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                                                                    EXHIBIT 10.7

COUNTY OF FULTON

STATE OF GEORGIA                                                  August 1, 1997

                                PROMISSORY NOTE

        FOR VALUE RECEIVED, CHARTER BEHAVIORAL HEALTH SYSTEMS, LLC, formed
under the laws of the State of Delaware (the "Maker"), promises to pay to the
order of CRESCENT OPERATING, INC., a Delaware corporation (the "Payee"); at the
office of Payee in Forth Worth, Texas, or at such other place as payee may from
time to time designate in writing, in legal tender of the United States of
America, the principal sum of ten million dollars ($10,000,000.00), together
with interest on the principal balance hereof at the rate hereinafter provided,
in accordance with the terms and conditions hereof. Maker acknowledges that it
is receiving consideration for this Note by the loan from Payee or Payee's
affiliates to Maker of ten million dollars ($10,000,000.00) pursuant to a
Member Commitment under the Amended and Restated Operating Agreement of Maker
dated as of June 16, 1997, between Payee and Charter Behavioral Health 
Systems, Inc.

        1.      Principal and Interest. Commencing on the date hereof and
continuing until repayment of the sums due hereunder in full, the principal
amount due hereunder shall bear interest at a rate equal to ten percent (10%)
per annum. Interest on the principal balance of this Note shall be due and
payable monthly, commencing on the first day of the calendar month succeeding
the date hereof and continuing on the first day of each succeeding calendar
month thereafter, and shall be computed on the basis of a 360-day year for the
actual number of days elapsed. Unless sooner accelerated in accordance with
the terms of this Note, the entire principal amount due hereunder, together
with all accrued but unpaid interest thereon, shall be due and payable in full
on the date that is five (5) years from the date hereof.

        2.      Maximum Lawful Rate. This Note is hereby expressly limited so
that in no contingency or event whatsoever, whether by acceleration of maturity
of the indebtedness evidenced hereby or otherwise, shall the amount paid or
agreed to be paid to Payee for the use, forbearance or detention of money
exceed the highest lawful rate permissible under applicable law. If, from any
circumstances whatsoever, fulfillment of any provision hereof, at the time
performance of such provision occurs, shall involve payment of interest in
excess of that authorized by law, the obligation to be fulfilled shall be
reduced to the limits so authorized by law, and if, from any circumstances,
Payee shall ever receive as interest an amount which would exceed the highest
lawful rate applicable to Maker, such amount which would be excessive interest
shall be applied to the reduction of the unpaid principal balance hereof and
not to the 

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payment of interest.

        3.      Method of Making Payments; Renewal of Obligations. All payments
with respect to principal and interest hereunder shall be made by wire transfer
of immediately available funds to such account as Payee has designated in
writing to Maker. Maker hereby expressly agrees that to the extent that Maker
makes a payment or payments on this Note and such payment or payments, or any
part thereof, are subsequently invalidated, declared to be fraudulent or
preferential, set aside or are required to be repaid to a trustee, receiver or
any other party under any bankruptcy act, state or national law, common law or
equitable cause, then to the extent of such payment or repayment, the
indebtedness evidenced hereby which is intended to be satisfied by such payment
or payments shall be revived and continued in full force and effect as if said
payment or payments had not been made.

        4.      Events of Default. The occurrence of any one or more of the
following conditions or events shall constitute an "Event of Default":

                (a)  Failure to Pay. Maker fails to pay any payment of
        principal or interest when due and payable or declared due and payable
        in accordance with the terms of this Note and such failure shall 
        continue for five (5) business days; or

                (b)  Bankruptcy. (i) Maker shall commence proceedings seeking
        either its own bankruptcy or to be granted a suspension of payments or
        any other proceeding under any bankruptcy, reorganization, arrangement,
        adjustment of debt, relief of debtors, dissolution, insolvency or
        liquidation or similar law of any jurisdiction, whether now or hereafter
        in effect; (ii) any proceeding described in clause (i) of this
        subsection 4(b) is commenced or applied to be commenced against Maker,
        which proceeding remains undismissed for a period of sixty (60) days or
        is dismissed on the ground of lack of funds sufficient to cover the
        costs of such proceedings; (iii) a custodian, trustee, administrator or
        similar official is appointed under any applicable law described in
        clause (i) of this subsection 4(b) with respect to Maker, or such
        custodian, trustee, administrator or similar official takes charge of
        all or any substantial part of the property of Maker; (iv) an
        adjudication is made that Maker is insolvent or bankrupt; (v) any order
        of relief or other order is entered approving any case or proceeding
        described in clause (ii) of this subsection 4(b); (vi) Maker makes a
        general assignment for the benefit of its creditors; or (vii) Maker
        takes any corporate or similar action for the purpose of effecting any
        of the actions, orders or events described in the foregoing clauses of
        this subsection 4(b).


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        5.  Remedies.  Upon the occurrence of an Event of Default, at the
option of Payee, all amounts payable by Maker to Payee under the terms of the
Note shall immediately become due and payable by Maker to Payee, and Payee
shall have all the rights, powers and remedies available under the terms of
this Note, under applicable law or otherwise. Notwithstanding the foregoing,
upon the occurrence of any Event of Default described in Section 4(b) above,
the amounts hereunder shall become automatically due and payable without
presentment, protest or demand of any kind.

        6.  Costs of Collection.  Maker agrees to pay all costs and expenses of
collection, including reasonable attorneys' fees and expenses arising in
connection with any enforcement action by Payee in which it shall prevail on
any of its rights under this Note whether by or through an attorney-at-law or
in an action in bankruptcy, insolvency or other judicial proceedings.

        7.  Waivers; Amendment.  No delay or failure on the part of Payee to
exercise any right or remedy accruing to Payee hereunder, upon any default or
breach by Maker of any term or provision hereof, shall be held to be an
abandonment thereof. No delay on the part of Payee in exercising any of its
rights or remedies shall preclude Payee from the exercise thereof at any time
during the continuance of any default or breach. No waiver of a single default
or breach shall be deemed a waiver of any subsequent default or breach. Payee
may enforce any one or more remedies hereunder successively or concurrently, at
its option. All waivers under this Note must be in writing signed by the Party
entitled to enforce the right waived. All amendments to this Note must be in
writing and signed by both the Maker and the Payee.

                Maker, its successors and assigns, and all other persons liable
for the payament of this Note, waive presentment for payment, demand, protest
and notice of demand, dishonor, protest and nonpayment, and consent to any and
all renewals, extensions or modifications that might be made by Payee and Maker
as to the time of payment of this Note from time to time.

        8.  Severability.  The invalidity or unenforceability of any provision
hereof in any jurisdiction will not affect the validity or enforceability of
the remainder hereof in that jurisdiction or the validity or enforceability of
this Note, including that provision, in any other jurisdiction. To the extent
permitted by applicable law, each party hereto waives any provision of
applicable law that renders any provision hereof prohibited or unenforceable in
any respect. If any provision of this Note is held to be unenforceable for any
reason, it shall be adjusted rather than voided, if possible, in order to
achieve the intent of the parties hereto to the extent possible.


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        9.      Notices. All notices, requests and demands to or upon the
respective parties hereto shall be deemed to have been given or made when
personally delivered, upon the date originally received if delivered by
telecopy transmission followed by registered or certified mail confirmation,
one (1) business day following deposit with an overnight delivery service or
three (3) business days following deposit in the mail, registered or certified
mail, postage prepaid as follows:

        To Maker:

                Charter Behavioral Health Systems, LLC
                3414 Peachtree Road, NE, Suite 900
                Atlanta, Georgia 30326
                Attention: Steve Love, Senior Vice President & CFO
                Telecopy: 404/814-2706

        with a copy to:

                Charter Behavioral Health Systems, LLC
                3414 Peachtree Road, NE, Suite 900
                Atlanta, Georgia 30326
                Attention: Mark Ford, Vice President, General Counsel & 
                           Secretary
                Telecopy: 404/814-5795

        To Payee:

                Crescent Operating, Inc.
                777 Main Street, Suite 2100
                Fort Worth, Texas 76102
                Attention: Jeffrey L. Stevens, CFO & Secretary
                Telecopy: 817/878-0429

        with a copy to:

                Crescent Operating, Inc.
                777 Main Street, Suite 2100
                Fort Worth, Texas 76102
                Attention: General Counsel
                Telecopy: 817/878-0429

        10.     Captions. The captions herein set forth are for convenience
only and should not be deemed to define, limit or describe the scope or intent
of this Note.




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        11.     Successors; Assignment. The terms and provisions of this Note
shall be binding upon and inure to the benefit of the successors and assigns of
the Maker and the successors and registered assigns of the Payee. This Note may
not be transferred or assigned by the Payee except for (a) a pledge to a bona
fide financial institution, which, immediately prior to the creation of such
pledge, is not an affiliate of Payee, to secure bona fide arms' length recourse
indebtedness of Payee and/or its subsidiaries or (b) a pledge to Crescent Real
Estate Equities Limited Partnership pursuant to that certain Line of Credit and
Security Agreement, dated as of May 21, 1997, and that certain Amended and
Restated Credit and Security Agreement, as amended, dated as of May 30, 1997.
Any purported transfer in violation of the foregoing provision shall be null
and void and of no force and effect whatsoever.

        12.     Governing Law; Submission to Jurisdiction.

                (a)     This Note shall be deemed to be made in and in any and
        all respects be governed by, and construed in accordance with, the laws
        of the State of Delaware (without regard to principles of conflict of
        laws).

                (b)     If any action is brought to enforce or interpret this
        Note, exclusive venue for such action shall be in the State of Delaware
        or the United States of America for the District of Delaware, and the
        parties hereto irrevocable and unconditionally submit to the
        jurisdiction of the state and federal courts located in the State of
        Delaware for such purpose.

        13.     Computation of Time. Whenever the last day for the exercise of
any privilege or the discharge of any duty under this Note shall fall on a day
other than a business day, the party having such privilege or duty shall have
until 5:00 p.m. (Eastern Standard Time) on the next succeeding business day to
exercise such privilege or to discharge such duty. For purposes of this Note,
the term "business day" shall mean any day other than a day which is a Saturday
or Sunday or other day on which commercial banks in the State of Georgia are
authorized or required to remain closed.

        IN WITNESS WHEREOF, Maker has caused this Note to be executed by its
duly authorized officer under its corporate seal as of the date first above
written. 
                                         CHARTER BEHAVIORAL HEALTH SYSTEMS, LLC



                                        By:     /s/ W. STEPHEN LOVE
                                           -------------------------------------
                                        Name: W. Stephen Love
                                        Title: Senior Vice President & CFO




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