##### 



Copano Energy, L.L.C.
Long-Term Incentive Plan
 Grant of Phantom Units
With DERs
 Grantee:Grant Date:
    
    , 200
 1.
    
    Grant of Phantom Units With DERs. Copano Energy, L.L.C. (the Company) hereby
grants to you ___Phantom Units under the Copano Energy, L.L.C. Long-Term Incentive Plan, as
amended (the Plan) on the terms and conditions set forth herein and in the Plan, which is
incorporated herein by reference as a part of this Agreement. This grant of Phantom Units
includes a tandem Distribution Equivalent Right (DER) grant with respect to each Phantom
Unit. The Company shall establish a DER bookkeeping account for you with respect to each
Phantom Unit granted hereunder that shall be credited with an amount equal to any cash
distributions made by the Company on a Unit during the period such Phantom Unit is
outstanding. In the event of any conflict between the terms of this Agreement and the Plan,
the Plan shall control. Capitalized terms used in this Agreement but not defined herein shall
have the meanings ascribed to such terms under the Plan, unless the context requires
otherwise.2.
    
    Regular Vesting. Except as otherwise provided in Paragraph 3 below, the Phantom
Units granted hereunder shall become vested in accordance with the following schedule:
 CumulativeVesting Dates
    
    Vested Percentage
  3.
    
    Events Occurring Prior to Regular Vesting.
 (a)
    
    Death, Disability or Retirement. If, prior to becoming fully vested in
the Phantom Units hereby granted, you cease to be an employee of the Company or




---



##### 



an Affiliate as a result of your death, a disability that entitles you to benefits
under the Companys or an Affiliates long-term disability plan or your retirement
on or after reaching age 70, the Phantom Units then held by you automatically will
become fully vested on the Designated Vesting Date (as defined below) that coincides
with or immediately follows such termination.
 (b)
    
    Terminations. If your employment with the Company or an Affiliate
terminates for any reason other than as provided in Paragraph 3(a) above, all unvested
Phantom Units then held by you automatically shall be forfeited.(c)
    
    Copano Operations Ceases to be an Affiliate. If (i) Copano Operations
ceases to be an Affiliate, (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
Phantom Units then held by you automatically will become fully vested on the Designated
Vesting Date (as defined below) that coincides with or immediately follows the date
Copano Operations ceases to be an Affiliate.(d)
    
    Change of Control. All outstanding Phantom Units held by you
automatically shall become fully vested upon a Change of Control.
  4.
    
    Payment.As soon as administratively practicable after the vesting of a Phantom
Unit, but not later than five business days thereafter, you shall be paid a Unit; provided,
however, the Committee may, in its sole discretion, direct that a cash payment be made to you
in lieu of the delivery of such Unit. Any such cash payment shall be equal to the Fair Market
Value of the Unit on the vesting date. If more than one Phantom Unit vests at the same time,
the Committee may elect to pay such vested Award in Units, cash or any combination thereof, in
its discretion. In addition, upon payment of a vested Phantom Unit, you shall be paid in cash
the amount of all tandem DERs credited to your account with respect to such vested Phantom
Unit.
 5.
    
    Limitations Upon Transfer. All rights under this Agreement shall belong to you alone
and may not be transferred, assigned, pledged, or hypothecated by you in any way (whether by
operation of law or otherwise), other than by will or the laws of descent and distribution and
shall not be subject to execution, attachment, or similar process. Upon any attempt by you to
transfer, assign, pledge, hypothecate, or otherwise dispose of such rights contrary to the
provisions in this Agreement or the Plan, or upon the levy of any attachment or similar
process upon such rights, such rights shall immediately become null and void.
 6.
    
    Restrictions. By accepting this grant, you agree that any Units which you may acquire
upon vesting of this award will not be sold or otherwise disposed of in any manner which would
constitute a violation of any applicable federal or state securities laws. You also
 -2-




---



##### 



agree that (i) any certificates representing the Units acquired under this award may bear
such legend or legends as the Committee deems appropriate in order to assure compliance with
applicable securities laws, (ii) the Company may refuse to register the transfer of the
Units acquired under this award on the transfer records of the Company if such proposed
transfer would in the opinion of counsel satisfactory to the Company constitute a violation
of any applicable securities law, and (iii) the Company may give related instructions to its
transfer agent, if any, to stop registration of the transfer of the Units to be acquired
under this award.
 7.
    
    Withholding of Tax. To the extent that the grant, vesting or payment of a Phantom
Unit results in the receipt of compensation by you with respect to which the Company or an
Affiliate has a tax withholding obligation pursuant to applicable law, unless other
arrangements have been made by you that are acceptable to the Company or such Affiliate, you
shall deliver to the Company or the Affiliate such amount of money as the Company or the
Affiliate may require to meet its withholding obligations under such applicable law. No
payment of a vested Phantom Unit or DER shall be made pursuant to this Agreement until you
have paid or made arrangements approved by the Company or the Affiliate to satisfy in full the
applicable tax withholding requirements of the Company or Affiliate with respect to such
event.
 8.
    
    Insider Trading Policy. The terms of the Companys Insider Trading Policy are
incorporated herein by reference.
 9.
    
    Binding Effect. This Agreement shall be binding upon and inure to the benefit of any
successor or successors of the Company and upon any person lawfully claiming under you.
 10.
    
    Entire Agreement.This Agreement constitutes the entire agreement of the parties
with regard to the subject matter hereof, and contains all the covenants, promises,
representations, warranties and agreements between the parties with respect to the Phantom
Units granted hereby. Without limiting the scope of the preceding sentence, all prior
understandings and agreements, if any, among the parties hereto relating to the subject matter
hereof are hereby null and void and of no further force and effect.
 11.
    
    Modifications. Except as provided below, any modification of this Agreement shall be
effective only if it is in writing and signed by both you and an authorized officer of the
Company. Notwithstanding anything in the Plan or this Agreement to the contrary, (a) if the
Committee determines that the terms of this grant do not, in whole or in part, satisfy the
requirements of new Section 409A of the Internal Revenue Code, the Committee, in its sole
discretion, may unilaterally modify this Agreement in such manner as it deems appropriate to
comply with such section and any regulations or guidance issued thereunder, and (b) the
Committee, in its sole discretion, may unilaterally modify this Agreement in any manner that
does not materially reduce your benefit.
 12.
    
    Governing Law. This grant shall be governed 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: -3-