Exhibit 10.2
(Form of Subordinated Promissory Note)
[FORM OF]
SUBORDINATED TERM NOTE
(EARN-BACK OBLIGATIONS)
THIS SUBORDINATED TERM NOTE (EARN-BACK OBLIGATIONS) 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
AMENDED AND RESTATED DEBT SUBORDINATION AGREEMENT,
EFFECTIVE AS OF JUNE 30, 2005, 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).
$___________________ As of [INSERT EARN-BACK DATE], 2005
FOR VALUE RECEIVED, the undersigned, ARGAN, INC., a Delaware corporation
(the "Maker"), hereby promises to pay to the order of XXXXX X. XXXXXX (the
"Creditor"), at 0000 Xxxxxxx Xxxx, Xxxxxx, Xxxxxxx 00000, the principal sum of
_______________________________________________DOLLARS ($______________) (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
January 1, 2006 and continuing on the first day of each April, July, October and
January thereafter. Unless otherwise prepaid as a Mandatory Prepayment or an
Additional 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, 2006.
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, 2006 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 Holder until such
time as the Principal Amount and all other sums due hereunder have been paid in
full.
In addition, Maker agrees that it shall not close any transaction after
the Earn-back Date (as that term is defined in that certain Letter Agreement
among the Maker, the Creditor and Vitarich Laboratories, Inc., a Delaware
corporation effective as of June 30, 2005 (the "Letter Agreement")) 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 "Additional Mandatory Prepayment"); provided, however,
that, notwithstanding the forgoing, the Maker shall not be required to make the
Additional 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 SUBORDINATED TERM NOTE (EARN-BACK OBLIGATIONS) 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 UNTED STATES OF
AMERICA.
This Subordinated Term Note (Earn-back Obligations) is being issued in full and
complete satisfaction of all obligations of the Maker to pay to the Creditor the
Reduced Earn-back Amount (as defined in and calculated pursuant to the Letter
Agreement) and the Additional Earn-back Amount (as defined in and calculated
pursuant to the Letter Agreement), as applicable.
ARGAN, INC.
By: _____________________________________
Name: ____________________
Title: _________________