Document:

<PAGE>
                                                                    EXHIBIT 10.3

                          REGISTRATION RIGHTS AGREEMENT

         This REGISTRATION RIGHTS AGREEMENT ("Agreement"), dated as of July 25,
2005, is made and entered into by and between CanArgo Energy Corporation, a
Delaware corporation ("Company") and Ingalls & Snyder Value Partners L.P.
("Purchaser" and the other Purchasers listed on Schedule A attached hereto,
collectively the "Purchasers").

                                    RECITALS

         A. Purchasers have acquired and Company has issued US$25,000,000.00
aggregate principal amount of its Senior Secured Notes due July 25, 2009
("Company Notes") pursuant to the Note Purchase Agreement ("Purchase Agreement")
of even date herewith.

         B. Pursuant to the terms of the Purchase Agreement, the Purchasers
acquired rights to convert the Company Notes into shares of the Company's common
stock, par value $.10 per share (" Common Stock") in accordance with the terms
of the Purchase Agreement and the Company Notes (a "Conversion").

         C. Upon the closing of a Conversion, Company shall authorize and issue
to such Purchasers electing so to convert their Company Notes one or more
certificates representing the applicable number of shares of Common Stock
issuable upon such Conversion of the Company Notes ("Conversion Stock").

         D. The Company has agreed to provide Purchasers with certain rights
with respect to all shares of Conversion Stock issuable upon Conversion to
register such shares under the Securities Act (as hereinafter defined) for
resale. All shares of Conversion Stock issued as of the date of this Agreement
or acquired at any time by Purchasers upon Conversion of the Company Notes,
other than shares which cease to be Restricted Securities (as hereinafter
defined), shall be referred to for the purposes of this Agreement as the
"Registrable Securities").

                                    AGREEMENT

         The parties, intending to be legally bound, agree as follows:

                                   ARTICLE 1

                       REGISTRATION RIGHTS AND PROCEDURES

         Section 1.1 Definitions.

         (a)      As used in this Agreement, the following terms shall have the
                  meanings:

                    (i) "AFFILIATE" of any specified Person means any other
          Person who directly, or indirectly through one or more intermediaries,
          is in control of, is controlled by, or is under common control with,
          such specified Person. For purposes of this definition, control of a
          Person means the power, directly or indirectly, to direct or cause the
          direction of the management and policies of such Person whether by
          contract, securities, ownership or otherwise; and the terms
          "controlling" and "controlled" have the respective meanings
          correlative to the foregoing.

<PAGE>

                    (ii) "COMMISSION" means the United States Securities and
          Exchange Commission.

                    (iii) "COMMON STOCK" has the meaning ascribed thereto in the
          Recitals.

                    (iv) "CONVERSION" has the meaning ascribed thereto in the
          Recitals.

                    (v) "CONVERSION STOCK" has the meaning ascribed thereto in
          the Recitals.

                    (vi) "EXCHANGE ACT" means the Securities Exchange Act of
          1934, as amended, and the rules and regulations of the Commission
          thereunder, or any similar successor statute.

                    (vii) "PURCHASER" has the meaning ascribed thereto in the
          Recitals and includes each transferee or assignee of Registrable
          Securities who agrees to become bound by all of the terms and
          provisions of this Agreement in accordance with Section 4.2 hereof.

                    (viii) "PERSON" means any individual, partnership,
          corporation, limited liability company, joint stock company,
          association, trust, unincorporated organization, or a government or
          agency or political subdivision thereof.

                    (ix) "PROSPECTUS" means the prospectus (including, without
          limitation, any preliminary prospectus and any final prospectus filed
          pursuant to Rule 424(b) under the Securities Act, including any
          prospectus that discloses information previously omitted from a
          prospectus filed as part of an effective registration statement in
          reliance on Rule 430A under the Securities Act) included in the
          Registration Statement, as amended or supplemented by any prospectus
          supplement with respect to the terms of the offering of any portion of
          the Registrable Securities covered by the Registration Statement and
          by all other amendments and supplements to such prospectus, including
          all material incorporated by reference in such prospectus and all
          documents filed after the date of such prospectus by the Company under
          the Exchange Act and incorporated by reference therein.

                    (x) "PURCHASE AGREEMENT" has the meaning ascribed thereto in
          the Recitals.

                    (xi) "REGISTRABLE SECURITIES" has the meaning ascribed
          thereto in the Recitals.

                    (xii) "REGISTRATION STATEMENT" means a registration
          statement of the Company filed on Form S-1 or S-3 or such other
          appropriate form under the Securities Act providing for the
          registration of, and the sale of Registrable Securities, including
          without limitation any Registration Statement providing for the
          registration of, and sale on a continuous or delayed basis by the
          holders of, the Registrable Securities pursuant to Rule 415 under the
          Securities Act, including the Prospectus contained therein and forming
          a part thereof, any amendments to such registration statement and
          supplements to such Prospectus, and all exhibits and other material
          incorporated by reference in such registration statement and
          Prospectus.

                    (XIII) "RESTRICTED SECURITY" means any share of Common Stock
          issued upon Conversion of the Company Notes or held by any Person,
          except for any such share that (i) has been registered pursuant to an
          effective Registration Statement under the Securities Act and sold in
          a manner contemplated by the Prospectus included in the Registration
          Statement, (ii) has been freely transferred in compliance with the
          resale provisions of Rule 144 under the Securities Act (or any
          successor provision thereto) or is freely transferable, together with
          all other Restricted Securities in one transaction, pursuant to
          paragraph (k) of Rule 144 under the Securities Act (or any successor
          provision thereto), or (iii) otherwise has been transferred and a new
          share of

                                       -2-
<PAGE>

          Common  Stock  not  subject  to any  transfer  restrictions  under
          the Securities Act has been delivered by or on behalf of the Company.

                    (XIV) "REQUIRED MAJORITY" means the Holders of a majority of
          the number of Registrable Securities then outstanding (for purposes of
          calculation, Company Notes shall be treated as if they have been
          converted into Registrable Securities).

                    (xv) "SECURITIES ACT" means the Securities Act of 1933, as
          amended, and the rules and, regulations of the Commission thereunder,
          or any similar successor statute.

          (b) All capitalized terms used and not defined herein have the
respective meaning assigned to them in the Purchase Agreement.

          Section 1.2 Registration Rights.

               (a) Piggyback Registration Rights. Subject to the terms and
conditions of this Agreement, if the Company intends to file or desires to file
a Registration Statement providing for the offering or resale of (i) Common
Stock or (ii) any Registrable Securities (other than a registration (A) on Form
S-8 or S-4 or any successor or similar forms, (B) relating to Common Stock or
any other shares of capital stock of the Company issuable upon exercise of
employee share options or in connection with any employee benefit or similar
plan of the Company or (C) in connection with a direct or indirect acquisition
by the Company of another Person or any transaction with respect to which Rule
145 (or any successor provision) under the Securities Act applies), the Company
will notify the holder or holders of the Registrable Securities ("Holders") of
the proposed filing at least 30 days prior to the filing of the Registration
Statement, and will afford each Holder an opportunity to include in such
Registration Statement all or any part of the Registrable Securities then held
by such Holder. If any Holder desires to include in any such Registration
Statement all or part of the Registrable Securities held by such Holder, such
Holder shall, within 15 days after receipt of the above-described notice from
the Company, so notify the Company in writing, and in such notice, if the Holder
has not already done so, shall inform the Company that the Holder has elected to
convert some or all of its Company Notes pursuant to Section 10.7 of the
Purchase Agreement, and of the number of Registrable Securities such Holder
wishes to include in such Registration Statement.

               (b) Demand Registration Rights.

                  (i) Requests for Registration. Subject to Section 1.2(b)(ii),
the Holders may request registration on a Registration Statement under the
Securities Act of all or part of their Registrable Securities, as the case may
be (a "Demand Registration"). Within ten days after receipt of any request
pursuant to this Section 1.2(b)(i), the Company shall give written notice of
such request to all other Holders and will include in such registration all
Registrable Securities with respect to which the Company has received written
requests for inclusion therein within 21 days after the Company's notice has
been given.

                  (ii) Limits on the Number of Demand Registrations. The Holders
may request only five (5) Demand Registrations and not more than one Demand
Registration in any twelve month period. A registration will not count as a
Demand Registration hereunder (x) (i) until it has become effective and (ii)
unless the Holders of Registrable Securities requested to be included in such
Demand Registration are able to register and sell all of the Registrable
Securities requested to be included in such registration (provided, if such
registration is made on Form S-1, such Registration Statement need only be
effective for a period of 90 consecutive days) or (y) if the Company shall sell
any Common Stock in the registration resulting from such Demand Registration (in
which case the request for a Demand

                                       -3-
<PAGE>

Registration shall be deemed a request for a Piggyback Registration pursuant to
Section 1.2(a)). The Company will pay all registration expenses in connection
with (x) any Demand Registration requested hereunder and (y) any registration
initiated as a Demand Registration requested hereunder which subsequently
becomes other than a Demand Registration. The Company shall have no obligation
to maintain the effectiveness of any registration statement on Form S-1 (or any
successor form thereto) for a period of greater than 90 consecutive days, but
all other Registration Statements shall remain in effect until the earlier of
two years or the date all the Registrable Securities cease to be Restricted
Securities.

               (c) The Company represents and warrants that it currently is
eligible to use Form S-3 and meets all applicable requirements for its use. The
Company shall use its commercially reasonable efforts to do any and all things,
including but not limited to following the requirements of the rules,
regulations and instructions promulgated by the Commission regarding Form S-3,
necessary to maintain the Company's eligibility to file a Registration Statement
on Form S-3 or any successor thereto. The Company shall use its commercially
reasonable efforts not take any action that will limit, impair or otherwise
prevent it from being eligible to use Form S-3 or any successor thereto.

               (d) Following any Conversion of Company Notes into Conversion
Stock, upon written notice to the Company by any Holder holding Conversion Stock
requesting that the Company effect a Registration Statement on Form S-3 or any
successor thereto, with respect to the Conversion Stock, the Company shall (i)
promptly give notice of the requested registration to all other Holders; and
(ii) as soon as reasonably practicable, but in no event later than 30 days from
the receipt of the such Holder's notice by the Company, use all commercially
reasonable efforts to file a Registration Statement on Form S-3 with respect to
all Conversion Stock, including Conversion Stock issuable upon Conversion of
Company Notes. In the event the Company is not eligible to file a Registration
Statement on Form S-3, the Company shall file a Registration Statement on Form
S-1. The Company shall use its commercially reasonable efforts to ensure the
Registration Statement becomes effective within 90 days of the date of filing.

         Section 1.3 Effectiveness of Registration Statement. The Company shall
use all commercially reasonable efforts to: (a) have the Registration Statement
declared effective by the Commission no later than the later of November 30,
2005 or 90 days after the filing thereof and to maintain such effectiveness as
provided herein; and (b) prepare and file with the Commission such amendments
and supplements to the Registration Statement and the Prospectus as may be
necessary to keep the Registration Statement effective with respect to any
Registrable Securities, until the until the earlier of two years or the date all
the Registrable Securities cease to be Restricted Securities.

         Section 1.4 Information and Copies.

            (a) The Company shall furnish to each Holder electing to include its
Common Stock in the Registration Statement such number of copies of the
Registration Statement, each amendment and supplement thereto, the Prospectus,
and such other documents as such Holder may reasonably request in order to
facilitate the disposition of the Registrable Securities owned by it.

            (b) The Company shall promptly notify each Purchaser whose
Registrable Securities are included in the Registration Statement of the
happening of any event as a result of which the Prospectus contains an untrue
statement of a material fact or omits to state any material fact required to be
stated therein or necessary to make the statements therein not misleading in
light of the circumstances under which it is made and shall use commercially
reasonable efforts to prepare and file with the Commission, and promptly notify
such Purchasers of the filing of, a supplement to such Prospectus or an
amendment to the Registration Statement so that, as thereafter delivered to the
purchasers of Registrable Securities, such Prospectus will not contain an untrue
statement of a material fact or omit to state any

                                       -4-
<PAGE>

material fact required to be stated therein or necessary to make the statements
therein not misleading in light of the circumstances under which they were made
and in the case of an amendment to the Registration Statement, use reasonable
best efforts to cause it to become effective as soon as possible. Each Purchaser
shall promptly notify the Company of the happening of any event applicable to
it, as a result of which the Prospectus contains an untrue statement of a
material fact or omits to state any material fact stated therein or necessary to
make the statements therein in relation to such Purchaser not misleading in
light of the circumstances under which it is made. Upon receipt of any notice
from the Company, or provision of any notice to the Company by any Purchaser, of
the happening of any event of the kind described above, such Purchaser will
forthwith discontinue disposition of Registrable Securities pursuant to the
Registration Statement until such Purchaser's receipt of the copies of the
supplemented or amended Prospectus, or until such Purchaser is advised in
writing by the Company that the use of the Prospectus may be resumed.

            (c) The Company shall make available for inspection by each
Purchaser, any underwriter participating in any disposition pursuant to the
Registration Statement, and any attorney, accountant, or other agent retained by
any Purchaser or any underwriter, all financial and other records of the Company
(reasonably requested), the Company's applicable corporate documents and
contracts as shall be reasonably necessary to enable them to exercise their due
diligence responsibility, and cause the Company's officers, directors,
employees, and independent accountants to supply all information reasonably
requested by any such Purchaser, as well as any underwriter, attorney,
accountant, or agent in connection with the Registration Statement; provided,
however, that each Purchaser agrees that information obtained by such Purchaser
as a result of such inspections which constitutes confidential information is
subject to the confidentiality provisions of Section 21 of the Purchase
Agreement and is deemed confidential shall not be used by such Purchaser as the
basis for any market transaction in the Company's securities unless and until
such information is made generally available to the public, and each Purchaser
shall use its best efforts to cause any attorney, accountant, or agent retained
by such Purchaser to keep confidential any such information.

            (d) In the event of the issuance of any stop order suspending the
effectiveness of the Registration Statement, or of any order suspending or
preventing the use of any related Prospectus or suspending the qualification of
any Common Stock included in the Registration Statement for sale in any
jurisdiction, the Company will promptly notify Purchasers of such and will use
reasonable efforts to obtain the withdrawal of such order.

         Section 1.5 Listing of Registrable Securities. The Company shall cause
all Registrable Securities to be listed on each securities exchange or other
quotation service on which the Common Stock is then listed.

         Section 1.6 Underwritten Offering. If the registration of which the
Company gives notice is for a registered public offering involving an
underwriting, the Company shall include such information in the notice given
pursuant to Section 1.2. In such event, the right of each Holder to registration
pursuant to Section 1.2 shall be conditioned upon such Holder agreeing to
participate in such underwriting and upon the inclusion of the Registrable
Securities in the underwriting to the extent provided herein. Each Holder
electing to include its Registrable Securities in such registration shall
(together with the Company and other participating shareholders) enter into an
underwriting agreement in customary form with the underwriter or underwriters
selected by the Company. Notwithstanding any other provision of this Section
1.6, if the underwriter shall, in good faith, advise the Company in writing that
the offering contemplated thereby will be materially adversely affected by the
inclusion of Registrable Securities, then the Company shall so advise such
Holder and the other participating shareholders, and the number of shares of
Registrable Securities and Common Stock (collectively, "Underwritten
Securities") that may be included in the registration and underwriting shall be
allocated first to the Company, if it is participating

                                       -5-
<PAGE>

in such registration and underwriting, second, pro rata among such Holders and
other parties have registration rights previously granted by the Company, and,
third, pro rata among the other participating shareholders, if any, in each case
in proportion, as nearly as practicable, to the respective amounts of
Underwritten Securities held by such Holder and participating shareholders at
the time of filing the Registration Statement. The Company may only exercise
this right once within any twelve-month period without the consent of the
Required Majority.

         If such Holder disapproves of the terms of any such underwriting, it
may elect to withdraw therefrom by written notice to the Company and the
underwriter. The Registrable Securities so withdrawn shall also be withdrawn
from registration.

         Section 1.7 Market Stand Off Agreement. By electing to include
Registrable Shares in any registration pursuant to Section 1.2, each Holder so
electing shall be deemed to have agreed, provided such Registrable Securities
are included in the Registration Statement, not to effect any public sale or
distribution of securities of the Company of the same or similar class or
classes of the securities included in the Registration Statement or any
securities convertible into or exchangeable or exercisable for such securities,
including a sale pursuant to Rule 144 or Rule 144A under the Securities Act,
following the filing of a Registration Statement by the Company with the
Commission in connection with a public offering of its securities and continuing
until 90 days (or such longer period as the underwriter may request in
connection with an underwritten offering but not to exceed 180 days) following
the date such Registration Statement is declared effective by the Commission and
in connection therewith such Holder agrees to execute and deliver such documents
or instruments as the Company may reasonably request evidencing this agreement.

         Section 1.8 Nature of Sale. Notwithstanding any other provision of this
Agreement, Common Stock shall only be treated as Registrable Securities if and
so long as it remains a Restricted Security.

         Section 1.9 Reports Under Exchange Act. With a view to making available
to the Holders the benefits of Rule 144 promulgated under the Securities Act, or
any other similar rule or regulation of the Commission that may at any time
permit the Holders to sell securities of the Company to the public without
registration ("Rule 144"), the Company agrees to use its commercially reasonable
efforts to:

            (a) make and keep public information available, as those terms are
understood and defined in Rule 144;

            (b) file with the Commission in a timely manner all reports and
other documents required of the Company under the Securities Act and Exchange
Act;

            (c) furnish to each Holder, so long as such Holder owns Registrable
Securities, promptly upon request, (i) a written statement by the Company that
it has complied with the reporting requirements of the Securities Act and the
Exchange Act, and (ii) a copy of the most recent annual or periodic report of
the Company and such other reports and documents so filed by the Company, unless
such reports and documents are publicly available on EDGAR; and

            (d) such other information as may be reasonably requested to permit
such Holder to sell such securities pursuant to Rule 144 without registration
unless such information is publicly available on EDGAR.

         Section 1.10 Other Securities. Nothing in this Agreement shall prevent
the Company from registering securities other than Common Stock by filing a
Registration Statement with the Commission.

                                       -6-
<PAGE>

                                   ARTICLE 2

                       PURCHASER'S RIGHTS AND UNDERTAKINGS

         Section 2.1 Rights. Purchasers shall have the absolute right to
exercise or refrain from exercising any right or rights they may have by reason
of this Agreement, including, without limitation, the right to consent to the
waiver or modification of any obligation under this Agreement, and Purchasers
shall not incur any liability to any other holder of any of the Company's
securities as a result of exercising or refraining from exercising any such
right or rights.

         Section 2.2 Suspension of Sales. If any Registrable Securities are
included in a Registration Statement pursuant to the terms of this Agreement,
Purchasers will not (until further notice) effect sales thereof after receipt of
written notice from the Company of the occurrence of an event specified in such
notice in order to permit the Company to correct or update the Registration
Statement or Prospectus.

         Section 2.3 Compliance. If any Registrable Securities are being
registered in any registration pursuant to this Agreement, Purchasers will
comply with all anti-stabilization, manipulation, and similar provisions of
Section 10 of the Exchange Act, and any rules promulgated thereunder by the
Commission and, at the Company's request, will execute and deliver to the
Company and to any underwriter participating in such offering an appropriate
agreement to such effect.

         Section 2.4 Termination of Effectiveness. Following the end of the
period during which the Company is obligated to keep the Registration Statement
current and effective as described herein, to the extent Purchasers' Registrable
Securities are included in the Registration Statement, Purchasers shall
discontinue sales thereof pursuant to such Registration Statement, unless
Purchasers have received written notice from the Company of its intention to
continue the effectiveness of such Registration Statement with respect to any of
such securities which remain unsold.

         Section 2.5 Furnish Information. It shall be a condition precedent to
the Company's obligations to take any action pursuant to this Agreement with
respect to the Registrable Securities that Purchasers shall furnish to the
Company such information regarding Purchasers, the Registrable Securities held
by Purchasers, and the intended method of disposition of such securities and
such other information as shall be required to effect the registration of
Purchasers' Registrable Securities or as the Company shall otherwise reasonably
request. The obligations of the Company under this Agreement with respect to any
Purchaser shall be suspended unless and until such Purchaser complies with this
Section 2.5. In connection with Purchasers' obligation to provide information
the Company may request and the Purchasers agree to complete, execute and
deliver to the Company a Stockholders Questionnaire providing the information
required to register their Registrable Securities under the Securities Act for
resale.

         Section 2.6 Underwritten Registration. Purchasers may not participate
in any registration hereunder which is underwritten unless Purchasers: (a) agree
to sell their securities on the basis provided in any underwriting arrangements
approved by the Company; (b) complete and execute all customary questionnaires,
powers of attorney, indemnities, underwriting agreements, and other documents
reasonably required under the terms of such underwriting arrangements; and (c)
agree to pay their pro rata share of all underwriting discounts and commissions
and their own expenses (including, without limitation, counsel fees).

         Section 2.7 Delay of Registration. Purchasers shall not have any right
to obtain or seek an injunction restraining or otherwise delaying the
preparation of, or declaration of the effectiveness of, any

                                       -7-
<PAGE>

Registration Statement initiated in accordance with the terms of this Agreement
if such injunction is the result of any controversy that might arise with
respect to the interpretation or implementation of these provisions.

                                   ARTICLE 3

                                 INDEMNIFICATION

         Section 3.1 Indemnification by the Company. The Company shall indemnify
and hold harmless, with respect to any Registration Statement filed by it
pursuant to this Agreement, to the fullest extent permitted by law, each
Purchaser, as well as each Purchaser's agents, representatives and Affiliates
(collectively, the "Purchaser Indemnified Parties") against all losses, claims,
damages, liabilities, and expenses joint or several (including reasonable fees
of counsel and any amounts paid in settlement effected with the Company's
consent, which consent shall not be unreasonably withheld) (collectively,
"Losses") to which any such Purchaser Indemnified Party may become subject under
the Securities Act, the Exchange Act, any other federal law, any state or common
law, any rule or regulation promulgated thereunder, or otherwise, insofar as
such Losses (or actions or proceedings, whether commenced or threatened, in
respect thereof) are caused by (a) any untrue statement or alleged untrue
statement of a material fact contained in any Registration Statement in which
such Registrable Securities were included as contemplated hereby or the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading, (b) any untrue
statement or alleged untrue statement of a material fact contained in any
Prospectus, together with the documents incorporated by reference therein (as
amended or supplemented if the Company shall have filed with the Commission any
amendment thereof or supplement thereto), or the omission or alleged omission to
state therein a material fact required to be stated therein or necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading, or (c) any violation by the Company of the
Securities Act, the Exchange Act, any other federal law, any state or common
law, or any rule or regulation promulgated thereunder in connection with any
such registration; provided, however, that the Company shall not be liable to
any such Purchaser Indemnified Party in any such case to the extent that any
such Loss (or action or proceeding, whether commenced or threatened, in respect
thereof) arises out of or is based upon any untrue statement or alleged untrue
statement or omission or alleged omission made in such Registration Statement or
amendment thereof or supplement thereto or in any such Prospectus in reliance
upon and in conformity with written information furnished to the Company by or
on behalf of any such Purchaser Indemnified Party relating to such Purchaser
Indemnified Party for use in the preparation thereof; and provided further, that
the Company shall not be liable to any such Purchaser Indemnified Party with
respect to any Prospectus to the extent that any such Loss of such Purchaser
Indemnified Party results from the fact that such Purchaser Indemnified Party
sold Registrable Securities to a person to whom there was not sent or given, at
or before the written confirmation of such sale, a copy of the Prospectus
(excluding documents incorporated by reference) or of the Prospectus as then
amended or supplemented (excluding documents incorporated by reference) if the
Company previously furnished copies thereof to such Purchaser Indemnified Party
in compliance with this Agreement and the Loss of such Purchaser Indemnified
Party results from an untrue statement or omission of a material fact contained
in such Prospectus which was subsequently corrected in the Prospectus (or the
Prospectus as amended or supplemented). Such indemnity and reimbursement of
expenses and obligations shall remain in full force and effect regardless of any
investigation made by or on behalf of the Purchaser Indemnified Parties and
shall survive the transfer of such securities by such Purchaser Indemnified
Parties.

         Section 3.2 Indemnification by Purchaser. Each Purchaser shall
indemnify and hold harmless, to the fullest extent permitted by law, the
Company, its directors, officers, employees, and agents, and each person who
controls the Company (within the meaning of the Securities Act)

                                       -8-
<PAGE>

(collectively, "Company Indemnified Parties") against all Losses to which any
Company Indemnified Party may become subject under the Securities Act, the
Exchange Act, any other federal law, any state or common law, any rule or
regulation promulgated thereunder, or otherwise, insofar as such Losses (or
actions or proceedings, whether commenced or threatened, in respect thereof) are
caused by (a) any untrue statement or alleged untrue statement of a material
fact contained in any Registration Statement in which such Registrable
Securities were included as contemplated hereby or the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, (b) any untrue
statement or alleged untrue statement of a material fact contained in any
Prospectus, together with the documents expressly incorporated by reference
therein (as amended or supplemented if the Company shall have filed with the
Commission any amendment thereof or supplement thereto), or the omission or
alleged omission to state therein a material fact required to be stated therein
or necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, and in the cases
described in clauses (a) and (b) of this Section 3.2, to the extent, but only to
the extent, that such untrue statement or omission is contained in any
information furnished in writing by or on behalf of such Purchaser relating to
such Purchaser for use in the preparation of the documents described in clauses
(a) and (b), (c) any violation by such Purchaser of the Securities Act, the
Exchange Act, any other federal law, any state or common law, or any rule or
regulation promulgated thereunder applicable to such Purchaser and relating to
action of or inaction by such Purchaser in connection with any such
registration, and (d) with respect to any Prospectus, the fact that such
Purchaser sold Registrable Securities to a person to whom there was not sent or
given, at or before the written confirmation of such sale, a copy of any
subsequent Prospectus (excluding the documents incorporated by reference) or of
the Prospectus as then amended or supplemented (excluding documents incorporated
by reference) if the Company has previously furnished copies thereof to such
Purchaser in compliance with this Agreement and the Loss of such Company
Indemnified Party results from an untrue statement or omission of a material
fact relating to information provided by such Purchaser contained in such
Prospectus which was corrected in the Prospectus (or the Prospectus as amended
or supplemented). Such indemnity and reimbursement of expenses and obligations
shall remain in full force and effect regardless of any investigation made by or
on behalf of the Company Indemnified Parties and shall survive the transfer of
securities by such Purchaser Indemnified Parties.

         Section 3.3 Conduct of Indemnification Proceedings. Promptly after
receipt by an identified party hereunder of written notice of the commencement
of any action, suit, proceeding, investigation, or threat thereof with respect
to which a claim for indemnification may be made pursuant hereto, such
indemnified party shall, if a claim in respect thereto is to be made against an
indemnifying party, give written notice to the indemnifying party of the threat
or commencement thereof; provided, however, that the failure to so notify the
indemnifying party shall not relieve it from any liability which it may have to
any indemnified party except to the extent that the indemnifying party is
actually prejudiced by such failure to give notice. If any such claim or action
referred to hereunder is brought against any indemnified party and it then
notifies the indemnifying party of the threat or commencement thereof, the
indemnifying party shall be entitled to participate therein and, to the extent
that it wishes, jointly with any other indemnifying party similarly notified, to
assume the defense thereof with counsel reasonably satisfactory to such
indemnified party (which counsel shall not, except with the consent of the
indemnified party, be counsel to the indemnifying party). The indemnifying party
shall not be liable to an indemnified party hereunder for any legal expenses of
counsel or any other expenses incurred by such indemnified party in connection
with the defense thereof, unless the indemnifying party has failed to assume the
defense of such claim or action or to employ counsel reasonably satisfactory to
such indemnified party. Notwithstanding the foregoing, the indemnified party
shall have the right to retain its own counsel, with the fees and expenses to be
paid by the indemnified party, if representation of such indemnified party by
the counsel retained by the indemnifying party would be inappropriate due to
actual or potential differing interests between such indemnified party and any
other party represented by such

                                       -9-
<PAGE>

counsel in such action. The indemnifying party shall not be required to
indemnify the indemnified party with respect to any amounts paid in settlement
of any action, proceeding, or investigation entered into without the written
consent of the indemnifying party, which consent shall not be unreasonably
withheld. No indemnifying party shall consent to the entry of any judgment or
enter into any settlement without the consent of the indemnified party unless
(a) such judgment or settlement does not impose any obligation or liability upon
the indemnified party other than the execution, delivery, or approval thereof,
and (b) such judgment or settlement includes as an unconditional term thereof
the giving by the claimant or plaintiff to such indemnified party of a full
release and discharge from all liability in respect of such claim and a full
release of all persons that may be entitled to or obligated to provide
indemnification or contribution under this Article.

         Section 3.4 Contribution. If the indemnification provided for herein is
unavailable to or insufficient to hold harmless an indemnified party hereunder,
then each indemnifying party shall contribute to the amount paid or payable by
such indemnified party as a result of the Losses (or actions or proceedings in
respect thereof) referred to herein in such proportion as is appropriate to
reflect the relative fault of the indemnifying party on the one hand and the
indemnified party on the other in connection with the statements, omissions,
actions, or inactions which resulted in such Losses. The relative fault of the
indemnifying party and the indemnified party shall be determined by reference
to, among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact
relates to information supplied by the indemnifying party or the indemnified
party, any action or inaction by any such party, and the parties' relative
intent, knowledge, access to information, and opportunity to correct or prevent
such statement, omission, action, or inaction. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. Promptly after receipt by an indemnified party
hereunder of written notice of the commencement of any action, suit, proceeding,
investigation, or threat thereof with respect to which a claim for contribution
may be made against an indemnifying party hereunder, such indemnified party
shall, if a claim for contribution in respect thereto is to be made against an
indemnifying party, give written notice to the indemnifying party of the
commencement thereof (if the notice specified herein has not been given with
respect to such action); provided, however, that the failure to so notify the
indemnifying party shall not relieve it from any obligation to provide
contribution which it may have to any indemnified party hereunder, except to the
extent that the indemnifying party is actually prejudiced by the failure to give
notice. The parties hereto agree that it would not be just and equitable if
contribution pursuant hereto were determined by pro rata allocation or by any
other method of allocation which does not take account of equitable
considerations referred to herein.

         If indemnification is available hereunder, the indemnifying parties
shall indemnify each indemnified party to the fullest extent provided herein,
without regard to the relative fault of said indemnifying party or indemnified
party or any other equitable consideration provided for herein. The provisions
hereof shall be in addition to any other rights to indemnification or
contribution which any indemnified party may have pursuant to law or contract
shall remain in full force and effect regardless of any investigation made by or
on behalf of any indemnified party, and shall survive the transfer of securities
by any such party.

                                   ARTICLE 4

                                  MISCELLANEOUS

         Section 4.1 Termination. The obligations under Article 1 shall
terminate on the earlier of the date on which all Registrable Securities have
been sold pursuant to a Registration Statement or all Conversion Stock is no
longer a Restricted Security. Purchasers whose shares of Common Stock are sol

                                      -10-
<PAGE>

pursuant to a Registration Statement shall reasonably inform the Company of
sales of such shares and shall provide all such other information as the Company
may reasonably request in order to comply with the requirements of the
Securities Act and the rules and regulations promulgated thereunder, including,
without limitation, Regulation S-K.

         Section 4.2 Assignment; Successors and Assigns. Purchasers may assign
their rights hereunder with respect to any permitted assignee all or any portion
of the Registrable Securities provided that (a) the Company is furnished with
written notice of the name and address of the assignee and the securities with
respect to which such rights are being assigned and all such other information
as may be reasonably requested by the Company in order for the Company to be
able to comply with applicable requirements of the Securities Act and the
Exchange Act and the rules and regulations promulgated thereunder, and (b) the
Company shall have the right to require any holder of Registrable Securities to
execute a counterpart of this Agreement as a condition to such holder's right to
claim any rights hereunder. This Agreement and all provisions thereof shall be
binding upon, inure to the benefit of, and are enforceable by the parties hereto
and their respective successors and permitted assigns.

         Section 4.3 Notices. All notices, requests, and other communications
hereunder shall be in writing and will be deemed to have been duly given and
received (a) when personally delivered, (b) when sent by facsimile upon
confirmation of receipt, (c) four business days after the day on which the same
has been delivered prepaid to a nationally recognized courier service, or (d)
ten business days after the deposit in the United States mail, registered or
certified, return receipt requested, postage prepaid, in each case addressed as
follows:

               (a) if to the Company: then at CanArgo Energy Corporation, P.O.
Box 291, St. Peter Port, Guernsey, Channel Islands, Attn: Corporate Secretary,
facsimile number: +44 1481 729982 (with a copy to McGrigors, Pacific House, 70
Wellington Street, Glasgow G2 6SB, UK, Attn: Paul Davidson, facsimile number +44
141 204 1351); or

               (b) if addressed to a Purchaser, then at the address set forth on
Schedule A attached hereto opposite such Purchaser's name.

         Purchasers or the Company may agree to accept notices and other
communications to it hereunder by electronic communications pursuant to
procedures reasonably approved by it; provided that approval of such procedures
may be limited to particular notices or communications. Any party hereto from
time to time may change its address, facsimile number, or other information for
the purpose of notices to that party by giving notice specifying such change to
the other parties hereto.

         Section 4.4 Public Announcements. Except as otherwise required by law,
Purchasers shall not issue any press release or make any other public
announcement with respect to the transactions contemplated hereby without the
approval of the Company, which approval shall not be unreasonably withheld or
delayed.

         Section 4.5 Governing Law; Jurisdiction. This Agreement shall be
construed and enforced in accordance with, and the rights of the parties shall
be governed by, the law of the State of New York excluding choice of law
principles of the law of such State that would require the application of the
laws of a jurisdiction other than such State. For the purposes of any action or
proceeding involving this Agreement or any other agreement or document referred
to herein or therein, the Company hereby, and shall cause its subsidiaries to,
expressly submits to the nonexclusive jurisdiction of all federal and state
courts sitting in the Borough of Manhattan, City and State of New York and
consents that any order, process, notice of motion or other application to or by
any of said courts or a judge thereof may be served within or without such
court's jurisdiction by registered mail or by personal service, provided that a
reasonable time for appearance is allowed. The Company hereby, and shall cause
its subsidiaries to,

                                      -11-
<PAGE>

irrevocably waives any objection that it may now or hereafter have to the laying
of venue of any suit, action or proceeding arising out of or relating to this
Agreement or any other agreement or document referred to herein or therein
brought in any federal or state court sitting in the City and State of New York,
and hereby further irrevocably waives any claim that any such suit, action or
proceeding brought in any such court has been brought in an inconvenient forum.

         Section 4.6 No Third Party Beneficiary. This Agreement shall not confer
any rights or remedies upon any person other than the parties hereto and their
respective successors and permitted assigns.

         Section 4.7 Severability. In the event that any provision of this
Agreement or the application of any provision hereof is declared to be illegal,
invalid, or otherwise unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall (to the full
extent permitted by law) not invalidate or render unenforceable such provision
in any other jurisdiction.

         Section 4.8 Headings. The headings in this Agreement are for
convenience of reference only and shall not constitute a part of this Agreement,
nor shall they affect its meaning, construction, or effect.

         Section 4.9 Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall be an original but all of which together
shall constitute one instrument. Each counterpart may consist of a number of
copies hereof, each signed by less than all, but together signed by all, of the
parties hereto.

         Section 4.10 Entire Agreement. This Agreement embodies the entire
understanding and agreement between the parties hereto with respect to the
subject matter hereof and supersedes all prior agreements and understandings
relating to the subject matter hereof.

         Section 4.11 Amendment; Waiver. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to or departures from the provisions
hereof may not be given, without the written consent of the Company and a
Required Majority of Holders.

         Section 4.12 Further Assurances. Each party shall cooperate and take
such action as may be reasonably requested by another party in order to carry
out the provisions and purposes of this Agreement and the transactions
contemplated hereby.

                            (SIGNATURE PAGES FOLLOW)

                                      -12-
<PAGE>

     IN WITNESS WHEREOF, the parties have caused this Agreement to be signed by
the undersigned, thereto duly authorized, as of the date first set forth above.

                                      CANARGO ENERGY CORPORATION

                                      By:
                                         ---------------------------------------
                                      Name:
                                           -------------------------------------
                                      Title:
                                            ------------------------------------

                                      INGALLS & SNYDER VALUE PARTNERS L.P.

                                      ------------------------------------------
                                      Thomas O. Bouchar Jr.
                                      General Partner

                                      ------------------------------------------
                                      Nikolaos D. Monoyios

                                      ------------------------------------------
                                      Thomas L. Gipson

                                      ------------------------------------------
                                      Arthur Koenig

                                      ------------------------------------------
                                      Thomas L. Gipson IRA

Registration Rights Agreement
                                       1
<PAGE>

                                            ------------------------------------
                                            Evan Janovic

                                            ------------------------------------
                                            Arthur Ablin

                                            Fledgling Associates, LLC
                                            By: Hartz Trading, Inc., Manager

                                            ------------------------------------
                                            Edward Stern
                                            President

                                            ------------------------------------
                                            Adam Janovic

                                            ------------------------------------
                                            Neil Janovic

                                            ------------------------------------
                                            Anthony Corso

                                            ------------------------------------
                                            John Gilmer

                                            ------------------------------------
                                            Martin Solomon

Registration Rights Agreement

                                       2
<PAGE>

                                   SCHEDULE A

<Table>
<Caption>
NAME OF PURCHASER                                                                     ADDRESS
-----------------                                                                     -------
<S>                                                                        <C>
INGALLS & SNYDER VALUE PARTNERS L.P.                                           INGALLS & SNYDER LLC
THOMAS O. BOUCHAR JR.                                                               61 BROADWAY
                                                                                NEW YORK, NY 10006

NIKOLAOS D. MONOYIOS                                                        C/O THOMAS O. BOUCHER, JR.
                                                                               INGALLS & SNYDER LLC
                                                                                    61 BROADWAY
                                                                                NEW YORK, NY 10006

THOMAS L. GIPSON                                                            C/O THOMAS O. BOUCHER, JR.
                                                                               INGALLS & SNYDER LLC
                                                                                    61 BROADWAY
                                                                                NEW YORK, NY 10006

ARTHUR KOENIG                                                               C/O THOMAS O. BOUCHER, JR.
                                                                               INGALLS & SNYDER LLC
                                                                                    61 BROADWAY
                                                                                NEW YORK, NY 10006

THOMAS L. GIPSON IRA                                                        C/O THOMAS O. BOUCHER, JR.
                                                                               INGALLS & SNYDER LLC
                                                                                    61 BROADWAY
                                                                                NEW YORK, NY 10006

EVAN JANOVIC                                                                C/O THOMAS O. BOUCHER, JR.
                                                                               INGALLS & SNYDER LLC
                                                                                    61 BROADWAY
                                                                                NEW YORK, NY 10006

ARTHUR ABLIN                                                                C/O THOMAS O. BOUCHER, JR.
                                                                               INGALLS & SNYDER LLC
                                                                                    61 BROADWAY
                                                                                NEW YORK, NY 10006

EDWARD STERN                                                                C/O THOMAS O. BOUCHER, JR.
                                                                               INGALLS & SNYDER LLC
                                                                                    61 BROADWAY
                                                                                NEW YORK, NY 10006

ADAM JANOVIC                                                                C/O THOMAS O. BOUCHER, JR.
                                                                               INGALLS & SNYDER LLC
                                                                                    61 BROADWAY
                                                                                NEW YORK, NY 10006

Registration Rights Agreement
</Table>

<PAGE>

<Table>
<S>                                                                        <C>
NEIL JANOVIC                                                                C/O THOMAS O. BOUCHER, JR.
                                                                               INGALLS & SNYDER LLC
                                                                                    61 BROADWAY
                                                                                NEW YORK, NY 10006

ANTHONY CORSO                                                               C/O THOMAS O. BOUCHER, JR.
                                                                               INGALLS & SNYDER LLC
                                                                                    61 BROADWAY
                                                                                NEW YORK, NY 10006

JOHN GILMER                                                                 C/O THOMAS O. BOUCHER, JR.
                                                                               INGALLS & SNYDER LLC
                                                                                    61 BROADWAY
                                                                                NEW YORK, NY 10006

MARTIN SOLOMON                                                              C/O THOMAS O. BOUCHER, JR.
                                                                               INGALLS & SNYDER LLC
                                                                                    61 BROADWAY
                                                                                NEW YORK, NY 10006

</Table>

Registration Rights Agreement<PAGE>
                                                                    EXHIBIT 10.4

                                PLEDGE OF SHARES

                       IN NINOTSMINDA OIL COMPANY LIMITED

<PAGE>

                                PLEDGE OF SHARES

THIS AGREEMENT is made the 25th day of July, 2005

BETWEEN

(1)  CANARGO LIMITED, a company incorporated under the laws of Guernsey, having
     its registered office at P.O. Box 291, St. Peter Port, Guernsey (the
     "Pledgor") and

(2)  INGALLS & SNYDER VALUE PARTNERS, LP, a limited partnership with offices at
     61 Broadway, New York, NY 10006, together with the other Purchasers listed
     on Schedule A to the Note Purchase Agreement (collectively, in such
     capacity "the Pledgee").

WHEREAS

(A)      NINOTSMINDA OIL COMPANY LIMITED is a limited liability company
         incorporated under the laws of Cyprus, under registration number 74623
         (hereinafter called "NOC"), having an authorised share capital at the
         date hereof comprising of 10,000 shares of Cyp1.00 each of which 9,424
         shares have been issued;

(B)      The Pledgor is the registered owner of 9,424 issued shares in NOC;

(D)      CANARGO ENERGY CORPORATION, a Delaware corporation ("CanArgo Energy")
         and the Pledgee have executed and delivered that certain Note Purchase
         Agreement, dated as of even date herewith (the "Note Purchase
         Agreement"), pursuant to which CanArgo Energy has issued and the
         Pledgee has purchased US$ 25,000,000 of CanArgo's Senior Secured Notes
         due in 2009 (the "Notes");

(D)      To induce the Pledgee to enter into the Note Purchase Agreement and to
         purchase the Notes and for other good and valuable consideration, the
         receipt and sufficiency of which are hereby acknowledged, the Pledgor
         has agreed to pledge and grant a security interest in the Collateral,
         as defined below, as security for the Secured Obligations, as defined
         below.

NOW THEREFORE IT IS HEREBY AGREED

                                       2
<PAGE>

1.       DEFINITIONS

1.01     Each capitalized term used herein but not otherwise defined herein
         shall have the meaning assigned to such term in the Note Purchase
         Agreement. In addition, the words and expressions specified below
         shall, except where the context otherwise requires have the meaning
         attributed to them below:

         "Collateral" has the meaning assigned to such term under Clause 2
         hereinbelow.

         "Pledged Shares" means     (i) the shares in NOC listed in Schedule I
                                    hereto;

                                    (ii) any further shares in NOC at any time
                                    issued to the Pledgor or to its nominees or
                                    to any other person on its behalf.

         "Cyp" means the lawful currency of the Republic of Cyprus;

         "Secured Obligations" means all Indebtedness and other monetary
         obligations of CanArgo Energy under or in respect of (i) the Loan
         Documents, whether for principal at the applicable Redemption Price,
         interest (including, without limitation, interest that accrues after
         the filing of a petition initiating any action or proceeding under the
         U.S. Federal Bankruptcy Code or any other bankruptcy, insolvency or
         similar law or statute protecting creditors in effect in any
         jurisdiction, or is an allowed claim in any such action or proceeding),
         fees, premia, indemnifications, liabilities, expenses or otherwise, and
         in each case as amended, supplemented, modified, extended, restated or
         renewed, in whole or in part, from time to time, and without limitation
         as to amount, terms, conditions, covenants and other provisions; and
         (ii) to the extent permitted under the Note Purchase Agreement, any
         instrument or other agreement governing Indebtedness or other monetary
         obligations of CanArgo Energy incurred to refinance, refund or replace,
         in whole or in part, any of the Indebtedness or other monetary
         obligations referred to in clause (i) above, together with any related
         notes, guarantees, collateral documents, instruments and agreements
         executed from time to time in connection therewith.

                                       3
<PAGE>

         "Termination Date" shall mean the date on which the Pledgee shall have
         received final payment in full of all Secured Obligations and all
         amounts owing to the Pledgee under each of the Loan Documents.

1.02     Clause headings are inserted for convenience of reference only and
         shall be ignored in the interpretation of this Agreement. References to
         clause are to be construed as references to clauses of this Agreement.
         Words importing the plural shall include the singular and vice versa.

2.       PLEDGE

2.01     As collateral security for the prompt payment in full in cash when due
         (whether at stated maturity, by acceleration or otherwise) of the
         Secured Obligations, the Pledgor hereby charges, assigns, pledges,
         hypothecates and transfers to the Pledgee, and hereby grants to the
         Pledgee, a security interest in all of such Pledgors' rights, title and
         interest in, to and under the Pledged Shares held by such Pledgor and
         the certificates representing such Pledged Shares, whether now owned or
         hereafter acquired by such Pledgor, wherever located and whether now or
         hereafter existing or arising (collectively, the "Collateral").

3.       REPRESENTATIONS AND WARRANTIES

3.01.    The Pledgor hereby represents and warrants to the Pledgee that:

         (a)      NOC is duly incorporated and validly existing under the laws
                  of the Republic of Cyprus and has power to carry on its
                  business as it is presently conducting same and to own its
                  property and assets;

         (b)      the Pledgor is the legal and registered owner of all of the
                  Pledged Shares charged by the Pledgor pursuant to this
                  Agreement, has full right and title to such Pledged Shares,
                  and such Pledged Shares are free from any charge, lien or
                  encumbrance of any kind save as created pursuant to (or
                  referred to in) this Agreement or in the Note Purchase
                  Agreement;

         (c)      other than recording the existence of the security interest in
                  the books and records of the Company, no filings or
                  registrations are necessary under Cyprus law to perfect the
                  security interest in the Collateral of the Pledgor created
                  under this Agreement, and this Agreement creates in

                                       4
<PAGE>
                  favor of the Pledgee, under Cyprus law, a valid and perfected
                  first priority security interest in the Collateral, securing
                  the payment of the Secured Obligations;

         (d)      any and all necessary governmental authorisations, approvals,
                  licenses, consents or waivers for the Pledgor to (i) grant the
                  security interest granted hereunder; (ii) perfect the security
                  interest created hereunder (including without limitation the
                  first priority nature of such security interest); and (iii)
                  enter into and perform its obligations under this Agreement
                  have been obtained and, as of the date of this Agreement, no
                  further consents or authorities are necessary for any of the
                  matters described in (i), (ii) and (iii) above;

         (e)      the Pledgor has the full power and authority to execute,
                  deliver and perform its obligations and duties under this
                  Agreement, the execution delivery and performance by the
                  Pledgor of this Agreement and the consummation of the
                  transactions contemplated hereby have been duly authorized by
                  all necessary corporate action by the Pledgor, and this
                  Agreement constitutes the legal, valid and binding obligation
                  of the Pledgor, enforceable in accordance with its terms;

         (f)      the execution and delivery of, and the performance of the
                  provisions of this Agreement by the Pledgor does not and will
                  not (i) require any consent or approval from any Person that
                  has not already been obtained; (ii) violate any provision of
                  the Charter Documents of the Pledgor or of any statute,
                  regulation, order, injunction or judgment applicable to the
                  Pledgor; (iii) violate, result in a breach of or constitute a
                  default under any mortgage, indenture or any other material
                  agreement to which the Pledgor is a party or by which it or
                  its property may be bound, except for any such violation or
                  breach which could not be reasonably expected to have a
                  Material Adverse Effect; or (iv) contravene any applicable law
                  or regulation existing at the date hereof or any contractual
                  restriction binding on the Pledgor, except for any such
                  contravention which could not be reasonably expected to have a
                  Material Adverse Effect;

                                       5
<PAGE>

         (g)      the authorised share capital of NOC is Cyp 10,000.00 divided
                  into 10,000 ordinary shares of Cyp 1.00 each, out of which
                  9,424 shares have been issued;

         (h)      there are no options or rights outstanding nor is there any
                  other agreement by virtue of which any person is entitled to
                  have issued or transferred to him or it any shares of NOC,
                  including without limitation the Pledged Shares;

         (i)      there are no actions, suits, litigation, administrative
                  proceedings or other proceedings at law or in equity, or by or
                  before any governmental authority or arbitral tribunal now
                  pending, or to the best Knowledge of the Pledgor, threatened
                  against or affecting the Collateral which could reasonably be
                  expected to have a Material Adverse Effect.

4.       DEPOSIT

4.01     The Pledgor has deposited with Ingalls & Snyder LLC, acting on behalf
         and for the ratable benefit of the Pledgee (in such capacity,
         hereinafter referred to as the "Security Agent"):

         (a)      the share certificate for the 9,424 shares in NOC which are
                  registered in the name of the Pledgor;

         (b)      an instrument of transfer in blank of the 9,424 ordinary
                  shares of NOC referred in Clause 4.01(a) above, duly executed
                  by the Pledgor;

         (c)      an irrevocable proxy from the Pledgor in respect of all the
                  Pledged Shares, substantially in the form annexed hereto
                  marked as "Appendix A".

4.02     The share certificate described in Clause 4.01(a) above shall be held
by the Security Agent until the Termination Date, subject to Clause 7.01.

5.       COVENANTS

5.01     The Pledgor hereby covenants and agrees that, unless authorised in
         writing by the Required Holders, until the Termination Date:

                                       6
<PAGE>

         (a)      the Pledgor shall not vote in favour of any resolution for the
                  increase of capital of NOC or for the issue of any shares in
                  the capital of NOC or for the variation of any of the rights
                  attaching to the Pledged Shares;

         (b)      the Pledgor shall not sell, assign, transfer, charge, grant
                  any option with respect to, pledge or encumber in any manner
                  any part of the Collateral or agree to do any of the aforesaid
                  or suffer to exist any charge, pledge or encumbrance on the
                  Collateral, other than as expressly permitted by the Note
                  Purchase Agreement;

         (c)      the Pledgor shall defend the right, title and interest of the
                  Pledgee in and to the Pledged Shares against all claims,
                  demands or otherwise of any third person or parties and
                  generally to protect the interests of the Pledgee;

         (d)      the Pledgor agrees that it will pledge hereunder, immediately
                  upon its acquisition (directly or indirectly) thereof, any and
                  all additional shares of stock or other securities of NOC.

6.       RIGHTS OF PLEDGOR

6.01     Until the occurrence of an Event of Default which is continuing, the
Pledgor shall be entitled to:

         (a)      exercise all voting, consensual and all conditional or
                  preferential rights attaching to the Pledged Shares, subject
                  to Clause 5.01 above, and the Pledgee shall (at the request
                  and expense of the Pledgor) deliver to the Pledgor such
                  proxies and authorisations as may be necessary to enable the
                  Pledgor to exercise such rights; and

         (b)      receive any dividends, principal, interest or other
                  distributions paid or to be made in respect of the Pledged
                  Shares.

7.       REMEDIES

7.01     Upon the occurrence and during the continuance of an Event of Default,
         the Security Agent may, upon written instructions from the Required
         Holders (i)

                                       7
<PAGE>

         transfer to or register in the name of the Pledgee or in the name of
         the Pledgee's nominees any or all of the certificates and instruments
         representing or evidencing the Pledged Shares; (ii) receive, endorse
         and collect all checks made payable to the order of the Pledgor that
         represent any dividend, payment or other distribution in respect of the
         Collateral, or any part thereof; and (iii) sell all or any part of the
         Pledged Shares to a third-party, on such terms as to price and
         otherwise and to such person and in such manner as the Required Holders
         may in their absolute discretion think fit, and Pledgee shall be
         entitled to recover from the proceeds of such sale all expenses and
         disbursements of the Security Agent relating to such sale and the
         balance of such proceeds shall be applied in discharge of the
         obligations in relation to the Secured Obligations in such manner and
         at such time as the Required Holders may see fit in their absolute
         discretion.

7.02     The Pledgor agrees with the Pledgee that it will from time to time
         execute and sign all transfers, powers of attorney and other documents
         which the Required Holders may require for perfecting the Pledgee's
         title to any of the Pledged Shares or for vesting or enabling the
         Pledgee to vest the same in itself or in any purchaser.

8.       APPOINTMENT AS ATTORNEY

8.01     The Pledgor hereby irrevocably appoints the Security Agent, acting at
         the direction of the Required Holders and upon the occurrence and
         continuance of an Event of Default, to be its attorney-in-fact, to
         insert the name of the Security Agent or its nominees or the name of
         any purchaser (or to make any alteration or addition as regards the
         particulars of the Pledged Securities affected thereby or any other
         addition which such attorney may consider desirable) in any transfer or
         other documents which the Required Holders may require for perfecting
         the Pledgee's title to or for vesting or enabling it to vest the
         Pledged Shares in the Pledgee or its nominees or in any purchaser and
         to redeliver the same after any alteration or addition has been made
         thereto and to present the same for registration in the name of the
         Security Agent or its nominees or of any purchaser and otherwise
         generally for the Pledgor and in its name in its behalf and as its act
         and deed or otherwise to execute seal and deliver and otherwise perfect
         and do any such transfers and other documents as aforesaid and all such
         deeds, assurances, agreements, instruments, acts and things which may
         be required for the full exercise of all or any of the powers hereby

                                       8
<PAGE>

         conferred or which may be deemed proper on, or in connection with, any
         sale, disposition or getting in by the Pledgee of any of the Pledged
         Shares. The Pledgor hereby ratifies and confirms and agrees to ratify
         and confirm any instrument, act or thing which any such attorney may
         execute or do under the provisions of this Clause 8.01.

8.02     Without prejudice to any other provision hereof:

         (a)      the obligations of the Security Agent to the Pledgee and to
                  the Pledgor shall not be and/or shall be deemed not to be
                  fiduciary in nature; and

         (b)      the obligations of the Security Agent to the Pledgee and to
                  the Pledgor shall be limited (a) to its obligations as
                  expressed in this Agreement and (b) in accordance with the
                  written authorisation of the Required Holders, where such
                  authorisation is required.

9.       ISSUE OF CERTIFICATE

9.01     The Pledgor undertakes to promptly and in any event not later than 10
         days from the execution of the present Agreement procure the delivery
         to the Security Agent of certificates in the form set out in the
         Appendix hereto, signed by the Secretary of NOC, confirming the
         endorsement in the Registry of Members of NOC of the security hereby
         constituted.

10.      SECURITY

10.01    It is declared and agreed:

         (a)      that this Agreement shall be held by the Pledgee as a
                  continuing security for the payment of the Secured
                  Obligations, and that the security so created shall not be
                  satisfied by any intermediate payment or satisfaction of any
                  part (but not all) of the Secured Obligations, and that the
                  security so created shall be in addition to and shall not in
                  any way be prejudiced or affected by any collateral or other
                  security now or hereafter held by the Pledgee for all or any
                  part of the Secured Obligations and may be enforced by the
                  Required Holders without prior recourse to any such other
                  security or to any other surety and that every

                                       9
<PAGE>

                  power and remedy given to the Pledgee hereunder shall be in
                  addition to and not a limitation of any and every other power
                  or remedy vested in the Pledgee and that all the powers so
                  vested in the Pledgee may be exercised from time to time and
                  as often as the Required Holders may deem expedient;

         (b)      that the security created by this Agreement shall not be
                  impaired affected or discharged by reason of time or other
                  indulgence granted by the Required Holders or any forbearance
                  (whether as to payment time performance or otherwise
                  howsoever) which might but for this provision have any such
                  effect or by reason of any variation in the terms of the Note
                  Purchase Agreement or any other related agreement thereto or
                  any of them or by reason of the unenforceability invalidity or
                  termination of or any irregularity in the Note Purchase
                  Agreement or any other related agreement thereto or any of
                  them or the execution thereof by Pledgor or any other party
                  thereto or any deficiency in the power of any party thereto to
                  enter into and perform their respective obligations thereunder
                  and should any obligation or purported obligation of any such
                  other party which if enforceable or valid or continuing would
                  be secured by this Agreement be or become wholly or in part
                  unenforceable or invalid or terminated for any reason
                  whatsoever the Pledgor shall keep the Pledgee and the Security
                  Agent fully indemnified against any loss suffered by the
                  Pledgee or the Security Agent as a result of any failure by
                  any such party to perform any such obligation or purported
                  obligation; and

         (c)      that until all Secured Obligations have been paid, discharged
                  and satisfied in full (which expression shall not embrace
                  payment of a dividend in liquidation or bankruptcy of less
                  than 100%) and notwithstanding that the security created by
                  this Agreement may have been realised, the Pledgor waives all
                  rights of subrogation and agrees not to demand or accept
                  repayment in whole or in part of any loan or advances at any
                  time owing to the Pledgor from NOC or to demand or accept any
                  security in respect thereof or to assign the same or charge
                  the same as security or to take any step to enforce any rights
                  against NOC or to claim or prove in competition with the
                  Pledgee or have the benefit of any share in any payment or
                  composition from NOC or any

                                       10
<PAGE>

                  other person or in any other guarantee or security now or
                  hereafter held by the Pledgee.

10.02             On the Termination Date, the Pledgee shall, at the Pledgor's
                  request, discharge the security interest created by this
                  Agreement and the Security Agent shall return the Pledged
                  Shares to the Pledgor, in a form transferable by delivery,
                  free and clear of all Encumbrances arising by, through or
                  under the Security Agent or the Pledgee, and in connection
                  therwith shall take such actions and shall execute and deliver
                  such documents as the Pledgor may reasonably request to
                  implement the foregoing.

11.      NOTICES

11.01    Every notice or demand under this Agreement shall:

         (A)      be in writing, delivered by hand, registered letter or
                  telefax;

         (B)      be deemed to have been received, subject as otherwise provided
                  in this Agreement, in the case of hand delivery, at the time
                  of delivery, in the case of a telefax, at the time of despatch
                  with confirmed answerback or transmission report of the
                  address appearing at the beginning and end of the
                  communication (provided that if the date of despatch is not a
                  Banking Day in the country of the addressee it shall be deemed
                  to have been received at the opening of business on the next
                  such Banking Day), and in the case of registered letter post
                  four (4) days after it has been put into the post.

12.      LAW

12.01    This Agreement shall be governed by and construed in accordance with
         Cyprus Law.

12.02    In relation to any dispute arising out of or in connection with this
         Agreement, and for the exclusive benefit of the Pledgee, the Pledgor
         hereby irrevocably and unconditionally submits to the non-exclusive
         jurisdiction of the Cyprus courts and waives any objection to
         proceedings with respect to this Agreement in such Court on the grounds
         of venue or inconvenient forum.

                                       11
<PAGE>

12.03    Nothing in this Clause shall effect the right of the Pledgee to serve
         process in any manner permitted by law or limit the right of the
         Pledgee to take proceedings with respect to this Agreement against the
         Pledgor in any jurisdiction nor shall the taking of proceedings with
         respect to this Agreement in any jurisdiction preclude the Pledgee from
         taking proceedings with respect to this Agreement in any other
         jurisdiction, whether concurrently or not.

13.      COUNTERPARTS

         This Agreement may be signed in any number of counterparts, all of
         which taken together and when delivered to the Pledgee shall constitute
         one and the same instrument. Any party may enter into this Agreement by
         signing any other counterpart.

14.      AMENDMENT

         No variation or amendment of this Agreement shall be valid unless in
         writing and signed by or on behalf of the Pledgor and the Security
         Agent.

15.      ASSIGNMENT

15.01    The Pledgee may grant a participation in, make an assignment of,
         transfer or otherwise dispose of the whole or any part of its rights
         and benefits under this Agreement.

15.02    The Pledgor shall not assign or transfer all or any part of its rights,
         benefits and obligations under this Agreement without the Required
         Holders' prior written consent.

16.      NO WAIVER

No failure or delay by the Security Agent or the Required Holders in exercising
any right or power hereunder shall operate as a waiver thereof, nor shall any
single or partial exercise of any such right or power, or any abandonment or
discontinuance of steps to enforce such right or power, preclude any other or
further exercise thereof or the exercise of any other right or power.

                                       12
<PAGE>

17.      SEVERABILITY

The unenforceability of any provision of this Agreement shall not invalidate the
remaining provisions of this Agreement.

18.      SUCCESSORS AND ASSIGNS

All covenants and other agreements contained in this Agreement shall bind and
inure to the benefit of the respective successors and assigns of the parties
(including without limitation any subsequent holder of a Note or any of the
Secured Obligations).

               The remainder of this page is intentionally blank.

                                       13
<PAGE>

IN WITNESS whereof the parties hereto have caused this Agreement to be duly
executed the day and year first above written.

PLEDGOR

SIGNED FOR AND ON BEHALF OF
CANARGO LIMITED

------------------------------------------

in the presence of:

1.  Witness: .............................

2.  Witness: .............................

PLEDGEE

SIGNED FOR AND ON BEHALF OF
INGALLS & SNYDER VALUE PARTNERS, LP

------------------------------------------
Thomas O. Boucher Jr.
General Partner

in the presence of:

1.  Witness: .............................

2.  Witness: .............................

                                      S-1
<PAGE>

------------------------------------------
Nikolaos D. Monoyios

in the presence of:

1.  Witness: .............................

2.  Witness: .............................

------------------------------------------
Thomas L. Gipson

in the presence of:

1.  Witness: .............................

2.  Witness: .............................

------------------------------------------
Arthur Koenig

in the presence of:

1.  Witness: .............................

2.  Witness: .............................

------------------------------------------
Thomas L. Gipson IRA

in the presence of:

1.  Witness: .............................

2.  Witness: .............................

                                      S-2
<PAGE>

------------------------------------------
Evan Janovic

in the presence of:

1.  Witness: .............................

2.  Witness: .............................

------------------------------------------
Arthur Ablin

in the presence of:

1.  Witness: .............................

2.  Witness: .............................

Fledgling Associates, LLC
By:  Hartz Trading, Inc., Manager

------------------------------------------
Edward Stern
President

in the presence of:

1.  Witness: .............................

2.  Witness: .............................

                                      S-3
<PAGE>

------------------------------------------
Adam Janovic

in the presence of:

1.  Witness: .............................

2.  Witness: .............................

------------------------------------------
Neil Janovic

in the presence of:

1.  Witness: .............................

2.  Witness: .............................

------------------------------------------
Anthony Corso

in the presence of:

1.  Witness: .............................

2.  Witness: .............................

------------------------------------------
John Gilmer

in the presence of:

1.  Witness: .............................

2.  Witness: .............................

                                      S-4
<PAGE>

------------------------------------------
Martin Solomon

in the presence of:

1.  Witness: .............................

2.  Witness: .............................

SECURITY AGENT

AGREED AND ACCEPTED ON BEHALF OF
INGALLS & SNYDER LLC

------------------------------------------

                                      S-5
<PAGE>
                                    SCHEDULE

                        NINOTSMINDA OIL COMPANY LIMITED

                                   CERTIFICATE

It is hereby certified that a Memorandum has been made in the Register of
Members of NINOTSMINDA OIL COMPANY LIMITED ("the Company") to the effect that
the share certificates in respect of the shares described in the Schedule
hereunder have been pledged to INGALLS & SNYDER VALUE PARTNERS, LP together with
the other Purchasers listed Schedule A to the Note Purchase Agreement
(collectively, in such capacity "the Pledgee"), in accordance with the terms and
conditions of a Pledge of Shares dated July 25, 2005 due notice of the said
pledge having been given by the Pledgee to the Company accompanied by a
certified copy of the said Pledge of Shares.

It is further certified that we have not heretofore received any notice of
pledge in relation to the same shares.

                                    SCHEDULE

9,424 ordinary Shares of CYP 1,00 par value each, numbered from 1 to 9424 both
inclusive, held by CANARGO LIMITED, of Guernsey.

Dated this ....... day of ......................................., .............

                                            ....................................
                                            NINOTSMINDA OIL COMPANY LIMITED

                                    Schedule
<PAGE>

                                   APPENDIX A

Irrevocable proxy referred to in clause 4.01 (c)

The undersigned, being the registered owner of the one hundred percent of the
issued shares of NINOTSMINDA OIL COMPANY LIMITED (the "Company") hereby make,
constitute and appoint INGALLS & SNYDER LLC (the "Security Agent") the true and
lawful attorney and proxy of the undersigned with full power to appoint a
nominee or nominees to act hereunder from time to time to vote the number of
shares of the issued share capital of the Company set against our names at the
foot of this proxy at all annual and special meetings of the Shareholders of the
Company with the same force and effect as the undersigned might or could do and
the undersigned hereby ratify and confirm all that the said attorney or his
nominee(s) shall do or cause to be done by virtue hereof.

The said shares have been pledged to INGALLS & SNYDER VALUE PARTNERS, LP,
together with the other Purchasers listed on Schedule A to the Note Purchase
Agreement, pursuant to a Pledge of Shares dated July 25, 2005

This power of attorney and proxy is coupled with an interest and is irrevocable
and shall remain irrevocable as long as the Pledge of Shares is outstanding and
is in full force and effect.

Shareholder                                                   No. of Shares

CANARGO LIMITED                                               9,424 shares

IN WITNESS WHEREOF this instrument has been duly executed this .......... day of
................................, 2005

SIGNED, SEALED AND DELIVERED
by CANARGO LIMITED
in the presence of:

1.  Witness: .............................................

2.  Witness: .............................................

                                   Appendix A

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00088-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00088-of-00352.parquet"}]]