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                                                                    EXHIBIT 10.8


                           CROSS TIMBERS OIL COMPANY









                           1997 STOCK INCENTIVE PLAN








                        Amended as of February 25, 1998
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                           CROSS TIMBERS OIL COMPANY

                             STOCK INCENTIVE PLAN


                              ARTICLE 1. GENERAL

     Section 1.1 Purpose.  The purposes of this Stock Incentive Plan (the
"Plan") are to: (1) associate the interests of the management of CROSS TIMBERS
OIL COMPANY and its subsidiaries and affiliates (collectively referred to as the
"Company") closely with the stockholders to generate an increased incentive to
contribute to the Company's future success and prosperity, thus enhancing the
value of the Company for the benefit of its stockholders; (2) provide management
with a proprietary ownership interest in the Company commensurate with Company
performance, as reflected in increased stockholder value; (3) maintain
competitive compensation levels thereby attracting and retaining highly
competent and talented directors and employees; and (4) provide an incentive to
management for continuous employment with the Company.  Certain capitalized
terms are defined in Section 6.7.

     Section 1.2.  Administration.

             (a) The Plan shall be administered by the Compensation Committee of
     the Board of Directors of the Company (the "Committee"), as constituted
     from time to time, consisting of two or more members who shall each be an
     Outside Director appointed by the Board of Directors.

             (b) The Committee shall have the authority in its sole discretion
     and from time to time to:

                 (i)     designate the executive employees (as defined in
          Section 1.3) of the Company eligible to participate in the Plan;

                 (ii)    grant Awards provided in the Plan in such form and
          amount as the Committee shall determine;

                 (iii)   impose such limitations, restrictions and conditions,
          not inconsistent with this Plan, upon any such Award as the Committee
          shall deem appropriate; and

                 (iv)    interpret the Plan and any agreement, instrument or
          other document executed in connection with the Plan, adopt, amend and
          rescind rules and regulations relating to the Plan, and make all other
          determinations and take all other action necessary or advisable for
          the implementation and administration of the Plan.

          (c) Decisions and determinations of the Committee on all matters
     relating to the Plan shall be in its sole discretion and shall be final,
     conclusive and binding upon all persons, including the Company, any
     participant, any stockholder of the Company and any employee.

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     A majority of the members of the Committee may determine its actions and
     fix the time and place of its meetings. No member of the Committee shall be
     liable for any action taken or decision made in good faith relating to the
     Plan or any Award thereunder.

     Section 1.3.  Eligibility for Participation.   Participants in the Plan
shall be selected by the Committee from the executive employees of the Company
or its Subsidiaries. For the purposes of this Plan, (i) the term "executive
employee" shall include only employees who are officers, or who are determined
by the Committee, in its discretion, to be key professional, managerial,
administrative, or technical employees or supervisors, and (ii) the term
"Subsidiary" means any corporation or other entity of which at least 50% of the
voting securities are owned by the Company directly or through one or more other
corporations, each of which is also a Subsidiary.  With respect to non-corporate
entities, Subsidiary shall mean an entity managed or controlled by the Company
or any Subsidiary and with respect to which the Company or any Subsidiary is
allocated more than half of the profits and losses thereof.

     Section 1.4.  Types of Awards Under Plan.  Awards under the Plan may be in
the form of any one or more of the following:

             (i)   Stock Options, as described in Article II;

             (ii)  Incentive Stock Options, as described in Article III; and/or

             (iii) Performance Shares, as described in Article IV.

Awards under the Plan shall be evidenced by an Award Agreement between the
Company and the recipient of the Award, in form and substance satisfactory to
the Committee, and not inconsistent with this Plan.  Award Agreements may
provide such vesting schedules for Stock Options and Incentive Stock Options,
and such other terms, conditions and provisions as are not inconsistent with the
terms of this Plan.  Subject to the express provisions of the Plan, and within
the limitations of the Plan, the Committee may modify, extend or renew
outstanding Award Agreements, or accept the surrender of outstanding Awards and
authorize the granting of new Awards in substitution therefor. However, except
as provided in this Plan, no modification of an Award shall impair the rights of
the holder thereof without his consent.

     Section 1.5.  Aggregate Limitation on Awards.

             (a) Shares of stock which may be issued under the Plan shall be
     authorized and unissued or treasury shares of Common Stock of the Company
     ("Common Stock").  The maximum number of shares of Common Stock which may
     be issued pursuant to Awards issued under the Plan shall be 2,250,000, of
     which 1,125,000 may be issued as Performance Shares.  In addition, the
     maximum number of shares that may be issued to any individual hereunder
     pursuant to Options or Performance Shares issued hereunder during any one
     year shall be 225,000 and 112,500, respectively, and the maximum number
     that may be issued to any individual pursuant to Options or Performance
     Shares issued hereunder during the life of the Plan shall be 450,000 and
     225,000, respectively.

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             (b)  For purposes of calculating the maximum number of shares of
     Common Stock which may be issued under the Plan at any time:

                  (i)  all the shares issued (including the shares, if any,
          withheld for tax withholding requirements) under the Plan shall be
          counted when issued upon exercise of a Stock Option or Incentive Stock
          Option; and

                  (ii) only the net shares issued as Performance Shares shall be
          counted (shares reacquired by the Company because of failure to
          achieve a performance target or failure to become fully vested for any
          other reason shall again be available for issuance under the Plan).

             (c)  Shares tendered by a participant as payment for shares issued
     upon exercise of a Stock Option or Incentive Stock Option may be made
     available for issuance under the Plan.  Any shares of Common Stock subject
     to a Stock Option or Incentive Stock Option which for any reason is
     terminated, unexercised or expires shall again be available for issuance
     under the Plan.

     Section 1.6.  Effective Date and Term of Plan.

             (a)  The Plan shall become effective on the date adopted by the
     Board of Directors, subject to approval by the holders of a majority of the
     votes of shares of Common Stock and Preferred Stock present in person or by
     proxy and entitled to vote at the Annual Meeting of stockholders of the
     Company held in 1997.

             (b)  No Awards shall be made under the Plan after the tenth
     anniversary of the effective date of this Plan; provided, however, that
     the Plan and all Awards made under the Plan prior to such date shall remain
     in effect until such Awards have been satisfied or terminated in accordance
     with the Plan and the terms of such Awards.

                           ARTICLE II. STOCK OPTIONS

     Section 2.1.  Award of Stock Options.  The Committee may from time to time,
and subject to the provisions of the Plan and such other terms and conditions as
the Committee may prescribe, grant to any participant in the Plan one or more
options to purchase for cash or shares the number of shares of Common Stock
("Stock Options") allotted by the Committee. The date a Stock Option is granted
shall mean the date selected by the Committee as of which the Committee allots a
specific number of shares to a participant pursuant to the Plan.

     Section 2.2.  Stock Option Agreements.  The grant of a Stock Option shall
be evidenced by a written Award Agreement, executed by the Company and the
holder of Stock Option (the "Optionee"), stating the number of shares of Common
Stock subject to the Stock Option evidenced thereby, and in such form as the
Committee may from time to time determine.

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     Section 2.3.  Stock Option Price.  The option price per share of Common
Stock deliverable upon the exercise of a Stock Option shall be 100% of the fair
market value of a share of Common Stock on the date the Stock Option is granted.

     Section 2.4.  Term and Exercise.  A Stock Option, unless a shorter period
is provided by the Committee or by another Section of this Plan, may be
exercised during a period of ten years from the date of grant thereof (the
"Option Term") and may be subject to such vesting scheduling as the Committee
may provide in an Award Agreement.  No Stock Option shall be exercisable after
the expiration of its Option Term.

     Section 2.5.  Manner of Payment. Each Award Agreement providing for Stock
Options shall set forth the procedure governing the exercise of the Stock Option
granted thereunder, and shall provide that, upon such exercise in respect of any
shares of Common Stock subject thereto, the Optionee shall pay to the Company,
in full, the option price for such shares with cash.  The Optionee may also pay
to the Company, in full, the option price with Common Stock owned by the
Optionee on the date of exercise or Common Stock acquired pursuant to such
exercise, provided that the Optionee provides satisfactory evidence, in the
opinion of the Secretary or any Assistant Secretary of the Company, that the
Optionee directly owns on the date of exercise shares of Common Stock sufficient
to pay the option price, and that the Optionee has owned such shares for six
months or more.

     Section 2.6.  Restrictions on Certain Shares.  As soon as practicable after
receipt of payment, the Company shall deliver to the Optionee a certificate or
certificates for such shares of Common Stock.  The Optionee shall become a
stockholder of the Company with respect to Common Stock represented by share
certificates so issued and as such shall be fully entitled to receive dividends,
to vote and to exercise all other rights of a stockholder.

     Section 2.7.  Death, Retirement and Termination of Employment of Optionee.
Unless otherwise provided in an Award Agreement or otherwise agreed to by the
Committee:

             (a) Upon the death of the Optionee, any Stock Option to the extent
     exercisable on the date of death may be exercised by the Optionee's estate,
     or by a person who acquires the right to exercise such Stock Option by
     bequest or inheritance or by reason of the death of the Optionee, provided
     that such exercise occurs within both (i) the remaining Option Term of the
     Stock Option and (ii) one year. The provisions of this Section shall apply
     notwithstanding that the Optionee's employment may have terminated prior to
     death,  but only to the extent of any rights exercisable on the date of
     termination of the Optionee's employment.

             (b)  Upon termination of the Optionee's employment by reason of
     retirement or permanent disability (as each is determined by the
     Committee), the Optionee may exercise any Stock Options, to the extent
     exercisable on the date of termination of the Optionee's employment,
     provided such option exercise occurs within both (i) the remaining Option
     Term of the Stock Option and (ii) six months (in the case of permanent
     disability) or three months (in the case of retirement).

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             (c)  Upon termination of the Optionee's employment by reason other
     than death, disability or cause (as each is determined by the Committee),
     the Optionee may exercise any Stock Options, to the extent exercisable on
     the date of termination of the Optionee's employment, provided such option
     exercise occurs within both (i) the remaining Option Term of the Stock
     Option and (ii) 30 days of the date of termination.

             (d)  Except as provided in Subsections (a), (b) and (c) of this
     Section 2.7, all Stock Options shall terminate immediately upon the
     termination of the Optionee's employment.

     Section 2.8.  Transferability.  The Committee may, in its discretion,
authorize all or a portion of the Stock Options to be granted to an Optionee to
be on terms which permit transfer by such Optionee to (i) the spouse, children
or grandchildren of the Optionee ("Immediate Family Members"), (ii) a trust or
trusts for the exclusive benefit of such Immediate Family Members, or (iii) a
partnership in which (a) the Optionee, (b) such Immediate Family Members, (c)
corporations, the only owners of which are such Immediate Family Members or the
Optionee, or (d) trusts whose only beneficiaries are such Immediate Family
Members or the Optionee, are the only partners, provided that (x) there may be
no consideration for any such transfer, (y) the Award Agreement pursuant to
which such Stock Options are granted must be approved by the Committee, and must
expressly provide for the transferability in a manner consistent with this
Section, and (z) subsequent transfers of transferred Stock Options shall be
prohibited except those in accordance with Section 6.2 hereof.  Following
transfer, such Stock Options shall continue to be subject to the same terms and
conditions as were applicable immediately prior to transfer, provided that for
purposes of Section 2.2 hereof the term "Optionee" shall be deemed to refer to
the transferee.  The events of termination of employment of Section 2.7 hereof
shall continue to be applied with respect to the original Optionee, following
which the Stock Options shall be exercisable by the transferee only to the
extent, and for the periods specified in Section 2.4.

                     ARTICLE III.  INCENTIVE STOCK OPTIONS

     Section 3.1.  Award of Incentive Stock Options.  The Committee may, from
time to time and subject to the provisions of the Plan and such other terms and
conditions as the Committee may prescribe, grant to any participant in the Plan
one or more "incentive stock options" (intended to qualify as such under the
provisions of section 422 of the Internal Revenue Code of 1986, as amended
("Incentive Stock Options")) to purchase for cash or shares the number of shares
of Common Stock allotted by the Committee. The date an Incentive Stock Option is
granted shall mean the date selected by the Committee as of which the Committee
allots a specific number of shares to a participant pursuant to the Plan.
Notwithstanding the foregoing, Incentive Stock Options shall not be granted to
any owner of 10% or more of the total combined voting power of all classes of
stock of the Company or its subsidiaries, unless the Incentive Stock Options (i)
have an exercise price of 110% of the fair market value of the Common Stock on
the date of grant, and (ii) may not be exercised more than five years from the
date of grant thereof.

     Section 3.2.  Incentive Stock Option Agreements.  The grant of an Incentive
Stock Option shall be evidenced by a written Award Agreement, executed by the
Company and the holder of an incentive

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Stock Option (the "Optionee"), stating the number of shares of Common Stock
subject to the Incentive Stock Option evidenced thereby and in such form as the
Committee may from time to time determine.

     Section 3.3.  Incentive Stock Option Price.  The option price per share of
Common Stock deliverable upon the exercise of an Incentive Stock Option shall be
100% of the fair market value of a share of Common Stock on the date the
Incentive Stock Option is granted.

     Section 3.4.  Term and Exercise.  Each Incentive Stock Option, unless a
shorter period is provided by the Committee or another Section of this Plan, may
be exercised during a period of ten years from the date of grant thereof (the
"Option Term") and may be subject to such vesting scheduling as the Committee
may provide in an Award Agreement.  No Incentive Stock Option shall be
exercisable after the expiration of its Option Term.

     Section 3.5.  Maximum Amount of Incentive Stock Option Grant.   The
aggregate fair market value (determined on the date the Incentive Stock Option
is granted) of Common Stock with respect to which Incentive Stock Options first
become exercisable by an Optionee during any calendar year (under all plans of
the Optionee's employer corporations and their parent and subsidiary
corporations) shall not exceed $100,000.

     Section 3.6.  Death of Optionee.

             (a)  Upon the death of the Optionee, any Incentive Stock Option
     exercisable on the date of death may be exercised by the Optionee's
     estate or by a person who acquires the right to exercise such Incentive
     Stock Option by bequest or inheritance or by reason of the death of the
     Optionee, provided that such exercise occurs within both the remaining
     Option Term of the Incentive Stock Option and one year after the Optionee's
     termination of employment.

             (b) The provisions of this Section shall apply notwithstanding that
     the Optionee's employment may have terminated prior to death, but only to
     the extent of any Incentive Stock Options exercisable on the date of death.

     Section 3.7.  Retirement or Disability.  Unless otherwise provided in an
Award Agreement or otherwise agreed to by the Committee, upon the termination of
the Optionee's employment by reason of permanent disability or retirement (as
each is determined by the Committee), the Optionee may exercise any Incentive
Stock Options, provided such option exercise occurs within both (i) the
remaining Option Term of the Incentive Stock Option and (ii) six months (in the
case of permanent disability) or three months (in the case of retirement).
Notwithstanding the terms of an Award Agreement, the tax treatment available
pursuant to Section 422 of the Internal Revenue Code of 1986 upon the exercise
of an Incentive Stock Option shall not be available to an Optionee who exercises
any Incentive Stock Options more than (i) six months after the date of
termination of employment due to permanent disability or (ii) three months after
the date of termination of employment due to retirement.

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     Section 3.8.  Termination for Other Reasons.  Except as provided in
Sections 3.6 and 3.7 or except as otherwise determined by the Committee in an
Award Agreement, all Incentive Stock Options shall terminate immediately upon
the termination of the Optionee's employment.

     Section 3.9.  Applicability of Stock Options Section.  Sections 2.5, Manner
of Payment; and 2.6, Restrictions on Certain Shares, applicable to Stock
Options, shall apply equally to Incentive Stock Options.  Said Sections are
incorporated by reference in this Article III, as though fully set forth herein.

                     ARTICLE IV.  PERFORMANCE SHARE AWARDS

     Section 4.1.  Awards Granted by Committee.   Coincident with or following
designation for participation in the Plan, a participant may be granted
Performance Shares.  Certificates representing Performance Shares shall be
issued to the participant effective as of the date of the Award.  Holders of
Performance Shares shall have all of the voting, dividend and other rights of
stockholders of the Company, subject to the terms of any Award Agreement.

     Section 4.2.  Amount of Award.  The Committee shall establish a maximum
amount of a participant's Award, which amount shall be denominated in shares of
Common Stock.

     Section 4.3.  Communication of Award.  Written notice of the maximum amount
of a participant's Award and the Performance Cycle determined by the Committee,
if any, shall be given to a participant as soon as practicable after approval of
the Award by the Committee.  The grant of Performance Shares shall be evidenced
by a written Award Agreement, executed by the Company and the recipient of
Performance Shares, in such form as the Committee may from time to time
determine, providing for the terms of such grant.

     Section 4.4.  Amount of Award Payable.  Performance Shares may be granted
based upon past performance or future performance.  In addition to any other
restrictions the Committee may place on Performance Shares, the Committee may,
in its discretion, provide that Performance Shares shall vest upon the
satisfaction of performance targets to be achieved during an applicable
"Performance Cycle."  Failure to satisfy the performance targets may result, in
the Committee's discretion as set forth in an Award Agreement, in the forfeiture
of the Performance Shares by the participant and the return of such shares to
the Company or have any other consequence as determined by the Committee.
Performance targets established by the Committee may relate to corporate, group,
unit or individual performance and may be established in terms of market price
of Common Stock, cash flow or cash flow per share, reserve value or reserve
value per share, net asset value or net asset value per share, earnings, or such
other measures or standards determined by the Committee.  Multiple performance
targets may be used and the components of multiple performance targets may be
given the same or different weight in determining the amount of an Award earned,
and may relate to absolute performance or relative performance measured against
other groups, units, individuals or entities.  Certificates representing
Performance Shares shall bear a legend restricting their transfer and requiring
the forfeiture of the shares to the Company if any performance targets or other
conditions to vesting are not met.  The Committee may also require a participant
to deliver certificates representing unvested Performance Shares to the Company
in escrow until the Performance Shares vest.

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     Section 4.5.  Adjustments.  At any time prior to vesting of a Performance
Share, the Committee may adjust previously established performance targets or
other terms and conditions to reflect events such as changes in laws,
regulations or accounting practice, or mergers, acquisitions, divestitures or
any other event determined by the Committee.

     Section 4.6.  Payments of Awards.  Following the conclusion of each
Performance Cycle, the Committee shall determine the extent to which performance
targets have been attained and the satisfaction of any other terms and
conditions with respect to vesting an Award relating to such Performance Cycle.
Subject to the provisions of Section 6.3, to the extent the Committee determines
Performance Shares have vested, the Company shall issue to the participant
certificates representing vested shares free of any legend regarding performance
targets or forfeiture in exchange for such participant's legended certificates.

     Section 4.7.  Termination of Employment.  Unless the Award Agreement
provides for vesting upon death, disability, retirement or other termination of
employment, upon any such termination of employment of a participant prior to
vesting of Performance Shares, all outstanding and unvested Awards of
Performance Shares to such participant shall be cancelled, shall not vest and
shall be returned to the Company.

     Section 4.8.  Transfer Restriction.  Any Award Agreement providing for the
issuance of Performance Shares to any person who at the time of grant is subject
to the restrictions of Section 16(b) of the Exchange Act, shall provide that
such Common Stock cannot be resold for a period of six months following the
grant of such Performance Shares.

                         ARTICLE V.  AUTOMATIC GRANTS

     Section 5.1.  Grant.  Each director who is not an employee of the Company,
its subsidiaries, affiliates and managers ("Non-Employee Director") shall on the
date on which he or she is initially elected or appointed a director of the
Company be granted a Stock Option to purchase 2,250 shares of Common Stock for
the fair market price on the date of such grant, for an Option Term of ten
years. Thereafter, on the first business day following the Annual Meeting of
Stockholders of each subsequent year in which the Non-Employee Director is still
serving as a director (whether or not such Non-Employee Director's term has been
continuous), he or she shall automatically be granted a Stock Option to purchase
an additional 2,250 shares of Common Stock for the fair market price on the date
of such grant for an Option Term of ten years, and shall automatically be
granted, in lieu of a cash fee for serving as a director of the Company, 3,375
Performance Shares, which shall vest six months after the date of grant, except
in the case of the death of the director, in which case they shall vest upon the
death of such director.

     Section 5.2.  Applicable Provisions.  The provisions of Section 2.7(a)
relating to the death of an Optionee shall apply to options granted to Non-
Employee Directors under Section 5.1, and the Committee may not agree to the
contrary in an Award Agreement or otherwise. The provisions of Subsections
2.7(b), (c) and (d) relating to disability and other termination of employment
shall not apply to options granted under Section 5.1, and the failure of a Non-
Employee Director to be re-elected as a director of the Company shall not affect
the Stock Options granted under this Article V.

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                          ARTICLE VI.  MISCELLANEOUS

     Section 6.1.  General Restriction.  Each Award under the Plan shall be
subject to the requirement that, if at any time the Committee shall determine
that (i) the listing, registration or qualification of the shares of Common
Stock subject or related thereto upon any securities exchange or under any state
or Federal law, or (ii) the consent or approval of any government regulatory
body, or (iii) an agreement by the grantee of an Award with respect to the
disposition of shares of Common Stock, is necessary or desirable as a condition
of, or in connection with the granting of such Award or the issue or purchase of
shares of Common Stock thereunder, such Award may not be consummated in whole or
in part unless such listing, registration, qualification, consent, approval or
agreement shall have been effected or obtained free of any conditions not
acceptable to the Committee.

     Section 6.2.  Non-Assignability.   Except as permitted by Section 2.8
hereof, no Award under the Plan shall be assignable or transferable by the
recipient thereof, except by will or by the laws of descent and distribution.
During the life of the recipient, such Award shall be exercisable only by such
person or by such person's guardian or legal representative.

     Section 6.3.  Withholding Taxes.  Whenever the Company proposes or is
required to issue or transfer shares of Common Stock under the Plan, the Company
shall have the right to require the grantee to remit to the Company as amounts
sufficient to satisfy any Federal, state and/or local withholding tax
requirements prior to the delivery of any certificates for such shares.
Alternatively, the Company may issue, transfer or vest only such number of
shares of Common Stock net of the number of shares sufficient to satisfy the
withholding tax requirements. For withholding tax purposes, the shares of Common
Stock shall be valued on the date the withholding obligation is incurred.

     Section 6.4.  Right to Terminate Employment.  Nothing in the Plan or in any
Agreement entered into pursuant to the Plan shall confer upon any participant
the right to continue in the employment of the Company or affect any right which
the Company may have to terminate the employment of such participant.

     Section 6.5.  Non-Uniform Determinations. The Committee's determinations
under the Plan (including without limitation determinations of the persons to
receive Awards, the form, amount and timing of such Awards, the terms and
provisions of such Awards and the agreements evidencing same) need not be
uniform and may be made by it selectively among persons who receive, or are
eligible to receive, Awards under the Plan, whether or not such persons are
similarly situated.

     Section 6.6.  Rights as a Stockholder.  The recipient of any Award under
the Plan shall have no rights as a stockholder with respect thereto unless and
until certificates for shares of Common Stock are issued to him.

     Section 6.7.  Definitions.  In this Plan the following definitions shall
apply:

             (a)  "Award" shall mean a grant of Stock Options, Incentive Stock
     Options or Performance Shares under the Plan.

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             (b)  "Fair market value" as of any date and in respect of any share
     of Common Stock means the average of the high and low sales price on such
     date or on the next business day, if such date is not a business day, of a
     share of Common Stock reflected in the consolidated trading tables of The
     Wall Street Journal (presently the NYSE - Composite Transactions) or any
     other publication selected by the Committee, provided that, if shares of
     Common Stock shall not have been traded on the New York Stock Exchange or
     other public securities market for more than 10 days immediately preceding
     such date or if deemed appropriate by the Committee for any other reason,
     the fair market value of shares of Common Stock shall be as determined by
     the Committee in such other manner as it may deem appropriate. In no event
     shall the fair market value of any share of Common Stock be less than its
     par value.

             (c) "Option" means a Stock Option or Incentive Stock Option.

             (d) "Option price" means the purchase price per share of Common
     Stock deliverable upon the exercise of a Stock Option or Incentive Stock
     Option.

             (e) "Outside Director" means a director of the Company who (i) is
     not a current employee of the Company; (ii) is not a former employee of the
     Company who receives compensation from the Company for prior services
     (other than benefits under a tax-qualified retirement plan); (iii) has not
     been an officer of the Company; (iv) does not receive remuneration from the
     Company, either directly or indirectly, in any capacity other than as a
     director; and (v) does not possess an interest in a transaction, or is
     engaged in a business relationship, that would require disclosure under
     Item 404(a) or (b) of Regulation S-K promulgated by the Securities and
     Exchange Commission.

             (f)  "Performance Cycle" means the period of time, if any, as
     specified by the Committee over which Performance Shares are to be
     vested.

     Section 6.8.  Leaves of Absence.  The Committee shall be entitled to make
such rules, regulations and determinations as it deems appropriate under the
Plan in respect of any leave of absence taken by the recipient of any Award.
Without limiting the generality of the foregoing, the Committee shall be
entitled to determine (i) whether or not any such leave of absence shall
constitute a termination of employment within the meaning of the Plan and (ii)
the impact, if any, of any such leave of absence on Awards under the Plan
theretofore made to any recipient who takes such leave of absence.

     Section 6.9.  Newly Eligible Employees.  The Committee shall be entitled to
make such rules, regulations, determinations and Awards as it deems appropriate
in respect of any employee who becomes eligible to participate in the Plan or
any portion thereof after the commencement of an Award or incentive period.

     Section 6.10.  Adjustments.

             (a) In the event of any change in the outstanding Common Stock by
     reason of a stock dividend or distribution, recapitalization, merger,
     consolidation, split-up, combination,

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     exchange of shares or the like, the Committee may appropriately adjust the
     number of shares of Common Stock which may be issued under the Plan, the
     number of shares of Common Stock subject to Option or Performance Shares
     theretofore granted under the Plan, and any and all other matters deemed
     appropriate by the Committee.

             (b) In the event of a subdivision or consolidation of shares or
     other increase or reduction in the number of shares of the Common Stock
     outstanding without receiving compensation therefor in money, services or
     property, then (a) in the event of an increase in the number of such shares
     outstanding, the number of shares of Common Stock purchasable pursuant to a
     Stock Option granted automatically pursuant to Section 5.1 after the date
     of increase, and the number of Performance Shares granted automatically
     pursuant to Section 5.1 after the date of such increase, shall be
     proportionately increased; and (b) in the event of a decrease in the number
     of such shares outstanding the number of shares of Common Stock purchasable
     pursuant to a Stock Option granted automatically pursuant to Section 5.1
     after the date of decrease, and the number of Performance Shares granted
     automatically pursuant to Section 5.1 after the date of such decrease shall
     be proportionately decreased.

     Section 6.11.  Changes in the Company's Capital Structure.

             (a) The existence of outstanding Options or Performance Shares
     shall not affect in any way the right or power of the Company or its
     stockholders to make or authorize any or all adjustments, recapitalization,
     reorganizations or other changes in the Company's capital structure or its
     business, or any merger or consolidation of the Company or any issue of
     bonds, debentures, preferred or prior preference stock ahead of or
     affecting the Common Stock or the rights thereof, or the dissolution or
     liquidation of the Company, or any sale or transfer of all or any part of
     its assets or business, or any other corporate act or proceeding, whether
     of a similar character or otherwise.

             (b) If, while there are outstanding Options or Performance Shares,
     the Company shall effect a subdivision or consolidation of shares or other
     increase or reduction in the number of shares of the Common Stock
     outstanding without receiving compensation therefor in money, services or
     property, then, subject to the provisions, if any, in the Award Agreement
     (a) in the event of an increase in the number of such shares outstanding,
     the number of shares of Common Stock then subject to Options hereunder or
     Performance Shares granted hereunder shall be proportionately increased;
     and (b) in the event of a decrease in the number of such shares outstanding
     the number of shares then available for Option hereunder or the number of
     Performance Shares granted hereunder shall be proportionately decreased.
     Any such adjustment in outstanding Options will be made without change to
     the total exercise price applicable to such Option and with a corresponding
     adjustment in the exercise price per share.

             (c) After a merger of one or more corporations into the Company, or
     after a consolidation of the Company and one or more corporations in which
     the Company shall be the surviving corporation, (i) each holder of an
     outstanding Option shall, at no additional cost, be entitled upon exercise
     of such Option to receive (subject to any required action by stockholders)
     in lieu of the number of shares as to which such Option shall then be so
     exercisable, the number and class of shares of stock, other securities or
     consideration to which

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<PAGE>

     such holder would have been entitled to receive pursuant to the terms of
     the agreement of merger or consolidation if, immediately prior to such
     merger or consolidation, such holder had been the holder of record of a
     number of shares of the Company equal to the number of shares as to which
     such Option had been exercisable and (ii) unless otherwise provided by the
     Committee, the number of shares of Common Stock, other securities or
     consideration to be received with respect to unvested Performance Shares
     shall continue to be subject to the Award Agreement, including any vesting
     provisions thereof.

          (d) If the Company is about to be merged into or consolidated with
     another corporation or other entity under circumstances where the Company
     is not the surviving corporation, or if the Company is about to sell or
     otherwise dispose of substantially all of its assets to another corporation
     or other entity while unvested Performance Shares or unexercised Options
     remain outstanding, the Committee may direct that any of the following
     shall occur:

              (i)   If the successor entity is willing to assume the obligation
          to deliver shares of stock or other securities after the effective
          date of the merger, consolidation or sale of assets, as the case may
          be, each holder of an outstanding Option shall be entitled to receive,
          upon the exercise of such Option and payment of the option price, in
          lieu of shares of Common Stock, such shares of stock or other
          securities as the holder of such option would have been entitled to
          receive had such Option been exercised immediately prior to the
          consummation of such merger, consolidation or sale, and the terms of
          such Option shall apply as nearly as practicable to the shares of
          stock or other securities purchasable upon exercise of the Option
          following such merger, consolidation or sale of assets;

              (ii)  The Committee may waive any limitations set forth in or
          imposed pursuant to this Plan or any Award Agreement with respect to
          such Option or Performance Share such that (A) such Option shall
          become exercisable prior to the record or effective date of such
          merger, consolidation or sale of assets or (B) the vesting of such
          Performance Share shall occur upon such merger, consolidation or sale
          of asset; and/or

              (iii) The Committee may cancel all outstanding Options as of
          the effective date of any such merger, consolidation or sale of assets
          provided that prior notice of such cancellation shall be given to each
          holder of an Option at least 30 days prior to the effective date of
          such merger, consolidation or sale of assets, and each holder of an
          Option shall have the right to exercise such Option, to the extent
          exercisable, during a period of not less than 30 days prior to the
          effective date of such merger, consolidation or sale of assets.

          (e) Except as herein provided, the issuance by the Company of Common
     Stock or any other shares of capital stock or securities convertible into
     shares of capital stock, for cash, property, labor done or other
     consideration, shall not affect, and no adjustment by reason thereof shall
     be made with respect to, the number or price of shares of Common Stock then
     subject to outstanding Options.

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<PAGE>

     Section 6.12.  Amendment of the Plan.

             (a)  The Committee may, without further action by the stockholders
     and without receiving further consideration from the participants, amend
     this Plan or condition or modify Awards under this Plan in response to
     changes in securities or other laws or rules, regulations or regulatory
     interpretations thereof applicable to this Plan or to comply with stock
     exchange rules or requirements.

             (b)  The Committee may at any time and from time to time terminate
     or modify or amend the Plan in any respect, except that without stockholder
     approval the committee may not (i) increase the maximum number of shares of
     Common Stock which may be issued under the Plan or to any individual (other
     than increases pursuant to Sections 6.10 and 6.11), or (ii) change the
     employees or class of employees eligible to participate in the Plan. The
     termination or any modification or amendment of the Plan, except as
     provided in subsection (a), shall not, without the consent of a
     participant, affect his or her rights under an Award previously granted to
     him or her.

     The undersigned hereby certifies that this is a true and correct copy of
the Cross Timbers Oil Company 1997 Stock Incentive Plan, as adopted by the
Company's Board of Directors on February 18, 1997 and the Company's stockholders
on May 20, 1997, as amended.



                              By
                                  -----------------------------------
                                  Virginia Anderson, Secretary

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