<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 9, 1999
FILE NO. 333-72295
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------------------
Amendment No. 3 to
Form S-1
REGISTRATION STATEMENT
UNDER THE
SECURITIES ACT OF 1933
------------------------------------
CANARGO ENERGY CORPORATION
(Exact name of Registrant as specified in its charter)
<TABLE>
<S> <C> <C>
DELAWARE 1311 91-0881481
(State or other jurisdiction (Primary Standard Industrial (IRS Employer Identification
of incorporation or Classification Code Number) No.)
organization)
</TABLE>
SUITE 1580, 727 - 7TH AVENUE S.W., CALGARY, ALBERTA T2P 0Z5 TELEPHONE (403)
777-1185
(Address and telephone number of principal executive offices)
------------------------------------
SUSAN E. PALMER
CANARGO ENERGY CORPORATION
1400 BROADFIELD BOULEVARD, SUITE 100, HOUSTON, TEXAS 77084 TELEPHONE (281)
492-6992
(Name, address and telephone number of agent for service)
------------------------------------
Please forward a copy of all correspondence to:
ALAN D. JACOBSON, ESQ.
KELLY LYTTON MINTZ & VANN LLP
1900 AVENUE OF THE STARS, SUITE 1450, LOS ANGELES, CALIFORNIA 90067 TELEPHONE
(310) 277-5333
------------------------------------
Approximate date of commencement of proposed sale to the public: As soon as
practicable after this Registration Statement becomes effective.
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]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration for the same
offering. [ ]
If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
------------------------------------
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
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- --------------------------------------------------------------------------------
2
<PAGE> 2
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) The following exhibits are filed herewith or incorporated herein by
reference:
(*) Management Contracts, Compensation Plans and Arrangements are
identified by an asterisk.
1(1) Escrow Agreement with Signature Stock Transfer, Inc.
1(2) Selling Agent Agreement with each of Credifinance Securities
Limited, David Williamson Associates Limited, and Orkla Finans
(Fondsmegling) ASA.
1(3) Escrow Agreement with Orkla Finans (Fondsmegling) ASA.
2(1) Amended and Restated Combination Agreement between Fountain Oil
Incorporated and CanArgo Energy Inc. dated as of February 2,
1998 (Incorporated herein by reference from Form S-3
Registration Statement, File No. 333-48287 filed on June 9,
1998).
2(2) Voting, Support and Exchange Trust Agreement (Incorporated
herein by reference as Annex G from Form S-3 Registration
Statement, File No. 333-48287 filed on June 9, 1998).
3(1) Registrant's Certificate of Incorporation and amendments
thereto (Incorporated herein by reference from July 15, 1998
Form 8-K).
3(2) Registrant's Bylaws (Incorporated herein by reference from
March 31, 1999 Form 10-Q).
4(1) Form of 8% Convertible Subordinated Debenture (Incorporated
herein by reference from February 29, 1996 Form 10-QSB).
4(2) Form of Stock Certificate(3)
5(1) Opinion of Kelly Lytton Mintz & Vann LLP.
*10(1) Securities Compensation Plan (Incorporated herein by reference
from August 31, 1994 Form 10-KSB, filed by Electromagnetic Oil
Recovery, Inc., the Company's predecessor).
*10(2) Form of Certificate for Common Stock Purchase Warrants issued
pursuant to the Securities Compensation Plan (Incorporated
herein by reference from Form S-8 Registration Statement, File
No. 33-82944 filed on August 17, 1994, filed by Electromagnetic
Oil Recovery, Inc., the Company's predecessor).
*10(3) Form of Option Agreement for options granted to certain
persons, including Directors (Incorporated herein by reference
from August 31, 1994 Form 10-KSB, filed by Electromagnetic Oil
Recovery, Inc., the Company's predecessor).
*10(4) Form of Certificate for Common Stock Purchase Warrants issued
to certain investors in August 1994, including Directors
(Incorporated
S-1
<PAGE> 3
herein by reference from August 31, 1994 Form 10-KSB, filed
by Electromagnetic Oil Recovery, Inc., the Company's
predecessor).
*10(5) Restated Employment Agreement between Fountain Oil Incorporated
and Nils N. Trulsvik (Incorporated herein by reference from
December 31, 1997 Form 10-K/A).
*10(6) Employment Agreement between Fountain Oil Incorporated and
Ravinder S. Sierra (Incorporated herein by reference from
August 31, 1995 Form 10-KSB).
*10(7) Amended and Restated 1995 Long-Term Incentive Plan
(Incorporated herein by reference from September 30, 1998 Form
10-Q).
*10(8) Fee Agreement dated November 15, 1995 between Fountain Oil
Incorporated and Robert A. Halpin (Incorporated herein by
reference from August 31, 1996 Form 10-KSB).
*10(9) Fee Agreement between Fountain Oil Incorporated and Eugene J.
Meyers (Incorporated herein by reference from August 31, 1996
Form 10-KSB).
*10(10) Amended Fee Agreement dated December 10, 1996 between Fountain
Oil Incorporated and Robert A. Halpin (Incorporated herein by
reference from December 31, 1996 Form 10-K).
*10(11) Employment Agreement between Fountain Oil Incorporated and
Alfred Kjemperud (Incorporated herein by reference from March
31, 1997 Form 10-Q).
*10(12) Employment Agreement between Fountain Oil Norway AS and Rune
Falstad (Incorporated herein by reference from December 31,
1997 Form 10-K/A).
*10(13) Amended and Restated CanArgo Energy Inc. Stock Option Plan
(Incorporated herein by reference from September 30, 1998 Form
10-Q).
*10(14) Workorder between CanArgo Energy Inc. and Nils N. Trulsvik as
Consultant (Incorporated herein by reference from September 30,
1998 Form 10-Q).
*10(15) Consultancy Agreement between CanArgo Energy Corporation and
Fincom AS, Norway (Incorporated herein by reference from
September 30, 1998 Form 10-Q).
*10(16) Employment Contract between CanArgo Energy Inc. and Anthony J.
Potter (Incorporated herein by reference from September 30,
1998 Form 10-Q).
*10(17) Workorder between CanArgo Energy Inc. and Alfred Kjemperud as
Consultant.(1)
10(18) Convertible Loan Agreement between Ninotsminda Oil Company
(NOC) and International Finance Corporation (IFC) dated
December 17, 1998.(1)
S-2
<PAGE> 4
10(19) Put Option Agreement between CanArgo Energy Corporation, JKX
Oil & Gas PLC. and IFC dated December 17, 1998.(1)
10(20) Guarantee Agreement between CanArgo Energy Corporation and IFC
dated December 17, 1998.(1)
10(21) Agreement between Georgian Oil Refinery Company and CanArgo
Petroleum Products Ltd. dated September 26, 1998.(1)
10(22) Terrenex Acquisition Corporation Option regarding CanArgo
(Nazvrevi) Limited.(1)
10(23) Production Sharing Contract between (1) Georgia and (2)
Georgian Oil and JKX Navtobi Ltd. dated February 15, 1996.(3)
21 List of Subsidiaries.(1)
23(1) Consent of PricewaterhouseCoopers LLP.(3)
23(2) Consent of Ernst & Young, Chartered Accountants, Calgary,
Canada.(2)
23(3) Consent of Ernst & Young, Chartered Accountants, Limassol,
Cyprus.(2)
23(4) Consent of AMH Group Ltd.(1)
23(5) Consent of Kelly Lytton Mintz & Vann LLP, contained in Exhibit
5(1).
24(1) Power of Attorney.(1)
24(2) Power of Attorney of Robert A. Halpin(2)
27(1) Restated Financial Data Schedule for the fiscal year ended
December 31, 1997.(1)
27(2) Restated Financial Data Schedule for the four-month period
ended December 31, 1996.(1)
27(3) Restated Financial Data Schedule for the fiscal year ended
August 31, 1996.(1)
27(4) Restated Financial Data Schedule for the fiscal year ended
August 31, 1995.(1)
27(5) Restated Financial Data Schedule for the quarter ended March
31, 1998.(1)
27(6) Restated Financial Data Schedule for the quarter ended June 30,
1998.(1)
27(7) Restated Financial Data Schedule for the quarter ended March
31, 1997.(1)
27(8) Restated Financial Data Schedule for the quarter ended June 30,
1997.(1)
27(9) Restated Financial Data Schedule for the quarter ended
September 30, 1997.(1)
S-3
<PAGE> 5
(b) No financial statement schedules are required to be filed
herewith.
- ---------------
(1) Previously filed on February 12, 1999.
(2) Previously filed on May 19, 1999.
(3) Previously filed on June 7, 1999.
S-4
<PAGE> 6
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant has
duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Calgary, Alberta, Canada, on June 9,
1999.
CANARGO ENERGY CORPORATION
By: /s/ MICHAEL BINNION
--------------------------------
Michael Binnion,
President
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
- --------- ----- ----
<C> <S> <C>
/s/ DAVID ROBSON Chief Executive Officer and June 9, 1999
- --------------------------------------------- Director (Principal Executive
David Robson* Officer)
/s/ MICHAEL BINNION President, Chief Financial June 9, 1999
- --------------------------------------------- Officer and Director
Michael Binnion (Principal Financial Officer)
/s/ ROBERT A. HALPIN Director June 9, 1999
- ---------------------------------------------
Robert A. Halpin*
/s/ J.F. RUSSELL HAMMOND Director June 9, 1999
- ---------------------------------------------
J.F. Russell Hammond*
/s/ PEDER PAUS Director June 9, 1999
- ---------------------------------------------
Peder Paus*
/s/ NILS N. TRULSVIK Director June 9, 1999
- ---------------------------------------------
Nils N. Trulsvik*
/s/ ANTHONY J. POTTER Controller (Principal June 9, 1999
- --------------------------------------------- Accounting Officer)
Anthony J. Potter*
</TABLE>
*By /s/ MICHAEL BINNION
------------------------------
Michael Binnion
Attorney-in-fact
S-5
<PAGE> 7
CANARGO ENERGY CORPORATION
AMENDMENT NO. 3 TO REGISTRATION STATEMENT
ON FORM S-1
EXHIBIT INDEX
<TABLE>
<CAPTION>
FILED
HEREWITH
- --------
<C> <C> <S>
(*) Management Contracts, Compensation Plans and Arrangements
are identified by an asterisk.
X 1(1) Escrow Agreement with Signature Stock Transfer, Inc.
X 1(2) Selling Agent Agreement with each of Credifinance Securities
Limited, David Williamson Associates Limited, and Orkla
Finans (Fondsmegling) ASA.
X 1(3) Escrow Agreement with Orkla Finans (Fondsmegling) ASA.
2(1) Amended and Restated Combination Agreement between Fountain
Oil Incorporated and CanArgo Energy Inc. dated as of
February 2, 1998 (Incorporated herein by reference from Form
S-3 Registration Statement, File No. 333-48287 filed on June
9, 1998).
2(2) Voting, Support and Exchange Trust Agreement (Incorporated
herein by reference as Annex G from Form S-3 Registration
Statement, File No. 333-48287 filed on June 9, 1998).
3(1) Registrant's Certificate of Incorporation and amendments
thereto (Incorporated herein by reference from July 15, 1998
Form 8-K).
3(2) Registrant's Bylaws (Incorporated herein by reference from
March 31, 1999 Form 10-Q).
4(1) Form of 8% Convertible Subordinated Debenture (Incorporated
herein by reference from February 29, 1996 Form 10-QSB).
4(2) Form of Stock Certificate(3)
X 5(1) Opinion of Kelly Lytton Mintz & Vann LLP
*10(1) Securities Compensation Plan (Incorporated herein by
reference from August 31, 1994 Form 10-KSB, filed by
Electromagnetic Oil Recovery, Inc., the Company's
predecessor).
*10(2) Form of Certificate for Common Stock Purchase Warrants
issued pursuant to the Securities Compensation Plan
(Incorporated herein by reference from Form S-8 Registration
Statement, File No. 33-82944 filed on August 17, 1994, filed
by Electromagnetic Oil Recovery, Inc., the Company's
predecessor).
*10(3) Form of Option Agreement for options granted to certain
persons, including Directors (Incorporated herein by
reference from August 31, 1994 Form 10-KSB, filed by
Electromagnetic Oil Recovery, Inc., the Company's
predecessor).
*10(4) Form of Certificate for Common Stock Purchase Warrants
issued to certain investors in August 1994, including
Directors (Incorporated herein by reference from August 31,
1994 Form 10-KSB, filed by Electromagnetic Oil Recovery,
Inc., the Company's predecessor).
</TABLE>
<PAGE> 8
<TABLE>
<CAPTION>
FILED
HEREWITH
- --------
<C> <C> <S>
*10(5) Restated Employment Agreement between Fountain Oil
Incorporated and Nils N. Trulsvik (Incorporated herein by
reference from December 31, 1997 Form 10-K/A).
*10(6) Employment Agreement between Fountain Oil Incorporated and
Ravinder S. Sierra (Incorporated herein by reference from
August 31, 1995 Form 10-KSB).
*10(7) Amended and Restated 1995 Long-Term Incentive Plan
(Incorporated herein by reference from September 30, 1998
Form 10-Q).
*10(8) Fee Agreement dated November 15, 1995 between Fountain Oil
Incorporated and Robert A. Halpin (Incorporated herein by
reference from August 31, 1996 Form 10-KSB).
*10(9) Fee Agreement between Fountain Oil Incorporated and Eugene
J. Meyers (Incorporated herein by reference from August 31,
1996 Form 10-KSB).
*10(10) Amended Fee Agreement dated December 10, 1996 between
Fountain Oil Incorporated and Robert A. Halpin (Incorporated
herein by reference from December 31, 1996 Form 10-K).
*10(11) Employment Agreement between Fountain Oil Incorporated and
Alfred Kjemperud (Incorporated herein by reference from
March 31, 1997 Form 10-Q).
*10(12) Employment Agreement between Fountain Oil Norway AS and Rune
Falstad (Incorporated herein by reference from December 31,
1997 Form 10-K/A).
*10(13) Amended and Restated CanArgo Energy Inc. Stock Option Plan
(Incorporated herein by reference from September 30, 1998
Form 10-Q).
*10(14) Workorder between CanArgo Energy Inc. and Nils N. Trulsvik
as Consultant (Incorporated herein by reference from
September 30, 1998 Form 10-Q).
*10(15) Consultancy Agreement between CanArgo Energy Corporation and
Fincom AS, Norway (Incorporated herein by reference from
September 30, 1998 Form 10-Q).
*10(16) Employment Contract between CanArgo Energy Inc. and Anthony
J. Potter (Incorporated herein by reference from September
30, 1998 Form 10-Q).
*10(17) Workorder between CanArgo Energy Inc. and Alfred Kjemperud
as Consultant.(1)
10(18) Convertible Loan Agreement between Ninotsminda Oil Company
(NOC) and International Finance Corporation (IFC) dated
December 17, 1998.(1)
10(19) Put Option Agreement between CanArgo Energy Corporation, JKX
Oil & Gas PLC. and IFC dated December 17, 1998.(1)
10(20) Guarantee Agreement between CanArgo Energy Corporation and
IFC dated December 17, 1998.(1)
10(21) Agreement between Georgian Oil Refinery Company and CanArgo
Petroleum Products Ltd. dated September 26, 1998.(1)
</TABLE>
<PAGE> 9
<TABLE>
<CAPTION>
FILED
HEREWITH
- --------
<C> <C> <S>
10(22) Terrenex Acquisition Corporation Option regarding CanArgo
(Nazvrevi) Limited.(1)
10(23) Production Sharing Contract between (1) Georgia and (2)
Georgian Oil and JKX Navtobi Ltd. dated February 15,
1996.(3)
21 List of Subsidiaries.(1)
23(1) Consent of PricewaterhouseCoopers LLP.(3)
23(2) Consent of Ernst & Young, Chartered Accountants, Calgary,
Canada.(2)
23(3) Consent of Ernst & Young, Chartered Accountants, Limassol,
Cyprus.(2)
23(4) Consent of AMH Group Ltd.(1)
23(5) Consent of Kelly Lytton Mintz & Vann LLP, contained in
Exhibit 5(1).
24(1) Power of Attorney.(1)
24(2) Power of Attorney of Robert A. Halpin(2)
27(1) Restated Financial Data Schedule for the fiscal year ended
December 31, 1997.(1)
27(2) Restated Financial Data Schedule for the four-month period
ended December 31, 1996.(1)
27(3) Restated Financial Data Schedule for the fiscal year ended
August 31, 1996.(1)
27(4) Restated Financial Data Schedule for the fiscal year ended
August 31, 1995.(1)
27(5) Restated Financial Data Schedule for the quarter ended March
31, 1998.(1)
27(6) Restated Financial Data Schedule for the quarter ended June
30, 1998.(1)
27(7) Restated Financial Data Schedule for the quarter ended March
31, 1997.(1)
27(8) Restated Financial Data Schedule for the quarter ended June
30, 1997.(1)
27(9) Restated Financial Data Schedule for the quarter ended
September 30, 1997.(1)
</TABLE>
- ---------------
(1) Previously filed on February 12, 1999.
(2) Previously filed on May 19, 1999.
(3) Previously filed on June 7, 1999.
<PAGE> 1
EXHIBIT 1(1)
ESCROW AGREEMENT
AGREEMENT made as of this 4th day of June, 1999 by and among CanArgo
Energy Corporation (the "Issuer" or "Company") and SST Holdings, Inc., dba
Signature Stock Transfer, Inc. (the "Escrow Agent"), whose addresses appear on
the Information Sheet attached to this Agreement.
WITNESSETH:
WHEREAS, the Issuer has filed Registration Statement No. 333-72295 (the
"Registration Statement") with the Securities and Exchange Commission (the
"SEC") on Form S-1 to register under the Securities Act of 1933, 21,264,643
shares (the "Securities") of the Common Stock, par value $.10 per share ("Common
Stock"), of the Issuer;
WHEREAS, following the declaration by the SEC of the effectiveness of
the Registration Statement the Issuer proposes to offer the Securities for sale
on an "all or none" basis with respect to 11,500,000 shares of Common Stock (the
"Minimum Securities Amount") which are to be sold at a price of U.S. Thirty
Cents ($.30) or 2.35 NOK (Norwegian Kroner) per share of Common Stock, all as
set forth on the Information Sheet (the "Information Sheet") attached hereto as
Exhibit A and incorporated herein by this reference;
WHEREAS, the Issuer proposes to establish an escrow account (the "Escrow
Account"), to which subscription monies which are received by the Escrow Agent
directly or indirectly from subscribers in connection with such offering are to
be credited, and the Escrow Agent is willing to establish the Escrow Account on
the terms and subject to the conditions hereinafter set forth;
WHEREAS, the Escrow Agent has established a special bank account into
which the subscription monies, which are received by the Escrow Agent directly
or indirectly from subscribers and credited to the Escrow Account, are to be
deposited;
WHEREAS, subscription monies will also be deposited into bank accounts
maintained by Orkla Finans (Fondsmegling) ASA as escrow agent (the "Norway
Account"); and
WHEREAS, the Escrow Agent also serves as the transfer agent and
registrar for the Common Stock.
-1-
<PAGE> 2
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, the parties hereto hereby agree as follows:
1. Information Sheet. Each capitalized term not otherwise
defined in this Agreement shall have the meaning set forth for such term on the
Information Sheet.
2. Establishment of the Bank Account.
2.1 The Escrow Agent shall establish a non-interest-bearing bank
account bearing the designation set forth on the Information Sheet (the "Bank
Account") at Compass Bank, Dallas, Texas (the "Bank"). The purpose of the Bank
Account is for (a) the deposit of all subscription monies (checks, bank drafts,
money orders or wire transfers) which are received from prospective purchasers
of the Securities and are delivered to the Escrow Agent, (b) the holding of
amounts of subscription monies which are collected through the banking system,
and (c) the disbursement of collected funds, all as described herein.
2.2 The Escrow Agent shall not accept any amounts for credit to
the Escrow Account or for deposit in the Bank Account prior to the effective
date of the Registration Statement (the "Effective Date").
2.3 The initial Offering Period shall consist of the period set
forth on the Information Sheet. The Offering Period shall be extended for an
Extension Period only if the Escrow Agent shall have received written notice
thereof at least two (2) business days prior to the scheduled expiration of the
Offering Period. The Extension Period, which shall be deemed to commence
simultaneously with the expiration of then initial Offering Period and shall end
on the date set forth in such notice not to exceed the period set forth on the
Information Sheet. The last day of the initial Offering Period, or the last day
of the Extension Period (if the Escrow Agent has received written notice thereof
as hereinabove provided), is referred to herein as the "Termination Date". After
the Termination Date subscribers shall not deposit, and the Escrow Agent shall
not accept, any additional amounts representing payments by prospective
purchasers.
3. Deposits to the Bank Account.
3.1 Prospective purchasers of the Securities may deliver to the
Escrow Agent monies representing the purchase price of the Securities, which
monies shall be in the form of checks, bank drafts, money orders or wire
transfers. Upon the Escrow Agent's receipt of such monies, they shall be
credited to the Escrow Account. All checks, bank drafts or money orders
(referred to as "checks" herein) delivered to the Escrow Agent shall be made
payable to "Signature Stock Transfer, Inc., as Agent for CanArgo Energy
Corporation". Any check payable other than to the Escrow Agent as required
hereby shall be returned to the prospective purchaser, or if the Escrow Agent
has insufficient information to do so, then to the Company (together with any
-2-
<PAGE> 3
Subscription Information, as defined below or other documents delivered
therewith) by noon of the next business day following receipt of such check by
the Escrow Agent, and such check shall be deemed not to have been delivered to
the Escrow Agent pursuant to the terms of this Agreement.
3.2 Promptly after receiving subscription monies as described in
Section 3.1, the Escrow Agent shall deposit the same into the Bank Account.
Amounts of monies so deposited are hereinafter referred to as "Escrow Amounts".
The Escrow Agent shall cause the Bank to process all Escrow Amounts for
collection through the banking system. Simultaneously with each deposit to the
Escrow Account, the prospective purchaser shall inform the Escrow Agent in
writing of its name, address, taxpayer identification number (if any), the
amount of Securities subscribed for by such prospective purchaser, and the
aggregate dollar amount of such subscription (collectively, the "Subscription
Information"). The Escrow Agent shall mark all Subscription Information with the
date and time it is received by the Escrow Agent.
3.3 The Escrow Agent shall not be required to accept for credit
to the Escrow Account or for deposit into the Bank Account checks which are not
accompanied by the appropriate Subscription Information. Wire transfers
representing payments by prospective purchasers shall not be deemed deposited in
the Escrow Account until the Escrow Agent has received in writing the
Subscription Information required with respect to such payments.
3.4 The Escrow Agent shall not be required to accept in the
Escrow Account any amounts representing payments by prospective purchasers,
whether by check or wire, except during the Escrow Agent's regular business
hours.
3.5 Only those Escrow Amounts which have been deposited in the
Bank Account and subscription monies which have been deposited in the Norway
Account and which have cleared the banking system and have been collected in
such Accounts are herein referred to as the "Fund".
3.6 The Escrow Agent and Orkla Finans shall advise each other
daily as to the amount of the Fund held in each of the Norway Account and the
Bank Account. The aggregate Fund in both the Norway Account and Bank Account is
referred to herein as the "Total Fund."
4. Disbursement from the Bank Account.
4.1 If by 9:00 a.m. Central Daylight Time on the Termination
Date the amount of the Total Fund is less than the aggregate Offering Price in
U.S. dollars and/or Norwegian kroner necessary to purchase the Minimum
Securities Amount, as indicated by the Subscription Information submitted to the
Escrow Agent and Orkla
-3-
<PAGE> 4
Finans, then in such case the Escrow Agent shall promptly refund to each
prospective purchaser the amount of payment received from such prospective
purchaser which is then held in the Bank Account or which thereafter clears the
banking system, without interest thereon or deduction therefrom, by drawing
checks on the Bank Account for the amounts of such payments and transmitting
them to the purchasers. In such event, the Escrow Agent shall promptly notify
the Issuer of its distribution of the Fund.
4.2 If at any time up to 9:00 a.m. Central Daylight Time on the
Termination Date, the amount of the Total Fund is at least equal to the
aggregate Offering Price in U.S. dollars and/or Norwegian kroner necessary to
represent the consideration for the purchase of not less than the Minimum
Securities Amount, as indicated by the Subscription Information submitted to the
Escrow Agent and Orkla Finans, the Escrow Agent shall promptly notify the Issuer
of such fact in writing. The Escrow Agent shall promptly disburse the Fund, by
drawing checks on or making wire transfers from the Bank Account in accordance
with instructions in writing signed by the Issuer as to the disbursement of the
Fund, promptly after the Escrow Agent receives such instructions and confirms
the concurrent issuance to the purchasers of the Securities being purchased with
the funds being disbursed.
4.3 In the event the Issuer determines to reject in whole or in
part the subscription of any prospective purchaser for whose account Escrow
Amounts have been deposited in the Escrow Account, the Issuer shall promptly
notify the Escrow Agent of such determination. Upon receipt of such
notification, the Escrow Agent shall promptly refund to such prospective
purchaser the amount of payment received from such purchaser attributable to the
rejected subscription which is then held in the Fund or which thereafter clears
the banking system, without interest thereon or deduction therefrom, by drawing
checks on the Bank Account for the amounts of such payments and transmitting
them to such purchaser.
4.4 Upon disbursement of the Fund pursuant to the terms of this
Article 4, the Escrow Agent shall be relieved of all further obligations and
released from all liability under this Agreement. It is expressly agreed and
understood that in no event shall the aggregate amount of payments made by the
Escrow Agent exceed the amount of the Fund.
5. Rights, Duties and Responsibilities of Escrow Agent. It is
understood and agreed that the duties of the Escrow Agent are purely ministerial
in nature, and that:
5.1 The Escrow Agent shall notify the Issuer, on a daily basis,
of the Escrow Amounts which have been deposited in the Bank Account and of the
amounts, constituting the Fund, which have cleared the banking system and have
been collected by the Escrow Agent. The Issuer will receive similar information
from Orkla Finans.
-4-
<PAGE> 5
5.2 The Escrow Agent shall not be responsible for the
performance by the Issuer of its obligations under this Agreement, or for any
obligations of Orkla Finans.
5.3 The Escrow Agent shall not be required to accept from the
Issuer any Subscription Information pertaining to prospective purchasers unless
such Subscription Information is accompanied by checks or wire transfers meeting
the requirements of Section 3.1, nor shall the Escrow Agent be required to keep
records of any information with respect to payments deposited by the Issuer
except as to the amount of such payments; however, the Escrow Agent shall notify
the Issuer within a reasonable time of any discrepancy between the amount set
forth in any Subscription Information and the amount delivered to the Escrow
Agent therewith. Such amount need not be accepted for deposit in the Escrow
Account until such discrepancy has been resolved.
5.4 The Escrow Agent shall be under no duty or responsibility to
enforce collection of any check delivered to it hereunder. The Escrow Agent,
within a reasonable time, shall return to the Issuer any check received which is
dishonored, together with the Subscription Information, if any, which
accompanied such check.
5.5 The Escrow Agent shall be entitled to rely upon the
accuracy, act in reliance upon the contents, and assume the genuineness of any
notice, instruction, certificate, signature, instrument or other document which
is given to the Escrow Agent pursuant to this Agreement without the necessity of
the Escrow Agent verifying the truth or accuracy thereof. The Escrow Agent shall
not be obligated to make any inquiry as to the authority, capacity, existence or
identity of any person purporting to give any such notice or instructions or to
execute any such certificate, instrument or other document.
5.6 If the Escrow Agent is uncertain as to its duties or rights
hereunder or shall receive instructions with respect to the Bank Account, the
Escrow Amounts or the Fund which, in its sole determination, are in conflict
either with other instructions received by it or with any provision of this
Agreement, it shall be entitled to hold the Escrow Amounts, the Fund, or a
portion thereof, in the Bank Account pending the resolution of such uncertainty
to the Escrow Agent's sole satisfaction, by final judgment of a court or courts
of competent jurisdiction or otherwise; or the Escrow Agent, at its sole option,
may deposit the Fund (and any other Escrow Amounts that thereafter become part
of the Fund) with the Clerk of a court of competent jurisdiction in a proceeding
to which all parties in interest are joined. Upon the deposit by the Escrow
Agent of the Fund with the Clerk of any court, the Escrow Agent shall be
relieved of all further obligations and released from all liability hereunder.
-5-
<PAGE> 6
5.7 The Escrow Agent shall not be liable for any action taken or
omitted hereunder, or for the misconduct of any employee, agent or attorney
appointed by it, except in the case of willful misconduct or gross negligence.
The Escrow Agent shall be entitled to consult with counsel of its own choosing
and shall not be liable for any action taken, suffered or omitted by it in
accordance with the advice of such counsel.
5.8 The Escrow Agent shall have no responsibility at any time to
ascertain whether or not any security interest exists in the Escrow Amounts, the
Fund or any part thereof or to file any financing statement under the Uniform
Commercial Code with respect to the Fund or any part thereof.
6. Amendment; Resignation. This Agreement may be altered or
amended only with the written consent of the Issuer and the Escrow Agent. The
Escrow Agent may resign for any reason upon three (3) business days' written
notice to the Issuer. Should the Escrow Agent resign as herein provided, it
shall not be required to accept any deposit, make any disbursement or otherwise
dispose of the Escrow Amounts or the Fund, but its only duty shall be to hold
the Escrow Amounts until they clear the banking system and the Fund for a period
of not more than five (5) business days following the effective date of such
resignation, at which time (a) if a successor escrow agent shall have been
appointed and written notice thereof (including the name and address of such
successor escrow agent) shall have been given to the resigning Escrow Agent by
the Issuer and such successor escrow agent, then the resigning Escrow Agent
shall pay over to the successor escrow agent the Fund, less any portion thereof
previously paid out in accordance with this Agreement; or (b) if the resigning
Escrow Agent shall not have received written notice signed by the Issuer and a
successor escrow agent, then the resigning Escrow Agent shall promptly refund
the amount in the Fund to each prospective purchaser, without interest thereon
or deduction therefrom, and the resigning Escrow Agent shall promptly notify the
Issuer in writing of its liquidation and distribution of the Fund; whereupon, in
either case, the Escrow Agent shall be relieved of all further obligations and
released from all liability under this Agreement. Without limiting the
provisions of Section 8 hereof, the resigning Escrow Agent shall be entitled to
be reimbursed by the Issuer for any expenses incurred in connection with its
resignation, transfer of the Fund to a successor escrow agent or distribution of
the Fund pursuant to this Section 6.
7. Representations and Warranties. The Issuer hereby represents
and warrants to Escrow Agent that:
7.1 No party other than the parties hereto and the prospective
purchasers have, or shall have, any lien, claim or security interest in the
Escrow Amounts or the Fund or any part thereof.
-6-
<PAGE> 7
7.2 No financing statement under the Uniform Commercial Code is
on file in any jurisdiction claiming a security interest in or describing
(whether specifically or generally) the Escrow Amounts or the Fund or any part
thereof.
7.3 The Subscription Information submitted with each deposit
shall, at the time of submission and at the time of the disbursement of the
Fund, be deemed a representation and warranty that such deposit represents a
bona fide payment by the purchaser described therein for the amount of
Securities set forth in such Subscription Information.
7.4 All of the information contained in the Information Sheet
is, as of the date hereof, and will be, at the time of any disbursement of the
Fund, true and correct.
8. Fees and Expenses. The Escrow Agent shall be entitled to the
Escrow Agent Fees set forth on the Information Sheet, payable as and when stated
therein. In addition, the Issuer agrees to reimburse the Escrow Agent for any
reasonable expenses incurred in connection with this Agreement, including, but
not limited to, reasonable counsel fees.
9. Indemnification and Contribution.
9.1 The Issuer ( the "Indemnitor") agrees to indemnify the
Escrow Agent and its officers, directors, employees, agents and shareholders
(collectively referred to as the "Indemnitees") against, and hold them harmless
of and from, any and all loss, liability, cost, damage and expense, including
without limitation, reasonable counsel fees, which the Indemnitees may suffer or
incur by reason of any action, claim or proceeding brought against the
Indemnitees arising out of or relating in any way to this Agreement or any
transaction to which this Agreement relates, unless such action, claim or
proceeding is the result of the willful misconduct or gross negligence of the
Indemnitees.
9.2 If the indemnification provided for in Section 9.1 is
applicable, but for any reason is held to be unavailable, the Indemnitor shall
contribute such amounts as are just and equitable to pay, or to reimburse the
Indemnitees for, the aggregate of any and all losses, liabilities, costs,
damages and expenses, including counsel fees, actually incurred by the
Indemnitees as a result of or in connection with, and any amount paid in
settlement of, any action, claim or proceeding arising out of or relating in any
way to any actions or omissions of the Indemnitor.
9.3 The provisions of this Article 9 shall survive any
termination of this Agreement, whether by disbursement of the Fund, resignation
of the Escrow Agent or otherwise.
-7-
<PAGE> 8
10. Governing Law and Assignment. This Agreement shall be
construed in accordance with and governed by the laws of the State of Texas and
shall be binding upon the parties hereto and their respective successors and
assigns; provided, however, that any assignment or transfer by any party of its
rights under this Agreement or with respect to the Escrow Amounts or the Fund
shall be void as against the Escrow Agent unless (a) written notice thereof
shall be given to the Escrow Agent; and (b) the Escrow Agent shall have
consented in writing to such assignment or transfer.
11. Notices. All notices required to be given in connection with
this Agreement shall be sent by registered or certified mail, return receipt
requested, or by hand delivery with receipt acknowledged, or by the Express Mail
service offered by the United States Post Office, and addressed, if to the
Issuer at its address set forth on the Information Sheet, and if to the Escrow
Agent, at its address set forth on the Information Sheet.
12. Severability. If any provision of this Agreement or the
application thereof to any person or circumstance shall be determined to be
invalid or unenforceable, the remaining provisions of this Agreement or the
application of such provision to persons or circumstances other than those to
which it is held invalid or unenforceable shall not be affected thereby and
shall be valid and enforceable to the fullest extent permitted by law.
13. Execution in Several Counterparts. This Agreement may be
executed in several counterparts or by separate instruments, and all of such
counterparts and instruments shall constitute one agreement, binding on all of
the parties hereto.
14. Entire Agreement. This Agreement constitutes the entire
agreement between the parties hereto with respect to the subject matter hereof
and supersedes all prior agreements and understandings (written or oral) of the
parties in connection therewith.
IN WITNESS WHEREOF, the undersigned have executed this Agreement
as of the day and year first above written.
CanArgo Energy Corporation
By: /s/ Michael Binnion
---------------------------------
Michael Binnion, President
-8-
<PAGE> 9
SST Holdings, Inc., dba,
Signature Stock Transfer, Inc.
By: /s/ Kathleen Bogutski
---------------------------------
Kathleen Bogutski, President
-9-
<PAGE> 10
ESCROW AGREEMENT INFORMATION SHEET
1. The Issuer
Name: CanArgo Energy Corporation
Address: 1400 Broadfield Boulevard, Suite 100, Houston, Texas 77084
State of incorporation or organization: Delaware
2. The Escrow Agent
Name: SST Holdings, Inc., dba Signature Stock Transfer, Inc.
Address: 14675 Midway Road, Suite 221, Dallas, Texas 75224-9651
3. The Securities
Description of the Securities to be offered: up to 21,264,643 shares of
Common Stock, par value $.10 per share, of CanArgo Energy Corporation
Offering Price per share: U.S. $0.30 or NOK 2.35 (Norwegian kroner)
4. Minimum Amount Required for Disbursement of the Escrow Account
The total amount of securities which must be subscribed for and for
which Total Funds have been deposited at the applicable Offering Price
based on each subscription before the Escrow Account may be disbursed to
the Issuer is 11,500,000 shares ("Minimum Securities Amount").
5. Offering Period
Initial Offering Period: From 9:00 a.m. Central Daylight time on the
date after the day when the prospectus is first available for
distribution in Norway through 9:00 a.m. Central Daylight Time on
any date through June 30, 1999
Extension Period, if any: 9:00 a.m. Central Daylight Time on any date
after June 30, 1999 through August 6, 1999
6. Title of Escrow Account: SST Holdings Inc. Escrow #2
7. Wire Instructions
Bank Name: Compass Bank
Bank Address: 14852 Preston Road, Dallas, Texas 75240
Account Name: SST Holdings Inc. Escrow #2
Account Number: 74784542
ABA Routing No.: 111907445
8. Escrow Agent Fees
Amount due on execution of the Escrow Agreement: $1,000
Fee for initial closing of at least Minimum Securities Amount: $1,000
Fee for each additional closing: $500
-10-
<PAGE> 1
EXHIBIT 1(2)
CANARGO ENERGY CORPORATION
21,264,643 Shares of Common Stock
SELLING AGENT AGREEMENT
June 3, 1999
[Note 1]
Gentlemen:
1. CanArgo Energy Corporation (the "Company") proposes to offer and sell
a minimum of 11,500,000 shares and a maximum of 21,264,643 shares of its common
stock, $0.10 par value per share (the "Shares") on the terms set forth in the
Prospectus described below (the "Offering"). Subject to the terms and conditions
set forth herein, you agree to use your best efforts as sales agent to solicit
purchasers of the Shares on the terms set forth in the Prospectus.
2. The Company has filed with the Securities and Exchange Commission
(the "Commission") a registration statement on Form S-1 (No. 333-72295) and a
related preliminary prospectus for the registration of the Shares under the
Securities Act of 1933, as amended (the "Act"), and has filed such amendments
thereto and such amended preliminary prospectuses as may have been required to
the date hereof. Such registration statement as amended and the amended
prospectus on file with the Commission at the time the registration statement
becomes effective are hereinafter called the "Registration Statement" and the
"Prospectus", respectively, except that (i) if the Company files a
post-effective amendment to such registration statement, then the term
"Registration Statement" shall, from and after the declaration of the
effectiveness of such post-effective amendment, refer to such registration
statement as amended by such post-effective amendment thereto, and the term
"Prospectus" shall refer to the amended prospectus then on file with the
Commission and (ii) if the prospectus filed by the Company pursuant to either
Rule 424(b) or (c) of the rules and regulations of the Commission under the Act
(the "Regulations") shall differ from the prospectus on file at the time the
Registration Statement became, or any post-effective amendment thereto shall
have become, effective, the term "Prospectus" shall refer to the prospectus
filed pursuant to Rule 424(b) or (c) from and after the date on which it shall
have been filed.
3. The Offering shall commence at 9:00 a.m. Texas, U.S.A. time or 4:00
p.m. Norway time on the date, as advised by the Company, that prospectuses are
available for distribution in Norway and continue until 9:00 a.m. Texas, U.S.A
time or 4:00 p.m. Oslo time on
<PAGE> 2
the earlier of: (i) the date on which subscriptions for all Shares shall have
been received and accepted by the Company and paid for; or (ii) June 30, 1999,
unless the Company extends this date without notice to subscribers to a date not
later than August 6, 1999 (the "Offering Termination Date"). The Company will
advise you of any extension of the Offering Termination Date beyond June 30,
1999.
4. You represent that you are a foreign dealer or institution ineligible
for membership in the NASD, and that you and your employees who solicit
subscriptions are properly licensed to sell securities in each of the
jurisdictions in which you intend to offer the Shares as set forth in paragraph
5 hereof. You agree that you will not solicit purchasers of Shares from persons
who are present in the United States or otherwise within the definition of "U.S.
person" contained in Rule 901 under the Act, and you will not direct any selling
efforts towards identifiable groups of U.S. citizens resident outside of the
United States.
5. You agree that you will not solicit purchasers of the Shares in any
jurisdiction except [Note 2]. You acknowledge and understand that no action has
been or, prior to the completion of the distribution of the Shares, will be
taken by the Company in any jurisdiction outside the United States or Norway
that would permit a public offering of the Shares, or possession or distribution
of the Prospectus, or any amendment or supplement thereto, or any related
preliminary prospectus issued in connection with the Offering, or any other
offering material, in any country or jurisdiction where action for that purpose
is required and you shall be solely responsible for compliance with applicable
laws of any jurisdiction as they relate to your solicitation activities.
6. You will deliver a copy of the Prospectus to each person whom you
solicit. You will not deliver any subscription agreement to any person unless it
is preceded or accompanied by a Prospectus. Neither you nor any other person is
or has been authorized to give any information or to make any representations in
connection with the sale of the Shares other than as contained in the
Prospectus. The Company will deliver to you from time to time such number of
copies of the Prospectus and subscription agreement as you may reasonably
request to enable you to solicit purchasers of the Shares.
The Company will promptly notify you upon the happening of any event as
a result of which the Prospectus as then in effect includes an untrue statement
of a material fact or omits to state a material fact required to be stated
therein or necessary to make the statements therein not misleading in light of
the circumstances then existing. Upon receipt of such notice you will forthwith
discontinue solicitations of purchasers until you have received a supplemental
or amended Prospectus or the Company has advised you that you may resume use of
the Prospectus in effect at the time of its notice.
7. Each subscriber for the Shares will be required to enter into a
subscription agreement in the form approved by the Company and make payment for
the Shares in the manner set forth in the subscription agreement. Each payment
for Shares must be accompanied by a
2
<PAGE> 3
completed and originally executed subscription agreement. All subscription
agreements and payments for Shares received by you shall be forwarded promptly
to the offices of an escrow agent identified in the subscription agreement, as
follows: (a) if, pursuant to your internal supervisory procedures, internal
supervisory review is conducted at the same location at which subscription
documents are received from subscribers, such documents and payments shall be
transmitted by the end of the business day next following the day of receipt; or
(b) if, pursuant to your internal supervisory procedures, final internal
supervisory review is conducted at a different location, such documents and
payments shall be transmitted to your final review office by the end of the
business day next following the day of receipt and the final review office
shall, by the end of the business day next following the day on which it
receives the documents and payment, transmit the documents and payments to the
offices of an escrow agent. The escrow agents will deposit all subscription
payments in bank accounts in accordance with the terms of their agreements with
the Company.
8. No subscription agreement shall be effective unless and until
accepted by the Company, and the Company reserves the right, in its sole
discretion, to refrain from accepting, in whole or in part, any Subscription
Agreement submitted.
9. During the Offering, you and the Company will comply with all
applicable requirements of the Act, the Securities Exchange Act of 1934, and the
laws of the jurisdictions in which the offering is being made so as to permit
the offer and sale of the Shares in accordance with applicable law, the
provisions hereof and as set forth in the Prospectus.
10. As compensation for your services in soliciting and obtaining
purchasers of the Shares, the Company will pay you as follows:
(i) a commission of eight percent (8%) of the total purchase
price for all Shares sold through your efforts evidenced by the
appearance in each purchaser's subscription agreement of your name as
the "Soliciting Dealer." All such compensation will be paid to you
concurrently with the disbursement of funds from an escrow account to
the Company.
(ii) reimbursement of those bona fide out-of-pocket expenses
associated with soliciting and obtaining subscriptions for Shares
incurred with the prior written consent of the Company, in an amount not
to exceed 2% of the total purchase price of all Shares sold through your
efforts evidenced in the manner described above, payable after the
Offering Termination Date within two (2) days of written request made to
the Company.
Notwithstanding the foregoing, no compensation or reimbursement will be
paid by the Company (a) in respect of subscriptions (or portions thereof) which
have been rejected by the Company, or (b) in the event that at least 11,500,000
Shares are not sold, or (c) with respect to Shares sold directly through the
Company's officers or directors or (d) until the Company receives the relevant
subscription payments from the Escrow Agent.
3
<PAGE> 4
11. Indemnification and Contribution.
(a) The Company agrees to indemnify and hold harmless you (the
"Selling Agent"), its officers, directors, partners, employees, agents, and
counsel, and each person, if any, who controls the Selling Agent within the
meaning of Section 15 of the Act or Section 20(a) of the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), against any and all loss, liability,
claim, damage, and expense whatsoever (which shall include, for all purposes of
this paragraph (a), but not be limited to, attorneys' fees and any and all
expense whatsoever incurred in investigating, preparing, or defending against
any litigation, commenced or threatened, or any claim whatsoever and any and all
amounts paid in settlement of any claim or litigation) as and when incurred
arising out of, based upon, or in connection with (i) any untrue statement or
alleged untrue statement of a material fact contained in the Prospectus or
Registration Statement, or in any application or other document or communication
(in this paragraph 11 collectively called an "application") executed by or on
behalf of the Company filed in any jurisdiction in order to register or qualify
the Shares under the "blue sky" or securities laws thereof; (ii) an omission or
alleged omission to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, unless such statement
or omission was made in reliance upon and in conformity with written information
furnished to the Company as stated in paragraph (b) below with respect to the
Selling Agent expressly for inclusion in the Prospectus or Registration
Statement or in any application, as the case may be; or (iii) any breach of any
representation, warranty, covenant, or agreement of the Company contained in
this Agreement; or (iv) except as provided in paragraph (b) below, any violation
by the Company of any federal or state securities law.
(b) The Selling Agent agrees to indemnify and hold harmless the
Company, its officers, directors, employees, agents and counsel, and each other
person, if any, who controls the Company within the meaning of Section 15 of the
Act or Section 20(a) of the Exchange Act, to the same extent as the foregoing
indemnity from the Company to the Selling Agent in paragraph (a) above, with
respect to any and all loss, liability, claim, damage, and expense whatsoever
(which shall include, for all purposes of this paragraph (b), but not limited
to, attorneys' fees and any and all expense whatsoever incurred in
investigating, preparing, or defending against any litigation, commenced or
threatened, or any claim whatsoever and any and all amounts paid in settlement
of any claim or litigation) as and when incurred arising out of, based upon, or
in connection with (i) statements or omissions, if any, made in the Prospectus,
Registration Statement or an application in reliance upon and in conformity with
written information furnished to the Company with respect to the Selling Agent
expressly for inclusion in the Prospectus, Registration Statement or an
application in reliance upon and in conformity with written information
furnished to the Company with respect to the Selling Agent expressly for
inclusion in the Prospectus, Registration Statement or an application, and (ii)
the failure of the Selling Agent to comply with the "blue sky" or securities
laws of the jurisdictions in which the Selling Agent solicits officers to by any
Shares or (iii) any breach of any representation, warranty, covenant or
agreement of the Selling Agent contained in this Agreement.
4
<PAGE> 5
(c) If any action is brought against the Selling Agent or the
Company or any of their respective officers, directors, partners, employees,
agents, or counsel, or any controlling persons of the Selling Agent or the
Company (each an "indemnified party"), in respect of which indemnity may be
sought against the Company or the Selling Agent pursuant to paragraphs (a) and
(b) hereof, as the case may be, such indemnified party or parties shall promptly
notify the Company or the Selling Agent (each an "indemnifying party"), as the
case may be, in writing of the institution of such action (but the failure so to
notify shall not relieve the indemnifying party from any liability it may have
other than pursuant to this paragraph (c)) and the indemnifying party shall
promptly assume the defense of such action, including the employment of counsel
(reasonably satisfactory to such indemnified party or parties) and payment of
expenses. Such indemnified party shall have the right to employ its own counsel
in any such case, but the fees and expense of such counsel shall be at the
expense of such indemnified party unless (i) the employment of such counsel
shall have been authorized in writing by the indemnifying party in connection
with the defense of such action or (ii) the indemnifying party shall not have
promptly employed counsel satisfactory to such indemnified party or parties to
have charge of the defense of such action or (iii) such indemnified party or
parties shall have reasonably concluded that there may be one or more legal
defenses available to it or them or to other indemnified parties which are
different from or additional to those available to one or more of the
indemnifying parties, in any of which events such fees and expenses of one such
counsel shall be borne by the indemnifying party and the indemnifying party
shall not have the right to direct the defense of such action on behalf of the
indemnified party or parties. Anything in this paragraph to the contrary
notwithstanding, the indemnifying party shall not be liable for any settlement
of any such claim or action effected without its written consent.
(d) To provide for just and equitable contribution, if (i) an
indemnified party makes a claim for indemnification pursuant to paragraph (a) or
(b) but it is found in a final judicial determination, not subject to further
appeal, that such indemnification may not be enforced in such case, even though
this Agreement expressly provides for indemnification in such case, or (ii) any
indemnifying party seeks contribution under the Act, the Exchange Act, or
otherwise, then the Company (including for this purpose any contribution made by
or on behalf of any officer, director, employee, agent, or counsel of the
Company, or any controlling person of the Company), on the one hand, and the
Selling Agent (including for this purpose any contribution by or on behalf of
any officer, director, employee, agent, or counsel of the Selling Agent, or any
controlling person of the Selling Agent), on the other hand, shall contribute to
the losses, liabilities, claims, damages and expenses whatsoever to which any of
them may be subject, in such proportions as are appropriate to reflect the
relative benefits received by the Company, on the one hand, and the Selling
Agent, on the other hand; provided, however, that if applicable law does not
permit such allocation, then other relevant equitable considerations such as the
relative fault of the Company and the Selling Agent in connection with the facts
which resulted in such losses, liabilities, claims, damages, and expenses shall
also be considered. The relative benefits received by the Company, on the one
hand, and the Selling Agent, on the other hand, shall be deemed to be in the
same proportion as (x) the total proceeds from the Offering
5
<PAGE> 6
(net of compensation payable to the Selling Agent pursuant to paragraph 10(i)
hereof but before deducting expenses) received by the Company, and (y) the
compensation received by the Selling Agent pursuant to paragraph 10(i) hereof.
The relative fault, in the case of an untrue statement, alleged
untrue statement, omission, or alleged omission, shall be determined by, among
other things, whether such statement, alleged statement, omission, or alleged
omission relates to information supplied by the Company or by the Selling Agent,
and the parties' relative intent, knowledge, access to information, and
opportunity to correct or prevent such statement, alleged statement, omission,
or alleged omission. The Company and the Selling Agent agree that it would be
unjust and inequitable if the respective obligations of the Company and the
Selling Agent for contribution were determined by pro rata or per capita
allocation of the aggregate losses, liabilities, claims, damages, and expenses
or by any other method of allocation and that does not reflect the equitable
considerations referred to in this paragraph (d). In no case shall the Selling
Agent be responsible for a portion of the contribution obligation in excess of
the compensation received by it pursuant to paragraph 10(i) hereof. No person
guilty of a fraudulent misrepresentation shall be entitled to contribution from
any person who is not guilty of such fraudulent misrepresentation. For purposes
of this paragraph (d), each person, if any, who controls the Selling Agent
within the meaning of Section 15 of the Act or Section 20(a) of the Exchange Act
and each officer, director, partner, employee, agent and counsel of the Selling
Agent, shall have the same rights to contribution as the Company, subject in
each case to the provisions of this paragraph (d). Anything in this paragraph
(d) to the contrary notwithstanding, no party shall be liable for contribution
with respect to the settlement of any claim or action effected without its
written consent. This paragraph (d) is intended to supersede any right to
contribution under the Act, the Exchange Act, or otherwise.
12. This Agreement will become effective at the time the Registration
Statement first becomes effective, or, if later, the date of this Agreement. You
or the Company may prevent this Agreement from becoming effective without
liability of any other party by giving notice prior to the time when this
Agreement would otherwise become effective as herein provided. This Agreement
will terminate when the Offering is terminated. The Company will give you prompt
notice of the effectiveness of the Registration Statement and the termination of
the Offering.
13. All communications hereunder shall be in writing and sent by
facsimile to you at the address on the first page hereof, or to the Company at
CanArgo Energy Corporation, Suite 1580, 727 - 7th Avenue, S.W., Calgary, Alberta
T2P OZ5, Canada, at (403) 777-1578, with a copy to Helen W. Melman, Esq., 815
Moraga Drive, Los Angeles, California 90049, at (310) 472-4091.
14. This Agreement shall be governed by and construed in accordance with
the laws of the State of Delaware.
6
<PAGE> 7
15. You and each other selling agent of the Company shall act as
independent contractors, and nothing herein contained shall constitute you or
such other selling agents as agents of the Company or constitute the other
selling agents as your agents in connection with the solicitation of
subscriptions for the Shares. You shall be under no liability to the Company for
any act or omission of any selling agent other than yourself, and you shall not
be liable hereunder except for the obligations you expressly assume hereunder or
for liabilities which may be incurred by you under the Act or the laws of the
jurisdictions set forth in paragraph 5 hereof.
If the foregoing is in accordance with our agreement, kindly sign and
return to us a counterpart hereof, whereupon this instrument along with all
counterparts will become a binding agreement in accordance with its terms.
Very truly yours,
CanArgo Energy Corporation
By /s/ Michael Binnion
---------------------------------
Michael Binnion, President
Confirmed and accepted as of the date first above written:
[Note 3]
7
<PAGE> 8
NOTES TO SELLING AGENT AGREEMENT
(1) The Selling Agent Agreement was entered into between CanArgo Energy
Corporation and each of the following:
Credifinance Securities Limited
Suite 3303, 130 Adelaide Street West
Toronto, Ontario M5H 3P5
CANADA
David Williamson Associates Limited
15 St. Helen's Place
London EC3A 6DE
UNITED KINGDOM
Orkla Finans (Fondsmegling) ASA
Tordenskioldsgt. 8/10
P.O. Box 1724 Vika
N-0121 Oslo
NORWAY
(2) Credifinance: Europe and Switzerland
David Williamson: United Kingdom, European Union and Switzerland
Orkla Finans: Norway
(3) The Selling Agent Agreements were executed as follows:
Credifinance Securities Limited
By /s/ George Bennaroch
----------------------------------
Chairman
David Williamson Associates Limited
By /s/ Martin Rosser
----------------------------------
Deputy Managing Director
Orkla Finans (Fondsmegling) ASA
By /s/ Jan-Tore Aschim
----------------------------------
Director
<PAGE> 1
EXHIBIT 1(3)
Canargo Energy Corporation
Suite 1580, 727 - 7th Avenue, S.W.
Calgary, Alberta T2P OZ5
CANADA
June 3, 1999
Orkla Finans (Fondsmegling) ASA
Tordenskioldsgt. 8/10
P.O. Box 1724 Vika
N-0121 Oslo
NORWAY
Re: Escrow Agreement
Gentlemen:
This will confirm the terms under which you will act as escrow agent to
collect and deposit subscription funds received in connection with the public
offering of up to 21, 264,643 shares of common stock by CanArgo Energy
Corporation pursuant to a Registration Statement filed with the Securities and
Exchange Commission and approved by the Oslo Stock Exchange. Prospective
purchasers of the shares will be required to deliver to you a completed
subscription agreement in the form approved by CanArgo and pay for the shares in
the manner indicated in the subscription agreement. Orkla Finans will establish
a separate, non-interest bearing account with Den Norske Bank ASA (the
"Account") into which it will promptly deposit all subscription monies which are
received from subscribers for the shares. For the purpose of determining the
order in which subscriptions are received, you will date and time stamp each
subscription agreement as it is received by you. You agree to promptly return to
any prospective investor his subscription agreement and payment if the
subscription agreement is not signed and complete or if the payment for shares
is not in accordance with the instructions for payment on the subscription
agreement.
The offering will commence at 4:00 p.m. Oslo time on the date after the
day when prospectuses are first available for distribution in Norway. Orkla
Finans will not accept any subscriptions or payments prior to that date. After
the offering commences, subscription monies will be deposited in the Account
until termination of the offering. The offering will terminate on the earlier of
(1) the time on which all 21,264,643 shares have been sold or (2) at 4:00 p.m.
Oslo time June 30, 1999, unless this date is extended by CanArgo to a date not
later than August 6, 1999. CanArgo will give you at least two business days
prior notice if it decides to extend the termination date beyond June 30, 1999.
The date that the offering terminates is referred to as the "Termination Date."
No subscriptions will be accepted or monies deposited in the Account after the
Termination Date.
Orkla Finans will notify CanArgo, on a daily basis, of the amount of
subscription monies that have been deposited in the Account and have cleared the
banking system. CanArgo will provide Orkla Finans with similar information with
respect to any other escrow account used in the offering to enable Orkla Finans
to determine when the minimum offering (defined below) has been achieved.
<PAGE> 2
Orkla Finans (Fondsmegling) ASA
June 8, 1999
Page 2
If by the Termination Date the total monies which have been deposited
into the Account and all other escrow accounts established for the offering and
which monies have cleared the banking system and been collected in those
accounts (the "Fund") is less than the amount in U.S. dollars or Norwegian
kroner necessary to pay the total subscription price set forth in the
Registration Statement for at least 11,500,000 shares of common stock (the
"minimum offering"), then Orkla Finans will promptly refund to each subscriber
the subscription monies received from such subscriber then held in the Account
for such subscriber. Orkla Finans will promptly notify CanArgo upon the
distribution of Funds out of the Account.
If at any time up to 4:00 p.m. Oslo time on the Termination Date the
Fund is at least equal to the minimum offering, Orkla Finans will promptly
notify CanArgo in writing. CanArgo will instruct its registrar and transfer
agent to issue certificates for the shares sold in accordance with instructions
from Orkla Finans. When CanArgo confirms to Orkla Finans that such certificates
have been issued, Orkla Finans will then promptly disburse the Funds in
accordance with CanArgo's instructions.
After the minimum offering has been reached and Funds relating to the
minimum offering have been disbursed to CanArgo, Orkla Finans will continue to
receive and deposit subscription monies into the Account and will, upon
confirmation by CanArgo that certificates for the shares have been issued,
disburse Funds at the instruction of CanArgo, until the Termination Date.
If CanArgo decides to reject in whole or in part the subscription of any
prospective purchaser whose subscription payment has been deposited into the
Account, CanArgo will promptly notify Orkla Finans and Orkla Finans will then
promptly refund that purchaser's subscription monies.
Any amounts refunded to subscribers due to the failure to obtain the
minimum offering amount or due to the rejection of a subscription for any reason
will be promptly refunded to the subscriber without interest thereon and without
any deductions therefrom.
Please confirm your agreement to the foregoing by signing below and
returning a copy of this letter.
Very truly yours,
CANARGO ENERGY CORPORATION
By /s/ Michael Binnion
---------------------------------
Michael Binnion
President
ORKLA FINANS (FONDSMEGLING) ASA
<PAGE> 3
Orkla Finans (Fondsmegling) ASA
June 8, 1999
Page 3
By /s/ Jan-Tore Aschim
--------------------------------
Jan-Tore Aschim, Director
<PAGE> 1
EXHIBIT 5.1
Kelly, Lytton Mintz & Vann LLP
1900 Avenue of the Stars
Suite 1450
Los Angeles, California 90067-2901
June 9, 1999
CanArgo Energy Corporation
Suite 1580
727 - 7th Avenue, S.W.
Calgary, Alberta T2P OZ5
CANADA
Re: CanArgo Energy Corporation
Registration Statement on Form S-1
Gentlemen:
We have acted as counsel to CanArgo Energy Corporation, a Delaware
corporation, in connection with the proposed issuance and sale by CanArgo of up
to 21,264,643 shares of its common stock (the "Shares") pursuant to CanArgo's
Registration Statement on Form S-1 filed with the Securities and Exchange
Commission under the Securities Act of 1933, as amended (the "Act").
We have reviewed CanArgo's charter documents and the corporate
proceedings taken by CanArgo in connection with the issuance and sale of the
Shares. Based on such review, we are of the opinion that the Shares have been
duly authorized and, if, as and when issued in accordance with the Registration
Statement and the related prospectus (as amended and supplemented through the
date of issuance) will be legally issued, fully paid and non-assessable.
We consent to this opinion being filed as an exhibit to the Registration
Statement and to the reference to this firm under the caption "Legal Matters."
In giving this consent, we do not admit that we are 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,
KELLY LYTTON MINTZ & VANN LLP
By /s/ Marshall G. Mintz
---------------------------------
Marshall G. Mintz
