Document:

Exhibit 4.2

 

Execution Copy

 

REGISTRATION RIGHTS AGREEMENT

 

 

by and
among

 

MARKWEST
ENERGY PARTNERS, L.P.,

 

KAYNE
ANDERSON ENERGY FUND II, L.P.,

 

KAYNE ANDERSON CAPITAL INCOME PARTNERS (QP), L.P.,

 

KAYNE ANDERSON MLP FUND, L.P.,

 

KAYNE ANDERSON CAPITAL INCOME FUND, LTD.,

 

KAYNE ANDERSON INCOME PARTNERS, L.P.,

 

HFR RV PERFORMANCE MASTER TRUST,

 

TORTOISE ENERGY INFRASTRUCTURE CORPORATION

 

AND

 

ENERGY
INCOME AND GROWTH FUND

 

 

REGISTRATION RIGHTS AGREEMENT

 

THIS REGISTRATION RIGHTS
AGREEMENT (this “Agreement”) is made and entered into as of July
    , 2004, by and among MARKWEST ENERGY PARTNERS, L.P. (“MarkWest”)
and each of KAYNE ANDERSON ENERGY FUND II, L.P. (“KAEF”), KAYNE ANDERSON CAPITAL INCOME PARTNERS (QP),
L.P. (“KACIP”), KAYNE ANDERSON MLP FUND, L.P. (“KAMLP”), KAYNE
ANDERSON CAPITAL INCOME FUND, LTD. (“KACIF”), KAYNE ANDERSON INCOME
PARTNERS, L.P. (“KAIP”), HFR RV PERFORMANCE MASTER TRUST (“HFR”)
(collectively, “Kayne Anderson”),  TORTOISE ENERGY
INFRASTRUCTURE CORPORATION (“Tortoise”) and ENERGY INCOME AND GROWTH
FUND (“Energy Income”) (each of KAEF, KACIP, KAMLP, KACIF, KAIP, HFR,
Tortoise and Energy Income a “Purchaser” and collectively, the “Purchasers”).  Capitalized terms used herein without
definition shall have the meanings given to them in the Purchase Agreement.

 

This Agreement is made in
connection with the Closing of the issuance and sale of the Purchased Units
pursuant to the Unit Purchase Agreement, dated as of July 29, 2004,
by and among MarkWest and the Purchasers (the “Purchase Agreement”).  MarkWest has agreed to provide the
registration and other rights set forth in this Agreement for the benefit of
the Purchasers pursuant to Section 2.05(d) of the Purchase Agreement. 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.  The terms set forth below are used herein as
so defined:

 

“Affiliate” means,
with respect to a specified Person, any other Person, 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.

 

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

 

“Closing” shall
have the meaning set forth in the Purchase Agreement.

 

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

 

“Common Units”
means the common units of MarkWest.

 

1

 

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

 

“Exchange Act”
shall mean the Securities Exchange Act of 1934, as amended, and the rules and
regulations of the Commission promulgated thereunder.

 

“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.

 

“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.

 

“MarkWest Hydrocarbon”
means MarkWest Hydrocarbon, Inc., a Delaware corporation.

 

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

 

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

 

“Prior Holders”
means Tortoise MWEP, L.P., a Kansas limited partnership, and each investor a
party to the Registration Rights Agreement dated June 13, 2003 by and among
MarkWest and each party listed on Schedule A thereto.

 

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

 

“Purchased Units”  shall have the meaning set forth in the
Purchase Agreement.

 

“Purchasers” has
the meaning specified therefor in the introductory paragraph of this Agreement.

 

“Registrable
Securities” means the Common Units comprising the Purchased Units until
such time as such securities cease to be Registrable Securities pursuant to
Section 1.02 hereof.

 

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

 

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

 

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

 

2

 

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

 

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

 

“Shelf Registration
Statement” has the meaning specified therefor in Section 2.01(a) of this
Agreement.

 

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

 

Section 1.02           Registrable Securities.  Any Registrable Security will cease to be a
Registrable Security when (a) a registration statement covering such
Registrable Security has been declared effective by the Commission and such
Registrable Security has been sold or disposed of pursuant to such effective
registration statement; (b) such Registrable Security has been disposed of
pursuant to any section of Rule 144 (or any similar provision then in force
under the Securities Act); or (c) such Registrable Security is held by MarkWest
or one of its subsidiaries.  Except for
the rights and obligations under Section 2.08 herein, all rights and
obligations of each Purchaser under this Agreement, and all rights and
obligations of MarkWest under this Agreement with respect to such Purchaser,
shall terminate when such Purchaser is no longer a Holder

 

ARTICLE
II.

REGISTRATION
RIGHTS

 

Section 2.01           Shelf Registration.

 

(a) Shelf
Registration.  As soon as
practicable following the Closing of the purchase of the Purchased Units
pursuant to the terms of the Purchase Agreement, but in any event within 120
days of the Closing, MarkWest shall prepare and file a registration statement
under the Securities Act to permit the public resale of the Registrable
Securities from time to time as permitted by Rule 415 of the Securities Act
(the “Shelf Registration Statement”). 
MarkWest shall use its commercially reasonable efforts to cause the
Shelf Registration Statement to become effective no later than 180 days after
the date of the Closing (the “Shelf Registration”).  A Shelf Registration Statement filed
pursuant to this Section 2.01(a) shall be on such appropriate registration form
of the Commission as shall be selected by MarkWest; 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 MarkWest 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, MarkWest
shall use its commercially reasonable efforts to include such information in
the prospectus.  MarkWest will cause the
Shelf Registration Statement filed

 

3

 

pursuant to this Section 2.01(a) to be continuously effective,
supplemented and amended to the extent necessary to assure that it is available
for resale of all Registrable Securities by the Holders and that it conforms in
all material respects with the requirements of the Securities Act during the
entire period beginning on the date the Shelf Registration Statement first is
declared effective under the Securities Act and ending on the earlier to occur
of (i) the date all Registrable Securities covered by the Shelf Registration
Statement have been distributed in the manner set forth and as contemplated in
the Shelf Registration Statement and (ii) the date on which the Registrable
Securities cease to be Registrable Securities hereunder in accordance with
Section 1.02 (the “Effectiveness Period”).  The Shelf Registration Statement when declared effective
(including the documents incorporated therein by reference) will comply as to
form with all applicable requirements of the Securities Act and the Exchange
Act and will not contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading.  

 

(b) Delay Rights.  Notwithstanding anything to the contrary
contained herein, MarkWest 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), for a period not to exceed an aggregate of 60 days in
any 180-day period and not to exceed an aggregate of 90 days in any 365-day
period, if (i) MarkWest is pursuing a material acquisition, merger,
reorganization, disposition or other similar transaction and MarkWest
determines in good faith that MarkWest’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) MarkWest has
experienced some other material non-public event the disclosure of which at
such time, in the good faith judgment of MarkWest, would materially adversely
affect MarkWest.  Upon disclosure of
such information or the termination of the condition described above, MarkWest
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.

 

Section 2.02           Piggyback Registration.

 

(a) Participation.  If MarkWest, MarkWest Hydrocarbon or any
subsidiary of MarkWest Hydrocarbon at any time proposes to (i) file a
prospectus supplement to an effective shelf registration statement with respect
to an Underwritten Offering of Common Units for its own account or (ii) register
any Common Units for its own account for sale to the public in an Underwritten
Offering other than, in the case of clause (ii), (a) a registration
relating solely to employee benefit plans, (b) a registration relating
solely to a Rule 145 transaction, or (c) a registration on any
registration form which does not permit secondary sales or does not include
substantially the same information as would be required to be included in a
registration statement covering the sale of Registrable Securities, then, as
soon as practicable following the engagement of counsel by MarkWest to prepare
the documents to be used in connection with an Underwritten Offering, MarkWest
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 as each such Holder
may request in writing (a “Piggyback

 

4

 

Registration”); provided, however,
that MarkWest shall not be required to offer such opportunity to Holders to the
extent MarkWest has been advised in writing 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.  Each Holder of Registrable
Securities acknowledges for purposes of clause (ii) that its Registrable
Securities are not covered by MarkWest’s existing registration statement on
Form S-3 (File No. 333-116680) and MarkWest shall have no obligation to include
such Registrable Securities in such registration statement, by post-effective
amendment or otherwise; provided, however, that if a registration statement
covering the Registrable Securities is effective and a prospectus supplement
relating to the Form S-3 (File No. 333-116680) described above has been
proposed with respect to an Underwritten Offering, the Holders shall be
entitled to notice and the opportunity to include in such Underwritten Offering,
pursuant to the registration statement covering the Registrable Securities,
such number of Registrable Securities as each such Holder may request in
writing, subject to the other terms and conditions of this Section 2.02(a).  Subject to Section 2.02(b), MarkWest
shall include in such Underwritten Offering all such Registrable Securities (“Included
Registrable Securities”) with respect to which MarkWest has received
requests within one Business Day after MarkWest’s notice has been delivered in
accordance with Section 3.01.  If
no request for inclusion from a Holder is received within the specified time,
such Holder shall have no further right to participate in such Piggyback
Registration.  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, MarkWest shall
determine for any reason not to undertake or to delay such Underwritten
Offering, MarkWest may, at its election, give written notice of such determination
to the Selling Holders and, (i) 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 (ii) 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 MarkWest of such withdrawal up to
and including the time of pricing of such offering.

 

(b)           Priority of Piggyback Registration.   If the Managing Underwriter or Underwriters
of any proposed Underwritten Offering of Common Units included in a Piggyback
Registration advises MarkWest in writing that the total amount of Common Units
which the Selling Holders and any other Persons intend to include in such
offering exceeds the number which 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
MarkWest can be sold without having such adverse effect, with such number to be
allocated pro  rata among the Selling Holders and Prior Holders
who have requested participation in the Piggyback Registration (based, for each
such Selling Holder or Prior Holder, as applicable, on the percentage derived
by dividing (A) the number of Registrable Securities proposed to be sold by
such Selling Holder or Prior Holder in such offering; by (B) the aggregate
number of Common Units proposed to be sold by the Selling Holders and Prior
Holders participating in the Piggyback Registration to be included in such
offering).

 

5

 

(c)           Termination of Piggyback
Registration Rights.  The Piggyback
Registration rights granted pursuant to this Section 2.02 shall be unlimited in
number and shall terminate the later of (i) two years following the Closing
Date under the Purchase Agreement and (ii) the date on which all Registrable
Securities cease to be Registrable Securities hereunder in accordance with
Section 1.02.

 

Section 2.03           Underwritten Offering.

 

(a) Shelf
Registration.  In the event that one
or more Selling Holders elect to dispose of Registrable Securities under the
Shelf Registration Statement pursuant to an Underwritten Offering and such
Selling Holders reasonably anticipate gross proceeds from such Underwritten
Offering of at least $10 million, MarkWest shall 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 in order to expedite or
facilitate the registration and disposition of the Registered Securities;
provided, however, that MarkWest shall be required to cause appropriate
officers of MarkWest or its Affiliates to participate in a “road show” or
similar marketing effort being conducted by such underwriter with respect to
such Underwritten Offering only if the Selling Holders reasonably anticipate
gross proceeds from such Underwritten Offering of at least $20 million.

 

(b) General
Procedures.  In connection with any
Underwritten Offering under this Agreement (except for Underwritten Offerings
pursuant to Section 2.03(a)), MarkWest shall be entitled to select the Managing
Underwriter or Underwriters, each of which must be a nationally-recognized
firm.  In the case of an Underwritten
Offering pursuant to Section 2.03(a) hereof, the Selling Holders in such
Underwritten Offering shall be entitled to select the Managing Underwriter or
Underwriters, each of which must be a nationally recognized firm.  In connection with an Underwritten Offering
under Section 2.01 or 2.02 hereof, each Selling Holder and MarkWest shall be
obligated to enter into an underwriting agreement which 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, MarkWest 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 MarkWest 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 MarkWest and the Managing Underwriter; provided,
however, that such withdrawal must be made prior to the time in the
final sentence of Section 2.02(a)

 

6

 

hereof to be effective.  No such
withdrawal or abandonment shall affect MarkWest’s obligation to pay
Registration Expenses.

 

Section 2.04           Registration Procedures.  In connection with its obligations contained
in Sections 2.01, 2.02 and 2.03, MarkWest 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 that
MarkWest 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;

 

7

 

(e)           immediately notify each Selling
Holder and each underwriter, at any time when a prospectus relating thereto is
required to be delivered under the Securities Act, of (i) the happening of any
event as a result of which the prospectus or prospectus supplement contained in
the Shelf Registration Statement or any other registration statement
contemplated by this Agreement, as then in effect, includes an untrue statement
of a material fact or omits to state any material fact required to be stated
therein or necessary to make the statements therein not misleading in the light
of the circumstances then existing; (ii) the issuance or threat of issuance by
the Commission of any stop order suspending the effectiveness of the Shelf
Registration Statement or any other registration statement contemplated by this
Agreement, or the initiation of any proceedings for that purpose; or (iii) the
receipt by MarkWest 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, MarkWest 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)            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 MarkWest, 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 MarkWest’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) and as are customarily covered in opinions of
issuer’s counsel and in accountants’ letters delivered to the underwriters in
Underwritten Offerings of securities, 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 covering the period of at least 12 months,
but not more than 18 months, beginning with the first full calendar month after
the effective date of such registration 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 MarkWest personnel as is

 

8

 

reasonable and customary to enable such parties to establish a due
diligence defense under the Securities Act; provided that MarkWest need not
disclose any information to any such representative unless and until such
representative has entered into a confidentiality agreement with MarkWest;

 

(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 MarkWest 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 MarkWest 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 MarkWest 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
MarkWest 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 MarkWest, such Selling Holder will, or will
request the managing underwriter or underwriters, if any, to deliver to
MarkWest (at MarkWest’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.  MarkWest shall have no obligation to include
in the Shelf Registration Statement units of a Holder or in a Piggyback
Registration units of a Selling Holder who has failed to timely furnish such
information which, in the opinion of counsel to MarkWest, 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 90 calendar day period beginning on the
date of a prospectus supplement filed with the Commission with respect to the
pricing of an Underwritten Offering, provided that the duration of the
foregoing restrictions shall be no longer than the duration of the shortest
restriction generally imposed by the underwriters on the officers or directors
or any other unitholder of MarkWest on whom a restriction is imposed; provided,
however, that the restrictions under this Section 2.06 shall not

 

9

 

apply to any Holder if such Holder, along with its Affiliates,
beneficially owns (in the aggregate) less than 5% of the outstanding Common Units.

 

Section 2.07           Expenses.

 

(a)           Certain Definitions.  “Registration Expenses” means all
expenses incident to MarkWest’s performance under or compliance with this
Agreement to effect the registration of Registrable Securities in a Shelf
Registration or a Piggyback Registration, or otherwise pursuant to Section
2.03, and the disposition of such securities, including, without limitation,
all registration, filing, securities exchange listing and American Stock
Exchange 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
MarkWest, 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, MarkWest shall not be responsible for legal fees incurred by Holders in
connection with the exercise of such Holders’ rights hereunder.  In addition, MarkWest 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.  MarkWest will pay all Registration Expenses
in connection with the Shelf Registration Statement filed pursuant to Section
2.01(a) of this Agreement, and MarkWest will pay all Registration Expenses in
connection with a Piggyback Registration, whether or not the applicable
registration statement becomes effective or any sale is made pursuant to the
Shelf Registration Statement or Piggyback Registration. Each Selling Holder
shall pay all Selling Expenses in connection with any sale of its Registrable
Securities hereunder.

 

Section 2.08           Indemnification.

 

(a)           By MarkWest.  In the event of a registration of any
Registrable Securities under the Securities Act pursuant to this Agreement,
MarkWest will indemnify and hold harmless each Selling Holder thereunder, its
Affiliates and their respective 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 (collectively, the “Selling Holder Indemnified Persons”), against
any losses, claims, damages, expenses or liabilities (including reasonable
attorneys’ fees and expenses) (collectively, “Losses”), joint or
several, to which such Selling Holder Indemnified 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

 

10

 

reimburse each such Selling Holder Indemnified 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 MarkWest 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 Indemnified 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 Indemnified Person, and shall survive the
transfer of such securities by such Selling Holder.

 

(b)           By Each Selling Holder.  Each Selling Holder agrees severally and not
jointly to indemnify and hold harmless MarkWest, its Affiliates and their
respective directors and officers, and each Person, if any, who controls
MarkWest within the meaning of the Securities Act or of the Exchange Act to the
same extent as the foregoing indemnity from MarkWest 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 

 

11

 

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 MarkWest or any Selling Holder 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 Losses as between
MarkWest on the one hand and such Selling Holder on the other, in such
proportion as is appropriate to reflect the relative fault of MarkWest on the
one hand and of such Selling Holder on the other in connection with the
statements or omissions which resulted in such Losses, as well as any other
relevant equitable considerations; provided, however, that in no
event shall such Selling Holder be required to contribute an aggregate amount
in excess of the dollar amount of proceeds (net of Selling Expenses) received
by such Selling Holder from the sale of Registrable Securities giving rise to
such indemnification.  The relative
fault of MarkWest on the one hand and each Selling Holder 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 in the first
sentence of this paragraph.  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, MarkWest agrees
to use its commercially reasonable efforts to:

 

(a)           Make and keep public information
regarding MarkWest 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 MarkWest under the
Securities Act and the Exchange Act at all times from and after the date
hereof; and

 

12

 

(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 MarkWest, 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 MarkWest to register Registrable Securities granted to the
Purchasers by MarkWest under this Article II may be transferred or assigned by
the Purchasers to one or more transferee(s) or assignee(s) of such Registrable
Securities, provided that (a) unless such transferee is an Affiliate of the
transferring Purchaser, each such transferee or assignee holds Registrable
Securities representing at least 15% of the total number of Purchased Units
sold pursuant to the terms of the Purchase Agreement, (b) MarkWest is given
written notice prior to any said transfer or assignment, stating the name and
address of each such transferee and identifying the securities with respect to
which such registration rights are being transferred or assigned, and (c) each
such transferee assumes in writing responsibility for its portion of the
obligations of the Purchasers under this Agreement.

 

ARTICLE III.

MISCELLANEOUS

 

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

 

(a)           if to the Purchasers, at the most
current addresses given by the Purchasers to MarkWest in accordance with the
provisions of this Section 3.01, which addresses initially are, with respect to
the Purchasers, the addresses set forth in the Purchase Agreement,

 

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

 

(c)           if to MarkWest, at 155 Inverness
Drive West, Suite 200, Englewood, CO  80112, 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 the Purchasers under this Agreement may be transferred or
assigned by the Purchasers in accordance with Section 2.10 hereof.

 

Section 3.04           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 MarkWest or any successor or assign of MarkWest (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 3.05           Specific Performance.  Damages in the event of breach of this
Agreement by a party hereto may be difficult, if not impossible, to ascertain,
and it is therefore agreed that each such Person, in addition to and without
limiting any other remedy or right it may have, will have the right to an
injunction or other equitable relief in any court of competent jurisdiction,
enjoining any such breach, and enforcing specifically the terms and provisions
hereof, and each of the parties hereto hereby waives any and all defenses it
may have on the ground of lack of jurisdiction or competence of the court to
grant such an injunction or other equitable relief.  The existence of this right will not preclude any such Person
from pursuing any other rights and remedies at law or in equity which such
Person may have.

 

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

 

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

 

Section 3.08           Governing Law.  The laws of the State of Delaware shall
govern this Agreement without regard to principles of conflict of laws.

 

Section 3.09           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 3.10           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 MarkWest set forth herein. 
This Agreement supersedes all prior agreements and understandings
between the parties with respect to such subject matter.

 

Section 3.11           Amendment.  This Agreement may be amended only by means
of a written amendment signed by MarkWest 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 3.12           No Presumption.  In the event any claim is made by
a party relating to any conflict, omission, or ambiguity in this Agreement, no
presumption or burden of proof or

 

14

 

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

 

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

 

15

 

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

 

	
   

  	
  MARKWEST ENERGY PARTNERS, LP.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  MarkWest Energy GP, L.L.C.,

  
	
   

  	
   

  	
  its general partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ MarkWest Energy Partners, L.P.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
  MarkWest Energy Partners, L.P.

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  KAYNE
  ANDERSON ENERGY FUND II, L.P.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  KAEFTX, L.P., its general partner

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Kayne Anderson Capital Advisors, L.P., its general

  partner

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Kayne Anderson Investment Management, Inc., its

  general partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Kayne Anderson Energy Fund II, L.P.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
  Kayne Anderson
  Energy Fund II, L.P.

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  KAYNE
  ANDERSON CAPITAL INCOME

  PARTNERS (QP), L.P.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Kayne Anderson Capital Advisors, L.P., its general

  partner

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Kayne Anderson Investment Management, Inc., its

  general partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Kayne Anderson Capital Income Partners (QP),
  L.P.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
  Kayne Anderson Capital Income Partners (QP), L.P.

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
					

 

 

	
   

  	
  KAYNE
  ANDERSON MLP FUND, L.P.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Kayne Anderson Capital Advisors, L.P., its general

  partner

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Kayne Anderson Investment Management, Inc., its

  general partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Kayne Anderson MLP Fund, L.P.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
  Kayne Anderson MLP Fund, L.P.

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  KAYNE
  ANDERSON CAPITAL INCOME FUND,

  LTD.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Kayne Anderson Capital Advisors, L.P., its general

  partner

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Kayne Anderson Investment Management, Inc., its

  general partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Kayne Anderson Capital Income Fund, LTD.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
  Kayne Anderson Capital Income Fund, LTD.

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  KAYNE
  ANDERSON INCOME PARTNERS, L.P.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Kayne Anderson Capital Advisors, L.P., its general

  partner

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Kayne Anderson Investment Management, Inc., its

  general partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Kayne Anderson Income Partners, L.P.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
  Kayne Anderson Income Partners, L.P.

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
						

 

 

	
   

  	
  TORTOISE ENERGY INFRASTRUCTURE

  CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ David J. Schulte

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
  David J. Schulte

  
	
   

  	
  Title:

  	
  President

  
	
   

  	
   

  	
   

  
	
   

  	
  ENERGY INCOME AND GROWTH FUND

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Energy Income and Growth Fund

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
  Energy Income and Growth Fund

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  

 

 

	
   

  	
  HFR RV PERFORMANCE MASTER TRUST

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  HFR RV Performance Master Trust

  	
  , its trustee

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ HFR RV Performance Master Trust

  	
   

  
	
   

  	
  Name:

  	
  HFR RV Performance Master Trust

  	
   

  
	
   

  	
  Title:Exhibit
10.2

 

AMENDED AND
RESTATED PROMISSORY NOTE

AND SECURITY AGREEMENT

 

THIS AMENDED AND RESTATED
PROMISSORY NOTE AND SECURITY AGREEMENT (the “Restated Note”) is made and
entered into this the 11th day of October, 2004 by and between Innovo Group Inc., a Delaware corporation (the “Company”)
and Marc Crossman (“Crossman”).

 

WHEREAS, the Company has
executed two promissory notes in favor of Crossman each for the principal sum
of Two Hundred Fifty Thousand and No/100 ($250,000.00) Dollars, together with
interest thereon as set forth in each Promissory Note dated February 7,
2003 and February 13, 2003, respectively, as extended on August 8,
2003 and August 14, 2003 for an additional six (6) months, respectively,
and extended and modified on February 9, 2004 and February 15, 2004
for an additional ninety (90) days, respectively, (together, each of the
promissory notes and extensions shall be referred to collectively as the
“Promissory Notes”);

 

WHEREAS, since the
expiration of the Promissory Notes on May 9, 2004 and May 15, 2004,
respectively, the Company and Crossman have been in discussions regarding the
terms of repayment for the Promissory Notes, as Crossman, in accordance with
the terms of the Promissory Notes as amended, has elected not to renew said Promissory
Notes and the Company has been in default of its interest payments thereunder;
and

 

WHEREAS, in connection
with the discussions between the Company and Crossman regarding terms of
repayment, the Audit Committee of the Board of Directors of the Company have
acknowledged, in the minutes of an Audit Committee meeting on October 8,
2004, that the terms of repayment, as set forth herein and as more fully
described in the repayment schedule attached hereto as Schedule A, are in the best
interest of the parties and that the Promissory Notes shall be deleted in their
entirety and replaced with this Restated Note.

 

NOW, THEREFORE, for good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:

 

1.                                       The
Promissory Notes shall be deleted in their entirety and replaced with this
Restated Note.

 

2.                                       Within
three (3) days of execution of this Restated Note, the Company shall pay to
Crossman the sum of $39,250.85, which represents unpaid and accrued interest
and interest thereon at a default rate of 10% due under the original Promissory
Notes until October 21, 2004.

 

3.                                       In
addition to any payment under Section 2 or any other provision of this
Restated Note, the Company shall pay to the order of Crossman the aggregate
principal sum of

 

 

Five Hundred Thousand and
No/100 ($500,000.00) Dollars (the “Principal Sum”), together with interest
thereon as hereinafter set forth on the outstanding Principal Sum, payable
without demand beginning on Friday, October 22, 2004 and thereafter on the
Friday of each successive week and continuing for a period of nine (9) months
(the “Term of Repayment”) until the Principal Sum is paid in full, as such
payments are set forth more particularly on Schedule A
attached hereto and incorporated herein (the “Payment Schedule” and each
payment on the Payment Schedule shall be deemed a “Payment”).

 

4.                                       (a)  Except as set forth in subsection (b) of
this Section 4, interest on the outstanding Principal Sum shall accrue at
a rate of ten percent (10%) per annum (“Initial Rate”) and such accrued
interest shall be payable in accordance with the Payment Schedule.  All interest accruing hereunder shall be
calculated based upon a three hundred sixty five (365) days’ year and charged
based upon the actual number of days elapsed.

 

(b)  In the event any Payment is not made when due
and not cured within the period prescribed in Section 8(a), then (i)
interest on the outstanding Principal Sum shall accrue at a rate of fourteen
and three-quarters percent (14.75%) per annum (“Contingency Rate”), from and
including such due date, and shall continue to accrue at the Contingency Rate
until all outstanding principal and accrued and unpaid interest are paid in
full, and (ii) the Company shall pay interest on the unpaid and accrued
interest otherwise due under the Payment Schedule at the Contingency Rate
until payment is made.  Except as
provided otherwise in this Restated Note, payments made pursuant to this
subsection (b) shall be applied first to any outstanding late charges,
then to payment of interest, with any remaining payment applied to the
outstanding Principal Sum.

 

(c)  The Company hereby waives and agrees not to
assert any defense of usury with respect to any interest rate or amounts paid
or payable pursuant to this Restated Note.

 

5.                                       This
Restated Note may be prepaid at any time, in whole, or in part, without penalty
or premium during the Term of Repayment.

 

6.                                       To
the extent permissible under that certain Subordination Agreement executed by
Crossman in favor of CIT Commercial Services dated April 11, 2003, the
Company hereby grants a security interest in the following property (the
“Collateral”) to Crossman in order to secure prompt payment and performance of
all obligations of the Company under this Restated Note:  all goods, equipment, inventory, contract
rights and general intangibles, now owned or hereafter acquired by the Company.

 

7.                                       An
Event of Default shall occur upon any of the following:

 

(a)  Any failure by the Company to pay any amount
owing under or in respect of this Restated Note as and when due;

 

(b)  Any breach by the Company of or under any
term of this Restated Note;

 

2

 

(c)  Any change in ownership or control of fifty
percent (50%) or more of the issued and outstanding common stock of the Company
in one or a series of related transfers;

 

(d)  The Company sells, transfers, leases or
otherwise disposes of substantially all of its assets;

 

(e)  The Company acquires, merges or consolidates
with or into any other business organization and the shareholders of the
Company do not own a majority of the ownership interest of the surviving
organization; or

 

(f)  The Company becomes insolvent, is generally
not paying its debts as such debts become due and the nonpayment of such debts
has a material adverse effect on the Company, or suffers a material adverse
change of financial condition.

 

8.                                       (a)                                  In
the Event of Default, the Company shall have five (5) business days to cure
such Event of Default from the receipt of written notice from Crossman of the
Event of Default.

 

(b)                                 In
the event that the Company fails to cure the Event of Default within five (5)
business days after the date of receipt of written notice of such default from
Crossman (such date to be defined as the “Non-cured Default Date”), Crossman
may at his election, notwithstanding any other provision of this Restated Note,
and without notice of his election and without demand, which the Company hereby
expressly waives, do any one or more of the following, all of which are
authorized by the Company:

 

(i)  Declare the outstanding Principal Sum and all
accrued interest on this Restated Note immediately due and payable.  Upon such declaration, interest shall accrue
on the outstanding Principal Sum and outstanding interest at the Contingency
Rate from the date of the Event of Default until all principal and accrued and
unpaid interest are paid in full;

 

(ii)  Exercise any or all of the rights given to a
secured party under law, without notice to or demand upon the Company, all of
which the Company hereby expressly waives.

 

9.                                       In
addition to any other provision of this Restated Note, including the
Contingency Rate set forth in Section 4(b), if any payment is not paid
when due and not cured within the period prescribed in Section 8(a), the
Company shall pay a sum equal to six (6) percent of the amount of the unpaid
payment (“Late Charge”).  The Company and
Crossman agree that actual damages will be extremely difficult and
impracticable to ascertain if any payment is not paid when due, and that the
late charge calculated pursuant to this Section are a reasonable estimate
of Crossman’s anticipated loss.  Any Late
Charge shall be immediately due and payable, and if not paid within fifteen
(15) days, shall accrue interest at the Contingency Rate until paid in full.

 

3

 

10.                                 Except
insofar as the waiver of applicable usury laws contained in Section 4 of
this Restated Note is valid and enforceable, in no event shall the amount of
interest or any other amount paid or agreed to be paid to Crossman exceed the
highest lawful rate permissible under applicable usury laws.  If for any reason amounts payable under this
Restated Note are deemed by a court of competent jurisdiction to involve the
payment of interest in excess of the maximum amount permissible by law, then
the obligation shall be reduced to the limit of such validity, and any amount
received by Crossman in excess of the maximum rate shall be applied to reduce
the unpaid Principal Sum of this Restated Note and not to the payment of
interest.  Such application shall be made
with the same force and effect as though the Company had specifically
designated such sums to be applied to principal and Crossman had agreed to
accept such sums for that purpose.

 

11.                                 Failure
of the either party to exercise any rights hereunder or at law, or indulgence
granted by the holder hereof from time to time, shall in no event be considered
as a waiver of any other right hereunder, including, but not limited to the
right to demand the payment of principal and/or interest comprising a portion
of the indebtedness evidenced hereby.

 

12.                                 Any
notice required to be given by the parties hereunder shall be deemed to be
given if it is in writing and sent via fax, email, overnight courier or regular
mail with confirmation of transmission to the following addresses:

 

	
  If to Company:

  	
  Innovo Group Inc.

  
	
   

  	
  5804 East Slauson
  Avenue

  
	
   

  	
  Commerce, CA 90040

  
	
   

  	
  Attention: Jay Furrow,
  CEO

  
	
   

  	
  Fax: 323.201.3846

  
	
   

  	
  jfurrow@innovogroup.com

  
	
   

  	
   

  
	
  With a copy to:

  	
  Dustin Huffine, Esq.

  
	
   

  	
  5804 East Slauson
  Avenue

  
	
   

  	
  Commerce, CA 90040

  
	
   

  	
  Fax: 323.201.3846

  
	
   

  	
  dhuffine@innovogroup.com

  
	
   

  	
   

  
	
  If to Crossman:

  	
  Marc Crossman

  
	
   

  	
  2600 Mandeville Canyon
  Road

  
	
   

  	
  Los Angeles, CA 90049

  
	
   

  	
  mcrossman@innovogroup.com

  

 

4

 

	
  With a copy to:

  	
  William J. Kelley

  
	
   

  	
  19200 Von Karman
  Avenue, Suite 600

  
	
   

  	
  Irvine, California
  92612

  
	
   

  	
  Fax: (949) 622-5578

  
	
   

  	
  Email:
  wjk@kelleyandkelleylaw.com

  

 

13.                                 If
it is necessary to enforce the payment of this Restated Note through an
attorney or by suit, the Company shall pay all Crossman’s attorney’s fees and
costs of collection, including, but not limited to court costs, court
reporter’s charges, postage, delivery service and transportation costs.

 

14.                                 This
Restated Note has been executed in the State of California and the laws of said
State shall govern the enforcement and construction of this Restated Note.

 

IN WITNESS WHEREOF, the
Company has caused this Restated Note to be executed as of the date first
written above.

 

	
   

  	
  COMPANY:

  
	
   

  	
   

  
	
   

  	
  INNOVO GROUP INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Samuel J. Furrow,
  Jr.

  	
   

  
	
   

  	
   

  	
  Samuel J. Furrow, Jr.

  
	
   

  	
  Its:

  	
  Chief Executive Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Marc B. Crossman

  	
   

  
	
   

  	
  Marc B. Crossman

  
					

 

5

 

Schedule A

 

Repayment

 

6

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00072-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00072-of-00352.parquet"}]]