**Exhibit 4.8**

 

***EXECUTION VERSION***

 

 

 

 

REGISTRATIONRIGHTS AGREEMENT

 

BY AND AMONG

 

COPANO ENERGY,L.L.C.

 

AND

 

ZLP FUND, L.P.

 

STRUCTUREDFINANCE AMERICAS, LLC

 

AND

 

ROYAL BANK OFCANADA

 

 

 

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**REGISTRATION RIGHTS AGREEMENT**

 

THISREGISTRATION RIGHTS AGREEMENT (this “Agreement”) is made and enteredinto as of December 29, 2005, by and among Copano Energy, L.L.C., a Delawarelimited liability company (“Copano”), and ZLP Fund, L.P., StructuredFinance Americas, LLC and Royal Bank of Canada, each a “Purchaser” and collectively,the “Purchasers”).

 

WHEREAS, thisAgreement is made in connection with the Closing of the issuance and sale ofthe Purchased Common Units pursuant to the Common Unit Purchase Agreement,dated as of December 29, 2005, by and among Copano and the Purchasers (the “PurchaseAgreement”);

 

WHEREAS,Copano has agreed to provide the registration and other rights set forth inthis Agreement for the benefit of the Purchasers pursuant to the PurchaseAgreement; and

 

WHEREAS, it isa condition to the obligations of each Purchaser and Copano under the PurchaseAgreement that this Agreement be executed and delivered.

 

NOW THEREFORE,in consideration of the mutual covenants and agreements set forth herein andfor good and valuable consideration, the receipt and sufficiency of which ishereby acknowledged by each party hereto, the parties hereby agree as follows:

 

**ARTICLEIDEFINITIONS**

 

Section 1.01           Definitions.  Capitalized terms used herein withoutdefinition shall have the meanings given to them in the PurchaseAgreement.  The terms set forth below areused herein as so defined:

 

“Agreement”has the meaning specified in the introductory paragraph.

 

“Copano”has the meaning specified in the introductory paragraph.

 

“EffectivenessPeriod” has the meaning specified therefor in Section 2.01(a) ofthis Agreement.

 

“Holder”means the record holder of any Registrable Securities.

 

“IncludedRegistrable Securities” has the meaning specified therefor in Section2.02(a) of this Agreement.

 

“LiquidatedDamages Amount” means an amount equal to 0.25% of the Liquidated DamagesMultiplier per 30-day period for the first sixty (60) days, with such paymentamount increasing by an additional 0.25% of the Liquidated Damages Multiplierper 30-day period for each subsequent sixty (60) days, up to a maximum of 1.00%of the Liquidated Damages Multiplier per 30-day period.  The Liquidated Damages Amount for any periodof less than 30-days shall be prorated by multiplying the Liquidated DamagesAmount to be paid in a full 30-

 

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day period by a fraction, the numerator ofwhich is the number of days for which such liquidated damages are owed, and thedenominator of which is 30.

 

 “Liquidated Damages Multiplier” meansthe product of $35.25 times the number of Common Units purchased by suchPurchaser.

 

“Losses”has the meaning specified therefor in Section 2.07(a) of this Agreement.

 

“ManagingUnderwriter” means, with respect to any Underwritten Offering, thebook-running lead manager of such Underwritten Offering.

 

“Opt-OutNotice” has the meaning specified therefor in Section 2.02(a).

 

“PurchaseAgreement” has the meaning specified therefor in the Recitals of thisAgreement.

 

“Purchaser”and “Purchasers” have the meanings specified therefor in theintroductory paragraph of this Agreement.

 

“RegistrableSecurities” means: (i) the Purchased Common Units and (ii) any Common Unitsissued as liquidated damages pursuant to Section 2.01(c) of thisAgreement, all of which Registrable Securities are subject to the rightsprovided herein until such rights terminate pursuant to the provisions hereof.

 

“RegistrationExpenses” has the meaning specified therefor in Section 2.06(a) ofthis Agreement.

 

“SellingExpenses” has the meaning specified therefor in Section 2.07(a) ofthis Agreement.

 

“SellingHolder” means a Holder who is selling Registrable Securities pursuant to aregistration statement.

 

“ShelfRegistration Statement” means a registration statement under the SecuritiesAct to permit the resale of the Registrable Securities from time to time, includingas permitted by Rule 415 of the Securities Act (or any similar provision thenin force under the Securities Act).

 

“UnderwrittenOffering” means an offering (including an offering pursuant to a ShelfRegistration Statement) in which Common Units are sold to an underwriter on afirm commitment basis for reoffering to the public or an offering that is a “boughtdeal” with one or more investment banks.

 

Section 1.02           Registrable Securities.  Any Registrable Security will cease to be aRegistrable Security when (a) a registration statement covering suchRegistrable Security has been declared effective by the Commission and suchRegistrable Security has been sold or disposed of pursuant to such effectiveregistration statement; (b) such Registrable Security has been disposed ofpursuant to any section of Rule 144 (or any similar provision then in force)under the Securities Act; (c) such Registrable Security is held by Copano orone of its

 

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subsidiaries; or (d) such RegistrableSecurity has been sold in a private transaction in which the transferor’srights under this Agreement are not assigned to the transferee of suchsecurities.

 

**ARTICLEIIREGISTRATION RIGHTS**

 

Section 2.01           Shelf Registration.

 

(a)           Deadline To Go Effective.  As soon as practicable following the Closing,but in any event within sixty (60) days of the Closing, Copano shall prepareand file a Shelf Registration Statement under the Act with respect to all ofthe Registrable Securities.  Copano shalluse its commercially reasonable efforts to cause the Shelf RegistrationStatement to become effective no later than 120 days after the ClosingDate.  A Shelf Registration Statementfiled pursuant to this Section 2.01 shall be on a registration statementon Form S-3 or, if Copano is ineligible to use a Form S-3, on such appropriateregistration form of the Commission as shall be selected by Copano; *provided*, *however*,that if a prospectus supplement will be used in connection with the marketingof an Underwritten Offering from the Shelf Registration Statement and theManaging Underwriter at any time shall notify Copano in writing that, in thesole judgment of such Managing Underwriter, inclusion of detailed informationto be used in such prospectus supplement is of material importance to thesuccess of the Underwritten Offering of such Registrable Securities, Copanoshall use its commercially reasonable efforts to include such information inthe prospectus.  Copano will use itscommercially reasonable efforts to cause the Shelf Registration Statement filedpursuant to this Section 2.01 to be continuously effective under theSecurities Act until the earlier of (i) when all such Registrable Securitiesare sold by the Purchaser or (ii) two years from the date the ShelfRegistration Statement is declared effective by the Commission (the “EffectivenessPeriod”).  The Shelf RegistrationStatement when declared effective (including the documents incorporated thereinby reference) will comply as to form with all applicable requirements of theSecurities Act and the Exchange Act and will not contain an untrue statement ofa material fact or omit to state a material fact required to be stated thereinor necessary to make the statements therein not misleading.

 

(b)           Delay Rights.  Notwithstanding anything to the contrarycontained herein, Copano may, upon written notice to any Selling Holder whoseRegistrable Securities are included in the Shelf Registration Statement,suspend such Selling Holder’s use of any prospectus which is a part of theShelf Registration Statement (in which event the Selling Holder shalldiscontinue sales of the Registrable Securities pursuant to the ShelfRegistration Statement) if (i) Copano is pursuing an acquisition, merger,reorganization, disposition or other similar transaction and Copano determinesin good faith that Copano’s ability to pursue or consummate such a transactionwould be materially adversely affected by any required disclosure of suchtransaction in the Shelf Registration Statement or (ii) Copano has experiencedsome other material non-public event the disclosure of which at such time, inthe good faith judgment of Copano, would materially adversely affect Copano; *provided, however*, in no event shall thePurchasers be suspended for a period exceeding an aggregate of ninety (90) daysin any 365-day period.  Upon disclosureof such information or the termination of the condition described above, Copanoshall provide prompt notice to the Selling Holders whose Registrable Securitiesare included in the Shelf Registration Statement, and shall promptly terminateany suspension of sales it has put into

 

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effect and shall take such other actions topermit registered sales of Registrable Securities as contemplated in thisAgreement.

 

(c)           Delay in Effectiveness of ShelfRegistration Statement; Certain Suspensions.

 

(i)            If the Shelf Registration Statementis not declared effective within 150 days after Closing, then, until such timeas the first to occur of (A) the Shelf Registration Statement is declaredeffective or (B) all of the Purchased Common Units are eligible for resaleunder Rule 144(k), under the Securities Act Copano shall pay each Holder withrespect to any such failure, following the 150th day after the Closing, anamount equal to the Liquidated Damages Amount, as liquidated damages and not asa penalty.

 

(ii)           If (i) the Holders shall beprohibited from selling their Registrable Securities under the ShelfRegistration Statement as a result of a suspension pursuant to Section 2.01(b)in excess of the periods permitted therein or (ii) the Shelf RegistrationStatement is filed and declared effective but, during the Effectiveness Period,shall thereafter cease to be effective or fail to be usable for its intendedpurpose without being succeeded within 60 Business Days by a post-effectiveamendment to the Shelf Registration Statement, a supplement to the prospectusor a report filed with the Commission pursuant to Section 13(a), 13(c), 14 or15(d) of the Exchange Act, then until the suspension is lifted or apost-effective amendment, supplement or report is filed with the Commission,but not including any day on which a suspension is lifted or such amendment,supplement or report is filed and declared effective, if applicable, Copanoshall owe the Holders an amount equal to the Liquidated Damages Amount,following (x) the date on which the suspension period exceeded the permittedperiod or (y) the sixty-first Business Day after the Shelf RegistrationStatement ceased to be effective or failed to be useable for its intendedpurposes, as liquidated damages and not as a penalty.  For purposes of this Section 2.01(c), asuspension shall be deemed lifted on the date that notice that the suspensionhas been lifted is delivered to the Holders pursuant to Section 3.01 of thisAgreement.

 

(iii)          The Liquidated Damages Amount shall bepaid to each Holder in cash within ten Business Days of the end of each such30-day period.  Any payments made pursuantto this Section 2.01(c) shall constitute the Holders’ exclusive remedy for suchevents.  The Liquidated Damages Amountimposed hereunder shall be made to the Holders in immediately availablefunds.  If Copano certifies that it is unableto pay the Liquidated Damages Amount in cash because such payment would resultin a breach under any of Copano’s or Copano’s Subsidiaries’ credit facilitiesfiled as exhibits to Copano’s SEC Documents, then Copano may pay the LiquidatedDamages Amount in kind in the form of the issuance of additional CommonUnits.  Upon any issuance of Common Unitsas liquidated damages, Copano shall promptly prepare and file an amendment tothe Shelf Registration Statement prior to its effectiveness adding such CommonUnits to such Shelf Registration Statement as additional RegistrableSecurities.  The determination of thenumber of Common Units to be issued as the Liquidated Damages Amount shall beequal to the Liquidated Damages Amount divided by the average closing price ofCopano’s Common Units on The Nasdaq National Market for the ten trading daysimmediately preceding the date on which the Liquidated Damages

 

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Amount paymentis due.  The payment of the LiquidatedDamages Amount to a Purchaser shall cease at such time as the Purchased CommonUnits of such Purchaser become eligible for resale under Rule 144(k).

 

(d)           Waiver of Liquidated Damages.  If Copano is unable to cause a ShelfRegistration Statement to go effective within the 150 days or suspends the useof the Shelf Registration Statement in excess of the periods permitted inSection 2.01(b) as a result of an acquisition, merger, reorganization,disposition or other similar transaction, then Copano may request a waiver ofthe Liquidated Damages Amount, which may be granted or withheld by the consentof each Holder, in its sole discretion. Purchaser’s rights (and any transferee’s rights pursuant to Section2.10) under this Section 2.01 shall terminate when such Registrable Securities becomeeligible for resale under Rule 144(k) (or any similar provision then in forceunder the Securities Act).

 

Section 2.02           Piggyback Rights.

 

(a)           Participation.  If at any time Copano proposes to file (i) aprospectus supplement to an effective shelf registration statement, includingthe Shelf Registration Statement contemplated by Section 2.01, or (ii) aregistration statement, other than a shelf registration statement, in eithercase, for the sale of Common Units in an Underwritten Offering for its ownaccount and/or another Person, then as soon as practicable but not less thanthree (3) Business Days prior to the filing of (x) any preliminary prospectussupplement relating to such Underwritten Offering pursuant to Rule 424(b), (y)the prospectus supplement relating to such Underwritten Offering pursuant toRule 424(b) (if no preliminary prospectus supplement is used) or (z) suchregistration statement as the case may be, then, Copano shall give notice ofsuch proposed Underwritten Offering to the Holders and such notice shall offerthe Holders the opportunity to include in such Underwritten Offering suchnumber of Registrable Securities (the “Included Registrable Securities”)as each such Holder may request in writing; *provided,however*, that if Copano has been advised by the Managing Underwriterthat the inclusion of Registrable Securities for sale for the benefit of theHolders will have a material adverse effect on the price, timing ordistribution of the Common Units, then the amount of Registrable Securities tobe offered for the accounts of Holders shall be determined based on theprovisions of Section 2.02(b). The notice required to be provided in this Section 2.02(a) toHolders shall be provided on a Business Day pursuant to Section 3.01hereof and receipt of such notice shall be confirmed by Holder.  Holder shall then have three Business Daysafter such Holder confirms receipt of the notice to request inclusion ofRegistrable Securities in the Underwritten Offering, except that Holder shallhave one Business Day after such Holder confirms receipt of the notice torequest inclusion of Registrable Securities in the Underwritten Offering in thecase of a “bought deal” or “overnight transaction”.  If no request for inclusion from a Holder isreceived within the specified time, such Holder shall have no further right toparticipate in such Underwritten Offering. If, at any time after giving written notice of its intention toundertake an Underwritten Offering and prior to the closing of such UnderwrittenOffering, Copano shall determine for any reason not to undertake or to delaysuch Underwritten Offering, Copano may, at its election, give written notice ofsuch determination to the Selling Holders and, (x) in the case of adetermination not to undertake such Underwritten Offering, shall be relieved ofits obligation to sell any Included Registrable Securities in connection withsuch terminated Underwritten Offering, and (y) in the case of a determinationto delay such Underwritten 

 

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Offering, shall be permitted to delayoffering any Included Registrable Securities for the same period as the delayin the Underwritten Offering. Any Selling Holder shall have the right towithdraw such Selling Holder’s request for inclusion of such Selling Holder’sRegistrable Securities in such offering by giving written notice to Copano ofsuch withdrawal up to and including the time of pricing of such offering.  Each Holder’s rights under this Section2.02(a) shall terminate when such Holder holds less than five million($5,000,000) of Purchased Common Units, as determined based on the closingprice of Copano’s Common Units on the date immediately preceding suchdetermination.  In addition, at any time,any Holder may deliver written notice (an “Opt-Out Notice”) to Copanoinstructing Copano not to deliver any written notice of any proposedUnderwritten Offering pursuant to this Section 2.02(a) to such Holder.  After receipt of an Opt-Out Notice from aHolder, Copano shall have no further obligation under this Section 2.02(a) todeliver a written notice of any proposed Underwritten Offering to such Holderand such Holder shall have no further rights under this Section 2.02(a) to haveany Registrable Securities included in any such Underwritten Offering.

 

(b)           Priority of Piggyback Rights.  If the Managing Underwriter or Underwritersof any proposed Underwritten Offering of Common Units included in anUnderwritten Offering involving Included Registrable Securities advises Copano thatthe total amount of Common Units that the Selling Holders and any other Personsintend to include in such offering exceeds the number that can be sold in suchoffering without being likely to have an adverse effect on the price, timing ordistribution of the Common Units offered or the market for the Common Units,then the Common Units to be included in such Underwritten Offering shallinclude the number of Registrable Securities that such Managing Underwriter orUnderwriters advises Copano can be sold without having such adverse effect,with such number to be allocated (i) first, to Copano; (ii) second, to Copano’spre-IPO investors as provided in (A) the Stakeholders’ Agreement dated July 30,2004, and (B) Article XIV of the Company’s Second Amended and Restated LimitedLiability Company Agreement dated November 15, 2004; and (iii) third, pro rataamong the Selling Holders party to this Agreement and those party to thatcertain Registration Rights Agreement dated August 1, 2005, by and among theCompany and the purchasers named therein who have requested participation insuch Underwritten Offering based, for each Selling Holder, on the fractionderived by dividing (x) the number of Common Units proposed to be sold by suchSelling Holder in such Underwritten Offering by (y) the aggregate number ofCommon Units proposed to be sold be all Selling Holders in such UnderwrittenOffering.  As of the date of execution ofthis Agreement, there are no other Persons with Registration Rights other thanas described in this Section 2.02(b).

 

Section 2.03           Underwritten Offering.

 

(a)           S-3 Registration.  If a Selling Holder elects to dispose ofRegistrable Securities under the Shelf Registration Statement pursuant to anUnderwritten Offering and reasonably anticipates gross proceeds of greater than$20 million from such Underwritten Offering, Copano shall, at the request ofsuch Selling Holder, enter into an underwriting agreement in customary formwith the Managing Underwriter or Underwriters, which shall include, among otherprovisions, indemnities to the effect and to the extent provided in Section2.08, and shall take all such other reasonable actions as are requested bythe Managing Underwriter to expedite or facilitate the disposition of theRegistrable Securities; *provided, however*,Copano management

 

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will not be required to participate in anyroadshow or similar marketing effort on behalf of any Selling Holder.

 

(b)           General Procedures.  In connection with any Underwritten Offeringunder this Agreement, Copano shall be entitled to select the ManagingUnderwriter or Underwriters.  Inconnection with an Underwritten Offering under Section 2.01 or Section2.03 hereof, each Selling Holder and Copano shall be obligated to enterinto an underwriting agreement that contains such representations, covenants,indemnities and other rights and obligations as are customary in underwritingagreements for firm commitment offerings of securities.  No Selling Holder may participate in suchUnderwritten Offering unless such Selling Holder agrees to sell its RegistrableSecurities on the basis provided in such underwriting agreement and completesand executes all questionnaires, powers of attorney, indemnities and otherdocuments reasonably required under the terms of such underwritingagreement.  Each Selling Holder may, atits option, require that any or all of the representations and warranties by,and the other agreements on the part of, Copano to and for the benefit of suchunderwriters also be made to and for such Selling Holder’s benefit and that anyor all of the conditions precedent to the obligations of such underwritersunder such underwriting agreement also be conditions precedent to itsobligations. No Selling Holder shall be required to make any representations orwarranties to or agreements with Copano or the underwriters other thanrepresentations, warranties or agreements regarding such Selling Holder and itsownership of the securities being registered on its behalf and its intendedmethod of distribution and any other representation required by law.  If any Selling Holder disapproves of theterms of an underwriting, such Selling Holder may elect to withdraw therefromby notice to Copano and the Managing Underwriter; *provided, however*, that such withdrawal must be made priorto the time in the penultimate sentence of Section 2.02(a) hereof to beeffective.  No such withdrawal orabandonment shall affect Copano’s obligation to pay Registration Expenses.

 

Section 2.04           Sale Procedures.  In connection with its obligations containedin Section 2.01 and Section 2.03, Copano will, as expeditiouslyas possible:

 

(a)           prepare and file with the Commissionsuch amendments and supplements to the Shelf Registration Statement and theprospectus used in connection therewith as may be necessary to keep the ShelfRegistration Statement effective for the Effectiveness Period and as may benecessary to comply with the provisions of the Securities Act with respect tothe disposition of all securities covered by the Shelf Registration Statement;

 

(b)           furnish to each Selling Holder (i) asfar in advance as reasonably practicable before filing the Shelf RegistrationStatement or any other registration statement contemplated by this Agreement orany supplement or amendment thereto, upon request, copies of reasonablycomplete drafts of all such documents proposed to be filed (including exhibitsand each document incorporated by reference therein to the extent then requiredby the rules and regulations of the Commission), and provide each such SellingHolder the opportunity to object to any information pertaining to such SellingHolder and its plan of distribution that is contained therein and make thecorrections reasonably requested by such Selling Holder with respect to suchinformation prior to filing the Shelf Registration Statement or such otherregistration statement or supplement or amendment thereto, and (ii) such numberof copies of the Shelf Registration Statement or such other registration statementand the prospectus included therein

 

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and any supplements and amendments thereto assuch Persons may reasonably request in order to facilitate the public sale orother disposition of the Registrable Securities covered by such ShelfRegistration Statement or other registration statement;

 

(c)           if applicable, use its commerciallyreasonable efforts to register or qualify the Registrable Securities covered bythe Shelf Registration Statement or any other registration statementcontemplated by this Agreement under the securities or blue sky laws of suchjurisdictions as the Selling Holders or, in the case of an UnderwrittenOffering, the Managing Underwriter, shall reasonably request; *provided, however*, that Copano will not berequired to qualify generally to transact business in any jurisdiction where itis not then required to so qualify or to take any action which would subject itto general service of process in any such jurisdiction where it is not then so subject;

 

(d)           promptly notify each Selling Holderand each underwriter, at any time when a prospectus relating thereto isrequired to be delivered under the Securities Act, of (i) the filing of theShelf Registration Statement or any other registration statement contemplatedby this Agreement or any prospectus or prospectus supplement to be used inconnection therewith, or any amendment or supplement thereto, and, with respectto such Shelf Registration Statement or any other registration statement or anypost-effective amendment thereto, when the same has become effective; and (ii)any written comments from the Commission with respect to any filing referred toin clause (i) and any written request by the Commission for amendments orsupplements to the Shelf Registration Statement or any other registrationstatement or any prospectus or prospectus supplement thereto;

 

(e)           immediately notify each SellingHolder and each underwriter, at any time when a prospectus relating thereto isrequired to be delivered under the Securities Act, of (i) the happening of anyevent as a result of which the prospectus or prospectus supplement contained inthe Shelf Registration Statement or any other registration statementcontemplated by this Agreement, as then in effect, includes an untrue statementof a material fact or omits to state any material fact required to be statedtherein or necessary to make the statements therein not misleading in the lightof the circumstances then existing; (ii) the issuance or threat of issuance bythe Commission of any stop order suspending the effectiveness of the ShelfRegistration Statement or any other registration statement contemplated by thisAgreement, or the initiation of any proceedings for that purpose; or (iii) thereceipt by Copano of any notification with respect to the suspension of thequalification of any Registrable Securities for sale under the applicablesecurities or blue sky laws of any jurisdiction.  Following the provision of such notice,Copano agrees to as promptly as practicable amend or supplement the prospectusor prospectus supplement or take other appropriate action so that theprospectus or prospectus supplement does not include an untrue statement of amaterial fact or omit to state a material fact required to be stated therein ornecessary to make the statements therein not misleading in the light of thecircumstances then existing and to take such other action as is necessary toremove a stop order, suspension, threat thereof or proceedings related thereto;

 

(f)            upon request and subject toappropriate confidentiality obligations, furnish to each Selling Holder copiesof any and all transmittal letters or other correspondence with the Commissionor any other governmental agency or self-regulatory body or other body having

 

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jurisdiction (including any domestic orforeign securities exchange) relating to such offering of RegistrableSecurities;

 

(g)           in the case of an UnderwrittenOffering, furnish upon request, (i) an opinion of counsel for Copano, dated theeffective date of the applicable registration statement or the date of anyamendment or supplement thereto, and a letter of like kind dated the date ofthe closing under the underwriting agreement, and (ii) a “cold comfort” letter,dated the effective date of the applicable registration statement or the dateof any amendment or supplement thereto and a letter of like kind dated the dateof the closing under the underwriting agreement, in each case, signed by theindependent public accountants who have certified Copano’s financial statementsincluded or incorporated by reference into the applicable registrationstatement, and each of the opinion and the “cold comfort” letter shall be incustomary form and covering substantially the same matters with respect to suchregistration statement (and the prospectus and any prospectus supplementincluded therein) as are customarily covered in opinions of issuer’s counseland in accountants’ letters delivered to the underwriters in UnderwrittenOfferings of securities and such other matters as such underwriters mayreasonably request;

 

(h)           otherwise use its commerciallyreasonable efforts to comply with all applicable rules and regulations of theCommission, and make available to its security holders, as soon as reasonablypracticable, an earnings statement, which earnings statement shall satisfy theprovisions of Section 11(a) of the Securities Act and Rule 158 promulgatedthereunder;

 

(i)            make available to the appropriaterepresentatives of the Managing Underwriter and Selling Holders access to suchinformation and Copano personnel as is reasonable and customary to enable suchparties to establish a due diligence defense under the Securities Act; *provided, however*, that Copano need notdisclose any information to any such representative unless and until suchrepresentative has entered into a confidentiality agreement with Copano;

 

(j)            cause all such RegistrableSecurities registered pursuant to this Agreement to be listed on each securitiesexchange or nationally recognized quotation system on which similar securitiesissued by Copano are then listed;

 

(k)           use its commercially reasonableefforts to cause the Registrable Securities to be registered with or approvedby such other governmental agencies or authorities as may be necessary byvirtue of the business and operations of Copano to enable the Selling Holdersto consummate the disposition of such Registrable Securities;

 

(l)            provide a transfer agent andregistrar for all Registrable Securities covered by such registration statementnot later than the effective date of such registration statement; and

 

(m)          enter into customary agreements andtake such other actions as are reasonably requested by the Selling Holders orthe underwriters, if any, in order to expedite or facilitate the disposition ofsuch Registrable Securities.

 

Each SellingHolder, upon receipt of notice from Copano of the happening of any event of thekind described in subsection (e) of this Section 2.04, shall forthwithdiscontinue disposition of the Registrable Securities until such Selling Holder’sreceipt of the copies of the supplemented or amended prospectus contemplated bysubsection (e) of this Section 2.04 or until

 

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it is advised in writing by Copano that theuse of the prospectus may be resumed, and has received copies of any additionalor supplemental filings incorporated by reference in the prospectus, and, if sodirected by Copano, such Selling Holder will, or will request the managingunderwriter or underwriters, if any, to deliver to Copano (at Copano’s expense)all copies in their possession or control, other than permanent file copiesthen in such Selling Holder’s possession, of the prospectus covering suchRegistrable Securities current at the time of receipt of such notice.

 

Section 2.05           Cooperation by Holders.  Copano shall have no obligation to include inthe Shelf Registration Statement units of a Holder or in a UnderwrittenOffering pursuant to Section 2.02 units of a Selling Holder who hasfailed to timely furnish such information that, in the opinion of counsel toCopano, is reasonably required in order for the registration statement orprospectus supplement, as applicable, to comply with the Securities Act.

 

Section 2.06           Restrictions on Public Sale byHolders of Registrable Securities. Each Holder of Registrable Securities who is included in the ShelfRegistration Statement agrees not to effect any public sale or distribution ofthe Registrable Securities during the 30 calendar day period followingcompletion of a public offering of equity securities by Copano except asspecifically provided herein; *provided,however*, (i) that the duration of the foregoing restrictions shallbe no longer than the duration of the shortest restriction generally imposed bythe underwriters on the officers or directors or any other unitholder of Copanoon whom a restriction is imposed and (ii) that such Selling Holder owns morethan ten million dollars ($10,000,000) of the Purchased Common Units, asdetermined based on the closing price of Copano’s Common Units on the dateimmediately preceding such determination, which threshold amount shall beincreased automatically to fifteen million dollars ($15,000,000) following thefirst Underwritten Offering by Copano after the Closing and (iii) therestrictions contained in this Section 2.06 shall not prevent a Holder fromselling during such 30 calendar day period an aggregate of the lesser of anumber of Common Units equal to (a) Copano’s average weekly trading volume overthe prior four trading weeks on the Nasdaq National Market or other applicableexchange or (b) one percent of Copano’s outstanding Common Units measured as ofthe date of such sale and, *provided further*,that if a Holder has submitted a notice to request inclusion in an UnderwrittenOffering pursuant to Section 2.02(a) but is unable to sell any of such CommonUnits as a result of the priority provisions contained in Section 2.02(b), thensuch Holder shall not be subject to the restrictions contained in this Section2.06.

 

Section 2.07           Expenses.

 

(a)           Certain Definitions.  “Registration Expenses” means allexpenses incident to Copano’s performance under or compliance with thisAgreement to effect the registration of Registrable Securities the ShelfRegistration Statement pursuant to Section 2.01, an UnderwrittenOffering pursuant to Section 2.02 or Section 2.03, and thedisposition of such securities, including, without limitation, allregistration, filing, securities exchange listing and The Nasdaq NationalMarket fees, all registration, filing, qualification and other fees andexpenses of complying with securities or blue sky laws, fees of the NationalAssociation of Securities Dealers, Inc., transfer taxes and fees of transferagents and registrars, all word processing, duplicating and printing expenses,the fees and disbursements of counsel and independent public accountants forCopano, including the expenses of any special audits or “cold comfort” letters

 

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required by or incident to such performanceand compliance.  Except as otherwiseprovided in Section 2.08 hereof, Copano shall not be responsible forlegal fees incurred by Holders in connection with the exercise of such Holders’rights hereunder.  In addition, Copanoshall not be responsible for any “Selling Expenses,” which means allunderwriting fees, discounts and selling commissions allocable to the sale ofthe Registrable Securities.

 

(b)           Expenses.  Copano will pay all reasonable RegistrationExpenses as determined in good faith, including, in the case of an UnderwrittenOffering, whether or not any sale is made pursuant to such UnderwrittenOffering. Each Selling Holder shall pay all Selling Expenses in connection withany sale of its Registrable Securities hereunder.

 

Section 2.08           Indemnification.

 

(a)           By Copano.  In the event of a registration of anyRegistrable Securities under the Securities Act pursuant to this Agreement,Copano will indemnify and hold harmless each Selling Holder thereunder, itsdirectors, officers, employees and agents, and each underwriter, pursuant tothe applicable underwriting agreement with such underwriter, of RegistrableSecurities thereunder and each Person, if any, who controls such Selling Holderor underwriter within the meaning of the Securities Act and the Exchange Act,against any losses, claims, damages, expenses or liabilities (includingreasonable attorneys’ fees and expenses) (collectively, “Losses”), jointor several, to which such Selling Holder, its directors, officers, employees oragents, or any underwriter or controlling Person may become subject under theSecurities Act, the Exchange Act or otherwise, insofar as such Losses (oractions or proceedings, whether commenced or threatened, in respect thereof)arise out of or are based upon any untrue statement or alleged untrue statementof any material fact contained in the Shelf Registration Statement or any otherregistration statement contemplated by this Agreement, any preliminaryprospectus or final prospectus contained therein, or any amendment orsupplement thereof, or arise out of or are based upon the omission or allegedomission to state therein a material fact required to be stated therein ornecessary to make the statements therein (in the case of a prospectus, in lightof the circumstances under which they were made) not misleading, and willreimburse each such Selling Holder, its directors, officers, employees oragents, or any underwriter or controlling Person for any legal or otherexpenses reasonably incurred by them in connection with investigating ordefending any such Loss or actions or proceedings; *provided, however*, that Copano will not be liable in anysuch case if and to the extent that any such Loss arises out of or is basedupon an untrue statement or alleged untrue statement or omission or allegedomission so made in conformity with information furnished by such SellingHolder, its directors, officers, employees or agents, or any underwriter orcontrolling Person in writing specifically for use in the Shelf RegistrationStatement or such other registration statement, or prospectus supplement, asapplicable. Such indemnity shall remain in full force and effect regardless ofany investigation made by or on behalf of such Selling Holder, its directors,officers, employees or agents, or any underwriter or controlling Person, andshall survive the transfer of such securities by such Selling Holder.

 

(b)           By Each Selling Holder.  Each Selling Holder agrees severally and notjointly to indemnify and hold harmless Copano, its directors, officers,employees and agents, and each Person, if any, who controls Copano within themeaning of the Securities Act or of the Exchange Act to the same extent as theforegoing indemnity from Copano to the Selling Holders, but only

 

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with respect to information regarding suchSelling Holder furnished in writing by or on behalf of such Selling Holderexpressly for inclusion in the Shelf Registration Statement or prospectussupplement relating to the Registrable Securities, or any amendment orsupplement thereto; *provided, however*,that the liability of each Selling Holder shall not be greater in amount thanthe dollar amount of the proceeds (net of any Selling Expenses) received bysuch Selling Holder from the sale of the Registrable Securities giving rise tosuch indemnification.

 

(c)           Notice.  Promptly after receipt by an indemnifiedparty hereunder of notice of the commencement of any action, such indemnifiedparty shall, if a claim in respect thereof is to be made against theindemnifying party hereunder, notify the indemnifying party in writing thereof,but the omission so to notify the indemnifying party shall not relieve it fromany liability which it may have to any indemnified party other than under this Section2.08.  In any action brought againstany indemnified party, it shall notify the indemnifying party of thecommencement thereof.  The indemnifyingparty shall be entitled to participate in and, to the extent it shall wish, toassume and undertake the defense thereof with counsel reasonably satisfactoryto such indemnified party and, after notice from the indemnifying party to suchindemnified party of its election so to assume and undertake the defensethereof, the indemnifying party shall not be liable to such indemnified partyunder this Section 2.08 for any legal expenses subsequently incurred bysuch indemnified party in connection with the defense thereof other thanreasonable costs of investigation and of liaison with counsel so selected; *provided, however*, that, (i) if theindemnifying party has failed to assume the defense and employ counselreasonably acceptable to the indemnified party or (ii) if the defendants in anysuch action include both the indemnified party and the indemnifying party andcounsel to the indemnified party shall have concluded that there may bereasonable defenses available to the indemnified party that are different fromor additional to those available to the indemnifying party, or if the interestsof the indemnified party reasonably may be deemed to conflict with theinterests of the indemnifying party, then the indemnified party shall have theright to select a separate counsel and to assume such legal defense andotherwise to participate in the defense of such action, with the reasonableexpenses and fees of such separate counsel and other reasonable expensesrelated to such participation to be reimbursed by the indemnifying party asincurred.  Notwithstanding any otherprovision of this Agreement, no indemnified party shall settle any actionbrought against it with respect to which it is entitled to indemnificationhereunder without the consent of the indemnifying party, unless the settlementthereof imposes no liability or obligation on, and includes a complete andunconditional release from all liability of, the indemnifying party.

 

(d)           Contribution.  If the indemnification provided for in this Section2.08 is held by a court or government agency of competent jurisdiction tobe unavailable to any indemnified party or is insufficient to hold themharmless in respect of any Losses, then each such indemnifying party, in lieuof indemnifying such indemnified party, shall contribute to the amount paid orpayable by such indemnified party as a result of such Loss in such proportionas is appropriate to reflect the relative fault of the indemnifying party onthe one hand and of such indemnified party on the other in connection with thestatements or omissions which resulted in such Losses, as well as any otherrelevant equitable considerations; *provided,however*, that in no event shall such Selling Holder be required tocontribute an aggregate amount in excess of the dollar amount of proceeds (netof Selling Expenses) received by such Selling Holder from the sale ofRegistrable Securities giving rise to such indemnification.  The relative fault of the indemnifying partyon the one hand and the indemnified party on the other shall be determined byreference to,

 

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among other things, whether the untrue oralleged untrue statement of a material fact or the omission or alleged omissionto state a material fact has been made by, or relates to, information suppliedby such party, and the parties’ relative intent, knowledge, access toinformation and opportunity to correct or prevent such statement oromission.  The parties hereto agree thatit would not be just and equitable if contributions pursuant to this paragraphwere to be determined by pro rata allocation or by any other method ofallocation which does not take account of the equitable considerations referredto herein.  The amount paid by anindemnified party as a result of the Losses referred to in the first sentenceof this paragraph shall be deemed to include any legal and other expensesreasonably incurred by such indemnified party in connection with investigatingor defending any Loss which is the subject of this paragraph. No person guiltyof fraudulent misrepresentation (within the meaning of Section 11(f) of theSecurities Act) shall be entitled to contribution from any Person who is notguilty of such fraudulent misrepresentation.

 

(e)           Other Indemnification.  The provisions of this Section 2.08shall be in addition to any other rights to indemnification or contributionwhich an indemnified party may have pursuant to law, equity, contract orotherwise.

 

Section 2.09           Rule 144 Reporting.  With a view to making available the benefitsof certain rules and regulations of the Commission that may permit the sale ofthe Registrable Securities to the public without registration, Copano agrees touse its commercially reasonable efforts to:

 

(a)           Make and keep public informationregarding Copano available, as those terms are understood and defined in Rule144 under the Securities Act, at all times from and after the date hereof;

 

(b)           File with the Commission in a timelymanner all reports and other documents required of Copano under the SecuritiesAct and the Exchange Act at all times from and after the date hereof; and

 

(c)           So long as a Holder owns anyRegistrable Securities, furnish to such Holder forthwith upon request a copy ofthe most recent annual or quarterly report of Copano, and such other reportsand documents so filed as such Holder may reasonably request in availing itselfof any rule or regulation of the Commission allowing such Holder to sell anysuch securities without registration.

 

Section 2.10           Transfer or Assignment ofRegistration Rights.  The rights tocause Copano to register Registrable Securities granted to the Purchasers byCopano under this Article II may be transferred or assigned by any Purchaser toone or more transferee(s) or assignee(s) of such Registrable Securities; *provided, however*, that (a) unless suchtransferee is an Affiliate of such Purchaser, each such transferee or assigneeholds Registrable Securities representing at least $5 million of the PurchasedCommon Units sold pursuant to the terms of the Purchase Agreement, asdetermined based on the closing price of Copano’s Common Units on the dateimmediately preceding such determination, (b) Copano is given written noticeprior to any said transfer or assignment, stating the name and address of eachsuch transferee and identifying the securities with respect to which suchregistration rights are being transferred or assigned, and (c)

 

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each such transferee assumes in writingresponsibility for its portion of the obligations of such Purchaser under thisAgreement.

 

Section 2.11           Limitation on SubsequentRegistration Rights.  From and afterthe date hereof, Copano shall not, without the prior written consent of theHolders of a majority of the outstanding Registrable Securities, enter into anyagreement with any current or future holder of any securities of Copano thatwould allow such current or future holder to require Copano to includesecurities in any registration statement filed by Copano on a basis that issuperior in any way to the piggyback rights granted to Purchaser hereunder.

 

Section 2.12           Lock-Up.  Notwithstanding anything to the contrary inthis Agreement, Purchaser agrees not to sell any of the Purchased Common Unitsprior to the date that is 90 days after the date of this Agreement.

 

**ARTICLEIIIMISCELLANEOUS**

 

Section 3.01           Communications.  All notices and other communications providedfor or permitted hereunder shall be made in writing by facsimile, electronicmail, courier service or personal delivery:

 

(a)           if to Purchaser, to the address setforth under that Purchaser’s signature block in accordance with the provisionsof this Section 3.01,

 

(b)           if to a transferee of Purchaser, tosuch Holder at the address provided pursuant to Section 2.10 above, and

 

(c)           if to Copano, at 2727 Allen Parkway,Suite 1200, Houston, Texas 77019, notice of which is given in accordance withthe provisions of this Section 3.01.

 

All suchnotices and communications shall be deemed to have been received at the timedelivered by hand, if personally delivered; when receipt acknowledged, if sentvia facsimile or sent via Internet electronic mail; and when actually received,if sent by courier service or any other means.

 

Section 3.02           Successor and Assigns.  This Agreement shall inure to the benefit ofand be binding upon the successors and assigns of each of the parties,including subsequent Holders of Registrable Securities to the extent permittedherein.

 

Section 3.03           Assignment of Rights.  All or any portion of the rights andobligations of any Purchaser under this Agreement may be transferred orassigned by such Purchaser in accordance with Section 2.10 hereof.

 

Section 3.04           Aggregation of Purchased CommonUnits.  All Purchased Common Unitsheld or acquired by Persons who are Affiliates of one another shall beaggregated together for the purpose of determining the availability of anyrights under this Agreement.

 

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Section 3.05           Recapitalization, Exchanges, Etc.Affecting the Common Units.  Theprovisions of this Agreement shall apply to the full extent set forth hereinwith respect to any and all units of Copano or any successor or assign ofCopano (whether by merger, consolidation, sale of assets or otherwise) whichmay be issued in respect of, in exchange for or in substitution of, theRegistrable Securities, and shall be appropriately adjusted for combinations,recapitalizations and the like occurring after the date of this Agreement.

 

Section 3.06           Specific Performance.  Damages in the event of breach of thisAgreement by a party hereto may be difficult, if not impossible, to ascertain,and it is therefore agreed that each such Person, in addition to and withoutlimiting any other remedy or right it may have, will have the right to an injunctionor other equitable relief in any court of competent jurisdiction, enjoining anysuch breach, and enforcing specifically the terms and provisions hereof, andeach of the parties hereto hereby waives any and all defenses it may have onthe ground of lack of jurisdiction or competence of the court to grant such aninjunction or other equitable relief. The existence of this right will not preclude any such Person frompursuing any other rights and remedies at law or in equity which such Personmay have.

 

Section 3.07           Counterparts.  This Agreement may be executed in any numberof counterparts and by different parties hereto in separate counterparts, eachof which counterparts, when so executed and delivered, shall be deemed to be anoriginal and all of which counterparts, taken together, shall constitute butone and the same Agreement.

 

Section 3.08           Headings.  The headings in this Agreement are forconvenience of reference only and shall not limit or otherwise affect themeaning hereof.

 

Section 3.09           Governing Law.  The laws of the State of Delaware shallgovern this Agreement without regard to principles of conflict of laws.

 

Section 3.10           Severability of Provisions.  Any provision of this Agreement which isprohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,be ineffective to the extent of such prohibition or unenforceability withoutinvalidating the remaining provisions hereof or affecting or impairing thevalidity or enforceability of such provision in any other jurisdiction.

 

Section 3.11           Entire Agreement.  This Agreement is intended by the parties asa final expression of their agreement and intended to be a complete andexclusive statement of the agreement and understanding of the parties hereto inrespect of the subject matter contained herein. There are no restrictions, promises, warranties or undertakings, otherthan those set forth or referred to herein with respect to the rights grantedby Copano set forth herein.  ThisAgreement supersedes all prior agreements and understandings between theparties with respect to such subject matter.

 

Section 3.12           Amendment.  This Agreement may be amended only by meansof a written amendment signed by Copano and the Holders of a majority of thethen outstanding Registrable Securities; *provided,however*, that no such amendment shall materially and adverselyaffect the rights of any Holder hereunder without the consent of such Holder.

 

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Section 3.13           No Presumption.  If any claim is made by a party relating toany conflict, omission, or ambiguity in this Agreement, no presumption orburden of proof or persuasion shall be implied by virtue of the fact that thisAgreement was prepared by or at the request of a particular party or itscounsel.

 

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IN WITNESSWHEREOF, the parties have executed this Agreement as of the date first writtenabove.

 
| ** ** | **COPANO ENERGY, L.L.C.** |
|------------|---------------------------|
|       |                      |   |   |
|       |                      |   |   |
|       |                      | By: | /s/ John R. Eckel, Jr. |
|       |                      |   | Name: | John R. Eckel, Jr. |
|       |                      |   | Title: | Chairman of the Board and Chief |
|       |                      |   |   | Executive Officer |

 

 

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RegistrationRights Agreement

 

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| ** ** | **ZLP FUND, L.P.** |                           |
|------------|--------------------|--------------------------------|
|       |               |                           |   |
|       | By:                | Zimmer Lucas Partners, LLC,    |
|       |               | its general partner            |
|       |               |                           |   |
|       |               |                           |   |
|       |               | By:                            | /s/ Stuart Zimmer |
|       |               |                           | Stuart Zimmer, Managing Member |
|       |               |                           |   |
|       |               |                           |   |
|       |               | ZLP Fund, L.P.                 |
|       |               | 45 Broadway, 28th Floor        |
|       |               | New York, NY 10006             |
|       |               | Attn: Stuart Zimmer            |
|       |               | Facsimile:   212-440-0750 |
|            |                    |                                |  |  |  |

 

 

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|   | **STRUCTURED FINANCE AMERICAS, LLC** |
|--------|--------------------------------------|
|   |                                 |   |   |
|   |                                 |   |   |
|   | By:                                  | /s/ K. Bell |   |
|   |                                 | Name:   K. Bell |   |
|   |                                 | Title:    Managing Director |   |
|   |                                 |   |   |
|   |                                 |   |   |
|   | By:                                  | /s/ Richard C.  Kennedy |   |
|   |                                 | Name:   Richard C. Kennedy |   |
|   |                                 | Title:   |   |
|   |                                 |   |
|   |                                 |   |   |
|   |                                 | Deutsche Bank Securities LLC |   |
|   |                                 | 60 Wall Street, 4th Floor |   |
|   |                                 | New York, NY 10005 |   |
|   |                                 | Attn:   Richard Kennedy |   |
|   |                                 | Facsimile: |   |
|        |                                      |  |  |  |

 

 

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| ** ** | **ROYAL BANK OF CANADA**            |                                           |
|------------|-------------------------------------|------------------------------------------------|
| ** ** | ** by  its agent**             |                                           |
|       |                                |                                           |
| ** ** | **RBC CAPITAL MARKETS CORPORATION** |                                           |
|       |                                |                                           |
|       |                                |
|       | By:                                 | /s/ Patrick Clarke                             |   |
|       |                                | Name:  Patrick Clarke                     |
|       |                                | Title:   Managing Director           |
|       |                                |                                           |
|       |                                |                                           |
|       | By:                                 | /s/ Josef Muskatel                             |   |
|       |                                | Name:  Josef Muskatel                     |
|       |                                | Title:   Director and Senior Counsel |

 

 

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