<PAGE>
 
Exhibit 10.  Material Contracts.

The Company's 1990 Stock Option Plan and 1990 Stock Bonus Plan are incorporated
 by reference from the Company's definitive proxy statement filed pursuant to
 Regulation 14A on April 12, 1990, and the Amendment to The Rouse Company 1990
 Stock Option Plan, effective as of May 12, 1994, is incorporated by reference
 from the Company's Form 10-K Annual Report for the fiscal year ended December
 31, 1994.

The Company's 1994 Stock Incentive Plan is incorporated by reference from the
 Company's definitive proxy statement filed pursuant to Regulation 14A on 
 April 5, 1994.

The Amended and Restated Supplemental Retirement Benefit Plan of The Rouse
 Company, made as of January 1, 1985 and further amended and restated as of
 September 24, 1992, March 4, 1994, and May 10, 1995, is incorporated by
 reference from the Company's Form 10-K Annual Report for the fiscal year ended
 December 31, 1996.

The Contingent Stock Agreement, effective as of January 1, 1996, by the Company
 in favor of and for the benefit of the Holders and Representatives named
 therein is incorporated by reference from the Exhibits to the Company's
 Form S-4 Registration Statement (No. 333-1693).

The Rouse Company Deferred Compensation Plan for Outside Directors (Amended and
 Restated), dated as of May 23, 1996, is incorporated by reference from the
 Company's Form 10-K Annual Report for the fiscal year ended December 31, 1996.

The memorandum of agreement, dated December 19, 1996, between the Company and
 Mathias J. DeVito, then Chairman of the Board of the Company, is incorporated
 by reference from the Company's Form 10-K Annual Report for the fiscal year
 ended December 31, 1996.

The employment agreement, dated May 1, 1996, between John L. Goolsby, The Rouse
 Company and TRC Acquisition Company I is incorporated by reference from the
 Company's 10-K Annual Report for the fiscal year ended December 31, 1997.

The Company's 1997 Stock Incentive Plan is incorporated by reference from the
 Company's definitive proxy statement filed pursuant to Regulation 14A on 
 April 4, 1997.

The Rouse Company Special Option Plan, effective January 1, 1998, is
 incorporated by reference from the Company's Form 10-K Annual Report for the
 year ended December 31, 1997.

The Asset Purchase Agreement, dated as of April 6, 1998, between TrizecHahn
 Centers, Inc., and The Rouse Company and Westfield America, Inc. is
 incorporated by reference from the Company's Current Report on Form 8-K dated
 August 14, 1998.
<PAGE>
 
The letter agreement, dated as of June 30, 1998, between The Rouse Company and
 Teachers Properties, Inc. relating to the purchase of certain of the interests
 in Rouse-Teachers Properties, Inc. is incorporated by reference from the
 Company's Form 10-Q Quarterly Report for the quarterly period ended 
 September 30, 1998.

The Contribution Agreement, dated as of February 1, 1999, among The Rouse
 Company of Nevada, Inc., HRD Properties, Inc., Rouse-Bridgewater Commons, LLC,
 Rouse-Park Meadows Holding, LLC, Rouse-Towson Town Center LLC, Bridgewater
 Commons Mall, LLC, Rouse-Fashion Place, LLC, Rouse-Park Meadows LLC, Towson TC,
 LLC, TTC SPE, LLC and Fourmall Acquisition, LLC is incorporated by reference
 from the Company's Current Report on Form 8-K dated February 10, 1999.

The employment agreement, dated September 24, 1998, between the Company and
 Anthony W. Deering is attached.



All documents referred to above may be found in Commission file number 0-1743.
<PAGE>
 
                             EMPLOYMENT AGREEMENT
                             --------------------


          This employment agreement ("Agreement") is entered into the 24th  day
of September, 1998 (the "Effective Date"), by and between THE ROUSE COMPANY (the
"Company") and ANTHONY W. DEERING (the "Executive").

                             EXPLANATORY STATEMENT
                             ---------------------

          The Executive is currently employed by the Company and serves as the
Company's Chief Executive Officer. The Company recognizing the unique skills and
abilities of the Executive wishes to insure that the Executive will continue to
be employed by the Company until the Executive reaches age 60. The Executive
desires to continue in the employment of the Company as Chief Executive Officer
until age 60. Accordingly the parties desire to enter into this employment
agreement.

          NOW, THEREFORE, in consideration of the mutual covenants hereinafter
set forth, the parties agree as follows:

          1.  Employment, Term and Duties.
              --------------------------- 

              1.1  Employment.  The Company hereby employs the Executive and the
                   ----------                                                   
Executive hereby accepts employment by the Company on the terms and conditions
set forth in this Agreement.

              1.2  Term.  The Executive's employment under this Agreement shall
                   ----                                                        
commence on the Effective Date and shall terminate on January 31, 2005, unless
earlier terminated as provided in Section 4 below (the "Term").

              1.3  Duties.  During the Term, the Executive shall serve as
                   ------                                                
the Chief Executive Officer of the Company, with such customary duties and
responsibilities as are incident to such position, including such authority,
duties, and responsibilities as are set forth with respect to such office in the
Company's articles and bylaws. The parties acknowledge that the Executive
currently also holds the titles of Chairman of the Board and of President. The
Company reserves the right to elect another individual(s) to such positions and
such election shall not constitute "Good Reason" as hereinafter defined,
provided the Executive consents to such election. The Executive shall report
directly to the Board of Directors of the Company (the "Board"). The Executive
agrees to devote substantially all his attention and time during normal business
hours to the business and affairs of the Company and to use his reasonable best
efforts to perform faithfully and efficiently the duties and responsibilities of
his positions and to accomplish the goals and objectives of the Company as may
be established by the Board. Notwithstanding 
<PAGE>
 
the foregoing, the Executive may engage in the following activities (and shall
be entitled to retain all economic benefits thereof including fees paid in
connection therewith) as long as they do not interfere in any material respect
with the performance of the Executive s duties and responsibilities hereunder:
(i) serve on corporate, civic, religious, educational and/or charitable boards
or committees, provided that the Executive shall not serve on any board or
committee of any corporation or other business which competes with the Business
(as defined in Section 3.1 below), (ii) deliver lectures, fulfill speaking
engagements or teach on a part-time basis at educational institutions and (iii)
make investments in businesses or enterprises and manage his personal
investments; provided that with respect to such activities Executive shall
comply with Business Conduct and Ethics Policy applicable to employees of the
Company and subsidiaries. The parties acknowledge that the Executives
participation as a director of the organizations listed on Exhibit A attached
hereto are acceptable.

          2.  Compensation and Other Benefits.
              ------------------------------- 

              2.1 Base Compensation. As compensation for services rendered
                  -----------------
during the Term, the Company shall pay to the Executive an annual salary of
$800,000 (the "Base Salary"). The Personnel Committee of the Board of Directors
of The Company (the "Committee") shall conduct a review of the Base Salary in
February, 1999, and thereafter at such time or times as the Committee reviews
the annual compensation of the executives of the Company in general, and the
Executive shall be entitled at such time or times to such annual increase in the
Base Salary as is in accordance with the then prevailing policy of The Company
with respect to executive compensation in general; provided, that such salary
may not be reduced at any time. The Base Salary shall be payable in accordance
with the payroll policies of The Company as from time to time in effect, less
such amounts as shall be required to be deducted or withheld therefrom by
applicable law and regulations.

              2.2 Annual Bonus. In addition to the Base Salary, the Executive
                  ------------  
shall continue to be eligible to receive, for each calendar year or portion
thereof occurring during the Term, an annual bonus (the "Annual Bonus") in an
amount annually determined by the Committee in accordance with the standard
practice of such Committee relating to the incentive compensation program of The
Company. The Annual Bonus shall be paid to the Executive, less such amounts as
shall be required to be deducted or withheld therefrom by applicable law and
regulations, at such time or times as is in accordance with the then prevailing
policy of The Company relating to incentive compensation payments.

              2.3 Stock Grant and Stock Options.
                  ----------------------------- 

                  (a) Stock Grant and Gross-Up; Repayment of Gross Up. Pursuant
                      -----------------------------------------------
to the resolutions adopted by the Board at its meeting on

                                      -2-
<PAGE>
 
September 24, 1998, the Company hereby grants Executive a stock grant of 109,850
shares of The Company's Common Stock pursuant to The Company's 1997 Stock
Incentive Plan. The terms, conditions and restrictions with regard to such stock
grant shall be evidenced by a letter agreement between the Company and the
Executive in the form of Exhibit B attached hereto which shall be incorporated
                         --------- 
herein by reference and its terms, conditions and notifications shall be
considered a part of this Agreement.

          In the event the Executive elects to be taxed in accordance with the
provisions of Section 83(b) of the Internal Revenue Code of 1986 (the "Code")
with regard to said stock grant, then Executive shall also receive a cash
payment (the "Gross-Up Payment") on or before December 31, 1998, in an amount
sufficient to pay all state and federal income taxes payable by Executive with
respect to the stock grant, including any tax payable with regard to the Gross-
Up Payment. The Gross-Up Payment shall be calculated based on the Executive's
actual items of income, expense and deductions for the year in which the Section
83(b) election is made and shall compensate the Executive for all additional
taxes payable by the Executive on account of his receipt of the Stock Grant and
the Gross-Up Payment.

          In the event that, prior to January 31, 2005, the Executive's
employment is terminated for Cause pursuant to Section 4.2 hereof or the
Executive effects a Voluntary Termination of his employment under Section 4.4
hereof, then the Executive shall be obligated to repay to the Company the entire
amount of the Gross-Up Payment, such payment to be made in its entirety within
thirty (30) days of the date of termination.

          If the Executive is required to repay the amount of the Gross Payment,
the Company shall have the right to set off such amount against any payments due
by the Company to the Executive.

               b. 1998 Stock Options. Pursuant to the resolutions adopted by the
                  ------------------
Board of Directors at its meeting on September 24, 1998, the Company grants
Executive effective as of September 24, 1998 a stock option for 300,000 shares
of the Company's Common Stock pursuant to The Company's 1997 Stock Incentive
Plan. The option price with respect to such stock option shall be $27.31 per
share. The maximum number of such options which qualify as "qualified stock
options" shall be granted as "qualified stock options" and the remainder of such
options shall be non-qualified stock options. The terms, conditions and
restrictions with regard to said stock options shall be evidenced by an
Incentive Stock Option Agreement (as to the qualified stock options) and a
Nonqualified Stock Option Agreement (as to the non-qualified stock options),
substantially in the forms attached hereto as Exhibit C-1 and Exhibit C-2
                                              -----------     -----------
respectively which shall be incorporated herein by reference and their terms,
conditions and restrictions shall be considered a part of this Agreement.

                                      -3-
<PAGE>
 
               c.  Accelerated Stock Options.  The Executive and the Company
                   -------------------------                                
acknowledge that the Executive would have been eligible, pursuant to the
Company's current policy, to receive a stock option grant in February 1999.  The
parties wish to provide for the acceleration of such grant.

               Accordingly, pursuant to the resolutions adopted by the Board at
its meeting on September 24, 1998, the Company hereby grants the Executive a
stock option for 300,000 shares of the Company's Common Stock pursuant to the
Company's 1997 Stock Incentive Plan. The option price with respect to such stock
options shall be $32.77 per share. The maximum number of such options which
qualify as "qualified stock options" shall be granted as "qualified stock
options" and the remainder of such options shall be non-qualified stock options.
The terms, conditions and restrictions with regard to said stock options shall
be evidenced by an Incentive Stock Option Agreement (as to the qualified stock
options) and a Non-Qualified Stock Option Agreement (as to the non-qualified
stock options), substantially in the forms attached hereto as Exhibit D-1 and D-
2, which are incorporated by reference and their terms, conditions and
restrictions shall be considered a part of this Agreement.

              2.4  Retirement Supplement.

                   a. Retirement at 62 or thereafter. If the Executive fulfills
                      ------------------------------
all the terms and conditions of this Agreement and the Executive retires from
the Company at age 62 or thereafter then the Executive's combined annual benefit
under The Rouse Company Pension Plan and the Supplemental Benefit Retirement
Plan shall be increased to an amount not less than fifty-five percent (55%) of
his Cash Compensation (as defined in The Rouse Company Pension Plan).

                   b. Retirement Before Age 62. If (i) the Executive is not then
                      ------------------------
in default under this Agreement and this Agreement is terminated pursuant to the
provisions of Section 4.1 or Section 4.3 hereof, (ii) the Executive retires upon
the expiration of this Agreement, or (iii) the Executive retires after age 60
but before age 62 under circumstances that would constitute a "Voluntary
Termination" under Section 4.4, then the Executive's combined annual benefit (at
age 62) under The Rouse Company Pension Plan and the Supplemental Retirement
Benefit Plan shall be increased to an amount not less than fifty-five percent
(55%) of the Executive's Cash Compensation (as defined in The Rouse Company
Pension Plan) computed for the 12 months immediately preceding such date of
termination.

          The amounts which may be paid to the Executive under this Section 2.4
are herein referred to as the "Retirement Supplement."

              2.5 Participation in Employee Benefit Plans. The Company agrees to
                  ---------------------------------------
permit the Executive during the Term to continue to participate in any group
life, hospitalization and/or disability insurance plan, health program,

                                      -4-
<PAGE>
 
supplemental executive retirement plan, nonqualified compensation plan, pension
and/or savings plans, long-term incentive plan, receive "fringe benefits," e.g.,
                                                                           ---- 
club memberships and automobile allowance, and participate in such other benefit
plans or programs as may be maintained by the Company (collectively "Benefits").
The Company also agrees to implement such other benefit plans (the Other
Benefit Plans) for the benefit of Executive to the extent the Company offers its
other senior executives benefits that are not currently offered by the Company.
The Other Benefit Plans shall provide Executive benefits that are no less
favorable than those benefits which are available to the most senior executives
of The Company or its subsidiaries. For so long as the Company owns or leases a
corporate aircraft, Executive shall be entitled to use such aircraft for
personal use on terms and conditions no less favorable to Executive (exclusive
of tax effects) as those in existence on the Effective Date.

              2.6 General Business Expenses. The Company shall pay or reimburse
                  -------------------------
the Executive for all expenses that are consistent with the Company policy and
reasonably and necessarily incurred by the Executive during the Term in the
performance of the Executive's duties under this Agreement. Such payment shall
be made upon presentation of such documentation as The Company customarily
requires of its executive employees prior to making such payments or
reimbursements.

          3.  Non-Competition.
              --------------- 

              3.1 Covenants Against Competition. The Executive acknowledges that
                  -----------------------------                                 
as of the execution of this Employment Agreement (i) the Company is engaged in
the business of commercial and community real estate development and management
and office and industrial building development and management and other related
activities (the "Business"); (ii) the Company's Business is conducted currently
throughout the United States and in Canada and may be expanded to other
locations; (iii) his employment with the Company will have given him access to
confidential information concerning the Company; and (iv) the agreements and
covenants contained in this Agreement are essential to protect the business and
goodwill of the Company. Accordingly, the Executive covenants and agrees as
follows:

          (a) Non-Compete.  Without the prior written consent of the Board of
              ------------                                                   
     Directors of the Company, the Executive shall not during the Restricted
     Period (as defined below) within the Restricted Area (as defined below)
     (except in the Executive's capacity as an officer of the Company or any of
     its affiliates), (i) engage or participate in the Business; (ii) enter the
     employ of, or render any services (whether or not for a fee or other
     compensation) to, any person engaged in the Business; or (iii) acquire an
     equity interest in any such person; provided, that the foregoing
     restrictions shall not apply at any time if the Executive s employment is
     terminated during the Term by the Executive 

                                      -5-
<PAGE>
 
     for Good Reason (as defined in Section 4.3 below) or by the Company other
     than for "Cause"; provided, further, that during the Restricted Period the
                       --------  -------
     Executive may own, directly or indirectly, solely as a passive investment,
     securities of any company traded on any national securities exchange or on
     the National Association of Securities Dealers Automated Quotation System.
     As used herein, "Restricted Period" shall mean the period commencing on the
     Effective Date and ending on the earlier of (i) the third anniversary of
     the Executive's termination of employment or (ii) January 31, 2006.
     "Restricted Area" shall mean any place within the United States, Canada and
     any other country in which the Company is then actively considering
     conducting Business.

          (b) Confidential Information; Personal Relationships. The Executive
              ------------------------------------------------               
     acknowledges that the Company has a legitimate and continuing proprietary
     interest in the protection of its confidential information and has invested
     substantial sums and will continue to invest substantial sums to develop,
     maintain and protect confidential information. The Executive agrees that,
     during and after the Restricted Period, without the prior written consent
     of the Board, the Executive shall keep secret and retain in strictest
     confidence, and shall not knowingly use for the benefit of himself or
     others all confidential matters relating to the Company's Business
     including, without limitation, operational methods, marketing or
     development plans or strategies, business acquisition plans, joint venture
     proposals or plans, and new personnel acquisition plans, learned by the
     Executive heretofore or hereafter (such information shall be referred to
     herein collectively as  Confidential Information ); provided, that nothing
     in this Agreement shall prohibit the Executive from disclosing or using any
     Confidential Information (A) in the performance of his duties hereunder,
     (B) as required by applicable law, (C) in connection with the enforcement
     of his rights under this Agreement or any other agreement with the Company,
     or (D) in connection with the defense or settlement of any claim, suit or
     action brought or threatened against the Executive by or in the right of
     the Company. Notwithstanding any provision contained herein to the
     contrary, the term  Confidential Information  shall not be deemed to
     include any general knowledge, skills or experience acquired by the
     Executive or any knowledge or information known or available to the public
     in general. Moreover, the Executive shall be permitted to retain copies of,
     or have access to, all such Confidential Information relating to any
     disagreement, dispute or litigation (pending or threatened) involving the
     Executive.

          (c) Employees of the Company and its Affiliates. During the Restricted
              -------------------------------------------                       
     Period, without the prior written consent of the Board of Directors of the
     Company, the Executive shall not, directly or indirectly, hire or solicit,
     or cause others to hire or solicit, for employment by any person other than
     the Company or any affiliate or successor thereof, any employee of, or
    
                                      -6-
<PAGE>
 
     person employed within the two years preceding the Executive's hiring or
     solicitation of such person by, the Company and its affiliates or
     successors or encourage any such employee to leave his employment. For this
     purpose, any person whose employment has been terminated involuntarily by
     The Company or the Company shall be excluded from those persons protected
     by this Section 3.1(c) for the benefit of the Company.

          (d) Business Relationships.  During the Restricted Period, the
              ----------------------                                    
     Executive shall not, directly or indirectly, request or advise a person
     that has a business relationship with the Company to curtail or cancel such
     person's business relationship with the Company.

               3.2 Rights and Remedies Upon Breach. If the Executive breaches,
                   -------------------------------
or threatens to commit a breach of, any of the provisions contained in Section
3.1 of this Agreement (the "Restrictive Covenants"), the Company shall have the
following rights and remedies, each of which rights and remedies shall be
independent of the others and severally enforceable, and each of which is in
addition to, and not in lieu of, any other rights and remedies available to the
Company under law or in equity.

               (a) Specific Performance.  The right and remedy to have the
                   --------------------                                   
     Restrictive Covenants specifically enforced by any court of competent
     jurisdiction, it being agreed that any breach or threatened breach of the
     Restrictive Covenants would cause irreparable injury to the Company and
     that money damages would not provide an adequate remedy to the Company.

               (b) Accounting.  The right and remedy to require the Executive to
                   ----------                                                   
     account for and pay over to the Company all compensation, profits, monies,
     accruals, increments or other benefits derived or received by the Executive
     as the result of any action constituting a breach of Restrictive Covenants.

          3.3  Severability of Covenants.  The Executive acknowledges and agrees
               -------------------------                                        
that the Restrictive Covenants are reasonable and valid in duration and
geographical scope and in all other respects.  If any court determines that any
of the Restrictive Covenants, or any part thereof, is invalid or unenforceable,
the remainder of the Restrictive Covenants shall not thereby be affected and
shall be given full effect without regard to the invalid portions.  The
provisions set forth in Section 3.1 above shall be in addition to any other
provisions of the Business Conduct and Ethics Policy applicable to employees of
The Company and its subsidiaries during the term of Executive s employment.

          4.   Termination.
               ----------- 

                                      -7-
<PAGE>
 
          4.1 Termination upon Death or Disability.  If the Executive either
              ------------------------------------                          
dies or becomes entitled to benefits under a Company long-term disability plan
or program during the Term, the Term shall automatically terminate thereupon,
and the Executive or the Executive's estate, as the case may be, shall be
entitled to receive, in addition to any life insurance or disability benefits
which are payable after the separate determinations thereof,

          (a) Base Salary at the rate in effect at the time of such
     termination through the date of termination;

          (b) any, otherwise payable with respect to the year in which the Term
     is terminated, multiplied by (ii) a fraction, the numerator of which is the
     number of days elapsed in such year as of the termination date and the
     denominator of which is 365 (the "Accrued Annual Bonus");

          (c) an amount equal to the product of (x) the lesser of 36 or the
     number of months from the termination date until the end of the month in
     which the Executive's 62nd birthday would have occurred (rounded to the
     next highest whole month) times (y) the Monthly Salary Amount;

          (d) any deferred compensation (including, without limitation, interest
     or other credits in the deferred amounts) and any accrued vacation pay,
     provided that any deferred compensation under the Supplemental Retirement
     Benefit Plan of the Company (the "SERP") shall be paid in accordance with
     the terms of the SERP;

          (e) the Retirement Supplement;

          (f) any other compensation and benefits as may be provided in
     accordance with the terms and provisions of any applicable plans or
     programs of the Company.

     As used herein the term "Monthly Salary Amount" shall mean an amount equal
to one-twelfth of the sum of (w) the Executive's then current Base Salary plus
(z) the average Annual Bonus paid to the Executive during the three years
immediately preceding the termination date.

     The amounts set forth above are in addition to and shall not reduce any
other benefits to which the Executive or his estate may be entitled (such as the
stock grant and the stock options).

               4.2  Termination by the Company for Cause. The Company may
                    ------------------------------------                  
terminate the Executive's employment hereunder for "Cause" (as defined

                                      -8-
<PAGE>
 
below). If the Company terminates the Executive's employment hereunder for
Cause, the Executive shall be entitled to:

     (a) Base Salary at the rate in effect at the time of such termination
   through the date of termination;


     (b) any deferred compensation (including, without limitation, interest or
   other credits on such deferred amounts) and any accrued vacation pay,
   provided that any deferred compensation under the SERP shall be paid in
   accordance with the terms of the SERP;

     (c) any other compensation and benefits as may be provided in accordance
   with the terms and provisions of any applicable plans and programs of the
   Company.

     In any case described in this Section 4.2, the Executive shall be
given written notice authorized by a vote of at least a majority of the members
of the Board of Directors that the Company intends to terminate the Executive's
employment for Cause.  Such written notice shall specify the particular act or
acts, or failure to act, which is or are the basis for the decision to so
terminate the Executive's employment for Cause.  The Executive shall be given
the opportunity within 30 calendar days of the receipt of such notice to meet
with the Board of Directors to defend such act or acts, or failure to act, and
the Executive shall be given 15 business days after such meeting to correct such
act or failure to act.  Upon failure of the Executive, within such latter 15 day
period, to correct such act or failure to act, the Executive's employment by the
Company shall automatically be terminated under this Section 4.2 for Cause.
Anything herein to the contrary notwithstanding, if, following a termination of
the Executive's employment by the Company for Cause based upon the conviction of
the Executive for a felony involving actual dishonesty as against the Company,
such conviction is overturned on appeal, the Executive shall be entitled to the
payments and the economic equivalent of the benefits that the Executive would
have received as a result of a termination of the Executive's employment by the
Company without Cause.

     For purposes of this Section 4.2, a termination of the Executive's
employment by the Company shall be for "Cause" if the Executive is discharged
(i) due solely to an act or acts of gross or willful negligence or of
intentional wrongdoing or misconduct, which has a material adverse effect on the
Executive's ability to perform the duties of his position or on the good
standing, financial condition or profitability of the Company or (ii) as the
result of a material breach of this Agreement.

               4.3 Termination Without Cause or Termination For Good Reason. The
                   --------------------------------------------------------
Company may terminate the Executive's employment hereunder 

                                      -9-
<PAGE>
 
without Cause and the Executive may terminate his employment hereunder for Good
Reason (defined below). If the Company terminates the Executive's employment
hereunder without Cause, other than due to death or Disability, or if the
Executive terminates his employment for Good Reason, the Executive shall be
entitled to:

          (a) Base Salary at the rate in effect at the time of termination
     through the date of Termination;

          (b) the Accrued Annual Bonus, if any;

          (c) a lump sum payment equal to the product of thirty-six (36) times
     the Monthly Salary Amount (as defined in Section 4.2 hereof);

          (d) any deferred compensation (including, without limitation, interest
     or other credits on the deferred amounts) and any accrued vacation pay;

          (e) the Retirement Supplement;

          (f) continuation until the Executive attains age 60, of the health and
     welfare benefits of the Executive and any long-term disability insurance
     generally provided to senior executives of the Company (as provided for by
     Section 2.5 of this Agreement) (or the Company shall provide the economic
     equivalent thereof); provided, however if the Executive obtains new
     employment and such employment makes the Executive eligible for health and
     welfare or long-term disability benefits which are equal to or greater in
     scope then the benefits then being offered by the Company, then the Company
     shall no longer be required to provide such benefits to the Executive; and

          (g) any other compensation and benefits as may be provided in
     accordance with the terms and provisions of any applicable plans or
     programs of the Company.

          As used herein, "Good Reason" means and shall be deemed to exist if,
without the prior express written consent of the Executive, (a) the Executive is
assigned any duties or responsibilities inconsistent in any material respect
with the scope of the duties or responsibilities associated with the Executive's
position as Chief Executive Officer, as set forth and described in Section 1 of
this Agreement; (b) the Executive suffers a reduction in the duties,
responsibilities or effective authority associated with his position as Chief
Executive Officer, as set forth and described in Section 1 of this Agreement;
(c) the Executive is not appointed to, or is removed from, his position as Chief
Executive Officer; (d) the Company breaches this Agreement in any material
respect; (e) the Company fails to obtain the full 

                                      -10-
<PAGE>
 
assumption of this Agreement by a successor entity in accordance with Section
6.4 of this Agreement; (f) the Company fails to use its reasonable best efforts
to maintain, or cause to be maintained, adequate directors and officers
liability insurance coverage for the Executive; (g) the Company purports to
terminate the Executive's employment for Cause and such purported termination of
employment is not effected in accordance with the requirements of this
Agreement. or (h) a Change in Control shall have occurred.

       For purposes of this Agreement, a "Change of Control" shall mean (1) any
merger by the Company with or into another corporation or corporations; (2) any
acquisition (by purchase, lease or otherwise) of all or substantially all of the
assets of the Company by any person, corporation or other entity or group
thereof acting jointly; (3) the acquisition of beneficial ownership, directly or
indirectly, of voting securities of the Company (defined as Common Stock of the
Company or any securities having voting rights that the Company may issue in the
future) and rights to acquire voting securities of the Company (defined as
including, without limitation, securities that are convertible into voting
securities of the Company (as defined above) and rights, options warrants and
other agreements or arrangements to acquire such voting securities) by any
person, corporation or other entity or group thereof acting jointly, in such
amount or amounts as would permit such person, corporation or other entity or
group thereof acting jointly to elect a majority of the members of the Board of
Directors of the Company, as then constituted; or (4) the acquisition of
beneficial ownership, directly or indirectly, of voting securities and rights to
acquire voting securities having voting power equal to 20% or more of the
combined voting power of the Company's then outstanding voting securities by any
person, corporation or other entity or group thereof acting jointly unless such
acquisition as is described in this part (4) is expressly approved by resolution
of the Board of Directors of the Company passed upon affirmative vote of not
less than a majority thereof and adopted at a meeting of the Board held not
later than the date of the next regularly scheduled or special meeting held
following the date the Company obtains actual knowledge of such acquisition
(which approval may be limited in purpose and effect solely to affecting the
rights of Employee under this Agreement). Notwithstanding the preceding
sentence, (i) any transaction that involves a mere change in identity, form or
place of organization within the meaning of Section 368(a)(1)(F) of the Internal
Revenue Code of 1986, as amended, or a transaction of similar effect, shall not
constitute a "Change in Control."

          4.4  Voluntary Termination.  The Executive may effect a Voluntary
               ---------------------                                       
Termination of his employment hereunder.  A "Voluntary Termination" shall mean a
termination of employment by the Executive on his own initiative other than (a)
a termination due to death or disability, or (b) a termination for Good Reason.

       A Voluntary Termination shall not be, nor shall it be deemed to be, a
breach of this Agreement and shall entitle the Executive to all of the rights
and 

                                      -11-
<PAGE>
 
benefits which the Executive would be entitled in the event of a termination of
his employment by the Company for Cause.

          4.5  Non-exclusivity of Rights.  Nothing in this Agreement shall
               --------------------------                                 
prevent or limit the Executive's continuing or future participation in any
benefit, bonus, incentive or other plan or program provided or maintained by the
Company and for which the Executive may qualify, nor shall anything herein limit
or otherwise prejudice such rights as the Executive may have under any other
existing or future agreements with the Company.  Except as otherwise expressly
provided for in this Agreement, amounts which are vested benefits or which the
Executive is otherwise entitled to receive under any plans or programs of the
Company at or subsequent to the date of termination shall be payable in
accordance with such plans or programs.

          4.6  Vesting of Stock Grants and Stock Options.  In the event of any
               -----------------------------------------                      
termination described in Sections 4.1, 4.2, 4.3 and 4.4 above, Executive's
rights with regard to any stock grants, loan agreements or stock options shall
be as set forth in the respective agreement containing the terms and conditions
pertaining thereto.

          4.7  Certain Additional Payments by the Company.  Anything in this
               ------------------------------------------                   
Agreement to the contrary notwithstanding, in the event that it shall be
determined that any payment or distribution by the Company to or for the benefit
of the Executive, whether paid or payable or distributed or distributable
pursuant to the terms of this Agreement or otherwise (a "Payment"), would be
subject to the excise tax imposed by Section 4999 of the Code or any interest or
penalties with respect to such excise tax (such excise tax, together with any
such interest and penalties, are hereinafter collectively referred to as the
"Excise Tax"), then the Executive shall be entitled to receive an additional
payment (an "Excise Gross-Up Payment") in an amount such that after payment by
the Executive of all taxes (including any interest or penalties imposed with
respect to such taxes), including any Excise Tax imposed upon the Excise Gross-
Up Payment, the Executive retains an amount of the Excise Gross-Up Payment equal
to the Excise Tax imposed upon the Payments.  Subject to the provisions of this
Section 4.8, all determinations required to be made hereunder, including whether
an Excise Gross-Up Payment is required and the amount of such Excise Gross-Up
Payment, shall be made by KPMG Peat Marwick or such other accounting firm which
at the time audits the financial statements of the Company (the "Accounting
Firm") at the sole expense of the Company, which shall provide detailed
supporting calculations both to the Company and the Executive within 15 business
days of the date of termination of the Executive's employment under this
Agreement, if applicable, or such earlier time as is requested by the Company.
If the Accounting Firm determines that no Excise Tax is payable by the
Executive, the Accounting Firm shall furnish the Executive with an opinion that
he has substantial authority not to report any Excise Tax on his federal income
tax return.  Any determination by the Accounting Firm shall be 

                                      -12-
<PAGE>
 
binding upon the Company and the Executive. As a result of the uncertainty in
the application of Section 4999 of the Code at the time of the initial
determination by the Accounting Firm hereunder, it is possible that Excise 
Gross-Up Payments, which will not have been made by the Company should have been
made (an "Underpayment") , consistent with the calculations required to be made
hereunder. If the Company exhausts its remedies pursuant hereto and the
Executive thereafter is required to make a payment of any Excise Tax, the
Accounting Firm shall determine the amount of the Underpayment that has occurred
and any such Underpayment shall be promptly paid by the Company to or for the
benefit of the Executive.

          The Executive shall notify the Company in writing of any claim by the
Internal Revenue Service that, if successful, would require the payment by the
Company of the Excise Gross-Up Payment.  Such notification shall be given as
soon as practicable but no later than ten business days after the Executive
knows of such claim and shall apprise the Company of the nature of such claim
and the date on which such claim is requested to be paid.  The Executive shall
not pay such claim prior to the expiration of the 30-day period following the
date on which it gives such notice to the Company (or such shorter period ending
on the date that any payment of taxes with respect to such claim is due) If the
Company notifies the Executive in writing prior to the expiration of such period
that it desires to contest such claim, the Executive shall:

                  (i)   give the Company any information reasonably requested by
          the Company relating to such claim,

                  (ii)  take such action in connection with contesting such
          claim as the Company shall reasonably request in writing from time to
          time, including (without limitation) accepting legal representation
          with respect to such claim by an attorney reasonably selected by the
          Company,

                  (iii) cooperate with the Company in good faith to contest
          effectively such claim, and

                  (iv)  permit the Company to participate in any proceedings
          relating to such claim;

provided that the Company shall bear and pay directly all costs and expenses
--------                                                                    
(including additional interest and penalties) incurred in connection with such
contest and shall indemnify and hold the Executive harmless, on an after-tax
basis, for any Excise Tax or income tax, including interest and penalties with
respect thereto, imposed as a result of such representation and payment of costs
and expenses.  Without limitation on the foregoing provisions hereof the Company
shall control all proceedings taken in connection with such contest and, at its
sole option, may 

                                      -13-
<PAGE>
 
pursue or forgo any and all administrative appeals, proceedings, hearings and
conferences with the taxing authority in respect of such claim and may, at its
sole option, either direct the Executive to pay the tax claimed and sue for a
refund or contest the claim in any permissible manner, and the Executive agrees
to prosecute such contest to a determination before any administrative tribunal,
in a court of initial jurisdiction and in one or more appellate courts, as the
Company shall determine, provided that if the Company directs the Executive to
                         -------- 
pay such claim and sue for a refund, the Company shall advance the amount of
such payment to the Executive, on an interest-free basis and shall indemnify and
hold the Executive harmless, on an after-tax basis, from any Excise Tax or
income tax, including interest or penalties with respect thereto, imposed with
respect to such advance or with respect to any imputed income with respect to
such advance, and further provided that any extension of the statute of 
                  ------- ---------      
limitations relating to payment of taxes for the taxable year of the Executive
with respect to which such contested amount is claimed to be due is limited
solely to such contested amount. Furthermore, the Company's control of the
contest shall be limited to issues with respect to which an Excise Gross-Up
Payment would be payable hereunder and the Executive shall be entitled to settle
or contest, as the case may be, any other issue raised by the Internal Revenue
Service or any other taxing authority.

          If, after the receipt by the Executive of an amount advanced by the
Company pursuant hereto, the Executive becomes entitled to receive any refund
with respect to such claim, the Executive shall (subject to the Company's
complying with the requirements hereof) promptly pay to the Company the amount
of such refund (together with any interest paid or credited thereon after taxes
applicable thereto).  If, after the receipt by the Executive of an amount
advanced by the Company pursuant hereto, a determination is made that the
Executive shall not be entitled to any refund with respect to such claim and the
Company does not notify the Executive in writing of its intent to contest such
denial of refund prior to the expiration of 30 days after such determination,
then such advance shall be forgiven and shall not be required to be repaid and
the amount of such advance shall offset, to the extent thereof, the amount of
Excise Gross-Up Payment required to be paid.

          4.8  Payment.  Except as otherwise provided in this Agreement, any
               -------                                                      
payments to which the Executive shall be entitled under this Section 4,
including, without limitation, any economic equivalent of any benefit, shall be
made as promptly as possible following the date of termination.  If the amount
of any payment due to the Executive cannot be finally determined with 90 days
after the Date of Termination, such amount shall be estimated on a good faith
basis by the Company and the estimated amount shall be paid no later than 90
days after such Date of Termination.  As soon as practicable thereafter, the
final determination of the amount due shall be made and any adjustment requiring
a payment to or from the Executive shall be made as promptly as practicable.

                                      -14-
<PAGE>
 
      5.  Indemnification.
          ----------------

          5.1  General.  The Company agrees that if the Executive is made a
               --------                                                    
party or is threatened to be made a party to any action, suit or proceeding,
whether civil, criminal, administrative or investigative (a "Proceeding"), by
reason of the fact that he is or was a director or officer of the Company is or
was serving at the request of the Company as a director, officer, member,
employee or agent of another corporation or of a partnership, joint venture,
trust or other enterprise, including, without limitation, service with respect
to employee benefit plans, whether or not the basis of such Proceeding is
alleged action in an official capacity as a director, officer, member, employee
or agent while serving as a director, officer, member, employee or agent, the
Executive shall be indemnified and held harmless by the Company to the fullest
extent authorized by applicable law (in accordance with the Articles of
Incorporation and/or bylaws of the Company), as the same exists or may hereafter
be amended, against all Expenses incurred or suffered by the Executive in
connection therewith, and such indemnification shall continue as to the
Executive even if the Executive has ceased to be an officer, director or agent,
or is no longer employed by the Company and shall inure to the benefit of his
heirs, executors and administrators.

          5.2  Expenses.  As used in this Agreement, the term "Expenses" shall
               --------                                                       
include, without limitation, damages, losses, judgments, liabilities, fines,
penalties, excise taxes, settlements and costs, attorneys' fees, accountants'
fees, and disbursements and costs of attachment or similar bonds,
investigations, and any expenses of establishing a right to indemnification
under this Agreement.

          5.3  Enforcement.  If a claim or request under this Agreement is not
               -----------                                                    
paid by the Company, or on their behalf, within fifteen days after a written
claim or request has been received by the Company, the Executive may at any time
thereafter bring suit against the Company to recover the unpaid amount of the
claim or request and if successful in whole or in part, the Executive shall be
entitled to be paid also the expenses of prosecuting such suit.  The burden of
proving that the Executive is not entitled to indemnification for any reason
shall be upon the Company.

          5.4  Subrogation.  In the event of payment under this Agreement, the
               -----------                                                    
Company shall be subrogated to the extent of such payment to all of the rights
of recovery of the Executive.

          5.5  Partial Indemnification.  If the Executive is entitled under any
               -----------------------                                         
provision of this Agreement to indemnification by the Company for some or a
portion of any Expenses, but not, however, for the total amount thereof, the
Company shall nevertheless indemnify the Executive for the portion of such
Expenses to which the Executive is entitled.

                                      -15-
<PAGE>
 
          5.6  Advances of Expenses.  Expenses incurred by the Executive in
               --------------------                                        
connection with any Proceeding shall be paid by the Company in advance upon
request of the Executive that the Company pay such Expenses.

          5.7  Notice of Claim.  The Executive shall give to the Company notice
               ---------------                                                 
of any claim made against his for which indemnity will or could be sought under
this Agreement.  In addition, the Executive shall give the Company such
information and cooperation as it may reasonably require and as shall be within
the Executive's power and at such times and places as are convenient for the
Executive.

          5.8  Defense of Claim.  With respect to any Proceeding as to which the
               ----------------                                                 
Executive notifies the Company of the commencement thereof:

                    5.8.1  The Company will be entitled to participate therein
at its own expense; and

                    5.8.2  Except as otherwise provided below, to the extent
that it may wish, the Company jointly with any other indemnifying party
similarly notified will be entitled to assume the defense thereof, with counsel
satisfactory to the Executive. The Executive also shall have the right to employ
his own counsel in such action, suit or proceeding and the fees and expenses of
such counsel shall be at the expense of the Company. The Company shall not be
entitled to assume the defense of any action, suit or proceeding brought by or
on behalf of the Company or as to which the Executive shall have reasonably
concluded that there may be a conflict of interest between the Company and the
Executive in the conduct of the defense of such action.

                    5.8.3  The Company shall not be liable to indemnify the
Executive under this Agreement for any amounts paid in settlement of any action
or claim effected without its written consent. The Company shall not settle any
action or claim in any manner which would impose any penalty or limitation on
the Executive without Executive's written consent. Neither the Company nor the
Executive shall unreasonably withhold or delay their consent to any proposed
settlement.

          5.9  Non-exclusivity.  The right to indemnification and the payment
               ----------------                                              
of expenses incurred in defending a Proceeding in advance of its final
disposition conferred in this Section 5 shall not be exclusive of any other
right which the Executive may have or hereafter may acquire under any statute,
provision of the certificate of incorporation or by-laws of the Company,
agreement, vote of stockholders or disinterested directors or otherwise.

          5.10 Directors and Officers Liability Policy.  The Company agrees to
               ----------------------------------------                       
use reasonable efforts to obtain a directors and officers liability insurance

                                      -16-
<PAGE>
 
policy covering the Executive.  The Company shall use its reasonable efforts to
maintain during the Term (and for so long thereafter as is practicable in the
circumstances taking account of prevailing conditions as to availability of such
insurance) coverage to the Executive in a reasonable and adequate amount.

          6.  Other Provisions.
              ---------------- 

              6.1  Notices.  Any notice or other communication required or
                   -------
permitted hereunder shall be in writing and shall be delivered personally,
telegraphed, telexed, sent by facsimile transmission or sent by certified,
registered or express mail, postage prepaid. Any such notice shall be deemed
given when so delivered personally, telegraphed, telexed or sent by facsimile
transmission or, if mailed, on the date of actual receipt thereof, as follows:

              (i)   If to the Company to:

                         The Rouse Company
                         10275 Little Patuxent Parkway
                         Columbia, MD 21044
                         Attn:  General Counsel

              (ii)  If to the Executive, to:

                         Anthony W. Deering
                         6011 Charlesmeade
                         Baltimore, MD 21212

              Any party may change its address for notice hereunder by notice
to the other party hereto.

              6.2  Entire Agreement.  This Agreement, including the attached
                   ----------------                                         
Schedules which are a part hereof for all purposes, contains the entire
agreement and understanding between the parties with respect to the subject
matter hereof and supersedes all prior agreements, written or oral, with respect
thereto.

              6.3  Governing Law.  This Agreement shall be governed and
                   -------------                                       
construed in accordance with the laws of the State of Maryland.

              6.4  Assignment.  The obligations of the Executive hereunder are
                   ----------                                                 
personal and may not be assigned or delegated by him or transferred in any
manner whatsoever, nor are such obligations subject to involuntary alienation,
assignment or transfer.  The Company shall have the right to assign this
Agreement and to delegate all rights, duties and obligations hereunder, either
in whole or in part, to any parent, affiliate, successor or subsidiary
organization or company of the 

                                      -17-
<PAGE>
 
Company, so long as the obligations of the Company under this Agreement remain
the obligations of the Company, provided, that the Company will require any
                                -------- 
successor (whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or assets of the
Company, by agreement in form and substance reasonably acceptable to the
Executive, to assume expressly and agree to perform this Agreement in the same
manner and to the same extent that the Company would be required to perform it
if no such succession had taken place. Nothing contained in this Section 6.4 is
intended to affect the Executive's rights under this Agreement if a Change of
Control shall occur.

          7.  Resolution of Disputes.
              ---------------------- 

                  7.1  Negotiation.  The parties shall attempt in good faith to
                       -----------           
resolve any dispute arising out of or relating to this Agreement promptly by
negotiations between the Executive and an executive officer of the Company or
member of the Board of Directors of the Company as may be designated by the
Board of Directors who has authority to settle the controversy. Any party may
give the other party written notice of any dispute not resolved in the normal
course of business. Within 10 days after the effective date of such notice, the
Executive and an executive officer of the Company shall meet at a mutually
acceptable time and place within the Baltimore-Washington metropolitan area, and
thereafter as often as they reasonably deem necessary, to exchange relevant
information and to attempt to resolve the dispute. If the matter has not been
resolved within 30 days of the disputing party's notice, or if the parties fail
to meet within 10 days, either party may initiate arbitration of the controversy
or claim as provided hereinafter. If a negotiator intends to be accompanied at a
meeting by an attorney, the other negotiator shall be given at least three
business days, notice of such intention and may also be accompanied by an
attorney. All negotiations pursuant to this Section 7.1 shall be treated as
compromise and settlement negotiations for the purposes of the federal and state
rules of evidence and procedure.

                  7.2  Arbitration. Any dispute arising out of or relating to
                       ----------- 
this Agreement or the breach, termination or validity thereof, which has not
been resolved by nonbinding means as provided in Section 7.1 within 60 days of
the initiation of such procedure, shall be finally settled by arbitration
conducted expeditiously in accordance with the Center for Public Resources, Inc.
("CPR") Rules for Non-Administered Arbitration of Business Disputes by three
independent and impartial arbitrators, of whom each party shall appoint one,
provided that if one party has requested the other to participate in a non-
binding procedure and the other has failed to participate, the requesting party
may initiate arbitration before the expiration of such period. Any such party
shall be appointed from the CPR Panels of Neutrals. The arbitration shall be
governed by the United States Arbitration Act and any judgment upon the award
decided upon the arbitrators may be entered by any court having jurisdiction
thereof. The arbitrators are not 

                                      -18-
<PAGE>
 
empowered to award damages in excess of compensatory damages and each party
hereby irrevocably waives any damages in excess of compensatory damages. Each
party hereby acknowledges that compensatory damages include (without limitation)
any benefit or right of indemnification given by another party to the other
under this Agreement.

              7.3  Expenses.  The Company shall promptly pay or reimburse the
                   --------                                                  
Executive for all costs and expenses, including, without limitation, court costs
and attorneys, fees, incurred by the Executive as a result of any claim, action
or proceeding (including, without limitation a claim action or proceeding by the
Executive against the Company) arising out of, or challenging the validity or
enforceability of, this Agreement or any provision hereof or any other agreement
or entitlement referred to herein.

          8.  Successors.  This Agreement shall be binding upon and inure to the
              ----------                                                        
benefit of the Executive and his heirs, executors, administrators and legal
representatives.  This Agreement shall be binding upon and inure to the benefit
of the Company and its successors and assigns.

          9.  No Mitigation or Set-Off.  The provisions of this Agreement are
              ------------------------                                       
not intended to, nor shall they be construed to, require that the Executive
mitigate the amount of any payment provided for in this Agreement by seeking or
accepting other employment, nor shall the amount of any payment provided for in
this Agreement be reduced by any compensation earned by the Executive as a
result of his employment by another employer or otherwise.  The Company's
obligations to make the payments to the Executive required under this Agreement
and otherwise to perform its obligations hereunder shall not be affected by any
set off, counterclaim, recoupment, defense or other claim, right or action that
the Company may have against the Executive.

          10. Amendment.  This Agreement may be amended or modified only by an
              ---------                                                       
agreement in writing executed by all of the parties hereto.

          11. Beneficiaries/References.  The Executive shall be entitled to
              -------------------------                                    
select (and change) a beneficiary or beneficiaries to receive any compensation
or benefit payable hereunder following the Executive's death, and may change
such election, in either case by giving the Company written notice thereof.  In
the event of the Executive's death or a judicial determination of his
incompetence, reference in this Agreement to the Executive shall be deemed,
where appropriate, to refer to his beneficiary(ies), estate or other legal
representative(s), as the case may be.

          12. Representation.  The Company represents and warrants that it is
              ---------------                                                
fully authorized and empowered to enter into this Agreement and that the
performance of its obligations under this Agreement will not violate any
agreement 

                                      -19-
<PAGE>
 
between the Company and any other person, firm or organization or any applicable
laws or regulations.

          13.  Survivorship.  The respective rights and obligations of the
               -------------                                              
parties hereunder shall survive any termination of this Agreement or the
Executive's employment hereunder to the extent necessary to the intended
preservation of such rights and obligations.


          IN WITNESS WHEREOF, the parties have executed this Agreement effective
for all purposes as of the date first above written.

                              THE ROUSE COMPANY



                              By: /s/ Mathias J. DeVito
                                  ------------------------------------
                                    Name:  Mathias J. DeVito
                                    Title: Chairman of the
                                           Executive Committee
                                           of the Board of Directors


                              ANTHONY W. DEERING



                                  /s/ Anthony W. Deering
                                --------------------------------------

                                      -20-
<PAGE>
 
                                   Exhibit A

                        List of Current Board Positions

1.   T. Rowe Price

2.   Baltimore Museum of Art

3.   Mayor's Business Advisory Council

4.   Greater Baltimore Committee

5.   NAREIT

6.   Parks and People
<PAGE>
 
                                                               EXHIBIT B



                                             March 24, 1999


Mr. Anthony W. Deering
The Rouse Company
10275 Little Patuxent Parkway
Columbia, MD 21044

Dear Mr. Deering:

          On September 24, 1998, the Board of Directors granted you a stock
bonus under the 1997 Stock Incentive Plan for 109,850 shares of the Company's
Common Stock (the "Bonus Shares"). This stock bonus is granted to you in
connection with the execution by you of an Employment Agreement of even date
herewith (the "Employment Agreement").

          The Bonus Shares are granted subject to the restriction that you may
not sell, assign, transfer, pledge, hypothecate, encumber or otherwise dispose
of the Bonus Shares until January 31, 2005; provided, however, that this
restriction shall be of no force and effect if your Employment Agreement is
terminated pursuant to the provisions of Section 4.1 or 4.3 thereof.

          However, if your Employment Agreement is terminated pursuant to the
provisions of Section 4.2 or Section 4.4 thereof, prior to January 31, 2005, all
of the Bonus Shares will be forfeited to the Company without payment therefor.

          One certificate for 109,850 shares of the Company's Common Stock is
simultaneously being delivered to you.  The legend on the reverse side of the
certificate describes the restrictions to which the stock is subject.

          To acknowledge your agreement to the terms and restrictions to which
the Bonus Shares are subject, please sign and date the original of this letter
and return it to Bruce I. Rothschild.
<PAGE>
 
Page 2
October 19, 1998


     If you have any questions concerning your stock bonus, please feel free to
contact me.

                                              Sincerely yours,

                                              THE ROUSE COMPANY


                                              By  /s/ Mathias J. Devito
                                                  ---------------------
                                                   Mathias J. DeVito
                                                   Chairman of the Executive
                                                   Committee of the Board of
                                                   Directors


The undersigned agrees to the
above-described restrictions
to which the Bonus Shares are
subject.

Signature: /s/ Anthony W. Deering
           ----------------------

Date: October 22, 1998
      ----------------      
<PAGE>
 
EXHIBIT C-1                                        1998 GRANT


                               THE ROUSE COMPANY

                           1997 STOCK INCENTIVE PLAN

                       INCENTIVE STOCK OPTION AGREEMENT
                       --------------------------------


          THIS INCENTIVE STOCK OPTION AGREEMENT, effective the 24th day of
                                                               ----       
September, 1998, by and between THE ROUSE COMPANY, a Maryland corporation (the
---------                                                                     
"Company"), and Anthony W. Deering ("Employee").

                                  BACKGROUND
                                  ----------

          By action of its Board of Directors and Stockholders, the Company has
adopted The Rouse Company 1997 Stock Incentive Plan (the "Plan"), under which
the Company may grant stock options and other stock awards to employees of the
Company.  The Board of Directors has authority (i) to grant stock options to
officers and other key employees of the Company and, subject to the provisions
of the Plan, to determine the employees to whom and the time or times at which
options will be granted, the number of shares to be covered by each option, the
period of time and requisite conditions for exercising an option and the terms
and provisions of the option agreements and (ii) to determine the fair market
value, from time to time, of a share of Common Stock of the Company.

                                  THE OPTION
                                  ----------

          The Board of Directors has determined to grant a stock option to
Employee, and Employee, by his execution of this Agreement, agrees to accept the
stock option, subject to the provisions of the Plan and the following terms and
conditions:

          SECTION 1.  Grant of Option.
                      --------------- 

          a.  Number of Shares.  The Company grants to Employee the right and
              ----------------                                               
option to purchase, subject to the terms and conditions of this Agreement and
the Plan, a total of 3,661 shares of Common Stock of the Company, par value one
cent ($.01) per share ("Common Stock"), which shares are designated as shares
<PAGE>
 
granted under an incentive stock option (as that term is described in Section
1(d) below).

          b.  Option Price.  The purchase price of all such shares of Common
              ------------                                                  
Stock shall be $27.3125 per share, which price is equal to the last sale price,
regular way, for Common Stock on September 23, 1998, the business day
immediately preceding the date such option was granted, as reported on the New
York Stock Exchange.

          c.  "Option" Defined.  The option granted hereby and all of Employee's
              ----------------                                                  
rights under this Agreement and the Plan are referred to collectively as the
"Option."

          d.  Tax Status of Option.  The option is designated as constituting an
              --------------------                                              
"incentive stock option" under Section 422 of the Internal Revenue Code of 1986,
as amended.

          SECTION 2.  Vesting of Option.  The Option vests as to all 3,661
                      -----------------                                   
shares of Common Stock on September 23, 2003.  In addition, the Option
immediately vests as to all of the shares of Common Stock in the event of
Employee's death, total disability (as defined in Section 5(c) below) or
discharge without good cause (as defined in Section 3 below).

          SECTION 3.  "Discharge Without Good Cause" and "Change of Control"
                       -----------------------------------------------------
Defined.
------- 

          a.  "Discharge Without Good Cause."  For purposes of this Agreement,
               ----------------------------                                   
"discharge without good cause" shall mean (i) any discharge other than discharge
due solely to an act or acts of gross or willful negligence or of intentional
wrongdoing or misconduct, which has or have a material adverse effect on
Employee's ability to perform the duties of his position or on the good
standing, financial condition or profitability of the Company or (ii) any change
of control of the Company (as hereinafter defined).

          b.  "Change of Control."  For purposes of this Agreement, a "change of
               -----------------                                                
control" shall mean (1) any merger by the Company with or into another
corporation or corporations; (2) any acquisition (by purchase, lease or
otherwise) of all or substantially all of the assets of the Company by any
person, corporation or other entity or group thereof acting jointly; (3) the
acquisition of beneficial ownership, directly or indirectly, of voting
securities of the Company (defined as Common Stock of 

                                      -2-
<PAGE>
 
the Company or any securities having voting rights that the Company may issue in
the future) and rights to acquire voting securities of the Company (defined as
including, without limitation, securities that are convertible into voting
securities of the Company (as defined above) and rights, options, warrants and
other agreements or arrangements to acquire such voting securities) by any
person, corporation or other entity or group thereof acting jointly, in such
amount or amounts as would permit such person, corporation or other entity or
group thereof acting jointly to elect a majority of the members of the Board of
Directors of the Company, as then constituted; or (4) the acquisition of
beneficial ownership, directly or indirectly, of voting securities and rights to
acquire voting securities having voting power equal to 20% or more of the
combined voting power of the Company's then outstanding voting securities by any
person, corporation or other entity or group thereof acting jointly unless such
acquisition as is described in this part (4) is expressly approved by resolution
of the Board of Directors of the Company passed upon affirmative vote of not
less than a majority thereof and adopted at a meeting of the Board held not
later than the date of the next regularly scheduled or special meeting held
following the date the Company obtains actual knowledge of such acquisition
(which approval may be limited in purpose and effect solely to affecting the
rights of Employee under this Agreement). Notwithstanding the preceding
sentence, (i) any transaction that involves a mere change in identity, form or
place of organization within the meaning of Section 368(a)(1)(F) of the Internal
Revenue Code of 1986, as amended, or a transaction of similar effect, and (ii)
any business combination involving solely the Company and Corporate Property
Investors which is approved by the Company's Board of Directors shall not
constitute a "change of control."

          SECTION 4.  Termination of Option.
                      --------------------- 

          a.  Termination for Cause.  If Employee's employment is terminated by
              ---------------------                                            
the Company for Cause (as defined in Section 4.2 of the Employee's Employment
Agreement of even date herewith), all unexercised rights under the Option shall
expire on the date of such termination.

          b.  Other Termination.  If, before the Option vests as provided in
              -----------------                                             
Section 2 above, Employee's employment with the Company terminates for any
reason other than death, total disability (as defined in Section 5(c) below) or
discharge without good cause (as defined in Section 3 above), the Option 

                                      -3-
<PAGE>
 
shall terminate on the date of such termination, and Employee shall have no
rights under the Option or this Agreement.

          SECTION 5.  Exercise of Option.
                      ------------------ 

          a.  Exercise Period. Employee may exercise the Option to purchase the
              ---------------                                                  
vested shares at any time (whether while serving as an employee of the Company
or after ceasing to be an employee of the Company), and from time to time (but
not as to less than 10 shares at any one time), on and after the date such
shares have vested as provided in Section 2 above through and including
September 23, 2008 (the "Expiration Date"), notwithstanding that Employee may
forfeit the favorable tax treatment afforded the Option if Employee exercises
the Option later than three (3) months after such termination.

          b.  Exercise Period - Death or Total Disability.  If Employee becomes
              -------------------------------------------                      
totally disabled (as defined in Section 5(c) below) or dies either while serving
as an employee of the Company or after ceasing to be an employee of the Company,
the Option may be exercised with respect to the vested shares by Employee or by
the executor, administrator or personal representative of Employee's estate or
other person entitled by law to Employee's rights under the Option at any time
through and including the Expiration Date.

          c.  "Total Disability" Defined.  "Total disability" shall mean a
               -------------------------                                  
disability that has continued for a period of more than 180 days and has
prevented Employee from performing in a usual and proper manner the functions of
his position.

          d.  Exercise before the Expiration Date.  Notwithstanding any other
              -----------------------------------                            
provision of this Agreement, in no event may the Option or any portion of the
Option be exercised after September 23, 2008.

          SECTION 6.  Manner of Exercise; Notices.  The Option shall be
                      ---------------------------                      
exercised by sending to the Secretary of the Company a written notice of
Employee's intention to purchase such shares, specifying the number of shares
(but not less than 10 shares at any one time) and the date that the purchase is
to occur.  Payment of the option price may be made (i) in U.S. dollars in cash
or by wire transfer, check, bank draft or money order payable to the Company,
(ii) through the delivery of Common Stock or other securities issued by the
Company that have a fair market 

                                      -4-
<PAGE>
 
value equal to the option price, or (iii) by a combination of the foregoing.
Full payment must be made for all shares to be purchased before the shares will
be released to Employee. The exercise notice shall be addressed to the Secretary
of the Company at The Rouse Company Building, 10275 Little Patuxent Parkway,
Columbia, Maryland 21044, or at such other address as the Company designates in
writing to Employee. Any notice to Employee shall be sent to his address as
shown in the records of the Company or at such other address as Employee
designates in writing to the Company. Any such notice shall be deemed to have
been duly given if it is personally delivered or registered and deposited,
postage and registry fee prepaid, in a United States Post Office. For purposes
of this Section 6, the "fair market value" of any Company securities that are
delivered in payment of the option price shall be equal to (i) the last sale
price for Company Common Stock or Preferred Stock for the business day
immediately preceding the date on which any portion of the Option is exercised
as reported on the New York Stock Exchange, or, if Company Common Stock or
Preferred Stock is not traded on the New York Stock Exchange, on the exchange on
which such Common Stock or Preferred Stock is principally traded, or, if no sale
price is reported for such day, the first preceding business day for which a
sale price for Common Stock or Preferred Stock is reported, or (ii) the value of
any other Company security, as determined by the Chief Financial Officer of the
Company in a manner consistent, to the extent possible, with the determination
of fair market value of Company Common Stock or Preferred Stock as provided in
clause (i).

          SECTION 7.  Reload Option.  If, while Employee is employed by the
                      -------------                                        
Company, Employee delivers shares of Common Stock in payment of the option price
of the Option, Employee shall be issued a new stock option (the "Reload
Option"), under any of The Rouse Company 1997 Stock Incentive Plan, The Rouse
Company 1994 Stock Incentive Plan, The Rouse Company 1990 Stock Option Plan or
any subsequently adopted Company Stock Incentive or Stock Option Plan
(collectively, the "Plans") that has Common Stock available for option grant,
upon the following terms:  (i)  the number of option shares of Common Stock
granted under the Reload Option shall be equal to the number of shares of Common
Stock that were delivered in payment of the option price of the Option; (ii) the
option exercise price of the Reload Option shall be equal to the last sale
price, regular way, for Common Stock on the New York Stock Exchange on the day
on which the Option was exercised, or, if Common Stock is not then traded on the
New York Stock Exchange, on the exchange on which such Common Stock is

                                      -5-
<PAGE>
 
principally traded; (iii) the Reload Option shall have a term equal to the
remaining term of the Option; (iv) the Reload Option shall vest immediately,
except that Employee may, in Employee's discretion, specify that a later vesting
date shall be included in the stock option agreement for the Reload Option, and
(v) the other terms of the Reload Option shall be consistent with the terms of
the most recent stock options granted by the Committee.

          SECTION 8.  Tax Provisions.  At the request of Employee, the Company
                      --------------                                          
shall retain or accept a sufficient number of shares in connection with the
receipt or exercise of the Option or a sale of the underlying shares to satisfy
the Company's tax withholding obligations, if any, or Employee's tax liabilities
with respect to such transactions.

          SECTION 9.  Adjustments upon Certain Changes in the Common Stock.  If,
                      ----------------------------------------------------      
after the date of this Agreement and prior to the full exercise of the Option,
the Company (without receiving compensation therefor) effects one or more stock
splits, stock dividends, recapitalizations or other increases or reductions in
the number of shares of its outstanding Common Stock, then, unless the Board of
Directors expressly determines otherwise, the number of shares with respect to
the unexercised portion of the Option and the per share purchase price shall be
adjusted as follows:

          a.  in the event of a net increase in the number of shares of its
outstanding Common Stock, the number of shares shall be proportionately
increased, and the per share purchase price shall be proportionately reduced; or

          b.  in the event of a net reduction in the number of shares of its
outstanding Common Stock, the number of shares shall be proportionately reduced,
and the per share purchase price shall be proportionately increased.

          SECTION 10. Employee's Rights Prior to Issuance of Shares.  Employee
                      ---------------------------------------------           
shall not be, nor shall Employee have any of the rights or privileges of, a
stockholder of the Company with regard to any of the shares issuable upon
exercise of the Option unless and until a physical stock certificate for such
shares has been issued or such shares have been credited to Employee's account
under a book entry or comparable system.

          SECTION 11. Assignment or Transfer.  Except for transfer by
                      ----------------------                         
testamentary instrument or the laws of inheritance, 

                                      -6-
<PAGE>
 
descent and distribution, the Option may not be transferred, assigned, pledged
or hypothecated in any way (whether by operation of law or otherwise) and shall
not be subject to execution, attachment or similar process.

          SECTION 12.  Continued Employment.  Employee shall have no duty or
                       --------------------                                 
obligation to remain in the employ of the Company.  Nothing in this Agreement
shall be deemed to confer upon Employee any right to continue in the employ of
the Company or to interfere in any way with the right of the Company to
terminate the employment of Employee, which is at will, at any time.

          SECTION 13.  Binding on Successors.  This Agreement shall be binding
                       ---------------------                                  
upon and inure to the benefit of the Company and Employee and their respective
successors, representatives and assigns.

          SECTION 14.  Captions.  The captions of this Agreement are for
                       --------                                         
convenience and reference only and in no way define, describe, extend or limit
the scope or intent of any of its provisions.

          SECTION 15.  Amendments.  This Agreement may only be amended in
                       ----------                                        
writing and with the mutual consent of the Company and Employee.

          SECTION 16.  Applicable Law.  This Agreement and any disputes arising
                       --------------                                          
under this Agreement shall be governed by, and construed in accordance with, the
laws of the State of Maryland and any applicable laws of the United States of
America.

                                      -7-
<PAGE>
 
          IN WITNESS WHEREOF the Company and Employee have executed this
Agreement as of the day and year first above written.

ATTEST:                                 THE ROUSE COMPANY



/s/ Bruce I. Rothschild                 By  /s/ Mathias J. DeVito
------------------------                  ---------------------------     
     Bruce I. Rothschild                     Mathias J. DeVito
     Secretary                               Chairman of the
                                             Executive Committee
                                             of the Board of
                                             Directors


                                          /s/ Anthony W. Deering
                                        -----------------------------       
                                              Anthony W. Deering

                                      -8-
<PAGE>
 
EXHIBIT C-2                                                  1998 GRANT



                               THE ROUSE COMPANY

                           1997 STOCK INCENTIVE PLAN

                      NONQUALIFIED STOCK OPTION AGREEMENT
                      -----------------------------------



          THIS NONQUALIFIED STOCK OPTION AGREEMENT, effective the 24th day of
                                                                  ----       
September, 1998, by and between THE ROUSE COMPANY, a Maryland corporation (the
---------  ----                                                               
"Company"), and Anthony W. Deering ("Employee").

                                  BACKGROUND
                                  ----------

          By action of its Board of Directors and Stockholders, the Company has
adopted The Rouse Company 1997 Stock Incentive Plan (the "Plan"), under which
the Company may grant stock options and other stock awards to employees of the
Company. The Board of Directors has authority (i) to grant stock options to
officers and other key employees of the Company and, subject to the provisions
of the Plan, to determine the employees to whom and the time or times at which
options will be granted, the number of shares to be covered by each option, the
period of time and requisite conditions for exercising an option and the terms
and provisions of the option agreements and (ii) to determine the fair market
value, from time to time, of a share of Common Stock of the Company.

                                 THE OPTION
                                 ----------

          The Board of Directors has determined to grant a nonqualified stock
option to Employee, and Employee, by his execution of this Agreement, agrees to
accept the nonqualified stock option, subject to the provisions of the Plan and
the following terms and conditions:

          SECTION 1.  Grant of Option.
                      --------------- 

          a.  Number of Shares.  The Company grants to Employee the right and
              ----------------                                               
option to purchase, subject to the terms and conditions of this Agreement and
the Plan, a total of 296,339 

                                      -1-
<PAGE>
 
shares of Common Stock of the Company, par value one cent ($.01) per share
("Common Stock").

          b.  Option Price.  The purchase price of all such shares of Common
              ------------                                                  
Stock shall be $27.3125 per share, which price is equal to the last sale price,
regular way, for Common Stock on September 23, 1998, the business day
immediately preceding the date such option was granted, as reported on the New
York Stock Exchange.

          c.  "Option" Defined.  The option granted hereby and all of Employee's
              ----------------                                                  
rights under this Agreement and the Plan are referred to collectively as the
"Option."

          d.  Tax Status of Option.  This option is designated as not
              --------------------                                   
constituting an "incentive stock option" under Section 422 of the Internal
Revenue Code of 1986, as amended.  If, however, there is a change in law that
permits all or any portion of the shares granted under this Agreement to be
treated as shares granted under an "incentive stock option," the Company (by the
Chairman of the Board or Chief Executive Officer of the Company) and Employee
may mutually agree that such shares shall be treated as shares granted under an
"incentive stock option," and the Company and Employee may amend this Agreement
or enter into such other agreements as may be necessary or desirable to provide
that such shares shall be treated as shares granted under an "incentive stock
option."

          SECTION 2.  Vesting of Option.  The Option vests as to 150,000 shares
                      -----------------                                        
of Common Stock on September 23, 2002 and 146,339 shares of Common Stock on
September 23, 2003. In addition, the Option immediately vests as to all of the
shares of Common Stock in the event of Employee's death, total disability (as
defined in Section 5(c) below) or discharge without good cause (as defined in
Section 3 below).

          SECTION 3.  "Discharge Without Good Cause" and "Change of Control"
                       -----------------------------------------------------
Defined.
------- 

          a.  "Discharge Without Good Cause."  For purposes of this Agreement,
               ----------------------------                                   
"discharge without good cause" shall mean (i) any discharge other than discharge
due solely to an act or acts of gross or willful negligence or of intentional
wrongdoing or misconduct, which has or have a material adverse effect on
Employee's ability to perform the duties of his position or on the good
standing, financial condition or profitability of the

                                      -2-
<PAGE>
 
Company or (ii) any change of control of the Company (as hereinafter defined).

          b.  "Change of Control."  For purposes of this Agreement, a "change of
               -----------------                                                
control" shall mean (1) any merger by the Company with or into another
corporation or corporations; (2) any acquisition (by purchase, lease or
otherwise) of all or substantially all of the assets of the Company by any
person, corporation or other entity or group thereof acting jointly; (3) the
acquisition of beneficial ownership, directly or indirectly, of voting
securities of the Company (defined as Common Stock of the Company or any
securities having voting rights that the Company may issue in the future) and
rights to acquire voting securities of the Company (defined as including,
without limitation, securities that are convertible into voting securities of
the Company (as defined above) and rights, options, warrants and other
agreements or arrangements to acquire such voting securities) by any person,
corporation or other entity or group thereof acting jointly, in such amount or
amounts as would permit such person, corporation or other entity or group
thereof acting jointly to elect a majority of the members of the Board of
Directors of the Company, as then constituted; or (4) the acquisition of
beneficial ownership, directly or indirectly, of voting securities and rights to
acquire voting securities having voting power equal to 20% or more of the
combined voting power of the Company's then outstanding voting securities by any
person, corporation or other entity or group thereof acting jointly unless such
acquisition as is described in this part (4) is expressly approved by resolution
of the Board of Directors of the Company passed upon affirmative vote of not
less than a majority thereof and adopted at a meeting of the Board held not
later than the date of the next regularly scheduled or special meeting held
following the date the Company obtains actual knowledge of such acquisition
(which approval may be limited in purpose and effect solely to affecting the
rights of Employee under this Agreement). Notwithstanding the preceding
sentence, (i) any transaction that involves a mere change in identity, form or
place of organization within the meaning of Section 368(a)(1)(F) of the Internal
Revenue Code of 1986, as amended, or a transaction of similar effect, and (ii)
any business combination involving solely the Company and Corporate Property
Investors which is approved by the Company's Board of Directors shall not
constitute a "change of control."

          SECTION 4.  Termination of Option.
                      --------------------- 

                                      -3-
<PAGE>
 
          a.  Termination for Cause.  If Employee's employment is terminated by
              ---------------------                                            
the Company for Cause (as defined in Section 4.2 of the Employee's Employment
Agreement of even date herewith), all unexercised rights under the Option shall
expire on the date of such termination.

          b.  Other Termination.  If, before the Option vests as provided in
              -----------------                                             
Section 2 above, Employee's employment with the Company terminates for any
reason other than death, total disability (as defined in Section 5(c) below) or
discharge without good cause (as defined in Section 3 above), the Option shall
terminate on the date of such termination, and Employee shall have no rights
under the Option or this Agreement.

          SECTION 5.  Exercise of Option.
                      ------------------ 

          a.  Exercise Period - General. Employee may exercise the Option to
              -------------------------                                     
purchase the vested shares at any time (whether while serving as an employee of
the Company or after ceasing to be an employee of the Company), and from time to
time (but not as to less than 10 shares at any one time), on and after the date
such shares have vested as provided in Section 2 above through and including
September 23, 2008 (the "Expiration Date").

          b.  Exercise Period - Death or Total Disability.  If Employee becomes
              -------------------------------------------                      
totally disabled (as defined in Section 5(c) below) or dies either while serving
as an employee of the Company or after ceasing to be an employee of the Company,
the Option may be exercised with respect to the vested shares by Employee or by
the executor, administrator or personal representative of Employee's estate or
other person entitled by law to Employee's rights under the Option at any time
through and including the Expiration Date.

          c.  "Total Disability" Defined.  "Total disability" shall mean a
               -------------------------                                  
disability that has continued for a period of more than 180 days and has
prevented Employee from performing in a usual and proper manner the functions of
his position.

          d.  Exercise before the Expiration Date.  Notwithstanding any other
              -----------------------------------                            
provision of this Agreement, in no event may the Option or any portion of the
Option be exercised after September 23, 2008.

          SECTION 6.  Manner of Exercise; Notices.  The Option shall be
                      ---------------------------                      
exercised by sending to the Secretary of the Company a 

                                      -4-
<PAGE>
 
written notice of Employee's intention to purchase such shares, specifying the
number of shares (but not less than 10 shares at any one time) and the date that
the purchase is to occur. Payment of the option price may be made (i) in U.S.
dollars in cash or by wire transfer, check, bank draft or money order payable to
the Company, (ii) through the delivery of Common Stock or other securities
issued by the Company that have a fair market value equal to the option price,
or (iii) by a combination of the foregoing. Full payment must be made for all
shares to be purchased before the shares will be released to Employee. The
exercise notice shall be addressed to the Secretary of the Company at The Rouse
Company Building, 10275 Little Patuxent Parkway, Columbia, Maryland 21044, or at
such other address as the Company designates in writing to Employee. Any notice
to Employee shall be sent to his address as shown in the records of the Company
or at such other address as Employee designates in writing to the Company. Any
such notice shall be deemed to have been duly given if it is personally
delivered or registered and deposited, postage and registry fee prepaid, in a
United States Post Office. For purposes of this Section 6, the "fair market
value" of any Company securities that are delivered in payment of the option
price shall be equal to (i) the last sale price for Company Common Stock or
Preferred Stock for the business day immediately preceding the date on which any
portion of the Option is exercised as reported on the New York Stock Exchange,
or, if Company Common Stock or Preferred Stock is not traded on the New York
Stock Exchange, on the exchange on which such Common Stock or Preferred Stock is
principally traded, or, if no sale price is reported for such day, the first
preceding business day for which a sale price for Common Stock or Preferred
Stock is reported, or (ii) the value of any other Company security, as
determined by the Chief Financial Officer of the Company in a manner consistent,
to the extent possible, with the determination of fair market value of Company
Common Stock or Preferred Stock as provided in clause (i).

          SECTION 7.  Reload Option.  If, while Employee is employed by the
                      -------------                                        
Company, Employee delivers shares of Common Stock in payment of the option price
of the Option, Employee shall be issued a new stock option (the "Reload
Option"), under any of The Rouse Company 1997 Stock Incentive Plan, The Rouse
Company 1994 Stock Incentive Plan, The Rouse Company 1990 Stock Option Plan or
any subsequently adopted Company Stock Incentive or Stock Option Plan
(collectively, the "Plans") that has Common Stock available for option grant,
upon the following terms: (i) the number of option shares of Common Stock
granted under the Reload Option 

                                      -5-
<PAGE>
 
shall be equal to the number of shares of Common Stock that were delivered in
payment of the option price of the Option; (ii) the option exercise price of the
Reload Option shall be equal to the last sale price, regular way, for Common
Stock on the New York Stock Exchange on the day on which the Option was
exercised, or, if Common Stock is not then traded on the New York Stock
Exchange, on the exchange on which such Common Stock is principally traded;
(iii) the Reload Option shall have a term equal to the remaining term of the
Option; (iv) the Reload Option shall vest immediately, except that Employee may,
in Employee's discretion, specify that a later vesting date shall be included in
the stock option agreement for the Reload Option, and (v) the other terms of the
Reload Option shall be consistent with the terms of the most recent stock
options granted by the Committee.

          SECTION 8.  Tax Provisions.  At the request of Employee, the Company
                      --------------                                          
shall retain or accept a sufficient number of shares in connection with the
receipt or exercise of the Option or a sale of the underlying shares to satisfy
the Company's tax withholding obligations, if any, or Employee's tax liabilities
with respect to such transactions.

          SECTION 9.  Adjustments upon Certain Changes in the Common Stock.  If,
                      ----------------------------------------------------      
after the date of this Agreement and prior to the full exercise of the Option,
the Company (without receiving compensation therefor) effects one or more stock
splits, stock dividends, recapitalizations or other increases or reductions in
the number of shares of its outstanding Common Stock, then, unless the Board of
Directors expressly determines otherwise, the number of shares with respect to
the unexercised portion of the Option and the per share purchase price shall be
adjusted as follows:

          a.  in the event of a net increase in the number of shares of its
outstanding Common Stock, the number of shares shall be proportionately
increased, and the per share purchase price shall be proportionately reduced; or

          b.  in the event of a net reduction in the number of shares of its
outstanding Common Stock, the number of shares shall be proportionately reduced,
and the per share purchase price shall be proportionately increased.

          SECTION 10. Employee's Rights Prior to Issuance of Shares.  Employee
                      ---------------------------------------------           
shall not be, nor shall Employee have any of the rights or privileges of, a
stockholder of the Company with 

                                      -6-
<PAGE>
 
regard to any of the shares issuable upon exercise of the Option unless and
until a physical stock certificate for such shares has been issued or such
shares have been credited to Employee's account under a book entry or comparable
system.

          SECTION 11.  Assignment or Transfer.  The Option may not be
                       ----------------------                        
transferred, assigned, pledged or hypothecated in any way (whether by operation
of law or otherwise) (i) except that the Option may be transferred, assigned,
pledged or hypothecated, in whole or in part to any member of the immediate
family of Employee (i.e., any child, stepchild, grandchild, parent, stepparent,
grandparent, spouse, sibling, mother-in-law, father-in-law, son-in-law,
daughter-in-law, brother-in-law or sister-in-law, including any adoptive
relationships) or to any trust, partnership, corporation or other entity for the
benefit of any member of the immediate family of Employee and (ii) except for
transfer by testamentary instrument or the laws of inheritance, descent and
distribution.  The Option shall not be subject to execution, attachment or
similar process.

          SECTION 12.  Continued Employment.  Employee shall have no duty or
                       --------------------                                 
obligation to remain in the employ of the Company.  Nothing in this Agreement
shall be deemed to confer upon Employee any right to continue in the employ of
the Company or to interfere in any way with the right of the Company to
terminate the employment of Employee, which is at will, at any time.

          SECTION 13.  Binding on Successors.  This Agreement shall be binding
                       ---------------------                                  
upon and inure to the benefit of the Company and Employee and their respective
successors, representatives and assigns.

          SECTION 14.  Captions.  The captions of this Agreement are for
                       --------                                         
convenience and reference only and in no way define, describe, extend or limit
the scope or intent of any of its provisions.

          SECTION 15.  Amendments.  This Agreement may only be amended in
                       ----------                                        
writing and with the mutual consent of the Company and Employee.

          SECTION 16.  Applicable Law.  This Agreement and any disputes arising
                       --------------                                          
under this Agreement shall be governed by, and construed in accordance with, the
laws of the State of Maryland and any applicable laws of the United States of
America.

                                      -7-
<PAGE>
 
          IN WITNESS WHEREOF the Company and Employee have executed this
Agreement as of the day and year first above written.

ATTEST:                             THE ROUSE COMPANY



/s/ Bruce I. Rothschil              By /s/ Mathias J. DeVito
-----------------------------         ----------------------------
     Bruce I. Rothschild                Mathias J. DeVito
     Secretary                          Chairman of the
                                        Executive Committee
                                        of the Board of
                                        Directors

                                     /s/ Anthony W. Deering
                                    ------------------------------
                                         Anthony W. Deering

                                      -8-
<PAGE>
 
EXHIBIT D-1                                                  ACCELERATED GRANT--
                                                             REVISED


                               THE ROUSE COMPANY

                           1997 STOCK INCENTIVE PLAN

                       INCENTIVE STOCK OPTION AGREEMENT
                       --------------------------------


          THIS INCENTIVE STOCK OPTION AGREEMENT, effective the 24th day of
September, 1998, by and between THE ROUSE COMPANY, a Maryland corporation (the
"Company"), and Anthony W. Deering ("Employee").

                                  BACKGROUND
                                  ----------

          By action of its Board of Directors and Stockholders, the Company has
adopted The Rouse Company 1997 Stock Incentive Plan (the "Plan"), under which
the Company may grant stock options and other stock awards to employees of the
Company.  The Board of Directors has authority (i) to grant stock options to
officers and other key employees of the Company and, subject to the provisions
of the Plan, to determine the employees to whom and the time or times at which
options will be granted, the number of shares to be covered by each option, the
period of time and requisite conditions for exercising an option and the terms
and provisions of the option agreements and (ii) to determine the fair market
value, from time to time, of a share of Common Stock of the Company.

                                  THE OPTION
                                  ----------

          The Board of Directors has determined to grant a stock option to
Employee, and Employee, by his execution of this Agreement, agrees to accept the
stock option, subject to the provisions of the Plan and the following terms and
conditions:

          SECTION 1.  Grant of Option.
                      --------------- 

          a.  Number of Shares.  The Company grants to Employee the right and
              ----------------                                               
option to purchase, subject to the terms and conditions of this Agreement and
the Plan, a total of 3,051 shares of Common Stock of the Company, par value one
cent ($.01) 
<PAGE>
 
per share ("Common Stock"), which shares are designated as shares granted under
an incentive stock option (as that term is described in Section 1(d) below).

          b.  Option Price.  The purchase price of all such shares of Common
              ------------                                                  
Stock shall be $32.77 per share.

          c.  "Option" Defined.  The option granted hereby and all of Employee's
              ----------------                                                  
rights under this Agreement and the Plan are referred to collectively as the
"Option."

          d.  Tax Status of Option.  The option is designated as constituting an
              --------------------                                              
"incentive stock option" under Section 422 of the Internal Revenue Code of 1986,
as amended.

          SECTION 2.  Vesting of Option.  The Option vests as to all 3,051
                      -----------------                                   
shares of Common Stock on February 25, 2004.  In addition, the Option
immediately vests as to all of the shares of Common Stock in the event of
Employee's death, total disability (as defined in Section 5(c) below) or
discharge without good cause (as defined in Section 3 below).

          SECTION 3.  "Discharge Without Good Cause" and "Change of Control"
                       -----------------------------------------------------
Defined.
------- 

          a.  "Discharge Without Good Cause."  For purposes of this Agreement,
               ----------------------------                                   
"discharge without good cause" shall mean (i) any discharge other than discharge
due solely to an act or acts of gross or willful negligence or of intentional
wrongdoing or misconduct, which has or have a material adverse effect on
Employee's ability to perform the duties of his position or on the good
standing, financial condition or profitability of the Company or (ii) any change
of control of the Company (as hereinafter defined).

          b.  "Change of Control."  For purposes of this Agreement, a "change of
               -----------------                                                
control" shall mean (1) any merger by the Company with or into another
corporation or corporations; (2) any acquisition (by purchase, lease or
otherwise) of all or substantially all of the assets of the Company by any
person, corporation or other entity or group thereof acting jointly; (3) the
acquisition of beneficial ownership, directly or indirectly, of voting
securities of the Company (defined as Common Stock of the Company or any
securities having voting rights that the Company may issue in the future) and
rights to acquire voting securities of the Company (defined as including,
without 

                                      -2-
<PAGE>
 
limitation, securities that are convertible into voting securities of the
Company (as defined above) and rights, options, warrants and other agreements or
arrangements to acquire such voting securities) by any person, corporation or
other entity or group thereof acting jointly, in such amount or amounts as would
permit such person, corporation or other entity or group thereof acting jointly
to elect a majority of the members of the Board of Directors of the Company, as
then constituted; or (4) the acquisition of beneficial ownership, directly or
indirectly, of voting securities and rights to acquire voting securities having
voting power equal to 20% or more of the combined voting power of the Company's
then outstanding voting securities by any person, corporation or other entity or
group thereof acting jointly unless such acquisition as is described in this
part (4) is expressly approved by resolution of the Board of Directors of the
Company passed upon affirmative vote of not less than a majority thereof and
adopted at a meeting of the Board held not later than the date of the next
regularly scheduled or special meeting held following the date the Company
obtains actual knowledge of such acquisition (which approval may be limited in
purpose and effect solely to affecting the rights of Employee under this
Agreement). Notwithstanding the preceding sentence, (i) any transaction that
involves a mere change in identity, form or place of organization within the
meaning of Section 368(a)(1)(F) of the Internal Revenue Code of 1986, as
amended, or a transaction of similar effect, and (ii) any business combination
involving solely the Company and Corporate Property Investors which is approved
by the Company's Board of Directors shall not constitute a "change of control."

          SECTION 4.  Termination of Option.
                      --------------------- 

          a.  Termination for Cause.  If Employee's employment is terminated by
              ---------------------                                            
the Company for Cause (as defined in Section 4.2 of the Employee's Employment
Agreement of even date herewith), all unexercised rights under the Option shall
expire on the date of such termination.

          b.  Other Termination.  If, before the Option vests as provided in
              -----------------                                             
Section 2 above, Employee's employment with the Company terminates for any
reason other than death, total disability (as defined in Section 5(c) below) or
discharge without good cause (as defined in Section 3 above), the Option shall
terminate on the date of such termination, and Employee shall have no rights
under the Option or this Agreement.

                                      -3-
<PAGE>
 
          SECTION 5.  Exercise of Option.
                      ------------------ 

          a.  Exercise Period. Employee may exercise the Option to purchase the
              ---------------                                                  
vested shares at any time (whether while serving as an employee of the Company
or after ceasing to be an employee of the Company), and from time to time (but
not as to less than 10 shares at any one time), on and after the date such
shares have vested as provided in Section 2 above through and including
September 23, 2008 (the "Expiration Date"), notwithstanding that Employee may
forfeit the favorable tax treatment afforded the Option if Employee exercises
the Option later than three (3) months after such termination.

          b.  Exercise Period - Death or Total Disability.  If Employee becomes
              -------------------------------------------                      
totally disabled (as defined in Section 5(c) below) or dies either while serving
as an employee of the Company or after ceasing to be an employee of the Company,
the Option may be exercised with respect to the vested shares by Employee or by
the executor, administrator or personal representative of Employee's estate or
other person entitled by law to Employee's rights under the Option at any time
through and including the Expiration Date.

          c.  "Total Disability" Defined.  "Total disability" shall mean a
               -------------------------                                  
disability that has continued for a period of more than 180 days and has
prevented Employee from performing in a usual and proper manner the functions of
his position.

          d.  Exercise before the Expiration Date.  Notwithstanding any other
              -----------------------------------                            
provision of this Agreement, in no event may the Option or any portion of the
Option be exercised after September 23, 2008.

          SECTION 6.  Manner of Exercise; Notices.  The Option shall be
                      ---------------------------                      
exercised by sending to the Secretary of the Company a written notice of
Employee's intention to purchase such shares, specifying the number of shares
(but not less than 10 shares at any one time) and the date that the purchase is
to occur.  Payment of the option price may be made (i) in U.S. dollars in cash
or by wire transfer, check, bank draft or money order payable to the Company,
(ii) through the delivery of Common Stock or other securities issued by the
Company that have a fair market value equal to the option price, or (iii) by a
combination of the foregoing.  Full payment must be made for all shares to be
purchased before the shares will be released to Employee.  The 

                                      -4-
<PAGE>
 
exercise notice shall be addressed to the Secretary of the Company at The Rouse
Company Building, 10275 Little Patuxent Parkway, Columbia, Maryland 21044, or at
such other address as the Company designates in writing to Employee. Any notice
to Employee shall be sent to his address as shown in the records of the Company
or at such other address as Employee designates in writing to the Company. Any
such notice shall be deemed to have been duly given if it is personally
delivered or registered and deposited, postage and registry fee prepaid, in a
United States Post Office. For purposes of this Section 6, the "fair market
value" of any Company securities that are delivered in payment of the option
price shall be equal to (i) the last sale price for Company Common Stock or
Preferred Stock for the business day immediately preceding the date on which any
portion of the Option is exercised as reported on the New York Stock Exchange,
or, if Company Common Stock or Preferred Stock is not traded on the New York
Stock Exchange, on the exchange on which such Common Stock or Preferred Stock is
principally traded, or, if no sale price is reported for such day, the first
preceding business day for which a sale price for Common Stock or Preferred
Stock is reported, or (ii) the value of any other Company security, as
determined by the Chief Financial Officer of the Company in a manner consistent,
to the extent possible, with the determination of fair market value of Company
Common Stock or Preferred Stock as provided in clause (i).

          SECTION 7.  Reload Option.  If, while Employee is employed by the
                      -------------                                        
Company, Employee delivers shares of Common Stock in payment of the option price
of the Option, Employee shall be issued a new stock option (the "Reload
Option"), under any of The Rouse Company 1997 Stock Incentive Plan, The Rouse
Company 1994 Stock Incentive Plan, The Rouse Company 1990 Stock Option Plan or
any subsequently adopted Company Stock Incentive or Stock Option Plan
(collectively, the "Plans") that has Common Stock available for option grant,
upon the following terms:  (i)  the number of option shares of Common Stock
granted under the Reload Option shall be equal to the number of shares of Common
Stock that were delivered in payment of the option price of the Option; (ii) the
option exercise price of the Reload Option shall be equal to the last sale
price, regular way, for Common Stock on the New York Stock Exchange on the day
on which the Option was exercised, or, if Common Stock is not then traded on the
New York Stock Exchange, on the exchange on which such Common Stock is
principally traded; (iii) the Reload Option shall have a term equal to the
remaining term of the Option; (iv) the Reload Option shall vest immediately,
except that Employee may, in Employee's 

                                      -5-
<PAGE>
 
discretion, specify that a later vesting date shall be included in the stock
option agreement for the Reload Option, and (v) the other terms of the Reload
Option shall be consistent with the terms of the most recent stock options
granted by the Committee.

          SECTION 8.  Tax Provisions.  At the request of Employee, the Company
                      --------------                                          
shall retain or accept a sufficient number of shares in connection with the
receipt or exercise of the Option or a sale of the underlying shares to satisfy
the Company's tax withholding obligations, if any, or Employee's tax liabilities
with respect to such transactions.

          SECTION 9.  Adjustments upon Certain Changes in the Common Stock.  If,
                      ----------------------------------------------------      
after the date of this Agreement and prior to the full exercise of the Option,
the Company (without receiving compensation therefor) effects one or more stock
splits, stock dividends, recapitalizations or other increases or reductions in
the number of shares of its outstanding Common Stock, then, unless the Board of
Directors expressly determines otherwise, the number of shares with respect to
the unexercised portion of the Option and the per share purchase price shall be
adjusted as follows:

          a.  in the event of a net increase in the number of shares of its
outstanding Common Stock, the number of shares shall be proportionately
increased, and the per share purchase price shall be proportionately reduced; or

          b.  in the event of a net reduction in the number of shares of its
outstanding Common Stock, the number of shares shall be proportionately reduced,
and the per share purchase price shall be proportionately increased.

          SECTION 10. Employee's Rights Prior to Issuance of Shares.  Employee
                      ---------------------------------------------           
shall not be, nor shall Employee have any of the rights or privileges of, a
stockholder of the Company with regard to any of the shares issuable upon
exercise of the Option unless and until a physical stock certificate for such
shares has been issued or such shares have been credited to Employee's account
under a book entry or comparable system.

          SECTION 11. Assignment or Transfer.  Except for transfer by
                      ----------------------                         
testamentary instrument or the laws of inheritance, descent and distribution,
the Option may not be transferred, assigned, pledged or hypothecated in any way
(whether by 

                                      -6-
<PAGE>
 
operation of law or otherwise) and shall not be subject to execution, attachment
or similar process.

          SECTION 12.  Continued Employment.  Employee shall have no duty or
                       --------------------                                 
obligation to remain in the employ of the Company.  Nothing in this Agreement
shall be deemed to confer upon Employee any right to continue in the employ of
the Company or to interfere in any way with the right of the Company to
terminate the employment of Employee, which is at will, at any time.

          SECTION 13.  Binding on Successors.  This Agreement shall be binding
                       ---------------------                                  
upon and inure to the benefit of the Company and Employee and their respective
successors, representatives and assigns.

          SECTION 14.  Captions.  The captions of this Agreement are for
                       --------                                         
convenience and reference only and in no way define, describe, extend or limit
the scope or intent of any of its provisions.

          SECTION 15.  Amendments.  This Agreement may only be amended in
                       ----------                                        
writing and with the mutual consent of the Company and Employee.

          SECTION 16.  Applicable Law.  This Agreement and any disputes arising
                       --------------                                          
under this Agreement shall be governed by, and construed in accordance with, the
laws of the State of Maryland and any applicable laws of the United States of
America.

                                      -7-
<PAGE>
 
          IN WITNESS WHEREOF the Company and Employee have executed this
Agreement as of the day and year first above written.

ATTEST:                                      THE ROUSE COMPANY


   /s/  Bruce I. Rothschild                  By /s/ Mathias J. DeVito
 ----------------------------                   -------------------------
     Bruce I. Rothschild                          Mathias J. DeVito
     Secretary                                    Chairman of the
                                                  Executive Committee
                                                  of the Board of
                                                  Directors



                                             /s/  Anthony W. Deering
                                             ----------------------------
                                                  Anthony W. Deering

                                      -8-
<PAGE>
 
EXHIBIT D-2                                            ACCELERATED GRANT--
                                                       REVISED


                               THE ROUSE COMPANY

                           1997 STOCK INCENTIVE PLAN

                      NONQUALIFIED STOCK OPTION AGREEMENT
                      -----------------------------------


          THIS NONQUALIFIED STOCK OPTION AGREEMENT, effective the 24th day of
September, 1998, by and between THE ROUSE COMPANY, a Maryland corporation (the
"Company"), and Anthony W. Deering ("Employee").

                                  BACKGROUND
                                  ----------

          By action of its Board of Directors and Stockholders, the Company has
adopted The Rouse Company 1997 Stock Incentive Plan (the "Plan"), under which
the Company may grant stock options and other stock awards to employees of the
Company.  The Board of Directors has authority (i) to grant stock options to
officers and other key employees of the Company and, subject to the provisions
of the Plan, to determine the employees to whom and the time or times at which
options will be granted, the number of shares to be covered by each option, the
period of time and requisite conditions for exercising an option and the terms
and provisions of the option agreements and (ii) to determine the fair market
value, from time to time, of a share of Common Stock of the Company.

                                  THE OPTION
                                  ----------

          The Board of Directors has determined to grant a nonqualified stock
option to Employee, and Employee, by his execution of this Agreement, agrees to
accept the nonqualified stock option, subject to the provisions of the Plan and
the following terms and conditions:

          SECTION 1.  Grant of Option.
                      --------------- 

          a.  Number of Shares.  The Company grants to Employee the right and
              ----------------                                               
option to purchase, subject to the terms and conditions of this Agreement and
the Plan, a total of 296,949 
<PAGE>
 
shares of Common Stock of the Company, par value one cent ($.01) per share
("Common Stock").

          b.  Option Price.  The purchase price of all such shares of Common
              ------------                                                  
Stock shall be $32.77 per share.

          c.  "Option" Defined.  The option granted hereby and all of Employee's
              ----------------                                                  
rights under this Agreement and the Plan are referred to collectively as the
"Option."

          d.  Tax Status of Option.  This option is designated as not
              --------------------                                   
constituting an "incentive stock option" under Section 422 of the Internal
Revenue Code of 1986, as amended.  If, however, there is a change in law that
permits all or any portion of the shares granted under this Agreement to be
treated as shares granted under an "incentive stock option," the Company (by the
Chairman of the Board or Chief Executive Officer of the Company) and Employee
may mutually agree that such shares shall be treated as shares granted under an
"incentive stock option," and the Company and Employee may amend this Agreement
or enter into such other agreements as may be necessary or desirable to provide
that such shares shall be treated as shares granted under an "incentive stock
option."

          SECTION 2.  Vesting of Option.  The Option vests as to 75,000 shares
                      -----------------                                       
of Common Stock on February 25, 2001, February 25, 2002 and February 25, 2003
and as to 71,949 shares on February 25, 2004.  In addition, the Option
immediately vests as to all of the shares of Common Stock in the event of
Employee's death, total disability (as defined in Section 5(c) below) or
discharge without good cause (as defined in Section 3 below).

          SECTION 3.  "Discharge Without Good Cause" and "Change of Control"
                       -----------------------------------------------------
Defined.
------- 

          a.  "Discharge Without Good Cause."  For purposes of this Agreement,
               ----------------------------                                   
"discharge without good cause" shall mean (i) any discharge other than discharge
due solely to an act or acts of gross or willful negligence or of intentional
wrongdoing or misconduct, which has or have a material adverse effect on
Employee's ability to perform the duties of his position or on the good
standing, financial condition or profitability of the Company or (ii) any change
of control of the Company (as hereinafter defined).

                                      -2-
<PAGE>
 
          b.  "Change of Control."  For purposes of this Agreement, a "change of
               -----------------                                                
control" shall mean (1) any merger by the Company with or into another
corporation or corporations; (2) any acquisition (by purchase, lease or
otherwise) of all or substantially all of the assets of the Company by any
person, corporation or other entity or group thereof acting jointly; (3) the
acquisition of beneficial ownership, directly or indirectly, of voting
securities of the Company (defined as Common Stock of the Company or any
securities having voting rights that the Company may issue in the future) and
rights to acquire voting securities of the Company (defined as including,
without limitation, securities that are convertible into voting securities of
the Company (as defined above) and rights, options, warrants and other
agreements or arrangements to acquire such voting securities) by any person,
corporation or other entity or group thereof acting jointly, in such amount or
amounts as would permit such person, corporation or other entity or group
thereof acting jointly to elect a majority of the members of the Board of
Directors of the Company, as then constituted; or (4) the acquisition of
beneficial ownership, directly or indirectly, of voting securities and rights to
acquire voting securities having voting power equal to 20% or more of the
combined voting power of the Company's then outstanding voting securities by any
person, corporation or other entity or group thereof acting jointly unless such
acquisition as is described in this part (4) is expressly approved by resolution
of the Board of Directors of the Company passed upon affirmative vote of not
less than a majority thereof and adopted at a meeting of the Board held not
later than the date of the next regularly scheduled or special meeting held
following the date the Company obtains actual knowledge of such acquisition
(which approval may be limited in purpose and effect solely to affecting the
rights of Employee under this Agreement). Notwithstanding the preceding
sentence, (i) any transaction that involves a mere change in identity, form or
place of organization within the meaning of Section 368(a)(1)(F) of the Internal
Revenue Code of 1986, as amended, or a transaction of similar effect, and (ii)
any business combination involving solely the Company and Corporate Property
Investors which is approved by the Company's Board of Directors shall not
constitute a "change of control."

          SECTION 4.  Termination of Option.
                      --------------------- 

          a.  Termination for Cause.  If Employee's employment is terminated by
              ---------------------                                            
the Company for Cause (as defined in Section 4.2 of 

                                      -3-
<PAGE>
 
the Employee's Employment Agreement of even date herewith), all unexercised
rights under the Option shall expire on the date of such termination.

          b.  Other Termination.  If, before the Option vests as provided in
              -----------------                                             
Section 2 above, Employee's employment with the Company terminates for any
reason other than death, total disability (as defined in Section 5(c) below) or
discharge without good cause (as defined in Section 3 above), the Option shall
terminate on the date of such termination, and Employee shall have no rights
under the Option or this Agreement.

          SECTION 5.  Exercise of Option.
                      ------------------ 

          a.  Exercise Period - General. Employee may exercise the Option to
              -------------------------                                     
purchase the vested shares at any time (whether while serving as an employee of
the Company or after ceasing to be an employee of the Company), and from time to
time (but not as to less than 10 shares at any one time), on and after the date
such shares have vested as provided in Section 2 above through and including
September 23, 2008 (the "Expiration Date").

          b.  Exercise Period - Death or Total Disability.  If Employee becomes
              -------------------------------------------                      
totally disabled (as defined in Section 5(c) below) or dies either while serving
as an employee of the Company or after ceasing to be an employee of the Company,
the Option may be exercised with respect to the vested shares by Employee or by
the executor, administrator or personal representative of Employee's estate or
other person entitled by law to Employee's rights under the Option at any time
through and including the Expiration Date.

          c.  "Total Disability" Defined.  "Total disability" shall mean a
               -------------------------                                  
disability that has continued for a period of more than 180 days and has
prevented Employee from performing in a usual and proper manner the functions of
his position.

          d.  Exercise before the Expiration Date.  Notwithstanding any other
              -----------------------------------                            
provision of this Agreement, in no event may the Option or any portion of the
Option be exercised after September 23, 2008.

          SECTION 6.  Manner of Exercise; Notices.  The Option shall be
                      ---------------------------                      
exercised by sending to the Secretary of the Company a written notice of
Employee's intention to purchase such shares, 

                                      -4-
<PAGE>
 
specifying the number of shares (but not less than 10 shares at any one time)
and the date that the purchase is to occur. Payment of the option price may be
made (i) in U.S. dollars in cash or by wire transfer, check, bank draft or money
order payable to the Company, (ii) through the delivery of Common Stock or other
securities issued by the Company that have a fair market value equal to the
option price, or (iii) by a combination of the foregoing. Full payment must be
made for all shares to be purchased before the shares will be released to
Employee. The exercise notice shall be addressed to the Secretary of the Company
at The Rouse Company Building, 10275 Little Patuxent Parkway, Columbia, Maryland
21044, or at such other address as the Company designates in writing to
Employee. Any notice to Employee shall be sent to his address as shown in the
records of the Company or at such other address as Employee designates in
writing to the Company. Any such notice shall be deemed to have been duly given
if it is personally delivered or registered and deposited, postage and registry
fee prepaid, in a United States Post Office. For purposes of this Section 6, the
"fair market value" of any Company securities that are delivered in payment of
the option price shall be equal to (i) the last sale price for Company Common
Stock or Preferred Stock for the business day immediately preceding the date on
which any portion of the Option is exercised as reported on the New York Stock
Exchange, or, if Company Common Stock or Preferred Stock is not traded on the
New York Stock Exchange, on the exchange on which such Common Stock or Preferred
Stock is principally traded, or, if no sale price is reported for such day, the
first preceding business day for which a sale price for Common Stock or
Preferred Stock is reported, or (ii) the value of any other Company security, as
determined by the Chief Financial Officer of the Company in a manner consistent,
to the extent possible, with the determination of fair market value of Company
Common Stock or Preferred Stock as provided in clause (i).

          SECTION 7.  Reload Option.  If, while Employee is employed by the
                      -------------                                        
Company, Employee delivers shares of Common Stock in payment of the option price
of the Option, Employee shall be issued a new stock option (the "Reload
Option"), under any of The Rouse Company 1997 Stock Incentive Plan, The Rouse
Company 1994 Stock Incentive Plan, The Rouse Company 1990 Stock Option Plan or
any subsequently adopted Company Stock Incentive or Stock Option Plan
(collectively, the "Plans") that has Common Stock available for option grant,
upon the following terms: (i) the number of option shares of Common Stock
granted under the Reload Option 

                                      -5-
<PAGE>
 
shall be equal to the number of shares of Common Stock that were delivered in
payment of the option price of the Option; (ii) the option exercise price of the
Reload Option shall be equal to the last sale price, regular way, for Common
Stock on the New York Stock Exchange on the day on which the Option was
exercised, or, if Common Stock is not then traded on the New York Stock
Exchange, on the exchange on which such Common Stock is principally traded;
(iii) the Reload Option shall have a term equal to the remaining term of the
Option; (iv) the Reload Option shall vest immediately, except that Employee may,
in Employee's discretion, specify that a later vesting date shall be included in
the stock option agreement for the Reload Option, and (v) the other terms of the
Reload Option shall be consistent with the terms of the most recent stock
options granted by the Committee.

          SECTION 8.  Tax Provisions.  At the request of Employee, the Company
                      --------------                                          
shall retain or accept a sufficient number of shares in connection with the
receipt or exercise of the Option or a sale of the underlying shares to satisfy
the Company's tax withholding obligations, if any, or Employee's tax liabilities
with respect to such transactions.

          SECTION 9.  Adjustments upon Certain Changes in the Common Stock.  If,
                      ----------------------------------------------------      
after the date of this Agreement and prior to the full exercise of the Option,
the Company (without receiving compensation therefor) effects one or more stock
splits, stock dividends, recapitalizations or other increases or reductions in
the number of shares of its outstanding Common Stock, then, unless the Board of
Directors expressly determines otherwise, the number of shares with respect to
the unexercised portion of the Option and the per share purchase price shall be
adjusted as follows:

          a.  in the event of a net increase in the number of shares of its
outstanding Common Stock, the number of shares shall be proportionately
increased, and the per share purchase price shall be proportionately reduced; or

          b.  in the event of a net reduction in the number of shares of its
outstanding Common Stock, the number of shares shall be proportionately reduced,
and the per share purchase price shall be proportionately increased.

          SECTION 10. Employee's Rights Prior to Issuance of Shares.  Employee
                      ---------------------------------------------           
shall not be, nor shall Employee have any of 

                                      -6-
<PAGE>
 
the rights or privileges of, a stockholder of the Company with regard to any of
the shares issuable upon exercise of the Option unless and until a physical
stock certificate for such shares has been issued or such shares have been
credited to Employee's account under a book entry or comparable system.

          SECTION 11.  Assignment or Transfer.  The Option may not be
                       ----------------------                        
transferred, assigned, pledged or hypothecated in any way (whether by operation
of law or otherwise) (i) except that the Option may be transferred, assigned,
pledged or hypothecated, in whole or in part to any member of the immediate
family of Employee (i.e., any child, stepchild, grandchild, parent, stepparent,
grandparent, spouse, sibling, mother-in-law, father-in-law, son-in-law,
daughter-in-law, brother-in-law or sister-in-law, including any adoptive
relationships) or to any trust, partnership, corporation or other entity for the
benefit of any member of the immediate family of Employee and (ii) except for
transfer by testamentary instrument or the laws of inheritance, descent and
distribution.  The Option shall not be subject to execution, attachment or
similar process.

          SECTION 12.  Continued Employment.  Employee shall have no duty or
                       --------------------                                 
obligation to remain in the employ of the Company.  Nothing in this Agreement
shall be deemed to confer upon Employee any right to continue in the employ of
the Company or to interfere in any way with the right of the Company to
terminate the employment of Employee, which is at will, at any time.

          SECTION 13.  Binding on Successors.  This Agreement shall be binding
                       ---------------------                                  
upon and inure to the benefit of the Company and Employee and their respective
successors, representatives and assigns.

          SECTION 14.  Captions.  The captions of this Agreement are for
                       --------                                         
convenience and reference only and in no way define, describe, extend or limit
the scope or intent of any of its provisions.

          SECTION 15.  Amendments.  This Agreement may only be amended in
                       ----------                                        
writing and with the mutual consent of the Company and Employee.

          SECTION 16.  Applicable Law.  This Agreement and any disputes arising
                       --------------                                          
under this Agreement shall be governed by, and 

                                      -7-
<PAGE>
 
construed in accordance with, the laws of the State of Maryland and any
applicable laws of the United States of America.

          IN WITNESS WHEREOF the Company and Employee have executed this
Agreement as of the day and year first above written.

ATTEST:                                      THE ROUSE COMPANY



 /s/ Bruce I. Rothschild                     By  /s/ Mathias J. DeVito
 -----------------------                       ----------------------------
     Bruce I. Rothschild                          Mathias J. DeVito
     Secretary                                    Chairman of the
                                                  Executive Committee
                                                  of the Board of
                                                  Directors



                                                 /s/ Anthony W. Deering
                                             ------------------------------ 
                                                     Anthony W. Deering

                                      -8-