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EXHIBIT 4.7
SUBORDINATION AGREEMENT
WHEREAS, WEDGE Energy Services, L.L.C., a Delaware limited liability
company ("WEDGE") intends to lend South Texas Drilling & Exploration, Inc.
("SOTX") the sum of $9,000,000.00 evidenced by a Subordinated Note of even date
herewith (the "Subordinated Note"); and
WHEREAS, the American Bank, N.A. has entered into a Loan Agreement,
(the "Loan Agreement"), with SOTX under which SOTX borrowed $3,000,000.00,
evidenced by one or more notes issued under the Loan Agreement (the "Notes")
which Notes are to be secured by certain real estate and assets of Pioneer
Drilling Co., Ltd. ("Pioneer", which is a partnership comprised of entities
which are wholly owned by SOTX) pursuant to a Deed of Trust and Security
Agreement (the "Security Agreement"). The Loan Agreement, Notes and Security
Agreement and any renewals and extensions thereof, are collectively referred to
herein as the "Superior Indebtedness"); and
WHEREAS, WEDGE has agreed to subordinate the Subordinated Note and any
renewals and extensions thereof (the "Inferior Indebtedness") to the Superior
Indebtedness:
NOW, THEREFORE, KNOW ALL MEN BY THESE PRESENTS, that WEDGE, in
consideration of the premises, and in consideration of the sum of TEN AND NO/100
DOLLARS ($10.00) and other good and valuable consideration, the receipt and
sufficiency of which consideration is hereby acknowledged, HAS COVENANTED AND
AGREED, and does hereby COVENANT AND AGREE, that the Inferior Indebtedness shall
be, and the same is hereby made subject and inferior to the Superior
Indebtedness.
WEDGE further agrees that it will not receive, collect or seek to
collect any amount owing under the Inferior Indebtedness until all of the
Superior Indebtedness is paid in full.
WEDGE further agrees to take all action necessary to convert the
Inferior Indebtedness into equity in SOTX as soon as shareholder approval has
been obtained.
IN WITNESS WHEREOF, this instrument has been executed by WEDGE
effective the 30th day of March, 2001.
WEDGE ENERGY SERVICES, L.L.C.
By: /s/ Xxxxx X. Xxxxxxx
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Xxxxx X. Xxxxxxx, Vice President
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