Exhibit 99(3)
THE SECURITIES OFFERED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") PURSUANT TO AN
EXEMPTION FROM SUCH REGISTRATION AND MAY NOT BE OFFERED, SOLD OR OTHERWISE
TRANSFERRED EXCEPT PURUSANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OR AN EXEMPTION FROM SUCH REGISTRATION. SEE PARAGRAPH 2
"OFFERING" HEREIN.
CANARGO ENERGY CORPORATION
TERM SHEET
PRIVATE PLACEMENT OF UP TO 10 MILLION SHARES IN CANARGO ENERGY CORPORATION
18 August 2000
1 ISSUER
CanArgo Energy Corporation, a Delaware corporation (the "Company") with its
principal offices at 1580, 727 - 7th Avenue SW Calgary, Alberta, Canada,
telephone no. 00 1 403 777 1185, telefax no. 00 1 403 777 1578, whose shares are
listed on the Oslo Stock Exchange (main) list and in the U.S. NASDAQ Over the
Counter Bulletin Board ("Bulletin Board"). The Company 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 in Eastern Europe. The
Company's principal activities involve the rehabilitation and development of oil
and gas fields with productive histories that indicate potential for increased
production through the application of modern production techniques. See
Paragraph 5 "Available Information" and Paragraph 6 "Risk Factors" herein.
2 OFFERING
The Company is offering up to 10 million shares (the "Shares") of its common
stock, par value $ 0,1 per share ("Common Stock") in a private placement (the
"Offering") to qualified investors who are knowledgeable, sophisticated and
experienced in making, and are qualified to make, decisions with respect to
investments in restricted securities (such as this Shares) and whose ordinary
activities involve them in acquiring, holding, managing or disposing of
investments (as principal or agent) for the purposes of their businesses or who
it is reasonable to expect will acquire the Shares for investment and not for
distribution in a restricted period and have sufficient resources to hold such
shares indefinitely and can suffer a loss of their entire investment, through
Den norske Bank ASA - DnB Markets, and Sundal Collier & Co ASA as placement
agents (collectively, the "Agents"), at NOK [ ] per Share during an offering
period closing on 18 August, 2000. No offering memorandum or prospectus has
been prepared for use in connection with the Offering. The Offering will
prior to the listing of the Shares require a prospectus under the Stock
Exchange Regulations, Chapter 18 (offering of more than 10 % of the share
capital). The Offering will not require a prospectus under the Securities Trade
Act of 1997, Chapter 5 as the Offer is in compliance with the exemptions from
the obligation to prepare a prospectus in connection with offers made to
professional investors (the Offering is being made to registered professional
investors or securities issued in minimum lots of EURO 40.000 in terms of
nominal value or subscription price)
The Shares are being offered in a transaction intended to qualify for an
exemption from the registration requirements of the United States Securities Act
of 1933, as amended (the "Securities Act") afforded by Regulation S promulgated
thereunder ("Regulation S"). Pursuant to Regulation S the Shares are deemed
"restricted securities" and may not be sold in the United States or to a "U.S.
person" (as defined in Schedule 2 attached to the Subscription Agreement and
made a part thereof) until after the first anniversary of the effective date of
the sale of the Shares ("Closing Date") or unless they have been registered
under the Securities Act or pursuant to an exemption from such registration.
Subscribers must also represent, among other things, that they also are not U.S.
persons, and that the Shares will not be resold by the subscribers to U.S.
persons or into the United States except pursuant to an exemption from
registration under the Securities Act or until the earlier of the first
anniversary of the Closing Date or the Shares have been registered for resale
under the Securities Act, as further detailed in Schedules 1 and 2 to the
Subscription Agreement. The Company has agreed, as soon as practicable after
the Closing Date, to prepare and file with the United States Securities and
Exchange Commission ("SEC") a registration statement registering the Shares on
Form S-3 (the "Registration Statement"), if available, for resale. The Company
has also agreed to pay subscribers a cash fee of 3.33% of the purchase price of
their Shares for each full 30 day period after receipt by CanArgo from all
investors of duly signed Subscription Agreements including Schedule 3 to the
Subscription Agreements until the registration Statement on Form S-3 is declared
effective by the SEC up to a maximum of 10 % of the purchase price.
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 CONTAINED IN REGULATION S UNDER THE
ACT. PRIOR TO 18 AUGUST, 2001, 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) 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.
3 USE OF PROCEEDS
The purpose of the offering is to provide working capital for the Company in
order to:
I. Continue growth and development of CanArgo in Georgia
Capitalize on available opportunities in Georgia to develop CanArgo
in to the dominant oil & gas company in the Central Caucasus
II. Expand activities in the Caucasus/Caspian region
Exploit CanArgo's existing assets and opportunities in the Caspian
Build on the Company's contacts and reputation in the area to acquire
further projects in the region either through project development
or corporate acquisitions
Under the mandate to place the Offering, the placement agents each receive a fee
of 5.75 % of gross placement consideration under the Offering. The Company will
also reimburse the placement agents their out of pocket expenses, legal fees,
etc.
4 TERMS OF THE SHARES
The Shares are common shares, with all the rights and privileges accorded the
Company's outstanding common shares. The Shares will be registered
electronically on a special VPS-account established for each subscriber, which
will indicate that the shares are restricted securities. At such time as the
resale of the Shares has been registered under the Securities Act, the
restriction on the special VPS accounts will be lifted and the special VPS
account will function as a regular VPS-account. Until then the Shares will be
restricted and will not be available for trading on the Bulletin Board or listed
for trading on the Oslo Stock Exchange. At such time as the Registration
Statement becomes effective and a prospectus under the Stock Exchange Regulation
Chapter 18 has been approved by the Oslo Stock Exchange and made public by the
Company, the Shares will be freely tradable on the Oslo Stock Exchange and in
the United States on the Bulletin Board and may be sold to U.S. persons,
provided, however, each selling stockholder (and any broker-dealer through
whom such stockholder sells its Shares) will be required, until the expiration
of the first anniversary of the Closing Date, to deliver a current prospectus
together with each confirmation of the sale of the Shares. Each subscriber
shall be required to make the representations and warranties in Schedule
1 to the Subscription Agreement regarding its status as a non-U.S. person
and its agreement to abide by the restrictions on resales into the United States
and to U.S. persons. Reference is made to the complete text of Schedule 1
to the Subscription Agreement, which is incorporated by reference herein.
5 AVAILABLE INFORMATION
No prospectus or offering memorandum has been prepared in connection with the
Offering. However, subscribers should review the following materials regarding
the Company (which are considered information furnished to investors and which
are incorporated by reference herein): the Company's Annual Report on Form 10-K
for the fiscal year ended December 31, 1999 filed with the SEC on in 2000; the
Quarterly Report on Form 10-Q for the fiscal quarter ended June 30 , 2000 filed
with the SEC in 2000; the definitive proxy statement for CanArgo's annual
general meeting of shareholders held 14 June in 2000 filed with the SEC on 9 May
2000, and the prospectuses (S-3 and S-3A filed 4 August, 2000 and
14 August, 2000 respectively and S-I/A and addenda POS-AM filed 7 June 1999 and
29 July, 1999 and 24 August, 1999 respectively) all of which may be obtained at
the following internet site: http://www.sec.gov) before electing to subscribe
for Shares. 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 Company's Annual Report on Form 10-K (see
above), which set forth certain risks associated with the Company's business,
financial condition and prospects. This Term Sheet (and the materials
incorporated by reference herein) includes forward-looking 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 Company's financial position, business strategy, projected
financial results and plans and objectives of management for future operation,
are forward-looking statements. Although the Company believes that the
expectations reflected in such statements are reasonable, it can give no
assurance that such expectations will prove to be correct.
7 MISCELLANEOUS
THIS TERM SHEET HAS NOT BEEN FILED WITH OR REVIEWED BY THE SEC OR ANY OTHER
GOVERNMENTAL AGENCY OR OTHER BODY CHARGED WITH THE ADMINISTRATION OF ANY
SECURITIES LAWS OF ANY JURISDICTION; NEITHER HAS THE SEC OR ANY SUCH OTHER
AGENCY OR BODY PASSED UPON OR ENDORSED THE MERITS OF THIS OFFERING. ANY
REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
This Term Sheet has been prepared by the Company and is being furnished through
the Agents, solely for the use of prospective purchasers in connection with this
Offering. The Agents make no representation or warranty as to the accuracy or
completeness of the information contained herein. By accepting delivery of this
Term Sheet and any associated materials, the recipient agrees not to reproduce
or distribute this Term Sheet and such materials to any person other than its
professional advisers, without the prior written consent of the Company. No
Shares may be sold to any person without delivery to such person of a Term Sheet
and the execution and delivery by such person of a Subscription Agreement.
The Shares are being offered when, as and if issued, subject to prior sale or
withdrawal, cancellation or modification of the offer without notice. The
distribution of this Term Sheet and associated materials in certain
jurisdictions may be restricted by law. Persons into whose possession this Term
Sheet may come are required by the Company to inform themselves about and to
observe any such restrictions.
NO PERSON (OTHER THAN COMPANY REPRESENTATIVES) HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR MAKE ANY REPRESENTATIONS IN CONNECTION WITH THE OFFER AND SALE OF
THE SHARES OTHER THAN THOSE CONTAINED IN THE TERM SHEET (AND THE MATERIALS
INCORPORATED BY REFERENCE HEREIN) AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS SHOULD NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
COMPANY OR ANY OTHER PERSON. THIS TERM SHEET DOES NOT RELATE TO ANY SECURITIES
OTHER THAN THOSE DESCRIBED HEREIN OR CONSTITUTES AN OFFER TO SELL OR A
SOLICITATION OF AN OFFER TO PURCHASE ANY OF THE SHARES IN ANY JURISDICTION TO
ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION IN SUCH
JURISDICTION. THE DELIVERY OF THIS TERM SHEET AT ANY TIME DOES NOT IMPLY THAT
THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS
DATE.
PURCHASE OF THE SHARES OFFERED HEREBY MAY RESULT IN TAX OR OTHER LEGAL
CONSEQUENCES NOT DISCUSSED HEREIN. PROSPECTIVE SUBSCRIBERS FOR SHARES ARE NOT
TO CONSTRUE THIS TERM SHEET AND ASSOCIATED MATERIALS OR ANY PRIOR OR SUBSEQUENT
COMMUNICATION FROM THE COMPANY OR THE AGENTS OR ANY OF THEIR RESPECTIVE
DIRECTORS, OFFICERS, AGENTS OR EMPLOYEES AS LEGAL OR INVESTMENT ADVICE. EACH
PROSPECTIVE SUBSCRIBER FOR SHARES SHOULD CONSULT WITH AND RELY ON THE
SUBSCRIBER'S OWN PROFESSIONAL ADVISERS, INCLUDING LEGAL COUNSEL AND TAX
ADVISERS, AS TO THE CONSEQUENCES OF ANY INVESTMENT BY THE SUBSCRIBER IN THE
SHARES.
In this Term Sheet, all references to "dollars" and "$" are to United States
dollars and all references to "NOK" are to Norwegian Kroner. On 18 August, 2000
the exchange rate for dollars and Kroner, as reported in Nettavisen, was $1.00
equals NOK ______ All references to "subscribers" are to those investors who
purchase Shares pursuant to Subscription Agreements and all references to
"Subscription Agreements" are to an agreement between the Company and a
subscriber, each of which shall be substantially identical, in substantially the
form of Appendix A.
APPENDIX A: Subscription Agreement
