REGISTRATION RIGHTS AGREEMENT
ARGAN, INC.
EXHIBIT 4.2
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (the "Agreement") is made and
entered into as of the 28th day of January, 2005 (the "Effective Date"), between
Argan, Inc., a Delaware corporation (the "Company"), and MSR I SBIC, L.P., a
Delaware limited partnership (the "Investor").
RECITALS:
A. The Investor has purchased shares of the Company's common stock, par
value $0.15 per share, pursuant to a Subscription Agreement of even date by and
between the Company and the Investor (the "Subscription Agreement").
B. The Company and the Investor desire to set forth the registration
rights to be granted by the Company to the Investor.
NOW, THEREFORE, in consideration of the mutual promises,
representations, warranties, covenants, and conditions set forth herein and in
the Subscription Agreement, the parties mutually agree as follows:
AGREEMENT:
1. Certain Definitions: As used in this Agreement, the following terms
have the following respective meanings:
"Blackout Period" means, with respect to a registration, a period not
in excess of 90 calendar days in any calendar year during which the Company, in
the good faith judgment of its Board of Directors, determines (because of the
existence of, or in anticipation of, any acquisition, financing activity or
other transaction involving the Company, or the unavailability for reasons
beyond the Company's control of any required financial statements, disclosure of
information which is in its best interest not to publicly disclose, or any other
event or condition of similar significance to the Company) that the registration
and distribution of the Registrable Securities to be covered by such
registration statement, if any, would be seriously detrimental to the Company
and its shareholders.
"Certificate of Incorporation" means the Certificate of Incorporation
of the Company as filed with the Secretary of State of the State of Delaware, as
the same may be amended from time to time.
"Commission" means the Securities and Exchange Commission or any other
federal agency at the time administering the Securities Act.
"Common Stock" means the common stock, par value $0.15 per share, of
the Company and any and all shares of capital stock or other equity securities
of: (i) the Company which are added to or exchanged or substituted for the
Common Stock by reason of the declaration of any stock dividend or stock split,
the issuance of any distribution or the reclassification, readjustment,
recapitalization or other such modification of the capital structure of the
Company; and (ii) any other corporation, now or hereafter organized under the
laws of any state or other
governmental authority, with which the Company is merged, which results from any
consolidation or reorganization to which the Company is a party, or to which is
sold all or substantially all of the shares or assets of the Company, if
immediately after such merger, consolidation, reorganization or sale, the
Company or the stockholders of the Company own equity securities having in the
aggregate more than 50% of the total voting power of such other corporation.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations of the Commission promulgated thereunder.
"Family Member" means (a) with respect to any individual, such
individual's spouse, any descendants (whether natural, adopted or in the process
of adoption), any trust all of the beneficial interests of which are owned by
any of such individuals or by any of such individuals together with any
organization described in Section 501 (c)(3) of the Internal Revenue Code of
1986, as amended, the estate of any such individual, and any corporation,
association, partnership or limited liability company all of the equity
interests of which are owned by those above described individuals, trusts or
organizations and (b) with respect to any trust, the owners of the beneficial
interests of such trust.
"Holder" means the Investor or any of the Investor's respective
successors and Permitted Assigns who acquire rights in accordance with this
Agreement with respect to the Registrable Securities directly or indirectly from
the Investor, including from a Permitted Assignee.
"Permitted Assignee" means (a) with respect to a partnership, its
partners or former partners in accordance with their partnership interests, (b)
with respect to a corporation, its shareholders in accordance with their
interest in the corporation, (c) with respect to a limited liability company,
its members or former members in accordance with their interest in the limited
liability company, (d) with respect to an individual party, any Family Member of
such party, (e) an entity that is controlled by, controls, or is under common
control with a Holder, or (f) a party to this Agreement.
The terms "register", "registered" and "registration" refers to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act, and the declaration or ordering of the
effectiveness of such registration statement.
"Registrable Securities" means shares of Common Stock issued to the
Investor pursuant to the Subscription Agreement, excluding (i) any Registrable
Securities that have been publicly sold or may be sold immediately without
registration under the Securities Act either pursuant to Rule 144 of the
Securities Act or otherwise; (ii) any Registrable Securities sold by a person in
a transaction pursuant to a registration statement filed under the Securities
Act or (iii) any Registrable Securities which are at the time subject to an
effective registration statement under the Securities Act.
"Securities Act" means the Securities Act of 1933, as amended, or any
similar federal statute promulgated in replacement thereof, and the rules and
regulations of the Commission thereunder, all as the same are in effect at the
time.
2. Term. This Agreement is in full force and effect for a period of two
years from the Effective Date.
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3. Registration. Not later that 180 days after the date hereof (the
"Registration Filing Date"), the Company must use its commercially reasonable
best efforts to file a registration statement relating to the resale by the
Holders of all of the Registrable Securities; provided, however, that the
Company is not obligated to effect any such registration, qualification or
compliance pursuant to this Section 3, or keep such registration effective
pursuant to Section 4: (i) in any particular jurisdiction in which the Company
would be required to qualify to do business as a foreign corporation or as a
dealer in securities under the securities or "blue sky" laws of such
jurisdiction or to execute a general consent to service of process in effecting
such registration, qualification or compliance, in each case where it has not
already done so, or (ii) during any Blackout Period.
4. Registration Procedures.
(a) In the case of each registration, qualification or compliance
effected by the Company pursuant to Section 3 hereof, the Company will keep each
Holder reasonably advised in writing as to the initiation of each registration,
qualification and compliance and as to the completion thereof. With respect to
any registration statement filed pursuant to Section 3, the Company will use its
commercially reasonable best efforts to:
(i) prepare and file with the Commission with respect to such
Registrable Securities, a registration statement on any form which (a)
the Company then qualifies for, (b) counsel for the Company deems
appropriate, and (c) is available for the resale of the Registrable
Securities in accordance with the intended method(s) of distribution
thereof; provided that no later than five business days before filing
with the Commission a registration statement or prospectus or any
amendments or supplements thereto, including documents incorporated by
reference after the initial filing of any registration statement, the
Company must (a) furnish to the underwriters, if any, and to one
counsel ("Holders Counsel") selected by the Holders of a majority of
the Registrable Securities covered by such registration statement
copies of all such documents proposed to be filed (excluding any
exhibits other than applicable underwriting documents), in
substantially the form proposed to be filed, which documents are
subject to the review of the underwriters and such counsel, and (b)
notify each Holder of Registrable Securities covered by such
registration statement of any stop order issued or threatened by the
Commission and take all reasonable actions required to prevent the
entry of such stop order or to remove it if entered;
(ii) cause such registration statement to become and remain
effective at least for a period ending with the first to occur of (i)
the sale of all Registrable Securities covered by the registration
statement, and (ii) the availability under Rule 144 for the Holder to
immediately, freely resell without restriction all Registrable
Securities covered by the registration statement (the "Effectiveness
Period");
(iii) if a registration statement is subject to review by the
Commission, promptly respond to all comments and diligently pursue
resolution of any comments to the satisfaction of the Commission;
(iv) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to keep such registration
statement effective during the Effectiveness Period
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(but in any event at least until expiration of the 90-day period
referred to in Section 4(3) of the Securities Act and Rule 174, or any
successor thereto, thereunder, if applicable), and comply with the
provisions of the Securities Act with respect to the disposition of all
securities covered by such registration statement during such period in
accordance with the intended method(s) of disposition by the sellers
thereof set forth in such registration statement;
(v) furnish, without charge, to each Holder one (1) signed
copy of such registration statement (excluding any exhibits thereto
other than applicable underwriting documents), each amendment and
supplement thereto (including one (1) conformed copy to each Holder and
one (1) signed copy to each managing underwriter and in each case
including all exhibits thereto), and such number of copies of the
prospectus included in such registration statement (including each
preliminary prospectus and any other prospectus filed under Rule 424
under the Securities Act) as such Holders may request, in conformity
with the requirements of the Securities Act, and such other documents
as such Holder may reasonably request in order to facilitate the
disposition of the Registrable Securities owned by such Holder, but
only during the Effectiveness Period;
(vi) use its commercially reasonable best efforts to register
or qualify such Registrable Securities under such other applicable
securities or blue sky laws of such jurisdictions as any Holder, and
underwriter, if any, of Registrable Securities covered by such
registration statement reasonably requests as may be necessary for the
marketability of the Registrable Securities (such request to be made by
the time the applicable registration statement is deemed effective by
the Commission) and do any and all other acts and things which may be
reasonably necessary or advisable to enable such Holder and each
underwriter, if any; provided that the Company is not required to (a)
qualify generally to do business in any jurisdiction where it would not
otherwise be required to qualify but for this Section 4(a)(vi), (b)
register as a securities dealer, or (c) subject itself to taxation in
any such jurisdiction;
(vii) immediately notify each Holder of any event which causes
the prospectus included in such registration statement to contain an
untrue statement of a material fact or omit any material fact required
to be stated therein or necessary to make the statements therein not
misleading and promptly prepare and furnish to such Holder a supplement
or amendment to such prospectus (or prepare and file appropriate
reports under the Exchange Act) so that, as thereafter delivered to the
Holder of such Registrable Securities, such prospectus does not contain
an untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements
therein not misleading, unless suspension of the use of such prospectus
otherwise is authorized herein or in the event of an Blackout Period,
in which case no supplement or amendment need be furnished (or Exchange
Act filing made) until the termination of such suspension or Blackout
Period; and
(viii) comply, and continue to comply during the period that
such registration statement is effective under the Securities Act, in
all material respects with the Securities Act and the Exchange Act and
with all applicable rules and regulations of the Commission with
respect to the disposition of all securities covered by such
registration statement.
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(b) Each Holder agrees that, upon receipt of any notice from the
Company of the happening of any event of the kind described in Section 4(a)(vii)
or of the commencement of a Blackout Period, such Holder must discontinue
disposition of Registrable Securities pursuant to the registration statement
until such Holder's receipt of the copies of the supplemented or amended
prospectus contemplated by Section 4(a)(vii) hereof or notice of the end of the
Blackout Period, and, if so directed by the Company, such Holder must deliver to
the Company all copies (including, without limitation, any and all drafts),
other than permanent file copies, then in such Holder's possession, of the
prospectus covering such Registrable Securities current at the time of receipt
of such notice. In the event the Company gives any such notice, the period
mentioned in Section 4(a)(i) hereof is extended by the greater of (i) ten
business days or (ii) the number of days during the period from and including
the date of the giving of such notice pursuant to Section 4(a)(vii) hereof to
and including the date when such Holder of Registrable Securities covered by
such registration statement has received the copies of the supplemented or
amended prospectus contemplated by Section 4(a)(vii) hereof.
5. Registration Expenses. The Company must pay all expenses in
connection with any registration, including, without limitation, all
registration, filing, stock exchange and NASD fees, printing expenses, all fees
and expenses of complying with securities or "blue sky" laws, and the fees and
disbursements of counsel for the Company and of its independent accountants and
the reasonable fees and disbursements of Holder's counsel; provided that, in any
underwritten registration, each party must pay for its own underwriting
discounts and commissions and transfer taxes. Except as provided in this Section
5 and in Section 8, the Company is not responsible for the expenses of any
attorney or other advisor employed by a Holder of Registrable Securities.
6. Assignment of Rights. No Holder may assign its rights under this
Agreement to any party without the prior written consent of the Company;
provided, however, that a Holder may assign its rights under this Agreement to a
Permitted Assignee upon notice to the Company.
7. Information by Holder. The Holder or Holders of Registrable
Securities included in any registration must furnish to the Company such
information regarding such Holder or Holders and the distribution proposed by
such Holder or Holders as the Company may request in writing.
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8. Indemnification.
(a) In the event of the offer and sale of Registrable Securities held
by Holders under the Securities Act, the Company must, and hereby does,
indemnify and hold harmless, to the fullest extent permitted by law, each
Holder, its directors, officers, partners, consultants, each other person who
participates as an underwriter in the offering or sale of such securities, and
each other person, if any, who controls or is under common control with such
Holder or any such underwriter within the meaning of Section 15 of the
Securities Act, against any losses, claims, damages or liabilities, joint or
several, and expenses to which the Holder or any such director, officer,
partner, consultant or underwriter or controlling person may become subject
under the Securities Act or otherwise, insofar as such losses, claims, damages,
liabilities or expenses (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 any
registration statement under which such shares were registered under the
Securities Act, any preliminary prospectus, final prospectus or summary
prospectus contained therein, or any amendment or supplement thereto, or any
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein in light of the
circumstances in which they were made not misleading, and the Company must
reimburse the Holder, and each such director, officer, partner, underwriter and
controlling person for any legal or any other expenses reasonably incurred by
them in connection with investigating, defending or settling any such loss,
claim, damage, liability, action or proceeding; provided that the Company is not
liable in any such case (i) to the extent that any such loss, claim, damage,
liability (or action or proceeding in respect thereof) or expense arises out of
or is based upon an untrue statement or omission from such registration
statement, any such preliminary prospectus, final prospectus, summary
prospectus, amendment or supplement made in reliance upon and in conformity with
written information furnished to the Company by or on behalf of such Holder or
(ii) if the person asserting any such loss, claim, damage, liability (or action
or proceeding in respect thereof) who purchased the Registrable Securities that
are the subject thereof did not receive a copy of an amended preliminary
prospectus or the final prospectus (or the final prospectus as amended or
supplemented) at or prior to the written confirmation of the sale of such
Registrable Securities to such person because of the failure of such Holder or
underwriter to so provide such amended preliminary or final prospectus and the
untrue statement or alleged untrue statement or omission or alleged omission of
a material fact made in such preliminary prospectus was corrected in the amended
preliminary or final prospectus (or the final prospectus as amended or
supplemented). Such indemnity remains in full force and effect regardless of any
investigation made by or on behalf of the Holders, or any such director,
officer, partner, underwriter or controlling person and survives the transfer of
such shares by the Holder.
(b) As a condition to including Registrable Securities in a
registration statement, each such Holder agrees to be bound by the terms of this
Section 8 and to indemnify and hold harmless, to the fullest extent permitted by
law, the Company, its directors and officers, its consultants, underwriters and
each other person, if any, who controls the Company within the meaning of
Section 15 of the Securities Act, against any losses, claims, damages or
liabilities, joint or several, to which the Company or any such director,
officer, consultant or underwriter or controlling person may become subject
under the Securities Act or otherwise, insofar as such losses, claims, damages
or liabilities (or actions or proceedings, whether commenced or threatened, in
respect thereof) arise out of or are based upon any untrue statement or alleged
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untrue statement in or omission or alleged omission from such registration
statement, any preliminary prospectus, final prospectus or summary prospectus
contained therein, or any amendment or supplement thereto, if such statement or
alleged statement or omission or alleged omission was made in reliance upon and
in conformity with written information furnished to the Company by such Holder,
and such Holder must reimburse the Company, and each such director, officer, and
controlling person for any legal or other expenses reasonably incurred by them
in connection with investigating, defending, or settling any such loss, claim,
damage, liability, action, or proceeding. Such indemnity remains in full force
and effect regardless of any investigation made by or on behalf of the Company
or any such director, officer or controlling person and shall survive the
transfer by any Holder of such shares.
(c) Promptly after receipt by an indemnified party of notice of the
commencement of any action or proceeding involving a claim referred to in
Section 8(a) or (b) hereof (including any governmental action), such indemnified
party must, if a claim in respect thereof is to be made against an indemnifying
party, give written notice to the indemnifying party of the commencement of such
action; provided that the failure of any indemnified party to give notice as
provided herein does not relieve the indemnifying party of its obligations under
Section 8(a) or (b) hereof, except to the extent that the indemnifying party is
actually prejudiced by such failure to give notice. In case any such action is
brought against an indemnified party, unless in the reasonable judgment of
counsel to such indemnified party a conflict of interest between such
indemnified and indemnifying parties may exist or the indemnified party may have
defenses not available to the indemnifying party in respect of such claim, the
indemnifying party is entitled to participate in and to assume 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 the defense thereof, the indemnifying party is not be
liable to such indemnified party for any legal or other expenses subsequently
incurred by the latter in connection with the defense thereof, unless in such
indemnified party's reasonable judgment a conflict of interest between such
indemnified and indemnifying parties arises in respect of such claim after the
assumption of the defenses thereof or the indemnifying party fails to defend
such claim in a diligent manner. Neither an indemnified nor an indemnifying
party is liable for any settlement of any action or proceeding effected without
its consent. No indemnifying party may, without the consent of the indemnified
party, consent to entry of any judgment or enter into any settlement, which does
not include as an unconditional term thereof the giving by the claimant or
plaintiff to such indemnified party of a release from all liability in respect
of such claim or litigation. Notwithstanding anything to the contrary set forth
herein, and without limiting any of the rights set forth above, in any event any
party has the right to retain, at its own expense, counsel with respect to the
defense of a claim.
(d) In the event that an indemnifying party does or is not permitted to
assume the defense of an action pursuant to Section 8(c) or in the case of the
expense reimbursement obligation set forth in Section 8(a) and (b), the
indemnification required by Section 8(a) and (b) hereof must be made by periodic
payments of the amount thereof during the course of the investigation or
defense, as, and when bills received or expenses, losses, damages, or
liabilities are incurred.
(e) If the indemnification provided for in this Section 8 is held by a
court of competent jurisdiction to be unavailable to an indemnified party with
respect to any loss,
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liability, claim, damage or expense referred to herein, the indemnifying party,
in lieu of indemnifying such indemnified party hereunder, must (i) contribute to
the amount paid or payable by such indemnified party as a result of such loss,
liability, claim, damage or expense as is appropriate to reflect the
proportionate relative fault of the indemnifying party on the one hand and the
indemnified party on the other (determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or omission
relates to information supplied by the indemnifying party or the indemnified
party and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such untrue statement or omission), or (ii) if
the allocation provided by clause (i) above is not permitted by applicable law
or provides a lesser sum to the indemnified party than the amount hereinafter
calculated, not only the proportionate relative fault of the indemnifying party
and the indemnified party, but also the relative benefits received by the
indemnifying party on the one hand and the indemnified party on the other, as
well as any other relevant equitable considerations. No indemnified party guilty
of fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) is entitled to contribution from any indemnifying party who was
not guilty of such fraudulent misrepresentation.
9. Miscellaneous
(a) Governing Law. This Agreement is governed by and construed in
accordance with the laws of the State of New York and the United States of
America, both substantive and remedial. Any judicial proceeding brought against
either of the parties to this agreement or any dispute arising out of this
Agreement or any matter related hereto may be brought in the courts of the State
of New York or in the United States District Court for the Southern District of
New York and, by its execution and delivery of this agreement, each party to
this Agreement accepts the jurisdiction of such courts. The foregoing consent to
jurisdiction does not confer rights on any person other than the parties to this
Agreement.
(b) Successors and Assigns. Except as otherwise provided herein, the
provisions hereof inure to the benefit of, and be binding upon, the successors,
Permitted Assigns, executors and administrators of the parties hereto. In the
event the Company merges with, or is otherwise acquired by, a direct or indirect
subsidiary of a publicly traded company, the Company shall condition the merger
or acquisition to require such parent company to assume the Company's
obligations under this Agreement.
(c) Entire Agreement. This Agreement constitutes the full and entire
understanding and agreement between the parties with regard to the subjects
hereof.
(d) Notices, etc. All notices or other communications which are
required or permitted under this Agreement must be in writing and sufficient if
delivered by hand, by facsimile transmission, by registered or certified mail,
postage pre-paid, or by courier or overnight carrier, to the persons at the
addresses set forth below (or at such other address as may be provided
hereunder), and shall be deemed to have been delivered as of the date so
delivered:
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If to the Company: Argan, Inc.
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇; ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
If to the Investor: MSR I SBIC, L.P.
▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: General Partner
or at such other address as any party furnishes to the other parties in writing.
(e) Delays or Omissions. No delay or omission to exercise any right,
power or remedy accruing to any Holder of any Registrable Securities, upon any
breach or default of the Company under this Agreement, shall impair any such
right, power or remedy of such Holder and shall not be construed to be a waiver
of any such breach or default, or an acquiescence therein, or of or in any
similar breach or default thereafter occurring. Any waiver of any single breach
or default is not a waiver of any other breach or default theretofore or
thereafter occurring. Any waiver, permit, consent or approval of any kind or
character on the part of any Holder of any breach or default under this
Agreement, or any waiver on the part of any Holder of any provisions or
conditions of this Agreement, must be in writing and is effective only to the
extent specifically set forth in such writing. All remedies, either under this
Agreement, or by law or otherwise afforded to any Holder, are cumulative and not
alternative.
(f) Counterparts. This Agreement may be executed in any number of
counterparts, each of which is enforceable against the parties actually
executing such counterparts, and all of which together constitute one
instrument.
(g) Severability. In the case any provision of this Agreement is
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions are not in any way be affected or impaired thereby.
(h) Amendments. The provisions of this Agreement may be amended at any
time and from time to time, and particular provisions of this Agreement may be
waived, with and only with an agreement or consent in writing signed by the
Company and by the Holders.
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This Agreement is hereby executed as of the date first above written.
COMPANY:
ARGAN, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
---------------------------------
Its: Chairman of the Board and
Chief Executive Officer
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INVESTOR:
MSR I SBIC, L.P.
By: MSR I SBIC PARTNERS, LLC
Its General Partner
By: MSR ADVISORS, INC.
Its Manager
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Its: President
