GEORESOURCES, INC.
SUBSCRIPTION AGREEMENT
1.
Subscription . Subject to the terms
and conditions of this Subscription Agreement (this “
Agreement ”) and the Registration Rights Agreement,
attached hereto (the “ Registration Rights
Agreement ”), the undersigned purchaser (the “
Purchaser ”) hereby irrevocably subscribes for
_______________ shares of Common Stock (the “ Common
Stock ”) of GeoResources, Inc., a Colorado corporation
(the “ Company ”) at $______ per share and
hereby tenders this Agreement and the Registration Rights
Agreement. The Purchaser agrees that this Agreement shall
be irrevocable and shall survive the death or disability of the
Purchaser.
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 Registration Rights Agreement.
(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 Company’s Form 10-KSB for the year ended December 31,
2006 filed with the Securities and Exchange Commission on April
2, 2007.
(g)
For purposes 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 purchase of Common Stock
has 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, 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 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 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, modi
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