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EXHIBIT 4.9
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 Frost National Bank ("Bank") intends to enter into a Loan
Agreement, of even date herewith (the "Loan Agreement"), under which Pioneer
Drilling Co., Ltd. ("Pioneer", which is a partnership comprised of entities
which are wholly owned by SOTX) intends to borrow up to $12,000,000.00,
evidenced by one or more notes issued under the Loan Agreement (the "Notes")
which Notes are to be secured by certain of the assets of Pioneer pursuant to a
Security Agreement of even date herewith (the "Security Agreement"). The Loan
Agreement, Notes and Security Agreement and any renewals and extensions thereof,
are collectively referred to herein as the "Frost 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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