**Exhibit 10.38**

 

**Copano EnergyLong-Term Incentive Plan**

 

**ScissorTailEnergy, L.L.C.**

 

**Grant ofRestricted Units**

 

**Grantee****:**

 

**Grant Date****:**

 

1.                                       **Grantof Restricted Units**.  Copano Energy,L.L.C. (the “Company”) hereby grants to you Restricted Units under the CopanoEnergy Long-Term Incentive Plan (the “Plan”) on the terms and conditions setforth herein and in the Plan, which is incorporated herein by reference as apart of this Agreement. In the event of any conflict between the terms of thisAgreement and the Plan, the Plan shall control. Capitalized terms used in thisAgreement but not defined herein shall have the meanings ascribed to such termsunder the Plan, unless the context requires otherwise.

 

2.                                       **RegularVesting****.**** **Except as otherwise provided inParagraph 3 below, the Restricted Units granted hereunder and any distributionsmade by the Company with respect to the Restricted Units shall vest on theanniversary of the above Grant Date as follows:

 

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

 

Distributions on a Restricted Unit shall beheld by the Company without interest until the Restricted Unit with respect towhich the distribution was made becomes vested or is forfeited and then paid orforfeited, as the case may be.

 

3.                                       **EventsOccurring Prior to Regular Vesting**.

 

(a)                      **Deathor Disability**. If, prior to becoming fully vested in the Restricted Units herebygranted, you cease to be an employee of the Company or an Affiliate as a resultof your death or a disability that entitles you to benefits under the Company’sor an Affiliate’s long-term disability plan, the Restricted Units then held byyou automatically will become fully vested upon such termination.

 

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(b)                     **Terminationby the Company other than for Cause**.  If your employment is terminated by theCompany or an Affiliate for any reason other than “Cause,” as determined by theCompany in accordance with its employment policies, the Restricted Units thenheld by you automatically will become fully vested upon such termination.

 

(c)                      **Other Terminations**.  Except as provided in Paragraph 2 hereof, ifyour employment with the Company or an Affiliate terminates for any reasonother than as provided in paragraphs 3(a) and (b) above, all unvestedRestricted Units then held by you automatically shall be forfeited withoutpayment upon such termination.

 

(d)                     **Copano Operations Ceases to bean Affiliate**.  If (i) Copano Operations ceases to be anAffiliate, (ii) you are an employee of Copano Operations on that date, and(iii) your employment is not transferred to the Company or an Affiliate,the Restricted Units then held by you automatically will become fully vested onthe date Copano Operations ceases to be an Affiliate**.**

 

(e)                      **Change of Control**.  All outstanding Restricted Units held by youautomatically shall become fully vested upon a Change of Control.

 

(f)                        **Change of Control or Liquidation****ofScissorTail Energy L.L.C. (“ScissorTail”)**. All outstanding Restricted Units held by shall become fully vested upona Change of Control of ScissorTail (as defined below).

 

“Change of Control of ScissorTail” shall mean (i) the consummationof a reorganization, merger, consolidation or other form of businesstransaction or series of business transactions, in each case, with respect towhich Company or an Affiliate, who was the owner of all of the outstandingmembership 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) thesale, lease or disposition (in one or a series of related transactions) byCompany or an Affiliate of all or substantially all of ScissorTail’s assets toany person or entity other than Company or an Affiliate; or (iii) the approvalby the Board of Directors of Company or ScissorTail of a complete orsubstantially complete liquidation or dissolution of ScissorTail.

 

For purposes of this Agreement, “employmentwith the Company” shall include being an employee or a director of the Companyor an Affiliate.

 

4.                                       **UnitCertificates**. Acertificate evidencing the Restricted Units shall be issued in your name,pursuant to which you shall have all voting rights.  The certificate shall bear the followinglegend:

 

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The Units evidenced by this certificate havebeen issued pursuant to a grant of restricted units, a copy of which isattached hereto and incorporated herein, made by the Company to the registeredholder of the Units, and are subject to forfeiture to the Company under certaincircumstances described in such grant. The sale, assignment, pledge or other transfer of the Units evidenced bythis certificate is prohibited under the terms and conditions of suchagreement, and such Units may not be sold, assigned, pledged or otherwisetransferred except as provided in such grant.

 

The Company maycause the certificate to be delivered upon issuance to the Secretary of theCompany as a depository for safekeeping until the forfeiture occurs or therestrictions lapse pursuant to the terms of this Agreement.  Upon request of the Company, you shalldeliver to the Company a unit power, endorsed in blank, relating to theRestricted Units then subject to the restrictions.  Upon the lapse of the restrictions withoutforfeiture, the Company shall cause a certificate or certificates to be issuedwithout legend in your name in exchange for the certificate evidencing theRestricted Units.

 

5.                                       **LimitationsUpon Transfer**. All rights under this Agreement shall belong to you alone and may not betransferred, assigned, pledged, or hypothecated by you in any way (whether byoperation of law or otherwise), other than by will or the laws of descent anddistribution and shall not be subject to execution, attachment, or similarprocess.  Upon any attempt by you totransfer, assign, pledge, hypothecate, or otherwise dispose of such rightscontrary to the provisions in this Agreement or the Plan, or upon the levy ofany attachment or similar process upon such rights, such rights shallimmediately become null and void.

 

6.                                       **Restrictions**. By accepting this grant, youagree that any Units which you may acquire upon vesting of this award will notbe sold or otherwise disposed of in any manner which would constitute a violationof any applicable federal or state securities laws.  You also agree that (i) the certificatesrepresenting the Units acquired under this award may bear such legend orlegends as the Committee deems appropriate in order to assure compliance withapplicable securities laws, (ii) the Company may refuse to register thetransfer of the Units acquired under this award on the transfer records of theCompany if such proposed transfer would in the opinion of counsel satisfactoryto the Company constitute a violation of any applicable securities law, and (iii) theCompany may give related instructions to its transfer agent, if any, to stopregistration of the transfer of the Units to be acquired under this award.

 

7.                                       **Withholdingof Tax**.  To  the extent that the grant or vesting of a Restricted Unit results in thereceipt of compensation by you with respect to which the Company or anAffiliate has a tax withholding obligation pursuant to applicable law, unlessother arrangements have been made by you that are acceptable to the Company orsuch Affiliate, you shall deliver to the Company or the Affiliate such amountof money as the Company or the Affiliate may require to meet its withholdingobligations under such applicable law. No issuance of an unrestricted Common Unit shall be made pursuant tothis Agreement until

 

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youhave paid or made arrangements approved by the Company or the Affiliate tosatisfy in full the applicable tax withholding requirements of the Company orAffiliate.

 

8.                                       **InsiderTrading Policy**.   The terms of the Company’s Insider Trading Policy are incorporatedherein by reference.

 

9.                                       **BindingEffect**.  This Agreementshall be binding upon and inure to the benefit of any successor or successorsof the Company and upon any person lawfully claiming 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 Restricted Units granted hereby. Without limiting the scope of the preceding sentence, all priorunderstandings and agreements, if any, among the parties hereto relating to thesubject matter hereof are hereby null and void and of no further force andeffect.  Any modification of thisAgreement shall be effective only if it is in writing and signed by both youand an authorized officer of the Company.

 

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.****                                ****GoverningLaw**.  **This grant shall begoverned by, and construed in accordance with, the laws of the State of Texas,without regard to conflicts of laws principles thereof.**

 

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

 

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