**Exhibit 10.22**

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**FERRELL COMPANIES, INC.1998**

**INCENTIVE COMPENSATION PLAN**

 

**As Amended and Restated effective asof October 11, 2004**

 

**1.**    **PURPOSE.** The purposes of the FerrellCompanies, Inc. 1998 Incentive Compensation Plan (the “Plan”) are asfollows:

 

(a)                                  to allow uppermiddle and senior level managers of Ferrellgas, Inc. (“FGI”) toparticipate in the equity growth of Ferrell Companies, Inc. (“FCI”) and,indirectly (through its “subsidiary” holding), in the equity growth ofFerrellgas Partners, L.P. (the “Partnership”) and its subsidiaries (with FCI,FGI, the Partnership and its subsidiaries being collectively referred to hereinas “Companies”);

 

(b)                                 to generate anincreased incentive to contribute to the Partnership’s future success andprosperity and to focus on the value growth of FCI; and

 

(c)                                  to focus onprofitable Partnership growth and acquisition activities that will enablesubordinated Partnership units (“Subordinated Units”) held by FCI to convert tocommon Partnership units (“Common Units”), to increase the value of allPartnership Units (including both Common and Subordinated Units) and toincrease the equity value of FCI, through an increasing Partnership value, amaximization of Partnership distributions, a reduction of FCI debt, and anoptimization of share value growth for the FCI shares held by FCI’s employeestock ownership plan (its “ESOP”).

 

Unless defined in the sentence or paragraph inwhich they are used, definitions used herein are set forth in Section 9.9below. The following provisions constitute an amendment, restatement andcontinuation of the Plan effective as of October 11, 2004.

 

**2.    ADMINISTRATION.**

 

**2.1**                               **Administrationby Committee.** The Plan shall be administered by the FCI OptionsCommittee (comprised of three members of the FCI’s or FGI’s ManagementCommittee, and generally including the CEO and CFO of FGI, as well as thesenior personnel manager of FGI) (the “Committee”).

 

**2.2**                               **Authority.** Subject to theprovisions of the Plan, the Committee shall have the authority to (a) interpretthe provisions of the Plan, and prescribe, amend, and rescind rules andprocedures relating to the Plan, (b) grant incentives under the Plan, insuch forms and amounts and subject to such terms and conditions as it deemsappropriate, including, without limitation, incentives which are made incombination with or in tandem with other incentives (whether or notcontemporaneously granted) or compensation or in lieu of current or deferredcompensation, (c) modify the terms of, cancel and reissue, or repurchaseoutstanding incentives, subject to Section 9.7, (d) suspend theoperation of the Plan (or any portion thereof) pursuant to the provisions of Section 9.8hereinbelow and (e) make all other determinations and take all otheractions as it deems necessary or desirable for the administration of the Plan.The determination of the Committee on matters within its authority shall beconclusive and binding on Companies and all other persons. The Committee shallcomply with all applicable law in administering the Plan.

 

**3.    PARTICIPATION.** Subject to theterms and conditions of the Plan, the Committee shall designate from time totime employees of Companies (including, without limitation, employees who areofficers and/or directors of any Companies entity) who shall receive incentivesunder the Plan (“Participants”).

 

**4.    SHARES SUBJECT TO THE PLAN**

 

**4.1****                              ****Number ofShares Reserved.** Subject to adjustment in accordance with Sections4.2 and 4.3, the aggregate number of shares of FCI common stock (“CommonStock”) available for incentives under the Plan shall be that number of sharesof Common Stock equaling 20% of FCI’s outstanding Common Stock shares, on afully-diluted basis, immediately following the date on which the ESOP hasacquired all of the outstanding Common Stock shares.

 

Allshares of Common Stock issued under the Plan may be authorized and unissuedshares or treasury shares. In addition, all of such shares may, but need not,be issued pursuant to the exercise of nonqualified stock options and/or“incentive stock options” (as defined in section 422 of the Internal RevenueCode of 1986, as amended (the “Code”)).

 

**4.2**            **Reusageof Shares.**

 

(a)                             In the event ofthe termination (by reason of forfeiture, expiration, cancellation, surrender,or otherwise) of any incentive under the Plan, that number of shares of CommonStock that was subject to the incentive but not delivered shall be availableagain for incentives under the Plan.

 

(b)                                 In the eventthat shares of Common Stock are delivered under the Plan and are thereafterforfeited or reacquired by FCI (whether or not pursuant to rights reserved uponthe award thereof), such forfeited or reacquired shares shall be availableagain for incentives under the Plan.

 

**4.3****                              ****Adjustmentsto Shares Reserved.** In the event of any merger, consolidation,reorganization, recapitalization, spinoff, stock dividend, stock split, reversestock split, exchange, or other distribution with respect to shares of CommonStock or other change in the corporate structure or capitalization affectingthe Common Stock (each being an “Adjustment”), the type and number of shares ofstock which are or may be subject to incentives under the Plan and the terms ofany outstanding incentives (including the price at which shares of stock may beissued pursuant to an outstanding incentive) shall be equitably adjusted by theCommittee, in its sole discretion, to preserve both the value of incentivesawarded or to be awarded to Participants under the Plan and the percentage ofoutstanding Common Stock shares (on a fully-diluted basis) available forincentives under the Plan immediately prior to the date of the Adjustment(taking into account both incentives granted but not yet distributed from thePlan and incentives not yet granted under the Plan).

 

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**5.    STOCK OPTIONS.**

 

**5.1**                               **Awards.** Subject to theterms and conditions of the Plan, the Committee shall designate the individualsto whom “nonqualified stock options” to purchase shares of Common Stock (“StockOptions”) are to be awarded under the Plan and shall determine the number, andterms of the Stock Options to be awarded to each of them. Unless and until theCommittee makes a decision to the contrary, the Participants to whom StockOptions are granted hereunder shall be designated from the following two employeegroups:

 

(i)            fieldemployees who are at or above the “area manager” designation level; and

 

(ii)           corporateemployees who are deemed by the Committee to have a material positive impact ondeveloping and implementing the strategies, systems or processes that supportthe operations of the Partnership and contribute to the achievement by thePartnership of its financial and operational goals and the maximization of theequity value of FCI.

 

Stock Options awarded under the Plan will, unless anduntil the Committee makes a decision to the contrary, be classified as either“Tranche A Options” or “Tranche B Options.” Each Stock Option awarded under thePlan shall be a “nonqualified stock option” for tax purposes.

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**5.2****                              ****Adjustmentof Awards.** If a Participant experiences a material change injob status (or other similar compensation measurement as may, from time totime, be utilized by the Committee), the Committee may, in its sole discretion,determine whether any or all of the unvested portion of the Participant’s StockOption(s) shall be taken from the Participant and returned to FCI. Inaddition, in the event of a Change in Control, the Committee may, in its solediscretion, determine what adjustments, if any, should be made to(i) Stock Options awarded hereunder and/or (ii) the Plan.

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**5.3****                              ****Timefor Exercise.** Each Stock Option shall be exercisable in accordancewith the following rules:

 

(a)                                  Each StockOption granted prior to September 28, 2004, shall be exercisable only ifit is vested (as described in Section 5.4 below) and, then, only to theextent, at the times and until the expiration date(s) described in thefollowing table and the remainder of this Section 5.3(a):

 
| **Exercise  Event**                                                                                                                                 | ** ** | **Percentage  of Vested Portion of********Tranche A Options Which May be********Exercised on Specified Exercise********Dates**                                                                                                                             | ** ** | **Percentage  of Vested Portion of********Tranche B Options Which May be********Exercised on Specified Exercise********Dates**                                                                                              |
|-----------------------------------------------------------------------------------------------------------------------------------------------------|------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Full  repayment of the “FCI Senior Notes”  (as defined inSection 9.9  below) (“Trigger1”)                             |       | Up  to 25% of the vested portion ofa Participant’s Stock Option(s)may be exercised, upon (and  onlyupon) the  first odd-numbered year“Exercise Date” (as defined inSection 9.9 below) next followingsuch repayment of the FCI  SeniorNotes. |       | Up  to 25% of the vested portion ofa Participant’s Stock Option(s) maybe exercised, upon (and  only upon)the first  even-numbered year“Exercise  Date” next following suchrepayment of the FCI Senior Notes. |
| Full  repayment of the“Subordinated  Notes” (asdefined in  Section 9.9below), and  assuming Trigger1 occurs  (“Trigger 2”) |       | An  additional 25% of the vestedportion of a Participant’s StockOption(s) may be  exercised, upon(and only  upon) the firstodd-numbered  year Exercise Datenext following  such repayment ofthe  Subordinated Notes.                                  |       | An  additional 25% of the vestedportion of a Participant’s StockOption(s) may be  exercised, upon(and only  upon) the firsteven-numbered  year Exercise Datenext following  such repayment ofthe  Subordinated Notes.  |
| Assuming  that both Trigger 1 and Trigger 2 have occurred:                                                                                     |       | The  vested portion of a Participant’s Stock Option(s) maybe exercised up to the  followingpercentage on  the Exercise Dateoccurring in  each of the following years:                                                                       |       | The  vested portion of a Participant’s Stock Option(s) maybe exercised up to the  followingpercentages on  the Exercise Dateoccurring in  each of the followin years:                                        |
|                                                                                                                                                |       | 2009  60%  2011 80%  2013 100%  2015 100%  2017 100%                                                                                                                                                                                                            |       | 2010  70%  2012 90%  2014 100%  2016 100%2018 100%                                                                                                                                                                               |

 

In the event that either or both of Trigger 1 andTrigger 2 has (have) not occurred by 2013 (for Tranche A Options) or 2014 (forTranche B Options), then (i) 100% of the vested portion of a Participant’sTranche A Option(s) may be exercised on the Exercise Date occurring ineach of 2013, 2015 and 2017; and (ii) to up to 100% of the vested portionof a Participant’s vested Tranche B Option(s) may be exercised on theExercise Date occurring in each of 2014, 2016 and 2018.

 

(b)                                 Each StockOption granted on or after September 28, 2004, shall be exercisable onlyif it is vested (as described in Section 5.4 below) and, then, only to theextent, at the times and until the expiration date(s) established by theCommittee and set forth in the stock option agreement evidencing the grant ofsuch Stock Option.

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**5.4          Vesting.Each Stock Option shall vest in accordance with the following:**

 

(a)                                  Subject to theprovisions of paragraph (c), Tranche A Options and Tranche B Options grantedprior to September 28, 2004, shall vest in accordance with the followingschedule:

 

| **Anniversary  of********Stock Option********Grant Date** | ** ** | **Annual********Vested Percentage** | ** ** | **Cumulative********Vested********Percentage** |
|-----------------------------------------------------------|------------|-------------------------------------|------------|------------------------------------------------|
| 1st                                                       |       | 5%                                  |       | 5%                                             |
| 2nd                                                       |       | 5%                                  |       | 10%                                            |
| 3rd                                                       |       | 5%                                  |       | 15%                                            |
| 4th                                                       |       | 5%                                  |       | 20%                                            |
| 5th                                                       |       | 5%                                  |       | 25%                                            |
| 6th                                                       |       | 10%                                 |       | 35%                                            |
| 7th                                                       |       | 10%                                 |       | 45%                                            |
| 8th                                                       |       | 10%                                 |       | 55%                                            |
| 9th                                                       |       | 10%                                 |       | 65%                                            |
| 10th                                                      |       | 10%                                 |       | 75%                                            |
| 11th                                                      |       | 10%                                 |       | 85%                                            |
| 12th                                                      |       | 15%                                 |       | 100%                                           |

 

(b)                                 Subject to the provisionsof paragraph (c), Stock Options granted on or after September 28, 2004,shall vest in accordance with the vesting schedule established by the Committeeand set forth in the stock option agreement evidencing the grant of such StockOptions.

 

(c)                                  Notwithstandingthe vesting schedule set forth in the immediately preceding paragraphs or in aParticipant’s stock option agreement, as applicable, all Stock Options grantedhereunder shall fully vest upon (i) a “Change in Control” of thePartnership or FCI, (ii) the Participant’s death, or “permanentdisability” or (iii) the Participant’s retirement from FCI at or afterattainment of age 65. A Stock Option, whether or not vested, will be forfeited,no longer exercisable and, if vested,*  divested*  if (I) a Participant’s employment withFGI is terminated for gross insubordination (as determined by FGI’s Board ofDirectors) or (II) the Participant enters a plea of “guilty” or “nolocontendre” to, or is convicted by a court of competent jurisdiction of, a felony.

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**5.5**                               **OptionPrice.** The option price per share (“Option Price”) for any Stock Optionawarded shall not be less than the “Fair Market Value” of a share of CommonStock on the date the Stock Option is granted. Recipients of Stock Optionsshall be timely notified no less frequently than twice annually of the FairMarket Value of a share of Common Stock.

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**5.6****                              ****Mannerof Exercise.** The vested portion of a Stock Option may beexercised, in whole or in part, once a year on the Exercise Date by notice toFCI specifying the number of whole (not fractional) shares of Common Stock tobe purchased. Such notice shall be given at least thirty (30) days prior to theExercise Date and it shall be accompanied by (or provision shall be made for) (i) paymentof the Option Price by a certified or cashiers check or wire transferpayable tothe order of the Company on or prior to the Exercise Date; (ii) anexecuted share transfer restriction agreement (the form of which shall eitherbe attached to the agreement memorializing the Participant’s Stock Option grantor be provided to the Participant prior to the first Exercise Date for theStock Option); and (iii) such other documents or representations(including, without limitation, representations as to the intention of theParticipant or his/her successor to acquire the shares for investment) as theCompany may reasonably request in order to comply with securities, tax or otherlaws then applicable to the exercise of the Stock Option.

 

The vested portion of the Stock Option so granted may be exercised until(and must be exercised on or before) the expiration date specified by theCommittee at the time of grant. Subject to the next succeeding sentence, if theParticipant becomes no longer employed by a Companies entity prior to the exerciseof all of the vested portion of the Participant’s Stock Option(s) (and theParticipant is not immediately thereafter employed with another Companiesentity), the* nonvested*  portion ofthe Participant’s Stock Option(s) shall expire, terminate and be forfeited,and the Participant will be permitted to exercise the vested portion of his/herStock Option(s) during the times set for exercise as described in thetable set forth in Section 5.3 above. In such case, the Committee may, inits sole discretion, give the terminated participant one opportunity toexercise all of the vested portion of his/her Stock Option(s) (with theopportunity specifying the early Exercise Date on which such vested portionmust be exercised). If the Participant is given such an opportunity and choosesnot to exercise all of the remaining vested portion of his/her remaining StockOption(s) by the early Exercise Date, such vested portion of the StockOption(s) will immediately expire, terminate and be forfeited as of suchdate.

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**5.7****                              ****ESOPCall.** All shares acquired bya Participant pursuant to the exercise of aStockOption shall be subject to a “call option” which shall be granted to andmay be (a) exercised by the Ferrell Companies, Inc. Employee StockOwnership Trust (the “Trust”) and (b) assigned by the trustee of the Trust(the “Trustee”) to FCI. Although the call option may generally be exercised byeither (i) the Trust or (ii) by the Trust’s assignee, if applicable,it may not be exercised during the first six months following the ExerciseDate.

 

Theshares acquired by a Participant pursuant to such exercise may be called by theTrust (or its assignee) at their Fair Market Value as of the date of the call(the “Call Date”) by giving the Participant who acquired the shares notice ofthe Trust’s (or its assignee’s) intention to call the shares (a “call notice”)at least ten (10) business days prior to the Call Date. As stated in Section 5.5above, Participants receiving grants of Stock Options shall be notified everysix (6) months of the Fair Market Value of a share of Common Stock.

 

A Participant receiving a call notice shall deliver to the Trustee (orthe Trust’s assignee, as applicable) stock certificate(s) for the calledshares prior to the Call Date. The Participant’s sale of the called sharesshall be deemed to have occurred as of the Call Date, with the purchase pricebeing payable in one lump sum by the Trust (or its assignee) within ninety (90)days of any Call Date not occurring on July 31st or January 31st andwithin ninety (90) days after the receipt of the ESOP financial advisor’sdetermination of the Fair Market Value of the called shares as of any July 31stor January 31st Call Date. Notwithstanding the immediately precedingsentence, however, if a Participant’s employment is terminated prior to theParticipant’s exercise of all of the vested portion of his/her Stock Option andthe Committee gives the Participant one opportunity to exercise such vestedportion as of an early Exercise Date, the purchase price to be paid by theTrust (or its assignee) for any early Exercise Date shares acquired pursuant toits call option may be, in the sole discretion of the Committee, payable in theform of a five-year promissory note given by the Trust (or its assignee) (with (i) interestpayable at the lowest percentage of libor which equals or exceeds the“Applicable Federal Rate” and (ii) semi-annual equal payments of principaland interest being made during the five-year payment period).

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**5.8**                               **Put Option.** All sharesacquired by a Participant pursuant to the exercise of a Stock Option shall besubject to a “put option” (the “Put Option”) which shall be granted as of theacquisition date to and may be exercised by the Participant or other partyreceiving such shares (as provided hereunder, the “Other Party”) if, at thetime of their receipt, the shares are not readily tradable on an establishedmarket, as defined in Section 409(h) of the Code and the Treasuryregulations promulgated thereunder. The Put Option shall permit the Participantor Other Party to sell some or all of the shares acquired at their Fair MarketValue as of (and*  only*  as of) any July 31st or January 31stfollowing the Exercise Date (each being a “Permissible Put Date”). The PutOption may not, however, be exercised during the first six months following theExercise Date*  and*  it may no longer*  ever* be exercisedonce a call notice (as described in Section 5.7 above) has been sent ordelivered by the Company.

 

Sharesacquired pursuant to the exercise of a Participant’s Stock Option may be put bythe Participant or Other Party at their Fair Market Value as of a PermissiblePut Date by giving the Company notice of the Participant’s (or Other Party’s)intention to put the shares (a “put notice”) at least ten (10) businessdays prior to the Permissible Put Date. As is stated in Section 5.5 above,Participants receiving grants of Stock Options shall be notified every six (6) monthsof the Fair Market Value of a share of a share of Common Stock.

 

In the event the Company receives a put notice, the sale pursuant to theput shall be deemed to have occurred as of the Permissible Put Date referencedin the Put Notice, with the purchase price being payable by the Company (or itsassignee) in one lump sum within ninety (90) days after the receipt of the ESOPfinancial advisor’s determination of the Fair Market Value of the put shares asof the specified Permissible Put Date. Notwithstanding the immediatelypreceding sentence, however, if a Participant’s employment is terminated priorto the Participant’s exercise of all of the vested portion of his/her StockOption and the Committee gives the Participant one opportunity to exercise suchvested portion as of an early Exercise Date, the purchase price to be paid bythe Company (or its assignee) for any early Exercise Date shares acquiredpursuant to the Put Option may be, in the sole discretion of the Committee,payable in the form of a five-year promissory note given by the Company (or itsassignee) (with (i) interest payable at the lowest percentage of liborwhich equals or exceeds the “Applicable Federal Rate” and (ii) semi-annualequal payments of principal and interest being made during the five-yearpayment period).

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**5.9****                              ****ShareRestrictions.** The exercise of a Participant’s Stock Option shallbe conditioned upon the Participant’s execution of a share transfer restrictionagreement (which shall either be attached to the agreement memorializing theParticipant’s Stock Option grant or provided to the Participant prior to thefirst Exercise Date for the Stock Option so granted). Unless and until theCommittee makes a decision to the contrary, all shares purchased pursuant tothe exercise of Stock Options granted hereunder (i) must be held for atleast, and shall be non-transferable during, the six-month period immediatelyfollowing the Exercise Date; (ii) will be subject to the call optiondescribed in Section5.7 above; and (iii) will be subject to the Put Optiondescribed in Section 5.8 above.

 

**6.     STOCK APPRECIATION RIGHTS.**

 

**6.1****                              ****Grantof SARs.** Subject to the terms and conditions of the Plan, theCommittee shall designate the employees to whom stock appreciation rights(“SARs”) are to be awarded under the Plan and shall determine the number, typeand terms of the SARs to be awarded to each of them. An SAR may be granted intandem with a Stock Option granted under the Plan, or the SAR may be granted ona free-standing basis. Tandem SARs may be granted either at or after the timeof grant of a Stock Option, provided that, in the case of an incentive stockoption, a tandem SAR may be granted only at the time of the grant of such StockOption. The grant price of a tandem SAR shall equal the option price of therelated Stock Option and the grant price of a free-standing SAR shall be equalto the Fair Market Value of a share of Common Stock on the SAR’s grant date.

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**6.2****                              ****Exerciseof Tandem SARs.** Tandem SARs may be exercised for all or part of theshares subject to the related option upon the surrender of the right toexercise the equivalent portion of the related Stock Option. A tandem SAR shallterminate and no longer be exercisable upon termination or exercise of therelated Stock Option. A tandem SAR may be exercised only with respect tothe shares for which its related option is then exercisable.

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**6.3****                              ****Exerciseof Free-Standing SARs.** Free-standing SARs may be exercised upon suchterms and conditions as the Committee, in its sole discretion, determines.

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**6.4****                              ****Termof SARs**. The term of an SAR granted under the Plan shall be determined by theCommittee in its sole discretion; provided, however, that such term shall notexceed the option term in the case of a tandem SAR, or ten years in the case ofa free-standing SAR.

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**6.5**                               **Paymentof SAR Amount.** Upon exercise of an SAR, a Participant shall beentitled to receive payment from Companies in an amount determined bymultiplying:

 

(a)                                  The excess ofthe Fair Market Value of a share of Common Stock on the date of exercise overthe “grant price” of the SAR; by

 

(b)                                 The number ofshares with respect to which the SAR is exercised.

 

At the discretion of theCommittee, the payment to be made upon an SAR exercise may be in cash, inshares of Common Stock of equivalent value, or in some combination thereof.

 

**7.    PERFORMANCE SHARES.**

 

**7.1****                              ****Awards.** Subject to theterms and conditions of the Plan, the Committee shall designate the employeesto whom Performance Shares are to be awarded and determine the number of sharesand the terms and conditions of each such award. Subject to the terms of Section 7.3below and the immediately preceding sentence, each Performance Share shallentitle the Participant to a payment in the form of one share of Common Stockas soon as reasonably practicable following the date on which the specifiedperformance goals and other terms and conditions specified by the Committee areattained (the “Attainment Date”).

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**7.2****                              ****NoAdjustments.** Except as otherwise provided by the Committee or insection 4.3 hereof, no adjustment shall be made in Performance Shares awardedon account of cash dividends which may be paid or other rights which may beprovided to the holders of Common Stock prior to the end of any performanceperiod.

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**7.3****                              ****Substitutionof Cash.** The Committee may, in its sole discretion,substitute cash equal to the Fair Market Value of shares of Common Stockotherwise required to be issued to a Participant hereunder (with such FairMarket Value being the Fair Market Value most recently determined by the ESOPfinancial advisor immediately prior to the Attainment Date).

 

**8.    OTHERINCENTIVES.** In addition to the incentives described in Sections5 through 7 above and subject to the terms and conditions of the Plan, theCommittee may grant other incentives (“Other Incentives”), payable in cash orin stock, under the Plan as it determines to be in the best interest ofCompanies.

 

**9.    GENERAL**

 

**9.1****                              ****EffectiveDate.** The Plan was adopted by the Board of Directors effective as of July 17,1998.

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**9.2****                              ****Duration.** The Plan shallremain in effect until all incentives granted under the Plan have beensatisfied by the issuance of shares of Common Stock, lapse of restrictions orthe payment of cash, or have been terminated in accordance with the terms ofthe Plan or the incentive. Notwithstanding any other provision of the Plan tothe contrary, no Stock Option which is intended to be an incentive stock optionshall be granted after July 17, 2008 and no incentive stock option shallbe exercisable after the expiration of ten (10) years from the date it isgranted.

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**9.3****                              ****Non-transferabilityof Incentives.** No incentive granted under the Plan may betransferred, pledged, or assigned by the employee except by will or the laws ofdescent and distribution in the event of death, and FCI shall not be requiredto recognize any attempted assignment of such rights by any Participant. Duringa Participant’s lifetime, awards may be exercised only by the Participant or bythe Participant’s guardian or legal representative. Notwithstanding theforegoing, at the discretion of the Committee, a grant of an award may (butneed not) permit the transfer of the award by the Participant solely to membersof the Participant’s immediate family or trusts or family partnerships for thebenefit of such persons, subject to such terms and conditions as may beestablished by the Committee.

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**9.4****                              ****Compliancewith Applicable Law and Withholding.**

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(a)                                  The award of anybenefit under the Plan may also be made subject to such other provisions as theCommittee determines appropriate, including, without limitation, provisions tocomply with federal and state securities laws or stock exchange requirements.

 

(b)                                 If, at any time,FCI, in its sole discretion, determines that the listing, registration,qualification of any type of incentive, or the shares of Common Stock issuablepursuant thereto, or availability of exemption is necessary on any securitiesexchange or under any federal or state securities or blue sky law, or that theconsent or approval of any governmental regulatory body is necessary ordesirable, the exercise or issuance of shares of Common Stock pursuant to anyincentive, or the removal of any restrictions imposed on shares subject to anincentive, may be delayed until such listing, registration, qualification,exemption, consent, or approval is effected.

 

(c)                                  The Companies’entities shall have the right to withhold from any award under the Plan or tocollect as a condition of any payment under the Plan, as applicable, any taxesrequired by law to be withheld. To the extent permitted by the Committee, tofulfill any tax withholding obligation, a Participant may elect to have anydistribution otherwise required to be made under the Plan (or a portionthereof) to be withheld or, where Stock Options are to be exercised, theParticipant may use shares received from the exercise of the Stock Option.

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**9.5****                              ****No ContinuedEmployment.** Participation in the Plan will not affect any rightany entity of Companies has to terminate the employment of a Participant orgive any Participant the right to be retained in the employ of Companies or anyright or claim to any benefit under the Plan unless such right or claim hasspecifically accrued under the terms of any incentive under the Plan.

 

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**9.6****                              ****Treatmentas a Stockholder.** No incentive granted to a Participant under the Planshall create any rights in such Participant as a stockholder of FCI untilshares of Common Stock related to the incentive are registered in the name ofthe Participant.

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**9.7****                              ****Amendmentor Discontinuation of the Plan.** The Board of Directors mayamend, suspend, or discontinue the Plan at any time; provided, however, that (a) *the Committee*  may amend or suspend the Plan to avoid theoccurrence of any of the events/circumstances described in Clauses (i) thru(iii) in Section 9.8 below; and (b), other than such an amendment orsuspension by the Committee, no amendment, suspension or discontinuance shalladversely affect any outstanding benefit and if any law, agreement or exchangeon which Common Stock is traded requires stockholder approval for an amendmentto become effective, no such amendment shall become effective unless approvedby vote of FCI’s stockholders.

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**9.8****                              ****Limitationson Applicability.** No Plan provision shall be applicable if itsapplication would (i) cause a default under the terms of an extension ofcredit made to any Companies’ entity, or (ii) have an effect on theability of the Partnership to make any “Restricted Payment,” or (iii) causea material change in FCI’s Federal, state or local corporate or tax status. Inaddition to the powers reserved to the Committee in Section 2.2 above, theCommittee shall have complete discretion to administer the Plan in such a wayas will prevent the occurrence of any such default, inability to make aRestricted Payment or change in corporate tax status.

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**9.9****                              ****Definitions.**

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**(a)****                                 ****Changein Control.** The term “Change in Control” shall be defined as

 

(1)                                  any merger orconsolidation of FCI in which such entity is not the survivor,

 

(2)                                  any sale of allor substantially all of the Common Stock of FCI by the Trust,

 

(3)                                  a sale of all orsubstantially all of the Common Stock of FGI,

 

(4)                                  a replacement ofFGI as the General Partner of the Partnership, or

 

(5)                                  a public sale ofa “material” amount of FCI’s equity (with materiality being determined by theCommittee, but with a material amount of such equity being*  at least*  51% thereof).

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**(b)****                                 ****ExerciseDate.** The term “Exercise Date” refers to the 31st day of January (i.e., January 31st)of each year in which a Stock Option may be exercised (with each such yearbeing an odd-numbered year for Tranche A Options and an even-numbered year forTranche B Options).

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**(c)****                                 ****FairMarket Value.** Except as otherwise determined by the Committee, the“Fair Market Value” of a share of Common Stock as of any date shall equal thevalue of such a share most recently determined for the ESOP by its independentfinancial advisor to the ESOP (assuming no material change in such value sincethe date as of which such determination was made); provided, however, that the“Fair Market Value” of a share of Common Stock as of any July 31st or January 31stshall equal the value of such a share,*  as of such date* , as determined bysuch independent financial advisor .

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**(d)****                                 ****FCISenior Notes.** The term “FCI Senior Notes” means the Series ANotes, the Series B Notes and the Series C Loans issued pursuant tothe Master Agreement dated July 15, 1998 among FCI, the initial purchasersof the Series A Notes, the initial purchasers of the Series B Notes,the Series C Lenders referred therein and U.S. Bank National Association,as collateral agent (the “Master Agreement”).

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**(e)****                                 ****MasterAgreement.** The term “Master Agreement” shall have the meaningset forth in Section 9.9(d) above.

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**(f)****                                   ****PermanentDisability.** The term “permanent disability” means any mental orphysical condition which entitles the referenced Participant to disability benefitsunder the long-term disability plans of the Participant’s employer.

** **

**(g)****                                ****RestrictedPayment.** The term “Restricted Payment” of the Partnership orits subsidiaries means, as applicable, a “Restricted Payment” as defined in thedebt documents of either the Partnership or its subsidiaries.

** **

**(h)****                                ****SubordinatedNotes.** The term “Subordinated Notes” means any promissory note(s) constituting“Subordinated Debt” (as said term is defined in the Master Agreement).

** **

**(i)****                                   ****Subsidiary.** The term“subsidiary” means any business, whether or not incorporated, in which FCI hasa direct or indirect ownership interest.

 
| Change  of control    | In  the case of a change of control of FGP in the 3 years, both the staybonus and the unvested BR  options fuly vest. |   |
|-----------------------|-----------------------------------------------------------------------------------------------------------------------|--------|
| Signed  by Ferrellgas | /s/  James E. Ferrell                                                                                                 |   |
|                  | Chairman,  CEO and President of Ferrellgas, Inc.                                                                 |   |
| Date                  | February 6,  2004                                                                                                |   |

 

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