Document:

Unassociated Document

    APPROVAL
      RIGHTS AGREEMENT AND TERMINATION OF ANTIDILUTION AGREEMENT AND ADDENDUM TO
      WARRANTS

     

    THIS
      AGREEMENT (the “Agreement”) is entered into as of January 1, 2006, by and
      among Patriot Scientific Corporation, a corporation duly organized and existing
      under the laws of the State of Delaware (the “Company” or “Patriot”) and Swartz
      Private Equity, LLC (hereinafter referred to as “Swartz” or “Holder”).

     

    RECITALS:

     

    WHEREAS,
      the Company and Swartz entered into an Antidilution Agreement and Addendum
      to
      Warrants, dated March 19, 2003 (the “Antidilution Agreement”), which
      superseded the Addendum to Amended Secured Promissory Note (the “Addendum to
      Amended Note”) between the Company and Swartz dated on or about March 12,
      2002, which superseded the Agreement (the “Original Loan Advance Agreement”)
      between the Company and Swartz dated on or about January 28,
      2002.

     

    WHEREAS,
      the parties mutually desire to terminate the Existing Antidilution Agreement
      as
      described herein and, in consideration therefor, the Company desires to grant
      certain approval rights to Swartz as further described herein.

     

    TERMS:

     

    NOW,
      THEREFORE, in consideration of the mutual promises, representations, warranties,
      covenants and conditions set forth in this Agreement and for other good and
      valuable consideration, the receipt and sufficiency of which are hereby
      acknowledged, the parties hereto agree as follows:

     

    1.
       Effective
      Date and Term.
      This
      Agreement is being signed on or about October 10, 2006 to be effective as of
      January 1, 2006. This Agreement shall remain in effect until May 31,
      2008.

     

    2. Termination
      of Antidilution Agreement.
      The
      Antidilution Agreement is terminated in its entirety as of January 1, 2006.
      

     

    3. Swartz
      to Retain Securities Issued Pursuant to the Antidilution
      Agreement.
      As a
      part of the consideration of this agreement, the parties agree that Swartz
      shall
      retain any Snapshot Warrants or other securities that have been issued to Swartz
      by Patriot up through the date of execution of this Agreement, including but
      not
      limited to all such securities that were issued pursuant to the Antidilution
      Agreement or its predecessors.

     

    4. Acquisition
      Approval Rights.
      Patriot
      shall not enter into any Protected Acquisition (as defined below), unless it
      obtains Swartz’s written approval at least thirty (30) days prior to entering
      into an agreement for such acquisition. For purposes hereof, a “Protected
      Acquisition” shall mean (i) any acquisition by the Company of any business
      entity or asset of any kind (collectively referred to as an “Acquisition”),
      where the aggregate number of shares of Common Stock and derivative
      securities (on a fully diluted basis) issued as consideration for such
      Acquisition and all related Acquisitions equals or exceeds 10% of the number
      of
      shares of common stock of the Company outstanding at the time of the Acquisition
      (on a fully diluted basis), or (ii) any acquisition (regardless of size) by
      the
      Company of any business entity or asset of any kind that is not unanimously
      approved by Patriot’s board of directors. 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    5. Law
      and Venue.
      This
      Amendment is covered by the law and venue provisions of the Antidilution
      Agreement, as they existed prior to its termination.

     

    IN
      WITNESS WHEREOF, the undersigned have executed this Amendment agreement as
      of
      the 1st day of January, 2006.

     

    
      	COMPANY:	 	SWARTZ
              PRIVATE EQUITY, LLC
	PATRIOT
              SCIENTIFIC CORPORATION	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	By:	
                                                                                                                                           

            	 	By:	 
	 	
              David
                H. Pohl, President, Chief Executive Officer and Chairman of 

              the
                Board

            	 	 	
              Eric
                S. Swartz, Manager

            
	 	 	 	 	 
	 	 	 	 	 
	Signed:
              October 10, 2006	 	Signed:
              October 10, 2006
	 	 	 	 	 
	 	 	 	 	 
	By:	 	 	 	 
	 	
              Thomas
                J. Sweeney

            	 	 	 
	 	
              Chief
                Financial Officer

            	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	ADDRESS	 	ADDRESS:
	 	 	 	 	 
	6183 Paseo Del Norte, Ste.
              180	 	1125 Sanctuary Parkway,
              Suite
              275
	Carlsbad, CA 92011	 	Alpharetta, GA 30004
	Telephone: (858) 674-5000	 	Telephone: (770)
              640-8130
	Facsimile:
              (858) 674-5005	 	Facsimile: (770)
              777-5844exv4w1

 

EXHIBIT 4.1

- CONFIDENTIAL -

SUBSCRIPTION AGREEMENT

SUBSCRIPTION FOR SHARES

	 	 	 
	Name of subscriber:

	 	                (the “Purchaser”)
	 
	 	 
	Shares subscribed for:

	 	                common shares (“the Shares”) of CanArgo Energy
Corporation (“the Company”)
	 
	 	 
	Total Subscription Price 

for the Shares:

	 	NOK
	 
	 	 
	Placement agents:

	 	The shares are subscribed for through Orion
Securities ASA and Terra Securities ASA
(collectively, the “Agents”).
	 
	 	 
	Date of subscription:

	 	19 September 2006
	 
	 	 
	Conditions precedent:

	 	The closing of the Offering is conditioned upon
minimum gross proceeds to the Company of $5 million
and that the AMEX approves the listing of the shares
(collectively, the “Condition Precedent”).
	 
	 	 
	Post-closing covenants:

	 	The Company shall list the Shares on the Oslo Stock
Exchange as soon as practicable after the Shares
have been registered for resale under the United
States Securities Act of 1933, as amended
(“Securities Act”) or are otherwise freely tradeable
through the facilities of the Oslo Stock Exchange in
accordance with Rule 904 of Regulation S
(“Regulation S”) promulgated by the U.S. Securities
and Exchange Commission (“SEC”) under the Securities
Act.
	 
	 	 
	Delivery of the Shares:

	 	At such time as the Company has received gross
proceeds from the sale of 13 million shares of
Common Stock or such fewer number of Shares as it
deems appropriate (but not less than USD$5 million
in gross proceeds of sale) and such shares have been
listed on the AMEX, the Company will instruct its
Stock Transfer Agent to issue and deliver one or
more stock certificates evidencing the Shares to
Brown Brothers Harriman & Co., 140 Broadway, New
York, New York, 10005-1101 Attention: Free Receive,
Trade Processing Department, Telephone No.: (212)
483 1818, as custodian for DnB NOR Bank ASA,
Registrars Department

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- CONFIDENTIAL -

	 	 	 
	 

	 	(“DnB”), registered in the name of Brown Brothers
Harriman & Co., as nominee for the Purchaser, to be held by
DnB on behalf of the Purchaser at such Purchaser’s risk of
loss. By contacting DnB NOR Bank ASA, Registrars Departement,
Aker Brygge A4, 0021 Oslo, Norway, Telephone No.: (+47) 22 48
35 80, the Purchaser may request that a stock certificate
(imprinted with an appropriate restrictive legend) for his,
her or its subscribed and allocated Shares is sent to the
Purchaser. At such time as the Shares are registered for
resale under the Securities Act or at the end of the
Restricted Period (as defined blow), whichever comes first,
the Company will instruct DnB to transfer the subscribed for
Shares which continue to be held by DnB to Purchaser’s
relevant VPS account (as stipulated herein) with the Company’s
ISIN NO for its ordinary shares. If the Purchaser has
previously requested delivery and received stock certificates
evidencing his, her or its subscribed for Shares, as mentioned
in the preceeding sentence, the Purchaser will be required to
resubmit such stock certificates, at the Purchaser’s sole risk
and expense, to DnB in order to have them registered in the
Purchaser’s VPS account. A purchaser or other transferee of
Shares who acquired ownership of his Shares from the Purchaser
during the Restricted Period may be required by the Company to
furnish an opinion of counsel and such other documentation as
described in the section entitled “Restrictions on Resale” of
Schedule 1 attached hereto and made a part hereof in order to
register the transfer in the Company’s stock transfer books
and to register such Shares in such person’s relevant VPS
account.
	 
	 	 
	Subscription price:

	 	NOK 9.10 per Share. Minimum amount for subscription and
allocation is €50,000 or currency equivalent.
	 
	 	 
	Payment instructions:

	 	Payment of the Total Subscription Price shall be made
in a wire transfer of the subscribed amount in
immediately available funds to Terra Securities ASA, to
be held in escrow on behalf of the subscribers until
the Closing Date, for deposit in the above mentioned
Agent’s bank account no 7050.05.54523 by no
later than 27 September 2006.
	 
	 	 
	Delayed payment:

	 	On overdue payment, interest may be charged at 9.75%
per annum. The Company reserves the right to cancel,
reduce

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- CONFIDENTIAL -

	 	 	 
	 

	 	and/or re-allocate the subscription regardless
of the amount of the subscription or the order in which
it was received or
if the Purchaser fails to comply with the payment instructions
and to seek indemnity from the Purchaser for any resulting
losses, damages, costs and expenses.
	 
	 	 
	Representations by Purchaser:

	 	The Purchaser makes the representations,
warranties and covenants to the Company set
forth in Schedule 1 hereto, incorporated by
reference herein, by his or its signature to
this Agreement.
	 
	 	 
	Private placement:

	 	The Shares are offered in a private placement
pursuant to an existing exemption from the
prospectus delivery requirements under
Norwegian law (the Securities Trade Act 1997)
and in reliance upon and conformity with an
exemption from the registration requirements of
the Securities Act afforded by Sections 4(2)
and 4(6) thereof and Regulation S promulgated
thereunder.
	 
	 	 
	Registration Covenant:

	 	The Company hereby covenants to and agrees with
the Purchaser that it shall use its
commercially reasonable efforts to prepare and
file with the SEC a Registration Statement
(“Registration Statement”) on Form S-3, if
available, registering the Shares for resale
under the Securities Act as soon as practicable
after the Closing Date hereunder. The Company’s
obligation to register the Purchaser’s Shares
is contingent, however, upon the Purchaser
completing, executing and delivering to the
Company the Questionnaire attached hereto as
Schedule 3. The Company also agrees to pay the
Purchaser a cash fee of 2.5% of the
subscription price of its Shares for each full
5 Business Day period after receipt by the
Company from all Purchasers of duly signed and
completed Subscription Agreements including
Schedule 3 to the Subscription Agreement until
the Registration Statement is declared
effective by the SEC up to a maximum of 5% of
the subscription price. “Business Day” shall
for the purposes of this Agreement mean any day
other than a Saturday or Sunday on which
commercial banks in London, Oslo and New York
are open for business.

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- CONFIDENTIAL -

	 	 	 
	Complete Agreement:

	 	The Purchaser agrees to be bound by the terms
of this Agreement and the Schedules attached
hereto including the Term Sheet; which form
part of the Agreement.
	 
	 	 
	Notices:

	 	Any notices to the parties shall be given at
the addresses included on the signature page of
this Agreement.
	 
	 	 
	Governing law:

	 	Norwegian law shall govern this Agreement,
although all material issues relating to the
Securities Act and any exemption from the
registration requirements thereunder shall be
governed by United States law. The Parties
consent to the Norwegian Courts as exclusive
venue to resolve any claim or dispute arising
under this Agreement.

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- CONFIDENTIAL -

September 2006

	 	 	 	 	 	 	 
	 	 	On behalf of CanArgo Energy Corporation:
	 
	 	 	 	 	 	 
	 
	 	By:	 	 	 	 
	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 
	 	Name:	 	 	 	 
	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 
	 	Title:	 	 	 	 
	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	Address:	 	Suite 9/10 Borough House

Rue du Pre

St. Peter Port

Guernsey GY1 3RR

British Isles

Telephone: +(44) 1481 729980

Telefax: +(44) 1481 729982	 	 

Purchaser:

[Please Complete
The Following Information And Sign This

Agreement In The Designated Place Below]

	 	 	 	 	 
	Name:
	 	 	 	 
	 
	 	 	 	 
	 
	 	[Please type or print your name]	 	 
	 
	 	 	 	 
	Signature:
	 	 	 	 
	 
	 	 	 	 
	 
	 	Authorized Signatory	 	 
	 
	 	 	 	 
	Number/ Birth 

Number
	 	 	 	 
	 
	 	 	 	 

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- CONFIDENTIAL -

	 	 	 	 	 
	Address:
	 	 	 	 
	 

	 	 

	 	 
	 
	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	Tel. nr.:
	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	Mob. nr.:
	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	Fax no:
	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	VPS account no:
	 	 	 	 
	 

	 	 	 	 

	 	 	 
	Schedules	 	 
	Schedule 1:
	 	Representations by Purchaser
	Schedule 2:
	 	Definition of US Persons
	Schedule 3:
	 	Questionnaire

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- CONFIDENTIAL -

SCHEDULE 1

to the

Subscription Agreement

A.      REPRESENTATIONS AND WARRANTIES OF PURCHASER

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

1.      Compliance with United States Securities Laws

Purchaser understands and acknowledges that (a) the Shares have not been and, except to the extent
described in “Registration Covenant” below, will not be registered under the Securities Act of 1933
as amended (the “Securities Act”) or any state or blue sky or foreign securities laws
(collectively, “Securities Laws”), and may not be offered or sold in the United States or to, or
for the account or benefit of, any “U.S. person” (as defined in Regulation S, which definition is
set out in Schedule 2 to the Subscription Agreement), unless such Shares are registered under
applicable Securities Laws or such offer or sale is made pursuant to exemptions from the
registration requirements of such Laws, (b) the Shares are being offered and sold (i) pursuant to
the terms of Regulation S promulgated under the Securities Act by the United States Securities and
Exchange Commission (the “SEC” or the “Commission”), which permits securities to be sold to
non-“U.S. persons” in “offshore transactions” (as defined in Regulation S) or (ii) only to
“Qualified Institutional Buyers” (as defined in Rule 144A) in a private placement that does not
involve a public offering, subject in each case, to certain terms and conditions, (c) the Company
is relying upon the truth and accuracy of the representations, warranties, agreements,
acknowledgements and understandings of the Purchaser set forth herein in order to determine the
availability of the exemptions from registration under the Securities Act relied upon by the
Company and the suitability of the Purchaser to acquire the Shares; (d) the Shares have been
offered and sold to the Purchaser either (i) in an “offshore transaction” and Purchaser has not
engaged in any “directed selling efforts”, as each such term is defined in Regulation S or (ii) in
a private placement that does not involve a public offering, and (e) in the view of the Commission,
the statutory basis for the exemption from registration claimed for this Offering would not be
present if the Offering of the Shares, although in technical compliance with the Securities Act and
the Regulations and Rules promulgated thereunder, is part of a plan or scheme to evade the
registration provisions of the Securities Act and, accordingly, the Purchaser is making the
representations and warranties in this Schedule to evidence its compliance with the applicable
requirements of the Securities Act and such Regulations and Rules and that its participation in
such Offering is not a part of any such plan or scheme.

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- CONFIDENTIAL -

2.      Status of Purchaser

(a)      Purchaser is purchasing the Shares for its own account or for persons or accounts as to which
it exercises investment discretion for investment and with no present intention to participate in a
public distribution of the shares or any interest therein. Purchaser or the persons or accounts as
to which Purchaser exercises investment discretion are either [CHECK ONE]:

	 	 ̈(i)	 	not a “U.S. person” (as defined in Regulation S); or
	 
	 	 ̈(ii)	 	if a U.S. person, a “Qualified Institutional Buyer” (as
defined in Rule 144A),

and neither Purchaser nor such other person or account has any present intention to sell any of the
Securities in the United States or to a U.S. person or to or for the account or benefit of a U.S.
person either now or promptly after expiration of the earlier of (i) registration of the Shares
under the Securities Act or (ii) the first anniversary of the date hereof (“Restricted Period”).
See Schedule 2 attached for definitions of “U.S. person” and “Qualified Institutional Buyer”.

(b)      Purchaser (and any person or account on whose behalf Purchaser is purchasing) is knowledgeable,
sophisticated and experienced in making, and is qualified to make, decisions with respect to
investments in restricted securities (such as the Shares) and has had access to and reviewed and
considered all information it deems relevant in making a decision to purchase the Shares.
Purchaser acknowledges that it is capable of evaluating the merits and risks of an investment in
the Shares and to make an informed decision relating thereto. In evaluating its investment,
Purchaser has consulted its own investment and/or legal and/or tax advisors.

(c)      Purchaser acknowledges that the Company has made available to Purchaser the opportunity to ask
questions and receive answers concerning the terms and conditions of the offering of the Shares and
the business and financial condition of the Company and to obtain any additional information that
the Company possesses or can acquire without unreasonable effort or expense that is necessary to
verify the accuracy of the information furnished in accordance herewith. Purchaser and its
advisors, if any, have received complete and satisfactory answers to all such inquiries.

(d)      Purchaser has agreed to purchase the Shares for investment purposes and not with a view to a
distribution. Purchaser is not an underwriter of, or dealer in, the Shares and is not
participating, pursuant to a contractual arrangement, in the distribution of the Shares. To the
extent that the Shares are registered in the name of Purchaser’s nominee, Purchaser confirms that
such nominee is acting as custodian for Purchaser of such securities.

(e)      Purchaser understands that no U.S. Federal or state or any foreign governmental or self
regulatory authority or agency has made or will make any finding or determination relating to the

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- CONFIDENTIAL -

fairness for public investment in the Shares, or has passed upon or made, or will pass upon or
make, any recommendation or endorsement of the Shares.

(f)      If Purchaser is a partnership, corporation, trust or other entity, the individual executing
this Subscription Agreement on its behalf represents and warrants that:

     (i)      He or she has made due inquiry to determine the truthfulness of the representations and
warranties made by the Purchaser in this Purchase Agreement; and

     (ii)      He or she is duly authorized under the corporation’s charter and by all requisite
corporate action (and if the Purchaser is a partnership, trust or other unincorporated entity, by
the agreements, deeds, indentures or other instruments pursuant to which such entity was organized
and all requisite action to be taken by such entity) to make this investment and to enter into,
execute and deliver this Subscription Agreement on behalf of such entity.

3.      Restrictions on Re-Sale

(a)      During the Restricted Period, Purchaser shall not engage in any activity for the purpose of, or
which may reasonably be expected to have the effect of, conditioning the market in the United
States for the Shares or directly or indirectly offer, sell, transfer, pledge or otherwise dispose
of the Shares, any interest therein in the United States or to, or for the account or benefit of, a
“U.S. person” (as defined in Regulation S) in violation of any Securities Laws. Purchaser hereby
also agrees that it shall not, either directly or indirectly, sell short the Company’s Shares of
Common Stock on the American Stock Exchange or otherwise in the United States or engage in any
other hedging activities in the United States during the Restricted Period and it has not made any
such sale in anticipation of purchasing the Shares.

(b)      Purchaser understands that the Shares or any interest therein are only transferable on the
books and records of the Transfer Agent and Registrar of the Common Stock of the Company.
Purchaser further understands that the Transfer Agent and Registrar will not register any transfer
of the Shares or any interest therein which the Company in good faith believes violates the
restrictions set forth herein.

(c)      Unless registered under the Securities Act, any proposed offer, sale, transfer, pledge or other
disposition during the Restricted Period of any of the Shares or any interest therein shall be
subject to the condition that Purchaser must deliver to the Company (i) a written certification
that either (i) neither record nor beneficial ownership of the Shares or any interest therein, as
the case may be, has been offered or sold in the United States or to, or for the account or benefit
of, any “U.S. person” (as defined in Regulation S) or (ii) the record nor beneficial ownership of
the Shares or any interest therein, as the case may be, has been offered or sold to a Qualified
Institutional Buyer in accordance with Rule 144A, (ii) a written certification of the proposed
transferee that such transferee (or any account for which such transferee is acquiring such Shares
or any interest therein, as the case may be) is either (i) not a “U.S. person” (as defined in

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- CONFIDENTIAL -

Regulation S) or (ii) is a Qualified Institutional Buyer, that such transferee is acquiring such
Shares or such interest therein, as the case may be, for such transferee’s own account (or an
account over which it has investment discretion) and for investment and not with a view to a
distribution, and that such transferee is knowledgeable of and agrees to be bound by the
restrictions on re-sale set forth in this section and Regulation S or Rule 144A, as the case may
be, during the Restricted Period, and (iii) a written opinion of United States counsel, in form and
substance satisfactory to the Company, to the effect that the offer, sale, transfer, pledge or
other disposition of such Shares, or any interest therein, as the case may be, are exempt from
registration under the Securities Act and any applicable state securities or blue sky laws.

(d)      Purchaser will not, directly or indirectly, voluntarily offer, sell, pledge, transfer or
otherwise dispose of (or solicit any offers to buy, purchase or otherwise acquire or take a pledge
of) its rights under this Subscription Agreement or the Shares or any interest therein otherwise
than in compliance with all applicable Securities Laws, and the rules and regulations promulgated
thereunder.

4.      Legends

(a)      Purchaser agrees that until the Shares are registered for resale under the Securities Act or
are sold pursuant to Rule 904 of Regulation S or Rule 144 after the expiration of the Restricted
Period, the stock certificates representing the Shares shall bear the legend set forth below:

“The Shares of Common Stock represented by this certificate have not been registered
under the United States Securities Act of 1933, as amended (the “Act”), or any other
securities laws, and have been issued in reliance upon exemptions from registration under
the Act contained Sections 4(2) and 4(6) of the Act and in Regulation S and Rule 144A under
the Act. No offer, sale, transfer, pledge or other disposition (collectively, a “Disposal”)
of the Shares of Common Stock represented by this certificate may be made: (a) in the United
States or to, or for the account or benefit of, any “U.S. person” (as defined in Regulation
S) unless (i) registered under the Act and any applicable state securities or blue sky laws
or (ii) exemptions from the registration requirements of such laws are available and CanArgo
Energy Corporation (the “Company”) receives a written opinion of United States legal counsel
in form and substance satisfactory to it to the effect that such Disposal is exempt from
such registration requirements; and (b) outside of the United States or to, or for the
account or benefit of a person who is not a “U.S. person” (as defined in Regulation S)
unless (i) the beneficial owner of such Shares and the proposed transferee submit certain
certifications to the Company and (ii) the Company receives a written opinion of United
States legal counsel in form and substance satisfactory to it to the effect that such
Disposal is exempt from the registration requirements of the Act.”

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5.      Re-Offers by Purchaser in the United States

If Purchaser publicly re-offers all or any part of the Shares in the United States, Purchaser
(and/or certain persons who participate in any such re-offer) may be deemed, under certain
circumstances, to be an “underwriter” as defined in Section 2(11) of the Securities Act. If
Purchaser plans to make any such re-offer, it will consult with United States legal counsel prior
to any such re-offer in order to determine its liabilities and obligations under this Subscription
Agreement, the Securities Act and any applicable state securities or blue sky or foreign securities
laws.

6.      Due Execution, Delivery and Performance of the Purchase Agreement and Other Obligations

Purchaser has full right, power, authority and capacity to enter into this Subscription Agreement
and to consummate the transactions contemplated hereby. Upon the execution and delivery of this
Purchase Agreement by Purchaser, this Purchase Agreement shall constitute the legal, valid and
binding obligations of Purchaser, except as the enforceability thereof may be limited by any
applicable bankruptcy, insolvency, reorganization or other similar laws, relating to or affecting
the enforcement of creditors rights generally and by general equitable principles, regardless of
whether such enforceability is considered in a proceeding in equity or at law.

7.      Survival of Representations, Warranties and Agreements

Notwithstanding any investigation made by Purchaser, all covenants, agreements, representations and
warranties made by Purchaser herein shall survive the delivery to Purchaser of the Shares.

B.      REGISTRATION COVENANTS

(a)      As soon as practicable after the date hereof, the Company shall use its commercially reasonable
efforts to effect such registration of the Shares under the Securities Act as would permit or
facilitate the sale and distribution of all of such Shares and, in connection therewith, shall
prepare and file with the SEC and shall use commercially reasonable efforts to cause to become
effective a registration statement (“Registration Statement”) on Form S-3, if available, covering
the Shares; provided, however, that the Company shall not be obligated to effect more than one such
registration, and; provided, further, however, that the Purchaser shall provide all such
information and materials relating to the Purchaser as the Company may reasonably request and as
may be required to be disclosed pursuant to applicable SEC rules and regulations, and take all such
action as may be reasonably required in order to permit the Company to comply with all the
requirements of the SEC applicable to selling security holders in order to cause the registration
statement to be declared effective by the SEC, such provision of information and materials to be a
condition precedent to the obligations of the Company pursuant to this Agreement.

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(b)      Notwithstanding subparagraph (a) above, the Company shall be entitled on not more than one
occasion in any 365 day period to postpone the declaration of effectiveness of any registration
statement prepared and filed pursuant to subparagraph (a) for a reasonable period of time, but not
in excess of 60 calendar days after the applicable deadline, if the Board of Directors of the
Company, acting in good faith, determines that there exists a happening of any event during the
period that a registration statement described in subparagraph (a) hereof is required to be
effective as a result of which, in the reasonable judgment of the Company, such registration
statement or the related prospectus contains or may contain any untrue statement of a material
fact or omits or may omit to state any material fact required to be stated therein or necessary to
make the statements therein not misleading (a “Material Event”).

(c)      The Purchaser agrees that, upon receipt of any notice from the Company of the happening of a
Material Event, the Purchaser will forthwith discontinue any disposition of Shares pursuant to any
registration statement described in Subparagraph (a) until the Purchaser’s receipt of copies of
supplemented or amended prospectuses prepared by the Company (which the Company will use its
commercially reasonable efforts to prepare and file promptly), and, if so directed by the Company,
the Purchaser will deliver to the Company all copies in their possession, other than permanent file
copies then in the Purchaser’s possession, of the prospectus covering such Shares current at the
time of receipt of such notice. So long as the Purchaser is deemed an “affiliate” of the Company
within the meaning of Rule 144(a)(1) it agrees to discontinue disposition of the Shares during any
restricted trading periods imposed on affiliates by any domestic or foreign securities laws, rules
or regulations applicable to the Company, including, without limitation, any rules and regulations
of any exchange on which the Shares are then listed for trading.

(d)      Except as set forth in subparagraph 2, the Company shall (i) prepare and file with the SEC the
Registration Statement in accordance with subparagraph (a) hereof with respect to the Shares and
shall use commercially reasonable efforts to cause such Registration Statement to become effective
as provided in subparagraph (a) and to keep such Registration Statement described in subparagraph
(a) continuously effective until the earlier to occur of (a) the sale of all of the Shares so
registered and (b) the first anniversary of the date on which the Shares are first issued by the
Company (the “Closing Date”) (it being understood that the Company’s obligations under subparagraph
(a) shall not be satisfied until such occurrence); (ii) furnish to the Purchaser such number of
copies of any prospectus (including any preliminary prospectus and any amended or supplemented
prospectus), as the Purchaser may reasonably request in order to effect the offering and sale of
the Shares to be offered and sold, but only while the Company shall be required under the
provisions hereof to cause such Registration Statement to remain current; (iii) use its
commercially reasonable efforts to register or qualify the Shares covered by such Registration
Statement under the securities or “blue sky” laws of such jurisdictions as the Purchaser shall
reasonably request (provided that the Company shall not be required in connection therewith or as a
condition thereto to qualify to do business or to file a general consent to service of process or
pay taxes in any such jurisdiction where it has not been

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qualified), and do any and all other acts
or things which may be reasonably necessary or advisable to enable the Purchaser to consummate the
public sale or other disposition of the Shares in such jurisdictions; (iv) cause all such Shares to
be listed on the American Stock Exchange and the Oslo Stock Exchange; (v) notify the Purchaser of
any material event; (vi) so long as any registration statement described in subparagraph (a)
remains effective, promptly prepare, file and furnish to the Purchaser a reasonable number of
copies of any supplement to or an amendment of such prospectus as may be necessary so that, as
thereafter delivered to the purchasers of the Shares, such prospectus shall not include an untrue
statement of a material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in the light of the circumstances then
existing; (vii) notify the Purchaser promptly after it shall receive notice thereof, of the date
and time any registration statement and
each post-effective amendment thereto has become effective or a supplement to any prospectus
forming a part of such registration statement has been filed; (viii) notify the Purchaser promptly
of any request by the SEC for the amending or supplementing of such registration statement or
prospectus or for additional information; and (ix) advise the Purchaser promptly after it shall
receive notice or obtain knowledge thereof, of the issuance of any stop order by the SEC suspending
the effectiveness of any registration statement or the initiation or threatening of any proceeding
for that purpose and promptly use commercially reasonable efforts to prevent the issuance of any
stop order or to obtain its withdrawal if such stop order should be issued.

(e)      The Company shall not, directly or indirectly, enter into any merger, consolidation or
reorganization in which the Company shall not be the surviving corporation unless the surviving
corporation shall, prior to such merger, consolidation or reorganization, agree in writing to
assume the obligations of the Company under this Agreement, and for that purpose references
hereunder to “Shares” shall be deemed to include the common stock, if any, that the Purchaser would
be entitled to receive in exchange for its securities under any such merger, consolidation or
reorganization; provided, however, that, to the extent the Purchaser receives securities that are
by their terms convertible into or exercisable or exchangeable for common stock of the issuer
thereof, then only such shares of common stock as are issued or issuable upon conversion, exercise
or exchange of said convertible, exercisable or exchangeable securities shall be included within
the definition of “Shares”.

(f)      The Company shall pay all costs and expenses incurred in connection with any registration of
Shares pursuant to subparagraph (a), including, without limitation, all commissions, transfer
taxes, SEC, stock exchange and “blue sky” registration and filing fees, printing expenses, transfer
agents’ and registrars’ fees, and the fees and disbursements of the Company’s outside counsel and
independent accountants, with respect to any registration of Shares under subparagraph (a). The
Purchaser shall pay its own costs and expenses and all commissions, discounts, SEC and “blue sky”
registration, qualification and filing fees applicable to the Shares included therein and the fees
and expenses of counsel and accountants engaged by Purchaser.

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(g)      The Company’s obligation to register the Shares pursuant to this agreement may not be assigned
by the Purchaser to any person or entity without the Company’s prior written consent.

(h)      The registration rights set forth in subparagraph (a) shall terminate at such time as all of
the Shares then held by the Purchaser can be sold by the Purchaser in accordance with the
provisions of Rule 144 or its equivalent under the Securities Act or have been sold pursuant to a
transaction effected through the facilities of the Oslo Stock Exchange in accordance with the
provisions of Rule 904.

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SCHEDULE 2

to the

Subscription Agreement

DEFINITIONS OF

U.S. PERSON UNDER REGULATION S

AND

QUALIFIED INSTITUTION BUYER UNDER RULE 144A

	 	 	 	 	 	 	 
	1.	 	U.S. Person
	 
	 	 	 	 	 	 
	 	 	(a)	 	“U.S. person” means:
	 
	 	 	 	 	 	 
	 

	 	 	 	(i)
	 	Any natural person resident in the United States;
	 
	 	 	 	 	 	 
	 

	 	 	 	(ii)
	 	Any partnership or corporation organized or incorporated under the laws of the United States;
	 
	 	 	 	 	 	 
	 

	 	 	 	(iii)
	 	Any estate of which any executor or administrator is a U.S. person;
	 
	 	 	 	 	 	 
	 

	 	 	 	(iv)
	 	Any trust of which any trustee is a U.S. person;
	 
	 	 	 	 	 	 
	 

	 	 	 	(v)
	 	Any agency or branch of a foreign entity located in the United States;
	 
	 	 	 	 	 	 
	 

	 	 	 	(vi)
	 	Any non-discretionary account or similar account (other than an estate or trust) held by a dealer or other fiduciary for the benefit or account of a U.S. person;
	 
	 	 	 	 	 	 
	 

	 	 	 	(vii)
	 	Any discretionary account or similar account (other than an estate or trust) held by a dealer or other fiduciary organized, incorporated,
or (if an individual) resident in the United States; and
	 
	 	 	 	 	 	 
	 

	 	 	 	(viii)
	 	Any partnership or corporation if: (A) organized or incorporated under the laws of any foreign jurisdiction; and (B) formed by a U.S. person principally
for the purpose of investing in securities not registered under the Securities
Act, unless it is organized or incorporated, and owned, by accredited
investors (as defined in Rule 501(a) of the Securities Act) who are not natural persons, estates or trusts.

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	 	 	(b)	 	Notwithstanding paragraph (1)(a) of this rule, any discretionary account or
similar account (other than an estate or trust) held for the benefit or account of a
non-U.S. person by a dealer or other professional fiduciary organized, incorporated, or
(if an individual) resident in the United States shall not be deemed a “U.S. person.”
	 
	 	 	 	 	 	 
	 	 	(c)	 	Notwithstanding paragraph (1)(a), any estate of which any professional
fiduciary acting as executor or administrator is a U.S. person shall not be deemed a U.S. person if:
	 
	 	 	 	 	 	 
	 

	 	 	 	(i)
	 	An executor or administrator of the estate who is not a U.S.
person has sole or shared investment discretion with respect to the assets of the estate; and
	 
	 	 	 	 	 	 
	 

	 	 	 	(ii)
	 	The estate is governed by foreign law.
	 
	 	 	 	 	 	 
	 	 	(d)	 	Notwithstanding paragraph (1)(a), any trust of which any professional fiduciary
acting as a trustee is a U.S. person shall not be deemed a U.S. person if a trustee who
is not a U.S. person has sole or shared investment discretion with respect to the trust
assets, and no beneficiary of the trust (and no settlor if the trust is revocable) is a U.S. person.
	 
	 	 	 	 	 	 
	 	 	(e)	 	Notwithstanding paragraph (1)(a), an employee benefit plan established and
administered in accordance with the law of a country other than the United States and
customary practices and documentation of such country shall not be deemed a U.S. person.
	 
	 	 	 	 	 	 
	 	 	(f)	 	Notwithstanding paragraph (1)(a), any agency or branch of a U.S. person located
outside the United States shall not be deemed a “U.S. person” if:
	 
	 	 	 	 	 	 
	 

	 	 	 	(i)
	 	The agency or branch operates for valid business reasons; and
	 
	 	 	 	 	 	 
	 

	 	 	 	(ii)
	 	The agency or branch is engaged in the business of insurance or
banking and is subject to substantive insurance or banking regulation,
respectively, in the jurisdiction where located.
	 
	 	 	 	 	 	 
	 	 	(g)	 	The International Monetary Fund, the International Bank for Reconstruction and
Development, the Inter American Development Bank, the Asian Development Bank, the
African Development Bank, the United Nations, and their agencies, affiliates and
pension plans and any other similar international organizations, their agencies,
affiliates and pension plans shall not be deemed “U.S. persons.”

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	2.	 	United States. “United States” means the United States of America, its territories and
possessions, any State of the United States, and the District of Columbia.
	 
	 	 	 	 	 	 	 	 
	3.	 	Qualified
Institutional Buyer.
	 
	 	 	 	 	 	 	 	 
	 	 	(a)	 	“Qualified Institutional Buyer” means:
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	i.	 	Any of the following entities, acting for its own account or the accounts of other qualified institutional buyers, that in the aggregate
owns and invests on a discretionary basis at least $100 million in securities of issuers that are not affiliated with the entity:
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	A.
	 	Any insurance company as defined in section 2(a)(13) of the Act ;
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	Note: A purchase by an insurance company for one or more of its
separate accounts, as defined by section 2(a)(37) of the Investment
Company Act of 1940 (the “Investment Company Act”), which are neither
registered under section 8 of the Investment Company Act nor required
to be so registered, shall be deemed to be a purchase for the account
of such insurance company.
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	B.
	 	Any investment company registered under the Investment Company Act or any
business development company as
defined in section 2(a)(48) of that Act;
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	C.
	 	Any Small Business Investment
Company licensed by the U.S. Small Business Administration under section
301(c) or (d) of the Small Business Investment Act of 1958;
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	D.
	 	Any plan established and maintained by a state, its political subdivisions, or any agency or instrumentality
of a state or its political subdivisions, for the benefit of its employees;
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	E.
	 	Any employee benefit plan within the meaning of title I of the Employee Retirement Income Security Act of 1974;
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	F.
	 	Any trust fund whose trustee is a bank or trust company and whose participants are exclusively plans of the
types identified in paragraph (a)(1)(i)(D) or (E) of this section,
except trust funds that include as participants individual
retirement accounts or H.R. 10 plans.

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	 	G.
	 	Any business development
company as defined in section 202(a)(22) of the Investment Advisers Act of 1940;
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	H.
	 	Any organization described in section 501(c) (3) of the Internal Revenue Code, corporation (other than a
bank as defined in section 3(a)(2) of the Act or a savings and loan
association or other institution referenced in section 3(a)(5)(A) of the Act or a foreign bank or savings and loan association or equivalent institution),
partnership, or Massachusetts or similar business trust; and

	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	I.
	 	Any investment adviser registered under the Investment Advisers Act.
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	ii.	 	Any dealer registered pursuant to section 15 of the Exchange Act, acting for its own account or the accounts of other qualified
institutional buyers, that in the aggregate owns and invests on a discretionary
basis at least $10 million of securities of issuers that are not affiliated
with the dealer, Provided, That securities constituting the whole or a part of
an unsold allotment to or subscription by a dealer as a participant in a public
offering shall not be deemed to be owned by such dealer;
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	iii.	 	Any dealer registered pursuant to section 15 of the Exchange
Act acting in a riskless principal transaction on behalf of a qualified
institutional buyer;
Note: A registered dealer may act as agent, on a non-discretionary basis, in a
transaction with a qualified institutional buyer without itself having to be a
qualified institutional buyer.
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	iv.	 	Any investment company registered under the Investment Company
Act, acting for its own account or for the accounts of other qualified
institutional buyers, that is part of a family of investment companies which
own in the aggregate at least $100 million in securities of issuers, other than
issuers that are affiliated with the investment company or are part of such
family of investment companies. Family of investment companies means any two or
more investment companies registered under the Investment Company Act, except
for a unit investment trust whose assets consist solely of shares of one or
more registered investment companies, that have the same investment adviser
(or, in the case of unit investment trusts, the same depositor), Provided That,
for purposes of this section:
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	A.
	 	Each series of a series company (as defined in Rule 18f-2 under the Investment Company Act ) shall be
deemed to be a separate investment company; and

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	 	 	 	B.
	 	Investment companies shall be deemed to have the same adviser (or depositor) if their advisers (or
depositors) are majority-owned subsidiaries of the same parent, or
if one investment company’s adviser (or depositor) is a
majority-owned subsidiary of the other investment company’s adviser (or depositor);
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	v.	 	Any entity, all of the equity owners of which are qualified
institutional buyers, acting for its own account or the accounts of other
qualified institutional buyers; and
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	vi.	 	Any bank as defined in section 3(a)(2) of the Act, any savings
and loan association or other institution as referenced in section 3(a)(5)(A)
of the Act, or any foreign bank or savings and loan association or equivalent
institution, acting for its own account or the accounts of other qualified
institutional buyers, that in the aggregate owns and invests on a discretionary
basis at least $100 million in securities of issuers that are not affiliated
with it and that has an audited net worth of at least $25 million as
demonstrated in its latest annual financial statements, as of a date not more
than 16 months preceding the date of sale under the Rule in the case of a U.S.
bank or savings and loan association, and not more than 18 months preceding
such date of sale for a foreign bank or savings and loan association or
equivalent institution.
	 
	 	 	 	 	 	 	 	 
	 	 	(b)	 	In determining the aggregate amount of securities owned and invested on a
discretionary basis by an entity, the following instruments and interests shall be
excluded: bank deposit notes and certificates of deposit; loan participations;
repurchase agreements; securities owned but subject to a repurchase agreement; and
currency, interest rate and commodity swaps.
	 
	 	 	 	 	 	 	 	 
	 	 	(c)	 	The aggregate value of securities owned and invested on a discretionary basis
by an entity shall be the cost of such securities, except where the entity reports its
securities holdings in its financial statements on the basis of their market value, and
no current information with respect to the cost of those securities has been published.
In the latter event, the securities may be valued at market for purposes of this section.
	 
	 	 	 	 	 	 	 	 
	 	 	(d)	 	In determining the aggregate amount of securities owned by an entity and
invested on a discretionary basis, securities owned by subsidiaries of the entity that
are consolidated with the entity in its financial statements prepared in accordance
with generally accepted accounting principles may be included if the investments of
such subsidiaries are managed under the direction of the entity, except that, unless
the entity is a reporting company under section 13 or 15(d) of the Exchange Act,
securities owned by such subsidiaries may not be included if the entity itself is a
majority-owned subsidiary that would be included in the consolidated financial
statements of another enterprise.

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	 	(e)
	 	For purposes of this section,
riskless principal transaction means a
transaction in which a dealer buys a security from any person and makes a simultaneous
offsetting sale of such security to a qualified institutional buyer, including another
dealer acting as riskless principal for a qualified institutional buyer.
	 
	 	 	 	 
	 

	 	(f)
	 	For purposes of this section,
effective conversion premium means the amount,
expressed as a percentage of the security’s conversion value, by which the price at
issuance of a convertible security exceeds its conversion value.
	 
	 	 	 	 
	 

	 	(g)
	 	For purposes of this section,
effective exercise premium means the amount,
expressed as a percentage of the warrant’s exercise value, by which the sum of the
price at issuance and the exercise price of a warrant exceeds its exercise value.

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Schedule 3

To

Subscription Agreement

CanArgo Energy Corporation

Selling Securityholder Questionnaire

Ladies and Gentlemen:

     It is expected that the undersigned will be a Selling Securityholder to be named in a
forthcoming registration of a secondary offering of common stock, $.10 par value per share,
(“Common Stock) of CanArgo Energy Corporation (the “Company”). The undersigned hereby furnishes
the following information for use by the Company in connection with the preparation of a
Registration Statement on Form S-3 (the “Registration Statement”) to be filed with the Securities
and Exchange Commission (“SEC”).

     Please answer every question. If the answer to any question is “no”, “not applicable” or “as
stated”, please so state. Complete all questions with information correct as of September 22, 2006
unless otherwise indicated. If there is not enough room for your answer to any of the following
questions, please use separate sheets and attach them to the questionnaire. Please sign and date
this Questionnaire in the space provided below and return the completed Questionnaire together with
your signed Subscription Agreement to your Placement Agent for delivery to the Company.

	1.	 	Please type or print your name exactly as it should appear in the Registration Statement.
Provide your current address.

	 	 	 	 	 
	Name
	 	 	 	 
	 	 	 
	Principal Residence or Mailing Address:	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	 	 	 

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	2.	 	Your Security Holdings

	 	(a)	 	State the total number of shares of Common Stock owned
“beneficially"1 by you as of September 22, 2006:

	 	 	 	 	 
	 	 	 	 	Number of
	 	 	 	 	Securities Owned
	 	 	Title of	 	Beneficially as of
	 	 	Security	 	September 22, 2006
	Common Stock
	 	 	 	 

	 	(b)	 	If, as a result of applying the rules regarding beneficial ownership summarized
in Appendix A to this Questionnaire, you have included in the amount stated in
response to Question 2(a) above securities which are not owned of record by
you, please give details as to the nature of such “beneficial” ownership of such
securities and state the amount of the securities so owned.

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Nature of	 
	Title of	 	Number of	 	 	Beneficial	 
	Security	 	Ownership	 	 	Securities	 
	Common Stock
	 	 	 	 	 	 	 	 

	 	(c)	 	If, as a result of applying the rules regarding beneficial ownership summarized
in Appendix A to this Questionnaire, you have excluded from the amount stated
in response to Question 2(a) above securities which are not owned of record by
you, please state the amount so excluded and explain why you are not the “beneficial”
owner of such securities.

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Explanation of	 
	Title of	 	Number of	 	 	Non-Beneficial	 
	Security	 	Securities	 	 	Ownership	 
	Common Stock
	 	 	 	 	 	 	 	 

 

			
	 	 	1  Please consult Appendix A to this Questionnaire for information as to the meaning of
“beneficial ownership”.

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	 	(d)	 	If you share beneficial ownership, i.e., share voting power or investment power
as defined in Appendix A, please indicate the other beneficial owner(s) and describe
the circumstances below.

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	Name of Person and	 
	Title of	 	Number of	 	 	Nature of Shared Voting	 
	Security	 	Securities	 	 	or Investment Power	 
	Common Stock
	 	 	 	 	 	 	 	 

	3.	 	Indicate below any person or entity that acts together with you in acquiring, holding, voting
or disposing of securities of the Company and may therefore be considered to be a part of a
“group” with you for United States federal securities law purposes:

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Name of	 
	Title of	 	Number of	 	 	Persons	 
	Security	 	Securities	 	 	in Group	 
	Common Stock
	 	 	 	 	 	 	 	 

	4.	 	If you have the right to purchase any additional securities of the Company of any class,
please indicate the number of securities you have a right to purchase and any contingencies
relating to the same.

	 	 	 	 	 	 	 	 	 
	Title of	 	Number of	 	 	 	 
	Security	 	Securities	 	 	Contingencies	 
	Common Stock
	 	 	 	 	 	 	 	 

	5.	 	Unless otherwise indicated below, all of the shares of Common Stock purchased by you will be
included in the Registration Statement. Such number of shares of Common Stock represent the
maximum number of such securities which may be included by the

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	 	 	Company on the Registration
Statement to be registered for sale by you. Indicate below by check mark whether you wish all
of such shares of Common Stock to be registered, or whether you wish a lesser number to be
registered, in which case insert such lesser number. As stated above, Securityholders who fail to complete this question will have all
of such securities registered.

	 	 	 	 	 	 	 	 	 
	 	 	Please	 	 	Register the	 
	Title of	 	Register All	 	 	Following Lesser	 
	Security	 	Such Securities	 	 	Number of Securities	 
	Common Stock
	 	 	 	 	or	 	 	 	 

	6.	 	(a) Please describe any position, office or other relationship which you have had with the
Company or any person or entity affiliated with the Company during the last three years. For
purposes of this Question 6, a person or entity is “affiliated” with the Company if that
person or entity directly, or indirectly through intermediaries, controls or is controlled by,
or is under common control with, the Company.
	 
	 	 	Answer:

	 	(b)	 	Does blood, marriage or adoption relate you to an executive officer or director
of the Company or any person who has been chosen to become a director or officer of the
Company?
	 
	 	 	 	Relationships more remote than first cousin need not be mentioned.
	 
	 	 	 	If yes, please identify the officer or director and describe the nature of the relationship.

	 	 	Answer:

	 	(c)	 	Have you been a member or employee of, or otherwise associated with any firm
that has provided accounting services to the Company in the last fiscal year or that
the Company proposes to have perform such services in the current fiscal year? If yes,
please describe:

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	 	 	Answer:

	7.	 	Do you know of any voting trust, agreement or other plan or arrangements designed to control
or direct the voting of the Company’s Capital Stock? If so, please describe in detail:
	 
	 	 	Answer:
	 
	 	 	 

	 
	 	 	 

	 
	 	 	 

	 
	 	 	 

	8.	 	Are you a party to or are you aware of any contractual arrangements, including any pledge of
securities of the Company, the operation or the terms of which may at a subsequent date result
in a change of control in the Company? If so, please describe.
	 
	 	 	Answer:
	 
	9.	 	Transactions with the Company
	 
	 	 	Have you, any member of your “immediate family” or any firm, corporation or other entity
with which you or any immediate family member had, have or will have a position or
relationship, had a direct or indirect interest in any transaction or proposed transaction
to which the Company was or is to be a party?
	 
	 	 	The term “immediate family” means your spouse, parents, children, siblings, mothers and
fathers-in-law, sons and daughters-in-law and brothers and sisters-in-law.
	 
	 	 	You may exclude a transaction if the amount involved in the transaction or series of similar
transactions, including all periodic payments in the case of a lease or other agreement
providing for periodic payments, does not exceed $60,000. If yes, please describe:

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Answer:

	10.	 	Plan of Distribution
	 
	 	 	Please read the following description of a proposed plan of distribution of your Shares and
if conforms with the manner of your proposed sale of the Shares kindly check to box provided
below:

     The following correctly summarises the intended manner of the
undersigned’s proposed distribution of its Shares (the terms “we” and “us” refer to the
Company).

     “Under the terms of the private placements, the shares registered for sale hereby are
restricted and not available for trading on the AMEX or the OSE until after a Registration
Statement filed with SEC becomes effective or offers and sales of such shares are otherwise exempt
from the registration requirements of the Securities Act. Thereafter, the shares may be sold or
distributed from time to time by the selling stockholders named in this prospectus, by their
donees, pledgees or transferees, or by their other successors in interest. The selling stockholders
may sell their shares at market prices prevailing at the time of sale, at prices related to such
prevailing market prices at the time of sale, at negotiated prices, or at fixed prices, which may
be changed. Each selling stockholder reserves the right to accept or reject, in whole or in part,
any proposed purchase of shares, whether the purchase is to be made directly or through agents. We
are not aware that any of the selling stockholders have entered into any arrangements with any
underwriters or broker-dealers regarding the sale of their shares of common stock. The registration
rights available to selling stockholders after the Registration Statement becomes effective shall
terminate at such time as all shares qualified by this Registration Statement are sold by the
selling stockholder in accordance with this prospectus or in accordance with the provisions of
Rules 144, 144A or their equivalent under the Securities Act, or have been sold pursuant to a
transaction effected through the facilities of the OSE in accordance with the provisions of Rule
904 or are otherwise freely transferable without restriction under applicable United States
securities laws.

     The selling stockholders may offer their shares, subject to the restrictions outlined above,
at various times in one or more of the following transactions:

	 	•	 	in ordinary brokers’ transactions and transactions in which the broker solicits purchasers;
	 
	 	•	 	in transactions including block trades, in which brokers, dealers or underwriters purchase
the shares as principal and resell the shares for their own accounts pursuant to this prospectus;
	 
	 	•	 	in transactions “at the market” to or through market makers in the common stock;

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	 	•	 	in other ways not involving market makers or established trading markets, including direct
sales of the shares to purchasers or sales of the shares effected through agents;
	 
	 	•	 	through transactions in options, swaps or other derivatives which may or may not be listed
on an exchange;
	 
	 	•	 	an exchange distribution in accordance with the rules of such exchange;
	 
	 	•	 	in privately negotiated transactions;
	 
	 	•	 	in transactions to cover short sales; or
	 
	 	•	 	in a combination of any of the foregoing transactions.

     In addition, the selling stockholders also may sell their shares in private transactions or in
accordance with Rules 144, 144A or 904 under the Securities Act rather than under this prospectus.

     From time to time, one or more of the selling stockholders may pledge or grant a security
interest in some or all of the shares owned by them. If the selling stockholders default in the
performance of the secured obligations, the pledgees or secured parties may offer and sell the
shares from time to time. The selling stockholders also may transfer and donate shares in other
circumstances. The number of shares beneficially owned by selling stockholders who donate or
otherwise transfer their shares will decrease as and when the selling stockholders take these
actions. The plan of distribution for the shares offered and sold under this prospectus will
otherwise remain unchanged, except that the transferees, donees or other successors in interest
will be selling stockholders for purposes of this prospectus. The selling stockholders may use
brokers, dealers, underwriters or agents to sell their shares. The persons acting as broker,
dealers or agents may receive compensation in the form of commissions, discounts or concessions.
This compensation may be paid by the selling stockholders or the purchasers of the shares for whom
such persons may act as agent, or to whom they may sell as a principal, or both. The selling
stockholders and any agents or broker-dealers that participate with the selling stockholders in the
offer and sale of the shares may deemed to be “underwriters” within the meaning of the Securities
Act in connection with the sale of their shares of common stock. Because selling stockholders may
be deemed to be “underwriters” within the meaning of the Securities Act, selling stockholders and
persons participating in the offer and sale of their shares will be subject to the prospectus
delivery requirements of the Securities Act.

     Under the securities laws of certain states, the shares of common stock may be sold in such
states only through registered or licensed brokers or dealers. The selling stockholders are advised
to ensure that any underwriters, brokers, dealers or agents effecting transactions on behalf of the
selling stockholders are registered to sell securities in all fifty states. In addition, in certain
states the shares of common stock may not be sold unless the shares have been registered or
qualified for sale in such state or an exemption from registration or qualification is available
and is complied with. We will pay the entire expenses incidental to the registration, offering and
sale of the shares of common stock to the public hereunder other than commissions, fees and
discounts of underwriters, brokers, dealers and agents. We have agreed to indemnify the selling
stockholders and their controlling persons against certain liabilities, including liabilities under
the Securities Act.

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     The selling stockholders and any other person participating in a distribution of the
securities covered by this prospectus will be subject to applicable provisions of the Exchange Act
and the rules and regulations under the Exchange Act, including Regulation M, which may limit the
timing of purchases and sales of any of the securities by the selling stockholders and any other
such person. Furthermore, under Regulation M, any person engaged in the distribution of the
securities may not simultaneously engage in market-making activities with respect to the particular
securities being distributed for certain periods prior to the commencement of or during such
distribution. Accordingly, except as noted below, the selling stockholders are not permitted to
cover short sales by purchasing shares while the distribution is taking place. All of the above may
affect the marketability of the securities and the availability of any person or entity to engage
in market-making activities with respect to the securities.

     Under our agreements with the selling stockholders, we are required to bear the expenses
relating to the registration of this offering. We estimate that the expenses of the offering to be
borne by us will be approximately $1 million. The selling stockholders will bear any underwriting discounts or
commissions, brokerage fees, stock transfer taxes and fees of their legal counsel. The selling
stockholders may agree to indemnify any broker-dealer or agent that participates in transactions
involving sales of the shares against certain liabilities, including liabilities arising under the
Securities Act. The selling stockholders have agreed to indemnify us against certain liabilities in
connection with the offer of the shares, including liabilities arising under the Securities Act.

     If we are notified by a selling stockholder that any material arrangement has been entered
into with a broker-dealer for the sale of shares through a block trade, special offering, exchange
distribution or secondary distribution or a purchase by a broker or dealer, we will file a
supplement to this prospectus, if required, pursuant to Rule 424(b) under the Securities Act. In
addition, if we are notified by a selling stockholder that a donee or pledgee intends to sell more
than 500 shares, we will file a supplement to this prospectus.

     To the extent required, this prospectus may be amended or supplemented from time to time to
describe a specific plan of distribution. In effecting sales, broker-dealers engaged by the selling
stockholders may arrange for other broker-dealers to participate in the resales.

     The selling stockholders may enter into hedging transactions with broker-dealers in connection
with distributions of the shares or otherwise. In such transactions, broker-dealers may engage in
short sales of the shares in the course of hedging the positions they assume with the selling
stockholders. The selling stockholders also may sell shares short and redeliver the shares to close
out such short positions. The selling stockholders may enter into option or other transactions with
broker-dealers, which require the delivery to the broker-dealer of the shares. The broker-dealer
may then resell or otherwise transfer such shares pursuant to this prospectus. The selling
stockholders also may loan or pledge the shares to a broker-dealer. The broker-dealer may sell the
shares so loaned, or upon a default, the broker-dealer may sell the pledged shares pursuant to this
prospectus.”

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The answers to the foregoing questions are true and accurate to the best of my information and
belief. The undersigned understands and agrees that that the Company will rely on the accuracy and
comleteness of the information sert forth herein in preparing and filing the proposed Registration
Statement with the SEC. The undersigned agrees to promptly notify Elizabeth Landles at the Company
at telephone +(44) 1481 729980 (telefax +(44) 1481 729982) of any changes in the foregoing answers
which should be made as a result of prior inaccuracies or developments occurring before the
effective date of the proposed Registration Statement.

	 	 	 	 	 
	 

	 	Name of Securityholder:	 	 
	 

	 	 	 	 
	 

	 	 	 	(Please Type or Print)
	Date:                                         

	 	Signature:	 	 
	 

	 	 	 	 
	 

	 	 	 	Authorized Signatory

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APPENDIX A — DEFINITIONS

Associate and Associated:

     “Associate” and “associated” are used to indicated the existence of a relationship with
another person or entity. A person is an associate of (and associated with) each of the following:

	 	(a)	 	Any business or other enterprise of which he is

	 	(i)	 	a partner, officer or director; or
	 
	 	(ii)	 	directly or indirectly, the beneficial
owner of 10% or more or any class of
equity securities;

	 	(b)	 	Any trust or estate in which he has a
beneficial interest or of which he is a trustee,
executor, administrator or similar fiduciary; and
	 
	 	(c)	 	Any member of his family. (Immediate
family includes one’s spouse; parents;
children; siblings; mothers and fathers-in-law; and
brothers and sisters-in-law.)

Beneficial and Beneficially:

     “Beneficial” and “beneficially” refer to ownership of securities registered in a
person’s name, or in bearer form, or otherwise held by him or by others for his benefit (including
those held in trusts in which he has an interest; those held for his account by pledgees; those
owned by a partnership of which he is a member; those owned by any corporation which he should
regard as a personal holding corporation; or those held in the name of another person if by reason
of arrangement he obtains benefits substantially equivalent to ownership or can vest and revest
title in himself immediately or at some future date).

     Under revised rules adopted by the Securities and Exchange Commission, you are deemed to be
the beneficial owner of a security if you directly or indirectly, through any contract,
arrangement, understanding, relationship or otherwise (1) have or share voting power, or
(2) have or share investment power over the security. Voting power includes the power to vote,

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or to direct the voting of, a security. Investment power includes the power to dispose of the
security or to direct its disposition.

     If you are a trustee, you are the beneficial owner of equity securities held in trust where
you or members of your immediate family have a vested interest in the income or principal of a
trust or own a beneficial vested interest in a trust. Where you are the settlor of a trust and you
retain the power to revoke the trust without the consent of all the beneficiaries, you are the
beneficial owner.

     You are also the beneficial owner of any security of which you have a right to acquire
beneficial ownership at any time within 60 days. For example, you beneficially own any security
that you are entitled to acquire within 60 days through any means, including but not limited to (1)
the exercise of any option, warrant, or right, (b) conversion of a convertible security, (c)
pursuant to the power to revoke a trust, discretionary account or similar arrangement or (d)
pursuant to the automatic termination of a trust, discretionary account or similar arrangement. In
addition, any person who acquires an option, warrant, right to convertible security or any power
specified in (c) above, with the purpose or effect of changing or influencing the control of the
issuer, or in connection with or as a participant in any transaction having such purpose or effect,
immediately upon such acquisition shall be deemed to be the beneficial owner of the securities
which may be acquired through the exercise or conversion of such option, warrant, right,
convertible security or power.

     If any equity securities of the Company are held by a corporation of which you are a majority
shareholder, you are deemed the beneficial owner of such securities.

     In the absence of special circumstances you should include as beneficially owned by you any
equity securities of the Company held in the name of your spouse, your minor children, or in the
name of a relative who shares your home. The conclusion that you own such securities is based on
the fact that such a relationship ordinarily would result in your having the power to exercise a
controlling influence over either the purchase, voting or the disposition of such securities. The
Securities and Exchange Commission takes the position that you also own such securities if you
obtain benefits substantially equivalent to those of ownership, such as the “application of the
income derived from such securities to maintain a common home [or] to meet expenses which [you]
otherwise would meet from other sources. However, you are entitled to disclaim beneficial
ownership of such securities if in your judgment the circumstances appear to justify a disclaimer.

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     Under the Securities and Exchange Commission’s beneficial ownership rules, all equity
securities of the Company owned by you must be aggregated in calculating the number of shares
beneficially owned by you, regardless of the form which such ownership takes. Please note that
under the rules, a single security may be deemed to be beneficially owned by more than one person.

Control or Control Person:

     “Control” means the possession, direct or indirect, of the power to direct or cause the
direction of the management and policies of a company, whether through the ownership of voting
securities, by contract or otherwise. Every person who, by or through stock ownership,
agency, or otherwise, or who, pursuant to or in connection with an agreement or understanding with
one or more other persons by or through stock ownership, agency, or otherwise, controls any person
is a “control person.”

Group:

     A “group” exists when two or more persons act as a partnership, limited partnership,
syndicate, or other group for the purpose of acquiring, holding or disposing of securities
of a company.

Interest:

     In addition to a direct interest, the term “interest” includes any indirect interest such as
through a partnership, corporation, trust or estate of which one is a partner (other than a limited
partner owning less than a 10% interest in the partnership), officer, director, holder of a 10% or
more equity interest, trustee, executor, administrator or similar fiduciary.

Security and Securities:

     “Security” and “securities” mean any note, stock, treasury stock, bond, debenture, evidence of
indebtedness, certificate of interest or participation in any profit sharing agreement,
collateral-trust certificate, preorganization certificate or subscription, transferable share,
investment contract, voting-trust certificate, certificate of deposit for a security, fractional
undivided interest in oil, gas or other mineral right, or, in general, any interest or instrument
commonly known as a “security”, or any certificate of interest or participation in, temporary or
interim certificate for, receipt for, guarantee of, or warrant or right to subscribe to or purchase
any of the foregoing.

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