This ESCROW AGREEMENT (this “Escrow Agreement”) is dated as of the 8^th 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 Robinson & Cole LLP (the “Escrow Agent”). Capitalized terms not otherwise defined herein shall have the meanings ascribed to them in the Purchase Agreement (defined below)

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.

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 JP Morgan Chase & Co. until the Escrow Amount is released from escrow in accordance with the provisions of Section 2 hereof.

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.

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.

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.

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.

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.

6.3 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.

6.5 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.

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.

		THE COMPANY:

		ARGAN, INC.


		/s/ Rainer Bosselmann
		By: Rainer Bosselmann
		Its: President


		BUYERS:

		Argan Investments LLC


		/s/ Robert Averick
		By: Robert Averick
		Its: Member


		ALLEN SBH INVESTMENTS, LLC


		/s/ Kim M. Wieland
		By: Kim M. Wieland
		Its: CFO



		/s/ Bruce Allen
		Bruce Allen


		/s/ James Quinn
		James Quinn


		/s/ John Simon
		John Simon


		/s/ Mark Levy
		Mark Levy


		/s/ Stephen J. Adler
		Stephen J. Adler


		WHITNEY GREEN RIVER MANAGEMENT
		CO., LLC


		/s/ John Hockin
		By: John Hockin
		Its:


		MSR I SBIC, L.P.

		By: MSR I SBIC Partners, LLC (its General Partner)

		By: MSR Advisors, Inc. (its Manager)

		/s/ Daniel A. Levinson
		By: Daniel A. Levinson
		Its: President


		MSR FUND II, L.P.

		MSR Fund II GP, LLC (its General Partner)

		By: MSR Advisors, Inc. (its Manager)

		/s/ Daniel A. Levinson
		By: Daniel A. Levinson
		Its: President


		ESCROW AGENT:

		ROBINSON & COLE LLP


		/s/ Richard A. Krantz
		By: Richard A. Krantz
		Its: Partner

Buyer	Number of Shares		Purchase Price		Number of Shares		Purchase Price
Argan Investments LLC		1,000,000	$	3,750,000.00		1,000,000	$	3,750,000.00
Allen SBH Investments, LLC		266,667	$	1,000,000.00		173,333	$	649,999.00
Perennial Partners LP		266,667	$	1,000,000.00		266,667	$	1,000,000.00
Whitney Green River Management Co., LLC		266,667	$	1,000,000.00		266,667	$	1,000,000.00
Westwind Equity Partners, LLC		266,667	$	1,000,000.00		266,667	$	1,000,000.00
MSR I SBIC, L.P.		92,793	$	347,974.00		92,793	$	347,974.00
MSR Fund II, L.P.		440,540	$	1,652,025.00		440,540	$	1,652,025.00
Allen & Company, LLC		80,000	$	300,000.00		266,667	$	1,000,000.00
Bruce Allen		53,333	$	200,000.00		160,000	$	600,000.00
John Simon		80,000	$	300,000.00
James Quinn		26,667	$	100,000.00
Mark Levy		6,667	$	25,000.00
Stephen J. Adler		6,667	$	25,000.00

		PERENNIAL PARTNERS LP


		/s/ Paul Fino
		By: Paul Fino
		Its: Principal


		WESTWIND EQUITY PARTNERS, LLC


		/s/ Beth Maxwell
		By: Beth Maxwell
		Its: Executive Director