Document:

Unassociated Document

  Exhibit 4.5

  

EXHIBIT A

  

NEITHER THESE SECURITIES NOR THE SECURITIES FOR WHICH THESE SECURITIES ARE EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS OR BLUE SKY LAWS. 
  

MCF CORPORATION

WARRANT

 

	 Warrant No. [ ]	
 Dated: August 11, 2004

  

MCF Corporation, a Delaware corporation (the "Company"), hereby certifies that, for value received, [Name of Holder] or its registered assigns (the "Holder"), is entitled to purchase from the Company up to a total of [_________] shares of common stock, $0.
0001 par value per share (the "Common Stock"), of the Company (each such share, a "Warrant Share" and all such shares, the "Warrant Shares") at an exercise price equal to $1.48 per share (as adjusted from time to time as provided in Section 9, the "Exercise Price"), at any time and from time to time, terminating on August 11, 2008 (the "Expiration Date"), and subject to the following terms and conditions. This Warrant (this "Warrant") is one of a series of similar warrants issued pursuant to that certain Se
curities Purchase Agreement, dated as of the date hereof, by and among the Company and the Purchasers identified therein (the "Purchase Agreement"). All such warrants are referred to herein, collectively, as the "Warrants."

  

1.
   Definitions. In addition to the terms defined elsewhere in this Warrant, capitalized terms that are not otherwise defined herein have the meanings given to such terms in the Purchase Agreement.

  

2. Registration of Warrant. The Company shall register this Warrant, upon records to be maintained by the Company for that purpose (the "Warrant Register"), in the name of the record Holder hereof from time to time. The Company may deem and treat the registered Holder of this Warrant as the absolute owner hereof for the purpose of any exercise hereof or any distri
bution to the Holder, and for all other purposes, absent actual notice to the contrary.

  

3.  Registration of Transfers. The Company shall register the transfer of any portion of this Warrant in the Warrant Register, upon surrender of this Warrant, with the Form of Assignment attached hereto duly completed and signed, to the Company’s transfer agent or to the Company at its address specified herein. Upon any such registration or transfer, a new warrant to purchase Common Stock, in substantially the form of this Warrant (any such new warrant, a
"New Warrant"), evidencing the portion of this Warrant so transferred shall be issued to the transferee and a New Warrant evidencing the remaining portion of this Warrant not so transferred, if any, shall be issued to the transferring Holder. The acceptance of the New Warrant by the transferee thereof shall be deemed the acceptance by such transferee of all of the rights and obligations of a holder of a Warrant.

  

  

4.  Exercise and Duration of Warrants.

 

(a) This Warrant shall be exercisable by the registered Holder at any time and from time to time on or after the date hereof to and including the Expiration Date at 5:00 P.M., Pacific Time on the Expiration Date. 
  

(b)  A Holder may exercise this Warrant by delivering to the Company (i) an exercise notice, in the form attached hereto (the "Exercise Notice"),
  appropriately completed and duly signed, and (ii) payment of the Exercise
  Price for the number of Warrant Shares as to which this Warrant is being
  exercised (which may take the form of a "cashless exercise" if so indicated in
  the Exercise Notice and if a "cashless exercise" may occur at such time
  pursuant to Section 10 below), and the date such items are delivered to the Company (as determined in accordance with the notice provisions hereof) is an "Exercise Date." Within five (5) Business Days after the Exercise Date, the Holder shall deliver the original Warrant, or an affidavit of loss thereof, to the Company. Execution and delivery of the Exercise Notice shall have the same effect as cancellation of the original Warrant and issuance of a New Warrant evidencing the right to purchase the remaining number of Warrant Shares.

(c) Notwithstanding the foregoing, if at any time after the Closing Date the Closing Price (as defined below) for a share of Common Stock is at or above $2.96 (as adjusted from time to time as provided in Section 9) for twenty (20) consecutive Business Days, the Holder will be deemed to have exercised this Warrant in full (the "Automatic Exercise"), to the extent not previously exercised by the Holder, as of the close of business on such twentieth consecuti
ve Business Day (the "Trigger Date"); provided, however, that in no event shall the Trigger Date be before the Effective Date. The Holder agrees to take every action reasonably requested by the Company or otherwise necessary to effect such Automatic Exercise. The Holder further agrees to make payment to the Company of the aggregate Exercise Price as soon as possible after the Trigger Date, but in no event later than the third Business Day after receipt by the Holder of a written communication from the Company informing the Holder of such Automatic Exercise having been triggered. Within three Business Days after receipt of such payment from the Holder, the Company agrees that it shall deliver or cause to be delivered to the Holder one or more stock certificates evidencing the number of shares of Common Stock for which t
his Warrant is being exercised, registered in the name of the Holder. 

"Closing Price" means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then listed or quoted on an Eligible Market or any other national securities exchange, the closing price per share of the Common Stock for such date (or the nearest preceding date) on the primary Eligible Market or exchange on which the Common Stock is then listed or quoted; (b) if prices for the Common Stock are then quoted on the OTC Bulletin Board, the closing bid price per share of the Common Stock for such date (or the nearest preceding date) so quoted; (c) if prices for the Common Sto
ck are then reported in the "Pink Sheets" published by the National Quotation Bureau Incorporated (or a similar organization or agency succeeding to its functions of reporting prices), the most recent closing bid price per share of the Common Stock so reported; or (d) in all other cases, the fair market value of a share of Common Stock as determined by an independent appraiser selected in good faith by the Company. 

5. Delivery of Warrant Shares. 

  (a) Upon
    exercise of this Warrant, the Company shall promptly (but in no event later
    than three Business Days after the Exercise Date) issue or cause to be issued
    and cause to be delivered to or upon the written order of the Holder and in
    such name or names as the Holder may designate, a certificate for the Warrant
    Shares issuable upon such exercise, free of restrictive legends unless a registration
    statement covering the resale of the Warrant Shares and naming the Holder
    as a selling stockholder thereunder is not then effective and the Warrant
    Shares are not freely transferable without volume restrictions pursuant to
    Rule 144 under the Securities Act. The Holder, or any Person so designated
    by the Holder to receive Warrant Shares, shall be deemed to have become holder
    of record of such Warrant Shares as of the Exercise Date. The Company shall,
    upon request of the Holder, use its reasonable best efforts to deliver Warrant
    Shares hereunder electronically through the Depository Trust Corporation or
    another established clearing corporation performing similar functions.

    

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  (b) This
    Warrant is exercisable, either in its entirety or, from time to time, for
    a portion of the number of Warrant Shares. Upon surrender of this Warrant
    following one or more partial exercises, the Company shall issue or cause
    to be issued, at its expense, a New Warrant evidencing the right to purchase
    the remaining number of Warrant Shares.

    

  

(c) Failure on the part of the Company to deliver or cause to be delivered a stock certificate or certificates representing Warrant Shares within three Business Days after receipt of payment of the aggregate Exercise Price from the Holder for that number of Warrant Shares being acquired shall be deemed to be an "Event" for purposes of Section 6.1(d) of the Purchase Agreement and the Holder shall be entitled to Event Payments as set forth in that Section 6.1(d).

(d) The Company’s obligations to issue and deliver Warrant Shares in accordance with the terms hereof are absolute and unconditional, irrespective of any action or inaction by the Holder to enforce the same, any waiver or consent with respect to any provision hereof, the recovery of any judgment against any Person or any action to enforce the same, or any setoff, counterclaim, recoupment, limitation or termination, or any breach or alleged breach by the Holder or any other Person of any obligation to the Company or any violation or alleged violation of law by the Holder or any other Person, and irrespective of any other circumstance which mi
ght otherwise limit such obligation of the Company to the Holder in connection with the issuance of Warrant Shares. Nothing herein shall limit a Holder’s right to pursue any other remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Company’s failure to timely deliver certificates representing shares of Common Stock upon exercise of the Warrant as required pursuant to the terms hereof.

6. Charges, Taxes and Expenses. Issuance and delivery of certificates for shares of Common Stock upon exercise of this Warrant shall be made without charge to the Holder for any issue or transfer tax, withholding tax, transfer agent fee or other incidental tax or expense in respect of the issuance of such certificates, all of which taxes and expenses shall be paid by the Company; provided, however, that the Company shall not be required to pay any tax which may be payable in respect of any transfer involved in the registration of any certificates for Warrant Shares or Warrants in a name other than that of the Holder or an Affiliate thereof. The Holder shall be responsible for all other tax liability that may arise as a result of holding or transferring this Warrant or receiving Warrant Shares upon exercise hereof.

7. Replacement of Warrant. If this Warrant is mutilated, lost, stolen or destroyed, the Company shall issue or cause to be issued in exchange and substitution for and upon cancellation hereof, or in lieu of and substitution for this Warrant, a New Warrant, but only upon receipt of evidence reasonably satisfactory to the Company of such loss, theft or destruction and customary and reasonable bond or indemnity, if requested. Applicants for a New Warrant under such circumstances shall also comply with such other reasonable regulations and procedures and pa
y such other reasonable third-party costs as the Company may prescribe.

8. Reservation of Warrant Shares. The Company covenants that it will at all times reserve and keep available out of the aggregate of its authorized but unissued and otherwise unreserved Common Stock, solely for the purpose of enabling it to issue Warrant Shares upon exercise of this Warrant as herein provided, the number of Warrant Shares which are then issuable and deliverable upon the exercise of this entire Warrant, free from preemptive rights or any other contingent purchase rights of persons other than the Holder (after giving effect to the adjustm
ents and restrictions of Section 9, if any). The Company covenants that all Warrant Shares so issuable and deliverable shall, upon issuance and the payment of the applicable Exercise Price in accordance with the terms hereof, be duly and validly authorized, issued and fully paid and nonassessable. The Company will take all such action as may be necessary to assure that such shares of Common Stock may be issued as provided herein without violation of any applicable law or regulation, or of any requirements of any securities exchange or automated quotation system upon which the Common Stock may be listed.

  
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9. Certain Adjustments. The Exercise Price and number of Warrant Shares issuable upon exercise of this Warrant are subject to adjustment from time to time as set forth in this Section 9.

(a) Stock Dividends and Splits. If the Company, at any time while this Warrant is outstanding, (i) pays a stock dividend on its Common Stock or otherwise makes a distribution on any class of capital stock that is payable in shares of Common Stock, (ii) subdivides outstanding shares of Common Stock into a larger number of shares or (iii) combines outstanding shares of Common Stock into a smaller number of shares, then in each such case (A) the Exercise Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common
Stock outstanding immediately before such event and of which the denominator shall be the number of shares of Common Stock outstanding immediately after such event, but the aggregate Exercise Price payable for the total number of Warrant Shares purchasable under this Warrant (as adjusted) shall remain the same and (B) the number of Warrant Shares shall be divided by a fraction of which the numerator shall be the number of shares of Common Stock outstanding immediately before such event and of which the denominator shall be the number of shares of Common Stock outstanding immediately after such event. Any adjustment made pursuant to clause "(i)" of this paragraph shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution, and any adjustment pursuant to clause "(ii)" or "(iii)" of this paragraph shall become effective immediately after the effective date of such subdivision or combination.

(b) Pro Rata Distributions. If the Company, at any time while this Warrant is outstanding, distributes to holders of Common Stock (i) evidences of its indebtedness, (ii) any security (other than a distribution of Common Stock covered by the preceding paragraph), (iii) rights or warrants to subscribe for or purchase any security or (iv) any other asset (in each case, "Distributed Property"), then in each such case the Holder shall be entitled upon exercise of this Warrant for the purchase of any or all of the Warrant Shares, to receive the amount of Distributed Property which would have been payable to the Holder had such Holder been the holder of such Warrant Shares on the record date for the determination of stockholders entitled to such Distributed Property. The Company will at all times set aside in escrow and keep available for distribution to such holder upon exercise of this Warrant a portion of the Distributed Property to satisfy the distribution to which such Holder is entitled pursuant to the preceding sentence. 

(c) Fundamental Transactions. If, at any time while this Warrant is outstanding, (i) the Company effects any merger or consolidation of the Company with or into another Person, (ii) the Company effects any sale of all or substantially all of its assets in one or a series of related transactions, (iii) any tender offer or exchange offer (whether by the Company or another Person) is completed pursuant to which holders of Common Stock are permitted to tender or exchange their shares for other securities, cash or property or (iv) the Company effects any rec
lassification of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash or property (other than as a result of a subdivision or combination of shares of Common Stock covered by Section 9(a) above) (in any such case, a "Fundamental Transaction"), then the Holder shall have the right thereafter to receive, upon exercise of this Warrant, the same amount and kind of securities, cash or property as it would have been entitled to receive upon the occurrence of such Fundamental Transaction if it had been, immediately prior to such Fundamental Transaction, the holder of the number of Warrant Shares then issuable upon exercise in full of this Warrant (the "Alternate Consideration"). The aggregate Exercise Price for this Warrant will not be affected by any such Fundamental Transaction, but the Company shall apportion such aggregate Exercise Price among the Alternate Consideration in a reasonable manner reflecting the relative value of any different components of the Alternate Consideration. If holders of Common Stock are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then the Holder shall be given the same choice as to the Alternate Consideration it receives upon any exercise of this Warrant following such Fundamental Transaction. At the Holder’s request, any successor to the Company or surviving entity in such Fundamental Transaction shall issue to the Holder a new warrant consistent with the foregoing provisions and evidencing the Holder’s right to purchase the Alternate Consider
ation for the aggregate Exercise Price upon exercise thereof. The terms of any agreement pursuant to which a Fundamental Transaction is effected shall include terms requiring any such successor or surviving entity to comply with the provisions of this paragraph (c) and insuring that the Warrant (or any such replacement security) will be similarly adjusted upon any subsequent transaction analogous to a Fundamental Transaction. If any Fundamental Transaction (x) results in a cash payment to holders of Common Stock or (y) constitutes or results in a Change of Control, and if as a result of such Change of Control the successor to the Company or surviving entity is not an entity whose stock is traded on an Eligible Market, then at the request of the Holder delivered before the 90th day after such Fundamental Transaction, the Company (or any such successor or surviving entity) will purchase the Warrant from the Holder for a purchase price, payable in cash within five (5) Business Days after such request (or, if la

ter, on the effective date of the Fundamental Transaction), equal to the Black-Scholes value of the remaining unexercised portion of this Warrant on the date of such request.

  
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(d) Calculations. All calculations under this Section 9 shall be made to the nearest cent or the nearest 1/100th of a share, as applicable. The number of shares of Common Stock outstanding at any given time shall not include shares owned or held by or for the account of the Company, and the disposition of any such shares shall be considered an issue or sale of Common Stock. 

(e) Notice of Adjustments. Upon the occurrence of an adjustment pursuant to this Section 9, the Company at its expense will promptly compute such adjustment in accordance with the terms of this Warrant and prepare a certificate setting forth such adjustment, including a statement of the adjusted Exercise Price and adjusted number or type of Warrant Shares or other securitie
s issuable upon exercise of this Warrant (as applicable), describing the transactions giving rise to such adjustments and showing in detail the facts upon which such adjustment is based. Upon written request, the Company will promptly deliver a copy of each such certificate to the Holder and to the Company’s Transfer Agent.

(f) Notice of Corporate Events. If the Company (i) declares a dividend or any other distribution of cash, securities or other property in respect of its Common Stock, including without limitation any granting of rights or warrants to subscribe for or purchase any capital stock of the Company or any Subsidiary, (ii) authorizes or approves, enters into any agreement contemplating or solicits stockholder approval for any Fundamental Transaction or (iii) authorizes the voluntary dissolution, liquidation or winding up of the affairs of the Company, then the
Company shall either make a public announcement of such transaction or deliver to the Holder a notice describing the material terms and conditions of such transaction and the Company will take all steps reasonably necessary in order to insure that the Holder is given the practical opportunity to exercise this Warrant prior to such time so as to participate in or vote with respect to such transaction at least 20 calendar days prior to the applicable record or effective date on which a Person would need to hold Common Stock in order to participate in or vote with respect to such transaction; provided, however, that the failure to deliver such notice o
r any defect therein shall not affect the validity of the corporate action required to be described in such notice. 

10. Payment of Exercise Price. The Holder shall pay the Exercise Price in immediately available funds; provided, however, that at any time following the one year anniversary of the Closing Date
 the Registration Statement filed by the Company pursuant to Section 6.1 of the Purchase Agreement is not effective with respect to all Warrant Shares the Holder may satisfy its obligation to pay the Exercise Price through a "cashless exercise," in which event the Company shall issue to the Holder the number of Warrant Shares determined as follows:

  

	 	
X = Y [(A-B)/A]

	
where:
	 
	 	
X = the number of Warrant Shares to be issued to the Holder.

	 	 
	 	
Y = the number of Warrant Shares with respect to which this Warrant is being exercised.

	 	 
	 	
A = the average of the Closing Prices for the five Business Days immediately prior to (but not including) the Exercise Date.

	 	 
	 	
B = the Exercise Price.

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For purposes of Rule 144 promulgated under the Securities Act, it is intended, understood and acknowledged that the Warrant Shares issued in a cashless exercise transaction shall be deemed to have been acquired by the Holder, and the holding period for the Warrant Shares shall be deemed to have commenced, on the date this Warrant was originally issued pursuant to the Purchase Agreement, provided such treatment still accords with the SEC’s interpretation that such treatment is proper under Rule 144.

11. Limitation on Exercise. Notwithstanding anything to the contrary contained herein, if the Trading Market is the New York Stock Exchange or any other market or exchange with similar applicable rules, then the maximum number of shares of Common Stock that the Company may issue pursuant to the Transaction Documents at an effective purchase price less than the Closing Price on the Business Day immediately preceding the Closing Date equals 19.99% of the shares of Common Stock outstanding immediately preceding the Closing Date (the "Issuable Maximum"), unless the Company obtains stockholder approval in accordance with the rules and regulations of such Trading Market. If, at the time any Holder requests an exercise of any of the Warrants, the Actual Minimum (excluding any shares issued or issuable at an effective purchase price in excess of the Closing Price on the Business Day immediately preceding the Closing Date) exceeds the Issuable Maximum (and if the Company has not previously obtained the required stockholder approval), then the Company shall issue to the Holder requesting such exercise a number of shares of Common Stock not exceeding such Holder’s pro-rata portion of the Issuable Maximum (based on such Holder’s share (vis-à-vis other Holders) of the aggregate purchase price paid under the Purchase Agreement and taking into account any Warrant Sha
res previously issued to such Holder). For the purposes hereof, "Actual Minimum" shall mean, as of any date, the maximum aggregate number of shares of Common Stock then issued or potentially issuable in the future pursuant to the Transaction Documents, including any Underlying Shares issuable upon exercise in full of all Warrants, without giving effect to any limits on the number of shares of Common Stock that may be owned by a Holder at any one time.

12. Fractional Shares. The Company shall not be required to issue or cause to be issued fractional Warrant Shares on the exercise of this Warrant. The Company shall, in lieu of issuing any fractional share, pay the Holder entitled to such fraction a sum in cash equal to such fraction (calculated to the nearest 1/100th of a share) multiplied by the then effective Exercise Price on the Exercise Date.

13. Notices. Any and all notices or other communications or deliveries hereunder (including without limitation any Exercise Notice) shall be in writing and shall be deemed given and effective on the earliest of (i) the date of transmission, if such notice or communication is delivered via facsimile prior to 5:00 p.m. (Eastern time) on a Business Day, (ii) the next Business Day after the date of transmission, if such notice or communication is delivered via facsimile on a day that is not a Business Day or later than 5:00 p.m. (Eastern time) on any Busine
ss Day, (iii) the Business Day following the date of mailing, if sent by nationally recognized overnight courier service, or (iv) upon actual receipt by the party to whom such notice is required to be given. The address for such notices or communications shall be as set forth in the Purchase Agreement.

14. Warrant Agent. The Company shall serve as warrant agent under this Warrant. Upon 30 days' notice to the Holder, the Company may appoint a new warrant agent. Any corporation into which the Company or any new warrant agent may be merged or any corporation resulting from any consolidation to which the Company or any new warrant agent shall be a party or any corporation to which the Company or any new warrant agent transfers substantially all of its corporate trust or stockholders services business shall be a successor warrant agent under this Warrant w
ithout any further act. Any such successor warrant agent shall promptly cause notice of its succession as warrant agent to be mailed (by first class mail, postage prepaid) to the Holder at the Holder's last address as shown on the Warrant Register.

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15. Miscellaneous.

(a) Subject to the restrictions on transfer set forth on the first page hereof, this Warrant may be assigned by the Holder. This Warrant may not be assigned by the Company except to a successor in the event of a Fundamental Transaction. This Warrant shall be binding on and inure to the benefit of the parties hereto and their respective successors and assigns. Subject to the preceding sentence, nothing in this Warrant shall be construed to give to any Person other than the Company and the Holder any legal or equitable right, remedy or cause of action under this Warrant. This Warrant may be amended only in writing signed by the Company and the Hold
er and their successors and assigns.

(b) The Company will not, by amendment of its governing documents or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such action as may be necessary or appropriate in order to protect the rights of the Holder against impairment. Without limiting the generality of the foregoing, the Company (i) will not increase the par value of any Warrant Shares above the amou
nt payable therefore on such exercise, (ii) will take all such action as may be reasonably necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable Warrant Shares on the exercise of this Warrant and (iii) will not close its stockholder books or records in any manner which interferes with the timely exercise of this Warrant.

  (c) GOVERNING LAW; VENUE; WAIVER OF JURY TRIAL. ALL QUESTIONS CONCERNING THE CONSTRUCTION, VALIDITY, ENFORCEMENT AND INTERPRETATION OF THIS WARRANT SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA. EACH PARTY HEREBY IRREVOCABLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE STATE AND FEDERAL COURTS SITTING IN THE CITY AND COUNTY OF SAN FRANCISCO, FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR WITH ANY TRANSACTION CONTEMPLATED HEREBY OR DISCUSSED HEREIN (INCLUDING WITH RESPEC
T TO THE ENFORCEMENT OF ANY OF THE TRANSACTION DOCUMENTS), AND HEREBY IRREVOCABLY WAIVES, AND AGREES NOT TO ASSERT IN ANY SUIT, ACTION OR PROCEEDING, ANY CLAIM THAT IT IS NOT PERSONALLY SUBJECT TO THE JURISDICTION OF ANY SUCH COURT, THAT SUCH SUIT, ACTION OR PROCEEDING IS IMPROPER. EACH PARTY HEREBY IRREVOCABLY WAIVES PERSONAL SERVICE OF PROCESS AND CONSENTS TO PROCESS BEING SERVED IN ANY SUCH SUIT, ACTION OR PROCEEDING BY MAILING A COPY THEREOF VIA REGISTERED OR CERTIFIED MAIL OR OVERNIGHT DELIVERY (WITH EVIDENCE OF DELIVERY) TO SUCH PARTY AT THE ADDRESS IN EFFECT FOR NOTICES TO IT UNDER THIS AGREEMENT AND AGREES THAT SUCH SERVICE SHALL CONSTITUTE GOOD AND SUFFICIENT SERVICE OF PROCESS AND NOTICE THEREOF. NOTHING CONTAINED HEREIN SHALL BE DEEMED TO LIMIT IN ANY WAY ANY RIGHT TO SERVE PROCESS IN ANY MANNER PERMITTED BY LAW. THE COMPANY HEREBY WAIVES ALL RIGHTS TO A TRIAL BY JURY.

(d) The headings herein are for convenience only, do not constitute a part of this Warrant and shall not be deemed to limit or affect any of the provisions hereof.

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(e) In case any one or more of the provisions of this Warrant shall be invalid or unenforceable in any respect, the validity and enforceability of the remaining terms and provisions of this Warrant shall not in any way be affected or impaired thereby and the parties will attempt in good faith to agree upon a valid and enforceable provision which shall be a commercially reasonable substitute therefor, and upon so agreeing, shall incorporate such substitute provision in this Warrant.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK,

SIGNATURE PAGE FOLLOWS]

     

     

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IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed by its authorized officer as of the date first indicated above.

  	 	 

          Company:

	 	 
	 	 MCF
            CORPORATION

	 	 
	 	 
	 	 By:
            

	 	

	 	 Name:
            D. Jonathan Merriman

	 	 Title:
            Chief Executive Officer

	 	 
	 	 
	 	 
	 	 Investor:

	 	 
	 	 INVESTOR
            NAME

	 	 
	 	 
	 	 By:
            

	 	

	 	 Name:
            

	 	

	 	 Title:
            

	 	

  

  

FORM OF EXERCISE NOTICE

(To be executed by the Holder to exercise the right to purchase shares of Common Stock ("Warrant Shares") under the foregoing Warrant)

To: MCF CORPORATION

The undersigned is the Holder of Warrant No. _______ (the "Warrant") issued by MCF Corporation, a Delaware corporation (the "Company"). Capitalized terms used herein and not otherwise defined have the respective meanings set forth in the Warrant.

	1. 	The Warrant is currently exercisable to purchase a total of ______________ Warrant Shares.

	2. 	The undersigned Holder hereby exercises its right to purchase _________________ Warrant Shares pursuant to the Warrant.

	3. 	The Holder intends that payment of the Exercise Price shall be made as (check one):

____    "Cash Exercise" 

____    "Cashless Exercise" under Section 10

	4. 	If the holder has elected a Cash Exercise, the holder shall pay the sum of $____________ to the Company in accordance with the terms of the Warrant.

	5. 	Pursuant to this exercise, the Company shall deliver to the holder _______________ Warrant Shares in accordance with the terms of the Warrant.

	6. 	Following this exercise, the Warrant shall be exercisable to purchase a total of ______________ Warrant Shares.

	 	 	 
	 	 	 
	
Dated:________________,
            __________ 
	 	
Name of Holder:

	 	 	 
	 	 	
(Print)
            
            

          

	 	 	 
	 	 	
By:
  
            

          

	 	 	
Name:
  
            

          

	 	 	
Title:
  
            

          

	 	 	 
	 	 	
(Signature must conform in all respects to name of holder as specified on the face of the Warrant)

  

  

FORM OF ASSIGNMENT

[To be completed and signed only upon transfer of Warrant]

FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto ________________________________ the right represented by the within Warrant to purchase ____________ shares of Common Stock of MCF Corporation to which the within Warrant relates and appoints ________________ attorney to transfer said right on the books of MCF Corporation with full power of substitution in the premises.

	 	 
	 	 
	
Dated: , 
	 
	 	 
	 	

	 	
(Signature must conform in all respects to name of holder as specified on the face of the Warrant)

	 	 
	 	

	 	
Address of Transferee

	 	 
	 	

	 	 
	 	 
	 	

	 	 
	
In the presence of:exv10w1

 

THIS AMENDED AND RESTATED AGREEMENT is made as a Deed the 27th day of August
2004:-

BETWEEN

	(1)	 	CANARGO ENERGY CORPORATION, a company registered in Delaware, USA and
having a place of business at PO Box 291, St Peter Port, Guernsey GY1 3RR
(the “Company”); and
	 
	(2)	 	SALAHI OZTURK residing at 30, Tuna Street, Lefkosa, Mersin, 10, Turkey
(the “Lender”);

WHEREAS:-

	(A)	 	On 26 April 2004, the Lender and the Company entered into a loan and
warrant agreement (“Original Agreement”) in which the parties recorded,
inter alia, the terms on which the Lender agreed to advance to the Company
the Loan (as defined herein) in consideration for which the Company issued
to the Lender a warrant to subscribe for 1,000,000 shares of the Company’s
common stock of par value US$0.10 each in the capital of the Company (the
“Original Warrant”);
	 
	(B)	 	The parties have agreed to amend and restate the Original Agreement on
the terms set out herein.

NOW THEREFORE IT IS IT IS AGREED as follows:-

	1	 	DEFINITIONS AND INTERPRETATION
	 
	1.1	 	In this Agreement unless the context otherwise requires
	 
	 	 	“Additional Loan” means the additional sum of US$1,050,000 including the
Fee;
	 
	 	 	“Auditors” means the auditors of the Company from time to time;
	 
	 	 	“Commission” means the United States Securities and Exchange Commission;
	 
	 	 	“Common Stock” means the common stock of the Company of par value
US$0.10 in the capital of the Company;
	 
	 	 	“Cornell Facility” means a Standby Equity Distribution Agreement between
Cornell Capital Partners, L.P. and the Company dated 11th February 2004;
	 
	 	 	“Default Interest Rate” means fifteen per cent (15%) per annum;
	 
	 	 	“Equity Conversion Rate” means 15% above the Market Price;
	 
	 	 	“Exercise Notice” means a notice in writing in the form set out in Part
2 of the Schedule served by the Lender on the Company pursuant to Clause
7.2;
	 
	 	 	“Exchange Act” means the United States Securities Exchange Act of 1934,
as amended;

 

 

	 	 	“Extraordinary Resolution” for the purposes of Clause 11 means a
resolution proposed at a meeting of the holders of outstanding warrants
to subscribe for shares of Common Stock duly convened and held and
passed by a majority consisting of warrant holders entitled to subscribe
for not less than 50 per cent of the shares of Common Stock which are
subject to outstanding warrants;
	 
	 	 	“Exercise Period” means the period of 4 years commencing one year from
the date of this Agreement;
	 
	 	 	“Exercise Price” means a price of 105% of the Market Price;
	 
	 	 	“Fee” means the corporate finance fee payable by the Company to the
Lender in accordance with Clause 16;
	 
	 	 	“Initial Default Period” means a period of one month commencing on the
date of expiry of either Term A or Term B as the case may be;
	 
	 	 	“Interest Rate” means seven and a half per cent (7.5%) per annum;
	 
	 	 	“Market Price” means $0.60;
	 
	 	 	“New Securities” means the shares of Common Stock issued to the Lender
upon conversion of the Additional Loan in accordance with Clause 5;
	 
	 	 	“Original Loan” has the meaning ascribed to it in Recital (A);
	 
	 	 	“Penalty Interest Rate” means twenty per cent (20%) per annum;
	 
	 	 	“Regulation S” means Regulation S promulgated under the Securities Act;
	 
	 	 	“Rules and Regulations” means the rules and regulations adopted by the
Commission under either the Securities Act or the Exchange Act, as
applicable;
	 
	 	 	“Schedule” means the schedule in three parts attached to and forming
part of this Agreement;
	 
	 	 	“Securities Act” means the United States Securities Act of 1933, as
amended;
	 
	 	 	“Subsidiary” means, for the purposes of Clause 13, Ninotsminda Oil
Company Limited or such other subsidiary of the Company which is a party
to an oil sales contract in relation to the sale of the Profit Oil (as
defined in the PSC) from time to time;
	 
	 	 	“Term A” means a period of one year and one day commencing on the date
of draw down by the Company of the Loan or any part thereof;
	 
	 	 	“Term B” means a period of two years and one day commencing on the date
of drawdown by the Company of the Additional Loan or any part thereof;
	 
	 	 	“Warrant” means a warrant to subscribe for the Warrant Shares pursuant
to Clause 6.1;
	 
	 	 	“Warrant Certificate” means a certificate in the form set out in Part 1
of the Schedule; and
	 
	 	 	“Warrant Shares” means up to 2,000,0000 shares of Common Stock issuable
upon exercise of the Warrant.
	 
	1.2	 	In this Agreement, unless otherwise specified or the context otherwise
requires:-

 

 

	 	(a)	 	words importing the singular only and shall include the
plural and vice versa;
	 
	 	(b)	 	words importing any gender shall include all other genders;
	 
	 	(c)	 	reference to a Clause or Recital is to a clause or recital
of this Agreement;
	 
	 	(d)	 	reference to the Schedule is to the schedule to this
Agreement;
	 
	 	(e)	 	words importing the whole shall be treated as including a
reference to any part thereof;
	 
	 	(f)	 	reference to a “person” includes any individual, firm,
company or other body corporate wherever incorporated or
established, corporation, government, state or agency of state,
trust or foundation, or any association, partnership or
unincorporated body (whether or not having separate legal
personality) or two or more of the foregoing; and
	 
	 	(g)	 	reference to this Agreement or to any other document shall
be construed as references to this Agreement or to that other
document as modified, amended, varied, supplemented, assigned,
novated or replaced from time to time.

	1.3	 	Headings used in this Agreement shall not affect its construction or
interpretation.
	 
	1.4	 	The Schedule and Recitals form part of this Agreement and have the same
full force and effect as if expressly set out in their entirety in the
operative part of this Agreement.
	 
	2	 	THE LOAN
	 
	2.1	 	The Lender hereby agrees to advance the Loan and the Additional Loan to
the Company on the terms and subject to the conditions set out in this
Agreement.
	 
	2.2	 	The Loan was drawn down by the Company in full on or around 26th April
2004 and the Additional Loan shall be made available to the Company in
immediately available funds and the Company shall be entitled to draw down
all or any part of the Additional Loan immediately following the execution
of this Agreement.
	 
	2.3	 	The Additional Loan shall be made available and drawn down in one
tranche, and upon draw down in immediately available funds shall be wire
transferred for deposit in the Company’s bank account the details of which
are as follows:-
	 
	 	 	US Dollar Account:

Correspondent Bank:

Bankers Trust Company

1 Bankers Trust Plaza

Liberty Street

New York NY 10006

A/C No: 04082437

SWIFT: BKTRUS33

	 
	 	 	For further credit of:

CanArgo Energy Corporation USD Account

Account Number: 011-660859-360

HSBC Bank International Limited

PO Box 315

St Peter Port

Guernsey GY1 3JQ

 

 

	 	 	Channel Islands

SWIFT: MIDLJESH

	3	 	INTEREST
	 
	3.1	 	Subject to Clause 3.2, the Loan and the Additional Loan shall bear
interest at the Interest Rate. Such interest shall accrue from day to day
from the respective dates of drawdown of the Loan and the Additional Loan
until the date of payment (both dates inclusive) and shall be calculated
on the basis of actual days elapsed and a 365 day year.
	 
	3.2	 	Interest due from the Company under this Agreement shall be paid by the
Company to the Lender quarterly in arrears, the first payment being due
and payable on 31st December 2004 (the “First Interest Payment Date”).
	 
	3.3	 	Interest paid by the Company to the Lender on the First Interest Payment
Date shall include any rolled up interest accrued in respect of the Loan
for the period from 26th April 2004 until 31st December 2004 (both dates
inclusive).
	 
	3.4	 	In the event that the Company shall fail to repay the Loan and all
interest accrued thereon in full on or before the expiry of Term A then:-

	 	(a)	 	the outstanding balance of the Loan and all accrued
interest shall bear interest at the Default Interest Rate which
shall accrue from day to day from the date of the expiry of Term A
until the date of payment (both dates inclusive) during the Initial
Default Period; and
	 
	 	(b)	 	any amount of the Loan and all accrued interest which
remains outstanding following the expiry of the Initial Default
Period shall bear interest at the Penalty Interest Rate which shall
accrue from day to day from the date of the expiry of the Initial
Default Period until the date of payment (both dates inclusive) and
shall be calculated on the basis of actual days elapsed and a 365
day year.

	3.5	 	In the event that the Company shall fail to repay the Additional Loan and
all interest accrued thereon in full on or before the expiry of Term B
then:-

	 	(a)	 	the outstanding balance of the Additional Loan and all
accrued interest shall bear interest at the Default Interest Rate
which shall accrue from day to day from the date of the expiry of
Term B until the date of payment (both dates inclusive) during the
Initial Default Period; and
	 
	 	(b)	 	any amount of the Additional Loan and all accrued interest
which remains outstanding following the expiry of the Initial
Default Period shall bear interest at the Penalty Interest Rate
which shall accrue from day to day from the date of the expiry of
the Initial Default Period until the date of payment (both dates
inclusive) and shall be calculated on the basis of actual days
elapsed and a 365 day year.

	4	 	REPAYMENT
	 
	4.1	 	Repayment of the Loan
	 
	4.1.1	 	The Loan together with all interest accrued thereon shall be repaid in
full by the Company to the Lender on or before the date of expiry of Term
A. In the event that the Company raises in excess of US$10,000,000 by way
of an equity offering(s) the Loan shall be repayable within 7 days of
receipt by the Company of the proceeds of that offering.

 

 

	4.1.2	 	In the event that the Company shall be unable to repay the Loan and all
interest accrued thereon in accordance with Clause 4.1.1, the Company
hereby unconditionally and irrevocably undertakes to the Lender that it
shall use all reasonable endeavours to draw down sufficient funds from the
Cornell Facility in order to repay such sums as soon as reasonably
practicable following the expiry of Term A.
	 
	4.2	 	Repayment of Additional Loan
	 
	4.2.1	 	In the event that the Additional Loan has not previously been converted
pursuant to Clause 5, the Additional Loan together with all interest
accrued thereon shall be repaid in full by the Company to the Lender on or
before the date of expiry of the Term B.
	 
	4.2.2	 	In the event that the Company is unable to repay the Additional Loan and
all interest accrued thereon in accordance with Clause 4.2.1 and the
Additional Loan has not previously been converted in accordance with
Clause 5, the Company hereby unconditionally and irrevocably undertakes to
the Lender that it shall use all reasonable endeavours to drawdown
sufficient funds from the Cornell Facility in order to repay such sums as
soon as reasonably practicable following expiry of Term B.
	 
	5	 	CONVERSION OF ADDITIONAL LOAN
	 
	5.1	 	Subject to Clause 5.4, the Lender may require the Company to convert into
Common Stock all of the Additional Loan then outstanding together with all
accrued but unpaid interest thereon by giving not less than 30 days prior
notice in writing to the Company (the “Conversion Notice”).
	 
	5.2	 	In the event that prior to the expiry of Term B, the closing price of the
Company’s Common Stock as reported on the American Stock Exchange
Composite Transactions Tape exceeds the Market Price by 60% for a period
of 20 consecutive trading days then the Company may require the Lender to
convert into the Company’s Common Stock all of the Additional Loan then
outstanding together with all accrued but unpaid interest thereon by
giving the Lender not less than 30 days prior notice in writing (the
“Forced Conversion Notice”).
	 
	5.3	 	For the purposes of Clause 5.1 and 5.2, the number of New Securities to
be allotted and issued fully paid upon conversion to the Lender shall be
calculated by dividing the sum of the outstanding amount of the Additional
Loan together with all accrued but unpaid interest thereon by the Equity
Conversion Rate rounded down to the nearest number of whole New Securities
and such allotment and issue shall be in full satisfaction and discharge
of the Additional Loan so converted.
	 
	5.4	 	Notwithstanding the provisions of Clauses 5.1 and 5.2, the Lender and the
Company are specifically prohibited from requiring the conversion of any
sums outstanding under this Agreement into Common Stock for a period of
one year from the date of this Agreement (“Hold Period”).
	 
	5.5	 	Once the Hold Period has elapsed, the Company hereby undertakes to use
its reasonable endeavours to procure the registration of the underlying
stock for resale pursuant to the provisions of the Securities Act.
	 
	5.6	 	Upon conversion of the Additional Loan pursuant to Clause 5.1 or 5.2,
interest shall cease to accrue in relation to the Additional Loan which is
converted in respect of any period after the date of such conversion. The
Common Stock resulting from such conversion will carry the right to
receive all dividends and other distributions declared, made or paid on
the Common Stock after the applicable conversion date and will rank
otherwise pari passu in all regards with the shares of Common Stock in
issue on the date of such allotment.

 

 

	5.7	 	Once lodged a Conversion Notice or Forced Conversion Notice shall be
irrevocable save with the consent of the directors of the Company.
	 
	6	 	GRANT OF WARRANT
	 
	6.1	 	In consideration of and subject only to the Lender advancing the Loan and
the Additional Loan to the Company and other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged and confirmed, the Company hereby issues the Warrant to the
Lender to subscribe for any or all of the Warrant Shares at the Exercise
Price on the terms set out in this Agreement and the Warrant Certificate.
The Original Warrant issued by the Company to the Lender (or his nominee)
on or around 26th April 2004 shall be deemed to be cancelled and the
Lender shall deliver the Original Warrant to the Company upon execution of
this Agreement.
	 
	6.2	 	Immediately following the execution of this Agreement the Company shall
deliver to the Lender a Warrant Certificate in respect of the Warrant
Shares.
	 
	6.3	 	In the event of any capitalisation issue, rights issue, open offer,
consolidation, sub-division or reduction or other variation of share
capital by the Company the number of Warrant Shares and/or the Exercise
Price in relation to each Warrant Share may, if the Board of the Company
considers it appropriate, be adjusted in such manner as the Auditors
confirm in writing to be fair and reasonable.
	 
	6.4	 	The Company shall promptly after any adjustment has been made pursuant to
this clause give notice thereof to each Warrant Holder.
	 
	7	 	EXERCISE OF WARRANT
	 
	7.1	 	The Warrant may be exercised by the Lender or any permitted holder of any
Warrant (herein referred to as a “Holder”) at any time during the
Exercise Period.
	 
	7.2	 	The Warrant shall be exercised by the Holder by executing and delivering
to the Company the Exercise Notice intimating that he wishes to exercise
the Warrant and specifying the number of Warrant Shares which he then
wishes to subscribe for.
	 
	7.3	 	Once lodged, an Exercise Notice shall be irrevocable save with the
consent of the directors of the Company. An Exercise Notice that is
completed and lodged otherwise than in accordance with this Clause 7 shall
be of no effect.
	 
	7.4	 	On receipt of an Exercise Notice the Company shall, subject to receipt by
the Company of:-

	 	(a)	 	an amount equal to the aggregate of the Exercise Price due
in respect of the number of Warrant Shares specified in the
Exercise Notice; and
	 
	 	(b)	 	the Warrant Certificate;

	 	 	and subject to compliance by the Company with the terms of Clause 7.5,
issue and allot to the Holder the number of Warrant Shares specified in
the Exercise Notice as soon as reasonably practicable thereafter.
	 
	7.5	 	The Company hereby unconditionally and irrevocably undertakes and
confirms to the Holder that it shall, prior to the issue and allotment of
any Warrant Shares pursuant to Clause 7.4 ensure that it has complied in
all respects with the Rules and Regulations, the listing requirements of
the American Stock Exchange and the Rules of the Oslo Stock Exchange and
in order to use its reasonable efforts to ensure that the Warrant Shares
allotted

 

 

	 	 	to the Holder are freely tradable and not restricted as at the date of
issue. To the extent that it is not possible and the Warrant Shares so
issued are restricted, the Company shall use its best efforts to
register for resale the said restricted stock under the Securities Act
as soon as possible thereafter.
	 
	7.6	 	In the event that the Holder serves an Exercise Notice in respect of some
only of the Warrant Shares (the “Exercise Shares”) the Company shall at
the time of issue and allotment of the Exercise Shares issue to the Holder
a new Warrant Certificate of like tenor in respect of the balance of
Warrant Shares remaining available to the Lender under the Warrant.
	 
	8	 	REGISTER
	 
	8.1	 	The Company shall keep a register of warrants (the “Register”) at its
registered office for the time being in which shall be entered:-

	 	(a)	 	the name and address of the Holder from time to time of any
warrants;
	 
	 	(b)	 	the date at which the Holder is entered in the Register
respect of the warrant standing in his name; and
	 
	 	(c)	 	the serial number of each warrant certificate issued by the
Company and the date of issue thereof.

	8.2	 	The Holder shall be entitled at all reasonable times during normal
business hours to inspect and take copies of the Register.
	 
	9	 	LAPSE OF WARRANT
	 
	9.1	 	Time shall be of the essence for the purposes of the exercise of the
Warrant.
	 
	9.2	 	To the extent not already exercised before the expiry of the Exercise
Period, the Warrant shall automatically lapse on the expiry of the
Exercise Period.
	 
	10	 	RANKING OF WARRANT SHARES
	 
	10.1	 	Warrant Shares issued and allotted to the Holder pursuant to Clause 7.4
will rank for all dividends or other distributions declared on the shares
of Common Stock after the date of allotment of such shares (but not
before such date) and otherwise pari passu in all respects with the shares
of Common Stock in issue on the date of such allotment.
	 
	11	 	VARIATION OF RIGHTS
	 
	11.1	 	All or any of the rights for the time being attached to the Warrant may
from time to time (whether or not the Company is being wound up) be
altered or abrogated with the consent in writing of the Company and with
either the consent in writing of all registered Holders entitled to
subscribe for not less than 50 per cent of the shares of Common Stock
which are subject to outstanding warrants or with the sanction of an
Extraordinary Resolution of the Holders.
	 
	12	 	LOST OR DAMAGED WARRANT CERTIFICATES
	 
	12.1	 	If any Warrant Certificate is worn out or defaced then upon production of
such certificate to the directors of the Company they may cancel the same
and may issue a new certificate in lieu thereof.

 

 

	12.2	 	If any Warrant Certificate is lost or destroyed then upon proof thereof
to the reasonable satisfaction of the directors of the Company (or in
default of proof, on such indemnity as the directors of the Company may
deem adequate, being given) a new certificate in lieu thereof may be given
to the Holder free of charge (save as regards any payment pursuant to any
such indemnity).
	 
	12.3	 	An entry as to the issue of any new Warrant Certificate and indemnity (if
any) shall be made in the Register.
	 
	13	 	SECURITY
	 
	 	 	As security for the Loan the Company will, within three months of the
date hereof, deliver or procure the delivery of a lien over 50% of the
revenues received by the Company through its Subsidiary from the sale of
its Profit Oil as defined in the Production Sharing Agreement dated 15th
February 1996 (the “PSC”) to which it is Party in relation to inter alia
the Ninotsminda Field in Georgia. Such security shall only remain in
place while the Loan is outstanding and shall be immediately discharged
in the event that the Loan is repaid in accordance with Clause 4.1.1.
	 
	14	 	COMPANY UNDERTAKINGS
	 
	14.1	 	The Company undertakes to the Holder that it shall throughout the
Exercise Period keep available for issue sufficient authorised but
unissued shares of Common Stock necessary to satisfy in full all
subscription rights exercisable by the Holder pursuant to the Warrant.
	 
	14.2	 	If an offer or invitation is made to all holders of shares of Common
Stock to acquire the whole or any part of such shares and the Company
becomes aware that as a result of such offer or invitation the right to
cast a majority of votes which may ordinarily be cast at a general meeting
of the Company has become or may become vested in the offeror and/or
persons acting in concert with the offeror, the Company shall, so far as
it is able, procure that a like offer or invitation is made or extended at
the same time to the Holder as if the Warrant had been exercised in full
and as if the Warrant Shares issued pursuant to such exercise had been
issued immediately prior to the record date for such an offer or
invitation.
	 
	14.3	 	For so long as the Warrant shall remain exercisable by the Holder the
Company shall send to each registered Holder a copy of every document sent
to all the holders of shares of Common Stock at the same time as it is
sent to such holders.
	 
	15	 	REPRESENTATIONS AND WARRANTIES
	 
	 	 	The Lender by signing this Agreement makes the representations and
warranties set out in Part 3 of the Schedule.
	 
	16	 	FEES
	 
	 	 	In consideration for the Lender advancing to the Company the additional
sum of $1,000,000 pursuant to Clause 2, the Company shall pay to the
Lender a non-refundable corporate finance fee of $50,000 (the “Fee”).
	 
	17	 	NOTICE
	 
	17.1	 	Any notice to be given under, or in connection with the matters
contemplated by, this Agreement shall be in writing and signed by or on
behalf of the party giving it and shall be served by delivering it
personally or sending it by pre-paid recorded delivery or registered post
or by facsimile to the address and for the attention of the relevant party
set out below

 

 

	 	 	(or as otherwise notified by that party hereunder). Any such notice
shall be deemed to have been received:-

	 	(a)	 	if delivered personally, at the time of delivery; and
	 
	 	(b)	 	in the case of pre-paid recorded delivery or registered
post, 48 hours from the date of posting;
	 
	 	(c)	 	in the case of fax, at the time of transmission;

	 	 	Provided that if deemed receipt occurs before 9am on a business day the
notice shall be deemed to have been received at 9am on that day and if
deemed receipt occurs after 5pm on a business day, or on a day which is
not a business day, the notice shall be deemed to have been received at
9am on the next business day. For the purpose of this Clause 17
“business day” means a day, other than a Saturday or a Sunday, on which
clearing banks are open for commercial business in London.
	 
	17.2	 	The addresses and facsimile numbers of the parties for the purposes of
this Clause 17 are:-

	 	 	 
	Company:

	 	CanArgo Energy Corporation
	 
	 	 
	Address:

	 	P.O. Box 291, St Peter Port, Guernsey GY1 3RR
	 
	 	 
	For the attention of:

	 	Dr David Robson
	 
	 	 
	Fax number:

	 	01481 729982
	 
	 	 
	Lender:

	 	Salahi Ozturk
	 
	 	 
	Address:

	 	30, Tuna Street, Lefkosa, Mersin, 10, Turkey
	 
	 	 
	Fax number:

	 	+41 22 73 90415

		 	or such other address or facsimile number as may be notified in writing
from time to time by the relevant party to the other party.
	 
	17.3	 	For the avoidance of doubt notice given under this Agreement shall not be
validly served if sent by e-mail.
	 
	18	 	FURTHER ASSURANCE
	 
	 	 	The parties shall at their own cost do or procure the doing of all such
acts and things and/or execute or procure the execution of all such
documents as are reasonably required to give effect to the provisions of
this Agreement.
	 
	19	 	ASSIGNMENT
	 
	 	 	Neither party shall be entitled to assign in whole or in part any rights
and/or obligations arising under this Agreement (including any
assignment of the Warrant or any interest therein by Lender) to a third
party without the prior written consent of the other party.
	 
	20	 	ENTIRE AGREEMENT

 

 

	 	 	This Agreement constitutes the entire agreement between the parties with
respect to the matters dealt with herein and supersedes any previous
agreement between the parties in relation to such matters.
	 
	21	 	VARIATION
	 
	 	 	No variation of this Agreement shall be valid or effective unless made
by an instrument in writing signed by both of the parties.
	 
	22	 	WAIVER
	 
	 	 	No waiver by either party of any of the requirements hereof or of any of
its rights hereunder shall be effective unless given in writing and
signed by or on behalf of that party and no forbearance, delay or
indulgence by either party in enforcing the provisions of this Agreement
shall prejudice or restrict the rights of that party nor shall any
waiver by that party of any of the requirements hereof or any of its
rights hereunder release the other from full performance of its
remaining obligations stated herein.
	 
	23	 	SEVERABILITY
	 
	 	 	Each provision of this Agreement shall be construed separately and (save
as otherwise expressly provided herein) none of the provisions hereof
shall limit or govern the extent, application or construction of any
other of them and notwithstanding that any provision of this Agreement
may prove to be illegal or unenforceable the remaining provisions of
this Agreement shall continue in full force and effect.
	 
	24	 	COUNTERPARTS
	 
	 	 	This Agreement may be executed in any number of counterparts and by each
of the parties on separate counterparts each of which when executed and
delivered shall be deemed to be an original, but all the counterparts
together shall constitute one and the same agreement.
	 
	25	 	LAW AND JURISDICTION
	 
	25.1	 	This Agreement shall be governed by and construed in accordance with the
law of England.
	 
	25.2	 	Each party hereby submits to the non-exclusive jurisdiction of the Courts
of England as regards any claim, dispute or matter arising out of or in
connection with this Agreement and its implementation and effect.

IN WITNESS of which the parties have executed and delivered this document as a
deed on the date first before written.

 

 

SCHEDULE

Part 1

Warrant Certificate

CANARGO ENERGY CORPORATION (the “Company”)

P.O. Box 291

Commerce House

Les Banques

St Peter Port

GUERNSEY

GY1 3RR

Warrant representing subscription rights for shares of common stock of par
value of US$0.10 in the capital of the Company

This is to certify that [Salahi Ozturk of 30, Tuna Street, Lefkosa, Mersin, 10,
Turkey] (the “Holder”) is the registered holder of a Warrant which entitles the
holder to subscribe for 2,000,000 shares of common stock of par value of
US$0.10 in the capital of the Company fully paid (the “Warrant Shares”) at a
price of 105% of the Market Price (as defined in the agreement between the
Company and Salahi Ozturk dated [                  ] (the
“Agreement”)) per Warrant Share subject to the terms of the Agreement, the
relevant provisions of which are incorporated herein by reference as if fully
set forth herein. Subject as aforesaid the Holder shall be entitled to
subscribe for the Warrant Shares upon exercise of the Warrant and may exercise
the Warrant in whole or in part and from time to time.

THE WARRANTS REPRESENTED HEREBY AND THE COMMON STOCK ISSUABLE UPON EXERCISE OF
THE WARRANTS (COLLECTIVELY, THE “WARRANT SECURITIES”), HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR REGISTERED OR
QUALIFIED UNDER THE SECURITIES LAWS OF ANY OTHER JURISDICTION IN RELIANCE UPON
EXEMPTIONS FROM SUCH REGISTRATION AFFORDED UNDER THE ACT AND APPLICABLE
SECURITIES LAWS OF OTHER JURISDICTIONS. THE WARRANT SECURITIES REPRESENTED
HEREBY MAY NOT BE OFFERED, SOLD, HYPOTHECATED OR OTHERWISE TRANSFERRED UNLESS
REGISTERED UNDER THE ACT OR AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF
THE ACT IS APPLICABLE (IN WHICH CASE THE ISSUER SHALL HAVE RECEIVED AN OPINION
OF COUNSEL IN FORM AND SUBSTANCE REASONABLY SATISFACTORY TO THE ISSUER TO SUCH
EFFECT) AND THE PROVISIONS OF ALL OTHER APPLICABLE SECURITIES LAWS ARE
OBSERVED.

THE WARRANTS REPRESENTED BY THIS CERTIFICATE AND THE COMMON STOCK ISSUABLE UPON
EXERCISE OF THE WARRANTS HAVE NOT BEEN REGISTERED UNDER THE ACT IN RELIANCE
UPON THE PROVISIONS OF REGULATION S PROMULGATED UNDER SAID ACT. ACCORDINGLY,
THE WARRANTS MAY NOT BE EXERCISED IN THE “UNITED STATES” OR BY OR ON BEHALF OF
ANY “U.S PERSON” AND THE WARRANT SECURITIES MAY NOT BE DELIVERED WITHIN THE
UNITED STATES OTHER THAN IN OFFERINGS DEEMED TO MEET THE DEFINITION OF AN
“OFFSHORE TRANSACTION” (AS ALL SUCH TERMS ARE DEFINED IN REGULATION S) EXCEPT
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SAID ACT OR PURSUANT TO
AN EXEMPTION FROM REGISTRATION UNDER SAID ACT.

Dated

EXECUTED AND DELIVERED AS A DEED

by CANARGO ENERGY CORPORATION acting by

	 	 	 
	_____________________________

	 	Director
	_____________________________

	 	Full Name
	_____________________________

	 	Director/Secretary
	_____________________________

	 	Full Name

Note: No transfer of any or all of the subscription rights represented by this
Warrant will be registered without the prior written consent of the Company and
production of this Warrant or an indemnity satisfactory to the Company.

 

 

Part 2

Exercise Notice

	To:	 	The Directors

Canargo Energy Corporation (the “Company”)
	 
	From:	 	[Warrantholder]

[address]
	 
	Date:	 	[          ] 200[ ]

	1	 	I/We, the registered holder(s) of this Warrant hereby:-
	 
	1.1	 	give notice of my/our wish to exercise my/our subscription rights in respect [ ] shares of common stock of par value
of US$0.10 in the capital of the
Company (the “Warrant Shares”) in
accordance with the particulars
below;
	 
	1.2	 	certify that (i) the undersigned is not a “U.S. person” (as defined in
Regulation S promulgated under the Securities Act of 1933, as amended),
(ii) the undersigned is not exercising any Warrants on behalf of a U.S.
person, (iii) no U.S. person has any interest in the Warrants being
exercised or the securities to be issued upon their exercise, and (iv)
that the undersigned is exercising the Warrants outside the United States.
	 
	1.3	 	confirm that US$[ ] has been transferred to the bank account notified to
me/us by the Company being payment in full at a price of [ ] per share for
the total number of Warrant Shares for which I/we wish to subscribe;
	 
	1.4	 	request that all of such Warrant Shares be registered in my/our name(s)
and authorise the entry of my/our name(s) in the register of members in
respect thereof;
	 
	1.5	 	authorise the despatch of the Certificate in respect of the Warrant
Shares to be allotted to me/us and a Warrant in my/our name(s) for any
balance of my/our subscription rights remaining exercisable by post at
my/our risk to the address shown above.

	 	 	 	 	 
	_______________________________

	 	 	_______________________________	 
	 
	_______________________________

	 	 	_______________________________	 
	 
	Signature(s) of registered Warrantholder(s)
	 	Date(s)

 

 

Part 3

Representations and Warranties

The Lender hereby represents, warrants and covenants to the Company as follows:

	1.	 	Compliance with United States Securities Laws

The Lender understands and acknowledges that (a) the Warrants and the Warrants
Shares to be issued in respect thereof and the shares of Common Stock (the
“Conversion Stock”) to be issued upon conversion of the Loan and Additional
Loan (collectively, the “Loans”) have not been and, except as provided in the
Agreement, will not be registered under the Securities Act, and may not be
offered or sold in the United States or to, or for the account or benefit of,
any “U.S. person” (as defined in Regulation S), unless such Warrants or, in the
event that the Warrants have been exercised, the Warrant Shares or the
Conversion Stock, as the case may be, are registered under the US Securities
Act and any applicable state securities or blue sky laws or such offer or sale
is made pursuant to exemptions from the registration requirements of such laws,
(b) the Warrants and upon exercise, the Warrant shares, and upon conversion of
the Loans, the conversion Stock, are being issued pursuant to the terms of
Regulation S under the Securities Act, which permits securities to be sold to
non-“U.S. persons” in “offshore transactions” (as defined in Regulation S),
subject to certain terms and conditions, (c) the Company is relying upon the
truth and accuracy of the representations, warranties, agreements,
acknowledgements and understandings of the Lender set forth herein in order to
determine the availability of the exemptions from registration under the
Securities Act relied upon by the Company and the suitability of the Lender to
acquire the Warrant, Warrants Shares and the Conversion Stock; (d) the Warrants
have been issued, and the Warrant Shares and the Conversion Stock will be
issued, to the Lender in an “offshore transaction” and Lender has not engaged
in, nor will the Lender engage in any “directed selling efforts”, as each such
term is defined in Regulation S, and (e) in the view of the Commission, the
statutory basis for the exemption from registration claimed for this issue
would not be present if the issue of the Warrants, Warrant Shares and
Conversion Stock although in technical compliance with Regulation S, is part of
a plan or scheme to evade the registration provisions of the Securities Act
and, accordingly, the Lender is making the representations and warranties in
this schedule to evidence its compliance with the applicable requirements of
the Securities Act and that its participation in such offering is not a part of
any such plan or scheme.

	2.	 	Status of Lender.

The Lender is receiving the Warrants and subsequently purchasing the Warrant
Shares and, upon conversion of the Loans, the Conversion Stock, for its own
account or for persons or accounts as to which it exercises investment
discretion. Neither the Lender nor such person or account is a “U.S. person”
(as defined in Regulation S) and neither the Lender nor such other person or
account has any present intention to sell either the Warrants or, upon exercise
of the Warrants, the Warrant Shares, or upon conversion of the Loans, the
Conversion Stock, in the United States or to a U.S. person or for the account
or benefit of a U.S. person either now or promptly after expiration of the
first anniversary of the date of delivery of the Warrants or, with respect to
the Loans, the first anniversary of the execution and delivery of the Agreement
(“Restricted Period”).

	3.	 	Restrictions on Re-sale
	 
	(a)	 	During the Restricted Period, Lender shall not engage in any activity for
the purpose of, or which may reasonably be expected to have the effect of,
conditioning the market in the United States for the Warrants or the
underlying Warrant Shares or the Conversion Stock,

 

 

	 	 	or directly or indirectly offer, sell, transfer, pledge or otherwise
dispose of the Warrants or the Warrant Shares, or Conversion Stock or
any interest therein in the United States or to, or for the account or
benefit of, a “U.S. person” (as defined in Regulation S). The Lender
hereby also agrees that it shall not, either directly or indirectly,
sell short any shares of Common Stock in the over-the-counter market or
otherwise in the United States or engage in any other hedging activities
in the United States during the Restricted Period and it has not made
any such sale in anticipation of acquiring the Warrant Shares or the
Conversion Stock.
	 	 	 
	 
	(b)	 	The Lender will not, directly or indirectly, voluntarily offer, sell,
pledge, transfer or otherwise dispose of (or solicit any offers to buy,
purchase or otherwise acquire or take a pledge of) its rights under this
Agreement or the Warrants or any interest therein, including the Warrant
Shares and Conversion Stock otherwise than in compliance with the
Securities Act, any applicable state securities or blue sky laws and any
applicable securities laws of jurisdictions outside the United States, and
the rules and regulations promulgated thereunder.

 

 

EXECUTED AND DELIVERED AS A DEED

by CANARGO ENERGY CORPORATION acting by

	 	 	 
	/s/: D Robson

	 	Director
	Dr David Robson

	 	Full Name
	/s/: E A Landles

	 	Secretary
	Elizabeth Anne Landles

	 	Full Name
	 
	 	 
	EXECUTED AND DELIVERED AS A DEED
	by SALAHI OZTURK
	 	 
	/s/: S Ozturk
	 	 
	before this witness
	 	 
	/s/: T Smales

	 	Witness
	Tamara Smales

	 	Full Name
	68 Ralph Court

	 	Address
	Queensway, London

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