Copano Operations or CPNO Services upon at least 60 days’ written notice prior to thecommencement of any such renewal term.     3. Goods and Services. CPNO Services shall provide to Copano Operations (i) the Goodsand Services reflected in Exhibit A to this Agreement and (ii) such other Goods andServices from time to time reasonably requested by Copano Operations to manage and operate thebusiness, properties and assets of Copano Operations and its affiliated entities. CopanoOperations shall provide to CPNO Services or an affiliated entity the Goods and Services reflectedin Exhibit B to this Agreement.     4. Transfer of Employees; Assumption of Obligations. In order that CPNO Services mayprovide the Goods and Services to Copano Operations, (i) Copano Operations shall cause the transferof employment of those persons set forth in Exhibit C to this Agreement (the“Transferred Employees”) to CPNO Services and CPNO Services shall hire those personspursuant to each employees’ then effective employment arrangement (including related benefits) withCopano Operations, each as of the Effective Date and (ii) CPNO Services or an affiliated entitythereof shall assume those obligations of Copano Operations set forth in Exhibit D to thisAgreement as of the Effective Date (the “Assumed Obligations”). If any of the agreementsgoverning the Assumed Obligations (the “Assumed Agreements”) are not assignable, then (x)CPNO Services and Copano Operations shall take such actions as may be necessary to permit CPNOServices to receive the economic benefits and assume the liabilities under the Assumed Agreementswithout committing a breach of the terms thereof and (y) **CPNO SERVICES SHALL INDEMNIFY COPANOOPERATIONS AND ITS AFFILIATED ENTITIES FROM AND AGAINST ANY AND ALL LIABILITIES AND OBLIGATIONSARISING UNDER THE ASSUMED AGREEMENTS ON OR AFTER THE EFFECTIVE TIME.**     5.Payment of Cost Reimbursement.          (a) Fees. Subject to Section 5(c) of this Agreement, Copano Operations shall pay amonthly cost reimbursement (the “Cost Reimbursement”) for the Goods and Services to CPNOServices equal to $25,000 calculated in accordance with the formula set forth in Exhibit Eto this Agreement (the “Cost Reimbursement Formula”). The Cost Reimbursement is net of the valueof the Goods and Services provided by Copano Operations to CPNO Services hereunder. It is theparties’ intention that the Cost Reimbursement represents fair and reasonable compensation to CPNOServices by Copano Operations for the Goods and Services provided by CPNO Services hereunder net offair and reasonable compensation for the Goods and Services provided by Copano Operationshereunder.          (b) Payment. CPNO Services shall invoice Copano Operations on or before the25th day of each month for the Cost Reimbursement for the next succeeding month. Allinvoices shall be due and payable within 15 days of the date of the invoice.
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          (c) Periodic Adjustments. No later than July 31, 2010 and annually thereafter, (i)CPNO Services shall furnish to Copano Operations a reasonable detail of the Goods and Servicesprovided to Copano Operations for the six-month period (or twelve-month period for years following2010) (the “Look-Back Period”) ended the immediately preceding June 30 (the “CPNO Goods andServices”) and (ii) Copano Operations shall furnish to CPNO Services a reasonable detail of theGoods and Services provided to CPNO Services for the Look-Back Period ended the immediatelypreceding June 30 (the “Copano Operations Goods and Services”). As soon as practicable thereafter,the Audit Committee of Copano Energy’s Board of Directors shall determine, based upon the CostReimbursement Formula, whether the Cost Reimbursements paid by Copano Operations relating to theLook-Back Period represent the reasonable value of the CPNO Goods and Services (net of thereasonable value of the Copano Operations Goods and Services) (the “Goods and Services Value”). Ifin the Audit Committee’s reasonable judgment, the Good and Services Value exceeds the CostReimbursement by more than 2% or the Cost Reimbursement exceeds the Goods and Services Value bymore than 2%, then the Cost Reimbursement shall be adjusted up or down, as appropriate, as of theJuly 1 immediately following the Look-Back Period so that the Goods and Services Value is equal tothe Cost Reimbursement.     **6. ****Limitation of Liability of CPNO Services****. Neither CPNO Services nor the officers,directors, employees, agents or affiliated entities (collectively, “Affiliates”) of CPNO Servicesshall be liable to Copano Operations or its Affiliates for any error of judgment or mistake of lawor any loss or damage with respect to any property of Copano Operations or its Affiliates orarising from any act or omission of CPNO Services or any of its Affiliates in the performance ofits obligations hereunder, unless such loss or damage is the result of bad faith, gross negligence,misconduct or any breach of fiduciary duty, disregard of any duties or obligations owed to CopanoOperations or its Affiliates by CPNO Services or its Affiliates by reason of this Agreement or anyrelationship created hereby.**     7**. ****Indemnification of CPNO Services; Insurance****. Copano Operations shall indemnify andhold harmless, to the extent permitted by law, CPNO Services and any of its Affiliates who was oris a party or is threatened to be made a party to any threatened, pending or completed action, suitor proceeding whether civil, criminal, administrative or investigative, by reason of any acts oromissions or alleged acts or omissions arising out of the activities of such person, if suchactivities were performed in good faith either on behalf of Copano Operations or its Affiliates orin furtherance of the interest of Copano Operations or its Affiliates, and in a manner reasonablybelieved by such person to be within the scope of the authority conferred by this Agreement or bylaw against losses, damages or expenses for which such person has not otherwise been reimbursed(including, but not limited to, accountants’ and attorneys’ fees, judgments, fines and amounts paidin settlement) actually and reasonably incurred by such person in connection with such action, suitor proceeding, so long as such person was not guilty of bad faith, negligence, misconduct or anyother breach of fiduciary duty with respect to such acts or omissions and, with respect to anycriminal action or proceedings, has no reasonable**
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**cause to believe his conduct was unlawful. Additionally, Copano Operations shall name CPNOServices as an insured on any liability insurance policy maintained by Copano Operations andcovering any matter for which CPNO Services or its Affiliates may be liable as a result of theperformance of this Agreement.**     8. **Limitation of Liability of Copano Operations****. Neither Copano Operations nor itsAffiliates shall be liable to CPNO Services or its Affiliates for any error of judgment or mistakeof law or any loss or damage with respect to any property of CPNO Services or its Affiliates orarising from any act or omission of Copano Operations or any of its Affiliates in the performanceof its obligations hereunder, unless such loss or damage is the result of bad faith, grossnegligence, misconduct or any breach of fiduciary duty, disregard of any duties or obligations owedto CPNO Services or its Affiliates by Copano Operations or its Affiliates by reason of thisAgreement or any relationship created hereby.**     9. **Indemnification of Copano Operations; Insurance****. CPNO Services shall indemnify andhold harmless, to the extent permitted by law, Copano Operations and any of its Affiliates who wasor is a party or is threatened to be made a party to any threatened, pending or completed action,suit or proceeding whether civil, criminal, administrative or investigative, by reason of any actsor omissions or alleged acts or omissions arising out of the activities of such person, if suchactivities were performed in good faith either on behalf of CPNO Services or its Affiliates or infurtherance of the interest of CPNO Services or its Affiliates, and in a manner reasonably believedby such person to be within the scope of the authority conferred by this Agreement or by lawagainst losses, damages or expenses for which such person has not otherwise been reimbursed(including, but not limited to, accountants’ and attorneys’ fees, judgments, fines and amounts paidin settlement) actually and reasonably incurred by such person in connection with such action, suitor proceeding, so long as such person was not guilty of bad faith, negligence, misconduct or anyother breach of fiduciary duty with respect to such acts or omissions and, with respect to anycriminal action or proceedings, has no reasonable cause to believe his conduct was unlawful.Additionally, CPNO Services shall name Copano Operations as an insured on any liability insurancepolicy maintained by CPNO Services and covering any matter for which Copano Operations or itsAffiliated Entities may be liable as a result of the performance of this Agreement.**10. Termination. This Agreement shall terminate prior to the Termination Date (i) upon 60days’ prior written notice by either CPNO Services or Copano Operations, upon failure to cure abreach of this Agreement by the other within thirty (30) days’ of notice thereof (provided,however, neither party shall have the right to terminate this Agreement as a result of an allegedbreach during any period during which the parties are in good faith attempting to resolve a relateddispute) or (ii) upon thirty (30) days’ prior written notice by CPNO Services in the event of a“change in control” of Copano Operations. For purposes hereof, “change of control” shall mean achange in the power or authority to direct or cause the direction of the management and policies ofCopano Operations
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whether through ownership of voting securities, by contract or otherwise. Upon termination of thisAgreement, including upon the Termination Date or as a result of a “change of control” of CopanoOperations, but not including a termination as a result of CPNO Services’ breach, Copano Operationsshall remain liable with respect to all continuing contractual obligations and liabilities properlyincurred by CPNO Services on behalf of and with the approval of Copano Operations (the“Existing Obligations”). If any of such Existing Obligations are not assignable, then suchExisting Obligations may be terminated by CPNO Services as of the Termination Date. CopanoOperations shall indemnify CPNO Services for any penalties or expense incurred by CPNO Services asa result of the early termination of any Existing Obligations.     11. Additional Provisions Upon Termination.     (a) Books and Records. Upon termination of this Agreement or, earlier upon request ofCopano Operations, CPNO Services shall make available to Copano Operations originals or copies ofall books, records and data (whether in electronic or other format) (collectively, the“Records”) in its possession and necessary for the operations of Copano Operations toCopano Operations as soon as practicable, but in no event later than 60 days after the terminationdate (the “Record Delivery Date”). During the period subsequent to termination of any ofCPNO Services’ responsibilities hereunder and prior to the related Record Delivery Date, CPNOServices shall grant Copano Operations access to the relevant Records during regular businesshours. With respect to any Records relating to Copano Operations that are not reasonably separablefrom Records that relate to CPNO Services and its Affiliates, CPNO Services shall providereasonable access to such Records to Copano Operations for a period of not less than six years.CPNO Services shall have a right to retain a copy of any Records that CPNO Services may reasonablyrequire for business purposes, including tax compliance.     (b) Property. Upon termination of this Agreement, CPNO Services shall also makeavailable to Copano Operations all the property described on Exhibit B to this Agreement.     12. Force Majeure. If either party is rendered unable, wholly or in part, by forcemajeure to carry out its obligations under this Agreement, other than to make payments due, it isagreed that such party’s obligations hereunder shall be suspended. The term “force majeure” asemployed herein and for all purposes relating hereto shall mean acts of God, strikes, lockouts orother industrial disturbances, acts of the public enemy, wars, blockades, insurrections, riots,epidemics, civil disturbance or any other causes or circumstances, whether similar or dissimilar tothe foregoing causes or circumstances, beyond the reasonable control of a party.     13. Notices. All notices, requests, consents and other communications under thisAgreement shall be in writing and shall be deemed to have been delivered on the date personallydelivered, as evidenced by an executed receipt, or on the date mailed, postage prepaid, bycertified mail, return receipt requested, or facsimile, if addressed to the respective parties asfollows:
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       If to CPNO Services: 2727 Allen Parkway, Suite 1200Houston, Texas 77019Attention: Senior Vice President, Controllerand Principal Accounting Officer       If to Copano Operations: 2727 Allen Parkway, Suite 1200Houston, Texas 77019Attention: Douglas L. Lawing, PresidentThe parties to this Agreement may designate a different address by providing written notice of suchnew address to the other party hereto.     14. Assignment. This Agreement may not be assigned (i) by Copano Operations unlessagreed to in writing by CPNO Services or (ii) by CPNO Services, except to an affiliated entity,unless agreed to in writing by Copano Operations.     15. Amendment. This Agreement may be amended only by an instrument in writingexecuted by all parties hereto.     16. Severability. Whenever possible, each provision of this Agreement shall beinterpreted in such a manner as to be effective and valid under applicable law, but if anyprovision of this Agreement shall be prohibited by or held invalid under applicable law, suchprovisions shall be ineffective to the extent of such provision or invalidity, without invalidatingthe remainder of such provision or the remaining provisions of this Agreement.     17. Binding Effect. This Agreement shall be binding upon and inure to the benefit ofthe parties hereto and the permitted successors and assigns of any of CPNO Services or CopanoOperations.     18. Captions. The section and paragraph headings in this Agreement are for referencepurposes only and shall not affect in any way the meaning or interpretation of this Agreement.     19. Counterparts. This Agreement may be executed in multiple original counterparts,each of which shall be deemed an original, but all of which together shall constitute the sameinstrument.     20. Entire Agreement. This Agreement constitutes the entire agreement of the partiesrelating to the matters contained herein and shall supersede the terms of any prior agreement orunderstanding between Copano Operations and CPNO Services concerning the subject matter hereof.
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     21. Governing Law. This Agreement shall be construed and enforced in accordance withand governed by the laws of the State of Texas, without regard to the principles of conflicts oflaw.     IN WITNESS WHEREOF, the parties have executed this Agreement on December ___, 2009 to beeffective for all purposes as of the Effective Date.         COPANO/OPERATIONS, INC.           By: /s/ Douglas L. Lawing       Douglas L. Lawing, President           CPNO SERVICES, L.P.           By: CPNO Services GP, L.L.C.    its General Partner             /s/ Lari Paradee       Lari Paradee, Senior Vice President,      Controller and Principal Accounting Officer  **Acknowledged and Agreed to Solely for Purposes of CPNO Services’ Assumption of Copano Operations’Obligations under the Houston Office Lease (as defined in Exhibit D):**         COPANO PIPELINES/HEBBRONVILLE, L.P.           By: Copano Pipelines GP, L.L.C.,      its Managing General Partner             /s/ Lari Paradee       Lari Paradee, Senior Vice President,      Controller and Principal Accounting Officer           COPANO PIPELINES/UPPER GULF COAST, L.P.           By: Copano Pipelines GP, L.L.C.,      its Managing General Partner             /s/ Lari Paradee       Lari Paradee, Senior Vice President,      Controller and Principal Accounting Officer  
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         COPANO FIELD SERVICES/CENTRAL GULFCOAST, L.P.           By: Copano Field Services/Central Gulf Coast      GP, L.L.C.,      its Managing General Partner             /s/ Lari Paradee       Lari Paradee, Senior Vice President,      Controller and Principal Accounting Officer           COPANO PROCESSING, L.P.           By: Copano Processing GP, L.L.C.,      its Managing General Partner             /s/ Lari Paradee       Lari Paradee, Senior Vice President,      Controller and Principal Accounting Officer  
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**EXHIBIT A****GOODS AND SERVICES PROVIDED BY CPNO SERVICES**Field personnel and related benefitsUse of field vehicles, related insurance, supplies and equipmentAdministrative personnel and related benefitsUse of allocated space on the 12th floor of the Wortham Tower, 2727 Allen Parkway,Houston, Texas (the “Houston Office”) and in Houston office storage facilities, and allocated spacein the Alice, Texas and Rockport, Texas field offices (the “Offices”)Use of furniture, equipment, computers and supplies owned or leased by CPNO Services or itsAffiliates and located in the Offices
 

 
**EXHIBIT B****GOODS AND SERVICES PROVIDED BY COPANO OPERATIONS**Use of the “Bobby S”, a vessel located in the Copano Bay, Texas area and used to maintain, repairand service locations in and around Copano BayInsurance related to the Bobby S vesselUse of artwork and sculptures located in the Houston Office (the “Art”)Insurance related to the Art
 

 
**EXHIBIT C****EMPLOYEES TO BE HIRED BY CPNO SERVICES**