-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Ogo/cYbfyBvpm7X7VqKuXc9SIyBmPnE92fCCqGh+3qwJTP09SKsihpUiQnioqrSE PrPyRzlAJp44QpAeT5bkow== 0001144204-05-003048.txt : 20050202 0001144204-05-003048.hdr.sgml : 20050202 20050202144300 ACCESSION NUMBER: 0001144204-05-003048 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20050128 ITEM INFORMATION: Unregistered Sales of Equity Securities ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20050202 DATE AS OF CHANGE: 20050202 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ARGAN INC CENTRAL INDEX KEY: 0000100591 STANDARD INDUSTRIAL CLASSIFICATION: GENERAL INDUSTRIAL MACHINERY & EQUIPMENT, NEC [3569] IRS NUMBER: 131947195 STATE OF INCORPORATION: DE FISCAL YEAR END: 0131 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-31756 FILM NUMBER: 05568874 BUSINESS ADDRESS: STREET 1: ONE CHURCH STREET STREET 2: SUITE 302 CITY: ROCKVILLE STATE: MD ZIP: 20850 BUSINESS PHONE: 301 315-0027 MAIL ADDRESS: STREET 1: ONE CHURCH STREET STREET 2: SUITE 302 CITY: ROCKVILLE STATE: MD ZIP: 20850 FORMER COMPANY: FORMER CONFORMED NAME: PUROFLOW INC DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: ULTRA DYNAMICS CORP DATE OF NAME CHANGE: 19830522 8-K 1 v012046_8-k.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ----------------- FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of report (Date of earliest event reported): January 28, 2005 ARGAN, INC. (Exact Name of Registrant as Specified in its Charter) Delaware 001-31756 13-1947195 (State or Other Jurisdiction (Commission (IRS Employer of Incorporation) File Number) Identification No.) One Church Street, Suite 302, Rockville, MD 20850 (Address of Principal Executive Offices) (Zip Code) Registrant's telephone number, including area code: (301) 315-0027 Not Applicable (Former Name or Former Address, if Changed Since Last Report) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: |_| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |_| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |_| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) Item 3.02 Unregistered Sales of Equity Securities. On January 28, 2005, Argan, Inc. (the "Company") sold and issued to MSR I SBIC, L.P., a Delaware limited partnership ("Investor"), 129,032 shares (the "Shares") of common stock, par value $0.15 per share ("Common Stock"), of the Company pursuant to a Subscription Agreement dated as of January 28, 2005 between the Company and Investor (the "Agreement"). The Shares were issued at a purchase price of $7.75 per share ("Share Price"), yielding an aggregate purchase price of $999,998. The Shares were issued pursuant to the exemption provided by Section 4(2) of the Securities Act of 1933, as amended. Pursuant to the Agreement, the Company has agreed to issue additional shares of Common Stock to Investor in accordance with the Agreement under certain conditions upon the earlier of (i) the Company's issuance of additional shares of Common Stock having an aggregate purchase price of at least $2,500,000 for a consideration per share less than the Share Price, subject to certain exclusions; and (ii) July 31, 2005. The number of additional shares to be issued would effectively reduce the Investor's purchase price per common share as set forth in the Agreement. In addition, the Company has agreed, pursuant to a Registration Rights Agreement dated as of January 28, 2005 between the Company and Investor, to file a registration statement relating to the resale of the Shares by Investor, or any of Investor's successors or permitted assigns, not later than 180 days following January 28, 2005, subject to certain conditions. Item 9.01. Financial Statements and Exhibits. (c) Exhibits. Exhibit No. Description ----------- ----------- 4.1 Subscription Agreement dated as of January 28, 2005 between Argan, Inc. and MSR I SBIC, L.P. 4.2 Registration Rights Agreement dated as of January 28, 2005 between Argan, Inc. and MSR I SBIC, L.P. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. ARGAN, INC. By: /s/ Rainer Bosselmann ---------------------------- Rainer Bosselmann Chairman of the Board and Chief Executive Officer Date: February 1, 2005 EXHIBIT INDEX Exhibit No. Description - ----------- ----------- 4.1 Subscription Agreement dated as of January 28, 2005 between Argan, Inc. and MSR I SBIC, L.P. 4.2 Registration Rights Agreement dated as of January 28, 2005 between Argan, Inc. and MSR I SBIC, L.P. EX-4.1 2 v012046_ex4-1.txt SUBSCRIPTION AGREEMENT ARGAN, INC. COMMON STOCK EXHIBIT 4.1 SUBSCRIPTION AGREEMENT THIS SUBSCRIPTION AGREEMENT (the "Agreement") is made as of this 28th day of January, 2005, by and among ARGAN, INC., a Delaware corporation (the "Company"), and MSR I SBIC, L.P., a Delaware limited partnership (the "Investor"). W I T N E S S E T H: WHEREAS, the Investor desires to subscribe for, purchase and acquire from the Company and the Company desires to sell and issue to the Investor 129,032 shares (the "Shares") of the Company's Common Stock, par value $0.15 per share (the "Common Stock"), upon the terms and conditions and subject to the provisions hereinafter set forth. NOW, THEREFORE, for and in consideration of the mutual premises contained herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: 1. Purchase and Sale of the Shares. Subject to the terms and conditions of this Agreement, the Investor subscribes for and agrees to purchase and acquire from the Company and the Company agrees to sell and issue to the Investor the Shares, in the manner set forth in Section 2 hereof, at a purchase price of $7.75 per share (the "Share Price"), yielding an aggregate purchase price of $999,998 (the "Total Purchase Price"). 2. Terms of Purchase and Sale of the Shares. (a) The closing of the transactions contemplated hereby (the "Closing") shall take place on January 28, 2005, at the offices of Robinson & Cole LLP, or at such other time and place as the Company and the Investor may agree upon. Contemporaneously with the delivery of this Agreement, the Investor shall deliver to the Company the Purchase Price by wire transfer of immediately available funds pursuant to wire transfer instructions given to the Investor by the Company. At the Closing, the Company will instruct the Company's transfer agent to deliver to the Investor a certificate, registered in the name of the Investor, representing the Shares. The Investor understands that the Shares will not be registered under the Securities Act of 1933, as amended (the "Act"), or under the securities laws of any U.S. state or foreign country. The Investor also understands that, in order to assure that the sale of the Shares to the Investor will be exempt from registration under the Act and applicable state securities laws, the Investor must meet certain financial prerequisites and must have such knowledge and experience in financial and business matters so as to be able to evaluate the risks and merits of an investment in the Shares. 3. Subsequent Sales. The Company shall issue additional shares of Common Stock to the Investor as follows: (a) Issuance of Additional Stock below Purchase Price. If the Company issues Additional Stock (as defined below) having a purchase price of at least $2,500,000 for a consideration per share less than the Share Price, the Company shall issue to the Investor an additional number of shares of Common Stock as determined in accordance with Section 3(b) (the "Bonus Shares"). (b) Adjustment Formula. Whenever the Company is required to issue Bonus Shares pursuant to Section 3(a), the total number of Bonus Shares shall be determined by (i) dividing the Total Purchase Price by the average weighted consideration per share received by the Company for the Additional Stock and (ii) subtracting therefrom the number of Shares. (c) Definition of Additional Stock. For purposes of this Section 3, "Additional Stock" means any shares of Common Stock issued by the Company in a transaction exempt from registration under the Act within 180 days after the Closing, other than: (i) Shares of Common Stock issuable or issued to employees, consultants or directors of the Company pursuant to a stock option plan or restricted stock plan approved by the Board of Directors of the Company; (ii) Capital stock, or options or warrants to purchase capital stock, issued to financial institutions or lessors in connection with commercial credit arrangements, equipment financings or similar transactions, the terms of which are approved by the Board of Directors of the Company, (iii) Shares of Common Stock issuable pursuant to or upon exercise of warrants, options, votes or other rights to acquire securities of the Company outstanding as of the Closing; and (iv) Shares of capital stock issued in connection with stock splits, stock dividends or similar transactions. (d) Failure to Issue Additional Stock. If the Company fails to issue, within 180 days after the Closing, Additional Stock having a purchase price of at least $2,500,000, as of July 31, 2005 (the "Settlement Date") the Company shall issue to the Investor additional shares of Common Stock. The additional number of shares of Common Stock to be issued to the Investor hereunder shall equal the Total Purchase Price divided by the lower of (a) the weighted average price of all Additional Stock sold by the Company during the period between the Closing Date and the Settlement Date and (b) 90% of the trailing 30-day average bid price of the Company's stock at the Settlement Date; and then subtracting therefrom the number of Shares. (e) No Fractional Shares. The number of shares to be issued pursuant to either subparagraph (a) or (d) hereunder shall be rounded down to the nearest whole share. -2- (f) Determination of Consideration. In the case of the issuance of Additional Stock for cash, the consideration is the amount of cash paid therefor before deducting any discounts, commissions or placement fees allowed, paid or incurred by the Company for any underwriting, placement or similar services in connection with the issuance and sale thereof. 4. Representations and Warranties of the Company. In order to induce the Investor to enter into this Agreement, the Company represents and warrants the following: (a) Authority. The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware, and has all requisite right, power and authority to execute, deliver and perform this Agreement. (b) Enforceability. The execution, delivery and performance of this Agreement by the Company have been duly authorized by all requisite corporate action. This Agreement has been duly executed and delivered by the Company, and, upon its execution by the Investor, constitutes the legal, valid and binding obligation of the Company, enforceable in accordance with its terms, except to the extent that its enforcement is limited by bankruptcy, insolvency, reorganization or other laws relating to or affecting the enforcement of creditors' rights generally and by general principles of equity. (c) No Violations. The execution, delivery and performance of this Agreement by the Company do not and will not violate or conflict with any provision of the Company's Certificate of Incorporation or Bylaws and do not and will not, with or without the passage of time or the giving of notice, result in the breach of, or constitute a default, cause the acceleration of performance, or require any consent under, or result in the creation of any lien, charge or encumbrance upon any property or assets of the Company pursuant to, any material instrument or agreement to which the Company is a party or by which the Company or its properties are bound excepts such consents as have been obtained as of the date hereof. (d) Capitalization. The authorized capital stock of the Company consists of 12,000,000 shares of Common Stock, of which 2,630,000 shares were issued and outstanding as of December 31, 2004, and 500,000 shares of preferred stock, $0.10 par value, of which no shares were issued and outstanding as of December 31, 2004. As of December 31, 2004, the Company had granted options and stock warrants to purchase 302,550 shares of Common Stock. Upon issuance in accordance with the terms of this Agreement against payment of the Purchase Price therefor, the Shares will be duly and validly authorized and issued, fully paid and nonassessable, and, assuming the accuracy of the representations and warranties of each Investor, will be issued in accordance with a valid exemption from the registration or qualification provisions of the Act, and any applicable state securities laws (the "State Acts"). (e) Exchange Act Filing. All reports and statements required to be filed by the Company under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the rules and regulations thereunder, due at or prior to the date of this -3- Agreement have been made. Such filings, together with all documents incorporated by reference therein, are referred to as "Exchange Act Documents." Each Exchange Act Document, as amended, conformed in all material respects to the requirements of the Exchange Act and the rules and regulations thereunder, and no Exchange Act Document, as amended, at the time each such document was filed, included any untrue statement of a material fact or omitted to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. The Company will file all applicable Exchange Act documents required to be filed by it pursuant to the transactions contemplated hereby. (f) Company Financial Statements. The audited financial statements, together with the related notes of the Company at January 31, 2004 and 2003, and for the years then ended, and the unaudited financial statements of the Company at October 31, 2004, and for the nine months then ended, (collectively, the "Company Financial Statements") included in the Company's Annual Report on Form 10-KSB for the year 2003 and its Quarterly Report on Form 10-QSB dated December 13, 2004, respectively, fairly present in all material respects, on the basis stated therein and on the date thereof, the financial position of the Company at the respective dates therein specified and its results of operations and cash flows for the periods then ended (subject to, in the case of unaudited financial statements, normal year-end adjustments). To the knowledge of the Company, such statements and related notes have been prepared in accordance with generally accepted accounting principles applied on a consistent basis except as expressly noted therein. (g) No Material Liabilities. Except for liabilities or obligations disclosed in Exchange Act Documents or with respect to the agreements with Kevin Thomas, since October 31, 2004, the Company has not incurred any material liabilities or obligations, direct or contingent, except in the ordinary course of business or except for liabilities or obligations reflected or reserved against on the Company's balance sheet as October 31, 2004, and there has not been any material adverse change in the condition (financial or otherwise), business, or results of operations of the Company or any change in the capital or increase in the long-term debt of the Company, nor has the Company declared, paid, or made any dividend or distribution of any kind on its capital stock. (h) No Disputes Against Company. Except as disclosed in the Exchange Act Documents there is no material pending or, to the knowledge of the Company, threatened (a) action, suit, claim, proceeding, or investigation against the Company, at law or in equity, or before or by any Federal, state, municipal, or other governmental department, commission, board, bureau, agency or instrumentality, domestic or foreign, (b) arbitration proceeding against the Company, (c) governmental inquiry against the Company, or (d) any action or suit by or on behalf of the Company pending or threatened against others. 5. Representations and Warranties of the Investor. In order to induce the Company to enter into this Agreement, the Investor represents and warrants the following: -4- (a) Authority. The Investor has all requisite right, power and authority to execute, deliver and perform this Agreement. (b) Enforceability. If necessary, the execution, delivery and performance of this Agreement by the Investor have been duly authorized by all requisite partnership or corporate action, as the case may be. This Agreement has been duly executed and delivered by the Investor, and, upon its execution by the Company, constitutes the legal, valid and binding obligation of the Investor, enforceable in accordance with its terms, except to the extent that its enforcement is limited by bankruptcy, insolvency, reorganization or other laws relating to or affecting the enforcement of creditors' rights generally and by general principles of equity. (c) No Violations. The execution, delivery and performance of this Agreement by the Investor do not and will not, with or without the passage of time or the giving of notice, result in the breach of, or constitute a default, cause the acceleration of performance, or require any consent under, or result in the creation of any lien, charge or encumbrance upon any property or assets of the Investor pursuant to, any material instrument or agreement to which the Investor is a party or by which the Investor or its properties may be bound or affected, and, do not or will not violate or conflict with any provision of the articles of incorporation or bylaws, partnership agreement, operating agreement, trust agreement or similar organizational or governing document of the Investor, as applicable. (d) Knowledge of Investment and its Risks. The Investor has knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of Investor's investment in the Shares. The Investor understands that an investment in the Company represents a high degree of risk and there is no assurance that the Company's business or operations will be successful. The Investor has considered carefully the risks attendant to an investment in the Company, and that, as a consequence of such risks, the Investor could lose Investor's entire investment in the Company. (e) Investment Intent. The Investor hereby represents and warrants that (i) the Shares are being acquired for investment for the Investor's own account, and not as a nominee or agent and not with a view to the resale or distribution of all or any part of the Shares, and the Investor has no present intention of selling, granting any participation in or otherwise distributing any of the Shares within the meaning of the Act and (ii) the Investor does not have any contracts, understandings, agreements or arrangements with any person or entity to sell, transfer or grant participations to such person or entity, with respect to any of the Shares. (f) Accredited Investor. The Investor is an "Accredited Investor" as that term is defined by Rule 501 of Regulation D promulgated under the Act. (g) Disclosure. The Investor has reviewed information provided by the Company in connection with the decision to purchase the Shares, consisting of the Company's publicly available filings with the Securities and Exchange Commission and the information contained therein. The Company has provided the Investor with all the -5- information that the Investor has requested in connection with the decision to purchase the Shares. The Investor further represents that the Investor has had an opportunity to ask questions and receive answers from the Company regarding the business, properties, prospects and financial condition of the Company. All such questions have been answered to the full satisfaction of the Investor. (h) No Registration. The Investor understands that Investor may be required to bear the economic risk of Investor's investment in the Company for an indefinite period of time. The Investor further understands that (i) neither the offering nor the sale of the Shares has been registered under the Act or any applicable State Acts in reliance upon exemptions from the registration requirements of such laws, (ii) the Shares must be held by the Investor indefinitely unless the sale or transfer thereof is subsequently registered under the Securities Act and any applicable State Acts, or an exemption from such registration requirements is available, (iii) except as set forth in the Registration Rights Agreement between the Company and the Investor, the Company is under no obligation to register any of the Shares on the Investor's behalf or to assist the Investor in complying with any exemption from registration, and (iv) the Company will rely upon the representations and warranties made by the Investor in this Subscription Agreement in order to establish such exemptions from the registration requirements of the Act and any applicable State Acts. (i) Transfer Restrictions. The Investor will not transfer any of the Shares unless such transfer is registered or exempt from registration under the Act and such State Acts, and, if requested by the Company in the case of an exempt transaction, the Investor has furnished an opinion of counsel reasonably satisfactory to the Company that such transfer is so exempt. The Investor understands and agrees that (i) the certificates evidencing the Shares will bear appropriate legends indicating such transfer restrictions placed upon the Shares, (ii) the Company shall have no obligation to honor transfers of any of the Shares in violation of such transfer restrictions, and (iii) the Company shall be entitled to instruct any transfer agent or agents for the securities of the Company to refuse to honor such transfers. (j) Legends. Each Investor understands that the certificates representing the Shares will bear any legend required by the "blue sky" laws of any state and a restrictive legend in substantially the following form until the Shares are registered under the Act as contemplated by the Registration Rights Agreement among the Company and the Investors: THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR APPLICABLE STATE SECURITIES LAWS. THE SHARES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (1) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SHARES UNDER THE ACT OR (B) AN OPINION OF COUNSEL, IN A FORM REASONABLY ACCEPTABLE TO THE COMPANY, THAT REGISTRATION IS NOT REQUIRED UNDER THE ACT OR (2) UNLESS SOLD PURSUANT TO RULE 144 UNDER THE ACT. -6- (k) Principal Address. The Investor's principal executive office is set forth on the signature page of this Subscription Agreement. (l) Money Laundering. The Investor hereby acknowledges that the Company seeks to comply with all applicable laws concerning money laundering and similar activities. In furtherance of such efforts, the Investor hereby represents and agrees that, to the best of the Investor's knowledge based upon appropriate diligence and investigation: (i) none of the cash or property that is paid or contributed to the Company by the Investor shall be derived from, or related to, any activity that is deemed criminal under United States law; (ii) no contribution or payment to the Company by the Investor shall (to the extent that such matters are within the Investor's control) cause the Company to be in violation of the Untied States Bank Secrecy Act, the United States Money Laundering Abatement and Anti-Terrorist Financing Act of 2001; and (iii) the Investor is not engaged in money laundering. Further, the Investor represents and warrants to the Company all evidence of identity provided in connection with the Investor's acquisition of Common Stock as contemplated herein is genuine and all related information furnished is accurate and the Investor hereby agrees to provide any information deemed necessary by the Company in its sole discretion to comply with the Company's anti-money laundering responsibilities and policies. 6. Further Assurances. The parties will, upon reasonable request, execute and deliver all such further assignments, endorsements and other documents as may be necessary in order to perfect the purchase by the Investors of the Shares. 7. Registration Rights Agreement. The Investor agrees to be bound by the terms of and execute the Registration Rights Agreement between the Company and the Investor. 8. Entire Agreement; No Oral Modification. This Agreement contains the entire agreement among the parties hereto with respect to the subject matter hereof and supersedes all prior agreements and understandings with respect thereto and may not be amended or modified except in a writing signed by both of the parties hereto. 9. Binding Effect; Benefits. This Agreement inures to the benefit of and is binding upon the parties hereto and their respective heirs, successors and assigns; however, nothing in this Agreement, expressed or implied, is intended to confer on any other person other than the parties hereto, or their respective heirs, successors or assigns, any rights, remedies, obligations or liabilities under or by reason of this Agreement. The undersigned agrees that the Investor may not cancel, terminate or revoke this Agreement or any agreement of the Investor made hereunder (except as otherwise specifically provided herein). This Agreement is not transferable or assignable by the undersigned except as may be provided herein; provided, however, that this Agreement survives the death or disability of the Investor and is binding upon the Investor's heirs, executors, administrators, successors and permitted assigns. 10. Counterparts. This Agreement may be executed in any number of counterparts, each of which is an original and all of which together are one and the same instrument. -7- 11. Governing Law. This Agreement shall be governed by, and construed and enforced in accordance with, the laws of the United States of America and the State of New York, 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. 12. Prevailing Parties. In any action or proceeding brought to enforce any provision of this Agreement, or where any provision hereof is validly asserted as a defense, the prevailing party shall be entitled to receive and the nonprevailing party shall pay upon demand reasonable attorneys' fees in addition to any other remedy. 13. Headings. The section headings herein are included for convenience only and are not to be deemed a part of this Agreement. 14. Notices. All notices, request, demands and other communications hereunder shall be in writing and shall be deemed to have been duly given to any party when delivered by hand, when delivered by telecopier or telex and confirmed, or when mailed, first-class postage pre-paid, (a) if to you, to you at the address or telecopy number set forth below your signature, or to such other address or telecopy number as you shall have furnished to the Company in writing and (b) if to the Company, to it at One Church Street, Suite 302; Rockville, Maryland 20850 or to such other address or addresses, or telecopy number or numbers, as the Company shall have furnished to you in writing. 15. Tax Certification. You certify that (a) the taxpayer identification provided under your signature is correct and (b) you are not subject to backup withholding because (i) you have not been notified that you are subject to backup withholding as a result of failure to report interest and dividends or (ii) the Internal Revenue Service has not notified you that you are subject to withholding. -8- IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first written above. ARGAN, INC., a Delaware corporation By: /s/ Rainer Bosselmann ------------------------------- Name: Rainer Bosselmann ------------------------------- Its: Chairman of the Board and Chief Executive Officer ------------------------------- MSR I SBIC, L.P. By: /s/ Daniel A. Levinson --------------------------------- Daniel A. Levinson --------------------------------- Print Name 8 Wright Street Westport, CT 06880 Attn: General Partner Employer Identification Number ---------------------------------- -9- EX-4.2 3 v012046_ex4-2.txt 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. 2 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 3 (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. 4 (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. 5 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 6 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, 7 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: 8 If to the Company: Argan, Inc. Attention: Rainer Bosselmann One Church Street; Suite 302 Rockville, Maryland 20850 If to the Investor: MSR I SBIC, L.P. 8 Wright Street Westport, Connecticut 06880 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. 9 This Agreement is hereby executed as of the date first above written. COMPANY: ARGAN, INC. By: /s/ Rainer Bosselmann --------------------------------- Name: Rainer Bosselmann --------------------------------- Its: Chairman of the Board and Chief Executive Officer --------------------------------- INVESTOR: MSR I SBIC, L.P. By: MSR I SBIC PARTNERS, LLC Its General Partner By: MSR ADVISORS, INC. Its Manager By: /s/ Daniel A. Levinson -------------------------------- Name: Daniel A. Levinson Its: President -----END PRIVACY-ENHANCED MESSAGE-----