Exhibit 4.1
Stock Purchase Agreement
This Stock Purchase Agreement (this "Agreement") is made as of this 4th
day of May, 2006, by and among Argan, Inc., a Delaware corporation (the
"Company") and the purchasers identified on Schedule A, attached hereto (each a
"Buyer", and collectively the "Buyers").
WHEREAS, the Company is offering 760,000 shares of the Company's Common
Stock, $.15 par value (the "Common Stock") to a limited number of sophisticated
investors in a non-public offering; and
WHEREAS, each Buyer desires to purchase that number of shares of Common
Stock as set forth opposite the name of such Buyer on Schedule A, attached
hereto (the "Shares").
NOW THEREFORE, in consideration of the foregoing and for valuable
consideration, the receipt and sufficiency of which is acknowledged, the parties
hereto agree as follows:
1. Issuance of Shares
Subject to the terms and conditions contained herein and in a certain
Escrow Agreement by and among the Company and the Buyers of even date herewith
(the "Escrow Agreement"), the Company will issue to each Buyer, and each Buyer
will purchase from Company, for the purchase price of $2.50 per share, that
number of shares of Common Stock as set forth opposite the name of such Buyer on
Schedule A, attached hereto. Pursuant to the terms of the Escrow Agreement, the
Company shall deliver to each Buyer a certificate in the name of such Buyer for
the respective number of Shares issued to such Buyer.
2. Restrictive Legends
All certificates representing Shares shall have affixed thereto legends in
substantially the following form, in addition to any other legends that may be
required under federal or state securities laws:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY STATE
SECURITIES OR BLUE SKY LAWS AND MAY NOT BE OFFERED, SOLD, TRANSFERRED,
HYPOTHECATED OR OTHERWISE ASSIGNED EXCEPT PURSUANT TO A REGISTRATION
STATEMENT WITH RESPECT TO SUCH SECURITIES WHICH IS EFFECTIVE UNDER THE ACT
OR PURSUANT TO AN AVAILABLE EXEMPTION FROM REGISTRATION UNDER THE ACT
RELATING TO THE DISPOSITION OF SECURITIES AND IN ACCORDANCE WITH
APPLICABLE STATE SECURITIES AND BLUE SKY LAWS.
3. Investment Representations
Each Buyer represents, warrants and covenants as follows:
(a) The Buyer is an "accredited investor" as such term is defined in
Rule 501(a) of Regulation D promulgated pursuant to the Securities Act of 1933,
as amended (the "Securities Act") and is purchasing the applicable Shares for
its own account for investment only, and not with a view to, or for sale in
connection with, any distribution of such Shares in violation of the Securities
Act or applicable state securities laws, or any rule or regulation thereunder.
(b) The Buyer has had such opportunity as it has deemed adequate to
obtain from representatives of the Company such information as is necessary to
permit it to evaluate the merits and risks of its investment in the Company, and
has done so.
(c) The Buyer understands that the Company is required to file
periodic reports pursuant to the Securities Exchange Act of 1934, as amended.
The Buyer acknowledges that they have had such opportunity to obtain such
periodic reports and are familiar with the information contained in such
periodic reports, including without limitation the risk factors contained
therein.
(d) The Buyer has sufficient experience in business, financial and
investment matters to be able to evaluate the risks involved in the purchase of
the Shares and to make an informed investment decision with respect to such
purchase.
(e) The Buyer can afford a complete loss of the value of the Shares
and is able to bear the economic risk of holding such Shares for an indefinite
period.
(f) The Buyer understands that: (i) the Shares have not been
registered under the Securities Act and are "restricted securities" within the
meaning of Rule 144 under the Securities Act; (ii) the Shares cannot be sold,
transferred or otherwise disposed of unless they are subsequently registered
under the Securities Act or an exemption from registration is then available;
(iii) in any event, the exemption from registration under Rule 144 will not be
available for at least one year and even then will not be available unless a
public market then exists for the Common Stock, adequate information concerning
the Company is then available to the public, and other terms and conditions of
Rule 144 are complied with; and (iv) there is now no registration statement on
file with the Securities and Exchange Commission with respect to any stock of
the Buyer.
4. Company Representations
The Company represents and warrants as follows:
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(a) Organization, Qualification and Corporate Power. The Company is
a corporation duly organized, validly existing and in good standing under the
laws of the state of its incorporation. The Company is duly qualified to conduct
business and is in corporate and tax good standing under the laws of each
jurisdiction in which the nature of its businesses or the ownership or leasing
of its properties requires such qualification, except where the failure to be so
qualified or in good standing would not have a material adverse effect on the
Company's business. The Company has all requisite corporate power and authority
to carry on the businesses in which it is engaged and to own and use the
properties owned and used by it.
(b) Authorization of Transaction. The Company has all requisite
power and authority to execute and deliver this Agreement and the Escrow
Agreement and to perform its obligations hereunder and thereunder. The execution
and delivery by the Company of this Agreement and the Escrow Agreement and the
consummation by the Company of the transactions contemplated hereby and thereby
have been duly and validly authorized by all necessary corporate action on the
part of the Company. This Agreement and the Escrow Agreement have been duly and
validly executed and delivered by the Company and constitute valid and binding
obligations of the Company, enforceable against it in accordance with their
respective terms.
(c) Noncontravention. Subject to compliance with the applicable
requirements of the Securities Act, the Securities Exchange Act of 1934 and any
applicable state securities laws, neither the execution and delivery by the
Company of this Agreement or the Escrow Agreement, nor the consummation by the
Company of the transactions contemplated hereby or thereby, will (a) conflict
with or violate any provision of the charter or Bylaws of the Company, (b)
require on the part of the Company any filing with, or permit, authorization,
consent or approval of, any court, arbitrational tribunal, administrative agency
or commission or other governmental or regulatory authority or agency
("Governmental Entity"), (c) conflict with, result in breach of, constitute
(with or without due notice or lapse of time or both) a default under, result in
the acceleration of obligations under, create in any party any right to
terminate, modify or cancel, or require any notice, consent or waiver under, any
contract or instrument to which the Company is a party or by which it is bound
or to which any of its assets are subject, or (d) violate any order, writ,
injunction, decree, statute, rule or regulation applicable to the Company or any
of its properties or assets.
(d) Litigation. There is no action, suit, proceeding, claim,
arbitration or investigation before any Governmental Entity which is pending or
has been threatened against the Company. There are no judgments, orders or
decrees outstanding against the Company. To the knowledge of the Company, there
is no threatened civil or criminal litigation, written notice of violation,
formal administrative proceeding, or investigation, inquiry or information
request by any governmental entity with respect to the business of the Company.
(e) Valid Issuance. The Shares, when sold, issued and delivered in
accordance with the terms of this Agreement, will be duly and validly issued,
fully paid and nonassessable, and will be subject to restrictions on transfer
under federal and applicable state securities law until the Registration
Statement (as defined in Section 6(a) below) is declared effective by the
Securities and Exchange Commission (the "SEC"), and then may be sold in
accordance with the terms provided in the prospectus to the Registration
Statement. The Shares will be issued in compliance in all material respects with
an exemption from the registration of the Securities Act, and the registration
and qualification requirements of the securities laws of the applicable states.
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5. Use of Proceeds
The Company will receive proceeds in the amount of $1,900,000 upon the
offering and sale of the Shares contemplated hereunder. The Company will use
$1,800,000 to reduce its indebtedness under a certain promissory note in favor
of ▇▇▇▇▇ ▇▇▇▇▇▇. The remaining $100,000 will be used by the Company for general
corporate purposes. The Company may invest the proceeds temporarily until it
uses them for their stated purpose.
6. Miscellaneous
(a) Registration. The Company agrees that it will, as soon as
practicable following the closing of the transaction contemplated hereby,
prepare and file with the SEC a registration statement on Form S-1 or, if
applicable, Form S-3, or any equivalent form for registration by issuers similar
to the Company in accordance with the Securities Act ("Registration Statement"),
to permit a public offering and resale of the Shares on a continuous basis under
Rule 415. The Company agrees that it will use commercially reasonable effects to
cause the Registration Statement to be declared effective by the SEC as soon as
practicable following the filing thereof. The Company will cause the
Registration Statement to remain effective until such time as all of the Shares
are sold or the holders thereof are entitled to rely on Rule 144(k) for sales of
the Shares without registration under the Securities Act and without compliance
with the public information, sales volume, manner of sale or notice requirements
of Rule 144(c), (e), (f) or (h). The Company will pay all registration expenses
of the registration of the Shares pursuant to this Section 6(a).
(b) Severability. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, and each other provision of this
Agreement shall be severable and enforceable to the extent permitted by law.
(c) Waiver. Any provision for the benefit of the Company contained
in this Agreement may be waived, either generally or in any particular instance,
by the Board of Directors of the Company.
(d) Binding Effect. This Agreement shall be binding upon and inure
to the benefit of the Company and each Buyer and their respective heirs,
executors, administrators, legal representatives, successors and assigns.
(e) Notice. All notices required or permitted hereunder shall be in
writing and deemed effectively given upon personal delivery or five days after
deposit in the United States Post Office, by registered or certified mail,
postage prepaid, addressed to the other party hereto at the address shown
beneath his or its respective signature to this Agreement, or at such other
address or addresses as either party shall designate to the other in accordance
with this Section 5(d).
(f) Pronouns. Whenever the context may require, any pronouns used in
this Agreement shall include the corresponding masculine, feminine or neuter
forms, and the singular form of nouns and pronouns shall include the plural, and
vice versa.
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(g) Entire Agreement. This Agreement, together with the Escrow
Agreement, constitutes the entire agreement between the parties with respect to
the Shares, and supersedes all prior agreements and understandings, relating to
the subject matter of this Agreement.
(h) Amendment. This Agreement may be amended or modified only by a
written instrument executed by the Buyers and the Company.
(i) Governing Law. This Agreement shall be construed, interpreted
and enforced in accordance with the internal laws of the State Delaware without
regard to any applicable conflicts of laws.
(j) Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original and constitute the same
instrument.
[NEXT PAGE IS SIGNATURE PAGE]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first written above.
COMPANY:
ARGAN, INC.
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
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By: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Its: President
BUYERS:
MSR I SBIC, L.P.
By: MSR I SBIC Partners, LLC, its General Partner
By: MSR Advisors, Inc., its Manager
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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By: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Its: President
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
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/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
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PRAIRIE FIRE CAPITAL LLC
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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By: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Its: Attorney-in-Fact
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▇▇▇▇▇ SBH LLC
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
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By: ▇▇▇▇▇▇▇ ▇▇▇▇▇
/s/ ▇▇▇▇ ▇▇▇▇▇
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Schedule A
Buyers of Restricted Stock
Buyer Number of Shares Purchase Price
----- ---------------- --------------
MSR SBIC I, L.P. 240,000 $600,000
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ 40,000 $100,000
▇▇▇▇▇▇▇ ▇▇▇▇▇ 120,000 $300,000
Prairie Fire Capital LLC 120,000 $300,000
▇▇▇▇▇ SBH LLC 120,000 $300,000
▇▇▇▇ ▇▇▇▇▇ 80,000 $200,000
▇▇▇▇▇ ▇▇▇▇▇ 40,000 $100,000
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