-----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, NthIcZuAQovl8K6aolKLeUhhgHc+ty7eUP0W9ECb8tQiwVjr0lsVKa8V8rTf7qVN +Q1EYJwdZD/5Oj0teeTsRg== 0001144204-05-034711.txt : 20051110 0001144204-05-034711.hdr.sgml : 20051110 20051110102702 ACCESSION NUMBER: 0001144204-05-034711 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20051107 ITEM INFORMATION: Entry into a Material Definitive Agreement ITEM INFORMATION: Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20051110 DATE AS OF CHANGE: 20051110 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ARGAN INC CENTRAL INDEX KEY: 0000100591 STANDARD INDUSTRIAL CLASSIFICATION: MEDICINAL CHEMICALS & BOTANICAL PRODUCTS [2833] 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: 051192241 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 v028773_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): November 7, 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 1.01 Entry into a Material Agreement. The information described below under Item 2.03 with regard to the Credit Facility (as defined below) is hereby incorporated herein by reference. Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant. In August 2003, Argan, Inc., a Delaware corporation (together with its affiliated entities, the "Company"), entered into a financing arrangement (the "Credit Facility") with Bank of America, N.A. (the "Bank") aggregating $2,950,000 in available financing in two facilities - a revolving line of credit with $1,750,000 in availability, having an initial expiration date of July 31, 2004 and bearing interest at LIBOR plus 2.75% (the "Revolving Loan"), and a three year term note with an original outstanding balance of $1,200,000, expiring July 31, 2006 and bearing interest at LIBOR plus 2.95% (the "Term Loan"). In August 2004, the Company and the Bank amended the Credit Facility. Under the amended documents, the Revolving Loan was increased to $3,500,000, bearing interest at a rate of LIBOR plus 3.25% with interest to be paid monthly and with a maturity date of May 31, 2005. Under the Revolving Loan, borrowing is limited based upon eligible accounts receivable and eligible inventory. The Term Loan was amended to bear interest at an increased rate of LIBOR plus 3.45%, with interest payable monthly and with a maturity date of July 31, 2006. In addition, the Credit Facility is secured by substantially all of the Company's assets. The Credit Facility contains certain affirmative and negative covenants including: requiring the ratio of funded debt to EBITDA to not exceed 2.5 to 1, requiring a fixed charge coverage ratio of not less than 1.25 to 1 and requiring the Bank's consent for acquisitions and divestitures. Finally, the Bank may accelerate the entire amount due under the Credit Facility in an event of default. On April 8, 2005, the Company and the Bank further amended the Credit Facility by entering into a Second Amended and Restated Revolving Credit Note dated April 8, 2005 and a Fourth Amendment to Financing and Security Agreement dated April 8, 2005 (collectively, the "Amended Credit Facility"). Under the Amended Credit Facility, the expiration date for the Revolving Loan was extended to May 31, 2006, and the line of credit was increased to $4,250,000. In addition, the Bank waived the Company's non-compliance with the financial covenants described above and released its lien on a certain $300,000 certificate of deposit previously pledged by the Company as collateral security for the Company's obligations under the Credit Facility. On November 7, 2005, the Company and the Bank further modified the Amended Credit Facility by entering into a Fifth Amendment to Financing and Security Agreement dated November 7, 2005 (the "Fifth Amendment"). Under the Fifth Amendment, the Bank waived the Company's non-compliance with certain financial covenants described above, and the parties modified certain definitions contained in the Amended Credit Facility to account for (i) an investment made by MSR I SBIC, L.P. in the Company on January 28, 2005 and (ii) an agreement entered into with Kevin Thomas on January 28, 2005 with respect to debt subordination and related concessions given to Mr. Thomas. Item 9.01. Financial Statements and Exhibits. (c) Exhibits. Exhibit No. Description ----------- ----------- 10.1 Financing and Security Agreement dated as of August 19, 2003 by and among Puroflow Incorporated, Southern Maryland Cable, Inc. and Bank of America, N.A. (Incorporated by reference to Exhibit 10.7 to the Company's Form 10-QSB filed with the Securities and Exchange Commission on December 15, 2003) 10.2 Fourth Amendment to Financing and Security Agreement dated as of April 8, 2005 by and among Argan, Inc., Southern Maryland Cable, Inc., Vitarich Laboratories, Inc. and Bank of America, N.A. (Incorporated by reference to Exhibit 10.12 to the Company's Form 8-K filed with the Securities and Exchange Commission on April 14, 2005) 10.3 Second Amended and Restated Revolving Credit Note dated as of April 8, 2005 by and among Argan, Inc., Southern Maryland Cable, Inc., Vitarich Laboratories, Inc. and Bank of America, N.A. (Incorporated by reference to Exhibit 10.13 to the Company's Form 8-K filed with the Securities and Exchange Commission on April 14, 2005) 10.4 Fifth Amendment to Financing and Security Agreement dated as of November 7, 2005 by and among Argan, Inc., Southern Maryland Cable, Inc., Vitarich Laboratories, Inc. and Bank of America, N.A. 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. Date: November 8, 2005 By: /s/ Rainer Bosselmann ------------------------- Rainer Bosselmann Chairman of the Board and Chief Executive Officer EXHIBIT INDEX Exhibit No. Description - ----------- ----------- 10.1 Financing and Security Agreement dated as of August 19, 2003 among Puroflow Incorporated, Southern Maryland Cable, Inc. and Bank of America, N.A. (Incorporated by reference to Exhibit 10.7 to the Company's Form 10-QSB filed with the Securities and Exchange Commission on December 15, 2003) 10.2 Fourth Amendment to Financing and Security Agreement dated as of April 8, 2005 among Argan, Inc., Southern Maryland Cable, Inc., Vitarich Laboratories, Inc. and Bank of America, N.A. (Incorporated by reference to Exhibit 10.12 to the Company's Form 8-K filed with the Securities and Exchange Commission on April 14, 2005) 10.3 Second Amended and Restated Revolving Credit Note dated as of April 8, 2005 among Argan, Inc., Southern Maryland Cable, Inc., Vitarich Laboratories, Inc. and Bank of America, N.A. (Incorporated by reference to Exhibit 10.13 to the Company's Form 8-K filed with the Securities and Exchange Commission on April 14, 2005) 10.4 Fifth Amendment to Financing and Security Agreement dated as of November 7, 2005 among Argan, Inc., Southern Maryland Cable, Inc., Vitarich Laboratories, Inc. and Bank of America, N.A. EX-10.4 2 v028773_ex10-4.txt Exhibit 10.4 FIFTH AMENDMENT TO FINANCING AND SECURITY AGREEMENT THIS FIFTH AMENDMENT TO FINANCING AND SECURITY AGREEMENT (this "Agreement") is made as of the 7th day of November, 2005, by and among ARGAN, INC. (formerly Puroflow Incorporated)("Argan"), a corporation organized and in good standing under the laws of the State of Delaware, SOUTHERN MARYLAND CABLE, INC. ("SMC"), a corporation organized and in good standing under the laws of the State of Delaware, and VITARICH LABORATORIES, INC. ("Vitarich"), a corporation organized and in good standing under the laws of the State of Delaware, jointly and severally (each a "Borrower"; and collectively, the "Borrowers") and BANK OF AMERICA, N.A., a national banking association, its successors and assigns (the "Lender"). RECITALS A. The Borrowers and the Lender are parties to a Financing and Security Agreement dated as of August 19, 2003 (the same, as amended, modified, substituted, extended, and renewed from time to time, the "Financing Agreement"). B. The Financing Agreement provides for some of the agreements between the Borrowers and the Lender with respect to the Loans (as defined in the Financing Agreement), including a revolving credit facility in the current maximum amount not to exceed Four Million Two Hundred Fifty Thousand Dollars ($4,250,000) and a term loan facility (the "Term Loan") in an amount not to exceed One Million Two Hundred Thousand Dollars ($1,200,000). C. The Borrowers have requested that the Lender amend the Financing Agreement and the Lender has agreed to do so, on the condition, among others, that this Agreement be executed. AGREEMENTS NOW, THEREFORE, in consideration of the premises and for other good and valuable consideration, receipt of which is hereby acknowledged, the Borrowers and the Lender agree as follows: 1. Recitals. The Borrowers and the Lender agree that the Recitals above are a part of this Agreement. Unless otherwise expressly defined in this Agreement, terms defined in the Financing Agreement shall have the same meaning under this Agreement. 2. Waiver. The Borrowers have failed to comply with the requirements of Sections 6.1.14(b) (Funded Debt to EBITDA) and 6.1.14 (c) (Fixed Charge Coverage Ratio) for the period ending July 31, 2005, and the Lender hereby agrees to waive such failure for the period ending July 31, 2005. 3. Revised Defined Terms. The following definitions in Section 1.1 of the Financing Agreement are amended and restated in their entirety as follows: "EBITDA" means as to the Borrowers and their Subsidiaries on a consolidated basis for any period of determination thereof, the sum of (a) the net profit (or loss) determined in accordance with GAAP consistently applied, plus (b) interest expense for such period, plus (c) income tax provisions for such period, plus (d) depreciation and amortization of assets for such period, plus (e) for the quarter ending January 31, 2005, $614,000 of non-cash compensation expense to Kevin Thomas, minus (f) for the quarter ending April 30, 2005, $23,000 of unrealized gains taken on financial derivatives for stock issued to Kevin Thomas and Main Street Resources, and plus (f) for the quarter ending July 31, 2005, the non-cash derivative expense associated with the issuance of common stock, in the amount of (i) $1,610,000 for Kevin Thomas and (ii) $342,000 for Main Street Resources. "Fixed Charges" means as to the Borrowers and their Subsidiaries for any period of determination, the sum of all scheduled interest expense excluding the non-cash interest expense associated with the amortization of issuance costs for Subordinated Indebtedness in favor of Kevin Thomas, all principal payments and all Capital Lease payments of the Borrowers and their Subsidiaries made during the twelve (12) months preceding the date such covenant is being tested, all in accordance with GAAP. "Funded Debt" means all Indebtedness of Borrowers in favor the Lender, including, without limitation, the outstanding principal balance of the Revolving Loan and the Term Loan and the face amount of any outstanding letters of credit and all Capital Leases. 4. Counterparts. This Agreement may be executed in any number of duplicate originals or counterparts, each of such duplicate originals or counterparts shall be deemed to be an original and all taken together shall constitute but one and the same instrument. Each Borrower agrees that the Lender may rely on a telecopy of any signature of a Borrower. The Lender agrees that the Borrowers may rely on a telecopy of this Agreement executed by the Lender. [SIGNATURES APPEAR ON THE FOLLOWING PAGE] IN WITNESS WHEREOF, the Borrowers and the Lender have executed this Agreement under seal as of the date and year first written above. WITNESS OR ATTEST: ARGAN, INC. /s/ Arthur Trudel By: /s/ Haywood Miller (SEAL) - ---------------------- ---------------------------- Name: Haywood Miller Title: EVP WITNESS OR ATTEST: SOUTHERN MARYLAND CABLE, INC. /s/ Haywood Miller By: /s/ Arthur Trudel (SEAL) - ---------------------- ---------------------------- Name: Arthur Trudel Title: VP and CFO WITNESS OR ATTEST: VITARICH LABORATORIES, INC. /s/ Haywood Miller By: /s/ Arthur Trudel (SEAL) - ---------------------- ---------------------------- Name: Arthur Trudel Title: VP and CFO WITNESS: BANK OF AMERICA, N.A. By: /s/ Michael Radcliffe (SEAL) - ---------------------- ---------------------------- Name: Michael J. Radcliffe Title: Senior Vice President -----END PRIVACY-ENHANCED MESSAGE-----