LIMITED PARTNERSHIP AGREEMENT

LIMITED PARTNERSHIP AGREEMENT
OF
PARKWAY PROPERTIES OFFICE FUND, L.P.

                       This Limited Partnership Agreement (this " Agreement ") of PARKWAY PROPERTIES OFFICE FUND, L.P., a Delaware limited partnership  (the " Partnership "), is dated as of June 30, 2005, by and among PKY FUND, LLC, a Delaware limited liability company, as the general partner of the Partnership (the " General Partner "), Parkway Properties LP, a Delaware limited partnership (" Parkway "), and PERS Holding Company Limited, L.L.C., a Delaware limited liability company (" PERS Holding " and together with Parkway, the " Limited Partners ").  The General Partner and the Limited Partners are hereinafter sometimes referred to collectively as the " Partners " and each of them individually as a " Partner ".

W I T N E S S E T H:

                       WHEREAS, the Partnership was formed upon the filing and acceptance of a Certificate of Limited Partnership (the " Certificate ") with the Secretary of State of the State of Delaware on June 29, 2005 (the " Formation Date ").

                       WHEREAS, the parties hereto desire to provide for the governance of the Partnership and to set forth in detail their respective rights and duties relating to the Partnership.

                       NOW, THEREFORE, in consideration of the mutual covenants herein contained, and other valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound hereby, the parties hereto do hereby agree as follows:

ARTICLE I

THE PARTNERSHIP

                       1.1        Formation .  The Partnership was formed on the Formation Date.  The Partners hereby enter into this Agreement for the purpose of establishing and governing the Partnership and setting forth the rights and obligations of the Partners.  The parties hereto hereby agree that the Partnership shall constitute a limited partnership under and pursuant to the provisions of the Act (as hereinafter defined) and agree that the rights, duties and liabilities of the Partners shall be as provided in the Act, except as otherwise provided herein.  Promptly after the execution of this Agreement, the Partners shall execute such documents, and the General Partner shall file and record with the proper offices in the State of Delaware, such certificates, and shall cause to be made such publications, as shall be required by the Act.   

                       1.2        Name .  The name of the Partnership shall be "Parkway Properties Office Fund, L.P."  All business of the Partnership shall be conducted under such name and such name shall be used at all times in connection with the Partnership's business and affairs.

                        1.3        Principal Place of Business .  The principal place of business of the Partnership shall be at One Jackson Place, 188 East Capitol Street, Suite 1000, Jackson, Mississippi 39201, or such place or places as the General Partner may, from time to time, designate.  The General Partner shall give notice to all of the Partners of any change in the Partnership's principal place of business.

                       1.4        Purposes and Powers .  Subject to the limitations set forth herein, the business and purposes of the Partnership shall be to, directly and indirectly, acquire, hold, maintain, operate, improve, renovate, expand, originate, use, lease, finance, manage and dispose of Investments (as hereinafter defined) and to engage in any and all activities as are related or incidental to the foregoing, as determined by the General Partner in its sole discretion.  Subject to the limitations set forth herein, the Partnership shall have the power to do anything and everything necessary, suitable or proper for the accomplishment of or in furtherance of any of the purposes set forth herein, and to do every other act or acts, thing or things, incidental or appurtenant to or arising from or connected with any of such purposes.

                       1.5        Registered Office and Agent .  The registered office of the Partnership in the State of Delaware shall be c/o National Registered Agent, Inc., 9 East Loockerman Street, Suite 1B, Dover, Delaware 19901, or such other address within the United States as may be designated from time to time by the General Partner.  The name and address of the registered agent for service of process on the Partnership in the State of Delaware shall be National Registered Agent, Inc. at the above address, or such other agent and address as may be designated from time to time by the General Partner.

                       1.6        Fiscal and Taxable Year .  The fiscal year and taxable year of the Partnership shall be the calendar year (the " Partnership Year "), unless another taxable year is otherwise required by Section 706 of the Code.

                       1.7        Term .  The term of the Partnership commenced upon the Formation Date and shall continue until the date that the Partnership is dissolved in accordance with the provisions of Article XV hereof.

                       1.8        Filings .  Upon the execution of this Agreement by the parties hereto, the General Partner shall do, and continue to do, all things as may be required or advisable to continue and maintain the Partnership as a limited partnership, qualified to do business in such jurisdictions as may be required, and to protect the limited liability of the Limited Partners in any jurisdiction in which the Partnership shall transact business.

ARTICLE II

DEFINITIONS

                       The following defined terms used in this Agreement shall have the respective meanings specified below.

                       " Act " shall mean the Delaware Revised Uniform Limited Partnership Act, as amended from time to time.

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                       " Adjusted Capital Account Deficit " shall mean, with respect to any Partner, the deficit balance, if any, in such Partner's Capital Account as of the end of the relevant Partnership Year, after giving effect to the following adjustments:

                       (a)        credit to such Capital Account any amounts which such Partner is obligated to restore pursuant to any provision of this Agreement or is deemed to be obligated to restore pursuant to the penultimate sentences of Sections 1.704-2(g)(1) and (i)(5) of the Regulations; and

                       (b)       debit to such Capital Account the items described in Sections 1.704-1(b)(2)(ii)(d)(4), (5) and (6) of the Regulations.

                                              The foregoing definition of "Adjusted Capital Account Deficit" is intended to comply with the provisions of Section 1.704-1(b)(2)(ii)(d) of the Regulations and shall be interpreted consistently therewith.

                       " Affiliate " shall mean, with respect to any Person, any Person Controlling, Controlled by, or under common Control with, such Person.

                       " Agreement " shall mean this Limited Partnership Agreement of the Partnership as the same may be amended from time to time.

                       " Asset Management Fees " shall mean the asset management fees payable to the General Partner to be calculated in the manner set forth in Exhibit B attached hereto and incorporated by reference herein. 

                       " Average Daily Outstanding Contribution Account Balance " or " ADOCAB " is the average of the Contribution Account Balances for a Partner as of the end of each day during any period for which the Asset Management Fees or Preferred Returns are calculated.  The ADOCAB for any period is calculated as the sum of all daily Contribution Account Balances of a Partner for each day of such period, divided by the number of days in such period. 

                       " Bankruptcy " shall mean, with respect to any Person, (a) the filing by such Person of a voluntary petition seeking liquidation, reorganization, arrangement or readjustment, in any form, of its debts under Title 11 of the United States Code or any other federal, state or foreign insolvency law, or such Person's filing an answer consenting to or acquiescing in any such petition, (b) the making by such Person of any assignment for the benefit of its creditors, (c) the expiration of 60 days after the filing of an involuntary petition under Title 11 of the United States Code, an application for the appointment of a receiver for a material portion of the assets of such Person, or an involuntary petition seeking liquidation, reorganization, arrangement or readjustment of its debts under any other federal, state or foreign insolvency law, provided that the same shall not have been vacated, set aside or stayed within such sixty-day period or (d) the entry against it of a final and nonappealable order for relief under any bankruptcy, insolvency or similar law now or hereafter in effect.  The term "Bankruptcy" as defined in this Agreement and used herein is intended, and shall be deemed to, supersede and replace the events of withdrawal described in Section 17-402(a)(4) and (5) of the Act.

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                       " Business Day " shall mean any day except a Saturday, Sunday or other day on which the New York Stock Exchange is not transacting business.

                       " Capital Account " shall mean, with respect to any Partner, the Capital Account which shall be established and maintained for such Partner in accordance with the following provisions:

                       (a)       To each Partner's Capital Account there shall be credited the aggregate amount of such Partner's Capital Contributions, the Gross Asset Value of any property contributed to the Partnership by such Partner, such Partner's distributive share of Profits and any items in the nature of income or gain which are specially allocated pursuant to Article V hereof, and the amount of any Partnership liabilities assumed by such Partner or which are secured by any Partnership property distributed to such Partner.

                       (b)       To each Partner's Capital Account there shall be debited the amount of cash and the Gross Asset Value of any Partnership property distributed to such Partner pursuant to any provision of this Agreement, such Partner's distributive share of Losses and any items in the nature of expenses or losses which are specially allocated pursuant to Article V 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)       If any Interest is Transferred in accordance with the terms of this Agreement, 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 determining Capital Account balances hereof, there shall be taken into account Code Section 752(c) and any other applicable provisions of the Code and Regulations.

                       The foregoing provisions and the other provisions of this Agreement relating to the maintenance of Capital Accounts are intended to comply with Section 1.704-1(b) of the Regulations, and shall be interpreted and applied in a manner consistent with such Regulations.  If the General Partner shall determine that it is prudent to modify the manner in which the Capital Accounts, or any debits or credits thereto, are computed in order to comply with such Regulations, the General Partner may make such modification if, and only if, it is not likely to have an adverse effect on the amounts distributable to any Partner pursuant to Article XV hereof upon the dissolution of the Partnership. 

                       " Capital Call " shall have the meaning set forth in Section 4.2(b) hereof.

                       " Capital Call Notice " shall have the meaning set forth in Section 4.2(b) hereof.

                       " Capital Commitment " shall have the meaning set forth in Section 4.1 hereof.

                       " Capital Contributions " shall have the meaning set forth in Section 4.2(a) hereof.

                       " Capital Default " shall have the meaning set forth in Section 4.5 hereof.

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                       " Capital Event " shall mean, with respect to any Investment, (a) the sale, transfer, exchange, pledge, hypothecation, or other disposition of all or any portion of such Investment or interests in any entity which directly or indirectly holds such Investment, (b) the incurrence of any indebtedness by the Partnership or by any entity which directly or indirectly holds such Investment and which is secured by such Investment or interests in any entity which directly or indirectly holds such Investment, other than any incurrence of Indebtedness the proceeds of which are used to acquire such Investment, (c) the refinancing of any Indebtedness allocated to such Investment, and (d) any similar transaction with respect to such Investment.

                       " Capital Interest " shall mean the General Partner's Interest, other than its Carried Interest.

                       " Carried Interest " shall mean the General Partner's rights with respect to Carried Interest Distributions.

                       " Carried Interest Distributions " shall mean the amounts distributable to the General Partner pursuant to Section 6.1(b)(iii)(B) hereof.

                       " Cause " shall mean any of the following: (1) an act or omission by the General Partner that constitutes fraud, dishonesty, malfeasance, gross negligence, or breach of fiduciary duty or breach of Section 7.5(f) of this Agreement; (2) the institution of any litigation, administrative proceeding or prosecution of criminal charges against or involving the General Partner or any of its Affiliates that are under contract with the Partnership or delivering services to the Partnership which materially adversely affect the reputation, business, or ability to perform of the General Partner or such Affiliate under this Agreement and with respect to which a meritorious defense has not been asserted within a reasonable time following the institution of such action and thereafter diligently prosecuted or pursued; (3) breach of any material term or provision of this Agreement (including, but not limited to, Article XIV of this Agreement) which remains uncured for a period of thirty (30) days after written notice of such breach from PERS Holding, or such longer period as may be reasonably necessary to affect a cure provided that a cure is commenced during the thirty (30) day period and diligently pursued; or (4) the initiation of any voluntary or involuntary bankruptcy proceeding by or against the General Partner, or the adjudication of General Partner as bankrupt or insolvent, or the appointment of a receiver or trustee for General Partner which is not dismissed within thirty (30) days, or any assignment by or with respect to either for the benefit of creditors. 

                       " Certificate " shall have the meaning set forth in the recitals hereto.

                       " Change of Control " shall mean any of the following:  (1) the General Partner at any time is no longer an Affiliate of Parkway Properties, Inc.; or (2) during the Investment Period, Steven Rogers and James Ingram shall no longer be a part of the executive management team of Parkway Properties, Inc.; or (3) after the expiration of the Investment Period, the resignation, replacement or removal (a "Disassociation") within any two (2) year period of any three of the following officers:  Chief Executive Officer, Chief Operating Officer, Chief Investment Officer and Chief Financial Officer (collectively, the "Key Officers").  However, after  the expiration  of the Investment  Period, if,  in any two (2) year period, any two of the Key

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Officers become Disassociated from Parkway Properties, Inc., then the second of the Key Officers to become Disassociated shall be replaced by Parkway Properties, Inc. within one hundred twenty (120) days with a person of similar (or better) experience and capabilities as the Disassociated Key Officer.

                       " Closing Date " shall mean June 30, 2005.

                       " Code " shall mean the Internal Revenue Code of 1986, as amended from time to time (or any corresponding provisions of succeeding law).

                       " Committed Investment " shall mean (a) an Investment which is subject to a letter of intent which is entered into by the Partnership or an Investment Vehicle on or prior to the end of the Investment Period and which is intended to be closed not more than 120 days after the end of the Investment Period, (b) additional phases of the redevelopment of an Investment, or (c) the remaining balance of unfunded capital contributions to ongoing Investments, in each case, to the extent identified to the Partners prior to the expiration of the Investment Period, together with a budget regarding such Investments, additional phases of redevelopment of Investments or remaining balance of unfunded Investments.

                       " Contribution Account Balance " for the purpose of determining ADOCAB for calculating Preferred Returns and Asset Management Fees, Contribution Account Balance shall mean the cumulative sum of all Capital Contributions of a Partner minus the cumulative sum of all distributions to such Partner pursuant to Section 6.1(b)(ii).

                       " Control " shall mean, the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of another Person without the consent or approval of any other Person.

                       " Core Market " shall mean the Partnership's primary targeted markets of the greater metropolitan areas of Houston, Texas; Chicago, Illinois; Atlanta, Georgia; Phoenix, Arizona; Charlotte, North Carolina; Jacksonville, Florida; Orlando, Florida; Tampa, Florida; and Fort Lauderdale, Florida; which targeted markets may be expanded by the General Partner from time to time upon the unanimous written approval of the Limited Partners.

                       " Covered Persons " shall have the meaning set forth in Section 10.1(a) hereof.

                       " Damages " shall have the meaning set forth in Section 10.1(a) hereof.

                       " Default Rate " shall have the meaning set forth in Section 4.5 hereof.

                       " Defaulting Partner " shall have the meaning set forth in Section 4.5 hereof.

                       " Depreciation " shall mean, for each Partnership 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

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deduction for such year or other period bears to such beginning adjusted tax basis; provided , however , that if the adjusted tax basis of such property is zero, Depreciation shall be determined with reference to such beginning Gross Asset Value using any reasonable method selected by the General Partner.

                       " Exclusivity Period " shall mean the period beginning on the Closing Date and ending on the earlier to occur of (a) the date of the termination of the Investment Period, and (b) the date on which at least 80% of the Capital Commitments have been invested or committed to Investments.

                       " Fair Market Value " shall mean, with respect to any Interest or Investment, the fair market value thereof as of the applicable date of determination, as determined by a qualified independent third-party appraisal firm in accordance with OPERS' Real Estate Investments Directly-Held Portfolio Valuation Policies set forth in Exhibit C attached hereto and incorporated herein by reference, which Exhibit C shall not be amended or altered without the unanimous written consent of the Partners, which shall not be unreasonably withheld, conditioned or delayed.  In making such determination, the appraiser shall assume that all of the assets of the Partnership were sold in a commercially reasonably manner on a one hundred percent (100%) fee simple basis as of the date of such determination and the proceeds of such sale, net of all obligations of the Partnership, will be distributed to the Partners pursuant to this Agreement. 

                       " Follow-on Investment " shall mean an Investment which, in the judgment of the General Partner, is appropriate or necessary for the Partnership to make for the purpose of preserving, protecting or enhancing an existing Investment, in each case, to the extent identified to the Partners prior to the expiration of the Investment Period, together with a budget regarding such Follow-on Investment.

                       " Formation Date " shall have the meaning set forth in the Whereas clauses hereto.

                       " GP Authorized Representative " shall have the meaning set forth in Section 17.12(b) hereof.

                       " General Partner " shall have the meaning set forth in the introductory paragraph of this Agreement and at all times be a wholly-owned subsidiary of Parkway Properties LP.

                       " Gross Asset Value " shall mean, 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 at the time of such contribution, as agreed between the General Partner and such Partner;

                       (b)       the Gross Asset Values of all Partnership assets may, in the reasonable discretion of the General Partner, be adjusted to equal their respective gross fair market values, as determined by the General Partner in accordance with Section 1.704-1(b)(2)(iv)(f) of the Regulation, as of the following times:  (i) the acquisition of an additional Interest by any new or existing Partner in exchange for more  than  a de minimis Capital Contribution or in exchange for

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services; (ii) the distribution by the Partnership to a Partner of more than a de minimis amount of Partnership property as consideration for an Interest; and (iii) the liquidation of the Partnership within the meaning of Regulations Section 1.704-l(b)(2)(ii)(g);

                       (c)       the Gross Asset Value of any Partnership asset distributed to any Partner shall be the gross fair market value of such asset on the date of distribution, as reasonably determined by the General Partner; and

                       (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 Section 1.704-l(b)(2)(iv)(m) of the Regulations and Article V hereof; provided , however , that Gross Asset Values shall not be adjusted pursuant to this clause (d) to the extent the General Partner determines that an adjustment pursuant to clause (b) above is necessary or appropriate in connection with a transaction that would otherwise result in an adjustment pursuant to this clause (d).

                       If the Gross Asset Value of an asset has been determined or adjusted pursuant to clause (a), (b) or (d) above, such Gross Asset Value shall thereafter be adjusted by the Depreciation taken into account with respect to such asset for purposes of computing Profits and Losses.

                       " Indebtedness " shall mean any indebtedness incurred by the Partnership or any Investment Vehicle, including, but not limited to, any guarantees by the Partnership or any Investment Vehicle of any indebtedness incurred by any Investment Vehicle and any repurchase obligations of the Partnership or any Investment Vehicle.

                       " Interest " shall mean, with respect to any Partner, the interest of such Partner as a partner in the Partnership at any particular time, including the partner interest of such Partner, and the rights and obligations of such Partner as provided in this Agreement and the Act.

                       " Interim Investments " shall mean each of the following provided that, in each case, such obligations are payable in United States Dollars:

                       (a)       certificates of deposit, time or demand deposits or bankers' acceptances maturing within six months and one day from the date of acquisition and money market deposit accounts issued or offered by:

                       (i)          any commercial bank organized under the laws of the United States of America or any state thereof or the District of Columbia having combined capital, surplus and undivided profits (less any undivided losses) of not less than $500 million;

                       (ii)          any domestic commercial bank the deposits of which are guaranteed by the Federal Deposit Insurance Corporation; provided that (A) the full amount of such Interim Investment are so guaranteed and (B) the aggregate amount of all Interim Investments under this clause does not exceed $500,000;

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                       (b)       marketable direct obligations issued or unconditionally guaranteed by the United States of America or issued by an agency thereof and backed by the full faith and credit of the United States of America, in each case maturing within six (6) months and one day from the date of acquisition thereof;

                       (c)       marketable general obligations issued by any State of the United States of America or any political subdivision of any such State or any public instrumentality thereof maturing within six (6) months and one day from the date of acquisition thereof and, at the time of acquisition, having one of the two highest ratings generally obtainable from either Standard & Poor's Corporation or Moody's Investors Service, Inc.;

                       (d)       commercial paper maturing no more than six (6) months and one day from the date of acquisition, having a rating of A-1 (or the equivalent) or higher from Standard & Poor's Corporation and P-1 (or the equivalent) or higher from Moody's Investors Service, Inc.; and

                       (e)       full collateralized repurchase agreements with a term of not more than thirty (30) days for underlying securities of the type described in paragraphs (b) and (c) of this definition, entered into with any institution meeting the qualifications specified in subclauses (i) or (ii) of clause (a) of this definition. !

                       " Invested Capital " shall mean, with respect to each Partner, at any date of determination, (a) the aggregate amount of all Capital Contributions previously made by such Partner less (b) the aggregate amount of distributions that have been made to such Partner pursuant to Section 6.1(b)(ii) hereof.

                       " Investment " shall mean a direct or indirect equity or debt investment by the Partnership in multi-tenant office properties containing 150,000 to 1,000,000 rentable square feet that are at least seventy percent (70%) leased and located in one of the Core Markets and of similar quality to properties generally acquired by Parkway for its own portfolio.   

                       " Investment Company Act " shall mean the Investment Company Act of 1940, as amended from time to time (or any corresponding provisions of succeeding law).

                       " Investment Period " shall mean the period beginning on the Closing Date and ending on the earliest of (a) the date on which all Capital Commitments have been drawn; (b) the third anniversary of the Closing Date; (c) the date determined by the General Partner in accordance with Section 4.5 hereof; and (d) the date of the removal of the General Partner by PERS Holding in accordance with Section 13.1(a) hereof.

                       " Investment Vehicle " shall have the meaning set forth in Section 9.2 hereof.

                       " Lien " shall mean any lien, pledge, hypothecation or other encumbrance. 

                       " Limited Partner " shall have the meaning set forth in the introductory paragraph of this Agreement.

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                       " LP Authorized Representative " shall have the meaning set forth in Section 17.13(a) hereof.

                       " Net Distributable Cash " shall mean all cash receipts from operations of the Partnership (including, without limitation, amounts released from Reserves) and from Capital Events, reduced by the portion thereof used to, in the discretion of the General Partner, (a) pay principal or interest on any Indebtedness, (b) establish Reserves, and (c) pay Operating Expenses and Organizational Expenses and property level fees pursuant to Exhibit B hereto.  Net Distributable Cash shall not be reduced by depreciation, amortization, cost recovery deductions or similar non-cash allowances and expenses.

                       " Nonrecourse Deductions " shall have the meaning set forth in Section 1.704-2(b)(1) of the Regulations.

                       " Nonrecourse Liability " shall have the meaning set forth in Section 1.704-2(b)(3) of the Regulations.

                       " Operating Expenses " shall have the meaning set forth in Section 8.2 hereof.

                       " OPERS " shall mean the Ohio Public Employees Retirement System.

                       " Organizational Expenses " shall have the meaning set forth in Section 8.3 hereof.

                       " Parkway Interest " shall have the meaning set forth in Section 13.2(a) hereof.

                       " Parkway Purchase Notice " shall have the meaning set forth in Section 13.2(b) hereof.

                       " Parkway Purchase Right " shall have the meaning set forth in Section 13.2(b) hereof.

                       " Partner Nonrecourse Debt " shall have the meaning set forth in Section 1.704-2(b)(4) of the Regulations.

                       " Partner Nonrecourse Debt Minimum Gain " shall have the meaning set forth in Section 1.704-2(i)(2) of the Regulations.

                       " Partner Nonrecourse Deductions " shall have the meaning set forth in Section 1.704-2(i)(2) of the Regulations.

                       " Partner " shall have the meaning set forth in the introductory paragraph of this Agreement.

                       " Partnership " shall have the meaning set forth in the introductory paragraph of this Agreement.

                       " Partnership Minimum Gain " shall have the meaning set forth in Section 1.704-2(b)(2) of the Regulations.

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                       " Partnership Year " shall have the meaning set forth in Section 1.6 hereof.

                       " Percentage Interest " shall mean, with respect to each Partner, a representation of such Partner's Interest as of the applicable date of determination, expressed as a percentage of all Partners' Interests and based on relative aggregate Capital Contributions.  The Partnership shall keep an up-to-date Schedule of Partners which shall include a statement of each Partner's Percentage Interest.

                       " PERS Holding Interest " shall have the meaning set forth in Section 13.2(b) hereof.

                       " PERS Holding Purchase Notice " shall have the meaning set forth in Section 13.2(a) hereof.

                        "PERS Holding Purchase Right " shall have the meaning set forth in Section 13.2(a) hereof.

                       " Person " shall mean any individual, partnership, joint venture, corporation, limited liability company, trust or other entity.

                       " Preferred Rate " shall mean a rate of return calculated in the same manner as interest, compounded annually, at an annual rate of ten percent (10%).

                       " Preferred Return " shall have the meaning set forth in Section 6.1(b)(i) hereof.

                       " Prime Rate " shall mean the rate of interest publicly announced from time to time by JP Morgan Chase Bank in New York City as such bank's prime reference rate.

                       " Profits " and " Losses " shall mean, for each Partnership Year or other period, an amount equal to the Partnership's taxable income or loss for such year or period, 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 Profits and Losses 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 Section 1.704-1(b)(2)(iv)(i) of the Regulations, and not otherwise taken into account in computing Profits or Losses shall be subtracted from such taxable income or loss;

                       (c)       if the Gross Asset Value of any Partnership asset is adjusted pursuant to clause (b) or clause (d) of the definition of Gross Asset Value herein, the amount of such adjustment shall be taken into account as gain or loss from the disposition of such asset for purposes of computing Profits or Losses;

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                       (d)       gain or loss resulting from any disposition of Partnership 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 Partnership Year or other period, computed in accordance with the definition of Depreciation herein; and

                       (f)       notwithstanding any other provisions hereof, any items which are specially allocated pursuant to Article V hereof shall not be taken into account in computing Profit or Losses.

                       " Regulations " shall mean the final, temporary and proposed Treasury Regulations promulgated under the Code, as the same may be amended from time to time (including corresponding provisions of succeeding regulations).

                       " Regulatory Allocations " shall have the meaning set forth in Section 5.3(g) hereof.

                       " Reserves " shall mean reserves established by the Partnership or any Investment Vehicle, in the discretion of the General Partner, for all expenses, debt payments, capital improvements, replacements, tenant improvements, leasing commissions and contingencies, including, but not limited to, loss and liquidity reserves, of the Partnership.

                       " Returned Capital " shall have the meaning set forth in Section 6.1(a) hereof.

                       " Schedule of Partners " shall mean the Schedule of Partners of the Partnership attached hereto as Exhibit A, as the same may be amended from time to time.

                       " Securities Act " shall mean the Securities Act of 1933, as amended from time to time.

                       " Successor General Partner " shall have the meaning set forth in Section 13.2(e) hereof.

                       " Transfer " shall mean, as applicable, a sale, exchange, transfer, assignment, pledge, hypothecation or other disposition of (a) all or any portion of an Interest (and the related Capital Commitment) or (b) all or any portion of a Limited Partner's obligations to make Capital Contributions pursuant to its Capital Commitment or its right to acquire an Interest in exchange therefore, in each case, either directly or indirectly, to another Person.  When used as a verb, the term "Transfer" shall have a correlative meaning.

ARTICLE III

REPRESENTATIONS, WARRANTIES, AND COVENANTS OF THE LIMITED PARTNERS

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                       Each Limited Partner represents, warrants and agrees with the Partnership, as of each time that the Limited Partner makes a Capital Contribution, as follows (and the Limited Partner agrees to notify the Partnership in writing immediately if any changes in the information set forth herein occur):

                       3.1       Interests Not Marketable .  The Interest is being purchased for the account of the Limited Partner for investment only and not with a view to, or with any intention of, a distribution or resale thereof, in whole or in part, or the grant of any participation therein by subdivision or otherwise.  The Limited Partner acknowledges that the Interests have not been registered under any federal or state securities laws and cannot be sold, pledged, hypothecated or otherwise disposed of unless they are subsequently registered under the Securities Act, and any applicable state acts or unless an exemption from such registration is available, and that the Limited Partner has no right to require the Partnership or any other party to seek such registration.  The Limited Partner also understands that there will be no public market for the Interests; that the Limited Partner will be unable to utilize the provisions of Rule 144, as adopted by the Securities and Exchange Commission (the " SEC ") under the Securities Act (" Rule 144 ") with respect to the resale of the Interests. The Limited Partner is prepared, therefore, to hold its Interest for the maximum possible term of the Partnership.

                       3.2        Accredited Investor Status; Sophistication .  The Limited Partner is an "accredited investor" as defined in Rule 501(a) of Regulation D, as adopted by the SEC under the Securities Act (" Regulation D ").  The Limited Partner agrees to notify the Partnership in writing immediately of any changes in the information set forth in this Section 3.2.  The Limited Partner has such knowledge and experience in financial and business matters as to enable it (i) to utilize the information made available to it in connection with its consideration of an investment in the Partnership, (ii) to evaluate the merits and risks associated with an investment in the Partnership, and (iii) to make an informed decision with respect thereto.  The Limited Partner agrees to be bound by the terms and provisions of this Agreement in the form delivered to it which are applicable to it as a Limited Partner, and has read, is familiar with, and understands the nature and scope of the rights and remedies provided to the Partnership in this Agreement in the event of a failure to pay any part of the Limited Partner's Capital Commitment under this Agreement when due, and is prepared to accept the exercise against the Limited Partner of such rights and remedies in the event of such failure on the Limited Partner's part.  The Limited Partner acknowledges its understanding of the meaning and legal consequences of the representations, warranties and covenants contained herein, and that the Partnership, the General Partner and their respective Affiliates are relying upon such representations, warranties and covenants.

                       3.3       Investment Company Act .  The Limited Partner understands that the Partnership will not be registered as an "investment company" under the Investment Company Act pursuant to one or more exclusions therefrom.   

                       3.4        No Public Offering; Reliance on Agreement .

                      (a)                The Limited Partner is not acquiring an Interest as a result of or subsequent to any advertisement, article, notice or other communication published in any newspaper, magazine, or similar  media  or broadcast  over  television or  radio,  presented at any

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seminar or meeting or any solicitation of an investment in the Partnership by a person not previously known to the Limited Partner in connection with investments in securities generally.

                       (b)       The Limited Partner acknowledges and agrees that neither the General Partner nor any other Person has promised, represented or guaranteed: (i) the safety of any capital investment in the Partnership, (ii) that the Partnership will be profitable, or (iii) that any particular investment return will be achieved or the probability of any investment return, and further that any such promise, representation, or guarantee, if made, would be strictly unauthorized and should not be relied on.  The Limited Partner recognizes that its acquisition of Interests involves certain risks, including, without limitation, the risk of a significant loss of the Limited Partner's investment in the Partnership.

                       3.5      Due Authorization. 

                       (a)         The Limited Partner, if a partnership, corporation or limited liability company, is duly organized or, if a trust, duly established pursuant to a valid trust instrument, validly existing and in good standing under the laws of the jurisdiction wherein it is organized; and has the power and authority to carry on the activities in which it is engaged and to acquire an Interest in the Partnership.  This Agreement and any other documents executed and delivered by the Limited Partner in connection herewith have been duly authorized, executed and delivered by the Limited Partner, and are the legal, valid and binding obligations of the Limited Partner enforceable against the Limited Partner in accordance with their respective terms.

                       (b)         The execution and delivery of this Agreement and any other documents executed and delivered by the Limited Partner in connection herewith do not, and the performance and consummation of the terms and transactions set forth or contemplated herein will not, contravene or result in a default under the provisions of the trust instrument, charter, by-laws or other governing documents of the Limited Partner, and will not contravene or result in a default, to the knowledge of the Limited Partner, under any provision of existing law or regulations to which the Limited Partner is subject, or any indenture, mortgage or other agreement or instrument to which the Limited Partner is a party or by which it is bound, and does not require on the part of the Limited Partner any approval, authorization, license, or filing from or with any foreign, federal, state or municipal board or agency that has not already been obtained.

                       3.6       Anti-Money Laundering .  The Limited Partner acknowledges that the Partnership will seek to comply at all times with applicable anti-money laundering laws and that it is the Partnership's policy to cooperate fully with law enforcement agencies.  To assist the Partnership in its efforts to comply with anti-money laundering laws, the Limited Partner represents that none of the Capital Contributions to be made by the Limited Partner to the Partnership will be derived from or related to any activity that is deemed criminal under United States laws, rules or regulations.  The Limited Partner understands and agrees that the Partnership may undertake any actions that the Partnership deems necessary or appropriate to ensure compliance with applicable laws, rules and regulations, including, without limitation, redeeming the Limited Partner's investment in the Partnership in the event that the foregoing representation by the Limited Partner is incorrect or in the event that, for any other reason, the Limited Partner's investment in the Partnership violates any law, rule or regulation.  The Limited

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Partner also understands and agrees that the Partnership may release confidential information about the Limited Partner and, if applicable, any underlying beneficial owners of the Limited Partner, to law enforcement agencies to the extent necessary to ensure compliance with all applicable laws, rules and regulations, provided that the General Partner, will to the extent consistent with the applicable laws in question, notify the Limited Partner prior to such release of confidential information with reasonably sufficient time so that the Limited Partner may take such action as it deems appropriate to control or limit dissemination of confidential information about such Limited Partner. The Limited Partner agrees that upon demand, it will (a) disclose to the Partnership in writing such information with respect to direct and indirect ownership of the Interest and the source of funds of the Limited Partner as the Partnership deems necessary to comply with (i) provisions of the Code applicable to the Partnership, (ii) statutory and other generally accepted principles relating to anti-money laundering and anti-terrorist groups (including any requirements imposed under the USA Patriot Act of 2001, as the same may be amended from time to time, and the rules and regulations promulgated thereunder) or (iii) the requirements of any other appropriate domestic or foreign authority and (b) promptly furnish such further information, and execute and deliver such documents, as reasonably may be required in the determination of the Partnership to comply with, or to confirm compliance with, any applicable laws or regulations or other obligations of the Limited Partner or the Partnership including, without limitation, a certificate in the form of Exhibit D attached hereto.

                       3.7       Acknowledgment of Potential Conflicts .  The Limited Partner agrees that by acquiring an Interest in the Partnership, it will be deemed to have acknowledged the existence of the actual and potential conflicts of interest: (i) identified herein, by nature of the affiliation between the General Partner, Parkway and their respective Affiliates that will be engaged from time to time to provide certain management and other services with respect to one or more of the Investments and (ii) arising from the fact that (x) one or more Persons serve as an employee, officer or director of both Parkway (and/or its Affiliates) and Five Arrows Realty Securities, L.L.C. (" Five Arrows "), (y) PERS Holding's and its parent entity, OPERS, currently, either individually or collectively, holds an equity interest in Five Arrows (and/or its Affiliates), and (z) Five Arrows (and/or its Affiliates) currently holds an equity interest in Parkway (and/or its Affiliates); the Limited Partner agrees that by acquiring an Interest in the Partnership, it will be deemed to have waived any claim the Limited Partner or any Person claiming through it may have with respect to the existence of any such conflict of interest.  

ARTICLE IV

CAPITAL COMMITMENTS; CONTRIBUTIONS

                      4.1         Capital Commitments .  Each Limited Partner has agreed to make Capital Contributions in the aggregate amount set forth on Exhibit A hereto as such Partner's "Capital Commitment" in whole or, from time to time, in part and at such times as the General Partner shall specify as provided herein.  Each Limited Partner agrees that (a) the Capital Commitment specified in Exhibit A hereof shall constitute its entire Capital Commitment and (b) it will make all Capital Contributions required by this Agreement when the same shall become due and payable.

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                       4.2        Capital Contributions; Capital Calls .  (a) Payments made by a Partner to the Partnership with respect to such Partner's Capital Commitment (such Partner's " Capital Contributions ") shall be made in United States Dollars by wire transfer of immediately available funds to an account or accounts of the Partnership specified by the General Partner to the Limited Partners.  Notwithstanding any other provision of this Agreement to the contrary, except as otherwise required by the Act or other applicable law, in no event shall any Limited Partner be required to make aggregate Capital Contributions in excess of such Limited Partner's Capital Commitment.

                       (b)         From time to time as determined by the General Partner in its sole discretion, the General Partner shall deliver written notices (each, a " Capital Call Notice ") to the Limited Partners, each of which shall call for a Capital Contribution from each Partner (a " Capital Call ") equal to such Partner's pro rata share (based upon such Partner's Capital Commitment in relation to the aggregate Capital Commitments of all the Partners) of the amount determined by the General Partner to be appropriate for the Partnership to: (i) make Investments; (ii) fund its working capital needs, including, without limitation, capital for the purpose of tenant improvements and leasing commissions; (iii) pay Operating Expenses and Organizational Expenses and the Asset Management Fees and property level fees to the General Partner or its Affiliate as set forth in Exhibit B hereto; (iv) establish Reserves; and (v) repay any Indebtedness of the Partnership (regardless of when incurred); provided that following the Investment Period the Partnership shall not make any Capital Call other than to fund Committed Investments and Follow-on Investments, to pay Operating Expenses and Asset Management Fees to the General Partner set forth in Exhibit B hereto, to fund its working capital needs, including, without limitation, capital for the purpose of tenant improvements and leasing commissions, or to pay off the outstanding balances of any Indebtedness.  General Partner shall use its best efforts to have Capital Calls equal to each Partner's Capital Commitment within three (3) years of the date hereof.

                       (c)         Each Capital Call Notice shall include a schedule setting forth, for each Partner, such Partner's Capital Commitment, the aggregate amount of Capital Contributions payable by such Partner pursuant to such Capital Call Notice and the aggregate amount of Capital Contributions made to date by such Partner.  Each Partner shall be required to make such Partner's Capital Contributions in the amount stated in a Capital Call Notice on the date specified in the Capital Call Notice, which date shall not be earlier than five (5) Business Days after the date such Capital Call Notice was delivered to the Limited Partners. 

                      4.3        Utilization of Leverage.  (a) The Partnership and any Investment Vehicle may incur Indebtedness as deemed appropriate by the General Partner; provided that neither the Partnership nor any Investment Vehicle may incur any Indebtedness if, immediately after giving effect to the incurrence of such Indebtedness, (i) the aggregate amount of outstanding Indebtedness of the Partnership and the Investment Vehicles exceeds 60% of the aggregate fair market value of all of the Partnership's assets, as reasonably determined by the General Partner at the time that the Partnership or any such Investment Vehicle incurs such Indebtedness, and (ii) the aggregate amount of outstanding Indebtedness on any single Investment may not exceed 75% of the fair market value of such Investment, as determined by the General Partner as of the date of incurrence of such Indebtedness.  Provided, however, the General Partner shall have the right to allow the aggregate amount of outstanding Indebtedness of the Partnership and the Investment

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Vehicles to exceed 60% but not 65% of the aggregate fair market value of all of the Partnership's assets, as reasonably determined by the General Partner, for a limited period of time not to exceed 365 days for the purpose of funding tenant improvements associated with a major new lease, lease renewal or expansion.  In the event that the amount of outstanding Indebtedness of the Partnership and the Investment Vehicles exceeds 65% of the aggregate fair market value of all of the Partnership's assets or will exceed 60% for a period greater than 365 days, then General Partner shall give written notice to PERS Holding and, within 10 days after receipt of notice, PERS Holding shall elect whether to approve the additional Indebtedness of the Partnership or to require General Partner to make a Capital Call in an aggregate amount enough to bring the Partnership in compliance with the leverage limitations set forth herein.  In the event that PERS Holding fails to make an election within such 10 day period, it shall be deemed to have elected to require General Partner to make a Capital Call.

                       (b)         Except to the extent of a Partner's Capital Commitments, no Indebtedness shall be the personal liability of any Partner, and in no event shall there be recourse to a Partner's Capital Commitment for liability to a lender for so-called "bad boy" acts of a borrower, as such term may be defined by lenders to the Partnership or Investment Vehicle.

                       4.4       Intentionally Deleted . 

                       4.5       Remedies upon a Capital Default .  Upon any failure by one or more Partners (each, a " Defaulting Partner ") to pay in full when due any Capital Contribution (a " Capital Default "), the Partnership, in the sole discretion of the General Partner, shall immediately have the right to declare that interest shall accrue on the outstanding unpaid balance of such requested Capital Contribution, from and including the date such payment was due until the earlier of the date of payment to the Partnership or the election by the Partnership to pursue the other remedies set forth in this Section 4.5, at a rate equal to the lesser of the rate of ten percent (10%) per annum over the Prime Rate and the maximum rate permitted by applicable law (the " Default Rate ").  For purposes of this Agreement, a Capital Default by Parkway shall also constitute a "for Cause" default by General Partner.  In the event of a Capital Default, the Partnership, in the sole discretion of the General Partner, shall have the right to take one or more of the following actions with regard to the Defaulting Partner: (a) continue to charge interest at the Default Rate on the outstanding unpaid balance of such requested Capital Contribution until the date of payment to the Partnership, (b) cause any distributions otherwise payable to the Defaulting Partner under this Agreement to be set off or withheld from such Defaulting Partner in accordance with Section 4.6 hereof, (c) suspend all voting rights, rights to distributions and, to the fullest extent permitted by law, other rights provided to the Defaulting Partner under the Act and this Agreement, (d) in the event that a Defaulting Partner has made less than fifty percent (50%) of its Capital Commitment or such Capital Contribution occurs after the third (3rd) anniversary hereof, offer the unfunded portion of the Interest for sale to the other Partner at such price and on such terms determined by the Partnership in accordance with the provisions of Article 13 hereof and, subject to compliance with the Transfer provisions of this Agreement, and/or (e) with respect to any portion of the Defaulting Partner's Interest not purchased by the other Partner in accordance with clause (d) above, cause a portion or all of such remaining Interest to be sold to third parties at such price and on such terms as may be determined by the Partnership in accordance with the provisions of Article 13 hereof.  The proceeds from the sale of  a  Defaulting  Partner's  Interest  under  clauses  (d)  and  (e)  above  shall  be used to fund the

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Capital Contribution requested from the Defaulting Partner and/or set off or withheld from such Defaulting Partner in accordance with Section 4.6 hereof and any excess amounts returned to the Defaulting Partner.  A Defaulting Partner shall remain liable for the payment of Capital Contributions as the same are called under this Section 4.5 except to the extent that such Capital Contribution is required after the third (3rd) anniversary hereof and the Partnership may exercise the remedies set forth above for every subsequent Capital Default by the Defaulting Partner.  Notwithstanding any other provision in this Agreement, upon a Capital Default by one or more Partners, the non-defaulting Partner(s) may, in its sole discretion, terminate the Investment Period and, immediately upon such termination, neither the General Partner nor any of its principals or Affiliates shall have any further duties or obligations under Article XIV of this Agreement.  The rights and remedies referred to in this Section shall be in addition to, and not in limitation of, any other rights available to the Partnership under this Agreement, or at law or in equity.  The Partnership may proceed to collect from any Defaulting Partner any amount due from such Defaulting Partner as and when due, as well as all costs and expenses of collection incurred by the Partnership (including reasonable fees and disbursements of counsel). 

                       4.6       Set-off and Withholding of Certain Amounts .  Notwithstanding anything to the contrary contained in this Agreement, the Partnership may, in the General Partner's discretion, set-off against or withhold from any distribution to any Partner pursuant to this Agreement any amounts due from such Partner to the Partnership pursuant to this Agreement, to the extent not otherwise paid.  Any amounts so set-off or withheld pursuant to this Section shall be applied by the Partnership to discharge the obligation in respect of which such amounts were withheld.  All amounts set-off or withheld pursuant to this Section 4.6 with respect to any Partner shall be treated as amounts distributed to such Partner by the Partnership and paid to the Partnership by such Partner for all purposes under this Agreement.  The Partnership shall give written notice of any such set-off or withholding to each Partner subject thereto within five (5) Business Days after such set-off or withholding.

                       4.7       No Right to Redemption of Interests or Return of Capital Contributions .  No Partner shall have the right to withdraw from the Partnership or require that the Partnership redeem all or any portion of such Partner's Interest.  No Partner shall have a right to receive a return of its Capital Contributions or a dividend in respect of such Partner's Interest from any specific assets of the Partnership.  Each Partner waives any right which it may have to cause a partition of all or any part of the Partnership's assets. 

                       4.8       Uncertificated Interests .  Interests shall be recorded in book-entry form and no Partner shall have the right to demand that the Partnership produce and/or deliver certificates representing such Interests.  Without limiting the foregoing, the General Partner may produce and deliver certificates representing Interests if the General Partner, in its sole and absolute discretion, determines that such production and delivery would be in the best interests of the Partnership.

                       4.9       Limitation on Liability of Limited Partners .  Except as otherwise required by this Agreement, the Act or other applicable law, the liability of each Limited Partner, in its capacity as such, shall be limited to the aggregate amount of such Limited Partner's Capital Commitment.  Each  Limited  Partner,  to the fullest extent permitted by applicable law, shall not

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have any fiduciary or other duty to the Partnership or any other Partner, other than the duty to act in accordance with the contractual covenant of good faith and fair dealing.

                       4.10       Interest .  No Partner shall receive any interest on its Capital Contributions.

                       4.11       Negative Capital Accounts .  At no time during the term of the Partnership or upon dissolution and liquidation thereof shall a Limited Partner with a negative balance in his Capital Account have any obligation to the Partnership or the other Partners to eliminate or restore such negative balance.

ARTICLE V

ALLOCATIONS OF PROFITS AND LOSSES

                       5.1       Allocation of Profits .  After giving effect to the Regulatory Allocations set forth in Section 5.3 of this Agreement, Profits for any fiscal year or other period of the Partnership shall be credited to the Capital Accounts of the Partners in the following order of priority:

                       (a)         First, to the Partners in an amount sufficient to reverse the cumulative amount of any Losses allocated to the Partners in all prior fiscal years, first pursuant to the proviso after Section 5.2(c) of this Agreement, and second pursuant to Section 5.2(c) of this Agreement, allocated to each Partner in the order and in proportion to the allocation of such Losses to such Partners;

                       (b)         Second, to the Partners, until the cumulative amount allocated pursuant to this Section 5.1(b) for the current and all prior fiscal years is equal to their cumulative Preferred Return, allocated to each Partner pro rata in proportion to their respective Percentage Interest, plus the cumulative amount of any Losses allocated to them pursuant to Section 5.2(b) of this Agreement in all prior fiscal years (which Losses reverse Profits allocated under this Section 5.1(b)) allocated to each Partner pro rata in proportion to the allocation of such Losses to such Partners;

                       (c)         Thereafter, (i) eighty percent (80%) pro rata to the Partners in proportion to their respective Percentage Interests and (ii) twenty percent (20%) to the General Partner.

                       5.2        Allocation of Losses .  After giving effect to the Regulatory Allocations set forth in Section 5.3 of this Agreement, Losses for any fiscal year or other period will be charged to the Capital Accounts of the Partners in the following order of priority:

                       (a)          First , (i) eighty percent (80%) to the Partners and (ii) twenty percent (20%) to the General Partner to reverse the cumulative amount of any Profits allocated under Section 5.1(c) of this Agreement in all prior fiscal years allocated to each Partner in proportion to the allocation of such Profits to such Partners;

                       (b)          Second , to the Partners until the cumulative amount allocated pursuant to this Section 5.2(b) for the current and all prior fiscal years is equal to the cumulative amount of any  Profits  allocated  to  them  under  Section 5.1(b)  of  this Agreement in all prior fiscal years,

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allocated to each Partner pro rata in proportion to the allocation of such Profits to such Partners; and

                       (c)          Third , one hundred percent (100%) pro rata to the Partners in proportion to their respective Percentage Interests;

provided, however, that Losses will not be allocated to any Partner if such Losses would result in or increase an Adjusted Capital Account Deficit with respect to such Partner, and any Losses that cannot be allocated to any Partner as a result of this proviso shall be allocated first to the Capital Accounts of the other Partners in proportion to the amounts allocable without causing or increasing an Adjusted Capital Account Deficit and then one hundred percent (100%) to the General Partner.

                       5.3       Regulatory Allocations .  The following special allocations shall be made in the following order:

                       (a)          Minimum Gain Chargeback .  Except as otherwise provided in Section 1.704-2(f) of the Regulations, in the event there is a net decrease in Partnership Minimum Gain during a Partnership taxable year, each Partner shall be allocated (before any other allocation is made pursuant to Section 5.2 of this Agreement) items of income and gain for such year (and, if necessary, for subsequent years) equal to that Partner's share of the net decrease in Partnership Minimum Gain.

                                    (i)          The determination of a Partner's share of the net decrease in Partnership Minimum Gain shall be determined in accordance with the Regulation Section 1.704-2(g).

            &