AGREEMENT AND AMENDMENT

        This Agreement and Amendment (this "Agreement") is dated as of January__, 2005, by and between PARKWAY PROPERTIES LP, a Delaware limited partnership, having an address at One Jackson Place, 188 East Capitol Street, Suite 1000, Jackson, Mississippi 39201 ("Parkway"), and 233 CHICAGOINVEST, INC., a Delaware corporation, having an address at 280 Park Avenue, 37th Floor, New York, New York  10017 ("Chicago Inc.").

RECITALS

        A.        Chicago OfficeInvest, LLC, a Delaware limited liability company ("Chicago LLC"), Parkway and Parkway 233 North Michigan Manager, Inc. (the "Company Manager"), a Delaware corporation, have entered into that certain Amended and Restated Operating Agreement of Parkway 233 North Michigan, LLC (the "Property Operating Agreement"), dated as of May 30, 2002;

        B.         Chicago LLC is the owner of sixty-nine and ninety-three hundredths percent (69.93%) of the Common Membership Interests (as defined in the Property Operating Agreement) in Parkway 233 North Michigan, LLC (the "Company"), a Delaware limited liability company;

       C.        Parkway is the owner of twenty-nine and ninety-seven hundredths percent (29.97%) of the Common Membership Interests in the Company;

        D.        The Company Manager is owner of ten hundredths percent (0.10%) of the Common Membership Interests in the Company;

        E.         Chicago LLC is the owner of one hundred percent (100%) of the Preferred Membership Interests (as defined in the Property Operating Agreement) in the Company;

        F.         Parkway Properties, Inc. ("PPI"), a Maryland corporation, is the owner of 30 shares of common stock, no par value per share, of the Company Manager, and Chicago LLC is the owner of 70 shares of common stock, no par value per share, of the Company Manager;

        G.        Chicago Inc. and Investcorp Properties Limited, a Delaware corporation ("IPL") have entered into that certain Operating Agreement of Chicago OfficeInvest, LLC (the "Chicago LLC Operating Agreement"), dated as of May 30, 2002;

        H.        Chicago Inc. is the owner of ninety-seven and fifty hundredths percent (97.50%) of the membership interests in Chicago LLC, and IPL is the owner of two and fifty hundredths percent (2.50%) of the membership interests in Chicago LLC;

        I.          Simultaneously herewith, (i) the Company is redeeming Chicago LLC's Preferred Membership Interest in the Company and paying to Chicago LLC the amount of $[ TO BE INSERTED ] on account of the Redemption Amount (as defined in the Property Operating Agreement), and (ii) Chicago LLC is distributing to Chicago Inc. the amount of $[ TO BE INSERTED ] pursuant to the terms of Section 9(b) of the Chicago LLC Operating Agreement;

        J.          Simultaneously herewith, on account of the Redemption Amount, Parkway only is making an additional capital contribution to the Company to fund the Redemption Amount; and

        K.        Following receipt of the payments to Chicago LLC and Chicago Inc., (i) on the date hereof (the "Initial Closing Date"), Chicago Inc. shall transfer to Parkway, and Parkway shall acquire from Chicago Inc., 90% of all of the membership interests in Chicago LLC, and (ii) on the Second Closing Date (as hereinafter defined), IPL and Chicago Inc. shall transfer to Parkway, and Parkway shall acquire from IPL and Chicago Inc., all of their remaining membership interests in Chicago LLC, subject to and in accordance with the terms of the Agreement.

        NOW, THEREFORE , in consideration of the foregoing, the mutual covenants set forth herein and other good and valuable consideration, the receipt and sufficiency of which are acknowledged, the parties agree as follows:

        1.         Simultaneously herewith, as described in the Recitals hereof (i) Parkway is making the additional capital contributions in the amount of $[ TO BE INSERTED ] on account of the Redemption Amount, (ii) the Company is paying such amount to Chicago LLC and redeeming Chicago LLC's Preferred Membership Interests, and (iii) Chicago LLC is distributing to Chicago Inc. the amount of $[ TO BE INSERTED ] pursuant to the terms of Section 9(b) of the Chicago LLC Operating Agreement.

        2.         Following receipt of the distributions described above, and upon receipt of the Initial Purchase Price (as hereinafter defined), Chicago Inc. is transferring and assigning to Parkway a 90% membership interest in Chicago LLC, including, without limitation, Chicago Inc.'s right to profits, losses and distributions after the Initial Closing Date (the "Membership Interests") pursuant to that certain Assignment of Membership Interests in the form of Exhibit A annexed hereto and made a part hereof (the "Assignment Agreement").  In addition, Chicago Inc. shall execute and deliver to Parkway a FIRPTA certificate in the form of Exhibit A-1 annexed hereto and made a part hereof.

        3.         (a)        Simultaneously herewith, the Company and the Company Manager are distributing to each of the members in the Company and the shareholders in the Company Manager, as the case may be (in accordance with their Applicable Percentages), an amount equal to all cash, as of the Initial Closing Date, in any accounts of the Company and/or the Company Manager and all deposits or reserves held by the Mortgage Lender (as defined in the Property Operating Agreement) (it being understood and agreed that the foregoing funds received by Chicago LLC shall be distributed to Chicago Inc. and IPL, 97.50% and 2.50%, respectively); excluding , however , any deposits or reserves held by the Mortgage Lender or the Company on account of real estate taxes affecting the Property.  In addition, simultaneously herewith, Chicago LLC is distributing to each of the members in Chicago LLC (in accordance with their Percentages Interests) all cash, as of the Initial Closing Date, in any accounts of Chicago LLC (it being understood and agreed that the foregoing funds shall be distributed to Chicago Inc. and IPL, 97.50% and 2.50%, respectively).

(b)        The purchase price for the Membership Interests (the "Initial Purchase Price") is an amount equal to 90% of $46,295,000 (i.e., $41,665,500).  In addition, the parties shall prorate and adjust the following items as more particularly described on the closing statement set forth on Schedule 1 annexed hereto and made a part hereof (it being understood and agreed that all prorations and adjustments on the Initial Closing Date for Chicago Inc. shall be allocated and paid 97.50% to Chicago Inc. and 2.50% to IPL):  rent, additional rent, rent escalations (including estimates of rent escalations), interest under the Mortgage Loan (as defined in the Property Operating Agreement), security deposits, and other revenues, costs and expenses associated with the ownership, operation and maintenance of the Property (as defined in the Property Operating Agreement) (including under service contracts and insurance policies).  Parkway shall pay the Initial Purchase Price, subject to the prorations and adjustments set forth on Schedule 1 hereto, by wire transfer of immediately available federal funds to the account(s) shown as an attachment to the closing statement set forth on Schedule 1 hereto.  The parties hereto acknowledge and agree the prorations and adjustments set forth on Schedule 1 with respect to the transfer of the Membership Interests are final and binding and not subject to recomputation, readjustment or correction.

(c)        All state and local (including county) transfer taxes and all other costs and expenses associated with the transfer of the Membership Interests shall be paid by Parkway.  Parkway shall also pay all costs, expenses and fees associated with obtaining the consents and approvals described in Section 5(a) of this Agreement.  In addition, on the Initial Closing Date, the Company (without contribution by Chicago LLC, IPL and/or Chicago Inc. or deduction from the Initial Purchase Price) shall distribute to Parkway an amount equal to 90% of $400,000 (i.e., $360,000), on account of Parkway's promoted interest under Section 3.03(a)(3) of the Property Operating Agreement.

(d)        In connection with the transfer of the Membership Interests, each party shall execute and deliver any transfer declaration or other documentation or forms required to comply with any state and/or local transfer tax requirements as to the transfer of the Membership Interests.

        4.         Upon the execution and delivery of the Assignment Agreement and the receipt of funds as described in Section 1 and Section 3 of this Agreement, the Chicago LLC Operating Agreement shall be deemed amended as follows: (a) Parkway shall be deemed admitted as a member in Chicago LLC; (b) the Percentage Interest of each member in Chicago LLC shall be as follows:  (i) Chicago Inc., 7.5%; (ii) IPL, 2.5%; and (iii) Parkway, 90%; and (c)  Chicago LLC shall distribute all Cash Flow (as defined in the Property Operating Agreement) and all Net Sale or Refinancing Proceeds (as defined in the Property Operating Agreement) received by Chicago LLC in accordance with the foregoing Percentage Interests.  Upon the execution and delivery of the Assignment Agreement and the receipt of the funds described in Section 1 and Section 3 of this Agreement, the Company Operating Agreement shall be amended as follows:  (i) as of

December 17, 2004, all capital expenditures, tenant improvements and inducements, leasing commissions, repairs, equipment purchases and any other item relating to the business of the Company that is not properly characterized as a current operating expense under Section 3.02(b)(2)(i) of the Company Operating Agreement (including, without limitation, on account of proposed leases with the following proposed tenants: Bridgeport Networks, Creative circle, and an unnamed tenant taking the former Worldbook space on 19th floor) (and any and all reserves related to any of the foregoing) (all of the foregoing are collectively, "Capital Expenses") shall be deemed to be the sole responsibility of Parkway and shall not be deducted from Cash Flow or Net Sale or Refinancing Proceeds; (b) notwithstanding the terms of Article III of the Company Operating Agreement, all distributions of Cash Flow and, following April 1, 2005, Net Sale or Refinancing Proceeds shall be distributed (without deductions on account of any member loans or Capital Expenses) in accordance with Applicable Percentages (it being understood and agreed that notwithstanding the terms of Section 5(b) of the Shareholders Agreement (as defined in the Company Operating Agreement), all funds received by the Company Manager under such Section 5(b) shall be distributed in accordance with Applicable Percentages); and (c) the percentages set forth in Section 9.01(c) of the Property Operating Agreement shall be deemed reduced from 70% to 7%.  Except as amended by this Agreement, all of the terms, covenants and conditions of the Property Operating Agreement, the Shareholders Agreement and the Chicago LLC Operating Agreement are hereby ratified and confirmed and shall continue to be and remain in full force and effect.

        5.         (a)        Subject to the terms of clause (e) below, if at any time before April 1, 2005, Parkway has obtained the consent of the Mortgage Lender (as defined in the Property Operating Agreement) and any required rating agency to the transfer of IPL's and Chicago Inc.'s remaining membership interest in Chicago LLC (it being understood and agreed that any document or instrument evidencing such consent(s) shall be without any recourse, representation, warranty, obligation, liability or cost or expense whatsoever to IPL or Chicago Inc., or their respective affiliates) (collectively, the "Section 5 Consent"), then, in any such event, Parkway shall give written notice of such consent to IPL and Chicago Inc., and no later than three (3) business days (TIME BEING OF THE ESSENCE) following obtaining the Section 5 Consent (the "Second Closing Date"), subject to the further terms of this Section 5, IPL and Chicago Inc. shall transfer, and Parkway shall acquire, all of IPL's and Chicago Inc.'s remaining membership interests in Chicago LLC, for a purchase price (the "Second Purchase Price") equal to 10% of $46,295,000 (i.e. $4,629,500).  In addition, the parties shall prorate and adjust for each of the line items set forth on the closing statement set forth on Schedule 1 hereto (it being understood and agreed that the amounts will be different from those set forth on Schedule 1 on the date hereof), and shall include, without limitation, to the extent not set forth on a line item on Schedule 1 hereto a proration and adjustment for rent, additional rent, rent escalations (including estimates of rent escalations), interest under the Mortgage Loan, and other revenues, costs and expenses associated with the ownership, operation and maintenance of the Property (including under service contracts and insurance policies).  In addition, at the Second Closing (as hereinafter defined), the Company, the Company Manager and Chicago LLC shall distribute to Parkway, IPL and Chicago Inc., 90%, 7.5% and 2.5%, respectively, an amount equal to all cash, as of the Second Closing, in any accounts of the Company and/or the Company Manager and all deposits or reserves held by the Mortgage Lender; excluding, however, any deposits or reserves held by the Mortgage Lender or the Company on account of real estate taxes affecting the Property. The parties hereto acknowledge and agree the prorations and adjustments made on the Second Closing Date shall be final and binding and not subject to recomputation, readjustment or correction.  IPL, Chicago Inc. and Parkway acknowledge and agree that no additional purchase and sale contract shall be required to be executed and delivered in connection with the transactions contemplated by this Section 5, it being understood and agreed that the terms of this Section 5 shall constitute a purchase and sale contract.

                    (b)        The following procedures shall apply to the closing (the "Second Closing") of the transfer of membership interests contemplated by this Section 5 on the Second Closing Date:

                                1.         At the Second Closing, (p) Parkway shall pay to IPL and Chicago Inc. the Second Purchase Price pro rata (based on the following percentages:  (x) IPL, 25%, and (y) Chicago Inc., 75%) by wire transfer of immediately available federal funds to the accounts identified in writing by IPL and Chicago Inc. prior to the Second Closing, and (q) each of Parkway, IPL and Chicago Inc. shall execute and deliver a closing statement reflecting the Second Purchase Price and the prorations and adjustments described in clause (a) above (it being understood and agreed that all prorations and adjustments at the Second Closing shall be allocated and paid 90.00% to Parkway, 7.50% to Chicago Inc. and 2.50% to IPL).

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