Document:

EXHIBIT
      10.5

    

    

    SOP07025

    

    THIS
      OPTION HAS BEEN ISSUED PURSUANT TO EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS
      OF THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND THE QUALIFICATION
      REQUIREMENTS OF APPLICABLE STATE SECURITIES LAWS (THE "LAWS"). IT IS UNLAWFUL
      TO
      EXERCISE, SELL, PLEDGE OR OTHERWISE DISPOSE OF THIS OPTION, OR ANY INTEREST
      THEREIN, OR RECEIVE ANY CONSIDERATION THEREFOR, IN THE ABSENCE OF AN EFFECTIVE
      REGISTRATION STATEMENT UNDER THE ACT AND QUALIFICATION UNDER THE LAWS, UNLESS
      EXEMPTIONS FROM SUCH REGISTRATION AND QUALIFICATION REQUIREMENTS ARE
      AVAILABLE.

    

    THIS
      OPTION MAY BE EXERCISED ONLY
      IN
      ACCORDANCE WITH THE TERMS OF THIS STOCK OPTION AGREEMENT.

    

    

    BOARD
      MEMBER - NONSTATUTORY STOCK OPTION AGREEMENT

    

    

    NutraCea,
      a California corporation (the "Company"), hereby grants to WESLEY CLARK (the
      "Optionee"), an option (the "Option") to purchase a total of 35,000 shares
      of
      common stock of the Company (the "Common Stock") at an exercise price (the
      "Exercise Price") equal to $3.76 per share, which is equal to the fair market
      value of the Company's Common Stock on the date of the grant, in all respects
      subject to the terms, definitions and provisions of this Nonstatutory Stock
      Option Agreement (the "Agreement"). Date of Grant: May 1,
      2007.

    

    1. Nature
      of the Option.
      The
      Option is intended to be a nonstatutory option and not
      an
      incentive stock option within the meaning of Section 422 of the Internal Revenue
      Code of 1986, as amended (the "Code").

     

    2. Payment
      of Exercise Price.

     

    (a) Method
      of Payment.
      Payment
      of the Exercise Price for shares purchased upon exercise of the Option shall
      be
      made (i) by delivery to the Company of cash or a check to the order of the
      Company in an amount equal to the purchase price of such shares;
      (ii) subject to the consent of the Company, by delivery to the Company of
      shares of Common Stock of the Company then owned by the Optionee having a fair
      market value equal in amount to the purchase price of such shares in accordance
      with Section 2(b); or, (iii) by any other means approved by the Board of
      Directors and which is consistent with applicable laws and regulations
      (including, without limitation, the provisions of Rule 16b-3 under the
      Securities Exchange Act of 1934 and Regulation T promulgated by the Federal
      Reserve Board); or (iv) by any combination of such methods of
      payment.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (b) Method
      of Payment - Public Market.
      In the
      event there exists a public market for the Company's Common Stock on the date
      of
      exercise, payment of the exercise price may be made by surrender of shares
      of
      the Company's Common Stock. In this case payment shall be made as
      follows:

     

    (i) Optionee
      shall deliver to the Secretary of the Company a written notice which shall
      set
      forth the portion of the purchase price the Optionee wishes to pay with Common
      Stock, and the number of shares of such Common Stock the Optionee intends to
      surrender pursuant to the exercise of this Option, which shall be determined
      by
      dividing the aforementioned portion of the purchase price by the average of
      the
      last reported bid and asked prices per share of Common Stock of the Company,
      as
      reported in The
      Wall Street Journal
      (or, if
      not so reported, as otherwise reported by the National Association of Securities
      Dealers Automated Quotation (NASDAQ) System or, in the event the Common Stock
      is
      listed on a national securities exchange, or on the NASDAQ Small-Cap Market
      of
      any successor national market system, the closing price of Common Stock of
      the
      Company on such exchange as reported in The
      Wall Street Journal)
      for the
      day on which the notice of exercise is sent or delivered;

     

    (ii) Fractional
      shares shall be disregarded and the Optionee shall pay in cash an amount equal
      to such fraction multiplied by the price determined under subparagraph
      (i);

     

    (iii) The
      written notice shall be accompanied by a duly endorsed blank stock power with
      respect to the number of Shares set forth in the notice, and the certificate(s)
      representing said Shares shall be delivered to the Company at its principal
      offices within three (3) working days from the date of the notice of
      exercise;

     

    (iv) The
      Optionee hereby authorizes and directs the Secretary of the Company to transfer
      so many of the Shares represented by such certificate(s) as are necessary to
      pay
      the purchase price in accordance with the provisions herein;

     

    (v) If
      any
      such transfer of Shares requires the consent of the California Commissioner
      of
      Corporations or of some other agency under the securities laws of any other
      state, or an opinion of counsel for the Company or Optionee that such transfer
      may be effected under applicable federal and state securities laws, the time
      periods specified herein shall be extended for such periods as the necessary
      request for consent to transfer is pending before said commissioner or other
      agency, or until counsel renders such an opinion, as the case may be. All
      parties agree to cooperate in making such request for transfer, or in obtaining
      such opinion of counsel, and no transfer shall be effected without such consent
      or opinion if required by law; and

     

    (vi) Notwithstanding
      any other provisions herein, the Optionee shall only be permitted to pay the
      purchase price with shares of the Company's Common Stock owned by him as of
      the
      exercise date in the manner and within the time periods allowed under Rule
      16b-3
      promulgated under the Securities Exchange Act of 1934 as such regulation is
      presently constituted, as it is amended from time to time, and as it is
      interpreted now or hereafter by the Securities and Exchange Commission and
      any
      such shares have been held by the Optionee for not less than six (6)
      months.

     

    
      
         

      

      
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    3. Exercise
      of Option.
      The
      Option shall vest and become exercisable during its term, subject to the
      provisions of Section 5 below, as follows:

     

    (a) Vesting
      and Right to Exercise.

     

    (i) The
      Option hereby granted shall vest and become exercisable on a prorated basis
      over
      a twelve-month period beginning June 1, 2007. The option will be fully vested
      on
      June 1, 2008.

     

    Subject
      to the provisions of subparagraph (ii) and (iii) below, the Optionee can
      exercise any portion of the Option, which has vested until the expiration of
      the
      Option term.

    

    If
      a
      "change of control" of the Company should occur, as defined below, then the
      Option shall immediately vest and become exercisable in full. For purposes
      of
      the foregoing provision, a "change in control" means the occurrence of any
      of
      the following:

    

    (A) any
      "person," as such term is used in Sections 13(d) and 14(d) of the
      Securities Exchange Act of 1934, as emended (the "Exchange Act") (other than
      the
      Company or its existing shareholders) is or becomes the "beneficial owner"
      (as
      defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of
      securities of the Company (or a successor to the Company) representing 50%
      or
      more of the combined voting power of the then outstanding securities of the
      Company or such successor;

    

    (B) the
      dissolution of the Company or liquidation of more than 50% or more in value
      of
      the assets of the Company, (ii) or any merger or reorganization of the Company
      whether or not another entity is the survivor, (iii) a transaction (other than
      the initial public offering of the Company's shares) pursuant to which holders,
      as a group, of all of the shares of the Company outstanding before the
      transaction, hold, as a group, less than 50% of the combined voting power of
      the
      Company or any successor company outstanding after the transaction, or (iv)
      any
      other event or series of events which the Optionee determines, in his
      discretion, would materially alter the structure of the Company or its
      ownership.

    

    (ii) In
      the
      event of the Optionee's death, disability, other termination of employment
      or
      ceases to be a member of the Board prior to exercise, the exercisability of
      the
      Option shall be governed by Section 5 below.

     

    (iii) The
      Option may be exercised in whole or in part but may not be exercised as to
      fractional shares.

     

    (b) Method
      of Exercise.
      In
      order to exercise any portion of the Option, the Optionee shall execute and
      deliver to the Chief Financial Officer of the Company the Notice of Exercise
      of
      Stock Option in the form attached hereto as Exhibit "A," together with the
      Consent of Spouse. The Notice of Exercise must be accompanied by payment in
      full
      of the aggregate purchase price for the Shares to be purchased in the type
      of
      consideration set forth in Section 2. The Notice of Exercise may be delivered
      to
      the Company at any time. The certificate(s) for the Shares as to which the
      Option has been exercised shall be registered in the name of Optionee or his
      designee.

     

    
      
         

      

      
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    (c) Restrictions
      on Exercise.
      This
      Option may not be exercised if the issuance of the shares upon such exercise
      or
      the method of payment of consideration for such shares would constitute a
      violation of any applicable federal or state securities law or any other law
      or
      regulation. As a condition to the exercise of the Option, the Company may
      require the Optionee to make any representation or warranty to the Company
      at
      the time of exercise of the Option as in the opinion of legal counsel for the
      Company may be required by any applicable law or regulation, including the
      execution and delivery of an appropriate representation statement. The stock
      certificate(s) for the Shares issued upon exercise of the Option may bear
      appropriate legends restricting transfer.

     

    (d) Delivery
      of Certificates.
      The
      Company shall deliver the certificate(s) for the Shares issued upon exercise
      of
      the Option to the Optionee as soon as is practicable; provided, however, that
      if
      any law or regulation requires the Company to take action with respect to such
      shares before the issuance thereof, including, without limitation, actions taken
      pursuant to Section 6 below, then the date of delivery of such Shares shall
      be
      extended for a period necessary to take such action.

     

    4. Non-Transferability
      of Option.
      This
      Option may be exercised during the lifetime of the Optionee only by the Optionee
      and may not be transferred in any manner other than by will or by the laws
      of
      descent and distribution. The terms of this Option shall be binding upon the
      executors, administrators, heirs and successors of the Optionee.

     

    5. Term
      of the Option.
      Except
      as otherwise provided in this Agreement, to the extent not previously exercised,
      the right to exercise the Option shall terminate on the tenth (10th) anniversary
      of the date of grant. Notwithstanding the foregoing, if an Optionee ceases
      to be
      a Board Member of the Company for any reason, except death and disability,
      he or
      she may, but only within ninety (90) days after the date he or she ceases to
      be
      a Board Member of the Company, exercise his or her Option to the extent that
      he
      or she was entitled to exercise it at the date of such termination, and in
      the
      case of the Optionee's death or disability, the Optionee (or the Administrator
      or Executor or other Representative of the Optionee's estate) may, but only
      within one (1) year after the date he or she ceases to be a Board Member of
      the
      Company due to death or disability, exercise his or her Option to the extent
      that he or she was entitled to exercise it at the date of such termination;
      provided, however that in no event may the Option be exercised after the ten
      (10) year term has expired. To the extent that the Optionee was not entitled
      to
      exercise an Option at the date of such termination, or if he or she does not
      exercise such Option (which he or she was entitled to exercise) within the
      time
      specified herein, the Option shall terminate.

     

    6. Adjustments
      Upon /Changes in Capitalization; Other Adjustments.
      Subject
      to any required action by the shareholders of the Company, the number of Shares
      and the Exercise Price shall be proportionately adjusted for any increase or
      decrease in the number of issued shares of Common Stock resulting from a stock
      split, reverse stock split, combination, reclassification, the payment of a
      stock dividend on the Common Stock or any other increase or decrease in the
      number of shares of Common Stock of the Company effected without receipt of
      consideration by the Company; provided, however, that conversion of any
      convertible securities of the Company shall not be deemed to have been "effected
      without receipt of consideration." Such adjustment shall be made by the Board,
      whose determination in that respect shall be final, binding and conclusive.
      Except as expressly provided herein, no issue by the Company of shares of stock
      of any class, or securities convertible into shares of stock of any class,
      shall
      affect and no adjustment by reason thereof shall be made with respect to, the
      number of shares subject to, or the Exercise Price of, this Option.

     

    
      
         

      

      
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    The
      Board
      may, if it so determines in the exercise of its sole discretion, also make
      provision for adjusting the number of shares, as well as the Exercise Price,
      in
      the event that the Company effects one or more reorganizations,
      recapitalizations, rights offerings, or other increases or reductions of shares
      of its outstanding common stock, and in the event of the Company being
      consolidated with or merged into any other corporation; provided, however,
      that
      in no event shall the Optionee be adversely affected by such
      adjustment.

     

    The
      Board
      may, if it so determines in the exercise of its sole discretion, also make
      provision for changing, modifying, amending or adjusting any of the terms of
      this Option solely in order for the Company to perfect a significant financing;
      provided, however, that in no event shall the Optionee be adversely affected
      by
      such adjustment.

     

    7. Rights
      of Shareholder.
      Optionee shall have no rights as a shareholder with respect to the shares until
      the date of the issuance or the transfer to the Optionee of the certificate(s)
      for such shares and only after the Exercise Price for such shares has been
      paid
      in full.

     

    8. Amendment.
      Except
      as set forth in Section 6, this Agreement may not be amended without the written
      consent of the Optionee.

     

    9. Income
      Tax Withholding.
      The
      Optionee authorizes the Company to withhold, in accordance with applicable
      law
      from any compensation payable to him or her, any taxes required to be withheld
      by federal, state or local laws as a result of the exercise of this Option.
      Furthermore, in the event of any determination that the Company has failed
      to
      withhold a sum sufficient to pay all withholding taxes due in connection with
      the exercise of this Option, the Optionee agrees to pay the Company the amount
      of such deficiency in cash within five (5) days after receiving a written demand
      from the Company to do so, whether or not Optionee is an employee or director
      of
      the Company at that time.

     

    10. Investment
      Representations; Legends.

     

    (a) Representations.
      The
      Optionee represents, warrants and covenants that:

     

    (i) Any
      shares purchased upon exercise of this Option shall be acquired for the
      Optionee's account for investment only, and not with a view to, or for sale
      in
      connection with, any distribution of the shares in violation of the Securities
      Act of 1933 (the "Securities Act"), or any rule or regulation under the
      Securities Act.

     

    
      
         

      

      
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    (ii) The
      Optionee has had such opportunity as he or she has deemed adequate to obtain
      from representatives of the Company such information as is necessary to permit
      the Optionee to evaluate the merits and risks of his or her investment in the
      Company.

     

    (iii) The
      Optionee is able to bear the economic risk of the holding of such shares
      acquired pursuant to the exercise of this Option for an indefinite
      period.

     

    (iv) The
      Optionee understands that the Shares acquired pursuant to the exercise of this
      Option are not registered under the Securities Act and are "restricted
      securities" within the meaning of Rule 144 under the Securities Act and may
      not
      be transferred, sold or otherwise disposed of in the absence of an effective
      registration statement with respect to the Shares filed and made effective
      under
      the Securities Act of 1933, or an opinion of counsel satisfactory to the Company
      to the effect that registration under such Act is not required.

     

    By
      making
      payment upon exercise of this Option, the Optionee shall be deemed to have
      reaffirmed, as of the date of such payment, the representations made in this
      Section 10.

    

    (b) Legends
      of Stock Certificate.
      All
      stock certificates representing share of Common Stock issued to the Optionee
      upon exercise of this Option shall have affixed thereto legend(s) substantially
      in the following forms, in addition to any other legends required by applicable
      state law:

    

    "THE
      SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
      THE SECURITIES ACT OF 1933 AND MAY NOT BE TRANSFERRED, SOLD OR OTHERWISE
      DISPOSED OF IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT WITH RESPECT
      TO THE SHARES EVIDENCED BY THIS CERTIFICATE, FILED AND MADE EFFECTIVE UNDER
      THE
      SECURITIES ACT OF 1933, OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY
      TO
      THE EFFECT THAT REGISTRATION UNDER SUCH ACT IS NOT REQUIRED."

     

    DATE
      OF
      GRANT: May 1, 2007

     

    
      	 	 	 
	 	NUTRACEA
	 
 	 
 	 
 
	 	By:  	 
	 	
              
Bradley
              D. Edson, Chief Executive Officer
	 	 

    

    
      
         

      

      
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    The
      Optionee acknowledges receipt of a copy of the Plan, and represents that he
      or
      she is familiar with the terms and provisions thereof, and hereby accepts this
      Option subject to all of the terms and provisions thereof. The Optionee hereby
      agrees to accept as binding, conclusive and final all decisions or
      interpretations of the Board of Directors of NutraCea upon any questions arising
      under such Agreement.

    

    Dated: ________________________

    

     

    
      	 	
              ____________________________________
                

              WESLEY
                CLARK

              

              ADDRESS:
                ___________________________ 

              

              ____________________________________
                

              

              ____________________________________
                

              

              PHONE:
                _____________________________ 

              

              SSN: ________________________________

            

    

     

    

    

    
      
         

      

      
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    CONSENT
      OF SPOUSE

    

    

    I,
      ________________________, spouse of the Optionee who executed the foregoing
      Agreement attached hereto, hereby agree that my spouse's interest in the shares
      of Common Stock of NutraCea subject to said Agreement shall be irrevocably
      bound
      by the Agreement's terms. I agree to accept as binding, conclusive and final
      all
      decisions or interpretations of the Board of Directors of NutraCea upon any
      questions arising under such Agreement. I further agree that my community
      property interest in such Shares, if any, shall similarly be bound by said
      Agreement and that such consent is binding upon my executors, administrators,
      heirs and assigns. I agree to execute and deliver such documents as may be
      necessary to carry out the intent of said Agreement and this
      consent.

    

    Dated: ________________________

    

    

     

    
      	 	
              ____________________________________ 

              Signature

            
	 	 
	 	
              ____________________________________ 

              Print Name

            

    

     

     

    
      
         

      

      
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    EXHIBIT
      A

    

    
      	TO:	
              NutraCea

            

    

    5090
      North 40th
      Street,
      Suite 400

    Phoenix,
      AZ 85018

     

    SUBJECT: NOTICE
      OF
      EXERCISE OF STOCK OPTIONS

    

    

    With
      respect to the stock option granted to the undersigned by NutraCea, (the
“Company”) on (grant date) _______________________, to purchase an aggregate of
      ________________________ shares of the Company’s Common Stock, this is official
      notice that the undersigned hereby elects to exercise such option to purchase
      shares as follows:

    

    
      	
              Number
                of Shares

            	
              ________________________

            	 
	 	 	 
	
              Date
                of Purchase:

            	
              ________________________

            	 
	 	 	 
	
              Mode
                of Payment:

            	
              ________________________

            	
              (certified
                check or cash)

            

    

    
 

    The
      shares should be issued as follows:

    

    
      	
              Name:

            	
              _____________________________________________

            
	 	 
	
              Address:

            	
              _____________________________________________

            
	 	 
	 	
              _____________________________________________

            
	 	 

    

     

    
      	 	 
	
              Signed
                by (print name):

            	
              _____________________________________________

            
	 	 
	
              Signature:

            	
              _____________________________________________

            
	 	 
	
              Dated:

            	
              _____________________________________________

            
	 	 
	
              SSN:

            	
              _____________________________________________

            
	 	 

    

    Please
      send this notice of exercise to:

    

    NutraCea

    5090
      North 40th
      Street,
      Suite 400

    Phoenix,
      AZ 85018

     

    Phone:
      602-522-3000

     

    
      
         

      

      
        9exv10w1

 

Exhibit 10.1

AMENDMENT, CONSENT AND WAIVER

     This AMENDMENT, CONSENT AND WAIVER (this “Agreement”) is made and entered into as of the 9th
day of August, 2007 by and among the individuals and entities who or which are signatories hereto.

     WHEREAS, CanArgo Energy Corporation, a Delaware corporation (“CanArgo” or the “Company”), and
certain persons (the “Senior Noteholders”) have entered into a Note Purchase Agreement dated July
25, 2005 as amended (the “Note Purchase Agreement”), pursuant to which CanArgo issued $25,000,000
in aggregate principal amount of senior secured promissory notes due July 25, 2009 and whereas on
the 13th day of June 2007 the individuals and entities who or which are signatories
hereto (other than Ingalls & Snyder LLC) entered into an amendment, consent and waiver in terms of
which the Senior Noteholders agreed that certain interest payments due on the Senior Notes as of
June 30, 2007 would instead be satisfied by way of the issue by CanArgo of a further $1,125,000 of
the aforesaid senior secured promissory notes (all such outstanding notes together the “Senior
Notes” or the “Notes”, it being noted that $10m of such Notes were in June 2007 converted
into/exchanged for shares in Tethys Petroleum Limited (“Tethys”) and accordingly that the aggregate
principal amount of Notes outstanding is currently $16,125,000); and

     WHEREAS CanArgo Limited, a wholly owned subsidiary of CanArgo, has recently sold 8 million
ordinary shares in the share capital of Tethys; and

     WHEREAS CanArgo has agreed (with the consent of CanArgo Limited) to use part of the net
proceeds (after commission and certain expenses, including CanArgo Limited’s pro rata share of the
costs and expenses incurred in relation to the recent initial public offering of shares in Tethys,
which pro rata share of costs and expenses is expected to amount to approximately $500,000) to
repay to the Senior Noteholders all amounts outstanding on the Senior Notes and accordingly
remitted (or procured the remittance) to Ingalls & Snyder LLC (the “Escrow Agent”) on or about
August 3, 2007 the sum of $20,840,396.49, such sum to be held in an escrow account (the “Escrow
Account”) and released from the Escrow Account pursuant to an escrow agreement (the “Escrow
Agreement”) dated as of August 3, 2007 among CanArgo, CanArgo Limited and the Escrow Agent; and

     WHEREAS the Senior Noteholders have agreed to waive the notice period which the Company would
otherwise be required to give the Senior Noteholders an early repayment of the Senior Notes; and

     WHEREAS the Senior Noteholders have agreed that, notwithstanding the date of this Agreement,
interest on the Senior Notes will cease to accrue as of (but including) August 8, 2007 (the
“Interest Cessation Date”); and

     WHEREAS the parties have agreed that following release from the Escrow Account of the monies
necessary to repay all amounts owing on the Senior Notes the Escrow Agent shall disburse such
amounts to the Senior Noteholders in accordance with the respective entitlements of the Senior
Noteholders to receive repayment of the Senior Notes; and

     WHEREAS by waiving the notice period which the Company would otherwise be required to give the
Senior Noteholders of an early repayment of the Senior Notes and by agreeing to a variation of the
interest provisions attaching to the Senior Notes the Senior Noteholders are effectively giving up
(a) certain rights to convert their Senior Notes into

1

 

common stock of CanArgo as an alternative to accepting repayment of their Senior Notes and (b)
the right to receive interest on their Senior Notes in respect of the period between, on the one
hand, the date on which CanArgo would otherwise have served notice of early repayment and, on the
other hand, the actual repayment (or conversion) date; and

     WHEREAS in order to compensate the Senior Noteholders for giving up the aforesaid rights,
CanArgo has agreed to issue to the Senior Noteholders in aggregate warrants to purchase up to
17,916,667 shares at an exercise price of $1.00 per share, subject to adjustment, of CanArgo’s
common stock, par value $0.10 per share, expiring at close of business on December 6, 2007 (the
“Warrants); and

     WHEREAS accordingly CanArgo and the Senior Noteholders wish to amend the Note Purchase
Agreement and the Notes to give effect to the foregoing.

     NOW, THEREFORE, in consideration of the foregoing and for other good and valuable
consideration, the receipt and sufficiency of 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. Amendment Consent and Waiver. Notwithstanding the provisions of any Loan Document
to the contrary provided, in accordance with Section 18 of the Note Purchase Agreement, the Senior
Noteholders hereby irrevocably and unconditionally agree to the amendment of the Note Purchase
Agreement and the Notes and consent to, and waive any rights they may have under the Note Purchase
Agreement or any other Loan Documents as follows:

	 	(a)	 	Notwithstanding any other provision to the contrary in the Note
Purchase Agreement or the Loan Documents, the Senior Noteholders agree to waive
the right to receive notice from the Company of the optional prepayment by the
Company of their Senior Notes. Instead, repayment of the Senior Notes shall be
effected by the release from the Escrow Account of an amount sufficient to
repay all amounts outstanding on the Senior Notes as at (but including) the
Interest Cessation Date (such amount being the aggregate of all amounts payable
to the Senior Noteholders in accordance with Section 2(d) below). Section 9 of
the Note Purchase Agreement (and in particular Section 9.1 thereof) shall be
deemed amended accordingly.
	 
	 	(b)	 	Notwithstanding any other provision to the contrary in the Note
Purchase Agreement or the Loan Documents the Senior Noteholders agree that the
Senior Notes shall cease to bear interest with effect from (but including) the
Interest Cessation Date.
	 
	 	(c)	 	The interest provisions in the Notes shall accordingly be
deemed to be varied in a manner consistent with the foregoing.
	 
	 	(d)	 	Accordingly, Section 9 of the Note Purchase Agreement (and, in
particular Section 9.3 thereof) shall be deemed amended to the effect that the
amount which each Senior Noteholder shall be entitled to receive on

2

 

	 	 	 	the repayment of his Notes shall be an amount equal to X multiplied by Y where:

	 	X =	 	the aggregate of (i) the principal amount of the
Notes held by the relevant Senior Noteholder whose Notes are being prepaid
plus (ii) the amount of interest accrued on such Notes up to and including
the Interest Cessation Date; and
	 
	 	Y =	 	103%, being the Redemption Price (as defined in
Section 9.5 of the Note Purchase Agreement) as at the Interest Cessation
Date.

	 	(e)	 	In consideration for the Senior Noteholders agreeing to enter
into this Agreement the Company agrees to issue the Warrants to the Senior
Noteholders. The Warrants shall be issued to and allocated amongst the Senior
Noteholders such that the number of the Warrants to which each Senior
Noteholder shall be entitled shall be the number which is the sum of
	 
	 	 	 	
	 
	 	 	 	where:

	 	A =	 	the aggregate of the principal amount of the Notes
held by the Senior Noteholders whose Notes are being prepaid.
	 
	 	B =	 	the aggregate of the principal amount of all of the
Notes held by the Senior Noteholders whose Notes are being prepaid.
	 
	 	C = 	 	17,916,667

	 	 	 	The Warrants will be substantially in the form set out in the Exhibit to this
Agreement, with such changes thereto, if any, as may be approved by the Senior
Noteholders and the Company.

     3. Appointment of Ingalls & Snyder LLC. The parties acknowledge and agree that
Ingalls & Snyder LLC is hereby appointed on behalf of the Senior Noteholders to receive from the
Company (or its agents or CanArgo Limited or CanArgo Limited’s agents) the aforesaid monies
necessary to repay all amounts owing on the Senior Notes and Ingalls & Snyder LLC hereby agrees to
disburse such amounts to the Senior Noteholders in accordance with the respective entitlements of
the Senior Noteholders to receive repayment of the Senior Notes.

     4. 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.

3

 

     5. Miscellaneous.

          (a) Successors and Assigns; Headings; Choice of Law, etc. This Agreement shall be
binding on and shall inure to the benefit of CanArgo, the Senior Noteholders and Ingalls & Snyder
LLC 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.

          (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:  	 	 
	 

4

 

INGALLS & SNYDER LLC

	 	 	 	 	 
	By:

	 	 	 	 
	 

	 	 	 	 
	Name:
	 	 	 	 
	 

	 	 	 	 
	Title:
	 	 	 	 
	 

	 	 	 	 

5

 

SENIOR NOTEHOLDERS:

INGALLS & SNYDER VALUE PARTNERS L.P.

	 	 	 	 	 
	By:

	 	 	 	 
	 

	 	 	 	 
	Name:
	 	 	 	 
	 

	 	 	 	 
	Title:
	 	 	 	 
	 

	 	 	 	 

	 	 	 
	 
	 	 
	 	 	 
	Nikolaos D. Monoyios

	 	 
	 
	 	 
	 
	 	 
	 	 	 
	Thomas L. Gipson
	 	 
	 
	 	 
	 
	 	 
	 	 	 
	Arthur Koenig
	 	 
	 
	 	 
	 
	 	 
	 	 	 
	Thomas L. Gipson IRA
	 	 
	 
	 	 
	 
	 	 
	 	 	 
	Evan Janovic
	 	 
	 
	 	 
	 
	 	 
	 	 	 
	Arthur Ablin
	 	 

6

 

FLEDGLING ASSOCIATES, LLC
  BY:
HARTZ TRADING, INC., MANAGER

	 	 	 	 	 
	By:

	 	 	 	 
	 

	 	 	 	 
	Name:
	 	 	 	 
	 

	 	 	 	 
	Title:
	 	 	 	 
	 

	 	 	 	 

	 	 	 
	 
	 	 
	 	 	 
	Adam Janovic

	 	 
	 
	 	 
	 
	 	 
	 	 	 
	Neil Janovic
	 	 
	 
	 	 
	 
	 	 
	 	 	 
	Anthony Corso
	 	 
	 
	 	 
	 
	 	 
	 	 	 
	John Gilmer
	 	 
	 
	 	 
	 
	 	 
	 	 	 
	Martin Solomon
	 	 

7

 

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:  	 	 
	 

8

 

EXHIBIT

FORM OF WARRANT

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.

CANARGO ENERGY CORPORATION

Incorporated Under the Laws of the State of Delaware

	 	 	 
	No. [•]
	 	[•] common Stock Purchase Warrants
	 
	 	

CERTIFICATE FOR COMMON STOCK

PURCHASE WARRANTS

1. Warrant, This Warrant Certificate certifies that [•]                    or
registered assigns (the “Registered Holder”), is the registered owner of the above indicated number
of Warrants expiring on the Expiration Date, as hereinafter defined. One (1) Warrant entitles the
Registered Holder to purchase one (1) share of the common stock, $0.10 par value (a “Share”), of
CanArgo Energy Corporation, a Delaware corporation (the “Company”), from the Company at a purchase
price of $1.00 (the “Exercise Price”) at any time during the Exercise Period, as hereinafter
defined, upon surrender of this Warrant Certificate with the exercise form hereon duly completed
and executed and accompanied by payment of the Exercise Price at the principal office of the
Company.

     Upon due presentment for transfer or exchange of this Warrant Certificate at the principal
office of the Company, a new Warrant Certificate or Warrant Certificates of like tenor and
evidencing in the aggregate a like number of Warrants shall be issued in exchange for this Warrant
Certificate, subject to the limitations provided herein, upon payment of any tax or governmental
charge imposed in connection with such transfer. Subject to the terms hereof the Company shall
deliver Warrant Certificates in required whole number

9

 

denominations to Registered Holders in connection with any transfer or exchange permitted
hereunder.

     This Warrant is one of several warrants in substantially identical form issued pursuant to the
provisions of that certain Amendment, Consent and Waiver dated
[•], 2007 by and among the Company,
Ingalls & Snyder LLC, Ingalls & Snyder Value Partners L.P., Nikolaos D. Monoyios, Thomas L. Gipson,
Arthur Koenig, Thomas L. Gipson IRA, Evan Janovic, Arthur Ablin, Fledgling Associates, LLC, Adam
Janovic, Neil Janovic, Anthony Corso, John Gilmer, Martin Solomon, CanArgo Limited, CanArgo Ltd.,
CanArgo Norio Limited, CanArgo (Nazrevi) Limited and Ninotsminda Oil Company Limited (the
“Amendment, Consent and Waiver”). Any capitalized terms not otherwise expressly defined herein
shall have the meaning ascribed thereto in the Amendment, Consent and Waiver.

2. Restrictive Legends. Each Warrant Certificate shall bear legends substantially in the
form of the legends that appear at the beginning of this Warrant Certificate. Each certificate
representing Shares issued upon exercise of a Warrant, unless such Shares are then registered under
the Securities Act of 1933, as amended (the “Act”), shall bear a legend in substantially the
following form:

“THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITES 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 SUCH
APPLICABLE LAWS OF OTHER JURISDICTIONS. THE SHARES REPRESENTED HEREBY MAY NOT BE OFFERED, SOLD,
HYPOTHECATED OR OTHERWISE TRANSFERRED UNLESS REGISTERED UNDER THE ACT OR AN EXEMPTION FROM THE
REGISTRATION REQUIREMENTS UNDER 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.”

Each such certificate representing Shares may also bear such legend relating to the issuance of
such Shares pursuant to any applicable securities laws as counsel for the Company shall reasonably
deem appropriate.

3. Exercise. Subject to the terms hereof: the Warrants, evidenced by this Warrant
Certificate, may be exercised at the Exercise Price in whole or in part at any time during the
period (the “Exercise Period”) commencing on August 9, 2007 as contemplated by the Amendment,
Consent and Waiver and terminating at the close of business on December 6, 2007 (the “Expiration
Date”). The Exercise Period may also be extended by the Company’s Board of Directors.

     A Warrant shall be deemed to have been exercised in immediately prior to the close of business
on the date (the “Exercise Date”) of the surrender to the Company at its principal offices of this
Warrant Certificate with the exercise form attached hereto executed by the Registered Holder and
accompanied by payment to the Company, in cash or by official bank or certified check, of an amount
equal to the aggregate Exercise Price, in lawful money of the United States of America.

10

 

     The person entitled to receive the Shares issuable upon exercise of a Warrant or Warrants
(“Warrant Shares”) shall be treated for all purposes as the holder of such Warrant Shares as of the
close of business on the Exercise Date. The Company shall not be obligated to issue any fractional
share interests in Warrant Shares issuable or deliverable on the exercise of any Warrant or script
or cash with respect thereto, but, if Company elects not to issue a fractional share, the Company
will pay a cash adjustment in respect of any fraction of a Warrant Share which would otherwise be
issuable in an amount equal to the same fraction of the amount by which the market price of a Share
on the date of exercise exceeds the Exercise Price, such market price to be determined in good
faith by the Board of Directors of the Company. If more than one Warrant shall be exercised at one
time by the same Registered Holder, the number of full Shares which shall be issuable on exercise
thereof shall be computed on the basis of the aggregate number of full shares issuable on such
exercise.

     Promptly, and in any event within ten business days after the Exercise Date, the Company shall
cause to be issued and delivered to the person or persons entitled to receive the same, a
certificate or certificates for the number of Warrant Shares deliverable on such exercise.

     The Company may deem and treat the Registered Holder of the Warrants at any time as the
absolute owner thereof for all purposes, and the Company shall not be affected by any notice to the
contrary. The Warrants shall not entitle the Registered Holder thereof to any of the rights of
shareholders or to any dividend declared on the Shares unless the Registered Holder shall have
exercised the Warrants and thereby purchased the Warrant Shares prior to the record date for the
determination of holders of Shares entitled to such dividend or other right.

4. Net Issue Conversion. Notwithstanding anything in this Warrant to the contrary, the
Registered Holder hereof may, subject to the prior concurrence of the Company, in lieu of
exercising this Warrant in the manner provided above in Section 3, elect to convert this Warrant
into Warrant Shares equal in number to the value of the exercised Warrants by so indicating on the
Form of Election to Purchase attached hereto, in which event the Registered Holder shall receive a
number of Warrant Shares equal to following shall occur.

[(X multiplied by (Y minus Z)] divided by Y;

where:

X = Number of Warrants Converted

Y = Fair Market Value of one share of Common Stock

Z = Exercise Price

For purposes of the above, “Fair Market Value” shall equal the closing price for the Company’s
Common Stock on the Exercise Date, as reported on the AMEX or, if the Common Stock is not then
listed for trading on the AMEX, then the dollar equivalent of such closing price as reported on the
Oslo Stock Exchange on the Exercise Date.

5. Reservation of Shares and Payment of Taxes. The Company covenants that it will at
all times reserve and have available from its authorized Common Stock such number of shares as
shall then be issuable on the exercise of outstanding Warrants. The Company covenants that all
Warrant Shares which shall be so issuable shall be duly and validly issued,

11

 

fully paid and nonassessable, and free from all taxes, liens and charges with respect to the issue
thereof.

     The Registered Holder shall pay all documentary, stamp or similar taxes and other government
charges that may be imposed with respect to the issuance, transfer or delivery of any Warrants and
Warrant Shares on exercise of the Warrants. In the event the Warrants or Warrant Shares are to be
delivered in a name other than the name of the Registered Holder of the Warrant Certificate, no
such delivery shall be made unless the person requesting the same has paid the amount of any such
taxes or charges incident thereto.

6. Registration of Transfer. The Warrant Certificates may be transferred in whole or
in part, provided any such transfer complies with all applicable foreign and United States federal
and state securities laws and, if requested by the Company, the Registered Holder delivers to the
Company an opinion of counsel to that effect, in form and substance reasonably acceptable to the
Company. Warrant Certificates to be transferred shall be surrendered to the Company at its
principal office. The Company shall execute, issue and deliver in exchange therefore the Warrant
Certificate or Certificates which the Registered Holder making the transfer shall be entitled to
receive.

     The Company shall keep transfer books at its principal office which shall register Warrant
Certificates and the transfer thereof. On due presentment of any Warrant Certificate for
registration of transfer at such office, the Company shall execute, issue and deliver to the
transferee or transferees a new Warrant Certificate or Certificates representing an equal aggregate
number of Warrants. All Warrant Certificates presented for registration of transfer or exercise
shall be duly endorsed or be accompanied by a written instrument or instruments of transfer in form
and substance satisfactory to the Company. The Company may require payment of a sum sufficient to
cover any tax or other government charge that may be imposed in connection therewith.

     All Warrant Certificates so surrendered, or surrendered for exercise, or for exchange in case
of mutilated Warrant Certificates, shall be promptly cancelled by the Company and thereafter
retained by the Company until the Expiration Date. Prior to due presentment for registration of
transfer thereof the Company may treat the Registered Holder of any Warrant Certificate as the
absolute owner thereof (notwithstanding any notations of ownership or writing thereon made by
anyone other than the Company), and the Company shall not be affected by any notice to the
contrary.

7. Loss or Mutilation. On receipt by the Company of evidence satisfactory as to the
ownership of and the loss, theft, destruction or mutilation of this Warrant Certificate, the
Company shall execute and deliver, in lieu thereof a new Warrant Certificate representing an equal
aggregate number of Warrants. In the case of loss, theft or destruction of any Warrant Certificate,
the individual requesting issuance of a new Warrant Certificate shall be required to indemnify the
Company in an amount satisfactory to the Company. In the event a Warrant Certificate is mutilated,
such Certificate shall be surrendered and cancelled by the Company prior to delivery of a new
Warrant Certificate. Applicants for a new Warrant Certificate shall also comply with such other
reasonable regulations as the Company may prescribe.

8. Adjustment of Shares. The number and kind of securities issuable upon exercise of a
Warrant or to be delivered upon the redemption of Warrants hereunder shall be subject to

12

 

adjustment from time to time upon the happening of certain events (“Adjustment Event”), as follows:

     (a) If the Company shall, at any time prior to the complete exercise of the Warrants evidenced
hereby, declare or pay to the holders of its outstanding Shares, a dividend payable in any kind of
shares of stock or other securities of the Company, or in property, or otherwise than in cash, the
Registered Holder upon thereafter exercising the Warrants evidenced hereby as herein provided shall
be entitled to receive for the Exercise Price, in addition to one Warrant Share, such additional
share or shares of stock or scrip representing fractions of a share or other securities or property
as the Registered Holder would have received in the form of such dividend if he had been the holder
of record of such Warrant Share on the record date for the determination of common stockholders
entitled to receive such dividend.

     (b) If the Company shall, while any Warrants evidenced hereby remain in force, effect a
recapitalization of such character that the Shares covered hereby shall be changed into or become
exchangeable for a larger or smaller number of shares, then thereafter, the number of Shares which
the Registered Holder shall be entitled to purchase hereunder, shall be increased or decreased, as
the case may be, in direct proportion to the increase or decrease in the number of Shares of the
Company by reason of such recapitalization, and the Exercise Price (per Share) shall in the case of
an increase in the number of Shares be proportionately reduced, and in the case of a decrease in
the number of shares be proportionately increased.

     (c) In case of any reorganization of the Company (or any other corporation the stock or other
securities of which are at the time receivable upon exercise of a Warrant) or in case the Company
(or any such other corporation) shall merge into or with or consolidate with another corporation or
convey all or substantially all of its assets to another corporation or enter into a business
combination of any form as a result of which the Shares or other securities receivable upon
exercise of a Warrant are converted into other stock or securities of the same or another
corporation, then and in each such case, the Registered Holder of a Warrant, upon exercise of the
purchase right at any time after the consummation of such reorganization, consolidation, merger,
conveyance or combination, shall be entitled to receive, in lieu of the Shares or other securities
to which such Registered Holder would have been entitled had he exercised the purchase right
immediately prior thereto, such stock and securities which such Registered Holder would have owned
immediately after such event with respect to the Shares and other securities for which a Warrant
may have been exercised immediately before such event had the Registered Holder exercised the
Warrant immediately prior to such event.

     (d) In case the Company shall at any time prior to the exercise of a Warrant evidenced hereby
make any distribution of its assets to holders of its Shares by way of a liquidating or partial
liquidating dividend or by way of a return of capital, or other than as a dividend payable out of
earnings or any surplus legally available for dividends under the laws of the state of its
incorporation, then the Registered Holder upon thereafter exercising such Warrant as herein
provided after the date of record for the determination of those holders of Shares entitled to such
distribution of assets, shall be entitled to receive for the Exercise Price, in addition to a
Warrant Share, the amount of such assets (or at the option of the Company, a sum equal to the value
thereof at the time of such distribution to holders of Shares as such value is determined by the
Board of Directors of the Company in good faith) which would have been payable to the Registered
Holder had he been the holder of record of

13

 

such Warrant Share receivable upon exercise of such Warrant on the record date for the
determination of those entitled to such distribution.

     The Company shall mail to the holder of this Certificate at least twenty (20) days prior to
any Adjustment Event a notice specifying the date on which any such Adjustment Event is to occur
together with a description thereof.

     In each case of an adjustment in the Shares or other securities receivable upon the exercise
of a Warrant, the Company shall promptly notify the Registered Holder of such adjustment. Such
notice shall set forth the facts upon which such adjustment is based.

9. Reduction in Exercise Price .

     The Company’s Board of Directors may, at its sole discretion, reduce the Exercise Price of the
Warrants in effect at any time either for the life of the Warrants or any shorter period of time
determined by the Company’s Board of Directors. The Company shall promptly notify the Registered
Holders of any such reduction in the Exercise Price. Notwithstanding the foregoing, in no event
shall the number of Shares issuable to the holders of the Warrants pursuant to this Section 9 cause
the holders of the Warrants collectively to own in excess of 19.9% of the outstanding Common Stock
of the Company as at the date of the Amendment, Consent and Waiver unless the Company has obtained
the prior approval of its stockholders as required by Section 713 of the AMEX Company Guide as in
effect from time to time, provided, however, that the Company shall use commercially reasonable
efforts to diligently seek to obtain such approval of its stockholders.

10. Notices. All notices, demands, elections, requests and communications provided for
hereunder shall be in writing and sent

     (a) by telefacsimile if the sender on the same day sends a confirming copy of such notice by a
recognized overnight delivery service (charges prepaid), or

     (b) by registered or certified mail with return receipt requested (postage prepaid), or

     (c) by a recognized overnight delivery service (with charges prepaid). Any such notice must
be sent:

          (i) if to the Registered Holder or its nominee, to the Registered Holder or its nominee at the
address of the Registered Holder as set forth on the books maintained by the Company, or at such
other address as such Registered Holder or nominee shall have specified to the Company in writing,

          (ii) if to the Company, to the Company at its principal executive office to the attention of
Chief Executive Officer, or at such other address as the Company shall have specified to the holder
of each Warrant in writing.

     Notices under this Section 10 will be deemed given only when actually received.

11. General Provisions. This Warrant Certificate shall be construed and enforced in
accordance with, and governed by, the laws of the State of Delaware, where the Company maintains
its registered offices. Except as otherwise expressly stated herein, time is of the

14

 

essence in performing hereunder. The headings of this Warrant Certificate are for convenience in
reference only and shall not limit or otherwise affect the meaning hereof.

     IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to be duly executed as of
the ___ day of                     , 2007.

	 	 	 	 	 	 	 
	 	 	CanArgo Energy Corporation	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 	 	 	 	 

15

 

CanArgo Energy Corporation

     The following abbreviations, when used in the inscription on the face of this instrument,
shall be construed as though they were written out in full according to applicable laws or
regulations:

	 	 	 	 	 	 
	 	 	 	 
	TEN COM – as tenants in common

	 	 	UNIF GIFT MIN ACT- Custodian
	 	 
	TEN ENT – as tenants by the entireties
	 	 	 	 	 
	JR TEN – as joint tenants with right of
	 	 	 	 	 
	 

	 	 	 	 	 
	survivorship and not as tenants in common

	 	 	(Cust)     (Minor)	 	 
	 

	 	 	under Uniform Gifts	 	 
	 

	 	 	to Minor Act                     .	 	 
	 

	 	 	                           (State)	 	 
	 	 	 	 

Additional abbreviations may also be used though not in the above list.

FORM OF ASSIGNMENT

(To be Executed by the Registered Holder if He

Desires to Assign Warrants Evidenced by the

Within Warrant Certificate)

     FOR VALUE RECEIVED                                          hereby sells,
assigns and transfers (                    ) Warrants, evidenced by the within Warrant Certificate, and does
hereby irrevocably constitute and appoint                                          Attorney to transfer the said
Warrants evidenced by the within Warrant Certificates on the books of the Company, with full power
of substitution.

	 	 	 
	Dated:                                         .

	 	                                        .
	 

	 	Signature

Notice: The above signature must correspond with the name as written upon the Face of the
Warrant Certificate in every particular, without alteration or enlargement or any change
whatsoever.

Signature Guaranteed:

SIGNATURE MUST BE GUARANTEED BY A COMMERCIAL BANK OR MEMBER FIRM OF ONE OF THE FOLLOWING STOCK
EXCHANGES: NEW YORK STOCK EXCHANGE, PACIFIC COAST STOCK EXCHANGE, AMERICAN STOCK EXCHANGE, OR
MIDWEST STOCK EXCHANGE.

16

 

FORM OF ELECTION TO PURCHASE

(To be Executed by the Holder if he Desires to Exercise

the Warrants Evidenced by the Warrant Certificate)

To CanArgo Energy Corporation:

          [The undersigned hereby irrevocably elects to exercise
                     (                    ) Warrants, evidenced by the within
Warrant Certificate for, and to purchase thereunder,                                         
(                    ) full shares of Common Stock issuable upon exercise of said
Warrants and delivery of $                     and payment of any applicable taxes.

     OR

          [The undersigned hereby irrevocably elects to convert
                     (                    ) Warrants, evidenced by the within
Warrant Certificate, and to acquire Warrant Shares pursuant to the “Net Issue Conversion” provision
in Section 4 thereof, and, upon payment of any applicable taxes, to acquire Warrant Shares
thereunder.]

          The undersigned hereby warrants and represents that he/it is an “accredited investor” as
defined under Rule 501(a) of the Securities Act of 1933, as amended and accordingly the Warrants
being exercised and the securities deliverable upon exercise thereof have been registered under the
Act or are exempt from registration thereunder.

          Please register the certificates for such share as follows:

Please insert taxpayer identification

Or social security number (if any)                                         .

 

(Please print name)

 

(Please print address)

          If said number of Warrants shall not be all the Warrants evidenced by the within Warrant
Certificate, the undersigned requests that a new Warrant Certificate evidencing the Warrants not so
exercised be registered in the name of the undersigned at the following address and deliver the
Certificate to that address:

 

(Please print address)

(SIGNATURES CONTINUED ON FOLLOWING PAGE)

17

 

Dated:                               Signature:                                        .

NOTICE: The above signature must correspond with the name as written upon the face of the
within Warrant Certificate in every particular, without alteration or enlargement or any change
whatsoever. If the certificate representing the shares is to be registered in a name other than
that in which the within Warrant Certificate is registered, the signature of the holder hereof must
be guaranteed.

Signature Guaranteed:                                                             .

SIGNATURE MUST BE GUARANTEED BY A COMMERCIAL BANK OR MEMBER FIRM OF ONE OF THE FOLLOWING STOCK
EXCHANGES: NEW YORK STOCK EXCHANGE, PACIFIC COAST STOCK EXCHANGE, AMERICAN STOCK EXCHANGE, OR
MIDWEST STOCK EXCHANGE.

18

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