**Exhibit10.26**

**EXHIBIT A**

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**APPENDIX**

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**TO**

**ADOPTION AGREEMENT**

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**FOR**

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**PARKWAY PROPERTIES, INC.**

**DEFERRED COMPENSATION PLAN**

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**as Amended and Restated**

**Effective January 1, 2005**

              The provisions of this Appendix supersede any contrary orconflicting provisions of the Adoption Agreement or Plan Document as amendedand restated effective January 1, 2005.

               1.                 Definitions.  Capitalized terms used in this Appendix that aredefined in the Plan Document have the meanings given in the Plan Document.

               2.                 Salary and Bonus Deferral Feature - Delayed Effective Date.  No Participantmay elect to reduce Compensation other than Deferred Share Units described inSection 3 below unless and until the Compensation Committee of the Board of Directors authorizes the Employer to accept salary or bonus Deferral Agreements with Participants.

               3.                 Deferred Share Units.  With respect to each Participant who:

(a)               has elected, pursuant to the Parkway Properties, Inc. 2003 EquityIncentive Plan or the Parkway Properties, Inc. 1994 Stock Option and Long TermIncentive Plan, as amended, (the "Incentive Plans") to surrender IncentiveRestricted Shares (as defined in the Incentive Plan) in exchange for the grantof Deferred Incentive Share Units (within the meaning of the Incentive Plans),or

(b)              has elected, pursuant to the Incentive Plans, to be granted a DeferredIncentive Share Unit (within the meaning of the Incentive Plans) in place of anIncentive Restricted Share that would otherwise have been granted under theIncentive Plans, or

(c)               has been granted Deferred Incentive Share Units under the IncentivePlans, and

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(d)              who, in any such case, has been designated by the Committee as eligibleto participate in this Deferred Compensation Plan with respect to the DeferredIncentive Share Units so granted and who has elected to participate in thisPlan with respect to such Deferred Incentive Share Units, the Employer shallcredit to a Parkway Stock Subaccount established under the Participant'sDeferred Compensation Account, the number of Deferred Incentive Share Unitswith respect to which the Participant has been so designated and has made suchan election.  For the purposes of the Deferred Compensation Plan, a DeferredIncentive Share Unit shall be called a "Deferred Share Unit."

                                With respect to each Participant who haselected, pursuant to the Parkway Properties, Inc. 2001 Non-Employee DirectorsEquity Compensation Plan (the "Directors' Plan") and with the consentof the Committee that an award under the Directors' Plan be made in DeferredShare Units (as defined in the Directors' Plan), rather than in shares ofcommon stock, $0.001 per value, of the Employer ("Parkway CommonStock"), the Employer shall credit to a Parkway Stock Subaccountestablished under the Participant's Deferred Compensation Account, one DeferredShare Unit for each share of Parkway Common Stock that would otherwise havebeen awarded.

            4.                 Dividend Equivalents.  The Employer shall credit a DividendEquivalent Subaccount established under a Participant's Deferred CompensationAccount with an amount equivalent to the amount of dividends that would bepayable on a number of shares of Parkway Common Stock that is equal to thenumber of Deferred Share Units credited to the Participant's Parkway StockSubaccount on the record date for dividend payment.

            5.                 Further Allocation to Other Accounts.  A Participant may elect inhis or her Incentive Plan or Directors' Plan payment election to have DeferredShare Units that are credited to his or her Parkway Stock Subaccount furtherallocated to In‐Service Accounts and Education Accounts within the ParkwayStock Subaccount.  Amounts credited to the Participant's Dividend EquivalentSubaccount that are attributable to the Deferred Share Units allocated to an In‐Serviceor Education Account shall also be allocated to those accounts.  The provisionsof the Plan Document governing the timing of payment from In‐Service andEducation Accounts shall apply to the portions of a Participant's Parkway Stockand Dividend Equivalent Subaccounts allocated to In-Service and EducationAccounts.

            6.                 Separate Set of Accounts for Each Award; Participant Deferral Credits. The Employer shall establish a separate set of accounts and subaccounts foreach award to a Participant under the Incentive Plans and Directors' Plan. Deferred Share Units credited to those accounts are, for the purposes of thePlan Document, "Participant Deferral Credits."

            7.                 Participant Elections.  A Participant's elections with respect tothe deferral of payment of Deferred Share Units and amounts credited to theParticipant's Dividend Equivalent Subaccount and changes in such electionsshall conform to the provisions of the Adoption Agreement and Plan Documentgoverning Participant Deferral Agreements and subsequent elections regardingthe changing the method of payment of Deferred Compensation Accounts.

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            8.                 Vesting.  Notwithstanding any contrary provision of the AdoptionAgreement or Plan Document, a Participant's interest in Deferred Share Unitsand amounts credited to the Participant's Dividend Equivalent Subaccount thatare attributable to those Deferred Share Units shall become vested only inaccordance with the Incentive Plan or Directors' Plan under which the DeferredShare Units were awarded.  No payment may be made under this DeferredCompensation Plan with respect to any Deferred Share Unit or the portion of theDividend Equivalent Subaccount attributable to a Deferred Incentive Share Unitbefore the Participant's interest in the Deferred Share Unit has become vestedand nonforfeitable under the terms of the applicable plan.

            9.                 No Deemed Investment of Parkway Stock Subaccount.  A Participantshall have no right to direct the deemed investment of his or her Parkway StockSubaccount.  The only credits to that subaccount at any time shall be in theform of Deferred Share Units, as they may be adjusted from time to time inaccordance with the Incentive Plan or Directors' Plan to which they areattributable.

            10.             Provision for No Deemed Investment of Nonvested Dividend EquivalentSubaccount.  The Committee may, in its discretion, provide that aParticipant has no right to direct the deemed investment of a DividendEquivalent Subaccount to the extent the subaccount is attributable to DeferredShare Units in which the Participant's interest has not yet become vested, in whichcase the Committee shall provide for the crediting of interest on the affectedportion of the subaccount.

            11.             Form of Payment from Parkway Stock Subaccount.  Payment from aParticipant's Parkway Stock Subaccount shall be only in the form of ParkwayCommon Stock, one share of Parkway Common Stock for each Deferred Share Unitpayable.

            12.             2007.  The last sentence of Section 6.1 of the Plan Document isamended to refer to the year 2007 and the date December 31, 2007, in place ofthe year 2006 and the date December 31, 2006, in each place they appear inthat sentence.

            13.             Committee Discretion.  The Compensation Committee of the Board ofDirectors of the Employer shall have complete discretion in exercising itsauthority and responsibilities under the Plan, including but not limited to,discretion with respect to the designation of Participants and theinterpretation of Plan provisions.

            IN WITNESS WHEREOF, the Board of Directors of ParkwayProperties, Inc., has authorized the execution of this document as part of theDeferred Compensation Plan.

February __, 2007

                                                                                                                        PARKWAY PROPERTIES, INC.

 

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