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                                TIPPERARY CORPORATION
                            1997 LONG-TERM INCENTIVE PLAN

                                      SECTION I
                           DESIGNATION AND PURPOSE OF PLAN

     The purpose of the Tipperary Corporation (the "Company") 1997 Long-Term
Incentive Plan (the "Plan") is to provide key management employees who are
mainly responsible for the continued growth, development, and financial success
of the Company and its subsidiaries with added incentives to continue in the
long-term service of the Company and to create a direct interest in the future
success of the Company.  The Plan also enables the Company to attract and retain
such employees and reward them for the continued performance beneficial to the
Company.


                                      SECTION II
                                     DEFINITIONS

          The following definitions are applicable herein:

     A.   "Award" - Individually or collectively, Options, Stock Appreciation
Rights, Performance Shares or Restricted Stock granted hereunder.

     B.   "Award Period" - the period of time during which a Stock Appreciation
Right which has not been granted pursuant to an Option may be exercised.  The
Award Period shall be set forth in the document issuing the Stock Appreciation
Right to the selected Eligible Person.

     C.   "Board" - the Board of Directors of the Company.

     D.   "Book Value" - the book value of a share of Stock determined in
accordance with the Company's regular accounting practices as of the last
business day of the month immediately preceding the month in which a Stock
Appreciation Right is exercised as provided in Section IX(D).

     E.   "Code" - the Internal Revenue Code of 1986, as amended.  Reference in
the Plan to any section of the Code shall be deemed to include any amendments or
successor provisions to such section and any regulations promulgated thereunder.

     F.   "Committee" - the Incentive Plan Committee appointed to administer the
Plan pursuant to Section IV.

     G.  "Company" - Tipperary Corporation, including any present or future
"subsidiary corporation" as such term is defined in Section 424(f) of the 1986
Internal Revenue Code, as amended.

     H.   "Covered Employee" - an individual described in Section 162(m)(3) of
the Code.

     I.   "Date of Grant" - the date on which the granting of an Award is
authorized by the Committee or Board or such later date as may be specified by
the Committee or Board in such authorization.

     J.   "Eligible Person" - any person who satisfies all of the requirements
of Section VI.

     K.   "Exercise Period" - the period or periods during which a Stock
Appreciation Right is exercisable as described in Section IX(B).


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     L.   "Fair Market Value" - the fair market value of the Stock as determined
in accordance with Section VIII(D).

     M.   "Incentive Stock Option" - an incentive stock option within the
meaning of Section 422 of the Code.

     N.   "Option" or "Stock Option" - either a non-qualified stock option or an
Incentive Stock Option granted under Section VIII.  It also means any Option
which remains after a Participant has exercised his Option with respect to part
of the shares covered by a Stock Option Agreement as described in Section
VIII(B).

     O.   "Option Period" or "Option Periods" - the period or periods during
which an Option is exercisable as described in Section VIII(E).

     P.   "Option Price" - the price, expressed on a per share basis, for which
the Company Stock can be acquired by the holder of an Option pursuant to the
exercise of such Option.

     Q.   "Participant" - an Eligible Person of the Company or a Subsidiary who
has been granted an Option, a Stock Appreciation Right, a Performance Share
Award or a Restricted Stock Award under this Plan.

     R.   "Performance Share" - an Award granted under Section X.

     S.   "Restricted Stock" - an Award granted under Section VII.

     T.   "Stock" and "Company Stock" - the common stock of the Company.

     U.   "Stock Appreciation Right" - an Award granted under Section IX.

     V.   "Stock Option Agreement" - shall have the meaning set forth in Section
VIII(B).

     W.   "Subsidiary" - any corporation of which fifty percent (50%) or more of
its outstanding voting stock or voting power is beneficially owned, directly or
indirectly, by the Company.

     X.   "Ten Percent Shareholder" - a Participant who, at the Date of Grant,
owns directly or indirectly (within the meaning of Section 424(d) of the
Internal Revenue Code) stock possessing more then ten percent (10%) of the total
combined voting power of all classes of stock of the Company or a subsidiary
thereof.

     Y.   Wherever appropriate, words used in this Plan in the singular may mean
the plural, the plural may mean the singular, and the masculine may mean the
feminine.


                                     SECTION III
                  EFFECTIVE DATE, DURATION AND STOCKHOLDER APPROVAL

     A.   Effective Date and Stockholder Approval.  Subject to the approval of
the Plan by a majority of the outstanding shares of Stock, the Plan shall be
effective as of February 1, 1997.

     B.   Period for Grant of Awards.  Awards may be made as provided herein for
a period of ten (10) years.


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                                      SECTION IV
                                    ADMINISTRATION

     A.   Appointment of Committee.  The Plan shall be administered by the Board
or an Incentive Plan Committee appointed by the Board.  Such Committee shall
consist of not less than two (2) members of the Board and such members shall be
non-employee directors as defined in Rule 16b-3 under the Securities Exchange
Act of 1934, as amended (or such greater number of members which may be required
by Rule 16b-3).  In addition, the Board shall designate a member of the
Committee to act as Chairman of the Committee, and the Board may remove any
member of the Committee at any time and appoint any non-employee director to
fill any vacancy on the Committee.

     B.   Committee Meetings.  The Committee, if any, shall hold its meetings at
such times and places as specified by the Committee Chairman.  A majority of the
Committee shall constitute a quorum.  All actions of the Committee shall be
taken by all of the members of the meeting duly called by its Chairman;
provided, however, any action taken by a written document signed by a majority
of the members of the Committee shall be as effective as action taken by the
Committee at a meeting duly called and held.

     C.   Committee Powers.  References in the Plan to the Committee shall also
mean the Board insofar as the Board administers the Plan rather than appointing
a Committee.  Subject to the provisions of this Plan, the Committee shall have
full authority in its discretion to (i) designate the Participants to whom
Awards shall be granted, (ii) determine the number of shares to be made
available under each such Award, (iii) determine the period or periods in which
the Participant may exercise such Award, (iv) determine the date when such Award
expires, (v) determine the price for Stock under such Award, and (vi) determine
the grounds of forfeiture of an Award.  The Committee shall have all powers
necessary to administer the Plan in accordance with its terms, including the
power to interpret this Plan and resolve all questions arising thereunder.  The
Committee may prescribe such rules and regulations for administering this Plan
as the Committee deems appropriate.


                                      SECTION V
                                 GRANT OF AWARDS AND
                   LIMITATION OF NUMBER OF SHARES SUBJECT TO AWARD

     The Committee may, from time to time, grant Awards to one or more Eligible
Persons, provided that (i) subject to any adjustment pursuant to Section XI, the
aggregate number of shares of Stock subject to Stock Options, Stock Appreciation
Rights, Performance Share Awards or Restricted Stock Awards under this Plan may
not exceed 250,000 shares; (ii) to the extent that a Stock Option, Stock
Appreciation Right, Performance Share Award or Restricted Stock Award lapses or
the rights of the Participant to whom it was granted terminate, expire or are
canceled for any other reason, in whole or in part, shares of Stock (or
remaining shares) subject to such Award shall again be available for the grant
of an Award under the Plan; and (iii) shares delivered by the Company under the
Plan may be authorized and unissued Stock, Stock held in the treasury of the
Company or Stock purchased on the open market (including private purchases) in
accordance with applicable securities laws.  In determining the size of Awards,
the Committee shall take into account the responsibility level, performance,
potential, and cash compensation level of a Participant, and the Fair Market
Value of the Stock at the time of Awards, as well as such other considerations
it deems appropriate.


                                      SECTION VI
                                     ELIGIBILITY

     Key employees and directors of the Company and its Subsidiaries (including
employees who are members of the Board) who, in the opinion of the Committee,
are mainly responsible for the continued growth and development and financial
success of the business of the Company or one or more of its Subsidiaries shall
be eligible to be granted Awards under the Plan.  Subject to the provisions of
the Plan, the Committee may from time to time select from such eligible persons
those to whom Awards shall be granted and determine the nature and amount of
each Award.  No

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employee of the Company or its Subsidiaries shall have any right to be granted
an Award under this Plan.  A member of the Committee shall not be eligible for
any Award hereunder, unless such Award is granted by the full Board.


                                     SECTION VII
                               RESTRICTED STOCK AWARDS

     A.   Grants of Shares of Restricted Stock.  An Award made pursuant to this
Section VII shall be granted in the form of shares of Stock, restricted as
provided in this Section VII.  Shares of Restricted Stock shall be issued to the
Participant upon the payment of consideration as determined by the Committee;
provided, however, that such consideration may not be less than the par value of
the Stock.  The shares of Restricted Stock shall be issued in the name of the
Participant and shall bear a restrictive legend prohibiting sale, transfer,
pledge or hypothecation of the shares of Restricted Stock until the expiration
of the restriction period.

     The Committee may also impose such other restrictions and conditions on the
shares of Restricted Stock as it deems appropriate, including but not limited to
requiring the participant to keep the restricted stock certificates, duly
endorsed, in the custody of the Company while the restrictions remain in effect.

     B.   Restriction Period.  At the time a Restricted Stock Award is made, the
Committee may establish a restriction period applicable to such Award which
shall not be more than ten (10) years.  Each Restricted Stock Award may have a
different restriction period, at the discretion of the Committee.  In addition
to or in lieu of a restriction period, the Committee may establish a performance
goal which must be achieved as a condition to the retention of the Restricted
Stock.  The performance goal may be based on the attainment of specified types
of performance measurement criteria, which may differ as to various Participants
or classes or categories of Participants.  Such criteria may include, without
limitation, the attainment of certain performance levels by the individual
Participant, the Company, a department or division of the Company and/or a group
or class of participants.  Any such performance goals, together with the ranges
of Restricted Stock Awards for which the Participants may be eligible shall be
set from time to time by the Committee and shall be timely communicated in
writing to the Eligible Persons in advance of the commencement of the
performance of services to which such performance goals relate.

     C.   Forfeiture or Payout of Award.  In the event a Participant ceases
employment during a restriction period, or in the event performance goals
attributable to a Restricted Stock Award are not achieved, subject to the terms
of each particular Restricted Stock Award, and subject to discretionary action
by the Committee as set forth below in Section XIII, a Restricted Stock Award is
subject to forfeiture of the shares of Stock which had not previously been
removed from restriction under the terms of the Award.

     Any shares of Restricted Stock which are forfeited will be transferred to
the Company.  Any consideration paid by the Participant for the Restricted Stock
shall be returned, without interest, to the Participant upon forfeiture.

     Upon completion of the restriction period and satisfaction of any
performance-goal criteria, all restrictions upon the Award will expire and new
certificates representing the Award will be issued or released without the
restrictive legend described in Section VII (A).  As a condition precedent to
receipt of the certificates, the Participant (or the designated beneficiary or
personal representative of the Participant) will agree to make payment to the
Company in the amount of any taxes, payable by the Participant, which are
required to be withheld with respect to such shares of Stock.


                                     SECTION VIII
                                    STOCK OPTIONS

     A.   Grant of Option.  One or more Options may be granted to any Eligible
Person.  Upon the grant of an Option to an Eligible Person, the Committee shall
specify whether the Option is intended to constitute a non-qualified stock
option or an Incentive Stock Option.

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     B.   Stock Option Agreement.  Each Option granted under the Plan shall be
evidenced by a written Stock Option Agreement between the Company and the
Participant containing such terms and conditions as the Committee determines,
including, without limitation, provisions to qualify Incentive Stock Options as
such under Section 422 of the Code.  Such agreements shall incorporate the
provisions of this Plan by reference.  The date of granting an Option is the
date specified in the written Stock Option Agreement which is signed by the
Participant and the Company.

     C.   Determination of Option Price.  The Option Price for shares of Stock
shall be determined by the Committee, but in no event shall the Option Price for
each share covered by an Incentive Stock Option be less than the Fair Market
Value of the Stock on the date of grant; the Option Price for shares covered by
a non-statutory Option may be less than Fair Market Value.  Notwithstanding the
foregoing, in the case of an Option which is designed to qualify as an Incentive
Stock Option (as defined in Section 422 of the Code) which is granted to a Ten
Percent Shareholder, the Option Price shall not be less than 110% of such Fair
Market Value.

     D.   Determination of Fair Market Value.  The Fair Market Value of the
Stock on the date of granting an Option shall be the officially quoted mean of
the high and low prices at which the Stock was sold on the market on such date.
If there are no Stock transactions on such date, the Fair Market Value shall be
determined as of the immediately preceding date on which there were Stock
transactions.  In the event the Stock is not publicly traded, the Fair Market
Value of the Stock shall be determined by the Committee in accordance with
applicable regulations of the Internal Revenue Service.

     E.   Term of Option.  The term of an Option may vary within the Committee's
discretion; provided, however, that the term of an Option shall not exceed ten
(10) years from the date of granting the Option to the Participant, and, to this
end, all Options granted pursuant to this Plan must provide that each such
Option cannot be exercised after the expiration of ten (10) years from the date
each such Option is granted.  Notwithstanding the foregoing, in the case of any
Option which is designed to qualify as an Incentive Stock Option (as defined in
Section 422 of the Code) which is granted to a Ten Percent Shareholder, the term
of such Option may not exceed five (5) years from the date of grant of such
Option.

     F.   Vesting of Options.  The Committee may limit an Option by restricting
its exercise in whole or in part for specified periods in its sole discretion.

     G.   Method of Exercising an Option.  Subject to the terms of a particular
Option, a Participant may exercise it in whole or in part by written notice to
the Secretary of the Company stating in such written notice the number of shares
of Stock such Participant elects to purchase under his Option.  Such written
notice shall be in a form satisfactory to the Committee and shall specify the
particular Option (or portion there of) which is being exercised.

     H.   No Obligation to Exercise Option.  A Participant is under no
obligation to exercise an Option or any part thereof.

     I.   Payment for Option Stock.  Stock purchased pursuant to an Option shall
be paid in full at the time of purchase.  Payment may be made (a) in cash, (b)
with the approval of the Committee, by delivery to the Company of shares of
Stock having an aggregate fair market value equal to the exercise price, or (c)
a combination of (a) and (b).  Payment may also be made, in the discretion of
the Committee, by delivery (including by facsimile transmission) to the Company
or its designated agent of an executed irrevocable Option exercise form together
with irrevocable instructions to a broker-dealer to sell (or margin) a
sufficient portion of the shares and deliver the sale (or margin loan) proceeds
directly to the Company to pay for the exercise price.  Upon receipt of payment
and subject to paragraph J of this Section VIII, the Company shall, without
transfer or issue tax to the Participant or other person entitled to exercise
the Option, deliver to the Participant (or other person entitled to exercise the
Option) a certificate or certificates for such shares.

     J.   Delivery of Stock to Participant.  The Company shall undertake and
follow all necessary procedures to make prompt delivery of the number of shares
of Stock which the Participant elects to purchase upon exercise of an

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Option granted under this Plan.  Such delivery, however, may be postponed, at
the sole discretion of the Company, to enable the Company to comply with any
applicable procedures, regulations or listing requirements of any government
agency, stock exchange or quotation system, or regulatory authority.

     K.   Failure to Accept Delivery of Stock.  If a Participant refuses to pay
for Stock which he has elected to purchase under his Option, in accordance with
the terms of payment which had previously been agreed upon, his Option shall
thereupon, at the sole discretion of the Committee, terminate, and such funds
previously paid for unissued Stock shall be refunded.  Stock which has been
previously issued to the Participant and been fully paid for shall remain the
property of the Participant and shall be unaffected by such termination.

     L.   Non-Transferability of Options.  During the lifetime of a Participant,
an Option granted to him may be exercised only by him.  It may not be sold,
assigned, pledged or otherwise transferred except by will or by the laws of
descent and distribution.

     M.   Purchase for Investment.

          (a)  Written Agreement by Participants.  Unless a registration
statement under the Securities Act of 1933 is then in effect with respect to the
Stock a Participant receives upon exercise of his Option, a Participant shall
acquire the Stock he receives upon exercise of his Option for investment and not
for resale or distribution, and he shall furnish the Company with a written
statement to that effect when he exercises his Option and a reference to such
investment warranty shall be inscribed on the Stock certificate(s).

          (b)  Registration Requirement.  Each Option shall be subject to the
requirement that, if at any time the Committee determines that the listing,
registration or qualification of the Stock subject to the Option upon any
securities exchange or quotation system, or under any state or Federal law is
necessary or desirable as a condition of, or in connection with, the issuance of
the Stock thereunder, the Option may not be exercised in whole or in part unless
such listing, registration or qualification shall have been effected or obtained
(and the same shall have been free of any conditions not acceptable to the
Committee).

     N.   Special Limitations on Exercise of Incentive Stock Options.  The
aggregate Fair Market Value (determined at the time the Incentive Stock Option
is granted) of the Stock with respect to which any Incentive Stock Option is
first exercisable during any calendar year shall not exceed $100,000.


                                      SECTION IX
                              STOCK APPRECIATION RIGHTS

     A.   Grant of Stock Appreciation Rights.  Stock Appreciation Rights may be
granted under the Plan in tandem with an Option either at the time of grant or
by amendment or may be separately awarded.  Stock Appreciation Rights shall be
subject to such terms and conditions not inconsistent with the Plan as the
Committee shall impose.

     B.   Right to Exercise; Exercise Period.  A Stock Appreciation Right issued
in tandem with an Option shall be exercisable to the extent the Option is
exercisable.  A Stock Appreciation Right issued independent of an Option shall
be exercisable pursuant to such terms and conditions established in the grant.

     C.   Automatic Redemption of Unexercised Stock Appreciation Rights.  If on
the last day of the Option Period, in the case of a Stock Appreciation Right
granted in tandem with an Option, or the specified Award Period, in the case of
a Stock Appreciation Right issued independent of an Option, the Participant has
not exercised such Stock Appreciation Right, then such Stock Appreciation Right
shall be automatically redeemed by the Company for an amount equal to the
payment that would otherwise have been made to the Participant if the
Participant had chosen to exercise the Stock Appreciation Right on the last day
of the Option Period or the specified Award Period, as the case may be.

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     D.   Rights Upon Exercise.  An exercisable Stock Appreciation Right granted
in tandem with an Option shall entitle the Participant to surrender unexercised
the Option or any portion thereof to which the Stock Appreciation Right is
attached, and to receive in exchange for the Stock Appreciation Right a payment
(in cash or Stock or a combination thereof as described below) equal to the Fair
Market Value of one share of Stock at the date of exercise minus the Option
Price times the number of shares called for by the Stock Appreciation Right (or
portion thereof) which is so exercised.  For example, assume that a Participant
is granted a tandem Award of an Option to purchase 1,000 shares of Stock at an
Option Price of $2.00 per share and 1,000 Stock Appreciation Rights.  In such a
case, the exercise of 700 Options by the Participant would relinquish and
terminate 700 Stock Appreciation Rights; similarly, the exercise of the
remaining 300 Stock Appreciation Rights would relinquish and terminate the
remaining 300 Options.  If the Fair Market Value of the Stock was $5.00 per
share at both the time of the exercise of the Options and Stock Appreciation
Rights, then the Participant would receive 700 shares of Stock upon payment of
$1,400 (700 times the Option Price of $2.00) and the Company would pay the
Participant $900 upon the exercise of the 300 Stock Appreciation Rights (($5.00
minus $2.00) times 300).

     With respect to the issuance of Stock Appreciation Rights which are not
granted in tandem with an Option, the Committee shall specify upon the Date of
Grant of the Stock Appreciation Right whether the Stock Appreciation Right is a
"regular" Stock Appreciation Right or a "book value" Stock Appreciation Right.
Upon the exercise of a "regular" Stock Appreciation Right, the Participant will
receive a payment equal to the Fair Market Value of one share of Stock at the
date of exercise minus the Fair Market Value of one share of Stock as of the
Date of Grant of the Stock Appreciation Right times the number of shares called
for by the Stock Appreciation Right (or portion thereof) which is so exercised.
Upon the exercise of a "book value" Stock Appreciation Right, the Participant
will receive a payment equal to the Book Value of one share of Stock at the date
of exercise minus the Book Value of one share of Stock as of the Date of the
Grant of the Stock Appreciation Right times the number of shares called for by
the Stock Appreciation Right (or portion thereof) which is so exercised.

     The value of any Stock to be received upon exercise of a Stock Appreciation
Right shall be the Fair Market Value of the Stock on such date of exercise.  To
the extent that a Stock Appreciation Right issued in tandem with an Option is
exercised, such Option shall be deemed to have been exercised, and shall not be
deemed to have lapsed.

     E.   Transferability.  The Committee may impose such restrictions on
transferability of Stock Appreciation Rights, if any, as it may in its sole
discretion determine; provided however, that Stock Appreciation Rights issued in
tandem with the grant of an Incentive Stock Option must be subject to the same
transferability restriction as the Incentive Stock Option itself.


                                      SECTION X
                                  PERFORMANCE SHARES

     A.   Grant of Performance Share Units.  Awards made pursuant to this
Section X shall be granted in the form of Performance Shares, subject to such
terms and conditions not inconsistent with the Plan as the Committee shall
impose.  Performance Shares shall be issued to the Participant without the
payment of consideration by the Participant.  Awards shall be based on the
attainment of specified types and combination of performance measurement
criteria, which may differ as to various Participants or classes or categories
of Participants.  Such criteria may include, without limitation, the attainment
of certain performance levels by the individual Participant, the Company, a
department or division of the Company and/or a group or class of Participants.
Such criteria, together with the ranges of Performance Shares from which
employees may be eligible shall be set from time to time by the Committee and
shall be communicated in writing to the Eligible Persons.

     B.   Performance Period.  The measuring period to establish the performance
criteria set forth in a Performance Share Award shall be determined by the
Committee.  A Performance Share Award may initially provide, or the Committee
may at any time thereafter, but no more frequently than once in any six (6)
month period, amend it to provide, for waiver or reduction of the measuring
period and, if appropriate, for adjustment of the performance

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criteria set forth in the Performance Share Award, upon the occurrence of events
determined by the Committee in its sole discretion to justify such waiver,
reduction or adjustment.

     C.   Form of Payment.  Upon the completion of the applicable measuring
period, a determination shall be made by the Committee in accordance with the
Award as to (i) the extent to which performance criteria have been attained,
(ii) the satisfaction of any other terms and conditions with respect to the
award, and (iii) the number of shares of Stock to be awarded to the Participant.
The appropriate number of shares of Stock shall thereupon be issued to the
Participant in accordance with the Award in satisfaction of such Performance
Share Award.


                                      SECTION XI
                        CHANGES IN CAPITAL STRUCTURE OR SHARES

     In the event any reorganization, merger, consolidation, recapitalization,
liquidation, reclassification, stock dividend, stock split, combination of
shares, rights offering, or extraordinary dividend or divestiture (including a
spin-off), or any other change in the capital structure or shares of the
Company, the Committee shall make adjustments, determined by the Committee in
its discretion to be appropriate, as to the number and kind of securities
subject to this Plan as specified in Section V herein, and as to the number and
kind of securities covered by each outstanding Award and, where applicable, the
price per share thereunder; provided, however, that with respect to Incentive
Stock Options, such adjustments shall be made in accordance with Section 424(h)
of the Code (and any other applicable sections or regulations of the Code)
unless the Committee determines otherwise.


                                     SECTION XII
                       CORPORATE REORGANIZATION OR DISSOLUTION

     A.   Discontinuation of the Plan.  The Plan shall be discontinued in the
event of the dissolution or liquidation of the Company or in the event of a
Reorganization (as hereinafter defined) in which the Company is not the
surviving or acquiring company, or in which the Company is or becomes a
wholly-owned subsidiary of another company after the effective date of the
Reorganization and no plan or agreement respecting the Reorganization is
established which specifically provides for the continuation of the Plan and the
change, conversion, or exchange of the Stock relating to existing Awards under
this Plan for securities of another corporation.  Upon the dissolution of the
Plan in connection with an event described in this Paragraph A, all Awards shall
become fully vested and all outstanding Options and Stock Appreciation Rights
shall become immediately exercisable by the holder thereof.  Any Options or
Stock Appreciation Rights granted under the Plan may be terminated as of a date
fixed by the Committee, provided that no less than fifteen (15) days written
notice of the date so fixed shall be given to each Participant and each such
Participant shall have the right during such period to exercise all or any
portion of such Options or Stock Appreciation Rights.  Any Stock Appreciation
Right not so exercised shall be redeemed.

     B.   Continuation of the Plan Upon a Reorganization.  In the event of a
Reorganization (as hereinafter defined) (i) in which the Company is not the
surviving or acquiring company, or in which the Company is or becomes a
wholly-owned subsidiary of another company after the effective date of the
Reorganization, and (ii) with respect to which there is a reorganization
agreement which undertakes to continue the Plan and to provide for the change,
conversion or exchange of the Stock attributable to outstanding Awards for
securities of another corporation, then the Plan shall continue and the
Committee shall adjust the shares under such outstanding Awards (and shall
adjust the shares remaining under the Plan which are then to be available for
the grant of additional Awards under the Plan, if the reorganization agreement
makes specific provisions therefor), in a manner not inconsistent with the
provisions of the reorganization agreement and this Plan for the adjustment,
change, conversion or exchange of such Awards.

     The term "Reorganization" as used in this Section XII shall mean any
statutory merger, statutory consolidation, sale of all or substantially all of
the assets of the Company, or sale, pursuant to an agreement with the Company,
of

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securities of the Company pursuant to which the Company is or becomes a
wholly-owned subsidiary of another company after the effective date of the
Reorganization.

     C.   Adjustments and Determinations.  Adjustments and determinations under
this Section XII shall be made by the Committee, whose decisions as to what
adjustments or determinations shall be made, and the extent thereof, shall be
final, binding, and conclusive.


                                     SECTION XIII
                              RETIREMENT AND DISABILITY

     The Committee may, in its discretion, waive the forfeiture, termination, or
lapse of an Award in the event of retirement or disability of a Participant
(each as determined by the Committee, in its discretion).  Exercise of such
discretion by the Committee in any individual case, however, shall not be deemed
to require, or to establish a precedent suggesting such waiver in any other
case.


                                     SECTION XIV
                               MISCELLANEOUS PROVISIONS

     A.   Non-transferability.  The Committee may impose such restrictions on
the transferability of an Award, if any, as it may in its sole discretion
determine.

     B.   No Employment Right.  Neither this Plan nor any action taken hereunder
shall be construed as giving any right to the Participants to be retained as an
officer or employee of the Company or any of its Subsidiaries.

     C.   Tax Withholding.  Either the Company or a Subsidiary, as appropriate,
shall have the right to deduct from all Awards paid in cash any federal, state
or local taxes as it deems to be required by law to be withheld with respect to
such cash payments.  In the case of Awards paid in Stock, the employee or other
person receiving such Stock may be required to pay to the Company or a
Subsidiary, as appropriate, the amount of any such taxes which the Company or
Subsidiary is required to withhold with respect to such Stock.  At the request
of a Participant, or as required by law, such sums as may be required for the
payment of any estimated or accrued income tax liability may be withheld and
paid over to the governmental entity entitled to receive the same.  The
Committee may from time to time establish procedures for withholding of Stock.

     D.   Fractional Shares.  Any fractional shares concerning Awards shall be
eliminated at the time of payment by rounding down for fractions of less than
one-half and rounding up for fractions of equal to or more than one-half.  No
cash settlements shall be made with respect to fractional shares eliminated by
rounding.

     E.   Government and Other Regulations.  The obligation of the Company to
make payment of Awards in Stock or otherwise shall be subject to all applicable
laws, rules, and regulations, and to such approvals by any government agency as
may be required.  The Company shall be under no obligation to register under the
Securities Act of 1933, as amended ("Act"), any of the shares of Stock issued,
delivered or paid in settlement under the Plan.  If Stock awarded under the Plan
may in certain circumstances be exempt from registration under the Act, the
Company may restrict its transfer in such manner as it deems advisable to ensure
such exempt status.

     F.   Termination of Employment, Death , Disability, Etc.  Except as
otherwise determined by the Committee, each Option shall provide as follows with
respect to the exercise of the Option and/or Stock Appreciation Right upon the
termination of employment or the death or disability of the Participant:

          (a)  if the employment of the Participant is terminated within the
Option or Exercise Period for cause, as determined by the Company, the Option
and/or Stock Appreciation Right shall thereafter be void for all

                                         9

<PAGE>

purposes.  As used in this Section XIV(F)(a) "cause" shall mean a gross
violation, as determined by the Company, of the Company's established policies
and procedures.  The effect of this Section XIV(F)(a) shall be limited to
determining the consequences of a termination, and nothing in this Section
XIV(F)(a) shall restrict or otherwise interfere with the Company's discretion
with respect to the termination of any employee.

          (b)  If the Participant dies during the Option or Exercise Period
while still employed, the Option and/or Stock Appreciation Right may be
exercised by those entitled to do so under the Participant's will or by the laws
of descent and distribution within three (3) months following the Participant's
death, but not thereafter.  In any such case, the Option and/or Stock
Appreciation Right may be exercised only as to the number of shares of Stock as
to which the Option and/or Stock Appreciation Right had become exercisable on or
before the date of the Participant's death (provided that such exercise occurs
within the Option or Exercise Period).

          (c)  If the Participant becomes disabled (within the meaning of
section 22(e) of the Code) during the Option or Exercise Period while still
employed, the Option and/or Stock Appreciation Right may be exercised by the
Participant (or legal representative) within twelve (12) months following the
disability, but not thereafter.  In any such case, the Option and/or Stock
Appreciation Right may be exercised only as to those number of shares of Stock
which had become exercisable on or before the date of the Participant's
disability (provided that such exercise occurs within the Option or Exercise
Period).

          (d)  If employment of the Participant by the Company is terminated
within the Option or Exercise Period for any reason other than cause, or the
Participant's disability or death, the Option and/or Stock Appreciation Right
may be exercised by the Participant within three (3) months following the date
of such termination (provided that such exercise must occur within the Option
Period), but not thereafter.  In any such case, the Option and/or Stock
Appreciation Right may be exercised only as to the number of shares of Stock
which had become exercisable on or before the date of termination of employment
(provided that such exercise occurs within the Option or Exercise Period).

     G.   Limitation.  In no event may an Option be exercised by anyone after
the expiration date set forth in the Stock Option Agreement.

     H.   Limits on Discretion.  Anything in this Plan to the contrary
notwithstanding, if the Award so provides, the Committee shall not have any
discretion to increase the amount of compensation payable under the Award to the
extent such discretion would cause the Award to lose its qualification as
performance-based compensation for purposes of Section 162(m)(4)(C) of the Code
and the regulations thereunder.

     I.   Governing Law.  All matters relating to the Plan or to Awards granted
hereunder shall be governed by the laws of the State of Colorado.

     J.   Titles and Headings.  The titles and headings of the sections in the
Plan are for convenience of reference only, and in the event of any conflict,
the text of the Plan, rather than such titles and headings, shall control.


                                      SECTION XV
                                  AMENDMENT OF PLAN

     A.   Discretion of the Board.  The Board may at any time and from time to
time alter, amend, suspend or terminate the Plan in whole or in part, except (i)
any such action affecting Options granted or to be granted under this Plan which
are intended to qualify as Incentive Stock Options shall be subject to
stockholder approval to the extent such stockholder approval is required
pursuant to Section 422 of the Internal Revenue Code and (ii) no such action may
be taken without the consent of the Participant to whom any Award shall
theretofore have been granted, which adversely affects the rights of such
Participant concerning such Award, except as such termination or amendment of
the Plan is required by statute, or rules and regulations promulgated
thereunder.

                                         10

<PAGE>

     B.   Automatic Termination.  This Plan shall terminate on January 31, 2006.
Awards may be granted under this Plan at any time and from time to time prior to
the termination of the Plan.  Any Award outstanding at the time the Plan is
terminated shall remain in effect until said Award is exercised or expires
pursuant to its terms.

                                         11

<PAGE>

                                  AMENDMENT NO. 1
                                       To the
                           1997 LONG-TERM INCENTIVE PLAN
                                         of
                               TIPPERARY CORPORATION


     This Amendment No. 1 to the 1997 Long-Term Incentive Plan (the "Plan") of
Tipperary Corporation is made and effective this 25th day of January 2000.

     WHEREAS, the Board of Directors and shareholders of Tipperary have
authorized an increase in the number of shares of Tipperary common stock
issuable under the Plan from 250,000 to 500,000;

     NOW, THEREFORE, the Plan is hereby amended as follows:

     Section V entitled "Grant of Awards and Limitation of Number of Shares
Subject to Award" is hereby amended to increase the number of shares of Stock
issuable pursuant to the Plan by 250,000 so that the aggregate number of shares
of Stock subject to Stock Options, Stock Appreciation Rights, Performance Share
Awards or Restricted Stock Awards under the Plan may not exceed 500,000.



By: /s/ David L. Bradshaw
    --------------------------
     David L. Bradshaw
     Chief Executive Officer