**Exhibit 10.27**

 

***Execution Copy***

 

 

**CLASS BUNIT AND COMMON UNITPURCHASE AGREEMENT**

 

 

**BY AND AMONGCOPANO ENERGY, L.L.C.AND**

 

**KAYNE ANDERSONMLP INVESTMENT COMPANY**

 

**RCH ENERGY MLPFUND LP**

 

**RCH ENERGY MLP FUND-A LP**

 

**TORTOISE ENERGY INFRASTRUCTURE CORPORATION**

 

**TORTOISE ENERGY CAPITAL CORPORATION**

 

**GOLDMAN, SACHS & CO.**

 

**ENERGY INCOME AND GROWTH FUND**

 

**FIDUCIARY/CLAYMORE MLP OPPORTUNITY FUND**

 

**ALERIAN OPPORTUNITY PARTNERS LP**

 

**ALERIAN CAPITAL PARTNERS LP**

 

**STROME HEDGECAP, LP**

 

**STROME ALPHA, LP**

 

**AND**

 

**STROME FAMILY FONDATION**

 

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**CLASS BUNIT ANDCOMMON UNIT PURCHASE AGREEMENT**

 

CLASS B UNIT ANDCOMMON UNIT PURCHASE AGREEMENT, dated as of June 17, 2005 (this “Agreement”),by and among COPANO ENERGY, L.L.C., a Delaware limited liability company (“Copano”),and each of KAYNE ANDERSON MLP INVESTMENT COMPANY (“KAMIC”), RCH ENERGYMLP FUND LP (“RCH”), RCH ENERGY MLP FUND-A LP (“RCH-A”), TORTOISEENERGY INFRASTRUCTURE CORPORATION (“TEIFC”), TORTOISE ENERGY CAPITALCORPORATION (“TECC”), GOLDMAN, SACHS & CO., on behalf ofPrincipal Strategies Group (“Goldman”), ENERGY INCOME AND GROWTH FUND (“EIGF”),FIDUCIARY/CLAYMORE MLP OPPORTUNITY FUND (“FCMOF”), ALERIAN OPPORTUNITYPARTNERS LP (“AOP”), ALERIAN CAPITAL PARTNERS LP (“ACP”), STROME HEDGECAP, LP (“SH”), STROME ALPHA, LP (“SA”)AND STROME FAMILY FOUNDATION (“SFF”) (each of KAMIC, RCH, RCH-A,TEIFC, TECC, EIGF FCMOF, AOP, ACP and SH, SA and SFF a “Purchaser” andcollectively, the “Purchasers”). 

 

WHEREAS, simultaneously with the execution of this Agreement, Copano isentering into a definitive purchase agreement to acquire, directly orindirectly, 100% of the outstanding membership interests in ScissorTail Energy,LLC, a Delaware limited liability company, from Hamilton ScissorTail LLC, aColorado limited liability company, and ScissorTail Holdings, LLC, a Delawarelimited liability company (the “ScissorTail Acquisition”);

 

WHEREAS, Copano desires to finance a portion of the ScissorTailAcquisition through the sale of an aggregate of $175,002,090 of Class BUnits and Common Units and Purchasers desire to purchase an aggregate of$175,002,090 of Common Units and Class B Units from Copano in accordancewith the provisions of this Agreement; 

 

WHEREAS, it is a condition to the obligations of Purchasers and Copanounder this Agreement that the ScissorTail Acquisition be consummated; 

 

WHEREAS, Copano has agreed to provide Purchasers with certainregistration rights with respect to the Purchased Units acquired pursuant tothis Agreement; and

 

WHEREAS, Copano has agreed to deliver or cause be delivered at Closinga Voting Agreement in the form attached as Exhibit F (the “UnitholderVoting Agreement”) with Copano Partners Trust, a Delaware statutory trust,DLJ Merchant Banking, and certain officers of Copano, pursuant to which each ofsuch unitholders will unconditionally and irrevocably agree to vote all of theCommon Units and Subordinated Units owned by it in favor of the conversion of Class BUnits into Common Units as contemplated by Section 5.01 of this Agreement.

 

NOW THEREFORE, in consideration of the mutual covenants and agreementsset forth herein and for good and valuable consideration, the receipt andsufficiency of which is hereby acknowledged, Copano and each of the Purchasers,severally and not jointly, hereby agree as follows:

 

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**ARTICLE I**DEFINITIONS

 

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

 

“Acquisition Documents”means the ScissorTail Purchase Agreement and the ScissorTail FinancingCommitment.

 

“Action” against aPerson means any lawsuit, action, proceeding, investigation or complaint beforeany Governmental Authority, mediator or arbitrator. 

 

“Affiliate” means,with respect to a specified Person, any other Person, whether now in existenceor hereafter created, directly or indirectly controlling, controlled by orunder direct or indirect common control with such specified Person.  For purposes of this definition, “control”(including, with correlative meanings, “controlling,” “controlled by,” and “undercommon control with”) means the power to direct or cause the direction of themanagement and policies of such Person, directly or indirectly, whether throughthe ownership of voting securities, by contract or otherwise.

 

“Basic Documents”means, collectively, this Agreement, the Registration Rights Agreement, theUnitholder Voting Agreement and any and all other agreements or instrumentsexecuted 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 commercialbanks in Houston, Texas. 

 

“Class BAmendment” shall have the meaning specified in Section 2.01(b).

 

“Class B UnitPrice” shall have the meaning specified in Section 2.01(c).

 

“Class B Units”means the Class B Units of Copano, as established by the Class BAmendment.

 

“Closing” shallhave the meaning specified in Section 2.02. 

 

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

 

“Commission” meansthe United States Securities and Exchange Commission.

 

“Commitment Amount”means the amount set forth opposite each Purchaser’s name on Schedule 2.01to this Agreement.

 

“Commitment Date”means the date of this Agreement.

 

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

 

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“Common Unit Price”shall have the meaning specified in Section 2.01(c).

 

“ConfidentialInformation” means all oral or written information, documents, records anddata relating to the ScissorTail Acquisition (including as referenced in thisAgreement) that Copano or its Representatives furnish or otherwise disclose toa Purchaser or any of its Representatives, together with all copies, extracts,analyses, compilations, studies, memoranda, notes or other documents, recordsor data (in whatever form maintained, whether documentary, computer or otherelectronic storage or otherwise) prepared by any Person that contain orotherwise reflect or are generated from such information, documents, records ordata.  The term “Confidential Information”does not include any information that (a) at the time of disclosure orthereafter is generally available to the public (other than as a result of adisclosure by a Purchaser or its Representatives), (b) is developed by aPurchaser or any of its Representatives, independent of, and without reliancein whole or in part on, any Confidential Information or any knowledge ofConfidential Information, (c) becomes available to a Purchaser or itsRepresentatives on a non-confidential basis from a source other than Copano orits Representatives who, insofar as is known to the recipient after reasonableinquiry, is not prohibited from transmitting the information to the recipientby a contractual, legal, fiduciary or other obligation to Copano or (d) wasavailable to a Purchaser or its Representatives on a non-confidential basisprior to its disclosure to a Purchaser or its Representatives by Copano or itsRepresentatives.

 

“Copano” meansCopano Energy, L.L.C., a Delaware limited liability company.

 

“Copano FinancialStatements” means the financial statement or statements described orreferred to in Section 3.03. 

 

“Copano MaterialAdverse Effect” means any material and adverse effect on (i) theassets, liabilities, financial condition, business, operations, prospects oraffairs of Copano and its Subsidiaries, taken as a whole, measured againstthose assets, liabilities, financial condition, business, operations, prospectsor affairs reflected in the Copano SEC Documents, (ii) the ability ofCopano and its Subsidiaries, taken as a whole, to carry out their business asof the date of this Agreement or to meet their obligations under the BasicDocuments on a timely basis, or (iii) the ability of Copano to consummatethe transactions under any Basic Document. 

 

“Copano Related Party”shall have the meaning specified in Section 7.02.

 

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

 

“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, andthe rules and regulations of the Commission promulgated thereunder. 

 

“GAAP” meansgenerally accepted accounting principles in the United States of America ineffect from time to time. 

 

“GovernmentalAuthority” shall include the country, state, county, city and politicalsubdivisions in which any Person or such Person’s Property is located or whichexercises valid

 

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jurisdiction overany such Person or such Person’s Property, and any court, agency, department,commission, board, bureau or instrumentality of any of them and any monetaryauthorities that exercise valid jurisdiction over any such Person or suchPerson’s Property. Unless otherwise specified, all references to GovernmentalAuthority herein shall mean a Governmental Authority having jurisdiction over,where applicable, Copano, its Subsidiaries or any of their Property or any ofthe Purchasers. 

 

“HSR Act” shallmean the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.

 

“Indemnified Party”shall have the meaning specified in Section 7.03. 

 

“Indemnifying Party”shall have the meaning specified in Section 7.03. 

 

“Law” means anyfederal, state, local or foreign order, writ, injunction, judgment, settlement,award, decree, statute, law, rule or regulation.

 

“Lien” means anyinterest in Property securing an obligation owed to, or a claim by, a Personother than the owner of the Property, whether such interest is based on thecommon law, statute or contract, and whether such obligation or claim is fixedor contingent, and including but not limited to the lien or security interestarising from a mortgage, encumbrance, pledge, security agreement, conditionalsale or trust receipt or a lease, consignment or bailment for securitypurposes.  For the purpose of thisAgreement, a Person shall be deemed to be the owner of any Property that it hasacquired or holds subject to a conditional sale agreement, or leases under afinancing lease or other arrangement pursuant to which title to the Propertyhas been retained by or vested in some other Person in a transaction intendedto create a financing.

 

“Limited LiabilityCompany Agreement” shall have the meaning specified in Section 2.01(a).

 

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

 

“Parties” meansCopano and the Purchasers.

 

“Person” means anyindividual, corporation, company, voluntary association, partnership, jointventure, trust, limited liability company, unincorporated organization orgovernment or any agency, instrumentality or political subdivision thereof, orany other form of entity. 

 

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

 

“Purchase Price”means the Common Unit Price and the Class B Unit Price. 

 

“Purchased Class BUnits” means the Class B Units to be issued and sold to the Purchaserspursuant to this Agreement.

 

“Purchased CommonUnits” means the Common Units to be issued and sold to the Purchaserspursuant to this Agreement.

 

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“Purchased Units”means the Purchased Class B Units and the Purchased Common Units. 

 

“Purchaser MaterialAdverse Effect” means any material and adverse effect on (i) theability of a Purchaser to meet its obligations under the Basic Documents on atimely basis or (ii) the ability of a Purchaser to consummate thetransactions under any Basic Document.

 

“Purchaser RelatedParty” shall have the meaning specified in Section 7.01.

 

“Purchasers” hasthe meaning set forth in the introductory paragraph. 

 

“Reference Price”means $29.37. 

 

“Registration RightsAgreement” means the Registration Rights Agreement, substantially in theform attached to this Agreement as Exhibit D, to be entered into atthe Closing, between Copano and the Purchasers. 

 

“Representatives”of any Person means the officers, directors, employees, agents and otherrepresentatives of such Person. 

 

“ScissorTailAcquisition” shall have the meaning specified in the recitals.

 

“ScissorTail ClosingDate” means the date on which the ScissorTail Acquisition is consummated.

 

“ScissorTail PurchaseAgreement” means the Membership Interest Purchase Agreement amongScissorTail Energy, LLC, Hamilton ScissorTail LLC, ScissorTail Holdings, LLC,and Copano dated June 20, 2005, in the form attached hereto as Exhibit G,pursuant to which the parties thereto will consummate the ScissorTailAcquisition.

 

“ScissorTail FinancingCommitment” means the Commitment Letter between Bank of America, N.A., Bancof America Securities LLC, Banc of America Bridge LLC and Copano, dated June 17,2005, in the form attached hereto as Exhibit H, pursuant to whichthe lenders thereunder will commit to provide the debt financing necessary toconsummate the ScissorTail Acquisition.

 

“Second QuarterDistribution” shall have the meaning specified in Section 5.02.

 

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

 

“Subsidiary”means, as to any Person, any corporation or other entity of which at least amajority of the outstanding equity interest having by the terms thereofordinary voting power to elect a majority of the board of directors of suchcorporation or other entity (irrespective of whether or not at the time anyequity interest of any other class or classes of such corporation or otherentity shall have or might have voting power by reason of the happening of anycontingency) is at the time directly or indirectly owned or controlled by suchPerson or one or more of its Subsidiaries. 

 

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“Unitholders”means the Common Unitholders and Subordinated Unitholders of Copano.

 

Section 1.02                                AccountingProcedures and Interpretation. Unless otherwise specified in this Agreement, all accounting terms usedherein shall be interpreted, all determinations with respect to accountingmatters under this Agreement shall be made, and all financial statements andcertificates and reports as to financial matters required to be furnished tothe Purchasers under this Agreement shall be prepared, in accordance with GAAPapplied on a consistent basis during the periods involved (except, in the caseof unaudited statements, as permitted by Form 10-Q promulgated bythe Commission) and in compliance as to form in all material respects withapplicable accounting requirements and with the published rules andregulations of the Commission with respect thereto. 

 

**ARTICLE II**SALE ANDPURCHASE

 

Section 2.01                                Saleand Purchase.  Contemporaneous with the consummation of theScissorTail Acquisition and subject to the terms and conditions of thisAgreement, at the Closing (as defined in Section 2.02 below) Copano herebyagrees to sell to each Purchaser, and each Purchaser hereby agrees, severallyand not jointly, to purchase from Copano, the number of Purchased Common Unitsand Purchased Class B Units, respectively, determined pursuant toparagraphs (a) and (b) below of this Section 2.01, and eachPurchaser agrees to pay Copano the Common Unit Price for each Purchased CommonUnit and the Class B Unit Price for each Purchased Class B Units, ineach case, as set forth in paragraph (c) below of this Section 2.01.  The obligation of each Purchaser under thisAgreement is independent of the obligation of each other Purchaser, and thefailure or waiver of performance by any Purchaser does not excuse performanceby any other Purchaser; *provided, however,*that, if (i) the number of Purchased Units to be purchased by Goldman atClosing would represent more than 9% of the issued and outstanding number ofCommon Units and Class B Units (counted together for this purpose) as ofimmediately after the Closing or (ii) the number of Common Units to bepurchased by Goldman at Closing would represent more than 9% of the issued andoutstanding number of Common Units as of immediately after the Closing, then,and only upon Goldman’s request, in the case of clause (i), the number ofCommon Units and Class B Units to be purchased by Goldman (and itsrespective aggregate Purchase Prices in respect thereof) shall be reduced prorata (based on the number of Common Units and Class B Units Goldman wouldotherwise be required to purchase) by the minimum amount necessary such thatGoldman’s Purchased Units would not represent more than 9% of the issued andoutstanding number of Common Units and Class B Units (counted together forthis purpose) as of immediately after the Closing, and/or, in the case ofclause (ii), the number of Common Units to be purchased by Goldman (and itsaggregate Purchase Price in respect thereof) shall be reduced, and the numberof Class B Units to be purchased by Goldman (and its aggregate PurchasePrice in respect thereof) shall be increased, by the minimum amount necessarysuch that Goldman’s Purchased Common Units would not represent more than 9% ofthe issued and outstanding number of Common Units as of immediately after theClosing. 

 

(a)                                  CommonUnits.  Subject to the provisocontained in the first paragraph of this Section 2.01, the number ofPurchased Common Units to be issued and sold to each Purchasers shall be equalto the quotient determined by dividing (i) the Commitment Amount for

 

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such Purchaser under the column entitled “CommonUnits” on Schedule 2.01 by (ii) the Common Unit Price (as defined in Section 2.01(c) below),which quotient shall be rounded, if necessary, down to the nearest wholenumber. The Purchased Common Units shall have those rights, preferences,privileges and restrictions governing the Common Units as set forth in theSecond Amended and Restated Limited Liability Company Agreement of Copano,dated as of November 15, 2004 (the “Limited Liability Company Agreement”),as amended by an amendment to the Limited Liability Company Agreement, in allmaterial respects in the form of Exhibit A to this Agreement, whichCopano will cause to be adopted immediately prior to the issuance and sale of Class BUnits contemplated by this agreement (the “Class B Amendment”).

 

(b)                                 Class BUnits.  Subject to the provisocontained in the first paragraph of this Section 2.01, the number ofPurchased Class B Units to be issued and sold to each Purchaser shall beequal to the quotient determined by dividing (i) the Commitment Amount forsuch Purchaser under the column entitled “Common Units” on Schedule 2.01 by(ii) the Class B Unit Price (as defined in Section 2.01(c) below),which quotient shall be rounded, if necessary, down to the nearest wholenumber. The Purchased Class B Units shall have those rights, preferences,privileges and restrictions governing the Class B Units, which shall bereflected in the Limited Liability Company Agreement, as amended by the Class BAmendment.

 

(c)                                  Consideration.  The amount per Common Unit each Purchaserwill pay to Copano to purchase the Purchased Common Units (the “Common UnitPrice”) shall be $28.78.  The amountper Class B Unit each Purchaser will pay to Copano to purchase thePurchased Class B Units (the “Class B Unit Price”) shall be$28.05.  

 

Section 2.02                                Closing.  The execution and delivery of the BasicDocuments (other than this Agreement), delivery of certificates representingthe Purchased Units, payment by each Purchaser of the Purchase Price andexecution and delivery of all other instruments, agreements, and otherdocuments required by this Agreement (the “Closing”) shall take place ona date (the “Closing Date”) concurrent with the ScissorTail ClosingDate, but on or prior to September 30, 2005, *provided* that Copano shall have given each Purchaser ten (10) BusinessDays (or such shorter period as shall be agreeable to the Parties) priorwritten notice of such designated closing date, at the offices of Vinson &Elkins L.L.P., 1001 Fannin, Suite 2300, Houston, Texas 77002.

 

**ARTICLE III**REPRESENTATIONSAND WARRANTIES OF COPANO

 

Copanorepresents and warrants to the Purchasers, on and as of the date of thisAgreement and on and as of the Closing Date, as follows:

 

Section 3.01                                CorporateExistence.  Copano: (i) isa limited liability company duly organized, legally existing and in goodstanding under the laws of the State of Delaware; (ii) has all requisitelimited liability company power, and has all material governmental licenses,authorizations, consents and approvals, necessary to own its assets and carryon its business as its business is now being conducted as described in Copano’sAnnual Report on Form 10-K for the year ended December 31,2004, except where the failure to obtain such licenses, authorizations,consents and approvals would not reasonably be expected to have a CopanoMaterial Adverse Effect; and (iii) is qualified to do business in alljurisdictions in which the nature of the business

 

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conducted by it makes such qualifications necessary, except wherefailure so to qualify would not reasonably be expected to have a CopanoMaterial Adverse Effect. 

 

Section 3.02                                Capitalizationand Valid Issuance of Purchased Units.

 

(a)                                  Asof the date of this Agreement, the issued and outstanding membership interestsof Copano consist of 7,076,192Common Units and 3,519,126 Subordinated Units. All of the outstanding Common Units and Subordinated Units have beenduly authorized and validly issued in accordance with applicable Law and theLimited Liability Company Agreement and are fully paid (to the extent requiredunder the Limited Liability Company Agreement) and nonassessable (except assuch nonassessability may be affected by Section 18-607 of theDelaware Limited Liability Company Act (the “Delaware LLC Act”).

 

(b)                                 Otherthan Copano’s Long-Term Incentive Plan, Copano has no equity compensation plansthat contemplate the issuance of Common Units (or securities convertible intoor exchangeable for Common Units).  Noindebtedness having the right to vote (or convertible into or exchangeable forsecurities having the right to vote) on any matters on which Copano’sunitholders may vote are 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 LiabilityCompany Agreement, there are no outstanding or authorized (i) options,warrants, preemptive rights, subscriptions, calls, or other rights, convertiblesecurities, agreements, claims or commitments of any character obligatingCopano or any of its Subsidiaries to issue, transfer or sell any limitedliability company interests or other equity interest in, Copano or any of itsSubsidiaries or securities convertible into or exchangeable for such limitedliability company interests or equity interests, (ii) obligations of Copanoor any of its Subsidiaries to repurchase, redeem or otherwise acquire anylimited liability company interests or equity interests of Copano or any of itsSubsidiaries or any such securities or agreements listed in clause (i) ofthis sentence or (iii) voting trusts or similar agreements to which Copanoor any of its Subsidiaries is a party with respect to the voting of the equityinterests of Copano or any of its Subsidiaries. 

 

(c)                                  (i) Allof the issued and outstanding equity interests of each of Copano’s Subsidiariesare owned, directly or indirectly, by Copano free and clear of any Liens(except for such restrictions as may exist under applicable Law and except forsuch Liens as may be imposed under Copano’s or Copano’s Subsidiaries’ creditfacilities filed as exhibits to Copano’s SEC Documents), and all such ownershipinterests have been duly authorized, validly issued and are fully paid (to theextent required in the organizational documents of Copano’s Subsidiaries, asapplicable) and non-assessable (except as nonassessability may be affected by Section 6.07of the Texas Revised Uniform Limited Partnership Act,  Section 18-607 of the DelawareLimited Liability Company Act, Section 17-607 of the DelawareRevised Uniform Limited Partnership Act or the organizational documents ofCopano’s Subsidiaries, as applicable) and free of preemptive rights, with nopersonal liability attaching to the ownership thereof, and (ii) except asdisclosed in the Copano SEC Documents, neither Copano nor any of its Subsidiariesown any shares of capital stock or other securities of, or interest in, anyother Person, or are obligated to make any capital contribution to or otherinvestment in any other Person.

 

(d)                                 ThePurchased Units and the membership interests represented thereby, will be dulyauthorized by Copano pursuant to the Limited Liability Company Agreement prior

 

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to the Closing and, when issued and delivered to the Purchasers againstpayment therefor in accordance with the terms of this Agreement, will bevalidly issued, fully paid (to the extent required by applicable Law and theLimited Liability Company Agreement) and nonassessable (except as suchnonassessability may be affected by Section 18-607 of the Delaware LLCAct) and will be free of any and all Liens and restrictions on transfer, otherthan restrictions on transfer under the Limited Liability Company Agreement andunder applicable state and federal securities laws and other than such Liens asare created by the Purchasers.  

 

(e)                                  TheCommon Units issuable upon conversion of the Class B Units, and themembership interests represented thereby, upon issuance in accordance with theterms of the Class B Units as reflected in the Class B Amendment willbe duly authorized by Copano pursuant to the Limited Liability CompanyAgreement and, subject to receipt of the required unitholder approval, will bevalidly issued, fully paid (to the extent required by applicable Law and theLimited Liability Company Agreement) and nonassessable (except as suchnonassessability may be affected by Section 18-607 of the DelawareLLC Act) and will be free of any and all Liens and restrictions on transfer,other than restrictions on transfer under the Limited Liability CompanyAgreement and under applicable state and federal securities laws and other thansuch Liens as are created by the Purchasers. 

 

(f)                                    ThePurchased Common Units, and the Common Units underlying the Purchased Class BUnits, have been approved for quotation on The Nasdaq National Market, subjectto official notice of issuance.  Copano’scurrently outstanding Common Units are quoted on The Nasdaq National Market.

 

Section 3.03                                CopanoSEC Documents.  Copano hastimely filed with the Commission all forms, registration statements, reports,schedules and statements required to be filed by it under the Exchange Act orthe Securities Act (all such documents filed on or prior to the date of thisAgreement, collectively, the “Copano SEC Documents”).  The Copano SEC Documents, including, withoutlimitation, any audited or unaudited financial statements and any notes theretoor schedules included therein (the “Copano Financial Statements”), atthe time filed (in the case of registration statements, solely on the dates ofeffectiveness) (except to the extent corrected by a subsequently filed CopanoSEC Document filed prior to the date of this Agreement) (i) did notcontain any untrue statement of a material fact or omit to state a materialfact required to be stated therein or necessary in order to make the statementstherein, in light of the circumstances under which they were made, notmisleading, (ii) complied in all material respects with the applicablerequirements of the Exchange Act and the Securities Act, as the case may be, (iii) compliedas to form in all material respects with applicable accounting requirements andwith the published rules and regulations of the Commission with respectthereto, (iv) were prepared in accordance with GAAP applied on aconsistent basis during the periods involved (except as may be indicated in thenotes thereto or, in the case of unaudited statements, as permitted by Form 10-Qof the Commission), and (v) fairly present (subject in the case ofunaudited statements to normal, recurring and year-end audit adjustments) inall material respects the consolidated financial position and status of thebusiness of Copano as of the dates thereof and the consolidated results of itsoperations and cash flows for the periods then ended.  Deloitte & Touche LLP is anindependent registered public accounting firm with respect to Copano and hasnot resigned or been dismissed as independent registered public accountants of

 

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Copano as a result of or in connection with any disagreement withCopano on any matter of accounting principles or practices, financial statementdisclosure or auditing scope or procedures.

 

Section 3.04                                NoMaterial Adverse Change. Except as set forth in or contemplated by the Copano SEC Documents, andexcept for the proposed ScissorTail Acquisition, which has been disclosed to,and discussed with, each of the Purchasers, since December 31, 2004,Copano and its Subsidiaries have conducted their business in the ordinarycourse, consistent with past practice, and there has been no (i) changethat has had or would reasonably be expected to have a Copano Material AdverseEffect, other than those occurring as a result of general economic or financialconditions or other developments that are not unique to Copano and itsSubsidiaries but also affect other Persons who participate or are engaged inthe lines of business of which Copano and its Subsidiaries participate or areengaged, (ii) acquisition or disposition of any material asset by Copanoor any of its Subsidiaries or any contract or arrangement therefor, otherwisethan for fair value in the ordinary course of business or as disclosed in theCopano SEC Documents, (iii) material change in Copano’s accountingprinciples, practices or methods, or (iv) incurrence of materialindebtedness (other than the incurrence of such indebtedness as is contemplatedin connection with the ScissorTail Acquisition). 

 

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

 

Section 3.06                                NoBreach.  The execution,delivery and performance by Copano of the Basic Documents to which it is aparty, and the Acquisition Documents and all other agreements and instrumentsto be executed and delivered by Copano pursuant thereto or in connection withthe transactions contemplated by the Basic Documents and the AcquisitionDocuments, and compliance by Copano with the terms and provisions under suchagreements, 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 Copano orany of its Subsidiaries or any of their respective properties or assets, (b) conflictwith or result in a violation of any provision of the Certificate of Formationor the Limited Liability Company Agreement, or any organizational documents ofany of Copano’s Subsidiaries, (c) require any consent, approval or noticeunder or result in a violation or breach of or constitute (with or without duenotice or lapse of time or both) a default (or give rise to any right oftermination, cancellation or acceleration) under (i) any note, bond,mortgage, license, or loan or credit agreement to which Copano or any of itsSubsidiaries is a party or by which Copano or any of its Subsidiaries or any oftheir respective properties may be bound or (ii) any other agreement,instrument or obligation, or (d) result in or require the creation orimposition of any Lien upon or with respect to any of the properties now ownedor hereafter acquired by Copano or any of its Subsidiaries; with the exceptionof 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 withrespect to the foregoing provisions of this Section 3.06

 

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would not, individually or in the aggregate, reasonably be expected tohave a Copano Material Adverse Effect. 

 

Section 3.07                                Authority.  Copano has all necessary limited liabilitycompany power and authority to execute, deliver and perform its obligationsunder the Basic Documents to which it is a party and the Acquisition Documents,and to consummate the transactions contemplated thereby; and the execution,delivery and performance by Copano of the Basic Documents to which it is aparty and the Acquisition Documents, and the consummation of the transactionscontemplated thereby, have been duly authorized by all necessary action on itspart; and the Basic Documents and the Acquisition Documents constitute thelegal, valid and binding obligations of Copano, enforceable in accordance withtheir terms, except as such enforceability may be limited by bankruptcy,insolvency, fraudulent transfer and similar laws affecting creditors’ rightsgenerally or by general principles of equity. Except as contemplated by thisAgreement, no approval from the holders of the Common Units or SubordinatedUnits is required as a result of Copano’s issuance and sale of the PurchasedUnits. 

 

Section 3.08                                Approvals.  Except for the approvals required by theCommission in connection with Copano’s obligations under the RegistrationRights Agreement and the Registration Statement and the filing and waitingperiod requirements of the HSR Act relating to the ScissorTail Acquisition, noauthorization, consent, approval, waiver, license, qualification or writtenexemption from, nor any filing, declaration, qualification or registrationwith, any Governmental Authority or any other Person is required in connectionwith the execution, delivery or performance by Copano of any of the BasicDocuments to which it is a party and the ScissorTail Purchase Agreement, exceptwhere 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 theaggregate, reasonably be expected to have a Copano Material Adverse Effect.

 

Section 3.09                                MLPStatus.  Copano has, for eachtaxable year beginning after December 31, 2003, during which Copano was inexistence, met the gross income requirements of Section 7704(c)(2) ofthe Internal Revenue Code of 1986, as amended.

 

Section 3.10                                InvestmentCompany Status.  Copano is notan “investment company” within the meaning of the Investment Company Act of1940, as amended.

 

Section 3.11                                Offering.  Assuming the accuracy of the representationsand warranties of the Purchasers contained in this Agreement, the sale andissuance of the Purchased Units pursuant to this Agreement is exempt from theregistration requirements of the Securities Act, and neither Copano nor anyauthorized agent acting on its behalf has taken or will take any actionhereafter that would cause the loss of such exemptions.

 

Section 3.12                                CertainFees.  No fees or commissionswill be payable by Copano to brokers, finders, or investment bankers withrespect to the sale of any of the Purchased Units or the consummation of thetransaction contemplated by this Agreement. Copano agrees that it will indemnify and hold harmless each of thePurchasers from and against any and all claims, demands, or liabilities forbroker’s, finder’s, placement, or other similar fees or commissions

 

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incurred by Copano or alleged to have been incurred by Copano inconnection with the sale of Purchased Units or the consummation of thetransactions contemplated by this Agreement.

 

Section 3.13                                NoSide Agreements.  There are noother agreements by, among or between Copano or its Affiliates, on the onehand, and any of the Purchasers or their Affiliates, on the other hand, withrespect to the transactions contemplated hereby nor promises or inducements forfuture transactions between or among any of such parties.

 

Section 3.14                                AcquisitionDocuments.  Copano has,contemporaneously with entering into this Agreement, entered into theUnitholder Voting Agreement and the Acquisition Documents in the forms attachedhereto as Exhibits F, G and H.

 

Section 3.15                                Class BUnit Vote.  The majority of the totalvotes cast of the holders of Common Units (with the exception of the PurchasedCommon Units which are not entitled to vote according to the rules of TheNasdaq National Market) and Subordinated Units (voting together as one class)is the only approval required to approve the conversion of Class B Unitsinto Common Units.  As of the date ofthis Agreement and based on Copano’s records, the Persons listed on Schedule 3.15to this Agreement are the beneficial owners of the Common Units andSubordinated Units set forth opposite such Person’s name on Schedule 3.15to this Agreement.

 

**ARTICLE IV**REPRESENTATIONSAND WARRANTIES OF EACH PURCHASER

 

Each Purchaser, severallyand not jointly, represents and warrants to Copano with respect to itself, onand as of the date of this Agreement and on and as of the Closing Date, asfollows:

 

Section 4.01                                CorporateExistence.  Each Purchaser (i) isduly organized, validly existing and in good standing under the laws of itsrespective jurisdiction of organization and (ii) has all requisite power,and has all material governmental licenses, authorizations, consents andapprovals necessary to own its assets and carry on its business as its businessis now being conducted, except where the failure to obtain such licenses,authorizations, consents and approvals would not have or would not reasonablybe expected to have a Purchaser Material Adverse Effect. 

 

Section 4.02                                NoConflicts.  The execution,delivery and performance by such Purchaser of this Agreement, the BasicDocuments and all other agreements and instruments to be executed and deliveredby such Purchaser pursuant hereto or thereto or in connection herewith ortherewith, compliance by such Purchaser with the terms and provisions hereofand thereof, and the purchase of the Purchased Units by such Purchaser do notand will not (a) violate any provision of any law, statute, rule orregulation, order, writ, judgment, injunction, decree, governmental permit,determination or award having applicability to such Purchaser or any of itsproperties or assets, (b) conflict with or result in a violation of anyprovision of the organizational documents of such Purchaser, or (c) requireany consent (other than standard internal consents), approval or notice underor result in a violation or breach of or constitute (with or without due noticeor 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 suchPurchaser or any of its

 

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properties may be bound or (ii) any other such agreement,instrument or obligation; with the exception of the conflicts stated inclause (b) of this Section 4.02, except where such conflict,violation, default, breach, termination, cancellation, failure to receiveconsent or approval, or acceleration with respect to the foregoing provisionsof 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.  Each Purchaser represents and warrants to,and covenants and agrees with, Copano that the Purchased Units are beingacquired for its own account, not as a nominee or agent, and with no presentintention of distributing the Purchased Units or any part thereof, and thatsuch Purchaser has no present intention of selling or granting anyparticipation in or otherwise distributing the same in any transaction inviolation 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 orotherwise dispose of all or any part of the Purchased Units under aregistration statement under the Securities Act and applicable state securitieslaws or under an exemption from such registration available thereunder(including, without limitation, if available, Rule 144 promulgatedthereunder). If such Purchaser should in the future decide to dispose of any ofthe Purchased Units, such Purchaser understands and agrees (a) that it maydo so only (i) in compliance with the Securities Act and applicable statesecurities law, as then in effect, or (ii) in the manner contemplated byany registration statement pursuant to which such securities are being offered,and (b) that stop-transfer instructions to that effect will be in effectwith respect to such securities. 

 

Section 4.04                                Natureof Purchaser.  Each Purchaserrepresents and warrants to, and covenants and agrees with, Copano that, (a) itis an “accredited investor” within the meaning of Rule 501 ofRegulation D promulgated by the Securities and Exchange Commissionpursuant to the Securities Act and (b) by reason of its business andfinancial experience it has such knowledge, sophistication and experience inbusiness and financial matters so as to be capable of evaluating the merits andrisks of the prospective investment in the Purchased Units, is able to bear theeconomic risk of such investment and, at the present time, would be able toafford a complete loss of such investment. 

 

Section 4.05                                Receiptof Information; Authorization. Each Purchaser acknowledges that it has (i) had access to Copano’sSEC Documents, (ii) had access to information regarding the proposedScissorTail Acquisition and its potential effect on Copano’s operations andfinancial results and (c) has been provided a reasonable opportunity toask questions of and receive answers from Representatives of Copano regardingsuch matters.

 

Section 4.06                                RestrictedSecurities.  Each Purchaserunderstands that the Purchased Units it is purchasing are characterized as “restrictedsecurities” under the federal securities laws inasmuch as they are beingacquired from Copano in a transaction not involving a public offering and thatunder such laws and applicable regulations such securities may be resoldwithout registration under the Securities Act only in certain limitedcircumstances. In this connection, Purchaser represents that it isknowledgeable with respect to Rule 144 of the Commission promulgated underthe Securities Act. 

 

Section 4.07                                CertainFees.  No fees or commissionswill be payable by such Purchaser to brokers, finders, or investment bankerswith respect to the sale of any of the Purchased Units

 

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or the consummation of the transaction contemplated by thisAgreement.  Purchaser agrees that it willindemnify and hold harmless Copano from and against any and all claims,demands, or liabilities for broker’s, finder’s, placement, or other similarfees or commissions incurred by such Purchaser or alleged to have been incurredby such Purchaser in connection with the sale of Purchased Units or theconsummation of the transactions contemplated by this Agreement.

 

Section 4.08                                Legend.  It is understood that the certificatesevidencing the Purchased Units may bear the following legend:  “These securities have not been registeredunder the Securities Act of 1933, as amended. They may not be sold, offered for sale, pledged or hypothecated in theabsence of a registration statement in effect with respect to the securitiesunder such Act or an opinion of counsel satisfactory to the Company that suchregistration is not required or unless sold pursuant to Rule 144 of suchAct.”

 

**ARTICLE VCOVENANTS**

 

Section 5.01                                ShareholderVote With Respect to Conversion. 

 

(a)                                  Copanoshall, in accordance with applicable Law and its Limited Liability CompanyAgreement, take all action necessary to convene a meeting of****its Unitholders to consider and vote uponthe conversion of the Class B Units into Common Units as soon aspracticable, but in any event not later than 180 days from the Closing Date.  Subject to fiduciaryduties under applicable Law, the Board of Directors of Copano shall, inconnection with such meeting, recommend approval of the conversion of the Class BUnits into Common Units and shall take all other lawful action to solicit theapproval of the conversion of the Class B Units into Common Units by theUnitholders, except that Copano may, but shall not be required to, hire anyproxy solicitation firm in connection with such meeting.  

 

(b)                                 Ifthe conversion of the Class B Units into Common Units is not approved bythe Unitholders at the meeting contemplated by clause (a), upon written noticefrom the Purchasers holding a majority of the Class B Units, Copano shallbe obligated to convene another meeting of its Unitholders on the terms setforth in clause (a) (except that such meeting shall take place no laterthan Copano’s next scheduled annual meeting of Copano’s Unitholders), and theBoard of Directors shall again be obligated to take the actions set forth inclause (a) with respect to such meeting. If the approval of its Unitholders is not obtained at this secondmeeting of Unitholders, then Copano shall be obligated to include theconversion of Class B Units into Common Units as a proposal to be votedupon at no more than two subsequent annual meetings of its Unitholders, and itsBoard of Directors shall remain obligated to take the actions set forth inclause (a) with respect to each such meeting.

 

Section 5.02                                SecondQuarter Distribution. If the Closing is after the record date of the distribution toUnitholders with respect to the quarter ended June 30, 2005 (the “SecondQuarter Distribution”), Copano and its Board of Directors shall, on thelater of its normal payment date (on or about August 15, 2005) and theClosing, take all action necessary to provide that the Purchasers receive suchdistribution or a cash payment equal to the same as would otherwise be payablein respect of each Purchased Unit if the holders thereof were record holders onthe record date for the Second Quarter Distribution.

 

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Section 5.03                                SubsequentPublic Offerings.  Without the written consent of theholders of a majority of the Purchased Units, from the date of this Agreement until the Lock-Up Date, Copanoshall not, and shall cause its Subsidiaries not to, grant, issue or sell anymembership interests or other equity securities, any securities convertibleinto or exchangeable for any membership interests or other equity securities,or take any other action that may result in the issuance of any of theforegoing, other than (i) options to purchase Common Units or SubordinatedUnits granted pursuant to compensation, benefit, severance or similar plans oremployment agreements of Copano as in effect on the date of this Agreement, (ii) theissuance or sale of Common Units at a price no less than $33.78 and (iii) theissuance or sale of up to 3.0 million Common Units, provided such Common Unitsare issued or sold in a registered public offering or private offering tofinance the ScissorTail Acquisition. Notwithstanding the foregoing, Copano shall not, and shall cause itsSubsidiaries not to, sell, offer for sale or solicit offers to buy any security(as defined in the Securities Act) that would be integrated with the sale ofthe Purchased Units in a manner that would require the registration under theSecurities Act of the sale of the Purchased Units to the Purchasers.

 

Section 5.04                                VoteFor Conversion of Class B Units.  At any meeting (including adjournments orpostponements thereof) of Copano’s Unitholders held to consider approval of theconversion of the Class B Units into Common Units (including the specialmeeting of Unitholders contemplated by Section 5.01 above), each of thePurchasers agrees to vote all of its Common Units and Subordinated Units, withthe exception of the Purchased Common Units which are not entitled to voteaccording to the rules of The Nasdaq National Market, in favor of theconversion of the Class B Units into Common Units. 

 

Section 5.05                                PurchaserLock-Up.  Each Purchaseragrees that from and after the Closing it will not sell any of the PurchasedUnits prior to the Lock-Up Date.

 

Section 5.06                                Takingof Necessary Action.  Each of theparties hereto shall use its commercially reasonable efforts promptly to takeor cause to be taken all action and promptly to do or cause to be done allthings necessary, proper or advisable under applicable Law and regulations toconsummate and make effective the transactions contemplated by thisAgreement.  Without limiting theforegoing, Copano and each Purchaser will, and Copano shall cause each of itsSubsidiaries to, use its commercially reasonable efforts to make all filings(including, without limitation and if applicable, under the HSR Act) and obtainall consents of Governmental Authorities which may be necessary or, in thereasonable opinion of the Purchasers or Copano, as the case may be, advisablefor the consummation of the transactions contemplated by this Agreement and theBasic Documents.

 

Section 5.07                                Non-Disclosure;Interim Public Filings.  Copano shallnot disclose the name or identity of any of the Purchasers as a Purchaserwithout the prior written consent of such Purchaser, except in connection withCopano’s filing of a Form 8-K under the Exchange Act, as a result ofthis Agreement, the other Basic Documents or the Acquisition Documents or thetransactions contemplated hereby and thereby, or other similarly requiredExchange Act reports, or as required by applicable Law or the rules orregulations of The Nasdaq National Market or other exchange on which securitiesof Copano are listed or traded;*provided,however*, that, in the event that any such required disclosurecontains specific information about a Purchaser other than its identity andownership interest and the type of Copano’s securities owned by it, Copano

 

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shall, priorto making such disclosure, provide such Purchaser with a draft of such disclosureand permit such Purchaser reasonable opportunity (in light of thecircumstances) to review and comment on such disclosure and consider in goodfaith (but not be required to accept) any comments proposed by such Purchaser..

 

**ARTICLE VICLOSINGCONDITIONS**

 

Section 6.01                                Conditionsto the Closing.  

 

(a)                                  MutualConditions.  The respectiveobligation of each Party to consummate the purchase and issuance and sale ofthe Purchased Units shall be subject to the satisfaction on or prior to theClosing Date of each of the following conditions (any or all of which may bewaived by a particular Party on behalf of itself in writing, in whole or inpart, to the extent permitted by applicable Law):  

 

(i)                                     nostatute, rule, order, decree or regulation shall have been enacted orpromulgated, and no action shall have been taken, by any Governmental Authorityof competent jurisdiction which temporarily, preliminarily or permanentlyrestrains, precludes, enjoins or otherwise prohibits the consummation of thetransactions contemplated by this Agreement or makes the transactions contemplated by this Agreement  illegal;

 

(ii)                                  thereshall not be pending any suit, action or proceeding by any GovernmentalAuthority seeking to restrain, preclude, enjoin or prohibit the transactionscontemplated by this Agreement; and

 

(iii)                               Copanoshall have consummated the ScissorTail Acquisition substantially on the termsset forth in the ScissorTail Purchase Agreement executed on the date hereof.

 

(b)                                 EachPurchaser’s Conditions.  The respectiveobligation of each Purchaser to consummate the purchase of its Purchased Unitsshall be subject to the satisfaction on or prior to the Closing Date of each ofthe following conditions (any or all of which may be waived by a particularPurchaser on behalf of itself in writing, in whole or in part, to the extentpermitted by applicable Law):

 

(i)                                     Copanoshall have performed and complied with the covenants and agreements containedin this Agreement that are required to be performed and complied with by Copanoon or prior to the Closing Date;

 

(ii)                                  therepresentations and warranties of Copano contained in this Agreement that arequalified by materiality or Copano Material Adverse Effect shall be true andcorrect when made and as of the Closing Date and all other representations andwarranties shall be true and correct in all material respects when made and asof the Closing Date, in each case as though made at and as of

 

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the ClosingDate (except that representations made as of a specific date shall be requiredto be true and correct as of such date only);

 

(iii)                               sincethe date of this Agreement, no Copano Material Adverse Effect shall haveoccurred and be continuing;

 

(iv)                              Copanoshall have adopted the Class B Amendment in all material respects in theform attached as Exhibit A to this Agreement;

 

(v)                                 Copanoshall have delivered, or caused to be delivered, to the Purchasers at theClosing, Copano’s closing deliveries described in Section 6.02 of thisAgreement; and

 

(vi)                              theUnitholder Voting Agreement shall be in full force and effect.

 

(c)                                  Copano’sConditions.   The obligation ofCopano to consummate the sale of the Purchased Units to each of the Purchasersshall be subject to the satisfaction on or prior to the Closing Date of thefollowing conditions with respect to each Purchaser individually and not thePurchasers jointly (which may be waived by Copano in writing, in whole or inpart, to the extent permitted by applicable Law) 

 

(i)                                     eachPurchaser shall have performed and complied with the covenants and agreementscontained in this Agreement that are required to be performed and complied withby that Purchaser on or prior to the Closing Date;

 

(ii)                                  therepresentations and warranties of each Purchaser contained in this Agreementthat are qualified by materiality or Purchaser Material Adverse Effect shall betrue and correct when made and as of the Closing Date and all otherrepresentations and warranties shall be true and correct in all materialrespects when made and as of the Closing Date, in each case as though made atand as of the Closing Date  (except thatrepresentations made as of a specific date shall be required to be true andcorrect as of such date only);

 

(iii)                               sincethe date of this Agreement, no Purchaser Material Adverse Effect shall haveoccurred and be continuing; and

 

(iv)                              eachPurchaser shall have delivered, or caused to be delivered, to Copano at theClosing, such Purchaser’s closing deliveries described in Section 6.03of this Agreement.

 

Section 6.02                                CopanoDeliveries. At the Closing, subject to the terms andconditions of this Agreement, Copano will deliver, or cause to be delivered, toeach Purchaser: 

 

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

 

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(b)                                 TheOfficer’s Certificate substantially in the form attached to this Agreement as Exhibit B.

 

(c)                                  Anopinion addressed to the Purchasers from legal counsel to Copano, dated theClosing Date, in the form substantially similar in substance to the form ofopinion attached to this Agreement as Exhibit C; and 

 

(d)                                 TheRegistration Rights Agreement in substantially the form attached to thisAgreement as Exhibit D, which shall have been executed by Copano.

 

Section 6.03                                PurchaserDeliveries.  At theClosing, subject to the terms and conditions of this Agreement, the Purchaserswill deliver, or cause to be delivered, to Copano:

 

(a)                                  Paymentto Copano of the Purchase Price by wire transfer(s) of immediately availablefunds to an account designated by Copano in writing at least two (2) BusinessDays (or such shorter period as shall be agreeable to all parties hereto) priorto the Closing;

 

(b)                                 TheRegistration Rights Agreement in substantially the form attached to thisAgreement as Exhibit D, which shall have been duly executed by eachPurchaser; and

 

(c)                                  TheOfficer’s Certificate substantially in the form attached to this Agreement as Exhibit E.

 

**ARTICLE VIIINDEMNIFICATION, COSTS AND EXPENSES**

 

Section 7.01                                Indemnificationby Copano.  Copano agrees toindemnify each Purchaser and its officers, directors, employees, advisors andagents (collectively, “Purchaser Related Parties”) from, and hold eachof them harmless against any and all actions, suits, proceedings (including anyinvestigations, litigation or inquiries), demands, causes of action, costs,losses, liabilities, damages, or expenses of any kind or nature whatsoever,including, without limitation, the reasonable fees and disbursements of counseland all other reasonable expenses incurred in connection with investigating,defending or preparing to defend any such matter that may be incurred by themor asserted against or involve any of them as a result of, arising out of, orin any way related to (i) any actual or proposed use by Copano of theproceeds of any sale of the Purchased Units or (ii) the breach of any ofthe representations, warranties or covenants of Copano contained herein, *provided* such claim for indemnificationrelating to a breach of a representation or warranty is made prior to theexpiration of such representation or warranty.

 

Section 7.02                                Indemnificationby Purchasers.  Each Purchaseragrees, severally and not jointly, to indemnify Copano and its Representatives(collectively, “Copano Related Parties”) from, and hold each of themharmless against, any and all actions, suits, proceedings (including anyinvestigations, litigation, or inquiries), demands, causes of action, costs,losses, liabilities, damages, or expenses of any kind or nature whatsoever,including, without limitation, the reasonable fees and disbursements of counseland all other reasonable expenses incurred in connection with investigating,defending or preparing to defend any such matter that may be 

 

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incurred by them or asserted against or involve any of them as a resultof, arising out of, or in any way related to the breach of any of therepresentations, warranties or covenants of such Purchaser contained herein, *provided* such claim for indemnificationrelating to a breach of the representations and warranties is made prior to theexpiration of such representations and warranties.

 

Section 7.03                                IndemnificationProcedure.  Promptly after anyCopano Related Party or Purchaser Related Party (hereinafter, the “IndemnifiedParty”) has received notice of any indemnifiable claim hereunder, or thecommencement of any action or proceeding by a third person, which theIndemnified Party believes in good faith is an indemnifiable claim under thisAgreement, the Indemnified Party shall give the indemnitor hereunder (the “IndemnifyingParty”) written notice of such claim or the commencement of such action orproceeding, but failure to so notify the Indemnifying Party will not relievethe Indemnifying Party from any liability it may have to such Indemnified Partyhereunder except to the extent that the Indemnifying Party is materiallyprejudiced by such failure. Such notice shall state the nature and the basis ofsuch claim to the extent then known.  TheIndemnifying Party shall have the right to defend and settle, at its ownexpense and by its own counsel, any such matter as long as the IndemnifyingParty pursues the same diligently and in good faith. If the Indemnifying Partyundertakes to defend or settle, it shall promptly notify the Indemnified Partyof its intention to do so, and the Indemnified Party shall cooperate with theIndemnifying Party and its counsel in all commercially reasonable respects inthe 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 Partyand in the Indemnified Party’s possession or control.  Such cooperation of the Indemnified Partyshall be at the cost of the Indemnifying Party. After the Indemnifying Party has notified the Indemnified Party of itsintention to undertake to defend or settle any such asserted liability, and forso long as the Indemnifying Party diligently pursues such defense, theIndemnifying Party shall not be liable for any additional legal expensesincurred by the Indemnified Party in connection with any defense or settlementof such asserted liability; *provided,however*, that the Indemnified Party shall be entitled (i) atits expense, to participate in the defense of such asserted liability and thenegotiations of the settlement thereof and (ii) if (A) theIndemnifying Party has failed to assume the defense and employ counsel or (B) ifthe defendants in any such action include both the Indemnified Party and theIndemnifying Party and counsel to the Indemnified Party shall have concludedthat there may be reasonable defenses available to the Indemnified Party thatare different from or in addition to those available to the Indemnifying Partyor if the interests of the Indemnified Party reasonably may be deemed toconflict with the interests of the Indemnifying Party, then the IndemnifiedParty shall have the right to select a separate counsel and to assume suchlegal defense and otherwise to participate in the defense of such action, withthe expenses and fees of such separate counsel and other expenses related tosuch participation to be reimbursed by the Indemnifying Party as incurred.  Notwithstanding any other provision of thisAgreement, the Indemnifying Party shall not settle any indemnified claimwithout the consent of the Indemnified Party, unless the settlement thereofimposes no liability or obligation on, involves no admission of wrongdoing ormalfeasance by, and includes a complete release from liability of, theIndemnified Party.

 

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**ARTICLE VIII**MISCELLANEOUS

 

Section 8.01                                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, andotherwise modified from time to time, unless otherwise specified. The word “including”shall mean “including but not limited to.” Whenever Copano has an obligationunder the Basic Documents, the expense of complying with that obligation shallbe an expense of Copano unless otherwise specified. Whenever any determination,consent, or approval is to be made or given by a Purchaser, such action shallbe in such Purchaser’s sole discretion unless otherwise specified in thisAgreement. If any provision in the Basic Documents is held to be illegal,invalid, not binding, or unenforceable, such provision shall be fully severableand the Basic Documents shall be construed and enforced as if such illegal,invalid, not binding, or unenforceable provision had never comprised a part ofthe Basic Documents, and the remaining provisions shall remain in full forceand effect. The Basic Documents have been reviewed and negotiated bysophisticated parties with access to legal counsel and shall not be construedagainst the drafter. 

 

Section 8.02                                Survivalof Provisions.  Therepresentations and warranties set forth in Sections 3.02, 3.04, 3.12, 3.13,4.03, 4.04, 4.05, 4.06, 4.07, 4.08 and 4.09 of this Agreement shall survive theexecution and delivery of this Agreement indefinitely, and the otherrepresentations and warranties set forth in this Agreement shall survive for aperiod of twelve (12) months following the Closing Date regardless of anyinvestigation made by or on behalf of Copano or any Purchaser.  The covenants made in this Agreement or anyother Basic Document shall survive the closing of the transactions describedherein and remain operative and in full force and effect regardless ofacceptance of any of the Purchased Units and payment therefor and repayment,conversion, exercise or repurchase thereof. All indemnification obligations ofCopano and the Purchasers the provisions of Article VII shall remainoperative and in full force and effect unless such obligations are expresslyterminated in a writing by the Parties referencing that individual Section,regardless of any purported general termination of this Agreement. 

 

Section 8.03                                NoWaiver; Modifications in Writing.

 

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

 

(b)                                 SpecificWaiver. Except as otherwise provided herein, no amendment, waiver, consent,modification, or termination of any provision of this Agreement or any otherBasic Document shall be effective unless signed by each of the originalsignatories hereto or thereto affected by such amendment, waiver, consent,modification, or termination. Any amendment, supplement or modification of orto any provision of this Agreement or any other Basic Document, any waiver ofany provision of this Agreement or any other Basic Document, and any consent toany departure by Copano from the terms of any provision of this Agreement

 

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or any other Basic Document shall be effective only in the specificinstance and for the specific purpose for which made or given. Except wherenotice is specifically required by this Agreement, no notice to or demand onCopano in any case shall entitle Copano to any other or further notice ordemand in similar or other circumstances. 

 

Section 8.04                                BindingEffect; Assignment.

 

(a)                                  BindingEffect. This Agreement shall be binding upon Copano, each Purchaser, andtheir respective successors and permitted assigns. Except as expressly providedin this Agreement, this Agreement shall not be construed so as to confer anyright or benefit upon any Person other than the parties to this Agreement andas provided in Article VII, and their respective successors and permittedassigns. 

 

(b)                                 Assignmentof Purchased Units. All or any portion of a Purchaser’s Purchased Unitspurchased pursuant to this Agreement may be sold, assigned or pledged bysuch  Purchaser, subject to compliancewith applicable securities laws, Section 5.02 of this Agreement and theRegistration Rights Agreement. 

 

(c)                                  Assignmentof Rights. All or any portion of the rights and obligations of eachPurchaser under this Agreement may be transferred to any Affiliate of suchPurchaser but may not otherwise be transferred by such Purchaser without theprior written consent of Copano. 

 

Section 8.05                                Aggregationof Purchased Units.  AllPurchased Units held or acquired by Persons who are Affiliates of one anothershall be aggregated together for the purpose of determining the availability ofany rights under this Agreement.

 

Section 8.06                                Confidentialityand Non-Disclosure. Notwithstanding anything herein to the contrary,each Purchaser that has executed a Confidentiality Agreement in favor of Copanoshall continue to be bound by such Confidentiality Agreement.  Each Purchaser that has not executed aConfidentiality Agreement in favor of Copano will refrain for a period of 18months after the date hereof, and will use reasonable best efforts to cause itsRepresentatives to refrain, from disclosing to any other Person anyConfidential Information, except to the extent compelled by Law or the rules,regulations or orders of any securities exchange or self-regulatory authority.

 

Section 8.07                                Communications.  All notices and demands provided forhereunder shall be in writing and shall be given by registered or certifiedmail, return receipt requested, telecopy, air courier guaranteeing overnightdelivery or personal delivery to the following addresses: 

 

(a)                                  Ifto KAMIC:

 

Kayne Anderson MLP Investment Company

1800 Avenue of the Stars, 2nd Floor

Los Angeles, California 90067

Attention: David Shladovsky, Esq.

Facsimile: (310) 284-6490

 

21

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with a copy to: 

 

1100 Louisiana, Suite 4550

Houston, Texas 77002

Attention: Kevin McCarthy

Facsimile: (713) 655-7355

 

Baker Botts L.L.P.

One Shell Plaza

910 Louisiana

Houston, Texas 77002

Attention: Joshua Davidson, Esq.

Facsimile: (713) 229-2727

 

(b)                                 Ifto the RCH Entities:

 

RR Advisors, LLC

2100 McKinney Ave, Suite 700

Dallas, TX 75201

Attention:  Robert Raymond

Facsimile:  (214) 661-8044 

 

with a copy to: 

 

Baker Botts L.L.P.

98 San Jacinto Blvd.

1500 San Jacinto Center

Austin, Texas  78701

Attention:  Joshua Davidson

Facsimile:  (713) 229-2727

 

(c)                                  Ifto the Tortoise Entities:

 

Tortoise EnergyInfrastructure Corporation

10801 Mastin, Suite 222

Overland Park, KS  66210

Attention:  David Schulte

Facsimile:  (913) 345-2763

 

with a copy to:

 

Blackwell Sanders PeperMartin LLP

2300 Main Street, Suite 1000

Kansas City, MO 64108

Attention: Steven F.Carman

Facsimile: (816) 983-8080

 

22

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(d)                                 Ifto EIGF or FCMOF:

 

c/o Fiduciary AssetManagement

8112 Maryland Avenue, Suite 400

St. Louis, MO 63105

Attention: Jim Cunnane

Facsimile:  (314) 863-4360

 

with a copy to:

 

Andrews Kurth L.L.P.

600 Travis, Suite 4200

Houston, Texas 77002

Attention:  Bill Cooper

Facsimile: (713) 238-7127

 

(e)                                  Ifto Goldman, Sachs & Co.:

 

Goldman, Sachs &Co.

Principal StrategiesGroup

One New York Plaza

47th Floor

New York, New York 10004

Attention:  Gaurav Bhandari 

Facsimile:  (212) 346-3124

 

with a copy to:

 

Fried Frank HarrisShriver & Jacobson LLP

One New York Plaza

New York, New York 10004

Attention:  David Shine, Esq.

Facsimile:  (212) 859-8586

 

(f)                                    Ifto AOP or ACP:

 

 

 

 

Attention:  

Facsimile:

 

23

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with a copy to:

 

 

 

Attention:  

Facsimile:

 

(g)                                 Ifto SH, SA or SFF:

 

Strome InvestmentManagement, LP

100 Wilshire Blvd. #1500

Santa Monica, CA  90401

Attention:  Casey J. Borman, Esq.

Facsimile:  (310) 752-1483

 

with a copy to:

 

 

 

 

Attention:  

Facsimile:

 

(h)                                 Ifto Copano: 

 

Copano Energy,L.L.C.2727 Allen Parkway, Suite 1200Houston, Texas 77019Attention: Douglas L. Lawing, Esq.Facsimile: (713) 621-9545

 

with a copyto:

 

Vinson &Elkins L.L.P.2300 First City Tower1001 Fannin StreetHouston, Texas 77002Attention: David Oelman, Esq.Facsimile: (713) 615-5861

 

or to such other address asCopano or such Purchaser may designate in writing. All notices andcommunications shall be deemed to have been duly given: at the time deliveredby hand, if personally delivered; upon actual receipt if sent by certifiedmail, return receipt requested, or regular mail, if mailed; when receiptacknowledged, if sent via facsimile; and upon actual receipt when delivered toan air courier guaranteeing overnight delivery. 

 

24

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Section 8.08                                Removalof Legend.  Copano shallremove the legend described in Section 4.08 of this Agreement from thecertificates evidencing the Purchased Units at the request of a Purchasersubmitting to Copano such certificates, together with an opinion of counsel tothe effect that such legend is no longer required under the Securities Act orapplicable state securities laws, as the case may be, unless Copano, with theadvice of counsel, determines that such removal is inappropriate.

 

Section 8.09                                EntireAgreement.  This Agreement isintended by the parties as a final expression of their agreement and intendedto be a complete and exclusive statement of the agreement and understanding ofthe parties hereto in respect of the subject matter contained herein. There areno restrictions, promises, warranties or undertakings, other than those setforth or referred to herein with respect to the rights granted by Copano or aPurchaser set forth herein. This Agreement supersedes all prior agreements andunderstandings between the parties with respect to such subject matter. 

 

Section 8.10                                GoverningLaw.  This Agreement will beconstrued in accordance with and governed by the laws of the State of Delawarewithout regard to principles of conflicts of laws. 

 

Section 8.11                                Executionin Counterparts.  ThisAgreement may be executed in any number of counterparts and by differentparties hereto in separate counterparts, each of which counterparts, when soexecuted and delivered, shall be deemed to be an original and all of whichcounterparts, taken together, shall constitute but one and the same Agreement. 

 

Section 8.12                                Termination.

 

(a)                                  Notwithstandinganything herein to the contrary, this Agreement may be terminated on or anytime prior to the Closing:

 

(i)                                     bythe mutual written consent of the Purchasers entitled to purchase a majority ofthe Purchased Units based on their Commitment Amounts and Copano; or

 

(ii)                                  bythe written consent of the Purchasers entitled to purchase a majority of thePurchased Units based on their Commitment Amounts or by Copano, (i) if anyrepresentation or warranty of the other party set forth in this Agreement shallbe untrue in any material respect when made, or (ii) upon a breach in anymaterial respect of any covenant or agreement on the part of the other setforth in this Agreement (either (i) or (ii) above being a “TerminatingBreach”); *provided, that,*eachTerminating Breach would cause the conditions to the non-terminating party’sobligations not to be satisfied and such Terminating Breach is not cured within20 days after written notice from the non-breaching party; or

 

(iii)                               byPurchasers entitled to purchase not less than two-thirds of the PurchasedCommon Units if (A) Bank of America, N.A. and Banc of America SecuritiesLLC or Banc of America Bridge LLC (collectively “Bank of America”) fails to provide financing toCopano pursuant to the Commitment Letter dated June 17, 2005 between Bankof America and Copano Energy, L.L.C. and (B) Copano is unable to obtainreplacement financing on substantially similar terms on or before September 30,2005.

 

25

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(b)                                 Notwithstandinganything herein to the contrary, this Agreement shall automatically terminateon or any time prior to the Closing:

 

(i)                                     ifthe Closing shall not have occurred on or before September 30, 2005;

 

(ii)                                  ifthe ScissorTail Purchase Agreement shall have been terminated pursuant to itsterms; or

 

(iii)                               ifa statute, rule, order, decree or regulation shall have been enacted orpromulgated, or if any action shall have been taken by any GovernmentalAuthority of competent jurisdiction which permanently restrains, precludes,enjoins or otherwise prohibits the consummation of the transactionscontemplated by this Agreement or makes the transactions contemplated by thisAgreement illegal.

 

(c)                                  Inthe event of the termination of this Agreement as provided in Section 8.12(a),this Agreement shall forthwith become null and void.  In the event of such termination, there shallbe no liability on the part of any party hereto, except as set forth in Article VIIof this Agreement and except with respect to the requirement to comply with anyconfidentiality agreement in favor of Copano; *provided*that nothing herein shall relieve any party from any liability or obligationwith respect to any willful breach of this Agreement.

 

Section 8.13                                Expenses.  Copano hereby covenants and agrees toreimburse KAMIC, as lead purchaser, for reasonable and documented costs andexpenses incurred in connection with the negotiation, execution, delivery andperformance of the Basic Documents and the transactions contemplated hereby andthereby (including the reasonable expenses of Baker Botts L.L.P.), *provided* that such expenses do not exceed$50,000 and that any request for such expense reimbursement by the Purchasersbe accompanied by a detailed invoice for such amount and that the Agreement isnot terminated by the Purchasers other than as a result of a breach of arepresentation, warranty or covenant by Copano or by mutual consent of theParties.  If any action at law or equityis necessary to enforce or interpret the terms of the Basic Documents, theprevailing party shall be entitled to reasonable attorney’s fees, costs andnecessary disbursements in addition to any other relief to which such party maybe entitled.

 

[The remainder of this page isintentionally left blank.]

 

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IN WITNESS WHEREOF, theparties hereto execute this Agreement, effective as of the date first abovewritten. 

 
| ** ** | **KAYNE ANDERSON MLP INVESTMENT  COMPANY** |
|------------|--------------------------------------------|
| ** ** | ** **                                 |
| ** ** | ** **                                 |
|       | By:                                        |   |   |
|       |                                       | Kevin  McCarthy |
|       |                                       | Chief  Executive Officer and President |

 

 

Signature Page to Class BUnit andCommon Unit Purchase Agreement

 

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| ** ** | **RCH ENERGY MLP FUND LP**   |
|------------|------------------------------|
| ** ** | ** **                   | ** ** |
|       | By:                          | RCH Energy  MLP Fund GP, LP, its general partner |
|       |                         |   |
|       |                         | By: RR  Advisors, LLC, its general partner |
|       |                         |   |
|       |                         |   |
|       |                         | By: |   |   |
|       |                         |   |   Robert  Raymond, its sole member |
|       |                         |   |
|       |                         |   |
| ** ** | **RCH ENERGY MLP FUND-A LP** |
| ** ** | ** **                   | ** ** |
|       | By:                          | RCH Energy  MLP Fund GP, LP, its general partner |
|       |                         |   |
|       |                         | By:  RR Advisors, LLC, its general partner |
|       |                         |   |
|       |                         |   |
|       |                         | By: |   |   |
|       |                         |   |   Robert  Raymond, its sole member |
|            |                              |  |  |  |  |

 

 

Signature Page to Class BUnit andCommon Unit Purchase Agreement

 

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| ** ** | **TORTOISE ENERGY INFRASTRUCTURE  CORPORATION** |
|------------|-------------------------------------------------|
| ** ** | ** **                                      |
| ** ** | ** **                                      |
|       | By:                                             |   |   |
|       |                                            |   David  J. Schulte |
|       |                                            |   President |
|       |                                            |
|       |                                            |
| ** ** | **TORTOISE ENERGY CAPITAL CORPORATION**         |
| ** ** | ** **                                      |
| ** ** | ** **                                      |
|       | By:                                             |   |   |
|       |                                            |   David  J. Schulte |
|       |                                            |   President |

 

 

Signature Page to Class BUnit andCommon Unit Purchase Agreement

 

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| ** ** | **ENERGY INCOME AND GROWTH FUND** |
|------------|-----------------------------------|
| ** ** | ** **                        |
| ** ** | ** **                        |
|       | By:                               |   |   |
|       |                              |
|       |                              |
| ** ** | **FIDUCIARY/CLAYMORE MLP**        |
|       | **OPPORTUNITY FUND**              |
|       |                              |
|       | By:                               |   |   |
|       |                              | James J.  Cunnane, Jr. |
|       |                              | Managing  Director and Senior Portfolio Manager |

 

 

Signature Page to Class BUnit andCommon Unit Purchase Agreement

 

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| ** ** | **GOLDMAN, SACHS & CO.**        | ** ** |
|------------|------------------------------------------|------------|
|       | On behalf of  Principal Strategies Group |       |
|       |                                     |
|       |                                     |
|       | By:                                      |       |   |
|       |                                     | Name:      |
|       |                                     | Title:     |
|            |                                          |            |  |  |

 

 

Signature Page to Class BUnit andCommon Unit Purchase Agreement

 

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| ** ** | **ALERIAN OPPORTUNITY PARTNERS LP** |
|------------|-------------------------------------|
| ** ** | ** **                          |
| ** ** | ** **                          |
|       | By:                                 |   |   |
|       |                                | Name: |
|       |                                | Title: |
| ** ** | ** **                          |
| ** ** | ** **                          |
| ** ** | **ALERIAN CAPITAL PARTNERS LP**     |
| ** ** | ** **                          |
| ** ** | ** **                          |
|       | By:                                 |   |   |
|       |                                | Name: |
|       |                                | Title: |

 

 

Signature Page to Class BUnit andCommon Unit Purchase Agreement

 

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| ** ** | **STROME  HEDGECAP, LP**      |
|------------|-------------------------------|
| ** ** | ** **                    |
|       | By:                           | Strome Investment Management, L.P., |
|       |                          | its general partner |
|       |                          |
|       |                          |
|       |                          | By: |   |   |
|       |                          | Jeffrey Lambert, Chief Operating Officer |
|       |                          |
|       |                          |
| ** ** | **STROME  ALPHA, LP**         |
| ** ** | ** **                    |
|       | By:                           | Strome Investment Management, L.P., |
|       |                          | its general partner |
|       |                          |
|       |                          |
|       |                          | By: |   |   |
|       |                          | Jeffrey  Lambert, Chief Operating Officer |
|       |                          |
|       |                          |
| ** ** | **STROME  FAMILY FOUNDATION** |
| ** ** | ** **                    |
| ** ** | ** **                    |
|       | By:                           |   |   |
|       |                          | Jeffrey  Lambert, Treasurer and Secretary |
|            |                               |  |  |  |  |

 

 

Signature Page to Class BUnit andCommon Unit Purchase Agreement

 

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

 

 

Signature Page to Class BUnit andCommon Unit Purchase Agreement

 

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