<PAGE>
As filed with the Securities and Exchange Commission on July 17, 1998
File No. 333-______
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------
Form S-8
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
----------------------
CANARGO ENERGY CORPORATION
(formerly FOUNTAIN OIL INCORPORATED)
(Exact name of issuer as specified in its charter)
DELAWARE 91-0881481
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1580 Guinness House, 727 - 7th Avenue S.W.,
Calgary, Alberta T2P 0Z5
(Address of principal executive offices)
___________________________________
CANARGO ENERGY INC. STOCK OPTION PLAN
(Full title of the Plan)
____________________________________
Michael Binnion
CANARGO ENERGY CORPORATION
1580 Guinness House, 727 - 7th Avenue S.W.,
Calgary, Alberta T2P 0Z5
Telephone (403) 777-1185
(Name, address and telephone number of agent for service)
_____________________________________
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [x]
<PAGE>
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
==============================================================================================================================
Proposed Proposed
Maximum Maximum
Title of Securities Amount Being Offering Price Aggregate Amount of
Being Registered Registered Per Share Offering Price Registration Fee
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock
$.10 par value 988,000 (1) shares $1.86 (2) $1,836,420.30 (2) $541.74
- ------------------------------------------------------------------------------------------------------------------------------
(1) This Registration Statement also covers such indeterminable number of
additional shares as may become deliverable as a result of future
adjustments in accordance with the terms of the Plan.
(2) Determined in accordance with Rule 457(h) under the Securities Act of 1933,
as amended, on the basis of the purchase price at which the options may be
exercised. The "Price Per Share" represents the average price per share
based on the number of shares being registered and the maximum aggregate
offering price. The currency exchange rate as of July 13, 1998 is $1
Canadian = $ .6759 U.S.
=============================================================================================================================
</TABLE>
ii
<PAGE>
PART II
Item 3. Incorporation of Documents by Reference
The following documents which have been filed by the Company with the
Securities and Exchange Commission are incorporated by reference as of their
respective dates and are a part hereof:
(a) Annual Report on Form 10-K as amended by Form 10-K/A for the year
ended December 31, 1997;
(b) Quarterly Report on Form 10-Q as amended by Form 10-Q/A and Form
10-Q/A-2 for the quarter ended March 31, 1998;
(c) Form 8-K dated January 27, 1998;
(d) Form 8-K dated July 7, 1998; and
(d) The description of the Common Stock contained in the Company's
Registration Statement on Form 8-B and in any amendment or report filed for the
purpose of amending such description.
Additionally, all documents subsequently filed by the Company pursuant
to Sections 13(a), 13(c), 14 and 15(d) of the Securities Exchange Act of 1934,
as amended, prior to the filing of a post-effective amendment hereto which
indicates that all of the shares of the Common Stock offered hereby have been
sold or which deregisters all such shares then remaining unsold, shall be deemed
to be incorporated by reference herein and to be a part hereof from the date of
filing of such documents.
Item 4. Description of Securities
Not applicable.
Item 5. Interests of Named Experts and Counsel
None.
Item 6. Indemnification of Directors and Officers
The Delaware General Corporate Law makes provision for the
indemnification of officers and directors in terms sufficiently broad to
indemnify officers and directors under certain circumstances from liabilities
(including reimbursement for expenses incurred) arising under the Securities Act
of 1933 (the "Securities Act"). The Company's Bylaws require the Company to
indemnify its officers and directors to the fullest extent authorized by
Delaware law.
1
<PAGE>
Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers or persons controlling
the Company pursuant to the foregoing provisions, the Company has been informed
that in the opinion of the Commission such indemnification is against public
policy as expressed in the Securities Act and is therefore unenforceable.
Item 7. Exemption from Registration Claimed
Not applicable.
Item 8. Exhibits
4.1 Canargo Energy Inc. Stock Option Plan.
5.1 Opinion of Counsel.
23.1 Consent of Independent Accountants.
23.2 Consent of Counsel - contained in Exhibit 5.1.
24.1 Power of Attorney, contained at page 4.
Item 9. Undertakings
The Company hereby undertakes: (1) to file, during any period in
which offers or sales of the Common Stock are being made, a post-effective
amendment to this registration statement: (i) to include any prospectus
required by Section 10(a)(3) of the Securities Act of 1933, as amended (the
"Securities Act"); (ii) to reflect in the prospectus any facts or events
arising after the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth in the
registration statement; (iii) to include any material information with respect
to the plan of distribution not previously disclosed in the registration
statement or any material change to such information in the registration
statement; provided that if the information required in clauses (i) and (ii)
above to be included in a post-effective amendment hereto is contained in one or
more periodic reports filed by the registrant pursuant to Section 13 or Section
15(d) of the Securities Exchange Act of 1934, no post-effective amendment hereto
shall be required; (2) that, for the purpose of determining any liability under
the Securities Act, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof; and (3) to remove from registration by means of a post-
effective amendment any of the securities being registered which remain unsold
at the termination of the offering.
2
<PAGE>
Additionally, the undersigned registrant hereby undertakes that, for
purposes of determining any liability under the Securities Act, each filing of
the Company's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act that is incorporated by reference in the registration statement
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the Company pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person in the successful defense of any action, suit or proceeding) is asserted
by such director, officer or controlling person in connection with the
securities being registered, the registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be governed by
the final adjudication of such issue.
3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Company certifies that it has reasonable grounds to believe that it meets all of
the requirements for filing on Form S-8 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in Calgary, Alberta, Canada, on July 16, 1998.
CANARGO ENERGY CORPORATION
By: /s/David Robson
----------------------
David Robson,
Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
follows constitutes and appoints each of MICHAEL BINNION and SUSAN E. PALMER,
and either of them, his true and lawful attorney-in-fact and agent, with full
power of substitution and resubstitution, for him and in his name, place and
stead, in any and all capacities, to sign any and all amendments (including
post-effective amendments) to this Registration Statement, and to file the same,
with all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorney-in-fact and
agent full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully to all
intents and purposes as the undersigned might or could do in person, and hereby
ratifying and confirming all that said attorney-in-fact, or his or her
substitute, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the date indicated.
<TABLE>
<CAPTION>
Signature Title Date
- ------------------------- --------------------------------------------------- -------------
<S> <C> <C>
/s/David Robson Chief Executive Officer and July 16, 1998
- ------------------------- Director (Principal Executive Officer)
David Robson
/s/Michael Binnion President, Chief Financial Officer and July 16, 1998
- ------------------------- Director (Principal Financial and
Michael Binnion Accounting Officer)
/s/Robert A. Halpin Director July 16, 1998
- -------------------------
Robert A. Halpin
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
/s/ J.F. Russell Hammond Director July 16, 1998
- -------------------------
J.F. Russell Hammond
/s/Peder Paus Director July 16, 1998
- -------------------------
Peder Paus
/s/Nils N. Trulsvik Director July 16, 1998
- -------------------------
Nils N. Trulsvik
</TABLE>
5
<PAGE>
CANARGO ENERGY CORPORATION
FORM S-8 REGISTRATION STATEMENT
Exhibit Index
-------------
4.1 CanArgo Energy Inc. Stock Option Plan.
5.1 Opinion of Counsel.
23.1 Consent of Independent Accountants.
23.2 Counsel of Counsel -- contained in Exhibit 5.1.
24.1 Power of Attorney -- contained at page 4.
6
<PAGE>
EXHIBIT 4.1
CANARGO ENERGY INC. - STOCK OPTION PLAN
ARTICLE 1
PURPOSE OF PLAN
1.1 The purpose of the Plan is to assist directors and key employees of the
Corporation and its Subsidiaries to participate in the growth and
development of the Corporation and its Subsidiaries by providing such
persons with the opportunity, through share options, to acquire an
increased proprietary interest in the Corporation.
ARTICLE 2
DEFINED TERMS
Where used herein, the following terms shall have the following meanings,
respectively:
2.1 "Board" means the board of directors of the Corporation or, if established
and duly authorized to act, the Executive Compensation Committee of the
board of directors of the Corporation;
2.2 "Business Day" means any day, other than a Saturday or a Sunday, on which
The Toronto Stock Exchange is open for trading;
2.3 "Compensation Committee" shall have the meaning attributed thereto in
Article 3 hereof;
2.4 "Corporation" means CanArgo Energy Inc., and includes any successor
corporation thereto;
<PAGE>
2.5 "Eligible Person" means any director or full-time employee of the
Corporation or any Subsidiary;
2.6 "Insider" means an insider as defined in the Securities Act (Ontario),
other than a person who falls within that definition solely by virtue of
being a director or senior officer of a Subsidiary, and an associate of any
of the foregoing;
2.7 "Market Price" at any date in respect of Shares shall be the closing price
of such Shares on the Canadian Dealing Network (or, if such shares are not
then listed and posted for trading on the Canadian Dealing Network, on such
stock exchange in Canada on which such Shares are listed and posted for
trading as may be selected for such purpose by the Compensation Committee)
on the last Business Day preceding the date on which the Option is approved
by the Compensation Committee. In the event that such Shares did not trade
on such Business Day, the Market Price shall be the average of the bid and
ask prices in respect of such Shares at the close of trading on such date.
In the event that such Shares are not listed and posted for trading on any
stock exchange, the Market Price in respect thereof shall be the fair
market value of such Shares as determined by the Compensation Committee in
its sole discretion;
2.8 "Option" means an option to purchase Shares granted under the Plan;
2.9 "Option Price" means the price per share at which Shares may be purchased
under the Option, as the same may be adjusted from time to time in
accordance with Article 7 hereof;
2.10 "Optionee" means a person to whom an Option has been granted;
2.11 "Outstanding Issue" means at any time the number of Shares of the
Corporation then issued and outstanding less the number of Shares issued
pursuant to Share Compensation Arrangements within the previous 12 months;
2.12 "Plan" means the CanArgo Energy Inc. Stock Option Plan, as embodied
herein, as the same may be amended or varied from time to time;
<PAGE>
2.13 "Shares" means the common shares of the Corporation, or, in the event of
an adjustment contemplated by Article 8 hereof, such other shares or
securities to which an Optionee may be entitled upon the exercise of an
Option as a result of such adjustment;
2.14 "Share Compensation Arrangement" means a stock option, stock option plan,
employee stock purchase plan or any other compensation or incentive
mechanism involving the issuance or potential issuance of shares to one or
more service provider, including a share purchase from treasury which is
financially assisted by the company by way of a loan, guaranty or
otherwise; and
2.15 "Subsidiary" means any corporation that is a subsidiary of the Corporation
(as such term is defined in subsection 1(2) of the Business Corporations
Act (Ontario), as such provision is from time to time amended, varied or
re-enacted).
ARTICLE 3
ADMINISTRATION OF THE PLAN
3.1 The Plan shall be administered by a Compensation Committee (the
"Compensation Committee") appointed by the Board and consisting of not less
than three members of the Board. The members of the Compensation Committee
shall serve at the pleasure of the Board and vacancies occurring in the
Compensation Committee shall be filled by the Board.
3.2 The Compensation Committee shall select one of its members as its Chairman
and shall hold its meetings at such time and place as it shall deem
advisable. A majority of the members of the Compensation Committee shall
constitute a quorum and all actions of the Compensation Committee shall be
taken by a majority of the members present at any meeting. Any action of
the Compensation Committee may be taken by an instrument or instruments in
writing signed by all the members of the Compensation Committee, and any
action so taken shall be as effective as if it had been passed by a
majority of the votes cast by the members of the Compensation Committee
present at a meeting of such member, duly called and held.
3.3 The Compensation Committee shall have the power, where consistent with the
general purpose and intent of the Plan and subject to the specific
provisions of the Plan:
<PAGE>
(a) to establish policies and to adopt rules and regulations for carrying
out the purposes, provisions and administration of the Plan;
(b) to interpret and construe the Plan and to determine all questions
arising out of the Plan and any Option granted pursuant to the Plan,
and any such interpretation, construction or termination made by the
Compensation Committee shall be final, binding and conclusive for all
purposes;
(c) to determine to which Eligible Employees Options are to be granted and
to grant such Options;
(d) to determine the number of Shares covered by each Option;
(e) to determine the Option Price;
(f) to determine the time or times when Options will be granted and
exercisable;
(g) to determine if the Shares that are subject to an Option will be
subject to any restrictions upon the exercise of such Option; and
(h) to prescribe the form of the instrument relating to the grant,
exercise and other terms of Options.
ARTICLE 4
SHARES SUBJECT TO PLAN
4.1 Options may be granted in respect of authorized and unissued Shares,
provided that the aggregate number of Shares reserved for issuance under
this Plan, subject to adjustment or increase of such number pursuant to the
provisions of Article 8 hereof, is 1,250,000. Shares in respect of which
Options are not exercised shall be available for subsequent Options under
the Plan. No fractional shares may be purchased or issued under the Plan.
<PAGE>
ARTICLE 5
ELIGIBILITY, GRANT AND TERMS OF OPTIONS
5.1 Options may be granted to directors or full-time employees of the
Corporation or of any Subsidiary of the Corporation.
5.2 Options may be granted by the Corporation pursuant to recommendations of
the Compensation Committee provided and to the extent that such
recommendations are approved by the Board.
5.3 Subject as herein and as otherwise specifically provided for in this
Article 5, the number of Shares subject to each Option, the Option Price,
the expiration date of each Option, the extent to which each option is
exercisable from time to time during the term of the Option and other
terms and conditions relating to each such Option shall be determined by
the Compensation Committee; provided, however, that if no specific
determination is made by the Compensation Committee with respect to any of
the following matters, each Option shall, subject to any other specific
provisions of the Plan, contain the following terms and conditions:
(a) the period during which an Option shall be exercisable shall be four
years from the date the Option is granted to the Optionee;
(b) the Optionee may immediately take up and pay for not more than 20% of
the Shares covered by the Option;
(c) the Optionee may also take up and pay for not more than 5% of the
Shares covered by the option during each 3-month period from the date
of the grant of the Option; provided, however, that if the number of
Shares taken up under the Option during any such 3-month period is
less than 5% of the Shares covered by the Option, the Optionee shall
have the right, at any time or from time to time during the remainder
of the term of the Option, to purchase such number of Shares subject
to the Option that were purchasable, but not purchased by him, during
such 3-month period.
5.4 The Option Price on Shares that are the subject of any Option shall in no
circumstances be lower than the Market Price of the Shares at the date of
the grant of the Option.
<PAGE>
5.5 In no event may the term of an Option exceed ten years from the date of the
grant of the Option.
5.6 The total number of Shares to be optioned to any Optionee under this Plan
together with any Shares reserved for issuance under options for services
and employee stock purchase plans or any other plans to such Optionee shall
not exceed 5% of the issued and outstanding Shares at the date of the grant
of the Option.
5.7 The total number of Shares in respect of Options outstanding at any time
under this Plan together with any Shares reserved for issuance under any
other share option arrangement of the Corporation, in aggregate, shall not
exceed 10% of the issued and outstanding Shares at the date of the grant of
the Option.
5.8 Notwithstanding anything to the contrary contained in the Plan, no Options
may be granted to Insiders if such Options, together with any other options
previously granted by the Corporation pursuant to any Share Compensation
Arrangement could result in:
(a) the number of Shares reserved for issuance pursuant to share option
arrangements to Insiders collectively exceeding 10% of the Outstanding
Issue; or
(b) the issuance to Insiders, collectively within the 12 months immediately
preceding or 12 months immediately following the date of grant of such
Options, of a number of Shares exceeding 10% of the Outstanding Issue; or
(c) the issuance to any one Insider within the 12 months immediately
preceding or 12 months immediately following the date or grant of such
Options, of a number of Shares exceeding 5% of the Outstanding Issue.
5.9 If a bona fide offer (the "Offer") for Shares is made to the Optionee or to
shareholders generally or to a class of shareholders which includes the
Optionee, which Offer, if accepted in whole or in part, would result in the
offeror exercising control over the Corporation within the meaning of
subsection 1(3) of the Securities Act (Ontario) (as amended from time to
time), then the Corporation shall, immediately upon receipt of notice of
the Offer, notify each Optionee currently holding an Option of the Offer,
with full particulars thereof; whereupon, notwithstanding Section 5.3
hereof, such Option may be exercised in whole or in part by the Optionee so
as to permit the Optionee to tender the Shares received upon such exercise
(the "Optioned Shares") pursuant to the Offer. If;
<PAGE>
(a) the Offer is not completed within the time specified therein; or
(b) the Optionee does not tender the Optioned Shares pursuant to the
Offer; or
(c) all of the Optioned Shares tendered by the Optionee pursuant to the
Offer are not taken up and paid for by the Offeror in respect thereof;
then the Optioned Shares or, in the case of clause (c) above, the Optioned
Share that are not taken up and paid for shall be returned by the Optionee
to the Corporation and reinstated as authorized but unissued Shares and the
terms of the Option as set forth in Section 5.3 shall again apply to the
Option. If any Optioned Shares are returned to the Corporation under this
Section, the Corporation shall refund the exercise price to the Optionee
for such Optioned Shares. In no event shall the Optionee be entitled to
sell the Optioned Shares otherwise than pursuant to the Offer.
5.10 An Option is personal to the Optionee and is non-asssignable.
ARTICLE 6
TERMINATION OF EMPLOYMENT; DEATH
6.1 Subject to section 6.2 hereof and to any express resolution passed by the
Compensation Committee with respect to an Option, an Option, and all rights
to purchase Shares pursuant thereto, shall expire and terminate immediately
upon the Optionee ceasing to be a director or full-time employee of the
Corporation or of any Subsidiary of the Corporation.
6.2 If, before the expiry of an Option in accordance with the terms thereof,
the employment of the Optionee by the Corporation or by any Subsidiary of
the Corporation shall terminate for any reason whatsoever other than
termination by the Corporation for cause, but including termination by
reason of the death of the Optionee, such Option may, subject to the terms
thereof and any other terms of the Plan, be exercised, if the Optionee is
deceased, by the legal personal representative(s) of the estate of the
Optionee during
<PAGE>
the first three months following the death of the Optionee, or if he is
alive, by the Optionee, at any time within three months of the date of
termination of the employment of the Optionee (but in either case prior to
the expiry of the Option in accordance with the terms thereof), but only to
the extent that the Optionee was entitled to exercise such Option at the
date of the termination of his employment.
6.3 Options shall not be affected by any change of employment of the Optionee
or by the Optionee ceasing to be a director where the Optionee continues to
be employed on a full-time basis by, or continues to be a director of, the
Corporation or any Subsidiary of the Corporation.
ARTICLE 7
EXERCISE OF OPTIONS
7.1 Subject to the provisions of the Plan, an Option may be exercised from time
to time by delivery to the Corporation at its registered office of a
written notice of exercise addressed to the Secretary of the Corporation
specifying the number of Shares with respect to which the Option is being
exercised and accompanied by payment in full of the Option Price of the
Shares to be purchased. Certificates for such Shares shall be issued and
delivered to the Optionee within a reasonable time following the receipt of
such notice and payment.
7.2 Notwithstanding any of the provisions contained in the Plan or in any
Option, the Corporation's obligation to issue Shares to an Optionee
pursuant to the exercise of an Option shall be subject to:
(a) completion of such registration or other qualification of such Shares
or obtaining approval of such governmental authority as the
Corporation shall determine to be necessary or advisable in
connection with the authorization, issuance or sale thereof;
(b) the admission of such Shares to listing on any stock exchange on which
the Shares may then be listed; and
(c) the receipt from the Optionee of such representations, agreements and
undertakings, including as to future dealings in such Shares, as the
Corporation or
<PAGE>
its counsel determines to be necessary or advisable in order to
safeguard against the violation of the securities laws of any
jurisdiction.
In this connection the Corporation shall, to the extent necessary, take all
reasonable steps to obtain such approvals, registrations and qualifications
as may be necessary for the issuance of such Shares in compliance with
applicable securities laws and for the listing of such Shares on any stock
exchange on which the Shares are then listed.
ARTICLE 8
CERTAIN ADJUSTMENTS
8.1 Appropriate adjustments in the number of Shares subject to the Plan, and as
regards Options granted or to be granted, in the number of Shares optioned
and in the Option Price, shall be made by the Board to give effect to
adjustments in the number of Shares of the Corporation resulting from
subdivisions, consolidations or reclassifications of the Shares of the
Corporation, the payment of stock dividends by the Corporation (other than
dividends in the ordinary course) or other relevant changes in the capital
stock of the Corporation.
ARTICLE 9
AMENDMENT OR DISCONTINUANCE OF PLAN
9.1 The Board may amend or discontinue the Plan at any time; provided, however,
that no such amendment may increase the maximum number of Shares that may
be optioned under the Plan, change the manner of determining the minimum
Option price or, without the consent of the Optionee, alter or impair any
Option previously granted to an Optionee under the Plan.
ARTICLE 10
MISCELLANEOUS PROVISIONS
10.1 The holder of an Option shall not have any rights as a shareholder of
the Corporation with respect to any of the Shares covered by such Option
until such holder shall have exercised such Option in accordance with the
terms of the Plan (including tendering payment in full of the Option Price
of the Shares in respect of which the Option is being exercised) and the
Corporation shall issue such Shares to the Optionee in accordance with the
terms of the Plan in those circumstances.
<PAGE>
10.2 Nothing in the Plan or any Option shall confer upon any Optionee any right
to continue in the employ of the Corporation or any Subsidiary of the
Corporation or affect in any way the right of the Corporation or any such
Subsidiary to terminate his employment at any time; nor shall anything in
the Plan or any Option be deemed or construed to constitute an agreement,
or an expression of intent, on the part of the Corporation or any such
Subsidiary to extend the employment of any Optionee beyond the time that he
would normally be retired pursuant to the provisions of any present or
future retirement plan of the Corporation or any Subsidiary or any present
or future retirement policy of the Corporation or any Subsidiary, or beyond
the time at which he would otherwise be retired pursuant to the provisions
of any contract of employment with the Corporation or any Subsidiary.
10.3 References herein to any gender include all genders.
ARTICLE 11
SHAREHOLDER AND REGULATORY APPROVAL
11.1 The Plan shall be subject to the approval of the shareholders of the
Corporation to be given by a resolution passed at a meeting of the
shareholders of the Corporation. Any Options granted prior to such
approval and acceptance shall be conditional upon such approval and
acceptance being given and no such Options may be exercised unless and
until such approval and acceptance is given.
<PAGE>
EXHIBIT 5.1
LETTERHEAD:
Helen W. Melman
Attorney at Law
1299 Ocean Avenue, Fourth Floor
Santa Monica, California 90401
Telephone (310) 458-6900
Facsimile (310) 394-4759
July 15, 1998
Canargo Energy Corporation
1580 Guinness house
727 - 7th Avenue, S.W.
Calgary, Alberta T2P 0Z5
CANADA
Re: Registration Statement on Form S-8
Gentlemen:
Canargo Energy Corporation, a Delaware corporation (the "Company"),
proposes to issue and sell up to 988,000 shares of its Common Stock, $.10 par
value (the "Shares"), pursuant to options granted under the Canargo Energy Inc.
Stock Option Plan (the "Plan"). Pursuant to the terms of an Amended and Restated
Combination Agreement between the Company and Canargo Energy Inc. dated as of
February 2, 1998 (the "Combination Agreement"), at the Effective Time (as
defined in the Combination Agreement), options granted under the Plan will be
automatically converted into options to purchase the Company's Common Stock. The
Shares are being registered on a Registration Statement on Form S-8 under the
Securities Act of 1933, as amended (the "Act") to be filed with the Securities
and Exchange Commission (the "Commission") on or about July 17, 1998.
In connection with rendering the opinion hereinafter expressed, I have
examined originals, certified copies or other copies identified to my
satisfaction of the following documents and instruments:
1. Certificate of Incorporation of the Company, as amended to date;
2. Bylaws of the Company, as amended to date;
<PAGE>
3. The Combination Agreement;
4. Certain resolutions adopted by the Board of Directors of the Company
approving the Combination Agreement and the issuance of the Shares and
evidence of approval of the Combination Agreement by the Company's
stockholders;
5. The Plan; and
6. The Registration Statement, together with the exhibits to be filed in
connection therewith, in the form to be filed with the Commission.
I have obtained from public officials and from officers of the Company
and have examined originals or copies, identified to my satisfaction, of such
other certificates, agreements and other assurances as I consider necessary for
the purpose of rendering the opinion hereinafter expressed.
I have additionally consulted with officers and representatives of the
Company and have obtained such representations with respect to matters of fact
as I deemed necessary or advisable. I have not necessarily independently
verified the content of the factual statements made to me in connection
therewith, nor the veracity of such representations, but I have no reason to
doubt their truth or accuracy.
Based on the foregoing, it is my opinion that from and after the Effective
Time the Shares, when issued, sold and paid for in accordance with the terms of
the Plan and the Combination Agreement, will be duly and validly issued, fully
paid and non-assessable.
I hereby consent to this opinion being filed as an exhibit to the
Registration Statement. In giving this consent, I do not admit that I am in the
category of persons whose consent is required under Section 7 of the Act or the
rules and regulations of the Commission thereunder.
Very truly yours,
/S/ Helen W. Melman
HELEN W. MELMAN
HWM:jw
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference into the registration statement of
CanArgo Energy Corporation (formerly Fountain Oil Incorporated) on Form S-8, of
our report which includes a paragraph regarding the Company's ability to
continue as a going concern, dated March 9, 1998 (except for the sixth paragraph
of Note 6, as to which the date is June 8, 1998), on our audits of the
consolidated financial statements of Fountain Oil Incorporated as of December
31, 1997, December 31, 1996 and August 31, 1996, and for the year ended December
31, 1997, the four month period ended December 31, 1996 and the years ended
August 31, 1996 and 1995.
/s/PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Houston, Texas
July 15, 1998
