**Exhibit 10.2**

**ParkwayProperties Inc.**

**DeferredCompensation Plan**

 

            Parkway Properties Inc., a Maryland corporation,and its affiliates and subsidiaries (the “Employer”), pursuant to Section 8 ofthe Parkway Properties, Inc. Deferred Compensation Plan (the “Prior Plan”),hereby amends and restates the Prior Plan for the benefit of a select group ofmanagement or highly compensated employees.  This Plan amendment andrestatement is effective January 1, 2005 and adopted by the Employer on November8, 2007, and shall represent the restatement and continuation of the Employer’sPrior Plan with the administration of such Prior Plan performed in compliancewith Internal Revenue Code Section 409A and the regulations promulgatedthereto.  This Plan is an unfunded arrangement and is intended to be exemptfrom the participation, vesting, funding, and fiduciary requirements set forthin Title I of the Employee Retirement Income Security Act of 1974, as amended. It is intended to comply with Internal Revenue Code Section 409A.  

 

# Article 1 - Definitions

 

## 1.1       Account.  

The bookkeeping account established for each Participant asprovided in Section 5.1 hereof.  

 

## 1.2       Administrator.

            The Compensation Committee appointed by theBoard of Directors. The Plan Administrator shall serve as the agent for theEmployer with respect to the Trust.

 

## 1.3       Board.

The Board of Directors of the Employer.

 

## 1.4       Bonus.

Compensation which is designated as such by the Employer andwhich relates to services performed during an incentive period by an EligibleService Provider in addition to his or her Salary, including any pretaxelective deferrals from said Bonus to any Employer sponsored plan that includesamounts deferred under a Deferral Election or any elective deferral as definedin Code Section 402(g)(3) or any amount contributed or deferred at the electionof the Eligible Service Provider in accordance with Code Section 125 or132(f)(4).

 

## 1.5       Change-in-Control.

Provided that such definition shall be interpreted in a mannerthat is consistent with Code Section 409A and regulationsthereunder, a “Change-in-Control” of the Employer (which,for purpose of this Section 1.5 shall mean Parkway Properties Inc. but not anyof its affiliates or subsidiaries) shall mean the first to occur of any ofthe following:

 

 

 

 

 

 

 

 

(a)        the date that any one person or personsacting as a group acquires ownership of Employer stock constituting more thanfifty percent (50%) of the total fair market value or total voting power of theEmployer;

1

----

 

(b)        the date that anyone person or persons acting as a group acquires (or has acquired during the12-month period ending on the date of the most recent acquisition by suchperson or persons) ownership of the stock of the Employer possessing thirtypercent (30%) or more of the total voting power of the stock of the Employer; 

 

c)         the date that anyone person or persons acting as a group acquires (or has acquired during the12-month period ending on the date of the most recent acquisition by suchperson or persons) assets from the Employer that have a total gross fair marketvalue equal to or more than forty percent (40%) of the total gross fair marketvalue of all of the assets of the Employer immediately prior to suchacquisition; or

 

d)          the date that amajority of members of the Employer’s Board is replaced during any 12-monthperiod by directors whose appointment or election is not endorsed by a majorityof the members of the Board prior to the date of the appointment or elections.

 

## 1.6       Code.

The Internal Revenue Code of 1986, as amended.

 

## 1.7       Compensation.

The Participant’s earned income, including Salary, Bonus,Performance-based Compensation, directors fees related to Board membership and Employerrestricted stock units and other remuneration from the Employer as may beincluded by the Administrator.  

 

## 1.8       Deferrals.

The portion of Compensation that a Participant elects to deferin accordance with Section 3.1 hereof.  The Employer may, from time to time intheir sole and absolute discretion, limit the Compensation for deferral underthis Plan.

 

## 1.9       Deferral Election.

The separate agreement, submitted to the Administrator, bywhich an Eligible Service Provider agrees to participate in the Plan and makeDeferrals thereto.

 

## 1.10     Disability.

 

A Participant shall be considered disabled if: (i) the Participantis unable to engage in any substantial gainful activity by reason of anymedically determinable physical or mental impairment which can be expected toresult in death or can be expected to last for a continuous period of not lessthan 12 months; (ii) the Participant is, by reason of any medicallydeterminable physical or mental impairment which can be expected to result indeath or can be expected to last for a continuous period of not less than 12months, receiving income replacement benefits for a period of not less than 3months under an accident and health plan covering employees of theParticipant’s Employer; or (iii) determined to be totally disabled by theSocial Security Administration.

 

## 1.11     Effective Date.

            January 1, 2008.

 2

----

 

## 1.12     Eligible Service Provider.

An Employee shall be considered an Eligible Service Providerif such Employee is a member of a select group of management or highlycompensated employees or is an active member of the Board and is designated asan Eligible Service Provider by the Administrator. The designation of an Employeeas an Eligible Service Provider in any year shall not confer upon such Employeeany right to be designated as an Eligible Service Provider in any future PlanYear.

 

## 1.13     Employee or Service Provider.

For purposes of this Plan, Employee or Service Provider shallmean any person employed  by the Employer or any person who is a member of theBoard.

 

## 1.14     Employer.

Parkway Properties Inc. and its subsidiaries and affiliates.

 

## 1.15     Employer Discretionary Contribution.

A discretionary contribution made by the Employer that iscredited to one or more Participant’s Accounts in accordance with the terms of Section3.6 hereof.

 

## 1.16     ERISA.

The Employee Retirement Income Security Act of 1974, asamended.

 

## 1.17     Investment Fund.

Each investment(s) which serves as a means to measure value,increases or decreases with respect to a Participant’s Accounts.

 

## 1.18     Matching Contribution.

A discretionary contribution made by the Employer that iscredited to one or more Participant’s Accounts in accordance with the terms of Section3.5 hereof.

 

## 1.19     Participant.

An Eligible Service Provider who is a Participant as providedin Article 2.

 

## 1.20     Performance-based Compensation.

Performance-based compensation shall mean compensation that(i) meets the definition of Code Section 409A(a)(4)(B)(iii) and relatedguidance and regulations, (ii) is designated as such by the Employer andrelates to services performed during a performance period of at least twelvemonths by an Eligible Service Provider, including any pretax elective deferralsfrom said Performance-based Compensation to any Employer sponsored plan thatincludes amounts deferred under a Deferral Election or any elective deferral asdefined in Code Section 402(g)(3) or any amount contributed or deferred at theelection of the Eligible Service Provider in accordance with Code Section 125or 132(f)(4). 

 

## 1.21     Plan Year.

Each Plan Year shall be measured from January 1 throughDecember 31.

3

----

 

## 1.22     Retirement.

Retirement shall mean either (i) a Participant has reached agesixty-five (65) and has a Separation from Service, or (ii) a Participant hasreached age fifty-five (55) and has five (5) Years of Service and has aSeparation from Service.  

 

## 1.23     Salary.

An Eligible Service Provider’s base salary earned during aPlan Year, including any pretax elective deferrals from said Salary to any Employersponsored plan that includes amounts deferred under a Deferral Election or anyelective deferral as defined in Code Section 402(g)(3) or any amountcontributed or deferred at the election of the Eligible Service Provider in accordancewith Code Section 125 or 132(f)(4).

 

## 1.24     Separation from Service.

As provided by regulations promulgated under Code Section409A, a Participant shall incur a Separation from Service with the ServiceRecipient due to death, Retirement or other termination of employment or servicewith the Service Recipient unless the employment relationship is treated ascontinuing intact while the individual is on military leave, sick leave, orother bona fide leave of absence if the period of such leave does not to exceedsix months, or if longer, so long as the individual retains a right toreemployment with the Service Recipient under an applicable statute or bycontract.  

 

## 1.25     Service Recipient.

As provided by regulations promulgated under Code Section 409A,Service Recipient shall mean the Employer or person for whom the services areperformed and with respect to whom the legally binding right to compensationarises, and all persons with whom such person would be considered a singleemployer under Code Section 414(b) (employees of controlled group ofcorporations), and all persons with whom such person would be considered a singleemployer under Code Section 414(c) (employees of partnerships, proprietorships,etc., under common control).

 

## 1.26     Specified Employee.

 

Specified Employee shall mean a participantwho is considered a key employee on the Identification Date, as defined in CodeSection 416(i) without regard to section 416(i)(5) and such other requirementsimposed under Code Section 409A(a)(2)(B)(i) and regulations thereunder for theperiod beginning April 1 of the year subsequent to the Identification Date andending March 31 of the following year.  The Identification Date for this Planis December 31 of each year.  Notwithstanding anything to the contrary, aParticipant is not a Specified Employee unless any stock of the ServiceRecipient is publicly traded on an established securities market or otherwise. 

 

## 1.27     Trust.

The agreement between the Employer and the Trustee under whichthe assets of the Plan are held, administered and managed, which shall conformto the terms of Rev. Proc. 92-64.

4

----

 

## 1.28     Trustee.

Regions Morgan Keegan Trust, or such other successor thatshall become trustee pursuant to the terms of the Plan.

 

## 1.29     Years of Service.

A Participant’s “Years of Service” shall be measured byemployment during a twelve (12) month period commencing with the Participant’sdate of hire or date of Board appointment, as applicable which ever is earlier,and anniversaries thereof.  

 

# Article2 - Participation

 

## 2.1       Commencement of Participation.

Each Eligible Service Provider shall become a Participant atthe earlier of the date on which his or her Deferral Election first becomeseffective or the date on which an Employer Discretionary Contribution is firstcredited to his or her Account.

##  

## 2.2       Loss of Eligible Service Provider Status.

A Participant who is no longer an Eligible Service Provider shallnot be permitted to submit a Deferral Election and all Deferrals for suchParticipant shall cease as of the end of the Plan Year in which suchParticipant is determined to no longer be an Eligible Service Provider.  Amountscredited to the Account of a Participant who is no longer an Eligible ServiceProvider shall continue to be held pursuant to the terms of the Plan and shallbe distributed as provided in Article 6. 

 

# Article 3 - Contributions

 

## 3.1       Deferral Elections - General.

A Participant’s Deferral Election for a Plan Year isirrevocable for that applicable Plan Year; provided, however that a cessationof Deferrals shall be allowed if required by the termsof the Employer’s qualified 401(k) plan in order for the Participant to obtain a hardship withdrawalfrom the 401(k) plan, or if required under Section 6.10 (UnforeseeableEmergency) of this Plan.  Such amounts deferred under the Plan shall not bemade available to such Participant, except as provided in Article 6, and shallreduce such Participant’s Compensation from the Employer in accordance with theprovisions of the applicable Deferral Election; provided, however, that allsuch amounts shall be subject to the rights of the general creditors of theEmployer as provided in Article 8.  The Deferral Election, in addition to therequirements set forth below, must designate: (i) the amount of Compensation tobe deferred, (ii) the time of the distribution, and (iii) the form of thedistribution.

 

 

## 3.2       Time of Election.

A Deferral Election shall be void ifit is not made in a timely manner as follows:

 

(a)        A DeferralElection with respect to any Compensation must be submitted to theAdministrator before the beginning of the calendar year during which the amountto be deferred will be earned.  As of December 31 of each calendar year, saidDeferral Election is irrevocable.

5

----

 

(b)        Notwithstandingthe foregoing and in the discretion of the Employer, in a year in which anEmployee or director on the Board is first eligible to participate, andprovided that such Employee or director on the Board is not eligible toparticipate in any other similar account balance arrangement subject to Code Section409A, such Deferral Election shall be submitted within thirty (30) days afterthe date on which an Employee or director on the Board is first eligible toparticipate, and such Deferral Election shall apply to Compensation to beearned during the remainder of the calendar year after suchelection is made.  

 

(c)        Notwithstandingthe foregoing and in the discretion of the Employer, a Deferral Election withrespect to any Performance-based Compensation may be submitted by the EligibleService Provider or Participant provided that such Deferral Election issubmitted at least six (6) months prior to the end of the performance period onwhich the Performance-based Compensation is based.

 

## 3.3       Distribution Elections.

At the time a Participant makes a Deferral Election, he or shemust also elect the time and form of the distribution by establishing one ormore In-Service Account(s) or Retirement Account(s) as provided in Sections 5.1and 6.1.  If the Participant fails to properly designate the time and form of adistribution, the Participant’s Accountshall be designated as a Retirement Account and shall be paid in a lump sum.

 

## 3.4       Additional Requirements.

The Deferral Election, subject tothe limitations set forth in Sections 3.1 and 3.2 hereof, shall comply with thefollowing additional requirements, or as otherwise required by theAdministrator in its sole discretion: 

 

(a)        Deferralsmay be made in whole percentages or stated dollar amounts with such limitationsas determined by the Administrator.

 

(b)       Themaximum amount that may be deferred each Plan Year is twenty-five percent (25%)of the Participant’s Salary and one-hundred percent (100%) of the Participant’sBonus or Performance-based Compensation, net of applicable taxes. The maximumamount of director fees that may be deferred each Plan Year is one hundredpercent (100%).  Contingent Bonus elections shall be allowed in any Plan Yeardesignated as a Bonus deferral Plan Year by the Employer.  The deferral ofrestricted stock units shall only be allowed as such units are provided by theEmployer and are designated as units available for deferral.

 

 

## 3.5       Matching Contribution.

The Employer may also credit to the Account of eachParticipant who makes Deferrals a Matching Contribution in an amount equal to apercentage of the Deferrals contributed by the Participant, with suchpercentage determined annually by the Employer, in its sole discretion.

Such Matching Contribution shall becredited to such sub-account(s) as may be elected by the Participant for his orher Base Salary Deferrals, or if no Base Salary Deferrals, then for Bonus orPerformance-based Compensation Deferrals in accordance with Section 5.1 andprocedures established by the Plan Administrator.  

 

 6

----

 

## 3.6       Employer Discretionary Contributions.

The Employer reserves the right to make discretionarycontributions to some or all Participants’ Accounts in such amount and in suchmanner as may be determined by the Employer.  Such Employer DiscretionaryContribution, at the option of the Employer shall be credited to suchsub-account(s) as may be elected by the Participant in accordance with Sections3.1 and 5.1 and procedures established by the Administrator, or if no suchelection is made by the Participant, then to such sub-account(s) as may beelected by the Participant for his or her Base Salary Deferrals, or if no BaseSalary Deferrals, then for Bonus or Performance-based Compensation Deferrals orif no Base Salary or Bonus Deferrals, then to the Participant’s Retirementsub-account with the shortest payment period maintained within theParticipant’s Account in accordance with Section 5.1.  

 

## 3.7       Crediting of Contributions.

 

(a)        Base Salary Deferralsshall be credited to a Participant’s Account, and if applicable transferred tothe Trust, as soon as administratively feasible following the close of each payroll period.  Bonus or Performance-basedCompensation Deferrals and director fees associated with Board membership shallbe credited to a Participant’s Account, and if applicable transferred to theTrust, quarterly or annually, as applicable. 

 

(b)        MatchingContributions shall be credited to a Participant’s Account, and if applicabletransferred to the Trust, as soon as administratively feasible followingthe close of each payroll period. 

 

(c)        EmployerDiscretionary Contributions shall be credited to a Participant’s Account, andif applicable transferred to the Trust, at such time as the Employer shalldetermine.  

 

# Article 4 - Vesting

 

## 4.1       Vesting of Deferrals.

A Participant shall be one-hundred percent (100%) vested inhis or her Account attributable to Deferrals and any earning or losses on theinvestment of such Deferrals. 

 

## 4.2       Vesting of Matching Contributions.

Except as otherwise provided herein, a Participant shall havea vested right to the portion of his or her Account attributable to Matching Contributionsand any earnings or losses on the investment of such Matching Contributions accordingto such vesting schedule as the Employer shall determine at the time a MatchingContribution is made.  

 

## 4.3       Vesting of Employer Discretionary Contributions.

A Participant shall have a vested right to the portion of hisor her Account attributable to Employer Discretionary Contribution(s) and anyearnings or losses on the investment of such Employer DiscretionaryContribution(s) according to such vesting schedule as the Employer shalldetermine at the time an Employer Discretionary Contribution is made.  

7

----

 

## 4.4       Vesting in Event of Retirement, Disability, Death or Change-in-Control.

 

(a)        A Participant who incurs a Separationfrom Service due to Retirement shall be fully vested in the amounts credited tohis or her Account as of the date of Retirement.

 

(b)        A Participant who incurs a Separationfrom Service due to Disability shall be fully vested in the amounts credited tohis or her Account as of the date of Disability.

 

(c)        Upon a Participant’s death, theParticipant shall be fully vested in the amounts credited to his or her Accountas of the date of death.

 

(d)       Upon a Change-in-Control, allParticipants shall be fully vested in the amounts credited to their Accounts asof the date of the Change-in-Control.

 

## 4.5       Amounts Not Vested.

Any amounts credited to a Participant’s Account that are notvested at the time of his or her Separation from Service shall be forfeited.

 

## 4.6       Forfeitures.

Any forfeitures from a Participant’s Account shall be returnedto the Employer.

 

# Article 5 - Accounts

 

## 5.1       Accounts.

The Administrator shall establish and maintain a bookkeepingaccount in the name of each Participant.  The Administrator shall alsoestablish sub-accounts as provided in subsection (a) and (b), below, as electedby the Participant pursuant to Article 3.  A Participant may have a maximum of ten(10) sub-accounts at any time.

 

 

 

 

 

 

(a)        A Participant may establish one or moreRetirement Account(s) (“Retirement sub-accounts”) by designating as such on theParticipant’s Deferral Election.  Each Participant’s Retirement sub-accountshall be credited with Deferrals (as specified in the Participant’s DeferralElection), any Matching Contributions allocable thereto, any Employer DiscretionaryContributions, and the Participant’s allocable share of any earnings or losseson the foregoing.  Each Participant’s Retirement sub-account shall be reducedby any distributions made plus any federal and state tax withholding, and anysocial security withholding tax as may be required by law.  

 

(b)        A Participant may elect to establish oneor more In-Service Accounts (“In-Service sub-accounts”) by designating as such inthe Participant’s Deferral Election the year in which payment shall be made. Each Participant’s In-Service sub-account shall be credited with Deferrals (asspecified in the Participant’s Deferral Election), any Matching Contributionsallocable thereto, any Employer Discretionary Contributions, and theParticipant’s allocable share of any earnings or losses on the foregoing.  EachParticipant’s In-Service sub-account shall be reduced by any distributions madeplus any federal and state tax withholding and any social security withholdingtax as may be required by law.

8

----

 

## 5.2       Investments, Gains and Losses.

 

(a)        A Participant may direct that his or herRetirement sub-accounts and or In-Service sub-accounts established pursuant toSection 5.1 may be valued as if they were invested in one or more InvestmentFunds as selected by the Employer in multiples of one percent (1%).  TheEmployer may from time to time, at the discretion ofthe Administrator, change the Investment Funds for purposes of this Plan.  

 

(b)        The Administrator shall adjust theamounts credited to each Participant’s Account to reflect Deferrals, MatchingContributions any Employer Discretionary Contributions, investment experience,distributions and any other appropriate adjustments.  Such adjustments shall bemade as frequently as is administratively feasible.

 

(c)        A Participant may change his or herselection of Investment Funds each Plan Year with respectto his or her Account or sub-accounts by filing a new election in accordancewith procedures established by the Administrator.  An election shall beeffective as soon as administratively feasible following the date the change issubmitted on a form prescribed by the Administrator.

 

(d)       Notwithstanding theParticipant’s ability to designate the Investment Fund in which his or herdeferred Compensation shall be deemed invested, the Employer shall have noobligation to invest any funds in accordance with the Participant’s election. Participants’ Accounts shall merely be bookkeeping entries on the Employer’sbooks, and no Participant shall obtain any property right or interest in anyInvestment Fund.

 

# Article 6 - Distributions

 

## 6.1       Distribution Election.

 

 

Each Participant shall designate in his or her DeferralElection the form and timing of his or her distribution by indicating the typeof sub-account as described under Section 5.1, and by designating the form inwhich payments shall be made from the choices available under Section 6.2 and6.3 hereof.  To the extent an Account distribution consists of Employer stock,such distribution as it relates to the Employer stock shall only be distributedto the Participant in Employer stock.  Notwithstanding anything to the contrarycontained herein provided, no acceleration of the time or schedule of paymentsunder the Plan shall occur except as permitted under both this Plan and CodeSection 409A.

 

## 6.2       Distributions Upon an In-Service Account Triggering Date.

In-Service sub-accountdistributions shall begin as soon as administratively feasible but no laterthan ninety (90) days following January 1 of the calendar year designated bythe Participant on a properly submitted Deferral Election, and are payable ineither a lump-sum payment or substantially equal annual installments, asdescribed in Section 6.4 below, over a period of up to five (5) years aselected by the Participant in his or her DeferralElection.  If the Participant fails to properly designate the form of the distribution,the sub-account shall be paid in a lump-sum payment.

9

----

 

## 6.3       Distributions Upon Retirement.

If theParticipant has a Separation from Service due to Retirement, the Participant’sRetirement sub-account(s) shall be distributed as soon as administrativelyfeasible, but no earlier than the first day of the seventh month followingParticipant’s Retirement.  

 

Distributionshall be made either in a lump-sum payment or in substantially equal annualinstallments, as defined in Section 6.4 below, over a period of up to ten (10)years as elected by the Participant.  If the Participant fails to properlydesignate the form of the distribution, the sub-account shall be paid in alump-sum payment.   If a Participant has any In-Service sub-accounts at thetime of his or her Retirement, said sub-accounts shall be distributed in a lumpsum as soon as administratively feasible but no earlier than the first day ofthe seventh month following Participant’s Retirement.  

 

## 6.4       Substantially Equal Annual Installments.

 

(a)        The amount of thesubstantially equal payments shall be determined by multiplying theParticipant’s Account or sub-account by a fraction, the denominator of which inthe first year of payment equals the number of years over which benefits are tobe paid, and the numerator of which is one (1).  The amounts of the paymentsfor each succeeding year shall be determined by multiplying the Participant’sAccount or sub-account as of the applicable anniversary of the payout by afraction, the denominator of which equals the number of remaining years overwhich benefits are to be paid, and the numerator of which is one (1). Installment payments made pursuant to this Section 6.4 shallbe made as soon as administratively feasible, but no later than ninety (90)days, following the anniversary of the distribution event.  

 

(b)        For purposes of the Plan pursuant to CodeSection 409A and regulations thereunder, a series of annual installments shallbe considered a single payment.  

 

|   |
|--------|

 

## 6.5       Distributions due to other Separation from Service.

If theParticipant has a Separation from Service for any reason other than Retirement,death or Disability, all vested amounts credited to his or her Account shall bepaid to the Participant in a lump sum, as soon as administratively feasible butno earlier than the first day of the seventh month following Participant’sSeparation from Service.  

 

## 6.6       Distributions upon Separation from Service due to Disability.

Upon aParticipant’s Separation from Service due to Disability, all amounts creditedto his or her Account shall be paid to the Participant in a lump sum, as soonas administratively feasible but no earlier than the first day of the seventhmonth following Participant’s Separation from Service.  

10

----

 

## 6.7       Distributions upon Death.

Upon thedeath of a Participant, all amounts credited to his or her Account shall bepaid, as soon as administratively feasible but no later than ninety (90) days followingParticipant’s date of death, to his or her beneficiary or beneficiaries, asdetermined under Article 7 hereof, in a lump sum.

 

## 6.8       Changes to Distribution Elections.

A Participant will be permitted to elect to change the form ortiming of the distribution of the balance of his or her one or moresub-accounts within his or her Account to the extent permitted and inaccordance with the requirements of Code Section 409A(a)(4)(C), including therequirement that (i) a redeferral election may not take effect until at least twelve(12) months after such election is filed with the Employer, (ii) an election tofurther defer a distribution (other than a distribution upon death, Disabilityor an unforeseeable emergency) must  result in the first distribution subjectto the election being made at least five (5) years after the previously electeddate of distribution, and (iii) any redeferral election affecting adistribution at a fixed date must be filed with the Employer at least twelve (12)months before the first scheduled payment under the previous fixed datedistribution election.  Once a sub-account begins distribution, no such changesto distributions shall be permitted.  

 

## 6.9       Cash-Out Provision.

Notwithstanding any provision to the contrary, and at the solediscretion of the Employer, if a Participant’s entire Account balance is lessthan the applicable Code Section 402(g) annual limit, the Employer maydistribute the Participant’s Account in a lump sum provided that thedistribution results in the termination of the participant’s entire interest inthe Plan, subject to the plan aggregation rules of Code Section 409A andregulations thereunder.  

 

## 6.10     Unforeseeable Emergency.

|   |
|--------|

 

 

The Administrator may permit an early distribution of part orall of any deferred amounts; provided, however, that such distribution shall bemade only if the Administrator, in its sole discretion, determines that the Participant,or the Participant’s beneficiary, has experienced an Unforeseeable Emergency. An Unforeseeable Emergency is defined as a severe financial hardship resultingfrom an illness or accident of the Participant, the Participant’s spouse, or adependent (as defined in Code Section 152(a)) of the Participant, loss of the Participant’sproperty due to casualty or other similar extraordinary and unforeseeablecircumstances arising as a result of events beyond the control of theParticipant.  If an Unforeseeable Emergency is determined to exist, adistribution may not exceed the amounts necessary to satisfy such emergencyplus amounts necessary to pay taxes reasonably anticipated as a result of thedistribution, after taking into account the extent to which such hardship is ormay be relieved through reimbursement or compensation by insurance or otherwiseor by liquidation of the Participant’s assets (to the extent the liquidation ofsuch assets would not itself cause severe financial hardship).  Upon adistribution to a Participant under this Section 6.10, the Participant’s Deferralsshall cease and no further Deferrals shall be made for such Participant for theremainder of the Plan Year. 

11

----

 

## 6.11     Distributions to Specified Employee.

Notwithstanding anything herein tothe contrary, if any Participant is a Specified Employee upon a Separation fromService for any reason other than death*,* distributions to suchParticipant shall not commence until the first day ofthe seventh month following the date of Separation from Service (or, ifearlier, the date of death of the Participant).  If distributions are to be made in annual installments, thesecond installment and all those thereafter will be made on the applicableanniversaries of the Participant’s Separation from Service.

 

## 6.12     Exception to Separation from Service.

At the discretion of Employer, a third-party unrelated toEmployer that acquires substantially all the assets of a subsidiary or businessunit, may apply the “same desk” rule so that Participants shall not incur aSeparation from Service upon the sale or transfer of the subsidiary or businessunit provided the following conditions are met: (i) the asset purchase ortransfer results from bona fide arm’s length negotiations, (ii) allParticipants providing services to the Employer prior to and after the transferare treated consistently, and (iii) such treatment is specified in writing nolater than the close date of the asset purchase transaction.

 

## 6.13     Minimum Distribution.

Notwithstanding any provision to thecontrary, if the balance of a Participant’s Account or sub-account at the timeof a distribution event or at the time of a scheduled installment payment is $25,000or less, then the Participant shall be paid his or her Account or sub-accountas a single lump sum.

 

## 6.14     Separation from Service for Cause.

|   |
|--------|

 

 

 

 

 

 

Notwithstanding anything to thecontrary contained herein, in the event the Participant has an involuntarySeparation from Service for Cause, Participant shall only receive the return oftheir Deferrals including the Participant’s allocable share of any earningsor losses credited on those Deferrals pursuant toSection 5.2 and subject to Section 6.11 (Distributions to Specified Employees)above.  Upon a Participant’s Separation from Service for Cause, amountscredited to Participant’s Account relating to Employer MatchingContribution(s), Employer Discretionary Contribution(s), including theParticipant’s allocable share of any earnings or losses credited on the foregoing pursuant to Section 5.2,hereinabove, shall be forfeited back to the Employer.  For purposes of thisPlan, “Cause” shall mean (i) engaging inwillful or grossly negligent misconduct that is materially injurious to theCompany and/or affiliate, (ii) embezzlement or misappropriation of funds orproperty of the Company and/or affiliate, (iii) conviction of a felony or theentrance of a plea of guilty or nolo contendere to a felony, (iv) conviction ofany crime involving fraud, dishonesty or breach of trust or the entrance of aplea of guilty or nolo contendere to such a crime, or (v) failure or refusal bythe Participant to devote full business time and attention to the performanceof his or her duties and responsibilities if such breach has not been curedwithin fifteen (15) days after notice is given to the Participant.

 

## 6.15     Domestic Relations Orders.

The Administrator may permit such acceleration of the time orschedule of a payment under the arrangement to an individual other than aParticipant as may be necessary to fulfill a domestic relations order (asdefined in Code Section 414(p)(1)(B)).

12

----

 

# Article 7 - Beneficiaries

 

## 7.1       Beneficiaries.

Each Participant may from time to time designate one or morepersons (who may be any one or more members of such person’s family or otherpersons, administrators, trusts, foundations or other entities) as his or herbeneficiary under the Plan.  Such designation shall be made in a formprescribed by the Administrator.  Each Participant may at any time and fromtime to time, change any previous beneficiary designation, without notice to orconsent of any previously designated beneficiary, by amending his or herprevious designation in a form prescribed by the Administrator.  If thebeneficiary does not survive the Participant (or is otherwise unavailable toreceive payment) or if no beneficiary is validly designated, then the amounts payableunder this Plan shall be paid to the Participant’s  surviving spouse, or if nosurviving spouse to the Participant’s estate.  If more than one person is the beneficiaryof a deceased Participant, each such person shall receive a pro rata share ofany death benefit payable unless otherwise designated in the applicable form. If a beneficiary who is receiving benefits dies, all benefits that were payableto such beneficiary shall then be payable to the estate of that beneficiary.

 

## 7.2       Lost Beneficiary.

All Participants and beneficiaries shall have the obligationto keep the Administrator informed of their current address until such time asall benefits due have been paid.  If a Participant or beneficiary cannot belocated by the Administrator exercising due diligence, then, in its solediscretion, the Administrator may presume that the Participant or beneficiaryis deceased for purposes of the Plan and all unpaid amounts (net of duediligence expenses) owed to the Participant or beneficiary shall be paid accordinglyor, if a beneficiary cannot be so located, then such amounts may be forfeited. Any such presumption of death shall be final, conclusive and binding on allparties.

 

# Article8 - Funding

 

## 8.1       Prohibition Against Funding.

|   |
|--------|

 

 

 

 

 

 

 

Should any investment be acquired in connection with theliabilities assumed under this Plan, it is expressly understood and agreed thatthe Participants and beneficiaries shall not have any right with respect to, orclaim against, such assets nor shall any such purchase be construed to create atrust of any kind or a fiduciary relationship between the Employer and theParticipants, their beneficiaries or any other person.  Any such assets shallbe and remain a part of the general, unpledged, unrestricted assets of theEmployer, subject to the claims of its general creditors.  It is the expressintention of the parties hereto that this arrangement shall be unfunded for taxpurposes and for purposes of Title I of the ERISA.  Each Participant andbeneficiary shall be required to look to the provisions of this Plan and to theEmployer itself for enforcement of any and all benefits due under this Plan,and to the extent any such person acquires a right to receive payment underthis Plan, such right shall be no greater than the right of any unsecured generalcreditor of the Employer.  The Employer or the Trust shall be designated theowner and beneficiary of any investment acquired in connection with itsobligation under this Plan.

13

----

 

## 8.2       Deposits in Trust.

Notwithstanding Section 8.1, or any other provision of thisPlan to the contrary, the Employer may deposit into the Trust any amounts itdeems appropriate to pay the benefits under this Plan.  The amounts sodeposited may include all contributions made pursuant to a Deferral Election bya Participant, all Matching Contributions and any Employer Discretionary Contributions.

 

## 8.3       Withholding of Employee Contributions.

The Administrator is authorized to make any and all necessaryarrangements with the Employer in order to withhold the Participant’s Deferralsunder Section 3.1 hereof from his or her Compensation.  The Administrator shalldetermine the amount and timing of such withholding.

 

# Article 9 - ClaimsAdministration

 

## 9.1       General.

If a Participant, beneficiary or his or her representative isdenied all or a portion of an expected Plan benefit for any reason and theParticipant, beneficiary or his or her representative desires to dispute the decisionof the Administrator, he or she must file a written notification of his or herclaim with the Administrator. 

 

## 9.2       Claims Procedure.

Upon receipt of any written claim for benefits, theAdministrator shall be notified and shall give due consideration to the claimpresented.  If any Participant or beneficiary claims to be entitled to benefitsunder the Plan and the Administrator determines that the claim should be deniedin whole or in part, the Administrator shall, in writing, notify such claimantwithin ninety (90) days of receipt of the claim that the claim has beendenied.  The Administrator may extend the period of time for making a determinationwith respect to any claim for a period of up to ninety (90) days, provided thatthe Administrator determines that such an extension is necessary because ofspecial circumstances and notifies the claimant, prior to the expiration of theinitial ninety (90) day period, of the circumstances requiring the extension oftime and the date by which the Plan expects to render a decision.  If the claimis denied to any extent by the Administrator, the Administrator shall furnishthe claimant with a written notice setting forth:

|   |
|--------|

 

(a)        the specific reason or reasons fordenial of the claim;

 

(b)        a specific reference to the Planprovisions on which the denial is based;

 

(c)        a description of any additional materialor information necessary for the claimant to perfect the claim and anexplanation of why such material or information is necessary; and

 

(d)        an explanation of the provisions of thisArticle.

14

----

 

## 9.3       Right of Appeal.

A claimant who has a claim denied wholly or partially underSection 9.2 may appeal to the Administrator for reconsideration of that claim. A request for reconsideration under this Section must be filed by writtennotice within sixty (60) days after receipt by the claimant of the notice ofdenial under Section 9.2.

 

## 9.4       Review of Appeal.

Upon receipt of an appeal the Administrator shall promptlytake action to give due consideration to the appeal.  Such consideration mayinclude a hearing of the parties involved, if the Administrator feels such ahearing is necessary.  In preparing for this appeal the claimant shall be giventhe right to review pertinent documents and the right to submit in writing astatement of issues and comments.  After consideration of the merits of theappeal the Administrator shall issue a written decision which shall be bindingon all parties.  The decision shall specifically state its reasons andpertinent Plan provisions on which it relies.  The Administrator’s decisionshall be issued within sixty (60) days after the appeal is filed, except thatthe Administrator may extend the period of time for making a determination withrespect to any claim for a period of up to sixty (60) days, provided that theAdministrator determines that such an extension is necessary because of specialcircumstances and notifies the claimant, prior to the expiration of the initialsixty (60) day period, of the circumstances requiring the extension of time andthe date by which the Plan expects to render a decision.  

 

## 9.5       Designation.

The Administrator may designate any other person of itschoosing to make any determination otherwise required under this Article.  Anyperson so designated shall have the same authority and discretion granted tothe Administrator hereunder.

 

# Article 10 - General Provisions

 

## 10.1     Administrator.

 

 

 

 

 

 

 

 

 

(a)        The Administrator is expressly empoweredto limit the amount of Compensation that may be deferred; to deposit amountsinto the Trust in accordance with Section 8.2 hereof; to interpret the Plan,and to determine all questions arising in the administration, interpretationand application of the Plan; to employ actuaries, accountants, counsel, andother persons it deems necessary in connection with the administration of thePlan; to request any information from the Employer it deems necessary todetermine whether the Employer would be considered insolvent or subject to aproceeding in bankruptcy; and to take all other necessary and proper actions tofulfill its duties as Administrator.

 

(b)        The Administrator shall not be liablefor any actions by it hereunder, unless due to its own negligence, willfulmisconduct or lack of good faith.

 

(c)        The Administrator shall be indemnifiedand saved harmless by the Employer from and against all personal liability towhich it may be subject by reason of any act done or omitted to be done in itsofficial capacity as Administrator in good faith in the administration of thePlan and Trust, including all expenses reasonably incurred in its defense inthe event the Employer fails to provide such defense upon the request of theAdministrator.  The Administrator is relieved of all responsibility inconnection with its duties hereunder to the fullest extent permitted by law,short of breach of duty to the beneficiaries.

15

----

 

## 10.2     No Assignment.

Benefits or payments under this Plan shall not be subject inany manner to anticipation, alienation, sale, transfer, assignment, pledge,encumbrance, attachment, or garnishment by creditors of the Participant or theParticipant’s beneficiary, whether voluntary or involuntary, and any attempt toso anticipate, alienate, sell, transfer, assign, pledge, encumber, attach orgarnish the same shall not be valid, nor shall any such benefit or payment bein any way liable for or subject to the debts, contracts, liabilities,engagement or torts of any Participant or beneficiary, or any other personentitled to such benefit or payment pursuant to the terms of this Plan, exceptto such extent as may be required by law.  If any Participant or beneficiary orany other person entitled to a benefit or payment pursuant to the terms of thisPlan becomes bankrupt or attempts to anticipate, alienate, sell, transfer,assign, pledge, encumber, attach or garnish any benefit or payment under thisPlan, in whole or in part, or if any attempt is made to subject any suchbenefit or payment, in whole or in part, to the debts, contracts, liabilities,engagements or torts of the Participant or beneficiary or any other personentitled to any such benefit or payment pursuant to the terms of this Plan,then such benefit or payment, in the discretion of the Administrator, shallcease and terminate with respect to such Participant or beneficiary, or anyother such person.

 

## 10.3     No Employment Rights.

Participation in this Plan shall not be construed to conferupon any Participant the legal right to be retained in the employ of theEmployer, or give a Participant or beneficiary, or any other person, any rightto any payment whatsoever, except to the extent of the benefits provided forhereunder.  Each Participant shall remain subject to discharge to the sameextent as if this Plan had never been adopted.

 

## 10.4     Incompetence.

|   |
|--------|

 

If the Administrator determines that any person to whom abenefit is payable under this Plan is incompetent by reason of physical ormental disability, the Administrator shall have the power to cause the paymentsbecoming due to such person to be made to another for his or her benefitwithout responsibility of the Administrator or the Employer to see to theapplication of such payments.  Any payment made pursuant to such power shall,as to such payment, operate as a complete discharge of the Employer, theAdministrator and the Trustee.

 

## 10.5     Identity.

If, at any time, any doubt exists as to the identity of anyperson entitled to any payment hereunder or the amount or time of such payment,the Administrator shall be entitled to hold such sum until such identity oramount or time is determined or until an order of a court of competentjurisdiction is obtained.  The Administrator shall also be entitled to pay suchsum into court in accordance with the appropriate rules of law.  Any expenses incurredby the Employer, Administrator, and Trust incident to such proceeding orlitigation shall be charged against the Account of the affected Participant.

16

----

 

 

## 10.6     Other Benefits.

The benefits of each Participant or beneficiary hereundershall be in addition to any benefits paid or payable to or on account of theParticipant or beneficiary under any other pension, disability, annuity orretirement plan or policy whatsoever.

 

## 10.7     Expenses.

All expenses incurred in the administration of the Plan,whether incurred by the Employer or the Plan, shall be paid by the Employer.

 

## 10.8     Insolvency.

Should the Employer be considered insolvent (as defined by theTrust), the Employer, through its Board and chief executive officer, shall giveimmediate written notice of such to the Administrator of the Plan and theTrustee.  Upon receipt of such notice, the Administrator or Trustee shall ceaseto make any payments to Participants who were Employees of the Employer ortheir beneficiaries and shall hold any and all assets attributable to theEmployer for the benefit of the general creditors of the Employer.

 

## 10.9     Amendment or Modification.

The Employer may, at any time, inits sole discretion, amend or modify the Plan in whole or in part, except thatno such amendment or modification shall have any retroactive effect to reduceany amounts allocated to a Participant’s Accounts, and provided that suchamendment or modification complies with Codes Section 409A and relatedregulations thereunder.  

 

## 10.10   PlanSuspension.

The Employer further reserves the right to suspend the Plan inwhole or in part, except that no such suspension shall have any retroactiveeffect to reduce any amounts allocated to a Participant’s Accounts, andprovided that that distribution of the vested Participant Accounts shall not beaccelerated but shall be paid at such time and in such manner as determinedunder the terms of the Plan immediately prior to suspension as if the Plan hadnot been suspended. 

 

## 10.11   PlanTermination.

|   |
|--------|

 

The Employer further reserves theright to terminate the Plan in whole or in part, in the following manner,except that no such termination shall have any retroactive effect to reduce anyamounts allocated to a Participant’s Accounts, and provided that suchtermination complies with Codes Section 409A and related regulations thereunder:

 

(a)        The Employer, in its sole discretion,may terminate the Plan and distribute all vested Participants’ Accounts noearlier than twelve (12) calendar months from the date of the Plan terminationand no later than twenty-four (24) calendar months from the date of the Plantermination, provided however that all other similar arrangements are alsoterminated by the Employer and no other similar arrangements are adopted by theEmployer within a three year period from the date of termination; or

 

(b)        The Employer may decide, in its solediscretion, to terminate the Plan in the event of a corporate dissolution taxedunder Code Section 331, or with the approval of a bankruptcy court, providedthat the Participants vested Account balances are distributed to Participantsand are included in the Participants’ gross income in the latest of:  (i) thecalendar year in which the termination occurs; (ii) the calendar year in whichthe amounts deferred are no longer subject to a substantial risk of forfeiture;or (iii) the first calendar year in which payment is administrativelypracticable. 

17

----

 

 

 

 

## 10.12   Plan Termination due to a Change-in-Control.

The Employer may decide, in itsdiscretion, to terminate the Plan in the event of a Change-in-Control anddistribute all vested Participants Account balances noearlier than thirty (30) days prior to the Change-in-Control and no later thantwelve (12) months after the effective date of the Change-in-Control, providedhowever that the Employer terminates all other similar arrangements.  Anycorporation or other business organization that is a successor to theEmployer by reason of a Change-in-Control shall have the right to become aparty to the Plan by appropriate entity action.  If within thirty (30) daysfrom the effective date of the Change-in-Control such new entity does notbecome a party hereto, as above provided, the full amount of the Participant’sAccount shall become immediately distributable to the Participant pursuant tothis subsection.

 

## 10.13   Construction.

All questions of interpretation, construction or applicationarising under or concerning the terms of this Plan shall be decided by theAdministrator, in its sole and final discretion, whose decision shall be final,binding and conclusive upon all persons.

 

## 10.14   GoverningLaw.

This Plan shall be governed by, construed and administered inaccordance with the applicable provisions of ERISA, Code Section 409A, and anyother applicable federal law, provided, however, that to the extent notpreempted by federal law this Plan shall be governed by, construed andadministered under the laws of the State of Maryland other than its lawsrespecting choice of law.

 

## 10.15   Severability.

|   |
|--------|

 

 

 

 

 

 

 

If any provision of this Plan is held invalid orunenforceable, its invalidity or unenforceability shall not affect any otherprovision of this Plan and this Plan shall be construed and enforced as if suchprovision had not been included therein.  If the inclusion of any Employee (orEmployees) as a Participant under this Plan would cause the Plan to fail to complywith the requirements of sections 201(2), 301(a)(3) and 401(a)(1) of ERISA, orCode Section 409A, then the Plan shall be severed with respect to such Employeeor Employees, who shall be considered to be participating in a separatearrangement.

 

## 10.16   Headings.

The Article headings contained herein are inserted only as amatter of convenience and for reference and in no way define, limit, enlarge ordescribe the scope or intent of this Plan nor in any way shall they affect thisPlan or the construction of any provision thereof.

 

## 10.17   Terms.

Capitalized terms shall have meanings as defined herein. Singular nouns shall be read as plural, masculine pronouns shall be read asfeminine, and vice versa, as appropriate.

18

----

 

## 10.18   PaymentsUpon Income Inclusion Under 409A.

The Plan may permit acceleration of the time or schedule of apayment to a Participant to pay an amount the Participant includes in income asa result of the Plan failing to meet the requirements of Code Section 409A.

 

## 10.19   SpecialElection.

Prior to December 31, 2008, consistent with IRS Notices 2005-1 Q&A 19, 2007-89 and Code Section 409A and regulations thereunder, aParticipant may change the time and form of a distribution of any priordeferral elections.

 

            IN WITNESS WHEREOF, Parkway Properties Inc. hascaused this instrument to be executed by its duly authorized officers as ofthis 23rd day of June, 2009.

 

                                                                                                                                    ParkwayProperties Inc.

 

                                                                                                                                    By:                                                                               

 

                                                                                                                                    Title:                                                                            

 

 

                                                                                                                                    By:                                                                               

 

                                                                                                                                    Title:                                                                            

 

ATTEST:

 

By:                                                                              

 

Title:                                                                           

 

19

----