Document:

Exhibit 10.1

 

INDEMNIFICATION
AGREEMENT

 

THIS INDEMNIFICATION AGREEMENT (this “Agreement”) is effective as of August 24,
2005 by and between Copano Energy, L.L.C., a Delaware limited liability company
(the “Company”), and                                         (“Indemnitee”).

 

PRELIMINARY
STATEMENT

 

Highly competent persons
have become more reluctant to serve corporations or other business enterprises
as officers, directors or in other capacities unless they are provided with
adequate protection through insurance or adequate indemnification against
inordinate risks of claims and actions against them arising out of their
service to and activities on behalf of such enterprises.

 

The Board of Directors of
the Company (the “Board”) has determined that, in order to attract and retain
qualified individuals, the Company will attempt to maintain on an ongoing
basis, at its sole expense, liability insurance to protect persons serving the
Company and its subsidiaries from certain liabilities.  Although the furnishing of that insurance has
been a customary and widespread practice among United States-based corporations
and other business enterprises, the Board believes that, given current market
conditions and trends, insurance may be available to it in the future only at
higher premiums and with more exclusions. 
At the same time, directors, officers and other persons in service to
corporations or business enterprises increasingly are being subjected to
expensive and time-consuming litigation, relating to, among other matters,
matters that traditionally would have been brought only against the corporation
or business enterprise itself.  The
uncertainties relating to liability insurance and to indemnification have
increased the difficulty of attracting and retaining those persons, and the
Board has determined that (i) this increased difficulty is detrimental to
the best interests of the Company’s unitholders and that the Company should act
to assure those persons that there will be increased certainty of such
protection in the future and (ii) it is reasonable, prudent and necessary
for the Company contractually to obligate itself to indemnify those persons to
the fullest extent applicable law permits so that they will serve or continue
to serve the Company free from undue concern that they will not be so
indemnified.

 

As permitted by the
Delaware Limited Liability Company Act (the “Delaware Act”), the Second Amended
and Restated Limited Liability Company Agreement of the Company (the “LLC
Agreement”) requires indemnification of the officers and directors of the
Company in certain circumstances.  The LLC
Agreement expressly provides that the indemnification provisions set forth
therein are not exclusive, and thereby contemplate that contracts may be
entered into between the Company and members of the board of directors,
officers and other persons with respect to indemnification.

 

This Agreement is a
supplement to and in furtherance of the LLC Agreement of the Company and any
resolutions adopted pursuant thereto, and shall not be deemed a substitute
therefor, nor to diminish or abrogate any rights of Indemnitee thereunder.

 

 

The Indemnitee does not
regard the protection available under the LLC Agreement and insurance as
adequate in the present circumstances, and may not be willing to continue to serve
as an officer or director without adequate protection, and the Company desires
Indemnitee to serve in such capacity. 
Indemnitee is willing to serve, continue to serve and to take on
additional service for or on behalf of the Company on the condition that he be
so indemnified.

 

NOW, THEREFORE, in
consideration of the premises and the covenants herein, the parties to this
Agreement agree as follows:

 

Section 1.               Services
by Indemnitee.  Indemnitee
agrees to serve as an officer or director of the Company or its subsidiaries and,
as mutually agreed by Indemnitee and the Company, as a director, officer, tax
matters partner, employee, partner, manager, fiduciary, trustee or agent of
other corporations, limited liability companies, partnerships, joint ventures,
trusts or other enterprises (including, without limitation, employee benefit
plans) (each, an “Enterprise”). 
Indemnitee may at any time and for any reason resign from any such
position (subject to any other contractual obligation or any obligation
applicable law imposes), in which event the Company will have no obligation
under this Agreement to continue Indemnitee in that position.  This Agreement is not and is not to be
construed as an employment contract between the Company (or any of its
subsidiaries) and Indemnitee.  Indemnitee
specifically acknowledges that Indemnitee’s employment with the Company (or any
of its subsidiaries), if any, is at will, and the Indemnitee may be discharged
at any time for any reason, with or without cause, except as may be otherwise
provided in any written employment contract between Indemnitee and the Company
(or any of its subsidiaries), other applicable formal severance policies duly
adopted by the Board or, with respect to service as a director of the Company,
by the Company’s Certificate of Formation, LLC Agreement and the Delaware Act.  The foregoing notwithstanding, subject to Section 12,
this Agreement will continue in force after Indemnitee has ceased to serve as
an officer or director of the Company or its subsidiaries and no longer serves
at the request of the Company as a director, officer, tax matters partner,
employee, partner, manager, fiduciary, trustee or agent of any other
Enterprise.

 

Section 2.               Indemnification—General.  The Company will indemnify and advance Expenses
(as hereinafter defined) to Indemnitee (i) as this Agreement permits and (ii) (subject
to the provisions hereof) to the fullest extent applicable law in effect on the
date hereof and as amended from time to time permits.  The rights the preceding sentence provides to
Indemnitee will include, but will not be limited to, the rights the other
Sections hereof set forth.

 

Section 3.               Proceedings
Other Than by or in the Right of the Company.  Indemnitee will be entitled to the rights of
indemnification this Section 3 provides if, by reason of his Corporate
Status, he was, is, or is threatened to be made, a party to or a participant in
any threatened, pending or completed Proceeding (as hereinafter defined), other
than a Proceeding by or in the right of the Company.  Pursuant to this Section 3, the Company
will indemnify Indemnitee against, and will hold Indemnitee harmless from and
in respect of, all Expenses, judgments, penalties, fines (including excise
taxes) and amounts paid in settlement (including all interest, assessments and
other charges paid or payable in connection with or in respect of those
Expenses) judgments, fines, penalties or amounts paid in settlement) actually
and reasonably incurred by him or on his behalf in connection with that
Proceeding or any claim, issue or matter therein, if he acted in good faith and
in a manner he reasonably believed to be in or not opposed

 

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to the best
interests of the Company and, with respect to any criminal Proceeding, had no
reasonable cause to believe his conduct was unlawful.

 

Section 4.               Proceedings
by or in the Right of the Company. 
Indemnitee will be entitled to the rights of indemnification this Section 4
provides if, by reason of his Corporate Status, he was, is, or is threatened to
be made, a party to or a participant (as a witness or otherwise) in any
threatened, pending or completed Proceeding brought by or in the right of the
Company to procure a judgment in its favor. 
Pursuant to this Section 4, the Company will indemnify Indemnitee
against, and will hold Indemnitee harmless from and in respect of, all Expenses
actually and reasonably incurred by him or on his behalf in connection with
that Proceeding if he acted in good faith and in a manner he reasonably
believed to be in or not opposed to the best interests of the Company;
provided, however, that no indemnification against those Expenses will be made
in respect of any claim, issue or matter in that Proceeding as to which Indemnitee
has been adjudged to be liable to the Company unless and to the extent that the
Court of Chancery, or the court in which that Proceeding has been brought or is
pending determines that despite the adjudication of liability but in view of
all the circumstances of the case, Indemnitee is fairly and reasonably entitled
to indemnification.

 

Section 5.               Indemnification
for Expenses of a Party Who Is Wholly or Partly Successful.  Notwithstanding any other provision hereof,
to the extent that Indemnitee is, by reason of his Corporate Status, a party to
(or a participant in) and is successful, on the merits or otherwise, in defense
of any Proceeding, the Company will indemnify him against all Expenses actually
and reasonably incurred by him or on his behalf in connection therewith.  If Indemnitee is not wholly successful in
defense of any Proceeding but is successful, on the merits or otherwise, as to
one or more but less than all claims, issues or matters in that Proceeding, the
Company will indemnify Indemnitee against all Expenses actually and reasonably
incurred by him or on his behalf in connection with each successfully resolved
claim, issue or matter.  For purposes of
this Section 5 and without limitation, the termination of any claim, issue
or matter in any Proceeding by dismissal, with or without prejudice, will be
deemed to be a successful result as to that claim, issue or matter.

 

Section 6.               Indemnification
for Expenses as a Witness. 
Notwithstanding any other provision hereof, to the extent that Indemnitee
is, by reason of his Corporate Status, a witness in any Proceeding to which
Indemnitee is not a party, the Company will indemnify him against all Expenses
actually and reasonably incurred by him or on his behalf in connection
therewith.

 

Section 7.               Advancement
of Expenses.  The Company will
advance all reasonable Expenses incurred by or on behalf of Indemnitee in
connection with any Proceeding within 10 days after the Company receives a
statement or statements from Indemnitee requesting such advance or advances
from time to time, whether prior to or after final disposition of that
Proceeding.  Each such statement must
reasonably evidence the Expenses incurred by or on behalf of Indemnitee and
include or be preceded or accompanied by an undertaking by or on behalf of
Indemnitee to repay any Expenses advanced if it ultimately is determined by
final judicial decision from which there is no further right to appeal that
Indemnitee is not entitled to be indemnified by the Company against those
Expenses.  The Company will accept any
such undertaking without reference to the financial ability of Indemnitee to
make repayment, and without regard to Indemnitee’s ultimate entitlement to
indemnification under other provisions of this Agreement.

 

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Section 8.               Procedure
for Determination of Entitlement to Indemnification.  (a)  Within sixty (60) days after the actual receipt by
Indemnitee of notice that he or she is a party to or a participant (as a
witness or otherwise) in any Proceeding, Indemnitee shall submit to the Company
a written notice identifying the Proceeding. 
The omission by the Indemnitee to notify the Company will not relieve
the Company from any liability which it may have to Indemnitee (i) otherwise
than under this Agreement, and (ii) under this Agreement only to the
extent the Company can establish that such omission to notify resulted in
actual prejudice to the Company.

 

(b)           Indemnitee shall thereafter deliver to the Company a
written application to indemnify Indemnitee in accordance with this Agreement.  Such application(s) may be delivered from
time to time and at such time(s) as Indemnitee deems appropriate in his or her
sole discretion.  Following such a
written application for indemnification by Indemnitee, the Indemnitee’s
entitlement to indemnification shall be determined according to Section 8(c) of
this Agreement. 

 

(c)           On written request by Indemnitee for indemnification
pursuant to Section 8(b), a determination, if applicable law requires, with
respect to Indemnitee’s entitlement thereto will be made in the specific case: (i) by
a majority vote of the Disinterested Directors, even though less than a quorum
of the Board, or (ii) if so requested by the Indemnitee in his or her sole
discretion by an Independent Counsel in a written opinion to the Board, a copy
of which will be delivered to Indemnitee. 
If it is so determined that Indemnitee is entitled to indemnification
hereunder, the Company will: (i) within 10 days after that determination,
pay to Indemnitee all amounts theretofore incurred by or on behalf of
Indemnitee in respect of which Indemnitee is entitled to that indemnification
by reason of that determination; and (ii) thereafter on written request by
Indemnitee, pay to Indemnitee within 10 days after that request such additional
amounts theretofore incurred by or on behalf of Indemnitee in respect of which
Indemnitee is entitled to that indemnification by reason of that
determination.  Indemnitee will cooperate
with the person, persons or entity making the determination with respect to
Indemnitee’s entitlement to indemnification under this Agreement, including
providing to such person, persons or entity on reasonable advance request any
documentation or information which is (i) not privileged or otherwise
protected from disclosure, (ii) reasonably available to Indemnitee and (iii) reasonably
necessary to that determination.  The
Company will bear all costs and expenses (including attorneys’ fees and
disbursements) Indemnitee incurs in so cooperating (irrespective of the
determination as to Indemnitee’s entitlement to indemnification) and hereby
indemnifies and agrees to bold Indemnitee harmless therefrom.

 

(d)           If an Independent Counsel is to make the determination of
entitlement to indemnification pursuant to Section 8(c), the Independent
Counsel will be selected as this Section 8(d) provides.  If a Change of Control has not occurred
within two years prior to the date of Indemnitee’s written request for
indemnification pursuant to Section 8(a), the Board will select the
Independent Counsel, and the Company will give written notice to Indemnitee
advising him of the identity of the Independent Counsel so selected.  If a Change of Control has occurred within
two years prior to the date of that written request, Indemnitee will select the
Independent Counsel (unless Indemnitee requests that the Board make the
selection, in which event the preceding sentence will apply), and Indemnitee
will give written notice to the Company advising it of the identity of the
Independent Counsel so selected.  In
either event, Indemnitee or the Company, as the case may be, may, within 10
days after the written notice of selection has been given deliver to the
Company or to Indemnitee, as the case may be, a written objection to the

 

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selection,
provided, however, that any such objection may be asserted only on the ground
that the Independent Counsel so selected is not an “Independent Counsel” as Section 18
defines that term, and the objection must set forth with particularity the
factual basis for that assertion. Absent a proper and timely objection, the
person so selected shall act as Independent Counsel.  If any such written objection is so made and
substantiated, the Independent Counsel so selected may not serve as Independent
Counsel unless and until that objection is withdrawn or a court of competent
jurisdiction has determined that objection is without merit.  If (i) an Independent Counsel is to make
the determination of entitlement to indemnification pursuant to Section 8(c) and
(ii) within 20 days after submission by Indemnitee of a written request
for indemnification pursuant to Section 8(a), no Independent Counsel has
been selected and not objected to, either the Company or Indemnitee may
petition the Court of Chancery or another court of competent jurisdiction for
resolution of any objection that has been made by the Company or Indemnitee to
the other’s selection of Independent Counsel and/or for the appointment as
Independent Counsel of a person selected by the petitioned court or by such
other person as the petitioned court designates, and the person with respect to
whom all objections are so resolved or the person so appointed will act as the
Independent Counsel under Section 8(c). 
The Company will pay any and all reasonable fees and expenses the Independent
Counsel incurs in connection with acting pursuant to Section 8(c), and the
Company will pay all reasonable fees and expenses incident to the procedures
this Section 8(d) sets forth, regardless of the manner in which the
Independent Counsel is selected or appointed. 
If (i) the Independent Counsel selected or appointed pursuant to
this Section 8(d) does not make any determination respecting
Indemnitee’s entitlement to indemnification hereunder within 45 days after the
Company receives a written request therefor and (ii) any judicial
proceeding or arbitration pursuant to Section 10(a) is then
commenced, that Independent Counsel will be discharged and relieved of any
further responsibility in such capacity (subject to the applicable standards of
professional conduct then prevailing).

 

Section 9.               Presumptions
and Effect of Certain Proceedings. 
(a) In making a determination with respect to entitlement to
indemnification hereunder, the person, persons or entity making that
determination must presume that Indemnitee is entitled to indemnification
hereunder if Indemnitee has submitted a request for indemnification in
accordance with Section 8(a), and the Company will have the burden of
proof to overcome that presumption in connection with the making by any person,
persons or entity of any determination contrary to that presumption.  Neither the failure of the Company (including
by its directors or independent legal counsel) to have made a determination
prior to the commencement of any action pursuant to this Agreement that
indemnification is proper in the circumstances because Indemnitee has met the
applicable standard of conduct, nor an actual determination by the Company
(including by its directors or independent legal counsel) that Indemnitee has
not met such applicable standard of conduct, shall be a defense to the action
or create a presumption that Indemnitee has not met the applicable standard of
conduct.

 

(b)           The termination of any Proceeding or of any claim, issue
or matter therein, by judgment, order, settlement or conviction, or on a plea
of nolo contendere or its equivalent, will not (except as this Agreement
otherwise expressly provides) of itself adversely affect the right of
Indemnitee to indemnification hereunder or create a presumption that Indemnitee
did not act in good faith and in a manner he reasonably believed to be in or
not opposed to the best interests of the Company or, with respect to any criminal
proceeding, that Indemnitee had reasonable cause to believe that his conduct
was unlawful.

 

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(c)           Any action Indemnitee takes or omits to take in connection
with any employee benefit plan will if taken or omitted in good faith by
Indemnitee and in a manner Indemnitee reasonably believed to be in the interest
of the participants in or beneficiaries of that plan, be deemed to have been
taken or omitted in a manner that is “in, or not opposed to, the best interests
of the Company” for all purposes hereof.

 

(d)           Reliance as Safe Harbor.  For purposes of any determination of good
faith, Indemnitee shall be deemed to have acted in good faith if Indemnitee’s
action is based on the records or books of account of the Enterprise, including
financial statements, or on information supplied to Indemnitee by the officers
of the Enterprise in the course of their duties, or on the advice of legal
counsel for the Enterprise or on information or records given or reports made to
the Enterprise by an independent certified public accountant or by an appraiser
or other expert selected by the Enterprise. 
The provisions of this Section 9(d) shall not be deemed to be exclusive
or to limit in any way the other circumstances in which the Indemnitee may be
deemed or found to have met the applicable standard of conduct set forth in
this Agreement.

 

(e)           Actions of Others. 
The knowledge and/or actions, or failure to act, of any other director,
officer, tax matters partner, employee, partner, manager, fiduciary, trustee or
agent of the Enterprise shall not be imputed to Indemnitee for purposes of
determining the right to indemnification under this Agreement.

 

Section 10.             Remedies
of Indemnitee.  (a) In
the event that (i) a determination is made pursuant to Section 8 that
Indemnitee is not entitled to indemnification hereunder, (ii) advancement
of Expenses is not timely made pursuant to Section 7, (iii) no
determination as to Indemnitee’s entitlement to indemnification shall have been
made pursuant to Section 8(c) of this Agreement hereunder, or that
determination shall not have been made within 45 days after receipt by the
Company of the request for that indemnification, (iv) payment of
indemnification is not made pursuant to Section 5 or 6 within 10 days
after receipt by the Company of a written request therefor or (v) payment
of indemnification pursuant to Section 8(c) is not made timely,
Indemnitee will be entitled to an adjudication from the Court of Chancery of
his entitlement to that indemnification or advancement of Expenses.  Alternatively, Indemnitee, at his option, may
seek an award in arbitration to be conducted by a single arbitrator pursuant to
the Commercial Arbitration Rules of the American Arbitration
Association.  Indemnitee must commence
any such proceeding seeking at adjudication or an award in arbitration within
180 days following the date on which Indemnitee first has the right to commence
that proceeding pursuant to this Section 10(a); provided, however, that
this sentence will not apply in respect of a proceeding brought by Indemnitee
to enforce his rights under Section 5.

 

(b)           If a determination has been made pursuant to Section 8(c) that
Indemnitee is not entitled to indemnification hereunder, any judicial
proceeding or arbitration commenced pursuant to this Section 10 will be
conducted in all respects as a de novo trial, or arbitration, on the merits and
Indemnitee will not be prejudiced by reason of that adverse determination.  In any judicial proceeding or arbitration
commenced pursuant to this Section 10, the Company will have the burden of
proving that Indemnitee is not entitled to indemnification or advancement of
Expenses, as the case may be and the Company may not refer to or introduce into
evidence any determination pursuant to Section 2(c) of this Agreement
adverse to Indemnitee for any purpose.  If
Indemnitee commences a judicial proceeding or arbitration pursuant to this Section 10,
Indemnitee shall not be required to reimburse the Company for any advances
pursuant to Section 7

 

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until a final
determination is made with respect to Indemnitee’s entitlement to
indemnification (as to which all rights of appeal have been exhausted or
lapsed).

 

(c)           If a determination has been made pursuant to Section 8(c) that
Indemnitee is entitled to indemnification hereunder, the Company will be bound
by that determination in any judicial proceeding or arbitration commenced
pursuant to this Section 10, absent (i) a misstatement by Indemnitee
of a material fact, or an omission by Indemnitee of a material fact necessary
to make Indemnitee’s statements not materially misleading in connection with
the request for indemnification, or (ii) a prohibition of such
indemnification under applicable law.

 

(d)           If Indemnitee, pursuant to this Section 10, seeks a
judicial adjudication of or an award in arbitration to enforce his rights
under, or to recover damages for breach of, this Agreement, Indemnitee will be
entitled to recover from the Company, and will be indemnified by the Company
against, any and all expenses (of the types described in the definition of
Expenses in Section 18) actually and reasonably incurred by him in that
judicial adjudication or arbitration, but only if he prevails therein.  If it is determined in that judicial
adjudication or arbitration that Indemnitee is entitled to receive part of, but
not all, the indemnification or advancement of expenses sought, the Expenses
incurred by Indemnitee in connection with that judicial adjudication or
arbitration will be appropriately prorated between those in respect of which
this Section 10(d) entitles Indemnitee to indemnification and those
Indemnitee must bear.

 

(e)           The Company shall be precluded from asserting in any
judicial proceeding or arbitration commenced pursuant to this Section 10
that the procedures and presumptions of this Agreement are not valid, binding
and enforceable and shall stipulate in any such court or before any such
arbitrator that the Company is bound by all the provisions of this Agreement.

 

(f)            The Company shall indemnify Indemnitee to the fullest
extent permitted by law against all Expenses and, if requested by Indemnitee,
shall (within ten (10) days after the Company’s receipt of such written
request) advance such Expenses to Indemnitee, which are incurred by Indemnitee
in connection with any judicial proceeding or arbitration brought by Indemnitee
for (i) indemnification or advances of Expenses by the Company under this
Agreement or any other agreement or provision of the Company’s Certificate of Formation
or LLC Agreement now or hereafter in effect or (ii) recovery or advances
under any insurance policy maintained by any person for the benefit of
Indemnitee, regardless of whether Indemnitee ultimately is determined to be
entitled to such indemnification, advance or insurance recovery, as the case
may be.

 

Section 11.             Non-exclusivity;
Survival of Rights; Insurance; Subrogation.  (a) The rights to indemnification and
advancement of Expenses this Agreement provides are not and will not be deemed
exclusive of any other rights to which Indemnitee may at any time be entitled
under applicable law, the Company’s Certificate of Formation, the LLC Agreement,
any other agreement, a vote of unitholders or a resolution of directors, or
otherwise.  No amendment, alteration or
termination of this Agreement or any provision hereof will limit or restrict
any right of Indemnitee hereunder in respect of any action Indemnitee has taken
or omitted in his Corporate Status prior to that amendment, alteration or
termination.  To the extent that a change
in Delaware law (whether by statute or judicial decision) permits greater
indemnification by agreement than would be afforded currently under this Agreement,
it is the intent and agreement of the parties hereto that Indemnitee will enjoy
by this Agreement the greater benefits that

 

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change
affords.  No right or remedy herein
conferred is intended to be exclusive of any other right or remedy, and every
other right and remedy shall be cumulative and in addition to every other right
and remedy given hereunder or now or hereafter existing at law or in equity or
otherwise.  The assertion or employment
of any right or remedy hereunder, or otherwise, shall not prevent the
concurrent assertion or employment of any other right or remedy.

 

(b)           If the Company maintains an insurance policy or policies
providing liability insurance for directors, officers, tax matters partners,
employees, partners, managers, fiduciaries, trustees or agents of the Company
or of any other Enterprise that any such person serves at the request of the
Company, Indemnitee will be covered by such policy or policies in accordance
with its or their terms to the maximum extent of the coverage available for any
such director, officer, tax matters partner, employee, partner, manager,
fiduciary, trustee or agent under such policy or policies. If, at the time the
Company receives notice from any source of a Proceeding as to which Indemnitee
is a party or a participant (as a witness or otherwise), the Company has
director and officer liability insurance in effect, the Company shall give
prompt notice of such Proceeding to the insurers in accordance with the
procedures set forth in the respective policies.  The Company shall thereafter take all
necessary or desirable action to cause such insurers to pay, on behalf of the
Indemnitee, all amounts payable as a result of such Proceeding in accordance
with the terms of such policies.

 

(c)           The Company will not be liable under this Agreement to
make any payment of amounts otherwise indemnifiable hereunder (or for which
advancement is provided hereunder) if and to the extent that Indemnitee has
otherwise actually received that payment or obtained the entire benefit
therefrom under any insurance policy, contract, agreement or otherwise.

 

(d)           If the Company makes any payment hereunder, it will be
subrogated to the extent of that payment to all the rights of recovery of
Indemnitee, who will execute all papers required and take all action necessary
to secure those rights, including execution of such documents as are necessary
to enable the Company to bring suit to enforce those rights.

 

(e)           The Company’s obligation to indemnify or advance Expenses
hereunder to Indemnitee with respect to Indemnitee’s service at the request of
the Company as a director, officer, tax matters partner, employee, partner,
manager, fiduciary, trustee or agent of any other Enterprise will be reduced by
any amount Indemnitee has actually received as indemnification or advancement
of Expenses from that other Enterprise.

 

Section 12.             Duration
of Agreement.  This Agreement
will continue until and terminate on the later of: (1) 10 years after the
date that Indemnitee has ceased to serve as a director or officer of the
Company or as a director, officer, tax matters partner, employee, partner,
manager, fiduciary, trustee or agent of any other Enterprise that Indemnitee
served on behalf of the Company at the request of the Company; or (ii) one
year after the final termination of any Proceeding (including any rights of
appeal thereto) then pending in respect of which Indemnitee is granted rights
of indemnification or advancement of Expenses hereunder and of any proceeding
commenced by Indemnitee pursuant to Section 10 relating thereto including
any rights of appeal of any Section 10 Proceeding.  This Agreement will be binding on the Company
and its successors and assigns and will inure to the benefit of Indemnitee and
his spouse (if Indemnitee resides in Texas or another community property
state), heirs, executors and administrators.

 

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Section 13.             Severability.  If any provision or provisions of this
Agreement is or are invalid, illegal or unenforceable for any reason
whatsoever; (i) the validity, legality and enforceability of the remaining
provisions hereof (including, without limitation, each portion of any Section containing
any such invalid, illegal or unenforceable provision which is not itself invalid,
illegal or unenforceable) will not in any way be affected or impaired thereby; (ii) such
provision or provisions will be deemed reformed to the extent necessary to
conform to applicable law and to give the maximum effect to the intent of the
parties hereto; and (iii) to the fullest extent possible, the provisions
of this Agreement (including, without limitation, each portion of any Section containing
any such invalid, illegal or unenforceable provision which is not itself
invalid, illegal or unenforceable) will be construed so as to give effect to
the intent manifested thereby.

 

Section 14.             Exception
to Right of Indemnification or Advancement of Expenses.  Notwithstanding any provision in this
Agreement, the Company shall not be obligated under this Agreement to make any
indemnity in connection with any claim made against Indemnitee:

 

(a)           for which payment has actually been received by or on
behalf of Indemnitee under any insurance policy or other indemnity provision,
except with respect to any excess beyond the amount actually received under any
insurance policy or other indemnity provision;

 

(b)           for an accounting of profits made from the purchase and
sale (or sale and purchase) by Indemnitee of securities of the Company within
the meaning of Section 16(b) of the Exchange Act or similar
provisions of state statutory law or common law;

 

(c)           except as otherwise provided in Sections 10(d)-(f) hereof,
prior to a Change in Control, in connection with any Proceeding (or any part of
any Proceeding) initiated by Indemnitee, including any Proceeding (or any part
of any Proceeding) initiated by Indemnitee against the Company or its
directors, officers, employees or other indemnitees, unless (i) the Board
of Directors of the Company authorized the Proceeding (or any part of any
Proceeding) prior to its initiation or (ii) the Company provides the
indemnification, in its sole discretion, pursuant to the powers vested in the
Company under applicable law; or

 

(d)           to the extent prohibited by
applicable law.

 

Section 15.             Enforcement
and Binding Effect.

 

(a)           The Company expressly confirms and agrees that it has
entered into this Agreement and assumed the obligations imposed on it hereby in
order to induce Indemnitee to serve as a director or officer of the Company,
and the Company acknowledges that Indemnitee is relying upon this Agreement in
serving as a director or officer of the Company.

 

(b)           Except with respect to rights that Indemnitee has under
the provisions of the LLC Agreement and as of the date hereof, this Agreement
constitutes the entire agreement between the parties hereto with respect to the
subject matter hereof and supersedes all prior agreements and understandings,
oral, written and implied, between the parties hereto with respect to the
subject matter hereof.

 

Section 16.             Identical
Counterparts.  This Agreement
may be executed in one or more counterparts, each of which will for all
purposes be deemed to ‘be an original but all of

 

9

 

which together
will constitute one and the same agreement. 
Only one such counterpart signed by the party against whom
enforceability is sought needs to be produced to evidence the existence of this
Agreement.

 

Section 17.             Headings.  The headings of the Sections hereof are
inserted for convenience only and do not and will not be deemed to constitute
part of this Agreement or to affect the construction thereof.

 

Section 18.             Definitions.  For purposes of this Agreement:

 

“Acquiring Person” means any Person who or which, together with all its
Affiliates and Associates, is or are the Beneficial Owner of 15% or more of the
Company Voting Shares then outstanding, but does not include any Exempt Person;
provided, however, that a Person will not be or become an Acquiring Person if
that Person, together with its Affiliates and Associates, becomes the
Beneficial Owner of 15% or more of the Company Voting Shares then outstanding
solely as a result of a reduction in the number of Company Voting Shares
outstanding which results from the Company’s direct or indirect repurchase of Company
Voting Shares, unless and until such time as that Person or any Affiliate or
Associate of that Person purchases or otherwise becomes the Beneficial Owner of
additional Company Voting Shares constituting 1% or more of the then
outstanding Company Voting Shares or any other Person (or Persons) who is (or
collectively are) the Beneficial Owner of Company Voting Shares constituting 1%
or more of the then outstanding Company Voting Shares becomes an Affiliate or
Associate of that Person, unless, in either such case, that Person, together
with all its Affiliates and Associates, is not then the Beneficial Owner of 15%
or more of the Company Voting Shares then outstanding.

 

“Affiliate” has the meaning Exchange Act Rule l2b-2 specifies.

 

“Associate” means, with reference to any Person, (1) any
corporation, firm, partnership, limited liability company, association,
unincorporated organization or other entity (other than the Company or a
subsidiary of the Company) of which that Person is an officer or general
partner (or officer or general partner of a general partner) or is, directly or
indirectly, the Beneficial Owner of 10% or more of any class of its equity
securities or interests, (ii) any trust or other estate in which that Person
has a substantial beneficial interest or for or of which that Person serves as
trustee or in a similar fiduciary capacity and (iii) any relative or
spouse of that Person, or any relative of that spouse, who has the same home as
that Person.

 

A specified Person is deemed the “Beneficial Owner” of, and is deemed
to “beneficially own,” any securities:

 

(i)            of
which that Person or any of that Person’s Affiliates or Associates, directly or
indirectly, is the “beneficial owner” (as determined pursuant to Exchange Act Rule 13d-3)
or otherwise has the right to vote or dispose of including pursuant to any
agreement, arrangement or understanding (whether or not in writing); provided,
however, that a Person will not be deemed the “Beneficial Owner” of, or to “beneficially
own,” any security under this

 

10

 

subparagraph (i) as a result of an
agreement, arrangement or understanding to vote that security if that agreement,
arrangement or understanding: (A) arises solely from a revocable proxy or
consent given in response to a public (that is, not including a solicitation
exempted by Exchange Act Rule 14a-2(b)(2)) proxy or consent solicitation
made pursuant to, and in accordance with, the applicable provisions of the
Exchange Act; and (B) is not then reportable by that Person on Exchange
Act Schedule 13D (or any comparable or successor report);

 

(ii)           which
that Person or any of that Person’s Affiliates or Associates, directly or
indirectly, has the right or obligation to acquire (whether that right or
obligation is exercisable or effective immediately, or only after the passage
of time or the occurrence of an event) pursuant to any agreement, arrangement
or understanding (whether or not in writing) or on the exercise of conversion
rights, exchange rights, other rights, warrants or options, or otherwise;
provided, however, that a Person will not be deemed the “Beneficial Owner” of,
or to beneficially own, securities tendered pursuant to a tender or exchange
offer made by that Person or any of that Person’s Affiliates or Associates
until those tendered securities are accepted for purchase or exchange; or

 

(iii)          which
are beneficially owned, directly or indirectly, by (A) any other Person
(or any Affiliate or Associate thereof) with which the specified Person or any
of the specified Person’s Affiliates or Associates has any agreement,
arrangement or understanding (whether or not in writing) for the purpose of
acquiring, holding, voting (except pursuant to a revocable proxy or consent as
described in the proviso to subparagraph (i) of this definition) or
disposing of any voting securities of the Company or (B) any group (as
Exchange Act Rule 13 d-5(b) uses that term) of which that specified
Person is a member;

 

provided, however, that nothing in this definition will cause a Person
engaged in business as an underwriter of securities to be the “Beneficial Owner”
of, or to “beneficially own,” any securities that Person acquires through its
participation in good faith in a firm commitment underwriting (including,
without limitation, securities acquired pursuant to stabilizing transactions to
facilitate a public offering in accordance with Exchange Act Regulation M or to
cover overallotments created in connection with a public offering) until the
expiration of 40 days after the date of that acquisition.  For purposes of this definition, “voting” a
security includes voting, granting a proxy, acting by consent, making a request
or demand relating to corporate action (including, without limitation, calling
a unitholder meeting) or otherwise giving an authorization (within the meaning
of Section 14(a) of the Exchange Act) in respect of that security.

 

“Change of Control” means the occurrence of any of the following events
that occurs after the IPO Closing Date: (i) any Person becomes an
Acquiring Person; (ii) at any time the then Continuing Directors cease to
constitute a majority of the members of the Board; (iii) a merger of the
Company with or into, or a sale by the Company of its properties and assets substantially
as an entirety to another Person occurs and, immediately after that occurrence,
any Person, other than an Exempt Person, together with all Affiliates and
Associates of that Person (other than Exempt Persons), will be the Beneficial Owner
of 15% or more of the total voting power of the then outstanding

 

11

 

Voting Shares of the Person surviving that
transaction (in the case of a merger or consolidation) or the Person acquiring
those properties and assets substantially as an entirety unless that Person,
together with all its Affiliates and Associates, was the Beneficial Owner of
15% or more of the Company Voting Shares outstanding prior to that transaction;
(iv) the approval by the unitholders of the Company of a complete
liquidation of the Company or an agreement or series of agreements for the sale
or disposition by the Company of all or substantially all of the Company’s
assets; or (v) occurs any other event of a nature that would be required
to be reported in response to Item 6(e) of Schedule 14A of Regulation
14A (or a response to any similar item on any similar schedule or form)
promulgated under the Exchange Act (as defined below), whether or not the
Company is then subject to such reporting requirement.

 

“Company Voting Shares” means Voting Shares issued by the Company.

 

“Continuing Director” means at any time any individual who then (i) is
a member of the Board and was a member of the Board as of the date hereof or
whose nomination for his first election, or that first election, to the Board
following that date was recommended or approved by a majority of the then
Continuing Directors (acting separately or as a part of any action taken by the
Board or any committee thereof) and. (ii) is not an Acquiring Person, an
Affiliate or Associate of an Acquiring Person or a nominee or representative of
an Acquiring Person or of any such Affiliate or Associate.

 

“Corporate Status” describes the status of a natural person who is or
was a director, officer, tax matters partner, employee, partner, manager,
fiduciary, trustee or agent of the Company or of any other Enterprise, provided
that person is or was serving in that capacity at the request of the
Company.  For purposes of this Agreement,
“serving at the request of the Company” includes any service by Indemnitee
which imposes duties on, or involves services by, Indemnitee with respect to
any employee benefit plan or its participants or beneficiaries.

 

“Court of Chancery” means the Court of Chancery of the State of
Delaware.

 

“Disinterested Director” means a director of the Company who is not and
was not a party to the Proceeding in respect of which indemnification is sought
by Indemnitee hereunder.

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

 

“Exempt Person” means: (i)(A) the Company, any subsidiary of the
Company, any employee benefit plan of the Company or of any subsidiary of the
Company and (B) any Person organized, appointed or established by the
Company for or pursuant to the terms of any such plan or for the purpose of
funding any such plan or funding other employee benefits for employees of the
Company or any subsidiary of the Company; and (ii) Indemnitee, any
Affiliate or Associate of Indemnitee or any group (as Exchange Act Rule l3d-5(b) uses
that term) of which Indemnitee or any Affiliate or Associate of Indemnitee is a
member.

 

“Expenses” include all attorneys’ fees, retainers, court costs,
transcript costs, fees of experts, witness fees, travel expenses, duplicating
costs, printing and binding costs,

 

12

 

telephone charges, postage, delivery service
fees, all other disbursements or expenses of the types customarily incurred in
connection with prosecuting, defending, preparing to prosecute or defend,
investigating, being or preparing to be a witness in, or otherwise
participating in, a Proceeding and all interest or finance charges attributable
to any thereof.  Should any payments by
the Company under this Agreement be determined to be subject to any federal,
state or local income or excise tax, “Expenses” also will include such amounts
as are necessary to place Indemnitee in the same after-tax position (after
giving effect to all applicable taxes) be would have been in had no such tax
been determined to apply to those payments. 
Expenses also shall include Expenses incurred in connection with any
appeal resulting from any Proceeding, including without limitation the premium,
security for, and other costs relating to any cost bond, supersedeas bond, or
other appeal bond or its equivalent. 
Expenses, however, shall not include amounts paid in settlement by
Indemnitee or the amount of judgments or fines against Indemnitee.

 

“Independent Counsel” means a law firm, or a member of a law firm, that
or who is experienced in matters of corporate law and neither presently is, nor
in the past five years has been retained to represent: (i) the Company,
its affiliates or Indemnitee in any matter material to any such party; or (ii) any
other party to the Proceeding giving rise to a claim for indemnification
hereunder.  Notwithstanding the
foregoing, the term “Independent Counsel” does not include at any time any
person who, under the applicable standards of professional conduct then prevailing,
would have a conflict of interest in representing either the Company or
Indemnitee in an action to determine Indemnitee’s rights under this Agreement.

 

“IPO Closing Date” means November 15, 2004.

 

“Person” means any natural person, sole proprietorship, corporation,
partnership of any kind having a separate legal status, limited liability
company, business trust, unincorporated organization or association, mutual
company, joint stock company, joint venture, estate, trust, union or employee
organization or governmental authority.

 

“Proceeding” includes any threatened, pending or completed action,
suit, arbitration, alternate dispute resolution mechanism, investigation,
inquiry, administrative bearing or any other actual, threatened or completed
proceeding, whether brought in the right of the Company or otherwise and
whether of a civil, criminal, administrative or investigative nature, in which
Indemnitee was, is or will be involved as a party or otherwise by reason of the
fact that Indemnitee is or was a director or officer of the Company, by reason
of any action taken by him or of any action on his part while acting as
director or officer of the Company, or by reason of the fact that be is or was
serving at the request of the Company as a director, officer, tax matters
partner, employee, partner, manager, fiduciary, trustee or agent of any other
Enterprise, in each case whether or not serving in such capacity at the time
any liability or expense is incurred for which indemnification, reimbursement,
or advancement of expenses can be provided under this Agreement.

 

“Voting Shares”
means:  (i) in the case of any
corporation, stock of that corporation of the class or classes having general
voting power under ordinary circumstances to participate in the election of the
corporation’s board of directors; and (ii) in the case of any other
entity, equity

 

13

 

interests of the class or classes having general
voting power under ordinary circumstances equivalent to the Voting Shares of a
corporation.

 

Section 19.             Modification
and Waiver.  No supplement to
or modification or amendment of this Agreement will be binding unless executed
in writing by both parties hereto.  No
waiver of any of the provisions of this Agreement will be deemed or will
constitute a waiver of any other provisions hereof (whether or not similar),
nor will any such waiver constitute a continuing waiver.

 

Section 20.             Notice
by Indemnitee.  Indemnitee
agrees promptly to notify the Company in writing on being served with any
summons, citation, subpoena, complaint, indictment, information or other
document relating to any Proceeding or matter which may be subject to
indemnification or advancement of Expenses hereunder; provided, however, a
failure to give that notice will not deprive Indemnitee of his rights to
indemnification and advancement of Expenses hereunder unless the Company is
actually and materially prejudiced thereby.

 

Section 21.             Notices.  All notices, requests, demands and other
communications hereunder must be in writing and will be deemed delivered and
received (i) if personally delivered or if delivered by telex, telegram,
facsimile or courier service, when actually received by the party to whom the
notice or communication is sent or (ii) if delivered by mail (whether
actually received or not), at the close of business on the third business day
in the city in which the Company’s principal executive office is located
next.  following the day when placed in
the mail, postage prepaid, certified or registered, addressed to the
appropriate party at the address of that party set forth below (or at such
other address as that party may designate by written notice to the other party
in accordance herewith):

 

	
  (a)

  	
  If to
  Indemnitee, to:

  
	
   

  	
   

  
	
   

  	
  with a copy (which will not constitute notice for the purposes of
  this Agreement) to such legal counsel, if any, as the Indemnitee may
  designate in writing; and

  
	
   

  	
   

  
	
  (b)

  	
  If to the
  Company, to:

  	
  Copano
  Energy, L.L.C.

  
	
   

  	
   

  	
  2727 Allen
  Parkway, Suite 1200

  
	
   

  	
   

  	
  Houston,
  Texas 77019

  
	
   

  	
   

  	
  Attention: General Counsel

  

 

Section 22.             Contribution.  To the fullest extent applicable law permits,
if the indemnification this Agreement provides is unavailable to Indemnitee for
any reason whatsoever, the Company, in lieu of indemnifying Indemnitee, will
contribute to the amount incurred by Indemnitee, whether for judgments, fines,
penalties, excise taxes, amounts paid or to be paid in settlement and/or for
Expenses, in connection with any claim relating to an indemnifiable event under
this Agreement, in such proportion as is deemed fair and reasonable in light of
all the circumstances of that Proceeding in order to reflect:  (i) the relative benefits received by
the Company and Indemnitee as a result of the event(s) and/or transaction(s)
giving rise to that Proceeding; and/or (ii) the relative fault of the
Company (and its directors, officers, employees and agents) and Indemnitee in
connection with such event(s) and/or transaction(s).

 

14

 

Section 23.             Governing
Law; Submission to Jurisdiction. 
This Agreement and the legal relations among the parties will be
governed by, and construed and enforced in accordance with, the laws of the
State of Delaware, without regard to its conflict of laws rules.  Except with respect to any arbitration
Indemnitee commences pursuant to Section 10(a), the Company and Indemnitee
hereby irrevocably and unconditionally (i) agree that any action or
proceeding arising out of or in connection with this Agreement will be brought
only in the Court of Chancery and not in any other state or federal court in
the United States of America or any court in any other country, (ii) consent
to submit to the exclusive jurisdiction of the Court of Chancery for purposes
of any action or proceeding arising out of or in connection with this
Agreement, (iii) waive any objection to the laying of venue of any such
action or proceeding in the Court of Chancery and (iv) waive, and agree
not to plead or to make, any claim that any such action or proceeding brought
in the Court of Chancery has been brought in an improper or otherwise
inconvenient forum.

 

Section 24.             Miscellaneous.  Use of one gender herein includes usage of
each other gender where appropriate. 
This Agreement uses the words “herein,” “hereof” and words of similar
import to refer to this Agreement as a whole and not ‘to any provision of this
Agreement, and the word “Section” refers to a Section of this Agreement,
unless otherwise specified.

 

IN WITNESS WHEREOF, the
parties hereto have executed this Agreement on the 1st day of
November, 2005 to be effective as of the day and year first above written.

 

	
   

  	
  COPANO ENERGY, L.L.C.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  INDEMNITEE:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  

 

15Exhibit 10.2

 

First
Amendment to

Copano Energy, L.L.C.

Long-Term Incentive Plan

 

WHEREAS, Copano Energy, L.L.C. (the “Company”)
maintains the Copano Energy, L.L.C. Long-Term Incentive Plan (the “LTIP”) for
the purpose of granting Awards thereunder to Employees and Directors of the
Company and its Affiliates who perform services for the Company and its
Affiliates; and

 

WHEREAS, the Company desires to amend the Plan to (i) increase
the number of Units that may be delivered with respect to Awards under the Plan,
(ii) provide the Committee with authority to delegate certain of its
powers and duties under the Plan to the Chief Executive Officer of the Company,
and (iii) expand the definition of Employee to include independent
contractor consultants.

 

NOW,
THEREFORE, the
following provisions of the Plan shall be amended to read as follows:

 

A.            SECTION 2. Definitions

 

“Employee” means (i) any
employee of the Company or (ii) an employee of an Affiliate or an
independent contractor consultant who performs services for the benefit of the
Company or a subsidiary of the Company. As used herein, termination of
consulting services shall be deemed to be a termination of employment.

 

B.            SECTION 3. Administration.

 

The Plan shall be
administered by the Committee.  A
majority of the Committee shall constitute a quorum, and the acts of the
members of the Committee who are present at any meeting thereof at which a
quorum is present, or acts unanimously approved by the members of the Committee
in writing, shall be the acts of the Committee. 
Subject to the following and applicable law, the Committee, in its sole
discretion, may delegate any or all of its powers and duties under the Plan,
including the power to grant Awards under the Plan, to the Chief Executive
Officer of the Company, subject to such limitations on such delegated powers
and duties as the Committee may impose, if any. 
Upon any such delegation all references in the Plan to the “Committee”,
other than in Section 7, shall be deemed to include the Chief Executive
Officer; provided, however, that such delegation shall not limit the Chief
Executive Officer’s right to receive Awards under the Plan.  Notwithstanding the foregoing, the Chief
Executive Officer may not grant Awards to, or take any action with respect to
any Award previously granted to, a person who is an officer subject to Rule 16b-3
or a member of the Board.  Subject to the
terms of the Plan and applicable law, and in addition to other express powers
and authorizations conferred on the Committee by the Plan, the Committee shall
have full power and authority to: (i) designate Participants; (ii) determine
the type or types of Awards to be granted to a Participant; (iii) determine
the number of Units to be covered by Awards; (iv) determine the terms and
conditions of any Award; (v) determine whether, to what extent, and under
what circumstances Awards may be settled, exercised, canceled, or forfeited; (vi) interpret
and

 

 

administer the Plan and any
instrument or agreement relating to an Award made under the Plan; (vii) establish,
amend, suspend, or waive such rules and regulations and appoint such
agents as it shall deem appropriate for the proper administration of the Plan;
and (viii) make any other determination and take any other action that the
Committee deems necessary or desirable for the administration of the Plan.  Unless otherwise expressly provided in the
Plan, all designations, determinations, interpretations, and other decisions
under or with respect to the Plan or any Award shall be within the sole discretion
of the Committee, may be made at any time and shall be final, conclusive, and
binding upon all Persons, including the Company, any Affiliate, any
Participant, and any beneficiary of any Award.

 

C.            SECTION 4. Units.

 

(a)           Limits on Units Deliverable.  Subject to adjustment as provided in Section 4(c),
the number of Units that may be delivered with respect to Awards under the Plan
shall not exceed the lesser of (i) 2,500,000 Units or (ii) the number of units equal to 10% of the sum
of total common units outstanding and the total amount of common units that may
be issued to the holders of any outstanding equity securities convertible into
common units, exclusive of outstanding Awards under the Plan, determined at the
time of any Award; provided however, no more than 30% of such Units (as
adjusted) may be delivered in payment of Restricted Units and Phantom Units. If
any Award (including Restricted Units) is terminated, forfeited or expires for
any reason without the delivery of Units covered by such Award or Units are
withheld from an Award to satisfy the exercise price or tax withholding
obligation with respect to such Award, such Units shall again be available for
delivery pursuant to other Awards granted under the Plan.  Notwithstanding the foregoing, there shall
not be any limitation on the number of Awards that may be granted under the
Plan and paid in cash.

 

All
terms used herein that are defined in the Plan shall have the same meanings
given to such terms in the Plan, except as otherwise expressly provided herein.

 

Except
as amended and modified hereby, the Plan shall continue in full force and
effect and the Plan and this instrument shall be read, taken and construed as
one and the same instrument.

 

Effective
October 27, 2005.

 

	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  

 

2

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