolidated Financial 
  Statements are attached hereto.
                                                               Page
                                                               ----
  Pro Forma Consolidated Financial Statements (Unaudited)	5
  Pro Forma Consolidated Balance Sheet (Unaudited) -
    March 31, 1998	7
  Pro Forma Consolidated Statement of Income (Unaudited) -
    For the Year Ended December 31, 1997	8
  Pro Forma Consolidated Statement of Income (Unaudited) -
    For the Three Months ended March 31, 1998	9
  Notes to Pro Forma Consolidated Financial
    Statements (Unaudited)	10
  
  	(c)  Exhibits
  
  (10)	(a) Purchase and Sale Agreement between Parkway 
  Properties LP and Triad Properties Corporation is 
  incorporated by reference to the Registrant's Form 8-K 
  dated and filed April 22, 1998. Parkway agrees to 
  furnish supplementally to the Securities and Exchange 
  Commission on request a copy of any omitted schedule or 
  exhibit to this agreement.
  
  (10) (b) Purchase and Sale Agreement between Parkway 
  Portfolio I LLC and Triad Properties Corporation, and 
  Parkway Properties LP, a Delaware limited partnership 
  is incorporated by reference to the Registrant's Form 
  8-K dated and filed April 22, 1998. 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)	(a)	Amended and Restated Agreement of Limited 
  Partnership of Parkway Properties LP, including Amended 
  and Restated Exhibit A of the Amended and Restated 
  Agreement of Limited Partnership. 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)	Admission Agreement between Parkway Properties LP 
  and Lane N. Meltzer. 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)	(c)	Promissory Note between Parkway Properties LP and 
  Teachers Insurance and Annuity Association of America.  
  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)	(d)	Form of Mortgage, Assignment of Leases and Rents 
  Security Agreement and Fixture Filing Statement by 
  Parkway Properties LP as borrower for the benefit of 
  Teachers Insurance and Annuity Association of America 
  as lender.  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)	(e)	Conversion and Note Agreement between Parkway 
  Properties LP Parkway Properties, Inc. and Teachers 
  Insurance and Annuity Association of America. Parkway 
  agrees to furnish supplementally to the Securities and 
  Exchange Commission on request a copy of any omitted 
  schedule or exhibit to this agreement.
  
  PARKWAY PROPERTIES, INC.
  
             Pro Forma Consolidated Financial Statements
                             (Unaudited)
  
       The following unaudited pro forma consolidated balance sheet 
  as of March 31, 1998 and pro forma consolidated statements of 
  income of Parkway Properties, Inc. ("Parkway") for the year ended 
  December 31, 1997 and the three months ended March 31, 1998 give 
  effect to the recent purchases of Parkway listed below for the 
  periods stated as well as the sale of the four office buildings 
  owned by Parkway in Dallas, Texas (the "Dallas Portfolio"). The 
  pro forma consolidated financial statements have been prepared by 
  management of Parkway based upon the historical financial 
  statements of Parkway and the adjustments and assumptions in the 
  accompanying notes to the pro forma consolidated financial 
  statements.
  
       The pro forma consolidated balance sheet sets forth the 
  effect of Parkway's sale of the Dallas Portfolio, as if it had 
  been consummated on March 31, 1998.
  
       The pro forma consolidated statements of income sets forth 
  the effects of Parkway's purchases of the buildings listed below 
  as if they had been consummated on January 1, 1997.  
  
  BUILDING                            DATE OF PURCHASE
  
  SouthTrust Bank Building                03/31/98
  Brookdale Portfolio                     02/25/98
  Schlumberger Building                   01/21/98
  Greenbrier Towers                       11/25/97
  Raytheon Building                       11/17/97
  First Little Rock Plaza                 11/07/97
  Hightower Centre                        10/01/97
  Morgan Keegan Tower                     09/30/97
  First Tennessee Plaza                   09/18/97
  Fairway Plaza                           08/12/97
  NationsBank Tower                       07/31/97
  Lakewood II                             07/10/97
  Sugar Grove                             05/01/97
  Vestavia Centre                         04/04/97
  Meridian                                03/31/97
  Charlotte Park Executive Center         03/18/97
  Courtyard at Arapaho                    03/06/97
  Ashford II                              01/28/97          
  Forum II & III                          01/07/97
  
  	In addition to the purchases listed above, the pro forma 
  consolidated statement of income sets forth the effect of the sale 
  of 1,750,000 shares of Common Stock on January 22, 1997, 262,500 
  shares of Common Stock on February 19, 1997, 3,000,000 shares of 
  Common Stock on September 24, 1997, 450,000 shares of Common Stock 
  On October 6, 1997, 451,128 shares of Common Stock on February 3, 
  1998 and 855,900 shares of Common Stock on March 11, 1998, as well 
  as the sale of the Dallas Portfolio as if these transactions had 
  occurred January 1, 1997.
  
  	These pro forma consolidated financial statements may not be 
  indicative of the results that actually would have occurred if the 
  purchases, sales and/or financings had been in effect on the dates 
  indicated or which may be obtained in the future.  The pro forma 
  consolidated financial statements should be read in conjunction 
  with the consolidated financial statements and notes of Parkway 
  included in its annual report on Form 10-K for the year ended 
  December 31, 1997.
  
  PARKWAY PROPERTIES, INC. AND SUBSIDIARIES
  	PRO FORMA CONSOLIDATED BALANCE SHEET
  	MARCH 31, 1998
  	(Unaudited)
  
                                             Pro Forma     
                                 Historical  Adjustments  Pro Forma
  						----------  -----------  ---------
                                            (In thousands)
   Assets                                     
   Real estate related investments:
     Office buildings.............$507,477    $      -     $507,477
     Office buildings held
       for sale...................  48,864     (48,864)           -
     Land held for development....   1,721           -        1,721
     Accumulated depreciation..... (16,238)          -      (16,238)
                                  --------    --------     --------
                                   541,824     (48,864)     492,960
   
   Land held for sale...........     5,341           -        5,341
   Mortgage loans...............     1,115           -        1,115
   Real estate partnership......       322           -          322
                                  --------    --------     --------
                                   548,602     (48,864)     499,738
   Interest, rents receivable 
     and other assets.............   9,755           -        9,755
   Cash and cash equivalents......   1,060      25,000       26,060
                                  --------    --------     --------
                                  $559,417    $(23,864)    $535,553
                                  ========    ========     ========
  Liabilities
  Notes payable to banks..........$152,404    $(27,164)    $125,240
  Mortgage notes payable
    without recourse.............. 104,157           -      104,157
  Accounts payable and other 
    liabilities...................  15,057           -       15,057
                                  --------    --------     --------
                                  $271,618     (27,164)    $244,454
                                  --------    --------     --------
  Stockholders' Equity
  Common stock, $0.001 par value, 
    70,000,000 shares authorized, 
    11,085,823 shares issued 
    and outstanding...............      11           -           11
  Additional paid-in capital...... 254,828           -      254,828
  Retained earnings...............  32,960       3,300       36,260
                                  --------    --------     --------
                                   287,799       3,300      291,099
                                  --------    --------     --------
                                  $559,417    $(23,864)    $535,553
                                  ========    ========     ========
  
  See accompanying notes 
  PARKWAY PROPERTIES, INC. AND SUBSIDIARIES
               PRO FORMA CONSOLIDATED STATEMENT OF INCOME
  FOR THE YEAR ENDED DECEMBER 31, 1997
                               (Unaudited)
                                            Pro Forma    
                                Historical Adjustments(1-2)Pro Forma
                                ---------- --------------  ---------
                               (In thousands, except per share data)
  Revenues 
  Income from office properties...$45,799    $38,745 (a)    $84,544
  Income from other real estate 
    properties....................    722          -            722
  Interest on mortgage loans......     63          -             63
  Management company income.......    539          -            539
  Interest on investments.........    373       (373)(d)          -
  Dividend income.................    388          -            388
  Deferred gains and other income.    203          -            203
                                  -------    -------        -------
                                   48,087     38,372         86,459
                                  -------    -------        -------
  Expenses
  Office properties                                  
    Operating expense............. 19,697     16,879 (a)     36,576
    Interest expense:
      Contractual.................  5,486      2,849 (c)      8,335
      Amortization of loan cost...     95          -             95
    Depreciation and amortization.  6,033      6,039 (a)     12,072
    Minority interest.............     59          -             59 
  Other real estate properties
    Operating expense.............    462          -            462
  Interest expense on bank notes:
    Contractual...................    810      5,624 (d)      6,434
    Amortization of loan costs....    187          -            187
  Management company expense......    362          -            362
  General and administrative......  3,312          -          3,312
                                  -------    -------        -------
                                   36,503     31,391         67,894 
                                  -------    -------        -------
  Income before gains............. 11,584      6,981         18,565
                                  -------    -------        -------
  Gain on sales
  Gain on real estate held for 
    sale and mortgage loans.......  2,907          -          2,907
                                  -------    -------        -------
  Net income......................$14,491    $ 6,981        $21,472
                                  =======    =======        =======
  Net income per share:           
    Basic.........................$  2.05                  $ 1.94(3)
    Diluted.......................$  2.01                  $ 1.92(3)      
  Weighted average shares 
    outstanding:                  
    Basic.........................  7,078                  11,072(3)
    Diluted.......................  7,214                  11,208(3)
  See accompanying notes
  
  PARKWAY PROPERTIES, INC. AND SUBSIDIARIES
               PRO FORMA CONSOLIDATED STATEMENT OF INCOME
  FOR THE THREE MONTHS ENDED MARCH 31, 1998
                               (Unaudited)
                                            Pro Forma    
                                Historical Adjustments(1-2)Pro Forma
                                ---------- --------------  ---------
                               (In thousands, except per share data)
  Revenues 
  Income from office properties...$19,644    $ 2,759 (b)    $22,403
  Income from other real estate 
    properties....................      -          -              -
  Interest on mortgage loans......     24          -             24
  Management company income.......    129          -            129
  Interest on investments.........      7          -              7
  Dividend income.................      -          -              -
  Deferred gains and other income.    110          -            110
                                  -------    -------        -------
                                   19,914      2,759         22,673
                                  -------    -------        -------
  Expenses
  Office properties                                  
    Operating expense.............  8,244      1,293 (b)      9,537
    Interest expense:
      Contractual.................  2,043          -          2,043
      Amortization of loan cost...     25          -             25
    Depreciation and amortization.  2,591        673 (b)      3,264
    Minority interest.............      -          -              - 
  Other real estate properties
    Operating expense.............     30          -             30
  Interest expense on bank notes:
    Contractual...................  1,122        353 (d)      1,475
    Amortization of loan costs....    234          -            234
  Management company expense......    105          -            105
  General and administrative......    902          -            902
                                  -------    -------        -------
                                   15,296      2,319         17,615
                                  -------    -------        -------
  Income before gains.............  4,618        440          5,058
                                  -------    -------        -------
  Gain on sales
  Gain on real estate held for 
    sale and mortgage loans.......    952          -            952
                                  -------    -------        -------
  Net income......................$ 5,570        440        $ 6,010
                                  =======    =======        =======
  Net income per share:           
    Basic.........................$   .55                   $   .54(3)
    Diluted.......................$   .54                   $   .54(3)          
  Weighted average shares 
    outstanding:                  
    Basic......................... 10,156                    11,078(3)
    Diluted....................... 10,301                    11,223(3)
  See accompanying notes
  
   PARKWAY PROPERTIES, INC.
       
         Notes to Pro Forma Consolidated Financial Statements
                           (Unaudited)
  
  1. On July 1, the Company sold the four-building Dallas 
  Portfolio for $53,250,000. The Company expects to record a 
  gain for financial purposes of approximately $3.3 million on 
  the sale. Approximately $25,000,000 of the sale proceeds 
  will be held in trust under the like-kind exchange rules, 
  pending the purchase of replacement properties.
  
  2.	The pro forma adjustments to the historical Consolidated  
  Statement of Income for the year ended December 31, 1997 and 
  the three months ended March 31, 1998 set forth the effects 
  of Parkway's purchases of the following buildings as if they 
  had been consummated on January 1, 1997.  
  
  BUILDING                            DATE OF PURCHASE
       
  	SouthTrust Bank Building                03/31/98
  	Brookdale Portfolio                     02/25/98
  	Schlumberger Building                   01/21/98
  	Greenbrier Towers                       11/25/97
  	Raytheon Building                       11/17/97
  	First Little Rock Plaza                 11/07/97
  	Hightower Centre                        10/01/97
       Morgan Keegan Tower                     09/30/97
  First Tennessee Plaza                   09/18/97
  Fairway Plaza                           08/12/97
  NationsBank Tower                       07/31/97
  Lakewood II                             07/10/97
  Sugar Grove                             05/01/97
  Vestavia Centre                         04/04/97
  Meridian                                03/31/97
  Charlotte Park Executive Center         03/18/97
  Courtyard at Arapaho                    03/06/97
  Ashford II                              01/28/97
  Forum II & III                          01/07/97
  
  (a)  The pro forma adjustments to the Consolidated Statement of 
  Income are detailed below by property for the year ended 
  December 31, 1997.
  
  					Revenue              Expenses
                         -----------   ---------------------------
                         Income From         Real Estate Owned
                         Real Estate    Operating     Depreciation
                         Properties      Expense        Expense*
                         -----------   ------------   ------------
  Purchases:
     Charlotte Park      $    505,000    $   208,000    $    69,000
     Ashford II                54,000         37,000          4,000
     Courtyard at
  	Arapaho                366,000        164,000         58,000
     Meridian                 354,000        123,000         59,000
     Vestavia                 240,000         91,000         26,000
     Sugar Grove              309,000        165,000         43,000
     Lakewood II              977,000        447,000        129,000
     NationsBank Tower      2,392,000      1,003,000        271,000
     Fairway Plaza            859,000        379,000         94,000
     First Tennessee
  	Plaza                4,253,000      2,080,000        477,000
     Morgan Keegan
  	Tower                3,327,000      1,665,000        618,000
     Hightower Centre         833,000        333,000        113,000
     Raytheon Building      2,417,000      1,072,000        315,000
     First Little Rock      1,298,000        517,000        191,000
     Greenbrier Towers      1,913,000        835,000        330,000
     Schlumberger           2,260,000        817,000        275,000
     Brookdale Portfolio   20,543,000      9,108,000      3,668,000
     SouthTrust Bank Bldg.  2,751,000      1,205,000        392,000
  Sale of Dallas Portfolio (6,906,000)    (3,370,000)    (1,093,000)
                          -----------    -----------    -----------
  	                   $38,745,000    $16,879,000    $ 6,039,000
  	                   ===========    ===========    ===========
  
  	*Depreciation is provided by the straight-line method over 
  the estimated useful lives of the buildings (40 years).
  
  (b)  The pro forma adjustments to the Consolidated Statement of 
  Income are detailed below by property for the three months 
  ended March 31, 1998.
  
  					 Revenue              Expenses
                          -----------   ---------------------------
                          Income From         Real Estate Owned
                          Real Estate    Operating     Depreciation
                          Properties      Expense        Expense*
                          -----------   ------------   ------------
  Purchases:
  Schlumberger            $   125,000   $     45,000     $   15,000
  Brookdale Portfolio       3,139,000      1,392,000        560,000
  SouthTrust Bank Building    720,000        335,000         98,000
  Sale of Dallas Portfolio (1,225,000)      (479,000)             -
                          -----------   ------------   ------------
  	                   $ 2,759,000   $  1,293,000     $  673,000
  	                   ===========   ============   ============
  
  	*Depreciation is provided by the straight-line method over 
  the estimated useful lives of the buildings (40 years).
  
  (c)	Pro forma interest expense on real estate owned reflects the 
  non-recourse debt placed on certain buildings acquired in 
  1996 and 1997 and debt assumed upon purchase at the actual 
  amounts and rates by property as if in place January 1, 1997 
  and is detailed below.
  
       Property/Placement 			  Year Ended
  	    Date/Rate          Debt       12/31/97
  	------------------  -----------  ---------- 
  	Lakewood II*
  	  7/97 8.08%       $ 6,910,000    $ 294,000
  
       BB&T
         11/97 7.3%        15,000,000      958,000
  
       Raytheon Building*
         11/97 8.125%       7,958,000      566,000
  
  	First Tennessee
  	  Plaza
         12/97 7.17%       15,000,000    1,031,000
                                        ----------
                                        $2,849,000
                                        ==========
  	*Assumed in purchase.
  
  (d) The pro forma effect of the building purchases, the 
  placement of non-recourse debt, the sales of Common 
  Stock and the proposed sale of the Dallas portfolio on 
  interest expense on notes payable to banks was 
  $5,624,000 for the year ended December 31, 1997 and 
  $353,000 for the three months ended March 31, 1998.
   
   3.  The pro forma basic and diluted earnings per share for the 
  year ended December 31, 1997 reflect the sale of 1,750,000 
  shares of Common Stock on January 22, 1997, 262,500 shares of 
  Common Stock on February 19, 1997, 3,000,000 shares of Common 
  Stock on September 24, 1997, 450,000 shares of Common Stock 
  on October 6, 1997, 451,128 shares of Common Stock on 
  February 23, 1998 and 855,900 shares of Common Stock on March 
  11, 1998.
  
   4.	No income tax expenses were provided because of the Company's 
  net operating loss carryover and status as a REIT.
  
   
  
  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:  July 15, 1998			PARKWAY PROPERTIES, INC.
  
  							BY:	/s/Steven G. Rogers
  								President and CEO
  
  AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP
  
  OF
  
  PARKWAY PROPERTIES LP
  
  January 1, 1998
  
  AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP
  
  OF
  
  PARKWAY PROPERTIES LP
  
  TABLE OF CONTENTS
  
  	PAGE
  
  ARTICLE 1
  DEFINED TERMS		1
  	Section 1.1	DEFINITIONS	  1
  
  ARTICLE 2
  ORGANIZATIONAL MATTERS	 16
  	Section 2.1	ORGANIZATION	 16
  	Section 2.2	NAME	 16
  	Section 2.3	RESIDENT AGENT; PRINCIPAL OFFICE	 16
  	Section 2.4	POWER OF ATTORNEY	 17
  	Section 2.5	TERM	 18
  
  ARTICLE 3
  PURPOSE		 18
  	Section 3.1	PURPOSE AND BUSINESS	 18
  	Section 3.2	POWERS	 18
  	Section 3.3	PARTNERSHIP ONLY FOR PURPOSES SPECIFIED	 19
  	Section 3.4	REPRESENTATIONS AND WARRANTIES BY THE PARTIES	 19
  
  ARTICLE 4
  CAPITAL CONTRIBUTIONS	 21
  	Section 4.1	CAPITAL CONTRIBUTIONS OF THE PARTNERS	 21
  	Section 4.2	LOANS BY THIRD PARTIES	 22
  	Section 4.3	ADDITIONAL FUNDING AND CAPITAL CONTRIBUTIONS	 22
  					(a)	GENERAL	 22
  					(b)	GENERAL PARTNER LOANS	 22
  					(c)	ISSUANCE OF ADDITIONAL PARTNERSHIP
  					 	INTERESTS	 22
  					(d)	ISSUANCE OF REIT SHARES OR OTHER
  						SECURITIES BY THE COMPANY	 23
  					(e)	PERCENTAGE INTEREST ADJUSTMENTS IN THE
  						CASE OF CAPITAL CONTRIBUTIONS FOR
  						PARTNERSHIP UNITS	 23
  	Section 4.4	STOCK PLAN	 24
  	Section 4.5	NO THIRD PARTY BENEFICIARY	 24
  	Section 4.6	OTHER CONTRIBUTION PROVISIONS	 24
  
  ARTICLE 5
  DISTRIBUTIONS		 25
  	Section 5.1	REQUIREMENT AND CHARACTERIZATION OF
  			DISTRIBUTIONS	 25
  	Section 5.2	DISTRIBUTIONS IN KIND	 25
  	Section 5.3	DISTRIBUTIONS UPON LIQUIDATION	 25
  	Section 5.4	DISTRIBUTIONS TO REFLECT ISSUANCE OF 
  			ADDITIONAL PARTNERSHIP INTERESTS	 26
  
  ARTICLE 6
  ALLOCATIONS		 26
  	Section 6.1	TIMING AND AMOUNT OF ALLOCATIONS OF NET INCOME 
  			AND NET LOSS	 26
  	Section 6.2	GENERAL ALLOCATIONS	 26
  						(a)IN GENERAL	 26
  						(b)	ALLOCATIONS TO REFLECT ISSUANCE OF	
  	 							ADDITIONAL PARTNERSHIP INTERESTS	 26
  	Section 6.3	ADDITIONAL ALLOCATION PROVISIONS	 26
  						(a)REGULATORY ALLOCATIONS	 26
  	Section 6.4	TAX ALLOCATIONS	 29
  						(a)IN GENERAL	 29
  						(b)ALLOCATIONS RESPECTING SECTION 704(C)
  						 REVALUATIONS	 29
  
  ARTICLE 7
  MANAGEMENT AND OPERATIONS OF BUSINESS	 29
  	Section 7.1	MANAGEMENT	 29
  	Section 7.2	CERTIFICATE OF LIMITED PARTNERSHIP	 33
  	Section 7.3	RESTRICTIONS ON GENERAL PARTNER'S AUTHORITY	 33
  	Section 7.4	REIMBURSEMENT OF THE GENERAL PARTNER	 36
  	Section 7.5	CONTRACTS WITH AFFILIATES	 36
  	Section 7.6	INDEMNIFICATION	 37
  	Section 7.7	LIABILITY OF THE GENERAL PARTNER	 39
  	Section 7.8	OTHER MATTERS CONCERNING THE GENERAL PARTNER	 40
  	Section 7.9	TITLE TO PARTNERSHIP ASSETS	 40
  	Section 7.10	RELIANCE BY THIRD PARTIES	 41
  
  ARTICLE 8
  RIGHTS AND OBLIGATIONS OF LIMITED PARTNER	 41
  	Section 8.1	LIMITATION OF LIABILITY	 41
  	Section 8.2	MANAGEMENT OF BUSINESS	 42
  	Section 8.3	OUTSIDE ACTIVITIES OF LIMITED PARTNERS	 42
  	Section 8.4	RETURN OF CAPITAL	 42
  	Section 8.5	RIGHTS OF LIMITED PARTNERS RELATING TO THE 
  			PARTNERSHIP	 43
  	Section 8.6	REDEMPTION RIGHTS	 43
  
  ARTICLE 9
  BOOKS, RECORDS, ACCOUNTING AND REPORTS	 46
  	Section 9.1	RECORDS AND ACCOUNTING	 46
  	Section 9.2	FISCAL YEAR	 46
  	Section 9.3	REPORTS	 47
  
  ARTICLE 10
  TAX MATTERS		 47
  	Section 10.1	PREPARATION OF TAX RETURNS	 47
  	Section 10.2	TAX ELECTIONS	 47
  	Section 10.3	TAX MATTERS PARTNER	 47
  	Section 10.4	ORGANIZATIONAL EXPENSES	 49
  	Section 10.5	WITHHOLDING	 49
  
  ARTICLE 11
  TRANSFERS AND WITHDRAWALS	 50
  	Section 11.1	TRANSFER	 50
  	Section 11.2	TRANSFER OF GENERAL PARTNER'S PARTNERSHIP 
  			INTEREST	 50
  	Section 11.3	LIMITED PARTNERS' RIGHTS TO TRANSFER	 52
  						(i)GENERAL PARTNER RIGHT OF FIRST REFUSAL	 52
  						(ii)QUALIFIED TRANSFEREE	 53
  	Section 11.4	SUBSTITUTED LIMITED PARTNERS	 54
  	Section 11.5	ASSIGNEES	 55
  	Section 11.6	GENERAL PROVISIONS	 55
  
  ARTICLE 12
  ADMISSION OF PARTNERS	 57
  	Section 12.1	ADMISSION OF SUCCESSOR GENERAL PARTNER	 57
  	Section 12.2	ADMISSION OF ADDITIONAL LIMITED PARTNERS	 57
  	Section 12.3	AMENDMENT OF AGREEMENT AND CERTIFICATE OF 
  LIMITED PARTNERSHIP	 58
  
  ARTICLE 13
  DISSOLUTION AND LIQUIDATION	 58
  	Section 13.1	DISSOLUTION	 58
  	Section 13.2	WINDING UP	 59
  	Section 13.3	COMPLIANCE WITH TIMING REQUIREMENTS OF 
  			REGULATIONS	 60
  	Section 13.4	RIGHTS OF LIMITED PARTNERS	 61
  	Section 13.5	NOTICE OF DISSOLUTION	 61
  	Section 13.6	CANCELLATION OF CERTIFICATE OF LIMITED 
  PARTNERSHIP	 61
  	Section 13.7	REASONABLE TIME FOR WINDING UP	 61
  	Section 13.8	WAIVER OF PARTITION	 62
  
  ARTICLE 14
  AMENDMENT OF PARTNERSHIP AGREEMENT; CONSENTS	 62
  	Section 14.1	AMENDMENTS	 62
  	Section 14.2	ACTION BY THE PARTNERS	 62
  
  ARTICLE 15
  GENERAL PROVISIONS	 63
  	Section 15.1	ADDRESSES AND NOTICE	 63
  	Section 15.2	TITLES AND CAPTIONS	 63
  	Section 15.3	PRONOUNS AND PLURALS	 63
  	Section 15.4	FURTHER ACTION	 64
  	Section 15.5	BINDING EFFECT	 64
  	Section 15.6	CREDITORS	 64
  	Section 15.7	WAIVER	 64
  	Section 15.8	COUNTERPARTS	 64
  	Section 15.9	APPLICABLE LAW	 64
  	Section 15.10	INVALIDITY OF PROVISIONS	 64
  	Section 15.11	LIMITATION TO PRESERVE REIT STATUS	 65
  	Section 15.12	ENTIRE AGREEMENT	 65
  	Section 15.13	NO RIGHTS AS STOCKHOLDERS	 66
  
  EXHIBIT A
  Partners, Contributions and Partnership Interests	 67
  
  EXHIBIT B
  Notice of Redemption	 68
  
  EXHIBIT C
  Schedule of Partners' Ownership with Respect to Tenants	 69
  
  EXHIBIT D
  Schedule of REIT Shares Actually or
  Constructively Owned by Limited Partners Other
  than those Acquired Pursuant to an Exchange	 70
  
  AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP
  OF
  PARKWAY PROPERTIES LP
  
  	THIS AMENDED AND RESTATED AGREEMENT OF LIMITED 
  PARTNERSHIP, dated as of January 1, 1998, is entered into by and 
  among Parkway Properties Inc., a Maryland corporation (the 
  "Company"), Parkway Properties General Partners Inc. ("PPGP"), 
  together with any other Persons who become Partners in the 
  Partnership as provided herein.
  
  	WHEREAS, the limited partnership was formed pursuant to 
  the Revised Uniform Limited Partnership Act of the State of 
  Delaware by filing a certificate of limited partnership on 
  January 6, 1997;
  
  	WHEREAS, the Agreement of Limited Partnership of 
  Parkway Properties LP was executed on January 3, 1997 with PPGP 
  as the original general partner and the Company as the original 
  Limited Partner, and amended on November 1, 1997; 
  
  	WHEREAS, the Company proposes to restructure its 
  operations by contributing substantially all of its assets and 
  properties to the Partnership in exchange for additional Limited 
  Partnership interests; 
  
  	NOW, THEREFORE, BE IT RESOLVED, that for good and 
  adequate consideration, the receipt of which is hereby 
  acknowledged, the parties hereto agree as follows:
  
  ARTICLE 1
  DEFINED TERMS
  
  	Section 1.1	DEFINITIONS
  
  	The following definitions shall be for all purposes, 
  unless otherwise clearly indicated to the contrary, applied to 
  the terms used in this Agreement:
  
  	"ACT" means the Delaware Revised Uniform Limited 
  Partnership Act, as it may be amended from time to time, and any 
  successor to such statute.
  
  	"ADDITIONAL FUNDS" shall have the meaning set forth in 
  Section 4.3(a).
  
  	"ADDITIONAL LIMITED PARTNER" means a Person admitted to 
  the Partnership as a Limited Partner pursuant to Section 12.2 
  hereof and who is shown as such on the books and records of the 
  Partnership.
  
  	"ADJUSTED CAPITAL ACCOUNT DEFICIT" means, with respect 
  to any Partner, the deficit balance, if any, in such Partner's 
  Capital Account as of the end of the relevant fiscal year, after 
  giving effect to the following adjustments:
  
  	(a)	decrease such deficit by any amounts which such 
  Partner is obligated, or is treated as obligated, to restore 
  pursuant to this Agreement or is deemed to be obligated to 
  restore pursuant to Regulations Section 1.704-1(b)(2)(ii)(c) or 
  the penultimate sentence of each of Regulations Sections 
  1.704-2(i)(5) and 1.704-2(g)(1); and
  
  	(b)	increase such deficit by the items described in 
  Regulations Section 1.704-1(b)(2)(ii)(d)(4), (5) and (6).
  
  	The foregoing definition of Adjusted Capital Account 
  Deficit is intended to comply with the provisions of Regulations 
  Section 1.704-1(b)(2)(ii)(d) and
  shall be interpreted consistently therewith.
  
  	"ADJUSTMENT DATE" means, with respect to any Capital 
  Contribution, the close of business on the Business Day last 
  preceding the date of the Capital Contribution, PROVIDED THAT, if 
  such Capital Contribution is being made by the Company in respect 
  of the proceeds from the issuance of REIT Shares (or the issuance 
  of the Company's securities exercisable for, convertible into or 
  exchangeable for REIT Shares), then the Adjustment Date shall be 
  as of the close of business on the Business Day last preceding 
  the date of the issuance of such securities.
  
  	"AFFILIATE" means, with respect to any Person, any 
  Person directly or indirectly controlling, controlled by or under 
  common control with such Person.
  
  	"AGENT" shall have the meaning set forth in Section 
  7.7(a).
  
  	"AGREED VALUE" means (i) in the case of any Contributed 
  Property set forth in Exhibit A and as of the time of its 
  contribution to the Partnership, the Agreed Value of such 
  property as set forth in Exhibit A; (ii) in the case of any 
  Contributed Property not set forth in Exhibit A and as of the 
  time of its contribution to the Partnership, the fair market 
  value of such property or other consideration as determined by 
  the General Partner, reduced by any liabilities either assumed by 
  the Partnership upon such contribution or to which such property 
  is subject when contributed; and (iii) in the case of any 
  property distributed to a Partner by the Partnership, the fair 
  market value of such property as determined by the General 
  Partner at the time such property is distributed, reduced by any 
  liabilities either assumed by such Partner upon such distribution 
  or to which such property is subject at the time of the 
  distribution as determined under Section 752 of the Code and the 
  Regulations thereunder.
  
  	"AGREEMENT" means this Amended and Restated Agreement 
  of Limited Partnership, as it may be amended, supplemented or 
  restated from time to time.
  
  	"APPRAISAL" means, with respect to any assets, the 
  opinion of an independent third party experienced in the 
  valuation of similar assets, selected by the General Partner in 
  good faith; such opinion may be in the form of an opinion by such 
  independent third party that the value for such property or asset 
  as set by the General Partner is fair, from a financial point of 
  view, to the Partnership.
  
  	"ASSIGNEE" means a Person to whom one or more 
  Partnership Units have been transferred in a manner permitted 
  under this Agreement, but who has not become a Substituted 
  Limited Partner, and who has the rights set forth in Section 
  11.5.
  
  	"AVAILABLE CASH" means, with respect to any period for 
  which such calculation is being made,
  
  	(a)	the sum of:
  
  		(i)		the Partnership's Net Income or Net Loss 
  (as the case may be) for such period,
  
  		(ii)		Depreciation and all other noncash 
  charges deducted in determining Net Income or Net Loss for such 
  period,
  
  		(iii)	the amount of any reduction in reserves 
  of the Partnership referred to in clause (b)(vi) below 
  (including, without limitation, reductions resulting because the 
  General Partner determines such amounts are no longer necessary),
  
  		(iv)		the excess of the net proceeds from the 
  sale, exchange, disposition, or refinancing of Partnership 
  property for such period over the gain (or loss, as the case may 
  be) recognized from any such sale, exchange, disposition, or 
  refinancing during such period (excluding Terminating Capital 
  Transactions), and
  
  		(v)		all other cash received by the 
  Partnership for such period that was not included in determining 
  Net Income or Net Loss for such period;
  
  	(b)	less the sum of:
  
  		(vi)		all principal debt payments made during 
  such period by the Partnership,
  
  		(vii)	capital expenditures made by the 
  Partnership during such period,
  
  		(viii)	investments in any entity (including 
  loans made thereto) to the extent that such investments are not 
  otherwise described in clause (vi) or (vii),
  
  		(ix)		all other expenditures and payments not 
  deducted in determining Net Income or Net Loss for such period,
  
  		(x)		any amount included in determining Net 
  Income or Net Loss for such period that was not received by the 
  Partnership during such period,
  
  		(xi)		the amount of any increase in reserves 
  established during such period which the General Partner 
  determines are necessary or appropriate in its sole and absolute 
  discretion, and
  
  		(xii)	the amount of any working capital 
  accounts and other cash or similar balances which the General 
  Partner determines to be necessary or appropriate in its sole and 
  absolute discretion.
  
  	Notwithstanding the foregoing, Available Cash shall not 
  include any cash received or reductions in reserves, or take into 
  account any disbursements made or reserves, established, after 
  commencement of the dissolution and liquidation of the 
  Partnership.
  
  	"BUSINESS DAY" means any day except a Saturday, Sunday 
  or other day on which commercial banks in New York, New York are 
  authorized or required by law to be closed.
  
  	"CAPITAL ACCOUNT" means, with respect to any Partner, 
  the Capital Account maintained for such Partner in accordance 
  with the following provisions:
  
  	(a)	To each Partner's Capital Account there shall be 
  added such Partner's Capital Contributions, such Partner's share 
  of Net Income and any items in the nature of income or gain which 
  are specially allocated pursuant to Section 0 hereof, and the 
  amount of any Partnership liabilities assumed by such Partner or 
  which are secured by any property distributed to such Partner.
  
  	(b)	From each Partner's Capital Account there shall be 
  subtracted the amount of cash and the Gross Asset Value of any 
  property distributed to such Partner pursuant to any provision of 
  this Agreement, such Partner's distributive share of Net Losses 
  and any items in the nature of expenses or losses which are 
  specially allocated pursuant to Section 0 hereof, and the amount 
  of any liabilities of such Partner assumed by the Partnership or 
  which are secured by any property contributed by such Partner to 
  the Partnership.
  
  	(c)	In the event any interest in the Partnership is 
  transferred in accordance with the terms of this Agreement (which 
  does not result in a termination of the Partnership for federal 
  income tax purposes), the transferee shall succeed to the Capital 
  Account of the transferor to the extent it relates to the 
  transferred interest.
  
  	(d)	In determining the amount of any liability for 
  purposes of subsections (a) and (b) hereof, there shall be taken 
  into account Code section 752(c) and any other applicable 
  provisions of the Code and Regulations. 
  
  	(e)	The foregoing provisions and the other provisions 
  of this Agreement relating to the maintenance of Capital Accounts 
  are intended to comply with Regulations Sections 1.704-1(b) and 
  1.704-2, and shall be interpreted and applied in a manner 
  consistent with such Regulations.  In the event the General 
  Partner shall determine that it is prudent to modify the manner 
  in which the Capital Accounts, or any debits or credits thereto 
  (including, without limitation, debits or credits relating to 
  liabilities which are secured by contributed or distributed 
  property or which are assumed by the Partnership, the General 
  Partner, or the Limited Partners) are computed in order to comply 
  with such Regulations, the General Partner may make such 
  modification, PROVIDED THAT it is not likely to have a material 
  effect on the amounts distributable to any Person pursuant to 
  Article 13 of the Agreement upon the dissolution of the 
  Partnership.  The General Partner also shall (i) make any 
  adjustments that are necessary or appropriate to maintain 
  equality between the Capital Accounts of the Partners and the 
  amount of Partnership capital reflected on the Partnership's 
  balance sheet, as computed for book purposes, in accordance with 
  Regulations Section 1.704-1(b)(2)(iv)(q), and (ii) make any 
  appropriate modifications in the event unanticipated events might 
  otherwise cause this Agreement not to comply with Regulations 
  Section 1.704-1(b) or Section 1.704-2.
  
  	"CAPITAL CONTRIBUTION" means, with respect to any 
  Partner, the amount of money and the initial Gross Asset Value of 
  any property (other than money) contributed to the Partnership by 
  such Partner.
  
  	"CASH AMOUNT" means, with respect to any Partnership 
  Units subject to a Redemption, an amount of cash equal to the 
  Deemed Partnership Interest Value attributable to such 
  Partnership Units.
  
  	"CERTIFICATE" means the Certificate of Limited 
  Partnership relating to the Partnership filed in the office of 
  the Secretary of State of Delaware, as amended from time to time 
  in accordance with the terms hereof and the Act.
  
  	"CHARTER" means the Articles of Incorporation of the 
  Company filed with the Maryland State Department of Assessments 
  and Taxation on May 17, 1996, as amended or restated from time to 
  time.
  
  	"CODE" means the Internal Revenue Code of 1986, as 
  amended from time to time or any successor statute thereto, as 
  interpreted by the applicable regulations thereunder.  Any 
  reference herein to a specific section or sections of the Code 
  shall be deemed to include a reference to any corresponding 
  provision of future law.
  
  	"CONSENT" means the consent to, approval of, or vote on 
  a proposed action by a Partner given in accordance with Article 
  14 hereof.
  
  	"CONSENT OF THE LIMITED PARTNERS" means the Consent of 
  a Majority In Interest of the Limited Partners, which Consent 
  shall be obtained prior to the taking of any action for which it 
  is required by this Agreement and may be given or withheld by a 
  Majority in Interest of the Limited Partners, unless otherwise 
  expressly provided herein, in their sole and absolute discretion. 
  
  	"CONSENT OF THE PARTNERS" means the Consent of Partners 
  holding Percentage Interests that, in the aggregate are equal to 
  or greater than 66 2/3% of the aggregate Percentage Interests of 
  all Partners, which Consent shall be obtained prior to the taking 
  of any action for which it is required by this Agreement and may 
  be given or withheld by such Partners, in their sole and absolute 
  discretion.
  
  	"CONSENT OF THE SUPER MAJORITY LIMITED PARTNERS" means 
  the consent of Limited Partners (other than the General Partner 
  and any Limited Partner 50% or more of whose equity is owned, 
  directly or indirectly, by the General Partner) holding 
  Percentage Interests that, in the aggregate are equal to or 
  greater than 66 2/3% of the aggregate Percentage Interests of all 
  Limited Partners (other than the General Partner and any Limited 
  Partner 50% or more of whose equity is owned, directly or 
  indirectly, by the General Partner), which Consent shall be 
  obtained prior to the taking of any action for which it is 
  required by this Agreement and may be given or withheld by such 
  Limited Partners, in their sole and absolute discretion.
  
  	"CONSTRUCTIVELY OWN" means ownership under the 
  constructive ownership rules of Section 856(d)(5) of the Code.
  
  	"CONTRIBUTED PROPERTY" means each property or other 
  asset, in such form as may be permitted by the Act, but excluding 
  cash, contributed or deemed contributed to the Partnership (or, 
  to the extent provided in applicable regulations, deemed 
  contributed to the Partnership on termination and reconstitution 
  thereof pursuant to Section 708 of the Code).
  
  	"DEBT" means, as to any Person, as of any date of 
  determination, (i) all indebtedness of such Person for borrowed 
  money or for the deferred purchase price of property or services; 
  (ii) all amounts owed by such Person to banks or other Persons in 
  respect to reimbursement obligations under letters of credit, 
  surety bonds and other similar instruments guaranteeing payment 
  or other performance of obligations by such Person; (iii) all 
  indebtedness for borrowed money or for the deferred purchase 
  price of property or services secured by any lien on any property 
  owned by such Person, to the extent attributable to such Person's 
  interest in such property, even though such Person has not 
  assumed or become liable for the payment thereof; and (iv) lease 
  obligations of such Person which, in accordance with generally 
  accepted accounting principles, should be capitalized.
  
  	"DEEMED PARTNERSHIP INTEREST VALUE" means, as of any 
  date with respect to any class of Partnership Interests, the 
  Deemed Value of the Partnership Interests of such class 
  multiplied by the applicable Partner's Percentage Interest of 
  such class.
  
  	"DEEMED VALUE OF THE PARTNERSHIP INTERESTS" means, as 
  of any date with respect to any class of Partnership Interests, 
  (i) the total number of shares of capital stock of the Company 
  corresponding to the Percentage Interest of the Company in such 
  class of Partnership Interests issued and outstanding as of the 
  close of business on such date (excluding any treasury shares) 
  multiplied by the Fair Market Value of a share of such capital 
  stock on such date; (ii) DIVIDED BY the Percentage Interest of 
  the General Partner in such class of Partnership Interests on 
  such date.
  
  	"DEPRECIATION" means, for each fiscal year or other 
  period, an amount equal to the depreciation, amortization or 
  other cost recovery deduction allowable with respect to an asset 
  for such year or other period, except that if the Gross Asset 
  Value of an asset differs from its adjusted basis for federal 
  income tax purposes at the beginning of such year or other 
  period, Depreciation shall be an amount which bears the same 
  ratio to such beginning Gross Asset Value as the federal income 
  tax depreciation, amortization or other cost recovery deduction 
  for such year or other period bears to such beginning adjusted 
  tax basis; PROVIDED, HOWEVER, that if the federal income tax 
  depreciation, amortization or other cost recovery deduction for 
  such year is zero, Depreciation shall be determined with 
  reference to such beginning Gross Asset Value using any 
  reasonable method selected by the General Partner.
  
  	"EFFECTIVE DATE" means the date upon which 
  contributions set forth on Exhibit A shall become completed.
  
  	"ERISA" means the Employee Retirement Income Security 
  Act of 1974, as amended, or any successor statute.
  
  	"FAIR MARKET VALUE" means, with respect to any REIT 
  Share, the average of the daily market price for the ten (10) 
  consecutive trading days immediately preceding the date with 
  respect to which "Fair Market Value" must be determined hereunder 
  or, if such date is not a Business Day, the immediately preceding 
  Business Day.  The market price for each such trading day shall 
  be: (i) if such shares are listed or admitted to trading on any 
  securities exchange or the Nasdaq National Market, the closing 
  price, regular way, on such day, or if no such sale takes place 
  on such day, the average of the closing bid and asked prices on 
  such day, (ii) if such shares are not listed or admitted to 
  trading on any securities exchange or the Nasdaq National Market, 
  the last reported sale price on such day or, if no sale takes 
  place on such day, the average of the closing bid and asked 
  prices on such day, as reported by a reliable quotation source 
  designated by the Company, or (iii) if such shares are not listed 
  or admitted to trading on any securities exchange or the Nasdaq 
  National Market and no such last reported sale price or closing 
  bid and asked prices are available, the average of the reported 
  high bid and low asked prices on such day, as reported by a 
  reliable quotation source designated by the Company, or if there 
  shall be no bid and asked prices on such day, the average of the 
  high bid and low asked prices, as so reported, on the most recent 
  day (not more than 10 days prior to the date in question) for 
  which prices have been so reported; PROVIDED THAT, if there are 
  no bid and asked prices reported during the 10 days prior to the 
  date in question, the Fair Market Value of such shares shall be 
  determined by the General Partner acting in good faith on the 
  basis of such quotations and other information as it considers, 
  in its reasonable judgment, appropriate.  In the event the REIT 
  Shares Amount for such shares includes rights that a holder of 
  such shares would be entitled to receive, then the Fair Market 
  Value of such rights shall be determined by the General Partner 
  acting in good faith on the basis of such quotations and other 
  information as it considers, in its reasonable judgment, 
  appropriate; and PROVIDED FURTHER THAT, in connection with 
  determining the Deemed Value of the Partnership Interests for 
  purposes of determining the number of additional Partnership 
  Units issuable upon a Capital Contribution funded by an 
  underwritten public offering of shares of capital stock of the 
  Company, the Fair Market Value of such shares shall be the public 
  offering price per share of such class of capital stock sold.
  
  	"FUNDING DEBT" means the incurrence of any Debt by or 
  on behalf of the General Partner for the purpose of providing 
  funds to the Partnership.
  
  	"GENERAL PARTNER" means Parkway Properties General 
  Partners, Inc. or its successors as general partner of the 
  Partnership.
  
  	"GENERAL PARTNER INTEREST" means a Partnership Interest 
  held by the General Partner.  A General Partner Interest may be 
  expressed as a number of Partnership Units.
  
  	"GENERAL PARTNER LOAN" shall have the meaning set forth 
  in Section 4.3(b).
  
  	"GENERAL PARTNER PAYMENT" shall have the meaning set 
  forth in Section 15.11.
  
  	"GROSS ASSET VALUE" means, with respect to any asset, 
  the asset's adjusted basis for federal income tax purposes, 
  except as follows:
  
  	(a)	The initial Gross Asset Value of any asset 
  contributed by a Partner to the Partnership shall be the gross 
  fair market value of such asset, as determined by the 
  contributing Partner and the General Partner (as set forth on 
  Exhibit A attached hereto, as such Exhibit may be amended from 
  time to time); PROVIDED THAT, if the contributing Partner is the 
  General Partner then, except with respect to the General 
  Partner's initial Capital Contribution which shall be determined 
  as set forth on Exhibit A, or capital contributions of cash, REIT 
  Shares or other shares of capital stock of the General Partner, 
  the determination of the fair market value of the contributed 
  asset shall be determined by the price paid by the General 
  Partner if the asset is acquired by the General Partner 
  contemporaneously with its contribution to the Partnership.
  
  	(b)	As of the times listed below, the Gross Asset 
  Values of all Partnership assets shall be adjusted to equal their 
  respective gross fair market values, as determined by the General 
  Partner using such reasonable method of valuation as it may 
  adopt, PROVIDED, HOWEVER, that for such purpose, the net value of 
  all of the Partnership assets, in the aggregate, shall be equal 
  to the Deemed Value of the Partnership Interests of all classes 
  of Partnership Interests then outstanding, regardless of the 
  method of valuation adopted by the General Partner:
  
  		(i)		the acquisition of an additional 
  interest in the Partnership by a new or existing Partner in 
  exchange for more than a de minimis Capital Contribution, if the 
  General Partner reasonably determines that such adjustment is 
  necessary or appropriate to reflect the relative economic 
  interests of the Partners in the Partnership;
  	
  		(ii)		the distribution by the Partnership to a 
  Partner of more than a de minimis amount of Partnership property 
  as consideration for an interest in the Partnership if the 
  General Partner reasonably determines that such adjustment is 
  necessary or appropriate to reflect the relative economic 
  interests of the Partners in the Partnership;
  
  		(iii)	the liquidation of the Partnership 
  within the meaning of Regulations Section 1.704-1(b)(2)(ii)(g); 
  and
  
  		(iv)	at such other times as the General Partner 
  shall reasonably determine necessary or advisable in order to 
  comply with Regulations Sections 1.704-1(b) and 1.704-2.
  
  	(c)	The Gross Asset Value of any Partnership asset 
  distributed to a Partner shall be the gross fair market value of 
  such asset (taking Section 7701(g) of the Code into account), 
  without reduction for liabilities, on the date of distribution as 
  determined by the distributee and the General Partner, or if the 
  distributee and the General Partner cannot agree on such a 
  determination, by Appraisal.
  
  	(d)	The Gross Asset Values of Partnership assets shall 
  be increased (or decreased) to reflect any adjustments to the 
  adjusted basis of such assets pursuant to Code Section 734(b) or 
  Code Section 743(b), but only to the extent that such adjustments 
  are taken into account in determining Capital Accounts pursuant 
  to Regulations Section 1.704-1(b)(2)(iv)(m); PROVIDED, HOWEVER, 
  that Gross Asset Values shall not be adjusted pursuant to this 
  subparagraph (d) to the extent that the General Partner 
  reasonably determines that an adjustment pursuant to subparagraph 
  (b) is necessary or appropriate in connection with a transaction 
  that would otherwise result in an adjustment pursuant to this 
  subparagraph (d).
  
  	(e)	If the Gross Asset Value of a Partnership asset 
  has been determined or adjusted pursuant to subparagraph (a), (b) 
  or (d), such Gross Asset Value shall thereafter be adjusted by 
  the Depreciation taken into account with respect to such asset 
  for purposes of computing Net Income and Net Losses.
  
  	"HOLDER" means either the Partner or Assignee owning a 
  Partnership Unit.
  
  	"IMMEDIATE FAMILY" means, with respect to any natural 
  Person, such natural Person's estate or heirs or current spouse, 
  parents, parents-in-law, children, siblings and grandchildren and 
  any trust or estate, all of the beneficiaries of which consist of 
  such Person or such Person's current spouse, parents, 
  parents-in-law, children, siblings or grandchildren.
  
  	"INCAPACITY" or "INCAPACITATED" means, (i) as to any 
  individual Partner, death, total physical disability or entry by 
  a court of competent jurisdiction adjudicating him or her 
  incompetent to manage his or her Person or his or her estate; 
  (ii) as to any corporation which is a Partner, the filing of a 
  certificate of dissolution, or its equivalent, for the 
  corporation or the revocation of its charter; (iii) as to any 
  partnership which is a Partner, the dissolution and commencement 
  of winding up of the partnership; (iv) as to any estate which is 
  a Partner, the distribution by the fiduciary of the estate's 
  entire interest in the Partnership; (v) as to any trustee of a 
  trust which is a Partner, the termination of the trust (but not 
  the substitution of a new trustee); or (vi) as to any Partner, 
  the bankruptcy of such Partner. For purposes of this definition, 
  bankruptcy of a Partner shall be deemed to have occurred when (a) 
  the Partner commences a voluntary proceeding seeking liquidation, 
  reorganization or other relief under any bankruptcy, insolvency 
  or other similar law now or hereafter in effect, (b) the Partner 
  is adjudged as bankrupt or insolvent, or a final and 
  nonappealable order for relief under any bankruptcy, insolvency 
  or similar law now or hereafter in effect has been entered 
  against the Partner, (c) the Partner executes and delivers a 
  general assignment for the benefit of the Partner's creditors, 
  (d) the Partner files an answer or other pleading admitting or 
  failing to contest the material allegations of a petition filed 
  against the Partner in any proceeding of the nature described in 
  clause (b) above, (e) the Partner seeks, consents to or 
  acquiesces in the appointment of a trustee, receiver or 
  liquidator for the Partner or for all or any substantial part of 
  the Partner's properties, (f) any proceeding seeking liquidation, 
  reorganization or other relief under any bankruptcy, insolvency 
  or other similar law now or hereafter in effect has not been 
  dismissed within 120 days after the commencement thereof, (g) the 
  appointment without the Partner's consent or acquiescence of a 
  trustee, receiver or liquidator has not been vacated or stayed 
  within 90 days of such appointment, or (h) an appointment 
  referred to in clause (g) is not vacated within 90 days after the 
  expiration of any such stay.
  
  	"INDEMNITEE" means (i) any Person subject to a claim or 
  demand or made or threatened to be made a party to, or involved 
  or threatened to be involved in, a proceeding by reason of his or 
  her status as (A) the General Partner or (B) a director or 
  officer of the Partnership or the General Partner, and (ii) such 
  other Persons (including Affiliates of the General Partner or the 
  Partnership) as the General Partner may designate from time to 
  time, in its sole and absolute discretion.
  
  	"INDEPENDENT TRUST MANAGER" means a member of the 
  General Partner's or the Company's Board of Directors who is not 
  an officer of the General Partner or the Company.
  
  	"IRS" means the Internal Revenue Service, which 
  administers the internal revenue laws of the United States.
  
  	"LIMITED PARTNER" means any Person named as a Limited 
  Partner in Exhibit A attached hereto, as such Exhibit may be 
  amended from time to time, or any Substituted Limited Partner or 
  Additional Limited Partner, in such Person's capacity as a 
  Limited Partner in the Partnership.
  
  	"LIMITED PARTNERSHIP INTEREST" means a Partnership 
  Interest of a Limited Partner representing a fractional part of 
  the Partnership Interests of all Limited Partners and includes 
  any and all benefits to which the holder of such a Partnership 
  Interest may be entitled as provided in this Agreement, together 
  with all obligations of such Person to comply with the terms and 
  provisions of this Agreement.  A Limited Partnership Interest may 
  be expressed as a number of Partnership Units.
  
  	"LIQUIDATING EVENTS" shall have the meaning set forth 
  in Section 13.1.
  
  	"LIQUIDATOR" shall have the meaning set forth in 
  Section 13.2(a).
  
  	"MAJORITY IN INTEREST OF THE LIMITED PARTNERS" means 
  Limited Partners (other than the General Partner and any Limited 
  Partner 50% or more of whose equity is owned, directly or 
  indirectly, by the General Partner) holding Percentage Interests 
  that in the aggregate are greater than fifty percent (50%) of the 
  aggregate Percentage Interests of all Limited Partners (other 
  than the General Partner and any Limited Partner 50% or more of 
  whose equity is owned, directly or indirectly, by the General 
  Partner).
  
  	"MAJORITY OF REMAINING PARTNERS" means Partners other 
  than the General Partner owning (i) greater than fifty percent 
  (50%) of the profits interests in the Partnership held by all 
  Partners other than the General Partner, determined and allocated 
  based on any reasonable estimate of profits from the relevant 
  date to the projected termination of the Partnership and taking 
  into account present and future allocations of profits under this 
  Agreement as it is in effect on the relevant date, and (ii) 
  greater than fifty percent (50%) of the capital interests in the 
  Partnership, determined as of the relevant date under this 
  Agreement, owned by all the Partners other than the General 
  Partner.
  
  	"NET INCOME" or "NET LOSS" means, for each fiscal year 
  of the Partnership, an amount equal to the Partnership's taxable 
  income or loss for such fiscal year, determined in accordance 
  with Code Section 703(a) (for this purpose, all items of income, 
  gain, loss, or deduction required to be stated separately 
  pursuant to Code Section 703(a)(1) shall be included in taxable 
  income or loss), with the following adjustments:
  
  	(a)	Any income of the Partnership that is exempt from 
  federal income tax and not otherwise taken into account in 
  computing Net Income or Net Loss pursuant to this definition of 
  Net Income or Net Loss shall be added to such taxable income or 
  loss;
  
  	(b)	Any expenditures of the Partnership described in 
  Code Section 705(a)(2)(B) or treated as Code Section 705(a)(2)(B) 
  expenditures pursuant to Regulations Section 1.704-1(b)(2)(iv)(i) 
  and not otherwise taken into account in computing Net Income or 
  Net Loss pursuant to this definition of Net Income or Net Loss 
  shall be subtracted from such taxable income or loss;
  
  	(c)	In the event the Gross Asset Value of any 
  Partnership asset is adjusted pursuant to subparagraph (b) or 
  subparagraph (c) of the definition of Gross Asset Value, the 
  amount of such adjustment shall be taken into account as gain or 
  loss from the disposition of such asset for purposes of computing 
  Net Income or Net Loss;
  
  	(d)	Gain or loss resulting from any disposition of 
  property with respect to which gain or loss is recognized for 
  federal income tax purposes shall be computed by reference to the 
  Gross Asset Value of the property disposed of, notwithstanding 
  that the adjusted tax basis of such property differs from its 
  Gross Asset Value;
  
  	(e)	In lieu of the depreciation, amortization, and 
  other cost recovery deductions taken into account in computing 
  such taxable income or loss, there shall be taken into account 
  Depreciation for such fiscal year;
  
  	(f)	To the extent an adjustment to the adjusted tax 
  basis of any Partnership asset pursuant to Code Section 734(b) or 
  Code Section 743(b) is required pursuant to Regulations Section 
  1.704-1(b)(2)(iv)(m)(4) to be taken into account in determining 
  Capital Accounts as a result of a distribution other than in 
  liquidation of a Partner's interest in the Partnership, the 
  amount of such adjustment shall be treated as an item of gain (if 
  the adjustment increases the basis of the asset) or loss (if the 
  adjustment decreases the basis of the asset) from the disposition 
  of the asset and shall be taken into account for purposes of 
  computing Net Income or Net Loss; and
  
  	(g)	Notwithstanding any other provision of this 
  definition of Net Income or Net Loss, any items which are 
  specially allocated pursuant to Section 6.3 hereof shall not be 
  taken into account in computing Net Income or Net Loss.  The 
  amounts of the items of Partnership income, gain, loss, or 
  deduction available to be specially allocated pursuant to Section 
  6.3 hereof shall be determined by applying rules analogous to 
  those set forth in this definition of Net Income or Net Loss.
  
  	"NEW SECURITIES" means (i) any rights, options, 
  warrants or convertible or exchangeable securities having the 
  right to subscribe for or purchase REIT Shares or other shares of 
  capital stock of the Company, excluding grants under any Stock 
  Plan, or (ii) any Debt issued by the Company that provides any of 
  the rights described in clause (i).
  
  	"NONRECOURSE DEDUCTIONS" shall have the meaning set 
  forth in Regulations Section 1.704-2(b)(1), and the amount of 
  Nonrecourse Deductions for a Partnership Year shall be determined 
  in accordance with the rules of Regulations Section 1.704-2(c).
  
  	"NONRECOURSE LIABILITY" shall have the meaning set 
  forth in Regulations Section 1.752-1(a)(2).
  
  	"NOTICE OF REDEMPTION" means the Notice of Redemption 
  substantially in the form of Exhibit B to this Agreement.
  
  	"PARTNER" means a General Partner or a Limited Partner, 
  and "PARTNERS" means the General Partner and the Limited 
  Partners.
  
  	"PARTNER MINIMUM GAIN" means an amount, with respect to 
  each Partner Nonrecourse Debt, equal to the Partnership Minimum 
  Gain that would result if such Partner Nonrecourse Debt were 
  treated as a Nonrecourse Liability, determined in accordance with 
  Regulations Section 1.704-2(i)(3).
  
  	"PARTNER NONRECOURSE DEBT" shall have the meaning set 
  forth in Regulations Section 1.704-2(b)(4).
  
  	"PARTNER NONRECOURSE DEDUCTIONS" shall have the meaning 
  set forth in Regulations Section 1.704-2(i)(2), and the amount of 
  Partner Nonrecourse Deductions with respect to a Partner 
  Nonrecourse Debt for a Partnership Year shall be determined in 
  accordance with the rules of Regulations Section 1.704-2(i)(2).
  
  	"PARTNERSHIP" means the limited partnership formed 
  under the Act and pursuant to this Agreement, and any successor 
  thereto.
  
  	"PARTNERSHIP INTEREST" means an ownership interest in 
  the Partnership of either a Limited Partner or the General 
  Partner and includes any and all benefits to which the holder of 
  such a Partnership Interest may be entitled as provided in this 
  Agreement, together with all obligations of such Person to comply 
  with the terms and provisions of this Agreement.  There may be 
  one or more classes of Partnership Interests as provided in 
  Section 4.3.  A Partnership Interest may be expressed as a number 
  of Partnership Units.  Unless otherwise expressly provided for by 
  the General Partner at the time of the original issuance of any 
  Partnership Interests, all Partnership Interests (whether of a 
  Limited Partner or a General Partner) shall be of the same class.
  
  	"PARTNERSHIP MINIMUM GAIN" shall have the meaning set 
  forth in Regulations Section 1.704-2(b)(2), and the amount of 
  Partnership Minimum Gain, as well as any net increase or decrease 
  in Partnership Minimum Gain, for a Partnership Year shall be 
  determined in accordance with the rules of Regulations Section 
  1.704-2(d).
  
  	"PARTNERSHIP RECORD DATE" means the record date 
  established by the General Partner for the distribution of 
  Available Cash pursuant to Section 5.1 hereof which record date 
  shall be the same as the record date established by the General 
  Partner for a distribution to its stockholders of some or all of 
  its portion of such distribution.
  
  	"PARTNERSHIP UNIT" means, with respect to any class of 
  Partnership Interest, a fractional, undivided share of such class 
  of Partnership Interest issued pursuant to Sections 4.1 and 4.3.  
  The ownership of Partnership Units may be evidenced by a 
  certificate for units substantially as the General Partner may 
  determine with respect to any class of Partnership Units issued 
  from time to time under Sections 4.1 and 4.3.
  
  	"PARTNERSHIP YEAR" means the fiscal year of the 
  Partnership, which shall be the calendar year.
  
  	"PERCENTAGE INTEREST" means, as to a Partner holding a 
  class of Partnership Interests, its interest in the Partnership 
  as determined by dividing the Partnership Units of such class 
  owned by such Partner by the total number of Partnership Units of 
  such class then outstanding as specified in Exhibit A attached 
  hereto, as such Exhibit may be amended from time to time.  If the 
  Partnership issues more than one class of Partnership Interest, 
  the interest in the Partnership among the classes of Partnership 
  Interests shall be determined as set forth in the amendment to 
  the Partnership Agreement setting forth the rights and privileges 
  of such additional classes of Partnership Interest, if any, as 
  contemplated by Section 4.3(c) hereof.
  
  	"PERSON" means an individual or a corporation, 
  partnership, limited liability company, trust, unincorporated 
  organization, association or other entity.
  
  	"PLEDGE" shall have the meaning set forth in Section 
  11.3(a).
  
  	"PROPERTIES" means such interests in real property and 
  personal property including, without limitation, fee interests, 
  interests in ground leases, interests in joint ventures, 
  interests in mortgages, and Debt instruments, as the Partnership 
  may hold from time to time.
  
  	"QUALIFIED REIT SUBSIDIARY" means any Subsidiary of the 
  Company that is a "qualified REIT subsidiary" within the meaning 
  of Section 856(i) of the Code.
  
  	"QUALIFIED TRANSFEREE" means an "Accredited Investor" 
  as defined in Rule 501 promulgated under the Securities Act.
  
  	"REDEMPTION" shall have the meaning set forth in 
  Section 8.6(a).
  
  	"REGULATIONS" means the Income Tax Regulations 
  promulgated under the Code, as such regulations may be amended 
  from time to time (including corresponding provisions of 
  succeeding regulations).
  
  	"REGULATORY ALLOCATIONS" shall have the meaning set 
  forth in Section 6.3(a)(vii) of this Agreement.
  
  	"REIT" means a real estate investment trust under 
  Section 856 of the Code.
  
  	"REIT REQUIREMENTS" shall have the meaning set forth in 
  Section 5.1.
  
  	"REIT SHARE" means a share of common stock of the 
  Company.
  
  	"REIT SHARES AMOUNT" means, as of any date, (i) with 
  respect to Tendered Units, an aggregate number of REIT Shares 
  equal to the number of such Tendered Units, as adjusted pursuant 
  to Section 8.6(h) (in the event the Company acquires material 
  assets, other than on behalf of the Partnership) and for stock 
  dividends and distributions, stock splits and subdivisions, 
  reverse stock splits and combinations, distributions of rights, 
  warrants or options, and distributions of evidences of 
  indebtedness or assets received by the Company pursuant to a 
  distribution by the Partnership other than a pro rata 
  distribution to all Partners based on their respective Percentage 
  Interests, and (ii) with respect to Partnership Units in any 
  other context, the amount of REIT Shares determined in accordance 
  with clause (i) assuming for such purpose that all such 
  Partnership Units are Tendered Units.
  
  	"SECURITIES ACT" means the Securities Act of 1933, as 
  amended, and the rules and regulations of the Securities and 
  Exchange Commission promulgated thereunder.
  
  	"SECURITIES EXCHANGE ACT" means the Securities Act of 
  1934, as amended, and the rules and regulations of the Securities 
  and Exchange Commission promulgated thereunder.
  
  	"SPECIFIED REDEMPTION DATE" means the day of receipt by 
  the General Partner of a Notice of Redemption.
  
  	"STOCK PLAN" means any stock incentive, stock option, 
  stock ownership or employee benefits plan of the Company.
  
  	"SUBSIDIARY" means, with respect to any Person, any 
  corporation or other entity of which a majority of (i) the voting 
  power of the voting equity securities or (ii) the outstanding 
  equity interests is owned, directly or indirectly, by such 
  Person.
  
  	"SUBSIDIARY PARTNERSHIP" means any partnership that is 
  a Subsidiary of the Partnership.
  
  	"SUBSTITUTE GENERAL PARTNER" means a Person who is 
  admitted as a successor General Partner to the Partnership 
  pursuant to Section 11.2(a).
  
  	"SUBSTITUTED LIMITED PARTNER" means a Person who is 
  admitted as a Limited Partner to the Partnership pursuant to 
  Section 11.4.
  
  	"TAX ITEMS" shall have the meaning set forth in Section 
  6.4(a).
  
  	"TENANT" means any tenant from which the Company 
  derives rent either directly or indirectly through partnerships, 
  including the Partnership.
  
  	"TENDERED UNITS" shall have the meaning set forth in 
  Section 8.6(a).
  
  	"TENDERING PARTNER" shall have the meaning set forth in 
  Section 8.6(a).
  
  	"TERMINATING CAPITAL TRANSACTION" means any sale or 
  other disposition of all or substantially all of the assets of 
  the Partnership or a related series of transactions that, taken 
  together, result in the sale or other disposition of all or 
  substantially all of the assets of the Partnership.
  
  ARTICLE 2
  ORGANIZATIONAL MATTERS
  
  	Section 2.1	ORGANIZATION
  
  	The Partnership is a limited partnership formed 
  pursuant to the provisions of the Act and upon the terms and 
  conditions set forth in this Agreement.  Except as expressly 
  provided herein, the rights and obligations of the Partners and 
  the administration and termination of the Partnership shall be 
  governed by the Act.  The Partnership Interest of each Partner 
  shall be personal property for all purposes.
  
  	Section 2.2	NAME
  
  	The name of the Partnership is Parkway Properties LP.  
  The Partnership's business may be conducted under any other name 
  or names deemed advisable by the General Partner, including the 
  name of the General Partner or any Affiliate thereof.  The words 
  "Limited Partnership," "L.P.," "Ltd." or similar words or letters 
  shall be included in the Partnership's name where necessary for 
  the purposes of complying with the laws of any jurisdiction that 
  so requires.  The General Partner in its sole and absolute 
  discretion may change the name of the Partnership at any time and 
  from time to time and shall notify the Limited Partners of such 
  change in the next regular communication to the Limited Partners.
  
  	Section 2.3	RESIDENT AGENT; PRINCIPAL OFFICE
  
  	The name and address of the resident agent of the 
  Partnership in the State of Delaware shall be United Corporate 
  Services, Inc., 15 Corporation Trust Center, 1209 Charge Street, 
  Wilmington, New Castle County, Delaware 19801 or such other 
  person as the General Partner may select in its sole discretion.  
  The registered office of the Partnership in the State of Delaware 
  shall be United Corporate Services, Inc. at such address or such 
  other location as the General Partner may select in its sole 
  discretion.  The Partnership may maintain offices at such other 
  place or places within or outside the State of Delaware as the 
  General Partner deems advisable.
  
  	Section 2.4	POWER OF ATTORNEY
  
  	(a)	Each Limited Partner and each Assignee constitutes 
  and appoints the General Partner, any Liquidator, and authorized 
  officers and attorneys-in-fact of each, and each of those acting 
  singly, in each case with full power of substitution, as its true 
  and lawful agent and attorney-in-fact, with full power and 
  authority in its name, place and stead to:
  
  		(i)	execute, swear to, acknowledge, deliver, file 
  and record in the appropriate public offices (a) all 
  certificates, documents and other instruments (including, without 
  limitation, this Agreement and the Certificate and all amendments 
  or restatements thereof) that the General Partner or the 
  Liquidator deems appropriate or necessary to form, qualify or 
  continue the existence or qualification of the Partnership as a 
  limited partnership (or a partnership in which the Limited 
  Partners have limited liability) in the State of Delaware and in 
  all other jurisdictions in which the Partnership may conduct 
  business or own property; (b) all instruments that the General 
  Partner or any Liquidator deems appropriate or necessary to 
  reflect any amendment, change, modification or restatement of 
  this Agreement in accordance with its terms; (c) all conveyances 
  and other instruments or documents that the General Partner or 
  any Liquidator deems appropriate or necessary to reflect the 
  dissolution and liquidation of the Partnership pursuant to the 
  terms of this Agreement, including, without limitation, a 
  certificate of cancellation; (d) all instruments relating to the 
  admission, withdrawal, removal or substitution of any Partner 
  pursuant to, or other events described in, Article 11, 12 or 13 
  hereof or the Capital Contribution of any Partner; and (e) all 
  certificates, documents and other instruments relating to the 
  determination of the rights, preferences and privileges of 
  Partnership Interests; and
  
  		(ii)	execute, swear to, acknowledge and file all 
  ballots, consents, approvals, waivers, certificates and other 
  instruments appropriate or necessary, in the sole and absolute 
  discretion of the General Partner or any Liquidator, to make, 
  evidence, give, confirm or ratify any vote, consent, approval, 
  agreement or other action which is made or given by the Partners 
  hereunder or is consistent with the terms of this Agreement or 
  appropriate or necessary, in the sole discretion of the General 
  Partner or any Liquidator, to effectuate the terms or intent of 
  this Agreement.
  
  	Nothing contained herein shall be construed as 
  authorizing the General Partner or any Liquidator to amend this 
  Agreement except in accordance with Article 14 hereof or as may 
  be otherwise expressly provided for in this Agreement.
  
  	(b)	The foregoing power of attorney is hereby declared 
  to be irrevocable and a power coupled with an interest, in 
  recognition of the fact that each of the Partners will be relying 
  upon the power of the General Partner and any Liquidator to act 
  as contemplated by this Agreement in any filing or other action 
  by it on behalf of the Partnership, and it shall survive and not 
  be affected by the subsequent Incapacity of any Limited Partner 
  or Assignee and the transfer of all or any portion of such 
  Limited Partner's or Assignee's Partnership Units and shall 
  extend to such Limited Partner's or Assignee's heirs, successors, 
  assigns and personal representatives.  Each such Limited Partner 
  or Assignee hereby agrees to be bound by any representation made 
  by the General Partner or any Liquidator, acting in good faith 
  pursuant to such power of attorney; and each such Limited Partner 
  or Assignee hereby waives any and all defenses which may be 
  available to contest, negate or disaffirm the action of the 
  General Partner or any Liquidator, taken in good faith under such 
  power of attorney and in accordance with the provisions of this 
  Agreement.  Each Limited Partner or Assignee shall execute and 
  deliver to the General Partner or any Liquidator, within 15 days 
  after receipt of the General Partner's or Liquidator's request 
  therefor, such further designation, powers of attorney and other 
  instruments as the General Partner or the Liquidator, as the case 
  may be, deems necessary to effectuate this Agreement and the 
  purposes of the Partnership.
  
  	Section 2.5	TERM
  
  	The term of the Partnership commenced on January 6, 
  1997 and shall continue until December 31, 2057 unless it is 
  dissolved sooner pursuant to the provisions of Article 13 or as 
  otherwise provided by law.
  
  ARTICLE 3
  PURPOSE
  
  	Section 3.1	PURPOSE AND BUSINESS
  
  	The purpose and nature of the business to be conducted 
  by the Partnership is (i) to conduct any business that may be 
  lawfully conducted by a limited partnership organized pursuant to 
  the Act, PROVIDED, HOWEVER, that such business shall be limited 
  to and conducted in such a manner as to permit the Company at all 
  times to be classified as a REIT for federal income tax purposes, 
  unless the Company ceases to qualify as a REIT for reasons other 
  than the conduct of the business of the Partnership, (ii) to 
  enter into any partnership, joint venture or other similar 
  arrangement to engage in any business described in the foregoing 
  clause (i) or to own interests in any entity engaged, directly or 
  indirectly, in any such business and (iii) to do anything 
  necessary or incidental to the foregoing.  In connection with the 
  foregoing, and without limiting the Company's right in its sole 
  discretion to cease qualifying as a REIT, the Partners 
  acknowledge that the Company's current status as a REIT inures to 
  the benefit of all the Partners and not solely the Company.
  
  	Section 3.2	POWERS
  
  	The Partnership is empowered to do any and all acts and 
  things necessary, appropriate, proper, advisable, incidental to 
  or convenient for the furtherance and accomplishment of the 
  purposes and business described herein and for the protection and 
  benefit of the Partnership, including, without limitation, full 
  power and authority, directly or through its ownership interest 
  in other entities, to enter into, perform and carry out contracts 
  of any kind, borrow money and issue evidences of indebtedness, 
  whether or not secured by mortgage, deed of trust, pledge or 
  other lien, acquire and develop real property, and manage, lease, 
  sell, transfer and dispose of real property; PROVIDED, HOWEVER, 
  that the Partnership shall not take, or refrain from taking, any 
  action which, in the judgment of the General Partner, in its sole 
  and absolute discretion, (i) could adversely affect the ability 
  of the Company to continue to qualify as a REIT, (ii) could 
  subject the Company to any taxes under Section 857 or Section 
  4981 of the Code, or (iii) could violate any law or regulation of 
  any governmental body or agency having jurisdiction over the 
  Company or its securities, unless any such action (or inaction) 
  under (i), (ii) or (iii) shall have been specifically consented 
  to by the Company in writing.
  
  	Section 3.3	PARTNERSHIP ONLY FOR PURPOSES SPECIFIED
  
  	The Partnership shall be a partnership only for the 
  purposes specified in Section 3.1 hereof, and this Agreement 
  shall not be deemed to create a partnership among the Partners 
  with respect to any activities whatsoever other than the 
  activities within the purposes of the Partnership as specified in 
  Section 3.1 hereof.  Except as otherwise provided in this 
  Agreement, no Partner shall have any authority to act for, bind, 
  commit or assume any obligation or responsibility on behalf of 
  the Partnership, its properties or any other Partner.  No 
  Partner, in its capacity as a Partner under this Agreement, shall 
  be responsible or liable for any indebtedness or obligation of 
  another Partner, nor shall the Partnership be responsible or 
  liable for any indebtedness or obligation of any Partner, 
  incurred either before or after the execution and delivery of 
  this Agreement by such Partner, except as to those 
  responsibilities, liabilities, indebtedness or obligations 
  incurred pursuant to and as limited by the terms of this 
  Agreement and the Act.
  
  	Section 3.4	REPRESENTATIONS AND WARRANTIES BY THE 
  PARTIES
  
  	(a)	Each Partner that is an individual represents and 
  warrants to each other Partner that (i) such Partner has, in the 
  case of any Person other than an individual, the power and 
  authority, and in the case of an individual, the legal capacity 
  to enter into this Agreement and perform such Partner's 
  obligations hereunder, (ii) the consummation of the transactions 
  contemplated by this Agreement to be performed by such Partner 
  will not result in a breach or violation of, or a default under, 
  any agreement by which such Partner or any of such Partner's 
  property is or are bound, or any statute, regulation, order or 
  other law to which such Partner is subject, (iii) such Partner is 
  neither a "foreign person" within the meaning of Section 1445(f) 
  of the Code nor a "foreign partner" within the meaning of Section 
  1446(e) of the Code, and (iv) this Agreement has been duly 
  executed and delivered by such Partner and is binding upon, and 
  enforceable against, such Partner in accordance with its terms.
  
  	(b)	Each Partner that is not an individual represents 
  and warrants to each other Partner that (i) it has the requisite 
  corporate or other power and authority to enter into this 
  Agreement, (ii) its execution and delivery of this Agreement, and 
  performance of all transactions contemplated by this Agreement to 
  be performed by it, have been duly authorized by all necessary 
  action, including, without limitation, that of its general 
  partner(s), committee(s), trustee(s), beneficiaries, directors 
  and/or stockholder(s), as the case may be, as required, (iii) the 
  consummation of such transactions shall not result in a breach or 
  violation of, or a default under, its certificate of limited 
  partnership, partnership agreement, trust agreement, limited 
  liability company operating agreement, charter, by-laws or other 
  organizational documents, as the case may be, any agreement by 
  which such Partner or any of such Partner's properties or any of 
  its partners, beneficiaries, trustees or stockholders, as the 
  case may be, is or are bound, or any statute, regulation, order 
  or other law to which such Partner or any of its partners, 
  trustees, beneficiaries or stockholders, as the case may be, is 
  or are subject, (iv) such Partner is neither a "foreign person" 
  within the meaning of Section 1445(f) of the Code nor a "foreign 
  partner" within the meaning of Section 1446(e) of the Code, and 
  (v) this Agreement has been duly executed and delivered by such 
  Partner and is binding upon, and enforceable against, such 
  Partner in accordance with its terms.
  
  	(c)	Each Partner represents, warrants and agrees that 
  it has acquired and continues to hold its interest in the 
  Partnership for its own account for investment only and not for 
  the purpose of, or with a view toward, the resale or distribution 
  of all or any part thereof, nor with a view toward selling or 
  otherwise distributing such interest or any part thereof at any 
  particular time or under any predetermined circumstances.  Each 
  Partner further represents and warrants that it is a 
  sophisticated investor, able and accustomed to handling 
  sophisticated financial matters for itself, particularly real 
  estate investments, and that it has a sufficiently high net worth 
  that it does not anticipate a need for the funds it has invested 
  in the Partnership in what it understands to be a highly 
  speculative and illiquid investment.
  
  	(d)	Each Partner further represents, warrants and 
  agrees as follows:
  
  		(i)	Except as provided in Exhibit C, it does not 
  and will not, without the prior written consent of the General 
  Partner, actually own or Constructively Own (a) with respect to 
  any Tenant that is a corporation, any stock of such Tenant, and 
  (b) with respect to any Tenant that is not a corporation, any 
  interests in either the assets or net profits of such Tenant; 
  PROVIDED, HOWEVER, that so long as there are fewer than 20 
  Partners, each partner may own or Constructively Own (x) with 
  respect to any Tenant that is a corporation, stock of such Tenant 
  possessing up to, but not more than, one-half of one percent 
  (0.5%) of the total combined voting power of all classes of stock 
  entitled to vote and one-half of one percent (0.5%) of the total 
  number of shares of all classes of stock of such Tenant and (y) 
  with respect to any Tenant that is not a corporation, interests 
  in such Tenant representing up to, but not more than, one-half of 
  one percent (0.5%) of the assets and one-half of one percent 
  (0.5%) of the net profits of such Tenant, so long as such actual 
  or Constructive Ownership otherwise permitted under clause (x) or 
  (y) would not cause the General Partner to receive amounts 
  described in Section 856(d)(2)(B) of the Code.
  
  		(ii)	Except as provided in Exhibit D, it does not, 
  and agrees that it will not without the prior written consent of 
  the General Partner, actually own or Constructively Own, any 
  stock in the Company, other than any REIT Shares or other shares 
  of capital stock of the Company such Partner may acquire (a) as a 
  result of an exchange of Tendered Units pursuant to Section 8.6 
  or (b) upon the exercise of options granted or delivery of REIT 
  Shares pursuant to any Stock Plan, or (c) in open market 
  transactions, in each case subject to the ownership limitations 
  set forth in the Charter.
  
  		(iii)	Upon request of the General Partner, it 
  will disclose to the General Partner the amount of REIT Shares or 
  other shares of capital stock of the Company that it actually 
  owns or Constructively Owns.
  
  		(iv)	It understands that if, for any reason, (a) 
  the representations, warranties or agreements set forth in d(i) 
  or (ii) above are violated, or (b) the Partner's actual or 
  Constructive ownership of REIT Shares or other shares of capital 
  stock of the Company violates the limitations set forth in the 
  Charter, then (1) some or all of the Redemption rights of the 
  Partners may become non-exercisable, and (2) some or all of the 
  REIT Shares owned by the Partners may be automatically converted 
  to Excess Shares, as provided in the Charter.
  
  	(e)	The representations and warranties contained in 
  Sections 3.4(a) - 3.4(d) hereof shall survive the execution and 
  delivery of this Agreement by each Partner and the dissolution 
  and windup of the Partnership.
  
  	(f)	Each Partner hereby acknowledges that no 
  representations as to potential profit, cash flows, funds from 
  operations or yield, if any, in respect of the Partnership or the 
  General Partner have been made by any Partner or any employee or 
  representative or Affiliate of any Partner, and that projections 
  and any other information, including, without limitation, 
  financial and descriptive information and documentation, which 
  may have been in any manner submitted to such Partner shall not 
  constitute any representation or warranty of any kind or nature, 
  express or implied.
  
  ARTICLE 4
  CAPITAL CONTRIBUTIONS
  
  	Section 4.1	CAPITAL CONTRIBUTIONS OF THE PARTNERS
  
  	The Partners confirm that they have made the Capital 
  Contributions as set forth in Exhibit A to this Agreement.  The 
  Partners shall own Partnership Units of the class and in the 
  amounts set forth in Exhibit A and shall have a Percentage 
  Interest in the Partnership as set forth in Exhibit A, which 
  Percentage Interest shall be adjusted in Exhibit A from time to 
  time by the General Partner to the extent necessary to reflect 
  accurately exchanges, redemptions, Capital Contributions, the 
  issuance of additional Partnership Units or similar events having 
  an effect on a Partner's Percentage Interest.  Except as required 
  by law or as otherwise provided in Sections 4.3, 4.4, and  10.5, 
  no Partner shall be required or permitted to make any additional 
  Capital Contributions or loans to the Partnership.  Unless 
  otherwise specified by the General Partner at the time of the 
  creation of any class of Partnership Interests, the corresponding 
  class of capital stock for any Partnership Units issued shall be 
  REIT Shares. 
  
  	Section 4.2	LOANS BY THIRD PARTIES
  
  	Subject to Section 4.3, the Partnership may incur Debt, 
  or enter into other similar credit, guarantee, financing or 
  refinancing arrangements for any purpose (including, without 
  limitation, in connection with any further acquisition of 
  Properties) with any Person that is not the General Partner upon 
  such terms as the General Partner determines appropriate.
  
  	Section 4.3	ADDITIONAL FUNDING AND CAPITAL 
  CONTRIBUTIONS
  
  	(a)	GENERAL.  The General Partner may, at any time and 
  from time to time, determine that the Partnership requires 
  additional funds ("Additional Funds") for the acquisition of 
  additional Properties or for such other Partnership purposes as 
  the General Partner may determine.  Additional Funds may be 
  raised by the Partnership, at the election of the General 
  Partner, in any manner provided in, and in accordance with, the 
  terms of this Section 4.3.  No Person shall have any preemptive, 
  preferential or similar right or rights to subscribe for or 
  acquire any Partnership Interest.
  
  	(b)	GENERAL PARTNER LOANS.  The General Partner or an 
  Affiliate may enter into a Funding Debt, including, without 
  limitation, a Funding Debt that is convertible into REIT shares, 
  and lend the Additional Funds to the Partnership (a "General 
  Partner Loan").  If the General Partner enters into such a 
  Funding Debt, the General Partner Loan will consist of the net 
  proceeds from such Funding Debt and will be on comparable terms 
  and conditions, including principal amount, interest rate, 
  repayment schedule and costs and expenses, as shall be applicable 
  with respect to or incurred in connection with such Funding Debt.
  
  	(c)	ISSUANCE OF ADDITIONAL PARTNERSHIP INTERESTS.  The 
  General Partner, in its sole and absolute discretion, may raise 
  all or any portion of the Additional Funds by accepting 
  additional Capital Contributions, including, without limitation, 
  the issuance of Partnership Units for interests in real property. 
  In connection with any such additional Capital Contributions (of 
  cash or property), the General Partner is hereby authorized to 
  cause the Partnership from time to time to issue to Partners 
  (including the General Partner or the Company) or other persons 
  (including, without limitation, in connection with the 
  contribution of property to the Partnership) additional 
  Partnership Units or other Partnership Interests in one or more 
  classes, or one or more series of any of such classes, with such 
  designations, preferences and relative, participating, optional 
  or other special rights, powers, and duties, including rights, 
  powers, and duties senior to then existing Limited Partnership 
  Interests, all as shall be determined by the General Partner in 
  its sole and absolute discretion subject to Delaware law, and as 
  set forth in an amendment to this Agreement, including, without 
  limitation, (i) the allocations of items of Partnership income, 
  gain, loss, deduction, and credit to such class or series of 
  Partnership Interests; (ii) the right of each such class or 
  series of Partnership Interests to share in Partnership 
  distributions; (iii) the rights of each such class or series of 
  Partnership Interests upon dissolution and liquidation of the 
  Partnership; and (iv) the right to vote; PROVIDED THAT no such 
  additional Partnership Units or other Partnership Interests shall 
  be issued to the Company unless either (a) the additional 
  Partnership Interests are issued in connection with the grant, 
  award, or issuance of shares of the Company pursuant to Section 
  4.3(d) below, which shares have designations, preferences, and 
  other rights (except voting rights) such that the economic 
  interests attributable to such shares are substantially similar 
  to the designations, preferences and other rights of the 
  additional Partnership Interests issued to the Company in 
  accordance with this Section 4.3(c), (b) the additional 
  Partnership Interests are issued to all Partners holding 
  Partnership Interests in the same class in proportion to their 
  respective Percentage Interests in such class or (c) pursuant to 
  Section 4.4; PROVIDED FURTHER, that no such additional 
  Partnership Units or Partnership Interests shall be issued if 
  such issuance would cause, or in the opinion of counsel selected 
  by the General Partner, could cause (i) the Partnership to 
  become, with respect to any employee benefit plan subject to 
  Title I of ERISA or Section 4975 of the Code, a "party in 
  interest" (as defined in Section 3(14) of ERISA) or a 
  "disqualified person" (as defined in Section 4975(e) of the 
  Code); and (ii) any portion of the assets of the Partnership to 
  constitute assets of any employee benefit plan pursuant to 
  Section 2510.3-101 of the regulations of the United States 
  Department of Labor.  In the event that the Partnership issues 
  additional Partnership Units or Partnership Interests pursuant to 
  this Section 4.3(c), the General Partner shall make such 
  revisions to this Agreement (including but not limited to the 
  revisions described in Section 5.4, Section 6.2(d), and Section 
  8.6) as it determines are necessary to reflect the issuance of 
  such additional Partnership Interests.
  
  	(d)	ISSUANCE OF REIT SHARES OR OTHER SECURITIES BY THE 
  COMPANY.  Except as contemplated by Section 4.4, the Company 
  shall not issue any additional REIT Shares (other than REIT 
  Shares issued pursuant to Section 8.6 hereof or pursuant to a 
  dividend or distribution (including any stock split) of REIT 
  Shares to all of its stockholders), other shares of capital stock 
  of the Company or New Securities unless the Company shall make a 
  Capital Contribution of the net proceeds from the issuance of 
  such additional REIT Shares, other shares of capital stock or New 
  Securities, as the case may be, and from the exercise of the 
  rights contained in such additional New Securities, as the case 
  may be.  The Company's Capital Account shall be increased by the 
  amount of cash so contributed.
  
  	(e)	PERCENTAGE INTEREST ADJUSTMENTS IN THE CASE OF 
  CAPITAL CONTRIBUTIONS FOR PARTNERSHIP UNITS.  Upon the acceptance 
  of additional Capital Contributions in exchange for Partnership 
  Units, the Percentage Interest related to such Partnership Units 
  shall be equal to a fraction, the numerator of which is equal to 
  the amount of cash and the Agreed Value of the Property 
  contributed as of the Business Day immediately preceding the date 
  on which the additional Capital Contributions are made (an 
  "Adjustment Date") and the denominator of which is equal to the 
  sum of (i) the Deemed Value of the Partnership Interests of such 
  class (computed as of the Business Day immediately preceding the 
  Adjustment Date) and (ii) the aggregate amount of additional 
  Capital Contributions contributed to the Partnership on such 
  Adjustment Date in respect of such class of Partnership 
  Interests.  The Percentage Interest of each other Partner holding 
  Partnership Interests of such class not making a full pro rata 
  Capital Contribution shall be adjusted to equal a fraction, the 
  numerator of which is equal to the sum of (i) the Deemed 
  Partnership Interest Value of such Limited Partner of such class 
  (computed as of the Business Day immediately preceding the 
  Adjustment Date) and (ii) the amount of additional Capital 
  Contributions made by such Partner to the Partnership in respect 
  of such class of Partnership Interests as of such Adjustment 
  Date, and the denominator of which is equal to the sum of (i) the 
  Deemed Value of the Partnership Interests of such class (computed 
  as of the Business Day immediately preceding the Adjustment 
  Date), and (ii) the aggregate amount of additional Capital 
  Contributions contributed to the Partnership on such Adjustment 
  Date in respect of such class. Notwithstanding the foregoing, 
  solely for purposes of calculating a Partner's Percentage 
  Interest pursuant to this Section 4.3(e), cash Capital 
  Contributions by the Company will be deemed to equal the cash 
  contributed by the Company plus, in the case of cash 
  contributions funded by an offering of any capital stock of the 
  Company, the offering costs attributable to the cash contributed 
  to the Partnership.
  
  	Section 4.4	STOCK PLAN
  
  	If at any time or from time to time the Company sells 
  or issues REIT Shares pursuant to any Stock Plan, the Company 
  shall contribute any proceeds therefrom to the Partnership as an 
  additional Capital Contribution and shall receive an amount of 
  additional Partnership Units equal to the number of REIT Shares 
  so sold or issued.  The Company's Capital Account shall be 
  increased by the amount of cash so contributed.
  
  	Section 4.5	NO THIRD PARTY BENEFICIARY
  
  	No creditor or other third party having dealings with 
  the Partnership shall have the right to enforce the right or 
  obligation of any Partner to make Capital Contributions or loans 
  or to pursue any other right or remedy hereunder or at law or in 
  equity, it being understood and agreed that the provisions of 
  this Agreement shall be solely for the benefit of, and may be 
  enforced solely by, the parties hereto and their respective 
  successors and assigns.  None of the rights or obligations of the 
  Partners herein set forth to make Capital Contributions or loans 
  to the Partnership shall be deemed an asset of the Partnership 
  for any purpose by any creditor or other third party, nor may 
  such rights or obligations be sold, transferred or assigned by 
  the Partnership or pledged or encumbered by the Partnership to 
  secure any debt or other obligation of the Partnership or of any 
  of the Partners.
  
  	Section 4.6	OTHER CONTRIBUTION PROVISIONS
  
  	In the event that any Partner is admitted to the 
  Partnership and is given a Capital Account in exchange for 
  services rendered to the Partnership, such transaction shall be 
  treated by the Partnership and the affected Partner as if the 
  Partnership had compensated such Partner in cash, and the Partner 
  had contributed such cash to the capital of the Partnership.  In 
  addition, with the consent of the General Partner, one or more 
  Limited Partners may enter into contribution agreements with the 
  Partnership which have the effect of providing a guarantee of 
  certain obligations of the Partnership.
  
  ARTICLE 5
  DISTRIBUTIONS
  
  	Section 5.1	REQUIREMENT AND CHARACTERIZATION OF 
  DISTRIBUTIONS
  
  	The General Partner shall cause the Partnership to 
  distribute quarterly all, or such portion as the General Partner 
  may in its discretion determine, of Available Cash generated by 
  the Partnership during such quarter to the Partners who are 
  Partners on the Partnership Record Date with respect to such 
  quarter, (1) first, with respect to any Partnership Interests 
  that are entitled to any preference in distribution, in 
  accordance with the rights of such class of Partnership Interests 
  (and within such class, pro rata in proportion to the respective 
  Percentage Interests on such Partnership Record Date), and, (2) 
  second, with respect to Partnership Interests that are not 
  entitled to any preference in distribution, pro rata to each such 
  class in accordance with the terms of such class (and within each 
  such class, pro rata in proportion with the respective Percentage 
  Interests on such Partnership Record Date).  Unless otherwise 
  expressly provided for herein or in an agreement at the time a 
  new class of Partnership Interests is created in accordance with 
  Article 4 hereof, no Partnership Interest shall be entitled to a 
  distribution in preference to any other Partnership Interest.  
  The General Partner shall take such reasonable efforts, as 
  determined by it in its sole and absolute discretion, and 
  consistent with the qualification of the Company as a REIT, to 
  cause the Partnership to distribute sufficient amounts to enable 
  the Company to pay stockholder dividends that will (a) satisfy 
  the requirements for qualifying as a REIT under the Code and 
  Regulations ("REIT Requirements"), and (b) avoid any federal 
  income or excise tax liability of the Company.
  
  	Section 5.2	DISTRIBUTIONS IN KIND
  
  	No right is given to any Partner to demand and receive 
  property other than cash.  The General Partner may determine, in 
  its sole and absolute discretion, to make a distribution in kind 
  to the Partners of Partnership assets, and such assets shall be 
  distributed in such a fashion as to ensure that the fair market 
  value is distributed and allocated in accordance with Articles 5, 
  6 and 10.
  
  	Section 5.3	DISTRIBUTIONS UPON LIQUIDATION
  
  	Proceeds from a Terminating Capital Transaction shall 
  be distributed to the Partners in accordance with Section 13.2.
  
  	Section 5.4	DISTRIBUTIONS TO REFLECT ISSUANCE OF 
  ADDITIONAL PARTNERSHIP INTERESTS
  
  	In the event that the Partnership issues additional 
  Partnership Interests to the General Partner, the Company, or any 
  Additional Limited Partner pursuant to Section 4.3(c) or 4.4 
  hereof, the General Partner shall make such revisions to this 
  Article 5 as it determines are necessary to reflect the issuance 
  of such additional Partnership Interests.
  
  ARTICLE 6
  ALLOCATIONS
  
  	Section 6.1	TIMING AND AMOUNT OF ALLOCATIONS OF NET 
  INCOME AND NET LOSS
  
  	Net Income and Net Loss of the Partnership shall be 
  determined and allocated with respect to each fiscal year of the 
  Partnership as of the end of each such year.  Subject to the 
  other provisions of this Article 6, an allocation to a Partner of 
  a share of Net Income or Net Loss shall be treated as an 
  allocation of the same share of each item of income, gain, loss 
  or deduction that is taken into account in computing Net Income 
  or Net Loss.
  
  	Section 6.2	GENERAL ALLOCATIONS
  
  	(a)	IN GENERAL.  Except as otherwise provided in this 
  Article 6, Net Income and Net Loss shall be allocated to each of 
  the Partners holding the same class of Partnership Interests in 
  accordance with their respective Percentage Interest of such 
  class.
  
  	(b)	ALLOCATIONS TO REFLECT ISSUANCE OF ADDITIONAL 
  PARTNERSHIP INTERESTS.  In the event that the Partnership issues 
  additional Partnership Interests to the General Partner, the 
  Company, or any Additional Limited Partner pursuant to Section 
  4.3 or 4.4 hereof, the General Partner shall make such revisions 
  to this Section 6.2 as it determines are necessary to reflect the 
  terms of the issuance of such additional Partnership Interests, 
  including making preferential allocations to certain classes of 
  Partnership Interests.
  
  	Section 6.3	ADDITIONAL ALLOCATION PROVISIONS
  
  	Notwithstanding the foregoing provisions of this 
  Article 6:
  
  	(a)	REGULATORY ALLOCATIONS.
  
  		(i)	MINIMUM GAIN CHARGEBACK.  Except as otherwise 
  provided in Regulations Section 1.704-2(f), notwithstanding the 
  provisions of Section 6.2 of the Agreement, or any other 
  provision of this Article 6, if there is a net decrease in 
  Partnership Minimum Gain during any fiscal year, each Partner 
  shall be specially allocated items of Partnership income and gain 
  for such year (and, if necessary, subsequent years) in an amount 
  equal to such Partner's share of the net decrease in Partnership 
  Minimum Gain, as determined under Regulations Section 1.704-2(g).  
  Allocations pursuant to the previous sentence shall be made in 
  proportion to the respective amounts required to be allocated to 
  each Partner pursuant thereto.  The items to be allocated shall 
  be determined in accordance with Regulations Sections 
  1.704-2(f)(6) and 1.704-2(j)(2).  This Section 6.3(a)(i) is 
  intended to qualify as a "minimum gain chargeback" within the 
  meaning of Regulation Section 1.704-2(f) which shall be 
  controlling in the event of a conflict between such Regulation 
  and this Section 6.3(a)(i).
  
  		(ii)	PARTNER MINIMUM GAIN CHARGEBACK.  Except as 
  otherwise provided in Regulations Section 1.704-2(i)(4), and 
  notwithstanding the provisions of Section 6.2 of the Agreement, 
  or any other provision of this Article 6 (except Section 
  6.3(a)(i)), if there is a net decrease in Partner Minimum Gain 
  attributable to a Partner Nonrecourse Debt during any fiscal 
  year, each Partner who has a share of the Partner Minimum Gain 
  attributable to such Partner Nonrecourse Debt, determined in 
  accordance with Regulations Section 1.704-2(i)(5), shall be 
  specially allocated items of Partnership income and gain for such 
  year (and, if necessary, subsequent years) in an amount equal to 
  such Partner's share of the net decrease in Partner Minimum Gain 
  attributable to such Partner Nonrecourse Debt, determined in 
  accordance with Regulations Section 1.704-2(i)(4).  Allocations 
  pursuant to the previous sentence shall be made in proportion to 
  the respective amounts required to be allocated to each General 
  Partner and Limited Partner pursuant thereto.  The items to be so 
  allocated shall be determined in accordance with Regulations 
  Sections 1.704-2(i)(4) and 1.704-2(j)(2).  This Section 
  6.3(a)(ii) is intended to qualify as a "chargeback of partner 
  nonrecourse debt minimum gain" within the meaning of Regulation 
  Section 1.704-2(i) which shall be controlling in the event of a 
  conflict between such Regulation and this Section 6.3(a)(ii).
  
  		(iii)	NONRECOURSE DEDUCTIONS AND PARTNER 
  NONRECOURSE DEDUCTIONS.  Any Nonrecourse Deductions for any 
  fiscal year shall be specially allocated to the Partners in 
  accordance with their Percentage Interests.  Any Partner 
  Nonrecourse Deductions for any fiscal year shall be specially 
  allocated to the Partner(s) who bears the economic risk of loss 
  with respect to the Partner Nonrecourse Debt to which such 
  Partner Nonrecourse Deductions are attributable, in accordance 
  with Regulations Sections 1.704-2(b)(4) and 1.704-2(i).
  
  		(iv)	QUALIFIED INCOME OFFSET.  If any Partner 
  unexpectedly receives an adjustment, allocation or distribution 
  described in Regulations Section 1.704-1(b)(2)(ii)(d)(4), (5) or 
  (6), items of Partnership income and gain shall be allocated, in 
  accordance with Regulations Section 1.704-1(b)(2)(ii)(d), to the 
  Partner in an amount and manner sufficient to eliminate, to the 
  extent required by such Regulations, the Adjusted Capital Account 
  Deficit of the Partner as quickly as possible provided that an 
  allocation pursuant to this Section 6.3(a)(iv) shall be made if 
  and only to the extent that such Partner would have an Adjusted 
  Capital Account Deficit after all other allocations provided in 
  this Article 6 have been tentatively made as if this Section 
  6.3(a)(iv) were not in the Agreement.  It is intended that this 
  Section 6.3(a)(iv) qualify and be construed as a "qualified 
  income offset" within the meaning of Regulations 
  1.704-1(b)(2)(ii)(d), which shall be controlling in the event of 
  a conflict between such Regulations and this Section 6.3(a)(iv).
  
  		(v)	GROSS INCOME ALLOCATION.  In the event any 
  Partner has a deficit Capital Account at the end of any fiscal 
  year which is in excess of the sum of (1) the amount (if any) 
  such Partner is obligated to restore to the Partnership, and (2) 
  the amount such Partner is deemed to be obligated to restore 
  pursuant to Regulations Section 1.704-1(b)(2)(ii)(c) or the 
  penultimate sentences of Regulations Sections 1.704-2(g)(1) and 
  1.704-2(i)(5), each such Partner shall be specially allocated 
  items of Partnership income and gain in the amount of such excess 
  as quickly as possible, PROVIDED THAT an allocation pursuant to 
  this Section 6.3(a)(v) shall be made if and only to the extent 
  that such Partner would have a deficit Capital Account in excess 
  of such sum after all other allocations provided in this Article 
  6 have been tentatively made as if this Section 6.3(a)(v) and 
  Section 6.3(a)(iv) were not in the Agreement.
  
  		(vi)	LIMITATION ON ALLOCATION OF NET LOSS.  To the 
  extent any allocation of Net Loss would cause or increase an 
  Adjusted Capital Account Deficit as to any Partner, such 
  allocation of Net Loss shall be reallocated among the other 
  Partners in accordance with their respective Percentage 
  Interests, subject to the limitations of this Section 6.3(a)(vi).
  
  		(vii)	SECTION 754 ADJUSTMENT.  To the extent 
  an adjustment to the adjusted tax basis of any Partnership asset 
  pursuant to Code Section 734(b) or Code Section 743(b) is 
  required, pursuant to Regulations Section 1.704-1(b)(2)(iv)(m)(2) 
  or Regulations Section 1.704-1(b)(2)(iv)(m)(4), to be taken into 
  account in determining Capital Accounts as the result of a 
  distribution to a Partner in complete liquidation of his interest 
  in the Partnership, the amount of such adjustment to the Capital 
  Accounts shall be treated as an item of gain (if the adjustment 
  increases the basis of the asset) or loss (if the adjustment 
  decreases such basis) and such gain or loss shall be specially 
  allocated to the Partners in accordance with their interests in 
  the Partnership in the event that Regulations Section 
  1.704-1(b)(2)(iv)(m)(2) applies, or to the Partners to whom such 
  distribution was made in the event that Regulations Section 
  1.704-1(b)(2)(iv)(m)(4) applies.
  
  		(viii)	CURATIVE ALLOCATION.  The allocations 
  set forth in Sections 6.3(a)(i), (ii), (iii), (iv), (v), (vi), 
  and (vii) (the "Regulatory Allocations") are intended to comply 
  with certain regulatory requirements, including the requirements 
  of Regulations Sections 1.704-1(b) and 1.704-2.  Notwithstanding 
  the provisions of Sections 6.1 and 6.2, the Regulatory 
  Allocations shall be taken into account in allocating other items 
  of income, gain, loss and deduction among the Partners so that, 
  to the extent possible, the net amount of such allocations of 
  other items and the Regulatory Allocations to each Partner shall 
  be equal to the net amount that would have been allocated to each 
  such Partner if the Regulatory Allocations had not occurred.
  
  	Section 6.4	TAX ALLOCATIONS
  
  	(a)	IN GENERAL.  Except as otherwise provided in this 
  Section 6.4, for income tax purposes each item of income, gain, 
  loss and deduction (collectively, "Tax Items") shall be allocated 
  among the Partners in the same manner as its correlative item of 
  "book" income, gain, loss or deduction is allocated pursuant to 
  Sections 6.2 and 6.3.
  
  	(b)	ALLOCATIONS RESPECTING SECTION 704(C) 
  REVALUATIONS. Notwithstanding Section 6.4(a), Tax Items with 
  respect to Partnership property that is contributed to the 
  Partnership by a Partner shall be shared among the Partners for 
  income tax purposes pursuant to Regulations promulgated under 
  Section 704(c) of the Code, so as to take into account the 
  variation, if any, between the basis of the property to the 
  Partnership and its initial Gross Asset Value.  With respect to 
  Partnership property that is initially contributed to the 
  Partnership upon its formation pursuant to Section 4.1, such 
  variation between basis and initial Gross Asset Value shall be 
  taken into account under the "traditional without curative 
  allocations method" of Regulations Section 1.704-3.  With respect 
  to properties subsequently contributed to the Partnership, the 
  Partnership shall account for such variation under any method 
  approved under Section 704(c) of the Code and the applicable 
  regulations as chosen by the General Partner.  In the event the 
  Gross Asset Value of any Partnership asset is adjusted pursuant 
  to subparagraph (b) of the definition of Gross Asset Value 
  (provided in Article 1 of this Agreement), subsequent allocations 
  of Tax Items with respect to such asset shall take account of the 
  variation, if any, between the adjusted basis of such asset and 
  its Gross Asset Value in the same manner as under Section 704(c) 
  of the Code and the applicable regulations consistent with the 
  requirements of Regulations Section 1.704-1(b)(2)(iv)(g) using 
  any method approved under 704(c) of the Code and the applicable 
  regulations as chosen by the General Partner.
  
  ARTICLE 7
  MANAGEMENT AND OPERATIONS OF BUSINESS
  
  	Section 7.1	MANAGEMENT
  
  	(a)	Except as otherwise expressly provided in this 
  Agreement, all management powers over the business and affairs of 
  the Partnership are exclusively vested in the General Partner, 
  and no Limited Partner shall have any right to participate in or 
  exercise control or management power over the business and 
  affairs of the Partnership.  The General Partner may not be 
  removed by the Limited Partners with or without cause, except 
  with the consent of the General Partner.  In addition to the 
  powers now or hereafter granted a General Partner of a limited 
  partnership under applicable law or which are granted to the 
  General Partner under any other provision of this Agreement, the 
  General Partner, subject to the other provisions hereof including 
  Section 7.3, shall have full power and authority to do all things 
  deemed necessary or desirable by it to conduct the business of 
  the Partnership, to exercise all powers set forth in Section 3.2 
  hereof and to effectuate the purposes set forth in Section 3.1 
  hereof, including, without limitation:
  
  		(i)	the making of any expenditures, the lending 
  or borrowing of money (including, without limitation, making 
  prepayments on loans and borrowing money to permit the 
  Partnership to make distributions to its Partners in such amounts 
  as will permit the Company (so long as the Company has determined 
  to qualify as a REIT) to avoid the payment of any federal income 
  tax (including, for this purpose, any excise tax pursuant to 
  Section 4981 of the Code) and to make distributions to its 
  stockholders sufficient to permit the Company to maintain REIT 
  status), the assumption or guarantee of, or other contracting 
  for, indebtedness and other liabilities, the issuance of 
  evidences of indebtedness (including the securing of same by 
  mortgage, deed of trust or other lien or encumbrance on all or 
  any of the Partnership's assets) and the incurring of any 
  obligations it deems necessary for the conduct of the activities 
  of the Partnership;
  
  		(ii)	the making of tax, regulatory and other 
  filings, or rendering of periodic or other reports to 
  governmental or other agencies having jurisdiction over the 
  business or assets of the Partnership;
  
  		(iii)	the acquisition, disposition, mortgage, 
  pledge, encumbrance, hypothecation or exchange of any assets of 
  the Partnership or the merger or other combination of the 
  Partnership with or into another entity;
  
  		(iv)	the mortgage, pledge, encumbrance or 
  hypothecation of all or any assets of the Partnership, and the 
  use of the assets of the Partnership (including, without 
  limitation, cash on hand) for any purpose consistent with the 
  terms of this Agreement and on any terms it sees fit, including, 
  without limitation, the financing of the conduct or the 
  operations of the General Partner, the Company, or the 
  Partnership, the lending of funds to other Persons (including, 
  without limitation, the General Partner or the Company (if 
  necessary to permit the financing or capitalization of a 
  subsidiary of the General Partner, the Company, or the 
  Partnership) or any Subsidiaries of the Partnership) and the 
  repayment of obligations of the Partnership, the Company, any of 
  its Subsidiaries and any other Person in which it has an equity 
  investment;
  
  		(v)	the negotiation, execution, and performance 
  of any contracts, leases, conveyances or other instruments that 
  the General Partner considers useful or necessary to the conduct 
  of the Partnership's operations or the implementation of the 
  General Partner's powers under this Agreement;
  
  		(vi)	the distribution of Partnership cash or other 
  Partnership assets in accordance with this Agreement;
  
  		(vii)	the selection and dismissal of employees 
  of the Partnership (including, without limitation, employees 
  having titles such as "president," "vice president," "secretary" 
  and "treasurer"), and agents, outside attorneys, accountants, 
  consultants and contractors of the Partnership, the determination 
  of their compensation and other terms of employment or hiring, 
  including waivers of conflicts of interest and the payment of 
  their expenses and compensation out of the Partnership's assets;
  
  		(viii)	the maintenance of such insurance for 
  the benefit of the Partnership and the Partners as it deems 
  necessary or appropriate;
  
  		(ix)	the formation of, or acquisition of an 
  interest in, and the
  contribution of property to, any further limited or general 
  partnerships, joint ventures or other relationships that it deems 
  desirable (including, without limitation, the acquisition of 
  interests in, and the contributions of property to any Subsidiary 
  and any other Person in which it has an equity investment from 
  time to time); PROVIDED THAT, as long as the Company has 
  determined to continue to qualify as a REIT, the Partnership may 
  not engage in any such formation, acquisition or contribution 
  that would cause the Company to fail to qualify as a REIT;
  
  		(x)	the control of any matters affecting the 
  rights and obligations of the Partnership, including the conduct 
  of litigation and the incurring of legal expense and the 
  settlement of claims and litigation, and the indemnification of 
  any Person against liabilities and contingencies to the extent 
  permitted by law;
  
  		(xi)	the undertaking of any action in connection 
  with the Partnership's direct or indirect investment in any 
  Person (including, without limitation, contributing or loaning 
  Partnership funds to, incurring indebtedness on behalf of, or 
  guarantying the obligations of any such Persons);
  
  		(xii)	subject to the other provisions in this 
  Agreement, the determination of the fair market value of any 
  Partnership property distributed in kind using such reasonable 
  method of valuation as it may adopt, PROVIDED THAT such methods 
  are otherwise consistent with requirements of this Agreement;
  
  		(xiii)	the management, operation, leasing, 
  landscaping, repair, alteration, demolition or improvement of any 
  real property or improvements owned by the Partnership or any 
  Subsidiary of the Partnership or any Person in which the 
  Partnership has made a direct or indirect equity investment;
  
  		(xiv)	holding, managing, investing and 
  reinvesting cash and other assets of the Partnership;
  
  		(xv)	the collection and receipt of revenues and 
  income of the Partnership;
  
  		(xvi)	the exercise, directly or indirectly 
  through any attorney-in-fact acting under a general or limited 
  power of attorney, of any right, including the right to vote, 
  appurtenant to any asset or investment held by the Partnership;
  
  		(xvii)	the exercise of any of the powers of the 
  General Partner enumerated in this Agreement on behalf of or in 
  connection with any Subsidiary of the Partnership or any other 
  Person in which the Partnership has a direct or indirect 
  interest, or jointly with any such Subsidiary or other Person;
  
  		(xviii)	the exercise of any of the powers of the 
  General Partner enumerated in this Agreement on behalf of any 
  Person in which the Partnership does not have an interest 
  pursuant to contractual or other arrangements with such Person; 
  and
  
  		(xix)	the making, execution and delivery of 
  any and all deeds, leases, notes, deeds to secure debt, 
  mortgages, deeds of trust, security agreements, conveyances, 
  contracts, guarantees, warranties, indemnities, waivers, releases 
  or legal instruments or agreements in writing necessary or 
  appropriate in the judgment of the General Partner for the 
  accomplishment of any of the powers of the General Partner 
  enumerated in this Agreement.
  
  	(b)	Each of the Limited Partners agrees that the 
  General Partner is authorized to execute, deliver and perform the 
  above-mentioned agreements and transactions on behalf of the 
  Partnership without any further act, approval or vote of the 
  partners, notwithstanding any other provisions of this Agreement 
  (except as provided in Section 7.3), the Act or any applicable 
  law, rule or regulation.  The execution, delivery or performance 
  by the General Partner or the Partnership of any agreement 
  authorized or permitted under this Agreement shall not constitute 
  a breach by the General Partner of any duty that the General 
  Partner may owe the Partnership or the Limited Partners or any 
  other Persons under this Agreement or of any duty stated or 
  implied by law or equity.
  
  	(c)	At all times from and after the date hereof, the 
  General Partner may cause the Partnership to obtain and maintain 
  (i) casualty, liability and other insurance on the properties of 
  the Partnership and (ii) liability insurance for the Indemnitees 
  hereunder.
  
  	(d)	At all times from and after the date hereof, the 
  General Partner may cause the Partnership to establish and 
  maintain working capital and other reserves in such amounts as 
  the General Partner, in it sole and absolute discretion, deems 
  appropriate and reasonable from time to time.
  
  	(e)	Other than as set forth in the following sentence, 
  and subject to Section 11.2(d), in exercising its authority under 
  this Agreement, the General Partner may, but shall be under no 
  obligation to, take into account the tax consequences to any 
  Partner (including the General Partner or the Company) of any 
  action taken by it.  The General Partner, on behalf of the 
  Partnership, shall use commercially reasonable efforts to 
  cooperate with the Limited Partners to minimize any taxes payable 
  in connection with any repayment, refinancing, replacement or 
  restructuring of Debt, or any sale, exchange or any other 
  disposition of assets, of the Partnership, including, without 
  limitation, amending this Agreement to provide obligations on the 
  part of any affected Partner to restore deficit balances in their 
  Capital Accounts as of the time of liquidation of the Partnership 
  and to maintain a corresponding level of recourse debt to match 
  such obligations or maintaining a level of non-recourse debt that 
  can be allocated to, and included in the Partnership tax basis 
  of, such Partners, pursuant to the regulations under Section 752 
  of the Code.  The General Partner and the Partnership shall not 
  have liability to a Limited Partner under any circumstances as a 
  result of an income tax liability incurred by such Limited 
  Partner as a result of an action (or inaction) by the General 
  Partner pursuant to its authority under this Agreement.
  
  	(f)	Except as otherwise provided herein, to the extent 
  the duties of the
  General Partner require expenditures of funds to be paid to third 
  parties, the General Partner shall not have any obligations 
  hereunder except to the extent that Partnership funds are 
  reasonably available to it for the performance of such duties, 
  and nothing herein contained shall be deemed to authorize or 
  require the General Partner, in its capacity as such, to expend 
  its individual funds for payment to third parties or to undertake 
  any individual liability or obligation on behalf of the 
  Partnership.
  
  	Section 7.2	CERTIFICATE OF LIMITED PARTNERSHIP
  
  	To the extent that such action is determined by the 
  General Partner to be reasonable and necessary or appropriate, 
  the General Partner shall file amendments to and restatements of 
  the Certificate and do all the things to maintain the Partnership 
  as a limited partnership (or a partnership in which the limited 
  partners have limited liability) under the laws of the State of 
  Delaware and each other state, the District of Columbia or other 
  jurisdiction, in which the Partnership may elect to do business 
  or own property.  Subject to the terms of Section 8.5(a)(i) 
  hereof, the General Partner shall not be required, before or 
  after filing, to deliver or mail a copy of the Certificate or any 
  amendment thereto to any Limited Partner.  The General Partner 
  shall use all reasonable efforts to cause to be filed such other 
  certificates or documents as may be reasonable and necessary or 
  appropriate for the formation, continuation, qualification and 
  operation of a limited partnership (or a partnership in which the 
  limited partners have limited liability) in the State of 
  Delaware, any other state, the District of Columbia or other 
  jurisdiction, in which the Partnership may elect to do business 
  or own property.
  
  	Section 7.3	RESTRICTIONS ON GENERAL PARTNER'S 
  AUTHORITY
  
  	(a)	The General Partner may not take any action in 
  contravention of an
  express prohibition or limitation of this Agreement, including, 
  without limitation:
  
  		(i)		take any action that would make it 
  impossible to carry on the ordinary business of the Partnership, 
  except as otherwise provided in this Agreement;
  
  		(ii)		possess Partnership property, or assign 
  any rights in specific Partnership property, for other than a 
  Partnership purpose except as otherwise provided in this 
  Agreement;
  
  		(iii)	admit a Person as a Partner, except as 
  otherwise provided in this Agreement;
  
  		(iv)	perform any act that would subject a Limited 
  Partner to liability as a general partner in any jurisdiction or 
  any other liability except as provided herein or under the Act; 
  or
  
  		(v)		enter into any contract, mortgage, loan 
  or other agreement that expressly prohibits or restricts, or has 
  the effect of limiting or restricting, the ability of a Limited 
  Partner to exercise its rights to a Redemption in full, except 
  with the written consent of such Limited Partner.
  
  	(b)	The General Partner shall not, without the prior 
  Consent of the Partners, undertake, on behalf of the Partnership, 
  any of the following actions or enter into any transaction which 
  would have the effect of such actions:
  
  		(i)		except as provided in Section 7.3(e), 
  amend, modify or terminate this Agreement other than to reflect 
  the admission, substitution, termination or withdrawal of 
  partners pursuant to Article 12 hereof;
  
  		(ii)		make a general assignment for the 
  benefit of creditors or appoint or acquiesce in the appointment 
  of a custodian, receiver or trustee for all or substantially all 
  of the assets of the Partnership;
  
  		(iii)	institute any proceeding for bankruptcy 
  on behalf of the Partnership; or
  	
  		(iv)		confess a judgment against the 
  Partnership.
  
  	(c)	The General Partner shall not, without the prior 
  Consent of the Super Majority Limited Partners, undertake, on 
  behalf of the Partnership, any of the following actions or enter 
  into any transaction which would have the effect of such actions:
  
  		(i)		approve or acquiesce to the transfer of 
  the Partnership Interest of the General Partner to any Person 
  other than the Partnership or an Affiliate of the General 
  Partner; or
  
  		(ii)		admit into the Partnership any 
  Additional or Substitute General Partners, other than Affiliates 
  of the General Partner.
  
  	(d)	Notwithstanding Sections 7.3(b), and 7.3(c) 
  hereof, the General Partner shall have the exclusive power to 
  amend this Agreement as may be required to facilitate or 
  implement any of the following purposes:
  
  		(i)		to add to the obligations of the General 
  Partner or surrender any right or power granted to the General 
  Partner or any Affiliate of the General Partner for the benefit 
  of the Limited Partners;
  
  		(ii)		to reflect the issuance of additional 
  Partnership Interests pursuant to Section 4.3(c) or 4.4 or the 
  admission, substitution, termination, or withdrawal of Partners 
  in accordance with this Agreement;
  
  		(iii)	to reflect a change that is of an 
  inconsequential nature and does not adversely affect the Limited 
  Partners in any material respect, or to cure any ambiguity, 
  correct or supplement any provision in this Agreement not 
  inconsistent with law or with other provisions, or make other 
  changes with respect to matters arising under this Agreement that 
  will not be inconsistent with law or with the provisions of this 
  Agreement;
  
  		(iv)		to satisfy any requirements, conditions, 
  or guidelines contained in any order, directive, opinion, ruling 
  or regulation of a federal or state agency or contained in 
  federal or state law;
  
  		(v)		to reflect such changes as are 
  reasonably necessary for the Company to maintain status as a 
  REIT, including changes which may be necessitated due to a change 
  in applicable law (or an authoritative interpretation thereof) or 
  a ruling of the IRS; and
  
  		(vi)		to modify, as set forth in the 
  definition of "Capital Account," the manner in which Capital 
  Accounts are computed.
  
  	The General Partner will provide notice to the Limited 
  Partners when any action under this Section 7.3(d) is taken.
  
  	(e)	Notwithstanding Sections 7.3(b), 7.3(c) and 7.3(d) 
  hereof, this Agreement shall not be amended with respect to any 
  Partner adversely affected, and no action may be taken by the 
  General Partner, without the Consent of such Partner adversely 
  affected if such amendment or action would (i) convert a Limited 
  Partner's interest in the Partnership into a general partner's 
  interest (except as the result of the General Partner acquiring 
  such interest), (ii) modify the limited liability of a Limited 
  Partner, (iii) alter rights of the Partner to receive 
  distributions pursuant to Article 5 or Section 13.2(a)(i), or the 
  allocations specified in Article 6 (except as permitted pursuant 
  to Section 4.3 and Section 7.3(d)(iii) hereof), (iv) materially 
  alter or modify the rights to a Redemption or the REIT Shares 
  Amount as set forth in Section 8.6, and related definitions 
  hereof or (v) amend this Section 7.3(e).  Further, no amendment 
  may alter the restrictions on the General Partner's authority set 
  forth elsewhere in this Section 7.3 without the Consent specified 
  in such section.  In addition, notwithstanding Sections 7.3(b), 
  7.3(c) and 7.3(e) hereof, Section 11.2 of this Agreement shall 
  not be amended, and no action in contravention of Section 11.2 
  hereof shall be taken, without the Consent of the Limited 
  Partners.  This Section 7.3(e) does not require unanimous consent 
  of all Partners adversely affected unless the amendment is to be 
  effective against all Partners adversely affected.
  
  	Section 7.4	REIMBURSEMENT OF THE GENERAL PARTNER
  
  	(a)	Except as provided in this Section 7.4 and 
  elsewhere in this Agreement (including the provisions of Articles 
  5 and 6 regarding distributions, payments and allocations to 
  which it may be entitled), the General Partner shall not be 
  compensated for its services as general partner of the 
  Partnership.
  
  	(b)	Subject to Section 15.11, the General Partner 
  shall be reimbursed on a monthly basis, or such other basis as 
  the General Partner may determine in its sole and absolute 
  discretion, for all expenses it incurs relating to the ownership 
  of interests in and operation of, or for the benefit of, the 
  Partnership.  The General Partner shall not, however, be 
  reimbursed for expenses it incurs relating to the organization of 
  the Partnership or any public offerings of REIT Shares, other 
  shares of capital stock or Funding Debt by the General Partner, 
  but shall be reimbursed for expenses it incurs with respect to 
  any other issuance of additional Partnership Interests pursuant 
  to the provisions hereof.  Such reimbursements shall be in 
  addition to any reimbursement to the General Partner as a result 
  of indemnification pursuant to Section 7.7 hereof.
  
  	(c)	If and to the extent any reimbursements to the 
  General Partner pursuant
  to this Section 7.4 constitute gross income of the General 
  Partner (as opposed to the repayment of advances made by the 
  General Partner on behalf of the Partnership), such amounts shall 
  constitute guaranteed payments within the meaning of Section 
  707(c) of the Code, shall be treated consistently therewith by 
  the Partnership and all Partners, and shall not be treated as 
  distributions for purposes of computing the Partners' Capital 
  Accounts.
  
  	Section 7.5	CONTRACTS WITH AFFILIATES
  
  	(a)	The Partnership may lend or contribute to Persons 
  in which it has an equity investment, and such Persons may borrow 
  funds from the Partnership, on terms and conditions established 
  in the sole and absolute discretion of the General Partner.  The 
  foregoing authority shall not create any right or benefit or 
  favor of any Person.
  
  	(b)	Except as provided in Section 7.5(a), the 
  Partnership may transfer assets to joint ventures, other 
  partnerships, corporations, limited liability companies or other 
  business entities in which it is or thereby becomes a participant 
  upon such terms and subject to such conditions consistent with 
  this Agreement and applicable law.
  
  	(c)	The General Partner, in its sole and absolute 
  discretion and without the approval of the Limited Partners, may 
  propose and adopt on behalf of the Partnership employee benefit 
  plans funded by the Partnership for the benefit of employees of 
  the General Partner, the Partnership, Subsidiaries of the 
  Partnership or any Affiliate of any of them in respect of 
  services performed, directly or indirectly, for the benefit of 
  the Partnership, the General Partner, or any of the Partnership's 
  Subsidiaries.  The General Partner also is expressly authorized 
  to cause the Partnership to issue to it Partnership Units 
  corresponding to REIT Shares issued by the Company pursuant to 
  any Stock Plan or any similar or successor plan and to repurchase 
  such Partnership Units from the Company to the extent necessary 
  to permit the General Partner to repurchase such REIT Shares in 
  accordance with such plan.
  
  	(d)	The General Partner is expressly authorized to 
  enter into, in the name and on behalf of the Partnership, a right 
  of first opportunity arrangement and other conflict avoidance 
  agreements with various Affiliates of the Partnership and the 
  General Partner, on such terms as the General Partner, in its 
  sole and absolute discretion, believes are advisable.
  
  	Section 7.6	INDEMNIFICATION
  
  	(a)	The Partnership shall indemnify an Indemnitee from 
  and against any and all losses, claims, damages, liabilities, 
  joint or several, expenses (including legal fees and expenses), 
  judgments, fines, settlements, and other amounts arising from any 
  and all claims, demands, actions, suits or proceedings, civil, 
  criminal, administrative or investigative, including, without 
  limitation, reasonable attorneys' fees and expenses, that relate 
  to the operations of the Partnership as set forth in this 
  Agreement in which any Indemnitee may be involved, or is 
  threatened to be involved, as a party or otherwise, unless it is 
  established that: (i) the act or omission of the Indemnitee was 
  material to the matter giving rise to the proceeding and either 
  was committed in bad faith or was the result of active and 
  deliberate dishonesty; (ii) the Indemnitee actually received an 
  improper personal benefit in money, property or services; or 
  (iii) in the case of any criminal proceeding, the Indemnitee had 
  reasonable cause to believe that the act or omission was 
  unlawful.  Except as otherwise specifically provided in writing 
  to the contrary, without limitation, the foregoing indemnity 
  shall extend to any liability of any Indemnitee, pursuant to a 
  loan guaranty or otherwise, for any indebtedness of the 
  Partnership or any Subsidiary of the Partnership (including, 
  without limitation, any indebtedness which the Partnership or any 
  Subsidiary of the Partnership has assumed or taken subject to), 
  and the General Partner is hereby authorized and empowered, on 
  behalf of the Partnership, to enter into one or more indemnity 
  agreements consistent with the provisions of this Section 7.6 in 
  favor of any Indemnitee having or potentially having liability 
  for any such indebtedness.  The termination of any proceeding by 
  judgment, order or settlement does not create a presumption that 
  the Indemnitee did not meet the requisite standard of conduct set 
  forth in this Section 7.6(a).  The termination of any proceeding 
  by conviction or upon a plea of nolo contendere or its 
  equivalent, or any entry of an order of probation prior to 
  judgment, creates a rebuttable presumption that the Indemnitee 
  acted in a manner contrary to that specified in this Section 
  7.6(a) with respect to subject matter of such proceeding.  Any 
  indemnification pursuant to this Section 7.6 shall be made only 
  out of the assets of the Partnership.
  
  	(b)	Reasonable expenses incurred by an Indemnitee in 
  connection with any proceeding which are otherwise indemnifiable 
  under this Section 7.6 may be paid or reimbursed by the 
  Partnership in advance of the final disposition of the proceeding 
  upon receipt by the Partnership of (i) a written affirmation by 
  the Indemnitee of the Indemnitee's good faith belief that the 
  standard of conduct necessary for indemnification by the 
  Partnership as authorized in this Section 7.6 has been met, and 
  (ii) a written undertaking by or on behalf of the Indemnitee to 
  repay the amount if it shall ultimately be determined that the 
  standard of conduct has not been met.
  
  	(c)	The indemnification provided by this Section 7.6 
  shall be in addition to any other rights to which an Indemnitee 
  or any other Person may be entitled under any agreement, pursuant 
  to any vote of the Partners, as a matter of law or otherwise, and 
  shall continue as to an Indemnitee who has ceased to serve in 
  such capacity.
  
  	(d)	The Partnership may purchase and maintain 
  insurance, on behalf of the Indemnitees and such other Persons as 
  the General Partner shall determine, against any liability that 
  may be asserted against or expenses that may be incurred by such 
  Person in connection with the Partnership's activities, 
  regardless of whether the Partnership would have the power to 
  indemnify such Person against such liability under the provisions 
  of this Agreement.
  
  	(e)	For purposes of this Section 7.6, the Partnership 
  shall be deemed to have requested an Indemnitee to serve as 
  fiduciary of an employee benefit plan whenever the performance by 
  it of its duties to the Partnership also imposes duties on, or 
  otherwise involves services by, it to the plan or participants or 
  beneficiaries of the plan; excise taxes assessed on an Indemnitee 
  with respect to an employee benefit plan pursuant to applicable 
  law shall constitute fines within the meaning of Section 7.6; and 
  actions taken or omitted by the Indemnitee with respect to an 
  employee benefit plan in the performance of its duties for a 
  purpose reasonably believed by it to be in the interest of the 
  participants and beneficiaries of the plan shall be deemed to be 
  for a purpose which is not opposed to the best interests of the 
  Partnership.
  
  	(f)	In no event may an Indemnitee subject the Limited 
  Partners to personal liability by reason of the indemnification 
  provisions set forth in this Agreement.
  
  	(g)	An Indemnitee shall not be denied indemnification 
  in whole or in part under this Section 7.6 because the Indemnitee 
  had an interest in the transaction with respect to which the 
  indemnification applies if the transaction was otherwise 
  permitted by the terms of this Agreement.
  
  	(h)	The provisions of this Section 7.6 are for the 
  benefit of the Indemnitees, their heirs, successors, assigns and 
  administrators and shall not be deemed to create any rights for 
  the benefit of any other Persons.  Any amendment, modification or 
  repeal of this Section 7.6 or any provision hereof shall be 
  prospective only and shall not in any way affect the limitations 
  on the Partnership's liability to any Indemnitee under this 
  Section 7.6 as in effect immediately prior to such amendment, 
  modification or repeal with respect to claims arising from or 
  relating to matters occurring, in whole or in part, prior to such 
  amendment, modification or repeal, regardless of when such claims 
  may arise or be asserted.
  
  	(i)	If and to the extent any reimbursements to the 
  General Partner pursuant to this Section 7.6 constitute gross 
  income of the General Partner (as opposed to the repayment of 
  advances made by the General Partner on behalf of the 
  Partnership) such amounts shall constitute guaranteed payments 
  within the meaning of Section 707(c) of the Code, shall be 
  treated consistently therewith by the Partnership and all 
  Partners, and shall not be treated as distributions for purposes 
  of computing the Partners' Capital Accounts.
  
  	(j)	Any indemnification hereunder is subject to, and 
  limited by, the provisions of Section 17-108 of the Act.
  
  	(k)	In the event the Partnership is made a party to 
  any litigation or otherwise incurs any loss or expenses as a 
  result of or in connection with any Partner's personal 
  obligations or liabilities unrelated to Partnership business, 
  such Partner shall indemnify and reimburse the Partnership for 
  all such loss and expense incurred, including legal fees, and the 
  Partnership Interest of such Partner may be charged therefor.  
  The liability of a Partner under this Section 7.6(k) shall not be 
  limited to such Partner's Partnership Interest, but shall be 
  enforceable against such Partner personally.
  
  	Section 7.7	LIABILITY OF THE GENERAL PARTNER
  
  	(a)	Notwithstanding anything to the contrary set forth 
  in this Agreement, neither the General Partner nor any director, 
  officer, employee or agent of the Partnership or the General 
  Partner (each, an "Agent") shall be liable or accountable in 
  damages or otherwise to the Partnership, any Partners or any 
  Assignees for losses sustained, liabilities incurred or benefits 
  not derived as a result of errors in judgment or mistakes of fact 
  or law or any act or omission if such Person acted in good faith.
  
  	(b)	The Limited Partners expressly acknowledge that 
  the General Partner is acting for the benefit of the Partnership, 
  the Limited Partners and the Company's stockholders collectively, 
  that the General Partner is under no obligation to give priority 
  to the separate interests of the Limited Partners or the 
  Company's stockholders (including, without limitation, the tax 
  consequences to Limited Partners or Assignees or to stockholders) 
  in deciding whether to cause the Partnership to take (or decline 
  to take) any actions and that the General Partner shall not be 
  liable to the Partnership or to any Limited Partner for monetary 
  damages for losses sustained, liabilities incurred, or benefits 
  not derived by Limited Partners in connection with such 
  decisions, PROVIDED THAT the General Partner has acted in good 
  faith.
  
  	(c)	Subject to its obligations and duties as General 
  Partner set forth in Section 7.1(a) hereof, the General Partner 
  may exercise any of the powers granted to it by this Agreement 
  and perform any of the duties imposed upon it hereunder either 
  directly or by or through its Agents.  The General Partner shall 
  not be responsible for any misconduct or negligence on the part 
  of any such Agent appointed by it in good faith.
  
  	(d)	Any amendment, modification or repeal of this 
  Section 7.7 or any provision hereof shall be prospective only and 
  shall not in any way affect the limitations on the General 
  Partner's or any Agent's liability to the Partnership and the 
  Limited Partners under this Section 7.7 as in effect immediately 
  prior to such amendment, modification or repeal with respect to 
  claims arising from or relating to matters occurring, in whole or 
  in part, prior to such amendment, modification or repeal, 
  regardless of when such claims may arise or be asserted.
  
  	Section 7.8	OTHER MATTERS CONCERNING THE GENERAL 
  PARTNER
  
  	(a)	The General Partner and any Agent may rely and 
  shall be protected in
  acting or refraining from acting upon any resolution, 
  certificate, statement, instrument, opinion, report, notice, 
  request, consent, order, bond, debenture, or other paper or 
  document believed by it to be genuine and to have been signed or 
  presented by the proper party or parties. 
  
  	(b)	The General Partner and any Agent may consult with 
  legal counsel, accountants, appraisers, management consultants, 
  investment bankers and other consultants and advisers selected by 
  it, and any act taken or omitted to be taken in reliance upon the 
  opinion of such Persons as to matters which such General Partner 
  or Agent reasonably believes to be within such Person's 
  professional or expert competence shall be conclusively presumed 
  to have been done or omitted in good faith and in accordance with 
  such opinion.
  
  	(c)	The General Partner shall have the right, in 
  respect of any of its powers or obligations hereunder, to act 
  through any of its duly authorized officers and a duly appointed 
  attorney or attorneys-in-fact.  Each such attorney shall, to the 
  extent provided by the General Partner in the power of attorney, 
  have full power and authority to do and perform all and every act 
  and duty which is permitted or required to be done by the General 
  Partner hereunder.
  
  	(d)	Notwithstanding any other provisions of this 
  Agreement or any non-mandatory provision of the Act, any action 
  of the General Partner on behalf of the Partnership or any 
  decision of the General Partner to refrain from acting on behalf 
  of the Partnership, undertaken in the good faith belief that such 
  action or omission is necessary or advisable in order (i) to 
  protect the ability of the Company to continue to qualify as a 
  REIT or (ii) to avoid the Company incurring any taxes under 
  Section 857 or Section 4981 of the Code, is expressly authorized 
  under this Agreement and is deemed approved by all of the Limited 
  Partners.
  
  	Section 7.9	TITLE TO PARTNERSHIP ASSETS
  
  	Title to Partnership assets, whether real, personal or 
  mixed and whether tangible or intangible, shall be deemed to be 
  owned by the Partnership as an entity, and no Partners, 
  individually or collectively, shall have any ownership interest 
  in such Partnership assets or any portion thereof.  Title to any 
  or all of the Partnership assets may be held in the name of the 
  Partnership, the General Partner or one or more nominees, as the 
  General Partner may determine, including Affiliates of the 
  General Partner.  The General Partner hereby declares and 
  warrants that any Partnership assets for which legal title is 
  held in the name of the General Partner or any nominee or 
  Affiliate of the General Partner shall be deemed held by the 
  General Partner or such nominee or Affiliate for the use and 
  benefit of the Partnership in accordance with the provisions of 
  this Agreement; PROVIDED, HOWEVER, that the General Partner shall 
  use its best efforts to cause beneficial and record title to such 
  assets to be vested in the Partnership as soon as reasonably 
  practicable.  All Partnership assets shall be recorded as the 
  property of the Partnership in its books and records, 
  irrespective of the name in which legal title to such Partnership 
  assets is held.
  
  	Section 7.10	RELIANCE BY THIRD PARTIES
  
  	Notwithstanding anything to the contrary in this 
  Agreement, any Person dealing with the Partnership shall be 
  entitled to assume that the General Partner has full power and 
  authority to encumber, sell or otherwise use in any manner any 
  and all assets of the Partnership and to enter into any contracts 
  on behalf of the Partnership, and such Person shall be entitled 
  to deal with the General Partner as if it were the Partnership's 
  sole party in interest, both legally and beneficially.  Each 
  Limited Partner hereby waives any and all defenses or other 
  remedies which may be available against such Person to contest, 
  negate or disaffirm any action of the General Partner in 
  connection with any such dealing.  In no event shall any Person 
  dealing with the General Partner or its representatives be 
  obligated to ascertain that the terms of this Agreement have been 
  complied with or to inquire into the necessity or expedience of 
  any act or action of the General Partner or its representatives. 
  Each and every certificate, document or other instrument executed 
  on behalf of the Partnership by the General Partner or its 
  representatives shall be conclusive evidence in favor of any and 
  every Person relying thereon or claiming thereunder that (i) at 
  the time of the execution and delivery of such certificate, 
  document or instrument, this Agreement was in full force and 
  effect, (ii) the Person executing and delivering such 
  certificate, document or instrument was duly authorized and 
  empowered to do so for and on behalf of the Partnership and (iii) 
  such certificate, document or instrument was duly executed and 
  delivered in accordance with the terms and provisions of this 
  Agreement and is binding upon the Partnership.
  
  ARTICLE 8
  RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS
  
  	Section 8.1	LIMITATION OF LIABILITY
  
  	The Limited Partners shall have no liability under this 
  Agreement except as expressly provided in this Agreement or under 
  the Act.
  
  	Section 8.2	MANAGEMENT OF BUSINESS
  
  	No Limited Partner or Assignee (other than the General 
  Partner, any of its Affiliates or any officer, director, 
  employee, partner (other than a Limited Partner), agent or 
  trustee of the General Partner, the Partnership or any of their 
  Affiliates, in their capacity as such) shall take part in the 
  operations, management or control (within the meaning of the Act) 
  of the Partnership's business, transact any business in the 
  Partnership's name or have the power to sign documents for or 
  otherwise bind the Partnership.  The transaction of any such 
  business by the General Partner, any of its Affiliates or any 
  officer, director, employee, partner (other than a Limited 
  Partner), agent or trustee of the General Partner, the 
  Partnership or any of their Affiliates, in their capacity as 
  such, shall not affect, impair or eliminate the limitations on 
  the liability of the Limited Partners or Assignees under this 
  Agreement.
  
  	Section 8.3	OUTSIDE ACTIVITIES OF LIMITED PARTNERS
  
  	Subject to any agreements entered into by a Limited 
  Partner or its Affiliates with the General Partner, Partnership 
  or a Subsidiary thereof, any Limited Partner and any officer, 
  director, employee, agent, trustee, Affiliate or stockholder of 
  any Limited Partner shall be entitled to and may have business 
  interests and engage in business activities in addition to those 
  relating to the Partnership, including business interests and 
  activities in direct competition with the Partnership or that are 
  enhanced by the activities of the Partnership.  Neither the 
  Partnership nor any Partners shall have any rights by virtue of 
  this Agreement in any business ventures, or the income or profits 
  derived therefrom, of any Limited Partner or Assignee.  Subject 
  to such agreements, none of the Limited Partners nor any other 
  Person shall have any rights by virtue of this Agreement or the 
  partnership relationship established hereby in any business 
  ventures of any other Person, other than the Limited Partners 
  benefitting from the business conducted by the General Partner, 
  and such Person shall have no obligation pursuant to this 
  Agreement to offer any interest in any such business ventures to 
  the Partnership, any Limited Partner or any such other Person, 
  even if such opportunity is of a character which, if presented to 
  the Partnership, any Limited Partner or such other Person, could 
  be taken by such other Person.
  
  	Section 8.4	RETURN OF CAPITAL
  
  	Except pursuant to the rights of Redemption set forth 
  in Section 8.6, no Limited Partner shall be entitled to the 
  withdrawal or return of his or her Capital Contribution, except 
  to the extent of distributions made pursuant to this Agreement or 
  upon termination of the Partnership as provided herein.  Except 
  as otherwise expressly set forth in this Agreement, no Limited 
  Partner or Assignee shall have priority over any other Limited 
  Partner or Assignee either as to the return of Capital 
  Contributions or as to profits, losses, distributions or credits.
  
  	Section 8.5	RIGHTS OF LIMITED PARTNERS RELATING TO 
  THE PARTNERSHIP
  
  	(a)	In addition to other rights provided by this 
  Agreement or by the Act, and except as limited by Section 8.5(b) 
  hereof, each Limited Partner shall have the right, for a purpose 
  reasonably related to such Limited Partner's interest as a 
  limited partner in the Partnership, upon written demand with a 
  statement of the purpose of such demand and at the Partnership's 
  expense:
  
  		(i)		to obtain a copy of the most recent 
  annual and quarterly reports filed with the Securities and 
  Exchange Commission by the Company pursuant to the Securities 
  Exchange Act, and each communication sent to the stockholders of 
  the Company;
  
  		(ii)		to obtain a copy of the Partnership's 
  federal, state and local income tax returns for each Partnership 
  Year;
  
  		(iii)	to obtain a copy of this Agreement and 
  the Certificate and all amendments thereto, together with 
  executed copies of all powers of attorney pursuant to which this 
  Agreement, the Certificate and all amendments thereto have been 
  executed; and
  
  		(iv)		to obtain true and full information 
  regarding the amount of cash and a description and statement of 
  any other property or services contributed by each Partner and 
  which each Partner has agreed to contribute in the future, and 
  the date on which each became a Partner.
  
  	(b)	Notwithstanding any other provision of this 
  Section 8.5, the General Partner may keep confidential from the 
  Limited Partners, for such period of time as the General Partner 
  determines in its sole and absolute discretion to be reasonable, 
  any information that (i) the General Partner believes to be in 
  the nature of trade secrets or other information the disclosure 
  of which the General Partner in good faith believes is not in the 
  best interests of the Partnership or (ii) the Partnership or the 
  General Partner is required by law or by agreements with 
  unaffiliated third parties to keep confidential.
  
  	Section 8.6	REDEMPTION RIGHTS
  
  	(a)	On or after December 31, 1999, each Limited 
  Partner shall have the right (subject to the terms and conditions 
  set forth herein), but not the obligation, to require the 
  Partnership to redeem all or a portion of the Partnership Units 
  held by such Limited Partner (such Partnership Units being 
  hereafter referred to as "Tendered Units") in exchange for the 
  Cash Amount (a "Redemption"); provided that the terms of such 
  Partnership Units do not provide that such Partnership Units are 
  not entitled to a right of Redemption.  Unless otherwise 
  expressly provided in this Agreement or in a separate agreement 
  entered into between the Partnership and the holders of such 
  Partnership Units, all Partnership Units shall be entitled to a 
  right of Redemption hereunder.  Any Redemption shall be exercised 
  pursuant to a Notice of Redemption delivered to the General 
  Partner and the Company, by the Limited Partner who is exercising 
  the right (the "Tendering Partner").  The Cash Amount shall be 
  delivered as a certified check payable to the Tendering Partner 
  within ten (10) days of the Specified Redemption Date in 
  accordance with the instructions set forth in the Notice of 
  Redemption.
  
  	(b)	Notwithstanding Section 8.6(a) above, if a Limited 
  Partner has delivered to the General Partner a Notice of 
  Redemption, then the Company may, in its sole and absolute 
  discretion (subject to the limitations on ownership and transfer 
  of REIT Shares set forth in the Charter), elect to acquire some 
  or all of the Tendered Units from the Tendering Partner in 
  exchange for the REIT Shares Amount (as of the Specified 
  Redemption Date) and, if the Company so elects, the Tendering 
  Partner shall sell the Tendered Units to the Company in exchange 
  for the REIT Shares Amount.  In such event, the Tendering Partner 
  shall have no right to cause the Partnership to redeem such 
  Tendered Units.  The Company shall promptly give the General 
  Partner and the Tendering Partner written notice of its election, 
  and the Tendering Partner may elect by written notice to the 
  Partnership to withdraw its redemption request at any time prior 
  to the acceptance of the Cash Amount or REIT Shares Amount by 
  such Tendering Partner.
  
  	(c)	The REIT Shares Amount, if applicable, shall be 
  delivered as duly authorized, validly issued, fully paid and 
  nonassessable REIT Shares and, if applicable, free of any pledge, 
  lien, encumbrance or restriction, other than those provided in 
  the Charter, the Bylaws of the Company, the Securities Act, 
  relevant state securities or blue sky laws and any applicable 
  registration rights agreement with respect to such REIT Shares 
  entered into by the Tendering Partner.  The REIT Shares Amount 
  shall be registered in the name and otherwise delivered as set 
  forth in the Notice of Redemption.  Notwithstanding any delay in 
  such delivery (but subject to Section 8.6(e), the Tendering 
  Partner shall be deemed the owner of such REIT Shares for all 
  purposes, including without limitation, rights to vote or 
  consent, and receive dividends, as of the Specified Redemption 
  Date.  Each Limited Partner covenants and agrees with the General 
  Partner and the Company that all Tendered Units shall be 
  delivered to the General Partner free and clear of all liens, 
  claims and encumbrances whatsoever and should any such liens, 
  claims and/or encumbrances exist or arise with respect to such 
  Tendered Units, the General Partner and the Company shall be 
  under no obligation to acquire the same.  Each Limited Partner 
  further agrees that, in the event any state or local property 
  transfer tax is payable as a result of the transfer of its 
  Tendered Units, such Limited Partner shall assume and pay such 
  transfer tax.  Each Limited Partner further agrees that it shall 
  enter into such documentation with respect to a Redemption for 
  cash or an exchange for REIT Shares as the Partnership, the 
  Company, or the General Partner shall reasonably request.
  
  	(d)	Each Limited Partner covenants and agrees with the 
  General Partner and the Company, as the case may be, that all 
  Tendered Units shall be delivered to the General Partner or the 
  Company free and clear of all liens, claims and encumbrances 
  whatsoever and should any such liens, claims and/or encumbrances 
  exist or arise with respect to such Tendered Units, the General 
  Partner and the Company shall be under no obligation to acquire 
  the same.  Each Limited Partner further agrees that, in the event 
  any state or local property transfer tax is payable as a result 
  of the transfer of its Tendered Units to the General Partner or 
  the Company (or the designee), such Limited Partner shall assume 
  and pay such transfer tax.
  
  	(e)	Notwithstanding the provisions of Section 8.6(a), 
  8.6(b), 8.6(c) or any other provision of this Agreement, a 
  Limited Partner (i) shall not be entitled to effect a Redemption 
  for cash or an exchange for REIT Shares to the extent the 
  ownership or right to acquire REIT Shares pursuant to such 
  exchange by such Partner on the Specified Redemption Date would 
  cause such Partner or another Person, or, in the opinion of 
  counsel selected by the General Partner, may cause such Partner 
  or any other Person, to violate the restrictions on ownership and 
  transfer of REIT Shares set forth in the Charter and (ii) shall 
  have no rights under this Agreement to acquire REIT Shares which 
  would otherwise be prohibited under the Charter.  To the extent 
  any attempted Redemption or exchange for REIT Shares would be in 
  violation of this Section 8.6(e), it shall be null and void AB 
  INITIO and such Limited Partner shall not acquire any rights or 
  economic interest in the cash otherwise payable upon such 
  Redemption or the REIT Shares otherwise issuable upon such 
  exchange.
  
  	(f)	Notwithstanding anything herein to the contrary 
  (but subject to Section
  8.6(e), with respect to any Redemption or exchange for REIT 
  Shares pursuant to this Section 8.6:
  
  		(i)		All Partnership Units acquired by the 
  General Partner pursuant thereto shall automatically, and without 
  further action required, be converted into and deemed to be 
  General Partner Interests comprised of the same number and class 
  of Partnership Units.
  
  		(ii)		All Partnership Units acquired by the 
  Company shall maintain their status as Limited Partnership 
  Interests of the same number and class as the Partnership Units 
  so acquired.
  
  		(iii)	Without the consent of the General 
  Partner, each Limited Partner may not effect a Redemption for 
  less than 500 Partnership Units or, if the Limited Partner holds 
  less than 500 Partnership Units, all of the Partnership Units 
  held by such Limited Partner.
  
  		(iv)		Without the consent of the General 
  Partner, each Limited Partner may not effect a Redemption during 
  the period after the Partnership Record Date with respect to a 
  distribution and before the record date established by the 
  Company for a distribution to its stockholders of some or all of 
  its portion of such distribution.
  
  		(v)		The consummation of any Redemption or 
  exchange for REIT Shares shall be subject to the expiration or 
  termination of the applicable waiting period, if any, under the 
  Hart-Scott-Redino Antitrust Improvements Act of 1976, as amended.
  		
  		(vi)		Each Tendering Partner shall continue to 
  own all Partnership Units subject to any Redemption or exchange 
  for REIT Shares, and be treated as a Limited Partner with respect 
  to such Partnership Units for all purposes of this Agreement, 
  until such Partnership Units are transferred to the General 
  Partner or the Company, as the case may be, and paid for or 
  exchanged on the Specified Redemption Date.  Until a Specified 
  Redemption Date, the Tendering Partner shall have no rights as a 
  stockholder of the Company with respect to such Tendering 
  Partner's Partnership Units.
  
  	(g)	In the event that the Partnership issues 
  additional Partnership Interests to any Additional Limited 
  Partner pursuant to Section 4.3(c) hereof, the General Partner 
  shall make such revisions to this Section 8.6 as it determines 
  are necessary to reflect the issuance of such additional 
  Partnership Interests.
  
  	(h)	If, at any time, the General Partner acquires 
  material assets (other than on behalf of the Partnership) the 
  definition of "REIT Shares Amount" shall be adjusted, as 
  reasonably agreed to by the General Partner and a Majority in 
  Interest of the Limited Partners, to reflect the relative Fair 
  Market Value of a share of capital stock of the General Partner 
  relative to the Deemed Partnership Interest Value of the related 
  Partnership Unit.
  
  	(i)	The Partnership shall notify each Limited Partner 
  in writing of any adjustment made in the calculation of the REIT 
  Shares Amount within 10 Business Days of the date such change 
  becomes effective.
  
  ARTICLE 9
  BOOKS, RECORDS, ACCOUNTING AND REPORTS
  
  	Section 9.1	RECORDS AND ACCOUNTING
  
  	The General Partner shall keep or cause to be kept at 
  the principal office of the Partnership appropriate books and 
  records with respect to the Partnership's business, including 
  without limitation, all books and records necessary to provide to 
  the Limited Partners any information, lists and copies of 
  documents required to be provided pursuant to Section 9.3 or 
  8.5(a)(i) hereof.  Any records maintained by or on behalf of the 
  Partnership in the regular course of its business may be kept on, 
  or be in the form of, punch cards, magnetic tape, photographs, 
  micrographics or any other information storage device, PROVIDED 
  THAT the records so maintained are convertible into clearly 
  legible written form within a reasonable period of time.  The 
  books of the Partnership shall be maintained, for financial and 
  tax reporting purposes, on an accrual basis in accordance with 
  generally accepted accounting principles.
  
  	Section 9.2	FISCAL YEAR
  
  	The fiscal year of the Partnership shall be the 
  calendar year.
  
  	Section 9.3	REPORTS
  
  	As soon as practicable, but in no event later than 105 
  days after the close of each Partnership Year, or such earlier 
  date as they are filed with the Securities and Exchange 
  Commission, the General Partner shall cause to be mailed to each 
  Limited Partner as of the close of the Partnership Year, an 
  annual report containing financial statements of the Partnership, 
  or of the General Partner if such statements are prepared solely 
  on a consolidated basis with the General Partner, for such 
  Partnership Year, presented in accordance with generally accepted 
  accounting principles, such statements to be audited by a 
  nationally recognized firm of independent public accountants 
  selected by the General Partner.
  
  ARTICLE 10
  TAX MATTERS
  
  	Section 10.1	PREPARATION OF TAX RETURNS
  
  	The General Partner shall arrange for the preparation 
  and timely filing of all returns of the Partnership and, to the 
  extent applicable, Subsidiary Partnership income, gains, 
  deductions, losses and other items required of the Partnership 
  for federal and state income tax purposes and shall use all 
  reasonable efforts to furnish, within 90 days of the close of 
  each taxable year, the tax information reasonably required by 
  Limited Partners for federal and state income tax reporting 
  purposes.
  
  	Section 10.2	TAX ELECTIONS
  
  	Except as otherwise provided herein, the General 
  Partner shall, in its sole and absolute discretion, determine 
  whether to make any available election pursuant to the Code, 
  including the election under Section 754 of the Code.  The 
  General Partner shall have the right to seek to revoke any such 
  election (including without limitation, any election under 
  Section 754 of the Code) upon the General Partner's determination 
  in its sole and absolute discretion that such revocation is in 
  the best interests of the Partners.
  
  	Section 10.3	TAX MATTERS PARTNER
  
  	(a)	The General Partner shall be the "tax matters 
  partner" of the Partnership for federal income tax purposes.  
  Pursuant to Section 6223(c) of the Code, upon receipt of notice 
  from the IRS of the beginning of an administrative proceeding 
  with respect to the Partnership, the tax matters partner shall 
  furnish the IRS with the name, address and profit interest of 
  each of the Limited Partners and Assignees; PROVIDED, HOWEVER, 
  that such information is provided to the Partnership by the 
  Limited Partners and Assignees.
  
  	(b)	The tax matters partner is authorized, but not 
  required:
  
  		(i)		to enter into any settlement with the 
  IRS with respect to any administrative or judicial proceedings 
  for the adjustment of Partnership items required to be taken into 
  account by a Partner for income tax purposes (such administrative 
  proceedings being referred to as a "tax audit" and such judicial 
  proceedings being referred to as "judicial review"), and in the 
  settlement agreement the tax matters partner may expressly state 
  that such agreement shall bind all Partners, except that such 
  settlement agreement shall not bind any Partner (i) who (within 
  the time prescribed pursuant to the Code and Regulations) files a 
  statement with the IRS providing that the tax matters partner 
  shall not have the authority to enter into a settlement agreement 
  on behalf of such Partner or (ii) who is a "notice partner" (as 
  defined in Section 6231 of the Code) or a member of a "notice 
  group" (as defined in Section 6223(b)(2) of the Code);
  
  		(ii)		in the event that a notice of a final 
  administrative adjustment at the Partnership level of any item 
  required to be taken into account by a Partner for tax purposes 
  (a "final adjustment") is mailed to the tax matters partner, to 
  seek judicial review of such final adjustment, including the 
  filing of a petition for readjustment with the Tax Court or the 
  United States Claims Court, or the filing of a complaint for 
  refund with the District Court of the United States for the 
  district in which the Partnership's principal place of business 
  is located;
  
  		(iii)	to intervene in any action brought by 
  any other Partner for judicial review of a final adjustment;
  
  		(iv)		to file a request for an administrative 
  adjustment with the IRS at any time and, if any part of such 
  request is not allowed by the IRS, to file an appropriate 
  pleading (petition or complaint) for judicial review with respect 
  to such request;
  
  		(v)		to enter into an agreement with the IRS 
  to extend the period for assessing any tax which is attributable 
  to any item required to be taken into account by a Partner for 
  tax purposes, or an item affected by such item; and
  
  		(vi)		to take any other action on behalf of 
  the Partners of the Partnership in connection with any tax audit 
  or judicial review proceeding to the extent permitted by 
  applicable law or regulations.
  
  	The taking of any action and the incurring of any 
  expense by the tax matters partner in connection with any such 
  proceeding, except to the extent required by law, is a matter in 
  the sole and absolute discretion of the tax matters partner and 
  the provisions relating to indemnification of the General Partner 
  set forth in Section 7.7 of this Agreement shall be fully 
  applicable to the tax matters partner in its capacity as such.
  
  	(c)	The tax matters partner shall receive no 
  compensation for its services.  All third party costs and 
  expenses incurred by the tax matters partner in performing its 
  duties as such (including legal and accounting fees) shall be 
  borne by the Partnership.  Nothing herein shall be construed to 
  restrict the Partnership from engaging an accounting firm to 
  assist the tax matters partner in discharging its duties 
  hereunder, so long as the compensation paid by the Partnership 
  for such services is reasonable.
  
  	Section 10.4	ORGANIZATIONAL EXPENSES
  
  	The Partnership shall elect to deduct expenses, if any, 
  incurred by it in organizing the Partnership ratably over a 
  60-month period as provided in Section 709 of the Code.
  
  	Section 10.5	WITHHOLDING
  
  	Each Limited Partner hereby authorizes the Partnership 
  to withhold from or pay on behalf of or with respect to such 
  Limited Partner any amount of federal, state, local, or foreign 
  taxes that the General Partner determines that the Partnership is 
  required to withhold or pay with respect to any amount 
  distributable or allocable to such Limited Partner pursuant to 
  this Agreement, including, without limitation, any taxes required 
  to be withheld or paid by the Partnership pursuant to Section 
  1441, 1442, 1445 or 1446 of the Code.  Any amount paid on behalf 
  of or with respect to a Limited Partner shall constitute a loan 
  by the Partnership to such Limited Partner, which loan shall be 
  repaid by such Limited Partner within 15 days after notice from 
  the General Partner that such payment must be made unless (i) the 
  Partnership withholds such payment from a distribution which 
  would otherwise be made to the Limited Partner or (ii) the 
  General Partner determines, in its sole and absolute discretion, 
  that such payment may be satisfied out of the available funds of 
  the Partnership which would, but for such payment, be distributed 
  to the Limited Partner.  Any amounts withheld pursuant to the 
  foregoing clauses (i) or (ii) shall be treated as having been 
  distributed to such Limited Partner. Each Limited Partner hereby 
  unconditionally and irrevocably grants to the Partnership a 
  security interest in such Limited Partner's Partnership Interest 
  to secure such Limited Partner's obligation to pay to the 
  Partnership any amounts required to be paid pursuant to this 
  Section 10.5.  In the event that a Limited Partner fails to pay 
  any amounts owed to the Partnership pursuant to this Section 10.5 
  when due, the General Partner may, in its sole and absolute 
  discretion, elect to make the payment to the Partnership on 
  behalf of such defaulting Limited Partner, and in such event 
  shall be deemed to have loaned such amount to such defaulting 
  Limited Partner and shall succeed to all rights and remedies of 
  the Partnership as against such defaulting Limited Partner 
  (including, without limitation, the right to receive 
  distributions and the holding of a security interest in such 
  Limited Partner's Partnership Interest).  Any amounts payable by 
  a Limited Partner hereunder shall bear interest at the base rate 
  on corporate loans at large United States money center commercial 
  banks, as published from time to time in the WALL STREET JOURNAL, 
  plus two percentage points (but not higher than the maximum 
  lawful rate) from the date such amount is due (i.e., 15 days 
  after demand) until such amount is paid in full.  Each Limited 
  Partner shall take such actions as the Partnership or the General 
  Partner shall request in order to perfect or enforce the security 
  interest created hereunder.
  
  ARTICLE 11
  TRANSFERS AND WITHDRAWALS
  
  	Section 11.1	TRANSFER
  
  	(a)	The term "transfer," when used in this Article 11 
  with respect to a Partnership Interest, shall be deemed to refer 
  to a transaction by which the General Partner purports to assign 
  all or any portion of its General Partner Interest to another 
  person or by which a Limited Partner purports to assign all or 
  any portion of its Limited Partnership Interest to another 
  Person, and includes a sale, assignment, gift (outright or in 
  trust), pledge, encumbrance, hypothecation, mortgage, exchange or 
  any other disposition by law or otherwise.  The term "transfer" 
  when used in this Article 11 does not include any Redemption or 
  exchange for REIT Shares pursuant to Section 8.6.  No part of the 
  interest of a Limited Partner shall be subject to the claims of 
  any creditor, any spouse for alimony or support, or to legal 
  process, and may not be voluntarily or involuntarily alienated or 
  encumbered except as may be specifically provided for in this 
  Agreement.
  
  	(b)	No Partnership Interest shall be transferred, in 
  whole or in part, except in accordance with the terms and 
  conditions set forth in this Article 11.  Any transfer or 
  purported transfer of a Partnership Interest not made in 
  accordance with this Article 0 shall be null and void.
  
  	Section 11.2	TRANSFER OF GENERAL PARTNER'S 
  PARTNERSHIP INTEREST
  
  		(a)	The General Partner shall not withdraw from the 
  Partnership and shall not transfer all or any portion of its 
  interest in the Partnership (whether by sale, statutory merger or 
  consolidation, liquidation or otherwise) without the Consent of 
  the Majority in Interest of the Limited Partners, which may be 
  given or withheld by each Limited Partner in its sole and 
  absolute discretion, and only, in the case of a purported 
  transfer of all of the General Partner's General Partner 
  Interest, upon the appointment and admission of a successor 
  General Partner  pursuant to Section 12.1 and 13.1(b).  Upon any 
  transfer of all of the General Partner's General Partner Interest 
  in accordance with the provisions of this Section 11.2, the 
  transferee shall become a Substitute General Partner for all 
  purposes herein, and shall be vested with the powers and rights 
  of the transferor General Partner, and shall be liable for all 
  obligations and responsible for all duties of the General 
  Partner, once such transferee has executed such instruments as 
  may be necessary to effectuate such admission and to confirm the 
  agreement of such transferee to be bound by all the terms and 
  provisions of this Agreement with respect to the Partnership 
  Interest so acquired.  It is a condition to any transfer 
  otherwise permitted hereunder that the transferee assumes, by 
  operation of law or express agreement, all of the obligations of 
  the transferor General Partner under this Agreement with respect 
  to such transferred Partnership Interest, and no such transfer 
  (other than pursuant to a statutory merger or consolidation 
  wherein all obligations and liabilities of the transferor General 
  Partner are assumed by a successor corporation by operation of 
  law) shall relieve the transferor General Partner of its 
  obligations under this Agreement without the Consent of the Super 
  Majority Limited Partners, in their reasonable discretion.  
  Subject to Section 7.3(c), in the event the General Partner 
  withdraws from the Partnership, in violation of this Agreement or 
  otherwise, or otherwise dissolves or terminates, or upon the 
  Incapacity of the General Partner, all of the remaining Partners 
  may elect to continue the Partnership business by selecting a 
  Substitute General Partner in accordance with the Act.
  
  	(a)	Except as otherwise provided in Section 11.2(c), 
  the General Partner shall not engage in any merger, consolidation 
  or other combination with or into another person, sale of all or 
  substantially all of its assets or any reclassification, 
  recapitalization or change of its outstanding equity interests 
  (each, a "Termination Transaction"), unless the Termination 
  Transaction has been approved by a Consent of the Partners and in 
  connection with which all Limited Partners either will receive, 
  or will have the right to elect to receive, for each Partnership 
  Unit an amount of cash, securities or other property equal to the 
  product of the REIT Shares Amount and the greatest amount of 
  cash, securities or other property paid to a holder of one REIT 
  Share in consideration of one REIT Share pursuant to the terms of 
  the Termination Transaction; PROVIDED THAT, if, in connection 
  with the Termination Transaction, a purchase, tender or exchange 
  offer shall have been made to and accepted by the holders of more 
  than thirty-three and one-third percent (33 1/3%) of the 
  outstanding REIT Shares, each holder of Partnership Units shall 
  receive, or shall have the right to elect to receive, the 
  greatest amount of cash, securities, or other property which such 
  holder would have received had it exercised its right to 
  Redemption (as set forth in Section 8.6) and received REIT Shares 
  in exchange for its Partnership Units immediately prior to the 
  expiration of such purchase, tender or exchange offer and had 
  thereupon accepted such purchase, tender or exchange offer.
  
  	(b)	Notwithstanding Section 11.2(b), the General 
  Partner may merge, or otherwise combine its assets, with another 
  entity if: (i) immediately after such merger or other 
  combination, substantially all of the assets directly or 
  indirectly owned by the surviving entity, other than Partnership 
  Units held by such General Partner, are owned directly or 
  indirectly by the Partnership or another limited partnership or 
  limited liability company which is the survivor of a merger, 
  consolidation or combination of assets with the Partnership (in 
  each case, the "Surviving Partnership"); (ii) the Limited 
  Partners own a percentage interest of the Surviving Partnership 
  based on the relative fair market value of the net assets of the 
  Partnership (as determined pursuant to Section 11.2(e) and the 
  other net assets of the Surviving Partnership (as determined 
  pursuant to Section 11.2(e)) immediately prior to the 
  consummation of such transaction; (iii) the rights, preferences 
  and privileges of the Limited Partners in the Surviving 
  Partnership are at least as favorable as those in effect 
  immediately prior to the consummation of such transaction and as 
  those applicable to any other limited partners or non-managing 
  members of the Surviving Partnership; and (iv) such rights of the 
  Limited Partners include the right to exchange their interests in 
  the Surviving Partnership for at least one of: (a) the 
  consideration available to such Limited Partners pursuant to 
  Section 11.2(b) or (b) if the ultimate controlling person of the 
  Surviving Partnership has publicly traded common equity 
  securities, such common equity securities, with an exchange ratio 
  based on the relative fair market value of such securities (as 
  determined pursuant to Section 11.2(e)) and the REIT Shares.
  
  	(c)	In connection with any transaction permitted by 
  Section 11.2(b) or Section 11.2(c) hereof, the General Partner 
  shall use its commercially reasonable efforts to structure such 
  Termination Transaction to avoid causing the Limited Partners to 
  recognize gain for federal income tax purposes by virtue of the 
  occurrence of or their participation in such Termination 
  Transaction.  The sole remedy for a breach by the General Partner 
  of this Section 11.2(d) shall be a claim for damages.
  
  	(d)	In connection with any transaction permitted by 
  Section 11.2(b) or 11.2(c), the relative fair market values shall 
  be reasonably determined by the General Partner as of the time of 
  such transaction and, to the extent applicable, shall be no less 
  favorable to the Limited Partners than the relative values 
  reflected in the terms of such transaction.
  
  	Section 11.3	LIMITED PARTNERS' RIGHTS TO TRANSFER
  
  	(a)	Prior to December 31, 1999, no Limited Partner 
  shall transfer all or any portion of its Partnership Interest to 
  any transferee without the consent of the General Partner, which 
  consent is to be exercised by its Independent Trust Managers and 
  may be withheld in its sole and absolute discretion; PROVIDED, 
  HOWEVER, that any Limited Partner may, at any time, without the 
  consent of the General Partner, (i) transfer all or any portion 
  of its Partnership Interest to the General Partner, (ii) transfer 
  all or any portion of its Partnership Interest to an Affiliate of 
  such Limited Partner, another original Limited Partner or to an 
  Immediate Family member, subject to the provisions of Section 
  11.6, (iii) transfer all or any portion of its Partnership 
  Interest to a trust for the benefit of a charitable beneficiary 
  or to a charitable foundation, subject to the provisions of 
  Section 11.6, and (iv) subject to the provisions of Section 11.6, 
  pledge (a "Pledge") all or any portion of its Partnership 
  Interest to a lending institution, which is not an Affiliate of 
  such Limited Partner, as collateral or security for a bona fide 
  loan or other extension of credit, and transfer such pledged 
  Partnership Interest to such lending institution in connection 
  with the exercise of remedies under such loan or extension or 
  credit, and the transfer of such pledged Partnership Interest by 
  the lender to any transferee.  Each Limited Partner or Assignee 
  (resulting from a transfer made pursuant to clauses (i)-(iv) of 
  the proviso of the preceding sentence) shall have the right to 
  transfer all or any portion of its Partnership Interest, subject 
  to the satisfaction of each of the following conditions (in 
  addition to the right of each such Limited Partner or Assignee to 
  continue to make any such transfer permitted by clauses (i)-(iv) 
  of such proviso without satisfying either of the following 
  conditions):
  
  		(i)	GENERAL PARTNER RIGHT OF FIRST REFUSAL.  The 
  transferring Partner shall give written notice of the proposed 
  transfer to the General Partner, which notice shall state (i) the 
  identity of the proposed transferee, and (ii) the amount and type 
  of consideration proposed to be received for the transferred 
  Partnership Units.  The General Partner shall have ten (10) days 
  upon which to give the transferring Partner notice of its 
  election to acquire the Partnership Units on the proposed terms.  
  If it so elects, it shall purchase the Partnership Units on such 
  terms within ten (10) days after giving notice of such election.  
  If it does not so elect, the transferring Partner may transfer 
  such Partnership Units to such third party, on economic terms no 
  more favorable to the transferee than the proposed terms, subject 
  to the other conditions of this Section 11.3, for a period of 
  ninety (90) days, after which such transfer shall again be 
  subject to compliance herewith.
  
  		(ii)	QUALIFIED TRANSFEREE.  Any transfer of a 
  Partnership Interest shall be made only to Qualified Transferees.  
  It is a condition to any transfer otherwise permitted hereunder 
  that the transferee assumes by operation of law or express 
  agreement all of the obligations of the transferor Limited 
  Partner under this Agreement with respect to such transferred 
  Partnership Interest and no such transfer (other than pursuant to 
  a statutory merger or consolidation wherein all obligations and 
  liabilities of the transferor Partner are assumed by a successor 
  corporation by operation of law) shall relieve the transferor 
  Partner of its obligations under this Agreement without the 
  approval of the General Partner, in its reasonable discretion.  
  Notwithstanding the foregoing, any transferee of any transferred 
  Partnership Interest shall be subject to any and all ownership 
  limitations contained in the Charter and the representations in 
  Section 3.4(d).  Any transferee, whether or not admitted as a 
  Substituted Limited Partner, shall take subject to the 
  obligations of the transferor hereunder.  Unless admitted as a 
  Substituted Limited Partner, no transferee, whether by a 
  voluntary transfer, by operation of law or otherwise, shall have 
  rights hereunder, other than the rights of an Assignee as 
  provided in Section11.5.
  	(b)	If a Limited Partner is subject to Incapacity, the 
  executor, administrator, trustee, committee, guardian, 
  conservator, or receiver of such Limited Partner's estate shall 
  have all the rights of a Limited Partner, but not more rights 
  than those enjoyed by other Limited Partners, for the purpose of 
  settling or managing the estate, and such power as the 
  Incapacitated Limited Partner possessed to transfer all or any 
  part of his or its interest in the Partnership.  The Incapacity 
  of a Limited Partner, in and of itself, shall not dissolve or 
  terminate the Partnership.
  
  	(c)	The General Partner may prohibit any transfer 
  otherwise permitted under Section 11.3 by a Limited Partner of 
  such Limited Partner's Partnership Units if, in the opinion of 
  legal counsel to the Partnership, such transfer would require the 
  filing of a registration statement under the Securities Act by 
  the Partnership or would otherwise violate any federal or state 
  securities laws or regulations applicable to the Partnership or 
  the Partnership Units.
  
  	(d)	No transfer by a Limited Partner of such Limited 
  Partner's Partnership Units (including any Redemption or exchange 
  for REIT Shares pursuant to Section 8.6) may be made to any 
  person if (i) in the opinion of legal counsel for the 
  Partnership, it would result in the Partnership being treated as 
  an association taxable as a corporation, or (ii) such transfer is 
  effectuated through an "established securities market" or a 
  "secondary market (or the substantial equivalent thereof)" within 
  the meaning of Section 7704 of the Code.
  
  	(e)	No transfer of any Partnership Units may be made 
  to a lender to the Partnership or any Person who is related 
  (within the meaning of Section 1.752-4(b) of the Regulations) to 
  any lender to the Partnership whose loan constitutes a 
  Nonrecourse Liability, without the consent of the General 
  Partner, in its sole and absolute discretion; PROVIDED THAT, as a 
  condition to such consent, the lender will be required to enter 
  into an arrangement with the Partnership and the General Partner 
  to redeem or exchange for the REIT Shares Amount any Partnership 
  Units in which a security interest is held simultaneously with 
  the time at which such lender would be deemed to be a partner in 
  the Partnership for purposes of allocating liabilities to such 
  lender under Section 752 of the Code.
  
  	(f)	In addition to any other restrictions on transfer 
  contained in this Agreement, in no event may any transfer of any 
  Partnership Units by any Partner be made if such transfer would 
  cause, or in the opinion of counsel selected by the General 
  Partner, could cause (i) the Partnership to become, with respect 
  to any employee benefit plan subject to Title I of ERISA or 
  Section 4975 of the Code, a "party-in-interest" (as defined in 
  Section 3(14) of ERISA) or a "disqualified person" (as defined in 
  Section 4975(c) of the Code); or (ii) any portion of the assets 
  of the Partnership to constitute assets of any employee benefit 
  plan pursuant to Section 2510.3-101 of the regulations of the 
  United States Department of Labor.
  
  	Section 11.4	SUBSTITUTED LIMITED PARTNERS
  
  	(a)	No Limited Partner shall have the right to 
  substitute a transferee as a Limited Partner in such Limited 
  Partner's place (including any transferee permitted by Section 
  11.3).  The General Partner shall, however, have the right to 
  consent to the admission of a transferee permitted under Section 
  11.3 of the interest of a Limited Partner as a Substituted 
  Limited Partner pursuant to this Section 11.4, which consent may 
  be given or withheld by the General Partner in its sole and 
  absolute discretion.  The General Partner's failure or refusal to 
  permit a transferee of any such interests to become a Substituted 
  Limited Partner shall not give rise to any cause of action 
  against the Partnership or any Partner.
  
  	(b)	A transferee who has been admitted as a 
  Substituted Limited Partner in accordance with this Article 11 
  shall have all the rights and powers and be subject to all the 
  restrictions and liabilities of a Limited Partner under this 
  Agreement.  The admission of any transferee as a Substituted 
  Limited Partner shall be subject to the transferee executing and 
  delivering to the Partnership an acceptance of all of the terms 
  and conditions of this Agreement (including, without limitation, 
  the provisions of Section 2.4 and such other documents or 
  instruments as may be required in the discretion of the General 
  Partner to effect the admission, each in form and substance 
  satisfactory to the General Partner) and the acknowledgment by 
  such transferee that each of the representations and warranties 
  set forth in Section 3.4 hereof are true and correct with respect 
  to such transferee as of the date of the transfer of the 
  Partnership Interest to such transferee.
  
  	(c)	Upon the admission of a Substituted Limited 
  Partner, the General Partner shall amend Exhibit A to reflect the 
  name, address, number of Partnership Units, and Percentage 
  Interest of such Substituted Limited Partner and to eliminate or 
  adjust, if necessary, the name, address and interest of the 
  predecessor of such Substituted Limited Partner.
  
  	Section 11.5	ASSIGNEES
  
  	If the General Partner, in its sole and absolute 
  discretion, does not consent to the admission of any permitted 
  transferee under Section 11.3 as a Substituted Limited Partner, 
  as described in Section 11.4, such transferee shall be considered 
  an Assignee for purposes of this Agreement.  An Assignee shall be 
  entitled to all the rights of an assignee of a limited 
  partnership interest under the Act, including the right to 
  receive distributions from the Partnership and the share of Net 
  Income, Net Losses, gain and loss attributable to the Partnership 
  Units assigned to such transferee, the rights to transfer the 
  Partnership Units provided in this Article 11, and the right of 
  Redemption provided in Section 8.6, but shall not be deemed to be 
  a holder of Partnership Units for any other purpose under this 
  Agreement, and shall not be entitled to effect a Consent with 
  respect to such Partnership Units on any matter presented to the 
  Limited Partners for approval (such Consent remaining with the 
  transferor Limited Partner).  In the event any such transferee 
  desires to make a further assignment of any such Partnership 
  Units, such transferee shall be subject to all the provisions of 
  this Article 11 to the same extent and in the same manner as any 
  Limited Partner desiring to make an assignment of Partnership 
  Units.
  
  	Section 11.6	GENERAL PROVISIONS
  
  	(a)	No Limited Partner may withdraw from the 
  Partnership other than as a result of (i) a permitted transfer of 
  all of such Limited Partner's Partnership Units in accordance 
  with this Article 11 and the transferee(s) of such Units being 
  admitted to the Partnership as a Substituted Limited Partner or 
  (ii) pursuant to a Redemption or exchange for REIT Shares of all 
  of such Limited Partner's Partnership Units under Section 8.6.
  
  	(b)	Any Limited Partner who shall transfer all of such 
  Limited Partner's Partnership Units in a transfer permitted 
  pursuant to this Article 11 where such transferee was admitted as 
  a Substituted Limited Partner or pursuant to a Redemption or 
  exchange for REIT Shares of all of such Limited Partner's 
  Partnership Units under Section 8.6 shall cease to be a Limited 
  Partner.
  
  	(c)	Transfers pursuant to this Article 11 may only be 
  made on the first day of a fiscal quarter of the Partnership, 
  unless the General Partner otherwise agrees.
  
  	(d)	If any Partnership Interest is transferred or 
  assigned during any quarterly segment of the Partnership's fiscal 
  year in compliance with the provisions of this Article 11 or 
  transferred or redeemed pursuant to Section 8.6, on any day other 
  than the first day of a Partnership Year, then Net Income, Net 
  Losses, each item thereof and all other items attributable to 
  such Partnership Interest for such fiscal year shall be divided 
  and allocated between the transferor Partner and the transferee 
  Partner by taking into account their varying interests during the 
  fiscal year in accordance with Section 706(d) of the Code, using 
  the pro-ration of items method.  Except as otherwise required by 
  Section 706(d) of the Code, solely for purposes of making such 
  allocations, each of such items for the calendar quarter in which 
  the transfer, assignment or redemption occurs shall be allocated 
  to the Person who is a Partner as of midnight on the Partnership 
  Record Date and none of such items for the calendar quarter in 
  which a redemption occurs will be allocated to the redeeming 
  Partner.  All distributions of Available Cash with respect to 
  which the Partnership Record Date is before the date of such 
  transfer, assignment or redemption shall be made to the 
  transferor Partner, and all distributions of Available Cash 
  thereafter, in the case of a transfer or assignment other than a 
  redemption, shall be made to the transferee Partner.
  
  	(e)	In addition to any other restrictions on transfer 
  herein contained, including without limitation the provisions of 
  this Article 11, in no event may any transfer or assignment of a 
  Partnership Interest by any Partner (including by way of a 
  Redemption) be made (i) to any person or entity who lacks the 
  legal right, power or capacity to own a Partnership Interest; 
  (ii) in violation of applicable law; (iii) of any component 
  portion of a Partnership Interest, such as the Capital Account, 
  or rights to distributions, separate and apart from all other 
  components of a Partnership Interest; (iv) if in the opinion of 
  legal counsel to the Partnership such transfer would cause a 
  termination of the Partnership for federal or state income tax 
  purposes (except as a result of the Redemption or exchange for 
  REIT Shares of all Partnership Units held by all Limited Partners 
  or pursuant to a Termination Transaction expressly permitted 
  under Section 11.2); (v) if in the opinion of counsel to the 
  Partnership such transfer would cause the Partnership to cease to 
  be classified as a partnership for federal or state income tax 
  purposes (except as a result of the Redemption or exchange for 
  REIT Shares of all Partnership Units held by all Limited 
  Partners); (vi) if such transfer requires the registration of 
  such Partnership Interest pursuant to any applicable federal or 
  state securities laws; (vii) if such transfer is effectuated 
  through an "established securities market" or a "secondary 
  market" (or the substantial equivalent thereof) within the 
  meaning of Section 7704 of the Code or such transfer causes the 
  Partnership to become a "Publicly Traded Partnership," as such 
  term is defined in Sections 469(k)(2) or 7704(b) of the Code; 
  (viii) if such transfer subjects the Partnership to be regulated 
  under the Investment Company Act of 1940, the Investment Advisors 
  Act of 1940 or the Employee Retirement Income Security Act of 
  1974, each as amended; (ix) if the transferee or assignee of such 
  Partnership Interest is unable to make the representations set 
  forth in Section 3.4(d) or such transfer could otherwise 
  adversely affect the ability of the Company to remain qualified 
  as a REIT; or (x) if in the opinion of legal counsel for the 
  Partnership such transfer would adversely affect the ability of 
  the Company to continue to qualify as a REIT or subject the 
  Company to any additional taxes under Section 857 or Section 4981 
  of the Code.
  
  	(f)	The General Partner shall monitor the transfers of 
  interests in the Partnership to determine (i) if such interests 
  are being traded on an "established securities market" or a 
  "secondary market (or the substantial equivalent thereof)" within 
  the meaning of Section 7704 of the Code, and (ii) whether 
  additional transfers of interests would result in the Partnership 
  being unable to qualify for at least one of the "safe harbors" 
  set forth in regulations Section 1.7704-1 (or such other guidance 
  subsequently published by the IRS setting forth safe harbors 
  under which interests will not be treated as "readily tradable on 
  a secondary market (or the substantial equivalent thereof)" 
  within the meaning of Section 7704 of the Code) (the "Safe 
  Harbors").  The General Partner shall take all steps reasonably 
  necessary or appropriate to prevent any trading of interests or 
  any recognition by the Partnership of transfers made on such 
  markets and, except as otherwise provided herein, to insure that 
  at least one of the Safe Harbors is met.
  
  ARTICLE 12
  ADMISSION OF PARTNERS
  
  	Section 12.1	ADMISSION OF SUCCESSOR GENERAL PARTNER
  
  	A successor to all of the General Partner's General 
  Partner Interest pursuant to Section 11.2 hereof who is proposed 
  to be admitted as a successor General Partner shall be admitted 
  to the Partnership as the General Partner, effective upon such 
  transfer.  Any such transferee shall carry on the business of the 
  Partnership without dissolution.  In each case, the admission 
  shall be subject to the successor General Partner executing and 
  delivering to the Partnership an acceptance of all of the terms 
  and conditions of this Agreement and such other documents or 
  instruments as may be required to effect the admission.  In the 
  case of such admission on any day other than the first day of a 
  Partnership Year, all items attributable to the General Partner's 
  Partnership Interest for such Partnership Year shall be allocated 
  between the transferring General Partner and such successor as 
  provided in Article 11 hereof.
  
  	Section 12.2	ADMISSION OF ADDITIONAL LIMITED PARTNERS
  
  	(a)	After the admission to the Partnership of the 
  Limited Partner on the date hereof, a Person who makes a Capital 
  Contribution to the Partnership in accordance with this Agreement 
  shall be admitted to the Partnership as an Additional Limited 
  Partner only upon furnishing to the General Partner (i) evidence 
  of acceptance in form satisfactory to the General Partner of all 
  of the terms and conditions of this Agreement, including, without 
  limitation, the power of attorney granted in Section 2.4 hereof 
  and (ii) such other documents or instruments as may be required 
  in the discretion of the General Partner in order to effect such 
  Person's admission as an Additional Limited Partner.
  
  	(b)	Notwithstanding anything to the contrary in this 
  Section 12.2, no Person shall be admitted as an Additional 
  Limited Partner without the consent of the General Partner, which 
  consent may be given or withheld in the General Partner's sole 
  and absolute discretion. The admission of any Person as an 
  Additional Limited Partner shall become effective on the date 
  upon which the name of such Person is recorded on the books and 
  records of the Partnership, following the receipt of the Capital 
  Contribution in respect of such Limited Partner, the documents 
  and instruments described in Section 12.2(a) and the consent of 
  the General Partner to such admission.  If any Additional Limited 
  Partner is admitted to the Partnership on any day other than the 
  first day of a Partnership Year, then Net Income, Net Losses, 
  each item thereof and all other items allocable among Partners 
  and Assignees for such Partnership Year shall be allocated among 
  such Additional Limited Partner and all other Partners and 
  Assignees by taking into account their varying interests during 
  the Partnership Year in accordance with Section 706(d) of the 
  Code, using the interim closing of the books method unless the 
  General Partner, in its sole and absolute discretion, elects to 
  adopt another reasonable method permitted by law.  Solely for 
  purposes of making such allocations, each of such items for the 
  calendar month in which an admission of an Additional Limited 
  Partner occurs shall be allocated among all the Partners and 
  Assignees including such Additional Limited Partner.  All 
  distributions of Available Cash with respect to which the 
  Partnership Record Date is before the date of such admission 
  shall be made solely to Partners and Assignees other than the 
  Additional Limited Partner (other than in its capacity as an 
  Assignee) and, except as otherwise agreed to by the Additional 
  Limited Partners and the General Partner, all distributions of 
  Available Cash thereafter shall be made to all Partners and 
  Assignees including such Additional Limited Partner.
  
  	Section 12.3	AMENDMENT OF AGREEMENT AND CERTIFICATE 
  OF LIMITED PARTNERSHIP
  
  	For the admission to the Partnership of any Partner, 
  the General Partner shall take all steps necessary and 
  appropriate under the Act to amend the records of the Partnership 
  and, if necessary, to prepare as soon as practical an amendment 
  of this Agreement (including an amendment of Exhibit A) and, if 
  required by law, shall prepare and file an amendment to the 
  Certificate and may for this purpose exercise the power of 
  attorney granted pursuant to Section 2.4 hereof.
  
  ARTICLE 13
  DISSOLUTION AND LIQUIDATION
  
  	Section 13.1	DISSOLUTION
  
  	The Partnership shall not be dissolved by the admission 
  of Substituted Limited Partners or Additional Limited Partners or 
  by the admission of a successor General Partner in accordance 
  with the terms of this Agreement.  Upon the withdrawal of the 
  General Partner, any successor General Partner (selected as 
  described in Section 13.1(b) below) shall continue the business 
  of the Partnership.  The Partnership shall dissolve, and its 
  affairs shall be wound up, upon the first to occur of any of the 
  following ("Liquidating Events"):
  
  	(a)	the expiration of its term as provided in Section 
  2.5 hereof;
  
  	(b)	an event of withdrawal of the General Partner, as 
  defined in the Act, unless, within 90 days after the withdrawal, 
  all of the remaining Partners agree in writing, in their sole and 
  absolute discretion, to continue the business of the Partnership 
  and to the appointment, effective as of the date of withdrawal, 
  of a successor General Partner;
  
  	(c)	an election to dissolve the Partnership made by 
  the General Partner;
  
  	(d)	entry of a decree of judicial dissolution of the 
  Partnership pursuant to the provisions of the Act;
  
  	(e)	the sale of all or substantially all of the assets 
  and properties of the Partnership for cash or marketable 
  securities;
  
  	(f)	the Incapacity of the General Partner, unless all 
  of the remaining Partners in their sole and absolute discretion 
  agree in writing to continue the business of the Partnership and 
  to the appointment, effective as of a date prior to the date of 
  such Incapacity, of a substitute General Partner; or
  
  	(g)	the Redemption or exchange for REIT Shares of all 
  Partnership Units (other than those of the General Partner).
  
  	Section 13.2	WINDING UP
  
  	(a)	Upon the occurrence of a Liquidating Event, the 
  Partnership shall continue solely for the purposes of winding up 
  its affairs in an orderly manner, liquidating its assets, and 
  satisfying the claims of its creditors and Partners.  No Partner 
  shall take any action that is inconsistent with, or not necessary 
  to or appropriate for, the winding up of the Partnership's 
  business and affairs.  The General Partner (or, in the event 
  there is no remaining General Partner, any Person elected by a 
  Majority in Interest of the Limited Partners) (the "Liquidator") 
  shall be responsible for overseeing the winding up and 
  dissolution of the Partnership and shall take full account of the 
  Partnership's liabilities and assets and the Partnership property 
  shall be liquidated as promptly as is consistent with obtaining 
  the fair value thereof, and the proceeds therefrom (which may, to 
  the extent determined by the General Partner, include shares of 
  stock of the General Partner) shall be applied and distributed in 
  the following order:
  
  		(i)		First, to the payment and discharge of 
  all of the Partnership's debts and liabilities to creditors other 
  than the Partners;
  
  		(ii)		Second, to the payment and discharge of 
  all of the Partnership's debts and liabilities to the General 
  Partner;
  
  		(iii)	Third, to the payment and discharge of 
  all of the Partnership's debts and liabilities to the other 
  Partners; and
  
  		(iv)		The balance, if any, to the General 
  Partner and Limited Partners in accordance with their positive 
  Capital Account balances, determined after taking into account 
  all Capital Account adjustments for the Partnership taxable year 
  during which the liquidation occurs (other than those made as a 
  result of the liquidating distribution set forth in this Section 
  13.2(a)(iv).
  
  	The General Partner shall not receive any additional 
  compensation for any services performed pursuant to this Article 
  13 other than reimbursement of its expenses as provided in 
  Section 7.4.
  
  	(b)	Notwithstanding the provisions of Section 13.2(a) 
  hereof, but subject to the order of priorities set forth therein, 
  if prior to or upon dissolution of the Partnership the Liquidator 
  determines that an immediate sale of part or all of the 
  Partnership's assets would be impractical or would cause undue 
  loss to the Partners, the Liquidator may, in its sole and 
  absolute discretion, defer for a reasonable time the liquidation 
  of any assets except those necessary to satisfy liabilities of 
  the Partnership (including to those Partners as creditors) and/or 
  distribute to the Partners, in lieu of cash, as tenants in common 
  and in accordance with the provisions of Section 13.2(a) hereof, 
  undivided interests in such Partnership assets as the Liquidator 
  deems not suitable for liquidation.  Any such distributions in 
  kind shall be made only if, in the good faith judgment of the 
  Liquidator, such distributions in kind are in the best interest 
  of the Partners, and shall be subject to such conditions relating 
  to the disposition and management of such properties as the 
  Liquidator deems reasonable and equitable and to any agreements 
  governing the operation of such properties at such time.  The 
  Liquidator shall determine the fair market value of any property 
  distributed in kind using such reasonable method of valuation as 
  it may adopt.
  
  	Section 13.3	COMPLIANCE WITH TIMING REQUIREMENTS OF 
  REGULATIONS
  
  	In the event the Partnership is "liquidated" within the 
  meaning of Regulations Section 1.704-1(b)(2)(ii)(g), 
  distributions shall be made pursuant to this Article 13 to the 
  General Partner and Limited Partners who have positive Capital 
  Accounts in compliance with Regulations Section 
  1.704-1(b)(2)(ii)(b)(2).  If any Partner has a deficit balance in 
  his or her Capital Account (after giving effect to all 
  contributions, distributions and allocations for the taxable 
  years, including the year during which such liquidation occurs), 
  such Partner shall have no obligation to make any contribution to 
  the capital of the Partnership with respect to such deficit, and 
  such deficit shall not be considered a debt owed to the 
  Partnership or to any other Person for any purpose whatsoever.  
  In the discretion of the Liquidator, a pro rata portion of the 
  distributions that would otherwise be made to the General Partner 
  and Limited Partners pursuant to this Article 13 may be:
  
  	(a)	distributed to a trust established for the benefit 
  of the Partners for the purposes of liquidating Partnership 
  assets, collecting amounts owed to the Partnership, and paying 
  any contingent or unforeseen liabilities or obligations of the 
  Partnership or of the General Partner arising out of or in 
  connection with the Partnership.  The assets of any such trust 
  shall be distributed to the Partners from time to time, in the 
  reasonable discretion of the Liquidator, in the same proportions 
  and the amount distributed to such trust by the Partnership would 
  otherwise have been distributed to the General Partner and 
  Limited Partners pursuant to this Agreement; or
  
  	(b)	withheld to provide a reasonable reserve for 
  Partnership liabilities (contingent or otherwise) and to reflect 
  the unrealized portion of any installment obligations owed to the 
  Partnership, PROVIDED THAT when the Liquidator determines that 
  the withheld amounts are no longer appropriate, such withheld 
  amounts shall be distributed to the Partners as soon as 
  practicable in the manner and order of priority set forth in 
  Section 13.2.
  
  	Section 13.4	RIGHTS OF LIMITED PARTNERS
  
  	Except as otherwise provided in this Agreement, each 
  Limited Partner shall look solely to the assets of the 
  Partnership for the return of such Limited Partner's Capital 
  Contribution and shall have no right or power to demand or 
  receive property from the General Partner.  Except as otherwise 
  provided in this Agreement, no Limited Partner shall have 
  priority over any other Limited Partner as to the return of his 
  Capital Contributions, distributions or allocations.
  
  	Section 13.5	NOTICE OF DISSOLUTION
  
  	In the event a Liquidating Event occurs or an event 
  occurs that would, but for provisions of Section 13.1, result in 
  a dissolution of the Partnership, the General Partner shall, 
  within 30 days thereafter, provide written notice thereof to each 
  of the Partners and to all other parties with whom the 
  Partnership regularly conducts business (as determined in the 
  discretion of the General Partner) and shall publish notice 
  thereof in a newspaper of general circulation in each place in 
  which the Partnership regularly conducts business (as determined 
  in the discretion of the General Partner).
  
  	Section 13.6	CANCELLATION OF CERTIFICATE OF LIMITED 
  PARTNERSHIP
  
  	Upon the completion of the liquidation of the 
  Partnership cash and property as provided in Section 13.2 hereof, 
  the Partnership shall be terminated and the Certificate and all 
  qualifications of the Partnership as a foreign limited 
  partnership in jurisdictions other than the State of Delaware 
  shall be canceled and such other actions as may be necessary to 
  terminate the Partnership shall be taken.
  
  	Section 13.7	REASONABLE TIME FOR WINDING UP
  
  	A reasonable time shall be allowed for the orderly 
  winding up of the business and affairs of the Partnership and the 
  liquidation of its assets pursuant to Section 13.2 hereof, in 
  order to minimize any losses otherwise attendant upon such 
  winding up, and the provisions of this Agreement shall remain in 
  effect between the Partners during the period of liquidation.
  
  	Section 13.8	WAIVER OF PARTITION
  
  	Each Partner hereby waives any right to partition of 
  the Partnership property.
  
  ARTICLE 14
  AMENDMENT OF PARTNERSHIP AGREEMENT; CONSENTS
  
  	Section 14.1	AMENDMENTS
  
  	(a)	The actions requiring consent or approval of the 
  Partners or of the Limited Partners pursuant to this Agreement, 
  including Section 7.3, or otherwise pursuant to applicable law, 
  are subject to the procedures in this Article 14.
  
  	(b)	Amendments to this Agreement requiring the consent 
  or approval of Limited Partners may be proposed by the General 
  Partner or by Limited Partners who hold 25% or more of the 
  Partnership Interests held by Limited Partners.  Following such 
  proposal, the General Partner shall submit any proposed amendment 
  to the Partners or the Limited Partners, as applicable.  The 
  General Partner shall seek the written consent or approval of the 
  Partners or Limited Partners on the proposed amendment or shall 
  call a meeting to vote thereon and to transact any other business 
  that it may deem appropriate.  For purposes of obtaining a 
  written consent, the General Partner may require a response 
  within a reasonable specified time, but not less than 15 days, 
  and failure to respond in such time period shall constitute a 
  consent which is consistent with the General Partner's 
  recommendation (if so recommended) with respect to the proposal; 
  PROVIDED THAT, an action shall become effective at such time as 
  requisite consents are received even if prior to such specified 
  time.
  
  	Section 14.2	ACTION BY THE PARTNERS
  
  	(a)	Meetings of the Partners may be called by the 
  General Partner and shall be called upon the receipt by the 
  General Partner of a written request by Limited Partners holding 
  twenty-five percent (25%) or more of the Partnership Interests 
  held by Limited Partners.  The call shall state the nature of the 
  business to be transacted.  Notice of any such meeting shall be 
  given to all Partners not less than seven days nor more than 30 
  days prior to the date of such meeting.  Partners may vote in 
  person or by proxy at such meeting.  Whenever the vote or consent 
  of the Limited Partners or of the Partners is permitted or 
  required under this Agreement, such vote or Consent may be given 
  at a meeting of Partners or may be given in accordance with the 
  procedure prescribed in Section 14.1 hereof.
  
  	(b)	Any action required or permitted to be taken at a 
  meeting of the Partners may be taken without a meeting if a 
  written consent setting forth the action so taken is signed by 
  the percentage as is expressly required by this Agreement for the 
  action in question.  Such consent may be in one instrument or in 
  several instruments, and shall have the same force and effect as 
  a vote of the Percentage Interests of the Partners (expressly 
  required by this Agreement).  Such consent shall be filed with 
  the General Partner.  An action so taken shall be deemed to have 
  been taken at a meeting held on the effective date so certified.
  
  	(c)	Each Limited Partner may authorize any Person or 
  Persons to act for him by proxy on all matters in which a Limited 
  Partner is entitled to participate, including waiving notice of 
  any meeting, or voting or participating at a meeting.  Every 
  proxy must be signed by the Limited Partner or his 
  attorney-in-fact.  No proxy shall be valid after the expiration 
  of 11 months from the date thereof unless otherwise provided in 
  the proxy.  Every proxy shall be revocable at the pleasure of the 
  Limited Partner executing it.
  
  	(d)	Each meeting of Partners shall be conducted by the 
  General Partner or
  such other Person as the General Partner may appoint pursuant to 
  such rules for the conduct of the meeting as the General Partner 
  or such other Person deems appropriate.
  
  ARTICLE 15
  GENERAL PROVISIONS
  
  	Section 15.1	ADDRESSES AND NOTICE
  
  	Any notice, demand, request or report required or 
  permitted to be given or made to a Partner or Assignee under this 
  Agreement shall be in writing and shall be deemed given or made 
  when delivered in person or when sent by certified first-class 
  United States mail, nationally recognized overnight delivery 
  service or facsimile transmission to the Partner or Assignee at 
  the address set forth in Exhibit A or such other address as the 
  Partners shall notify the General Partner in writing.
  
  	Section 15.2	TITLES AND CAPTIONS
  
  	All article or Section titles or captions in this 
  Agreement are for convenience only.  They shall not be deemed 
  part of this Agreement and in no way define, limit, extend or 
  describe the scope or intent of any provisions hereof.  Except as 
  specifically provided otherwise, references to "Articles" and 
  "Sections" are to Articles and Sections of this Agreement.
  
  	Section 15.3	PRONOUNS AND PLURALS
  
  	Whenever the context may require, any pronoun used in 
  this Agreement shall include the corresponding masculine, 
  feminine or neuter forms, and the singular form of nouns, 
  pronouns and verbs shall include the plural and vice versa.
  
  	Section 15.4	FURTHER ACTION
  
  	The parties shall execute and deliver all documents, 
  provide all information and take or refrain from taking action as 
  may be necessary or appropriate to achieve the purposes of this 
  Agreement.
  
  	Section 15.5	BINDING EFFECT
  
  	This Agreement shall be binding upon and inure to the 
  benefit of the parties hereto and their heirs, executors, 
  administrators, successors, legal representatives and permitted 
  assigns.
  
  	Section 15.6	CREDITORS
  
  	Other than as expressly set forth herein with respect 
  to Indemnitees, none of the provisions of this Agreement shall be 
  for the benefit of, or shall be enforceable by, any creditor of 
  the Partnership.
  
  	Section 15.7	WAIVER
  
  	No failure or delay by any party to insist upon the 
  strict performance of any covenant, duty, agreement or condition 
  of this Agreement or to exercise any right or remedy consequent 
  upon any breach thereof shall constitute waiver of any such 
  breach or any other covenant, duty, agreement or condition.
  
  	Section 15.8	COUNTERPARTS
  
  	This Agreement may be executed in counterparts, all of 
  which together shall constitute one agreement binding on all the 
  parties hereto, notwithstanding that all such parties are not 
  signatories to the original or the same counterpart.  Each party 
  shall become bound by this Agreement immediately upon affixing 
  its signature hereto.
  
  	Section 15.9	APPLICABLE LAW
  
  	This Agreement shall be construed in accordance with 
  and governed by the laws of the State of Delaware, without regard 
  to the principles of conflicts of law.
  
  	Section 15.10	INVALIDITY OF PROVISIONS
  
  	If any provision of this Agreement is or becomes 
  invalid, illegal or unenforceable in any respect, the validity, 
  legality and enforceability of the remaining provisions contained 
  herein shall not be affected thereby.
  
  	Section 15.11	LIMITATION TO PRESERVE REIT STATUS
  
  	To the extent that any amount paid or credited to the 
  General Partner or its officers, directors, employees or agents 
  pursuant to Section 7.4 or Section 7.7 would constitute gross 
  income to the Company for purposes of Sections 856(c)(2) or 
  856(c)(3) of the Code (a "General Partner Payment") then, 
  notwithstanding any other provision of this Agreement, the amount 
  of such General Partner Payments for any fiscal year shall not 
  exceed the lesser of:
  
  	(a)	an amount equal to the excess, if any, of (a) 
  5.00% of the General Partner's total gross income (but not 
  including the amount of any General Partner Payments) for the 
  fiscal year which is described in subsections (A) through (H) of 
  Section 856(c)(2) of the Code over (b) the amount of gross income 
  (within the meaning of Section 856(c)(2) of the Code) derived by 
  the General Partner from sources other than those described in 
  subsections (A) through (H) of Section 856(c)(2) of the Code (but 
  not including the amount of any General Partner Payments); or
  
  	(b)	an amount equal to the excess, if any, of (a) 25% 
  of the General Partner's total gross income (but not including 
  the amount of any General Partner Payments) for the fiscal year 
  which is described in subsections (A) through (I) of Section 
  856(c)(3) of the Code over (b) the amount of gross income (within 
  the meaning of Section 856(c)(3) of the Code) derived by the 
  General Partner from sources other than those described in 
  subsections (A) through (I) of Section 856(c)(3) of the Code (but 
  not including the amount of any General Partner Payments); 
  PROVIDED, HOWEVER, that General Partner Payments in excess of the 
  amounts set forth in subparagraphs (i) and (ii) above may be made 
  if the General Partner, as a condition precedent, obtains an 
  opinion of tax counsel that the receipt of such excess amounts 
  would not adversely affect the Company's ability to qualify as a 
  REIT.  To the extent General Partner Payments may not be made in 
  a year due to the foregoing limitations, such General Partner 
  Payments shall carry over and be treated as arising in the 
  following year, PROVIDED, HOWEVER, that such amounts shall not 
  carry over for more than five years, and if not paid within such 
  five-year period, shall expire; PROVIDED FURTHER, that (i) as 
  General Partner Payments are made, such payments shall be applied 
  first to carryover amounts outstanding, if any, and (ii) with 
  respect to carryover amounts for more than one Partnership Year, 
  such payments shall be applied to the earliest Partnership Year 
  first.
  
  	Section 15.12	ENTIRE AGREEMENT
  
  	This Agreement contains the entire understanding and 
  agreement among the Partners with respect to the subject matter 
  hereof and supersedes any other prior written or oral 
  understandings or agreements among them with respect thereto.
  
  	Section 15.13	NO RIGHTS AS STOCKHOLDERS
  
  	Nothing contained in this Agreement shall be construed 
  as conferring upon the holders of Partnership Units any rights 
  whatsoever as stockholders of the Company including without 
  limitation any right to receive dividends or other distributions 
  made to stockholders of the Company or to vote or to consent or 
  to receive notice as stockholders in respect of any meeting of 
  stockholders for the election of directors of the Company or any 
  other matter.
  
  	IN WITNESS WHEREOF, the parties hereto have executed 
  this Agreement as of the date first written above.
  
  PARKWAY PROPERTIES, INC.
  
  BY:
  	Name:
  	Title:
  
  PARKWAY PROPERTIES GENERAL PARTNERS, INC.
  
  By:
  	Name:
  	Title:
  
  306886
  
  EXHIBIT A
  Partners, Contributions and Partnership Interests
  
  	Partner
  	Initial Contribution
  	Partnership Interest
  Parkway Properties, 
  Inc.
  $9,900           
  99% Limited 
  Partnership Interest 
  consisting of 
  9,670,080 Units.
  Parkway Properties 
  General Partners, 
  Inc.
  $100          
  1% General 
  Partnership Interest 
  consisting of 97,678 
  Units.
  
  EXHIBIT B
  Notice of Redemption
  
  	The undersigned hereby irrevocably (i) redeems 
  Partnership Units in Parkway Properties LP in accordance with the 
  terms of the Amended and Restated Limited Partnership Agreement 
  of Parkway Properties LP and the Redemption Right referred to 
  therein, (ii) surrenders such Limited Partnership Units and all 
  right, title and interest therein, and (iii) directs that the 
  Cash Amount or REIT Shares Amount (as determined by the General 
  Partner and/or the Company) deliverable upon exercise of the 
  Redemption Right be delivered to the address specified below, and 
  if REIT Shares are to be delivered, such REIT Shares be 
  registered or placed in the name(s) and at the address(es) 
  specified below.  The undersigned hereby represents, warrants, 
  and certifies, that the undersigned (a) has marketable, and 
  unencumbered title to the Partnership Units, free and clear of 
  the rights of or interests of any other person or entity; (b) has 
  the full right, power and authority to redeem and surrender such 
  Partnership Units as provided herein; and (c) has obtained the 
  consent or approval of all persons or entities, if any, having 
  the right to consult or approve such redemption and surrender.
  
  Dated:
  
  Name of Limited Partner:
  
  (Signature of Limited Partner)
  
  (Street Address)
  
  	(City)		(State)		(Zip Code)
  
  Signature Guaranteed by:
  
  If REIT Shares are to be issued, issue to:
  
  Name:
  
  Please insert social security or identifying number:
  
  EXHIBIT C
  Schedule of Partners' Ownership with Respect to Tenants
  
  	NONE
  
  EXHIBIT D
  Schedule of REIT Shares Actually or
  Constructively Owned by Limited Partners Other
  than those Acquired Pursuant to an Exchange
  
  	NONE
  
  	PARKWAY PROPERTIES LP
  
  	AMENDMENT TO EXHIBIT A
  
  	OF THE
  
  	AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP
  
  	Exhibit A of the Amended and Restated Agreement of Limited 
  Partnership of Parkway Properties LP, is hereby amended in its entirety 
  to read as follows:
  
  	Partner
  	Contribution
  Partnership Interest
  
  Parkway Properties, Inc.
  $9,900 plus those 
  properties 
  contributed 
  subsequent to the 
  Effective Date
  
  98.988108% Limited 
  Partnership Interest 
  consisting of 
  10,974,965 Class A 
  Common Limited 
  Partnership Units
  Lane N. Meltzer
  47.5% General 
  Partnership 
  Interest in and to 
  the 111 Capitol 
  Building Limited 
  Partnership
   .0118876% Limited 
  Partnership Interest 
  consisting of 1318 
  Class A Common 
  Limited Partnership 
  Units
  Parkway Properties General 
  Partners, Inc.
  $100 plus those 
  properties 
  contributed 
  subsequent to the 
  Effective Date
  1.0000044% General 
  Partnership Interest 
  consisting of 
  110,858 Class A 
  Common General 
  Partnership Units
  Parkway Properties, Inc.
  $63,631,250  
  2,650,000 units of 
  Series A Preferred 
  Limited Partnership 
  Interests
  
  	The following is a description of the preferences, 
  conversion and other rights, voting powers, restrictions, limitations 
  as to distribution, qualifications and terms and conditions of 
  redemption of the Series A Preferred Limited Partnership Interests of 
  the Limited Partnership:
  
  1.	Designation and Amount.
  
  		The designation of Series A Preferred Limited 
  Partnership Interests shall be 8.75% Series A Cumulative 
  Preferred Limited Partnership Interests, par value $.001 per 
  unit.  The number of units of Series A Preferred Limited 
  Partnership Interests to be issued shall be 2,650,000.
  
  	2.	Distribution Provisions.
  
  		(a)	Subject to the rights of any series of 
  Partnership Interests which may from time to time come into 
  existence, holders of Series A Preferred Limited Partnership 
  Interests shall be entitled to receive, when and as declared by 
  the General Partner, out of funds legally available for the 
  payment of distributions, cumulative preferential cash 
  distributions at the rate of 8.75% per annum of the Liquidation 
  Preference (as herein defined) per unit (equivalent to a fixed 
  amount of $2.1875 per unit.  Such distribution shall be 
  cumulative from the date of original issue and shall be payable 
  quarterly in arrears on the 15th day of each of January, April, 
  July and October or, if not a business day, the next succeeding 
  business day (each, a "Distribution Payment Date").  The first 
  distribution, which will be due on July 15, 1998, will be for 
  less than a full quarter.  Such first distribution and any 
  distribution payable on Series A Preferred Limited Partnership 
  Interests for any partial distribution period will be computed on 
  the basis of a 360-day year consisting of twelve 30-day months.  
  Distributions will be payable to holders of record as they appear 
  in the records of the Partnership at the close of business on the 
  last business day of March, June, September and December, 
  respectively, or on such date designated by the General Partner 
  of the Partnership for the payment of distributions that is not 
  more than 30 nor less than 10 days prior to such Distribution 
  Payment Date (each a "Distribution Record Date").
  
  		(b)	Distributions on Series A Preferred Limited 
  Partnership Interests will accrue whether or not the Partnership 
  has earnings, whether or not there are funds legally available 
  for the payment of such distributions and whether or not such 
  distributions are declared.  No interest, or sum of money in lieu 
  of interest, shall be payable in respect of any distribution 
  payment or payments on Series A Preferred Limited Partnership 
  Interests which may be in arrears.
  
  		(c)	Capital gains shall be allocable to holders 
  of Series A Preferred Limited Partnership Interests in the same 
  proportion that the total distributions paid or made available to 
  the holders of Series A Preferred Limited Partnership Interests 
  for the Fiscal Year bears to the total distributions paid or made 
  available for the Fiscal Year to holders of all classes of 
  Partnership Interests.
  
  		(d)	Pursuant to section 6.2(b) of the Partnership 
  Agreement, income or gain for the Fiscal Year, if any, shall be 
  specially allocated to the holders of Series A Preferred Limited 
  Partnership Interests in proportion to and to the extent of the 
  excess, if any, of (i) the cumulative Distributions each has 
  received pursuant to this section 2 from the initial issuance of 
  the Series A Preferred Limited Partnership Interests to a date 
  thirty (30) days after the end of such Fiscal Year, over (ii) the 
  cumulative items of income and gain allocated to such holders 
  pursuant to this section 2(d) for all prior Fiscal Years.
  
  		(e)	If any units of Series A Preferred Limited 
  Partnership Interests are outstanding, no full distributions 
  (other than in units of Common Partnership Interests or other 
  Partnership Interests ranking junior to Series A Preferred 
  Limited Partnership Interests as to distributions and upon 
  liquidation) shall be declared or paid or set apart for payment 
  on any units of series of Partnership Interests of the 
  Partnership ranking, as to distributions, on a parity with or 
  junior to Series A Preferred Limited Partnership Interest for any 
  period unless full cumulative distributions have been or 
  contemporaneously are declared and paid or declared and a sum 
  sufficient for the payment thereof set apart for such payments on 
  units of Series A Preferred Limited Partnership Interests for all 
  past distribution periods and the then current distribution 
  period.  When distributions are not paid in full (or a sum 
  sufficient for such full payment is not set apart) upon the units 
  of Series A Preferred Limited Partnership Interests and the units 
  of any other series of Partnership Interests ranking on parity as 
  to distributions with units of Series A Preferred Limited 
  Partnership Interests, all distributions declared upon units of 
  Series A Preferred Limited Partnership Interests and any other 
  series of Partnership Interests ranking on a parity as to 
  distributions with Series A Preferred Limited Partnership 
  Interests shall be declared pro rata so that the amount of 
  distributions declared per unit on Series A Preferred Limited 
  Partnership Interests and such other series of Partnership 
  Interests shall in all cases bear to each other the same ratio 
  that accrued distributions per unit on Series A Preferred Limited 
  Partnership Interests and such other series of Partnership 
  Interests bear to each other.
  
  		(f)	Except as provided in Section 2(e), unless 
  full cumulative distributions on units of Series A Preferred 
  Limited Partnership Interests have been or contemporaneously are 
  declared and paid or declared and a sum sufficient for the 
  payment thereof set apart for payment for all past distribution 
  periods and the then current distribution period, no 
  distributions (other than in shares of Common Partnership 
  Interests or other Partnership Interests ranking junior to Series 
  A Preferred Limited Partnership Interests as to distributions and 
  upon liquidation) shall be declared or paid or set aside for 
  payment or other distribution shall be declared or made upon the 
  units of Common Partnership Interests or any other Partnership 
  Interests of the Partnership ranking junior to or on a parity 
  with Series A Preferred Limited Partnership Interests as to 
  distributions or upon liquidation, not shall any units of Common 
  Partnership Interests or any other Partnership Interest of the 
  Partnership ranking junior to or on a parity with Series A 
  Preferred Limited Partnership Interest as to distributions or 
  upon liquidation be redeemed, purchased or otherwise acquired for 
  any consideration (or any moneys be paid to or made available for 
  a sinking fund for the redemption of any such Partnership 
  Interests) by the Partnership (except by conversion into or 
  exchange for other Partnership Interests of the Partnership 
  ranking junior to Series A Preferred Partnership Interests as to 
  distributions and amounts upon liquidation or redemption for the 
  purpose of preserving the Company's status as a REIT.
  
  	(g)	Any distribution payment made on units of Series A 
  Preferred Limited Partnership Interests shall first be credited 
  against the earliest accrued but unpaid distribution due with 
  respect to units of Series A Preferred Limited Partnership 
  Interests which remains payable.
  
  	3.	Liquidation Rights.
  
  		(a)	Subject to the rights of series of 
  Partnership Interests which may from time to time come into 
  existence, upon any voluntary or involuntary liquidation, 
  dissolution or winding up of the affairs of the Partnership, 
  then, before any distribution or payment shall be made to the 
  holders of any units of Common Partnership Interest or any other 
  class or series of Partnership Interests of the Partnership 
  ranking junior to Series A Preferred Limited Partnership 
  Interests in the distribution of assets upon any liquidation, 
  dissolution or winding up of the affairs of the Partnership, the 
  holders of units of Series A Preferred Limited Partnership 
  Interests shall be entitled to receive out of assets of the 
  Partnership legally available for distribution to partners, 
  liquidation distributions in the amount of the liquidation 
  preference of $25.00 per unit, plus an amount equal to all 
  distributions accrued and unpaid thereon (the "Liquidation 
  Preference").  Holders of Series A Preferred Limited Partnership 
  Interests will be entitled to written notice of any event 
  triggering the right to receive such Liquidation Preference.  
  After payment of the full amount of the liquidating distributions 
  to which they are entitled, the holders of units of Series A 
  Preferred Limited Partnership Interests will have no right or 
  claim to any of the remaining assets of the Partnership.  In the 
  event that, upon any such voluntary or involuntary liquidation, 
  dissolution or winding up of the affairs of the Partnership, the 
  available assets of the Partnership are insufficient to pay the 
  amount of the liquidation distributions on all outstanding shares 
  of Series A Preferred Limited Partnership Interests and the 
  corresponding amounts payable on all shares of other classes or 
  series of Partnership Interests of the Partnership ranking on a 
  parity with Series A Preferred Limited Partnership Interests in 
  the distribution of assets upon any liquidation, dissolution or 
  winding up of the affairs of the Partnership ("Parity Units"), 
  then the holders of units of Series A Preferred Limited 
  Partnership Interests and Parity Units shall share ratably in any 
  such distribution of assets in proportion to the full liquidating 
  distributions to which they would otherwise be respectively 
  entitled.
  
  	4.	Redemption.
  
  		(a)	Units of Series A Preferred Limited 
  Partnership Interests are not redeemable prior to April 23, 2003 
  except that each unit of Series A Preferred Limited Partnership 
  Interest is redeemable to the same extent that shares of Series A 
  Preferred Stock of the Company is redeemable as provided in 
  Article V of the Charter of the Company.  On and after April 23, 
  2003, the Partnership at its option upon not less than 30 nor 
  more than 60 days' written notice, may redeem outstanding units 
  of Series A Preferred Limited Partnership Interests, in whole or 
  in part, at any time or from time to time, for cash at a 
  redemption price of $25.00 per unit, plus an amount equal to all 
  distributions accrued and unpaid thereon to the date fixed for 
  redemption, without interest.  The redemption price of units of 
  Series A Preferred Limited Partnership Interests (other than the 
  portion thereof consisting of accrued and unpaid distributions) 
  is payable solely out of proceeds from the sale of other capital 
  stock of the Company and contributed to the Partnership for 
  purposes of such redemption, which may include common stock, 
  preferred stock, depository shares, interests, participations or 
  other ownership interests in the Company however designated 
  (other than debt securities converted into or exchangeable for 
  capital stock) and any rights, warrants or options to purchase 
  any thereof.  Holders of units of Series A Preferred Limited 
  Partnership Interests to be redeemed shall surrender such units 
  of Series A Preferred Limited Partnership Interests at the place 
  designated in such notice and shall be entitled to the redemption 
  price and any accrued and unpaid distributions payable upon such 
  redemption following such surrender.  If fewer than all of the 
  outstanding units of Series A Preferred Limited Partnership 
  Interests are to be redeemed, the number of units to be redeemed 
  will be determined by the Partnership and such units may be 
  redeemed pro rata from the holders of record of such units in 
  proportion to the number of such units held by such holders (with 
  adjustments to avoid redemption of fractional units) or by lot in 
  a manner determined by the Partnership.
  
  		(b)	Unless full cumulative distributions on all 
  units of Series A Preferred Limited Partnership Interests and 
  Parity Units shall have been or contemporaneously are declared 
  and paid or declared and a sum sufficient for the payment thereof 
  set apart for payment for all past distribution periods and the 
  then current distribution period, no units of Series A Preferred 
  Limited Partnership Interests or Parity Units shall be redeemed 
  unless all outstanding units of Series A Preferred Limited 
  Partnership Interests and Parity Units are simultaneously 
  redeemed; provided, however,  that the foregoing shall not 
  prevent redemption to the same extent shares of Series A 
  Preferred stock of the Company are redeemable in accordance with 
  Article V of the Charter of the Company or the purchase or 
  acquisition of units of Series A Preferred Limited Partnership 
  Interests or Parity Units pursuant to a purchase or exchange 
  offer made on the same terms to holders of all outstanding units 
  of Series A Preferred Limited Partnership Interests or Parity 
  Stock, as the case may be.  Furthermore, unless full cumulative 
  distributions on all outstanding units of Series A Preferred 
  Limited Partnership Interests and Parity Units have been or 
  contemporaneously are declared and paid or declared and a sum 
  sufficient for the payment thereof set apart for payment for all 
  past distribution periods and the then current distribution 
  period, the Partnership shall not purchase or otherwise acquire 
  directly or indirectly any units of Series A Preferred Limited 
  partnership Interests or Parity Units (except by conversion into 
  or exchange for units of Partnership Interests of the Partnership 
  ranking junior to Series A Preferred Limited Partnership 
  Interests and Parity Units as to distributions and upon 
  liquidation).
  
  		(c)	Notice of redemption will be mailed at least 
  30 days but not more than 60 days before the redemption date to 
  each holder of record of units of Series A Preferred Limited 
  Partnership Interests at the address shown on the books of the 
  Partnership.  Each notice shall state (i)  the redemption date; 
  (ii)  the number of units of Series A Preferred Limited 
  Partnership Interests to be redeemed; (iii)  the redemption price 
  per share; (iv)  the place or places for payment of the 
  redemption price; and (v)  that distributions of units of Series 
  A Preferred Limited Partnership Interests will cease to accrue on 
  such redemption date.  If fewer than all units of Series A 
  Preferred Limited Partnership Interests are to be redeemed, the 
  notice mailed to each such holder thereof shall also specify the 
  number of units of Series A Preferred Limited Partnership 
  Interests to be redeemed from each such holder.  If notice of 
  redemption of any units of Series A Preferred Limited Partnership 
  Interests has been given and if the funds necessary for such 
  redemption have been set aside by the Partnership in trust for 
  the benefit of the holders of units of Series A Preferred Limited 
  Partnership Interests so called for redemption, then from and 
  after the redemption date, distributions will cease to accrue on 
  such units of Series A Preferred Limited Partnership Interests, 
  such units of Series A Limited Partnership Interests shall no 
  longer be deemed outstanding and all rights of the holders of 
  such units will terminate, except the right to receive the 
  redemption price.
  
  		(d)	The holders of units of Series A Preferred 
  Limited Partnership Interests at the close of business on a 
  Distribution Record Date will be entitled to receive the 
  distribution payable with respect to such units of Series A 
  Preferred Limited Partnership Interests on the corresponding 
  Distribution Payment Date notwithstanding the redemption thereof 
  between such Distribution Record Date and the corresponding 
  Distribution Payment Date or the Partnership's default in the 
  payment of the distribution due.  Except as provided above, the 
  Partnership will make no payment or allowance for unpaid 
  distributions, whether or not in arrears, on units of Series A 
  Preferred Limited Partnership Interests which have been called 
  for redemption.
  
  		(e)	Series A Preferred Limited Partnership 
  Interests will not be subject to any sinking fund or mandatory 
  redemption, except to the same extent that Series A Preferred 
  Stock of the Company are subject to sinking fund or mandatory 
  redemption as provided in Article V of the Charter of the 
  Company.
  
  	5.	Voting Rights.
  
  		(a)	Except as otherwise from time to time 
  required by applicable law, the holders of units of Series A 
  Preferred Limited Partnership Interests will have no voting 
  rights.
  
  		(b)	So long as any units of Series A Preferred 
  Limited Partnership Interests remain outstanding, the Partnership 
  will not, without the affirmative vote or consent of the holders 
  of at least two-thirds of units of the Series A Preferred Limited 
  Partnership Interests outstanding at the time, given in person or 
  by proxy, either in writing or at a meeting (voting separately as 
  a class), (a) authorize or create, or increase the authorized or 
  issued amount of any class or series or Partnership Interests 
  ranking senior to the Series A Preferred Limited partnership 
  Interests with respect to payment of distributions or the 
  distribution of assets upon liquidation, dissolution or winding 
  up or reclassify any existing Partnership Interests of the 
  Partnership into such units or create, authorize or issue any 
  obligation or security convertible into or evidencing the right 
  to purchase any such units; or (b) amend, alter or repeal the 
  provisions of the Partnership Agreement whether by merger, 
  consolidation or otherwise (an "Event"), so as to materially and 
  adversely affect any right, preference, privilege or voting power 
  of the Series A Preferred Limited Partnership Interests or the 
  holders thereof; provided, however, with respect to the 
  occurrence of any Event set forth in (b) above, so long as the 
  Series A Preferred Limited Partnership Interests remains 
  outstanding with the terms thereof materially unchanged taking 
  into account that upon the occurrence of an Event the partnership 
  may not be the surviving entity, the occurrence of any such Event 
  shall not be deemed to materially and adversely affect such 
  rights, preferences, privileges or voting power of holders of the 
  Series A Preferred Limited Partnership Interests and provided 
  further that (i) any increase in the amount of the authorized 
  Series A Preferred Limited Partnership Interests or the creation 
  or issuance of any other series of Preferred Partnership 
  Interests or (ii) any increase in the amount of authorized units 
  of such series in each case ranking on a parity with or junior to 
  the Series A Preferred Limited Partnership Interests with respect 
  to payment of distributions or the distribution of assets upon 
  liquidation, dissolution or winding up shall not been deemed to 
  materially and adversely affect such rights, preferences, 
  privileges or voting powers.
  
  		(c)	Except as provided above and as required by 
  law, the holders of Series A Preferred Limited Partnership 
  Interests are not entitled to vote on any merger or consolidation 
  involving the Partnership, on any Partnership Interest exchange 
  or on a sale of all or substantially all of the assets of the 
  Partnership.
  
  	6.	Conversion.
  
  		The units of Series A Preferred Limited 
  Partnership Interests are not convertible into or exchangeable 
  for any other property or securities of the Partnership.
  
  	Dated the 1st day of July, 1998.
  
  		PARKWAY PROPERTIES GENERAL
  		PARTNERS, INC.
  
  					By 	
  
  316440
  
  	ADMISSION AGREEMENT
  
  	This Admission Agreement dated as of July 1, 1998 
  between PARKWAY PROPERTIES LP, a Delaware limited partnership 
  having its principal place of business in Jackson, Mississippi 
  ("Partnership") and LANE N. MELTZER, 316 South Rampart Street, 
  New Orleans, Louisiana 70112 ("Meltzer").
  
  	RECITALS
  
  	1.	Partnership and Meltzer, among others, executed a 
  certain contribution agreement dated April __, 1998, 
  ("Contribution Agreement") providing for the contribution of all 
  partnership interests of the 111 Capitol Building Limited 
  Partnership ("Capitol") to Partnership  and Parkway Jackson LLC, 
  a Mississippi limited liability company wholly owned by 
  Partnership.
  
  	2.	Pursuant to Section 2.2 of the Contribution 
  Agreement, Meltzer has elected to receive units of partnership 
  interest in Partnership in exchange for the contribution of his 
  partnership interest in Capitol.
  
  	3.	The parties desire to, pursuant to the 
  Contribution Agreement, admit Meltzer to the Partnership and 
  specify his rights and obligations with respect thereto;
  
  	NOW, THEREFORE, for good and valuable consideration, 
  the receipt of which is hereby acknowledged, the parties agree as 
  follows:
  
  	1.	Partnership hereby issues to Meltzer ______ 
  Class A Common Limited Partnership Units.
  
  	2.	Meltzer agrees to be admitted as a Limited Partner 
  to the Partnership effective the date hereof, and hereby further 
  agrees to be bound by all the provisions of the Amended and 
  Restated Agreement of Limited Partnership of Parkway Properties 
  LP ("Partnership Agreement"), as amended and restated through the 
  date hereof.
  
  	3.	Partnership through Parkway Properties General 
  Partners, Inc., its General Partner, hereby consents to the 
  admission of Meltzer as a Limited Partner in Partnership.
  
  	4.	Restoration Obligation.  Notwithstanding anything 
  contained in the Partnership Agreement, in the event Meltzer's 
  Capital Account is less than zero after giving effect to all 
  distributions, all contributions, and all allocations for all 
  periods, Meltzer shall contribute cash to the capital of the 
  Partnership in the amount necessary to restore his Capital 
  Account to zero in compliance with Treasury Regulation Section 
  1.704-1(b)(2)(ii)(b)(3), and the amount so contributed shall be 
  treated as proceeds from the liquidation of partnership assets 
  for purposes of, and shall be distributed pursuant to, 
  Section 13.2(a)(iv) of the Partnership Agreement.  Meltzer waives 
  any rights he may have against Partnership, the General Partner 
  or any Limited Partner which might otherwise arise from the 
  restoration of such negative Capital Account.
  
  						
  					Lane N. Meltzer
  
  					PARKWAY PROPERTIES LP
  					by:	Parkway Properties General
  						Partners, Inc., its
  						General Partner
  
  					By 	
  						Sarah P. Clark, 			
  						Senior Vice President and
  						Chief Financial Officer
  
  TIAA Appl. # FL-889;  M-000441900
  TIAA Appl. # NC-190;  M-000448000
  TIAA Appl. # SC-74;   M-000442200
  TIAA Appl. # TN-145;  M-000442100
  TIAA Appl. # TX-899;  M-000440000
  TIAA Appl. # VA-387;  M-000442000
  
  PROMISSORY NOTE
  
  $97,000,000.00					New York, New York
  							Dated:  June 30, 1998
  
  		FOR VALUE RECEIVED, Parkway Properties LP ("Borrower"), 
  a Delaware limited partnership having its principal place of 
  business at c/o Parkway Properties, Inc., 188 East Capitol 
  Street, Suite 1000, Jackson, Mississippi  39201-2195, promises to 
  pay to TEACHERS INSURANCE AND ANNUITY ASSOCIATION OF AMERICA 
  ("Lender"), a New York corporation, or order, at Lender's offices 
  at 730 Third Avenue, New York, New York  10017 or at such other 
  place as Lender designates in writing, the principal sum of 
  NINETY-SEVEN MILLION AND 00/100ths DOLLARS ($97,000,000) (the 
  principal sum or so much of the principal sum as may be advanced 
  and outstanding from time to time, the "Principal"), in lawful 
  money of the United States of America, with interest on the 
  Principal from the date of this Promissory Note (this "Note") 
  through and including July 1, 2008 (the "Maturity Date") at the 
  fixed rate of Six and Nine Hundred Forty-Five Thousandths percent 
  (6.945%) per annum (the "Fixed Interest Rate").
  
  		This Note is secured by, among other things, thirteen 
  (13) Mortgages and/or Deeds of Trust, Assignment of Leases and 
  Rents and Security Agreement, (each, a "Mortgage", collectively, 
  the "Mortgages") dated the date of this Note made by Borrower for 
  the benefit of Lender as security for the Loan.  All capitalized 
  terms not expressly defined in this Note will have the 
  definitions set forth in the Mortgages.		
  
  	Section 1.  Payments of Principal and Fixed Interest.
  
  	(a)  Borrower will make monthly installment payments ("Debt 
  Service Payments") as follows:
  
  (i)  On July 1, 1998, a payment of accrued interest on the 
  Principal at the Fixed Interest Rate; and
  
  (ii)  On August 1, 1998 and on the first day of each 
  succeeding calendar month through and including June 1, 
  2008, payments in the amount of Eight Hundred Sixty-Eight 
  Thousand Eight Hundred Eighty Three and 48/100ths Dollars 
  ($868,883.48), each of which will be applied first to 
  interest on the Principal at the Fixed Interest Rate and 
  then to the Principal.
  
  	(b)  On the Maturity Date, Borrower will pay the Principal 
  in full together with accrued interest at the Fixed Interest Rate 
  and all other amounts due under the Loan Documents. 
  
  	Section 2.  Prepayment Provisions.  
  
  	(a)  The following definitions apply:
  
  "Discount Rate" means the yield on a U.S. Treasury issue selected 
  by Lender, as published in the Wall Street Journal, two weeks 
  prior to prepayment, having a maturity date corresponding (or 
  most closely corresponding, if not identical) to the Maturity 
  Date, and a coupon rate corresponding (or most closely 
  corresponding, if not identical) to the Fixed Interest Rate.
  
  "Default Discount Rate" means the Discount Rate less 300 basis 
  points.
  
  "Discounted Value" means the Discounted Value of a Note Payment 
  based on the following formula:
  
  	      NP   
  	(1 + R/12)n  =  Discounted Value
  
  	NP	=	Amount of Note Payment
  
  	R	=	Discount Rate or Default Discount Rate 
  as the case may be.
  
  	n	=	The number of months between the date of 
  prepayment and the scheduled date of the Note 
  Payment being discounted rounded to the nearest 
  integer.
  
  "Note Payments" means (i) the scheduled Debt Service Payments for 
  the period from the date of prepayment through the Maturity Date 
  and (ii) the scheduled repayment of Principal, if any, on the 
  Maturity Date.
  
  "Prepayment Date Principal" means the Principal on the date of 
  prepayment.
  
  	(b) This Note may not be prepaid in full or in part before 
  July 1, 2003.  Commencing on July 1, 2003, provided there is no 
  Event of Default, Borrower may prepay this Note in full only, but 
  not in part (except to the extent expressly provided to the 
  contrary in any Loan Document), on the first day of any calendar 
  month, upon 90 days prior notice to Lender and upon payment in 
  full of the Debt which will include a payment (the "Prepayment 
  Premium") equal to the  greater of (i) an amount equal to the 
  product of 1% times the Prepayment Date Principal and (ii) the 
  amount by which the sum of the Discounted Values of Note 
  Payments, calculated at the Discount Rate, exceeds the Prepayment 
  Date Principal.  Provided there is no Event of Default, this Note 
  may be prepaid in full without payment of the Prepayment Premium 
  during the last 90 days of the Term.  This Note may not be 
  prepaid without simultaneous prepayment in full of any other 
  notes secured by the Loan Documents.  Notwithstanding anything 
  contained herein to the contrary, if Borrower is entitled to 
  Proceeds in accordance with the provisions of the Mortgages and 
  either Borrower or Lender elect not to apply the proceeds to 
  Restoration in accordance with the Loan Documents, the Loan may 
  be partially prepaid to the extent of the Proceeds without 
  payment of the Prepayment Premium.
  
  	(c)  After an Acceleration or upon any other prepayment not 
  permitted by the Loan Documents, any tender of payment of the 
  amount necessary to satisfy the Debt accelerated, any decree of 
  foreclosure, any statement of the amount due at the time of 
  foreclosure (including foreclosure by power of sale) and any 
  tender of payment made during any redemption period after 
  foreclosure, will include a payment (the "Evasion Premium") equal 
  to the greater of (i) an amount equal to the product of 4% times 
  the Prepayment Date Principal, and (ii) the amount by which the 
  sum of the Discounted Values of the Note Payments, calculated at 
  the Default Discount Rate, exceeds the Prepayment Date Principal.
  
  	(d)  Borrower acknowledges that:
  
  (i)	a prepayment will cause damage to Lender;
  	
  (ii)	the Evasion Premium is intended to compensate Lender 
  for the loss of its investment and the expense incurred and 
  time and effort associated with making the Loan, which will 
  not be fully repaid if the Loan is prepaid;
  
  (iii) it will be extremely difficult and impractical to 
  ascertain the extent of Lender's damages caused by a 
  prepayment after an Event of Default or any other prepayment 
  not permitted by the Loan Documents; and
  
  (iv)	the Evasion Premium represents Lender and Borrower's 
  reasonable estimate of Lender's damages for the prepayment 
  and is not a penalty.
   
  	Section 3.  Events of Default:
  
  	(a)	It is an "Event of Default" under this Note:
  
  (i)	if Borrower fails to pay any amount due, as and when 
  required, under this Note or any other Loan Document and the 
  failure continues for a period of 5 days; or
  
  (ii)	if an Event of Default occurs under any other Loan 
  Document.
  
  	(b)	If an Event of Default occurs, Lender may declare all 
  or any portion of the Debt immediately due and payable 
  ("Acceleration") and exercise any of the other Remedies.
  
  	Section 4.  Default Rate.  Interest on the Principal will 
  accrue at the Default Interest Rate from the date an Event of 
  Default occurs until such Event of Default is cured.
  
  	Section 5.  Late Charges.
  
  	(a)  If Borrower fails to pay any Debt Service Payment when 
  due and the failure continues for a period of 5 days or more or 
  fails to pay any amount due under the Loan Documents on the 
  Maturity Date, Borrower agrees to pay to Lender an amount (a 
  "Late Charge") equal to five cents ($.05) for each one dollar 
  ($1.00) of the delinquent payment.
  
  	(b)  Borrower acknowledges that:
  
  (i)	 a delinquent payment will cause damage to Lender;
  
  (ii)	 the Late Charge is intended to compensate Lender for 
  loss of use of the delinquent payment and the expense 
  incurred and time and effort associated with recovering the 
  delinquent payment;
  
  (iii) it will be extremely difficult and impractical to 
  ascertain the extent of Lender's damages caused by the 
  delinquency; and
  
  (iv)	 the Late Charge represents Lender and Borrower's 
  reasonable estimate of Lender's damages from the delinquency 
  and is not a penalty.
  
  	Section 6.  Limitation of Liability.   This Note is subject 
  to the limitations on liability set forth in the Article of the 
  Mortgage entitled "Limitation of Liability". 
  
  	Section 7.  WAIVERS.   IN ADDITION TO THE WAIVERS SET FORTH 
  IN THE ARTICLE OF THE MORTGAGES ENTITLED "WAIVERS", BORROWER 
  WAIVES PRESENTMENT FOR PAYMENT, DEMAND, DISHONOR AND, EXCEPT AS 
  EXPRESSLY SET FORTH IN THE LOAN DOCUMENTS, NOTICE OF ANY OF THE 
  FOREGOING.  BORROWER FURTHER WAIVES ANY PROTEST, LACK OF 
  DILIGENCE OR DELAY IN COLLECTION OF THE DEBT OR ENFORCEMENT OF 
  THE LOAN DOCUMENTS.  BORROWER AND ALL INDORSERS, SURETIES AND 
  GUARANTORS OF THE OBLIGATIONS CONSENT TO ANY EXTENSIONS OF TIME, 
  RENEWALS, WAIVERS AND MODIFICATIONS THAT LENDER MAY GRANT WITH 
  RESPECT TO THE OBLIGATIONS AND TO THE RELEASE OF ANY SECURITY FOR 
  THIS NOTE AND AGREE THAT ADDITIONAL MAKERS MAY BECOME PARTIES TO 
  THIS NOTE AND ADDITIONAL INDORSERS, GUARANTORS OR SURETIES MAY BE 
  ADDED WITHOUT NOTICE AND WITHOUT AFFECTING THE LIABILITY OF THE  
  ORIGINAL MAKER OR ANY ORIGINAL INDORSER, SURETY OR GUARANTOR.
  
  	Section 8.  Commercial Loan.  The Loan is made for the 
  purpose of carrying on a business or commercial activity or 
  acquiring real or personal property as an investment or carrying 
  on an investment activity and not for personal or household 
  purposes. 
  
  	Section 9.  Usury Limitations.  Borrower and Lender intend 
  to comply with all Laws with respect to the charging and 
  receiving of interest.  Any amounts charged or received by Lender 
  for the use or forbearance of the Principal to the extent 
  permitted by Law, will be amortized and spread throughout the 
  Term until payment in full so that the rate or amount of interest 
  charged or received by Lender on account the Principal does not 
  exceed the Maximum Interest Rate.  If any amount charged or 
  received under the Loan Documents that is deemed to be interest 
  is determined to be in excess of the amount permitted to be 
  charged or received at the Maximum Interest Rate, the excess will 
  be deemed to be a prepayment of Principal when paid, without 
  premium, and any portion of the excess not capable of being so 
  applied will be refunded to Borrower.  If during the Term the 
  Maximum Interest Rate, if any, is eliminated, then for purposes 
  of the Loan, there will be no Maximum Interest Rate.
  
  	Section 10.  Applicable Law.  This Note was negotiated in 
  the State of New York, made by Borrower and accepted by Lender in 
  the State of New York, and the proceeds of this Note were 
  delivered and were disbursed from the State of New York.  This 
  Note is governed by and will be construed in accordance with the 
  Laws of the State of New York including, without limitation,Code 5-
  1401 of the New York General Obligations Law.  To the fullest 
  extent permitted by law, Maker hereby unconditionally and 
  irrevocably waives any claim or right to assert that the law of 
  any other jurisdiction governs this Note.
  
  	Section 11.  Time of the Essence.  Time is of the essence 
  with respect to the payment and performance of the Obligations.
  	Section 12.  Cross-Default.  A default under any other note 
  now or hereafter secured by the Loan Documents or under any loan 
  document related to such other note constitutes a default under 
  this Note and under the other Loan Documents.  When the default 
  under the other note constitutes an Event of Default under that 
  note or the related loan document, an Event of Default also will 
  exist under this Note and the other Loan Documents.
   
  	Section 13.  Construction.  Unless expressly provided 
  otherwise in this Note, this Note will be construed in accordance 
  with the Exhibit attached to the Mortgages entitled "Rules of 
  Construction".
  
  	Section 14.  Mortgage Provisions Incorporated.   To the 
  extent not otherwise set forth in this Note, the provisions of 
  the Articles of the Mortgages entitled "Expenses and Duty to 
  Defend", "Waivers", "Notices", "Miscellaneous" and "Jurisdicition 
  and Venue" are applicable to this Note and deemed incorporated by 
  reference as if set forth at length in this Note.
  
  	Section 15.  Joint and Several Liability; Successors and 
  Assigns.   If Maker consists of more than one entity, the 
  obligations and liabilities of each such entity will be joint and 
  several.  This Note binds Borrower and successors, assigns, 
  heirs, administrators, executors, agents and representatives and 
  inures to the benefit of Lender and its successors, assigns, 
  heirs, administrators, executors, agents and representatives.
  
  	Section 16.  Absolute Obligation.  Except for the Section of 
  this Note entitled "Limitation of Liability", no reference in 
  this Note to the other Loan Documents and no other provision of 
  this Note or of the other Loan Documents will impair or alter the 
  obligation of Borrower, which is absolute and unconditional, to 
  pay the Principal, interest at the Fixed Interest Rate and any 
  other amounts due and payable under this Note, as and when 
  required.
  
  balance of page is intentionally blank]
  
  	IN WITNESS WHEREOF, Borrower has executed and delivered this 
  Note as of the date first set forth above.
  
  	PARKWAY PROPERTIES LP, a Delaware 
  limited partnership
  
  					
  	By:	Parkway Properties General 
  Partners, Inc., its sole general 
  partner, a Delaware corporation
  
  	
  		     			By:_______________________
  		 			   Name:  James M. Ingram
                                   Title: Senior Vice 
       President
  
                      By:_______________________
  						   Name:  Sarah P. Clark
  					       Title:	Senior Vice President, 
  CFO, Treasurer & 
  Secretary
  
  Completion Notes on "Promissory Note":
  
  Signatures needed
  
  Copies to be made after signature
  
  Original on safety paper
  	
  
  Form Mortgage [Modify state-by-state]
  
   
  
  MORTGAGE, ASSIGNMENT OF LEASES AND RENTS
  SECURITY AGREEMENT AND FIXTURE FILING STATEMENT
  
  by 
  
  PARKWAY PROPERTIES LP,
  as Borrower
  
  for the benefit of
  
  TEACHERS INSURANCE AND ANNUITY ASSOCIATION 
  OF AMERICA, 
                             as Lender
  
  			
  
  Property Known As
  	
  
  ****
  
  This Mortgage Was Prepared By
  And After Recordation This Mortgage Should Be Returned To:
  
  Jack Edelbrock, Esq.
  c/o Mayer, Brown & Platt
  190 South LaSalle Street
  Chicago, Illinois 60603-3441
  
  TABLE OF CONTENTS
  
  Page
  
  RECITALS	1
  
  ARTICLE I		DEFINITIONS AND RULES OF CONSTRUCTION	1
  Section 1.1.	Definitions	1
  Section 1.2.	Rules of Construction	2
  
  ARTICLE II	GRANTING CLAUSES	2
  Section 2.1.  	Encumbered Property	2
  Section 2.2.	Habendum Clause	4
  Section 2.3.	Security Agreement	5
  Section 2.4.  	Conditions to Grant	6
  
  ARTICLE III	OBLIGATIONS SECURED	6
  Section 3.1.	The Obligations	6
  	Section 3.2.	Future Advances	6
  
  ARTICLE IV	TITLE AND AUTHORITY	6
  Section 4.1.  	Title to the Property	6
  Section 4.2.  	Authority	7
  Section 4.3.	No Foreign Person	7
  Section 4.4.  	Litigation	7
  
  ARTICLE V		PROPERTY STATUS, MAINTENANCE AND LEASES	8
  Section 5.1.  	Status of the Property	8
  Section 5.2.  	Maintenance of the Property	8
  Section 5.3.  	Change in Use	9
  Section 5.4.  	Waste	9
  Section 5.5.  	Inspection of the Property	9
  Section 5.6.  	Leases and Rents	9
  Section 5.7.  	Parking	10
  Section 5.8.	Separate Tax Lot	10
  Section 5.9.	Changes in Zoning or Restrictive 
  				Covenants 	10
  Section 5.10.	Lender's Right to Appear	10
  
  ARTICLE VI	IMPOSITIONS AND ACCUMULATIONS	10
  Section 6.1.  	Impositions	10
  Section 6.2.  	Accumulations	11
  Section 6.3.	Changes in Tax Laws	13
  Section 6.4.	Reserves	13
  
  ARTICLE VII	INSURANCE, CASUALTY, CONDEMNATION		AND 
  RESTORATION	13
  Section 7.1.	Insurance Coverages	13
  Section 7.2.	Casualty and Condemnation	15
  Section 7.3.	Application of Proceeds	15
  Section 7.4.  	Conditions to Availability of Proceeds for 	
  			
  				Restoration	16
  Section 7.5.	Restoration	17
  
  ARTICLE VIII	COMPLIANCE WITH LAW AND AGREEMENTS	19
  Section 8.1.  	Compliance with Law	19
  Section 8.2.  	Compliance with Agreements	19
  Section 8.3.  	ERISA Compliance	20
  Section 8.4.  	Section 6045(e) Filing	20
  
  ARTICLE IX	ENVIRONMENTAL 	21
  Section 9.1.  	Environmental Representations and 
  				Warranties 	21
  Section 9.2.  	Environmental Covenants	21
  
  ARTICLE X		FINANCIAL REPORTING	23
  Section 10.1.  Fiscal Year; Financial Statements; 
  Reports of Parkway Properties, Inc. (the 
  "Company") and Borrower; SEC and Other 
  Reports; Officer's Certificate	23
  
  ARTICLE XI	EXPENSES AND DUTY TO DEFEND	24
  Section 11.1.  Payment of Expenses	24
  Section 11.2.	Duty to Defend	24
  
  ARTICLE XII	TRANSFERS LIENS AND ENCUMBRANCES	25
  Section 12.1.  Prohibitions on Transfers, Liens and 		
  				Encumbrances 	25
  Section 12.2.  Permitted Transfers	25
  Section 12.3.  Right to Contest Liens	26
  Section 12.4.  Release Rights	27
  [Section 12.5.	Substitution of Collateral.  [For Loudoun 
  				mortgage only][Additional Edits Needed]	28
  
  ARTICLE XIII	ADDITIONAL REPRESENTATIONS, WARRANTIES AND
  			 COVENANTS	30
  Section 13.1.  Further Assurances	30
  Section 13.2.  Estoppel Certificates	30
  
  ARTICLE XIV	DEFAULTS AND REMEDIES 	31
  Section 14.1.  Events of Default	31
  Section 14.2.  Remedies.	32
  Section 14.3.	General Provisions Pertaining to 
  				Remedies 	33
  Section 14.4.	Foreclosure by Power of Sale	34
  Section 14.5.	General Provisions Pertaining to 
  				Mortgagee-in-Possession or Receiver	34
  Section 14.6.  General Provisions Pertaining to 
  				Foreclosures and the Power of Sale	36
  Section 14.7.  Application of Proceeds	36
  Section 14.8.  Power of Attorney.	37
  Section 14.9.  Tenant at Sufferance	37
  Section 14.10.	State Laws Pertaining to Remedies	37
  
  ARTICLE XV	LIMITATION OF LIABILITY	37
  
  Section 15.1.  Limitation of Liability	37
  
  ARTICLE XVI	WAIVERS	39
  
  SECTION 16.1	WAIVER OF NOTICE	39
  SECTION 16.2.  WAIVER OF MARSHALLING AND OTHER MATTERS	39
  SECTION 16.3.  WAIVER OF TRIAL BY JURY	40
  SECTION 16.4.	WAIVER OF JUDICIAL NOTICE AND HEARING	40
  SECTION 16.5.	WAIVER OF SUBROGATION	40
  SECTION 16.6.  GENERAL WAIVER	40
  
  ARTICLE XVII	NOTICES 	40
  
  Section 17.1.  Notices	40
  Section 17.2.	Change in Borrower's Name or Place of
  				Business	42
  
  ARTICLE XVIII	MISCELLANEOUS 	42
  
  Section 18.1.	Applicable Law	42
  Section 18.2.  Usury Limitations	42
  Section 18.3.  Lender's Discretion	42
  Section 18.4.  Unenforceable Provisions	42
  Section 18.5.  Survival of Borrower's Obligations	43
  Section 18.6.  Relationship Between Borrower and Lender; 
  				No Third Party Beneficiaries	43
  Section 18.7.  Partial Releases; Extensions; Waivers	43
  Section 18.8.  Service of Process	44
  Section 18.9.  Entire Agreement	44
  Section 18.10. No Oral Amendment	44
  Section 18.11.	Severability	44
  Section 18.12. Covenants Run with the Land	44
  Section 18.13. Time of the Essence	45
  Section 18.14. Subrogation	45
  Section 18.15.	Joint and Several Liability	45
  Section 18.16. Successors and Assigns	45
  Section 18.17. Duplicates and Counterparts	45
  
  ARTICLE XIX	ADDITIONAL PROVISIONS PERTAINING TO STATE 
  			LAWS 	45
  
  		MORTGAGE, ASSIGNMENT OF LEASES AND RENTS,
  SECURITY AGREEMENT AND FIXTURE FILING
  
  		THIS MORTGAGE, ASSIGNMENT OF LEASES AND RENTS AND 
  SECURITY AGREEMENT made this 30th day of June, 1998, by PARKWAY 
  PROPERTIES LP ("Borrower"), a Delaware limited partnership, 
  having its principal place of business c/o Parkway Properties, 
  Inc., 188 East Capitol Street, Suite 1000, Jackson, Mississippi 
  39201-2195, Attn: Sarah P. Clark for the benefit of TEACHERS 
  INSURANCE AND ANNUITY ASSOCIATION OF AMERICA ("Lender"), a New 
  York corporation, having an address at 730 Third Avenue, New 
  York, New York 10017.
  
  RECITALS:
  
  		A.  Lender agreed to make and Borrower agreed to accept 
  a loan (the "Loan") in the maximum principal amount of 
  $97,000,000.00.
  
  		B.  To evidence the Loan, Borrower executed and 
  delivered to Lender a promissory note (the "Note"), dated the 
  date of this Mortgage, in the principal amount of Ninety Seven 
  Million and 00/100ths Dollars ($97,000,000.00) (that amount or so 
  much as is outstanding from time to time is referred to as the 
  "Principal"), promising to pay the Principal with interest 
  thereon to the order of Lender as set forth in the Note and with 
  the balance, if any, of the Debt being due and payable on July 1, 
  2008 (the "Maturity Date").
  
  ****
  		C.  To secure the Note, this Mortgage encumbers, among 
  other things, Borrower's fee interest in the real property 
  located in the City of _____________, County of ___________, 
  [State] [Commonwealth] of _________________, more particularly 
  described in Exhibit A (the "Land").	
  
  ARTICLE I
  
  DEFINITIONS AND RULES OF CONSTRUCTION
  
  	Section 1.1.	Definitions.  Capitalized terms used in this 
  Mortgage are defined in Exhibit B or in the text with a cross-
  reference in Exhibit B.
  	Section 1.2.	Rules of Construction.  This Mortgage will be 
  interpreted in accordance with the rules of construction set 
  forth in Exhibit C.
  
  ARTICLE II
  
  GRANTING CLAUSES
  
  	Section 2.1.  Encumbered Property.  Borrower irrevocably 
  grants, mortgages, warrants, conveys, assigns and pledges to 
  Lender, and grants to Lender a security interest in, the 
  following property, rights, interests and estates now or in the 
  future owned or held by Borrower (the "Property") for the uses 
  and purposes set forth in this Mortgage forever: 
  
  (i)	the Land;
  
  (ii)  all buildings and improvements located on the Land 
  (the "Improvements");
  
  (iii)  all easements; rights of way or use, including any 
  rights of ingress and egress; streets, roads, ways, 
  sidewalks, alleys and passages; strips and gores; sewer 
  rights; water, water rights, water courses, riparian rights 
  and drainage rights; air rights and development rights; oil 
  and mineral rights; and tenements, hereditaments and 
  appurtenances, in each instance adjoining or otherwise 
  appurtenant to or benefitting the Land or the Improvements;
  
  (iv)  all materials intended for construction, re-
  construction, alteration or repair of the Improvements, such 
  materials to be deemed included in the Land and the 
  Improvements immediately on delivery to the Land; all 
  fixtures and personal property that are attached to, 
  contained in or used solely in connection with the Land or 
  the Improvements (excluding personal property owned by 
  tenants), including: furniture; furnishings; machinery; 
  motors; elevators; fittings; microwave ovens; refrigerators; 
  office systems and equipment; plumbing, heating, ventilating 
  and air conditioning systems and equipment; maintenance and 
  landscaping equipment; lighting, cooking, laundry, dry 
  cleaning, refrigerating, incinerating and sprinkler systems 
  and equipment; telecommunications systems and equipment; 
  computer or word processing systems and equipment; security 
  systems and equipment; the items listed on Schedule 1 
  hereto; and equipment leases for any of the property 
  described in this subsection (the "Fixtures and Personal 
  Property");
  
  (v)  all agreements, ground leases, grants of easements or 
  rights-of-way, permits, declarations of covenants, 
  conditions and restrictions, disposition and development 
  agreements, planned unit development agreements, 
  cooperative, condominium or similar ownership or conversion 
  plans, management, leasing, brokerage or parking agreements 
  or other material documents affecting the Land, Borrower's 
  interest in the Property, the Improvements or the Fixtures 
  and Personal Property, including the documents described on 
  Exhibit D but expressly excluding the Leases (the "Property 
  Documents");
  
  (vi)  all inventory (including all goods, merchandise, raw 
  materials, incidentals, office supplies and packaging 
  materials) held for sale, lease or resale or furnished or to 
  be furnished under contracts of service, or used or consumed 
  in the ownership, use or operation of the Land, the 
  Improvements or the Fixtures and Personal Property, all 
  documents of title evidencing any part of any of the 
  foregoing and all returned or repossessed goods arising from 
  or relating to any sale or disposition of such inventory;
  
  (vii)  all intangible personal property relating to the 
  Land, the Improvements or the Fixtures and Personal 
  Property, including choses in action and causes of action 
  (except those personal to Borrower), corporate and other 
  business records, inventions, designs, promotional 
  materials, blueprints, plans, specifications, patents, 
  patent applications, trademarks, trade names, trade secrets, 
  goodwill, copyrights, registrations, licenses, franchises, 
  claims for refunds or rebates of taxes, insurance surpluses, 
  refunds or rebates of taxes and any letter of credit, 
  guarantee, claim, security interest or other security held 
  by or granted to Borrower to secure payment by an account 
  debtor of any of the accounts of Borrower arising out of the 
  ownership, use or operation of the Land, the Improvements or 
  the Fixtures and Personal Property, and documents covering 
  all of the foregoing; all accounts, accounts receivable, 
  documents, instruments, money, deposit accounts, funds 
  deposited in accounts established with a bank, savings and 
  loan association, trust company or other financial 
  institution in connection with the ownership, use or 
  operation of the Land, the Improvements or the Fixtures and 
  Personal Property, including any reserve accounts or escrow 
  accounts, and all investments of the funds and all other 
  general intangibles;
   
  (viii)  all awards and other compensation paid after the 
  date of this Mortgage for any Condemnation (the 
  "Condemnation Awards");
   
  (ix)  all proceeds of and all unearned premiums on the 
  Policies (the "Insurance Proceeds");
  
  (x)  all licenses, certificates of occupancy, contracts, 
  management agreements, operating agreements, operating 
  covenants, franchise agreements, permits and variances 
  relating to the Land, the Improvements or the Fixtures and 
  Personal Property;
  
  (xi)  all books, records and other information, wherever 
  located, which are in Borrower's possession, custody or 
  control or to which Borrower is entitled at law or in equity 
  and which are related exclusively to the Property, including 
  all computer or other equipment used to record, store, 
  manage, manipulate or access the information; 
  
  (xii)  all deposits held from time to time by the 
  Accumulations Depositary to provide reserves for Taxes and 
  Assessments together with interest thereon, if any (the 
  "Accumulations");
  
  (xiii)  all after-acquired title to or remainder or 
  reversion in any of the property described in this Section; 
  all additions, accessions and extensions to, improvements of 
  and substitutions or replacements for any of such property; 
  all products and all cash and non-cash proceeds, immediate 
  or remote, of any sale or other disposition of any of such 
  property, excluding sales or other dispositions of inventory 
  in the ordinary course of the business of operating the Land 
  and the Improvements; and all additional lands, estates, 
  interests, rights or other property acquired by Borrower 
  after the date of this Mortgage for use in connection with 
  the Land or the Improvements, all without the need for any 
  additional mortgage, assignment, pledge or conveyance to 
  Lender but Borrower will execute and deliver to Lender, upon 
  Lender's request, any documents reasonably requested by 
  Lender to further evidence the foregoing; and
  
  (xiv)  all deposits for reserves held from time to time by 
  an escrow holder in accordance with the Tax Agreement 
  described in the Section entitled "Reserves" and all 
  accounts established to maintain the deposits together with 
  investments thereof and interest thereon.
  
  	Section 2.2.	Habendum Clause.  The Property is conveyed to 
  Lender to have and to hold forever in fee simple.
  
  	Section 2.3.	Security Agreement.  
  
  	(a)  The Property includes both real and personal property 
  and this Mortgage is a real property mortgage and also a 
  "security agreement" and a "financing statement" within the 
  meaning of the Uniform Commercial Code.  By executing and 
  delivering this Mortgage, Borrower grants to Lender, as security 
  for the Obligations, a security interest in the Property to the 
  full extent that any of the Property may be subject to the 
  Uniform Commercial Code.
  
  	(b)  This Mortgage constitutes a fixture financing statement 
  under the Laws of the state or commonwealth in which the Property 
  is located and/or the purpose, the following information is set 
  forth:
  
  	(a)	Name and address of Debtor:
  
  		Parkway Properties L P
  c/o Parkway Properties, Inc.
  188 East Capitol Street, Suite 1000
  Jackson, Mississippi 39201-2195
  
  	(b)	Name and address of Secured Party:
  
  		Teachers Insurance and Annuity Association of America
  730 Third Avenue
  New York, New York 10017
  Attn:	Managing Director
  Mortgage and Real Estate Division
  Region:	Northeast/South/International
  
  	(c)	Description of the types (or items) of
  		property covered by this Financing Statement:
  		all of the property described in section ii-xiv of 
  the Section entitled "Encumbered Property" described or 
  referred to herein and included as part of the 
  Premises.
  
  	(d)	Description of real estate to which collateral is 
  attached or upon which it is located:  Described in 
  Exhibit A.
  
  (e)	Federal Taxpayer Identification Number of the Debtor:  
  72-1344324
  
  	Lender may file this Mortgage, or a reproduction thereof, in 
  the real estate records or other appropriate index, as a 
  financing statement for any of the items specified above as part 
  of the Property.  Any reproduction of this Mortgage or of any 
  other security agreement or financing statement is sufficient as 
  a financing statement.
  
  	Section 2.4.  Conditions to Grant.  This Mortgage is made on 
  the express condition that if Borrower pays and performs the 
  Obligations in full in accordance with the Loan Documents, then, 
  unless expressly provided otherwise in the Loan Documents, the 
  Loan Documents will be released at Borrower's expense.
  
  ARTICLE III
  
  OBLIGATIONS SECURED
  
  	Section 3.1.  The Obligations.  This Mortgage secures the 
  Principal, the Interest, the Late Charges (as defined in the 
  Note), the Prepayment Premiums (as defined in the Note), the 
  Expenses, any additional advances made by Lender in connection 
  with the Property or the Loan and all other amounts payable under 
  the Loan Documents (the "Debt") and also secures both the timely 
  payment of the Debt as and when required and the timely 
  performance of all other obligations and covenants to be 
  performed under the Loan Documents (the "Obligations"), provided 
  that the foregoing does not limit, qualify or affect in any way 
  the present, absolute nature of the Assignment.
  
  	Section 3.2.  Future Advances.  It is agreed that this 
  Mortgage shall also secure such future or additional advances for 
  construction, improvements, preservation, maintenance and 
  operation of the Property and the security for the Obligations as 
  may be made by Lender, whether such future advances are 
  obligatory or are to be made at Lender's option to Borrower, or 
  its successor in title, for any purpose [add additional state - 
  specific provisions as required].
  
  ARTICLE IV
  
  TITLE AND AUTHORITY
  
  	Section 4.1.  Title to the Property.  
  
  	(a)  Borrower has and will continue to have good and 
  marketable title in fee simple absolute to the Land and the 
  Improvements and good and marketable title to the Fixtures and 
  Personal Property, all free and clear of liens, encumbrances and 
  charges except the Permitted Exceptions.  To Borrower's 
  knowledge, there are no facts or circumstances that might give 
  rise to a lien, encumbrance or charge on the Property.
  
  	(b)  Borrower owns and will continue to own all of the other 
  Property free and clear of all liens, encumbrances and charges 
  except the Permitted Exceptions.  
  
  	(c)  This Mortgage is and will remain a valid and 
  enforceable first lien on and security interest in the Property, 
  subject only to the Permitted Exceptions.
  
  	Section 4.2.  Authority.  
  
  	(a)  Borrower is and will continue to be (i) duly organized, 
  validly existing and in good standing under the Laws of the state 
  or commonwealth in which it was organized or incorporated and 
  (ii) duly qualified to conduct business, in good standing, in the 
  state or commonwealth where the Property is located.  
  
  	(b)  Borrower has and will continue to have all 
  approvals required by Law or otherwise and full right, power and 
  authority to (i) own and operate the Property and carry on 
  Borrower's business as now conducted or as proposed to be 
  conducted; (ii) execute and deliver the Loan Documents; (iii) 
  grant, mortgage, warrant the title to, convey, assign and pledge 
  the Property to Lender pursuant to the provisions of this 
  Mortgage; and (iv) perform the Obligations.  
  
  	(c)  The execution and delivery of the Loan Documents and 
  the performance of the Obligations do not and will not conflict 
  with or result in a default under any Laws or any Leases or 
  Property Documents and do not and will not conflict with or 
  result in a default under any agreement binding upon any party to 
  the Loan Documents.
  
  	(d)  The Loan Documents constitute and will continue to 
  constitute legal, valid and binding obligations of all parties to 
  the Loan Documents enforceable in accordance with their 
  respective terms.
  
  	(e)	Borrower and each of Borrower's constituent entities 
  executing this Mortgage on behalf of Borrower have the requisite 
  power and authority under their respective organizational 
  documents to execute and deliver this Mortgage, to perform 
  Borrower's obligations under this Mortgage and to consummate the 
  transaction contemplated by this Mortgage and have taken any 
  necessary action to authorize the execution and delivery of this 
  Mortgage, the performance of Borrower's obligations under this 
  Mortgage and the consummation of the transaction contemplated by 
  this Mortgage.
  
  	Section 4.3.	No Foreign Person.  Borrower is not a 
  "foreign person" within the meaning of Section 1445(f)(3) of the 
  Code.
  
  	Section 4.4.  Litigation.  There are no Proceedings or, to 
  Borrower's knowledge, investigations against or affecting 
  Borrower or the Property and, to Borrower's knowledge, there are 
  no facts or circumstances that might give rise to a Proceeding or 
  an investigation against or affecting Borrower or the Property 
  which could have a material adverse effect on the Borrower or the 
  Property or Lender's Security interest in the Property.  Borrower 
  will give Lender prompt notice of the commencement of any 
  Proceeding or investigation against or affecting the Property or 
  Borrower which could have a material adverse effect on the 
  Property or on Lender's interests in the Property or under the 
  Loan Documents.  Borrower also will deliver to Lender such 
  additional information relating to the Proceeding or 
  investigation as Lender may request from time to time.
  
  ARTICLE V
  
  PROPERTY STATUS, MAINTENANCE AND LEASES
  
  	Section 5.1.  Status of the Property.
  
  	(a)  Borrower has obtained and will maintain in full force 
  and effect all certificates, licenses, permits and approvals that 
  are issued or required by Law or by any entity having 
  jurisdiction over the Property or over Borrower or that are 
  necessary for the Permitted Use, for occupancy and operation of 
  the Property, for the granting of this Mortgage or for the 
  conduct of Borrower's business on the Property in accordance with 
  the Permitted Use.  
  
  	(b)  The Property is and will continue to be serviced by all 
  public utilities required for the Permitted Use of the Property.
  
   	(c)  All roads and streets necessary for service of and 
  access to the Property for the current or contemplated use of the 
  Property have been completed and are serviceable, physically open 
  and dedicated to and accepted by the Government for use by the 
  public.
  
  	(d)  The Property is free from damage caused by a Casualty.
  
  	(e)  To Borrower's knowledge, all costs and expenses of 
  labor, materials, supplies and equipment used in the construction 
  of the Improvements have been paid in full.
  		
  	Section 5.2.  Maintenance of the Property.  Borrower will 
  maintain the Property in thorough repair and good and safe 
  condition, suitable for the Permitted Use, including, to the 
  extent necessary, replacing the Fixtures and Personal Property 
  with property at least equal in quality and condition to that 
  being replaced.  Borrower will not erect any new buildings, 
  building additions or other structures on the Land or, except for 
  tenant and common area improvements undertaken in the ordinary 
  course of business, otherwise materially alter the Improvements 
  (except for tenant improvements made in accordance with Leases 
  approved or not requiring approval of Lender) without Lender's 
  prior consent which may be withheld in Lender's sole discretion.  
  The Property will be managed by an Affiliate of Borrower or an 
  independent property manager, satisfactory to Lender pursuant to 
  a management agreement satisfactory to Lender and terminable by 
  Borrower upon 30 days notice to the property  manager. 
  
  	Section 5.3.  Change in Use.  Borrower will use and permit 
  the use of the Property for the Permitted Use and for no other 
  purpose.  
  
  	Section 5.4.  Waste.  Borrower will not commit or permit any 
  waste (including economic and non-physical waste), impairment or 
  deterioration of the Property or, except for tenant and common 
  area improvements undertaken in the ordinary course of business, 
  any alteration, demolition or removal of any of the Property 
  without Lender's prior consent which may be withheld in Lender's 
  sole discretion.
  
  	Section 5.5.  Inspection of the Property.  Subject to the 
  rights of tenants under the Leases, Lender has the right to enter 
  and inspect the Property on reasonable prior notice, except 
  during the existence of an Event of Default, when no prior notice 
  is necessary.  Lender has the right to engage an independent 
  expert to review and report on Borrower's compliance with 
  Borrower's obligations under this Mortgage to maintain the 
  Property, comply with Law and refrain from waste, impairment or 
  deterioration of the Property and the alteration, demolition or 
  removal of any of the Property except as may be permitted by the 
  provisions of this Mortgage.  If the independent expert's report 
  discloses material failure to comply with such obligations or if 
  Lender engages the independent expert after the occurrence of an 
  Event of Default, then the independent experts review and report 
  will be at Borrower's expense, payable on demand.
  
  	Section 5.6.  Leases and Rents.  
  
  	(a)  Borrower assigns the Leases and the Rents to Lender 
  absolutely and not merely as additional collateral or security 
  for the payment and performance of the Obligations, but subject 
  to a license back to Borrower of the right to collect the Rents 
  unless and until an Event of Default occurs at which time the 
  license will terminate automatically, all as more particularly 
  set forth in the Assignment, the provisions of which are 
  incorporated in this Mortgage by reference.
  
  	(b) Upon an Event of Default, Borrower appoints Lender as 
  Borrower's attorney-in-fact to execute unilaterally and record, 
  at Lender's election, a document subordinating this Mortgage to 
  the Leases, provided that the subordination will not affect (i) 
  the priority of Lender's entitlement to Insurance Proceeds or 
  Condemnation Awards or (ii) the priority of this Mortgage over 
  intervening liens or liens arising under or with respect to the 
  Leases.
  
  	Section 5.7.  Parking.  Borrower will provide, maintain and 
  light parking areas within the Property, including any sidewalks, 
  aisles, streets, driveways, sidewalk cuts and rights-of-way to 
  and from the adjacent public streets, in a manner consistent with 
  the Permitted Use and sufficient to accommodate the greatest of: 
  (i) the number of parking spaces required by Law; (ii) the number 
  of parking spaces required by the Leases and the Property 
  Documents; or (iii) ______ parking spaces.  The parking areas 
  will be reserved and used exclusively for ingress, egress and 
  parking for Borrower and the tenants under the Leases and their 
  respective employees, customers and invitees and in accordance 
  with the Leases and the Property Documents.
  
  	Section 5.8.	Separate Tax Lot.  The Property is and will 
  remain assessed for real estate tax purposes as one or more 
  wholly independent tax lots, separate from any property that is 
  not part of the Property.
  		
  	Section 5.9.	Changes in Zoning or Restrictive Covenants.   
  Borrower will not (i) initiate, join in or consent to any change 
  in any Laws pertaining to zoning, any restrictive covenant or 
  other restriction which would restrict the Permitted Uses for the 
  Property; (ii) permit the Property to be used to fulfil any 
  requirements of Law for the construction or maintenance of any 
  improvements on property that is not part of the Property; (iii) 
  permit the Property to be used for any purpose not included in 
  the Permitted Use; or (iv) impair the integrity of the Property 
  as a single, legally subdivided zoning lot separate from all 
  other property.
  
  	Section 5.10.	Lender's Right to Appear.  Lender has the 
  right to appear in and defend any Proceeding brought regarding 
  the Property and to bring any Proceeding, in the name and on 
  behalf of Borrower or in Lender's name, which Lender, in its sole 
  discretion, determines should be brought to protect Lender's 
  interest in the Property.
  
  ARTICLE VI
  
  IMPOSITIONS AND ACCUMULATIONS
  
  		
  	Section 6.1.  Impositions.
  
  	(a)  Borrower will pay or cause the Escrow Holder to pay 
  each Imposition at least 10 days before the date (the "Imposition 
  Penalty Date") that is the earlier of (i) the date on which the 
  Imposition becomes delinquent and (ii) the date on which any 
  penalty, interest or charge for non-payment of the Imposition 
  accrues.
  
  	(b)  At least 10 days before each Imposition Penalty Date, 
  Borrower will deliver or cause Escrow Holder to deliver to Lender 
  a receipted bill or other evidence of payment.
  
  	(c)  Borrower, at its own expense, may contest any Taxes or 
  Assessments, provided that the following conditions are met:
  
  (i)  not less than 30 days prior to the Imposition Penalty 
  Date, Borrower delivers to Lender notice of the proposed 
  contest;
  
  (ii) the contest is by a Proceeding promptly initiated and 
  conducted diligently and in good faith; 
  
  (iii) there is no Event of Default; 
  
  (iv)  the Proceeding suspends the collection of the 
  contested Taxes or Assessments or a bond is furnished by 
  Borrower to Lender, satisfactory to Lender in its sole 
  discretion; 
  
  (v)  the Proceeding is permitted under and is conducted in 
  accordance with the Leases and the Property Documents;
  
  (vi)  the Proceeding precludes imposition of criminal or 
  civil penalties and sale or forfeiture of the Property and 
  Lender will not be subject to any civil suit; and 
  
  (vii)  Borrower either deposits with the Accumulations 
  Depositary reserves or furnishes a bond or other security 
  satisfactory to Lender, in either case in an amount 
  sufficient to pay the contested Taxes or Assessments, 
  together with all interest and penalties or Borrower pays 
  all of the contested Taxes or Assessments under protest. 
  
  	(d)  Installment Payments.  If any Assessment is payable in 
  installments, Borrower will nevertheless pay the Assessment in 
  its entirety on the day the first installment becomes due and 
  payable or a lien, unless Lender approves payment of the 
  Assessment in installments or such installment payments will not 
  result in a lien, or trigger any interest or penalty. 
  
  	Section 6.2.  Accumulations.
  
  	(a)  Borrower made an initial deposit with either Lender or 
  a mortgage servicer or financial institution designated or 
  approved by Lender from time to time to receive, hold and 
  disburse the Accumulations in accordance with this Section (the 
  "Accumulations Depositary").  The initial Accumulation Depositary 
  is identified in the Tax Agreement.  On the first day of each 
  calendar month during the Term Borrower will deposit with the 
  Accumulations Depositary an amount equal to one-twelfth (1/12) of 
  the annual Taxes and Assessments as determined by Lender or its 
  designee.  At least 30 days before each Imposition Penalty Date, 
  or as soon thereafter as received by Borrower, Borrower will 
  deliver to the Accumulations Depositary any bills and other 
  documents that are necessary to pay the Taxes and Assessments.
  
  	(b)  The Accumulations will be applied to the payment of 
  Taxes and Assessments.  Any excess Accumulations after payment of 
  Taxes and Assessments will be returned to Borrower or credited 
  against future payments of the Accumulations, at Lender's 
  election or as required by Law.  If the Accumulations are not 
  sufficient to pay Taxes and Assessments, Borrower will pay the 
  deficiency to the Accumulations Depositary within 5 days of 
  demand.  At any time after an Event of Default occurs, Lender may 
  apply the Accumulations as a credit against any portion of the 
  Debt selected by Lender in its sole discretion.
  
  	(c)  The Accumulations Depositary will hold the 
  Accumulations as additional security for the Obligations until 
  applied in accordance with the provisions of this Mortgage and 
  the Tax Agreement.  If Lender is not the Accumulations 
  Depositary, the Accumulations Depositary will deliver the 
  Accumulations to Lender upon Lender's demand at any time after an 
  Event of Default.
   		
  	(d)  The Accumulations Depositary has deposited the initial 
  deposit and will deposit the monthly deposits into a separate 
  interest bearing account in the name of Lender as secured party, 
  all in accordance with the Tax Agreement.
  
  	(e)  Lender has the right to pay, or to direct the  
  Accumulations Depositary to pay, any Taxes or Assessments unless 
  Borrower is contesting the Taxes or Assessments in accordance 
  with the provisions of this Mortgage, in which event any payment 
  of the contested Taxes or Assessments will be made under protest 
  in the manner prescribed by Law or, at Lender's election, will be 
  withheld.
  
  	(f)  If Lender assigns this Mortgage, Lender will pay, or 
  cause the Accumulations Depositary to pay, the unapplied balance 
  of the Accumulations to or at the direction of the assignee in 
  accordance with the Tax Agreement.  Simultaneously with the 
  payment, Lender and the Accumulations Depositary will be released 
  from all liability with respect to the Accumulations and Borrower 
  will look solely to the assignee with respect to the 
  Accumulations.  When the Obligations have been fully satisfied, 
  any unapplied balance of the Accumulations will be returned to 
  Borrower.
  
  	Section 6.3.	Changes in Tax Laws.  If a Law requires the 
  deduction of the Debt from the value of the Property for the 
  purpose of taxation or imposes a tax, either directly or 
  indirectly, on the Debt, any Loan Document or Lender's interest 
  in the Property, Borrower will pay the tax with interest and 
  penalties, if any.  If Lender determines that Borrower's payment 
  of the tax may be unlawful, unenforceable, usurious or taxable to 
  Lender, the Debt will become immediately due and payable on 60 
  days' prior notice unless the tax must be paid within the 60-day 
  period, in which case, the Debt will be due and payable within 
  the lesser period.
  
  	Section 6.4.	Reserves.	Borrower made an initial deposit 
  and will make monthly deposits into an account established as 
  additional security for the payment and performance of the 
  Obligations, to be held and disbursed in accordance with the Tax 
  Agreement.
  
  			ARTICLE VII
  
  INSURANCE, CASUALTY, CONDEMNATION
  AND RESTORATION
  
  	Section 7.1.  Insurance Coverages.
  
  	(a)  Borrower will maintain such insurance coverages and 
  endorsements in form and substance and in amounts as Lender may 
  require in its sole discretion, from time to time.  Until Lender 
  notifies Borrower of changes in Lender's requirements, Borrower 
  will maintain not less than the insurance coverages and 
  endorsements Lender required for closing of the Loan.
  
  	(b)  The insurance, including renewals, required under this 
  Section will be issued on valid and enforceable policies and 
  endorsements satisfactory to Lender (the "Policies").	Each 
  Policy will contain a standard waiver of subrogation and a 
  replacement cost endorsement and will provide that Lender will 
  receive not less than 30 days' prior written notice of any 
  cancellation, termination or non-renewal of a Policy or any 
  material change other than an increase in coverage and that 
  Lender will be named under a standard mortgage endorsement as 
  loss payee.
  
  	(c)  The insurance companies issuing the Policies (the 
  "Insurers") must be authorized to do business in the State or 
  Commonwealth where the Property is located, must have been in 
  business for at least 5 years, must carry an A.M. Best Company, 
  Inc. policy holder rating of A or better and an A.M. Best 
  Company, Inc. financial category rating of Class X or better and 
  must be otherwise satisfactory to Lender.  Lender may select an 
  alternative credit rating agency and may impose different credit 
  rating standards for the Insurers.  Notwithstanding Lender's 
  right to approve the Insurers and to establish credit rating 
  standards for the Insurers, Lender will not be responsible for 
  the solvency of any Insurer.
  
  	(d)  Notwithstanding Lender's rights under this Article, 
  Lender will not be liable for any loss, damage or injury 
  resulting from the inadequacy or lack of any insurance coverage.
  
  	(e)  Borrower will comply with the provisions of the 
  Policies and with the requirements, notices and demands imposed 
  by the Insurers and applicable to Borrower or the Property.
  
  	(f)  Borrower will pay the Insurance Premiums for each 
  Policy not less than 30 days before the expiration date of the 
  Policy being replaced or renewed and will deliver to Lender an 
  original or, if a blanket policy, a certificate evidencing 
  coverage under the Policies marked "Paid" not less than 15 days 
  prior to the expiration date of the Policy being replaced or 
  renewed.  Borrower shall provide a certified copy of each Policy 
  promptly upon receipt thereof.
  
  	(g)  Borrower will not carry separate insurance concurrent 
  in kind or form or contributing in the event of loss with any 
  other insurance carried by Borrower.
  
  	(h)  Borrower will not carry any of the insurance required 
  under this Section on a blanket or umbrella policy without in 
  each instance Lender's prior approval which may be withheld in 
  Lender's sole discretion.  If Lender approves, Borrower will 
  deliver to Lender a certified copy of the blanket policy which 
  will allocate to the Property the amount of coverage required 
  under this Section and otherwise will provide the same coverage 
  and protection as would a separate policy insuring only the 
  Property.
  	(i) If required by the Policy, Borrower will give the 
  Insurers prompt notice of any change in ownership or occupancy of 
  the Property.  This subsection does not abrogate the prohibitions 
  on transfers set forth in this Mortgage.
  
  	Section 7.2.  Casualty and Condemnation.
  
  	(a)  Borrower will give Lender notice of any Casualty 
  immediately after it occurs and will give Lender notice of any 
  Proceeding in Condemnation immediately after Borrower receives 
  notice of commencement or notice that such a Proceeding will be 
  commencing.  Borrower immediately will deliver to Lender copies 
  of all documents Borrower delivers or receives relating to the 
  Casualty or the Proceeding, as the case may be.
  
  	(b) Upon the occurrence and continuance of an Event of 
  Default, Borrower authorizes Lender, at Lender's option, to act 
  on Borrower's behalf to collect, adjust and compromise any claims 
  for loss, damage or destruction under the Policies on such terms 
  as Lender determines in Lender's sole discretion.  Borrower 
  authorizes Lender to act, at Lender's option, on Borrower's 
  behalf in connection with any Condemnation Proceeding.  Borrower 
  will execute and deliver to Lender all documents requested by 
  Lender and all documents as may be required by Law to confirm 
  such authorizations.  Nothing in this Section will be construed 
  to limit or prevent Lender from joining with Borrower either as a 
  co-defendant or as a co-plaintiff in any Condemnation Proceeding.  
  	(c)  If Lender elects not to act on Borrower's behalf as 
  provided in this Section, then Borrower promptly will file and 
  prosecute all claims (including Lender's claims) relating to the  
  Casualty and will prosecute or defend (including defense of 
  Lender's interest) any Condemnation Proceeding.  Borrower will 
  have the authority to settle or compromise the claims or 
  Proceeding, as the case may be, provided that Lender has approved 
  in Lender's sole discretion any compromise or settlement that 
  exceeds $750,000.00.  Any check for Insurance Proceeds or 
  Condemnation Awards, as the case may be (the "Proceeds") will be 
  made payable to Lender and Borrower.  Borrower will endorse the 
  check to Lender immediately upon Lender presenting the check to 
  Borrower for endorsement or if Borrower receives the check first, 
  will endorse the check immediately upon receipt and forward it to 
  Lender.  If any Proceeds are paid to Borrower, Borrower 
  immediately will deposit the Proceeds with Lender, to be applied 
  or disbursed in accordance with the provisions of this Mortgage.  
  Lender will be responsible for only the Proceeds actually 
  received by Lender.
  
  	Section 7.3.  Application of Proceeds.  After deducting the 
  costs incurred by Lender in collecting the Proceeds, Lender may, 
  in its sole discretion, (i) apply the Proceeds as a credit 
  against any portion of the Debt selected by Lender in its sole 
  discretion; (ii) apply the Proceeds to restore the Improvements, 
  provided that Lender will not be obligated to see to the proper 
  application of the Proceeds and provided further that any amounts 
  released for Restoration will not be deemed a payment on the 
  Debt; or (iii) deliver the Proceeds to Borrower.
  
  	Section 7.4.  Conditions to Availability of Proceeds for 
  Restoration.  Notwithstanding the preceding Section, after a 
  Casualty or a Condemnation (a "Destruction Event"), Lender will 
  make the Proceeds (less any costs incurred by Lender in 
  collecting the Proceeds) available for Restoration in accordance 
  with the conditions for disbursements set forth in the Section 
  entitled "Restoration", provided that the following conditions 
  are met:
  
  (i)  Parkway Properties LP or the transferee under a 
  Permitted Transfer, if any, continues to be Borrower at the 
  time of the Destruction Event and at all times thereafter 
  until the Proceeds have been fully disbursed; 
  
  (ii)  no default under the Loan Documents exists at the time 
  of the Destruction Event and no Event of Default has 
  occurred which remains uncured during the 12 months prior to 
  the Destruction Event;  
  
  (iii)  all Major Leases in effect immediately prior to the 
  Destruction Event and all Property Documents in effect 
  immediately prior to the Destruction Event that are 
  essential to the use and operation of the Property continue 
  in full force and effect notwithstanding the Destruction 
  Event;
  
  (iv)  if the Destruction Event is a Condemnation, Borrower 
  delivers to Lender evidence satisfactory to Lender that the 
  Improvements can be restored to an economically and 
  architecturally viable unit;
  
  (v)  Borrower delivers to Lender evidence satisfactory to 
  Lender that the Proceeds are sufficient to complete 
  Restoration or if the Proceeds are insufficient to complete 
  Restoration, Borrower first deposits with Lender funds 
  ("Additional Funds") that when added to the Proceeds will be 
  sufficient to complete Restoration;
  			
  (vi)  if the Destruction Event is a Casualty, Borrower 
  delivers to Lender evidence satisfactory to Lender that the 
  Insurer under each affected Policy has not denied liability 
  under the Policy as to Borrower or the insured under the 
  Policy;
  
  (vii)  Lender is satisfied that the proceeds of any business 
  interruption insurance in effect together with other 
  available gross revenues from the Property are sufficient to 
  pay Debt Service Payments after paying the Impositions, 
  Insurance Premiums, reasonable and customary operating 
  expenses and capital expenditures until Restoration is 
  complete;
  
  (viii)  Lender is satisfied that Restoration will be 
  completed on or before the date (the "Restoration Completion 
  Date") that is the earliest of:  (A) 12 months prior to the 
  Maturity Date; (B) 12 months after the Destruction Event; 
  (C) the earliest date required for completion of Restoration 
  under any Major Lease or any material Property Document; or 
  (D) any date required by Law; and
  
  (ix)  the annual Rents (excluding security deposits) under 
  Leases in effect on the date of the Destruction Event are 
  providing debt service coverage for the annual Debt Service 
  Payments of 1.15 after payment of annual Insurance Premiums, 
  Impositions and operating expenses of the Property 
  (including ground rent, if any), provided that if the Rents 
  do not provide such debt service coverage, then Borrower 
  expressly authorizes and directs Lender to apply an amount 
  from the Proceeds to reduction of Principal without 
  Prepayment Premium in order to reduce the annual Debt 
  Service Payments sufficiently for such debt service coverage 
  to be achieved.  The reduced debt service payments will be 
  calculated using the Fixed Interest Rate and an amortization 
  schedule that will achieve the same proportionate 
  amortization of the reduced Principal over the then 
  remaining Term as would have been achieved if the Principal 
  and the originally scheduled Debt Service Payments had not 
  been reduced.  Borrower will execute any documentation that 
  Lender deems reasonably necessary to evidence the reduced 
  Principal and debt service payments.
  
  	Section 7.5.	Restoration.
  
  	(a)  If the total Proceeds for any Destruction Event do not 
  exceed $750,000.00 and Lender elects or is obligated by Law or 
  under this Article to make the Proceeds available for 
  Restoration, Lender will disburse to Borrower the entire amount 
  received by Lender and Borrower will commence Restoration 
  promptly after the Destruction Event and complete Restoration not 
  later than the Restoration Completion Date.
  
  	(b)  If the Proceeds for any Destruction Event exceed 
  $750,000.00 and Lender elects or is obligated by Law or under 
  this Article to make the Proceeds available for Restoration, 
  Lender will disburse the Proceeds and any Additional Funds (the 
  "Restoration Funds") upon Borrower's request as Restoration 
  progresses, generally in accordance with normal construction 
  lending practices for disbursing funds for construction costs and 
  provided that the following conditions are met:
  
  	(i)	Borrower commences Restoration promptly after the 
  Destruction Event and completes Restoration on or 
  before the Restoration Completion Date;
  
  	(ii)	if Lender requests, Borrower delivers to Lender 
  prior to commencing Restoration, for Lender's approval, 
  plans and specifications and detailed budget for the 
  Restoration;
  
  (iii)Borrower delivers to Lender satisfactory evidence 
  of the costs of Restoration incurred prior to the date 
  of the request, and such other documents as Lender may 
  request including mechanic's liens, waivers and title 
  insurance endorsements;
  
  	(iv)	Borrower pays all costs of Restoration whether or 
  not the Restoration Funds are sufficient and, if at any 
  time during Restoration, Lender determines that the 
  undisbursed balance of the Restoration Funds is 
  insufficient to complete Restoration, Borrower deposits 
  with Lender, as part of the Restoration Funds, an 
  amount equal to the deficiency within 30 days of 
  receiving notice of the deficiency from Lender; and  
  
  	(v)	there is no default under the Loan Documents at 
  the time Borrower requests funds or at the time Lender 
  disburses funds.
  
  	(c)  If an Event of Default occurs at any time after the 
  Destruction Event, then Lender will have no further obligation to 
  make any remaining Proceeds available for Restoration and may 
  apply any remaining Proceeds as a credit against any portion of 
  the Debt selected by Lender in its sole discretion.
  
  	(d)  Lender may elect at any time prior to commencement of 
  Restoration or while work is in progress to retain, at Borrower's 
  expense, an independent engineer or other consultant to review 
  any plans and specifications required by Lender, to inspect the 
  work as it progresses and to provide reports.  If any matter 
  included in a report by the engineer or consultant is 
  unsatisfactory to Lender, Lender may suspend disbursement of the 
  Restoration Funds until the unsatisfactory matters contained in 
  the report are resolved to Lender's satisfaction.
  
  	(e)  If Borrower fails to commence and complete Restoration 
  in accordance with the terms of this Article, then in addition to 
  the Remedies, Lender may elect to restore the Improvements on 
  Borrower's behalf and reimburse itself out of the Restoration 
  Funds for costs and expenses incurred by Lender in restoring the 
  Improvements, or Lender may apply the Restoration Funds as a 
  credit against any portion of the Debt selected by Lender in its 
  sole discretion.
  	
  	(f)	Lender shall deposit the Restoration Funds in escrow 
  with a duly licensed title insurance company as an escrow agent, 
  pursuant to an escrow agreement providing, among other things, 
  that such escrow account shall be an interest-bearing account for 
  the benefit of Borrower and otherwise shall be in form and 
  substance reasonably satisfactory to Lender.
  
  	(g)  Borrower will pay all of Lender's expenses incurred in 
  connection with a Destruction Event or Restoration.  If Borrower 
  fails to do so, then in addition to the Remedies, Lender may from 
  time to time reimburse itself out of the Restoration Funds.
  
  	(h)  If any excess Proceeds remains after Restoration, 
  Lender may elect, in its sole discretion either to apply the 
  excess as a credit against any portion of the Debt, without 
  Prepayment Premium as selected by Lender in its sole discretion 
  or to deliver the excess to Borrower.
  
  ARTICLE VIII
  
  COMPLIANCE WITH LAW AND AGREEMENTS
  
  	Section 8.1.  Compliance with Law.  Borrower, the Property 
  and the use of the Property comply and will continue to comply 
  with Law and with all agreements and conditions necessary to 
  preserve and extend all rights, licenses, permits, privileges, 
  franchises and concessions (including zoning variances, special 
  exceptions and non-conforming uses) relating to the Property or 
  Borrower.  Borrower will notify Lender of the commencement of any 
  investigation or Proceeding relating to a possible violation of 
  Law immediately after Borrower receives notice thereof and will 
  deliver promptly to Lender copies of all documents Borrower 
  receives or delivers in connection with the investigation or 
  Proceeding.  Borrower will not alter the Property in any manner 
  that would increase Borrower's responsibilities for compliance 
  with Law. 
  
  	Section 8.2.  Compliance with Agreements.  There are no 
  defaults, events of defaults or events which, with the passage of 
  time or the giving of notice, would constitute an event of 
  default under the Property Documents.  Borrower will pay and 
  perform all of its obligations under the Property Documents as 
  and when required by the Property Documents.  Borrower will cause 
  all other parties to the Property Documents to pay and perform 
  their obligations under the Property Documents as and when 
  required by the Property Documents.  Borrower will not amend or 
  waive any provisions of the Property Documents; exercise any 
  options under the Property Documents; give any approval required 
  or permitted under the Property Documents that would adversely 
  affect the Property or Lender's rights and interests under the 
  Loan Documents; cancel or surrender any of the Property Documents 
  that would adversely affect the Property or Lender's rights and 
  interests under the Loan Documents; or release or discharge or 
  permit the release or discharge of any party to or entity bound 
  by any of the Property Documents, without, in each instance, 
  Lender's prior approval (excepting therefrom all service 
  contracts or other agreements entered into in the normal course 
  of business that are cancelable upon not more than 30 days 
  notice).  Borrower promptly will deliver to Lender copies of any 
  notices of default or of termination that Borrower receives or 
  delivers relating to any Property Document.
  
  	Section 8.3.  ERISA Compliance.
  
  	(a)  Borrower is not and will continue not to be an 
  "employee benefit plan" as defined in Section 3(3) of the 
  Employee Retirement Income Security Act of 1974 ("ERISA") that is 
  subject to Title I of ERISA or a "plan" as defined in Section 
  4975(e)(1) of the Code that is subject to Section 4975 of the 
  Code, and Borrower's assets do not and will not constitute "plan 
  assets" of one or more such plans for purposes of Title I of 
  ERISA or Section 4975 of the Code.
  
  	(b)	Borrower will not engage in any transaction which would 
  cause any obligation or any action under the Loan Documents, 
  including Lender's exercise of the Remedies, to be a non-exempt 
  prohibited transaction under ERISA.
  
  	Section 8.4.  Section 6045(e) Filing.  Borrower will supply 
  or cause to be supplied to Lender either (i) a copy of a 
  completed Form 1099-B, Statement for Recipients of Proceeds from 
  Real Estate, Broker and Barter Exchange Proceeds prepared by 
  Borrower's attorney or other person responsible for the 
  preparation of the form, together with a certificate from the 
  person who prepared the form to the effect that the form has, to 
  the best of the preparer's knowledge, been accurately prepared 
  and that the preparer will timely file the form; or (ii) a 
  certification from Borrower that the Loan is a refinancing of the 
  Property or is otherwise not required to be reported to the 
  Internal Revenue Service pursuant to Section 6045(e) of the Code.  
  Under no circumstances will Lender or Lender's counsel be 
  obligated to file the reports or returns.
  
  ARTICLE IX
  
  ENVIRONMENTAL
  
  	Section 9.1.  Environmental Representations and Warranties.  
  Except as disclosed in the Environmental Report and to Borrower's 
  knowledge as of the date of this Mortgage:
  
  	(i)	no Environmental Activity has occurred or is 
  occurring on the Property other than the use, storage, 
  and disposal of Hazardous Materials which (A) is in the 
  ordinary course of business consistent with the 
  Permitted Use; (B) is in compliance with all 
  Environmental Laws and (C) has not resulted in material 
  environmental contamination of the Property; and
  
  (ii)	no Environmental Activity has occurred or is 
  occurring on any property in the vicinity of the 
  Property which has resulted in material environmental 
  contamination of the Property.
  
  	Section 9.2.  Environmental Covenants.
  
  	(a)  Borrower will not cause or permit any Material 
  environmental contamination of the Property.
  
  	(b)  No Environmental Activity will occur on the Property 
  other than the use, storage and disposal of Hazardous Materials 
  which (A) is in the ordinary course of business consistent with 
  the Permitted Use; (B) is in compliance with all Environmental 
  Laws; and (C) does not create a risk of material environmental 
  contamination of the Property.
  
  	(c)  Borrower will notify Lender immediately upon Borrower 
  becoming aware of (i) any material environmental contamination of 
  the Property or (ii) any Environmental Activity with respect to 
  the Property that is not in accordance with the preceding 
  subsection (b).  Borrower promptly will deliver to Lender copies 
  of all documents delivered to or received by Borrower regarding 
  the matters set forth in this subsection, including notices of 
  Proceedings or investigations concerning any material 
  environmental contamination of the Property or Environmental 
  Activity or concerning Borrower's status as a potentially 
  responsible party (as defined in the Environmental Laws).  
  Borrower's notification of Lender in accordance with the 
  provisions of this subsection will not be deemed to excuse any 
  default under the Loan Documents resulting from the violation of 
  Environmental Laws or the material environmental contamination of 
  the Property or Environmental Activity that is the subject of the 
  notice.  If Borrower receives notice of a suspected violation of 
  Environmental Laws in the vicinity of the Property that poses a 
  risk of material environmental contamination of the Property, 
  Borrower will give Lender notice and copies of any documents 
  received relating to such suspected violation.  
  
  	(d)  From time to time at Lender's request, Borrower will 
  deliver to Lender any information known and documents available 
  to Borrower relating to the environmental condition of the 
  Property.
  
  	(e)  Lender may perform or engage an independent consultant 
  to perform an assessment of the environmental condition of the 
  Property and of Borrower's compliance with this Section on an 
  annual basis or at any time for reasonable cause or after an 
  Event of Default.  In connection with the assessment:  (i) Lender 
  or consultant may enter and inspect the Property and perform 
  tests of the air, soil, ground water and building materials; (ii) 
  Borrower will cooperate and use commercially reasonable efforts 
  to cause tenants and other occupants of the Property to cooperate 
  with Lender or consultant; (iii) Borrower will receive a copy of 
  any final report prepared after the assessment, to be delivered 
  to Borrower not more than 10 days after Borrower requests a copy 
  and executes Lender's standard confidentiality and waiver of 
  liability letter; (iv) Borrower will accept custody of and 
  arrange for lawful disposal of any Hazardous Materials required 
  to be disposed of as a result of the tests; (v) Lender will not 
  have liability to Borrower with respect to the results of the 
  assessment; and (vi) Lender will not be responsible for any 
  damage to the Property resulting from the tests described in this 
  subsection and Borrower will look solely to the consultants to 
  reimburse Borrower for any such damage.  Lender shall cause such 
  consultant to provide evidence of insurance satisfactory to 
  Borrower and, if available, name Borrower as an additional 
  insured on consultant's liability insurance at Borrower's 
  expense.  The consultant's assessment and reports will be at 
  Borrower's expense (i) if the reports disclose any material 
  adverse change in the environmental condition of the Property 
  from that disclosed in the Environmental Report; (ii) if Lender 
  engaged the consultant when Lender had reasonable cause to 
  believe Borrower was not in compliance with the terms of this 
  Article and, after written notice from Lender, Borrower failed to 
  provide promptly reasonable evidence that Borrower is in 
  compliance; or (iii) if Lender engaged the consultant after the 
  occurrence of an Event of Default.
  
  	(f)  If Lender has reasonable cause to believe that there is 
  Environmental Activity at the Property, Lender may elect in its 
  sole discretion to release from the lien of this Mortgage any 
  portion of the Property affected by the Environmental Activity 
  and Borrower will accept the release.
  
  ARTICLE X
  
  FINANCIAL REPORTING
  
  	Section 10.1. Fiscal Year; Financial Statements; Reports of 
  Parkway Properties, Inc. (the "Company") and Borrower; SEC and 
  Other Reports; Officer's Certificate.  The Company and the 
  Borrower shall each maintain its fiscal year as a calendar year 
  at all times.  Borrower shall deliver the following submissions 
  to Lender with respect to the Company, and the Borrower shall 
  make identical submissions for itself (except for those relating 
  to Securities and Exchange Commission requirements) at the times 
  required pursuant to clauses (a), (b), (d) and (e) below for the 
  appropriate period:
  
  	(a)	Quarterly Statements -- within 45 days after the 
  end of each quarterly fiscal period in each fiscal year of 
  the Company (other than the last quarterly fiscal period of 
  each such fiscal year), duplicate copies of,
  
  	(A)	a consolidated balance sheet of the Company 
  and its Consolidated Subsidiaries as at the end of such 
  quarter, and
  
  	(B)	consolidated statements of income, changes in 
  shareholders' equity and cash flows of the Company and 
  its Consolidated Subsidiaries, for such quarter and (in 
  the case of the second and third quarters) for the 
  portion of the fiscal year ending with such quarter,
  
  setting forth in each case in comparative form the figures 
  for the corresponding periods in the previous fiscal year, 
  all in reasonable detail, prepared in accordance with GAAP 
  applicable to quarterly financial statements generally, and 
  certified by a financial officer of the Company as fairly 
  presenting, in all material respects, the financial position 
  of the companies being reported on and their results of 
  operations and cash flows, subject to changes resulting from 
  year-end adjustments, provided that delivery within the time 
  period specified above of copies of the Company's Quarterly 
  Report on Form 10-Q prepared in compliance with the 
  requirements therefor and filed with the Securities and 
  Exchange Commission shall be deemed to satisfy the 
  requirements of this Section 10.1(a);
  
  	(b)	Annual Statements -- within 90 days after the end 
  of each fiscal year of the Company, duplicate copies of,
  
  	(A)	a consolidated balance sheet of the Company 
  and its Consolidated Subsidiaries, as at the end of 
  such year, and
  
  	(B)	consolidated statements of income, changes in 
  shareholders' equity and cash flows of the Company and 
  its Consolidated Subsidiaries, for each such year,
  
  setting forth in each case in comparative form the figures 
  for the previous fiscal year, all in reasonable detail, 
  prepared in accordance with GAAP, and accompanied by:
  
  	(1)	an opinion thereon of independent certified 
  public accountants of recognized national standing, 
  which opinion shall state that such financial 
  statements present fairly, in all material respects, 
  the financial position of the companies being reported 
  upon and their results of operations and cash flows and 
  have been prepared in conformity with GAAP, and that 
  the examination of such accountants in connection with 
  such financial statements has been made in accordance 
  with generally accepted auditing standards, and that 
  such audit provides a reasonable basis for such opinion 
  in the circumstances, and 
  
  	(2)	upon request of Lender, but only if a default 
  shall exist or if the Unsecured Note (as defined in 
  that certain Note and Conversion Agreement [the "Note 
  Agreement"] of even date herewith among Borrower, 
  Lender and Existing Limited Partner) shall have a lower 
  rating than that specified in Section 2.01(b) of the 
  Note Agreement at the time of such request, a 
  certificate of such accountants stating that they have 
  reviewed this Agreement and the certificate of a 
  financial officer of the Company provided pursuant to 
  Section 10.1(d) in connection with such financial 
  statements, and stating further whether, in making 
  their audit, they have become aware of any condition or 
  event that then constitutes a breach of any covenant 
  contained in Article Four, and, if they are aware that 
  any such condition or event then exists, specifying the 
  nature and period of the existence thereof (it being 
  understood that such accountants shall not be liable, 
  directly or indirectly, for any failure to obtain 
  knowledge of any such breach unless such accountants 
  should have obtained knowledge thereof in making an 
  audit in accordance with generally accepted auditing 
  standards or did not make such an audit),
  
  provided that the delivery within the time period specified 
  above of the Company's Annual Report on Form 10-K for such 
  fiscal year (together with the Company's annual report to 
  shareholders, if any, prepared pursuant to Rule 14a-3 under 
  the Exchange Act) prepared in accordance with the 
  requirements therefor and filed with the Securities and 
  Exchange Commission, together with the accountant's 
  certificate described in clause (2) above, shall be deemed 
  to satisfy the requirements of this Section 10.1(b);
  
  	(c)	Promptly upon their becoming available, one copy 
  of (A) each financial statement, report, notice or proxy 
  statement sent by the Company or any of its Subsidiaries to 
  public securities holders generally, and (B) each regular or 
  periodic report, each registration statement (without 
  exhibits except as expressly requested by Lender), and each 
  prospectus and all amendments thereto filed by the Company 
  or any such Subsidiary with the Securities and Exchange 
  Commission and of all press releases and other statements 
  made available generally by the Company or any such 
  Subsidiary to the public concerning developments that are 
  material;
  
  	(d)	Each set of financial statements delivered to 
  Lender pursuant to Section 10.1(a) or Section 10.1(b) hereof 
  shall be accompanied by a certificate of a financial officer 
  of the Company, in his or her capacity as such officer and 
  without personal liability other than for fraudulent 
  statements or omissions, setting forth:
  
  	(A)	Covenant Compliance -- the information 
  (including detailed calculations) required in order to 
  establish whether the Company was in compliance with 
  the requirements of Section 4.01 Note and Conversion 
  Agreement and whether the Borrower was in compliance 
  with the requirements of Section 4.02 of the Note and 
  Conversion Agreement, during the quarterly or annual 
  period covered by the statements then being furnished 
  (including with respect to such Section, where 
  applicable, the calculations of the maximum or minimum 
  amount, ratio or percentage, as the case may be, 
  permissible under the terms of such Sections, and the 
  calculation of the amount, ratio or percentage then in 
  existence), provided that the foregoing shall only be 
  required after the Conversion Option (as defined in the 
  Note Agreement) shall have been exercised; and
  
  	(B)	Event of Default -- a statement that such 
  officer has reviewed the relevant terms hereof and has 
  made, or caused to be made, under his or her 
  supervision, a review of the transactions and 
  conditions of the Company, the Borrower, and the 
  Company's other Subsidiaries from the beginning of the 
  quarterly or annual period covered by the statements 
  then being furnished to the date of the certificate and 
  that such review shall not have disclosed the existence 
  during such period of any condition or event that 
  constitutes a Default or an Event of Default or, if any 
  such condition or event existed or exists, specifying 
  the nature and period of existence thereof and what 
  action the Company or Borrower (as applicable) shall 
  have taken or proposes to take with respect thereto;
  
  	(e)	Promptly after Lender shall so request, such other 
  reports and information as Lender shall reasonably request 
  from time to time.
  
  ARTICLE XI
  
  EXPENSES AND DUTY TO DEFEND
  
  	Section 11.1.  Payment of Expenses.  
  
  	(a)  Borrower is obligated to pay all fees and expenses (the 
  "Expenses") incurred by Lender or that are otherwise payable in 
  connection with the Loan or the Property, including attorneys' 
  fees and expenses and any fees and expenses relating to (i) the 
  preparation, execution, acknowledgment, delivery and recording or 
  filing of the Loan Documents; (ii) except as otherwise provided 
  herein, any Proceeding or other claim asserted against Lender; 
  (iii) except as otherwise provided herein, any inspection, 
  assessment, survey and test permitted under the Loan Documents; 
  (iv) any Destruction Event; (v) the preservation of Lender's 
  security and the exercise of any rights or remedies available at 
  Law, in equity or otherwise; and (vi) the Leases and the Property 
  Documents.  
  
  	(b)  Borrower will pay the Expenses immediately on demand, 
  together with any applicable interest, premiums or penalties.  If 
  Lender pays any of the Expenses, Borrower will reimburse Lender 
  the amount paid by Lender immediately upon demand, together with 
  interest on such amount at the Default Interest Rate from the 
  date Lender paid the Expenses through and including the date 
  Borrower reimburses Lender.  The Expenses together with any 
  applicable interest, premiums or penalties constitute a portion 
  of the Debt secured by this Mortgage.
  
  	Section 11.2.	Duty to Defend.  If Lender or any of its 
  trustees, officers, participants, employees or affiliates is a 
  party in any Proceeding relating to the Property, Borrower or the 
  Loan, Borrower will indemnify and hold harmless the party and 
  will defend the party with attorneys and other professionals 
  retained by Borrower and approved by Lender.  Lender may elect to 
  engage its own attorneys and other professionals, at Borrower's 
  expense, to defend or to assist in the defense of the party.  In 
  all events, case strategy will be determined by Lender if Lender 
  so elects and no Proceeding will be settled without Lender's 
  prior approval which may be withheld in Lender's reasonable 
  discretion.  
  
  ARTICLE XII
  
  TRANSFERS LIENS AND ENCUMBRANCES
  
  	Section 12.1.  Prohibitions on Transfers, Liens and 
  Encumbrances.	 
  
  	(a)  Borrower acknowledges that in making the Loan, Lender 
  is relying to a material extent on the business expertise and net 
  worth of Borrower and Borrower's general partners, members or 
  principals and on the continuing interest that each of them has, 
  directly or indirectly, in the Property.  Accordingly, except as 
  specifically set forth in this Mortgage, Borrower (i) will not, 
  and will not permit its partners, members or principals to, 
  effect a Transfer without Lender's prior approval, which may be 
  withheld in Lender's sole discretion and (ii) will keep the 
  Property free from all liens and encumbrances other than the lien 
  of this Mortgage and the Permitted Exceptions.  A "Transfer" is 
  defined as any sale, grant, lease (other than bona fide third-
  party space leases with tenants), conveyance, assignment or other 
  transfer of, or any encumbrance or pledge against, the Property, 
  any interest in the Property, or any change in Borrower's 
  composition, in each instance whether voluntary or involuntary, 
  direct or indirect, by operation of law or otherwise and 
  including the grant of an option or the execution of an agreement 
  relating to any of the foregoing matters.  	
  
  	(b)  Borrower represents, warrants and covenants that 
  Borrower is a Delaware limited partnership whose sole general 
  partner is Parkway Properties General Partners, Inc., a Delaware 
  corporation ("Existing General Partner").  Existing General 
  Partner owns 1% of the partnership interests in Borrower and 
  Borrower's sole remaining limited partner is Parkway Properties, 
  Inc., a Delaware corporation ("Existing Limited Partner").  
  Existing Limited Partner owns 99% of the partnership interests in 
  Borrower, which interest may be reduced to not less than a fifty-
  one percent (51%) in each class of limited partnership interests 
  in Borrower pursuant to one or more UPREIT Transactions (as 
  defined in the Note Agreement).  The Existing General Partner is 
  a wholly owned subsidiary of the Existing Limited Partner.
  
  	Section 12.2.  Permitted Transfers.  
  
  	(a)	Notwithstanding the prohibitions regarding Transfers, 
  there is no restriction on (i) transfers of stock in Existing 
  Limited Partner or (ii) transfers of limited partnership 
  interests in Borrower by limited partners in Borrower other than 
  Existing Limited Partner.
  
  	(b)  Notwithstanding the prohibitions regarding Transfers, a 
  Permitted Transfer may occur without Lender's prior consent, 
  provided that the following conditions are met:
  
  (i)   at least 30 days prior to the proposed Permitted 
  Transfer, Borrower delivers to Lender a notice that is 
  sufficiently detailed to enable Lender to determine that the 
  proposed Permitted Transfer complies with the terms of this 
  Section; 
  
  (ii)	 there is no default under the Loan Documents either 
  when Lender receives the notice or when the proposed 
  Permitted Transfer occurs; 
  
  (iii)  the proposed Permitted Transfer will not result in a 
  violation of any of the covenants contained in the Section 
  entitled, "ERISA Compliance" and Borrower will deliver to 
  Lender such documentation of compliance as Lender requests 
  in its sole discretion;
  
  (iv)	Borrower pays all of Lender's expenses relating to the 
  Transfer, including Lender's attorneys' fees; and
  
  (v)	Lender is satisfied that the Property will continue to 
  be managed by a property manager satisfactory to Lender.
  
  	(c)	Upon compliance with the conditions set forth in the 
  preceding subsection, the following Transfers (the "Permitted 
  Transfers") may occur without Lender's prior consent:
  
  (i)	Transfers of limited partnership interests in Borrower 
  by the Existing Limited Partner provided that subsequent to 
  the Transfer, Existing General Partner remains as sole 
  general partner, Existing General Partner remains a wholly 
  owned subsidiary of Parkway Properties, Inc. and Existing 
  Limited Partner retains not less than 51% in each class of 
  limited partnership interests in Borrower (including its 
  interest in Existing General Partner); and
  
  (ii) A pledge by Borrower of its ownership interest(s) in 
  any wholly-owned subsidiary of Borrower.
  
  	Section 12.3.  Right to Contest Liens.  Borrower, at its own 
  expense, may contest the amount, validity or application, in 
  whole or in part, of any mechanic's, materialmen's or 
  environmental liens in which event Lender will refrain from 
  exercising any of the Remedies, provided that the following 
  conditions are met: 
  
  (i)   Borrower delivers to Lender notice of the proposed 
  contest not more than 30 days after the lien is filed;
  
  (ii)  the contest is by a Proceeding promptly initiated and 
  conducted in good faith and with due diligence; 
  
  (iii)  there is no Event of Default other than the Event of 
  Default arising from the filing of the lien; 
  
  (iv)  the Proceeding suspends enforcement of collection of 
  the lien, imposition of criminal or civil penalties and sale 
  or forfeiture of the Property or Borrower has posted a bond 
  with such effect satisfactory to Lender in its sole 
  discretion and Lender will not be subject to any civil suit;
  
  (v)  the Proceeding is permitted under and is conducted in 
  accordance with the Leases and the Property Documents;
   
  (vi)  Borrower sets aside reserves or furnishes a bond or 
  other security satisfactory to Lender, in either case in an 
  amount sufficient to pay the claim giving rise to the lien, 
  together with all interest and penalties, or Borrower pays 
  the contested lien under protest; and  
  
  (vii)  with respect to an environmental lien, Borrower is 
  using reasonable efforts to mitigate or prevent any 
  deterioration of the Property resulting from the alleged 
  violation of any Environmental Laws or the alleged 
  Environmental Activity.
  
  	Section 12.4.  Release Rights.  Notwithstanding the 
  prohibitions regarding Transfers, Borrower may obtain the release 
  of the Property in whole, but not in part, provided that the 
  following conditions are met:
  
  (i)  no release shall occur before July 1, 2003;
  
  (ii) the release is solely (A) for the purpose of a transfer 
  of the Property to an unaffiliated, bona fide, third party 
  purchaser or (B) for the purpose of subjecting the Property 
  to the lien of a first mortgage in favor of an unaffiliated, 
  bona fide, third party mortgagee in connection with a 
  refinancing of the Property;
   
  (iii)  not less than 90 days prior to the date of the 
  release, Borrower delivers to Lender a notice setting forth 
  (A) the date of the release; (B) the name of the proposed 
  transferee or mortgagee and (C) data necessary for Lender to 
  determine whether the proposed release satisfies the 
  criteria set forth in this Section;
   	
  (iv)  on the date Borrower delivers to Lender notice of the 
  proposed release and on the date of the release, there is no 
  default under the Loan Documents;
  
  (v)  Borrower pays to Lender the entire sales proceeds or 
  refinancing proceeds less actual transaction costs actually 
  paid by Borrower to unaffiliated third parties in connection 
  with such transfer or refinance (provided that Borrower 
  shall not be entitled to deduct from such payment to Lender 
  Borrower's attorney's fees or, in the case of a refinance, 
  any loan fee or "points" paid to the new Lender) which shall 
  be applied by Lender in accordance with the Loan Documents;
  
  (vi)  Borrower pays to Lender a Prepayment Premium as to 
  such amount paid to Lender calculated in accordance with 
  Section 2 of the Note;
  
  (vii)  after giving effect to the release and the partial 
  repayment of the Loan, the Debt Service Coverage Ratio, 
  calculated for the Loan in the aggregate, for the 12 months 
  next ensuing (as evidenced by documentation satisfactory to 
  Lender in its sole discretion) will be equal to or greater 
  than 1.2 and the Loan to Value Ratio will not be greater 
  than 50%.
  
  (viii)  Borrower pays all expenses relating to the release, 
  including Lender's attorneys' fees; 
  
  (ix) Borrower delivers to Lender copies of the approved 
  final, executed and delivered documents evidencing the 
  transfer or refinancing of the Property; and
  
  (x)  Borrower delivers to Lender any other information, 
  approvals and documents reasonably required by Lender 
  relating to the release. 
  
  	[Section 12.5.	Substitution of Collateral.	[For Loudoun 
  mortgage only]
  
  	Notwithstanding the prohibitions regarding Transfers, 
  Borrower may sell the Property to a bona fide, unaffiliated third 
  party, and Lender will release the Property from the lien of this 
  Mortgage and the Assignment provided that simultaneously with 
  such sale Borrower substitutes collateral property (the 
  "Substitute Collateral") and provided further that in each 
  instance the following conditions are met:
  
  (i) there is no default under the Loan Documents or Event of 
  Default;
  
  (ii) the Substitute Collateral is a Class A office 
  building(s), with at least the same number of rentable 
  square feet as the Property and is located in either the 
  States of Georgia, Florida, Virginia, North Carolina, South 
  Carolina, Tennessee, Mississippi or Texas;
  
  (iii)  the Substitute Collateral will have been built not 
  earlier than the date the Property shall have been built;
  
  (iv)  the appraised value (as determined by reference to an 
  appraisal satisfactorily performed on behalf of Lender, at 
  the expense of Borrower) of the Substitute Collateral will 
  be equal to or greater than the greater of (i) the appraised 
  value of the Property, determined at the time of the closing 
  of the Loan, or (ii) the appraised value of the Property at 
  the time of such substitution;
  
  (v)	after the substitution, the Debt Service Coverage Ratio 
  (computed for purposes of this provision by reference to the 
  Net Operating Income derived from the Substitute Collateral 
  and the Debt Service Payments associated with that portion 
  of the Debt reasonably allocated by Lender to the Substitute 
  Collateral) shall be greater than or equal to the Debt 
  Service Coverage Ratio computed with respect to the Property 
  immediately prior to the substitution, but in no event shall 
  such Debt Service Coverage Ratio be less than 1.20;
  
  (vi)  the Substitute Collateral shall satisfy each of the 
  Borrower's Covenants and Conditions to Closing set forth in 
  paragraphs 11 and 12 of the Commitment that would have been 
  applicable to the Substitute Collateral had such Substitute 
  Collateral been a property thereunder;
  
  (vii)  the Substitute Collateral shall be fully cross-
  defaulted and cross-collateralized with all other property 
  securing the Debt, pursuant to documentation satisfactory to 
  Lender in its sole discretion;
  
  (viii) the Substitute Collateral shall conform in all 
  respects to such underwriting standards and criteria as well 
  as such other appraisal, legal, business, environmental, 
  engineering, diversification, leasing and title 
  requirements, all as Lender may determine in its sole 
  discretion; and
  
  (ix)  Borrower shall have paid all costs and expenses of 
  Lender relating to the substitution, including Lender's 
  attorneys' fees.
  
  ARTICLE XIII
  
  ADDITIONAL REPRESENTATIONS, WARRANTIES AND COVENANTS
  
  	Section 13.1.  Further Assurances.  
  
  	(a)  Borrower will execute, acknowledge and deliver to 
  Lender, or to any other entity Lender designates, any additional 
  or replacement documents and perform any additional actions that 
  Lender determines are reasonably necessary to evidence, perfect 
  or protect Lender's first lien on and prior security interest in 
  the Property or to carry out the intent or facilitate the 
  performance of the provisions of the Loan Documents.		
  
  	(b)  Borrower appoints Lender as Borrower's attorney-in-fact 
  to perform, at Lender's election, any actions and to execute and 
  record any of the additional or replacement documents referred to 
  in this Section, in each instance only at Lender's election and 
  only to the extent Borrower has failed to comply with the terms 
  of this Section within 10 days after notice from Lender. 
  
  	Section 13.2.  Estoppel Certificates.  
  
  	(a)  Within 10 days of Lender's request, Borrower will 
  deliver to Lender, or to any entity Lender designates, a 
  certificate certifying (i) the original principal amount of the 
  Note; (ii) the unpaid principal amount of the Note; (iii) the 
  Fixed Interest Rate; (iv) the amount of the then current Debt 
  Service Payments; (v) the Maturity Date; (vi) the date a Debt 
  Service Payment was last made; (vii) that, except as may be 
  disclosed in the statement, there are no defaults or events 
  which, with the passage of time or the giving of notice, would 
  constitute an Event of Default; and (viii) there are no offsets 
  or defenses against any portion of the Obligations except as may 
  be disclosed in the statement.
  
  	(b)  If Lender requests, Borrower promptly will deliver to 
  Lender or to any entity Lender designates a certificate from each 
  party to any Property Document excluding operating service 
  agreements, certifying that the Property Document is in full 
  force and effect with no defaults or events which, with the 
  passage of time or the giving of notice, would constitute an 
  event of default under the Property Document and that there are 
  no defenses or offsets against the performance of its obligations 
  under the Property Document.
  	(c)  If Lender requests, Borrower promptly will deliver to 
  Lender, or to any entity Lender designates, a certificate from 
  each tenant under a Major Lease, and any the tenant under any 
  other Lease then affecting the Property if requested by Lender, 
  certifying to any facts regarding the Lease as Lender may 
  require, including that the Lease is in full force and effect 
  with no defaults or events which, with the passage of time or the 
  giving of notice, would constitute an event of default under the 
  Lease by any party, that the rent has not been paid more than one 
  month in advance and that the tenant claims no defense or offset 
  against the performance of its obligations under the Lease.
  
  ARTICLE XIV
  
  DEFAULTS AND REMEDIES
  
  	Section 14.1.  Events of Default.	The term "Event of 
  Default" means the occurrence of any of the following events:
  
  (i)  if Borrower fails to pay any amount due, as and when 
  required, under any Loan Document and the failure continues 
  for a period of 5 days;
  
  (ii)  if Borrower makes a general assignment for the benefit 
  of creditors or generally is not paying, or is unable to 
  pay, or admits in writing its inability to pay, its debts as 
  they become due; or if Borrower or any other party commences 
  any Proceeding (A) relating to bankruptcy, insolvency, 
  reorganization, conservatorship or relief of debtors, in 
  each instance with respect to Borrower; (B) seeking to have 
  an order for relief entered with respect to Borrower; (C) 
  seeking attachment, distraint or execution of a judgment 
  with respect to Borrower or the Property and having a 
  material adverse effect thereon; (D) seeking to adjudicate 
  Borrower as bankrupt or insolvent; (E) seeking 
  reorganization, arrangement, adjustment, winding-up, 
  liquidation, dissolution, composition or other relief with 
  respect to Borrower or Borrower's debts; or (F) seeking 
  appointment of a Receiver, trustee, custodian, conservator 
  or other similar official for Borrower or for all or any 
  substantial part of Borrower's assets, provided that if the 
  Proceeding is commenced by a party other than Borrower or 
  any of Borrower's general partners or members, Borrower will 
  have 120 days to have the Proceeding dismissed or discharged 
  before an Event of Default occurs;  
  
  (iii)  if Borrower is in default beyond any applicable grace 
  and cure period under any other mortgage, deed of trust, 
  deed to secure debt or other security agreement encumbering 
  the Property whether junior or senior to the lien of this 
  Mortgage;
  
  (iv)  if there is a default beyond any applicable grace and 
  cure period under any guaranty in favor of Lender delivered 
  to Lender in connection with the Loan or in connection with 
  any loan cross-collateralized with the Loan;
  
  (v)  if Borrower is in default beyond any applicable grace 
  and cure period under any other Loan Documents evidencing 
  and securing the Loan including those Mortgages and/or Deeds 
  of Trusts granted by Borrower to or for the benefit of 
  Lender, encumbering those certain properties identified on 
  Exhibit D hereto;
  
  (vi)  if a Transfer occurs except in accordance with the 
  provisions of this Mortgage or the other Loan Documents;  
  
  (vii)  if Borrower abandons the Property or ceases to 
  conduct its business at the Property; or
  
  (viii)  if there is a default in the performance of any 
  other provision of any Loan Document or if there is any 
  inaccuracy or falsehood in any representation or warranty 
  contained in any Loan Document which is not remedied within 
  15 days after Borrower receives notice thereof, provided 
  that if the default, inaccuracy or falsehood is of a nature 
  that it cannot be cured within the 15-day period and during 
  that period Borrower commences to cure, and thereafter 
  diligently continues to cure, the default, inaccuracy or 
  falsehood, then the 15-day period will be extended for a 
  reasonable period not to exceed 120 days after the notice to 
  Borrower.
  
  	Section 14.2.  Remedies.   
  
  	(a)  If an Event of Default occurs, Lender may take any of 
  the following actions (the "Remedies") without notice to 
  Borrower:
  
  (i)  declare all or any portion of the Debt immediately due 
  and payable ("Acceleration");
  
  (ii)  pay or perform any Obligation;
  
  (iii)  institute a Proceeding for the specific performance 
  of any Obligation;
  
  (iv)  apply for the appointment of a Receiver to be vested 
  with the fullest powers permitted by Law, without bond being 
  required, which appointment may be made ex parte, as a 
  matter of right and without regard to the value of the 
  Property, the amount of the Debt or the solvency of Borrower 
  or any other person liable for the payment or performance of 
  any portion of the Obligations; 
  
  (v)  directly, by its agents or representatives or through a 
  Receiver appointed by a court of competent jurisdiction, 
  enter on the Land and Improvements, take possession of the 
  Property, dispossess Borrower and exercise Borrower's rights 
  with respect to the Property, either in Borrower's name or 
  otherwise;  
  
  (vi)  institute a Proceeding for the foreclosure of this 
  Mortgage or, if applicable, sell by power of sale, all or 
  any portion of the Property;
  
  (vii)  institute proceedings for the partial foreclosure of 
  this Mortgage for the portion of the Debt then due and 
  payable, subject to the continuing lien of this Mortgage for 
  the balance of the Debt not then due;
  
  (viii)  exercise any and all rights and remedies granted to 
  a secured party under the Uniform Commercial Code; and
  
  (ix)  pursue any other right or remedy available to Lender 
  at Law, in equity or otherwise.
  
  	(b)  If an Event of Default occurs, the license granted to 
  Borrower in the Loan Documents to collect Rents will terminate 
  automatically without any action required of Lender.
  
  	Section 14.3.	General Provisions Pertaining to Remedies.  
  	
  	(a)  The Remedies are cumulative and may be pursued 
  concurrently or otherwise, at such time and in such order as 
  Lender may determine in its sole discretion and without 
  presentment, demand, protest or further notice of any kind, all 
  of which are expressly waived by Borrower.
  	
  	(b) The enumeration in the Loan Documents of specific rights 
  or powers will not be construed to limit any general rights or 
  powers or impair Lender's rights with respect to the Remedies.
  	
  	(c)  If Lender exercises any of the Remedies, Lender will 
  not be deemed a mortgagee-in-possession unless Lender has elected 
  affirmatively to be a mortgagee-in-possession.
  
  	(d)  Lender will not be liable for any act or omission of 
  Lender in connection with the exercise of the Remedies.  
  	
  	(e)  Lender's right to exercise any Remedy will not be 
  impaired by any delay in exercising or failure to exercise the 
  Remedy and the delay or failure will not be construed as 
  extending any cure period or constitute a waiver of the default 
  or Event of Default. 
  	
  	(f)  If an Event of Default occurs, Lender's payment or 
  performance or acceptance of payment or performance will not be 
  deemed a waiver or cure of the Event of Default.
  
  	(g)  Lender's acceptance of partial payment or receipt of 
  Rents will not:  extend or affect any grace period, constitute a 
  waiver of a default or Event of Default or constitute a recision 
  of Acceleration.
  
  	Section 14.4.	Foreclosure by Power of Sale.
  
  Insert State Provisions
  
  	Section 14.5.	General Provisions Pertaining to Mortgagee-
  in-Possession or Receiver.  
  
  	(a)  If an Event of Default occurs, any court of competent 
  jurisdiction will, upon application by Lender, appoint a Receiver 
  as designated in the application and issue an injunction 
  prohibiting Borrower from interfering with the Receiver, 
  collecting Rents, disposing of any Rents or any part of the 
  Property, committing waste or doing any other act that will tend 
  to affect the preservation of the Leases, the Rents and the 
  Property and Borrower approves the appointment of the designated 
  Receiver or any other Receiver appointed by the court.  Borrower 
  agrees that the appointment may be made ex parte and as a matter 
  of right to Lender, either before or after sale of the Property, 
  without further notice, and without regard to the solvency or 
  insolvency, at the time of application for the Receiver, of the 
  person or persons, if any, liable for the payment of any portion 
  of the Debt and the performance of any portion of the Obligations 
  and without regard to the value of the Property or whether the 
  Property is occupied as a homestead and without bond being 
  required of the applicant.  
  	
  	(b)  The Receiver will be vested with the fullest powers 
  permitted by Law including all powers necessary or usual in 
  similar cases for the protection, possession and operation of the 
  Property and all the powers and duties of Lender as a mortgagee-
  in-possession as provided in this Mortgage and may continue to 
  exercise all the usual powers and duties until the Receiver is 
  discharged by the court.
  	
  	(c)  In addition to the Remedies and all other available 
  rights, Lender or the Receiver may take any of the following 
  actions:
  
  (i)  take exclusive possession, custody and control of the 
  Property and manage the Property so as to prevent waste;
   
  (ii)  require Borrower to deliver to Lender or the Receiver 
  all keys, security deposits, operating accounts, prepaid 
  Rents, past due Rents, the Books and Records and all 
  original counterparts of the Leases and the Property 
  Documents; 
  
  (iii)  collect, sue for and give receipts for the Rents and, 
  after paying all expenses of collection, including 
  reasonable receiver's, broker's and attorney's fees, apply 
  the net collections to any portion of the Debt selected by 
  Lender in its sole discretion;
  
  (iv)  enter into, modify, extend, enforce, terminate, renew 
  or accept surrender of Leases and evict tenants except that 
  in the case of a Receiver, such actions may be taken only 
  with the written consent of Lender as provided in this 
  Mortgage and in the Assignment;
  
  (v)  enter into, modify, extend, enforce, terminate or renew 
  Property Documents except that in the case of a Receiver, 
  such actions may be taken only with the written consent of 
  Lender as provided in this Mortgage and in the Assignment;
  		
  (vi)  appear in and defend any Proceeding brought in 
  connection with the Property and bring any Proceeding to 
  protect the Property as well as Borrower's and Lender's 
  respective interests in the Property (unless any such 
  Proceeding has been assigned previously to Lender in the 
  Assignment, or if so assigned, Lender has not expressly 
  assigned such Proceeding to the Receiver and consented to 
  such appearance or defense by the Receiver); and
  	
  (vii)  perform any act in the place of Borrower 
  that Lender or the Receiver deems necessary (A) to preserve 
  the value, marketability or rentability of the Property; (B) 
  upon consent by Lender, to increase the gross receipts from 
  the Property; or (C) otherwise to protect Borrower's and 
  Lender's respective interests in the Property. 
  	
  	(d)	Borrower upon the occurrence of an Event of Default 
  appoints Lender as Borrower's attorney-in-fact, at Lender's 
  election, to perform any actions and to execute and record any 
  instruments necessary to effectuate the actions described in this 
  Section, in each instance only at Lender's election and only to 
  the extent Borrower has failed to comply with the provisions of 
  this Section.   
  
  	Section 14.6.  General Provisions Pertaining to Foreclosures 
  and the Power of Sale.  The following provisions will apply to 
  any Proceeding to foreclose and to any sale of the Property by 
  power of sale or pursuant to a judgment of foreclosure and sale:
  	
  (i)  Lender's right to institute a Proceeding to foreclose 
  or to sell by power of sale will not be exhausted by a 
  Proceeding or a sale that is defective or not completed;
  
  (ii)  a sale pursuant to a judgment of foreclosure and sale 
  may be postponed or adjourned by public announcement at the 
  time and place appointed for the sale without further 
  notice;
  	
  (iii)  with respect to sale pursuant to a judgment of 
  foreclosure and sale, the Property may be sold as an 
  entirety or in parcels, at one or more sales, at the time 
  and place, on terms and in the order that Lender deems 
  expedient in its sole discretion;
  	
  (iv)  if a portion of the Property is sold pursuant to this 
  Article, the Loan Documents will remain in full force and 
  effect with respect to any unmatured portion of the Debt and 
  this Mortgage will continue as a valid and enforceable first 
  lien on and security interest in the remaining portion of 
  the Property, subject only to the Permitted Exceptions, 
  without loss of priority and without impairment of any of 
  Lender's rights and remedies with respect to the unmatured 
  portion of the Debt; 
  
  (v)  Lender may bid for and acquire the Property at a sale 
  and, in lieu of paying cash, may credit the amount of 
  Lender's bid against any portion of the Debt selected by 
  Lender in its sole discretion after deducting from the 
  amount of Lender's bid the expenses of the sale, costs of 
  enforcement and other amounts that Lender is authorized to 
  deduct at Law, in equity or otherwise; and
  	
  (vi)  Lender's receipt of the proceeds of a sale will be 
  sufficient consideration for the portion of the Property 
  sold and Lender will apply the proceeds as set forth in this 
  Mortgage.
  		
  	Section 14.7.  Application of Proceeds.   Lender may apply 
  the proceeds of any sale of the Property by power of sale or 
  pursuant to a judgment of foreclosure and sale and any other 
  amounts collected by Lender in connection with the exercise of 
  the Remedies to payment of the Debt in such priority and 
  proportions as Lender may determine in its sole discretion or in 
  such priority and proportions as required by Law.
  
  	Section 14.8.  Power of Attorney.  Borrower appoints Lender 
  as Borrower's attorney-in-fact to perform any actions necessary 
  and incidental to exercising the Remedies. 
  
  	Section 14.9.  Tenant at Sufferance.  If Lender or a 
  Receiver enters the Property in the exercise of the Remedies and 
  Borrower is allowed to remain in occupancy of the Property, 
  Borrower will pay to Lender or the Receiver, as the case may be, 
  in advance, a reasonable rent for the Property occupied by 
  Borrower.  If Borrower fails to pay the rent, Borrower may be 
  dispossessed by the usual Proceedings available against  
  defaulting tenants.  
  
  	Section 14.10.	 State Laws Pertaining to Remedies.
  
  ARTICLE XV
  
  LIMITATION OF LIABILITY
  
  	Section 15.1.  Limitation of Liability.  
  
  	(a)  Notwithstanding any provision in the Loan Documents to 
  the contrary, except as set forth in subsections (b) and (c), if 
  Lender seeks to enforce the collection of the Debt, Lender will 
  foreclose this Mortgage instead of instituting suit on the Note.  
  If a lesser sum is realized from a foreclosure of this Mortgage 
  and sale of the Property than the then outstanding Debt, Lender 
  will not institute any Proceeding against Borrower or Borrower's 
  general partners, if any, for or on account of the deficiency, 
  except as set forth in subsections (b) and (c).  
  
  	(b)  The limitation of liability in subsection (a) will not 
  affect or impair (i) the lien of this Mortgage or Lender's other 
  rights and Remedies under the Loan Documents, including Lender's 
  right as mortgagee or secured party to commence an action to 
  foreclose any lien or security interest Lender has under the Loan 
  Documents; (ii) the validity of the Loan Documents or the 
  Obligations; or (iii) Lender's right to present and collect on 
  any letter of credit or other credit enhancement document held by 
  Lender in connection with the Obligations.
  
  	(c)  The following are excluded and excepted from the 
  limitation of liability in subsection (a) and Lender may recover 
  personally against Borrower and its general partners, if any, for 
  the following:
  (i)  all losses suffered and liabilities and expenses 
  incurred by Lender relating to any fraud or intentional 
  misrepresentation or intentional omission by Borrower or any 
  of Borrower's partners, members, officers, directors, 
  shareholders or principals in connection with (A) the 
  performance of any of the conditions to Lender making the 
  Loan; (B) any inducements to Lender to make the Loan; (C) 
  the execution and delivery of the Loan Documents; (D) any 
  certificates, representations or warranties given in 
  connection with the Loan; or (E) Borrower's performance of 
  the Obligations;
  
  (ii)  all Rents derived from the Property after a default 
  under the Loan Documents and all moneys that, on the date a 
  default occurs, are on deposit in one or more accounts used 
  by or on behalf of Borrower relating to the operation of the 
  Property, except to the extent properly applied to payment 
  of Debt Service Payments, Impositions, Insurance Premiums, 
  and any reasonable and customary expenses incurred by 
  Borrower in the operation, maintenance and leasing of the 
  Property or delivered to Lender; 
  
  (iii)  the cost of remediation of any Environmental Activity 
  affecting the Property, any diminution in the value of the 
  Property arising from any Environmental Activity affecting 
  the Property (but only to the extent attributable to the 
  Environmental Activity) and any other losses suffered and 
  liabilities and expenses incurred by Lender relating to a 
  default under the Article entitled "Environmental";
  
  (iv)  all security deposits collected by Borrower or any of 
  Borrower's predecessors and not refunded to Tenants in 
  accordance with their respective Leases, applied in 
  accordance with the Leases or Law or delivered to Lender, 
  and all advance rents collected by Borrower or any of 
  Borrower's predecessors and not applied in accordance with 
  the Leases or delivered to Lender; 
  
  (v)  the replacement cost of any Fixtures or Personal 
  Property removed from the Property after a default occurs;
  
  (vi)  all losses suffered and liabilities and expenses 
  incurred by Lender relating to any acts or omissions by 
  Borrower that result in waste (including economic and non-
  physical waste) on the Property;
  
  (vii)  all protective advances and other payments made by 
  Lender pursuant to express provisions of the Loan Documents 
  to protect Lender's security interest in the Property or to 
  protect the assignment of the property described in and 
  effected by the Assignment, but only to the extent that the 
  Rents would have been sufficient to permit Borrower to make 
  the payment and Borrower failed to do so;
  
  (viii)  all mechanic's or similar liens relating to work 
  performed on or materials delivered to the Property prior to 
  a foreclosure sale of the Property, but only to the extent 
  Lender had advanced funds to pay for the work or materials; 
  
  (ix)  all Proceeds that are not applied in accordance with 
  this Mortgage or not paid to Lender as required under this 
  Mortgage; 
  
  (x)  all losses suffered and liabilities and expenses 
  incurred by Lender relating to a Transfer that is not 
  permitted under the Section entitled "Permitted Transfers".
  
  (xi)  all losses suffered and liabilities and expenses 
  incurred by Lender relating to forfeiture or threatened 
  forfeiture of the Property to the Government; and 
  
  (xii)  all losses suffered and liabilities and expenses 
  incurred by Lender relating to any default by Borrower under 
  any of the provisions of this Mortgage relating to ERISA, 
  including the prohibition on any Transfer that results in a 
  violation of ERISA.
  
  	(d)  Nothing under subparagraph (a) above will be deemed to 
  be a waiver of any right which Lender may have under Section 
  506(a), 506(b), 1111(b) or any other provisions of the Bankruptcy 
  Code or under any other Law relating to bankruptcy or insolvency 
  to file a claim for the full amount of the Debt or to require 
  that all collateral will continue to secure all of the 
  Obligations in accordance with the Loan Documents.
  
  ARTICLE XVI
  
  WAIVERS
  
  	SECTION 16.1. WAIVER OF NOTICE.  BORROWER WAIVES THE RIGHT 
  TO RECEIVE ANY NOTICE FROM LENDER WITH RESPECT TO THE LOAN 
  DOCUMENTS EXCEPT FOR THOSE NOTICES THAT LENDER IS EXPRESSLY 
  REQUIRED TO DELIVER PURSUANT TO THE LOAN DOCUMENTS.
  
  	SECTION 16.2.  WAIVER OF MARSHALLING AND OTHER MATTERS.  
  BORROWER WAIVES THE BENEFIT OF ANY RIGHTS OF MARSHALLING OR ANY 
  OTHER RIGHT TO DIRECT THE ORDER IN WHICH ANY OF THE PROPERTY WILL 
  BE (i) SOLD; OR (ii) MADE AVAILABLE TO ANY ENTITY IF THE PROPERTY 
  IS SOLD BY POWER OF SALE OR PURSUANT TO A JUDGMENT OF FORECLOSURE 
  AND SALE.  BORROWER ALSO WAIVES THE BENEFIT OF ANY LAWS RELATING 
  TO APPRAISEMENT, VALUATION, STAY, EXTENSION, REINSTATEMENT, 
  MORATORIUM, HOMESTEAD AND EXEMPTION RIGHTS OR A SALE IN INVERSE 
  ORDER OF ALIENATION.
  
  	SECTION 16.3.  WAIVER OF TRIAL BY JURY.  BORROWER WAIVES 
  TRIAL BY JURY IN ANY PROCEEDING BROUGHT BY OR AGAINST, OR 
  COUNTERCLAIM OR CROSS-COMPLAINT ASSERTED BY OR AGAINST, LENDER 
  RELATING TO THE LOAN, THE PROPERTY DOCUMENTS OR THE LEASES.
  
  	SECTION 16.4.	WAIVER OF JUDICIAL NOTICE AND HEARING.  
  BORROWER WAIVES ANY RIGHT BORROWER MAY HAVE UNDER LAW TO NOTICE 
  OR TO A JUDICIAL HEARING PRIOR TO THE EXERCISE OF ANY RIGHT OR 
  REMEDY PROVIDED BY THE LOAN DOCUMENTS TO LENDER AND BORROWER 
  WAIVES THE RIGHTS, IF ANY, TO SET ASIDE OR INVALIDATE ANY SALE 
  DULY CONSUMMATED IN ACCORDANCE WITH THE PROVISIONS OF THE LOAN 
  DOCUMENTS ON THE GROUND (IF SUCH BE THE CASE) THAT THE SALE WAS 
  CONSUMMATED WITHOUT A PRIOR JUDICIAL HEARING.
  
  	SECTION 16.5.	WAIVER OF SUBROGATION.  BORROWER WAIVES ALL 
  RIGHTS OF SUBROGATION TO LENDER'S RIGHTS OR CLAIMS RELATED TO OR 
  AFFECTING THE PROPERTY OR ANY OTHER SECURITY FOR THE LOAN UNTIL 
  THE LOAN IS PAID IN FULL AND ALL FUNDING OBLIGATIONS UNDER THE 
  LOAN DOCUMENTS HAVE BEEN TERMINATED.
  
  	SECTION 16.6.  GENERAL WAIVER.  BORROWER ACKNOWLEDGES THAT 
  (A) BORROWER AND BORROWER'S PARTNERS, MEMBERS OR PRINCIPALS, AS 
  THE CASE MAY BE, ARE KNOWLEDGEABLE BORROWERS OF COMMERCIAL FUNDS 
  AND EXPERIENCED REAL ESTATE DEVELOPERS OR INVESTORS WHO 
  UNDERSTAND FULLY THE EFFECT OF THE ABOVE PROVISIONS; (B) LENDER 
  WOULD NOT MAKE THE LOAN WITHOUT THE PROVISIONS OF THIS ARTICLE; 
  (C) THE LOAN IS A COMMERCIAL OR BUSINESS LOAN UNDER THE LAWS OF 
  THE STATE OR COMMONWEALTH WHERE THE PROPERTY IS LOCATED, 
  NEGOTIATED BY LENDER AND BORROWER AND THEIR RESPECTIVE ATTORNEYS 
  AT ARMS LENGTH; AND (D) ALL WAIVERS BY BORROWER IN THIS ARTICLE 
  HAVE BEEN MADE VOLUNTARILY, INTELLIGENTLY AND KNOWINGLY, AFTER 
  BORROWER FIRST HAS BEEN INFORMED BY COUNSEL OF BORROWER'S OWN 
  CHOOSING AS TO POSSIBLE ALTERNATIVE RIGHTS, AND HAVE BEEN MADE AS 
  AN INTENTIONAL RELINQUISHMENT AND ABANDONMENT OF A KNOWN RIGHT 
  AND PRIVILEGE. THE FOREGOING ACKNOWLEDGMENT IS MADE WITH THE 
  INTENT THAT LENDER AND ANY SUBSEQUENT HOLDER OF THE NOTE WILL 
  RELY ON THE ACKNOWLEDGMENT.
  
  I. ARTICLE XVII
  
  NOTICES
  
  	Section 17.1.  Notices.  All acceptances, approvals, 
  consents, demands, notices, requests, waivers and other 
  communications (the "Notices") required or permitted to be given 
  under the Loan Documents must be in writing and (a) delivered 
  personally by a process server providing a sworn declaration 
  evidencing the date of service, the individual served, and the 
  address where the service was made; (b) sent by certified mail, 
  return receipt requested; or (c) delivered by nationally 
  recognized overnight delivery service providing evidence of the 
  date of delivery, with all charges prepaid, addressed to the 
  appropriate party at its address listed below:
  
  If to Lender:			Teachers Insurance and Annuity   		
  	               Association of America
  					730 Third Avenue
  					New York, New York  10017
  					Attention:  Director Portfolio
                                       Management   
    Mortgage and 
    Real Estate
  					Region: Northeast/South/Int'L
  					Application # TX-899
  					Mortgage 	  #000440000
  
  with a courtesy
  copy to:	Teachers Insurance and Annuity 
  Association of America
  					730 Third Avenue
  					New York, New York  10017
  					Attention:  Vice President and
                                       Chief Counsel
                                       Mortgage and 
                                       Real Estate Law
  					Application # TX-899
  					Mortgage 	  #000440000
  
  If to Borrower:		Parkway Properties LP
  					c/o Parkway Properties, Inc.
  					188 East Capitol Street
  					Suite 1000
  					Jackson, Mississippi  39201
  					Attention:  Sarah P. Clark
  					TIAA Appl. # TX-899
  					Mortgage   #000440000
  
  with a courtesy
  copy to:	Forman Perry Watkins
  					Krutz & Tardy, PLLC
  					188 East Capitol Street
  					Suite 1200
  					Jackson, Mississippi  39201
  					Attention:  Steven M. Hendrix 
                                       Esquire
  					TIAA Appl. # TX-899
  					Mortgage   #000440000
  
  Lender and Borrower each may change from time to time the address 
  to which Notices must be sent, by notice given in accordance with 
  the provisions of this Section.  All Notices given in accordance 
  with the provisions of this Section will be deemed to have been 
  given on the earliest of (i) actual receipt; (ii) Borrower's 
  rejection of delivery; or (iii) 3 Business Days after having been 
  deposited in any mail depository regularly maintained by the 
  United States postal service, if sent by certified mail, or 1 
  Business Day after having been deposited with a nationally 
  recognized overnight delivery service, if sent by overnight 
  delivery or on the date of personal service, if served by a 
  process server.
  
  	Section 17.2.	Change in Borrower's Name or Place of 
  Business.  Borrower will immediately notify Lender in writing of 
  any change in Borrower's name or the place of business set forth 
  in the beginning of this Mortgage.
  
  ARTICLE XVIII
  
  MISCELLANEOUS
  
  	Section 18.1.	Applicable Law.  This Mortgage is to be  
  governed by and to be construed in accordance with the Laws of 
  the State or Commonwealth in which the Property is located 
  without regard to conflict of law provisions.
  
  	Section 18.2.  Usury Limitations.  Borrower and Lender 
  intend to comply with all Laws with respect to the charging and 
  receiving of interest.  Any amounts charged or received by Lender 
  for the use or forbearance of the Principal to the extent 
  permitted by Law, will be amortized and spread throughout the 
  Term until payment in full so that the rate or amount of interest 
  charged or received by Lender on account of the Principal does 
  not exceed the Maximum Interest Rate.  If any amount charged or 
  received under the Loan Documents that is deemed to be interest 
  is determined to be in excess of the amount permitted to be 
  charged or received at the Maximum Interest Rate, the excess will 
  be deemed to be a prepayment of Principal when paid, without 
  premium, and any portion of the excess not capable of being so 
  applied will be refunded to Borrower.  If during the Term the 
  Maximum Interest Rate, if any, is eliminated, then for the 
  purposes of the Loan, there will be no Maximum Interest Rate.
  
  	Section 18.3.  Lender's Discretion.  Wherever under the Loan 
  Documents any matter is required to be satisfactory to Lender, 
  Lender has the right to approve or determine any matter or Lender 
  has an election, Lender's approval, determination or election 
  will be made in Lender's reasonable discretion unless expressly 
  provided to the contrary.
  
  	Section 18.4.  Unenforceable Provisions.  If any provision 
  in the Loan Documents is found to be illegal or unenforceable or 
  would operate to invalidate any of the Loan Documents, then the 
  provision will be deemed expunged and the Loan Documents will be 
  construed as though the provision was not contained in the Loan 
  Documents and the remainder of the Loan Documents will remain in 
  full force and effect.
  
  	Section 18.5.  Survival of Borrower's Obligations.  Unless 
  expressly released by Lender, Borrower's representations, 
  warranties and covenants contained in the Loan Documents will 
  continue in full force and effect and survive (i) satisfaction of 
  the Obligations; (ii) release of the lien of this Mortgage; (iii) 
  assignment or other transfer of all or any portion of Lender's 
  interest in the Loan Documents or the Property; (iv) Lender's 
  exercise of any of the Remedies or any of Lender's other rights 
  under the Loan Documents; (v) a Transfer; (vi) amendments to the 
  Loan Documents; and (vii) any other act or omission that might 
  otherwise be construed as a release or discharge of Borrower.
  
  	Section 18.6.  Relationship Between Borrower and Lender; No 
  Third Party Beneficiaries.  
  
  	(a)	Lender is not a partner of or joint venturer with 
  Borrower or any other entity as a result of the Loan or Lender's 
  rights under the Loan Documents; the relationship between Lender 
  and Borrower is strictly that of creditor and debtor.  Each Loan 
  Document is an agreement between the parties to that Loan 
  Document for the mutual benefit of the parties and no entities 
  other than the parties to that Loan Document will be a third 
  party beneficiary or will have any claim against Lender or 
  Borrower by virtue of the Loan Document.  As between Lender and 
  Borrower, any actions taken by Lender under the Loan Documents 
  will be taken for Lender's protection only, and Lender has not 
  and will not be deemed to have assumed any responsibility to 
  Borrower or to any other entity by virtue of Lender's actions.
  
  	(b)	All conditions to Lender's performance of its 
  obligations under the Loan Documents are imposed solely for the 
  benefit of Lender.  No entity other than Lender will have 
  standing to require satisfaction of the conditions in accordance 
  with their provisions or will be entitled to assume that Lender 
  will refuse to perform its obligations in the absence of strict 
  compliance with any of the conditions.
  
  	Section 18.7.  Partial Releases; Extensions; Waivers.  
  Lender may: (i) release any part of the Property or any entity 
  obligated for any of the Obligations; (ii) extend the time for 
  payment or performance of any of the Obligations or otherwise 
  amend the provisions for payment or performance by agreement with 
  any entity that is obligated for the Obligations or that has an 
  interest in the Property; (iii) accept additional security for 
  the payment and performance of the Obligations; and (iv) waive 
  any entity's performance of an Obligation, release any entity or 
  individual now or in the future liable for the performance of the 
  Obligation or waive the exercise of any Remedy or option.  Lender 
  may exercise any of the foregoing rights without notice, without 
  regard to the amount of any consideration given, without 
  affecting the priority of the Loan Documents, without releasing 
  any entity not specifically released from its obligations under 
  the Loan Documents, without releasing any guarantor(s) or 
  surety(ies) of any of the Obligations, without effecting a 
  novation of the Loan Documents and, with respect to a waiver, 
  without waiving future performance of the Obligation or exercise 
  of the Remedy waived.
  
  	Section 18.8.  Service of Process.  Borrower irrevocably 
  consents to service of process by registered or certified mail, 
  postage prepaid, return receipt requested, to Borrower at its 
  address set forth in the Article entitled "Notices".
  
  	Section 18.9.  Entire Agreement.  Oral agreements or 
  commitments between Borrower and Lender to lend money, to extend 
  credit or to forbear from enforcing repayment of a debt, 
  including promises to extend or renew the debt, are not 
  enforceable.  Any agreements between Borrower and Lender relating 
  to the Loan are contained in the Loan Documents, which contain 
  the complete and exclusive statement of the agreements between 
  Borrower and Lender, except as Borrower and Lender may later 
  agree in writing to amend the Loan Documents.  The language of 
  each Loan Document will be construed as a whole according to its 
  fair meaning and will not be construed against the draftsman.
  
  	Section 18.10.  No Oral Amendment.  The Loan Documents may 
  not be amended, waived or terminated orally or by any act or 
  omission made individually by Borrower or Lender but may be 
  amended, waived or terminated only by a written document signed 
  by the party against which enforcement of the amendment, waiver 
  or termination is sought.
  
  	Section 18.11.  Severability.  The invalidity, illegality or 
  unenforceability of any provision of any of the Loan Documents 
  will not affect any other provisions of the Loan Documents, which 
  will be construed as if the invalid, illegal or unenforceable 
  provision never had been included.
  
  	Section 18.12.  Covenants Run with the Land.  Subject to the 
  restrictions on transfer contained in the Article entitled 
  "TRANSFERS, LIENS AND ENCUMBRANCES", all of the covenants of this 
  Mortgage and the Assignment run with the Land, will bind all 
  parties hereto and all tenants and subtenants of the Land or the 
  Improvements and their respective heirs, executors, 
  administrators, successors and assigns, and all occupants and 
  subsequent owners of the Property, and will inure to the benefit 
  of Lender and all subsequent holders of the Note and this 
  Mortgage.
  
  	Section 18.13.  Time of the Essence.  Time is of the essence 
  with respect to Borrower's payment and performance of the 
  Obligations.
  
  	Section 18.14.  Subrogation.  If the Principal or any other 
  amount advanced by Lender is used directly or indirectly to pay 
  off, discharge or satisfy all or any part of an encumbrance 
  affecting the Property, then Lender is subrogated to the 
  encumbrance and to any security held by the holder of the 
  encumbrance, all of which will continue in full force and effect 
  in favor of Lender as additional security for the Obligations.
  
  	Section 18.15.	 Joint and Several Liability.  If Borrower 
  consists of more than one person or entity, the obligations and 
  liabilities of each such person or entity under this Mortgage are 
  joint and several.  
  
  	Section 18.16.  Successors and Assigns.  The Loan Documents 
  bind the parties to the Loan Documents and their respective 
  successors, assigns, heirs, administrators, executors, agents and 
  representatives and inure to the benefit of Lender and its 
  successors, assigns, heirs, administrators, executors, agents and 
  representatives.
  
  	Section 18.17.  Duplicates and Counterparts.  Duplicate  
  counterparts of any Loan Documents, other than the Note, may be 
  executed and together will constitute a single original document.  
  ARTICLE XIX
  
  ADDITIONAL PROVISIONS PERTAINING TO STATE LAWS
  
  	IN WITNESS WHEREOF, Borrower has executed and delivered this 
  Mortgage as of the date first set forth above.
  
  	PARKWAY PROPERTIES LP, a Delaware limited partnership
  
  By: Parkway Properties General Partners, 
  Inc. a Delaware corporation, its 
  sole general partner, a Delaware 
  corporation
  
  					By:	
  					Name:   James M. Ingram
  				     Title:  Senior Vice President
  
  					By:	
  					     Name:   Sarah P. Clark
                                Title:  Senior Vice President,
  							   CFO, Treasurer & 
  							   Secretary
  
  Appropriate witnesses
  and acknowledgments to be attached
  
  Exhibit A
  
  LEGAL DESCRIPTION
  
  Exhibit B
  
  DEFINITIONS
  
  "Acceleration" is defined in Section 14.2(a)(i).
  
  "Accumulations" is defined in Section 2.1(xii).
  
  "Accumulations Depositary" is defined in Section 6.2(a).
  
  "Additional Funds" is defined in Section 7.4(v).
  
  "Allocated Loan Value" is defined as that portion of the 
  Principal allocated by Lender to the Property, as set forth in 
  Exhibit E hereto, as the same may be modified from time to time 
  by Lender to reflect releases, substitutions and repayments.
  
  "Assessments" is defined as all assessments now or hereafter 
  levied, assessed or imposed against the Property.
  
  "Assignment" is defined as the Assignment of Leases and Rents 
  dated of even date with this Mortgage made by Borrower for the 
  benefit of Lender.
  
  "Bankruptcy Code" means Title 11 of the United States Code.
  
  "Borrower" is defined in the introductory paragraph.
  
  "Business Days" is defined as any day on which commercial banks 
  are not authorized or required by Law to close in New York, New 
  York.
  
  "Casualty" is defined as damage to or destruction of the Property 
  by fire or other casualty.
  
  "Code" is defined as the Internal Revenue Code of 1986 and the 
  regulations promulgated thereunder.
  
  "Commitment" is defined as that certain Loan Application and 
  Commitment Agreement between Borrower and Lender, as the same may 
  be amended in writing from time to time.
  
  "Company" is defined in Section 10.1.
  
  "Condemnation" is defined as the permanent or temporary taking of 
  all or any portion of the Property, or any interest therein or 
  right accruing thereto, by the exercise of the right of eminent 
  domain (including any transfer in lieu of or in anticipation of 
  the exercise of the right), inverse condemnation or any similar 
  injury or damage to or decrease in the value of the Property, 
  including severance and change in the grade of any streets 
  
  "Condemnation Awards" is defined in Section 2.1(viii).
  
  "Condemnation Proceeding" is defined as a Proceeding that could 
  result in a Condemnation.
  
  "Consolidated Subsidiary" of a Person shall mean, at any time, 
  any Subsidiary or other entity the accounts of which would in 
  accordance with GAAP be consolidated with those of such Person in 
  its consolidated financial statements as of such time
  
  "CPA" is defined as an independent certified public accountant 
  satisfactory to Lender.
  
  "Debt" is defined in Section 3.1.
  
  "Debt Service Coverage Ratio" means the Net Operating Income of 
  the Property divided by the scheduled annual Debt Service 
  Payments.
  
  "Debt Service Payments" is defined as that portion of the monthly 
  installments of principal and interest payable by Borrower to 
  Lender, as set forth in the Note, allocated to the Property based 
  upon the ratio of the Allocated Loan Value to the Principal.
  
  "Default Interest Rate" is defined as the lower of 11.945% per 
  annum or the Maximum Interest Rate, if any.
  
  "Destruction Event" is defined in Section 7.4.
  
  "Environmental Activity" is defined as any actual, suspected or 
  threatened abatement, cleanup, disposal, generation, handling, 
  manufacture, possession, release, remediation, removal, storage, 
  transportation, treatment or use of any Hazardous Material.  The 
  actual, suspected or threatened presence of any Hazardous 
  Material or the actual, suspected or threatened noncompliance 
  with any Environmental Laws, will be deemed Environmental 
  Activity.
  
  "Environmental Laws" is defined as all Laws pertaining to health, 
  safety, protection of the environment, natural resources, 
  conservation, wildlife, waste management, Environmental 
  Activities and pollution.
  
  "Environmental Report" is defined as the report prepared by 
  ___________, dated __________, as amended.
  
  "ERISA" is defined in Section 8.3(a).
  
  "Event of Default" is defined in Section 14.1.
  
  "Existing General Partner" is defined in Section 12.1(b).
  
  "Existing Limited Partners" is defined in Section 12.1(b).
  
  "Expenses" is defined in Section 11.1(a).
  
  "Financial Books and Records" is defined as detailed accounts of 
  the income and expenses of the Property and of Borrower and all 
  other data, records and information that either are specifically 
  referred to in the Article entitled "FINANCIAL REPORTING" or are 
  necessary to the preparation of any of the statements, reports or 
  certificates required under such Article and includes all 
  supporting schedules prepared or used by the CPA in auditing the 
  financial statements required to be delivered pursuant to Article 
  10 hereof or in issuing its opinion.
  
  "Fiscal Year" is defined as any calendar year or partial calendar 
  year during the Term.
  
  "Fixed Interest Rate" is defined as 6.945% per annum.
  
  "Fixtures and Personal Property" is defined in Section 2.1(iv).
  
  "Government" is defined as any federal, state or municipal 
  governmental or quasi-governmental authority including any 
  executive, legislative or judicial branch and any division, 
  subdivision or agency of any of them and any entity to which any 
  of them has delegated authority.
  
  "Hazardous Materials" is defined as any by-product, chemical, 
  compound, contaminant, pollutant, product, substance, waste or 
  other material (i) that is hazardous or toxic or (ii) the 
  abatement, cleanup, discharge, disposal, emission, exposure to, 
  generation, handling, manufacture, possession, presence, release, 
  removal, remediation, storage, transportation, treatment or use 
  of which is controlled, prohibited or regulated by any 
  Environmental Laws, including asbestos, petroleum and petroleum 
  products and polychlorinated biphenyls.
  
  "Imposition Penalty Date" is defined in Section 6.1(a). 
  
  "Impositions" is defined as all Taxes, Assessments, ground rent, 
  if any, water and sewer rents, fees and charges, levies, permit, 
  inspection and license fees and other dues, charges or 
  impositions, including all charges and license fees for the use 
  of vaults, chutes and similar areas adjoining the Land, 
  maintenance and similar charges and charges for utility services, 
  in each instance whether now or in the future, directly or 
  indirectly, levied, assessed or imposed on the Property or 
  Borrower and whether levied, assessed or imposed as excise, 
  privilege or property taxes. 
  
  "Improvements" is defined in Section 2.1(ii).
  
  "Insurance Premiums" is defined as all present and future 
  premiums and other charges due and payable on policies of fire, 
  rental value and other insurance covering the Property and 
  required pursuant to the provisions of this Mortgage.
  
  "Insurance Proceeds" is defined in Section 2.1(ix).
  
  "Insurers" is defined in Section 7.1(c).
  
  "Institutional Investor" is defined as any bank, savings 
  institution, charitable foundation, insurance company, real 
  estate investment trust, pension fund or investment advisor 
  registered under the Investment Advisors Act of 1940, as amended, 
  and acting as trustee or agent.
  
  "Interest" is defined as the fixed interest payable under the 
  Note at the Fixed Interest Rate and any other sums which are 
  deemed to be interest under Law, including, without limitation, 
  interest at the Default Interest Rate, to the extent applicable.
  
  "Land" is defined in the Recitals.
  
  "Law" is defined as all present and future codes, constitutions, 
  cases, opinions, rules, manuals, regulations, determinations, 
  laws, orders, ordinances, requirements and statutes, as amended, 
  of any Government that affect or that may be interpreted to 
  affect the Property, Borrower or the Loan, including amendments 
  and all guidance documents and publications promulgated 
  thereunder.
  
  "Leases" is defined as all present and future leases, subleases, 
  licenses, and other agreements for the use and occupancy of the 
  Land and Improvements, any related guarantees and any use and 
  occupancy arrangements created pursuant to Section 365(h) of the 
  Bankruptcy Code or otherwise in connection with the commencement 
  or continuation of any bankruptcy, reorganization, arrangement, 
  insolvency, dissolution, receivership or similar Proceedings, or 
  any assignment for the benefit of creditors, in respect of any 
  tenant or other occupant of the Land and Improvements.
  
  "Lender" is defined in the introductory paragraph.
  
  "Loan" is defined in the Recitals.
  
  "Loan Documents" is defined as the Note, this Mortgage, the 
  Assignment and all documents now or hereafter executed by 
  Borrower or held by Lender relating to the Loan, including all 
  amendments and including that certain Conversion and Note 
  Agreement of even date herewith between Borrower and Lender.
  
  "Loan to Value Ratio" is defined as the ratio, expressed as a 
  decimal number, of the outstanding principal of the Loan at the 
  time of determination to the aggregate of the values of all real 
  property collateral securing the Loan at the time of 
  determination established by the appraisal (complying with the 
  Lender's appraisal requirements) most recently delivered to 
  Lender.
  
  "Major Lease" is defined as:  (i) a lease of any full floor in a 
  building; (ii) a lease to any one of the following Tenants:  
  ___________; (iii) a lease demising, in the aggregate, 25,000 
  square feet or more of rentable square feet; (iv) a lease 
  representing 10% or more of rentable square feet of a building or 
  50% or more of the gross revenues of any building.
  
  "Maturity Date" is defined in the Recitals.
  
  "Maximum Interest Rate" is defined as the maximum rate of 
  interest, if any, permitted by Law as of the date of this 
  Mortgage to be charged with respect to the Loan.
  
  "Mortgage" is defined as this Mortgage, Assignment of Leases and 
  Rents, Security Agreement and Fixture Filing Statement.
  
  "Net Operating Income" means (a) the total annual gross rental 
  income as determined by the most recent rent roll of the 
  Property, plus other income received during the most recent 12 
  month period, less (b) actual operating expenses for the most 
  recent 12 month period, including a management fee not to exceed 
  3% of total annual gross revenue, and excluding depreciation and 
  capital expenditures.
  
  "Note" is defined in the Recitals.
  
  "Note Agreement" is defined in Section 10.1(b).
  
  "Note Payments" is defined in the Note.
  
  "Notices" is defined in Section 17.1.
  
  "Obligations" is defined in Section 3.1.
  
  "Permitted Exceptions" is defined as the matters shown in 
  Schedule B, Part 1 and 2 of the title insurance policy insuring 
  the lien of this Mortgage.
  
  "Permitted Transfers" is defined in Section 12.2(b).
  "Permitted Use" is defined as use as a first-class commercial 
  office building and uses incidentally and directly related to 
  such use.
  
  "Person" shall mean natural persons, corporations, limited 
  partnerships, general partnerships, limited liability companies, 
  joint stock companies, joint ventures, associations, companies, 
  trusts, banks, trust companies, land trusts, business trusts or 
  other organizations, whether or not legal entities, and 
  governments and agencies and political subdivisions thereof
  
  "Policies" is defined in Section 7.1(b).
  
  "Principal" is defined in the Recitals.
  
  "Proceeding" is defined as a pending or threatened action, claim 
  or litigation before a legal, equitable or administrative 
  tribunal having proper jurisdiction.
  
  "Proceeds" is defined in Section 7.2(c).
  
  "Property" is defined in Section 2.1.
  
  "Property Documents" is defined in Section 2.1(v). 
  
  "Receiver" is defined as a receiver, custodian, trustee, 
  liquidator or conservator of the Property.
  
  "Remedies" is defined in Section 14.2(a).
  
  "Rents" is defined as all rents, prepaid rents, percentage, 
  participation or contingent rents, issues, profits, proceeds, 
  revenues and other consideration accruing under the Leases or 
  otherwise derived from the use and occupancy of the Land or the 
  Improvements, including tenant contributions to expenses, 
  security deposits, royalties and contingent rent, if any, all 
  other fees or payments paid to or for the benefit of Borrower and 
  any payments received pursuant to Section 502(b) of the 
  Bankruptcy Code or otherwise in connection with the commencement 
  or continuance of any bankruptcy, reorganization, arrangement, 
  insolvency, dissolution, receivership or similar proceedings, or 
  any assignment for the benefit of creditors, in respect of any 
  tenant or other occupant of the Land or the Improvements and all 
  claims as a creditor in connection with any of the foregoing.
  
  "Reserves" is defined in Section 2.1(xiv).
  
  "Restoration" is defined as the restoration of the Property after 
  a Destruction Event to substantially its condition immediately 
  prior to the Destruction Event, in accordance with the plans and 
  specifications, in a first-class workmanlike manner using 
  materials substantially equivalent in quality and character to 
  those used for the original improvements, in accordance with Law 
  and free and clear of all liens, encumbrances or other charges 
  other than this Mortgage and the Permitted Exceptions.
  
  "Restoration Completion Date" is defined in Section 7.4(viii).  
  
  "Subsidiary" shall mean, with respect to any Person, any 
  corporation, association or other business entity of which more 
  than 50% of the total voting power of shares of stock (or 
  equivalent ownership or controlling interest) entitled (without 
  regard to the occurrence of any contingency) to vote in the 
  election of directors, managers or trustees thereof is at the 
  time owned or controlled, directly or indirectly, by that Person 
  or one or more of the other Subsidiaries of that Person or a 
  combination thereof.
  
  "Substitute Collateral" is defined in Section 12.5.
  
  "Tax Agreement" is defined as that certain Real Estate Tax Escrow 
  and Security Agreement of even date herewith among Borrower, 
  Lender and Deposit Guaranty National Bank as "Escrowee".
  
  "Taxes" is defined as all present and future real estate taxes 
  levied, assessed or imposed against the Property.
  
  "Term" is defined as the scheduled term of this Mortgage 
  commencing on the date Lender makes the first disbursement of the 
  Loan and terminating on the Maturity Date.
  
  "Transfer" is defined in Section 12.1(a).
  
  "Uniform Commercial Code" is defined as the Uniform Commercial 
  Code in effect in the jurisdiction where the Land is located.
  
  Exhibit C
  
  RULES OF CONSTRUCTION
  
  	(a)  References in any Loan Document to numbered Articles or 
  Sections are references to the Articles and Sections of that Loan 
  Document.  References in any Loan Document to lettered Exhibits 
  are references to the Exhibits attached to that Loan Document, 
  all of which are incorporated in and constitute a part of that 
  Loan Document.  Article, Section and Exhibit captions used in any 
  Loan Document are for reference only and do not describe or limit 
  the substance, scope or intent of that Loan Document or the 
  individual Articles, Sections or Exhibits of that Loan Document.
  
  	(b)  The terms "include", "including" and similar terms are 
  construed as if followed by the phrase "without limitation".
  
  	(c)  The terms "Land", "Improvements", "Fixtures and 
  Personal Property", "Condemnation Awards", "Insurance Proceeds" 
  and "Property" are construed as if followed by the phrase "or any 
  part thereof".
  
  	(d)  Any agreement by or duty imposed on Borrower in any 
  Loan Document to perform any obligation or to refrain from any 
  act or omission constitutes a covenant running with the ownership 
  or occupancy of the Land and the Improvements, which will bind 
  all parties hereto and their respective successors and assigns, 
  and all lessees, subtenants and assigns of same, and all 
  occupants and subsequent owners of the Property, and will inure 
  to the benefit of Lender and all subsequent holders of the Note 
  and this Mortgage and includes a covenant by Borrower to cause 
  its partners, members, principals, agents, representatives and 
  employees to perform the obligation or to refrain from the act or 
  omission in accordance with the Loan Documents.  Any statement or 
  disclosure contained in any Loan Document about facts or 
  circumstances relating to the Property, Borrower or the Loan 
  constitutes a representation and warranty by Borrower made as of 
  the date of the Loan Document in which the statement or 
  disclosure is contained.
  
  	(e)  The term "to Borrower's knowledge" is construed as 
  meaning to the best of Borrower's knowledge after diligent 
  inquiry.
  
  	(f)  The singular of any word includes the plural and the 
  plural includes the singular.  The use of any gender includes all 
  genders.
  
  	(g)  The terms "person", "party" and "entity" include 
  natural persons, firms, partnerships, limited liability companies 
  and partnerships, corporations and any other public or private 
  legal entity.
  
  	(h)  The term "provisions" includes terms, covenants, 
  conditions, agreements and requirements.
  
  	(i)  The term "amend" includes modify, supplement, renew, 
  extend, replace or substitute and the term "amendment" includes 
  modification, supplement, renewal, extension, replacement and 
  substitution.
  
  	(j)  Reference to any specific Law or to any document or 
  agreement, including the Note, this Mortgage, any of the other 
  Loan Documents, the Leases and the Property Documents includes 
  any future amendments to the Law, document or agreement, as the 
  case may be.
  
  	(k)  No inference in favor of or against a party with 
  respect to any provision in any Loan Document may be drawn from 
  the fact that the party drafted the Loan Document.
  
  	(l)  The term "certificate" means the sworn, notarized 
  statement of the entity giving the certificate, made by a duly 
  authorized person satisfactory to Lender affirming the truth and 
  accuracy of every statement in the certificate.  Any document 
  that is "certified" means the document has been appended to a 
  certificate of the entity certifying the document that affirms 
  the truth and accuracy of everything in the document being 
  certified.  In all instances the entity issuing a certificate 
  must be satisfactory to Lender.
  
  	(m)	Any appointment of Lender as Borrower's attorney-in-
  fact is irrevocable and coupled with an interest.  Lender may 
  appoint a substitute attorney-in-fact.  Borrower ratifies all 
  actions taken by the attorney-in-fact but, nevertheless, if 
  Lender requests, Borrower will specifically ratify any action 
  taken by the attorney-in-fact by executing and delivering to the 
  attorney-in-fact or to any entity designated by the attorney-in-
  fact all documents necessary to effect the ratification.
  
  	(n)  Any document, instrument or agreement to be delivered 
  by Borrower will be in form and content satisfactory to Lender.
  
  	(o)  All obligations, rights, remedies and waivers contained 
  in the Loan Documents will be construed as being limited only to 
  the extent required to be enforceable under the Law.
  
  	(p)  The unmodified word "days" means calendar days.
  
  Exhibit D
  
  Property Documents
  
  	Those documents set forth within the policy of title 
  insurance for the Property issued to Lender in connection with 
  the granting of the Loan.
  
  	Management and leasing agreements between the Borrower and 
  various affiliates of Borrower, which may be canceled upon 30 
  days notice or less.
  
  Exhibit E
  
  Allocated Loan Values
  
  Appl. #
  
  Mortgage #
  
  Property
  
  Location
  Allocated
  Loan Amount
  TX-899
  000440000
  One Sugar Creek Ctr.
  One Commerce Green
  Houston, TX
  Houston, TX
  $14,343,000
   20,912,000
  $35,255,000
  FL-899
  000441900
  Hillsboro 5
  Hillsboro 1-4
  Ft. Lauderdale, FL
  Ft. Lauderdale, FL
     8,710,000
    5,525,000 
  $14,235,000
  VA-387
  000442000
  Glen Forest Building
  Moorefield II
  Moorefield III
  Lynwood Plaza
  Loudoun Plaza One
  Greenbrier Towers I & II
  Richmond, VA
  Richmond, VA
  Richmond, VA
  Virginia Beach, VA
  Sterling, VA
  Greenbrier, VA
     4,745,000
     2,672,000
     3,109,000
     5,154,000
     5,427,000
    10,529,000
   $31,636,000
  TN-145
  000442100
  Executive Tower I
  Knoxville, TN
     5,384,000
  SC-74
  000442200
  The Provident Building
  Greenville, SC
     2,885,000
  NC-190
  000448000
  Charlotte Park Exec. Ctr.
  Charlotte, NC
     7,605,000
  
       TOTAL PORTFOLIO
  
   $97,000,000
  
  Schedule 1
  
  Personal Property
  
  [See Attached]
  
  TIAA Appl. # FL-889;	M-000441900
  TIAA Appl. # NC-190;  	M-000448000
  TIAA Appl. # SC-74;  	M-000442200
  TIAA Appl. # TN-145;  	M-000442100			
  TIAA Appl. # TX-899;  	M-000440000
  TIAA Appl. # VA-387;  	M-000442000		
  
  CONVERSION AND NOTE AGREEMENT
  
  	This CONVERSION AND NOTE AGREEMENT (the "Agreement") dated 
  as of June 30, 1998, between PARKWAY PROPERTIES LP, a Delaware 
  limited partnership (the "Borrower"), PARKWAY PROPERTIES, INC., a 
  Maryland corporation (the "Company") and TEACHERS INSURANCE AND 
  ANNUITY ASSOCIATION OF AMERICA, a New York corporation 
  ("Lender");
  
  W I T N E S S E T H:
  
  	WHEREAS, pursuant to that certain Loan Application and 
  Commitment Agreement between Borrower, Company and Lender (as 
  amended from time to time, the "Commitment"), Lender has agreed 
  to make a loan to Borrower in the amount of $97,000,000 subject 
  to the terms and conditions set forth in the Commitment (the 
  "Loan");
  
  	WHEREAS, the Borrower has executed and delivered to Lender a 
  promissory note (the "Note"), dated the date hereof in the amount 
  of $97,000,000, which Note is secured by first priority liens on 
  those certain projects commonly known as; One Sugar Creek Center, 
  Sugar Land, TX, One Commerce Green, Houston, TX, Greenbrier I and 
  II, Chesapeake, VA, Charlotte Park Executive Center, Charlotte,  
  NC, Hillsboro 1-4, Deerfield Beach, FL, Hillsboro Center 5, 
  Deerfield Beach, FL, Glen Forest Building, Richmond, VA, 
  Moorefield II, Richmond, VA, Moorefield III, Richmond, VA, 
  Loudoun Plaza One, Sterling, VA, Executive Tower I, Knoxville, 
  TN, Healthsource Building, Greenville, SC, Lynnwood Plaza, 
  Virginia Beach, VA, (collectively, the "Properties");
  
  	WHEREAS, in order to secure the payment of the Note, 
  interest on the Note and all other indebtedness owed by Borrower 
  to Lender, as evidenced by the Note, Borrower has executed and 
  delivered to Lender certain mortgages, deeds of trust and deeds 
  to secure debt (collectively, the "Mortgages") encumbering the 
  Properties;
  
  	WHEREAS, pursuant to the Commitment and this Agreement, 
  Borrower has the one-time right, subject to certain terms and 
  conditions, to convert the Loan (or one-half of the Loan as 
  determined in accordance with Section 2.02 hereof) to an 
  unsecured obligation of Borrower (the "Conversion Option"); and
  
  	WHEREAS, Borrower and Lender desire to set forth the terms 
  and conditions of the Conversion Option and the Company and 
  Borrower are willing to make the representations, warranties and 
  covenants set forth herein and the Company, under the 
  circumstances specified in Section 10.01, is willing to become 
  liable, jointly and severally with Borrower, for the amounts 
  outstanding in respect of the Unsecured Note (as described in 
  Article Two hereof); 
  
  	NOW THEREFORE, the parties hereto hereby agree as follows:
  
  ARTICLE ONE
  
  Section 1.01. Certain Defined Terms.  The following terms used in 
  this Agreement shall have the following meanings:
  
  (a) 		"Affiliate" shall mean, as to any Person, any 
  other Person (other than Lender): (a) directly or indirectly 
  controlling, controlled by, or under common control with, such 
  first Person; (b) directly or indirectly owning or holding ten 
  percent (10%) or more of any equity interest in such first 
  Person; or (c) ten percent (10%) or more of whose voting stock or 
  other equity interest is directly or indirectly owned or held by 
  such first Person.  For purposes of this definition, "control" 
  (including with correlative meanings, the terms "controlling", 
  "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 a Person, whether 
  through the ownership of voting securities or by contract or 
  otherwise.
  
  (a) 		"Business Day" means any day excluding Saturday, 
  Sunday and any day which is a legal holiday under the laws of the 
  State of New York, or is a day on which national banking 
  institutions located in such State are closed.
  
  (a) 		"CADS" (Cash Available for Debt Service) of a 
  Person for any period shall be calculated based upon the 
  consolidated financial statements of such Person, prepared in 
  accordance with GAAP, and shall be equal to net income (loss) 
  before adjustment for minority interest and extraordinary items 
  of such Person for such period, adjusted by the following items 
  as reflected in such consolidated financial statements:
  
  		(i)		Add interest expense as reflected 
  in such Person's consolidated financial 
  statements;
  
  		(ii)		Add depreciation and amortization;
  
    	(iii)	Add non-recurring losses and less 
  non-recurring gains, identified as such in such 
  Person's consolidated financial statements, 
  without duplication;
  
  		(iv)		Less capital expenditures made to 
  existing properties (except capitalized capital 
  expenditures anticipated at the time of the 
  purchase of a Property) not funded from 
  reserves;
  
  		(v)		Less cash deposits to required 
  reserves not otherwise expensed; and
  
  		(vi)		Less net revenue from any 
  cancelable service contracts with third-parties.
  
  (a) 		"Consolidated Net Worth" of a Person at any time 
  shall mean the aggregate of accumulated depreciation and 
  accumulated amortization and all amounts that would be included 
  under shareholders' or partners' equity and minority interests on 
  a consolidated balance sheet of such Person prepared in 
  accordance with GAAP.
  
  (a) 		"Consolidated Subsidiary" of a Person shall mean, 
  at any time, any Subsidiary or other entity the accounts of which 
  would in accordance with GAAP be consolidated with those of such 
  Person in its consolidated financial statements as of such time.
  
  (a) 		"Debt" of a Person at any time shall mean total 
  debt (not to include minority interests) shown on such Person's 
  consolidated financial statements as prepared and classified in 
  accordance with GAAP.
  
  (a) 		"Debt Service" of a Person shall mean the maximum 
  amount of interest on, and required amortization of principal of, 
  Debt of such Person which, in accordance with the instruments 
  evidencing the same, is scheduled to become payable (not to 
  include interest payable from a reserve, the funding of which was 
  reflected in the calculation of CADS of such Person) in the 
  period of 12 consecutive calendar months following the date for 
  which it is being determined.  For purposes of this calculation, 
  the applicable interest rates shall take into account any 
  interest rate swap, cap or other interest rate management 
  agreement in effect. Interest on floating rate debt shall be 
  calculated at its then current rate, increasing at the rate of 
  0.5% per quarter during the period for which the calculation of 
  Debt Service is being performed, not to exceed any interest rate 
  cap in place during the twelve-month period.  The amounts payable 
  for amortization shall include the amount of any sinking fund or 
  other analogous fund for the retirement of Debt of such Person, 
  and the amount payable on account of principal on any such Debt 
  which matures serially other than at the final maturity of such 
  Debt.
  
  (a) 		"Default" shall mean an event which, with notice 
  or lapse of time or both, would constitute an Event of Default if 
  that event or condition were not cured or removed within any 
  applicable grace period.
  
  (a) 		"Encumbrance" means any mortgage, lien (excluding 
  ad valorem taxes that are not yet due and payable), charge, 
  pledge, encumbrance or security interest.
  
  (a) 		"Environmental Law" means any present or future 
  federal, state or local law, rule, regulation or order relating 
  to pollution, waste, disposal or the protection of human health 
  or safety, plant life or animal life, natural resources or the 
  environment. 
  
  (a) 		"Event of Default" shall have the meaning provided 
  in Section 6.01.
  
  (a) 		"Exchange Act" means the Securities and Exchange 
  Act of 1934, as amended.
  
  (a) 		"GAAP" shall mean generally accepted accounting 
  principles, consistently applied, set forth in the opinions and 
  pronouncements of the Accounting Principles Board of the American 
  Institute of Certified Public Accountants and statements and 
  pronouncements of the Financial Accounting Standards Board that 
  are applicable to the circumstances as of the date of 
  determination.
  
  (a) 		"Hazardous Material" means all or any of the 
  following: (a) substances that are defined or listed in, or 
  otherwise classified pursuant to, any Environmental Laws or 
  regulations as "hazardous substances," "hazardous materials," 
  "hazardous wastes," "toxic substances" or any other formulation 
  intended to define, list or classify substances by reason of 
  deleterious properties such as ignitability, corrosivity, 
  reactivity, carcinogenicity, reproductive toxicity or "EP 
  toxicity"; (b) oil, petroleum or petroleum derived substances, 
  natural gas, natural gas liquids or synthetic gas and drilling 
  fluids, produced waters and other wastes associated with the 
  exploration, development or production of crude oil, natural gas 
  or geothermal resources; (c) any flammable substances or 
  explosives or any radioactive materials; and (d) asbestos in any 
  form or electrical equipment which contains any oil or dielectric 
  fluid containing levels of polychlorinated biphenyls in excess of 
  fifty parts per million.
  
  (a) 		"Loan Documents" shall mean,  the Note, the 
  Mortgages, the Assignments of Leases and Rents relating to the 
  Properties, and all other documents now or hereafter executed by 
  Borrower or held by Lender relating to the Loan, including all 
  amendments, but excluding this Agreement and the Unsecured Note 
  described in Article Two below.
  
  (a) 		"Loan Parties" shall mean the Borrower and the 
  Company, and "Loan Party" shall mean the Borrower or the Company.
  
  (a) 		"Material Adverse Effect" shall mean a material 
  adverse effect upon the ability of any Loan Party to perform its 
  obligations under this Agreement or the Unsecured Note or upon 
  the ability of Lender to enforce or collect any of the 
  Obligations. 
  
  (a) 		"Obligations" shall mean all obligations, 
  liabilities and indebtedness of every nature of each Loan Party 
  from time to time owed to Lender, including the principal amount 
  of all debts, claims and indebtedness, accrued and unpaid 
  interest and all fees, costs and expenses, whether primary, 
  secondary, direct, contingent, fixed or otherwise, heretofore, 
  now and/or from time to time hereafter owing, due or payable, 
  under the Loan Documents, this Agreement and the Unsecured Note.
  (b) 		"Person" shall mean natural persons, corporations, 
  limited partnerships, general partnerships, limited liability 
  companies, joint stock companies, joint ventures, associations, 
  companies, trusts, banks, trust companies, land trusts, business 
  trusts or other organizations, whether or not legal entities, and 
  governments and agencies and political subdivisions thereof.
  
  (a) 		"Secured Debt" of a Person at any time shall mean 
  any debt, liability or other obligation of such Person which is 
  included in Debt or Total Liabilities of such Person at such time 
  and is secured by any Encumbrance.
  
  (a) 		"Subsidiary" shall mean, with respect to any 
  Person, any corporation, association or other business entity of 
  which more than 50% of the total voting power of shares of stock 
  (or equivalent ownership or controlling interest) entitled 
  (without regard to the occurrence of any contingency) to vote in 
  the election of directors, managers or trustees thereof is at the 
  time owned or controlled, directly or indirectly, by that Person 
  or one or more of the other Subsidiaries of that Person or a 
  combination thereof.
  
  (a) 		"Total Capitalization" of a Person at any time 
  shall mean the aggregate of such Person's Consolidated Net Worth 
  and Total Liabilities at such time.
  
  (a) 		"Total Liabilities" of a Person at any time shall 
  mean, without duplication:
  
  		(1)	Total liabilities (not to include minority 
  interests) as shown on such Person's consolidated 
  financial statements as prepared and classified in 
  accordance with GAAP;
  
  		(2)	All obligations of such Person evidenced or 
  secured by debentures, notes, deeds of trust, 
  mortgages, liens, pledges, charges, encumbrances, 
  security interests or other similar instruments 
  (including Debt);
  
  		(3)	All obligations of such Person to pay the deferred 
  purchase price of property or services;
  
  		(4)	All obligations of such Person as lessee that are 
  required to be capitalized in accordance with 
  GAAP;
  
  		(5)	All obligations of such Person incurred in 
  connection with acquisition of property, assets or 
  businesses;
  
  		(6)	Every currently due reimbursement obligation of 
  such Person with respect to a letter of credit or 
  bankers' acceptance or similar facility issued for 
  the account of such Person;
  
  		(7)	Any shares of stock (common or preferred), units, 
  minority interests or other beneficial ownership 
  interests of such Person which are convertible to 
  Debt of such Person or to an obligation of such 
  Person;
  
  		(8)	Any obligation of such Person to be liable for, or 
  to pay, as obligor, guarantor or otherwise, 
  indebtedness or other liability of another Person 
  (other than Borrower or Company, as applicable, or 
  a Consolidated Subsidiary), which, in management's 
  opinion would be reportable as a liability in such 
  Person's financial statements in accordance with 
  GAAP (other than for purposes of collection in the 
  ordinary course of business), it being understood 
  that debt or a liability shall be deemed to be 
  incurred by such Person whenever such Person or 
  such Person's Consolidated Subsidiary shall 
  create, assume or guarantee such indebtedness or 
  liability or otherwise become liable in respect 
  thereof.
  
  (a) 		"Unencumbered Assets" of a Person at any time 
  shall mean total undepreciated assets of such Person not subject 
  to any Encumbrance, excluding restricted cash, accounts 
  receivable and intangibles, as shown on such Person's 
  consolidated financial statements as prepared and classified in 
  accordance with GAAP.
  
  (a) 		"Unsecured Debt" of a Person at any time shall 
  mean any obligation which is included in Debt of such Person at 
  such time which is not secured by any Encumbrance.
  
  (a) 		"Unsecured Note" shall have the meaning provided 
  in Section 2.01.
  
  (a) 		"Unsecured Note Base Rate" shall mean 7.095% per 
  annum.
  
  Capitalized terms which are used in this Agreement but not 
  defined herein shall be defined as they are defined in the 
  Mortgage or other Loan Documents, and the rules of construction 
  stated in the Mortgage shall apply in this Agreement.
  
  Section 1.02.  Accounting Matters.  
  
  	For purposes of this Agreement, all accounting terms not 
  otherwise defined herein shall have the meanings assigned to such 
  terms in conformity with GAAP.  The terms "Consolidated Net 
  Worth," "Debt," "Debt Service," "Secured Debt," "Total 
  Liabilities," "Total Capitalization," "Unencumbered Assets" and 
  "Unsecured Debt" shall be calculated for the Company and its 
  Consolidated Subsidiaries and for the Borrower and its 
  Consolidated Subsidiaries in accordance with GAAP.  Financial 
  statements and other information furnished to Lender pursuant to 
  Article Five shall be prepared in accordance with GAAP (as in 
  effect at the time of such preparation). 
  
  ARTICLE TWO
  
  Section 2.01. Conversion Option.
  
  	If all of the conditions of Section 2.02 hereof are 
  fulfilled when required, Borrower may, at its option, exercisable 
  (a) only one time, (b) not later than two years from the date of 
  the Note and (c) upon not less than ninety (90) days' prior 
  written notice to Lender (the "Conversion Notice"), convert the 
  Loan into an unsecured obligation of Borrower to be evidenced by 
  a note substantially in the form of Exhibit A hereof and 
  satisfying all other requirements of this Article Two (the 
  "Unsecured Note") in the amount of the then outstanding principal 
  balance of the Note, or of half of that amount, as determined in 
  accordance with Section 2.02(a) below (the "Unsecured Note 
  Amount").  The date on which such conversion (the "Conversion") 
  shall become effective, which shall be the first day of a 
  calendar month, is hereinafter referred to as the "Conversion 
  Date."  
  
  Section 2.02. Conditions Precedent to Conversion.
  
  	The right of the Borrower to convert the entire Loan, or 
  half of the Loan, to the Unsecured Note in the Unsecured Note 
  Amount is subject to satisfaction of the following conditions 
  precedent:
  
  	(a)	On or prior to the Conversion Date, in order to convert 
  the entire Loan, the proposed Unsecured Note shall have received 
  (based on the assumption that the lien of all or certain of the 
  Mortgages will be released in accordance with Section 2.06) two 
  of the following: (i) a rating of at least BBB from Standard & 
  Poor's Ratings Group ("S&P"), (ii) a rating of at least Baa2 from 
  Moody's Investors Service, Inc. ("Moody's") or (iii) a rating at 
  least equivalent to the aforesaid ratings from a nationally 
  recognized rating agency acceptable to Lender (a "Nationally 
  Recognized Rating Agency").  On or prior to the Conversion Date, 
  in order to convert one-half of the Loan, the proposed Unsecured 
  Note shall have received (based on the assumption that the lien 
  of certain of the Mortgages will be released in accordance with 
  Section 2.06) two of the following: (i) a rating of at least BBB- 
  from S&P, (ii) a rating of at least Baa3 from Moody's, or (iii) a 
  rating at least equivalent to the aforesaid from a Nationally 
  Recognized Rating Agency.  If the proposed Unsecured Note shall 
  not have received at least two of the three ratings described 
  above, Borrower will not have any right to convert either the 
  Loan or one-half of the Loan.  Such ratings shall be in effect on 
  the Conversion Date, and Lender shall have received evidence 
  satisfactory to it of such rating.  The Unsecured Note shall be 
  subject to and comply with any covenants required by and 
  acceptable to any applicable rating agency for its ratings, 
  provided that in no event may those covenants be less restrictive 
  than or contravene the Financial Covenants contained in Article 
  Four.
  
  	(b)	At the time of delivery of the Conversion Notice and at 
  all times thereafter to and including the Conversion Date, the 
  following statements shall be true and correct, and Lender shall 
  have received on the Conversion Date certificates as of that date 
  from an executive officer of the Company certifying on behalf of 
  the Company and of the general partner of Borrower certifying on 
  behalf of Borrower to that effect:
  
  		(i)		The representations and warranties 
  contained in Section 3.01 and 3.02 hereof are 
  true and correct;
  
  		(ii)		No default or Event of Default 
  under the Loan Documents or this Agreement has 
  occurred and is continuing;
  
  		(iii)		Neither Borrower nor the 
  Company is in default under any of its Debt; and
  
  		(iv)		After giving effect to the 
  Conversion, and without giving effect to any 
  otherwise applicable grace periods or notice 
  requirements, (i) the Company is in compliance 
  with the covenants set forth in Section 4.01, 
  and is in accordance with such covenants able to 
  incur at least $1.00 of Debt, (ii) Borrower is 
  in compliance with the covenants set forth in 
  Section 4.02, and is in accordance with such 
  covenants able to incur at least $1.00 of Debt 
  and (iii) each Loan Party is in compliance with 
  the covenants set forth in Article Five.
  
  	(c)	On the Conversion Date, Lender shall have received a 
  favorable opinion of counsel for Borrower and Company in all 
  relevant jurisdictions reasonably satisfactory to Lender, in such 
  form as may be reasonably satisfactory to Lender and as to such 
  matters as are described in Exhibit  B annexed hereto.
  
  	(d)	On or prior to the Conversion Date, Borrower shall have 
  paid or caused to be paid (i) all principal of the Loan that 
  shall have become due and payable pursuant to the Loan Documents, 
  (ii) all unpaid interest on the Loan accrued to but not including 
  the Conversion Date, (iii) all accrued fees and expenses payable 
  to Lender pursuant to the Loan Documents and (iv) all reasonable 
  fees and expenses of outside counsel to Lender incurred in 
  connection with the preparation, execution and delivery of all 
  documents relating to the Conversion Option and in connection 
  with the exercise thereof, whether or not the Conversion is 
  effected.
  
  	(e)	On the Conversion Date, Borrower shall have executed 
  and delivered to Lender the Unsecured Note either (i) in the 
  amount of the then outstanding principal balance of the Note or 
  (ii) in one-half of that amount, as determined in accordance with 
  Sections 2.02(a), substantially in the form of Exhibit A hereto, 
  appropriately completed.
  
  	(f)	On or prior to the Conversion Date, a Private Placement 
  number issued by Standard & Poor's CUSIP Service Bureau (in 
  cooperation with the Securities Valuation Office of the National 
  Association of Insurance Commissioners) shall have been obtained 
  for the Unsecured Note.
  
  	(g)	Unless previously approved by Lender, neither Borrower 
  nor Company shall after the date of this Agreement have been a 
  party to any consolidation or merger unless the Borrower or the 
  Company, as the case may be, is the surviving entity and at the 
  time of such consolidation or merger and after giving effect 
  thereto, no default or Event of Default shall exist under the 
  Loan Documents or this Agreement and the Borrower and the 
  Company, as the case may be, may without causing a default under 
  this Agreement incur at least $1 of Debt. 
  
  	(h)	On the Conversion Date the issuance to Lender of the 
  Unsecured Note shall (A) not violate any applicable law or 
  regulation, which law or regulation was not in effect as of the 
  date of this Agreement, and (B) not subject the Lender to any tax 
  under or pursuant to any applicable law or regulation, which law 
  or regulation was not in effect as of the date of this Agreement; 
  provided that, if Lender shall be subject to any such tax, the 
  condition specified in this clause (B) shall be deemed satisfied 
  if Borrower shall on or prior to the Conversion Date deliver a 
  written undertaking, satisfactory in form and substance to Lender 
  (which undertaking, if so delivered, shall for all purposes be 
  deemed an obligation of Borrower under this Agreement), (i) to 
  pay, before delinquency and before any penalty for non-payment 
  attaches thereto, all such taxes and any related interest; and 
  (ii) to deliver to Lender, at least ten (10) days before 
  delinquency, receipted bills evidencing such payment.  If 
  requested by Lender, Lender shall have received a certification 
  from an officer of the Company, or an officer of a general 
  partner of the Borrower, as to such matters of fact as Lender may 
  reasonably specify to enable Lender to determine whether such 
  issuance of the Unsecured Note is so permitted.
  
  	(i)	Subject to the provisions of this subparagraph (i), 
  Borrower shall have no right to convert any portion of the Loan 
  to an unsecured obligation unless and until the entire amount of 
  the Loan, as set forth in the first Recital of this Agreement, 
  shall have been disbursed by Lender pursuant to that certain 
  Holdback Agreement of even date herewith between Borrower and 
  Lender (the "Holdback Agreement").  Notwithstanding the 
  foregoing, if, through no fault of the Borrower or the Company,  
  the entire amount of the Loan is not funded pursuant to the 
  Holdback Agreement on or before September 30, 1998, the parties 
  hereto agree that they will enter into good faith negotiations to 
  modify this Agreement to effect a conversion to an unsecured 
  obligation of such lesser amount of the Loan as the parties shall 
  reasonably agree.
  
  Section 2.03.  Interest.
  
  	Borrower shall pay interest on the unpaid principal amount 
  of the Unsecured Note until the principal amount thereof shall be 
  paid in full, at a rate per annum equal to the Unsecured Note 
  Base Rate, subject to the terms of the Unsecured Note providing 
  for an increase in such rate after the occurrence of an Event of 
  Default.
  
  Section 2.04.  Repayment of Unsecured Note.
  
  	Borrower shall repay the principal and interest on the 
  Unsecured Note:
  
  	(a)	Commencing on the first day of the calendar month 
  following the calendar month in which the Conversion Date occurs 
  and continuing on the first day of each month to, but excluding 
  July 1, 2008 (the "Maturity Date"), Borrower shall pay 
  installments of principal and interest in the amount shown on 
  Exhibit C, which amount shall be set forth in the Unsecured Note, 
  each of which installments shall be applied first to the payment 
  of interest on the outstanding principal and the balance to the 
  payment of principal.   In the event the entire Loan is not 
  funded on or before July 31, 1998 pursuant to the Holdback 
  Agreement, the Lender shall revise Exhibit C to reflect a revised 
  amortization and payment schedule based upon the amount of 
  principal anticipated to be outstanding under the Note on the 
  Conversion Date.
  
  	(b)	On the Maturity Date, Borrower shall pay the entire 
  unpaid principal balance of the Unsecured Note, together with all 
  accrued and unpaid interest on the Unsecured Note and all other 
  sums due thereunder.
  
  Section 2.05.	Prepayment.
  
  	Borrower shall have no right to prepay the principal balance 
  on the Unsecured Note in whole or in part, except as set forth in 
  this Section 2.05 and in the Unsecured Note.
  
  	(a)	Prepayment Premium.  Commencing on July 1, 2003, 
  Borrower may prepay the Unsecured Note on the first day of any 
  calendar month in whole but not in part, together with accrued 
  and unpaid interest on the principal being repaid, provided that 
  Borrower shall simultaneously pay to Lender a prepayment premium 
  (the "Prepayment Premium") in an amount equal to the greater of:  
  (i) one (1%) percent (the "Prepayment Percentage") multiplied by 
  the principal amount being prepaid and (ii) the amount by which 
  the sum of the Discounted Values (as hereinafter defined) of all 
  Note Payments (as hereinafter defined) with respect to the 
  Unsecured Note from the date of prepayment to and including the 
  Maturity Date, calculated at the Discount Rate (as hereinafter 
  defined), exceeds the principal amount being prepaid.  Borrower 
  shall give Lender at least ninety (90) days' prior notice of its 
  intention to prepay the Unsecured Note.
  
  	(b)	Evasion of Prepayment Premium.  In the event that the 
  outstanding principal of the Unsecured Note shall, in accordance 
  with Section 6.02, have become due and payable prior to the 
  Maturity Date, or Lender shall receive any payment or tender of 
  payment of principal of the Unsecured Note in any manner not in 
  accordance with the terms of Section 2.04, 2.05(a) or 2.05(d), 
  then, in each case, to the extent permitted by applicable law, 
  there shall also be due and payable by Borrower to Lender a 
  premium (the "Evasion of Prepayment Premium") in an amount equal 
  to the greater of (i) an amount equal to the product of (A) the 
  sum of the Prepayment Percentage plus 300 basis points multiplied 
  by (B) the outstanding principal balance of the Unsecured Note 
  immediately prior to Lender's receipt of such payment (the 
  "Applicable Principal Amount") and (ii) the amount by which the 
  sum of the Discounted Values of Note Payments for the Unsecured 
  Note, calculated at the Default Discount Rate, exceeds the 
  Applicable Principal Amount.
  
  	(c)	Definitions.  As used in this Section 2.05, the 
  following terms shall have the respective meanings set forth 
  below:
  
  		(i)		"Default Discount Rate"  means the 
  Discount Rate less 300 basis points.
  
  		(ii)		"Discount Rate" means the yield on 
  a U.S. Treasury issue selected by Lender, as 
  published in The Wall Street Journal two weeks 
  prior to prepayment, having a maturity date 
  corresponding (or most closely corresponding, if 
  not identical) to the scheduled maturity date of 
  the Unsecured Note, and a coupon rate 
  corresponding (or most closely corresponding, if 
  not identical) to the interest rate on the 
  Unsecured Note.
  
  		(iii)		"Discounted Value" means the 
  Discounted Value of a Note Payment based on the 
  following formula:
  
  			     NP         
  				(1 + R/12)n 	= 	Discounted Value
  
  						NP 	= 	Amount of Note Payment
  				R 	= 	Discount Rate or Default 
  Discount Rate,
  								as the case may be
  
  n 	=	The number of months between 
  the date of prepayment and the 
  scheduled date of the Note 
  Payment in question rounded to 
  the nearest integer.
  
  		(iv)		"Note Payments" means (A) the 
  scheduled payments of monthly debt service on 
  the Unsecured Note for the period between the 
  date of prepayment and the scheduled maturity 
  date of the Unsecured Note; and (B) the 
  scheduled repayment of the outstanding principal 
  balance of the Unsecured Note at the scheduled 
  maturity date.
  
  	(d)	Prepayment During Final 90 Days of Term.  
  Notwithstanding anything herein to the contrary, (i) during the 
  ninety (90) day period immediately preceding the Maturity Date, 
  Borrower shall have the right to voluntarily prepay the Unsecured 
  Note in whole or in part, without any Prepayment Premium, Evasion 
  of Prepayment Premium or any other prepayment premium.
  
  Section 2.06. Release of Lien.
  
  	Upon compliance with the conditions precedent set forth in 
  Section 2.02 and the effectiveness of the Conversion, Lender 
  shall, concurrently with the delivery of the Unsecured Note, (a) 
  if the Unsecured Note is in the entire amount of the outstanding 
  principal balance of the Loan, release the Properties from the 
  lien of the Mortgages on the Conversion Date and return to 
  Borrower the Note and any and all collateral held by Lender as 
  security for the Loan, and (b) if the Unsecured Note is in the 
  amount of one-half of the outstanding principal balance of the 
  Loan, then release Properties from the lien of the Mortgages on 
  the Conversion Date such that (i) the Properties remaining 
  subject to Mortgages shall have a Loan to Value Ratio and Debt 
  Service Coverage (as such terms are defined in the Mortgages) in 
  the same proportions as existed at the disbursement of the Loan, 
  and (ii) the number and identity of such Properties remaining 
  subject to Mortgages shall be approved by Lender in its sole 
  reasonable discretion.
  
  ARTICLE THREE
  
  Section 3.01.  Representations and Warranties of the Borrower.
  
  	Borrower makes the following representations and warranties 
  to Lender.  These representations and warranties shall be true 
  and correct as of the Conversion Date.  These representations 
  shall also be true and correct, as a condition precedent to 
  Conversion under Section 2.02(b), at the time of the delivery of 
  the Conversion Notice and at all times thereafter to and 
  including the Conversion Date.
  
  	(a)	Borrower is a limited partnership, duly and validly 
  organized and in good standing under the laws of Delaware, and 
  the sole general partner of Borrower is Parkway Properties 
  General Partners, Inc., a Delaware corporation ("GP").  GP holds 
  a one percent (1%) general partnership interest in Borrower.  The 
  Company is a limited partner of Borrower, holding a ninety-nine 
  percent (99%) limited partnership interest in Borrower which may 
  be decreased (but to not less than a fifty-one percent (51%) 
  interest in each class of limited partnership interest in 
  Borrower) by one or more UPREIT transactions, as hereinafter 
  defined (an "UPREIT Transaction").  An UPREIT Transaction is a 
  transaction in which Borrower in acquiring a property from a 
  third party transferor provides as consideration to the 
  transferor partnership interests in Borrower convertible to 
  shares in the Company, and in which transferor may later convert 
  such partnership interests to shares or cash, provided that 
  Borrower shall comply with the provisions of Section 4.02(d).  
  Borrower is duly qualified to do business in each jurisdiction in 
  which the nature of its business or other ownership of its 
  property requires such qualification.  Borrower has all requisite 
  power and authority to own and operate its properties and to 
  carry on its business as now conducted.  
  
  	(b)	Borrower has all necessary legal power and authority to 
  enter into this Agreement, the Unsecured Note and the Loan 
  Documents and the transactions contemplated hereby and thereby 
  and has taken all necessary action to authorize the execution, 
  delivery, and performance of this Agreement, the Unsecured Note 
  and the Loan Documents.  This Agreement
  
  and each of the Loan Documents have been duly and validly 
  executed and delivered by the Borrower, and this Agreement and 
  each of the Loan Documents constitute, and upon execution by the 
  Borrower, the Unsecured Note will constitute, the legal, valid, 
  and binding obligations of the Borrower enforceable against the 
  Borrower in accordance with their respective terms, except as 
  enforceability may be limited by applicable bankruptcy, 
  insolvency, reorganization, or similar laws affecting the rights 
  of creditors generally and by equitable principles of general 
  application.
  
  	(c)	The execution and delivery of this Agreement, the Loan 
  Documents and the Unsecured Note by the Borrower, and the 
  performance by Borrower of its obligations hereunder and under 
  the Loan Documents and the Unsecured Note, will not violate or 
  conflict with any law, rule, or regulation applicable to the 
  Borrower, any provision of the organizational documents of the 
  Borrower, any order, judgment, or decree of any court, arbitrator 
  or governmental agency applicable to the Borrower or any of its 
  assets, or any agreement binding on the Borrower, or result in 
  the creation or imposition of a lien on any properties or 
  revenues of the Borrower, except for liens created by the Loan 
  Documents.
  
  	(d)	There is not presently pending, or to the knowledge of 
  the Borrower threatened, any action, claim, proceeding, or 
  investigation, at law or in equity or by or before any court or 
  arbitrator or any governmental, public, or regulatory authority, 
  against, affecting, or involving the Borrower or any employee 
  thereof which questions the right, power, legal capacity, or 
  permissibility of the Borrower to execute, deliver, and perform 
  its obligations under this Agreement or the Unsecured Note or the 
  Loan Documents, or wherein any unfavorable decision, ruling, or 
  finding could have a Material Adverse Effect.  As of the date of 
  this Agreement, there is no existing matter of a character that 
  would require disclosure to Lender pursuant to Section 5.01(h).
  
  	(e)	No consent or authorization of, filing with, or other 
  act by or in respect of, any governmental authority and no 
  consent of any party is required in connection with the 
  execution, delivery or performance by the Borrower of this 
  Agreement and the Loan Documents and the Unsecured Note or the 
  enforceability thereof against the Borrower, other than any such 
  consent, authorization, filing or other act which has been 
  identified in a notice to Lender, has been obtained or effected, 
  is in full force and effect, and is not the subject of any 
  pending or threatened attack by direct or collateral proceeding.
  
  	(f)	The Borrower has filed all tax returns that are 
  required to have been filed in any jurisdiction, and has paid all 
  taxes shown to be due and payable on such returns and all other 
  taxes and assessments levied upon the Borrower or its properties, 
  assets, income and franchises, to the extent such taxes and 
  assessments have become due and payable and before they have 
  become delinquent, except for any taxes and assessments (i) the 
  amount of which is not individually or in the aggregate material 
  or (ii) the amount, applicability or validity of which is 
  currently being contested in good faith by appropriate 
  proceedings and with respect to which the Borrower has 
  established adequate reserves in accordance with GAAP.
  
  	(g)	The Borrower is not in violation of any law, ordinance, 
  rule, regulation, order, policy, guideline or other requirement 
  of any domestic or foreign government or any instrumentality or 
  agency thereof, having jurisdiction over the conduct of its 
  business or the ownership of its properties, including, without 
  limitation, any violation relating to any use, release, storage, 
  transport or disposal of any Hazardous Material, which violation 
  would subject the Borrower or any of its Subsidiaries to criminal 
  liability or have a Material Adverse Effect, and, to the best 
  knowledge of the Borrower, no such violation has been alleged.  
  As of the date of this Agreement, there is no existing matter of 
  a character that would require disclosure to Lender pursuant to 
  Section 5.01(a).
  
  	(h)	The Borrower does not have any knowledge of any claim, 
  and has not received any notice of any claim, and no proceeding 
  has been instituted raising any claim, against the Borrower or 
  any of its real properties or other assets now or formerly owned, 
  leased or operated by it, alleging any damage to the environment 
  or violation of any Environmental Laws, except, in each case, 
  such as could not reasonably be expected to have a Material 
  Adverse Effect.
  
  	(i)	The Unsecured Note will constitute the senior unsecured 
  obligation of the Borrower, ranking equally with the Borrower's 
  existing and future senior unsecured and unsubordinated 
  indebtedness.  Borrower shall use the proceeds of the Unsecured 
  Note for proper business purposes consistent with all applicable 
  laws, statutes, rules and regulations.  No portion of the 
  proceeds of the Unsecured Note shall be used by Borrower in any 
  manner that might cause the borrowing or the application of such 
  proceeds to violate Regulation U, Regulation T or Regulation X or 
  any other regulation of the Board of Governors of the Federal 
  Reserve System or to violate the Exchange Act.
  
  	(j)	Borrower is not an "employee benefit plan" as defined 
  in Section 3(3) of the Employee Retirement Income Security Act of 
  1974, as amended ("ERISA") that is subject to Title I of ERISA, 
  or a "plan" as defined in Section 4975(e)(1) of the Internal 
  Revenue Code of 1986, as amended (the "Code") that is subject to 
  Section 4975 of the Code, and Borrower's assets do not constitute 
  "plan assets" of one or more such plans for purposes of Title I 
  of ERISA or Section 4975 of the Code.  Borrower is not a 
  "governmental plan" within the meaning of Section 3(3) of ERISA 
  and transactions by or with Borrower are not subject to any laws 
  regulating investments of and fiduciary obligations with respect 
  to governmental plans.
  
  	(k)	Borrower is not, nor after giving effect to any loan 
  will be, subject to regulation under the Public Utility Holding 
  Company Act of 1935, the Federal Power Act or the Investment 
  Company Act of 1940 or to any federal or state statute or 
  regulation limiting its ability to incur indebtedness for 
  borrowed money.
  
  Section 3.02.  Representations and Warranties of the Company.
  
  	The Company makes the following representations and 
  warranties to Lender.  These representations and warranties shall 
  be true and correct as of the Conversion Date.  These 
  representations shall also be true and correct, as a condition 
  precedent to Conversion under Section 2.02(b), at the time of the 
  delivery of the Conversion Notice and at all times thereafter to 
  and including the Conversion Date.
  
  	(a)	The Company is a corporation duly and validly organized 
  and in good standing under the laws of Maryland.  GP is a 
  corporation, duly and validly organized and in good standing 
  under the laws of Delaware.  GP is duly qualified to do business 
  in each jurisdiction in which the nature of its business or the 
  ownership of its properties requires such qualification.  The 
  Company holds, beneficially and of record, one hundred percent 
  (100%) of each class of the outstanding capital stock of GP.   No 
  partnership interest in the Borrower held by the Company or GP is 
  subject to any Encumbrance.
  
  	(b)	The Company has all necessary legal power and authority 
  to enter into this Agreement and the transactions contemplated 
  hereby and has taken all necessary action to authorize the 
  execution, delivery, and performance of this Agreement.  This 
  Agreement has been duly and validly executed and delivered by the 
  Company, and this Agreement and, if applicable, the Unsecured 
  Note, constitutes the legal, valid, and binding obligation of the 
  Company enforceable against the Company in accordance with its 
  terms, except as enforceability may be limited by applicable 
  bankruptcy, insolvency, reorganization, or similar laws affecting 
  the rights of creditors generally and by equitable principles of 
  general application.  The Company has all requisite power and 
  authority to carry on its business as now conducted.
  
  	(c)	The execution and delivery of this Agreement by the 
  Company, and the performance by the Company of its obligations 
  hereunder and, if applicable, under the Unsecured Note, will not 
  violate or conflict with any law, rule, or regulation applicable 
  to the Company, any provision of the organizational documents of 
  the Company, any order, judgment, or decree of any court, 
  arbitrator or governmental agency applicable to the Company or 
  any of its assets, or any agreement binding on the Company, or 
  result in the creation or imposition of a lien on any properties 
  or revenues of the Company.
  
  	(d)	There is not presently pending, or to the knowledge of 
  the Company threatened, any action, claim, proceeding, or 
  investigation, at law or in equity or by or before any court or 
  arbitrator or any governmental, public, or regulatory authority, 
  against, affecting, or involving the Company or any employee 
  thereof which questions the right, power, legal capacity, or 
  permissibility of the Company to execute, deliver, and perform 
  its obligations under this Agreement or, to the extent 
  applicable, the Unsecured Note, or wherein any unfavorable 
  decision, ruling, or finding could have a Material Adverse 
  Effect.  As of the date of this Agreement, there is no existing 
  matter of a character that would require disclosure to Lender 
  pursuant to Section 5.01(h).
  
  	(e)	No consent or authorization of, filing with, or other 
  act by or in respect of, any governmental authority and no 
  consent of any party is required in connection with the 
  execution, delivery or performance by the Company of this 
  Agreement and, if applicable, the Unsecured Note or the 
  enforceability thereof against the Company, other than any such 
  consent, authorization, filing or other act which has been 
  identified in a notice to Lender, has been obtained or effected, 
  is in full force and effect, and is not the subject of any 
  pending or threatened attack by direct or collateral proceeding.
  
  	(f)	The Company has filed all tax returns that are required 
  to have been filed in any jurisdiction, and has paid all taxes 
  shown to be due and payable on such returns and all other taxes 
  and assessments levied upon the Company or the Company's 
  properties, assets, income and franchises, to the extent such 
  taxes and assessments have become due and payable and before they 
  have become delinquent, except for any taxes and assessments (i) 
  the amount of which is not individually or in the aggregate 
  material or (ii) the amount, applicability or validity of which 
  is currently being contested in good faith by appropriate 
  proceedings and with respect to which the Company has established 
  adequate reserves in accordance with GAAP.
  
  	(g)	The audited consolidated financial statements of the 
  Company for the years 1996 and  1997 delivered to Lender in 
  connection with the Loan are complete and correct in all material 
  respects and present fairly the combined financial condition and 
  results of operations of the Company on a consolidated basis, as 
  at the dates thereof and for the periods indicated.  The most 
  recent financial statements of Company delivered to Lender 
  pursuant to the Loan Documents are complete and correct in all 
  material respects and present fairly the combined financial 
  condition and results of operations of Company on a consolidated 
  basis as at the dates thereof and for the periods indicated.  As 
  of the current date, there has been no material adverse change 
  since the date of the 1997 audited consolidated financial 
  statements of the Company in the business, operations, 
  properties, assets, condition (financial or otherwise) or 
  prospects of the Company on a consolidated basis.
  
  	(h)	The Company is not in violation of any law, ordinance, 
  rule, regulation, order, policy, guideline or other requirement 
  of any domestic or foreign government or any instrumentality or 
  agency thereof, having jurisdiction over the conduct of its 
  business or the ownership of its properties, which violation 
  would subject the Company or any of its Subsidiaries to criminal 
  liability or have a Material Adverse Effect, and, to the best 
  knowledge of the Company, no such violation has been alleged.  As 
  of the date of this Agreement, there is no existing matter of a 
  character that would require disclosure to Lender pursuant to 
  Section 5.01(a).
  
  	(i)	The Company does not have any knowledge of any claim, 
  and has not received any notice of any claim, and no proceeding 
  has been instituted raising any claim, against the Company or any 
  of its assets, except, in each case, such as could not reasonably 
  be expected to have a Material Adverse Effect.
  
  ARTICLE FOUR
  
  Section 4.01.  Financial Covenants of the Company.
  
  	The Company covenants and agrees with Lender as follows.  
  Such covenants and agreements shall apply, as a condition 
  precedent to the Conversion, at the Conversion Date and shall 
  continue to apply at all times thereafter until payment in full 
  of all Obligations.
  
  	(a)	Ratio of Total Liabilities to Total Capitalization.  
  The Company shall not, and shall not permit any of its 
  Consolidated Subsidiaries to, incur any debt or liability (which 
  if incurred would be included in the definition of Debt or Total 
  Liabilities) if, immediately after giving effect to the 
  incurrence of such debt or liability, the ratio of the Company's 
  Total Liabilities to the Company's Total  Capitalization would 
  exceed sixty percent (60%).
  
  	(b)	Ratio of CADS to Debt Service.  The Company shall not, 
  and shall not permit any of its Consolidated Subsidiaries to, 
  incur any debt (which if incurred would be included in the 
  definition of Debt) if, for the four most recent consecutive 
  calendar quarters ended prior to the date on which such debt is 
  to be incurred (determined in accordance with the financial 
  statements of the Company provided pursuant to Section 5.01(g) 
  hereof), the ratio of CADS to Debt Service of the Company, on a 
  pro-forma basis (if the debt to be incurred is for the purchase 
  or development of a property, then CADS shall be adjusted to 
  reflect such property's projected contribution to CADS during the 
  same period for which Debt Service is being calculated; likewise, 
  such pro-forma calculation shall take into account reductions in 
  CADS resulting from sales of property occurring in the prior four 
  quarters) as if the debt were incurred, is less than 1.5 to 1.
  
  	(c)	Minimum Consolidated Net Worth.  The Company shall not 
  permit its Consolidated Net Worth at any time to be less than 
  $250,000,000.
  
  	(d)	Restricted Payments.  The Company shall not incur any 
  debt or liability (other than short-term borrowings in respect of 
  unsecured lines of credit used in the Company's normal and 
  ongoing cash management which will be repaid within ninety (90) 
  days) in order to declare, pay, make or distribute any dividend 
  or other distribution on account of any shares of stock (common 
  or preferred), units, minority interests or other beneficial 
  ownership interests in the Company.  The Company shall not, and 
  shall not permit any of its Consolidated Subsidiaries to, incur 
  any debt or liability (other than short-term borrowings in 
  respect of unsecured lines of credit used in the Company's normal 
  and ongoing cash management which will be repaid within ninety 
  (90) days) to purchase, redeem, retire or acquire any shares of 
  stock (common or preferred), units, minority interests or other 
  beneficial ownership interests in the Company or in any of its 
  Affiliates.  During the continuance of any Default or Event of 
  Default, the Company shall not (i) declare, pay, make or 
  distribute any dividend or other distribution on account of any 
  shares of stock (common or preferred), units, minority interests 
  or other beneficial ownership interests in the Company or (ii) 
  purchase, redeem, retire or acquire any shares of stock (common 
  or preferred), units, minority interests or other beneficial 
  ownership interests in the Company or in any of its Affiliates, 
  provided that this sentence shall not prohibit the Company (x) 
  after the exhaustion of other sources of funds from declaring or 
  paying any dividend or other distribution to the extent required 
  for the Company to satisfy the provisions of Section 857(a)(1) of 
  the Code or (y) from issuing stock in the Company to a third 
  party transferor as a result of transferor's election to convert 
  partnership interests in Borrower to stock in the Company in 
  connection with an UPREIT Transaction.
  
  	(e)	Ratio of Secured Debt to Total Capitalization.  The 
  Company shall not, and shall not permit any of its Consolidated 
  Subsidiaries to, incur any Secured Debt, if, immediately after 
  giving effect to the incurrence of such Secured Debt, the ratio 
  of the Secured Debt of the Company and its Consolidated 
  Subsidiaries to Total Capitalization of the Company would exceed 
  forty percent (40%).
  
  	(f)	Unencumbered Assets.  Unencumbered Assets of the 
  Company and its Consolidated Subsidiaries shall at all times be 
  equal to or greater than 150% of the aggregate outstanding 
  principal amount of Unsecured Debt of the Company and its 
  Consolidated Subsidiaries.
  
  	(g)	Unsecured Debt by Subsidiaries of Company.  The Company 
  shall not permit any of its Subsidiaries other than Borrower to 
  incur any Unsecured Debt at any time.
  
  	(h)	Restricted Transactions.  The Company shall not, and 
  shall not permit its Consolidated Subsidiaries to, enter into any 
  transaction with any unconsolidated Affiliate of the Company or 
  such Subsidiary unless such transaction is approved by a majority 
  of the Company's outside trustees or is on market terms and 
  otherwise on terms not more favorable to such Affiliate than 
  would have been obtained in a comparable arm's length transaction 
  between the Company or such Subsidiary and an unaffiliated third 
  party.
  
  	(i)	Status of Company.  The Company shall at all times 
  remain (1) a listed company on the New York Stock Exchange or 
  American Stock Exchange and (2) qualified as a real estate 
  investment trust (REIT) under the Code.  The Company shall at all 
  times have as its sole business purpose to directly or indirectly 
  purchase, hold, lease, manage, develop, construct upon, 
  subdivide, finance and improve and sell or exchange, real 
  property and interests in real property and in entities owning 
  real property, and to conduct all activities incidental or 
  related thereto.
  
  	(j)	Organizational Documents of Company.  The Company shall 
  not make a material change to its organizational documents which 
  would have an adverse effect on the Lender without the prior 
  written consent of Lender.
  
  	(k)	Assets of Company.  The Company's only assets (other 
  than cash held for distribution) shall at all times remain its 
  limited partnership interest in Borrower and its existing 100% 
  ownership interest in GP, and GP's sole interest shall be its 1% 
  general partnership interest in Borrower.  All assets acquired, 
  owned or held after the date of this Agreement shall be held by 
  Borrower, or by a wholly owned Subsidiary of Borrower.  Each 
  Subsidiary of Borrower shall at all times remain a Consolidated 
  Subsidiary of the Company.
  
  	(l)	Consolidation or Merger. Without the previous approval 
  of the Lender, the Company shall not be a party to any 
  consolidation or merger unless the Company is the surviving 
  entity, and at the time of such consolidation or merger and after 
  giving effect thereto no default or Event of Default shall exist 
  and the Company shall be able to incur in accordance with the 
  terms of this Agreement at least one dollar ($1.00) of Debt.
  
  	(m)	Sale of Assets.  During any twelve (12) month period 
  commencing on or after the Conversion Date, the Company shall 
  not, and shall not permit any of its Consolidated Subsidiaries 
  to, sell or transfer assets owned by the Company or any of its 
  Consolidated Subsidiaries which in total have an undepreciated 
  book value of more than fifteen percent (15%) of the 
  undepreciated book value of the sum of (i) all of the assets of 
  the Company and its Consolidated Subsidiaries prior to the first 
  such sale or transfer during the applicable twelve (12) month 
  period, plus (ii) all of the assets of the Company and its 
  Consolidated Subsidiaries acquired or developed during such 
  twelve (12) month period.  The Company shall not, and shall not 
  permit any of its Consolidated Subsidiaries to, sell or transfer 
  any assets unless, at the time of such sale or transfer, and 
  after giving effect thereto, no Default or Event of Default shall 
  exist and the Company shall be able to incur in accordance with 
  the terms of this Agreement at least one dollar ($1.00) of Debt.
  
  Section 4.02.  Financial Covenants of Borrower.
  
  	The Borrower covenants and agrees with Lender as follows.  
  Such covenants and agreements shall apply as a condition 
  precedent to Conversion under Section 2.02(b), at the Conversion 
  Date and shall continue to apply at all times thereafter until 
  payment in full of all Obligations.
  
  	(a)	Ratio of Total Liabilities to Total Capitalization.  
  The Borrower shall not incur, and shall not permit any of its 
  Consolidated Subsidiaries to incur, any debt or liability (which 
  if incurred would be included in the definition of Debt or Total 
  Liabilities) if, immediately after giving effect to the 
  incurrence of such debt or liability, the ratio of Borrower's 
  Total Liabilities to Borrower's Total Capitalization would exceed 
  sixty percent (60%).
  
  	(b)	Ratio of CADS to Debt Service.  The Borrower shall not 
  incur, and shall not permit any of its Consolidated Subsidiaries 
  to incur, any debt (which if incurred would be included in the 
  definition of Debt) if, for the four most recent consecutive 
  calendar quarters ended prior to the date on which such debt is 
  to be incurred (determined in accordance with the financial 
  statements provided pursuant to Section 5.01(j) hereof), the 
  ratio of CADS to Debt Service of Borrower, on a pro-forma basis 
  (if the debt to be incurred is for the purchase or development of 
  a property, then CADS shall be adjusted to reflect such 
  property's projected contribution to CADS during the same period 
  for which Debt Service is being calculated; likewise, such pro-
  forma calculation shall take into account reductions in CADS 
  resulting from sales of property occurring in the prior four 
  quarters) as if the debt were incurred, is less than 1.5 to 1.
  
  	(c)	Minimum Consolidated Net Worth.  Borrower shall not 
  permit its Consolidated Net Worth at any time to be less than 
  $250,000,000.
  
  	(d)	Restricted Payments.  The Borrower shall not incur, and 
  shall not permit any of its Consolidated Subsidiaries to incur, 
  any debt or liability (other than short-term borrowings in 
  respect of unsecured lines of credit used in the Borrower's 
  normal and ongoing cash management which will be repaid within 
  ninety (90) days) in order to declare, pay, make or distribute 
  any dividend or other distribution on account of any partnership 
  or other beneficial ownership interests in the Borrower.  The 
  Borrower shall not incur, and shall not permit any of its 
  Consolidated Subsidiaries to incur, any debt or liability (other 
  than short-term borrowings in respect of unsecured lines of 
  credit used in the Borrower's normal and ongoing cash management 
  which will be repaid within ninety (90) days) to purchase, 
  redeem, retire or acquire any partnership or other beneficial 
  ownership interests in the Borrower or in any of its Affiliates.  
  During the continuance of any Default or Event of Default, the 
  Borrower shall not (i) declare, pay, make or distribute any 
  dividend or other distribution on account of any shares of stock 
  (common or preferred), units, minority interests or other 
  beneficial ownership interests in the Borrower or (ii) purchase, 
  redeem, retire or acquire any shares of stock (common or 
  preferred), units, minority interests or other beneficial 
  ownership interests in the Borrower or in any of its Affiliates, 
  provided that this sentence shall not preclude the Borrower from 
  declaring or paying any distribution to the extent necessary to 
  permit the Company (after the exhaustion of other sources of 
  funds) to make such distributions as are required for the Company 
  to satisfy the provisions of Section 857(a)(1) of the Code.
  
  	(e)	Ratio of Secured Debt to Total Capitalization.  The 
  Borrower shall not incur, or permit any of its Consolidated 
  Subsidiaries to incur, any Secured Debt at any time if, 
  immediately after giving effect to the incurrence of such Secured 
  Debt, the ratio of the Secured Debt of Borrower and its 
  Consolidated Subsidiaries to Total Capitalization of Borrower 
  would exceed forty percent (40%).
  
  	(f)	Unencumbered Assets.  Unencumbered Assets of Borrower 
  and its Consolidated Subsidiaries shall at all times be equal to 
  or greater than 150% of the aggregate outstanding principal 
  amount of Unsecured Debt of the Borrower and its Consolidated 
  Subsidiaries.
  
  	(g)	Unsecured Debt by Subsidiaries of Borrower.  The 
  Borrower shall not permit any of its Subsidiaries to incur any 
  Unsecured Debt at any time.
  
  	(h)	Restricted Transactions.  The Borrower shall not enter 
  into, or permit any of its Subsidiaries to enter into, any 
  transaction with any unconsolidated Affiliate of the Borrower or 
  any of its Subsidiaries or the Company unless such transaction is 
  on market terms and otherwise on terms not more favorable to the 
  Affiliate than would be obtained in a comparable arm's length 
  transaction between the Borrower or such Subsidiary and an 
  unaffiliated third party.
  	(i)	Borrower's Organizational Documents.  The Borrower will 
  not make a material change to its partnership agreement or other 
  organizational documents which would have an adverse effect on 
  Lender, without the prior written consent of Lender.
  
  	(j)	Consolidation or Merger.  Neither Borrower, nor any of 
  its Consolidated Subsidiaries, shall be a party to any 
  consolidation or merger unless the Borrower or such Consolidated 
  Subsidiary is the surviving entity, and at the time of such 
  consolidation or merger and after giving effect thereto no 
  Default or Event of Default shall exist and the Borrower shall be 
  able to incur in accordance with the terms of this Agreement at 
  least at least one dollar ($1.00) of Debt.
  
  	(k)	Sale of Assets.  During any twelve (12) month period 
  commencing on or after the Conversion Date, the Borrower shall 
  not, and shall not permit any of its Consolidated Subsidiaries 
  to, sell or transfer assets owned by the Borrower or any of its 
  Consolidated Subsidiaries which in total have an undepreciated 
  book value of more than fifteen percent (15%) of the 
  undepreciated book value of the sum of (i) all of the assets of 
  the Borrower and its Consolidated Subsidiaries prior to the first 
  such sale or transfer during the applicable twelve (12) month 
  period, plus (ii) all of the assets of the Borrower and its 
  Consolidated Subsidiaries acquired or developed during such 
  twelve (12) month period.  The Borrower shall not sell or 
  transfer, or permit any of its Consolidated Subsidiaries to sell 
  or transfer, any assets unless, at the time of such sale or 
  transfer, and after giving effect thereto, no Default or Event of 
  Default shall exist and Borrower shall be able to incur in 
  accordance with the terms of this Agreement at least one dollar 
  ($1.00) of Debt.
  
  ARTICLE FIVE
  
  Section 5.01. Additional Affirmative Covenants.
  
  	Each Loan Party covenants and agrees with Lender as follows.  
  Such covenants and agreements shall apply as of the Conversion 
  Date and at all times thereafter.   Such covenants and agreements 
  shall also apply as a condition precedent to Conversion under 
  Section 2.02(b), at the time of the delivery of the Conversion 
  Notice, to the extent applicable, and at all times thereafter to 
  and including the Conversion Date.
  
  	(a)	Compliance with Laws.  Each Loan Party shall, and shall 
  cause each of its Consolidated Subsidiaries to, comply with the 
  requirements of all applicable laws, rules, regulations and 
  orders of any governmental authority, including any Environmental 
  Law, as now in effect and which may be imposed in the future in 
  all jurisdictions in which such Loan Party is now doing business 
  or may hereafter be doing business, other than those applicable 
  laws, rules, regulations and orders of any governmental 
  authority, the noncompliance with which would not, individually 
  or in the aggregate, have a Material Adverse Effect.  Each Loan 
  Party shall promptly notify Lender of any noncompliance with the 
  requirements of all applicable laws, rules, regulations and 
  orders of any governmental authority, including but not limited 
  to any Environmental Law, as now in effect and which may be 
  imposed in the future in all jurisdictions in which such Loan 
  Party is now doing business or may hereafter be doing business, 
  and provide such other information as may be reasonably available 
  to it to enable Lender and its counsel to evaluate such matter.
  
  	(b)	Maintenance of Properties; Insurance.  Each Loan Party 
  shall, and shall cause each of its Consolidated Subsidiaries to, 
  maintain or cause to be maintained in good repair, working order 
  and condition all material properties used in the business of 
  such Person and shall make or cause to be made all appropriate 
  repairs, renewals and replacements thereof.  Each Loan Party 
  shall maintain, and shall cause each of its Consolidated 
  Subsidiaries to maintain, or cause to be maintained, with 
  financially sound and reputable insurers, public liability and 
  property damage insurance with respect to its business and 
  properties against loss or damage of the kinds customarily 
  carried or maintained by corporations of established reputation 
  engaged in similar businesses and in amounts acceptable to 
  Lender.  
  
  	(c)	Keeping of Books.   Each Loan Party shall keep proper 
  books of record and account for itself and all of its 
  Consolidated Subsidiaries, in which full and correct entries 
  shall be made of all financial transactions and the assets and 
  business of such Person in conformity with GAAP.
  
  	(d)	Corporate or Partnership Existence.  Except as 
  permitted in Section 4.01 and 4.02, each Loan Party shall, and 
  shall cause each of its Consolidated Subsidiaries to, at all 
  times preserve and keep in full force and effect its corporate or 
  partnership existence (as the case may be) and all rights and 
  franchises material to its business.  Each Loan Party will 
  promptly notify Lender of any change (i) in its or its 
  Consolidated Subsidiaries' corporate or partnership structure or 
  (ii) to its organizational documents. 
  
  	(e)	Inspection.  Each Loan Party shall, at any reasonable 
  time and from time to time, upon reasonable prior notice, during 
  regular business hours permit Lender (and any authorized 
  representatives designated by Lender) to (1) examine and make 
  copies of and abstracts from the records (other than records 
  subject to attorney-client privilege or confidentiality 
  agreements) and books of account of such Loan Party, (2) to visit 
  and, subject to the rights of tenants, inspect any of the 
  properties of such Loan Party and its Subsidiaries, (3) discuss 
  the affairs, finances and accounts of such Loan Party and its 
  Subsidiaries with the executive officers of the Company, and (4) 
  communicate directly, in the presence of representatives of  such 
  Loan Party, with such Loan  Party's independent public 
  accountants at such reasonable times during normal business hours 
  and as often as may be reasonably requested.  Lender's expenses 
  associated with such inspection, shall be paid by Lender, except 
  during the continuance of any Event of Default, in which event 
  the reasonable expenses of Lender associated with such inspection 
  shall be paid by such Loan Party.
  
  	(f)	Payment of Taxes and Claims.  Each Loan Party shall, 
  and shall cause its Consolidated Subsidiaries to, file all tax 
  returns required to be filed in any jurisdiction and to pay and 
  discharge all taxes shown to be due and payable on such returns 
  and all other taxes, assessments, governmental charges, or levies 
  imposed on such Person or its properties, assets, income or 
  franchises, provided that such Person need not pay any such tax 
  or assessment or claims if the amount, applicability or validity 
  thereof is contested by such Person on a timely basis in good 
  faith and in appropriate proceedings, and such Person has 
  established adequate reserves therefor on its books in accordance 
  with GAAP.
  
  	(g)	Events of Default, Etc.  Promptly, and in any event 
  within five (5) days after any Loan Party shall obtain knowledge 
  of any of the following events or conditions, such Loan Party 
  shall deliver copies of all notices given or received by such 
  Loan Party with respect to any such event or condition and a 
  certificate of an authorized party on behalf of such Loan Party 
  specifying the nature and period of existence of such event or 
  condition and what action of such Loan Party has taken, is taking 
  and proposes to take with respect thereto: (i) any condition or 
  event that constitutes a Default or an Event of Default; or (ii) 
  any event or condition that could reasonably be expected to 
  result in any Material Adverse Effect.
  
  	(h)	Litigation.  Promptly upon any officer of any Loan 
  Party obtaining knowledge of (1) the institution of any action, 
  suit, proceeding, governmental investigation or arbitration 
  against or affecting any Loan Party, (2) any material development 
  in any action, suit, proceeding, governmental investigation or 
  arbitration at any time pending against or affecting any Loan 
  Party or any property of any Loan Party, or (3) the assertion of 
  any claim, or the institution of any proceeding raising any 
  claim, against any Loan Party or any of its real properties now 
  or formerly owned, leased or operated by it or other assets of 
  it, alleging any damage to the environment or violation of any 
  Environmental Laws, that in any such case could reasonably be 
  expected to have a Material Adverse Effect or a material adverse 
  effect upon the business, operations, properties, assets, 
  condition (financial or otherwise) or prospects of any Loan Party 
  on an individual basis or taken as a whole, such Loan Party will 
  give notice thereof to Lender and provide such other information 
  as may be reasonably available to it to enable Lender and its 
  counsel to evaluate such matter.
  
  	(i)	Other Indebtedness Notices.   Each Loan Party shall 
  promptly deliver copies of all notices given or received by such 
  Loan Party with respect to noncompliance with any term or 
  condition related to any Debt in excess of $1,000,000 with 
  respect to a single item or $3,000,000 in the aggregate, and 
  shall promptly notify Lender of any potential or actual event of 
  default with respect to any such Debt.
  
  	(j)	Fiscal Year; Financial Statements; Reports of the 
  Company and Borrower; SEC and Other Reports; Officer's 
  Certificate.  Each Loan Party shall maintain its fiscal year as a 
  calendar year at all times.  The Company shall deliver the 
  following submissions to Lender, and the Borrower shall make 
  identical submissions (except for those relating to Securities 
  and Exchange Commission requirements) at the times required for 
  submissions from Company pursuant to clauses (i), (ii), (iv) and 
  (v) below for the appropriate period:
  
  	(i)	Quarterly Statements -- within 45 days after the 
  end of each quarterly fiscal period in each fiscal year of 
  the Company (other than the last quarterly fiscal period of 
  each such fiscal year), duplicate copies of,
  
  	(A)	a consolidated balance sheet of the Company 
  and its Consolidated Subsidiaries as at the end of such 
  quarter, and
  
  	(B)	consolidated statements of income, changes in 
  shareholders' equity and cash flows of the Company and 
  its Consolidated Subsidiaries, for such quarter and (in 
  the case of the second and third quarters) for the 
  portion of the fiscal year ending with such quarter,
  
  setting forth in each case in comparative form the figures 
  for the corresponding periods in the previous fiscal year, 
  all in reasonable detail, prepared in accordance with GAAP 
  applicable to quarterly financial statements generally, and 
  certified by a financial officer of the Company as fairly 
  presenting, in all material respects, the financial position 
  of the companies being reported on and their results of 
  operations and cash flows, subject to changes resulting from 
  year-end adjustments, provided that delivery within the time 
  period specified above of copies of the Company's Quarterly 
  Report on Form 10-Q prepared in compliance with the 
  requirements therefor and filed with the Securities and 
  Exchange Commission shall be deemed to satisfy the 
  requirements of this Section 5.01(j)(i);
  
  	(ii)	Annual Statements -- within 90 days after the end 
  of each fiscal year of the Company, duplicate copies of,
  
  	(A)	a consolidated balance sheet of the Company 
  and its Consolidated Subsidiaries, as at the end of 
  such year, and
  
  	(B)	consolidated statements of income, changes in 
  shareholders' equity and cash flows of the Company and 
  its Consolidated Subsidiaries, for each such year,
  
  setting forth in each case in comparative form the figures 
  for the previous fiscal year, all in reasonable detail, 
  prepared in accordance with GAAP, and accompanied by:
  
  	(1)	an opinion thereon of independent certified 
  public accountants of recognized national standing, 
  which opinion shall state that such financial 
  statements present fairly, in all material respects, 
  the financial position of the companies being reported 
  upon and their results of operations and cash flows and 
  have been prepared in conformity with GAAP, and that 
  the examination of such accountants in connection with 
  such financial statements has been made in accordance 
  with generally accepted auditing standards, and that 
  such audit provides a reasonable basis for such opinion 
  in the circumstances, and 
  	(2)	upon request of Lender, but only if a default 
  shall exist or if the Unsecured Note shall have a lower 
  rating than that specified in Section 2.01(b) hereof at 
  the time of such request, a certificate of such 
  accountants stating that they have reviewed this 
  Agreement and the certificate of a financial officer of 
  the Company provided pursuant to Section 5.01(j)(iv) in 
  connection with such financial statements, and stating 
  further whether, in making their audit, they have 
  become aware of any condition or event that then 
  constitutes a breach of any covenant contained in 
  Article Four, and, if they are aware that any such 
  condition or event then exists, specifying the nature 
  and period of the existence thereof (it being 
  understood that such accountants shall not be liable, 
  directly or indirectly, for any failure to obtain 
  knowledge of any such breach unless such accountants 
  should have obtained knowledge thereof in making an 
  audit in accordance with generally accepted auditing 
  standards or did not make such an audit),
  
  provided that the delivery within the time period specified 
  above of the Company's Annual Report on Form 10-K for such 
  fiscal year (together with the Company's annual report to 
  shareholders, if any, prepared pursuant to Rule 14a-3 under 
  the Exchange Act) prepared in accordance with the 
  requirements therefor and filed with the Securities and 
  Exchange Commission, together with the accountant's 
  certificate described in clause (2) above, shall be deemed 
  to satisfy the requirements of this Section 5.01(j)(ii);
  
  	(iii)	Promptly upon their becoming available, one copy 
  of (A) each financial statement, report, notice or proxy 
  statement sent by the Company or any of its Subsidiaries to 
  public securities holders generally, and (B) each regular or 
  periodic report, each registration statement (without 
  exhibits except as expressly requested by Lender), and each 
  prospectus and all amendments thereto filed by the Company 
  or any such Subsidiary with the Securities and Exchange 
  Commission and of all press releases and other statements 
  made available generally by the Company or any such 
  Subsidiary to the public concerning developments that are 
  material;
  
  	(iv)	Each set of financial statements delivered to 
  Lender pursuant to Section 5.01(j)(i) or Section 5.01(j)(ii) 
  hereof shall be accompanied by a certificate of a financial 
  officer of the Company, in his or her capacity as such 
  officer and without personal liability other than for 
  fraudulent statements or omissions, setting forth:
  
  	(A)	Covenant Compliance -- the information 
  (including detailed calculations) required in order to 
  establish whether the Company was in compliance with 
  the requirements of Section 4.01 hereof and whether the 
  Borrower was in compliance with the requirements of 
  Section 4.02 hereof, during the quarterly or annual 
  period covered by the statements then being furnished 
  (including with respect to such Section, where 
  applicable, the calculations of the maximum or minimum 
  amount, ratio or percentage, as the case may be, 
  permissible under the terms of such Sections, and the 
  calculation of the amount, ratio or percentage then in 
  existence); and
  	(B)	Event of Default -- a statement that such 
  officer has reviewed the relevant terms hereof and has 
  made, or caused to be made, under his or her 
  supervision, a review of the transactions and 
  conditions of the Company, the Borrower, and the 
  Company's other Subsidiaries from the beginning of the 
  quarterly or annual period covered by the statements 
  then being furnished to the date of the certificate and 
  that such review shall not have disclosed the existence 
  during such period of any condition or event that 
  constitutes a Default or an Event of Default or, if any 
  such condition or event existed or exists, specifying 
  the nature and period of existence thereof and what 
  action the Company or Borrower (as applicable) shall 
  have taken or proposes to take with respect thereto;
  
  	(v)	Promptly after Lender shall so request, such other 
  reports and information as Lender shall reasonably request 
  from time to time.
  
  ARTICLE SIX
  
  Section 6.01.  Events of Default.
  
  	(a)	From and after the Conversion Date, each of the 
  following shall constitute an Event of Default for purposes of 
  this Agreement:
  
  		(i)		Borrower shall fail to pay (A) any 
  installment or mandatory prepayment of principal 
  of or Prepayment Premium or the Evasion of 
  Prepayment Premium, if any, on the Unsecured 
  Note, (B) any interest on the Unsecured Note or 
  (C) any fee or other amount payable hereunder or 
  under the Unsecured Note, in each case when the 
  same becomes due and payable, whether at 
  maturity or otherwise, and such failure 
  continues for five (5) days after the same 
  becomes due and payable; or 
  
  		(ii)		Any representation or warranty made 
  by either Loan Party herein, or in any writing 
  furnished to Lender in connection with the 
  transactions contemplated by this Agreement, 
  shall prove to have been incorrect in any 
  material respect when made or deemed made; or 
  
  		(iii)		Borrower or the Company shall 
  fail to perform or observe any term, covenant or 
  agreement contained in this Agreement (other 
  than as specified in clause (i) above), and such 
  failure shall remain unremedied for forty-five 
  (45) days; or 
  
  		(iv)		Any recourse obligation of either 
  Loan Party or any of their respective 
  Consolidated Subsidiaries (other than the 
  Unsecured Note) shall have been declared (or one 
  or more Persons is entitled to declare any such 
  obligation) due and payable prior to its 
  scheduled maturity, or any payment in respect of 
  such obligations shall be past due beyond any 
  applicable grace period; or
  
  		(v)		There shall be an Event of Default 
  under any of the Loan Documents; or
  
  		(vi)		Either Loan Party, GP or any of 
  their respective Consolidated Subsidiaries shall 
  commence a voluntary case or other proceeding 
  seeking liquidation, reorganization or other 
  relief with respect to itself or its debts under 
  any bankruptcy, insolvency or other similar law 
  now or hereafter in effect or seeking the 
  appointment of a trustee, receiver, liquidator, 
  custodian or other similar official of its or 
  any substantial part of its property, or shall 
  consent to any such relief or to the appointment 
  of or taking possession by any such official in 
  an involuntary case or other proceeding 
  commenced against it, or shall make a general 
  assignment for the benefit of creditors, or 
  shall fail generally to pay its debts as they 
  become due, or shall take any corporate action 
  to authorize any of the foregoing; or
  
  		(vii)		an involuntary case or other 
  proceeding shall be commenced against either 
  Loan Party, GP or any of their respective 
  Consolidated Subsidiaries, seeking liquidation, 
  reorganization or other relief with respect to 
  it or its debts under any bankruptcy, insolvency 
  or other similar law now or hereafter in effect 
  or seeking the appointment of a trustee, 
  receiver, liquidator, custodian or other similar 
  official of it or any substantial part of its 
  property, and such involuntary case or other 
  proceeding shall remain undismissed and unstayed 
  for a period of 90 days; or an order for relief 
  shall be entered against either Loan Party, GP 
  or any of their respective Consolidated 
  Subsidiaries, under the federal bankruptcy laws 
  as now or hereafter in effect; or
  
  		(viii)		a final judgment or judgments 
  for the payment of money are rendered against 
  one or more of the Company, GP or any of their 
  respective Consolidated Subsidiaries, and which 
  judgments are not adequately covered by 
  insurance satisfactory to Lender in its sole 
  discretion, or within 60 days after entry 
  thereof, bonded, discharged or stayed pending 
  appeal, or are not discharged within 60 days 
  after the expiration of such stay.
  
  Section 6.02. Remedies Upon Default.
  
  	Upon the occurrence of an Event of Default described in 
  Section 6.01(b)(vi) or (vii), the entire principal sum evidenced 
  by the Unsecured Note together with accrued interest and all 
  other amounts due under this Agreement and the Unsecured Note 
  (including the Evasion of Prepayment Premium) shall become 
  immediately due and payable without any declaration or other act 
  on the part of Lender.  Upon the occurrence of any other Event of 
  Default, Lender may, upon notice to Borrower, in addition to such 
  other and further rights and remedies provided by law, the 
  Unsecured Note, or any other agreement entered into by Borrower 
  with respect to the Loan, declare the entire principal sum 
  evidenced by the Unsecured Note due and payable, together with 
  accrued interest thereon and all other amounts due under this 
  Agreement and the Unsecured Note, whereupon the Unsecured Note, 
  plus the applicable Evasion of Prepayment Premium, if any, and 
  all such interest and all such amounts shall become due and 
  payable without presentment, demand, protest or further notice of 
  any kind, all of which are hereby expressly waived by Borrower.  
  If an Event of Default has occurred and is continuing, and 
  irrespective of whether the Unsecured Note has become or has been 
  declared immediately due and payable under this Section 6.02, the 
  Lender may proceed to protect and enforce the rights of Lender by 
  an action at law, suit in equity or other appropriate proceeding, 
  whether for the specific performance of any agreement contained 
  herein or in the Unsecured Note, or for an injunction against a 
  violation of any of the terms hereof or thereof, or in aid of the 
  exercise of the power granted hereby or thereby or by law or 
  otherwise.
  
  Section 6.03. No Waivers or Election of Remedies; Expenses, etc.
  
  	No delay on the part of Lender in exercising any right, 
  power or remedy following the occurrence of an Event of Default 
  and no course of dealing shall operate as a waiver thereof or 
  otherwise prejudice Lender's rights, powers or remedies.  No 
  right, power or remedy conferred by this Agreement or the 
  Unsecured Note shall be exclusive of any other right, power or 
  remedy referred to herein or therein or now or hereafter 
  available at law, in equity, by statute or otherwise, including 
  any right, power or remedy of Lender under any of the Loan 
  Documents.  Without limiting the obligations of Borrower set 
  forth elsewhere herein, Borrower will pay to Lender on demand 
  such further amount as shall be sufficient to cover all costs and 
  expenses of Lender incurred in any enforcement or collection 
  under this Article 6, including attorneys' fees, expenses and 
  disbursements.
  
  ARTICLE SEVEN
  
  Section 7.01.  Amendments and Waivers.
  
  	This Agreement may be amended, superseded, canceled, renewed 
  or extended, and the terms hereof may be waived, only by a 
  written instrument signed by the parties hereto or, in the case 
  of a waiver, by the party waiving compliance.  Borrower shall pay 
  all costs and expenses (including attorneys' fees) incurred by 
  Lender in connection with any amendments, waivers or consents 
  requested by Borrower under or in respect of this Agreement or 
  the Unsecured Note (whether or not such amendment, waiver or 
  consent becomes effective).
  
  Section 7.02.  Notices.  Unless otherwise specifically provided 
  herein, all notices shall be in writing addressed to the 
  respective party as set forth below and may be personally served, 
  sent by overnight courier service for next business day delivery 
  or United States mail and shall be deemed to have been given: (a) 
  if delivered in person, when delivered; (b) if delivered by 
  overnight courier, on the next succeeding Business Day after 
  delivery to such courier properly addressed; or (c) if by U.S. 
  Mail, four Business Days after depositing in the United States 
  mail, with postage prepaid and properly addressed:
  
  	If to Borrower		Parkway Properties LP
  	or Company:			c/o Parkway Properties, Inc.
  						188 East Capitol Street
  						Suite 1000
  						Jackson, MS 39201
  						Attn.: Sarah P. Clark
  
  						TIAA Appl. # FL-889;  M-000441900
  						TIAA Appl. # NC-190;  M-000448000
  						TIAA Appl. # SC-74;  M-000442200
  						TIAA Appl. # TN-145;  M-000442100								TIAA Appl. # TX-899;  M-000440000
  						TIAA Appl. # VA-387;  M-000442000		
  	
  	with a copy to:	Forman Perry Watkins
  						Krutz & Tardy, PLLC
  						188 East Capitol Street
  						Suite 1200
  						Jackson, MS 39201
  						Attn.:  Steven M. Hendrix, Esq.
  
  						TIAA Appl. # FL-889;  M-000441900
  						TIAA Appl. # NC-190;  M-000448000
  						TIAA Appl. # SC-74;  M-000442200
  						TIAA Appl. # TN-145;  M-000442100								TIAA Appl. # TX-899;  M-000440000
  						TIAA Appl. # VA-387;  M-000442000		
  
  	If to Lender:		Teachers Insurance and Annuity 
  Association of America
  						730 Third Avenue
  						New York, New York  10017
  						Attn:	Managing Director
  						Mortgage and Real Estate Division
  						Region: Northeast/South/Int'l
  
  						TIAA Appl. # FL-889;  M-000441900
  						TIAA Appl. # NC-190;  M-000448000
  						TIAA Appl. # SC-74;  M-000442200
  						TIAA Appl. # TN-145;  M-000442100								TIAA Appl. # TX-899;  M-000440000
  						TIAA Appl. # VA-387;  M-000442000		
  
  	with a copy to:	Teachers Insurance and Annuity 
  Association of America
  						730 Third Avenue
  						New York, New York  10017
  						Attn:	Vice President and Chief 
  Counsel in charge of Mortgage 
  and Real Estate Law
  
  						TIAA Appl. # FL-889;  M-000441900
  						TIAA Appl. # NC-190;  M-000448000
  						TIAA Appl. # SC-74;  M-000442200
  						TIAA Appl. # TN-145;  M-000442100								TIAA Appl. # TX-899;  M-000440000
  						TIAA Appl. # VA-387;  M-000442000		
  
  or to such other address as the party addressed shall have 
  previously designated by written notice to the serving party, 
  given in accordance with this subsection.
  
  Section 7.03.  Governing Law.
  
  	This Agreement shall be governed and construed in accordance 
  with, and the rights of the parties shall be governed by, the 
  laws of the State of New York excluding choice-of-law principles 
  of the law of such State that would require the application of 
  the laws of a jurisdiction other than such State.
  
  Section 7.04.  Execution in Counterparts.
  
  	This Agreement may be executed by the parties hereto in 
  separate counterparts, each of which when so executed and 
  delivered shall be an original, but all such counterparts shall 
  together constitute one and the same instrument.  Each 
  counterpart may consist of a number of copies hereof each signed 
  by less than all, but together signed by all, of the parties 
  hereto.
  
  Section 7.05.  Exhibits.
  
  The Exhibits hereto shall constitute a part of this Agreement as 
  if fully set forth herein.
  
  Section 7.06.  Severability.
  
  	Any provision of this Agreement that is prohibited or 
  unenforceable in any jurisdiction shall, as to such jurisdiction, 
  be ineffective to the extent of such prohibition or 
  unenforceability without invalidating the remaining provisions 
  hereof, and any such prohibition or unenforceability in any 
  jurisdiction shall (to the full extent permitted by law) not 
  invalidate or render unenforceable such provision in any other 
  jurisdiction.
  
  Section 7.07.  Survival of Representations and Warranties.
  
  	All representations and warranties contained in this 
  Agreement or made in writing by or on behalf of Borrower or the 
  Company in connection with the transactions contemplated hereby 
  shall survive the execution and delivery of this Agreement and 
  the Unsecured Note and the sale of the Unsecured Note, regardless 
  of any investigation made at any time by or on behalf of Lender.
  
  Section 7.08.  Successors and Assigns.
  
  	All covenants and other agreements contained in this 
  Agreement by or on behalf of any of the parties hereto bind and 
  inure to the benefit of their respective successors and assigns 
  whether so expressed or not.
  
  Section 7.09.  The Meaning of "Including".
  
  	The word "including" or other forms of the word "include" 
  shall mean "without limitation".
  
  ARTICLE EIGHT
  
  Section 8.01.	Payment on Unsecured Note.
  
  	(a)	Each payment to be made by Borrower hereunder and under 
  the Unsecured Note shall be made not later than 12:00 noon (New 
  York City time) on the day when due, in U.S. dollars, to Lender 
  at its account address set forth below (or at such other account 
  address as Lender shall have previously designated by written 
  notice to Borrower) in immediately available funds without 
  set-off or counterclaim:
  
  				Chase Manhattan Bank
  				New York, NY
  				ABA #021000021
  				Account #910-2-766467
  Credit to Teachers Insurance and Annuity 
  Association of America
  
  						TIAA Appl. # FL-889;  M-000441900
  						TIAA Appl. # NC-190;  M-000448000
  						TIAA Appl. # SC-74;  M-000442200
  						TIAA Appl. # TN-145;  M-000442100							
       	TIAA Appl. # TX-899;  M-000440000
  						TIAA Appl. # VA-387;  M-000442000		
  
  	(b)	Whenever any payment hereunder or under the Unsecured 
  Note shall be stated to be due on a day other than a Business 
  Day, such payment shall be made on the next succeeding Business 
  Day, and such extension of time shall in such case be included in 
  the computation of payment of interest or fee, as the case may 
  be.
  
  ARTICLE NINE
  
  Section 9.01.  Registration of the Unsecured Note.
  
  	The Borrower shall keep at its principal executive office, 
  and at its own expense, a register for the registration and 
  registration of transfer of the Unsecured Note.  The names and 
  addresses of the holder of the Unsecured Note, the transfer 
  thereof and the names and addresses of the transferees of the 
  Unsecured Note shall be registered in such note register.  
  Borrower may deem and treat the person in whose name the 
  Unsecured Note is registered as the owner and holder thereof for 
  all purposes and shall not be affected by any notice to the 
  contrary, until due presentment of such Unsecured Note for 
  registration of transfer as provided in this Article Nine.  
  Neither Borrower nor Company may register or otherwise represent 
  the Unsecured Note as a public instrument.
  
  Section 9.02. Transfer and Exchange of the Unsecured Note.
  
  	Upon surrender of the Unsecured Note at the principal 
  executive office of the Borrower for registration of transfer or 
  exchange, Borrower shall execute and deliver, at Borrower's 
  expense, a new Unsecured Note of the same series (as requested by 
  the holder thereof) in exchange therefor, in an aggregate 
  principal amount equal to the unpaid principal amount of the 
  surrendered Unsecured Note.  Each such new Unsecured Note shall 
  be dated and bear interest from the date to which interest shall 
  have been paid on the surrendered Unsecured Note or dated the 
  date of the surrendered Unsecured Note if no interest shall have 
  been paid thereon.
  
  	Every Unsecured Note surrendered for registration of 
  transfer shall be duly endorsed, or be accompanied by a written 
  instrument of transfer duly executed, by the holder of such 
  Unsecured Note or by his or her attorney duly authorized in 
  writing.  Borrower may condition its issuance of any new 
  Unsecured Note in connection with a transfer by any holder on the 
  receipt of customary representations from any transferee of any 
  Unsecured Note as to securities law matters and on payment to 
  Borrower of a sum sufficient to cover any stamp tax or other 
  governmental charge imposed in respect of such transfer.
  
  Section 9.03.  Lost, Stolen or Mutilated Notes.
  
  	Upon receipt by the Borrower of evidence reasonably 
  satisfactory to it of the ownership of and the loss, theft, 
  destruction or mutilation of any Unsecured Note (which evidence 
  shall be, in the case of Lender or other institutional investor, 
  notice from Lender or such other institutional investor, of such 
  ownership and such loss, theft, destruction or mutilation), and
  
  	(a)	in the case of loss, theft or destruction, of an 
  indemnity in such form or amount as shall be reasonably 
  satisfactory to Borrower (provided that if the holder of the 
  Unsecured Note is, or is a nominee for, Lender or another 
  institutional investor, such Person's unsecured agreement of 
  indemnity shall conclusively be deemed to be satisfactory so 
  long as such Person (other than Lender or any nominee of 
  Lender) has a net worth at least equal to the greater of the 
  outstanding principal amount of the lost, stolen or 
  destroyed Unsecured Note or $50,000,000), or
  
  	(b)	in the case of mutilation, upon surrender and 
  cancellation thereof,
  
  Borrower at its own expense shall execute and deliver, in lieu 
  thereof, a new Unsecured Note, dated and bearing interest from 
  the date to which interest shall have been paid on such lost, 
  stolen, destroyed or mutilated Unsecured Note or dated the date 
  of such lost, stolen, destroyed or mutilated Unsecured Note if no 
  interest shall have been paid thereon.
  
  ARTICLE TEN
  
  Section 10.01.  Contingent Liability of the Company in Respect of 
  the Unsecured Note.
  
  	The Company shall have no liability whatsoever for the 
  Unsecured Note unless and until the Company shall fail to perform 
  or observe its obligations under Section 4.01(k), in which event 
  the Company shall become jointly and severally liable to Lender, 
  as fully as if the Company were named together with the Borrower 
  in the Unsecured Note, for the Obligations thereunder outstanding 
  as of the date of such failure by the Company or incurred 
  thereafter.
  
  [balance of page is intentionally blank]
  
  	IN WITNESS WHEREOF, the parties hereto have executed this 
  Agreement on the date first above written.
  
  					BORROWER:
  
  PARKWAY PROPERTIES LP, a Delaware limited 
  partnership
  
  	By:	Parkway Properties General 
  Partners, Inc.,its sole general partner, 
  a Delaware corporation
  
  						By:
  						Name:  James M. Ingram
  						Title: Senior Vice President
  
  						By:
  							Name:  Sarah P. Clark
  						  	Title: Senior Vice President,
  								  CFO, Treasurer & 
  							   	  Secretary
  
  					 
  					COMPANY:
  
  PARKWAY PROPERTIES, INC., a Maryland 
  corporation
  
  					
  						By:
   							Name:   James M. Ingram
  							Title:  Senior Vice President
  
  						By:
  							Name:   Sarah P. Clark
  							Title:  Senior Vice President,  
  								   CFO, Treasurer &
  								   Secretary
  
  [Signatures Continued on Following Page]
  
  [Signatures Continued From Previous Page]
  
  					LENDER:
  
  					TEACHERS INSURANCE AND ANNUITY
  					ASSOCIATION OF AMERICA
  
  	 By:
  						 Name:   William A. Welcher
  						 Title:  Associate Director 
    							    and Assistant 
  							    Secretary
  
  Exhibit A
  
  UNSECURED NOTE
  
  $_____________[ ]	__________, _________
  _______ __, ____
  PPN [_________________]
  
  	FOR VALUE RECEIVED, the undersigned, PARKWAY PROPERTIES LP, 
  a Delaware limited partnership (herein, together with its 
  successors and assigns, "Maker"), having an address c/o Parkway 
  Properties, Inc., 188 East Capitol Street, Suite 1000, Jackson, 
  MS 39201, Attn.: Sarah P. Clark promises to pay to the order of 
  TEACHERS INSURANCE AND ANNUITY ASSOCIATION OF AMERICA (herein, 
  together with its successors and assigns, "Holder") during 
  regular business hours at its offices at 730 Third Avenue, New 
  York, New York 10017, or at such other place as may be designated 
  from time to time in writing by Holder, the principal sum of 
  _________ MILLION ________________________ AND ____/100 
  ($______________) DOLLARS, together with interest at the rate of 
  seven and 95/1000 (7.095%) percent per annum (the "Unsecured Note 
  Base Rate") thereon on so much thereof as is from time to time 
  outstanding and unpaid in the manner hereinafter more 
  specifically set forth, in lawful money of the United States of 
  America which will at that time be deemed to be legal tender in 
  payment of all debts and dues, public and private, such principal 
  and interest to be paid in installments as follows:
  
  		1.	Principal and accrued interest in the amount of 
  $____________[ ] shall be due and payable on the first day of the 
  calendar month following the Conversion Date and on the first day 
  of each month thereafter but excluding August 1, 2008 (the 
  "Maturity Date"). 
  
  		2.	On the Maturity Date, the entire unpaid principal 
  balance together with accrued and unpaid interest and all other 
  sums due hereunder and under the Conversion and Note Agreement 
  (as hereinafter defined) shall be due and payable.
  
  	Maker acknowledges that the monthly installments of 
  principal and interest provided in Paragraph [1] above will not 
  fully repay the principal of this Note and that a balloon payment 
  of the 
  entire unpaid principal balance, together with accrued and unpaid 
  interest thereon, will be due on the Maturity Date.  Holder has 
  made no agreement to make financing available to Maker in 
  connection with such balloon payment.
  
  	The indebtedness evidenced by this Note may not be prepaid, 
  in whole or in part, except on the terms and conditions and in 
  the amounts and with the premiums, if any, set forth in the 
  Conversion and Note Agreement.
  
  	This Unsecured Note of the Maker in the aggregate principal 
  amount of $___________ is issued under and pursuant to the 
  Conversion and Note Agreement dated as of _________, 1998 (the 
  "Conversion and Note Agreement") and entered into by Maker, 
  Parkway Properties, Inc., a Maryland corporation (the "Company"), 
  and Holder, and the holder of this Note is entitled to all the 
  benefits provided for thereby or referred to therein, to which 
  Conversion and Note Agreement reference is hereby made for the 
  statement thereof.
  
  	Upon the occurrence of an Event of Default (as defined in 
  the Conversion and Note Agreement), the entire principal balance 
  of this Note together with accrued interest and all other sums 
  due under the Conversion and Note Agreement will become or may be 
  declared to be immediately due and payable, without any notice or 
  demand whatsoever, notice of exercise of such option being waived 
  by Maker.  Holder's failure to exercise its option to accelerate 
  will not constitute a waiver of the right to exercise such option 
  at a later date (provided the Event of Default continues) or upon 
  the occurrence of a subsequent Event of Default.
  
  	Maker hereby waives and renounces for itself, and all its 
  successors and assigns, all right to the benefit of any 
  moratorium, reinstatement, forbearance, stay and extension now 
  provided, or which hereafter may be provided, by the Constitution 
  and laws of the United States of America and of any state 
  thereof, as to itself and in and to all of its property, real and 
  personal, against the enforcement and collection of the 
  obligations evidenced by this Note.
  	In the event of an Event of Default under the Conversion and 
  Note Agreement, interest will accrue thereafter on the unpaid 
  principal balance of this Note at the rate of five percent (5%) 
  per annum plus the Unsecured Note Base Rate.
  
  	In addition to the foregoing, if Maker shall fail to timely 
  make any payment of interest or principal beyond any grace period 
  provided in the Conversion and Note Agreement, time being of the 
  essence, including payments due on maturity, then a late charge 
  by way of damages will be immediately due and payable.  Maker 
  recognizes that a default by Maker in making the payments under 
  this Note and under the Conversion and Note Agreement on or 
  before the due date thereof will result in Holder incurring 
  additional expense in servicing the loan evidenced by this 
  Unsecured Note outstanding under the Conversion and Note 
  Agreement, in a loss to Holder of the use of the money due and in 
  frustration to Holder in meeting its loan commitments.  Maker 
  agrees that if, for any reason, Maker fails to pay the amounts 
  due under this Note or under the Conversion and Note Agreement on 
  or before the due date thereof and such failure continues beyond 
  any such grace period, Holder will be entitled to damages for the 
  detriment caused thereby, but that it is extremely 
  difficult and impractical to ascertain the extent of such 
  damages.  Maker therefore agrees that a sum equal to five cents 
  ($.05) for each dollar ($1.00) of each payment which becomes and 
  remains delinquent is a reasonable estimate of the damages to 
  Holder, which sum Maker agrees to pay on demand.
  
  	If any suit or action is instituted to collect this Note or 
  any part thereof, or if it is placed in the hands of an attorney 
  for collection, Maker promises and agrees to pay reasonable 
  attorneys' fees, court costs and fees of Holder or any agent of 
  Holder.
  
  	Maker and all endorsers or guarantors hereof and all others 
  who may become liable for all or any part of this obligation 
  agree hereby to be jointly and severally bound, and they jointly 
  and severally waive and renounce, to the extent permitted by law, 
  demand, protest, notice of nonpayment (other than for such 
  notices as are expressly set forth in the Conversion and Note 
  Agreement) and any and all lack of diligence or delays in 
  collection or enforcement thereof, and expressly consent to any 
  extension of time, release of any party liable for this 
  obligation, or any other indulgence or forbearance whatsoever.  
  Any such extension, release, indulgence or forbearance may be 
  made without notice to such party and without in any way 
  affecting the liability of such party.
  
  	Presentment for payment, demand, protest and notice of 
  demand, notice of dishonor and notice of non-payment, and all 
  other notices not expressly provided for herein or in the 
  Conversion and Note Agreement, are hereby waived by Maker.
  
  	No failure to accelerate the debt evidenced hereby by reason 
  of an Event of Default, acceptance of a past due installment, or 
  indulgence granted from time to time will be construed (i) as a 
  novation of this Note or as a reinstatement of the indebtedness 
  evidenced hereby or as a waiver of such right of acceleration or 
  of the right of Holder thereafter to insist upon strict 
  compliance with the terms of this Note, or (ii) to prevent the 
  exercise of such right of acceleration or of any other right 
  granted hereunder by the laws of the State of New York.  Maker 
  hereby expressly waives the benefit of any statute or rule of law 
  or equity now provided, or which may hereafter be provided, which 
  would produce a result contrary to or in conflict with the 
  foregoing.  No extension of time for the payment of this Note or 
  any installment due hereunder, made by agreement with any person 
  now or hereafter liable for the payment of this Note, will 
  operate to release, discharge, modify, change or affect the 
  original liability, if any, of Maker under this Note, either in 
  whole or in part.  This Note may not be changed orally but only 
  by an agreement in writing signed by the party against whom 
  enforcement of any waiver, change, modification or discharge is 
  sought.
  
  	Notwithstanding any provision herein or in the Conversion 
  and Note Agreement to the contrary, it is not the intention of 
  Holder to charge or collect, nor shall there at any time be 
  charged or become due and payable hereunder any interest (whether 
  based on the Unsecured Note Base Rate or otherwise) which would 
  result in a rate of interest being charged which is in excess of 
  the maximum rate, if any, now permitted by law for this 
  transaction to be charged; and in the event that any sum in 
  excess of the maximum rate of interest is paid or charged, the 
  same shall be deemed to have been a prepayment of principal 
  (which prepayment shall be permitted, and be without Prepayment 
  Premium or penalty) when paid, and all payments made thereafter 
  shall be appropriately applied to interest and principal to give 
  such effect to the maximum rate permitted by law, and after such 
  application, any excess payment shall be immediately refunded to 
  Maker.
  
  	If during the term of this Note the maximum rate of 
  interest, if any, now permitted by law for this transaction to be 
  charged should be increased, then for so long as such increase is 
  in effect, the applicable maximum rate permitted to be charged as 
  referred to in the paragraph immediately preceding will be deemed 
  to be such increased rate.  If such maximum rate of interest, if 
  any, now permitted by law to be charged for this transaction 
  should be deleted so that there would be no such maximum rate, 
  then for purposes of this Note there will thereafter be no 
  maximum rate limiting the amount that can be charged.
  
  	This Note is intended as a contract under, and will be 
  construed and enforced in accordance with, the laws of the State 
  of New York or the laws of the United States of America, when and 
  where applicable (including, without limitation, any federal 
  usury ceiling or other federal law preempting state usury laws, 
  which law, from time to time, may be applicable to the 
  indebtedness evidenced hereby), as Holder may elect.
  
  	As used herein, the terms "Maker" and "Holder" will be 
  deemed to include their respective successors, legal 
  representatives and assigns, whether by voluntary action by the 
  parties or by the operation of law.
  
  	Any and all notices, demands or requests provided for or 
  permitted to be given pursuant to this Note will be given in the 
  manner described in Section 7.02 of the Conversion and Note 
  Agreement.
  
  * * * *
  
  	IN WITNESS WHEREOF, the undersigned has duly executed and 
  delivered this Note as of the date first above written.
  
  					MAKER:
  
  					PARKWAY PROPERTIES LP, a Delaware 
  limited partnership
  
  II. By: 	Parkway Properties General
  	Partners, Inc., a Delaware 
  	corporation, its sole 
  	general partner
  
  	By:
  				     	Name: ____________________
  					Title: _____________________
  
  	By:
  						Name: ____________________
  						Title: ____________________
  
  Exhibit B
  FORM OF LEGAL OPINION
  
  	The opinion of Forman Perry Watkins Krutz & Tardy, PLLC and 
  other counsel, as counsel for the Loan Parties and GP, shall be 
  to the effect that:
  
  	1.	The Borrower is a limited partnership, duly 
  incorporated and in good standing under the laws of 
  Delaware.  The Borrower has all requisite power and 
  authority to own and operate its properties and to 
  carry on its business as now conducted and proposed 
  to be conducted.
  
  	2.	The Company is a  ____________________ duly 
  incorporated and in good standing under the laws of 
  ________.  The Company has all requisite power and 
  authority to carry on its business as now conducted 
  and proposed to be conducted.  The Company holds, 
  beneficially and of record, one hundred percent 
  (100%) of each class of the outstanding capital stock 
  of GP, and owns a ____ limited partnership interest 
  in the Borrower.
  
  	3.	GP is a corporation, duly incorporated and in good 
  standing under the laws of ____________.
  
  	4.	GP is the sole general partner of Borrower.
  
  	5.	The Borrower has all necessary legal power and 
  authority to enter into and to perform its 
  obligations under the Conversion and Note Agreement 
  and the Unsecured Note and has taken all necessary 
  action to authorize the execution and delivery of, 
  and the performance of its obligations under, the 
  Conversion and Note Agreement and the Unsecured Note.  
  The Conversion and Note Agreement and the Unsecured 
  Note have been duly and validly executed and 
  delivered by the Borrower, and constitute the legal, 
  valid, and binding joint and several obligations of 
  the Borrower enforceable against the Borrower in 
  accordance with their respective terms, except as 
  enforceability may be limited by applicable 
  bankruptcy, insolvency, reorganization, or similar 
  laws affecting the rights of creditors generally and 
  by equitable principles of general application.
  
  	6.	The Company has all necessary legal power and 
  authority to enter into and to perform its 
  obligations under the Conversion and Note Agreement 
  and has taken all necessary action to authorize the 
  execution and delivery of, and the performance of its 
  obligations under, the Conversion and Note Agreement.  
  The Conversion and Note Agreement has been duly and 
  validly executed and delivered by the Company, and 
  constitutes the legal, valid, and binding obligation 
  of the Company enforceable against the Company in 
  accordance with its terms, except as enforceability 
  may be limited by applicable bankruptcy, insolvency, 
  reorganization, or similar laws affecting the rights 
  of creditors generally and by equitable principles of 
  general application.
  
  	7.	The execution and delivery of the Conversion and Note 
  Agreement by the respective Loan Parties and of the 
  Unsecured Note by the Borrower, and the performance 
  by each Loan Party of its obligations under the 
  Conversion and Note Agreement and, in the case of the 
  Borrower and, if applicable the Company, under the 
  Unsecured Note, will not violate or conflict with any 
  law, rule, or regulation applicable to either Loan 
  Party, any provision of the organizational documents 
  of either Loan Party or, to such counsel's knowledge 
  after due inquiry, (i) any order, judgment, or decree 
  of any court, arbitrator or governmental agency 
  applicable to either Loan Party or any of its assets, 
  or (ii) any agreement binding on either Loan Party 
  or, to such counsel's knowledge after due inquiry, 
  result in the creation or imposition of a lien on any 
  properties or revenues of either Loan Party.
  
  	8.	No consent or authorization of, filing with, or other 
  act by or in respect of, any governmental authority 
  and no consent of any party is required in connection 
  with the execution, delivery or performance by either 
  Loan Party of the Conversion and Note Agreement and 
  the Unsecured Note or the enforceability thereof 
  against each Loan Party.
  
  	9.	To such counsel's knowledge after due inquiry, there 
  is not presently pending or threatened any action, 
  claim, proceeding, or investigation, at law or in 
  equity or by or before any court or arbitrator or any 
  governmental, public, or regulatory authority, 
  against, affecting, or involving either Loan Party or 
  any employee thereof which questions the right, 
  power, legal capacity, or permissibility of either 
  Loan Party to execute and deliver, and to perform its 
  obligations under, the Conversion and Note Agreement 
  or the Unsecured Note, or wherein any unfavorable 
  decision, ruling, or finding could have a Material 
  Adverse Effect.
  
  	10.	Borrower is not an "employee benefit plan" as defined 
  in Section 3(3) of the Employee Retirement Income 
  Security Act of 1974, as amended ("ERISA") that is 
  subject to Title I of ERISA, or a "plan" as defined 
  in Section 4975(e)(1) of the Internal Revenue Code of 
  1986, as amended (the "Code") that is subject to 
  Section 4975 of the Code, and Borrower's assets do 
  not constitute "plan assets" of one or more such 
  plans for purposes of Title I of ERISA or Section 
  4975 of the Code.  Borrower is not a "governmental 
  plan" within the meaning of Section 3(3) of ERISA and 
  transactions by or with Borrower are not subject to 
  any laws regulating investments of and fiduciary 
  obligations with respect to governmental plans.
  
  	11.	Borrower is not, nor after giving effect to any loan 
  will be, subject to regulation under the Public 
  Utility Holding Company Act of 1935, the Federal 
  Power Act or the Investment Company Act of 1940 or to 
  any federal or state statute or regulation limiting 
  its ability to incur indebtedness for borrowed money.
  
  	12.	Neither the purchase of the Unsecured Note nor the 
  use by the Borrower of all or any portion of the 
  proceeds of the sale of the Unsecured Note will 
  violate Regulation U, Regulation T or Regulation X or 
  any other regulation of the Board of Governors of the 
  Federal Reserve System or the Securities Exchange Act 
  of 1934, as amended.
  
  	13.	The issuance, delivery and sale of the Unsecured Note 
  do not require registration under the Securities Act 
  of 1933, as amended, or the qualification of an 
  indenture under the Trust Indenture Act of 1939, as 
  amended.
  
  With respect to matters of fact on which such opinion is based, 
  such counsel shall be entitled to rely on appropriate 
  certificates of public officials and officers of either Loan 
  Party or GP, and with respect to matters governed by the laws of 
  any jurisdiction in which such counsel is not admitted to 
  practice, such counsel may rely upon the opinions of counsel 
  deemed (and stated in their opinion to be deemed) by them to be 
  competent and reliable, which counsel shall be reasonably 
  satisfactory to Lender
  
  Exhibit C
  
  Amo
  rti
  zat
  ion
  Paym
  ent
  Numb
  er
  
  Due Date
  Outstanding
  Principal Amt 
  of Secured 
  Loan (1)
  Amount of
  Unsecured loan
  w/100% 
  Conversion
  P & I 
  Payment
  for 
  unsecured
  Loan @ 
  7.095%
  Amount of
  Unsecured 
  loan
  w/50% 
  Conversion
  P&I 
  Payment
  for  
  unsecured
  component 
  @7.095%
  P&I payment
  for secured
  component 
  @6.945%
  179
  1
  01-Aug-98
  96,692,504.02
  96,692,504.02
  876,987.25
  48,346,252.01
  438,493.63
  434,441.74
  178
  2
  01-Sept-98
  96,383,228.40
  96,383,228.40
  876,951.01
  48,191,614.20
  438,475.51
  434,441.74
  177
  3
  01-Oct-98
  96,072,162.86
  96,072,162.86
  876,914.68
  48,036,081.43
  438,457.34
  434,441.74
  176
  4
  01-Nov-98
  95,759,297.02
  95,759,297.02
  876,878.26
  47,879,648.51
  438,439.13
  434,441.74
  175
  5
  01-Dec-98
  95,444,620.47
  95,444,620.47
  876,841.74
  47,722,310.23
  438,420.87
  434,441.74
  174
  6
  01-Jan-99
  95,128,122.73
  95,128,122.73
  876,805.13
  47,564,061.36
  438,402.57
  434,441.74
  173
  7
  01-Feb-99
  94,809,793.25
  94,809,793.25
  876,768.42
  47,404,896.63
  438,384.21
  434,441.74
  172
  8
  01-Mar-99
  94,489,621.45
  94,489,621.45
  876,731.62
  47,244,810.73
  438,365.81
  434,441.74
  171
  9
  01-Apr-99
  94,167,596.65
  94,167,596.65
  876,694.72
  47,083,798.33
  438,347.36
  434,441.74
  170
  10
  01-May-99
  93,843,708.14
  93,843,708.14
  876,657.73
  46,921,854.07
  438,328.87
  434,441.74
  169
  11
  01-Jun-99
  93,517,945.12
  93,517,945.12
  876,620.65
  46,758,972.56
  438,310.33
  434,441.74
  168
  12
  01-Jul-99
  93,190,296.74
  93,190,296.74
  876,583.47
  46,595,148.37
  438,291.74
  434,441.74
  167
  13
  01-Aug-99
  92,860,752.10
  92,860,752.10
  876,546.19
  46,430,376.05
  438,273.10
  434,441.74
  166
  14
  01-Sep-99
  92,529,300.22
  92,529,300.22
  876,508.82
  46,264,650.11
  438,254.41
  434,441.74
  165
  15
  01-Oct-99
  92,195,930.07
  92,195,930.07
  876,471.36
  46,097,965.03
  438,235.68
  434,441.74
  164
  16
  01-Nov-99
  91,860,630.53
  91,860,630.53
  876,433.80
  45,930,315.27
  438,216.90
  434,441.74
  163
  17
  01-Dec-99
  91,523,390.45
  91,523,390.45
  876,396.15
  45,761,695.22
  438,198.08
  434,441.74
  162
  18
  01-Jan-2000
  91,184,198.59
  91,184,198.59
  876,358.40
  45,592,099.30
  438,179.20
  434,441.74
  161
  19
  01-Feb-2000
  90,843,043.66
  90,843,043.66
  876,320.55
  45,421,521.83
  438,160.28
  434,441.74
  160
  20
  01-Mar-2000
  90,499,914.29
  90,499,914.29
  876,282.61
  45,249,957.15
  438,141.31
  434,441.74
  159
  21
  01-Apr-2000
  90,154,799.06
  90,154,799.06
  876,244.58
  45,077,399.53
  438,122.29
  434,441.74
  158
  22
  01-May-2000
  89,807,686.48
  89,807,686.48
  876,206.45
  44,903,843.24
  438,103.23
  434,441.74
  157
  23
  01-Jun-2000
  89,458,564.99
  89,458,564.99
  876,168.22
  44,729,282.49
  438,084.11
  434,441.74
  156
  24
  01-Jul-2000
  89,107,422.95
  89,107,422.95
  876,129.90
  44,553,711.47
  438,064.95
  434,441.74
  (1) Assumes that no conversion has occurred and that all scheduled principal
  and interest payments were made on the first day of the respective calendar 
  month
  
  Completion Notes for Note and Conversion Agreement:
  
  Attach Signature Pages
  
  /	The amount of the Unsecured Note will be determined according to 
  Sections 2.01 and 2.02(a) of the 
  Conversion and Note Agreement.
  
  /	This amount will be determined in accordance with Exhibit A.