**Exhibit 4.9**

 

**This Promissory Note has not been registered underthe Securities Act of 1933, as amended (the “Act”), or applicable statesecurities laws (the “State Acts”), and shall not be sold, pledged,hypothecated, donated or otherwise transferred (whether or not forconsideration) by the holder except upon the issuance to Tipperary Corporationof a favorable opinion of the holder’s counsel or submission to TipperaryCorporation of such other evidence as may be satisfactory to counsel toTipperary Corporation, to the effect that any such transfer shall not be inviolation of the Act and/or the State Acts.**

 

**PROMISSORYNOTE**

 
| $11,400,000 | Denver, Colorado    |
|-------------|---------------------|
|        | August 1, 2005 |

 

Tipperary Corporation, a Texas corporation (“Maker”),hereby promises to pay to the order of Santos International Holdings Pty Ltd.,a corporation organized under the laws of the Australian Capital TerritoryA.B.N. 57 057 585 869 (“Lender”), the owner and holder of that certainPromissory Note dated July 12, 2005 made by Maker and payable to the orderof Slough Estates USA Inc., a Delaware corporation, in the original principalamount of Ten Million, Nine Hundred Thousand and No/100 Dollars ($10,900,000),at 10111 Richmond Avenue, Suite 500, Houston, Texas 77042 or at any otherplace the holder hereafter designates, the principal amount of Eleven Million,Four Hundred Thousand and No/100 Dollars ($11,400,000), together with interestthereon in lawful money of the United States (“Note”) as herein provided.

 

1.             Interest.  The unpaid principal balance of this Noteshall bear interest on the following sums received or to be received,commencing on the following dates:

 
| (i)     |   | One Million and  No/100 Dollars ($1,000,000), received on July 29, 2002;            |
|---------|--------|------------------------------------------------------------------------------------------|
| (ii)    |   | Two Million and  No/100 Dollars ($2,000,000), received on October 30, 2002;         |
| (iii)   |   | One Million and  No/100 Dollars ($1,000,000), received on November 18, 2002;        |
| (iv)    |   | Five Hundred  Thousand and No/100 Dollars ($500,000), received on March 19, 2005;   |
| (v)     |   | Five Hundred  Thousand and No/100 Dollars ($500,000), received on March 28, 2005;   |
| (vi)    |   | Three Hundred  Thousand and No/100 Dollars ($300,000), received on April 4, 2005;   |
| (vii)   |   | Three Hundred  Thousand and No/100 Dollars ($300,000), received on April 19, 2005;  |
| (viii)  |   | One Million and  No/100 Dollars ($1,000,000), received on May 3, 2005;              |
| (ix)    |   | Two Hundred  Thousand and No/100 Dollars ($200,000), received on May 11, 2005;      |
| (x)     |   | Three Hundred  Thousand and No/100 Dollars ($300,000) received on May 12, 2005;     |
| (xi)    |   | Four Hundred  Thousand and No/100 Dollars ($400,000 received on May 19,2005         |
| (xii)   |   | Four Hundred  Thousand and No/100 Dollars ($400,000) received on May 26,2005;       |
| (xiii)  |   | Five Hundred  Thousand and No/100 Dollars ($500,000) received on June 2, 2005;      |
| (xiv)   |   | Five Hundred  Thousand and No/100 Dollars ($500,000) received on June 9, 2005;      |
| (xv)    |   | Five Hundred  Thousand and No/100 Dollars ($500,000) received on June 16, 2005;     |
| (xvi)   |   | Five Hundred  Thousand and No/100 Dollars ($500,000) received on July 1, 2005;      |
| (xvii)  |   | Five Hundred  Thousand and No/100 Dollars ($500,000) received on July 12, 2005;     |
| (xviii) |   | Five Hundred  Thousand and No/100 Dollars ($500,000) received on July 21, 2005; and |
| (xix)   |   | Five Hundred  Thousand and No/100 Dollars ($500,000) received on August 1, 2005.    |

 

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The applicable annual interest rate hereunder, adjusted monthly, shallbe the sum of (i) the one month London Interbank Offered Rate on the firstday of each calendar month (“LIBOR”) plus (ii) 3.5% per year until suchdate as the unpaid principal balance of this Note becomes due and payable and (ii) 6.0%per year after such date as the unpaid principal balance of this Note becomesdue and payable, whether at maturity or pursuant to other default as providedhereunder.  Each monthly interest paymentshall be payable in arrears in calendar monthly installments, due and payableby the second business day of the following calendar month.  Interest shall be calculated based on theactual number of days the principal balance remains outstanding in a year of 365days.

 

2.             Maturity.  The unpaid principal balance of this Note,together with accrued and unpaid interest, shall be due and payable on April 30,2006.

 

3.             Prepayment.  The unpaid principal balance of the Note,together with accrued and unpaid interest, may be paid in whole or in part atany time in the sole discretion of Maker without penalty.  Any prepayment in part by Maker shall befirst allocated to any accrued and unpaid interest, with any remaining amountbeing allocated to the unpaid principal.

 

4.             Default.  If any of the following events occur, allindebtedness owing by Maker hereunder shall become forthwith due and payable toholder, upon delivery by holder to Maker of a written notice of default anddemand for payment, and the expiration of the following periods from thedelivery of such notice, during which periods Maker shall have the ability tocure such default: (i) in the case of (a) below, ten days, (ii) inthe case of (b), (c) or (d) below, 30 days and, (iii) in thecase of (e) below, 15 days, or, if it is not practicable for Maker to curesuch default within said 15-day period and Maker is diligently proceedingto cure such default, such time longer than 15 days as is reasonable for Makerto cure such default.

 

(a)           Anydefault by Maker in the payment, when due, of any part of the principal of orinterest on this Note and the payment of any other sums payable by Makerpursuant to the terms of this Note.

 

(b)           Theinsolvency or bankruptcy of Maker or any of its direct or indirectsubsidiaries, the execution by Maker or any of its direct or indirectsubsidiaries of an assignment for the benefit of creditors of substantially allof the assets of Maker or any such direct or indirect subsidiary, or Maker’s orany of its direct or indirect subsidiary’s consent to the appointment of a trusteeor a receiver or other officer of a court or other tribunal.

 

(c)           Theappointment of a trustee or receiver or other officer of a court for Maker orany of its direct or indirect subsidiaries, or for a substantial part of theirproperties, without the consent of Maker or of such direct or indirectsubsidiary, where no discharge is effected within 30 days.

 

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(d)           Theinstitution of bankruptcy, reorganization, insolvency or liquidationproceedings by or against Maker or any of its direct or indirect subsidiaries,and if against Maker or such a direct or indirect subsidiary, where suchproceeding is consented to by Maker or such subsidiary or remains undismissedfor 30 days.

 

(e)           Anyother breach or failure of Maker to perform any term or condition of this Note.

 

5.             Collection.  Maker and all guarantors and endorsers ofthis Note shall pay all costs and expenses of collection and enforcement ofthis Note, including reasonable attorneys’ fees.

 

6.             Waiver.  Demand, presentment for payment, notice ofdishonor, protest and notice of protest are hereby waived.

 

7.             Proceeds.  The proceeds from this Note have previouslybeen advanced to Maker by Lender.

 

8.             Assignment.  This Note may not be assigned by Lender orMaker without the express written consent of the other party; provided,however, that Lender may assign this Note to any of its affiliates without suchconsent.  Such an affiliate, for purposesof this Section 9, is any person of which Lender owns directly orindirectly more than 50% of the voting equity interests, or such person as ownsdirectly or indirectly more than 50% of the voting equity interests of Lender.

 

9.             GoverningLaw.  This Note is made and is beingexecuted in the State of Colorado, and the provisions hereof will be construedin accordance with the laws of the State of Colorado, without regard toprinciples of conflicts of laws. Furthermore, Lender and Maker (and their lawful assignees, successorsand endorsers) further agree that in the event of default this Note may beenforced in any court of competent jurisdiction in the States of Colorado orIllinois, and they do hereby submit to such jurisdiction in the States ofColorado or Illinois.

 

10.           Severability.  Invalidation of any of the provisions of thisNote shall not affect the remainder of this Note.

 

11.           Amendment.  This Note may not be amended or modifiedexcept by an instrument in writing signed by both parties.

 

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12.           Modification.  This Note is given in modification andincrease, but not in extinguishment or discharge of the sum of Ten Million,Nine Hundred Thousand and No/100 Dollars ($10,900,000) left owing and unpaidupon that certain promissory note dated July 21, 2005, executed by Makerand payable to the order of Slough Estates USA Inc. in the original principalamount of Eleven Million, Four Hundred Thousand and No/100 Dollars($11,400,000).  The principal amount ofthis Note represents an additional Five Hundred Thousand and No/100 Dollars($500,000) monies advanced by Lender and paid to Maker at its special instanceand request.

 
|   | TIPPERARY CORPORATION |
|--------|-----------------------|
|   |                  |
|   | By:                   | /s/ David L. Bradshaw |   |
|   |                  | David L. Bradshaw, President and |
|   |                  | Chief Executive Officer |

 

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