EXHIBIT 10.32

 

EMPLOYMENT AGREEMENT

 

This Employment Agreement (the “Agreement”) is entered into between CPNO
Services L.P., a Texas limited partnership (“Employer”) and John A. Raber
(“Employee”) on this 1st day of August 2005 (the “Commencement Date”).

 

WHEREAS, Employer recognizes the value of the continued employment of Employee
to the continued success and profitable operation of Employer and its
Affiliates;

 

WHEREAS, Employer desires to employ Employee to serve as President and Chief
Operating Officer of ScissorTail Energy, L.L.C. (“ScissorTail”), President and
Chief Operating Officer of Copano Energy/Rocky Mountains and Mid-Continent,
L.L.C. and in such other positions with Affiliates of Employer as may be
designated from time to time;

 

NOW, THEREFORE, for and in consideration of the premises and the mutual
agreements contained herein and for other good and valuable consideration, the
receipt, adequacy and sufficiency of which are hereby acknowledged, Employer and
Employee hereby agree as follows:

 

1.             Employment.  Employer hereby agrees to employ Employee and
Employee hereby accepts employment upon the terms and conditions specified in
this Agreement.

 

2.             Duties and Responsibilities.

 

2.1          Duties.  Employee shall be employed by Employer to serve as
President and Chief Operating Officer of ScissorTail, President and Chief
Operating Officer of Copano Energy/Rocky Mountains and Mid-Continent, L.L.C. and
in such other positions with Affiliates of Employer as may be designated from
time to time. Employee agrees to perform diligently and to the best of his
abilities the duties and services required to effectively discharge the
functions assigned to such position by Employer, as well as such additional or
different duties and services that Employee from time to time may be reasonably
directed to perform by Employer.  Employee shall at all times comply with and be
subject to all policies and procedures of Employer.

 

2.2          Time and Effort.  Employee shall, during the term of this
Agreement, devote his full business time, energy, and best reasonable efforts to
the business and affairs of Employer and its Affiliates. Employee may not
engage, directly or indirectly, in any other business, investment, or business
activity that interferes with Employee’s performance of his duties under this
Agreement, is contrary to the interests of Employer and its Affiliates, or
requires any significant portion of Employee’s business time.

 

3.             Term of Agreement.  This Agreement shall be for a two-year period
commencing on the Commencement Date (the “Primary Term”) and shall continue in
effect year-to-year thereafter (each year known as a “Renewal Term”) until
terminated by Employer or Employee providing thirty (30) days’ written notice to
the other prior to the end of the Primary Term or any subsequent Renewal Term.

 

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4.             Compensation and Benefits

 

4.1          Salary.  Employee shall be paid beginning on the Commencement Date
an annual base salary of $256,000 (Two Hundred Fifty Six Thousand Dollars and No
Cents) (the “Base Salary”), subject to Employer’s standard payroll practice and
minus applicable taxes and withholdings. Employee’s Base Salary shall be subject
to annual review and upward adjustment by the Compensation Committee (the
“Committee”) of the Board of Directors of Copano Energy, L.L.C. (the “Company”),
Employer’s parent company. In no event shall the Base Salary ever be less than
the initial Base Salary set forth in the first sentence of this Section 4.1.

 

4.2          Bonus.  Effective January 1, 2006, Employee shall be eligible to
participate in Company’s Management Incentive Compensation Plan (“MICP”) or any
substitute incentive compensation plan as may be in effect from time to time for
the benefit of executive officers of Company and its Affiliates. Employer shall
be eligible to earn an annual incentive cash award with an initial target award
of 50% of the Base Salary. Employee’s bonus will be determined by the Committee
based on a combination of factors, including Employee’s achievement of personal
objectives, ScissorTail’s achievement of financial and operational objectives
and Company’s achievement of financial objectives.

 

4.3          Long-Term Incentive Plan. Employee will be eligible to participate
in Company’s Long-Term Incentive Plan (“LTIP”). On the Commencement Date,
Employee will receive a grant of 40,000 options to purchase Company Common Units
and 10,000 restricted Common Units; provided however, the mix of options and
restricted Common Units to be awarded hereunder shall be reallocated to reflect
any appreciation in the Common Units from June 20, 2005 through the Commencement
Date based upon the closing sales price of a Common Unit as reported on NASDAQ
(the “Closing Price”) on each of such dates (the “Appreciation Amount”). If the
Appreciation Amount is a positive number, Employee shall be entitled to
additional restricted Common Units, the value of which (based on the Closing
Price on the Commencement Date”) is equal to 40,000 times the Appreciation
Amount. The number of options awarded hereunder will be reduced by the number of
additional restricted Common Units awarded in connection with the reallocation.
The options will have an exercise price equal to the closing price of Company’s
Common Units on the Commencement Date, vest in equal one-fifth increments on the
grant anniversary date for the next five (5) years, and have a ten (10) year
exercise term.  The restricted Common Units will vest in equal one-fifth
increments on the grant anniversary date over the next five (5) years.

 

4.4          Insurance, Vacation, and Other Benefits.  Employee shall be
eligible to participate in the Employer’s medical and other insurance plans and
all other programs, savings plans, and other employment-related benefits of
Employer in accordance with the terms of those programs. Employer shall pay 100%
of the costs for coverage under the group health plans provided for employees
and their dependents. To the extent that the Employee does not utilize this
coverage for a spouse and/or dependents, Employee shall receive monthly
compensation equal to the cost the Employer would have otherwise incurred.

 

5.             Termination of Agreement.

 

5.1          Termination of Agreement by Employer For Cause or Upon Employee
Death or Disability.

 

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(a) Employer shall have the right to terminate Employee’s employment under this
Agreement prior to the expiration of the Primary Term or any Renewal Term for
any of the following reasons:

 

(i) for “Cause,” which termination shall be without notice or payment in lieu of
notice.  “Cause” shall mean (a) gross negligence, gross incompetence, or willful
misconduct in the performance of the duties and services required of Employee
pursuant to this Agreement; (b) willful refusal without proper reason to perform
the duties and services required of Employee pursuant to this Agreement; (c) the
commission of any fraudulent act or dishonesty in the course of Employee’s
employment by Employer; (d) conviction of a felony under a criminal code of the
United States of America or any state thereof, whether or not committed in the
course of employment by Employer; (e) breach of any material provision of this
Agreement or of any material policy or procedure of Employer, which breach is
not remedied by Employee within thirty (30) days of Employee’s receipt of
written notice from Employer of such breach;

 

(ii) upon Employee’s death;

 

(iii) upon Employee’s becoming incapacitated by accident, sickness, or other
circumstances that in the reasonable opinion of a qualified doctor approved by
Employer renders Employee mentally or physically incapable of performing the
duties and services required of Employee (with or without reasonable
accommodation within the meaning of the Americans with Disabilities Act).

 

(b) In the event of termination of this Agreement pursuant to Section 5.1,
Employee shall be entitled to receive (a) any Base Salary earned through the
date of termination of the Agreement but not yet paid, (b) an amount equal to
any earned but unused vacation time and (c) amounts (if any) to which Employee
may be entitled pursuant to the Company’s incentive compensation plans.

 

5.2          Other Terminations of Agreement by Employer.  In the event Employer
terminates this Agreement for any reason other than those set forth in
Section 5.1 or does not offer Employee a comparable position within the Denver,
CO locale prior to the expiration of the Primary Term, Employee shall be
entitled to a lump sum severance payment equal to two times the sum of
(a) Employee’s then Base Salary in effect at the time of termination and (b) 50%
of Employee’s maximum incentive award under the bonus plan in which Employee is
participating at the time of termination. If Employee is terminated at any time
after the expiration of the Primary Term, Employee shall be entitled to a lump
sum severance payment equal to one year of Employee’s then Base Salary in effect
at the time of termination of the Agreement and shall be eligible to receive a
pro-rata bonus pursuant to the terms of the MICP or any applicable incentive
compensation plan as may be in effect. In the event of termination of Employee
at any time during the term of this Agreement pursuant to this Section 5.2, all
outstanding awards under the LITP shall automatically vest or become
exercisable, as the case may be.  In addition, Employee shall also be entitled
to continuation of the insurance benefits in which he participated on the date
of termination of the Agreement, at Employer’s cost, for the greater of (a) one
year after the date of termination of the Agreement or (b) the remainder of the
Primary Term, if applicable, not to exceed the maximum periods provided for
under the Consolidated Omnibus Budget Reconciliation Act. Notwithstanding the
foregoing provisions of this Section 5.2, Employee shall

 

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be entitled to payment of the greater of (1) any severance amount provided for
in any Company sponsored severance plan, if applicable, or (2) amounts payable
hereunder.

 

5.3.         Change of Control or Liquidation.  In the event Employee is
terminated on or within one year following a Change of Control of ScissorTail or
a Change of Control of Company, Employee shall be entitled to severance payments
as set forth in Section 5.2. In addition, pursuant to the terms of the LTIP and
the applicable awards, upon a Change of Control of Company or ScissorTail all
outstanding awards (including, without limitation, those specified in
Section 4.3 above) shall automatically vest or become exercisable, as the case
may be.

 

“Change of Control of ScissorTail” shall mean (i) the consummation of a
reorganization, merger, consolidation or other form of business transaction or
series of business transactions, in each case, with respect to which Company or
an Affiliate, who was the owner of all of the outstanding membership interests
of ScissorTail immediately prior to such reorganization, merger or consolidation
or other transaction does not, immediately thereafter, own more than 50% of the
outstanding membership interests of ScissorTail; or (ii) the sale, lease or
disposition (in one or a series of related transactions) by Company or an
Affiliate of all or substantially all of ScissorTail’s assets to any person or
entity other than Company or an Affiliate; or (iii) the approval by the Board of
Directors of Company or ScissorTail of a complete or substantially complete
liquidation or dissolution of ScissorTail.

 

“Change of Control of Company” shall mean the happening of any of the following
events:

 

(i)            the acquisition by any “person,” as such term is used in Sections
13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the
“Exchange Act”), other than the Company or an Affiliate of the Company, of
“beneficial ownership” (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of securities of the Company representing more than 50%
of the combined voting power of the Company’s then outstanding securities
entitled to vote generally in the election of directors; or

 

(ii)           the consummation of a reorganization, merger, consolidation or
other form of business transaction or series of business transactions, in each
case, with respect to which persons who were the members of the Company
immediately prior to such reorganization, merger or consolidation or other
transaction do not, immediately thereafter, own more than 50% of the combined
voting power entitled to vote generally in the election of directors of the
reorganized, merged or consolidated company’s then outstanding voting
securities; or

 

(iii)          the sale, lease or disposition (in one or a series of related
transactions) by the Company of all or substantially all the Company’s assets to
any person or its Affiliates, other than the Company or its Affiliates; or

 

(iv)          a change in the composition of the Board of Directors of the
Company, as a result of which fewer than a majority of the directors are
Incumbent Directors. “Incumbent Directors” shall mean directors who either
(A) are directors of the Company as of the Commencement Date, or (B) are
elected, or nominated for election, thereafter to the Board with the affirmative
votes of at least a majority of the Incumbent Directors at the time of such
election or nomination, but “Incumbent Director” shall not include an

 

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individual whose election or nomination is in connection with (i) an actual or
threatened election contest (as such terms are used in Rule 14a-11 of Regulation
14A promulgated under the Exchange Act) or an actual or threatened solicitation
of proxies or consents by or on behalf of a person other than the Board of
Directors of the Company or (ii) a plan or agreement to replace a majority of
the then Incumbent Directors; or

 

(v)           the approval by the Board of Directors of Company or the members
of the Company of a complete or substantially complete liquidation or
dissolution of the Company.

 

“Affiliate” shall mean with respect to any person, any other person that
directly or indirectly through one or more intermediaries controls, is
controlled by or is under common control with, the person in question As used
herein, the term “control” means the possession, direct or indirect, of the
power to direct or cause the direction of the management and policies of a
person, whether through ownership of voting securities, by contract or
otherwise.

 

5.4          Termination by Employee.  Employee shall have the right to
terminate this Agreement at any time upon thirty (30) days prior written notice
to Employer.

 

6.             Warranty.  Employee represents and warrants that he is not under
any obligation to any entity or person that would prevent, impair or limit the
performance of his obligations under this Agreement.  Employee further
represents and warrants that he has been afforded a reasonable opportunity to
consider this Agreement before signing it, that he has been afforded a
reasonable opportunity to retain an attorney of his choosing in connection with
this Agreement, and that he has carefully read the Agreement and understands it.

 

7.             Non-Disclosure Agreement, Non-Solicitation Agreements, and
Covenant Not to  Compete.

 

7.1          Acknowledgments.  Employee acknowledges that Employer wishes to
protect the competitive position of Employer and its Affiliates and to ensure
the continued protection of the confidential information of Employer and its
Affiliates. Employee further acknowledges that by virtue of his employment with
Employer, including those services provided by Employee to ScissorTail and other
Affiliates he is the beneficiary of the goodwill of Employer.

 

7.2          Access to and Use of Confidential Information.  Employee
acknowledges that during the course of his employment, he will have access to
highly confidential information about Employer and its Affiliates’ business,
including but not limited to (i) information and records about customers,
partners, business methods or practices, (ii) finances, (iii) accounting,
(iv) pricing or pricing strategies, (v) contracts, (vi) vendors, (vii) computer
hardware, software, and operating systems and (viii) training programs
(collectively “Confidential Information”).  Employee acknowledges that the
Confidential Information is constantly revised and updated.  Employee further
acknowledges that he needs the Confidential Information to perform his job
duties for Employer. Notwithstanding any provision of this Agreement to the
contrary, Confidential Information does not include any information which:
(i) at the time of disclosure to Employee or thereafter is in the public domain
(other than as a result of a disclosure directly or indirectly by Employee),
(ii) was available to Employee on a non-confidential basis from a source other
than Employer or its Affiliates, provided that such source was not bound by a
duty

 

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of confidentiality to Employer or its Affiliates or (iii) is independently
acquired or developed by Employee without violating any of Employee’s
obligations hereunder.

 

7.3          Non-Disclosure of Confidential Information.  Employee acknowledges
that the Confidential Information that Employer promises to provide him
constitutes a valuable, special, and unique asset of Employer.  Employee
acknowledges that all Confidential Information is and shall at all times remain
the property of Employer.  Employee further acknowledges that except as required
by his duties to Employer, he will not, at any time during or for a period of
two (2) years after termination of his employment, directly, indirectly, or
otherwise, use, disseminate, or disclose the Confidential Information without
having first obtained written permission from Employer.  Employee agrees that
any Confidential Information in his possession or control, as well as any other
materials or items owned by Employer, whether or not they constitute
Confidential Information, shall be returned to Employer immediately upon the
termination of this Agreement.

 

7.4.         Non-Solicitation of Employees.  In consideration of Employer’s
promise to provide Confidential Information to Employee, in consideration of his
employment with Employer, and in consideration of Employer’s promise to pay
Employee certain severance benefits as set forth in Section 5.2, Employee agrees
that for a one-year period following the termination of this Agreement, Employee
shall not, directly or indirectly, jointly or individually, through other
entities or persons or either on his own behalf or in the service of others,
encourage or induce any then current employee of Employer or its Affiliates or
former employee of Employer or its Affiliates employed by Employer or its
Affiliates at any time during the twelve (12) month period prior to the
termination of this Agreement, to leave the employment of Employer or its
Affiliates or offer employment, retain, hire or assist in the hiring of any such
employees by any person, association, or entity not affiliated with Employer or
its Affiliates.

 

7.5.         Non-Solicitation of Customers.  In consideration of Employer’s
promise to provide Confidential Information, in consideration of his employment
with Employer, and in consideration of Employer’s promise to pay Employee
certain severance benefits as set forth in Section 5.2, Employee agrees that for
a one-year period following the termination of this Agreement, Employee shall
not, directly or indirectly, jointly or individually, solicit or otherwise try
to obtain the business of customers of Employer or its Affiliates that conduct
business in the counties in which Employer or its Affiliates conduct business or
assist in the solicitation of such business by any person, association, or
entity not affiliated with Employer.

 

7.6          Covenant Not to Compete.  In consideration of Employer’s promise to
provide Confidential Information to Employee, in consideration of his employment
with Employer, and in consideration of Employer’s promise to pay Employee
certain severance benefits as set forth in Section 5.2, Employee agrees that for
a one-year period following the termination of this Agreement, Employee shall
not, directly or indirectly, jointly or individually, through other entities or
persons or either on his own behalf or in the service of others, practice or
attempt to compete with ScissorTail or work with or for any person or entity
that provides the same services or engages in the same business as ScissorTail
in any of the following counties in Oklahoma: Cowley, Chautauqua, Montgomery,
Kay, Osage, Washington, Nowata, Rogers, Noble, Pawnee, Mayes, Tulsa, Payne,
Logan, Lincoln, Creek, Wagoner, Cherokee, Okmulgee, Muskogee, Oklahoma,
Cleveland, Pottawattomie, Okfuskee, McIntosh, Sequoyah, Haskell, Seminole,
Hughes, Pittsburg, Latimer, Le Flore, McClain, Garvin, Pontotoc, Coal, Murray,
Johnston, Atoka, Pushmataha, Bryan and Choctaw, or any other county in Oklahoma
where ScissorTail

 

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does business at the time of termination of employment of Employee.  Employee
hereby agrees that the provisions of this section are reasonable in time, area,
and scope, and that in the event of Employee’s breach of this covenant not to
compete or to disclose, Employer shall be entitled to injunctive and/or monetary
relief.

 

7.7          Remedies.  Employee and Employer acknowledge that in the event that
Employee breaches any of the restrictive covenants contained in this Agreement,
it will be difficult to measure Employer’s damages for such injuries and that,
in the event of such a breach, Employer, in addition to pursuing its other legal
and equitable remedies, will be entitled to a temporary restraining order and
injunction to enforce this Agreement, without any requirement for the securing
or posting of any bond in connection with such a remedy.

 

8.             Resolution of Disputes.

 

8.1. Alternative Dispute Resolution.  Except with respect to the equitable
relief described in Section 7, Employer and Employee hereby knowingly,
voluntarily, and irrevocably agree that any disputes or conflicts in any way
arising out of or relating to: (a) this Agreement; (b) the performance or breach
of any of the matters described herein; or (c) Employee’s employment with
Employer shall be resolved pursuant to binding arbitration under the auspices of
the American Arbitration Association (“AAA”).

 

(a)           The arbitrator shall be licensed to practice law in Texas and
shall be selected by mutual agreement of the parties.  If the parties fail to
reach agreement upon appointment of an arbitrator within thirty (30) days
following receipt by one party of the other party’s notice of desire to
arbitrate, then the arbitrator shall be selected from a list or lists of persons
submitted by the AAA.  The selection process shall be that which is set forth in
the AAA National Rules for the Resolution of Employment Disputes then
prevailing, except that, if the parties fail to select an arbitrator from one or
more lists, AAA shall not have the power to make an appointment but shall
continue to submit additional lists until an arbitrator has been selected.

 

(b)           Notice of arbitration must be given within the limitations period
for the claim on which the notice is based.  If the claiming party fails to give
notice of arbitration within that time, the claim shall be deemed to be waived
and shall be barred from either arbitration or litigation.

 

(c)           The arbitrator shall render a final decision on the claim(s)
within 180 days of the selection of the arbitrator.

 

8.2          Survival.  The provisions of Section 8 shall survive the
termination of this Agreement for any reason whatsoever.

 

9.             Waiver.  Any waiver or consent from either party with respect to
any term or provision of this Agreement shall be effective only in the specific
instance and for the specific purpose for which it was given and shall not be
deemed, regardless of frequency given, to be a further or continuing waiver or
consent.  The failure or delay of either party at any time to require
performance of, or to exercise any of its rights or remedies with respect to any
term or provision

 

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of this Agreement shall not affect such party’s right at a later time to enforce
any such term or provision.

 

10.          Amendment.  No amendment or modification of this Agreement shall be
valid or effective, unless it is in writing and signed by both Employer and
Employee.

 

11.          Assignment.  Employer may assign this Agreement to any successor
entity of Employer or any Affiliate of Employer.  Employee may not assign this
Agreement.

 

12.          Severability.  The invalidity or unenforceability of any provision
hereof shall in no way affect the validity or enforceability of any other
provision.

 

13.          Entire Agreement.  This Agreement constitutes the entire agreement
between Employer and Employee with respect to the subject matter of this
Agreement.

 

14.          Applicable Law.  This Agreement shall be governed by and construed
in accordance with the laws of the state of Delaware, except for any disputes
resolved pursuant to binding arbitration for which Texas law shall apply.

 

15.          Notices.  Any notice required or permitted under this Agreement
shall be in writing and shall be delivered by certified or registered United
States Mail, postage prepaid, addressed as follows:

 

Employer:

CPNO Services L.P.

 

2727 Allen Parkway, Suite 1200

 

Houston, Texas 77019

 

Facsimile (713) 621-9547

 

Attention: John R. Eckel, Jr.

 

 

Employee:

John A. Raber

 

6043 S. Geneva Ct.

 

Englewood, CO 80111

 

Any notice given in accordance herewith shall be deemed to have been given when
received by the addressee.  The address for notice may be changed by notice
given in accordance with this provision.

 

15.          Execution.  This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original but all of which shall
be deemed one instrument.

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first written above.

 

 

CPNO SERVICES L.P.

 

By:

CPNO Services GP, L.L.C., its General
Partner

 

 

 

By:

/s/ John R. Eckel, Jr.

 

 

Name: John R. Eckel Jr.

 

Title: Chairman and Chief Executive Officer

 

 

 

 

 

JOHN A. RABER

 

 

 

/s/ John A. Raber

 

 

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