ACQUISITION TERM NOTE
FOR
VALUE
RECEIVED, ARGAN, INC., a corporation organized under the laws of the State
of
Delaware (“Argan”),
SOUTHERN MARYLAND CABLE, INC., a corporation organized under the laws of
the
State of Delaware (“SMC”),
VITARICH LABORATORIES, INC., a corporation organized under the laws of the
State
of Delaware (“Vitarich”),
GEMMA
POWER, INC., a corporation organized under the laws of the State of Connecticut
(“GP”),
GEMMA
POWER SYSTEMS CALIFORNIA, INC., a corporation organized under the laws of
the
State of California (“GPSC”),
GEMMA
POWER SYSTEMS, LLC, a limited liability company organized under the laws
of the
state of Connecticut (“GPS”),
and
GEMMA POWER HARTFORD, LLC, a limited liability company organized under the
laws
of the State of Connecticut (“GPH”),
jointly and severally (each of Argan, SMC, Vitarich, GP, GPSC, GPS, and GPH,
a
“Borrower”
and
collectively, the “Borrowers”);
promise
to pay to the order of BANK OF AMERICA, N.A., a national banking association,
its successors and assigns (the “Lender”),
the
principal sum of EIGHT MILLION DOLLARS
($8,000,000) (the “Principal Sum”),
or so
much thereof as has been or may be advanced to or for the account of the
Borrowers pursuant to the terms and conditions of the Financing Agreement
(as
hereinafter defined), together with interest thereon at the rate or rates
hereinafter provided, in accordance with the following:
1. Interest.
Commencing
as of the date hereof and continuing until repayment in full of all sums
due
hereunder, the unpaid Principal Sum shall bear interest at the LIBOR Rate,
plus
three hundred twenty five (325) basis points per annum. For purposes hereof,
the
“LIBOR
Rate”
shall
mean a daily fluctuating rate equal to the one (1) month rate of interest
(rounded upwards, if necessary to the nearest 1/100 of 1%) appearing on Telerate
Page 3750 (or any successor page) as the one (1) month London interbank offered
rate for deposits in U.S. Dollars at approximately 11:00 A.M. (London, time),
on
the second preceding business day, as adjusted from time to time in the Lender’s
sole discretion for then-applicable reserve requirements, deposits insurance
assessment rates and other regulatory costs. If for any reason such rate
is not
available, the term “LIBOR
Rate”
shall
mean the fluctuating rate of interest equal to the one (1) month rate of
interest (rounded upwards, if necessary to the nearest 1/100 of 1%) appearing
on
Reuters Screen LIBO Page as the one (1) month London interbank offered rate
for
deposits in U.S. Dollars at approximately 11:00 a.m. (London Time) on the
second
preceding business day, as adjusted from time to time for then-applicable
reserve requirements, deposit insurance assessment rates and other regulatory
costs; provided, however, if more than one rate is specified on Reuters Screen
LIBO page, the applicable rate shall be the arithmetic mean of all such
rates.
The
rate
of interest charged under this Note shall change immediately and
contemporaneously with any change in the LIBOR Rate. All interest payable
under
the terms of this Note shall be calculated on the basis of a 360-day year
and
the actual number of days elapsed.
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2. Payments
and Maturity.
The
unpaid Principal Sum, together with interest thereon at the rate or rates
provided above, shall be payable as follows:
(a) The
unpaid
Principal Sum together with interest shall be due and payable in
forty-seven
(47)
monthly
installments of principal each in the amount of One
Hundred Sixty-Sixty Thousand Six Hundred Sixty-Six Dollars and Sixty-Seven
Cents
($166,666.67)
plus
accrued and unpaid interest, commencing January 31,
2007,
and on the last day of each month thereafter and
one
(1) monthly payment at maturity of One Hundred Sixty-Sixty Thousand Six Hundred
Sixty-Six Dollars and Fifty-One Cents ($166,666.51) plus accrued and unpaid
interest;
(b) Unless
sooner paid, the unpaid Principal Sum, together with interest accrued and
unpaid
thereon, shall be due and payable in full on January 31, 2011.
Borrower
hereby authorizes Xxxxxx to automatically deduct from Borrower’s account
numbered 004467062810 the amount of each payment of principal (including
without
limitation the principal payment due on the final maturity date) and/or interest
on the dates such payments become due. If the funds in the account are
insufficient to cover any payment, Lender shall not be obligated to advance
funds to cover the payment. At any time and for any reason, Borrower or Lender
may voluntarily terminate automatic payments as provided in this
paragraph.
3. Default
Interest.
Upon
the
occurrence of an Event of Default (as hereinafter defined), the unpaid Principal
Sum shall bear interest thereafter at the LIBOR Rate plus four percent (4.00%)
(the “Post-Default
Rate”)
per
annum until such Event of Default is cured.
4. Late
Charges.
If
the
Borrowers shall fail to make any payment under the terms of this Note within
ten
(10) days after the date such payment is due, the Borrowers shall pay to
the
Lender on demand a late charge equal to five percent (5.00%) of such
payment.
5. Application
and Place of Payments.
All
payments, made on account of this Note shall be applied first to the payment
of
accrued and unpaid interest then due hereunder, and the remainder, if any,
shall
be applied to the unpaid Principal Sum. All payments on account of this Note
shall be paid in lawful money of the United States of America in immediately
available funds during regular business hours of the Lender at its principal
office in Rockville, Maryland or at such other times and places as the Lender
may at any time and from time to time designate in writing to the
Borrowers.
6. Prepayment.
The
Borrowers may prepay the Principal Sum in whole or in part upon five (5)
days
prior written notice to the Lender without premium or penalty.
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7. Financing
Agreement and Other Financing Documents.
This
Note
is the “Acquisition
Term
Note”
described in the Second Amended and Restated Financing and Security Agreement
of
even date herewith by and among the Borrowers and the Lender (as amended,
modified, restated, substituted, extended and renewed at any time and from
time
to time, the “Financing
Agreement”).
The
indebtedness evidenced by this Note is included within the meaning of the
term
“Obligations”
as
defined in the Financing Agreement. The term “Financing
Documents”
as
used
in this Note shall mean collectively this Note, the Revolving Credit Note,
the
2006 Term Note, the Financing Agreement and any other instrument, agreement,
or
document previously, simultaneously, or hereafter executed and delivered
by any
Borrower and/or any other Person, singularly or jointly with any other Person,
evidencing, securing, guaranteeing, or in connection with the Principal Sum,
this Note, the Revolving Credit Note, the 2006 Term Note, and/or the Financing
Agreement.
8. Security.
This
Note
is secured as provided in the Financing Agreement.
9. Events
of Default.
The
occurrence of any one or more of the following events shall constitute an
event
of default (individually, an “Event
of Default”
and
collectively, the “Events
of Default”)
under
the terms of this Note:
(a) The
failure of any Borrower to pay to the Lender within five (5) days of when
due
any and all amounts payable by any Borrower to the Lender under the terms
of
this Note; or
(b) The
occurrence of an Event of Default (as defined therein) under the terms and
conditions of any of the other Financing Documents.
10. Remedies.
Upon
the
occurrence of an Event of Default, at the option of the Lender, all amounts
payable by the Borrowers to the Lender under the terms of this Note shall
immediately become due and payable by the Borrowers to the Lender without
notice
to the Borrowers or any other Person, and the Lender shall have all of the
rights, powers, and remedies available under the terms of this Note, any
of the
other Financing Documents and all applicable laws. The Borrowers and all
endorsers, guarantors, and other parties who may now or in the future be
primarily or secondarily liable for the payment of the indebtedness evidenced
by
this Note hereby severally waive presentment, protest and demand, notice
of
protest, notice of demand and of dishonor and non-payment of this Note and
expressly agree that this Note or any payment hereunder may be extended from
time to time without in any way affecting the liability of the Borrowers,
guarantors and endorsers.
11. Confessed
Judgment.
Upon
the
occurrence of an Event of Default, each Borrower hereby authorizes any attorney
designated by the Lender or any clerk of any court of record to appear for
the
Borrowers in any court of record and confess judgment without prior hearing
against the Borrowers in favor of the Lender for and in the amount of the
unpaid
Principal Sum, all interest accrued and unpaid thereon, all other amounts
payable by any Borrower to the Lender under the terms of this Note or any
of the
other Financing Documents, costs of suit, and attorneys’ fees of fifteen percent
(15%) of the unpaid Principal Xxx and interest then due hereunder. By its
acceptance of this Note, the Lender agrees that in the event the Lender
exercises at any time its right to confess judgment under this Note, the
Lender
shall use its best efforts to obtain legal counsel who will charge the Lender
for its services on an hourly basis, at its customary hourly rates and only
for
the time and reasonable expenses incurred. In no event shall the Lender enforce
the legal fees portion of a confessed judgment award for an amount in excess
of
the fees and expenses actually charged to the Lender for services rendered
by
its counsel in connection with such confession of judgment and/or the collection
of sums owed to the Lender. In the event the Lender receives, through execution
upon a confessed judgment, payments on account of attorneys’ fees in excess of
such actual attorneys’ fees and expenses incurred by the Lender, then, after
full repayment and satisfaction of all of the obligations under and in
connection with this Note, the Financing Agreement and all of the other
Financing Documents, the Lender shall refund such excess amount to the
Borrowers. Each Borrower hereby releases, to the extent permitted by applicable
law, all errors and all rights of exemption, appeal, stay of execution,
inquisition, and other rights to which any Borrower may otherwise be entitled
under the laws of the United States of America or of any state or possession
of
the United States of America now in force or which may hereafter be enacted.
The
authority and power to appear for and enter judgment against the Borrowers
shall
not be exhausted by one or more exercises thereof or by any imperfect exercise
thereof and shall not be extinguished by any judgment entered pursuant thereto.
Such authority may be exercised on one or more occasions or from time to
time in
the same or different jurisdictions as often as the Lender shall deem necessary
or desirable, for all of which this Note shall be a sufficient
warrant.
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12. Expenses.
Each
Borrower promises to pay to the Lender on demand by the Lender all costs
and
expenses incurred by the Lender in connection with the collection and
enforcement of this Note, including, without limitation, reasonable attorneys’
fees and expenses and all court costs.
13. Notices.
Any
notice, request, or demand to or upon the Borrowers or the Lender shall be
deemed to have been properly given or made when delivered in accordance with
Section 8.1 of the Financing Agreement.
14. Miscellaneous.
Each
right, power, and remedy of the Lender as provided for in this Note or any
of
the other Financing Documents, or now or hereafter existing under any applicable
law or otherwise shall be cumulative and concurrent and shall be in addition
to
every other right, power, or remedy provided for in this Note or any of the
other Financing Documents or now or hereafter existing under any applicable
law,
and the exercise or beginning of the exercise by the Lender of any one or
more
of such rights, powers, or remedies shall not preclude the simultaneous or
later
exercise by the Lender of any or all such other rights, powers, or remedies.
No
failure or delay by the Lender to insist upon the strict performance of any
term, condition, covenant, or agreement of this Note or any of the other
Financing Documents, or to exercise any right, power, or remedy consequent
upon
a breach thereof, shall constitute a waiver of any such term, condition,
covenant, or agreement or of any such breach, or preclude the Lender from
exercising any such right, power, or remedy at a later time or times. By
accepting payment after the due date of any amount payable under the terms
of
this Note, the Lender shall not be deemed to waive the right either to require
prompt payment when due of all other amounts payable under the terms of this
Note or to declare an Event of Default for the failure to effect such prompt
payment of any such other amount. No course of dealing or conduct shall be
effective to amend, modify, waive, release, or change any provisions of this
Note.
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Until
such time as the Lender is not committed to extend further credit to the
Borrowers and all Obligations of the Borrowers to the Lender have been
indefeasibly paid in full in cash, and subject to and not in limitation of
the
provisions set forth in the next following paragraph below, no Borrower shall
have any right of subrogation (whether contractual, arising under the bankruptcy
code or otherwise), reimbursement or contribution from any Borrower or any
guarantor, nor any right of recourse to its security for any of the debts
and
obligations of any Borrower which are the subject of this Note. Except as
otherwise expressly permitted by the Financing Agreement, any and all present
and future debts and obligations of any Borrower to any other Borrower are
hereby subordinated to the full payment and performance of all present and
future debts and obligations to the Lender under this Note and the Financing
Agreement and the Financing Documents, provided, however, notwithstanding
anything set forth in this Note to the contrary, prior to the occurrence
of a
payment Default, the Borrowers shall be permitted to make payments on account
of
any of such present and future debts and obligations from time to time in
accordance with the terms thereof.
Each
Borrower further agrees that, if any payment made by any Borrower or any
other
person is applied to this Note and is at any time annulled, set aside,
rescinded, invalidated, declared to be fraudulent or preferential or otherwise
required to be refunded or repaid, or the proceeds of any property hereafter
securing this Note is required to be returned by the Lender to any Borrower,
its
estate, trustee, receiver or any other party, including, without limitation,
such Borrower, under any bankruptcy law, state or federal law, common law
or
equitable cause, then, to the extent of such payment or repayment, such
Borrower's liability hereunder (and any lien, security interest or other
collateral securing such liability) shall be and remain in full force and
effect, as fully as if such payment had never been made, or, if prior thereto
any such lien, security interest or other collateral hereafter securing such
Borrower's liability hereunder shall have been released or terminated by
virtue
of such cancellation or surrender, this Note (and such lien, security interest
or other collateral) shall be reinstated in full force and effect, and such
prior cancellation or surrender shall not diminish, release, discharge, impair
or otherwise affect the obligations of such Borrower in respect of the amount
of
such payment (or any lien, security interest or other collateral securing
such
obligation).
The
JOINT
AND SEVERAL obligations of each Borrower under this Note shall be absolute,
irrevocable and unconditional and shall remain in full force and effect until
the outstanding principal of and interest on this Note and all other Obligations
or amounts due hereunder and under the Financing Agreement and the Financing
Documents shall have been indefeasibly paid in full in cash in accordance
with
the terms thereof and this Note shall have been canceled.
5
The
Borrowers each shall be jointly and severally liable on the payment of the
Obligations as and when due and payable in accordance with the provisions
of
this Note, the Financing Agreement and the other Financing Documents. The
term
"Borrowers"
when
used in this Note shall include all of the Borrowers, individually and jointly,
and the Lender may (without notice to or consent of any or all of the Borrowers
and with or without consideration) release, compromise, settle with, proceed
against any or all of the Borrowers without affecting, impairing, lessening
or
releasing the obligations of the other Borrower hereunder.
15. Partial Invalidity.
In
the
event any provision of this Note (or any part of any provision) is held by
a
court of competent jurisdiction to be invalid, illegal, or unenforceable
in any
respect, such invalidity, illegality, or unenforceability shall not affect
any
other provision (or remaining part of the affected provision) of this Note;
but
this Note shall be construed as if such invalid, illegal, or unenforceable
provision (or part thereof) had not been contained in this Note, but only
to the
extent it is invalid, illegal, or unenforceable.
16. Captions.
The
captions herein set forth are for convenience only and shall not be deemed
to
define, limit, or describe the scope or intent of this Note.
17. Applicable Law.
Each
Borrower acknowledges and agrees that this Note shall be governed by the
laws of
the State of Maryland, even though for the convenience and at the request
of the
Borrowers, this Note may be executed elsewhere.
18. Consent
to Jurisdiction.
Each
Borrower irrevocably submits to the jurisdiction of any state or federal
court
sitting in the State of Maryland over any suit, action, or proceeding arising
out of or relating to this Note or any of the other Financing Documents.
Each
Borrower irrevocably waives, to the fullest extent permitted by law, any
objection that any Borrower may now or hereafter have to the laying of venue
of
any such suit, action, or proceeding brought in any such court and any claim
that any such suit, action, or proceeding brought in any such court has been
brought in an inconvenient forum. Final judgment in any such suit, action,
or
proceeding brought in any such court shall be conclusive and binding upon
the
Borrowers and may be enforced in any court in which any Borrower is subject
to
jurisdiction by a suit upon such judgment, provided that service of process
is
effected upon the Borrowers as provided in this Note or as otherwise permitted
by applicable law.
19. Service
of Process.
Each
Borrower hereby irrevocably designates and appoints CT Corporation, Corporation
Trust Center, 0000 Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxx 00000, as each Borrower’s
authorized agent to receive on each Borrower’s behalf service of any and all
process that may be served in any suit, action, or proceeding instituted
in
connection with this Note in any state or federal court sitting in the State
of
Maryland. If such agent shall cease so to act, the Borrowers shall irrevocably
designate and appoint without delay another such agent in the State of Maryland
satisfactory to the Lender and shall promptly deliver to the Lender evidence
in
writing of such agent’s acceptance of such appointment and its agreement that
such appointment shall be irrevocable.
6
Each
Borrower hereby consents to process being served in any suit, action, or
proceeding instituted in connection with this Note by (a) the mailing of
a copy
thereof by certified mail, postage prepaid, return receipt requested, to
each
Borrower and (b) serving a copy thereof upon the agent hereinabove designated
and appointed by each Borrower as each Borrower’s agent for service of process.
Each Borrower irrevocably agrees that such service shall be deemed in every
respect effective service of process upon the Borrowers in any such suit,
action
or proceeding, and shall, to the fullest extent permitted by law, be taken
and
held to be valid personal service upon the Borrowers. Nothing in this Section
shall affect the right of the Lender to serve process in any manner otherwise
permitted by law or limit the right of the Lender otherwise to bring proceedings
against the Borrowers in the courts of any jurisdiction or
jurisdictions.
20. WAIVER
OF TRIAL BY JURY.
EACH
BORROWER AND THE LENDER HEREBY WAIVE TRIAL BY JURY IN ANY ACTION OR PROCEEDING
TO WHICH ANY BORROWER AND THE LENDER MAY BE PARTIES, ARISING OUT OF OR IN
ANY
WAY PERTAINING TO (A) THIS NOTE OR (B) THE FINANCING DOCUMENTS. IT IS AGREED
AND
UNDERSTOOD THAT THIS WAIVER CONSTITUTES A WAIVER OF TRIAL BY JURY OF ALL
CLAIMS
AGAINST ALL PARTIES TO SUCH ACTIONS OR PROCEEDINGS, INCLUDING CLAIMS AGAINST
PARTIES WHO ARE NOT PARTIES TO THIS NOTE.
THIS
WAIVER IS KNOWINGLY, WILLINGLY AND VOLUNTARILY MADE BY EACH BORROWER, AND
EACH
BORROWER HEREBY REPRESENTS THAT NO REPRESENTATIONS OF FACT OR OPINION HAVE
BEEN
MADE BY ANY INDIVIDUAL TO INDUCE THIS WAIVER OF TRIAL BY JURY OR TO IN ANY
WAY
MODIFY OR NULLIFY ITS EFFECT. EACH BORROWER FURTHER REPRESENTS THAT IT HAS
BEEN
REPRESENTED IN THE SIGNING OF THIS NOTE AND IN THE MAKING OF THIS WAIVER
BY
INDEPENDENT LEGAL COUNSEL, SELECTED OF ITS OWN FREE WILL, AND THAT EACH HAS
HAD
THE OPPORTUNITY TO DISCUSS THIS WAIVER WITH COUNSEL.
[SIGNATURES
APPEAR ON THE FOLLOWING PAGE]
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IN
WITNESS WHEREOF, the Borrowers have caused this Note to be executed under
seal
by their duly authorized officers as of the date first written
above.
| WITNESS/ATTEST: | ARGAN, INC. | |
| /s/ Xxxxxx Xxxxxx | By: /s/ Xxxxxx Xxxxxxxxxx (SEAL) | |
|
|
Name:
Xxxxxx Xxxxxxxxxx
Title:
Chairman and CEO
|
|
| WITNESS: | SOUTHERN MARYLAND CABLE, INC. | |
| /s/ Xxxxxx Xxxxxxxxxx | By: /s/ Xxxxxx Xxxxxx (Seal) | |
|
|
Name: Xxxxxx Xxxxxx Title:
CFO
|
|
| WITNESS/ATTEST: | VITARICH LABORATORIES, INC. | |
| /s/ Xxxxxx Xxxxxxxxxx | By: /s/ Xxxxxx Xxxxxx (Seal) | |
|
|
Name: Xxxxxx Xxxxxx Title:
CFO
|
|
| WITNESS/ATTEST: | GEMMA POWER, INC. | |
| /s/ Xxxxxx Xxxxxxxxxx | By: /s/ Xxxxxx Xxxxxx (Seal) | |
|
|
Name:
Xxxxxx Xxxxxx
Title:
CFO
|
|
| WITNESS/ATTEST: |
GEMMA POWER SYSTEMS
CALIFORNIA, INC.
|
|
| /s/ Xxxxxx Xxxxxxxxxx | By: /s/ Xxxxxx Xxxxxx (Seal) | |
|
|
Name:
Xxxxxx Xxxxxx
Title:
CFO
|
Signature
Page to Acquisition Term Note
1
| WITNESS/ATTEST: | GEMMA POWER SYSTEMS, LLC | |
| /s/ Xxxx X. Xxxxxx | By: /s/ Xxxxxxx X. Xxxxxxx, Xx. (Seal) | |
|
|
Name: Xxxxxxx X. Xxxxxxx, Xx. Title:
Manager
|
|
| WITNESS/ATTEST: | GEMMA POWER HARTFORD, LLC | |
| /s/ Xxxx X. Xxxxxx | By: /s/ Xxxxxxx X. Xxxxxxx, Xx. (Seal) | |
|
|
Name: Xxxxxxx X. Xxxxxxx, Xx. Title: Manager |
Signature
Page to Acquisition Term Note
2
