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Canargo Energy - Put Option Agreement Between Canargo Energy
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INVESTMENT NUMBER 8138
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PUT OPTION AGREEMENT
BETWEEN
CANARGO ENERGY CORPORATION
AND
JKX OIL & GAS PLC.
AND
INTERNATIONAL FINANCE CORPORATION
DATED DECEMBER 17, 1998
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PUT OPTION AGREEMENT
AGREEMENT dated December 17, 1998, between CanArgo Energy Corporation, a Delaware corporation ("CanArgo"), JKX Oil & Gas plc., a company registered in England ("JKX") and International Finance Corporation, an international organization established by Articles of Agreement among its member countries (hereinafter called "IFC").
WHEREAS:
(A) By a convertible loan agreement (the "Convertible Loan
Agreement") dated as of even date herewith between IFC and
Ninotsminda Oil Company (the "Company"), IFC has agreed to
extend to the Company a convertible loan (the "Loan") in the
principal amount of six million Dollars ($6,000,000), on the
terms and subject to the conditions set forth in the
Convertible Loan Agreement.
(B) By virtue of Section 6.01 (d) of the Convertible Loan
Agreement, it is a condition of the initial disbursement of
the Loan that CanArgo and JKX enter into a Put Option
Agreement with IFC pursuant to which IFC shall have the right
following conversion of the Loan, to put any of its shares in
the Company to CanArgo and JKX, on several basis as more fully
set forth below.
NOW, THEREFORE, the parties agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01. Wherever used in this Agreement, unless the context otherwise requires or unless otherwise defined herein, terms defined in the Convertible Loan Agreement have the same meanings herein.
Section 1.02. Wherever used in this Agreement, unless the context otherwise requires, the following terms shall have the following meanings:
"Compounded Dollar Cost" the aggregate amount of Dollars at any time
or from time to time disbursed by IFC for the
purpose of paying for IFC Shares plus the
Dollar equivalent value of any
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taxes, fees or other charges in connection
with the purchase or subscription of IFC
Shares, compounded semi-annually at the rate
of twelve percent (12%) per annum from the
Conversion Settlement Date to the relevant
Put Settlement Date (provided that such
compounding rate shall, for any period less
than six months, be prorated on the basis of
a 360-day year and the actual number of days
elapsed).
"Compounded Dollar Dividends" the amount of Dollars (if any) at any time or
from time to time received by IFC in
immediately available funds in New York City,
New York, United States of America, as the
proceeds of conversion of cash dividends paid
on or with respect to the IFC Shares,
compounded semi-annually at the rate of
twelve percent (12%) per annum from the date
or dates of receipt by IFC to the relevant
Put Settlement Date (provided that such
compounding rate shall, for any period less
than six months, be prorated on the basis of
a 360-day year and the actual number of days
elapsed).
"Compounded Dollar Sales Proceeds" the aggregate of (i) in the case of any sale
of IFC Shares pursuant to this Agreement, the
actual amount of Dollars received by IFC in
immediately available funds in New York City,
New York, United States of America, as the
proceeds of such sale; and (ii) in the case
of any other sale of IFC Shares, the amount
of Dollars that IFC would have received in
immediately available funds in New York City,
New York, United States of America, as the
proceeds of such sale (or the proceeds of
conversion into Dollars of the sale proceeds
if such other sale was denominated in other
currencies), on the same date or dates as
Dollars were received under such other sale,
if such other sale had instead been made by
IFC to CanArgo and JKX pursuant to the
provisions of this Agreement, such amounts in
each case compounded semi-annually at the
rate of twelve percent (12%) per annum from
the date or dates of receipt by IFC to the
relevant Put Settlement Date (provided that
such compounding rate shall, for any period
less than six months, be prorated on the
basis of a 360-day year and the actual number
of days elapsed).
"Net Asset Value" the net present value of future Net Cash
Flows to NOC, discounted at the Discount
Rate, of all probable reserves (risked at
50%) and all proven reserves, plus current
assets, plus non Exploration and Production
Fixed Assets, less liabilities excluding
related party debt (other than amounts paid
in accordance with section 7.02(x) and (y) of
the Convertible Loan Agreement), the
calculation of Net Cash Flows being based on
the latest valuation submitted to a
recognized securities exchange, or an
equivalent independent valuation to be
obtained at IFC's option.
"Net Asset Value per Share" Net Asset Value divided by the sum of the
total number of authorized and outstanding
shares of the Company plus all shares the
subject of outstanding options or warrants;
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"Net Cash Flow" for any period, Operating Cash Flow less
NOC's proportionate share of Project capital
development expenses.
"Operating Cash Flow" means, for any period, the sum of all
proceeds from the sale of NOC's share of oil
and gas, less NOC's proportionate share of
operating costs, operating overheads,
royalties, transportation costs and taxes.
"Option Period" the period commencing on the second
anniversary of the Conversion Settlement Date
and ending upon the first to occur of: (i)
the date on which the Company's shares are
accepted for listing on a stock exchange
acceptable to IFC (which acceptance shall not
be unreasonably withheld) or (ii) December
31, 2007;
"Option Price" the greater of (i) (x) the amount (but not
less than zero) obtained by subtracting from
the Compounded Dollar Cost the sum of (A) the
Compounded Dollar Dividends and (B) the
Compounded Dollar Sales Proceeds, multiplied
by (y) the Put Ratio or (ii) the Net Asset
Value per Share multiplied by the number of
Option Shares the subject of the Put Notice;
"Option Shares" the aggregate of:
(i) all shares of the Company purchased
by IFC pursuant to the Conversion
Option;
(ii) all shares of the Company subscribed
or acquired by IFC pursuant to the
exercise of preemptive rights,
options or warrants accruing to IFC
in relation to any Option Shares;
(iii) all shares of the Company received
by IFC as a result of stock splits
or stock bonuses or stock dividends
on any Option Shares; and
(iv) all shares (of any company) received
by IFC in exchange, replacement or
substitution of any Option Shares;
"Pro-Rata Share" means a percentage of the Option Price based
on the pro-rata ownership interest in the
Company of each of CanArgo Limited, in the
case of CanArgo, and JKX Nederlands B.V., in
the case of JKX;
"Put Notice" the notice given by IFC to CanArgo and JKX
pursuant to Section 2.02, which shall set
forth:
(i) the number of Option Shares which
are the subject of the Put Notice;
(ii) the Option Price and the basis for
its determination;
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(iii) the Put Settlement Date, such date
to be not less than thirty (30) days
nor more than sixty (60) days after
the date of the Put Notice; and
(iv) the Settlement Place;
"Put Option" the option, hereby granted, of IFC to sell to
CanArgo and/or JKX on a several basis, at the
Option Price all or part of the Option
Shares;
"Put Ratio" the ratio obtained by dividing (i) the number
of Option Shares the subject of the Put
Notice, by (ii) the total number of Option
Shares;
"Put Settlement Date" the date specified in the Put Notice for
making payment for the Option Shares; and
"Settlement Place" the place for any payments to be made under
this Agreement, which shall be made for the
account of IFC at Northern Trust
International Banking Corporation, New York,
New York (IFC's Account No. 10215220300 CHIPS
ID 142255) or at such other bank and account
as IFC shall notify the parties.
ARTICLE II
THE PUT OPTION
Section 2.01. IFC shall have the option to sell to CanArgo and JKX, on a several basis, any or all of its Option Shares by exercising its Put Option in accordance with Section 2.02 below, and, upon the exercise by IFC of such Put Option, CanArgo and JKX shall be obligated to pay (subject to Section 2.07 hereof) at the Option Price on the Put Settlement Date at the Settlement Place, for all the Option Shares so sold by IFC.
Section 2.02. The Put Option may be exercised by IFC from time to time during the Option Period (subject to the provision of the preceding Section 2.01) in respect of all or part of the Option Shares, by delivery of a Put Notice within the Option Period.
Section 2.03. Upon receipt of a Put Notice, CanArgo and JKX shall, on the Put Settlement Date and at the Settlement Place, acquire the Option Shares which are the subject of the Put Notice and (subject to Section 2.07 hereof) pay therefor the Option Price.
Section 2.04. Payment for the Option Shares referred to in the Put Notice at the Option Price, shall be made in Dollars in New York, New York in immediately available funds, without deduction whatsoever for any fees, taxes, duties or other charges howsoever called, all of which shall be borne by CanArgo and JKX as applicable.
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Section 2.05. Without prejudice to the remedies available to IFC under this Agreement or otherwise, if CanArgo and JKX shall fail to make payment on or before the Put Settlement Date as specified pursuant to this Agreement, CanArgo and JKX shall pay in Dollars, in respect of such payment due and unpaid, a late payment charge calculated from the Put Settlement Date until all amounts due are paid at the rate of three percent (3%) per annum above the rate which appears on the Dow Jones Markets, Inc. Page in the column headed "USD" as of 11:00 a.m., London time, on the Put Settlement Date for whichever period is closest to the duration of such period; such late payment charge shall accrue from day to day and be prorated on the basis of a 360-day year for the actual number of days in the above mentioned relevant period.
Section 2.06. Without pre...
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