Exhibit 10.1

 

INDEMNIFICATION AGREEMENT

 

THIS INDEMNIFICATION AGREEMENT (this “Agreement”) is effective as of August 24,
2005 by and between Copano Energy, L.L.C., a Delaware limited liability company
(the “Company”), and                                         (“Indemnitee”).

 

PRELIMINARY STATEMENT

 

Highly competent persons have become more reluctant to serve corporations or
other business enterprises as officers, directors or in other capacities unless
they are provided with adequate protection through insurance or adequate
indemnification against inordinate risks of claims and actions against them
arising out of their service to and activities on behalf of such enterprises.

 

The Board of Directors of the Company (the “Board”) has determined that, in
order to attract and retain qualified individuals, the Company will attempt to
maintain on an ongoing basis, at its sole expense, liability insurance to
protect persons serving the Company and its subsidiaries from certain
liabilities.  Although the furnishing of that insurance has been a customary and
widespread practice among United States-based corporations and other business
enterprises, the Board believes that, given current market conditions and
trends, insurance may be available to it in the future only at higher premiums
and with more exclusions.  At the same time, directors, officers and other
persons in service to corporations or business enterprises increasingly are
being subjected to expensive and time-consuming litigation, relating to, among
other matters, matters that traditionally would have been brought only against
the corporation or business enterprise itself.  The uncertainties relating to
liability insurance and to indemnification have increased the difficulty of
attracting and retaining those persons, and the Board has determined that
(i) this increased difficulty is detrimental to the best interests of the
Company’s unitholders and that the Company should act to assure those persons
that there will be increased certainty of such protection in the future and
(ii) it is reasonable, prudent and necessary for the Company contractually to
obligate itself to indemnify those persons to the fullest extent applicable law
permits so that they will serve or continue to serve the Company free from undue
concern that they will not be so indemnified.

 

As permitted by the Delaware Limited Liability Company Act (the “Delaware Act”),
the Second Amended and Restated Limited Liability Company Agreement of the
Company (the “LLC Agreement”) requires indemnification of the officers and
directors of the Company in certain circumstances.  The LLC Agreement expressly
provides that the indemnification provisions set forth therein are not
exclusive, and thereby contemplate that contracts may be entered into between
the Company and members of the board of directors, officers and other persons
with respect to indemnification.

 

This Agreement is a supplement to and in furtherance of the LLC Agreement of the
Company and any resolutions adopted pursuant thereto, and shall not be deemed a
substitute therefor, nor to diminish or abrogate any rights of Indemnitee
thereunder.

 

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The Indemnitee does not regard the protection available under the LLC Agreement
and insurance as adequate in the present circumstances, and may not be willing
to continue to serve as an officer or director without adequate protection, and
the Company desires Indemnitee to serve in such capacity.  Indemnitee is willing
to serve, continue to serve and to take on additional service for or on behalf
of the Company on the condition that he be so indemnified.

 

NOW, THEREFORE, in consideration of the premises and the covenants herein, the
parties to this Agreement agree as follows:

 

Section 1.               Services by Indemnitee.  Indemnitee agrees to serve as
an officer or director of the Company or its subsidiaries and, as mutually
agreed by Indemnitee and the Company, as a director, officer, tax matters
partner, employee, partner, manager, fiduciary, trustee or agent of other
corporations, limited liability companies, partnerships, joint ventures, trusts
or other enterprises (including, without limitation, employee benefit plans)
(each, an “Enterprise”).  Indemnitee may at any time and for any reason resign
from any such position (subject to any other contractual obligation or any
obligation applicable law imposes), in which event the Company will have no
obligation under this Agreement to continue Indemnitee in that position.  This
Agreement is not and is not to be construed as an employment contract between
the Company (or any of its subsidiaries) and Indemnitee.  Indemnitee
specifically acknowledges that Indemnitee’s employment with the Company (or any
of its subsidiaries), if any, is at will, and the Indemnitee may be discharged
at any time for any reason, with or without cause, except as may be otherwise
provided in any written employment contract between Indemnitee and the Company
(or any of its subsidiaries), other applicable formal severance policies duly
adopted by the Board or, with respect to service as a director of the Company,
by the Company’s Certificate of Formation, LLC Agreement and the Delaware Act. 
The foregoing notwithstanding, subject to Section 12, this Agreement will
continue in force after Indemnitee has ceased to serve as an officer or director
of the Company or its subsidiaries and no longer serves at the request of the
Company as a director, officer, tax matters partner, employee, partner, manager,
fiduciary, trustee or agent of any other Enterprise.

 

Section 2.               Indemnification—General.  The Company will indemnify
and advance Expenses (as hereinafter defined) to Indemnitee (i) as this
Agreement permits and (ii) (subject to the provisions hereof) to the fullest
extent applicable law in effect on the date hereof and as amended from time to
time permits.  The rights the preceding sentence provides to Indemnitee will
include, but will not be limited to, the rights the other Sections hereof set
forth.

 

Section 3.               Proceedings Other Than by or in the Right of the
Company.  Indemnitee will be entitled to the rights of indemnification this
Section 3 provides if, by reason of his Corporate Status, he was, is, or is
threatened to be made, a party to or a participant in any threatened, pending or
completed Proceeding (as hereinafter defined), other than a Proceeding by or in
the right of the Company.  Pursuant to this Section 3, the Company will
indemnify Indemnitee against, and will hold Indemnitee harmless from and in
respect of, all Expenses, judgments, penalties, fines (including excise taxes)
and amounts paid in settlement (including all interest, assessments and other
charges paid or payable in connection with or in respect of those Expenses)
judgments, fines, penalties or amounts paid in settlement) actually and
reasonably incurred by him or on his behalf in connection with that Proceeding
or any claim, issue or matter therein, if he acted in good faith and in a manner
he reasonably believed to be in or not opposed

 

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to the best interests of the Company and, with respect to any criminal
Proceeding, had no reasonable cause to believe his conduct was unlawful.

 

Section 4.               Proceedings by or in the Right of the Company. 
Indemnitee will be entitled to the rights of indemnification this Section 4
provides if, by reason of his Corporate Status, he was, is, or is threatened to
be made, a party to or a participant (as a witness or otherwise) in any
threatened, pending or completed Proceeding brought by or in the right of the
Company to procure a judgment in its favor.  Pursuant to this Section 4, the
Company will indemnify Indemnitee against, and will hold Indemnitee harmless
from and in respect of, all Expenses actually and reasonably incurred by him or
on his behalf in connection with that Proceeding if he acted in good faith and
in a manner he reasonably believed to be in or not opposed to the best interests
of the Company; provided, however, that no indemnification against those
Expenses will be made in respect of any claim, issue or matter in that
Proceeding as to which Indemnitee has been adjudged to be liable to the Company
unless and to the extent that the Court of Chancery, or the court in which that
Proceeding has been brought or is pending determines that despite the
adjudication of liability but in view of all the circumstances of the case,
Indemnitee is fairly and reasonably entitled to indemnification.

 

Section 5.               Indemnification for Expenses of a Party Who Is Wholly
or Partly Successful.  Notwithstanding any other provision hereof, to the extent
that Indemnitee is, by reason of his Corporate Status, a party to (or a
participant in) and is successful, on the merits or otherwise, in defense of any
Proceeding, the Company will indemnify him against all Expenses actually and
reasonably incurred by him or on his behalf in connection therewith.  If
Indemnitee is not wholly successful in defense of any Proceeding but is
successful, on the merits or otherwise, as to one or more but less than all
claims, issues or matters in that Proceeding, the Company will indemnify
Indemnitee against all Expenses actually and reasonably incurred by him or on
his behalf in connection with each successfully resolved claim, issue or
matter.  For purposes of this Section 5 and without limitation, the termination
of any claim, issue or matter in any Proceeding by dismissal, with or without
prejudice, will be deemed to be a successful result as to that claim, issue or
matter.

 

Section 6.               Indemnification for Expenses as a Witness. 
Notwithstanding any other provision hereof, to the extent that Indemnitee is, by
reason of his Corporate Status, a witness in any Proceeding to which Indemnitee
is not a party, the Company will indemnify him against all Expenses actually and
reasonably incurred by him or on his behalf in connection therewith.

 

Section 7.               Advancement of Expenses.  The Company will advance all
reasonable Expenses incurred by or on behalf of Indemnitee in connection with
any Proceeding within 10 days after the Company receives a statement or
statements from Indemnitee requesting such advance or advances from time to
time, whether prior to or after final disposition of that Proceeding.  Each such
statement must reasonably evidence the Expenses incurred by or on behalf of
Indemnitee and include or be preceded or accompanied by an undertaking by or on
behalf of Indemnitee to repay any Expenses advanced if it ultimately is
determined by final judicial decision from which there is no further right to
appeal that Indemnitee is not entitled to be indemnified by the Company against
those Expenses.  The Company will accept any such undertaking without reference
to the financial ability of Indemnitee to make repayment, and without regard to
Indemnitee’s ultimate entitlement to indemnification under other provisions of
this Agreement.

 

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Section 8.               Procedure for Determination of Entitlement to
Indemnification.  (a)  Within sixty (60) days after the actual receipt by
Indemnitee of notice that he or she is a party to or a participant (as a witness
or otherwise) in any Proceeding, Indemnitee shall submit to the Company a
written notice identifying the Proceeding.  The omission by the Indemnitee to
notify the Company will not relieve the Company from any liability which it may
have to Indemnitee (i) otherwise than under this Agreement, and (ii) under this
Agreement only to the extent the Company can establish that such omission to
notify resulted in actual prejudice to the Company.

 

(b)           Indemnitee shall thereafter deliver to the Company a written
application to indemnify Indemnitee in accordance with this Agreement.  Such
application(s) may be delivered from time to time and at such time(s) as
Indemnitee deems appropriate in his or her sole discretion.  Following such a
written application for indemnification by Indemnitee, the Indemnitee’s
entitlement to indemnification shall be determined according to Section 8(c) of
this Agreement.

 

(c)           On written request by Indemnitee for indemnification pursuant to
Section 8(b), a determination, if applicable law requires, with respect to
Indemnitee’s entitlement thereto will be made in the specific case: (i) by a
majority vote of the Disinterested Directors, even though less than a quorum of
the Board, or (ii) if so requested by the Indemnitee in his or her sole
discretion by an Independent Counsel in a written opinion to the Board, a copy
of which will be delivered to Indemnitee.  If it is so determined that
Indemnitee is entitled to indemnification hereunder, the Company will:
(i) within 10 days after that determination, pay to Indemnitee all amounts
theretofore incurred by or on behalf of Indemnitee in respect of which
Indemnitee is entitled to that indemnification by reason of that determination;
and (ii) thereafter on written request by Indemnitee, pay to Indemnitee within
10 days after that request such additional amounts theretofore incurred by or on
behalf of Indemnitee in respect of which Indemnitee is entitled to that
indemnification by reason of that determination.  Indemnitee will cooperate with
the person, persons or entity making the determination with respect to
Indemnitee’s entitlement to indemnification under this Agreement, including
providing to such person, persons or entity on reasonable advance request any
documentation or information which is (i) not privileged or otherwise protected
from disclosure, (ii) reasonably available to Indemnitee and (iii) reasonably
necessary to that determination.  The Company will bear all costs and expenses
(including attorneys’ fees and disbursements) Indemnitee incurs in so
cooperating (irrespective of the determination as to Indemnitee’s entitlement to
indemnification) and hereby indemnifies and agrees to bold Indemnitee harmless
therefrom.

 

(d)           If an Independent Counsel is to make the determination of
entitlement to indemnification pursuant to Section 8(c), the Independent Counsel
will be selected as this Section 8(d) provides.  If a Change of Control has not
occurred within two years prior to the date of Indemnitee’s written request for
indemnification pursuant to Section 8(a), the Board will select the Independent
Counsel, and the Company will give written notice to Indemnitee advising him of
the identity of the Independent Counsel so selected.  If a Change of Control has
occurred within two years prior to the date of that written request, Indemnitee
will select the Independent Counsel (unless Indemnitee requests that the Board
make the selection, in which event the preceding sentence will apply), and
Indemnitee will give written notice to the Company advising it of the identity
of the Independent Counsel so selected.  In either event, Indemnitee or the
Company, as the case may be, may, within 10 days after the written notice of
selection has been given deliver to the Company or to Indemnitee, as the case
may be, a written objection to the

 

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selection, provided, however, that any such objection may be asserted only on
the ground that the Independent Counsel so selected is not an “Independent
Counsel” as Section 18 defines that term, and the objection must set forth with
particularity the factual basis for that assertion. Absent a proper and timely
objection, the person so selected shall act as Independent Counsel.  If any such
written objection is so made and substantiated, the Independent Counsel so
selected may not serve as Independent Counsel unless and until that objection is
withdrawn or a court of competent jurisdiction has determined that objection is
without merit.  If (i) an Independent Counsel is to make the determination of
entitlement to indemnification pursuant to Section 8(c) and (ii) within 20 days
after submission by Indemnitee of a written request for indemnification pursuant
to Section 8(a), no Independent Counsel has been selected and not objected to,
either the Company or Indemnitee may petition the Court of Chancery or another
court of competent jurisdiction for resolution of any objection that has been
made by the Company or Indemnitee to the other’s selection of Independent
Counsel and/or for the appointment as Independent Counsel of a person selected
by the petitioned court or by such other person as the petitioned court
designates, and the person with respect to whom all objections are so resolved
or the person so appointed will act as the Independent Counsel under
Section 8(c).  The Company will pay any and all reasonable fees and expenses the
Independent Counsel incurs in connection with acting pursuant to Section 8(c),
and the Company will pay all reasonable fees and expenses incident to the
procedures this Section 8(d) sets forth, regardless of the manner in which the
Independent Counsel is selected or appointed.  If (i) the Independent Counsel
selected or appointed pursuant to this Section 8(d) does not make any
determination respecting Indemnitee’s entitlement to indemnification hereunder
within 45 days after the Company receives a written request therefor and
(ii) any judicial proceeding or arbitration pursuant to Section 10(a) is then
commenced, that Independent Counsel will be discharged and relieved of any
further responsibility in such capacity (subject to the applicable standards of
professional conduct then prevailing).

 

Section 9.               Presumptions and Effect of Certain Proceedings.  (a) In
making a determination with respect to entitlement to indemnification hereunder,
the person, persons or entity making that determination must presume that
Indemnitee is entitled to indemnification hereunder if Indemnitee has submitted
a request for indemnification in accordance with Section 8(a), and the Company
will have the burden of proof to overcome that presumption in connection with
the making by any person, persons or entity of any determination contrary to
that presumption.  Neither the failure of the Company (including by its
directors or independent legal counsel) to have made a determination prior to
the commencement of any action pursuant to this Agreement that indemnification
is proper in the circumstances because Indemnitee has met the applicable
standard of conduct, nor an actual determination by the Company (including by
its directors or independent legal counsel) that Indemnitee has not met such
applicable standard of conduct, shall be a defense to the action or create a
presumption that Indemnitee has not met the applicable standard of conduct.

 

(b)           The termination of any Proceeding or of any claim, issue or matter
therein, by judgment, order, settlement or conviction, or on a plea of nolo
contendere or its equivalent, will not (except as this Agreement otherwise
expressly provides) of itself adversely affect the right of Indemnitee to
indemnification hereunder or create a presumption that Indemnitee did not act in
good faith and in a manner he reasonably believed to be in or not opposed to the
best interests of the Company or, with respect to any criminal proceeding, that
Indemnitee had reasonable cause to believe that his conduct was unlawful.

 

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(c)           Any action Indemnitee takes or omits to take in connection with
any employee benefit plan will if taken or omitted in good faith by Indemnitee
and in a manner Indemnitee reasonably believed to be in the interest of the
participants in or beneficiaries of that plan, be deemed to have been taken or
omitted in a manner that is “in, or not opposed to, the best interests of the
Company” for all purposes hereof.

 

(d)           Reliance as Safe Harbor.  For purposes of any determination of
good faith, Indemnitee shall be deemed to have acted in good faith if
Indemnitee’s action is based on the records or books of account of the
Enterprise, including financial statements, or on information supplied to
Indemnitee by the officers of the Enterprise in the course of their duties, or
on the advice of legal counsel for the Enterprise or on information or records
given or reports made to the Enterprise by an independent certified public
accountant or by an appraiser or other expert selected by the Enterprise.  The
provisions of this Section 9(d) shall not be deemed to be exclusive or to limit
in any way the other circumstances in which the Indemnitee may be deemed or
found to have met the applicable standard of conduct set forth in this
Agreement.

 

(e)           Actions of Others.  The knowledge and/or actions, or failure to
act, of any other director, officer, tax matters partner, employee, partner,
manager, fiduciary, trustee or agent of the Enterprise shall not be imputed to
Indemnitee for purposes of determining the right to indemnification under this
Agreement.

 

Section 10.             Remedies of Indemnitee.  (a) In the event that (i) a
determination is made pursuant to Section 8 that Indemnitee is not entitled to
indemnification hereunder, (ii) advancement of Expenses is not timely made
pursuant to Section 7, (iii) no determination as to Indemnitee’s entitlement to
indemnification shall have been made pursuant to Section 8(c) of this Agreement
hereunder, or that determination shall not have been made within 45 days after
receipt by the Company of the request for that indemnification, (iv) payment of
indemnification is not made pursuant to Section 5 or 6 within 10 days after
receipt by the Company of a written request therefor or (v) payment of
indemnification pursuant to Section 8(c) is not made timely, Indemnitee will be
entitled to an adjudication from the Court of Chancery of his entitlement to
that indemnification or advancement of Expenses.  Alternatively, Indemnitee, at
his option, may seek an award in arbitration to be conducted by a single
arbitrator pursuant to the Commercial Arbitration Rules of the American
Arbitration Association.  Indemnitee must commence any such proceeding seeking
at adjudication or an award in arbitration within 180 days following the date on
which Indemnitee first has the right to commence that proceeding pursuant to
this Section 10(a); provided, however, that this sentence will not apply in
respect of a proceeding brought by Indemnitee to enforce his rights under
Section 5.

 

(b)           If a determination has been made pursuant to Section 8(c) that
Indemnitee is not entitled to indemnification hereunder, any judicial proceeding
or arbitration commenced pursuant to this Section 10 will be conducted in all
respects as a de novo trial, or arbitration, on the merits and Indemnitee will
not be prejudiced by reason of that adverse determination.  In any judicial
proceeding or arbitration commenced pursuant to this Section 10, the Company
will have the burden of proving that Indemnitee is not entitled to
indemnification or advancement of Expenses, as the case may be and the Company
may not refer to or introduce into evidence any determination pursuant to
Section 2(c) of this Agreement adverse to Indemnitee for any purpose.  If
Indemnitee commences a judicial proceeding or arbitration pursuant to this
Section 10, Indemnitee shall not be required to reimburse the Company for any
advances pursuant to Section 7

 

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until a final determination is made with respect to Indemnitee’s entitlement to
indemnification (as to which all rights of appeal have been exhausted or
lapsed).

 

(c)           If a determination has been made pursuant to Section 8(c) that
Indemnitee is entitled to indemnification hereunder, the Company will be bound
by that determination in any judicial proceeding or arbitration commenced
pursuant to this Section 10, absent (i) a misstatement by Indemnitee of a
material fact, or an omission by Indemnitee of a material fact necessary to make
Indemnitee’s statements not materially misleading in connection with the request
for indemnification, or (ii) a prohibition of such indemnification under
applicable law.

 

(d)           If Indemnitee, pursuant to this Section 10, seeks a judicial
adjudication of or an award in arbitration to enforce his rights under, or to
recover damages for breach of, this Agreement, Indemnitee will be entitled to
recover from the Company, and will be indemnified by the Company against, any
and all expenses (of the types described in the definition of Expenses in
Section 18) actually and reasonably incurred by him in that judicial
adjudication or arbitration, but only if he prevails therein.  If it is
determined in that judicial adjudication or arbitration that Indemnitee is
entitled to receive part of, but not all, the indemnification or advancement of
expenses sought, the Expenses incurred by Indemnitee in connection with that
judicial adjudication or arbitration will be appropriately prorated between
those in respect of which this Section 10(d) entitles Indemnitee to
indemnification and those Indemnitee must bear.

 

(e)           The Company shall be precluded from asserting in any judicial
proceeding or arbitration commenced pursuant to this Section 10 that the
procedures and presumptions of this Agreement are not valid, binding and
enforceable and shall stipulate in any such court or before any such arbitrator
that the Company is bound by all the provisions of this Agreement.

 

(f)            The Company shall indemnify Indemnitee to the fullest extent
permitted by law against all Expenses and, if requested by Indemnitee, shall
(within ten (10) days after the Company’s receipt of such written request)
advance such Expenses to Indemnitee, which are incurred by Indemnitee in
connection with any judicial proceeding or arbitration brought by Indemnitee for
(i) indemnification or advances of Expenses by the Company under this Agreement
or any other agreement or provision of the Company’s Certificate of Formation or
LLC Agreement now or hereafter in effect or (ii) recovery or advances under any
insurance policy maintained by any person for the benefit of Indemnitee,
regardless of whether Indemnitee ultimately is determined to be entitled to such
indemnification, advance or insurance recovery, as the case may be.

 

Section 11.             Non-exclusivity; Survival of Rights; Insurance;
Subrogation.  (a) The rights to indemnification and advancement of Expenses this
Agreement provides are not and will not be deemed exclusive of any other rights
to which Indemnitee may at any time be entitled under applicable law, the
Company’s Certificate of Formation, the LLC Agreement, any other agreement, a
vote of unitholders or a resolution of directors, or otherwise.  No amendment,
alteration or termination of this Agreement or any provision hereof will limit
or restrict any right of Indemnitee hereunder in respect of any action
Indemnitee has taken or omitted in his Corporate Status prior to that amendment,
alteration or termination.  To the extent that a change in Delaware law (whether
by statute or judicial decision) permits greater indemnification by agreement
than would be afforded currently under this Agreement, it is the intent and
agreement of the parties hereto that Indemnitee will enjoy by this Agreement the
greater benefits that

 

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change affords.  No right or remedy herein conferred is intended to be exclusive
of any other right or remedy, and every other right and remedy shall be
cumulative and in addition to every other right and remedy given hereunder or
now or hereafter existing at law or in equity or otherwise.  The assertion or
employment of any right or remedy hereunder, or otherwise, shall not prevent the
concurrent assertion or employment of any other right or remedy.

 

(b)           If the Company maintains an insurance policy or policies providing
liability insurance for directors, officers, tax matters partners, employees,
partners, managers, fiduciaries, trustees or agents of the Company or of any
other Enterprise that any such person serves at the request of the Company,
Indemnitee will be covered by such policy or policies in accordance with its or
their terms to the maximum extent of the coverage available for any such
director, officer, tax matters partner, employee, partner, manager, fiduciary,
trustee or agent under such policy or policies. If, at the time the Company
receives notice from any source of a Proceeding as to which Indemnitee is a
party or a participant (as a witness or otherwise), the Company has director and
officer liability insurance in effect, the Company shall give prompt notice of
such Proceeding to the insurers in accordance with the procedures set forth in
the respective policies.  The Company shall thereafter take all necessary or
desirable action to cause such insurers to pay, on behalf of the Indemnitee, all
amounts payable as a result of such Proceeding in accordance with the terms of
such policies.

 

(c)           The Company will not be liable under this Agreement to make any
payment of amounts otherwise indemnifiable hereunder (or for which advancement
is provided hereunder) if and to the extent that Indemnitee has otherwise
actually received that payment or obtained the entire benefit therefrom under
any insurance policy, contract, agreement or otherwise.

 

(d)           If the Company makes any payment hereunder, it will be subrogated
to the extent of that payment to all the rights of recovery of Indemnitee, who
will execute all papers required and take all action necessary to secure those
rights, including execution of such documents as are necessary to enable the
Company to bring suit to enforce those rights.

 

(e)           The Company’s obligation to indemnify or advance Expenses
hereunder to Indemnitee with respect to Indemnitee’s service at the request of
the Company as a director, officer, tax matters partner, employee, partner,
manager, fiduciary, trustee or agent of any other Enterprise will be reduced by
any amount Indemnitee has actually received as indemnification or advancement of
Expenses from that other Enterprise.

 

Section 12.             Duration of Agreement.  This Agreement will continue
until and terminate on the later of: (1) 10 years after the date that Indemnitee
has ceased to serve as a director or officer of the Company or as a director,
officer, tax matters partner, employee, partner, manager, fiduciary, trustee or
agent of any other Enterprise that Indemnitee served on behalf of the Company at
the request of the Company; or (ii) one year after the final termination of any
Proceeding (including any rights of appeal thereto) then pending in respect of
which Indemnitee is granted rights of indemnification or advancement of Expenses
hereunder and of any proceeding commenced by Indemnitee pursuant to Section 10
relating thereto including any rights of appeal of any Section 10 Proceeding. 
This Agreement will be binding on the Company and its successors and assigns and
will inure to the benefit of Indemnitee and his spouse (if Indemnitee resides in
Texas or another community property state), heirs, executors and administrators.

 

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Section 13.             Severability.  If any provision or provisions of this
Agreement is or are invalid, illegal or unenforceable for any reason whatsoever;
(i) the validity, legality and enforceability of the remaining provisions hereof
(including, without limitation, each portion of any Section containing any such
invalid, illegal or unenforceable provision which is not itself invalid, illegal
or unenforceable) will not in any way be affected or impaired thereby; (ii) such
provision or provisions will be deemed reformed to the extent necessary to
conform to applicable law and to give the maximum effect to the intent of the
parties hereto; and (iii) to the fullest extent possible, the provisions of this
Agreement (including, without limitation, each portion of any Section containing
any such invalid, illegal or unenforceable provision which is not itself
invalid, illegal or unenforceable) will be construed so as to give effect to the
intent manifested thereby.

 

Section 14.             Exception to Right of Indemnification or Advancement of
Expenses.  Notwithstanding any provision in this Agreement, the Company shall
not be obligated under this Agreement to make any indemnity in connection with
any claim made against Indemnitee:

 

(a)           for which payment has actually been received by or on behalf of
Indemnitee under any insurance policy or other indemnity provision, except with
respect to any excess beyond the amount actually received under any insurance
policy or other indemnity provision;

 

(b)           for an accounting of profits made from the purchase and sale (or
sale and purchase) by Indemnitee of securities of the Company within the meaning
of Section 16(b) of the Exchange Act or similar provisions of state statutory
law or common law;

 

(c)           except as otherwise provided in Sections 10(d)-(f) hereof, prior
to a Change in Control, in connection with any Proceeding (or any part of any
Proceeding) initiated by Indemnitee, including any Proceeding (or any part of
any Proceeding) initiated by Indemnitee against the Company or its directors,
officers, employees or other indemnitees, unless (i) the Board of Directors of
the Company authorized the Proceeding (or any part of any Proceeding) prior to
its initiation or (ii) the Company provides the indemnification, in its sole
discretion, pursuant to the powers vested in the Company under applicable law;
or

 

(d)           to the extent prohibited by applicable law.

 

Section 15.             Enforcement and Binding Effect.

 

(a)           The Company expressly confirms and agrees that it has entered into
this Agreement and assumed the obligations imposed on it hereby in order to
induce Indemnitee to serve as a director or officer of the Company, and the
Company acknowledges that Indemnitee is relying upon this Agreement in serving
as a director or officer of the Company.

 

(b)           Except with respect to rights that Indemnitee has under the
provisions of the LLC Agreement and as of the date hereof, this Agreement
constitutes the entire agreement between the parties hereto with respect to the
subject matter hereof and supersedes all prior agreements and understandings,
oral, written and implied, between the parties hereto with respect to the
subject matter hereof.

 

Section 16.             Identical Counterparts.  This Agreement may be executed
in one or more counterparts, each of which will for all purposes be deemed to
‘be an original but all of

 

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which together will constitute one and the same agreement.  Only one such
counterpart signed by the party against whom enforceability is sought needs to
be produced to evidence the existence of this Agreement.

 

Section 17.             Headings.  The headings of the Sections hereof are
inserted for convenience only and do not and will not be deemed to constitute
part of this Agreement or to affect the construction thereof.

 

Section 18.             Definitions.  For purposes of this Agreement:

 

“Acquiring Person” means any Person who or which, together with all its
Affiliates and Associates, is or are the Beneficial Owner of 15% or more of the
Company Voting Shares then outstanding, but does not include any Exempt Person;
provided, however, that a Person will not be or become an Acquiring Person if
that Person, together with its Affiliates and Associates, becomes the Beneficial
Owner of 15% or more of the Company Voting Shares then outstanding solely as a
result of a reduction in the number of Company Voting Shares outstanding which
results from the Company’s direct or indirect repurchase of Company Voting
Shares, unless and until such time as that Person or any Affiliate or Associate
of that Person purchases or otherwise becomes the Beneficial Owner of additional
Company Voting Shares constituting 1% or more of the then outstanding Company
Voting Shares or any other Person (or Persons) who is (or collectively are) the
Beneficial Owner of Company Voting Shares constituting 1% or more of the then
outstanding Company Voting Shares becomes an Affiliate or Associate of that
Person, unless, in either such case, that Person, together with all its
Affiliates and Associates, is not then the Beneficial Owner of 15% or more of
the Company Voting Shares then outstanding.

 

“Affiliate” has the meaning Exchange Act Rule l2b-2 specifies.

 

“Associate” means, with reference to any Person, (1) any corporation, firm,
partnership, limited liability company, association, unincorporated organization
or other entity (other than the Company or a subsidiary of the Company) of which
that Person is an officer or general partner (or officer or general partner of a
general partner) or is, directly or indirectly, the Beneficial Owner of 10% or
more of any class of its equity securities or interests, (ii) any trust or other
estate in which that Person has a substantial beneficial interest or for or of
which that Person serves as trustee or in a similar fiduciary capacity and
(iii) any relative or spouse of that Person, or any relative of that spouse, who
has the same home as that Person.

 

A specified Person is deemed the “Beneficial Owner” of, and is deemed to
“beneficially own,” any securities:

 

(i)            of which that Person or any of that Person’s Affiliates or
Associates, directly or indirectly, is the “beneficial owner” (as determined
pursuant to Exchange Act Rule 13d-3) or otherwise has the right to vote or
dispose of including pursuant to any agreement, arrangement or understanding
(whether or not in writing); provided, however, that a Person will not be deemed
the “Beneficial Owner” of, or to “beneficially own,” any security under this

 

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subparagraph (i) as a result of an agreement, arrangement or understanding to
vote that security if that agreement, arrangement or understanding: (A) arises
solely from a revocable proxy or consent given in response to a public (that is,
not including a solicitation exempted by Exchange Act Rule 14a-2(b)(2)) proxy or
consent solicitation made pursuant to, and in accordance with, the applicable
provisions of the Exchange Act; and (B) is not then reportable by that Person on
Exchange Act Schedule 13D (or any comparable or successor report);

 

(ii)           which that Person or any of that Person’s Affiliates or
Associates, directly or indirectly, has the right or obligation to acquire
(whether that right or obligation is exercisable or effective immediately, or
only after the passage of time or the occurrence of an event) pursuant to any
agreement, arrangement or understanding (whether or not in writing) or on the
exercise of conversion rights, exchange rights, other rights, warrants or
options, or otherwise; provided, however, that a Person will not be deemed the
“Beneficial Owner” of, or to beneficially own, securities tendered pursuant to a
tender or exchange offer made by that Person or any of that Person’s Affiliates
or Associates until those tendered securities are accepted for purchase or
exchange; or

 

(iii)          which are beneficially owned, directly or indirectly, by (A) any
other Person (or any Affiliate or Associate thereof) with which the specified
Person or any of the specified Person’s Affiliates or Associates has any
agreement, arrangement or understanding (whether or not in writing) for the
purpose of acquiring, holding, voting (except pursuant to a revocable proxy or
consent as described in the proviso to subparagraph (i) of this definition) or
disposing of any voting securities of the Company or (B) any group (as Exchange
Act Rule 13 d-5(b) uses that term) of which that specified Person is a member;

 

provided, however, that nothing in this definition will cause a Person engaged
in business as an underwriter of securities to be the “Beneficial Owner” of, or
to “beneficially own,” any securities that Person acquires through its
participation in good faith in a firm commitment underwriting (including,
without limitation, securities acquired pursuant to stabilizing transactions to
facilitate a public offering in accordance with Exchange Act Regulation M or to
cover overallotments created in connection with a public offering) until the
expiration of 40 days after the date of that acquisition.  For purposes of this
definition, “voting” a security includes voting, granting a proxy, acting by
consent, making a request or demand relating to corporate action (including,
without limitation, calling a unitholder meeting) or otherwise giving an
authorization (within the meaning of Section 14(a) of the Exchange Act) in
respect of that security.

 

“Change of Control” means the occurrence of any of the following events that
occurs after the IPO Closing Date: (i) any Person becomes an Acquiring Person;
(ii) at any time the then Continuing Directors cease to constitute a majority of
the members of the Board; (iii) a merger of the Company with or into, or a sale
by the Company of its properties and assets substantially as an entirety to
another Person occurs and, immediately after that occurrence, any Person, other
than an Exempt Person, together with all Affiliates and Associates of that
Person (other than Exempt Persons), will be the Beneficial Owner of 15% or more
of the total voting power of the then outstanding

 

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Voting Shares of the Person surviving that transaction (in the case of a merger
or consolidation) or the Person acquiring those properties and assets
substantially as an entirety unless that Person, together with all its
Affiliates and Associates, was the Beneficial Owner of 15% or more of the
Company Voting Shares outstanding prior to that transaction; (iv) the approval
by the unitholders of the Company of a complete liquidation of the Company or an
agreement or series of agreements for the sale or disposition by the Company of
all or substantially all of the Company’s assets; or (v) occurs any other event
of a nature that would be required to be reported in response to Item 6(e) of
Schedule 14A of Regulation 14A (or a response to any similar item on any similar
schedule or form) promulgated under the Exchange Act (as defined below), whether
or not the Company is then subject to such reporting requirement.

 

“Company Voting Shares” means Voting Shares issued by the Company.

 

“Continuing Director” means at any time any individual who then (i) is a member
of the Board and was a member of the Board as of the date hereof or whose
nomination for his first election, or that first election, to the Board
following that date was recommended or approved by a majority of the then
Continuing Directors (acting separately or as a part of any action taken by the
Board or any committee thereof) and. (ii) is not an Acquiring Person, an
Affiliate or Associate of an Acquiring Person or a nominee or representative of
an Acquiring Person or of any such Affiliate or Associate.

 

“Corporate Status” describes the status of a natural person who is or was a
director, officer, tax matters partner, employee, partner, manager, fiduciary,
trustee or agent of the Company or of any other Enterprise, provided that person
is or was serving in that capacity at the request of the Company.  For purposes
of this Agreement, “serving at the request of the Company” includes any service
by Indemnitee which imposes duties on, or involves services by, Indemnitee with
respect to any employee benefit plan or its participants or beneficiaries.

 

“Court of Chancery” means the Court of Chancery of the State of Delaware.

 

“Disinterested Director” means a director of the Company who is not and was not
a party to the Proceeding in respect of which indemnification is sought by
Indemnitee hereunder.

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

 

“Exempt Person” means: (i)(A) the Company, any subsidiary of the Company, any
employee benefit plan of the Company or of any subsidiary of the Company and
(B) any Person organized, appointed or established by the Company for or
pursuant to the terms of any such plan or for the purpose of funding any such
plan or funding other employee benefits for employees of the Company or any
subsidiary of the Company; and (ii) Indemnitee, any Affiliate or Associate of
Indemnitee or any group (as Exchange Act Rule l3d-5(b) uses that term) of which
Indemnitee or any Affiliate or Associate of Indemnitee is a member.

 

“Expenses” include all attorneys’ fees, retainers, court costs, transcript
costs, fees of experts, witness fees, travel expenses, duplicating costs,
printing and binding costs,

 

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telephone charges, postage, delivery service fees, all other disbursements or
expenses of the types customarily incurred in connection with prosecuting,
defending, preparing to prosecute or defend, investigating, being or preparing
to be a witness in, or otherwise participating in, a Proceeding and all interest
or finance charges attributable to any thereof.  Should any payments by the
Company under this Agreement be determined to be subject to any federal, state
or local income or excise tax, “Expenses” also will include such amounts as are
necessary to place Indemnitee in the same after-tax position (after giving
effect to all applicable taxes) be would have been in had no such tax been
determined to apply to those payments.  Expenses also shall include Expenses
incurred in connection with any appeal resulting from any Proceeding, including
without limitation the premium, security for, and other costs relating to any
cost bond, supersedeas bond, or other appeal bond or its equivalent.  Expenses,
however, shall not include amounts paid in settlement by Indemnitee or the
amount of judgments or fines against Indemnitee.

 

“Independent Counsel” means a law firm, or a member of a law firm, that or who
is experienced in matters of corporate law and neither presently is, nor in the
past five years has been retained to represent: (i) the Company, its affiliates
or Indemnitee in any matter material to any such party; or (ii) any other party
to the Proceeding giving rise to a claim for indemnification hereunder. 
Notwithstanding the foregoing, the term “Independent Counsel” does not include
at any time any person who, under the applicable standards of professional
conduct then prevailing, would have a conflict of interest in representing
either the Company or Indemnitee in an action to determine Indemnitee’s rights
under this Agreement.

 

“IPO Closing Date” means November 15, 2004.

 

“Person” means any natural person, sole proprietorship, corporation, partnership
of any kind having a separate legal status, limited liability company, business
trust, unincorporated organization or association, mutual company, joint stock
company, joint venture, estate, trust, union or employee organization or
governmental authority.

 

“Proceeding” includes any threatened, pending or completed action, suit,
arbitration, alternate dispute resolution mechanism, investigation, inquiry,
administrative bearing or any other actual, threatened or completed proceeding,
whether brought in the right of the Company or otherwise and whether of a civil,
criminal, administrative or investigative nature, in which Indemnitee was, is or
will be involved as a party or otherwise by reason of the fact that Indemnitee
is or was a director or officer of the Company, by reason of any action taken by
him or of any action on his part while acting as director or officer of the
Company, or by reason of the fact that be is or was serving at the request of
the Company as a director, officer, tax matters partner, employee, partner,
manager, fiduciary, trustee or agent of any other Enterprise, in each case
whether or not serving in such capacity at the time any liability or expense is
incurred for which indemnification, reimbursement, or advancement of expenses
can be provided under this Agreement.

 

“Voting Shares” means:  (i) in the case of any corporation, stock of that
corporation of the class or classes having general voting power under ordinary
circumstances to participate in the election of the corporation’s board of
directors; and (ii) in the case of any other entity, equity

 

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interests of the class or classes having general voting power under ordinary
circumstances equivalent to the Voting Shares of a corporation.

 

Section 19.             Modification and Waiver.  No supplement to or
modification or amendment of this Agreement will be binding unless executed in
writing by both parties hereto.  No waiver of any of the provisions of this
Agreement will be deemed or will constitute a waiver of any other provisions
hereof (whether or not similar), nor will any such waiver constitute a
continuing waiver.

 

Section 20.             Notice by Indemnitee.  Indemnitee agrees promptly to
notify the Company in writing on being served with any summons, citation,
subpoena, complaint, indictment, information or other document relating to any
Proceeding or matter which may be subject to indemnification or advancement of
Expenses hereunder; provided, however, a failure to give that notice will not
deprive Indemnitee of his rights to indemnification and advancement of Expenses
hereunder unless the Company is actually and materially prejudiced thereby.

 

Section 21.             Notices.  All notices, requests, demands and other
communications hereunder must be in writing and will be deemed delivered and
received (i) if personally delivered or if delivered by telex, telegram,
facsimile or courier service, when actually received by the party to whom the
notice or communication is sent or (ii) if delivered by mail (whether actually
received or not), at the close of business on the third business day in the city
in which the Company’s principal executive office is located next.  following
the day when placed in the mail, postage prepaid, certified or registered,
addressed to the appropriate party at the address of that party set forth below
(or at such other address as that party may designate by written notice to the
other party in accordance herewith):

 

(a)

If to Indemnitee, to:

 

 

 

with a copy (which will not constitute notice for the purposes of this
Agreement) to such legal counsel, if any, as the Indemnitee may designate in
writing; and

 

 

(b)

If to the Company, to:

Copano Energy, L.L.C.

 

 

2727 Allen Parkway, Suite 1200

 

 

Houston, Texas 77019

 

 

Attention: General Counsel

 

Section 22.             Contribution.  To the fullest extent applicable law
permits, if the indemnification this Agreement provides is unavailable to
Indemnitee for any reason whatsoever, the Company, in lieu of indemnifying
Indemnitee, will contribute to the amount incurred by Indemnitee, whether for
judgments, fines, penalties, excise taxes, amounts paid or to be paid in
settlement and/or for Expenses, in connection with any claim relating to an
indemnifiable event under this Agreement, in such proportion as is deemed fair
and reasonable in light of all the circumstances of that Proceeding in order to
reflect:  (i) the relative benefits received by the Company and Indemnitee as a
result of the event(s) and/or transaction(s) giving rise to that Proceeding;
and/or (ii) the relative fault of the Company (and its directors, officers,
employees and agents) and Indemnitee in connection with such event(s) and/or
transaction(s).

 

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Section 23.             Governing Law; Submission to Jurisdiction.  This
Agreement and the legal relations among the parties will be governed by, and
construed and enforced in accordance with, the laws of the State of Delaware,
without regard to its conflict of laws rules.  Except with respect to any
arbitration Indemnitee commences pursuant to Section 10(a), the Company and
Indemnitee hereby irrevocably and unconditionally (i) agree that any action or
proceeding arising out of or in connection with this Agreement will be brought
only in the Court of Chancery and not in any other state or federal court in the
United States of America or any court in any other country, (ii) consent to
submit to the exclusive jurisdiction of the Court of Chancery for purposes of
any action or proceeding arising out of or in connection with this Agreement,
(iii) waive any objection to the laying of venue of any such action or
proceeding in the Court of Chancery and (iv) waive, and agree not to plead or to
make, any claim that any such action or proceeding brought in the Court of
Chancery has been brought in an improper or otherwise inconvenient forum.

 

Section 24.             Miscellaneous.  Use of one gender herein includes usage
of each other gender where appropriate.  This Agreement uses the words “herein,”
“hereof” and words of similar import to refer to this Agreement as a whole and
not ‘to any provision of this Agreement, and the word “Section” refers to a
Section of this Agreement, unless otherwise specified.

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the 1st
day of November, 2005 to be effective as of the day and year first above
written.

 

 

COPANO ENERGY, L.L.C.

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

 

 

 

 

 

INDEMNITEE:

 

 

 

 

 

By:

 

 

 

Name:

 

 

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