Exhibit 10.5


 


SECOND
AMENDED AND RESTATED FERRELLGAS UNIT OPTION PLAN


 


SECTION 1.  PURPOSE


 


The
Ferrellgas Unit Option Plan was adopted effective as of August 1, 1994 and
amended and restated effective as of March 1, 1995.  This Second Amended and Restated Ferrellgas
Unit Option Plan (the “Plan”) amends and restates in its entirety those prior
plans effective as of April 19, 2001 (the “Amendment Effective Date”).  Some capitalized terms are defined in Section 10
of this Plan.  This Plan is adopted by
Ferrellgas Partners, L.P., a Delaware limited partnership (the “Partnership”),
to encourage selected Employees of Ferrellgas, Inc., a Delaware
corporation and the general partner of the Partnership (the “Company”), to
develop a proprietary interest in the growth and performance of the
Partnership, to generate an increased incentive to contribute to the
Partnership’s future success and prosperity, thus enhancing the value of the
Partnership for the benefit of its unitholders, and to enhance the ability of
the Company to attract and retain key individuals who are essential to the
progress, growth and profitability of the Partnership, by giving such Employees
the opportunity to acquire Common Units.


 


SECTION 2.  ADMINISTRATION


 


The
Plan shall be administered by the Option Committee of the Board of Directors of
the Company (“the Board”) as designated by the Board to administer the Plan and
composed of not less than two directors of the Board, each of whom is a “non-employee
directors” within the meaning of Rule 16b-3.  A majority of the Committee shall constitute a
quorum, and the acts of a majority of the members present at any meeting at
which a quorum is present, or acts approved in writing by all members of the
Committee, shall be deemed the acts of the Committee.


 


Subject
to the terms of the Plan and applicable law, the Committee shall have the sole
power, authority and discretion to: (i) designate the Employees who are to
be Participants; (ii) determine the number of Options to be granted to an
Employee; (iii) determine the terms and conditions of any Option; (iv) interpret,
construe and administer the Plan and any instrument or agreement relating to an
Option granted under the Plan; (v) establish, amend, suspend, or waive
such rules and regulations and appoint such agents as it shall deem
appropriate for the proper administration of the Plan; (vi) make a
determination as to the right of any Person to receive payment of (or with
respect to) an Option; and (vii) make any other determinations and take
any other actions that the Committee deems necessary or desirable for the
administration of the Plan.


 


Except
to the extent prohibited by applicable law or the applicable rules of a
stock exchange, the Committee may allocate all or any portion of its
responsibilities and powers to any one or more of its members and may delegate
all or any part of its responsibilities and powers to any person or persons
selected by it.  Any such allocation or
delegation may be revoked by the Committee at any time.


 


The
Company and the Partnership shall furnish the Committee with such data and
information as it determines may be required for it to discharge its
duties.  The records of the Company and
the Partnership as to an employee’s or Participant’s employment (or other
provision of services), termination of employment (or cessation of the
provision of services), leave of absence, reemployment and compensation shall
be conclusive on all Persons unless determined to be 


 

















 


incorrect.  Participants and other persons entitled to
benefits under the Plan must furnish the Committee such evidence, data or
information as the Committee considers desirable to carry out the terms of the
Plan.


 


Unless
otherwise expressly provided in the Plan, all designations, determinations,
interpretations, and other decisions with respect to the Plan or any Option
granted thereunder shall be within the sole discretion of the Committee, may be
made at any time, and shall be final, conclusive, and binding upon all Persons.


 


SECTION 3.  UNITS AVAILABLE FOR OPTIONS


 


3.1           CALCULATION OF NUMBER OF COMMON UNITS AVAILABLE.  The number of Common Units available for
granting Options under the Plan shall be 1,350,000 Common Units, subject to
adjustment as provided in Section 3.3. 
Further, if any Option granted under the Plan is forfeited, canceled,
surrendered, or otherwise terminates or expires without the delivery of Common
Units or other consideration, then the Common Units subject to such Option
shall again be available for granting Options under the Plan.  To comply with the rules of the New York
Stock Exchange, no single officer or director may acquire under the Plan more
than one percent (1%) of the 31,489,516 outstanding Common Units as of the
Amendment Effective Date, for a limitation of no more than 314,895 Common
Units.  In addition, all Common Units
available for issuance under this Plan together with any Common Units available
for issuance under any other employee benefit plan of the Partnership shall not
exceed five percent (5%) of the Partnership’s 31,489,516 outstanding Common
Units as of Amendment Effective Date, for a limitation of 1,574,475 Common
Units.


 


3.2            SOURCES OF UNITS DELIVERABLE UNDER OPTIONS.  Common Units delivered by the Partnership on
exercise of an Option may consist, in whole or in part, of Common Units
acquired in the open market or from any Person.


 


3.3           ADJUSTMENTS.  In the
event that (i) any change is made to the Common Units issuable under the
Plan or (ii) the Partnership makes any distribution of cash, Common Units
or other property to unitholders which results from the sale or disposition of
a major asset or separate operating division of the Partnership or any other
extraordinary event and, in the judgment of the Committee, such change or
distribution would significantly dilute the rights of Participants hereunder,
then the Committee may make appropriate adjustments in the maximum number of
Units issuable under the Plan to reflect the effect of such change or
distribution upon the Partnership’s capital structure, and may make appropriate
adjustments to the number of Units subject to, and/or the exercise price of,
each outstanding Option.  The adjustments
determined by the Committee shall be final, binding and conclusive.


 


3.4           SUBORDINATED UNITS. 
Under the Original Plan, the Options were exercisable into Subordinated
Units.  As of August 1, 1999, all
Subordinate Units converted into Common Units. 
Any Options previously outstanding as of that date were automatically
converted into Options with respect to Common Units.


 


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SECTION 4.  ELIGIBILITY


 


Any
Employee who is not a member of the Committee shall be eligible to be a
Participant.  Grants may be made to the
same Employee on more than one occasion.


 


SECTION 5.  OPTIONS


 


5.1           OPTION TERMS.  The
Committee is hereby authorized to grant Options to Employees with the following
terms and conditions and with such additional terms and conditions, which are
not inconsistent with the provisions of the Plan, as the Committee shall
determine:


 


(i)            EXERCISE PRICE. 
The per Unit exercise price of an Option shall be determined by the
Committee at the date of grant.


 


(ii)           TIME AND METHOD OF VESTING OR EXERCISE, The Committee
shall determine the time or times at which an Option may become vested in whole
or in part, may be exercised in whole or in part, and the method by which
payment of the exercise price with respect thereto may be made; provided,
however, no Option shall be exercisable within six months of its date of
grant.  Subject to any limitations in the
Option Agreement, a Participant may purchase Common Units subject to the vested
and exercisable portion of an Option in whole at any time, or in part from time
to time, by delivering to the Chief Financial Officer of the Company, on behalf
of the Partnership, written notice specifying the number of Common Units with
respect to which the Option is being exercised, together with payment in full
of the purchase price of such Common Units plus any applicable federal, state
or local taxes for which the Partnership has a withholding obligation in
connection with such purchase.  Such
payment shall be payable in full in cash or by check acceptable to the Company.


 


(iii)          TERM OF OPTIONS.  The
term of each Option shall be for such period as may be determined by the Committee;
provided, however, that in no event shall the term of any Option exceed a
period of 10 years from the date of its grant.


 


(iv)          TERMINATION OF EMPLOYMENT. 
Options, to the extent vested as of the date the Participant ceases to
be an Employee, will remain the property of the Participant until such Options
are exercised pursuant to the Plan or expire by their terms.  Options, to the extent not vested as of the
date the Participant ceases to be an Employee, shall be automatically canceled
unexercised on such date.


 


(v)           LIMITS ON TRANSFER OF OPTIONS.  No Option or rights thereunder shall be
assignable, alienable, saleable or transferable by a Participant otherwise than
by will or by the laws of descent and distribution.  Each Option shall be exercisable during that
Participant’s lifetime only by the Participant or, if permissible under
applicable law, by the Participant’s guardian or legal representative.  No Option or any rights thereunder may be
pledged, alienated, attached or otherwise encumbered, and any purported pledge,
alienation, attachment or encumbrance thereof shall be void and unenforceable
against the Partnership and the Company.


 


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(vi)          UNIT CERTIFICATES. 
Upon exercise of an Option, delivery of a certificate for fully paid and
nonassessable Common Units shall be made to the Person exercising the Option
either at such time during ordinary business hours after 15 days but not more
than 30 days from the date of receipt of the notice by the Partnership as shall
be designed in such notice, or at such time, place and manner as may be agreed
upon by the Partnership and the Person exercising the Option.


 


(vii)         OPTION AGREEMENT. 
Each Option shall be evidenced by an Option Agreement, which shall have
such terms and provisions, not inconsistent with the Plan, that the Committee
determines.


 


5.2           OPTION CANCELLATION RIGHTS.  Notwithstanding anything in the Plan to the
contrary, the Committee shall have the discretion to cancel all or part of any
outstanding Options at any time or times. 
Upon any such cancellation the Partnership shall pay to the Participant
with respect to each Common Unit that is subject to the canceled (or canceled
portion of the) Option an amount in cash equal to the excess, if any, of (i) the
Fair Market Value of a Common Unit (at the effective date of such cancellation)
over (ii) the exercise price per Common Unit of such canceled Option.


 


SECTION 6.  AMENDMENT AND TERMINATION


 


(i)            The Board in its discretion may terminate the Plan at any
time with respect to any Common Units for which a grant has not theretofore
been made.  The Board shall also have the
right to alter or amend the Plan or any part thereof from time to time;
provided, however, that no change in any Option theretofore made may be made
which would impair the rights of the Participant without the consent of such
Participant.


 


SECTION 7.  VESTING UPON THE OCCURRENCE OF CERTAIN EVENTS


 


If
a plan of complete dissolution of the Partnership is adopted or the unitholders
approve an agreement for the sale or disposition by the Partnership (in one
transaction or a series of transactions) of all or substantially all the
Partnership’s assets then upon such adoption or approval all or a portion (as
determined by the Committee and set forth in the related Option Agreement) of a
Participant’s Options outstanding as of the date of such adoption or approval
shall be immediately and fully vested and exercisable and may be exercised
within one year from the date of such adoption or approval, but not thereafter;
provided, however, that if, on any date during such year the Participant
desires to exercise those Options, such Participant cannot exercise such
Options and sell all of the Common Units issuable upon such exercise without
being subject to liability under Section 16(b) of the 1934 Act, then
the Partnership shall pay to such Participant with respect to each Common Unit
which would have been issuable upon the Participant’s exercise of the those
Options an amount in cash equal to the excess, if any, of (i) the Fair
Market Value of a Common Unit (as of the date of such exercise) over (ii) the
exercise price per Common Unit of such Options. 
The remaining unvested and/or unexercisable Options shall be immediately
cancelled unexercised and without the payment of any consideration.


 


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SECTION 8.  GENERAL PROVISIONS


 


8.1           NO RIGHTS TO OPTIONS. 
No Person shall have any claim to be granted any Option under the Plan,
and there is no obligation for uniformity of treatment of Persons under the
Plan.  The terms and conditions of
Options need not be the same with respect to each Participant.


 


8.2           WITHHOLDING. The Partnership shall (i) withhold from
any transfer made with respect to any Option cancellation or exercise under the
Plan the amount (in cash or Units) of withholding taxes due in respect thereof,
and (ii) take such other action as may be necessary in the opinion of the
Partnership to satisfy all obligations for the payment of such taxes.


 


8.3           CORRECTION OF DEFECTS, OMISSIONS AND INCONSISTENCIES.  The Committee may correct any defect, supply
any omission, or reconcile any inconsistency in the Plan or any Option in the
manner and to the extent it shall deem desirable in the establishment or
administration of the Plan.


 


8.4           NO LIMIT ON OTHER COMPENSATION ARRANGEMENTS.  Nothing contained in the Plan shall prevent
the Partnership or the Company from adopting or continuing in effect other or
additional compensation arrangements and such arrangements may be either
generally applicable or applicable only in specific cases.


 


8.5           NO RIGHT TO EMPLOYMENT. 
The grant of an Option shall not be construed as giving a Participant
the right to be retained in the employ of the Company or the Partnership.  Further, the Company may at any time dismiss
a Participant from employment, free from any liability or any claim under the
Plan unless otherwise expressly provided in the Plan or in any Option
Agreement.


 


8.6           GOVERNING LAW.  The
validity, construction and effect of the Plan and any rules and
regulations relating to the Plan shall be determined in accordance with
applicable Federal law, and to the extent not preempted thereby, with the laws
of the State of Missouri.


 


8.7           SEVERABILITY.  If
any provision of the Plan or any Option is or becomes or is deemed to be
invalid, illegal or unenforceable in any jurisdiction, or as to any person or
Option, or would disqualify the Plan or any Option under any law deemed
applicable by the Committee, such provision shall be construed or deemed amended
to conform to applicable laws.  If it
cannot be so construed or deemed amended without, in the determination of the
Committee, materially altering the intent of the Plan or the Option, such
provision shall be stricken as to such jurisdiction, Person or Option and the
remainder of the Plan and any such Option shall remain in full force and
effect.


 


8.8           NO TRUST OR FUND CREATED. 
Neither the Plan nor any Option shall create or be construed to create a
trust or separate fund of any kind or a fiduciary relationship between the
Company, the Partnership or any Affiliate and a Participant or any other
Person.  To the extent that any Person
acquires a right to receive payments from the Company, the Partnership or any Affiliate
pursuant to an Option, such right shall be no greater than the right of any
unsecured general creditor of the Company, the Partnership or any Affiliate.


 


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8.9           NO FRACTIONAL UNITS. 
No fractional Units shall be issued or delivered pursuant to the Plan or
any Option, and the Committee shall determine whether cash, other securities,
or other property shall be paid or transferred in lieu of any fractional Units,
or whether such fractional Units or any rights thereto shall be canceled, terminated
or otherwise eliminated.


 


8.10         HEADINGS.  Headings
are given to the Sections and subsections of the Plan solely as a convenience
to facilitate reference.  Such headings
shall not be deemed in any way material or relevant to the construction or
interpretation of the Plan or any provision thereof.


 


8.11         NO LIMITATION.  The
existence of the Plan and the grants of Options made hereunder shall not affect
in any way the right or power of the Board, the Company in its capacity as the
general partner of the Partnership or unitholders of the Partnership to make or
authorize any adjustment, recapitalization, reorganization or other change in
the capital structure or business of the Partnership or any Affiliate, any
merger or consolidation of the Partnership or any Affiliate, any issue of debt
or equity securities ahead of or affecting Units or the rights thereof or
pertaining thereto, the dissolution or liquidation of the Partnership or any
Affiliate or any sale or transfer of all or any part of Partnership or any Affiliate’s
assets or business, or any other corporate act or proceeding.


 


8.12         RULE 16b-3.  It is
intended that the Plan and any Option granted to a Person subject to Section 16
of the Securities Exchange Act of 1934, as amended, meet all of the requirements
of Rule 16b-3.  If any provision of
the Plan or any such Option would disqualify the Plan or such Option under, or
would otherwise not comply with, Rule 16b-3, such provision or Option
shall be construed or deemed amended to conform to Rule 16b-3.


 


8.13         INVESTMENT REPRESENTATION. 
Unless the Common Units subject to Options granted under the Plan have
been registered under the Securities Act of 1933, as amended (the “1933 Act”),
(and, in the case of any Participant who may be deemed an affiliate (for securities
law purposes) of the Company or Partnership, such Common Units have been
registered under the 1933 Act for resale by such Participant), or the
Partnership has determined that an exemption from registration is available,
the Partnership may require prior to and as a condition of the issuance of any
Common Units that the person exercising an Option hereunder furnish the
Partnership with a written representation in a form prescribed by the Committee
to the effect that such person is acquiring said Common Units solely with a
view to investment for his or her own account and not with a view to the resale
or distribution of all or any part thereof, and that such person will not
dispose of any of such Common Units otherwise than in accordance with the provisions
of Rule 144 under the 1933 Act unless and until either the Common Units
are registered under the 1933 Act or the Company, on behalf of the Partnership,
is satisfied that an exemption from such registration is available.


 


8.14         COMPLIANCE WITH SECURITIES LAWS.  Anything contained herein to the contrary
notwithstanding, the Partnership shall not be obligated to sell or issue any
Common Units under the Plan unless and until the Partnership is satisfied that
such sale or issuance complies with (i) all applicable requirements of the
exchange on which the Units are traded (or the governing body of the principal
market in which such Common Units are traded, if such Common Units are not then
listed on an exchange), (ii) all applicable provisions of the 1933 Act,
and (iii) all other laws or regulations by which the Partnership is bound
or to which the Partnership is subject. 
The 


 


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Company acknowledges that,
as the general partner of the Partnership, it is an affiliate of the
Partnership under securities laws and it shall comply with such laws and
obligations of the Partnership relating thereto as if they were directly
applicable to the Company.


 


SECTION 9.  TERM OF THE PLAN


 


No
Option shall be granted after the termination of the Plan.  However, unless otherwise expressly provided
in the Plan or in an applicable Option Agreement, any Option theretofore
granted may extend beyond such date, and any authority of the Committee to
amend, alter, suspend, discontinue or terminate any such Option, or to waive
any conditions or rights under any such Option, and the authority of the Board
to cancel the Option pursuant to Section 5.2, shall extend beyond such
date.


 


SECTION 10.  DEFINITIONS


 


As
used in the Plan, the following terms shall have the meanings set forth below:


 


(a)                                  “Affiliate”
shall mean (i) the Partnership, (ii) the Company, and (iii) any
entity in which the Partnership owns, directly or indirectly, more than 50% of
the beneficial interests.


 


(b)                                 “Code” shall
mean the Internal Revenue Code of 1986, as amended from time to time.


 


(c)                                  “Common Unit”
shall mean a limited partnership interest in the Partnership represented by a
common unit as set forth in the Third Amended and Restated Agreement of Limited
Partnership of Ferrellgas Partners, L.P., dated as of April 6, 2001, as
amended from time to time.


 


(d)                                 “Employee”
shall mean any employee of the Company or any Affiliate.


 


(e)                                  “Fair Market
Value” shall mean, at any specified time, with respect to a Common Unit, an amount
equal to the average closing price of a Common Unit on the New York Stock
Exchange for the 20 trading days immediately preceding such determination or,
if not so traded, as determined by the Committee.


 


(f)                                    “1933 Act”
shall mean the Securities Act of 1933, as amended.


 


(g)                                 “1934 Act”
shall mean the Securities Exchange Act of 1934, as amended.


 


(h)                                 “Option” shall
mean a right granted under the Plan to purchase Units under the Plan.


 


(i)                                     “Participant”
shall mean an Employee granted an Option under the Plan.


 


(j)                                      “Person” shall
mean any individual, corporation, partnership, association, joint-stock
company, trust, unincorporated organization or government or political
subdivision thereof.


 


(k)                                  “Rule 16b-3”
shall mean Rule 16b-3 promulgated by the Securities and Exchange
Commission under the 1934 Act.


 


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(l)                                     “Subordinated
Unit” shall mean a limited partnership interest in the Partnership represented
by a subordinated unit as set forth in the Agreement of Limited Partnership of
Ferrellgas Partners, L.P., dated as of July 5, 1994.


 


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