**EXHIBIT 10.32**

 

**EMPLOYMENTAGREEMENT**

 

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

 

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

 

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

 

NOW, THEREFORE,for and in consideration of the premises and the mutual agreements containedherein and for other good and valuable consideration, the receipt, adequacy andsufficiency of which are hereby acknowledged, Employer and Employee herebyagree as follows:

 

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

 

2.             Dutiesand Responsibilities.

 

2.1          Duties.  Employee shall be employed by Employer toserve as President and Chief Operating Officer of ScissorTail, President andChief Operating Officer of Copano Energy/Rocky Mountains and Mid-Continent,L.L.C. and in such other positions with Affiliates of Employer as may bedesignated from time to time. Employee agrees to perform diligently and to thebest of his abilities the duties and services required to effectively dischargethe functions assigned to such position by Employer, as well as such additionalor different duties and services that Employee from time to time may bereasonably directed to perform by Employer. Employee shall at all times comply with and be subject to all policiesand procedures of Employer.

 

2.2          Timeand Effort.  Employee shall, duringthe term of this Agreement, devote his full business time, energy, and best reasonableefforts to the business and affairs of Employer and its Affiliates. Employeemay not engage, directly or indirectly, in any other business, investment, or businessactivity that interferes with Employee’s performance of his duties under thisAgreement, is contrary to the interests of Employer and its Affiliates, orrequires any significant portion of Employee’s business time.

 

3.             Termof Agreement.  This Agreement shallbe 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 “RenewalTerm”) until terminated by Employer or Employee providing thirty (30) days’written notice to the other prior to the end of the Primary Term or anysubsequent Renewal Term.

 

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4.             Compensation andBenefits

 

4.1          Salary.  Employee shall be paid beginning on theCommencement Date an annual base salary of $256,000 (Two Hundred Fifty Six ThousandDollars and No Cents) (the “Base Salary”), subject to Employer’s standardpayroll practice and minus applicable taxes and withholdings. Employee’s BaseSalary shall be subject to annual review and upward adjustment by theCompensation 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 BaseSalary ever be less than the initial Base Salary set forth in the firstsentence of this Section 4.1.

 

4.2          Bonus.  Effective January 1, 2006, Employeeshall be eligible to participate in Company’s Management Incentive CompensationPlan (“MICP”) or any substitute incentive compensation plan as may be in effectfrom time to time for the benefit of executive officers of Company and its Affiliates. Employer shall beeligible to earn an annual incentive cash award with an initial target award of50% of the Base Salary. Employee’s bonus will be determined by the Committeebased on a combination of factors, including Employee’s achievement of personalobjectives, ScissorTail’s achievement of financial and operational objectivesand Company’s achievement of financial objectives.

 

4.3          Long-TermIncentive Plan. Employeewill beeligible to participate in Company’s Long-Term Incentive Plan (“LTIP”). On theCommencement Date, Employee will receive a grant of 40,000 options to purchaseCompany Common Units and 10,000 restricted Common Units; provided however, themix of options and restricted Common Units to be awarded hereunder shall bereallocated to reflect any appreciation in the Common Units from June 20,2005 through the CommencementDate based upon the closing sales priceof a Common Unit as reported on NASDAQ (the “Closing Price”) on each of suchdates (the “Appreciation Amount”). If the Appreciation Amount is apositive number, Employee shall be entitled to additional restricted CommonUnits, 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 awardedhereunder will be reduced by the number of additional restricted Common Unitsawarded in connection with the reallocation. The options will have an exercise price equal to the closing price ofCompany’s Common Units on the Commencement Date, vest in equal one-fifthincrements on the grant anniversary date for the next five (5) years, andhave a ten (10) year exercise term. The restricted Common Units will vest in equal one-fifth increments onthe 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 andother insurance plans and all other programs, savings plans, and otheremployment-related benefits of Employer in accordance with the terms of thoseprograms. Employer shall pay 100% of the costs for coverage under the grouphealth plans provided for employees and their dependents. To the extent thatthe Employee does not utilize this coverage for a spouse and/or dependents,Employee shall receive monthly compensation equal to the cost the Employer wouldhave otherwise incurred.

 

5.             Terminationof Agreement.

 

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

 

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(a) Employershall have the right to terminate Employee’s employment under this Agreementprior to the expiration of the Primary Term or any Renewal Term for any of thefollowing reasons:

 

(i) for “Cause,” which termination shall bewithout notice or payment in lieu of notice. “Cause” shall mean (a) gross negligence, gross incompetence, orwillful misconduct in the performance of the duties and services required ofEmployee pursuant to this Agreement; (b) willful refusal without properreason to perform the duties and services required of Employee pursuant to thisAgreement; (c) the commission of any fraudulent act or dishonesty in thecourse of Employee’s employment by Employer; (d) conviction of a felonyunder 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) breachof any material provision of this Agreement or of any material policy orprocedure 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’sdeath;

 

(iii) upon Employee’s becoming incapacitated byaccident, sickness, or other circumstances that in the reasonable opinion of aqualified doctor approved by Employer renders Employee mentally or physicallyincapable of performing the duties and services required of Employee (with orwithout reasonable accommodation within the meaning of the Americans withDisabilities Act).

 

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

 

5.2          OtherTerminations of Agreement by Employer. In the event Employer terminates this Agreement for any reason otherthan those set forth in Section 5.1 or does not offer Employee acomparable position within the Denver, CO locale prior to the expiration of thePrimary Term, Employee shall be entitled to a lump sum severance payment equalto two times the sum of (a) Employee’s then Base Salary in effect at thetime of termination and (b) 50% of Employee’s maximum incentive awardunder the bonus plan in which Employee is participating at the time oftermination. If Employee is terminated at any time after the expiration of thePrimary Term, Employee shall be entitled to a lump sum severance payment equalto one year of Employee’s then Base Salary in effect at the time of terminationof the Agreement and shall be eligible to receive a pro-rata bonus pursuant tothe terms of the MICP or any applicable incentive compensation plan as may bein effect. In the event of termination of Employee at any time during the termof this Agreement pursuant to this Section 5.2, all outstanding awardsunder the LITP shall automatically vest or become exercisable, as the case maybe.  In addition, Employee shall also beentitled to continuation of the insurance benefits in which he participated onthe date of termination of the Agreement, at Employer’s cost, for the greaterof (a) one year after the date of termination of the Agreement or (b) theremainder of the Primary Term, if applicable, not to exceed the maximum periodsprovided for under the Consolidated Omnibus Budget Reconciliation Act.Notwithstanding the foregoing provisions of this Section 5.2, Employeeshall

 

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

 

5.3.         Changeof Control or Liquidation.  In theevent Employee is terminated on or within one year following a Change ofControl of ScissorTail or a Change of Control of Company, Employee shall beentitled 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 ofControl of Company or ScissorTail all outstanding awards (including, withoutlimitation, those specified in Section 4.3 above) shall automatically vestor become exercisable, as the case may be.

 

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

 

“Change of Control ofCompany” 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 theSecurities Exchange Act of 1934, as amended (the “Exchange Act”), other thanthe Company or an Affiliate of the Company, of “beneficial ownership” (asdefined in Rule 13d-3 under the Exchange Act), directly or indirectly, ofsecurities of the Company representing more than 50% of the combined votingpower of the Company’s then outstanding securities entitled to vote generallyin the election of directors; or

 

(ii)           the consummation of areorganization, merger, consolidation or other form of business transaction or seriesof business transactions, in each case, with respect to which persons who werethe members of the Company immediately prior to such reorganization, merger orconsolidation or other transaction do not, immediately thereafter, own morethan 50% of the combined voting power entitled to vote generally in theelection of directors of the reorganized, merged or consolidated company’s thenoutstanding voting securities; or

 

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

 

(iv)          a change in thecomposition of the Board of Directors of the Company, as a result of whichfewer than a majority of the directors are Incumbent Directors. “IncumbentDirectors” shall mean directors who either (A) are directors of theCompany as of the Commencement Date, or (B) are elected, or nominated forelection, thereafter to the Board with the affirmative votes of at least amajority 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 inconnection with (i) an actual or threatened election contest (as suchterms are used in Rule 14a-11 of Regulation 14A promulgated under theExchange Act) or an actual or threatened solicitation of proxies or consents byor on behalf of a person other than the Board of Directors of the Company or (ii) aplan or agreement to replace a majority of the then Incumbent Directors; or

 

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

 

“Affiliate” shall meanwith respect to any person, any other person that directly or indirectlythrough one or more intermediaries controls, is controlled by or is undercommon 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 thedirection of the management and policies of a person, whether through ownershipof voting securities, by contract or otherwise.

 

5.4          Terminationby Employee.  Employee shall have theright to terminate this Agreement at any time upon thirty (30) days priorwritten notice to Employer. 

 

6.             Warranty.  Employee represents and warrants that he isnot under any obligation to any entity or person that would prevent, impair orlimit the performance of his obligations under this Agreement.  Employee further represents and warrants thathe has been afforded a reasonable opportunity to consider this Agreement beforesigning it, that he has been afforded a reasonable opportunity to retain anattorney of his choosing in connection with this Agreement, and that he hascarefully read the Agreement and understands it.

 

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

 

7.1          Acknowledgments.  Employee acknowledges that Employer wishes toprotect the competitive position of Employer and its Affiliates and to ensurethe continued protection of the confidential information of Employer and itsAffiliates. Employee further acknowledges that by virtue of his employment withEmployer, including those services provided by Employee to ScissorTail andother Affiliates he is the beneficiary of the goodwill of Employer.

 

7.2          Accessto and Use of Confidential Information. Employee acknowledges that during the course of his employment, he willhave access to highly confidential information about Employer and itsAffiliates’ business, including but not limited to (i) information andrecords 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 operatingsystems and (viii) training programs (collectively “ConfidentialInformation”).  Employee acknowledgesthat the Confidential Information is constantly revised and updated.  Employee further acknowledges that he needsthe Confidential Information to perform his job duties for Employer. Notwithstandingany provision of this Agreement to the contrary, Confidential Information doesnot include any information which: (i) at the time of disclosure toEmployee or thereafter is in the public domain (other than as a result of adisclosure directly or indirectly by Employee), (ii) was available toEmployee on a non-confidential basis from a source other than Employer or itsAffiliates, provided that such source was not bound by a duty

 

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of confidentiality toEmployer or its Affiliates or (iii) is independently acquired or developedby Employee without violating any of Employee’s obligations hereunder.

 

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

 

7.4.         Non-Solicitationof Employees.  In consideration ofEmployer’s promise to provide Confidential Information to Employee, inconsideration of his employment with Employer, and in consideration of Employer’spromise 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 thisAgreement, Employee shall not, directly or indirectly, jointly or individually,through other entities or persons or either on his own behalf or in the serviceof others, encourage or induce any then current employee of Employer or itsAffiliates or former employee of Employer or its Affiliates employed by Employeror its Affiliates at any time during the twelve (12) month period prior to thetermination of this Agreement, to leave the employment of Employer or itsAffiliates or offer employment, retain, hire or assist in the hiring of anysuch employees by any person, association, or entity not affiliated with Employeror its Affiliates.

 

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

 

7.6          CovenantNot to Compete.  In consideration ofEmployer’s promise to provide Confidential Information to Employee, inconsideration of his employment with Employer, and in consideration of Employer’spromise 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 thisAgreement, Employee shall not, directly or indirectly, jointly or individually,through other entities or persons or either on his own behalf or in the serviceof others, practice or attempt to compete with ScissorTail or work with or forany person or entity that provides the same services or engages in the samebusiness 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 anyother county in Oklahoma where ScissorTail

 

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

 

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

 

8.             Resolutionof Disputes.

 

8.1. AlternativeDispute Resolution.  Except withrespect to the equitable relief described in Section 7, Employer andEmployee hereby knowingly, voluntarily, and irrevocably agree that any disputesor 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’semployment with Employer shall be resolved pursuant to binding arbitrationunder the auspices of the American Arbitration Association (“AAA”).

 

(a)           Thearbitrator shall be licensed to practice law in Texas and shall be selected bymutual agreement of the parties.  If theparties 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 desireto arbitrate, then the arbitrator shall be selected from a list or lists ofpersons submitted by the AAA.  Theselection process shall be that which is set forth in the AAA National Rules forthe Resolution of Employment Disputes then prevailing, except that, if theparties fail to select an arbitrator from one or more lists, AAA shall not havethe power to make an appointment but shall continue to submit additional listsuntil an arbitrator has been selected.

 

(b)           Noticeof arbitration must be given within the limitations period for the claim onwhich the notice is based.  If theclaiming party fails to give notice of arbitration within that time, the claimshall be deemed to be waived and shall be barred from either arbitration orlitigation.

 

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

 

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

 

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

 

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of this Agreement shallnot affect such party’s right at a later time to enforce any such term orprovision.

 

10.          Amendment.  No amendment or modification of thisAgreement shall be valid or effective, unless it is in writing and signed byboth Employer and Employee.

 

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

 

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

 

13.          EntireAgreement.  This Agreementconstitutes the entire agreement between Employer and Employee with respect tothe subject matter of this Agreement.

 

14.          ApplicableLaw.  This Agreement shall begoverned by and construed in accordance with the laws of the state of Delaware,except for any disputes resolved pursuant to binding arbitration for whichTexas law shall apply.

 

15.          Notices.  Any notice required or permitted under thisAgreement shall be in writing and shall be delivered by certified or registeredUnited 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 givenin accordance herewith shall be deemed to have been given when received by theaddressee.  The address for notice may bechanged by notice given in accordance with this provision.

 

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

 

IN WITNESS WHEREOF, the parties hereto have executedthis 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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