SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant |X|
Filed by a Party other than the Registrant |_|
Check the appropriate box:
|_| Preliminary Proxy Statement |_| Confidential, for Use of
the Commission Only (as
permitted by Rule
14a-6(e)(2))
|X| Definitive Proxy Statement
|_| Definitive Additional Materials
|_| Soliciting Material Under Rule 14a-12
ARGAN, INC.
(Name of Registrant as Specified In Its Charter)
-----------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
|X| No fee required.
|_| Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
|_| Fee paid previously with preliminary materials:
|_| Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
Argan, Inc.
One Church Street, Suite 302
Rockville, Maryland 20850
May 23, 2005
To Our Stockholders:
You are cordially invited to attend the Annual Meeting of Stockholders of
Argan, Inc. (the "Company"), to be held on June 23, 2005 at 11:00 a.m. local
time, at the offices of Allen & Company LLC located at 711 Fifth Avenue, 9th
Floor, New York, New York 10022. Enclosed are the Secretary's notice of this
meeting, a proxy statement and a form of proxy.
At the Annual Meeting, you will be asked to consider and vote upon the
following proposals described in the enclosed proxy statement:
1. To elect seven directors to serve for a term ending at the 2006 Annual
Meeting;
2. To ratify the selection of Ernst & Young LLP as independent auditors
for the Company for the fiscal year ending January 31, 2006; and
3. To transact such other business as may properly come before the Meeting
or any adjournment or postponement thereof.
As described in the enclosed materials, the Company's Board of Directors
has approved the matters included in these proposals and believes that they are
fair to, and in the best interests of, the Company and its stockholders. The
Board of Directors recommends a vote "FOR" each of the proposals.
Regardless of whether you plan to attend the Annual Meeting, your vote is
important. I urge you to participate by promptly completing and returning the
enclosed proxy card as soon as possible. You may revoke your proxy and vote in
person if you decide to attend the Annual Meeting.
Sincerely,
Rainer H. Bosselmann
Chairman of the Board
IF YOU PLAN TO ATTEND, PLEASE CONTACT US
If you plan to attend the Annual Meeting on June 23, 2005, as a courtesy to the
building management at 711 Fifth Avenue, we request that you call, fax or email
your intentions so that we can notify the front desk of your attendance. Please
notify Haywood Miller by phone at 301-315-0027, by fax at 301-315-0064, or by
email at hhmiller3@arganinc.com.
Argan, Inc.
One Church Street, Suite 302
Rockville, Maryland 20850
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 23, 2005
To the Stockholders of Argan, Inc.:
NOTICE IS HEREBY GIVEN that an Annual Meeting of Stockholders (the
"Meeting") of Argan, Inc. (the "Company") will be held on June 23, 2005 at 11:00
a.m. local time, at the offices of Allen & Company LLC located at 711 Fifth
Avenue, 9th Floor, New York, New York 10022, for the following purposes:
1. To elect seven directors to serve for a term ending at the 2006 Annual
Meeting;
2. To ratify the selection of Ernst & Young LLP as independent auditors
for the Company for the fiscal year ending January 31, 2006; and
3. To transact such other business as may properly come before the Meeting
or any adjournment or postponement thereof.
Only holders of record of outstanding shares of Common Stock, $.15 par
value per share, of the Company at the close of business on May 6, 2005 will be
entitled to notice of, and to vote at, the Meeting or any adjournment or
postponement thereof.
By Order of the Board of Directors
H. Haywood Miller
Corporate Secretary
Rockville, Maryland
May 23, 2005
Your vote is important. To vote your shares, please mark, sign and date
the enclosed proxy card and mail it promptly in the enclosed return envelope,
which requires no postage if mailed in the United States.
Argan, Inc.
One Church Street, Suite 302
Rockville, Maryland 20850
PROXY STATEMENT FOR ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 23, 2005
Introduction
This Proxy Statement is being furnished to stockholders of Argan, Inc., a
Delaware corporation (the "Company"), in connection with the solicitation of
proxies by the Board of Directors of the Company for use at the Annual Meeting
of Stockholders to be held on Thursday, June 23, 2005 at 11:00 a.m. local time,
at the offices of Allen & Company LLC located at 711 Fifth Avenue, 9th Floor,
New York, New York 10022, and any adjournment or postponement thereof (the
"Meeting").
At the Meeting, stockholders will be asked to consider and vote upon two
proposals: (1) the election of seven directors to serve until the 2006 Annual
Meeting (the "Election of Directors"); and (2) the ratification of the selection
of the Company's independent auditors (the "Ratification of Auditors").
This Proxy Statement is dated May 23, 2005 and is first being mailed to
stockholders along with the related form of proxy on or about May 25, 2005.
If a proxy in the accompanying form is properly executed and returned to
the Company in time for the Meeting and is not revoked prior to the time it is
exercised, the shares represented by the proxy will be voted in accordance with
the directions specified therein for the matters listed on the proxy card.
Unless the proxy specifies that it is to be voted against or is an abstention on
a listed matter, proxies will be voted FOR the Election of Directors and FOR the
Ratification of Auditors and otherwise in the discretion of the proxy holders as
to any other matter that may come before the Meeting.
Revocability of Proxy
Any stockholder of the Company who has given a proxy has the power to
revoke such proxy at any time before it is voted either (i) by filing a written
revocation or a duly executed proxy bearing a later date with H. Haywood Miller
III, Corporate Secretary of the Company, at Argan, Inc., One Church Street,
Suite 302, Rockville, Maryland 20850, or (ii) by appearing at the Meeting and
voting in person. Attendance at the Meeting will not in and of itself constitute
the revocation of a proxy. Voting by those present during the Meeting will be by
ballot.
Record Date, Outstanding Securities and Votes Required
The Board of Directors of the Company has fixed the close of business on
May 6, 2005 as the record date (the "Record Date") for determining holders of
outstanding shares of Common Stock, $.15 par value per share (the "Common
Stock"), who are entitled to notice of and to vote at the Meeting. As of the
Record Date, there were approximately 460 stockholders of record and 2,758,845
shares of Common Stock issued and outstanding. Each share of Common Stock is
entitled to one vote on each of the proposals to be voted upon.
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Abstentions and broker non-votes are counted for purposes of determining
the number of shares represented at the Meeting, but are deemed not to have
voted on the proposals. Broker non-votes occur when a broker nominee, holding
shares in street name for the beneficial owner thereof, has not received voting
instructions from the beneficial owner and does not have discretionary authority
to vote. Both the Election of Directors and the Ratification of Auditors require
the affirmative vote of a majority of the shares of Common Stock present in
person or represented by proxy and voting. Accordingly, abstentions, broker
non-votes or the failure to either return a proxy or to attend the meeting will
be deemed not to have voted on the Election of Directors and the Ratification of
Auditors.
The officers and directors of the Company will vote the shares of Common
Stock beneficially owned or controlled by them (representing approximately 29%
of the shares of Common Stock issued and outstanding) in favor of the Election
of Directors and the Ratification of Auditors.
PROPOSAL NUMBER ONE
Election of Directors
The directors of the Company are elected annually and hold office until
the next annual meeting of stockholders and until their successors have been
elected and shall have been qualified. Vacancies and newly-created directorships
resulting from any increase in the number of authorized directors may be filled
by a majority vote of the directors then in office.
At the Meeting, stockholders of the Company are being asked to elect seven
directors. Each of the nominees is currently a member of the Company's Board of
Directors.
Unless a stockholder withholds authority, the holders of proxies
representing shares of Common Stock will vote FOR the election of each of the
nominees listed below. The Board of Directors has no reason to believe that the
nominees will decline or be unable to serve as Directors of the Company.
However, if a nominee shall be unavailable for any reason, then the proxies may
be voted for the election of such person as may be recommended by the Board of
Directors.
Nominees for Election as Director
The following table sets forth the age and title of each nominee director,
as well as descriptions of such person's additional business experience during
the past five years.
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Name Age Position
---- --- --------
Rainer H. Bosselmann 62 Chairman of the Board, Chief
Executive Officer and President
DeSoto S. Jordan 60 Director
Daniel A. Levinson 44 Director
W.G. Champion Mitchell 58 Director
T. Kent Pugmire 73 Director
James W. Quinn 47 Director
Peter L. Winslow 74 Director
Rainer H. Bosselmann. Mr. Bosselmann has been a Director and Chairman of
the Board since May 2003 and President since October 2003. Mr. Bosselmann was a
Director and Vice Chairman of the Board from January 2003 to May 2003. Mr.
Bosselmann was Chairman of the Board, Chief Executive Officer and a Director of
Arguss Communications, Inc. ("Arguss"), a telecommunications infrastructure
company listed on the New York Stock Exchange, from 1996 through 2002 and
President of Arguss from 1997 through 2002. Since 1996, Mr. Bosselmann has
served as a principal with Holding Capital Group, Inc., a firm engaged in
mid-market acquisitions and investments. From 1991 through 1995, Mr. Bosselmann
served as Vice Chairman of the Board and President of Jupiter National, Inc.
("Jupiter National"), a business development company listed on the American
Stock Exchange.
DeSoto S. Jordan. Mr. Jordan has been a Director of the Company since May
2003. Mr. Jordan has been Chairman of Afton Holdings, LLC, a private equity
firm, since 2000. Mr. Jordan was co-founder of Perot Systems Corporation and
served as an officer from 1988 to 1999 and as a Director since February 2004.
Mr. Jordan was a Director of Arguss from 1999 through 2002.
Daniel A. Levinson. Mr. Levinson has been a Director of the Company since
May 2003. In 1997, Mr. Levinson founded Main Street Resources, a niche sponsor
of private equity transactions, and has been its managing partner. Since 1998,
Mr. Levinson has been President of MSR Advisors, Inc. From 1988 to 1997, Mr.
Levinson was one of the principals of Holding Capital Group. Mr. Levinson was
also a Director of Arguss from 2000 through 2002.
W.G. Champion Mitchell. Mr. Mitchell has been a Director of the Company
since October 2003. Since January 2003, Mr. Mitchell has been Chairman of the
Board and Chief Executive Officer of Network Solutions, Inc. Network Solutions
is engaged in the creation, marketing and management of digital identity and web
presence products. From August 2001 to 2003, Mr. Mitchell was Executive Vice
President and General Manager, Mass Markets Division, of VeriSign Inc. VeriSign
is a provider of critical Internet infrastructure services. From May 1999 to
March 2000, Mr. Mitchell was Chairman, President and CEO of Convergence
Equipment Company, a telephony switch manufacturer. From February 1997 until May
1999, Mr. Mitchell was Chairman and Chief Executive Officer of Global Exchange
Carrier Co., an Internet telephone networking company.
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T. Kent Pugmire. Dr. Pugmire has served as a Director of the Company since
June 1991. Since 1992, Dr. Pugmire has served as an independent technical
consultant. Previously, Dr. Pugmire was Executive Vice President of ARDE Inc.
and worked as a Program Manager for several companies, including TRW Space
Systems Division, Technion Inc., AVCO Missile and Space Systems (now a division
of Textron), General Electric Space Sciences Laboratory, and Boeing Propulsion
and Mechanical Systems Department.
James W. Quinn. Mr. Quinn has been a Director of the Company since May
2003. Mr. Quinn is currently a Director of Allen & Company LLC, an investment
banking firm. Since 1982, Mr. Quinn has served in various capacities at Allen &
Company and its affiliates, including head of the Corporate Syndicate Department
and Chief Financial Officer. Mr. Quinn served as a Director of Arguss from 1999
through 2002.
Peter L. Winslow. Mr. Winslow has been a Director of the Company since
June 2003. Since 1992, Mr. Winslow has served in several executive capacities at
Fin-Net LLC and its predecessor company Fin-Net, Inc., a financial networking
company, where he currently serves as Chairman and Managing Director. Mr.
Winslow was the founder and President of Winslow, Evans & Crocker, Inc., a
brokerage and financial services company, and he served in several executive
capacities between 1992 and 2004. Since March 2002, Mr. Winslow has been
Managing Director of Family Capital Trust Company, N.A. Mr. Winslow was also a
Director of Jupiter National from 1991 to 1996. Mr. Winslow served as a Director
of Arguss from 1996 through 2002.
Executive Officers who are Not Directors
The following table sets forth the age and title of each executive officer
of the Company who is not a nominee director, as well as descriptions of such
person's additional business experience during the past five years.
Name Age Position
---- --- --------
H. Haywood Miller III 45 Executive Vice President and
Secretary
Arthur F. Trudel 55 Senior Vice President and
Chief Financial Officer
H. Haywood Miller III. Mr. Miller has been Executive Vice President of the
Company since May 2003 and a corporate officer of the Company since January
2003. From 1997 to 2002, Mr. Miller served as Executive Vice President of
Arguss. From 1990 to 1996, Mr. Miller was general counsel and portfolio manager
of Jupiter National.
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Arthur F. Trudel. Mr. Trudel has been Senior Vice President and Chief
Financial Officer of the Company since May 2003 and a corporate officer of the
Company since January 2003. From 1997 to 2002, Mr. Trudel served as Chief
Financial Officer of Arguss. From 1988 to 1997, Mr. Trudel was Senior Vice
President and Chief Financial Officer of JHM Capital Corporation.
Compliance with Section 16(a) of the Exchange Act
Section 16(a) of the Exchange Act requires the Company's directors and
executive officers and persons who beneficially own more than 10% of the
Company's common stock (collectively, the "Reporting Persons") to file with the
Commission (and, if such security is listed on a national securities exchange,
with such exchange), various reports as to ownership of such common stock. Based
solely upon a review of copies of Section 16(a) reports and representations
received by the Company from Reporting Persons, and without conducting any
independent investigations of its own, the Company believes that no Reporting
Person failed to timely file Forms 3, 4 or 5 with the Commission during the
fiscal year ended January 31, 2005, other than Mr. Kevin Thomas who was late
with one filing.
Compensation of Executive Officers
The following summary compensation table sets forth the aggregate
compensation paid to or earned by the President and Chief Executive Officer of
the Company and the most highly compensated executive officers of the Company
(other than the President and Chief Executive Officer) whose total annual
salaries and bonuses exceeded $100,000 for the year ended January 31, 2005 (the
"Named Executive Officers").
Annual
Compensation Long Term Compensation
----------------------------------------------- -------------------------
Awards Payouts
------ -------
Fiscal
Year Other
Ended Annual Securities LTIP All Other
Name And Principal Position January Salary Bonus Compensation ($) Underlying Payouts Comp.
31 ($) ($) Options (#) ($) ($)(1)
---------------------------- ---------- -------------- ----------- -------------------- ------------- ----------- -------------
Rainer H. Bosselmann 2005 $120,833 $50,000 -- -- -- $1,008
Chief Executive 2004 $ 83,333 -- -- -- -- --
Officer and 2003 -- -- -- -- -- --
President
H. Haywood Miller III 2005 $120,833 $50,000 -- -- -- $1,008
Executive Vice 2004 $ 83,333 -- -- -- -- --
President and 2003 -- -- -- -- -- --
Secretary
Arthur F. Trudel, Jr. 2005 $120,833 $50,000 -- -- -- $1,358
Senior Vice 2004 $ 83,333 -- -- -- -- --
President 2003 -- -- -- -- -- --
(1) Represents Company contributions under the Company's 401(k) Plan.
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Option Grants
No individual grants of stock options were made during the fiscal year
ended January 31, 2005 to any of the Named Executive Officers.
Option Exercises
The Named Executive Officers held no exercisable or unexercisable options
during the fiscal year ended January 31, 2005. No options were exercised by any
of the Named Executive Officers during the fiscal year ended January 31, 2005.
For a description of certain warrants held by Named Executive Officers, see
"Security Ownership of Certain Beneficial Owners and Management" below.
Description of the 2001 Stock Option Plan
In August 2001, the Board of Directors adopted and the stockholders of the
Company approved the 2001 Stock Option Plan (the "Stock Option Plan"). As
adopted in 2001, the Stock Option Plan authorized the issuance of options to
purchase a maximum of 33,333 shares of Common Stock. In April 2003, the Board of
Directors adopted and the stockholders of the Company approved an amendment to
the Stock Option Plan increasing the total number of shares of Common Stock
reserved for issuance under the Stock Option Plan to 250,000. The maximum number
of shares may be adjusted in certain events, such as a stock split,
reorganization or recapitalization. Officers, directors and employees of the
Company or its subsidiaries are eligible to receive non-qualified stock options
under the Stock Option Plan. Employees (including officers and directors who are
employees) of the Company or its subsidiaries are eligible to receive incentive
stock options under the Stock Option Plan. In the event incentive stock options
are granted, the aggregate fair market value of the Common Stock issuable under
such options for each optionee during any calendar year cannot exceed $100,000.
To the extent that an incentive stock option exceeds the $100,000 threshold, the
excess will be treated as a non-qualified stock option.
The Company receives no monetary consideration for the grant of options
under the Stock Option Plan. In the case of an incentive stock option, the
exercise price cannot be less than the fair market value (as defined in the
Stock Option Plan) of the Common Stock on the date the option is granted. If the
optionee is a stockholder who beneficially owns 10% or more of the outstanding
Common Stock, the exercise price of incentive stock options may not be less than
110% of the fair market value of the Common Stock. The term of an option cannot
exceed ten years; provided, however, that the term of options granted to owners
of 10% or more of the outstanding shares of Common Stock cannot exceed five
years.
The Stock Option Plan will terminate automatically and no options may be
granted after July 19, 2011 (the "Termination Date"); provided, however, that
Stock Option Plan may be terminated by the Board of Directors at any time prior
to the Termination Date. Termination of the Stock Option Plan will not affect
options that were previously granted.
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Pursuant to the terms of the Stock Option Plan, the vesting with respect
to all issued and outstanding options to purchase Common Stock of the Company
may accelerate and become fully exercisable upon a change in control of the
Company.
As of January 31, 2005 there were 82,000 options granted under the 2001
Stock Option Plan.
Employment and Severance Agreements
On January 3, 2005, the Company entered into substantially similar
employment agreements with (i) Rainer H. Bosselmann as its President and Chief
Executive Officer, (ii) H. Haywood Miller III as its Executive Vice President,
and (iii) Arthur F. Trudel, Jr. as its Senior Vice President and Chief Financial
Officer (each, an "Executive").
Pursuant to the employment agreements, the Company agreed to employ each
Executive for an initial term of one year, which term will automatically renew
for successive one year periods unless the Company or the Executive provides at
least 90 days prior written notice of its or his election not to renew. The
agreements provide for each Executive to receive during the employment period an
annual base salary of $150,000, subject to increase (but may not be reduced)
from time to time in such amounts as the Company, in its reasonable discretion,
deems to be appropriate, and an annual bonus in the discretion of the Board of
Directors of the Company, subject to the satisfaction of reasonable performance
criteria established for the Executive with respect to such year. The agreements
further provide that each Executive may participate in any stock option,
incentive and similar plans established by the Company and shall be granted
stock options and other benefits similar to options and benefits granted to
other executives, subject in all cases to the satisfaction by the Executive of
the terms and conditions of such plans and to the reasonable exercise by the
Board of any discretion granted to it or them thereunder.
In addition, under the employment agreements, in the event that an
Executive's employment is terminated for any of the reasons specified below or
there occurs a "change in control", the Executive will receive as severance pay
in a single lump sum payment, an amount equal to 24 months of his base salary
within 30 days after the Executive's termination of employment or change of
control, as the case may be, based on 12 times the Executive's final full month
salary at the date the Executive's employment ceases or at the date of the
change in control, as the case may be, without reduction or offset for any other
monies which the Executive may thereafter earn or be paid. The reasons which
cause severance pay to be paid to an Executive include:
(i) termination by the Executive because of a material diminution of the
Executive's duties, authority or responsibility, or a material impairment
by action of the Company of his ability to perform his duties and
responsibilities, regardless of whether such diminution is accompanied by
a change in the Executive's title with the Company;
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(ii) termination by the Executive because of a material breach by the
Company of any provision of the employment agreement, which breach
continues for a period of 30 days after written notice of such breach is
given by the Executive to the Company; and
(iii) termination by the Company at any time without cause, including
notice of non-renewal of the agreement.
Each Executive shall also be entitled for a period of 24 months from the
termination of his employment or a change in control, as the case may be, to the
continuation of all benefits provided to the Executive, excluding sick and
vacation time, subject to any applicable employee co-payments.
If an Executive's employment is terminated by the Company by reason of the
Executive's death, disability or "for cause" or voluntarily by the Executive for
any reason other than as set forth in the preceding paragraph, the Company will
not be obligated to make any payments to the Executive by reason of his
cessation of employment other than such amounts, if any, of his base salary that
have accrued and remain unpaid and such other amounts which may then otherwise
be payable to the Executive from the Company's benefit plans or reimbursement
policies, if any.
Committees and Meetings of the Board of Directors and Related Matters
The Board of Directors held six regular meetings and acted by unanimous
consent two other times during the fiscal year ended January 31, 2005. Each
director attended at least 75% of the meetings of the Board of Directors and
Board committees of which he was a member during the period he served as
director, except for Mr. Mitchell who attended 67%.
Independent Directors
The Board of Directors has determined that the following members of the
Board are independent directors, as such term is defined in Nasdaq Rule
4200(a)(15): Messrs. Quinn, Jordan, Winslow, Mitchell and Pugmire. The
independent directors may meet from time to time in executive session without
the other members of the Board.
Executive Committee
The Board of Directors has an Executive Committee comprised of Messrs.
Bosselmann (Chairman), Jordan and Levinson. The Executive Committee, which held
no meetings during fiscal 2005, is authorized to exercise the general powers of
the Board managing the business and affairs of the Company between meetings of
the Board of Directors.
Nominating Committee
The Board of Directors has a Nominating Committee. During fiscal 2005, the
committee was comprised of Messrs. Winslow (Chairman), Jordan and Pugmire. The
committee was formed in April 2004. The committee adopted a written charter, a
copy of which can be found at http://www.arganinc.com/financial_statements.html
by selecting Document Title: DEF14A -Proxy Statement filed May 21, 2004 and
scrolling down to Exhibit A. The members of the committee are all independent
directors under applicable Nasdaq rules. Members of the Nominating Committee are
appointed by the Board of Directors.
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The committee is responsible for identifying individuals qualified to
become members of the Board of Directors, and recommending to the Board of
Directors the persons to be nominated by the Board for election as directors at
the annual meeting of stockholders and the persons to be elected by the Board of
Directors to fill any vacancies on the Board.
Directors are not required to meet any specific or minimum qualifications.
The committee does, however, use certain selection criteria as a guide in its
selection process including the following: (i) nominees should have a reputation
for integrity, honesty and adherence to high ethical standards; (ii) nominees
should have demonstrated business acumen, experience and ability to exercise
sound judgments in matters that relate to the current and long-term objectives
of the Company and should be willing and able to contribute positively to the
decision-making process of the Company; (iii) nominees should have a commitment
to understand the Company and its industry and to regularly attend and
participate in meetings of the Board of Directors and its committees; (iv)
nominees should have the interest and ability to understand the sometimes
conflicting interests of the various constituencies of the Company, which
include stockholders, employees, customers, governmental units, creditors and
the general public, and to act in the interests of all stockholders; (v)
nominees should not have, or appear to have, a conflict of interest that would
impair the nominee's ability to represent the interests of all the Company's
stockholders and to fulfill the responsibilities of a director; and (iv)
nominees shall not be discriminated against on the basis of race, religion,
national origin, sex, sexual orientation, disability or any other basis
proscribed by law. The committee is also responsible for reviewing with the
Board of Directors, on an annual basis, the requisite skills and criteria for
new Board members as well as the composition of the Board as a whole.
The committee will consider nominees for the Board of Directors
recommended by stockholders. Nominations by stockholders must be in writing,
must include the full name of the proposed nominee, a brief description of the
proposed nominee's business experience for at least the previous five years, and
a representation that the nominating stockholder is a beneficial or record owner
of the Company's common stock. Any such submission must also be accompanied by
the written consent of the proposed nominee to be named as a nominee and to
serve as director if elected. Nominations must be delivered to the committee at
the following address:
Nominating Committee
Argan, Inc.
c/o Corporate Secretary
One Church Street, Suite 302
Rockville, MD 20850
The committee is required to review the qualifications and backgrounds of
all directors and nominees (without regard to whether a nominee has been
recommended by stockholders), as well as the overall composition of the Board of
Directors, and recommend a slate of directors to be nominated for election at
the annual meeting of stockholders, or, in the case of a vacancy on the Board of
Directors, recommend a director to be elected by the Board to fill such vacancy.
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Audit Committee
The Board of Directors has an Audit Committee. During fiscal 2005, the
committee was comprised of Messrs. Quinn (Chairman), Jordan and Winslow. The
committee held six meetings during fiscal 2005. The members of the committee are
all independent directors under applicable SEC and Nasdaq rules. In addition,
the Board of Directors has determined that at least one of the independent
directors serving on the Audit Committee, Mr. Quinn, is an audit committee
financial expert, as that term has been defined by SEC rules.
Audit Committee Report
The Audit Committee of the Board of Directors of the Company is composed
of three independent directors. The Board has made a determination that the
members of the Audit Committee satisfy the independence and other requirements
of applicable Nasdaq and SEC rules. The Board has also made the determination
that at least one member of the Audit Committee is a "financial expert" as that
term is defined in applicable SEC rules.
The responsibilities of the Audit Committee are set forth in the Charter
of the Audit Committee, which was adopted by the Board of Directors of the
Company in October 2003. The Audit Committee is responsible for, among other
things, appointing, establishing the compensation for, supervising and, where
appropriate, replacing the Company's independent public accountants; considering
the qualifications and independence of the Company's independent accountants;
approving all audit and non-audit services provided by the Company's independent
public accountants; and reviewing and discussing with Company management and the
Company's independent public accountants the Company's financial statements. The
Company's independent public accountants are required to report directly to the
Audit Committee. The Audit Committee also reviews the Company's accounting
policies, internal control procedures and systems and compliance activities and
also reviews the Charter of the Audit Committee.
The following is a report on the Audit Committee's activities relating to
fiscal year 2005.
Review of Audited Financial Statements with Management
The Audit Committee reviewed and discussed the audited financial
statements with the management of the Company.
Review of Financial Statements and Other Matters with Independent
Accountants
The Audit Committee has discussed with Ernst & Young LLP, the Company's
independent auditors, the matters required to be discussed by Statement on
Auditing Standards No. 61 (Communication with Audit Committees). The Audit
Committee has received from Ernst & Young LLP the written disclosures and the
letter required by Independence Standards Board Standard No. 1 (Independence
Discussions with Audit Committees), and has discussed with Ernst & Young LLP
matters relating to the firm's independence from the Company.
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Recommendation that Financial Statements be Included in Annual Report
Based on the reviews and discussions referred to above, the Audit
Committee recommended to the Board of Directors that the audited financial
statements be included in the Company's Annual Report on Form 10-KSB for the
fiscal year ended January 31, 2005 for filing with the Securities and Exchange
Commission.
May 11, 2005
---------------------------------------
Audit Committee
James W. Quinn (Chairman)
DeSoto S. Jordan
Peter L. Winslow
Compensation Committee
The Board of Directors has a Compensation Committee. During fiscal 2005,
the Committee was comprised of Messrs. Jordan (Chairman), Quinn and Winslow. The
Committee held two meetings during fiscal 2005. The members of the committee are
all independent directors under applicable Nasdaq rules. Members of the
Compensation Committee are appointed by the Board of Directors.
The Compensation Committee is responsible for implementing and reviewing
executive compensation plans, policies and programs in an effort to ensure the
attraction and retention of executive officers in a reasonable and
cost-effective manner, to motivate their performance in the achievement of the
Company's business objectives and to align the interests of executive officers
with the long-term interests of the Company's shareholders. To that end, it is
the responsibility of the committee to develop and approve periodically a
general compensation policy and salary structure for executive officers of the
Company which considers business and financial objectives, industry and market
pay practices and/or such other information as may be deemed appropriate. It is
also the responsibility of the committee to review and recommend for approval by
the independent directors of the Board the compensation (salary, bonus and
incentive compensation) of the Chief Executive Officer of the Company and review
and approve the compensation (salary, bonus, incentive and other compensation)
of the other executive officers of the Company; review and approve perquisites
offered to executive officers of the Company; review and approve corporate goals
and objectives relevant to the compensation of executive officers of the Company
and evaluate performance in light of the goals and objectives; and review and
approve all employment, retention and severance agreements for executive
officers of the Company. The committee also acts on behalf of the Board in
administering compensation plans approved by the Board and/or the shareholders
of the Company (including the Company's 2001 Stock Option Plan), in a manner
consistent with the terms of such plans; reviews and makes recommendations to
the Board with respect to new compensation incentive plans and equity-based
plans; and reviews and make recommendations to the Board on changes in major
benefit programs of executive officers of the Company. The committee also
reviews the management succession program for the Chief Executive Officer and
selected executive officers of the Company.
11
Stockholder Communications with Directors
The Company has established a process by which stockholders can
communicate with the Company's Board of Directors. Stockholders may communicate
with the Board of Directors, or any of the Company's individual directors, by
sending their communications to the Board of Directors, or to any individual
director, at the following address:
Board of Directors of
Argan, Inc.
c/o Corporate Secretary
One Church Street, Suite 302
Rockville, MD 20850
All stockholder communications received by the Company's Corporate
Secretary will be delivered to one or more members of the Board of Directors,
or, in the case of communications sent to an individual director, to such
director.
Director Attendance at the Annual Meeting
Although the Company does not have a formal policy with respect to
director attendance at annual meetings, the Company strongly encourages
directors to attend the annual meeting. All but one of our directors attended
last year's annual meeting, and we expect that all of our directors will attend
this year's annual meeting.
Compensation Committee Interlocks and Insider Participation
Decisions regarding executive compensation are principally made by the
Compensation Committee. The Compensation Committee reviews and recommends for
approval by the independent members of the Board of Directors the compensation
(salary, bonus and other long-term incentives) of the Chief Executive Officer of
the Company and reviews and approves the compensation (salary, bonus and
long-term incentives) of the other executive officers of the Company. The
Compensation Committee is responsible for the recommendation to the independent
directors of the Company of incentive awards to the Chief Executive Officer of
the Company under the plans and the approval of incentive awards to the other
executive officers of the Company under the plans. No member of the Compensation
Committee was an officer or employee of the Company during the fiscal year ended
January 31, 2005.
12
Compensation Committee Report On Executive Compensation
The Compensation Committee reviews the Company's compensation plan on a
regular basis. The Compensation Committee regularly updates its assessment of
various long-term incentive tools including stock options, restricted stock,
performance-based equity and other alternatives that might be available.
The Company's primary objective in developing executive compensation
policies is to attract, motivate and retain highly qualified and effective
leaders. The compensation policy includes various components of compensation
that are intended to align management behaviors and priorities directly with the
Company's strategic objectives and to encourage management to act in the best
long-term interest of the Company and its shareholders. The Company's executive
officer compensation policy generally consists of three elements: base
compensation, annual cash bonus and long-term incentive compensation.
Cash Compensation
Annual cash compensation consists of two elements: base salary and annual
cash bonus. Each officer is offered a base salary that is commensurate for the
role that he or she is performing. In setting compensation, the Compensation
Committee strives to maintain base compensation for the Company's executive
officers at levels which the Compensation Committee, based on its experience,
believes are competitive with the compensation of comparable executive officers
in similarly situated companies.
Increases in base salary are based on a periodic review and evaluation of
the performance of the operation or function for which the executive has
responsibility, and is measured against defined performance criteria. The
executive is also reviewed according to his or her competence as an effective
leader in the Company, which includes an evaluation of the skills and experience
required for the job, coupled with a comparison of these elements with similar
elements for other executives both within and outside of the Company.
Executive officers are eligible to participate in a bonus plan. The
Compensation Committee determines awards under the bonus plan. The Compensation
Committee considers input of the Chief Executive Officer with respect to the
bonus to be awarded to the other executive officers. The executive officers, as
well as other key employees, may receive bonuses based upon meeting the
performance objectives of the Company and their contributions to the Company.
The compensation paid by the Company to its Chief Executive Officer for
fiscal 2005 was based upon an agreement negotiated with Mr. Bosselmann. The
Compensation Committee believes, based upon the individual experience of its
members, that the compensation package for Mr. Bosselmann for fiscal 2005 was
reasonable based upon Mr. Bosselmann's experience, his level of responsibility
and the contributions made and expected to be made by him to the Company.
13
Long-term Incentive Compensation
Each of the executive officers and all employees are eligible to receive
awards under the 2001 Stock Option Plan. The 2001 Stock Option Plan will be used
to align a portion of the officers' compensation with the shareholders' interest
and the long-term success of the Company by encouraging the executive officers
and other employees to remain with the Company, and by enabling optionees to
develop and maintain a significant, long-term stock ownership position in the
Company's Common Stock. The value realizable from exercisable options is
dependent upon the extent to which the Company's performance is reflected in the
market price of the Company's Common Stock at any particular point in time.
In determining the number of options to be granted to each executive
officer, the Compensation Committee considers input of the Chief Executive
Officer with respect to the executive officers, other than the Chief Executive
Officer. These determinations are based upon compensation surveys conducted
during fiscal 2001 of executive officers and certain key employees in comparable
companies.
The members of the Compensation Committee have submitted this report.
---------------------------------------
Compensation Committee
DeSoto S. Jordan (Chairman)
James W. Quinn
Peter L. Winslow
Directors' Compensation
Each non-employee director of the Company receives a $2,500 annual fee,
plus $300 for each formal meeting attended. Directors are also reimbursed for
reasonable expenses actually incurred in connection with attending each formal
meeting of the Board of Directors or any committee thereof.
Performance Graph
The following graph compares the annual change in the Company's cumulative
total shareholder return on its Common Stock for the five fiscal years ended
January 31, 2005 with the cumulative total return on the Russell 2000 and a peer
group consisting of SIC Group Code 2833 companies for that period.
14
1/31/00 1/31/01 1/31/02 1/31/03 1/31/04 1/31/05
Argan, Inc. $100.00 $100.00 $ 71.09 $ 88.86 $ 81.87 $ 66.94
Russell 2000 $100.00 $102.44 $ 97.35 $ 75.00 $117.03 $125.75
Peer Group $100.00 $ 85.32 $ 51.20 $ 31.87 $ 66.76 $ 56.63
Certain Relationships and Related Transactions
On January 28, 2005, the Company sold and issued to MSR I SBIC, L.P., a
Delaware limited partnership ("MSR"), 129,032 shares (the "Shares") of common
stock, pursuant to a Subscription Agreement dated as of January 28, 2005 between
the Company and MSR (the "Subscription Agreement"). The Shares were issued at a
purchase price of $7.75 per share ("Share Price"), yielding aggregate proceeds
of $999,998. MSR is an entity controlled by Daniel Levinson, a director of the
Company.
Pursuant to the Subscription Agreement, the Company has agreed to issue
additional shares of Common Stock to MSR in accordance with the Subscription
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. Shares would be issued in
amounts determined by reference to the Company's prevailing thirty-day average
stock price. The number of additional shares to be issued would effectively
reduce the MSR's purchase price per common stock as set forth in the
Subscription Agreement.
The Company leases administrative, manufacturing and warehouse facilities
from Kevin Thomas, who is an officer Vitarich Laboratories, Inc. ("VLI"), a
wholly owned subsidiary of the Company, and an employee and former owner of
Southern Maryland Cable, Inc., a wholly owned subsidiary of the Company. The
total expenses under these arrangements were $134,000 and $72,000 for the years
ended January 31, 2005 and 2004, respectively. The future minimum lease
commitments under these arrangements during each fiscal year ended January 31
through fiscal year ended January 31, 2010 are: 2006 - $290,000; 2007 - 292,000;
2008 - 231,000; 2009 - 231,000; 2010 - 152,000; thereafter - $714,000 which
totals $1,910,000.
15
The Company also entered into a supply agreement with an entity owned by
Kevin Thomas whereby the supplier committed to sell to the Company and the
Company committed to purchase on an as-needed basis, certain organic products.
VLI made $47,000 in purchases under the supply agreement for the period from
acquisition (August 31, 2004) through January 31, 2005. On January 31, 2005, the
Company owed $8,000 to the entity owned by Kevin Thomas.
The Company also sells its products in the normal course of business to an
entity in which Kevin Thomas has an ownership interest. The pricing on such
transactions is consistent with VLI's general customer pricing for nonaffiliated
entities. VLI had approximately $242,000 in sales with this entity for the
period from acquisition (August 31, 2004) to January 31, 2005. On January 31,
2005, the affiliated entity owed $112,000 to VLI net of an allowance for
doubtful accounts of $84,000.
Security Ownership of Certain Beneficial Owners and Management
The following table sets forth certain information as of January 31, 2005
regarding the beneficial ownership of common stock by (A) each person known by
the Company to own beneficially more than five percent of the common stock, (B)
each director and director nominee of the Company, (C) each of the "Named
Executive Officers" (as defined in "Executive Compensation - Summary
Compensation Table"), and (D) all directors and nominees, named executive
officers and executive officers of the Company as a group. Unless otherwise
indicated, the address of each person named in the table below is c/o Argan,
Inc., One Church Street, Suite 302, Rockville, Maryland 20850.
--------------------------------------------------------------------------------
Number of Shares Percentage
Name Beneficially Owned(1) Beneficially Owned(1)
Kevin Thomas 779,958(2) 28.3%
KeyCorp 779,958(3) 28.3%
MSR Advisors, Inc. 504,616(4) 18.0%
Wheatley Partners III, LLC 258,065(5) 9.4%
Steel Partners II, L.P. 175,840(6) 6.4%
Rainer H. Bosselmann 322,560(7) 11.4%
DeSoto S. Jordan 5,000(8) *
Daniel A. Levinson 509,616(9) 18.1%
W.G. Champion Mitchell 5,000(10) *
T. Kent Pugmire 6,400(11) *
James W. Quinn 17,903(12) *
Peter L. Winslow 43,640(13) 1.6%
H. Haywood Miller III 73,300(14) 2.6%
Arthur F. Trudel 70,000(15) 2.5%
All directors and nominees, named
executive officers and
executive officers
as a group (9 persons) 1,053,419(16) 34.9%
----------
* Less than 1 %
16
(1) As used in this table, a beneficial owner of a security includes any person
who, directly or indirectly, through contract, arrangement, understanding,
relationship or otherwise has or shares (i) the power to vote, or direct the
voting of, such security or (ii) investment power which includes the power to
dispose, or to direct the disposition of, such security. In addition, a person
is deemed to be the beneficial owner of a security if that person has the right
to acquire beneficial ownership of such security within 60 days of the date
shown above.
(2) Based upon a Schedule 13D filed with the Commission by Kevin Thomas on
January 28, 2005. Mr. Thomas has sole voting and sole dispositive power with
respect to all of the shares owned by KeyCorp.
(3) Based upon a Schedule 13G/A filed with the Commission by KeyCorp on March
14, 2005. Of such 779,958 shares, KeyCorp has sole voting power with respect to
0 shares and sole dispositive power with respect to all of the shares.
(4) Based upon a Schedule 13D filed with the Commission by MSR Advisors, Inc.
and certain affiliates on February 10, 2005. Includes 454,616 shares of Common
Stock and warrants to purchase 50,000 shares of Common Stock beneficially owned
(in the aggregate) by MSR Advisors, Inc., a Delaware corporation ("MSRA"), MSR I
SBIC Partners, LLC, a Delaware limited liability company ("MSRI Partners"), MSR
I SBIC, L.P., a Delaware limited partnership ("MSRI"), and Tri-Lev LLC, a
Connecticut limited liability company ("Tri-Lev"). Of such 504,616 shares, MSRA
has sole voting and dispositive power with respect to 50,000 shares and shared
voting and dispositive power with respect to 454,616 shares; MSRI Partners has
sole voting and dispositive power with respect to 0 shares and shared voting and
dispositive power with respect to 504,616 shares; MSRI has sole voting and
dispositive power with respect to 451,616 shares and shared voting and
dispositive power with respect to 53,000 shares; and Tri-Lev has sole voting and
dispositive power with respect to 3,000 shares and shared voting and dispositive
power with respect to 501,616 shares. Daniel A. Levinson, a director of the
Company, is the President of MSRA and the Managing Member of MSRI Partners. MSRA
is the Manager of Tri-Lev. MSRI Partners is the General Partner of MSRI. The
business address of Mr. Levinson, MSRA, MSRI Partners, MSRI, and Tri-Lev is 8
Wright Street, Westport, Connecticut 06880. Each of Mr. Levinson, MSRA, MSRI
Partners, MSRI, and Tri-Lev (each an "MSRA Person") disclaims beneficial
ownership of all shares and warrants of the Company beneficially owned by the
other MSRA Persons, except to the extent such person has sole voting and
dispositive power with respect to such securities.
17
(5) Based upon a Schedule 13G filed with the Commission by Wheatley Partners
III, LLC and certain affiliates on May 6, 2003, includes 258,065 shares
beneficially owned (in the aggregate) by Wheatley Partners III, LLC, Wheatley
Partners III, L.P., Wheatley Associates III, L.P. and Wheatley Foreign Partners
III, L.P. Wheatley Partners III, LLC is the General Partner of Wheatley Partners
III, L.P., Wheatley Associates III, L.P. and Wheatley Foreign Partners III, L.P.
Of such 258,065 shares, Wheatley Partners III, LLC has sole voting and
dispositive power with respect to 0 shares and shared voting and dispositive
power with respect to 258,065 shares; Wheatley Partners III, L.P. has sole
voting and dispositive power with respect to 180,542 shares and shared voting
and dispositive power with respect to 77,523 shares; Wheatley Associates III,
L.P. has sole voting and dispositive power with respect to 38,135 shares and
shared voting and dispositive power with respect to 219,930 shares; and Wheatley
Foreign Partners III, L.P. has sole voting and dispositive power with respect to
39,388 shares and shared voting and dispositive power with respect to 218,677
shares. The business address of Wheatley Partners is 80 Cuttermill Road, Suite
311, Great Neck, NY 11021.
(6) Based upon a Form 4 filed with the Commission by Steel Partners II, L.P. and
its affiliates. The business address of Steel Partners is 150 East 52nd Street,
21st Floor, New York, New York 10020.
(7) Includes 238,710 shares owned by Mr. Bosselmann, 23,850 shares owned by Mr.
Bosselmann's wife (of which Mr. Bosselmann disclaims beneficial ownership), and
warrants to purchase 60,000 shares held by Mr. Bosselmann.
(8) Includes options to purchase 5,000 shares of common stock held by Mr.
Jordan, all of which are fully vested.
(9) Includes options to purchase 5,000 shares of common stock held by Mr.
Levinson, all of which are fully vested. Includes 454,616 shares and warrants to
purchase 50,000 shares beneficially owned (in the aggregate) by MSRA, MSRI
Partners, MSRI, and Tri-Lev. Mr. Levinson is the President of MSRA and the
Managing Member of MSRI Partners. MSRA is the Manager of Tri-Lev. MSRI Partners
is the General Partner of MSRI. The business address of Mr. Levinson is 8 Wright
Street, Westport, Connecticut 06880. Mr. Levinson disclaims beneficial ownership
of all shares and warrants of the Company beneficially owned by MSRA, MSRI
Partners, MSRI and Tri-Lev.
(10) Includes options to purchase 5,000 shares of common stock held by Mr.
Mitchell, all of which are fully vested.
(11) Includes options to purchase 5,000 shares of common stock held by Dr.
Pugmire, all of which are fully vested.
(12) Includes options to purchase 5,000 shares of common stock held by Mr.
Quinn, all of which are fully vested. Does not include 64,516 shares of common
stock held by Allen & Company LLC, of which Mr. Quinn is a principal. Mr. Quinn
disclaims beneficial ownership of the shares held by Allen & Company.
18
(13) Includes options to purchase 5,000 shares of common stock held by Mr.
Winslow, all of which are fully vested. The 43,640 shares held by Mr. Winslow
also include: 1,290 shares held by Mr. Winslow; 3,870 shares held by Mr. Winslow
as Trustee for Louise Condit Trust u/d FBO Elinor Winslow; 3,200 shares held by
Mr. Winslow as Trustee for Condit & EC Winslow 41 u/d Trust; 1,900 shares held
by Mr. Winslow as Trustee for Sears B. Condit Trust u/w; 25,800 shares held by
Mr. Winslow as Trustee for Sears B. Condit Trust u/l; and 2,580 shares held by
Mr. Winslow as Trustee for Andrew N. Winslow Trust u/w.
(14) Includes 13,000 shares owned by Mr. Miller, 300 shares held in custodial
accounts for Mr. Miller's minor children, and warrants to purchase 60,000 shares
held by Mr. Miller.
(15) Includes 10,000 shares owned by Mr. Trudel and warrants to purchase 60,000
shares held by Mr. Trudel.
(16) Includes warrants to purchase 60,000 shares of Common Stock held by Mr.
Bosselmann, warrants to purchase 60,000 shares of Common Stock held by Mr.
Miller, warrants to purchase 60,000 shares of Common Stock held by Mr. Trudel,
warrants to purchase 50,000 shares of Common Stock held by MSR Advisors, Inc.
(of which Mr. Levinson is President), and options to purchase 30,000 shares of
Common Stock held by directors and nominees, named executive officers and
executive officers of the Company.
19
Securities Authorized for Issuance Under Equity Compensation Plans
The following table sets forth information concerning equity compensation
plans of the Company as of January 31, 2005:
Equity Compensation Plan Information
Number of securities to be Weighted average Number of securities
issued upon exercise of exercise price of remaining available
outstanding options, outstanding options, for future issuance
warrants and rights warrants and rights under equity
compensation plans
(excluding securities
reflected in column
(a))
(a) (b) (c)
Equity compensation plans approved by security 312,000(1) $7.77 162,000(2)
Equity compensation plans not approved by -- -- --
security holders
Total 312,000 $7.77 162,000
(1) Represents 82,000 shares issuable upon exercise of options granted under the
2001 Stock Option Plan as of January 31, 2005 and 230,000 shares issuable upon
exercise of warrants as described below.
(2) Represents 162,000 shares remaining available for grant under the 2001 Stock
Option Plan as of January 31, 2005.
PROPOSAL NUMBER TWO
Ratification of Independent Accountants
The persons named in the enclosed proxy will vote to ratify the selection
of Ernst & Young LLP as the Company's independent public accounting firm for the
fiscal year ending January 31, 2006 unless otherwise directed by the
stockholders.
Rose, Snyder & Jacobs, a corporation of Certified Public Accountants
("RS&J"), audited the Company's financial statements for its fiscal years ended
January 31, 2003 and January 31, 2002. The Company dismissed RS&J as the
Company's principal accountants in May 2003. The decision to dismiss RS&J was
approved by the Audit Committee of the Company on May 19, 2003, and RS&J was
notified of the decision on May 20, 2003. The Company found no fault with the
services rendered by RS&J to the Company. Rather, the Company believed that RS&J
was not equipped to audit the newly-established national operations of the
Company.
20
During the Company's fiscal years ended January 31, 2003 and January 31,
2002, there were no disagreements with RS&J on any matter of accounting
principles or practices, financial statement disclosure or auditing scope or
procedure, which, if not resolved to the satisfaction of RS&J, would have caused
it to make references to the subject matter of the disagreement in connection
with its report. RS&J's reports on the Company's financial statements for fiscal
years 2002 and 2003 did not contain an adverse opinion or a disclaimer of
opinion, nor were they qualified or modified as to uncertainty, audit scope or
accounting principles. During the Company's fiscal years 2002 and 2003 and the
subsequent interim period preceding the decision to change principal
accountants, there were no reportable events as defined in Regulation S-K Item
304(a)(1)(v).
On May 19, 2003, Ernst & Young LLP was engaged as the Company's principal
accountants, and Ernst & Young audited the Company's financial statements for
its fiscal year ended January 31, 2004 and January 31, 2005.
Representatives of Ernst & Young are expected to be present at the
Meeting. If present, the representatives will have an opportunity to make a
statement, and it is expected that the representatives will be available to
respond to appropriate questions.
Fees Paid to Accountants
The following table shows the fees for professional services provided by
Ernst & Young and RS&J for the fiscal years ended January 31, 2005 and January
31, 2004.
2005 2004
-------- --------
Audit Fees $428,000 $265,000
Audit Related Fees $ 21,000 6,000
Tax Fees $ 48,000 $ 13,000
-------- --------
Total $497,000 $284,000
Audit Fees. This category includes the audit of the Company's annual
financial statements, review of financial statements included in the Company's
Form 10-QSB quarterly reports and services that are normally provided by the
independent auditors in connection with SEC registration statements, assistance
with SEC comment letters and accounting and reporting consultation for those
fiscal years.
Audit Related Fees. This category consists of professional services for
due diligence in connection with proposed acquisitions.
Tax Fees. This category consists of professional services rendered for tax
compliance, tax advice and tax planning.
21
Stockholder Proposals
In order to be considered for inclusion in the Proxy Statement relating to
the 2006 Annual Meeting, any proposal by a record holder of Common Stock must be
received by the Company at its principal offices in Rockville, Maryland on or
before January 21, 2006. A proponent of such a proposal must comply with the
proxy rules under the Securities Exchange Act of 1934, as amended.
Solicitation
All costs and expenses associated with soliciting proxies will be borne by
the Company. In addition to the use of the mails, proxies may be solicited by
the directors, officers and employees of the Company by personal interview,
telephone, telegram, facsimile or electronic mail. Directors, officers and
employees will not be additionally compensated for such solicitation but may be
reimbursed for their out-of-pocket expenses. Arrangements will also be made with
custodians, nominees and fiduciaries for the forwarding of solicitation material
to the beneficial owners of Common Stock and the Company will reimburse
custodians, nominees and fiduciaries for their reasonable out-of-pocket expenses
incurred in connection therewith.
Other Matters
As of the date of this Proxy Statement, the Board of Directors is not
aware of any other business or matters to be presented for consideration at the
Meeting other than as set forth in the Notice of Meeting attached to this Proxy
Statement. However, if any other business shall come before the Meeting or any
adjournment or postponement thereof and be voted upon, the enclosed proxy shall
be deemed to confer discretionary authority on the individuals named to vote the
shares represented by the proxy as to any such matters.
Annual Report on Form 10-KSB
The Company will provide without charge to each beneficial holder of its
Common Stock on the Record Date, upon the written request of any such person,
copies of the Company's Annual Report on Form 10-KSB for the fiscal year ended
January 31, 2005, as filed with the Commission. Any such request should be made
in writing to Corporate Secretary, Argan, Inc., One Church Street, Suite 302,
Rockville, Maryland 20850, telephone 301-315-0027.
22
ARGAN, INC.
One Church Street, Suite 302
Rockville, Maryland 20850
Proxy for Annual Meeting of Stockholders to be held June 23, 2005
Solicited on Behalf of the Board of Directors
The undersigned hereby appoint(s) Rainer H. Bosselmann, H. Haywood Miller
III and Arthur F. Trudel, and each of them, attorneys with full power of
substitution, to vote as directed below all shares of Common Stock of Argan,
Inc. registered in the name of the undersigned, or which the undersigned may be
entitled to vote, at the Annual Meeting of Stockholders to be held at the
offices of Allen & Company LLC located at 711 Fifth Avenue, 9th Floor, New York,
New York 10022, on June 23, 2005 at 11:00 a.m. and at any adjournment or
postponement thereof.
1. Election of Directors.
|_| FOR all nominees listed below (except as marked to the contrary
below)
|_| WITHHOLD AUTHORITY to vote for all nominees listed below
Nominees:
Rainer H. Bosselmann
DeSoto S. Jordan
Daniel A. Levinson
W.G. Champion Mitchell
T. Kent Pugmire
James W. Quinn
Peter L. Winslow
(Instruction: To Withhold Authority to Vote for any Individual Nominee Strike a
Line Through the Nominee's Name in the List Above.)
(Continues on Reverse Side)
23
2. Approval of the Ratification of Auditors.
|_| FOR |_| AGAINST |_| ABSTAIN
3. As Such Proxies May in Their Discretion Determine in Respect of Any Other
Business Properly to Come Before Said Meeting (The Board of Directors Knowing of
No Such Other Business).
The directors recommend a vote FOR items 1 and 2.
This Proxy, when properly executed, will be voted in the manner directed herein.
If no direction is made, this Proxy will be voted for Items 1 and 2 as proposed.
DATED____________________, 2005
-----------------------------------------
signature
-----------------------------------------
signature (if held jointly)
(Please sign exactly as name appears on
this card. When shares are held by joint
tenants, both should sign. When signing
as attorney, executor, administrator,
trustee or guardian, please give full
title as such. If a corporation, please
sign in full corporate name by president
or other authorized officer. If a
partnership or limited liability
company, please sign in partnership or
limited liability company name by
authorized person).
PLEASE MARK, SIGN, DATE AND RETURN PROXY CARD
PROMPTLY USING THE ENCLOSED ENVELOPE