exv10w1



 





Exhibit 10.1









July 20, 2007




PRIVATE AND CONFIDENTIAL




CanArgo Limited

P.O. Box 291

St Peter Port

Guernsey, GY1 3RR, British Isles




Attention: Vincent McDonnell, President and Chief Operating Officer




Secondary Offering of Common Shares of Tethys Petroleum Limited



The purpose of this letter is to confirm the engagement (“Engagement”) of Jennings Capital Inc.
(“JCI” or the “Placing Agent” or the “Participating Organization”) by CanArgo Limited (“CanArgo” or
the “Company” or the “Selling Shareholder”), a wholly owned subsidiary of CanArgo Energy
Corporation, to act as the sole placing agent, or sole participating organization as the case may
be, for the sale of up to 8,000,000 common shares of Tethys Petroleum Limited (the “Placement”)
(“Tethys Common Shares” in the singular and the “Tethys Common Shares Block” in the aggregate)
currently owned by CanArgo. The agreement resulting from acceptance of the provisions of this
letter is hereinafter called the “Agreement”.





	 	1.	 	JCI shall, after seven days from the Company filing Form 45-102F1, solicit potential
buyers on an agency basis, pursuant to any regulatory requirements, to acquire up to
8,000,000 Tethys Common Shares at a price not less than C$2.95 per Tethys Common Share.
	 
	 	2.	 	JCI agrees to act as the sole placing agent, or sole participating organization as the
case may be, to the Company in the sale of the Tethys Common Shares, subject to the terms
and conditions below:






	 	a.	 	CanArgo, on or before July 23, 2007, files a 45-102F1 to the
appropriate regulatory authorities (the “Filing Date”);
	 
	 	b.	 	CanArgo agrees to comply with all regulatory requirements
including the filing of any insider trading reports as required;
	 
	 	c.	 	The Tethys Common Shares are not legended stock as per United States
security laws (provided that the Tethys Common Shares are not sold in transactions
subject to United States securities laws) and that the sale of any Tethys Common
Shares does not contravene any securities laws including United States security
laws;
	 
	 	d.	 	CanArgo shall pay to JCI a cash commission of C$0.14 per each Tethys Common Share




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	 	 	 	sold under this Placement as compensation for acting as Placing Agent, or
Participating Organization as the case may be;
	 
	 	e.	 	CanArgo shall reimburse JCI for all reasonable expenses relating to the
Placement, including travel costs, out-of-pocket expenses, legal fees and
disbursements of its counsel, such costs in the aggregate not to exceed $15,000 (not
including G.S.T) without the written approval of CanArgo, such approval not to be
unreasonably withheld. The obligation to make the foregoing payments shall survive
the termination of this Agreement;
	 
	 	f.	 	The Company covenants and agrees to indemnify the Agent as provided for in
Schedule “A” attached hereto; and
	 
	 	g.	 	JCI confirms that (i) it has not made and agrees that it will not make any
unusual effort to prepare the market in respect of the Placement or to create a demand
for the Tethys Common Shares (within the meaning of National Instrument 45-102 and
related rules of the Alberta Securities Commission), (ii) the compensation payable to
JCI under the terms of this Agreement is not an extraordinary commission or
consideration (within the meaning of National instrument 45-102 and related rules of
the Alberta Securities Commission), (iii) it has not and will not compensate any other
person in respect of the Placement other than customary brokerage fees payable to
registered dealers, and (iv) it will comply with all applicable laws and rules of the
Toronto Stock Exchange in connection with the Placement.






	 	3.	 	This Agreement shall expire on the earlier of the Placement of the Tethys Common Share Block
or 60 days from the Filing Date.
	 
	 	4.	 	The Company agrees to provide to JCI drafts of any press releases relating to the Placement
and to consult with JCI in this respect.
	 
	 	5.	 	This Agreement shall be governed by and construed in accordance with the laws of the Province
of Alberta and the laws of Canada applicable herein.
	 
	 	6.	 	This Agreement shall enure to the benefit of and be binding upon both JCI and the Company;
including the respective successors and permitted assignees of each of the parties.
	 
	 	7.	 	In addition to sales in the Qualifying Jurisdictions, the Tethys Common Shares may be sold in
the U.S. and certain European jurisdictions including, but not limited to, the United Kingdom,
France and Switzerland, in compliance with the securities laws of such jurisdictions.
	 
	 	8.	 	This Agreement may be executed and delivered by facsimile transmission, each of which so
executed and delivered shall be deemed to be an original and all of which collectively shall
constitute one and the same instrument and executed facsimile copies shall be deemed for all
purposes hereunder to be valid executed copies hereof.
	 
	 	9.	 	Any notice or other communication hereunder shall be in writing and may be given by
telecopier or personal delivery to an officer of each of the entities to whom such notice is
given and shall, in the case of notice to the Company, be addressed and sent to the Company at
the address indicated above and in the case of JCI, be addressed and sent to:





Jennings Capital Inc.

2600, 520 — 5th Avenue SW




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Calgary, Alberta, Canada T2P 3R7

Attention: David G. McGorman

Fax #: (403)292-0979





	 	 	 	Or such other address as the parties may be apprised of and shall be deemed to have been
delivered upon receipt by a responsible officer of the addressee in the event of personal
delivery or in the event of telecopied delivery on the following business day in the
respective city.




If the foregoing and Schedule “A” (the Indemnity) are acceptable to you, we would ask you to
please sign and return one copy of this letter to the attention of the undersigned. This offer is
made subject to the terms and conditions outlined in this letter. Upon acceptance, this letter
will then constitute your authorization to us to proceed. We are very much looking forward to
being of service to you in this placement.




Yours truly




JENNINGS CAPITAL INC.




	 	 	 
	/s/ David G. McGorman
 

David G. McGorman

	 	 
	Senior
Managing Director, Investment Banking
	 	 





The foregoing is in accordance with our understanding and is accepted and agreed to
by us. 

DATED this 22 day of July, 2007




CANARGO LIMITED




	 	 	 
	/s/ V. McDonnell
 

Name: V. McDONNELL

	 	 
	Title: Director
	 	 






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SCHEDULE “A” — INDEMNITY



In connection with the engagement of JCI to perform services in accordance with the
agreement of which this Schedule “A” forms an integral part (the “Agreement”), CanArgo Limited
(herein called “the Company”) hereby agrees to indemnify and hold harmless JCI, its affiliates, the
respective shareholders, directors, officers, partners, agents and employees of JCI and its
affiliates (individually, an “Indemnified Person”), to the full extent lawful, from and against all
losses, (other than loss of profit) claims, damages, liabilities and expenses (including reasonable
fees and disbursements of counsel on a solicitor / client basis) which (A) are related to or arise
out of actions taken or omitted to be taken (including any untrue statements made or any statements
omitted to be made) by the Company in the context of the Agreement, or (B) are otherwise related to
or arise out of JCI’s activities on behalf of the Company under the Agreement and the Company will
reimburse any Indemnified Person for all expenses (including reasonable fees and disbursements of
counsel on a solicitor / client basis) as they are incurred by JCI or such other Indemnified Person
in connection with investigating, preparing or defending any such action or claim, whether or not
in connection with pending or threatened litigation in which any Indemnified Person is a party. The
Company will not be responsible, however, for any losses, claims, damages, liabilities or expenses
pursuant to clause (B) of the preceding sentence which are finally judicially determined to have
resulted primarily from the bad faith, negligence, misconduct or failure to comply with applicable
laws or regulations or breach of the Agreement by JCI, any Indemnified Person or the person seeking
indemnification hereunder.



The Company also agrees that no Indemnified Person shall have any liability to the Company
(whether direct or indirect, in contract, in tort or otherwise) for or in connection with the
Agreement except for such liability for losses (other than loss of profit), claims, damages,
liabilities or expenses incurred by the Company which is finally judicially determined to have
resulted primarily from such Indemnified Person’s bad faith, negligence, misconduct or failure to
comply with applicable laws or regulations.



If any action, claim or other proceeding is brought, instituted or threatened in respect of any
Indemnified Person which may result in a claim for indemnification hereunder, such Indemnified
Person shall promptly, after receiving notice thereof, notify the Company, in writing. Failure to
so notify the Company shall not relieve the Company from liability except only to the extent that
the failure materially prejudices the Company. The Company will assume the defence of any
litigation or proceeding in respect of which indemnity may be sought hereunder, including the
employment of counsel satisfactory to such Indemnified Person, acting reasonably, and the payment
of the fees and disbursements of such counsel. In any such litigation or proceeding the defence of
which the Company shall have assumed, any Indemnified Person shall have the right to participate
in such litigation or proceeding and to retain its own counsel, but the fees and disbursements of
such counsel shall be at the expense of such Indemnified Person unless the named parties to any
such litigation or proceeding including one or more of the Company and the Indemnified Person and
the representation of both parties by the same counsel in the written
opinion of the Indemnified
Person’s counsel would be inappropriate due to actual or potential differing interests between
them and provided, however, that the Company shall only be obligated to pay for one set of counsel
for all Indemnified Parties (in addition to counsel retained by the Company). The Company shall not
be liable for any settlement of any litigation or proceeding effected without its written consent,
such consent not to be unreasonably withheld. If the Company assumes the defence of any litigation
or proceeding, the Company will not, without the prior written consent of the Indemnified Person,
such consent not to be unreasonably withheld, settle or compromise or consent to the entry of any
judgement in any pending or threatened claim, action, suit or proceeding in respect of which
indemnification may be sought hereunder unless such settlement, compromise or consent includes an
unconditional release of each Indemnified Person hereunder from all liability arising out of such
claim, action, suit or proceeding.




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If for any reason (other than determinations based on bad faith, negligence, misconduct or failure
to comply with applicable laws or regulations as contemplated above), the foregoing indemnification
is unavailable to any Indemnified Person or is insufficient to hold any Indemnified Person
harmless, the Company shall contribute to the amount paid or payable by any Indemnified Person as a
result of such losses (other than loss of profits), claims, damages, liabilities or expenses in
such proportion as is appropriate to reflect not only the relative benefits received by JCI on the
one hand and the Company on the other hand but also the relative degrees of fault of the Company,
JCI and any other Indemnified Person, as well as, any relevant equitable considerations, provided
that the Company shall in any event contribute to the amount paid or payable by any Indemnified
Person as a result of any such loss, claim, damage, liability or expense any excess of such amount
over the amount of fees received by JCI pursuant to this Agreement.



The foregoing shall be in addition to any rights that any Indemnified Person may have at common
law or otherwise, including, but not limited to, any right to contribution. The Company hereby
agrees to submit to the non-exclusive jurisdiction of the Courts of Alberta in respect of any
claim made by an Indemnified Person pursuant hereto.





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