-----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, OxfK09ZwB2cXHa0L6gQ44J1TcSFQN8XKRc6cVj2ot2FlLdTIf+MFxx+j/Mflldjo KiImvx9ndzGTHfE8ZAeIgQ== 0000750813-00-000002.txt : 20000428 0000750813-00-000002.hdr.sgml : 20000428 ACCESSION NUMBER: 0000750813-00-000002 CONFORMED SUBMISSION TYPE: 10-K/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19991231 FILED AS OF DATE: 20000427 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: 10-K/A SEC ACT: SEC FILE NUMBER: 001-10165 FILM NUMBER: 610101 BUSINESS ADDRESS: STREET 1: 50 BRIAR HOLLOW LN STREET 2: WEST BLDG 7TH FLR CITY: HOUSTON STATE: TX ZIP: 77027 BUSINESS PHONE: 7138818900 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 10-K/A 1 FORM 10-K/A AMENDMENT NO. 1 FOR 1999 SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 10-K/A Amendment No. 1 FOR ANNUAL AND TRANSITION REPORTS PURSUANT TO SECTIONS 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 - ------- X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES - ------- EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 1999 OR - ------- TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES - ------- EXCHANGE ACT OF 1934 Commission File Number 0-14488 ------- SEITEL, INC. (Exact name of registrant as specified in charter) Delaware 76-0025431 -------- ---------- (State or other jurisdiction of (IRS Employer incorporation or organization) Identification Number) 50 Briar Hollow Lane West Building, 7th Floor Houston, Texas 77027 -------------- ----- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (713) 881-8900 -------------- Securities registered pursuant to Section 12(b) of the Act: Title of Each Class Name of Each Exchange on Which Registered ------------------- ----------------------------------------- Common Stock, par value $0.01 New York Stock Exchange Securities registered pursuant to Section 12(g) of the Act: None Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ---- ---- Yes X No ---- ---- Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. X ---- The aggregate market value of the voting stock held by non-affiliates of the registrant at March 27, 2000 was approximately $177,941,709. For these purposes, the term "affiliate" is deemed to mean officers and directors of the registrant. On such date, the closing price of the Common Stock on the New York Stock Exchange was $8.125 and there were a total of 23,640,613 shares of Common Stock outstanding. PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT - ------------------------------------------------------------ The executive officers and directors of the Company and their ages (as of April 1, 2000) and positions with the Company are as follows: - -------------------------------------------------------------------------------- Name Age Position(s) with the Company Director Since - -------------------- ----- ------------------------------ -------------- Herbert M. Pearlman 67 Chairman of the Board 1982 of Directors Paul A. Frame 53 Chief Executive Officer, 1986 President and Director Horace A. Calvert 46 Chief Operating Officer, 1987 Executive Vice President and Director David S. Lawi 64 Chairman of the Executive 1982 Committee and Director Debra D. Valice 43 Chief Financial Officer, 1995 Executive Vice President of Finance, Treasurer, Corporate Secretary and Director Walter M. Craig, Jr. 45 Director 1987 William Lerner 66 Director 1985 John E. Stieglitz 68 Director 1989 Fred S. Zeidman 53 Director 1997 - -------------------------------------------------------------------------------- Herbert M. Pearlman, a co-founder of Seitel, Inc., has been a director of the Company since 1982, and Chairman of the Company's Board of Directors since 1987. Since March 1984, Mr. Pearlman has been Chairman of Intersystems, Inc. ("Intersystems"), an American Stock Exchange listed company engaged in providing services to the thermoplastic resins industry; he became President of Intersystems in January 2000. Since June 1990, Mr. Pearlman has served as Chairman of Unapix Entertainment, Inc. ("Unapix Entertainment"), an American Stock Exchange listed company engaged in multi-media entertainment, and in February 1999, he became Chief Executive Officer of Unapix. He has served as President, Chief Executive Officer and a Director of Helm Resources, Inc. ("Helm"), a publicly-traded company with equity interests in diverse businesses, since 1980, and in June 1984, he became Helm's Chairman of the Board. Paul A. Frame has been Chief Executive Officer of the Company since July 1992 and President since January 1987. He was Executive Vice President of the Company from January 1985 until his appointment as President. He was hired by the Company in August 1984 as Vice President of Marketing. From December 1996 to March 1999, Mr. Frame was a Director of Eagle Geophysical, Inc. ("Eagle"), a former subsidiary of the Company engaged in providing seismic data acquisition services to the oil and gas industry, and from August 1997 to March 1999, he was Chairman of the Executive Committee of Eagle's board of directors. Eagle filed bankruptcy under Chapter 11 of the Federal Bankruptcy Code in September 1999. Horace A. Calvert has been Chief Operating Officer of the Company since July 1992 and Executive Vice President since January 1987. In March 1993, Mr. Calvert was appointed President of DDD Energy, Inc., a wholly-owned subsidiary of the Company engaged in the exploration and development of oil and gas reserves. From January 1985 until his appointment as Vice President in May 1986, he was the Company's Chief Geophysicist. David S. Lawi has been Chairman of the Company's Executive Committee since March 1987. He also was Assistant Secretary of the Company from May 1986 until June 1987 and from June 1989 until July 1993. Since March 1984, Mr. Lawi has been a Director of Intersystems and, since 1985, he has been Chairman of Intersystems' Executive Committee. Since June 1990, Mr. Lawi has been a Director of Unapix Entertainment and, since January 1993, Chairman of its Executive Committee. Mr. Lawi has been a Director of Helm since 1980, and Chairman of the Executive Committee since 1997. Debra D. Valice, CPA, is the Company's Chief Financial Officer, Executive Vice President of Finance, Treasurer and Corporate Secretary. Ms. Valice has been the Company's Chief Financial Officer since February 1987, and was the Company's Chief Accounting Officer from March 1986 until February 1987. Ms. Valice was elected as a director of the Company in November 1995. Walter M. Craig, Jr. is a member of the Company's Audit Committee. Since 1993, he has been President of Mezzanine Financial Fund, L.P. which is engaged in providing structured capital to small and mid-market companies based on the value of their assets. He served as Executive Vice President and Chief Operating Officer of Helm from August 1992 through 1999. From 1984 to 1992, he was Senior Vice President of Business and Legal Affairs of Helm. Since April 1993, Mr. Craig has been a Director of Unapix Entertainment and Intersystems. William Lerner is Chairman of the Company's Audit Committee and Co-Chairman of the Company's Compensation and Stock Option Committee. Since January 1990, Mr. Lerner has been engaged in the private practice of law. From May 1990 until December 1990, he was General Counsel to Hon Development Company, a California real estate development company. From June 1986 until December 1989, Mr. Lerner was Vice President and General Counsel of The Geneva Companies, Inc., a financial services company engaged in counseling privately owned middle-market companies. Since 1985, he has been a Director of Helm. Mr. Lerner is also a Director of Rent-Way, Inc., a New York Stock Exchange listed company headquartered in Pennsylvania that operates the second-largest chain of rental-purchase stores in the United States, and Micros-to-Mainframes, Inc., a NASDAQ listed company headquartered in New York that provides advanced technology communications products and systems integration and internet services to Fortune 2000 companies. John E. Stieglitz is Co-Chairman of the Company's Compensation and Stock Option Committee and a member of the Company's Audit Committee. He is Chairman Emeritus of Conspectus, Inc., a privately held company, formed in 1976, engaged in providing services in the area of executive recruitment. He served as President of Conspectus, Inc. from 1976 to 1996. Mr. Stieglitz is also a Director of Helm and Intersystems. Fred S. Zeidman is a member of the Company's Compensation and Stock Option Committee. Mr. Zeidman has been a Director of Intersystems since July 1993. He served as President and Chief Executive Officer of Intersystems from July 1993 until its sale in December 1999. He also served as President of Interpak Terminals, Inc., a wholly-owned subsidiary of Helm engaged in the packaging and distribution of thermoplastic resins, from July 1993 until its sale in July 1997. Mr. Zeidman served as Chairman of Unibar Energy Services Corporation, one of the largest independent drilling fluids companies in the United States, from 1985 to 1991. From April 1992 to July 1993, Mr. Zeidman served as President of Service Enterprises, Inc., which is primarily engaged in plumbing, heating, air conditioning and electrical installation and repair. From 1983 to 1993, Mr. Zeidman served as President of Enterprise Capital Corporation, a federally licensed small business investment company specializing in venture capital financing. Mr. Zeidman also serves as a Director of Heritage Bank. Section 16(a) Beneficial Ownership Reporting Compliance - ------------------------------------------------------- Section 16(a) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), requires the Company's officers, directors and persons who own more than 10% of the Company's common stock to file reports of ownership and changes in ownership concerning the common stock with the Securities and Exchange Commission and to furnish the Company with copies of all Section 16(a) forms they file. Based upon the Company's review of the Section 16(a) filings that have been received by the Company, the Company believes that all filings required to be made under Section 16(a) during 1999 were timely made. ITEM 11. EXECUTIVE COMPENSATION - -------------------------------- The following table sets forth certain summary information concerning the compensation awarded to, earned by or paid to the Chief Executive Officer of the Company and each of the four most highly compensated executive officers of the Company other than the Chief Executive Officer (collectively, the "named executive officers") for the years indicated. SUMMARY COMPENSATION TABLE - --------------------------
- ------------------------------------------------------------------------------------------------------------------------------------ Annual Compensation ---------------------------------------------- Long-Term All Other Compensation Other Compensation ---------------------------- Eagle Annual Awards Other Tax Name and Principal Year Salary Bonus Bonus Compensation Stock Options/ Compensation Reimbursement Position ($) ($)(1) ($)(2) ($)(3) SARs (#) ($) ($)(5) - -------------------------- ------ -------- ---------- ----------- ---------- --------- ---------- ---------- Paul A. Frame 1999 $444,878 $1,161,351 $(377,899) $1,128,581 197,538 $83,213 (4) $463,164 Chief Executive Officer 1998 $444,878 $1,809,077 -- $1,180,450 1,190,798 $104,001 -- and President 1997 $144,878 $905,099 $2,282,500 $1,301,809 932,160 $104,764 -- Horace A. Calvert 1999 $444,878 $1,061,351 $(377,899) $1,074,656 -- $83,218 (4) $266,276 Chief Operating 1998 $444,878 $1,809,077 -- $1,180,450 625,418 $104,001 -- Executive Vice 1997 $144,878 $903,598 $1,455,811 $1,301,809 378,882 $104,764 -- Herbert M. Pearlman 1999 $428,437 $1,151,689 $(472,374) $71,801 -- $83,340 (4) $300,774 Chairman of the 1998 $428,437 $1,961,347 -- -- 690,582 $104,123 -- Board of Directors 1997 $128,438 $1,183,947 $1,819,763 -- 393,874 $104,764 -- David S. Lawi 1999 $214,219 $575,845 $(236,187) -- -- $83,218 (4) $271,426 Chairman of the 1998 $214,219 $980,673 -- -- 505,726 $104,001 -- Executive Committee 1997 $64,892 $591,975 $909,881 -- 293,874 $104,764 -- Debra D. Valice 1999 $214,583 $391,726 -- $467,500 -- $56,619 (4) $116,497 Executive Vice 1998 $155,853 $437,064 -- -- 172,412 $69,449 -- of Finance, Treasurer 1997 $138,583 $270,833 $502,713 -- 142,762 $70,816 -- Corporate Secretary - ------------------------------------------------------------------------------------------------------------------------------------ (1) Includes contractual bonuses based on the Company's pre-tax profits and includes a discretionary bonus for Ms. Valice of $266,726 in 1999. (2) Amounts in 1999 reflect a reduction in contractual bonuses as a result of the impairment recorded in 1999 due to the dividend distribution of Eagle stock. Amounts in 1997 include contractual bonuses based on the Company's pre-tax profits related to the spin-off of Eagle in 1997 for Messrs. Frame, Calvert, Pearlman, and Lawi, an additional bonus for Mr. Frame of $826,690 related to the spin-off of Eagle, and a discretionary bonus for Ms. Valice of $502,713 related to the spin-off of Eagle. (3) Includes commissions based on sales for Messrs. Frame and Calvert of $1,074,656 in 1999. Amount in 1999 for Mr. Frame includes other compensation of $53,925 of which $22,036 represents compensation due to the below market interest rate on loans from the Company for the purchase of stock and $17,330 for disability insurance premiums. Amount in 1999 for Mr. Pearlman includes other compensation of $71,801 of which $50,577 relates to life insurance premiums. Includes a bonus based on placement of senior notes for Ms. Valice in 1999. (4) Includes amounts paid pursuant to a program (the "Incentive Compensation Program") whereby between 2-1/2% and 5% of the revenue generated annually by seismic creation programs that have fully recouped their direct costs is distributed to certain officers and key employees, and amounts contributed by the Company to its 401(k) Savings Plan (the "401(k) Plan") on behalf of such named executive officers as discretionary and matching contributions. Includes $78,340 contributed by the Company pursuant to its Incentive Compensation Program for Messrs. Frame, Calvert, Pearlman and Lawi, and $51,619 for Ms. Valice. Also includes 401(k) Plan matching contributions made by the Company of $4,873 for Mr. Frame, $4,878 for Messrs. Calvert and Lawi and $5,000 for Mr. Pearlman and Ms. Valice. (5) Includes amounts paid pursuant to a program ("the Tax Equalization Program") whereby 10% of the profits (defined as net revenue less costs incurred) generated by oil and gas projects, whose capital costs were funded by proceeds from the employee's exercise of Company common stock purchase warrants, are distributed to employees as compensation for the ordinary Federal income taxes paid in excess of Federal taxes computed at the capital gains rate on the warrants exercised.
The following table sets forth certain information with respect to options to purchase common stock granted during the year ended December 31, 1999 to each of the named executive officers. OPTION/SAR GRANTS IN 1999 - -------------------------
- ------------------------------------------------------------------------------------------------------------------------------------ Individual Grants --------------------------------------------------------- Percent Potential Realizable Value Number of of Total at Assumed Annual Rates of Securities Options/SARs Stock Price Appreciation Underlying Granted to Exercise for Option Term (3) Options/SARs Employees or Base Expiration --------------------------------------- Name Granted (#) in 1999 Price($/Sh) Date 0 Percent($) 5 Percent($) 10 Percent($) - ------------------ ----------- -------- --------- -------- -------- -------- -------- Paul A. Frame 100 (1) 0.01 $16.12500 10/02/03 ($31) $342 $781 4,400 (1) 0.52 $15.68750 10/02/03 ($79) $16,164 $35,203 8,600 (1) 1.02 $15.62500 10/02/03 $1,182 $33,113 $70,539 5,650 (1) 0.67 $15.75000 10/02/03 $51 $21,024 $45,607 18,750 (1) 2.22 $16.50000 10/02/03 $7,031 $81,281 $168,247 21,000 (2) 2.49 $16.00625 05/20/04 ($131) $92,699 $205,000 10,000 (2) 1.18 $16.12500 05/20/04 ($1,250) $42,955 $96,432 45,000 (2) 5.33 $16.00000 05/20/04 - $198,923 $439,567 6,100 (2) 0.72 $16.00000 05/21/04 - $26,965 $59,586 57,038 (2) 6.76 $16.12500 05/21/04 ($7,130) $245,007 $550,027 20,900 (2) 2.48 $16.18750 05/21/04 ($3,919) $88,470 $200,236 - ------------------------------------------------------------------------------------------------------------------------------------ (1) These common stock purchase warrants were granted under the terms of the Company's 1998 Employee Stock Purchase Plan upon the exercise of the same number of previously issued warrants subject to the reload provision of the 1998 Employee Stock Purchase Plan. The common stock purchase warrants were fully exercisable on the date of grant and will expire on the expiration date indicated, subject to certain events related to termination of employment. (2) These options were granted under the Company's 1993 Incentive Stock Option Plan pursuant to the terms of the Company's 1995 Warrant Reload Plan upon the exercise of the same number of previously granted warrants subject to the Warrant Reload Plan. These options were fully exercisable on the date of grant and will expire on the expiration date indicated, subject to certain events related to termination of employment. (3) The values shown are based on the indicated assumed annual rates of appreciation compounded annually. The actual value an executive may realize will depend on the extent to which the stock price exceeds the exercise price of the options or warrants on the date the option or warrant is exercised. Accordingly, the value, if any, realized by an executive will not necessarily equal any of the amounts set forth in the table above. These calculations are not intended to forecast possible future appreciation, if any, of the price of the Company's common stock.
The following table sets forth certain information with respect to the exercise of options during the year ended December 31, 1999, and unexercised options held at December 31, 1999, and the value thereof, by each of the named executive officers. AGGREGATED OPTION/SAR EXERCISES IN 1999 AND 12/31/99 OPTION/SAR VALUES - ------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------ Number of Securities Underlying Unexercised Value of Unexercised In-the Shares Options/SARs Money Options/SARs at Acquired at 12/31/99 (#) 12/31/99 ($) on Value ------------------------------- --------------------------------- Name Exercise(#) Realized ($) Exercisable Unexercisable Exercisable Unexercisable - ------------------------- ------------ --------------- ------------- --------------- ----------------- ------------- Paul A. Frame 225,562 $1,174,838 1,255,798 160,000 $0 $0 Horace A. Calvert 28,024 $329,515 955,798 160,000 $85,597 $0 Herbert M. Pearlman 0 $0 705,582 160,000 $0 $0 David S. Lawi 0 $0 550,726 80,000 $0 $0 Debra D. Valice 0 $0 263,205 35,000 $0 $0 - ------------------------------------------------------------------------------------------------------------------------------------
EMPLOYMENT ARRANGEMENTS - ----------------------- Agreements with Messrs. Frame, Calvert, Pearlman and Lawi - --------------------------------------------------------- The Company has employment agreements with Herbert M. Pearlman, Paul A. Frame, Horace A. Calvert and David S. Lawi (the "Executives"), for service in their respective capacities set forth in the listing of directors and executive officers, that provide for compensation in accordance with the 1998 Executive Compensation Plan that was approved by stockholders in 1997. Messrs. Pearlman, Frame, Calvert and Lawi receive an annual base salary of $428,437, $444,878, $444,878, and $214,219, respectively, under these employment agreements. The agreements also provide for the Executives to receive bonus payments based on the annual Pre-Tax Profits (the "PTP") of the Company and its majority-owned subsidiaries ("Subsidiaries"). The PTP must exceed $10 million for fiscal 1999 and each of the three years thereafter, $12 million for fiscal 2003 and each of the four years thereafter, and $14 million for fiscal 2008 and thereafter (the "PTP Threshold"). If the PTP exceeds the PTP Threshold, the Executives will receive the following bonuses based on the annual PTP of the Company and its Subsidiaries:
- -------------------------------------------------------------------------------- Percentage up to Percentage above $50 Million PTP $50 Million PTP ------------------------ ---------------------- Herbert M. Pearlman* 5.0% 5.30% Paul A. Frame 4.0% 4.25% Horace A. Calvert 4.0% 4.25% David S. Lawi* 2.5% 2.65% - -------------------------------------------------------------------------------- * The annual bonus payments to Messrs. Pearlman and Lawi are reduced by $300,000 and $150,000, respectively.
The agreements further provide for Messrs. Frame and Calvert to receive annual bonuses equal to 1% of the annual sales of the Company and its Subsidiaries in excess of $30 million, provided that the PTP exceeds the PTP Threshold. Each of the agreements with Messrs. Frame and Calvert provide that if at any time during the term of such agreement, (i) the employment agreements of Messrs. Pearlman or Lawi are terminated by the Company prior to the stated term thereof, or (ii) Messrs. Pearlman and Lawi resign from the Company's Board of Directors prior to the expiration of the term of their employment agreements, or (iii) the majority of the members of the Company's Board of Directors is no longer nominated and supported by a majority of Messrs. Frame, Calvert, Pearlman and Lawi (each a "Change in Control"), the employee shall have the right to terminate the agreement immediately and receive from the Company all compensation required to be paid during the unexpired term thereof as well as the severance payment described below without any obligation to perform consulting services as described below. The Company believes that the Change in Control provisions in these agreements may tend to discourage attempts to acquire a controlling interest in the Company and may also tend to make the removal of management more difficult. Each of the agreements for Messrs. Pearlman and Frame is for a term of five years, renewable each year for an additional year unless either party to the agreement gives notice to the contrary. The agreements for Messrs. Calvert and Lawi were for a term of five years, renewable each year for an additional year unless either party to the agreement gave notice to the contrary. In October 1999, the Company's Board of Directors voted to not renew the employment contracts of Messrs. Calvert and Lawi; these contracts will now expire on December 31, 2003. Each of these agreements provides that if it is not renewed, the Company will pay the employee for two additional years' compensation including his then current base salary plus the average of all bonuses paid to the employee for the then prior three years. The severance payments are contingent upon the employee remaining available to perform consulting services for the benefit of the Company. Each agreement also provides for monthly salary continuation payments for one year upon the employee's death, so long as the agreement is in full force and effect at the time of the employee's death. The annual salary continuation amount will equal the employee's base salary at his date of death plus an average of the bonuses paid for the three previous calendar years. Each agreement provides for certain noncompetition and nondisclosure covenants of the employee and for certain Company-paid fringe benefits such as an automobile allowance, disability insurance and inclusion in pension, deferred compensation, profit sharing, stock purchase, savings, hospitalization and other benefit plans in effect from time to time. Agreement with Ms. Valice - ------------------------- Effective as of January 1, 1993, the Company entered into an employment agreement with Ms. Valice for service in her capacities set forth in the listing of directors and executive officers. In 1999, Ms. Valice received an annual salary base of $214,583 under her employment agreement. The agreement also provides for an annual bonus of 2% of the Company's pre-tax profits up to $125,000, plus an additional amount as determined by the Board of Directors of the Company. The agreement includes the same Charge in Control provision as described above for the Frame and Calvert agreements, and is for a term of five years, renewable each year for an additional year unless either party to the agreement gives notice to the contrary. The agreement provides that if it is not renewed, the Company will pay Ms. Valice for two additional years' compensation including her then current base salary plus the average of all bonuses paid to her for the then prior three years. The severance payments are contingent upon Ms. Valice remaining available to perform consulting services for the benefit of the Company. The agreement also provides for monthly salary continuation payments for one year upon Ms. Valice's death, so long as the agreement is in full force and effect at the time of her death. The annual salary continuation amount will equal Ms. Valice's base salary at her date of death plus an average of the bonuses paid for the three previous calendar years. The agreement provides for certain noncompetition and nondisclosure covenants of Ms. Valice and for certain Company-paid fringe benefits such as an automobile allowance, disability insurance and inclusion in pension, deferred compensation, profit sharing, stock purchase, savings, hospitalization and other benefit plans in effect from time to time. Directors Compensation - ---------------------- Outside directors receive an annual fee of $50,000 for serving on the board and are reimbursed for out of pocket expenses for meeting attendance. No additional fees are paid for serving on committees, except that committee chairs receive an additional $5,000 annually or 10,000 options to purchase the Company's common stock. On July 25, 1996, the Company's Board of Directors adopted the Non-Employee Directors' Deferred Compensation Plan which permits each non-employee director to elect to receive annual director fees in the form of stock options and to defer receipt of any directors' fees in a deferred cash account or as deferred shares. Currently, each non-employee director has elected to receive $20,000 of his annual fee in the form of deferred shares. As of December 31, 1999, 60,000 shares have been reserved for issuance under this plan and directors (including former directors) have accumulated 7,067 deferred shares in their accounts of which 656 shares have been distributed and 6,411 will be distributed in future years. Directors who are also employees receive no separate compensation for their services as directors. Non-employee directors also participate in the Non-Employee Directors' Stock Option Plan (the "Stock Option Plan"), which was approved by Company Shareholders at the 1994 annual meeting. Under the terms of the Stock Option Plan, each non-employee director receives on the date of each annual meeting during the term of the Stock Option Plan an option to purchase 2,000 shares of common stock at an exercise price equal to the fair market value of the common stock on the date of grant. In addition, each non-employee director who is elected or appointed to the Board of Directors for the first time is granted on the date of such election or appointment an option to purchase 10,000 shares of common stock at an exercise price equal to the fair market value of the common stock on the date of grant. Options granted under the Stock Option Plan become exercisable one year after the date of grant. All options expire at the earlier of five years after the date of grant, twelve months after the optionee ceases to serve as a director due to death, disability, or retirement at or after age 65, or sixty days after the optionee otherwise ceases to serve as a director of the Company. If a director ceases to serve as such for any reason other than death, disability, or retirement at or after age 65, the option may be exercised only if it was exercisable at the date of such cessation of service. During 1999, William Lerner and John E. Stieglitz were granted 12,000 options each (including 10,000 for chairing a board committee), at an exercise price of $14.75. In addition, Fred S. Zeidman and Walter M. Craig, Jr. each received 2,000 options at an exercise price of $14.75. In 1999, the Company's Board of Directors adopted the Non-Employee Directors' Retirement Plan (the "Retirement Plan"). Under the terms of the Retirement Plan, each non-employee director with 10 or more years continuous service is eligible to receive a retirement benefit. The retirement benefit consists of two credits. The first credit is equal to $5,000 times each participating non-employee director's years of continuous service as an Outside Director, as defined in the Retirement Plan. The second credit is equal to the increase, if any, in the fair market value of 15,000 shares of the Company's common stock from the initial date of participation in the Retirement Plan to the last day of the Company's fiscal year ending five years after the participant's initial participation date. The retirement benefit vests 10% on each January 1 following the participant's initial participation date. During 1999, Messrs. Craig, Lerner and Stieglitz were credited with a retirement benefit totaling $5,000, $70,000 and $50,000, respectively. Compensation Committee Interlocks and Insider Participation - ----------------------------------------------------------- The Company's Compensation and Stock Option Committee is composed of William Lerner, John E. Stieglitz and Fred S. Zeidman. No member of the Compensation Committee of the Board of Directors of the Company was, during 1999, an officer or employee of the Company or any of its subsidiaries, or was formerly an officer of the Company or any of its subsidiaries, or had any relationship requiring disclosure pursuant to applicable rules and regulations of the Securities and Exchange Commission. During 1999, no executive officer of the Company served as (i) a member of the compensation committee (or other board committee performing equivalent functions) of another entity, one of whose executive officers served on the Compensation Committee of the Company, (ii) a director of another entity, one of whose executive officers served on the Compensation Committee of the Company, or (iii) a member of the compensation committee (or other board committee performing equivalent functions) of another entity, one of whose executive officers served as a director of the Company. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT - ------------------------------------------------------------------------ The following table sets forth certain information regarding the beneficial ownership of the common stock, as of April 15, 2000, by (i) persons known to the Company to be beneficial owners of more than 5% of the common stock, (ii) each of the Company's directors, (iii) each of the named executive officers, and (iv) all directors and executive officers of the Company as a group.
- -------------------------------------------------------------------------------- Amount and Nature Name and Address of Beneficial Percentage of Beneficial Owner Ownership(1)(2) of Class - -------------------- ------------------- ------------ Horace A. Calvert 1,528,177 (3) 6.2% 50 Briar Hollow Lane, 7th Floor West Houston, TX 77027 Paul A. Frame, Jr. 1,502,730 (4) 6.0% 50 Briar Hollow Lane, 7th Floor West Houston, TX 77027 Driehaus Capital Management, Inc. 1,241,170 5.3% 25 East Erie Street Chicago, IL 60611 Lord, Abbett & Co. 1,234,080 5.2% 90 Hudson Street Jersey City, NJ 07302 Herbert M. Pearlman 1,078,827 (5) 4.4% 537 Steamboat Road Greenwich, CT 06830 David S. Lawi 730,394 (6) 3.0% 537 Steamboat Road Greenwich, CT 06830 Debra D. Valice 394,892 (7) 1.7% 50 Briar Hollow Lane, 7th Floor West Houston, TX 77027 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Amount and Nature Name and Address of Beneficial Percentage of Beneficial Owner Ownership(1)(2) of Class - -------------------- ------------------- ------------ Walter M. Craig, Jr. 75,562 (8) * 1011 HWY 7 Spring Lake, NJ 07762 William Lerner 37,170 (9) * 423 East Beau Street Washington, PA 15301 John E. Stieglitz 37,085 (9) * Conspectus, Inc. 222 Purchase Street Rye, NY 10580 Fred S. Zeidman 21,200 (10) * 2104 Chilton Houston, TX 77019 All directors and executive officers as a group (9 persons) 5,406,037 (11) 19.7% - -------------------------------------------------------------------------------- * Less than 1% (1) Except as otherwise noted, each named holder has, to the best of the Company's knowledge, sole voting and investment power with respect to the shares indicated. (2) Includes shares that may be acquired within 60 days by any of the named persons upon exercise of any right. (3) Includes 415,380 and 540,418 shares which may be acquired from the Company within 60 days upon exercise of options and common stock purchase warrants, respectively. The exercise prices of the options range from $12.37 to $13.73 per share, and the exercise prices of the common stock purchase warrants range from $6.43 to $13.73 per share. (4) Includes 410,398 and 845,400 shares which may be acquired from the Company within 60 days upon exercise of options and common stock purchase warrants, respectively. The exercise prices of the options range from $12.37 to $16.19 per share, and the exercise prices of the common stock purchase warrants range from $11.57 to $16.50 per share. (5) Includes 338,456 and 322,126 shares which may be acquired from the Company within 60 days upon exercise of options and common stock purchase warrants, respectively. The exercise prices of the options range from $12.37 to $13.73, and the exercise prices of the common stock purchase warrants range from $11.57 to $13.73 per share. (6) Includes 288,456 and 187,270 shares which may be acquired from the Company within 60 days upon exercise of options and common stock purchase warrants, respectively. The exercise prices of the options range from $12.37 to $13.73, and the exercise prices of the common stock purchase warrants range from $11.57 to $13.73 per share. (7) Includes 170,745 and 92,460 shares which may be acquired from the Company within 60 days upon exercise of options and common stock purchase warrants, respectively. The exercise prices of the options range from $12.37 to $13.73 per share, and the exercise prices of the common stock purchase warrants range from $11.57 to $13.36 per share. (8) Includes 67,554 shares which may be acquired from the Company within 60 days upon exercise of common stock purchase warrants. The exercise prices of the common stock purchase warrants range from $11.57 to $16.00 per share. (9) Includes 28,000 shares which may be acquired from the Company within 60 days upon exercise of options. The exercise prices of the options range from $13.54 to $19.82 per share. (10) Includes 12,000 shares which may be acquired from the Company within 60 days upon exercise of options. The exercise prices of the options range from $13.54 to $20.32 per share. (11) Includes an aggregate of 3,746,663 shares which may be acquired from the Company within 60 days upon exercise of 1,691,435 options and 2,055,228 common stock purchase warrants, respectively, by the group of nine persons which comprises all executive officers and directors. The exercise prices of the options range from $12.37 to $20.32 per share, and the exercise prices of the common stock purchase warrants range from $6.43 to $16.50 per share.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS - -------------------------------------------------------- On July 21, 1992, the Company granted ten-year loans at an interest rate of 4% to most of its employees for the purchase of 800,000 shares of the Company's common stock at the then market price of $2.6875 per share. Payments of 5% of the original principal balance plus accrued interest are due annually on August 1, with a balloon payment of the remaining principal and accrued interest due August 1, 2002. The Company recorded compensation expense due to the below market interest rate on these loans of $38,000 in 1999. The stock certificates are held by the Company as collateral until payment is received. Loans in excess of $60,000 were made to Messrs. Frame and Calvert and Ms. Valice, amounting to $537,500, $537,500 and $134,375, respectively. The largest aggregate amounts of principal and interest outstanding on such loans during 1999 were approximately $391,000, $391,000 and $98,000, respectively. As of April 15, 2000, the aggregate amounts of principal and interest outstanding on such loans were approximately $359,000, $359,000 and $90,000, respectively. On October 2, 1998, the Company granted five-year loans at an interest rate of 4% to most of its employees for the purchase from the Company of 794,300 shares of the Company's common stock and options to purchase a like number of shares of the Company's common stock at an exercise price of $11.75 per share. Payment of 60% of the loan amount plus accrued interest is being made in equal monthly, quarterly or annual payments, as applicable, and a balloon payment of the remaining 40% is due on October 2, 2003. The Company recorded compensation expense due to the below market interest rate on these loans of $76,000 in 1999. The stock certificates are held by the Company as collateral until payment is received. Loans in excess of $60,000 were made to Messrs. Frame, Calvert, Pearlman and Lawi amounting to $773,438 each and to Ms. Valice amounting to $515,625. The largest aggregate amounts of principal and interest outstanding on such loans during 1999 were approximately $786,000 for each of Messrs. Frame, Calvert, Pearlman and Lawi and $524,000 for Ms. Valice. As of April 15, 2000, the aggregate amounts of principal and interest outstanding on such loans were approximately $661,000 for each of Messrs. Frame, Calvert, Pearlman and Lawi and $440,000 for Ms. Valice. The Company guarantees borrowings up to $750,000 made by Paul Frame under a line of credit. The Company is only obligated to make payment in the event of default by Mr. Frame. The Company has a contractual right of offset against any salary, bonus, commission or other amounts due from the Company to Mr. Frame for any amounts paid by the Company pursuant to this guaranty. At December 31, 1999, $700,000 was outstanding on this line of credit, which represented the maximum amount outstanding on this line of credit for the year. The Company did not make any payments under this guaranty during 1999. On August 11, 1997, the Company's wholly-owned seismic data acquisition crew subsidiary, Eagle Geophysical, Inc., completed an initial public offering ("Offering") in which the Company sold 1,880,000 of its 3,400,000 shares of Eagle common stock as a selling stockholder. On April 22, 1999, the Board of Directors of Seitel, Inc. declared to its common stockholders a dividend consisting of the remaining 1,520,000 shares of the common stock of Eagle owned by the Company. The dividend was declared at the rate of approximately 0.064 shares of Eagle common stock for each share of Seitel, Inc. common stock owned as of the close of business on the record date of May 18, 1999. The Company incurred charges of $58,594,000 for the seismic data acquisition services of Eagle for the year ended December 31, 1999, $27,735,000 of which were incurred during the four months ended April 30, 1999, the period that Eagle was considered a related party. Costs incurred for these services were based on agreed upon contractual amounts and terms similar to contracts with third party contractors. Paul Frame, the Chief Executive Officer, President and Director of the Company, was a Director of Eagle and Chairman of the Executive Committee of Eagle's Board of Directors until March 1999. In addition to his duties as a director of Eagle, Mr. Frame was responsible for strategic planning, marketing, and domestic and international growth of Eagle's business pursuant to a bonus agreement with Eagle, which was terminated in March 1999 when he resigned as a director of Eagle. The Board of Directors of the Company had agreed to allow Mr. Frame to devote 20% of his time to Eagle until December 31, 1999. SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this amendment to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Houston, State of Texas, on the 26th of April, 2000. SEITEL, INC. By: /s/Paul A. Frame --------------------------------------- Paul A. Frame President and Chief Executive Officer -----END PRIVACY-ENHANCED MESSAGE-----