Exhibit 10.35
THIS AGREEMENT is made on 24th September 2003 between:-
(1) CANARGO ENERGY CORPORATION, a company incorporated under the laws of
Delaware and having its registered offices at 0000 Xxxxxxxxxxx Xxxx,
Xxxxx 000, Xxxxxxxxxx, Xxxxxxxx 00000, XXX (hereinafter "CANARGO"); and
(2) CORPORATION IBM, a company incorporated and existing under the laws of
Ukraine and having its registered office at Ukraine 46006, Xxxxxxxx, 00x
Xxxxxxxxxxxx Xxxxxx (hereinafter the "PURCHASER").
who hereinafter are referred to individually as Party and collectively as
Parties.
WHEREAS:
(A) CanArgo is the beneficial and registered owner of the entire issued share
capital (the "SALE Shares") of FOUNTAIN OIL BORYSLAV INCORPORATED, a
company incorporated under the laws of Delaware and having its registered
offices at 0000 Xxxxxxxxxxx Xxxx, Xxxxx 000, Xxxxxxxxxx, Xxxxxxxx 00000,
XXX (the "COMPANY");
(B) The Company is a co-founder and owns a 45% (forty five per centum)
interest in the Joint Venture Company "Boryslav Oil Company" ("BOC")
which holds the licence for the production of hydrocarbons in the
Stynawske Oil Field in western Ukraine (the "LICENCE"); and
(C) CanArgo is willing to sell and the Purchaser is willing to purchase the
Sale Shares for the consideration and upon the terms and conditions set
out in this Agreement.
IT IS AGREED:-
1 STRUCTURE
Subject to the terms of this Agreement CanArgo shall sell and the
Purchaser shall purchase the Sale Shares.
2 PRICE
2.1 The consideration (the "CONSIDERATION") payable by the Purchaser to
CanArgo for the Sale Shares is US$1,000,000 (one million US dollars)
payable on the dates and in the amounts set out below (the "PAYMENT
SCHEDULE"):-
AMOUNT TIME FOR PAYMENT
------ ----------------
US$125,000 (the "FIRST PAYMENT") Two weeks following the date of this Agreement
US$125,000 (the "SECOND PAYMENT") One month after the First Payment
US$125,000 (the "THIRD PAYMENT") One month after the Second Payment
US$125,000 (the "FOURTH PAYMENT") One month after the Third Payment
US$125,000 (the "FIFTH PAYMENT") One month after the Fourth Payment
US$125,000 (the "SIXTH PAYMENT") One month after the Fifth Payment
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CanArgo-IBM Sales Agreement (Fountain Oil Boryslav Inc.)
US$125,000 (the "SEVENTH PAYMENT") One month after the Sixth Payment
US$125,000 (the "FINAL PAYMENT") One month after the Seventh Payment
2.2 Any of the Payments will be deemed to be made on the date ("PAYMENT
DATE") when the respective Payment has been credited to CanArgo's bank
account indicated in the Clause 3.1 below.
2.3 In the event that payment of the Consideration is not made in accordance
with the Payment Schedule interest shall accrue daily at the rate of 16%
per annum on any part of the Consideration which is not paid in
accordance with the Payment Schedule.
2.4 In the event that any of the Payments are not made within 30 days of the
due date CanArgo shall be entitled to terminate this Agreement forthwith
and any of the Consideration which has been paid by the Purchaser shall
not be repaid to the Purchaser but shall be retained by CanArgo. In the
event of termination by CanArgo in the circumstances envisaged by Clause
2.4, the Purchaser shall have no claim whatsoever against CanArgo.
The Payment Schedule shall only be amended in writing by the Parties
hereto. Where any payment falls due on a date which is not a business
day, the payment shall be due on the immediately preceding business day.
3 SECURITY AND CONDUCT OF THE COMPANY PENDING PAYMENT OF THE CONSIDERATION
3.1 The Purchaser will become the legal and beneficial owner of the Sale
Shares only following payment in full of the Consideration and any
interest due thereon by the Purchaser and receipt of cleared funds by
CanArgo in the under noted account:-
Bank: HSBC Bank International Limited
Account: 000-000000-000
Name: CanArgo Energy Corporation USD Account
Instructions for transferring funds are as follows:
Receipt Correspondent Bank:
Instructions Bankers Trust Company
1 Bankers Trust Xxxxx
Xxxxxxx Xxxxxx, Xxx Xxxx, XX 00000
Account No. 00000000
SWIFT: XXXXXX00
For further credit of:
CanArgo Energy Corporation USD Account
Account No. 000-000000-000
HSBC Bank International Limited
XX XXX 000 Xx. Xxxxx Xxxx
Xxxxxxxx, XX0 0XX
Channel Islands
SWIFT: MIDLJESH
Payment will be made by way of Bank Transfers and will not be subject
to any withholding tax or any other deductions.
3.2 CanArgo confirms that as at the date hereof it controls the business and
affairs of the Company and that it will continue to do so until the
Purchaser makes the Final Payment. CanArgo confirms that to the extent
possible, it shall continue to run the business and affairs
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of the Company in the ordinary course.
3.3 The Purchaser acknowledges that CanArgo has provided loans in the total
amount of US$161,000 (one hundred and sixty one thousand US dollars) to
BOC for the purpose of financing the work programme (the "LOAN") and the
total amount is still outstanding as of the date hereof. On Completion,
the Purchaser will make best endeavours to ensure that the Loan or any
outstanding part thereof is repaid by BOC to CanArgo in accordance with
the terms of the original loan agreements.
3.4 Any dividends accrued or declared by BOC up to the date of this Agreement
shall be for CanArgo's benefit. Dividends declared after the date hereof
but before Completion shall be paid to CanArgo and will be offset against
the Final Payment.
3.5 The Purchaser shall provide a bank guarantee (the "GUARANTEE") to CanArgo
from the Purchaser's bank for the entire Consideration.
4. POWER OF ATTORNEY
4.1 The Company shall issue a power of attorney forthwith to the Purchaser's
nominated representative to act on behalf of the Executive Sponsor of BOC
(Dr. Xxxxx Xxxxxx) in relation to matters pertaining to the Licence and
related issues (the "POA"). The Company can withdraw this POA at any time
by giving 30 (thirty) days written notice to the Purchaser.
4 COMPLETION
4.1 Completion of the sale and purchase of the Sale Shares ("COMPLETION")
shall take place immediately following receipt of the Final Payment by
CanArgo or earlier should sufficient dividends be paid by BOC to CanArgo
to cover the Final Payment in accordance with Clause 4.3 above.
4.2 At Completion, CanArgo shall deliver the following:-
4.2.1 transfers of the Sale Shares duly executed by CanArgo in favour of the
Purchaser together with the definitive certificates in respect thereof in
the names of CanArgo;
4.2.2 the resignation referred to in Clause 6.2;
4.3 At Completion, the Purchaser shall deliver a written waiver in the agreed
form from the Company and BOC in respect of any claims which the Company
or BOC may have against CanArgo and any member of CanArgo's group as at
Completion and releasing CanArgo and any member of CanArgo's group from
all and any liabilities which may be owing to either the Company or BOC
by CanArgo or any member of CanArgo's group.
4.3.1 The Purchaser shall be responsible for obtaining all consents, waivers
and approvals to the purchase of the Sale Shares.
4.4 For the purposes of this Clause 5, 'CanArgo's group' means any holding,
subsidiary or associated company CanArgo or any subsidiary or associated
company of any such holding Company.
5 DIRECTORS
5.1 To the extent that it is able, CanArgo shall procure that its existing
directors (the "CURRENT DIRECTORS") will remain directors of the Company
from the date hereof until the date of
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Completion.
5.2 At Completion, CanArgo shall deliver the written resignation of each of
the Current Directors.
6 ENTIRE AGREEMENT
This Agreement constitutes the entire understanding and agreement of the
Parties with respect of the subject matter hereof and supersedes all
prior and contemporaneous agreements and understandings written or oral
regarding the subject matter of this Agreement.
7 CONFIDENTIALITY
7.1 All Parties undertake:-
Not to disclose the same to any other person unless expressly authorised
by the board of directors of CanArgo save for the purposes of:-
(a) Seeking legal or accounting advice in relation to its terms; and
(b) Disclosing the same to a competent authority or stock exchange, as
required by law.
8 FEES, COSTS AND EXPENSES
8.1 The Parties shall each bear their own professional and other costs and
expenses including, without limitation, any taxation associated with the
purchase of the Sale Shares.
9 GOVERNING LAW AND JURISDICTION
9.1 This Agreement shall be governed and construed in accordance with the law
of England.
9.2 Each Party hereby irrevocably submits to the non-exclusive jurisdiction
of the Courts of England as regards any claim, dispute or matter arising
out of or in connection with this Agreement and its implementation and
effect.
IN WITNESS WHEREOF this Agreement has been duly executed on behalf of each of
the Parties on the day and year first before written
SIGNED by SIGNED by
on behalf of CANARGO ENERGY CORPORATION on behalf of CORPORATION IBM
................................................ ...............................................
Name /s/ Dr Xxxxx Xxxxxx.................... Name /s/ Ukrainian signature................
Position ...................................... Position ......................................
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Exhibit 10(35) CanArgo-IBM Sales Agreement Final.DOC
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