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                                                                   EXHIBIT 10.5




                    THE 1997 STOCK OPTION AND INCENTIVE PLAN

                                       OF

                 AMB PROPERTY CORPORATION AND ITS SUBSIDIARIES

                  AND AMB INSTITUTIONAL REALTY ADVISORS, INC.



                 AMB Property Corporation, a Maryland corporation (the
"Company"), and AMB Institutional Realty Advisors, Inc., a Maryland corporation
(the "Investment Management Company"), has adopted The 1997 Stock Option and
Incentive Plan of AMB Property Corporation and AMB Institutional Realty
Advisors, Inc. and their respective Subsidiaries (the "Plan"), effective
November ___, 1997, for the benefit of its eligible employees, consultants and
directors and those of its Subsidiaries (as such term is defined below).  The
Plan consists of two plans, one for the benefit of employees, consultants and
independent directors of the Company and one for the benefit of the employees,
consultants and independent directors of the Investment Management Company.

                 The purposes of this Plan are as follows:

                 (1)      To provide an additional incentive for directors, key
Employees and consultants to further the growth, development and financial
success of the Company by personally benefiting through the ownership of
Company stock and/or rights which recognize such growth, development and
financial success.

                 (2)      To enable the Company and the Investment Management
Company, and their respective Subsidiaries, to obtain and retain the services
of directors, key Employees and consultants considered essential to the long
range success of the Company by offering them an opportunity to own stock in
the Company and/or rights which will reflect the growth, development and
financial success of the Company.

                                   ARTICLE I.


                                  DEFINITIONS

                 1.1.     General.  Wherever the following terms are used in
this Plan they shall have the meanings specified below, unless the context
clearly indicates otherwise.

                 1.2.     Award Limit.  "Award Limit" shall mean 1 million
shares of Common Stock, as adjusted pursuant to Section 10.3.

                 1.3.     Board.  "Board" shall mean the Board of Directors of
the Company.

                 1.4.     Cause.  "Cause," unless otherwise defined in an
Employee's employment agreement, or a consultant's consulting agreement, with
the Company or one of its Subsidiaries,
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shall mean (i) gross negligence or willful misconduct, (ii) an uncured breach
of any of the employee's material duties under their employment agreement,
(iii) fraud or other conduct against the material best interests of the Company
or (iv) a conviction of a felony if such conviction has a material adverse
effect on the Company.

                 1.5.     Change in Control.  "Change in Control" shall mean a
change in ownership or control of the Company effected through either of the
following transactions:

                 (a)      any person or related group of persons (other than
the Company or a person that directly or indirectly controls, is controlled by,
or is under common control with, the Company) directly or indirectly acquires
beneficial ownership (within the meaning of Rule 13d-3 under the Exchange Act)
of securities possessing more than fifty percent (50%) of the total combined
voting power of the Company's outstanding securities pursuant to a tender or
exchange offer made directly to the Company's stockholders which the Board does
not recommend such stockholders to accept; or

                 (b)      there is a change in the composition of the Board
over a period of thirty-six (36) consecutive months (or less) such that a
majority of the Board members (rounded up to the nearest whole number) ceases,
by reason of one or more proxy contests for the election of Board members, to
be comprised of individuals who either (i) have been Board members continuously
since the beginning of such period or (ii) have been elected or nominated for
election as Board members during such period by at least a majority of the
Board members described in clause (i) who were still in office at the time such
election or nomination was approved by the Board.

                 1.6.     Code.  "Code" shall mean the Internal Revenue Code of
1986, as amended.

                 1.7.     Committee.  "Committee" shall mean the Compensation
Committee of the Board, or another committee or subcommittee of the Board,
appointed as provided in Section 9.1.

                 1.8.     Common Stock.  "Common Stock" shall mean the common
stock of the Company, par value $.01 per share, and any equity security of the
Company issued or authorized to be issued in the future, but excluding any
preferred stock and any warrants, options or other rights to purchase Common
Stock.  Debt securities of the Company convertible into Common Stock shall be
deemed equity securities of the Company.

                 1.9.     Company.  "Company" shall mean AMB Property
Corporation, a Maryland corporation.

                 1.10.    Company Employee.  "Company Employee" shall mean any
officer or other employee (as defined in accordance with Section 3401(c) of the
Code) of the Company or of any Company Subsidiary.





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                 1.11.    Company Subsidiary. "Company Subsidiary" shall mean
(i) a corporation, association or other business entity of which 50% or more of
the total combined voting power of all classes of capital stock is owned,
directly or indirectly, by the Company or by one or more Company Subsidiaries
or by the Company and one or more Company Subsidiaries, (ii) any partnership of
which 50% or more of the capital and profits interests is owned, directly or
indirectly, by the Company or by one or more Company Subsidiaries or by the
Company and one or more Company Subsidiaries, and (iii) any other entity not
described in clauses (i) or (ii) above of which 50% or more of the ownership
and the power, pursuant to a written contract or agreement, to direct the
policies and management or the financial and the other affairs thereof, are
owned or controlled by the Company or by one or more other Company Subsidiaries
or by the Company and one or more Company Subsidiaries.

                 1.12.    Corporate Transaction.  "Corporate Transaction" shall
mean any of the following stockholder-approved transactions to which the
Company is a party:

                 (a)      a merger or consolidation in which the Company is not
the surviving entity, except for a transaction the principal purpose of which
is to change the State in which the Company is incorporated, form a holding
company or effect a similar reorganization as to form whereupon this Plan and
all Options are assumed by the successor entity;

                 (b)      the sale, transfer, exchange or other disposition of
all or substantially all of the assets of the Company, in complete liquidation
or dissolution of the Company in a transaction not covered by the exceptions to
clause (a), above; or

                 (c)      any reverse merger in which the Company is the
surviving entity but in which securities possessing more than fifty percent
(50%) of the total combined voting power of the Company's outstanding
securities are transferred or issued to a person or persons different from
those who held such securities immediately prior to such merger.

                 1.13.    Deferred Stock.  "Deferred Stock" shall mean Common
Stock awarded under Article VII of this Plan.

                 1.14.    Director.  "Director" shall mean an Independent
Director, an Investment Management Company Director or a Non-Employee Director.

                 1.15.    Dividend Equivalent.  "Dividend Equivalent" shall
mean a right to receive the equivalent value (in cash or Common Stock) of
dividends or regular cash distributions paid on Common Stock, awarded under
Article VII of this Plan.

                 1.16.    Employee.  "Employee" shall mean any Company Employee
or any Investment Management Company Employee.

                 1.17.    Exchange Act.  "Exchange Act" shall mean the
Securities Exchange Act of 1934, as amended.





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                 1.18.    Fair Market Value.  "Fair Market Value" of a share of
Common Stock as of a given date shall be (i) the closing price of a share of
Common Stock on the principal exchange on which shares of Common Stock are then
trading, if any (or as reported on any composite index which includes such
principal exchange), on the trading day previous to such date, or if shares
were not traded on the trading day previous to such date, then on the next
preceding date on which a trade occurred, or (ii) if Common Stock is not traded
on an exchange but is quoted on Nasdaq or a successor quotation system, the
mean between the closing representative bid and asked prices for the Common
Stock on the trading day previous to such date as reported by Nasdaq or such
successor quotation system; or (iii) if Common Stock is not publicly traded on
an exchange and not quoted on Nasdaq or a successor quotation system, the Fair
Market Value of a share of Common Stock as established by the Committee (or the
Board, in the case of Options granted to Independent Directors) acting in good
faith.  Notwithstanding anything to the contrary herein, the Fair Market Value
at the time of grant of a share of Common Stock underlying an option grant or
other award made under this Plan and in connection with the initial public
offering of the Company shall be the initial offering price per share.

                 1.19.    General Partner Interest.  "General Partner Interest"
shall mean an ownership interest in the Partnership that is a general partner
interest and includes any and all benefits to which the holder of such an
interest may be entitled as provided in the Partnership Agreement, together
with all obligations of such holder to comply with the terms and provisions of
such agreement.

                 1.20.    Grantee.  "Grantee" shall mean an Employee or
consultant granted a Performance Award, Dividend Equivalent, Stock Payment or
Stock Appreciation Right, or an award of Deferred Stock, under this Plan.

                 1.21.    Incentive Stock Option.  "Incentive Stock Option"
shall mean an option which conforms to the applicable provisions of Section 422
of the Code and which is designated as an Incentive Stock Option by the
Committee.

                 1.22.    Initial Independent Director.  "Initial Independent
Director" shall have the meaning given to such term in Section 3.4(d) hereof.

                 1.23.    Independent Director.  "Independent Director" shall
mean a member of the Board who is not an employee, officer or affiliate of the
Company or a subsidiary or division thereof, or a relative of a principal
executive officer, and who is not an individual member of an organization
acting as an advisor, consultant or legal counsel receiving compensation on a
continuing basis from the Company in addition to director's fees.

                 1.24.    Investment Management Company.  "Investment
Management Company" shall mean AMB Institutional Realty Advisors, Inc., a
Maryland corporation.

                 1.25.    Investment Management Company Employee.  "Investment
Management Company Employee" shall mean any officer or other employee (as
defined in accordance with





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Section 3401(c) of the Code) of the Investment Management Company, or any
corporation or partnership which is then an Investment Management Company
Subsidiary.

                 1.26.    Investment Management Company Independent Director.
"Investment Management Company Independent Director" shall mean a member of the
Investment Management Company Board who is not (i) an employee, officer, or
affiliates of the Company, the Investment Management Company or a subsidiary or
division of the foregoing, or a relative of a principal executive officer, and
who is not an individual member of an organization acting as an advisor,
consultant or legal counsel receiving compensation on a continuing basis from
the company or the Services company in addition to director's fees or (b) an
Independent Director.

                 1.27.    Investment Management Company Purchase Price.
"Investment Management Company Purchase Price" shall have the meaning set forth
in Section 5.5 hereof.

                 1.28.    Investment Management Company Purchased Shares.
"Investment Management Company Purchased Shares" shall have the meaning set
forth in Section 5.5 hereof.

                 1.29.    Investment Management Company Subsidiary.
"Investment Management Subsidiary" shall mean (i) a corporation, association or
other business of which 50% or more of the total combined voting power of all
classes of capital stock is owned, directly or indirectly, by the Investment
Management Company or by one or more Investment Management Company Subsidiaries
or by the Investment Management Company and one or more Investment Management
Company Subsidiaries, (ii) any partnership of which 50% or more of the capital
and profits interests is owned, directly or indirectly, by the Investment
Management Company or by one or more Investment Management Company Subsidiaries
or by the Investment Management Company and one or more Investment Management
Company Subsidiaries and (iii) any other entity not described in clauses (i) or
(ii) above of which 50% or more of the ownership and the power, pursuant to a
written contract or agreement, to direct the policies and management or the
financial and the other affairs thereof, are owned or controlled by the
Investment Management Company or by one or more Investment Management Company
Subsidiaries or by the Investment Management Company and one or more Investment
Management Company Subsidiaries.

                 1.30.    Non-Employee Director.  "Non-Employee Director" shall
mean a member of the Board of the Investment Management Company Board who is
not an Independent Director, an Investment Management Services Company Director
or an Employee.

                 1.31.    Non-Qualified Stock Option.  "Non-Qualified Stock
Option" shall mean an Option which is not designated as an Incentive Stock
Option by the Committee.

                 1.32.    Option.  "Option" shall mean a stock option granted
under Article III of this Plan.  An Option granted under this Plan shall, as
determined by the Committee, be either a Non-Qualified Stock Option or an
Incentive Stock Option; provided, however, that Options granted to anyone other
than Company Employees shall be Non-Qualified Stock Options.





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                 1.33.    Optionee.  "Optionee" shall mean an Employee,
consultant or Director granted an Option under this Plan.

                 1.34.    Partnership.  "Partnership" shall mean AMB Property,
L.P., a Delaware limited partnership.

                 1.35.    Partnership Agreement.  "Partnership Agreement" shall
mean the Amended and Restated Agreement of Limited Partnership of the
Partnership, as the same may be amended, modified or restated from time to
time.

                 1.36.    Partnership Employee.  "Partnership Employee" shall
mean any officer, other employee (as defined in accordance with Section 3401(c)
of the Code) of the Partnership, or any entity which is then a Partnership
Subsidiary.

                 1.37.    Partnership Purchase Price.  "Partnership Purchase
Price" shall have the meaning set forth in Section 5.4

                 1.38.    Partnership Purchased Shares.  "Partnership Purchased
Shares" shall have the meaning set forth in Section 5.4.

                 1.39.    Partnership Subsidiary.  "Partnership Subsidiary"
shall mean (i) a corporation, association or other business entity of which 50%
or more of the total combined voting power of all classes of capital stock is
owned, directly or indirectly, by the Partnership or by one or more Partnership
Subsidiaries or by the Partnership and one or more Partnership Subsidiaries,
(ii) any partnership of which 50% or more of the capital and profits interests
is owned, directly or indirectly, by the Partnership or by one or more
Partnership Subsidiaries or by the Partnership and one or more Partnership
Subsidiaries, and (iii) any other entity not described in clauses (i) or (ii)
above of which 50% or more of the ownership and the power, pursuant to a
written contract or agreement, to direct the policies and management or the
financial and the other affairs thereof, are owned or controlled by the
Partnership or by one or more other Partnership Subsidiaries or by the
Partnership and one or more Partnership Subsidiaries.

                 1.40.    Performance Award.  "Performance Award" shall mean a
cash bonus, stock bonus or other performance or incentive award that is paid in
cash, Common Stock or a combination of both, awarded under Article VII of this
Plan.

                 1.41.    Plan.  "Plan" shall mean The 1997 Stock Option and
Incentive Plan of AMB Property Corporation and its Subsidiaries.

                 1.42.    QDRO.  "QDRO" shall mean a qualified domestic
relations order as defined by the Code or Title I of the Employee Retirement
Income Security Act of 1974, as amended, or the rules thereunder.

                 1.43.    Restricted Stock.  "Restricted Stock" shall mean
Common Stock awarded under Article VI of this Plan.





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                 1.44.    Restricted Stockholder.  "Restricted Stockholder"
shall mean an Employee or consultant granted an award of Restricted Stock under
Article VI of this Plan.

                 1.45.    Rule 16b-3.  "Rule 16b-3" shall mean that certain
Rule 16b-3 under the Exchange Act, as such Rule may be amended from time to
time.

                 1.46.    Section 162(m) Participant.  "Section 162(m)
Participant" shall mean any key Employee designated by the Committee as a key
Employee whose compensation for the fiscal year in which the key Employee is so
designated or a future fiscal year may be subject to the limit on deductible
compensation imposed by Section 162(m) of the Code.

                 1.47.    Stock Appreciation Right.  "Stock Appreciation Right"
shall mean a stock appreciation right granted under Article VIII of this Plan.

                 1.48.    Stock Payment.  "Stock Payment" shall mean (i) a
payment in the form of shares of Common Stock, or (ii) an option or other right
to purchase shares of Common Stock, as part of a deferred compensation
arrangement, made in lieu of all or any portion of the compensation, including
without limitation, salary, bonuses and commissions, that would otherwise
become payable to a key Employee or consultant in cash, awarded under Article
VII of this Plan.

                 1.49.    Subsidiary.  "Subsidiary" shall mean any Company
Subsidiary or Subsidiary.

                 1.50.    Termination of Consultancy.  "Termination of
Consultancy" shall mean the time when the engagement of an Optionee, Grantee or
Restricted Stockholder as a consultant to the Company, a Company Subsidiary,
the Investment Management Company, an Investment Management Company Subsidiary,
the Partnership or a Partnership Subsidiary is terminated for any reason, with
or without Cause, including, but not by way of limitation, by resignation,
discharge, death or retirement; but excluding terminations where there is a
simultaneous commencement of employment with the Company, a Company Subsidiary,
the Investment Management Company, an Investment Management Company Subsidiary,
the Partnership or a Partnership Subsidiary.  The Committee, in its absolute
discretion, shall determine the effect of all matters and questions relating to
Termination of Consultancy, including, but not by way of limitation, the
question of whether a Termination of Consultancy resulted from a discharge for
Cause, and all questions of whether a particular leave of absence constitutes a
Terminations of Consultancy.  Notwithstanding any other provision of this Plan,
the Company, a Company Subsidiary, the Investment Management Company, an
Investment Management Company Subsidiary, the Partnership or a Partnership
Subsidiary has an absolute and unrestricted right to terminate a consultant's
service at any time for any reason whatsoever, with or without Cause, except to
the extent expressly provided otherwise in writing.

                 1.51.    Termination of Directorship.  "Termination of
Directorship" shall mean the time when an Optionee, Grantee or Restricted
Stockholder who is an Independent Director or a Management Investment Company
Independent Director ceases to be a Director for any reason,





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including, but not by way of limitation, a termination by resignation, failure
to be elected, death or retirement; but excluding, at the discretion of the
Committee, terminations (i) where there is a simultaneous reemployment or
continuing employment of an Optionee, Grantee or Restricted Stockholder by the
Company, a Company Subsidiary, the Investment Management Company, an Investment
Management Company Subsidiary, the Partnership or a Partnership Subsidiary and
(ii) which are followed by the simultaneous establishment of a directorship
with the Company, a Company Subsidiary, the Investment Management Company, an
Investment Management Company Subsidiary, the Partnership or a Partnership
Subsidiary.  The Board, in its sole and absolute discretion, shall determine
the effect of all matters and questions relating to Termination of Directorship
with respect to Independent Directors or Management Investment Company
Independent Directors in accordance with the Company's bylaws.

                 1.52.    Termination of Employment.  "Termination of
Employment" shall mean the time when the employee-employer relationship between
an Optionee, Grantee or Restricted Stockholder and the Company, Investment
Management Company or Partnership, or any of their respective Subsidiaries, is
terminated for any reason, with or without Cause, including, but not by way of
limitation, a termination by resignation, discharge, death, disability or
retirement; but excluding (i) terminations where there is a simultaneous
reemployment or continuing employment of an Optionee, Grantee or Restricted
Stockholder by the Company, a Company Subsidiary, the Investment Management
Company, an Investment Management Company Subsidiary, the Partnership or a
Partnership Subsidiary, (ii) at the discretion of the Committee, terminations
which result in a temporary severance of the employee-employer relationship,
and (iii) at the discretion of the Committee, terminations which are followed
by the simultaneous establishment of a consulting relationship by the Company,
a Company Subsidiary, the Investment Management Company, an Investment
Management Company Subsidiary, the Partnership or a Partnership Subsidiary with
the former employee.  The Committee, in its absolute discretion, shall
determine the effect of all matters and questions relating to Termination of
Employment, including, but not by way of limitation, the question of whether a
Termination of Employment resulted from a discharge for Cause, and all
questions of whether a particular leave of absence constitutes a Termination of
Employment; provided, however, that, with respect to Incentive Stock Options
unless otherwise determined by the Committee in its discretion, a leave of
absence, change in status from an employee to an independent contractor or
other change in the employee-employer relationship shall constitute a
Termination of Employment if, and to the extent that, such leave of absence,
change in status or other change interrupts employment for the purposes of
Section 422(a)(2) of the Code and the then applicable regulations and revenue
rulings under said Section.  Notwithstanding any other provision of this Plan,
the Company, a Company Subsidiary, the Investment Management Company, an
Investment Management Company Subsidiary, the Partnership or a Partnership
Subsidiary has an absolute and unrestricted right to terminate an Employee's
employment at any time for any reason whatsoever, with or without Cause, except
to the extent expressly provided otherwise in writing.





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                                  ARTICLE II.

                             SHARES SUBJECT TO PLAN

                 2.1.     Shares Subject to Plan.

                 (a)      The shares of stock subject to Options, awards of
Restricted Stock, Performance Awards, Dividend Equivalents, awards of Deferred
Stock, Stock Payments or Stock Appreciation Rights shall be shares of Common
Stock.  The aggregate number of such shares which may be issued upon exercise
of such Options or rights or upon any such awards under the Plan shall not
exceed Five Million Seven Hundred Fifty Thousand (5,750,000).  The shares of
Common Stock issuable upon exercise of such Options or rights or upon any such
awards may be either previously authorized but unissued shares or treasury
shares.

                 (b)      The maximum number of shares which may be subject to
Options, awards of Restricted Stock, Performance Awards, Dividend Equivalents,
awards of Deferred Stock, Stock Payments or Stock Appreciation Rights granted
under the Plan to any individual in any calendar year shall not exceed the
Award Limit.  To the extent required by Section 162(m) of the Code, shares
subject to Options which are canceled continue to be counted against the Award
Limit and if, after grant of an Option, the price of shares subject to such
Option is reduced, the transaction is treated as a cancellation of the Option
and a grant of a new Option and both the Option deemed to be canceled and the
Option deemed to be granted are counted against the Award Limit.  Furthermore,
to the extent required by Section 162(m) of the Code, if, after grant of a
Stock Appreciation Right, the base amount on which stock appreciation is
calculated is reduced to reflect a reduction in the Fair Market Value of the
Common Stock, the transaction is treated as a cancellation of the Stock
Appreciation Right and a grant of a new Stock Appreciation Right and both the
Stock Appreciation Right deemed to be canceled and the Stock Appreciation Right
deemed to be granted are counted against the Award Limit.

                 2.2.     Add-back of Options and Other Rights.  If any Option,
or other right to acquire shares of Common Stock under any other award under
this Plan, expires or is canceled without having been fully exercised, or is
exercised in whole or in part for cash as permitted by this Plan, the number of
shares subject to such Option or other right but as to which such Option or
other right was not exercised prior to its expiration, cancellation or exercise
may again be optioned, granted or awarded hereunder, subject to the limitations
of Section 2.1.

Furthermore, any shares subject to Options or other awards which are adjusted
pursuant to Section 10.3 and become exercisable with respect to shares of stock
of another corporation shall be considered canceled and may again be optioned,
granted or awarded hereunder, subject to the limitations of Section 2.1.
Shares of Common Stock which are delivered by the Optionee or Grantee or
withheld by the Company upon the exercise of any Option or other award under
this Plan, in payment of the exercise price thereof, may again be optioned,
granted or awarded hereunder, subject to the limitations of Section 2.1.  If
any share of Restricted Stock is forfeited by the Grantee or repurchased by the
Company pursuant to Section 6.6 hereof, such share may again be optioned,
granted or awarded hereunder, subject to the limitations of Section 2.1.





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Notwithstanding the provisions of this Section 2.2, no shares of Common Stock
may again be optioned, granted or awarded if such action would cause an
Incentive Stock Option to fail to qualify as an incentive stock option under
Section 422 of the Code.

                                  ARTICLE III.

                              GRANTING OF OPTIONS

                 3.1.     Eligibility.  Any Employee or consultant selected by
the Committee pursuant to Section 3.4(a)(i) shall be eligible to be granted an
Option.  Each Non-Employee Director of the Company shall be eligible to be
granted Options at the times and in the manner set forth in Section 3.4(d).

                 3.2.     Disqualification for Stock Ownership.  No person may
be granted an Incentive Stock Option under this Plan if such person, at the
time the Incentive Stock Option is granted, owns stock possessing more than ten
percent (10%) of the total combined voting power of all classes of stock of the
Company or any then existing Subsidiary or parent corporation (within the
meaning of Section 422 of the Code) unless such Incentive Stock Option conforms
to the applicable provisions of Section 422 of the Code.

                 3.3.     Qualification of Incentive Stock Options.  No
Incentive Stock Option shall be granted to any person who is not an Employee,
or to any Employee of a Subsidiary which does not constitute a "subsidiary
corporation" within Section 424(f) of the Code.

                 3.4.     Granting of Options

                 (a)      The Committee shall from time to time, in its
absolute discretion, and subject to applicable limitations of this Plan:

                          (i)     Determine which Employees are key Employees
         and select from among the key Employees, consultants and Non- Employee
         Directors (including Employees, consultants and Non-Employee Directors
         who have previously received Options or other awards under this Plan)
         such of them as in its opinion should be granted Options;

                          (ii)    Subject to the Award Limit, determine the
         number of shares to be subject to such Options granted to the selected
         key Employees or consultants;

                          (iii)   Subject to Section 3.3, determine whether
         such Options are to be Incentive Stock Options or Non-Qualified Stock
         Options and whether such Options are to qualify as performance-based
         compensation as described in Section 162(m)(4)(C) of the Code; and

                          (iv)    Determine the terms and conditions of such
         Options, consistent with this Plan; provided, however, that the terms
         and conditions of Options intended





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         to qualify as performance-based compensation as described in Section
         162(m)(4)(C) of the Code shall include, but not be limited to, such
         terms and conditions as may be necessary to meet the applicable
         provisions of Section 162(m) of the Code.

                 (b)      Upon the selection of a key Employee or consultant to
be granted an Option, the Committee shall instruct the Secretary of the Company
to issue the Option and may impose such conditions on the grant of the Option
as it deems appropriate.  Without limiting the generality of the preceding
sentence, the Committee may, in its discretion and on such terms as it deems
appropriate, require as a condition on the grant of an Option to an Employee or
consultant that the Employee or consultant surrender for cancellation some or
all of the unexercised Options, awards of Restricted Stock or Deferred Stock,
Performance Awards, Stock Appreciation Rights, Dividend Equivalents or Stock
Payments or other rights which have been previously granted to him under this
Plan or otherwise.  An Option, the grant of which is conditioned upon such
surrender, may have an Option price lower (or higher) than the exercise price
of such surrendered Option or other award, may cover the same (or a lesser or
greater) number of shares as such surrendered Option or other award, may
contain such other terms as the Committee deems appropriate, and shall be
exercisable in accordance with its terms, without regard to the number of
shares, price, exercise period or any other term or condition of such
surrendered Option or other award.

                 (c)      Any Incentive Stock Option granted under this Plan
may be modified by the Committee, with the consent of the Optionee, to
disqualify such Option from treatment as an "incentive stock option" under
Section 422 of the Code.

                 (d)      During the term of the Plan, each person who is named
as an Independent Director in the Company's registration statement in
connection with the Company's initial public offering of its Common Stock (an
"Initial Independent Director") as of the date upon which such Independent
Director's term as a director commences, automatically shall be granted (i) an
Option to purchase twenty-six thousand two hundred fifty (26,250) shares of
Common Stock (subject to adjustment as provided in Section 10.3) on the date of
such initial public offering and (ii) an Option to purchase fifteen thousand
(15,000) shares of Common Stock (subject to adjustment as provided in Section
10.3) on the date of each annual meeting of stockholders after such initial
public offering at which the Independent Director is reelected to the Board
commencing with the annual meeting to be held in 1999.  During the term of the
Plan, a person, other than an Initial Independent Director, who is initially
elected to the Board after the consummation of the initial public offering of
Common Stock and who is an Independent Director at the time of such initial
election automatically shall be granted (i) an Option to purchase twenty
thousand (20,000) shares of Common Stock (subject to adjustment as provided in
Section 10.3) on the date of such initial election and (ii) an Option to
purchase fifteen thousand (15,000) shares of Common Stock (subject to
adjustment as provided in Section 10.3) on the date of each annual meeting of
stockholders after such initial election at which the Independent Director is
reelected to the Board.  Members of the Board who are employees of the Company
who subsequently retire from the Company and remain on the Board will not
receive an initial Option grant pursuant to clause (i) of the preceding
sentence, but to the extent that they





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are otherwise eligible, will receive, after retirement from employment with the
Company, Options as described in clause (ii) of the preceding sentence.  All
the foregoing Option grants authorized by this Section 3.4(d) are subject to
stockholder approval of the Plan.

                                  ARTICLE IV.

                                TERMS OF OPTIONS

                 4.1.     Option Agreement.  Each Option shall be evidenced by
a written Stock Option Agreement, which shall be executed by the Optionee and
an authorized officer of the Company and which shall contain such terms and
conditions as the Committee (or the Board, in the case of Options granted to
Independent Directors) shall determine, consistent with this Plan.  Stock
Option Agreements evidencing Options intended to qualify as performance-based
compensation as described in Section 162(m)(4)(C) of the Code shall contain
such terms and conditions as may be necessary to meet the applicable provisions
of Section 162(m) of the Code.  Stock Option Agreements evidencing Incentive
Stock Options shall contain such terms and conditions as may be necessary to
meet the applicable provisions of Section 422 of the Code.

                 4.2.     Option Price.  The price per share of the shares
subject to each Option shall be set by the Committee; provided, however, that
(i) in the case of Incentive Stock Options such price shall not be less than
100% of the Fair Market Value of a share of Common Stock on the date the Option
is granted (or the date the Option is modified, extended or renewed for
purposes of Section 424(h) of the Code); (ii) in the case of Incentive Stock
Options granted to an individual then owning (within the meaning of Section
424(d) of the Code) more than 10% of the total combined voting power of all
classes of stock of the Company or any Subsidiary or parent corporation thereof
(within the meaning of Section 422 of the Code), such price shall not be less
than 110% of the Fair Market Value of a share of Common Stock on the date the
Option is granted (or the date the Option is modified, extended or renewed for
purposes of Section 424(h) of the Code); (iii) in the case of Options granted
to Independent Directors, such price shall equal 100% of the Fair Market Value
of a share of Common Stock on the date the Option is granted; provided,
however, that the price of each share subject to each Option granted to Initial
Independent Directors pursuant to Section 3.4(d) hereof shall equal the initial
public offering price per share of Common Stock; and (iv) in the case of all
other Options granted, such price shall be not less than 100% of the Fair
Market Value of a share of Common Stock on the date the Option is granted.

                 4.3.     Option Term.  The term of an Option shall be set by
the Committee in its discretion; provided, however, that, (i) in the case of
Options granted to Independent Directors, the term shall be ten (10) years from
the date the Option is granted, without variation or acceleration hereunder,
but subject to Section 5.6, and (ii) in the case of Incentive Stock Options,
the term shall not be more than ten (10) years from the date the Incentive
Stock Option is granted, or five (5) years from such date if the Incentive
Stock Option is granted to an individual then owning (within the meaning of
Section 424(d) of the Code) more than 10% of the total combined voting power of
all classes of stock of the Company or any Subsidiary or parent





                                       12
<PAGE>   13



corporation thereof (within the meaning of Section 422 of the Code).  Except as
limited by requirements of Section 422 of the Code and regulations and rulings
thereunder applicable to Incentive Stock Options, the Committee may extend the
term of any outstanding Option in connection with any Termination of Employment
or Termination of Consultancy of the Optionee, or amend any other term or
condition of such Option relating to such a termination.

                 4.4.     Option Vesting

                 (a)      The period during which the right to exercise an
Option in whole or in part vests in the Optionee shall be set by the Committee
and the Committee may determine that an Option may not be exercised in whole or
in part for a specified period after it is granted; provided, however, that,
unless the Committee otherwise provides in the terms of the Option or
otherwise, no Option shall be exercisable by any Optionee who is then subject
to Section 16 of the Exchange Act within the period ending six months and one
day after the date the Option is granted; and provided, further, that, unless
the Committee otherwise provides in the terms of the Options or otherwise,
Options granted to Independent Directors shall become exercisable in cumulative
annual installments of 331/3% on each of the first, second and third
anniversaries of the date of Option grant, without variation or acceleration
hereunder except as provided in Section 10.3(b).  At any time after grant of an
Option, the Committee may, in its sole and absolute discretion and subject to
whatever terms and conditions it selects, accelerate the period during which an
Option (except an Option granted to an Independent Director) vests.

                 (b)      No portion of an Option which is unexercisable at
Termination of Employment, Termination of Directorship or Termination of
Consultancy, as applicable, shall thereafter become exercisable, except as may
be otherwise provided by the Committee in the case of Options granted to
Employees or consultants either in the Stock Option Agreement or by action of
the Committee following the grant of the Option.

                 (c)      To the extent that the aggregate Fair Market Value of
stock with respect to which "incentive stock options" (within the meaning of
Section 422 of the Code, but without regard to Section 422(d) of the Code) are
exercisable for the first time by an Optionee during any calendar year (under
the Plan and all other incentive stock option plans of the Company and any
parent or subsidiary corporation (within the meaning of Section 422 of the
Code) of the Company) exceeds $100,000, such Options shall be treated as
Non-Qualified Options to the extent required by Section 422 of the Code.  The
rule set forth in the preceding sentence shall be applied by taking Options
into account in the order in which they were granted.  For purposes of this
Section 4.4(c), the Fair Market Value of stock shall be determined as of the
time the Option with respect to such stock is granted.

                 4.5.     Consideration.  In consideration of the granting of
an Option, the Optionee shall agree, in the written Stock Option Agreement, to
remain in the employ of (or to consult for or to serve as an Independent
Director of, as applicable) the Company, a Company Subsidiary, the Investment
Management Company, an Investment Management Company Subsidiary, the
Partnership or a Partnership Subsidiary for a period of at least one year (or
such shorter period as





                                       13
<PAGE>   14



may be fixed in the Stock Option Agreement or by action of the Committee
following grant of the Option) after the Option is granted (or, in the case of
an Independent Director, until the next annual meeting of stockholders of the
Company).  Nothing in this Plan or in any Stock Option Agreement hereunder
shall (i) confer upon any Optionee any right to (a) continue in the employ of,
or as a consultant for, the Company, a Company Subsidiary, the Investment
Management Company, an Investment Management Company Subsidiary, the
Partnership or a Partnership Subsidiary, or as a Director, or (b) receive any
severance pay from the Company, a Company Subsidiary, the Investment Management
Company, an Investment Management Company Subsidiary, the Partnership or a
Partnership Subsidiary or (ii) interfere with or restrict in any way the rights
of the Company, a Company Subsidiary, the Investment Management Company, an
Investment Management Company Subsidiary, the Partnership or a Partnership
Subsidiary, which are hereby expressly reserved, to discharge any Optionee at
any time for any reason whatsoever, with or without Cause.

                                   ARTICLE V.

                              EXERCISE OF OPTIONS

                 5.1.     Partial Exercise.  An exercisable Option may be
exercised in whole or in part.  However, an Option shall not be exercisable
with respect to fractional shares and the Committee (or the Board, in the case
of Options granted to Independent Directors) may require that, by the terms of
the Option, a partial exercise be with respect to a minimum number of shares.

                 5.2.     Manner of Exercise.  All or a portion of an
exercisable Option shall be deemed exercised upon delivery of all of the
following to the Secretary of the Company or his office:

                 (a)      A written notice complying with the applicable rules
established by the Committee (or the Board, in the case of Options granted to
Independent Directors) stating that the Option, or a portion thereof, is
exercised.  The notice shall be signed by the Optionee or other person then
entitled to exercise the Option or such portion of the Option;

                 (b)      Such representations and documents as the Committee
(or the Board, in the case of Options granted to Independent Directors), in its
absolute discretion, deems necessary or advisable to effect compliance with all
applicable provisions of the Securities Act of 1933, as amended, and any other
federal or state securities laws or regulations.  The Committee or Board may,
in its absolute discretion, also take whatever additional actions it deems
appropriate to effect such compliance including, without limitation, placing
legends on share certificates and issuing stop-transfer notices to agents and
registrars;

                 (c)      In the event that the Option shall be exercised
pursuant to Section 10.1 by any person or persons other than the Optionee,
appropriate proof of the right of such person or persons to exercise the
Option; and





                                       14
<PAGE>   15

                 (d)      Full cash payment to the Secretary of the Company for
the shares with respect to which the Option, or portion thereof, is exercised.
However, the Committee (or the Board, in the case of Options granted to
Independent Directors), may in its discretion (i) allow a delay in payment up
to thirty (30) days from the date the Option, or portion thereof, is exercised;
(ii) allow payment, in whole or in part, through the delivery of shares of
Common Stock owned by the Optionee, duly endorsed for transfer to the Company
with a Fair Market Value on the date of delivery equal to the aggregate
exercise price of the Option or exercised portion thereof; (iii) allow payment,
in whole or in part, through the surrender of shares of Common Stock then
issuable upon exercise of the Option having a Fair Market Value on the date of
Option exercise equal to the aggregate exercise price of the Option or
exercised portion thereof; (iv) allow payment, in whole or in part, through the
delivery of a full recourse promissory note bearing interest (at no less than
such rate as shall then preclude the imputation of interest under the Code) and
payable upon such terms as may be prescribed by the Committee or the Board; or
(v) allow payment through any combination of the consideration provided in the
foregoing subparagraphs (ii), (iii) and (iv).  In the case of a promissory
note, the Committee (or the Board, in the case of Options granted to
Independent Directors) may also prescribe the form of such note and the
security to be given for such note.  The Option may not be exercised, however,
by delivery of a promissory note or by a loan from the Company when or where
such loan or other extension of credit is prohibited by law.

                 5.3.     Transfer of Shares to a Company Employee, Independent
Director or Other Board Member.  As soon as practicable after receipt by the
Company, pursuant to Section 5.2(d), of payment for the shares with respect to
which an Option (which in the case of a Company Employee or Company consultant
was issued to and is held by such Company Employee or Company consultant in his
capacity as a Company Employee or a Company consultant, as the case may be), or
portion thereof, is exercised by an Optionee who is a Company Employee,
Independent Director or a consultant to the Company, with respect to each such
exercise, the Company shall transfer to the Optionee the number of shares equal
to

                 (a)      The amount of the payment made by the Optionee to the
Company pursuant to Section 5.2(d), divided by

                 (b)      The price per share of the shares subject to the
Option as determined pursuant to Section 4.2.

                 5.4.     Transfer of Shares to a Partnership Employee. (a)
At the time that an Optionee who is an Employee, Independent Director or
consultant of the Partnership or a Partnership Subsidiary exercises all or any
part of an Option pursuant to the terms of this Plan, such Optionee shall remit
to the Partnership or the Partnership Subsidiary, as the case may be, an amount
equal to the product of the exercise price per share of such Option and the
number of shares with respect to such Option being exercised by such Optionee.

                 (b)      As soon as practicable after receipt by the Company
of a notice of the exercise of shares with respect to which an Option (which
was issued to and is held by a





                                       15
<PAGE>   16



Partnership Employee or consultant in such capacity), or portion thereof, is
exercised by an Optionee who is a Partnership Employee, Partnership Director or
consultant, with respect to each such exercise the Company shall sell to the
Partnership the number of shares (the "Partnership Purchased Shares") equal to
the number of shares subject to such exercise by such Optionee at a purchase
price equal to the Fair Market Value of a share of Common Stock at the time of
the exercise (the "Partnership Purchase Price");

                 (c)      If such Optionee is an Employee, Independent Director
or consultant of a Partnership Subsidiary, as soon as practicable after receipt
of the Partnership Purchased Shares by the Partnership, the Partnership shall
sell such shares to such Partnership Subsidiary at a price equal to the
Partnership Purchase Price; and

                 (d)      As soon as practicable after receipt of the
Partnership Purchased Shares by the Partnership, or the Partnership Subsidiary
in the case of an Optionee who is an Employee, Independent Director or
consultant of a Partnership Subsidiary, the Partnership or the Partnership
Subsidiary, as the case may be, shall transfer such shares to the Optionee at
no additional cost with the difference between the exercise price paid by the
Optionee to the Partnership or the Partnership Subsidiary, as the case may be,
and the Partnership Purchase Price, as additional compensation.

                 5.5.     Transfer of Shares to a Services Company Employee,
Investment Management Company Independent Director or other Non-Employee
Members of the Investment Management Company Board.

                 (a) At the time that an Optionee who is an Employee,
Independent Director or consultant of the Investment Management Company or an
Investment Management Company Subsidiary exercises all or any part of an Option
pursuant to the terms of this Plan, such Optionee shall remit to the Investment
Management Company or the Investment Management Company Subsidiary, as the case
may be, an amount equal to the product of the exercise price per share of such
Option and the number of shares with respect to such Option being exercised by
such Optionee.

                 (b)      As soon as practicable after receipt by the Company,
of a notice of the exercise of shares with respect to which an Option (which in
the case of an Investment Management Company Employee or consultant was issued
to and is held by such Investment Management Company Employee or consultant in
such capacity), or portion thereof, is exercised by an Optionee who is an
Investment Management Company Employee, an Investment Management Company
Independent Director or consultant, with respect to each such exercise the
Company shall sell to the Investment Management Company the number of shares
(the "Investment Management Company Purchased Shares") equal to the number of
shares subject to such exercise by such Optionee at a purchase price equal to
the Fair Market Value of a share of Common Stock at the time of the exercise
(the "Investment Management Company Purchase Price");

                 (c)      If such Optionee is an Employee, Independent Director
or consultant of a Investment Management Company Subsidiary, as soon as
practicable after receipt of the





                                       16
<PAGE>   17



Investment Management Company Purchased Shares by the Investment Management
Company, the Investment Management Company shall sell such shares to such
Investment Management Company Subsidiary at a price equal to the Investment
Management Company Purchase Price; and

                 (d)      As soon as practicable after receipt of the
Investment Management Company Purchased Shares by the Investment Management
Company, or the Investment Management Company Subsidiary in the case of an
Optionee who is an Employee, Independent Director or consultant of a Investment
Management Company Subsidiary, the Investment Management Company or such
Investment Management Company Subsidiary, as the case may be, shall transfer
such shares to the Optionee at no additional cost with the difference between
the exercise price paid by the Optionee to the Investment Management Company or
such Investment Management Company Subsidiary, as the case may be, and the
Investment Management Company Purchase Price as additional compensation.

                 5.6.     Transfer of Payment to the Partnership.  As soon as
practicable after receipt by the Company of the amount described in Section
5.2(d), 5.4(d) and 5.5(b) the Company shall contribute to the Partnership an
amount of cash equal to such payment and the Partnership shall issue an
additional interest in the Partnership on the terms set forth in the
Partnership Agreement.

                 5.7.     Conditions to Issuance of Stock Certificates.  The
Company shall not be required to issue or deliver any certificate or
certificates for shares of stock purchased upon the exercise of any Option or
portion thereof prior to fulfillment of all of the following conditions:

                 (a)      The admission of such shares to listing on all stock
exchanges on which such class of stock is then listed;

                 (b)      The completion of any registration or other
qualification of such shares under any state or federal law, or under the
rulings or regulations of the Securities and Exchange Commission or any other
governmental regulatory body which the Committee or Board shall, in its
absolute discretion, deem necessary or advisable;

                 (c)      The obtaining of any approval or other clearance from
any state or federal governmental agency which the Committee (or Board, in the
case of Options granted to Independent Directors) shall, in its absolute
discretion, determine to be necessary or advisable;

                 (d)      The lapse of such reasonable period of time following
the exercise of the Option as the Committee (or Board, in the case of Options
granted to Independent Directors) may establish from time to time for reasons
of administrative convenience; and

                 (e)      The receipt by the Company of full payment for such
shares, including payment of any applicable withholding tax.





                                       17
<PAGE>   18



                 5.8.     Rights as Stockholders.  The holders of Options shall
not be, nor have any of the rights or privileges of, stockholders of the
Company in respect of any shares purchasable upon the exercise of any part of
an Option unless and until certificates representing such shares have been
issued by the Company to such holders.

                 5.9.     Ownership and Transfer Restrictions.  The Committee
(or Board, in the case of Options granted to Independent Directors), in its
absolute discretion, may impose such restrictions on the ownership and
transferability of the shares purchasable upon the exercise of an Option as it
deems appropriate.  Any such restriction shall be set forth in the respective
Stock Option Agreement and may be referred to on the certificates evidencing
such shares.  The Committee may require the Employee to give the Company prompt
notice of any disposition of shares of Common Stock acquired by exercise of an
Incentive Stock Option within (i) two years from the date of granting
(including the date the Option is modified, extended or renewed for purposes of
Section 424(h) of the Code) such Option to such Employee or (ii) one year after
the transfer of such shares to such Employee.  The Committee may direct that
the certificates evidencing shares acquired by exercise of an Option refer to
such requirement to give prompt notice of disposition.

                 5.10.    Limitations on Exercise of Options Granted to an
Optionee.  The Committee (or the Board, in the case of Options granted to
Independent Directors), in its absolute discretion, may impose such limitations
and restrictions on the exercise of Options as it deems appropriate.  Any such
limitation shall be set forth in the respective Stock Option Agreement.

                                  ARTICLE VI.

                           AWARD OF RESTRICTED STOCK

                 6.1.     Eligibility.  Subject to the Award Limit, Restricted
Stock may be awarded to any Employee who the Committee determines is a key
Employee or any Director or consultant whom the Committee determines should
receive such an award.

                 6.2.     Award of Restricted Stock

                 (a)      The Committee may from time to time, in its absolute
discretion:

                          (i)     Determine which Employees are key Employees
         and select from among the key Employees, Directors or consultants
         (including Employees, Directors or consultants who have previously
         received other awards under this Plan) such of them as in its opinion
         should be awarded Restricted Stock; and

                          (ii)    Determine the purchase price, if any, and
         other terms and conditions (including without limitation, in the case
         of awards to Partnership Employees, Investment Management Company
         Employees and Investment Management Company Directors, the mechanism
         for the transfer of the Restricted Stock and payment therefor





                                       18
<PAGE>   19



         and, in the case of the repurchase of shares of Restricted Stock
         subject to restrictions in effect at the time of the Termination of
         Employment or Termination of Directorship of such Employee or
         Director, as the case may be) applicable to such Restricted Stock,
         consistent with this Plan.

                 (b)      The Committee shall establish the purchase price, if
any, and form of payment for Restricted Stock; provided, however, that such
purchase price shall be no less than the par value of the Common Stock to be
purchased, unless otherwise permitted by applicable state law.  In all cases,
legal consideration shall be required for each issuance of Restricted Stock.

                 (c)      Upon the selection of a key Employee or consultant to
be awarded Restricted Stock, the Committee shall instruct the Secretary of the
Company to issue such Restricted Stock and may impose such conditions on the
issuance of such Restricted Stock as it deems appropriate.

                 6.3.     Restricted Stock Agreement.  Restricted Stock shall
be issued only pursuant to a written Restricted Stock Agreement, which shall be
executed by the selected key Employee or consultant and an authorized officer
of the Company and which shall contain such terms and conditions as the
Committee shall determine, consistent with this Plan.

                 6.4.     Consideration.  As consideration for the issuance of
Restricted Stock, in addition to payment of any purchase price, the Restricted
Stockholder shall agree, in the written Restricted Stock Agreement, to remain
in the employ of, or to consult for, the Company, a Company Subsidiary, the
Investment Management Company, an Investment Management Company Subsidiary, the
Partnership or a Partnership Subsidiary for a period of at least one year after
the Restricted Stock is issued (or such shorter period as may be fixed in the
Restricted Stock Agreement or by action of the Committee following grant of the
Restricted Stock) or, in the case of a Director, complete the remainder of such
Director's elected term.  Nothing in this Plan or in any Restricted Stock
Agreement hereunder shall (i) confer on any Restricted Stockholder any right to
(a) continue in the employ of, as a Director of or as a consultant for, the
Company, a Company Subsidiary, the Investment Management Company, an Investment
Management Company Subsidiary, the Partnership or a Partnership Subsidiary or
(b) receive any severance pay from the Company, a Company Subsidiary, the
Investment Management Company, an Investment Management Company Subsidiary, the
Partnership or a Partnership Subsidiary or (ii) interfere with or restrict in
any way the rights of the Company, a Company Subsidiary, the Investment
Management Company, an Investment Management Company Subsidiary, the
Partnership or a Partnership Subsidiary, which are hereby expressly reserved,
to discharge the Employee or consultant at any time for any reason whatsoever,
with or without Cause, or any Director pursuant to the Company's bylaws.

                 6.5.     Rights as Stockholders.  Subject to Section 6.6, upon
delivery of the shares of Restricted Stock to the escrow holder pursuant to
Section 6.8, the Restricted Stockholder shall have, unless otherwise provided
by the Committee, all the rights of a stockholder with respect to said shares,
subject to the restrictions in his Restricted Stock





                                       19
<PAGE>   20



Agreement, including the right to receive all dividends and other distributions
paid or made with respect to the shares; provided, however, that in the
discretion of the Committee, any extraordinary distributions with respect to
the Common Stock shall be subject to the restrictions set forth in Section 6.6.

                 6.6.     Restriction.  All shares of Restricted Stock issued
under this Plan (including any shares received by holders thereof with respect
to shares of Restricted Stock as a result of stock dividends, stock splits or
any other form of recapitalization) shall, in the terms of each individual
Restricted Stock Agreement, be subject to such restrictions as the Committee
shall provide, which restrictions may include, without limitation, restrictions
concerning voting rights and transferability and restrictions based on duration
of employment with the Company, Company performance and individual performance;
provided, however, that, unless the Committee otherwise provides in the terms
of the Restricted Stock Agreement or otherwise, no share of Restricted Stock
granted to a person subject to Section 16 of the Exchange Act shall be sold,
assigned or otherwise transferred until at least six months and one day have
elapsed from the date on which the Restricted Stock was issued, and provided,
further, that, except with respect to shares of Restricted Stock granted
pursuant to Section 6.10, by action taken after the Restricted Stock is issued,
the Committee may, on such terms and conditions as it may determine to be
appropriate, remove any or all of the restrictions imposed by the terms of the
Restricted Stock Agreement.  Restricted Stock may not be sold or encumbered
until all restrictions are terminated or expire.  If no consideration was paid
by the Restricted Stockholder upon issuance, a Restricted Stockholder's rights
in unvested Restricted Stock shall lapse upon a Termination of Employment or,
if applicable, upon a Termination of Directorship or a Termination of
Consultancy; provided, however, that the Committee in its sole and absolute
discretion may provide that such rights shall not lapse in the event of a
Termination of Employment or Termination of Directorship following a "change of
ownership control" (within the meaning of Treasury Regulation Section
1.62-27(e)(2)(v) or any successor regulation thereto) of the Company or because
of the Restricted Stockholder's death or disability.

                 6.7.     Repurchase of Restricted Stock.  The Committee shall
provide in the terms of each individual Restricted Stock Agreement that the
Company shall have the right to repurchase from the Restricted Stockholder the
Restricted Stock then subject to restrictions under the Restricted Stock
Agreement immediately upon a Termination of Employment or, if applicable, upon
a Termination of Director or a Termination of Consultancy, at a cash price per
share equal to the price paid by the Restricted Stockholder for such Restricted
Stock; provided, however, that the Committee in its sole and absolute
discretion may provide that no such right of repurchase shall exist in the
event of a Termination of Employment, Termination of Directorship or
Termination of Consultancy following a "change of ownership or control" (within
the meaning of Treasury Regulation Section 1.162-27(e)(2)(v) or any successor
regulation thereto) of the Company or because of the Restricted Stockholder's
death or disability; provided, further, that, except with respect to shares of
Restricted Stock granted pursuant to Section 6.10, the Committee in its sole
and absolute discretion may provide that no such right of repurchase shall
exist in the event of a Termination of Employment, Termination of Directorship
or a Termination





                                       20
<PAGE>   21



of Consultancy without Cause, following any change in control or ownership of
the Company, because of the Restricted Stockholder's retirement, or otherwise.

                 6.8.     Escrow.  The Secretary of the Company or such other
escrow holder as the Committee may appoint shall retain physical custody of
each certificate representing Restricted Stock until all of the restrictions
imposed under the Restricted Stock Agreement with respect to the shares
evidenced by such certificate expire or shall have been removed.

                 6.9.     Legend.  In order to enforce the restrictions imposed
upon shares of Restricted Stock hereunder, the Committee shall cause a legend
or legends to be placed on certificates representing all shares of Restricted
Stock that are still subject to restrictions under Restricted Stock Agreements,
which legend or legends shall make appropriate reference to the conditions
imposed thereby.

                 6.10.    Provisions Applicable to Section 162(m) Participants.

                 (a)      Notwithstanding anything in the Plan to the contrary,
the Committee may grant Restricted Stock to a Section 162(m) Participant the
restrictions with respect to which lapse upon the attainment of performance
goals for the Company which are related to one or more of the following
business criteria: (i) pre-tax income, (ii) operating income, (iii) cash flow,
(iv) earnings per share, (v) return on equity, (vi) return on invested capital
or assets, (vii) cost reductions or savings, (viii) funds from operations, (ix)
appreciation in the fair market value of Common Stock and (x) earnings before
any one or more of the following items: interest, taxes, depreciation or
amortization.

                 (b)      To the extent necessary to comply with the
performance-based compensation requirements of Section 162(m)(4)(C) of the
Code, with respect to Restricted Stock which may be granted to one or more
Section 162(m) Participants, no later than ninety (90) days following the
commencement of any fiscal year in question or any other designated fiscal
period or period of service (or such other time as may be required or permitted
by Section 162(m) of the Code), the Committee shall, in writing, (i) designate
one or more Section 162(m) Participants, (ii) select the performance goal or
goals applicable to the fiscal year or other designated fiscal period or period
of service, (iii) establish the various targets and amounts of Restricted Stock
which may be earned for such fiscal year or other designated fiscal period or
period of service and (iv) specify the relationship between performance goals
and targets and the amounts of Restricted Stock to be earned by each Section
162(m) Participant for such fiscal year or other designated fiscal period or
period of service.  Following the completion of each fiscal year or other
designated fiscal period or period of service, the Committee shall certify in
writing whether the applicable performance targets have been achieved for such
fiscal year or other designated fiscal period or period of service.  In
determining the amount earned by a Section 162(m) Participant, the Committee
shall have the right to reduce (but not to increase) the amount payable at a
given level of performance to take into account additional factors that the
Committee may deem relevant to the assessment of individual or corporate
performance for the fiscal year or other designated fiscal period or period of
service.





                                       21
<PAGE>   22

                                  ARTICLE VII.



                   PERFORMANCE AWARDS, DIVIDEND EQUIVALENTS,
                         DEFERRED STOCK, STOCK PAYMENTS

                 7.1.     Eligibility.  Subject to the Award Limit, one or more
Performance Awards, Dividend Equivalents, awards of Deferred Stock, and/or
Stock Payments may be granted to any Employee whom the Committee determines is
a key Employee or any consultant whom the Committee determines should receive
such an award.

                 7.2.     Performance Awards.  Any key Employee or consultant
selected by the Committee may be granted one or more Performance Awards.  The
value of such Performance Awards may be linked to the market value, book value,
net profits or other measure of the value of Common Stock or other specific
performance criteria determined appropriate by the Committee, in each case on a
specified date or dates or over any period or periods determined by the
Committee, or may be based upon the appreciation in the market value, book
value, net profits or other measure of the value of a specified number of
shares of Common Stock over a fixed period or periods determined by the
Committee.  In making such determinations, the Committee shall consider (among
such other factors as it deems relevant in light of the specific type of award)
the contributions, responsibilities and other compensation of the particular
key Employee or consultant.

                 7.3.     Dividend Equivalents.  Any key Employee or consultant
selected by the Committee may be granted Dividend Equivalents based on the
dividends declared on Common Stock, to be credited as of dividend payment
dates, during the period between the date an Option, Stock Appreciation Right,
Deferred Stock or Performance Award is granted, and the date such Option, Stock
Appreciation Right, Deferred Stock or Performance Award is exercised, vests or
expires, as determined by the Committee.  Such Dividend Equivalents shall be
converted to cash or additional shares of Common Stock by such formula and at
such time and subject to such limitations as may be determined by the
Committee.  With respect to Dividend Equivalents granted with respect to
Options intended to be qualified performance-based compensation for purposes of
Section 162(m) of the Code, such Dividend Equivalents shall be payable
regardless of whether such Option is exercised.

                 7.4.     Stock Payments.  Any key Employee or consultant
selected by the Committee may receive Stock Payments in the manner determined
from time to time by the Committee.  The number of shares shall be determined
by the Committee and may be based upon the Fair Market Value, book value, net
profits or other measure of the value of Common Stock or other specific
performance criteria determined appropriate by the Committee, determined on the
date such Stock Payment is made or on any date thereafter.

                 7.5.     Deferred Stock.  Any key Employee or consultant
selected by the Committee may be granted an award of Deferred Stock in the
manner determined from time to time by the Committee.  The number of shares of
Deferred Stock shall be determined by the





                                       22
<PAGE>   23

Committee and may be linked to the market value, book value, net profits or
other measure of the value of Common Stock or other specific performance
criteria determined to be appropriate by the Committee, in each case on a
specified date or dates or over any period or periods determined by the
Committee.  Common Stock underlying a Deferred Stock award will not be issued
until the Deferred Stock award has vested, pursuant to a vesting schedule or
performance criteria set by the Committee.  Unless otherwise provided by the
Committee, a Grantee of Deferred Stock shall have no rights as a Company
stockholder with respect to such Deferred Stock until such time as the award
has vested and the Common Stock underlying the award has been issued.

                 7.6.     Performance Award Agreement, Dividend Equivalent
Agreement, Deferred Stock Agreement, Stock Payment Agreement.  Each Performance
Award, Dividend Equivalent, award of Deferred Stock and/or Stock Payment shall
be evidenced by a written agreement, which shall be executed by the Grantee and
an authorized Officer of the Company and which shall contain such terms and
conditions (including, without limitation, in the case of awards to Partnership
Employees and Investment Management Company Employees, the mechanism for the
transfer or rights under such awards) as the Committee shall determine,
consistent with this Plan.

                 7.7.     Term.  The term of a Performance Award, Dividend
Equivalent, award of Deferred Stock and/or Stock Payment shall be set by the
Committee in its discretion.

                 7.8.     Exercise or Purchase Price.  The Committee may
establish the exercise or purchase price of a Performance Award, shares of
Deferred Stock, or shares received as a Stock Payment; provided, however, that
such price shall not be less than the par value for a share of Common Stock,
unless otherwise permitted by applicable state law.

                 7.9.     Exercise Upon Termination of Employment.  A
Performance Award, Dividend Equivalent, award of Deferred Stock and/or Stock
Payment is exercisable or payable only while the Grantee is an Employee or
consultant; provided, however, that the Committee in its sole and absolute
discretion may provide that the Performance Award, Dividend Equivalent, award
of Deferred Stock and/or Stock Payment may be exercised or paid subsequent to a
Termination of Employment following a "change of control or ownership" (within
the meaning of Section 1.162-27(e)(2)(v) or any successor regulation thereto)
of the Company; provided, further, that except with respect to Performance
Awards granted pursuant to Section 7.12, the Committee in its sole and absolute
discretion may provide that the Performance Awards may be exercised or paid
following a Termination of Employment or a Termination of Consultancy without
cause, or following a change in control of the Company, or because of the
Grantee's retirement, death or disability, or otherwise.

                 7.10.    Payment on Exercise.  Payment of the amount
determined under Section 7.1 or 7.2 above shall be in cash, in Common Stock or
a combination of both, as determined by the Committee.  To the extent any
payment under this Article VII is effected in Common Stock, it shall be made
subject to satisfaction of all provisions of Section 5.3.





                                       23
<PAGE>   24

                 7.11.    Consideration.  In consideration of the granting of a
Performance Award, Dividend Equivalent, award of Deferred Stock and/or Stock
Payment, the Grantee shall agree, in a written agreement, to remain in the
employ of, or to consult for, the Company, a Company Subsidiary, the Investment
Management Company, an Investment Management Company Subsidiary, the
Partnership or a Partnership Subsidiary for a period of at least one year after
such Performance Award, Dividend Equivalent, award of Deferred Stock and/or
Stock Payment is granted (or such shorter period as may be fixed in such
agreement or by action of the Committee following such grant).  Nothing in this
Plan or in any agreement hereunder shall (i) confer on any Grantee any right to
(a) continue in the employ of, or as a consultant for, the Company, a Company
Subsidiary, the Investment Management Company, an Investment Management Company
Subsidiary, the Partnership or a Partnership Subsidiary or (b) receive any
severance pay from the Company, a Company Subsidiary, the Investment Management
Company, an Investment Management Company Subsidiary, the Partnership or a
Partnership Subsidiary or (ii) interfere with or restrict in any way the rights
of the Company, a Company Subsidiary, the Investment Management Company, an
Investment Management Company Subsidiary, the Partnership or a Partnership
Subsidiary, which are hereby expressly reserved, to discharge any Grantee at
any time for any reason whatsoever, with or without Cause.

                 7.12.    Provisions Applicable to Section 162(m) Participants.

                 (a)      Notwithstanding anything in the Plan to the contrary,
the Committee may grant any performance or incentive awards described in
Article VII to a Section 162(m) Participant that vest or become exercisable or
payable upon the attainment of performance goals for the Company which are
related to one or more of the following business criteria: (i) pre-tax income,
(ii) operating income, (iii) cash flow, (iv) earnings per share, (v) return on
equity, (vi) return on invested capital or assets, (vii) cost reductions or
savings, (viii) funds from operations, (ix) appreciation in the fair market
value of Common Stock and (x) earnings before any one or more of the following
items: interest, taxes, depreciation or amortization.

                 (b)      To the extent necessary to comply with the
performance-based compensation requirements of Section 162(m)(4)(C) of the
Code, with respect to performance or incentive awards described in Article VII
which may be granted to one or more Section 162(m) Participants, no later than
ninety (90) days following the commencement of any fiscal year in question or
any other designated fiscal period  or period of service (or such other time as
may be required or permitted by Section 162(m) of the Code), the Committee
shall, in writing, (i) designate one or more Section 162(m) Participants, (ii)
select the performance goal or goals applicable to the fiscal year or other
designated fiscal period or period of service, (iii) establish the various
targets and bonus amounts which may be earned for such fiscal year or other
designated fiscal period or period of service and (iv) specify the relationship
between performance goals and targets and the amounts to be earned by each
Section 162(m) Participant for such fiscal year or other designated fiscal
period or period of service.  Following the completion of each fiscal year or
other designated fiscal period or period of service, the Committee shall
certify in writing whether the applicable performance targets have been
achieved for such fiscal year or other designated fiscal period or period of
service.  In





                                       24
<PAGE>   25



determining the amount earned by a Section 162(m) Participant, the Committee
shall have the right to reduce (but not to increase) the amount payable at a
given level of performance to take into account additional factors that the
Committee may deem relevant to the assessment of individual or corporate
performance for the fiscal year or other designated fiscal period or period of
service.

                                 ARTICLE VIII.

                           STOCK APPRECIATION RIGHTS

                 8.1.     Grant of Stock Appreciation Rights.  A Stock
Appreciation Right may be granted to any key Employee or consultant selected by
the Committee.  A Stock Appreciation Right may be granted (i) in connection and
simultaneously with the grant of an Option, (ii) with respect to a previously
granted Option, or (iii) independent of an Option.  A Stock Appreciation Right
shall be subject to such terms and conditions (including, without limitation,
in the case of awards to Partnership Employees and Investment Management
Company Employees, and Investment Management Company Directors, the mechanism
for the transfer or rights under such awards) not inconsistent with this Plan
as the Committee shall impose and shall be evidenced by a written Stock
Appreciation Right Agreement, which shall be executed by the Grantee and an
authorized officer of the Company.  The Committee, in its discretion, may
determine whether a Stock Appreciation Right is to qualify as performance-based
compensation as described in Section 162(m)(4)(C) of the Code and Stock
Appreciation Right Agreements evidencing Stock Appreciation Rights intended to
so qualify shall contain such terms and conditions as may be necessary to meet
the applicable provisions of Section 162(m) of the Code.  Without limiting the
generality of the foregoing, the Committee may, in its discretion and on such
terms as it deems appropriate, require as a condition of the grant of a Stock
Appreciation Right to an Employee or consultant that the Employee or consultant
surrender for cancellation some or all of the unexercised Options, awards of
Restricted Stock or Deferred Stock, Performance Awards, Stock Appreciation
Rights, Dividend Equivalents or Stock Payments, or other rights which have been
previously granted to him under this Plan or otherwise.  A Stock Appreciation
Right, the grant of which is conditioned upon such surrender, may have an
exercise price lower (or higher) than the exercise price of the surrendered
Option or other award, may cover the same (or a lesser or greater) number of
shares as such surrendered Option or other award, may contain such other terms
as the Committee deems appropriate, and shall be exercisable in accordance with
its terms, without regard to the number of shares, price, exercise period or
any other term or condition of such surrendered Option or other award.

                 8.2.     Coupled Stock Appreciation Rights

                 (a)      A Coupled Stock Appreciation Right ("CSAR") shall be
related to a particular Option and shall be exercisable only when and to the
extent the related Option is exercisable.





                                       25
<PAGE>   26

                 (b)      A CSAR may be granted to the Grantee for no more than
the number of shares subject to the simultaneously or previously granted Option
to which it is coupled.

                 (c)      A CSAR shall entitle the Grantee (or other person
entitled to exercise the Option pursuant to this Plan) to surrender to the
Company unexercised a portion of the Option to which the CSAR relates (to the
extent then exercisable pursuant to its terms) and to receive from the Company
in exchange therefor an amount determined by multiplying the difference
obtained by subtracting the Option exercise price from the Fair Market Value of
a share of Common Stock on the date of exercise of the CSAR by the number of
shares of Common Stock with respect to which the CSAR shall have been
exercised, subject to any limitations the Committee may impose.

                 8.3.     Independent Stock Appreciation Rights

                 (a)      An Independent Stock Appreciation Right ("ISAR")
shall be unrelated to any Option and shall have a term set by the Committee.
An ISAR shall be exercisable in such installments as the Committee may
determine.  An ISAR shall cover such number of shares of Common Stock as the
Committee may determine; provided, however, that unless the Committee otherwise
provides in the terms of the ISAR or otherwise, no ISAR granted to a person
subject to Section 16 of the Exchange Act shall be exercisable until at least
six months have elapsed from (but excluding) the date on which the Option was
granted.  The exercise price per share of Common Stock subject to each ISAR
shall be set by the Committee.  An ISAR is exercisable only while the Grantee
is an Employee or consultant; provided that the Committee may determine that
the ISAR may be exercised subsequent to Termination of Employment or
Termination of Consultancy without cause, or following a change in control of
the Company, or because of the Grantee's retirement, death or disability, or
otherwise.

                 (b)      An ISAR shall entitle the Grantee (or other person
entitled to exercise the ISAR pursuant to this Plan) to exercise all or a
specified portion of the ISAR (to the extent then exercisable pursuant to its
terms) and to receive from the Company an amount determined by multiplying the
difference obtained by subtracting the exercise price per share of the ISAR
from the Fair Market Value of a share of Common Stock on the date of exercise
of the ISAR by the number of shares of Common Stock with respect to which the
ISAR shall have been exercised, subject to any limitations the Committee may
impose.

                 8.4.     Payment and Limitations on Exercise

                 (a)      Payment of the amount determined under Section 8.2(c)
and 8.3(b) above shall be in cash, in Common Stock (based on its Fair Market
Value as of the date the Stock Appreciation Right is exercised) or a
combination of both, as determined by the Committee.  To the extent such
payment is effected in Common Stock it shall be made subject to satisfaction of
all provisions of Section 5.3 above pertaining to Options.

                 (b)      Grantees of Stock Appreciation Rights may be required
to comply with any timing or other restrictions with respect to the settlement
or exercise of a Stock Appreciation





                                       26
<PAGE>   27

Right, including a window-period limitation, as may be imposed in the
discretion of the Board or Committee.

                 8.5.     Consideration.  In consideration of the granting of a
Stock Appreciation Right, the Grantee shall agree, in the written Stock
Appreciation Right Agreement, to remain in the employ of, or to consult for,
the Company, a Company Subsidiary, the Investment Management Company, an
Investment Management Company Subsidiary, the Partnership or a Partnership
Subsidiary for a period of at least one year after the Stock Appreciation Right
is granted (or such shorter period as may be fixed in the Stock Appreciation
Right Agreement or by action of the Committee following grant of the Restricted
Stock).  Nothing in this Plan or in any Stock Appreciation Right Agreement
hereunder shall (i) confer on any Grantee any right to (a) continue in the
employ of, or as a consultant for, the Company, a Company Subsidiary, the
Investment Management Company, an Investment Management Company Subsidiary, the
Partnership or a Partnership Subsidiary or (b) receive any severance pay from
the Company, a Company Subsidiary, the Investment Management Company, an
Investment Management Company Subsidiary, the Partnership or a Partnership
Subsidiary or (ii) interfere with or restrict in any way the rights of the
Company, a Company Subsidiary, the Investment Management Company, an Investment
Management Company Subsidiary, the Partnership or a Partnership Subsidiary,
which are hereby expressly reserved, to discharge any Grantee at any time for
any reason whatsoever, with or without Cause.

                                  ARTICLE IX.
                                 ADMINISTRATION

                 9.1.     Compensation Committee.  Prior to the Company's
initial registration of Common Stock under Section 12 of the Exchange Act, the
Compensation Committee shall consist of the entire Board.  Following such
registration, the Compensation Committee (or another committee or a
subcommittee of the Board assuming the functions of the Committee under this
Plan) shall consist solely of two or more Independent Directors appointed by
and holding office at the pleasure of the Board, each of whom is both a
"non-employee director" as defined by Rule 16b-3 and an "outside director" for
purposes of Section 162(m) of the Code. Appointment of Committee members shall
be effective upon acceptance of appointment.  Committee members may resign at
any time by delivering written notice to the Board.  Vacancies in the Committee
may be filled by the Board.

                 9.2.     Duties and Powers of Committee.  It shall be the duty
of the Committee to conduct the general administration of this Plan in
accordance with its provisions.  The Committee shall have the power to
interpret this Plan and the agreements pursuant to which Options, awards of
Restricted Stock or Deferred Stock, Performance Awards, Stock Appreciation
Rights, Dividend Equivalents or Stock Payments are granted or awarded, and to
adopt such rules for the administration, interpretation, and application of
this Plan as are consistent therewith and to interpret, amend or revoke any
such rules.  Notwithstanding the foregoing, the full Board, acting by a
majority of its members in office, shall conduct the general administration of
the Plan





                                       27
<PAGE>   28



with respect to Options granted to Independent Directors.  Any such grant or
award under this Plan need not be the same with respect to each Optionee,
Grantee or Restricted Stockholder.  Any such interpretations and rules with
respect to Incentive Stock Options shall be consistent with the provisions of
Section 422 of the Code.  In its absolute discretion, the Board may at any time
and from time to time exercise any and all rights and duties of the Committee
under this Plan except with respect to matters which under Rule 16b-3 or
Section 162(m) of the Code, or any regulations or rules issued thereunder, are
required to be determined in the sole discretion of the Committee.

                 9.3.     Majority Rule; Unanimous Written Consent.  The
Committee shall act by a majority of its members in attendance at a meeting at
which a quorum is present or by a memorandum or other written instrument signed
by all members of the Committee.

                 9.4.     Compensation; Professional Assistance; Good Faith
Actions.  Members of the Committee shall receive such compensation, if any, for
their services as members as may be determined by the Board.  All expenses and
liabilities which members of the Committee incur in connection with the
administration of this Plan shall be borne by the Company.  The Committee may,
with the approval of the Board, employ attorneys, consultants, accountants,
appraisers, brokers, or other persons.  The Committee, the Company and the
Company's officers and Directors shall be entitled to rely upon the advice,
opinions or valuations of any such persons.  All actions taken and all
interpretations and determinations made by the Committee or the Board in good
faith shall be final and binding upon all Optionees, Grantees, Restricted
Stockholders, the Company and all other interested persons.  No members of the
Committee or Board shall be personally liable for any action, determination or
interpretation made in good faith with respect to this Plan, Options, awards of
Restricted Stock or Deferred Stock, Performance Awards, Stock Appreciation
Rights, Dividend Equivalents or Stock Payments, and all members of the
Committee and the Board shall be fully protected by the Company in respect of
any such action, determination or interpretation.

                                   ARTICLE X.

                            MISCELLANEOUS PROVISIONS

                 10.1.    Not Transferable.  Options, Restricted Stock awards,
Deferred Stock awards, Performance Awards, Stock Appreciation Rights, Dividend
Equivalents or Stock Payments under this Plan may not be sold, pledged,
assigned, or transferred in any manner other than by will or the laws of
descent and distribution or pursuant to a QDRO, unless and until such rights or
awards have been exercised, or the shares underlying such rights or awards have
been issued, and all restrictions applicable to such shares have lapsed.  No
Option, Restricted Stock award, Deferred Stock award, Performance Award, Stock
Appreciation Right, Dividend Equivalent or Stock Payment or interest or right
therein shall be liable for the debts, contracts or engagements of the
Optionee, Grantee or Restricted Stockholder or his successors in interest or
shall be subject to disposition by transfer, alienation, anticipation, pledge,
encumbrance, assignment or any other means whether such disposition be
voluntary or involuntary or by





                                       28
<PAGE>   29



operation of law by judgment, levy, attachment, garnishment or any other legal
or equitable proceedings (including bankruptcy), and any attempted disposition
thereof shall be null and void and of no effect, except to the extent that such
disposition is permitted by the preceding sentence.

                 During the lifetime of the Optionee or Grantee, only he may
exercise an Option or other right or award (or any portion thereof) granted to
him under the Plan, unless it has been disposed of pursuant to a QDRO.  After
the death of the Optionee or Grantee, any exercisable portion of an Option or
other right or award may, prior to the time when such portion becomes
unexercisable under the Plan or the applicable Stock Option Agreement or other
agreement, be exercised by his personal representative or by any person
empowered to do so under the deceased Optionee's or Grantee's will or under the
then applicable laws of descent and distribution.

                 10.2.    Amendment, Suspension or Termination of this Plan.
Except as otherwise provided in this Section 10.2, this Plan may be wholly or
partially amended or otherwise modified, suspended or terminated at any time or
from time to time by the Board or the Committee.  However, without approval of
the Company's stockholders given within twelve months before or after the
action by the Board or the Committee, no action of the Board or the Committee
may, except as provided in Section 10.3, increase the limits imposed in Section
2.1 on the maximum number of shares which may be issued under this Plan or
increase the Award Limit, and no action of the Board or the Committee may be
taken that would otherwise require stockholder approval as a matter of
applicable law, regulation or rule.  No amendment, suspension or termination of
this Plan shall, without the consent of the holder of Options, Restricted Stock
awards, Deferred Stock awards, Performance Awards, Stock Appreciation Rights,
Dividend Equivalents or Stock Payments, alter or impair any rights or
obligations under any Options, Restricted Stock awards, Deferred Stock awards,
Performance Awards, Stock Appreciation Rights, Dividend Equivalents or Stock
Payments theretofore granted or awarded, unless the award itself otherwise
expressly so provides.  No Options, Restricted Stock, Deferred Stock,
Performance Awards, Stock Appreciation Rights, Dividend Equivalents or Stock
Payments may be granted or awarded during any period of suspension or after
termination of this Plan, and in no event may any Incentive Stock Option be
granted under this Plan after the first to occur of the following events:

                 (a)      The expiration of ten years from the date the Plan is
adopted by the Board; or

                 (b)      The expiration of ten years from the date the Plan is
approved by the Company's stockholders under Section 10.4.

                 10.3.    Changes in Common Stock or Assets of the Company,
Acquisition or Liquidation of the Company and Other Corporate Events.

                 (a)      Subject to Section 10.3(d), in the event that the
Committee (or the Board, in the case of Options granted to Independent
Directors) determines that any dividend or other distribution (whether in the
form of cash, Common Stock, other securities, or other property),
recapitalization, reclassification, stock split, reverse stock split,
reorganization, merger,





                                       29
<PAGE>   30



consolidation, split-up, spin-off, combination, repurchase, liquidation,
dissolution, or sale, transfer, exchange or other disposition of all or
substantially all of the assets of the Company (including, but not limited to,
a Corporate Transaction), or exchange of Common Stock or other securities of
the Company, issuance of warrants or other rights to purchase Common Stock or
other securities of the Company, or other similar corporate transaction or
event, in the Committee's sole discretion (or in the case of Options granted to
Independent Directors, the Board's sole discretion), affects the Common Stock
such that an adjustment is determined by the Committee to be appropriate in
order to prevent dilution or enlargement of the benefits or potential benefits
intended to be made available under the Plan or with respect to an Option,
Restricted Stock award, Performance Award, Stock Appreciation Right, Dividend
Equivalent, Deferred Stock award or Stock Payment, then the Committee (or the
Board, in the case of Options granted to Independent Directors) shall, in such
manner as it may deem equitable, adjust any or all of

                          (i)     the number and kind of shares of Common Stock
         (or other securities or property) with respect to which Options,
         Performance Awards, Stock Appreciation Rights, Dividend Equivalents or
         Stock Payments may be granted under the Plan, or which may be granted
         as Restricted Stock or Deferred Stock (including, but not limited to,
         adjustments of the limitations in Section 2.1 on the maximum number
         and kind of shares which may be issued and adjustments of the Award
         Limit),

                          (ii)    the number and kind of shares of Common Stock
         (or other securities or property) subject to outstanding Options,
         Performance Awards, Stock Appreciation Rights, Dividend Equivalents,
         or Stock Payments, and in the number and kind of shares of outstanding
         Restricted Stock or Deferred Stock, and

                          (iii)   the grant or exercise price with respect to
         any Option, Performance Award, Stock Appreciation Right, Dividend
         Equivalent or Stock Payment.

                 (b)      Subject to Section 10.3(d), in the event of any
Corporate Transaction or other transaction or event described in Section
10.3(a) or any unusual or nonrecurring transactions or events affecting the
Company, any affiliate of the Company, or the financial statements of the
Company or any affiliate, or of changes in applicable laws, regulations, or
accounting principles, the Committee (or the Board, in the case of Options
granted to Independent Directors) in its discretion is hereby authorized to
take any one or more of the following actions whenever the Committee (or the
Board, in the case of Options granted to Independent Directors) determines that
such action is appropriate or desirable:

                          (i)     In its sole and absolute discretion, and on
         such terms and conditions as it deems appropriate, the Committee (or
         the Board, in the case of Options granted to Independent Directors)
         may provide, either by the terms of the agreement or by action taken
         prior to the occurrence of such transaction or event and either
         automatically or upon the optionee's request, for either the purchase
         of any such Option, Performance Award, Stock Appreciation Right,
         Dividend Equivalent, or Stock Payment, or any





                                       30
<PAGE>   31

         Restricted Stock or Deferred Stock for an amount of cash equal to the
         amount that could have been attained upon the exercise of such option,
         right or award or realization of the optionee's rights had such
         option, right or award been currently exercisable or payable or fully
         vested or the replacement of such option, right or award with other
         rights or property selected by the Committee (or the Board, in the
         case of Options granted to Independent Directors) in its sole
         discretion;

                          (ii)    In its sole and absolute discretion, the
         Committee (or the Board, in the case of Options granted to Independent
         Directors) may provide, either by the terms of such Option,
         Performance Award, Stock Appreciation Right, Dividend Equivalent, or
         Stock Payment, or Restricted Stock or Deferred Stock or by action
         taken prior to the occurrence of such transaction or event that it
         cannot vest, be exercised or become payable after such event;

                          (iii)   In its sole and absolute discretion, and on
         such terms and conditions as it deems appropriate, the Committee (or
         the Board, in the case of Options granted to Independent Directors)
         may provide, either by the terms of such Option, Performance Award,
         Stock Appreciation Right, Dividend Equivalent, or Stock Payment, or
         Restricted Stock or Deferred Stock or by action taken prior to the
         occurrence of such transaction or event, that for a specified period
         of time prior to such transaction or event, such option, right or
         award shall be exercisable as to all shares covered thereby,
         notwithstanding anything to the contrary in (i) Section 4.4 or (ii)
         the provisions of such Option, Performance Award, Stock Appreciation
         Right, Dividend Equivalent, or Stock Payment, or Restricted Stock or
         Deferred Stock;

                          (iv)    In its sole and absolute discretion, and on
         such terms and conditions as it deems appropriate, the Committee (or
         the Board, in the case of Options granted to Independent Directors)
         may provide, either by the terms of such Option, Performance Award,
         Stock Appreciation Right, Dividend Equivalent, or Stock Payment, or
         Restricted Stock or Deferred Stock or by action taken prior to the
         occurrence of such transaction or event, that upon such event, such
         option, right or award be assumed by the successor or survivor
         corporation, or a parent or subsidiary thereof, or shall be
         substituted for by similar options, rights or awards covering the
         stock of the successor or survivor corporation, or a parent or
         subsidiary thereof, with appropriate adjustments as to the number and
         kind of shares and prices;

                          (v)     In its sole and absolute discretion, and on
         such terms and conditions as it deems appropriate, the Committee (or
         the Board, in the case of Options granted to Independent Directors)
         may make adjustments in the number and type of shares of Common Stock
         (or other securities or property) subject to outstanding Options,
         Performance Awards, Stock Appreciation Rights, Dividend Equivalents,
         or Stock Payments, and in the number and kind of outstanding
         Restricted Stock or Deferred Stock and/or in the terms and conditions
         of (including the grant or exercise price), and the





                                       31
<PAGE>   32



         criteria included in, outstanding options, rights and awards and
         options, rights and awards which may be granted in the future; and

                          (vi)    In its sole and absolute discretion, and on
         such terms and conditions as it deems appropriate, the Committee may
         provide either by the terms of a Restricted Stock award or Deferred
         Stock award or by action taken prior to the occurrence of such event
         that, for a specified period of time prior to such event, the
         restrictions imposed under a Restricted Stock Agreement or a Deferred
         Stock Agreement upon some or all shares of Restricted Stock or
         Deferred Stock may be terminated, and, in the case of Restricted
         Stock, some or all shares of such Restricted Stock may cease to be
         subject to repurchase under Section 6.6 or forfeiture under Section
         6.5 after such event.

                 (c)      Subject to Section 10.3(d) and 10.8, the Committee
(or the Board, in the case of Options granted to Independent Directors) may, in
its discretion, include such further provisions and limitations in any Option,
Performance Award, Stock Appreciation Right, Dividend Equivalent, or Stock
Payment, or Restricted Stock or Deferred Stock agreement or certificate, as it
may deem equitable and in the best interests of the Company.

                 (d)      With respect to Options, Restricted Stock, Deferred
Stock, Stock Appreciation Rights and performance or incentive awards described
in Article VII which are granted to Section 162(m) Participants and are
intended to qualify as performance-based compensation under Section
162(m)(4)(C), no adjustment or action described in this Section 10.3 or in any
other provision of the Plan shall be authorized to the extent that such
adjustment or action would cause the Plan to violate Section 422(b)(1) of the
Code or would cause such option or stock appreciation right to fail to so
qualify under Section 162(m)(4)(C), as the case may be, or any successor
provisions thereto.  Furthermore, no such adjustment or action shall be
authorized to the extent such adjustment or action would result in short-swing
profits liability under Section 16 or violate the exemptive conditions of Rule
16b-3 unless the Committee (or the Board, in the case of Options granted to
Independent Directors) determines that the option or other award is not to
comply with such exemptive conditions.  The number of shares of Common Stock
subject to any option, right or award shall always be rounded to the next whole
number.

                 10.4.    Approval of Plan by Stockholders.  This Plan will be
submitted for the approval of the Company's stockholders within twelve months
after the date of the Board's initial adoption of this Plan.  Options,
Performance Awards, Stock Appreciation Rights, Dividend Equivalents or Stock
Payments may be granted and Restricted Stock or Deferred Stock may be awarded
prior to such stockholder approval, provided that such Options, Performance
Awards, Stock Appreciation Rights, Dividend Equivalents or Stock Payments shall
not be exercisable and such Restricted Stock or Deferred Stock shall not vest
prior to the time when this Plan is approved by the stockholders, and provided
further that if such approval has not been obtained at the end of said
twelve-month period, all Options, Performance Awards, Stock Appreciation
Rights, Dividend Equivalents or Stock Payments previously granted and all
Restricted Stock or Deferred Stock previously awarded under this Plan shall
thereupon be canceled and become null and void.





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                 10.5.    Tax Withholding.  The Company shall be entitled to
require payment in cash or deduction from other compensation payable to each
Optionee, Grantee or Restricted Stockholder of any sums required by federal,
state or local tax law to be withheld with respect to the issuance, vesting,
exercise or payment of any Option, Restricted Stock, Deferred Stock,
Performance Award, Stock Appreciation Right, Dividend Equivalent or Stock
Payment.  The Committee (or the Board, in the case of Options granted to
Independent Directors) may in its discretion and in satisfaction of the
foregoing requirement allow such Optionee, Grantee or Restricted Stockholder to
elect to have the Company withhold shares of Common Stock otherwise issuable
under such Option or other award (or allow the return of shares of Common
Stock) having a Fair Market Value equal to the sums required to be withheld.

                 10.6.    Loans.  The Committee may, in its discretion, extend
one or more loans to key Employees in connection with the exercise or receipt
of an Option, Performance Award, Stock Appreciation Right, Dividend Equivalent
or Stock Payment granted under this Plan, or the issuance of Restricted Stock
or Deferred Stock awarded under this Plan.  The terms and conditions of any
such loan shall be set by the Committee.

                 10.7.    Forfeiture Provisions.  Pursuant to its general
authority to determine the terms and conditions applicable to awards under the
Plan, the Committee (or the Board, in the case of Options granted to
Independent Directors) shall have the right (to the extent consistent with the
applicable exemptive conditions of Rule 16b-3) to provide, in the terms of
Options or other awards made under the Plan, or to require the recipient to
agree by separate written instrument, that (i) any proceeds, gains or other
economic benefit actually or constructively received by the recipient upon any
receipt or exercise of the award, or upon the receipt or resale of any Common
Stock underlying such award, must be paid to the Company, and (ii) the award
shall terminate and any unexercised portion of such award (whether or not
vested) shall be forfeited, if (a) a Termination of Employment, Termination of
Consultancy or Termination of Directorship occurs prior to a specified date, or
within a specified time period following receipt or exercise of the award, or
(b) the recipient at any time, or during a specified time period, engages in
any activity in competition with the Company, or which is inimical, contrary or
harmful to the interests of the Company, as further defined by the Committee
(or the Board, as applicable).

                 10.8.    Limitations Applicable to Section 16 Persons and
Performance-Based Compensation.  Notwithstanding any other provision of this
Plan, this Plan, and any Option, Performance Award, Stock Appreciation Right,
Dividend Equivalent or Stock Payment granted, or Restricted Stock or Deferred
Stock awarded, to any individual who is then subject to Section 16 of the
Exchange Act, shall be subject to any additional limitations set forth in any
applicable exemptive rule under Section 16 of the Exchange Act (including any
amendment to Rule 16b-3 of the Exchange Act) that are requirements for the
application of such exemptive rule.  To the extent permitted by applicable law,
the Plan, Options, Performance Awards, Stock Appreciation Rights, Dividend
Equivalents, Stock Payments, Restricted Stock and Deferred Stock granted or
awarded hereunder shall be deemed amended to the extent necessary to conform to
such applicable exemptive rule. Furthermore, notwithstanding any other
provision of this Plan, any





                                       33
<PAGE>   34



Option, Stock Appreciation Right or performance or incentive award described in
Article VII which is granted to a Section 162(m) Participant and is intended to
qualify as performance-based compensation as described in Section 162(m)(4)(C)
of the Code shall be subject to any additional limitations set forth in Section
162(m) of the Code (including any amendment to Section 162(m) of the Code) or
any regulations or rulings issued thereunder that are requirements for
qualification as performance-based compensation as described in Section
162(m)(4)(C) of the Code, and this Plan shall be deemed amended to the extent
necessary to conform to such requirements.

                 10.9.    Effect of Plan Upon Options and Compensation Plans.
The adoption of this Plan shall not affect any other compensation or incentive
plans in effect for the Company or any Subsidiary.  Nothing in this Plan shall
be construed to limit the right of the Company (i) to establish any other forms
of incentives or compensation for Employees, Directors or Consultants of the
Company or any Subsidiary or (ii) to grant or assume options or other rights or
awards otherwise than under this Plan in connection with any proper corporate
purpose including but not by way of limitation, the grant or assumption of
options in connection with the acquisition by purchase, lease, merger,
consolidation or otherwise, of the business, stock or assets of any
corporation, partnership, limited liability company, firm or association.

                 10.10.   Compliance with Laws.  This Plan, the granting and
vesting of Options, Restricted Stock awards, Deferred Stock awards, Performance
Awards, Stock Appreciation Rights, Dividend Equivalents or Stock Payments under
this Plan and the issuance and delivery of shares of Common Stock and the
payment of money under this Plan or under Options, Performance Awards, Stock
Appreciation Rights, Dividend Equivalents or Stock Payments granted or
Restricted Stock or Deferred Stock awarded hereunder are subject to compliance
with all applicable federal and state laws, rules and regulations (including
but not limited to state and federal securities law and federal margin
requirements) and to such approvals by any listing, regulatory or governmental
authority as may, in the opinion of counsel for the Company, be necessary or
advisable in connection therewith.  Any securities delivered under this Plan
shall be subject to such restrictions, and the person acquiring such securities
shall, if requested by the Company, provide such assurances and representations
to the Company as the Company may deem necessary or desirable to assure
compliance with all applicable legal requirements.  To the extent permitted by
applicable law, the Plan, Options, Restricted Stock awards, Deferred Stock
awards, Performance Awards, Stock Appreciation Rights, Dividend Equivalents or
Stock Payments granted or awarded hereunder shall be deemed amended to the
extent necessary to conform to such laws, rules and regulations.

                 10.11.   Titles.  Titles are provided herein for convenience
only and are not to serve as a basis for interpretation or construction of this
Plan.

                 10.12.   Governing Law.  This Plan and any agreements
hereunder shall be administered, interpreted and enforced under the internal
laws of the State of California without regard to conflicts of laws thereof.





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                 I hereby certify that the foregoing Plan was duly adopted by
the Board of Directors of AMB Property Corporation on November __, 1997.

                 Executed on this ____ day of November, 1997.



                                                  _____________________________
                                                   S. Davis Carniglia
                                                   Secretary

























