GEORESOURCES, INC. SUBSCRIPTION AGREEMENT
Exhibit
99.3
GEORESOURCES, INC.
SUBSCRIPTION AGREEMENT
SUBSCRIPTION AGREEMENT
1. Subscription. Subject to the terms and conditions of (a) this Subscription Agreement (this
"Agreement”), (b) the Private Placement Memorandum (the “PPM”) (which includes the Definitive Proxy
Statement filed with the Securities and Exchange Commission (the “Commission”) on February 23, 2007
(the “Proxy Statement”)), to which this Agreement is attached as Exhibit B, and (c) the
Registration Rights Agreement attached to the PPM as Exhibit C, the undersigned purchaser (the
"Purchaser”) hereby irrevocably subscribes for shares of Common Stock (the “Common Stock”) of
GeoResources, Inc., a Colorado corporation (the “Company”), and agrees to exchange the number of
limited partnership interests with the class of Units thereof in Southern Bay Oil & Gas, L.P.
(“Southern Bay”) for Common Stock as indicated on the signature page hereof and hereby tenders this
Agreement, together with an assignment of his/her limited partnership interest in Southern Bay.
The Purchaser agrees that this Agreement shall be irrevocable and shall survive the death or
disability of the Purchaser. As set forth in the PPM, this Agreement is part of a proposed private
placement by the Company to accredited investors of up a maximum of 8,263,000 shares of Common
Stock which will be exchanged for all of the Southern Bay partnership interests.
2. Representations, Warranties and Covenants of the Purchaser. The Purchaser hereby
represents and warrants to and covenants with the Company as follows:
(a) Unless otherwise expressly disclosed to the Company in writing, the Purchaser is both (i)
an “accredited investor” as such term is defined in Rule 501 of Regulation D promulgated under the
Securities Act of 1933, as amended (the “Securities Act”) and set forth hereto on page Q-2 (for
natural persons) and R-1 (for organizations), and (ii) a sophisticated investor who has knowledge
and experience in financial and business matters so as to be capable of evaluating the merits and
risks of an investment in the stock of the Company. Furthermore, the information contained in the
Purchaser’s Confidential Purchaser Questionnaire attached hereto is complete, accurate and true in
all respects.
(b) The Purchaser understands that the offer and sale of Common Stock pursuant to this
Agreement is made in conjunction with the PPM, the Merger Agreement (attached to the Proxy
Statement) and the terms and conditions of the First Amended and Restated Agreement of Limited
Partnership of Southern Bay, dated March 14, 2005.
(c) The Purchaser’s overall commitment to investments which are not readily marketable is not
disproportionate to the Purchaser’s net worth, an investment in the Company will not cause such
overall commitment to become excessive, and Purchaser can afford to bear the loss of the
Purchaser’s entire investment in the Company.
(d) The Purchaser has adequate means of providing for the Purchaser’s current needs and
personal contingencies and has no need for liquidity in the Purchaser’s investment in the Company.
(e) The Purchaser has, to the extent the Purchaser has deemed advisable, employed the services
of the Purchaser’s professional advisors to evaluate the merits and risks of such an investment on
the Purchaser’s behalf.
(f) The Purchaser acknowledges that an investment in the Company is subject to a multitude of
material risks, including those set forth under “Risk Factors” in the Proxy Statement, which is
attached as Exhibit A to the PPM.
(g) For purposes of verifying the accuracy of the information in the PPM, concerning the terms
and conditions of this private placement and an investment in the Company, the Company has made
available to the Purchaser the opportunity to ask questions of and receive answers from the Company
and its management, and to obtain any additional information relating to the Company and the offer
and sale of Common Stock to the purchasers, to the extent that that the Company possess such
additional information or can acquire it without unreasonable effort or expense. The Purchaser has
asked questions of, and has received answers and additional information, as the Purchaser deemed
appropriate, as provided in the preceding sentence in this clause (g).
(h) The Purchaser hereby acknowledges that the Purchaser has been advised that this offer and
exchange of Common Stock for the Purchaser’s partnership interests in Southern Bay have not been
registered with, or reviewed by, the Commission because the transaction is intended to be a
non-public, private offering pursuant to Section 4(2) of the Securities Act and Regulation D
thereunder. The Purchaser represents and warrants that the Common Stock being acquired under this
Agreement is being acquired for the Purchaser’s own account, for investment purposes only and not
with a view for distribution or resale to others. The Purchaser agrees that the Purchaser will not
sell or otherwise transfer the securities being acquired hereby, including by way of a gift, unless
they are registered under the Securities Act or unless, in the opinion of counsel satisfactory to
the Company, an exemption from such registration is available.
(i) The Purchaser understands that no securities administrator of the federal government or
any state has made any finding or determination relating to the fairness of the investment offered
through this Agreement and that no securities administrator of the federal government or any state
has recommended or endorsed, or will recommend or endorse, the private placement of the securities
purchased hereby.
(j) The Purchaser acknowledges that as a condition to the Company’s acceptance of this
Agreement, the Purchaser must execute a counterpart signature page to the Registration Rights
Agreement, which is attached to the PPM as Exhibit C, thus becoming a party to, and bound by, the
Registration Rights Agreement. The Purchaser acknowledges that the Purchaser has reviewed and
understands the Registration Rights Agreement.
(k) The Purchaser has the full legal competence and capacity and right to execute, deliver and
perform this Agreement and the Registration Rights Agreement, and such execution, delivery and
performance will not constitute or result in a breach or default under, or conflict with, any
order, ruling or regulation of any court or other tribunal or of any governmental commission or
agency, or any agreement or other undertaking to which the Purchaser is a party
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or by which the Purchaser is bound. This Agreement and Registration Rights Agreement constitute
the legal, valid and binding obligations of the Purchaser, enforceable in accordance with their
terms.
(l) The Purchaser acknowledges that no general or public solicitation or general advertising
(including communications published in any newspaper, magazine or other broadcast) has been
received by or made to the Purchaser with respect to the private placement of the securities
purchased hereby, nor has any such general or public or general advertising been made by the
Purchaser.
(m) The decision of the Purchaser to invest in the Common Stock is solely the result of the
Purchaser’s own personal decision, and the Purchaser has fully considered and assessed the legal,
tax, economic and related matters concerning this investment and its suitability for the Purchaser
before entering in this Agreement.
(n) The Purchaser has been furnished and has completed and executed the attached Confidential
Purchaser Questionnaire, and the information set forth therein by the Purchaser is true and correct
in all respects and is incorporated by reference into this Agreement.
3. Indemnification. The Purchaser acknowledges and understands the meaning and legal
consequences of the representations, warranties, covenants and agreements in Paragraph 2 above and
that the Company will rely upon such representations, warranties, covenants and agreements, and the
Purchaser hereby agrees to indemnify and hold harmless the Company and its respective officers,
directors, controlling persons, representatives, agents and employees, from and against any and all
losses, damages or liabilities due to or arising out of a breach of any representation, warranty,
covenant or agreement made by the Purchaser as set forth in this Agreement. All representations,
warranties, covenants and agreements contained in this Agreement, along with this indemnification
shall survive the Company’s acceptance of this Agreement.
4. Restrictions on Transfer. The stock certificates representing the Common Stock of the
Company issued to the Purchaser will bear a legend substantially as follows:
The securities represented hereby have not been registered under the
Securities Act of 1933 (the “Securities Act”) and may not be offered, sold or
otherwise transferred, assigned, pledged or hypothecated unless and until
registered under the Securities Act or unless the company has received an
opinion of counsel satisfactory to the Company that such registration is not
required.
The sale, pledge, hypothecation or transfer of the securities represented by
this Certificate is subject to the terms and conditions of a that certain
Registration Rights Agreement by and among the Company and certain of its
stockholders. Copies
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of such agreement may be obtained upon written request to the Secretary of
the Company.
5. Brokers or Finders. The Purchaser represents and warrants that no person has or will have,
as a result of the transactions contemplated by this Agreement, any right, interest or valid claim
against or upon the Company or the Purchaser, as the case may be, for any commission, fee or other
compensation as a finder or broker because of any act or omission by the Purchaser, or by its
agents.
6. Modification. Neither this Agreement nor any provision hereof shall be waived, modified,
changed, discharged or terminated except by an instrument in writing signed by the party against
whom any waiver, modification, charge, discharge or termination is sought.
7. Notices. All notices, requests, consents and other communications hereunder shall be in
writing and shall be deemed to have been duly made when delivered, or mailed by registered or
certified mail, return receipt requested:
(a) if to the Purchaser, to the address set forth on the signature page of this Agreement or
at such address as Purchaser has advised the Company of in writing; or
(b) if to the Company, to
GeoResources, Inc.
Attn: President
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Attn: President
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or at such other address as the Company has advised the Purchaser of in writing.
8. Binding Effect. Except as otherwise provided herein, this Agreement shall be binding upon
and inure to the benefit of the parties hereto and their heirs, executors, administrators,
successors, legal representatives and assigns.
9. Entire Agreement. This Agreement contains the entire agreement of the parties with respect
to the matters set forth herein and there are no representations, covenants or other agreements
except as stated or referred to herein.
10. Assignability. This Agreement is not transferable or assignable by the undersigned or any
successor thereto.
11. Applicable law. This Agreement shall be governed by and construed in accordance with the
laws of the State of Colorado without reference to the principles thereof relating to the conflict
of laws.
12. Jurisdiction and Service of Process. The parties irrevocably consent to the jurisdiction
of the courts of the State of Colorado and of any federal or state court located in the
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county of Denver, Colorado in connection with any action or proceeding arising out of or relating
to this Agreement.
13. Attorneys Fees. In the event of a dispute regarding this Agreement that results in
litigation or arbitration, the prevailing party, as determined by the finder of fact, shall be
entitled to an award of reasonable attorneys fees.
14. Counterparts. To facilitate the execution of this Agreement, any number of counterparts
hereof may be executed, and each such counterpart shall be deemed to be an original instrument, but
all such counterparts together shall constitute but one instrument. Facsimile signatures shall
have the same effect as an original signature.
15. Certification. The Purchaser certifies that the Purchaser has read this entire Agreement
and the attached Confidential Purchaser Questionnaire and that every statement on the Purchaser’s
part made and set forth herein and therein is true and complete.
[Reminder of this page intentionally left blank; signature page follows.]
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IN WITNESS WHEREOF, the undersigned has executed this Agreement as of the 20th day of March,
2007.
Amount Subscribed for: 1,888,560 shares of GeoResources, Inc. common stock in exchange for 52,832
Units of Class A Southern Bay Oil & Gas, L.P. and 533 Units of Class A Southern Bay Oil & Gas, L.P
representing our interest in the General Partner plus funding our remaining capital commitment
totaling $4,615,000.
| Address: | ||
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇. — 12th Floor | |
Signature of Purchaser |
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▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, as Director of |
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| ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ | ||
Typed/Printed Name of Purchaser |
| Accepted as of the 17th day of April, 2007. | ||||||
| GEORESOURCES, INC. | ||||||
| By: | /s/ ▇.▇. ▇▇▇▇▇▇▇ | |||||
| Name: | ▇.▇. ▇▇▇▇▇▇▇ | |||||
| and Title: | President | |||||
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