PARKWAY PROPERTIES, INC

















                                                                                                                Exhibit
10.5




PARKWAY
PROPERTIES, INC.


2001
NON-EMPLOYEE DIRECTORS EQUITY COMPENSATION PLAN


as
Amended and Restated Effective May 5, 2005






1.                      Introduction




                      Parkway Properties, Inc., (the "Company") established the
Parkway Properties, Inc. 1997 Non‐Employee Directors' Stock Ownership
Plan (the "1997 Plan") to provide for an annual award of Shares of common stock
of Parkway Properties, Inc., to the members of the Company's Board of Directors
who are Non‐Employee Directors.  The 1997 Plan replaced the Company's
former policy of paying a monthly cash retainer to those directors, which
policy the Company discontinued as of June 30, 1997.




                        The Company established the Parkway Properties, Inc. 2001
Directors Stock Option Plan (the "2001 Plan" or the "Plan") upon the expiration
of the 1991 Directors' Stock Option Plan.  Like the 1991 Directors' Stock
Option Plan, the 2001 Plan provides for annual option grants to Non‐Employee
Directors and for an option grant when an individual first becomes a Non‐Employee
Director.




                        In 2004, the Company  merged the 1997 Plan into the 2001
Plan and  amended and restated the 2001 Plan and changed the name of the 2001
Plan to the Parkway Properties, Inc. 2001 Non‐Employee Directors Equity
Compensation Plan.  In 2005, the Company further amended and restated the
Parkway Properties, Inc. 2001 Non‐Employee Directors Equity Compensation
Plan.




By the adoption of this document, the Company again restates
the Plan and amends it to conform to the requirements of section 409A of the
Internal Revenue Code for a nonqualified deferred compensation plan.




2.                     
Purpose




                                        The purpose of the Plan as amended and restated is to secure
for the Company and its shareholders the benefit of the incentive inherent in
increased Share ownership by directors of the Company and to strengthen the
Company's ability to attract and retain the services of experienced and
knowledgeable directors.




3.                     
Definitions




                         As used in this Plan:




(a)           "Board
of Directors" or "Board" shall mean the Board of Directors of the Company. 




























(b)           "Committee"
means the Compensation Committee of the Board of Directors or such other
committee of the Board that the Board has appointed to administer the Plan.


(c)           "Deferred
Share Unit" or "Unit" shall mean a bookkeeping entry used by the Company to
record and account for an award that is the economic equivalent of a Share,
until the award is paid.




(d)           "Fair
Market Value" of a Share on any date means (i), if the Shares are traded
in the over-the-counter market, the mean between the closing bid and asked
prices of a Share quoted on that date, or, if no prices are so quoted on that
date, on the next preceding date on which such prices are so quoted or
(ii), if the Shares are traded on a national securities exchange, the
closing price of a Share as reported on such exchange or under any composite
transaction report of such exchange on that date, or, if no prices are so
reported on that date, on the next preceding date on which such prices are so
reported.




(e)           "Internal
Revenue Code" or "Code" means the Internal Revenue Code of 1986,
as amended




(f)            "Option"
means an option granted pursuant to the Plan to purchase Shares.




(g)           "Non‐Employee
Director" means a director of the Company who is not an employee of the
Company.




(h)           "Share
Award" means an award of Shares made pursuant to Section 6, 7(a), or 7(b).




(i)            "Shares"
means shares of common stock, $0.001 par value, of the Company.




4.                      Administration




The Committee shall administer the Plan.  The Committee
shall have all the powers vested in it by the terms of the Plan.  The Committee
shall be authorized to interpret the Plan and the Options granted under the
Plan, to establish, amend, and rescind rules relating to the Plan, and to make
any determinations it believes necessary or advisable for the administration of
the Plan.  The Committee may correct any defect or supply any omission or
reconcile any inconsistency in the Plan or in any Option in the manner and to
the extent the Committee deems desirable.  Any decision of the Committee in the
administration of the Plan shall be in its sole discretion and conclusive.  The
Committee may act only by a majority of its members in office, except that the
members of the Committee may authorize any one or more of their number or any
officer of the Company to execute and deliver documents on behalf of the
Committee.




5.                      Shares Available


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                        A total of 300,000 Shares of the Company shall be available
for award and Option grant under the Plan.  The aggregate number of Shares that
may be awarded and purchased pursuant to Options shall not exceed the available
number of Shares.  Upon the expiration or termination in whole or in part of
any unexercised Option, the Shares subject to the Option shall again be
available for grant under the Plan.  The award of a Deferred Share Unit shall
be treated as a Share Award for purposes of this Section 5.




6.                     Initial Share Award




                        The Company shall automatically award 600 Shares to each
individual who is first elected or appointed a Non‐Employee Director on
or after the date of the 2005 annual meeting of the Company.  The Company shall
issue such Shares on the fifth business day following the effective date of the
election or appointment.




7.                     Annual Retainer Share Award.




                        (a)        Each year, as of the date of the annual meeting
of the Company, the Company shall automatically award 600 Shares of the Company
to each Non‐Employee Director who has been elected or reelected as a
member of the Board of Directors as of the adjournment of the annual meeting. 
The number of Shares awarded was 300 for annual meeting dates in the years 1997
through 2003 and 500 for the year 2004.  The Company shall issue the Shares
awarded under this Section 7(a) as of the annual meeting date.




                        (b)        If a Non-Employee Director is elected or
appointed to the Board of Directors other than at an annual meeting of the
Company and has not received a Share award pursuant to Section 7(a) during the
twelve months preceding election or appointment, the Company shall
automatically award to the Non‐Employee Director a number of Shares that
is equal to 600 multiplied by a fraction, the numerator of which is the
remainder of 365 minus the number of days between the adjournment of the last
annual meeting and the effective date of the appointment or election, and the
denominator of which is 365; if a fraction results, the product shall be
rounded up to the next whole number.  For appointments or elections after the
1997 annual meeting and before the 2004 annual meeting, the number of Shares
awarded was 300 multiplied by the fraction described in the preceding
sentence.   For appointments or elections after the 2004 annual meeting and
before the 2005 annual meeting, the number of Shares awarded was 500 multiplied
by the fraction described in the preceding sentence. The Company shall issue
the Shares awarded under this Section 7(b) on the fifth business day following
the effective date of the election or appointment.




8.                     Election of Deferred Share Units.




                        (a)        At the discretion of the Committee, a Non‐Employee
Director may elect that the Company award Deferred Share Units rather than issue
Shares pursuant to a Share Award under Section 6, 7(a), or 7(b).




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                                    (1)        The Non‐Employee Director's
election of Deferred Share Units  shall be in writing and irrevocable and made
at such times as the Committee shall establish.  The Committee shall establish
procedures for the form and timing of a Non‐Employee Director's election
of Deferred Share Units, and all elections shall conform to the Committee's
procedures.  The Committee's procedures shall conform to the requirements of
section 409A of the Internal Revenue Code for the deferral (until payment) of
the inclusion of compensation in gross income.  Upon an election of Deferred
Share Units, the Non‐Employee Director shall have no further interest in
the Shares that would have been issued pursuant to the Share Award.




                                    (2)        The Company shall award one Deferred
Share Unit to the Non‐Employee Director for each Share that would have
been issued, and credit such Deferred Share Units to a bookkeeping account
maintained for the Non‐Employee Director under the Plan.




                        (b)        The award of Deferred Share Units shall be
evidenced by an agreement signed on behalf of the Company and by the Non‐Employee
Director.  The Deferred Share Units agreement shall set forth such terms as the
Committee shall determine and as are consistent with the provisions of the
Plan, including the following:




                                    (1)        A Deferred Share Unit shall carry
with it no voting or other rights associated with Share ownership.




                                    (2)        Notwithstanding Section 8(b)(1), the
Committee shall provide that  the Non‐Employee Director's account shall
be credited with an amount equivalent to the amount of dividends that would be
payable with respect to a number of Shares equal to the number of Deferred
Share Units credited to the account.




                                    (3)        The Committee may provide for the
crediting of interest on any dividend equivalents credited to the Non‐Employee
Director's account or may provide that the dividend equivalent credit be
adjusted for hypothetical investment experience in such manner as the Committee
may determine.




                        (c)        Payment of the Deferred Share Units and other
amounts credited to a Non‐Employee Director's account shall be made at
such time or times as the Committee may establish.  The Committee may but need
not provide that a Non‐Employee Director may elect to defer payment until
such time or times as the Committee may allow.  The Committee may provide for
payments in lump sums or installments or both.  The Committee shall establish
procedures for its establishment of the time of payment and for the form and
timing of a Non‐Employee Director's deferral and payment elections.  All
elections shall conform to the Committee's procedures.  The Committee's
procedures shall conform to the requirements of section 409A of the Internal
Revenue Code for the deferral (until payment) of the inclusion of compensation
in gross income.




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                                    The Committee may, in its discretion, change the
procedures for elections, change the time to which payment may be deferred, and
change the availability of lump sum or installment payments.  The Committee may
provide that such changes shall apply to Deferred Share Units and other amounts
already credited to a Non‐Employee Director's account, with respect to
which the Non‐Employee Director may have already made deferral and
payment elections, but only to the extent such changes would not cause the Plan
to fail to conform to the requirements of section 409A of the Code for the
deferral (until payment) of the inclusion of compensation in gross income.




                                    Payment of Deferred Share Units shall be made in
the form of Shares, one Share for each Unit.  Payment of any dividend
equivalents (as adjusted) shall be made in cash.




                        (d)        (1)        The Company shall not establish any
special fund with respect to a Non‐Employee Director's account.  Any
credit entries made to a Non‐Employee Director's account shall constitute
a mere promise by the Company to make payments to the Non‐Employee
Director, subject to and in accordance with the Plan, from the general assets
of the Company, when the payments become due.




                                    (2)        To the extent that any person
acquires a right to receive payments from the Company under this Plan, such
right shall be no greater than the right of any unsecured general creditor of
the Company.




                                    (3)        The Company has established a trust
of which the Company is treated as the owner under Subpart E of Subchapter J,
Chapter 1 of the Internal Revenue Code of 1986, as amended.  The trust is
dedicated to the payment of benefits owed by the Company under its plans of
deferred compensation, provided, however, that the assets held in trust are subject
to the claims of creditors in the case of the insolvency of the Company.  The
Company shall not be obliged to fund the trust with respect to this Plan, but
may, in the discretion of the Board, issue Shares to the trustee of such trust
or deposit other assets in the trust, in connection with its obligations under
this Plan.




9.                     Grant of Options




The Board of Directors may direct, in its discretion, from
time to time, that the Company grant nonqualified stock options to Non‐Employee
Directors to purchase Shares under the Plan.  The Board shall designate the Non‐Employee
Directors to whom Options are to be granted and shall determine when Options
are to be granted and the number of Shares subject to each Option.




                        Under the Plan as in effect before May 6, 2004, the Company automatically granted to each person who was first elected or appointed a
Non‐Employee Director on or after the date of the 2001 annual meeting of
the Company and before the date of the 2004 annual meeting, a non‐qualified
stock Option to purchase 7,500 Shares.  In addition, as of the date of each
annual meeting in the years 2001 through 2003, the Company automatically
granted to each Non‐Employee Director reelected at such meeting a
non-qualified stock Option to purchase 3,000 Shares.




10.                   Terms of Options




Each Option granted under the Plan to a Non‐Employee
Director shall be evidenced by an agreement executed on behalf of the Company
and by the holder of the Option, including the following terms and conditions:


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(a)           The purchase price of each Share subject to an Option granted to a Non‐Employee
Director shall equal the Fair Market Value of a Share on the date the Option is
granted.




(b)           An Option granted to a Non‐Employee Director shall be exercisable in
full six months from the date it is granted and, to the extent not already
exercised, shall expire upon the earliest to occur of (i) the date that is six
months after the termination of the Non‐Employee Director's service as a
Non‐Employee Director other than by reason of death; (ii) the date that
is one year after the death of a Non‐Employee Director while in office;
or (iii) the date that is ten years after the date of the grant of the Option.




(c)           An Option shall require that the optionee represent at the time of each exercise of the
Option that the Shares purchased are being acquired for investment and not with
a view to distribution.




(d)           The purchase price of the Shares with respect to which an Option is exercised
shall be payable in full on the date the Option is exercised, in cash or in
Shares (by surrender or attestation to ownership, and provided the Optionholder
owned the Shares for at least six months or did not acquire them from the
Company) or in a combination of cash and Shares.  The value of a Share used in
payment of the purchase price shall be its Fair Market Value on the date the
Option is exercised.  The Committee may provide that payment of the purchase
price may be made by delivery of a properly executed exercise notice together
with irrevocable instructions to a broker to deliver promptly to the Company
the appropriate amount of sale or loan proceeds, subject to applicable law and
regulation and any conditions the Committee may impose, and may establish other
methods for payment of the purchase price.




(e)           An Option shall not be assignable or transferable by the optionee except by
will or the laws of descent and distribution and shall be exercisable, during
the optionee's lifetime, only by him or her.


 


11.                   Recapitalization or Reorganization




The existence of the Plan, the award of Shares, and the
grant of Deferred Share Units and Options under the Plan shall not affect the
right or power of the Board or the shareholders of the Company to make or
authorize the adjustment, recapitalization, reorganization, or other change in
the Company's capital structure or its business, any merger or consolidation of
the Company, any issue of bonds, debentures, preferred or prior preference
stocks ahead of or affecting Shares or the rights of Shares, the dissolution or
liquidation of the Company or any sale or transfer of all or any part of its
assets or business, or any other corporate act or proceeding. 




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                        If, and whenever, the Company shall effect a subdivision or
consolidation of Shares or the payment of a Share dividend on Shares without
receipt of consideration by the Company,  (a) the number of Shares
available under Section 5 for future awards and grants, the number of Shares to
be included in a future Share Award under Section 6 or 7, and the number of
Shares subject to an outstanding Deferred Share Unit shall be proportionately
adjusted for any increase or decrease in the number of outstanding Shares; and
(b), in the case of an unexpired and unexercised Option, the number of Shares
subject to the Option (i) in the event of an increase in the number of
outstanding Shares shall be proportionately increased and the purchase price
per Share shall be proportionately reduced, and (ii) in the event of a
reduction in the number of outstanding Shares shall be proportionately reduced
and the purchase price per Share shall be proportionately increased.




                        If the Company shall effect a recapitalization or other
change in its capital structure, the number of Shares available under Section 5
for future awards and grants, the number of Shares to be included in a future
Share Award under Section 6 or 7, and the number of Shares subject to an
outstanding Deferred Share Unit shall be adjusted accordingly, and the number
of Shares subject to an outstanding Option grant shall be the number and class
of Shares to which the holder would have been entitled pursuant to the terms of
such recapitalization if, immediately prior to such recapitalization, the
holder had been the holder of record of the number of Shares subject to the
grant.




                        If the Company is merged or consolidated with a corporation,
the Committee shall make appropriate adjustments to outstanding Deferred Share
Units and Option grants to give effect to the merger or consolidation on an
equitable basis in terms of issuance of shares of the corporation surviving the
merger or the consolidated corporation.




                        Except as expressly provided in this Section, the issuance
by the Company of shares of any class or securities convertible into shares of
any class, for cash, property, labor or services, upon direct sale, upon the
exercise of rights or warrants, or upon the conversion of shares or obligations
of the Company convertible into such shares or other securities, and in any
case whether or not for fair value, shall not affect, and no adjustment shall
be made with respect to, the number of Shares subject to Deferred Share Units
and Options previously granted or the purchase price per Share. 




12.                   Amendment




The Board of Directors may amend the Plan at any time and
may amend Deferred Share Units and Options granted under the Plan in any
respect at any time, provided, however, that without the approval of the shareholders
of the Company the Board may not (a) except as provided in Section 11, increase
the maximum number of Shares that may be issued under the Plan or decrease the
minimum purchase price of Shares subject to an Option; (b) extend the term of
the Plan; or (c) change the classes of directors to whom Share Awards may be
made and Options may be granted under the Plan.  No amendment of the Plan shall
adversely affect any right under any Share Award to which a Non‐Employee
Director has previously become entitled, and no amendment of the Plan, a
Deferred Share Unit, or an Option shall adversely affect any right of any
holder of a Deferred Share Unit or Option already granted without such holder's
written consent.




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13.                   Termination of Plan




                        The Board of Directors may terminate the Plan at any time
with respect to any Shares that have not yet been awarded and are not then
subject to Deferred Share Units or Options.  Unless terminated earlier by the
Board of Directors, the Plan shall terminate on May 14, 2011.




14.                   Restrictions on Issuance of Shares; Rights as Shareholders




                        Should the Board of Directors determine that the listing,
registration, or qualification of Shares upon any securities exchange or under
any state or federal law or the consent or approval of any governmental
regulatory body is necessary or desirable as a condition to or in connection
with the issuance or delivery of Shares upon the award of Shares, the payment
of a Deferred Share Unit, or the exercise of an Option under the Plan, no such
Shares shall be issued or delivered unless such listing, registration,
qualification, consent, or approval has been effected or obtained free of any
conditions not acceptable to the Board of Directors.




                        The certificates representing Shares issued by the Company
upon the award of Shares, the payment of a Deferred Share Unit, or the exercise
of an Option under the Plan may bear a legend describing any restrictions on
resale of such Shares under applicable securities laws, and stop transfer
orders with respect to such certificates may be entered on the Company's stock
transfer records.




                        A Non‐Employee Director shall have no rights as a
shareholder of the Company with respect to any Shares to be issued in
connection with a Share Award, the payment of a Deferred Share Unit, or the exercise
of an Option until the date of issuance of the certificate for such Shares.  No
adjustment shall be made for dividends or other rights for which the record
date precedes the date the certificate is issued.




15.                   No Alienation.




                        Except
to the extent required by law, the right of a Non‐Employee Director or
beneficiary to payment under this Plan shall not be subject in any manner to
anticipation, alienation, sale, transfer, assignment, pledge, encumbrance,
attachment, or garnishment by creditors of the Non‐Employee Director or
beneficiary.




16.                   Construction




The Plan shall be construed in accordance with the laws of
the State of Maryland.




17.                   Satisfaction of Tax Liabilities




                        Whenever under the Plan Shares are to be issued or delivered
upon the award of Shares, the payment of a Deferred Share Unit, or the exercise
of Options, the Company shall have a right to require the awardee or holder to
remit to the Company an amount sufficient to satisfy federal, state, and local
withholding tax requirements, if any, before the issuance or delivery of any
certificate for such Shares.  In the awardee's or holder's discretion, such
requirements shall be satisfied through the retention of Shares otherwise
issuable or by the delivery of Shares to the Company 




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by the awardee or holder
(by surrender or attestation to ownership), under such terms as the Committee
finds appropriate.  The value of a Share used to satisfy withholding
requirements shall be its Fair Market Value on the date the withholding
obligation is calculated.  The Committee may also provide that provision for
the tax withholding obligation may be made, in connection with the exercise of
an Option, in any manner provided pursuant to Section 10(d) for the payment of
the purchase price.




18.                   Effective Date and Approval of Shareholders




                        This Plan was originally adopted on May 15, 2001, and was approved by the Company's shareholders at the 2002 annual meeting.  The Board of
Directors amended and restated the Plan and merged the Parkway Properties,
Inc., 1997 Non‐Employee Directors' Stock Ownership Plan into this Plan,
all effective May 6, 2004.  The Board of Directors amended and restated the
Plan effective May 5, 2005, with the approval of the Company's shareholders at
the 2005 annual meeting of the Company's shareholders.  On November 3, 2006, the Board of Directors has further amended and restated the Plan to read as provided
above, effective May 1, 2005, with the exception of Section 8, which is
effective January 1, 2005, as an amendment to the Plan as then in effect.









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