**Exhibit10.5**

**PARKWAYPROPERTIES, INC.**

**2001NON-EMPLOYEE DIRECTORS EQUITY COMPENSATION PLAN**

**asAmended and Restated Effective May 5, 2005**

1.                      Introduction

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

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

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

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

2.                     Purpose

                                        The purpose of the Plan as amended and restated is to securefor the Company and its shareholders the benefit of the incentive inherent inincreased Share ownership by directors of the Company and to strengthen theCompany's ability to attract and retain the services of experienced andknowledgeable directors.

3.                     Definitions

                         As used in this Plan:

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

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

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

(d)           "FairMarket Value" of a Share on any date means (i), if the Shares are tradedin the over-the-counter market, the mean between the closing bid and askedprices of a Share quoted on that date, or, if no prices are so quoted on thatdate, on the next preceding date on which such prices are so quoted or(ii), if the Shares are traded on a national securities exchange, theclosing price of a Share as reported on such exchange or under any compositetransaction report of such exchange on that date, or, if no prices are soreported on that date, on the next preceding date on which such prices are soreported.

(e)           "InternalRevenue 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‐EmployeeDirector" means a director of the Company who is not an employee of theCompany.

(h)           "ShareAward" 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 Committeeshall have all the powers vested in it by the terms of the Plan.  The Committeeshall be authorized to interpret the Plan and the Options granted under thePlan, to establish, amend, and rescind rules relating to the Plan, and to makeany determinations it believes necessary or advisable for the administration ofthe Plan.  The Committee may correct any defect or supply any omission orreconcile any inconsistency in the Plan or in any Option in the manner and tothe extent the Committee deems desirable.  Any decision of the Committee in theadministration of the Plan shall be in its sole discretion and conclusive.  TheCommittee may act only by a majority of its members in office, except that themembers of the Committee may authorize any one or more of their number or anyofficer of the Company to execute and deliver documents on behalf of theCommittee.

5.                      Shares Available

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

6.                     Initial Share Award

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

7.                     Annual Retainer Share Award.

                        (a)        Each year, as of the date of the annual meetingof the Company, the Company shall automatically award 600 Shares of the Companyto each Non‐Employee Director who has been elected or reelected as amember 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 1997through 2003 and 500 for the year 2004.  The Company shall issue the Sharesawarded under this Section 7(a) as of the annual meeting date.

                        (b)        If a Non-Employee Director is elected orappointed to the Board of Directors other than at an annual meeting of theCompany and has not received a Share award pursuant to Section 7(a) during thetwelve months preceding election or appointment, the Company shallautomatically award to the Non‐Employee Director a number of Shares thatis equal to 600 multiplied by a fraction, the numerator of which is theremainder of 365 minus the number of days between the adjournment of the lastannual meeting and the effective date of the appointment or election, and thedenominator of which is 365; if a fraction results, the product shall berounded up to the next whole number.  For appointments or elections after the1997 annual meeting and before the 2004 annual meeting, the number of Sharesawarded was 300 multiplied by the fraction described in the precedingsentence.   For appointments or elections after the 2004 annual meeting andbefore the 2005 annual meeting, the number of Shares awarded was 500 multipliedby the fraction described in the preceding sentence. The Company shall issuethe Shares awarded under this Section 7(b) on the fifth business day followingthe effective date of the election or appointment.

8.                     Election of Deferred Share Units.

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

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

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

                        (b)        The award of Deferred Share Units shall beevidenced by an agreement signed on behalf of the Company and by the Non‐EmployeeDirector.  The Deferred Share Units agreement shall set forth such terms as theCommittee shall determine and as are consistent with the provisions of thePlan, including the following:

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

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

                                    (3)        The Committee may provide for thecrediting of interest on any dividend equivalents credited to the Non‐EmployeeDirector's account or may provide that the dividend equivalent credit beadjusted for hypothetical investment experience in such manner as the Committeemay determine.

                        (c)        Payment of the Deferred Share Units and otheramounts credited to a Non‐Employee Director's account shall be made atsuch time or times as the Committee may establish.  The Committee may but neednot provide that a Non‐Employee Director may elect to defer payment untilsuch time or times as the Committee may allow.  The Committee may provide forpayments in lump sums or installments or both.  The Committee shall establishprocedures for its establishment of the time of payment and for the form andtiming of a Non‐Employee Director's deferral and payment elections.  Allelections shall conform to the Committee's procedures.  The Committee'sprocedures shall conform to the requirements of section 409A of the InternalRevenue Code for the deferral (until payment) of the inclusion of compensationin gross income.

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

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

                        (d)        (1)        The Company shall not establish anyspecial fund with respect to a Non‐Employee Director's account.  Anycredit entries made to a Non‐Employee Director's account shall constitutea mere promise by the Company to make payments to the Non‐EmployeeDirector, subject to and in accordance with the Plan, from the general assetsof the Company, when the payments become due.

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

                                    (3)        The Company has established a trustof 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 isdedicated to the payment of benefits owed by the Company under its plans ofdeferred compensation, provided, however, that the assets held in trust are subjectto the claims of creditors in the case of the insolvency of the Company.  TheCompany shall not be obliged to fund the trust with respect to this Plan, butmay, in the discretion of the Board, issue Shares to the trustee of such trustor deposit other assets in the trust, in connection with its obligations underthis Plan.

9.                     Grant of Options

The Board of Directors may direct, in its discretion, fromtime to time, that the Company grant nonqualified stock options to Non‐EmployeeDirectors to purchase Shares under the Plan.  The Board shall designate the Non‐EmployeeDirectors to whom Options are to be granted and shall determine when Optionsare 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 aNon‐Employee Director on or after the date of the 2001 annual meeting ofthe Company and before the date of the 2004 annual meeting, a non‐qualifiedstock Option to purchase 7,500 Shares.  In addition, as of the date of eachannual meeting in the years 2001 through 2003, the Company automaticallygranted to each Non‐Employee Director reelected at such meeting anon-qualified stock Option to purchase 3,000 Shares.

10.                   Terms of Options

Each Option granted under the Plan to a Non‐EmployeeDirector shall be evidenced by an agreement executed on behalf of the Companyand 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‐EmployeeDirector shall equal the Fair Market Value of a Share on the date the Option isgranted.

(b)           An Option granted to a Non‐Employee Director shall be exercisable infull six months from the date it is granted and, to the extent not alreadyexercised, shall expire upon the earliest to occur of (i) the date that is sixmonths after the termination of the Non‐Employee Director's service as aNon‐Employee Director other than by reason of death; (ii) the date thatis 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 theOption that the Shares purchased are being acquired for investment and not witha view to distribution.

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

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

 

11.                   Recapitalization or Reorganization

The existence of the Plan, the award of Shares, and thegrant of Deferred Share Units and Options under the Plan shall not affect theright or power of the Board or the shareholders of the Company to make orauthorize the adjustment, recapitalization, reorganization, or other change inthe Company's capital structure or its business, any merger or consolidation ofthe Company, any issue of bonds, debentures, preferred or prior preferencestocks ahead of or affecting Shares or the rights of Shares, the dissolution orliquidation of the Company or any sale or transfer of all or any part of itsassets or business, or any other corporate act or proceeding. 

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                        If, and whenever, the Company shall effect a subdivision orconsolidation of Shares or the payment of a Share dividend on Shares withoutreceipt of consideration by the Company,  (a) the number of Sharesavailable under Section 5 for future awards and grants, the number of Shares tobe included in a future Share Award under Section 6 or 7, and the number ofShares subject to an outstanding Deferred Share Unit shall be proportionatelyadjusted 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 Sharessubject to the Option (i) in the event of an increase in the number ofoutstanding Shares shall be proportionately increased and the purchase priceper Share shall be proportionately reduced, and (ii) in the event of areduction in the number of outstanding Shares shall be proportionately reducedand the purchase price per Share shall be proportionately increased.

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

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

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

12.                   Amendment

The Board of Directors may amend the Plan at any time andmay amend Deferred Share Units and Options granted under the Plan in anyrespect at any time, provided, however, that without the approval of the shareholdersof the Company the Board may not (a) except as provided in Section 11, increasethe maximum number of Shares that may be issued under the Plan or decrease theminimum purchase price of Shares subject to an Option; (b) extend the term ofthe Plan; or (c) change the classes of directors to whom Share Awards may bemade and Options may be granted under the Plan.  No amendment of the Plan shalladversely affect any right under any Share Award to which a Non‐EmployeeDirector has previously become entitled, and no amendment of the Plan, aDeferred Share Unit, or an Option shall adversely affect any right of anyholder of a Deferred Share Unit or Option already granted without such holder'swritten consent.

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13.                   Termination of Plan

                        The Board of Directors may terminate the Plan at any timewith respect to any Shares that have not yet been awarded and are not thensubject to Deferred Share Units or Options.  Unless terminated earlier by theBoard 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 underany state or federal law or the consent or approval of any governmentalregulatory body is necessary or desirable as a condition to or in connectionwith the issuance or delivery of Shares upon the award of Shares, the paymentof a Deferred Share Unit, or the exercise of an Option under the Plan, no suchShares shall be issued or delivered unless such listing, registration,qualification, consent, or approval has been effected or obtained free of anyconditions not acceptable to the Board of Directors.

                        The certificates representing Shares issued by the Companyupon the award of Shares, the payment of a Deferred Share Unit, or the exerciseof an Option under the Plan may bear a legend describing any restrictions onresale of such Shares under applicable securities laws, and stop transferorders with respect to such certificates may be entered on the Company's stocktransfer records.

                        A Non‐Employee Director shall have no rights as ashareholder of the Company with respect to any Shares to be issued inconnection with a Share Award, the payment of a Deferred Share Unit, or the exerciseof an Option until the date of issuance of the certificate for such Shares.  Noadjustment shall be made for dividends or other rights for which the recorddate precedes the date the certificate is issued.

15.                   No Alienation.

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

16.                   Construction

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

17.                   Satisfaction of Tax Liabilities

                        Whenever under the Plan Shares are to be issued or deliveredupon the award of Shares, the payment of a Deferred Share Unit, or the exerciseof Options, the Company shall have a right to require the awardee or holder toremit to the Company an amount sufficient to satisfy federal, state, and localwithholding tax requirements, if any, before the issuance or delivery of anycertificate for such Shares.  In the awardee's or holder's discretion, suchrequirements shall be satisfied through the retention of Shares otherwiseissuable 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 Committeefinds appropriate.  The value of a Share used to satisfy withholdingrequirements shall be its Fair Market Value on the date the withholdingobligation is calculated.  The Committee may also provide that provision forthe tax withholding obligation may be made, in connection with the exercise ofan Option, in any manner provided pursuant to Section 10(d) for the payment ofthe 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 ofDirectors 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 thePlan effective May 5, 2005, with the approval of the Company's shareholders atthe 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 providedabove, effective May 1, 2005, with the exception of Section 8, which iseffective January 1, 2005, as an amendment to the Plan as then in effect.

826956

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