EXHIBIT 10.35


 


EMPLOYMENT
AGREEMENT


 


This Employment
Agreement (the “Agreement”) is entered into between Scissortail Energy, L.L.C.,
a Delaware limited liability company (“Employer”) and Thomas Coleman (“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;


 


WHEREAS, Employer
desires to employ Employee to serve as Vice President, Engineering of Employer;


 


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 Vice President, Engineering 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.  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, 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.


 


4.             Compensation
and Benefits


 


4.1          Salary.  Employee shall be paid beginning on the
Commencement Date an annual base salary of $140,000 (One Hundred Forty 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
30% 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, Employer’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 16,000 options to purchase
Company Common Units and 4,000 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 16,000 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.


 


(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


 


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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 Tulsa, Oklahoma 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 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 Employer or a Change of Control of Company, Employee shall be
entitled to severance payments as set forth in Section 5.2. In addition,


 


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pursuant to the terms of
the LTIP and the applicable awards, upon a Change of Control of Company or
Employer 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 Employer” 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 Employer
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 Employer; 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 Employer’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 Employer of a complete or substantially
complete liquidation or dissolution of Employer.


 


“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 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


 


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(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 to ensure the continued
protection of the confidential information of Employer.  Employee further acknowledges that by virtue
of his employment with Employer, he is the beneficiary of the goodwill of
Employer.


 


7.2          Access
to and Use of Employer’s Confidential Information.  Employee acknowledges that during the course
of his employment, he will have access to highly confidential information about
Employer’s 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 of Employer (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,
provided that such source was not bound by a duty of confidentiality to
Employer 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)


 


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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 of Employer 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 former
employee of Employer employed by Employer at any time during the twelve (12)
month period prior to the termination of this Agreement, to leave the
employment of Employer or offer employment, retain, hire or assist in the
hiring of any such employees by any person, association, or entity not
affiliated with Employer.


 


7.5.         Non-Solicitation
of Customers.  In consideration of
Employer’s promise to provide Confidential Information of Employer, 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 that
conduct business in the counties in which Employer conducts 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 of Employer 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 Employer or work with or for any
person or entity that provides the same services or engages in the same
business as Employer 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 Employer 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,


 


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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 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.


 


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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:

  	
  ScissorTail Energy, L.L.C.

  
	
   

  	
  624 South Boston, Suite 800

  
	
   

  	
  Tulsa, Oklahoma 74119

  
	
   

  	
  Facsimile (918) 587-2990

  
	
   

  	
  Attention: John A Raber

  
	
   

  	
   

  
	
  Employee:

  	
  Thomas Coleman

  
	
   

  	
  2226 S. Florence Place

  
	
   

  	
  Tulsa OK 74114

  



 


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.


 


16.          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.


 


 


	
   

  	
  SCISSORTAIL ENERGY, L.L.C.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ John R. Eckel, Jr.

  	
   

  
	
   

  	
  Name: John R. Eckel, Jr.

  
	
   

  	
  Title: Chairman and Chief Executive Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  THOMAS COLEMAN

  
	
   

  	
   

  
	
   

  	
  /s/ Thomas Coleman

  	
   

  
					



 


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