-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, MQk6WDUIYExULbSHTgkkcUBqD8lGva3rkOor5bvXJ8FbQqZqfzv7kzMlaVYw8LmT vx8QtQr5K/R2TmeODxUCuQ== 0000750813-98-000027.txt : 19980918 0000750813-98-000027.hdr.sgml : 19980918 ACCESSION NUMBER: 0000750813-98-000027 CONFORMED SUBMISSION TYPE: S-8 POS PUBLIC DOCUMENT COUNT: 6 FILED AS OF DATE: 19980917 EFFECTIVENESS DATE: 19980917 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: SEITEL INC CENTRAL INDEX KEY: 0000750813 STANDARD INDUSTRIAL CLASSIFICATION: OIL AND GAS FIELD EXPLORATION SERVICES [1382] IRS NUMBER: 760025431 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-8 POS SEC ACT: SEC FILE NUMBER: 333-63383 FILM NUMBER: 98710649 BUSINESS ADDRESS: STREET 1: 50 BRIAR HOLLOW LN STREET 2: WEST BLDG 7TH FLR CITY: HOUSTON STATE: TX ZIP: 77027 BUSINESS PHONE: 7136271990 MAIL ADDRESS: STREET 1: 50 BRIAR HOLLOW LANE WEST STREET 2: 7TH FLOOR CITY: HOUSTON STATE: TX ZIP: 77027 FORMER COMPANY: FORMER CONFORMED NAME: SEISMIC ENTERPRISES INC DATE OF NAME CHANGE: 19870814 S-8 POS 1 9/15/98 REGISTRATION STATEMENT AMEND. #1 As filed with the Securities and Exchange Commission on September , 1998 ---- Registration No. 333- ----- ================================================================================ SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form S-8 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 SEITEL, INC. (Exact name of registrant as specified in its charter) Delaware 76-0025431 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 50 Briar Hollow Lane 7th Floor, West Bldg. Houston, Texas 77027 (Address of registrant's principal executive offices, including zip code) SEITEL, INC. 1998 EMPLOYEE STOCK PURCHASE PLAN (Full Title of Plan) PAUL A. FRAME President and Chief Executive Officer Seitel, Inc. 50 Briar Hollow Lane, 7th Floor, West Bldg. Houston, Texas 77027 (713) 881-8900 (Name and address, including zip code, and telephone number, including area code, of registrant's agent for service) Copy to: William Mark Young Gardere Wynne Sewell & Riggs, LLP 333 Clay, Suite 800 Houston, Texas 77002 Phone (713) 308-5500, Fax: (713) 308-5555 CALCULATION OF REGISTRATION FEE
================================================================================================================== Title of Each Class of Amount Proposed Maximum Proposed Maximum Amount of Securities to be to be Offering Price Aggregate Offering Registration Registered Registered Per Security (1) Price (1) Fee - ------------------------------------------------------------------------------------------------------------------ Units 1,194,000 $9.50 $11,343,000 $3,350 - ------------------------------------------------------------------------------------------------------------------ Common Stock, par value $0.01 per share 1,194,000 (2) (2) (2) - ------------------------------------------------------------------------------------------------------------------ Common Stock Purchase Warrants 1,194,000 (2) (2) (2) - ------------------------------------------------------------------------------------------------------------------ Common Stock, underlying Common Stock Purchase Warrants (3) 1,194,000 $10.6875 $12,760,875 $3,765 - ------------------------------------------------------------------------------------------------------------------ Total $24,103,875 $7,115 ================================================================================================================== (cover page continued) (1) Pursuant to the Employee Stock Purchase Plan (the "Plan"), Units will be offered to participants at the market price of Common Stock. Therefore, the filing fee with respect to Units has been calculated pursuant to Rule 457(h)(1) based on the average of the high and low sales price of the Common Stock as reported on the New York Stock Exchange on September 10, 1998. Pursuant to the Plan, the exercise price of the Warrants will equal 112 1/2% of the sales price of a Unit rounded up to the next one-quarter of one dollar. Therefore, the filing fee with respect to Warrants has been calculated pursuant to Rule 457(g)(2) based on the average of the high and low sales price of the Common Stock as reported on the New York Stock Exchange on September 10, 1998. (2) Included in the Units. No additional registration fee required. (3) Issuable upon exercise. Pursuant to Rule 416(a), there are also registered such an indeterminate number of shares of Common Stock that may be issued pursuant to the anti-dilution provisions applicable to the Common Stock Purchase Warrants.
EXPLANATORY NOTE This Registration Statement contains two parts: the first part contains a Prospectus on Form S-3 (in accordance with Section C of the General Instructions to Form S-8) which covers re-offers and re-sales by the Selling Stockholders listed, from time to time, in the Prospectus of shares of Common Stock of the Company to be issued pursuant to purchases made under the Seitel, Inc. 1998 Employee Stock Purchase Plan and upon exercise of warrants issued pursuant to purchases made under the Seitel, Inc. 1998 Employee Stock Purchase Plan. The second part contains information required in the Registration Statement pursuant to Part II of Form S-8. Pursuant to Note to Part I of Form S-8, the Plan Information specified by Part I is not being filed with the Securities and Exchange Commission, as such information will be sent or given to each employee participant in accordance with Rule 428 under the Securities Act of 1933, as amended (the "Securities Act"). This information and the documents incorporated by reference into this Registration Statement pursuant to Item 3 of Part II of this Registration Statement, taken together, constitute a prospectus that meets the requirements of Section 10(a) of the Securities Act. PROSPECTUS SEITEL, INC. (Form S-3) 812,500 Shares Common Stock ($.01 Par Value Per Share) SEITEL, INC. 1998 EMPLOYEE STOCK PURCHASE PLAN This Prospectus is being used in connection with the offering, from time to time, by certain stockholders (the "Selling Stockholders") of Seitel, Inc. (the "Company") of shares of common stock, $.01 par value per share (the "Common Stock") which may be acquired under the Seitel, Inc. 1998 Employee Stock Purchase Plan (the "Purchase Plan") and upon exercise of warrant which may be acquired under the Purchase Plan. The securities being registered hereby (the "Securities") may be sold, from time to time, by the Selling Stockholders, directly or indirectly, through agents designated from time to time, in one or more open market transactions, including block trades, on the New York Stock Exchange, in privately negotiated transactions, or in a combination of such methods of sale. Such sales may be made through dealers or underwriters to be designated, on terms to be determined at the time of sale, or at prices and at terms then prevailing or at prices related to the then current market price. In effecting sales, brokers or dealers engaged by the Selling Stockholders may arrange for other brokers or dealers to participate. Brokers or dealers will receive commissions or discounts from Selling Stockholders in amounts to be negotiated immediately prior to the sale. Such brokers or dealers and any other participating brokers or dealers may be deemed to be "underwriters" within the meaning of the Securities Act of 1933, as amended (the "Securities Act"), in connection with such sales. To the extent required, the specific securities sold, the name of the Selling Stockholders, the purchase price, public offering price, name of any such agent, dealer or underwriter, and any applicable discount or commission with respect to a particular offer will be set forth by supplement to this Prospectus. In addition, any securities covered by this Prospectus which qualify for sale pursuant to Rule 144 may be sold under Rule 144 rather than pursuant to this Prospectus. The Company will not receive any of the proceeds from the sale of these shares, but will receive the aggregate exercise price of warrants exercised under the Purchase Plan. The Company's Common Stock is presently listed on the New York Stock Exchange under the symbol "SEI." The closing price for the Common Stock on the New York Stock Exchange on September 11, 1998, was $10.625. SEE "RISK FACTORS" BEGINNING ON PAGE 4 OF THIS PROSPECTUS FOR CERTAIN MATTERS TO BE CONSIDERED BY PROSPECTIVE INVESTORS The date of this Prospectus is September 14, 1998. THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. No person is authorized in connection with the offering made by this Prospectus to give any information or to make any representations not contained or incorporated by reference in this Prospectus, and any information or representation not contained or incorporated by reference in this Prospectus must not be relied upon as having been authorized by the Company. This Prospectus is not an offer to sell, or a solicitation of an offer to buy, by any person in any jurisdiction in which it is unlawful for that person to make an offer or solicitation. Neither the delivery of this Prospectus or any sale made under this Prospectus shall, under any circumstance, create any implication that the information in this Prospectus is correct as of any time subsequent to the date of this Prospectus. AVAILABLE INFORMATION Seitel, Inc. (the "Company") is subject to the informational requirements of the Securities Exchange Act of 1934, as amended (the "Exchange Act") and, in accordance therewith, files reports, proxy and information statements and other information with the Securities and Exchange Commission (the "Commission"). The reports, proxy statements and other information filed by the Company with the Commission can be obtained by mail from the Public Reference Section of the Commission at Judiciary Plaza, 450 Fifth Street, Room 1024, Washington, D.C. 20549, at prescribed rates. In addition, such reports, proxy statements and information may be inspected and copied at the aforementioned public reference facility and at the Commission's regional offices at Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661-2511, and at 7 World Trade Center, 13th Floor, New York, New York 10048. The Commission maintains a world wide web site on the Internet at http://www.sec.gov that contains reports, proxy and information statements and other information regarding registrants that file electronically with the Commission. Such reports, proxy statements and other information may also be inspected at the offices of the New York Stock Exchange, 20 Broad Street, New York, New York 10005. The Company has filed with the Commission a Registration Statement under the Securities Act with respect to the securities offered by this Prospectus. This Prospectus does not contain all of the information set forth in the Registration Statement, certain parts of which are omitted in accordance with the rules and regulations of the Commission. Additional information concerning the securities offered hereby is to be found in the Registration Statement, including various exhibits thereto, which may be inspected at the Commission's office in Washington, D.C. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE The Company incorporates by reference into this Prospectus the following documents and portions of documents: 1. The Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1997, as amended by Form 10-K/A dated April 28, 1998, as filed with the Commission on April 29, 1998 and by Form 10-K/A dated June 10, 1998, as filed with the Commission on June 12, 1998. 2. The Company's Quarterly Reports on Form 10-Q for the fiscal quarters ended March 31 and June 30, 1998. 3. All other reports filed pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), since December 31, 1997. 4. The description of the Company's Common Stock contained in the Company's Registration Statement on Form 8-A, dated March 27, 1991 (Registration Number 0-14488). All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to the termination of the offering of the Common Stock contemplated hereby shall be deemed to be incorporated by reference into this Prospectus and made a part hereof from the respective dates of filing of such documents. Any statement contained herein, or in a document incorporated or deemed incorporated by reference herein, shall be deemed to be modified or superseded for purposes of the Registration Statement and this Prospectus to the extent that a statement contained herein or in any subsequently filed document which also is or is deemed to be incorporated herein modifies or supersedes such statement. Any such statements so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of the Registration Statement or this Prospectus. The Company will provide without charge to each person to whom this Prospectus is delivered, upon written or oral request of that person, a copy of all other documents incorporated by reference into the Registration Statement of which this Prospectus is a part, other than exhibits to those documents. Requests should be directed to Debra D. Valice, Seitel, Inc., 50 Briar Hollow Lane, West Building, 7th Floor, Houston, Texas 77027 (telephone: (713) 881-8900). RISK FACTORS Prospective purchasers of the Common Stock should carefully consider, in addition to the other information contained in this Prospectus and any accompanying Prospectus Supplement, the following risk factors. Competition. Competition in the seismic data licensing industry and in the oil and gas exploration and production industry is intense. A number of independent oil-service companies create and market seismic data, and numerous oil and gas companies create seismic data and maintain their own seismic data banks. Due to difficult industry conditions in recent years, the number of independent seismic companies has decreased, and oil and gas companies have acquired an increasing portion of their seismic data from outside sources, including the Company. In the oil and gas exploration and production business, there are numerous oil and gas companies competing for the acquisition of mineral properties. Although the Company has significant operating history in its seismic data licensing operations, it has limited operating history in oil and gas exploration. Some of the Company's competitors have longer operating histories, greater financial resources and larger sales volumes than the Company. Although the Company believes that its fully-integrated seismic resources and technical, geophysical and marketing expertise will allow it to compete effectively in both the seismic data industry and the oil and gas exploration and development industry, there can be no assurance that this will be the case. Industry Conditions. Demand for the Company's seismic data depends primarily upon the level of spending by oil and gas companies for exploration, production and development activities. These spending levels tend to increase and decrease with increases and decreases in the commodity prices for oil and gas, so that demand for the Company's seismic data is affected to some degree by market prices for natural gas and crude oil, which have historically been very volatile. Revenues generated by the Company's oil and gas exploration and development business increase and decrease with increases and decreases in the market prices of oil and gas. A substantial or extended decline in oil and gas prices could have a material adverse effect on the Company's financial position. In addition, if oil and gas prices decrease materially, the Company may be unable to find partners willing to pay the relatively high costs of exploration and development and grant the Company an interest in production in exchange for seismic data. Further, as high quality 3D data becomes more widely available from other sources, the Company may be unable to obtain the same level of working interests in oil and gas properties in exchange for use of its 3D data. Also, other factors beyond the Company's control may affect its oil and gas operations. These factors include the level of supply of natural gas and oil, the availability of adequate pipeline and other transportation and processing facilities and the marketing of competitive fuels. See also "Compliance with Governmental Regulations." Operating Risks. The Company's oil and gas operations are subject to hazards incident to the drilling of oil and gas wells, such as cratering, explosions, uncontrollable flows of oil, gas or well fluids, fires, pollution, or other environmental risks, as well as to the risk that no commercially productive natural gas or oil reserves will be encountered. Some of these hazards can cause personal injury and loss of life, severe damage to and destruction of property and equipment, environmental damage and suspension of operations. In addition, the cost of drilling, completing and operating wells is often uncertain, and drilling operations may be curtailed, delayed or canceled as a result of a variety of factors, including unexpected drilling conditions, pressure or irregularities in formations, equipment failures or accidents, weather conditions and shortages or delays in the delivery of equipment. These risks are typically shared by the Company and its petroleum company partners. The Company also seeks to reduce dry hole risks by utilizing 3D seismic data, where deemed appropriate, to assist in the determination of where to drill. However, since the Company does not act as operator in its oil and gas drilling business, it is dependent upon its petroleum company partners to conduct operations in a manner so as to minimize these operating risks. In accordance with industry practice, the Company maintains insurance against some, but not all, of these operating risks. There can be no assurance that adequate insurance will be available in the future, or that the Company will be able to maintain adequate insurance on terms and conditions it finds acceptable. As a result of the risks inherent in oil and gas operations, there can be no assurance as to the success of the Company's oil and gas exploration, development and production activities. Holding Company Structure. The Company has no operations or significant assets other than through its ownership of the capital stock of its subsidiaries. Dividends and other permitted payments from such subsidiaries will be the primary source of funds to pay dividends on the Common Stock. The rights of the Company and its creditors to participate in the assets of any subsidiary upon the latter's liquidation or reorganization will be subject to the prior claims of the subsidiary's creditors except to the extent that the Company may itself be a creditor with recognized claims against the subsidiary. Dependence on Key Personnel. The Company's operations are dependent upon a relatively small group of management and technical personnel. The loss of one or more of these individuals could have a material adverse effect on the Company. The Company utilizes equity ownership and other incentives to attract and retain its employees. In addition, the Company's President and Chief Executive Officer, Paul A. Frame, Executive Vice President and Chief Operating Officer, Horace A. Calvert, and Senior Vice President-Finance and Chief Financial Officer, Debra D. Valice, all have employment agreements with the Company. Geographic Concentration of Operations. Most of the Company's seismic data in its seismic data library, as well as most of the Company's existing interests in oil and gas properties, are located along the coast and offshore in the U.S. Gulf of Mexico. Because of this concentration, any regional events that increase costs, reduce availability of equipment or supplies, reduce demand or limit production will impact the Company more adversely than if the Company were more geographically diversified. Compliance with Governmental Regulations. The oil and gas industry in general is subject to extensive governmental regulation, which may be changed from time to time in response to economic or political conditions. In particular, oil and gas exploration and production is subject to federal and state regulations governing environmental quality and pollution control, state limits on allowable rates of production by well or proration unit, and other similar regulations. State and federal regulations generally are intended to prevent waste of natural gas and oil, protect rights to produce natural gas and oil between owners in a common reservoir, control the amount of natural gas and oil produced by assigning allowable rates of production and control contamination of the environment. Also, the Company believes that the trend toward more expansive and stricter environmental laws and regulations will continue. The implementation of new, or the modification of existing, laws or regulations affecting the oil and gas industry could have a material adverse impact on the Company. Shares Eligible for Future Sale. No prediction can be made as to the effect, if any, that future sales of shares of the Company's capital stock, or the availability of shares of capital stock for future sale will have on the market price of such stock prevailing from time to time. Almost all of the 4,500,105 shares of Common Stock currently held by or issuable pursuant to options, warrants and other rights granted prior to the date hereof and exercisable within 60 days of the date hereof to the Company's directors and executive officers are eligible for sale currently or immediately upon exercise. Sales of substantial amounts of Common Stock (including shares issued upon the exercise of stock options or warrants), or the perception that such sales could occur, could adversely affect prevailing market prices for the Common Stock. DISCLOSURE REGARDING FORWARD-LOOKING INFORMATION This Prospectus includes "forward-looking statements" within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. All statements other than statements of historical facts included in this Prospectus, including without limitation, statements regarding the Company's financial position, business strategy, budgets, plans and objectives of management for future operations are forward-looking statements. The words "anticipate," "believe," "expect," "plan," "intend," "estimate," "project," "will," "could," "may," "predict" and similar terms and phrases are intended to identify forward-looking statements. These statements involve risks and uncertainties that may cause actual future activities and results of operations to be materially different from those suggested or described in this Prospectus. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to have been correct. Important factors that could cause actual results to differ materially from the Company's expectations ("Cautionary Statements") are disclosed under "Risk Factors" and elsewhere in this Prospectus. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those expected, estimated or projected. All subsequent written and oral forward-looking statements attributable to the Company, or persons acting on its behalf, are expressly qualified in their entirety by the Cautionary Statements. THE COMPANY The Company and its subsidiaries, located in Houston, Texas, are a leading provider of seismic data and related geophysical services and expertise to the petroleum industry. The Company has evolved into a diversified energy concern with several niche operations, including one of the largest independent seismic data libraries in the United States; three-dimensional seismic data processing and interpretation technology; and direct participation in exploration, development and ownership of natural gas and crude oil reserves. Since its inception in 1982, the Company has been engaged in the development of a proprietary library of seismic data, created by both the Company and others. The Company's seismic data library is owned and marketed by Seitel Data, Ltd., a Texas limited partnership of which wholly-owned Seitel subsidiaries constitute all of the limited and general partners. Seitel Data, Ltd. markets the data library, which consists of both two-dimensional ("2D") and three-dimensional ("3D") data, to oil and gas companies under license agreements. Seismic surveys and the analysis of seismic data for the identification and definition of underground geological structures are principal techniques used in oil and gas exploration and development to determine the existence and location of subsurface hydrocarbons. The Company's integrated seismic data operations include its large 2D and 3D seismic library, its seismic data processing center and computer software, and the Company's geophysical application experience in interpreting 3D data. In March 1993, the Company formed DDD Energy, Inc. ("DDD Energy"), a wholly-owned subsidiary, to participate directly in petroleum exploration, development and ownership of hydrocarbon reserves through cost and revenue sharing relationships with oil and gas producers. The Company's objective is to participate through DDD Energy in exploration and development programs which combine the Company's 3D and 2D seismic resources and related geophysical technologies with the geology and engineering expertise and land positions of selected petroleum producers. USE OF PROCEEDS The Company will not receive any part of the proceeds from the sale of the shares of Common Stock by the Selling Stockholders. The Company will, however, receive the exercise price of warrants under the Purchase Plan, which warrants must be exercised before the Selling Stockholders can sell certain of the shares offered hereunder. The exercise price of the warrants will be determined at the time such options are purchased by the Selling Stockholders under the Purchase Plan. The Company intends to use the proceeds from the exercise of such warrants for general corporate purposes. COMMON STOCK OFFERED BY THE SELLING STOCKHOLDERS This Prospectus covers offers, from time to time, of a total of 812,500 shares of Common Stock that may be purchased by officers and directors of the Company pursuant to the Company's Purchase Plan or pursuant to the exercise of warrants under the Purchase Plan. SELLING STOCKHOLDERS This Prospectus may be used by officers and directors of the Company for the resale of up to 812,500 shares of Common Stock that may be issued to them pursuant to the Purchase Plan and upon exercise of warrants pursuant to the Purchase Plan. As of the date hereof, no shares had been acquired by officers or directors of the Company pursuant to the Purchase Plan and no warrants had been acquired by officers or directors under the Purchase Plan. If and when any of the 812,500 shares of Common Stock are issued to officers or directors, including issuances upon exercise of warrants under the Purchase Plan, are sought to be offered for resale by the Selling Stockholders, the number of shares of Common Stock beneficially owned by each Selling Stockholder, the number of shares acquired pursuant to the Purchase Plan, including the number of shares that may be acquired upon exercise of warrants pursuant to the Purchase Plan, and the number of shares offered for resale pursuant to this Prospectus will be indicated by Prospectus Supplement. PLAN OF DISTRIBUTION All Securities covered by this Prospectus are being offered for the accounts of the Selling Stockholders. The Securities may be sold, from time to time, in one or more transactions at a fixed offering price, which may be changed, at varying prices determined at the time of sale, at terms then prevailing or at prices related to the then current market price or at negotiated prices. The Securities may be sold in one or more open market transactions on the New York Stock Exchange or in privately negotiated transactions. The Securities may be sold by various methods, including, but not limited to, one or more of the following: a block trade in which the broker or dealer so engaged will attempt to sell Securities as agent but may position and resell a portion of the block as principal to facilitate the transaction, purchases by a broker or dealer as principal and resale by the broker or dealer for its own account pursuant to this Prospectus, a transaction on the New York Stock Exchange in accordance with the rules of such exchange, and ordinary brokers transactions and transactions in which the broker solicits the purchasers. Alternatively, the Selling Stockholder may from time to time offer the securities through underwriters, dealers or agents who may receive compensation in the form of underwriting discounts, concessions, or commissions from the Selling Stockholders and/or purchasers of Securities for whom they act as agents. In addition, any of the Securities which qualify for sale pursuant to Rule 144 under the Securities Act, or otherwise pursuant to an applicable exemption under the Securities Act, may be sold other than pursuant to this Prospectus. The Selling Stockholders and any such underwriters, dealers or agents that participate in the distribution of Securities may be deemed to be underwriters, and any profit on the sale of the Securities by them and any discounts, commissions or concessions received by them may be deemed to be underwriting discounts and commissions under the Securities Act. Brokers or dealers acting in connection with the sale of the Securities contemplated by this Prospectus may receive commissions in connection therewith. At the time a particular offer of Securities is made, to the extent required, a supplement to this Prospectus will be distributed which will identify the Selling Stockholders, identify and set forth the aggregate amount of Securities being offered and the terms of the offering, including the name or names of any underwriters, dealers or agents, the purchase price paid by any underwriter for Securities purchased from the Selling Stockholder, any discounts, commissions and other items constituting compensation from the Selling Stockholder and any discounts, commissions or concessions allowed or re-allowed or paid to dealers, including the proposed selling price to the public. Such supplement to this Prospectus and, if necessary, a post-effective amendment to the Registration Statement of which the Prospectus is a part, will be filed with the Commission to reflect the disclosure of additional information with respect to the distribution of the Securities. The Company will pay all of the expenses incident to the registration and certain other expenses related to this offering of the Securities, other than underwriting commissions and discounts, normal commission expenses and brokerage fees, applicable transfer taxes and attorneys' fees of Selling Stockholders' counsel. The Company intends to require the Selling Stockholders to enter into indemnification agreements with the Company pursuant to which the Company will be indemnified against failure by the Selling Stockholders to deliver a Prospectus if required, as well as against certain civil liabilities, including liabilities under the Securities Act or the Exchange Act, incurred in connection with any untrue (or alleged untrue) statement of a material fact or omission of a material fact in this Registration Statement pursuant to an applicable Prospectus Supplement to the extent such liability relates to information supplied by the Selling Stockholder for inclusion in the Registration Statement pursuant to an applicable Prospectus Supplement. In order to comply with certain states' securities laws, if applicable, the Securities will be sold in such jurisdictions only through registered or licensed brokers or dealers. In certain states, the Securities may not be sold unless the Securities have been registered or qualified for sale in such state, or unless an exemption from registration or qualification is available and is obtained. LEGAL MATTERS The validity of the Securities will be passed upon for the Company by Gardere Wynne Sewell & Riggs, L.L.P., Houston, Texas. EXPERTS The financial statements incorporated by reference in this registration statement have been audited by Arthur Andersen LLP, independent public accountants, as indicated in their reports with respect thereto, and are incorporated by reference herein in reliance upon the authority of said firm as experts in giving said reports. The estimate of natural gas reserves contained in the Company's Annual Report on Form 10-K for the year ended December 31, 1997, was obtained from reserve reports dated as of January 1, 1998 prepared by Miller and Lents, Ltd. and dated January 1, 1998 prepared by Forrest A. Garb & Associates, Inc., and are incorporated herein in reliance upon the authority of said firms as experts in such matters. PART II INFORMATION REQUIRED IN THE REGISTRATION STATEMENT Item 3: Incorporation of Documents by Reference. The Company incorporates by reference into this Registration Statement the following documents which have been or will be filed by the Company with the Securities and Exchange Commission (the "Commission"): 1. The Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1997, as amended by Form 10-K/A dated April 28, 1998, as filed with the Commission on April 29, 1998, and as amended by Form 10-K/A dated June 10, 1998, as filed with the Commission on June 12, 1998. 2. The Company's Quarterly Reports on Form 10-Q for the fiscal quarters ended March 31 and June 30, 1998. 3. All other reports filed pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), since December 31, 1997. 4. The description of the Company's Common Stock contained in the Company's Registration Statement on Form 8-A, dated March 27, 1991 (Registration Number 0-14488). In addition, all documents subsequently filed by the Company pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act, prior to the filing of a post-effective amendment which indicates that all securities offered have been sold or which de-registers all securities then remaining unsold, shall be deemed to be incorporated by reference in this Registration Statement and to be a part hereof from the date of filing of such documents. Any statement contained in a document incorporated by reference herein shall be deemed to be modified or superseded for purposes of this Prospectus to the extent that a statement contained herein modifies or supersedes such statement. Any such statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute part of this Prospectus. Item 4: Description of Securities. Units - ----- Each unit consists of one share of Common Stock and one Warrant. The Plan authorizes the issuance of 2,388,000 shares of Common Stock, of which 1,194,000 are issuable pursuant to the exercise of the 1,194,000 Warrants that may be issued under the Plan. Terms of Warrants - ----------------- Each Warrant entitles the holder to purchase one share of Common Stock at a price equal to one hundred twelve and one-half percent (112 1/2%) of the average of the closing prices of one share of Common Stock on the New York Stock Exchange on the 10 trading days before the Closing Date (as such term is defined in the Plan) rounded up to the next one-quarter of one dollar. The Warrants will expire on the earlier of (i) the date that is five years after the Closing Date, (ii) the date that is five business days after termination of employment if the original purchaser of the Warrant from the Company ceases to be an employee of the Company or a subsidiary of the Company for any reason (other than for death, disability or retirement after the age of 65), or (iii) the date that is one year after the death, disability or retirement after age 65 of the original purchaser of the Warrant from the Company if he ceases to be an employee of the Company or a Subsidiary because of death, disability or retirement after age 65. Exercise of Warrants - -------------------- A Warrant may be exercised only by a holder during his lifetime, or after his disability by his legal representative on his behalf, or after his death by his personal representative or estate or the person or persons entitled thereto under his will or under the laws of descent and distribution. Warrants may be exercised in whole or part at any time, within the period permitted for exercise thereof. Warrants must be exercised by written notice with respect to a specified number of shares delivered to the Company at its principal office, together with payment in full to the Company for the number of shares of Common Stock to be purchased pursuant to the exercise of the Warrant. Upon any exercise of a Warrant, the holder must pay the full amount of the exercise price in cash at the time of the exercise. Holders will not be or have any of the rights or privileges of a stockholder of the Company in respect of any Shares purchasable upon the exercise of any part of a Warrant unless and until certificates representing such Shares shall have been issued by the Company to such holders after exercise of a Warrant. A Warrant is exercisable only if the issuance of Common Stock pursuant to the exercise would be in compliance with applicable securities laws. The Warrants further provide that the holder exercising a warrant shall pay or make provisions satisfactory to the Company for the payment of certain taxes which the Company may be obligated to collect upon exercise. Adjustments - ----------- The number of shares of Common Stock issuable upon exercise of outstanding Warrants, and the exercise price of such Warrants, is subject to adjustment by the Board of Directors of the Company, acting in good faith, to reflect any stock dividend, stock split, share combination, exchange of shares, recapitalization, merger, consolidation, separation, reorganization, liquidation or the like, of or by the Company. If the Company is a party to any merger or similar transaction and is the surviving corporation, the Warrants will not be affected. If (i) the Company sells all or substantially all of its assets, (ii) is a party to a merger or similar transaction and is not the surviving corporation, or (iii) another company makes a tender offer for stock of the Company, then the Company may, at its election, (a) reach an agreement with the purchaser in that transaction that the purchaser will assume the obligations of the Company under the Warrants; (b) reach an agreement with the purchaser that the purchaser will convert the Warrants into warrants of at least equal value as to stock of the purchaser; or (c) not later than thirty (30) days prior to the effective date of the transaction, notify the holder of the Warrants of the proposed transaction and afford the holders of the Warrants the right prior to such transaction to exercise the Warrants, which exercise may be contingent upon consummation of the transaction. Restrictions on Transfer of Warrants - ------------------------------------ Warrants are not be transferable other than by will or by the laws of descent and distribution, except that Warrants may be transferred by the original purchaser of the Warrant from the Company to members of his immediate family who are U.S. residents or to trusts or business entities formed for the benefit of members of his immediate family who are U.S. residents. "Immediate family" means your parents, children, grandchildren, or spouse. A Warrant may not be subsequently transferred by such immediate family member other than by will or by the laws of descent and distribution. If a Warrant is transferred to an immediate family member, the Company may require investment representations upon exercise of the Warrant and may impose such conditions upon the exercise of the Warrant as may be required to comply with federal and state securities laws, and the Shares of Common Stock issuable upon exercise of a Warrant by such immediate family member may be "restricted shares" as such term is defined in Rule 144 under the Securities Act of 1933, as amended, and may contain such restrictive legends as may be deemed necessary by the Company. Item 5: Interests of Named Experts and Counsel. Not applicable. Item 6: Indemnification of Directors and Officers. Section 145(a) of the General Corporation Law of the State of Delaware (the "General Corporation Law") provides, in general, that a corporation shall have the power to indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the corporation), by reason of the fact that he is or was a director or officer of the corporation. Such indemnity may be against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred in connection with such action, suit or proceeding, if the indemnitee acted in good faith and in a manner reasonably believed to be in or not opposed to the best interests of the corporation and, with respect to any criminal action or proceeding, the indemnitee must not have had reasonable cause to believe his conduct was unlawful. Section 145(b) of the General Corporation Law provides, in general, that a corporation shall have the power to indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the corporation to procure a judgment in its favor by reason of the fact that he is or was a director or officer of the corporation against expenses (including attorneys' fees) actually and reasonably incurred by him in connection with the defense or settlement of such action or suit if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interest of the corporation; provided, however, that if the person is found to be liable to the corporation, no indemnification shall be made except to the extent that the court determines that indemnification is fair and reasonable under the circumstances. Section 145(g) of the General Corporation Law provides, in general, that a corporation shall have power to purchase and maintain insurance on behalf of any person who is or was a director or officer of the corporation against any liability asserted against him or incurred by him in any capacity, or arising out of his status as such, whether or not the corporation would have the power to indemnify him against such liability under the provisions of the law. Article Eighth of the Registrant's Certificate of Incorporation and Section Six of the Registrant's Bylaws give a director or officer the right to be indemnified by the Registrant to the fullest extent permitted under Delaware law. Item 7: Exemption From Registration Claimed. [Not Applicable.] Item 8: Exhibits: 4.1 Seitel, Inc. 1998 Employee Stock Purchase Plan including Form of Common Stock Purchase Warrant.* 5.1 Opinion of Gardere Wynne Sewell & Riggs, L.L.P., legal counsel to the Company.* 23.1 Consent of Arthur Andersen LLP.* 23.2 Consent of Miller and Lents, Ltd.* 23.3 Consent of Forrest A. Garb & Associates, Inc.* 23.4 Consent of Gardere, Wynne, Sewell & Riggs, L.L.P. (included in Exhibit 5.1). 24.1 Power of Attorney (included on Signature Page). * filed herewith Item 9: Undertakings. The undersigned registrant hereby undertakes: (1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement: (i) To include any prospectus required by section 10(a)(3) of the Securities Act of 1933; (ii) To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective registration statement; (iii) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement. provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if the registration statement is on Form S-3 or Form S-8, and the information required to be included in a post-effective amendment by those paragraphs is contained in periodic reports filed by the registrant pursuant to section 13 or section 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in the registration statement. (2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. The undersigned registrant hereby undertakes that, for purposes of determining any liability under the Securities Act of 1933, each filing of the registrant's annual report pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing of an employee benefit plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission, such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-8 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Houston, State of Texas, on this 14th day of September, 1998. SEITEL, INC. BY: /s/Paul A. Frame ------------------------------------------ PAUL A. FRAME, President, Chief Executive Officer and Director (principal executive officer) BY: /s/ Debra D. Valice ------------------------------------------ DEBRA D. VALICE, Senior Vice President of Finance, Chief Financial Officer and Director (principal financial and accounting officer) Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following individuals in the capacities and on the date indicated. Each person whose signature appears below constitutes and appoints Paul A. Frame and Debra D. Valice true and lawful attorneys-in-fact and agents, each acting alone, with full powers of substitution and re-substitution, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments) to this Registration Statement, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, each acting alone, full powers and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, each acting alone, or his or her substitute or substitutes, may lawfully do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities indicated on September 14, 1998. Signature Title --------- ----- /s/Herbert M. Pearlman - ------------------------------------ HERBERT M. PEARLMAN Chairman of the Board of Directors /s/Paul A. Frame - ------------------------------------ PAUL A. FRAME President, Chief Executive Officer and Director /s/Horace A. Calvert - ------------------------------------ HORACE A. CALVERT Executive Vice President, Chief Operating Officer and Director /s/Debra D. Valice - ------------------------------------ DEBRA D. VALICE Senior Vice President of Finance, Chief Financial Officer and Director /s/David S. Lawi - ------------------------------------ DAVID S. LAWI Director /s/Walter M. Craig, Jr. - ------------------------------------ WALTER M. CRAIG, JR. Director /s/Fred S. Zeidman - ------------------------------------ FRED S. ZEIDMAN Director /s/John E. Stieglitz - ------------------------------------ JOHN E. STIEGLITZ Director /s/William Lerner - ------------------------------------ WILLIAM LERNER Director Index of Exhibits Exhibit Document Page ------- -------- ---- 4.1 Seitel, Inc. 1998 Employee Stock Purchase Plan including Form of Common Stock Purchase Warrant. 5.1 Opinion of Gardere, Wynne, Sewell & Riggs, L.L.P., legal counsel to the Company. 23.1 Consent of Arthur Andersen L.L.P. 23.2 Consent of Miller and Lents, Ltd. 23.3 Consent of Forrest A. Garb & Associates, Inc. 23.4 Consent of Gardere, Wynne, Sewell & Riggs, L.L.P. (included in Exhibit 5.1). 24.1 Power of Attorney (included on Signature Page). EX-4.1 2 SEITEL, INC. 1998 EMPLOYEE STOCK PURCHASE PLAN SEITEL, INC. 1998 EMPLOYEE STOCK PURCHASE PLAN Seitel, Inc., a Delaware corporation (the "Company"), hereby establishes and adopts the Seitel, Inc. 1998 Employee Stock Purchase Plan (the "Plan") effective as of September 14, 1998 on the following terms and conditions: I. PURPOSE The Plan is intended as an employment incentive, to retain in the employment of the Company and its subsidiaries persons of experience and ability, to encourage the sense of proprietorship of such persons, and to stimulate the active interest of such persons in the development and financial success of the Company. II. DEFINITIONS As used in this Plan, the following words and phrases shall have the following meanings: (1) Board of Directors shall mean the Board of Directors of the Company. (2) Closing Date shall mean the date designated by the Company on which shares of Common Stock and Warrants are purchased by Eligible Employees under the Plan. The Company shall not designate more than one Closing Date. (3) Code shall mean the Internal Revenue Code of 1986, as amended. (4) Common Stock means the common stock, par value $0.01 per share, of the Company. (5) Company means Seitel, Inc. and any successor thereto by merger, consolidation, liquidation or other reorganization which has made provision for adoption of the Plan and the assumption of the Company's obligations hereunder. (6) Eligible Employee shall mean any person who is employed by the Company or a Subsidiary in a salaried position, including, but not limited to, any employee who is also an officer and director of the Company or a Subsidiary. (7) Expiration Date shall have the meaning set forth in Section V hereof. (8) Pledge shall mean a pledge of the shares of Common Stock purchased by an Eligible Employee as security for the Promissory Note in the form of Exhibit D hereto. (9) Promissory Note shall mean a promissory note in the form of Exhibit C hereto executed by an Eligible Employee as partial payment for Common Stock and Warrants purchased under the Plan. (10) Purchase Price shall mean, with respect to one share of Common Stock and one Warrant, the price equal to the average of the closing prices of the Common Stock as reported on the New York Stock Exchange on the ten trading days immediately preceding the Closing Date. (11) Shares shall have the meaning set forth in Section IV hereof. (12) Subscription Agreement shall mean a subscription agreement in the form of Exhibit B hereto duly executed and delivered by an Eligible Employee to the Company on or before the Closing Date as provided herein. (13) Subsidiary shall mean any corporation to which the Company is a "parent corporation" as defined in Section 424(e) of the Code. (14) Warrants shall mean the warrants to purchase shares of Common Stock that may be purchased by Eligible Employees pursuant to the terms of the Plan, in the form of Exhibit E hereto. III. EMPLOYEE STOCK AND WARRANT PURCHASES Eligible Employees may, pursuant to the Plan, purchase from the Company on the Closing Date shares of Common Stock and Warrants. An Eligible Employee may purchase up to the maximum number of shares of Common Stock and Warrants set forth on Exhibit A hereto based on such Eligible Employee's maximum annual cash compensation from the Company and its Subsidiaries for the 12 month period ended on December 31st of 1995, 1996 or 1997. If such Eligible Employee was first employed by the Company or any Subsidiary after January 1, 1997, the maximum number of shares of Common Stock and Warrants set forth on Exhibit A hereto shall be based on the Company's reasonable estimate of such Eligible Employee's annual cash compensation. Eligible Employees must purchase an equal number of shares of Common Stock and Warrants, and Common Stock and Warrants must be purchased in whole multiples of 50 with a minimum of 100. On or before the Closing Date, any Eligible Employee who desires to purchase Common Stock and Warrants shall complete and deliver to the Senior Vice President - Finance of the Company a duly executed Subscription Agreement in the form of Exhibit B hereto, a duly executed Promissory Note in the form of Exhibit C hereto, and a duly executed Pledge in the form of Exhibit D hereto. IV. SHARES SUBJECT TO THE PLAN A total of TWO MILLION THREE HUNDRED EIGHTY-EIGHT THOUSAND (2,388,000) shares of Common Stock of the Company (the "Shares") shall be subject to the Plan, which shall include shares of Common Stock that may be purchased by Eligible Employees on the Closing Date and thereafter upon exercise of Warrants. The Shares shall consist of unissued shares or previously issued shares reacquired and held by the Company, and such number of shares shall be and is hereby reserved for sale for such purpose. Any of the Shares which remain unsold and which are not subject to outstanding Warrants after the Closing Date shall cease to be reserved for the purpose of the Plan, but until expiration or exercise of all of the Warrants, the Company shall at all times reserve a sufficient number of Shares to be issued upon exercise thereof. V. WARRANTS The Warrants shall be in the form attached hereto as Exhibit E. The Warrants shall provide as follows: Exercise Price The exercise price per Share of the Warrants shall equal one hundred twelve and one-half percent (112 1/2%) of the Purchase Price rounded up to the next one-quarter of one dollar. Warrant Period Each Warrant shall expire on the earlier of (i) the date that is five (5) years after the Closing Date (the "Stated Date"), (ii) the date that is five business days after termination of employment if the Eligible Employee who has purchased such Warrant ceases to be an employee of the Company or a Subsidiary of the Company for any reason other than for death, disability or retirement after the age of 65, or (iii) the date that is one year after the death, disability or retirement after age 65 of an Eligible Employee who has purchased such Warrant if he ceases to be an employee of the Company or a Subsidiary because of his death, disability or retirement after age 65 (the earlier of (i), (ii) or (iii) being referred to herein as the "Expiration Date"). As used herein, disability has the meaning used in Section 22(e)(3) of the Code. Exercise of Warrants A Warrant may be exercised solely by the Eligible Employee or permitted transferee during his lifetime, or after his disability by his legal representative on his behalf, or after his death by the personal representative of the Eligible Employee's estate or permitted transferee (in the event such Warrant was transferred prior to the Eligible Employee's death) or the person or persons entitled thereto under his will or under the laws of descent and distribution. The purchase price of the Shares as to which a Warrant is exercised shall be paid in full in cash at the time of the exercise. An Eligible Employee or permitted transferee shall not be or have any of the rights or privileges of a stockholder of the Company in respect of any Shares purchasable upon the exercise of any part of a Warrant unless and until certificates representing such Shares shall have been issued by the Company to such Eligible Employee or permitted transferee. Limited Transferability of Warrants Warrants shall not be transferable other than by will or by the laws of descent and distribution, except that Warrants may be transferred by an Eligible Employee to members of the Eligible Employee's immediate family who are U.S. residents or to trusts or business entities formed for the benefit of members of the Eligible Employee's immediate family who are U.S. residents. As used herein, immediate family means a parent, child, grandchild, or spouse. A Warrant may not be subsequently transferred by the immediate family member of the Eligible Employee to whom the Warrant is transferred other than by will or by the laws of descent and distribution. If a Warrant is transferred to an immediate family member, the Company may require investment representations upon exercise of the Warrant and may impose such conditions upon the exercise of the Warrant as may be required to comply with federal and state securities laws, and the Shares of Common Stock issuable upon exercise of a Warrant by such immediate family member may be "restricted shares" as such term is defined in Rule 144 under the Securities Act of 1933, as amended, and may contain such restrictive legends as may be deemed necessary by the Company. VI. PURCHASE PRICE Eligible Employees shall pay the Company the Purchase Price for each share of Common Stock and Warrant purchased hereunder pursuant to the terms hereof. The proceeds received by the Company from the sale of Shares (both on the Closing Date and subsequently upon the exercise of Warrants) pursuant to this Plan will be used for general corporate purposes. VII. PAYMENT TERMS The consideration for Shares of Common Stock and Warrants purchased under the Plan shall be payable as follows: (i) not less than 10% of the total purchase price shall be payable in cash on the Closing Date, and (ii) the balance of the purchase price shall be payable pursuant to a Promissory Note in the form of Exhibit C hereto. The Promissory Note will bear interest at 4.0% per annum and be payable as follows: (i) 60 equal monthly payments of principal and interest calculated so as to pay interest as it accrues and to reduce the principal balance to 40% of the purchase price on the Stated Date, and (ii) all outstanding principal and accrued but unpaid interest shall be due on the Stated Date. Such payments shall be made by payroll deduction (one-half of such payment twice per month for non-commission employees, or the full amount of such payment monthly for commission employees). Notwithstanding the foregoing, (i) if an Eligible Employee receives commissions quarterly rather than monthly, the Eligible Employee may elect to defer monthly payments under the Promissory Note and instead make quarterly payments of accrued interest and principal at the time of payment of such quarterly commission, provided that such payment shall in any event be due on or before each April 30, July 30, October 30 and January 30 prior to the Stated Date, and (ii) if an Eligible Employee is eligible to receive an annual bonus from the Company pursuant to a written employment contract between the Company and the Eligible Employee, the Eligible Employee may elect to defer monthly payments under the Promissory Note and instead make annual payments of accrued interest and principal at the time of payment of such bonus, provided that such payment shall in any event be due on or before each March 15 prior to the Stated Date. If the Expiration Date occurs prior to the Stated Date, all amounts due under the Promissory Note shall become immediately due and payable on the Expiration Date. The Promissory Note will be secured by the Pledge, and the Company shall have an express contractual right of setoff against any amounts otherwise due to an Eligible Employee for any payments due under the Promissory Note, including any amounts due upon acceleration of the maturity thereof. VIII. PLEDGE OF SHARES The Promissory Note shall be secured by a pledge of the Shares of Common Stock purchased by an Eligible Employee on the Closing Date pursuant to the terms of Pledge in the form of Exhibit D hereto. Each Eligible Employee who executes a Promissory Note shall also execute and deliver to the Company a Pledge. IX. CHANGE OF CONTROL OF THE COMPANY In the event the Company shall be a party to any merger, consolidation or corporate reorganization, as the result of which the Company shall be the surviving corporation, the rights and duties of the Eligible Employees and the Company shall not be affected in any manner. In the event the Company shall sell all or substantially all of its assets or shall be a party to any merger, consolidation or corporate reorganization, as the result of which the Company shall not be the surviving organization, or in the event any other corporation may make a tender or exchange offer for stock of the Company (the surviving corporation, purchaser, or tendering corporation being hereinafter collectively referred to as the "purchaser," and the transaction being hereinafter referred to as the "purchase"), then the Board of Directors may, at its election, (i) reach an agreement with the purchaser that the purchaser will assume the obligations of the Company as to all outstanding Warrants; (ii) reach an agreement with the purchaser that the purchaser will convert each outstanding Warrant into a Warrant of at least equal value as to stock of the purchaser; or (iii) not later than thirty (30) days prior to the effective date of the purchase, notify all Eligible Employees who hold Warrants of the proposed purchase and afford to each such Eligible Employee the right prior to such purchase to exercise any then unexercised portion of all Warrants held by him, which exercise may be contingent upon consummation of the purchase. X. LIMITATION OF RIGHTS Nothing in this Plan shall be construed to: (1) give an Eligible Employee or permitted transferee any rights whatsoever with respect to Shares issuable upon the exercise of Warrants until the Warrants are exercised and Shares are issued to the Eligible Employee or permitted transferee; (2) give an Eligible Employee or any person any interest in any fund or in any specific asset or assets of the Company; (3) limit in any way the right of the Company or a Subsidiary to terminate an Eligible Employee's employment with the Company or a Subsidiary at any time; or (4) be evidence of any agreement or understanding, express or implied, that the Company or a Subsidiary will employ an Eligible Employee in any particular position or at any particular rate of remuneration. The existence of outstanding Warrants shall not affect in any way the right or power of the Company or its Subsidiaries or their stockholders to make or authorize any or all adjustments, recapitalization, reorganization or other changes in the capital structure of the Company or its Subsidiaries or their businesses, or any merger or consolidation of the Company or its Subsidiaries or any issue of bonds, debentures, preferred stock or the right to acquire any thereof, or the dissolution or liquidation of the Company or its Subsidiaries, or any sale or transfer of all or any part of their assets or business, or any other corporate act or proceeding whether of a similar character or otherwise. XI. GOVERNMENT REGULATIONS The Plan, and the granting and exercise of Warrants hereunder, and the obligation of the Company to sell and deliver Shares under such Warrants, shall be subject to all applicable laws, rules and regulations, and to such approvals by any governmental agencies or national securities exchanges as may be required. Purchase for Investment Whether or not the Warrants and Shares covered by the Plan have been registered under the Securities Act of 1933, as amended, each Eligible Employee or permitted transferee exercising a Warrant may be required by the Company to give a representation in writing that he is acquiring such Shares for his own account for investment and not with a view to, or for sale in connection with, the distribution of any part thereof. Governing Law The place of administration of the Plan shall be conclusively deemed to be within the State of Texas; and the validity, construction, interpretation and effect of the Plan and all rights of any of the persons having or claiming to have any interest in the Plan shall be governed by the laws of the State of Texas. Exhibit A to Seitel, Inc. 1998 Employee Stock Purchase Plan Maximum Number of Shares of Maximum Annual Compensation Common Stock and Warrants - ----------------------------- ------------------------------------- $2,000,001 and over 75,000/75,000 $750,001 to $2,000,000 50,000/50,000 $200,001 to $750,000 25,000/25,000 $100,001 to $200,000 12,500/12,500 $50,001 to $100,000 6,250/6,250 $25,001 to $50,000 3,000/3,000 under $25,001 1,000/1,000 Exhibit B to Seitel, Inc. 1998 Employee Stock Purchase Plan SUBSCRIPTION AGREEMENT 1. Subscription. Subject to the terms and conditions hereof and of the Seitel, Inc. 1998 Employee Stock Purchase Plan, (the "Subscriber") hereby irrevocably subscribes for and agrees to purchase shares of Common Stock, ------ par value $0.01 per share (the "Shares"), of Seitel, Inc., a Delaware corporation (the "Company"), and warrants to purchase an equal number of shares of Common Stock of the Company for $ per share (the "Warrants") and agrees to --- become a shareholder of the Company and to be bound by the terms of this Subscription Agreement ("Agreement"). As consideration for the Shares and the Warrants, the Subscriber hereby irrevocably tenders to the Company cash in the amount of $ and a Promissory Note in the amount of $ (collectively, --- --------- the "Purchase Price"). This Agreement shall not become binding unless this subscription is accepted by the Company, the Purchase Price has been received and accepted by the Company and such additional closing conditions as the Company, in its sole discretion, shall require are satisfied. This subscription shall not be deemed accepted by the Company until this Agreement is signed by a duly authorized officer of the Company. If this subscription is accepted, this Agreement shall become effective as between the Company and the Subscriber. If this subscription is rejected, this Agreement and the Purchase Price will be returned to the Subscriber as soon as reasonably practicable, and this subscription shall be rendered void and of no further force or effect. 2. Acceptance of Subscription. The Subscriber acknowledges and agrees that this subscription is made subject to the following terms and conditions: (a) the Subscriber is committing to purchase the Shares and Warrants for which he has subscribed upon executing this Agreement; and (b) the Company shall have the right to reject this subscription, in whole or in part, for any reason whatsoever. 3. Acknowledgments, Representations and Covenants of the Subscriber. The Subscriber represents and warrants that: (a) The Subscriber has been provided with a copy of the prospectus dated September , 1998, relating to the Shares and the Warrants. -- (b) The Subscriber understands that no federal or state agency has passed on or made any recommendation or endorsement of the Shares or Warrants. 4. Other Matters. (a) The Subscriber recognizes that the sale of the Shares to him is based upon representations and warranties contained herein, and the Subscriber agrees to indemnify the Company and its officers, directors and shareholders and to hold each of them harmless against any liability, costs or expenses (including reasonable attorneys' fees and costs) arising by reason of or in connection with any misrepresentation or any breach of such warranties by the Subscriber. The covenants, warranties and representations contained herein shall be for the benefit of the Company and its officers, directors and shareholders and each of them shall be entitled to all of the rights that such covenants, warranties and representations shall confer. (b) The Subscriber agrees that, except as provided herein, this Agreement or any agreement made hereunder or pursuant hereto may not be canceled, terminated or revoked by him except upon the written consent of the Company. (c) The Subscriber agrees to execute any and all further documents necessary or advisable, in the sole discretion of the Company, in connection with his becoming a holder of the Shares or any portion thereof. (d) Any notice, consent, or other communication to be given under this Agreement by any party to any other party shall be in writing and shall be either (a) personally delivered, (b) mailed by registered or certified mail, postage prepaid with return receipt requested, (c) delivered by overnight express delivery service or same-day local courier service, or (d) delivered by telex or facsimile transmission to the address set forth beneath the signature of the parties, or at such other address as may be designated by the parties from time to time in accordance with this Section. Notices delivered personally, by overnight express delivery service or by local courier service shall be deemed given as of actual receipt. Mailed notices shall be deemed given five business days after mailing. Notices delivered by telex or facsimile transmission shall be deemed given upon receipt by the sender of the answerback (in the case of a telex) or transmission confirmation (in the case of a facsimile transmission). (e) The parties acknowledge and agree that this Agreement and the obligations and undertakings of the parties hereunder will be performable in Houston, Harris County, Texas. This Agreement shall be governed by, and construed and enforced in accordance with, the laws of the State of Texas. If any action is brought to enforce or interpret this Agreement, venue for such action shall be in Harris County, Texas. (f) This Agreement constitutes the entire agreement among the parties hereto with respect to the subject matter hereof, and may be amended only by a writing executed by the party to be bound thereby. IN WITNESS WHEREOF, the Subscriber has hereby executed this Agreement as of the date set forth below. --------------------------------------- Printed Name of Subscriber --------------------------------------- Subscriber's Street Address --------------------------------------- City --------------------------------------- State Zip Code --------------------------------------- Signature of Subscriber --------------------------------------- Title (if applicable) --------------------------------------- Subscriber's Social Security or Tax ID Number Date: ---------------------- Accepted: SEITEL, INC. By: ------------------------------------- Name: ----------------------------------- Title: ---------------------------------- Exhibit C to Seitel, Inc. 1998 Employee Stock Purchase Plan PROMISSORY NOTE $ September , 1998 --------- ---- (the "Maker"), for value received, hereby promises -------------------- to pay to the order of Seitel, Inc. (together with any successors or assigns, the "Payee"), at the time and in the manner hereinafter provided, the principal sum of Dollars ($ ), together with interest ------------------------- ------------ computed thereon at the rate hereinafter provided. This Note shall be payable at the office of the Payee at 50 Briar Hollow Lane West, Houston, Texas 77027, or at such other address in Houston, Texas as the holder of this Note shall from time to time designate. This Note is made and issued as partial consideration for the purchase by the Maker of certain shares ("Shares") of common stock, par value $0.01 per share, of Payee (the "Common Stock") and certain warrants to purchase shares of Common Stock (the "Warrants") pursuant to the Payee's 1998 Employee Stock Purchase Plan. The outstanding principal amount of this Promissory Note shall bear interest from the date hereof at four percent (4.0%) per annum and be payable as follows: (i) 60 equal monthly payments of principal and interest of $ and (ii) all outstanding principal and accrued but unpaid -------------- interest shall be due on September , 2003 (the "Stated Date"). Such monthly -- payments shall be made by payroll deduction (one-half of such payment twice per month for non-commission employees, or the full amount of such payment monthly for commission employees). Notwithstanding the foregoing, (i) if the Maker receives commissions quarterly rather than monthly, the Maker may elect to defer monthly payments under this Note and instead make quarterly payments of accrued interest and principal at the time of payment of such quarterly commission, provided that such payment shall in any event be due on or before each April 30, July 30, October 30 and January 30 prior to the Stated Date, and (ii) if the Maker is eligible to receive an annual bonus from the Payee pursuant to a written employment contract with Payee, the Maker may elect to defer monthly payments under this Note and instead make annual payments of accrued interest and principal at the time of payment of such bonus, provided that such payment shall in any event be due on or before each March 15 prior to the Stated Date. All payments hereunder shall be applied first to accrued interest and the balance, if any, shall be applied to reduce the principal amount hereof. If the period during which the Maker may exercise the Warrants expires on a date (the "Expiration Date") prior to the Stated Date, all amounts due under this Note shall become immediately due and payable on the Expiration Date. The Payee shall have an express contractual right of setoff against any amounts otherwise due to the Maker for any payments due under this Promissory Note, including any amounts due upon acceleration of the maturity hereof. All sums of principal and interest past due under the terms of this Note shall bear interest at a per annum interest rate equal to the maximum rate allowed by law from the due date thereof until paid. Any one or more of the following shall constitute an "Event of Default" hereunder: 1. Failure by the Maker to pay any amount that has become due and payable pursuant to any provision of this Note and such amount has remained unpaid for a period of 10 days from the date of written demand by the Payee; 2. Termination of the Maker's employment with the Payee for any reason whatsoever, whether voluntary or involuntary, and whether with or without cause; 3. A court of competent jurisdiction enters (i) a decree or order for relief in respect of the Maker in an involuntary case or proceeding under any applicable federal or state bankruptcy, insolvency, reorganization or other similar law and such decree or order remains in effect for a period of 60 days or (ii) a decree or order adjudging the Maker a bankrupt or insolvent, or approving as properly filed a petition seeking reorganization, arrangement, adjustment or composition of or in respect of the Maker under any applicable federal or state law, or appointing a custodian, receiver, liquidator, assignee, trustee, sequestrator or other similar official of the Maker or of any substantial part of the property of the Maker and such decree or order remains in effect for a period of 30 days; and 4. The Maker (i) commences a voluntary case or proceeding under any applicable federal or state bankruptcy, insolvency, reorganization or other similar law or any other case or proceeding to be adjudicated a bankrupt or insolvent; (ii) files a petition, answer or consent seeking reorganization or similar relief under any applicable federal or state law; (iii) makes an assignment for the benefit of creditors; or (iv) admits in writing its inability to pay its debts generally as they become due. In the event of a default hereunder or if this Note is placed in the hands of an attorney for collection (whether or not suit is filed), or if this Note is collected by suit or legal proceedings or through bankruptcy proceedings, the Maker agrees to pay in addition to all sums then due hereon, including principal and interest, all expenses of collection, including, without limitation, reasonable attorneys' fees. This Note may be prepaid in whole or in part from time to time, without premium or penalty. Each prepayment of principal shall be accompanied by an amount equal to the accrued interest on the principal amount prepaid to the date of such prepayment. The Payee shall be entitled to accelerate this Note and declare all sums due hereunder immediately due and payable upon default by the Maker in any of its obligations under the Seitel, Inc. 1998 Employee Stock Purchase Plan, any agreement executed in connection therewith or this Note. The Maker and any and all sureties, guarantors and endorsers of this Note and all other parties now or hereafter liable hereon, severally waive grace, demand, presentment for payment, notice of dishonor, protest and notice of protest, notice of intention to accelerate, notice of acceleration, any other notice and diligence in collecting and bringing suit against any party hereto and agree (i) to all extensions and partial payments, with or without notice, before or after maturity, (ii) to any substitution, exchange or release of any security now or hereafter given for this Note, (iii) to the release of any party primarily or secondarily liable hereon, and (iv) that it will not be necessary for the holder hereof, in order to enforce payment of this Note, to first institute or exhaust such holder's remedies against the Maker or any other party liable therefor or against any security for this Note. No delay on the part of the Payee in exercising any power or right under this Note shall operate as a waiver of such power or right, nor shall any single or partial exercise of any power of right preclude further exercise of that power or right. A security interest in the Stock has been granted by Maker to the Payee to secure the payment of this Note pursuant to the terms and conditions of that certain Pledge by the Maker, dated as of the date hereof, and to secure the payment of any costs and expenses incurred by the Payee in the collection and enforcement hereof. The Maker understands that this Note may be pledged to secure certain obligations of the Payee and hereby consents to any such pledge. All agreements between the Maker and the holder hereof, whether now existing or hereafter arising and whether written or oral, are hereby expressly limited so that in no contingency or event whatsoever, whether by reason of acceleration of the maturity hereof, or otherwise, shall the amount paid, or agreed to be paid, to the holder hereof for the use, forbearance or detention of the funds advanced pursuant to this Note, or otherwise, or for the payment or performance of any covenant or obligation contained herein or in any other document or instrument evidencing, securing or pertaining to this Note exceed the maximum amount permissible under applicable law. If from any circumstances whatsoever fulfillment of any provision hereof or any other document or instrument exceeds the maximum amount of interest prescribed by law, then ipso facto, the obligation to be fulfilled shall be reduced to the limit of such validity, and if from any such circumstances the holder hereof shall ever receive anything of value deemed interest by applicable law, which would exceed interest at the highest lawful rate, such amount which would be excessive interest shall be applied to the reduction of the unpaid principal balance of this Note or on account of any other principal indebtedness of the Maker to the holder hereof, and not to the payment of interest, or if such excessive interest exceeds the unpaid principal balance of this Note and such other indebtedness, such excess shall be refunded to the Maker. All sums paid, or agreed to be paid, by the Maker for the use, forbearance or detention of the indebtedness of the Maker to the holder of this Note shall, to the extent permitted by applicable law, be amortized, prorated, allocated and spread throughout the full term of such indebtedness until payment in full so that the actual rate of interest on account of such indebtedness is uniform throughout the term hereof. The terms and provisions of this paragraph shall control and supersede every other provision of all agreements between the Maker and the holder hereof. This Note shall be governed by and construed in accordance with the laws of the State of Texas. All references to the Maker herein shall, and shall be deemed to, include its successors and assigns, and all covenants, stipulations, promises and agreements contained herein by or on behalf of the Maker shall be binding upon its successors and assigns, whether so expressed or not. --------------------------------------- MAKER Exhibit D to Seitel, Inc. 1998 Employee Stock Purchase Plan September , 1998 ---- Seitel, Inc. 50 Briar Hollow Road West 7th Floor Houston, Texas 77027 Re: 1998 Employee Stock Purchase Ladies and Gentlemen: I have on this date executed a promissory note in the principal amount of $ (the "Note") as partial consideration for shares (the ----------- ----------- "Shares") of common stock, par value $0.01 per share, of Seitel, Inc. (the "Company"), and warrants to purchase such Stock (the "Warrants," and together with the Stock, the "Securities") purchased by me from the Company pursuant to the Seitel, Inc. 1998 Employee Stock Purchase Plan. Pursuant to this letter, I hereby grant, assign, transfer and deliver to the Company a security interest in the following property as security for all of my obligations under the Note: (i) the Shares; (ii) stock powers executed in blank which are related to the Shares; (iii) any and all stock rights, rights to subscribe, liquidating dividends, cash dividends, stock dividends and dividends paid in stock, securities or other property that I am or may hereafter become entitled to receive on account of the Shares, and in the event that I receive any such property, I will immediately deliver same to the Company; provided, however, that I shall be entitled to receive and retain any such property so long as no default shall have occurred and be continuing under the Note; and (iv) the proceeds of any and all property described in subparagraphs (i), (ii) or (iii) above. To perfect this security interest, I hereby agree to deliver with this letter the certificate(s) representing the Stock, together with a stock power executed in blank relating to the Stock, to the Chief Financial Officer of the Company, as escrow agent, to hold until such time as the Note shall have been paid in full. In the event of a default under the Note, the Company is hereby fully authorized and empowered, at any time thereafter and from time to time, to sell or otherwise dispose of the Shares to satisfy the remaining unpaid amounts under the Note and any expenses associated with such satisfaction. Any excess proceeds from the sale shall be returned to me. I shall remain liable for any deficiency. I understand that to the extent that the Note is repaid, the Company from time to time upon my request will take all actions as may be necessary to release some of the Shares from this security agreement and pledge so long as both (i) the market value of the remaining Shares at the time of the release and (ii) the average market price of the remaining Shares for the six months prior thereto are equal to or not less than 100% of the outstanding balance under the Note. --------------------------------------- Employee ACCEPTED AND AGREED TO: Seitel, Inc. By: -------------------------------------- Name: ------------------------------------ Title: ----------------------------------- Exhibit E to Seitel, Inc. 1998 Employee Stock Purchase Plan NEITHER THIS WARRANT NOR, IF THE WARRANT IS TRANSFERRED AS PERMITTED HEREIN, THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF THIS WARRANT, HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AND NEITHER THIS WARRANT NOR THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF THIS WARRANT MAY BE SOLD, TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF IN WHOLE OR IN PART IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO COUNSEL TO SEITEL, INC., IN FORM AND SUBSTANCE REASONABLY SATISFACTORY TO SEITEL, INC., THAT AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT OR THE RULES AND REGULATIONS THEREUNDER IS AVAILABLE WITH RESPECT TO THE PROPOSED SALE, TRANSFER, PLEDGE, HYPOTHECATION OR OTHER DISPOSITION. SEITEL, INC. COMMON STOCK PURCHASE WARRANT CERTIFICATE TO PURCHASE [BLANK] SHARES OF COMMON STOCK Certificate No. ESP- ---- This Warrant Certificate certifies that [Employee Name, Address, and SSN] is the registered holder ("Holder") of Common Stock Purchase Warrants ---------- (the "Warrants") to purchase shares of the $0.01 par value common stock ("Common Stock") of SEITEL, INC., a Delaware corporation (the "Company"). Each Warrant enables the Holder to purchase from the Company at any time until 5:00 p.m., New York, New York, local time on , 2003, subject to earlier ------------- termination as specified in Section 10 herein, one fully paid and non-assessable share of Common Stock ("Share") upon presentation and surrender of this Warrant Certificate and upon payment of the Exercise Price per Share determined in accordance with the terms hereof. Payment shall be made in lawful money of the United States of America in cash delivered to the Company at its principal office at 50 Briar Hollow Lane, 7th Floor West, Houston, Texas 77027. As hereinafter provided, the Exercise Price and number of Shares purchasable upon the exercise of the Warrants are subject to modification or adjustment upon the happening of certain events. THIS WARRANT IS NOT ASSIGNABLE OR TRANSFERABLE BY THE HOLDER EXCEPT BY WILL OR THE LAWS OF DESCENT AND DISTRIBUTION UPON THE HOLDER'S DEATH OR, BY THE ORIGINAL PURCHASER OF THIS WARRANT FROM THE COMPANY, TO AN IMMEDIATE FAMILY MEMBER OR A TRUST OR BUSINESS ENTITY FORMED FOR THE BENEFIT OF AN IMMEDIATE FAMILY MEMBER AS PROVIDED HEREIN. 1. Upon surrender to the Company, this Warrant Certificate may be exchanged for another Warrant Certificate or Warrant Certificates evidencing a like aggregate number of Warrants. If this Warrant Certificate shall be exercised in part, the Holder shall be entitled to receive upon surrender hereof another Warrant Certificate or Warrant Certificates evidencing the number of Warrants not exercised. Subject to the provisions of Section 11 below, during the lifetime of the Holder, the Warrants may be exercised only by the Holder. If the Holder dies or becomes disabled within the meaning of Section 22(e)(3) of the Code prior to the termination date specified herein without having exercised all of the Warrants, the remaining Warrants may be exercised to the extent the Holder could have exercised the Warrants on the date of his death or disability at any time prior to the expiration hereof by (i) the Holder's estate or a person who acquired the right to exercise the Warrants by bequest or inheritance or by reason of the death of the Holder in the event of the Holder's death, or (ii) the Holder or his personal representative in the event of the Holder's disability, subject to the other terms of this Warrant Certificate and applicable laws, rules and regulations. For purposes of this Warrant Certificate, the Company shall determine the date of disability of the Holder. 2. No Holder shall be deemed to be the holder of Common Stock or any other securities of the Company that may at any time be issuable on the exercise hereof for any purpose nor shall anything contained herein be construed to confer upon the Holder any of the rights of a shareholder of the Company or any right to vote for the election of directors or upon any matter submitted to shareholders at any meeting thereof or to give or withhold consent to any corporate action whether upon any reorganization, issuance of stock, reclassification or conversion of stock, change of par value, consolidation, merger, conveyance, or otherwise) or to receive notice of meetings or to receive dividends or subscription rights or otherwise until a Warrant shall have been exercised and the Common Stock purchasable upon the exercise thereof shall have become issuable. 3. Each Holder consents and agrees with the Company and any other Holder that: (a) This Warrant Certificate is exercisable in whole or in part by the Holder in person or by attorney duly authorized in writing at the principal office of the Company. (b) The Company may deem and treat the person in whose name this Warrant Certificate is registered as the absolute true and lawful owner hereof for all purposes whatsoever. (c) Anything herein to the contrary notwithstanding, in no event shall the Company be obligated to issue Warrant Certificates evidencing other than a whole number of Warrants or issue certificates evidencing other than a whole number of Shares upon the exercise of this Warrant Certificate; provided, however, that the Company shall pay with respect to any such fraction of a Share an amount of cash based upon the current public market value (or book value, if there shall be no public market value) for Shares purchasable upon exercise hereof. For purposes of this Paragraph 3(c), the current public market value of a share of Common Stock on any date shall be deemed to be the arithmetical average of the following prices for such of the thirty (30) business days immediately preceding such day as shall be available: (i) for any of such days on which the Common Stock shall be listed on a national securities exchange, the last sale price on such day or, if there shall have been no sale on such day, the average of the closing bid and asked prices on such exchange on such day, or (ii) for any of such days on which the Common Stock shall not be listed on a national securities exchange but shall be included in the National Association of Securities Dealers Automated Quotation System ("NASDAQ"), the average of the closing bid and asked prices on such day quoted by brokers and dealers making a market in NASDAQ, furnished by any member of the New York Stock Exchange selected by the Company for that purpose, or (iii) for any of such days on which the Common Stock shall not be so listed on a national securities exchange or included in NASDAQ but shall be quoted by three brokers regularly making a market in such shares in the over-the-counter market, the average of the closing bid and asked prices on such day, furnished by any member of the New York Stock Exchange selected by the Company for that purpose, or (iv) for any days on which the information described in items (i), (ii) or (iii) above is unavailable, the book value per share of the Common Stock as determined in accordance with generally accepted accounting principles; provided, however, in its discretion the Board of Directors of the Company may make an appropriate reduction in the "current public market value" based upon any applicable trading restrictions to particular shares of Common Stock. 4. The Exercise Price per Share for the Warrants shall equal $ per Share. ---- 5. The Company will pay any documentary stamp taxes attributable to the initial issuance of the Shares issuable upon the exercise of the Warrants; provided, however, that the Company shall not be required to pay any tax or taxes which may be payable in respect of income or similar taxes of the holder arising from such exercise or any transfer involved in the issuance or delivery of any certificates for Shares in a name other than that of the Holder in respect of which such Shares are issued, and in such case the Company shall not be required to issue or deliver any certificate for Shares or any Warrant until the person requesting the same has paid to the Company the amount of such tax or has established to the Company's satisfaction that such tax has been paid. 6. In case the Warrant Certificate shall be mutilated, lost, stolen or destroyed, the Company may, in its discretion, issue and deliver in exchange and substitution for and upon cancellation of the mutilated Warrant Certificate, or in lieu of and substitution for the Warrant Certificate, lost, stolen or destroyed, a new Warrant Certificate of like tenor and representing an equivalent right or interest, but only upon receipt of evidence satisfactory to the Company of such loss, theft or destruction and an indemnity, if requested, also satisfactory to it. 7. The Company warrants that there have been reserved, and covenants that at all times in the future it shall keep reserved, out of the authorized and unissued Common Stock, a number of Shares sufficient to provide for the exercise of the rights or purchase represented by this Warrant Certificate. The Company agrees that all Shares issuable upon exercise of the Warrants shall be, at the time of delivery of the certificates for such Shares, validly issued and outstanding, fully paid and non assessable and that the issuance of such Shares will not give rise to preemptive rights in favor of existing shareholders. 8. The number of shares of Common Stock covered by this Warrant Certificate, and the Exercise Price thereof, shall be subject to such adjustment as the Board of Directors of the Company acting in good faith deems appropriate to reflect any stock dividend, stock split, share combination, exchange of shares, recapitalization, merger, consolidation, separation, reorganization, liquidation or the like, of or by the Company. In the event the Company shall be a party to any merger, consolidation or corporate reorganization, as the result of which the Company shall be the surviving corporation, the rights and duties of the Holder and the Company shall not be affected in any manner. In the event the Company shall sell all or substantially all of its assets or shall be a party to any merger, consolidation or corporate reorganization, as the result of which the Company shall not be the surviving corporation, or in the event any other person or entity may make a tender or exchange offer for stock of the Company (the surviving corporation, purchaser, or tendering corporation being collectively referred to as the "Purchaser", and the transaction being collectively referred to as the "Purchase"), then the Company may, at its election, (a) reach an agreement with the Purchaser that the Purchaser will assume the obligations of the Company under this Warrant Certificate; (b) reach an agreement with the Purchaser that the Purchaser will convert the Warrants represented by this Warrant Certificate into warrants of at least equal value as to stock of the Purchaser; or (c) not later than thirty (30) days prior to the effective date of the Purchase, notify the Holder of the proposed Purchase and afford to the Holder the right prior to such Purchase to exercise any then unexercised portion of the Warrants, which exercise may be contingent upon consummation of the Purchase. 9. The Warrants may not be exercised in whole or in part and no cash or certificates representing Shares shall be delivered if any requisite approval or consent of any government authority of any kind having jurisdiction over the exercise of the Warrants or of any stock exchange on which the Common Stock is listed shall not have been secured or if such exercise of delivery would cause any violation of any applicable laws, regulations or stock exchange rules, including but not limited to applicable Federal and State securities laws. The Holder of this Warrant Certificate, each permitted transferee hereof and any holder and transferee of any Shares, by his acceptance thereof, agrees that (i) no public distribution of Warrants or Shares will be made in violation of the Securities Act of 1933, as amended (the "Act"), and (ii) during such period as the delivery of a prospectus with respect to Warrants or Shares may be required by the Act, no public distribution of Warrants or Shares will be made in a manner or on terms different from those set forth in, or without delivery of, a prospectus then meeting the requirements of Section 10 of the Act and in compliance with all applicable state securities laws. The Holder of this Warrant Certificate and each permitted transferee hereof further agrees that if any distribution of any of the Warrants or Shares is proposed to be made by them otherwise than by delivery of a prospectus meeting the requirements of Section 10 of the Act, such action shall be taken only after submission to the Company of an opinion of counsel, reasonably satisfactory in form and substance to the Company's counsel, to the effect that the proposed distribution will not be in violation of the Act or of applicable state law. Furthermore, it shall be a condition to the transfer of the Warrants that any permitted transferee thereof deliver to the Company his written agreement to accept and be bound by all of the terms and conditions in this Warrant Certificate. 10. The Warrants shall terminate before the date specified on the first page of this Warrant Certificate upon the earlier of (i) five business days after the date of termination of employment if the original purchaser of the Warrants from the Company (the "Original Purchaser") ceases to be an employee of the Company or a Subsidiary of the Company for any reason other than for death, disability (within the meaning of Section 22(e)(3) of the Internal Revenue Code of 1986, as amended (the "Code")) or retirement after age 65, or (ii) one year after the death, disability or retirement after age 65 of the Original Purchaser if he ceases to be an employee of the Company or a Subsidiary because of his death, disability or retirement after age 65. 11. The Warrants shall not be transferable other than by will or by the laws of descent and distribution, except that the Warrants may be transferred by the Original Purchaser to members of the Original Purchaser's immediate family who are U.S. residents or to trusts or business entities formed for the benefit of members of the Original Purchaser's immediate family who are U.S. residents. As used herein, immediate family means a parent, child, grandchild, or spouse. A Warrant may not be subsequently transferred by the immediate family member (or the trust or business entity formed for the benefit of an immediate family member) of the Original Purchaser to whom the Warrant is transferred other than by will or by the laws of descent and distribution. If a Warrant is transferred to an immediate family member (or a trust or business entity formed for the benefit of an immediate family member), the Company may require investment representations upon exercise of the Warrant and may impose such conditions upon the exercise of the Warrant as may be required to comply with federal and state securities laws, and the Shares of Common Stock issuable upon exercise of a Warrant by such immediate family member (or such trust or business entity formed for the benefit of an immediate family member) may be "restricted shares" as such term is defined in Rule 144 under the Securities Act of 1933, as amended, and may contain such restrictive legends as may be deemed necessary by the Company. 12. In the event that the Original Purchaser transfers this Warrant to an immediate family member, such transferee agrees and acknowledges that neither this Warrant nor the shares of Common Stock issuable upon exercise of this Warrant have been registered under the Securities Act of 1933, as amended, and neither this Warrant nor the shares of Common Stock issuable upon exercise of this Warrant may be sold, transferred, pledged, hypothecated or otherwise disposed of in whole or in part in the absence of an effective registration statement under such Act or an opinion of counsel reasonably satisfactory to counsel to the Company in form and substance reasonably satisfactory to the Company that an exemption from registration under such Act or the rules and regulations thereunder is available with respect to the proposed sale, transfer, pledge, hypothecation or other disposition. WITNESS the following signatures as of this day of September, 1998. --- SEITEL, INC. BY: ----------------------------------- PAUL A. FRAME, President BY: ----------------------------------- DEBRA D. VALICE, Secretary PURCHASE FORM TO: SEITEL, INC. DATE: The undersigned hereby irrevocably elects to exercise the attached Warrant Certificate, Certificate No. ESP- , to the extent of (number of shares) ----- Shares of Common Stock, $0.01 par value per share, of SEITEL, INC., and hereby makes payment of $ in payment of the aggregate exercise price thereof. --------- INSTRUCTIONS FOR REGISTRATION OF SECURITIES ------------------------------------------- Name: ----------------------------------- Address: -------------------------------- -------------------------------- -------------------------------- By: ----------------------------------- EX-5.1 3 OPINION OF GARDERE, WYNNE, SEWELL & RIGGS L.L.P. GARDERE WYNNE SEWELL & RIGGS, L.L.P. 333 Clay, Suite 800 Houston, Texas 77002-4086 (713) 308-5500 September 14, 1998 Seitel, Inc. 50 Briar Hollow Lane, 7th Floor West Houston, Texas 77027 Gentlemen: We have acted as counsel for Seitel, Inc. (the "Company") in connection with the registration statement on Form S-8/S-3 of the Company (the "Registration Statement"), which is being filed on or about the date hereof by the Company with the Securities and Exchange Commission under the Securities Act of 1933, as amended (the "Act"), for the registration under the Act of up to 2,388,000 shares (the "S-8 Shares") of common stock, par value $.01 per share, of the Company to be issued by the Company under the Company's 1998 Employee Stock Purchase Plan (the "Plan"), including upon exercise of warrants issued thereunder. In the capacity as counsel for the Company, we have familiarized ourselves with the Certificate of Incorporation of the Company, as amended, and the Bylaws of the Company, as amended. We have examined all statutes and other records, instruments and documents pertaining to the Company that we have deemed necessary to examine for the purpose of this opinion. Based upon and subject to the foregoing, we are of the opinion that, upon completion of the proceedings being taken to permit such transactions to be carried out in accordance with the securities laws of the various states where required, the S-8 Shares acquired in accordance with the terms of the Plan will be validly issued, fully paid, and non-assessable. We are members of the Bar of the State of Texas and we do not express an opinion herein concerning any other law other than the laws of the State of Texas, the federal law of the United States, and the Delaware General Corporation Law. We hereby consent to the filing of this opinion as an exhibit to the Registration Statement and to the reference to us under the caption "Legal Matters" in the Prospectus forming a part thereof. Very truly yours, GARDERE WYNNE SEWELL & RIGGS, L.L.P. BY: /s/N. L. Stevens III ------------------------------------- N. L. Stevens III EX-23.1 4 CONSENT OF ARTHUR ANDERSEN LLP CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS As independent public accountants, we hereby consent to the incorporation by reference in this registration statement of our report dated March 26, 1998, included in the Seitel, Inc. Annual Report on Form 10-K for the year ended December 31, 1997, and to all references to our Firm included in this registration statement. ARTHUR ANDERSEN LLP Houston, Texas September 14, 1998 EX-23.2 5 CONSENT OF MILLER AND LENTS, LTD. MILLER AND LENTS, LTD. INTERNATIONAL OIL AND GAS CONSULTANTS TWENTY-SEVENTH FLOOR 1100 LOUISIANA HOUSTON, TEXAS 77002-5216 September 14, 1998 Ms. Debra D. Valice Seitel, Inc. 50 Briar Hollow Lane, 7th Floor West Houston, TX 77027 Dear Ms. Valice: The firm of Miller and Lents, Ltd., consents to the use of its name and to the incorporation by reference of its report dated March 26, 1998, regarding the DDD Energy, Inc., Proved Reserves and Future Net Revenue, as of January 1, 1998, SEC Case, in Seitel, Inc.'s Form S-8 Registration Statement. Miller and Lents, Ltd., has no interest in Seitel, Inc., or DDD Energy, Inc., or in any affiliated companies or subsidiaries and is not to receive any such interest as payment for such reports and has no director, officer, or employee otherwise connected with Seitel, Inc., or DDD Energy, Inc. We are not employed by Seitel, Inc., on a contingent basis. Yours very truly, MILLER AND LENTS, LTD. By: /s/James A. Cole ------------------- James A. Cole Senior Vice President EX-23.3 6 CONSENT OF FORREST A. GARB & ASSOCIATES, INC. FORREST A. GARB & ASSOCIATES, INC. INTERNATIONAL PETROLEUM CONSULTANTS 5310 HARVEST HILL ROAD, SUITE 160 - LB 152 DALLAS, TEXAS 75230 - 5805 September 14, 1998 CONSENT OF EXPERT Ms. Debra D. Valice Seitel, Inc. 50 Briar Hollow Lane 7th Floor West Houston, TX 77027 Dear Ms. Valice: Forrest A. Garb & Associates, Inc., petroleum consultants, hereby consent to the incorporation by reference in any registration statement or other document filed with the Securities and Exchange Commission by Seitel, Inc., our reserve report dated January 1, 1998, and to all references to our firm included therein. Forrest A. Garb & Associates, Inc. By: /s/Forrest A. Garb ----------------------------- Name: Forrest A. Garb --------------------------- Title: Chairman of the Board --------------------------- Dallas, Texas September 14, 1998 -----END PRIVACY-ENHANCED MESSAGE-----