<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported) December 8, 1999
CANARGO ENERGY CORPORATION
- -------------------------------------------------------------------------------
(Exact Name of Registrant as Specified in its Charter)
Delaware 0-9147 91-0881481
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(State or other jurisdiction (Commission File Number) (I.R.S. Employer
of incorporation) Identification No.)
1580, 727 - 7th Avenue SW, Calgary, Alberta T2P 0Z5
- -------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 403-777-1185
- -------------------------------------------------------------------------------
(Former Name or Former Address, if Changed Since Last Report)
<PAGE> 2
ITEM 5. OTHER EVENTS
Between December 9, 1999 and December 10, 1999, the Registrant
sold 3,300,000 shares of the Registrant's Common Stock at NOK 6.90 per share
based on the closing price of the Registrant's stock on the Oslo Stock Exchange
on December 8, 1999. Orkla Finans and Sundal Collier & Co. acted as placement
agents for this transaction and received a success fee of 6.0% of the gross
proceeds of NOK 22,770,000.
In accordance with Rule 901 promulgated under the Securities
Act of 1933, as amended (the "Act"), the offer and sale of the Common Shares
were not included within the terms "offer, "offer to sell", "sell", "sale" and
"offer to buy" as used in Section 5 of the Act. Each purchaser of the Common
Shares has represented and warranted to and agreed with the Registrant, among
other things, that that (a) the Shares have not been and will not be registered
under the Securities Act, and may not be offered or sold in the United States or
to, or for the account or benefit of, any "U.S. person" (as defined in
Regulation S), unless such Shares are registered under the US Securities Act and
any applicable state securities or blue sky laws or such offer or sale is made
pursuant to exemptions from the registration requirements of such laws, (b) the
Shares are being offered and sold pursuant to the terms of Regulation S under
the Securities Act of 1933 as amended (the "Securities Act"), which permits
securities to be sold to non-"U.S. persons" in "offshore transactions" (as
defined in Regulation S), subject to certain terms and conditions, (c) the
Company is relying upon the truth and accuracy of the representations,
warranties, agreements, acknowledgements and understandings of the Purchaser set
forth herein in order to determine the availability of the exemptions from
registration under the Securities Act relied upon by the Company and the
suitability of the Purchaser to acquire the Shares; (d) the Shares have been
offered and sold to the Purchaser in an "offshore transaction" and Purchaser has
not engaged in any "directed selling efforts", as each such term is defined in
Regulation S, and (e) in the view of the Commission, the statutory basis for the
exemption from registration claimed for this Offering would not be present if
the Offering of the Shares, although in technical compliance with Regulation S,
is part of a plan or scheme to evade the registration provisions of the
Securities Act and, accordingly, the Purchaser is making the representations and
warranties in this schedule to evidence its compliance with the applicable
requirements of the Securities Act and that its participation in such Offering
is not a part of any such plan or scheme.
The share certificate representing the Common Shares had
endorsed thereon a legend stating that the shares sold had not been registered
under the Act and that the Common Shares could not be disposed, transferred,
pledged or otherwise disposed to or on behalf of a U.S. person unless registered
under the Act or an exemption from such registration was available.
(c) Exhibits
99(1) Agreement on Financial Advisory Services
dated December 8,
2
<PAGE> 3
1999.
99(2) Form of Subscription Agreement
SIGNATURES
Pursuant to the requirement of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
CANARGO ENERGY CORPORATION
Date: December 23, 1999 By: /s/Maria Rees
--------------------------
Maria Rees
Corporate Secretary
3
<PAGE> 4
EXHIBIT INDEX
FILED WITH
EXHIBIT THIS
NUMBER EXHIBIT REPORT
- ------- ------- ---------
99(1) Agreement on Financial Advisory Services dated
December 8, 1999. X
99(2) Form of Subscription Agreement X
<PAGE> 1
Exhibit 99(1)
ORKLA LETTERHEAD SUNDAL COLLIER & CO CORPORATE
FINANCE LETTERHEAD
The Board of CanArgo Energy, Corp.
Att: Chairman David Robson
Oslo, December 8, 1999
STRICTLY CONFIDENTIAL
AGREEMENT ON FINANCIAL ADVISORY SERVICES
With reference to our recent meetings and telephone conversations, we are
pleased to present the arrangements under which Orkla and Sundal could act as
financial advisor for CanArgo Energy, Corp. in connection with a private
placement in CanArgo Energy, Corp.
("the Company").
Definitions:
CanArgo: CanArgo Energy, Corp.
Orkla: Orkla Finans (Fondsmegling) ASA
Sundal: Sundal Collier & Co. ASA
PROPOSAL
Orkla and Sundal propose to act as financial advisor for CanArgo in connection
with a placement of new shares ("the Private Placement"). In this connection we
each propose to approach up to 25 investors in Norway. We will aim at placing
the total number of shares on December 9, 1999. We have a preliminary
understanding that the size of the Private Placement should be 3,300,000 new
shares of common stock of the same class as the present listed stock on the Oslo
Stock Exchange. The shares will be placed at market price on December 8, 1999
and will be made available for the managers from the Company within two
working-days after the placement.
THE ASSIGNMENT
The assignment for Orkla and Sundal to act as joint managers in the completion
of the proposed Transaction include, but is not limited to the following tasks:
o overall co-ordination and execution of the proposed Transaction
o organize and host investor presentations
o to in co-operation with the Company prepare necessary legal
documents for subscription/purchase of shares for both the Private
Placement and the Listing
o management and co-ordination of settlement and registration of
the new shares
o necessary contact with the Oslo Stock Exchange and CanArgo's
account manager in the VPS/VPC
CONDITIONS
Orkla and Sundal's offer is based on the following conditions:
o that a possible completion of the Transaction will be based on
legally binding decisions of CanArgo's management and board of
directors and that all decisions will be in accordance with
prevailing law
<PAGE> 2
o that no substantial new information will be resulting from the
managers' due diligence leading to a reconsideration of the
assignment from Orkla and Sundal and that CanArgo will provide us
with a declaration of completeness with regard to the information
Orkla and Sundal will receive in connection with the Transaction
o that the board of CanArgo will be responsible for the information
contained in the presentation material and a possible prospectus
o that CanArgo co-operate with Orkla and Sundal in the making of any
public announcements and in particular shall not make any
announcement concerning the subject matter of the engagement,
whether formal or informal, without the prior consent of Orkla and
Sundal
TERMS
For Orkla and Sundal's participation in the Private Placement and the Listing,
CanArgo shall pay a total success fee of 6.0% of the gross placement
consideration under the Transaction.
The fee shall be split equally between Orkla and Sundal, if each party has
succeeded in completing a placement of 50% of the total number of shares to be
issued under the transaction by the end of the business day on December 9, 1999.
If one of the managers fails to accomplish his part of the Transaction at market
conditions for the day, the other manager has the option to place the remaining
number of shares on that day or the day after.
CanArgo shall further cover all Orkla and Sundal's reasonable "out-of-pocket"
expenses regarding the Transactions such as legal fees, Oslo Stock Exchange
listing fees and others. Orkla and Sundal does not foresee any significant such
costs.
The success fee is deductible against the total placement consideration at the
completion of the Private Placement.
OTHERS
We are looking forward to a co-operation with you on this assignment. Please
sign on the bottom of this page and return to the undersigned within the scope
of this business day if the proposal is acceptable.
Yours sincerely,
for Orkla Finans (Fondsmegling) A.S for Sundal Collier & Co. ASA
/s/Thor Andre Talhaug /s/Martin Molsaeter
Thor Andre Talhaug Martin Molsaeter
for CanArgo Energy, Corporation
/s/David Robson
David Robson
Chairman
<PAGE> 1
Exhibit 99(2)
SUBSCRIPTION AGREEMENT
SUBSCRIPTION OF SHARES
NAME OF SUBSCRIBER: .......................... (the "Purchaser")
SHARES SUBSCRIBED FOR: ........... common shares of CanArgo Energy
Corporation ("the Shares")
TOTAL SUBSCRIPTION PRICE
FOR THE SHARES: NOK .......
PLACEMENT AGENT: The shares are subscribed for through
[Orkla Finans Fondsmegling ASA]/[Sundal
Collier & Co.] ("the Agent")
DATE OF SUBSCRIPTION: 9 December 1999
DELIVERY OF THE SHARES: Approximately..... December 1999 at
Purchaser's VPS- account
PURCHASER'S VPS-ACCOUNT: .............
SUBSCRIPTION PRICE: NOK 6.90 per Share
PAYMENT INSTRUCTIONS: Payment of the Total subscription Price
shall be made [in accordance with separate
instructions from the Agent]/ [in NOK to
bank account no. ................... within
... December 1999]
DELAYED PAYMENT: On overdue payment, interest may be charged
at 12 percent per annum. The Placement Agent
reserves the request to cancel the
subscription if Purchaser fails to comply
with the Payment instructions and to claim
the Purchaser for any resulting losses in
accordance with Norwegian law
REPRESENTATIONS BY PURCHASER: The Purchaser gives the representations,
warranties and covenants which follow from
schedule 1 hereto by his signature to this
Agreement
PRIVATE PLACEMENT: The shares are offered in a private
placement pursuant to an existing exemption
from prospectus requirements under Norwegian
law (the Securities Trade
<PAGE> 2
Act 1999 and the Stock Exchange Regulations)
and in reliance upon and conformity with an
exemption from the registration requirements
of the United States Securities Act of 1993
as amended ("the Securities Act") pursuant
to Regulation S under the Securities Act
("Regulation S")
COMPLETE AGREEMENT: The Purchaser agrees to be bound by the
terms of this Agreement and the Schedules
attached hereto including the Term Sheet;
which form part of the Agreement
NOTICES: Any notices to the parties shall be given
at the addresses included on the signatory
page of this Agreement.
GOVERNING LAW: This agreement shall be governed by
Norwegian law, although all material issues
relating to the Securities Act and
Regulation S shall be governed by Norwegian
law. The Parties consent to the Oslo City
Court as exclusive venue
<PAGE> 3
Oslo, 10 December 1999
[ORKLA FINANS FONDSMEGLING ASA]/[SUNDAL COLLIER & CO.]
ON BEHALF OF CANARGO ENERGY CORPORATION
__________________________________________
Address: __________________________
__________________________
__________________________
PURCHASER:
Name: __________________________
Signature: __________________________
Address: __________________________
__________________________
__________________________
Fax no: __________________________
Schedules
Schedule 1: Representations by Purchaser
Schedule 2: Definition of US Persons
Term Sheet with accompanying corporate documentation
<PAGE> 4
SCHEDULE 1
TO THE
SUBSCRIPTION AGREEMENT
REPRESENTATIONS, WARRANTIES AND COVENANTS OF PURCHASER
Purchaser hereby represents, warrants and covenants to the Company as follows:
1. Compliance with United States Securities Laws.
Purchaser understands and acknowledges that (a) the Shares have not been and
will not be registered under the Securities Act, and may not be offered or sold
in the United States or to, or for the account or benefit of, any "U.S. person"
(as defined in Regulation S, which definition is set out in Schedule 2 to the
Subscription Agreement), unless such Shares are registered under the US
Securities Act and any applicable state securities or blue sky laws or such
offer or sale is made pursuant to exemptions from the registration requirements
of such laws, (b) the Shares are being offered and sold pursuant to the terms of
Regulation S under the Securities Act of 1933 as amended (the "Securities Act"),
which permits securities to be sold to non-"U.S. persons" in "offshore
transactions" (as defined in Regulation S), subject to certain terms and
conditions, (c) the Company is relying upon the truth and accuracy of the
representations, warranties, agreements, acknowledgements and understandings of
the Purchaser set forth herein in order to determine the availability of the
exemptions from registration under the Securities Act relied upon by the Company
and the suitability of the Purchaser to acquire the Shares; (d) the Shares have
been offered and sold to the Purchaser in an "offshore transaction" and
Purchaser has not engaged in any "directed selling efforts", as each such term
is defined in Regulation S, and (e) in the view of the Commission, the statutory
basis for the exemption from registration claimed for this Offering would not be
present if the Offering of the Shares, although in technical compliance with
Regulation S, is part of a plan or scheme to evade the registration provisions
of the Securities Act and, accordingly, the Purchaser is making the
representations and warranties in this schedule to evidence its compliance with
the applicable requirements of the Securities Act and that its participation in
such Offering is not a part of any such plan or scheme.
2. STATUS OF PURCHASER.
(a) Purchaser is purchasing the Shares for its own account or for persons or
accounts as to which it exercises investment discretion. Neither Purchaser nor
such person or account is a "U.S. person" (as defined in Regulation S) and
neither Purchaser nor such other person or account has any present intention to
sell any of the Securities in the United States or to a U.S. person or for the
account or benefit of a U.S. person either now or promptly after expiration of
the first anniversary of the date hereof (Restricted Period).
<PAGE> 5
(b) Purchaser (and any person or account on whose behalf Purchaser is
purchasing) is knowledgeable, sophisticated and experienced in making, and is
qualified to make, decisions with respect to investments in restricted
securities (such as this Shares reviewed and considered all information it deems
relevant in making a decision to purchase the Shares. Purchaser acknowledges
that it is capable of evaluating the merits and risks of an investment in the
Shares and to make an informed decision relating thereto. In evaluating its
investment, Purchaser has consulted its own investment and/or legal and/or tax
advisors.
(c) Purchaser acknowledges that the Company has made available to Purchaser the
opportunity to ask questions and receive answers concerning the terms and
conditions of the offering of the Shares and the business and financial
condition of the Company and to obtain any additional information that the
Company possesses or can acquire without unreasonable effort or expense that is
necessary to verify the accuracy of the information furnished in accordance
herewith. Purchaser and its advisors, if any, have received complete and
satisfactory answers to all such inquiries.
(d) Purchaser has agreed to purchase the Shares for investment purposes and not
with a view to a distribution. Purchaser is not an underwriter of, or dealer in,
the Shares and is not participating, pursuant to a contractual arrangement, in
the distribution of the Shares. To the extent that the Shares are registered in
the name of Purchaser's nominee, Purchaser confirms that such nominee is acting
as custodian for Purchaser of such securities.
(e) Purchaser understands that no U.S. Federal or state or any foreign
governmental authority or agency has made or will make any finding or
determination relating to the fairness for public investment in the Shares, or
has passed upon or made, or will pass upon or make, any recommendation or
endorsement of the Shares.
(f) If Purchaser is a partnership, corporation, trust or other entity, the
individual executing this Subscription Note on its behalf represents and
warrants that:
(i) He or she has made due inquiry to determine the truthfulness
of the representations and warranties made by the Purchaser in this Purchase
Agreement; and
(ii) He or she is duly authorized under the corporation's
charter and by all requisite corporate action (and if the Purchaser is a
partnership, trust or other unincorporated entity, by the agreements, deeds,
indentures or other instruments pursuant to which such entity was organized and
all requisite action to be taken by such entity) to make this investment and to
enter into, execute and deliver this Subscription Note on behalf of such entity.
3. Restrictions on Re-Sale
(a) During the Restricted Period, Purchaser shall not engage in any activity for
the purpose of, or which may reasonably be expected to have the effect of,
conditioning the market in the United States for the Shares or directly or
indirectly offer, sell, transfer, pledge or otherwise dispose of the Shares, any
interest therein in the United States or to, or for the account or benefit
<PAGE> 6
of, a "U.S. person" (as defined in Regulation S). Purchaser hereby also agrees
that it shall not, either directly or indirectly, sell short the Company's
Shares of Common Stock in the over-the-counter market or otherwise in the United
States or engage in any other hedging activities in the United States during the
Restricted Period and it has not made any such sale in anticipation of
purchasing the Shares.
(b) Purchaser understands that the Shares or any interest therein are only
transferable on the books and records of the Transfer Agents and Registrar of
the Common Stock of the Company. Purchaser further understands that the Transfer
Agents and Registrar will not register any transfer of the Shares or any
interest therein which the Company in good faith believes violates the
restrictions set forth herein.
(c) Unless registered under the Securities Act (or unless sold over the Oslo
Stock Exchange in compliance with Regulation S), any proposed offer, sale,
transfer, pledge or other disposition during the Restricted Period of any of the
Shares or any interest therein shall be subject to the condition that Purchaser
must deliver to the Company (i) a written certification that neither record nor
beneficial ownership of the Shares or any interest therein, as the case may be,
has been offered or sold in the United States or to, or for the account or
benefit of, any "U.S. person" (as defined in Regulation S), (ii) a written
certification of the proposed transferee that such transferee (or any account
for which such transferee is acquiring such Shares or any interest therein, as
the case may be) is not a "U.S. person" (as defined in Regulation S), that such
transferee is acquiring such Shares or such interest therein, as the case may
be, for such transferee's own account (or an account over which it has
investment discretion) and for investment and not with a view to a distribution,
and that such transferee is knowledgeable of and agrees to be bound by the
restrictions on re-sale set forth in this section and Regulation S during the
Restricted Period, and (iii) a written opinion of United States counsel, in form
and substance satisfactory to the Company, to the effect that the offer, sale,
transfer, pledge or other disposition of such Shares, or any interest therein,
as the case may be, are exempt from registration under the Securities Act and
any applicable state securities or blue sky laws.
(d) Purchaser will not, directly or indirectly, voluntarily offer, sell, pledge,
transfer or otherwise dispose of (or solicit any offers to buy, purchase or
otherwise acquire or take a pledge of) its rights under this Subscription Note
or the Shares or any interest therein otherwise than in compliance with the
Securities Act, any applicable state securities or blue sky laws and any
applicable securities laws of jurisdictions outside the United States, and the
rules and regulations promulgated thereunder.
4. Legends.
(a) Purchaser agrees for the duration of the Restricted Period that the stock
certificates representing the Shares (but not the electronic registration of
these in the VPS) shall bear the legend set forth below:
"The Shares of Common Stock represented by this certificate have not
been registered under the United States Securities Act of 1933, as amended (the
"Act"), or any other securities
<PAGE> 7
laws, and have been issued in reliance upon the exemption from registration
under the Act contained in Regulation S under the Act. Prior to December 9,
2000, no offer, sale, transfer, pledge or other disposition (collectively, a
"Disposal") of the Shares of Common Stock represented by this certificate may be
made: (a) in the United States or to, or for the account or benefit of, any
"U.S. person" (as defined in Regulation S) unless (i) registered under the Act
and any applicable state securities or blue sky laws or (ii) exemptions from the
registration requirements of such laws are available and CanArgo Energy
Corporation (the "Company") receives a written opinion of United States legal
counsel in form and substance satisfactory to it to the effect that such
Disposal is exempt from such registration requirements; and (b) outside of the
United States or to, or for the account or benefit of a person who is not a
"U.S. person" (as defined in Regulation S) unless (i) the beneficial owner of
such Shares and the proposed transferee submit certain certifications to the
Company and (ii) the Company receives a written opinion of United States legal
counsel in form and substance satisfactory to it to the effect that such
Disposal is exempt from the registration requirements of the Act."
5. Re-Offers by Purchaser in the United States.
If Purchaser publicly re-offers all or any part of the Shares in the United
States, Purchaser (and/or certain persons who participate in any such re-offer)
may be deemed, under certain circumstances, to be an "underwriter" as defined in
section 2(11) of the Securities Act. If Purchaser plans to make any such
re-offer, it will consult with United States legal counsel prior to any such
re-offer in order to determine its liabilities and obligations under this
Subscription Note, the Securities Act and any applicable state securities or
blue sky laws.
6. Due Execution, Delivery and Performance of the Purchase Agreement and Other
Obligations.
Purchaser has full right, power, authority and capacity to enter into this
Subscription Agreement and to consummate the transactions contemplated hereby.
Upon the execution and delivery of this Purchase Agreement by Purchaser, this
Purchase Agreement shall constitute the legal, valid and binding obligations of
Purchaser, except as the enforceability thereof may be limited by any applicable
bankruptcy, insolvency, reorganization or other similar laws, relating to or
affecting the enforcement of creditors rights generally and by general equitable
principles, regardless of whether such enforceability is considered in a
proceeding in equity or at law.
7. Survival of Representations , Warranties and agreements
Notwithstanding any investigation made by Purchaser, all covenants, agreements,
representations and warranties made by Purchaser herein shall survive the
delivery to Purchaser of the Shares.
<PAGE> 8
SCHEDULE 2
TO THE
SUBSCRIPTION AGREEMENT
DEFINITION OF U.S. PERSON UNDER REGULATION S
1. U.S. Person
(a) "U.S. person" means:
(i) Any natural person resident in the United
States;
(ii) Any partnership or corporation organized or
incorporated under the laws of the United
States;
(iii) Any estate of which any executor or
administrator is a U.S. person;
(iv) Any trust of which any trustee is a U.S.
person;
(v) Any agency or branch of a foreign entity
located in the United States;
(vi) Any non-discretionary account or similar
account (other than an estate or trust) held
by a dealer or other fiduciary for the
benefit or account of a U.S. person;
(vii) Any discretionary account or similar account
(other than an estate or trust) held by a
dealer or other fiduciary organized,
incorporated, or (if an individual) resident
in the United States; and
(viii) Any partnership or corporation if: (A)
organized or incorporated under the laws of
any foreign jurisdiction; and (B) formed by
a U.S. person principally for the purpose of
investing in securities not registered under
the Securities Act, unless it is organized
or incorporated, and owned, by accredited
investors (as defined in Rule 501(a) of the
Securities Act) who are not natural persons,
estates or trusts.
(b) Notwithstanding paragraph (1)(a) of this rule, any
discretionary account or similar acount (other than an estate
or trust) held for the benefit or account of a non-U.S.
<PAGE> 9
person by a dealer or other professional fiduciary organized,
incorporated, or (if an individual) resident in the United
States shall not be deemed a "U.S. person."
(c) Notwithstanding paragraph (1)(a), any estate of which any
professional fiduciary acting as executor or administrator is
a U.S. person shall not be deemed a U.S. person if:
(i) An executor or administrator of the estate who is not
a U.S. person has sole or shared investment discretion
with respect to the assets of the estate; and
(ii) The estate is governed by foreign law.
(d) Notwithstanding paragraph (1)(a), any trust of which any
professional fiduciary acting as a trustee is a U.S. person
shall not be deemed a U.S. person if a trustee who is not a
U.S. person has sole or shared investment discretion with
respect to the trust assets, and no beneficiary of the trust
(and no settlor if the trust is revocable) is a U.S. person.
(e) Notwithstanding paragraph (1)(a), an employee benefit plan
established and administered in accordance with the law of a
country other than the United States and customary practices
and documentation of such country shall not be deemed a U.S.
person.
(f) Notwithstanding paragraph (1)(a), any agency or branch of a
U.S. person located outside the United States shall not be
deemed a "U.S. person" if:
(i) The agency or branch operates for valid business
reasons; and
(ii) The agency or branch is engaged in the business of
insurance or banking and is subject to substantive
insurance or banking regulation, respectively, in the
jurisdiction where located.
(g) The International Monetary Fund, the International Bank for
Reconstruction and Development, the Inter American Development
Bank, the Asian Development Bank, the African Development
Bank, the United Nations, and their agencies, affiliates and
pension plans and any other similar international
organizations, their agencies, affiliates and pension plans
shall not be deemed "U.S. persons."
2. United States. "United States" means the United States of America, its
territories and possessions, any State of the United States, and the
District of Columbia.
<PAGE> 10
TERM SHEET
PRIVATE PLACEMENT OF 3.3 MILL. SHARES IN CANARGO
ENERGY CORPORATION 9 DECEMBER 1999
1 ISSUER
CanArgo Energy Corporation, a Delaware corporation with its principle offices at
1580, 272- 7th Avenue SW Calgary, Alberta, Canada, telephone no. 00 1 403 777
1185, telefax no. ................, which shares are listed on the Oslo Stock
Exchange (main) list. CanArgo Energy Corporation is an oil- and gas exploration
and production company that owns interests in oil- and gas properties located in
the Republic of Georgia and elsewhere and Eastern Europe. The Company's
principle activities involves the rehabilitation and development of oil- and gas
fields with a productive history that indicates potential for increased
production through the application of modern production techniques.
2 OFFERING
The Company is offering 3.3 mill. shares ("the Offering") in a private placement
to investors in Norway through Orkla Finans Fondsmegling ASA ("Orkla Finans")
and Sundal Collier & Co. as placement agents ("the "Agents"), at NOK 6.90 on
December 9, 1999. No prospectus is prepared in connection with the Offering. The
Offering is made pursuant to relevant exemptions for prospectus requirements
under the Stock Exchange Regulations, chapter 18 (offering of less than 10 % of
the share capital) and the Securities Trade Act of 1997, chapter 5 (the Offering
is made available to less than 50 persons). The shares are offered in conformity
with an exemption from registration requirements of the United States Securities
Act of 1933, as amended (the "Securities Act") pursuant to Regulation S under
the Securities Act ("Regulation S"). Pursuant to Regulation S the shares may be
traded over the Oslo Stock Exchange. Subscribers must, however, represent i.a.
that they are not US Persons as defined under Regulation S, and that the shares
will not be resold by the subscribers to US Persons or into the United States
within a period of 1 year, as further detailed in schedule 1 to the Subscription
Agreement.
3 USE OF PROCEEDS
The purpose of the offering is to provide working capital for the Company
[..............]. Under the mandate to place the Offering, the placement agents
each receive a fee of 6 % of gross placement consideration under the Offering.
The Company will also reimburse the placement agent out of pocket expenses,
legal fees etc.
4 TERMS OF THE SHARES
The shares are common shares which will be registered electronically on each
subscriber's VPS-account. The shares are freely tradable of the Oslo Stock
Exchange, however, each subscriber gives the representations and warranties in
Schedule 1 to the Subscription Agreement regarding
<PAGE> 11
i.a. restriction on resales into the United States and to US Persons. Reference
is made to the complete text of Schedule 1 to the Subscription Agreement.
5 DOCUMENTATION
No prospectus is prepared in connection with the Offering. However, the
investors should review the following material regarding the Company (which are
considered as documentation offered to investors), the Company's Annual Report
on Form 10-K filed with the SEC on 29 April 1999, Form 10-Q filed with the SEC
on 15 November 1999 and the prospectus (S-I/A and addenda POS-AM filed 7 June
1999 and 29 July and 24 August, respectively) which may be obtained at the
following internet site: http://www.sec.gov1. Copies of these documents can also
be obtained from the Agents.
6 RISKS OF THE INVESTMENT
An investment in the shares in the Offering constitutes a speculative investment
entailing a high degree of risk. Investors should review the attached materials,
and, in particular, the Companies Annual Report on Form 10-K, (see above), which
sets forth certain risks associated with the Companies' business, financial
condition and prospects. These material include (or incorporates by reference)
forwardlooking statements within the meaning of Section 27 a) of the Securities
Act. All statements other than statements of historical fact made herein,
including without limitation, those regarding the Companies' financial position,
business strategy, projected financial results and plans and objectives of
management for future operation, are forwardlooking statements. Although the
Company believes that the expectations are reflected in such statements are
reasonable, it can give no assurance that such expectations will prove to be
correct.
The shares of common stock being sold pursuant to the offering have not been
registered under the united states securities act of 1933 as amended (the
"act"), or any other securities laws, and have been issued in reliance upon the
exemption from registration under the act containing regulation s under the act.
Prior to December 9, 2000, no offer, sale, transfer, pledge or other disposition
(collectively a disposal) of the common stock sold pursuant to the offering may
be made: a) in the united states or to, for the account or benefit of, any "US
Person" (as defined in regulation S) unless (i) registered under the act and any
applicable state securities or blue sky laws or (ii) exemptions from the
registration requirements of such laws are available and canargo energy
corporation (the "Company") receives a written opinion of united states legal
counsel in form and substance satisfactory to it to the effect that such
disposal is exempt from such registration requirements; and (b) outside the
united states or to, or for the account or benefit of a person who is not a "US
Person" (as defined in regulation S) unless (i) the BENEFICIAL owner of such
shares and the proposed transferee submit certain certifications to the company
and (ii)
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1 Instructions: Click 1) EDGAR database 2) "search the EDGAR database" 3) "Quick
Forms look up" and fill in CanArgo Energy in the box for "Enter a company", then
4) "Submit choices" and 5) open the following forms: Form 10Q filed 11-15-1999;
Form POSAM filed 7-29-1999 and 08-24-1999 and S-1/A filed 06-07-1999 and Form
10-K/A filed 29 April 1999.
<PAGE> 12
the company receives a written opinion of United States legal counsel
in form and substance satisfactory to it to the effect that such disposal is
exempt from the registration requirements of the act.
