Document:

exv10w1

 

Exhibit
10.1 

CONSENT AND CONVERSION AGREEMENT

This CONSENT AND CONVERSION AGREEMENT (this “Agreement”) is made and entered into as of the 5th day
of June, 2007 by and among:

	(1)	 	CANARGO ENERGY CORPORATION, a Delaware Corporation (the “Company”);
	 
	(2)	 	THE PERSONS whose names are set out in Schedule 1 (the “Senior Noteholders” and individually
a “Senior Noteholder”); and
	 
	(3)	 	CANARGO LIMITED, a company incorporated under the laws of Guernsey (“CanArgo Limited”).

WHEREAS

	(A)	 	On 25 July 2005 the Senior Noteholders entered into a Note Purchase Agreement with the
Company, as amended (the “NPA”) pursuant to which the Company issued US$25,000,000 in
aggregate principal amount of senior secured promissory notes due 25 July 2009 (the “Senior
Secured Notes”) to the Senior Noteholders which are convertible into shares of common stock,
par value $0.10 each, in the Company.
	 
	(B)	 	On or around the date of this Agreement, the Company and the Senior Noteholders have entered
into an amendment to the NPA pursuant to which the Senior Noteholders have acquired the right
to convert an aggregate of US$10,000,000 of the entire outstanding principal amount of the
Senior Secured Notes into Tethys Common Stock at a price of US$2.50 per share of Tethys Common
Stock (the “Amendment Agreement”).
	 
	(C)	 	Certain of the Senior Noteholders are willing to agree to convert US$10 million in aggregate
of their Senior Secured Notes into Tethys Common Stock in accordance with the NPA as amended
by the Amendment Agreement on the terms and subject to the conditions set out in this
Agreement.

IT IS AGREED as follows:

	1	 	DEFINITIONS AND INTERPRETATION

	1.1	 	In this Agreement the following words and expressions shall,
unless the context otherwise requires, have the following
meanings:
	 
	 	 	“Business Day” means any day other than a Saturday, a Sunday or a day on which commercial
banks in New York City, Toronto or London are required or authorized to be closed;
	 
	 	 	“Conversion” has the meaning ascribed in Clause 3.1 of this Agreement;
	 
	 	 	“Conversion Date” means the date five Business Days from the date of satisfaction of the
conditions specified in Clause 2.1 of this Agreement;
	 
	 	 	“Conversion Stock” has the meaning ascribed to it in Clause 3.1 of this Agreement;

 

 

	 	 	“Senior Noteholders” means the record holders of the Senior Secured Notes as of the
Conversion Date;
	 
	 	 	“Tethys” means Tethys Petroleum Limited, a company incorporated under the laws of the
Bailiwick of Guernsey and an indirect subsidiary of the Company;
	 
	 	 	“Tethys Common Stock” means the ordinary shares with a nominal value of $0.10 each in the
capital of Tethys; and
	 
	 	 	“Tethys Share Pledge” means the pledge over certain of the Tethys Common Stock granted to
the Senior Noteholders pursuant to the Security Interest Agreement dated 9 February 2007
by and among CanArgo Limited, Tethys, Ingalls & Snyder LLC and others party thereto.
	 
	1.2	 	Words and expressions defined in the NPA shall have the same
meanings herein except in so far as expressly varied by or
inconsistent with the provisions of this Agreement.
	 
	2	 	CONDITIONS PRECEDENT
	 
	2.1	 	The Senior Noteholders consent to the conversion of, and those
Senior Noteholders whose names are set out in Schedule 1 agree
that they shall convert, an aggregate of US$10 million of the
entire principal amount issued and outstanding under the Senior
Secured Notes into shares of Tethys Common Stock pursuant to the
NPA conditional upon the prior or contemporaneous satisfaction or
waiver of the following conditions:

	 	(a)	 	The Senior Noteholders and the Company shall have entered into the Amendment
Agreement; and
	 
	 	(b)	 	Ingalls & Snyder LLC, as the Security Agent, shall have provided the requisite
consent to release the Conversion Stock from the Tethys Share Pledge.

	2.2	 	Notwithstanding Clause 2.1 the Required Holders (as defined in the
NPA) shall be entitled by notice in writing given to the Company
to waive (to such extent as they may think fit) compliance with
the conditions stated in Clauses 2.1(a) and (b).
	 
	2.3	 	If any of the conditions in Clause 2.1 has not been satisfied or
waived by 8 June 2007 (or by such later date as may be agreed in
writing between the Senior Noteholders, and the Company), then,
without prejudice to any accrued rights of the parties arising in
respect of any of the provisions of this Agreement, this Agreement
shall, thereupon cease to have effect.
	 
	3	 	CONVERSION
	 
	3.1	 	Subject to the terms of Clause 2, on and with effect from the
Conversion Date the Senior Noteholders whose names are set out in
Schedule 1 shall convert US$10 million of the entire outstanding
principal amount of the Senior Secured Notes held by them in
aggregate into 4 million shares of Tethys Common Stock (the
“Conversion Stock”) pursuant to the NPA as amended by the
Amendment Agreement (the “Conversion”). The principal amount of
each of the Senior Secured Notes being converted by each such
Senior Noteholder pursuant to this Agreement is as set out
opposite their respective names in Column (2) of Schedule 1.
	 
	3.2	 	Accrued interest through the Conversion Date in respect of the
Senior Secured Notes being converted shall be payable by the
Company in cash to each of the Senior Noteholders who is

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	 	 	converting Senior Secured Notes in the proportions set out
opposite their respective names in Column (4) of Schedule 1. The
interest payments due to the converting Senior Noteholders
pursuant to this Clause 3.2 shall be paid to the converting Senior
Noteholders on the Conversion Date.
	 
	3.3	 	The Conversion Stock shall be divided amongst the converting
Senior Noteholders in the amounts set out opposite their
respective names in Column (3) of Schedule 1.
	 
	3.4	 	The Conversion Stock to be issued to each converting Senior
Noteholder pursuant to this Clause 3 to effect the Conversion
shall be satisfied by the transfer on the Conversion Date by
CanArgo Limited of the requisite amount of the Conversion Stock
due to each converting Senior Noteholder with full title guarantee
in consideration for the cancellation of an aggregate of US$10
million of the Senior Secured Notes held by the converting Senior
Noteholders.
	 
	4	 	WARRANTS
	 
	4.1	 	The consideration payable to the converting Senior Noteholders for
the conversion of all or part of their Senior Secured Notes into
Tethys Common Stock pursuant to Clause 3 shall be the issue by the
Company of warrants (the “Compensation Warrants”) to purchase up
to an aggregate of 11,111,111 shares, at an exercise price of
US$0.90 per share (subject to adjustment), of the Company’s common
stock par value US$0.10 per share (the “Compensation Warrant
Shares”). The Compensation Warrants issuable to the converting
Senior Noteholders pursuant to this Clause 4.1 shall be issued to
the converting Senior Noteholders on the Conversion Date upon
consummation of the conversion.
	 
	4.2	 	The Compensation Warrants to be issued to the converting Senior
Noteholders shall be substantially in the form set out in Schedule
2, with such changes thereto, if any, as may be approved by the
Required Holders (as defined in the NPA) and the Company in
respect of their respective Compensation Warrants.
	 
	4.3	 	The Compensation Warrants shall be divided amongst the converting
Senior Noteholders in the proportions of the Senior Secured Notes
being converted by them respectively.

	5	 	GENERAL

	5.1	 	Representations and Warranties
	 
	 	 	The Senior Noteholders party hereto hereby repeat their respective representations and
warranties to the Company set forth in the NPA with the same effect as if set forth in
full herein, and, in connection therewith, they hereby further represent, warrant,
acknowledge and agree with the Company that neither the Conversion Stock, the Compensation
Warrants nor the Compensation Warrant Shares (collectively the “Securities”) have been
registered under the United States Securities Act of 1933, as amended (the “Securities
Act”) or any other state, provincial or foreign securities laws (such laws together with
the Securities Act being collectively referred to herein as “Securities Laws”), the
Securities are “restricted securities” as defined in Rule 144 promulgated under the
Securities Act and the Securities may not be sold, transferred or offered for sale except
in compliance with all applicable Securities Laws and the rules and regulations
promulgated thereunder. The certificates evidencing the Securities shall be imprinted
with suitable restrictive legends reflecting the foregoing.

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	5.2	 	Further Assurance
	 
	 	 	The parties shall at their own cost do or procure the doing of all such acts and things
and/or execute or procure the execution of all such documents as are reasonably required
to give effect to the provisions of this Agreement.
	 
	5.3	 	Assignment
	 
	 	 	No party shall be entitled to assign in whole or in part any rights and/or obligations
arising under this Agreement to a third party without the prior written consent of the
other parties.
	 
	5.4	 	Entire Agreement
	 
	 	 	This Agreement together with the NPA constitute the entire agreement among the parties
with respect to the matters dealt with herein and supersedes any previous agreement among
the parties in relation to such matters.
	 
	5.5	 	Variation
	 
	 	 	No variation of this Agreement shall be valid or effective unless made by an instrument in
writing signed by the parties hereto.
	 
	5.6	 	Waiver
	 
	 	 	No waiver by either party of any of the requirements hereof or of any of its rights
hereunder shall be effective unless given in writing and signed by or on behalf of that
party and no forbearance, delay or indulgence by either party in enforcing the provisions
of this Agreement shall prejudice or restrict the rights of that party nor shall any
waiver by that party of any of the requirements hereof or any of its rights hereunder
release the other from full performance of its remaining obligations stated herein.
	 
	5.7	 	Severability
	 
	 	 	Each provision of this Agreement shall be construed separately and (save as otherwise
expressly provided herein) none of the provisions hereof shall limit or govern the extent,
application or construction of any other of them and notwithstanding that any provision of
this Agreement may prove to be illegal or unenforceable the remaining provisions of this
Agreement shall continue in full force and effect.
	 
	5.8	 	Counterparts, Facsimile Execution and Delivery
	 
	 	 	This Agreement may be executed in any number of counterparts and by each of the parties on
separate counterparts each of which when executed and delivered shall be deemed to be an
original, but all the counterparts together shall constitute one and the same agreement.
Delivery of an executed counterpart of a signature page to this Agreement by telecopy
shall be equally effective as the delivery of a manually executed counterpart of this
Agreement.
	 
	5.9	 	Law and Jurisdiction
	 
	5.9.1	 	This Agreement shall be governed by and construed in accordance
with the law of the State of New York.

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	5.9.2	 	Each party hereby submits to the non-exclusive jurisdiction of the
Courts of New York as regards any claim, dispute or matter arising
out of or in connection with this Agreement and its implementation
and effect.
	 
	5.10	 	Binding Effect
	 
	 	 	This Agreement shall be binding upon the parties hereto and their successors in interest
and assigns.
	 
	5.11	 	Notices
	 
	 	 	All notices, demands, elections, requests and communications provided for hereunder shall
be in writing and sent: (a) by telefacsimile if the sender on the same day sends a
confirming copy of such notice by a recognized overnight delivery service (charges
prepaid), or (b) by registered or certified mail with return receipt requested (postage
prepaid), or (c) by a recognized overnight delivery service (with charges prepaid). Any
such notice must be sent:

	 	(i)	 	if to the Senior Noteholders, to Senior Noteholders at their respective
addresses as set forth on the books maintained by the Company, or at such
other address as any Senior Noteholder shall have specified to the Company
in writing,
	 
	 	(ii)	 	if to the Company, to the Company at its principal executive office to
the attention of Chief Executive Officer, or at such other address as the
Company shall have specified to the Senior Noteholders in writing;
	 
	 	(iii)	 	if to CanArgo Limited, to CanArgo Limited at its principal executive
office for the attention of the Chief Executive Officer, or at such other
address as CanArgo Limited shall have specified to the Company in writing.

	 	 	Notices under this Section 5.10 will be deemed given only when actually received.

[signature pages follows]

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

SIGNED by

	 	 	 
	 

For and on behalf of CANARGO

	 	 
	ENERGY CORPORATION
	 	 

	 	 	 	 	 
	Name:
	 	 	 	 
	 

	 	 

	 	 
	 
	 	 	 	 
	Title:
	 	 	 	 
	 

	 	 

	 	 

	 	 	 
	 

	 	 
	For and on behalf of INGALLS & SNYDER
	 	 
	VALUE PARTNERS L.P.
	 	 

	 	 	 	 	 
	Name:
	 	 	 	 
	 

	 	 

	 	 
	 
	 	 	 	 
	Title:
	 	 	 	 
	 

	 	 

	 	 

	 	 	 
	 

NIKOLAOS D MONOYIOS

	 	 
	 
	 	 
	 

THOMAS L GIPSON

	 	 
	 
	 	 
	 

ARTHUR KOENIG

	 	 
	 
	 	 
	 

THOMAS L GIPSON IRA

	 	 
	 
	 	 
	 

EVAN JANOVIC

	 	 
	 
	 	 
	 

ARTHUR ABLIN

	 	 

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For and on behalf of FLEDGLING

	 	 
	ASSOCIATES LLC
	 	 
	By: Hartz Trading, Inc., Manager
	 	 

	 	 	 	 	 
	Name:
	 	 	 	 
	 

	 	 

	 	 
	 
	 	 	 	 
	Title:
	 	 	 	 
	 

	 	 

	 	 

	 	 	 
	 

ADAM JANOVIC

	 	 
	 
	 	 
	 

NEIL JANOVIC

	 	 
	 
	 	 
	 

ANTHONY CORSO

	 	 
	 
	 	 
	 

JOHN GILMER

	 	 
	 
	 	 
	 

MARTIN SOLOMON

	 	 
	 
	 	 
	SIGNED by
	 	 
	 
	 	 
	 

For and on behalf of

	 	 
	CANARGO LIMITED
	 	 

	 	 	 	 	 
	Name:
	 	 	 	 
	 

	 	 

	 	 
	 
	 	 	 	 
	Title:
	 	 	 	 
	 

	 	 

	 	 

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SCHEDULES

SCHEDULE 1

Senior Noteholders

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	(3)	 	 
	 	 	(2)	 	Number of shares of	 	(4)
	 	 	Amount of Senior	 	Tethys Common Stock	 	Proportion of
	(1)	 	Secured Note being	 	to be received on	 	Interest Payment
	Name of Senior Noteholders	 	converted (US$)	 	Conversion	 	due on Conversion
	Ingalls & Snyder Value
Partners L.P.
	 	 	5,500,000	 	 	 	2,200,000	 	 	 	55	%
	Arthur Koenig
	 	 	2,000,000	 	 	 	800,000	 	 	 	20	%
	Thomas L Gipson IRA
	 	 	1,000,000	 	 	 	400,000	 	 	 	10	%
	Evan Janovic
	 	 	275,000	 	 	 	110,000	 	 	 	2.75	%
	Arthur Ablin
	 	 	250,000	 	 	 	100,000	 	 	 	2.5	%
	Fledgling Associates LLC
	 	 	250,000	 	 	 	100,000	 	 	 	2.5	%
	Adam Janovic
	 	 	200,000	 	 	 	80,000	 	 	 	2	%
	Neil Janovic
	 	 	200,000	 	 	 	80,000	 	 	 	2	%
	Anthony Corso
	 	 	125,000	 	 	 	50,000	 	 	 	1.25	%
	John Gilmer
	 	 	125,000	 	 	 	50,000	 	 	 	1.25	%
	Martin Solomon
	 	 	75,000	 	 	 	30,000	 	 	 	0.75	%

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SCHEDULE 2

Form
of Warrant Certificate

(Senior Noteholders)

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SCHEDULE 2

FORM OF WARRANT

(Senior Noteholders)

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

CANARGO ENERGY CORPORATION

Incorporated Under the Laws of the State of Delaware

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	No. 	 	 	 	 	 	 	 	 Common
	 

	 	 	 	 

	 	 
	 	 	 	 

	 	 
	 	 	 	 	 	 	 	 	Stock Purchase Warrants	 	 

CERTIFICATE FOR COMMON STOCK

PURCHASE WARRANTS

1. Warrant, This Warrant Certificate certifies that
                    , or registered assigns (the “Registered Holder”), is the registered owner of the above
indicated number of Warrants expiring on the Expiration Date, as hereinafter defined. One (1)
Warrant entitles the Registered Holder to purchase one (1) share of the common stock, $.10 par
value (a “Share”), of CanArgo Energy Corporation, a Delaware corporation (the “Company”), from the
Company at a purchase price of $0.90 (the “Exercise Price”) at any time during the Exercise Period,
as hereinafter defined, upon surrender of this Warrant Certificate with the exercise form hereon
duly completed and executed and accompanied by payment of the Exercise Price at the principal
office of the Company.

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

     This Warrant is one of several warrants in substantially identical form issued pursuant to the
provisions of that certain Conversion Agreement dated June 5, 2007 by and among the Company,
CanArgo Limited (a company incorporated under the laws of the Island of Guernsey), and the persons

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whose names and addresses are set out in Schedule 1 attached thereto (the “Senior Noteholders” and
individually a “Senior Noteholder”)(the “Conversion Agreement”). Any capitalized terms not
otherwise expressly defined herein shall have the meaning ascribed thereto in the Conversion
Agreement.

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

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

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

3. Exercise. Subject to the terms hereof: the Warrants, evidenced by this Warrant
Certificate, may be exercised at the Exercise Price in whole or in part at any time during the
period (the “Exercise Period”) commencing on the next Business Day after the Conversion Date as
contemplated by Section 4 of the Conversion Agreement and terminating at the close of business on
the earlier of: (i) July 25, 2009; or (ii) or shall be exercised on such sooner date at the
election of the Company and upon at least thirty (30) days prior written notice to the Registered
Holder in the event that: (a) the Manavi M12 well indicates, by way of an independent engineering
report, sustainable production, if developed, in excess of 7,500 barrels of oil per day or (b) all
the warrants originally issued under that certain Note and Warrant Purchase Agreement dated as of
March 3, 2006 by and among the Company and the purchasers listed therein are exercised by the
holders thereof and the average closing price for the Company’s Common Stock on the American Stock
Exchange or, if the Common Stock is not then listed for trading on the American Stock Exchange
(“AMEX”) then the Oslo Stock Exchange, is above U.S. $2.00 (or its equivalent in NOK, and in any
case adjusted for any stock dividends, stock split, its reverse split, recapitalization or
reorganization) for a period of five consecutive trading days (the “Expiration Date”). The Exercise
Period may also be extended by the Company’s Board of Directors.

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

     The person entitled to receive the Shares issuable upon exercise of a Warrant or Warrants
(“Warrant Shares”) shall be treated for all purposes as the holder of such Warrant Shares as of the
close of business on the Exercise Date. The Company shall not be obligated to issue any fractional
share interests in Warrant Shares issuable or deliverable on the exercise of any Warrant or script
or cash with

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respect thereto, but, if Company elects not to issue a fractional share, the Company will pay a
cash adjustment in respect of any fraction of a Warrant Share which would otherwise be issuable in
an amount equal to the same fraction of the amount by which the market price of a Share on the date
of exercise exceeds the Exercise Price, such market price to be determined in good faith by the
Board of Directors of the Company. If more than one Warrant shall be exercised at one time by the
same Registered Holder, the number of full Shares which shall be issuable on exercise thereof shall
be computed on the basis of the aggregate number of full shares issuable on such exercise.

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

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

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

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

          where:

          X = Number of Warrants Converted

          Y = Fair Market Value of one share of Common Stock

          Z = Exercise Price

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

5. Reservation of Shares and Payment of Taxes. The Company covenants that it will at all
times reserve and have available from its authorized Common Stock such number of shares as shall
then be issuable on the exercise of outstanding Warrants. The Company covenants that all Warrant
Shares which shall be so issuable shall be duly and validly issued, fully paid and nonassessable,
and free from all taxes, liens and charges with respect to the issue thereof.

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

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delivery shall be made unless the person requesting the same has paid the amount of any such taxes
or charges incident thereto.

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

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

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

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

8. Adjustment of Shares. The number and kind of securities issuable upon exercise of a
Warrant or to be delivered upon the redemption of Warrants hereunder shall be subject to adjustment
from time to time upon the happening of certain events (“Adjustment Event”), as follows:

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

     (b) If the Company shall, while any Warrants evidenced hereby remain in force, effect a
recapitalization of such character that the Shares covered hereby shall be changed into or become

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exchangeable for a larger or smaller number of shares, then thereafter, the number of Shares which
the Registered Holder shall be entitled to purchase hereunder, shall be increased or decreased, as
the case may be, in direct proportion to the increase or decrease in the number of Shares of the
Company by reason of such recapitalization, and the Exercise Price (per Share) shall in the case of
an increase in the number of Shares be proportionately reduced, and in the case of a decrease in
the number of shares be proportionately increased.

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

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

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

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

9. Reduction in Exercise Price .

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

14

 

however, that the Company shall use commercially reasonable efforts to diligently seek to obtain
such approval of its stockholders.

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

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

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

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

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

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

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

15

 

11. General Provisions. This Warrant Certificate shall be construed and enforced in
accordance with, and governed by, the laws of the State of Delaware, where the Company maintains
its registered offices. Except as otherwise expressly stated herein, time is of the essence in
performing hereunder. The headings of this Warrant Certificate are for convenience in reference
only and shall not limit or otherwise affect the meaning hereof.

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

	 	 	 	 	 	 	 
	 	 	CanArgo Energy Corporation	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 	 	 

	 	 

16

 

CanArgo Energy Corporation

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

	 	 	 	 	 	 	 
	TEN COM — as tenants in common	 	UNIF GIFT MIN ACT- Custodian	 	 
	TEN ENT — as tenants by the entireties

	 	 

	 	 	 	 
	JR TEN — as joint tenants with right	 	(Cust)
          (Minor)	 	 
	of survivorship and not as tenants in	 	under Uniform Gifts	 	 
	common

	 	to Minor Act                                  .	 	 	 	 
	 

	 	(State) 	 	 	 	 

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

FORM OF ASSIGNMENT

(To be Executed by the Registered Holder if He

Desires to Assign Warrants Evidenced by the

Within Warrant Certificate)

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

	 	 	 	 	 	 	 	 	 
	Dated:                                                        
	 	 	 	 	 	                                                       .
Signature	 	 
	 

	 	 

	 	 
	 	 
	 	 

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

Signature Guaranteed:

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

17

 

FORM OF ELECTION TO PURCHASE

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

the Warrants Evidenced by the Warrant Certificate)

To CanArgo Energy Corporation:

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

     OR

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

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

          Please register the certificates for such share as follows:

Please insert taxpayer identification

Or social security number (if any)            
                                                                 
    .

	 	 	 
	 

(Please print name)

	 	 
	 
	 	 
	 

(Please print address)

	 	 

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

	 	 	 
	 

(Please print address)

	 	 

(SIGNATURES CONTINUED ON FOLLOWING PAGE)

	 	 	 	 	 	 	 	 	 	 	 
	Dated:

	 	 

	 	 
	 	Signature:
	 	 

	. 	 

18

 

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

Signature Guaranteed:                                                             
                    .

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

19exv10w2

 

Exhibit
10.2 

REGISTRATION RIGHTS AGREEMENT

     This REGISTRATION RIGHTS AGREEMENT (“Agreement”), dated as of June 5, 2007, is made
and entered into by and between CanArgo Energy Corporation, a Delaware corporation
(“Company”) and the Purchasers listed on Schedule A attached hereto (each a
“Purchaser” collectively, the “Purchasers”).

RECITALS

     A. Purchasers have acquired and Company has issued warrants to purchase up to 10 million
shares of the Company’s common stock, par value $0.10 per share (“Common Stock”) expiring
on the July 25, 2009 (the “Warrants”) pursuant to the Conversion Agreement (“Conversion
Agreement”) of even date herewith by and among the Company, the Purchasers and the other
parties thereto.

     B. Pursuant to the terms of the Warrants, the Purchasers acquired the rights to purchase
shares of Common Stock upon exercise thereof in accordance with the terms of the Warrants (an
“Exercise”);

     C. Upon the closing of an Exercise, the Company shall authorize and issue to such Purchasers
electing so to exercise its Warrants, respectively, one or more certificates representing the
applicable number of shares of Common Stock issuable upon such Exercise of the Warrants
(“Warrant Shares”);

     D. The Company has agreed to provide the Purchasers with certain rights with respect to all
Warrant Shares issuable upon Exercise to register such shares under the Securities Act (as
hereinafter defined) for resale. All Warrant Shares issued as of the date of this Agreement or
issued or issuable at any time by the Company to Purchasers upon Exercise of the Warrants, 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” ; and

     E. For the avoidance of doubt, nothing in this Agreement or in the Conversion Agreement or the
Warrants shall obligate the Company to register the Warrants or any securities of Tethys Petroleum
Limited under the Securities Act or any other foreign or domestic securities laws.

     NOW, THEREFORE, in consideration of the premises and other good and valuable consideration the
receipt and sufficiency of which are hereby acknowledged and confirmed, 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.

	 	(i)	 	“Commission” means the United States Securities and Exchange Commission.
	 
	 	(ii)	 	“Common Stock” has the meaning ascribed thereto in the Recitals.
	 
	 	(iii)	 	“Conversion Agreement” has the meaning ascribed thereto in the
Recitals.
	 
	 	(iv)	 	“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.
	 
	 	(v)	 	“Exercise” has the meaning ascribed thereto in the Recitals.
	 
	 	(vi)	 	“Holder” means a Purchaser so long as the Purchaser holds
Registrable Securities and each subsequent holder 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.
	 
	 	(vii)	 	“Note Purchase Agreement” means the Note and Warrant Purchase
Agreement dated as of July 25, 2005, as amended, by and among the Company and
Persistency.
	 
	 	(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)	 	“Registrable Securities” has the meaning ascribed thereto in
the Recitals.
	 
	 	(xi)	 	“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

- 2 -

 

	 	 	 	registration statement and supplements to such
Prospectus, and all exhibits and other material incorporated by reference in
such registration statement and Prospectus.
	 
	 	(xii)	 	“Restricted Security” means any share of Common Stock issued
upon Exercise of the Warrants 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 Common Stock not
subject to any transfer restrictions under the Securities Act has been
delivered by or on behalf of the Company.
	 
	 	(xiii)	 	“Required Majority” means the Holders of a majority of the number of
Registrable Securities then outstanding.
	 
	 	(xiv)	 	“Securities Act” means the Securities Act of 1933, as amended,
and the rules and, regulations of the Commission thereunder, or any similar
successor statute.
	 
	 	(xv)	 	“Warrants” has the meaning ascribed thereto in the Recitals.
	 
	 	(xvi)	 	“Warrant Shares” has the meaning ascribed thereto in the
Recitals.

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

     Section 1.2 Registration Rights.

          (a). Initial Filing. The Company shall use all commercially reasonable efforts to file
a Registration Statement on Form S-3 with respect to all Registrable Securities by July 31, 2007
and have such Registration Statement declared effective pursuant to this Agreement. 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 no later than December 31, 2007 (provided, if such registration
is made on Form S-1, such Registration Statement need only be effective for a period of 180
consecutive days). Failure so to file timely any such Registration Statement shall not result in
the application of any liquidity or other penalty.

          (b). 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 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

- 3 -

 

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
exercise some or all of its Warrants, and of the number of Registrable Securities such Holder
wishes to include in such Registration Statement.

          (c). Demand Registration Rights.

               (i) Requests for Registration. Subject to Section 1.2(c)(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, at any time after December 31, 2007 (a “Demand
Registration”). Within ten days after receipt of any request pursuant to this Section
1.2(c)(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 180 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 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.

          (d) Qualification for Form S-3. 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 not take any willful and discretionary action that will
limit, impair or otherwise prevent it from being able to use Form S-3 or any successor thereto once
eligibility for such use has been established.

          (e) Effectiveness of Registration Statement. The Company shall use all
commercially reasonable efforts to have any Registration Statement filed pursuant to this
Agreement (other than a Registration Statement on Form S-1 or any successor form) declared
effective by the Commission no later than 120 days after the filing thereof. All Registration
Statements filed pursuant to this Agreement, other than any Registration Statement on Form S-1 (or
any successor form thereto), shall be maintained in effect by the Company until the earlier of two
years or the date on which all Registrable Securities cease to be Restricted Securities. The
Company shall maintain the effectiveness of any registration statement on Form S-1 (or any
successor form thereto) for a period of 180 consecutive days.

     Section 1.3 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.

- 4 -

 

          (b) The Company shall promptly notify each Holder 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 Holders 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 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 Holder 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 Holder 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 Holder, of the happening of any event of the kind described above, such Holder
will forthwith discontinue disposition of Registrable Securities pursuant to the Registration
Statement until such Holder’s receipt of the copies of the supplemented or amended Prospectus, or
until such Holder 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 Holder, any underwriter
participating in any disposition pursuant to the Registration Statement, and any attorney,
accountant, or other agent retained by any Holder 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 Holder, as well as any underwriter,
attorney, accountant, or agent in connection with the Registration Statement; provided, however,
that each Holder agrees that information obtained by such Holder as a result of such inspections
which constitutes confidential information is subject to the confidentiality provisions of
Section 21 of the Note Purchase Agreement and is deemed confidential shall not be used by
such Holder 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 Holder shall use its best
efforts to cause any attorney, accountant, or agent retained by such Holder 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 Holders of such and will use reasonable
efforts to obtain the withdrawal of such order.

     Section 1.4 Listing of Registrable Securities. The Company shall use its commercially reasonable
efforts to cause all Registrable Securities to be listed on each securities exchange or other
quotation service on which the Common Stock is then listed.

     Section 1.5 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

- 5 -

 

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
1.5, 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 in such registration and underwriting,
second, pro rata among such Holders and other parties having 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 1.6 Market Stand Off Agreement. If the Company intends to make an underwritten public offering
of its securities, the Holders agree to consider and negotiate in good faith with the Company and
its underwriters, any requests regarding market stand off arrangements. The Holders will consider
arrangements that are in the interests of the Company and an orderly market for the Company’s
securities. This agreement amend and supersedes all prior agreements by the Holders a party
hereto as to market stand off arrangements and all such prior provisions are cancelled, null and
void.

     Section 1.7 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 1.8 Reports under the 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.

- 6 -

 

     Section 1.9 Expenses of Registration. The Company agrees to pay any and all expenses of preparing
and filing all Registration Statements under this Agreement, and of having such Registration
Statements declared effective and of maintaining the effectiveness thereof. For the avoidance of
doubt, the Holders shall be responsible for payment of their own fees and expenses incurred in
connection with the preparation, filing, review, declaration of effectiveness and maintenance of
effectiveness of any Registration Statement filed pursuant to this Agreement, including, without
limitation, legal and accounting fees and expenses.

     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.

ARTICLE 2

PURCHASER’S RIGHTS AND UNDERTAKINGS

     Section 2.1 Rights. Holders 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 Holders 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, Holders 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, Holders 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 Holders’ Registrable Securities are included in the Registration Statement, Holders shall
discontinue sales thereof pursuant to such Registration Statement, unless Holders 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 Holders
shall furnish to the Company such information regarding Holders, the Registrable Securities held by
Holders, and the intended method of disposition of such securities and such other information as
shall be required to effect the registration of Holders’ Registrable Securities or as the Company
shall otherwise reasonably request. The obligations of the Company under this Agreement with
respect to any Holder shall be suspended unless and until such Holder complies with this
Section 2.5. In connection with Holders’ obligation to provide information the Company may
request and the Holders 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.

- 7 -

 

     Section 2.6 Underwritten Registration. Holders may not participate in any registration hereunder which
is underwritten unless Holders: (a) agree to sell their securities on the basis provided in any
customary 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. Holders 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
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 Holder, as well as each Holder’s agents, representatives and Affiliates
(collectively, the “Holder 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 Holder 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 Holder 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 Holder Indemnified Party
relating to such Holder Indemnified Party for use in the preparation thereof; and provided
further, that the Company shall not be liable to any such Holder Indemnified Party with
respect to any Prospectus to the extent that any such Loss of such Holder Indemnified Party results
from the fact that such Holder 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 Holder

- 8 -

 

Indemnified Party in compliance with this Agreement and the Loss of
such Holder 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) or such Holder Indemnified Party otherwise breached the provisions of
this Agreement in a manner which resulted in the Loss of such Holder Indemnified Party. 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 Holder Indemnified Parties and shall
survive the transfer of such securities by such Holder Indemnified Parties.

     Section 3.2 Indemnification by Holders. Each Holder 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) (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
Holder relating to such Holder for use in the preparation of the documents described in clauses (a)
and (b), (c) any violation by such Holder 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 Holder and relating to action of or inaction by such Holder in connection with any such
registration, and (d) with respect to any Prospectus, the fact that such Holder 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 Holder 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 Holder 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 Holder 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

- 9 -

 

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 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, conditioned or delayed. 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

- 10 -

 

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
Warrant Shares are no longer Restricted Securities. Holders whose shares of Common Stock are sold
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. Holders 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: Rosalie Mackay,
Esq., facsimile number +44 141 204 1351); or

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

     Holders 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, Holders 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.

- 11 -

 

     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, 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 Counterpart, Facsimile Execution and Delivery. 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. Delivery of an executed
counterpart of a signature page to this Agreement by telecopy shall be equally effective as the
delivery of a manually executed counterpart of this Agreement.

     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 -

 

     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:	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	Its	 	 	 	 
	 

	 	 	 	 	 	 

	 	 
	 	 	PURCHASERS:	 	 
	 
	 	 	 	 	 	 
	 	 	INGALLS & SNYDER VALUE PARTNERS L.P.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

	 	 
	 

	 	Name:	 	 	 	 
	 

	 	 	 	 

	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 	 	 

	 	 

	 	 	 	 	 
	 

	 	 

NIKOLAOS D MONOYIOS
	 	 
	 
	 	 	 	 
	 

	 	 

THOMAS L GIPSON
	 	 
	 
	 	 	 	 
	 

	 	 

ARTHUR KOENIG
	 	 
	 
	 	 	 	 
	 

	 	 

THOMAS L GIPSON IRA
	 	 
	 
	 	 	 	 
	 

	 	 

EVAN JANOVIC
	 	 
	 
	 	 	 	 
	 

	 	 

ARTHUR ABLIN
	 	 

- 13-

 

	 	 	 	 	 	 
	 

	 	 

FLEDGLING ASSOCIATES, INC

	 

	 	BY: HARTZ TRADING INC., MANAGER
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

	 	 
	 
	 	 	 	 	 	 
	 

	 	Name:	 	 	 	 
	 

	 	 	 	 

	 	 
	 
	 	 	 	 	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 	 	 

	 	 
	 

	 	 

ADAM JANOVIC
	 	 
	 
	 	 	 	 
	 

	 	 

NEIL JANOVIC
	 	 
	 
	 	 	 	 
	 

	 	 

ANTHONY CORSO
	 	 
	 
	 	 	 	 
	 

	 	 

JOHN GILMER
	 	 
	 
	 	 	 	 
	 

	 	 

MARTIN SOLOMON
	 	 

- 14 -

 

SCHEDULE A

	 	 	 
	NAME OF PURCHASER	 	ADDRESS
	INGALLS & SNYDER VALUE PARTNERS L.P.

	 	c/o Thomas Boucher Jr

Ingalls & Snyder LLC

61 Broadway

New York, NY 10006
	 
	 	 
	NIKOLAOS D MONOYIOS

	 	c/o Thomas Boucher Jr

Ingalls & Snyder LLC

61 Broadway

New York, NY 10006
	 
	 	 
	THOMAS L GIPSON

	 	c/o Thomas Boucher Jr

Ingalls & Snyder LLC

61 Broadway

New York, NY 10006
	 
	 	 
	ARTHUR KOENIG

	 	c/o Thomas Boucher Jr

Ingalls & Snyder LLC

61 Broadway

New York, NY 10006
	 
	 	 
	THOMAS L GIPSON IRA

	 	c/o Thomas Boucher Jr

Ingalls & Snyder LLC

61 Broadway

New York, NY 10006
	 
	 	 
	EVAN JANOVIC

	 	c/o Thomas Boucher Jr

Ingalls & Snyder LLC

61 Broadway

New York, NY 10006
	 
	 	 
	ARTHUR ABLIN

	 	c/o Thomas Boucher Jr

Ingalls & Snyder LLC

61 Broadway

New York, NY 10006
	 
	 	 
	FLEDGLING ASSOCIATES LLC

	 	c/o Thomas Boucher Jr

Ingalls & Snyder LLC

61 Broadway

New York, NY 10006
	 
	 	 
	ADAM JANOVIC

	 	c/o Thomas Boucher Jr

Ingalls & Snyder LLC

61 Broadway

New York, NY 10006

- 15 -

 

	 	 	 
	NAME OF PURCHASER	 	ADDRESS
	NEIL JANOVIC

	 	c/o Thomas Boucher Jr

Ingalls & Snyder LLC

61 Broadway

New York, NY 10006
	 
	 	 
	ANTHONY CORSO

	 	c/o Thomas Boucher Jr

Ingalls & Snyder LLC

61 Broadway

New York, NY 10006
	 
	 	 
	JOHN GILMER

	 	c/o Thomas Boucher Jr

Ingalls & Snyder LLC

61 Broadway

New York, NY 10006
	 
	 	 
	MARTIN SOLOMON

	 	c/o Thomas Boucher Jr

Ingalls & Snyder LLC

61 Broadway

New York, NY 10006

- 16 -

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