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                                                                    EXHIBIT 10.9

                         1997 CRESCENT OPERATING, INC.

                          SECOND STOCK INCENTIVE PLAN

                                  ARTICLE I
                                   THE PLAN

      1.1     NAME.  This plan will be known as the "1997 Crescent Operating,
Inc. Second Stock Incentive Plan."  Capitalized terms used herein are defined
in Article X hereof.

      1.2     PURPOSE.  The purpose of the Plan is to promote the growth and
general prosperity of the Company by permitting the Company and its
Subsidiaries to grant Options to their Employees, Outside Directors and
Advisors and Restricted Stock to their Employees and Advisors.  The Plan is
designed to help the Company and its Subsidiaries attract and retain superior
personnel for positions of substantial responsibility and to provide Employees
(including officers), Outside Directors and Advisors with an additional
incentive to contribute to the success of the Company and its Subsidiaries.
The Company intends that Incentive Stock Options granted pursuant to Article IV
will qualify as "incentive stock options" within the meaning of Section 422 of
the Code.  Subject to Article VII, Outside Directors of the Company may elect
to receive Common Stock in lieu of Director's Fees.  With respect to Reporting
Participants, transactions under the Plan are intended to comply with all
applicable conditions of Rule 16b-3 or its successors under the Exchange Act.
To the extent that any provision of the Plan or action by the Board or the
Committee fails to so comply, it will be deemed null and void to the extent
permitted by law and deemed advisable by the Committee.

      1.3     EFFECTIVE DATE.  The Plan will become effective upon the
Effective Date.

      1.4     ELIGIBILITY TO PARTICIPATE.  Any Employee, Outside Director or
Advisor will be eligible to participate in the Plan; provided that Incentive
Stock Options may be granted only to persons who are Employees of the Company
and its Subsidiaries.  The Board or the Committee may grant Options to
Employees, Outside Directors and Advisors in accordance with such
determinations as the Board or the Committee from time to time in its sole
discretion may make.

      1.5     MAXIMUM NUMBER OF SHARES OF COMMON STOCK SUBJECT TO AWARDS.  The
shares of Common Stock subject to Awards pursuant to the Plan may be either
authorized and unissued shares or shares issued and thereafter acquired by the
Company.  Subject to adjustment pursuant to the provisions of Section 8.2, and
subject to any additional restrictions elsewhere in the Plan, the maximum
aggregate number of shares of Common Stock that may be issued from time to time
pursuant to the Plan shall be one million (1,000,000) shares.  The maximum
number of shares of Common Stock with respect to which Awards may be granted to
any Reporting Participant during any calendar year shall be five hundred
thousand (500,000) shares.  The maximum number of shares of Common Stock which
may be subject to Incentive Stock Options during the life of the Plan shall be
fifty thousand (50,000) shares.  If shares of Restricted Stock
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are reacquired by the Company pursuant to the provisions of Section 6.1 of the
Plan or if an Option expires or terminates for any reason without having been
exercised in full, the reacquired shares and/or the shares not purchased or
distributed will again be available for issuance under the Plan.

       .6     CONDITIONS PRECEDENT.  The Company will not issue or deliver any
certificate for Plan Shares pursuant to the Plan prior to fulfillment of all of
the following conditions:

              (a)    The admission of the Plan Shares to listing on all stock
       exchanges on which the Common Stock is then listed, unless the Board or
       the Committee determines in its sole discretion that such listing is
       neither necessary nor advisable;

              (b)    The completion of any registration or other qualification
       of the sale of the Plan Shares under any federal or state law or under
       the rulings or regulations of the Securities and Exchange Commission or
       any other governmental regulatory body that the Board or the Committee
       in its sole discretion deems necessary or advisable; and

              (c)    The obtaining of any approval or other clearance from any
       federal or state governmental agency that the Board or the Committee in
       its sole discretion determines to be necessary or advisable.

       .7     RESERVATION OF SHARES OF COMMON STOCK.  During the term of the
Plan, the Company will at all times reserve and keep available such number of
shares of Common Stock as may be necessary to satisfy the requirements of the
Plan as to the number of Plan Shares.  In addition, the Company will from time
to time, as is necessary to accomplish the purposes of the Plan, use its best
efforts to obtain from any regulatory agency having jurisdiction any requisite
authority necessary to issue Plan Shares hereunder.  The inability of the
Company to obtain from any regulatory agency having jurisdiction the authority
deemed by the Company's counsel to be necessary for the lawful issuance of any
Plan Shares will relieve the Company of any liability in respect of the
nonissuance of Plan Shares as to which the requisite authority has not been
obtained.

       .8     TAX WITHHOLDING.

              (a)    Condition Precedent.  The issuances of Plan Shares
       pursuant to Awards under the Plan are subject to the condition that if
       at any time the Board or the Committee determines, in its discretion,
       that the satisfaction of withholding tax or other withholding
       liabilities under any federal, state or local law is necessary or
       desirable as a condition of, or in connection with such issuances, then
       the issuances will not be effective unless the withholding has been
       effected or obtained in a manner acceptable to the Board or the
       Committee.  Each Option granted to a Reporting Participant shall contain
       a provision in the related Option Agreement making any required
       withholding tax or other withholding liability mandatory, and specifying
       that the Company withhold a portion of the Plan Shares as specified in
       clause (iv) of paragraph (b) below.





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              (b)    Manner of Satisfying Withholding Obligation.  When a
       Participant is required to pay to the Company an amount required to be
       withheld under applicable income tax laws in connection with an Award,
       such payment may be made (i) in cash, (ii) by check, (iii) by delivery
       to the Company of shares of Common Stock already owned by the
       Participant having a Fair Market Value on the date the amount of tax to
       be withheld is to be determined (the "Tax Date") equal to the amount
       required to be withheld, (iv) with respect to Options, through the
       withholding by the Company ("Company Withholding") of a portion of the
       Plan Shares acquired upon the exercise of the Options (provided that,
       with respect to any Option held by a Reporting Participant, at least six
       months has elapsed between the grant of such Option and the exercise
       involving tax withholding) having a Fair Market Value on the Tax Date
       equal to the amount required to be withheld or (v) in any other form of
       valid consideration, as permitted by the Committee in its discretion.

              (c)    Notice of Disposition of Stock Acquired Pursuant to
       Incentive Stock Options.  The Company may require as a condition to the
       issuance of Plan Shares covered by any Incentive Stock Option that the
       party exercising such Option give a written representation to the
       Company, which is satisfactory in form and substance to its counsel and
       upon which the Company may reasonably rely, that he will report to the
       Company any disposition of such shares prior to the expiration of the
       holding periods specified by Section 422(a)(1) of the Code.  If and to
       the extent that the realization of income in such a disposition imposes
       upon the Company federal, state or local withholding tax requirements,
       or any such withholding is required to secure for the Company an
       otherwise available tax deduction, the Company will have the right to
       require that the recipient remit to the Company an amount sufficient to
       satisfy those requirements; and the Company may require as a condition
       to the issuance of Plan Shares covered by an Incentive Stock Option that
       the party exercising such Option give a satisfactory written
       representation promising to make such a remittance.

      1.9     ACCELERATION IN CERTAIN EVENTS.  The Board or the Committee may
accelerate the exercisability of any Option or waive any restrictions with
respect to shares of Restricted Stock in whole or in part at any time.
Notwithstanding the provisions of any Option Agreement or Restricted Stock
Agreement, the following provisions will apply:

              (a)    Mergers and Reorganizations.  If the Company or its
       shareholders enter into an agreement to dispose of all or substantially
       all of the assets of the Company by means of a sale, merger or other
       reorganization, liquidation or otherwise in a transaction in which the
       Company is not the surviving corporation, any Option will become
       immediately exercisable with respect to the full number of shares
       subject to that Option and all restrictions will lapse with respect to
       an Award of Restricted Stock during the period commencing as of the date
       of the agreement to dispose of all or substantially all of the assets of
       the Company and ending when the disposition of assets contemplated by
       that agreement is consummated or the Award is otherwise terminated in
       accordance with its provisions or the provisions of the Plan, whichever
       occurs first; provided that no Reporting Participant may exercise an
       Option and no restrictions will lapse with respect to an





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       Award of Restricted Stock to a Reporting Participant unless at least six
       months have elapsed since the grant of such Option or Award; provided,
       further, that no Option will be immediately exercisable and no
       restrictions will lapse with respect to an Award of Restricted Stock
       under this Section on account of any agreement of merger or other
       reorganization when the shareholders of the Company immediately before
       the consummation of the transaction will own at least fifty percent of
       the total combined voting power of all classes of stock entitled to vote
       of the surviving entity immediately after the consummation of the
       transaction.  An Option will not become immediately exercisable and no
       restrictions will lapse with respect to an Award of Restricted Stock if
       the transaction contemplated in the agreement is a merger or
       reorganization in which the Company will survive.

              (b)    Change in Control.  In the event of a change in control or
       threatened change in control of the Company, all Options granted prior
       to the change in control or threatened change in control will become
       immediately exercisable, and all restrictions will lapse with respect to
       awards of Restricted Stock granted prior to the change in control or
       threatened change in control, provided that no Reporting Participant may
       exercise an Option and no restriction will lapse with respect to an
       Award of Restricted Stock to a Reporting Participant unless at least six
       months have elapsed since the grant of such Option or Award.  The term
       "change in control" for purposes of this Section refers to the
       acquisition of 15% or more of the voting securities of the Company by
       any person or by persons acting as a group within the meaning of Section
       13(d)(3) of the Exchange Act (other than an acquisition by (i) a person
       or group meeting the requirements of clauses (i) and (ii) of Rule
       13d-l(b)(1) promulgated under the Exchange Act, (ii) or any employee
       pension benefit plan (within the meaning of Section 3(2) of ERISA) of
       the Company or of its Subsidiaries, including a trust established
       pursuant to such plan); provided that no change in control or threatened
       change in control will be deemed to have occurred (i) if prior to the
       acquisition of, or offer to acquire, 15% or more of the voting
       securities of the Company, the full Board has adopted by not less than
       two-thirds vote a resolution specifically approving such acquisition or
       offer or (ii) from (A) a transfer of the Company's voting securities by
       Richard E. Rainwater ("Rainwater") to (i) a member of Rainwater's
       immediate family (within the meaning of Rule 16a-1(e) of the Exchange
       Act) either during Rainwater's lifetime or by will or the laws of
       descent and distribution; (ii) any trust as to which Rainwater or a
       member (or members) of his immediate family (within the meaning of Rule
       16a-1(e) of the Exchange Act) is the beneficiary; (iii) any trust as to
       which Rainwater is the settlor with sole power to revoke; (iv) any
       entity over which Rainwater has the power, directly or indirectly, to
       direct or cause the direction of the management and policies of the
       entity, whether through the ownership of voting securities, by contract
       or otherwise; or (v) any charitable trust, foundation or corporation
       under Section 501(c)(3) of the Code that is funded by Rainwater; or (B)
       the acquisition of voting securities of the Corporation by either (i)
       Rainwater or (ii) a person, trust or other entity described in the
       foregoing clauses (A)(i)-(v) of this subsection.  The term "person" for
       purposes of this Section refers to an individual or a corporation,
       partnership, trust, association, joint venture, pool, syndicate, sole
       proprietorship, unincorporated organization





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       or any other form of entity not specifically listed herein.  Whether a
       change in control is threatened will be determined solely by the
       Committee.

      1.10    COMPLIANCE WITH SECURITIES LAWS.  Plan Shares will not be issued
with respect to any Award unless the issuance and delivery of the Plan Shares
(and the exercise of an Option, if applicable) complies with all relevant
provisions of federal and state law, including without limitation the
Securities Act, the rules and regulations promulgated thereunder and the
requirements of any stock exchange upon which the Plan Shares may then be
listed, and will be further subject to the approval of counsel for the Company
with respect to such compliance.  The Board or the Committee may also require a
Participant to furnish evidence satisfactory to the Company, including, without
limitation, a written and signed representation letter and consent to be bound
by any transfer restrictions imposed by law, legend, condition or otherwise,
and a representation that the Plan Shares are being acquired only for
investment and without any present intention to sell or distribute the shares
in violation of any federal or state law, rule or regulation.  Further, each
Participant will consent to the imposition of a legend on the certificate
representing the Plan Shares issued pursuant to an Award restricting their
transferability as required by law or by this Section.

      1.11    EMPLOYMENT OF PARTICIPANT.  Nothing in the Plan or in any Award
granted hereunder will confer upon any Participant any right to continued
employment by the Company or any of its Subsidiaries or to continued service as
a Director or Advisor or limit in any way the right of the Company or any
Subsidiary at any time to terminate or alter the terms of that employment or
services as a Director or Advisor.

      1.12    INFORMATION TO PARTICIPANTS.  The Company will furnish to each
Participant copies of annual reports, proxy statements and all other reports
sent to the Company's shareholders.  Upon written request, the Company will
furnish to each Participant a copy of its most recent Annual Report on Form
10-K and each quarterly report to shareholders issued since the end of the
Company's most recent fiscal year.

                                   ARTICLE II
                                 ADMINISTRATION

      2.1     COMMITTEE.  The Plan will be administered by the Board or by a
Committee of not fewer than two directors appointed by the Board.  As used
herein, if the Company has any class of common equity securities required to be
registered under Section 12 of the Exchange Act, as to any Award to a Covered
Employee, "Committee" shall mean a committee consisting of two or more
Directors, each of whom shall be an "outside director" as defined in Section
162(m) of the Code.  Subject to the provisions of the Plan, the Board or
Committee will have the sole discretion and authority to determine from time to
time the Employees and Advisors to whom Awards will be granted and the number
of Plan Shares subject to each Award, to interpret the Plan, to prescribe,
amend and rescind any rules and regulations necessary or appropriate for the
administration of the Plan, to determine and interpret the details and
provisions of each Option Agreement and Restricted Stock Agreement, to modify
or amend any Option Agreement or Restricted Stock Agreement or waive any
conditions or restrictions applicable to any Option (or





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the exercise thereof) or to any shares of Restricted Stock, and to make all
other determinations or advisable for the administration of the Plan.  The
Committee shall be solely responsible for the grant and administration of
Awards to Covered Employees.  With respect to any provision of the Plan
granting the Board or the Committee the right to agree, in its sole discretion,
to further extend the term of any Award hereunder, the  Board or the Committee
may exercise such right at the time of grant, in the Option Agreement relating
to such Award, or at any time or from time-to-time after the grant of any Award
hereunder.

      2.2     MAJORITY RULE; UNANIMOUS WRITTEN CONSENT.  A majority of the
members of the Board or the Committee will constitute a quorum, and any action
taken by a majority present at a meeting at which a quorum is present or any
action taken without a meeting evidenced by a writing executed by all members
of the Board or the Committee will constitute the action of the Board or the
Committee.  Meetings of the Committee may take place by telephone conference
call.

      2.3     COMPANY ASSISTANCE.  The Company will supply full and timely
information to the Board or the Committee on all matters relating to Employees,
Outside Directors and Advisors, their employment, death, Retirement, Disability
or other termination of employment, and such other pertinent facts as the Board
or the Committee may require.  The Company will furnish the Board or the
Committee with such clerical and other assistance as is necessary to the
performance of its duties.

                                  ARTICLE III
                                    OPTIONS

      3.1     METHOD OF EXERCISE.  Each Option will be exercisable at any time
and from time in whole or in part in accordance with the terms of the Option
Agreement pursuant to which the Option was granted.  No Option may be exercised
for a fraction of a Plan Share.

      3.2     PAYMENT OF PURCHASE PRICE.  The purchase price of any Plan Shares
purchased will be paid at the time of exercise of the Option either (i) in
cash, (ii) by certified or cashier's check, (iii) by shares of Common Stock, if
permitted by the Committee, (iv) as to Outside Directors, by cash or certified
or cashier's check for the par value of the Plan Shares plus a recourse
promissory note for the balance of the purchase price, such note to provide for
the right to repay the note partially or wholly with Common Stock and with an
interest rate based on the current dividend yield of the Common Stock, (v) as
to Employees and Advisors, by cash or certified or cashier's check for the par
value of the Plan Shares plus a promissory note for the balance of the purchase
price, which note will contain such terms and provisions as the Board or the
Committee may approve, including without limitation the right to repay the note
partially or wholly with Common Stock and to base the interest rate on the
current dividend yield of the Common Stock,  (vi) by delivery of a copy of
irrevocable instructions from the Optionee to a broker or dealer, reasonably
acceptable to the Company, to sell certain of the Plan Shares upon exercise of
the Option or to pledge them as collateral for a loan and promptly deliver to
the Company the amount of sale or loan proceeds necessary to pay such purchase
price or (vii) as to Employees and Advisors, in any other form of valid
consideration, as permitted by the Board or the





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Committee in its discretion.  If any portion of the purchase price or a note
given at the time of exercise is paid in shares of Common Stock, those shares
will be valued at the then Fair Market Value.

      3.3     WRITTEN NOTICE REQUIRED.  Any Option will be deemed to be
exercised for purposes of the Plan when written notice of exercise has been
received by the Company at its principal office from the person entitled to
exercise the Option and payment for the Plan Shares with respect to which the
Option is exercised has been received by the Company in accordance with Section
3.2.

      3.4     RIGHTS OF OPTIONEES UPON TERMINATION OF EMPLOYMENT OR SERVICE.

              (a)    In the event an Optionee ceases to be an Employee and
Advisor, and does not continue to be a Director, for any reason other than
death, Retirement, Disability or for Cause, (i) the Board or the Committee
shall have the ability to accelerate the vesting of the Optionee's Option in
its sole discretion, and (ii) such Optionee's Option shall be exercisable (to
the extent exercisable on the date of termination of employment or service as
an Employee or Advisor, or, if the Committee, in its discretion, has
accelerated the vesting of such Option, to the extent exercisable following
such acceleration) (a) if such Option is an Incentive Stock Option, at any time
within three months after the date of termination of employment with the
Company or any Subsidiary, unless by its terms the Option expires earlier; or
(b) if such Option is a Nonqualified Stock Option, at any time within one year
after the date of termination of employment or service as an Employee or
Advisor, unless by its terms the Option expires earlier or unless the Committee
agrees, in its sole discretion, to further extend the term of such Nonqualified
Stock Option; provided that the term of any such Nonqualified Stock Option
shall not be extended beyond its initial term.  An Employee or Advisor who
continues to be  a Director shall not be deemed to have terminated employment
or service as to any Nonqualified Stock Option.

              (b)    In addition, unless the Board or the Committee agrees, in
its sole discretion, to extend the term of a Nonqualified Stock Option granted
to an Employee or Advisor (provided that the term of any such Option shall not
be extended beyond its initial term), an Optionee's Option may be exercised as
follows in the event such Optionee ceases to serve as an Employee, Outside
Director or Advisor due to death, Disability, Retirement or for Cause:

              (i)    Death.  If an Optionee dies while serving as an Employee,
       Outside Director or Advisor, or within three months after ceasing to be
       an Employee, Outside Director or Advisor, his option shall become fully
       exercisable on the date of his death and shall expire 12 months
       thereafter, unless by its terms it expires sooner.  During such period,
       the Option may be fully exercised, to the extent that it remains
       unexercised on the date of death, by the Optionee's personal
       representative or by the distributees to whom the Optionee's rights
       under the Option shall pass by will or by the laws of descent and
       distribution.

              (ii)   Retirement.  If an Optionee ceases to serve as an
       Employee, Outside Director or Advisor as a result of Retirement,  his
       Option shall become fully exercisable on the date of his Retirement and
       (a) if such Option is an Incentive Stock Option, such Option





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       will be exercisable at any time within three months after the effective
       date of such Retirement, unless by its terms the Option expires earlier,
       and (b) if such Option is a Nonqualified Stock Option, such Option will
       be exercisable at any time within one year after the effective date of
       such Retirement, unless by its terms the Option expires sooner.

              (iii)  Disability.  If an Optionee ceases to serve as an
       Employee, Outside Director or Advisor as a result of Disability, the
       Optionee's Option shall become fully exercisable and shall expire 12
       months thereafter, unless by its terms it expires sooner.

              (iv)   Cause.  If an Optionee ceases to serve as an Employee,
       Outside Director or Advisor, because the Optionee is terminated for
       Cause, the Optionee's Option shall automatically expire.  If any facts
       that would constitute Cause for termination or removal of an Employee or
       Advisor are discovered after the Optionee's relationship with the
       Company has ended, any Options then held by the Optionee may be
       immediately terminated by the Committee.  Notwithstanding the foregoing,
       if an Optionee is an Employee employed pursuant to a written employment
       agreement, or is an Advisor retained pursuant to a written agreement,
       the Optionee's relationship with the Company will be deemed terminated
       for 'Cause' for purposes of the Plan only if the Optionee is considered
       under the circumstances to have been terminated for cause for purposes
       of such written agreement.

      3.5     TRANSFERABILITY OF OPTIONS.  Options shall not be transferable
other than pursuant to a qualified domestic relations order, by will or by the
laws of descent and distribution and, with respect to an Incentive Stock
Option, may be exercised during the lifetime of an Optionee only by that
Optionee or by his legally authorized representative.

      3.6     OPTIONS SUBJECT TO SHAREHOLDERS APPROVAL.  Options granted to
Covered Employees and Incentive Stock Options granted prior to the date on
which shareholder approval of the Plan is obtained shall be subject to and
conditioned upon shareholder approval of the Plan in accordance with Section
162(m) and 422 of the Code.

                                   ARTICLE IV
                            INCENTIVE STOCK OPTIONS

      4.1     OPTION TERMS AND CONDITIONS.  The terms and conditions of Options
granted under this Article may differ from one another as the Board or the
Committee may, in its discretion, determine, as long as all Options granted
under this Article satisfy the requirements of this Article.

      4.2     DURATION OF OPTIONS.  Each Option granted under this Article will
expire on the date determined by the Board or Committee, but in no event will
any Option granted under this Article expire earlier than one year or later
than ten years after the date on which the Option is granted.  In addition,
each Option will be subject to early termination as provided elsewhere in the
Plan.





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      4.3     PURCHASE PRICE.  The purchase price for Plan Shares acquired
pursuant to the exercise, in whole or in part, of any Option granted under this
Article will not be less than the Fair Market Value of the Plan Shares at the
time of the grant of the Option.

      4.4     MAXIMUM AMOUNT OF OPTIONS FIRST EXERCISABLE IN ANY CALENDAR YEAR.
The maximum aggregate Fair Market Value of Plan Shares (determined at the time
the Option is granted) with respect to which Options issued under this Article
are exercisable for the first time by any Employee during any calendar year
under all incentive stock option plans of the Company and its Subsidiaries and
affiliates may not exceed $100,000.  Any portion of an Option granted under the
Plan and first exercisable in excess of the foregoing limitations will be
considered granted under Article V.

      4.5     REQUIREMENTS AS TO CERTAIN OPTIONS.  In the event of the grant of
any Option to an individual who, at the time the Option is granted, owns shares
of stock possessing more than ten percent of the total combined voting power of
all classes of stock of the Company or any of its Subsidiaries or affiliates
within the meaning of Section 422 of the Code, the purchase price for the Plan
Shares subject to that Option must be at least 110% of the Fair Market Value of
those Plan Shares at the time the Option is granted, and the Option must not be
exercisable after the expiration of five years from the date of its grant.

      4.6     INDIVIDUAL OPTION AGREEMENTS.  Each Employee receiving Options
under this Article will be required to enter into a written Option Agreement
with the Company.  In such Option Agreement, the Employee will agree to be
bound by the terms and conditions of the Plan and such other matters as the
Committee deems appropriate.

                                   ARTICLE V
                           NONQUALIFIED STOCK OPTIONS

      5.1     OPTION TERMS AND CONDITIONS.  The terms and conditions of Options
granted under this Article may differ from one another as the Board or
Committee may, in its discretion, determine, as long as all Options granted
under this Article satisfy the requirements of this Article.

      5.2     DURATION OF OPTIONS.  Each Option granted to an Employee, Outside
Director or Advisor under this Article and all rights thereunder will expire on
the date determined by the Board or Committee, but in no event will any Option
granted under this Article expire later than ten years after the date on which
the Option is granted. In addition, each Option will be subject to early
termination as provided elsewhere in the Plan.

      5.3     PURCHASE PRICE.  The purchase price for Plan Shares acquired
pursuant to the exercise, in whole or in part, of any Option granted under this
Article shall be not less than  the Fair Market Value of the Plan Shares at the
time of the grant of the Option.





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      5.4     INDIVIDUAL OPTION AGREEMENTS.  Each Employee, Outside Director or
Advisor receiving Options under this Article will be required to enter into a
written Option Agreement with the Company.  In such Option Agreement, the
Employee, Outside Director or Advisor will agree to be bound by the terms and
conditions of the Plan and such other matters as the Board or Committee deems
appropriate.

                                   ARTICLE VI
                                RESTRICTED STOCK

      6.1     TERMS AND CONDITIONS.  Each Restricted Stock Grant confers upon
the  recipient thereof the right to receive a specified number of shares of
Common Stock of the Company in accordance with the terms and conditions of each
Participant's individual written agreement as set forth in Section 6.2.  The
general terms and conditions of the Restricted Stock awards shall be as
follows:

              (a)    Any shares of Common Stock awarded hereunder to a
       Participant shall be restricted for a period of time to be determined by
       the Committee for each participant at the time of the Award, which
       period shall be not less than one year or more than ten years.  The
       restrictions shall prohibit the sale, assignment, transfer, pledge or
       other encumbrance of such shares, and will provide for possible
       reversion thereof to the Company in accordance with subparagraph (b)
       during the period of restriction.

              (b)    All Restricted Stock awarded under this Plan to a
       Participant shall be forfeited and returned to the Company in the event
       the Participant ceases to be employed by, serve as a Director of, or
       serve as an Advisor to the Company, one of its Subsidiaries, or any
       Affiliated Company prior to the expiration of the period of restriction,
       unless the Participant's termination of employment is due to his or her
       death, Disability or Retirement.  An Employee or Advisor who continues
       to be a Director shall not be deemed to have terminated employment or
       service.

              (c)    In the event of a Participant's death or Disability, the
       restrictions under subparagraph (a) will lapse with respect to all
       Restricted Stock awarded to the Participant under this Plan prior to any
       such event, and the shares of Common Stock involved shall cease to be
       Restricted Stock within the meaning of this Plan and shall no longer be
       subject to forfeiture to the Company pursuant to subparagraph (b).

              (d)    In the event of a Participant's Retirement, the
       restrictions under subparagraph (a) shall continue to apply unless the
       Board or the Committee in its discretion shall shorten the restriction
       period.

              (e)    Stock certificates issued with respect to awards of
       Restricted Stock made under this Plan shall be registered in the name of
       the Participant, but shall be delivered by him or her to the Company
       together with a stock power endorsed in blank.  Each such certificate
       shall bear the following legend:





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                     "THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
                     FORFEITURE, RESTRICTIONS ON TRANSFER AND CERTAIN OTHER
                     TERMS AND CONDITIONS SET FORTH IN THE 1997 CRESCENT
                     OPERATING, INC. SECOND STOCK INCENTIVE PLAN AND THE
                     AGREEMENT BETWEEN THE REGISTERED OWNER OF THE SHARES
                     REPRESENTED BY THIS CERTIFICATE AND CRESCENT OPERATING,
                     INC. ENTERED INTO PURSUANT TO SUCH PLAN."

              (f)    Upon the lapse of a restriction period as determined
       pursuant to subparagraph (a), the Company will return the stock
       certificates representing the shares with respect to which the
       restriction has lapsed to the Participant or his or her legal
       representative, and pursuant to the instruction of the Participant or
       his or her legal representative will issue a certificate for such shares
       which does not bear the legend set forth in subparagraph (e).

              (g)    Any other securities or assets (other than ordinary cash
       dividends) which are received by a Participant with respect to
       Restricted Stock awarded to him, which is still subject to restrictions
       provided for in subparagraph (a), will be subject to the same
       restrictions and shall be delivered by the Participant to the Company as
       provided in subparagraph (e).

              (h)    From the time of grant of the Restricted Stock Award, the
       Participant shall be entitled to exercise all rights attributable to the
       Restricted Stock, subject to forfeiture of such rights and the stock as
       provided in subparagraph (b).

      6.2     INDIVIDUAL AGREEMENTS.  Each Participant receiving an Award of
Restricted Stock under this Article will be required to enter into a written
Restricted Stock Agreement with the Company.  In such Restricted Stock
Agreement, the Participant will agree to be bound by the terms and conditions
of the Plan and such other matters as the Board or the Committee deems
appropriate.



                                  ARTICLE VII
                   OUTSIDE DIRECTOR STOCK-FOR-FEES ELECTIONS

      7.1     OUTSIDE DIRECTOR STOCK-FOR-FEES ELECTION.  Each Outside Director
of the Company shall be permitted to receive Director's Fees in the form of
Common Stock rather than cash in accordance with the following provisions:

              (a)    Each Outside Director shall have the right to elect to
       receive one-half or all of such Outside Director's Fees in the form of
       Common Stock rather than cash by tendering an irrevocable written
       election to the Secretary of the Company pursuant to which all
       Director's Fees otherwise payable to the Outside Director shall be paid
       in the form of





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<PAGE>   12
       Common Stock as provided in (b) below.  Such election shall become
       effective six (6) months after its delivery to the Secretary of the
       Company by the Outside Director.  Such election shall remain in effect
       until the earlier of (i) the date six (6) months after such Outside
       Director shall have delivered to the Secretary of the Company
       irrevocable written notice that his or her election to receive Common
       Stock shall cease as of the date six months following delivery of the
       notice, or (ii) the date on which such Outside Director terminates as a
       member of the Board of Directors by reason of resignation,
       non-reelection, death, or disability.  Any Outside Director who having
       terminated an election to receive Common Stock or having failed to elect
       to receive Common Stock rather than cash may elect to receive Director's
       Fees in the form of Common Stock as of the date six (6) months following
       delivery of irrevocable written notice of such election to the Secretary
       of the Company.  An Outside Director who does not elect to have
       Director's Fees paid in Common Stock shall receive his or her
       remuneration in cash at such times that such remuneration is otherwise
       due.

              (b)    If an Outside Director elects to receive payment of
       Director's Fees in the form of Common Stock, such Common Stock shall be
       issued as soon as practicable after the annual meeting of shareholders
       or meeting of the Board or Committee of the Board to which such
       remuneration relates.  The number of shares of Common Stock to be issued
       to such Outside Director shall be determined by dividing:

              (i)    the remuneration otherwise payable to the Outside
       Director, by

              (ii)   ninety percent (90%) of the Fair Market Value of the
       Company's Common Stock on the determination date on the rounding up or
       down of any fractional share to the nearest whole share.

       The determination date shall be the date that the relevant payment of
Director's Fees is payable.

              (c)    Shares of Common Stock issued under this Article VII shall
       be free of any restrictions except for restrictions applicable under the
       Exchange Act.

      7.2     INCOME TAX.  Each Outside Director who elects to receive
Director's Fees in the form of Common Stock rather than cash shall be
responsible for payment of federal, state, and local income taxes on the Fair
Market Value of such Common Stock.

                                  ARTICLE VIII
                     TERMINATION, AMENDMENT AND ADJUSTMENT

      8.1     TERMINATION AND AMENDMENT.  The Plan will terminate on August __,
2007.  No Awards will be granted under the Plan after that date of termination,
although Awards granted prior to such date shall remain outstanding in
accordance with their terms.  Subject to the limitations contained in this
Section 8.1, the Board or the Committee may at any time amend or revise the
terms of the Plan, including the form and substance of the Option Agreements
and Restricted Stock Agreements to be used in connection herewith; provided
that, without





                                      -12-
<PAGE>   13
shareholder approval, no amendment or revision may (i) increase the maximum
aggregate number of Plan Shares, except as permitted Section 8.2, (ii) change
the minimum purchase price for shares under Article IV or Article V or (iii)
permit the granting of an Award to anyone other than as provided in the Plan.
No amendment, suspension or termination of the Plan may, without the consent of
the Optionee who has received an Award hereunder, alter or impair any of that
Participant's rights or obligations under any Award granted under the Plan
prior to that amendment, suspension or termination.

      8.2     ADJUSTMENT.  If the outstanding Common Stock is increased,
decreased, changed into or exchanged for a different number or kind of shares
or securities through merger, consolidation, combination, exchange of shares,
other reorganization, recapitalization, reclassification, stock dividend, stock
split or reverse stock split, an appropriate and proportionate adjustment will
be made in the maximum number and kind of Plan Shares as to which Awards may be
granted under the Plan.  A corresponding adjustment will be made in the number
or kind of shares allocated to and purchasable under unexercised Options or
shares of Restricted Stock with respect to which restrictions have not yet
lapsed prior to any such change.  Any such adjustment in outstanding Options
will be made without change in the aggregate purchase price applicable to the
unexercised portion of the Option, but with a corresponding adjustment in the
price for each share purchasable under the Option.  Any new or additional or
different class of securities that are distributed to a Participant in his
capacity as the owner of Restricted Stock as granted hereunder shall be
considered to be Restricted Stock and shall be subject to all of the conditions
and restrictions provided herein applicable to Restricted Stock.  The foregoing
adjustments and the manner of application of the foregoing provisions will be
determined solely by the Board or the Committee, and any such adjustment may
provide for the elimination of fractional share interests.

                                  ARTICLE  IX
                                 MISCELLANEOUS

      9.1     OTHER COMPENSATION PLANS.  The adoption of the Plan will not
affect any other stock option or incentive or other compensation plans in
effect for the Company or any of its Subsidiaries, nor will the Plan preclude
the Company or any of its Subsidiaries, from establishing any other forms of
incentive or other compensation for Employees.

      9.2     PLAN BINDING ON SUCCESSORS.  The Plan will be binding upon the
successors and assigns of the Company and any of its Subsidiaries that adopt
the Plan.

      9.3     NUMBER AND GENDER.  Whenever used herein, nouns in the singular
will include the plural where appropriate, and the masculine pronoun will
include the feminine gender.

      9.4     HEADINGS.  Headings of articles and sections hereof are inserted
for convenience of reference and constitute no part of the Plan.





                                      -13-
<PAGE>   14
                                   ARTICLE X
                                  DEFINITIONS

       As used herein with initial capital letters, the following terms have
the meanings set forth unless the context clearly indicates to the contrary:

     10.1     "Advisor" means any person performing advisory or consulting
services for the Company or Subsidiary of the Company, with or without
compensation, to whom the Company chooses to grant Options in accordance with
the Plan, provided that bona fide services must be rendered by such person and
such services shall not be rendered in connection with the offer or sale of
securities in a capital raising transaction.

     10.2     "Award" means a grant of Options under Articles IV and V of the
Plan or an Award of Restricted Stock under Article VI of the Plan.

     10.3     "Board" means the Board of Directors of the Company, provided
that, if the Board delegates all or any part of its authority to a committee
composed of one or more directors, then the term "Board" shall be deemed to
refer to such committee to the extent of such delegation.

     10.4     "Cause" will mean an act or acts involving a felony, fraud,
willful misconduct, commission of any act that causes or reasonably may be
expected to cause substantial injury to the Company or other good cause.  The
term "other good cause" as used in this Section will include, but shall not be
limited to, habitual impertinence, a pattern of conduct that tends to hold the
Company up to ridicule in the community, conduct disloyal to the Company,
conviction of any crime of moral turpitude and substantial dependence, as
judged by the Committee, on alcohol or any controlled substance.  "Controlled
substance" means a drug, immediate precursor or other substance listed in
Schedules I-V of the Federal Comprehensive Drug Abuse Prevention Control Act of
1970, as amended.

     10.5     "Code" means the Internal Revenue Code of 1986, as amended.

     10.6     "Committee" shall have the meaning set forth in Section 2.1.

     10.7     "Common Stock" means the Common Stock, par value $.01 per share,
of the Company or, in the event that the outstanding shares of such Common
Stock are hereafter changed into or exchanged for shares of a different stock
or security of the Company or some other corporation, such other stock or
security.

     10.8     "Company" means Crescent Operating, Inc., a Delaware corporation.

     10.9     "Covered Employee" means any individual who is the chief
executive officer or is acting in such capacity, or is among the four highest
compensated officers (other than the chief executive officer) of the Company or
of any Subsidiary.

     10.10    "Director" means a member of the Board of Directors of the
Company.





                                      -14-
<PAGE>   15
     10.11    "Director's Fees" means the remuneration otherwise payable to an
Outside Director of the Company as an annual retainer and for attending
meetings of the Board and meetings of the committees of the Board.

     10.12    "Disability" of a Participant shall be deemed to occur whenever a
Participant is rendered unable to engage in any substantial gainful activity by
reason of any medically determinable physical or mental impairment which can be
expected to result in death or which has lasted or can be expected to last for
a continuing period of not less than 12 months.

     10.13    "Effective Date" means August __, 1997.

     10.14    "Employee" means an employee (as defined under Section 3401(c) of
the Code and the regulations thereunder) of the Company (including an officer),
or an officer or other employee of  any of the Subsidiaries of the Company.

     10.15    "ERISA" means the Employee Retirement Income Security Act of
1974, as amended.

     10.16    "Exchange Act" means the Securities Exchange Act of 1934, as
amended.

     10.17    "Fair Market Value" means such value as will be determined by the
Board or the  Committee on the basis of such factors as it deems appropriate;
provided that if the Common Stock is traded on a national securities exchange,
such value will be determined by the Board or the Committee on the basis of the
closing price for the Common Stock on the date for which such determination is
relevant, as reported on the exchange and further provided that if there should
be no sales on such date, such value shall be deemed equal to the closing price
on the last preceding date on which sales of Common Stock were reported.  If
the Common Stock is traded on more than one exchange, such value will be
determined on the basis of the exchange trading the greatest volume of shares
on such date.  In no event shall "Fair Market Value" be less than the par value
of the Common Stock.

     10.18    "Incentive Stock Option" means an Option granted under Article
IV.

     10.19    "Nonqualified Stock Option" means an Option granted under Article
V.

     10.20    "Option" means an Incentive Stock Option or a Nonqualified Stock
Option granted under the Plan.

     10.21    "Option Agreement" means an agreement between the Company and a
Participant with respect to one or more Options.

     10.22    "Outside Director" means a Director who is not an Employee of the
Company or of any Subsidiary.





                                      -15-
<PAGE>   16
     10.23    "Participant" means an Employee, Director or Advisor to whom an
Award has been granted hereunder.

     10.24    "Plan" means the 1997 Crescent Operating, Inc. Amended Stock
Incentive Plan, as amended from time to time.

     10.25    "Plan Shares" means shares of Common Stock issuable pursuant to
the Plan.

     10.26    "Restricted Stock" means an Award of Common Stock granted under
Article VI.

     10.27    "Restricted Stock Agreement" means an agreement between the
Company and a Participant with respect to an Award of Restricted Stock.

     10.28    "Retirement" means termination of employment or service as a
Director on or after the date on which a Participant attains age 70.

     10.29    "Securities Act" means the Securities Act of 1933, as amended.

     10.30    "Subsidiary" means a subsidiary corporation of the Company, as
defined in Section 424(f) of the Code.





                                      -16-