Summary of CANARGO ENERGY CORP

Entry into a Material Definitive Agreement, Creation of a Direct Financial Ob

Item 1.01 Entry into a Material Definitive Agreement
The information set forth under Item 1.03 "Bankruptcy or Receivership" is incorporated herein by reference.
Item 1.03 Bankruptcy or Receivership.
As previously disclosed in the Current Report on Form 8-K filed on October 28, 2009 by CanArgo Energy Corporation (the "Company"), on October 28, 2009, the Company filed a voluntary petition seeking relief under Chapter 11 (the "Chapter 11 Case") of the United States Bankruptcy Code (the "Bankruptcy Code") in the United States Bankruptcy Court for the Southern District of New York (the "Bankruptcy Court"). The Chapter 11 Case is being administered under the caption In re CanArgo Energy Corporation, No. 09-16453.
On October 29, 2009, the Company as Debtor in Possession and Persistency (the "Lender") entered into a Debtor-in-Possession Financing Agreement (the "DIP Credit Agreement") and other financing documents by and between the Debtor and the Lender and by and between certain of Debtor's direct and indirect subsidiaries and Lender, including forms of Secured Promissory Note, Security Agreement, Pledge Agreement under New York Law, Security Agreement under Guernsey Law and Subsidiary Guarantee Agreement (together with the DIP Credit Agreement, collectively, the "Financing Documents"). The Bankruptcy Court subsequently approved the DIP Credit Agreement and authorized a draw down pursuant to an Interim Financing Order.

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The DIP Credit Agreement was previously summarized in the Term Sheet comprising Exhibit A to the Plan Support and Lock-Up Agreement filed as an Exhibit to the Company's Current Report on Form 8-K filed on October 28, 2009, and the Company also disclosed that the DIP Credit Agreement provides for a commitment by the Lender to lend the Debtor up to $1.2 million in one or more advances, which advances may not be repaid and re-borrowed. The proceeds from the initial advance under the DIP Credit Agreement were used to repay the outstanding amount of $73,122 due under a bridge loan of up to $550,000 (under which $408,470 was drawn and partly repaid) previously provided by Persistency to CanArgo Limited, the Company's wholly owned Guernsey subsidiary and the reimbursement of professional fees previously incurred by Persistency in the amount of $253,087 and, among other things, to provide the Company with working capital for general corporate purposes. The DIP Credit Agreement contains events of default and includes certain financial covenants. The above summary of the DIP Credit Agreement is qualified in its entirety by reference to the DIP Credit Agreement and related Financing Documents, copies of which, in the form approved by the Bankruptcy Court, are attached hereto as Exhibits 10.1 through 10.6.

Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an
Off-Balance Sheet Arrangement of a Registrant.
The information set forth under Item 1.03 "Bankruptcy or Receivership" is incorporated herein by reference.
Item 8.01 Other Events.
Periodic Reports
Under the Bankruptcy Code and related rules, the Company is required to file certain information and periodic reports with the Bankruptcy Court. The reports are limited in scope, cover a limited time period and will be prepared solely for the purpose of the Debtor's compliance with the reporting requirements of the Bankruptcy Court. The financial information in the reports will not be audited or reviewed by independent registered accountants and will not be presented in accordance with generally accepted accounting principles, will be in a format prescribed by applicable bankruptcy laws and will be subject to future adjustment and reconciliation. There can be no assurance that the reports will be complete. The reports also will contain information for periods which may be shorter or otherwise different from those contained in reports required pursuant to the Securities Exchange Act of 1934, as amended (the "Exchange Act"). The reports will not include footnotes that would ordinarily be contained in the financial statements in the Company's quarterly and annual reports pursuant to the Exchange Act. In addition, the income tax provision in the reports will be difficult to ascertain as a result of many factors, including, among other things, the Company's inability to predict taxable income that may be generated as a result of any cancellation of indebtedness that might occur as a result of the bankruptcy proceeding involving the Company. Results set forth in the reports should not be viewed as indicative of future results. Bankruptcy Materials
On October 28, 2009, the Company filed certain materials with the Bankruptcy Court (together with future filings with the Bankruptcy Court, the "Bankruptcy Materials"). The Bankruptcy Materials contain unaudited summary financial information relating to the Company's assets and liabilities and operating results in the form required under the Bankruptcy Code and the rules and regulations thereunder. The Bankruptcy Materials are available to the public via the Bankruptcy Court's Case Management/Electronic Case Filing system at http://ecf.mdb.uscourts.gov and in paper format at the following address:
Bankruptcy

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Clerk's Office, U.S. Bankruptcy Court, Alexander Hamilton Custom House, One Bowling Green, New York, NY 10004-1408 (telephone number: (212) 668-2870). The Bankruptcy Materials contain financial information that has not been and will not be audited or reviewed by independent registered accountants and is and will not be not presented in accordance with generally accepted accounting principles. The information contained in the Bankruptcy Materials has been and will be prepared in accordance with the Bankruptcy Code and the rules and regulations thereunder and was not and will not be prepared for the purpose of providing a basis for an investment decision relating to any securities of the Company. The Bankruptcy Materials also contain information for periods that are shorter or otherwise different from those required by the periodic reporting requirements of the Exchange Act, and the rules and regulations thereunder, and such information may not be indicative of the Company's financial condition or operating results for the period that would be reflected in its financial statements or in its reports pursuant to the Exchange Act or the rules and regulations thereunder. Results set forth in the Bankruptcy Materials should not be viewed as indicative of future results. There can be no assurance that the Bankruptcy Materials are complete. The Company may amend, supplement or otherwise change the information contained in the Bankruptcy Materials at a future date.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.

              Exhibit No.                 Description
              10.1          Debtor in Possession Financing Agreement
              10.2          Form of Secured Promissory Note
              10.3          Form of Security Agreement
              10.4          Form of U.S. Pledge Agreement
              10.5          Form of Guernsey Pledge Agreement
              10.6          Form of Subsidiary Guarantee

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