Exhibit 99(4)
SUBSCRIPTION AGREEMENT
SUBSCRIPTION FOR SHARES
NAME OF SUBSCRIBER: JKX Nederland B.V. (the "Purchaser")
SHARES SUBSCRIBED FOR: 4,054,054 common shares ("the Shares")of CanArgo
Energy Corporation ("CanArgo")
TOTAL SUBSCRIPTION PRICE
FOR THE SHARES: US $4,500,000.00 (US$1.11 per Share)
DATE OF SUBSCRIPTION: June 15, 2000
DELIVERY OF THE SHARES: Approximately June 22, 2000 at Xxxxxx Xxxxx
Sapte, of One Fleet Place, London EC4M WS
England ("Xxxxxx Xxxxx"), counsel for
Purchaser, to be held by them in accordance with
the terms of a letter agreement
between CanArgo and Purchaser dated 19 May
2000 ("Letter Agreement")
PAYMENT INSTRUCTIONS: Payment of the Total Subscription Price shall be
made by delivery to CanArgo of one or more
share certificates representing all
of Purchaser's shareholding in Ninotsminda Oil
Company ("NOC") together with a share transfer
form in respect of such shares duly executed
in favour of CanArgo, the date on which such NOC
shares are received by CanArgo being referred
to as the "Closing Date", at which time
certificate(s) representing the Shares will be
delivered by Xxxxxx Xxxxx to the Purchaser and
the purchase will be deemed to have been
completed
REPRESENTATIONS BY PURCHASER: By its execution of this Agreement, the
Purchaser hereby makes the representations,
warranties and covenants set forth
in Schedules 1 and 2 attached hereto
and made a part hereof
REPRESENTATIONS BY CANARGO: By its execution and delivery of this Agreement,
CanArgo hereby makes the representations,
warranties and covenants set forth in
Schedule 3 attached hereto and made a
part hereof
PRIVATE PLACEMENT: The Shares are offered in a private placement
pursuant to and in reliance upon and
conformity with an exemption from the
registration requirements of the United
States Securities Act of 1993, as
amended (the "Securities Act") pursuant to
Regulation S promulgated thereunder
("Regulation S")
REGISTRATION RIGHTS: The Purchaser and CanArgo will enter into a
Registration Rights Agreement ("Registration
Rights Agreement") on the Closing Date in
substantially in the form attached hereto as
Schedule 4, providing for US registration rights
with respect to the Shares, which rights will
commence as of the first anniversary of the
Closing Date
COMPLETE AGREEMENT: The Purchaser agrees to be bound by the terms of
this Agreement and the Schedules attached
hereto; which form part of this Agreement
NOTICES: Any notices to the parties hereto shall
be in writing and shall be deemed given if
delivered personally or by commercial delivery
service, or mailed by registered or
certified mail (return receipt requested) or
sent via facsimile (with acknowledgement of
complete transmission) to the parties at
their respective addresses included on the
signatory page of this Agreement (or at such
other address for a party as shall be specified
by like notice)
GOVERNING LAW,
AMENDMENTS,
COUNTERPARTS AND
ASSIGNMENTS : This Agreement shall be governed by the law of
England although all matters relating to the
Registration Rights Agreement, the Securities
Act and Regulation S shall be governed by US
law. This Agreement, together with the
Letter Agreement represents the entire
understanding of the parties hereto with
respect to the subject matter hereof and may
not be amended except by an instrument in
writing signed by the parties hereto. This
Agreement may be executed in counterparts,
all of which shall be considered to comprise a
single agreement. This Agreement may not be
assigned by the Purchaser without the prior
written consent of CanArgo
CANARGO ENERGY CORPORATION Address:
/s/ Xxxxx Xxxxxx 1580 Guinness House
Name: Dr. Xxxxx Xxxxxx 000 0xx Xxxxxx XX, Xxxxxxx
Position: Chairman and Xxxxx Xxxxxxxxx Xxxxxxx Xxxxxxx X0X 0X0, Xxxxxx
Facsimile No: x0 000 000 0000
JKX NEDERLAND B.V. Address:
/s/ Xxxxx Xxxxxxx Aert Xxx Xxxxxxxxx 00, 0xx Xxxxx
Name: Xxxxx Xxxxxxx XX Xxx 000
Position: Director 3012 CA, Rotterdam, Netherlands
Facsimile No.: x00 000 000 0000
Schedules
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Schedule 1: Representations by Purchaser
Schedule 2: Definition of US Persons
Schedule 3: Representations of CanArgo
Schedule 4: Registration Rights Agreement
SCHEDULE 1
TO THE
SUBSCRIPTION AGREEMENT
REPRESENTATIONS, WARRANTIES AND COVENANTS OF PURCHASER
Purchaser hereby represents, warrants and covenants to CanArgo Energy
Corporation (the "Company") as follows:
1. COMPLIANCE WITH SECURITIES LAWS.
Purchaser understands and acknowledges that
(a) the Shares have not been and will not be registered under the United
States Securities Act of 1933, as amended (the "Securities Act"),
or any applicable state securities or blue sky laws or any applicable
securities laws of jurisdictions outside the United States, and the
rules and regulations promulgated thereunder (the Securities Act and
such state and foreign securities laws, rules and regulations are
collectively referred to herein as the "Securities Laws") and may
not be offered or sold in the United States or to, or for the account
or benefit of, any "U.S. person" (as defined in Regulation S promulgated
under the Securities Act ("Regulation S"), which definition is set out
in Schedule 2 to the Subscription Agreement), unless such Shares are
registered under the US Securities Act and any applicable state
securities or blue sky laws or such offer or sale is made pursuant
to exemptions from the registration requirements of such Laws;
(b) the Shares are being offered and sold pursuant to the terms of
Regulation S under the Securities Act which permits securities to be
sold to "nonU.S. persons" in "offshore transactions" (as defined in
Regulation S), subject to certain terms and conditions;
(c) the Company is relying upon the truth and accuracy of the
representations, warranties, agreements, acknowledgements and
understandings of the Purchaser set forth herein in order to
determine the availability of the exemptions from registration under
the Securities Act relied upon by the Company and the suitability of
the Purchaser to acquire the Shares;
(d) the Shares have been offered and sold to the Purchaser in an "offshore
transaction" and Purchaser has not engaged in any "directed selling
efforts", as each such term is defined in Regulation S, and
(e) in the view of the Commission, the statutory basis for the exemption
from registration claimed for this offer and sale of the shares
("Offering") would not be present if the Offering , although in
technical compliance with Regulation S, is part of a plan or scheme to
evade the registration provisions of the Securities Act and,
accordingly, the Purchaser is making the representations and
warranties in this Schedule to evidence its compliance with the
applicable requirements of the Securities Act and Regulation S and that
its participation in such Offering is not a part of any such
plan or scheme.
2. STATUS OF PURCHASER.
(a) Purchaser is purchasing the Shares for its own account or for persons or
accounts as to which it exercises investment discretion. Neither
Purchaser nor such person or account is a "U.S. person"
(as defined in Regulation S) and neither Purchaser nor such other
person or account has any present intention to sell any of the Shares
in the United States or to a U.S. person or for the account or benefit
of a U.S. person either now or promptly after expiration of
the first anniversary of the date hereof (Restricted Period).
(b) Purchaser (and any person or account on whose behalf Purchaser is
purchasing) is knowledgeable, sophisticated and experienced in and
qualified to make, decisions with respect to investments in
restricted securities (such as the Shares) and has reviewed and
considered all information it deems relevant in making a decision to
purchase the Shares. Purchaser acknowledges that it is capable of
evaluating the merits and risks of an investment in the Shares and to
make an informed decision relating thereto. In evaluating its
investment, Purchaser has consulted its own investment and/or legal
and/or tax advisors.
(c) Purchaser acknowledges that the Company has made available to Purchaser
the opportunity to ask questions and receive answers concerning the
terms and conditions of the Offering and the business and financial
condition of the Company, and to obtain any additional information that
the Company possesses or can acquire without unreasonable effort or
expense which is necessary to verify the accuracy of the information
furnished in accordance herewith. Purchaser and its advisors, if any,
have received complete and satisfactory answers to all such inquiries.
(d) Purchaser has agreed to purchase the Shares for investment purposes and
not for further distribution to other purchasers than persons or
accounts as to which it exercises investment discretion. Purchaser is
not an underwriter or broker dealer ("investment firm") and is not
participating pursuant to a contractual arrangement in the
distribution of the Shares. To the extent that the Shares are
registered in the name of Purchaser's nominee, Purchaser confirms that
such nominee is acting as custodian for Purchaser of such securities.
(e) Purchaser understands that no U.S. Federal or state or any foreign
governmental authority or agency has made or will make any
finding or determination relating to the fairness for public
investment in the Shares, or has passed upon or made, or will
pass upon or make, any recommendation or endorsement of the Shares.
(f) If Purchaser is a partnership, corporation, trust or other entity, the
individual person signing the Subscription Agreement on its behalf
represents and warrants that:
(i) He or she has made due inquiry to determine the truthfulness
of the representations and warranties made by the Purchaser
in this Purchase Agreement;
and
(ii) He or she is duly authorised under the corporation's charter
and by all requisite corporate action (and if the Purchaser
is a partnership, trust or other unincorporated entity, by
the agreements, deeds, indentures or other instruments pursuant
to which such entity was organised and all requisite action to
be taken by such entity) to make this investment and to enter
into, execute and deliver this Subscription Note on behalf
of such entity.
3. RESTRICTIONS ON RE-SALE
(a) During the Restricted Period from June 15 2000 to June 15 2001, the
Purchaser shall not engage in any activity for the purpose of or
which may reasonably be expected to have an effect of conditioning
the market in the United States for the Shares, or directly or
indirectly offer, sell, transfer, pledge or otherwise dispose of the
Shares or any interest therein in the United States or to or for the
account or benefit of a "U.S. person" (as defined in Regulation S, ref.
Schedule 2). Purchaser hereby also agrees that it shall not, either
directly or indirectly, sell short the Company's shares of Common Stock
in the over-the-counter market or otherwise in the United States or
engage in any hedging activities in the United States during the
Restricted Period, and it has not made any such sale in
anticipation of purchasing the Shares.
(b) Purchaser understands that the Shares or any interest therein are only
transferable on the books and records of the Transfer Agents and
Registrar of the Common Stock of the Company. Purchaser further
understands that the Transfer Agents and Registrar will not register
any transfer of the Shares or any interest therein which the Company
in good faith believes violates the restrictions set forth herein.
(c) Unless registered under the Securities Act or otherwise traded in
compliance with Regulation S, during the Restricted Period any
proposed offer, sale, transfer, pledge or other disposition of any of
the Shares or any interest therein shall be subject to the condition
that Purchaser must deliver to the Company,
(i) a written certification that neither record nor beneficial
ownership of the Shares or any interest therein, as the case
may be, has been offered or sold in the United States or to or
for the account or benefit of, any "U.S. person" (as defined
in Regulation S),
(ii) a written certification of the proposed transferee that such
transferee (or any account for which such transferee is
acquiring such Shares or any interest therein, as the case may
be) is not a "U.S. person" (as defined in Regulation S), that
such transferee is acquiring such Shares or such interest
therein, as the case may be, for such transferee's own
account (or an account over which it has investment discretion)
and for investment and not with a view to a distribution,
and that such transferee is knowledgeable of and agrees to be
bound by the restrictions on re-sale set forth in this section
and Regulation S during the Restricted Period, and
(iii) a written opinion of United States counsel, in form and
substance satisfactory to the Company, to the effect that
the offer, sale, transfer, pledge or other disposition of such
Shares, or any interest therein, as the case may be, are
exempt from registration under the Securities Act and all other
applicable Securities Laws.
(d) Purchaser will not, directly or indirectly, voluntarily offer, sell,
pledge, transfer or otherwise dispose of or solicit any offers to buy,
purchase or otherwise acquire or take a pledge of its rights under
the Subscription Agreement or the Shares or any interest therein
otherwise than in compliance with all applicable Securities Laws.
4. LEGENDS
(a) Purchaser agrees that the stock certificates representing the Shares
shall bear the legend set forth below:
"The Shares of Common Stock represented by this certificate have not
been registered under the United States Securities Act of 1933, as
amended (the"Act"), or any other securities laws, and have been issued
in reliance upon the exemption from registration under the Act
contained in Regulation S under the Act. No offer, sale, transfer,
pledge or other disposition (collectively, a "Disposal") of the Shares
of Common Stock represented by this certificate may be made: (a) in
the United States or to, or for the account or benefit of, any "U.S.
person" (as defined in Regulation S) unless (i) registered under the Act
and any applicable state securities or blue sky laws or (ii) exemptions
from the registration requirements of such laws are available and
CanArgo Energy Corporation (the "Company") receives a written
opinion of United States legal counsel in form and substance
satisfactory to it to the effect that such Disposal is exempt
from such registration requirements; and (b) outside of the United
States or to, or for the account or benefit of a person who is not a
"U.S. person" (as defined in Regulation S) unless (i) the beneficial
owner of such Shares and the proposed transferee submit certain
certifications to the Company and (ii) the Company receives a written
opinion of United States legal counsel in form and substance
satisfactory to it to the effect that such Disposal is exempt
from the registration requirements of the Act."
5. RE-OFFERS BY PURCHASER IN THE UNITED STATES.
If Purchaser publicly re-offers all or any part of the Shares in the United
States, Purchaser (and/or certain persons who participate in any such re-offer)
may be deemed, under certain circumstances, to be an "underwriter" as defined in
section 2(11) of the Securities Act. If Purchaser plans to make any such
re-offer, it will consult with United States legal counsel prior to any such
re-offer in order to determine its liabilities and obligations under this
Subscription Agreement and any applicable Securities Laws.
6. AUTHORITY;NO CONFLICT.
6.1 Purchaser has the corporate power, authority and capacity to enter into the
Subscription Agreement and to consummate the transactions contemplated hereby.
Upon the execution and delivery of this Purchase Agreement by Purchaser, the
Subscription Agreement with Schedules 1-3 shall constitute the legal, valid and
binding obligations of Purchaser, enforceable in accordance with its terms
except as the enforceability thereof may be limited by any applicable
bankruptcy, insolvency, reorganisation or other similar laws, relating to or
affecting the enforcement of creditors rights generally and by general equitable
principles, regardless of whether such enforceability is considered in a
proceeding in equity or at law.
6.2 The execution, delivery and performance of this Agreement by Purchaser do
not and (with notice or the passage of time or both) will not materially
conflict with, or result in a material violation or breach of or loss of any
material benefit under, or permit the acceleration of any material obligation or
give rise to a right of termination under, (i) the organisational documents of
Purchaser, (ii) any existing law, rule or regulation, judgement or order
applicable to Purchaser, (iii) any mortgage, lease, indenture, agreement or
other instrument to which Purchaser is a party (other than agreements to which
Purchaser and/or JKX Oil & Gas plc and the International Finance Corporation are
parties relating to the financing of Ninotsminda Oil Company), or (iv) any
permit, license, franchise or concession, applicable to Purchaser in each case,
except for any of the same that would not impair or impede Purchaser's ability
to enter into this Agreement and to consummate in a timely fashion the
transactions contemplated hereby.
7. SURVIVAL OF REPRESENTATIONS , WARRANTIES AND AGREEMENTS
Notwithstanding any investigation made by CanArgo, all covenants, agreements,
representations and warranties made by Purchaser herein shall survive the
delivery to Purchaser of the Shares.
SCHEDULE 2
TO
SUBSCRIPTION AGREEMENT
DEFINITION OF U.S. PERSON UNDER REGULATION S
1. U.S. Person
(a) "U.S. person" means:
(i) Any natural person resident in the United States;
(ii) Any partnership or corporation organised or
incorporated under the laws of the United States;
(iii) Any estate of which any executor or administrator is a
U.S. person;
(iv) Any trust of which any trustee is a U.S. person;
(v) Any agency or branch of a foreign entity located in the
United States;
(vi) Any non-discretionary account or similar account (other
than an estate or trust) held by a dealer or other
fiduciary for the benefit or account of a U.S. person;
(vii) Any discretionary account or similar account (other than
an estate or trust) held by a dealer or other fiduciary
organised, incorporated, or (if an individual) resident
in the United States; and
(viii) Any partnership or corporation if: (A) organised or
incorporated under the laws of any foreign
jurisdiction; and (B) formed by a U.S. person
principally for the purpose of investing in
securities not registered under the Securities Act,
unless it is organised or incorporated, and owned, by
accredited investors (as defined in Rule 501(a) of the
Securities Act) who are not natural persons,
estates or trusts.
(b) Notwithstanding paragraph (1)(a) of this rule, any discretionary
account or similar account (other than an estate or trust) held
for the benefit or account of a non-U.S. person by a dealer
or other professional fiduciary organised, incorporated, or (if
an individual) resident in the United States shall not be deemed a
"U.S. person."
(c) Notwithstanding paragraph (1)(a), any estate of which any
professional fiduciary acting as executor or administrator is
a U.S. person shall not be deemed a U.S. person if:
(i) An executor or administrator of the estate who is
not a U.S. person has sole or shared investment
discretion with respect to the assets of the estate;
and
(ii) The estate is governed by foreign law.
(d) Notwithstanding paragraph (1)(a), any trust of which any
professional fiduciary acting as a trustee is a U.S. person shall
not be deemed a U.S. person if a trustee who is not a
U.S. person has sole or shared investment discretion with respect
to the trust assets, and no beneficiary of the trust (and no
settler if the trust is revocable) is a U.S. person.
(e) Notwithstanding paragraph (1)(a), an employee benefit plan
established and administered in accordance with the law of a
country other than the United States and customary practices
and documentation of such country shall not be deemed a U.S.
person.
(f) Notwithstanding paragraph (1)(a), any agency or branch of a U.S.
person located outside the United States shall not be deemed a
"U.S. person" if:
(i) The agency or branch operates for valid business reasons;
and
(ii) The agency or branch is engaged in the business of
insurance or banking and is subject to substantive
insurance or banking regulation, respectively, in the
jurisdiction where located.
(g) The International Monetary Fund, the International Bank for
Reconstruction and Development, the Inter American Development
Bank, the Asian Development Bank, the African Development Bank,
the United Nations, and their agencies, affiliates and pension
plans and any other similar international organisations, their
agencies, affiliates and pension plans shall not be deemed
"U.S. persons."
2. United States. "United States" means the United States of America, its
territories and possessions, any State of the United States, and the
District of Columbia.
SCHEDULE 3
TO THE
SUBSCRIPTION AGREEMENT
REPRESENTATIONS, WARRANTIES AND COVENANTS OF CANARGO
1. AUTHORITY, NO CONFLICT
1.1 CanArgo has the corporate power, authority and capacity to enter into the
Subscription Agreement and to consummate the transactions contemplated hereby.
Upon execution and delivery of this Agreement by CanArgo, the Subscription
Agreement, with Schedules 1-3 shall constitute the legal, valid and binding
obligations of CanArgo, enforceable in accordance with its terms except as the
enforceability thereof may be limited by any applicable bankruptcy, insolvency,
reorganisation or other similar laws related to or affecting the enforcement of
creditors rights generally and by general equitable principles, regardless of
whether such enforceability is considered in a proceeding in equity or at law.
1.2 The execution, delivery and performance of this Agreement by CanArgo do not
and (with notice or the passage of time or both) will not materially conflict
with, or result in a material violation or breach of or loss of any material
benefit under, or permit the acceleration of any material obligation or give
rise to a right of termination under, (i) the certificate of incorporation or
bylaws of CanArgo, (ii) any existing law, rule or regulation, judgement or order
applicable to CanArgo, (iii) any mortgage, lease, indenture, agreement or other
instrument to which CanArgo is a party, or (iv) any permit, license, franchise
or concession applicable to CanArgo, in each case, except for any of the same
that would not have a material adverse effect on the business, assets,
operations or financial condition of CanArgo and its subsidiaries taken as one
enterprise.
2. DISCLOSURE
CanArgo's Annual Report on Form 10-K for the fiscal year ended December 31, 1999
and its Quarterly Report on Form 10-Q ("Form 10-Q") for the fiscal quarter ended
March 31, 2000 (collectively, the "SEC Filings"), including any financial
statements or schedules included therein, comply in all material respects with
the requirements of the Securities Exchange Act of 1934, as amended, and the
rules and regulations promulgated thereunder and did not at the time of their
filing contain any untrue statement of material fact or omit to state a material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
3. FINANCIAL STATEMENTS; NO MATERIAL ADVERSE CHANGE
3.1 The consolidated financial statements included in the SEC Filings have been
prepared in accordance with US generally accepted accounting principles (except
as may be indicated in the notes thereto or, in the case of the unaudited
statements included in the Form 10-Q, as permitted by the SEC and subject to
normal year-end audit adjustments). The consolidated balance sheets included in
the SEC Filings fairly present in all material respects the consolidated
financial position of CanArgo and its subsidiaries as of their respective dates,
and the related consolidated statements of operations, stockholders equity and
cash flows included in the SEC Filings fairly present in all material respects
the consolidated results of operations, changes in equity and cash flows of
CanArgo and its subsidiaries for the respective periods then ended (subject, in
the case of unaudited statements, to normal audit adjustments).
3.2 Since March 31, 2000, there has been no event or circumstance that has had
a material adverse effect on the business, assets, operations or financial
condition of CanArgo and its subsidiaries taken as one enterprise.
4. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS
Notwithstanding any investigation made by the Purchaser, all covenants,
agreements, representations and warranties made by CanArgo herein shall survive
the delivery to Purchaser of the Shares.
