Document:

Exhibit 10.21

 

Execution Copy

 

	
WHEN   RECORDED OR FILED,

PLEASE   RETURN TO:

Jones   Day

717   Texas, Suite 3300

Houston,   Texas  77002-2712

Attention:  Cassandra G. Mott
    	
 
    
	
 
    	
 
    
	
 
    	
Space above for County Recorder’s Use
    

 

MORTGAGE AND SECURITY AGREEMENT (KANSAS)

 

from

 

SANDRIDGE MISSISSIPPIAN TRUST II,

as Mortgagor,

 

to

 

WILMINGTON TRUST, NATIONAL ASSOCIATION,

as Collateral Agent, as Mortgagee,

 

for the benefit of

 

THE SECURED PERSONS

 

Dated as of April 23, 2012

 

THIS INSTRUMENT IS TO BE FILED AND RECORDED AS A MORTGAGE IN THE REAL ESTATE RECORDS OF EACH COUNTY IN WHICH THE HYDROCARBON INTERESTS DESCRIBED IN EXHIBIT A, OR ANY PORTION THEREOF, ARE LOCATED.

 

NOTWITHSTANDING ANY OTHER PROVISIONS HEREOF, THE INDEBTEDNESS SECURED HEREUNDER BY A MORTGAGE ON REAL PROPERTY WITHIN THE STATE OF KANSAS EXCLUDING FINANCE CHARGES AND INTEREST SHALL NOT EXCEED $8,649,000.

 

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THIS MORTGAGE AND SECURITY AGREEMENT (KANSAS) (this “Mortgage”) is entered into as of April 23, 2012 (the “Effective Date”) by SandRidge Mississippian Trust II, a Delaware statutory trust (the “Mortgagor”), whose address for notice is c/o The Bank of New York Mellon Trust Company, N.A., 919 Congress Avenue, Suite 500, Austin, Texas 78701, in favor of Wilmington Trust, National Association, as Collateral Agent (the “Mortgagee”), whose address for notice is 50 South Sixth Street, Suite 1290, Minneapolis, Minnesota 55402, for the benefit of the Secured Persons (as defined below) with respect to all Mortgaged Property (as defined below).

 

RECITALS

 

A.            On even date herewith, the Mortgagor, Swap Counterparties and the Mortgagee, as collateral agent, are executing a Collateral Agency Agreement (such agreement, as may from time to time be amended, restated, amended and restated, modified or supplemented, the “Collateral Agency Agreement”), pursuant to which, upon the terms and conditions stated therein, the Mortgagee, as collateral agent, has agreed to act on behalf of all Swap Counterparties with respect to the Collateral and to define the rights, duties, authority and responsibilities of the Mortgagee and the relationship among the Swap Counterparties regarding their interests in the Collateral.

 

B.            The Mortgagee and the other Secured Persons (as defined herein) have conditioned their obligations under the Secured Documents (as defined herein) upon the execution and delivery by the Mortgagor of this Mortgage.

 

C.            Therefore, in order to comply with the terms and conditions of the Secured Documents and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Mortgagor hereby agrees as follows:

 

ARTICLE I
 DEFINITIONS

 

Section 1.01          Terms Defined Above.  As used in this Mortgage, each term defined above has the meaning indicated above.

 

Section 1.02          Terms Defined in the Collateral Agency Agreement.  Unless otherwise defined herein, each term defined in the Collateral Agency Agreement and used herein has the meaning given to it in the Collateral Agency Agreement.

 

Section 1.03          Terms Defined in the UCC.  Unless otherwise defined herein or in the Collateral Agency Agreement, each capitalized term defined in the Applicable UCC and used herein has the meaning given to it in the Applicable UCC.

 

Section 1.04          Certain Defined Terms.  As used in this Mortgage, the following terms have the meanings specified below:

 

“Applicable UCC” means the provisions of the Uniform Commercial Code presently in effect in the jurisdiction in which the relevant UCC Collateral is situated or which otherwise is applicable to the creation, perfection, the effect of perfection or nonperfection, or the priority of the Liens described herein or the rights and remedies of Mortgagee under this Mortgage.

 

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“Collateral” means, collectively, all the Mortgaged Property and all the UCC Collateral.

 

“Event of Default” has the meaning assigned to such term in Section 4.01.

 

“Hydrocarbon Interests” means all rights, titles, interests and estates now owned or hereafter acquired by the Mortgagor in and to the oil and gas leases, oil, gas and mineral leases, wellbore interests, and/or other liquid or gaseous hydrocarbon leases, mineral fee interests, overriding royalty and royalty interests, net profit interests and production payment interests, and other interests and estates and the lands and premises covered or affected thereby, including any reserved or residual interests of whatever nature, in each case, that are described on Exhibit A; and it is the intention of the Mortgagor and the Mortgagee herein to cover and affect hereby all interests which the Mortgagor may now own or may hereafter acquire in and to the interests and Property described on Exhibit A, even though the Mortgagor’s interests or the Property be incorrectly described on Exhibit A or a description of a part or all of the interests or Property described on Exhibit A or the Mortgagor’s interests therein be omitted, and notwithstanding that the interests as specified on Exhibit A may be limited to particular lands, specified depths or particular types of property interests.

 

“Hydrocarbons” means all oil, gas, casinghead gas, drip gasoline, natural gasoline, condensate, distillate, liquid hydrocarbons, gaseous hydrocarbons and all products refined or separated therefrom and all other minerals which may be produced and saved from or attributable to the Oil and Gas Properties of the Mortgagor, including all oil in tanks, and all rents, issues, profits, proceeds, products, revenues and other incomes from or attributable to the Hydrocarbon Interests or other properties constituting Oil and Gas Properties.

 

“Indemnified Parties” means the Mortgagee and each other Secured Person, their respective Affiliates, and each such Person’s officers, directors, employees, representatives, agents, attorneys, accountants and experts.

 

“Mortgaged Property” means the properties and assets described in Section 2.01(a) through Section 2.01(d).

 

“Oil and Gas Properties” means  the Hydrocarbon Interests;  the Properties now or hereafter pooled or unitized with the Hydrocarbon Interests; and  all presently existing or future unitization, communitization, pooling agreements and declarations of pooled units and the units created thereby (including without limitation all units created under orders, regulations and rules or other official acts of any Governmental Authority and units created solely among working interest owners pursuant to operating agreements or otherwise) which may affect all or any portion of the Hydrocarbon Interests, the lands pooled or unitized therewith and the Mortgagor’s interests therein, together with all additions, substitutions, replacements and accessions to any and all of the foregoing.

 

“Permitted Liens” means all Liens permitted to be placed on the Mortgaged Properties under Section 14(a) of the Collateral Agency Agreement.

 

“Release Date” means the date upon which (a) all Secured Obligations (including, without limitation, all Swap Obligations (including interest accruing during the pendency of an insolvency or liquidation proceeding, regardless of whether allowed or allowable in such insolvency or liquidation proceeding) and all fees, costs, expenses and other amounts payable under the Principal Documents) shall

 

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have been paid in full in cash (other than contingent indemnification obligations) and (b) no Approved Swap Agreement is outstanding and in effect.

 

“Secured Documents” means the collective reference to the Collateral Agency Agreement and each Approved Swap Agreement.

 

“Secured Obligations” has the meaning assigned to such term in Section 2.04.

 

“Secured Persons” means the Collateral Agent, each Swap Counterparty, each Indemnified Party and any legal owner, holder, assignee or pledgee of any of the Secured Obligations.

 

“UCC Collateral” has the meaning assigned to such term in Section 2.02.

 

ARTICLE II
 GRANT OF MORTGAGE AND SECURED OBLIGATIONS

 

Section 2.01          Grant of Mortgage.  To secure payment of the Secured Obligations and the performance of the covenants and obligations herein contained, the Mortgagor does by these presents hereby GRANT, BARGAIN, SELL, ALIEN, CONVEY, TRANSFER, MORTGAGE, ASSIGN, WARRANT, PLEDGE, HYPOTHECATE and CONFIRM to the Mortgagee for the benefit of the Secured Persons, all of the following described rights, titles, interests, properties and estates of Mortgagor:

 

(a)           All rights, titles, interests and estates now owned or hereafter acquired by the Mortgagor in and to the Oil and Gas Properties.

 

(b)           All rights, titles, interests and estates now owned or hereafter acquired by the Mortgagor in and to all geological, geophysical, engineering, accounting, title, legal and other technical or business data concerning the Oil and Gas Properties, the Hydrocarbons or any other item of property which are in the possession of the Mortgagor, including all books, files, records, magnetic media, computer records and other forms of recording or obtaining access to such data.

 

(c)           Any Property that may from time to time hereafter, by delivery or by writing of any kind, be subjected to the Liens hereof by the Mortgagor or by anyone on the Mortgagor’s behalf; and the Mortgagee is hereby authorized to receive the same at any time as additional security hereunder.

 

(d)           All other rights, titles, interests and estates now owned or hereafter acquired by the Mortgagor in and to the Oil and Gas Properties and every part and parcel thereof, including, without limitation, any rights, titles, interests and estates as the same may be enlarged by the discharge of any payments out of production or by the removal of any charges or Permitted Liens to which any of such Oil and Gas Properties or other rights, titles, interests or estates are subject or otherwise; all rights of the Mortgagor to Liens securing payment of proceeds from the sale of production from any of such Oil and Gas Properties, together with any and all renewals and extensions of any of such related rights, titles, interests or estates; all contracts and agreements supplemental to or amendatory of or in substitution for the contracts and agreements described or mentioned above; and any and all additional interests of any kind hereafter acquired by the Mortgagor in and to the such related rights, titles, interests or estates.

 

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TO HAVE AND TO HOLD the Mortgaged Property unto the Mortgagee for the use and benefit of the Mortgagee and the Secured Persons and to its and their successors and assigns, upon the terms, provisions and conditions herein set forth.

 

This Mortgage is an absolute and unconditional mortgage to Mortgagee of the Mortgaged Property, whether now in existence or hereafter arising, for the purpose of vesting in Mortgagee, subject to the Permitted Liens, a perfected mortgage lien in the Mortgaged Property.

 

Any fractions or percentages specified on Exhibit A in referring to the Mortgagor’s interests are solely for purposes of the warranties made by the Mortgagor pursuant to Section 3.01 and shall in no manner limit the quantum of interest affected by this Section 2.01 with respect to any Oil and Gas Property or with respect to any unit or well identified on Exhibit A.

 

Section 2.02          Grant of Security Interest.  The Mortgagor hereby grants to the Mortgagee, for the benefit of the Secured Persons, a security interest in and to all of the Mortgagor’s rights, titles and interests in and to the following Property of the Mortgagor now owned or at any time hereafter acquired by the Mortgagor or in which the Mortgagor now has or at any time in the future may acquire any right, title or interest and whether now existing or hereafter coming into existence (collectively, the “UCC Collateral”) as collateral security for the prompt and complete payment when due (whether at the stated maturity, by acceleration or otherwise) of the Secured Obligations:

 

(a)           all as-extracted collateral produced or arising from the Property described on Exhibit A;

 

(b)           all Accounts arising from the sale, assignment, transfer or disposition of Hydrocarbons;

 

(c)           all Deposit Accounts holding proceeds from the sale, assignment, transfer or disposition of Hydrocarbons (each, a “Pledged Deposit Account”);

 

(d)           all Mortgaged Property in which, but only to the extent that, a security interest can be created under Article 9 of the Uniform Commercial Code of the State of Kansas; and

 

(e)           to the extent not otherwise included, all Proceeds of any and all of the foregoing UCC Collateral and all supporting obligations given with respect thereto; provided, however, that the foregoing grant of a security interest, and the provisions of this Mortgage, shall not apply to up to $1,000,000 in cash held by The Bank of New York Mellon Trust Company, N.A., as Trustee of Mortgagor, as a reserve for the payment of Mortgagor’s administrative expenses.

 

Section 2.03          Deposit Account Control Agreements.

 

(a)           The Mortgagor shall cause or arrange for the Mortgagee to have control, in accordance with Section 9-104 of the Applicable UCC, over each Pledged Deposit Account that the Mortgagor at any time opens or maintains.

 

(b)           So long as no Event of Default shall have occurred and be continuing, the Mortgagor shall have the sole right to direct the disposition of funds with respect to each Pledged Deposit Account.

 

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(c)           If an Event of Default shall have occurred and be continuing, the Mortgagee may, at any time and without notice to, or consent from, the Mortgagor transfer, or direct the transfer of, funds from any Pledged Deposit Account to satisfy the Secured Obligations (as defined in the Collateral Agency Agreement).

 

(d)           Upon the occurrence and during the continuance of any Event of Default, the Mortgagee shall be authorized to send each bank at which a Pledged Deposit Account is maintained (with a copy to the Mortgagor) a notice instructing such bank that Mortgagee shall thereafter, and Mortgagee shall be authorized to, exercise exclusive control of the applicable Pledged Deposit Account.

 

Section 2.04          Secured Obligations.  This Mortgage is executed and delivered by the Mortgagor to secure and enforce the payment of the following (the “Secured Obligations”):

 

(a)           any sums which may be advanced or paid by the Mortgagee or the Swap Counterparties under the terms hereof or of the Collateral Agency Agreement or other Secured Documents on account of the failure of the Mortgagor to comply with the covenants of the Mortgagor contained herein, or the failure of the Mortgagor or other obligor to comply with the covenants of the Mortgagor; and all other obligations of the Mortgagor arising pursuant to the provisions of this Mortgage, including penalties, indemnities, legal and other fees, charges and expenses, and amounts advanced by and expenses incurred in order to preserve any Collateral, whether due after acceleration or otherwise;

 

(b)           all interest (including, without limitation, interest accruing at any post-default rate (including the Default Rate) and interest accruing after the filing of any petition in bankruptcy, or the commencement of any insolvency, reorganization or like proceeding, whether or not a claim for post-filing or post-petition interest is allowed in such proceeding) in respect of all of the Secured Obligations and all costs of collection and attorneys’ fees, all as provided herein and in the Collateral Agency Agreement, Approved Swap Agreements and other Security Instruments;

 

(c)           all Swap Obligations, indebtedness, obligations and liabilities, whether now in existence or hereafter arising, whether by acceleration or otherwise, of the Mortgagor to any  Swap Counterparty under any Approved Swap Agreement, including, without limitation, any amounts payable in respect of a liquidation of, an acceleration of obligations under, or an early termination of, such Approved Swap Agreement, and any unpaid amounts owing in respect thereof;

 

(d)           all other obligations and liabilities of the Mortgagor to the Secured Persons, whether direct or indirect, absolute or contingent, due or to become due, or now existing or hereafter incurred, which may arise under, out of, or in connection with, the Secured Documents, in each case, whether on account of principal, interest, reimbursement obligations, payments in respect of an early termination date, fees, indemnities, costs, expenses or otherwise (including, without limitation, all fees and disbursements of counsel to the Secured Persons that are required to be paid by the Mortgagor pursuant to the terms of any of the Secured Documents); and

 

(e)           any and all renewals, modifications, substitutions, rearrangements or extensions of any of the foregoing, whether in whole or in part.

 

Section 2.05          Pro Rata Benefit.  This Mortgage is executed and granted for the pro rata benefit and security of the Secured Persons to secure the Secured Obligations for so long as same remains unpaid and thereafter until the Release Date.  This Section 2.05 shall not be construed to nor grant any of the

 

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Secured Persons the right to enforce the terms and provision of this Mortgage, such right being granted solely to the Mortgagee.

 

Section 2.06.  Maximum Secured Obligation.  The maximum amount of all obligations secured by this Mortgage, not including interest, collection costs, and attorneys’ fees, is $8,649,000.

 

ARTICLE III
 REPRESENTATIONS, WARRANTIES AND COVENANTS

 

The Mortgagor hereby represents, warrants and covenants as follows:

 

Section 3.01          Title.  To the extent of the undivided interests specified on Exhibit A, the Mortgagor has good and defensible title to and is possessed of the Mortgaged Property.  The Mortgagor has valid title to the UCC Collateral.  The Collateral is free of all Liens except Permitted Liens.

 

Section 3.02          Defend Title.  This Mortgage is, and always will be kept, a direct first priority Lien upon the Collateral; provided that Permitted Liens may exist as provided in the Collateral Agency Agreement, but no intent to subordinate the priority of the Liens created hereby is intended or inferred by such existence.  The Mortgagor will not create or suffer to be created or permit to exist any Lien prior or junior to or on a parity with the Lien of this Mortgage upon the Collateral or any part thereof other than such Permitted Liens.  The Mortgagor will warrant and defend the title to the Collateral, subject to the Permitted Liens, against the claims and demands of all other Persons whomsoever and will maintain and preserve the Lien created hereby (and its priority) until the Release Date.  If (i) an adverse claim be made against or  a cloud develop upon the title to any part of the Collateral other than a Permitted Lien or (ii) any Person, including the holder of a Permitted Lien, shall challenge the priority or validity of the Liens created by this Mortgage, then the Mortgagor agrees, upon obtaining knowledge thereof, to immediately defend against such adverse claim, take appropriate action to remove such cloud or subordinate such Permitted Lien, in each case, at the Mortgagor’s sole cost and expense.  The Mortgagor further agrees that the Mortgagee may take such other action as it reasonably deems advisable to protect and preserve its interest in the Collateral, and in such event the Mortgagor will indemnify the Mortgagee against any and all cost, attorneys’ fees and other expenses which they may incur in defending against any such adverse claim or taking action to remove any such cloud.

 

Section 3.03          Not a Foreign Person.  The Mortgagor is not a “foreign person” within the meaning of sections 1445 and 7701 of the Internal Revenue Code of 1986, as amended (i.e., the Mortgagor is not a non-resident alien, foreign corporation, foreign partnership, foreign trust or foreign estate as those terms are defined in such Code and any regulations promulgated thereunder).

 

Section 3.04          Power to Create Lien and Security.  The Mortgagor has full trust power and lawful authority to grant, bargain, sell, assign, transfer, mortgage and convey a Lien on all of the Collateral in the manner and form herein provided.

 

Section 3.05          Abandon, Sales.  The Mortgagor will not sell, lease, assign, transfer or otherwise dispose or abandon any of the Collateral before the Release Date except (i) for the sale, assignment, transfer and disposition of Hydrocarbons in the ordinary course of business, (ii) as consented to by a Dual-Vote Majority and/or (iii) as otherwise contemplated by this Mortgage.

 

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Section 3.06          Failure to Perform.  The Mortgagor agrees that if it fails to perform any act or to take any action which it is required to perform or take hereunder or pay any money which the Mortgagor is required to pay hereunder, the Mortgagee, in the Mortgagor’s name or its own name, may, but shall not be obligated to, perform or cause to perform such act or take such action or pay such money, and any expenses so incurred by it and any money so paid by it shall be a demand obligation owing by the Mortgagor to the Mortgagee, and the Mortgagee, upon making such payment, shall be subrogated to all of the rights of the Person receiving such payment.  Each amount due and owing by the Mortgagor to the Mortgagee pursuant to this Mortgage shall bear interest from the date of demand on Mortgagor therefor until paid at the Default Rate.

 

ARTICLE IV
 RIGHTS AND REMEDIES

 

Section 4.01          Event of Default.  A Triggering Event under the Collateral Agency Agreement shall be an “Event of Default” under this Mortgage.

 

Section 4.02          Foreclosure and Other Remedies.

 

(a)           After the occurrence of an Event of Default, the lien evidenced hereby shall be subject to foreclosure, as Mortgagee may elect, in any manner provided for herein or provided for or required by law.

 

(b)           After the occurrence of an Event of Default, and if such event shall be continuing, Mortgagee shall have the right and power to sell, to the extent permitted by law, at one or more sales, as an entirety or in parcels, as Mortgagee may elect, the Mortgaged Properties, at such place or places and otherwise in such manner and upon such notice as may be required by law, or, in the absence of any such requirement, as Mortgagee may deem appropriate, and to make conveyance to the purchaser or purchasers.  Mortgagee may postpone the sale of all or any portion of the Mortgaged Properties by public announcement at the time and place of such sale and from time to time thereafter may further postpone such sale by public announcement made at the time of sale fixed by the preceding postponement.

 

(c)           If any of the Secured Obligations shall become due and payable and shall not be promptly paid, the Mortgagee shall have the right and power to proceed by a suit or suits in equity or at law, whether for the specific performance of any covenant or agreement herein contained or in aid of the execution of any power herein granted, or for any foreclosure hereunder or for the sale of the Collateral under the judgment or decree of any court or courts of competent jurisdiction, or for the appointment of a receiver pending any foreclosure hereunder or the sale of the Collateral under the order of a court or courts of competent jurisdiction or under executory or other legal process, or for the enforcement of any other appropriate legal or equitable remedy.  Any money advanced by the Mortgagee in connection with any such receivership shall be a demand obligation (which obligation the Mortgagor hereby expressly promises to pay) owing by the Mortgagor to the Mortgagee and shall bear interest from the date of making such advance by the Mortgagee until paid at the Default Rate.

 

(d)           Mortgagee shall have the right to become the purchaser at any sale held by Mortgagee or by any court, receiver or public officer, and shall have the right to credit upon the amount of the bid made therefor the amount payable out of the net proceeds of such sale to it.

 

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(e)           Any sale by Mortgagee of the Mortgaged Properties may be made in any county in which any part of the Mortgaged Properties to be sold at such sale may be situated.  Mortgagee may, from time to time, postpone the sale by public announcement thereof at the time and place noticed therefor.  If the Mortgaged Properties consists of several parcels or interests, Mortgagee may designate the order in which the same shall be offered for sale or sold.  Mortgagor waives all rights to direct the order in which any of the Mortgaged Properties will be sold in the event of any sale under this Mortgage, and also any right to have any of the Mortgaged Properties marshaled upon any sale.

 

(f)            Notwithstanding any other provisions of this Mortgage, any lease of Minerals covered by this Mortgage which are subject to the Mineral Leasing Act of 1920 as amended, and the regulations promulgated thereunder, shall not be sold or otherwise disposed of to any party other than the citizens of the United States, or to associations of such citizens or to any corporation organized under the laws of the United States, or any state or territory thereof that are qualified to own or control interests in such leases under the provisions of such Act and regulations, or to Persons who may acquire ownership or interest in such leases under the provisions of 30 U.S.C. §184(g) if applicable, as such Act or regulations are now or may be from time to time in effect.

 

(g)           If an Event of Default shall occur and be continuing, then (i) the Mortgagee shall be entitled to all of the rights, powers and remedies afforded a secured party by the Applicable UCC with reference to the UCC Collateral and (ii) the Mortgagee may proceed as to any UCC Collateral in accordance with the rights and remedies granted under this Mortgage or applicable law in respect of the UCC Collateral.  Such rights, powers and remedies shall be cumulative and in addition to those granted to the Mortgagee under any other provision of this Mortgage or under any other Secured Document.  Written notice mailed to Mortgagor as provided herein at least ten (10) days prior to the date of public sale of any part of the Collateral which is personal property subject to the provisions of the Applicable UCC, or prior to the date after which private sale of any such part of the Collateral will be made, shall constitute reasonable notice.  Without in any manner limiting the generality of any of the other provisions of this Mortgage, this Mortgage is effective as a financing statement and may be filed of record in the real estate records with respect to all as-extracted collateral comprising any part of the Collateral pursuant to the Applicable UCC.  Mortgagor hereby authorizes Mortgagee to file, in any filing or recording office, one or more UCC financing statements describing the UCC Collateral and any renewal, continuation or amendment statements thereof.

 

(h)           The Collateral may be sold in one or more parcels and to the extent permitted by applicable law in such manner and order as the Mortgagee, in its sole discretion, may elect, it being expressly understood and agreed that the right of sale arising out of any Event of Default shall not be exhausted by any one or more sales.

 

(i)            The Mortgagee may appoint or delegate any one or more Persons as agent to perform any act or acts necessary or incident to any sale held by the Mortgagee, including the posting of notices, in the name and on behalf of the Mortgagee.

 

Section 4.03          Possession of Mortgaged Property.  If an Event of Default shall have occurred and be continuing, then, to the extent permitted by applicable law, the Mortgagee shall have the right and power to enter into and upon and take possession of all or any part of the Collateral in the possession of the Mortgagor, its successors or assigns, or its or their agents or servants, and may exclude the Mortgagor, its successors or assigns, and all persons claiming under the Mortgagor, and its or their agents or servants wholly or partly therefrom; and, holding the same, the Mortgagee may use, administer, manage, operate

 

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and control the Collateral and conduct the business thereof to the same extent as the Mortgagor, its successors or assigns, might at the time do and may exercise all rights and powers of the Mortgagor, in the name, place and stead of the Mortgagor, or otherwise as the Mortgagee shall deem best.  All costs, expenses and liabilities of every character incurred by the Mortgagee in administering, managing, operating, and controlling the Mortgaged Property shall constitute a demand obligation (which obligation the Mortgagor hereby expressly promises to pay) owing by the Mortgagor to the Mortgagee and shall bear interest from the date of demand on Mortgagor therefor until paid at the Default Rate.

 

Section 4.04          Remedies Cumulative, Concurrent and Nonexclusive.  Every right, power, privilege and remedy herein given to the Mortgagee shall be cumulative and in addition to every other right, power and remedy herein specifically given or now or hereafter existing in equity, at law or by statute.  Each and every right, power, privilege and remedy whether specifically herein given or otherwise existing may be exercised from time to time and so often and in such order as may be deemed expedient by the Mortgagee, and the exercise, or the beginning of the exercise, or the abandonment, of any such right, power, privilege or remedy shall not be deemed a waiver of the right to exercise, at the same time or thereafter any other right, power, privilege or remedy.  No delay or omission by the Mortgagee or any other Secured Person in the exercise of any right, power or remedy shall impair any such right, power, privilege or remedy or operate as a waiver thereof or of any other right, power, privilege or remedy then or thereafter existing.

 

Section 4.05          Discontinuance of Proceedings.  If the Mortgagee shall have proceeded to invoke any right, remedy or recourse permitted hereunder or under any Secured Document or available at law and shall thereafter elect to discontinue or abandon same for any reason, then it shall have the unqualified right so to do and, in such an event, the parties shall be restored to their former positions with respect to the Secured Obligations, this Mortgage, the Collateral Agency Agreement, the Collateral and otherwise, and the rights, remedies, recourses and powers of the Mortgagee, as applicable, shall continue as if same had never been invoked.

 

Section 4.06          No Release of Obligations.  Neither the Mortgagor nor any other Person hereafter obligated for payment of all or any part of the Secured Obligations shall be relieved of such obligation by reason of:  the failure of any Person so obligated to foreclose the Lien of this Mortgage or to enforce any provision hereunder or under the Collateral Agency Agreement or any other Secured Document;  the release, regardless of consideration, of the Collateral or any portion thereof or interest therein or the addition of any other property to the Collateral; or  by any other act or occurrence save and except upon the occurrence of the Release Date.

 

Section 4.07          Release of and Resort to Collateral.  The Mortgagee may release, regardless of consideration, any part of the Collateral without, as to the remainder, in any way impairing, affecting, subordinating or releasing the Lien created in or evidenced by this Mortgage or its stature as a first and prior Lien in and to the Collateral and without in any way releasing or diminishing the liability of any Person liable for the repayment of the Secured Obligations.  For payment of the Secured Obligations, the Mortgagee may resort to any other security therefor held by the Mortgagee in such order and manner as the Mortgagee may elect.

 

Section 4.08          Waiver of Redemption, Notice and Marshalling of Assets, Etc.  To the fullest extent permitted by law, the Mortgagor hereby irrevocably and unconditionally waives and releases  all benefits that might accrue to the Mortgagor by virtue of any present or future moratorium law or other law exempting the Collateral from attachment, levy or sale on execution or providing for any

 

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appraisement, valuation, stay of execution, exemption from civil process, redemption or extension of time for payment;  all notices of any Event of Default or of the Mortgagee’s or any other Secured Person’s intention to accelerate the Secured Obligations or of any election to exercise or any actual exercise of any right, remedy or recourse provided for hereunder or under any Secured Document or available at law; and  any right to a marshalling of assets or a sale in inverse order of alienation.  Notwithstanding the foregoing, in the event of any judicial foreclosure of this Mortgage with respect to the Mortgaged Property, or any part thereof, appraisement of the Mortgaged Property is hereby waived or not waived, at the option of Mortgagee, such option to be exercised at the time of the entry of the foreclosure judgment or any time prior thereto.  If any law referred to in this Mortgage and now in force, of which the Mortgagor or its successor or successors might take advantage despite the provisions hereof, shall hereafter be repealed or cease to be in force, such law shall thereafter be deemed not to constitute any part of the contract herein contained or to preclude the operation or application of the provisions hereof.  If the laws of any state which provides for a redemption period do not permit the redemption period to be waived, the redemption period shall be specifically reduced to the minimum amount of time allowable by statute.

 

Section 4.09          Application of Proceeds.  The proceeds of any foreclosure sale of the Collateral or any part thereof and all other monies received in any other proceedings for the enforcement hereof shall be applied:

 

(a)           First, to the payment of all reasonable expenses incurred by the Mortgagee incident to the enforcement of this Mortgage, the Collateral Agency Agreement or any Secured Document to collect any portion of the Secured Obligations (including, without limiting the generality of the foregoing, expenses of any entry or taking of possession, of any sale, of advertisement thereof, and of conveyances, and court costs, compensation of agents and employees, and legal fees), and to the payment of all other reasonable charges, expenses, liabilities and advances incurred or made by the Mortgagee under this Mortgage or in executing any trust or power hereunder; and

 

(b)           Second, as set forth in Section 6(b) of the Collateral Agency Agreement (but without duplication of the amounts applied in (a) above).

 

Section 4.10          Indemnity.  THE INDEMNIFIED PARTIES SHALL NOT BE LIABLE, IN CONNECTION WITH ANY ACTION TAKEN, FOR ANY LOSS SUSTAINED BY THE MORTGAGOR RESULTING FROM AN ASSERTION THAT THE MORTGAGEE HAS RECEIVED FUNDS FROM THE PRODUCTION OF HYDROCARBONS CLAIMED BY THIRD PERSONS OR ANY ACT OR OMISSION OF ANY INDEMNIFIED PARTY IN ADMINISTERING, MANAGING, OPERATING OR CONTROLLING THE COLLATERAL INCLUDING SUCH LOSS WHICH MAY RESULT FROM THE ORDINARY NEGLIGENCE OF AN INDEMNIFIED PARTY UNLESS SUCH LOSS IS CAUSED BY THE WILLFUL MISCONDUCT OR GROSS NEGLIGENCE OF THE RELEVANT INDEMNIFIED PARTY.  NO INDEMNIFIED PARTY WILL BE OBLIGATED TO PERFORM OR DISCHARGE ANY OBLIGATION, DUTY OR LIABILITY OF THE MORTGAGOR.  THE MORTGAGOR SHALL AND DOES HEREBY AGREE TO INDEMNIFY EACH INDEMNIFIED PARTY FOR, AND TO HOLD EACH INDEMNIFIED PARTY HARMLESS FROM, ANY AND ALL LIABILITY, LOSS OR DAMAGE WHICH MAY OR MIGHT BE INCURRED BY ANY INDEMNIFIED PARTY BY REASON OF THIS MORTGAGE OR THE EXERCISE OF RIGHTS OR REMEDIES HEREUNDER, UNLESS SUCH LIABILITY, LOSS OR DAMAGE IS CAUSED BY THE WILLFUL MISCONDUCT OR GROSS NEGLIGENCE OF THE RELEVANT INDEMNIFIED PARTY.  IF ANY INDEMNIFIED PARTY SHALL MAKE ANY EXPENDITURE ON ACCOUNT OF ANY SUCH LIABILITY, LOSS OR DAMAGE, THE AMOUNT THEREOF, INCLUDING COSTS, EXPENSES AND REASONABLE ATTORNEYS’ FEES, SHALL BE A DEMAND OBLIGATION (WHICH OBLIGATION THE MORTGAGOR HEREBY EXPRESSLY PROMISES TO PAY) OWING BY THE

 

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MORTGAGOR TO SUCH INDEMNIFIED PARTY AND SHALL BEAR INTEREST FROM THE DATE OF DEMAND THEREFOR UNTIL PAID AT THE DEFAULT RATE.  THE MORTGAGOR HEREBY ASSENTS TO, RATIFIES AND CONFIRMS ANY AND ALL ACTIONS OF EACH INDEMNIFIED PARTY WITH RESPECT TO THE COLLATERAL TAKEN UNDER AND IN COMPLIANCE WITH THE TERMS OF THIS MORTGAGE.  THE LIABILITIES OF THE MORTGAGOR AS SET FORTH IN THIS SECTION 4.10 SHALL SURVIVE THE TERMINATION OF THIS MORTGAGE.

 

Section 4.11          Limitations on Rights and Waivers.  All rights, powers and remedies herein conferred shall be exercisable by Mortgagee only to the extent not prohibited by applicable law; and all waivers and relinquishments of rights and similar matters shall be effective only to the extent such waivers or relinquishments are not prohibited by applicable law.

 

ARTICLE V
 MISCELLANEOUS

 

Section 5.01          Instrument Construed.  This Mortgage may be construed as a mortgage, conveyance, assignment, security agreement, hypothecation or contract, or any one or more of them, in order fully to effectuate the Lien hereof and the purposes and agreements herein set forth.

 

Section 5.02          Recording.  Mortgagor will cause this Mortgage and all amendments and supplements thereto and substitutions therefor to be recorded, filed, re-recorded and refiled in such manner and in such places as Mortgagee shall reasonably request and will pay all such recording, filing, re-recording and refiling taxes, fees and other charges.

 

Section 5.03          Releases.

 

(a)           Full Release.  Upon the Release Date, (i) all Liens granted hereunder shall automatically be released without any further action on the part of any Person and (ii) the Mortgagee shall forthwith cause satisfaction and discharge of this Mortgage to be entered upon the record at the expense of the Mortgagor and shall promptly execute and deliver or cause to be executed and delivered to the Mortgagor such instruments of satisfaction, release, re-conveyance and reassignment or other documents as may be appropriate.  Otherwise, this Mortgage shall remain and continue in full force and effect.

 

(b)           Partial Release.  If any of the Collateral shall be sold, assigned, transferred or otherwise disposed of by the Mortgagor in a transaction that is not prohibited by Section 3.05 of this Mortgage, then (i) such Collateral shall be so sold, assigned, transferred or otherwise disposed of free and clear of all Liens thereon granted hereunder (and such Liens on such Collateral shall automatically be released without further action on the part of any Person) and (ii) the Mortgagee, at the request and sole expense of the Mortgagor, shall promptly execute and deliver or cause to be executed and delivered to the Mortgagor such instruments of release, re-conveyance and reassignment or other documents reasonably necessary or desirable for the release of the Liens created hereby on such Collateral.

 

Section 5.04          Severability.  If any provision hereof is invalid or unenforceable in any jurisdiction, the other provisions hereof shall remain in full force and effect in such jurisdiction and the remaining provisions hereof shall be liberally construed in favor of the Mortgagee and the other Secured Persons in order to effectuate the provisions hereof.  The invalidity or unenforceability of any provision hereof in any jurisdiction shall not affect the validity or enforceability of any such provision in any other jurisdiction.

 

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Section 5.05          Successors and Assigns.  The terms used to designate any party or group of Persons shall be deemed to include the respective heirs, legal representatives, successors and assigns of such Persons.

 

Section 5.06          Application of Payments to Certain Obligations.  If any part of the Secured Obligations cannot be lawfully secured by this Mortgage or if any part of the Collateral cannot be lawfully subject to the Lien hereof to the full extent of the Secured Obligations, then all payments made shall be applied on said Secured Obligations first in discharge of that portion thereof which is not secured by this Mortgage.

 

Section 5.07          Nature of Covenants.  The covenants and agreements herein contained shall constitute covenants running with the land and interests covered or affected hereby and shall be binding upon the heirs, legal representatives, successors and assigns of the parties hereto.

 

Section 5.08          Notices.  All notices, requests, consents, demands and other communications required or permitted hereunder shall be in writing and shall be deemed sufficiently given or furnished if delivered by registered or certified United States mail, postage prepaid, or by personal service (including express or courier service) at their respective addresses below:

 

	
If   to Mortgagor:
    	
 
    	
SandRidge   Mississippian Trust II
    
	
 
    	
 
    	
c/o   The Bank of New York Mellon Trust Company, N.A.
    
	
 
    	
 
    	
Institutional   Trust Services
    
	
 
    	
 
    	
919   Congress Avenue, Suite 500
    
	
 
    	
 
    	
Austin,   Texas 78701
    
	
 
    	
 
    	
Attention:   Michael J. Ulrich
    
	
 
    	
 
    	
 
    
	
If   to Mortgagee:
    	
 
    	
Wilmington   Trust, National Association, as Collateral Agent
    
	
 
    	
 
    	
50   South Sixth Street, Suite 1290
    
	
 
    	
 
    	
Minneapolis,   MN 55402
    
	
 
    	
 
    	
Attention:   Jeffery Rose
    

 

(unless changed by similar notice in writing given by the particular party whose address is to be changed). Any such notice or communication shall be deemed to have been given either at the time of personal delivery or, in the case of delivery at the address and in the manner provided herein, upon receipt; provided that, service of notice as required by the laws of any state in which portions of the Collateral may be situated shall for all purposes be deemed appropriate and sufficient with the giving of such notice.

 

Section 5.09          Counterparts.  This Mortgage is being executed in several counterparts, all of which are identical,.  Each of such counterparts shall for all purposes be deemed to be an original and all such counterparts shall together constitute but one and the same instrument.

 

Section 5.10          Governing Law.  Insofar as permitted by otherwise applicable law, this Mortgage shall be construed under and governed by the laws of the State of Kansas.

 

Section 5.11          Exculpation Provisions.  EACH OF THE PARTIES HERETO SPECIFICALLY AGREES THAT IT HAS A DUTY TO READ THIS MORTGAGE; AND AGREES THAT IT IS CHARGED WITH

 

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NOTICE AND KNOWLEDGE OF THE TERMS OF THIS MORTGAGE; THAT IT HAS IN FACT READ THIS MORTGAGE AND IS FULLY INFORMED AND HAS FULL NOTICE AND KNOWLEDGE OF THE TERMS, CONDITIONS AND EFFECTS OF THIS MORTGAGE; THAT IT HAS BEEN REPRESENTED BY INDEPENDENT LEGAL COUNSEL OF ITS CHOICE THROUGHOUT THE NEGOTIATIONS PRECEDING ITS EXECUTION OF THIS MORTGAGE; AND HAS RECEIVED THE ADVICE OF ITS ATTORNEY IN ENTERING INTO THIS MORTGAGE; AND THAT IT RECOGNIZES THAT CERTAIN OF THE TERMS OF THIS MORTGAGE RESULT IN ONE PARTY ASSUMING THE LIABILITY INHERENT IN SOME ASPECTS OF THE TRANSACTION AND RELIEVING THE OTHER PARTY OF ITS RESPONSIBILITY FOR SUCH LIABILITY.  EACH PARTY HERETO AGREES AND COVENANTS THAT IT WILL NOT CONTEST THE VALIDITY OR ENFORCEABILITY OF ANY  EXCULPATORY PROVISION OF THIS MORTGAGE ON THE BASIS THAT THE PARTY HAD NO NOTICE OR KNOWLEDGE OF SUCH PROVISION OR THAT THE PROVISION IS NOT “CONSPICUOUS.”

 

Section 5.12          Amendments.  Subject to the provisions of the Collateral Agency Agreement, this Mortgage may be amended or modified by the Mortgagor and the Mortgagee in writing.

 

Section 5.13          Entire Agreement; Collateral Agency Agreement Controlling.  THIS WRITTEN MORTGAGE AND THE OTHER PRINCIPAL DOCUMENTS TOGETHER REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.  THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.  In the event of a conflict between any provision hereof and any provision of the Collateral Agency Agreement, the provisions of the Collateral Agency Agreement shall govern and control.

 

Section 5.14          Execution of Financing Statements.  Pursuant to the Applicable UCC, the Mortgagor authorizes the Mortgagee, its counsel or its representative, at any time and from time to time, to file or record financing statements, continuation statements, amendments thereto and other filing or recording documents or instruments with respect to the Collateral without the signature of the Mortgagor in such form and in such offices as the Mortgagee reasonably determines appropriate to perfect the security interests of the Mortgagee under this Mortgage.

 

In that regard, the following information is provided:

 

	
Name   of Debtor:
    	
 
    	
SandRidge   Mississippian Trust II
    
	
Address   of Debtor:
    	
 
    	
c/o   The Bank of New York Mellon Trust Company, N.A.
    
	
 
    	
 
    	
Institutional   Trust Services
    
	
 
    	
 
    	
919   Congress Avenue, Suite 500
    
	
 
    	
 
    	
Austin,   Texas 78701
    
	
 
    	
 
    	
Attention:   Michael J. Ulrich
    
	
State   of Formation/Location:
    	
 
    	
Delaware
    

 

Section 5.15          References.  The words “herein,” “hereof,” “hereunder” and other words of similar import when used in this Mortgage refer to this Mortgage as a whole, and not to any particular article, section or subsection.  Any reference herein to a Section shall be deemed to refer to the applicable Section of this Mortgage unless otherwise stated herein.  Any reference herein to an exhibit or schedule shall be deemed to refer to the applicable exhibit or schedule attached hereto unless otherwise stated herein.   The words “include,” “includes” and “including” as used in this Mortgage shall be deemed to be followed by the phrase “without limitation.”

 

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[SIGNATURES BEGIN NEXT PAGE]

 

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Executed on this 16th day of April, 2012, to be effective as of the Effective Date.

 

 

	
 
    	
SANDRIDGE   MISSISSIPPIAN TRUST II
    
	
 
    	
 
    
	
 
    	
By:
    	
THE   BANK OF NEW YORK MELLON TRUST COMPANY, N.A., as Trustee
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
  /s/Michael   J. Ulrich
    
	
 
    	
 
    	
 
    	
Michael   J. Ulrich
    
	
 
    	
 
    	
 
    	
Vice   President
    

 

 

	
STATE   OF TEXAS
    	
§
    	
 
    
	
 
    	
§
    	
 
    
	
COUNTY   OF TRAVIS
    	
§
    	
 
    

 

 

This instrument was acknowledged before me on April 16, 2012 by Michael J. Ulrich, Vice President of The Bank of New York Mellon Trust Company, N.A., a national banking association, on behalf of said association as the Trustee of SandRidge Mississippian Trust II, a Delaware statutory trust.

 

 

	
 
    	
/s/   Sarah Newell
    
	
 
    	
Notary   Public
    
	
 
    	
 
    
	
 
    	
Seal:
    

 

 

Signature Page - Trust Mortgage

 

 

EXHIBIT A

 

(See attached.)

 

Exhibit A-1Exhibit 10.1

 

Execution Copy

 

DEVELOPMENT AGREEMENT

 

This Development Agreement (this “Development Agreement”) by and among SandRidge Energy, Inc., a Delaware corporation, with offices at 123 Robert S. Kerr Avenue, Oklahoma City, OK 73102-6406 (“SandRidge Parent”), SandRidge Exploration and Production, LLC, a Delaware limited liability company and wholly owned subsidiary of SandRidge Parent with offices at 123 Robert S. Kerr Avenue, Oklahoma City, OK 73102-6406 (“Assignor” and, together with SandRidge Parent, “SandRidge”) and SandRidge Mississippian Trust II, a statutory trust formed under the laws of the State of Delaware (the “Trust”), is delivered to be effective as of 12:01 a.m., Central Time, January 1, 2012 (the “Effective Time”).  All capitalized terms not otherwise defined herein shall have the meanings ascribed to such terms in Article I below.

 

WHEREAS, Assignor and the Trust have entered into that certain Perpetual Overriding Royalty Interest Conveyance (Oklahoma) (Development) and that certain Long-Term Overriding Royalty Interest Conveyance (Kansas) (Development), each to be effective as of the Effective Time (collectively, the “Perpetual Development Conveyances”);

 

WHEREAS, Assignor and Mistmada Oil Company, Inc., an Oklahoma corporation and wholly owned subsidiary of SandRidge Parent (“SandRidge Sub”), have entered into that certain Term Overriding Royalty Interest Conveyance (Oklahoma) (Development) and that certain Term Overriding Royalty Interest Conveyance (Kansas) (Development), each to be effective as of the Effective Time (collectively, the “Term Development Conveyances,” and together with the Perpetual Development Conveyances, the “Conveyances”), which Term Development Conveyances have been assigned as of the Effective Time by SandRidge Sub to the Trust; and

 

WHEREAS, in connection with the Conveyances, SandRidge has agreed to undertake certain obligations with respect to the drilling and completion of the Development Wells.

 

NOW, THEREFORE, in consideration of the premises and the covenants hereinafter contained and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intended to be legally bound hereby, it is agreed as follows:

 

ARTICLE I

 

DEFINITIONS

 

This Article I defines certain capitalized words, terms and phrases used in this Development Agreement. Certain other capitalized words, terms and phrases used in this Development Agreement are defined elsewhere in this Development Agreement.

 

“Additional Interest” is defined in Section 3.01.

 

“Additional Lease” is defined in Section 3.01.

 

“Adjusted Development Well Amount” means the amount, for each Development Well, equal to the product of (a) the NRI Factor for such well, multiplied by (b) the Lateral

 

 

Distance Factor for such well.  For example, in the case of a Development Well for which the NRI Factor is 1.5 and the Lateral Distance Factor is 1.0, the Adjusted Development Well Amount would be equal to: NRI Factor (1.5) x Lateral Distance Factor (1.0) = 1.5.  Therefore, such Development Well would have a 1.5 Adjusted Development Well Amount.  The Adjusted Development Well Amount shall be rounded to the nearest ten thousandth (i.e., four decimal places to the right of the decimal point).

 

“Affiliate” means, for any specified Person, another Person that controls, is controlled by, or is under common control with, the specified Person.  “Control,” in the preceding sentence, refers to the possession by one Person, directly or indirectly, of the right or power to direct or cause the direction of the management and policies of another Person, whether through the ownership of voting securities, by contract or otherwise.

 

“AMI” means that area described in Exhibit A to this Development Agreement, as such area may be extended or exchanged pursuant to Article III below.

 

“Assignee Minerals” means, collectively, the “Assignee Minerals” as defined under each of the Conveyances.

 

“Assignor” is defined in the introductory paragraph to this Development Agreement.

 

“Assignor’s Net Revenue Interest” means the interest, stated as a decimal fraction, in Subject Minerals production from a Development Well attributable to Subject Interests in that Development Well, net of Production Burdens.

 

“Closing Time” means 12:01 a.m., Central Time, on April 23, 2012.

 

“Conveyances” is defined in the recitals to this Development Agreement.

 

“Development Agreement” is defined in the introductory paragraph to this Development Agreement.

 

“Development Area” means each governmental section outside the AMI but adjacent to a governmental section included in the AMI, except for any governmental section outside the AMI that comprises a part of the Area of Mutual Interest with respect to SandRidge Mississippian Trust I or any other royalty trust sponsored by SandRidge Parent.

 

“Development Well” means any Mineral well located on the Subject Lands, or on lands with which the Subject Lands are pooled or unitized, that is spud after December 31, 2011 and drilled horizontally to, and perforated (or made ready to commence stimulation) for completion in, the Target Formation, on or prior to the Drilling Obligation Completion Date.

 

“Drilling Obligation Completion Date” means the date that the Total Drilling Target is reached; provided that the “Drilling Obligation Completion Date” shall not be deemed to have been achieved unless SandRidge Parent shall have delivered to the Trustee, within a reasonable time thereafter, (a) a certificate substantially in the form of Exhibit B to this Development Agreement, executed by its Chief Executive Officer, President or any Vice President, certifying that the Total Drilling Target was achieved as of such date and identifying each Development

 

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Well, and (b) such other documentation as the Trustee may reasonably request to establish satisfaction of SandRidge’s drilling obligation hereunder.

 

“Effective Time” is defined in the introductory paragraph to this Development Agreement.

 

“Exchange Acreage” is defined in Section 3.02.

 

“Excluded Assets” means those Mineral wells that are described in Exhibit B to each of the Conveyances.

 

“Gas” means natural gas and all other gaseous hydrocarbons or minerals, including helium, but specifically excluding any Gas Liquids.

 

“Gas Liquids” means those natural gas liquids and other similar liquid hydrocarbons, including ethane, propane, butane and natural gasoline, and mixtures thereof, that are removed from a gas stream by the liquids extraction process of any field facility or gas processing plant and delivered by the facility or plant as natural gas liquids.

 

“Kansas Cap” is defined in Section 2.05(d).

 

“Kansas Mortgage” is defined in Section 2.05(b).

 

“Lateral Distance Factor” means:

 

(a)                 for each Development Well with a Perforated Length of less than 3,500 feet, the quotient obtained by dividing such well’s Perforated Length by 3,500 feet;

 

(b)                for each Development Well with a Perforated Length of more than 4,500 feet, the quotient obtained by dividing such well’s Perforated Length by 4,500 feet; and

 

(c)                 for each Development Well with a Perforated Length from and including 3,500 feet to and including 4,500 feet, a factor equal to 1.0.

 

For example, if the Perforated Length of a Development Well is 3,000 feet, the computation would be: 3,000 feet / 3,500 feet = 0.8571. Therefore, such Development Well would have a Lateral Distance Factor of 0.8571.  If the Perforated Length of a Development Well is 5,000 feet, however, the computation would be: 5,000 feet / 4,500 feet = 1.1111. Therefore, such Development Well would have a Lateral Distance Factor of 1.1111.  If the Perforated Length of a Development Well is 4,000 feet, the Lateral Distance Factor for such Development Well would be 1.0.  The Lateral Distance Factor for each Development Well shall be rounded to the nearest ten thousandth (i.e., four decimal places to the right of the decimal point).

 

“Mineral(s) ” means Oil, Gas and Gas Liquids.

 

“Mortgages” is defined in Section 2.05(b).

 

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“NRI Factor” means, with respect to each Development Well, the fraction obtained by dividing Assignor’s Net Revenue Interest for such well by 47.3967%.  For example, if Assignor’s Net Revenue Interest in a Development Well is 70.0%, the computation would be: 70.0% / 47.3967% = 1.4769.  Therefore, such Development Well would have a NRI Factor of 1.4769.  The NRI Factor for each Development Well shall be rounded to the nearest ten thousandth (i.e., four decimal places to the right of the decimal point).

 

“Oil” means crude oil, condensate and other liquid hydrocarbons recovered by field equipment or facilities, excluding Gas Liquids.

 

“Oklahoma Cap” is defined in Section 2.05(d).

 

“Oklahoma Mortgage” is defined in Section 2.05(b).

 

“Party,” when capitalized, refers to SandRidge Parent, Assignor or the Trust. “Parties,” when capitalized, refers to SandRidge Parent, Assignor and the Trust.

 

“Perforated Length” means the perforated length (in feet) of the well bore of a Development Well, measured from the first perforation or stimulation site along the measured depth to the last perforation or stimulation site along the measured depth.

 

“Perpetual Development Conveyances” is defined in the recitals to this Development Agreement.

 

“Person” means any natural person, corporation, partnership, trust, estate or other entity, organization or association.

 

“Production Burdens” means, with respect to any Subject Lands, Subject Interests or Subject Minerals, all royalty interests, overriding royalty interests, production payments, net profits interests and other similar interests that constitute a burden on, are measured by or are payable out of the production of Minerals or the proceeds realized from the sale or other disposition thereof.

 

“Reasonably Prudent Operator Standard” means the standard of conduct of a reasonably prudent oil and gas operator in the AMI under the same or similar circumstances, acting with respect to its own property and disregarding the existence of the Royalty Interests as a burden on such property.

 

“Royalty Interests” means, collectively, the royalty interests created under each of the Conveyances.

 

“SandRidge” is defined in the introductory paragraph to this Development Agreement.

 

“SandRidge Parent” is defined in the introductory paragraph to this Development Agreement.

 

“SandRidge Sub” is defined in the recitals to this Development Agreement.

 

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“Subject Interests” means Assignor’s undivided interests in the Subject Lands as described on Exhibit A to each of the Conveyances, whether as lessee under leases, as an owner of the Subject Minerals (or the right to extract such Minerals) or otherwise, by virtue of which undivided interests Assignor has the right to conduct exploration, drilling, development and Mineral production operations on the Subject Lands, or to cause such operations to be conducted, or to participate in such operations by paying and bearing all or any part of the costs, risks and liabilities of such operations, to drill, test, complete, equip, operate and produce wells to exploit the Minerals. The “Subject Interests” (a) may be owned by Assignor pursuant to leases, deeds, operating, pooling or unitization agreements, orders or any other instruments, agreements or documents, recorded or unrecorded, (b) include any and all extensions or renewals of leases covering the Subject Lands (or any portion thereof) obtained by Assignor, or any Affiliate thereof, within six (6) months after the expiration or termination of any such lease, and (c) are subject to the Permitted Encumbrances (as defined in each of the Conveyances). For the avoidance of doubt, the “Subject Interests” do not include: (i) Assignor’s interests in the Excluded Assets; (ii) Assignor’s rights to substances other than Minerals; (iii) Assignor’s rights to Minerals (other than Assignee Minerals) under contracts for the purchase, sale, transportation, storage, processing or other handling or disposition of Minerals; (iv) Assignor’s interests in, or rights to Minerals (other than Assignee Minerals) held in pipelines, gathering systems, storage facilities, processing facilities or other equipment or facilities; or (v) any additional or enlarged interests in the Development Wells, Subject Lands or Subject Minerals acquired by Assignor after the Closing Time, except (1) to the extent any such additional or enlarged interest becomes a part of the Subject Interests by amendment to the applicable Conveyance pursuant to Section 3.01 or Section 3.02 below, (2) as may result from the operation of the terms of the instruments creating the Subject Interests, or (3) as may be reflected in extensions and renewals covered by the preceding sentence.

 

“Subject Lands” means the lands subject to or covered by the oil and gas leases described in Exhibit A to each of the Conveyances, insofar and only insofar as they cover the Target Formation, subject to the exceptions, exclusions and reservations set forth on each such Exhibit A.

 

“Subject Minerals” means all Minerals in and under, and that may be produced, saved and sold from a Development Well, from and after the Effective Time, insofar and only insofar as such Minerals are produced from the Target Formation, subject to the following exclusions: Minerals that are (a) lost in the production, gathering or marketing of Minerals; (b) used (i) in conformity with ordinary and prudent operations on the Subject Lands, including drilling and production operations with respect to a Development Well, or (ii) in connection with operations (whether on or off the Subject Lands) for processing or compressing the Subject Minerals; (c) taken by a Third Person to recover costs, or some multiple of costs, paid or incurred by that Third Person under any operating agreement, unit agreement or other agreement in connection with nonconsent operations conducted (or participated in) by that Third Person; and (d) retained by a Third Person for gathering, transportation, processing or marketing services related to the Subject Minerals in lieu of or in addition to cash payment for such services, to the extent such agreement is permitted under the Conveyances.

 

“Target Formation” means (i) with respect to Alfalfa County, Oklahoma, the “Target Formation” being defined as being the interval between the base of Pennsylvanian-aged Morrow

 

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or its stratigraphic equivalent at a depth of 4,833’ and the Devonian-aged Woodford Shale or its stratigraphic equivalent at a depth of 5,344’ in the SandRidge Energy Dorado SWD 1-32 located in section 32, Township 29 North, Range 9 West (API No. 35003219830000); (ii) with respect to Grant County, Oklahoma, the “Target Formation” being defined as being the interval between the base of Pennsylvanian-aged Morrow or its stratigraphic equivalent at a depth of 5,395’ and the Devonian-aged Woodford Shale or its stratigraphic equivalent at a depth of 6,060’ in the SandRidge Energy Orion 1-22 SWD located in section 22, Township 25 North, Range 5 West (API No. 35053227710000); (iii) with respect to Kay County, Oklahoma, the “Target Formation” being defined as being the interval between the base of Pennsylvanian-aged Morrow or its stratigraphic equivalent at a depth of 4,387’ and the Devonian-aged Woodford Shale or its stratigraphic equivalent at a depth of 4,619’ in the Jefferson-WMS State School Land 5-36 located in section 36, Township 25 North, Range 2 West (API No. 35071224500000); (iv) with respect to Noble County, Oklahoma, the “Target Formation” being defined as being the interval between the base of Pennsylvanian-aged Morrow or its stratigraphic equivalent at a depth of 4,523’ and the Devonian-aged Woodford Shale or its stratigraphic equivalent at a depth of 4,783’ in the SandRidge Energy County Line SWD 1-2 located in section 2, Township 24 North, Range 2 West (API No. 35103242860000); (v) with respect to Woods County, Oklahoma, the “Target Formation” being defined as being the interval between the base of Pennsylvanian-aged Morrow or its stratigraphic equivalent at a depth of 5,204’ and the Devonian-aged Woodford Shale or its stratigraphic equivalent at a depth of 5,704’ in the SandRidge Energy Koppitz SWD 1-31 located in section 31, Township 28 North, Range 13 West (API No. 35151232750000); (vi) with respect to Barber County, Kansas, the “Target Formation” being defined as being the interval between the base of the Pennsylvanian-aged Morrow or its stratigraphic equivalent at a depth of 4744’ and the Devonian-aged Chattanooga Shale or its stratigraphic equivalent at a depth of 5096’ in the SandRidge Energy Stephanie SWD 1-3 located in 3-35S-10W (API No. 15007237990000); (vii) with respect to Comanche County, Kansas, the “Target Formation” being defined as being the interval between the base of Pennsylvanian-aged Morrow or its stratigraphic equivalent at a depth of 5,511’ and the Devonian-aged Woodford Shale or its stratigraphic equivalent at a depth of 6,786’ in the Sho-Bar #1-29 Wayne located in section 29, Township 34 South, Range 20 West (API No. 15033213800000); (viii) with respect to Harper County, Kansas, the “Target Formation” being defined as being the interval between the base of the Pennsylvanian-aged Morrow or its stratigraphic equivalent at a depth of 4800’ and the Devonian-aged Chattanooga Shale or its stratigraphic equivalent at a depth of 5096’ in the SandRidge Energy Shea SWD 1-17 located in 17-35S-7W (API No. 15077217810000); and (ix) with respect to Sumner County, Kansas, the “Target Formation” being defined as being the interval between the base of Pennsylvanian-aged Red Fork Zone or its stratigraphic equivalent at a depth of 4,660’ and the Devonian-aged Woodford Shale or its stratigraphic equivalent at a depth of 5,112’ in the Quinton Little Company #1-18 Wolff located in section 18, Township 35 South, Range 4 West (API No. 15191201870000).

 

“Term Development Conveyances” is defined in the recitals to this Development Agreement.

 

“Third Person” means a Person other than SandRidge or the Trustee.

 

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“Total Drilling Target” means that number of Development Wells where the cumulative sum of all the Adjusted Development Well Amounts for such Development Wells drilled or caused to be drilled by SandRidge equals 206.

 

“Trust” is defined in the introductory paragraph to this Development Agreement.

 

“Trust Agreement” means the Amended and Restated Trust Agreement of the Trust, dated as of April 23, 2012 (as may be amended from time to time), among SandRidge Parent, the Trustee and The Corporation Trust Company, as Delaware trustee.

 

“Trustee” means The Bank of New York Mellon Trust Company, N.A., a national banking association organized under the laws of the United States of America with its principal place of business in New York, New York, as trustee, acting not in its individual capacity but solely as trustee of the Trust.

 

ARTICLE II

 

DEVELOPMENT OF THE SUBJECT LANDS

 

Section 2.01 Drilling Program.

 

(a) Obligation to Drill. SandRidge shall, subject to the terms of this Article II, drill or cause to be drilled such number of Development Wells that is necessary to achieve the Total Drilling Target on or prior to December 31, 2016.

 

(b) Drilling Standard. SandRidge shall drill or caused to be drilled, at SandRidge’s sole cost and expense, each of the Development Wells in a diligent manner in accordance with the Reasonably Prudent Operator Standard.

 

Section 2.02 Obligation to Complete and Equip. SandRidge shall, at SandRidge’s sole cost and expense, (a) attempt to complete in the Target Formation each Development Well that reasonably appears to SandRidge, acting in accordance with the Reasonably Prudent Operator Standard, to be capable of producing Minerals in quantities sufficient to pay completion, equipping and operating costs, (b) equip for production each Development Well that is successfully completed and, when it is equipped and connected to a gathering line, pipeline or other storage or marketing facility, commence production, and (c) plug and abandon all Development Wells that are unsuccessful to the extent required by applicable law.

 

Section 2.03 Costs and Expenses of Development Wells. All costs and expenses associated with or paid or incurred in connection with the spudding, drilling, testing, completing and equipping for production, operating and/or plugging and abandoning of the Development Wells shall be borne solely by SandRidge, but SandRidge may use any Subject Minerals in such operations without any duty to account to the Trustee or the Trust.

 

Section 2.04 Title Due Diligence. Prior to commencing the drilling of any Development Well, SandRidge shall perform such title due diligence and such title curative work as would be performed by an oil and gas operator drilling a well and acting in accordance with the Reasonably Prudent Operator Standard.

 

7

 

Section 2.05 Wells.

 

(a) Prior to the Drilling Obligation Completion Date, SandRidge shall not, and shall cause its Affiliates not to, drill and/or complete any well to the Target Formation in the AMI, other than Development Wells in furtherance of its drilling obligation in Section 2.01 above.

 

(b) In order to secure the performance of SandRidge’s drilling obligation under Section 2.01 above, Assignor hereby covenants and agrees to enter into (i) a Mortgage by which Assignor will grant to the Trust a mortgage lien in and to any of the undeveloped portions of the Subject Interests (including, by amendment to such mortgage, any Additional Lease, Additional Interest or Exchange Acreage that becomes part of the Subject Interests) located in those parts of the AMI located in Oklahoma (the “Oklahoma Mortgage”), and (ii) a Mortgage by which Assignor will grant to the Trust a mortgage lien in and to any of the undeveloped portions of the Subject Interests (including, by amendment to such mortgage, any Additional Lease, Additional Interest or Exchange Acreage that becomes part of the Subject Interests) located in those parts of the AMI located in Kansas (the “Kansas Mortgage” and, together with the Oklahoma Mortgage, the “Mortgages”).

 

(c) If SandRidge fails to achieve the Total Drilling Target by December 31, 2016, SandRidge shall be in default of its obligations under this Development Agreement and the Trust shall be entitled to pursue, in its sole discretion, any and all remedies available pursuant to Article III of each of the Mortgages.  Other than as set forth in the Mortgages, the Trust shall have no separate cause of action for default by SandRidge under Article II of this Development Agreement.  If SandRidge fails to perform its obligations under this Development Agreement (other than its obligations under Article II above), SandRidge shall be in default and the Trust shall be entitled to pursue, in its sole discretion, any and all remedies available at law and in equity.  Notwithstanding anything to the contrary contained herein, the Trust hereby waives any and all claims or rights of action to compel specific performance of SandRidge’s obligations under this Development Agreement.

 

(d) Notwithstanding Section 2.05(c), the maximum amount recoverable upon a failure by SandRidge to satisfy its obligations under Section 2.01 above shall initially be $239,499,000 with respect to the Oklahoma Mortgage (the “Oklahoma Cap”) and $29,601,000 with respect to the Kansas Mortgage (the “Kansas Cap”); provided, that, from and after such time as SandRidge has drilled or caused to be drilled that number of Development Wells where the cumulative total of all Adjusted Development Well Amounts for such Development Wells equals or exceeds 103, the Oklahoma Cap and the Kansas Cap shall be reduced, for each additional Development Well drilled or caused to be drilled by SandRidge (whether located in Oklahoma or Kansas), as follows:

 

(i) the Oklahoma Cap shall automatically be reduced (but not below zero) by an amount that is equal to (A) $2,325,233.01 multiplied by (B) the Adjusted Development Well Amount for such Development Well; and

 

(ii)     the Kansas Cap shall automatically be reduced (but not below zero) by an amount that is equal to (A) $287,388.35 multiplied by (B) the Adjusted Development Well Amount for such Development Well.

 

8

 

For the avoidance of doubt, each of the Oklahoma Cap and the Kansas Cap shall be equal to zero once SandRidge has drilled or caused to be drilled such number of Development Wells that is necessary to achieve the Total Drilling Target.  In addition, upon Assignor’s request and at Assignor’s expense, the lien and security interest evidenced by the applicable Mortgage shall be released as to each Development Well located on the Subject Lands subject to such Mortgage as the same is completed or perforated (or made ready to commence stimulation) for completion in accordance with this Development Agreement, including wells that are completed or perforated (or made ready to commence stimulation) for completion and then plugged and abandoned in the Target Formation.

 

ARTICLE III

 

AMI

 

Section 3.01 Additional Leases and Additional Interests. In the event that, after the Closing Time and prior to the Drilling Obligation Completion Date, Assignor (a) acquires additional leases (other than renewals or extensions of leases that already constitute a part of the Subject Interests) covering lands lying within the AMI (each, an “Additional Lease”) or (b) acquires through forced pooling or otherwise by operation of law or pursuant to any applicable contract any rights or interests that increase Assignor’s Net Revenue Interest in any Development Well, whether before or after the drilling of such well (each such increase in Assignor’s Net Revenue Interest, an “Additional Interest”), at Assignor’s option and subject to Section 3.03 below, upon notice from Assignor, the Trust shall execute, acknowledge and deliver (i) an instrument that amends the applicable Conveyance so that each such Additional Lease or Additional Interest will be subject to the Royalty Interest and be part of the Subject Interests and Subject Lands, and (ii) an instrument that amends the applicable Mortgage so that each such Additional Lease will be subject to such Mortgage.

 

Section 3.02 Exchange of Subject Lands. At Assignor’s option and subject to Section 3.03 below, at any time prior to the Drilling Obligation Completion Date, upon notice from Assignor, the Trust shall execute, acknowledge and deliver to Assignor a recordable instrument (reasonably acceptable to Assignor) that reconveys to Assignor the Royalty Interest relating to such undeveloped portions of the Subject Interests as Assignor may elect, and releases such Subject Interests from the applicable Mortgage, in connection with Assignor’s exchange of such Subject Interests for other undeveloped acreage either within the AMI or outside the AMI but within the Development Area (the “Exchange Acreage”).  Concurrently with such reconveyance and release, Assignor and the Trust shall execute, acknowledge and deliver (a) an instrument that amends the applicable Conveyance so that such Exchange Acreage will be subject to the Royalty Interest and be part of the Subject Interests and Subject Lands, and (b) an instrument that amends the applicable Mortgage so that such Exchange Acreage will be subject to such Mortgage.  In no event shall Assignor extend any well into any Exchange Acreage unless and until the applicable Conveyance is amended to include such Exchange Acreage as part of the Subject Interests.

 

Section 3.03 Limitations. In no event may (i) any Additional Lease or Additional Interest be made subject to the Royalty Interest pursuant to Section 3.01 above, or (ii) any

 

9

 

exchange involving Exchange Acreage be effected pursuant to Section 3.02 above, unless Assignor certifies to the Trust that:

 

(a) the aggregate acreage attributable to all Additional Leases, Additional Interests and Exchange Acreage will not exceed 5% of the Subject Interests as such exist as of the Closing Time;

 

(b) in the case of an Additional Lease only, the reserve profile of the acreage subject to such Additional Lease is consistent with the reserve profiles of other portions of the Subject Interests;

 

(c) in the case of Exchange Acreage only, the reasonably projected quantity of proved undeveloped reserves and probable reserves attributable to the Exchange Acreage does not significantly differ from the reasonably projected quantity of proved undeveloped reserves and probable reserves attributable to the portion of the Subject Interests to be given in exchange therefor; and

 

(d) the addition of any Additional Leases, Additional Interests, or Exchange Acreage, as applicable, to the Conveyances will not cause any adverse federal income tax consequence to any unitholder of the Trust.

 

The Trustee is hereby authorized and directed to rely on any such certification from Assignor, and shall have no authority or responsibility to exercise any discretion in connection with any transaction authorized by this Article III.

 

ARTICLE IV

 

OTHER PROVISIONS

 

Section 4.01 Successors and Assigns.  Subject to the limitation and restrictions on the assignment or delegation by the Parties of their rights and interests under this Development Agreement, all of the covenants and agreements of SandRidge Parent, Assignor and the Trust contained herein shall be deemed to be covenants running with the land and shall be binding upon the successors and assigns of SandRidge Parent’s and Assignor’s interests in the Subject Interests or this Development Agreement and SandRidge Sub’s and the Trust’s interest in the Royalty Interests and shall inure to the benefit of SandRidge Sub and the Trust and their respective successors and permitted assigns.  The foregoing notwithstanding, nothing herein is intended to modify or shall have the effect of modifying the restrictions on assignment set forth in the Conveyances regarding assignments, transfer or pooling of SandRidge Parent’s and Assignor’s interests in the Subject Interests; and the preceding sentence shall not be deemed to permit any assignment or other transfer of the interest of SandRidge Parent or Assignor in any of the Subject Interests that is not specifically permitted by the provisions of the Conveyances.  Nothing contained in this Development Agreement or in the Conveyances shall in any way limit or restrict the right of the Trust, or the Trust’s respective successors and assigns, to sell, convey, assign or mortgage the Royalty Interests in whole or in part.  If the Trust, or the Trust’s successors and assigns, at any time shall execute a mortgage, pledge or deed of trust covering all or any part of the Royalty Interests as security for any obligation, the mortgagee, the pledgee or the trustee therein named or the holder of the obligation secured thereby shall be entitled, to the

 

10

 

extent such mortgage, pledge or deed of trust so provides and upon the occurrence or existence of the event or condition therein stated, if so conditioned, to exercise all of the rights, remedies, powers and privileges herein conferred upon the Trust, and to give or withhold all consents herein required or permitted to be obtained from the Trust.

 

Section 4.02 Governing Law.  THIS DEVELOPMENT AGREEMENT SHALL BE CONSTRUED UNDER AND GOVERNED BY THE LAWS OF THE STATE OF OKLAHOMA WITHOUT GIVING EFFECT TO ANY CHOICE OR CONFLICT OF LAW PRINCIPLES THAT WOULD CAUSE THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION.

 

Section 4.03 Construction of Development Agreement. In construing this Development Agreement, the following principles shall be followed:

 

(a) no consideration shall be given to the captions of the articles, sections, subsections or clauses, which are inserted for convenience in locating the provisions of this Development Agreement and not as an aid in its construction;

 

(b) no consideration shall be given to the fact or presumption that one Party had a greater or lesser hand in drafting this Development Agreement;

 

(c) the word “includes” and its syntactical variants mean “includes, but is not limited to” and corresponding syntactical variant expressions;

 

(d) a defined term has its defined meaning throughout this Development Agreement, regardless of whether it appears before or after the place in this Development Agreement where it is defined;

 

(e) unless the context clearly indicates to the contrary, references to any Party shall be construed to include all permitted successors and assigns of such Party and references to the Trustee shall be construed to include all successor and substitute trustees under the Trust Agreement;

 

(f) the plural shall be deemed to include the singular, and vice versa; and

 

(g) each exhibit, attachment and schedule to this Development Agreement is a part of this Development Agreement, but if there is any conflict or inconsistency between the main body of this Development Agreement and any exhibit, attachment or schedule, the provisions of the main body of this Development Agreement shall prevail.

 

Section 4.04 No Waiver. Failure of any Party to require performance of any provision of this Development Agreement shall not affect any Party’s right to require full performance thereof at any time thereafter, and the waiver by any Party of a breach of any provision hereof shall not constitute a waiver of a similar breach in the future or of any other breach or nullify the effectiveness of such provision.

 

11

 

Section 4.05 Relationship of Parties. This Development Agreement does not create a partnership, mining partnership, joint venture or relationship of trust or agency between the Parties.

 

Section 4.06 Further Assurances. Each Party shall execute, acknowledge and deliver to the other Parties all additional instruments and other documents reasonably required to evidence or effect any transaction contemplated by this Development Agreement.

 

Section 4.07 The 12:01 A.M. Convention. Except as otherwise provided in this Development Agreement, each calendar day, month, quarter, and year shall be deemed to begin at 12:01 a.m. Central Time on the stated day or on the first day of the stated month, quarter, or year, and to end at 12:00 a.m. Central Time on the next day or on first day of the next month, quarter or year, respectively.

 

Section 4.08 Counterpart Execution. This Development Agreement may be executed in any number of counterparts with the same effect as if all the Parties had signed the same document. All counterparts shall be construed together and shall constitute one and the same instrument.

 

Section 4.09 Notices. Any and all notices or demands permitted or required to be given under this Development Agreement shall be in writing and shall be validly given or made if (a) personally delivered, (b) delivered and confirmed by facsimile or like instantaneous transmission service, or by Federal Express or other overnight courier delivery service, which shall be effective as of confirmation of receipt by the courier at the address for notice hereinafter stated or (c) deposited in the United States mail, first class, postage prepaid, certified or registered, return receipt requested, addressed as follows:

 

If to the Trust, to:

 

SandRidge Mississippian Trust II

c/o The Bank of New York Mellon Trust Company, N.A.

Institutional Trust Services

919 Congress Avenue, Suite 500

Austin, Texas 78701

Attention: Michael J. Ulrich

Facsimile No.: (512) 479-2253

 

With a copy (which shall not constitute notice) to:

 

Bracewell & Giuliani LLP

111 Congress Avenue

Suite 2300

Austin, Texas 78701

Attention: Thomas W. Adkins

Facsimile No.: (512) 479-3940

 

12

 

If to SandRidge, to:

 

123 Robert S. Kerr Avenue

Oklahoma City, OK 73102-6406

Attention: Philip T. Warman

Facsimile No.: (405) 429-5983

 

With a copy (which shall not constitute notice) to:

 

Covington & Burling LLP

1201 Pennsylvania Avenue, N.W.

Washington, D.C. 20004

Attention: David H. Engvall

Facsimile No. (202) 778 5307

 

Section 4.10 Limitation of Liability. It is expressly understood and agreed by the Parties that (a) this Development Agreement is executed and delivered by the Trustee not individually or personally, but solely as the Trustee in the exercise of the powers and authority conferred and vested in it, and (b) under no circumstances shall the Trustee be liable for the breach or failure of any obligation, representation, warranty or covenant made or undertaken by the Trust under this Development Agreement.  It is further expressly understood and agreed by the Parties that neither the Trust nor the Trustee, in its capacity as the Trustee or individually, shall have any authority over, or responsibility or liability for, the drilling of the Development Wells or any of the other business or commercial activities contemplated by this Development Agreement, all of which are hereby agreed to be the sole responsibility of SandRidge, and SandRidge hereby agrees to and hereby does indemnify and agree to hold harmless each of the Trust and the Trustee, in its capacity as the Trustee and individually, from and against any and all damages, liabilities, expenses, fines, judgments, amounts paid in settlement, reasonable attorneys’ fees and costs of investigation, and other expenses reasonably incurred by any of them in connection with or as a result of any of the business or commercial activities contemplated by this Development Agreement or any other matter arising out of this Development Agreement or any such matter. SandRidge further agrees to advance any such attorneys’ fees, costs of investigation and other expenses described above as they are incurred.

 

Section 4.11 Severability. If any provision of this Development Agreement or the application thereof to any Party or circumstance shall be held invalid or unenforceable to any extent, the remainder of this Development Agreement and the application of such provision to the other Parties or circumstances shall not be affected thereby and shall be enforced to the greatest extent permitted by law.

 

Section 4.12 Termination. This Development Agreement shall terminate and be deemed null and void as of and following the Drilling Obligation Completion Date.

 

Section 4.13 Joint and Several Liability. The Parties acknowledge and agree that the obligations of SandRidge contained in this Development Agreement are the joint and several obligations of SandRidge Parent and Assignor.

 

13

 

[Remainder of page intentionally left blank.]

 

14

 

IN WITNESS WHEREOF, each Party has caused this Development Agreement to be executed in its name and behalf and delivered on the date or dates stated in the acknowledgment certificates appended to this Development Agreement, to be effective as of the Effective Time.

 

	
 
    	
 
    	
SANDRIDGE   ENERGY, INC.
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
/s/   Matthew K. Grubb
    
	
 
    	
 
    	
 
    	
Name:   
    	
Matthew   K. Grubb
    
	
 
    	
 
    	
 
    	
Title:   
    	
President   and Chief Operating Officer
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
SANDRIDGE   EXPLORATION AND PRODUCTION, LLC
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
/s/   Matthew K. Grubb
    
	
 
    	
 
    	
 
    	
Name:   
    	
Matthew   K. Grubb
    
	
 
    	
 
    	
 
    	
Title:   
    	
President   and Chief Operating Officer
    

 

Signature Page to Development Agreement

 

 

	
 
    	
 
    	
SANDRIDGE   MISSISSIPPIAN TRUST II
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
The   Bank of New York Mellon Trust Company, N.A., as Trustee
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
/s/   Michael J. Ulrich
    
	
 
    	
 
    	
 
    	
Name:
    	
Michael   J. Ulrich
    
	
 
    	
 
    	
 
    	
Title:
    	
Vice   President
    

 

Signature Page to Development Agreement

 

 

	
STATE   OF OKLAHOMA
    	
 
    	
§
    
	
 
    	
 
    	
§
    
	
COUNTY   OF OKLAHOMA
    	
 
    	
§
    

 

This instrument was acknowledged before me on April 23, 2012, by Matthew K. Grubb, President and Chief Operating Officer of SandRidge Energy Inc., a Delaware corporation, on behalf of said corporation.

 

 

	
 
    	
 
    	
/s/   Janis L. Roberts
    
	
 
    	
 
    	
NOTARY   PUBLIC,
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
State   of Oklahoma
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Janis   L. Roberts
    
	
 
    	
 
    	
(printed   name)
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
My   commission expires: May 22, 2012
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
SEAL   or STAMP
    	
 
    	
 
    

 

Acknowledgment Page to Development Agreement

 

 

	
STATE   OF OKLAHOMA
    	
 
    	
§
    
	
 
    	
 
    	
§
    
	
COUNTY   OF OKLAHOMA
    	
 
    	
§
    

 

This instrument was acknowledged before me on April 23, 2012, by Matthew K. Grubb, President and Chief Operating Officer of SandRidge Exploration and Production, LLC, a Delaware limited liability company, on behalf of said limited liability company.

 

 

	
 
    	
 
    	
/s/   Janis L. Roberts
    
	
 
    	
 
    	
NOTARY   PUBLIC,
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
State   of Oklahoma
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Janis   L. Roberts
    
	
 
    	
 
    	
(printed   name)
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
My   commission expires: May 22, 2012
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
SEAL   or STAMP
    	
 
    	
 
    

 

Acknowledgment Page to Development Agreement

 

 

	
STATE   OF TEXAS
    	
 
    	
§
    
	
 
    	
 
    	
§
    
	
COUNTY   OF TRAVIS
    	
 
    	
§
    

 

This instrument was acknowledged before me on April 17, 2012, by Michael J. Ulrich, Vice President of The Bank of New York Mellon Trust Company, N.A., a national banking association organized under the laws of the United States of America, as Trustee of SandRidge Mississippian Trust II, a Delaware statutory trust, on behalf of said national banking association and said trust.

 

 

	
 
    	
 
    	
/s/   Sarah Newell
    
	
 
    	
 
    	
NOTARY   PUBLIC,
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
State   of Texas
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Sarah   Newell
    
	
 
    	
 
    	
(printed   name)
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
My   commission expires: February 16, 2014
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
SEAL   or STAMP
    	
 
    	
 
    

 

Acknowledgment Page to Development Agreement

 

 

Exhibit A

 

(Description of AMI)

 

See attached.

 

 

Exhibit B

 

[Letterhead of SandRidge Energy, Inc.]

 

[Date]

 

Reference is made to that certain Development Agreement (the “Development Agreement”), by and between SandRidge Energy, Inc. (“SandRidge”), SandRidge Exploration and Production, LLC and SandRidge Mississippian Trust II, a Delaware statutory trust, delivered to be effective as of January 1, 2012.  Capitalized terms used but not defined herein have the meaning given them in the Development Agreement.

 

SandRidge hereby certifies to the Trust that SandRidge achieved the Total Drilling Target on [insert date] and, therefore, such date shall be, for all purposes, established as the Drilling Obligation Completion Date.

 

The Development Wells drilled to achieve the Total Drilling Target are listed in the attachment to this letter.

 

Please sign and return an executed copy of this letter to certify that you require no additional documentation to establish SandRidge’s satisfaction of its drilling obligation under the Development Agreement and that [insert date] shall be, for all purposes, established as the Drilling Obligation Completion Date.

 

	
 
    	
 
    	
 
    	
 
    	
SandRidge   Energy, Inc.
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
By:
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
Title:
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Acknowledged and agreed:
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 SandRidge   Mississippian Trust II
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 By: 
    	
The   Bank of New York Mellon Trust Company, N.A., as Trustee
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Name:
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Title:

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