ESCROW AGREEMENT
This
ESCROW AGREEMENT (this “Escrow
Agreement”)
is
dated as of the 8th
day of
December, 2006, by and among Argan, Inc., a Delaware corporation (the
“Company”),
the
purchasers identified on Schedule
A
attached
hereto (each a “Buyer”,
and
collectively the “Buyers”)
and
Xxxxxxxx & Xxxx LLP (the “Escrow
Agent”).
Capitalized terms not otherwise defined herein shall have the meanings ascribed
to them in the Purchase Agreement (defined below)
P
R E M I S E S:
WHEREAS,
the Company and the Buyers are parties to that certain Stock Purchase Agreement,
dated as of the date hereof (the “Purchase
Agreement”),
pursuant to which the Company is offering, and the Buyers are purchasing (the
“Transaction”),
an
aggregate of up to 2,853,335 shares (the “Shares”)
of the
Company’s common stock, $.15 par value, at a purchase price of $3.75 per share
(the “Share
Consideration”);
and
WHEREAS,
pursuant to the terms of the Purchase Agreement, the Company and the Buyers
shall deliver to the Escrow Agent the Shares and the Share Consideration,
respectively (collectively, the “Escrow
Amount”),
to
provide for certain contingencies as set forth herein.
A
G R E E M E N T S:
NOW,
THEREFORE, in consideration of the above premises and of the covenants and
agreements contained herein, the Company, the Buyers and the Escrow Agent agree
as follows:
Section
1
Escrow
Fund
1.1 Delivery.
Simultaneously with the execution and delivery of this Agreement, (i) the
Company shall deliver to the Escrow Agent written instructions to its transfer
agent instructing it to issue a stock certificate in the name of each Buyer
for
the respective number of Shares issued to such Buyer as set forth on Schedule
A
attached hereto (collectively, “Certificates”),
pursuant to the Purchase Agreement, and (ii) each Buyer shall deliver to the
Escrow Agent such Buyer’s respective portion of the Share Consideration for the
number of Shares purchased by such Buyer as set forth on Schedule A attached
hereto, pursuant to the Purchase Agreement. Upon receipt of the Escrow Amount
by
the Escrow Agent, the Escrow Amount held by the Escrow Agent pursuant to this
Escrow Agreement shall be deemed to comprise the “Escrow
Fund”.
The
Escrow Agent agrees to hold the Escrow Amount in an interest bearing account
with XX Xxxxxx Chase & Co. until the Escrow Amount is released from escrow
in accordance with the provisions of Section 2 hereof.
Section
2
Disbursement
of Escrow Fund
The
Escrow Agent agrees to hold the Escrow Amount as provided hereunder until the
Escrow Amount is released as follows:
2.1 Disbursement
of Escrow Amount.
The
Escrow Agent shall release the Escrow Amount in accordance with this Paragraph
2.1 upon the consummation of the acquisition by the Company of Gemma Power
Systems, LLC and its affiliated entities (the “Release Condition”). Upon
satisfaction of the Release Condition, the Escrow Agent shall deliver (i) the
Share Consideration, and the interest earned thereon, to the Company and (ii)
the Certificates to the Buyers.
2.2 Expiration
of Escrow Period.
In
the
event that the Release Condition is not fulfilled by January 1, 2007, unless
otherwise agreed in writing by the parties, the Transaction shall terminate
and
the Escrow Agent shall return (i) the Certificates to the Company, and (ii)
the
Share Consideration (including interest earned thereon) to the Buyers in their
respective amounts.
2.3 Dispute
Resolution.
In the
event that any dispute arises with respect to this Agreement or in the event
that any claim is made with respect to the Escrow Fund, then the Escrow Agent,
upon receipt of written notice of such dispute, is authorized and directed
to
retain in its possession without liability to any person or party, all of the
Escrow Amount until such dispute shall have been settled either by the mutual
agreement of the parties involved or by a final, unappealable order, decree
or
judgment of a court of competent jurisdiction.
Section
3
Escrow
Agent
3.1 Appointment
and Duties.
The
Company and each Buyer hereby appoints the Escrow Agent to serve hereunder,
and
the Escrow Agent hereby agrees to perform all duties which are expressly set
forth in this Escrow Agreement.
3.2 Acknowledgement.
The
Company and each Buyer acknowledges that the Escrow Agent acts as counsel to
the
Company and is likely to continue to act in such capacity in any matter not
in
conflict with its duties as the Escrow Agent hereunder.
3.3 Indemnification.
Each
Buyer severally but not jointly, and the Company, jointly and severally with
each Buyer, will indemnify and defend the Escrow Agent, and hold it harmless
from any and all claims, regardless of nature, arising out of or because of
this
Escrow Agreement, and exonerate the Escrow Agent from any liability in
connection with its discharge of obligations pursuant to this Escrow Agreement
in the absence of fraud or gross negligence.
3.4 Resignation.
The
Escrow Agent may resign at any time upon giving the other parties hereto ten
(10) days prior written notice of resignation. In such event, the successor
shall be such person, firm or corporation as shall be mutually selected by
the
Company and the Buyers. It is understood and agreed that such resignation shall
not be effective until a successor agrees to act hereunder; provided,
however,
if no
successor is appointed and acting hereunder within ten (10) days after such
notice is given, the Escrow Agent may pay and deliver the Escrow Fund to a
court
as part of an interpleader or like action.
3.5
Payment
of Fees.
The
Company shall pay all of the Escrow Agent’s fees and expenses arising out of or
relating to this Escrow Agreement.
2
Section
4
Liabilities
of Escrow Agent
4.1 Limitations. The
Escrow Agent shall be liable only to accept, hold and deliver the Escrow Fund
in
accordance with the provisions of this Escrow Agreement and amendments hereto;
provided,
however,
that
the Escrow Agent shall not incur any liability with respect to any action taken
or omitted (a) in good faith upon the advice of its counsel given with respect
to any questions relating to its duties and responsibilities as the Escrow
Agent
under this Escrow Agreement, or (b) in reliance upon any instrument which the
Escrow Agent shall in good faith believe to be genuine (including the execution,
identity, or authority of any person executing such instrument, its validity
and
effectiveness, and the truth and accuracy of any information contained therein),
to have been signed by a proper person or persons, and to conform to the
provisions of this Escrow Agreement.
4.2 Collateral
Agreements.
The
Escrow Agent shall not be bound in any way by any contract or agreement between
the parties hereto, whether or not it has knowledge of any such contract or
agreement or of the terms or conditions of any such contract or agreement,
including without limitation, the Purchase Agreement.
Section
5
Termination
This
Escrow Agreement, other than Paragraph 3.4, Paragraph 3.5 and Section 4, shall
be terminated upon the earliest to occur of: (i) the full disbursement of the
Escrow Fund by the Escrow Agent; (ii) written mutual consent signed by the
Company and Buyers; or (iii) the transfer of the Escrow Fund to a court in
accordance with Paragraph 3.4 hereof. This Escrow Agreement shall not otherwise
be terminated.
Section
6
Other
Provisions
6.1 Notices.
Any
notices required or permitted to be given to any party hereto shall be given
to
all of the parties hereto. Any notices required or permitted hereunder shall
be
sufficiently given pursuant to the notice provisions in the Purchase
Agreement.
6.2 Benefit.
This
Escrow Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and assigns.
6.3 Entire
Agreement; Amendment.
This
Escrow Agreement contains all the terms agreed upon by the parties with respect
to the subject matter hereof. This Escrow Agreement may be amended only by
a
written instrument signed by all of the parties hereto.
6.4 Headings.
The
headings of the sections and sub-sections of this Escrow Agreement are for
ease
of reference only and do not evidence the intentions of the
parties.
6.5 Governing
Law.
This
Escrow Agreement shall be governed by, and construed according to, the laws
of
the State of Connecticut, without regard to the principles thereof relating
to
conflicts of laws. The parties hereto consent to the jurisdiction of the courts
of the State of Connecticut in Fairfield County and the United States District
Court for the District of Connecticut.
3
6.6 Counterparts.
This
Escrow Agreement may be executed in one or more counterparts, each of which
shall be deemed an original, but all of which taken together shall constitute
one and the same instrument. This Agreement may be executed by telecopied
signatures with the same effect as original signatures.
[signatures
to follow]
4
IN
WITNESS WHEREOF, the parties hereto have executed this Escrow Agreement as
of
the date first written above.
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THE
COMPANY:
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ARGAN,
INC.
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/s/
Xxxxxx Xxxxxxxxxx
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By: Xxxxxx Xxxxxxxxxx |
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Its:
President
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BUYERS:
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Argan
Investments LLC
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/s/
Xxxxxx Xxxxxxx
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By: Xxxxxx Xxxxxxx |
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Its:
Member
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XXXXX
SBH INVESTMENTS, LLC
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/s/
Xxx X. Xxxxxxx
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By: Xxx X. Xxxxxxx |
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Its:
CFO
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XXXXX
& COMPANY, LLC
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/s/
Xxx X. Xxxxxxx
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By: Xxx X. Xxxxxxx |
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Its:
Managing Director and CFO
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5
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/s/
Xxxxx Xxxxx
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Xxxxx Xxxxx |
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/s/
Xxxxx Xxxxx
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Xxxxx Xxxxx |
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/s/
Xxxx Xxxxx
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Xxxx Xxxxx |
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/s/
Xxxx Xxxx
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Xxxx Xxxx |
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/s/
Xxxxxxx X. Xxxxx
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Xxxxxxx X. Xxxxx |
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XXXXXXX
XXXXX RIVER MANAGEMENT
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CO.,
LLC
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/s/
Xxxx Xxxxxx
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By: Xxxx Xxxxxx |
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Its:
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PERENNIAL
PARTNERS LP
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/s/
Xxxx Xxxx
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By: Xxxx Xxxx |
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Its:
Principal
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WESTWIND
EQUITY PARTNERS, LLC
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/s/
Xxxx Xxxxxxx
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By: Xxxx Xxxxxxx |
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Its:
Executive Director
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6
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MSR
I SBIC, L.P.
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By:
MSR I SBIC Partners, LLC (its General Partner)
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By:
MSR Advisors, Inc. (its Manager)
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/s/
Xxxxxx X. Xxxxxxxx
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By: Xxxxxx X. Xxxxxxxx |
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Its:
President
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MSR
FUND II, L.P.
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MSR
Fund II GP, LLC (its General Partner)
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By:
MSR Advisors, Inc. (its Manager)
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/s/
Xxxxxx X. Xxxxxxxx
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By: Xxxxxx X. Xxxxxxxx |
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Its:
President
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ESCROW
AGENT:
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XXXXXXXX
& XXXX LLP
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/s/
Xxxxxxx X. Xxxxxx
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By: Xxxxxxx X. Xxxxxx |
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Its:
Partner
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7
Schedule
A
Buyers
of Restricted Stock
|
Buyer
|
Number
of Shares
|
Purchase
Price
|
Number
of Shares
|
Purchase
Price
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|||||||||
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Argan
Investments LLC
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1,000,000
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$
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3,750,000.00
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1,000,000
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$
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3,750,000.00
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Xxxxx
SBH Investments, LLC
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266,667
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$
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1,000,000.00
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173,333
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$
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649,999.00
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Perennial
Partners LP
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266,667
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$
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1,000,000.00
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266,667
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$
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1,000,000.00
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Xxxxxxx
Xxxxx River Management Co., LLC
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266,667
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$
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1,000,000.00
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266,667
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$
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1,000,000.00
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Westwind
Equity Partners, LLC
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266,667
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$
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1,000,000.00
|
266,667
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$
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1,000,000.00
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|||||||
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MSR
I SBIC, L.P.
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92,793
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$
|
347,974.00
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92,793
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$
|
347,974.00
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|||||||
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MSR
Fund II, L.P.
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440,540
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$
|
1,652,025.00
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440,540
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$
|
1,652,025.00
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Xxxxx
&
Company,
LLC
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80,000
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$ | 300,000.00 |
266,667
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$
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1,000,000.00
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Xxxxx
Xxxxx
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53,333
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$ | 200,000.00 |
160,000
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$
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600,000.00
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Xxxx
Xxxxx
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80,000
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$ | 300,000.00 | ||||||||||
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Xxxxx
Xxxxx
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26,667
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$ | 100,000.00 | ||||||||||
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Xxxx
Xxxx
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6,667
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$ | 25,000.00 | ||||||||||
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Xxxxxxx
X. Xxxxx
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6,667
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$
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25,000.00
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8
