Exhibit 10.4

 

 

 

INTERCREDITOR AND SUBORDINATION AGREEMENT

dated as of October 4, 2016 between

Royal Bank of Canada,

as Priority Lien Agent,

and

Wilmington Trust, National Association,

as Subordinated Collateral Trustee

and Acknowledged and Agreed by

SandRidge Energy, Inc. and certain of its subsidiaries

 

 

THIS IS THE INTERCREDITOR AGREEMENT REFERRED TO IN (A) THE INDENTURE DATED AS OF
OCTOBER 4, 2016, AMONG SANDRIDGE ENERGY, INC., CERTAIN OF ITS SUBSIDIARIES FROM
TIME TO TIME PARTY THERETO AND WILMINGTON TRUST, NATIONAL ASSOCIATION, AS
TRUSTEE, (B) THE SENIOR REVOLVING CREDIT AGREEMENT DATED AS OF OCTOBER 4, 2016
AS AMENDED, SUPPLEMENTED, RESTATED OR OTHERWISE MODIFIED FROM TIME TO TIME,
AMONG SANDRIDGE ENERGY, INC., THE LENDERS PARTY THERETO FROM TIME TO TIME AND
ROYAL BANK OF CANADA, AS ADMINISTRATIVE AGENT, (C) THE OTHER NOTE DOCUMENTS
REFERRED TO IN SUCH INDENTURE AND (D) THE OTHER LOAN DOCUMENTS REFERRED TO IN
SUCH CREDIT AGREEMENT.

 

 

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TABLE OF CONTENTS

 

          Page   ARTICLE I    DEFINITIONS    Section 1.01    Construction;
Certain Defined Terms      1    ARTICLE II    SUBORDINATION    Section 2.01   
Subordination of Subordinated Debt to Priority Lien Debt      15    Section 2.02
   Subordinated Debt Payment Restrictions      16    Section 2.03    Relative
Priorities      16    Section 2.04    Prohibition on Marshalling, Etc      17   
Section 2.05    No New Liens      17    Section 2.06    Similar Collateral and
Agreements      17    Section 2.07    No Duties of Priority Lien Agent      18
   ARTICLE III    ENFORCEMENT RIGHTS; PURCHASE OPTION    Section 3.01   
Limitation on Enforcement Action      18    Section 3.02    Standstill Period;
Permitted Enforcement Action      19    Section 3.03    Insurance      20   
Section 3.04    Notification of Release of Collateral      20    Section 3.05   
No Interference; Payment Over      20    Section 3.06    Purchase Option      21
   ARTICLE IV    OTHER AGREEMENTS    Section 4.01    Release of Liens; Automatic
Release of Subordinated Liens      23    Section 4.02    Certain Agreements With
Respect to Insolvency or Liquidation Proceedings      24    Section 4.03   
Reinstatement      27    Section 4.04    Refinancings; Additional Priority Lien
Debt; Additional Subordinated Debt      27    Section 4.05    Amendments to
Subordinated Documents      29    Section 4.06    Legends      29   
Section 4.07    Subordinated Secured Parties Rights as Unsecured Creditors;
Judgment Lien Creditor      30    Section 4.08    Postponement of Subrogation   
  30    Section 4.09    Acknowledgment by the Secured Debt Representatives     
30    ARTICLE V    GRATUITOUS BAILMENT FOR PERFECTION OF CERTAIN SECURITY
INTERESTS    Section 5.01    General      30    Section 5.02    Deposit Accounts
     31    ARTICLE VI    APPLICATION OF PROCEEDS; DETERMINATION OF AMOUNTS   
Section 6.01    Application of Proceeds      31    Section 6.02    Determination
of Amounts      31    ARTICLE VII    NO RELIANCE; NO LIABILITY; OBLIGATIONS
ABSOLUTE; CONSENT OF GRANTORS; ETC.    Section 7.01    No Reliance; Information
     32   

 

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          Page   Section 7.02    No Warranties or Liability      32    Section
7.03    Obligations Absolute      33    Section 7.04    Grantors Consent      33
   ARTICLE VIII    REPRESENTATIONS AND WARRANTIES    Section 8.01   
Representations and Warranties of Each Party      33    Section 8.02   
Representations and Warranties of Each Representative      34    ARTICLE IX   
MISCELLANEOUS    Section 9.01    Notices      34    Section 9.02    Waivers;
Amendment      35    Section 9.03    Actions Upon Breach; Specific Performance
     35    Section 9.04    Parties in Interest      35    Section 9.05   
Survival of Agreement      35    Section 9.06    Counterparts      36    Section
9.07    Severability      36    Section 9.08    Governing Law; Jurisdiction;
Consent to Service of Process      36    Section 9.09    WAIVER OF JURY TRIAL   
  36    Section 9.10    Headings      37    Section 9.11    Conflicts      37   
Section 9.12    Provisions Solely to Define Relative Rights      37    Section
9.13    Certain Terms Concerning the Subordinated Collateral Trustee      37   
Section 9.14    Certain Terms Concerning the Priority Lien Agent and the
Subordinated Collateral Trustee      37    Section 9.15    Authorization of
Secured Agents      38    Section 9.16    Further Assurances      38    Section
9.17    Relationship of Secured Parties      38    Section 9.18    Springing
Event      38    Annex and Exhibits    Annex I    Exhibit A    Form of Priority
Confirmation Joinder    Exhibit B    Security Documents   

 

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INTERCREDITOR AND SUBORDINATION AGREEMENT, dated as of October 4, 2016 (as
amended, supplemented or otherwise modified from time to time in accordance with
the terms hereof, this “Agreement”), between Royal Bank of Canada, as
administrative agent for the Priority Lien Secured Parties referred to herein
(in such capacity, and together with its successors and assigns in such
capacity, the “Original Priority Lien Agent”), and Wilmington Trust, National
Association, as collateral trustee for the Subordinated Secured Parties referred
to herein (in such capacity, and together with its successors in such capacity,
the “Original Subordinated Collateral Trustee”) and agreed by SandRidge Energy,
Inc., a Delaware corporation (together with its successors and assigns,
“SandRidge”) and certain of its subsidiaries.

Reference is made to (a) the Priority Credit Agreement (defined below) and
(b) the Subordinated Notes Indenture (defined below) governing the Subordinated
Notes (defined below).

From time to time following the date hereof, SandRidge may (i) incur Additional
Priority Lien Obligations (defined below) to the extent permitted by the Secured
Debt Documents (defined below); in connection with any Additional Priority Lien
Obligations, SandRidge and the Priority Lien Agent (defined below) shall,
concurrently with the incurrence of such Additional Priority Lien Obligations,
enter into a Priority Lien Intercreditor Agreement (defined below) and (ii) with
respect to the Subordinated Notes and the Subordinated Obligations (each defined
below), in accordance with the terms of and to the extent permitted by the
Subordinated Notes Indenture, the Priority Lien Documents and subject to the
express conditions set forth in Section 4.04 of this Agreement, incur liens on
the Collateral securing such Subordinated Obligations on a second priority,
subordinated basis (any such Subordinated Obligations so secured, the
Subordinated Secured Obligations); in connection with the Subordinated Notes
Indenture and any Subordinated Secured Obligations, SandRidge and certain
Grantors (defined below), the Subordinated Notes Trustee (defined below) and the
Subordinated Collateral Trustee (defined below) shall, concurrently with the
incurrence of such Subordinated Secured Obligations, enter into a Subordinated
Collateral Trust Agreement (defined below).

In consideration of the mutual agreements herein contained and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Priority Lien Agent (for itself and on behalf of the Priority
Lien Secured Parties) and the Subordinated Collateral Trustee (for itself and on
behalf of the Subordinated Secured Parties (defined below), if any) agree as
follows:

ARTICLE I

DEFINITIONS

Section 1.01 Construction; Certain Defined Terms. (a) The definitions of terms
herein shall apply equally to the singular and plural forms of the terms
defined. Whenever the context may require, any pronoun shall include the
corresponding masculine, feminine and neuter forms. The words “include,”
“includes” and “including” shall be deemed to be followed by the phrase “without
limitation.” The word “will” shall be construed to have the same meaning and
effect as the word “shall.” Unless the context requires otherwise, (i) any
reference herein to any agreement, instrument, other document, statute or
regulation shall be construed as referring to such agreement, instrument, other
document, statute or regulation as from time to time amended, supplemented or
otherwise modified, (ii) any reference herein to any Person shall be construed
to include such Person’s successors and assigns, but shall not be deemed to
include the subsidiaries of such Person unless express reference is made to such
subsidiaries, (iii) the words “herein,” “hereof and “hereunder,” and words of
similar import, shall be construed to refer to this Agreement in its entirety
and not to any particular provision hereof, (iv) all references herein to
Articles, Sections and Annexes shall be construed to refer to Articles, Sections
and Annexes of this Agreement, (v) unless otherwise expressly qualified herein,
the words “asset” and “property” shall be construed to have the same meaning and
effect and to refer to any and all tangible and intangible assets and
properties, including cash, securities, accounts and contract rights and
(vi) the term “or” is not exclusive.

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(b) All terms used in this Agreement that are defined in Article 1, 8 or 9 of
the New York UCC (whether capitalized herein or not) and not otherwise defined
herein have the meanings assigned to them in Article 1, 8 or 9 of the New York
UCC. If a term is defined in Article 9 of the New York UCC and another Article
of the UCC, such term shall have the meaning assigned to it in Article 9 of the
New York UCC.

(c) Unless otherwise set forth herein, all references herein to the Subordinated
Collateral Trustee shall be deemed to refer to the Subordinated Collateral
Trustee in its capacity as collateral trustee under the Subordinated Collateral
Trust Agreement.

(d) As used in this Agreement, the following terms have the meanings specified
below:

“Accounts” has the meaning assigned to such term in Section 3.01.

“Additional Priority Lien Debt Facility” means any indebtedness for which the
requirements of Section 4.04(b) of this Agreement have been satisfied, as
amended, restated, modified, renewed, refunded, restated, restructured,
increased, supplemented, replaced or refinanced in whole or in part from time to
time in accordance with each applicable Secured Debt Document; provided that
neither the Priority Credit Agreement nor any Priority Substitute Credit
Facility shall constitute an Additional Priority Lien Debt Facility at any time.

“Additional Priority Lien Documents” means the Additional Priority Lien Debt
Facility, the Priority Lien Intercreditor Agreement and the Additional Priority
Lien Security Documents.

“Additional Priority Lien Obligations” means, with respect to any Grantor, any
obligations of such Grantor owed to any Additional Priority Lien Secured Party
(or any of its Affiliates) in respect of the Additional Priority Lien Documents.

“Additional Priority Lien Secured Parties” means, at any time, the Priority Lien
Agent, the trustee, agent or other representative of the holders of any Series
of Priority Lien Debt who maintains the transfer register for such Series of
Priority Lien Debt, the beneficiaries of each indemnification obligation
undertaken by any Grantor under any Additional Priority Lien Document and each
other holder of, or obligee in respect of, any holder or lender pursuant to any
Series of Priority Lien Debt outstanding at such time; provided that the Credit
Agreement Secured Parties (other than the Priority Lien Agent) shall not be
deemed Additional Priority Lien Secured Parties.

“Additional Priority Lien Security Documents” means the Additional Priority Lien
Debt Facility (insofar as the same grants a Lien on the Collateral) and any
other security agreements, pledge agreements, collateral assignments, mortgages,
deeds of trust, collateral agency agreements, control agreements, or grants or
transfers for security, now existing or entered into after the date hereof,
executed and delivered by SandRidge or any other Grantor to the Priority Lien
Agent creating (or purporting to create) a Lien upon the Priority Lien
Collateral in favor of the Additional Priority Lien Secured Parties.

“Additional Subordinated Debt Facility” means any indebtedness for which the
requirements of Section 4.04(b) of this Agreement have been satisfied, as
amended, restated, modified, renewed, refunded, restated, restructured,
increased, supplemented, replaced or refinanced in whole or in part from time to
time in accordance with each applicable Secured Debt Document; provided that
neither the Subordinated Notes Indenture nor any Subordinated Substitute
Facility shall constitute an Additional Subordinated Debt Facility at any time.

 

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“Additional Subordinated Documents” means the Additional Subordinated Debt
Facility and the Additional Subordinated Security Documents.

“Additional Subordinated Obligations” means, with respect to any Grantor, any
obligations of such Grantor owed to any Additional Subordinated Secured Party
(or any of its Affiliates) in respect of the Additional Subordinated Documents.

“Additional Subordinated Secured Parties” means, at any time, the Subordinated
Collateral Trustee, the trustee, agent or other representative of the holders of
any Series of Subordinated Debt who maintains the transfer register for such
Series of Subordinated Debt, the beneficiaries of each indemnification
obligation undertaken by any Grantor under any Additional Subordinated Document
and each other holder of, or obligee in respect of, any holder or lender
pursuant to any Series of Subordinated Debt outstanding at such time; provided
that the Indenture Subordinated Secured Parties shall not be deemed Additional
Subordinated Secured Parties.

“Additional Subordinated Security Documents” means the Additional Subordinated
Debt Facility (insofar as the same grants a Lien on the Collateral) and any
other security agreements, pledge agreements, collateral assignments, mortgages,
deeds of trust, collateral agency agreements, control agreements, or grants or
transfers for security, now existing or entered into after the date hereof,
executed and delivered by SandRidge or any other Grantor creating (or purporting
to create) a Lien upon the Subordinated Collateral in favor of the Additional
Subordinated Secured Parties.

“Affiliate” means, with respect to any specified Person: (a) any other Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with such specified Person; (b) any other Person that owns,
directly or indirectly, 10% or more of the Voting Stock of such specified Person
(or any of such specified Person’s direct or indirect parent’s Voting Stock); or
(c) any other Person 10% or more of the Voting Stock of which is beneficially
owned or held directly or indirectly by such specified Person. For purposes of
this definition, “control” when used with respect to any specified Person means
the power to direct the management and policies of such Person, whether through
the ownership of voting securities, by contract or otherwise; and the terms
“controlling” and “under common control with” have meanings correlative to the
foregoing.

“Agreement” has the meaning assigned to such term in the preamble hereto.

“Bank Product” means each and any of the following bank services and products
provided to SandRidge or any other Grantor by any lender under the Priority
Credit Agreement or any Affiliate of any such lender: (a) commercial credit
cards; (b) stored value cards; and (c) Treasury Management Arrangements
(including controlled disbursement, automated clearinghouse transactions, return
items, overdrafts and interstate depository network services).

“Bank Product Obligations” means any and all obligations of SandRidge or any
other Grantor, whether absolute or contingent and howsoever and whensoever
created, arising, evidenced or acquired (including all renewals, extensions and
modifications thereof and substitutions therefor) in connection with any Bank
Product.

“Bankruptcy Code” means Title 11 of the United States Code.

 

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“Bankruptcy Law” means the Bankruptcy Code and any other liquidation,
conservatorship, bankruptcy, assignment for the benefit of creditors,
moratorium, administration, rearrangement, judicial management, receivership,
insolvency, reorganization (by way of voluntary arrangement, scheme of
arrangement or otherwise), or similar federal, state, or foreign debtor relief
laws (including under any applicable corporate statute) of the United States or
other applicable jurisdictions from time to time in effect.

“Business Day” means each day that is not a Saturday, Sunday or other day on
which banking institutions in Houston, Texas or in New York, New York are
authorized or required by law to close.

“Capital Stock” of any Person means any and all shares, units, interests,
participations, rights in or other equivalents (however designated) of such
Person’s capital stock, other equity interests whether now outstanding or issued
after the date hereof, partnership interests (whether general or limited),
limited liability company interests, any other interest or participation that
confers on a Person the right to receive a share of the profits and losses of,
or distributions of assets of, the issuing Person, including any Preferred
Stock, and any rights (other than debt securities or other indebtedness
convertible into Capital Stock), warrants or options exchangeable for or
convertible into such Capital Stock.

“Collateral” means all of the assets and property of any Grantor, whether real,
personal or mixed, constituting the Priority Lien Collateral and/or the
Subordinated Collateral, if any.

“Credit Agreement Debt” means the indebtedness under the Priority Credit
Agreement (including letters of credit and reimbursement obligations with
respect thereto) that was permitted to be incurred and secured under the
Priority Credit Agreement or any Additional Priority Lien Debt Facility (or as
to which the lenders under the Priority Credit Agreement obtained an Officer’s
Certificate at the time of incurrence to the effect that such indebtedness was
permitted to be incurred and secured by all applicable Secured Debt Documents)
and additional indebtedness under any Priority Substitute Credit Facility. For
purposes of this Agreement, indebtedness under the Priority Credit Agreement is
permitted to be incurred under the Subordinated Notes Indenture.

“Credit Agreement Documents” means the Priority Credit Agreement, the Credit
Agreement Security Documents, the other “Loan Documents” (as defined in the
Priority Credit Agreement) and all other loan documents, notes, guarantees,
instruments and agreements governing or evidencing, or executed or delivered in
connection with, any Priority Substitute Credit Facility.

“Credit Agreement Obligations” means the Credit Agreement Debt and all other
Obligations in respect of or in connection with Credit Agreement Debt including,
without limitation, the principal amount of all debts, claims and indebtedness
and accrued interest, fees, costs, and other charges incurred under the Priority
Credit Agreement and the other Credit Agreement Documents, whether incurred
before or after commencement of an Insolvency or Liquidation Proceeding, and
whether or not allowable in an Insolvency or Liquidation Proceeding together
with (a) any amendments, modifications, renewals or extensions thereof to the
extent not prohibited by the terms of this Agreement, (b) any interest accruing
thereon after the commencement of an Insolvency or Liquidation Proceeding,
without regard to whether or not such interest is an allowed claim, and
(c) Hedging Obligations and the Bank Product Obligations. For the avoidance of
doubt, Hedging Obligations shall only constitute Credit Agreement Obligations to
the extent that such Hedging Obligations are secured under the terms of the
Credit Agreement Documents. To the extent that any payment with respect to the
Credit Agreement Obligations (whether by or on behalf of SandRidge, as proceeds
of security, enforcement of any right of set-off, or otherwise) is declared to
be fraudulent or preferential in any respect, set aside, or required to be paid
to a debtor in possession, trustee, receiver, or similar Person, then the
obligation or part thereof originally intended to be satisfied will be deemed to
be reinstated and outstanding as if such payment had not occurred.

 

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“Credit Agreement Secured Parties” means, at any time, (a) the Priority Lien
Agent, (b) each lender or issuing bank under the Priority Credit Agreement,
(c) each holder, provider or obligee of any Hedging Obligations and Bank Product
Obligations that (i) is a lender under the Priority Credit Agreement or an
Affiliate (as defined herein or in the Priority Credit Agreement) thereof at the
time such Hedging Obligation or Bank Product Obligation is entered into or
(ii) is a holder, provider or obligee of Hedging Obligations and Bank Product
Obligations designated on Schedule 1.01A or 1.01B, respectively of the Priority
Credit Agreement, and, in the case of each of the foregoing clauses (i) and
(ii), is a secured party (or a party entitled to the benefits of the security)
under any Credit Agreement Document, (d) the beneficiaries of each
indemnification obligation undertaken by any Grantor under any Credit Agreement
Document, (e) each other Person that provides letters of credit, guarantees or
other credit support related thereto under any Credit Agreement Document and
(f) each other holder of, or obligee in respect of, any Credit Agreement
Obligations (including pursuant to a Priority Substitute Credit Facility), in
each case to the extent designated as a secured party (or a party entitled to
the benefits of the security) under any Credit Agreement Document outstanding at
such time.

“Credit Agreement Security Documents” means the Priority Credit Agreement
(insofar as the same grants a Lien on the Collateral), each agreement listed in
Part A of Exhibit B hereto, and any other security agreements, pledge
agreements, collateral assignments, mortgages, deeds of trust, control
agreements, or grants or transfers for security, now existing or entered into
after the date hereof, executed and delivered by SandRidge or any other Grantor
creating (or purporting to create) a Lien upon Collateral in favor of the
Priority Lien Agent (including any such agreements, assignments, mortgages,
deeds of trust and other documents or instruments associated with any Priority
Substitute Credit Facility).

“Credit Facilities” means one or more debt facilities (including, without
limitation, the Priority Credit Agreement), commercial paper facilities or other
debt instruments, indentures or agreements providing for revolving credit loans,
term loans, receivables financings (including through the sale of receivables to
the lenders or to special purpose entities formed to borrow from the lenders
against such receivables), letters of credit, capital markets financings and/or
private placements involving bonds or other debt securities, or other debt
obligations, in each case, as amended, restated, modified, renewed, refunded,
restructured, supplemented, replaced or refinanced from time to time in whole or
in part from time to time, including without limitation any amendment increasing
the amount of indebtedness incurred or available to be borrowed thereunder,
extending the maturity of any indebtedness incurred thereunder or contemplated
thereby or deleting, adding or substituting one or more parties thereto (whether
or not such added or substituted parties are banks or other institutional
lenders).

“DIP Financing” has the meaning assigned to such term in Section 4.02(b).

“DIP Financing Liens” has the meaning assigned to such term in Section 4.02(b).

“DIP Lenders” has the meaning assigned to such term in Section 4.02(b).

“Discharge of Priority Lien Obligations” means the occurrence of all of the
following:

(a) termination or expiration of all commitments to lend and to extend credit
(and to acquire participations in letters of credit and all obligations to
issue, amend, renew or extend letters of credit) that would constitute Priority
Lien Obligations;

(b) payment in full in cash of the principal of and interest (including interest
accruing on or after the commencement of any Insolvency or Liquidation
Proceeding, whether or not such interest would be allowed in such proceeding),
premium (if any), and expenses (including, without limitation, all professional
fees and expenses) on all Priority Lien Obligations (other than any undrawn
letters of credit);

 

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(c) discharge or cash collateralization (at the lower of (i) 105% of the
aggregate undrawn amount and (ii) the percentage of the aggregate undrawn amount
required for release of Liens under the terms of the applicable Priority Lien
Document) of all outstanding letters of credit constituting Priority Lien
Obligations;

(d) payment in full in cash of obligations in respect of Hedging Obligations
constituting Priority Lien Obligations (and, with respect to any particular
agreement regarding Hedging Obligations, termination of such agreement and
payment in full in cash of all obligations thereunder or such other arrangements
as have been made by the counterparty thereto (and communicated to the Priority
Lien Agent) pursuant to the terms of the Priority Credit Agreement);

(e) the provision of cash collateral to the applicable Priority Lien Secured
Parties in such amount as such Priority Lien Secured Parties determine is
reasonably necessary to secure such Priority Lien Secured Parties in respect of
any asserted or threatened (in writing) claims, demands, actions, suits,
proceedings, investigations, liabilities, fines, costs, penalties, or damages
for which any such Priority Lien Secured Parties may be entitled to
indemnification or reimbursement by any Obligor pursuant to the indemnification
or reimbursement provisions of the applicable Priority Lien Documents; and

(f) payment in full in cash of all other Priority Lien Obligations, including
without limitation, Bank Product Obligations, that are outstanding and unpaid at
the time the Priority Lien Debt is paid in full in cash (other than any
obligations for taxes, costs, indemnifications, reimbursements, damages and
other liabilities in respect of which no claim or demand for payment has been
made at or prior to such time, except to the extent provided for in the
preceding clause (e)).

provided that, if, at any time after the Discharge of Priority Lien Obligations
has occurred, SandRidge or any Grantor enters into any Priority Lien Document
evidencing a Priority Lien Obligation which incurrence is not prohibited by the
applicable Secured Debt Documents, then such Discharge of Priority Lien
Obligations shall automatically be deemed not to have occurred for all purposes
of this Agreement with respect to such new Priority Lien Obligations (other than
with respect to any actions taken as a result of the occurrence of such first
Discharge of Priority Lien Obligations), and, from and after the date on which
SandRidge designates such indebtedness as Priority Lien Debt in accordance with
this Agreement, the obligations under such Priority Lien Document shall
automatically and without any further action be treated as Priority Lien
Obligations for all purposes of this Agreement, including for purposes of the
Lien priorities and rights in respect of Collateral set forth in this Agreement,
any Subordinated Obligations shall be deemed to have been at all times
Subordinated Obligations and at no time Priority Lien Obligations. For the
avoidance of doubt, a Replacement as contemplated by Section 4.04(a) shall not
be deemed to cause a Discharge of Priority Lien Obligations. In the event that
any Priority Lien Obligations are modified and are paid, or to be paid, over
time pursuant to section 1129 of the Bankruptcy code or any similar provision
under another Bankruptcy Law, such Priority Lien Obligations shall be deemed to
be Discharged when the final payment is made, in cash, in respect of such Debt
and all obligations pursuant to such new Debt shall have been satisfied.

“Disposition” shall mean any sale, lease, exchange, assignment, license,
contribution, transfer or other disposition. “Dispose” shall have a correlative
meaning.

“Enforcement Action” means an action to:

(a) foreclose, execute, levy, or collect on, take possession or control of, sell
or otherwise realize upon (judicially or non-judicially), or lease, license or
otherwise dispose of (whether publicly or privately), Collateral, or otherwise
exercise or enforce remedial rights with respect to Collateral under the
Priority Lien Documents or the Subordinated Documents (including by way of
setoff, recoupment,

 

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notification of a public or private sale or other disposition pursuant to the
New York UCC or other applicable law, notification to account debtors,
notification to depositary banks under deposit account control agreements, or
exercise of rights under letters-in-lieu, bailee’s letter, landlord consents or
similar agreements or arrangements, if applicable);

(b) solicit bids from third Persons to conduct the liquidation or disposition of
Collateral or to engage or retain sales brokers, marketing agents, auctioneers,
investment bankers or other third Persons for the purposes of marketing,
promoting and selling Collateral;

(c) receive a transfer of Collateral in satisfaction of Debt or any other
Obligations secured thereby;

(d) otherwise enforce a security interest or exercise another right or remedy,
as a secured creditor or otherwise, pertaining to the Collateral at law, in
equity or pursuant to the Priority Lien Documents or Subordinated Documents
(including the commencement of applicable legal proceedings or other actions
with respect to all or any portion of the Collateral to facilitate the actions
described in the preceding clauses, and exercising voting rights in respect of
equity interests comprising Collateral);

(e) effect the disposition of Collateral by any Grantor (in lieu of a
foreclosure sale) after the occurrence and during the continuation of an Event
of Default (as defined in the Priority Credit Agreement or the Subordinated
Collateral Trust Agreement) with the consent of the Priority Lien Agent or the
Subordinated Collateral Trustee, as applicable;

(f) after the occurrence of an Event of Default under the Priority Credit
Agreement, obtain payment of, collect or realize upon any Subordinated Debt; or

(g) commence, or join in filing of a petition for commencement of, an Insolvency
or Liquidation Proceeding against any Obligor or the owner of Collateral.

provided that “Enforcement Action” shall not include any forbearance from the
exercise of any remedies by the Priority Lien Agent or any other Priority Lien
Secured Parties or by the Subordinated Collateral Trustee or any other
Subordinated Secured Parties, as the case may be.

“Governmental Authority” means the government of the United States or any other
nation, or any political subdivision thereof, whether state, provincial or
local, and any agency, authority, instrumentality, regulatory body, court,
central bank or other Person exercising executive, legislative, judicial,
taxing, regulatory or administrative powers or functions of or pertaining to
government.

“Grantor” means SandRidge, each other subsidiary of SandRidge that shall have
granted any Lien in favor of any of the Priority Lien Agent or the Subordinated
Collateral Trustee on any of its assets or properties to secure any of the
Secured Obligations.

“Hedging Obligations” means, with respect to any Grantor, the obligations of
such Grantor incurred in the normal course of business and consistent with past
practices and not for speculative purposes under:

(a) interest rate swap agreements, interest rate cap agreements and interest
rate collar agreements entered into with one or more financial institutions and
designed to protect such Grantor or any subsidiary thereof entering into the
agreement against fluctuations in interest rates with respect to indebtedness
incurred;

 

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(b) foreign exchange contracts and currency protection agreements entered into
with one or more financial institutions and designed to protect such Grantor or
any subsidiary thereof entering into the agreement against fluctuations in
currency exchanges rates with respect to indebtedness incurred;

(c) any commodity futures contract, commodity option or other similar agreement
or arrangement designed to protect against fluctuations in the price of oil,
natural gas or other commodities used, produced, processed or sold by that
Grantor or any subsidiary thereof at the time; and

(d) other agreements or arrangements designed to protect such Grantor or any
subsidiary thereof against fluctuations in interest rates, commodity prices or
currency exchange rates.

“Indebtedness” has the meaning set forth in the Priority Credit Agreement as in
effect on the date hereof, and any component definition used therein has the
meaning set forth in the Priority Credit Agreement as of the date hereof.

“Indenture Subordinated Documents” means the Subordinated Notes Indenture, the
Subordinated Indenture Notes, the Indenture Subordinated Security Documents and
all other loan documents, notes, guarantees, instruments and agreements
governing or evidencing the Indenture Subordinated Obligations or any
Subordinated Substitute Facility.

“Indenture Subordinated Obligations” means, with respect to any Grantor, any
obligations of such Grantor owed to any Indenture Subordinated Secured Party (or
any of its Affiliates) in respect of the Indenture Subordinated Documents.

“Indenture Subordinated Secured Parties” means, at any time, the Subordinated
Notes Trustee, the Subordinated Collateral Trustee, the trustees, agents and
other representatives of the holders of the Subordinated Indenture Notes
(including any holders of notes pursuant to supplements executed in connection
with the issuance of any Series of Subordinated Debt under the Subordinated
Notes Indenture) who maintain the transfer register for such Subordinated
Indenture Notes or such Series of Subordinated Debt, the beneficiaries of each
indemnification obligation undertaken by any Grantor under any Indenture
Subordinated Document and each other holder of, or obligee in respect of, any
Subordinated Indenture Notes, any holder or lender pursuant to any Indenture
Subordinated Document outstanding at such time; provided that the Additional
Subordinated Secured Parties shall not be deemed Indenture Subordinated Secured
Parties.

“Indenture Subordinated Security Documents” means the Subordinated Notes
Indenture (insofar as the same grants a Lien on the Collateral), the
Subordinated Collateral Trust Agreement, each agreement listed in Part B of
Exhibit B hereto and any other security agreements, pledge agreements,
collateral assignments, mortgages, deeds of trust, collateral agency agreements,
control agreements, or grants or transfers for security, now existing or entered
into after the date hereof, executed and delivered by SandRidge or any other
Grantor creating (or purporting to create) a Lien upon Collateral in favor of
the Subordinated Collateral Trustee (including any such agreements, assignments,
mortgages, deeds of trust and other documents or instruments associated with any
Subordinated Substitute Facility).

“Insolvency or Liquidation Proceeding” means:

(a) any case commenced by or against SandRidge or any other Grantor under the
Bankruptcy Code or any other Bankruptcy Law, any other proceeding for the
reorganization, recapitalization or adjustment or marshalling of the assets or
liabilities of SandRidge or any other Grantor, any receivership or assignment
for the benefit of creditors relating to SandRidge or any other Grantor or any
similar case or proceeding relative to SandRidge or any other Grantor or its
creditors, as such, in each case whether or not voluntary;

 

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(b) any liquidation, dissolution, marshalling of assets or liabilities or other
winding up of or relating to SandRidge or any other Grantor, in each case
whether or not voluntary and whether or not involving bankruptcy or insolvency;
or

(c) any other proceeding of any type or nature in which substantially all claims
of creditors of SandRidge or any other Grantor are determined and any payment or
distribution is or may be made on account of such claims.

“Lien” means any mortgage or deed of trust, charge, pledge, lien (statutory or
otherwise), privilege, security interest, assignment, deposit, arrangement,
hypothecation, claim, preference, priority or other encumbrance for security
purposes upon or with respect to any property of any kind (including any
conditional sale, capital lease or other title retention agreement, any leases
in the nature thereof, and any agreement to give any security interest), real or
personal, movable or immovable, now owned or hereafter acquired.

“Material Adverse Effect” means a material adverse change in, or a material
adverse effect upon, the operations, earnings, business, assets, properties,
liabilities, condition (financial or otherwise) or prospects of the Company and
its Subsidiaries, taken as a whole; provided, without limiting the generality of
the foregoing, that the Company’s entry into bankruptcy proceedings shall be
deemed to constitute a “Material Adverse Effect.”

“New York UCC” means the Uniform Commercial Code as from time to time in effect
in the State of New York.

“Obligations” means any principal (including reimbursement obligations and
obligations to provide cash collateral with respect to letters of credit whether
or not drawn), interest (including, to the extent legally permitted, all
interest accrued thereon after the commencement of any Insolvency or Liquidation
Proceeding at the rate, including any applicable post-default rate even if such
interest is not enforceable, allowable or allowed as a claim in such
proceeding), premium (if any), fees, indemnifications, reimbursements, expenses
and other liabilities payable under the documentation governing any
indebtedness.

“Officer” means, with respect to any Person, the Chairman of the Board, the
Chief Executive Officer, the President, the Chief Operating Officer, the Chief
Financial Officer, the Treasurer, any Assistant Treasurer, the Controller, the
Secretary, any Senior Vice President, any Vice President or any Assistant Vice
President of such Person.

“Officer’s Certificate” means a certificate signed on behalf of SandRidge by any
Officer of SandRidge.

“Original Priority Lien Agent” has the meaning assigned to such term in the
preamble hereto.

“Original Subordinated Collateral Trustee” has the meaning assigned to such term
in the preamble hereto.

“Permitted Subordinated Debt Payments” means any payment permitted by
Section 7.15 of the Priority Credit Agreement and any similar restriction in any
successor agreement no more favorable to the Subordinated Debt than as provided
in such Section 7.15; provided that nothing shall prevent the Subordinated Debt
from paying interest-in-kind or making a claim in any Insolvency or Liquidation
Proceeding.

 

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“Person” means an individual, a corporation, a partnership, a limited liability
company, an association, a trust or any other entity, including a government or
political subdivision or an agency or instrumentality thereof.

“Preferred Stock” means, with respect to any Person, any Capital Stock of any
class or classes (however designated) which is preferred as to the payment of
dividends or distributions, or as to the distribution of assets upon any
voluntary or involuntary liquidation or dissolution of such Person, over the
Capital Stock of any other class in such Person.

“Priority Confirmation Joinder” means an agreement substantially in the form of
Exhibit. A.

“Priority Credit Agreement” means that certain Credit Agreement, dated as of
October 4, 2016, by and among SandRidge, as borrower, the Original Priority Lien
Agent, and the other lenders party thereto, as such agreement, in whole or in
part, in one or more instances, may be amended, restated, renewed, extended,
substituted, refinanced, restructured, replaced, supplemented or otherwise
modified from time to time (including, without limitation, any successive
amendments, restatements, renewals, extensions, substitutions, foregoing) and
any credit agreement, loan agreement, note agreement, promissory note, indenture
or any other agreement or instrument evidencing or governing the terms of any
Priority Substitute Credit Facility.

“Priority Lien” means a Lien granted by SandRidge or any other Grantor in favor
of the Priority Lien Agent, at any time, upon any Property of SandRidge or such
Grantor to secure Priority Lien Obligations (including Liens on such Collateral
under the security documents associated with any Priority Substitute Credit
Facility).

“Priority Lien Agent” means (a) the Original Priority Lien Agent, and, from and
after the date of execution and delivery of a Priority Substitute Credit
Facility, the agent, collateral agent, trustee or other representative of the
lenders or holders of the indebtedness and other Obligations evidenced
thereunder or governed thereby, in each case, together with its successors in
such capacity and (b) any collateral trustee or agent in respect of any
Additional Priority Lien Debt Facility pursuant to the Priority Lien
Intercreditor Agreement.

“Priority Lien Collateral” shall mean all “Collateral”, as defined in the
Priority Credit Agreement or any other Priority Lien Document, and any other
assets of any Grantor now or at any time hereafter subject to Liens which
secure, but only to the extent securing, any Priority Lien Obligation.

“Priority Lien Debt” means the Credit Agreement Debt and all additional
indebtedness incurred under any Additional Priority Lien Documents and with
respect to which the requirements of Section 4.04(b) have been satisfied, and
all indebtedness incurred under any Priority Substitute Credit Facility.

“Priority Lien Documents” means the Credit Agreement Documents and the
Additional Priority Lien Documents.

“Priority Lien Intercreditor Agreement” means from and after the date of
execution and delivery of any Additional Priority Lien Debt Facility and/or a
Priority Substitute Credit Facility, an intercreditor agreement entered into
among SandRidge, the other Grantors, the Priority Lien Agent and the other
Priority Lien Representatives, as amended, restated, adjusted, waived, renewed,
extended, supplemented or otherwise modified from time to time, in accordance
with each applicable Priority Lien Document.

 

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“Priority Lien Obligations” means the Credit Agreement Obligations, Additional
Priority Lien Obligations and, in each case, all other Obligations in respect
thereof. Notwithstanding any other provision hereof, the term “Priority Lien
Obligations” will include accrued interest, fees, costs and other charges
incurred under the Priority Lien Documents, whether incurred before or after
commencement of an Insolvency or Liquidation Proceeding.

“Priority Lien Representative” means (a) in the case of the Priority Credit
Agreement, the Priority Lien Agent, and (b) in the case of any other Series of
Priority Lien Debt, the trustee, agent or representative of the holders of such
Series of Priority Lien Debt who (i) is appointed as a Priority Lien
Representative (for purposes related to the administration of the security
documents) pursuant to the indenture, credit agreement or other agreement
governing such Series of Priority Lien Debt, together with its successors in
such capacity, and (ii) has executed the Priority Lien Intercreditor Agreement
or become party to the Priority Lien Intercreditor Agreement by executing a
joinder in the form required under the Priority Lien Intercreditor Agreement.

“Priority Lien Secured Parties” means, at any time, the Credit Agreement Secured
Parties and the Additional Priority Lien Secured Parties at such time.

“Priority Lien Security Documents” means the Credit Agreement Security Documents
and the Additional Priority Lien Security Documents.

“Priority Substitute Credit Facility” means any Credit Facility with respect to
which the requirements contained in Section 4.04(a) of this Agreement have been
satisfied and that Replaces the Priority Credit Agreement then in existence. For
the avoidance of doubt, no Priority Substitute Credit Facility shall be required
to be a revolving or asset-based loan facility and may be a facility evidenced
or governed by a credit agreement, loan agreement, note agreement, promissory
note, indenture or any other agreement or instrument; provided that any Priority
Lien securing such Priority Substitute Credit Facility shall be subject to the
terms of this Agreement for all purposes (including the lien priorities as set
forth herein as of the date hereof).

“Property” means any interest in any kind of property or asset, whether real,
personal or mixed, or tangible or intangible, including, without limitation,
cash, securities, accounts and contract rights.

“Recovery” has the meaning assigned to such term in Section 4.03.

“Replaces” means, (a) in respect of any agreement with reference to the Priority
Credit Agreement or the Priority Lien Obligations or any Priority Substitute
Credit Facility, that such agreement refunds, refinances, increases or replaces
the Priority Credit Agreement, the Priority Lien Obligations or such Priority
Substitute Credit Facility in whole (in a transaction that is in compliance with
Section 4.04(a)) and that all commitments thereunder are terminated, or, to the
extent permitted by the terms of the Priority Credit Agreement, Priority Lien
Obligations or such Priority Substitute Credit Facility, in part, and (b) in
respect of any agreement with reference to the Subordinated Documents, the
Subordinated Obligations or any Subordinated Substitute Facility, that such
indebtedness refunds, refinances, increases or replaces the Subordinated
Documents, the Subordinated Obligations or such Subordinated Substitute Facility
in whole (in a transaction that is in compliance with Section 4.04(a)) and that
all commitments thereunder are terminated, or, to the extent permitted by the
terms of the Subordinated Documents, the Subordinated Obligations or such
Subordinated Substitute Facility, in part. “Replace,” “Replaced” and
“Replacement” shall have correlative meanings.

“SandRidge” has the meaning assigned to such term in the preamble hereto.

 

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“Secured Debt Documents” means the Priority Lien Documents and the Subordinated
Documents.

“Secured Debt Representative” means the Priority Lien Agent and the Subordinated
Collateral Trustee.

“Secured Obligations” means the Priority Lien Obligations and the Subordinated
Obligations.

“Secured Parties” means the Priority Lien Secured Parties and the Subordinated
Secured Parties.

“Security Documents” means the Priority Lien Security Documents and the
Subordinated Security Documents.

“Series of Priority Lien Debt” means, severally, the Priority Credit Agreement
and each other issue or series of Priority Lien Debt (including any Additional
Priority Lien Debt Facility) for which a single transfer register is maintained.

“Series of Subordinated Debt” means, severally, the Subordinated Indenture Notes
and each other issue or series of Subordinated Debt (including any Additional
Subordinated Debt Facility) for which a single transfer register is maintained.

“Series of Secured Debt” means each Series of Priority Lien Debt and each Series
of Subordinated Debt.

“Specified Litigation Event” means (i)(a) the entry of an order by a court of
competent jurisdiction denying summary judgment to the Company or its Affiliates
or (b) the expiration of the time period in which the Company or its Affiliates
may move for summary judgment, in either case, in a class action lawsuit against
the Company (other than such a lawsuit initiated by any Subordinated Secured
Party or Affiliate of a Subordinated Secured Party) that is reasonably expected
to result in a Material Adverse Effect under the relevant Subordinated
Documents.

“Springing Event” shall mean the creation of a Subordinated Lien on the
Collateral to secure up to $100,000,000 in aggregate principal amount, subject
to increase pursuant to Section 9.18(c), of the obligations of the Company under
the relevant Subordinated Debt Documents and guarantee obligations of any
subsidiary of the Company providing a guarantee of such Subordinated Debt upon
the earlier to occur of (i) the Company’s good faith determination that the
Specified Litigation Event has occurred or (ii) the receipt of written notice
from holders or lenders constituting at least two-thirds in aggregate principal
amount of the relevant Subordinated Obligations then outstanding (or the
Subordinated Representative acting pursuant to the direction of such holders or
lenders) that the Specified Litigation Event has occurred, the Springing Event
shall be deemed to have occurred.

“Springing Event Notice” has the meaning assigned to such term in Section 9.18.

“Standstill Period” has the meaning assigned to such term in Section 3.02(a)(i).

“Subordinated Collateral” shall mean all “Collateral”, as defined in any
Subordinated Document, and any other assets of any Grantor now or at any time
hereafter subject to Liens which secure, but only to the extent securing, any
Subordinated Obligations.

“Subordinated Collateral Trust Agreement” means the Collateral Trust Agreement,
dated as of October 4, among SandRidge, the other Grantors from time to time
party thereto, the Subordinated Notes

 

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Trustee, the other Subordinated Representatives from time to time party thereto
and the Subordinated Collateral Trustee, as amended, restated, adjusted, waived,
renewed, extended, supplemented or otherwise modified from time to time, in
accordance with each applicable Subordinated Document.

“Subordinated Collateral Trustee” means the Original Subordinated Collateral
Trustee, and, from and after the date of execution and delivery of a
Subordinated Substitute Facility, the agent, collateral agent, trustee or other
representative of the lenders or other holders of the indebtedness and other
obligations evidenced thereunder or governed thereby, in each case, together
with its successors in such capacity.

“Subordinated Debt” means the indebtedness under the Subordinated Indenture
Notes issued on the date hereof and guarantees thereof and all additional
indebtedness incurred under any Additional Subordinated Documents, in each case,
that was permitted to be incurred and secured in accordance with the Secured
Debt Documents (or as to which the lenders or other financing sources under the
applicable Subordinated Documents obtained an Officer’s Certificate at the time
of incurrence to the effect that such indebtedness was permitted to be incurred
and secured by all applicable Secured Debt Documents) and with respect to which
the requirements of Section 4.04(b) have been (or are deemed) satisfied, and all
indebtedness incurred under any Subordinated Substitute Facility.

“Subordinated Documents” means the Indenture Subordinated Documents and the
Additional Subordinated Documents.

“Subordinated Indenture Notes” means (i) the Subordinated Notes due 2020 issued
under the Subordinated Notes Indenture.

“Subordinated Lien” means a Lien granted by a Subordinated Document to the
Subordinated Collateral Trustee, at any time, upon any Collateral by any Grantor
to secure Subordinated Obligations (including Liens on such Collateral under the
security documents associated with any Subordinated Substitute Facility);
provided, that in no event shall any Subordinated Lien be granted unless a
Springing Event has occurred.

“Subordinated Notes Indenture” means the Indenture, dated as of October 4, 2016,
among SandRidge, the Grantors party thereto from time to time and the
Subordinated Notes Trustee, as amended, restated, adjusted, waived, renewed,
extended, supplemented or otherwise modified from time to time in accordance
with the terms hereof (including any supplements executed in connection with the
issuance of any Series of Subordinated Debt under the Subordinated Notes
Indenture) unless restricted by the terms of this Agreement, and any credit
agreement, loan agreement, note agreement, promissory note, indenture or any
other agreement or instrument evidencing or governing the terms of any
Subordinated Substitute Facility.

“Subordinated Notes Trustee” means the Original Subordinated Notes Trustee, and,
from and after the date of execution and delivery of a Subordinated Substitute
Facility, the agent, collateral agent, trustee or other representative of the
lenders or other holders of the indebtedness and other obligations evidenced
thereunder or governed thereby, together with its successors in such capacity.

“Subordinated Obligations” means Subordinated Debt and all other Obligations in
respect thereof. Notwithstanding any other provision hereof, the term
“Subordinated Obligations” will include accrued interest, fees, costs and other
charges incurred under the Subordinated Notes Indenture and the other
Subordinated Documents, whether incurred before or after commencement of an
Insolvency or Liquidation Proceeding and whether or not allowable in an
Insolvency or Liquidation Proceeding.

 

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“Subordinated Purchasers” has the meaning assigned to such term in
Section 3.06(a).

“Subordinated Representative” means (a) in the case of the Subordinated
Indenture Notes, the Subordinated Notes Trustee, and (b) in the case of any
other Series of Subordinated Debt, the trustee, agent or representative of the
holders of such Series of Subordinated Debt who (i) is appointed as a
Subordinated Representative (for purposes related to the administration of the
security documents) pursuant to the indenture, credit agreement or other
agreement governing such Series of Subordinated Debt, together with its
successors in such capacity, and (ii) has become party to the Subordinated
Collateral Trust Agreement by executing a joinder in the form required under the
Subordinated Collateral Trust Agreement.

“Subordinated Secured Parties” means the Indenture Subordinated Secured Parties
and the Additional Subordinated Secured Parties.

“Subordinated Security Documents” means the Indenture Subordinated Security
Documents and the Additional Subordinated Security Documents.

“Subordinated Substitute Facility” means any facility with respect to which the
requirements contained in Section 4.04(a) of this Agreement have been satisfied
and that is permitted to be incurred pursuant to the Priority Lien Documents,
the proceeds of which are used to, among other things, Replace the Subordinated
Notes Indenture and/or any Additional Subordinated Debt Facility then in
existence. For the avoidance of doubt, no Subordinated Substitute Facility shall
be required to be evidenced by notes or other instruments and may be a facility
evidenced or governed by a credit agreement, loan agreement, note agreement,
promissory note, indenture or any other agreement or instrument; provided that
any such Subordinated Substitute Facility shall be subject to the terms of this
Agreement for all purposes (including the lien priority as set forth herein as
of the date hereof) as the other Liens securing the Subordinated Obligations are
subject to under this Agreement.

“subsidiary” of a Person means:

(a) any corporation more than 50% of the outstanding voting power of the Voting
Stock of which is owned or controlled, directly or indirectly, by such Person or
by one or more other subsidiaries of such Person, or by such Person and one or
more other subsidiaries thereof, or

(b) any limited partnership of which such Person or any subsidiary of such
Person is a general partner, or

(c) any other Person in which such Person, or one or more other subsidiaries of
such Person, or such Person and one or more other subsidiaries, directly or
indirectly, has more than 50% of the outstanding Capital Stock or has the power,
by contract or otherwise, to direct or cause the direction of the policies,
management and affairs thereof.

“Treasury Management Arrangement” means any agreement or other arrangement
governing the provision of treasury or cash management services, including
deposit accounts, overdraft, credit or debit card, funds transfer, automated
clearinghouse, zero balance accounts, returned check concentration, controlled
disbursement, lockbox, account reconciliation and reporting and trade finance
services and other cash management services.

“Voting Stock” of a Person means Capital Stock of such Person of the class or
classes pursuant to which the holders thereof have the general voting power
under ordinary circumstances to elect at least a majority of the board of
directors, managers or trustees of such Person (irrespective of whether or not
at the time Capital Stock of any other class or classes shall have or might have
voting power by reason of the happening of any contingency).

 

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ARTICLE II

SUBORDINATION

Section 2.01 Subordination of Subordinated Debt to Priority Lien Debt.

(a) SandRidge covenants and agrees, and each of the Subordinated Collateral
Trustee and each Subordinated Secured Party by its acceptance of the
Subordinated Documents (whether upon original issue or upon transfer or
assignment) likewise covenants and agrees, notwithstanding anything to the
contrary contained in any of the Subordinated Documents, that the payment of any
and all of the Subordinated Debt shall be subordinate and subject in right and
time of payment, to the extent and in the manner hereinafter set forth, to the
prior indefeasible payment in full in cash of all Priority Lien Debt and all the
termination of all commitments to lend under the Priority Lien Documents,
subject to Section 2.02. Each holder of Priority Lien Debt, whether now
outstanding or hereafter created, incurred, assumed or guaranteed, shall be
deemed to have acquired Priority Lien Debt in reliance upon the provisions
contained in this Agreement.

(b) In the event of any Insolvency or Liquidation Proceeding involving any
Credit Party:

(i) All Priority Lien Debt shall first be indefeasibly paid in full in cash and
all commitments to lend under the Priority Lien Documents shall have been
terminated before any Distribution, whether in cash, securities or other
property, shall be made on account of any Subordinated Debt.

(ii) Any Distribution, whether in cash, securities or other property which would
otherwise, but for the terms hereof, be payable or deliverable in respect of the
Subordinated Debt shall be paid or delivered directly to the Priority Lien Agent
(to be held and/or applied by the Priority Lien Agent in accordance with the
terms of the applicable Priority Lien Documents) until all Priority Lien Debt is
indefeasibly paid in full in cash and all commitments to lend under the Priority
Lien Documents have terminated. Each of the Subordinated Collateral Trustee and
each Subordinated Secured Party irrevocably authorizes, empowers and directs any
debtor, debtor in possession, receiver, trustee, liquidator, custodian,
conservator or other Person having authority, to pay or otherwise deliver all
such Distributions to the Priority Lien Agent. Each of the Subordinated
Collateral Trustee and each Subordinated Secured Party also irrevocably
authorizes and empowers the Priority Lien Agent, in the name of each such
Person, to demand, sue for, collect and receive any and all such Distributions.

(iii) Each of the Subordinated Collateral Trustee and each Subordinated Secured
Party agrees not to (and hereby waives any right to) initiate, prosecute or
participate (or support any other Person in initiating, prosecuting or
participating) in any claim, action or other proceeding challenging the
enforceability or validity of the Priority Lien Debt or the perfection or
priority of any Liens securing the Priority Lien Debt, including without
limitation, any Lien on the Collateral securing the Priority Lien Debt.

(iv) The Priority Lien Debt shall continue to be treated as Priority Lien Debt
and the provisions of this Agreement shall continue to govern the relative
rights and priorities of the holders of the Priority Lien Debt even if all or
part of the Senior Debt or any security interests securing the Priority Lien
Debt are subordinated, set aside, avoided, invalidated or disallowed in
connection with any such Insolvency and Liquidation Proceeding, and this
Agreement shall be reinstated if at any time any payment of any of the Prior
Lien Debt is rescinded or must otherwise be returned by any holder of the
Priority Lien Debt or any representative of such holder.

 

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Section 2.02 Subordinated Debt Payment Restrictions.

(a) Notwithstanding the terms of the Subordinated Documents, SandRidge hereby
agrees that it may not make, and the Subordinated Collateral Trustee for itself
and on behalf of each Subordinated Secured Party hereby agrees that it will not
accept, any Distribution with respect to the Subordinated Debt (including
without limitation, any Distribution in respect of any put or repurchase of
warrants or similar instruments) until the Priority Lien Debt is indefeasibly
paid in full in cash and all commitments to lend under the Priority Lien
Documents have terminated, other than Permitted Subordinated Debt Payments,
subject to the terms of this Agreement.

(b) If any Distribution on account of the Subordinated Debt not permitted to be
made by SandRidge or accepted by any Subordinated Secured Creditor under this
Agreement is made and received by any Subordinated Secured Creditor, such
Distribution shall not be commingled with any of the assets of such Subordinated
Secured Creditor, shall be held in trust by such Subordinated Secured Creditor
for the benefit of the holder of the Priority Lien Debt and shall be promptly
paid over to the Priority Lien Agent for application (in accordance with the
relevant Priority Lien Documents) to the payment of the Priority Lien Debt then
remaining unpaid, until all of the Priority Lien Debt is indefeasibly paid in
full in cash and all commitments to lend under the Priority Lien Documents have
terminated.

Section 2.03 Relative Priorities. (a) The grant of the Priority Liens pursuant
to the Priority Lien Documents and the grant of the Subordinated Liens, if any,
pursuant to the Subordinated Documents create two separate and distinct Liens on
the Collateral; provided, however, that no Subordinated Liens shall be granted
unless and until a Springing Event occurs and such Subordinated Liens are
granted in accordance with Section 4.04.

(b) Notwithstanding anything contained in this Agreement, the Priority Lien
Documents, the Subordinated Documents or any other agreement or instrument or
operation of law to the contrary, or any other circumstance whatsoever and
irrespective of (i) how a Lien was acquired (whether by grant, possession,
statute, operation of law, subrogation, or otherwise), (ii) the time, manner, or
order of the grant, attachment or perfection of a Lien, (iii) any conflicting
provision of the New York UCC or other applicable law, (iv) any defect in, or
non-perfection, setting aside, or avoidance of, a Lien or a Priority Lien
Document or a Subordinated Document, (v) the modification of a Priority Lien
Obligation or a Subordinated Obligation, or (vi) the subordination of a Lien on
Collateral securing a Priority Lien Obligation to a Lien securing another
obligation of SandRidge or other Person that is permitted under the Priority
Lien Documents as in effect on the date hereof or securing a DIP Financing and
the Subordinated Collateral Trustee, on behalf of itself and the other
Subordinated Secured Parties, hereby agrees that (i) any Priority Lien on any
Collateral now or hereafter held by or for the benefit of any Priority Lien
Secured Party shall be senior in right, priority, operation, effect and all
other respects to any and all Subordinated Liens on any Collateral and (ii) any
Subordinated Lien on any Collateral now or hereafter held by or for the benefit
of any Subordinated Secured Party shall be junior and subordinate in right,
priority, operation, effect and all other respects to any and all Priority Liens
on any Collateral.

(c) It is acknowledged that (i) the aggregate amount of the Priority Lien
Obligations may be increased from time to time pursuant to the terms of the
Priority Lien Documents, (ii) a portion of the Priority Lien Obligations
consists or may consist of indebtedness that is revolving in nature, and the
amount thereof that may be outstanding at any time or from time to time may be
increased or reduced and subsequently reborrowed, and (iii) (A) the Priority
Lien Documents may be replaced, restated,

 

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supplemented, restructured or otherwise amended or modified from time to time
and (B) the Priority Lien Obligations may be increased, extended, renewed,
replaced, restated, supplemented, restructured, repaid, refunded, refinanced or
otherwise amended or modified from time to time, in the case of the foregoing
(A) and (B) all without affecting the subordination and lien priorities of the
Subordinated Debt and Subordinated Liens provided hereunder or the provisions of
this Agreement defining the relative rights of the Priority Lien Secured Parties
and the Subordinated Secured Parties. The lien priorities provided for herein
shall not be altered or otherwise affected by any amendment, modification,
supplement, extension, increase, renewal, restatement or Replacement of either
the Priority Lien Obligations (or any part thereof) or the Subordinated
Obligations (or any part thereof), by the release of any Collateral or of any
guarantees for any Priority Lien Obligations or by any action that any Secured
Debt Representative or Secured Party may take or fail to take in respect of any
Collateral.

Section 2.04 Prohibition on Marshalling, Etc. Until the Discharge of Priority
Lien Obligations, the Subordinated Collateral Trustee will not assert any
marshalling, appraisal, valuation, or other similar right that may otherwise be
available to a junior secured creditor.

Section 2.05 No New Liens. The parties hereto agree that, so long as the
Discharge of Priority Lien Obligations has not occurred, none of the Grantors
shall, nor shall any Grantor permit any of its subsidiaries to, (i) grant or
permit any additional Liens (other than, for the avoidance of doubt, Liens
granted upon the occurrence of a Springing Event) on any asset of a Grantor to
secure any Subordinated Obligation, or take any action to perfect any additional
Liens (other than, for the avoidance of doubt, Liens granted upon the occurrence
of a Springing Event), unless it has granted, or substantially concurrently
therewith grants (or offers to grant), a Lien on such asset of such Grantor to
secure the Priority Lien Obligations and has taken all actions required to
perfect such Liens; provided, however, the refusal or inability of the Priority
Lien Agent to accept such Lien will not prevent the Subordinated Collateral
Trustee from taking the Lien or (ii) grant or permit any additional Liens on any
asset of a Grantor to secure any Priority Lien Obligation, or take any action to
perfect any additional Liens, unless it has granted, or substantially
concurrently therewith grants (or offers to grant), a Lien on such asset of such
Grantor to secure the Subordinated Obligations and has taken all actions
required to perfect such Liens; provided, however, the refusal or inability of
the Subordinated Collateral Trustee to accept such Lien will not prevent the
Priority Lien Agent from taking the Lien, with each such Lien as described in
this Section 2.05 to be subject to the provisions of this Agreement. To the
extent that the provisions of the immediately preceding sentence are not
complied with for any reason, without limiting any other right or remedy
available to the Priority Lien Agent, the other Priority Lien Secured Parties,
the Subordinated Collateral Trustee or the other Subordinated Secured Parties,
the Subordinated Collateral Trustee, for itself and on behalf of the other
Subordinated Secured Parties agrees that any amounts received by or distributed
to any Subordinated Secured Party pursuant to or as a result of any Lien granted
in contravention of this Section 2.05 shall be subject to Section 3.05(b).

Section 2.06 Similar Collateral and Agreements. The parties hereto acknowledge
and agree that it is their intention that the Priority Lien Collateral and the
Subordinated Collateral be identical. In furtherance of the foregoing, the
parties hereto agree (a) to cooperate in good faith in order to determine, upon
any reasonable request by the Priority Lien Agent or the Subordinated Collateral
Trustee, the specific assets included in the Priority Lien Collateral and the
Subordinated Collateral, the steps taken to perfect the Priority Liens and the
Subordinated Liens thereon and the identity of the respective parties obligated
under the Priority Lien Documents and the Subordinated Documents in respect of
the Priority Lien Obligations and the Subordinated Obligations, respectively,
(b) that the Subordinated Security Documents creating Liens on the Collateral
shall be in all material respects the same forms of documents as the respective
Priority Lien

 

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Security Documents creating Liens on the Collateral other than (i) with respect
to the priority nature of the Liens created thereunder in such Collateral,
(ii) such modifications to such Subordinated Security Documents which are less
restrictive than the corresponding Priority Lien Security Documents,
(iii) provisions in the Subordinated Security Documents which are solely
applicable to the rights and duties of the Subordinated Secured Parties, and
(iv) such deletions or modifications of representations, warranties and
covenants as are customary with respect to security documents establishing Liens
securing publicly traded debt securities and (c) that at no time shall there be
any Grantor that is an obligor in respect of the Subordinated Obligations that
is not also an obligor in respect of the Priority Lien Obligations.

Section 2.07 No Duties of Priority Lien Agent. The Subordinated Collateral
Trustee, for itself and on behalf of each Subordinated Secured Party,
acknowledges and agrees that neither the Priority Lien Agent nor any other
Priority Lien Secured Party shall have any duties or other obligations to any
such Subordinated Secured Party with respect to any Collateral, other than to
transfer to the Subordinated Collateral Trustee any remaining Collateral and any
proceeds of the sale or other Disposition of any such Collateral remaining in
its possession following the associated Discharge of Priority Lien Obligations,
in each case without representation or warranty on the part of the Priority Lien
Agent or any Priority Lien Secured Party. In furtherance of the foregoing, each
Subordinated Secured Party acknowledges and agrees that until the Discharge of
Priority Lien Obligations (subject to the terms of Section 3.02, including the
rights of the Subordinated Secured Parties following the expiration of any
applicable Standstill Period), the Priority Lien Agent shall be entitled, for
the benefit of the Priority Lien Secured Parties, to sell, transfer or otherwise
Dispose of or deal with such Collateral, as provided herein and in the Priority
Lien Documents, without regard to any Subordinated Lien or any rights to which
the Subordinated Collateral Trustee or any Subordinated Secured Party would
otherwise be entitled as a result of such Subordinated Lien. Without limiting
the foregoing, each Subordinated Secured Party agrees that neither the Priority
Lien Agent nor any other Priority Lien Secured Party shall have any duty or
obligation first to marshal or realize upon any type of Collateral, or to sell,
Dispose of or otherwise liquidate all or any portion of such Collateral, in any
manner that would maximize the return to the Subordinated Secured Parties,
notwithstanding that the order and timing of any such realization, sale,
Disposition or liquidation may affect the amount of proceeds actually received
by the Subordinated Secured Parties from such realization, sale, Disposition or
liquidation. Each of the Subordinated Secured Parties waives any claim such
Subordinated Secured Party may now or hereafter have against the Priority Lien
Agent or any other Priority Lien Secured Party arising out of any actions which
the Priority Lien Agent or the Priority Lien Secured Parties take or omit to
take (including actions with respect to the creation, perfection or continuation
of Liens on any Collateral, actions with respect to the foreclosure upon, sale,
release or depreciation of, or failure to realize upon, any of the Collateral,
and actions with respect to the collection of any claim for all or any part of
the Priority Lien Obligations from any account debtor, guarantor or any other
party) in accordance with this Agreement and the Priority Lien Documents or the
valuation, use, protection or release of any security for the Priority Lien
Obligations.

ARTICLE III

ENFORCEMENT RIGHTS; PURCHASE OPTION

Section 3.01 Limitation on Enforcement Action. Prior to the Discharge of
Priority Lien Obligations, the Subordinated Collateral Trustee, for itself and
on behalf of each Subordinated Secured Party hereby agrees that, subject to
Section 3.05(b) and Section 4.07, none of the Subordinated Collateral Trustee,
Subordinated Noteholder or any other Subordinated Secured Party shall take any
Enforcement Action or commence or join in any judicial or nonjudicial
foreclosure proceedings with respect to, seek to have a trustee, receiver,
liquidator or similar official appointed for or over, attempt any action to take
possession of, exercise any right, remedy or power with respect to, or otherwise
take any action to enforce its interest in or realize upon, or take any other
action available to it in respect of, any Subordinated Debt or Collateral under
any Subordinated Security Document, applicable law or otherwise (including but
not limited to any right of setoff), it being agreed that only the Priority Lien
Agent, acting in accordance with the applicable Priority Lien Documents, shall
have the exclusive right (and whether or not any Insolvency

 

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or Liquidation Proceeding has been commenced), to take any such actions or
exercise any such remedies with respect to Collateral, in each case, without any
consultation with or the consent of the Subordinated Collateral Trustee or any
other Subordinated Secured Party. In exercising rights and remedies with respect
to the Collateral, the Priority Lien Agent and the other Priority Lien Secured
Parties may enforce the provisions of the Priority Lien Documents and exercise
remedies thereunder, all in such order and in such manner as they may determine
in their sole discretion and regardless of whether such exercise and enforcement
is adverse to the interest of any Subordinated Secured Party. Such exercise and
enforcement shall include the rights of an agent appointed by them to Dispose of
Collateral upon foreclosure, to incur expenses in connection with any such
Disposition and to exercise all the rights and remedies of a secured creditor
under the Uniform Commercial Code, the Bankruptcy Code or any other Bankruptcy
Law. Without limiting the generality of the foregoing, the Priority Lien Agent
will have the exclusive right to deal with that portion of the Collateral
consisting of deposit accounts and securities accounts (collectively
“Accounts”), including exercising rights under control agreements with respect
to such Accounts. The Subordinated Collateral Trustee, for itself and on behalf
of the other Subordinated Secured Parties, hereby acknowledges and agrees that
no covenant, agreement or restriction contained in any Subordinated Security
Document or any other Subordinated Document, shall be deemed to restrict in any
way the rights and remedies of the Priority Lien Agent or the other Priority
Lien Secured Parties with respect to the Collateral as set forth in this
Agreement. Notwithstanding the foregoing, subject to Section 3.05, the
Subordinated Collateral Trustee, on behalf of the Subordinated Secured Parties,
may, but will have no obligation to, take all such actions (not adverse to the
Priority Liens or the rights of the Priority Lien Agent and the Priority Lien
Secured Parties) it deems necessary to perfect or continue the perfection of the
Subordinated Liens in the Collateral or to create, preserve or protect (but not
enforce) the Subordinated Liens in the Collateral. Nothing herein shall limit
the right or ability of the Subordinated Secured Parties to (i) purchase (by
credit bid or otherwise) all or any portion of the Collateral in connection with
any enforcement of remedies by the Priority Lien Agent to the extent that, and
so long as, the Priority Lien Secured Parties receive payment in full in cash of
all Priority Lien Obligations after giving effect thereto, (ii) file a proof of
claim with respect to the Subordinated Obligations or (iii) as provided in
Section 4.07.

Section 3.02 Standstill Period; Permitted Enforcement Action. Prior to the
Discharge of Priority Lien Obligations and notwithstanding the foregoing
Section 3.01, both before and during an Insolvency or Liquidation Proceeding:
after a period of 270 days has elapsed (which period will be tolled during any
period in which the Priority Lien Agent is not entitled, on behalf of the
Priority Lien Secured Parties, to enforce or exercise any rights or remedies
with respect to any Collateral as a result of (A) any injunction issued by a
court of competent jurisdiction or (B) the automatic stay or any other stay in
any Insolvency or Liquidation Proceeding) since the date on which the
Subordinated Collateral Trustee has delivered to the Priority Lien Agent written
notice of the acceleration of any Subordinated Debt (the “Standstill Period”),
the Subordinated Collateral Trustee and the other Subordinated Secured Parties
may enforce or exercise any rights or remedies with respect to any Collateral;
provided, however that notwithstanding the expiration of the Standstill Period
or anything in the Subordinated Collateral Trust Agreement to the contrary, in
no event may the Subordinated Collateral Trustee or any other Subordinated
Secured Party enforce or exercise any rights or remedies with respect to any
Collateral, or commence, join with any Person at any time in commencing, or
petition for or vote in favor of any resolution for, any such action or
proceeding, if the Priority Lien Agent on behalf of the Priority Lien Secured
Parties or any other Priority Lien Secured Party shall have (A) commenced, and
shall be diligently pursuing (or shall have sought or requested relief from, or
modification of, the automatic stay or any other stay or other prohibition in
any Insolvency or Liquidation Proceeding to enable the commencement and pursuit
thereof), the enforcement or exercise of any rights or remedies with respect to
the Collateral or any such action or proceeding or (B) given prompt written
notice to the Subordinated Representatives by the Priority Lien Agent of its
intention to commence any such proceeding described in the preceding clause (A).

 

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Section 3.03 Insurance. Unless and until the Discharge of Priority Lien
Obligations has occurred (subject to the terms of Section 3.02, including the
rights of the Subordinated Secured Parties following expiration of any
applicable Standstill Period), the Priority Lien Agent shall have the sole and
exclusive right, subject to the rights of the Grantors under the Priority Lien
Documents, to adjust and settle claims in respect of Collateral under any
insurance policy in the event of any loss thereunder and to approve any award
granted in any condemnation or similar proceeding (or any deed in lieu of
condemnation) affecting the Collateral. Unless and until the Discharge of
Priority Lien Obligations has occurred, and subject to the rights of the
Grantors under the Priority Lien Documents, all proceeds of any such policy and
any such award (or any payments with respect to a deed in lieu of condemnation)
in respect to the Collateral shall be paid to the Priority Lien Agent pursuant
to the terms of the Priority Lien Documents (including for purposes of cash
collateralization of commitments, letters of credit and Hedging Obligations). If
the Subordinated Collateral Trustee or any Subordinated Secured Party shall, at
any time prior to the Discharge of Priority Lien Obligations, receive any
proceeds of any such insurance policy or any such award or payment in
contravention of the foregoing, it shall pay such proceeds over to the Priority
Lien Agent. In addition, if by virtue of being named as an additional insured or
loss payee of any insurance policy of any Grantor covering any of the
Collateral, the Subordinated Collateral Trustee, or any other Subordinated
Secured Party shall have the right to adjust or settle any claim under any such
insurance policy, then unless and until the Discharge of Priority Lien
Obligations has occurred, the Subordinated Collateral Trustee and any such
Subordinated Secured Party shall follow the instructions of the Priority Lien
Agent, or of the Grantors under the Priority Lien Documents to the extent the
Priority Lien Documents grant such Grantors the right to adjust or settle such
claims, with respect to such adjustment or settlement (subject to the terms of
Section 3.02, including the rights of the Subordinated Secured Parties following
expiration of any applicable Standstill Period).

Section 3.04 Notification of Release of Collateral. Each of the Priority Lien
Agent and the Subordinated Collateral Trustee shall give the other Secured Debt
Representatives prompt written notice of the Disposition by it of, and Release
by it of the Lien on, any Collateral. Such notice shall describe in reasonable
detail the subject Collateral, the parties involved in such Disposition or
Release, the place, time, manner and method thereof, and the consideration, if
any, received therefor; provided, however, that the failure to give any such
notice shall not in and of itself in any way impair the effectiveness of any
such Disposition or Release.

Section 3.05 No Interference; Payment Over.

(a) No Interference. The Subordinated Collateral Trustee, for itself and on
behalf of each Subordinated Secured Party, agrees that each Subordinated Secured
Party (i) will not take or cause to be taken any action the purpose or effect of
which is, or could be, to make any Subordinated Lien pari passu with, or to give
such Subordinated Secured Party any preference or priority relative to, any
Priority Lien with respect to the Collateral or any part thereof, (ii) will not
challenge or question in any proceeding the validity or enforceability of any
Priority Lien Obligations or Priority Lien Document, or the validity,
attachment, perfection or priority of any Priority Lien, or the validity or
enforceability of the priorities, rights or duties established by the provisions
of this Agreement, (iii) will not take or cause to be taken any action the
purpose or effect of which is, or could be, to interfere, hinder or delay, in
any manner, whether by judicial proceedings or otherwise, any sale, transfer or
other Disposition of the Collateral by any Priority Lien Secured Party or the
Priority Lien Agent acting on their behalf, (iv) shall have no right to
(A) direct the Priority Lien Agent or any other Priority Lien Secured Party to
exercise any right, remedy or power with respect to any Collateral or
(B) consent to the exercise by the Priority Lien Agent or any other Priority
Lien Secured Party of any right, remedy or power with respect to any Collateral,
(v) will not institute any suit or assert in any suit or Insolvency or
Liquidation Proceeding any claim against the Priority Lien Agent or other
Priority Lien Secured Party seeking damages from or other relief by way of
specific performance, instructions or otherwise with respect to, and neither the
Priority

 

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Lien Agent nor any other Priority Lien Secured Party shall be liable for, any
action taken or omitted to be taken by the Priority Lien Agent or other Priority
Lien Secured Party with respect to any Priority Lien Collateral, (vi) prior to
the Discharge of Priority Lien Obligations will not seek, and hereby waives any
right, to have any Collateral or any part thereof marshaled upon any foreclosure
or other Disposition of such Collateral, (vii) will not attempt, directly or
indirectly, whether by judicial proceedings or otherwise, to challenge the
enforceability of any provision of this Agreement, (viii) will not object to
forbearance by the Priority Lien Agent or any Priority Lien Secured Party, and
(ix) prior to the Discharge of Priority Lien Obligations will not assert, and
hereby waives, to the fullest extent permitted by law, any right to demand,
request, plead or otherwise assert or claim the benefit of any marshalling,
appraisal, valuation or other similar right that may be available under
applicable law with respect to the Collateral or any similar rights a junior
secured creditor may have under applicable law.

(b) Payment Over. The Subordinated Collateral Trustee, for itself and on behalf
of each other Subordinated Secured Party hereby agrees that if any Subordinated
Secured Party shall obtain possession of any Collateral or shall realize any
proceeds or payment in respect of any Collateral, pursuant to the exercise of
any rights or remedies with respect to the Collateral under any Subordinated
Security Document or by the exercise of any rights available to it under
applicable law or in any Insolvency or Liquidation Proceeding, to the extent
permitted hereunder, at any time prior to the Discharge of Priority Lien
Obligations secured, or intended to be secured, by such Collateral, then it
shall hold such Collateral, proceeds or payment in trust for the Priority Lien
Agent and the other Priority Lien Secured Parties and transfer such Collateral,
proceeds or payment, as the case may be, to the Priority Lien Agent as promptly
as practicable. Furthermore, the Subordinated Collateral Trustee shall, at the
Grantors’ expense, promptly send written notice to the Priority Lien Agent upon
receipt of such Collateral, proceeds or payment by it or the Subordinated Notes
Trustee or, to the extent it has knowledge, by any other Subordinated Secured
Party and if directed by the Priority Lien Agent within five (5) days after
receipt by the Priority Lien Agent of such written notice, the applicable
Subordinated Secured Party shall deliver such Collateral, proceeds or payment to
the Priority Lien Agent in the same form as received, with any necessary
endorsements, or as court of competent jurisdiction may otherwise direct. The
Priority Lien Agent is hereby authorized to make any such endorsements as agent
for the Subordinated Collateral Trustee or any other Subordinated Secured Party.
The Subordinated Collateral Trustee, for itself and on behalf of each other
Subordinated Secured Party, agrees that if, at any time, it obtains written
notice that all or part of any payment with respect to any Priority Lien
Obligations previously made shall be rescinded for any reason whatsoever, it
will promptly pay over to the Priority Lien Agent any payment received by it and
then in its possession or under its direct control in respect of any such
Priority Lien Collateral and shall promptly turn any such Collateral then held
by it over to the Priority Lien Agent, and the provisions set forth in this
Agreement will be reinstated as if such payment had not been made, until the
Discharge of Priority Lien Obligations. All Subordinated Liens will remain
attached to and enforceable against all proceeds so held or remitted, subject to
the priorities set forth in this Agreement. Anything contained herein to the
contrary notwithstanding, this Section 3.05(b) shall not apply to any proceeds
of Collateral realized in a transaction not prohibited by the Priority Lien
Documents and as to which the possession or receipt thereof by the Subordinated
Collateral Trustee or any other Subordinated Secured Party is otherwise
permitted by the Priority Lien Documents.

Section 3.06 Purchase Option.

(a) Notwithstanding anything in this Agreement to the contrary, on or at any
time after (i) the commencement of an Insolvency or Liquidation Proceeding or
(ii) the acceleration of the Priority Lien Obligations, holders of the
Subordinated Debt and each of their respective designated Affiliates (the
“Subordinated Purchasers”) will have the right, at their sole option and
election (but will not be obligated), at any time upon prior written notice to
the Priority Lien Agent, to purchase from the Priority Lien Secured Parties
(x) all (but not less than all) Priority Lien Obligations (including unfunded

 

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commitments) and (y) any loans provided by any of the Priority Lien Secured
Parties in connection with a DIP Financing that are outstanding on the date of
such purchase. Promptly following the receipt of such notice, the Priority Lien
Agent will deliver to the Subordinated Collateral Trustee a statement of the
amount of Priority Lien Debt, other Priority Lien Obligations and DIP Financing
provided by any of the Priority Lien Secured Parties, if any, then outstanding
and the amount of the cash collateral requested by the Priority Lien Agent to be
delivered pursuant to Section 3.06(b)(ii) below. The right to purchase provided
for in this Section 3.06 will expire unless, within 10 Business Days after the
receipt by the Subordinated Collateral Trustee of such notice from the Priority
Lien Agent, the Subordinated Purchasers deliver to the Priority Lien Agent an
irrevocable commitment of the Subordinated Purchasers to purchase (x) all (but
not less than all) of the Priority Lien Obligations (including unfunded
commitments) and (y) any loans provided by any of the Priority Lien Secured
Parties in connection with a DIP Financing and to otherwise complete such
purchase on the terms set forth under this Section 3.06.

(b) On the date specified by the Subordinated Purchasers in such irrevocable
commitment (which shall not be less than five Business Days nor more than 20
Business Days, after the receipt by the Priority Lien Agent of such irrevocable
commitment), the Priority Lien Secured Parties shall sell to the Subordinated
Purchasers (x) all (but not less than all) Priority Lien Obligations (including
unfunded commitments) and (y) any loans provided by any of the Priority Lien
Secured Parties in connection with a DIP Financing that are outstanding on the
date of such sale, subject to any required approval of any Governmental
Authority then in effect, if any, and only if on the date of such sale, the
Priority Lien Agent receives the following:

(i) payment, as the purchase price for all Priority Lien Obligations sold in
such sale, of an amount equal to the full amount of (x) all Priority Lien
Obligations (other than outstanding letters of credit as referred to in clause
(ii) below) and (y) loans provided by any of the Priority Lien Secured Parties
in connection with a DIP Financing then outstanding (including principal,
interest, fees, reasonable attorneys’ fees and legal expenses, but excluding
contingent indemnification obligations for which no claim or demand for payment
has been made at or prior to such time); provided that in the case of Hedging
Obligations that constitute Priority Lien Obligations the Subordinated
Purchasers shall cause the applicable agreements governing such Hedging
Obligations to be assigned and novated or, if such agreements have been
terminated, such purchase price shall include an amount equal to the sum of any
unpaid amounts then due in respect of such Hedging Obligations, calculated using
the methodology provided for under the applicable Hedging Obligation (e.g.,
loss, market quotations or close-out amount) and after giving effect to any
netting arrangements;

(ii) a cash collateral deposit in such amount as the Priority Lien Agent
determines is reasonably necessary to secure the payment of any outstanding
letters of credit constituting Priority Lien Obligations that may become due and
payable after such sale (but not in any event in an amount greater than one
hundred five percent (105%) of the amount then reasonably estimated by the
Priority Lien Agent to be the aggregate outstanding amount of such letters of
credit at such time), which cash collateral shall be (A) held by the Priority
Lien Agent as security solely to reimburse the issuers of such letters of credit
that become due and payable after such sale and any fees and expenses incurred
in connection with such letters of credit and (B) returned to the Subordinated
Purchasers (except as may otherwise be required by applicable law or any order
of any court or other Governmental Authority) promptly after the expiration or
termination from time to time of all payment contingencies affecting such
letters of credit; and

(iii) any agreements, documents or instruments which the Priority Lien Agent may
reasonably request pursuant to which the Subordinated Purchasers in such sale
expressly assume and adopt all of the obligations of the Priority Lien Agent and
the Priority Lien Secured Parties under the Priority Lien Documents and in
connection with loans provided by any of the Priority Lien Secured

 

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Parties in connection with a DIP Financing on and after the date of the purchase
and sale and the Subordinated Notes Trustee (or any other representative
appointed by the holders of a majority in aggregate principal amount of the
Subordinated Indenture Notes then outstanding) becomes a successor agent
thereunder.

(c) Such purchase of the Priority Lien Obligations (including unfunded
commitments) and any loans provided by any of the Priority Lien Secured Parties
in connection with a DIP Financing shall be made on a pro rata basis among the
Subordinated Purchasers giving notice to the Priority Lien Agent of their
interest to exercise the purchase option hereunder according to each such
Subordinated Purchaser’s portion of the Subordinated Debt outstanding on the
date of purchase or such portion as such Subordinated Purchasers may otherwise
agree among themselves. Such purchase price and cash collateral shall be
remitted by wire transfer in federal funds to such bank account of the Priority
Lien Agent as the Priority Lien Agent may designate in writing to the
Subordinated Purchasers for such purpose. Interest shall be calculated to but
excluding the Business Day on which such sale occurs if the amounts so paid by
the Subordinated Purchasers to the bank account designated by the Priority Lien
Agent are received in such bank account prior to 12:00 noon, New York City time,
and interest shall be calculated to and including such Business Day if the
amounts so paid by the Subordinated Purchasers to the bank account designated by
the Priority Lien Agent are received in such bank account later than 12:00 noon,
New York City time.

(d) Such sale shall be expressly made without representation or warranty of any
kind by the Priority Lien Secured Parties as to the Priority Lien Obligations,
the Collateral or otherwise and without recourse to any Priority Lien Secured
Party, except that the Priority Lien Secured Parties shall represent and warrant
severally as to the Priority Lien Obligations (including unfunded commitments)
and any loans provided by any of the Priority Lien Secured Parties in connection
with a DIP Financing then owing to it: (i) that such applicable Priority Lien
Secured Party owns such Priority Lien Obligations (including unfunded
commitments) and any loans provided by any of the Priority Lien Secured Parties
in connection with a DIP Financing; and (ii) that such applicable Priority Lien
Secured Party has the necessary corporate or other governing authority to assign
such interests.

(e) After such sale becomes effective, the outstanding letters of credit will
remain enforceable against the issuers thereof and will remain secured by the
Priority Liens upon the Collateral in accordance with the applicable provisions
of the Priority Lien Documents as in effect at the time of such sale, and the
issuers of letters of credit will remain entitled to the benefit of the Priority
Liens upon the Collateral and sharing rights in the proceeds thereof in
accordance with the provisions of the Priority Lien Documents as in effect at
the time of such sale, as fully as if the sale of the Priority Lien Debt had not
been made, but only the Person or successor agent to whom the Priority Liens are
transferred in such sale will have the right to foreclose upon or otherwise
enforce the Priority Liens and only the Subordinated Purchasers in the sale will
have the right to direct such Person or successor as to matters relating to the
foreclosure or other enforcement of the Priority Liens.

ARTICLE IV

OTHER AGREEMENTS

Section 4.01 Release of Liens; Automatic Release of Subordinated Liens.
(a) Prior to the Discharge of Priority Lien Obligations, the Subordinated
Collateral Trustee, for itself and on behalf of each other Subordinated Secured
Party, agrees that, in the event the Priority Lien Secured Parties release their
Lien on any Collateral, the Subordinated Lien on such Collateral shall terminate
and be released automatically and without further action if (i) such sale,
transfer or other disposition of Collateral is effectuated in compliance with
the Subordinated Notes Indenture, (ii) such release is effected in connection
with the Priority Lien Collateral Agent’s foreclosure upon, or other exercise of
rights or

 

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remedies with respect to, such Collateral, or (iii) such release is effected in
connection with a sale or other Disposition of any Collateral (or any portion
thereof) under Section 363 of the Bankruptcy Code or any other provision of the
Bankruptcy Code if the Priority Lien Secured Parties shall have consented to
such sale or Disposition of such Collateral; provided that, in the case of each
of clauses (i), (ii) and (iii), the Subordinated Liens on such Collateral shall
attach to (and shall remain subject and subordinate to all Priority Liens
securing Priority Lien Obligations) any proceeds of a sale, transfer or other
Disposition of Collateral not paid to the Priority Lien Secured Parties or that
remain after the Discharge of Priority Lien Obligations.

(b) The Subordinated Collateral Trustee agrees to execute and deliver (at the
sole cost and expense of the Grantors) all such releases and other instruments
as shall reasonably be requested by the Priority Lien Agent to evidence and
confirm any release of Collateral provided for in this Section 4.01.

Section 4.02 Certain Agreements With Respect to Insolvency or Liquidation
Proceedings. (a) The parties hereto acknowledge that this Agreement is a
“subordination agreement” under Section 510(a) of the Bankruptcy Code and shall
continue in full force and effect, notwithstanding the commencement of any
Insolvency or Liquidation Proceeding by or against SandRidge or any subsidiary
of SandRidge. All references in this Agreement to SandRidge or any subsidiary of
SandRidge or any other Grantor will include such Person or Persons as a
debtor-in-possession and any receiver or trustee for such Person or Persons in
an Insolvency or Liquidation Proceeding.

(b) If SandRidge or any of its subsidiaries shall become subject to any
Insolvency or Liquidation Proceeding and shall, as debtor(s)-in-possession, or
if any receiver or trustee for such Person or Persons shall, move for approval
of financing (“DIP Financing”) to be provided by one or more lenders (the “DIP
Lenders”) under Section 364 of the Bankruptcy Code or the use of cash collateral
under Section 363 of the Bankruptcy Code, the Subordinated Collateral Trustee,
for itself and on behalf of each Subordinated Secured Party, agrees that neither
it nor any other Subordinated Secured Party will raise any objection, contest or
oppose, and each Subordinated Secured Party will waive any claim such Person may
now or hereafter have, to any such financing or to the Liens on the Collateral
securing the same (“DIP Financing Liens”), or to any use, sale or lease of cash
collateral that constitutes Collateral or to any grant of administrative expense
priority under Section 364 of the Bankruptcy Code, unless the Priority Lien
Agent or the Priority Lien Secured Parties oppose or object to such DIP
Financing or such DIP Financing Liens or such use of cash collateral. To the
extent such DIP Financing Liens are senior to, or rank pari passu with, the
Priority Liens, the Subordinated Collateral Trustee will, for itself and on
behalf of the other Subordinated Secured Parties, subordinate the Subordinated
Liens on the Collateral to the Priority Liens and to such DIP Financing Liens,
so long as the Subordinated Collateral Trustee, on behalf of the Subordinated
Secured Parties, retains Liens on all the Collateral, including proceeds thereof
arising after the commencement of any Insolvency or Liquidation Proceeding, with
the same priority relative to the Priority Liens as existed prior to the
commencement of the case under the Bankruptcy Code.

(c) Prior to the Discharge of Priority Lien Obligations, without the consent of
the Priority Lien Agent, in the Priority Lien Agent’s sole discretion, the
Subordinated Collateral Trustee, for itself and on behalf of each Subordinated
Secured Party agrees not to propose, support or enter into any DIP Financing.

(d) The Subordinated Collateral Trustee, for itself and on behalf of each
Subordinated Secured Party, agrees that it will not object to, oppose or contest
(or join with or support any third party objecting to, opposing or contesting) a
sale or other Disposition, a motion to sell or Dispose or the bidding procedure
for such sale or Disposition of any Collateral (or any portion thereof) under
Section 363 of the Bankruptcy Code or any other provision of the Bankruptcy Code
if the Priority

 

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Lien Secured Parties shall have consented to such sale or Disposition, such
motion to sell or Dispose or such bidding procedure for such sale or Disposition
of such Collateral and all Priority Liens and Subordinated Liens will attach to
the proceeds of the sale in the same respective priorities as set forth in this
Agreement.

(e) The Subordinated Collateral Trustee, for itself and on behalf of each other
Subordinated Secured Party, waives any claim that may be had against the
Priority Lien Agent or any other Priority Lien Secured Party arising out of any
DIP Financing Liens (that is granted in a manner that is consistent with this
Agreement) or administrative expense priority under Section 364 of the
Bankruptcy Code.

(f) The Subordinated Collateral Trustee, for itself and on behalf of each other
Subordinated Secured Party, agrees that neither the Subordinated Collateral
Trustee nor any other Subordinated Secured Party, will file or prosecute in any
Insolvency or Liquidation Proceeding any motion for adequate protection (or any
comparable request for relief) based upon their interest in the Collateral, nor
object to, oppose or contest (or join with or support any third party objecting
to, opposing or contesting) (i) any request by the Priority Lien Agent or any
other Priority Lien Secured Party for adequate protection or (ii) any objection
by the Priority Lien Agent or any other Priority Lien Secured Party to any
motion, relief, action or proceeding based on the Priority Lien Agent or
Priority Lien Secured Parties claiming a lack of adequate protection, except
that the Subordinated Secured Parties may:

(A) freely seek and obtain relief granting adequate protection in the form of a
replacement lien co-extensive in all respects with, but subordinated (as set
forth in Section 2.01) to, and with the same relative priority to the Priority
Liens as existed prior to the commencement of the Insolvency or Liquidation
Proceeding, all Liens granted in the Insolvency or Liquidation Proceeding to, or
for the benefit of, the Priority Lien Secured Parties; and

(B) freely seek and obtain any relief upon a motion for adequate protection (or
any comparable relief), without any condition or restriction whatsoever, at any
time after the Discharge of Priority Lien Obligations.

(g) The Subordinated Collateral Trustee, for itself and on behalf of each of the
Subordinated Secured Parties, waives any claim it or any other Subordinated
Secured Party may now or hereafter have against the Priority Lien Agent or any
other Priority Lien Secured Party (or their representatives) arising out of any
election by the Priority Lien Agent or any Priority Lien Secured Parties, in any
proceeding instituted under the Bankruptcy Code, or the application of
Section 1111(b) of the Bankruptcy Code.

(h) The Subordinated Collateral Trustee, for itself and on behalf of each other
Subordinated Secured Party, agrees that in any Insolvency or Liquidation
Proceeding, neither the Subordinated Collateral Trustee nor any other
Subordinated Secured Party shall support or vote to accept any plan of
reorganization or disclosure statement of SandRidge or any other Grantor unless
such plan is supported by each class under such plan of Priority Lien Secured
Parties in accordance with Section 1126(c) of the Bankruptcy Code or otherwise
provides for the payment in full in cash of all Priority Lien Obligations
(including all post-petition interest approved by the bankruptcy court, fees and
expenses and cash collateralization of all letters of credit) on the effective
date of such plan of reorganization.

(i) The Subordinated Collateral Trustee, for itself and on behalf of each other
Subordinated Secured Party, agrees that neither the Subordinated Collateral
Trustee nor any other Subordinated Secured Party shall seek relief, pursuant to
Section 362(d) of the Bankruptcy Code or otherwise, from the automatic stay of
Section 362(a) of the Bankruptcy Code or from any other stay in any Insolvency
or Liquidation Proceeding in respect of the Collateral without the prior written
consent of the Priority Lien Agent.

 

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(j) The Subordinated Collateral Trustee, for itself and on behalf of each other
Subordinated Secured Party, agrees that neither the Subordinated Collateral
Trustee nor any other Subordinated Secured Party shall oppose or seek to
challenge any claim by the Priority Lien Agent or any other Priority Lien
Secured Party for allowance or payment in any Insolvency or Liquidation
Proceeding of Priority Lien Obligations consisting of post-petition interest,
fees or expenses or cash collateralization of all letters of credit to the
extent of the value of the Priority Liens (it being understood that such value
will be determined without regard to the existence of the Subordinated Liens on
the Collateral). Neither Priority Lien Agent nor any other Priority Lien Secured
Party shall oppose or seek to challenge any claim by the Subordinated Collateral
Trustee or any other Subordinated Secured Party for allowance or payment in any
Insolvency or Liquidation Proceeding of Subordinated Obligations consisting of
post-petition interest, fees or expenses to the extent of the value of the
Subordinated Liens on the Collateral; provided that if the Priority Lien Agent
or any other Priority Lien Secured Party shall have made any such claim, such
claim (i) shall have been approved or (ii) will be approved contemporaneously
with the approval of any such claim by the Subordinated Collateral Trustee or
any Subordinated Secured Party.

(k) Without the express written consent of the Priority Lien Agent, none of the
Subordinated Collateral Trustee or any other Subordinated Secured Party shall
(or shall join with or support any third party in opposing, objecting to or
contesting, as the case may be), in any Insolvency or Liquidation Proceeding
involving any Grantor, (i) oppose, object to or contest the determination of the
extent of any Liens held by any of Priority Lien Secured Party or the value of
any claims of any such holder under Section 506(a) of the Bankruptcy Code or
(ii) oppose, object to or contest the payment to the Priority Lien Secured Party
of interest, fees or expenses under Section 506(b) of the Bankruptcy Code.

(l) Notwithstanding anything to the contrary contained herein, if in any
Insolvency or Liquidation Proceeding a determination is made that any Lien
encumbering any Collateral is not enforceable for any reason, then the
Subordinated Collateral Trustee for itself and on behalf of each other
Subordinated Secured Party, agrees that, any distribution or recovery they may
receive in respect of any Collateral shall be segregated and held in trust and
forthwith paid over to the Priority Lien Agent for the benefit of the Priority
Lien Secured Parties in the same form as received without recourse,
representation or warranty (other than a representation of the Subordinated
Collateral Trustee that it has not otherwise sold, assigned, transferred or
pledged any right, title or interest in and to such distribution or recovery)
but with any necessary endorsements or as a court of competent jurisdiction may
otherwise direct. The Subordinated Collateral Trustee, for itself and on behalf
of each other Subordinated Secured Party, hereby appoints the Priority Lien
Agent, and any officer or agent of the Priority Lien Agent, with full power of
substitution, the attorney-in-fact of each Subordinated Secured Party for the
limited purpose of carrying out the provisions of this Section 4.02(l) and
taking any action and executing any instrument that the Priority Lien Agent may
deem necessary or advisable to accomplish the purposes of this Section 4.02(l),
which appointment is irrevocable and coupled with an interest.

(m) The Subordinated Collateral Trustee, for itself and on behalf of each other
Subordinated Secured Party, hereby agrees that the Priority Lien Agent shall
have the exclusive right to credit bid the Priority Lien Obligations and further
that none of the Subordinated Collateral Trustee or, any other Subordinated
Secured Party shall (or shall join with or support any third party in opposing,
objecting to or contesting, as the case may be) oppose, object to or contest
such credit bid by the Priority Lien Agent.

(n) Without the consent of the Priority Lien Agent in its sole discretion, the
Subordinated Collateral Trustee, for itself and on behalf of each other
Subordinated Secured Party, agrees it will not file an involuntary bankruptcy
claim or seek the appointment of an examiner or a trustee for SandRidge or any
of its subsidiaries.

 

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(o) The Subordinated Collateral Trustee, for itself and on behalf of each other
Subordinated Secured Party, waives any right to assert or enforce any claim
under Section 506(c) or 552 of the Bankruptcy Code as against any Priority Lien
Secured Party or any of the Collateral, except as expressly permitted by this
Agreement.

Section 4.03 Reinstatement. If any Priority Lien Secured Party is required in
any Insolvency or Liquidation Proceeding or otherwise to turn over or otherwise
pay to the estate of any Grantor any amount (a “Recovery”) for any reason
whatsoever, then the Priority Lien Obligations shall be reinstated to the extent
of such Recovery and the Priority Lien Secured Parties shall be entitled to a
reinstatement of Priority Lien Obligations with respect to all such recovered
amounts. The Subordinated Collateral Trustee, for itself and on behalf of each
other Subordinated Secured Party, agrees that if, at any time, a Subordinated
Secured Party receives notice of any Recovery, the Subordinated Collateral
Trustee or any other Subordinated Secured Party shall promptly pay over to the
Priority Lien Agent any payment received by it and then in its possession or
under its control in respect of any Collateral subject to any Priority Lien
securing such Priority Lien Obligations and shall promptly turn any Collateral
subject to any such Priority Lien then held by it over to the Priority Lien
Agent, and the provisions set forth in this Agreement shall be reinstated as if
such payment had not been made. If this Agreement shall have been terminated
prior to any such Recovery, this Agreement shall be reinstated in full force and
effect, and such prior termination shall not diminish, release, discharge,
impair or otherwise affect the obligations of the parties hereto from such date
of reinstatement. Any amounts received by the Subordinated Collateral Trustee or
any other Subordinated Secured Party and then in its possession or under its
control on account of the Subordinated Obligations after the termination of this
Agreement shall, in the event of a reinstatement of this Agreement pursuant to
this Section 4.03, be held in trust for and paid over to the Priority Lien Agent
for the benefit of the Priority Lien Secured Parties for application to the
reinstated Priority Lien Obligations until the discharge thereof. This
Section 4.03 shall survive termination of this Agreement.

Section 4.04 Refinancings; Additional Priority Lien Debt; Additional
Subordinated Debt.

(a) The Priority Lien Obligations and the Subordinated Obligations may be
Replaced, by any Priority Substitute Credit Facility or Subordinated Substitute
Facility, as the case may be, in each case, without notice to, or the consent of
any Secured Party, all without affecting the Lien priorities provided for herein
or the other provisions hereof; provided, that (i) the Priority Lien Agent and
the Subordinated Collateral Trustee shall receive on or prior to incurrence of a
Priority Substitute Credit Facility or Subordinated Substitute Facility (A) an
Officer’s Certificate from SandRidge stating that (I) the incurrence thereof is
permitted by each applicable Secured Debt Document to be incurred and (II) the
requirements of Section 4.06 have been satisfied, and (B) a Priority
Confirmation Joinder from the holders or lenders of any indebtedness that
Replaces the Priority Lien Obligations or the Subordinated Obligations (or an
authorized agent, trustee or other representative on their behalf), and (ii) on
or before the date of such incurrence, such Priority Substitute Credit Facility
or Subordinated Substitute Facility is designated by SandRidge, in an Officer’s
Certificate delivered to the Priority Lien Agent and the Subordinated Collateral
Trustee, as “Priority Lien Debt” or “Subordinated Debt”, as applicable, for the
purposes of the Secured Debt Documents and this Agreement; provided that no
Series of Secured Debt may be designated as more than one of Priority Lien Debt
or Subordinated Debt.

(b) SandRidge will be permitted to designate as an additional holder of Priority
Lien Obligations or Subordinated Obligations hereunder each Person who is, or
who becomes, the registered holder of Priority Lien Debt or Subordinated Debt,
as applicable, incurred by SandRidge after the date of

 

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this Agreement in accordance with the terms of all applicable Secured Debt
Documents. SandRidge may effect such designation by delivering to the Priority
Lien Agent and the Subordinated Collateral Trustee, each of the following:

(i) an Officer’s Certificate stating that SandRidge intends to incur
(A) Additional Priority Lien Obligations which will be Priority Lien Debt,
(B) Additional Subordinated Obligations which will be Subordinated Debt, which
in each case, will be permitted by each applicable Secured Debt Document to be
incurred and secured by a Priority Lien or Subordinated Lien;

(ii) an authorized agent, trustee or other representative on behalf of the
holders or lenders of any Additional Priority Lien Obligations or Additional
Subordinated Obligations, as applicable, must be designated as an additional
holder of Secured Obligations hereunder and must, prior to such designation,
sign and deliver on behalf of the holders or lenders of such Additional Priority
Lien Obligations or Additional Subordinated Obligations, as applicable, a
Priority Confirmation Joinder, and, to the extent necessary or appropriate to
facilitate such transaction, a new intercreditor agreement substantially similar
to this Agreement, as in effect on the date hereof; and

(iii) evidence that SandRidge has duly authorized, executed (if applicable) and
recorded (or caused to be recorded) in each appropriate governmental office all
relevant filings and recordations deemed necessary by SandRidge and the holder
of such Additional Priority Lien Obligations, or Additional Subordinated
Obligations, as applicable, or its Secured Debt Representative, to ensure that
the Additional Priority Lien Obligations or Additional Subordinated Obligations
are secured by the Collateral in accordance with the Priority Lien Security
Documents or Subordinated Security Documents, as applicable (provided that such
filings and recordings may be authorized, executed and recorded following any
incurrence on a post-closing basis if permitted by the Priority Lien
Representative or Subordinated Representative for such Additional Priority Lien
Obligations or Additional Subordinated Obligations, as applicable).

(c) SandRidge will be permitted to incur Subordinated Liens with respect to the
Subordinated Obligations to the extent such Subordinated Obligations are
permitted to be secured by the Priority Credit Agreement, the other Priority
Lien Documents, the Subordinated Notes Indenture and the other Subordinated
Documents in connection with a Springing Event. Any Subordinated Debt with
respect to which such Springing Event applies may be secured by a Subordinated
Lien under and pursuant to the Subordinated Security Documents provided the
Subordinated Collateral Trustee, acting for itself and on behalf of the
Subordinated Secured Parties, becomes a party to this Agreement by satisfying
the conditions set forth in clauses (i) and (ii) of the immediately succeeding
paragraph.

In order for the Subordinated Collateral Trustee to become a party to this
Agreement,

(i) the Priority Lien Agent and the Subordinated Collateral Trustee shall have
executed and delivered a Priority Confirmation Joinder pursuant to which
(a) such Subordinated Collateral Trustee becomes a Secured Debt Representative
hereunder and (b) the Subordinated Secured Debt and the related Subordinated
Secured Parties become subject hereto and bound hereby;

(ii) SandRidge shall have delivered to the Priority Lien Agent and the
Subordinated Collateral Trustee (A) true and complete copies of each
Subordinated Secured Document and (B) an Officer’s Certificate certifying such
copies as being true and correct and identifying the obligations to be
designated as Subordinated Secured Obligations and the initial aggregate
principal amount thereof; and

 

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(iii) without limiting Section 4.06, the Subordinated Secured Documents relating
to such Subordinated Secured Debt shall provide, in a manner satisfactory to the
Priority Lien Agent, that each Subordinated Secured Party shall be subject to
and bound by the provisions of this Agreement in its capacity as a holder of
such Subordinated Secured Debt.

Notwithstanding the foregoing, nothing in this Agreement will be construed to
allow SandRidge or any other Grantor to incur additional indebtedness unless
otherwise permitted by the terms of each applicable Secured Debt Document.

Each of the then-exiting Priority Lien Agent and the Subordinated Collateral
Trustee shall be authorized to execute and deliver such documents and agreements
(including amendments or supplements to this Agreement) as such holders,
lenders, agent, trustee or other representative may reasonably request to give
effect to any such Replacement or any incurrence of Additional Priority Lien
Obligations, Additional Subordinated Obligations, it being understood that the
Priority Lien Agent and the Subordinated Collateral Trustee or (if permitted by
the terms of the applicable Secured Debt Documents) the Grantors, without the
consent of any other Secured Party or (in the case of the Grantors) one or more
Secured Debt Representatives, may amend, supplement, modify or restate this
Agreement to the extent necessary or appropriate to facilitate such amendments
or supplements to effect such Replacement or incurrence all at the expense of
the Grantors. Upon the consummation of such Replacement or incurrence and the
execution and delivery of the documents and agreements contemplated in the
preceding sentence, the holders or lenders of such indebtedness and any
authorized agent, trustee or other representative thereof shall be entitled to
the benefits of this Agreement.

Section 4.05 Amendments to Subordinated Documents. Prior to the Discharge of
Priority Lien Obligations, without the prior written consent of the Priority
Lien Agent, no Subordinated Document may be amended, supplemented, restated or
otherwise modified and/or refinanced or entered into to the extent such
amendment, supplement, restatement or modification and/or refinancing, or the
terms of any new Subordinated Document would (i) adversely affect the lien
priority rights of the Priority Lien Secured Parties or the rights of the
Priority Lien Secured Parties to receive payments owing pursuant to the Priority
Lien Documents, (ii) except as otherwise provided for in this Agreement, add any
Liens securing the Collateral granted under the Subordinated Security Documents,
if any, (iii) confer any additional rights on the Subordinated Collateral
Trustee or any other Subordinated Secured Party, if any, in a manner adverse to
the Priority Lien Secured Parties, or (iv) contravene the provisions of this
Agreement or the Priority Lien Documents.

Section 4.06 Legends. Each of

(a) the Priority Lien Agent acknowledges with respect to the (i) Priority Credit
Agreement and the Credit Agreement Security Documents and (ii) the Additional
Priority Lien Debt Facility and the Additional Priority Lien Security Documents,
if any, and

(b) the Subordinated Collateral Trustee acknowledges with respect to (i) the
Subordinated Notes Indenture and the Indenture Subordinated Security Documents,
and (ii) the Additional Subordinated Debt Facility and the Additional
Subordinated Security Documents, if any, that

the Grantors shall cause the Subordinated Notes Indenture, the Additional
Subordinated Debt Facility (if any), the Subordinated Documents (other than
control agreements to which both the Priority Lien Agent and the Subordinated
Collateral Trustee are parties) and each associated Security Document (other
than control agreements to which both the Priority Lien Agent and the
Subordinated Collateral Trustee are parties) granting any security interest in
the Collateral to contain the appropriate legend set forth on Annex I.

 

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Section 4.07 Subordinated Secured Parties Rights as Unsecured Creditors;
Judgment Lien Creditor. Both before and during an Insolvency or Liquidation
Proceeding, any of the Subordinated Secured Parties may take any actions and
exercise any and all rights that would be available to a holder of unsecured
claims so long as such action or exercise of rights is permitted hereunder by
such party acting in its capacity as a Subordinated Secured Party; provided,
however, that the Subordinated Secured Parties may not take any of the actions
prohibited by Section 3.05(a) or Section 4.02 or any other provisions in this
Agreement, nor may any of the Subordinated Secured Parties take any action as an
unsecured creditor which such party is not permitted to take hereunder as a
secured Subordinated Secured Party; provided, further, that in the event that
any of the Subordinated Secured Parties becomes a judgment lien creditor in
respect of any Collateral as a result of its enforcement of its rights as an
unsecured creditor with respect to the Subordinated Obligations such judgment
lien shall be subject to the terms of this Agreement for all purposes (including
in relation to the Priority Lien Obligations) as the Subordinated Secured
Parties are subject to this Agreement.

Section 4.08 Postponement of Subrogation. The Subordinated Collateral Trustee,
for itself and on behalf of each other Subordinated Secured Party, hereby agrees
that no payment or distribution to any Priority Lien Secured Party pursuant to
the provisions of this Agreement shall entitle any Subordinated Secured Party to
exercise any rights of subrogation in respect thereof until the Discharge of
Priority Lien Obligations shall have occurred. Following the Discharge of
Priority Lien Obligations, but subject to the reinstatement as provided in
Section 4.03, each Priority Lien Secured Party will execute such documents,
agreements, and instruments as any Subordinated Secured Party may reasonably
request to evidence the transfer by subrogation to any such Person of an
interest in the Priority Lien Obligations resulting from payments or
distributions to such Priority Lien Secured Party by such Person, so long as all
costs and expenses (including all reasonable legal fees and disbursements)
incurred in connection therewith by such Priority Lien Secured Party are paid by
such Person upon request for payment thereof.

Section 4.09 Acknowledgment by the Secured Debt Representatives. Each of the
Priority Lien Agent, for itself and on behalf of the other Priority Lien Secured
Parties, and the Subordinated Collateral Trustee, for itself and on behalf of
the other Subordinated Secured Parties, hereby acknowledges that this Agreement
is a material inducement to enter into a business relationship, that each has
relied on this Agreement to enter into the Priority Credit Agreement and the
Subordinated Notes Indenture, as applicable, and all documentation related
thereto, and that each will continue to rely on this Agreement in their related
future dealings.

ARTICLE V

GRATUITOUS BAILMENT FOR PERFECTION OF CERTAIN SECURITY INTERESTS

Section 5.01 General. Prior to the Discharge of Priority Lien Obligations, the
Priority Lien Agent agrees that if it shall at any time hold a Priority Lien on
any Collateral that can be perfected by the possession or control of such
Collateral or of any Account in which such Collateral is held, and if such
Collateral or any such Account is in fact in the possession or under the control
of the Priority Lien Agent, the Priority Lien Agent will serve as gratuitous
bailee for the Subordinated Collateral Trustee for the sole purpose of
perfecting the Subordinated Lien of the Subordinated Collateral Trustee on such
Collateral. It is agreed that the obligations of the Priority Lien Agent and the
rights of the Subordinated Collateral Trustee and the other Subordinated Secured
Parties in connection with any such bailment arrangement will be in all respects
subject to the provisions of Article II. Notwithstanding anything to the
contrary herein, the Priority Lien Agent will be deemed to make no
representation as to the adequacy of the steps taken by it to perfect the
Subordinated Lien on any such

 

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Collateral and shall have no responsibility, duty, obligation or liability to
the Subordinated Collateral Trustee, any other Subordinated Secured Party or any
other Person for such perfection or failure to perfect, it being understood that
the sole purpose of this Article is to enable the Subordinated Secured Parties
to obtain a perfected Subordinated Lien in such Collateral to the extent, if
any, that such perfection results from the possession or control of such
Collateral or any such Account by the Priority Lien Agent. The Priority Lien
Agent acting pursuant to this Section 5.01 shall not have by reason of the
Priority Lien Security Documents, the Subordinated Security Documents, this
Agreement or any other document or theory, a fiduciary relationship in respect
of any Priority Lien Secured Party, the Subordinated Collateral Trustee or any
Subordinated Secured Party. Subject to Section 4.03, from and after the
Discharge of Priority Lien Obligations, the Priority Lien Agent shall take all
such actions in its power as shall reasonably be requested by the Grantors or
the Subordinated Collateral Trustee (at the sole cost and expense of the
Grantors) to transfer possession or control of such Collateral or any such
Account (in each case to the extent the Subordinated Collateral Trustee has a
Lien on such Collateral or Account after giving effect to any prior or
concurrent releases of Liens) to the Subordinated Collateral Trustee for the
benefit of all Subordinated Secured Parties.

Section 5.02 Deposit Accounts. Prior to the Discharge of Priority Lien
Obligations, to the extent that any Account is under the control of the Priority
Lien Agent at any time, the Priority Lien Agent will act as gratuitous bailee
for the Subordinated Collateral Trustee for the purpose of perfecting the Liens
of the Subordinated Secured Parties in such Accounts and the cash and other
assets therein as provided in Section 5.01 (but will have no duty,
responsibility or obligation to the Subordinated Secured Parties (including,
without limitation, any duty, responsibility or obligation as to the maintenance
of such control, the effect of such arrangement or the establishment of such
perfection) except as set forth in the last sentence of this Section 5.02(a)).
Unless the Subordinated Liens on such Collateral shall have been or concurrently
are released, after the occurrence of Discharge of Priority Lien Obligations,
the Priority Lien Agent shall, at the request of the Subordinated Collateral
Trustee, cooperate with the Grantors and the Subordinated Collateral Trustee (at
the expense of the Grantors) in permitting control of any other Accounts to be
transferred to the Subordinated Collateral Trustee (or for other arrangements
with respect to each such Accounts satisfactory to the Subordinated Collateral
Trustee to be made).

ARTICLE VI

APPLICATION OF PROCEEDS; DETERMINATION OF AMOUNTS

Section 6.01 Application of Proceeds. Prior to the Discharge of Priority Lien
Obligations, and regardless of whether an Insolvency or Liquidation Proceeding
has been commenced, Collateral or Proceeds received in connection with the
enforcement or exercise of any rights or remedies with respect to any portion of
the Collateral will be applied:

(a) first, to the payment in full in cash of all Priority Lien Obligations,

(b) second, to the payment in full in cash of all Subordinated Obligations, and

(c) third, to SandRidge or as otherwise required by applicable law.

Section 6.02 Determination of Amounts. Whenever a Secured Debt Representative
shall be required, in connection with the exercise of its rights or the
performance of its obligations hereunder, to determine the existence or amount
of any Priority Lien Obligations (or the existence of any commitment to extend
credit that would constitute Priority Lien Obligations) or Subordinated
Obligations, or the existence of any Lien securing any such obligations, or the
Collateral subject to any such Lien, it may request that such information be
furnished to it in writing by the other Secured Debt Representatives and shall
be entitled to make such determination on the basis of the information so
furnished; provided, however, that if a Secured Debt Representative shall fail
or refuse reasonably promptly to provide the requested information, the
requesting Secured Debt Representative shall be entitled to make any such
determination by such method as it may, in the exercise of its good faith
judgment, determine, including by reliance upon a certificate of SandRidge. Each
Secured Debt Representative may rely conclusively,

 

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and shall be fully protected in so relying, on any determination made by it in
accordance with the provisions of the preceding sentence (or as otherwise
directed by a court of competent jurisdiction) and shall have no liability to
SandRidge or any of their subsidiaries, any Secured Party or any other Person as
a result of such determination.

ARTICLE VII

NO RELIANCE; NO LIABILITY; OBLIGATIONS ABSOLUTE; CONSENT OF GRANTORS; ETC.

Section 7.01 No Reliance; Information. The Priority Lien Secured Parties and the
Subordinated Secured Parties shall have no duty to disclose to any Subordinated
Secured Party or to any Priority Lien Secured Party, as the case may be, any
information relating to SandRidge or any of the other Grantors, or any other
circumstance bearing upon the risk of non-payment of any of the Priority Lien
Obligations or the Subordinated Obligations, as the case may be, that is known
or becomes known to any of them or any of their Affiliates. In the event any
Priority Lien Secured Party or any Subordinated Secured Party, in its sole
discretion, undertakes at any time or from time to time to provide any such
information to, any Subordinated Secured Party or any Priority Lien Secured
Party, as the case may be, it shall be under no obligation (a) to make, and
shall not make or be deemed to have made, any express or implied representation
or warranty, including with respect to the accuracy, completeness, truthfulness
or validity of the information so provided, (b) to provide any additional
information or to provide any such information on any subsequent occasion or
(c) to undertake any investigation.

Section 7.02 No Warranties or Liability.

(a) The Priority Lien Agent, for itself and on behalf of the other Priority Lien
Secured Parties, acknowledges and agrees that, except for the representations
and warranties set forth in Article VIII, neither the Subordinated Collateral
Trustee nor any other Subordinated Secured Party has made any express or implied
representation or warranty, including with respect to the execution, validity,
legality, completeness, collectability or enforceability of any of the
Subordinated Documents, the ownership of any Collateral or the perfection or
priority of any Liens thereon.

(b) The Subordinated Collateral Trustee, for itself and on behalf of the other
Subordinated Secured Parties, acknowledges and agrees that, except for the
representations and warranties set forth in Article VIII, neither the Priority
Lien Agent nor any other Priority Lien Secured Party has made any express or
implied representation or warranty, including with respect to the execution,
validity, legality, completeness, collectability or enforceability of any of the
Priority Lien Documents, the ownership of any Collateral or the perfection or
priority of any Liens thereon.

(c) (i) The Priority Lien Agent and the other Priority Lien Secured Parties
shall have no express or implied duty to the Subordinated Collateral Trustee or
any other Subordinated Secured Party, and (ii) the Subordinated Collateral
Trustee and the other Subordinated Secured Parties shall have no express or
implied duty to the Priority Lien Agent or any other Priority Lien Secured
Party, in each case to act or refrain from acting in a manner which allows, or
results in, the occurrence or continuance of a default or an event of default
under any Priority Lien Document and any Subordinated (other than, in each case,
this Agreement), regardless of any knowledge thereof which they may have or be
charged with.

(d) The Subordinated Collateral Trustee, for itself and on behalf of each other
Subordinated Secured Party, hereby waives any claim that may be had against the
Priority Lien Agent or any other Priority Lien Secured Party arising out of any
actions which the Priority Lien Agent or such Priority Lien Secured Party takes
or omits to take (including actions with respect to the creation,

 

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perfection or continuation of Liens on any Collateral, actions with respect to
the foreclosure upon, sale, release or depreciation of, or failure to realize
upon, any Collateral, and actions with respect to the collection of any claim
for all or only part of the Priority Lien Obligations from any account debtor,
guarantor or any other party) in accordance with this Agreement and the Priority
Lien Documents or the valuation, use, protection or release of any security for
such Priority Lien Obligations.

Section 7.03 Obligations Absolute. The Lien priorities provided for herein and
the respective rights, interests, agreements and obligations hereunder of the
Priority Lien Agent and the other Priority Lien Secured Parties and the
Subordinated Collateral Trustee and the other Subordinated Secured Parties shall
remain in full force and effect irrespective of:

(a) any lack of validity or enforceability of any Secured Debt Document;

(b) any change in the time, place or manner of payment of, or in any other term
of (including the Replacing of), all or any portion of the Priority Lien
Obligations, it being specifically acknowledged that a portion of the Priority
Lien Obligations consists or may consist of indebtedness that is revolving in
nature, and the amount thereof that may be outstanding at any time or from time
to time may be increased or reduced and subsequently reborrowed;

(c) any amendment, waiver or other modification, whether by course of conduct or
otherwise, of any Secured Debt Document;

(d) the securing of any Priority Lien Obligations or Subordinated Obligations or
with any additional collateral or guarantees, or any exchange, release, voiding,
avoidance or non-perfection of any security interest in any Collateral or any
other collateral or any release of any guarantee securing any Priority Lien
Obligations or Subordinated Obligations;

(e) the commencement of any Insolvency or Liquidation Proceeding in respect of
SandRidge or any other Grantor; or

(f) any other circumstances that otherwise might constitute a defense available
to, or a discharge of, SandRidge or any other Grantor in respect of the Priority
Lien Obligations or the Subordinated Obligations.

Section 7.04 Grantors Consent. Each Grantor hereby consents to the provisions of
this Agreement and the intercreditor arrangements provided for herein and agrees
that the obligations of the Grantors under the Secured Debt Documents will in no
way be diminished or otherwise affected by such provisions or arrangements
(except as expressly provided herein).

ARTICLE VIII

REPRESENTATIONS AND WARRANTIES

Section 8.01 Representations and Warranties of Each Party. Each party hereto
represents and warrants to the other parties hereto as follows:

(a) Such party is duly organized, validly existing and in good standing under
the laws of the jurisdiction of its organization and has all requisite power and
authority to enter into and perform its obligations under this Agreement.

(b) This Agreement has been duly executed and delivered by such party.

 

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(c) The execution, delivery and performance by such party of this Agreement
(i) do not require any consent or approval of, registration or filing with or
any other action by any Governmental Authority of which the failure to obtain
could reasonably be expected to have a Material Adverse Effect (as defined in
the Priority Credit Agreement), (ii) will not violate any applicable law or
regulation or any order of any Governmental Authority or any indenture,
agreement or other instrument binding upon such party which could reasonably be
expected to have a Material Adverse Effect and (iii) will not violate the
charter, by-laws or other organizational documents of such party.

Section 8.02 Representations and Warranties of Each Representative. Each of the
Priority Lien Agent and the Subordinated Collateral Trustee represents and
warrants to the other parties hereto that it is authorized under the Priority
Credit Agreement and the Subordinated Collateral Trust Agreement, as the case
may be, to enter into this Agreement.

ARTICLE IX

MISCELLANEOUS

Section 9.01 Notices. All notices and other communications provided for herein
shall be in writing and shall be delivered by hand or overnight courier service,
mailed by certified or registered mail or sent by telecopy, as follows:

(a) if to the Original Priority Lien Agent, to it at:

Royal Bank of Canada

20 King Street West, 4th Floor

Toronto, Ontario M5K 1C4

Fax: 416.842.4023

Attention: manager Agency Services

(b) if to the Original Subordinated Collateral Trustee, to it at:

Wilmington Trust, National Association

15950 North Dallas Parkway, Suite 550

Dallas, Texas 75248

Attention: SandRidge Notes Administrator

(c) if to any other Secured Debt Representative, to such address as specified in
the Priority Confirmation Joinder.

Any party hereto may change its address or facsimile number for notices and
other communications hereunder by notice to the other parties hereto. All
notices and other communications given to any party hereto in accordance with
the provisions of this Agreement shall be deemed to have been given on the date
of receipt (if a Business Day) and on the next Business Day thereafter (in all
other cases) if delivered by hand or overnight courier service or sent by
telecopy or on the date five Business Days after dispatch by certified or
registered mail if mailed, in each case delivered, sent or mailed (properly
addressed) to such party as provided in this Section 9.01 or in accordance with
the latest unrevoked direction from such party given in accordance with this
Section 9.01. As agreed to in writing among SandRidge, the Priority Lien Agent
and the Subordinated Collateral Trustee from time to time, notices and other
communications may also be delivered by e-mail to the e-mail address of a
representative of the applicable person provided from time to time by such
person.

 

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Section 9.02 Waivers; Amendment. (a) No failure or delay on the part of any
party hereto in exercising any right or power hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any such right or
power, or any abandonment or discontinuance of steps to enforce such a right or
power, preclude any other or further exercise thereof or the exercise of any
other right or power. The rights and remedies of the parties hereto are
cumulative and are not exclusive of any rights or remedies that they would
otherwise have. No waiver of any provision of this Agreement or consent to any
departure by any party therefrom shall in any event be effective unless the same
shall be permitted by paragraph (b) of this Section 9.02, and then such waiver
or consent shall be effective only in the specific instance and for the purpose
for which given. No notice or demand on any party hereto in any case shall
entitle such party to any other or further notice or demand in similar or other
circumstances.

(b) Neither this Agreement nor any provision hereof may be terminated, waived,
amended or modified except pursuant to an agreement or agreements in writing
entered into by each Secured Debt Representative; provided, however, that this
Agreement may be amended from time to time as provided in Section 4.04. Any
amendment of this Agreement that is proposed to be effected without the consent
of a Secured Debt Representative as permitted by the proviso to the preceding
sentence shall be submitted to such Secured Debt Representative for its review
at least 5 Business Days prior to the proposed effectiveness of such amendment.

Section 9.03 Actions Upon Breach; Specific Performance. (a) Prior to the
Discharge of Priority Lien Obligations, if any Subordinated Secured Party,
contrary to this Agreement, commences or participates in any action or
proceeding against any Grantor or the Collateral, such Grantor, with the prior
written consent of the Priority Lien Agent, may interpose as a defense or
dilatory plea the making of this Agreement, and any Priority Lien Secured Party
may intervene and interpose such defense or plea in its or their name or in the
name of such Grantor.

(b) Prior to the Discharge of Priority Lien Obligations, should any Subordinated
Secured Party, contrary to this Agreement, in any way take, attempt to or
threaten to take any action with respect to the Collateral (including any
attempt to realize upon or enforce any remedy with respect to this Agreement),
or take any other action in violation of this Agreement or fail to take any
action required by this Agreement, the Priority Lien Agent or any other Priority
Lien Secured Party (in its own name or in the name of the relevant Grantor) or
the relevant Grantor, with the prior written consent of the Priority Lien Agent,
(A) may obtain relief against such Subordinated Secured Party, by injunction,
specific performance and/or other appropriate equitable relief, it being
understood and agreed by the Subordinated Collateral Trustee on behalf of each
Subordinated Secured Party that (I) the Priority Lien Secured Parties’ damages
from its actions may at that time be difficult to ascertain and may be
irreparable, and (II) each Subordinated Secured Party waives any defense that
the Grantors and/or the Priority Lien Secured Parties cannot demonstrate damage
and/or be made whole by the awarding of damages, and (B) shall be entitled to
damages, as well as reimbursement for all reasonable and documented costs and
expenses incurred in connection with any action to enforce the provisions of
this Agreement, from such Subordinated Secured Party.

Section 9.04 Parties in Interest. This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective successors and
assigns, as well as the other Secured Parties, all of whom are intended to be
bound by, and to be third party beneficiaries of, this Agreement.

Section 9.05 Survival of Agreement. All covenants, agreements, representations
and warranties made by any party in this Agreement shall be considered to have
been relied upon by the other parties hereto and shall survive the execution and
delivery of this Agreement.

 

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Section 9.06 Counterparts. This Agreement may be executed in counterparts, each
of which shall constitute an original but all of which when taken together shall
constitute a single contract. Delivery of an executed signature page to this
Agreement by facsimile transmission shall be as effective as delivery of a
manually signed counterpart of this Agreement.

Section 9.07 Severability. Any provision of this Agreement held to be invalid,
illegal or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such invalidity, illegality or unenforceability
without affecting the validity, legality and enforceability of the remaining
provisions hereof; and the invalidity of a particular provision in a particular
jurisdiction shall not invalidate such provision in any other jurisdiction. The
parties shall endeavor in good-faith negotiations to replace the invalid,
illegal or unenforceable provisions with valid provisions the economic effect of
which comes as close as possible to that of the invalid, illegal or
unenforceable provisions.

Section 9.08 Governing Law; Jurisdiction; Consent to Service of Process.
(a) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF NEW YORK.

(b) Each party hereto hereby irrevocably and unconditionally submits, for itself
and its property, to the nonexclusive jurisdiction of the Supreme Court of the
State of New York sitting in New York County and of the United States District
Court of the Southern District of New York, and any appellate court from any
thereof, in any action or proceeding arising out of or relating to this
Agreement, or for recognition or enforcement of any judgment, and each of the
parties hereto hereby irrevocably and unconditionally agrees that all claims in
respect of any such action or proceeding may be heard and determined in such New
York State court or, to the extent permitted by law, in such federal court. Each
of the parties hereto agrees that a final judgment in any such action or
proceeding shall be conclusive and may be enforced in other jurisdictions by
suit on the judgment or in any other manner provided by law. Nothing in this
Agreement shall affect any right that any party hereto may otherwise have to
bring any action or proceeding relating to this Agreement in the courts of any
jurisdiction.

(c) Each party hereto hereby irrevocably and unconditionally waives, to the
fullest extent it may legally and effectively do so, any objection which it may
now or hereafter have to the laying of venue of any suit, action or proceeding
arising out of or relating to this Agreement in any court referred to in
paragraph (b) of this Section 9.08. Each of the parties hereto hereby
irrevocably waives, to the fullest extent permitted by law, the defense of an
inconvenient forum to the maintenance of such action or proceeding in any such
court.

(d) Each party to this Agreement irrevocably consents to service of process in
the manner provided for notices in Section 9.01. Nothing in this Agreement will
affect the right of any party to this Agreement to serve process in any other
manner permitted by law.

Section 9.09 WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING
TO THIS AGREEMENT. EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT
OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT
SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE
FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE
BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL
WAIVERS AND CERTIFICATIONS IN THIS SECTION.

 

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Section 9.10 Headings. Article, Section and Annex headings used herein are for
convenience of reference only, are not part of this Agreement and are not to
affect the construction of, or to be taken into consideration in interpreting,
this Agreement.

Section 9.11 Conflicts. In the event of any conflict or inconsistency between
the provisions of this Agreement and the provisions of any Secured Debt
Documents, the provisions of this Agreement shall control.

Section 9.12 Provisions Solely to Define Relative Rights. The provisions of this
Agreement are and are intended solely for the purpose of defining the distinct
and separate relative rights of the Priority Lien Secured Parties and the
Subordinated Secured Parties. None of SandRidge, any other Grantor or any other
creditor thereof shall have any rights or obligations hereunder, except as
expressly provided in this Agreement (provided that nothing in this Agreement
(other than Sections 4.01, 4.02, 4.04, or 4.05) is intended to or will amend,
waive or otherwise modify the provisions of the Priority Credit Agreement or the
Subordinated Notes Indenture, as applicable), and except as expressly provided
in this Agreement neither SandRidge nor any other Grantor may rely on the terms
hereof (other than Sections 4.01, 4.02, 4.04, or 4.05, Article VII and Article
IX). Nothing in this Agreement is intended to or shall impair the obligations of
SandRidge or any other Grantor, which are absolute and unconditional, to pay the
Obligations under the Secured Debt Documents as and when the same shall become
due and payable in accordance with their terms. Notwithstanding anything to the
contrary herein or in any Secured Debt Document, the Grantors shall not be
required to act or refrain from acting pursuant to this Agreement, any Priority
Lien Document or any Subordinated Document with respect to any Collateral in any
manner that would cause a default under any Priority Lien Document.

Section 9.13 Certain Terms Concerning the Subordinated Collateral Trustee. The
Subordinated Collateral Trustee is executing and delivering this Agreement
solely in its capacity as such and pursuant to direction set forth in the
Subordinated Collateral Trust Agreement; and in so doing, the Subordinated
Collateral Trustee shall not be responsible for the terms or sufficiency of this
Agreement for any purpose. The Subordinated Collateral Trustee shall have no
duties or obligations under or pursuant to this Agreement other than such duties
and obligations as may be expressly set forth in this Agreement as duties and
obligations on its part to be performed or observed. In entering into this
Agreement, or in taking (or forbearing from) any action under or pursuant to the
Agreement, the Subordinated Collateral Trustee shall have and be protected by
all of the rights, immunities, indemnities and other protections granted to it
under the Subordinated Notes Indenture and the other Subordinated Documents
(including without limitation Article 5 and Section 7.8 of the Subordinated
Collateral Trust Agreement).

Section 9.14 Certain Terms Concerning the Priority Lien Agent and the
Subordinated Collateral Trustee. None of the Priority Lien Agent or the
Subordinated Collateral Trustee shall have any liability or responsibility for
the actions or omissions of any other Secured Party, or for any other Secured
Party’s compliance with (or failure to comply with) the terms of this Agreement.
None of the Priority Lien Agent or the Subordinated Collateral Trustee shall
have individual liability to any Person if it shall mistakenly pay over or
distribute to any Secured Party (or SandRidge) any amounts in violation of the
terms of this Agreement, so long as the Priority Lien Agent or the Subordinated
Collateral Trustee, as the case may be, is acting in good faith. Each party
hereto hereby acknowledges and agrees that each of the Priority Lien Agent and
the Subordinated Collateral Trustee is entering into this Agreement solely in
its capacity under the Priority Lien Documents and the Subordinated Documents,
respectively, and not in its individual capacity. (a) The Priority Lien Agent
shall not be deemed to owe any fiduciary duty to the Subordinated Collateral
Trustee or any other Subordinated Representative or any other Subordinated
Secured Party; and (b) the Subordinated Collateral Trustee shall not be deemed
to owe any fiduciary duty to the Priority Lien Agent or any other Priority Lien
Secured Party.

 

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Section 9.15 Authorization of Secured Agents. By accepting the benefits of this
Agreement and the other Priority Lien Security Documents, each Priority Lien
Secured Party authorizes the Priority Lien Agent to enter into this Agreement
and to act on its behalf as collateral agent hereunder and in connection
herewith. By accepting the benefits of this Agreement and the other Subordinated
Security Documents, each Subordinated Secured Party authorizes the Subordinated
Collateral Trustee to enter into this Agreement and to act on its behalf as
collateral agent hereunder and in connection herewith.

Section 9.16 Further Assurances. Each of the Priority Lien Agent, for itself and
on behalf of the other Priority Lien Secured Party, the Subordinated Collateral
Trustee, for itself and on behalf of the other Subordinated Secured Parties, and
each Grantor party hereto, for itself and on behalf of its subsidiaries, agrees
that it will execute, or will cause to be executed, any and all further
documents, agreements and instruments, and take all such further actions, as may
be required under any applicable law, or which the Priority Lien Agent or the
Subordinated Collateral Trustee may reasonably request, to effectuate the terms
of this Agreement, including the relative Lien priorities provided for herein,
all at the Grantor’s sole cost and expense.

Section 9.17 Relationship of Secured Parties. Nothing set forth herein shall
create or evidence a joint venture, partnership or an agency or fiduciary
relationship among the Secured Parties. None of the Secured Parties nor any of
their respective directors, officers, agents or employees shall be responsible
to any other Secured Party or to any other Person for any Grantor’s solvency,
financial condition or ability to repay the Priority Lien Obligations or the
Subordinated Obligations, or for statements of any Grantor, oral or written, or
for the validity, sufficiency or enforceability of the Priority Lien Documents
or the Subordinated Documents, or any security interests granted by any Grantor
to any Secured Party in connection therewith. Each Secured Party has entered
into its respective financing agreements with the Grantors based upon its own
independent investigation, and none of the Priority Lien Agent or the
Subordinated Collateral Trustee makes any warranty or representation to the
other Secured Debt Representatives or the Secured Parties for which it acts as
agent nor does it rely upon any representation of the other agents or the
Secured Parties for which it acts as agent with respect to matters identified or
referred to in this Agreement.

Section 9.18 Springing Event.

(a) Within five Business Days of the Springing Event, the Company shall, or
cause the Subordinated Representative to, deliver a written notice (the
“Springing Event Notice”) of the Springing Event to all holders, or lenders, of
the relevant Subordinated Obligations. The Springing Event Notice shall
(i) provide reasonable background on the facts and circumstances of the
Specified Litigation Event, (ii) inform such holders or lenders that the
Springing Event has occurred and (iii) to the extent applicable, request that
each of the holders, or lenders, of such Subordinated Obligations notify the
Company of the number of shares of common stock held by such holder or lender.

(b) Upon the occurrence of a Springing Event, and from time to time thereafter,
including, without limitation, upon any increase in the obligations of the
Company under the relevant Subordinated Debt Documents and guarantee obligations
of any subsidiary of the Company providing a guarantee of the relevant
Subordinated Debt pursuant to Section 9.18(c), the Company shall take such
actions as are necessary and as the Subordinated Debt Representative or the
holders or lenders in respect of the relevant Subordinated Debt Obligations may
request, including delivery of financing statements and other security
documents, authorization documents and opinions of counsel, to ensure and
confirm that the obligations of the Company under the relevant Subordinated Debt
Documents and guarantee obligations of any subsidiary of the Company providing a
guarantee of the relevant Subordinated Debt will be secured by a perfected
Subordinated Lien on the Collateral junior only to the Liens securing the
Priority Credit Agreement.

 

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(c) Immediately upon receiving sufficient notices from the holders or lenders of
Subordinated Obligations on or after the date of the Specified Litigation Event
that such holders or lenders own the greater of (x) at least 8,483,489 shares of
common stock of the Company or (y) at least a majority of the aggregate number
of shares of common stock outstanding as of the date of delivery of a Springing
Event Notice in the aggregate (whether in response to the Springing Event Notice
or otherwise), the amount of the obligations of the Company under the relevant
Subordinated Debt Documents and guarantee obligations of any subsidiary of the
Company providing a guarantee of the relevant Subordinated Debt shall be
increased from $100,000,000 in aggregate principal amount of such obligations to
the full outstanding principal amount of such obligations (including any
additional principal amount).

[SIGNATURES BEGIN NEXT PAGE]

 

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their respective authorized officers as of the day and year first
above written.

 

ROYAL BANK OF CANADA, as Priority Lien Agent By:  

/s/ Susan Khokher

Name:   Susan Khokher Title:   Manager

Signature Page

Intercreditor and Subordination Agreement

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WILMINGTON TRUST, NATIONAL ASSOCIATION, as Subordinated Collateral Trustee By:  

/s/ Shawn Goffinet

Name:   Shawn Goffinet Title:   Assistant Vice President

Signature Page

Intercreditor and Subordination Agreement

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ACKNOWLEDGED AND AGREED AS OF THE DATE FIRST ABOVE WRITTEN: SANDRIDGE ENERGY,
INC. By:  

/s/ Julian Bott

Name:   Julian Bott Title:   Executive Vice President and Chief Financial
Officer SANDRIDGE HOLDINGS, INC. SANDRIDGE EXPLORATION AND PRODUCTION, LLC
SANDRIDGE MIDSTREAM, INC. SANDRIDGE OPERATING COMPANY INTEGRA ENERGY, L.L.C.
LARIAT SERVICES, INC. By:  

/s/ Julian Bott

Name:   Julian Bott Title:   Executive Vice President and Chief Financial
Officer

Signature Page

Intercreditor and Subordination Agreement

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ANNEX I

Provision for the Subordinated Notes Indenture, any Additional Subordinated Debt
Facility and the Subordinated Documents

Reference is made to the Intercreditor and Subordination Agreement, dated as of
October 4, 2016, between Royal Bank of Canada, as Priority Lien Agent (as
defined therein), and Wilmington Trust, National Association, as Subordinated
Collateral Trustee (as defined therein) and acknowledged and agreed by SandRidge
Energy, Inc. and certain of its subsidiaries (as amended, supplemented, amended
and restated or otherwise modified and in effect from time to time, the
“Intercreditor Agreement”). Each holder of Subordinated Obligations (as defined
therein), by its acceptance of such Subordinated Obligations i) consents to the
subordination of Liens provided for in the Intercreditor Agreement, ii) agrees
that it will be bound by, and will take no actions contrary to, the provisions
of the Intercreditor Agreement and iii) authorizes and instructs the
Subordinated Collateral Trustee (as defined therein) on behalf of each
Subordinated Secured Party (as defined therein) to enter into the Intercreditor
Agreement as Subordinated Collateral Trustee on behalf of such Subordinated
Secured Parties. The foregoing provisions are intended as an inducement to the
lenders under the Priority Lien Documents (as defined in the Intercreditor
Agreement) to extend credit to SandRidge Energy, Inc. and such lenders are
intended third party beneficiaries of such provisions and the provisions of the
Intercreditor Agreement.

Provision for all Subordinated Security Documents

Reference is made to the Intercreditor and Subordination Agreement, dated as of
October 4, 2016, between Royal Bank of Canada, as Priority Lien Agent (as
defined therein), and Wilmington Trust, National Association, as Subordinated
Collateral Trustee (as defined therein) and acknowledged and agreed by SandRidge
Energy, Inc. and certain of its subsidiaries (as amended, supplemented, amended
and restated or otherwise modified and in effect from time to time, the
“Intercreditor Agreement”). Each Person that is secured hereunder, by accepting
the benefits of the security provided hereby, (i) consents (or is deemed to
consent), to the subordination of Liens provided for in the Intercreditor
Agreement, (ii) agrees (or is deemed to agree) that it will be bound by, and
will take no actions contrary to, the provisions of the Intercreditor Agreement,
(iii) authorizes (or is deemed to authorize) the Subordinated Collateral Trustee
(as defined in the Intercreditor Agreement) on behalf of such Person to enter
into, and perform under, the Intercreditor Agreement and (iv) acknowledges (or
is deemed to acknowledge) that a copy of the Intercreditor Agreement was
delivered, or made available, to such Person.

Notwithstanding any other provision contained herein, this Agreement, the Liens
created hereby and the rights, remedies, duties and obligations provided for
herein are subject in all respects to the provisions of the Intercreditor
Agreement and, to the extent provided therein, the applicable Security Documents
(as defined in the Intercreditor Agreement). In the event of any conflict or
inconsistency between the provisions of this Agreement and the Intercreditor
Agreement, the provisions of the Intercreditor Agreement shall control.

 

Annex I-1

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EXHIBIT A

to Intercreditor Agreement

[FORM OF]

PRIORITY CONFIRMATION JOINDER

Reference is made to the Intercreditor Agreement, dated as of October 4, 2016
(as amended, supplemented, amended and restated or otherwise modified and in
effect from time to time, the “Intercreditor Agreement”) between Royal Bank of
Canada, as Priority Lien Agent for the Priority Lien Secured Parties (as defined
therein), and Wilmington Trust, National Association, as Subordinated Collateral
Trustee for the Subordinated Secured Parties (as defined therein) and
acknowledged and agreed by SandRidge Energy, Inc. and certain of its
subsidiaries.

Capitalized terms used but not otherwise defined herein shall have the meaning
set forth in the Intercreditor Agreement. This Priority Confirmation Joinder is
being executed and delivered pursuant to Section 4.04 [(a)][(b)][(c)] of the
Intercreditor Agreement as a condition precedent to the debt for which the
undersigned is acting as representative being entitled to the rights and
obligations of being [Additional [Priority Lien/Subordinated] Obligations] under
the Intercreditor Agreement.

1. Joinder. The undersigned, [                    ], a [                    ],
(the “New Representative”) as [trustee] [collateral trustee] [administrative
agent] [collateral agent] under that certain [describe applicable indenture,
credit agreement or other document governing the Additional Priority Lien or
Subordinated Obligations] hereby:

(a) represents that the New Representative has been authorized to become a party
to the Intercreditor Agreement on behalf of the [Priority Lien Secured Parties
under a Priority Substitute Credit Facility] [Additional Priority Lien Secured
Parties under an Additional Priority Lien Debt Facility] [Indenture Subordinated
Secured Parties under the Subordinated Substitute Facility] [Additional
Subordinated Secured Parties under the Additional Subordinated Debt Facility] as
[a Priority Lien Agent under a Priority Substitute Credit Facility] [a
Subordinated Collateral Trustee under a Subordinated Substitute Facility]
[Secured Debt Representative] [Priority Lien Representative] [Subordinated
Representative] under the Intercreditor Agreement for all purposes thereof on
the terms set forth therein, and to be bound by the terms of the Intercreditor
Agreement as fully as if the undersigned had executed and delivered the
Intercreditor Agreement as of the date thereof; and

(b) agrees that its address for receiving notices pursuant to the Intercreditor
Agreement shall be as follows:

[Address];

2. Priority Confirmation.

[Option A: to be used if additional debt constitutes a Series of Priority Lien
Debt] The undersigned New Representative, on behalf of itself and each holder of
Obligations in respect of the Series of Priority Lien Debt [that constitutes a
Priority Lien Substitute Facility] for which the undersigned is acting as
[Priority Lien Representative] [Priority Lien Agent] hereby agrees, for the
benefit of all Secured Parties and each future Secured Debt Representative, and
as a condition to being treated as Secured Obligations under the Intercreditor
Agreement, that:

(a) all Priority Lien Obligations will be and are secured in accordance with the
Priority Lien Intercreditor Agreement by all Priority Liens at any time granted
by SandRidge or any other Grantor to secure any Obligations in respect of such
Series of Priority Lien Debt, whether or not upon property otherwise
constituting Collateral for such Series of Priority Lien Debt;

 

Exhibit A - 1

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(b) the New Representative and each holder of Obligations in respect of the
Series of Priority Lien Debt for which the undersigned is acting as [Priority
Lien Representative] are bound by the provisions of the Intercreditor Agreement,
including the provisions relating to the ranking of Priority Liens and
Subordinated Liens and the order of application of proceeds from enforcement of
Priority Liens and Subordinated Liens; and

(c) the New Representative and each holder of Obligations in respect of the
Series of Priority Lien Debt for which the undersigned is acting as [Priority
Lien Representative] appoints the Priority Lien Agent and consents to the terms
of the Intercreditor Agreement and the performance by the Priority Lien Agent
of, and directs the Priority Lien Agent to perform, its obligations under the
Intercreditor Agreement and the Priority Lien Intercreditor Agreement, together
with all such powers as are reasonably incidental thereto. [or]

[Option B: to be used if additional debt constitutes a Series of Subordinated
Debt] The undersigned New Representative, on behalf of itself and each holder of
Obligations in respect of the Series of Subordinated Debt [that constitutes
Subordinated Substitute Facility] for which the undersigned is acting as
[Subordinated Representative] [Subordinated Collateral Trustee] hereby agrees,
for the benefit of all Secured Parties and each future Secured Debt
Representative, and as a condition to being treated as Secured Obligations under
the Intercreditor Agreement, that:

(a) all Subordinated Obligations will be and are secured equally and ratably by
all Subordinated Liens at any time granted by SandRidge or any other Grantor to
secure any Obligations in respect of such Series of Subordinated Debt, whether
or not upon property otherwise constituting Collateral for such Series of
Subordinated Debt;

(b) the New Representative and each holder of Obligations in respect of the
Series of Subordinated Debt for which the undersigned is acting as [Subordinated
Representative] are bound by the provisions of the Intercreditor Agreement,
including the provisions relating to the ranking of Priority Liens and
Subordinated Liens and the order of application of proceeds from enforcement of
Priority Liens and Subordinated Liens; and

(c) the New Representative and each holder of Obligations in respect of the
Series of Subordinated Debt for which the undersigned is acting as [Subordinated
Representative] appoints the Subordinated Collateral Trustee and consents to the
terms of the Intercreditor Agreement and the performance by the Second Lien
Collateral Trustee of, and directs the Subordinated Collateral Trustee to
perform, its obligations under the Intercreditor Agreement and the Subordinated
Collateral Trust Agreement, together with all such powers as are reasonably
incidental thereto. [or]

3. Full Force and Effect of Intercreditor Agreement. Except as expressly
supplemented hereby, the Intercreditor Agreement shall remain in full force and
effect.

4. Governing Law and Miscellaneous Provisions. The provisions of Article IX of
the Intercreditor Agreement will apply with like effect to this Priority
Confirmation Joinder.

5. Expenses. SandRidge agree to reimburse each Secured Debt Representative for
its reasonable fees and expenses in connection with this Priority Confirmation
Joinder, including the reasonable fees, other charges and disbursements of
counsel.

 

Exhibit A - 2

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IN WITNESS WHEREOF, the parties hereto have caused this Priority Confirmation
Joinder to be executed by their respective officers or representatives as of
[                    , 20    ].

 

[insert name of New Representative] By:  

 

Name:  

 

Title:  

 

The Priority Lien Agent hereby acknowledges receipt of this Priority
Confirmation Joinder [and agrees to act as Priority Lien Agent for the New
Representative and the holders of the Obligations represented thereby]:

 

 

as Priority Lien Agent By:  

 

Name:  

 

Title:  

 

The Subordinated Collateral Trustee hereby acknowledges receipt of this Priority
Confirmation Joinder [and agrees to act as Subordinated Collateral Trustee for
the New Representative and the holders of the Obligations represented thereby]:

 

 

as Subordinated Collateral Trustee By:  

 

Name:  

 

Title:  

 

 

Exhibit A - 3

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Acknowledged and Agreed to by: SANDRIDGE ENERGY, INC. By:  

 

Name:  

 

Title:  

 

 

Exhibit A - 4

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EXHIBIT B

to Intercreditor Agreement

SECURITY DOCUMENTS

PART A.

List of Credit Agreement Security Documents

 

1. Security Agreement, dated as of October 4, 2016 among SandRidge Energy, Inc.,
each of the other Grantors party thereto, and the Priority Lien Agent as
Administrative Agent for the Priority Lien Secured Parties.

 

2. Each mortgage and deed of trust entered into as of October 4, 2016 and
thereafter, assigned to the Priority Lien Agent or executed and delivered by
SandRidge Energy, Inc. or any other Grantor creating (or purporting to create) a
Lien upon Collateral in favor of the Priority Lien Agent, to secure the Priority
Lien Obligations, except to the extent released by the Priority Lien Agent in
accordance with this Agreement and the Priority Lien Security Documents.

 

3. Each UCC Financing Statement filed in connection with the documents listed in
items 1 and 2 of this Part A.

PART B.

List of Indenture Subordinated Lien Security Documents

 

1. Security Agreement, dated as of [●] among SandRidge Energy, Inc., each of the
other Grantors party thereto, and the Subordinated Collateral Trustee for the
Subordinated Secured Parties.

 

2. Each mortgage and deed of trust entered into as of [●] and thereafter,
assigned to the Subordinated Collateral Trustee or executed and delivered by
SandRidge Energy, Inc. or any other Grantor creating (or purporting to create) a
Lien upon Collateral in favor of the Subordinated Collateral Trustee, to secure
the Subordinated Obligations, except to the extent released by the Subordinated
Collateral Trustee in accordance with this Agreement and the Subordinated
Security Documents.

 

3. Each UCC Financing Statement filed in connection with the documents listed in
items 1 and 2 of this Part A.

 

Exhibit B - 1