Exhibit 10.3
Form of Long-Term Retention Award
Copano Energy, L.L.C.
Long-Term Incentive Plan
Long-Term Retention Award
Grant of Phantom Units
With DERs
Grantee:                    
Grant Date:                    

1.   Grant of Phantom Units with DERs. Copano Energy, L.L.C. (the “Company”)
hereby grants to you ___Phantom Units under the Copano Energy, L.L.C. Long-Term
Incentive Plan, as amended (the “Plan”) on the terms and conditions set forth
herein and in the Plan, which is incorporated herein by reference as a part of
this Agreement. This grant of Phantom Units includes a tandem Distribution
Equivalent Right (“DER”) grant with respect to each Phantom Unit. The Company
shall establish a DER bookkeeping account for you with respect to each Phantom
Unit granted hereunder that shall be credited with an amount equal to any cash
distributions made by the Company on a Unit during the period such Phantom Unit
is outstanding. In the event of any conflict between the terms of this Agreement
and the Plan, the Plan shall control. Capitalized terms used in this Agreement
but not defined herein shall have the meanings ascribed to such terms under the
Plan, unless the context requires otherwise.   2.   Regular Vesting. Except as
otherwise provided in Paragraph 3 below, the Phantom Units granted hereunder
shall become vested in accordance with the following schedule:

              Cumulative Vesting Date   Vested Percentage
 
       
 
    100 %
 
       
 
       
 
       
 
       

Tandem DERs shall be subject to vesting and forfeiture under the same terms and
conditions as apply to the Phantom Units to which they correspond and, to the
extent vested, will be paid at the time of payment of the vested Phantom Units
to which they correspond. If a Phantom Unit is forfeited, the amount credited to
your tandem DER account with respect to such Phantom Unit shall be similarly
forfeited.

 

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Exhibit 10.3
Form of Long-Term Retention Award

3.   Events Occurring Prior to Regular Vesting.

  (a)   Death or Disability. If, prior to becoming fully vested in the Phantom
Units hereby granted, you cease to be an employee of the Company or an Affiliate
as a result of your death or a disability that entitles you to benefits under
the Company’s or an Affiliate’s long-term disability plan, then, on the
Designated Vesting Date (as defined below) that coincides with or immediately
follows such termination, you will become vested in the number of Phantom Units
that is determined by multiplying the number of Phantom Units subject to this
Award by a fraction, the numerator of which is the number of full or partial
months in which you were continuously employed by the Company between the Grant
Date and the date of the termination of your employment with the Company and the
denominator of which is the number of months between the Grant Date and the
Vesting Date (such fraction, the “Pro Rata Vesting Fraction”).     (b)  
Termination for Reasons Other Than Cause. If, prior to becoming fully vested in
the Phantom Units hereby granted, the Company or an Affiliate terminates your
employment for reasons other than Cause, then, on the Designated Vesting Date
(as defined below) that coincides with or immediately follows such termination,
you will become vested in the number of Phantom Units that is determined by
multiplying the number of Phantom Units subject to this Award by the Pro Rata
Vesting Fraction. For purposes of this Agreement, “Cause” shall have the same
meaning as defined under any written employment agreement between you and the
Company or its Affiliate, but in the absence of any such agreement or
definition, “Cause” shall mean (a) gross negligence, gross incompetence, or
willful misconduct in the performance of the duties and services required of you
in your employment with the Company or its Affiliate; (b) willful refusal
without proper reason to perform the duties and services required of you in such
employment; (c) the commission of any fraudulent act or dishonesty by you in the
course of such employment; (d) your indictment, arrest or 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 such employment; (d) investigation of
you by any state or federal agency for any alleged breach of a criminal or civil
statute or regulation; or (e) breach of any material provision of any written
agreement with the Company or any Affiliate or of any material policy or
procedure applicable to the Company or any Affiliate.     (c)   Other
Terminations. If your employment with the Company or an Affiliate terminates for
any reason other than as provided in Paragraph 3(a) or (b) above, all unvested
Phantom Units then held by you automatically shall be forfeited.     (d)  
Copano Operations Ceases to be an Affiliate. If (i) Copano Operations ceases to
be an Affiliate, (ii) you are an employee of Copano Operations on that date, and
(iii) your employment is not transferred to the Company or an Affiliate, then,
on the Designated Vesting Date (as defined below) that coincides with or
immediately follows the date Copano Operations ceases to be an Affiliate, you
will become vested in the number of Phantom Units that is determined by
multiplying the number of Phantom Units subject to this Award by the Pro Rata
Vesting Fraction.

 

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Exhibit 10.3
Form of Long-Term Retention Award

  (e)   Change of Control. All outstanding Phantom Units held by you
automatically shall become fully vested upon a Change of Control.

    For purposes of this Agreement, (i) “employment with the Company” or being
an “employee of the Company” shall only include being an employee of the Company
or an Affiliate and (ii) the “Designated Vesting Dates” shall be February 15,
May 15, August 15 or November 15.   4.   Payment. As soon as administratively
practicable after the vesting of a Phantom Unit, but not later than five
business days thereafter, you shall be paid a Unit; provided, however, the
Committee may, in its sole discretion, direct that a cash payment be made to you
in lieu of the delivery of such Unit. Any such cash payment shall be equal to
the Fair Market Value of the Unit on the date of vesting of the Phantom Unit. If
more than one Phantom Unit vests at the same time, the Committee may elect to
pay such vested Award in Units, cash or any combination thereof, in its
discretion. In addition, upon payment of a vested Phantom Unit, you shall be
paid in cash the amount credited to your tandem DER account with respect to such
vested Phantom Unit, without interest.   5.   Limitations Upon Transfer. All
rights under this Agreement shall belong to you alone and may not be
transferred, assigned, pledged, or hypothecated by you in any way (whether by
operation of law or otherwise), other than by will or the laws of descent and
distribution and shall not be subject to execution, attachment, or similar
process. Upon any attempt by you to transfer, assign, pledge, hypothecate, or
otherwise dispose of such rights contrary to the provisions in this Agreement or
the Plan, or upon the levy of any attachment or similar process upon such
rights, such rights shall immediately become null and void.   6.   Restrictions.
By accepting this grant, you agree that any Units which you may acquire upon
vesting of this Award will not be sold or otherwise disposed of in any manner
which would constitute a violation of any applicable federal or state securities
laws. You also agree that (i) any certificates representing the Units acquired
under this Award may bear such legend or legends as the Committee deems
appropriate in order to assure compliance with applicable securities laws,
(ii) the Company may refuse to register the transfer of the Units acquired under
this Award on the transfer records of the Company if such proposed transfer
would in the opinion of counsel satisfactory to the Company constitute a
violation of any applicable securities law, and (iii) the Company may give
related instructions to its transfer agent, if any, to stop registration of the
transfer of the Units to be acquired under this Award.   7.   Withholding of
Tax. To the extent that the grant, vesting or payment of a Phantom Unit results
in the receipt of compensation by you with respect to which the Company or its
Affiliate has a tax withholding obligation pursuant to applicable law, the
Company or its Affiliate is authorized to withhold from any payment due under
this Agreement or from any compensation or other amount owing to you the amount
(in cash or Units that would otherwise be issued or delivered to you) of any
applicable taxes payable in respect of such compensation and to take such other
action as may be necessary in the opinion of the Company or its Affiliate to
satisfy its withholding obligations for the payment of such taxes.

 

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Exhibit 10.3
Form of Long-Term Retention Award

8.   Insider Trading Policy. The terms of the Company’s Insider Trading Policy
are incorporated herein by reference.   9.   Binding Effect. This Agreement
shall be binding upon and inure to the benefit of any successor or successors of
the Company and upon any person lawfully claiming under you.   10.   Entire
Agreement. This Agreement constitutes the entire agreement of the parties with
regard to the subject matter hereof, and contains all the covenants, promises,
representations, warranties and agreements between the parties with respect to
the Phantom Units granted hereby. Without limiting the scope of the preceding
sentence, all prior understandings and agreements, if any, among the parties
hereto relating to the subject matter hereof are hereby null and void and of no
further force and effect.   11.   Modifications. Except as provided below, any
modification of this Agreement shall be effective only if it is in writing and
signed by both you and an authorized officer of the Company. Notwithstanding
anything in the Plan or this Agreement to the contrary, (a) if the Committee
determines that the terms of this grant do not, in whole or in part, satisfy the
requirements of new Section 409A of the Internal Revenue Code, the Committee, in
its sole discretion, may unilaterally modify this Agreement in such manner as it
deems appropriate to cause this Award to comply with or be treated as exempt
from such section and any regulations and guidance issued thereunder, and
(b) the Committee, in its sole discretion, may unilaterally modify this
Agreement in any manner that does not materially reduce your benefit.   12.  
Governing Law. This grant shall be governed by, and construed in accordance
with, the laws of the State of Texas, without regard to conflicts of laws
principles thereof.

            Copano Energy, L.L.C.
      By:           Name:   Douglas L. Lawing        Title:   Senior Vice
President and General Counsel