Document:

ex4-1.htm

 

 

 

Exhibit 4.1

REGISTRATION RIGHTS AGREEMENT

 

This REGISTRATION RIGHTS AGREEMENT, dated as of July 21, 2010 (this “Agreement”), is entered into by and between COPANO ENERGY, L.L.C., a Delaware limited liability company (“Copano”), and TPG Copenhagen, L.P., a Delaware limited partnership (the “Purchaser”).

 

WHEREAS, this Agreement is made in connection with the Closing of the issuance and sale of the Purchased Units pursuant to the Series A Convertible Preferred Unit Purchase Agreement, dated the date hereof, by and between Copano and the Purchaser (the “Purchase Agreement”);

 

WHEREAS, Copano has agreed to provide the registration and other rights set forth in this Agreement for the benefit of the Purchaser pursuant to the Purchase Agreement; and

 

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

 

ARTICLE I

 

DEFINITIONS

 

Section 1.01                      Definitions.  Capitalized terms used in this Agreement and not defined herein shall have the meanings ascribed to such terms in the Purchase Agreement.  As used in this Agreement, the following terms have the meanings indicated:

 

“Agreement” shall have the meaning specified in the introductory paragraph of this Agreement.

 

“Copano” shall have the meaning specified in the introductory paragraph of this Agreement.

 

“Delay Liquidated Damages” shall have the meaning specified in Section 2.01(c) of this Agreement.

 

“Effective Date” means, with respect to a particular Shelf Registration Statement, the date of effectiveness of such Shelf Registration Statement.

 

“Effectiveness Period” shall have the meaning specified in Section 2.01(a) of this Agreement.

 

“Filing Date” shall have the meaning specified in Section 2.01(a) of this Agreement.

 

“Holder” means a record holder of Registrable Securities.

 

“Included Registrable Securities” shall have the meaning specified in Section 2.02(a) of this Agreement.

 

  

  

  

  

“Launch Date” shall have the meaning specified in Section 2.02(b) of this Agreement.

 

“Liquidated Damages” shall have the meaning specified in Section 2.01(c) of this Agreement.

 

“Liquidated Damages Cap” shall have the meaning specified in Section 2.01(d) of this Agreement.

 

“Losses” shall have the meaning specified in Section 2.08(a) of this Agreement.

 

“Managing Underwriter” means, with respect to any Underwritten Offering, the book running lead manager of such Underwritten Offering.

 

“Opt-Out Notice” shall have the meaning specified in Section 2.02(a).

 

“Other Holder” shall have the meaning specified in Section 2.02(c) of this Agreement.

 

“Overnight Underwritten Offering” shall have the meaning specified in Section 2.02(b) of this Agreement.

 

“Piggyback Offering” shall have the meaning specified in Section 2.02(a) of this Agreement.

 

“Pricing Date” shall have the meaning specified in Section 2.02(b) of this Agreement.

 

“Primary Offering” shall have the meaning specified in Section 2.04(n) of this Agreement.

 

“Purchase Agreement” shall have the meaning specified in the recitals of this Agreement.

 

“Purchaser” shall have the meaning specified in the introductory paragraph of this Agreement.

 

“Registrable Securities” means the Conversion Common Units underlying: (i) the Series A Preferred Units acquired pursuant to the Purchase Agreement (including Conversion Common Units underlying any Series A Preferred Units issued to the Purchaser as payment in-kind pursuant to the terms of the Series A Preferred Units); and (ii) any Class B Units issued upon conversion of any Series A Preferred Units.

 

“Registration Expenses” shall have the meaning specified in Section 2.07(a) of this Agreement.

 

“Selling Expenses” shall have the meaning specified in Section 2.07(a) of this Agreement.

 

“Selling Holder” means a Holder who is selling Registrable Securities under a registration statement pursuant to the terms of this Agreement.

 

“Selling Holder Documentation” shall have the meaning specified in Section 2.02(b).

 

  

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“Shelf Registration Statement” means a registration statement under the Securities Act to permit the public resale of the Registrable Securities from time to time as permitted by Rule 415 of the Securities Act (or any similar provision then in force under the Securities Act).

 

“Underwritten Offering” means an offering (including an offering pursuant to a Shelf Registration Statement) in which Common Units are sold to an underwriter on a best efforts or firm commitment basis for reoffering to the public or an offering that is Overnight Underwritten Offering with one or more investment banks.

 

“Underwritten Offering Filing” shall have the meaning specified in Section 2.02(a) of this Agreement.

 

“Underwritten Offering Request” shall have the meaning specified in Section 2.03(a) of this Agreement.

 

“Unit Purchase Price” means $29.05.

 

Section 1.02                      Registrable Securities.  Any Registrable Security will cease to be a Registrable Security at the earliest of the following: (a) when a registration statement covering such Registrable Security becomes or has been declared effective by the Commission and such Registrable Security has been sold or disposed of pursuant to such registration statement; (b) when such Registrable Security has been disposed of pursuant to Rule 144 (or any similar provision then in force) under the Securities Act; (c) when such Registrable Security is held by Copano or one of its subsidiaries; (d) when such Registrable Security has been sold in a private transaction in which the transferor’s rights under this Agreement are not assigned to the transferee of such securities pursuant to the terms of this Agreement; and (e) two (2) years from the Effective Date of the registration statement relating to such Registrable Securities.

 

ARTICLE II

 

REGISTRATION RIGHTS

 

Section 2.01                      Shelf Registration.

 

(a)           Shelf Registration.  As soon as practicable following Copano’s receipt of written notice from the Holders of a majority of the Registrable Securities then outstanding requesting the filing of a Shelf Registration Statement, Copano shall prepare and file a Shelf Registration Statement under the Securities Act covering Registrable Securities then outstanding; provided, however, that the right of such Holders to request such filing shall expire on the seventh anniversary of the date hereof.  If Copano does not meet the Commission’s definition of “well known seasoned issuer,” Copano shall use its commercially reasonable efforts to cause the Shelf Registration Statement to become effective no later than 180 days after the date of the filing of such Shelf Registration Statement (the “Filing Date”).  A Shelf Registration Statement filed pursuant to this Section 2.01(a) shall be on such appropriate registration form of the Commission as shall be selected by Copano; provided, however, that if a prospectus supplement will be used in connection with the marketing of an Underwritten Offering from a Shelf Registration Statement and the Managing Underwriter at any time shall notify Copano in writing that, in the reasonable judgment of such Managing Underwriter, inclusion of detailed information to be used in such prospectus supplement is of material importance to the success of

 

  

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the Underwritten Offering of such Registrable Securities, Copano shall use its commercially reasonable efforts to include such information in the prospectus supplement.  Copano will use its commercially reasonable efforts to cause a Shelf Registration Statement filed pursuant to this Section 2.01(a) to be continuously effective under the Securities Act until the earliest date on which any of the following occurs: (i) all Registrable Securities covered by such Shelf Registration Statement have been distributed in the manner set forth and as contemplated in such Shelf Registration Statement, (ii) there are no longer any Registrable Securities outstanding and (iii) two years from the Effective Date of such Shelf Registration Statement (the “Effectiveness Period”).  A Shelf Registration Statement when it becomes or is declared effective (including the documents incorporated therein by reference) will comply as to form in all material respects with all applicable requirements of the Securities Act and the Exchange Act and will not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading (and, in the case of any prospectus contained in such Shelf Registration Statement, in the light of the circumstances under which a statement is made).  As soon as practicable following the Effective Date of a Shelf Registration Statement, but in any event within three (3) Business Days of such date, Copano will notify the Selling Holders of the effectiveness of such Shelf Registration Statement.

 

(b)           Maximum Shelf Registration Requests; Delay Rights.

 

(i)           Notwithstanding anything to the contrary contained in this Agreement, Copano shall not be obligated to file or effect more than two (2) Shelf Registration Statements (including any post-effective amendments to such Shelf Registration Statement filed for the primary purpose of including Selling Holders or adding Conversion Common Units to such Registration Statement) pursuant to Section 2.01 of this Agreement.

 

(ii)           Notwithstanding anything to the contrary contained in this Agreement, Copano may, upon written notice to any Selling Holder whose Registrable Securities are included in a Shelf Registration Statement, suspend such Selling Holder’s use of any prospectus that is a part of such Shelf Registration Statement (in which event the Selling Holder shall discontinue sales of the Registrable Securities pursuant to the Shelf Registration Statement) if (A) Copano is pursuing an acquisition, merger, reorganization, disposition or other similar transaction and Copano determines in good faith that Copano’s ability to pursue or consummate such a transaction would be materially and adversely affected by any required disclosure of such transaction in the Shelf Registration Statement or (B) Copano has experienced some other material non-public event the disclosure of which at such time, in the good faith judgment of Copano, would materially and adversely affect Copano; provided, however, that in no event shall the Selling Holders be suspended from selling Registrable Securities pursuant to the Shelf Registration Statement for a period that exceeds an aggregate of sixty (60) days in any one hundred-eighty (180) day period or ninety (90) days (exclusive of days covered by any lock-up agreement executed by a Selling Holder in connection with any Underwritten Offering by Copano or a Selling Holder) in any 365 day period.  Upon disclosure of such information or the termination of the conditions described above, Copano shall provide prompt notice to the Selling Holders whose Registrable Securities are included in the

 

  

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Shelf Registration Statement, and shall promptly terminate any suspension of sales it has put into effect and shall take such other actions necessary or appropriate to permit registered sales of Registrable Securities as contemplated in this Agreement.

 

(c)           Failure To Become Effective; Additional Rights to Liquidated Damages.

 

(i)           If a Shelf Registration Statement required by Section 2.01(a) does not become or is not declared effective within 180 days after its Filing Date, then each Selling Holder shall be entitled to a payment (with respect to each Registrable Security held by the Selling Holder), as liquidated damages and not as a penalty, of 0.25% per annum of the Unit Purchase Price for the first 60-day period immediately following the 180th day after the Filing Date, with such payment amount increasing by an additional 0.25% per annum of the Unit Purchase Price for each subsequent 60-day period, up to a maximum of 1.00% per annum of the Unit Purchase Price (the “Liquidated Damages”), until such time as such Shelf Registration Statement becomes effective or is declared effective or the Registrable Securities covered by such Shelf Registration Statement are no longer outstanding.

 

(ii)           If (A) the Holders shall be prohibited from selling their Registrable Securities under the Registration Statement as a result of a suspension pursuant to Section 2.01(b)(ii) of this Agreement in excess of the periods permitted therein or (B) the Registration Statement is filed and effective but, during the Effectiveness Period, shall thereafter cease to be effective or fail to be usable for its intended purpose without being succeeded within ninety (90) Business Days by a post-effective amendment to the Registration Statement, a supplement to the prospectus or a report filed with the Commission pursuant to Section 13(a), 13(c), 14 or l5(d) of the Exchange Act, then, until the suspension is lifted or such amendment, supplement or report is filed and effective, but not including any day on which a suspension is lifted, if applicable, then each Holder shall be entitled to a payment (with respect to each Registrable Security), as liquidated damages and not as a penalty, of 0.125% per annum of the Unit Purchase Price for the first 90-days following (x) the date on which the suspension period exceeded the permitted period under Section 2.01(b)(ii) of this Agreement or (y) the 91st Business Day after the Registration Statement ceased to be effective or failed to be useable for its intended purposes, increasing by an additional 0.125% per annum of the Unit Purchase Price for each subsequent 90-day period, up to a maximum of 0.50% per annum of the Unit Purchase Price (the “Delay Liquidated Damages”). For purposes of this Section 2.01(c)(ii), a suspension shall be deemed lifted on the date that notice that the suspension has been lifted or that a post-effective amendment is effective is delivered to the Holders pursuant to Section 3.01 of this Agreement.

 

(d)           General.  The Liquidated Damages and the Delay Liquidated Damages shall be paid to each Selling Holder in cash within ten (10) Business Days of the end of each such 30-day period.  Any payments made pursuant to this Section 2.01(d) shall constitute the Selling Holders’ exclusive remedy for such events.  The Liquidated Damages and the Delay Liquidated Damages imposed hereunder shall be paid to the Selling Holders in immediately available funds.  In no event will the aggregate amount of Liquidated Damages and the Delay Liquidated Damages paid to the Selling Holders exceed 5% of the aggregate of the Total

 

 

  

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Purchase Price (the “Liquidated Damages Cap”).  In addition to being subject to the Liquidated Damages Cap, the payment of the Liquidated Damages and the Delay Liquidated Damages to a Selling Holder shall cease at such time as the Registrable Securities of such Selling Holder become eligible for resale under Rule 144 of the Securities Act.

 

Section 2.02                      Piggyback Rights.

 

(a)           Underwritten Offering Piggyback Rights.  Except as provided in Section 2.02(b), if at any time during any Effectiveness Period Copano proposes to file (i) a prospectus supplement to an effective shelf registration statement, other than a Shelf Registration Statement contemplated by Section 2.01, or (ii) a registration statement, other than a shelf registration statement, in either case, for the sale of Common Units in an Underwritten Offering for its own account, then, as soon as practicable but not less than three (3) Business Days prior to the filing of (A) any preliminary prospectus supplement relating to such Underwritten Offering pursuant to Rule 424(b) of the Securities Act, (B) the prospectus supplement relating to such Underwritten Offering pursuant to Rule 424(b) of the Securities Act (if no preliminary prospectus supplement is used) or (C) such registration statement (other than a shelf registration statement), as the case may be (an “Underwritten Offering Filing”), Copano shall give notice of such proposed Underwritten Offering to the Holders and such notice shall offer the Holders the opportunity to include in such Underwritten Offering such number of Registrable Securities (the “Included Registrable Securities”) as each such Holder may request in writing (a “Piggyback Offering”); provided, however, that Copano shall not be required to offer such opportunity to Holders if (aa) the Holders do not offer a minimum of $15 million of Registrable Securities, in the aggregate (determined by multiplying the number of Registrable Securities held by the participating Holdings by the average of the closing price on NASDAQ for Common Units for the ten (10) trading days preceding the date of such notice) or (bb) Copano has been advised by the Managing Underwriter that the inclusion of Registrable Securities for sale for the benefit of the Holders will have an adverse effect on the price, timing or distribution of the Common Units, in which case the amount of Registrable Securities to be offered for the accounts of participating Holders shall be determined based on the provisions of Section 2.02(c) of this Agreement.  Each Holder shall keep any information relating to any such Underwritten Offering confidential and shall not disseminate or in any way disclose such information.  Except as provided in Section 2.02(b), each Holder shall then have two (2) Business Days from the date of such notice to request inclusion of its Registrable Securities in the Piggyback Offering.  If no request for inclusion from a Holder is received within the specified time, such Holder shall have no further right to participate in such Piggyback Offering.  If, at any time after giving written notice of its intention to undertake an Underwritten Offering and prior to the closing of such Underwritten Offering, Copano shall determine for any reason not to undertake or to delay such Underwritten Offering, Copano shall give written notice of such determination to the Selling Holders and, (x) in the case of a determination not to undertake such Underwritten Offering, shall be relieved of its obligation to sell any Included Registrable Securities in connection with such terminated Underwritten Offering, and (y) in the case of a determination to delay such Underwritten Offering, shall be permitted to delay offering any Included Registrable Securities for the same period as the delay of the Underwritten Offering.  Any Selling Holder shall have the right to withdraw such Selling Holder’s request for inclusion of such Selling Holder’s Registrable Securities in such Underwritten Offering by giving written notice to Copano of such withdrawal at least one (1) Business Day prior to the time of pricing of such Underwritten Offering.  Each

 

  

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Holder’s rights under this Section 2.02(a) shall terminate when such Holder holds less than $30 million of Registrable Securities (based on the Unit Purchase Price).  Notwithstanding the foregoing, any Holder may deliver written notice (an “Opt-Out Notice”) to Copano requesting that such Holder not receive notice from Copano of any proposed Underwritten Offering; provided, however, that such Holder may later revoke any such Opt-Out Notice in writing.

 

(b)           Overnight Underwritten Offering Piggyback Rights.  If at any time during any Effectiveness Period Copano proposes to make an Underwritten Offering Filing and such Underwritten Offering is expected to be effected by launching an Underwritten Offering after the close of trading on one trading day (the “Launch Date”) and pricing the Underwritten Offering before the open of trading on the next succeeding trading day (the “Pricing Date” and, such execution format, an “Overnight Underwritten Offering”), then no later than three (3) Business Days after Copano engages a Managing Underwriter for the proposed Overnight Underwritten Offering, (x) Copano shall notify the Holders of the pendency of the Overnight Underwritten Offering and (y) if the Holders propose to include Registrable Securities in the Overnight Underwritten Offering, then the Managing Underwriter of the Overnight Underwritten Offering shall, no later than the tenth (10th) Business Day prior to the expected Launch Date, provide to the Selling Holders all of the documentation customarily required for the inclusion of Registrable Securities in the Overnight Underwritten Offering, including, without limitation, a custody agreement and power-of-attorney, Selling Holders’ customary representations and warranties, and a form of legal opinion required to be delivered by counsel to the Selling Holders (in form and substance reasonably acceptable to counsel for the Selling Holders) at the closing of an Overnight Underwritten Offering and any over-allotment option closing (collectively, the “Selling Holder Documentation”).  To include Registrable Securities in an Overnight Underwritten Offering, each Selling Holder shall, subject to receipt of notice of the Overnight Underwritten Offering and Selling Holder Documentation within the time periods set forth above, (A) complete its review and return the Selling Holder Documentation, with such revisions as have been agreed to by Copano (such agreement not to be unreasonably withheld) and the Selling Holder, at least seven (7) Business Days prior to the expected Launch Date, (B) place the Registrable Securities eligible for inclusion in an Overnight Underwritten Offering into the custody of Copano’s transfer agent at least five (5) Business Days prior to the expected Launch Date, (C) agree to participate following reasonable notice in any due diligence calls arranged by the Managing Underwriter of an Overnight Underwritten Offering on the expected Launch Date, the Pricing Date or in advance of the closing of an Overnight Underwritten Offering and any over-allotment option closing, and (D) unconditionally waive any right to withdraw any Registrable Securities placed into the custody of Copano’s transfer agent for inclusion in an Overnight Underwritten Offering within three (3) Business Days of the expected Launch Date, whether on the basis of the offering price, underwriter discount, or for any other reason; provided, however, that Copano shall not be required to offer such opportunity to Holders if (aa) the Holders do not offer a minimum of $15 million of Registrable Securities, in the aggregate (determined by multiplying the number of Registrable Securities held by the participating Holders by the average of the closing price on NASDAQ for Common Units for the ten (10) trading days preceding the date of such notice) or (bb) Copano has been advised by the Managing Underwriter that the inclusion of Registrable Securities for sale for the benefit of the Holders will have an adverse effect on the price, timing or distribution of the Common Units, in which case the amount of Registrable Securities to be offered for the accounts of participating

 

 

  

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Holders shall be determined based on the provisions of Section 2.02(c) of this Agreement.  If, at any time after giving written notice of its intention to undertake an Overnight Underwritten Offering and prior to the closing of such Overnight Underwritten Offering, Copano shall determine for any reason not to undertake or to delay such Overnight Underwritten Offering, Copano shall give written notice of such determination to the Selling Holders and, (i) in the case of a determination not to undertake such Overnight Underwritten Offering, shall be relieved of its obligation to sell any Registrable Securities held by the Selling Holders in connection with such terminated Overnight Underwritten Offering, and (ii) in the case of a determination to delay such Overnight Underwritten Offering, shall be permitted to delay offering any Registrable Securities held by the Selling Holders for the same period as the delay of the Overnight Underwritten Offering.  Any Selling Holder shall have the right to withdraw such Selling Holder’s request for inclusion of such Selling Holder’s Registrable Securities in such Overnight Underwritten Offering by giving written notice to Copano of such withdrawal at least three (3) Business Days prior to the Launch Date.  Each Holder’s rights under this Section 2.02(b) shall terminate when such Holder holds less than $30 million of Registrable Securities (based on the Unit Purchase Price).  Notwithstanding the foregoing, any Holder may deliver an Opt-Out Notice to Copano requesting that such Holder not receive notice from Copano of any proposed Overnight Underwritten Offering; provided, however, that such Holder may later revoke any such Opt-Out Notice in writing.

 

(c)           Priority of Piggyback Rights.  In connection with an Underwritten Offering contemplated by Section 2.02(a) or Section 2.02(b), if the Managing Underwriter or Underwriters of such Underwritten Offering advises Copano that the total amount of Common Units that the Selling Holders and any other Persons intend to include in such Underwritten Offering exceeds the number that can be sold in such Underwritten Offering without being likely to have an adverse effect on the price, timing or distribution of the Common Units offered or the market for the Common Units, then the Common Units to be included in such Underwritten Offering shall include the number of Common Units that such Managing Underwriter or Underwriters advises Copano can be sold without having such adverse effect, with such number to be allocated (i) first to Copano, (ii) second pro rata among the Selling Holders and any other Persons who have been or are granted registration rights on or after the date of this Agreement who have requested participation in the Underwritten Offering (the “Other Holders”) based, for each such Selling Holder or Other Holder, on the percentage derived by dividing (A) the number of Common Units proposed to be sold by such Selling Holder(s) and such Other Holders in such Underwritten Offering; by (B) the aggregate number of Common Units proposed to be sold by all Selling Holders and all Other Holders in the Underwritten Offering.

 

Section 2.03                      Underwritten Offering.

 

(a)           Request for Underwritten Offering.  In the event that a Selling Holder (together with any Affiliates that are Selling Holders) elects to dispose of Registrable Securities under a Shelf Registration Statement pursuant to an Underwritten Offering and reasonably anticipates gross proceeds of greater than $30 million from such Underwritten Offering of Registrable Securities, Copano shall, at the request of such Selling Holder (each, an “Underwritten Offering Request”), enter into an underwriting agreement in customary form with the Managing Underwriter or Underwriters, which shall include, among other provisions, indemnities to the effect and to the extent provided in Section 2.08, and shall take all such other

 

  

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reasonable actions as are requested by the Managing Underwriter to expedite or facilitate the disposition of the Registrable Securities; provided, however, that Copano shall not be required to effect more than two (2) Underwritten Offerings pursuant to Section 2.03 of this Agreement, and the Holders shall be limited to one Underwritten Offering Request in any 240 day period.

 

(b)           General Procedures.  In connection with any Underwritten Offering, Copano shall be entitled to select the Managing Underwriter or Underwriters.  In connection with an Underwritten Offering contemplated by this Agreement in which a Selling Holder participates, each Selling Holder and Copano shall be obligated to enter into an underwriting agreement with the Managing Underwriter or Underwriters that contains such representations, covenants, indemnities and other rights and obligations as are customary in underwriting agreements for firm commitment offerings of equity securities.  No Selling Holder may participate in an Underwritten Offering unless such Selling Holder agrees to sell its Registrable Securities on the basis provided in such underwriting agreement and completes and executes all questionnaires, powers-of-attorney, indemnities and other documents reasonably required under the terms of such underwriting agreement.  Each Selling Holder may, at its 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 such underwriters also be made to and for such Selling Holder’s benefit and that any or all of the conditions precedent to the obligations of such underwriters under such underwriting agreement also be conditions precedent to its obligations.  No Selling Holder shall be required to make any representations or warranties to or agreements with Copano or the underwriters other than representations, warranties or agreements regarding such Selling Holder and its ownership of the securities being registered on its behalf and its intended method of distribution and any other representation required by Law.  If any Selling Holder disapproves of the terms of an Underwritten Offering, such Selling Holder may elect to withdraw therefrom by notice to Copano and the Managing Underwriter; provided, however, that such withdrawal must be made at least one (1) Business Day prior to the pricing of such Underwritten Offering to be effective.  No such withdrawal or abandonment shall affect Copano’s obligation to pay Registration Expenses. Upon the receipt by Copano of a written request from the Holders of at least $60 million of Common Units that are participating in an Underwritten Offering, Copano’s management shall be required to participate in a roadshow or similar marketing effort in connection with that Underwritten Offering; provided, that management: (i) is given at least 60 days notice prior to the commitment of any roadshow or similar marketing effort; (ii) agrees to the proposed commencement date of any roadshow or similar marketing effort; and (iii) is not required to participate in any roadshow or similar marketing effort for more than two days.

 

Section 2.04                      Sale Procedures.  In connection with its obligations under this Article II, Copano will, as expeditiously as possible:

 

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

 

  

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(b)           furnish to each Selling Holder (i) as far in advance as reasonably practicable before filing a Shelf Registration Statement or any other registration statement contemplated by this Agreement or any supplement or amendment thereto, upon request, copies of reasonably complete drafts of all such documents proposed to be filed (including exhibits and each document incorporated by reference therein to the extent then required by the rules and regulations of the Commission), and provide each such Selling Holder the opportunity to object to any information pertaining to such Selling Holder and its plan of distribution that is contained therein and make the corrections reasonably requested by such Selling Holder with respect to such information prior to filing such Shelf Registration Statement or such other registration statement and the prospectus included therein or any supplement or amendment thereto, and (ii) an electronic copy of such Shelf Registration Statement or such other registration statement and the prospectus included therein and any supplements and amendments thereto as such Selling Holder may reasonably request in order to facilitate the public sale or other disposition of the Registrable Securities covered by such Shelf Registration Statement or other registration statement;

 

(c)           if applicable, use its commercially reasonable efforts to register or qualify the Registrable Securities covered by a Shelf Registration Statement or any other registration statement contemplated by this Agreement under the securities or “blue sky” laws of such jurisdictions as the Selling Holders or, in the case of an Underwritten Offering, the Managing Underwriter, shall reasonably request; provided, however, that Copano shall not be required to qualify generally to transact business in any jurisdiction where it is not then required to so qualify or to take any action which would subject it to general service of process in any such jurisdiction where it is not then so subject;

 

(d)           promptly notify each Selling Holder and each underwriter of Registrable Securities, at any time when a prospectus relating thereto is required to be delivered under the Securities Act, of (i) the filing of a Shelf Registration Statement or any other registration statement contemplated by this Agreement or any prospectus or prospectus supplement to be used in connection therewith, or any amendment or supplement thereto, and, with respect to such Shelf Registration Statement or any other registration statement or any post-effective amendment thereto, when the same has become effective; and (ii) the receipt of any written comments from the Commission with respect to any filing referred to in clause (i) and any written request by the Commission for amendments or supplements to such Shelf Registration Statement or any other registration statement or any prospectus or prospectus supplement thereto;

 

(e)           immediately notify each Selling Holder and each underwriter of Registrable Securities, at any time when a prospectus relating thereto is required to be delivered under the Securities Act, of (i) the happening of any event as a result of which the prospectus or prospectus supplement contained in a Shelf Registration Statement or any other registration statement contemplated by this Agreement, as then in effect, or any supplemental amendment thereto, includes an untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary to make the statements therein not misleading in the light of the circumstances then existing; (ii) the issuance or threat of issuance by the Commission of any stop order suspending the effectiveness of such Shelf Registration Statement or any other registration statement contemplated by this Agreement, or the initiation of any proceedings for that purpose; or (iii) the receipt by Copano of any notification with respect to the suspension of the

 

  

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qualification of any Registrable Securities for sale under the applicable securities or blue sky laws of any jurisdiction.  Following the provision of such notice, Copano agrees to as promptly as practicable amend or supplement the prospectus or prospectus supplement or take other appropriate action so that the prospectus or prospectus supplement does not include an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading in the light of the circumstances then existing and to take such other action as is necessary to remove a stop order, suspension, threat thereof or proceedings related thereto;

 

(f)           upon request and subject to appropriate confidentiality obligations, furnish to each Selling Holder copies of any and all transmittal letters or other correspondence with the Commission or any other governmental agency or self-regulatory body or other body having jurisdiction (including any domestic or foreign securities exchange) relating to such offering of Registrable Securities;

 

(g)           in the case of an Underwritten Offering, furnish upon request, (i) an opinion letter of counsel for Copano dated the date of the closing under the underwriting agreement, including a standard “10b-5” letter and (ii) a “cold comfort” letter dated the pricing date of such Underwritten Offering and a letter of like kind dated the date of the closing under the underwriting agreement, in each case, signed by the independent public accountants who have certified Copano’s financial statements included or incorporated by reference into the applicable registration statement, and each of the opinion and the “cold comfort” letter shall be in customary form and covering substantially the same matters with respect to such registration statement (and the prospectus included therein and any supplement thereto) and as are customarily covered in opinion letters of issuer’s counsel and in accountants’ letters delivered to the underwriters in underwritten offerings of equity securities;

 

(h)           otherwise use its commercially reasonable efforts to comply with all applicable rules and regulations of the Commission, and make available to its security holders, as soon as reasonably practicable, an earnings statement, which earnings statement shall satisfy the provisions of Section 11(a) of the Securities Act and Rule 158 promulgated thereunder;

 

(i)           make available to the appropriate representatives of the Managing Underwriter and Selling Holders access to such information and Copano personnel as is reasonable and customary to enable such parties to establish a due diligence defense under the Securities Act; provided, however, that Copano need not disclose any non-public information to any such representative unless and until such representative has entered into a confidentiality agreement with Copano reasonably satisfactory to Copano;

 

(j)           cause all such Registrable Securities registered pursuant to this Agreement to be listed on each securities exchange or nationally recognized quotation system, if any, on which similar securities issued by Copano are then listed;

 

(k)           use its commercially reasonable efforts to cause the Registrable Securities to be registered with or approved by such other governmental agencies or authorities as may be necessary by virtue of the business and operations of Copano to enable the Selling Holders to consummate the disposition of such Registrable Securities;

 

  

11

  

  

(l)           provide a transfer agent and registrar for all Registrable Securities covered by such registration statement not later than the effective date of such registration statement;

 

(m)           take such other actions as are reasonably requested by the Selling Holders or the underwriters, if any, to expedite or facilitate the disposition of such Registrable Securities; and

 

(n)           (i) cooperate with a Selling Holder if such Selling Holder could reasonably be deemed to be an “underwriter,” as defined in Section 2(a)(11) of the Securities Act, in connection with the registration statement in respect of any registration of the Registrable Securities of such Selling Holder pursuant to this Agreement, and any amendment or supplement thereof (any such registration statement or amendment or supplement a “Primary Offering”), in allowing such Selling Holder to conduct customary “underwriter’s due diligence” with respect to Copano and satisfy its obligations in respect thereof, (ii) furnish to such Selling Holder upon such Selling Holder’s request, on the date of the effectiveness of any Primary Offering and thereafter from time to time on such dates as such Selling Holder may reasonably request, the letters covered by Section 2.04(g) of this Agreement, in each case addressed to such Selling Holder, and (iii) permit legal counsel to such Selling Holder to review and comment upon any such Primary Offering at least five (5) Business Days prior to its filing with the Commission and all amendments and supplements to any such Primary Offering within a reasonable number of days prior to their filing with the Commission and not file any Primary Offering or amendment or supplement thereto in a form to which such Selling Holder’s legal counsel reasonably objects in writing.

 

Each Selling Holder, upon receipt of notice from Copano of the happening of any event of the kind described in subsection (e) of this Section 2.04, shall forthwith discontinue disposition of the Registrable Securities until such Selling Holder’s receipt of the copies of the supplemented or amended prospectus contemplated by subsection (e) of this Section 2.04 or until it is advised in writing by Copano that the use of the prospectus may be resumed, and has received copies of any additional or supplemental filings incorporated by reference in the prospectus, and, if so directed by Copano, such Selling Holder will deliver, or will request the Managing Underwriter or underwriters, if any, to deliver to Copano all copies in their possession or control, other than permanent file copies then in such Selling Holder’s possession, of the prospectus and any prospectus supplement covering such Registrable Securities current at the time of receipt of such notice.

 

If reasonably requested by a Selling Holder, Copano shall: (i) as soon as practicable incorporate in a prospectus supplement or post-effective amendment such information as such Selling Holder reasonably requests to be included therein relating to the sale and distribution of Registrable Securities, including information with respect to the number of Registrable Securities being offered or sold, the purchase price being paid therefor and any other terms of the offering of the Registrable Securities to be sold in such offering; (ii) as soon as practicable make all required filings of such prospectus supplement or post-effective amendment after being notified of the matters to be incorporated in such prospectus supplement or post-effective amendment; and (iii) as soon as practicable, supplement or make amendments to any Shelf Registration Statement or any other registration statement contemplated by this Agreement.

 

  

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Section 2.05                      Cooperation by Holders.  Copano shall have no obligation to include Registrable Securities of a Holder in a Shelf Registration Statement or in an Underwritten Offering under Article II of this Agreement if such Selling Holder has failed to timely furnish such information that, in the opinion of counsel to Copano, is reasonably required for such registration statement or prospectus supplement, as applicable, to comply with the Securities Act.

 

Section 2.06                      Restrictions on Public Sale by Holders of Registrable Securities.  During the Effectiveness Period, each Holder of Registrable Securities who is included in a Shelf Registration Statement agrees not to effect any public sale or distribution of the Registrable Securities during the thirty (30) calendar day period beginning on the date that a prospectus supplement or other prospectus (including any free writing prospectus) is filed with the Commission with respect to an Underwritten Offering of equity securities of Copano; provided, that the duration of the foregoing restrictions shall be no longer than the duration of the shortest restriction generally imposed by the underwriters on the officers, directors or any other unitholder of Copano on whom a restriction is imposed in connection with such public offering; provided, further, that this Section 2.06 shall apply only to a Selling Holder (together with any Affiliates that are Selling Holders) that holds at least $35 million of Registrable Securities, in the aggregate (determined by multiplying the number of Registrable Securities owned by the average of the closing price for Common Units for the ten (10) trading days preceding the date of such filing).

 

Section 2.07                      Expenses.

 

(a)           Certain Definitions.  “Registration Expenses” means all expenses incident to Copano’s performance under or compliance with this Agreement to effect the registration of Registrable Securities in a Shelf Registration Statement pursuant to Section 2.01, a Piggyback Offering or Overnight Underwritten Offering pursuant to Section 2.02, or an Underwritten Offering pursuant to Section 2.03, and the disposition of such securities, including, without limitation, all customary registration, filing, securities exchange listing and NASDAQ fees, all customary registration, filing, qualification and other fees and expenses of complying with securities or “blue sky” laws, fees of the Financial Industry Regulatory Authority, Inc., fees of transfer agents and registrars, all word processing, duplicating and printing expenses, the fees and disbursements of counsel to Copano and independent public accountants for Copano, including the expenses of any special audits or “cold comfort” letters required by or incident to such performance and compliance.  “Selling Expenses” means all underwriting fees, discounts and selling commissions (and similar fees or arrangements associated with) and transfer taxes allocable to the sale of the Registrable Securities.

 

(b)           Expenses.  Copano will pay all reasonable Registration Expenses as determined in good faith, including, in the case of an Underwritten Offering or a Piggyback Offering, whether or not any sale is made pursuant to the related registration statement. Except as otherwise provided in Section 2.08, Copano shall not be responsible for legal fees incurred by Holders in connection with the exercise of such Holders’ rights and obligations under this Agreement hereunder, or for any Selling Expenses.  Each Selling Holder shall pay all Selling Expenses in connection with any sale of its Registrable Securities.

 

Section 2.08                      Indemnification.

 

(a)           By Copano.  In the event of a registration of any Registrable Securities under the Securities Act pursuant to this Agreement, Copano will indemnify and hold harmless each Selling Holder thereunder, its directors, officers, employees, agents and managers, and each underwriter, pursuant to the applicable underwriting agreement with such underwriter, of Registrable Securities thereunder and each Person, if any, who controls such Selling Holder or underwriter within the meaning of the Securities Act and the Exchange Act, and its directors, officers, employees, agents and managers, against any losses, claims, damages, expenses or liabilities (including reasonable attorneys’ fees and expenses) (collectively, “Losses”), joint or several, to which such Selling Holder or underwriter or controlling Person may become subject under the Securities Act, the Exchange Act or otherwise, insofar as such Losses (or actions or proceedings, whether commenced or threatened, in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact (in the case of any prospectus, in the light of the circumstances under which such statement is made) contained in a Shelf Registration Statement or any other registration statement contemplated by this Agreement, any preliminary prospectus or final prospectus contained therein, or any free writing prospectus related thereto, or any amendment or supplement thereof, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein (in the case of a prospectus, in the light of the circumstances under which they were made) not misleading, and will reimburse each such Selling Holder, its directors and officers, each such underwriter and each such controlling Person for any legal or other expenses reasonably incurred by them in connection with investigating or defending any such Loss or actions or proceedings; provided, however, that Copano will not be liable in any such case if and to the extent that any such Loss arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission so made in conformity with information furnished by such Selling Holder, such underwriter or such controlling Person in writing specifically for use in the Shelf Registration Statement or such other registration statement, free writing prospectus or prospectus supplement, as applicable.  Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of such Selling Holder or any such director, officer, employee, agent, manager or controlling Person, and shall survive the transfer of such securities by such Selling Holder.

 

(b)           By Each Selling Holder.  Each Selling Holder agrees to indemnify and hold harmless Copano, its directors, officers, employees and agents and each Person, if any, who controls Copano within the meaning of the Securities Act or of the Exchange Act to the same extent as the foregoing indemnity from Copano to the Selling Holders, but only with respect to information regarding such Selling Holder furnished in writing by or on behalf of such Selling Holder expressly for inclusion in a Shelf Registration Statement or any other registration statement contemplated by this Agreement, any preliminary prospectus or final prospectus contained therein, or any free writing prospectus related thereto, or any amendment or supplement thereof; provided, however, that the liability of each Selling Holder shall not be greater in amount than the dollar amount of the proceeds (net of Selling Expenses) received by such Selling Holder from the sale of the Registrable Securities giving rise to such indemnification.  Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of Copano or any such director, officer, employee, agent, manager or controlling Person, and shall survive the transfer of such securities by such Selling Holder.

 

  

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(c)           Notice.  Promptly after any indemnified party has received notice of any indemnifiable claim hereunder, or the commencement of any action, suit or proceeding by a third person, which the indemnified party believes in good faith is an indemnifiable claim under this Agreement, the indemnified party shall give the indemnifying party written notice of such claim but failure to so notify the indemnifying party will not relieve the indemnifying party from any liability it may have to such indemnified party hereunder except to the extent that the indemnifying party is materially prejudiced by such failure.  Such notice shall state the nature and the basis of such claim to the extent then known.  The indemnifying party shall be entitled to participate in and, to the extent it shall wish, to assume and undertake the defense thereof with counsel reasonably satisfactory to such indemnified party and, after notice from the indemnifying party to such indemnified party of its election so to assume and undertake the defense thereof, the indemnifying party shall not be liable to such indemnified party under this Section 2.08 for any legal expenses subsequently incurred by such indemnified party in connection with the defense thereof other than reasonable costs of investigation and of liaison with counsel so selected; provided, however, that, (i) if the indemnifying party has failed to assume the defense and employ counsel or (ii) if the defendants in any such action include both the indemnified party and the indemnifying party and counsel to the indemnified party shall have concluded that there may be reasonable defenses available to the indemnified party that are different from or additional to those available to the indemnifying party, or if the interests of the indemnified party reasonably may be deemed to conflict with the interests of the indemnifying party, then the indemnified party shall have the right to select a separate counsel and to assume such legal defense and otherwise to participate in the defense of such action, with the reasonable out-of-pocket expenses and fees of such separate counsel and other reasonable out-of-pocket expenses related to such participation to be reimbursed by the indemnifying party as incurred.  Notwithstanding any other provision of this Agreement, the indemnifying party shall not settle any indemnified claim without the consent of the indemnified party, unless the settlement thereof imposes no liability or obligation on, and includes a complete release from liability of, and does not contain any admission of wrongdoing by, the indemnified party.

 

(d)           Contribution.  If the indemnification provided for in this Section 2.08 is held by a court or government agency of competent jurisdiction to be unavailable to any indemnified party or is insufficient to hold them harmless in respect of any Losses, then each such indemnifying party, in lieu of indemnifying such indemnified party, shall contribute to the amount paid or payable by such indemnified party as a result of such Loss in such proportion as is appropriate to reflect the relative fault of the indemnifying party on the one hand and of such indemnified party on the other in connection with the statements or omissions which resulted in such Losses, as well as any other relevant equitable considerations; provided, however, that in no event shall such Selling Holder be required to contribute an aggregate amount in excess of the dollar amount of gross proceeds received by such Selling Holder from the sale of Registrable Securities giving rise to such indemnification.  The relative fault of the indemnifying party on the one hand and the indemnified party on the other shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact has been made by, or relates to, information supplied by such party, and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission.  The parties hereto agree that it would not be just and equitable if contributions pursuant to this paragraph were to be determined by pro rata allocation or by any other method of allocation which does not take account of the equitable

 

  

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 considerations referred to herein.  The amount paid by an indemnified party as a result of the Losses referred to in the first sentence of this paragraph shall be deemed to include any legal and other expenses reasonably incurred by such indemnified party in connection with investigating or defending any Loss that is the subject of this paragraph. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who is not guilty of such fraudulent misrepresentation.

 

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

 

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

 

(a)           make and keep public information regarding Copano available, as those terms are understood and defined in Rule 144 of the Securities Act, at all times from and after the date hereof;

 

(b)           file with the Commission in a timely manner all reports and other documents required of Copano under the Securities Act and the Exchange Act at all times from and after the date hereof; and

 

(c)           so long as a Holder owns any Registrable Securities, furnish, unless otherwise available at no charge by access electronically to the Commission’s EDGAR filing system, to such Holder forthwith upon request (i) a copy of the most recent annual or quarterly report of Copano, and (ii) such other reports and documents so filed with the Commission as such Holder may reasonably request in availing itself of any rule or regulation of the Commission allowing such Holder to sell any such securities without registration.

 

Section 2.10                      Transfer or Assignment of Registration Rights.  The rights to cause Copano to register Registrable Securities granted to the Purchaser by Copano under this Article II may be transferred or assigned by a Holder to a transferee or assignee; provided, that (i) the transferee or assignee is an Affiliate of the Purchaser or (ii) there is transferred to such transferee at least $35 million of Registrable Securities (based on the Unit Purchase Price).  The transferor shall give written notice to Copano at least ten (10) Business Days prior to any said transfer or assignment, setting forth the information required under Section 3.01 of this Agreement for each such transferee and identifying the securities with respect to which such registration rights are being transferred or assigned, and each such transferee shall agree in writing to be subject to all of the terms and conditions of this Agreement..

 

Section 2.11                      Limitation on Subsequent Registration Rights.  From and after the date hereof, Copano shall not, without the prior written consent of the Holders of a majority of the outstanding Registrable Securities, enter into any agreement with any current or future holder of any securities of Copano that would allow such current or future holder to require Copano to include securities in any Underwritten Offering or Overnight Underwritten Offering by Copano

 

  

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for its own account on a basis that is superior in any way to the Piggyback Offering rights granted to the Holders pursuant to Section 2.02 of this Agreement..

 

ARTICLE III

 

MISCELLANEOUS

 

Section 3.01                      Communications.  All notices and demands provided for hereunder shall be in writing and shall be given by hand delivery, electronic mail, registered or certified mail, return receipt requested, regular mail, facsimile or air courier guaranteeing overnight delivery to the following addresses:.

 

(a)           If to the Purchaser:

TPG Copenhagen, L.P.

c/o TPG Capital, L.P.

345 California Street, Suite 3300

San Francisco, California  94104

Attention:  Ronald Cami

Facsimile:  (415) 743-1501

 

            with a copy to:

 

Baker Botts L.L.P.

One Shell Plaza

910 Louisiana

Houston, Texas 77002

Attention: Ryan Maierson

Facsimile: (713) 229-7911

Internet electronic mail: ryan.maierson@bakerbotts.com

(b)           If to Copano:

 

Copano Energy, L.L.C.

2727 Allen Parkway, Suite 1200

Houston, Texas 77019

Attention:      Douglas L. Lawing, Executive Vice President,

General Counsel and Secretary

Facsimile: (713) 621-9545

Internet electronic mail: doug.lawing@copanoenergy.com

 

with a copy to:

 

Vinson & Elkins L.L.P.

1001 Fannin, Suite 2500

Houston, Texas 77002

Attention: Jeffery K. Malonson

Facsimile: (713) 615-5627

Internet electronic mail: jmalonson@velaw.com

 

or, if to a transferee of the Purchaser, to the transferee at the addresses provided pursuant to Section 2.10 above.  All notices and communications shall be deemed to have been duly given: (i) at the time delivered by hand, if personally delivered; (ii) when notice is sent to the sender that the recipient has read the message, if sent by electronic mail; (iii) upon actual receipt if sent by registered or certified mail, return receipt requested, or regular mail, if mailed; (iv) when receipt is acknowledged, if sent by facsimile; and (v) upon actual receipt when delivered to an air courier guaranteeing overnight delivery.

 

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

 

Section 3.03                      Aggregation of Registrable Securities.  All Registrable Securities held or acquired by Persons who are Affiliates of one another shall be aggregated together for the purpose of determining the availability of any rights under this Agreement.

 

Section 3.04                      Recapitalization, Exchanges, Etc. Affecting the Registrable Securities.  The provisions of this Agreement shall apply to the fullest extent set forth herein with respect to any and all units of Copano or any successor or assignee of Copano (whether by merger, consolidation, sale of assets or otherwise) that may be issued in respect of, in exchange for or in substitution of, the Registrable Securities, and shall be appropriately adjusted for combinations, splits, recapitalizations and the like occurring after the date of this Agreement.

 

  

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Section 3.05                      Specific Performance.  Damages in the event of breach of this Agreement 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 without limiting any other remedy or right it may have, will have the right to an injunction or other equitable relief in any court of competent jurisdiction, enjoining any such breach, and enforcing specifically the terms and provisions hereof, and each of the parties hereto hereby waives any and all defenses it may have on the ground of lack of jurisdiction or competence of the court to grant such an injunction or other equitable relief.  The existence of this right will not preclude any such Person from pursuing any other rights and remedies at law or in equity which such Person may have.

 

Section 3.06                      Counterparts.  This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which counterparts, when so executed and delivered, shall be deemed to be an original and all of which counterparts, taken together, shall constitute but one and the same Agreement.

 

Section 3.07                      Headings.  The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof.

 

Section 3.08                      Governing Law, Submission to Jurisdiction.  This Agreement, and all claims or causes of action (whether in contract or tort) that may be based upon, arise out of or relate to this Agreement or the negotiation, execution or performance of this Agreement (including any claim or cause of action based upon, arising out of or related to any representation or warranty made in or in connection with this Agreement), will be construed in accordance with and governed by the Laws of the State of Delaware without regard to principles of conflicts of laws.  Any action against any party relating to the foregoing shall be brought in any federal or state court of competent jurisdiction located within the State of Delaware, and the parties hereto hereby irrevocably submit to the non-exclusive jurisdiction of any federal or state court located within the State of Delaware over any such action.  The parties hereby irrevocably waive, to the fullest extent permitted by applicable Law, any objection which they may now or hereafter have to the laying of venue of any such dispute brought in such court or any defense of inconvenient forum for the maintenance of such dispute.  Each of the parties hereto agrees that a judgment in any such dispute may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by Law.

 

Section 3.09                      Waiver of Jury Trial.  THE PARTIES TO THIS AGREEMENT EACH HEREBY WAIVE, AND AGREE TO CAUSE THEIR AFFILIATES TO WAIVE, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (i) ARISING UNDER THIS AGREEMENT OR (ii) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO IN RESPECT OF THIS AGREEMENT OR ANY OF THE TRANSACTIONS RELATED HERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER IN CONTRACT, TORT, EQUITY OR OTHERWISE.  THE PARTIES TO THIS AGREEMENT EACH HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY AND THAT THE PARTIES TO THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OF A COPY OF THIS AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.

 

Section 3.10                      Severability of Provisions.  Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof or affecting or impairing the validity or enforceability of such provision in any other jurisdiction.

 

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

 

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

 

  

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Section 3.13                      No Presumption.  In the event any claim is made by a party relating to any conflict, omission, or ambiguity in this Agreement, no presumption or burden of proof or persuasion shall be implied by virtue of the fact that this Agreement was prepared by or at the request of a particular party or its counsel.

 

Section 3.14                      Obligations Limited to Parties to this Agreement.  Each of the parties hereto covenants, agrees and acknowledges that no Person other than the Purchaser, their respective permitted assignees and Copano shall have any obligation hereunder and that, notwithstanding that one or more of Copano and the Purchaser may be a corporation, partnership, limited liability company or other entity, no recourse under this Agreement or under any documents or instruments delivered in connection herewith or therewith shall be had against any former, current or future director, officer, employee, agent, general or limited partner, manager, member, stockholder or Affiliate of any of Copano, the Purchaser or their respective permitted assignees, or any former, current or future director, officer, employee, agent, general or limited partner, manager, member, stockholder or Affiliate of any of the foregoing, whether by the enforcement of any assessment or by any legal or equitable proceeding, or by virtue of any applicable Law, it being expressly agreed and acknowledged that no personal liability whatsoever shall attach to, be imposed on or otherwise by incurred by any former, current or future director, officer, employee, agent, general or limited partner, manager, member, stockholder or Affiliate of any of Copano, the Purchaser or any of their respective assignees, or any former, current or future director, officer, employee, agent, general or limited partner, manager, member, stockholder or Affiliate of any of the foregoing, as such, for any obligations of Copano, the Purchaser or their respective permitted assignees under this Agreement or any documents or instruments delivered in connection herewith or therewith or for any claim based on, in respect of or by reason of such obligation or its creation, except in each case for any assignee of a Holder.

 

Section 3.15                      Interpretation.  Article and Section references in this Agreement are references to the corresponding Article and Section to this Agreement, unless otherwise specified.  All references to instruments, documents, contracts and agreements are references to such instruments, documents, contracts and agreements as the same may be amended, supplemented and otherwise modified from time to time, unless otherwise specified.  The word “including” shall mean “including but not limited to.” Whenever any determination, consent or approval is to be made or given by Copano under this Agreement, such action shall be in the Copano’s sole discretion unless otherwise specified.

 

[Signature Page Follows]

 

  

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IN WITNESS WHEREOF, the parties hereto execute this Agreement, effective as of the date first above written.

 

	 	COPANO ENERGY, L.L.C.	 
	 	 	 	 
	
 

	
By: 

	/s/ Carl A. Luna	 
	 	 	Name: Carl A. Luna	 
	 	 	Title: Senor Vice President and Chief Financial Officer	 
	 	 	 	 

	 	
TPG COPENHAGEN, L.P.

	 
	 	 By:	  

TPG Advisors VI, Inc., its General Partner

	 
	
 

	
By:

	/s/ Ronald Cami	 
	 	 	Name: Ronald Cami	 
	 	 	Title: Vice President	 
	 	 	 	 

 

 

 

  

Signature Page to Registration Rights Agreementex10-1.htm

 

 

 

Exhibit 10.1

 

 

 

SERIES A CONVERTIBLE PREFERRED UNIT

 

PURCHASE AGREEMENT

 

among

 

COPANO ENERGY, L.L.C.

 

and

 

TPG COPENHAGEN, L.P.

 

dated as of July 21, 2010

 

  

  

  

  

TABLE OF CONTENTS

 

Page

 

	
ARTICLE I

DEFINITIONS

	
Section 1.01

	
Definitions

	
1

	
Section 1.02

	
Accounting Procedures and Interpretation

	
7

	
ARTICLE II

AGREEMENT TO SELL AND PURCHASE

	
Section 2.01

	
Sale and Purchase

	
7

	
Section 2.02

	
Closing

	
7

	
Section 2.03

	
Copano Closing Deliverables

	
8

	
Section 2.04

	
Purchaser Closing Deliverables

	
9

	
ARTICLE III

REPRESENTATIONS AND WARRANTIES OF COPANO

	
Section 3.01

	
Formation and Qualification

	
9

	
Section 3.02

	
Ownership of Subsidiaries

	
9

	
Section 3.03

	
No Other Subsidiaries

	
10

	
Section 3.04

	
Authorization; Enforceability; Valid Issuance.

	
10

	
Section 3.05

	
No Preemptive Rights, Registration Rights or Options

	
11

	
Section 3.06

	
Capitalization

	
12

	
Section 3.07

	
No Breach

	
12

	
Section 3.08

	
No Approvals

	
12

	
Section 3.09

	
No Default

	
12

	
Section 3.10

	
Copano SEC Documents; Copano Financial Statements

	
12

	
Section 3.11

	
No Material Adverse Change

	
13

	
Section 3.12

	
Title to Real Property

	
13

	
Section 3.13

	
Insurance

	
14

	
Section 3.14

	
Litigation

	
14

	
Section 3.15

	
No Labor Dispute

	
14

	
Section 3.16

	
Tax Returns

	
14

	
Section 3.17

	
Environmental Compliance

	
14

	
Section 3.18

	
Permits

	
15

	
Section 3.19

	
NASDAQ Listing

	
15

	
Section 3.20

	
Investment Company

	
15

	
Section 3.21

	
MLP Status

	
15

	
Section 3.22

	
Certain Fees

	
15

	
Section 3.23

	
Form S-3 Eligibility

	
16

	
Section 3.24

	
Required Unit Vote

	
16

	
ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF THE PURCHASER

	
Section 4.01

	
Existence

	
16

	
Section 4.02

	
Authorization; Enforceability

	
16

	
Section 4.03

	
No Breach

	
16

	
Section 4.04

	
Certain Fees

	
17

	
Section 4.05

	
Unregistered Securities.

	
17

	
Section 4.06

	
Short Selling

	
18

	
Section 4.07

	
Copano Information

	
18

	
ARTICLE V

COVENANTS

	
Section 5.01

	
Unitholder Vote with Respect to Conversion.

	
19

	
Section 5.02

	
Transfer Restrictions

	
19

	
Section 5.03

	
Standstill Obligation

	
20

	
Section 5.04

	
Business Combinations

	
21

	
Section 5.05

	
Further Assurances; NASDAQ Listing

	
22

	
ARTICLE VI

INDEMNIFICATION, COSTS AND EXPENSES

	
Section 6.01

	
Indemnification by Copano

	
22

	
Section 6.02

	
Indemnification by the Purchaser

	
22

	
Section 6.03

	
Indemnification Procedure

	
23

	
Section 6.04

	
Tax Matters

	
24

	
ARTICLE VII

MISCELLANEOUS

	
Section 7.01

	
Fees and Expenses

	
24

	
Section 7.02

	
Interpretation

	
24

	
Section 7.03

	
Survival of Provisions

	
25

	
Section 7.04

	
No Waiver; Modifications in Writing.

	
25

	
Section 7.05

	
Binding Effect; Assignment.

	
26

	
Section 7.06

	
Non-Disclosure

	
26

	
Section 7.07

	
Communications

	
27

	
Section 7.08

	
Removal of Legend

	
28

	
Section 7.09

	
Entire Agreement

	
28

	
Section 7.10

	
Governing Law; Submission to Jurisdiction

	
29

	
Section 7.11

	
Waiver of Jury Trial

	
29

	
Section 7.12

	
Execution in Counterparts

	
29

	
  

	
Schedule I

	


	
Subsidiaries

	
  

	
Schedule II

	


	
Certain Beneficial Owners of Common Units

 

  

  

  

  

SERIES A CONVERTIBLE PREFERRED UNIT PURCHASE AGREEMENT

 

This SERIES A CONVERTIBLE PREFERRED UNIT PURCHASE AGREEMENT, dated as of July 21, 2010 (this “Agreement”), is entered into by and between COPANO ENERGY, L.L.C., a Delaware limited liability company (“Copano”), and TPG Copenhagen, L.P., a Delaware limited partnership (the “Purchaser”).

 

WHEREAS, Copano desires to sell to the Purchaser, and the Purchaser desires to purchase from Copano, $300,000,000 of Series A Preferred Units (as defined below) at the Closing (as defined below), in accordance with the provisions of this Agreement;

 

WHEREAS, Copano has agreed to deliver, or cause to be delivered, at the Closing, the Unitholder Voting Agreement (as defined below) pursuant to which certain unitholders will each agree to vote all of the Common Units (as defined below) owned by it in favor of: (i) the full convertibility of the Purchased Units (as defined below) into Common Units; and (ii) if any Class B Units (as defined below) are then issued and outstanding, the automatic conversion of the Class B Units into Common Units (clauses (i) and (ii) collectively, the “Proposal”) as contemplated by Section 5.01 of this Agreement; and

 

WHEREAS, Copano has agreed to provide the Purchaser with certain registration rights with respect to the Conversion Common Units (as defined below) underlying: (i) the Series A Preferred Units acquired pursuant to this Agreement (including Conversion Common Units underlying any Series A Preferred Units issued to the Purchaser as payment in-kind distributions pursuant to the terms of the Series A Preferred Units); and (ii) any Class B Units issued upon conversion of any Series A Preferred Units.

 

NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth herein and for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereby agree as follows:

 

ARTICLE I

 

DEFINITIONS

 

Section 1.01                      Definitions.  As used in this Agreement, the following terms have the meanings indicated:

 

“Affiliate” means, with respect to a specified Person, any other Person, whether now in existence or hereafter created, directly or indirectly controlling, controlled by or under direct or indirect common control with such specified Person.  For purposes of this definition, “control” (including, with correlative meanings, “controlling,” “controlled by” and “under common control with”) means the power to direct or cause the direction of the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; provided, however, that “Affiliate” shall not be deemed to include any portfolio company in which the Purchaser or any of its investment fund Affiliates have made a debt or equity investment.

 

“Agreement” has the meaning set forth in the introductory paragraph of this Agreement.

 

  

  

  

  

“Amendment No. 1” means Amendment No. 1 to the Fourth Amended and Restated Limited Liability Company Agreement of Copano.

 

“Basic Documents” means, collectively, this Agreement, the Registration Rights Agreement, the Copano LLC Agreement, the Director Designation Agreement and the Non-Disclosure Agreement.

 

“Big Horn” shall have the meaning specified in Section 3.02.

 

“Board” means the Board of Directors of Copano.

 

“Business Day” means any day other than a Saturday, Sunday, any federal holiday or day on which banking institutions in the State of New York or State of Texas are authorized or required by Law or other governmental action to close.

 

“Class B Units” shall have the meaning specified in Amendment No. 1 to the Copano LLC Agreement.

 

“Closing” shall have the meaning specified in Section 2.02.

 

“Closing Date” shall have the meaning specified in Section 2.02.

 

“Code” shall have the meaning specified in Section 3.21.

 

“Commission” means the United States Securities and Exchange Commission.

 

“Common Unitholders” means holders of Common Units.

 

“Common Units” means common units representing limited liability company interests in Copano.

 

“Competitor” means any Person that directly, or indirectly through (i) the ownership of 15% or more of any Person and (ii)(A) the right to designate one or more members of the board of directors (or similar governing body) of such Person (or with respect to a limited partnership, its general partner) or (B) the power to direct or control the direction of the management and policies of such Person, whether through ownership of voting securities, by contract or otherwise, engages in the midstream energy business or otherwise provides similar services or engages in a similar business as Copano at any time during the twelve (12) months preceding a proposed Transfer of Series A Preferred Units, Class B Units or Conversion Common Units.

 

“Contract” means any contract, agreement, indenture, note, bond, mortgage, deed of trust, loan, instrument, lease, license, commitment or other arrangement, understanding, undertaking, commitment or obligation, whether written or oral.

 

“Conversion B Units” means the Class B Units issuable upon conversion of the Purchased Units in accordance with the Copano LLC Agreement.

 

  

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“Conversion Common Units” means the Common Units issuable upon conversion of the Purchased Units or upon conversion of the Class B Units, as the context requires, in accordance with the Copano LLC Agreement.

 

“Conversion Units” means the Conversion B Units and the Conversion Common Units.

 

“Copano” has the meaning set forth in the introductory paragraph of this Agreement.

 

“Copano Credit Agreement” shall have the meaning specified in Section 3.02.

 

“Copano Credit Agreement Second Amendment” means the Second Amendment, dated as of July 21, 2010, to the Copano Credit Agreement.

 

“Copano Entities” means, collectively, the entities listed on Schedule I to this Agreement.

 

“Copano Entity Operating Agreements” means the certificate of incorporation, certificate of formation, bylaws, limited liability company agreement, limited partnership agreement or other organizational documents, as applicable, of the Copano Entities (excluding Copano).

 

“Copano Financial Statements” shall have the meaning specified in Section 3.10.

 

“Copano LLC Agreement” means the Fourth Amended and Restated Limited Liability Company Agreement of Copano, dated as of July 20, 2010, as amended by Amendment No. 1 and as may be further amended through the date hereof.

 

“Copano Material Adverse Effect” means any material and adverse effect on (a) the assets, liabilities, financial condition, business, results of operations or affairs of the Copano Entities taken as a whole; (b) the ability of the Copano Entities, taken as a whole, to carry on their business as such business is conducted as of the date hereof or to meet their obligations under the Basic Documents on a timely basis; or (c) the ability of Copano to consummate the transactions under any Basic Document to which it is a party; provided, however, that a Copano Material Adverse Effect shall not include any material and adverse effect on the foregoing to the extent such material and adverse effect results from, arises out of, or is attributable to (x) a general deterioration in the economy or changes in the general state of the industries in which the Copano Entities operate, except to the extent that the Copano Entities, taken as a whole, are adversely affected in a materially disproportionate manner as compared to other industry participants, (y) the outbreak or escalation of hostilities involving the United States, the declaration by the United States of a national emergency or war or the occurrence of any other calamity or crisis affecting the national economy as a whole, including acts of terrorism, or (z) any change in applicable Law, or the interpretation thereof.

 

“Copano Related Parties” shall have the meaning specified in Section 6.02.

 

“Copano SEC Documents” shall have the meaning specified in Section 3.10.

 

“Delaware LLC Act” shall have the meaning specified in Section 3.02.

 

“DGCL” shall have the meaning specified in Section 5.04.

 

  

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“Director Designation Agreement” means the Director Designation Agreement, dated as of the Closing Date, between Copano and the Purchaser.

 

“Eagle Ford” shall have the meaning specified in Section 3.02.

 

“Environmental Law” means any Law, Environmental Permit, and other legally enforceable requirements applicable to the Copano Entities or the operation of their business in any way relating to the protection of human health and safety (to the extent such health or safety relate to exposure to Hazardous Materials), the environment and natural resources (including, without limitation, any natural resource damages, any generation, manufacture, processing, use, storage, treatment, disposal, release, threatened release, discharge, or emission of Hazardous Materials into the environment, and any exposure to Hazardous Materials), including, without limitation, the Comprehensive Environmental Response, Compensation and Liability Act (42 U.S.C. § 9601 et seq.), the Hazardous Materials Transportation Act (49 U.S.C. App. § 1801 et seq.), the Resource Conservation and Recovery Act (42 U.S.C. § 6901 et seq.), the Clean Water Act (33 U.S.C. § 1251 et seq.), the Clean Air Act (42 U.S.C. § 7401 et seq.), the Toxic Substances Control Act (15 U.S.C. § 2601 et seq.), the Occupational Safety and Health Act (29 C.F.R. part 24 et seq.), and the Federal Insecticide, Fungicide, and Rodenticide Act (7 U.S.C. § 136 et seq.).

 

“Environmental Permits” means all permits, approvals, identification numbers, registrations, consents, licenses, exemptions, variances and authorizations required under or issued pursuant to any applicable Environmental Law.

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended from time to time, and the rules and regulations of the Commission promulgated thereunder.

 

“Fort Union” shall have the meaning specified in Section 3.02.

 

“Fort Union Credit Agreement” shall have the meaning specified in Section 3.02.

 

“GAAP” means generally accepted accounting principles in the United States of America as of the date hereof; provided, however, that for the Copano Financial Statements prepared as of a certain date, GAAP referenced therein shall be GAAP as of the date of such Copano Financial Statements.

 

“Governmental Authority” means, with respect to a particular Person, any state, county, city and political subdivision of the United States in which such Person or such Person’s Property is located or which exercises valid jurisdiction over any such Person or such Person’s Property, and any court, agency, department, commission, board, bureau or instrumentality of any of them and any monetary authority that exercises valid jurisdiction over any such Person or such Person’s Property.  Unless otherwise specified, all references to Governmental Authority herein with respect to Copano means a Governmental Authority having jurisdiction over Copano, its Subsidiaries or any of their respective Properties.

 

“Hazardous Material” means any substance regulated by or as to which liability might arise under any applicable Environmental Law including any:  (i) chemical, product, material, substance or waste defined as “hazardous substance,” “hazardous material,” “hazardous waste,”

 

  

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“restricted hazardous waste,” “extremely hazardous waste,” “solid waste,” “toxic waste,” “extremely hazardous substance,” “toxic substance,” “toxic pollutant,” “contaminant,” “pollutant,” or words of similar meaning or import found in any applicable Environmental Law; (ii) petroleum hydrocarbons, petrochemical or petroleum products, petroleum substances, natural gas and crude oil or any components, fractions or derivatives thereof; and (iii) asbestos containing materials, polychlorinated biphenyls, urea formaldehyde foam insulation, or radon gas.

 

“Indemnified Party” shall have the meaning specified in Section 6.03(b).

 

“Indemnifying Party” shall have the meaning specified in Section 6.03(b).

 

“Law” means any applicable federal, state or local order, writ, injunction, judgment, settlement, award, decree, statute, law (including common law), rule or regulation.

 

“Lien” means any interest in Property securing an obligation owed to, or a claim by, a Person other than the owner of the Property, whether such interest is based on the common law, statute or contract, and whether such obligation or claim is fixed or contingent, and including but not limited to the lien or security interest arising from a mortgage, encumbrance, pledge, security agreement, conditional sale or trust receipt or a lease, consignment or bailment for security purposes.  For the purpose of this Agreement, a Person shall be deemed to be the owner of any Property that it has acquired or holds subject to a conditional sale agreement, or leases under a financing lease or other arrangement pursuant to which title to the Property has been retained by or vested in some other Person in a transaction intended to create a financing.

 

“Merrill Lynch” means Merrill Lynch, Pierce, Fenner & Smith Incorporated.

 

“NASDAQ” means the NASDAQ Global Select Market.

 

“Non-Disclosure Agreement” means the Confidentiality Agreement, dated as of the Closing Date, by and between Copano and TPG Capital, L.P.

 

“Operating Agreements” means, collectively, the Copano Entity Operating Agreements, the Copano LLC Agreement and the Certificate of Formation of Copano, each as amended to date.

 

“Permits” shall have the meaning specified in Section 3.18.

 

“Person” means any individual, corporation, company, voluntary association, partnership, joint venture, trust, limited liability company, unincorporated organization, Governmental Authority or any agency, instrumentality or political subdivision thereof or any other form of entity.

 

“Placement Agent” means Merrill Lynch, as exclusive placement agent to Copano.

 

“Property” or “Properties” means any interest in any kind of property or asset, whether real, personal or mixed, or tangible or intangible (including intellectual property rights).

 

  

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“Proposal” shall have the meaning set forth in the introductory paragraph of this Agreement.

 

“Purchase Price” means $300,000,000.

 

“Purchased Units” has the meaning specified in Section 2.01.

 

“Purchaser” has the meaning set forth in the introductory paragraph of this Agreement.

 

“Purchaser Related Parties” has the meaning specified in Section 6.01.

 

“Registration Rights Agreement” means the Registration Rights Agreement, dated as of the Closing Date, between Copano and the Purchaser.

 

“Representatives” means, with respect to a specified Person, the officers, directors, managers, employees, agents, counsel, accountants, investment bankers, and other representatives of such Person and, when used with respect to the Purchaser, also includes the Purchaser’s direct and indirect stockholders, partners, members, subsidiaries, parent companies and other Affiliates.

 

“Sales Transaction” shall have the meaning specified in Section 5.03(b).

 

“Securities” shall have the meaning specified in Section 5.03(a).

 

“Securities Act” means the Securities Act of 1933, as amended from time to time, and the rules and regulations of the Commission promulgated thereunder.

 

“Series A Preferred Units” means Copano’s Series A Convertible Preferred Units.

 

“Short Sales” means, without limitation, all “short sales” as defined in Rule 200 promulgated under Regulation SHO under the Exchange Act, whether or not against the box, and forward sale contracts, options, puts, calls, short sales, “put equivalent positions” (as defined in Rule 16a-1(h) under the Exchange Act) and similar arrangements, and sales and other transactions through non-U.S. broker dealers or foreign regulated brokers.

 

“Significant Event” means the entry by Copano into an agreement providing for a sale of all or substantially all of Copano’s assets or a merger or other business combination transaction that will result in Copano’s then current Unitholders owning less than 30% of the outstanding equity securities of the combined Person following such sale, merger or other business combination transaction.

 

“Southern Dome” shall have the meaning specified in Section 3.02.

 

“Standstill Termination Date” shall have the meaning specified in Section 5.03(a).

 

“Subsidiary” means, as to any Person, any corporation or other entity of which: (i) such Person or a Subsidiary of such Person is a general partner or manager; (ii) at least a majority of the outstanding equity interest having by the terms thereof ordinary voting power to elect a

 

  

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majority of the board of directors or similar governing body of such corporation or other entity (irrespective of whether or not at the time any equity interest of any other class or classes of such corporation or other entity shall have or might have voting power by reason of the happening of any contingency) is at the time directly or indirectly owned or controlled by such Person or one or more of its Subsidiaries; or (iii) any corporation or other entity as to which such Person consolidates for accounting purposes.

 

“Third Party Claim” shall have the meaning specified in Section 6.03(b).

 

“Transfer” shall have the meaning specified in Section 5.02(a).

 

“Unitholder Voting Agreement” means the Unitholder Voting Agreement, dated as of the Closing Date.

 

“Unitholders” means holders of limited liability company interests in Copano.

 

 “Webb/Duval” shall have the meaning specified in Section 3.01.

 

Section 1.02                      Accounting Procedures and Interpretation.  Unless otherwise specified in this Agreement, all accounting terms used herein shall be interpreted, all determinations with respect to accounting matters under this Agreement shall be made, and all financial statements and certificates and reports as to financial matters required to be furnished to the Purchaser under this Agreement shall be prepared, in accordance with GAAP applied on a consistent basis during the periods involved (except, in the case of unaudited financial statements, as permitted by Form 10-Q promulgated by the Commission) and in compliance as to form in all material respects with applicable accounting requirements and with the published rules and regulations of the Commission with respect thereto.

 

ARTICLE II

 

AGREEMENT TO SELL AND PURCHASE

 

Section 2.01                      Sale and Purchase.  Pursuant to the terms of this Agreement, at the Closing: (i) Copano hereby agrees to issue and sell to the Purchaser, and the Purchaser hereby agrees to purchase from Copano, 10,327,022 Series A Preferred Units (the “Purchased Units”); and (ii) as consideration for the issuance and sale of the Purchased Units to the Purchaser, the Purchaser hereby agrees to pay Copano the Purchase Price.

 

Section 2.02                      Closing.  Pursuant to the terms of this Agreement, the consummation of the purchase and sale of the Purchased Units hereunder (the “Closing”) is taking place concurrently with the execution and delivery of this Agreement. The Closing under this Agreement shall take place at the offices of Vinson & Elkins L.L.P., 1001 Fannin, 2500 First City Tower, Houston, Texas 77002.  The parties agree that the Closing may occur via delivery of facsimiles or photocopies of the Basic Documents and the closing deliverables contemplated hereby and thereby.  Unless otherwise provided herein, all proceedings to be taken and all documents to be executed and delivered by all parties at the Closing will be deemed to have been taken and executed simultaneously, and no proceedings will be deemed to have been taken nor documents executed or delivered until all have been taken. The date on which the Closing occurs

 

  

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and the transactions contemplated by this Agreement become effective is referred to as the “Closing Date.”

 

Section 2.03                      Copano Closing Deliverables.  Upon the terms and subject to the conditions of this Agreement, at the Closing, Copano is delivering (or causing to be delivered) the following:

 

(a)           a certificate or certificates (bearing the legend set forth in Section 4.05(e) of this Agreement) representing the Purchased Units and meeting the requirements of the Copano LLC Agreement, registered in such name(s) as the Purchaser has designated (which shall be limited to Purchaser and its Affiliates);

 

(b)           a certificate of the Secretary or Assistant Secretary of Copano, dated as of the date hereof, certifying as to and attaching: (i) the Certificate of Formation of Copano, as amended, as filed with the Delaware Secretary of State, (ii) the Copano LLC Agreement, (iii) the resolutions of the Board authorizing the Basic Documents and the transactions contemplated thereby, including the issuance of the Purchased Units and (iv) the incumbency of the officers executing the Basic Documents;

 

(c)           copies of the Certificate of Formation, Certificate of Incorporation or Certificate of Limited Partnership, as the case may be, and all amendments thereto, of each of the Copano Entities, certified by the Secretary of State (or corresponding state official) of its state of formation and dated as of a recent date;

 

(d)           certificates from the Secretary of State (or corresponding state official) of the state of formation of each of the Copano Entities evidencing that such Copano Entity is in good standing and dated as of a recent date;

 

(e)           certificates of the Secretary of State (or corresponding state official) of each of the jurisdictions listed on Schedule I to this Agreement, dated as of a recent date, evidencing the qualification and good standing of each of the Copano Entities as a foreign limited liability company, foreign limited partnership or foreign corporation, as the case may be;

 

(f)           the cross-receipt executed by Copano and delivered to the Purchaser certifying that it has received the Purchase Price;

 

(g)           the Registration Rights Agreement with respect to Purchased Units, which shall have been duly executed by Copano;

 

(h)           Amendment No. 1 and the Copano LLC Agreement, each as duly adopted and in full force and effect;

 

(i)           the Director Designation Agreement, which shall have been duly executed by Copano;

 

(j)           the Unitholder Voting Agreement, which shall have been duly executed by the Persons listed on Schedule II to this Agreement; and

 

  

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(k)           all other documents, instruments and writings required to be delivered by Copano at the Closing under the Basic Documents.

 

Section 2.04                      Purchaser Closing Deliverables.  Upon the terms and subject to the conditions of this Agreement, Purchaser is delivering (or causing to be delivered) the following:.

 

(a)           the Purchase Price, in immediately available funds;

 

(b)           the Registration Rights Agreement with respect to the Purchased Units, which shall have been duly executed by the Purchaser;

 

(c)           the Director Designation Agreement, which shall have been duly executed by the Purchaser;

 

(d)           a letter agreement as contemplated in the Director Designation Agreement duly executed by Michael G. MacDougall and the Purchaser;

 

(e)           a cross-receipt executed by the Purchaser and delivered to Copano certifying that it has received the Purchased Units; and

 

(f)           all other documents, instruments and writings required to be delivered by the Purchaser at the Closing under the Basic Documents.

 

ARTICLE III

 

REPRESENTATIONS AND WARRANTIES OF COPANO

 

Copano represents and warrants to the Purchaser, on and as of the date of this Agreement, as follows:

 

Section 3.01                      Formation and Qualification.  Each of the Copano Entities (except for Webb/Duval Gatherers, a Texas general partnership (“Webb/Duval”), with respect to good standing) has been duly formed and is validly existing in good standing under the Laws of its jurisdiction of formation, and is duly registered or qualified to do business and is in good standing as a foreign corporation, limited liability company, limited partnership or general partnership, as the case may be, in each jurisdiction in which its ownership or lease of property or the conduct of its businesses requires such registration or qualification, except where the failure so to register or qualify would not, individually or in the aggregate, be reasonably likely to have a Copano Material Adverse Effect.  Each of the Copano Entities has all corporate, limited liability company, limited partnership or general partnership, as the case may be, power and authority necessary to own or lease its Properties currently owned or leased and to conduct its business as currently conducted, in each case in all material respects as described in the Copano SEC Documents.

 

Section 3.02                      Ownership of Subsidiaries.  Copano directly or indirectly owns 100% of the issued and outstanding capital stock, membership interests or partnership interests, as the case may be, of the other Copano Entities (excluding Webb/Duval, Big Horn Gas Gathering, LLC, a Delaware limited liability company (“Big Horn”), Fort Union Gas Gathering, L.L.C., a

 

  

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Delaware limited liability company (“Fort Union”), Southern Dome, LLC, a Delaware limited liability company (“Southern Dome”), and Eagle Ford Gathering LLC, a Delaware limited liability company (“Eagle Ford”), as to which Copano owns a 62.5% partnership interest, a 51% limited liability company interest, a 37.04% limited liability company interest, a majority limited liability company interest and a 50% limited liability company interest, respectively) free and clear of all Liens, encumbrances, security interests, equities, charges and other claims except for Liens created pursuant to (i) the Amended and Restated Credit Agreement dated as of January 12, 2007 among Copano, as the borrower, Bank of America, N.A., as administrative agent and L/C issuer, JPMorgan Chase Bank, N.A. and Wachovia Bank, National Association, as co-syndication agents, and the other lenders party thereto and Banc of America Securities LLC, as sole lead arranger and sole book manager, as amended by the First Amendment to the Amended and Restated Credit Agreement, dated as of October 19, 2007, and the Copano Credit Agreement Second Amendment (together, the “Copano Credit Agreement”) or (ii) the Amended and Restated Credit Agreement, dated as of April 30, 2007, among Fort Union, as the borrower, Bank of America, N.A., as administrative agent, L/C issuer, the other lenders party thereto and Banc of America Securities LLC, as sole lead arranger and sole book manager (the “Fort Union Credit Agreement”).  Such capital stock, limited liability company interests or limited partnership interests, as the case may be, have been duly authorized and validly issued and are fully paid (to the extent required under such Subsidiary’s applicable constituent documents) and non-assessable (except as such non-assessability may be affected by matters described in: (A) Sections 18-607 and 18-804 of the Delaware Limited Liability Company Act (the “Delaware LLC Act”), in the case of a Delaware limited liability company, (B) Sections 17-303, 17-607 and 17-804 of the Delaware Revised Uniform Limited Partnership Act, in the case of a Delaware limited partnership, (C) Sections 3.03, 5.02 and 6.07 of the Texas Revised Uniform Limited Partnership Act, in the case of a Texas limited partnership, (D) Section 5.09 of the Texas Limited Liability Company Act, in the case of a Texas limited liability company or (E) Section 2031 of the Oklahoma Limited Liability Company Act, in the case of an Oklahoma limited liability company.

 

Section 3.03                      No Other Subsidiaries.  Other than its ownership interests in the other Copano Entities, Copano does not own, directly or indirectly, any equity or long-term debt securities of any other Person that, individually or in the aggregate, would be deemed to be a “significant subsidiary” as such term is defined in Rule 405 of the Securities Act.

 

Section 3.04                      Authorization; Enforceability; Valid Issuance.

 

(a)           Copano has all requisite limited liability company power and authority to issue and sell the Purchased Units, in accordance with and upon the terms and conditions set forth in the Basic Documents, and no further consent or authorization is required.

 

(b)           The Basic Documents to which Copano is a party have been duly authorized and validly executed and delivered by Copano and, assuming due authorization, execution and delivery by the Purchaser or its Affiliate, as applicable (if either the Purchaser or its Affiliate is a party thereto), constitute, valid and binding obligations of Copano; provided, that the enforceability thereof may be limited by (i) bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws relating to or affecting creditors’ rights generally and by general principles of equity (regardless of whether such enforceability is considered in a

 

  

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proceeding in equity or at law) and (ii) public policy, applicable law relating to fiduciary duties and indemnification and contribution and an implied covenant of good faith and fair dealing.

 

(c)           The Purchased Units and the limited liability company interests represented thereby have been duly authorized in accordance with the Copano LLC Agreement and, when issued and delivered against payment therefor in accordance with this Agreement, will be validly issued, fully paid (to the extent required under the Copano LLC Agreement) and non-assessable (except as such non-assessability may be affected by matters described in Sections 18-607 and 18-804 of the Delaware LLC Act) and will be free of any and all Liens and restrictions on transfer, other than (i) restrictions on transfer under the Copano LLC Agreement or this Agreement and under applicable state and federal securities laws, (ii) such Liens as are created by the Purchaser and (iii) such Liens as arise under the Copano LLC Agreement or the Delaware LLC Act.

 

(d)           Upon issuance in accordance with this Agreement and the Copano LLC Agreement, the Conversion Units will be duly authorized, validly issued, fully paid (to the extent required by the Copano LLC Agreement) and non-assessable (except as such non-assessability may be affected by matters described in Sections 18-607 and 18-804 of the Delaware LLC Act) and will be free of any and all Liens and restrictions on transfer, other than (i) restrictions on transfer under the Copano LLC Agreement or this Agreement and under applicable state and federal securities laws, (ii) such Liens as are created by the Purchaser and (iii) such Liens as arise under the Copano LLC Agreement or the Delaware LLC Act.

 

(e)           The Copano Entity Operating Agreements have been duly authorized, executed and delivered by the respective Copano Entities that are parties thereto, and are valid and legally binding agreements of the respective Copano Entities that are parties thereto, enforceable against such parties in accordance with their terms; provided, that the enforceability thereof may be limited by (i) applicable bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium or similar laws relating to or affecting creditors’ rights generally and by general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law) and (ii) public policy, applicable law relating to fiduciary duties and indemnification and contribution and an implied covenant of good faith and fair dealing.

 

Section 3.05                      No Preemptive Rights, Registration Rights or Options.  There are no preemptive rights or other rights to subscribe for or options or warrants to purchase, nor any restriction upon the voting or transfer of, any equity securities in any of the Copano Entities, except (i) as described in the Copano SEC Documents, (ii) for rights granted to the partners of Webb/Duval Gatherers and the members of Southern Dome, Big Horn, Fort Union and Eagle Ford pursuant to their respective constituent documents, (iii) for options, units appreciation rights or phantom units granted pursuant to Copano’s employee benefit or other compensation plans as such plans are described in Copano’s most recently filed proxy statement pursuant to Section 14(a) of the Exchange Act and (iv) as contemplated by the Basic Documents.  Except as contemplated by the Basic Documents, the issuance and sale of the Purchased Units as contemplated by this Agreement does not give rise to any rights for or relating to the registration of any Common Units or other securities of Copano other than as have been waived or deemed waived.

 

  

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Section 3.06                      Capitalization.  As of the date of this Agreement, immediately prior to the issuance and sale of the Purchased Units, the issued and outstanding limited liability company interests of Copano consist of 65,673,755 Common Units. All outstanding Common Units and the limited liability company interests represented thereby have been duly authorized and validly issued in accordance with the Copano LLC Agreement and are fully paid (to the extent required under the Copano LLC Agreement) and non-assessable (except as such non-assessability may be affected by matters described in Sections 18-607 and 18-804 of the Delaware LLC Act).

 

Section 3.07                      No Breach.  None of the issuance and sale by Copano of the Purchased Units, the execution, delivery and performance of the Basic Documents or the consummation of the transactions contemplated hereby or thereby (i) conflicts or will conflict with or constitutes or will constitute a violation of any of the Operating Agreements, (ii) requires any consent, approval or notice under or results in a breach or violation of, or constitutes a default (or an event which, with notice or lapse of time or both, would constitute such a default) under, any Contract to which any of the Copano Entities is a party or by which any of them or any of their respective Properties may be bound (other than conflicts, breaches, violations or defaults that have been waived or cured), (iii) violates or will violate any Law of any Governmental Authority in a proceeding to which any of them or their Property is or was a party or (iv) results or will result in the creation or imposition of any Lien, charge or encumbrance upon any property or assets of any of the Copano Entities, which conflicts, breaches, violations, defaults or Liens, in the case of clauses (ii), (iii) or (iv), could reasonably be expected to have, individually or in the aggregate, a Copano Material Adverse Effect.

 

Section 3.08                      No Approvals.  Except for (i) the approvals required by the Commission in connection with any registration statement filed under the Registration Rights Agreement, (ii) such consents that have been obtained and (iii) such consents, approvals, authorizations or orders that, if not obtained, could not reasonably be expected to have, individually or in the aggregate, a Copano Material Adverse Effect, no consent, approval, authorization or order of, or filing or registration with, any Governmental Authority is required in connection with the issuance and sale by Copano of the Purchased Units, the execution, delivery and performance of each of the Basic Documents to which it is a party or the consummation by Copano of the transactions contemplated by the Basic Documents.

 

Section 3.09                      No Default.  None of the Copano Entities (i) is in violation of its applicable Operating Agreement, (ii) is in default (and no event has occurred which, with notice or lapse of time or both, would constitute such a default) in the due performance or observance of any term, covenant or condition contained in any Contract to which it is a party or by which it is bound or to which any of its properties or assets is subject or (iii) is in violation of any Law of any Governmental Authority, which default or violation in the case of clause (ii) or (iii), could reasonably be expected to have, individually or in the aggregate, a Copano Material Adverse Effect.

 

Section 3.10                      Copano SEC Documents; Copano Financial Statements.  Copano has filed or furnished with the Commission all reports, schedules, forms, statements and other documents (including exhibits and other information incorporated therein) required to be filed or furnished by it under the Exchange Act or the Securities Act since January 1, 2010 (all such documents, collectively, the “Copano SEC Documents”).  The Copano SEC Documents, including any

 

  

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audited or unaudited financial statements and any notes thereto or schedules included therein (the “Copano Financial Statements”), at the time filed or furnished (except to the extent corrected by a subsequently filed or furnished Copano SEC Document filed or furnished prior to the date hereof) (i) did not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein (in the light of the circumstances under which they were made in the case of any prospectus) not misleading, (ii) complied in all material respects with the applicable requirements of the Exchange Act and the Securities Act, as applicable, (iii) complied as to form in all material respects with applicable accounting requirements and with the published rules and regulations of the Commission with respect thereto, (iv) in the case of the Copano Financial Statements, were prepared in accordance with GAAP applied on a consistent basis during the periods involved (except as may be indicated in the notes thereto or, in the case of unaudited statements, as permitted by Form 10-Q of the Commission), and (v) in the case of the Copano Financial Statements, fairly present (subject in the case of unaudited statements to normal, recurring and year-end audit adjustments) in all material respects the financial condition, results of operations and cash flows of Copano and its Subsidiaries as of the dates and for the periods indicated.  Deloitte & Touche LLP is an independent registered public accounting firm with respect to Copano and has not resigned or been dismissed as independent registered public accountants of Copano as a result of or in connection with any disagreement with Copano on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedures.

 

Section 3.11                      No Material Adverse Change.  Except as expressly set forth in or contemplated by the Copano SEC Documents furnished or filed with the Commission after January 1, 2010 and prior to the date hereof, since December 31, 2009, and except as contemplated by the Basic Documents, there has not been (i) any material adverse change, or any development involving a prospective material adverse change, in the business, Properties, management, financial condition or results of operations of the Copano Entities taken as a whole, (ii) any transaction that is material to the Copano Entities taken as a whole, (iii) any obligation or liability, direct or contingent (including any off-balance sheet obligations), incurred by any of the Copano Entities that is material to the Copano Entities taken as a whole, (iv) any change in the capital stock, membership or other equity interests or outstanding indebtedness of any of the Copano Entities that is material to the Copano Entities taken as a whole or (v) any dividend or distribution of any kind declared, paid or made on the capital stock of, or in respect of membership or partnership interests in, the Copano Entities, except for dividends or distributions made or paid to the Copano Entities.

 

Section 3.12                      Title to Real Property.  Each of the Copano Entities has good and marketable title to all Property described in the Copano SEC Documents as owned by such Copano Entity, free and clear of all (i) Liens and security interests except Liens or security interests arising under or securing indebtedness incurred under the Copano Credit Agreement or the Fort Union Credit Agreement or (ii) other claims and other encumbrances (other than Liens or security interests) except, in each case, (A) as described, and subject to the limitations contained, in the Copano SEC Documents, (B) such as do not materially affect the value of such Property taken as a whole or (C) such as do not materially interfere with the use of such Properties taken as a whole as they have been used in the past and are proposed to be used in the future as described in the Copano SEC Documents; provided, that with respect to any real property and buildings held under lease by any of the Copano Entities, such real property and

 

  

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buildings are held under valid and subsisting and enforceable leases with such exceptions as do not materially interfere with the use of the Properties of the Copano Entities taken as a whole as they have been used in the past as described in the Copano SEC Documents and are proposed to be used in the future as described in the Copano SEC Documents.

 

Section 3.13                      Insurance.  The Copano Entities maintain insurance covering their properties, operations, personnel and businesses against such losses and risks and in such amounts as is reasonably adequate for the conduct of their respective businesses and the value of their respective Properties and as is customary for companies engaged in similar businesses in similar industries.  Except as could not reasonably be expected to have, individually or in the aggregate, a Copano Material Adverse Effect, none of the Copano Entities has received notice from any insurer or agent of such insurer that substantial capital improvements (relating to Copano and its Subsidiaries on a consolidated basis) or other substantial expenditures will have to be made in order to continue such insurance, and all such insurance is outstanding and in force on the date hereof.

 

Section 3.14                      Litigation.  There are no actions, suits, claims, investigations or proceedings pending or, to the knowledge of Copano, threatened, to which any of the Copano Entities is or would be a party or of which any of their respective Properties is or would be subject at law or in equity, before or by any Governmental Authority, or before or by any self-regulatory organization or other non-governmental regulatory authority (including NASDAQ) that are required to be described in the Copano SEC Documents but are not described as required or that could reasonably be expected to have, individually or in the aggregate, a Copano Material Adverse Effect.

 

Section 3.15                      No Labor Dispute.  No labor dispute with the employees of any of the Copano Entities exists or, to the knowledge of Copano, is imminent.

 

Section 3.16                      Tax Returns.  Each of the Copano Entities has filed (or has obtained extensions with respect to) all material federal, state and local income and franchise tax returns required to be filed through the date of this Agreement, which returns are correct and complete in all material respects, and has timely paid all taxes due thereon, other than those (i) that are being contested in good faith and for which adequate reserves have been established in accordance with GAAP or (ii) that, if not paid, could not reasonably be expected to have, individually or in the aggregate, a Copano Material Adverse Effect.

 

Section 3.17                      Environmental Compliance.  The Copano Entities (i) are in compliance with any and all Environmental Laws, (ii) have received all Environmental Permits required of them under applicable Environmental Laws to conduct their respective businesses as they are currently being conducted, (iii) are in compliance with all terms and conditions of any such Environmental Permits and (iv) do not have any liability in connection with the release into the environment of any Hazardous Material, except where such failure to comply with Environmental Laws, such failure to receive required Environmental Permits, such failure to comply with the terms and conditions of such Environmental Permits or such liability in connection with releases of such Hazardous Materials could not reasonably be expected to have, individually or in the aggregate, a Copano Material Adverse Effect. The representations and warranties in this Section 3.17 are the sole representations and warranties of the Copano Entities

 

  

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in this Agreement with respect to Environmental Laws, Environmental Permits, and Hazardous Materials.

 

Section 3.18                      Permits.  Excluding any Environmental Permits, each of the Copano Entities has such permits, consents, licenses, franchises, certificates and authorizations of governmental or regulatory authorities (“permits”) as are necessary to own its Properties and to conduct its business in the manner described in the Copano SEC Documents, subject to such qualifications as may be set forth therein and except for such permits which, if not obtained, could not reasonably be expected to have, individually or in the aggregate, a Copano Material Adverse Effect.  Except as set forth in the Copano SEC Documents, each of the Copano Entities has fulfilled and performed all its material obligations with respect to such permits which are or will be due to have been fulfilled and performed by such date and no event has occurred that would prevent the permits from being renewed or reissued or which allows, or after notice or lapse of time would allow, revocation or termination thereof or results in any impairment of the rights of the holder of any such permit, except for such non-renewals, non-issues, revocations, terminations and impairments that could not reasonably be expected to have, individually or in the aggregate, a Copano Material Adverse Effect.  Except as described in the Copano SEC Documents, none of such permits contains any restriction that is materially burdensome to the Copano Entities considered as a whole.

 

Section 3.19                      NASDAQ Listing.  The Common Units are listed on NASDAQ, and Copano has not received any notice of delisting.  The issuance and sale of the Purchased Units and the issuance of Conversion Units does not contravene NASDAQ rules and regulations.

 

Section 3.20                      Investment Company.  None of the Copano Entities is now, and after the sale of the Purchased Units to be sold by Copano to the Purchaser hereunder, an “investment company” or a company “controlled by” an “investment company” within the meaning of the Investment Company Act of 1940, as amended.

 

Section 3.21                      MLP Status.  Copano has, for each taxable year beginning after December 31, 2003, during which Copano was in existence, met the gross income requirements of Section 7704(c)(2) of the Internal Revenue Code of 1986, as amended (the “Code”).  Copano expects to meet the gross income requirements of Section 7704(c)(2) of the Code for its taxable year ending December 31, 2010.

 

Section 3.22                      Certain Fees.  Except for (i) the fees contemplated by Section 7.01 of this Agreement to be paid by Copano to the Purchaser or its designee, (ii) fees to be paid by Copano to Merrill Lynch for placement agent services and (iii) fees to be paid by Copano to Morgan Stanley & Co. Incorporated for a fairness opinion in connection with this Agreement and the transactions contemplated hereby, no fees or commissions are or will be payable by Copano to brokers, finders or investment bankers with respect to the sale of any of the Purchased Units or the consummation of the transactions contemplated by this Agreement.  Copano agrees that it will indemnify and hold harmless the Purchaser from and against any and all claims, demands or liabilities for broker’s, finder’s, placement or other similar fees or commissions incurred by Copano or alleged to have been incurred by Copano in connection with the sale of the Purchased Units or the consummation of the transactions contemplated by the Basic Documents.

 

  

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Section 3.23                      Form S-3 Eligibility.  As of the date of this Agreement, Copano is eligible to register the resale of its Common Units for resale by the Purchaser under Form S-3 promulgated under the Securities Act.

 

Section 3.24                      Required Unit Vote.  The majority of the total votes cast by the holders of Common Units (with the exception of the Purchased Units, which are not entitled to vote according to the rules of NASDAQ) is the only approval required to approve the Proposal.  As of the date of this Agreement and based on Copano’s internal records, to Copano’s knowledge, the Persons listed on Schedule II to this Agreement are the beneficial owners of the Common Units set forth opposite such Person’s name on Schedule II to this Agreement.

 

ARTICLE IV

 

REPRESENTATIONS AND WARRANTIES OF THE PURCHASER

 

The Purchaser hereby represents and warrants to Copano with respect to itself, on and as of the date of this Agreement, as follows:

 

Section 4.01                      Existence.  The Purchaser is duly organized and validly existing and in good standing under the laws of its state of formation, with all necessary power and authority to own properties and to conduct its business as currently conducted.

 

Section 4.02                      Authorization; Enforceability.

 

(a)           The Purchaser has all necessary legal power and authority to purchase the Purchased Units, in accordance with and upon the terms and conditions set forth in the Basic Documents, and no further consent or authorization of the Purchaser is required.

 

(b)           The Basic Documents to which the Purchaser is a party have been duly authorized and validly executed and delivered by the Purchaser and, assuming due authorization, execution and delivery by Copano, constitute valid and binding obligations of the Purchaser; provided, that the enforceability thereof may be limited by (i) bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws relating to or affecting creditors’ rights generally and by general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law) and (ii) public policy, applicable law relating to fiduciary duties and indemnification and contribution and an implied covenant of good faith and fair dealing.

 

Section 4.03                      No Breach.  The execution, delivery and performance of the Basic Documents by the Purchaser and the consummation by the Purchaser of the transactions contemplated thereby will not (i) conflict with or result in a breach or violation of any of the terms or provisions of, or constitute a default under, any material agreement to which the Purchaser is a party or by which the Purchaser is bound or to which any of the property or assets of the Purchaser is subject, (ii) conflict with or result in any violation of the provisions of the organizational documents of the Purchaser, or (iii) violate any statute, order, rule or regulation of any court or Governmental Authority, except in the case of clauses (i) and (iii), for such conflicts, breaches, violations or defaults as would not prevent the consummation of the transactions contemplated by the Basic Documents.

 

  

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Section 4.04                      Certain Fees.  No fees or commissions are or will be payable by the Purchaser to brokers, finders or investment bankers with respect to the purchase of any of the Purchased Units or the consummation of the transactions contemplated by this Agreement.  The Purchaser agrees that it will indemnify and hold harmless Copano from and against any and all claims, demands or liabilities for broker’s, finder’s, placement or other similar fees or commissions incurred by the Purchaser or alleged to have been incurred by the Purchaser in connection with the purchase of the Purchased Units or the consummation of the transactions contemplated by the Basic Documents.

 

Section 4.05                      Unregistered Securities.

 

(a)           Accredited Investor Status; Sophisticated Purchaser.  The Purchaser is an “accredited investor” within the meaning of Rule 501 under the Securities Act and is able to bear the risk of its investment in the Purchased Units and the Conversion Units.  The Purchaser has such knowledge and experience in financial and business matters that it is capable of evaluating the merits and risks of the purchase of the Purchased Units and the Conversion Units.

 

(b)           Information.  The Purchaser or its Representatives have been furnished with materials relating to the business, finances and operations of Copano and relating to the offer and sale of the Purchased Units and Conversion Units that have been requested by the Purchaser.  The Purchaser or its Representatives has been afforded the opportunity to ask questions of Copano or its Representatives.  Neither such inquiries nor any other due diligence investigations conducted at any time by the Purchaser or its Representatives shall modify, amend or affect the Purchaser’s right (i) to rely on Copano’s representations and warranties contained in Article III above or (ii) to indemnification or any other remedy based on, or with respect to the accuracy or inaccuracy of, or compliance with, the representations, warranties, covenants and agreements in this Agreement.  The Purchaser understands and acknowledges that its purchase of the Purchased Units involves a high degree of risk and uncertainty.  The Purchaser has sought such accounting, legal and tax advice as it has considered necessary to make an informed investment decision with respect to its investment in the Purchased Units.

 

(c)           Cooperation.  The Purchaser shall cooperate reasonably with Copano to provide any information necessary for any applicable securities filings.

 

(d)           Purchaser Representation.  The Purchaser is purchasing the Purchased Units for its own account and not with a view to distribution in violation of any securities laws.  The Purchaser understands and acknowledges that there is no public trading market for the Purchased Units or the Conversion B Units and that none is expected to develop.  The Purchaser has been advised and understands and acknowledges that neither the Purchased Units nor the Conversion Units have been registered under the Securities Act or under the “blue sky” laws of any jurisdiction and may be resold only if registered pursuant to the provisions of the Securities Act (or if eligible, pursuant to the provisions of Rule 144 promulgated under the Securities Act or pursuant to another available exemption from the registration requirements of the Securities Act).  The Purchaser has been advised of and is aware of the provisions of Rule 144 promulgated under the Securities Act.

 

  

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(e)           Legends.  The Purchaser understands and acknowledges that, until such time as the Purchased Units and Conversion Units have been registered pursuant to the provisions of the Securities Act, or the Purchased Units and Conversion Units are eligible for resale pursuant to Rule 144 promulgated under the Securities Act without any restriction as to the number of securities as of a particular date that can then be immediately sold, the Purchased Units and Conversion Units will bear the following restrictive legend:  “THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED.  THESE SECURITIES MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF A REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO THE SECURITIES UNDER SUCH ACT OR PURSUANT TO AN EXEMPTION FROM REGISTRATION THEREUNDER AND, IN THE CASE OF A TRANSACTION EXEMPT FROM REGISTRATION, UNLESS SOLD PURSUANT TO RULE 144 UNDER SUCH ACT OR THE ISSUER HAS RECEIVED DOCUMENTATION REASONABLY SATISFACTORY TO IT THAT SUCH TRANSACTION DOES NOT REQUIRE REGISTRATION UNDER SUCH ACT. THIS SECURITY IS SUBJECT TO CERTAIN RESTRICTIONS ON TRANSFER SET FORTH IN (i) THE FOURTH AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT OF THE COMPANY, DATED AS OF JULY 20, 2010, AS AMENDED, AND (ii) THE SERIES A CONVERTIBLE PREFERRED UNIT PURCHASE AGREEMENT, DATED AS OF JULY 21, 2010, BY AND BETWEEN THE COMPANY AND THE PURCHASER PARTY THERETO, IN EACH CASE A COPY OF WHICH MAY BE OBTAINED FROM THE COMPANY AT ITS PRINCIPAL EXECUTIVE OFFICES.”

 

(f)           Reliance Upon the Purchaser’s Representations and Warranties.  The Purchaser understands and acknowledges that the Purchased Units are being offered and sold in reliance on a transactional exemption from the registration requirements of federal and state securities laws, and that Copano, the Placement Agent and Vinson & Elkins L.L.P., counsel for Copano, are relying in part upon the truth and accuracy of the representations, warranties, agreements, acknowledgments and understandings of the Purchaser set forth in this Agreement in (i) concluding that the issuance and sale of the Purchased Units is a “private offering” and, as such, is exempt from the registration requirements of the Securities Act, and (ii) determining the applicability of such exemptions and the suitability of the Purchaser to purchase the Purchased Units.

 

Section 4.06                      Short Selling.  The Purchaser represents and warrants that it (i) has not entered into any Short Sales of the Common Units owned by it between the time it first began discussions with Copano or the Placement Agent about the transactions contemplated by this Agreement and the date hereof and (ii) will not enter into any Short Sales of the Common Units owned by it from the date hereof and such time as the Shelf Registration Statement (as defined in the Registration Rights Agreement) is declared or deemed effective by the Commission.

 

Section 4.07                      Copano Information.  The Purchaser acknowledges and agrees that Copano has provided or made available to the Purchaser (through EDGAR, Copano’s website or otherwise) all Copano SEC Documents, as well as all press releases issued by Copano through the date of this Agreement that are included in a filing by Copano on Form 8-K or clearly posted on Copano’s website.

 

  

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ARTICLE V

 

COVENANTS

 

Section 5.01                      Unitholder Vote with Respect to Conversion.

 

(a)           As soon as practicable, but in any event no later than 180 days following the date hereof, Copano shall, in accordance with applicable Law and the Copano LLC Agreement, take all action necessary to convene a meeting of its Common Unitholders to consider and vote upon the Proposal.  Subject to fiduciary duties under applicable Law, the Board shall, in connection with such meeting, recommend approval of the Proposal and shall take all other lawful action to solicit the approval of the Proposal by the Common Unitholders, except that Copano may, but shall not be required to, hire any proxy solicitation firm in connection with such meeting.

 

(b)           If the Proposal is not approved by the Common Unitholders at the meeting contemplated by Section 5.01(a), Copano shall be obligated to convene another meeting of its Unitholders on the terms set forth in Section 5.01(a) (except that such meeting shall take place no later than the next annual meeting of Unitholders), and the Board shall again be obligated to take the actions set forth in Section 5.01(a) with respect to such meeting.  If the approval of its Common Unitholders is not obtained at this second meeting of Unitholders, then Copano shall be obligated to include the Proposal to be voted upon at two (or one, if approval of the Proposal is obtained at such annual meeting) subsequent annual meetings (Copano shall use commercially reasonable efforts to hold any such subsequent meeting within 365 days of the preceding annual meeting) of its Unitholders, and its Board shall remain obligated to take the actions set forth in Section 5.01(a) with respect to each such meeting.

 

Section 5.02                      Transfer Restrictions.

 

(a)           Without the prior written consent of Copano, except as specifically provided in the Basic Documents, the Purchaser will not, during the period commencing on the date hereof and ending on the third anniversary of the date hereof (i) offer, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, lend or otherwise transfer or dispose of, directly or indirectly, any of its Purchased Units; or (ii) enter into any swap or other transaction or arrangement that transfers or that is designed to, or that might reasonably be expected to, result in the transfer to another, in whole or in part, any of the economic consequences of ownership of its Purchased Units, whether any such transaction described in clause (i) or (ii) above is to be settled by delivery of Common Units or such other securities, in cash or otherwise (any such transaction, a “Transfer”); provided, however, that the Purchaser may pledge all or any portion of its Purchased Units to any holders of obligations owed by the Purchaser, including to the trustee for, or representative of, such holders; and provided, further, that the Purchaser may Transfer the Purchased Units to an Affiliate of the Purchaser if such Transfer to an Affiliate would not, when aggregated with all other sales or exchanges of Securities within the prior 12-month period, cause a technical termination under Section 708 of the Code, provided, that any such transferee (i) agrees to be bound by all of the terms and conditions of this Agreement, including this Section 5.02, (ii) expressly assumes a proportionate share (based on the number of Series A Preferred Units being Transferred relative to the total number of Purchased Units) of the Purchaser’s obligations in respect of indemnification pursuant to Section 6.02 of this Agreement, and (iii) the Purchaser

 

  

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acknowledges and agrees that it shall remain the primary obligor under this Agreement, and as such, the Purchaser further acknowledges and agrees that any claims for indemnity pursuant to Section 6.02 of this Agreement shall be satisfied first by the Purchaser, and if the Purchaser does not have sufficient assets to satisfy claims for indemnity pursuant to Section 6.02 of this Agreement, then the transferee shall be liable to Copano for up to the balance due on any such claims pursuant to Section 6.02 of this Agreement (based on the number of Series A Preferred Units Transferred relative to the total number of Purchased Units).

 

(b)           Prior to and after the expiration of the period referred to in Section 5.02(a), the Purchaser will not, individually or collectively, directly or indirectly, Transfer any Purchased Units or any Conversion Units to (i) any Competitor of Copano or (ii) any other Person or “group” (within the meaning of Section 13(d) of the Exchange Act) that will own more than 10% of the outstanding Common Units on an as converted basis after such Transfer.

 

Section 5.03                      Standstill Obligation.

 

(a)           For a period beginning on the date hereof and ending on the third anniversary of the date hereof (the “Standstill Termination Date”), without the prior written consent of Copano, the Purchaser agrees that it shall not, nor shall it permit any of its Affiliates to, nor shall the Purchaser agree, advise, assist, provide information or provide financing to others, or permit its Affiliates to agree, advise, assist, provide information or provide financing to others, to, individually or collectively, directly or indirectly:

 

(i)           acquire or offer to acquire or agree to acquire from any Person, directly or indirectly, by purchase or merger, through the acquisition of control of another Person, by joining a partnership, limited partnership or other “group” (within the meaning of Section 13(d)(3) of the Exchange Act) or otherwise, beneficial ownership of any equity securities of Copano, or direct or indirect rights (including convertible securities) or options to acquire such beneficial ownership (collectively, the “Securities”) (or otherwise act in concert with respect to any such Securities with any Person that so acquires, offers to acquire or agrees to acquire); provided, however, that no such acquisition, offer to acquire or agreement to acquire shall be deemed to occur solely due to: (a) the issuance of the Purchased Units (including the issuance of any Conversion Units underlying the Purchased Units or any additional Series A Preferred Units issued in respect of distributions by Copano), (b) a unit split, reverse unit split, reclassification, reorganization or other transaction by Copano affecting any class of the outstanding equity securities of Copano generally or (c) a dividend of units or other pro rata distribution by Copano to holders of its outstanding equity securities; or

 

(ii)           make, or in any way participate in, directly or indirectly, any “solicitation” of “proxies” to vote (as such terms are used in the Regulation 14A promulgated under the Exchange Act), become a “participant” in, or encourage, support or aid any other Person to become a “participant,” in any “election contest” (as such terms are defined in Rule 14a-11 promulgated under the Exchange Act) or initiate, propose or otherwise solicit unitholders of Copano for the approval of any unitholder proposals, in each case with respect to Copano; or

 

  

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(iii)           form, join, in any way participate in, or encourage the formation of, a “group” (within the meaning of Section 13(d)(3) of the Exchange Act) with respect to any voting securities of Copano; or

 

(iv)           deposit any securities of Copano into a voting trust, or subject any securities of Copano to any agreement or arrangement with respect to the voting of such securities, or other agreement or arrangement having similar effect; or

 

(v)           alone or in concert with others, seek, or encourage, support or aid any effort, to influence or control the management, Board, business, policies, affairs or actions of Copano; or

 

(vi)           request Copano (or any directors, officers, employees or agents of Copano), directly or indirectly to amend, waive or modify any provision of this Section 5.03; provided, however, that a request to amend, waive or modify any provision of this Section 5.03 shall not be prohibited so long as such request does not include an offer or statement of intent to do any of the foregoing.

 

The foregoing provisions of this Section 5.03(a) shall not apply (i) to the Purchaser with respect to a Significant Event or (ii) to any person who is a director of Copano acting in his capacity as a director of Copano in the ordinary course and within Copano’s Board process.

 

(b)           If prior to the Standstill Termination Date, Copano or its Affiliates conduct a process with three or more potential bidders relating to a sale of all or substantially all of Copano’s assets or a merger or other business combination transaction involving Copano that would reasonably be expected to result in Copano’s then current Unitholders owning less than 30% of the outstanding equity securities of the combined Person following such sale, merger or other business combination transaction (a “Sales Transaction”), then Copano agrees that it shall provide the Purchaser with an invitation to bid, using substantially the same invitation to bid sent to other potential bidders in such process, and shall provide to the Purchaser substantially the same information relating to the Copano Entities that Copano provided in such process to such other potential bidders, subject to a confidentiality agreement acceptable to Copano containing confidentiality restrictions no more restrictive in the aggregate than those in the confidentiality agreement entered into by any other potential bidder in connection with such process, and the restrictions set forth in Section 5.03(a) shall not apply to any process or transaction described in this Section 5.03(b) for the limited purpose of allowing the Purchaser to bid, negotiate and, with the approval and recommendation of the Board, complete a Sales Transaction as contemplated by this paragraph.  If Copano elects not to pursue a Sales Transaction with the Purchaser following the process described in this Section 5.03(b), then the restrictions in Section 5.03(a) shall continue to apply to the Purchaser.

 

(c)           Notwithstanding anything to the contrary in this Section 5.03, prior to the Standstill Termination Date, at Copano’s request, the Purchaser shall be permitted to provide strategic advice to Copano from time to time.

 

Section 5.04                      Business Combinations.  Notwithstanding any other provision of this Agreement, (a) the provisions of Section 203 of the General Corporation Law of the State of

 

  

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Delaware (the “DGCL”) shall be applied with respect to Copano as though Copano were a Delaware corporation pursuant to Section 12.6 of the Copano LLC Agreement, (b) the Board’s approval of this Agreement and the transactions contemplated hereby shall not be deemed approval for purposes of Section 203(a)(1) of the DGCL, (c) Copano shall be entitled to all of the protections provided under Section 203 of the DGCL and (d) the Purchaser shall be subject to all of the restrictions and limitations of Section 203 of the DGCL.

 

Section 5.05                      Further Assurances; NASDAQ Listing.  From time to time after the date hereof, without further consideration, Copano and the Purchaser shall use their commercially reasonable efforts to take, or cause to be taken, all actions necessary or appropriate to consummate the transactions contemplated by this Agreement and the other Basic Documents. Without limiting the foregoing, Copano shall (i) file with NASDAQ the proper form or other notification and required supporting documentation, and provide to NASDAQ any other requested information, related to the Conversion Common Units and (ii) ensure that the issuance of the Series A Preferred Units and Conversion Units is in compliance with applicable NASDAQ rules and regulations.

 

ARTICLE VI

 

INDEMNIFICATION, COSTS AND EXPENSES

 

Section 6.01                      Indemnification by Copano.  Copano agrees to indemnify the Purchaser and its Representatives (collectively, “Purchaser Related Parties”) from, and hold each of them harmless against, any and all losses, actions, suits, proceedings (including any investigations, litigation or inquiries), demands and causes of action, and, in connection therewith, and promptly upon demand, pay or reimburse each of them for all reasonable costs, losses, liabilities, damages or expenses of any kind or nature whatsoever (including the reasonable fees and disbursements of counsel and all other reasonable expenses incurred in connection with investigating, defending or preparing to defend any such matter that may be incurred by them or asserted against or involve any of them), whether or not involving a Third Party Claim, as a result of, arising out of, or in any way related to (i) the failure of any of the representations or warranties made by Copano contained herein to be true and correct in all material respects as of the date hereof (except with respect to any provisions including the word “material” or words of similar import, with respect to which such representations and warranties must have been true and correct) or (ii) the breach of any of the covenants of Copano contained herein; provided, that in the case of the immediately preceding clause (i), such claim for indemnification relating to a breach of any representation or warranty is made prior to the expiration of such representation or warranty; provided, however, that for purposes of determining when an indemnification claim has been made, the date upon which a Purchaser Related Party shall have given notice (stating in reasonable detail the basis of the claim for indemnification) to Copano shall constitute the date upon which such claim has been made; provided, further, that the liability of Copano shall not be greater in amount than the Purchase Price.

 

Section 6.02                      Indemnification by the Purchaser.  The Purchaser agrees to indemnify Copano and its Representatives (collectively, “Copano Related Parties”) from, and hold each of them harmless against, any and all losses, actions, suits, proceedings (including any investigations, litigation or inquiries), demands and causes of action, and, in connection therewith, and promptly upon demand, pay or reimburse each of them for all reasonable costs,

 

  

22

  

  

losses, liabilities, damages or expenses of any kind or nature whatsoever (including the reasonable fees and disbursements of counsel and all other reasonable expenses incurred in connection with investigating, defending or preparing to defend any such matter that may be incurred by them or asserted against or involve any of them), whether or not involving a Third Party Claim, as a result of, arising out of, or in any way related to (i) the failure of any of the representations or warranties made by the Purchaser contained herein to be true and correct in all material respects as of the date hereof or (ii) the breach of any of the covenants of the Purchaser contained herein; provided, that in the case of the immediately preceding clause (i), such claim for indemnification relating to a breach of any representation or warranty is made prior to the expiration of such representation or warranty; provided, however, that for purposes of determining when an indemnification claim has been made, the date upon which a Copano Related Party shall have given notice (stating in reasonable detail the basis of the claim for indemnification) to the Purchaser shall constitute the date upon which such claim has been made; provided, further, that the liability of the Purchaser (and its Affiliates, if the Purchaser Transfers a portion or all of the Purchased Units to an Affiliate as permitted by Section 5.02) shall not be greater in amount than the Purchase Price.

 

Section 6.03                      Indemnification Procedure.

 

(a)           A claim for indemnification for any matter not involving a Third Party Claim may be asserted by notice to the party from whom indemnification is sought; provided, however, that failure to so notify the indemnifying party shall not preclude the indemnified party from any indemnification that it may claim in accordance with this Article VI, except as otherwise provided in Sections 6.01 and 6.02.

 

(b)           Promptly after any Copano Related Party or Purchaser Related Party (hereinafter, the “Indemnified Party”) has received notice of any indemnifiable claim hereunder, or the commencement of any action, suit or proceeding by a third person, which the Indemnified Party believes in good faith is an indemnifiable claim under this Agreement (each, a “Third Party Claim”), the Indemnified Party shall give the indemnitor hereunder (the “Indemnifying Party”) written notice of such Third Party Claim but failure to so notify the Indemnifying Party will not relieve the Indemnifying Party from any liability it may have to such Indemnified Party hereunder except to the extent that the Indemnifying Party is materially prejudiced by such failure.  Such notice shall state the nature and the basis of such Third Party Claim to the extent then known.  The Indemnifying Party shall have the right to defend and settle, at its own expense and by its own counsel, any such matter as long as the Indemnifying Party pursues the same diligently and in good faith.  If the Indemnifying Party undertakes to defend or settle such Third Party Claim, it shall promptly, and in no event later than five (5) days, notify the Indemnified Party of its intention to do so, and the Indemnified Party shall cooperate with the Indemnifying Party and its counsel in all commercially reasonable respects in the defense thereof and/or the settlement thereof.  Such cooperation shall include, but shall not be limited to, furnishing the Indemnifying Party with any books, records and other information reasonably requested by the Indemnifying Party and in the Indemnified Party’s possession or control.  Such cooperation of the Indemnified Party shall be at the cost of the Indemnifying Party.  After the Indemnifying Party has notified the Indemnified Party of its intention to undertake to defend or settle any such asserted liability, and for so long as the Indemnifying Party diligently pursues such defense, the Indemnifying Party shall not be liable for any additional legal expenses incurred by the

 

  

23

  

  

Indemnified Party in connection with any defense or settlement of such asserted liability; provided, however, that the Indemnified Party shall be entitled (i) at its expense, to participate in the defense of such asserted liability and the negotiations of the settlement thereof and (ii) if (A) the Indemnifying Party has, within ten (10) Business Days of when the Indemnified Party provides written notice of a Third Party Claim, failed (y) to assume the defense or settlement of such Third Party Claim and employ counsel and (z) notify the Indemnified Party of such assumption, or (B) if the defendants in any such action include both the Indemnified Party and the Indemnifying Party and counsel to the Indemnified Party shall have concluded that there may be reasonable defenses available to the Indemnified Party that are different from or in addition to those available to the Indemnifying Party or if the interests of the Indemnified Party reasonably may be deemed to conflict with the interests of the Indemnifying Party, then the Indemnified Party shall have the right to select a separate counsel and to assume such settlement or legal defense and otherwise to participate in the defense of such action, with the expenses and fees of such separate counsel and other expenses related to such participation to be reimbursed by the Indemnifying Party as incurred.  Notwithstanding any other provision of this Agreement, the Indemnifying Party shall not settle any indemnified claim without the consent of the Indemnified Party, unless the settlement thereof imposes no liability or obligation on, and includes a complete release from liability of, and does not contain any admission of wrongdoing by, the Indemnified Party.

 

Section 6.04                      Tax Matters.  All indemnification payments under this Article VI shall be adjustments to the Purchase Price, except as otherwise required by applicable Law.

 

ARTICLE VII

 

MISCELLANEOUS

 

Section 7.01                      Fees and Expenses.  Copano shall pay out of the proceeds received from the consummation of the transactions contemplated by this Agreement: (i) a transaction fee of 3% of the Purchase Price to the Purchaser or its designee on the date hereof and (ii) the reasonable out-of-pocket fees and expenses incurred by the Purchaser in connection the transactions contemplated by the Basic Documents, including without limitation, legal, accounting, advisory and other reasonable out-of-pocket fees and expenses; provided, that the expenses of the Purchaser paid out of such proceeds shall not exceed $1,000,000 in the aggregate.

 

Section 7.02                      Interpretation.  Article, Section and Schedule references in this Agreement are references to the corresponding Article, Section and Schedule to this Agreement, unless otherwise specified.  All Schedules to this Agreement are hereby incorporated and made a part hereof as if set forth in full herein and are an integral part of this Agreement.  All references to instruments, documents, Contracts and agreements are references to such instruments, documents, Contracts and agreements as the same may be amended, supplemented and otherwise modified from time to time, unless otherwise specified.  The word “including” shall mean “including but not limited to” and shall not be construed to limit any general statement that it follows to the specific or similar items or matters immediately following it.  Whenever Copano has an obligation under the Basic Documents, the expense of complying with that obligation shall be an expense of Copano unless otherwise specified.  Any reference in this Agreement to $ shall mean U.S. dollars.  Whenever any determination, consent or approval is to be made or

 

  

24

  

  

given by the Purchaser, such action shall be in the Purchaser’s sole discretion, unless otherwise specified in this Agreement.  If any provision in the Basic Documents is held to be illegal, invalid, not binding or unenforceable, (i) such provision shall be fully severable and the Basic Documents shall be construed and enforced as if such illegal, invalid, not binding or unenforceable provision had never comprised a part of the Basic Documents, and the remaining provisions shall remain in full force and effect and (ii) the parties hereto shall negotiate in good faith to modify the Basic Documents so as to effect the original intent of the parties as closely as possible in an acceptable manner in order that the transactions contemplated hereby are consummated as originally contemplated to the greatest extent possible.  When calculating the period of time before which, within which or following which any act is to be done or step taken pursuant to the Basic Documents, the date that is the reference date in calculating such period shall be excluded.  If the last day of such period is a non-Business Day, the period in question shall end on the next succeeding Business Day.  Any words imparting the singular number only shall include the plural and vice versa.  The words such as “herein,” “hereinafter,” “hereof” and “hereunder” refer to this Agreement as a whole and not merely to a subdivision in which such words appear unless the context otherwise requires.  The provision of a Table of Contents, the division of this Agreement into Articles, Sections and other subdivisions and the insertion of headings are for convenience of reference only and shall not affect or be utilized in construing or interpreting this Agreement.

 

Section 7.03                      Survival of Provisions.  The representations and warranties set forth in Sections 3.01, 3.02, 3.04, 3.06, 3.08, 3.20, 3.22, 3.24, 4.01, 4.02, 4.04 and 4.05 hereunder shall survive the execution and delivery of this Agreement indefinitely, the representations and warranties set forth in Sections 3.16 and 3.21 shall survive for a period of three (3) years following the date hereof regardless of any investigation made by or on behalf of Copano or the Purchaser, and the other representations and warranties set forth herein shall survive for a period of eighteen (18) months following the date hereof regardless of any investigation made by or on behalf of Copano or the Purchaser.  The covenants made in this Agreement or any other Basic Document shall survive the Closing and remain operative and in full force and effect regardless of acceptance of any of the Purchased Units and payment therefor and repayment, conversion or repurchase thereof. Regardless of any purported general termination of this Agreement, the provisions of Article VI and all indemnification rights and obligations of Copano and the Purchaser thereunder, and this Article VII shall remain operative and in full force and effect as between Copano and the Purchaser, unless Copano and the Purchaser execute a writing that expressly (with specific references to the applicable Section or subsection of this Agreement) terminates such rights and obligations as between Copano and the Purchaser.

 

Section 7.04                      No Waiver; Modifications in Writing.

 

(a)           Delay.  No failure or delay on the part of any party in exercising any right, power or remedy hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right, power or remedy preclude any other or further exercise thereof or the exercise of any other right, power or remedy.  The remedies provided for herein are cumulative and are not exclusive of any remedies that may be available to a party at law or in equity or otherwise.

 

(b)           Specific Waiver.  Except as otherwise provided herein, no amendment, waiver, consent, modification or termination of any provision of this Agreement or any other Basic

 

  

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Document (except in the case of the Copano LLC Agreement for amendments adopted pursuant to Section 11.1(c) thereof) shall be effective unless signed by each of the parties hereto or thereto affected by such amendment, waiver, consent, modification or termination.  Any amendment, supplement or modification of or to any provision of this Agreement or any other Basic Document, any waiver of any provision of this Agreement or any other Basic Document and any consent to any departure by Copano from the terms of any provision of this Agreement or any other Basic Document shall be effective only in the specific instance and for the specific purpose for which made or given.  Except where notice is specifically required by this Agreement, no notice to or demand on Copano in any case shall entitle Copano to any other or further notice or demand in similar or other circumstances.  Any investigation by or on behalf of any party shall not be deemed to constitute a waiver by the party taking such action of compliance with any representation, warranty, covenant or agreement contained herein.

 

Section 7.05                      Binding Effect; Assignment.

 

(a)           Binding Effect.  This Agreement shall be binding upon Copano, the Purchaser and their respective successors and permitted assigns.  Except as expressly provided in this Agreement, this Agreement shall not be construed so as to confer any right or benefit upon any Person other than the parties to this Agreement and their respective successors and permitted assigns.

 

(b)           Assignment of Rights.  The Purchaser’s rights and obligations hereunder (including the right to seek indemnification) may be transferred or assigned in whole or in part by the Purchaser to any Affiliate of the Purchaser without the consent of Copano.  Upon any such permitted transfer or assignment, references in this Agreement to the Purchaser (as they apply to the transferor or assignor, as the case may be) shall thereafter apply to such transferee or assignee of the Purchaser unless the context otherwise requires.  Without the written consent of Copano, which consent shall not be unreasonably withheld, no portion of the rights and obligations of the Purchaser under this Agreement may be assigned or transferred by the Purchaser or such a transferee of Purchased Units to a Person that is not an Affiliate of the Purchaser.  No portion of the rights and obligations of Copano under this Agreement may be transferred or assigned without the prior written consent of the Purchaser, which consent shall not be unreasonably withheld.

 

Section 7.06                      Non-Disclosure.

 

(a)           The Purchaser agrees to abide by its obligations under the Non-Disclosure Agreement.

 

(b)           The Copano Entities and any of their respective Representatives shall disclose any information naming the Purchaser or any of its Affiliates (other than simply naming the Purchaser and its Affiliates as a party to certain of the Basic Documents and describing the transactions contemplated by the Basic Documents) in any filing with the Commission, NASDAQ or any Governmental Authority or other public disclosure, only after providing the Purchaser a reasonable opportunity to review and comment on such disclosure (with such comments being incorporated or reflected, to the extent reasonable, in any such disclosure); provided, however, that nothing in this Section 7.06 shall delay any required filing with the

 

  

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Commission, NASDAQ or any Governmental Authority or other public disclosure or otherwise hinder the Copano Entities’ or their Representatives’ ability to timely comply with all Laws or rules and regulations of the Commission, NASDAQ or other Governmental Authority.

 

Section 7.07                      Communications.  All notices and demands provided for hereunder shall be in writing and shall be given by hand delivery, electronic mail, registered or certified mail, return receipt requested, regular mail, facsimile or air courier guaranteeing overnight delivery to the following addresses:

 

(a)           If to the Purchaser:

 

TPG Copenhagen, L.P.

c/o TPG Capital, L.P.

345 California Street, Suite 3300

San Francisco, California 94104

Attention:  Ronald Cami

Facsimile:  (415) 743-1501

with a copy to:

 

Baker Botts L.L.P.

One Shell Plaza

910 Louisiana

Houston, Texas 77002

Attention: Ryan Maierson

Facsimile: (713) 229-7911

Internet electronic mail: ryan.maierson@bakerbotts.com

(b)           If to Copano:

 

Copano Energy, L.L.C.

2727 Allen Parkway, Suite 1200

Houston, Texas 77019

Attention: Douglas L. Lawing, Executive Vice President, 

General Counsel and Secretary

Facsimile: (713) 621-9545

Internet electronic mail: doug.lawing@copanoenergy.com

 

with a copy to:

 

Vinson & Elkins L.L.P.

1001 Fannin, Suite 2500

Houston, Texas 77002

Attention: Jeffery K. Malonson

Facsimile: (713) 615-5627

Internet electronic mail: jmalonson@velaw.com

 

  

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or to such other address as Copano or the Purchaser may designate in writing.  All notices and communications shall be deemed to have been duly given: (i) at the time delivered by hand, if personally delivered; (ii) when notice is sent to the sender that the recipient has read the message, if sent by electronic mail; (iii) upon actual receipt if sent by registered or certified mail, return receipt requested, or regular mail, if mailed; (iv) when receipt is acknowledged, if sent by facsimile; and (v) upon actual receipt when delivered to an air courier guaranteeing overnight delivery.

 

Section 7.08                      Removal of Legend.

 

(a)           The Purchaser may request Copano to remove the legend set forth in Section 4.05(e) from the certificates evidencing the Purchased Units by submitting to Copano such certificates, together with an opinion of counsel to the effect that such legend is no longer required under the Securities Act or applicable state laws as the case may be, as Copano may request; provided, that, no opinion of counsel shall be required if the Purchaser is effecting a sale of Purchased Units pursuant to Rule 144 under the Securities Act (and the Purchaser delivers a Rule 144 Representation Letter to Copano) or the Conversion Common Units have been registered under the Securities Act pursuant to an effective registration statement.  Copano shall cooperate with the Purchaser to effect removal of such legend.  Subject to the provisions of the Copano LLC Agreement, the legend described in Section 4.05(e) shall be removed and Copano shall issue a certificate without such legend to the holder of Purchased Units upon which it is stamped, if, unless otherwise required by state securities Laws, (i) such Purchased Units are sold pursuant to an effective registration statement, (ii) in connection with a sale, assignment or other transfer, such holder provides Copano with an opinion of a law firm reasonably acceptable to Copano, in a generally acceptable form, to the effect that such sale, assignment or transfer of such Purchased Units may be made without registration under the applicable requirements of the Securities Act, or (iii) in connection with a sale, assignment of or other transfer of such Purchased Units, such holder provides Copano with a representation letter that such Purchased Units will be sold, assigned or transferred pursuant to Rule 144 under the Securities Act.  Copano shall bear all direct costs and expenses associated with the removal of a legend pursuant to this Section 7.08; provided, that the Purchaser shall be responsible for all legal fees and expenses of counsel incurred by the Purchaser with respect to matters addressed in this Section 7.08.

 

(b)           Certificates evidencing Conversion Units shall not contain any legend (including the legend set forth in Section 4.05(e)), (i) while a registration statement covering the resale of such security is effective under the Securities Act and the Purchaser delivers to Copano a representation letter agreeing that such Conversion Units will be sold under such effective registration statement, or (ii) following any sale of such Conversion Units pursuant to Rule 144, or (iii) if such legend is not required under applicable requirements of the Securities Act (including judicial interpretations and pronouncements issued by the staff of the Commission).

 

Section 7.09                      Entire Agreement.  This Agreement, the other Basic Documents and the other agreements and documents referred to herein are intended by the parties as a final expression of their agreement and intended to be a complete and exclusive statement of the agreement and understanding of the parties hereto in respect of the subject matter contained

 

  

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herein and therein.  There are no restrictions, promises, warranties or undertakings, other than those set forth or referred to herein or the other Basic Documents with respect to the rights granted by Copano or any of its Affiliates or the Purchaser or any of their Affiliates set forth herein or therein.  This Agreement, the other Basic Documents and the other agreements and documents referred to herein or therein supersede all prior agreements and understandings between the parties with respect to such subject matter.

 

Section 7.10                      Governing Law; Submission to Jurisdiction.  This Agreement, and all claims or causes of action (whether in contract or tort) that may be based upon, arise out of or relate to this Agreement or the negotiation, execution or performance of this Agreement (including any claim or cause of action based upon, arising out of or related to any representation or warranty made in or in connection with this Agreement), will be construed in accordance with and governed by the laws of the State of Delaware without regard to principles of conflicts of laws.  Any action against any party relating to the foregoing shall be brought in any federal or state court of competent jurisdiction located within the State of Delaware, and the parties hereto hereby irrevocably submit to the non-exclusive jurisdiction of any federal or state court located within the State of Delaware over any such action.  The parties hereby irrevocably waive, to the fullest extent permitted by applicable Law, any objection that they may now or hereafter have to the laying of venue of any such dispute brought in such court or any defense of inconvenient forum for the maintenance of such dispute.  Each of the parties hereto agrees that a judgment in any such dispute may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by Law.

 

Section 7.11                      Waiver of Jury Trial.  THE PARTIES TO THIS AGREEMENT EACH HEREBY WAIVES, AND AGREES TO CAUSE ITS AFFILIATES TO WAIVE, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (i) ARISING UNDER THIS AGREEMENT OR (ii) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO IN RESPECT OF THIS AGREEMENT OR ANY OF THE TRANSACTIONS RELATED HERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER IN CONTRACT, TORT, EQUITY OR OTHERWISE.  THE PARTIES TO THIS AGREEMENT EACH HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY AND THAT THE PARTIES TO THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OF A COPY OF THIS AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.

 

Section 7.12                      Execution in Counterparts.  This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which counterparts, when so executed and delivered, shall be deemed to be an original and all of which counterparts, taken together, shall constitute but one and the same agreement.

 

 

[Remainder of Page Left Intentionally Blank]

 

  

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IN WITNESS WHEREOF, the parties hereto execute this Agreement, effective as of the date first above written.

 

 

	  	  	
COPANO ENERGY, L.L.C.,

	  	  	  
	  	
By:

	

/s/Carl A. Luna

	  	
Name:

	
Carl A. Luna

	  	
Title:

	
Senior Vice President and

	  	  	
Chief Financial Officer

	  	  	  
	  	  	  
	  	  	  
	  	  	
TPG COPENHAGEN, L.P.

	  	  	  
	  	
By:

	
TPG Advisors VI, Inc., its General Partner

	  	  	  
	  	
By:

	

/s/Ronald Cami

	  	  	
Ronald Cami

	  	  	
Vice President

	  	  	  
	  	  	  

Signature Page to Purchase Agreement

  

  

  

  

Schedule I

 

Copano Entities

 

	
Name

	
Jurisdiction of Formation

	
Foreign Qualifications

	
Alamo Creek Properties, L.L.C.

	
Delaware

	
Texas

	
Bighorn Gas Gathering, L.L.C.

	
Delaware

	
Wyoming

	
Cimmarron Gathering, LP

	
Texas

	
Oklahoma

	
CMW Energy Services, L.L.C.

	
Delaware

	
Texas

	
Copano Energy, L.L.C.

	
Delaware

	
Texas

	
Copano Energy Finance Corporation

	
Delaware

	
-

	
Copano Energy Services/Texas Gulf Coast, L.P.

	
Texas

	
-

	
Copano Energy Services/Upper Gulf Coast, L.P.

	
Texas

	
-

	
Copano Field Facilities/Rocky Mountains, LLC

	
Delaware

	
Colorado; Wyoming

	
Copano Field Services/Agua Dulce, L.P.

	
Texas

	
-

	
Copano Field Services/Central Gulf Coast, L.P.

	
Texas

	
-

	
Copano Field Services/Copano Bay, L.P.

	
Texas

	
-

	
Copano Field Services/Karnes, L.P.

	
Texas

	
-

	
Copano Field Services/Live Oak, L.P.

	
Texas

	
-

	
Copano Field Services/North Texas, L.L.C.

	
Delaware

	
Texas

	
Copano Field Services/Rocky Mountains, LLC

	
Delaware

	
Colorado; Montana; Wyoming

	
Copano Field Services/South Texas, L.P.

	
Texas

	
-

	
Copano Field Services/Upper Gulf Coast, L.P.

	
Texas

	
-

	
Copano NGL Services (Markham), L.L.C.

	
Delaware

	
Texas

	
Copano NGL Services, L.P.

	
Texas

	
-

	
Copano Pipelines/Hebbronville, L.P.

	
Texas

	
-

	
Copano Pipelines/North Texas, L.L.C.

	
Delaware

	
Texas

	
Copano Pipelines/Rocky Mountains, LLC

	
Delaware

	
Colorado; Wyoming

	
Copano Pipelines/South Texas, L.P.

	
Texas

	
-

	
Copano Pipelines/Texas Gulf Coast, L.L.C.

	
Delaware

	
Texas

	
Copano Pipelines/TGC, L.P.

	
Texas

	
-

	
Copano Pipelines/Upper Gulf Coast, L.P.

	
Texas

	
-

	
Copano Pipelines/Victoria, L.L.C.

	
Delaware

	
Texas

	
Copano Processing, L.P.

	
Texas

	
-

	
Copano Processing/Louisiana, LLC

	
Oklahoma

	
Louisiana

	
Copano Risk Management, L.P.

	
Texas

	
-

	
Copano/Webb-Duval Pipeline, L.P.

	
Delaware

	
Texas

	
CPNO Services, L.P.

	
Texas

	
Colorado; Louisiana; Wyoming

	
Eagle Ford Gathering, LLC

	
Delaware

	
Texas

	
Fort Union Gas Gathering, L.L.C.

	
Delaware

	
Colorado; Wyoming

	
Greenwood Gathering, L.L.C.

	
Delaware

	
Texas

	
River View Pipelines, L.L.C.

	
Delaware

	
Texas

	
ScissorTail Energy, LLC

	
Delaware

	
Oklahoma; Texas

	
Southern Dome, LLC

	
Delaware

	
Oklahoma

	
Webb/Duval Gatherers

	
Texas

	
-

 

 

Schedule I

  

  

  

  

Schedule II

 

Certain Beneficial Owners of Common Units

 

	  	

 

Common Units

 

	
Copano Partners Trust.                                                                                                      

	
3,276,908

	
R. Bruce Northcutt                                                                                                      

	

 

221,849

 

	
Total:

	

 

3,498,757

 

 

 

Schedule II

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