EXHIBIT 10.32


 


EMPLOYMENT
AGREEMENT


 


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


 


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


 


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


 


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


 


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


 


2.             Duties
and Responsibilities.


 


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


 


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


 


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


 





















 


4.             Compensation and
Benefits


 


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


 


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


 


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


 


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


 


5.             Termination
of Agreement.


 


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


 


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


 


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


 


(ii) upon Employee’s
death;


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


8.             Resolution
of Disputes.


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


	
  Employer:

  	
  CPNO Services L.P.

  
	
   

  	
  2727 Allen Parkway, Suite 1200

  
	
   

  	
  Houston, Texas 77019

  
	
   

  	
  Facsimile (713) 621-9547

  
	
   

  	
  Attention: John R. Eckel, Jr.

  
	
   

  	
   

  
	
  Employee:

  	
  John A. Raber

  
	
   

  	
  6043 S. Geneva Ct.

  
	
   

  	
  Englewood, CO 80111

  



 


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


 


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


 


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


 


	
   

  	
  CPNO SERVICES L.P.

  
	
   

  	
  By:

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

  Partner

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ John R. Eckel, Jr.

  	
   

  
	
   

  	
  Name: John R. Eckel Jr.

  
	
   

  	
  Title: Chairman and Chief Executive Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  JOHN A. RABER

  
	
   

  	
   

  
	
   

  	
  /s/ John A. Raber

  	
   

  
						



 


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