Document:

Exhibit 10.27

 

Execution Copy

 

 

CLASS B
UNIT AND COMMON UNIT

PURCHASE AGREEMENT

 

 

BY AND AMONG

COPANO ENERGY, L.L.C.

AND

 

KAYNE ANDERSON
MLP INVESTMENT COMPANY

 

RCH ENERGY MLP
FUND 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

 

 

CLASS B
UNIT AND

COMMON UNIT PURCHASE AGREEMENT

 

CLASS B UNIT AND
COMMON 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 ENERGY
MLP FUND LP (“RCH”), RCH ENERGY MLP FUND-A LP (“RCH-A”), TORTOISE
ENERGY INFRASTRUCTURE CORPORATION (“TEIFC”), TORTOISE ENERGY CAPITAL
CORPORATION (“TECC”), GOLDMAN, SACHS & CO., on behalf of
Principal Strategies Group (“Goldman”), ENERGY INCOME AND GROWTH FUND (“EIGF”),
FIDUCIARY/CLAYMORE MLP OPPORTUNITY FUND (“FCMOF”), ALERIAN OPPORTUNITY
PARTNERS 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” and
collectively, the “Purchasers”). 

 

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

 

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

 

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

 

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

 

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

 

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

 

 

ARTICLE I
DEFINITIONS 

 

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

 

“Acquisition Documents”
means the ScissorTail Purchase Agreement and the ScissorTail Financing
Commitment.

 

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

 

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

 

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

 

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

 

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

 

“Class B Unit
Price” 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 B
Amendment.

 

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

 

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

 

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

 

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

 

“Commitment Date”
means the date of this Agreement.

 

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

 

2

 

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

 

“Confidential
Information” means all oral or written information, documents, records and
data relating to the ScissorTail Acquisition (including as referenced in this
Agreement) that Copano or its Representatives furnish or otherwise disclose to
a Purchaser or any of its Representatives, together with all copies, extracts,
analyses, compilations, studies, memoranda, notes or other documents, records
or data (in whatever form maintained, whether documentary, computer or other
electronic storage or otherwise) prepared by any Person that contain or
otherwise reflect or are generated from such information, documents, records or
data.  The term “Confidential Information”
does not include any information that (a) at the time of disclosure or
thereafter is generally available to the public (other than as a result of a
disclosure by a Purchaser or its Representatives), (b) is developed by a
Purchaser or any of its Representatives, independent of, and without reliance
in whole or in part on, any Confidential Information or any knowledge of
Confidential Information, (c) becomes available to a Purchaser or its
Representatives on a non-confidential basis from a source other than Copano or
its Representatives who, insofar as is known to the recipient after reasonable
inquiry, is not prohibited from transmitting the information to the recipient
by a contractual, legal, fiduciary or other obligation to Copano or (d) was
available to a Purchaser or its Representatives on a non-confidential basis
prior to its disclosure to a Purchaser or its Representatives by Copano or its
Representatives.

 

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

 

“Copano Financial
Statements” means the financial statement or statements described or
referred to in Section 3.03. 

 

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

 

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

 

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

 

“Governmental
Authority” shall include the country, state, county, city and political
subdivisions in which any Person or such Person’s Property is located or which
exercises valid

 

3

 

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

 

“HSR Act” shall
mean 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 any
federal, state, local or foreign order, writ, injunction, judgment, settlement,
award, decree, statute, law, rule or regulation.

 

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

 

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

 

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

 

“Parties” means
Copano and the Purchasers.

 

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

 

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

 

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

 

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

 

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

 

4

 

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

 

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

 

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

 

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

 

“Reference Price”
means $29.37. 

 

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

 

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

 

“ScissorTail
Acquisition” shall have the meaning specified in the recitals.

 

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

 

“ScissorTail Purchase
Agreement” means the Membership Interest Purchase Agreement among
ScissorTail 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 ScissorTail
Acquisition.

 

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

 

“Second Quarter
Distribution” 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 and
regulations of the Commission promulgated thereunder. 

 

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

 

5

 

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

 

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

 

ARTICLE II
SALE AND
PURCHASE 

 

Section 2.01                                Sale
and Purchase.  Contemporaneous with the consummation of the
ScissorTail Acquisition and subject to the terms and conditions of this
Agreement, at the Closing (as defined in Section 2.02 below) Copano hereby
agrees to sell to each Purchaser, and each Purchaser hereby agrees, severally
and not jointly, to purchase from Copano, the number of Purchased Common Units
and Purchased Class B Units, respectively, determined pursuant to
paragraphs (a) and (b) below of this Section 2.01, and each
Purchaser agrees to pay Copano the Common Unit Price for each Purchased Common
Unit and the Class B Unit Price for each Purchased Class B Units, in
each case, as set forth in paragraph (c) below of this Section 2.01.  The obligation of each Purchaser under this
Agreement is independent of the obligation of each other Purchaser, and the
failure or waiver of performance by any Purchaser does not excuse performance
by any other Purchaser; provided, however,
that, if (i) the number of Purchased Units to be purchased by Goldman at
Closing would represent more than 9% of the issued and outstanding number of
Common Units and Class B Units (counted together for this purpose) as of
immediately after the Closing or (ii) the number of Common Units to be
purchased by Goldman at Closing would represent more than 9% of the issued and
outstanding 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 of
Common Units and Class B Units to be purchased by Goldman (and its
respective aggregate Purchase Prices in respect thereof) shall be reduced pro
rata (based on the number of Common Units and Class B Units Goldman would
otherwise be required to purchase) by the minimum amount necessary such that
Goldman’s Purchased Units would not represent more than 9% of the issued and
outstanding number of Common Units and Class B Units (counted together for
this purpose) as of immediately after the Closing, and/or, in the case of
clause (ii), the number of Common Units to be purchased by Goldman (and its
aggregate Purchase Price in respect thereof) shall be reduced, and the number
of Class B Units to be purchased by Goldman (and its aggregate Purchase
Price in respect thereof) shall be increased, by the minimum amount necessary
such that Goldman’s Purchased Common Units would not represent more than 9% of
the issued and outstanding number of Common Units as of immediately after the
Closing. 

 

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

 

6

 

such Purchaser under the column entitled “Common
Units” 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 whole
number. The Purchased Common Units shall have those rights, preferences,
privileges and restrictions governing the Common Units as set forth in the
Second 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 all
material respects in the form of Exhibit A to this Agreement, which
Copano will cause to be adopted immediately prior to the issuance and sale of Class B
Units contemplated by this agreement (the “Class B Amendment”).

 

(b)                                 Class B
Units.  Subject to the proviso
contained in the first paragraph of this Section 2.01, the number of
Purchased Class B Units to be issued and sold to each Purchaser shall be
equal to the quotient determined by dividing (i) the Commitment Amount for
such 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 whole
number. The Purchased Class B Units shall have those rights, preferences,
privileges and restrictions governing the Class B Units, which shall be
reflected in the Limited Liability Company Agreement, as amended by the Class B
Amendment.

 

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

 

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

 

ARTICLE III
REPRESENTATIONS
AND WARRANTIES OF COPANO 

 

Copano
represents and warrants to the Purchasers, on and as of the date of this
Agreement and on and as of the Closing Date, 
as follows:

 

Section 3.01                                Corporate
Existence.  Copano: (i) is
a limited liability company duly organized, legally existing and in good
standing under the laws of the State of Delaware; (ii) has all requisite
limited liability company power, and has all material governmental licenses,
authorizations, consents and approvals, necessary to own its assets and carry
on its business as its business is now being conducted as described in Copano’s
Annual 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 Copano
Material Adverse Effect; and (iii) is qualified to do business in all
jurisdictions in which the nature of the business

 

7

 

conducted by it makes such qualifications necessary, except where
failure so to qualify would not reasonably be expected to have a Copano
Material Adverse Effect. 

 

Section 3.02                                Capitalization
and Valid Issuance of Purchased Units.

 

(a)                                  As
of the date of this Agreement, the issued and outstanding membership interests
of Copano consist of 7,076,192
Common Units and 3,519,126 Subordinated Units. 
All of the outstanding Common Units and Subordinated Units have been
duly authorized and validly issued in accordance with applicable Law and the
Limited Liability Company Agreement and are fully paid (to the extent required
under the Limited Liability Company Agreement) and nonassessable (except as
such nonassessability may be affected by Section 18-607 of the
Delaware Limited Liability Company Act (the “Delaware LLC Act”).

 

(b)                                 Other
than Copano’s Long-Term Incentive Plan, Copano has no equity compensation plans
that contemplate the issuance of Common Units (or securities convertible into
or exchangeable for Common Units).  No
indebtedness having the right to vote (or convertible into or exchangeable for
securities having the right to vote) on any matters on which Copano’s
unitholders may vote 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 Liability
Company Agreement, there are no outstanding or authorized (i) options,
warrants, preemptive rights, subscriptions, calls, or other rights, convertible
securities, agreements, claims or commitments of any character obligating
Copano or any of its Subsidiaries to issue, transfer or sell any limited
liability company interests or other equity interest in, Copano or any of its
Subsidiaries or securities convertible into or exchangeable for such limited
liability company interests or equity interests, (ii) obligations of Copano
or any of its Subsidiaries to repurchase, redeem or otherwise acquire any
limited liability company interests or equity interests of Copano or any of its
Subsidiaries or any such securities or agreements listed in clause (i) of
this sentence or (iii) voting trusts or similar agreements to which Copano
or any of its Subsidiaries is a party with respect to the voting of the equity
interests of Copano or any of its Subsidiaries. 

 

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

 

(d)                                 The
Purchased Units and the membership interests represented thereby, will be duly
authorized by Copano pursuant to the Limited Liability Company Agreement prior

 

8

 

to the Closing and, when issued and delivered to the Purchasers against
payment therefor in accordance with the terms of this Agreement, will be
validly issued, fully paid (to the extent required by applicable Law and the
Limited Liability Company Agreement) and nonassessable (except as such
nonassessability may be affected by Section 18-607 of the Delaware LLC
Act) and will be free of any and all Liens and restrictions on transfer, other
than restrictions on transfer under the Limited Liability Company Agreement and
under applicable state and federal securities laws and other than such Liens as
are created by the Purchasers.  

 

(e)                                  The
Common Units issuable upon conversion of the Class B Units, and the
membership interests represented thereby, upon issuance in accordance with the
terms of the Class B Units as reflected in the Class B Amendment will
be duly authorized by Copano pursuant to the Limited Liability Company
Agreement and, subject to receipt of the required unitholder approval, will be
validly issued, fully paid (to the extent required by applicable Law and the
Limited Liability Company Agreement) and nonassessable (except as such
nonassessability may be affected by Section 18-607 of the Delaware
LLC Act) and will be free of any and all Liens and restrictions on transfer,
other than restrictions on transfer under the Limited Liability Company
Agreement and under applicable state and federal securities laws and other than
such Liens as are created by the Purchasers. 

 

(f)                                    The
Purchased Common Units, and the Common Units underlying the Purchased Class B
Units, have been approved for quotation on The Nasdaq National Market, subject
to official notice of issuance.  Copano’s
currently outstanding Common Units are quoted on The Nasdaq National Market.

 

Section 3.03                                Copano
SEC Documents.  Copano has
timely filed with the Commission all forms, registration statements, reports,
schedules and statements required to be filed by it under the Exchange Act or
the Securities Act (all such documents filed on or prior to the date of this
Agreement, collectively, the “Copano SEC Documents”).  The Copano SEC Documents, including, without
limitation, any audited or unaudited financial statements and any notes thereto
or schedules included therein (the “Copano Financial Statements”), at
the time filed (in the case of registration statements, solely on the dates of
effectiveness) (except to the extent corrected by a subsequently filed Copano
SEC Document filed prior to the date of this Agreement) (i) did not
contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading, (ii) complied in all material respects with the applicable
requirements of the Exchange Act and the Securities Act, as the case may be, (iii) complied
as to form in all material respects with applicable accounting requirements and
with the published rules and regulations of the Commission with respect
thereto, (iv) were prepared in accordance with GAAP applied on a
consistent basis during the periods involved (except as may be indicated in the
notes thereto or, in the case of unaudited statements, as permitted by Form 10-Q
of the Commission), and (v) fairly present (subject in the case of
unaudited statements to normal, recurring and year-end audit adjustments) in
all material respects the consolidated financial position and status of the
business of Copano as of the dates thereof and the consolidated results of its
operations and cash flows for the periods then ended.  Deloitte & Touche LLP is an
independent registered public accounting firm with respect to Copano and has
not resigned or been dismissed as independent registered public accountants of

 

9

 

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

 

Section 3.04                                No
Material Adverse Change. 
Except as set forth in or contemplated by the Copano SEC Documents, and
except 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 ordinary
course, consistent with past practice, and there has been no (i) change
that has had or would reasonably be expected to have a Copano Material Adverse
Effect, other than those occurring as a result of general economic or financial
conditions or other developments that are not unique to Copano and its
Subsidiaries but also affect other Persons who participate or are engaged in
the lines of business of which Copano and its Subsidiaries participate or are
engaged, (ii) acquisition or disposition of any material asset by Copano
or any of its Subsidiaries or any contract or arrangement therefor, otherwise
than for fair value in the ordinary course of business or as disclosed in the
Copano SEC Documents, (iii) material change in Copano’s accounting
principles, practices or methods, or (iv) incurrence of material
indebtedness (other than the incurrence of such indebtedness as is contemplated
in connection with the ScissorTail Acquisition). 

 

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

 

Section 3.06                                No
Breach.  The execution,
delivery and performance by Copano of the Basic Documents to which it is a
party, and the Acquisition Documents and all other agreements and instruments
to be executed and delivered by Copano pursuant thereto or in connection with
the transactions contemplated by the Basic Documents and the Acquisition
Documents, and compliance by Copano with the terms and provisions under such
agreements, do not and will not (a) violate any provision of any law,
statute, rule or regulation, order, writ, judgment, injunction, decree,
governmental permit, determination or award having applicability to Copano or
any of its Subsidiaries or any of their respective properties or assets, (b) conflict
with or result in a violation of any provision of the Certificate of Formation
or the Limited Liability Company Agreement, or any organizational documents of
any of Copano’s Subsidiaries, (c) require any consent, approval or notice
under or result in a violation or breach of or constitute (with or without due
notice or lapse of time or both) a default (or give rise to any right of
termination, cancellation or acceleration) under (i) any note, bond,
mortgage, license, or loan or credit agreement to which Copano or any of its
Subsidiaries is a party or by which Copano or any of its Subsidiaries or any of
their respective properties may be bound or (ii) any other agreement,
instrument or obligation, or (d) result in or require the creation or
imposition of any Lien upon or with respect to any of the properties now owned
or hereafter acquired by Copano or any of its Subsidiaries; with the exception
of the conflicts stated in clause (b) of this Section 3.06,
except where such conflict, violation, default, breach, termination,
cancellation, failure to receive consent or approval, or acceleration with
respect to the foregoing provisions of this Section 3.06

 

10

 

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

 

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

 

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

 

Section 3.09                                MLP
Status.  Copano has, for each
taxable year beginning after December 31, 2003, during which Copano was in
existence, met the gross income requirements of Section 7704(c)(2) of
the Internal Revenue Code of 1986, as amended.

 

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

 

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

 

Section 3.12                                Certain
Fees.  No fees or commissions
will be payable by Copano to brokers, finders, or investment bankers with
respect to the sale of any of the Purchased Units or the consummation of the
transaction contemplated by this Agreement. 
Copano agrees that it will indemnify and hold harmless each of the
Purchasers from and against any and all claims, demands, or liabilities for
broker’s, finder’s, placement, or other similar fees or commissions

 

11

 

incurred by Copano or alleged to have been incurred by Copano in
connection with the sale of Purchased Units or the consummation of the
transactions contemplated by this Agreement.

 

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

 

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

 

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

 

ARTICLE IV
REPRESENTATIONS
AND WARRANTIES OF EACH PURCHASER

 

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

 

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

 

Section 4.02                                No
Conflicts.  The execution,
delivery and performance by such Purchaser of this Agreement, the Basic
Documents and all other agreements and instruments to be executed and delivered
by such Purchaser pursuant hereto or thereto or in connection herewith or
therewith, compliance by such Purchaser with the terms and provisions hereof
and thereof, and the purchase of the Purchased Units by such Purchaser do not
and will not (a) violate any provision of any law, statute, rule or
regulation, order, writ, judgment, injunction, decree, governmental permit,
determination or award having applicability to such Purchaser or any of its
properties or assets, (b) conflict with or result in a violation of any
provision of the organizational documents of such Purchaser, or (c) require
any consent (other than standard internal consents), approval or notice under
or result in a violation or breach of or constitute (with or without due notice
or lapse of time or both) a default (or give rise to any right of termination,
cancellation or acceleration) under (i) any note, bond, mortgage, license,
or loan or credit agreement to which such Purchaser is a party or by which such
Purchaser or any of its

 

12

 

properties may be bound or (ii) any other such agreement,
instrument or obligation; with the exception of the conflicts stated in
clause (b) of this Section 4.02, except where such conflict,
violation, default, breach, termination, cancellation, failure to receive
consent or approval, or acceleration with respect to the foregoing provisions
of this Section 4.02 would not, individually or in the aggregate,
reasonably be likely to have a Purchaser Material Adverse Effect.

 

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

 

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

 

Section 4.05                                Receipt
of Information; Authorization. 
Each Purchaser acknowledges that it has (i) had access to Copano’s
SEC Documents, (ii) had access to information regarding the proposed
ScissorTail Acquisition and its potential effect on Copano’s operations and
financial results and (c) has been provided a reasonable opportunity to
ask questions of and receive answers from Representatives of Copano regarding
such matters.

 

Section 4.06                                Restricted
Securities.  Each Purchaser
understands that the Purchased Units it is purchasing are characterized as “restricted
securities” under the federal securities laws inasmuch as they are being
acquired from Copano in a transaction not involving a public offering and that
under such laws and applicable regulations such securities may be resold
without registration under the Securities Act only in certain limited
circumstances. In this connection, Purchaser represents that it is
knowledgeable with respect to Rule 144 of the Commission promulgated under
the Securities Act. 

 

Section 4.07                                Certain
Fees.  No fees or commissions
will be payable by such Purchaser to brokers, finders, or investment bankers
with respect to the sale of any of the Purchased Units

 

13

 

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

 

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

 

ARTICLE V

COVENANTS

 

Section 5.01                                Shareholder
Vote With Respect to Conversion. 

 

(a)                                  Copano
shall, in accordance with applicable Law and its Limited Liability Company
Agreement, take all action necessary to convene a meeting of its Unitholders to consider and vote upon
the conversion of the Class B Units into Common Units as soon as
practicable, but in any event not later than 180 days from the Closing Date.  Subject to fiduciary
duties under applicable Law, the Board of Directors of Copano shall, in
connection with such meeting, recommend approval of the conversion of the Class B
Units into Common Units and shall take all other lawful action to solicit the
approval of the conversion of the Class B Units into Common Units by the
Unitholders, except that Copano may, but shall not be required to, hire any
proxy solicitation firm in connection with such meeting.  

 

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

 

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

 

14

 

Section 5.03                                Subsequent
Public Offerings.  Without the written consent of the
holders of a majority of the Purchased Units, from the date of this Agreement until the Lock-Up Date, Copano
shall not, and shall cause its Subsidiaries not to, grant, issue or sell any
membership interests or other equity securities, any securities convertible
into or exchangeable for any membership interests or other equity securities,
or take any other action that may result in the issuance of any of the
foregoing, other than (i) options to purchase Common Units or Subordinated
Units granted pursuant to compensation, benefit, severance or similar plans or
employment agreements of Copano as in effect on the date of this Agreement, (ii) the
issuance or sale of Common Units at a price no less than $33.78 and (iii) the
issuance or sale of up to 3.0 million Common Units, provided such Common Units
are issued or sold in a registered public offering or private offering to
finance the ScissorTail Acquisition. 
Notwithstanding the foregoing, Copano shall not, and shall cause its
Subsidiaries 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 of
the Purchased Units in a manner that would require the registration under the
Securities Act of the sale of the Purchased Units to the Purchasers.

 

Section 5.04                                Vote
For Conversion of Class B Units.  At any meeting (including adjournments or
postponements thereof) of Copano’s Unitholders held to consider approval of the
conversion of the Class B Units into Common Units (including the special
meeting of Unitholders contemplated by Section 5.01 above), each of the
Purchasers agrees to vote all of its Common Units and Subordinated Units, with
the exception of the Purchased Common Units which are not entitled to vote
according to the rules of The Nasdaq National Market, in favor of the
conversion of the Class B Units into Common Units. 

 

Section 5.05                                Purchaser
Lock-Up.  Each Purchaser
agrees that from and after the Closing it will not sell any of the Purchased
Units prior to the Lock-Up Date.

 

Section 5.06                                Taking
of Necessary Action.  Each of the
parties hereto shall use its commercially reasonable efforts promptly to take
or cause to be taken all action and promptly to do or cause to be done all
things necessary, proper or advisable under applicable Law and regulations to
consummate and make effective the transactions contemplated by this
Agreement.  Without limiting the
foregoing, Copano and each Purchaser will, and Copano shall cause each of its
Subsidiaries to, use its commercially reasonable efforts to make all filings
(including, without limitation and if applicable, under the HSR Act) and obtain
all consents of Governmental Authorities which may be necessary or, in the
reasonable opinion of the Purchasers or Copano, as the case may be, advisable
for the consummation of the transactions contemplated by this Agreement and the
Basic Documents.

 

Section 5.07                                Non-Disclosure;
Interim Public Filings.  Copano shall
not disclose the name or identity of any of the Purchasers as a Purchaser
without the prior written consent of such Purchaser, except in connection with
Copano’s filing of a Form 8-K under the Exchange Act, as a result of
this Agreement, the other Basic Documents or the Acquisition Documents or the
transactions contemplated hereby and thereby, or other similarly required
Exchange Act reports, or as required by applicable Law or the rules or
regulations of The Nasdaq National Market or other exchange on which securities
of Copano are listed or traded; provided,
however, that, in the event that any such required disclosure
contains specific information about a Purchaser other than its identity and
ownership interest and the type of Copano’s securities owned by it, Copano

 

15

 

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

 

ARTICLE VI

CLOSING
CONDITIONS

 

Section 6.01                                Conditions
to the Closing.  

 

(a)                                  Mutual
Conditions.  The respective
obligation of each Party to consummate the purchase and issuance and sale of
the Purchased Units shall be subject to the satisfaction on or prior to the
Closing Date of each of the following conditions (any or all of which may be
waived by a particular Party on behalf of itself in writing, in whole or in
part, to the extent permitted by applicable Law):  

 

(i)                                     no
statute, rule, order, decree or regulation shall have been enacted or
promulgated, and no action shall have been taken, by any Governmental Authority
of competent jurisdiction which temporarily, preliminarily or permanently
restrains, precludes, enjoins or otherwise prohibits the consummation of the
transactions contemplated by this Agreement 
or makes the transactions contemplated by this Agreement  illegal;

 

(ii)                                  there
shall not be pending any suit, action or proceeding by any Governmental
Authority seeking to restrain, preclude, enjoin or prohibit the transactions
contemplated by this Agreement; and

 

(iii)                               Copano
shall have consummated the ScissorTail Acquisition substantially on the terms
set forth in the ScissorTail Purchase Agreement executed on the date hereof.

 

(b)                                 Each
Purchaser’s Conditions.  The respective
obligation of each Purchaser to consummate the purchase of its Purchased Units
shall be subject to the satisfaction on or prior to the Closing Date of each of
the following conditions (any or all of which may be waived by a particular
Purchaser on behalf of itself in writing, in whole or in part, to the extent
permitted by applicable Law):

 

(i)                                     Copano
shall have performed and complied with the covenants and agreements contained
in this Agreement that are required to be performed and complied with by Copano
on or prior to the Closing Date;

 

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

 

16

 

the Closing
Date (except that representations made as of a specific date shall be required
to be true and correct as of such date only);

 

(iii)                               since
the date of this Agreement, no Copano Material Adverse Effect shall have
occurred and be continuing;

 

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

 

(v)                                 Copano
shall have delivered, or caused to be delivered, to the Purchasers at the
Closing, Copano’s closing deliveries described in Section 6.02 of this
Agreement; and

 

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

 

(c)                                  Copano’s
Conditions.   The obligation of
Copano to consummate the sale of the Purchased Units to each of the Purchasers
shall be subject to the satisfaction on or prior to the Closing Date of the
following conditions with respect to each Purchaser individually and not the
Purchasers jointly (which may be waived by Copano in writing, in whole or in
part, to the extent permitted by applicable Law) 

 

(i)                                     each
Purchaser shall have performed and complied with the covenants and agreements
contained in this Agreement that are required to be performed and complied with
by that Purchaser on or prior to the Closing Date;

 

(ii)                                  the
representations and warranties of each Purchaser contained in this Agreement
that are qualified by materiality or Purchaser Material Adverse Effect shall be
true and correct when made and as of the Closing Date and all other
representations and warranties shall be true and correct in all material
respects when made and as of the Closing Date, in each case as though made at
and as of the Closing Date  (except that
representations made as of a specific date shall be required to be true and
correct as of such date only);

 

(iii)                               since
the date of this Agreement, no Purchaser Material Adverse Effect shall have
occurred and be continuing; and

 

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

 

Section 6.02                                Copano
Deliveries. At the Closing, subject to the terms and
conditions of this Agreement, Copano will deliver, or cause to be delivered, to
each Purchaser: 

 

(a)                                  The
Purchased 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 any
Liens, encumbrances or interests of any other party; 

 

17

 

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

 

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

 

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

 

Section 6.03                                Purchaser
Deliveries.  At the
Closing, subject to the terms and conditions of this Agreement, the Purchasers
will deliver, or cause to be delivered, to Copano:

 

(a)                                  Payment
to Copano of the Purchase Price by wire transfer(s) of immediately available
funds to an account designated by Copano in writing at least two (2) Business
Days (or such shorter period as shall be agreeable to all parties hereto) prior
to the Closing;

 

(b)                                 The
Registration Rights Agreement in substantially the form attached to this
Agreement as Exhibit D, which shall have been duly executed by each
Purchaser; and

 

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

 

ARTICLE VII

INDEMNIFICATION, COSTS AND EXPENSES

 

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

 

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

 

18

 

incurred by them or asserted against or involve any of them as a result
of, arising out of, or in any way related to the breach of any of the
representations, warranties or covenants of such Purchaser contained herein, provided such claim for indemnification
relating to a breach of the representations and warranties is made prior to the
expiration of such representations and warranties.

 

Section 7.03                                Indemnification
Procedure.  Promptly after any
Copano Related Party or Purchaser Related Party (hereinafter, the “Indemnified
Party”) has received notice of any indemnifiable claim hereunder, or the
commencement of any action or proceeding by a third person, which the
Indemnified Party believes in good faith is an indemnifiable claim under this
Agreement, the Indemnified Party shall give the indemnitor hereunder (the “Indemnifying
Party”) written notice of such claim or the commencement of such action or
proceeding, but failure to so notify the Indemnifying Party will not relieve
the Indemnifying Party from any liability it may have to such Indemnified Party
hereunder except to the extent that the Indemnifying Party is materially
prejudiced by such failure. Such notice shall state the nature and the basis of
such claim to the extent then known.  The
Indemnifying Party shall have the right to defend and settle, at its own
expense and by its own counsel, any such matter as long as the Indemnifying
Party pursues the same diligently and in good faith. If the Indemnifying Party
undertakes to defend or settle, it shall promptly notify the Indemnified Party
of its intention to do so, and the Indemnified Party shall cooperate with the
Indemnifying Party and its counsel in all commercially reasonable respects in
the defense thereof and the settlement thereof. Such cooperation shall include,
but shall not be limited to, furnishing the Indemnifying Party with any books,
records and other information reasonably requested by the Indemnifying Party
and in the Indemnified Party’s possession or control.  Such cooperation of the Indemnified Party
shall be at the cost of the Indemnifying Party. 
After the Indemnifying Party has notified the Indemnified Party of its
intention to undertake to defend or settle any such asserted liability, and for
so long as the Indemnifying Party diligently pursues such defense, the
Indemnifying Party shall not be liable for any additional legal expenses
incurred by the Indemnified Party in connection with any defense or settlement
of such asserted liability; provided,
however, that the Indemnified Party shall be entitled (i) at
its expense, to participate in the defense of such asserted liability and the
negotiations of the settlement thereof and (ii) if (A) the
Indemnifying Party has failed to assume the defense and employ counsel or (B) if
the defendants in any such action include both the Indemnified Party and the
Indemnifying Party and counsel to the Indemnified Party shall have concluded
that there may be reasonable defenses available to the Indemnified Party that
are different from or in addition to those available to the Indemnifying Party
or if the interests of the Indemnified Party reasonably may be deemed to
conflict with the interests of the Indemnifying Party, then the Indemnified
Party shall have the right to select a separate counsel and to assume such
legal defense and otherwise to participate in the defense of such action, with
the expenses and fees of such separate counsel and other expenses related to
such participation to be reimbursed by the Indemnifying Party as incurred.  Notwithstanding any other provision of this
Agreement, the Indemnifying Party shall not settle any indemnified claim
without the consent of the Indemnified Party, unless the settlement thereof
imposes no liability or obligation on, involves no admission of wrongdoing or
malfeasance by, and includes a complete release from liability of, the
Indemnified Party.

 

19

 

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

 

Section 8.02                                Survival
of Provisions.  The
representations 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 the
execution and delivery of this Agreement indefinitely, and the other
representations and warranties set forth in this Agreement shall survive for a
period of twelve (12) months following the Closing Date regardless of any
investigation made by or on behalf of Copano or any Purchaser.  The covenants made in this Agreement or any
other Basic Document shall survive the closing of the transactions described
herein and remain operative and in full force and effect regardless of
acceptance of any of the Purchased Units and payment therefor and repayment,
conversion, exercise or repurchase thereof. All indemnification obligations of
Copano and the Purchasers the provisions of Article VII shall remain
operative and in full force and effect unless such obligations are expressly
terminated in a writing by the Parties referencing that individual Section,
regardless of any purported general termination of this Agreement. 

 

Section 8.03                                No
Waiver; Modifications in Writing.

 

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

 

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

 

20

 

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

 

Section 8.04                                Binding
Effect; Assignment.

 

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

 

(b)                                 Assignment
of Purchased Units. All or any portion of a Purchaser’s Purchased Units
purchased pursuant to this Agreement may be sold, assigned or pledged by
such  Purchaser, subject to compliance
with applicable securities laws, Section 5.02 of this Agreement and the
Registration Rights Agreement. 

 

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

 

Section 8.05                                Aggregation
of Purchased Units.  All
Purchased Units held or acquired by Persons who are Affiliates of one another
shall be aggregated together for the purpose of determining the availability of
any rights under this Agreement.

 

Section 8.06                                Confidentiality
and Non-Disclosure. Notwithstanding anything herein to the contrary,
each Purchaser that has executed a Confidentiality Agreement in favor of Copano
shall continue to be bound by such Confidentiality Agreement.  Each Purchaser that has not executed a
Confidentiality Agreement in favor of Copano will refrain for a period of 18
months after the date hereof, and will use reasonable best efforts to cause its
Representatives to refrain, from disclosing to any other Person any
Confidential 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 for
hereunder shall be in writing and shall be given by registered or certified
mail, return receipt requested, telecopy, air courier guaranteeing overnight
delivery or personal delivery to the following addresses: 

 

(a)                                  If
to 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

 

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)                                 If
to 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)                                  If
to the Tortoise Entities:

 

Tortoise Energy
Infrastructure Corporation

10801 Mastin, Suite 222

Overland Park, KS  66210

Attention:  David Schulte

Facsimile:  (913) 345-2763

 

with a copy to:

 

Blackwell Sanders Peper
Martin LLP

2300 Main Street, Suite 1000

Kansas City, MO 64108

Attention: Steven F.
Carman

Facsimile: (816) 983-8080

 

22

 

(d)                                 If
to EIGF or FCMOF:

 

c/o Fiduciary Asset
Management

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)                                  If
to Goldman, Sachs & Co.:

 

Goldman, Sachs &
Co.

Principal Strategies
Group

One New York Plaza

47th Floor

New York, New York 10004

Attention:  Gaurav Bhandari 

Facsimile:  (212) 346-3124

 

with a copy to:

 

Fried Frank Harris
Shriver & Jacobson LLP

One New York Plaza

New York, New York 10004

Attention:  David Shine, Esq.

Facsimile:  (212) 859-8586

 

(f)                                    If
to AOP or ACP:

 

 

 

 

Attention:  

Facsimile:

 

23

 

with a copy to:

 

 

 

Attention:  

Facsimile:

 

(g)                                 If
to SH, SA or SFF:

 

Strome Investment
Management, 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)                                 If
to Copano: 

 

Copano Energy,
L.L.C.

2727 Allen Parkway, Suite 1200

Houston, Texas 77019

Attention: Douglas L. Lawing, Esq.

Facsimile: (713) 621-9545

 

with a copy
to:

 

Vinson &
Elkins L.L.P.

2300 First City Tower

1001 Fannin Street

Houston, Texas 77002

Attention: David Oelman, Esq.

Facsimile: (713) 615-5861

 

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

 

24

 

Section 8.08                                Removal
of Legend.  Copano shall
remove the legend described in Section 4.08 of this Agreement from the
certificates evidencing the Purchased Units at the request of a Purchaser
submitting to Copano such certificates, together with an opinion of counsel to
the effect that such legend is no longer required under the Securities Act or
applicable state securities laws, as the case may be, unless Copano, with the
advice of counsel, determines that such removal is inappropriate.

 

Section 8.09                                Entire
Agreement.  This Agreement is
intended by the parties as a final expression of their agreement and intended
to be a complete and exclusive statement of the agreement and understanding of
the parties hereto in respect of the subject matter contained herein. There are
no restrictions, promises, warranties or undertakings, other than those set
forth or referred to herein with respect to the rights granted by Copano or a
Purchaser set forth herein. This Agreement supersedes all prior agreements and
understandings between the parties with respect to such subject matter. 

 

Section 8.10                                Governing
Law.  This Agreement will be
construed in accordance with and governed by the laws of the State of Delaware
without regard to principles of conflicts of laws. 

 

Section 8.11                                Execution
in Counterparts.  This
Agreement may be executed in any number of counterparts and by different
parties hereto in separate counterparts, each of which counterparts, when so
executed and delivered, shall be deemed to be an original and all of which
counterparts, taken together, shall constitute but one and the same Agreement. 

 

Section 8.12                                Termination.

 

(a)                                  Notwithstanding
anything herein to the contrary, this Agreement may be terminated on or any
time prior to the Closing:

 

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

 

(ii)                                  by
the written consent of the Purchasers entitled to purchase a majority of the
Purchased Units based on their Commitment Amounts or by Copano, (i) if any
representation or warranty of the other party set forth in this Agreement shall
be untrue in any material respect when made, or (ii) upon a breach in any
material respect of any covenant or agreement on the part of the other set
forth in this Agreement (either (i) or (ii) above being a “Terminating
Breach”); provided, that, each
Terminating Breach would cause the conditions to the non-terminating party’s
obligations not to be satisfied and such Terminating Breach is not cured within
20 days after written notice from the non-breaching party; or

 

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

 

25

 

(b)                                 Notwithstanding
anything herein to the contrary, this Agreement shall automatically terminate
on or any time prior to the Closing:

 

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

 

(ii)                                  if
the ScissorTail Purchase Agreement shall have been terminated pursuant to its
terms; or

 

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

 

(c)                                  In
the 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 shall
be no liability on the part of any party hereto, except as set forth in Article VII
of this Agreement and except with respect to the requirement to comply with any
confidentiality agreement in favor of Copano; provided
that nothing herein shall relieve any party from any liability or obligation
with respect to any willful breach of this Agreement.

 

Section 8.13                                Expenses.  Copano hereby covenants and agrees to
reimburse KAMIC, as lead purchaser, for reasonable and documented costs and
expenses incurred in connection with the negotiation, execution, delivery and
performance of the Basic Documents and the transactions contemplated hereby and
thereby (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 Purchasers
be accompanied by a detailed invoice for such amount and that the Agreement is
not terminated by the Purchasers other than as a result of a breach of a
representation, warranty or covenant by Copano or by mutual consent of the
Parties.  If any action at law or equity
is necessary to enforce or interpret the terms of the Basic Documents, the
prevailing party shall be entitled to reasonable attorney’s fees, costs and
necessary disbursements in addition to any other relief to which such party may
be entitled.

 

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

 

26

 

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

 

	
   

  	
  KAYNE ANDERSON MLP INVESTMENT

  COMPANY

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Kevin
  McCarthy

  
	
   

  	
   

  	
  Chief
  Executive Officer and President

  

 

 

Signature Page to Class B
Unit and

Common Unit Purchase Agreement

 

 

	
   

  	
  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 B
Unit and

Common Unit Purchase Agreement

 

 

	
   

  	
  TORTOISE ENERGY INFRASTRUCTURE

  CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
    David
  J. Schulte

  
	
   

  	
   

  	
    President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  TORTOISE ENERGY CAPITAL CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
    David
  J. Schulte

  
	
   

  	
   

  	
    President

  

 

 

Signature Page to Class B
Unit and

Common Unit Purchase Agreement

 

 

	
   

  	
  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 B
Unit and

Common Unit Purchase Agreement

 

 

	
   

  	
  GOLDMAN, SACHS & CO.

  	
   

  
	
   

  	
  On behalf of
  Principal Strategies Group

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
					

 

 

Signature Page to Class B
Unit and

Common Unit Purchase Agreement

 

 

	
   

  	
  ALERIAN OPPORTUNITY PARTNERS LP

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  ALERIAN CAPITAL PARTNERS LP

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

 

Signature Page to Class B
Unit and

Common Unit Purchase Agreement

 

 

	
   

  	
  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 B
Unit and

Common Unit Purchase Agreement

 

 

	
   

  	
  COPANO ENERGY, L.L.C.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
    John
  R. Eckel, Jr.

  
	
   

  	
   

  	
    Chairman
  of the Board and Chief Executive

    Officer

  

 

 

Signature Page to Class B
Unit and

Common Unit Purchase AgreementExhibit 10.28

 

 

 

 

REGISTRATION RIGHTS
AGREEMENT

BY AND AMONG

COPANO ENERGY, L.L.C.

AND

KAYNE ANDERSON MLP INVESTMENT COMPANY

RCH ENERGY MLP FUND 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 MLP FUND, L.P.

STROME ALPHA, LP

AND

STROME FAMILY FOUNDATION

 

Table of Contents

	
   

  	
   

  	
   

  
	
  ARTICLE I

  DEFINITIONS

  
	
  Section 1.01

  	
  Definitions

  	
   

  
	
  Section 1.02

  	
  Registrable
  Securities

  	
   

  
	
  ARTICLE II

  REGISTRATION RIGHTS

  
	
  Section 2.01

  	
  Shelf Registration.

  	
   

  
	
  Section 2.02

  	
  Piggyback Rights.

  	
   

  
	
  Section 2.03

  	
  Underwritten
  Offering.

  	
   

  
	
  Section 2.04

  	
  Sale Procedures

  	
   

  
	
  Section 2.05

  	
  Cooperation by
  Holders

  	
   

  
	
  Section 2.06

  	
  Restrictions on
  Public Sale by Holders of Registrable Securities

  	
   

  
	
  Section 2.07

  	
  Expenses.

  	
   

  
	
  Section 2.08

  	
  Indemnification.

  	
   

  
	
  Section 2.09

  	
  Rule 144 Reporting

  	
   

  
	
  Section 2.10

  	
  Transfer or
  Assignment of Registration Rights

  	
   

  
	
  Section 2.11

  	
  Limitation on
  Subsequent Registration Rights

  	
   

  
	
  Section 2.12

  	
  Lock-Up

  	
   

  
	
  ARTICLE III

  MISCELLANEOUS

  
	
  Section 3.01

  	
  Communications

  	
   

  
	
  Section 3.02

  	
  Successor and Assigns

  	
   

  
	
  Section 3.03

  	
  Assignment of Rights

  	
   

  
	
  Section 3.04

  	
  Aggregation of
  Purchased Units

  	
   

  
	
  Section 3.05

  	
  Recapitalization,
  Exchanges, Etc. Affecting the Common Units

  	
   

  
	
  Section 3.06

  	
  Specific Performance

  	
   

  
	
  Section 3.07

  	
  Counterparts

  	
   

  
	
  Section 3.08

  	
  Headings

  	
   

  
	
  Section 3.09

  	
  Governing Law

  	
   

  
	
  Section 3.10

  	
  Severability of
  Provisions

  	
   

  
	
  Section 3.11

  	
  Entire Agreement

  	
   

  
	
  Section 3.12

  	
  Amendment

  	
   

  
	
  Section 3.13

  	
  No Presumption

  	
   

  

 

i

REGISTRATION RIGHTS
AGREEMENT

THIS REGISTRATION RIGHTS
AGREEMENT (this “Agreement”) is made and entered into as of August 1,
2005, by and among Copano Energy, L.L.C., a Delaware limited liability company
(“Copano”), and KAYNE ANDERSON MLP INVESTMENT COMPANY (“KAMIC”),
RCH ENERGY MLP FUND LP (“RCH”), RCH ENERGY MLP FUND-A LP (“RCH-A”),
GOLDMAN, SACHS & CO., on behalf of Principal Strategies Group (“Goldman”),
TORTOISE ENERGY INFRASTRUCTURE CORPORATION (“TEIFC”), TORTOISE ENERGY
CAPITAL CORPORATION (“TECC”), ENERGY INCOME AND GROWTH FUND (“EIGF”),
FIDUCIARY/CLAYMORE MLP OPPORTUNITY FUND (“FCMOF”), ALERIAN OPPORTUNITY
PARTNERS LP (“AOP”), ALERIAN CAPITAL PARTNERS LP (“ACP”), STROME
MLP FUND, L.P. (“SMF”), STROME ALPHA, LP (“SA”) AND STROME FAMILY
FOUNDATION (“SFF”) (each of KAMIC, RCH, RCH-A, TEIFC, TECC, EIGF, FCMOF,
AOP, ACP, SMF, SA and SFF a “Purchaser” and collectively, the “Purchasers”).

WHEREAS, this Agreement
is made in connection with the Closing of the issuance and sale of the
Purchased Units pursuant to the Class B Unit and Common Unit Purchase
Agreement, dated as of June 17, 2005, by and among Copano and the Purchasers
(the “Purchase Agreement”);

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

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

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

ARTICLE I

DEFINITIONS

Section 1.01          Definitions.  Capitalized terms used herein without
definition shall have the meanings given to them in the Purchase Agreement.  The terms set forth below are used herein as
so defined:

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

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

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

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

“Liquidated Damages
Multiplier” means the product of $28.05 times the number of Class B Units purchased
by such Purchaser plus the product of $28.78 times the number of Common Units
held by such Purchaser.

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

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

“Other Holder” has
the meaning specified in Section 2.02(b).

“Piggyback
Registration” has the meaning specified therefor in Section 2.02(a)
of this Agreement.

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

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

“Registrable
Securities” means: (i) the Purchased Units, (ii) the Common Units
underlying the Class B Units, and (iii) any Common Units or Class B Units
issued as Liquidated Damages pursuant to Section 2.01(a) this
Agreement, all of which Registrable Securities are subject to the rights
provided herein until such rights terminate pursuant to the provisions hereof.

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

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

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

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

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

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

2

under the Securities Act); (c) such Registrable Security is held
by Copano or one of its subsidiaries; or (d) such Registrable Security has
been sold in a private transaction in which the transferor’s rights under this
Agreement are not assigned to the transferee of such securities.

ARTICLE II

REGISTRATION RIGHTS

Section 2.01          Shelf
Registration.

(a)           Deadline
To Go Effective.  As soon as
practicable following the Closing, but in any event within 135 days of the
Closing, Copano shall prepare and file a Shelf Registration Statement under the
Act with respect to all of the Registrable Securities.  Copano shall use its commercially reasonable
efforts to cause the Shelf Registration Statement to become effective no later
than 195 days after the date of the Closing. 
A Shelf Registration Statement filed pursuant to this Section 2.01
shall be on such appropriate registration form of the Commission as shall be
selected by Copano; provided, however, that if a prospectus supplement
will be used in connection with the marketing of an Underwritten Offering from
the Shelf Registration Statement and the Managing Underwriter at any time shall
notify Copano in writing that, in the sole judgment of such Managing
Underwriter, inclusion of detailed information to be used in such prospectus
supplement is of material importance to the success of the Underwritten
Offering of such Registrable Securities, Copano shall use its commercially
reasonable efforts to include such information in the prospectus.  Copano will use its commercially reasonable
efforts to cause the Shelf Registration Statement filed pursuant to this Section 2.01
to be continuously effective under the Securities Act until the earlier of (i)
when all such Registrable Securities are sold by the Purchaser or (ii) two
years from the date the Shelf Registration Statement is declared effective by
the Commission (the “Effectiveness Period”).  The Shelf Registration Statement when
declared effective (including the documents incorporated therein by reference)
will comply as to form with all applicable requirements of the Securities Act
and the Exchange Act and will not contain an untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading.

(b)           Failure
To Go Effective.  If the Shelf
Registration Statement required by Section 2.01 is not declared
effective within 225 days after Closing, then each Purchaser shall be entitled
to a payment (with respect to each of such Purchaser’s Purchased Units), as
liquidated damages and not as a penalty, of .25% of the Liquidated Damages
Multiplier per 30-day period for the first 60 days following the 225th day,
increasing by an additional .25% of the Liquidated Damages Multiplier per
30-day period for each subsequent 60 days, up to a maximum of 1.00% of the
Liquidated Damages Multiplier per 30-day period (the “Liquidated Damages”),
which shall be payable within 10 Business Days of the end of such 30-day
period.  The Liquidated Damages shall be
paid to each Purchaser in cash; provided,
however, if Copano certifies that
it is unable to pay the Liquidated Damages in cash because such payment would
result in a breach under any of Copano’s or Copano’s Subsidiaries’ credit
facilities filed as exhibits to Copano’s SEC Documents, then Copano may pay the
Liquidated Damages in kind in the form of the issuance of additional
(A) Common Units or (B) Common Units and Class B Units.  Class B Units may only be issued as
Liquidated Damages if and to the extent required by The Nasdaq National Market
or similar regulation.  If Common Units
and Class B Units are issued as Liquidated Damages as a result of a requirement
by The Nasdaq National Market or similar

3

regulation, then such units will be issued to each Purchaser in such a
manner as to maximize the number of Common Units issued to each Purchaser and
in no event shall the percentage of Class B Units issued to a Purchaser
relative to the percentage of Common Units issued to such Purchaser exceed the
percentage that is determined by dividing the number of Class B Units
originally purchased by such Purchaser by the number of Common Units plus the
number of Class B Units originally purchased by such Purchaser. Upon any
issuance of Common Units and/or Class B Units as Liquidated Damages,
Copano shall promptly prepare and file an amendment to the Shelf Registration
Statement prior to its effectiveness adding such Common Units and/or
Class B Units to such Shelf Registration Statement as additional
Registrable Securities. The determination of the number of Common Units and/or
Class B Units to be issued as Liquidated Damages shall be equal to the
Liquidated Damages divided by the average closing price of Copano’s Common
Units on The Nasdaq National Market for the ten trading days immediately
preceding the date on which the Liquidated Damages payment is due.  The payment of the Liquidated Damages to a
Purchaser shall cease at such time as the Purchased Units of such Purchaser
become eligible for resale under Rule 144(k).

(c)           Waiver
of Liquidated Damages.  If Copano is
unable to cause a Shelf Registration Statement to go effective within the 225
days as a result of an acquisition, merger, reorganization, disposition or
other similar transaction, then Copano may request a waiver of the Liquidated
Damages, which may be granted or withheld by the consent of the holders of a
majority of the Purchased Units, in their sole discretion.  Purchaser’s rights (and any transferee’s
rights pursuant to Section 2.10) under this Section 2.01
shall terminate when such Registrable Securities become eligible for resale
under Rule 144(k) (or any similar provision then in force under the
Securities Act).

(d)           Delay
Rights.  Notwithstanding anything to
the contrary contained herein, Copano may, upon written notice to any Selling
Holder whose Registrable Securities are included in the Shelf Registration
Statement, suspend such Selling Holder’s use of any prospectus which is a part
of the Shelf Registration Statement (in which event the Selling Holder shall
discontinue sales of the Registrable Securities pursuant to the Shelf
Registration Statement) if (i) Copano is pursuing an acquisition, merger,
reorganization, disposition or other similar transaction and Copano determines
in good faith that Copano’s ability to pursue or consummate such a transaction
would be materially adversely affected by any required disclosure of such
transaction in the Shelf Registration Statement or (ii) Copano has
experienced some other material non-public event the disclosure of which at
such time, in the good faith judgment of Copano, would materially adversely
affect Copano; provided, however, in no event shall the Purchasers
be suspended for a period exceeding an aggregate of ninety (90) days (exclusive
of days covered by any lock-up agreement executed by a Purchaser in connection
with any Underwritten Offering by Copano or a Purchaser) in any 365-day
period.  Upon disclosure of such
information or the termination of the condition described above, Copano shall
provide prompt notice to the Selling Holders whose Registrable Securities are
included in the Shelf Registration Statement, and shall promptly terminate any
suspension of sales it has put into effect and shall take such other actions to
permit registered sales of Registrable Securities as contemplated in this
Agreement.

4

Section
2.02          Piggyback Rights.

(a)           Participation.  If at any time Copano proposes to file (i) a
prospectus supplement to an effective shelf registration statement, including
the Shelf Registration Statement contemplated by Section 2.01, or
(ii) a registration statement, other than a shelf registration statement, in
either case, for the sale of Common Units in an Underwritten Offering for its
own account and/or another Person, then as soon as practicable but not less
than three (3) Business Days prior to the filing of (x) any preliminary
prospectus supplement relating to such Underwritten Offering pursuant to
Rule 424(b), (y) the prospectus supplement relating to such
Underwritten Offering pursuant to Rule 424(b) (if no preliminary
prospectus supplement is used) or (z) such registration statement as the
case may be, then, Copano shall give notice of such proposed Underwritten
Offering to the Holders and such notice shall offer the Holders the opportunity
to include in such Underwritten Offering such number of Registrable Securities
(the “Included Registrable Securities”) as each such Holder may request
in writing; provided, however, that if Copano has been advised
by the Managing Underwriter that the inclusion of Registrable Securities for
sale for the benefit of the Holders will have an adverse effect on the price,
timing or distribution of the Common Units, then the amount of Registrable
Securities to be offered for the accounts of Holders shall be determined based
on the provisions of Section 2.02(b).  The notice required to be provided in this Section 2.02(a)
to Holders shall be provided on a Business Day pursuant to Section 3.01
hereof and receipt of such notice shall be confirmed by Holder.  Holder shall then have one Business Day after
such Holder confirms receipt of the notice to request inclusion of Registrable
Securities in the Underwritten Offering. 
If no request for inclusion from a Holder is received within the
specified time, such Holder shall have no further right to participate in such
Underwritten Offering.  If, at any time
after giving written notice of its intention to undertake an Underwritten
Offering and prior to the closing of such Underwritten Offering, Copano shall
determine for any reason not to undertake or to delay such Underwritten
Offering, Copano may, at its election, give written notice of such
determination to the Selling Holders and, (x) in the case of a determination
not to undertake such Underwritten Offering, shall be relieved of its
obligation to sell any Included Registrable Securities in connection with such
terminated Underwritten Offering, and (y) in the case of a determination to
delay such Underwritten Offering, shall be permitted to delay offering any
Included Registrable Securities for the same period as the delay in the
Underwritten Offering. Any Selling Holder shall have the right to withdraw such
Selling Holder’s request for inclusion of such Selling Holder’s Registrable
Securities in such offering by giving written notice to Copano of such
withdrawal up to and including the time of pricing of such offering.  Each Holder’s rights under this Section 2.02(a)
shall terminate when such Holder holds less than five million ($5,000,000) of
Purchased Units.

(b)           Priority
of Piggyback Rights.  If the Managing
Underwriter or Underwriters of any proposed Underwritten Offering of Common
Units included in an Underwritten Offering involving Included Registrable
Securities advises Copano that the total amount of Common Units that the
Selling Holders and any other Persons intend to include in such offering
exceeds the number that can be sold in such offering without being likely to
have an adverse effect on the price, timing or distribution of the Common Units
offered or the market for the Common Units, then the Common Units to be
included in such Underwritten Offering shall include the number of Registrable
Securities that such Managing Underwriter or Underwriters advises Copano can be
sold without having such adverse effect, with such number to be allocated
(i) first, to Copano;

5

(ii) second, to Copano’s pre-IPO investors as provided in (A) the
Stakeholders’ Agreement dated July 30, 2004, and (B) Article XIV of
the Company’s Second Amended and Restated Limited Liability Company Agreement
dated November 15, 2004; and (iii) third, pro rata among the Selling
Holders who have requested participation in such Underwritten Offering based,
for each Selling Holder, on the fraction derived by dividing (x) the
number of Common Units proposed to be sold by such Selling Holder in such
Underwritten Offering by (y) the aggregate number of Common Units proposed
to be sold be all Selling Holders in such Underwritten Offering.  As of the date of execution of this
Agreement, there are no other Persons with Registration Rights other than as
described in this Section 2.02(b).

Section 2.03          Underwritten
Offering.

(a)           S-3
Registration.  If a Selling Holder
elects to dispose of Registrable Securities under the Shelf Registration
Statement pursuant to an Underwritten Offering and reasonably anticipates gross
proceeds of greater than $20 million from such Underwritten Offering, Copano
shall, at the request of such Selling Holder, enter into an underwriting
agreement in customary form with the Managing Underwriter or Underwriters,
which shall include, among other provisions, indemnities to the effect and to
the extent provided in Section 2.08, and shall take all such other
reasonable actions as are requested by the Managing Underwriter to expedite or
facilitate the disposition of the Registrable Securities; provided, however,
Copano management will not be required to participate in any roadshow or
similar marketing effort on behalf of any Selling Holder.

(b)           General
Procedures.  In connection with any
Underwritten Offering under this Agreement, Copano shall be entitled to select
the Managing Underwriter or Underwriters. 
In connection with an Underwritten Offering under Section 2.01
or Section 2.03 hereof, each Selling Holder and Copano shall be
obligated to enter into an underwriting agreement that contains such
representations, covenants, indemnities and other rights and obligations as are
customary in underwriting agreements for firm commitment offerings of
securities.  No Selling Holder may
participate in such Underwritten Offering unless such Selling Holder agrees to
sell its Registrable Securities on the basis provided in such underwriting
agreement and completes and executes all questionnaires, powers of attorney,
indemnities and other documents reasonably required under the terms of such
underwriting agreement.  Each Selling
Holder may, at its option, require that any or all of the representations and
warranties by, and the other agreements on the part of, Copano to and for the
benefit of such underwriters also be made to and for such Selling Holder’s
benefit and that any or all of the conditions precedent to the obligations of
such underwriters under such underwriting agreement also be conditions
precedent to its obligations. No Selling Holder shall be required to make any
representations or warranties to or agreements with Copano or the underwriters
other than representations, warranties or agreements regarding such Selling
Holder and its ownership of the securities being registered on its behalf and
its intended method of distribution and any other representation required by
law.  If any Selling Holder disapproves
of the terms of an underwriting, such Selling Holder may elect to withdraw
therefrom by notice to Copano and the Managing Underwriter; provided, however,
that such withdrawal must be made prior to the time in the penultimate sentence
of Section 2.02(a) hereof to be effective.  No such withdrawal or abandonment shall
affect Copano’s obligation to pay Registration Expenses.

6

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

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

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

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

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

(e)           immediately
notify each Selling Holder and each underwriter, at any time when a prospectus
relating thereto is required to be delivered under the Securities Act, of
(i) the happening of any event as a result of which the prospectus or
prospectus supplement contained

7

in the Shelf Registration Statement or any other registration statement
contemplated by this Agreement, as then in effect, includes an untrue statement
of a material fact or omits to state any material fact required to be stated
therein or necessary to make the statements therein not misleading in the light
of the circumstances then existing; (ii) the issuance or threat of
issuance by the Commission of any stop order suspending the effectiveness of
the Shelf Registration Statement or any other registration statement
contemplated by this Agreement, or the initiation of any proceedings for that
purpose; or (iii) the receipt by Copano of any notification with respect
to the suspension of the qualification of any Registrable Securities for sale
under the applicable securities or blue sky laws of any jurisdiction.  Following the provision of such notice,
Copano agrees to as promptly as practicable amend or supplement the prospectus
or prospectus supplement or take other appropriate action so that the
prospectus or prospectus supplement does not include an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in the light of the
circumstances then existing and to take such other action as is necessary to
remove a stop order, suspension, threat thereof or proceedings related thereto;

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

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

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

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

8

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

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

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

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

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

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

Section 2.06          Restrictions
on Public Sale by Holders of Registrable Securities.  Each Holder of Registrable Securities who is
included in the Shelf Registration Statement agrees not to effect any public
sale or distribution of the Registrable Securities during the 30 calendar day
period following completion of a public offering of equity securities by
Copano; provided, however, that the duration of the
foregoing restrictions shall be no longer than the duration of the shortest
restriction generally imposed by the underwriters on the officers or directors
or any other unitholder of Copano on whom a restriction is imposed and provided
further that such Selling Holder owns more than five million dollars
($5,000,000) of the Purchased Units.

Section 2.07          Expenses.

(a)           Certain
Definitions.  “Registration
Expenses” means all expenses incident to Copano’s performance under or
compliance with this Agreement to effect the registration of Registrable
Securities the Shelf Registration Statement pursuant to Section 2.01,
an Underwritten

9

Offering pursuant to Section 2.02 or Section 2.03,
and the disposition of such securities, including, without limitation, all
registration, filing, securities exchange listing and The Nasdaq National Market
fees, all registration, filing, qualification and other fees and expenses of
complying with securities or blue sky laws, fees of the National Association of
Securities Dealers, Inc., transfer taxes and fees of transfer agents and
registrars, all word processing, duplicating and printing expenses, the fees
and disbursements of counsel and independent public accountants for Copano,
including the expenses of any special audits or “cold comfort” letters required
by or incident to such performance and compliance.  Except as otherwise provided in Section 2.08
hereof, Copano shall not be responsible for legal fees incurred by Holders in
connection with the exercise of such Holders’ rights hereunder.  In addition, Copano shall not be responsible
for any “Selling Expenses,” which means all underwriting fees, discounts
and selling commissions allocable to the sale of the Registrable Securities.

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

Section 2.08          Indemnification.

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

10

(b)           By
Each Selling Holder.  Each Selling
Holder agrees severally and not jointly to indemnify and hold harmless Copano,
its directors and officers, and each Person, if any, who controls Copano within
the meaning of the Securities Act or of the Exchange Act to the same extent as
the foregoing indemnity from Copano to the Selling Holders, but only with
respect to information regarding such Selling Holder furnished in writing by or
on behalf of such Selling Holder expressly for inclusion in the Shelf Registration
Statement or prospectus supplement relating to the Registrable Securities, or
any amendment or supplement thereto; provided,
however, that the liability of
each Selling Holder shall not be greater in amount than the dollar amount of
the proceeds (net of any Selling Expenses) received by such Selling Holder from
the sale of the Registrable Securities giving rise to such indemnification.

(c)           Notice.  Promptly after receipt by an indemnified
party hereunder of notice of the commencement of any action, such indemnified
party shall, if a claim in respect thereof is to be made against the
indemnifying party hereunder, notify the indemnifying party in writing thereof,
but the omission so to notify the indemnifying party shall not relieve it from
any liability which it may have to any indemnified party other than under this Section 2.08.  In any action brought against any indemnified
party, it shall notify the indemnifying party of the commencement thereof.  The indemnifying party shall be entitled to
participate in and, to the extent it shall wish, to assume and undertake the
defense thereof with counsel reasonably satisfactory to such indemnified party
and, after notice from the indemnifying party to such indemnified party of its
election so to assume and undertake the defense thereof, the indemnifying party
shall not be liable to such indemnified party under this Section 2.08
for any legal expenses subsequently incurred by such indemnified party in
connection with the defense thereof other than reasonable costs of
investigation and of liaison with counsel so selected; provided, however, that, (i) if the indemnifying
party has failed to assume the defense and employ counsel or (ii) if the
defendants in any such action include both the indemnified party and the indemnifying
party and counsel to the indemnified party shall have concluded that there may
be reasonable defenses available to the indemnified party that are different
from or additional to those available to the indemnifying party, or if the
interests of the indemnified party reasonably may be deemed to conflict with
the interests of the indemnifying party, then the indemnified party shall have
the right to select a separate counsel and to assume such legal defense and
otherwise to participate in the defense of such action, with the reasonable
expenses and fees of such separate counsel and other reasonable expenses
related to such participation to be reimbursed by the indemnifying party as
incurred.  Notwithstanding any other
provision of this Agreement, no indemnified party shall settle any action
brought against it with respect to which it is entitled to indemnification
hereunder without the consent of the indemnifying party, unless the settlement
thereof imposes no liability or obligation on, and includes a complete and
unconditional release from all liability of, the indemnifying party.

(d)           Contribution.  If the indemnification provided for in this Section 2.08
is held by a court or government agency of competent jurisdiction to be
unavailable to any indemnified party or is insufficient to hold them harmless
in respect of any Losses, then each such indemnifying party, in lieu of
indemnifying such indemnified party, shall contribute to the amount paid or
payable by such indemnified party as a result of such Loss in such proportion
as is appropriate to reflect the relative fault of the indemnifying party on
the one hand and of such indemnified party on the other in connection with the
statements or omissions which resulted in such Losses, as well as any other relevant
equitable considerations; provided,
however, that in no event shall

11

such Selling Holder be required to contribute an aggregate amount in
excess of the dollar amount of proceeds (net of Selling Expenses) received by
such Selling Holder from the sale of Registrable Securities giving rise to such
indemnification.  The relative fault of
the indemnifying party on the one hand and the indemnified party on the other shall
be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged omission
to state a material fact has been made by, or relates to, information supplied
by such party, and the parties’ relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or
omission.  The parties hereto agree that
it would not be just and equitable if contributions pursuant to this paragraph
were to be determined by pro rata allocation or by any other method of
allocation which does not take account of the equitable considerations referred
to herein.  The amount paid by an
indemnified party as a result of the Losses referred to in the first sentence
of this paragraph shall be deemed to include any legal and other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any Loss which is the subject of this paragraph. No person guilty
of fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any Person who is not
guilty of such fraudulent misrepresentation.

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

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

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

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

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

Section 2.10          Transfer
or Assignment of Registration Rights. 
The rights to cause Copano to register Registrable Securities granted to
the Purchasers by Copano under this Article II may be transferred or
assigned by any Purchaser to one or more transferee(s) or assignee(s) of such
Registrable Securities; provided,
however, that (a) unless
such transferee is an Affiliate of such Purchaser, each such transferee or
assignee holds Registrable Securities representing at least $5 million of the
Purchased Units sold pursuant to the terms of the Purchase Agreement,
(b) Copano is given written notice prior to any said transfer or
assignment, stating

12

the name and address of each such transferee and identifying the
securities with respect to which such registration rights are being transferred
or assigned, and (c) each such transferee assumes in writing responsibility
for its portion of the obligations of such Purchaser under this Agreement.

Section 2.11          Limitation
on Subsequent Registration Rights. 
From and after the date hereof, Copano shall not, without the prior
written consent of the Holders of a majority of the outstanding Registrable
Securities, enter into any agreement with any current or future holder of any
securities of Copano that would allow such current or future holder to require
Copano to include securities in any registration statement filed by Copano on a
basis that is superior in any way to the piggyback rights granted to Purchaser
hereunder.

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

ARTICLE III

MISCELLANEOUS

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

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

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

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

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

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

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

Section 3.04          Aggregation
of Purchased Units.  All Purchased
Units held or acquired by Persons who are Affiliates of one another shall be
aggregated together for the purpose of determining the availability of any
rights under this Agreement.

Section 3.05          Recapitalization,
Exchanges, Etc. Affecting the Common Units. 
The provisions of this Agreement shall apply to the full extent set
forth herein with respect to any and

13

all units of Copano or any successor or assign of Copano (whether by
merger, consolidation, sale of assets or otherwise) which may be issued in
respect of, in exchange for or in substitution of, the Registrable Securities,
and shall be appropriately adjusted for combinations, recapitalizations and the
like occurring after the date of this Agreement.

Section 3.06          Specific
Performance.  Damages in the event of
breach of this Agreement by a party hereto may be difficult, if not impossible,
to ascertain, and it is therefore agreed that each such Person, in addition to
and without limiting any other remedy or right it may have, will have the right
to an injunction or other equitable relief in any court of competent
jurisdiction, enjoining any such breach, and enforcing specifically the terms
and provisions hereof, and each of the parties hereto hereby waives any and all
defenses it may have on the ground of lack of jurisdiction or competence of the
court to grant such an injunction or other equitable relief.  The existence of this right will not preclude
any such Person from pursuing any other rights and remedies at law or in equity
which such Person may have.

Section 3.07          Counterparts.  This Agreement may be executed in any number
of counterparts and by different parties hereto in separate counterparts, each
of which counterparts, when so executed and delivered, shall be deemed to be an
original and all of which counterparts, taken together, shall constitute but
one and the same Agreement.

Section 3.08          Headings.  The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.

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

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

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

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

Section 3.13          No
Presumption.  If any claim is made by
a party relating to any conflict, omission, or ambiguity in this Agreement, no
presumption or burden of proof or persuasion shall

14

be implied by virtue of the fact that this Agreement was prepared by or
at the request of a particular party or its counsel.

15

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

	
   

  	
  COPANO ENERGY, L.L.C.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
  John
  R. Eckel, Jr.

  
	
   

  	
   

  	
  Title:

  	
  Chairman
  of the Board and Chief Executive Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  KAYNE
  ANDERSON MLP

  INVESTMENT COMPANY

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:
  

  	
  Kevin
  McCarthy

  
	
   

  	
   

  	
  Title:

  	
  Chief
  Executive Officer and President

  
	
   

  	
   

  	
  Address:

  	
  1800
  Avenue of the Stars,

  
	
   

  	
   

  	
   

  	
  2nd
  Floor

  
	
   

  	
   

  	
   

  	
  Los
  Angeles, California 90067

  
	
   

  	
   

  	
  Attention:
  

  	
  David
  Shladovsky, Esq.

  
	
   

  	
   

  	
  Facsimile:
  

  	
  (310)
  284-6490

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  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

  

 

16

 

	
   

  	
  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

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  TORTOISE
  ENERGY

  INFRASTRUCTURE CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:
  

  	
  David
  J. Schulte

  
	
   

  	
   

  	
  Title:
  

  	
  President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  TORTOISE
  ENERGY CAPITAL

  CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:
  

  	
  David
  J. Schulte

  
	
   

  	
   

  	
  Title:
  

  	
  President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  ENERGY
  INCOME AND GROWTH

  FUND

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  

 

17

 

	
   

  	
  FIDUCIARY/CLAYMORE
  MLP

  OPPORTUNITY FUND

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  GOLDMAN, SACHS & CO.

  On behalf of Principal Strategies Group

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  ALERIAN
  OPPORTUNITY PARTNERS

  LP

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  ALERIAN CAPITAL PARTNERS LP

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  STROME MLP FUND, L.P.

  
	
   

  	
   

  
	
   

  	
  By:
  

  	
  Strome Investment
  Management, L.P.,

  its general partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:
  

  	
  Jeffrey
  Lambert

  
	
   

  	
   

  	
  Title:
  

  	
  Chief
  Operating Officer

  

 

18

 

	
   

  	
  STROME ALPHA, LP

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Strome Investment
  Management, L.P.,

  its general partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:
  

  	
  Jeffrey
  Lambert

  
	
   

  	
   

  	
  Title:
  

  	
  Chief
  Operating Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  STROME FAMILY FOUNDATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Jeffrey
  Lambert

  
	
   

  	
   

  	
  Title:

  	
  Treasurer
  and Secretary

  

 

19

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