COPANO ENERGY, L.L.C. DEFERRED COMPENSATION PLAN PARTICIPATION AGREEMENT
Exhibit
99.2
Form
of Participation Agreement
DEFERRED
COMPENSATION PLAN
This
Participation Agreement (“Participation Agreement”) is made this _____ day of
December, 2008, by and between Copano Energy, L.L.C. (the “Company”) and
_________________ (the “Participant”).
WITNESSETH:
WHEREAS,
the Company has adopted the Copano Energy, L.L.C Deferred Compensation Plan (the
“Plan”);
WHEREAS,
the Participant has been approved for participation in the Plan for the 2009
calendar year;
WHEREAS,
the Participant’s annual base compensation for the 2009 calendar
year is $__________ (the “2009 Base Salary”); and
WHEREAS,
the Company has determined that 5% of the 2009 Base Salary, totaling $_________
(the “Award Opportunity”) shall be deferred in accordance with this
Participation Agreement and the Plan;
NOW,
THEREFORE, the Company and the Participant hereby agree as follows:
1. Grant of Award
Opportunity. Subject to all of the terms, conditions and
restrictions described in the Plan and to the further terms, conditions and
restrictions described in this Participation Agreement, the Participant is
hereby awarded the opportunity to earn, during the 7-year period beginning
January 1, 2009 (the “Performance Period”), a cash payment equal to the Award
Opportunity, and this amount shall be credited to the Participant’s Account
under the Plan as of January 1, 2009. No interest or earnings
shall be credited to the Participant’s Account with respect to the Award
Opportunity. Unless otherwise indicated, terms used in this
Participation Agreement shall have the same meanings as are ascribed to such
terms in the Plan.
2. Payment of Award
Opportunity. The Award Opportunity will be distributed in the
first calendar quarter of 2010, provided that during the four consecutive
calendar quarters preceding such calendar quarter, the Company has generated
cumulative distributable cash flow of at least $4.00 per common unit (the
“Distribution Limitation”). If the Distribution Limitation has not
been satisfied as of the first calendar quarter of 2010, the Award Opportunity
will be distributed in the second calendar quarter of 2010 (provided the
Distribution Limitation has been satisfied as of such calendar quarter), or the
first such later calendar quarter during the Performance Period for which the
Distribution Limitation has been satisfied.
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3. Early
Payment. In the event that during the Performance Period but
prior to the payment of the Award Opportunity pursuant to Section 2,
(a) the Participant’s employment with the Company is terminated and such
termination is due to (i) the Participant’s death, (ii) the Participant’s
Disability or (iii) the termination of Participant’s employment or services by
the Company for reasons other than Cause or by the Participant for Good Reason,
(b) the Participant incurs a Section 409A Disability while the Participant
remains in employment with the Company, or (c) a Change in Control occurs
while the Participant remains in employment with the Company, then within 30
days following such termination of employment, Section 409A Disability or Change
in Control, as applicable, the Participant (or his or her Beneficiary designated
under the Plan) will be paid a lump sum cash payment equal to the Award
Opportunity unless previously received by the Participant pursuant to Section
2. For this purpose:
“Disability”
means a disability that entitles a Participant to benefits under the Company’s
or an Affiliate’s long-term disability plan.
“Cause”
means (a) gross negligence or willful misconduct in the performance of the
duties and services required of the Participant by the Company; (b) the
Participant’s willful and continued failure to substantially perform his duties
and other obligations (for reasons other than physical or mental incapacity) and
such failure continues for a period of 30 days after written notice by the
Company of the existence of such failure; provided, however, that only one such
notice by the Company need be sent and, if such failure re-occurs thereafter, no
further notice and opportunity to cure such failure shall be required; (c) the
commission of any fraudulent act or dishonesty in the course of the
Participant’s employment or provision of services; or (d) conviction of or a
plea of guilty to a felony that requires an intentional, knowing or reckless
mental state (or any such equivalent mental state) under a criminal code of the
United States of America or any state thereof, whether or not committed in the
course of employment by the Participant.
“Change
in Control” has the meaning set forth in the Copano Energy, L.L.C. Change in
Control Severance Plan, provided that such event constitutes a “change of
control event” within the meaning of Treas. Reg. § 1.409A-3(i)(5).
“Good
Reason” means any of the following events that occurs without the Participant’s
prior written consent:
(i) a material diminution in the
Participant’s base salary that is not consented to by the Participant or is not
part of a Company-wide cost reduction program (provided, however,
(A) without limiting the interpretation of “material,” a 5% or greater
reduction in Participant’s base salary shall be deemed “material” in all
circumstances and (B) in no event will this Participation Agreement or a
subsequent required deferral under the Plan result in a material reduction in
base salary for this purpose);
(ii) a material
diminution in the Participant’s authority, duties, or
responsibilities;
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(iii) a requirement that the
Participant report to a supervisor, whose authority, duties, or responsibilities
are materially diminished in comparison to the authority, duties and
responsibilities of the supervisor to whom the Participant previously reported,
including a requirement that a Participant report to a corporate officer or
employee instead of reporting directly to the Board;
(iv) a material diminution in the
budget over which the Participant retains authority that is not part of a
Company-wide cost reduction program;
(v) reassignment of Participant
to any office located more than 25 miles from where the office to which
Participant is assigned is located as of the date of this Participation
Agreement (or, if the Participant consents to a subsequent relocation, as of the
date of the last relocation to which Participant has consented); or
(vi) any other action or inaction
that constitutes a material breach by the Company or a subsidiary thereof of any
employment agreement under which the Participant provides services.
No act or
omission shall constitute “Good Reason” for purposes of this Plan unless the
Participant provides to the Company a written notice clearly and fully
describing the particular acts or omissions which the Participant reasonably
believes in good faith constitutes “Good Reason” within 90 days of the first
date of such acts or omissions, and an opportunity, within 30 days following its
receipt of such notice, to cure such acts or omissions. If such acts or
omissions are not cured within the 30 day cure period, Participant shall provide
a notice of termination for Good Reason to the Company.
“Section
409A Disability” means either (i) the Participant is unable to engage in any
substantial gainful activity by reason of any medically determinable physical or
mental impairment that can be expected to result in death or can be expected to
last for a continuous period of not less than 12 months, or (ii) the Participant
is, by reason of any medically determinable physical or mental impairment that
can be expected to result in death or can be expected to last for a continuous
period of not less than 12 months, receiving income replacement benefits for a
period of not less than three months under an accident and health plan of the
Company or any Affiliate.
For
purposes of this Agreement, “employment with the Company” or being an “employee
of the Company” shall include being an employee or a director of the Company or
an Affiliate, and “termination of employment” shall be interpreted in a manner
consistent with the concept of a “separation from service” within the meaning of
Section 409A.
4. Forfeiture. In
the event (i) the Participant terminates employment prior to payment of the
Award Opportunity pursuant to Section 2 and under circumstances other than those
set forth in Section 3 or (ii) the Distribution Limitation has not been
satisfied as of the last calendar quarter in the Performance Period, then the
Participant’s right to the Award Opportunity shall be forfeited.
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5. Withholding of
Tax. The Company shall withhold the amount of any federal,
state or local taxes of any kind required by law to be withheld as a result of
any payment made hereunder.
6. Limitations Upon
Transfer. All rights under this Agreement shall belong to the
Participant alone and may not be transferred, assigned, pledged, or hypothecated
by the Participant 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 the
Participant 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.
7. Waiver of
Claims. In exchange for the consideration provided in this
Participation Agreement and for other good and valuable consideration, the
Participant consents to the 2009 Base Salary and waives any breach of contract
or other claim the Participant may have with respect to the deferral or ultimate
reduction thereof as described in this Participation Agreement.
8. Disputes. Any
dispute or disagreement which shall arise under, or as a result of or pursuant
to, this Participation Agreement shall be determined by the Committee in its
absolute discretion, and any such determination or any other determination by
the Committee under or pursuant to this Participation Agreement and any
interpretation by the Committee of the terms of this Participation Agreement or
the Plan shall be final, binding and conclusive on all persons affected hereby.
The Plan shall control in case of conflict with this Participation
Agreement.
9. Entire Agreement;
Modifications. This Agreement and the Plan constitute 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 Award Opportunities 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. Except as provided below, any modification of this
Agreement shall be effective only if it is in writing and signed by both the
Participant and an authorized officer of the Company.
10. Section
409A. The payments provided by this Agreement are intended to
be provided in a manner compliant with or exempt from Section 409A of the
Internal Revenue Code and this Participation Agreement shall be construed,
interpreted and administered accordingly. Notwithstanding any
provision of this Agreement to the contrary, the Participant agrees that any
payment under this Participation Agreement that the Company determines is
subject to the suspension period under Code Section 409A(a)(2)(B) shall not be
paid or commence until a date following six months after the Participant’s
termination date, or if earlier, the Participant’s death.
[END OF
PAGE]
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The
parties hereto have caused this agreement to be executed this _____ day of
December 2008.
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By:
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Name:
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▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇
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Title:
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Senior
Vice President and General Counsel
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