REGISTRATION RIGHTS AGREEMENT
Exhibit
10.2
This REGISTRATION RIGHTS AGREEMENT (“Agreement”), dated as of June 5, 2007, is made
and entered into by and between CanArgo Energy Corporation, a Delaware corporation
(“Company”) and the Purchasers listed on Schedule A attached hereto (each a
“Purchaser” collectively, the “Purchasers”).
RECITALS
A. Purchasers have acquired and Company has issued warrants to purchase up to 10 million
shares of the Company’s common stock, par value $0.10 per share (“Common Stock”) expiring
on the July 25, 2009 (the “Warrants”) pursuant to the Conversion Agreement (“Conversion
Agreement”) of even date herewith by and among the Company, the Purchasers and the other
parties thereto.
B. Pursuant to the terms of the Warrants, the Purchasers acquired the rights to purchase
shares of Common Stock upon exercise thereof in accordance with the terms of the Warrants (an
“Exercise”);
C. Upon the closing of an Exercise, the Company shall authorize and issue to such Purchasers
electing so to exercise its Warrants, respectively, one or more certificates representing the
applicable number of shares of Common Stock issuable upon such Exercise of the Warrants
(“Warrant Shares”);
D. The Company has agreed to provide the Purchasers with certain rights with respect to all
Warrant Shares issuable upon Exercise to register such shares under the Securities Act (as
hereinafter defined) for resale. All Warrant Shares issued as of the date of this Agreement or
issued or issuable at any time by the Company to Purchasers upon Exercise of the Warrants, other
than shares which cease to be Restricted Securities (as hereinafter defined), shall be referred to
for the purposes of this Agreement as the “Registrable Securities” ; and
E. For the avoidance of doubt, nothing in this Agreement or in the Conversion Agreement or the
Warrants shall obligate the Company to register the Warrants or any securities of Tethys Petroleum
Limited under the Securities Act or any other foreign or domestic securities laws.
NOW, THEREFORE, in consideration of the premises and other good and valuable consideration the
receipt and sufficiency of which are hereby acknowledged and confirmed, the parties, intending to
be legally bound, agree as follows:
ARTICLE 1
REGISTRATION RIGHTS AND PROCEDURES
Section 1.1 Definitions.
(a) As used in this Agreement, the following terms shall have the meanings:
(i) “Affiliate” of any specified Person means any other Person who directly, or
indirectly through one or more intermediaries, is in control of, is controlled by, or is
under common control with, such specified Person. For purposes of this definition, control
of a Person means the power, directly or indirectly, to direct or cause the direction of the
management and
policies of such Person whether by contract, securities, ownership or
otherwise; and the terms “controlling” and “controlled” have the respective meanings
correlative to the foregoing.
| (i) | “Commission” means the United States Securities and Exchange Commission. | ||
| (ii) | “Common Stock” has the meaning ascribed thereto in the Recitals. | ||
| (iii) | “Conversion Agreement” has the meaning ascribed thereto in the Recitals. | ||
| (iv) | “Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations of the Commission thereunder, or any similar successor statute. | ||
| (v) | “Exercise” has the meaning ascribed thereto in the Recitals. | ||
| (vi) | “Holder” means a Purchaser so long as the Purchaser holds Registrable Securities and each subsequent holder of Registrable Securities who agrees to become bound by all of the terms and provisions of this Agreement in accordance with Section 4.2 hereof. | ||
| (vii) | “Note Purchase Agreement” means the Note and Warrant Purchase Agreement dated as of July 25, 2005, as amended, by and among the Company and Persistency. | ||
| (viii) | “Person” means any individual, partnership, corporation, limited liability company, joint stock company, association, trust, unincorporated organization, or a government or agency or political subdivision thereof. | ||
| (ix) | “Prospectus” means the prospectus (including, without limitation, any preliminary prospectus and any final prospectus filed pursuant to Rule 424(b) under the Securities Act, including any prospectus that discloses information previously omitted from a prospectus filed as part of an effective registration statement in reliance on Rule 430A under the Securities Act) included in the Registration Statement, as amended or supplemented by any prospectus supplement with respect to the terms of the offering of any portion of the Registrable Securities covered by the Registration Statement and by all other amendments and supplements to such prospectus, including all material incorporated by reference in such prospectus and all documents filed after the date of such prospectus by the Company under the Exchange Act and incorporated by reference therein. | ||
| (x) | “Registrable Securities” has the meaning ascribed thereto in the Recitals. | ||
| (xi) | “Registration Statement” means a registration statement of the Company filed on Form S-1 or S-3 or such other appropriate form under the Securities Act providing for the registration of, and the sale of Registrable Securities, including without limitation any Registration Statement providing for the registration of, and sale on a continuous or delayed basis by the holders of, the Registrable Securities pursuant to Rule 415 under the Securities Act, including the Prospectus contained therein and forming a part thereof, any amendments to such |
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| registration statement and supplements to such Prospectus, and all exhibits and other material incorporated by reference in such registration statement and Prospectus. | |||
| (xii) | “Restricted Security” means any share of Common Stock issued upon Exercise of the Warrants or held by any Person, except for any such share that (i) has been registered pursuant to an effective Registration Statement under the Securities Act and sold in a manner contemplated by the Prospectus included in the Registration Statement, (ii) has been freely transferred in compliance with the resale provisions of Rule 144 under the Securities Act (or any successor provision thereto) or is freely transferable, together with all other Restricted Securities in one transaction, pursuant to paragraph (k) of Rule 144 under the Securities Act (or any successor provision thereto), or (iii) otherwise has been transferred and a new share of Common Stock not subject to any transfer restrictions under the Securities Act has been delivered by or on behalf of the Company. | ||
| (xiii) | “Required Majority” means the Holders of a majority of the number of Registrable Securities then outstanding. | ||
| (xiv) | “Securities Act” means the Securities Act of 1933, as amended, and the rules and, regulations of the Commission thereunder, or any similar successor statute. | ||
| (xv) | “Warrants” has the meaning ascribed thereto in the Recitals. | ||
| (xvi) | “Warrant Shares” has the meaning ascribed thereto in the Recitals. |
(b) All capitalized terms used and not defined herein have the respective meaning assigned to
them in the Conversion Agreement.
Section 1.2 Registration Rights.
(a). Initial Filing. The Company shall use all commercially reasonable efforts to file
a Registration Statement on Form S-3 with respect to all Registrable Securities by July 31, 2007
and have such Registration Statement declared effective pursuant to this Agreement. In the event
the Company is not eligible to file a Registration Statement on Form S-3, the Company shall file a
Registration Statement on Form S-1 no later than December 31, 2007 (provided, if such registration
is made on Form S-1, such Registration Statement need only be effective for a period of 180
consecutive days). Failure so to file timely any such Registration Statement shall not result in
the application of any liquidity or other penalty.
(b). Piggyback Registration Rights. Subject to the terms and conditions of this
Agreement, if the Company intends to file or desires to file a Registration Statement providing for
the offering or resale of (i) Common Stock or (ii) any Registrable Securities (other than a
registration (A) on Form S-8 or S-4 or any successor or similar forms, (B) relating to Common Stock
or any other shares of capital stock of the Company issuable upon exercise of employee share
options or in connection with any employee benefit or similar plan of the Company or (C) in
connection with a direct or indirect acquisition by the Company of another Person or any
transaction with respect to which Rule 145 (or any successor provision) under the Securities Act
applies), the Company will notify the Holders of the proposed filing at least 30 days prior to the
filing of the Registration Statement, and will afford each Holder an opportunity to include in such
Registration Statement all or any part of the Registrable
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Securities then held by such Holder. If
any Holder desires to include in any such Registration Statement all or part of the Registrable
Securities held by such Holder, such Holder shall, within 15 days after receipt of the
above-described notice from the Company, so notify the Company in writing, and in such notice, if
the Holder has not already done so, shall inform the Company that the Holder has elected to
exercise some or all of its Warrants, and of the number of Registrable Securities such Holder
wishes to include in such Registration Statement.
(c). Demand Registration Rights.
(i) Requests for Registration. Subject to Section 1.2(c)(ii), the Holders may
request registration on a Registration Statement under the Securities Act of all or part of their
Registrable Securities, as the case may be, at any time after December 31, 2007 (a “Demand
Registration”). Within ten days after receipt of any request pursuant to this Section
1.2(c)(i), the Company shall give written notice of such request to all other Holders and will
include in such registration all Registrable Securities with respect to which the Company has
received written requests for inclusion therein within 21 days after the Company’s notice has been
given.
(ii) Limits on the Number of Demand Registrations. The Holders may request only five
(5) Demand Registrations and not more than one Demand Registration in any twelve month period. A
registration will not count as a Demand Registration hereunder (x) (i) until it has become
effective and (ii) unless the Holders of Registrable Securities requested to be included in such
Demand Registration are able to register and sell all of the Registrable Securities requested to be
included in such registration (provided, if such registration is made on Form S-1, such
Registration Statement need only be effective for a period of 180 consecutive days) or (y) if the
Company shall sell any Common Stock in the registration resulting from such Demand Registration (in
which case the request for a Demand Registration shall be deemed a request for a Piggyback
Registration pursuant to Section 1.2(a)). The Company will pay all registration expenses in
connection with (x) any Demand Registration requested hereunder and (y) any registration initiated
as a Demand Registration requested hereunder which subsequently becomes other than a Demand
Registration.
(d) Qualification for Form S-3. The Company represents and warrants that it currently
is eligible to use Form S-3 and meets all applicable requirements for its use. The Company shall
use its commercially reasonable efforts not take any willful and discretionary action that will
limit, impair or otherwise prevent it from being able to use Form S-3 or any successor thereto once
eligibility for such use has been established.
(e) Effectiveness of Registration Statement. The Company shall use all
commercially reasonable efforts to have any Registration Statement filed pursuant to this
Agreement (other than a Registration Statement on Form S-1 or any successor form) declared
effective by the Commission no later than 120 days after the filing thereof. All Registration
Statements filed pursuant to this Agreement, other than any Registration Statement on Form S-1 (or
any successor form thereto), shall be maintained in effect by the Company until the earlier of two
years or the date on which all Registrable Securities cease to be Restricted Securities. The
Company shall maintain the effectiveness of any registration statement on Form S-1 (or any
successor form thereto) for a period of 180 consecutive days.
Section 1.3 Information and Copies.
(a) The Company shall furnish to each Holder electing to include its Common Stock in the
Registration Statement such number of copies of the Registration Statement, each amendment and
supplement thereto, the Prospectus, and such other documents as such Holder may reasonably request
in order to facilitate the disposition of the Registrable Securities owned by it.
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(b) The Company shall promptly notify each Holder whose Registrable Securities are included in
the Registration Statement of the happening of any event as a result of which the Prospectus
contains an untrue statement of a material fact or omits to state any material fact required to be
stated therein or necessary to make the statements therein not misleading in light of the
circumstances under which it is made and shall use commercially reasonable efforts to prepare and
file with the Commission, and promptly notify such Holders of the filing of, a supplement to such
Prospectus or an amendment to the Registration Statement so that, as thereafter delivered to the
purchasers of Registrable Securities, such Prospectus will not contain an untrue statement of a
material fact or omit to state any material fact required to be stated therein or necessary to make
the statements therein not misleading in light of the circumstances under which they were made and
in the case of an amendment to the Registration Statement, use reasonable best efforts to cause it
to become effective as soon as possible. Each Holder shall promptly notify the Company of the
happening of any event applicable to it, as a result of which the Prospectus contains an untrue
statement of a material fact or omits to state any material fact stated therein or necessary to
make the statements therein in relation to such Holder not misleading in light of the circumstances
under which it is made. Upon receipt of any notice from the Company, or provision of any notice to
the Company by any Holder, of the happening of any event of the kind described above, such Holder
will forthwith discontinue disposition of Registrable Securities pursuant to the Registration
Statement until such Holder’s receipt of the copies of the supplemented or amended Prospectus, or
until such Holder is advised in writing by the Company that the use of the Prospectus may be
resumed.
(c) The Company shall make available for inspection by each Holder, any underwriter
participating in any disposition pursuant to the Registration Statement, and any attorney,
accountant, or other agent retained by any Holder or any underwriter, all financial and other
records of the Company (reasonably requested), the Company’s applicable corporate documents and
contracts as shall be reasonably necessary to enable them to exercise their due diligence
responsibility, and cause the Company’s officers, directors, employees, and independent accountants
to supply all information reasonably requested by any such Holder, as well as any underwriter,
attorney, accountant, or agent in connection with the Registration Statement; provided, however,
that each Holder agrees that information obtained by such Holder as a result of such inspections
which constitutes confidential information is subject to the confidentiality provisions of
Section 21 of the Note Purchase Agreement and is deemed confidential shall not be used by
such Holder as the basis for any market transaction in the Company’s securities unless and until
such information is made generally available to the public, and each Holder shall use its best
efforts to cause any attorney, accountant, or agent retained by such Holder to keep confidential
any such information.
(d) In the event of the issuance of any stop order suspending the effectiveness of the
Registration Statement, or of any order suspending or preventing the use of any related Prospectus
or suspending the qualification of any Common Stock included in the Registration Statement for sale
in any jurisdiction, the Company will promptly notify Holders of such and will use reasonable
efforts to obtain the withdrawal of such order.
Section 1.4 Listing of Registrable Securities. The Company shall use its commercially reasonable
efforts to cause all Registrable Securities to be listed on each securities exchange or other
quotation service on which the Common Stock is then listed.
Section 1.5 Underwritten Offering. If the registration of which the Company gives notice is for a
registered public offering involving an underwriting, the Company shall include such information in
the notice given pursuant to Section 1.2. In such event, the right of each Holder to
registration pursuant to Section 1.2 shall be conditioned upon such Holder agreeing to
participate in such underwriting and upon the inclusion of the Registrable Securities in the
underwriting to the extent provided herein. Each Holder
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electing to include its Registrable
Securities in such registration shall (together with the Company and other participating
shareholders) enter into an underwriting agreement in customary form with the underwriter or
underwriters selected by the Company. Notwithstanding any other provision of this Section
1.5, if the underwriter shall, in good faith, advise the Company in writing that the offering
contemplated thereby will be materially adversely affected by the inclusion of Registrable
Securities, then the Company shall so advise such Holder and the other participating shareholders,
and the number of shares of Registrable Securities and Common Stock (collectively,
“Underwritten Securities”) that may be included in the registration and underwriting shall
be allocated first to the Company, if it is participating in such registration and underwriting,
second, pro rata among such Holders and other parties having registration rights previously granted
by the Company, and, third, pro rata among the other participating shareholders, if any, in each
case in proportion, as nearly as practicable, to the respective amounts of Underwritten Securities
held by such Holder and participating shareholders at the time of filing the Registration
Statement. The Company may only exercise this right once within any twelve-month period without
the consent of the Required Majority.
If such Holder disapproves of the terms of any such underwriting, it may elect to withdraw
therefrom by written notice to the Company and the underwriter. The Registrable Securities so
withdrawn shall also be withdrawn from registration.
Section 1.6 Market Stand Off Agreement. If the Company intends to make an underwritten public offering
of its securities, the Holders agree to consider and negotiate in good faith with the Company and
its underwriters, any requests regarding market stand off arrangements. The Holders will consider
arrangements that are in the interests of the Company and an orderly market for the Company’s
securities. This agreement amend and supersedes all prior agreements by the Holders a party
hereto as to market stand off arrangements and all such prior provisions are cancelled, null and
void.
Section 1.7 Nature of Sale. Notwithstanding any other provision of this Agreement, Common Stock shall
only be treated as Registrable Securities if and so long as it remains a Restricted Security.
Section 1.8 Reports under the Exchange Act. With a view to making available to the Holders the
benefits of Rule 144 promulgated under the Securities Act, or any other similar rule or regulation
of the Commission that may at any time permit the Holders to sell securities of the Company to the
public without registration (“Rule 144”), the Company agrees to use its commercially
reasonable efforts to:
(a) make and keep public information available, as those terms are understood and defined in
Rule 144;
(b) file with the Commission in a timely manner all reports and other documents required of
the Company under the Securities Act and Exchange Act;
(c) furnish to each Holder, so long as such Holder owns Registrable Securities, promptly upon
request, (i) a written statement by the Company that it has complied with the reporting
requirements of the Securities Act and the Exchange Act, and (ii) a copy of the most recent annual
or periodic report of the Company and such other reports and documents so filed by the Company,
unless such reports and documents are publicly available on XXXXX; and
(d) such other information as may be reasonably requested to permit such Holder to sell such
securities pursuant to Rule 144 without registration unless such information is publicly available
on XXXXX.
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Section 1.9 Expenses of Registration. The Company agrees to pay any and all expenses of preparing
and filing all Registration Statements under this Agreement, and of having such Registration
Statements declared effective and of maintaining the effectiveness thereof. For the avoidance of
doubt, the Holders shall be responsible for payment of their own fees and expenses incurred in
connection with the preparation, filing, review, declaration of effectiveness and maintenance of
effectiveness of any Registration Statement filed pursuant to this Agreement, including, without
limitation, legal and accounting fees and expenses.
Section 1.10 Other Securities. Nothing in this Agreement shall prevent the Company from registering
securities other than Common Stock by filing a Registration Statement with the Commission.
ARTICLE 2
PURCHASER’S RIGHTS AND UNDERTAKINGS
Section 2.1 Rights. Holders shall have the absolute right to exercise or refrain from exercising any
right or rights they may have by reason of this Agreement, including, without limitation, the right
to consent to the waiver or modification of any obligation under this Agreement, and Holders shall
not incur any liability to any other holder of any of the Company’s securities as a result of
exercising or refraining from exercising any such right or rights.
Section 2.2 Suspension of Sales. If any Registrable Securities are included in a Registration
Statement pursuant to the terms of this Agreement, Holders will not (until further notice) effect
sales thereof after receipt of written notice from the Company of the occurrence of an event
specified in such notice in order to permit the Company to correct or update the Registration
Statement or Prospectus.
Section 2.3 Compliance. If any Registrable Securities are being registered in any registration
pursuant to this Agreement, Holders will comply with all anti-stabilization, manipulation, and
similar provisions of Section 10 of the Exchange Act, and any rules promulgated thereunder
by the Commission and, at the Company’s request, will execute and deliver to the Company and to any
underwriter participating in such offering an appropriate agreement to such effect.
Section 2.4 Termination of Effectiveness. Following the end of the period during which the Company is
obligated to keep the Registration Statement current and effective as described herein, to the
extent Holders’ Registrable Securities are included in the Registration Statement, Holders shall
discontinue sales thereof pursuant to such Registration Statement, unless Holders have received
written notice from the Company of its intention to continue the effectiveness of such Registration
Statement with respect to any of such securities which remain unsold.
Section 2.5 Furnish Information. It shall be a condition precedent to the Company’s obligations to
take any action pursuant to this Agreement with respect to the Registrable Securities that Holders
shall furnish to the Company such information regarding Holders, the Registrable Securities held by
Holders, and the intended method of disposition of such securities and such other information as
shall be required to effect the registration of Holders’ Registrable Securities or as the Company
shall otherwise reasonably request. The obligations of the Company under this Agreement with
respect to any Holder shall be suspended unless and until such Holder complies with this
Section 2.5. In connection with Holders’ obligation to provide information the Company may
request and the Holders agree to complete, execute and deliver to the Company a Stockholders
Questionnaire providing the information required to register their Registrable Securities under the
Securities Act for resale.
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Section 2.6 Underwritten Registration. Holders may not participate in any registration hereunder which
is underwritten unless Holders: (a) agree to sell their securities on the basis provided in any
customary underwriting arrangements approved by the Company; (b) complete and execute all customary
questionnaires, powers of attorney, indemnities, underwriting agreements, and other documents
reasonably required under the terms of such underwriting arrangements; and (c) agree to pay their
pro rata share of all underwriting discounts and commissions and their own expenses (including,
without limitation, counsel fees).
Section 2.7 Delay of Registration. Holders shall not have any right to obtain or seek an injunction
restraining or otherwise delaying the preparation of, or declaration of the effectiveness of, any
Registration Statement initiated in accordance with the terms of this Agreement if such injunction
is the result of any controversy that might arise with respect to the interpretation or
implementation of these provisions.
ARTICLE 3
INDEMNIFICATION
Section 3.1 Indemnification by the Company. The Company shall indemnify and hold harmless, with
respect to any Registration Statement filed by it pursuant to this Agreement, to the fullest extent
permitted by law, each Holder, as well as each Holder’s agents, representatives and Affiliates
(collectively, the “Holder Indemnified Parties”) against all losses, claims, damages,
liabilities, and expenses joint or several (including reasonable fees of counsel and any amounts
paid in settlement effected with the Company’s consent, which consent shall not be unreasonably
withheld) (collectively, “Losses”) to which any such Holder Indemnified Party may become
subject under the Securities Act, the Exchange Act, any other federal law, any state or common law,
any rule or regulation promulgated thereunder, or otherwise, insofar as such Losses (or actions or
proceedings, whether commenced or threatened, in respect thereof) are caused by (a) any untrue
statement or alleged untrue statement of a material fact contained in any Registration Statement in
which such Registrable Securities were included as contemplated hereby or the omission or alleged
omission to state therein a material fact required to be stated therein or necessary in order to
make the statements therein, in the light of the circumstances under which they were made, not
misleading, (b) any untrue statement or alleged untrue statement of a material fact contained in
any Prospectus, together with the documents incorporated by reference therein (as amended or
supplemented if the Company shall have filed with the Commission any amendment thereof or
supplement thereto), or the omission or alleged omission to state therein a material fact required
to be stated therein or necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, or (c) any violation by the Company of
the Securities Act, the Exchange Act, any other federal law, any state or common law, or any rule
or regulation promulgated thereunder in connection with any such registration; provided,
however, that the Company shall not be liable to any such Holder Indemnified Party in any
such case to the extent that any such Loss (or action or proceeding, whether commenced or
threatened, in respect thereof) arises out of or is based upon any untrue statement or alleged
untrue statement or omission or alleged omission made in such Registration Statement or amendment
thereof or supplement thereto or in any such Prospectus in reliance upon and in conformity with
written information furnished to the Company by or on behalf of any such Holder Indemnified Party
relating to such Holder Indemnified Party for use in the preparation thereof; and provided
further, that the Company shall not be liable to any such Holder Indemnified Party with
respect to any Prospectus to the extent that any such Loss of such Holder Indemnified Party results
from the fact that such Holder Indemnified Party sold Registrable Securities to a person to whom
there was not sent or given, at or before the written confirmation of such sale, a copy of the
Prospectus (excluding documents incorporated by reference) or of the Prospectus as then amended or
supplemented (excluding documents incorporated by reference) if the Company previously furnished
copies thereof to such Holder
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Indemnified Party in compliance with this Agreement and the Loss of
such Holder Indemnified Party results from an untrue statement or omission of a material fact
contained in such Prospectus which was subsequently corrected in the Prospectus (or the Prospectus
as amended or supplemented) or such Holder Indemnified Party otherwise breached the provisions of
this Agreement in a manner which resulted in the Loss of such Holder Indemnified Party. Such
indemnity and reimbursement of expenses and obligations shall remain in full force and effect
regardless of any investigation made by or on behalf of the Holder Indemnified Parties and shall
survive the transfer of such securities by such Holder Indemnified Parties.
Section 3.2 Indemnification by Holders. Each Holder shall indemnify and hold harmless, to the fullest
extent permitted by law, the Company, its directors, officers, employees, and agents, and each
person who controls the Company (within the meaning of the Securities Act) (collectively,
“Company Indemnified Parties”) against all Losses to which any Company Indemnified Party
may become subject under the Securities Act, the Exchange Act, any other federal law, any state or
common law, any rule or regulation promulgated thereunder, or otherwise, insofar as such Losses (or
actions or proceedings, whether commenced or threatened, in respect thereof) are caused by (a) any
untrue statement or alleged untrue statement of a material fact contained in any Registration
Statement in which such Registrable Securities were included as contemplated hereby or the omission
or alleged omission to state therein a material fact required to be stated therein or necessary in
order to make the statements therein, in the light of the circumstances under which they were made,
not misleading, (b) any untrue statement or alleged untrue statement of a material fact contained
in any Prospectus, together with the documents expressly incorporated by reference therein (as
amended or supplemented if the Company shall have filed with the Commission any amendment thereof
or supplement thereto), or the omission or alleged omission to state therein a material fact
required to be stated therein or necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading, and in the cases described in clauses
(a) and (b) of this Section 3.2, to the extent, but only to the extent, that such untrue
statement or omission is contained in any information furnished in writing by or on behalf of such
Holder relating to such Holder for use in the preparation of the documents described in clauses (a)
and (b), (c) any violation by such Holder of the Securities Act, the Exchange Act, any other
federal law, any state or common law, or any rule or regulation promulgated thereunder applicable
to such Holder and relating to action of or inaction by such Holder in connection with any such
registration, and (d) with respect to any Prospectus, the fact that such Holder sold Registrable
Securities to a person to whom there was not sent or given, at or before the written confirmation
of such sale, a copy of any subsequent Prospectus (excluding the documents incorporated by
reference) or of the Prospectus as then amended or supplemented (excluding documents incorporated
by reference) if the Company has previously furnished copies thereof to such Holder in compliance
with this Agreement and the Loss of such Company Indemnified Party results from an untrue statement
or omission of a material fact relating to information provided by such Holder contained in such
Prospectus which was corrected in the Prospectus (or the Prospectus as amended or supplemented).
Such indemnity and reimbursement of expenses and obligations shall remain in full force and effect
regardless of any investigation made by or on behalf of the Company Indemnified Parties and shall
survive the transfer of securities by such Holder Indemnified Parties.
Section 3.3 Conduct of Indemnification Proceedings. Promptly after receipt by an identified party
hereunder of written notice of the commencement of any action, suit, proceeding, investigation, or
threat thereof with respect to which a claim for indemnification may be made pursuant hereto, such
indemnified party shall, if a claim in respect thereto is to be made against an indemnifying party,
give written notice to the indemnifying party of the threat or commencement thereof;
provided, however, that the failure to so notify the indemnifying party shall not
relieve it from any liability which it may have to any indemnified party except to the extent that
the indemnifying party is actually prejudiced by such failure to give notice. If any such claim or
action referred to hereunder is brought against any indemnified party and it then notifies the
indemnifying party of the threat or commencement thereof, the indemnifying party shall be entitled
to participate therein and, to the extent that it wishes, jointly with any
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other indemnifying party
similarly notified, to assume the defense thereof with counsel reasonably satisfactory to such
indemnified party (which counsel shall not, except with the consent of the indemnified party, be
counsel to the indemnifying party). The indemnifying party shall not be liable to an indemnified
party hereunder for any legal expenses of counsel or any other expenses incurred by such
indemnified party in connection with the defense thereof, unless the indemnifying party has failed
to assume the defense of such claim or action or to employ counsel reasonably satisfactory to such
indemnified party. Notwithstanding the foregoing, the indemnified party shall have the right to
retain its own counsel, with the fees and expenses to be paid by the indemnified party, if
representation of such indemnified party by the counsel retained by the indemnifying party would be
inappropriate due to actual or potential differing interests between such indemnified party and any
other party represented by such counsel in such action. The indemnifying party shall not be
required to indemnify the indemnified party with respect to any amounts paid in settlement of any
action, proceeding, or investigation entered into without the written consent of the indemnifying
party, which consent shall not be unreasonably withheld, conditioned or delayed. No indemnifying
party shall consent to the entry of any judgment or enter into any settlement without the consent
of the indemnified party unless (a) such judgment or settlement does not impose any obligation or
liability upon the indemnified party other than the execution, delivery, or approval thereof, and
(b) such judgment or settlement includes as an unconditional term thereof the giving by the
claimant or plaintiff to such indemnified party of a full release and discharge from all liability
in respect of such claim and a full release of all persons that may be entitled to or obligated to
provide indemnification or contribution under this Article.
Section 3.4 Contribution. If the indemnification provided for herein is unavailable to or insufficient
to hold harmless an indemnified party hereunder, then each indemnifying party shall contribute to
the amount paid or payable by such indemnified party as a result of the Losses (or actions or
proceedings in respect thereof) referred to herein in such proportion as is appropriate to reflect
the relative fault of the indemnifying party on the one hand and the indemnified party on the other
in connection with the statements, omissions, actions, or inactions which resulted in such Losses.
The relative fault of the indemnifying party and the indemnified party shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to information supplied by the
indemnifying party or the indemnified party, any action or inaction by any such party, and the
parties’ relative intent, knowledge, access to information, and opportunity to correct or prevent
such statement, omission, action, or inaction. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent misrepresentation. Promptly
after receipt by an indemnified party hereunder of written notice of the commencement of any
action, suit, proceeding, investigation, or threat thereof with respect to which a claim for
contribution may be made against an indemnifying party hereunder, such indemnified party shall, if
a claim for contribution in respect thereto is to be made against an indemnifying party, give
written notice to the indemnifying party of the commencement thereof (if the notice specified
herein has not been given with respect to such action); provided, however, that the
failure to so notify the indemnifying party shall not relieve it from any obligation to provide
contribution which it may have to any indemnified party hereunder, except to the extent that the
indemnifying party is actually prejudiced by the failure to give notice. The parties hereto agree
that it would not be just and equitable if contribution pursuant hereto were determined by pro rata
allocation or by any other method of allocation which does not take account of equitable
considerations referred to herein.
If indemnification is available hereunder, the indemnifying parties shall indemnify each
indemnified party to the fullest extent provided herein, without regard to the relative fault of
said indemnifying party or indemnified party or any other equitable consideration provided for
herein. The provisions hereof shall be in addition to any other rights to indemnification or
contribution which any indemnified party may have pursuant to law or contract shall remain in full
force and effect regardless of
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any investigation made by or on behalf of any indemnified party, and
shall survive the transfer of securities by any such party.
ARTICLE 4
MISCELLANEOUS
Section 4.1 Termination. The obligations under Article 1 shall terminate on the earlier of the
date on which all Registrable Securities have been sold pursuant to a Registration Statement or all
Warrant Shares are no longer Restricted Securities. Holders whose shares of Common Stock are sold
pursuant to a Registration Statement shall reasonably inform the Company of sales of such shares
and shall provide all such other information as the Company may reasonably request in order to
comply with the requirements of the Securities Act and the rules and regulations promulgated
thereunder, including, without limitation, Regulation S-K.
Section 4.2 Assignment; Successors and Assigns. Holders may assign their rights hereunder with respect
to any permitted assignee all or any portion of the Registrable Securities provided that (a) the
Company is furnished with written notice of the name and address of the assignee and the securities
with respect to which such rights are being assigned and all such other information as may be
reasonably requested by the Company in order for the Company to be able to comply with applicable
requirements of the Securities Act and the Exchange Act and the rules and regulations promulgated
thereunder, and (b) the Company shall have the right to require any holder of Registrable
Securities to execute a counterpart of this Agreement as a condition to such holder’s right to
claim any rights hereunder. This Agreement and all provisions thereof shall be binding upon, inure
to the benefit of, and are enforceable by the parties hereto and their respective successors and
permitted assigns.
Section 4.3 Notices. All notices, requests, and other communications hereunder shall be in writing and
will be deemed to have been duly given and received (a) when personally delivered, (b) when sent by
facsimile upon confirmation of receipt, (c) four business days after the day on which the same has
been delivered prepaid to a nationally recognized courier service, or (d) ten business days after
the deposit in the United States mail, registered or certified, return receipt requested, postage
prepaid, in each case addressed as follows:
(a) if to the Company: then at CanArgo Energy Corporation, X.X. Xxx 000, Xx. Xxxxx Xxxx,
Xxxxxxxx, Xxxxxxx Xxxxxxx, Attn: Corporate Secretary, facsimile number: x00 0000 000000 (with a
copy to McGrigors, Xxxxxxx Xxxxx, 00 Xxxxxxxxxx Xxxxxx, Xxxxxxx X0 0XX, XX, Attn: Xxxxxxx Xxxxxx,
Esq., facsimile number x00 000 000 0000); or
(b) if addressed to a Holder, then at the address set forth on Schedule A attached hereto
opposite such Holder’s name.
Holders or the Company may agree to accept notices and other communications to it
hereunder by electronic communications pursuant to procedures reasonably approved by it; provided
that approval of such procedures may be limited to particular notices or communications. Any party
hereto from time to time may change its address, facsimile number, or other information for the
purpose of notices to that party by giving notice specifying such change to the other parties
hereto.
Section 4.4 Public Announcements. Except as otherwise required by law, Holders shall not issue any
press release or make any other public announcement with respect to the transactions contemplated
hereby without the approval of the Company, which approval shall not be unreasonably withheld or
delayed.
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Section 4.5 Governing Law; Jurisdiction. This Agreement shall be construed and enforced in accordance
with, and the rights of the parties shall be governed by, the law of the State of New York
excluding choice of law principles of the law of such State that would require the application of
the laws of a jurisdiction other than such State. For the purposes of any action or proceeding
involving this Agreement or any other agreement or document referred to herein or therein, the
Company hereby, and shall cause its subsidiaries to, expressly submits to the nonexclusive
jurisdiction of all federal and state courts sitting in the Borough of Manhattan, City and State of
New York and consents that any order, process, notice of motion or other application to or by any
of said courts or a judge thereof may be served within or without such court’s jurisdiction by
registered mail or by personal service, provided that a reasonable time for appearance is
allowed. The Company hereby, and shall cause its subsidiaries to, irrevocably waives any objection
that it may now or hereafter have to the laying of venue of any suit, action or proceeding arising
out of or relating to this Agreement or any other agreement or document referred to herein or
therein brought in any federal or state court sitting in the City and State of New York, and hereby
further irrevocably waives any claim that any such suit, action or proceeding brought in any such
court has been brought in an inconvenient forum.
Section 4.6 No Third Party Beneficiary. This Agreement shall not confer any rights or remedies upon
any person other than the parties hereto and their respective successors and permitted assigns.
Section 4.7 Severability. In the event that any provision of this Agreement or the application of any
provision hereof is declared to be illegal, invalid, or otherwise unenforceable in any jurisdiction
shall, as to such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall (to the full extent permitted by law) not invalidate or
render unenforceable such provision in any other jurisdiction.
Section 4.8 Headings. The headings in this Agreement are for convenience of reference only and shall
not constitute a part of this Agreement, nor shall they affect its meaning, construction, or
effect.
Section 4.9 Counterpart, Facsimile Execution and Delivery. This Agreement may be executed in any
number of counterparts, each of which shall be an original but all of which together shall
constitute one instrument. Each counterpart may consist of a number of copies hereof, each signed
by less than all, but together signed by all, of the parties hereto. Delivery of an executed
counterpart of a signature page to this Agreement by telecopy shall be equally effective as the
delivery of a manually executed counterpart of this Agreement.
Section 4.10 Entire Agreement. This Agreement embodies the entire understanding and agreement between
the parties hereto with respect to the subject matter hereof and supersedes all prior agreements
and understandings relating to the subject matter hereof.
Section 4.11 Amendment; Waiver. The provisions of this Agreement, including the provisions of this
sentence, may not be amended, modified or supplemented, and waivers or consents to or departures
from the provisions hereof may not be given, without the written consent of the Company and a
Required Majority of Holders.
Section 4.12 Further Assurances. Each party shall cooperate and take such action as may be reasonably
requested by another party in order to carry out the provisions and purposes of this Agreement and
the transactions contemplated hereby.
(Signature pages follow)
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IN WITNESS WHEREOF, the parties have caused this Agreement to be signed by the undersigned,
thereto duly authorized, as of the date first set forth above.
| CanArgo Energy Corporation | ||||||||
| By: | ||||||||
| Its | ||||||||
| PURCHASERS: | ||||||||
| XXXXXXX & XXXXXX VALUE PARTNERS L.P. | ||||||||
| By: | ||||||||
| Name: | ||||||||
| Title: | ||||||||
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| BY: XXXXX TRADING INC., MANAGER | ||||||
| By: | ||||||
| Name: | ||||||
| Title: | ||||||
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SCHEDULE A
| NAME OF PURCHASER | ADDRESS | |
XXXXXXX & XXXXXX VALUE PARTNERS L.P.
|
c/o Xxxxxx Xxxxxxx Xx Xxxxxxx & Xxxxxx LLC 00 Xxxxxxxx Xxx Xxxx, XX 00000 |
|
XXXXXXXX X XXXXXXXX
|
c/o Xxxxxx Xxxxxxx Xx Xxxxxxx & Xxxxxx LLC 00 Xxxxxxxx Xxx Xxxx, XX 00000 |
|
XXXXXX X XXXXXX
|
c/o Xxxxxx Xxxxxxx Xx Xxxxxxx & Xxxxxx LLC 00 Xxxxxxxx Xxx Xxxx, XX 00000 |
|
XXXXXX XXXXXX
|
c/o Xxxxxx Xxxxxxx Xx Xxxxxxx & Xxxxxx LLC 00 Xxxxxxxx Xxx Xxxx, XX 00000 |
|
XXXXXX X XXXXXX XXX
|
c/o Xxxxxx Xxxxxxx Xx Xxxxxxx & Xxxxxx LLC 00 Xxxxxxxx Xxx Xxxx, XX 00000 |
|
XXXX XXXXXXX
|
c/o Xxxxxx Xxxxxxx Xx Xxxxxxx & Xxxxxx LLC 00 Xxxxxxxx Xxx Xxxx, XX 00000 |
|
XXXXXX XXXXX
|
c/o Xxxxxx Xxxxxxx Xx Xxxxxxx & Xxxxxx LLC 00 Xxxxxxxx Xxx Xxxx, XX 00000 |
|
FLEDGLING ASSOCIATES LLC
|
c/o Xxxxxx Xxxxxxx Xx Xxxxxxx & Xxxxxx LLC 00 Xxxxxxxx Xxx Xxxx, XX 00000 |
|
XXXX XXXXXXX
|
c/o Xxxxxx Xxxxxxx Xx Xxxxxxx & Xxxxxx LLC 00 Xxxxxxxx Xxx Xxxx, XX 00000 |
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| NAME OF PURCHASER | ADDRESS | |
XXXX XXXXXXX
|
c/o Xxxxxx Xxxxxxx Xx Xxxxxxx & Xxxxxx LLC 00 Xxxxxxxx Xxx Xxxx, XX 00000 |
|
XXXXXXX XXXXX
|
c/o Xxxxxx Xxxxxxx Xx Xxxxxxx & Xxxxxx LLC 00 Xxxxxxxx Xxx Xxxx, XX 00000 |
|
XXXX XXXXXX
|
c/o Xxxxxx Xxxxxxx Xx Xxxxxxx & Xxxxxx LLC 00 Xxxxxxxx Xxx Xxxx, XX 00000 |
|
XXXXXX XXXXXXX
|
c/o Xxxxxx Xxxxxxx Xx Xxxxxxx & Xxxxxx LLC 00 Xxxxxxxx Xxx Xxxx, XX 00000 |
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