AMENDMENT NO. 1 TO THIRD AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT OF COPANO ENERGY, L.L.C.
Exhibit 3.1
AMENDMENT NO. 1 TO THIRD AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT OF
COPANO ENERGY, L.L.C.
LIMITED LIABILITY COMPANY AGREEMENT OF
COPANO ENERGY, L.L.C.
THIS AMENDMENT NO. 1 TO THIRD AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT OF
COPANO ENERGY, L.L.C. (this “Amendment”), dated as of May 1, 2007, is entered into and
effectuated by the Board of Directors (the “Board”) of Copano Energy, L.L.C. (the
“Company”), pursuant to authority granted to it in Sections 5.6 and 11.1(c) of the Third
Amended and Restated Limited Liability Company Agreement of Copano Energy, L.L.C., dated as of
April 30, 2007, (the “Limited Liability Company Agreement”). Capitalized terms used but
not defined herein are used as defined in the Limited Liability Company Agreement.
WHEREAS, Section 5.6(a) of the Limited Liability Company Agreement provides that the Company
may issue additional Company Securities for any Company purpose at any time and from time to time
to such Persons and for such consideration and on such terms and conditions as the Board shall
determine, all without the approval of any Members;
WHEREAS, Section 5.6(b) of the Limited Liability Company Agreement provides that the Company
Securities authorized to be issued by the Company pursuant to Section 5.6(a), may be issued in one
or more classes, or one or more series of any such classes, with such designations, preferences,
rights, powers and duties (which may be senior to existing classes and series of Company
Securities) as shall be fixed by the Board;
WHEREAS, Section 11.1(c)(vii) of the Limited Liability Company Agreement provides that the
Board, without the approval of any Member, may amend any provision of the Limited Liability Company
Agreement to reflect an amendment that the Board determines to be necessary or appropriate in
connection with the authorization of issuance of any class or series of Company Securities pursuant
to Section 5.6 of the Limited Liability Company Agreement; and
WHEREAS, the Board deems it in the best interest of the Company to effect this Amendment to
provide for (i) the creation of a new class of Units to be designated as Class C Units and to fix
the preferences and the relative participating, optional and other special rights, powers and
duties pertaining to the Class C Units, including without limitation the conversion of the Class C
Units into Common Units in accordance with the terms described herein, and (ii) such other matters
as are provided herein.
NOW, THEREFORE, it is hereby agreed as follows:
A. Amendment. The Limited Liability Company Agreement is hereby amended as follows:
1. Section 1.1 is hereby amended to add the following definitions:
“Class C Units” means a Company Security representing a
fractional part of the Interests of all Members, and having the
rights and obligations specified with respect to the Class C Units
in this Agreement. The term “Class C Unit” does not refer to a
Common Unit prior to its conversion into a Common Unit pursuant to
the terms hereof.
“Contribution Agreement” means that certain Contribution
Agreement dated April 5, 2007 among Cimmarron Gathering GP, LLC,
Taos Gathering, LP, Cimmarron Transportation, L.L.C. and the
Company.
“Contribution Agreement Closing Date” means May 1, 2007.
“Contributors” has the meaning assigned to such term in the
Contribution Agreement.
“Escrow Agreement” has the meaning assigned to such term in the
Contribution Agreement.
2. Section 1.1 is hereby amended by amending and restating the following definitions:
“Adjusted Capital Account” means the Capital Account maintained
for each Member as of the end of each fiscal year of the Company,
(a) increased by any amounts that such Member is obligated to
restore under the standards set by Treasury Regulation Section
1.704-1(b)(2)(ii)(c) (or is deemed obligated to restore under
Treasury Regulation Sections 1.704-2(g) and 1.704-2(i)(5)) and (b)
decreased by (i) the amount of all losses and deductions that, as of
the end of such fiscal year, are reasonably expected to be allocated
to such Member in subsequent years under Sections 704(e)(2) and
706(d) of the Code and Treasury Regulation Section
1.751-1(b)(2)(ii), and (ii) the amount of all distributions that, as
of the end of such fiscal year, are reasonably expected to be made
to such Member in subsequent years in accordance with the terms of
this Agreement or otherwise to the extent they exceed offsetting
increases to such Member’s Capital Account that are reasonably
expected to occur during (or prior to) the year in which such
distributions are reasonably expected to be made (other than
increases as a result of a minimum gain chargeback pursuant to
Section 6.1(d)(i) or Section 6.1(d)(ii)). The foregoing definition
of Adjusted Capital Account is intended to comply with the
provisions of Treasury Regulation Section 1.704-1(b)(2)(ii)(d) and
shall be interpreted consistently therewith. The “Adjusted Capital
Account” of a Member in respect of a Common Unit, Class C Unit or
any other Interest shall be the amount that such Adjusted Capital
Account would be if such Common Unit, Class C Unit or other
Interest were the only interest in the Company held by such
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Member from and after the date on which such Common Unit, Class C
Unit or other Interest was first issued.
“Capital Account” means the capital account maintained for a
Member pursuant to Section 5.5. The “Capital Account” of a Member
in respect of a Common Unit, Class C Unit or any other Interest
shall be the amount that such Capital Account would be if such
Common Unit, Class C Unit or other Interest were the only interest
in the Company held by such Member from and after the date on which
such Common Unit, Class C Unit or other Interest was first issued.
“Company Security” means any class or series of equity interest
in the Company (but excluding any options, rights, warrants and
appreciation rights relating to an equity interest in the Company),
including without limitation, Common Units and Class C Units, which
are separate classes of Interests.
“Interest” means the ownership interest of a Member in the
Company, which may be evidenced by Common Units, Class C Units or
other Company Securities or a combination thereof or interest
therein, and includes any and all benefits to which such Member is
entitled as provided in this Agreement, together with all
obligations of such Member to comply with the terms and provisions
of this Agreement.
“Remaining Net Positive Adjustments” means as of the end of any
taxable period, with respect to the Unitholders holding Common Units
or Class C Units, the excess of (i) the Net Positive Adjustments of
the Unitholders holding Common Units or Class C Units as of the end
of such period over (ii) the sum of those Members’ Share of
Additional Book Basis Derivative Items for each prior taxable
period.
“Share of Additional Book Basis Derivative Items” means in
connection with any allocation of Additional Book Basis Derivative
Items for any taxable period, with respect to the Unitholders
holding Common Units or Class C Units, the amount that bears the
same ratio to such Additional Book Basis Derivative Items as the
Unitholders’ Remaining Net Positive Adjustments as of the end of
such period bears to the Aggregate Remaining Net Positive
Adjustments as of that time.
“Unit” means a Company Security that is designated as a “Unit”
and shall include Common Units and Class C Units.
“Unit Majority” means, during the period in which any Class C
Units are Outstanding, at least a majority of the
Outstanding Common Units and the Outstanding Class C Units
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voting together as a single class, and after the end of such period,
at least a majority of the Outstanding Common Units.
3. Section 1.1 is hereby amended by amending and restating the final sentence to the
definition of “Common Unit:”
“The term “Common Unit” does not refer to a Class C Unit prior
to its conversion into a Common Unit pursuant to the terms hereof.”
4. Section 1.1 is hereby amended by adding the following final proviso to the definition of
“Outstanding”:
“provided, further, that for purposes of the foregoing, the
Class C Units shall be deemed to be of the same class of Company
Securities as the Common Units.”
5. The heading for Article IV is hereby amended and restated to read:
CERTIFICATES; RECORD HOLDERS; ISSUANCE AND TRANSFER OF INTERESTS; REDEMPTION OF
INTERESTS
6. Section 4.1 is hereby amended and restated as follows:
Section 4.1 Certificates. Upon the Company’s issuance of Common
Units or Class C Units to any Person, the Company shall issue one or
more Certificates in the name of such Person evidencing the number
of such Units being so issued. In addition, upon the request of any
Person owning any other Company Securities other than Common Units
or Class C Units, the Company shall issue to such Person one or more
certificates evidencing such other Company Securities. Certificates
shall be executed on behalf of the Company by the Chairman of the
Board, President or any Vice President and the Secretary or any
Assistant Secretary. No Common Unit Certificate shall be valid for
any purpose until it has been countersigned by the Transfer Agent;
provided, however, that if the Board of Directors
elects to issue Common Units in global form, the Common Unit
Certificates shall be valid upon receipt of a certificate from the
Transfer Agent certifying that the Common Units have been duly
registered in accordance with the directions of the Company. Any or
all of the signatures required on the Certificate may be by
facsimile. If any Officer or Transfer Agent who shall have signed
or whose facsimile signature shall have been placed upon any such
Certificate shall have ceased to be such Officer or Transfer Agent
before such Certificate is issued by the Company, such Certificate
may nevertheless be issued by the Company with the same effect as if
such Person were such Officer or Transfer Agent at the date
of issue. Certificates shall be consecutively numbered and shall be
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entered on the books and records of the Company as they are issued
and shall exhibit the holder’s name and number of Units.
7. Section 4.5(c) is hereby amended and restated as follows:
(c) By acceptance of the transfer of any Interest in accordance
with this Section 4.5 or the issuance of any Interest in accordance
with Section 5.6, and except as provided in Section 4.7, each
acquiror or transferee of an Interest (including any nominee holder
or an agent or representative acquiring such Interests for the
account of another Person) (i) shall be admitted to the Company as a
Member with respect to the Interests so acquired or transferred to
such Person when any such acquisition, transfer or admission is
reflected in the books and records of the Company, with or without
execution of this Agreement, (ii) shall be deemed to agree to be
bound by the terms of, and shall be deemed to have executed, this
Agreement, (iii) shall become the Record Holder of the Interests so
transferred, (iv) represents that the transferee has the capacity,
power and authority to enter into this Agreement, (v) grants powers
of attorney to the Officers of the Company and any Liquidator of the
Company and (vi) makes the consents and waivers contained in this
Agreement. The issuance or transfer of any Interests in accordance
with this Agreement and the admission of any new Member shall not
constitute an amendment to this Agreement.
8. Section 5.5(c) is hereby redesignated as Section 5.5(c)(i) and the following is added as a
new Section 5.5(c)(ii):
(ii) Immediately prior to the transfer of a Class C Unit or of
a Class C Unit that has converted into a Common Unit pursuant to
Section 5.12(e) by a holder thereof (other than a transfer to an
Affiliate unless the Board of Directors elects to have this
subparagraph 5.5(c)(ii) apply), the Capital Account maintained for
such Person with respect to its Class C Units or converted Class C
Units will (a) first, be allocated to the Class C Units or converted
Class C Units to be transferred in an amount equal to the product of
(x) the number of such Class C Units or converted Class C Units to
be transferred and (y) the Per Unit Capital Amount for a Common
Unit, and (b) second, any remaining balance in such Capital Account
will be retained by the transferor, regardless of whether it has
retained any Class C Units or converted Class C Units. Promptly,
following any such allocation, the transferor’s Capital Account, if
any, maintained with respect to the retained Class C Units or
converted Class C Units, if any, will have a balance equal to the
amount allocated under clause (b) hereinabove, and the transferee’s
Capital Account established with
respect to the transferred Class C Units or converted Class C
Units
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will have a balance equal to the amount allocated under clause
(a) hereinabove.
9. Section 5.10(a) is hereby amended to read in its entirety:
(a) Subject to Section 5.10(d), Section 6.6 and Section 6.7
(dealing with adjustments of distribution levels), the Company may
make a Pro Rata distribution of Company Securities to all Record
Holders of Company Securities or may effect a subdivision or
combination of Company Securities so long as, after any such event,
each Member shall have the same Percentage Interest in the Company
as before such event, and any amounts calculated on a per Unit basis
or stated as a number of Units (including the number of Common Units
into which Class C Units may convert and the number of Class C Units
issued on the Contribution Agreement Closing Date) are
proportionately adjusted retroactive to the date of formation of the
Company.
10. Article V is hereby amended to add a new Section 5.12 creating a new series of Units as
follows:
Section 5.12 Establishment of Class C Units.
(a) General. The Board of Directors hereby designates and
creates a series of Units to be designated as “Class C Units” and
consisting of a total of 1,579,409 Class C Units, and fixes the
designations, preferences and relative, participating, optional or
other special rights, powers and duties of holders of the Class C
Units as set forth in this Section 5.12.
(b) Allocations. Subject to the provisions of Section
6.1(d)(iii), all allocations of items of Company income, gain, loss,
deduction and credit under Section 6.1(a) and Section 6.1(b) shall
be allocated to the Class C Units on a basis that is pro rata with
the Common Units, so that the amount thereof allocated to each
Common Unit will equal the amount thereof allocated to each Class C
Unit;
(c) Distributions of Available Cash from Operating Surplus and
Distributions of Available Cash from Capital Surplus.
Notwithstanding anything to the contrary in Section 6.4 or Section
6.5, no Class C Unit shall have the right to share in any
distributions made to the Unitholders pursuant to Section 6.4 or
Section 6.5;
(d) Capital Accounts. The initial Capital Account balance of
each Class C Unit shall equal $34.19.
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(e) Conversion of Class C Units to Common Units. Except as
provided in this Section 5.12(e), the Class C Units are not
convertible into Common Units. The Class C Units will be converted
into Common Units in accordance with this Section 5.12(e) without
the vote or consent of the Unitholders. With respect to the
aggregate number of Class C Units issued on the Contribution
Agreement Closing Date:
(i) on the six-month anniversary of the Contribution Agreement
Closing Date, the lesser of 394,853 Class C Units and the number of
Outstanding Class C Units will automatically convert to Common Units
on a one-for-one basis, as adjusted pursuant to Section 5.10(a);
(ii) on the first anniversary of the Contribution Agreement
Closing Date, the lesser of 394,852 Class C Units and the number of
Outstanding Class C Units will automatically convert to Common Units
on a one-for-one basis, as adjusted pursuant to Section 5.10(a);
(iii) on the 18-month anniversary of the Contribution
Agreement Closing Date, the lesser of 394,852 Class C Units and the
number of Outstanding Class C Units will automatically convert to
Common Units on a one-for-one basis, as adjusted pursuant to Section
5.10(a);
(iv) on the second anniversary of the Contribution Agreement
Closing Date, the lesser of 394,852 Class C Units and the number of
Outstanding Class C Units will automatically convert to Common Units
on a one-for-one basis, as adjusted pursuant to Section 5.10(a);
(v) subject to the other provisions of this Section 5.12(e),
the Class C Units held by the Contributors shall be converted to
Common Units prior to the conversion of Class C Units held by the
Escrow Agent pursuant to the Contribution Agreement.
(f) Surrender of Certificates. Upon conversion of the Class C
Units into Common Units in accordance with Section 5.12(e), each
holder of converted Class C Units shall promptly surrender the Class
C Unit Certificates therefor, duly endorsed, at the office of the
Company. As soon as practicable thereafter, the Company shall issue
and deliver at such office to such holder of converted Class C Units
one or more Common Unit Certificates, registered in the name of such
holder, for the number of Common Units to which such holder shall be
entitled as provided in Section 5.12(e). Such conversion shall be
deemed to have been made as of the date of the conversion specified
in Section 5.12(e), and the
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Person entitled to receive the Common Units issuable upon such
conversion shall be treated for all purposes as the record holder of
such Common Units on said date.
(g) Voting Rights. The Class C Units shall be entitled to vote
together as a single class with the Common Units on any matter for
which the holders of Common Units are entitled to vote. Each Class
C Unit will be entitled to the number of votes equal to the number
of Common Units into which a Class C Unit is convertible at the time
of the Record Date for the vote or written consent on the matter for
which the Class C Units are entitled to vote together as a single
class with the Common Units. The Class C Units shall have no voting
rights except as set forth in this Section 5.12(g) or Section
11.2(c).
(h) Certificates. The Class C Units will be evidenced by
certificates in such form as the Board of Directors may approve and,
subject to the satisfaction of any applicable legal and regulatory
requirements, may be assigned or transferred in a manner identical
to the assignment and transfer of other Units. The certificates
will initially include a restrictive legend to the effect that the
Class C Units have not been registered under the Securities Act or
any state securities laws.
(i) Registrar and Transfer Agent. The Company will act as the
registrar and transfer agent of the Class C Units.
(j) Any Class C Units or Common Units delivered to the Company
pursuant to the Contribution Agreement or the Escrow Agreement as a
result of the indemnification obligations of any Contributor
contained in the Contribution Agreement shall automatically be
cancelled and shall not be deemed to be Outstanding for any purpose
under this Agreement.
11. Section 6.1(c)(i)(B) is hereby amended and restated as follows:
(B) Second, to all Unitholders holding Common Units or Class C
Units, Pro Rata, until the Capital Account in respect of each Common
Unit and Class C Unit then Outstanding is equal to the sum of (1)
its Unrecovered Capital and (2) the Minimum Quarterly Distribution,
if otherwise entitled, for the Quarter during which the Liquidation
Date occurs, reduced (but not below zero) by any distribution
pursuant to Section 6.4 with respect to such Common Unit for such
Quarter (the amount determined pursuant to this clause (2) is
hereinafter defined as the “Unpaid MQD”); and
12. Section 6.1(c)(ii)(A) is hereby amended and restated as follows:
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(A) First, to the Unitholders holding Common Units or Class C
Units, Pro Rata, until the Capital Account in respect of each Common
Unit and Class C Unit then Outstanding has been reduced to zero; and
13. Section 6.1(d) is hereby amended to add the following new Section 6.1(d)(xiii):
(xiii) Economic Uniformity. At the election of the Board of
Directors with respect to any taxable period, all or a portion of
the remaining items of Company gross income or gain for such taxable
period, after taking into account allocations pursuant to Section
6.1(d)(iii), shall be allocated 100% to each Member holding Class C
Units in the proportion of the number of Class C Units held by such
Member to the total number of Class C Units then Outstanding, until
each such Member has been allocated an amount of gross income or
gain that increases the Capital Account maintained with respect to
such Class C Units to an amount equal to the product of (A) the
number of Class C Units held by such Member and (B) the Per Unit
Capital Amount for a Common Unit. The purpose of this allocation is
to establish uniformity between the Capital Accounts underlying
Class C Units and the Capital Accounts underlying Common Units
immediately prior to the conversion of such Class C Units into
Common Units.
14. Section 6.4 is hereby amended by adding the following final proviso:
“; provided, however, that no distributions shall be made
pursuant to this Section 6.4 in respect of any Class C Unit.”
15. Section 6.5 is herby amended by adding the following final sentence:
“Notwithstanding anything to the contrary in this Agreement, no
distributions shall be made pursuant to this Section 6.5 in respect
of any Class C Unit.”
16. Article VI is hereby amended to add a new Section 6.8 as follows:
Section 6.8 Special Provision Relating to Holdings of Class C
Units.
(a) Except with respect to the right to vote on or approve
matters pursuant to Section 5.12(g) and the right to participate in
allocations of income, gain, loss and deduction and certain
distributions made with respect to Common Units, the holder of a
Class C Unit shall have all of the rights and obligations of a
Unitholder holding Common Units hereunder; provided,
however, that immediately upon the conversion of any Class C
Units into Common Units pursuant to Section 5.12(e), the Unitholder
holding a Class C Unit that is to be converted shall
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possess all of the rights and obligations of a Unitholder
holding Common Units hereunder, including the right to vote as a
Common Unitholder and the right to participate in allocations of
income, gain, loss and deduction and distributions made with respect
to Common Units; provided, however, that such
converted Class C Units shall remain subject to the provisions of
Section 5.5(c)(ii), Section 6.1(d)(xiii) and Section 6.8(b).
(b) The Unitholder holding a Class C Unit that has converted
into a Common Unit pursuant to Section 5.12(e) shall not be issued a
Common Unit Certificate pursuant to Section 4.1 and shall not be
permitted to transfer its converted Class C Units to a Person that
is not an Affiliate of the holder until such time as the Board of
Directors determines, based on advice of counsel, that a converted
Class C Unit should have, as a substantive matter, like intrinsic
economic and federal income tax characteristics, in all material
respects, to the intrinsic economic and federal income tax
characteristics of an Initial Common Unit. In connection with the
condition imposed by this Section 6.8(b), the Board of Directors may
take whatever steps are required to provide economic uniformity to
the converted Class C Units in preparation for a transfer of such
converted Class C Units, including the application of Section
5.5(c)(ii) and Section 6.1(d)(xiii); provided,
however, that no such steps may be taken that would have a
material adverse effect on the Unitholders holding Common Units
represented by Common Unit Certificates. The Board of Directors
shall act in good faith to make the determinations set forth in this
Section 6.8(b) as soon as practicable.
17. Section 11.8(b) is herby amended by adding the following final sentence:
“The Class C Units shall be entitled to vote together as a single
class with the Common Units on any matter for which the holders of
Common Units are entitled to vote.”
B. Agreement in Effect. Except as hereby amended, the Limited Liability Company Agreement
shall remain in full force and effect.
C. Applicable Law. This Amendment shall be construed in accordance with and governed by
the laws of the State of Delaware, without regard to principles of conflicts of laws.
D. Invalidity of Provisions. If any provisions of this Amendment is or becomes invalid,
illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining
provisions contained herein shall not be effected thereby.
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IN WITNESS WHEREOF, this Amendment has been executed as of the date first written above.
| COPANO ENERGY, L.L.C. |
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| By: | /s/ Xxxx X. Xxxxx, Xx. | |||
| Xxxx X. Xxxxx, Xx. | ||||
| Chairman of the Board and Chief Executive Officer | ||||
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