Document:

Exhibit 4.7

 

EXECUTION VERSION

 

COMMON UNIT PURCHASE AGREEMENT

 

BY AND AMONG

 

COPANO ENERGY, L.L.C.

 

AND

 

ZLP FUND, L.P.

 

STRUCTURED FINANCE AMERICAS, LLC

 

AND

 

ROYAL BANK OF CANADA

 

 

Dated As of December 29, 2005

 

 

COMMON
UNIT PURCHASE AGREEMENT

 

COMMON UNIT
PURCHASE AGREEMENT, dated as of December 29, 2005 (this “Agreement”), by
and among COPANO ENERGY, L.L.C., a Delaware limited liability company (“Copano”),
and ZLP Fund, L.P., Structured Finance Americas, LLC and Royal Bank of Canada
(each referred to herein as a “Purchaser” and collectively, the “Purchasers”).

 

WHEREAS,
Copano desires to sell an aggregate of 1,418,440 of Common Units and the
Purchasers desire to purchase an aggregate of 1,418,440 of Common Units from
Copano in accordance with the provisions of this Agreement; and

 

WHEREAS,
Copano has agreed to provide the Purchasers with certain registration rights
with respect to the Purchased Common Units acquired pursuant to this Agreement.

 

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, Copano and each Purchaser, severally and not jointly,
hereby agree as follows:

 

ARTICLE I

DEFINITIONS

 

Section 1.01           Definitions.  As used in this Agreement, and unless the
context requires a different meaning, the following terms have the meanings
indicated:

 

“Action”
against a Person means any lawsuit, action, proceeding, investigation or
complaint before any Governmental Authority, mediator or arbitrator.

 

“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.

 

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

 

“Basic
Documents” means, collectively, this Agreement, the Registration Rights
Agreement and any and all other agreements or instruments executed and
delivered by the Parties on even date herewith, or any amendments, supplements,
continuations or modifications thereto.

 

“Business
Day” means any day other than a Saturday, Sunday, or a legal holiday for
commercial banks in Houston, Texas.

 

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

 

 

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

 

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

 

“Common
Unit Purchase Price” means $35.25 per Purchased Common Unit.

 

“Common
Units” means the Common Units of Copano representing limited liability
company interests.

 

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

 

“Copano
Material Adverse Effect” means any material and adverse effect on (i) the
assets, liabilities, financial condition, business, operations, or affairs of
Copano and its Subsidiaries, taken as a whole, measured against those assets,
liabilities, financial condition, business, operations, or affairs reflected in
the Copano SEC Documents, (ii) the ability of Copano and its Subsidiaries,
taken as a whole, to carry out their business as of the date of this Agreement
or to meet their obligations under the Basic Documents on a timely basis, or
(iii) the ability of Copano to consummate the transactions under any Basic
Document.  Notwithstanding the foregoing,
a “Copano Material Adverse Effect” shall not include any effect resulting or
arising from: (a) any change in general economic conditions in the industries
or markets in which Copano or its Subsidiaries operate;  (b) seasonal reductions in revenues and/or
earnings of Copano and its Subsidiaries in the ordinary course of their respective
businesses; (c) national or international political, diplomatic or military
conditions, including any engagement in hostilities, whether or not pursuant to
a declaration of war, or the occurrence of any military or terrorist attack; or
(d) changes in GAAP or other accounting principles.

 

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

 

“Copano SEC
Documents” shall have the meaning specified in Section 3.03.

 

“Copano SEC
Reports” means Copano’s Annual Report on Form 10-K for the year ended
December 31, 2004 and Copano’s Quarterly Reports on Form 10-Q for the quarterly
periods ended March 31, 2005, June 30, 2005 and September 30, 2005.

 

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

 

“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.

 

“GAAP”
means generally accepted accounting principles in the United States of America
in effect from time to time.

 

“Governmental
Authority” shall include the country, state, county, city and political
subdivisions in which any 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 authorities that exercise valid jurisdiction
over any such Person or such Person’s Property. Unless otherwise specified, all
references to Governmental Authority herein shall mean a Governmental Authority

 

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having jurisdiction over, where
applicable, Copano, its Subsidiaries or any of their Property or any of the
Purchasers.

 

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

 

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

 

“Law”
means any federal, state, local or foreign order, writ, injunction, judgment,
settlement, award, decree, statute, 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.

 

“Limited
Liability Company Agreement” shall have the meaning specified in
Section 2.01.

 

“Lock-Up
Date” means 90 days from the Closing Date.

 

“LTIP”
shall have the meaning specified in Section 3.02(b).

 

“Parties”
means Copano and the Purchasers party to this Agreement, collectively.

 

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

 

“Property”
means any interest in any kind of property or asset, whether real, personal or
mixed, or tangible or intangible.

 

“Purchased
Common Units” means the Common Units to be issued and sold to the
Purchasers pursuant to this Agreement.

 

“Purchaser”
and “Purchasers” each has the meaning set forth in the introductory
paragraph.

 

“Purchaser
Material Adverse Effect” means any material and adverse effect on (i) the
ability of a Purchaser to meet its obligations under the Basic Documents on a
timely basis or (ii) the ability of a Purchaser to consummate the
transactions under any Basic Document.

 

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

 

3

 

“Registration
Rights Agreement” means the Registration Rights Agreement, in the form
attached to this Agreement as Exhibit B, to be entered into at the
Closing, between Copano and the Purchasers.

 

“Representatives”
of any Person means the affiliates, control persons, officers, directors,
employees, agents and other representatives of such Person.

 

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

 

“Subsidiary”
means, as to any Person, any corporation or other entity of which at least a
majority of the outstanding equity interest having by the terms thereof
ordinary voting power to elect a majority of the board of directors 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.

 

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 Purchasers
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
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

SALE AND PURCHASE

 

Section 2.01           Sale and Purchase of Common Units.  Subject to the terms and conditions of this Agreement,
at the Closing (as defined in Section 2.02 below) Copano hereby agrees to sell
to each Purchaser, and each Purchaser hereby agrees, severally and not jointly,
to purchase from Copano, the number of Common Units set forth opposite such
Purchaser’s name on Schedule 2.01, and each Purchaser agrees to pay Copano the
Common Unit Purchase Price for each such Purchased Common Unit; provided, however,
that, if the number of Purchased Common Units to be purchased by Structured
Finance Americas, LLC, at Closing would represent more than 9.3% of the issued
and outstanding number of Common Units as of immediately after the Closing
then, and only upon Structured Finance Americas, LLC’s request, the number of
Common Units to be purchased by Structured Finance Americas, LLC and its
respective aggregate Common Unit Purchase Price in respect thereof, shall be
reduced pro rata (based on the number of Common Units Structured Finance
Americas, LLC would otherwise be required to purchase) by the minimum amount
necessary such that Structured Finance Americas, LLC’s Purchased Common Units
would not represent more than 9.3% of the issued and outstanding number of
Common Units as of immediately after the Closing.  The Purchased Common Units shall have those
rights, preferences, privileges and restrictions governing the

 

4

 

Common Units as set forth in
the Second Amended and Restated Limited Liability Company Agreement of Copano,
dated as of November 15, 2004, as amended (the “Limited Liability Company
Agreement”).  A true and correct copy
of the Limited Liability Company Agreement together with Amendment No. 1 and
Amendment No. 2 thereto have been filed by Copano with the Commission as
Exhibits 3.3, 3.4 and 3.5 to Copano’s registration statement on Form S-3 (File
No. 333-130315) filed on December 14, 2005.

 

Section 2.02           Closing.  The execution and delivery of the Basic
Documents and execution and delivery of all other instruments, agreements, and
other documents required by this Agreement (the “Closing”) shall take
place on December 29, 2005 (the “Closing Date”.  Delivery of certificates representing the
Purchased Common Units and payment by each Purchaser of the Common Unit
Purchase Price therefor shall take place on (i) December 30, 2005 with respect
to the Common Units to be purchased by Royal Bank of Canada and Structured
Finance Americas, LLC and (ii) January 3, 2006 with respect to the Common Units
to be purchased by ZLP Fund, L.P., in each case at the offices of Vinson &
Elkins L.L.P., 1001 Fannin Street, Suite 2300, Houston, Texas 77002.  Each of the closing deliveries required by
Section 2.03 and Section 2.04 below other than the delivery of certificates
representing the Purchased Common Units and the payment by each Purchaser of
the Common Unit Purchase Price therefor shall be deemed satisfied by delivery
of such items on December 29, 2005.

 

Section 2.03           Copano Closing Deliveries. At
the Closing, subject to the terms and conditions of this Agreement, Copano will
deliver, or cause to be delivered, to each Purchaser:

 

(a)           The Purchased Common
Units by delivering certificates (bearing the legend set forth in Section 4.08)
evidencing such Purchased Common Units at the Closing, all free and clear of
any Liens, encumbrances or interests of any other party;

 

(b)           An opinion addressed
to the Purchasers from legal counsel to Copano, dated the Closing Date, in the
form similar in substance to the form of opinion attached to this Agreement as Exhibit A;
and

 

(c)           The Registration
Rights Agreement in the form attached to this Agreement as Exhibit B,
which shall have been executed by Copano.

 

Section 2.04           Purchaser Closing Deliveries.  At the Closing, subject to the terms and
conditions of this Agreement, each Purchaser will deliver, or cause to be
delivered, to Copano:

 

(a)           Payment to Copano of
the aggregate Common Unit Purchase Price for each Purchased Common Unit
purchased by such Purchaser by wire transfer(s) of immediately available funds
to an account designated by Copano; and

 

(b)           The Registration
Rights Agreement in substantially the form attached to this Agreement as Exhibit
B, which shall have been duly executed by such Purchaser.

 

Section 2.05           Independent Nature of Purchasers’
Obligations and Rights.

 

The
obligations of each Purchaser under any Basic Document are several and not
joint with the obligations of any other Purchaser, and no Purchaser shall be
responsible in any way for

 

5

 

the performance of the
obligations of any other Purchaser under any Basic Document.  The failure or waiver of performance under
any Basic Document by any Purchaser does not excuse performance by any other
Purchaser.  Nothing contained herein or
in any other Basic Document, and no action taken by any Purchaser pursuant
thereto, shall be deemed to constitute the Purchasers as a partnership, an
association, a joint venture or any other kind of entity, or create a
presumption that the Purchasers are in any way acting in concert or as a group
with respect to such obligations or the transactions contemplated by the Basic
Document.  Each Purchaser shall be
entitled to independently protect and enforce its rights, including without
limitation, the rights arising out of this Agreement or out of the other Basic
Documents, and it shall not be necessary for any other Purchaser to be joined
as an additional party in any proceeding for such purpose.

 

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF COPANO

 

Copano
represents and warrants to the Purchasers as follows:

 

Section 3.01           Corporate Existence.  Copano: (i) is a limited liability
company duly organized, legally existing and in good standing under the laws of
the State of Delaware; (ii) has all requisite limited liability company
power, and has all material governmental licenses, authorizations, consents and
approvals, necessary to own its assets and carry on its business as its
business is now being conducted as described in the Copano SEC Reports, except
where the failure to obtain such licenses, authorizations, consents and
approvals would not reasonably be expected to have a Copano Material Adverse
Effect; and (iii) is qualified to do business in all jurisdictions in
which the nature of the business conducted by it makes such qualifications
necessary, except where failure so to qualify would not reasonably be expected
to have a Copano Material Adverse Effect.

 

Section 3.02           Capitalization and Valid Issuance
of Purchased Common Units.

 

(a)           As of the date of
this Agreement, the issued and outstanding membership interests of Copano
consist of 13,391,288 Common Units and 3,519,126 Subordinated Units.  All of the outstanding Common Units and
Subordinated Units have been duly authorized and validly issued in accordance
with applicable Law and the Limited Liability Company Agreement and are fully
paid (to the extent required under the Limited Liability Company Agreement) and
nonassessable (except as such nonassessability may be affected by Section
18-607 of the Delaware Limited Liability Company Act (the “Delaware LLC Act”).

 

(b)           Other than Copano’s
Long-Term Incentive Plan (the “LTIP”), Copano has no equity compensation
plans that contemplate the issuance of Common Units (or securities convertible
into or exchangeable for Common Units). 
No indebtedness having the right to vote (or convertible into or
exchangeable for securities having the right to vote) on any matters on which
Copano’s unitholders may vote is issued or outstanding.  Except as set forth in the first sentence of
this Section 3.02(b), as contemplated by this Agreement, or as are
contained in the Limited Liability Company Agreement, there are no outstanding
or authorized (i) options, warrants, preemptive rights, subscriptions, calls,
or other rights, convertible securities, agreements, claims or commitments of
any

 

6

 

character
obligating Copano or any of its Subsidiaries to issue, transfer or sell any
limited liability company interests or other equity interest in, Copano or any
of its Subsidiaries or securities convertible into or exchangeable for such
limited liability company interests or equity interests, (ii) obligations of
Copano or any of its Subsidiaries to repurchase, redeem or otherwise acquire
any limited liability company interests or equity interests of Copano or any of
its Subsidiaries or any such securities or agreements listed in clause (i) of
this sentence or (iii) voting trusts or similar agreements to which Copano or
any of its Subsidiaries is a party with respect to the voting of the equity
interests of Copano or any of its Subsidiaries.

 

(c)           (i) All of the
issued and outstanding equity interests of each of Copano’s Subsidiaries (other
than Webb/Duval Gatherers and Southern Dome, LLC) are owned, directly or
indirectly, by Copano free and clear of any Liens (except for such restrictions
as may exist under applicable Law and except for such Liens as may be imposed
under Copano’s or Copano’s Subsidiaries’ credit facilities filed as exhibits to
the Copano SEC Documents), and all such ownership interests have been duly
authorized, validly issued and are fully paid (to the extent required in the
organizational documents of Copano’s Subsidiaries, as applicable) and
non-assessable (except as nonassessability may be affected by Section 6.07 of
the Texas Revised Uniform Limited Partnership Act, Section 18-607 of the
Delaware Limited Liability Company Act, Section 17-607 of the Delaware Revised
Uniform Limited Partnership Act or the organizational documents of Copano’s
Subsidiaries, as applicable) and free of preemptive rights, with no personal
liability attaching to the ownership thereof, and (ii) except as disclosed in
the Copano SEC Documents and pursuant to the Amended and Restated Operating
Agreement of Southern Dome, LLC dated August 1, 2005, neither Copano nor any of
its Subsidiaries own any shares of capital stock or other securities of, or
interest in, any other Person, or are obligated to make any capital
contribution to or other investment in any other Person.

 

(d)           The Purchased Common
Units and the membership interests represented thereby, have been duly
authorized by Copano pursuant to the Limited Liability Company Agreement and,
when issued and delivered to the Purchasers against payment therefor in
accordance with the terms of this Agreement, will be validly issued, fully paid
(to the extent required by applicable Law and the Limited Liability Company
Agreement) and nonassessable (except as such nonassessability may be affected
by Section 18-607 of the Delaware LLC Act) with no personal liability attaching
to the ownership thereof, and will be free of any and all Liens and
restrictions on transfer, other than restrictions on transfer under the Limited
Liability Company Agreement and under applicable state and federal securities
laws and other than such Liens as are created by the Purchasers.

 

(e)           Copano’s currently
outstanding Common Units are quoted on The Nasdaq National Market.  The Purchased Common Units will be issued in
compliance with all applicable rules of The Nasdaq National Market.  Copano has filed a supplemental listing
application with The Nasdaq National Market to list the Purchased Common Units.

 

Section 3.03           Copano SEC Documents.  Copano has timely filed with the Commission
all forms, registration statements, reports, schedules and statements required
to be filed by it under the Exchange Act or the Securities Act (all such
documents filed on or prior to the date of

 

7

 

this Agreement, collectively,
the “Copano SEC Documents”).  The
Copano SEC Documents, including, without limitation, any audited or unaudited
financial statements and any notes thereto or schedules included therein, at
the time filed (in the case of registration statements, solely on the dates of
effectiveness) (except to the extent corrected by a subsequently filed Copano
SEC Document filed prior to the date of this Agreement) (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 light of the circumstances under which they were made, not
misleading, (ii) complied in all material respects with the applicable
requirements of the Exchange Act and the Securities Act, as the case may be,
(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) 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) fairly present
(subject in the case of unaudited statements to normal, recurring and year-end
audit adjustments) in all material respects the consolidated financial position
and status of the business of Copano as of the dates thereof and the
consolidated results of its operations and cash flows for the periods then
ended.  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 3.04           No Material Adverse Change.  Except as set forth in or contemplated by the
Copano SEC Documents, since December 31, 2004, Copano and its Subsidiaries have
conducted their business in the ordinary course, consistent with past practice,
and there has been no (i) change that has had or would reasonably be
expected to have a Copano Material Adverse Effect, other than those occurring
as a result of general economic or financial conditions or other developments
that are not unique to Copano and its Subsidiaries but also affect other
Persons who participate or are engaged in the lines of business of which Copano
and its Subsidiaries participate or are engaged, (ii) acquisition or disposition
of any material asset by Copano or any of its Subsidiaries or any contract or
arrangement therefor, otherwise than for fair value in the ordinary course of
business, (iii) material change in Copano’s accounting principles,
practices or methods, or (iv) incurrence of material indebtedness.

 

Section 3.05           Litigation.  Except as set forth in the Copano SEC
Documents, there is no Action pending or, to the knowledge of Copano,
contemplated or threatened against Copano or any of its Subsidiaries or any of
their respective officers, directors, properties or assets, which (individually
or in the aggregate) reasonably would be expected to have a Copano Material
Adverse Effect or which challenges the validity of this Agreement or which
would reasonably be expected to adversely affect or restrict Copano’s ability
to consummate the transactions contemplated by the Basic Documents.

 

Section 3.06           No Breach.  The execution, delivery and performance by
Copano of the Basic Documents to which it is a party, and all other agreements
and instruments to be executed and delivered by Copano pursuant thereto or in
connection with the transactions contemplated by the Basic Documents, and
compliance by Copano with the terms and provisions under such agreements, do
not and will not (a) violate any provision of any law, statute, rule or
regulation,

 

8

 

order, writ, judgment,
injunction, decree, governmental permit, determination or award having
applicability to Copano or any of its Subsidiaries or any of their respective
properties or assets, (b) conflict with or result in a violation of any
provision of the Certificate of Formation or the Limited Liability Company
Agreement, or any organizational documents of any of Copano’s Subsidiaries,
(c) require any consent, approval or notice under or result in a violation
or breach of or constitute (with or without due notice or lapse of time or
both) a default (or give rise to any right of termination, cancellation or
acceleration) under (i) any note, bond, mortgage, license, or loan or
credit agreement to which Copano or any of its Subsidiaries is a party or by
which Copano or any of its Subsidiaries or any of their respective properties
may be bound or (ii) any other agreement, instrument or obligation, or
(d) result in or require the creation or imposition of any Lien upon or
with respect to any of the properties now owned or hereafter acquired by Copano
or any of its Subsidiaries; with the exception of the conflicts stated in
clause (b) of this Section 3.06, except where such conflict,
violation, default, breach, termination, cancellation, failure to receive
consent or approval, or acceleration with respect to the foregoing provisions
of this Section 3.06 would not, individually or in the aggregate,
reasonably be expected to have a Copano Material Adverse Effect.

 

Section 3.07           Authority.  Copano has all necessary limited liability
company power and authority to execute, deliver and perform its obligations
under the Basic Documents to which it is a party, and to consummate the
transactions contemplated thereby; the execution, delivery and performance by
Copano of the Basic Documents to which it is a party, and the consummation of
the transactions contemplated thereby, have been duly authorized by all
necessary action on its part; and the Basic Documents constitute the legal,
valid and binding obligations of Copano, enforceable in accordance with their
terms, except as such enforceability may be limited by bankruptcy, insolvency,
fraudulent transfer and similar laws affecting creditors’ rights generally or
by general principles of equity.  No
approval from the holders of the Common Units or Subordinated Units is required
as a result of Copano’s issuance and sale of the Purchased Common Units.

 

Section 3.08           Approvals.  Except for the approvals required by the
Commission in connection with Copano’s obligations under the Registration
Rights Agreement and the registration statement, no authorization, consent,
approval, waiver, license, qualification or written exemption from, nor any
filing, declaration, qualification or registration with, any Governmental
Authority or any other Person is required in connection with the execution,
delivery or performance by Copano of any of the Basic Documents to which it is
a party, except where the failure to receive such authorization, consent,
approval, waiver, license, qualification or written exemption from, or to make
such filing, declaration, qualification or registration would not, individually
or in the aggregate, reasonably be expected to have a Copano Material Adverse
Effect.

 

Section 3.09           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.

 

Section 3.10           Investment Company Status.  Copano is not an “investment company” within
the meaning of the Investment Company Act of 1940, as amended.

 

9

 

Section 3.11           Offering.  Assuming the accuracy of the representations
and warranties of the Purchasers contained in this Agreement, the sale and
issuance of the Purchased Common Units pursuant to this Agreement is exempt
from the registration requirements of the Securities Act, and neither Copano
nor any authorized agent acting on its behalf has taken or will take any action
hereafter that would cause the loss of such exemption.

 

Section 3.12           Certain Fees.  Other than fees payable to Banc of America
Securities LLC for its services as placement agent, no fees or commissions will
be payable by Copano to brokers, finders, or investment bankers with respect to
the sale of any of the Purchased Common Units or the consummation of the
transaction contemplated by this Agreement. 
The Purchasers shall not be liable for any such fees or
commissions.  Copano agrees that it will
indemnify and hold harmless each of the Purchasers 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 Purchased Common Units or the
consummation of the transactions contemplated by this Agreement.

 

Section 3.13           No Side Agreements.  There are no other agreements by, among or
between Copano or its Affiliates, on the one hand, and any of the Purchasers or
their Affiliates, on the other hand, with respect to the transactions
contemplated hereby nor promises or inducements for future transactions between
or among any of such parties.

 

Section 3.14           Hedging Arrangements.  Copano has entered into the hedging
arrangements reflected on Schedule 3.14 of this Agreement.

 

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF EACH PURCHASER

 

Each Purchaser,
severally and not jointly, represents and warrants to Copano with respect to
itself as follows:

 

Section 4.01           Corporate Existence.  Such Purchaser (i) is duly organized,
validly existing and in good standing under the laws of its respective
jurisdiction of organization and (ii) has all requisite power, and has all
material governmental licenses, authorizations, consents and approvals
necessary to own its assets and carry on its business as its business is now
being conducted, except where the failure to obtain such licenses,
authorizations, consents and approvals would not have or would not reasonably
be expected to have a Purchaser Material Adverse Effect.

 

Section 4.02           No Conflicts.  The execution, delivery and performance by
such Purchaser of this Agreement, the Basic Documents and all other agreements
and instruments to be executed and delivered by such Purchaser pursuant hereto
or thereto or in connection herewith or therewith, compliance by such Purchaser
with the terms and provisions hereof and thereof, and the purchase of the
Purchased Common Units by such Purchaser do not and will not (a) violate
any provision of any law, statute, rule or regulation, order, writ, judgment,
injunction, decree, governmental permit, determination or award having applicability
to such Purchaser or any of its properties or assets, (b) conflict with or
result in a violation of any provision of the

 

10

 

organizational documents of
such Purchaser, or (c) require any consent (other than standard internal
consents), approval or notice under or result in a violation or breach of or
constitute (with or without due notice or lapse of time or both) a default (or
give rise to any right of termination, cancellation or acceleration) under
(i) any note, bond, mortgage, license, or loan or credit agreement to
which such Purchaser is a party or by which such Purchaser or any of its
properties may be bound or (ii) any other such agreement, instrument or
obligation; with the exception of the conflicts stated in
clause (b) of this Section 4.02, except where such conflict,
violation, default, breach, termination, cancellation, failure to receive
consent or approval, or acceleration with respect to the foregoing provisions
of this Section 4.02 would not, individually or in the aggregate,
reasonably be likely to have a Purchaser Material Adverse Effect.

 

Section 4.03           Investment.  The Purchased Common Units are being acquired
for its own account, not as a nominee or agent, and with no present intention
of distributing the Purchased Common Units or any part thereof, and that such
Purchaser has no present intention of selling or granting any participation in
or otherwise distributing the same in any transaction in violation of the
securities laws of the United States of America or any State, without
prejudice, however, to such Purchaser’s right at all times to sell or otherwise
dispose of all or any part of the Purchased Common Units under a registration
statement under the Securities Act and applicable state securities laws or
under an exemption from such registration available thereunder (including,
without limitation, if available, Rule 144 promulgated thereunder). If
such Purchaser should in the future decide to dispose of any of the Purchased
Common Units, such Purchaser understands and agrees (a) that it may do so
only (i) in compliance with the Securities Act and applicable state
securities law, as then in effect, or (ii) in the manner contemplated by
any registration statement pursuant to which such securities are being offered,
and (b) that stop-transfer instructions to that effect will be in effect
with respect to such securities. 
Notwithstanding the foregoing, a Purchaser may enter into a total return
swap with respect to such Purchaser’s Purchased Common Units with a third party
provided that such transaction is exempt from registration under the Securities
Act.

 

Section 4.04           Nature of Purchaser.  Such Purchaser represents and warrants to,
and covenants and agrees with, Copano that, (a) it is an “accredited
investor” within the meaning of Rule 501 of Regulation D promulgated
by the Commission pursuant to the Securities Act and (b) by reason of its
business and financial experience it has such knowledge, sophistication and
experience in business and financial matters so as to be capable of evaluating
the merits and risks of the prospective investment in the Purchased Common
Units, is able to bear the economic risk of such investment and, at the present
time, would be able to afford a complete loss of such investment.

 

Section 4.05           Receipt of Information;
Authorization.  Such Purchaser
acknowledges that it has (a) had access to the Copano SEC Documents and (b) has
been provided a reasonable opportunity to ask questions of and receive answers
from Representatives of Copano regarding the matters disclosed therein.

 

Section 4.06           Restricted Securities.  Such Purchaser understands that the Purchased
Common Units it is purchasing are characterized as “restricted securities”
under the federal securities laws inasmuch as they are being acquired from
Copano in a transaction not involving a public offering and that under such
laws and applicable regulations such securities may be resold

 

11

 

without registration under the
Securities Act only in certain limited circumstances. In this connection,
Purchaser represents that it is knowledgeable with respect to Rule 144 of
the Commission promulgated under the Securities Act.

 

Section 4.07           Certain Fees.  No fees or commissions will be payable by
such Purchaser to brokers, finders, or investment bankers with respect to the
sale of any of the Purchased Common Units or the consummation of the
transaction contemplated by this Agreement. 
Such 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 such
Purchaser or alleged to have been incurred by such Purchaser in connection with
the sale of Purchased Common Units or the consummation of the transactions
contemplated by this Agreement.

 

Section 4.08           Legend.  It is understood that the certificates
evidencing the Purchased Common Units will bear the following legend:  “These securities have not been registered
under the Securities Act of 1933, as amended. 
They 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 documentation reasonably satisfactory to the Company that
such registration is not required or unless sold pursuant to Rule 144 of such
Act.”

 

ARTICLE V

COVENANTS

 

Section 5.01           Purchaser Lock-Up.  Each Purchaser agrees that from and after the
Closing it will not sell any of the Purchased Common Units prior to the Lock-Up
Date; provided, however, that any
Purchaser may enter into a total return swap or similar transaction with
respect to the Purchased Common Units purchased by such Purchaser.

 

Section 5.02           Taking of Necessary Action.  Each of the parties hereto shall use its
commercially reasonable efforts promptly to take or cause to be taken all
action and promptly to do or cause to be done all things necessary, proper or
advisable under applicable Law and regulations to consummate and make effective
the transactions contemplated by this Agreement.  Without limiting the foregoing, Copano and
each Purchaser will, and Copano shall cause each of its Subsidiaries to, use
its commercially reasonable efforts to make all filings and obtain all consents
of Governmental Authorities which may be necessary or, in the reasonable
opinion of the Purchasers or Copano, as the case may be, advisable for the
consummation of the transactions contemplated by this Agreement and the Basic Documents.

 

Section 5.03           Non-Disclosure; Interim Public
Filings.  Copano shall not disclose
the name or identity of any of the Purchasers as a Purchaser without the prior
written consent of such Purchaser, except in connection with Copano’s filing of
a Form 8-K under the Exchange Act, as a result of this Agreement or the other
Basic Documents or the transactions contemplated hereby and thereby, or other
similarly required Exchange Act reports, or as required by applicable Law or
the rules or regulations of The Nasdaq National Market or other exchange on
which securities of Copano are listed or traded; provided, however, that, in the event that any such
required disclosure contains specific information about a Purchaser other than
its identity and ownership interest and the type of Copano’s securities owned
by it, Copano shall, prior to making such

 

12

 

disclosure, provide such
Purchaser with a draft of such disclosure and permit such Purchaser reasonable
opportunity (in light of the circumstances) to review and comment on such
disclosure and consider in good faith (but not be required to accept) any
comments proposed by such Purchaser.

 

Section 5.04           Use of Proceeds.  Copano will use all of the proceeds from the
sale of the Purchased Common Units to repay outstanding indebtedness and for
general limited liability company purposes, including organic growth projects
and commodity derivatives programs.

 

ARTICLE VI

INDEMNIFICATION, COSTS AND EXPENSES

 

Section 6.01           Indemnification by Copano.  Copano agrees to indemnify each Purchaser and
its affiliates, control persons, officers, directors, employees, advisors, and
agents (collectively, “Purchaser Related Parties”) from, and hold each
of them harmless against any and all actions, suits, proceedings (including any
investigations, litigation or inquiries), demands, causes of action, costs,
losses, liabilities, diminution in value, damages, or expenses of any kind or
nature whatsoever, including, without limitation, 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 as a
result of, arising out of, or in any way related to (i) any actual or proposed
use by Copano of the proceeds of any sale of the Purchased Common Units or (ii)
the breach of any of the representations, warranties or covenants of Copano
contained herein, provided such
claim for indemnification relating to a breach of a representation or warranty
is made prior to the expiration of such representation or warranty.

 

Section 6.02           Indemnification by Purchasers.  Each Purchaser agrees, severally and not
jointly, to indemnify Copano and its Representatives (collectively, “Copano
Related Parties”) from, and hold each of them harmless against, any and all
actions, suits, proceedings (including any investigations, litigation, or
inquiries), demands, causes of action, costs, losses, liabilities, diminution
in value, damages, or expenses of any kind or nature whatsoever, including,
without limitation, 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 as a result of, arising out of, or in any way
related to the breach of any of the representations, warranties or covenants of
such Purchaser contained herein, provided
such claim for indemnification relating to a breach of the representations and
warranties is made prior to the expiration of such representations and
warranties.

 

Section 6.03           Indemnification Procedure.  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 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 indemnitor hereunder (the “Indemnifying
Party”) written notice of such claim or the commencement of such action or
proceeding, but

 

13

 

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 have the right to defend and settle, at its
own expense and by its own counsel who shall be reasonably acceptable to the
Indemnified Party, 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, it shall
promptly 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 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
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 failed to assume
the defense or employ counsel reasonably acceptable to the Indemnified Party 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 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, involves no admission
of wrongdoing or malfeasance by, and includes a complete release from liability
of, the Indemnified Party.

 

ARTICLE VII

MISCELLANEOUS

 

Section 7.01           Interpretation. Article,
Section, Schedule, and Exhibit references are 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 Copano has an obligation under the Basic
Documents, the expense of complying with that obligation shall be an expense of
Copano unless otherwise specified. Whenever any determination, consent, or
approval is to be made or given by a Purchaser, such action shall be in such
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, such provision

 

14

 

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. The Basic Documents have been reviewed and negotiated by
sophisticated parties with access to legal counsel and shall not be construed
against the drafter.

 

Section 7.02           Survival of Provisions.  The representations and warranties set forth
in Sections 3.01, 3.02, 3.04, 3.12, 3.13, 4.03, 4.04, 4.05, 4.06, 4.07 and 4.08
of this Agreement shall survive the execution and delivery of this Agreement
indefinitely, and the other representations and warranties set forth in this Agreement
shall survive for a period of twelve (12) months following the Closing Date
regardless of any investigation made by or on behalf of Copano or any
Purchaser.  The covenants made in this
Agreement or any other Basic Document shall survive the closing of the
transactions described herein and remain operative and in full force and effect
regardless of acceptance of any of the Purchased Common Units and payment
therefor and repayment, conversion or repurchase thereof. All indemnification
obligations of Copano and the Purchasers the provisions of Article VI shall
remain operative and in full force and effect unless such obligations are
expressly terminated in a writing by the Parties referencing that individual
Section, regardless of any purported general termination of this Agreement.

 

Section 7.03           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 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 Document shall be effective unless signed by each of the original
signatories 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.

 

Section 7.04           Binding Effect; Assignment.

 

(a)           Binding Effect.
This Agreement shall be binding upon Copano, each 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

 

15

 

right or
benefit upon any Person other than the parties to this Agreement and as
provided in Article VI, and their respective successors and permitted assigns.

 

(b)           Assignment of
Purchased Common Units. All or any portion of a Purchaser’s Purchased
Common Units purchased pursuant to this Agreement may be sold, assigned or
pledged by such Purchaser, subject to compliance with applicable securities
laws, this Agreement and the Registration Rights Agreement.

 

(c)           Assignment of
Rights. Each Purchaser under this Agreement may assign all or any portion
of its rights hereunder: (i) to any Affiliate of such Purchaser; or (ii) in
connection with a total return swap or similar transaction with respect to the
Purchased Common Units purchased by such Purchaser, and in each case the
assignee shall be deemed to be a Purchaser hereunder with respect to such
assigned rights and shall agree to be bound by the provisions of this
Agreement.   Except as expressly permitted
by this Section 7.04(c), such rights may not otherwise be transferred except
with the prior written consent of Copano (which consent shall not be
unreasonably withheld), in which case the assignee shall be deemed to be a
Purchaser hereunder with respect to such assigned rights and shall agree to be
bound by the provisions of this Agreement.

 

Section 7.05           Aggregation of Purchased Common
Units.  All Purchased Common Units
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 7.06           Communications.  All notices and demands provided for
hereunder shall be in writing and shall be given by registered or certified
mail, return receipt requested, regular mail, telecopy, air courier
guaranteeing overnight delivery, electronic mail or personal delivery to the
addresses listed in Schedule 7.06 of this Agreement or to such other
address as Copano or such Purchaser may designate in writing. All notices and
communications shall be deemed to have been duly given: at the time delivered
by hand, if personally delivered; upon actual receipt if sent by registered or
certified mail, return receipt requested, or regular mail, if mailed; when
receipt acknowledged, if sent via facsimile; and upon actual receipt when
delivered by an air courier guaranteeing overnight delivery or via electronic
mail.

 

Section 7.07           Removal of Legend.  Copano shall remove the legend described in
Section 4.08 of this Agreement from the certificates evidencing the Purchased
Common Units at the request of a Purchaser submitting to Copano such
certificates, together with such other documentation as may be reasonably
requested by Copano or required by the transfer agent, unless Copano, with the
advice of counsel, determines that such removal is inappropriate.

 

Section 7.08           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 or a Purchaser set forth
herein. This Agreement supersedes all prior agreements and understandings
between the parties with respect to such subject matter.

 

16

 

Section 7.09           Governing Law.  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.

 

Section 7.10           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. 

 

Section 7.11           Expenses.  Copano hereby covenants and agrees to
reimburse Baker Botts L.L.P., for reasonable and documented legal fees not to
exceed $50,000.  If any action at law or
equity is necessary to enforce or interpret the terms of the Basic Documents,
the prevailing party shall be entitled to reasonable attorney’s fees,
out-of-pocket costs and necessary disbursements in addition to any other relief
to which such party may be entitled.

 

Section 7.12           Recapitalization, Exchanges, Etc.
Affecting the Purchased Common Units. 
The provisions of this Agreement shall apply to the full extent set
forth herein with respect to any and all units of Copano or any successor or
assign of Copano (whether by merger, consolidation, sale of assets or
otherwise) which may be issued in respect of, in exchange for or in
substitution of, the Purchased Common Units, and shall be appropriately
adjusted for combinations, recapitalizations and the like occurring after the
date of this Agreement.

 

[The remainder of this page is intentionally left blank.]

 

17

 

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

 

	
   

  	
  COPANO ENERGY, L.L.C.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ John R.
  Eckel, Jr.

  
	
   

  	
   

  	
  John R.
  Eckel, Jr.

  
	
   

  	
   

  	
  Chairman of
  the Board and Chief Executive Officer

  

 

 

Signature Page to

Common Unit Purchase Agreement

 

 

	
   

  	
  ZLP FUND, L.P.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Zimmer Lucas
  Partners, LLC,

  
	
   

  	
   

  	
  its general
  partner

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
    /s/
  Stuart Zimmer

  
	
   

  	
   

  	
   

  	
    Stuart
  Zimmer, Managing Member

  

 

 

Signature Page to

Common Unit Purchase Agreement

 

 

	
   

  	
  STRUCTURED FINANCE AMERICAS, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ K. Bell

  
	
   

  	
   

  	
  Name:  K. Bell

  
	
   

  	
   

  	
  Title:   Managing Director

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Richard C. Kennedy

  
	
   

  	
   

  	
  Name:  Richard C. Kennedy

  
	
   

  	
   

  	
  Title:   

  

 

 

Signature Page to

Common Unit Purchase Agreement

 

 

	
   

  	
  ROYAL BANK OF CANADA

  
	
   

  	
   by its agent

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  RBC CAPITAL MARKETS CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Patrick
  Clarke

  
	
   

  	
   

  	
  Name: 
  Patrick Clarke

  
	
   

  	
   

  	
  Title:  
  Managing Director

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Josef
  Muskatel

  
	
   

  	
   

  	
  Name: 
  Josef Muskatel

  
	
   

  	
   

  	
  Title:  
  Director and Senior Counsel

  
				

 

Signature Page to

Common Unit Purchase Agreement

 

 

Schedule 2.01

 

	
  Entity

  	
   

  	
  Number of

  Common Units

  	
   

  	
  Aggregate Purchase

  Price

  	
   

  
	
  ZLP Fund,
  L.P.

  	
   

  	
  709,220

  	
   

  	
  $

  	
  25,000,005

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Structured
  Finance Americas, LLC

  	
   

  	
  567,376

  	
   

  	
  $

  	
  20,000,004

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Royal Bank
  of Canada

  	
   

  	
  141,844

  	
   

  	
  $

  	
  5,000,001

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Total

  	
   

  	
  1,418,440

  	
   

  	
  $

  	
  50,000,010Exhibit 4.8

 

EXECUTION VERSION

 

 

 

 

REGISTRATION
RIGHTS AGREEMENT

 

BY AND AMONG

 

COPANO ENERGY,
L.L.C.

 

AND

 

ZLP FUND, L.P.

 

STRUCTURED
FINANCE AMERICAS, LLC

 

AND

 

ROYAL BANK OF
CANADA

 

 

 

 

REGISTRATION RIGHTS AGREEMENT

 

THIS
REGISTRATION RIGHTS AGREEMENT (this “Agreement”) is made and entered
into as of December 29, 2005, by and among Copano Energy, L.L.C., a Delaware
limited liability company (“Copano”), and ZLP Fund, L.P., Structured
Finance Americas, LLC and Royal Bank of Canada, each a “Purchaser” and collectively,
the “Purchasers”).

 

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

 

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

 

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

 

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 herein without
definition shall have the meanings given to them in the Purchase
Agreement.  The terms set forth below are
used herein as so defined:

 

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

 

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

 

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

 

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

 

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

 

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

 

 

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

 

 “Liquidated Damages Multiplier” means
the product of $35.25 times the number of Common Units purchased by such
Purchaser.

 

“Losses”
has the meaning specified therefor in Section 2.07(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” has the meaning specified therefor in Section 2.02(a).

 

“Purchase
Agreement” has the meaning specified therefor in the Recitals of this
Agreement.

 

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

 

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

 

“Registration
Expenses” has the meaning specified therefor in Section 2.06(a) of
this Agreement.

 

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

 

“Selling
Holder” means a Holder who is selling Registrable Securities pursuant to a
registration statement.

 

“Shelf
Registration Statement” means a registration statement under the Securities
Act to permit the resale of the Registrable Securities from time to time, including
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
firm commitment basis for reoffering to the public or an offering that is a “bought
deal” with one or more investment banks.

 

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

 

2

 

subsidiaries; or (d) 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.

 

ARTICLE
II

REGISTRATION RIGHTS

 

Section 2.01           Shelf Registration.

 

(a)           Deadline To Go Effective.  As soon as practicable following the Closing,
but in any event within sixty (60) days of the Closing, Copano shall prepare
and file a Shelf Registration Statement under the Act with respect to all of
the Registrable Securities.  Copano shall
use its commercially reasonable efforts to cause the Shelf Registration
Statement to become effective no later than 120 days after the Closing
Date.  A Shelf Registration Statement
filed pursuant to this Section 2.01 shall be on a registration statement
on Form S-3 or, if Copano is ineligible to use a Form S-3, 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 the Shelf Registration Statement and the
Managing Underwriter at any time shall notify Copano in writing that, in the
sole judgment of such Managing Underwriter, inclusion of detailed information
to be used in such prospectus supplement is of material importance to the
success of the Underwritten Offering of such Registrable Securities, Copano
shall use its commercially reasonable efforts to include such information in
the prospectus.  Copano will use its
commercially reasonable efforts to cause the Shelf Registration Statement filed
pursuant to this Section 2.01 to be continuously effective under the
Securities Act until the earlier of (i) when all such Registrable Securities
are sold by the Purchaser or (ii) two years from the date the Shelf
Registration Statement is declared effective by the Commission (the “Effectiveness
Period”).  The Shelf Registration
Statement when declared effective (including the documents incorporated therein
by reference) will comply as to form 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.

 

(b)           Delay Rights.  Notwithstanding anything to the contrary
contained herein, Copano may, upon written notice to any Selling Holder whose
Registrable Securities are included in the Shelf Registration Statement,
suspend such Selling Holder’s use of any prospectus which is a part of the
Shelf Registration Statement (in which event the Selling Holder shall
discontinue sales of the Registrable Securities pursuant to the Shelf
Registration Statement) if (i) 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 adversely affected by any required disclosure of such
transaction in the Shelf Registration Statement or (ii) 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 adversely affect Copano; provided, however, in no event shall the
Purchasers be suspended for a period exceeding an aggregate of ninety (90) days
in any 365-day period.  Upon disclosure
of such information or the termination of the condition described above, Copano
shall provide prompt notice to the Selling Holders whose Registrable Securities
are included in the Shelf Registration Statement, and shall promptly terminate
any suspension of sales it has put into

 

3

 

effect and shall take such other actions to
permit registered sales of Registrable Securities as contemplated in this
Agreement.

 

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

 

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

 

(ii)           If (i) the Holders shall be
prohibited from selling their Registrable Securities under the Shelf
Registration Statement as a result of a suspension pursuant to Section 2.01(b)
in excess of the periods permitted therein or (ii) the Shelf Registration
Statement is filed and declared 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 60 Business Days by a post-effective
amendment to the Shelf Registration Statement, a supplement to the prospectus
or a report filed with the Commission pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act, then until the suspension is lifted or a
post-effective amendment, supplement or report is filed with the Commission,
but not including any day on which a suspension is lifted or such amendment,
supplement or report is filed and declared effective, if applicable, Copano
shall owe the Holders an amount equal to the Liquidated Damages Amount,
following (x) the date on which the suspension period exceeded the permitted
period or (y) the sixty-first Business Day after the Shelf Registration
Statement ceased to be effective or failed to be useable for its intended
purposes, as liquidated damages and not as a penalty.  For purposes of this Section 2.01(c), a
suspension shall be deemed lifted on the date that notice that the suspension
has been lifted is delivered to the Holders pursuant to Section 3.01 of this
Agreement.

 

(iii)          The Liquidated Damages Amount shall be
paid to each Holder in cash within ten Business Days of the end of each such
30-day period.  Any payments made pursuant
to this Section 2.01(c) shall constitute the Holders’ exclusive remedy for such
events.  The Liquidated Damages Amount
imposed hereunder shall be made to the Holders in immediately available
funds.  If Copano certifies that it is unable
to pay the Liquidated Damages Amount in cash because such payment would result
in a breach under any of Copano’s or Copano’s Subsidiaries’ credit facilities
filed as exhibits to Copano’s SEC Documents, then Copano may pay the Liquidated
Damages Amount in kind in the form of the issuance of additional Common
Units.  Upon any issuance of Common Units
as liquidated damages, Copano shall promptly prepare and file an amendment to
the Shelf Registration Statement prior to its effectiveness adding such Common
Units to such Shelf Registration Statement as additional Registrable
Securities.  The determination of the
number of Common Units to be issued as the Liquidated Damages Amount shall be
equal to the Liquidated Damages Amount divided by the average closing price of
Copano’s Common Units on The Nasdaq National Market for the ten trading days
immediately preceding the date on which the Liquidated Damages

 

4

 

Amount payment
is due.  The payment of the Liquidated
Damages Amount to a Purchaser shall cease at such time as the Purchased Common
Units of such Purchaser become eligible for resale under Rule 144(k).

 

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

 

Section 2.02           Piggyback Rights.

 

(a)           Participation.  If at any time Copano proposes to file (i) a
prospectus supplement to an effective shelf registration statement, including
the 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 and/or another Person, then as soon as practicable but not less than
three (3) Business Days prior to the filing of (x) any preliminary prospectus
supplement relating to such Underwritten Offering pursuant to Rule 424(b), (y)
the prospectus supplement relating to such Underwritten Offering pursuant to
Rule 424(b) (if no preliminary prospectus supplement is used) or (z) such
registration statement as the case may be, then, 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; provided,
however, that if Copano has been advised by the Managing Underwriter
that the inclusion of Registrable Securities for sale for the benefit of the
Holders will have a material adverse effect on the price, timing or
distribution of the Common Units, then the amount of Registrable Securities to
be offered for the accounts of Holders shall be determined based on the
provisions of Section 2.02(b). 
The notice required to be provided in this Section 2.02(a) to
Holders shall be provided on a Business Day pursuant to Section 3.01
hereof and receipt of such notice shall be confirmed by Holder.  Holder shall then have three Business Days
after such Holder confirms receipt of the notice to request inclusion of
Registrable Securities in the Underwritten Offering, except that Holder shall
have one Business Day after such Holder confirms receipt of the notice to
request inclusion of Registrable Securities in the Underwritten Offering in the
case of a “bought deal” or “overnight transaction”.  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 Underwritten 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 may, at its election, 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 

 

5

 

Offering, shall be permitted to delay
offering any Included Registrable Securities for the same period as the delay
in 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 offering by giving written notice to Copano of
such withdrawal up to and including the time of pricing of such offering.  Each Holder’s rights under this Section
2.02(a) shall terminate when such Holder holds less than five million
($5,000,000) of Purchased Common Units, as determined based on the closing
price of Copano’s Common Units on the date immediately preceding such
determination.  In addition, at any time,
any Holder may deliver written notice (an “Opt-Out Notice”) to Copano
instructing Copano not to deliver any written notice of any proposed
Underwritten Offering pursuant to this Section 2.02(a) to such Holder.  After receipt of an Opt-Out Notice from a
Holder, Copano shall have no further obligation under this Section 2.02(a) to
deliver a written notice of any proposed Underwritten Offering to such Holder
and such Holder shall have no further rights under this Section 2.02(a) to have
any Registrable Securities included in any such Underwritten Offering.

 

(b)           Priority of Piggyback Rights.  If the Managing Underwriter or Underwriters
of any proposed Underwritten Offering of Common Units included in an
Underwritten Offering involving Included Registrable Securities advises Copano that
the total amount of Common Units that the Selling Holders and any other Persons
intend to include in such offering exceeds the number that can be sold in such
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 Registrable Securities 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, to Copano’s
pre-IPO investors as provided in (A) the Stakeholders’ Agreement dated July 30,
2004, and (B) Article XIV of the Company’s Second Amended and Restated Limited
Liability Company Agreement dated November 15, 2004; and (iii) third, pro rata
among the Selling Holders party to this Agreement and those party to that
certain Registration Rights Agreement dated August 1, 2005, by and among the
Company and the purchasers named therein who have requested participation in
such Underwritten Offering based, for each Selling Holder, on the fraction
derived by dividing (x) the number of Common Units proposed to be sold by such
Selling Holder in such Underwritten Offering by (y) the aggregate number of
Common Units proposed to be sold be all Selling Holders in such Underwritten
Offering.  As of the date of execution of
this Agreement, there are no other Persons with Registration Rights other than
as described in this Section 2.02(b).

 

Section 2.03           Underwritten Offering.

 

(a)           S-3 Registration.  If a Selling Holder elects to dispose of
Registrable Securities under the Shelf Registration Statement pursuant to an
Underwritten Offering and reasonably anticipates gross proceeds of greater than
$20 million from such Underwritten Offering, Copano shall, at the request of
such Selling Holder, 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 reasonable actions as are requested by
the Managing Underwriter to expedite or facilitate the disposition of the
Registrable Securities; provided, however,
Copano management

 

6

 

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

 

(b)           General Procedures.  In connection with any Underwritten Offering
under this Agreement, Copano shall be entitled to select the Managing
Underwriter or Underwriters.  In
connection with an Underwritten Offering under Section 2.01 or Section
2.03 hereof, each Selling Holder and Copano shall be obligated to enter
into an underwriting agreement that contains such representations, covenants,
indemnities and other rights and obligations as are customary in underwriting
agreements for firm commitment offerings of securities.  No Selling Holder may participate in such
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 underwriting, such Selling Holder may elect to withdraw therefrom
by notice to Copano and the Managing Underwriter; provided, however, that such withdrawal must be made prior
to the time in the penultimate sentence of Section 2.02(a) hereof to be
effective.  No such withdrawal or
abandonment shall affect Copano’s obligation to pay Registration Expenses.

 

Section 2.04           Sale Procedures.  In connection with its obligations contained
in Section 2.01 and Section 2.03, Copano will, as expeditiously
as possible:

 

(a)           prepare and file with the Commission
such amendments and supplements to the Shelf Registration Statement and the
prospectus used in connection therewith as may be necessary to keep the Shelf
Registration Statement effective for the 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 the Shelf Registration Statement;

 

(b)           furnish to each Selling Holder (i) as
far in advance as reasonably practicable before filing the 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 the Shelf Registration Statement or such other
registration statement or supplement or amendment thereto, and (ii) such number
of copies of the Shelf Registration Statement or such other registration statement
and the prospectus included therein

 

7

 

and any supplements and amendments thereto as
such Persons 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
the 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 will 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, at any time when a prospectus relating thereto is
required to be delivered under the Securities Act, of (i) the filing of the
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)
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 the Shelf Registration Statement or any other registration
statement or any prospectus or prospectus supplement thereto;

 

(e)           immediately notify each Selling
Holder and each underwriter, 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
the Shelf Registration Statement or any other registration statement
contemplated by this Agreement, as then in effect, 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 the 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
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

 

8

 

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 of counsel for Copano, dated the
effective date of the applicable registration statement or the date of any
amendment or supplement thereto, and a letter of like kind dated the date of
the closing under the underwriting agreement, and (ii) a “cold comfort” letter,
dated the effective date of the applicable registration statement or the date
of any amendment or supplement thereto 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 and any prospectus supplement
included therein) as are customarily covered in opinions of issuer’s counsel
and in accountants’ letters delivered to the underwriters in Underwritten
Offerings of securities and such other matters as such underwriters may
reasonably request;

 

(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 information to any such representative unless and until such
representative has entered into a confidentiality agreement with Copano;

 

(j)            cause all such Registrable
Securities registered pursuant to this Agreement to be listed on each securities
exchange or nationally recognized quotation system 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;

 

(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; and

 

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

 

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

 

9

 

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, or will request the managing
underwriter or underwriters, if any, to deliver to Copano (at Copano’s expense)
all copies in their possession or control, other than permanent file copies
then in such Selling Holder’s possession, of the prospectus covering such
Registrable Securities current at the time of receipt of such notice.

 

Section 2.05           Cooperation by Holders.  Copano shall have no obligation to include in
the Shelf Registration Statement units of a Holder or in a Underwritten
Offering pursuant to Section 2.02 units of a Selling Holder who has
failed to timely furnish such information that, in the opinion of counsel to
Copano, is reasonably required in order for the 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. 
Each Holder of Registrable Securities who is included in the Shelf
Registration Statement agrees not to effect any public sale or distribution of
the Registrable Securities during the 30 calendar day period following
completion of a public offering of equity securities by Copano except as
specifically provided herein; provided,
however, (i) 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 or directors or any other unitholder of Copano
on whom a restriction is imposed and (ii) that such Selling Holder owns more
than ten million dollars ($10,000,000) of the Purchased Common Units, as
determined based on the closing price of Copano’s Common Units on the date
immediately preceding such determination, which threshold amount shall be
increased automatically to fifteen million dollars ($15,000,000) following the
first Underwritten Offering by Copano after the Closing and (iii) the
restrictions contained in this Section 2.06 shall not prevent a Holder from
selling during such 30 calendar day period an aggregate of the lesser of a
number of Common Units equal to (a) Copano’s average weekly trading volume over
the prior four trading weeks on the Nasdaq National Market or other applicable
exchange or (b) one percent of Copano’s outstanding Common Units measured as of
the date of such sale and, provided further,
that if a Holder has submitted a notice to request inclusion in an Underwritten
Offering pursuant to Section 2.02(a) but is unable to sell any of such Common
Units as a result of the priority provisions contained in Section 2.02(b), then
such Holder shall not be subject to the restrictions contained in this Section
2.06.

 

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 the Shelf
Registration Statement pursuant to Section 2.01, an Underwritten
Offering pursuant to Section 2.02 or Section 2.03, and the
disposition of such securities, including, without limitation, all
registration, filing, securities exchange listing and The Nasdaq National
Market fees, all registration, filing, qualification and other fees and
expenses of complying with securities or blue sky laws, fees of the National
Association of Securities Dealers, Inc., transfer taxes and fees of transfer
agents and registrars, all word processing, duplicating and printing expenses,
the fees and disbursements of counsel and independent public accountants for
Copano, including the expenses of any special audits or “cold comfort” letters

 

10

 

required by or incident to such performance
and compliance.  Except as otherwise
provided in Section 2.08 hereof, Copano shall not be responsible for
legal fees incurred by Holders in connection with the exercise of such Holders’
rights hereunder.  In addition, Copano
shall not be responsible for any “Selling Expenses,” which means all
underwriting fees, discounts and selling commissions 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, whether or not any sale is made pursuant to such Underwritten
Offering. Each Selling Holder shall pay all Selling Expenses in connection with
any sale of its Registrable Securities hereunder.

 

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 and agents, 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,
against any losses, claims, damages, expenses or liabilities (including
reasonable attorneys’ fees and expenses) (collectively, “Losses”), joint
or several, to which such Selling Holder, its directors, officers, employees or
agents, or any 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 contained in the Shelf Registration Statement or any other
registration statement contemplated by this Agreement, any preliminary
prospectus or final prospectus contained therein, 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 light
of the circumstances under which they were made) not misleading, and will
reimburse each such Selling Holder, its directors, officers, employees or
agents, or any underwriter or 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, its directors, officers, employees or agents, or any underwriter or
controlling Person in writing specifically for use in the Shelf Registration
Statement or such other registration statement, 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, its directors,
officers, employees or agents, or any underwriter or controlling Person, and
shall survive the transfer of such securities by such Selling Holder.

 

(b)           By Each Selling Holder.  Each Selling Holder agrees severally and not
jointly 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

 

11

 

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

 

(c)           Notice.  Promptly after receipt by an indemnified
party hereunder of notice of the commencement of any action, such indemnified
party shall, if a claim in respect thereof is to be made against the
indemnifying party hereunder, notify the indemnifying party in writing thereof,
but the omission so to notify the indemnifying party shall not relieve it from
any liability which it may have to any indemnified party other than under this Section
2.08.  In any action brought against
any indemnified party, it shall notify the indemnifying party of the
commencement thereof.  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
reasonably acceptable to the indemnified party 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
expenses and fees of such separate counsel and other reasonable expenses
related to such participation to be reimbursed by the indemnifying party as
incurred.  Notwithstanding any other
provision of this Agreement, no indemnified party shall settle any action
brought against it with respect to which it is entitled to indemnification
hereunder without the consent of the indemnifying party, unless the settlement
thereof imposes no liability or obligation on, and includes a complete and
unconditional release from all liability of, the indemnifying 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 proceeds (net
of Selling Expenses) 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,

 

12

 

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 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 which 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
which 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 under 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 to such Holder forthwith upon request a copy of
the most recent annual or quarterly report of Copano, and such other reports
and documents so filed 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 Purchasers by
Copano under this Article II may be transferred or assigned by any Purchaser to
one or more transferee(s) or assignee(s) of such Registrable Securities; provided, however, that (a) unless such
transferee is an Affiliate of such Purchaser, each such transferee or assignee
holds Registrable Securities representing at least $5 million of the Purchased
Common Units sold pursuant to the terms of the Purchase Agreement, as
determined based on the closing price of Copano’s Common Units on the date
immediately preceding such determination, (b) Copano is given written notice
prior to any said transfer or assignment, stating the name and address of each
such transferee and identifying the securities with respect to which such
registration rights are being transferred or assigned, and (c)

 

13

 

each such transferee assumes in writing
responsibility for its portion of the obligations of such Purchaser under 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 registration statement filed by Copano on a basis that is
superior in any way to the piggyback rights granted to Purchaser hereunder.

 

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

 

ARTICLE
III

MISCELLANEOUS

 

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

 

(a)           if to Purchaser, to the address set
forth under that Purchaser’s signature block in accordance with the provisions
of this Section 3.01,

 

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

 

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

 

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

 

Section 3.02           Successor and Assigns.  This Agreement shall inure to the benefit 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           Assignment of Rights.  All or any portion of the rights and
obligations of any Purchaser under this Agreement may be transferred or
assigned by such Purchaser in accordance with Section 2.10 hereof.

 

Section 3.04           Aggregation of Purchased Common
Units.  All Purchased Common Units
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.

 

14

 

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

 

Section 3.06           Specific Performance.  Damages in the event of breach of 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 3.07           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 3.08           Headings.  The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.

 

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

 

Section 3.10           Severability of Provisions.  Any provision of this Agreement which 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 materially and adversely
affect the rights of any Holder hereunder without the consent of such Holder.

 

15

 

Section 3.13           No Presumption.  If 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.

 

16

 

IN WITNESS
WHEREOF, the parties have executed this Agreement as of the date first written
above.

 

	
   

  	
  COPANO ENERGY, L.L.C.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ John R. Eckel, Jr.

  
	
   

  	
   

  	
   

  	
  Name:

  	
  John R. Eckel, Jr.

  
	
   

  	
   

  	
   

  	
  Title:

  	
  Chairman of the Board and Chief

  
	
   

  	
   

  	
   

  	
   

  	
  Executive Officer

  

 

 

Signature Page
to

Registration
Rights Agreement

 

 

	
   

  	
  ZLP FUND, L.P.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Zimmer Lucas Partners, LLC,

  
	
   

  	
   

  	
  its general partner

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Stuart Zimmer

  
	
   

  	
   

  	
   

  	
  Stuart Zimmer, Managing Member

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  ZLP Fund, L.P.

  
	
   

  	
   

  	
  45 Broadway, 28th Floor

  
	
   

  	
   

  	
  New York, NY 10006

  
	
   

  	
   

  	
  Attn: Stuart Zimmer

  
	
   

  	
   

  	
  Facsimile: 
  212-440-0750

  
						

 

 

Signature Page
to

Registration
Rights Agreement

 

 

	
   

  	
  STRUCTURED FINANCE AMERICAS, LLC

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ K. Bell

  	
   

  
	
   

  	
   

  	
  Name: 
  K. Bell

  	
   

  
	
   

  	
   

  	
  Title:  
  Managing Director

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Richard C.
  Kennedy

  	
   

  
	
   

  	
   

  	
  Name: 
  Richard C. Kennedy

  	
   

  
	
   

  	
   

  	
  Title:  
  

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Deutsche Bank Securities LLC

  	
   

  
	
   

  	
   

  	
  60 Wall Street, 4th Floor

  	
   

  
	
   

  	
   

  	
  New York, NY 10005

  	
   

  
	
   

  	
   

  	
  Attn: 
  Richard Kennedy

  	
   

  
	
   

  	
   

  	
  Facsimile:

  	
   

  
					

 

 

Signature Page
to

Registration
Rights Agreement

 

 

	
   

  	
  ROYAL BANK OF CANADA

  	
   

  
	
   

  	
   by
  its agent

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  RBC CAPITAL MARKETS CORPORATION

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Patrick Clarke

  	
   

  
	
   

  	
   

  	
  Name:  Patrick Clarke

  
	
   

  	
   

  	
  Title:   Managing Director

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Josef Muskatel

  	
   

  
	
   

  	
   

  	
  Name:  Josef Muskatel

  
	
   

  	
   

  	
  Title:   Director and Senior Counsel

  

 

 

Signature Page
to

Registration Rights Agreement

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