Preview | Escrow Agreement |

This ESCROW AGREEMENT (this Escrow Agreement), is made and entered into as of the 8^th day of December, 2006, by and among (i) ARGAN, INC., a Delaware corporation (Purchaser), (ii) WILLIAM F. GRIFFIN, JR. (Griffin), and JOEL M. CANINO (Canino, and together with Griffin sometimes hereinafter referred to together as, the Sellers); (iii) MICHAEL PRICE (Price); and (iv) CURTIN LAW ROBERSON DUNIGAN & SALANS, P.C., a District of Columbia professional corporation (Escrow Agent).

WHEREAS, Purchaser, the Sellers, and Gemma Power Systems, LLC, a Connecticut limited liability company (GPS), Gemma Power, Inc., a Connecticut corporation (GPS-Connecticut), and Gemma Power Systems California, Inc., a California corporation (GPS-California), entered into that certain Membership Interest Purchase Agreement dated December 8, 2006 (the MIPA), pursuant to which Purchaser acquired, on the date hereof, all of the membership interests of GPS; and

WHEREAS, Purchaser, the Sellers and GPS-Connecticut and GPS-California entered into that certain Stock Purchase Agreement dated December 8, 2006 (the SPA), pursuant to which Purchaser acquired, on the date hereof, all of the issued and outstanding shares of capital stock of GPS-Connecticut and GPS-California (the acquisition of all of said membership interests of GPS under the MIPA and of all of said shares of capital stock of GPS-Connecticut and GPS-California under the SPA sometimes hereinafter referred to together as, the Acquisition); and

WHEREAS, as a result of the Acquisition, the Sellers are entitled to, among other things, the Stock Consideration; provided, however, that, in accordance with the terms and conditions of the MIPA, Purchaser has retained from the Stock Consideration the Escrowed Stock Consideration and is depositing same in escrow with the Escrow Agent to be held subject to the terms and conditions of this Escrow Agreement.

NOW, THEREFORE, in consideration of the mutual promises herein contained, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, and intending to be legally bound hereby, the parties hereto covenant and agree as follows:

1.1 Pursuant to Section 2.2(b) of the MIPA, Purchaser hereby deposits with Escrow Agent the Escrowed Stock Consideration, consisting of three (3) stock certificates evidencing the issuance to each of the Sellers of 325,000 shares of Argan Common Stock, and, at the direction of Sellers, the issuance to Price of 16,667 shares of Argan Common Stock, together having an aggregate value (valued at the Argan Per Share Value) of Two Million Five Hundred Thousand Dollars ($2,500,000), together with three (3) stock powers attached to each of said stock certificates executed by each of the Sellers, and by Price, as the case may be, in blank, which will be held subject to the terms and conditions of this Escrow Agreement.

1.2 Purchaser and the Sellers and Price hereby acknowledge and agree that the Escrowed Stock Consideration is to secure the Sellers obligation to indemnify, defend, protect, and hold harmless each Buyer Indemnitee pursuant to Section 10 of the MIPA.

1.3 Escrow Agent hereby acknowledges receipt of the Escrowed Stock Consideration and agrees to hold the Escrowed Stock Consideration in accordance with the terms and conditions of this Escrow Agreement.

2.1 The term of this Escrow Agreement shall commence on the date hereof and shall expire one (1) year from the Closing Date (the Escrow Release Date), unless a claim for indemnification under Section 10 of the MIPA is made on or before the Escrow Release Date, in which event this Escrow Agreement shall continue in effect in accordance the following provisions.

(a) In the event that Purchaser makes a claim for indemnification under Section 10 of the MIPA (which Purchaser may do on one or more occasions during the term of this Escrow Agreement), it shall notify the Escrow Agent and the Sellers and Price of such claim and the amount thereof in writing (the Indemnification Claim Notice) no later than the Escrow Release Date. Upon the giving of the Indemnification Claim Notice, the Sellers shall have the right to dispute such claim by giving notice of dispute to the Escrow Agent and Purchaser and Price in writing (the Dispute Notice) within five (5) business days of Purchasers giving of the Indemnification Claim Notice. Purchaser and the Sellers thereafter shall attempt to agree in writing on the dollar amount owed by the Sellers pursuant to such claim. If the parties are unable to agree in writing to such dollar amount, the matter shall be resolved in accordance with Paragraph 2.3 below.