EXHIBIT 10.5
AMENDED AND RESTATED SUBORDINATED TERM NOTE
THIS AMENDED AND RESTATED SUBORDINATED TERM NOTE AND INDEBTEDNESS
EVIDENCED HEREBY ARE AND SHALL AT ALL TIMES BE AND REMAIN SUBORDINATED IN
RIGHT OF PAYMENT TO THE EXTENT AND IN THE MANNER SET FORTH IN THAT CERTAIN
SECOND AMENDED AND RESTATED DEBT SUBORDINATION AGREEMENT, DATED AS OF MAY
5, 2006, BY AND AMONG BANK OF AMERICA, N.A., ARGAN, INC., A DELAWARE
CORPORATION AND XXXXX X. XXXXXX, AN INDIVIDUAL, TO THE PRIOR PAYMENT IN
FULL OF ALL SUPERIOR DEBT (AS DEFINED THEREIN).
$3,292,131.00
As of May 5, 2006
FOR VALUE RECEIVED, the undersigned, ARGAN, INC., a Delaware corporation
(the "Maker"), hereby promises to pay to the order of XXXXX X. XXXXXX (the
"Creditor"), at 0000 Xxxxxxx Xxxx, Xxxxxx, Xxxxxxx 00000, the principal sum of
THREE MILLION TWO HUNDRED NINETY TWO THOUSAND ONE HUNDRED THIRTY ONE DOLLARS
($3,292,131.00) (the "Principal Amount"), in lawful money of the United States
of America in immediately available funds, without deduction, set-off or
counterclaim, and to pay interest from the date hereof on the principal amount
hereof from time to time outstanding, in like funds, at a rate per annum equal
to ten percent (10%). Interest hereunder shall be due and payable on a quarterly
basis commencing on July 1, 2006 and continuing on the first day of each
October, January, April and July thereafter. Unless otherwise prepaid as a
Mandatory Prepayment as provided below, the Principal Amount together with all
accrued and unpaid interest thereon shall be due and payable in one installment
on August 1, 2007.
Notwithstanding the forgoing, in the event that the Maker receives gross
cash consideration (prior to the payment of any fees, discounts, costs, expenses
or commissions) in connection with one or more public offerings or private
placements of the Maker's capital stock during the period from the date hereof
to August 1, 2007 which is in excess of $1,000,000 in the aggregate (the
"Aggregate Consideration"), the Maker shall prepay the Principal Amount by an
amount equal to that portion of the Aggregate Consideration which is in excess
of $1,000,000 (a "Mandatory Prepayment") so that all capital raised by the Maker
which is in excess of $1,000,000 shall be paid over to the Creditor until such
time as the Principal Amount and all other sums due hereunder have been paid in
full.
In addition, if, on and after the date hereof, Bank of America, N.A. (the
"Bank") extends to the Maker additional term loan financing (the "Additional
Term Loan") which is funded and received by the Maker on or before August 1,
2007, and the Bank permits the proceeds of such Additional Term Loan to be used
by the Maker to pay down a portion of the subordinated debt evidenced by this
Note, then the Maker shall use the proceeds of such Additional Term Loan (net of
any fees, costs and expenses incurred in connection with the closing of the
Additional Term Loan) (the "Net Additional Term Loan Proceeds"), to prepay the
Principal Amount by an amount equal to such Net Additional Term Loan Proceeds
(the "Additional Term Loan Mandatory Prepayment").
In addition, Maker agrees that it shall not close any transaction after
the date hereof involving the acquisition by Maker of all or substantially all
of the capital stock, equity interests or assets of any corporation,
partnership, limited liability company or any other organization or entity (an
"Acquisition") unless on or before the closing of any such Acquisition all
amounts due hereunder shall have been paid in full (the "Acquisition Mandatory
Prepayment"); provided, however, that, notwithstanding the forgoing, the Maker
shall not be required to make the Acquisition Mandatory Prepayment in connection
with any acquisition by the Maker of any assets, capital stock or other equity
interests of any of its subsidiaries or affiliates whether as a result of a
merger or for any other reason.
Interest on the outstanding Principal Amount shall be computed on the
basis of the actual number of days elapsed over a 365 day year.
The Maker hereby waives diligence, presentment, demand, protest and notice
of any kind whatsoever. The non-exercise by the holder of any of its rights
hereunder in any particular instance shall not constitute a waiver thereof in
that or any subsequent instance.
THIS AMENDED AND RESTATED SUBORDINATED TERM NOTE SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF CONNECTICUT, WITHOUT
REGARD TO CHOICE OF LAW DOCTRINE, AND ANY APPLICABLE LAWS OF THE UNITED STATES
OF AMERICA.
This Amended and Restated Subordinated Term Note is being issued in full
and complete satisfaction of all obligations of the Maker to pay to the
Creditor: (a) the Additional Cash Consideration (as defined in and to be paid
pursuant to that certain Agreement and Plan of Merger among the Maker, the
Creditor, Vitarich Laboratories, Inc., a Florida corporation and Vitarich
Laboratories, Inc., a Delaware corporation (formerly known as AGAX/VLI
Acquisition Corporation) ("Vitarich") dated as of August 31, 2004); and (b) the
Reduced Earn-back Amount (as defined in and calculated pursuant to that certain
Letter Agreement among the Maker, the Creditor and Vitarich effective as of June
30, 2005) (the "2005 Letter Agreement"); and (c) the Additional Earn-back Amount
(as defined in and calculated pursuant to the 2005 Letter Agreement).
This Amended and Restated Subordinated Term Note amends, restates,
consolidates, supersedes and replaces in their entirety: (a) that certain
$2,698,131.00 Subordinated Term Note of the Maker payable to the Creditor dated
as of June 30, 2005; and (b) that certain $594,000.00 Subordinated Term Note
(Earn-Back Obligations) of the Maker payable to the Creditor dated as of
November 30, 2005 (collectively, the "Existing Notes") and, upon the execution
and delivery by the Maker of this Amended and Restated Subordinated Note to the
Creditor, the Creditor shall immediately return said Existing Notes to the Maker
marked "Cancelled".
ARGAN, INC.
By: /s/ Xxxxxx Xxxxxx
--------------------
Name: Xxxxxx Xxxxxx
-------------
Title: SVP/CFO
-------------
