exv10w26



 






EXHIBIT 10(26)




STATEMENT OF TERMS AND CONDITIONS OF EMPLOYMENT




For




RICHARD BATTEY




	 	 	 
	Employer:

	 	VAZON ENERGY LIMITED a company incorporated and existing under the
laws of Guernsey with registered number 32244 (the “Company”)
	 
	 	 
	Employee:

	 	RICHARD BATTEY (the “Employee”) of Woodgrange, Fort Road, Guernsey GY1
1ZW.






	 	 	 
	Starting Date of Employment:

	 	6th May 2005
	 
	 	 
	Starting Date of Continuous Employment:

	 	6th May 2005






	 	 	 
	1

	 	Job Title/Job Description
	 
	 	 
	1.1

	 	The Employee is employed by the Company on a full time permanent basis to fulfil the position
of Chief Financial Officer to CanArgo Energy Corporation (“CanArgo”) reporting to the Chief
Executive Officer of CanArgo. The Company provides management services to CanArgo pursuant to
the terms of the Agreement for the Provision of Management Services dated 18th
February 2004 (“MSA”), as such agreement is amended or varied from time to time.
	 
	 	 
	1.2

	 	The Employee’s principal duties as Chief Financial Officer shall be the management and
development of the central finance function within the CanArgo group as set out in Appendix A
hereto. Notwithstanding the foregoing, the Employee accepts that he may be required to
perform other duties and tasks outwith the scope of his normal duties.
	 
	 	 
	1.3

	 	Whilst employed by the Company the Employee must:-
	 
	 	 
	

	 	during his hours of work devote the whole of his time, attention and abilities to the
business of the Company and carry out his duties with due care and attention;
	 
	 	 
	

	 	not, without the Company’s prior written consent, be in any way directly or indirectly
engaged or concerned with any other business or employment whether during or outside his
hours of work for the Company;
	 
	 	 
	

	 	use his best efforts to promote and protect the interests of the Company and observe the
utmost good faith towards the Company; and
	 
	 	 
	

	 	comply with all the Company’s rules, regulations and policies from time to time in force
and any rules which the Company’s clients may require him to observe whilst working on
their premises.
	 
	 	 
	2

	 	Place of Work
	 
	 	 
	

	 	The Employee’s place of work will be at Suite 9/10, Borough House, Rue du Pre, St Peter
Port, Guernsey, Channel Islands or such other location within Guernsey as shall be
notified by the Company to the Employee from time to time. The Employee may be required
to travel and work at any of the premises of the Company or CanArgo as may be required for
the proper fulfilment of the Employee’s duties, including in particular within the former
Soviet Union. Wherever possible, the Employee will be given reasonable notice of any
change in his place of work.






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	3

	 	Pay
	 
	 	 
	3.1

	 	The Employee’s base salary shall be £120,000 per annum payable monthly by bank transfer on or
around the 15th day of each calendar month into the bank account notified in
writing by the Employee to the Company.
	 
	 	 
	3.2

	 	The Employee’s base salary shall be subject to review annually at the discretion of the
Compensation Committee of CanArgo. The Company is not obliged to increase the Employee’s base
salary at such review.
	 
	 	 
	4

	 	Hours of Employment
	 
	 	 
	

	 	The Employee agrees that he shall work such hours as are necessary for the proper
performance of his duties. The Employee shall work a minimum of 140 hours per month based
upon an 8 hour day Monday to Friday (inclusive) between the hours of 8am and 6.00pm, with
a break of one hour for lunch each day.
	 
	 	 
	5

	 	Overtime
	 
	 	 
	

	 	The Employee will not receive additional remuneration for any hours worked over and above
the normal hours of work narrated in Clause 4.
	 
	 	 
	6

	 	Holidays
	 
	 	 
	6.1

	 	The holiday year runs from 1st January until 31st December the same
year. Holidays can be taken only with the advance permission of the Chief Executive Officer
of CanArgo from time to time.
	 
	 	 
	6.2

	 	In addition to public and bank holidays, the Employee is entitled to a maximum of 25 working
days holiday every calendar year. Such days holiday are accrued pro rata throughout the
calendar year, depending on the Employee’s length of service within that year. Holiday
entitlement will accrue per each month worked and will be rounded up to the nearest whole day.
	 
	 	 
	6.3

	 	There is no facility to carry holidays forward from one year to the next. However, except in
exceptional circumstances, holidays not taken in one calendar year may be carried forward to
the following calendar year provided they are taken within the first quarter and with the
advance permission of the Chief Executive Officer.
	 
	 	 
	6.4

	 	On leaving, holiday pay will be paid for all entitlement accrued in the current holiday year
but not taken at the time of termination of employment. In the event of holidays being taken
but not earned, appropriate holiday pay will be deducted by the Company from the Employee’s
final payment, the Company’s authority to do so being evidenced by the Employee’s signature to
this Statement.
	 
	 	 
	6.5

	 	The Company may require the Employee to take accrued holidays during any period of notice.
	 
	 	 
	7

	 	Expenses
	 
	 	 
	

	 	The Employee will be reimbursed for any expenses properly incurred in connection with his
duties in accordance with the Company’s expenses policy as amended from time to time.






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	8

	 	Notice
	 
	 	 
	8.1

	 	The Employment shall continue unless and until terminated at any time by:-
	 
	 	 
	8.1.1

	 	the Company giving the Employee not less than 3 months’ previous notice in writing to that
effect; or
	 
	 	 
	8.1.2

	 	the Employee giving to the Company not less than 3 months’ previous notice in writing to
that effect.
	 
	 	 
	8.2

	 	The Company shall be entitled, at its sole discretion, to terminate the Employment in writing
either instead of, or at any time after, notice of termination being given (by either the
Company or the Employee) and in either case to make a payment to the Employee in lieu of
notice.
	 
	 	 
	8.3

	 	Notwithstanding Clauses 8.1 and 8.2, if the Employee is dismissed for gross misconduct, he
will receive no notice and no payment in lieu of notice.
	 
	 	 
	9

	 	Other Insurance & Benefits
	 
	 	 
	9.1

	 	Life Assurance
	 
	 	 
	

	 	The Company (through CanArgo) will provide the Employee with the benefit of death in
service life assurance which, in the event of death itself will pay a maximum amount of 4
times his annual salary, subject to the rules and conditions of the policy.
	 
	 	 
	9.2

	 	Health Care Scheme
	 
	 	 
	9.2.1

	 	The Company (through CanArgo) shall provide the Employee with PPP Healthcare cover at the
expense of the Company, always subject to the terms and conditions of the PPP Healthcare
scheme.
	 
	 	 
	9.2.2

	 	All payments under the PPP Healthcare scheme or the like will be subject to any deductions
required by law.
	 
	 	 
	9.1.3

	 	The Company (through CanArgo) reserves the right at its absolute discretion to terminate or
amend at any time the PPP Healthcare scheme or the Employee’s membership of any scheme. The
Company (through CanArgo) will provide an equivalent benefit unless, in the reasonable opinion
of the Company (through CanArgo), it is unable to secure membership for the Employee due to
the medical condition of the Employee.
	 
	 	 
	9.3

	 	PHI
	 
	 	 
	

	 	The Employee shall be entitled to participate in a Permanent Health Insurance (“PHI”)
scheme (through CanArgo), always subject to the terms and conditions of the PHI scheme.
	 
	 	 
	9.3.1

	 	Payments
	 
	 	 
	

	 	All payments under the PHI scheme or the like will be subject to the
deductions required by law.
	 
	 	 
	

	 	Where payments are made under the PHI scheme all other benefits
provided to or in respect of the Employee will cease from the start
of those payments (if they have not done so already), unless the
Company is fully reimbursed by the PHI scheme for the cost of
providing the benefit.






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	9.4

	 	Right to terminate or amend
	 
	 	 
	

	 	The Company reserves the right at its absolute discretion to terminate or amend at any
time any Health Care Scheme or PHI scheme or the Employee’s membership of any such scheme.
The Company will provide an equivalent benefit unless, in the reasonable opinion of the
Chief Executive Officer, it is unable to secure insurance at reasonable premiums due to
the medical condition of the Employee or his spouse or children.
	 
	 	 
	10

	 	Pension
	 
	 	 
	

	 	The Company does not operate a company pension scheme. However, the Company will pay a
monthly contribution of 9% of the Employee’s base salary, as outlined in Clause 3, to the
Employee.
	 
	 	 
	11

	 	Grievance Procedures
	 
	 	 
	

	 	If the Employee wishes to obtain redress of any grievance relating to the Employment or is
dissatisfied with any reprimand, suspension or other disciplinary step taken by the
Company, he shall apply in writing to the Chief Executive Officer, setting out the nature
and details of any such grievance or dissatisfaction.
	 
	 	 
	12

	 	Disciplinary Rules and Procedure
	 
	 	 
	

	 	Any disciplinary action taken in connection with the Employment will usually be taken in
accordance with the Company’s normal disciplinary procedure (which are workplace rules and
not contractually binding) a copy of which is available from the Corporate Secretary of
CanArgo.
	 
	 	 
	13

	 	Health and Safety
	 
	 	 
	13.1

	 	It is the Company’s policy to comply with all statutory requirements arising from legislation
applicable to Guernsey prevailing at the time.
	 
	 	 
	13.2

	 	In addition, the Company may at its discretion impose even more stringent health and safety
standards if it is considered that these may increase the safety and well being of its
employees. Any such additional requirements will be notified to the Employee.
	 
	 	 
	14

	 	Sickness and Absence
	 
	 	 
	14.1

	 	If the Employee is absent from work for any reason and the absence has not previously been
authorised by the Company, the Employee must notify a representative of Company at his place
of work by no later 10.00am on the first day of absence, of the reason for the absence and the
anticipated duration. Failure to do so may lead to disciplinary action.
	 
	 	 
	14.2

	 	Should the absence extend beyond 7 days (including weekends) a doctor’s certificate should be
sent to the Company as soon as possible from the eighth consecutive day of the absence.
Thereafter medical certificates should be provided to the Company to cover the full period of
continuous absence. In these circumstances, the Employee should not return to work until
authorised by the doctor.
	 
	 	 
	14.3

	 	Immediately following the Employee’s return to work after any period of absence the Employee
shall be required to complete and submit and self-certification form available from his place
of work.






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	14.4

	 	At its discretion, the Company may terminate the employment of the Employee, after the agreed
notice period, if it considers that the Employee’s sickness record makes him unfit for regular
full time work. The Company reserves the right to require the Employee to undergo a medical
examination conducted by a doctor provided by the Company (at the Company’s expense).
	 
	 	 
	14.5

	 	If the Employee’s absence is due to sickness or injury, the Company will pay any Statutory
Sick Pay (“SSP”) in accordance with any relevant statutory provisions in Guernsey. For SSP
purposes, qualifying days are Monday to Friday (inclusive).
	 
	 	 
	14.6

	 	In addition, in the event of the Employee being absent from work due to sickness or injury,
the Company will pay sick pay as follows:-







	 	(a)  	During the first ten weeks of absence in any twelve month period, the
Employee shall be paid his base salary as outlined in Clause 3, less any SSP paid to
the Employee by the Company and less any other state sickness benefit recoverable by
the Employee;
	 
	 	(b)  	For a further ten weeks of absence in the same twelve month period, the
Employee shall be paid one half of his base salary as outlined in Clause 3, less any
SSP paid to the Employee by the Company and less any other state sickness benefit
recoverable by the Employee;
	 
	 	(c)  	After a total of twenty weeks of absence in the same twelve month period,
the provisions of the sickness and disability insurance cover to be arranged by the
Company for the Employee shall apply.





	 	 	 
	15

	 	Confidentiality
	 
	 	 
	15.1

	 	The Employee will during the employment and at all times keep secret all trade secrets or
other confidential technical or commercial information which the Employee may obtain regarding
the affairs of either the Company or CanArgo including, in particular, names of its clients,
trade information relating to Company or CanArgo’s research and development, engineering data,
seismic data, surveys, specifications, process formulations, production operations or
techniques, planning, purchasing, accounting, finance, selling, marketing, market research,
promotional plans, customers, suppliers, and all other information pertaining to the business
of the Company or CanArgo which is not publicly available. This restriction shall continue to
apply after the termination of the Employee’s employment without limit in point of time but
shall cease to apply to any such information which may come into the public domain other than
through unauthorised disclosure by the Employee.
	 
	 	 
	15.2

	 	The Employee may not make, otherwise than for the benefit of the Company, any notes or
memoranda relating to any matter within the scope of the business of the Company or CanArgo
concerning any of its dealings or affairs nor shall the Employee during the continuance of his
employment or at any time after such Employee has left the employment of the Company use or
permit to be used any such notes or memoranda. Any such documents made by the Employee shall
be the property of the Company or CanArgo and shall be left at its registered office upon
termination of the Employee’s employment with the Company and all copyright in such notes or
memoranda shall vest in the Company or CanArgo as appropriate.
	 
	 	 
	16

	 	Data Protection






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	 	The Employee acknowledges and agrees that the Company is permitted to hold personal
information about the Employee as part of its personnel and other business records and may
use such information in the course of the Company’s business. The Employee agrees that
the Company may disclose such information to third parties in the event that such
disclosure is in the Company’s view required for the proper conduct of the Company’s
business or that of CanArgo or any associated company. This clause applies to any
information held, used or disclosed in any medium.
	 
	 	 
	17

	 	Company and client Property
	 
	 	 
	

	 	All equipment (including computer equipment), notes, memoranda, records, lists of
customers, suppliers and employees, correspondence, computer and other discs or tapes,
data listings, codes, keys and passwords, designs, drawings and other documents or
material whatsoever (whether made or created by you or otherwise and in whatever medium or
format) relating to the business of the Company or CanArgo or any of their clients (and
any copies of the same) shall:
	 
	 	 
	17.1.1.1

	 	be and remain the property of the Company or CanArgo or the relevant client; and
	 
	 	 
	17.1.1.2

	 	be handed over by the Employee to the Company or CanArgo on demand and in any event on the
termination of his employment.
	 
	 	 
	18

	 	Governing Law and Jurisdiction
	 
	 	 
	18.1

	 	This statement shall be governed and construed in accordance with the law of Guernsey.
	 
	 	 
	18.2

	 	Each party hereby submits to the non-exclusive jurisdiction of the Guernsey courts as regards
any claim, dispute or matter arising out of or in connection with this Agreement and its
implementation and effect.






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They are subscribed by the Company and signed for and on its behalf at




On the                              day of                              2005



                                                  Director



                                                  Director/Secretary



They are subscribed by the Employee in acknowledgement that he has received a copy of this
Statement and has read it or has had it explained by a member of management and that he
understands it.




At




On the                              day of                              2005




in the presence of




	 	 	 
	Signature of Witness

	 	Signature of Employee
	 

	 	 
	 

	 	 
	 
	 	 
	Full Name
	 	 
	 



	 	 
	 
	 	 
	Address
	 	 
	 
	 	 
	


	 	 
	 
	 	 
	


	 	 






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Appendix A




	 	 	 
	

	 	CanArgo Energy Corporation

Job Description

Chief Financial Officer (CFO)






	 	 	 
	Position:

	 	Location:
	Chief Financial Officer

	 	Guernsey, with occasional travel to Georgia and elsewhere






Employed by:

Vazon Energy Limited, on behalf of

CanArgo Energy Corporation (the “Company”), as an

Officer of the Company



Reporting to:

Chief Executive Officer of CanArgo

Specific Responsibilities:

Overall management of the Finance function of the Company. Specific responsibilities in the area of

financial and project accounting, management & control include:-



Accounting:





	 	1)  	Assess overall accounting needs of the organization
	 
	 	2)  	Provide technical accounting services to the CanArgo group
	 
	 	3)  	Monitor and ensure corporate compliance with new accounting standards
	 
	 	4)  	Manage monthly payroll (all companies) and directors compensation





Finance:





	 	1)  	Ensure that the company’s financial records are accurately maintained
	 
	 	2)  	Take responsibility for all financial functions including; A/P; A/R; Cash Management; G/L;
Reconciliations
	 
	 	3)  	Supervise and review consolidated financial statement preparation process
	 
	 	4)  	Take responsibility for quarterly and annual financial statements including management
discussion and analysis and notes thereto for inclusion in 10-Q and 10-K and filing of same
	 
	 	5)  	Chief liaison with auditors during review of 10-Q, 10-K and SOX 404
	 
	 	6)  	Coordinate prospectus and other filing documents including liaison with legal counsel,
auditors, etc.
	 
	 	7)  	Ensure compliance with SEC and OSE regulations including filing of S-8’s, 8-K’s
	 
	 	8)  	Proposals on corporate funding and assistance with fund raising
	 
	 	9)  	Monitor and ensure compliance with initial and subsequent disbursement conditions of debt or
other loans
	 
	 	10)  	Liaise with legal counsel, corporate secretary to ensure that corporate investments are
adequately protected/registered
	 
	 	11)  	Prepare and maintain consolidated budget and present to Board of Directors
	 
	 	12)  	Review quarterly cost recovery submissions under each Production Sharing Contract





Treasury:





	 	1)  	Monitor cash balances
	 
	 	2)  	Monitor and Advise on term deposit investment
	 
	 	3)  	Liaise with bank(s)
	 
	 	4)  	Prepare and monitor letter of credit applications/status, escrow accounts, etc.
	 
	 	5)  	Prepare vendor credit applications





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	 	6)  	Review and sign cheques/wires for all outgoing payments





Taxation:





	 	1)  	Ensure compliance with applicable federal tax codes in US, Canada, UK, Cyprus, Georgia and
Kazakhstan
	 
	 	2)  	Prepare or review annual corporate tax filings in above jurisdictions
	 
	 	3)  	Prepare annual franchise tax or other corporate tax filings/questionnaires
	 
	 	4)  	Defend, if necessary, the corporation against unfair or frivolous tax claims or positions
	 
	 	5)  	Develop appropriate corporate tax planning strategies





Internal Controls:





	 	1)  	Implement adequate internal controls and procedures to optimize resources, safeguard assets,
prevent and detect fraud and maintain reliable control systems
	 
	 	2)  	Update and maintain Accounting Policy and Procedures Manual
	 
	 	3)  	Ensure compliance with Sarbanes Oxley and other relevant legislation





Insurance:





	 	1)  	Ensure the Company maintains adequate insurance coverage for existing group assets
	 
	 	2)  	Assess or add coverage for new activities, assets
	 
	 	3)  	Review annual insurance and other corporate practice applications
	 
	 	4)  	Supervise preparation and follow-up of insurance claims




Job Description:

This position is responsible for the overall financial management of the Company with the objectives of
ensuring finance is available for agreed programmes, maintaining tight financial control of the business and
ensuring financial reporting to the Company’s regulatory bodies is complied with in full. The position is
based in Guernsey, but will require some travel (particularly at the beginning) to the Company’s operating
areas and more generally. The main finance function is based in Guernsey but as most expenditure and all
income is currently received from Georgia, this position will be responsible for the overall finance function
in Georgia, either directly, or indirectly through the Company’s Georgian operating companies. As a senior
officer of the Company this position will work closely with the CEO, COO and Corporate Secretary, and will be
involved in discussions on overall corporate strategy, financing etc. The position will be expected to
present to the Board of Directors of the Company, and to the Company’s Audit Committee.




Date: May 2005





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