exv10w8



 






	 	 	 	 	 



Exhibit 10.8




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
Persistency, a company incorporated in the Cayman Islands (“Purchaser”) .



     WHEREAS, CanArgo and the Purchaser have entered into a Note Purchase Agreement dated as of
June 28, 2006 (the “Note Purchase Agreement”), pursuant to which CanArgo issued $10,000,000 in
aggregate principal amount of a 12% Subordinated Convertible Guaranteed Promissory Note due
September 1, 2009 (the “12% Subordinated Note”); and



     WHERAS pursuant to a Conversion Agreement (the “Senior Conversion Agreement”) dated as of June
5, 2007, among (1) CanArgo, (2) the holders of the Senior Secured Notes and (3) CanArgo Limited,
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 converting all or part of their 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 all or part of their respective Senior Secured
Notes; and



     WHEREAS, the 12% Subordinated Noteholder desires to waive certain of its rights under the Note
Purchase Agreement in respect of the Senior Conversion Agreement and the transactions contemplated
thereby, including without limitation its rights in connection with the automatic reset of the
conversion price of the 12% Subordinated Note and the exercise price of the Warrants issued
pursuant to the Note Purchase Agreement upon the issue of the Compensatory Warrants.



     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 Purchaser
hereby irrevocably and unconditionally consents to, and waives any rights it may have under the
Note Purchase Agreement, the 12% Subordinated Note or any other Loan Documents in connection with:



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	 	(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(e) of the Note Purchase Agreement; and (b) Section 8 of the Warrants to the
automatic reset of the conversion price of the 12% Subordinated Note 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, amendments and waivers granted in this Section 2 only apply to the 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 the repayment of the Senior Secured Notes);
	 
	 	(ii)	 	second, in repaying any amounts outstanding to the holders of the Senior
Subordinated Convertible Guaranteed Promissory Notes due September 1, 2009 (the
“Senior Subordinated Notes”) under the Senior Subordinated Notes (including, for the
avoidance of doubt, interest due and payable on the repayment of the Senior
Subordinated Notes);
	 
	 	(iii)	 	third, in repaying any amounts outstanding to Persistency under the 12%
Subordinated Note (including, for the avoidance of doubt, interest due and payable on
the repayment of the 12% Subordinated Notes); and
	 
	 	(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. Covenants. For good and valuable consideration, the adequacy of which is hereby
acknowledged by CanArgo, CanArgo and Persistency agree that Section 12.9 of the 12% Subordinated
Convertible Guaranteed Promissory Note due September 1, 2009 shall be amended and restated in its
entirety as follows:-



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     “Section 12.9. Future Indebtedness. Neither the Company nor any other CanArgo Group Member
shall incur any Indebtedness after the date of this Agreement other than (a) Indebtedness
outstanding under the Senior Secured Notes, provided that the aggregate principal amount of such
indebtedness shall not exceed the lowest amount of the aggregate principal amount of such
indebtedness that is outstanding from time to time under all Senior Secured Notes from and after
the date hereof and that no amendment or modification to the Senior Secured Notes shall otherwise
increase the aggregate principal amount then outstanding thereunder, (b) Indebtedness outstanding
under the Subordinated Notes, provided that the aggregate principal amount of such indebtedness
shall not exceed the lowest amount of the aggregate principal amount of such indebtedness that is
outstanding from time to time under all Subordinated Notes from and after the date hereof and that
no amendment or modification to the Subordinated Notes shall otherwise increase the aggregate
principal amount then outstanding thereunder, (c) Indebtedness outstanding under the Notes, (d) any
additional unsecured Indebtedness from lenders other than CanArgo Group Members, the aggregate
amount outstanding thereunder for the CanArgo Group in the aggregate shall not at any time exceed
US$2,500,000, (e) unsecured Indebtedness of the Company or another CanArgo Group Member to another
CanArgo Group Member, provided that such Indebtedness is subordinated in right of payment to the
rights of the holders of Senior Indebtedness and the Notes, such subordination to be upon terms set
forth in the Senior Secured and Subordinated Note and the Loan Documents (as defined therein)
related thereto and the provisions of Section 4 hereof (the Indebtedness represented by the
Notes constituting “Senior Indebtedness” for the purposes of such Section); (f) Indebtedness of a
CanArgo Group Member to a direct or indirect Subsidiary of the Company that is not a Material
Subsidiary provided that the aggregate amount outstanding thereunder at any time shall not exceed
US$1,500,000; and (g) Indebtedness of the Company or a CanArgo Group Member to BN Munai LLP or a
Subsidiary of BN Munai LLP. In considering whether to give its consent to any future Indebtedness,
the Required Holders shall be entitled to take into consideration, inter alia, the potential
effects of any such proposed Indebtedness upon the financial condition and wherewithal of the
Company and/or upon their rights under the Loan Documents, and any decision by the Required Holders
to withhold their consent to any such proposed future Indebtedness shall be final and binding
absent a showing of manifest bad faith.”



     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



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Purchaser 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.



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          (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.



	 	 	 	 	 
	 	CANARGO ENERGY CORPORATION

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 



	 	 	 	 	 
	PURCHASER:	 	 
	 
	 	 	 	 
	PERSISTENCY	 	 
	 
	 	 	 	 
	By:
	 	 	 	 
	Name:

	 	 

	 	 
	Title:
	 	 	 	 






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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:  	 	 
	 
	 	NINOTSMINDA OIL COMPANY LIMITED

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 



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