exv10w7



 




Exhibit 10.7


AMENDMENT, CONSENT AND WAIVER




     This AMENDMENT, CONSENT AND WAIVER (this “Agreement”) is made and entered into as of the 5th
day of June, 2007 by and among CanArgo Energy Corporation, a Delaware Corporation (“CanArgo”), and
the individuals and entities who or which are signatories hereto.



     WHEREAS, CanArgo and certain persons (the “Subordinated Noteholders”) have entered into a Note
Purchase Agreement dated as of March 3, 2006, as amended (the “Note Purchase Agreement”), pursuant
to which CanArgo issued $13,000,000 in aggregate principal amount of Senior Subordinated
Convertible Guaranteed Promissory Notes due September 1, 2009 (the “Subordinated Notes”); and



     WHEREAS, pursuant to a Conversion Agreement (the “Persistency Conversion Agreement”) dated as
of June 5, 2007, among (1) CanArgo, (2) Persistency and (3) CanArgo Limited, Persistency agreed
subject to certain conditions to convert its holding of US$5 million of principal amount of
Subordinated Notes into Tethys Common Stock; and



     WHEREAS pursuant to a Consent and Conversion Agreement (the “Senior Conversion Agreement”, and
together with the Persistency Conversion Agreement the “Conversion Agreements”) dated as of June 5,
2007, among (1) CanArgo, (2) the holders of the Senior Secured Notes and (3) CanArgo Limited,
certain of the holders of the Senior Secured Notes agreed subject to certain conditions to convert
an aggregate of US$10million of the entire principal amount of the Senior Secured Notes into Tethys
Common Stock; and



     WHEREAS pursuant to the terms of the Senior Conversion Agreement, the holders of the Senior
Secured Notes (each hereby referred to as a “Senior Noteholder” and collectively as the “Senior
Noteholders”) converting all or part of their Senior Secured Notes into Tethys Common Stock, are to
be issued by CanArgo with warrants to purchase certain shares of CanArgo’s common stock par value
$0.10 per share, at an exercise price of $0.90 per share (subject to adjustment) (the “Compensatory
Warrants”) in consideration for the conversion of their respective Senior Secured Notes; and



     WHEREAS, each of the Subordinated Noteholders desires to waive certain of their rights under
the Note Purchase Agreement in respect of the Conversion Agreements and the transactions
contemplated thereby, including without limitation their rights in connection with the automatic
reset of the conversion price of the Subordinated Notes and the exercise of the Warrants upon the
issue of the Compensatory Warrants; and



     WHEREAS, CanArgo and the Subordinated Noteholders wish to amend the Note Purchase Agreement
such that with effect from the date of this Agreement the Subordinated Noteholders shall no longer
have the right to convert all or a portion of their Subordinated Notes into Tethys Common Stock;



1









 





     NOW, THEREFORE, in consideration of the foregoing and for other good and valuable
consideration, the receipt and sufficiency or which is hereby acknowledged, the parties hereto,
intending to be legally bound, hereby agree as follows:



     1. Definitions. Capitalized terms used herein but not otherwise defined have the
meanings assigned to them in the Note Purchase Agreement.



     2. Consent and Waiver. Notwithstanding the provisions of any Loan Document to the
contrary provided, in accordance with Section 19 of the Note Purchase Agreement, the Subordinated
Noteholders hereby irrevocably and unconditionally consent to, and waive any rights they may have
under the Note Purchase Agreement, the Subordinated Notes or any other Loan Documents in connection
with:




	 	(i)	 	the issue of the Compensatory Warrants at an exercise price of $0.90 per
share including, without limitation, the waiver of any rights pursuant to (a) Section
11.7(d) of the Note Purchase Agreement; and (b) Section 8 of the Warrants to the
automatic reset of the conversion price of the Subordinated Notes and the exercise
price of the Warrants respectively upon the issue of the Compensatory Warrants; and
	 
	 	(ii)	 	the sale by CanArgo Limited of any shares of Tethys Common Stock it owns from
time to time provided that CanArgo Limited shall receive a minimum price of $2.50 for
each share of Tethys Common Stock it sells (the “Sell Down”);




The consents, releases and amendments granted in this Section 2 only apply to matters described in
clauses (i) and (ii) above, and do not constitute a waiver of, or consent to, any other amendment
to or waiver of any other provisions of the Loan Documents.




     3. Use of Proceeds from Sell Down. CanArgo shall apply the net proceeds received by
CanArgo Limited pursuant to any Sell Down on the terms, and in the order of priority, stated
below:-




	 	(i)	 	first, in repaying any amounts outstanding to the Senior Noteholders under
the Senior Secured Notes (including, for the avoidance of doubt, interest due and
payable on repayment of the Senior Secured Notes);
	 
	 	(ii)	 	second, in repaying any amounts outstanding to the Subordinated Noteholders
under the Subordinated Notes (including, for the avoidance of doubt, interest due and
payable on repayment of the Senior Subordinated Notes);
	 
	 	(iii)	 	third, in repaying any amounts outstanding to Persistency under the 12%
Subordinated Convertible Guaranteed Promissory Note due September 1, 2009 (including,
for the avoidance of doubt, interest due and payable on repayment of such Note); and




2









 






	 	(iv)	 	finally, following payment of the amounts specified in sub-sections (i) to
(iii) (inclusive), any surplus proceeds shall be distributed by CanArgo Limited as it
shall in its sole discretion determine.





     4. Amendment of the Note Purchase Agreement. The Note Purchase Agreement is hereby
amended nunc pro tunc by the deletion of Section 11.7 in its entirety (to the effect that with
effect from the date of this Agreement the Subordinated Noteholders shall no longer have the right
to convert all or a portion of their Subordinated Notes into Tethys Common Stock).



     5. Effect on Loan Documents. This Agreement and the amendments set forth herein are
limited to the specific purpose for which it is entered into and, except as specifically set forth
above, (a) shall not be construed as a consent, waiver, amendment or other modification with
respect to any other term, condition or other provision of any Loan Document and (b) each of the
Loan Documents shall remain in full force and effect and are each hereby ratified and confirmed.



     6. Miscellaneous.



          (a) Successors and Assigns; Headings; Choice of Law, etc. This Agreement shall be
binding on and shall inure to the benefit of CanArgo and the Subordinated Noteholders and their
respective successors and assigns, heirs and legal representatives; provided that CanArgo may not
assign its rights hereunder without the prior written consent of the Required Holders. The
headings in this Agreement have been inserted for convenience purposes only and shall not be used
in the interpretation or enforcement of this Agreement. The Agreement shall be interpreted and
enforced in accordance with the laws of the State of New York, United States of America, applicable
to contracts made in and to be performed in such State. There shall be no third party
beneficiaries of any of the terms and provisions of this Agreement.



          (b) Entire Agreement; Amendments. This Agreement, including all documents attached
hereto, incorporated by reference herein or delivered in connection herewith, constitute the entire
agreement of the parties with respect to the subject matter hereof and supersede all other prior
understandings, oral or written, with respect to the subject matter hereof and may not be amended,
or any provision thereof waived, except by an instrument in writing signed by the parties hereto.



          (c) Severability. Whenever possible each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable law, but if any provision
of this Agreement shall be prohibited by or invalid under such law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of
such provision or the remaining provisions of this Agreement.



3









 





          (d) Counterparts. This Agreement may be executed in any number of counterparts and by
the different parties on separate counterparts, and each such counterpart shall be deemed to be an
original, but all such counterparts shall together constitute but one and the same instrument.
Delivery of an executed counterpart of a signature page to this Agreement by telecopy shall be
equally effective as the delivery of a manually executed counterpart of this Agreement.



     IN WITNESS WHEREOF, this Agreement has been executed by the parties hereto or by their
representatives, thereunto duly authorized, as of the day and year first above written.



	 	 	 	 	 
	 	 	 
	 	By:  	
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	CANARGO ENERGY CORPORATION   	 




	 	 	 	 	 
	SUBORDINATED NOTEHOLDERS:	 	 
	 
	 	 	 	 
	THOMAS L. GIPSON	 	 
	 
	 	 	 	 
	 	 	 
	 
	 	 	 	 
	ROBERT L. GIPSON	 	 
	 
	 	 	 	 
	 	 	 
	 
	 	 	 	 
	PENRITH LTD.	 	 
	 
	 	 	 	 
	By:
	 	 	 	 
	Name:

	 	 

	 	 
	Title:
	 	 	 	 






4









 






	 	 	 	 	 
	PERSISTENCY	 	 
	 
	 	 	 	 
	By:
	 	 	 	 
	Name:

	 	 

	 	 
	Title:
	 	 	 	 






AGREED AND ACKNOWLEDGED




	 	 	 	 	 
	 	CANARGO LIMITED

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	CANARGO LTD.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	CANARGO NORIO LIMITED

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	CANARGO (NAZVREVI) LIMITED

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 



5









 






	 	 	 	 	 
	 	NINOTSMINDA OIL COMPANY LIMITED

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 



6