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                                                                    EXHIBIT 10.2
 
                            BOSTON PROPERTIES, INC.

                      1997 STOCK OPTION AND INCENTIVE PLAN
                                        

SECTION 1.  GENERAL PURPOSE OF THE PLAN; DEFINITIONS
            ----------------------------------------

     The name of the plan is the Boston Properties, Inc. 1997 Stock Option and
Incentive Plan (the "Plan").  The purpose of the Plan is to encourage and enable
the officers, employees, Independent Directors and other key persons of Boston
Properties, Inc. (the "Company"), and the employees and other key persons of
Boston Properties Limited Partnership (the "Operating Partnership") and the
Company's other Subsidiaries, upon whose judgment, initiative and efforts the
Company largely depends for the successful conduct of its business to acquire a
proprietary interest in the Company.  It is anticipated that providing such
persons with a direct stake in the Company's welfare will assure a closer
identification of their interests with those of the Company, thereby stimulating
their efforts on the Company's behalf and strengthening their desire to remain
with the Company.

     The following terms shall be defined as set forth below:

     "Act" means the Securities Exchange Act of 1934, as amended from time to
time.

     "Administrator" is defined in Section 2(a).

     "Award" or "Awards," except where referring to a particular category of
grant under the Plan, shall include Incentive Stock Options, Non-Qualified Stock
Options, Restricted Stock Awards, Deferred Stock Awards, Unrestricted Stock
Awards, Performance Share Awards, Dividend Equivalent Rights and Other Stock-
Based Awards.

     "Board" means the Board of Directors of the Company as constituted from
time to time.

     "Change of Control" is defined in Section 16.

     "Code" means the Internal Revenue Code of 1986, as amended from time to
time, and any successor Code, and related rules, regulations and
interpretations.

     "Committee" means the Committee of the Board referred to in Section 2.

     "Company" means Boston Properties, Inc., a Delaware corporation, and any
successor thereto.

     "Deferred Stock Award" means Awards granted pursuant to Section 7.

     "Dividend Equivalent Right" means Awards granted pursuant to Section 10.
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     "Effective Date" means the date on which the Plan is initially approved by
stockholders as set forth in Section 18.

     "Fair Market Value" on any given date means the last reported sale price at
which Stock is traded on such date or, if no Stock is traded on such date, the
next preceding date on which Stock was traded, as reflected on the principal
stock exchange or, if applicable, any other national stock exchange on which the
Stock is traded or admitted to trading. Notwithstanding the foregoing, the Fair
Market Value on the first day of the Company's initial public offering of Stock
shall be the initial public offering price as set forth in the final prospectus
for the Company's initial public offering.

     "Incentive Stock Option" means any Stock Option that qualifies as and is
designated in writing in the related Option agreement as constituting an
"incentive stock option" as defined in Section 422 of the Code.

     "Independent Director" means a member of the Board who is not also an
employee of the Company or any Subsidiary.

     "Non-Qualified Stock Option" means any Stock Option that is not an
Incentive Stock Option.

     "Operating Partnership" means Boston Properties Limited Partnership, a
Delaware limited partnership, and any successor thereto.

     "Option" or "Stock Option" means any option to purchase shares of Stock
granted pursuant to Section 5.

     "Other Stock-Based Award" means Awards granted pursuant to Section 11.

     "Performance Share Award" means Awards granted pursuant to Section 9.

     "Restricted Stock Award" means Awards granted pursuant to Section 6.

     "Stock" means the Common Stock, par value $.01 per share, of the Company,
subject to adjustments pursuant to Section 3.

     "Subsidiary" means any corporation or other entity (other than the Company)
in any unbroken chain of corporations or other entities beginning with the
Company if each of the corporations or entities (other than the last corporation
or entity in the unbroken chain) owns stock or other interests possessing 50
percent or more of the economic interest or the total combined voting power of
all classes of stock or other interests in one of the other corporations or
entities in the chain.

     "Unrestricted Stock Award" means any Award granted pursuant to Section 8.

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SECTION 2.  ADMINISTRATION OF PLAN; ADMINISTRATOR AUTHORITY TO SELECTAND
            ---------------------------------------------------------
            PARTICIPANTS AND DETERMINE AWARDS
            ---------------------------------

     (a) Committee.  The Plan shall be administered by either the Board or a
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committee of not less than two Independent Directors (in either case, the
"Administrator").  Each member of the Committee shall be a "non-employee
director" within the meaning of Rule 16b-3(b)(3)(i) promulgated under the Act,
or any successor definition under said rule.  From and after the date the
Company becomes subject to Section 162(m) of the Code with respect to
compensation earned under this Plan, each member of the Committee shall also be
an "outside director" within the meaning of Section 162(m) of the Code and the
regulations promulgated thereunder.

     (b) Powers of Administrator.  The Administrator shall have the power and
         -----------------------                                             
authority to grant Awards consistent with the terms of the Plan, including the
power and authority:

         (i) to select the individuals to whom Awards may from time to time be
     granted;

         (ii) to determine the time or times of grant, and the extent, if any,
     of Incentive Stock Options, Non-Qualified Stock Options, Restricted Stock
     Awards, Deferred Stock Awards, Unrestricted Stock Awards, Performance Share
     Awards, Dividend Equivalent Rights and Other Stock-Based Awards, or any
     combination of the foregoing, granted to any one or more participants;

         (iii) to determine the number of shares of Stock to be covered by any
     Award;

          (iv)  to determine and modify from time to time the terms and
     conditions, including restrictions, not inconsistent with the terms of the
     Plan, of any Award, which terms and conditions may differ among individual
     Awards and participants, and to approve the form of written instruments
     evidencing the Awards;

          (v) to accelerate at any time the exercisability or vesting of all or
     any portion of any Award;

          (vi)  subject to the provisions of Section 5(a)(iii), to extend at any
     time the post-termination period in which Stock Options may be exercised;

          (vii) to determine at any time whether, to what extent, and under what
     circumstances Stock and other amounts payable with respect to an Award
     shall be deferred either automatically or at the election of the
     participant and whether and to what extent the Company shall pay or credit
     amounts constituting deemed interest (at rates determined by the
     Administrator) or dividends or deemed dividends on such deferrals; and

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          (viii) at any time to adopt, alter and repeal such rules, guidelines
     and practices for administration of the Plan and for its own acts and
     proceedings as it shall deem advisable; to interpret the terms and
     provisions of the Plan and any Award (including related written
     instruments); to make all determinations it deems advisable for the
     administration of the Plan; to decide all disputes arising in connection
     with the Plan; and to otherwise supervise the administration of the Plan.

     All decisions and interpretations of the Administrator shall be made in the
Administrator's sole and absolute discretion and shall be final and binding on
all persons, including the Company and Plan participants.

     (c) Delegation of Authority to Grant Awards.  The Administrator, in its
         ---------------------------------------                            
discretion, may delegate to the Chief Executive Officer of the Company all or
part of the Administrator's authority and duties with respect to Awards,
including the granting thereof, to individuals who are not subject to the
reporting and other provisions of Section 16 of the Act or "covered employees"
within the meaning of Section 162(m) of the Code.  Any such delegation by the
Administrator shall include a limitation as to the amount of Awards that may be
awarded during the period of the delegation and shall contain guidelines as to
the determination of the exercise price of any Option, the conversion ratio or
price of other Awards and the vesting criteria.  The Administrator may revoke or
amend the terms of a delegation at any time but such action shall not invalidate
any prior actions of the Administrator's delegate or delegates that were
consistent with the terms of the Plan.

SECTION3.  STOCK ISSUABLE UNDER THE PLAN; RECAPITALIZATIONS; MERGERS; SUBSTITUTE
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           AWARDS
           ------

     (a) Stock Issuable.  The maximum number of shares of Stock reserved and
         --------------                                                     
available for issuance under the Plan shall be such aggregate number of shares
of Stock as does not exceed the sum of (i) 4,883,000 shares; plus (ii) as of
January 1, 1998, 9.5 percent of any net increase since the Company's initial
public offering in the total number of shares of Stock actually outstanding
(assuming all units of partnership interests in the Operating Partnership that
are subject to redemption rights are converted into Stock); plus (iii) as of
each January 1 thereafter, 9.5 percent of any net increase since the preceding
January 1 in the total number of shares of Stock actually outstanding (assuming
all units of partnership interests in the Operating Partnership that are subject
to redemption rights are converted into Stock). Notwithstanding the foregoing,
the maximum number of shares of Stock for which Incentive Stock Options may be
granted under the Plan shall not exceed 4,883,000 shares, reduced by the
aggregate number of shares subject to outstanding Awards granted under the Plan.
For purposes of this limitation, if any portion of an Award is forfeited,
cancelled, reacquired by the Company, satisfied without the issuance of Stock or
otherwise terminated, the shares of Stock underlying such portion of the Award
shall be added back to the shares of Stock available for issuance under the
Plan.  Subject to such overall limitation, shares of Stock may be issued up to
such maximum number pursuant to any type or types of Award; provided, however,
that on and after the date the Company is first subject to the provisions of
Section 162(m) of the Code

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with respect to grants made or compensation earned under the Plan, Stock Options
with respect to no more than 1,500,000 shares of Stock may be granted to any one
individual participant during any one calendar year period. The shares available
for issuance under the Plan may be authorized but unissued shares of Stock or
shares of Stock reacquired by the Company.

     (b) Recapitalizations.  If, through or as a result of any merger,
         -----------------                                            
consolidation, sale of all or substantially all of the assets of the Company,
reorganization, recapitalization, reclassification, stock dividend, stock split,
reverse stock split or other similar transaction, the outstanding shares of
Stock are increased or decreased or are exchanged for a different number or kind
of shares or other securities of the Company, or additional shares or new or
different shares or other securities of the Company or other non-cash assets are
distributed with respect to such shares of Stock or other securities, the
Administrator may make an appropriate or proportionate adjustment in (i) the
maximum number of shares reserved for issuance under the Plan, (ii) the number
of Stock Options that can be granted to any one individual participant, (iii)
the number and kind of shares or other securities subject to any then
outstanding Awards under the Plan, and (iv) the price for each share subject to
any then outstanding Stock Options under the Plan, without changing the
aggregate exercise price (i.e., the exercise price multiplied by the number of
Stock Options) as to which such Stock Options remain exercisable. The adjustment
by the Administrator shall be final, binding and conclusive.  No fractional
shares of Stock shall be issued under the Plan resulting from any such
adjustment, but the Administrator in its discretion may make a cash payment in
lieu of fractional shares.

     (c) Mergers.  In contemplation of and subject to the consummation of a
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consolidation or merger or sale of all or substantially all of the assets of the
Company in which outstanding shares of Stock are exchanged for securities, cash
or other property of an unrelated corporation or business entity or in the event
of a liquidation of the Company (in each case, a "Transaction"), the Board, or
the board of directors of any corporation assuming the obligations of the
Company, may, in its discretion, take any one or more of the following actions,
as to outstanding Awards:  (i) provide that such Awards shall be assumed or
equivalent awards shall be substituted, by the acquiring or succeeding
corporation (or an affiliate thereof), and/or (ii) upon written notice to the
participants, provide that all Awards will terminate immediately prior to the
consummation of the Transaction.  In the event that, pursuant to clause (ii)
above, Awards will terminate immediately prior to the consummation of the
Transaction, all vested Awards, other than Options, shall be fully settled in
cash or in kind at such appropriate consideration as determined by the
Administrator in its sole discretion after taking into account the consideration
payable per share of Stock pursuant to the business combination (the "Merger
Price") and all Stock Options shall be fully settled, in cash or in kind, in an
amount equal to the difference between (A) the Merger Price times the number of
shares of Stock subject to such outstanding Stock Options (to the extent then
exercisable at prices not in excess of the Merger Price) and (B) the aggregate
exercise price of all such outstanding Stock Options; provided, however, that
each participant shall be permitted, within a specified period determined by the
Administrator prior to the consummation of the Transaction, to exercise all
outstanding Stock Options, including those that are not then exercisable,
subject to the consummation of the Transaction.

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     (d) Substitute Awards.  The Administrator may grant Awards under the Plan
         -----------------                                                    
in substitution for stock and stock based awards held by employees of another
corporation who become employees of the Company or a Subsidiary as the result of
a merger or consolidation of the employing corporation with the Company or a
Subsidiary or the acquisition by the Company or a Subsidiary of property or
stock of the employing corporation.  The Administrator may direct that the
substitute awards be granted on such terms and conditions as the Administrator
considers appropriate in the circumstances.

SECTION 4.  ELIGIBILITY
            -----------

     Participants in the Plan will be such full or part-time officers and other
employees, Independent Directors and key persons of the Company, the Operating
Partnership and the Company's other Subsidiaries who are responsible for or
contribute to the management, growth or profitability of the Company, the
Operating Partnership and the Company's other Subsidiaries as are selected from
time to time by the Administrator in its sole discretion.

SECTION 5.  STOCK OPTIONS
            -------------

     Any Stock Option granted under the Plan shall be in such form as the
Administrator may from time to time approve.

     Stock Options granted under the Plan may be either Incentive Stock Options
or Non-Qualified Stock Options.  Incentive Stock Options may be granted only to
employees of the Company or any Subsidiary that is a "subsidiary corporation"
within the meaning of Section 424(f) of the Code.  To the extent that any Option
does not qualify as an Incentive Stock Option, it shall be deemed a Non-
Qualified Stock Option.

     No Incentive Stock Option shall be granted under the Plan after June 10,
2007.

     (a) Stock Options Granted to Employees and Key Persons.  The Administrator
         --------------------------------------------------                    
in its discretion may grant Stock Options to eligible employees and key persons
of the Company or any Subsidiary.  Stock Options granted pursuant to this
Section 5(a) shall be subject to the following terms and conditions and shall
contain such additional terms and conditions, not inconsistent with the terms of
the Plan, as the Administrator shall deem desirable.  If the Administrator so
determines, Stock Options may be granted in lieu of cash compensation at the
participant's election, subject to such terms and conditions as the
Administrator may establish, as well as in addition to other compensation.

          (i) Exercise Price.  The exercise price per share for the Stock
              --------------                                             
     covered by a Stock Option granted pursuant to this Section 5(a) shall be
     determined by the Administrator at the time of grant but shall not be less
     than 100 percent of the Fair Market Value on the date of grant in the case
     of Incentive Stock Options, and 25 percent of the Fair Market Value on the
     date of grant, in the case of Non-Qualified Stock Options.  If an employee
     owns or is deemed to own (by reason of the attribution

                                       6
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     rules of Section 424(d) of the Code) more than 10 percent of the combined
     voting power of all classes of stock of the Company or any parent or
     subsidiary corporation and an Incentive Stock Option is granted to such
     employee, the option price of such Incentive Stock Option shall be not less
     than 110 percent of the Fair Market Value on the grant date.

          (ii)  Option Term.  The term of each Stock Option shall be fixed by 
               -----------                                                      
     the Administrator, but no Incentive Stock Option shall be exercisable more
     than ten years after the date the option is granted. If an employee owns or
     is deemed to own (by reason of the attribution rules of Section 424(d) of
     the Code) more than 10 percent of the combined voting power of all classes
     of stock of the Company or any parent or subsidiary corporation and an
     Incentive Stock Option is granted to such employee, the term of such option
     shall be no more than five years from the date of grant.

          (iii)  Exercisability; Rights of a Stockholder.  Stock Options shall
                 ---------------------------------------                      
     become exercisable at such time or times, whether or not in installments,
     as shall be determined by the Administrator at or after the grant date;
     provided, however, that Stock Options granted in lieu of compensation shall
     be exercisable in full as of the grant date unless the Administrator
     otherwise provides in the Award agreement.  The Administrator may at any
     time accelerate the exercisability of all or any portion of any Stock
     Option.  An optionee shall have the rights of a stockholder only as to
     shares acquired upon the exercise of a Stock Option and not as to
     unexercised Stock Options.

          (iv)  Method of Exercise.  Stock Options may be exercised in whole or
                ------------------                                             
     in part, by giving written notice of exercise to the Company, specifying
     the number of shares to be purchased.  Payment of the purchase price may be
     made by one or more of the following methods to the extent provided in the
     Option Award agreement:

               (A) In cash, by certified or bank check or other instrument
          acceptable to the Administrator;

               (B) In the form of shares of Stock that are not then subject to
          restrictions under any Company plan and that have been beneficially
          owned by the optionee for at least six months, if permitted by the
          Administrator in its discretion.  Such surrendered shares shall be
          valued at Fair Market Value on the exercise date;

               (C) By the optionee delivering to the Company a properly executed
          exercise notice together with irrevocable instructions to a broker to
          promptly deliver to the Company cash or a check payable and acceptable
          to the Company to pay the purchase price; provided that in the event
          the optionee chooses to pay the purchase price as so provided, the
          optionee and the broker shall comply with such procedures and enter
          into such agreements of indemnity and other

                                       7
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          agreements as the Administrator shall prescribe as a condition of such
          payment procedure; or

               (D) By the optionee delivering to the Company a promissory note
          if the Administrator has expressly authorized the loan of funds to the
          optionee for the purpose of enabling or assisting the optionee to
          effect the exercise of his Stock Option; provided that at least so
          much of the exercise price as represents the par value of the Stock
          shall be paid other than with a promissory note.

     Payment instruments will be received subject to collection.  The delivery
     of certificates representing the shares of Stock to be purchased pursuant
     to the exercise of a Stock Option will be contingent upon receipt from the
     optionee (or a purchaser acting in his stead in accordance with the
     provisions of the Stock Option) by the Company of the full purchase price
     for such shares and the fulfillment of any other requirements contained in
     the Stock Option or applicable provisions of laws.

          (v) Annual Limit on Incentive Stock Options.  To the extent required
              ---------------------------------------                         
     for "incentive stock option" treatment under Section 422 of the Code, the
     aggregate Fair Market Value (determined as of the time of grant) of the
     shares of Stock with respect to which Incentive Stock Options granted under
     this Plan and any other plan of the Company or its parent and subsidiary
     corporations become exercisable for the first time by an optionee during
     any calendar year shall not exceed $100,000.  To the extent that any Stock
     Option exceeds this limit, it shall constitute a Non-Qualified Stock
     Option.

     (b) Reload Options.  At the discretion of the Administrator and subject to
         --------------                                                        
such restrictions, terms and conditions as the Administrator may establish,
Options granted under the Plan may include a "reload" feature pursuant to which
an optionee exercising an option by the delivery of a number of shares of Stock
in accordance with Section 5(a)(iv)(B) hereof would automatically be granted an
additional Option (with an exercise price equal to the Fair Market Value of the
Stock on the date the additional Option is granted and with such other terms as
the Administrator may provide) to purchase that number of shares of Stock equal
to the number delivered to exercise the original Option with an Option term
equal to the remainder of the original Option term unless the Administrator
otherwise determines in the Award agreement for the original Option grant.

     (c) Stock Options Granted to Independent Directors.
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          (i)  Automatic Grant of Options.
               -------------------------- 

               (A) Each person who is an Independent Director on the effective
     date of the Company's initial public offering shall be granted on such date
     a Non-Qualified Stock Option to acquire 10,000 shares of Stock.  The
     exercise price per share for the Stock covered by such Non-Qualified Stock
     Option shall 

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<PAGE>
 
     be the initial public offering price as set forth in the final prospectus
     for the Company's initial public offering.

               (B) Each Independent Director who is first elected to serve as a
     Director after the effective date of the Company's initial public offering
     shall be granted, on the fifth business day after his election, a Non-
     Qualified Stock Option to acquire 10,000 shares of Stock.

               (C) Each Independent Director who is serving as Director of the
     Company on the fifth business day after each annual meeting of
     shareholders, beginning with the 1998 annual meeting, shall automatically
     be granted on such day a Non-Qualified Stock Option to acquire 5,000 shares
     of Stock.

               (D) The exercise price per share for the Stock covered by a Stock
     Option granted under this Section 5(c)(i)(B) and (C) shall be equal to the
     Fair Market Value of the Stock on the date the Stock Option is granted.

               (E) The Board, in its discretion, may grant additional Non-
     Qualified Stock Options to Independent Directors.  Any such grant may vary
     among individual Independent Directors.

          (ii) Exercise; Termination.
               --------------------- 

               (A) Unless otherwise determined by the Administrator, an Option
          granted under Section 5(c)(i)(A), (B) or (C) shall be exercisable with
          respect to 50 percent of the underlying shares on the first
          anniversary of the grant date and shall be exercisable with respect to
          all of the underlying shares on the second anniversary of the grant
          date.  An Option granted under Section 5(c)(i)(E) shall be subject to
          such vesting and exercisability provisions as the Board may provide at
          the time of grant.  An Option issued under this Section 5(c) shall not
          be exercisable after the expiration of ten years from the date of
          grant.

               (B) Options granted under this Section 5(c) may be exercised only
          by written notice to the Company specifying the number of shares to be
          purchased. Payment of the full purchase price of the shares to be
          purchased may be made by one or more of the methods specified in
          Section 5(a)(iv).  An optionee shall have the rights of a stockholder
          only as to shares acquired upon the exercise of a Stock Option and not
          as to unexercised Stock Options.

     (d)  Non-transferability of Options.  No Stock Option shall be transferable
          ------------------------------                                        
by the optionee otherwise than by will or by the laws of descent and
distribution and all Stock Options shall be exercisable, during the optionee's
lifetime, only by the optionee.  Notwithstanding the foregoing, the
Administrator, in its sole discretion, may provide in the Award agreement
regarding a given Option that the optionee may transfer, without consideration
for the transfer,

                                       9
<PAGE>
 
his Non-Qualified Stock Options to members of his family, to trusts for the
benefit of such family members, or to partnerships in which such family members
are the only partners, provided that the transferee agrees in writing with the
Company to be bound by all of the terms and conditions of this Plan and the
applicable option agreement.

     (e) Termination.  Except as may otherwise be provided by the Administrator
         -----------                                                           
either in the Award agreement, or subject to Section 14 below, in writing after
the Award agreement is issued, an optionee's rights in all Stock Options shall
automatically terminate upon the participant's termination of employment (or
cessation of business relationship) with the Company and its Subsidiaries for
any reason.

SECTION 6.  RESTRICTED STOCK AWARDS
            -----------------------

     (a) Nature of Restricted Stock Awards.  A Restricted Stock Award is an
         ---------------------------------                                 
Award entitling the recipient to acquire, at par value or such other higher
purchase price determined by the Administrator, shares of Stock subject to such
restrictions and conditions as the Administrator may determine at the time of
grant ("Restricted Stock").  Conditions may be based on continuing employment
(or other business relationship) and/or achievement of pre-established
performance goals and objectives.  The grant of a Restricted Stock Award is
contingent on the participant executing the Restricted Stock Award agreement.
The terms and conditions of each such agreement shall be determined by the
Administrator, and such terms and conditions may differ among individual Awards
and participants.

     (b) Rights as a Stockholder.  Upon execution of the Restricted Stock Award
         -----------------------                                               
agreement and paying any applicable purchase price, a participant shall have the
rights of a stockholder with respect to the voting of the Restricted Stock,
subject to such terms and conditions as may be contained in the Restricted Stock
Award agreement.  Unless the Administrator shall otherwise determine,
certificates evidencing the Restricted Stock shall remain in the possession of
the Company until such Restricted Stock is vested as provided in Section 6(d)
below, and the participant shall be required, as a condition of the grant, to
deliver to the Company a stock power endorsed in blank.

     (c) Restrictions.  Restricted Stock may not be sold, assigned, transferred,
         ------------                                                           
pledged or otherwise encumbered or disposed of except as specifically provided
herein or in the Restricted Stock Award agreement.  If a participant's
employment (or other business relationship) with the Company and its
Subsidiaries terminates for any reason, the Company shall have the right to
repurchase Restricted Stock that has not vested at the time of termination at
its original purchase price, from the participant or the participant's legal
representative.

     (d) Vesting of Restricted Stock.  The Administrator at the time of grant
         ---------------------------                                         
shall specify the date or dates and/or the attainment of pre-established
performance goals, objectives and other conditions on which the non-
transferability of the Restricted Stock and the Company's right of repurchase or
forfeiture shall lapse.  Subsequent to such date or dates and/or the attainment
of such pre-established performance goals, objectives and other

                                       10
<PAGE>
 
conditions, the shares on which all restrictions have lapsed shall no longer be
Restricted Stock and shall be deemed "vested." Except as may otherwise be
provided by the Administrator either in the Award agreement or, subject to
Section 14 below, in writing after the Award agreement is issued, a
participant's rights in any shares of Restricted Stock that have not vested
shall automatically terminate upon the participant's termination of employment
(or other business relationship) with the Company and its Subsidiaries and such
shares shall be subject to the Company's right of repurchase as provided in
Section 6(c) above.

     (e) Waiver, Deferral and Reinvestment of Dividends.  The Restricted Stock
         ----------------------------------------------                       
Award agreement may require or permit the immediate payment, waiver, deferral or
reinvestment (in the form of additional Restricted Stock) of dividends paid on
the Restricted Stock.

SECTION 7.  DEFERRED STOCK AWARDS
            ---------------------

     (a) Nature of Deferred Stock Awards.   A Deferred Stock Award is an Award
         -------------------------------                                      
of phantom stock units to a participant, subject to restrictions and conditions
as the Administrator may determine at the time of grant.  Conditions may be
based on continuing employment (or other business relationship) and/or
achievement of pre-established performance goals and objectives.  The grant of a
Deferred Stock Award is contingent on the participant executing the Deferred
Stock Award agreement.  The terms and conditions of each such agreement shall be
determined by the Administrator, and such terms and conditions may differ among
individual Awards and participants.  At the end of the deferral period, the
Deferred Stock Award, to the extent vested, shall be paid to the participant in
the form of shares of Stock.

     (b) Election to Receive Deferred Stock Awards in Lieu of Compensation.  The
         -----------------------------------------------------------------      
Administrator may, in its sole discretion, permit a participant to elect to
receive a portion of the cash compensation or Restricted Stock Award otherwise
due to such participant in the form of a Deferred Stock Award.  Any such
election shall be made in writing and shall be delivered to the Company no later
than the date specified by the Administrator and in accordance with rules and
procedures established by the Administrator.  The Administrator shall have the
sole right to determine whether and under what circumstances to permit such
elections and to impose such limitations and other terms and conditions thereon
as the Administrator deems appropriate.

     (c) Rights as a Stockholder.  During the deferral period, a participant
         -----------------------                                            
shall have no rights as a stockholder; provided, however, that the participant
may be credited with Dividend Equivalent Rights with respect to the phantom
stock units underlying his Deferred Stock Award, subject to such terms and
conditions as the Administrator may determine.

     (d) Restrictions.  A Deferred Stock Award may not be sold, assigned,
         ------------                                                    
transferred, pledged or otherwise encumbered or disposed of during the deferral
period.

     (e) Termination.  Except as may otherwise be provided by the Administrator
         -----------                                                           
either in the Award agreement or, subject to Section 14 below, in writing after
the Award agreement

                                       11
<PAGE>
 
is issued, a participant's right in all Deferred Stock Awards that have not
vested shall automatically terminate upon the participant's termination of
employment (or cessation of business relationship) with the Company and its
Subsidiaries for any reason.

SECTION 8.  UNRESTRICTED STOCK AWARDS
            -------------------------

     Grant or Sale of Unrestricted Stock.  The Administrator may, in its sole
     -----------------------------------                                     
discretion, grant (or sell at par value or such other higher purchase price
determined by the Administrator) an Unrestricted Stock Award to any participant
pursuant to which such participant may receive shares of Stock free of any
restrictions ("Unrestricted Stock") under the Plan.  Unrestricted Stock Awards
may be granted or sold as described in the preceding sentence in respect of past
services or other valid consideration, or in lieu of any cash compensation due
to such participant.

SECTION 9.  PERFORMANCE SHARE AWARDS
     ------------------------

     (a) Nature of Performance Share Awards.  A Performance Share Award is an
         ----------------------------------                                  
Award entitling the recipient to acquire shares of Stock upon the attainment of
specified performance goals.  The Administrator may make Performance Share
Awards independent of or in connection with the granting of any other Award
under the Plan.  The Administrator in its sole discretion shall determine
whether and to whom Performance Share Awards shall be made, the performance
goals applicable under each such Award, the periods during which performance is
to be measured, and all other limitations and conditions applicable to the
awarded Performance Shares; provided, however, that the Administrator may rely
on the performance goals and other standards applicable to other performance
unit plans of the Company in setting the standards for Performance Share Awards
under the Plan.

     (b) Rights as a Stockholder.  A participant receiving a Performance Share
         -----------------------                                              
Award shall have the rights of a stockholder only as to shares actually received
by the participant under the Plan and not with respect to shares subject to the
Award but not actually received by the participant.  A participant shall be
entitled to receive a stock certificate evidencing the acquisition of shares of
Stock under a Performance Share Award only upon satisfaction of all conditions
specified in the written instrument evidencing the Performance Share Award (or
in a performance plan adopted by the Administrator).

     (c) Termination.  Except as may otherwise be provided by the Administrator
         -----------                                                           
either in the Award agreement or, subject to Section 14 below, in writing after
the Award agreement is issued, a participant's rights in all Performance Share
Awards shall automatically terminate upon the participant's termination of
employment (or cessation of business relationship) with the Company and its
Subsidiaries for any reason.

     (d) Acceleration, Waiver, Etc.  At any time prior to the participant's
         -------------------------                                         
termination of employment (or other business relationship) by the Company and
its Subsidiaries, the

                                       12
<PAGE>
 
Administrator may in its sole discretion accelerate, waive or, subject to
Section 14, amend any or all of the goals, restrictions or conditions imposed
under any Performance Share Award.

SECTION 10.  DIVIDEND EQUIVALENT RIGHTS
             --------------------------

     (a) Dividend Equivalent Rights.  A Dividend Equivalent Right is an Award
         --------------------------                                          
entitling the recipient to receive credits based on cash dividends that would
have been paid on the shares of Stock specified in the Dividend Equivalent Right
(or other award to which it relates) if such shares had been issued to and held
by the recipient.  A Dividend Equivalent Right may be granted hereunder to any
participant as a component of another Award or as a freestanding award.  The
terms and conditions of Dividend Equivalent Rights shall be specified in the
grant. Dividend equivalents credited to the holder of a Dividend Equivalent
Right may be paid currently or may be deemed to be reinvested in additional
shares of Stock, which may thereafter accrue additional equivalents.  Any such
reinvestment shall be at Fair Market Value on the date of reinvestment.
Dividend Equivalent Rights may be settled in cash or shares of Stock or a
combination thereof, in a single installment or installments.  A Dividend
Equivalent Right granted as a component of another Award may provide that such
Dividend Equivalent Right shall be settled upon exercise, settlement, or payment
of, or lapse of restrictions on, such other award, and that such Dividend
Equivalent Right shall expire or be forfeited or annulled under the same
conditions as such other award.  A Dividend Equivalent Right granted as a
component of another Award may also contain terms and conditions different from
such other award.

     (b) Interest Equivalents.  Any Award under this Plan that is settled in
         --------------------                                               
whole or in part in cash on a deferred basis may provide in the grant for
interest equivalents to be credited with respect to such cash payment.  Interest
equivalents may be compounded and shall be paid upon such terms and conditions
as may be specified by the grant.

     (c) Termination.  Except as may otherwise be provided by the Administrator
         -----------                                                           
either in the Award agreement or, subject to Section 14 below, in writing after
the Award agreement is issued, a participant's rights in all Dividend Equivalent
Rights or interest equivalents shall automatically terminate upon the
participant's termination of employment (or cessation of business relationship)
with the Company and its Subsidiaries for any reason.

SECTION 11.  OTHER STOCK-BASED AWARDS
             ------------------------

     (a) Nature of Other Stock-Based Awards.  An Other Stock-Based Award
         ----------------------------------                             
includes other Awards of Stock and other Awards that are valued in whole or in
part by reference to, or are otherwise based on, Stock, including without
limitation, convertible preferred stock, convertible debentures, exchangeable
securities and Awards valued by reference to book value or subsidiary
performance.  An Other Stock-Based Award may be granted to any participant
either along side or in addition to or in tandem with Stock Options, Restricted
Stock or Deferred Stock granted under the Plan and/or cash awards made outside
of the Plan.  Stock (including securities convertible into Stock) issued on a
bonus basis under this Section 11 may

                                       13
<PAGE>
 
be issued for no cash consideration. Stock (including securities convertible
into Stock) purchased with a purchase right awarded under this Section 11 shall
be priced at at least 25 percent of the Fair Market Value of the Stock on the
date of grant. The grant of an Other Stock-Based Award may be subject to
restrictions and conditions as the Administrator may determine at the time of
grant, including conditions based on continuing employment (or other business
relationship) and/or achievement of pre-established performance goals and
objectives. The grant of an Other Stock-Based Award is contingent on the
participant executing the Award agreement. The terms and conditions of each such
agreement shall be determined by the Administrator, and such terms and
conditions may differ among individual Awards and participants.

     (b) Rights as a Stockholder.  Until such time as an Other Stock-Based Award
         -----------------------                                                
is actually paid out in shares of Stock, a participant shall have no rights as a
holder of Stock.

     (c) Restrictions.  An Other Stock-Based Award may not be sold, assigned,
         ------------                                                        
transferred, pledged or otherwise encumbered or disposed of except as
specifically provided herein or in the Award agreement.

     (d) Termination.  Except as may otherwise be provided by the Administrator
         -----------                                                           
in the Award agreement or, subject to Section 14 below, in writing after the
Award agreement is issued, a participant's right in his Other Stock-Based Awards
that have not vested shall automatically terminate upon the participant's
termination of employment (or cessation of business relationship) with the
Company and its Subsidiaries for any reason.

SECTION 12. TAX WITHHOLDING
            ---------------

     (a) Payment by Participant.  Each participant shall, no later than the date
         ----------------------                                                 
as of which the value of an Award or of any Stock or other amounts received
thereunder first becomes includable in the gross income of the participant for
Federal income tax purposes, pay to the Company, or make arrangements
satisfactory to the Administrator regarding payment of, any Federal, state, or
local taxes of any kind required by law to be withheld with respect to such
income.  The Company and its Subsidiaries shall, to the extent permitted by law,
have the right to deduct any such taxes from any payment of any kind otherwise
due to the participant. The Company's obligation to deliver stock certificates
to any participant is subject to and conditioned on tax obligations being
satisfied by the participant.

     (b) Payment in Stock.  Subject to approval by the Administrator, a
         ----------------                                              
participant may elect to have such tax withholding obligation satisfied, in
whole or in part, by (i) authorizing the Company to withhold from shares of
Stock to be issued pursuant to any Award a number of shares with an aggregate
Fair Market Value (as of the date the withholding is effected) that would
satisfy the withholding amount due, or (ii) transferring to the Company shares
of Stock owned by the participant with an aggregate Fair Market Value (as of the
date the withholding is effected) that would satisfy the withholding amount due.

                                       14
<PAGE>
 
SECTION 13.  TRANSFER, LEAVE OF ABSENCE, ETC.
             ------------------------------- 

     For purposes of the Plan, the following events shall not be deemed a
termination of employment:

     (a) a transfer to the employment of the Company from a Subsidiary or from
the Company to a Subsidiary, or from one Subsidiary to another; or

     (b) an approved leave of absence for military service or sickness, or for
any other purpose approved by the Company, if the employee's right to re-
employment is guaranteed either by a statute or by contract or under the written
policy pursuant to which the leave of absence was granted or if the
Administrator otherwise so provides in writing.

SECTION 14.  AMENDMENTS AND TERMINATION
             --------------------------

     The Board may, at any time, amend or discontinue the Plan and the
Administrator may, at any time, amend or cancel any outstanding Award for the
purpose of satisfying changes in law or for any other lawful purpose, but no
such action shall adversely affect rights under any outstanding Award without
the holder's written consent.  The Administrator may provide substitute Awards
at the same or reduced exercise or purchase price or with no exercise or
purchase price in a manner not inconsistent with the terms of the Plan, but such
price, if any, must satisfy the requirements which would apply to the substitute
or amended Award if it were then initially granted under this Plan, but no such
action shall adversely affect rights under any outstanding Award without the
holder's written consent.  If and to the extent determined by the Administrator
to be required by the Code to ensure that Incentive Stock Options granted under
the Plan are qualified under Section 422 of the Code or ensure that compensation
earned under Stock Options granted under the Plan qualifies as performance-based
compensation under Section 162(m) of the Code, if and to the extent intended to
so qualify, Plan amendments shall be subject to approval by the Company
stockholders entitled to vote at a meeting of stockholders.  Nothing in this
Section 14 shall limit the Board's authority to take any action permitted
pursuant to Section 3(c).

SECTION 15.  STATUS OF PLAN
             --------------

     Unless the Administrator shall otherwise expressly determine in writing,
with respect to the portion of any Award which has not been exercised and any
payments in cash, Stock or other consideration not received by a participant, a
participant shall have no rights greater than those of a general creditor of the
Company.  In its sole discretion, the Administrator may authorize the creation
of trusts or other arrangements to meet the Company's obligations to deliver
Stock or make payments with respect to Awards hereunder, provided that the
existence of such trusts or other arrangements is consistent with the foregoing
sentence.

                                       15
<PAGE>
 
SECTION 16.  CHANGE OF CONTROL PROVISIONS
             ----------------------------

     (a) Upon the occurrence of a Change of Control as defined in this Section
16, each Award shall be subject to such terms, if any, with respect to a Change
of Control as have been provided by the Administrator either in the Award
agreement or, subject to Section 14 above, in writing after the Award agreement
is issued.

     (b) "Change of Control" shall mean the occurrence of any one of the
following events:

          (i) any "person," as such term is used in Sections 13(d) and 14(d) of
     the Act (other than the Company, any of its Subsidiaries, Mortimer B.
     Zuckerman, Edward H. Linde, any "affiliate" or "associate" (as such terms
     are defined in Rule 12b-2 under the Act) of Mortimer B. Zuckerman or Edward
     H. Linde, or any trustee, fiduciary or other person or entity holding
     securities under any employee benefit plan or trust of the Company or any
     of its Subsidiaries), together with all "affiliates" and "associates" (as
     such terms are defined in Rule 12b-2 under the Act) of such person, shall
     become the "beneficial owner" (as such term is defined in Rule 13d-3 under
     the Act), directly or indirectly, of securities of the Company representing
     25 percent or more of the combined voting power of the Company's then
     outstanding securities having the right to vote in an election of the
     Company's Board of Directors ("Voting Securities") (other than as a result
     of an acquisition of securities directly from the Company); provided that
     for purposes of determining the "beneficial ownership" (as such term is
     defined in Rule 13d-3 under the Act) of any "group" of which Mortimer B.
     Zuckerman, Edward H. Linde or any of their affiliates or associates is a
     member (each such entity or individual, a "Related Party"), there shall not
     be attributed to the "beneficial ownership" (as such term is defined in
     Rule 13d-3 under the Act) of such group any shares beneficially owned by
     any Related Party; or

          (ii) persons who, as of the effective date of the Company's initial
     public offering of Stock, constitute the Company's Board of Directors (the
     "Incumbent Directors") cease for any reason, including, without limitation,
     as a result of a tender offer, proxy contest, merger or similar
     transaction, to constitute at least a majority of the Board, provided that
     any person becoming a director of the Company subsequent to such date shall
     be considered an Incumbent Director if such person's election was approved
     by or such person was nominated for election by either (A) a vote of at
     least two-thirds of the Incumbent Directors or (B) a vote of at least a
     majority of the Incumbent Directors who are members of a nominating
     committee comprised, in the majority, of Incumbent Directors; or

          (iii) the stockholders of the Company shall approve (A) any
     consolidation or merger of the Company where the stockholders of the
     Company, immediately prior to the consolidation or merger, would not,
     immediately after the consolidation or merger, "beneficially own" (as such
     term is defined in Rule 13d-3 under the Act), directly or

                                       16
<PAGE>
 
     indirectly, shares representing in the aggregate 60 percent or more of the
     voting shares of the corporation issuing cash or securities in the
     consolidation or merger (or of its ultimate parent corporation, if any),
     (B) any sale, lease, exchange or other transfer to an unrelated party (in
     one transaction or a series of transactions contemplated or arranged by any
     party as a single plan) of all or substantially all of the assets of the
     Company or (C) any plan or proposal for the liquidation or dissolution of
     the Company.

     Notwithstanding the foregoing, a "Change of Control" shall not be deemed to
have occurred for purposes of the foregoing clause (i) solely as the result of
an acquisition of securities by the Company which, by reducing the number of
shares of Voting Securities outstanding, increases the proportionate number of
shares of Voting Securities beneficially owned by any person (as defined in the
foregoing clause (i)) to 25 percent or more of the combined voting power of all
then outstanding Voting Securities; provided, however, that if such person shall
                                    --------  -------                           
thereafter become the beneficial owner of any additional shares of Voting
Securities (other than pursuant to a stock split, stock dividend, or similar
transaction or as a result of an acquisition of securities directly from the
Company), then a "Change of Control" shall be deemed to have occurred for
purposes of the foregoing clause (i).

SECTION 17.  GENERAL PROVISIONS
             ------------------

     (a) No Distribution; Compliance with Legal Requirements.  The Administrator
         ---------------------------------------------------                    
may require each person acquiring Stock pursuant to an Award to represent to and
agree with the Company in writing that such person is acquiring the shares
without a view to distribution thereof.

     No shares of Stock shall be issued pursuant to an Award until all
applicable securities law and other legal and stock exchange or similar
requirements have been satisfied.  The Administrator may require the placing of
such stop-orders and restrictive legends on certificates for Stock and Awards as
it deems appropriate.

     (b) Delivery of Stock Certificates.  Stock certificates to be delivered to
         ------------------------------                                        
participants under this Plan shall be deemed delivered for all purposes when the
Company or a stock transfer agent of the Company shall have mailed such
certificates in the United States mail, addressed to the participant, at the
participant's last known address on file with the Company.

     (c) Other Compensation Arrangements; No Employment Rights.  Nothing
         -----------------------------------------------------          
contained in this Plan shall prevent the Board from adopting other or additional
compensation arrangements, including trusts, and such arrangements may be either
generally applicable or applicable only in specific cases.  The adoption of this
Plan and the grant of Awards shall not confer upon any employee any right to
continued employment with the Company or any Subsidiary and shall not interfere
in any way with the right of the Company or any Subsidiary to terminate the
employment of any of its employees at any time.

                                       17
<PAGE>
 
     (d) Trading Policy Restrictions.  Option exercises and other Awards under
         ---------------------------                                          
the Plan shall be subject to such Company insider-trading-policy-related
restrictions, terms and conditions as may be established by the Administrator,
or in accordance with policies set by the Administrator, from time to time.

SECTION 18.  EFFECTIVE DATE OF PLAN
             ----------------------

     This Plan shall become effective upon approval by the holders of a majority
of the votes cast at a meeting of stockholders at which a quorum is present or
by a unanimous written consent of stockholders.  Subject to such approval by the
stockholders and to the requirement that no Stock may be issued hereunder prior
to such approval, Stock Options and other Awards may be granted hereunder on and
after adoption of this Plan by the Board.

SECTION 19.  GOVERNING LAW
             -------------

     This Plan and all Awards and actions taken thereunder shall be governed by,
and construed in accordance with, the laws of the State of Delaware, applied
without regard to conflict of law principles.



DATE APPROVED BY BOARD OF DIRECTORS:  June 11, 1997


DATE APPROVED BY STOCKHOLDERS:  June 11, 1997

                                       18
