PLEDGE AND ASSIGNMENT AGREEMENT
THIS
PLEDGE AND ASSIGNMENT AGREEMENT (this “Agreement”),
dated
December 11, 2006, from ARGAN, INC., a corporation organized under the laws
of
the State of Delaware (the “Pledgor”),
to
BANK OF AMERICA, N.A., a national banking association (the “Lender”).
PRELIMINARY
STATEMENTS:
(1) The
Pledgor has opened account No. 003933352877 (such account, and any extension
or
renewal of such account from time to time, being the “Account”)
with
the Lender in the aggregate amount of Twelve Million Dollars ($12,000,000)
of
which (a) Ten Million Dollars ($10,000,000) will secure that certain Standby
Letter of Credit #____ issued by the Lender for the benefit of Travelers
Casualty and Surety Company of America (as amended, extended and renewed from
time to time, the “LC”)
and
(b) Two Million Dollars ($2,000,000) will be held as an escrow fund (the
“Escrow
Fund”)
pursuant to the Financing Agreement (as hereinafter defined).
(2) Pursuant
to that certain Second Amended and Rested Financing and Security Agreement
(as
amended, modified, restated, substituted, extended and renewed at any time
and
from time to time, the “Financing
Agreement”),
dated
as of December 11, 2006, by and among the Pledgor, Southern Maryland Cable,
Inc., a corporation organized under the laws of the State of Delaware, Vitarich
Laboratories, Inc., a corporation organized under the laws of the State of
Delaware, Gemma Power Systems, LLC, a Connecticut limited liability company,
Gemma Power, Inc., a corporation organized under the laws of the State of
Connecticut, Gemma Power Systems California, Inc., a corporation organized
under
the laws of the State of California, and Gemma Power Hartford, LLC, a limited
liability company organized under the laws of the State of Connecticut (each
a
“Borrower”
and,
collectively, the “Borrowers”)
and
the Lender, the Pledgor agreed to pledge and assign its interests in the Account
as set forth in this Agreement. All capitalized terms used herein and not
otherwise defined herein shall have the meanings given to such terms in the
Financing Agreement.
NOW
THEREFORE in consideration of the premises and for other good and valuable
consideration, the Pledgor hereby agrees with the Lender as
follows:
SECTION
1.
Incorporation
of Recitals.
The
Preliminary Statements set forth above are incorporated herein by reference
as
if fully set forth in the text of this Agreement.
SECTION
2. Pledge
and Assignment.
The
Pledgor hereby pledges and assigns to the Lender, and grants to the Lender
a
security interest in, the following collateral (the “Collateral”):
(i) the
Account, all funds held therein and all certificates and instruments, if any,
from time to time representing or evidencing the Account;
(ii) all
interest, dividends, cash, instruments and other property from time to time
received, receivable or otherwise distributed in respect of or in exchange
for
any or all of the then existing Collateral; and
(iii) all
proceeds of any and all of the foregoing Collateral.
SECTION
3. Security
for Obligations.
This
Agreement secures the payment of all obligations of the Borrowers, jointly
and
severally, now or hereafter existing under Financing Agreement (all such
obligations of the Borrowers being called the “Obligations”).
SECTION
4. Maintaining
the Account.
So long
as any Obligations are outstanding:
(a) The
Pledgor will maintain the Account.
(b) It
shall
be a term and condition of the Account, notwithstanding any term or condition
to
the contrary in any other agreement relating to the Account that no amount
(including interest on the Account) shall be paid or released to or for the
account of or withdrawn by or for the account of the Pledgor or any other person
or entity from the Account.
SECTION
5. Further
Assurances.
The
Pledgor agrees that at any time and from time to time, at the expense of the
Pledgor, the Pledgor will promptly execute and deliver all further instruments
and documents, and take all further action, that may be necessary or desirable,
or that the Lender may reasonably request, in order to perfect and protect
any
security interest granted or purported to be granted hereby or to enable the
Lender to exercise and enforce its rights and remedies hereunder with respect
to
any Collateral.
SECTION
6. Transfers
and Other Liens.
The
Pledgor agrees that it will not (i) sell, assign (by operation of law or
otherwise) or otherwise dispose of, or grant any option with respect to, any
of
the Collateral or (ii) create or permit to exist any lien, security interest
option or other charge or encumbrance upon or with respect to any of the
Collateral except for the security interest under this Agreement.
SECTION
7. The
Lender’s Duties.
The
powers conferred on the Lender hereunder are solely to protect its interest
in
the Collateral and shall not impose any duty upon it to exercise any such
powers. Except for the safe custody of any Collateral in its possession and
the
accounting for moneys actually received by it hereunder, the Lender shall have
no duty as to any collateral, as to ascertaining or taking action with respect
to calls, conversions exchanges maturities, tenders or other matters relative
to
any Collateral, whether or not the Lender or any Bank has or is deemed to have
knowledge of such matters, or as to the taking of any necessary steps to
preserve rights against any parties or any other rights pertaining to any
Collateral.
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SECTION
8. Remedies
Upon Default.
If any
Event of Default shall have occurred and be continuing, in addition to the
remedies set forth in the Financing Agreement:
(a) The
Lender may, without notice to the Pledgor except as required by law and at
any
time or from time to time, charge, set-off and otherwise apply all or any part
of the Account against the Obligations or any part thereof.
(b) The
Lender may also exercise in respect of the Collateral, in addition to other
rights and remedies provided for herein or otherwise available to it, all the
rights and remedies of a secured party on default under the Uniform Commercial
Code in effect in the State of Maryland at that time (the “Code”)
(whether or not the Code applies to the affected Collateral).
SECTION
9. Amendments.
Etc.
No
amendment or waiver of any provision of this Agreement, and no consent to any
departure by the Pledgor herefrom shall in any event be effective unless the
same shall be in writing and signed by the Lender, and then such waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which given.
SECTION
10. Continual
Security Interest: Assignments under Financing Agreement.
This
Agreement shall create a continuing security interest in the Collateral and
shall (i) remain in full force and effect until the payment in full of the
Obligations and all other amounts payable under this Agreement, (ii) be binding
upon the Pledgor, its successors and assigns, and (iii) inure to the benefit
of,
and be enforceable by, the Lender, and its successors, transferees and assigns.
Upon the payment in full of the Obligations the security interest granted hereby
shall terminate and all rights to the Collateral shall revert to the Pledgor.
Upon any such termination, the Lender will, at the Pledgor’s expense, return to
the Pledgor such of the Collateral as shall not have been sold or otherwise
applied pursuant to the terms hereof and execute and deliver to the Pledgor
such
documents as the Pledgor shall reasonably request to evidence such termination.
SECTION
11. Release
of Security Interest.
Notwithstanding, anything contained in this Agreement to the contrary, provided,
no Event of Default has occurred and is continuing under any of the Financing
Documents, the Lender agrees upon written request from Pledgor to promptly
release its security interest in (a) Ten Million Dollars ($10,000,000) of the
Collateral and interest accrued on such amount, if at such time no Letter of
Credit Obligations remain outstanding and Lender has no further obligations
to
issue any Letters of Credit, and (b) Two Million Dollars ($2,000,000) of the
Collateral and interest accrued on such amount, in accordance with the
provisions of Sections 2.2.4(c) or 2.4 of the Financing Agreement.
SECTION
12. Governing
Law; Terms.
This
Agreement shall be governed by and construed in accordance with the laws of
the
State of Maryland. Unless otherwise defined herein or in the Financing
Agreement, terms defined in Article 9 of the Code are used herein as therein
defined.
[SIGNATURES
APPEAR ON THE FOLLOWING PAGE]
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IN
WITNESS WHEREOF, the Pledgor has caused this Pledge and Assignment Agreement
to
be duly executed and delivered by its officer thereunto duly authorized as
of
the date first above written.
| ARGAN, INC. | ||
| |
|
|
| By: | /s/ Xxxxxx Xxxxxxxxxx | |
|
Name:
Xxxxxx Xxxxxxxxxx
Title:
Chairman and CEO
|
||
| ACCEPTED AND AGREED: | |||
| BANK OF AMERICA, N.A. | |||
| By: /s/ Xxxxxxx X. Xxxxxxxxx | |||
|
Name:
Xxxxxxx X. Xxxxxxxxx
Title:
Senior Vice President
|
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