**Exhibit 10.37**

 

**CopanoEnergy, L.L.C.Long-Term Incentive Plan**

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**SCISSORTAILENERGY, L.L.C.**

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**Grantof Options**

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**Grantee****:**

 

**Grant Date****:**

 

1.                                       **Grant of Options**.  Copano Energy, L.L.C. (the “Company”) herebygrants to you the right and option (“Options”) to purchase all or any part ofan aggregate of **Common**Units (“Units”) of Copano Energy, L.L.C. on the terms and conditions setforth herein and in the Copano Energy, L.L.C. Long-Term Incentive Plan (the “Plan”),which is incorporated herein by reference as a part of this Agreement.  This grant of Options does not include atandem grant of DERs.  In the event ofany conflict between the terms of this Agreement and the Plan, the Plan shallcontrol.  Capitalized terms used but notdefined in this Agreement shall have the meaning attributed to such terms underthe Plan, unless the context requires otherwise.

 

2.                                       **Purchase Price**.  The purchase price per Unit purchasedpursuant to the exercise of the Options shall be $     , subject to adjustment as provided in thePlan.

 

3.                                       **Vesting andExercise of Option**. Subject to the further provisions of this Agreement, the Options shallbecome vested and may be exercised in accordance with the following schedule,by written notice to the Company at its principal executive office addressed tothe attention of its Secretary (or such other officer or employee of theCompany as the Company may designate from time to time):

 

| **Anniversary of  Grant Date** | ** ** | **Cumulative  Vested Percentage** |
|--------------------------------|------------|-----------------------------------|
|                           |       |                              |
|                           |       |                              |

 

Notwithstanding the above schedule, but subject to the furtherprovisions hereof, upon the occurrence of the following events the Optionsshall vest and become exercisable as provided below:

 

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(a)                                  **Disability**.If your employment with the Company and its Affiliates terminates by reason ofa disability that entitles you to benefits under the Company’s or an Affiliate’slong-term disability plan, the Options shall become fully vested and, subjectto the further provisions of this Agreement, may be exercised at any timeduring the one-year period following such termination****by you or by your guardian or legal representative (or, ifyou die during such one-year period, by your estate or the person who acquiresthe Options by will or the laws of descent and distribution).

 

(b)                                 **Death**.  If you die while in the employ of the Companyor an Affiliate, the Options shall become fully vested and, subject to thefurther provisions of this Agreement, your estate (or the person who acquiresthe Options by will or the laws of descent and distribution) may exercise theOptions at any time during the one-year period following the date of your death**.**

 

(c)                                  **Termination ForCause**.  If your employmentwith the Company and its Affiliates is terminated by the Company or anAffiliate for Cause (as determined by the Company or an Affiliate in accordancewith its employment policies), the Options, whether or not then vested, shallimmediately cease to be exercisable upon such termination and shall becancelled automatically without payment**.**

 

**(d)****                                ****OtherTerminations**.  If youremployment with the Company and its Affiliates is terminated for any reason other than as provided in paragraphs3(a), (b) and (c) above, the Options, to the extent vested on thedate of your termination, may be exercised, subject to the further provisionsof this Agreement, at any time during the three month period following suchtermination by you or by your guardian or legal representative (or by yourestate or the person who acquires the Options by will or the laws of descentand distribution or otherwise by reason of your death if you die during suchperiod)**, but only as tothe vested number of Units, if any, that you were entitled to purchasehereunder as of the date your employment so terminates.**

 

(e)                                  **Copano OperationsCeases to be an Affiliate**. If (i) Copano Operations ceases to be an Affiliate, (ii) youare an employee of Copano Operations on that date, and (iii) youremployment is not transferred to the Company or an Affiliate, the Options, tothe extent vested on the date Copano Operations ceases to be an Affiliate, maybe exercised, subject to the further provisions of this Agreement, at any timeduring the three month period following such date by you or by your guardian orlegal representative (or by your estate or the person who acquires the Optionsby will or the laws of descent and distribution or otherwise by reason of yourdeath if you die during such period)**, but only as to the vested number of Units, if any,that you were entitled to purchase hereunder as of the date Copano Operationsceases to be an Affiliate.**

 

(f)                                    **Change of Control**.  The Options shall become fully vested upon aChange of Control.

 

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(g)                     **Change ofControl or Liquidation****of ScissorTail EnergyL.L.C. (“ScissorTail”)**.  TheOptions shall become fully vested upon a Change of Control of ScissorTail (asdefined below).

 

 “Change of Control ofScissorTail” shall mean (i) the consummation of a reorganization, merger,consolidation or other form of business transaction or series of businesstransactions, in each case, with respect to which Company or an Affiliate, whowas 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.

 

For purposes of this Agreement, “employment with the Company” shallinclude being an employee or a director of the Company or an Affiliate.

 

There is no minimum or maximum number of Units that must be purchasedupon exercise of the Options.  Instead,the Option may be exercised, at any time and from time to time, to purchase anynumber of Units that are then vested and exercisable according to theprovisions of this Agreement.

 

Notwithstanding any of the foregoing, the Options shall not beexercisable in any event after the expiration of 10 years from the Grant Date.

 

All Options that are not vested on your termination of employment asprovided above shall be automatically cancelled without payment upon yourtermination.

 

4.                                       **Payment ofExercise Price**.  Thepurchase price of the Units as to which the Options are exercised shall be paidin full at the time of exercise (a) in cash (including by check acceptableto the Company), (b) if the Units are readily tradable on a nationalsecurities market or exchange, through a “cashless broker exercise” procedure (a“cashless broker exercise” is not available for executive officers of theCompany except to the extent the exercise in such manner is approved in advanceby the Company) in accordance with a program established by the Company, (c) anyother method approved by the Company, including, with the consent of theCommittee, by withholding a number of Units that would otherwise be deliveredon exercise of the Option that have an aggregate Fair Market Value that doesnot exceed the aggregate exercise price for the Options being then exercised,or (d) any combination of the foregoing. No fraction of a Unit shall be transferred upon exercise of theOptions.  Unless and until a certificateor certificates representing such Units shall have been transferred by the Companyto you, you (or the person permitted to exercise the Options in the event ofyour death) shall not be or have

 

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any of the rights or privileges of aunitholder of the Company with respect to Units acquirable upon an exercise ofthe Options.

 

5.                                       **Withholding ofTax**.  To the extent that the exercise of an Optionresults in the receipt of compensation by you with respect to which the Companyor an Affiliate has a tax withholding obligation pursuant to applicable law,unless other arrangements have been made by you that are acceptable to theCompany or such Affiliate, which, with the consent of the Committee, mayinclude withholding a number of Units that would otherwise be delivered onexercise or vesting that have an aggregate Fair Market Value that does notexceed the amount of taxes to be withheld, you shall deliver to the Company orthe Affiliate such amount of money as the Company or the Affiliate may requireto meet its withholding obligations under such applicable law.  No delivery of Units shall be made pursuantto the exercise of an Option under this Agreement until you have paid or madearrangements approved by the Company or the Affiliate to satisfy in full theapplicable tax withholding requirements of the Company or Affiliate.

 

6.                                       **Restrictions**.By accepting this grant, you agree that the Units which you may acquire byexercising the Options will not be sold or otherwise disposed of in any mannerwhich would constitute a violation of any applicable federal or statesecurities laws.  You also agree that (i) thecertificates representing the Units purchased under the Options may bear suchlegend or legends as the Committee deems appropriate in order to assurecompliance with applicable securities laws, (ii) the Company may refuse toregister the transfer of the Units purchased under the Options on the transferrecords of the Company if such proposed transfer would in the opinion ofcounsel satisfactory to the Company constitute a violation of any applicablesecurities law, and (iii) the Company may give related instructions to itstransfer agent, if any, to stop registration of the transfer of the Unitspurchased under the Options.

 

7.                                       **Limitations Upon Transfer**.  All rights under this Agreement shall belongto you alone and may not be transferred, assigned, pledged, or hypothecated byyou in any way (whether by operation of law or otherwise), other than by willor the laws of descent and distribution and shall not be subject to execution,attachment, or similar process.  Upon anyattempt by you to transfer, assign, pledge, hypothecate, or otherwise disposeof such rights contrary to the provisions in this Agreement or the Plan, orupon the levy of any attachment or similar process upon such rights, such rightsshall immediately become null and void.

 

8.                                       **Insider Trading**.  The terms of the Company’s Insider TradingPolicy are incorporated herein by reference. The timing of the delivery of any Units pursuant to an Option exerciseshall be subject to and comply with such policy.

 

9.                                       **Binding Effect**.  This Agreement shall be binding upon andinure to the benefit of any successors to the Company and all persons lawfullyclaiming under you.

 

10.                                 **Entire Agreement****.** This Agreement constitutes the entire agreement of the parties withregard to the subject matter hereof, and contains all the covenants, promises,representations, warranties and agreements between the parties with respect tothe Option

 

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granted hereby.  Without limiting the scope of the precedingsentence, all prior understandings and agreements, if any, among the partieshereto relating to the subject matter hereof are hereby null and void and of nofurther force and effect.

 

11.           **Modifications**.  Except as provided below, any modification ofthis Agreement shall be effective only if it is in writing and signed by bothyou and an authorized officer of the Company. Notwithstanding anything in the Plan or this Agreement to the contrary,if the Committee determines that the terms of this grant do not, in whole or inpart, satisfy the requirements of new Section 409A of the Internal RevenueCode, the Committee, in its sole discretion, may unilaterally modify thisAgreement in such manner as it deems appropriate to comply with such section andany regulations or guidance issued thereunder.

 

**12.****                                ****Governing Law**.  **This Agreement shall be governed by, and construedin accordance with, the laws of the State of Texas, without regard to conflictsof laws principles thereof.**

 

**IN WITNESS WHEREOF**, the Company hascaused this Agreement to be executed by its duly authorized officer, effectiveas of the day and year first above written.

 
|   | **Copano  Energy, L.L.C.** |
|--------|----------------------------|
|   |                       |
|   |                       |
|   | **By:**                    |   |   |
|   | **Name:**                  |
|   | **Title:**                 |

 

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