10-K/A

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-K/A

Amendment No. 3

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, 2001

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 incorporation or organization)	(IRS Employer Identification Number)

50 Briar Hollow Lane, 7th Floor West 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; Toronto 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 28, 2002 and August 15, 2002 was approximately $225,707,442 and $13,853,415, respectively. On those dates, the closing prices of the Common Stock on the New York Stock Exchange were $9.15 and $.55, respectively and there were a total of 25,075,350 and 25,375,683 shares of Common Stock outstanding, respectively.

Item 1.    Business

General

Seitel, Inc. (the “Company”) is a leading provider of seismic data and related geophysical services and expertise to the petroleum industry. The Company owns and licenses what it believes to be the largest nonproprietary onshore seismic data library in North America as well as one of the largest offshore seismic data libraries and initiates new seismic data through multi-client shoots with oil and gas companies. Oil and gas companies consider seismic data an essential tool for finding hydrocarbons. By properly utilizing seismic data, oil and gas companies can significantly increase drilling success rates and reduce the occurrence of dry holes. By participating in multi-client surveys, oil and gas companies can obtain access to expensive surveys that they could not otherwise afford. Further, seismic data can increase recoveries of reserves from existing, mature oil fields by optimizing the drilling location of development wells and by revealing additional, or “step-out,” locations that would not otherwise be apparent. Unless the context requires otherwise, references to “we”, “our” and the “Company”, refer to Seitel, Inc. and its subsidiaries.

Seitel is a Delaware corporation, which was founded in 1982. Since that time, Seitel has engaged in the creation of 2D, 3D and 4C seismic databases and has acquired a large number of existing seismic data libraries. The Company conducts its seismic activities principally through its wholly owned subsidiaries, Seitel Data, Ltd. and Olympic Seismic Ltd. (the “Seismic Data Group “), which have their principal offices in Houston, Texas and Calgary, Alberta Canada, respectively. The Company also has marketing offices in Denver, Colorado and New Orleans, Louisiana. The Company also explores for, finds, develops, produces and sells natural gas and oil through its Exploration and Production Group (“E&P Group”), which has its principal office in Houston, Texas. In the second quarter of 2002, the Company decided to dispose of the E&P Group by sale. On August 2, 2002, the Company completed the sale of a majority of the assets of DDD Energy, Inc. See Note Q to the Company’s Consolidated Financial Statements for financial information relating to industry segments.

Since September 2000, the Company has been developing proprietary software, technology, and business methods (the “Solution”) through its wholly owned subsidiary, Seitel Solutions, that will enable its clients to access and interact, via a standard web browser and the Internet, with the one petabyte of seismic data currently owned and marketed by Seitel. The Company opened a state-of-the-art data technology center in Houston, Texas on March 12, 2002, which will (i) run its Solutions offering; (ii) store its petabyte of seismic data; and (iii) provide a secure storage facility for its customers’ seismic data and other intellectual property. The Company opened a second state-of-the-art data technology center in Calgary, Alberta, Canada in April 2002.

Restatement of Financial Statements

Historically, Seitel recognized revenue from the licensing of seismic data when it had a contract with its customer for a fixed sales price, a licensing agreement was in place, the seismic data was available for use by the customer, and collectibility of the sales price was reasonably assured. Under certain contracts, although a licensing agreement was in place, collectibility was reasonably assured, and access to the seismic data available was delivered to the customer, the customer was given time to select specific data from the data available to it to be held long-term under its licensing agreement. Under those contracts, delivery of data to the customer was, therefore, not required until a specific selection was made. In other cases, the customer was delivered seismic data to review and could select from among that data the specific data it wanted to hold long-term. With each of these types of contracts, specific data selections could be made over the term of the contract, which is typically two years. The accounting model described above had been consistently followed by the Company for these types of contracts and had also been followed by others in the seismic industry on similar types of data licensing contracts. In February 2002, following a SAB 101 restatement by an industry colleague, the Company evaluated the application of SAB 101 and determined it was appropriate to change its revenue recognition policies for certain data licensing contracts to recognize revenue at the time of data selection. During April 2002, the Company consulted with the Staff of the Securities and Exchange Commission (“SEC”) at the Staff’s request regarding their interpretation of the appropriate application of SAB 101. Based upon SAB 101, effective January 1, 2000, the Company recognizes revenue under certain seismic data licensing contracts upon selection by the customer of specific seismic data. As a result, we have revised our 2000 and first through third quarter 2001 financial statements to adopt the selection method for certain data licensing contracts.

The financial statements also reflect revisions for the amount and timing of revenue recognized under certain data acquisition contracts. In 2000 and 2001, the Company entered into certain acquisition contracts under which both the Company and the customer jointly participated in the acquisition services. Consequently, the Company did not assume the sole risk of service throughout the acquisition process. The Company recognized revenue under these contracts consistent with its revenue recognition policies for acquisition contracts. Under these contracts, the Company has now determined that revenue previously recognized for amounts funded by customers should be used to reduce the Company’s recorded cost of creating the seismic data. The Company continues to have sole ownership of the newly created data.

While the above revisions reduced reported revenue and net income for the nine months ended September 30, 2001, and the year ended December 31, 2000, they had no effect on the cash received by the Company during those periods.

As a result of the foregoing revisions to our financial statements, our previously filed financial statements and announced earnings for the quarterly and annual results in 2000 and the first through third quarters of 2001 should not be relied on. Further, as a result of this amendment no. 3 to our 2001 10-K, the previously filed 2001 10-K, as amended, is superceded by this document and should not be relied on.

Recent Developments

Non-Compliance with Debt Covenants

The financial covenants in the Senior Notes and the Company’s now terminated Revolving Line of Credit Agreements include, among other restrictions, maintenance of minimum net worth and limitations on total debt, interest coverage, liens, debt issuance and disposition of assets. As a result of the restatement of its financial statements, the Company was not in compliance with the limitation on total debt covenant in the Senior Note Agreements dated December 28, 1995 and February 12, 1999 and the leverage ratio covenant in the Revolving Line of Credit Agreement at September 30, 2001. In addition, as a result of the restatement of its financial statements and the impairment of oil and gas properties recorded in the fourth quarter of 2001, the Company was not in compliance with these same financial covenants in these agreements at December 31, 2001. The Company received an amendment from the Senior Noteholders that waived noncompliance with the limitation on total debt covenant in the third and fourth quarters of 2001 and increased the ratio of allowed debt to total capitalization through March 31, 2003, after which date the original financial covenants will again be imposed.

In addition, as a result of increased interest expense and decreased revenue in the first quarter of 2002, the Company was not in compliance with the interest coverage covenant as of March 31, 2002 in the Senior Note Agreements dated December 28, 1995, February 12, 1999 and October 15, 2001 and the Revolving Line of Credit Agreement. Additionally, as of March 31, 2002, the Company was not in compliance with the limitation on restricted payments and investments covenant in the Senior Note Agreement dated February 12, 1999 and the leverage ratio covenant in the Revolving Line of Credit Agreement. The Company received waivers from the Senior Noteholders for the covenants it was not in compliance with; such waivers continued through May 24, 2002. Effective June 21, 2002, the Company entered into a standstill agreement with its Senior Noteholders pursuant to which the Noteholders agreed not to exercise remedies available to them under the Senior Note Agreements as a result of existing defaults until July 17, 2002. Effective as of July 17, 2002, the Company reached an agreement with the Senior Noteholders to extend the standstill agreement for an additional 90 days until October 15, 2002. During the 90 day standstill period, various existing covenants are suspended and replaced with certain enumerated covenants, including the requirement that the Company receive Senior Noteholder approval to make certain investments or

2

payments out of the ordinary course of business, incur additional debt, create liens or sell assets. The standstill may terminate prior to October 15, 2002 if, among other things,

(i) there is an event of default by the Company under the standstill agreement or any subsequent defaults under the existing Senior Note Agreements;

(ii) the Company defaults on the payments of any non-excluded debt of $5,000,000 or more; or

(iii) the Company does not provide the Noteholders with a form of business plan by August 19, 2002, and an acceptable business plan by August 31, 2002.

The Company was not in compliance with the interest coverage covenant as of June 30, 2002, in the Senior Note Agreements dated December 28, 1995, February 12, 1999 and October 15, 2001. However, under the terms of the standstill agreement, such non-compliance has been waived. The Company is working with the Noteholders toward a long-term modification of the Senior Note Agreements. If the Company is unable to obtain such long-term modifications, the Senior Noteholders could elect to accelerate the debt. Based on the Company’s current financial condition, if the debt were to be accelerated the Company would be unable to satisfy the obligation. If such an acceleration occurred, the Company would seek additional or replacement sources of financing. However, there can be no assurance that the Company would be able to obtain such financing on satisfactory terms or at all.

In addition, the Company was not in compliance with the leverage ratio covenant and the interest coverage covenant of the Seitel Data, Ltd. term loan at June 30, 2002 and March 31, 2002 and the leverage ratio covenant at September 30, 2001 and December 31, 2001. Additionally, the Company was not in compliance with its net worth covenant at June 30, 2002. The lender has issued a notice of default but has not accelerated the debt.

As a result of the Company’s non-compliance with certain of the covenants of its debt agreements, the Company’s 2001 financial statements contain a “going concern” qualification. The Company’s independent auditors have advised the Company that, if the non-compliance with the debt agreements is not satisfactorily resolved, their report on the December 31, 2002 financial statements will contain a “going concern” qualification.

Internal and SEC Investigation

During the course of a recent internal investigation, the Company discovered that the former president and chief executive officer and the former chief financial officer of the Company may have improperly converted corporate funds for their personal use, including certain unearned advances. From the former chief executive officer, the Company is seeking immediate reimbursement of:

• $2,641,038 of “unearned advances” that he drew from Company funds;

• $750,000 of his personal attorneys’ fees and legal settlement costs that he caused the Company to pay;

• $695,805 in his personal automobile racing expenses that he caused the Company to pay;

• $148,309 for the purchase of a security system for his home that he caused the Company to pay.

The Company is also seeking reimbursement from its former chief financial officer of $621,293 of “unearned advances” that she drew from Company funds.

Reimbursement of additional funds from Mr. Frame and Ms. Valice may be sought following the results of further investigation by the Company. The Company has notified the Securities and Exchange Commission (“SEC”) regarding the findings of the internal investigation. The SEC’s Fort Worth District Office has informed the Company that it has initiated an informal inquiry into these events and the Company is fully cooperating with the inquiry. As discussed below, the Company’s former chief executive officer and the former chief financial officer have each filed suit against the Company alleging, among other things, breach of contract. The Company has filed counterclaims against each to recover the above described funds owed by each to the Company.

3

New York Stock Exchange Listing

The Company has received notification from the New York Stock Exchange (“NYSE”) that it has fallen below the NYSE continued listing standards due to the Company’s stock trading at a price of below $1.00 per share for a consecutive 30-day trading period. In accordance with the rules and procedures of the NYSE, the Company has six months within which to cure this price per share deficiency, prior to the NYSE commencing suspension and delisting procedures. The Company has responded to the notification letter, informing the NYSE of the Company’s intent to cure the deficiency.

Sale of DDD Energy

On July 3, 2002, DDD Energy entered into a Purchase and Sale Agreement with Rising Star Energy L.L.C. for the sale of a majority of the oil and gas exploration and production properties and related assets of DDD Energy. The transaction closed on August 2, 2002. After adjustments, the Company received cash proceeds of $23.8 million with a final adjustment, if any, to be made within 90 days following closing. The purchase agreement grants Rising Star an option, exercisable within 30 days of closing, to purchase additional oil and gas assets of DDD Energy and another subsidiary of the Company for up to $15 million, or to enter into a joint venture arrangement with the Company related to these assets.

Litigation

The Company is a party to a significant number of shareholder and derivative lawsuits and lawsuits with former executive officers and directors. The Company intends to vigorously defend these lawsuits and pursue any available counterclaims. Please Read Item 3 “Legal Proceedings”.

4

Description of Operating Groups

Seismic Data Group

The Company’s Seismic Data Group markets licenses to seismic data from its library to the oil and gas industry. The Company’s data library includes two-dimensional (“2D”), three-dimensional (“3D”) and multi-component data, in both the onshore and offshore segments. The Company has a strong market position in the United States and Canadian markets because of its ownership in 1.1 million linear miles of two-dimensional and 26,000 square miles of three-dimensional seismic data. Revenue from the Seismic Data Group and their percentage of total revenue of the Company for the years ended December 31, 2001, 2000 and 1999 were $115,238,000 (85%), $113,887,000 (82%) and $109,671,000 (85%), respectively.

The Seismic Data Group actively markets data from its library for resale under non-exclusive, non-transferable license agreements using an aggressive marketing strategy combined with geophysical expertise. The Company’s customers may not assign or transfer a seismic data license. In the event of a merger or acquisition of an existing customer, the surviving entity generally must pay a fee to relicense any data it wants to continue to use. The Company’s marketing philosophy is that seismic data must be sold actively as opposed to waiting passively for customer purchases. The Seismic Data Group has a team of dedicated marketing specialists who maximize license sales opportunities by monitoring petroleum industry exploration and development activities through close interaction with oil and gas companies on a daily basis.

Within the seismic industry in general, there are two broad approaches to data initiation: (i) there are speculative shoots, where a company will proceed regardless of the level of underwriting (surveys shot with less than 50% underwriting are usually referred to as “speculative shoots”), and (ii) there are surveys which will not be started unless there is a minimum underwriting level achieved (normally 50% or higher). The Seismic Data Group initiates new data surveys using this “minimum funding” approach, where the Company usually targets 65% as the acceptable threshold. The Company does not initiate speculative shoots, as it believes the risks to generating an acceptable financial return on these type of projects are too high. Seitel employs a group of experienced geoscientists who design seismic programs and manage the field acquisition and data processing centers for our clients to assure customer satisfaction.

The Company’s data library is concentrated primarily in the major North American oil and gas producing areas. The main areas of focus include the onshore, offshore and transition zone of the U.S. Gulf of Mexico extending from Texas to Florida, onshore East Texas and the Rocky Mountain region. In addition, the Company’s international seismic surveys are concentrated in Western Canada and the Continental Shelf offshore the United Kingdom and Ireland.

Three-dimensional seismic data provides a graphic depiction of the earth’s subsurface from two horizontal dimensions and one vertical dimension, rendering a more detailed picture than 2D data, which presents a cross-sectional view from one vertical and one horizontal dimension. The more comprehensive geophysical information provided by 3D surveys significantly enhances an interpreter’s ability to evaluate the probability of the existence and location of oil and gas deposits. The proper use of 3D surveys can significantly increase drilling success rates and, correspondingly, significantly lower exploration and development finding costs. However, the cost to

5

create 3D seismic data is significantly more than the cost to create 2D seismic data. As a result, 2D data remains economically more efficient for preliminary, broad-scale exploration evaluation as well as in determining the location and design of 3D surveys. The 3D surveys can then be used for more site-specific analysis to maximize actual drilling potential and success.

The Company has expanded its seismic activities to include multi-component data, primarily 3D/4-C data. In a standard 3D seismic survey, the reflections of only pressure waves are measured and recorded. A 3D/4-C survey measures and records not only pressure waves but also shear waves. Pressure waves are affected by the fluids in rock formation, whereas shear waves are not. By measuring and recording both pressure waves and shear waves, a 3D/4-C survey can improve analysis of rock formations.

Seitel Solutions

Since September 2000, the Company has been developing proprietary software, technology, and business methods (the “Solution”) that will enable its clients to access and interact, via a standard web browser and the Internet, with its seismic data library. During 2000, the Company acquired the rights to certain software that aided in the development of the Solution; and during 2001, the Company continued to develop the Solution. On March 12, 2002, the Company opened a state-of-the-art data technology center in Houston, Texas. In April 2002, the Company opened a second state-of-the-art data technology center in Calgary, Alberta, Canada.

Through Seitel Solutions’ data technology centers, the Company will be able to offer the following services: (1) online licensing of seismic data and oil and gas attribute products; (2) licensing of software; (3) hosted services on the internet; (4) turnkey/enterprise installations on third party premises; (5) data storage and management services; and (6) data management consulting services. The Company believes that these expanded services create new market opportunities in the U.S., Canada and other international markets.

The E&P Group

The E&P Group engages in the exploration for and production of oil and gas. The E&P Group participates in these projects as a working interest owner, sharing costs and revenue of oil and gas exploration and production projects with other oil and gas companies. Revenue from the E&P Group and their percentage of total revenue for the years ended December 31, 2001, 2000 and 1999 totaled $21,091,000 (15%), $24,435,000 (18%) and $19,036,000 (15%), respectively. On July 3, 2002, DDD Energy entered into a Purchase and Sale Agreement with Rising Star Energy, L.L.C. for the sale of a majority of the oil and gas exploration and production properties and related assets of DDD Energy. The transaction closed on August 2, 2002. After adjustments, the Company received cash proceeds of $23.8 million with a final adjustment, if any, to be made within 90 days following closing. The purchase agreement grants Rising Star an option, exercisable within 30 days of closing, to purchase additional oil and gas assets of DDD Energy and another subsidiary of the Company for up to $15 million, or to enter into a joint venture arrangement with the Company related to these assets.

Customers

The Company markets its seismic data to major and independent oil and gas companies. The Company generally markets its quantities of oil and gas to numerous purchasers through the operators of its oil and gas properties. During 2001, 2000 and 1999, no one customer accounted for more than 10% of the Company’s revenue. The Company does not believe that the loss of any single customer would have a material adverse impact on its seismic or oil and gas business.

Competition

        The creation and licensing of seismic data are highly competitive. There are a number of independent oil-service companies that create and market data, and numerous oil and gas companies create seismic data and maintain their own seismic data libraries which they offer for licensing. The Company’s largest competitors, most of whom are engaged in acquiring seismic data as well as maintaining a data library, are: Petroleum Geo-Services, WesternGeco, TGS Nopec, Veritas DGC and Compagnie Generale de Geophysique. The Company has positioned itself to take advantage of the increased outsourcing trend by exploration and production companies for their seismic data services. In addition, the Company believes it can compete favorably because of the breadth of its data library, the expertise of its marketing staff and the technical proficiency and exploration experience of its geoscientists. These resources enable the Company to provide high-quality service and to create and market high-grade data which enhances explorationists’ success in finding hydrocarbons.

6

In the oil and gas exploration and production business, there are numerous exploration and production companies competing for the acquisition of mineral properties.

Seasonality and Timing Factors

The Company’s results of operations can fluctuate from quarter to quarter. The fluctuations are caused by a number of factors.

With respect to seismic licensing revenue, the Company’s results are influenced by oil and gas industry capital expenditure budgets and spending patterns. These budgets are not necessarily spent in either equal or progressive increments during the year, with spending patterns affected by individual oil and gas company requirements as well as industry-wide conditions. In addition, the Company’s revenue recognition policy under certain data licensing contracts is dependent upon when the customer selects the data. As a result, the Company’s seismic data revenue does not necessarily flow evenly or progressively on a sequential quarterly basis during the year. In addition, certain weather-related events may delay the creation of seismic data for the Company’s library during any given quarter. Although the majority of the Company’s seismic resales are under $500,000 per sale, occasionally a single data resale from the Company’s library, including those resulting from the merger and acquisition of the Company’s oil and gas company customers, can be as large as $5 million or more. Such large resales can materially impact the Company’s results during the quarter in which they occur, creating an impression of a trend of increasing revenue that may not be achieved in subsequent periods.

Employees

As of December 31, 2001 and August 15, 2002, the Company and its subsidiaries had 188 and 165 full-time employees, respectively. None of the Company’s employees are covered by collective bargaining agreements.

Other

The Company is not dependent on any particular raw materials, patents, trademarks or copyrights for its business operations.

7

The following table gives an overview of the structure of the Company. All subsidiaries are directly or indirectly wholly owned unless separately noted.

Name of Subsidiary	Incorporated In
**African Geophysical, Inc.	Cayman Islands
**Alternative Communication Enterprises, Inc.	Texas
Datatel, Inc.	Delaware
DDD Energy, Inc.	Delaware
**EHI Holdings, Inc.	Delaware
Endeavor Exploration LLC	Delaware
Energy Venture Holdings LLC	Delaware
**Exsol, Inc.	Delaware
**Geo-Bank, Inc.	Texas
Matrix Geophysical, Inc.	Delaware
N360X, L.L.C.	Texas
Olympic Seismic Ltd.	Alberta, Canada
SEIC, Inc.	Delaware
SEIC Business Trust	Canadian business trust
SEIC Holdings Ltd.	Alberta, Canada
SEIC L.L.C.	Delaware
SEIC Partners Limited Partnership	Alberta, Canada limited partnership
SEIC Trust Administration, Ltd.	Alberta, Canada
Seitel Canada Holdings, Inc.	Delaware
Seitel Canada, L.L.C.	Delaware
Seitel Data Corp.	Delaware
Seitel Data, Ltd.	Texas limited partnership
Seitel Delaware, Inc.	Delaware
**Seitel Gas & Energy Corp.	Delaware
**Seitel Geophysical, Inc.	Delaware
Seitel IP Holdings, LLC	Delaware
Seitel International, Inc.	Cayman Islands
Seitel Management, Inc.	Delaware
Seitel Natural Gas, Inc.	Delaware
Seitel Offshore Corp.	Delaware
Seitel Power Corp.	Delaware
Seitel Solutions Canada Ltd.	Alberta, Canada
Seitel Solutions, Inc.	Delaware
Seitel Solutions, L.L.C.	Delaware
Seitel Solutions, Ltd.	Texas limited partnership
Seitel Solutions Holdings, LLC	Delaware
SI Holdings, G.P.	Delaware
Seitel International, CV	Netherlands
**Vision Energy, Inc.	Delaware(1)
818312 Alberta Ltd.	Alberta, Canada

(1) Seitel, Inc. owns 19%

** Dormant

Item 2.    Properties

The Company leases office and warehouse space principally in Houston and Calgary. The Company also owns warehouse space in Calgary. The size and condition of the spaces are appropriate for the Company’s business.

The Company, through its E&P Group, participates in oil and gas exploration and development efforts. For estimates of the Company’s net proved and proved developed oil and gas reserves as of December 31, 2001, see Note T to the Company’s Consolidated Financial Statements. There are numerous uncertainties inherent in estimating quantities of proved reserves and in projecting future rates of production and timing of development expenditures, including many factors beyond the control of the producer. The reserve data set forth in Note T to the Company’s Consolidated Financial statements represents only estimates. Reservoir engineering is a

8

subjective process of estimating underground accumulations of natural gas and liquids, including crude oil, condensate and natural gas liquids that cannot be measured in an exact manner. The accuracy of any reserve estimate is a function of the amount and quality of available data and of engineering and geological interpretation and judgment. As a result, estimates of different engineers normally vary. In addition, results of drilling, testing and production subsequent to the date of an estimate may justify revision of such estimate. Accordingly, reserve estimates are often different from the quantities ultimately recovered. The meaningfulness of such estimates is highly dependent upon the accuracy of the assumptions upon which they were based.

In general, the volume of production from oil and gas properties owned by the Company declines as reserves are depleted. Except to the extent that the Company acquires additional properties containing proved reserves or conducts successful exploration and development activities, or both, the proved reserves of the Company will decline as reserves are produced. Volumes generated from future activities of the Company are therefore highly dependent upon the level of success in finding or acquiring additional reserves and the costs incurred in so doing.

The following table sets forth the number of productive oil and gas wells (including producing wells and wells capable of production) in which the Company owned an interest as of December 31, 2001. As noted above under “The E&P Group”, DDD Energy sold a majority of its oil and gas properties and related assets on August 2, 2002. Gross oil and gas wells include five with multiple completions. All of the wells are operated by the Company’s oil and gas company partners. A “gross” well is a well in which the Company owns a working interest. “Net” wells refer to the sum of the fractional working interests owned by the Company in gross wells.

	Gross Wells	Net Wells
Oil	13	3.11
Gas	58	15.57

The following table sets forth the number of net wells drilled in the last three fiscal years and in which the Company participated.

	Exploratory			Development
	Productive	Dry	Total	Productive	Dry	Total
2001
Texas	.20	.15	.35	.67	.21	.88
Mississippi	2.80	—	2.80	—	—	—
Louisiana	.25	.25	.50	.33	—	.33
California	2.80	.13	2.93	—	—	—
2000
Texas	1.78	.25	2.03	1.24	—	1.24
Mississippi	.80	.40	1.20	—	—	—
Louisiana	—	.49	.49	—	—	—
California	2.33	.48	2.81	—	—	—
1999
Texas	1.14	.28	1.42	1.09	—	1.09
Louisiana	.52	—	.52	—	—	—
California	.30	—	.30	—	—	—

As of December 31, 2001, the Company was not participating in the drilling of any wells.

9

The following table sets forth certain information regarding the Company’s developed and undeveloped lease acreage as of December 31, 2001. “Gross” acres refer to the number of acres in which the Company owns a working interest. “Net” acres refer to the sum of the fractional working interests owned by the Company in gross acres.

	Developed Acres		Undeveloped Acres
	Gross	Net	Gross	Net
California	8,836	2,437	95,810	30,181
Louisiana	3,887	940	12,163	3,153
Michigan	320	90	0	0
Offshore	0	0	7,456	4,576
Texas	12,394	3,717	27,168	7,488
Total	25,437	7,184	142,597	45,398

The following table describes for each of the last three fiscal years, crude oil (including condensate and natural gas liquids) and natural gas production for the Company, average production costs and average sales prices. All such production primarily comes from the U.S. Gulf Coast region and California. The Company has not filed any different estimates of its December 31, 2001 reserves with any federal agencies.

	Net Production		Average Production Cost per Mcfe		Average Sales Price
Year Ended December 31,	Oil (Mbbls)	Gas (Mmcf)			Oil (Bbls)		Gas (Mcf)
2001	278	3,157	$	.88	$	21.73	$	4.74
2000	303	4,390		.78		27.09		3.65
1999	346	5,693		.61		16.35		2.28

Item 3.    Legal Proceedings

The Company and certain of its former and current officers and directors have been named as defendants in eleven lawsuits brought as class actions alleging violations of the federal securities laws, all of which were consolidated by an Order entered August 7, 2002, under Cause No. 02-1566, styled In re Seitel, Inc. Securities Litigation, in the United States District Court for the Southern District of Texas. The complaints generally allege that during proposed class periods of May 5, 2000 through May 3, 2002, or July 13, 2000 through April 1, 2002, the defendants violated sections 10(b) and 20(a) of the Securities and Exchange Act of 1934, by overstating revenues in violation of generally accepted accounting principles. The plaintiffs seek an unspecified amount of actual and exemplary damages, costs of court, pre- and post-judgment interest and attorneys’ fees. The Court has set a hearing for August 30, 2002 on several motions for appointment of lead plaintiff and approval of lead counsel for plaintiffs. By agreement of the parties, the defendants are not required to answer or otherwise respond until after the court selects lead plaintiff and lead counsel and the plaintiffs file a consolidated amended complaint. No discovery has been conducted. The Company intends to vigorously defend these lawsuits.

        The Company has been named as a nominal defendant in seven stockholder derivative actions filed in various courts: Chemical Valley & North Central West Virginia Carpenters Pension Plan v. Frame, Valice, Hoffman, Pearlman, Craig, Lerner, Steiglitz, Zeidman, Fiur, and Seitel, Inc., No. 2002-39404, In the District Court of Harris County, Texas, 151st Judicial District; Almekinder v. Frame, Valice, Pearlman, Craig, Lerner, Steiglitz, Zeidman, Hoffman, and Seitel, Inc., No. H-02-2960, In the United States District Court for the Southern District of Texas; Basser v. Frame, Valice, Kendrick, Pearlman, Fiur, Zeidman, Steiglitz, Craig, Lerner, and Seitel, Inc., No. H-02-1874, In the United States Court for the Southern District of Texas; Berger v. Frame, Pearlman, Valice, Craig, Stieglitz, Lerner, Zeidman, Fiur, and Seitel, Inc., No. 19534-NC, In the Court of Chancery, State of Delaware, Castle County; Couture v. Frame, Valice, Craig, Lerner, Stieglitz, Zeidman, Hoffman, and Seitel, Inc., No. 20002-37065, In the 80th Judicial District Court, Harris County, Texas; Talley v. Frame, Valice, Pearlman, Craig, Lerner, Stieglitz, Zeidman, Hoffman, and Seitel, Inc., In the 151st Judicial District Court, Harris County, Texas; and Zambie v. Frame, Pearlman, Valice, Craig, Zeidman, Lerner, Stieglitz, Fiur, Ernst & Young, LLP, and Seitel, Inc., In the 333rd Judicial District Court, Harris County, Texas. The Plaintiffs generally allege that the defendants breached and conspired to breach fiduciary duties to the Company and its shareholders by failing to maintain adequate

10

accounting controls and by using improper accounting and, as applicable, auditing practices and procedures. Certain of the plaintiffs also assert causes of action for mismanagement, waste of corporate assets and unjust enrichment. The Zambie case also alleges professional negligence against Ernst & Young LLP. The plaintiffs seek judgments for unspecified amounts of compensatory damages, including return of salaries and other payments, exemplary damages, attorneys’ fees, experts’ fees and costs. The Company’s board of directors has appointed a special litigation committee, which is conducting an independent investigation of the allegations asserted in the derivative lawsuits, which it expects to be completed in September 2002. No discovery has been conducted. The defendants presently intend to seek to have all of the derivative cases stayed, including discovery that has been served in the Talley case, pending completion of that investigation.

The Company sued its former chairman of the board in Seitel, Inc. v. Pearlman, C.A. No. H-02-1843, In the United States District Court in the Southern District of Texas. The Company seeks a declaratory judgment with respect to the employment agreement between Mr. Pearlman and the Company. Following his resignation as chairman of the board, Mr. Pearlman and the Company entered into negotiations for a restructuring of his employment agreement. During the negotiations, a document was created that Mr. Pearlman now alleges has superseded the employment agreement. The Company believes that neither its board of directors nor any of its committees approved the document. The Company seeks a judgment declaring the effect of Mr. Pearlman’s resignation on the employment agreement, whether the Company owes any amounts under the employment agreement as a result of his resignation and, if so, how much, and a judgment that the subsequent document is not binding on the Company and is not enforceable by Mr. Pearlman against the Company. Mr. Pearlman has filed counterclaims asserting that the board of directors approved the subsequent document and asserts causes of action for breach of contract, fraud, negligent misrepresentation and promissory estoppel. Mr. Pearlman seeks to be realigned as the plaintiff in the action, and seeks actual damages in an amount exceeding $4,000,000, punitive damages, attorneys’ fees, costs and expenses. No discovery has been conducted. The Company intends to vigorously pursue its claims and defend against the counterclaims.

The Company has been sued by its former chief financial officer in Valice v. Seitel, in the 55th Judicial District Court of Harris County, No. 2002-30195. Ms. Valice filed suit against the Company alleging a breach of her employment contract by virtue of her termination. The Company terminated her employment for what it believes is “cause” under her contract, and the Company believes that she is entitled to no recovery on her suit. The Company has filed a counter suit against Ms. Valice seeking to recover over $621,000 in unearned advances she received from the Company and has failed to repay. The Company intends to vigorously defend the suit and pursue its counterclaim. Discovery is not yet underway.

The Company has been sued by its former chief executive officer in Frame v. Seitel, in the 113th Judicial District Court of Harris County, No. 2002-35891. Mr. Frame filed suit against the Company alleging a breach of his employment contract by virtue of his asserted termination. He also alleges a press release announcing his resignation and advising that the Company was investigating possible misappropriation of corporate funds for personal use by him was defamatory. He also seeks a declaratory judgment that certain funds he received from the Company were proper and do not have to be repaid. The Company has answered and asserted various defenses including the fact that the allegedly defamatory statements are true or substantially true and that its publication was privileged. The Company also filed a counter suit to recover the approximately $4,200,000 in corporate funds that the Company believes he inappropriately converted for his personal use and benefit. The Company intends to vigorously defend the suit and pursue its counterclaim. Discovery is not yet underway.

The litigation referred to above is in its early stages. Accordingly, the Company is unable to determine a range of contingent liabilities associated with such litigation. However, if one or more of the parties were to prevail against the Company in one or more of the cases described above, the amounts of any judgments against the Company or settlements that the Company may enter into could be material to the Company’s financial statements for any particular reporting period.

11

        The Company is currently a party to a dispute with Winthrop Resources Corporation (“Winthrop”) arising out of an equipment lease signed by the parties in October 2001. The Company sought to lease a majority of the equipment needed to establish and operate certain data centers from Winthrop. Based on representations from Winthrop, the Company expected to receive an operating lease, but the Company determined the lease was, in fact, a capital lease. Winthrop alleges that the Company’s restatement of its financial statements was a material adverse event and thus prevented further leasing. The Company made all monthly payments called for under the lease until the July 1, 2002 payment, at which time the Company suspended payment. The Company filed an application for a temporary restraining order on July 12, 2002, which was granted on that same day, seeking to enjoin Winthrop from repossession of certain equipment pending the hearing on the application for a temporary injunction which hearing was set for August 9, 2002, but was postponed by the parties. Winthrop filed suit in Minnesota state court on July 15, 2002 in which it seeks contractual damages and return of the leased equipment. Winthrop asserts the case in Texas should be dismissed because the parties agreed in the lease that venue would be in Minnesota. That motion to dismiss was scheduled to be heard at the August 9 hearing, but now is rescheduled to begin August 30, 2002. The Company and Winthrop recently entered into a standstill agreement in both the Texas and Minnesota actions so they can explore a settlement. No settlement agreement has been executed, although discussions continue. The standstill agreement expires at the resolution of the August 30 hearing.

12

In addition to the lawsuits described above, the Company is involved from time to time in ordinary, routine claims and lawsuits incidental to its business. In the opinion of management, uninsured losses, if any, resulting from the ultimate resolution of these matters should not be material to the Company’s financial position or results of operations.

Item 4.    Submission of Matters to a Vote of Security Holders

No matters were submitted to a vote of security holders during the fourth fiscal quarter of 2001.

PART II

Item 5.    Market for Registrant’s Common Stock and Related Stockholder Matters

The Company’s Common Stock is traded on the NYSE which is the Company’s principal exchange. The Company’s Common Stock is also traded on the Toronto Stock Exchange. The following table sets forth the high and low sales prices for the Common Stock for 2002, 2001 and 2000 as reported by the NYSE.

	2002				2001				2000
	High		Low		High		Low		High		Low
First Quarter	$	14.49	$	8.05	$	22.72	$	16.29	$	9.63	$	6.50
Second Quarter	$	11.45	$	.95		20.16		13.03		9.50		5.88
Third Quarter		N/A		N/A		14.36		8.89		16.38		7.06
Fourth Quarter		N/A		N/A		14.20		9.55		19.75		13.25

On March 28, 2002 and August 15, 2002, the closing price for the Common Stock was $9.15 and $.55, respectively. To the best of the Company’s knowledge, there were approximately 903 and 907 record holders of the Company’s Common Stock as of March 28, 2002 and August 15, 2002, respectively.

The Company has received notification from the NYSE that it has fallen below the NYSE continued listing standards due to the Company’s stock trading at a price of below $1.00 per share for a consecutive 30-day trading period. In accordance with the rules and procedures of the NYSE, the Company has six months within which to cure this price per share deficiency, prior to the NYSE commencing suspension and delisting procedures. The Company has responded to the notification letter, informing the NYSE of the Company’s intent to cure the deficiency.

Dividend Policy

The Company did not pay cash dividends during 2001 or 2000, and it intends to retain future earnings in order to provide funds for use in the operation and expansion of its business. Because the payment of dividends is dependent upon earnings, capital requirements, financial conditions, any required consents of lenders and other factors, there is no assurance that dividends, whether in the form of stock or cash, will be paid in the future.

13

Item 6.    Selected Consolidated Financial Data (in thousands, except per share data)

The following table summarizes certain historical consolidated financial data of the Company and is qualified in its entirety by the more detailed consolidated financial statements and notes thereto included in Item 8 hereof.

	Year Ended December 31,
	2001			2000			1999			1998			1997
				(Restated)
Statement of Operations Data:
Revenue(1)	$	136,329		$	138,322		$	128,707		$	144,857		$	127,556
Expenses and costs:
Depreciation, depletion and amortization		60,713			62,897			59,624			69,890			49,679
Impairment of oil and gas properties		40,433			—			—			—			9,560
Cost of sales		5,465			5,570			5,016			4,874			17,953
Selling, general and administrative		36,828			33,131			28,587			26,599			23,043
Special charges		1,265			—			—			—			—
Expenses related to delayed DDD Energy, Inc. offering		—			958			—			—			—
Restructuring charge		—			4,394			—			—			—
		144,704			106,950			93,227			101,363			100,235
(Loss) income from operations		(8,375	)		31,372			35,480			43,494			27,321
Interest expense, net		(13,102	)		(12,106	)		(11,077	)		(5,540	)		(3,554	)
Dividend income		—			22			—			—			—
Equity in earnings (loss) of affiliate		—			—			(91	)		222			146
Impairment due to dividend distribution of affiliate stock		—			—			(7,794	)		—			—
Gain on sale of subsidiary stock					—			—			—			18,449
Increase (decrease) in underlying equity of affiliate		—			—			—			(193	)		10,750
Extinguishment of volumetric production payment		—			—			—			—			(4,133	)
(Loss) income before provision for income taxes		(21,477	)		19,288			16,518			37,983			48,979
(Benefit) provision for income taxes		(6,484	)		7,578			7,138			13,623			17,422
(Loss) income before cumulative effect of accounting change		(14,993	)		11,710			9,380			24,360			31,557
Cumulative effect on prior years of change in revenue recognition, net of tax benefit of $8,859		—			(14,219	)		—			—			—
Net (loss) income	$	(14,993	)	$	(2,509	)	$	9,380		$	24,360		$	31,557

14

	Year Ended December 31,
	2001			2000			1999		1998		1997
				(Restated)
Statement of Operations Data:
Earnings (loss) per share:(2)
Basic:
(Loss) Income before cumulative effect	$	(.60	)	$	.49		$	.39	$	1.07	$	1.48
Cumulative effect of accounting change		—			(.59	)		—		—		—
Net (loss) income	$	(.60	)	$	(.10	)	$	.39	$	1.07	$	1.48
Diluted:
(Loss) income before cumulative effect	$	(.60	)	$	.49		$	.39	$	1.05	$	1.43
Cumulative effect of accounting change		—			(.59	)		—		—		—
Net (loss) income	$	(.60	)		(.10	)	$	.39	$	1.05	$	1.43
Weighted average shares:(2)
—Basic		24,986			23,909			23,863		22,720		21,380
—Diluted		24,986			24,090			24,063		23,124		22,050
EBITDA(4)	$	92,771		$	99,621		$	95,104	$	113,384	$	84,436
	As of December 31,
	2001			2000			1999		1998		1997
				(Restated)
Balance Sheet Data:
Seismic data library, net	$	455,845		$	362,603		$	329,885	$	262,950	$	180,936
Oil and gas properties, net		89,370			141,658			150,166		148,977		112,915
Total assets		661,469			599,131			555,919		495,767		365,682
Total debt		268,350			206,598			225,223		150,690		90,566
Stockholders’ equity		243,587			253,590			243,024		237,587		207,273
Stockholders’ equity per common share outstanding at December 31	$	9.71		$	10.28		$	10.30	$	10.05	$	9.26
Common shares outstanding at December 31(2)(3)		25,075			24,671			23,605		23,629		22,373

(1) Non-cash revenue and the percentage of total revenue for the five years ended December 31, 2001 are $18,219,000 (13.4%), $7,330,000 (5.3%), $8,989,000 (7.0%), $1,140,000 (.9%) and $0, respectively.

(2) All number of shares and per share amounts have been restated to give effect to the two-for-one stock split effected in the form of a 100% stock dividend in December 1997.

(3) Net of treasury shares.

(4) “EBITDA” is earnings before special items, equity in earnings (loss) from affiliate, interest expense, depreciation, depletion, amortization, taxes, impairment charges, and cumulative effect of accounting changes. EBITDA includes non-cash earnings. EBITDA should not be interpreted as a measure of operating results, cash flows provided by operating activities, a measure of liquidity, or as an alternative to any generally accepted accounting principle measure of performance. The Company is reporting EBITDA because it is a widely used financial measure of the potential capacity of a company to incur and service debt. The Company’s reported EBITDA may not be comparable to similarly titled measures used by other companies.

15

Item  7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Information Regarding Forward Looking Statements

Statements contained in this Report about Seitel’s future outlook, prospects and plans, including those that express belief, expectation, estimates or intentions, as well as those that are not statements of historical fact, are forward looking. These statements represent Seitel’s reasonable belief and are based on Seitel’s current expectations and assumptions with respect to future events. While Seitel believes its expectations and assumptions are reasonable, they involve risks and uncertainties beyond Seitel’s control that could cause the actual results or outcome to differ materially from the expected results or outcome. Such factors include any significant change in the oil and gas business or the economy generally, changes in the exploration budgets of the Company’s seismic data and related services customers, actual customer demand for the Company’s seismic data and related services, the timing and extent of changes in commodity prices for natural gas, crude oil and condensate and natural gas liquids and conditions in the capital markets and equity markets during the periods covered by the forward looking statements, and the effect on our reported operating results and stock price as a result of the Company’s restatement of financial statements, as well as any litigation or action taken as a result of the Company’s non-compliance with its debt covenants. The forward-looking statements contained in this Report speak only as of the date hereof, and Seitel disclaims any duty to update these statements.

Basis of Presentation of Our Financial Statements

The Company’s financial statements have been prepared on a basis that assumes the Company will continue as a going concern. The Company is not in compliance with various covenants in its debt agreements. The independent auditors’ report on the Company’s 2001 financial statements contains a “going concern” qualification based on the Company’s non-compliance with its debt agreements, which indicates their belief that there is substantial doubt about the Company’s ability to continue to recover assets and satisfy liabilities in the normal course of business. The Company’s independent auditors have advised the Company that, if its non-compliance with its debt agreements is not satisfactorily resolved, its report relative to the Company’s December 31, 2002 financial statements would include a “going concern” qualification. The Company is working with its lenders toward a long-term modification of the Senior Note Agreements, but there can be no assurance that the Company will be successful in its negotiations. The accompanying financial statements do not include any adjustments to reflect the possible future effects on the recoverability of assets or the amounts of liabilities that may result from the outcome of the uncertainty.

Because of the level of the Company’s debt and the Company’s non-compliance with certain covenants, (1) a substantial portion of the Company’s cash flow from operations must be dedicated to debt service and payments of such obligations and, to the extent so used, will not be available for operational purposes, (2) the Company’s ability to obtain additional financing in the future may be limited, and (3) the Company’s flexibility in reacting to changes in the operating environment and economic conditions may be limited. If the Company is unable to successfully conclude its negotiations with its lenders, it may be forced to take actions such as reducing or delaying capital expenditures, reducing costs, selling assets, refinancing or restructuring its debt or other obligations and seeking additional equity capital. The Company may not be able to take any of these actions on satisfactory terms or at all.

As a result of the Company’s current financial condition and the possibility that the Company may be unable to satisfy its future obligations, certain customers of the Company have refused to enter into large data licensing agreements for delivery of future data and some contractors have refused to provide services to the Company without receiving payment in advance. A significant loss of customers or agreements with contractors may have a material adverse effect on the financial condition of the Company.

Restatement of Financial Statements

Effective for the year ended December 31, 2001, the Company has determined that the timing and amount of reported revenue from certain data licensing contracts and certain data acquisition contracts warranted revision to the reported results for the nine months ended September 30, 2001 and the year ended December 31, 2000.

The effect of these revisions is to defer revenue previously recognized under certain seismic data licensing agreements until selection of specific data is made by the customer. The deferral in revenue resulted in an increase in deferred revenue. Associated with the deferral of the revenue on these contracts, the Company also deferred the direct costs related to the revenue, which resulted in an increase in prepaid expenses. The Company also recognized a reduction in amortization expense, which is recorded as an adjustment to accumulated amortization, and in income tax expense, which is recorded as an adjustment to deferred taxes. The change in revenue recognition, effective January 1, 2000, was recorded as a cumulative effect adjustment in 2000, which means that the net effect of applying SAB 101 for periods prior to January 1, 2000 was recorded in the Statement of Operations as one amount, net of taxes. The total effects of all revisions to revenue recognition related to the seismic data licensing arrangements for the nine months ended September 30, 2001 and the year ended December 31, 2000 are summarized in the tables on the following pages.

The revisions also reflect adjustments for the amount and timing of revenue previously recognized under certain data acquisition contracts. In 2001 and 2000, the Company entered into certain acquisition contracts under which both the Company and the customer jointly participated in the acquisition services. Consequently, the Company did not assume the sole risk of service throughout the acquisition process. The Company recognized revenue under these contracts consistent with its revenue recognition policy for acquisition contracts. The Company has determined that revenue previously recognized for amounts funded by customers under these contracts should be used to reduce the Company’s recorded cost of creating the seismic data. The Company continues to have sole ownership of the newly created data. The reduction of revenue resulting from these revisions also reduced the Company’s amortization expense, which is recorded as an adjustment to accumulated amortization, and income tax expense, which is recorded as an adjustment to deferred taxes. The total effects of all revisions to revenue recognition related to certain data acquisition contracts for the nine months ended September 30, 2001 and the year ended December 31, 2000 are summarized in the tables on the following pages.

16

Accordingly, such financial statements have been restated as follows:

	Nine Months Ended September 30, 2001 (Unaudited)
	As Reported			Adjustments for Data Licensing Agreements			Adjustments for Data Acquisition Contracts			As Restated
	(in ‘000’s except per share amounts)
Statements of Operations Data:
Revenue	$	140,775		$	(31,203	)	$	(11,491	)	$	98,081	(1)
Depreciation, depletion & amortization		61,872			(13,433	)		(5,528	)		42,911
Cost of sales		4,182			—			—			4,182
SG&A expense		29,868			(2,115	)		(57	)		27,696
Impairment of oil and gas properties		30,038			—			—			30,038
Special charges		1,130			—			—			1,130
Income (loss) from operations		13,685			(15,655	)		(5,906	)		(7,876	)
Interest expense, net		(9,515	)		—			72			(9,443	)
(Provision) benefit for income taxes		(1,398	)		5,078			2,042			5,722
Net income (loss).	$	2,772		$	(10,577	)	$	(3,792	)	$	(11,597	)
Net income (loss) per share:
Basic	$	0.11		$	(.42	)	$	(.15	)	$	(0.46	)
Diluted	$	0.11		$	(.42	)	$	(.15	)	$	(0.46	)
Balance Sheet Data:
Cash and cash equivalents	$	5,572		$	—		$	—		$	5,572
Receivables		58,162			—			—			58,162
Seismic data library, net		401,967			30,609	(2)		(5,615	)		426,961
Property and equipment, net		123,660			—			—			123,660
Prepaid expenses and deferred charges		6,203			6,229			14			12,446
Accounts payable and accrued liabilities		43,182			—			—			43,182
Deferred income taxes		24,389			(17,857	)		(2,042	)		4,490
Deferred revenue		1,093			87,683	(3)		233			89,009
Retained earnings		132,315			(33,503	)		(3,792	)		95,020
Accumulated other comprehensive loss		(2,822	)		515			—			(2,307	)

(1) Non-cash revenue and the percentage of total revenue are $12,408,000 and 12.7%, respectively.

(2) Represents reduction in accumulated amortization due to deferral of revenue.

(3) The impact of the data licensing revisions on deferred revenue includes approximately $57 million related to the cumulative effect of periods prior to 2001.

17

	Year Ended December 31, 2000
	As Reported			Adjustments for Data Licensing Agreements			Adjustments for Data Acquisition Contracts			As Restated
	(in ‘000’s except per share amounts)
Statements of Operations Data:
Revenue	$	163,811		$	(19,599	)	$	(5,890	)	$	138,322	(1)
Depreciation, depletion & amortization		73,709			(8,054	)		(2,758	)		62,897
Cost of sales		5,570			—			—			5,570
SG&A expense		34,790			(1,476	)		(183	)		33,131
Other		5,352			—			—			5,352
Income (loss) from operations		44,390			(10,069	)		(2,949	)		31,372
Interest expense and other, net		(12,184	)		—			100			(12,084	)
(Provision) benefit for income taxes		(11,789	)		3,215			996			(7,578	)
Cumulative effect of accounting change		—			(14,219	)		—			(14,219	)
Net income (loss)	$	20,417		$	(21,073	)	$	(1,853	)	$	(2,509	)
Net income (loss) per share:
Basic	$	0.85		$	(.88	)	$	(.07	)	$	(0.10	)
Diluted	$	0.85		$	(.88	)	$	(.07	)	$	(0.10	)
Balance Sheet Data:
Cash and cash equivalents	$	10,216		$	—		$	—		$	10,216
Receivables		69,740			—			—			69,740
Seismic data library, net		345,201			18,855	(2)		(1,453	)		362,603
Property and equipment, net		145,655			—			—			145,655
Prepaid expenses and deferred charges		4,716			4,093			79			8,888
Accounts payable and accrued liabilities		49,736			—			—			49,736
Deferred income taxes		30,412			(11,944	)		(996	)		17,472
Deferred revenue		2,975			55,773	(3)		1,477			60,225
Retained earnings		129,543			(21,073	)		(1,853	)		106,617
Accumulated other comprehensive income (loss)		(381	)		190			—			(191	)

(1) Non-cash revenue and the percentage of total revenue are $7,330,000 and 5.3%, respectively.

(2) Represents reduction in accumulated amortization due to deferral of revenue.

(3) The impact of the data licensing revisions on deferred revenue includes approximately $36 million related to the cumulative effect of periods prior to 2000.

While the above revisions reduced reported revenues and net income for the nine months ended September 30, 2001 and the year ended December 31, 2000, they had no effect on the cash received by the Company during those periods.

18

At December 31, 2001, the Company had a deferred revenue balance of $97,330,000, of which $47,708,000 resulted from non-cash transactions through which the Company received ownership of seismic data in lieu of cash. Of the remaining deferred revenue balance of $49,622,000 at December 31, 2001, approximately $27,593,000 or 56% has been collected. The total deferred revenue at December 31, 2001, consists of: $4.4 million deferred revenue existing at December 31, 1999; $36.0 million resulting from the cumulative effect for periods prior to January 1, 2000, of the adoption of the new accounting policies; $19.8 million resulting from the net effect in 2000 of the adoption of the new accounting policies; and $37.1 million resulting from the net effect in 2001 of the adoption of the new accounting policies. The 2000 and 2001 deferred revenue is net of revenue realized from the selection of data or expiration of contracts during those periods from previously deferred revenue. The deferred revenue will be recognized when selection of the data is made by the customer or upon expiration of the data licensing contracts, whichever occurs first. Deferred revenue will be recognized no later than the following, based on the expiration of the selection period, although some revenue may be recognized earlier if selection occurs earlier (in thousands):

2002	$	25,000
2003		19,000
2004		17,000
2005 and thereafter		21,330

The remaining approximately $15,000,000 will be spread throughout the above periods depending upon the customers’ needs.

Significant Accounting Policies

Revenue Recognition

Revenue from Data Acquisition

Revenue from the creation of new seismic data under the Company’s acquisition contracts is recognized using the percentage-of-completion method of accounting based upon costs incurred to date as a percentage of total estimated costs. Under these contracts, the Company creates new seismic data designed in conjunction with its customers and specifically suited to the geology of the area using the most appropriate technology available. The contracts typically result in one or more customers paying 65% or more of the direct creation costs in exchange for a license or licenses to use the resulting data. Customers make periodic payments throughout the creation period, which generally correspond to costs to be incurred. These payments are non-refundable once the costs of creation are incurred. The creation process generally occurs in the following stages: permitting, surveying, drilling, recording and processing. At each stage, the customers receive legally enforceable rights and access to, and the benefits of, the results of all work performed. The customers also receive access to and use of the newly acquired, processed data. The customers may have exclusive access to the work performed and exclusive use of the newly acquired, processed data for a limited term, which is generally less than nine months after final delivery of the processed data. The customers’ access to and use of the results of the work performed and of the newly acquired, processed data is governed by a long-term (generally twenty years or more) license agreement, which is a separate agreement from the acquisition contract. The Company’s acquisition contracts require the customer either to have a license agreement in place or to execute one at the time the acquisition contract is signed. The Company maintains sole ownership of the newly acquired data, which is added to its library, and is free to license the data to other customers when the original customers’ exclusivity ends.

Revenue from Data Licenses

The Company licenses data from its seismic data library to customers under four basic forms of contracts.

Under the first form of contract, the customer licenses and selects data from the data library at the time of contracting.

Under the second form of contract, referred to as a “review and possession contract”, the customer obtains the right to review a certain quantity of data for a limited period of time. During the review period, the customer may select specific data from that available for review to hold long-term under its license agreement. Any data not selected for long-term licensing must be returned to the Company at the end of the review period.

19

Under the third form of contract, referred to as “library card” contracts, the customer initially receives only access to data. The customer may then select specific data, from the collection of data to which it has access, to hold long-term under its license agreement. The lengths of the selection periods under the library card contracts vary.

Under the fourth form of contract, referred to as a “review only” contract, the customer obtains rights to review a certain quantity of data for a limited period of time, but does not obtain the right to select specific data to hold long-term.

The usage of all data delivered to the customer, whether for review only or to hold long-term, is governed by a license agreement, which is a separate agreement from the contracts. The Company’s contracts require the customer either to have a license agreement in place or to execute one at the time the contract is signed. The term of the license agreement is generally twenty years or more and governs all data delivered to the customer during the term. Payment terms under the contracts are typically less than eighteen months. All payments due are non-cancelable and all payments made are non-refundable. The customer has complete access to all available data covered by the contracts on the date the contract is executed. The contracts permit selection of the data in its present form and the Company is under no obligation to make any enhancements, modifications or additions to the data unless specific terms are included, upon which revenue would be deferred until performance is met. The customers’ rights under the contracts are non-transferable without payment of an additional fee. Copies of the data are available to the customer immediately upon request.

Before 2000, under the Company’s interpretation of accounting principles generally accepted in the United States in effect at that time, the Company recognized revenue when it had a contract with its customer for a fixed sales price, a license agreement was in place, collectibility was reasonably assured and the seismic data was available for use by the customer. Effective January 1, 2000, revenue from licensing of seismic data is recognized when the Company has contracted with the customer for a fixed sales price; a licensing agreement is in place; the customer has selected specific data under the terms of the contract or the contract has expired without full selection having occurred; and collectibility of the sales price is reasonably assured. The Company recognizes revenue for the particular data selected as each specific selection of data is made by the customer. If selections are not completed by the expiration date of the contract, the Company then recognizes any remaining revenue under that contract. In each case (selection or expiration), the earnings process is completed. The Company does not recognize revenue for amounts billed in advance of being earned until these conditions are met. For revenue that is deferred, the Company defers the direct costs related to the revenue. Revenue from licensing of seismic data is presented net of revenue shared with other entities.

Revenue from Non-Cash Data Licenses

In certain cases, the Company grants its customer a non-exclusive license to specific, selected data or access to data to be used in its operations (not for resale) in exchange for ownership of seismic data from the customer. Where the customer receives access to data, the customer may then select specific data to hold under a long-term license; the lengths of the selection periods vary, but are generally three to five years. The Company records a data library asset for the seismic data acquired at the time the contract is entered into and defers revenue recognition on the transaction until the customer selects the data. These transactions are accounted for as non-monetary exchanges and are valued at the fair value of the data received or delivered, whichever is more readily determinable. The Company determines fair value for the data exchanged by first determining the value of the license granted to the customer. It does so by looking at the range of cash transactions by the Company for licenses of similar data during either the prior six months (for licenses in the United States), or the prior twelve months (for licenses in Canada). In looking at the range of cash transactions, the Company does not consider transactions that are disproportionately high or low. The Company then also considers the value of the data received from the customer. In determining the value of the data received, the Company considers the age, quality, current demand and future marketability of the data as well as the cost that would be required to create the data. In significant exchanges, the Company also engaged either Bella Geo Technical Services Ltd. or Boyd Exploration Consultants Ltd. as an independent third party to confirm for fairness the Company’s valuation of the data received. In the United States, the Company applies a cap on the value it will assign per square mile on the data exchanged. In Canada, in the event of a difference greater than 2% between the value of the license granted and the value of the data received, the Company assigns the lower value to the exchange. In 2001, the Company obtained third party fairness opinions on all non-cash exchanges valued at $800,000 or more. In the future, the Company will obtain third party fairness opinions on all non-cash exchanges of $500,000 or more. The Company intends to obtain these opinions on an annual basis, usually in connection with the preparation of its annual financial statements.

Revenue from non-cash exchanges is recognized under the same method as the Company’s data licensing contracts. Therefore, as a result of the Company’s restatement of its financial statements, some non-cash revenue has been deferred until selection of specific data is made by the customer. In 2000, the Company entered into non-cash exchanges valued at a total of $12.4 million of which $5.4 million was deferred at December 31, 2001. In 2001, the Company entered into non-cash exchanges valued at $57.0 million of which

20

$50.0 million was deferred at December 31, 2001. The Company’s method of valuing its non-cash transactions has not been changed due to the restatement.

In its non-cash exchanges, the Company is selling its customer licenses to data from the Company’s data library. In exchange it receives ownership of data, that it does not own or to which it does not have full marketing rights. Although the customer may also retain a license to the data it is transferring to the Company, the data licensed by the Company from its library is distinct from the data received from the customer. Thus, in exchange for a license to data, the Company receives ownership of distinct data to be added to its library and, therefore, the exchange is not a “like-kind” exchange.

Revenue from Oil and Gas Operations

The Company uses the sales method of accounting for its oil and gas revenue. Under this method, revenue is recognized based on actual volumes of oil and gas sold to purchasers. The volumes of oil and gas sold may differ from the volumes to which the Company is entitled based on its interests in the properties, which historically, has not been significant.

Amortization of Seismic Data Library

In accordance with its business model, the Company undertakes seismic data creation programs and purchases existing seismic data programs in instances where it is expected that the amount of total licensing fees from the program will equal at least twice the program’s cost.

When undertaking seismic data creation programs, the Company subcontracts third parties to shoot the seismic data. By outsourcing this service, the Company is able to choose if and when to create new seismic data and generally does so when it has received customer underwriting of 65% or more of the direct creation costs of the data. The Company is also able to use the latest technology available without buying the equipment necessary to create the data. Other seismic companies, which own and operate seismic crews, equipment or vessels, not only contract those resources to third parties, but may also use those resources to create speculative data, which has little or no customer underwriting. The Company does not engage in speculative data creation projects. The Company believes its approach to creating new data only when there is customer demand for licenses to the data and future marketability is high causes its data to have a longer sales life than that of other seismic companies.

The Company uses the income forecast method to amortize the costs of seismic data programs it creates. Under the income forecast method, seismic data costs are amortized based on the proportion of revenue for a period to total revenue, as estimated by management. Because the Company generally receives significant underwriting revenue under its seismic data creation programs, amortization of approximately 30% of the cost of the program is recorded during data creation along with the recording of revenue from that program. Although the data may be marketed for a longer period, the Company expects the majority of sales to occur during the first ten years.

The costs of purchased seismic data programs are generally amortized on a straight-line basis over ten years, however, the costs of a significant purchase (greater than 5% of the net book value of the seismic data library) are amortized using the greater of the income forecast method or ten-year straight-line method. The Company generally amortizes purchased data evenly over ten years because it expects to generate revenue from purchased data consistently over ten years, unlike data created by the Company with specific customer underwriting, where the underwriting commitment results in higher initial sales.

On a periodic basis, the Company evaluates the performance of all of its seismic data programs. The Company evaluates its revenue trends, as well as industry revenue trends, in order to estimate future revenue from seismic data sales. When economic conditions indicate, the Company may reduce its estimates of future revenue, causing the amortization rate to rise and operating results to decline. The Company also reviews the carrying value of seismic data to assess whether there has been a permanent impairment of value. The primary indicator of impairment of value is reduced sales over an extended period of time. When indicated by continuous, reduced sales over three years or more, the Company compares the net book value of the seismic data to forecasted, undiscounted cash flows. When appropriate, indicated impairments are recorded based on the excess of net book value over fair value.

21

The amount of seismic data amortization recorded each year fluctuates based on the amount of seismic revenue recognized and the mix of data to which the revenue relates. The data is amortized based on: (i) the income forecast method, which is generally used for created data or (ii) the ten-year straight-line method which is generally used for purchased data.

Results of Operations

The following table sets forth selected financial information (in thousands) for the periods indicated, and should be read in conjunction with the discussion below.

	2001			2000			1999
				(Restated)
Seismic:
Revenue	$	115,238		$	113,887		$	109,671
Amortization		(48,216	)		(51,347	)		(49,375	)
Cost of sales		(1,196	)		(738	)		(296	)
Oil and Gas:
Revenue		21,091			24,435			19,036
Depletion		(10,640	)		(10,376	)		(9,093	)
Impairment of oil and gas properties		(40,433	)		—			—
Cost of sales		(4,269	)		(4,832	)		(4,720	)
Other depreciation		(1,857	)		(1,174	)		(1,156	)
Selling, general and administrative		(36,828	)		(33,131	)		(28,587	)
Special charges		(1,265	)		—			—
Expenses related to delayed DDD Energy, Inc. offering		—			(958	)		—
Restructuring charge		—			(4,394	)		—
Net interest expense		(13,102	)		(12,106	)		(11,077	)
Dividend income		—			22			—
Equity in loss of affiliate		—			—			(91	)
Impairment due to dividend distribution of affiliate stock		—			—			(7,794	)
(Loss) income before provision for income taxes		(21,477	)		19,288			16,518
Provision (benefit) for income taxes		(6,484	)		7,578			7,138
(Loss) income before cumulative effect of accounting change		(14,993	)		11,710			9,380
Cumulative effect on prior years of change in accounting principle for revenue recognition, net of tax		—			(14,219	)		—
Net (loss) income	$	(14,993	)	$	(2,509	)	$	9,380

Overview

Income before special items, impairment of oil and gas properties and cumulative effect of accounting change was $11,288,000, $16,023,000 and $14,446,000 for the years ended December 31, 2001, 2000 and 1999, respectively. Special items for the year ended December 31, 2000, include a pre-tax restructuring charge of $4,394,000 related to reduction of management incentive bonus compensation and a pre-tax charge of $958,000 related to expenses incurred in connection with the now abandoned DDD Energy, Inc. initial public offering. Special items for the year ended December 31, 1999, include a pre-tax loss of $7,794,000 related to an impairment due to the dividend distribution of affiliate stock.

Seismic

        Oil and gas companies consider seismic data an essential tool for finding hydrocarbons. Oil and gas companies use seismic data in oil and gas exploration and development efforts to increase the probability of drilling success. By properly utilizing seismic data, oil and gas companies can significantly increase drilling success rates and reduce the occurrence of dry holes. By participating in multi-client surveys, oil and gas companies can obtain access to expensive surveys that they could not otherwise afford. Further, seismic data can increase recoveries of reserves from existing, mature oil fields by optimizing the drilling location of development wells and by revealing additional, or “step-out,” locations that would not otherwise be apparent.

22

The Company generates seismic revenue by licensing data from its existing data library and from new data acquisitions conducted for our customers. Revenue from the seismic division was $115,238,000, $113,887,000 and $109,671,000 during 2001, 2000 and 1999, respectively. The increase in total seismic division revenue between years was due to an increase in revenue from licensing of existing data from the Company’s data library, which was partially offset by a decrease in revenue from new seismic data creation. Additionally, library sales include revenue resulting from the merger and acquisition of some of the Company’s oil and gas company customers. In these instances, the data was relicensed due to the nontransferability of the original license. Seismic division revenue includes $18,219,000 and $7,330,000 from non-cash data transactions during 2001 and 2000, respectively. The increase in non-cash licensing revenue from 2000 to 2001 was due to an increase in non-cash licenses in 2001 under which data selections occurred in 2001 and an increase in selections of data under non-cash license transactions entered into in 1999 and 2000.

Data bank amortization amounted to $48,216,000, $51,347,000 and $49,375,000 for the years ended December 31, 2001, 2000 and 1999, respectively. The amount of seismic data amortization fluctuates based on the level of seismic marketing revenue. As a percentage of revenue from licensing seismic data, data bank amortization was 43%, 46% and 45% for 2001, 2000 and 1999, respectively. The change in the percentage between 2000 and 2001 was primarily due to the mix of sales of created and purchased data which is generally amortized on an income forecast and straight line method, respectively.

Oil and Gas

Net volume and price information for the Company’s oil and gas production for the years ended December 31, 2001, 2000 and 1999 is summarized in the following table:

	Year Ended December 31,
	2001		2000		1999
Natural gas volumes (mmcf)		3,157		4,390		5,693
Average natural gas price ($/mcf)	$	4.74	$	3.65	$	2.28
Crude oil/condensate volumes (mbbl)		278		303		346
Average crude oil/condensate price ($/bbl)	$	21.73	$	27.09	$	16.35

Oil and gas revenue was $21,091,000, $24,435,000 and $19,036,000 during 2001, 2000 and 1999, respectively. The decrease in oil and gas revenue from 2000 to 2001 resulted from lower production volumes due to property sales and normal production declines, and lower oil prices. These decreases offset the increase in pricing of natural gas from 2000 to 2001. The increase in oil and gas revenue from 1999 to 2000 was due to higher market prices in 2000 offset by lower production volumes. The decline in oil and gas production was primarily due to the effect of the sale of a group of wells in August 2000 and July 1999, some of which were producing, as well as normal production declines on several of the Company’s older wells. Production from new wells drilled in 2000 partially offset these declines.

Depletion of oil and gas properties was $10,640,000, $10,376,000 and $9,093,000 for the years ended December 31, 2001, 2000 and 1999, respectively, which amounted to $2.21, $1.67 and $1.17, respectively, per mcfe of gas produced during such periods. The rate per mcfe varies with the estimate of proved oil and gas reserves of the Company at each quarter end, as well as evaluated property costs. The increases in the rate between years was primarily due to lower proved reserve volumes each year end compared to the previous year end, primarily resulting from the sale of proved reserves and revisions to estimated reserve volumes.

For the quarter ended December 31, 2001, the Company recorded a non-cash impairment of oil and gas properties totaling $10,395,000 based on its December 31, 2001 estimated proved reserves valued at March 27, 2002 market prices. The non-cash impairments of oil and gas properties totaled $40,433,000 for the year ended December 31, 2001. The impairment was primarily due to lower commodity prices.

Oil and gas production costs amounted to $.88, $.78 and $.61, per mcfe of gas produced during 2001, 2000 and 1999, respectively. The increase in the rate between 2000 and 2001 was primarily due to higher ad valorem taxes and increases in certain production costs. The increase in the rate between 1999 and 2000 was primarily due to higher workover costs incurred during 2000 and higher production taxes in 2000 due to higher oil and gas prices.

23

Corporate and Other

The Company’s selling, general and administrative expenses were $36,828,000 in 2001, $33,131,000 in 2000 and $28,587,000 in 1999. The increase from 2000 to 2001 primarily resulted from an increase in overhead costs due to the growth of the Company, including overhead costs associated with its wholly owned subsidiary, Seitel Solutions, and international business development. These increases were partially offset by a decrease in compensation payable on pre-tax profits resulting from the restatement of the Company’s financial statements and impairment of oil and gas properties recorded by the Company during 2001. The increase from 1999 to 2000 was primarily due to an increase in fixed costs due to the growth of the Company, as well as an increase in variable expenses related to increased revenue. These increases were partially offset by a decrease in management’s incentive compensation resulting from the restructuring that occurred in June 2000. As a percentage of total revenue, selling, general and administrative expenses were 27% in 2001, 24% in 2000 and 22% in 1999.

24

The Company’s interest expense was $13,898,000 in 2001, $13,068,000 in 2000 and $11,791,000 in 1999. The increase from 2000 to 2001 primarily relates to a decrease in the amount of interest capitalized. The increase from 1999 to 2000 primarily relates to $138 million in Series D, E and F Senior Notes being outstanding for the entire year in 2000, whereas in 1999, these notes were outstanding for 10½ months.

On April 22, 1999, the Board of Directors of the Company declared a dividend to its common stockholders consisting of 1,520,000 shares of the common stock of Eagle Geophysical, Inc. (“Eagle”) owned by the Company. The fair market value of the common stock of Eagle held by the Company on the date the dividend was declared was lower than the carrying value of the stock on the Company’s balance sheet; therefore, a non-cash, non-recurring, pre-tax impairment, net of bonus effect, of $7,794,000 was recorded for the year ended December 31, 1999.

The Company’s effective income tax rate was 30.2%, 39.3% and 43.2% for the years ended December 31, 2001, 2000 and 1999, respectively. The decrease in the effective tax rate from 2000 to 2001 was primarily due to foreign tax rate reductions enacted in 2001. The decrease in the effective income tax rate from 1999 to 2000 was primarily due to lower taxes on foreign earnings in 2000.

Special Items

In June 2002, the Company’s former president and chief executive officer, Paul Frame, resigned, and the Company’s former chief financial officer, Debra Valice, was terminated. In connection with the departure of these executives from the Company, the Company’s Board of Directors initiated an investigation into the possible improper conversion of corporate funds for personal use. Based on the results of the investigation, the Company believes that, during 2001, Mr. Frame caused the Company to pay $1.3 million in expenses that were personal in nature. These costs were previously reflected in “selling, general and administrative” expenses in its 2001 financial statements, but have been reclassified to “special charges”.

The Company is seeking reimbursement from Mr. Frame for these costs, and the Company believes it has meritorious arguments in its pursuit of reimbursement of these funds. Given the uncertainty surrounding the recovery of these costs, the Company has continued to report these costs as expenses for the applicable periods.

During the year ended December 31, 2000, the Company charged to expense costs totaling $958,000 that had been incurred in connection with the proposed initial public offering of its wholly owned subsidiary, DDD Energy, which was abandoned. In the third quarter of 2002, the Company sold the majority of DDD Energy’s assets and provided the purchaser with an option to acquire additional assets of DDD Energy and another of the Company’s oil and gas exploration and production subsidiaries.

On June 23, 2000, the Company announced that its management incentive bonus compensation contracts had been restructured to reduce bonuses on pre-tax profits to 8.5% from 17.5%. In connection with the restructuring, the Company issued 375,000 restricted shares of its Common Stock to three members of management and made cash payments totaling $1,771,000. As a result, the Company recorded a restructuring charge in 2000 totaling $4,394,000 ($3,743,000, net of tax) to reflect the cost of the shares issued and the cash payments made. The terms of these restructured contracts provide for, subject to continued employment, (i) four annual payments of $187,500, net of taxes, to Herbert Pearlman, former Chairman of the Board of Directors, beginning January 1, 2001; (ii) four annual payments of $125,000, net of taxes, to Paul Frame, former Chairman of the Board, President and Chief Executive Officer, beginning January 1, 2001; and (iii) payments totaling $1.4 million, net of taxes, to David Lawi payable over four years beginning January 1, 2001. The agreements provide that the Company will pay withholding taxes of 35% relating to these payments. The agreements also provide that the Company will make annual payments of $850,000 to Horace Calvert beginning July 1, 2000 through May 31, 2004, subject to continued employment. These payments will be charged to expense over the period earned. Selling, general and administrative expenses for 2001 and 2000 include $1,850,000 and $1,425,000, respectively, related to these payments. As a result of the litigation with Mr. Pearlman, the annual payments due January 1, 2003 and 2004 have been suspended pending the outcome of the litigation. As a result of the resignation of Mr. Frame, the Company believes the annual payments for January 1, 2003 and 2004 are no longer due. The Company has reduced the annual payments to Mr. Calvert to $96,000 annually for the period from May 1, 2002 to June 30, 2003.

Liquidity and Capital Resources

The Company’s cash flow from operations was $48,487,000, $78,424,000 and $72,027,000 for the years ended December 31, 2001, 2000 and 1999, respectively. The decrease from 2000 to 2001 was primarily due to the following: (i) an increase in cash paid to suppliers and employees of approximately $10 million due to the overall growth of the Company, including Seitel Solutions, and international business development, (ii) an increase in non-cash revenue of approximately $11 million, (iii) an increase in Federal income taxes paid of approximately $6 million and (iv) a decrease in cash collected from customers of approximately $3 million. The increase from 1999 to 2000 was primarily attributable to an increase in cash received from customers resulting from the increase in revenue partially offset by an increase in interest expense and taxes paid.

-

25

On June 29, 2001, the Company replaced its existing $75 million line of credit with a new $75 million unsecured revolving line of credit facility that was to mature on June 29, 2004. The facility’s interest rate was determined by the ratio of the Company’s debt to EBITDA (earnings before interest, taxes, depreciation, deletion and amortization). Pursuant to the interest rate pricing structure, the interest rate would be set at LIBOR plus 1.75% or the bank’s prevailing prime rate plus 0.75%. As of December 31, 2001 and March 28, 2002, no amounts were outstanding and the Company had no availability on this revolving line of credit due to the Company’s non-compliance with certain covenants. The revolving line of credit was terminated in June 2002.

The Company’s wholly owned subsidiary, Olympic Seismic Ltd. (“Olympic”), has a revolving credit facility which allows it to borrow up to $5 million (Canadian dollars) by way of prime based loans, bankers’ acceptances, or letters of credit. Prime based loans and bankers’ acceptances bear interest at the rate of the bank’s prime rate plus 0.35% per annum and 0.50% per annum, respectively. Letter of credit fees are based on scheduled rates in effect at the time of issuance. The facility is secured by Olympic’s assets, but is not guaranteed by the Company or any of its other United States subsidiaries. Available borrowings under the facility are determined as $2 million (Canadian dollars) plus 75% of trade receivables less than 90 days old, the total not to exceed $5 million (Canadian dollars). The facility is subject to repayment upon demand and is available from time to time at the Bank’s sole discretion. The anniversary date of the credit facility was May 16, 2002, which has been extended to August 31, 2002. The Company is currently in negotiations with the bank to renew this facility. As of March 28, 2002, no amounts were outstanding on this revolving line of credit. As of August 15, 2002, $799,000 was outstanding on this revolving line of credit. Olympic is not a party to any of the debt issued by Seitel, Inc.

On October 15, 2001, the Company completed the first funding, totaling $82 million, of a private placement of three series of unsecured Senior Notes totaling $107 million. The second funding, for an additional $25 million, was completed on December 27, 2001. The Series G Notes total $20 million, bear interest at a fixed rate of 7.04% and mature on October 15, 2006. The Series H Notes total $50 million, bear interest at a fixed rate of 7.19% and mature on October 15, 2008. The Series I Notes total $37 million, bear interest at a fixed rate of 7.34% and mature on October 15, 2011. Interest on the Series G, H and I Notes is payable semi-annually on April 15 and October 15. As of March 28, 2002 and August 15, 2002 the balance outstanding on the Series G, H and I Notes was $107 million.

On February 12, 1999, the Company completed a private placement of three series of unsecured Senior Notes totaling $138 million. The Series D Notes total $20 million, bear interest at a fixed rate of 7.03% and mature on February 15, 2004, with no principal payments due until maturity. The Series E Notes total $75 million, bear interest at a fixed rate of 7.28% and mature on February 15, 2009, with annual principal payments of $12.5 million beginning February 15, 2004. The Series F Notes total $43 million, bear interest at a fixed rate of 7.43% and mature on February 15, 2009, with no principal payments due until maturity. Interest on the Series D, E and F Notes is payable semi-annually on February 15 and August 15. As of March 28, 2002 and August 15, 2002, the balance outstanding on the Series D, E and F Notes was $138 million.

On December 28, 1995, the Company completed a private placement of three series of unsecured Senior Notes totaling $75 million. The Company contemporaneously issued its Series A Notes and Series B Notes, which total $52.5 million and bear interest at a fixed rate of 7.17%. On April 9, 1996, the Company issued its Series C Notes, which total $22.5 million and bear interest at a fixed rate of 7.48%. The Series A Notes matured on December 30, 2001. The Series B and Series C Notes mature on December 30, 2002, and require combined annual principal payments of $10 million which began on December 30, 1998. Interest on the Series B and C Notes is payable semi-annually on June 30 and December 30. As of March 28, 2002 and August 15, 2002, the balance outstanding on the Series B and C Notes was $10 million.

        The financial covenants in the Senior Notes and the Company’s now terminated Revolving Line of Credit Agreements include, among other restrictions, maintenance of minimum net worth and limitations on total debt, interest coverage, liens, debt issuance and disposition of assets. As a result of the restatement of its financial statements, the Company was not in compliance with certain financial covenants in the Senior Note Agreements

26

dated December 28, 1995 and February 12, 1999 and the Revolving Line of Credit Agreement at September 30, 2001. In addition, as a result of the restatement of its financial statements and the impairment of oil and gas properties recorded in the fourth quarter of 2001, the Company was not in compliance with certain financial covenants in these agreements at December 31, 2001. The Company received an amendment from the Senior Noteholders that waives noncompliance with certain covenants in the third and fourth quarters of 2001 and increases the ratio of debt to total capitalization through March 31, 2003, after which date the original financial covenants will again be imposed.

Effective June 21, 2002, the Company entered into a standstill agreement with its Senior Noteholders pursuant to which the Senior Noteholders agreed not to exercise remedies available to them under the Senior Note Agreements as a result of existing defaults until July 17, 2002. Effective as of July 17, 2002, the Company reached an agreement with the Senior Noteholders to extend the standstill agreement an additional 90 days until October 15, 2002. During the 90 day standstill period, various existing covenants are being suspended and replaced with certain enumerated covenants, including the requirement that the Company receive Senior Noteholder approval to make certain investments or payments out of the ordinary course of business, incur additional debt, create liens or sell assets. The standstill may terminate prior to October 15, 2002 if, among other things,

(i)  there is an event of default by the Company under the standstill agreement or any subsequent defaults under the existing Senior Note Agreements;

(ii)  the Company defaults on the payments of any non-excluded debt of $5,000,000 or more; or

(iii)  the Company does not provide the Noteholders with a form of business plan by August 19, 2002, and an acceptable business plan by August 31, 2002.

The Company is working with the Senior Noteholders toward a long-term modification of the Senior Note Agreements. If the Company is unable to obtain such long-term modifications, the Senior Noteholders could elect to accelerate the debt. Based on the Company’s current financial condition, if the debt were to be accelerated the Company would be unable to satisfy the obligation. If such an acceleration occurred, the Company would seek additional or replacement sources of financing. However, there can be no assurance that the Company would be able to obtain such financing on satisfactory terms or at all.

27

On August 28, 2001, the Company’s wholly owned subsidiary, Seitel Data, Ltd., obtained a term loan totaling $10 million for the purchase of certain seismic data some of which secures the debt. The term of the loan is three years, with maturity on October 1, 2004. The loan bears interest at the rate of LIBOR plus 2.9%. Monthly principal payments total $208,000. The balance outstanding on this loan on March 28, 2002 and August 15, 2002 was $8,750,000 and $7,708,000, respectively. This term loan has similar financial covenants to the Company’s Revolving Line of Credit. As discussed above, the Company was not in compliance with the leverage ratio covenant and the interest coverage covenant at June 30, 2002 and March 31, 2002 and the leverage ratio covenant at September 30, 2001 and December 31, 2001. Additionally, the Company was not in compliance with the net worth covenant at June 30, 2002. The lender has issued a notice of a default but has not accelerated the debt.

During 2001, the Company entered into capital leases for the purchase of computer and data technology center furniture and equipment. The lease agreements are for terms of approximately two years. Monthly principal and interest payments total $102,000 and $355,000 at December 31, 2001 and June 30, 2002, respectively. The balance outstanding under these capital leases was $2,111,000 on March 28, 2002 and $6,028,000 on August 15, 2002. The Company has suspended payments on the leases due to a dispute with the lessor. Please read Item 3 “Legal Proceedings”.

On January 14, 2002, the Company’s wholly owned subsidiary, SEIC Business Trust (the “Trust”), entered into a demand reducing credit facility to borrow $4 million (Canadian dollars) by way of prime based loans. Payments of $166,670 (Canadian dollars) are due on the last day of each month. The funds were drawn down on January 30, 2002 to finance the purchase of seismic data. The loans bear interest at the bank’s prime rate plus 0.50%. The facility is secured by the Trust’s assets and guaranteed by Olympic Seismic Ltd. and SEIC Holdings Ltd. The balances outstanding on this loan on March 28, 2002 and August 15, 2002 were $2,406,000 and $1,925,000, respectively.

On April 30, 2002, Olympic Seismic Ltd. (“Olympic”) entered into a sale leaseback agreement on a building and land located in Calgary, Alberta, Canada. Proceeds of the sale were $3.6 million (Canadian Dollars). The proceeds were used to pay off Olympic’s revolving line of credit and for general corporate purposes. The term of the lease is a 20-year capital lease with lease payments of: $336,000 (Canadian dollars) in years 1-5; $370,860 (Canadian dollars) in years 6-10; $409,500 (Canadian dollars) in years 11-15; and $452,340 (Canadian dollars) in years 16-20. The transaction resulted in a gain on the sale of $737,000 which has been deferred and is being recognized into income over the term of the lease.

From January 1, 2001, through March 28, 2002, and through August 15, 2002 the Company received $6,155,000 from the exercise of common stock purchase warrants and options. In connection with these exercises, the Company will also realize approximately $515,000 in tax savings.

During 2001, the Company sold various producing oil and gas wells and associated leaseholds for approximately $6.2 million, net of revenue and costs.

28

     On July 3, 2002, DDD Energy entered into a Purchase and Sale Agreement with Rising Star Energy, L.L.C. for the sale of a majority of the oil and gas exploration and production properties and related assets of DDD Energy. The transaction closed on August 2, 2002. After adjustments, the Company received cash proceeds of $23.8 million with a final adjustment, if any, to be made within 90 days following closing. The purchase agreement grants Rising Star an option, exercisable within 30 days of closing, to purchase additional oil and gas assets of DDD Energy and another subsidiary of the Company for up to $15 million, or to enter into a joint venture arrangement with the Company related to these assets.

During 2001, the Company repurchased 100,000 shares of its common stock in the open market at a cost of $1,405,000, pursuant to a stock repurchase program authorized by the Board of Directors in 1997. The Board has authorized expenditures of up to $25 million towards the repurchase of its common stock. As of March 28, 2002 and August 15, 2002 the Company has repurchased a total of 1,110,100 shares of its common stock at a cost of $12,529,000 since 1997 under this plan. Under the terms of the standstill agreement with the Noteholders, the Company is prohibited from repurchasing its common stock unless it obtains consent from the Noteholders.

During 2001, capital expenditures for seismic data, oil and gas property and other property and equipment amounted to $140,192,000, and $17,600,000 and $10,367,000, respectively. Of the $140,192,000 of seismic data additions in 2001, $79,803,000 were cash additions and $60,389,000 were for non-cash additions. These

29

capital expenditures, as well as taxes, interest expenses, cost of sales and general and administrative expenses, were funded by operations, proceeds from the sale of oil and gas properties, proceeds from the exercise of common stock purchase warrants and options, proceeds from the Senior Note offering and amounts available under the Company’s line of credit.

Currently, the Company anticipates capital expenditures for 2002 to total approximately $88 million, of which approximately $69 million will be for seismic data bank additions, approximately $12 million will be for computer equipment and data technology center related purchases and approximately $7 million will be for oil and gas exploration and development efforts. Of the anticipated seismic data additions of $69 million in 2002, the Company estimates that $47 million will be cash additions and $22 million will be non-cash additions. If the Company’s cash balances, revenue from operating sources and proceeds from the DDD Energy asset sale are not sufficient to fund the currently anticipated 2002 capital expenditures, general and administrative expenses and debt repayments or if the Company were to increase its planned capital expenditures for 2002, the Company could seek to obtain additional debt or equity financing during 2002. However, there can be no assurance that the Company would be able to accomplish any such debt or equity financing on satisfactory terms or at all. If such debt or equity financing is not available on satisfactory terms, the Company could reduce its current capital budget or general and administrative expenses, and fund expenditures with cash flow generated from operating sources.

Recent Accounting Pronouncements

In June 2001, the Financial Accounting Standards Board (FASB) issued Statements of Financial Accounting Standards (SFAS) No. 141, “Business Combinations,” effective for business combinations effected after June 30, 2001 and No. 142, “Goodwill and Other Intangible Assets,” effective for fiscal years beginning after December 15, 2001. Under the new rules, goodwill and intangible assets deemed to have indefinite lives will no longer be amortized but will be subject to annual impairment tests in accordance with the Statements. Other intangible assets will continue to be amortized over their useful lives. The Company applied the new rules on accounting for goodwill and other intangible assets beginning in the first quarter of 2002, and the adoption had no effect on the Company’s financial statements.

In July 2001, the FASB issued SFAS No. 143, “Accounting for Asset Retirement Obligations.” This statement addresses financial accounting and reporting for obligations associated with the retirement of tangible long-lived assets and the associated asset retirement costs. This statement applies to all entities. It applies to legal obligations associated with the retirement of long-lived assets that result from the acquisition, construction, development and (or) the normal operation of a long-lived asset, except for certain obligations of lessees. This Statement is effective for the Company on January 1, 2003. The Company does not believe that the adoption of this standard will have a material effect on its financial statements.

In August 2001, the FASB issued SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets,” effective for the Company on January 1, 2003. This statement supercedes SFAS No. 121, “Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of,” and provides a single accounting model for long-lived assets to be disposed of. The Company applied this new standard on July 1, 2002. The adoption of this standard did not have a material impact on the Company’s financial position or results of operations.

Related Party Transactions

The Company owed Helm Capital Group, Inc. and its subsidiaries (“Helm”), a company that has an executive officer who is a former director of the Company, $49,000 and $16,000 as of December 31, 2001 and 2000, respectively, for sales of seismic data they jointly own and for general and administrative expenses paid by Helm on behalf of the Company. The Company incurred charges of $175,000, $117,000 and $115,000, for these general and administrative expenses during 2001, 2000 and 1999, respectively. Management believes that these expenses, which were specifically related to the Company’s business, represented costs which would have been incurred in similar amounts by the Company if such services that were performed by Helm were performed by an unaffiliated entity.

During 2001, the former chief executive officer received advances against bonus and commission payments that

30

were contingent upon achieving $10 million in pre-tax profits during 2001. The former chief financial officer received advances against customary and anticipated bonus payments. The pre-tax profits threshold was not met in 2001. The Company initially determined that advances previously paid but not earned or awarded would be repaid pursuant to promissory notes. However, during the course of a recent internal investigation, the Company discovered that the former chief executive officer and the former chief financial officer of the Company may have improperly converted corporate funds to their personal use, including certain unearned advances. The Company is seeking immediate reimbursement of these funds and has notified the SEC regarding its findings. The SEC’s Fort Worth District Office has informed the Company that it has initiated an informal inquiry into these events and the Company is fully cooperating with the inquiry.

The Company guaranteed borrowings up to $750,000 made by its former chief executive officer under a line of credit. The Company terminated its guaranty in June 2002. The Company is only obligated to make payment in the event of default by its former chief executive officer, who has defaulted on the making of his June payment of $10,000. At December 31, 2001 and August 15, 2002, $590,000 and $540,000, respectively, was outstanding on this line of credit. The bank has asserted that the Company is obligated to repay the outstanding principal amount and has accelerated the debt.

In October 2001, the Company guaranteed an institutional loan to its former chief operating officer and general counsel, now its chief executive officer. The original principal of $600,000 will be paid annually, based on amortization of 120 months, but is payable in full in October 2006. The Company also agreed to make payments of principal and interest on the loan during the officer’s employment by the Company. As long as the officer remains in the employ of the Company, his obligation to repay shall be forgiven ratably over 120 months; however, under certain conditions of termination, he will be required to reimburse the Company a pro rata portion of amounts paid by the Company on the indebtedness. Such proration is based on length of employment. The Company has a contractual right of offset against any compensation due from the Company to the officer for any amounts paid by the Company on the indebtedness.

Risk Factors

Any investment in our securities involves substantial risk. Investors should carefully consider, in addition to the other information contained in this report, the risks described below before making any investment decision.

The Company is not in compliance with certain covenants in its Senior Note Agreements.

If the Company is unable to obtain a long-term modification of its Senior Note Agreements, the Senior Note holders could elect to accelerate the debt. Based on the Company’s current financial condition, if the debt were to be accelerated, the Company would be unable to satisfy the obligation. If such an acceleration occurred, the Company would seek additional or replacement sources of financing. However, there can be no assurance that the Company would be able to obtain such financing on satisfactory terms or at all.

Our auditors have expressed substantial doubt about our ability to continue as a going concern.

In their report on our 2001 financial statements, our auditors have expressed substantial doubt about our ability to continue as a going concern based on our non-compliance with our debt covenants, which means that there is substantial doubt about our ability to recover our assets and satisfy our liabilities in the normal course of business. In addition, our auditors have advised us that, if our non-compliance with our debt covenants is not satisfactorily resolved, their report on our 2002 financial statements will include a going concern modification.

31

The Company’s debt agreements and non-compliance with certain covenants may limit its flexibility in responding to changing market opportunities or pursuing its business plan.

        Because of the level of the Company’s debt, the Company’s non-compliance with certain covenants and the related requirement that the Company obtain Noteholder consent prior to taking certain actions, (1) the Company’s flexibility in reacting to changes in the operating environment and economic conditions will be limited if the Company is unable to obtain the required Noteholder consents, (2) a substantial portion of the Company’s cash flow from operations must be dedicated to debt service and payments of such obligations and, to the extent so used, will not be available for operational purposes, and (3) the Company’s ability to obtain additional financing in the future may be limited. If the Company is unable to successfully conclude its negotiations with its lenders, it may be forced to take actions such as reducing or delaying capital expenditures, reducing costs, selling assets, refinancing or restructuring its debt or other obligations and seeking additional equity capital. The Company may not be able to take any of these actions on satisfactory terms or at all.

Changes in accounting principles may affect the Company’s reported operating results and stock price.

As a public company with securities registered under the Securities Exchange Act of 1934, the Company prepares its financial statements in accordance with generally accepted accounting principles. The Company has modified its revenue recognition policies in accordance with SAB 101 and has restated its earnings for 2000 and the nine months ended September 30, 2001. In addition, the Company changed its policy for amortizing its created data library on January 1, 2002. These changes may make it more difficult for investors to compare its historical operating results against its future operating results.

The Company is involved in a significant amount of litigation which, if adversely determined, could have a material adverse effect on the financial condition of the Company.

The Company is a party to a significant number of shareholder and derivative lawsuits and lawsuits with former executive officers and directors. Any adverse judgments against the Company may not be covered by insurance or may exceed insurance coverage amounts and may have a material adverse effect on the financial condition of the Company.

The Company’s business could be adversely affected if the SEC decides to extend its inquiry to include the Company.

The SEC has initiated an informal inquiry regarding the Company’s former chief executive officer and former chief financial officer. During the course of its inquiry, the SEC could expand its existing investigation to include an evaluation of the Company’s business practices and controls. Any action initiated against the Company by the SEC could adversely affect the business operations and financial condition of the Company.

The Company may lose customers and fail to obtain agreements with certain contractors as a result of its financial condition.

        As a result of the Company’s current financial condition and the possibility that the Company may be unable to satisfy its future obligations, certain customers of the Company have refused to enter into large data licensing agreements for delivery of future data and some contractors have refused to provide services to the Company without receiving payment in advance. A significant loss of customers or agreements with contractors may have a material adverse effect on the financial condition of the Company.

The Company’s 1999 financial statements were audited by Arthur Andersen LLP, and your ability to rely on those statements and recover from Arthur Andersen LLP may be limited.

        The financial statements for the year ended December 31, 1999 included in this Form 10-K/A (Amendment No. 3) were audited by Arthur Andersen LLP. The report of Arthur Andersen LLP included in this Form 10-K/A (Amendment No. 3) is a copy of the previously issued report of Arthur Andersen LLP, and it has not been reissued by Arthur Andersen LLP. The report was filed with our Form 10-K/A (Amendment No. l), and the consent of Arthur Andersen LLP, dated March 29, 2002, was filed as an exhibit to the Form 10–K/A (Amendment No. l), consenting to the inclusion of the report in the Form 10–K/A (Amendment No. 1). After reasonable efforts, the Company has been unable to obtain a reissued report of Arthur Andersen LLP or a currently dated consent to the inclusion of this previously issued report of Arthur Andersen LLP into our Form 10-K/A (Amendment No. 3). In addition, the Company will not be able to obtain the written consent of Arthur Andersen LLP for any registration statement it may file as required by Section 7 of the Securities Act.

32

Accordingly, investors will not be able to sue Arthur Andersen LLP pursuant to Section 1l(a)(4) of the Securities Act relating to those registration statements and therefore may have their recovery limited as a result of the lack of Arthur Andersen LLP’s consent. The ability of investors to recover from Arthur Andersen LLP also may be limited as a result of their financial condition or other matters relating to the various civil and criminal lawsuits relating to them.

The Company’s business could be adversely affected by low exploration, development and production spending by oil and gas companies and by low oil and gas prices.

The Company’s seismic business depends upon exploration, development and production spending by oil and gas companies. Low oil and gas prices could result in decreased exploration, development and production spending by oil and gas companies, which could affect the Company’s seismic data business. Any future decline could result in decreased revenue from the Company’s oil and gas exploration and production business.

The Company invests significant amounts of money in acquiring and processing seismic data for its data library with only partial underwriting of the costs by customers.

The Company invests significant amounts of money in acquiring and processing new seismic data to add to its data library, which is generally funded by current and future data licensing fees. The amounts of these future data licensing fees are uncertain and depend on a variety of factors, including the market prices of oil and gas, customer demand for seismic data in the Company’s library, availability of similar data from competitors and governmental regulations affecting oil and gas exploration. Many of these factors are beyond the Company’s control. In addition, the timing of these sales can vary greatly from period to period. Technological or regulatory changes or other developments could adversely affect the value of the data.

Because the Company’s business is concentrated in the U.S. Gulf Coast and Canada, it could be adversely affected by developments in the oil and gas business that affect these areas.

Most of the seismic data in the Company’s seismic data library covers areas along the U.S. Gulf Coast, offshore in the U.S. Gulf of Mexico or in Canada. Also, most of the Company’s existing interests in oil and gas properties are located along the coast of the U.S. Gulf of Mexico. Because of this geographic concentration, the Company’s results of operations could be adversely affected by events relating primarily to one of these regions even if conditions in the oil and gas industry worldwide were favorable. Some examples of possible events that would adversely affect the U.S. Gulf Coast region would be changes in governmental regulations adversely affecting offshore drilling in the U.S. Gulf of Mexico, shortages of drilling or other necessary equipment in this region, or increases in gas transportation costs from this region to the Northeastern U.S., where much of the gas produced in this region is consumed.

33

The amounts the Company amortizes from its data library each period may fluctuate, and these fluctuations can affect the Company’s reported results of operations.

The Company amortizes the cost of its seismic data library based in part on its estimates of future sales of data. These estimates may vary from period to period depending upon market developments and the Company’s expectations. Substantial changes in amortization rates can have a significant effect on the Company’s reported results of operations.

34

Extensive governmental regulation of the Company’s business affects our daily operations.

The Company’s seismic data customers are subject to extensive governmental regulation. In addition, the Company’s oil and gas exploration and production operations are subject to regulations. These regulations, among other things:

• govern environmental quality and pollution control; and

• limit rates of production.

New laws or regulations or changes to existing laws or regulations affecting the oil and gas industry could reduce customer demand for the Company’s seismic data or increase the operating costs of the Company’s oil and gas business.

Item 7a.    Quantitative and Qualitative Disclosures About Market Risk

The Company is exposed to market risk, including adverse changes in commodity prices, interest rates and foreign currency exchange rates as discussed below.

Commodity Price Risk

The Company produces and sells natural gas, crude oil, condensate and natural gas liquids. The Company currently sells most of its oil and gas production under price sensitive or market contracts. As a result, the Company’s financial results can be significantly affected as oil and gas prices fluctuate. The Company has a price risk management program that utilizes derivative financial instruments, principally natural gas swaps, to reduce the price risks associated with fluctuations in natural gas prices. However, these types of contracts also limit the benefits the Company would realize if prices increase. Realized gains or losses from the Company’s price risk management activities are recognized in oil and gas production revenue when the associated production occurs. These contracts usually are placed with major derivative dealers that the Company believes are minimal credit risks.

During 2000 and 1999, the Company recognized net hedging losses of $1,692,000 and $308,000, respectively. As of December 31, 2001 and 2000, the Company did not have any open commodity price hedges.

35

Interest Rate Risk

The Company may enter into various financial instruments, such as interest rate swaps, to manage the impact of changes in interest rates. Currently, the Company has no open interest rate swap or interest rate lock agreements. Therefore, the Company’s exposure to changes in interest rates primarily results from its short-term and long-term debt with both fixed and floating interest rates. The following table presents principal or notional amounts (stated in thousands) and related average interest rates by year of maturity for the Company’s debt obligations and their indicated fair market value at December 31, 2001:

	2002			2003			2004			2005			2006			There-after			Total			Fair Value
Debt:
Variable Rate	$	3,819		$	2,500		$	4,375		$	—		$	—		$	—		$	10,694		$	10,694
Average Interest Rate		4.79	%		5.02	%		5.02	%		—			—			—			4.94	%		—
Fixed Rate	$	10,000		$	—		$	32,500		$	12,500		$	32,500		$	167,500		$	255,000		$	284,554
Average Interest Rate		7.31	%		—			7.13	%		7.28	%		7.13	%		7.30	%		7.26	%		—

The following table presents principal or notional amounts (stated in thousands) and related average interest rates by year of maturity for the Company’s debt obligations and their indicated fair market value at December 31, 2000:

	2001			2002			2003		2004			2005			There-after			Total			Fair Value
Debt:
Variable Rate	$	40,000		$	—		$	—	$	—		$	—		$	—		$	40,000		$	40,000
Average Interest Rate		7.39	%		—			—		—			—			—			7.39	%		—
Fixed Rate	$	18,333		$	10,000		$	—	$	32,500		$	12,500		$	93,000		$	166,333		$	173,828
Average Interest Rate		7.25	%		7.31	%		—		7.13	%		7.28	%		7.35	%		7.29	%		—

Foreign Currency Exchange Rate Risk

The Company conducts business in the Canadian dollar and pounds sterling and is therefore subject to foreign currency exchange rate risk on cash flows related to sales, expenses, financing and investing transactions. As of December 31, 2001, the Company did not have any open forward exchange contracts. Exposure from market rate fluctuations related to activities in the Cayman Islands, where the Company’s functional currency is pounds sterling, is not material at this time.

Item 8.    Financial Statements and Supplementary Data

The financial statements and financial statement schedules required by this Item are set forth at the pages indicated in ITEM 14(a) (1) and (2) below.

Item 9.    Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

NONE

PART IV

Item 14.    Exhibits, Financial Statement Schedules and Reports on Form 8-K

(a)  Documents filed as part of this Report

	Page
(1)  Financial Statements:
Report of Independent Auditors	F-1
Report of Independent Public Accountants	F-2
Consolidated Balance Sheets as of December 31, 2001 and 2000	F-3
Consolidated Statements of Operations for the years ended December 31, 2001, 2000, and 1999	F-5
Consolidated Statements of Stockholders’ Equity for the years ended December 31, 2001, 2000 and 1999	F-6

36

Consolidated Statements of Cash Flows for the years ended December 31, 2001, 2000 and 1999	F-7
Notes to Consolidated Financial Statements	F-8

(2)  All schedules are omitted because they are not applicable or the required information is shown in the financial statements or the notes to the financial statements.

(3)  Exhibits:

3.1	Certificate of Incorporation of the Company filed May 7, 1982 and Amendment to Certificate of Incorporation filed April 25, 1984(1)
3.2	Amendment to Certificate of Incorporation filed August 4, 1987(3)
3.3	Amendment to Certificate of Incorporation filed January 18, 1989*
3.4	Amendment to Certificate of Incorporation filed July 13, 1989*
3.5	Amendment to Certificate of Incorporation filed August 3, 1993*
3.6	Amendment to Certificate of Incorporation filed November 21, 1997(7)
3.7	Amended and Restated By-Laws of Seitel, Inc. effective July 26, 2000(15)
4.1	Specimen of Common Stock Certificate(1)
4.2	Form of Warrant Certificate granted to certain employees and one Director of the Company in December 1990 and expiring in December 2001*
4.3	Form of Promissory Note for Employee Stock Purchase dated July 21, 1992*
4.4	Form of Subscription Agreement for Employee Stock Purchase dated July 21, 1992*
4.5	Form of Pledge for Employee Stock Purchase dated July 21, 1992*
4.6	Form of Warrant Certificate granted under the 1994 Warrant Plans(5)
4.7	Form of Warrant Certificate granted under the 1995 Warrant Reload Plan(6)
4.8	Form of Executive Warrant Certificate granted to certain employees of the Company in November 1997 and expiring in November 2002(7)
4.9	Form of Bonus Warrant Certificate granted to an employee of the Company in November 1997 and expiring in November 2002(7)
4.10	Form of Departure Warrant granted to certain employees of the Company in August 1997(9)
4.11	Form of Employment Warrant granted to an employee of the Company in April 1998 and expiring in April 2008(9)
4.12	Form of Employment Warrant granted to an employee of the Company in April 1998 and expiring in April 2008(9)
4.13	Amended and Restated 1998 Employee Stock Purchase Plan(12)
4.14	Form of Employment Warrant granted to an employee of the Company in November 1999 and expiring in November 2009(14)
10.1	1993 Incentive Stock Option Plan of the Company*

37

10.2	Amendment No. 1 to the Seitel, Inc. 1993 Incentive Stock Option Plan*
10.3	Statement of Amendments effective November 29, 1995, to the Seitel, Inc. 1993 Incentive Stock Option Plan*
10.4	Statement of Amendments effective April 22, 1996, to the Seitel, Inc. 1993 Incentive Stock Option Plan*
10.5	Amendment to the Seitel, Inc. 1993 Incentive Stock Option Plan effective December 31, 1996*
10.6	Amendment to Limit Options Granted to a Single Participant under the Seitel, Inc. 1993 Incentive Stock Option Plan(7)
10.7	Amendment to Increase Number of Shares Available for Granting Options under the Seitel, Inc. 1993 Incentive Stock Option Plan(7)
10.8	Non-Employee Directors’ Stock Option Plan of the Company*
10.9	Amendment to the Seitel, Inc. Non-Employee Directors’ Stock Option Plan effective December 31, 1996*
10.10	Seitel, Inc. Non-Employee Directors’ Deferred Compensation Plan*
10.11	Non-Employee Directors’ Retirement Plan(12)
10.12	Seitel, Inc. Amended and Restated 1995 Warrant Reload Plan*
10.13	Amendment to the Seitel, Inc. Amended and Restated 1995 Warrant Reload Plan effective December 31, 1996*
10.14	2000 Stock Option Plan of the Company(16)
10.15	Seitel, Inc. 2001 Inducement Stock Option Plan adopted January 1, 2001(18)
10.16	Seitel, Inc. 2001 Non-Officer Stock Option Plan adopted June 5, 2001(18)
10.17	Memorandum of Understanding between the Company and Triangle Geophysical Company dated as of June 7, 1984(1)
10.18	Lease Agreement by and between the Company and Commonwealth Computer Advisors, Inc.(2)
10.19	The Company’s 401(k) Plan adopted January 1, 1998(7)
10.20	Executive Services Agreement dated April 3, 1990 between the Company and Helm Resources, Inc.(4)
10.21	Employment Agreement effective as of January 1, 1991 between the Company and Paul A. Frame, Jr.*
10.22	Amendment to Employment Agreement dated effective as of January 1, 1998 between the Company and Paul A. Frame, Jr.(7)
10.23	Paul A. Frame’s Employment Contract Amendment No. 2 dated as of June 26, 2000(15)

38

10.24	Horace A. Calvert’s Amended and Restated Employment Agreement dated as of April 1, 2000(15)
10.25	Employment Agreement effective as of January 1, 1991 between the Company and Herbert M. Pearlman*
10.26	Amendment to Employment Agreement dated effective as of January 1, 1998 between the Company and Herbert M. Pearlman(7)
10.27	Herbert M. Pearlman’s Employment Contract Amendment No. 2 dated as of June 26, 2000(15)
10.28	Employment Agreement effective as of January 1, 1991 between the Company and David S. Lawi*
10.29	Amendment to Employment Agreement dated effective as of January 1, 1998 between the Company and David S. Lawi(7)
10.30	David S. Lawi’s Employment Contract Amendment No. 2 dated as of June 26, 2000(15)
10.31	Letter to David S. Lawi from Seitel, Inc. dated June 26, 2000 regarding his October 2, 1998 Promissory Note(15)
10.32	David S. Lawi’s Promissory Note dated as of June 26, 2000(15)
10.33	Employment Agreement effective as of January 1, 1993 between the Company and Debra D. Valice*
10.34	Amendment to Employment Agreement dated effective as of January 1, 1998 between the Company and Debra D. Valice(7)
10.35	Amendment to Employment Agreement dated effective as of June 10, 1998 between the Company and Debra D. Valice(8)

39

10.36	Incentive Compensation Agreement*
10.37	Note Purchase Agreement dated as of December 28, 1995, between the Company and the Series A Purchasers, the Series B Purchasers and the Series C Purchasers*
10.38	First Amendment to Note Purchase Agreement dated as of February 12, 1999 between the Company and Senior Noteholders as of December 28, 1995(11)
10.39	Second Amendment, dated as of July 14, 1999, to the Separate Note Purchase Agreements, dated as of December 28, 1995, among Seitel, Inc. and the Noteholders(12)
10.40	Third Amendment, dated as of November 22, 1999, to the Separate Note Purchase Agreements, dated as of December 28, 1995, among Seitel, Inc. and the Noteholders(13)
10.41	Fourth Amendment, dated as of October 15, 2001, to the Separate Note Purchase Agreements, dated as of December 28, 1995, among Seitel, Inc. and the Noteholders(20)
10.42	Fifth Amendment, dated as of March 27, 2002, to the Separate Note Purchase Agreements, dated as of December 28, 1995, among Seitel, Inc. and the Noteholders(20)
10.43	Revolving Credit Agreement, dated as of November 9, 1999, between Olympic Seismic Ltd. and Royal Bank of Canada(13)
10.44	Amendment, dated as of March 2, 2000, to the Revolving Credit Agreement, dated as of November 9, 1999, between Olympic Seismic Ltd. and Royal Bank of Canada(13)
10.45	Note Purchase Agreement dated as of February 12, 1999, between the Company and the Series D Purchasers, the Series E Purchasers and the Series F Purchasers(10)
10.46	First Amendment, dated as of July 14, 1999, to the Separate Note Purchase Agreements, dated as of February 12, 1999, among Seitel, Inc. and the Noteholders(12 )

40

10.47	Second Amendment, dated as of November 22, 1999, to the Separate Note Purchase Agreements, dated as of February 12, 1999, among Seitel, Inc. and the Noteholders(13)
10.48	Third Amendment, dated as of October 15, 2001, to the Separate Note Purchase Agreements, dated as of February 12, 1999, among Seitel, Inc. and the Noteholders(20)
10.49	Fourth Amendment, dated as of March 27, 2002, to the Separate Note Purchase Agreements, dated as of February 12, 1999, among Seitel, Inc. and the Noteholders(20)
10.50	Note Purchase Agreement dated as of October 15, 2001, between the Company and the Series G Purchasers, the Series H Purchasers and the Series I Purchasers(19)
10.51	Executive Retention Agreement with Kevin S. Fiur dated October 12, 2001(20)
10.52	Employment Agreement, dated effective as of January 1, 2002, between the Company and Kevin S. Fiur (23)
10.53	Amendment No. 3 to Employment Agreement, dated effective as of January 28, 2002, between the Company and Paul A. Frame (23)
10.54	Standstill and Amendment Agreement, dated effective as of June 21, 2002, by and among Seitel, Inc., various of its subsidiaries parties thereto and those Senior Noteholders of Seitel, Inc. parties thereto.*
10.55	Standstill and Amendment Agreement, dated effective as of July 17, 2002, by and among Seitel, Inc., various of its subsidiaries parties thereto and those Senior Noteholders of Seitel, Inc. parties thereto.(22)
10.56	Noteholder Consent, dated July 15, 2002, by and among Seitel, Inc., various of its subsidiaries parties thereto and those Senior Noteholders of Seitel, Inc. parties thereto.*
10.57	Purchase and Sale Agreement between DDD Energy, Inc. and Rising Star Energy, L.L.C., dated July 3, 2002.*
16.1	Concurrence letter of Arthur Andersen LLP dated December 6, 2000(17)
21.1	Subsidiaries of the Registrant(20)
23.1	Consent of Ernst & Young LLP*
23.2	Intentionally left blank
23.3	Consent of Garb Grubbs Harris & Associates, Inc.(20)
23.4	Consent of Bella Geo Technical Services Ltd.(24)
23.5	Consent of Boyd Exploration Consultants Ltd.(24)

 * Filed herewith

(1) Incorporated by reference to the Company’s Registration Statement, as amended, on Form S-1, No. 2-92572 as filed with the Securities and Exchange Commission on August 3, 1984.

(2) Incorporated by reference to Post-Effective Amendment No. 2 to the Company’s Registration Statement on Form S-2, File No. 33-32838, as filed with the Securities and Exchange Commission on October 10, 1991.

(3) Incorporated by reference to the Company’s Registration Statement, as amended, on Form S-2, No. 33-21300 as filed with the Securities and Exchange Commission on April 18, 1988.

41

(4) Incorporated by reference to the Company’s Registration Statement, as amended, on Form S-2, No. 33-34217 as filed with the Commission on April 6, 1990.

(5) Incorporated by reference to the Company’s Registration Statement on Form S-8, No. 33-89934 as filed with the Securities and Exchange Commission on March 2, 1995.

(6) Incorporated by reference to the Company’s Registration Statement on Form S-8, No. 333-01271 as filed with the Securities and Exchange Commission on February 28, 1996.

(7) Incorporated by reference to the Company’s Annual Report on From 10-K for the year ended December 31, 1997.

(8) Incorporated by reference to the Company’s Form 10-Q for the quarter ended June 30, 1998.

(9) Incorporated by reference to the Company’s Registration Statement on Form S-8, No. 333-64557 as filed with the Securities and Exchange Commission on September 29, 1998.

(10) Incorporated by reference to the Company’s Annual Report on Form 10-K for the year ended December 31, 1998.

(11) Incorporated by reference to the Company’s Form 10-Q for the year ended March 31, 1999.

42

(12) Incorporated by reference to the Company’s Form 10-Q for the quarter ended September 30, 1999.

(13) Incorporated by reference to the Company’s Annual Report on Form 10-K for the year ended December 31, 1999.

(14) Incorporated by reference to the Company’s Form 10-Q for the quarter ended March 31, 2000.

(15) Incorporated by reference to the Company’s Form 10-Q for the quarter ended June 30, 2000.

(16) Incorporated by reference to the Company’s Form 10-Q for the quarter ended September 30, 2000.

(17) Incorporated by reference to the Company’s Form 8-K filed on December 7, 2000.

(18) Incorporated by reference to the Company’s Form 10-Q for the quarter ended June 30, 2001.

(19) Incorporated by reference to the Company’s Form 10-Q for the quarter ended September 30, 2001.

(20) Incorporated by reference to the Company’s Annual Report on Form 10-K/A Amendment No.1 for the year ended December 31, 2001.

(21) intentionally deleted

(22) Incorporated by reference to the Company’s Form 8-K filed on July 23, 2002.

(23) Incorporated by reference to the Company’s Form 10-Q for the quarter ended March 31, 2002.

(24) Incorporated by reference to the Company’s Form 8-K filed on May 6, 2002.

NOTE: The financial statements for the year ended December 31, 1999 included in this Form 10-K/A (Amendment No. 3) were audited by Arthur Andersen LLP. The report of Arthur Andersen LLP included in this Form l0-K/A (Amendment No. 3) is a copy of the previously issued report of Arthur Andersen LLP, and it has not been reissued by Arthur Andersen LLP. The report was filed with our Form l0-K/A (Amendment No. l), and the consent of Arthur Andersen LLP, dated March 29, 2002, was filed as an exhibit to the Form 10-K/A (Amendment No. l), consenting to the inclusion of the report in the Form 10-K/A (Amendment No. 1). After reasonable efforts, we have been unable to obtain a reissued report of Arthur Andersen LLP or a currently dated consent to the inclusion of this previously issued report of Arthur Andersen LLP into our Form 10-K/A (Amendment No. 3). In addition, we will not be able to obtain the written consent of Arthur Andersen LLP for any registration statement we may file as required by Section 7 of the Securities Act. Accordingly, investors will not be able to sue Arthur Andersen LLP pursuant to Section 1l(a)(4) of the Securities Act relating to those registration statements and therefore may have their recovery limited as a result of the lack of Arthur Andersen LLP’s consent. The ability of investors to recover from Arthur Andersen LLP also may be limited as a result of their financial condition or other matters relating to the various civil and criminal lawsuits relating to them.

43

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Act of 1934, the Registrant has duly caused this report on Form 10-K, Amendment No. 3 to be signed on its behalf by the undersigned, thereunto duly authorized.

SEITEL, INC.
By:	/s/    KEVIN S. FIUR
	Kevin S. Fiur Chief Executive Officer President

Date:  August 19, 2002

Pursuant to the requirements of the Securities Act of 1934, this Report on Form 10-K, Amendment No. 3 has been signed below by the following persons in the capacities and on the date indicated.

Signature	Title	Date
/s/    FRED S. ZEIDMAN         Fred S. Zeidman	Chairman of the Board of Directors	August 19, 2002
/s/    KEVIN S. FIUR          Kevin S. Fiur	Chief Executive Officer, President and Director	August 19, 2002
/s/    WALTER M. CRAIG, JR.         Walter M. Craig, Jr	Director	August 19, 2002
/S/    WILLIAM LERNER         William Lerner	Director	August 19, 2002
/S/    JOHN STIEGLITZ          John Stieglitz	Director	August 19, 2002
/s/    ROBERT KNAUSS         Robert Knauss	Director	August 19, 2002
/s/     MARCIA H. KENDRICK         Marcia H. Kendrick	Acting Chief Financial Officer (Principal Accounting Officer)	August 19, 2002

44

CERTIFCATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

Not Filed Pursuant to the Securities Exchange Act of 1934

In connection with the Annual Report of Seitel, Inc. (the “Company”) on Form 10-K/A (Amendment No. 3) for the year ended December 31, 2001 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), we, Kevin S. Fiur, President and Chief Executive Officer, and Marcia H. Kendrick, Acting Chief Financial Officer, of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: August 19, 2002

/s/ Kevin S. Fiur

Name: Kevin S. Fiur

Title: President and Chief Executive Officer

/s/ Marcia H. Kendrick

Name: Marcia H. Kendrick

Title: Acting Chief Financial Officer

45

REPORT OF INDEPENDENT AUDITORS

Board of Directors and Management of Seitel, Inc.:

We have audited the accompanying consolidated balance sheets of Seitel, Inc. and subsidiaries as of December 31, 2001 and 2000, and the related consolidated statements of operations, stockholders’ equity and cash flows for each of the two years in the period ended December 31, 2001. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Seitel, Inc. and subsidiaries at December 31, 2001 and 2000, and the consolidated results of their operations and their cash flows for each of the two years in the period ended December 31, 2001, in conformity with accounting principles generally accepted in the United States.

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As more fully described in Note R to the accompanying consolidated financial statements, the Company is not in compliance with certain of its debt covenants. This condition raises substantial doubt about the Company’s ability to continue as a going concern. The consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability of assets or the amounts of liabilities that may result from the outcome of this uncertainty.

As discussed in Note B to the accompanying consolidated financial statements, the Company has restated its financial statements for the year ended December 31, 2000.

ERNST & YOUNG LLP

Houston, Texas

March 29, 2002, except for the fourth paragraph

of Note A and for Note R, as to which the date is August 16, 2002

F-1

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To Seitel, Inc.:

We have audited the accompanying consolidated statements of operations, stockholders’ equity and cash flows of Seitel, Inc. (a Delaware corporation) and subsidiaries for the year ended December 31, 1999. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the results of operations and cash flows of Seitel, Inc. and subsidiaries for the year ended December 31, 1999, in conformity with accounting principles generally accepted in the United States.

ARTHUR ANDERSEN LLP

Houston, Texas

February 25, 2000

NOTE: The financial statements for the year ended December 31, 1999 included in this Form 10-K/A (Amendment No. 3) were audited by Arthur Andersen LLP. The report of Arthur Andersen LLP included in this Form 10-K/A (Amendment No. 3) is a copy of the previously issued report of Arthur Andersen LLP, and it has not been reissued by Arthur Andersen LLP. The report was filed with our Form 10-K/A (Amendment No. l), and the consent of Arthur Andersen LLP, dated March 29, 2002, was filed as an exhibit to the Form 10-K/A (Amendment No. l), consenting to the inclusion of the report in the Form l0-K/A (Amendment No. 1). After reasonable efforts, we have been unable to obtain a reissued report of Arthur Andersen LLP or a currently dated consent to the inclusion of this previously issued report of Arthur Andersen LLP into our Form l0-K/A (Amendment No. 3). In addition, we will not be able to obtain the written consent of Arthur Andersen LLP for any registration statement we may file as required by Section 7 of the Securities Act. Accordingly, investors will not be able to sue Arthur Andersen LLP pursuant to Section 11(a)(4) of the Securities Act relating to those registration statements and therefore may have their recovery limited as a result of the lack of Arthur Andersen LLP’s consent. The ability of investors to recover from Arthur Andersen LLP also may be limited as a result of their financial condition or other matters relating to the various civil and criminal lawsuits relating to them.

F-2

SEITEL, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands)

	December 31,
	2001			2000
				(Restated)
				See Note B
ASSETS
Cash and equivalents	$	25,223		$	10,216
Receivables
Trade, less allowance for doubtful accounts of $500 and $661 at December 31, 2001 and 2000, respectively		59,243			68,924
Notes and other		4,245			816
Seismic data library		839,228			699,036
Less: Accumulated amortization		(383,383	)		(336,433	)
Net seismic data library		455,845			362,603
Property and equipment, at cost:
Oil and gas properties, full-cost method of accounting, including $23,242 and $45,908 not being amortized at December 31, 2001 and 2000, respectively		205,510			206,726
Furniture, fixtures and other		20,099			9,945
		225,609			216,671
Less: Accumulated depreciation, depletion and amortization		(123,741	)		(71,016	)
Net property and equipment		101,868			145,655
Investment in marketable securities		2,501			2,029
Prepaid expenses, deferred charges and other assets		12,544			8,888
TOTAL ASSETS	$	661,469		$	599,131

The accompanying notes are an integral part of these consolidated financial statements.

F-3

SEITEL, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS—continued

(In thousands, except share and per share amounts)

	December 31,
	2001			2000
				(Restated)
				See Note B
LIABILITIES AND STOCKHOLDERS’ EQUITY
Accounts payable	$	30,936		$	35,136
Accrued liabilities		15,925			14,600
Employee compensation payable		2,344			5,435
Income taxes payable		2,646			6,075
Debt
Senior Notes		255,000			166,333
Line of credit		1,319			40,000
Term loans		9,375			—
Obligations under capital leases		2,656			265
Deferred income taxes		351			17,472
Deferred revenue		97,330			60,225
TOTAL LIABILITIES		417,882			345,541
CONTINGENCIES AND COMMITMENTS
STOCKHOLDERS’ EQUITY
Preferred stock, par value $.01 per share; authorized 5,000,000 shares; none issued		—			—
Common stock, par value $.01 per share; authorized 50,000,000 shares; issued and outstanding 25,810,603 and 25,306,517 at December 31, 2001 and 2000, respectively		258			253
Additional paid-in capital		166,456			159,543
Retained earnings		91,624			106,617
Treasury stock, 735,918 and 635,918 shares at cost at December 31, 2001 and 2000, respectively		(9,072	)		(7,667	)
Notes receivable from officers and employees for stock purchase		(3,776	)		(4,965	)
Accumulated other comprehensive loss		(1,903	)		(191	)
TOTAL STOCKHOLDERS’ EQUITY		243,587			253,590
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	661,469		$	599,131

The accompanying notes are an integral part of these consolidated financial statements.

F-4

SEITEL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts)

	Year Ended December 31,
	2001			2000			1999
				(Restated)
				See Note B
REVENUE(1)	$	136,329		$	138,322		$	128,707
EXPENSES
Depreciation, depletion and amortization		60,713			62,897			59,624
Impairment of oil and gas properties		40,433			—			—
Cost of sales		5,465			5,570			5,016
Selling, general and administrative expenses		36,828			33,131			28,587
Special charges		1,265			—			—
Expenses related to delayed DDD Energy, Inc. offering		—			958			—
Restructuring charge		—			4,394			—
		144,704			106,950			93,227
(LOSS) INCOME FROM OPERATIONS		(8,375	)		31,372			35,480
Interest expense		(13,898	)		(13,068	)		(11,791	)
Interest income		796			962			714
Dividend income		—			22			—
Equity in loss of affiliate		—			—			(91	)
Impairment due to dividend distribution of affiliate stock		—			—			(7,794	)
(Loss) income before provision for income taxes and cumulative effect of accounting change		(21,477	)		19,288			16,518
(Benefit) provision for income taxes		(6,484	)		7,578			7,138
(Loss) income before cumulative effect of accounting change		(14,993	)		11,710			9,380
Cumulative effect on prior years of change in accounting principle for revenue recognition, net of tax benefit of $8,859		—			(14,219	)		—
NET (LOSS) INCOME	$	(14,993	)	$	(2,509	)	$	9,380
Earnings (loss) per share:
Basic:
(Loss) income before cumulative effect of accounting change	$	(.60	)	$	.49		$	.39
Cumulative effect on prior years of change in accounting principle for revenue recognition, net of tax		—			(.59	)		—
Net (loss) income	$	(.60	)	$	(.10	)	$	.39
Diluted:
(Loss) income before cumulative effect of accounting change	$	(.60	)	$	.49		$	.39
Cumulative effect on prior years of change in accounting principle for revenue recognition, net of tax		—			(.59	)		—
Net (loss) income	$	(.60	)	$	(.10	)	$	.39
Pro forma for change in accounting principle:(2)
Net income				$	11,710		$	3,106
Net income per common share:
Basic				$	.49		$	.13
Diluted				$	.49		$	.13
Weighted average number of common and common equivalent shares:
Basic		24,986			23,909			23,863
Diluted		24,986			24,090			24,063

(1) Non-cash revenue and the percentage of total revenue for the years ended December 31, 2001, 2000 and 1999 are $18,219,000 (13.4%), $7,330,000 (5.3%) and $8,989,000 (7.0%), respectively.

(2) Pro forma disclosure of earnings and earnings per share information gives effect to the 2000 change in accounting principle for revenue recognition on certain data licenses as described in Note B as if it had been in effect for all periods presented.

The accompanying notes are an integral part of these consolidated financial statements.

F-5

SEITEL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In thousands, except share amounts)

	Comprehensive Income			Common Stock			Additional Paid-In Capital		Retained Earnings			Treasury Stock					Notes Receivable from Officers & Employees			Accumulated Other Comprehensive Income (Loss)
				Shares	Amount							Shares		Amount
Balance, December 31, 1998				23,804,508	$	238	$	141,826	$	107,102		(175,818	)	$	(2,977	)	$	(8,651	)	$	49
Net proceeds from issuance of common stock				481,287		5		5,126		—		—			—			—			—
Tax reduction from exercise of stock options				—		—		597		—		—			—			—			—
Treasury stock purchased				—		—		—		—		(504,700	)		(3,302	)		—			—
Payments received on notes receivable from officers and employees				—		—		—		—		—			—			1,736			—
Distribution of Eagle Geophysical, Inc. shares				—		—		—		(6,365	)	—			—			—			—
Net income	$	9,380		—		—		—		9,380		—			—			—			—
Foreign currency translation adjustments		(695	)	—		—		—		—		—			—			—			(695	)
Unrealized loss on marketable securities net of income tax benefit of $526		(1,045	)	—		—		—		—		—			—			—			(1,045	)
Comprehensive income	$	7,640
Balance, December 31, 1999				24,285,795		243		147,549		110,117		(680,518	)		(6,279	)		(6,915	)		(1,691	)
Net proceeds from issuance of common stock				1,020,722		10		10,180		—		—			—			—			—
Tax reduction from exercise of stock options				—		—		1,814		—		—			—			—			—
Treasury stock purchased				—		—		—		—		(330,400	)		(4,849	)		—			—
Issuance of common stock in connection with restructuring				—		—		—		(991	)	375,000			3,461			—			—
Payments received on notes receivable from officers and employees				—		—		—		—		—			—			1,950			—
Net loss	$	(2,509	)	—		—		—		(2,509	)	—			—			—			—
Foreign currency translation adjustments		837		—		—		—		—		—			—			—			837
Unrealized gain on marketable securities net of income tax expense of $333		663		—		—		—		—		—			—			—			663
Comprehensive loss	$	(1,009	)
Balance, December 31, 2000
(Restated, see Note B)				25,306,517		253		159,543		106,617		(635,918	)		(7,667	)		(4,965	)		(191	)
Net proceeds from issuance of common stock				504,086		5		6,398		—		—			—			—			—
Tax reduction from exercise of stock options				—		—		515		—		—			—			—			—
Treasury stock purchased				—		—		—		—		(100,000	)		(1,405	)		—			—
Payments received on notes receivable from officers and employees				—		—		—		—		—			—			1,189			—
Net loss	$	(14,993	)	—		—		—		(14,993	)	—			—			—			—
Foreign currency translation adjustments		(1,733	)	—		—		—		—		—			—			—			(1,733	)
Unrealized gain on marketable securities net of income tax expense of $14		21		—		—		—		—		—			—			—			21
Comprehensive loss	$	(16,705	)
Balance, December 31, 2001				25,810,603	$	258	$	166,456	$	91,624		(735,918	)	$	(9,072	)	$	(3,776	)	$	(1,903	)

The accompanying notes are an integral part of these consolidated financial statements.

F-6

SEITEL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

	Year Ended December 31,
	2001			2000			1999
	(Restated)
Cash flows from operating activities:
Reconciliation of net (loss) income to net cash provided by operating activities:
Net (loss) income	$	(14,993	)	$	(2,509	)	$	9,380
Depreciation, depletion and amortization		60,584			62,914			59,624
Impairment of oil and gas properties		40,433			—			—
Equity in loss of affiliate		—			—			91
Impairment due to dividend distribution of affiliate stock		—			—			7,794
Cumulative effect of change in accounting principle, net of tax		—			14,219			—
Restructuring charge		—			2,470			—
Deferred income tax provision (benefit)		(17,121	)		(6,494	)		5,501
Non-cash sales		(18,219	)		(7,330	)		(8,989	)
(Increase) decrease in receivables		8,427			(6,474	)		(2,851	)
(Increase) decrease in other assets		(2,929	)		(1,736	)		402
Decrease (increase) in deferred revenue		(4,134	)		10,184			(2,104	)
Decrease (increase) in accounts payable and other liabilities		(3,561	)		13,180			3,179
Net cash provided by operating activities		48,487			78,424			72,027
Cash flows from investing activities:
Cash invested in seismic data		(71,922	)		(55,423	)		(125,727	)
Cash invested in oil and gas properties		(19,591	)		(16,352	)		(27,857	)
Cash paid to acquire property and equipment		(7,653	)		(2,319	)		(1,073	)
Net proceeds from sale of oil and gas properties		6,235			12,946			11,657
Investment in marketable securities		—			—			(3,043	)
Deferred offering costs		—			(925	)		(80	)
Net cash used in investing activities		(92,931	)		(62,073	)		(146,123	)
Cash flows from financing activities:
Borrowings under line of credit agreements		112,771			64,436			91,314
Principal payments under line of credit agreements		(151,440	)		(64,936	)		(136,314	)
Borrowings on term loan		10,000			—			—
Principal payments on term loans		(625	)		(33	)		(139	)
Principal payments under capital lease obligations		(110	)		(41	)		(28	)
Proceeds from issuance of senior notes		107,000			—			138,000
Principal payments under senior notes		(18,333	)		(18,334	)		(18,333	)
Proceeds from issuance of common stock		6,437			10,221			5,167
Costs of debt and equity transactions		(1,148	)		(31	)		(1,571	)
Repurchase of common stock		(1,405	)		(4,849	)		(3,302	)
Loans to officers, employee and director		(3,194	)		(591	)		—
Payments on notes receivable from officers, employees and director		1,302			1,951			1,736
Net cash provided by (used in) financing activities		61,255			(12,207	)		76,530
Effect of exchange rate changes		(1,804	)		884			(407	)
Net increase (decrease) in cash and equivalents		15,007			5,028			2,027
Cash and equivalents at beginning of period		10,216			5,188			3,161
Cash and equivalents at end of period	$	25,223		$	10,216		$	5,188

The accompanying notes are an integral part of these consolidated financial statements.

F-7

SEITEL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2001

NOTE A—BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

Nature of Operations:    Seitel, Inc. (the “Company”) is a leading diversified energy company providing seismic data and related geophysical services to the oil and gas industry and directly participating in exploration for development and ownership of natural gas and crude oil reserves. The majority of the Company’s seismic surveys cover onshore and offshore U.S. Gulf Coast region, the Rocky Mountain region and Canada. The Company’s oil and gas exploration, development and production activities are on properties located primarily in the onshore Gulf Coast region and California. Since September 2000, the Company has been developing proprietary software, technology, and business methods through its wholly owned subsidiary, Seitel Solutions, that will enable its clients to access and interact, via a standard web browser and the Internet, with its seismic data library. During the years ended December 31, 2001, 2000 and 1999, Seitel Solutions had no significant operations.

In the course of its operations, the Company is subject to certain risk factors, including, but not limited to, the following: competition, industry conditions, volatility of oil and gas prices, operating risks, dependence of key personnel, geographic concentration of operations and compliance with governmental regulations.

Use of Estimates:    The preparation of these consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires the use of certain estimates by management in determining the Company’s assets, liabilities, revenues and expenses. Actual results could differ from those estimates. Seismic data library amortization is determined using estimates of ultimate revenues from licensing of the seismic data. Refer to the seismic data library discussion below for additional information on seismic data library amortization. Depreciation, depletion and amortization of oil and gas properties and the impairment of oil and gas properties are determined using estimates of proved oil and gas reserves and the present value of estimated cash flows therefrom. There are numerous uncertainties in estimating the quantity of proved reserves and in projecting the future rates of production and timing of development expenditures. Refer to Note T, “Supplemental Oil and Gas Information” for additional information regarding the process of estimating proved oil and gas reserve quantities and related values.

Substantial Doubt About the Company’s Ability to Continue as a Going Concern: The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As more fully described in Note R, the Company is not in compliance with certain of its debt covenants. The Company’s auditors have expressed substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustments to reflect the possible future effects on the recoverability of assets or the amounts of liabilities that may result from the outcome of this uncertainty.

Basis of Presentation: The accompanying consolidated financial statements include the accounts of Seitel, Inc., the accounts of its wholly owned subsidiaries and the Company’s pro rata share of its investments in joint ventures. Investments in less than majority owned companies over which the Company has the ability to exercise significant influence are accounted for using the equity method. All material intercompany accounts and transactions have been eliminated in consolidation. Certain reclassifications have been made to the amounts in the prior years’ financial statements to conform to the current year’s presentation.

The Company presents its consolidated balance sheets on an unclassified basis. The portion of seismic data library costs to be amortized during the next year cannot be classified as a current asset due to Securities and Exchange Commission (“SEC”) guidance. Classification of all of these costs as noncurrent would be misleading to the reader because it would not indicate the level of assets expected to be converted into cash in the next year. As a result, the Company believes that the use of an unclassified balance sheet results in improved financial reporting.

The Company changed its presentation of cash flows from operating activities from the direct method to the indirect method as allowed in Statement of Financial Accounting Standards No. 95.

Revenue Recognition:

Revenue from Data Acquisition

Revenue from the creation of new seismic data under the Company’s acquisition contracts is recognized using the percentage-of-completion method of accounting based upon costs incurred to date as a percentage of total estimated costs. Under these contracts, the Company creates new seismic data designed in conjunction

F-8

SEITEL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

with its customers and specifically suited to the geology of the area using the most appropriate technology available. The contracts typically result in one or more customers paying between 65% or more of the direct creation costs in exchange for a license or licenses to use the resulting data. Customers make periodic payments throughout the creation period, which generally correspond to costs to be incurred. These payments are non-refundable once the costs of creation are incurred. The creation process generally occurs in the following stages: permitting, surveying, drilling, recording and processing. At each stage, the customers receive legally enforceable rights and access to, and the benefits of, the results of all work performed. The customers also receive access to and use of the newly acquired, processed data. The customers may have exclusive access to the work performed and exclusive use of the newly acquired, processed data for a limited term, which is generally less than nine months after final delivery of the processed data. The customers’ access to and use of the results of the work performed and of the newly acquired, processed data is governed by a long-term (generally twenty years or more) license agreement, which is a separate agreement from the acquisition contract. The Company’s acquisition contracts require the customer either to have a license agreement in place or to execute one at the time the acquisition contract is signed. The Company maintains sole ownership of the newly acquired data, which is added to its library, and is free to license the data to other customers when the original customers’ exclusivity ends.

Revenue from Data Licenses

The Company licenses data from its seismic data library to customers under four basic forms of contracts.

Under the first, the customer licenses and selects data from the data library at the time of contracting.

Under the second, called review and possession contracts, the customer obtains the right to review a certain quantity of data for a limited period of time. During the review period, the customer may select specific data from that available for review to hold long-term under its license agreement. Any data not selected for long-term licensing must be returned to the Company at the end of the review period.

Under the third, called library card contracts, the customer initially receives only access to data. The customer may then select specific data, from the collection of data to which it has access, to hold long-term under its license agreement. The lengths of the selection periods under the library card contracts vary.

Under the fourth, called review only contracts, the customer obtains rights to review a certain quantity of data for a limited period of time, but does not obtain the right to select specific data to hold long-term.

The usage of all data delivered to the customer, whether for review only or to hold long-term, is governed by a license agreement, which is a separate agreement from the contracts. The Company’s contracts require the customer either to have a license agreement in place or to execute one at the time the contract is signed. The term of the license agreement is generally twenty years or more and governs all data delivered to the customer during the term. Payment terms under the contracts are typically less than eighteen months. All payments due are non cancelable and all payments made are non-refundable. The customer has complete access to all available data covered by the contracts on the date the contract is executed. The contracts permit selection of the data in its present form and the Company is under no obligation to make any enhancements, modifications or additions to the data unless specific terms are included, upon which revenue would be deferred until performance is met. The customers’ rights under the contracts are non-transferable without payment of an additional fee. Copies of the data are available to the customer immediately upon request.

Before 2000, under the Company’s interpretation of accounting principles generally accepted in the United States in effect at that time, the Company recognized revenue when it had a contract with its customer for a fixed sales price, a licensing agreement was in place, collectibility was reasonably assured and the seismic data was available for use by the customer. Effective January 1, 2000, revenue from licensing of seismic data is recognized when the Company has contracted with the customer for a fixed sales price; a licensing agreement is in place; the customer has selected specific data under the terms of the contract or the contract has expired without full selection having occurred; and collectibility of the sales price is reasonably assured. The Company recognizes revenue for the particular data selected as each specific selection of data is made by the customer. If selections are not completed by the expiration date of the contract, the Company then recognizes any remaining revenue under that contract. In each case (selection or expiration), the earnings process is complete. The Company does not recognize revenue for amounts billed in advance of being earned until these conditions are met. For revenue that is deferred, the Company defers the direct costs related to the revenues. Revenue from licensing of seismic data is presented net of revenue shared with other entities.

F-9

SEITEL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Revenue from Non-Cash Data Licenses

In certain cases, the Company grants its customer a non-exclusive license to specific, selected data or access to data to be used in its operations (not for resale) in exchange for ownership of seismic data from the customer. Where the customer receives access to data, the customer may then select specific data to hold under a long-term license; the lengths of the selection periods vary, but are generally three to five years. The Company records a data library asset for the seismic data acquired at the time the contract is entered into and defers revenue recognition on the transaction until the customer selects the data. These transactions are accounted for as non-monetary exchanges and are valued at the fair value of the data received or delivered, whichever is more readily determinable. The Company determines fair value for the data exchanged by first determining the value of the license granted to the customer. It does so by looking at the range of cash transactions by the Company for licenses of similar data during either the prior six months (for licenses in the United States) or the prior twelve months (for licenses in Canada). In looking at the range of cash transactions, the Company does not consider transactions that are disproportionately high or low. The Company then also considers the value of the data received from the customer. In determining the value of the data received, the Company considers the age, quality, current demand and future marketability of the data as well as the cost that would be required to create the data. In significant exchanges, the Company also engaged an independent third party to confirm for fairness the Company’s valuation of the data received. In the United States, the Company applies a cap on the value it will assign per square mile on the data exchanged. In Canada, in the event of a difference greater than 2% between the value of the license granted and the value of the data received, the Company assigns the lower value to the exchange. In 2001, the Company obtained third party fairness opinions on all non-cash exchanges valued at $800,000 or more. In the future, the Company will obtain third party fairness opinions on all non-cash exchanges of $500,000 or more. The Company intends to obtain these opinions on an annual basis, usually in connection with the preparation of its annual financial statements. The Company’s valuations of all significant exchange transactions (those valued at greater than $800,000) during 2001 were found to be fair by the independent third party evaluators.

In its non-cash exchanges, the Company is selling its customer licenses to data from the Company’s data library. In exchange it receives ownership of data, that it does not own or to which it does not have full marketing rights. Although the customer may also retain a license to the data it is transferring to the Company, the data licensed by the Company from its library is distinct from the data received from the customer. Thus, in exchange for a license to data, the Company receives ownership of distinct data to be added to its library and, therefore, the exchange is not a “like-kind” exchange.

In 2001, 2000 and 1999, the Company recorded seismic data library assets of $57,045,000, $12,435,000 and $8,989,000, respectively, from non-monetary exchanges of seismic data, including exchanges in which the Company and the customer issued cash payments.

In 2001, 2000 and 1999, the Company recognized revenue of $14,875,000, $4,049,000 and $8,989,000, respectively from non-monetary exchanges of seismic data, including exchanges in which the Company and the customer issued cash payments.

Revenue from Oil and Gas Operations

The Company uses the sales method of accounting for its oil and gas revenue. Under this method, revenue is recognized based on actual volumes of oil and gas sold to purchasers. The volumes of oil and gas sold may differ from the volumes to which the Company is entitled based on its interests in the properties, which historically, has not been significant.

Seismic Data Library:    Costs incurred in the creation of proprietary seismic data, including the direct and incremental costs of the Company’s seismic segment personnel engaged in project management and design, are capitalized. The Company uses the income forecast method to amortize the costs of seismic data programs it creates. Under the income forecast method, seismic data costs are amortized based on the proportion of revenue for a period to total revenue, as estimated by management. The Company also purchases existing seismic data programs from other companies. The costs of purchased seismic data programs are generally amortized on a straight-line basis over ten years, however, the costs of a significant purchase (greater than 5% of the net book value of the seismic data library) are amortized using the greater of the income forecast method or ten-year straight-line method.

        On a periodic basis, the Company evaluates the performance of all of its seismic data programs. The Company evaluates its revenue trends, as well as industry revenue trends, in order to estimate future revenue from seismic data sales. When economic conditions indicate, the Company may reduce its estimates of future revenue, causing the amortization rate to rise and operating results to decline. The Company also reviews the carrying value of seismic data to assess whether there has been a permanent impairment of value. The primary indicator of impairment of value is reduced sales over an extended period of time. When indicated by continuous, reduced sales over three years or more, the Company compares the net book value of the seismic data to forecasted, undiscounted cash flows. When appropriate, indicated impairments are recorded based on the excess of net book value over fair value.

10

SEITEL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Net seismic data library at December 31, 2001 and 2000 was comprised of the following (in thousands):

	December 31,
	2001		2000
			(Restated)
2D data created by the Company	$	4,496	$	8,524
3D data created by the Company		325,430		310,522
Data purchased by the Company		125,919		43,557
Net seismic data library	$	455,845	$	362,603

The amount of seismic data amortization recorded each year fluctuates based on the amount of seismic revenue recognized and the mix of data to which the revenue relates. The data is amortized based on: (i) the income forecast method, which is used for created data or (ii) the ten-year straight-line method which is generally used for purchased data.

Oil and Gas Properties:    The Company accounts for its oil and gas exploration and production activities using the full-cost method of accounting. Under this method, all costs associated with acquisition, exploration and development of oil and gas reserves are capitalized, including salaries, benefits and other internal costs of the exploration and production segment, directly attributable to these activities. Costs associated with production and general corporate activities are expensed in the period incurred. For the years ended December 31, 2001, 2000 and 1999, exploration and development related overhead costs of $2,385,000, $1,809,000 and $1,938,000, respectively, have been capitalized to oil and gas properties. Interest costs related to unproved properties and certain properties under development are also capitalized to oil and gas properties. For the years ended December 31, 2001, 2000 and 1999, interest costs of $2,583,000, $2,936,000 and $3,101,000, respectively, have been capitalized to oil and gas properties.

No gains or losses are recognized upon the sale of oil and gas properties unless a significant portion of the Company’s proved oil and gas reserves are sold (generally greater than 25 percent). Instead, proceeds from the sale of oil and gas properties are accounted for as a reduction of capitalized costs. The Company sold various producing oil and gas wells, representing less than 25 percent of its proved oil and gas reserves each year, and associated leaseholds during 2001, 2000 and 1999 for proceeds, net of revenue and costs, totaling $6.2 million, $12.9 million and $11.7 million, respectively.

Depreciation, depletion and amortization (“DD&A”) expense is calculated quarterly using the units-of-production method based upon production and estimates of proved reserves. Estimated future development costs and site restoration, dismantlement and abandonment costs, net of salvage values, are included in the amortization base. Capitalized costs associated with the acquisition and evaluation of unproved properties and certain properties under development are not included in the amortization base until these costs are evaluated.

Capitalized costs of oil and gas properties, net of accumulated DD&A and deferred income taxes, are limited to the present value, discounted at 10 percent, of future net cash flows from estimated proved oil and gas reserves, based on current economic and operating conditions, plus the lower of cost or fair value of unproved properties, adjusted for the effects of related income taxes. If capitalized costs exceed this limit, the excess is charged to impairment of oil and gas properties. During 2001, the Company recorded non-cash impairments of oil and gas properties totaling $40,433,000. The impairment of $10,395,000 recorded in the fourth quarter of 2001 was based on December 31, 2001 estimated proved reserves valued at March 27, 2002 market prices.

Substantially all of the Company’s exploration and development activities are conducted jointly with others and, accordingly, the Company’s oil and gas property balance reflects only its proportionate interest in such activities.

Other Property and Equipment:    Depreciation of other property and equipment is calculated using the straight-line method over the estimated useful lives of the assets of three to five years.

Marketable Equity Securities:    The Company accounts for its marketable equity securities in accordance with Statement of Financial Accounting Standards (“SFAS”) No. 115, “Accounting for Certain Investments in Debt and Equity Securities.” Management determines the appropriate classification of marketable securities at the time

F-11

SEITEL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

of purchase and reevaluates such designation at each balance sheet date. The Company’s marketable securities are categorized as available-for-sale and are carried at fair value, with unrealized holding gains and losses, net of taxes, reflected in accumulated other comprehensive income (loss) included in stockholders’ equity until realized. For the purpose of computing realized gains and losses, cost is identified on a specific identification basis.

At December 31, 2001 and 2000, total unrealized gains on marketable securities were $753,000 and $996,000, respectively, and total unrealized losses on marketable securities were $718,000 and $0, respectively. The deferred tax expense on the net gains was $14,000 and $333,000 at December 31, 2001 and 2000, respectively, resulting in a net increase of $21,000 and $663,000, respectively, to other comprehensive income.

Debt Issue Costs:    Debt issue costs related to the Company’s Senior Notes and line of credit are included in prepaid expenses, deferred charges and other assets in the consolidated balance sheet. Such costs are amortized over the scheduled maturities of the debt. As of December 31, 2001 and 2000, unamortized debt issue costs were $1,745,000 and $1,457,000, respectively.

Income Taxes:    The Company and all of its U.S. subsidiaries file a consolidated federal income tax return. The Company does not provide U.S. taxes on the undistributed earnings of its foreign subsidiaries whose earnings are intended to be permanently reinvested in foreign operations. At December 31, 2001, accumulated net earnings of non-U.S. subsidiaries for which no U.S. federal taxes have been provided were $6.1 million.

Software Development Costs:    In accordance with SFAS No 86, “Accounting for the Costs of Computer Software to Be Sold, Leased, or Otherwise Marketed,” software development costs are expensed as incurred until technological feasibility has been established, at which time such costs are capitalized until the product is available for general release. Software development costs capitalized include direct labor costs and overhead costs attributed to programmers and software engineers working on products after they reach technological feasibility but before they are generally available for sale or use. Capitalized costs are amortized over the estimated product life of three to five years using the greater of the straight-line method or the ratio of current product revenues to total projected future revenues. Software development costs capitalized in 2001 were $489,000 and are included in furniture, fixtures and other property. As of December 31, 2001, the product was not available for sale or use.

Foreign Currency Translation:    For subsidiaries whose functional currency is deemed to be other than the U.S. dollar, asset and liability accounts are translated at period-end exchange rates and revenue and expenses are translated at the current exchange rates as of the dates on which they are recognized. Resulting translation adjustments are included in accumulated other comprehensive income (loss) in stockholders’ equity. Any gains or losses realized on transactions or monetary assets or liabilities in currencies other than the functional currency are included in net income in the current period. Transaction gains (losses) totaling $(315,000), $(233,000) and $455,000 for the years ended December 31, 2001, 2000 and 1999, respectively, are included in selling general and administrative expenses in the consolidated statements of operations.

Use of Derivatives:    The Company may enter into various derivative instruments to manage commodity price fluctuations and foreign exchange risks. Derivatives are limited in use and are entered into for purposes of hedging cash flows and not speculative purposes. The Company may enter into foreign exchange contracts to hedge certain foreign currency denominated assets or liabilities and currency commitments.

On January 1, 2001, the Company adopted SFAS No. 133, as amended, “Accounting for Derivative Instruments and Hedging Activities.” Effective with the adoption of SFAS No. 133, all derivatives are recognized on the balance sheet and measured at fair value. If the derivative does not qualify as a hedge or is not designated as a hedge, the gain or loss on the derivative is recognized currently in earnings. If the derivative qualifies for hedge accounting, the gain or loss on the derivative is either recognized in income along with an offsetting adjustment to the basis of the item being hedged or deferred in other comprehensive income to the extent the hedge is effective. The adoption of SFAS No. 133 did not have a material impact on the Company’s financial position or results of operations.

F-12

SEITEL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Earnings per Share:    In accordance with SFAS No. 128, “Earnings Per Share,” basic earnings per share is computed based on the weighted average shares of common stock outstanding during the periods. Diluted earnings per share is computed based on the weighted average shares of common stock plus the assumed issuance of common stock for all potentially dilutive securities. The computations for basic and diluted net income per share for the years 2001, 2000 and 1999 consist of the following (in thousands except per share amounts):

	Year Ended December 31,
	2001			2000			1999
				(Restated)
(Loss) income before cumulative effect of accounting change	$	(14,993	)	$	11,710		$	9,380
Cumulative effect on prior years of change in accounting principle for revenue recognition, net of tax		—			(14,219	)		—
Net (loss) income	$	(14,993	)	$	(2,509	)	$	9,380
Basic weighted average shares		24,986			23,909			23,863
Effect of dilutive securities:(1)
Options and warrants		—			181			200
Diluted weighted average shares		24,986			24,090			24,063
Earnings (loss) per share:
Basic:
(Loss) income before cumulative effect of accounting change	$	(.60	)	$	.49		$	.39
Cumulative effect on prior years of change in accounting principle for revenue recognition, net of tax		—			(.59	)		—
Net (loss) income	$	(.60	)	$	(.10	)	$	.39
Diluted:
(Loss) income before cumulative effect of accounting change	$	(.60	)	$	.49		$	.39
Cumulative effect on prior years of change in accounting principle for revenue recognition, net of tax		—			(.59	)		—
Net (loss) income	$	(.60	)	$	(.10	)	$	.39

(1) A weighted average year-to-date number of options and warrants to purchase 2,680,000, 6,379,000 and 5,517,000 shares of common stock were outstanding during 2001, 2000 and 1999, respectively, but were not included in the computation of diluted per share net income because they were anti-dilutive.

Stock-Based Compensation:    The Company accounts for employee stock-based compensation using the intrinsic value method prescribed by Accounting Principles Board (“APB”) Opinion No. 25, “Accounting for Stock Issued to Employees.” Reference is made to Note J, “Stock Options and Warrants,” for a summary of the pro forma effect of SFAS No. 123, “Accounting for Stock-Based Compensation” on the Company’s results of operations in 2001, 2000 and 1999.

Fair Value of Financial Instruments:    SFAS No. 107, “Disclosures about Fair Value of Financial Instruments,” requires disclosure of the fair value of certain financial instruments. The estimated fair value amounts have been determined by the Company using available market data and valuation methodologies. The book values of cash and equivalents, receivables and accounts payable approximate their fair value as of

F-13

SEITEL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

December 31, 2001 and 2000, because of the short-term maturity of these instruments. Based upon the rates available to the Company, the fair value of the Senior Notes approximates $284,554,000 and $173,828,000 as of December 31, 2001 and 2000, respectively. The book value of the Company’s revolving lines of credit and the term loans approximates fair value due to the variable interest rates under the line.

Impairment of Long-Lived Assets:    In accordance with SFAS No. 121, “Accounting for Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of,” the Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be realizable. If an evaluation is required, the estimated future undiscounted cash flows associated with the asset are compared to the asset’s carrying amount to determine if an impairment of such asset is necessary. The effect of any impairment would be to expense the difference between the fair value of such asset and its carrying value. There were no such impairments recorded under SFAS No. 121 in 2001, 2000 or 1999.

Accounting For Sales of Stock By Subsidiary Companies:    The Company recognizes gains or losses on sales of stock by its subsidiary companies when such sales are not made as part of a larger plan of corporate reorganization. Such gains or losses are based upon the difference between the book value of the Company’s investment in the subsidiary immediately after the sale and the historical book value of the Company’s investment immediately prior to the sale.

Comprehensive Income:    In accordance with SFAS No. 130, “Reporting Comprehensive Income,” the Company has reported comprehensive income in the consolidated statements of stockholders’ equity for the three years ended December 31, 2001. Accumulated other comprehensive income for the Company consists of foreign currency translation adjustments and unrealized gains (losses) on marketable securities. Cumulative translation adjustments are not adjusted for income taxes as they relate to indefinite investments in non-U.S. subsidiaries.

Allowance for Doubtful Accounts:    Activity in the Company’s allowance for doubtful accounts receivable consists of the following (in thousands):

	December 31,
	2001			2000
Balance at beginning of period	$	661		$	1,183
Additions to costs and expenses		30			300
Deductions for uncollectible receivables written off, net of recoveries		(191	)		(822	)
Balance at end of period	$	500		$	661

NOTE B—RESTATEMENT OF FINANCIAL STATEMENTS

Effective for the fiscal year ended December 31, 2001, the Company has determined that the timing and amount of reported revenue from certain data licensing contracts and certain data acquisition contracts warranted revision to the reported results for the nine months ended September 30, 2001 and the year ended December 31, 2000. The revisions to revenue recognition under the seismic data licensing agreements are based upon the Securities and Exchange Commission’s Staff Accounting Bulletin No. 101 (SAB 101), “Revenue Recognition in Financial Statements”. The effect of these revisions is to defer revenue previously recognized under certain seismic data licensing agreements until selection of specific data is made by the customer. The deferral in revenue resulted in an increase in deferred revenue. Associated with the deferral of the revenue on these contracts, the Company also deferred the direct costs related to the revenue, which resulted in an increase in prepaid expenses. The Company also recognized a reduction in amortization expense, which is recorded as an adjustment to accumulated amortization, and in income tax expense, which is recorded as an adjustment to deferred taxes. The change in revenue recognition effective January 1, 2000, was recorded as a cumulative effect adjustment in 2000, which means that the net effect of applying SAB 101 for periods prior to January 1, 2000 was recorded in the Statement of Operations as one amount, net of taxes. The total effects of all revisions to revenue recognition related to the seismic data licensing arrangements for the nine months ended September 30, 2001 and the year ended December 31, 2000 are summarized in the tables on the following pages.

F-14

SEITEL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The revisions also reflect adjustments for the amount and timing of revenue previously recognized under certain data acquisition contracts. In 2001 and 2000, the Company entered into certain acquisition contracts under which both the Company and the customer jointly participated in the acquisition services. Consequently, the Company did not assume the sole risk of service throughout the acquisition process. The Company recognized revenue under these contracts consistent with its revenue recognition policy for acquisition contracts. The Company has determined that revenue previously recognized for amounts funded by customers under these contracts should be used to reduce the Company’s recorded cost of creating the seismic data. The Company continues to have sole ownership of the newly created data. The reduction of revenue resulting from these revisions also reduced the Company’s amortization expense, which is recorded as an adjustment to accumulated amortization, and income tax expense, which is recorded as an adjustment to deferred taxes. The total effects of all revisions to revenue recognition related to certain data acquisition contracts for the nine months ended September 30, 2001 and the year ended December 31, 2000 are summarized in the tables on the following pages.

F-15

SEITEL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Accordingly, such financial statements have been restated as follows:

	Nine Months Ended September 30, 2001 (Unaudited)
	As Reported			Adjustments for Data Licensing Agreements			Adjustments for Data Acquisition Contracts			As Restated
	(in ‘000’s except per share amounts)
Statements of Operations Data:
Revenue	$	140,775		$	(31,203	)	$	(11,491	)	$	98,081	(1)
Depreciation, depletion & amortization		61,872			(13,433	)		(5,528	)		42,911
Impairment of oil and gas properties		30,038			—			—			30,038
Cost of sales		4,182			—			—			4,182
SG&A expense		29,868			(2,115	)		(57	)		27,696
Special charges		1,130			—			—			1,130
Income (loss) from operations		13,685			(15,655	)		(5,906	)		(7,876	)
Interest expense and other, net		(9,515	)		—			72			(9,443	)
(Provision) benefit for income taxes		(1,398	)		5,078			2,042			5,722
Net income (loss)	$	2,772		$	(10,577	)	$	(3,792	)	$	(11,597	)
Net income (loss) per share:
Basic	$	0.11		$	(.42	)	$	(.15	)	$	(0.46	)
Diluted	$	0.11		$	(.42	)	$	(.15	)	$	(0.46	)
Balance Sheet Data:
Cash and cash equivalents	$	5,572		$	—		$	—		$	5,572
Receivables		58,162			—			—			58,162
Seismic data library, net		401,967			30,609	(2)		(5,615	)		426,961
Property and equipment, net		123,660			—			—			123,660
Prepaid expenses and deferred charges		6,203			6,229			14			12,446
Accounts payable and accrued liabilities		43,182			—			—			43,182
Deferred income taxes		24,389			(17,857	)		(2,042	)		4,490
Deferred revenue		1,093			87,683	(3)		233			89,009
Retained earnings		132,315			(33,503	)		(3,792	)		95,020
Accumulated other comprehensive loss		(2,822	)		515			—			(2,307	)

(1) Non-cash revenue and the percentage of total revenue are $12,408,000 and 12.7%, respectively.

(2) Represents reduction in accumulated amortization due to deferral of revenue.

(3) The impact of the data licensing revisions on deferred revenue includes approximately $57 million related to the cumulative effect of periods prior to 2001.

F-16

SEITEL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

	Year Ended December 31, 2000
	As Reported			Adjustments for Data Licensing Agreements			Adjustments for Data Acquisition Contracts			As Restated
	(in ‘000’s except per share amounts)
Statements of Operations Data:
Revenue	$	163,811		$	(19,599	)	$	(5,890	)	$	138,322	(1)
Depreciation, depletion and amortization		73,709			(8,054	)		(2,758	)		62,897
Cost of sales		5,570			—			—			5,570
SG&A expense		34,790			(1,476	)		(183	)		33,131
Other		5,352			—			—			5,352
Income (loss) from operations		44,390			(10,069	)		(2,949	)		31,372
Interest expense and other, net		(12,184	)		—			100			(12,084	)
(Provision) benefit for income taxes		(11,789	)		3,215			996			(7,578	)
Cumulative effect of accounting change		—			(14,219	)		—			(14,219	)
Net income (loss)	$	20,417		$	(21,073	)	$	(1,853	)	$	(2,509	)
Net income (loss) per share:
Basic	$	0.85		$	(.88	)	$	(.07	)	$	(0.10	)
Diluted	$	0.85		$	(.88	)	$	(.07	)	$	(0.10	)
Balance Sheet Data:
Cash and cash equivalents	$	10,216		$	—		$	—		$	10,216
Receivables		69,740			—			—			69,740
Seismic data library, net		345,201			18,855	(2)		(1,453	)		362,603
Property and equipment, net		145,655			—			—			145,655
Prepaid expenses and deferred charges		4,716			4,093			79			8,888
Accounts payable and accrued liabilities		49,736			—			—			49,736
Deferred income taxes		30,412			(11,944	)		(996	)		17,472
Deferred revenue		2,975			55,773	(3)		1,477			60,225
Retained earnings		129,543			(21,073	)		(1,853	)		106,617
Accumulated other comprehensive income (loss)		(381	)		190			—			(191	)

(1) Non-cash revenue and the percentage of total revenue are $7,330,000 and 5.3%, respectively.

(2) Represents reduction in accumulated amortization due to deferral of revenue.

(3) The impact of the data licensing revisions on deferred revenue includes approximately $36 million related to the cumulative effect of periods prior to 2000. Of the $36 million of revenue deferred by the change in accounting principle for revenue recognition at the beginning of 2000, $14.8 million was recognized as revenue in 2001 and $12.6 million was recognized as revenue in 2000.

F-17

SEITEL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

NOTE C—INCOME TAXES

The discussion of income taxes herein does not include the income tax effects of the cumulative effect of the change in accounting method explained in Note B of these consolidated financial statements.

Income (loss) before provision for income taxes for each of the three years ended December 31, 2001 is comprised of the following (in thousands):

	2001			2000		1999
				(Restated)
U.S.	$	(22,693	)	$	13,575	$	6,894
Foreign		1,216			5,713		9,624
	$	(21,447	)	$	19,288	$	16,518

The provision (benefit) for income taxes for each of the three years ended December 31, 2001, is comprised of the following (in thousands):

	2001			2000			1999
				(Restated)
Current:
Federal	$	9,894		$	13,839		$	1,456
State		202			230			156
Foreign		541			3			25
		10,637			14,072			1,637
Deferred:
Federal		(17,108	)		(8,454	)		1,678
Foreign		(13	)		1,960			3,823
		(17,121	)		(6,494	)		5,501
Tax provision:
Federal		(7,214	)		5,385			3,134
State		202			230			156
Foreign		528			1,963			3,848
	$	(6,484	)	$	7,578		$	7,138

F-18

SEITEL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The differences between the U.S. Federal income taxes computed at the statutory rate (35%) and the Company’s income taxes for financial reporting purposes are as follows (in thousands):

	2001			2000			1999
				(Restated)
Statutory Federal income tax	$	(7,517	)	$	6,751		$	5,781
State income tax, less Federal benefit		131			150			101
Tax difference on foreign earnings		525			(116	)		913
Restructuring charge not fully benefited		—			887			—
Reduction in foreign tax rates		(422	)		—			—
Non-deductible expense and other, net		799			(94	)		343
Income tax expense	$	(6,484	)	$	7,578		$	7,138

The components of the net deferred income tax asset (liability) reflected in the Company’s consolidated balance sheets at December 31, 2001 and 2000 were as follows (in thousands):

	Deferred Tax Assets (Liabilities) at December 31,
	2001			2000
				(Restated)
Deferred revenue	$	15,241		$	13,754
Alternative minimum tax credit carryforward		210			549
Canadian net operating loss carryforward		4,729			960
Partnership earnings		1,043			1,327
Foreign tax credits		191			191
Investment tax credits		44			44
Other		1,447			2,115
Total deferred tax assets		22,905			18,940
Less: Valuation allowance		(235	)		(44	)
Deferred tax assets, net of valuation allowance		22,670			18,896
Depreciation, depletion and amortization		(20,968	)		(33,314	)
Other		(2,053	)		(3,054	)
Total deferred tax liabilities		(23,021	)		(36,368	)
Net deferred tax liability	$	(351	)	$	(17,472	)

As of December 31, 2001, the Company has an alternative minimum tax (AMT) credit carryforward of approximately $210,000 which can be used to offset regular Federal income taxes payable in future years. The AMT credit has an indefinite carryforward period. As of December 31, 2001, the Company has Canadian net operating loss (NOL) carryforwards of approximately $18,106,000 which can be used to offset Canadian income taxes payable in future years. The NOL carryforwards will expire in periods through 2008.

In connection with the exercise of non-qualified stock options and common stock purchase warrants by employees during 2001, 2000 and 1999, the Company received $515,000, $1,814,000 and $597,000, respectively, in Federal income tax savings which has been reflected as a credit to additional paid-in capital.

F-19

SEITEL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

NOTE D—DEBT

The following is a summary of the Company’s debt at December 31, 2001 and 2000 (in thousands):

	December 31,
	2001		2000
Senior notes, Series A, 7.17%, maturing in equal amounts of $8,333 through 2001	$	—	$	8,333
Senior notes, Series B, 7.17%, maturing in equal amounts of $5,500 through 2002		5,500		11,000
Senior notes, Series C, 7.48%, maturing in equal amounts of $4,500 through 2002		4,500		9,000
Senior notes, Series D, 7.03%, maturing in 2004		20,000		20,000
Senior notes, Series E, 7.28%, maturing in equal amounts of $12,500 beginning 2004 through 2009		75,000		75,000
Senior notes, Series F, 7.43%, maturing in 2009		43,000		43,000
Senior notes, Series G, 7.04%, maturing in 2006		20,000		—
Senior notes, Series H, 7.19%, maturing in 2008		50,000		—
Senior notes, Series I, 7.34%, maturing in 2011		37,000		—
Parent revolving credit agreement, maturing in 2004		—		40,000
Subsidiary revolving credit agreement (average 4.35% at December 31, 2001)		1,319		—
Term loan, variable rate ranging from 5.02% to 6.65% in 2001, maturing $2,500 in 2002 and 2003 and $4,375 in 2004		9,375		—
	$	265,694	$	206,333

Senior Notes:    The Company has issued through private placement, nine series of unsecured Senior Notes totaling $320 million, of which $255 million is outstanding at December 31, 2001. Interest on the Series A, B and C Senior Notes is payable semi-annually on June 30 and December 30, interest on the Series D, E and F Senior Notes is payable semi-annually on February 15 and August 15, and interest on the Series G, H and I Notes is payable semi-annually on April 15 and October 15. Accrued interest of $5,018,000 is included in accrued liabilities at December 31, 2001.

Lines of Credit:    On June 29, 2001, the Company replaced its existing $75 million line of credit with a new $75 million unsecured revolving line of credit facility that matures on June 29, 2004. The facility bears interest at a rate determined by the ratio of the Company’s debt to EBITDA (earnings before interest, taxes, depreciation, deletion and amortization). Pursuant to the interest rate pricing structure, the interest rate would be set at LIBOR plus 1.75% or the bank’s prevailing prime rate plus 0.75%. As of December 31, 2001, no amounts were outstanding and the Company had no availability on this revolving line of credit.

F-20

SEITEL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The Company’s wholly owned subsidiary, Olympic Seismic Ltd. (“Olympic”), has a revolving credit facility which allows it to borrow up to $5 million (Canadian dollars) by way of prime based loans, bankers’ acceptances or letters of credit. Prime based loans and bankers’ acceptances bear interest at the rate of the bank’s prime rate plus 0.35% per annum and 0.50% per annum, respectively. Letter of credit fees are based on scheduled rates in effect at the time of issuance. The facility is secured by Olympic’s assets, but is not guaranteed by Seitel, Inc. or any of its other United States subsidiaries. Available borrowings under the facility are determined as $2 million (Canadian dollars) plus 75% of trade receivables less than 90 days old, the total not to exceed $5 million (Canadian dollars). The facility is subject to repayment upon demand and is available from time to time at the Bank’s sole discretion. Olympic had a balance outstanding under this line of credit at December 31, 2001 of $1,319,000.

Term Loans:    On August 28, 2001, the Company’s wholly-owned subsidiary, Seitel Data, Ltd., obtained a term loan totaling $10 million for the purchase of certain seismic data which secures the debt. The loan is for a term of three years, maturing on October 1, 2004, and bears interest at the rate of LIBOR plus 2.9%. Monthly principal payments total $208,000. The balance outstanding on this loan on December 31, 2001 was $9,375,000.

The financial covenants in the Senior Notes and the Revolving Line of Credit Agreements include, among other restrictions, maintenance of minimum net worth and limitations on total debt, interest coverage, liens, debt issuance and disposition of assets. As a result of the restatement of its financial statements, the Company was not in compliance with certain financial covenants in the Senior Note Agreements dated December 28, 1995 and February 12, 1999 and the Revolving Line of Credit Agreement at September 30, 2001. In addition, as a result of the restatement of its financial statements and the impairment of oil and gas properties recorded in the fourth quarter of 2001, the Company was not in compliance with certain financial covenants in these agreements at December 31, 2001.

Refer to Note R for a discussion of the status of the Company’s non-compliance with its debt covenants.

Aggregate maturities of the Company’s debt over the next five years and thereafter are as follows: $13,819,000 in 2002; $2,500,000 in 2003, $36,875,000 in 2004, $12,500,000 in 2005, $32,500,000 in 2006 and $167,500,000 thereafter.

NOTE E—LEASE OBLIGATIONS

Assets recorded under capital lease obligations of $2,641,000 and $239,000 at December 31, 2001 and 2000, respectively, are included in property and equipment.

The Company leases office space under operating leases, some of which include renewal options. Rental expense for 2001, 2000 and 1999 was approximately $1,170,000, $1,148,000 and $1,112,000, respectively.

F-21

SEITEL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Future minimum lease payments for the five years subsequent to December 31, 2001 and in the aggregate are as follows (in thousands):

	Capital Leases			Operating Leases
2002	$	1,390		$	1,586
2003		1,366			1,288
2004		332			1,245
2005		—			1,242
2006		—			1,088
Total minimum lease payments		3,088		$	6,449
Less amount representing interest		(432	)
Present value of net minimum lease payments	$	2,656

NOTE F—COMMITMENTS AND CONTINGENCIES

Refer to Note R for a discussion of certain commitments and contingencies, including litigation arising subsequent to December 31, 2001.

The Company has employment agreements with certain of its key employees and other incentive compensation arrangements that commit it to commissions based on revenue, bonuses based on pre-tax profits, and other amounts based on seismic data program and oil and gas project profitability.

The Company guarantees borrowings up to $750,000 made by its former chief executive officer under a line of credit. The Company is only obligated to make payment in the event of default by its chief executive officer. The Company has a contractual right of offset against any salary, bonus, commission or other amounts due from the Company to its former chief executive officer for any amounts paid by the Company pursuant to this guaranty. At December 31, 2001, $590,000 was outstanding on this line of credit. The maximum amount outstanding on this line of credit during 2001 was $690,000. No amounts were paid by the Company relative to this Guaranty in 2001 or 2000.

In October 2001, the Company guaranteed an institutional loan to its former chief operating officer and general counsel, now its chief executive officer. The original principal of $600,000 will be paid annually, based on amortization of 120 months, but is payable in full in October 2006. The Company also agreed to make payments of principal and interest on the loan during the officer’s employment by the Company. As long as the officer remains in the employ of the Company, his obligation to repay shall be forgiven ratably over 120 months; however, under certain conditions of termination, he will be required to reimburse the Company a pro rata portion of amounts paid by the Company on the indebtedness. Such proration is based on length of employment. The Company has a contractual right of offset against any compensation due from the Company to the officer for any amounts paid by the Company on the indebtedness.

The Company is involved from time to time in or threatened with litigation and is subject to governmental and regulatory controls arising in the ordinary course of business. It is the opinion of the Company’s management that all claims and litigation involving the Company are not likely to have a material adverse effect on its financial position or results of operations.

        The Company, as an owner of oil and gas properties, is subject to various federal, state and local laws and regulations relating to discharge of materials into, and protection of, the environment. These laws and regulations may, among other things, impose liability on the lessee under an oil and gas lease for the cost of pollution clean-up resulting from operations and subject the lessee to liability for pollution damages. The Company maintains insurance coverage, which it believes is customary in the industry, although it is not fully insured against all environmental risks. The Company is not aware of any environmental claims existing as of December 31, 2001, which would have a material impact on its financial position or results of operations.

F-22

SEITEL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

NOTE G—FINANCIAL INSTRUMENTS AND OFF-BALANCE-SHEET RISK

The Company has a price risk management program that utilizes derivative financial instruments, principally natural gas swaps, to reduce the price risk associated with fluctuations in natural gas prices. The derivative financial instruments called for the Company to receive or make payments based upon the differential between a fixed and a variable commodity price as specified in the contract. As a result of these activities, the Company recognized net hedging losses of $1,692,000 and $308,000 for the years ended December 31, 2000 and 1999, respectively. As of December 31, 2001 and 2000, the Company did not have any open commodity price hedges.

The Company may enter into foreign exchange contracts to hedge a portion of its foreign currency exchange risk related to its Canadian activities. As of December 31, 2000, the Company had forward exchange contracts totaling $4 million (Canadian dollars) at an exchange rate into U.S. dollars of .6925 maturing in equal amounts of $1 million (Canadian dollars) each month from January 2001 to April 2001. The estimated fair market value of open foreign exchange contracts as of December 31, 2000 was $100,000. As of December 31, 2001 and 1999, the Company did not have any open foreign exchange contracts.

NOTE H—COMMON STOCK

In December 1997, the Company’s Board of Directors approved the expenditure of up to $25 million to repurchase the Company’s common stock. As of December 31, 2001, the Company has repurchased 1,110,100 shares of common stock at a cost of $12,529,000 under this plan.

The Company may offer from time to time in one or more series (i) unsecured debt securities, which may be senior or subordinated, (ii) preferred stock and (iii) common stock or any combination of the foregoing, up to an aggregate of $41,041,600 pursuant to an effective “shelf” registration statement filed with the SEC. In addition, under another effective “shelf” registration statement filed with the SEC, the Company may offer up to an aggregate of $200,000,000 of the following securities, in any combination, from time to time in one or more series: (1) unsecured debt securities, which may be senior or subordinated; (2) preferred stock; (3) common stock, and (4) trust preferred securities.

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 $2.69 per share. Payment of 5% of the original principal balance plus accrued interest are due annually August 1, with a balloon payment of the remaining principal and interest due August 1, 2002. On October 2, 1998, the Company granted five-year loans at an interest rate of 4% to most of its employees for the purchase of 794,300 shares of the Company’s common stock at the then market price of $10.31 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 related compensation expense due to the below market interest rate on these loans of $65,000, $98,000 and $114,000 for the years ended December 31, 2001, 2000 and 1999, respectively. During 2001, 2000 and 1999, the Company received $1,189,000, $1,950,000 and $1,736,000, respectively, as principal payments on these recourse notes. The stock certificates are held by the Company as collateral until payment is received.

NOTE I—PREFERRED STOCK

The Company is authorized by its Amended Certificate of Incorporation to issue 5,000,000 shares of preferred stock, the terms and conditions to be determined by the Board of Directors in creating any particular series. As of December 31, 2001, no preferred stock had been issued.

NOTE J—STOCK OPTIONS AND WARRANTS

The Company maintains various stock option plans under which the Company’s officers, directors and employees may be granted options or warrants to purchase the Company’s common stock. The exercise price, term and other conditions applicable to each option or warrant granted under the Company’s plans are generally determined by the Compensation Committee at the time of grant and may vary with each option or warrant granted. All options and warrants issued under the Company’s plans are issued at or above the market price of the Company’s common stock as of the date of issuance, have a term of no more than ten years and vest under varying schedules in accordance with the terms of the respective option or warrant agreements.

F-23

SEITEL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The following summarizes information with regard to the stock option and warrant plans for the years ended December 31, 2001, 2000 and 1999 (shares in thousands):

	2001				2000				1999
	Shares		Weighted Average Exercise Price		Shares		Weighted Average Exercise Price		Shares		Weighted Average Exercise Price
Outstanding at beginning of year	7,226		$	13.43	6,853		$	13.01	6,768		$	12.99
Granted	2,437			13.75	1,694			13.89	878			12.98
Exercised	(504	)		9.74	(1,021	)		10.16	(481	)		10.75
Cancelled	(316	)		12.96	(300	)		18.02	(312	)		11.87
Outstanding at end of year	8,843			13.55	7,226			13.43	6,853			13.01
Options exercisable at end of year	5,919				5,817				5,626
Available for grant at end of year	1,274				1,395				1,636

The following table summarizes information for the options and warrants outstanding at December 31, 2001 (shares in thousands):

	Options Outstanding			Options Exercisable
Range of Exercise Prices	Number of Options Outstanding at 12/31/01	Weighted Average Contractual Life in Years	Weighted Average Exercise Price	Number of Options Exercisable at 12/31/01	Weighted Average Exercise Price
$  3.88–$11.38	2,101	9.15	$10.83	315	$  9.97
$11.50–$13.50	1,363	4.54	12.31	1,128	12.15
$13.54–$13.73	3,184	3.04	13.73	3,079	13.73
$13.75–$17.56	1,898	5.32	16.28	1,163	16.06
$17.59–$22.13	297	4.50	19.12	234	19.08
$  3.88–$22.13	8,843	5.26	13.55	5,919	13.90

The Company applies APB Opinion No. 25 and related interpretations in accounting for its stock-based compensation plans. APB Opinion No. 25 generally does not require compensation costs to be recorded on options which have exercise prices at least equal to the market price of the stock on the date of grant. Accordingly, no compensation cost has been recognized for the Company’s stock-based plans. Had compensation cost for the Company’s stock-based compensation plans been determined based on the fair value at the grant dates for awards under those plans consistent with the optional accounting method prescribed by SFAS No. 123, “Accounting for Stock-Based Compensation,” the Company’s net income and earnings per share would have been reduced to the pro forma amounts indicated below (in thousands, except per share data):

	2001			2000			1999
				(Restated)
Net (loss) income
As reported	$	(14,993	)	$	(2,509	)	$	9,380
Pro forma	$	(24,339	)	$	(11,791	)	$	5,331
Basic (loss) earnings per share
As reported	$	(.60	)	$	(.10	)	$	.39
Pro forma	$	(.97	)	$	(.49	)	$	.22
Diluted (loss) earnings per share
As reported	$	(.60	)	$	(.10	)	$	.39
Pro forma	$	(.97	)	$	(.49	)	$	.22

F-24

SEITEL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The fair value of each option grant was estimated on the date of grant using the Black-Scholes option-pricing model with the following assumptions for 2001, 2000 and 1999, respectively: (1) risk-free interest rates ranging from 2.77% to 5.35%, 5.02% to 6.06% and 5.56% to 6.73%, (2) dividend yield of 0%, 0% and 0%, (3) stock price volatility ranging from 234.55% to 399.84%, 248.45% to 401.22% and 47.84% to 482.90%, and (4) expected option lives ranging from 1.15 to 10 years, 2.78 to 10 years and .67 to 10 years. The weighted-average fair value of options granted during 2001, 2000 and 1999 was $13.51, $13.78 and $12.57 per option, respectively, for options granted at fair market value and $7.13 per option for options granted above fair market value in 1999. The pro forma amounts shown above may not be representative of future results because the SFAS No. 123 method of accounting has not been applied to options granted prior to January 1, 1995.

NOTE K—NON-EMPLOYEE DIRECTORS’ PLANS

The Company has a 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 director fees in a deferred cash account or as deferred shares. As of December 31, 2001, 60,000 shares have been reserved for issuance under this plan and directors have accumulated 16,391 deferred shares in their accounts of which 1,312 shares have been distributed and 15,079 will be distributed in future years.

In 1999, the Company’s Board of Directors adopted the Non-Employee Directors’ Retirement Plan which provides that each non-employee director with 10 or more years of continuous service is eligible to receive a retirement benefit based on a formula defined in the plan. A portion of the retirement benefit fluctuates based on the fair market value of the Company’s stock. As a result, in 2001 the Company recorded a reduction of $32,000 in the retirement benefit related to this plan. The Company expensed $82,000 and $18,000 related to this plan in 2000 and 1999, respectively.

NOTE L—RESTRUCTURING

On June 23, 2000, the Company announced that its management incentive bonus compensation contracts had been restructured to reduce bonuses on pre-tax profits to 8.5% from 17.5%. In connection with the restructuring, the Company issued 375,000 restricted shares of its Common Stock to three members of management and made cash payments totaling $1,771,000. As a result, the Company recorded a restructuring charge in 2000 totaling $4,394,000 ($3,743,000 net of tax) to reflect the cost of the shares issued and the cash payments made. In addition, the Company will, subject to continued employment, make (i) four annual payments of $187,500, net of taxes, to Herbert Pearlman, former Chairman of the Board of Directors, beginning January 1, 2001; (ii) four annual payments of $125,000, net of taxes, to Paul Frame, Chairman of the Board, President and Chief Executive Officer, beginning January 1, 2001; and (iii) payments totaling $1.4 million, net of taxes, to David Lawi payable over four years beginning January 1, 2001. The withholding taxes on these payments will total 35%. The Company will also make annual payments of $850,000 to Horace Calvert beginning July 1, 2000 through May 31, 2004, subject to continued employment. These payments will be charged to expense over the period earned. For the years ended December 31, 2001 and 2000, $1,850,000 and $1,425,000, respectively, was included in selling, general and administrative expense related to these payments.

NOTE M—INVESTMENT IN EAGLE GEOPHYSICAL, INC.

On April 22, 1999, the Board of Directors of Seitel, Inc. declared to its common stockholders a dividend consisting of 1,520,000 shares of the common stock of Eagle Geophysical, Inc. (“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 fair market value of the common stock of Eagle held by the Company on the date this dividend was declared was lower than the carrying value of the stock on the Company’s balance sheet; therefore, a non-cash, non-recurring, pre-tax impairment, net of bonus effect, of $7,794,000 was recorded for the year ended December 31, 1999.

F-25

SEITEL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

NOTE N—RELATED PARTY TRANSACTIONS

Refer to Note R for a discussion of transactions involving certain former executives.

The Company owed Helm Capital Group, Inc. and its subsidiaries (“Helm”), a company that has an executive officer who is a former director of the Company, $49,000 and $16,000 as of December 31, 2001 and 2000, respectively, for sales of seismic data they jointly own and for general and administrative expenses paid by Helm on behalf of the Company. The Company incurred charges of $175,000, $117,000 and $115,000, for these general and administrative expenses during 2001, 2000 and 1999, respectively. Management believes that these expenses, which were specifically related to the Company’s business, represented costs which would have been incurred in similar amounts by the Company if such services that were performed by Helm were performed by an unaffiliated entity.

During 2001, the former chief executive officer received advances against bonus and commission payments that were contingent upon achieving $10 million in pre-tax profits during 2001. The former chief financial officer received advances against customary and anticipated bonus payments. The pre-tax profits threshold was not met in 2001. The Company determined that advances previously paid but not earned or rewarded would be repaid pursuant to promissory notes. The former chief executive officer and the former chief financial officer agreed to deliver promissory notes to the Company in a principal amount equal to $2,572,730 and $621,293, respectively. These amounts are included in notes and other receivables as of December 31, 2002. The promissory notes are to be repaid over five years; however, the balance owed under the promissory notes will be reduced by 20% in any year in which the pre-tax profits threshold of $10 million is met.

The Company guarantees borrowings up to $750, 000 made by its former chief executive officer under a line of credit. The Company is only obligated to make payment in the event of default by its chief executive officer. The Company has a contractual right of offset against any salary, bonus, commission or other amounts due from the Company to its former chief executive officer for any amounts paid by the Company pursuant to this guaranty. At December 31, 2001, $590,000 was outstanding on this line of credit. The Company did not make any payments under this guaranty during 2001 or 2000.

In October 2001, the Company guaranteed an institutional loan to its former chief operating officer and general counsel, now its chief executive officer. The original principal of $600,000 will be paid annually, based on amortization of 120 months, but is payable in full in October 2006. The Company also agreed to make payments of principal and interest on the loan during the officer’s employment by the Company. As long as the officer remains in the employ of the Company, his obligation to repay shall be forgiven ratably over 120 months; however, under certain conditions of termination, he will be required to reimburse the Company a pro rata portion of amounts paid by the Company on the indebtedness. Such proration is based on length of employment. The Company has a contractual right of offset against any compensation due from the Company to the officer for any amounts paid by the Company on the indebtedness.

NOTE O—MAJOR CUSTOMERS

No single customer accounted for 10% or more of revenue during 2001, 2000 and 1999.

The Company extends credit to various companies in the oil and gas industry for the purchase of their seismic data, which results in a concentration of credit risk. This concentration of credit risk may be affected by changes in economic or other conditions and may accordingly impact the Company’s overall credit risk. However, management believes that the risk is mitigated by the number, size, reputation and diversified nature of the companies to which they extend credit. Historical credit losses incurred on receivables by the Company have not been significant relative to sales.

NOTE P—STATEMENT OF CASH FLOW INFORMATION

For purposes of the statement of cash flows, the Company considers all highly liquid investments or debt instruments with original maturity of three months or less to be cash equivalents.

Operating cash flows reported in the consolidated statements of cash flows do not reflect effects of changes in inventory levels because the Company reports no inventories and classifies cash expenditures for its seismic data library as an investing, rather than an operating, activity.

F-26

SEITEL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Income taxes paid during 2001, 2000 and 1999 were $13,404,000, $6,716,000 and $1,754,000, respectively. Interest paid, net of amounts capitalized, during 2001, 2000 and 1999 was $11,975,000, $13,003,000 and $8,926,000, respectively.

Significant non-cash investing and financing activities are as follows:

1. During 2001, 2000 and 1999, the Company had non-cash additions to its seismic data library totaling $60,389,000, $15,716,000 and $8,989,000, respectively. Of these amounts, $57,045,000, $12,435,000 and $8,989,000 resulted from non-exclusive licensing of data in exchange for ownership of data during 2001, 2000 and 1999, respectively. The balance of $3,344,000 and $3,281,000 for 2001 and 2000, respectively, resulted from non-cash additions related to certain data creation costs, which were offset against amounts due from the customer for data license fees. This remaining balance is also included in non-cash sales in the Consolidated Statements of Cash Flows.

2. During 2001 and 2000, capital lease obligations totaling $2,501,000 and $283,000, respectively, were incurred when the Company entered into leases for property and equipment.

3. During 1999, the Company declared to its common stockholders a dividend consisting of 1,520,000 shares of common stock of Eagle owned by the Company with a fair market value of $6,365,000.

NOTE Q—INDUSTRY SEGMENTS

Segment information has been prepared in accordance with SFAS No. 131, “Disclosures about Segments of an Enterprise and Related Information”. The Company operates in two reportable segments—seismic and exploration and production. The long-term financial performance of each of the reportable segments is affected by similar economic conditions. The accounting policies of the segments are the same as those described in Footnote A to these consolidated financial statements. The Company evaluates performance of each reportable segment based on operating income before selling, general and administrative expenses, interest income and expense, income taxes, non-recurring items and accounting changes.

F-27

SEITEL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Financial information by reportable segment for the three years ended December 31, 2001, was as follows (in thousands):

	Seismic		Exploration and Production			Total Segments
2001
Revenue from external purchasers	$	115,238	$	21,091		$	136,329
Depreciation, depletion and amortization		48,216		10,640			58,856
Impairment of oil and gas properties		—		40,433			40,433
Cost of sales		1,196		4,269			5,465
Segment operating income		65,826		(34,251	)		31,575
Assets		556,971		93,932			650,903
Capital expenditures(a)		145,421		17,786			163,207
2000 (Restated)
Revenue from external purchasers	$	113,887	$	24,435		$	138,322
Depreciation, depletion and amortization		51,347		10,376			61,723
Cost of sales		738		4,832			5,570
Segment operating income		61,802		9,227			71,029
Assets		444,453		149,113			593,566
Capital expenditures(a)		70,072		14,955			85,027
1999
Revenue from external purchasers	$	109,671	$	19,036		$	128,707
Depreciation, depletion and amortization		49,375		9,093			58,468
Cost of sales		296		4,720			5,016
Segment operating income		60,000		5,223			65,223
Assets		391,849		157,925			549,774
Capital expenditures(a)		116,525		22,318			138,843

(a) Includes other ancillary equipment.

The following geographic information for the three years ended December 31, 2001 pertains to the Company’s seismic segment (in thousands):

	United States		Canada		Other Foreign Countries		Total
2001
Revenue from external customers	$	91,250	$	23,988	$	—	$	115,238
Assets		479,868		75,746		1,357		556,971
2000 (Restated)
Revenue from external customers	$	86,942	$	26,900	$	45	$	113,887
Assets		386,167		56,857		1,429		444,453
1999
Revenue from external customers	$	83,532	$	26,139	$	—	$	109,671
Assets		347,672		42,654		1,523		391,849

All exploration and production activities are conducted in the United States.

F-28

SEITEL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The following table reconciles segment information to consolidated totals (in thousands):

	December 31,
	2001			2000			1999
				(Restated)
Depreciation, depletion and amortization:
Total reportable segment depreciation, depletion and amortization	$	58,856		$	61,723		$	58,468
Corporate and other		1,857			1,174			1,156
Total consolidated depreciation, depletion and amortization	$	60,713		$	62,897		$	59,624
Income before income taxes:
Total reportable segment operating income	$	31,575		$	71,029		$	65,223
Selling general and administrative expense		(36,828	)		(33,131	)		(28,587	)
Special charges		(1,265	)		—			—
Expenses related to delayed DDD Energy, Inc. offering		—			(958	)		—
Restructuring charge		—			(4,394	)		—
Interest expense, net		(13,102	)		(12,106	)		(11,077	)
Dividend income		—			22			—
Equity in earnings (loss) of affiliate		—			—			(91	)
Impairment due to dividend distribution of affiliate stock		—			—			(7,794	)
Eliminations and other		(1,857	)		(1,174	)		(1,156	)
(Loss) income before income taxes	$	(21,477	)	$	19,288		$	16,518
Assets:
Total reportable segment assets	$	650,903		$	593,566		$	549,774
Corporate and other		10,566			5,565			6,145
Total consolidated assets	$	661,469		$	599,131		$	555,919

NOTE R—SUBSEQUENT EVENTS

Internal and Securities And Exchange Commission Investigation

In the second quarter of 2002, Mr. Frame resigned from the Company and Ms. Valice’s employment was terminated. In connection with the departure of these executives, the Company initiated an internal investigation. As a result of that investigation, the Company discovered that Mr. Frame and Ms. Valice may have improperly converted corporate funds for their personal use, including certain “unearned advances”. The Company is seeking immediate reimbursement from Mr. Frame of:

• $2,641,038 of “unearned advances” that he drew from Company funds;

• $750,000 of his personal attorney’ fees and legal settlement costs that he caused the Company to pay;

• $695,805 in his personal automobile racing expenses that he caused the Company to pay;

• $148,309 for the purchase of a security system for his home that he caused the Company to pay.

Of these amounts, Mr. Frame caused the Company to pay approximately $1.3 million, in 2001, that was personal in nature and unrelated to the conduct of the Company’s business. These amounts were previously recorded in “selling, general and administrative” expenses, but have been reclassified to “special charges” in the accompanying financial statements.

The Company is also seeking reimbursement from Ms. Valice of $621,293 of “unearned advances” that she drew from Company funds.

The Company has notified the Securities and Exchange Commission (“SEC”) regarding the findings of the internal investigation. The SEC’s Fort Worth District Office has informed the Company that it has initiated an informal inquiry into these events and the Company is fully cooperating with the inquiry. As discussed below, Mr. Frame and Ms. Valice have each filed suit against the Company alleging, among other things, breach of contract. The Company has filed counterclaims against each to recover the above described funds owed by each to the Company.

F-29

SEITEL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Litigation

The Company and certain of its former and current officers and directors have been named as defendants in eleven lawsuits brought as class actions alleging violations of the federal securities laws, all of which were consolidated by Order entered August 7, 2002, under Cause No. 02-1566, styled In re Seitel, Inc. Securities Litigation, in the United States District Court for the Southern District of Texas. The complaints generally allege that during proposed class periods of May 5, 2000 through May 3, 2002 or July 13, 2000 through April 1, 2002, the defendants violated sections 10(b) and 20(a) of the Securities and Exchange Act of 1934, by overstating revenues in violation of generally accepted accounting principles. The plaintiffs seek an unspecified amount of actual and exemplary damages, costs of court, pre- and post-judgment interest and attorney’ fees. The Court has set a hearing for August 30, 2002 on several motions for appointment of lead plaintiff and approval of lead counsel for plaintiffs. By agreement of the parties, the defendants are not required to answer or otherwise respond until after the court selects lead plaintiff and lead counsel and the plaintiffs file a consolidated amended complaint. No discovery has been conducted. The Company intends to vigorously defend these lawsuits.

        The Company has been named as a nominal defendant in seven stockholder derivative actions filed in various courts: Chemical Valley & North Central West Virginia Carpenters Pension Plan v. Frame, Valice, Hoffman, Pearlman, Craig, Lerner, Steiglitz, Zeidman, Fiur, and Seitel, Inc., No. 2002-39404, In the District Court of Harris County, Texas, 151st Judicial District; Almekinder v. Frame, Valice, Pearlman, Craig, Lerner, Stieglitz, Zeidman, Hoffman, and Seitel, Inc., No. H-02-2960, In the United States District Court for the Southern District of Texas; Basser v. Frame, Valice, Kendrick, Pearlman, Fiur, Zeidman, Stieglitz, Craig, Lerner, and Seitel, Inc., No. H-02-1874, In the United States Court for the Southern District of Texas; Berger v. Frame, Pearlman, Valice, Craig, Stieglitz, Lerner, Zeidman, Fiur, and Seitel, Inc., No. 19534-NC, In the Court of Chancery, State of Delaware, Castle County; Couture v. Frame, Valice, Craig, Lerner, Stieglitz, Zeidman, Hoffman, and Seitel, Inc., No. 20002-37065, In the 80th Judicial District Court, Harris County, Texas; Talley v. Frame, Valice, Pearlman, Craig, Lerner, Stieglitz, Zeidman, Hoffman, and Seitel, Inc., In the 151st Judicial District Court, Harris County, Texas; and Zambie v. Frame, Pearlman, Valice, Craig, Zeidman, Lerner, Steiglitz, Fiur, Ernst & Young, LLP, and Seitel, Inc., In the 333rd Judicial District Court, Harris County, Texas. The Plaintiffs generally allege that the defendants breached and conspired to breach fiduciary duties to the Company and its shareholders by failing to maintain adequate accounting controls and by using improper accounting and, as applicable, auditing practices and procedures. Certain of the plaintiffs also assert causes of action for mismanagement, waste of corporate assets and unjust enrichment. The Zambie case also alleges professional negligence against Ernst & Young LLP. The plaintiffs seek judgments for unspecified amounts of compensatory damages, including return of salaries and other payments, exemplary damages, attorneys’ fees, experts’ fees and costs. The Company’s Board of Directors has appointed a special litigation committee, which is conducting an independent investigation of the allegations asserted in the derivative lawsuits, which it expects to be completed in September 2002. No discovery has been conducted. The defendants presently intend to seek to have all of the derivative cases stayed, including discovery that has been served in the Talley case, pending completion of that investigation.

The Company sued its former chairman of the board in Seitel, Inc. v. Pearlman, C.A. No. H-02-1843, In the United States District Court in the Southern District of Texas. The Company seeks a declaratory judgment with respect to the employment agreement between Mr. Pearlman and the Company. Following his resignation as chairman of the board, Mr. Pearlman and the Company entered into negotiations for a restructuring of his employment agreement. During the negotiations, a document was created that Mr. Pearlman now alleges has superseded the employment agreement. The Company believes that neither its Board of Directors nor any committee approved the document. The Company seeks a judgment declaring the effect of Mr. Pearlman’s resignation on the employment agreement, whether the Company owes any amounts under the employment agreement as a result of his resignation and, if so, how much, and a judgment that the subsequent document is not binding on the Company and is not enforceable by Mr. Pearlman against the Company. Mr. Pearlman has filed counterclaims asserting that the board of directors approved the subsequent document and asserts causes of action for breach of contract, fraud, negligent misrepresentation and promissory estoppel. Mr. Pearlman seeks to

F-30

SEITEL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

be realigned as the plaintiff in the action and seeks actual damages in an amount exceeding $4,000,000, punitive damages, attorneys’ fees, costs and expenses. No discovery has been conducted. The Company intends to vigorously pursue its claims and defend against the counterclaims.

The Company has been sued by its former chief financial officer in Valice v. Seitel, in the 55th Judicial District Court of Harris County, No. 2002-30195. Ms. Valice filed suit against the Company alleging a breach of her employment contract by virtue of her termination. The Company terminated her employment for what it believes is “cause” under her contract, and the Company believes that she is entitled to no recovery on her suit. The Company has filed a counter suit against Ms. Valice seeking to recover over $621,000 in unearned advances she received from the Company and has failed to repay. The Company intends to vigorously defend the suit and pursue its counterclaim. Discovery is not yet underway.

The Company has been sued by its former chief executive officer in Frame v. Seitel, in the 113th Judicial District Court of Harris County, No. 2002-35891. Mr. Frame filed suit against the Company alleging a breach of his employment contract by virtue of his asserted termination. He also alleges a press release announcing his resignation and advising that the Company was investigating possible misappropriation of corporate funds for personal use by him was defamatory. He also seeks a declaratory judgment that certain funds he received from the Company were proper and do not have to be repaid. The Company has answered and asserted various defenses including the fact that the allegedly defamatory statements are true or substantially true and that its publication was privileged. The Company also has filed a counter suit to recover the approximately $4,200,000 in corporate funds that the Company believes he inappropriately converted for his personal use and benefit. The Company intends to vigorously defend the suit and pursue its counterclaim. Discovery is not yet underway.

The litigation referred to above is in its early stages. Accordingly, the Company is unable to determine a range of contingent liabilities associated with such litigation. However, if one or more of the parties were to prevail against the Company in one or more of the cases described above, the amounts of any judgments against the Company or settlements that the Company may enter into could be material to the Company’s financial statements for any particular reporting period. Based on its present evaluation of the merits of the litigation referred to above the Company does not believe any amounts should be accrued based on SFAS No. 5, “Accounting For Contingencies.” Accordingly, the Company has not recorded any liabilities related to such litigation as of August 16, 2002.

The Company is currently a party to a dispute with Winthrop Resources Corporation (“Winthrop”) arising out of an equipment lease signed by the parties in October 2001. The Company sought to lease a majority of the equipment needed to establish and operate certain data centers from Winthrop. Based on representations from Winthrop, the Company expected to receive an operating lease, but after an inquiry the Company determined the lease was, in fact, a capital lease. Winthrop alleges that the Company’s restatement of its financial statements was a material adverse event and thus prevented further leasing. The Company made all monthly payments called for under the lease until the July 1, 2002 payment, at which time the Company suspended payment. The Company filed an application for a temporary restraining order on July 12, 2002, which was granted on that same day, seeking to enjoin Winthrop from repossession of certain equipment pending the hearing on the application for a temporary injunction which hearing was set for August 9, 2002, but was postponed by the parties. Winthrop filed suit in Minnesota state court on July 15, 2002 in which it seeks contractual damages and return of the leased equipment. Winthrop asserts the case in Texas should be dismissed because the parties agreed in the lease that venue would be in Minnesota. That motion to dismiss was scheduled to be heard at the August 9 hearing, but now rescheduled to begin August 30, 2002.

        The Company and Winthrop recently entered into a standstill agreement in both the Texas and Minnesota actions so they can explore a settlement. No settlement agreement has been executed, although discussions continue. The standstill agreement expires at the resolution of the August 30 hearing.

New York Stock Exchange Listing

The Company received notification from the New York Stock Exchange (“NYSE”) that it has fallen below the NYSE continued listing standards due to the Company’s stock trading at a price of below $1.00 per share for a consecutive 30-day trading period. In accordance with the rules and procedures of the NYSE, the Company has six months within which to cure this price per share deficiency, prior to the NYSE commencing suspension and delisting procedures. The Company has responded to the notification letter, informing the NYSE of the Company’s intent to cure the deficiency.

F-31

SEITEL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Non-Compliance With Debt Covenants

The financial covenants in the Senior Notes and the Company’s now terminated Revolving Line of Credit Agreements include, among other restrictions, maintenance of minimum net worth and limitations on total debt, interest coverage, liens, debt issuance and disposition of assets. As a result of the restatement of its financial statements, the Company was not in compliance with certain financial covenants in the Senior Note Agreements dated December 28, 1995 and February 12, 1999 and the Revolving Line of Credit Agreement at September 30, 2001. In addition, as a result of the restatement of its financial statements and the impairment of oil and gas properties recorded in the fourth quarter of 2001, the Company was not in compliance with these same financial covenants in these agreements at December 31, 2001. The Company received an amendment from the Senior Noteholders that waived noncompliance with the limitation on total debt covenant in the third and fourth quarters of 2001 and increased the ratio of allowed debt total capitalization through March 31, 2003, after which date the original financial covenants will again be imposed.

In addition, as a result of increased interest expense and decreased revenue in the first quarter of 2002, the Company was not in compliance with the interest coverage covenant as of March 31, 2002 in the Senior Note Agreements dated December 28, 1995, February 12, 1999 and October 15, 2001 and the Revolving Line of Credit Agreement. Additionally, as of March 31, 2002, the Company was not in compliance with the limitation on restricted payments and investments covenant in the Senior Note Agreement dated February 12, 1999 and the leverage ratio covenant in the Revolving Line of Credit Agreement. The Company received waivers from the Senior Noteholders for the covenants it was not in compliance with; such waivers continued through May 24, 2002. Effective June 21, 2002, the Company entered into a standstill agreement with its Senior Noteholders pursuant to which the Noteholders agreed not to exercise remedies available to them under the Senior Note Agreements as a result of existing defaults until July 17, 2002. Effective as of July 17, 2002, the Company reached an agreement with the Senior Noteholders to extend the standstill agreement for an additional 90 days until October 15, 2002. During the 90 day standstill period, various existing covenants are suspended and replaced with certain enumerated covenants, including the requirement that the Company receive Senior Noteholder approval to make certain investments or payments out of the ordinary course of business, incur additional debt, create liens or sell assets. The standstill may terminate prior to October 15, 2002 if, among other things,

(i) there is an event of default by the Company under the standstill agreement or any subsequent defaults under the existing Senior Note Agreements;

(ii) the Company defaults on the payments of any non-excluded debt of $5,000,000 or more; or

(iii) the Company does not provide the Noteholders with a form of business plan by August 19, 2002, and an acceptable business plan by August 31, 2002.

The Company was not in compliance with the interest coverage covenant as of June 30, 2002, in the Senior Note Agreements dated December 28, 1995, February 12, 1999 and October 15, 2001. However, under the terms of the standstill agreements, such non-compliance has been waived.

        The Company is working with the Noteholders toward a long-term modification of the Senior Note Agreements. If the Company is unable to obtain such long-term modifications, the Senior Noteholders could elect to accelerate the debt. Based on the Company’s current financial condition, if the debt were to be accelerated the Company would be unable to satisfy the obligation. If such an acceleration occurred, the Company would intend to seek additional or replacement sources of fundraising. However, there can be no assurance that the Company would be able to obtain such financing on satisfactory terms or at all.

        In addition, the Company was not in compliance with the leverage ratio covenant and the interest coverage covenant of the Seitel Data, Ltd. term loan at June 30, 2002 and March 31, 2002 and the leverage ratio covenant at September 30, 2001 and December 31, 2001. Additionally, the Company was not in compliance with the net worth covenant at June 30, 2002. The lender has issued a notice of default but has not accelerated the debt.

As a result of the Company’s non-compliance with certain of the covenants of its debt agreements, the Company’s 2001 financial statements contain a “going concern” qualification. The Company’s independent auditors have advised the Company that, if the non-compliance with the debt agreements is not satisfactorily resolved, their report on the December 31, 2002 financial statements will contain a “going concern” qualification.

Sale of DDD Energy

On July 3, 2002, DDD Energy entered into a Purchase and Sale Agreement with Rising Star Energy, L.L.C. for the sale of a majority of the oil and gas exploration and production properties and related assets of DDD Energy. The transaction closed on August 2, 2002. After adjustments, the Company received cash proceeds of $23.8 million with a final adjustment, if any, to be made within 90 days following closing. The purchase agreement grants Rising Star an option, exercisable within 30 days of closing, to purchase additional oil and gas assets of DDD Energy and another subsidiary of the Company for up to $15 million, or to enter into a joint venture arrangement with the Company related to these assets.

F-32

SEITEL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

NOTE S—QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)

The following is a summary of the unaudited quarterly results of operations for the years ended December 31, 2001 and 2000.

	Quarter Ended
	March 31			June 30			Sept. 30			Dec. 31
	(In thousands, except per share amounts)
2001 (first three quarters restated)(1)
Revenue	$	38,324		$	30,451		$	29,306		$	38,248
Gross profit (loss)(2)		20,491			7,429			(6,970	)		8,768
Provision (benefit) for income taxes		2,653			(1,660	)		(6,715	)		(762	)
Net income (loss)		4,031			(3,218	)		(12,410	)		(3,396	)
Earnings (loss) per share:(3)
Basic		.16			(.13	)		(.50	)		(.14	)
Diluted		.15			(.13	)		(.50	)		(.14	)
2000 (restated)(1)
Revenue	$	28,040		$	33,177		$	37,247		$	39,858
Gross profit(2)		13,630			15,931			18,951			21,343
Provision for income taxes		1,303			2,099			2,524			1,652
Cumulative effect of accounting change		(14,219	)		—			—			—
Net (loss) income		(11,664	)		(1,425	)		4,607			5,973
Earnings (loss) per share:(3)
Basic		(.49	)		(.06	)		.19			.25
Diluted		(.49	)		(.06	)		.19			.24

(1) The amounts for the first three quarters of 2001 and the four quarters of 2000 have been restated consistent with the disclosure in Note B.

(2) Gross profit represents revenue less data bank amortization, depletion of oil and gas properties, impairment of oil and gas properties and cost of sales.

(3) The sum of the individual quarterly earnings per share may not agree with the year to date earnings per share as each period’s computation is based on the weighted average number of common shares outstanding during the period.

Non-Monetary Transactions

Effective September 30, 2001, and prior to the change in accounting policy for revenue recognition discussed in Note B, the Company changed its presentation with respect to certain exchange transactions. In these transactions, the Company sold the customer a non-exclusive license to data from its library and in turn purchased seismic data from the customer. The Company and the customer each issued cash payments for the transaction amount. Prior to September 30, 2001, the sale of the license was recorded as cash revenue and the purchase of data was recorded as cash invested in seismic data. As of September 30, 2001, the presentation of these transactions was changed from a cash transaction to a non-monetary transaction because the data license and the data purchase were with the same customer. As a result of this change in presentation, the $39.4 million in non-monetary transactions reported for the nine months ended September 30, 2001 in the

F-33

SEITEL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

statement of cash flows included $11.1 million related to transactions which occurred in the first and second quarters of 2001 in which the Company and its customer each issued cash payments. The following table summarizes the non-monetary transactions as reported and as revised (in thousands):

	Prior to Restatement
Quarter Ended	As Reported		Amounts Related to Change in Presentation			As Revised for Change in Presentation
March 31, 2001	$	7,824	$	4,741		$	12,565
June 30, 2001		1,672		6,407			8,079
September 30, 2001		29,917		(11,148	)		18,769
	$	39,413	$	—		$	39,413

Following the restatement for the nine months ended September 30, 2001 and under the Company’s newly adopted revenue recognition policy, revenue under certain data licensing contracts is deferred until selection of the data is made. The result of the deferral is to reduce the amount of revenue currently recognized. Had the new revenue recognition policy been adopted at the time of issuance of the Company’s quarterly financial statements, the quarterly revenue totals reported for non-monetary transactions would have been as follows (in thousands):

Quarter Ended	As Restated
March 31, 2001	$	4,363
June 30, 2001		3,330
September 30, 2001		4,715
December 31, 2001		5,811
Total	$	18,219

NOTE T—SUPPLEMENTAL OIL AND GAS INFORMATION (UNAUDITED)

The following information concerning the Company’s oil and gas operations is presented in accordance with SFAS No. 69, “Disclosures about Oil and Gas Producing Activities.”

Oil and Gas Reserves:    Proved oil and gas reserves represent estimated quantities of natural gas, crude oil, condensate and natural gas liquids that geological and engineering data demonstrate, with reasonable certainty, to be recoverable in future years from known reservoirs under economic and operating conditions existing at the time the estimates were made. Proved developed reserves are proved reserves expected to be recovered through wells and equipment in place and under operating methods being utilized at the time the estimates were made.

F-34

SEITEL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The following table sets forth estimates of proved reserves and proved developed reserves of natural gas and crude oil (including condensate and natural gas liquids) attributable to the Company’s interest in oil and gas properties. The reserve estimates presented herein were prepared by the independent petroleum engineering firm of Garb Grubbs Harris & Associates, Inc. (formerly Forrest A. Garb & Associates, Inc.) in accordance with guidelines established by the SEC. It should be noted that these reserve quantities are estimates and may be subject to substantial upward or downward revisions. The estimates are based on the most current and reliable information available; however, additional information obtained through future production and experience and additional development of existing reservoirs may significantly alter previous estimates of proved reserves.

	Oil (Mbbl)		Gas (MMcf)
Proved reserves at December 31, 1998	7,338		74,059
Revisions of previous estimates	(1,494	)	(6,978	)
Purchases of reserves in place	118		6,600
Sales of reserves in place	(1,307	)	(11,336	)
Extensions and discoveries	152		5,405
Production	(346	)	(5,693	)
Proved reserves at December 31, 1999	4,461		62,057
Revisions of previous estimates	(795	)	(20,999	)
Purchases of reserves in place	133		697
Sales of reserves in place	(57	)	(2,059	)
Extensions and discoveries	339		6,285
Production	(303	)	(4,390	)
Proved reserves at December 31, 2000	3,778		41,591
Revisions of previous estimates	(427	)	(1,543	)
Sales of reserves in place	(324	)	(1,268	)
Extensions and discoveries	160		1,706
Production	(278	)	(3,157	)
Proved reserves at December 31, 2001	2,909		37,329
Proved developed reserves—
December 31, 1998	5,265		37,844
December 31, 1999	2,355		19,608
December 31, 2000	2,149		12,376
December 31, 2001	1,450		11,440

The proved reserves disclosed above exclude proved sulfur reserves of 80,000 long tons, 164,000 long tons and 260,000 long tons at December 31, 2001, 2000 and 1999, respectively. The proved reserves are subject to a net profits interest equivalent to 1,007 MMcf of natural gas and 33 MBbl of crude oil at December 31, 2001.

Capitalized Costs of Oil and Gas Properties:    As of December 31, 2001 and 2000, the Company’s capitalized costs of oil and gas properties were as follows (in thousands):

	December 31,
	2001			2000
Unproved properties	$	23,242		$	45,908
Proved properties		182,268			160,818
Total capitalized costs		205,510			206,726
Less: Accumulated depreciation, depletion and amortization		(116,140	)		(65,068	)
Net capitalized costs	$	89,370		$	141,658

F-35

SEITEL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Of the total costs excluded from the amortization calculation as of December 31, 2001, $9,043,000 was incurred during 2001, $2,452,000 was incurred during 2000, $7,177,000 was incurred during 1999, $4,307,000 was incurred during 1998, and $263,000 was incurred during 1997. The Company cannot accurately predict when these costs will be included in the amortization base, but it is expected that these costs will be evaluated in the next three to five years.

Costs Incurred in Oil and Gas Activities:    The following table sets forth the Company’s costs incurred for oil and gas activities for the years ended December 31, 2001, 2000 and 1999 (in thousands):

	2001		2000		1999
Acquisition of properties:
Evaluated	$	—	$	—	$	—
Unevaluated		9,858		6,951		8,303
Exploration costs		4,211		2,641		12,789
Development costs		3,531		5,175		847
Total costs incurred	$	17,600	$	14,767	$	21,939

Results of Operations for Oil and Gas Producing Activities:    The following table sets forth the results of operations for oil and gas producing activities for the years ended December 31, 2001, 2000 and 1999 (in thousands):

	2001			2000			1999
Revenue	$	21,011		$	24,226		$	18,637
Production costs		(4,260	)		(4,821	)		(4,706	)
Depreciation, depletion and amortization		(10,640	)		(10,376	)		(9,093	)
Impairment of oil and gas properties		(40,433	)		—			—
(Loss) income before income taxes		(34,322	)		9,029			4,838
Income tax benefit (expense)		(12,013	)		(3,160	)		(1,693	)
Results of operations	$	(22,309	)	$	5,869		$	3,145

In addition to the revenue and production costs disclosed above, the Company had revenues from sulfur sales and related production costs of $80,000 and $9,000, respectively, for the year ended December 31, 2001, $209,000 and $11,000, respectively, for the year ended December 31, 2000, and $399,000 and $14,000, respectively, for the year ended December 31, 1999.

Standardized Measure of Discounted Future Net Cash Flows Relating to Proved Oil and Gas Reserves:    The following table sets forth the standardized measure of the discounted future net cash flows attributable to the Company’s proved oil and gas reserves as prescribed by SFAS No. 69. Future cash inflows were computed by applying year-end prices of oil and gas to the estimated future production of proved oil and gas reserves. Future prices actually received may differ from the estimates in the standardized measure.

        Future production and development costs represent the estimated future expenditures (based on current costs) to be incurred in developing and producing the proved reserves, assuming continuation of existing economic conditions. Future income tax expenses were computed by applying statutory income tax rates to the difference between pre-tax net cash flows relating to the Company’s proved oil and gas reserves and the tax basis of proved oil and gas properties, adjusted for tax credits and allowances. The resulting annual net cash flows were then discounted to present value amounts by applying a 10 percent annual discount factor.

        Although the information presented is based on the Company’s best estimates of the required data, the methods and assumptions used in preparing the data were those prescribed by the Financial Accounting Standards Board. Although not market sensitive, they were specified in order to achieve uniformity in assumptions and to provide for the use of reasonably objective data. It is important to note here that this information is neither fair market value nor the present value of future cash flows and it does not reflect changes in oil and gas prices experienced since the respective year-end. It is primarily a tool designed by the FASB to allow for a reasonable comparison of oil and gas reserves and changes therein through the use of a standardized method. Accordingly, the Company cautions that this data should not be used for other than its intended purpose.

F-36

SEITEL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Management does not rely upon the following information in making investment and operating decisions. The Company, along with its partners, bases such decisions upon a wide range of factors, including estimates of probable as well as proved reserves, and varying price and cost assumptions considered more representative of a range of possible economic conditions that may occur in the future.

	December 31,
	2001			2000			1999
	(in thousands)
Cash inflows	$	152,452		$	503,950		$	247,158
Production costs		(26,404	)		(56,470	)		(56,308	)
Development costs		(37,038	)		(40,815	)		(37,099	)
Income taxes		(15,624	)		(115,108	)		(36,554	)
Future net cash flows		73,386			291,557			117,197
10 percent annual discount		(34,266	)		(125,181	)		(45,133	)
Standardized measure of discounted future net cash flows(1)(2)	$	39,120		$	166,376		$	72,064

(1) Estimated future net cash flows before income tax expense, discounted at 10 percent per annum, totaled approximately $47,269,000, $232,693,000 and $94,796,000 as of December 31, 2001, 2000 and 1999, respectively.

(2) The above table excludes future net cash flows before income taxes of $0, $3,660,000 and $5,029,000, and discounted future net cash flows before income taxes of $0, $1,955,000 and $2,854,000, as of December 31, 2001, 2000 and 1999, respectively, related to proved sulfur reserves.

The following are the principal sources of changes in the standardized measure of discounted future net cash flows for the years ended December 31, 2001, 2000 and 1999 (in thousands):

	2001			2000			1999
Standardized measure, beginning of year	$	166,376		$	72,064		$	81,543
Extensions and discoveries, net of related costs		5,573			45,001			13,001
Sales of oil and gas produced, net of production costs		(16,751	)		(19,405	)		(13,931	)
Net changes in prices and production costs		(163,972	)		231,194			26,992
Change in future development costs		1,366			(214	)		(9,608	)
Development costs incurred during the period that reduced future development costs		1,618			3,087			227
Revision of previous quantity estimates		(5,374	)		(108,365	)		(19,232	)
Purchases of reserves in place		—			1,222			6,222
Sales of reserves in place		(10,429	)		(7,855	)		(23,402	)
Accretion of discount		23,269			9,480			10,765
Net change in income taxes		58,169			(43,586	)		3,375
Change in production rates and other		(20,725	)		(16,247	)		(3,888	)
Standardized measure, end of year	$	39,120		$	166,376		$	72,064

F-37

EX-3.3

                                                                     Exhibit 3.3

                            CERTIFICATE OF AMENDMENT
                                       OF
                          CERTIFICATE OF INCORPORATION
                                       OF
                        SEISMIC ENTERPRISES INCORPORATED

          The undersigned, president of Seismic Enterprises Incorporated, a
Delaware corporation (the "Company"), hereby certifies as follows:

          1. That at a meeting duly called and held on March 11, 1987, the board
of directors of the Company adopted resolutions setting forth proposed
amendments to the certificate of incorporation of the Company, declared the
amendments advisable and directed that the amendments be presented to the next
annual meeting of shareholders of the Company for consideration thereof.

          2. That the amendments approved by the board of directors and
presented to the shareholders is to amend the first article of the certificate
of incorporation of the Company and to adopt a new eighth article to read as
follows:

          "FIRST: The name of the corporation is SEITEL, INC."

          "EIGHTH: A. A director of the Company shall not be
          personally liable to the Company or its shareholders for
          monetary damages for breach of fiduciary duty as a
          director, except for liability (i) for any breach of the
          director's duty of loyalty to the Company or its
          shareholders (ii) for acts or omissions not in good
          faith or which involve intentional misconduct or a
          knowing violation of law, (iii) under Section 174 of the
          General Corporation Law of the State of Delaware,
          or (iv) for any transaction



          from which the director derived an improper personal
          benefit. If the General Corporation Law of the State of
          Delaware is amended to authorize corporate action
          further eliminating or limiting the personal liability
          of directors, then the liability of a director of the
          Company shall be eliminated or limited to the fullest
          extent permitted by the General Corporation Law of the
          State of Delaware, as so amended. Any repeal or
          modification of this Article EIGHTH by the shareholders
          of the Company shall not adversely affect any right or
          protection of a director of the Company existing at the
          time of such repeal or modification.

          B. (1) Each person who was or is made a party or is
          threatened to be made a party to or is involved in any
          action, suit or proceeding, whether civil, criminal,
          administrative or investigative - (hereinafter a
          "proceeding"), by reason of the fact that he or she or a
          person of whom he or she is the legal representative is
          or was a director, officer or employee of the Company or
          is or was serving at the request of the Company as a
          director, officer, employee or agent of another
          corporation or of a partnership, joint venture, trust or
          other enterprise, including service with respect to
          employee benefit plans, whether the basis of such
          proceeding is alleged action in an official capacity as
          a director, officer, employee or agent or in any other
          capacity while serving as a director, officer, employee
          or agent, shall be indemnified and held harmless by the
          Company to the fullest extent authorized by the General
          Corporation Law of the State of Delaware as the same
          exists or may hereafter be amended (but, in the case of
          any such amendment, only to the extent that such
          amendment permits the Company to provide broader
          indemnification rights than said law permitted the
          Company to provide prior to such amendment), against all
          expense, liability and loss (including attorneys' fees,
          judgments, fines, ERISA excise taxes or penalties and
          amounts paid or to be paid in settlement) reasonably
          incurred or suffered by such person in connection
          therewith and such indemnification shall continue as to
          a person who has ceased to be a director, officer,
          employee or agent and shall inure to the benefit of his
          or her heirs, executors and aministrators; provided,

                                        2



          however, that except as provided in paragraph (2) of
          this Section B with respect to proceedings seeking to
          enforce rights to indemnification, the Company shall
          indemnify and such person seeking indemnification in
          connection with a proceeding (or part thereof) initiated
          by such person only if such proceeding (or part thereof)
          was authorized by the Board of Directors of the Company.
          The right to indemnification conferred in this Section B
          shall be a contract right and shall include the right to
          be paid by the Company the expenses incurred in
          defending any such proceeding in advance of its final
          disposition; provided, however, that if the General
          Corporation Law of the State of Delaware requires, the
          payment of such expenses incurred by a director or
          officer in his or her capacity as a director or officer
          (and not in any other capacity in which service was or
          is rendered by such person while a director or officer,
          including, without limitation, service to an employee
          benefit plan) in advance of the final disposition of a
          proceeding, shall be made only upon delivery to the
          Company of an undertaking by or on behalf of such
          director or officer, to repay all amounts so advanced if
          it shall ultimately be determined that such director of
          officer is not entitled  to be indemnified under this
          Section B or otherwise.

          (2)  If a claim under paragraph (1) of the Section B is
          not paid in full by the Company within thirty days after
          a written claim has been received by the Company, the
          claimant may at any time thereafter bring suit against
          the Company to recover the unpaid amount of the claim
          and, if successful in whole or in part, the claimant
          shall be entitled to be paid also the expense of
          prosecuting such claim. It shall be a defense to any
          such action (other than an action brought to enforce a
          claim for expenses incurred in defending any proceeding
          in advance of its final disposition where the required
          undertaking, if any is required, has been tended to the
          Company) that the claimant has not met the standards of
          conduct which make it permissable under the General
          Corporation Law of the State of Delaware for the company
          to indemnify the claimant for the amount claimed, but
          the burden of providing such defense shall be on the
          Company. Neither the failure of the Company {including
          its

                                        3



          Board of Directors, independent legal counsel or
          shareholders) to have made a determination prior to the
          commencement of such action that indemnification of the
          claimant is proper in the circumstances because he or
          she has met the applicable standard of conduct set forth
          in the General corporation law of the State of Delaware,
          nor an actual determination by the Company (including
          its Board of Directors, independent legal counsel or
          shareholders) that the claimant has not met such
          applicable standard of conduct, shall be a defense to
          the action or create a presumption that the claimant has
          not met the applicable standard of conduct.

          (3)  The right to indemnification and the payment of
          expenses incurred in defending a proceeding in advance
          of its final disposition conferred in Section B shall
          not be exclusive of any other right which any person may
          have or hereafter acquire under any statute, provision
          of the Certificate of Incorporation, By-Law, agreement,
          vote of shareholders or disinterested directors or
          otherwise.

          (4)  The Company may maintain insurance, at its expense,
          to protect itself and any director, officer, employee or
          agent of the Company  or another corporation,
          partnership, joint venture, trust or other enterprise
          against any expense, liability or loss, whether or not
          the Company would have the power to indemnify such
          person against such expense, liability or loss under the
          General Corporation Law of the State of Delaware.

          (5)  The Company may, to the extent authorized from time
          to time by the Board of Directors, grant rights to
          indemnification, and rights to be paid by the Company
          the expenses incurred in defending any proceeding in
          advance of its final disposition, to any agent of the
          Company to the fullest extent of the provisions of this
          Section B with respect to the indemnification and
          advancement of expenses of directors, officers and
          employees of the Company.

          3. That the annual meeting of shareholders of the Company was duly
called and held on June 11, 1987, upon notice in accordance with Section 222 of
the General Corporation Law of the

                                        4



State of Delaware, at which the necessary number of shares as required by law
were voted in favor of the amendments.

          4. That the amendments were duly adopted in accordance with the
provisions of Section 242 of the General Corporation Law of the State of
Delaware.

          5. That the capital of the Company will not be reduced under or by
reason of the amendments.

          IN WITNESS WHEREOF, the Company has caused this Certificate to be
signed by Paul A. Frame, its president, and attested by Debra D. Valice, its
secretary, as of this 7th day of July 1987.

                                               /s/ Paul A. Frame
                                               ------------------------
                                               Paul A. Frame
                                               President

Attest:

/s/ Debra D. Valice
- ---------------------------
Debra D. Valice, Secretary

                                        5

EX-3.4

                                                                     EXHIBIT 3.4

                            CERTIFICATE OF AMENDMENT
                                       OF
                          CERTIFICATE OF INCORPORATION
                                       OF
                                  SEITEL, INC.

     The undersigned, chairman of Seitel, Inc., a Delaware corporation (the
"Company"), hereby certifies as follows:

     1. That at a meeting duly called and held on April 5, 1989, the board of
directors of the Company adopted a resolution setting forth a proposed amendment
to the certificate of incorporation of the Company, declared the amendment
advisable and directed that the amendment be presented to the next annual
meeting of stockholders of the Company for consideration thereof.

     2. That the amendment approved by the board of directors and presented to
the stockholders is to amend the fourth article of the certificate of
incorporation of the Company to read as follows:

"FOURTH: The corporation shall be authorized to issue ten million (10,000,000)
shares of common stock, par value $.01 per share."

     3. That the annual meeting of stockholders of the Company was duly called
and held, upon notice in accordance with Section 222 of the General
Corporation Law of the State of Delaware, at which the necessary number of
shares as required by law were voted in favor of the amendment.

     4. That the amendment was duly adopted in accordance with the provisions of
Section 242 of the General Corporation Law of the State of Delaware.

     5. That the capital of the Company will not be reduced under or by reason
of the amendment.



     IN WITNESS WHEREOF, the Company has caused this Certificate to be signed
by Herbert M. Pearlman, its chairman, and attested by David S. Lawi, its
assistant secretary, as of this 26th day of June, 1989.

                                               /s/ Herbert M. Pearlman
                                               -----------------------
                                               Herbert M. Pearlman
                                               Chairman

Attest:

/s/ David S. Lawi
- -----------------
David S. Lawi
Assistant Secretary

EX-3.5

                                                                     EXHIBIT 3.5

                            CERTIFICATE OF AMENDMENT
                       OF CERTIFICATE OF INCORPORATION OF
                                   SEITEL, INC.

     Seitel, Inc. (the "Corporation"), a corporation organized and existing
under and by virtue of the General Corporation Law of the State of Delaware,
does hereby certify:

     FIRST: That the Board of Directors of the Corporation adopted resolutions
proposing and declaring advisable the following amendments to the Certificate of
Incorporation of the Corporation:

          RESOLVED, that Article FOURTH of the Certificate of Incorporation of
     the Corporation be amended by deleting existing Article FOURTH and
     replacing it with the following:

     "FOURTH:

     (a) The aggregate number of shares of all classes of stock which the
     corporation shall have the authority to issue is twenty-five million
     (25,000,000), consisting of and divided into:

          (i)       one class of twenty million (20,000,000) shares of common
        stock, par value $0.01 per share; and

          (ii)      one class of five million (5,000,000) shares of preferred
        stock, par value $0.01 per share, which may be divided into and issued
        in series, as hereinafter provided.

     (b) Each share of the common stock of the corporation shall be entitled to
     one vote on all matters requiring a vote of the shareholders and, subject
     to the rights of the holders of any outstanding shares of preferred stock,
     shall be entitled to receive such dividends, in cash, securities, or
     property, as may from time to time be declared by the board of directors.
     In the event of any liquidation, dissolution, or winding up of the
     corporation, either voluntary or involuntary, subject to the rights of the
     holders of any outstanding shares of preferred stock, the holders of common
     stock shall be entitled to share ratably, according to the number of shares
     held by them, in all remaining assets of the corporation available for
     distribution.

     (c) The board of directors is authorized, at any time or from time to time,
     to issue preferred stock and (i) to divide the shares of preferred stock
     into series; (ii) to determine the distinguishing designation for any such
     series; (iii) to determine the number of shares in any such series; and
     (iv) to determine with respect to the shares of any such series:

          (A) whether the holders thereof shall be entitled to cumulative,
          noncumulative, or partially cumulative dividends and, with respect
          to shares entitled to dividends, the dividend rate or rates, including
          without limitation the methods



          and procedures for determining such rate or rates, and any other terms
          and conditions relating to such dividends;

          (B) whether, and if so to what extent and upon what terms and
          conditions, the holders thereof shall be entitled to rights upon the
          liquidation of, or upon any distribution of the assets of, the
          corporation;

          (C) whether, and if so upon what terms and conditions, such shares
          shall be convertible into, or exchangeable for, other securities or
          property;

          (D) whether, and if so upon what terms and conditions, such shares
          shall be redeemable;

          (E) whether the shares shall be subject to any sinking fund for the
          purchase or redemption of such shares and, if so, the terms of such
          fund;

          (F) whether the holders thereof shall be entitled to voting rights
          and, if so, the terms and conditions for the exercise thereof,
          provided that the holders of such shares of preferred stock (i) will
          not be entitled to more than the lesser of (x) one vote per $100 of
          liquidation value or (y) one vote per share, when voting as a class
          with the holders of shares of common stock, and (ii) will not be
          entitled to vote on any matter separately as a class, except to the
          extent (1) required by law or (2) specified for any series (x) with
          respect to an amendment of this Certificate of Incorporation affecting
          the powers, preferences, or special rights of such series or (y) with
          respect to the election of directors in the event of the failure of
          the corporation to pay dividends on such series; and

          (G) whether the holders thereof shall be entitled to other preferences
          or rights and, if so, the qualifications, limitations, or
          restrictions of such preferences or rights."

     SECOND: That the annual meeting of the Corporation was duly called and held
on July 28, 1993, and at such meeting the necessary number of shares as required
by law were voted in favor of such amendments.

     THIRD: That said amendments were duly adopted in accordance with the
provisions of Section 242 of the General Corporation Law of the State of
Delaware.

     IN WITNESS WHEREOF, the Corporation has caused this Certificate to be
signed by Paul A. Frame, its President, and Debra Valice, its Secretary, this
28th day of July, 1993.

                                          ATTEST:

/s/ Paul A. Frame                                 /s/ Debra Valice
- -----------------------------                     -----------------------------
Paul A. Frame, President                          Debra Valice, Secretary

EX-4.2

                                                                     EXHIBIT 4.2

                                    SPECIMEN

Neither this warrant nor 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

                    VOID AFTER 5:00 P.M., NEW YORK, NEW YORK
                         LOCAL TIME ON DECEMBER 10, 2000

Certificate No. W-

     This Warrant Certificate certifies that (Name, Address, Social Security
Number), its registered assigns is the registered holder ("Holder") of (Number
of Warrants) Common Stock Purchase Warrants (the "Warrants") to purchase shares
of the $.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
December 10, 2000 one fully paid and non-assessable share of common stock
("Share") upon presentation and surrender of this Warrant Certificate and upon
payment of the purchase price of $22.00 per Share. Payment shall be made in
lawful money of the United States of America by certified check payable to the
Company at its principal office at 16010 Barker's Point Lane, Suite 550,
Houston, Texas 77079. As hereinafter provided, the purchase price and number of
Shares purchasable upon the exercise of the Warrants are subject to modification
or adjustment upon the happening of certain events.

     FOR ALL OTHER PURPOSES STATED HEREIN, 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.

                                       -1-



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.

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.   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, as
          determined in accordance with subparagraph I of Section 10 hereof; and

     C.   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.

                                       -2-



4.   The Company shall maintain books for the transfer and registration of
     Warrants. Upon the transfer of any Warrants, the Company shall issue and
     register the Warrants in the names of the new Holders. The Warrants shall
     be signed manually by the Chairman, Chief Executive Officer, President or
     any Vice President and the Secretary (or Assistant Secretary) of the
     Company. The Company shall transfer, from time to time, any outstanding
     Warrants upon the books to be maintained by the Company for such purpose
     upon surrender thereof for transfer properly endorsed or accompanied by
     appropriate instructions for transfer. Upon any transfer, a new Warrant
     Certificate shall be issued to the transferee and the surrendered Warrants
     shall be cancelled by the Company. Warrants may be exchanged at the option
     of the Holder, when surrendered at the office of the Company, for another
     Warrant, or other Warrants of different denominations, of like tenor and
     representing in the aggregate the right to purchase a like number of
     Shares. Subject to the terms of this Warrant Certificate, upon such
     surrender and payment of the purchase price, the Company shall issue and
     deliver with all reasonable dispatch to or upon the written order of the
     Holder of such Warrants and in such name or names as such Holder may
     designate, a certificate or certificates for the number of full Shares so
     purchased upon the exercise of such Warrants. Such certificate or
     certificates shall be deemed to have been issued and any person so
     designated to be named therein shall be deemed to have become the holder of
     record of such Shares as of the date of the surrender of such Warrants and
     payment of the purchase price; provided, however, that if, at the date of
     surrender and payment, the transfer books of the Shares shall be closed,
     the certificates for the Shares shall be issuable as of the date on which
     such books shall be opened and until such date the Company shall be under
     no duty to deliver any certificate for such Shares; provided, further,
     however, that such transfer books, unless otherwise required by law or by
     applicable rule of any national securities exchange, shall not be closed at
     any one time for a period longer than 20 days. The rights of purchase
     represented by the Warrants shall be exercisable, at the election of the
     Holders, either as an entirety or from time to time for part only of the
     Shares.

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 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

                                       -3-



     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.   As used herein, the term "Exercise Rate" shall mean the number and kind of
     shares of capital stock of the Company which the Holder of this Warrant
     shall be entitled from time to time to receive for each $1,000.00 of
     warrant exercise payment. Unless and until an adjustment thereof shall be
     required as hereinafter provided, the Exercise Rate shall be 50 shares of
     Common Stock.

9.   The term "Exercise Price" shall mean the price obtained by dividing
     $1,000.00 by the number of shares constituting the Exercise Rate in effect
     at the time for such amount.

10.  The Exercise Rate in effect any time shall be subject to adjustment as
     follows:

     A.   Whenever the Company shall (i) pay a dividend on Common Stock in
          shares of its Common Stock, (ii) subdivide its outstanding shares of
          Common Stock, (iii) combine its outstanding shares of Common Stock
          into a smaller number of shares, or (iv) issue by reclassification of
          its shares of Common Stock (including any reclassification in
          connection with a

                                       -4-



          consolidation or merger in which the Company is the continuing
          corporation) any shares, the Exercise Rate in effect at the time of
          the record date for such dividend or of the effective date of such
          subdivision, combination or reclassification shall be proportionately
          adjusted so that the Holder of this Warrant exercising it after such
          time shall be entitled to receive the total number and kind of shares
          which bear the same proportion to the total issued and outstanding
          Common Stock of the Company immediately after such time as the
          proportion he would have owned and have been entitled to receive
          immediately prior to such time.

     B.   Whenever the Company shall issue any shares of Common Stock other
          than:

          (i)  shares issued in a transaction described in subparagraph H of
               this Paragraph 10; and

          (ii) shares issued upon exercise or conversion of securities of the
               type referred to in subparagraphs E and F of this Paragraph 10 or
               shares issued, subdivided or combined in transactions described
               in subparagraph (A) of this Paragraph 10 if and to the extent
               that the Exercise Rate shall have been previously adjusted
               pursuant to the terms of this subparagraph (B) or subparagraph
               (A) of this Paragraph 10 as a result of the issuance, subdivision
               or combination of such securities; at a price per share which is
               less than the current public market value of a share of Common
               Stock, the Exercise Rate in effect immediately prior to such
               issuance shall be adjusted by multiplying such Exercise Rate by a
               fraction, the numerator of which shall be the number of shares of
               Common Stock outstanding immediately prior to such issuance plus
               the number of additional shares of Common Stock so issued, and
               the denominator of which shall be the number of Shares of Common
               Stock outstanding immediately prior to such issuance plus the
               number of shares of Common Stock which the fair value of the
               consideration received by the Company for the total number of
               additional shares so issued would purchase at a price equal to
               the current public market value.

     C.   Whenever the Company shall pay a dividend or make a distribution
          (other than in a transaction which results in an equivalent adjustment
          pursuant to other subparagraphs of this Paragraph 10) generally to
          holders of its Common Stock or evidences of its

                                       -5-



          indebtedness or assets (excluding dividends paid in, or distributions
          of cash to the extent of current income or earned surplus of the
          Company), or securities of the Company, or rights to subscribe for or
          purchase securities of the Company, the Exercise Rate in effect
          immediately prior to such distribution shall be adjusted by
          multiplying such Exercise Rate by a fraction, the numerator of which
          shall be the then current public market value, if any, per share of
          the Common Stock receiving such dividend or distribution or, if there
          shall be no such current public market value, then the book value per
          share as of the close of the month preceding such distribution, and
          the denominator of which shall be the numerator less the fair market
          value of the portion of the assets, or the evidences of indebtedness
          or rights, so distributed which is applicable to each such share;
          provided, however, if as a result of such adjustment the Exercise
          Price would be a negative figure, such adjustment shall be modified so
          that the Exercise Price after such adjustment is $.01 per share.

     D.   Whenever the Company shall issue by reclassification of its shares of
          Common Stock any shares of stock, the Exercise Rate in effect
          immediately prior to such issuance shall be proportionately adjusted
          so that the Holder of this Warrant exercising it after such time shall
          be entitled to receive, the number and kind of shares which, when
          added to the number of shares of such kind exercisable hereunder prior
          to such issue, would entitle the Holder hereof, upon the exercise
          hereof in full, to purchase an amount of shares of such kind which
          bears the same proportion to the total issued and outstanding capital
          stock of the Company as the proportion he would have owned and have
          been entitled to receive immediately prior to such issue. In the event
          that at any time, as a result of an adjustment made pursuant to this
          Paragraph 10, the Holder of this Warrant shall become entitled upon
          exercise thereof to receive any shares of the Company other than
          shares of its Common Stock, then thereafter the number of such other
          shares so receivable upon exercise of this Warrant shall be subject to
          adjustment from time to time in a manner and on terms as nearly
          equivalent as practicable to the provisions contained in this
          Paragraph 10 in the respect of the Common Stock.

     E.   For purposes of the adjustments provided for in the foregoing
          subparagraphs of this Paragraph 10, if at any time, the Company shall
          issue any rights or options for the purchase of, or stock or other

                                       -6-



          securities convertible into Common Stock, (such convertible stock or
          securities being herein referred to as "Convertible Securities") the
          Company shall be deemed to have issued at the time of the issuance of
          such rights or options or Convertible Securities the maximum number of
          shares of Common Stock issuable upon exercise or conversion thereof
          and to have received as consideration for the issuance of such shares
          an amount equal to the amount of cash and fair value of other
          consideration, if any, received by the Company for the issuance of
          such rights or options or Convertible Securities, plus, in the case of
          such options or rights, the minimum amounts of cash and fair value of
          other consideration, if any, payable to the Company upon the exercise
          of such options or rights and, in the case of Convertible Securities,
          the minimum amounts of cash and fair value of other consideration, if
          any, payable, to the Company.

     F.   For purposes of the adjustment provided for in subparagraph B above,
          if at any time the Company shall issue any rights or options for the
          purchase of Convertible Securities, the Company shall be deemed to
          have issued at the time of the issuance of such rights or options the
          maximum number of shares of Common Stock issuable upon conversion of
          the total amount of Convertible Securities covered by such rights or
          options and to have received as consideration for the issuance of such
          shares an amount equal to the amount of cash and the amount of fair
          value of other consideration, if any, received by the Company for the
          issuance of such rights or options, plus the minimum amounts of cash
          and fair value of other consideration, if any, payable to the Company
          upon the exercise of such rights or options and payable to the Company
          upon the exercise of such rights or options and payable to the Company
          on conversion of such Convertible Securities.

     G.   Anything in subparagraph E or F above to the contrary notwithstanding,
          whenever the Company shall issue any shares (other than on exercise of
          this Warrant) upon exercise of any rights or options or upon
          conversion of any Convertible Securities and if the Exercise Rate
          shall not previously have been adjusted upon the issuance of such
          rights, options or Convertible Securities, the computation described
          in subparagraph B above shall be made and the Exercise Rate adjusted
          in accordance with the provisions thereof (the shares so issued being
          deemed for purposes of such computation to have been issued at a price
          per share equal to the amount of cash and fair value of other
          consideration, if any,

                                       -7-



          properly attributable to one such share received by the Company upon
          issuance and exercise of such rights or options or sale and conversion
          of such Convertible Securities (and upon issuance of any rights or
          options pursuant to which such Convertible Securities may have been
          sold).

     H.   Anything in this Paragraph 10 to contrary notwithstanding, no
          adjustment in the Exercise Rate or Exercise Price shall be made in
          connection with:

          (i)  Convertible Securities issued pursuant to the Company's
               qualified or non-qualified Employee Stock Option Plans or any
               other bona fide employee benefit plan or incentive arrangement,
               adopted or approved by the Company's Board of Directors or shares
               of Common Stock issued pursuant to the exercise of any rights or
               options granted pursuant to said plans or arrangements (but only
               to the extent that the aggregate number of shares excluded by the
               Clause (i) and issued after the date hereof shall not exceed 15%
               of the Company's Common Stock outstanding at the time of any such
               issuance); and

          (ii) The issuance of any shares of Common Stock pursuant to the
               exercise of Convertible Securities outstanding as of the date
               hereof including without limitation, the conversion of any
               Warrant issued in the same placement of securities pursuant to
               which this Warrant was issued by the Company.

     I.   For purposes of this Paragraph 10, 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

                                       -8-



          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 may make an
          appropriate reduction in the "current public market value" based upon
          any applicable trading restrictions to particular shares of Common
          Stock.

     J.   Anything in this Paragraph 10 to the contrary notwithstanding, no
          adjustment in the Exercise Rate shall be required unless such
          adjustment would require an increase or decrease of at least 1% in
          such rate; provided, however, that any adjustments which by reason of
          this subparagraph J are not required to be made shall be carried
          forward and taken into account in making subsequent adjustments. All
          calculations under the Paragraph 10 shall be made to the nearest cent
          or to the nearest one-hundredth of a share, as the case may be.

     K.   No adjustment in the Exercise Rate shall be made for purposes of
          subparagraphs B and C of this Paragraph 10 if such adjustment would
          result in an increase in such Exercise Price or decrease in the
          Exercise Rate except that, in the case of any Convertible Securities
          in respect of which an adjustment has previously been made under
          subparagraph B above and which has expired or otherwise been cancelled
          without exercise of the rights or options evidenced thereby, such
          previous adjustment shall be reversed.

     L.   Before taking any action which could cause an adjustment pursuant to
          this Paragraph 10 reducing the Exercise Price per share below the then
          par value (if any) of the shares covered hereby, the Company will take
          any corporate action which may be necessary in order that the Company
          may validly and legally issue at the Exercise Price as so adjusted
          share that are fully paid and non-assessable.

     M.   The number of shares of capital stock of the Company outstanding at
          any given time shall not include shares owned or held by or for the
          account of the Company, and the disposition of any such shares shall
          be considered an issue or sale of such shares for the purposes of this
          Paragraph 10.

                                       -9-



     N.   If any event occurs as to which the other provisions of this Paragraph
          10 are not strictly applicable but the lack of any adjustment would
          not fairly protect the purchase rights of the Holder of this Warrant
          in accordance with the basic intent and principles of such provisions,
          or if strictly applicable would not fairly protect the purchase rights
          of the Holder of this Warrant in accordance with the basic intent and
          principles of such provisions, then the Company shall appoint a firm
          of independent certified public accountants (which shall not be the
          regular auditors of the Company) of recognized national standing,
          which shall give their opinion upon the adjustment, if any, on a basis
          consistent with the basic intent and principles established in the
          other provisions of this Paragraph 10, necessary to preserve, without
          dilution, the exercise rights of the registered Holder of this
          Warrant. Upon receipt of such opinion, the Company shall forthwith
          make the adjustments described therein. In taking any action or making
          any determination pursuant to the provisions of this Section 10, the
          Company and its Board of Directors shall, at all times, exercise
          reasonable judgment and act in good faith.

     O.   Upon any adjustment of any Exercise Rate, then and in each such case
          the Company shall promptly deliver a notice to the registered Holder
          of this Warrant, which notice shall state the Exercise Price and
          Exercise Rate resulting from such adjustment and the increase or
          decrease, if any, in the number of shares purchasable at such price
          upon the exercise hereof, setting forth in reasonable detail the
          method of calculation and the facts upon which such calculation is
          based.

     P.   In the case of the issuance of shares of Common Stock or Convertible
          Securities for a consideration in whole or in part, other than cash,
          the consideration other than cash shall be deemed to be the fair
          market value thereof as reasonably determined in good faith by the
          Board of Directors of the Company (irrespective of accounting
          treatment thereof); provided, however, that if such consideration
          consists of the cancellation of debt issued by the Company the
          consideration shall be deemed to be the amount the Company received
          upon issuance of such debt (gross proceeds) plus accrued interest and,
          in the case of original issue discount or zero coupon indebtedness,
          accreted value to the date of such cancellation, but not including any
          premium or discount at which the debt may then be trading or which
          might otherwise be appropriate for such class of debt;

                                      -10-



     Q.   The Company shall not issue any shares of its capital stock (other
          than common stock) at or for consideration which is less than fair
          value determined by the Board of Directors of the Company in light of
          all circumstances surrounding such issuance.

11.  In the case:

     A.   The Company shall declare any dividend or distribution on its Common
          Stock (or on any other shares which the Holder of this Warrant may
          become entitled to receive upon exercise hereof); or

     B.   The Company shall authorize the issuance to holders of its Common
          Stock (or on any other shares which the Holder of this Warrant may
          become entitled to receive upon exercise hereof) any subscription
          rights or warrants; or

     C.   Of any subdivision, combination or reclassification of shares of
          Common Stock of the Company (or any shares of the Company which are
          subject to this Warrant), or of any proposed consolidation or merger
          to which the Company is to be a party and for which the approval of
          any shareholders of the Company is required, or of the proposed sale
          or transfer of all or substantially all of the assets of the Company;
          or

     D.   Of the proposed voluntary or involuntary dissolution, liquidation, or
          winding up of the Company; or

     E.   The Company proposes to effect any transaction not specified above
          which would require an adjustment of the Exercise Rate pursuant to
          Paragraph 10 hereof; then the Company shall cause to be mailed to
          Holders of this Warrant, at least ten (10) days prior to the
          applicable record or other date hereinafter specified, a notice
          describing such transaction in reasonable detail, specifying the
          character, amount and terms of all securities and the amounts of cash
          and other property, if any, involved in such transaction and stating
          (i) the date as of which the holders of Common Stock (or any such
          other shares) of record to be entitled to receive any such dividend,
          distribution, rights, or warrants is to be determined, or (ii) the
          date of which any such subdivision, combination, reclassification,
          consolidation, merger, sale, transfer, dissolution, liquidation,
          winding up, or other transaction is expected to become effective, and
          the date as of

                                      -11-



          which it is expected that holders of Common Stock (or any such other
          shares) of record shall be entitled to exchange the same for
          securities or other property, if any, deliverable upon such
          transaction.

12.  The Company covenants and agrees that it will not merge or consolidate with
     or into or sell or otherwise transfer all or substantially all of its
     assets to any other corporation or entity unless at the time of or prior to
     such transaction such other corporation or other entity shall expressly
     assume all of the liabilities and obligations of the Company under this
     Warrant and (without limiting the generality of the foregoing) shall
     expressly agree that the Holder of this Warrant shall thereafter have the
     right (subject to subsequent adjustment as nearly equivalent as practicable
     to the adjustments provided for in Paragraph 10 of this Warrant) to receive
     upon the exercise of this Warrant the number and kind of shares of stock
     and other securities and property receivable upon such transaction by a
     Holder of the number and kind of shares which would have been receivable
     upon the exercise of this Warrant immediately prior to such transactions.

13.  The Holder of this Warrant Certificate, each 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 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 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 transferee thereof deliver to the Company his written agreement to
     accept and be bound by all of the terms and conditions contained in this
     Warrant Certificate.

                                      -12-



WITNESS the following signatures as of this ____ day of _______, 19__.

                                                   SEITEL, INC.

                                                   By:
                                                      ------------------------
                                                      Paul A. Frame
                                                      President

                                      -13-




                                  PURCHASE FORM

TO:  SEITEL, INC.                                     DATE:

     The undersigned hereby irrevocably elects to exercise the attached Warrant
Certificate, Certificate No. W-     , to the extent of (number of shares) Shares
of Common Stock, $.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:
                                                     --------------------------

                                      -14-

EX-4.3

                                                                     EXHIBIT 4.3

                                 PROMISSORY NOTE

$    Principal Amount                             Dated as of: July 21, 1992
                                                  Houston, Texas

     FOR VALUE RECEIVED, ____________________________________ (the "Borrower"),
promises to pay to the order of Seitel, Inc., a Delaware corporation
(hereinafter the "Company") the principal amount of
                                                                   AND 00/100
DOLLARS ($      ) together with interest thereon as hereinafter provided. This
promissory note is made and issued as partial consideration for the purchase by
the Borrower of certain shares of common stock of the Company (the "Shares").

     1. Calculation of Interest. Interest on the unpaid principal amount shall
accrue from the date hereof until the principal amount hereof and accrued
interest hereon shall be paid in full, at a rate of four percent (4%) per annum.
Interest shall be computed on the basis of a 360 day year of twelve 30-day
months.

     2. Payment of Principal. The principal amount hereof shall be due and
payable in nine (9) equal annual installments of
                                AND   /100 DOLLARS ($       ) commencing on the
first day of August, 1993 and ending on August 1, 2001. The balance of the
unpaid principal amount hereof shall be due and payable in full on August 1,
2002.

     3. Payment of Interest. Unpaid and accrued interest on the then unpaid
principal balance hereof shall be due and payable annually on each principal
payment date and thereafter until paid in full.

     4. Method of Payment. Payment of principal and accrued interest shall be
made in such coin or currency of the United States of America as, at the time of
payment, shall be legal tender for the payment of public and private debts.

     5. Prepayment Fees. Prepayment of this Note in whole or in part may be made
at any time without any fees, penalty, premium or discount.

     6. Place and Manner of Payment. All payments of principal and interest
shall be made by the Borrower to the Company at the offices of the Company at 50
Briar Hollow Lane West, Houston, Texas 77027.

     7. Attorneys' Fees. The Borrower agrees to pay the reasonable fees of any
attorney-at-law who may be employed by the Company to recover the amount hereof,
or any part hereof, in principal or interest, or to protect the interest of the
holder hereof, or to compromise or to take any other action with regard hereto.



     8. Waiver. The Borrower hereby waives presentment, demand, protest and
notice of protest, and all other demands and notices in connection with the
payment and enforcement of this Note.

     9. Events of Default. Any one or more of the following shall constitute an
"Event of Default" hereunder:

     (A) Failure by the Borrower 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 thirty (30) days from the date of receipt of written
demand by the Company;

     (B) The Borrower shall have applied for or consented to the appointment of
a custodian, receiver, trustee, liquidator, or other court appointed fiduciary
of all or a substantial part of its properties; or a custodian, receiver,
trustee, liquidator or other court appointed fiduciary shall have been appointed
with or without the consent of the Borrower, or the Borrower is generally not
paying its debts as they become due by means of available assets and the fair
use of credit, or has made a general assignment for the benefit of creditors; or
the Borrower has committed an act of bankruptcy, or has filed a voluntary
petition in bankruptcy, or a petition or an answer seeking reorganization or an
arrangement with creditors or seeking to take advantage of any insolvency law,
or an answer admitting the material allegations or a petition in any bankruptcy,
reorganization or insolvency proceeding to has taken action for the purpose of
effecting any of the foregoing; or if, within 45 days after the commencement of
any proceeding against the Borrower seeking any reorganization, rehabilitation,
arrangement, composition, readjustment, liquidation, dissolution or similar
relief under the Federal Bankruptcy Code or any present or future applicable
Federal, state or other statute or law, such proceeding shall not have been
dismissed; or if, within 45 days after the entry of an Order of Relief under the
Federal Bankruptcy Code or similar order under future similar legislation, the
appointment of any trustee, receiver, custodian, liquidator, or other court
appointed fiduciary of the Borrower of all or any substantial part of its
properties, such order or appointment shall not have been vacated or stayed on
appeal or otherwise or if, within 45 days after the expiration of any such stay,
such order or appointment shall not have been vacated;

     (C) Transfer for value by the Borrower of all or some of the shares of
common stock of the Company for which this promissory note was made by the
Borrower as partial consideration for the payment for said shares, without a
proportionate prepayment of the principal amount of this Note; and

     (D) Termination of Borrower's employment with the Company for any reason
whatsoever, whether voluntary or involuntary, and whether with or without cause.

     10. Remedies on Default. Whenever any Event of Default shall have occurred
and be continuing, the Company may:



     (A) By notice to the Borrower, declare all amounts payable hereunder to be
immediately due and payable, whereupon the same shall become immediately due and
payable, both as to principal and interest, without presentment, demand,
protest, or other notice of any kind, all of which are expressly waived hereby,
anything in this Note to the contrary notwithstanding; and

     (B) Take any action at law or in equity to collect the payments then due
and thereafter to become due hereunder or to enforce performance and observance
of any obligation, agreement or covenant of the Borrower under this Note.

     11. Remedies Cumulative.

     (A) The occurrence of any Event of Default and the exercise of any remedy
by the Company shall not terminate any obligation of the Borrower incurred
hereunder.

     (B) No remedy herein conferred upon or reserved to the Company is intended
to be exclusive of any other available remedy or remedies, and such remedy or
remedies are in addition to each and every remedy now or hereafter existing at
law or in equity or by statute. Delay or omission in the exercise of any right,
remedy or power accruing upon any default or failure by the Company to insist
upon the strict performance of any of the covenants and agreements set forth in
this Note shall not impair any such right, remedy or power or be considered or
taken as a waiver or relinquishment of the right to insist upon and to enforce
in the future, by injunction or other appropriate legal or equitable remedy,
strict compliance by the Borrower with all of the covenantal and conditions
hereof, or of the rights to exercise any such rights or remedies, if such
default by the Borrower be continued or repeated.

     12. Security Interest. This promissory note is secured by a security
interest in the Shares, which have been pledged and delivered to the Company
pursuant to a certain Pledge Letter of even date herewith to perfect this
security interest.

     13. Successors and Assigns. The provisions hereof shall inure to the
benefit of, and be binding upon, the successors and assigns of the parties
hereto; provided, however, the Borrower may not assign or transfer their rights
and obligations hereunder.

     14. Governing Law. This Agreement and the rights and remedies of the
parties hereto shall in all respects be interpreted, construed, governed and
enforced in accordance with the laws and the public policies of the State of
Texas, without giving effect to conflict of laws principles.

     IN WITNESS WHEREOF, the undersigned has duly executed this Note on the day
and year first above written.

                                                  ______________________________
                                                    Borrower

EX-4.4

                                                                     EXHIBIT 4.4

                                  SEITEL, INC.

                             SUBSCRIPTION AGREEMENT

To:  Seitel, Inc.
     50 Briar Hollow Road West
     Houston, Texas 77027

     1.   The undersigned hereby subscribes for      shares of common stock, par
value $.01 per share (the "Common Stock") issued by Seitel, Inc. (the "Company")
at a price of $5.375 per share. The undersigned agrees to tender payment of the
subscription price of the Common Stock subscribed for as set forth on the
signature page of this Subscription Agreement, upon return of this executed
Subscription Agreement.

          The undersigned agrees that this subscription is and shall be
irrevocable, but that it may be rejected, in whole or in part, by the Company,
and that the obligations of the undersigned hereunder will terminate if this
subscription is not accepted by the Company. The undersigned understands that
the Company will notify him if this subscription has been rejected for any
reason. If this subscription is rejected by the Company, the payment tendered by
him will be returned to him forthwith, without interest or deduction. If this
subscription is accepted by the Company, the amount of the payment tendered will
be applied by the Company for working capital purposes.

     2.   The undersigned understands and agrees that an investment in the
Company at the outset is an illiquid investment.

          (a)(i)    Texas Residents. The undersigned hereby acknowledges
that the Common Stock cannot be sold unless it is subsequently registered under
the Securities Act of 1933, as amended (the "Act") and applicable state
securities laws ("State Acts") including in particular the Texas Securities Act,
or an exemption from registration is available. The undersigned further
acknowledges that because the shares of Common Stock are not readily
transferable, he must bear the economic risk of his investment for an indefinite
period of time.

             (ii)   Other Residents. The undersigned must bear the economic risk
of investment in the Common Stock for an indefinite period of time, since Common
Stock has not been registered under the Securities Act of 1933, as amended (the
"Act") or applicable state securities laws ("State Acts"), and, therefore,
cannot be transferred or sold unless either subsequently registered under the
Act and applicable State Acts, or an exemption from registration is available
and a favorable opinion of counsel to that effect is obtained.

          (b) The Company plans to use its best efforts to file a registration
statement under the Act within one year from the date hereof for the Common
Stock, but there is no assurance that the registration statement in connection
therewith will be declared effective.



     3.   The undersigned represents to and agrees with the Company, that:

          (a) The undersigned and his investment advisor(s), if any, have
carefully reviewed and understand the risks of and other considerations relating
to, a purchase of the Common Stock.

          (b) The undersigned and his investment advisor(s), if any, have been
afforded the opportunity to obtain any information necessary to verify the
accuracy of any representations or information set forth in the Memorandum and
have had all of their inquiries to the Company answered in full, and have been
furnished all requested materials relating to the Company and the offering and
sale of the Common Stock and any other matter described in the letter dated as
of July 21, 1992 accompanying this Subscription Agreement (the "Letter").

          (c) Neither the undersigned nor his investment advisor(s), if any,
have been furnished any offering literature by the Company or any of its
affiliates, associates or agents, other than the Letter and the exhibits and
attachments thereto.

          (d) The undersigned is acquiring the Common Stock for which he hereby
subscribes as principal for his own investment account, and not (1) with a view
to the resale or distribution of all or any part of such Common Stock, (2) on
behalf of another person who has not made the foregoing representation, or (3)
in order for any person to acquire less than the minimum subscription required
hereunder, unless a lesser subscription specifically has been accepted by the
Company.

          (e) The undersigned is an accredited investor, as defined in Rule
501(a) of Regulation D promulgated pursuant to the Act, by virtue of the fact
that (initial applicable choice):

          ____    (i)  The undersigned had individual income (exclusive of any
income attributable to spouse) of more than $200,000 in each of the most recent
two years or joint income with the undersigned's spouse in excess of $300,000
and reasonably expects to have income of at least the same level for the current
year.

          ____   (ii)  The undersigned has an individual net worth, or a
combined net worth with the undersigned's spouse, in excess of $1,000,000. For
purposes of this Subscription Agreement, "individual net worth" means the excess
of total assets at fair market value, including home and personal property, over
total liabilities.

          ____  (iii)  The undersigned is a director or executive officer of the
Company.

           Accredited partnership, corporation, trust or other entity:
       investors must initial one or both of the following two statements.

          ____   (iv)  The undersigned is a bank as defined in section 3(a)(2)
of the Act, or a savings and loan association or other institution as defined in
section 3(a)(5)(A) of the Act whether acting in its

                                       -2-



individual or fiduciary capacity; a broker or dealer registered pursuant to
section 15 of the Securities Exchange Act of 1934; an insurance company as
defined in section 2(13) of the Act; an investment company registered under the
Investment Company Act of 1940 or a business development company as defined in
section 2(a)(48) of the Act; a Small Business Investment Company licensed by
the U.S. Small Business Administration under section 301(c) or (d) of the Small
Business Investment Act of 1958; a plan established and maintained by a state,
its political subdivisions, or any agency or instrumentality of a state or its
political subdivisions, for the benefit of its employees if such plan has total
assets in excess of $5,000,000; an employee benefit plan within the meaning of
the Employee Retirement Income Security Act of 1974 if the investment decision
is made by a plan fiduciary, as defined in section 3(21) of such Act, which is
either a bank, savings and loan association, insurance company, or registered
investment adviser, or if the employee benefit plan has total assets in excess
of $5,000,000 or, if a self-directed plan, with investment decisions made solely
by persons that are accredited investors.

          ____   (v)  The undersigned is a private business development company
as defined in section 202(a)(22) of the Investment Advisers Act of 1940.

          ____  (vi)  The undersigned is an organization described in section
501(c)(3) of the Internal Revenue Code, corporation, Massachusetts or similar
business trust, or partnership, not formed for the specific purpose of acquiring
the securities offered, with total assets in excess of $5,000,000.

          ____ (vii)  The undersigned is a trust, with total assets in excess of
$5,000,000, not formed for the specific purpose of acquiring the securities
offered, whose purchase is directed by a sophisticated person as described in
section 230.506(b)(2)(ii).

          ____ (viii) All of the equity owners of the undersigned qualify as
accredited investors under one of the statements set forth above.

          ____  (ix)  The undersigned otherwise meets the definition of
accredited investor set forth in Rule 501(a) of Regulation D, as follows
(explain briefly):

          ____   (x)  Check here if the undersigned does not meet any of the
above criteria for accredited investors.

          (f) The undersigned has evaluated the risks of investing in the
Company and has substantial experience in making investment decisions of this
type or is relying on his professional advisors or purchaser representative(s)
(check here if this is the case _____), in making this investment decision.

          (g) The undersigned understands the fundamental aspects of and risks
involved in an investment in the Company, including (1) the volatility in the
demand for seismic data and the highly competitive

                                       -3-



nature of the Company's business, (2) the lack of liquidity and the
restrictions on transferability of the Common Stock, and (3) the potential
dilution due to the outstanding common stock equivalents.

          (h) The address set forth on the Subscription Agreement Signature Page
hereof is the undersigned's true and correct principal address, and the
undersigned has no present intention of becoming a resident of any other state
or jurisdiction.

          (i) The undersigned, if a corporation, partnership, trust or other
form of business entity, (1) is authorized and otherwise duly qualified to
purchase and hold the Common Stock, (2) has its principal place of business at
its residence address set forth on the Subscription Agreement Signature Page
hereof, (3) has not been formed for the specific purpose of acquiring the Common
Stock, and (4) has submitted and executed all documents required pursuant to the
Certificate for Corporate, Partnership, Trust and Joint Purchasers and Special
Subscription Instructions. The person executing this Subscription Agreement and
all other documents related to the offering hereby represents that he is duly
authorized to execute all such documents on behalf of the entity. IF THE
UNDERSIGNED IS ONE OF THE AFOREMENTIONED ENTITIES, IT HEREBY AGREES TO SUPPLY
ANY ADDITIONAL WRITTEN INFORMATION THAT MAY BE REQUIRED BY THE COMPANY.

          (j) All of the information that the undersigned has heretofore
furnished to the Company, or that is set forth herein with respect to himself,
his financial position, and his business and investment experience, is correct
and complete as of the date hereof, and, if there should be any material change
in such information prior to the closing of the sale of the Common Stock, the
undersigned will immediately furnish the revised or corrected information to the
Company.

          (k) The undersigned agrees to be bound by all of the terms and
conditions of the offering made by the Letter and the exhibits thereto.

          (1) No person other than the undersigned will have a direct or
indirect interest in the Common Stock subscribed for hereby.

     4.   The foregoing representations are true and accurate as of the date
hereof, shall be true and accurate as of the date of the closing of this
offering, and shall survive such closing. If, in any respect, such
representations shall not be true and accurate prior to or upon the closing of
this offering, the undersigned shall give written notice of such fact to the
Company, specifying which representations are not true and accurate and the
reasons therefor, with a copy to his purchaser representative(s), if any.

     5.   The undersigned agrees to indemnify and hold harmless the Company, and
each of the officers, directors, partners and shareholders of the Company, and
any selected dealer, from and against any loss, damage or liability due to or
arising out of a breach of any of the foregoing representations.

     6.   If the undersigned is more than one person or entity, the obligations
of the undersigned shall be joint and several and the

                                       -4-



representations and the indemnification obligation herein contained shall be
deemed to be made by and be binding upon each such person and his heirs,
executors, administrators, successor and assigns.

     7.   (a) The Company agrees to use its best efforts to include the
shares of Common Stock in a registration' statement filed with the Securities
and Exchange Commission within one year from the date of the issuance of the
Common Stock and will to use its best efforts to cause such registration
statement to be declared effective and to maintain its effectiveness for a
period of two (2) years. The Company shall bear all of the Cost and Expense (as
hereinafter defined) of such registration.

          (b) The undersigned agrees that in connection with the Company's
registration of shares of Common Stock he shall:

               (i)  Deliver in writing all information to the Company concerning
          himself and his holdings of securities of the Company as shall be
          required in connection with the preparation and filing of any
          registration statement covering any shares of the Company's common
          stock owned by him; and

               (ii) Indemnify the Company, and each person who controls the
          Company within the meaning of Section 15 of the Act, from and against
          any and all losses, claims, damages, expenses and liabilities caused
          by any untrue statement of a material fact contained in any
          registration statement or prospectus furnished under the Act or caused
          by any omission to state a material fact therein necessary to make the
          statements therein not misleading, insofar as such losses, claims,
          damages, expenses and liabilities are caused by such untrue statement
          or omission based upon information furnished in writing to the Company
          by him expressly for use in any registration statement or prospectus.

          (c)  As used in this Subscription Agreement, "Cost and Expense" shall
include all of the costs and expenses relating to any registration statement to
which it relates, including, without limitation, registration, filing and
qualification fees, blue-sky expenses, printing expenses, fees and disbursements
of counsel to the Company, and accounting fees, except that underwriting
discounts and commissions and reimbursable underwriters' expenses (if any) shall
be borne by each Subscriber.

     8.   This subscription is not transferable or assignable by the
undersigned.

     9.   This subscription, upon acceptance by the Company, shall be binding
upon the heirs, executors, administrators, successors and assigns of the
undersigned.

     10.  This Subscription Agreement shall be construed in accordance with and
governed by the laws of the State of Texas, without giving effect to conflict of
law principles.

     11.  When the context in which words are used in this Agreement indicates
that such is the intent, singular words shall include the plural and vice versa
and masculine words shall include the feminine and the neuter genders and vice
versa.

                                       -5-



                                  SEITEL, INC.
                      SUBSCRIPTION AGREEMENT SIGNATURE PAGE

     The undersigned hereby subscribes for shares of common stock, par value
$.01 per share, issued by Seitel, Inc., a corporation organized under the laws
of the State of Delaware, at $5.375 per share. This Subscription Agreement as
executed and the appropriate payment should be forwarded to Clare J. Attura, c/o
Helm Resources, Inc., 93 Mason Street, Greenwich, CT 06830.

     1. Dated: as of July 21, 1992

     2. Number of shares subscribed for:

     3. Aggregate Subscription Price :          (1)

     4. Subscription Payable: Cash:
                              Promissory Note:

- ----------------------------                      ----------------------------
Signature of Subscriber (and                      Taxpayer Identification or
title, if applicable)                             Social Security Number

- ----------------------------                      ----------------------------
Signature of Joint Purchaser                      Taxpayer Identification or
(if any)                                          Social Security Number

Name and Residence Address                        Mailing Address, if Different
(No Post Office Address)                          from Residence Address:

- ----------------------------                      ----------------------------
Name (please print)                               Name (please print)

- ----------------------------                      ----------------------------
Number and Street                                 Number and Street

- ----------------------------                      ----------------------------
City     State     Zip Code                       City      State   Zip Code

Subscription for      shares of common stock, par value $.01 per share,
of Seitel, Inc. accepted.

SEITEL, INC.

By:
   -------------------------
Title: Vice President

Date: as of July 21, 1992

                                       -6-



                SPECIAL SUBSCRIPTION INSTRUCTIONS FOR CORPORATE,

                    PARTNERSHIP, TRUST, AND JOINT PURCHASERS

     If the investor is a corporation, partnership, trust, or other entity or
joint purchaser, the following additional instructions must be followed.
INFORMATION ADDITIONAL TO THAT REQUESTED BELOW MAY ALSO BE REQUIRED BY THE
COMPANY IN SOME CASES.

     I.   Authorization. The investor must provide a copy of (a) the
corporation's articles of incorporation, by-laws and authorizing resolution, (b)
the partnership agreement, or (c) the trust agreement, as applicable.

     II.  Subscription Agreement

          A. Corporations. An authorized officer of the corporation must date,
sign, and complete the Subscription Agreement with information concerning the
corporation. The officer should print the name of the corporation above his
signature, and print his name and office below his signature.

          B. Partnerships. An authorized partner must date, sign, and complete
the Subscription Agreement with information concerning the partnership. The
partner should print the name of the partnership above his signature, and print
his name and the words "general partner" below his signature.

          C. Trusts. In the case of a trust, the authorized trustee should date,
sign, and complete the Subscription Agreement with information concerning the
trust. The trustee should print the name of the trust above his signature, and
print his name and the word "trustee" below his signature. In addition, an
authorized trustee should also provide information requested in the Subscription
Agreement as it pertains to him as an individual.

          D. Joint Ownership. Except with regard to married couples, joint
investors must individually meet the investor suitability requirements; in all
cases, each must date, sign, and complete the Subscription Agreement. Joint
investors must state if they are purchasing the Common Stock as joint tenants
with the right of survivorship, tenants in common, or community property, and
each must execute the Subscription Agreement Signature Page.

     III. In certain circumstances, the investor may also be required to provide
an opinion of counsel to the same effect as the Certificate set forth on the
following page.



                                  SEITEL, INC.

                CERTIFICATE FOR CORPORATE, PARTNERSHIP, AND TRUST

     If the investor is a corporation, partnership, trust, or other entity, an
authorized officer, partner, or trustee must complete, date, and sign this
Certificate.

                                   CERTIFICATE

I hereby certify that:

     a.   The investor has been duly formed and is validly existing and has full
          power and authority to invest in Helm Resources, Inc. (the "Company").
          The investor has not been formed for the purpose of investing in the
          Common Stock.

     b.   The investor's Subscription Agreement has been duly and validly
          authorized, executed, and delivered by the investor and, upon
          acceptance by the Company, will constitute the valid, binding, and
          enforceable obligation of the investor.

Dated:   ____________, 1992                    -------------------------------
                                               Name of investor (please print)


                                               ---------------------------------
                                               Signature and title of authorized
                                               officer, partner, or trustee

EX-4.5

                                                                     EXHIBIT 4.5

                                                      as of July 21, 1992

Seitel, Inc.
The Seitel Building
50 Briar Hollow Road West
7th floor
Houston, Texas 77027

Re: 1992 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 $.01 per share, of Seitel, Inc. (the "Company")
purchased by me from the Company pursuant to the Company's 1992 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 which 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 Shares, together with a stock power
executed in blank relating to the Shares, 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
the market value of the remaining Shares at the time of the release and the
average market price of the Shares for the six months prior thereto is
sufficient to cover 100% of the outstanding balance under the Note.

                                                        Sincerely,

                                                        ----------------------
                                                        Employee

ACCEPTED AND AGREED TO:

Seitel, Inc.

By:
    --------------------------------
Debra D. Valice, Chief Financial Officer

                                       -2-

EX-10.1

                                                                    EXHIBIT 10.1

                        1993 INCENTIVE STOCK OPTION PLAN
                                  SEITEL, INC.

     Seitel, Inc., a Delaware corporation (the "Company"), hereby establishes
and adopts the following 1993 Incentive Stock Option Plan (the "Plan"):

                                   I. PURPOSE

     The Plan is intended as an employment incentive, to retain in the
employment of the Company and its subsidiaries persons of training, experience
and ability, to attract new employees whose services are considered unusually
valuable, 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 or "Board" shall mean the Board of Directors of
     the Company.

          (2) Code shall mean the Internal Revenue Code of 1986, as amended.

          (3) Committee shall mean the Compensation Committee of the Board or
     such other committee of the Board designated by the Board to administer the
     Plan as provided herein.

          (4) 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.

          (5) Eligible Employee shall mean any person who is employed on a full
     time salaried basis by the Company or a Subsidiary, including, but not
     limited to, any employee who is also an officer and director of the Company
     or a Subsidiary.

          (6) Fair Market Value of a share of Common Stock of the Company shall
     mean the closing sales price per share of such stock as reported in the
     Wall Street Journal (or any other nationally recognized newspaper or other
     source should such price not be published in the Wall Street Journal) as of
     the applicable date.

          (7) Options shall mean the stock options granted from time to time
     under the Plan.

          (8) Participant shall mean an Eligible Employee who has been
     designated by the Committee to participate in the Plan.

          (9) Subsidiary shall mean any corporation to which the Company is a
     "parent corporation" as defined in Section 424(e) of the Code.

                                  III. DURATION

     The effective date of the Plan (the "Effective Dale") is May 10, 1993,
subject to approval of the Plan by the Company's shareholders within twelve
months after the Effective Date. No Option shall be granted pursuant to the Plan
more than ten years after the Effective Date.



                               IV. ADMINISTRATION

     The Plan will be administered as follows:

Committee

     The Plan shall be administered by the Committee as it may be constituted by
the Board from time to time. The Committee shall consist of at least two members
of the Board, who shall be "disinterested persons" within the meaning of Rule
16b-3 of the Securities Exchange Act of 1934 or any successor rule or
regulation.

Committee Powers

     The Committee shall be deemed to have and to be exercising all of the
powers of the Board in the performance of any of the powers and duties delegated
to it under the Plan, including, without limitation, the selection of
Participants, the determination of the number of shares for which each
Participant shall be granted an Option, and all other terms and conditions of
each Option to the extent not inconsistent with the Plan. The Committee may from
time to time establish eligibility requirements for participation in the Plan
and rules for the administration of the Plan that are not inconsistent with the
provisions and purposes of the Plan. The Committee shall have the authority,
exercisable in its sole discretion, to grant various forms of Options containing
such terms and conditions, consistent with the provisions of this Plan, as the
Committee shall determine.

Committee Action

     A majority of the members of the Committee shall constitute a quorum. All
action taken by the Committee at a meeting shall be by the vote of a majority of
those present at such meeting, but any action may be taken by the Committee
without a meeting upon written consent signed by all of the members of the
Committee. Members of the Committee may participate in a meeting by means of
conference telephone or similar communications equipment by means of which all
persons participating in the meeting can hear each other. The Committee shall
appoint a secretary and shall keep minutes of its meetings, including those
conducted by telephone conference.

Committee Determination Conclusive

     The determination of the Committee as to any disputed question arising
under the Plan, including questions of construction and interpretation, shall be
final, binding, and conclusive upon all persons. Without limiting the
generality of the foregoing, the determination of the Committee as to whether a
Participant has terminated his employment and the date thereof, or the cause to
which termination of employment is attributable, shall be final, binding, and
conclusive upon all persons.

Committee Liability

     No member of the Committee or of the Board as a whole shall be liable to
any person for any action taken or omitted in connection with the interpretation
or administration of the Plan unless attributable to such member's own willful
misconduct or lack of good faith.

Expenses of Administration

     All expenses of administration of the Plan shall be borne by the Company,
and no part thereof shall be directly charged against the Participants.



                          V. SHARES SUBJECT TO THE PLAN

     Subject to adjustment as provided in Section VIII hereof, a total of two
hundred ninety-five thousand (295,000) shares of Common Stock of the Company
(the "Shares") shall be subject to the Plan. 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 Options at the termination of the Plan shall cease to be reserved
for the purpose of the Plan, but until termination of the Plan, the Company
shall at all times reserve a sufficient number of Shares to meet the
requirements of the Plan. Should any Option expire or be canceled prior to its
exercise, the Shares theretofore subject to such Option may again by subjected
to an Option under the Plan.

                                VI. PARTICIPATION

     Participation in the Plan will be subject to the following:

Eligibility

     Full time salaried employees of the Company or a Subsidiary who are in a
position to materially contribute to the Company's or such Subsidiary's success
shall be eligible for participation in the Plan. Eligible Employees shall
include, but shall not necessarily be limited to, officers and directors of the
Company or a Subsidiary. Members of the Board of Directors or the board of
directors of a Subsidiary shall not be Eligible Employees solely by virtue of
their being directors of the Company or such Subsidiary, but directors otherwise
qualified shall be eligible to participate.

Participants

     The Committee shall determine and designate from time to time those
management, professional and key employees of the Company and its Subsidiaries,
including officers and directors active in capacities other than as directors
only, to whom Options are to be granted and who thereby become Participants in
the Plan. A designation of an Eligible Employee to participate shall not
automatically entitle such Participant to participate with respect to future
Options.

                               VII. PLAN OPERATION

     The Plan shall operate according to the following general guidelines:

Time of Granting Options

     Neither anything contained in the Plan or in any resolution adopted or to
be adopted by the Board of Directors or the stockholders of the Company nor any
action taken by the Committee shall constitute the granting of any Option. The
granting of an Option shall take place only when a written option agreement
shall have been duly executed and delivered by or on behalf of the Company and
the Participant to whom such Option has been granted. No Option shall be granted
following the expiration of ten (10) years from the earlier of (i) the Effective
Date of this Plan as stated in Article III, or (ii) approval of this Plan by the
shareholders of the Company.

Option Price

     The purchase price of each Share placed under Option shall be determined by
the Committee, but shall in no event be less than one hundred percent (100%) of
the Fair Market Value of such Share on the date the



Option is granted. However, the purchase price of each Share placed under Option
to a Participant who owns stock possessing more than ten percent (10%) of the
total combined voting power of all classes of stock of the Company or any
Subsidiary at the time of the grant shall be at least one hundred and ten
percent (110%) of the Fair Market Value of such Share on the date the Option is
granted.

Option Period and Terms

     No Option shall be exercisable after the expiration of ten (10) years from
the date such Option is granted. However, if the Participant to whom an Option
is granted owns stock possessing more than ten percent (10%) of the total
combined voting power of all classes of stock of the Company or any Subsidiary
at the time such Option is granted, such Option shall not be exercisable after
the expiration of five (5) years from the date such Option is granted. Subject
to the provisions of the Plan, the Committee shall determine the terms and
conditions of each Option granted under the Plan, including the number of Shares
covered by the Option, and the time or times of exercise of the Option (which
may be for a term of up to ten (10) years from the date the Option is granted,
or, in the discretion of the Committee, may be for a shorter term designated by
the Committee). The Committee may provide that an Option shall not be
exercisable for a designated period of time after grant. The Committee may
provide that failure to exercise an Option as to the exercisable portion of the
Option during a specific time shall constitute a forfeiture of the right to
exercise such Option after termination of that time period. So long as
consistent with the provisions of the Plan, the terms and conditions of any
Option need not be the same as the terms and conditions of any other Option.

Maximum Annual Amount Per Employee

     The aggregate fair market value (determined as of the time the Option is
granted) of the stock with respect to which Options are exercisable for the
first time by any Participant during any calendar year (under this and any other
plans of the Company or any Subsidiary) shall not exceed $100,000.

Exercise of Options

     No Option may be exercised unless the Participant shall have been an
employee of the Company or a Subsidiary at all times during the period beginning
on the date of grant of the Option and ending on the day three (3) months before
the date of such exercise. However, if a Participant becomes disabled (within
the meaning of Section 22(e)(3) of the Code) or dies, no Option may be exercised
by such Participant after such disability, or by the estate of such Participant
or a person who acquired the right to exercise such Option by bequest or
inheritance or by reason of the death of such Participant, unless the
Participant shall have been an employee of the Company or a Subsidiary at all
times during the period beginning on the date of grant of the Option and ending
on the date one (1) year before the date of such exercise. Options may be
exercised solely by the Participant during his lifetime, or after his
disability by his legal representative on his behalf, or after his death by the
personal representative of the Participant's estate 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 an Option is exercised shall
be paid in full in cash and/or other property, including stock of the Company,
as deemed acceptable by the Committee, at the time of the exercise. Without
limiting the generality of the foregoing, the Committee shall have the power to
establish procedures from time to time for Participants: (1) to pay the exercise
price of an Option by withholding from the total number of Shares to be acquired
upon exercise of an Option that number of Shares having a Fair Market Value
equal to the aggregate exercise price; (2) to have withheld from the total
number of Shares to be acquired, in the same manner as (1) above, the
withholding obligation for federal and state income and other taxes; and (3)
to exercise a portion of the Option by delivering already-owned shares of
Common Stock of the Company in payment of the exercise price. A Participant
shall not be or have any of the rights or privileges of a shareholder of the
Company in respect of any Shares purchasable upon the exercise of any part of
an Option unless and until certificates representing such Shares shall have been
issued by the Company to such Participant.



Use of Proceeds

     The proceeds received by the Company from the sale of stock pursuant to
this Plan will be used for general corporate purposes.

                      VIII. CAPITAL CHANGES OF THE COMPANY

     In the event there is any change in the Common Stock of the Company through
the declaration of stock dividends, or through recapitalization resulting in
stock splits, or combinations or exchanges of shares, or any similar
transactions, the number of Shares subject to Options previously granted and the
number of Shares remaining available for Options and the price per Share of such
Shares shall be appropriately adjusted by the Committee.

     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 Participants 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 Options; (ii) reach an agreement with the
purchaser that the purchaser will convert each outstanding Option into an option
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
Participants that their Options are accelerated and afford to each Participant a
right for ten (10) days after the date of such notice to exercise any then
unexercised portion of all Options held by him whether or not such Options shall
then be exercisable under the terms of the Plan or his option agreement; and
within such ten day period, each such Participant may exercise any portion of
any Option as he may desire.

                            IX. LIMITATION OF RIGHTS

     Participation in this Plan is subject to certain limitations:

Limitations

     Nothing in this Plan shall be construed to:

          (1) give any employee of the Company or a Subsidiary any right to be
     designated a Participant herein, other than in the sole discretion of the
     Committee;

          (2) give a Participant any rights whatsoever with respect to Shares
     until Options are exercised and Shares are issued to the Participant;

          (3) give a Participant or any person any interest in any fund or in
     any specific asset or assets of the Company;

          (4) limit in any way the right of the Company or a Subsidiary to
     terminate a Participant's, employment with the Company or a Subsidiary at
     anytime; or

          (5) be evidence of any agreement or understanding, express or implied,
     that the Company or a Subsidiary will employ a Participant in any
     particular position or at any particular rate of remuneration.



Nonassignability of Options

     Options shall not be transferable other than by will or by the laws of
descent and distribution, and during a Participant's lifetime shall be
exercisable only by him (unless he becomes disabled, in which event they may be
exercised by his legal representative).

Power of the Company

     The existence of outstanding Options 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.

                    X. TERMINATION AND AMENDMENT OF THE PLAN

     The Plan shall terminate upon the expiration of ten years after the
Effective Date and no Options shall be granted after that date. The Board of
Directors may amend, alter, or discontinue the Plan, but no amendment or
alteration shall be made which would impair the rights of any Participant under
any Option theretofore granted, without his consent, unless his Option Agreement
so provides. The Board of Directors may at any time and from time to time modify
or amend the Plan in such respects as it shall deem advisable in order that the
Options shall be "incentive stock options" as defined in Section 422 of the
Code.

                           XI. GOVERNMENT REGULATIONS

     The Plan, and the granting and exercise of Options thereunder, and the
obligation of the Company to sell and deliver Shares under such Options, 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 Options and Shares covered by the Plan have been
registered under the Securities Act of 1933, as amended, each Participant
exercising an Option 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.

     IN WITNESS WHEREOF, Seitel, Inc. has caused the Plan to be executed by its
duly authorized officers in a number of copies, each of which shall be deemed an
original, but all of which shall constitute the same instrument, effective this
10th day of May, 1993.

                                                SEITEL, INC.

                                                /s/ Paul A. Frame
                                                ---------------------
                                                Paul A. Frame
                                                President

EX-10.2

                                                                    EXHIBIT 10.2

                 SEITEL, INC. 1993 INCENTIVE STOCK OPTION PLAN
                 Statement of Amendments Effective May 12, 1995

     1.   Section II(5) is hereby amended to read as follows:

          Eligible Employee shall mean any person who is employed by the Company
          or a Subsidiary, including, but not limited to, any employee who is
          also an officer and director of the Company or a Subsidiary, but not
          including any director who serves on the Committee.

     2.   The first sentence of Section V is hereby amended to read as follows:

          Subject to adjustment as provided in Section VIII hereof, a total of
          Seven Hundred Thousand (700,000) shares of Common Stock of the Company
          (the "Shares") shall be subject to the Plan.

     3.   The first sentence of the section headed "Eligibility" under Section
          VI is hereby amended to read as follows:

          Employees of the Company or a Subsidiary who are in a position to
          materially contribute to the Company's or such Subsidiary's success
          shall be eligible for participation under the Plan.

     4.   The section headed "Maximum Annual Amount Per Employee" under Section
          VII is hereby amended by adding the following sentence at the end of
          such section:

          In no event will any Participant be granted under the Plan in any
          calendar year Options to purchase more than 100,000 Shares, subject to
          adjustment as provided in Section VIII hereof.

EX-10.3

                                                                    EXHIBIT 10.3

                  SEITEL, INC. 1993 INCENTIVE STOCK OPTION PLAN
               Statement of Amendments Effective November 29, 1995

1.   The definition of the term "Options" set forth in Section II is hereby
     amended to read in its entirety as follows:

          (7) Options shall mean the Incentive Stock Options and the
     Non-Qualified Stock Options granted from time to time under the Plan. If
     Options are not designated as Incentive Stock Options or Non-Qualified
     Stock Options at the time of grant, the number of Options granted which
     qualify for treatment as Incentive Stock Options under the Code will be
     Incentive Stock Options, and the remainder of such Options, if any, will be
     Non-Qualified Stock Options.

2.   The following new definitions are hereby added to Section II:

          (10) Incentive Stock Option shall mean a stock option granted under
     the Plan that is intended to be an incentive stock option within the
     meaning of Section 422 of the Code.

          (11) Non-Qualified Stock Option shall mean a stock option granted
     under the Plan that is not an incentive stock option within the meaning of
     Section 422 of the Code.

3.   The subsection of Section VII headed "Option Price" is hereby amended to
     read in its entirety as follows:

          The purchase price of each Share placed under an Incentive Stock
     Option shall be determined by the Committee, but shall in no event be less
     than one hundred percent (100%) of the Fair Market Value of such Share on
     the date the Incentive Stock Option is granted. However, the purchase price
     of each Share placed under an Incentive Stock Option to a Participant who
     owns stock possessing more than ten percent (10%) of the total combined
     voting power of all classes of stock of the Company or any Subsidiary at
     the time of the grant shall be at least one hundred and ten percent (110%)
     of the Fair Market Value of such Share on the date the Option is granted.
     The purchase price of each Share placed under a Non-Qualified Stock Option
     shall be determined by the Committee, and may be less than, equal to, or
     greater than the Fair Market Value of such Share on the date the
     Non-Qualified Stock Option is granted.

4.   The first two sentences of the subsection of Section VII headed "Option
     Period and Terms" are hereby amended to read in their entirety as follows:

          No option shall be exercisable after the expiration of ten (10) years
     from the date such Option is granted. However, if the Participant to whom
     an Incentive Stock Option is granted owns stock possessing more than ten
     percent (10%) of the total combined voting power of all classes of stock of
     the Company or any Subsidiary at the time such Incentive Stock Option shall
     not be exercisable after the expiration of five (5) years from the date
     such Incentive Stock option is granted.

5.   The subsection of Section VII headed "Maximum Annual Amount Per Employee"
     is hereby amended to read in its entirety as follows:



          The aggregate fair market value (determined as of the time the
     Incentive Stock Option is granted) of the stock with respect to which
     Incentive Stock Options are exercisable for the first time by any
     Participant during any calendar year (under this and any other plans of the
     Company or any Subsidiary) shall not exceed $100,000.

EX-10.4

                                                                    EXHIBTI 10.4

                  SEITEL, INC. 1993 INCENTIVE STOCK OPTION PLAN
                Statement of Amendments Effective April 22, 1996

1.   The first sentence of Section V is hereby amended to read as follows:

          Subject to adjustment as provided in Section VIII hereof, a total of
     One Million One Hundred Fifty Thousand (1,150,000) shares of Common Stock
     of the Company (the "Shares") shall be subject to the Plan.

EX-10.5

                                                                    EXHIBIT 10.5

           Amendment to Seitel, Inc. 1993 Incentive Stock Option Plan
                           Effective December 31, 1996

The section of the Plan headed "Nonassignability of Options" in Article IX is
hereby deleted and replaced with the following:

Limited Transferability of Options

          The Committee may, in its discretion, authorize all or a portion of
the Options granted to an optionee to be on terms which permit transfer by such
optionee to (1) the spouse, children or grandchildren of the optionee
("Immediate Family Members"), (2) a trust or trusts for the exclusive benefit of
such Immediate Family Members, (3) a partnership in which such Immediate Family
Members are the only partners, or (4) such other person or persons in the sole
discretion of the Committee, provided that the Option Agreement pursuant to
which such Options are granted must be approved by the Committee, and must
expressly provide for transferability in a manner consistent with this
paragraph, and provided further, that subsequent transfers of transferred
Options shall be prohibited except those by will or in accordance with the laws
of descent and distribution. Following transfer, any such Options shall continue
to be subject to the same terms and conditions as were applicable immediately
prior to transfer, provided that for purposes of this Plan the transferee shall
be treated as optionee. However, the events of termination of employment
described in this Plan and in the applicable Option Agreement, as well as other
similar conditions relating to exercisability, termination, expiration, and
vesting shall continue to be applied with respect to the original optionee, and
following discontinuance of employment of such original optionee or such other
event, the Options shall be exercisable by the transferee only to the extent,
and for the periods specified pursuant to the terms of this Plan and the Option
Agreement. If the Committee does not so authorize Options to be transferable,
such Options shall not be transferable other than by will or by the laws of
descent and distribution, and during a Participant's lifetime shall be
exercisable only by him (unless he becomes disabled, in which event they may be
exercised by his legal representative).

EX-10.8

                                                                    EXHIBIT 10.8

                                  SEITEL, INC.
                    NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN

1.   Purpose. The purpose of this Non-Employee Directors' Stock Option Plan
     (the "Plan) of Seitel, Inc. (the "Company") is to promote ownership by
     non-employee Directors of a greater proprietary interest in the Company,
     thereby aligning such Directors' interests more closely with the interests
     of stockholders of the Company, and to assist the Company in attracting and
     retaining qualified persons to serve as non-employee Directors.

2.   Definitions. In addition to terms defined elsewhere in the Plan, the
     following are defined terms under the Plan:

     (a) "Code" means the Internal Revenue Code of 1986, as amended. References
     to any provision of the Code include regulations thereunder and successor
     provisions and regulations.

     (b) "Exchange Act" means the Securities Exchange Act of 1934, as amended.
     References to any provision of the Exchange Act include rules thereunder
     and successor provisions and rules.

     (c) "Fair Market Value" of Stock means the closing price of the Stock on
     the date on which such value is to be determined, as reported for such day
     by the New York Stock Exchange.

     (d) "Option" means the right, granted to a Participant under Section 6, to
     purchase Stock at the specified exercise price for a specified period of
     time under the Plan.

     (e) "Participant" means a Director who is eligible to receive and is
     granted Options under the Plan.

     (f) "Stock" means the Common Stock, $.01 par value, of the Company and such
     other securities as may be substituted for Stock or such other securities
     pursuant to Section 7.

3.   Shares Available Under the Plan. The total number of shares of Stock
     reserved and available for delivery under the Plan is 75,000, subject to
     adjustment as provided in Section 7 below. Such shares may be authorized
     but unissued shares or treasury shares. If any Option expires or terminates
     for any reason without having been exercised in full, the shares remaining
     subject to such Option will again be available for delivery under the Plan.

4.   Administration of the Plan. The Plan will be administered by the Board of
     Directors of the Company, provided that any action by the Board of
     Directors relating to the Plan will be taken only if, in addition to any
     other required vote, approved by the affirmative vote of the majority of
     the Directors who are not then eligible to participate under the Plan.

5.   Eligibility. Each Director of the Company who, on any date on which an
     Option is to be granted hereunder, is not, and has not been during the
     preceding three months, an employee of the Company or any parent or
     subsidiary of the Company will be eligible to receive a grant of an Option
     at such date. No person other than those specified in this Section 5 will
     participate in the Plan.

6.   Stock Options. An option to purchase 5,000 shares of Stock will be granted
     under the Plan to each person who is an existing non-employee Director of
     the Company on the effective date of the Plan. Additionally, an option to
     purchase 5,000 shares of Stock will be granted under the Plan to each
     person who, after the effective date of the Plan, is first elected or
     appointed to serve as a Director of the Company, such grant to be effective
     at the date of such first election or appointment, if such Director is then
     eligible to receive an Option grant. Also, an Option to purchase 1 ,000
     shares of Stock will be granted each year to each

                                       A-1



     Director of the Company who is then eligible to receive an Option grant at
     the close of business on the day of the Company's annual meeting of
     stockholders at which Directors (or a class of Directors if the Company
     then has a classified Board of Directors) are elected or reelected by the
     Company's stockholders. The foregoing notwithstanding, no Director may be
     granted an Option more than once during any one calendar year under the
     Plan. Options granted under the Plan will be non-qualified stock options
     which will be subject to the following terms and conditions:

     (a) Exercise Price. The exercise price per share of Stock purchasable under
     an Option will be equal to 100% of the Fair Market Value of Stock on the
     date of grant of the Option.

     (b) Option Term. Each Option will expire at the earlier of (i) five years
     after the date of grant, (ii) twelve months after the Participant ceases to
     serve as a Director of the Company due to death, disability, or retirement
     at or after age 65, or (iii) sixty days after the Participant ceases to
     serve as a Director of the Company for any reason other than death,
     disability, or retirement at or after age 65.

     (c) Exercisability. Each Option will become fully exercisable beginning one
     year after the date of grant, and will thereafter remain exercisable until
     the Option expires; provided, however, that an Option previously granted to
     a Participant will be exercisable after the Participant ceases to serve as
     a Director of the Company for any reason other than death, disability, or
     retirement at or after age 65 only if the Option was exercisable at the
     date of such cessation of service.

     (d) Method of Exercise. Each Option may be exercised, in whole or in part,
     at such time as it is exercisable and prior to its expiration by giving
     written notice of exercise to the Company specifying the Option to be
     exercised and the number of shares to be purchased, and accompanied by
     payment in full of the exercise price in cash (including by check) or by
     surrender of shares of Stock of the Company acquired by the Participant at
     least six months prior to the exercise date and having a Fair Market Value
     at the time of exercise equal to the exercise price, or a combination of a
     cash payment and surrender of such Stock.

7.   Adjustment Provisions. In the event any recapitalization, reorganization,
     merger, consolidation, spin-off, combination, repurchase, exchange of
     shares or other securities of the Company, stock split or reverse split,
     extraordinary dividend having a value in excess of 150% of the quarterly
     dividends paid during the preceding twelve-month period, liquidation,
     dissolution, or other similar corporate transaction or event affects Stock
     such that an adjustment is determined by the Board of Directors to be
     appropriate in order to prevent dilution or enlargement of Participants'
     rights under the Plan, then the Board of Directors will, in a manner that
     is proportionate to the change to the Stock and is otherwise equitable,
     adjust (i) any or all of the number or kind of shares of Stock reserved for
     issuance and delivery under the Plan, (ii) the number or kind of shares of
     Stock to be subject to each automatic grant of Options under Section 6, and
     (iii) the number and kind of shares of Stock issuable or deliverable upon
     exercise of outstanding Options, and/or the exercise price per share
     thereof (provided that no fractional shares will be issued upon exercise of
     any Option). The foregoing notwithstanding, no adjustment may be made
     hereunder except as shall be necessary to preserve, without exceeding, the
     value of outstanding Options and potential grants of Options. If at any
     date an insufficient number of shares are available for the automatic grant
     of Options at that date, Options will be automatically granted under
     Section 6 proportionately to Participants to the extent shares are
     available.

8.   Changes to the Plan. The Board of Directors may amend, alter, suspend,
     discontinue, or terminate the Plan or authority to grant Options under the
     Plan without the consent of stockholders or Participants, except that any
     such action will be subject to the approval of the Company's stockholders
     at the next annual meeting of stockholders having a record date after the
     date such action was taken if such stockholder approval is required by any
     federal or state law or regulation or the rules of any automated quotation
     system or stock exchange on which the Stock may then be quoted or listed,
     or if the Board of Directors determines in its discretion to seek such
     stockholder approval; provided, however, that, without the consent of an
     affected Participant, no such action may materially impair the rights of
     such Participant with respect to any previously granted Option; and
     provided further, that any Plan provision that specifies the

                                       A-2



     Directors who may receive grants of Options, the amount and price of
     securities to be granted to such Directors, and the timing of grants to
     such Directors, or is otherwise a "plan provision" referred to in Rule
     16b-3(c)(2)(ii)(B) under the Exchange Act, shall not be amended more than
     once every six months, other than to comport with changes in the Code or
     the rules thereunder.

9.   General Provisions.

     (a) Consideration for Grants; Agreements. Options will be granted under the
     Plan in consideration of the services of the Participants and, except for
     the payment of the Option exercise price upon exercise of the options, no
     other consideration shall be required therefor. Grants of Options will be
     evidenced by agreements executed by the Company and the Participant
     containing the terms and conditions set forth in the Plan together with
     such other terms and conditions not inconsistent with the Plan as the Board
     of Directors may from time to time approve.

     (b) Compliance with Laws and Obligations. The Company will not be obligated
     to issue or deliver Stock in connection with any Option in a transaction
     subject to the registration requirements of the Securities Act of 1933, as
     amended, or any state securities law, any requirement under any listing
     agreement between the Company and any automated quotation system or
     national securities exchange, or any other law, regulation or contractual
     obligation, until the Company is satisfied that such laws, regulations, and
     other obligations of the Company have been complied with in full.
     Certificates representing shares of Stock delivered under the Pan will be
     subject to such stop-transfer orders and other restrictions as may be
     applicable under such laws, regulations, and other obligations of the
     Company, including any requirement that a legend or legends be placed
     thereon.

     (c) Non-transferability. Options and any other right under the Plan that
     may constitute a "derivative security" as generally defined in Rule
     16a-1(c) under the Exchange Act will not be transferable by a Participant
     except by will or the laws of descent and distribution (or to a designated
     beneficiary in the event of a Participant's death), and will be exercisable
     during the lifetime of a Participant only by such Participant or his or her
     guardian or legal representative.

     (d) Compliance with Rule 16b-3. It is the intent of the Company that this
     Plan comply in all respects with applicable provisions of Rule 16b-3 under
     the Exchange Act in connection with any grant of Options to a Participant.
     Accordingly, if any provision of this Plan or any agreement hereunder does
     not comply with the requirements of Rule 16b-3 as then applicable to any
     such grant to a Participant, or would cause any Participant no longer to be
     deemed a "disinterested person" within the meaning of Rule 16b-3, such
     provision will be construed or deemed amended to the extent necessary to
     conform to such requirements with respect to such Participant. In addition,
     the Board of Directors shall have no authority to make any amendment,
     alteration, suspension, discontinuation, or termination of the Plan or any
     agreement hereunder, to make any adjustment under Section 7, or take other
     action if and to the extent such authority would cause a Participant's
     transactions under the Plan not to be exempt, or would cause Participants
     no longer to be deemed "disinterested persons," under Rule 16b-3 under the
     Exchange Act.

     (e) Continued Service as an Employee. If a Participant ceases serving as a
     Director and, immediately thereafter, he or she is employed by the Company
     or any subsidiary, then solely for purposes of Sections 6(b) and (c) of the
     Plan, such Participant will not be deemed to have ceased service as a
     Director at that time, and his or her continued employment by the Company
     or any subsidiary will be deemed to be continued service as a Director;
     provided, however, that such former Director will not be eligible for
     additional grants of Options under the Plan.

     (f) No Right to Continue as a Director. Nothing contained in the Plan or
     any agreement hereunder will confer upon any Participant any rights to
     continue to serve as a Director of the Company.

                                       A-3



     (g) No Stockholder Rights Conferred. Nothing contained in the Plan or any
     agreement hereunder will confer upon any Participant any rights of a
     stockholder of the Company unless and until an Option is duly exercised
     hereunder.

     (h) 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.

10.  Effective Date and Duration of Plan. The Plan will be effective at the time
     stockholders of the Company have approved it by the affirmative votes of
     the holders of a majority of the shares of Stock present in person, or
     represented by proxy, and entitled to vote at a meeting of the Company's
     stockholders duly held in accordance with the Delaware General Corporation
     Law or any adjournment thereof. Unless earlier terminated by action of the
     Board of Directors, the Plan will remain in effect until such time as no
     Stock remains available for issuance or delivery under the Plan and the
     Company has no further rights or obligations with respect to outstanding
     Options under the Plan.

     Adopted by the Board of Directors:

                                                        April 19, 1994

                                       A-4

EX-10.9

                                                                    EXHIBIT 10.9

       Amendment to Seitel, Inc. Non-Employee Directors' Stock Option Plan
                           Effective December 31, 1996

Section 9(c) of the Plan is hereby deleted and replaced with the following:

(c) Limited Transferability. The Options granted hereunder may be transferred by
a Participant to (1) the spouse, children or grandchildren of the Participant
("Immediate Family Members"), (2) a trust or trusts for the exclusive benefit of
such Immediate Family Members, (3) a partnership in which such Immediate Family
Members are the only partners, or (4) such other person or persons as may be
approved by the Board of Directors in their sole discretion, provided that
subsequent transfers of transferred Options shall be prohibited except those by
will or in accordance with the laws of descent and distribution. Following
transfer, any such Options shall continue to be subject to the same terms and
conditions as were applicable immediately prior to transfer, provided that for
purposes of this Plan the transferee shall be treated as optionee. However, the
events of termination of employment described in this Plan, as well as other
similar conditions relating to exercisability, termination, expiration, and
vesting shall continue to be applied with respect to the original optionee, and
following discontinuance of employment of such original optionee or such other
event, the Options shall be exercisable by the transferee only to the extent,
and for the periods specified pursuant to the terms of this Plan.

EX-10.10

                                                                   EXHIBIT 10.10

                                  SEITEL, INC.
                             NON-EMPLOYEE DIRECTORS'
                           DEFERRED COMPENSATION PLAN

1.   Purpose. The purpose of the Non-Employee Directors' Deferred Compensation
     Plan (the "Plan") of Seitel, Inc., a Delaware corporation (the "Company"),
     is to attract and retain highly qualified persons to serve as non-employee
     Directors of the Company by providing such Directors with greater
     flexibility in the form and timing of receipt of fees for services on the
     Board of Directors, and an opportunity to obtain a greater proprietary
     interest in the Company's success and progress through receipt of fees in
     the form of options and deferral of fees in the form of Deferred Shares,
     thereby aligning such Directors' interests more closely with the interests
     of shareholders of the Company.

2.   Definitions. In addition to terms defined elsewhere in the Plan, the
     following are defined terms under the Plan:

          (a) "Account" means the account established under Sections 8 and 9 for
     Participants, which may include, as subaccounts, a Cash Account and
     Deferred Share Account. Such Accounts, and deferred cash and Deferred
     Shares credited thereto, are maintained solely as bookkeeping entries by
     the Company evidencing unfunded obligations of the Company.

          (b) "Agreement" means a written agreement between the Company and a
     Participant setting forth the terms of an Option.

          (c) "Board" means the Board of Directors of the Company.

          (d) "Deferred Share" means a credit to a Participant's Deferred Share
     Account under Section 9 which represents the right to receive one Share
     upon settlement of the Account.

          (e) "Director Fees" means annual director fees payable to a Director
     in his or her capacity as such for service on the Board.

          (f) "Exchange Act" means the Securities Exchange Act of 1934, as
     amended. References to any provision of the Exchange Act include rules
     thereunder and successor provisions and rules thereto.

          (g) "Fair Market Value" of a Share means, as of any given date, the
     closing sales price of a Share reported in the table entitled "New York
     Stock Exchange Composite Transactions" contained in The Wall Street Journal
     (or an equivalent successor table) for such date or, if no such closing
     sales price was reported for such date, for the most recent trading day
     prior to such date for which a closing sales price was reported.

          (h) "Option" means the right, granted to a Participant under Section 7
     in payment of Director Fees, to purchase a specified number of Shares at
     the specified exercise price for a specified period of time under the Plan.
     All Options will be non-qualified stock options.

          (i) "Option Value" means the value of an Option as of a given date
     determined in accordance with the Black-Scholes option valuation model or
     such other recognized option valuation model used by the Company in
     preparing footnotes to the Company's financial statements. For this
     purpose, the applicable option valuation model shall be based on
     assumptions consistent with those then used in preparing footnotes to the
     Company's financial statements in conformity with Statement of Financial
     Accounting Standards No. 123.

          (j) "Participant" means a person who has been granted an Option in
     payment of Director Fees which remains outstanding, who has amounts of
     deferred cash or Deferred Shares credited to his or her Account, or who has
     elected to be granted Options in payment of Director Fees or to defer
     payment of Director Fees in the form of deferred cash or Deferred Shares
     under the Plan.

                                 Page 19 of 200



          (k) "Plan Year" means, with respect to a Participant, the period
     commencing at the time of election of the Director at an annual meeting of
     shareholders (or the election of a class of Directors if the Company then
     has a classified Board of Directors), or the Director's initial appointment
     to the Board if not at an annual meeting of shareholders, and continuing
     until the next annual meeting of shareholders.

          (l) "Rule 16b-3" means Rule 16b-3, as from time to time in effect and
     applicable to the Plan and Participants, promulgated by the Securities and
     Exchange Commission under Section 16 of the Exchange Act.

          (m) "Share" means a share of Common Stock, $.01 par value, of the
     Company and such other securities as may be substituted for such Share or
     such other securities pursuant to Section 11.

          (n) "Valuation Date" means the last business day of a Plan Year and
     the last business day preceding a date on which a distribution is made in
     settlement of a Participant's Account.

3.   Shares Available Under the Plan. The total number of Shares reserved and
     available for issuance under the Plan is 30,000, subject to adjustment as
     provided in Section 11. Such Shares may be authorized but unissued Shares,
     treasury Shares, or Shares acquired in the market for the account of the
     Participant. For purposes of the Plan, Shares that may be purchased upon
     exercise of an Option or distributed in settlement of Deferred Shares will
     not be considered to be available after such Option has been granted or
     Deferred Share credited, except for purposes of issuance in connection with
     such Option or Deferred Share; provided, however, that if an Option expires
     for any reason without having been exercised in full, the Shares subject to
     the unexercised portion of such Option will again be available for issuance
     under the Plan.

4.   Administration of the Plan. The Plan will be administered by the Board;
     provided, however, that any action by the Board relating to the Plan will
     be taken only if, in addition to any other required vote, such action is
     approved by the affirmative vote of a majority of the Directors who are not
     then eligible to participate in the Plan. Subject to the direction of the
     Board, bookkeeping and other ministerial functions under the Plan shall be
     performed by the Secretary and the Chief Accounting Officer of the Company.

5.   Eligibility. Each non-employee Director of the Company who is paid Director
     Fees for service on the Board may participate in the Plan. No person other
     than those specified in this Section 5 will be eligible to participate in
     the Plan.

6.   Elections Relating to Participation. Each Director of the Company who is
     eligible under Section 5 may elect, in accordance with this Section 6, to
     be paid Director Fees in the form of Options under Section 7 or to defer
     receipt of Director Fees in the form of deferred cash under Section 8 or in
     the form of Deferred Shares under Section 9.

          (a) Time of Filing of Elections; Irrevocability. A Director shall
     elect to participate and the terms of such participation by filing an
     election with the Secretary of the Company prior to the beginning of a Plan
     Year (which generally will begin at each annual meeting of the
     shareholders) or at such earlier time as may be specified by the Secretary
     in order to ensure compliance with Rule 16b-3. Elections shall be deemed
     continuing, and therefore applicable to Plan Years after the initial Plan
     Year, until the election is modified or revoked by the Participant.
     Elections other than those subject to Section 6(d) shall become irrevocable
     at the commencement of the Plan Year to which an election relates, unless
     the Secretary specifies an earlier time at which elections shall become
     irrevocable in order to ensure compliance with Rule 16b-3. Elections
     relating to the time of settlement of a Cash Account or Deferred Share
     Account shall become irrevocable at the time specified in Section 6(d).
     Elections may be modified or revoked by filing a new election prior to the
     time the election to be modified or revoked has become irrevocable. The
     latest election filed with the Secretary shall be deemed to revoke all

                                 Page 20 of 200



     prior inconsistent elections that remain revocable at the time of filing of
     the latest election. The Secretary will notify eligible Directors of any
     date prior to the commencement of a Plan Year by which Directors must make
     elections or upon which elections will become irrevocable in order to
     ensure compliance with Rule 16b-3.

          (b) Matters to be Elected. A Director's election must specify the
     following:

               (i) With respect to Director Fees, the percentage to be paid in
          the form of Options under Section 7, the percentage to be deferred and
          credited to the Participant's Cash Account under Section 8, and the
          percentage to be deferred and credited to the Participant's Deferred
          Share Account under Section 9. The sum of such percentages must not
          exceed 100%; if such sum is less than 100%, the balance of Director
          Fees will be paid in accordance with the Company's regular
          non-employee Director compensation policies.

               (ii) In the case of a deferral under Section 8 or 9, the period
          or periods during which settlement of the Participant's Cash Account
          or Deferred Share Account will be deferred, subject to Section 6(d),
          and whether distribution will be in a lump sum or in annual
          installments; provided, however, that not more than ten installments
          may be elected, and any installment distributions must commence no
          later than the first business day of the year following the year in
          which the Participant ceases to serve as a Director. An election as to
          the period or periods in which such settlement will be deferred may
          relate to a given Plan Account or Deferred Share Account in respect of
          such Plan Year and to any additional amounts credited as interest or
          dividend equivalents in respect of such originally credited amounts
          and previously credited amounts.

          (c) Form of Election. Elections under the Plan shall be made in
     writing on such form or forms as may be specified from time to time by the
     Secretary.

          (d) Modifying the Time of Settlement. A Participant may modify an
     election as to the time at which a Participant's Cash Account will be
     settled under Section 8 or Deferred Share Account will be settled under
     Section 9 at any time prior to the earlier of (i) the calendar year in
     which a lump sum settlement will occur or the first installment will
     commence or (ii) the time the Participant ceases to serve as a Director of
     the Company, except that such modification may only extend the date of
     settlement to a date later than the previously elected settlement date.
     Such modification shall be made by filing a new election with the
     Secretary. The foregoing notwithstanding, the Secretary may disapprove or
     limit elections under this Section 6(d) in order to ensure that the
     Participant will not be deemed to have constructively received compensation
     in respect of the Participant's Account prior to settlement.

          (e) Delayed Effectiveness of Elections in Order to Comply with Rule
     16b-3. Other provisions of this Section 6 notwithstanding, if any payment
     of Director Fees in the form of Options under Section 7 or deferral of
     receipt of Director Fees in the form of Deferred Shares under Section 9
     would occur (i) less than six months after the Participant's election which
     would result in such payment or deferral became irrevocable, (ii) at a time
     when the Company's employee benefit plans are being operated in conformity
     with Rule 16b-3 as in effect on and after May 1, 1991, and (iii) at a time
     that Rule 16b-3 imposes a requirement with participant-director
     transactions occur at least six months after the participant's making of an
     irrevocable election in order for such transactions to be exempt from
     Section 16(b) liability, then any Director Fees otherwise payable within
     six months after such election became irrevocable shall instead accrue and
     be payable at the date that is six months and one day after such election
     became irrevocable.

          (f) No Reallocation of Accounts. Amounts credited as cash to a
     Participant's Cash Account may not be reallocated or switched to the
     Participant's Deferred Share Account, and amounts credited to the
     Participant's Deferred Share Account may not be reallocated or switched to
     the Participant's Cash Account.

          (g) Cessation of Service as a Director. If any Director Fees otherwise
     subject to an election would be paid to a Participant after he or she has
     ceased to serve as a Director, such payment shall not be subject to such
     election, but shall instead be paid in accordance with the Company's
     regular non-employee Director compensation policies.

                                 Page 21 of 200



7.   Options Granted in Payment of Director Fees. A Participant who has elected
     to be paid a specified amount of Director Fees in the form of Options shall
     be granted, at the close of business on the day the Participant's Plan Year
     commences (usually the day of the Company's annual meeting of
     shareholders), an Option to purchase the number of whole Shares determined
     by dividing the specified amount of Director Fees (as then in effect) that
     would be payable for the full Plan Year by the Option Value as of that
     date. The Fair Market Value of any fractional share resulting from the
     foregoing calculation will be paid in cash to the Participant.

          (a) Exercise Price. The exercise price per Share purchasable under an
     Option will be equal to 100% of the Fair Market Value of a Share on the
     date of grant of the Option.

          (b) Option Term. Each Option will expire ten years after the date of
     grant; provided, however, that any portion of an Option that is not yet
     exercisable at the date a Participant ceases to serve as a Director will
     expire at the date such service ceases.

          (c) Exercisability. Each Option will become exercisable as to 25% of
     the underlying shares on the last day of each calendar quarter following
     the date of grant; provided, however, that any Option that is not fully
     exercisable at the close of business on the last day of the Plan Year in
     which it was granted shall become fully exercisable on such date.

          (d) Method of Exercise. Each Option may be exercised, in whole or in
     part, at such time as it has become exercisable and prior to its expiration
     by giving written notice of exercise to the Secretary specifying the Option
     to be exercised and the number of shares to be purchased, and accompanied
     by payment in full of the exercise price in cash (including by check) or by
     surrender of Shares (other than Shares acquired from the Company by
     exercise of an option less than six months before the date of surrender)
     having a Fair Market Value at the time of exercise equal to the exercise
     price, or a combination of a cash payment and surrender of such Shares.

          (e) Changes in Fees. If the amount of Director Fees is increased
     during a Plan Year, the increase in such fees may not be paid in the form
     of Options.

8.   Deferral of Director Fees in the Form of Deferred Cash. If a Participant
     has elected to defer receipt of a specified amount of Director Fees in the
     form of deferred cash, an amount equal to such specified amount shall be
     credited to the Participant's Cash Account as of the date such Director
     Fees otherwise would have been payable to the Participant but for such
     election to defer. As of the close of business on each Valuation Date,
     interest shall be credited to such Cash Account in an amount equal to the
     average daily balance in such Cash Account since the last Valuation Date
     multiplied by the prime interest rate as published in The Wall Street
     Journal and effective on the date of the last preceding annual meeting of
     shareholders of the Company.

9.   Deferral of Director Fees in the Form of Deferred Shares. If a Participant
     has elected to defer receipt of a specified amount of Director Fees in the
     form of Deferred Shares, a number of Deferred Shares shall be credited to
     the Participant's Deferred Share Account, at the close of business on the
     day the Participant's Plan Year commences, equal to the number of Shares
     having an aggregate Fair Market Value on such date equal to such specified
     amount. Such credit of Deferred Shares to the Participant's Deferred Share
     Account will initially be unvested and subject to forfeiture, and shall
     vest and become nonforfeitable as to 25% of such number of Deferred Shares
     on the last day of each calendar quarter following the date of such credit,
     except if all such shares have not become fully vested but the Director has
     served through the end of the applicable Plan Year, the full number of such
     Deferred Shares will become fully vested and nonforfeitable. Any Deferred
     Shares credited to a Participant's Deferred Share Account that are unvested
     at the time a Director ceases to serve as such will be forfeited at that
     time, regardless of the reason for the Director's termination. The amount
     of Deferred Shares credited to a Participant's Deferred Share Account shall
     include fractional Shares calculated to at least three decimal places.

                                 Page 22 of 200



          (a) Crediting of Dividend Equivalents - Cash and Non-Share Dividends.
     If the Company declares and pays a dividend in the form of cash or property
     other than Shares in respect of Shares, then a number of additional
     Deferred Shares shall be credited to the Deferred Share Account as of the
     payment date for such dividend equal to (i) the number of Deferred Shares
     credited to such Account as of the record date for such dividend,
     multiplied by (ii) the amount of cash plus the Fair Market Value of any
     property other than Shares actually paid as a dividend on each Share at
     such payment date, divided by (iii) the Fair Market Value of a Share at
     such payment date.

          (b) Crediting of Dividend Equivalents - Share Dividends and Splits. If
     the Company declares and pays a dividend in the form of additional Shares
     payable in respect of Shares, or there occurs a forward stock split of
     Shares, then a number of additional Deferred Shares shall be credited to
     the Participant's Deferred Share Account as of the payment date for such
     dividend or forward stock split equal to (i) the number of Deferred Shares
     credited to such Account as of the record date for such dividend or split
     multiplied by (ii) the number of additional Shares actually paid as a
     dividend or issued in such split in respect of each Share.

10.  Settlement of Accounts. The Company will settle a Participant's Account by
     making one or more distributions to the Participant (or his or her
     designated beneficiary, upon the Participant's death) at the time or times,
     in a lump sum or installments, as specified in the Participant's election
     filed in accordance with Section 6; provided, however, that Accounts will
     be settled at times earlier than those specified in such election in
     accordance with Sections 10(b), 10(c), and 11.

          (a) Form of Distribution. Distributions in respect of a Participant's
     Cash Account shall be made only in cash. Distributions in respect of a
     Participant's Deferred Share Account shall be made only in Shares, together
     with cash in lieu of any fractional Share remaining at a time that less
     than one whole Deferred Share is credited to such Deferred Share Account.
     Shares may be delivered in certificate form to a Participant (or his or her
     designated beneficiary) or to a nominee for the account of the Participant
     (or his or her designated beneficiary), or in such other manner as the
     Secretary may determine.

          (b) Termination of Service as a Director; Death.

               (i) Cessation of Service Other than Due to Death. If a
          Participant ceases to serve as a Director due to any reason other than
          death, the Company shall make distributions in respect of the
          Participant's Account to such Participant in a lump sum or
          installments, as previously elected by the Participant, except that
          installment payments shall commence not later than the first business
          day of the year following the year in which the Participant ceases to
          serve as a Director.

               (ii) Death. If a Participant ceases to serve as a Director due to
          death or dies prior to distribution of all amounts from his or her
          Account, the Company shall make a single lump sum distribution to the
          beneficiary designated by such Participant in his or her most recent
          beneficiary designation form filed with the Secretary. If there is no
          beneficiary designation on file with the Secretary at the time of the
          Participant's death or no surviving designated beneficiary, such
          distributions shall be made to the executor or administrator of the
          Director's estate. Any such distribution shall be made as soon as
          practicable following notification to the Company of the Participant's
          death.

          (c) Financial Hardship. Other provisions notwithstanding, at the
     written request of a Participant or his or her legal representative, the
     Board, in its sole discretion, upon a finding that continued deferral will
     result in financial hardship to the Participant, may authorize (i) the
     distribution of all or a part of a Participant's Account in a single
     installment or (ii) the acceleration of payment of any multiple
     installments thereof.

11.  Adjustment Provisions. In the event any recapitalization, reorganization,
     merger, consolidation, spin-off, combination, repurchase, exchange of
     Shares or other securities of the Company, stock split or reverse split,

                                 Page 23 of 200



     extraordinary dividend (whether in the form of cash, Shares, or other
     property), liquidation, dissolution, or other similar corporate transaction
     or event affects the Shares such that an adjustment is appropriate in order
     to prevent dilution or enlargement of a Participant's rights under the
     Plan, then an adjustment shall be made, in a manner that is proportionate
     to the change to the Shares and otherwise equitable, in (i) the number and
     kind of Shares remaining reserved and available for issuance under Section
     3, (ii) the number and kind of Shares issuable upon exercise of outstanding
     Options, and the exercise price per Share thereof (provided that no
     fractional Shares will be issued upon exercise of any Option), and (iii)
     the number and kind of Shares to be issued upon settlement of Deferred
     Shares under Section 9. Upon the effective date of the dissolution or
     liquidation of the Company, or of a reorganization, merger, or
     consolidation of the Company with one or more other corporations in which
     the Company is not the surviving corporation, or of the transfer of
     substantially all of the assets or shares of the Company to another
     corporation, the Plan shall terminate and all distributions shall be
     completed five business days before the scheduled completion of such
     corporate event unless provision is made in writing in connection with such
     corporate event for the continuance of the Plan and for the assumption of
     Accounts maintained under the Plan immediately prior to the effectiveness
     of such corporate event.

12.  Changes to the Plan. The Board may amend, alter, suspend, discontinue, or
     terminate the Plan without the consent of shareholders or Participants,
     except that any amendment or alteration will be subject to the approval of
     the Company's shareholders at or before the next annual meeting of
     shareholders for which the record date is after the date of such Board
     action if such shareholder approval is required by any federal or state law
     or regulation or the rules of any stock exchange or automated quotation
     system as then in effect, and the Board may otherwise determine to submit
     other such amendments or alterations to shareholders for approval;
     provided, however, that, without the consent of an affected Participant, no
     such action may materially impair the rights of such Participant with
     respect to any previously granted Option or any previous payment of fees in
     the form of deferred cash or Deferred Shares; and, provided further, that
     any provisions of this Plan relating to the amount, price, and timing of
     awards under this Plan shall not be amended more than once every six
     months, other than to comport with changes in the Internal Revenue Code,
     the Employee Retirement Income Security Act, or the rules thereunder, if
     such amendment would not comply with the requirements of Rule 16b-3.

13.  General Provisions.

          (a) Agreements; Account Statements. Options, Deferred Shares, and
     other rights or obligations under the Plan may be evidenced by Agreements
     or other documents executed by the Company and the Participant
     incorporating the terms and conditions set forth in the Plan, together with
     such other terms and conditions not inconsistent with the Plan, as the
     Secretary may from time to time approve. The Secretary shall provide each
     Participant, not less frequently than once per Plan Year, with an account
     statement reflecting Account balances under the Plan, Account transactions
     during the period covered by the statement, and such other information as
     the Secretary may deem relevant.

          (b) Compliance with Laws and Obligations. The Company will not be
     obligated to issue or deliver Shares in connection with any Option or in
     settlement of Deferred Shares in a transaction subject to the registration
     requirements of the Securities Act of 1933, as amended, or any other
     federal or state securities law, any requirement under any listing
     agreement between the Company and any stock exchange or automated quotation
     system, or any other law, regulation, or contractual obligation of the
     Company, until the Company is satisfied that such laws, regulations, and
     other obligations of the Company have been complied with in full.
     Certificates representing Shares issued under the Plan will be subject to
     such stop-transfer orders and other restrictions as may be applicable under
     such laws, regulations, and other obligations of the Company, including any
     requirement that a legend or legends be placed thereon.

          (c) Limitations on Transferability. Options, Deferred Shares, and any
     other rights under the Plan will not be transferable by a Participant
     except by will or the laws of descent and distribution, or to a designated
     beneficiary in the event of a Participant's death, and Options will be
     exercisable during the lifetime of the Participant only by such Participant
     or his or her guardian or legal representative; provided, however, that
     Options, Deferred Shares, and related rights may be transferred to one or
     more transferees during the lifetime of the Participant, but only if and to
     the extent then permissible without loss of the exemption under Rule 16b-3

                                 Page 24 of 200



     and consistent with the registration of the offer and sale of Shares
     related thereto on Form S-8, Form S-3, or such other registration form of
     the Securities and Exchange Commission as may then be filed and effective
     with respect to the Plan. The Company may rely upon the beneficiary
     designation last filed in accordance with this Section 13(c).

          (d) Nonforfeitability. The interest of each Participant in deferred
     cash or vested Deferred Shares credited to his or her Account at all times
     will be nonforfeitable.

          (e) Compliance with Rule 16b-3. It is the intent of the Company that
     this Plan comply in all respects with applicable provisions of Rule 16b-3
     in connection with any grant of Options or deferral in the form of Deferred
     Shares. Accordingly, if any provision of this Plan or an Agreement does not
     comply with the requirements of Rule 16b-3 as then applicable to any such
     transaction, or would preclude a Director of the Company from being deemed
     a "disinterested person" under then applicable provisions of Rule 16b-3,
     such provision will be construed or deemed amended to the extent necessary
     so that such Participant shall avoid liability under Section 16(b) and
     ensure that the Director's status as a "disinterested person" is
     unaffected.

          (f) Continued Service as an Employee. If a Participant ceases to serve
     as a Director and, immediately thereafter, is employed by the Company or
     any subsidiary, then such Participant will not be deemed to have ceased to
     serve as a Director or as Chairman or as a member of a Board committee at
     that time, and his or her continued employment by the Company or any
     subsidiary will be deemed to be continued service as a Director or Chairman
     or a member of a Board committee; provided, however, that such former
     Director will not be deemed to be a non-employee Director for purposes of
     Section 5.

          (g) No Right to Continue as a Director. Nothing contained in the Plan
     or any Agreement will confer upon any Participant any right to continue to
     serve as a Director of the Company or to be nominated for re-election as a
     Director.

          (h) No Shareholder Rights Conferred. Nothing contained in the Plan or
     any Agreement will confer upon any Participant (or any person claiming
     rights by or through a Participant) any rights of a shareholder of the
     Company unless and until Shares are in fact issued to such Participant (or
     person) or, in the case of an Option, such Option is validly exercised in
     accordance with Section 7.

          (i) Unfunded Status of Accounts. The Plan is intended to constitute an
     "unfunded" plan to provide deferred compensation. With respect to any
     rights to payment of a Participant under his or her Account, nothing
     contained in the Plan or any Agreement shall give any such Participant any
     rights that are greater than those of a general creditor of the Company.

          (j) Nonexclusivity of the Plan. Neither the adoption of the Plan by
     the Board nor its submission to the shareholders of the Company for
     approval shall be construed as creating any limitations on the power of the
     Board to adopt such other compensatory arrangements for Directors as it may
     deem desirable.

          (k) Governing Law. The validity, construction, and effect of the Plan
     and any Agreement will be determined in accordance with the laws of the
     State of Delaware and applicable federal law.

14.  Shareholder Approval, Effective Date, and Plan Termination. The Plan will
     be effective as of the opening of business of the Company's 1996 Annual
     Meeting of Shareholders if, and only if, the shareholders of the Company
     approve the Plan at such Annual Meeting by the affirmative votes of the
     holders of a majority of Shares present, or represented, and entitled to
     vote on the matter at such Annual Meeting. Unless earlier terminated by
     action of the Board or in accordance with Section 11, the Plan will remain
     in effect until such time as no Shares remain available for issuance under
     the Plan and the Company and Participants have no further rights or
     obligations under the Plan.

Adopted By the Board of Directors effective May 22, 1996.

EX-10.12

                                                                   EXHIBIT 10.12
                                  SEITEL, INC.

                  AMENDED AND RESTATED 1995 WARRANT RELOAD PLAN

     The Board of Directors of Seitel, Inc. (the "Company") has adopted this
1995 Warrant Reload Plan (the "Plan"), effective as of January 1, 1995. The Plan
applies only to the 61 warrantholders (the "Warrantholders") and the warrants to
purchase common stock of the Company held by the Warrantholders as of the
effective date hereof (the "Warrants"), which Warrantholders and Warrants are
listed on Exhibit A hereto.

     The Company shall, on exercise of any Warrant by a Warrantholder according
to the terms thereof at any time prior to expiration thereof, grant replacement
warrants ("Replacement Warrants") to the exercising Warrantholder. Such
Replacement Warrants shall be granted effective on the later of (i) the exercise
of the applicable Warrant, (ii) confirmation from the New York Stock Exchange
that stockholder approval of this Plan is not required, or (iii) at the request
of any Warrantholder, such later date as may be required to avoid the imposition
of short-swing profits liability under Section 16 of the Securities Exchange Act
of 1934, and the regulations thereunder.

     Warrantholders who are not a director or employee of the Company or a
majority-owned subsidiary as of the date of exercise of a Warrant shall not be
entitled to be granted Replacement Warrants under this Plan with respect to such
exercise. Warrantholders will not be entitled to any grant of Replacement
Warrants under this Plan upon exercise of Replacement Warrants.

     The Replacement Warrants shall expire on the later of (i) the date five (5)
years after the date that the exercised Warrant is exercised, or (ii) the
expiration date of the exercised Warrant, and shall entitle the Warrantholder to
purchased the same number of shares of Company common stock as the Warrantholder
purchased upon exercise of such Warrant. The Replacement Warrants shall have an
exercise price equal to either (i) the closing price of Company common stock as
reported on the New York Stock Exchange on the effective date of grant of the
Replacement Warrant, or (ii) at the request of the Warrantholder, such greater
exercise price as may be required to avoid the imposition of short-swing profits
liability under Section 16 of the Securities Exchange Act of 1934, and the
regulations thereunder.

     No Replacement Warrant shall be exercisable until the Company has received
notice from the New York Stock Exchange that the shares issuable upon exercise
of the Replacement Warrants have been approved for listing on the Exchange
subject to issuance. The Company may place other restrictions on the
exercisability of the Replacement Warrants as may be required to comply with
applicable laws, including but not limited to restrictions limiting or
prohibiting exercise prior to registration pursuant to applicable securities
laws of the shares issuable upon exercise.

     The Replacement Warrants shall not be sold, transferred, pledged, assigned,
hypothecated or otherwise disposed of in any manner by any Warrantholder except
by will or by the laws of descent and distribution, and shall not be assignable
by operation of law or subject to execution, attachment or similar process.

     Except as set forth in this Plan, the Replacement Warrants will contain
substantially the same terms and conditions as the Warrants.

     The Board of Directors reserves the right to terminate this Plan at any
time upon notice to the Warrantholders, and no Warrantholder shall have any
rights or claims against the Company upon such termination, it being the
intention of this Plan that the right to any grant of Replacement Warrants shall
not vest in any Warrantholder until exercise of a Warrant, and shall then vest
only as to the grant of a Replacement Warrant with respect to such exercise of
such Warrant.

                                  Page 24 of 27



Exhibit A

                                  SEITEL, INC.

                            1995 Warrant Reload Plan
                         Listing of Warrant Holders and
                           Warrants Outstanding as of
                                 January 1, 1995

                                                      Warrants
               Employee                             Outstanding
          -------------------                       -----------
          Brian Adsit                                   4,569
          Linda Diane Allison                             418
          Debra Bartholowmew                               85
          Richard Boespflug                               302
          James Bowers                                    270
          Peter Bryant                                    340
          William Burke                                 1,443
          Horace Calvert                              345,399
          Margaret Carpenter                              532
          Robert Choate                                 2,585
          John Cox                                        405
          Walter Craig                                 30,652
          Angela Cunningham                               133
          Twana Dryer                                     559
          Karen Duxbury                                 8,882
          Otis Elmore                                     510
          Juan Falcon                                     253
          Allan Filipov                                 2,419
          Paul Frame                                  345,399
          Arthur Freeman                                4,513
          Jay Green                                    24,271
          James Harley                                  6,461
          Cheryl Heath                                    944
          Mary Hopping                                     99
          Wanda Jones                                     281
          Tammy Holbrook                                  455
          Marcia Kendrick                                 952
          Philip Koine                                    460
          David Lawi                                  202,863
          David Scott Lemke                               537
          Doreen Lorenzo                                4,846
          Jesse Marion                                 10,577
          Allana Ruby                                  20,963
          Kathy McCarty                                   523
          James McGinnis                                1,752
          Joe Morgan                                   26,324

                                  Page 25 of 27



Exhibit A, continued...

                                  SEITEL, INC.

                            1995 Warrant Reload Plan
                         Listing of Warrant Holders and
                           Warrants Outstanding as of
                                 January 1, 1995

                                                      Warrants
               Employee                             Outstanding
          -------------------                       -----------

          Juan Nieto                                       26
          Thomas Norton                                   375
          Michael Oline                                   457
          Charles Patterson                             1,418
          Herbert Pearlman                            245,291
          Cathryn Penn                                    196
          Charles Puckett                                 352
          Paul Richard                                  4,908
          Jay Rives                                   123,463
          Steven Sahinen                                2,583
          Charles Scalf                                   155
          Rick Schmid                                   2,623
          Lori Segeth                                   2,458
          Jay Silverman                                 3,282
          Robert Simon                                 34,229
          Samuel Sloan                                    625
          Christopher Talbot                            6,080
          Kyle Tillman                                  3,794
          Karen Underwood                                 791
          Debra Valice                                 78,666
          Richard Veazy                                   349
          Ysidro Villarreal                               834
          David Wegner                                 80,627
          James Cortis Wilson                              69
          Phillip Worsham                                 495

                                                   ==========
                                                    1,646,122
                                                   ==========

EX-10.13

                                                                   EXHIBIT 10.13

     Amendment to Seitel, Inc. Amended and Restated 1995 Warrant Reload Plan
                           Effective December 31, 1996

The sixth paragraph of the Plan is hereby deleted and replaced with the
following:

         The Board of Directors may, in its discretion, authorize all or a
portion of the Warrants granted pursuant to this Plan be on terms which permit
transfer by the Warrantholder to (1) the spouse, children or grandchildren of
such Warrantholder ("Immediate Family Members"), (2) a trust or trusts for the
exclusive benefit of such Immediate Family Members, (3) a partnership in which
such Immediate Family Members are the only partners, or (4) such other person or
persons in the sole discretion of the Board of Directors, provided that the
Warrant Certificate pursuant to which such Warrants are granted must be approved
by the Board of Directors, and must expressly provide for transferability in a
manner consistent with this paragraph, and provided further, that subsequent
transfers of transferred Warrants shall be prohibited except those by will or in
accordance with the laws of descent and distribution. Following transfer, any
such Warrants shall continue to be subject to the same terms and conditions as
were applicable immediately prior to transfer, provided that for purposes of
this Plan the transferee shall be treated as the Warrantholder. However, the
events of termination of employment described in this Plan and in the applicable
Warrant Certificate, as well as other similar conditions relating to
exercisability, termination, expiration, and vesting shall continue to be
applied with respect to the original Warrantholder, and following discontinuance
of employment of such original Warrantholder or such other event, the Warrants
shall be exercisable by the transferee only to the extent, and for the periods
specified pursuant to the terms of this Plan and the Warrant Certificate. If the
Board of Directors does not so authorize Warrants issued hereunder to be
transferable, such Warrants shall not be transferable other than by will or by
the laws of descent and distribution, and during a Warrantholder's lifetime
shall be exercisable only by him (unless he becomes disabled, in which event
they may be exercised by his legal representative).

EX-10.21

                                                                   EXHIBIT 10.21

                              EMPLOYMENT AGREEMENT

     THIS AGREEMENT is effective as of January 1, 1991, and has been entered
into between Seitel, Inc., a Delaware corporation with its principal offices at
16010 Barker's Point Lane, Houston, Texas 77079 (hereinafter together with its
subsidiaries, and including any successors in interest or assigns, called
"Employer" or "Company", except where otherwise specifically referenced) and
Paul A. Frame (hereinafter called PAF the "Employee").

     WHEREAS, Employer desires to employ the Employee on the terms and
conditions set forth herein; and

     WHEREAS, the Employee desires to be employed by the Employer on the terms
and conditions set forth herein:

     NOW THEREFORE, in consideration of the mutual covenants, agreement and
warranties contained in this Agreement, and intending to be legally bound, the
parties agree as follows:

     1. Employment: The Employer hereby employs the Employee, and the Employee
hereby accepts employment, upon the terms and conditions hereinafter set forth.

     2. Term: The term of this Agreement shall begin on January 1, 1991 and
shall terminate on December 31, 1995 (being five (5) years after the
commencement date); provided, however, that commencing on the date which is one
year after the date hereof, and on each anniversary of such date (such date and
the date of each anniversary thereof being a "Renewal Date"), the term shall be
automatically extended so as to terminate five (5) years from such Renewal Date,
unless at least Sixty (60) days prior to such Renewal Date either party hereto
gives notice to the other that the term should not be extended for an additional
year (the "Termination Date"). The term of this Agreement, as extended in the
manner described in the preceding sentence is hereafter sometimes referred to as
the "Employment Period"; and each year of the Employment Period; beginning
January 1st and ending December 31st of any year is hereafter sometimes referred
to as the "Annual Period". If the Employment Period reaches the Termination
Date, Employer will pay Employee for two (2) additional years the compensation
then applicable, which shall include for purposes of this payment the Base
Salary, together with the average of all commissions and bonus payments paid to
Employee for the prior three (3) years (the Severance Payment). The Severance
Payment will be paid provided Employee is available to act as a consultant to
Employer for up to Fifty (50%) per cent of Employee's work related time (as
compared to his final year of employment) (hereinafter "Consulting Services").
If Employee terminates this Agreement during any renewal period, Employer will
pay Employee 100% of his then current Base Salary (including One Hundred (100%)
percent of the average of all bonuses and/or commissions paid to Employee during
the immediately prior three (3) years for two additional years, provided
Employee performs the Consulting



Services (the Termination Payment). Employer shall have no obligation to pay
Employee any Severance Payment if Employee:

     (i)  refuses to perform the consulting services requested by Employer
     although there is no requirement that Employer request such services for
     Employee to be entitled to said payment; or

     (ii) violates any of the provisions of the Confidential and Proprietary
     Information or the Non-Compete provisions set forth in paragraphs Thirteen
     (13) and Fourteen (14) herein.

     3. Payments to Employee:
          (a) For services rendered by the Employee under this Agreement, the
Company shall pay the Employee an annual base salary as follows:

     1990 Base Salary - $100,000 per year;
     1991 Base Salary - $125,000 per year;

(the "Base Salary"), which Base Salary shall be paid in twenty-four (24)
bimonthly installments and may be increased from time to time as approved by the
Company's Board of Directors, and will be increased each year by any increase in
the Consumer Price Index for the recently completed calendar year as applied to
the Houston, Texas region.

          (b) Employee will receive the following annual bonus compensation:

          1% on the first $12,000,000 in sales; and
          1/2% on all sales in excess of $12,000,000; and
          1/2% on sales in excess of $12,000,000 if at least 40% of
          the Company's revenues during said year were derived from
          the resale of seismic data, (which payments shall be made
          on the fifteenth (15th) day of the month following such
          billings); and
          4% of the Company's pre-tax profits (which payment shall be
          made within five (5) days following the Company's receipt of
          its audited year-end financial statement, but in no event
          later than March 15th of the following year).

          (c) If (i) the employment agreement of Herbert Pearlman or the
employment agreement of David Lawi is ever terminated by the Company prior to
the completion of the term thereof, or (ii) Messrs. Pearlman and Lawi should
resign from the Company's Board of Directors prior to completion of their
Employment Period, as described in 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 the Company's current management team
(Messrs. Frame, Calvert, Pearlman and Lawi), the Employee shall have the right
to terminate this Agreement as set forth in Section 13(b) hereof and shall
receive from the Company all compensation required to be paid during the term of
this Agreement as set forth in paragraph 3 hereof, as well as the Severance
Payment provided in Section 2 hereof, and Employee shall have no obligation to
perform any

                                       -2-



services in order to receive such payments.

          For purposes of calculating any bonus, "pretax profit" of the Company
will mean consolidated profits of the Company before payment of (i) all local,
state and federal income taxes and (ii) payment of any severance or buy-out
payments to Messrs. Pearlman and/or Lawi, but after deduction for: (i) all
expenses of any subsidiary companies and divisions allocable to that year; (ii)
the payment of any management fee incurred for carrying out the activities of
the Company; and (iii) the payment of any bonuses to employees of each company
of Employer.

          Pretax profits will be determined in accordance with generally
accepted accounting principles and shall include only the results from
operations under each company's direct and complete control. Employer will remit
payment of any bonus to Employee within thirty (30) days of the date Employer's
independent auditors complete the financial statements of the Company.

     4. Deferred Compensation Plan: As further consideration for Employee's
services under this Agreement, Employer agrees to provide Employee with deferred
compensation pursuant to the program set forth in Exhibit A which is attached
hereto and made a part hereof. In the event this Agreement is terminated, or at
its expiration, if not renewed, Employee shall have the right to receive that
portion of his vested deferred compensation payable to him within the period
prescribed by the Deferred Compensation Program.

     5. Duties: The Employee is employed as President of the Company. His duties
shall be consistent with the responsibilities of such office, as same are
directed by the Company's Board of Directors. Employee shall be responsible for
all day-to-day operations related to such office and shall perform the
activities related to such office as assigned to him by the Company's Board of
Directors. Employee shall not be required to relocate his residence to perform
his duties under this Agreement.

     6. Extent of Services: During the term of his employment, Employee will
devote One Hundred (100%) per cent of his work-related time, attention and
energies to the business of the Employer, unless written permission to the
contrary is given by the Company's Board of Directors.

     7. Vacation: Employee shall be entitled each year to a vacation of four (4)
weeks, during which time his compensation shall be paid in full.

     8. Automobile Allowance: During the term of this Agreement, Employer will
provide Employee with an automobile allowance that will enable Employee to lease
a top of the line Mercedes Sedan.

     9. Fringe Benefits: The Employee shall be entitled to participate on the
same bases, except where stated otherwise in this Agreement, and subject to the
same qualifications as other executives of the Employer, in any pension, profit
sharing, stock purchase, savings, hospitalization, sick leave and other fringe
benefit plans in effect from

                                       -3-



time to time with respect to executives of Employer (the "Fringe Benefits").
Employer agrees that each of the Fringe Benefits of the Employer in effect on
the date hereof, or at any time during the Employment Period shall not be
terminated or modified in any manner which reduces the benefits of the Employee
without first obtaining the written consent of the Employee.

     10. Common Stock Purchase Warrant: As further consideration for the
Employee's consent to enter into this Agreement, the Company's Board of
Directors has agreed to issue the Employee a total of 250,000 Common Stock
Purchase Warrants (the "Warrants"). The Warrants will entitle the Employee to
purchase 125,000 shares of the Company's restricted common stock at a price of
$14.00 per share and 125,000 shares of common stock at $22.00 per share over a
five (5) year and a ten (10) year period, respectively. The Warrants will be
evidenced by certificates as set forth in Exhibit B, which Exhibit further
defines all terms and conditions thereof.

     11. Expenses: The Employee shall be entitled to reimbursement, upon
presentation of a voucher indicating the amount and purpose, for reasonable
expenses incurred on behalf of the Employer.

     12. Termination for Disability: In the event that the Employee shall have
been prevented from substantially rendering the services required under this
Agreement by reason of his disability (as confirmed by medical authority and
Social Security guidelines) for a period of six (6) consecutive months (or 180
consecutive days), Employer shall have the right to terminate this Agreement
upon thirty (30) days written notice, provided such disability continues during
said notice period. If the Employer shall terminate this Agreement as a result
of Employee's disability, Employee shall receive from Employer, until reaching
65 years of age, annual disability payments in an amount equal to the greater of
Ten Thousand ($10,000) Dollars per month, or sixty (60%) percent of the
Employee's Base Salary (which shall include any disability payments from state
or federal authorities). In order to cover this payment, Employer shall purchase
such disability insurance necessary under which the Employee is the insured and
beneficiary.

     13. Termination:
          (a) Termination for Employee's Breach. Employer shall have the right
to terminate this Agreement and the employment hereunder if Employee violates
his responsibilities under paragraph 5. of this Agreement and such violation
continues after having received notice of such violation and thirty (30) days to
cure such violations to the satisfaction of Employer's Board of Directors.
Employer may also immediately terminate this Agreement and the employment
hereunder by reason of: (i) determination by Employer's Board of Directors that
there has been a defalcation of the Employer's funds by Employee, (ii)
conviction of Employee on a felony charge, commission of an act of moral

                                       -4-



turpitude or; (iii) determination by Employer's Board of Directors that the
Employee has had unauthorized discussions of Employer's business activities, or
improperly disclosed trade secrets or confidential information concerning
Employer's business activities or proposed business activities.

          (b) Termination for Employer's Breach: Employee shall have the right
to terminate this Agreement if (i) Employer terminates the employment contracts
of Herbert Pearlman or David Lawi, or (ii) Messrs. Pearlman and Lawi resign from
the Company's Board of Directors prior to the resignation of Messrs. Frame and
Calvert, or (iii) the majority of Employer's Board of Directors is no longer
comprised of persons who are nominated or supported by a majority of the
Company's current management group (Messrs. Frame, Calvert, Pearlman and Lawi),
or (iv) Employer materially breaches any of the provisions hereof and such
breach is not cured within thirty (30) days after the Employer receives written
notice from Employee thereof. In such event, or in the event of a wrongful
termination of Employee, all monies due to Employee through the term of this
Agreement, including the Severance Payment, shall be paid by Employer in a lump
sum amount within thirty (30) days of Employee's termination, with bonuses to be
paid quarterly for the remaining term of this Agreement based on the relevant
performance criteria of the Company; provided, however, that in no event will
bonuses payable be less than the average of all bonuses paid under this
Agreement during the immediately preceding three (3) years. Employee shall have
no obligation to mitigate his loss or any occasioned damages as a result of such
termination.

     14. Confidential and Proprietary Information: Employee recognizes that
Employer's business involves the handling of confidential information of both
Employer and its clients and requires a confidential relationship between
Employer and its clients and also between Employer and Employee. Employer's
business requires the fullest practical protection and confidential treatment of
various information, trade secrets, data and other knowledge of both Employer's
clients and Employer which will be conceived or learned by Employee in the
course of his employment. Accordingly, Employee agrees to keep secret all
confidential information, trade secrets and proprietary information acquired by
him during his employment concerning the business and affairs of the Employer
(the "Information") and further agrees for the period of his employment and at
all times following the termination of his employment, for any reason, not to
disclose any such Information to any person, firm or corporation other than as
directed by Employer, unless and until such Information becomes publicly known
outside of Employer (other than through any violation by the Employee of his
obligation hereunder). Employee also agrees, upon request by Employer, to
execute a confidentiality and non-disclosure agreement if Employer has same
prepared to protect the confidentiality of certain information relating to the
Company.

     15. Employee's Non-Compete.
     (a) In connection with its business, Employer has developed and refined
(and will in the future develop and refine) numerous techniques, procedures,
methods, and data used in connection with its business. In

                                       -5-



addition, Employer has developed (and will in the future develop) substantial
goodwill with its customers, clients, and generally within the geophysical and
energy exploration industry. This goodwill is of extreme importance to the
future financial success of Employer because of the highly specialized nature of
Employer's business. During Employee's association with Employer, Employee has
or will become familiar with the nature of Employer's business and with these
special techniques, procedures, methods and data and will become associated with
and participate in Employer's goodwill.

     (b) Therefore, for so long as Employee is associated with Employer as an
officer director, employee or consultant and for a period of Twelve (12) months
after the date when Employee ceases to be associated with Employer in any such
capacity ("Termination Date"), Employee shall not, directly or indirectly, for
his own account or for the account of others, as an officer, director,
stockholder, owner, partner, employee, promoter, consultant, manager, advisor or
otherwise, engage in or solicit the same or similar business(es) as Employer is
engaged in on the Termination Date, within a Two Hundred (200) mile radius of
(i) Houston, Texas, (ii) New Orleans, Louisiana, or (iii) any other city in
which Employer has an office on the Termination Date. In addition, Employee
agree that, for so long as Employee is associated with Employer as an officer,
director, employee or consultant, and for a period of two (2) years after the
Termination Date, Employee shall not, directly or indirectly, solicit or induce,
or attempt to solicit or induce, any employee to leave Employer for any reason
whatsoever.

     16. Remedies. In the event of any breach of Employee's covenants contained
in Paragraph 13 or 14, Employer would suffer immediate and irreparable harm for
which Employer would not have an adequate remedy at law. Accordingly, Employee
understands that in the event of any breach of Employee's covenants contained in
paragraph 13 or 14, Employer shall be entitled to injunctive relief as well as
any and all other applicable remedies at law or in equity available to Employer.

     17. Miscellaneous Provisions:

          (a) Notices and Communications. All notices and communications
hereunder shall be in writing and shall be hand delivered or sent postage
prepaid by registered or certified mail, return receipt requested, to the
addresses first above written or to such other address of which notice shall
have been given in the manner herein provided.

          (b) Entire Agreement. All prior agreements and understandings between
the parties with respect to the subject matter of this agreement are superseded
by this Agreement, and this Agreement constitutes the entire understanding
between the parties with respect to employment of the Employee by Employer, and
Employer and Employee hereby release the other from any claims or amounts due
under any prior agreements. This Agreement may not be modified, amended, changed
or discharged, except by a writing signed by the parties hereto and then only to
the extent therein set forth.

          (c) Non-Assignment. This agreement shall be binding upon and inure to
the benefit of the parties hereto, and any administrator,

                                       -6-



executor or successor of Employer. This Agreement may not be assigned by either
of the parties hereto without prior written consent of the other party.

          (d) Waiver. No waiver of any breach of this Agreement or of any
objection to any act or omission connected herewith shall be implied or claimed
by any party, or be deemed to constitute a consent to any continuation of such
breach, act or omission, unless in a writing signed by the party against whom
enforcement of such waiver or consent is sought, and then only to the extent
therein set forth.

          (e) Section Headings. The section headings of this Agreement are
solely for the purpose of convenience and shall neither be deemed a part of this
Agreement nor used in any interpretation thereof.

          (f) Governing Law. This Agreement and the relationship of the parties
shall be governed by, and construed in accordance with, the laws of the State of
Texas.

          (g) Legal Expenses. All legal fees and expenses incurred by Employee
in attempts to receive the benefits granted hereunder or to enforce this
Agreement or any of its terms will be paid by the Company providing Employee's
claims are not dismissed in a summary proceeding.

     IN WITNESS WHEREOF, the parties hereto have executed this Agreement to be
effective as of the day and year first above written.

ATTEST                                          SEITEL, INC.

                                                By: /s/ [ILLEGIBLE]
- ----------------------------                        -------------------
                                                        [ILLEGIBLE]
WITNESS:

                                                    /s/ [ILLEGIBLE]
- ----------------------------                        --------------------

                                       -7-

EX-10.25

                                                                   EXHIBIT 10.25

                              EMPLOYMENT AGREEMENT

     THIS AGREEMENT is effective as of January 1, 1991, and has been entered
into between Seitel, Inc., a Delaware corporation with its principal offices at
16010 Barker's Point Lane, Houston, Texas 77079 (hereinafter together with its
subsidiaries, and including any successors in interest or assigns, called
"Employer" or "Company", except where otherwise specifically referenced) and
Herbert M. Pearlman (hereinafter called the "Employee").

     WHEREAS, Employer desires to employ the Employee on the terms and
conditions set forth herein; and

     WHEREAS, the Employee desires to be employed by the Employer on the terms
and conditions set forth herein:

     NOW THEREFORE, in consideration of the mutual covenants, agreement and
warranties contained in this Agreement, and intending to be legally bound, the
parties agree as follows:

     1. Employment: The Employer hereby employs the Employee, and the Employee
hereby accepts employment, upon the terms and conditions hereinafter set forth.

     2. Term: The term of this Agreement shall begin on January 1, 1991 and
shall terminate on December 31, 1995 (being five (5) years after the
commencement date); provided, however, that commencing on the date which is one
year after the date hereof, and on each anniversary of such date (such date and
the date of each anniversary thereof being a "Renewal Date"), the term shall be
automatically extended so as to terminate five (5) years from such Renewal Date,
unless at least Sixty (60) days prior to such Renewal Date either party hereto
gives notice to the other that the term should not be extended for an additional
year (the "Termination Date"). The term of this Agreement, as extended in the
manner described in the preceding sentence is hereafter sometimes referred to as
the "Employment Period"; and each year of the Employment Period; beginning
January 1st and ending December 31st of any year is hereafter sometimes referred
to as the "Annual Period". If the Employment Period reaches the Termination
Date, Employer will pay Employee for two (2) additional years the compensation
then applicable, which shall include for purposes of this payment the Base
Salary, together with the average of all bonus payments paid to Employee for the
prior three (3) years (the Severance Payment). The Severance Payment will be
paid provided Employee is available to act as a consultant to Employer for up to
Twenty (20%) per cent of Employee's work related time (as compared to his final
year of employment) (hereinafter "Consulting Services"). If Employee terminates
this Agreement during any renewal period, Employer will pay Employee 100% of his
then current Base Salary (including bonus and/or commissions) for two additional
years, provided Employee performs the Consulting Services (the Termination
Payment). Employer shall have no obligation to pay Employee any Severance
Payment if Employee:



     (i) refuses to perform the consulting services requested by Employer
     although there is no requirement that Employer request such services for
     Employee to be entitled to said payment; or

     (ii) violates any of the provisions of the Confidential and Proprietary
     Information or the Non-Compete provisions set forth in paragraphs Thirteen
     (13) and Fourteen (14) herein.

     3. Compensation:
          (a) For services rendered by the Employee under this Agreement, the
Company shall pay the Employee a salary of One Hundred and Six Thousand, Three
Hundred and Eighty-Two ($106,382) Dollars per year (which includes $10,000 of
deferred compensation) (the "Base Salary"), which Base Salary shall be increased
each year by the amount of increase in the Consumer Price Index for the New York
Metropolitan region.

          (b) Employee will receive the following annual bonus compensation:

          5% of the Company's consolidated pre-tax profits, less the 5% bonus
          amount paid to Employee by Helm pursuant to the Company's earnings
          that are consolidated with Helm.

          For purposes of calculating any bonus, "pretax profit" of the Company
will mean consolidated profits of the Company before payment of all local, state
and federal income taxes, but after deduction for: (i) all expenses of any
subsidiary companies and divisions allocable to that year; (ii) the payment of
any management fee incurred for carrying out the activities of the Company; and
(iii) the payment of any bonuses to employees of each company of Employer.

          Pretax profits will be determined in accordance with generally
accepted accounting principles and shall include only the results from
operations under each company's direct and complete control. Employer will remit
payment of any bonus to Employee within thirty (30) days of the date Employer's
independent auditors complete the financial statements of the Company.

     4. Deferred Compensation Plan: As further consideration for Employee's
services under this Agreement, Employer agrees to provide Employee with deferred
compensation pursuant to the program set forth in Exhibit A which is attached
hereto and made a part hereof. In the event this Agreement is terminated, or at
its expiration, if not renewed, Employee shall have the right to receive that
portion of his vested deferred compensation paid to him within the period
prescribed by the Deferred Compensation Program.

     5. Duties: The Employee is employed as Chairman of the Company. His duties
shall be consistent with the responsibilities of such office, as same are
directed by the Company's Board of Directors. Employee shall be responsible for
all day-to-day operations related to such office and shall perform the
activities related to such office as assigned to him by the Company's Board of
Directors. Employee shall not be required to relocate his residence to perform
his duties under this Agreement.

                                       -2-



     (b) The Company recognizes that Employee, from time to time, may seek to
acquire, on his own or as a member of a group, various business enterprises. In
any instance when, in Employee's opinion, a potential acquisition with which
Employee may be involved presents a potential conflict of interest with, or an
opportunity for, the Company, Employee shall discuss the matter with the
Company's Board of Directors and obtain approval from the Board of Directors
before proceeding with his involvement; provided, however, that such approval
need not be obtained if the sales, net income before taxes and stockholders'
equity of the enterprise in question are not more than $4,000,000, $600,000 and
$750,000, respectively, for and as of the end of the enterprise's last fiscal
year. No claim may be made by, or on behalf of, the Company against Employee as
to any acquisition with respect to which Employee has complied with the
provisions of this subparagraph.

     6. Extent of Services and Agreement Not To Compete: During the term of his
employment, Employee will devote such time to the performance of his services
for the Company as he considers necessary to properly perform his duties and
discharge his responsibilities; however, although the Company recognizes that
Employee will be involved in various other business activities, no other
work-related activities of Employee shall be in competition with any of the
Company's activities and such activities shall be first approved by the
Company's Board of Directors.

     7. Vacation: Employee shall be entitled each year to a vacation of four (4)
weeks, during which time his compensation shall be paid in full.

     8. Automobile Allowance: During the term of this Agreement, Employer will
provide Employee with a reasonable pro-rata allowance (20%) that will enable
Employee to lease a top of the line Mercedes Sedan. Employee shall cover all
costs of insurance and maintenance related to the use of this automobile.

     9. Fringe Benefits: The Employee shall be entitled to participate on the
same bases, except where stated otherwise in this Agreement, and subject to the
same qualifications as other executives of the Employer, in any pension, profit
sharing, stock purchase, savings, hospitalization, sick leave and other fringe
benefit plans in effect from time to time with respect to executives of Employer
(the "Fringe Benefits"). Employer agrees that each of the Fringe Benefits of the
Employer in effect on the date hereof, or at any time during the Employment
Period shall not be terminated or modified in any manner which reduces the
benefits of the Employee without first obtaining the written consent of the
Employee.

                                       -3-



     10. Common Stock Purchase Warrants: As further consideration for the
Employee's consent to enter into this Agreement, the Company's Board of
Directors has agreed to issue the Employee a total of 150,000 Common Stock
Purchase Warrants (the "Warrants"). The Warrants will entitle the Employee to
purchase 75,000 shares of the Company's restricted common stock at a price of
$14.00 per share and 75,000 shares of common stock at $22.00 per share over a
five (5) year and a ten (10) year period, respectively. The Warrants will be
evidenced by certificates as set forth in Exhibit B, which Exhibit further
defines all terms and conditions thereof.

     11. Expenses: The Employee shall be entitled to reimbursement, upon
presentation of a voucher indicating the amount and purpose, for reasonable
expenses incurred on behalf of the Employer.

     12. Termination for Disability: In the event that the Employee shall have
been prevented from substantially rendering the services required under this
Agreement by reason of his disability (as confirmed by medical authority and
Social Security guidelines) for a period of six (6) consecutive months (or 180
consecutive days), Employer shall have the right to terminate this Agreement
upon thirty (30) days written notice, provided such disability continues during
said notice period. Employer will provide Helm Resources, Inc., or its designee,
with a pro-rata payment that should be twenty (20%) per cent of such disability
insurance payment that provides Employee with annual disability payment sin an
amount equal to the greater of Ten Thousand ($10,000) Dollars per month or sixty
(60%) per cent of the Employee's Base Salary under which the Employee is the
insured and beneficiary.

     13. Termination:
          (a) Termination for Employee's Breach. Employer shall have the right
to terminate this Agreement and the employment hereunder if Employee violates
his responsibilities under paragraph 5. of this Agreement and such violation
continues after having received notice of such violation and thirty (30) days to
cure such violations to the satisfaction of Employer's Board of Directors.
Employer may also immediately terminate this Agreement and the employment
hereunder by reason of: (i) determination by Employer's Board of Directors that
there has been a defalcation of the Employer's funds by Employee, (ii)
conviction of Employee on a felony charge, commission of an act of moral
turpitude or; (iii) determination by Employer's Board of Directors that the
Employee has had unauthorized discussions of Employer's business activities, or
improperly disclosed trade secrets or confidential information concerning
Employer's business activities or proposed business activities.

          (b) Termination for Employer's Breach: Employee shall have the right
to terminate this Agreement if (i) the Employer materially breaches any of the
provisions hereof and such breach is not cured within thirty (30) days after the
Employer receives written notice from Employee thereof; or (ii) the majority of
Employer's Board of Directors is no longer comprised of persons who were
nominated or supported by a majority of the Company's current management group
(Messrs. Frame, Calvert, Pearlman and Lawi). In such event, or in the event of a
wrongful

                                       -4-



termination of Employee, all monies due to Employee through the term of this
Agreement, including the Severance Payment, shall be paid by Employer in a lump
sum amount within thirty (30) days of Employee's termination, with bonuses to
be paid quarterly based on the relevant performance criteria of the Company;
provided, however that in no event will bonuses payable be less than the average
of all bonuses paid under this Agreement during the immediately preceding three
(3) years. Employee shall have no obligation to mitigate his loss or any
occasioned damages as a result of such termination, or perform any services to
receive such payments.

     14. Confidential and Proprietary Information: Employee recognizes that
Employer's business involves the handling of confidential information of both
Employer and its clients and requires a confidential relationship between
Employer and its clients and also between Employer and Employee. Employer's
business requires the fullest practical protection and confidential treatment of
various information, trade secrets, data and other knowledge of both Employer's
clients and Employer which will be conceived or learned by Employee in the
course of his employment. Accordingly, Employee agrees to keep secret all
confidential information, trade secrets and proprietary information acquired by
him during his employment concerning the business and affairs of the Employer
(the "Information") and further agrees for the period of his employment and at
all times following the termination of his employment, for any reason, not to
disclose any such Information to any person, firm or corporation other than as
directed by Employer, unless and until such Information becomes publicly known
outside of Employer (other than through any violation by the Employee of his
obligation hereunder). Employee also agrees, upon request by Employer, to
execute a confidentiality and non-disclosure agreement if Employer has same
prepared to protect the confidentiality of certain information relating to the
Company.

     15. Employee's Non-Compete.
     (a) In connection with its business, Employer has developed and refined
(and will in the future develop and refine) numerous techniques, procedures,
methods, and data used in connection with its business. In addition, Employer
has developed (and will in the future develop) substantial goodwill with its
customers, clients, and generally within the geophysical and energy exploration
industry. This goodwill is of extreme importance to the future financial success
of Employer because of the highly specialized nature of Employer's business.
During Employee's association with Employer, Employee has or will become
familiar with the nature of Employer's business and with these special
techniques, procedures, methods and data and will become associated with and
participate in Employer's goodwill.

     (b) Therefore, for so long as Employee is associated with Employer as an
officer director, employee or consultant and for a period of eighteen (18)
months after the date when Employee ceases to be associated with Employer in any
such capacity ("Termination Date"), Employee shall not, directly or indirectly,
for his own account or for the account of others, as an officer, director,
stockholder, owner, partner, employee, promoter, consultant, manager, advisor or
otherwise, engage in or solicit the same or similar business(es) as Employer is
engaged in on the Termination Date, within a Two Hundred (200) mile

                                       -5-



radius of (i) Houston, Texas, (ii) New Orleans, Louisiana, or (iii) any other
city in which Employer has an office on the Termination Date. In addition,
Employee agree that, for so long as Employee is associated with Employer as an
officer, director, employee or consultant, and for a period of two (2) years
after the Termination Date, Employee shall not, directly or indirectly, solicit
or induce, or attempt to solicit or induce, any employee to leave Employer for
any reason whatsoever.

     16. Remedies. In the event of any breach of Employee's covenants contained
in Paragraph 13 or 14, Employer would suffer immediate and irreparable harm for
which Employer would not have an adequate remedy at law. Accordingly, Employee
understands that in the event of any breach of Employee's covenants contained in
paragraph 13 or 14, Employer shall be entitled to injunctive relief as well as
any and all other applicable remedies at law or in equity available to Employer.

     17. Miscellaneous Provisions:

          (a) Notices and Communications. All notices and communications
hereunder shall be in writing and shall be hand delivered or sent postage
prepaid by registered or certified mail, return receipt requested, to the
addresses first above written or to such other address of which notice shall
have been given in the manner herein provided.

          (b) Entire Agreement. All prior agreements and understandings between
the parties with respect to the subject matter of this agreement are superseded
by this Agreement, and this Agreement constitutes the entire understanding
between the parties with respect to employment of the Employee by Employer, and
Employer and Employee hereby release the other from any claims or amounts due
under any prior agreements. This Agreement may not be modified, amended, changed
or discharged, except by a writing signed by the parties hereto and then only to
the extent therein set forth.

          (c) Non-Assignment. This agreement shall be binding upon and inure to
the benefit of the parties hereto, and any administrator, executor or successor
of Employer. This Agreement may not be assigned by either of the parties hereto
without prior written consent of the other party.

          (d) Waiver. No waiver of any breach of this Agreement or of any
objection to any act or omission connected herewith shall be implied or claimed
by any party, or be deemed to constitute a consent to any continuation of such
breach, act or omission, unless in a writing signed by the party against whom
enforcement of such waiver or consent is sought, and then only to the extent
therein set forth.

          (e) Section Headings. The section headings of this Agreement are
solely for the purpose of convenience and shall neither be deemed a part of this
Agreement nor used in any interpretation thereof.

                                       -6-



          (f) Governing Law. This Agreement and the relationship of the parties
shall be governed by, and construed in accordance with, the laws of the State of
Texas.

          (g) Legal Expenses. All legal fees and expenses incurred by Employee
in attempts to receive the benefits granted hereunder or to enforce this
Agreement or any of its terms will be paid by the Company providing Employee's
claims are not dismissed in a summary proceeding.

     IN WITNESS WHEREOF, the parties hereto have executed this Agreement to be
effective as of the day and year first above written.

ATTEST                                          SEITEL, INC.

/s/ [ILLEGIBLE]                                 By: /s/ [ILLEGIBLE]
- ----------------------------                        -------------------
                                                    President

WITNESS:

/s/ [ILLEGIBLE]                                     /s/ [ILLEGIBLE]
- ----------------------------                        -------------------

                                       -7-

EX-10.28

                                                                   EXHIBIT 10.28

                              EMPLOYMENT AGREEMENT

     THIS AGREEMENT is effective as of January 1, 1991, and has been entered
into between Seitel, Inc., a Delaware corporation with its principal offices at
16010 Barker's Point Lane, Houston, Texas 77079 (hereinafter together with its
subsidiaries, successors in interest or assigns, called "Employer" or "Company",
except where otherwise specifically referenced) and David S. Lawi
(hereinafter called the "Employee").

     WHEREAS, Employer desires to employ the Employee on the terms and
conditions set forth herein; and

     WHEREAS, the Employee desires to be employed by the Employer on the terms
and conditions set forth herein:

     NOW THEREFORE, in consideration of the mutual covenants, agreement and
warranties contained in this Agreement, and intending to be legally bound, the
parties agree as follows:

     1. Employment: The Employer hereby employs the Employee, and the Employee
hereby accepts employment, upon the terms and conditions hereinafter set forth.

     2. Term: The term of this Agreement shall begin on January 1, 1991 and
shall terminate on December 31, 1995 (being five (5) years after the
commencement date); provided, however, that commencing on the date which is one
year after the date hereof, and on each anniversary of such date (such date and
the date of each anniversary thereof being a "Renewal Date"), the term shall be
automatically extended so as to terminate five (5) years from such Renewal Date,
unless at least Sixty (60) days prior to such Renewal Date either party hereto
gives notice to the other that the term should not be extended for an additional
year (the "Termination Date"). The term of this Agreement, as extended in the
manner described in the preceding sentence is hereafter sometimes referred to as
the "Employment Period"; and each year of the Employment Period; beginning
January 1st and ending December 31st of any year is hereafter sometimes referred
to as the "Annual Period". If the Employment Period reaches the Termination
Date, Employer will pay Employee for two (2) additional years the compensation
then applicable, which shall include for purposes of this payment the Base
Salary, together with the average of all bonus payments paid to Employee for the
prior three (3) years (the Severance Payment). The Severance Payment will be
paid provided Employee is available to act as a consultant to Employer for up to
Twenty (20%) per cent of Employee's work related time (as compared to his final
year of employment) (hereinafter "Consulting Services"). If Employee terminates
this Agreement during any renewal period, Employer will pay Employee 100% of his
then current Base Salary (including bonus and/or commissions) for two additional
years, provided Employee performs the Consulting Services (the Termination
Payment). Employer shall have no obligation to pay Employee any Severance
Payment if Employee:



     (i) refuses to perform the consulting services requested by Employer
     although there is no requirement that Employer request such services for
     Employee to be entitled to said payment; or

     (ii) violates any of the provisions of the Confidential and Proprietary
     Information or the Non-Compete provisions set forth in paragraphs Thirteen
     (13) and Fourteen (14) herein.

     3. Compensation:
          (a) For services rendered by the Employee under this Agreement, the
Company shall pay the Employee a salary of Fifty-Three Thousand, One Hundred and
Eighty-Eight ($53,188) Dollars per year (which includes $5,000 of deferred
compensation) (the "Base Salary"), which Base Salary shall be increased each
year by the amount of the increase in the Consumer Price Index for the New York
Metropolitan region.

          (b) Employee will receive the following annual bonus compensation:

          2.5% of the Company's consolidated pre-tax profits, less the 2.5%
          bonus amount paid to Employee by Helm pursuant to the Company's
          earning that are consolidated with Helm.

          For purposes of calculating any bonus, "pretax profit" of the Company
will mean consolidated profits of the Company before payment of all local, state
and federal income taxes, but after deduction for: (i) all expenses of any
subsidiary companies and divisions allocable to that year; (ii) the payment of
any management fee incurred for carrying out the activities of the Company; and
(iii) the payment of any bonuses to employees of each company of Employer.

          Pretax profits will be determined in accordance with generally
accepted accounting principles and shall include only the results from
operations under each company's direct and complete control. Employer will remit
payment of any bonus to Employee within thirty (30) days of the date Employer's
independent auditors complete the financial statements of the Company.

     4. Deferred Compensation Plan: As further consideration for Employee's
services under this Agreement, Employer agrees to provide Employee with deferred
compensation pursuant to the program set forth in Exhibit A which is attached
hereto and made a part hereof. In the event this Agreement is terminated, or at
its expiration, if not renewed, Employee shall have the right to receive that
portion of his vested deferred compensation paid to him within the period
prescribed by the Deferred Compensation Program.

     5. Duties:
     (a) The Employee is employed as Chairman of the Executive Committee of the
Company. His duties shall be consistent with the

                                       -2-



responsibilities of such office, as same are directed by the Company's Board of
Directors. Employee shall be responsible for all day-to-day operations related
to such office and shall perform the activities related to such office as
assigned to him by the Company's Board of Directors. Employee shall not be
required to relocate his residence to perform his duties under this Agreement.

     (b) The Company recognizes that Employee, from time to time, may seek to
acquire, on his own or as a member of a group, various business enterprises. In
any instance when, in Employee's opinion, a potential acquisition with which
Employee may be involved presents a potential conflict of interest with, or an
opportunity for, the Company, Employee shall discuss the matter with the
Company's Board of Directors and obtain approval from the Board of Directors
before proceeding with his involvement; provided, however, that such approval
need not be obtained if the sales, net income before taxes and stockholders'
equity of the enterprise in question are not more than $4,000,000, $600,000 and
$750,000, respectively, for and as of the end of the enterprise's last fiscal
year. No claim may be made by, or on behalf of, the Company against Employee as
to any acquisition with respect to which Employee has complied with the
provisions of this subparagraph.

     6. Extent of Services and Agreement Not To Compete: During the term of his
employment, Employee will devote such time to the performance of his services
for the Company as he considers necessary to properly perform his duties and
discharge his responsibilities; however, although the Company recognizes that
Employee will be involved in various other business activities, no other
work-related activities of Employee shall be in competition with any of the
Company's activities and such activities shall be first approved by the
Company's Board of Directors.

     7. Vacation: Employee shall be entitled each year to a vacation of four (4)
weeks, during which time his compensation shall be paid in full.

     8. Automobile Allowance: During the term of this Agreement, Employer will
provide Employee with a reasonable pro-rata allowance (20%) that will enable
Employee to lease a top of the line Jaguar Sedan. Employee shall cover all costs
of insurance and maintenance related to the use of this automobile.

     9. Fringe Benefits: The Employee shall be entitled to participate on the
same bases, except where stated otherwise in this Agreement, and subject to the
same qualifications as other executives of the Employer, in any pension, profit
sharing, stock purchase, savings, hospitalization, sick leave and other fringe
benefit plans in effect from time to time with respect to executives of Employer
(the "Fringe Benefits"). Employer agrees that each of the Fringe Benefits of the
Employer in effect on the date hereof, or at any time during the Employment
Period shall not be terminated or modified in any manner which reduces the
benefits of the Employee without first obtaining the written

                                       -3-



consent of the Employee.

     10. Common Stock Purchase Warrant: As further consideration for the
Employee's consent to enter into this Agreement, the Company's Board of
Directors has agreed to issue the Employee a total of 150,000 Common Stock
Purchase Warrants (the "Warrants"). The Warrants will entitle the Employee to
purchase 75,000 shares of the Company's restricted common stock at a price of
$14.00 per share and 75,000 shares of common stock at $22.00 per share over a
five (5) year and a ten (10) year period, respectively. The Warrants will be
evidenced by certificates as set forth in Exhibit B, which Exhibit further
defines all terms and conditions thereof.

     11. Expenses: The Employee shall be entitled to reimbursement, upon
presentation of a voucher indicating the amount and purpose, for reasonable
expenses incurred on behalf of the Employer.

     12. Termination for Disability: In the event that the Employee shall have
been prevented from substantially rendering the services required under this
Agreement by reason of his disability (as confirmed by medical authority and
Social Security guidelines) for a period of six (6) consecutive months (or 180
consecutive days), Employer shall have the right to terminate this Agreement
upon thirty (30) days written notice, provided such disability continues during
said notice period. Employer will provide Helm Resources, Inc., or its designee,
with a pro-rata payment that should be twenty (20%) per cent of such disability
insurance payment that provides Employee with annual disability payments in an
amount equal to the greater of Ten Thousand ($10,000) Dollars per month or sixty
(60%) per cent of the Employee's Base Salary under which the Employee is the
insured and beneficiary.

     13. Termination:

          (a) Termination for Employee's Breach. Employer shall have the right
to terminate this Agreement and the employment hereunder if Employee violates
his responsibilities under paragraph 5. of this Agreement and such violation
continues after having received notice of such violation and thirty (30) days to
cure such violations to the satisfaction of Employer's Board of Directors.
Employer may also immediately terminate this Agreement and the employment
hereunder by reason of: (i) determination by Employer's Board of Directors that
there has been a defalcation of the Employer's funds by Employee, (ii)
conviction of Employee on a felony charge, commission of an act of moral
turpitude or; (iii) determination by Employer's Board of Directors that the
Employee has had unauthorized discussions of Employer's business activities, or
improperly disclosed trade secrets or confidential information concerning
Employer's business activities or proposed business activities.

          (b) Termination for Employer's Breach: Employee shall have the right
to terminate this Agreement if (i) the Employer materially breaches any of the
provisions hereof and such breach is not cured within thirty (30) days after the
Employer receives written notice from Employee

                                       -4-



thereof or (ii) the majority of Employer's Board of Directors is no longer
comprised of persons who were nominated or supported by a majority of the
Company's current management group (Messrs. Frame, Calvert, Pearlman and Lawi).
In such event, or in the event of a wrongful termination of Employee, all monies
due to Employee through the term of this Agreement, including the Severance
Payment, shall be paid by Employer in a lump sum amount within thirty (30) days
of Employee's termination, with bonuses to be paid quarterly based on the
relevant performance criteria of the Company; provided, however, that in no
event will bonuses payable be less than the average of all bonuses paid under
this Agreement during the immediately preceding three (3) years. Employee shall
have no obligation to mitigate his loss or any occasioned damages as a result of
such termination, or perform any services to receive such payments.

     14. Confidential and Proprietary Information: Employee recognizes that
Employer's business involves the handling of confidential information of both
Employer and its clients and requires a confidential relationship between
Employer and its clients and also between Employer and Employee. Employer's
business requires the fullest practical protection and confidential treatment of
various information, trade secrets, data and other knowledge of both Employer's
clients and Employer which will be conceived or learned by Employee in the
course of his employment. Accordingly, Employee agrees to keep secret all
confidential information, trade secrets and proprietary information acquired by
him during his employment concerning the business and affairs of the Employer
(the "Information") and further agrees for the period of his employment and at
all times following the termination of his employment, for any reason, not to
disclose any such Information to any person, firm or corporation other than as
directed by Employer, unless and until such Information becomes publicly known
outside of Employer (other than through any violation by the Employee of his
obligation hereunder). Employee also agrees, upon request by Employer, to
execute a confidentiality and non-disclosure agreement if Employer has same
prepared to protect the confidentiality of certain information relating to the
Company.

     15. Employee's Non-Compete.
     (a) In connection with its business, Employer has developed and refined
(and will in the future develop and refine) numerous techniques, procedures,
methods, and data used in connection with its business. In addition. Employer
has developed (and will in the future develop) substantial goodwill with its
customers, clients, and generally within the geophysical and energy exploration
industry. This goodwill is of extreme importance to the future financial success
of Employer because of the highly specialized nature of Employer's business.
During Employee's association with Employer, Employee has or will become
familiar with the nature of Employer's business and with these special
techniques, procedures, methods and data and will become associated with and
participate in Employer's goodwill.

     (b) Therefore, for so long as Employee is associated with Employer as an
officer, director, employee or consultant and for a period of eighteen (18)
months after the date when Employee ceases to be associated with Employer in any
such capacity ("Termination Date"),

                                       -5-



Employee shall not, directly or indirectly, for his own account or for the
account of others, as an officer, director, stockholder, owner, partner,
employee, promoter, consultant, manager, advisor or otherwise, engage in or
solicit the same or similar business(es) as Employer is engaged in on the
Termination Date, within a Two Hundred (200) mile radius of (i) Houston, Texas,
(ii) New Orleans, Louisiana, or (iii) any other city in which Employer has an
office on the Termination Date. In addition, Employee agree that, for so long as
Employee is associated with Employer as an officer, director, employee or
consultant, and for a period of two (2) years after the Termination Date,
Employee shall not, directly or indirectly, solicit or induce, or attempt to
solicit or induce, any employee to leave Employer for any reason whatsoever.

     16. Remedies. In the event of any breach of Employee's covenants contained
in Paragraph 13 or 14, Employer would suffer immediate and irreparable harm for
which Employer would not have an adequate remedy at law. Accordingly, Employee
understands that in the event of any breach of Employee's covenants contained in
paragraph 13 or 14, Employer shall be entitled to injunctive relief as well as
any and all other applicable remedies at law or in equity available to Employer.

     17. Miscellaneous Provisions:

          (a) Notices and Communications. All notices and communications
hereunder shall be in writing and shall be hand delivered or sent postage
prepaid by registered or certified mail, return receipt requested, to the
addresses first above written or to such other address of which notice shall
have been given in the manner herein provided.

          (b) Entire Agreement. All prior agreements and understandings between
the parties with respect to the subject matter of this agreement are superseded
by this Agreement, and this Agreement constitutes the entire understanding
between the parties with respect to employment of the Employee by Employer, and
Employer and Employee hereby release the other from any claims or amounts due
under any prior agreements. This Agreement may not be modified, amended, changed
or discharged, except by a writing signed by the parties hereto and then only to
the extent therein set forth.

          (c) Non-Assignment. This agreement shall be binding upon and inure to
the benefit of the parties hereto, and any administrator, executor or successor
of Employer. This Agreement may not be assigned by either of the parties hereto
without prior written consent of the other party.

          (d) Waiver. No waiver of any breach of this Agreement or of any
objection to any act or omission connected herewith shall be implied or claimed
by any party, or be deemed to constitute a consent to any continuation of such
breach, act or omission, unless in a writing signed by the party against whom
enforcement of such waiver or consent is sought, and then only to the extent
therein set forth.

          (e) Section Headings. The section headings of this

                                       -6-



Agreement are solely for the purpose of convenience and shall neither be deemed
a part of this Agreement nor used in any interpretation thereof.

          (f) Governing Law. This Agreement and the relationship of the parties
shall be governed by, and construed in accordance with, the laws of the State of
Texas.

          (g) Legal Expenses. All legal fees and expenses incurred by Employee
in attempts to receive the benefits granted hereunder or to enforce this
Agreement or any of its terms will be paid by the Company providing Employee's
claims are not dismissed in a summary proceeding.

     IN WITNESS WHEREOF, the parties hereto have executed this Agreement to be
effective as of the day and year first above written

ATTEST                                          SEITEL, INC.

/s/ [ILLEGIBLE]                                 By: /s/ [ILLEGIBLE], President
- -------------------                                 --------------------------

WITNESS:

/s/ [ILLEGIBLE]                                     /s/ [ILLEGIBLE]
- -------------------                                 ---------------

                                       -7-

EX-10.33

                                                                   EXHIBIT 10.33

                              EMPLOYMENT AGREEMENT

     THIS AGREEMENT is effective as of January 1, 1993, and has been entered
into between Seitel, Inc., a Delaware corporation with its principal offices at
50 Briar Hollow Lane, 7th Floor West, Houston, Texas 77027 (hereinafter together
with its subsidiaries, and including any successors in interest or assigns,
called "Employer" or "Company", except where otherwise specifically referenced)
and Debra D. Valice (hereinafter call the "Employee").

WHEREAS, Employer desires to employ the Employee on the terms and conditions set
forth herein; and

WHEREAS, the Employee desires to be employed by the Employer on the terms and
conditions set forth herein:

NOW THEREFORE, in consideration of the mutual covenants, agreement and
warranties contained in this Agreement, and intending to be legally bound, the
parties agree as follows:

     1.   Employment: The Employer hereby employs the Employee, and the Employee
hereby accepts employment, upon the terms and conditions hereinafter set forth.

     2.   Term: The term of this Agreement shall begin on January 1, 1993 and
shall terminate on December 31, 1998 (being five (5) years after the
commencement date). The term of this Agreement is hereafter sometimes referred
to as the "Employment Period"; and each year of the Employment Period; beginning
January 1st and ending December 31st of any year is hereafter sometimes
referred to as the "Annual Period". The term of this Agreement will
automatically be extended for an additional five (5) year period if at least
sixty (60) days prior to January 1, 1996 written notice of termination has not
been given by either Party. If such termination notice is given by Employer to
Employee, Employer will pay Employee for two (2) additional years after the end
of the Employment Period the compensation then applicable, which shall include
for purposes of this payment the Base Salary, together with the average of all
bonus and commission payments paid to Employee for the prior three (3) years
(the Severance Payment). The Severance Payment will be paid provided Employee is
available to act as a consultant to Employer for up to Fifty (50%) per cent of
Employee's work related time (as compared to her final year of employment)
(hereinafter "Consulting Services"). If Employee terminates this Agreement, the
Employer shall be under no obligation to pay Employee any Severance Payment.
Employer shall have no obligation to pay Employee any Severance Payment if
Employee:

     (i)  refuses to perform the consulting services requested by Employer
although there is no requirement that Employer request such services for
Employee to be entitled to said payment; or

     (ii) violates any of the provisions of the Confidential and Proprietary
Information or the Non-Compete provisions set forth in paragraphs Thirteen (13)
and Fourteen (14) herein.

     3.   Payments to Employee:



Employment Agreement - Debra D. Valice - Seitel -1/1/93 - page 2

          (a)  For services rendered by the Employee under this Agreement, the
Company shall pay the Employee an annual base salary as follows:

          1993 Base Salary - $106,090.00 per year;

(the "Base Salary"), which Base Salary shall be paid in twenty-four (24)
bimonthly installments and may be increased from time to time as approved by the
Company's Board of Directors, and will be increased each year by any increase in
the Consumer Price Index for the recently completed calendar year as applied to
the Houston, Texas region.

          (b)  Employee will receive the following annual bonus compensation:

               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 (which payment shall be made within five (5) days
               following the Company's receipt of its audited year-end financial
               statements, but in no event later than March 15th of the
               following year).

          (c)  If (i) the employment agreement of Herbert Pearlman or the
employment agreement of David Lawi is ever terminated by the Company prior to
the completion of the term thereof, or (ii) Messrs. Pearlman and Lawi should
resign from the Company's Board of Directors prior to completion of their
Employment Period, as described in 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 the Company's current management team
(Messrs. Frame, Calvert, Pearlman and Lawi), the Employee shall have the right
to terminate this Agreement as set forth in Section 13(b) hereof and shall
receive from the Company all compensation required to be paid during the term of
this Agreement as set forth in paragraph 3 hereof, as well as the Severance
Payment provided in Section 2 hereof, and Employee shall have no obligation to
perform any services in order to receive such payments.

               For purposes of calculating any bonus, "pretax profit" of the
Company will mean consolidated profits of the Company before payment of (i) all
local, state and federal income taxes and (ii) payment of any severance or
buy-out payments to Messrs. Pearlman and/or Lawi, but after deduction for: (i)
all expenses of any subsidiary companies and divisions allocable to that year;
(ii) the payment of any management fee incurred for carrying out the activities
of the Company; and (iii) the payment of any bonuses to employees of each
company of Employer.

Pretax profits will be determined in accordance with generally accepted
accounting principles and shall include only the results from operations under
each company's direct and complete control. Employer will remit payment of any
bonus to Employee within thirty (30) days of the date Employer's independent
auditors complete the financial statements of the Company.

     4.   Deferred Compensation Plan: As further consideration for Employee's
services under this Agreement, Employer agrees to provide Employee with deferred
compensation pursuant to the program set forth in Exhibit A which is attached
hereto and made a part hereof. In the event this Agreement is terminated, or at
its expiration, if not renewed, Employee shall have the right to receive that
portion of her vested deferred compensation payable to her within the period
prescribed by the Deferred Compensation Program.



Employment Agreement - Debra D. Valice - Seitel - 1/1/93 - page 3

     5.   Duties: The Employee is employed as Chief Financial Officer of the
Company. Her duties shall be consistent with the responsibilities of such
office, as same are directed by the Company's Board of Directors. Employee shall
be responsible for all day-to-day operations related to such office and shall
perform the activities related to such office as assigned to her by the
Company's Board of Directors. Employee shall not be required to relocate her
residence to perform her duties under this Agreement.

     6.   Extent of Services: During the term of her employment, Employee will
devote One Hundred (100%) per cent of her work-related time, attention and
energies to the business of the Employer, unless written permission to the
contrary is given by the Company's Board of Directors.

     7.   Vacation: Employee shall be entitled each year to a vacation of four
(4) weeks, during which time her compensation shall be paid in full.

     8.   Automobile Allowance: During the term of this Agreement, Employer will
provide Employee with an automobile allowance of at least $700.00 per month.

     9.   Fringe Benefits: The Employee shall be entitled to participate on the
same bases, except where stated otherwise in this Agreement, and subject to the
same qualifications as other executives of the Employer, in any pension, profit
sharing, stock purchase, savings, hospitalization, sick leave and other fringe
benefit plans in effect from time to time with respect to executives of Employer
(the "Fringe Benefits"). Employer agrees that each of the Fringe Benefits of
the Employer in effect on the date hereof, or at any time during the Employment
Period shall not be terminated or modified in any manner which reduces the
benefits of the Employee without first obtaining the written consent of the
Employee.

     10.  Common Stock Purchase Warrant: As further consideration for the
Employee's consent to enter into this Agreement, the Company's Board of
Directors has agreed to issue the Employee a total of 40,000 Common Stock
Purchase Warrants (the "Warrants"). The Warrants will entitle the Employee to
purchase 20,000 shares of the Company's restricted common stock at a price of
$14.00 per share and 20,000 shares of common stock at $22.00 per share over a
seven (7) year and a ten (10) year period, respectively. The Warrants will be
evidenced by certificates as set forth in Exhibit B, which Exhibit further
defines all terms and conditions thereof.

     11.  Expenses: The Employee shall be entitled to reimbursement, upon
presentation of a voucher indicating the amount and purpose, for reasonable
expenses incurred on behalf of the Employer.

     12.  Termination for Disability: In the event that the Employee shall have
been prevented from substantially rendering the services required under this
Agreement by reason of her disability (as confirmed by medical authority and
Social Security guidelines) for a period of six (6) consecutive months (or 180
consecutive days), Employer shall have the right to terminate this Agreement
upon thirty (30) days written notice, provided such disability continues during
said notice period. If the Employer shall terminate this Agreement as a result
of Employee's disability, Employee shall receive from Employer, until reaching
65 years of age, annual disability payments in an amount equal to the greater of
Ten Thousand and no/100 Dollars ($10,000.00) per month, or sixty (60%) percent
of the Employee's Base Salary (which shall include any disability payments from
state or federal authorities). In order to cover this payment, Employer shall
purchase such disability insurance necessary under which the Employee is the
insured and beneficiary.



Employment Agreement - Debra D. Valice - Seitel -1/1/93 - page 4

     13.  Termination:
          (a) Termination for Employee's Breach. Employer shall have the right
to terminate this Agreement and the employment hereunder if Employee violates
her responsibilities under paragraph 5. of this Agreement and such violation
continues after having received notice of such violation and thirty (30) days to
cure such violations to the satisfaction of Employer's Board of Directors.
Employer may also immediately terminate this Agreement and the employment
hereunder by reason of: (i) determination by Employer's Board of Directors that
there has been a defalcation of the Employer's funds by Employee, (ii)
conviction of Employee on a felony charge, commission of an act of moral
turpitude or; (iii) determination by Employer's Board of Directors that the
Employee has had unauthorized discussions of Employer's business activities, or
improperly disclosed trade secrets or confidential information concerning
Employer's business activities or proposed business activities.

          (b) Termination for Employer's Breach: Employee shall have the right
to terminate this Agreement if (i) Employer terminates the employment contracts
of Herbert Pearlman or David Lawi, or (ii) Messrs. Pearlman and Lawi resign from
the Company's Board of Directors prior to the resignation of Messrs. Frame and
Calvert, or (iii) the majority of Employer's Board of Directors is no longer
comprised of persons who are nominated or supported by a majority of the
Company's current management group (Messrs. Frame, Calvert, Pearlman and Lawi),
or (iv) Employer materially breaches any of the provisions hereof and such
breach is not cured within thirty (30) days after the Employer receives written
notice from Employee thereof. In such event, or hi the event of a wrongful
termination of Employee, all monies due to Employee through the term of this
Agreement, including the Severance Payment, shall be paid by Employer in a lump
sum amount within thirty (30) days of Employee's termination, with bonuses to be
paid quarterly for the remaining term of this Agreement based on the relevant
performance criteria of the Company; provided, however, that in no event will
bonuses payable be less than the average of all bonuses paid under this
Agreement during the immediately preceding three (3) years. Employee shall have
no obligation to mitigate her loss or any occasioned damages as a result of such
termination.

     14.  Confidential and Proprietary Information: Employee recognizes that
Employer's business involves the handling of confidential information of both
Employer and its clients and requires a confidential relationship between
Employer and its clients and also between Employer and Employee. Employer's
business requires the fullest practical protection and confidential treatment of
various information, trade secrets, data and other knowledge of both Employer's
clients and Employer which will be conceived or learned by Employee in the
course of her employment. Accordingly, Employee agrees to keep secret all
confidential information, trade secrets and proprietary information acquired by
her during her employment concerning the business and affairs of the Employer
(the "Information") and further agrees for the period of her employment and at
all times following the termination of her employment, for any reason, not to
disclose any such Information to any person, firm or corporation other than as
directed by Employer, unless and until such Information becomes publicly known
outside of Employer (other than through any violation by the Employee of her
obligation hereunder). Employee also agrees, upon request by Employer, to
execute a confidentiality and non-disclosure agreement if Employer has same
prepared to protect the confidentiality of certain information relating to the
Company.

     15.  Employee's Non-Compete.



Employment Agreement - Debra D. Valice - Seitel - 1/1/93 - page 5

          (a) In connection with its business, Employer has developed and
refined (and will in the future develop and refine) numerous techniques,
procedures, methods, and data used in connection with its business. In addition,
Employer has developed (and will in the future develop) substantial goodwill
with its customers, clients, and generally within the geophysical and energy
exploration industry. This goodwill is of extreme importance to the future
financial success of Employer because of the highly specialized nature of
Employer's business. During Employee's association with Employer, Employee has
or will become familiar with the nature of Employer's business and with these
special techniques, procedures, methods and data and will become associated with
and participate in Employer's goodwill.

          (b) Therefore, for so long as Employee is associated with Employer as
an officer, director, employee or consultant and for a period of Twelve,(12)
months after the date when Employee ceases to be associated with Employer in any
such capacity ("Termination Date"), Employee shall not, directly or indirectly,
for her own account or for the account of others, as an officer, director,
stockholder, owner, partner, employee, promoter, consultant, manager, advisor or
otherwise, engage in or solicit the same or similar business(es) as Employer is
engaged in on the Termination Date, within a Two Hundred (200) mile radius of
(i) Houston, Texas, (ii) New Orleans, Louisiana, or (iii) any other city in
which Employer has an office on the Termination Date. In addition, Employee
agrees that, for so long as Employee is associated with Employer as an officer,
director, employee or consultant, and for a period of two (2) years after the
Termination Date, Employee shall not, directly or indirectly, solicit or induce,
or attempt to solicit or induce, any employee to leave Employer for any reason
whatsoever.

     16.  Remedies. In the event of any breach of Employee's covenants contained
in Paragraph 13 or 14, Employer would suffer immediate and irreparable harm for
which Employer would not have an adequate remedy at law. Accordingly, Employee
understands that in the event of any breach of Employee's covenants contained in
paragraph 13 or 14, Employer shall be entitled to injunctive relief as well as
any and all other applicable remedies at law or in equity available to Employer.

     17.  Miscellaneous Provisions:
          (a) Notices and Communications. All notices and communications
hereunder shall be in writing and shall be hand delivered or sent postage
prepaid by registered or certified mail, return receipt requested, to the
addresses first above written or to such other address of which notice shall
have been given in the manner herein provided.

          (b) Entire Agreement. All prior agreements and understandings between
the parties with respect to the subject matter of this agreement are superseded
by this Agreement, and this Agreement constitutes the entire understanding
between the parties with respect to employment of the Employee by Employer, and
Employer and Employee hereby release the other from any claims or amounts due
under any prior agreements. This Agreement may not be modified, amended, changed
or discharged, except by a writing signed by the parties hereto and then only to
the extent therein set forth.

          (c) Non-Assignment. This agreement shall be binding upon and inure to
the benefit of the parties hereto, and any administrator, executor or successor
of Employer. This Agreement may not be assigned by either of the parties
hereto without prior written consent of the other party.

          (d) Waiver. No waiver of any breach of this Agreement or of any
objection to any act or omission connected herewith shall be implied or claimed
by any party, or be deemed to constitute a consent to any continuation of such
breach, act or omission, unless in a writing signed by the party



Employment Agreement - Debra D. Valice - Seitel -1/1/93 - page 6

against whom enforcement of such waiver or consent is sought and then only to
the extent therein set forth.

          (e) Section Headings. The section headings of this Agreement are
solely for the purpose of convenience and shall neither be deemed a part of this
Agreement nor used in any interpretation thereof.

          (f) Governing Law. This Agreement and the relationship of the parties
shall be governed by, and construed in accordance with, the laws of the State of
Texas.

          (g) Legal Expenses. All legal fees and expenses incurred by Employee
in attempts to receive the benefits granted hereunder or to enforce this
Agreement or any of its terms will be paid by the Company providing Employee's
claims are not dismissed in a summary proceeding.

     IN WITNESS WHEREOF, the parties hereto have executed this Agreement to be
effective as of the day and year first above written.

Attest                                                  Seitel, Inc.

/s/ [ILLEGIBLE]                                         /s/ [ILLEGIBLE]
- -------------------                                     -------------------

Witness:                                                Debra D. Valice

/s/ [ILLEGIBLE]                                         /s/ Debra D. Valice
- ---------------                                         --------------------

EX-10.36

                                                                   EXHIBIT 10.36

                                  SEITEL, INC.

                        INCENTIVE COMPENSATION AGREEMENT

     THIS CONTRACT AND AGREEMENT made and entered into this 11th day of March,
1993, by and between SEITEL, INC., a Delaware corporation, (referred to herein
as the "Company"), DEBRA D. VALICE, PAUL A. FRAME and HORACE A. CALVERT,
Trustees of the Supplemental Income Trust and each individual who executes the
Ratification Form attached hereto as Exhibit "A" (hereinafter referred to as
"Employee").

     WHEREAS, the services of the Employees, their experience and dedication to
the Company, their reputation and contacts in the industry are invaluable to the
Company; and,

     WHEREAS, the Company wishes to reward each Employee for his/her involvement
in the Company's projects and subsequent success that he/she has brought to the
Company;

     WHEREAS, the Company has established the trust in which these benefits are
to be placed for the Employee;

     NOW, THEREFORE, in further consideration for the Employee's continued
employment, and upon the terms and conditions stated below, the parties agree as
follows:

                                    ARTICLE I
                                   DEFINITIONS

     1.1  Definitions. Unless the context of this Agreement otherwise requires,
the terms defined herein shall have the following meanings:

          (a) The term "Beneficiary" shall mean the Employee and any successor
     in interest to such Employee who acquires his/her interest by devise or
     intestate succession.

          (b) The term "Benefits" shall mean those amounts which are payable to
     the Beneficiary as a result of this agreement.

          (c) The term "Company" shall mean Seitel, Inc., a Delaware
     corporation.

          (d) The term "Contributions" shall mean the amounts paid by the
     Company equal to (i) a percentage of the revenue so designated for the
     contributions to the Trusts and (ii) those amounts due and payable directly
     to Beneficiaries who are not or are no longer Employees of the Company.

          (e) The term "Designated Percentage" means the percentage of a
     particular Funding Pool assigned to a specific Employee by the Company.



          (f) The term "Designated Project Line" means any Project Line
     separately identified by the Company pursuant to the procedures set forth
     in Paragraph 3.1.

          (g) The term "Employee" shall mean any employee of the Company who has
     executed the Ratification form attached hereto as Exhibit "A".

          (h) The term "Funding Pool" shall have the meaning as provided in
     Article IV hereof.

          (i) The term "Net Billing" shall mean the amount of revenue received
     for a Project Line by the Company net of the typical selling commission,
     which is 6% at the time of the execution of this Agreement.

          (j) The term "Partially Funded Project Line" means one in which all
     Third Party Costs are not paid for or underwritten by parties other than
     the Company and Company elects to pay the shortfall.

          (k) The term "Project Line" shall mean each separate and identifiable
     group of reports, data, software, charts, graphs and other forms of
     information related to a line of seismic exploration, which is gathered by
     the Company.

          (1) The term "Third Party Costs" shall mean those costs incurred by
     the Company for a Project Line. It is understood by the parties that even
     after a Project Line starts to produce revenue, additional third party
     costs may be added to a Project Line because of subsequent development.
     Third Party Costs excludes any capitalized internal charges, capitalized
     management fees or any other form of overhead allocation.

          (m) The term "Trust" means the Supplemental Income Trust executed
     effective the 30th day of December, 1990.

          (n) The term "Trustees" means Debra D. Valice, Paul A. Frame and
     Horace A. Calvert, or the then acting trustees of the Trust.

          (o) The term "Zero Cost Project Line" means a Project Line under which
     all Third Party Costs are paid for or will be underwritten by parties other
     than the Company.

                                   ARTICLE II
                             EMPLOYER'S CONTRIBUTION

     2.1  Contributions. The Company agrees to make Contributions under the
terms stated in this Agreement for the benefit of those Employees who have
executed a Ratification Agreement. If the Employee is currently employed by the
Company, such contribution shall be made to the Trust selected by Employee upon
the execution of the Ratification Agreement. If

                                       -2-



Beneficiary is not an Employee, or an Employee no longer employed by the
Company, for any reason, any amounts due and payable under this Agreement shall
be made directly to the Employee/Beneficiary.

     2.2  Amount of Contributions. The Company shall fund for each calendar
quarter an amount for each Employee equal to such Employee's Designated
Percentage (as established on Exhibit B for such employees) times such
Employee's assigned Funding Pool. The Company retains the right to increase or
decrease such Designated Percentage for each Employee or switch an Employee from
one Funding Pool to another (any such change collectively called a
"Redesignation"); however the following limitations apply:

          (a) Any new Redesignation applies only to new Project Lines dedicated
     to this program. For any Project Line previously designated, the old
     designation applies.

          (b) The Company may only change the designation twice a year, once
     between January 1 and January 31 applicable that January 1 and once between
     July 1 and July 31 applicable for that July 1. The Company must provide
     written notice to Trustees of any change in designation in January by March
     1 and in July by September 1.

     2.3 Funding of Contributions. The Contributions shall be funded as provided
in Article III.

                                   ARTICLE III
                        MECHANICS FOR DETERMINING PROFITS
                            ELIGIBLE FOR CONTRIBUTION

     3.1  Designation of Project Line. Upon the instigation or purchase of a new
Project Line by the Company, the Company shall notify the Trustees that a new
Project Line has been established in the Company records. At the time of the
execution of this Agreement, those Project Lines listed on Exhibit C have
already been designated by the Company. The head of the Geophysical Department
of the Company shall be responsible for designation of new project lines and
shall do so by written notice to the Trustees.

     3.2  Eligible Project Lines. Once a Project Line has been designated as a
project under this agreement, then the Company must designate it as a Zero Cost
Project Line or a Partially Funded Project Line. All data listed on Exhibit C
represents Zero Cost Project Lines. New Project Lines purchased by the Company
shall be eligible for participation once sufficient revenue has been received by
the Company to make it a Zero Cost Project Line.

          (a) If the project is a Zero Cost Project Line, then all net billings
     are eligible for the Funding Pools.

          (b) If the project is a Partially Funded Project Line, then the
     Company must first receive sufficient revenues from third parties to make
     such project a Zero Cost

                                       -3-



     Project Line. Once such revenues have been received, the project then
     becomes a Zero Cost Project Line and all future net billings are
     eligible for the Funding Pools.

               (c) The Chief Financial Officer of the Company shall
     determine when a project line becomes a Zero Cost Project Line. Such
     determination shall be made on a quarterly basis and may be audited by
     the Trustees.

     3.3  Allocation of Contributions. There will be three Funding Pools: Alpha,
Beta and Iota. Each Employee's Designated Percentage of a Funding Pool is
determined by the Company pursuant to Article II.

     3.4  Determination of Funding Pool Size. The amount considered available in
each Funding Pool will be determined on the following sliding scale:



          Net Billing Available                                   Funding Percentage
          In Excess Sales Pool                         Alpha             Beta              Iota
          --------------------                        -------------------------------------------
                                                                                 
          $         0 - $  6,000,000                  2.5000%           3.0000%           3.5000%
          $ 6,000,000 - $  7,000,000                  2.6667%           3.3333%           4.0000%
          $ 7,000,000 - $  8,000,000                  2.7857%           3.5714%           4.3571%
          $ 8,000,000 - $  9,000,000                  2.8750%           3.7500%           4.6250%
          $ 9,000,000 - $ 10,000,000                  2.9444%           3.8889%           4.8333%
                      > $ 10,000,000                  3.0000%           4.0000%           5.0000%


               (a) For example, for the first 0-$6,000,000 in Net Billings by
          the Company from all designated Zero Cost Project Lines for the
          calendar year

               Funding Pool Alpha= 2-1/2% of the net revenues
               Funding Pool Beta= 3% of the net revenues
               Funding Pool Iota= 3-1/2% of the net revenues

               (b) The Parties understand that the above calculation represents
          the maximum potential of each Funding Pool, but only that amount equal
          to the Designated Percentage of the Funding Pool will be contributed
          to each Employee.

               (c) The contribution amount shall be calculated quarterly (always
          based on cumulative costs and cumulative revenues to date). For
          example, if at the end of the second quarter, the increase in the
          excess sales pool necessitates use of higher funding percentage, the
          new percentages are applied to the six months excess sales pool
          information and the adjustment to the first quarter contribution is
          made at that time. Same procedure should be used at the end of nine
          and twelve months, respectively. The calculation starts over again at
          the beginning of the next fiscal year.

                                       -4-



                                   ARTICLE IV
                                  MISCELLANEOUS

     4.1  LAWS OF TEXAS TO GOVERN. THIS AGREEMENT SHALL BE CONSTRUED AND
REGULATED BY THE LAWS OF THE STATE OF TEXAS, EXCEPT TO THE EXTENT PREEMPTED BY
FEDERAL LAW.

     4.2  Titles and Headings not to Control. The titles to Articles and
headings of Sections in this Agreement are placed herein for convenience of
reference only and in case of any conflict the text of this Agreement, rather
than such titles or headings, shall control.

     4.3  Successors and Assigns. This Agreement may not be assigned by either
party without the prior written consent of the other, and any purported
assignment without such prior written consent shall be null and void. This
Agreement shall be binding upon the successors and permitted assigns of each
party hereto.

     4.4  Severability. If any provision of this Agreement is held to be
illegal, invalid or unenforceable under the present or future laws effective
during the term of this Agreement, such provision shall be fully severable; this
Agreement shall be construed as if such illegal, invalid or unenforceable
provision had never comprised a part of this Agreement; and the remaining
provisions of this Agreement shall remain in full force and effect and shall not
be effected by the illegal, invalid or unenforceable provision or by its
severance from this Agreement. In lieu of such illegal, invalid or unenforceable
provisions, there shall be added automatically as a part of this Agreement a
provision as similar in terms to such illegal, invalid and unenforceable
provision as may be possible and be legal, valid and enforceable.

     4.5  Notices. All notices, elections, demands or other communications
required or permitted under this Agreement shall be in writing and shall be
considered as properly given or made when personally delivered or two days after
deposit in the United States mail, first class postage, prepaid addressed to the
Beneficiary at the address set forth opposite such Beneficiary's name on Exhibit
B hereto, to the Company at 16010 Barkers Point Lane, Suite 550, Houston, Texas
77079 and the Trustees at the address specified on the signature page hereto.
Any party may change his address by giving notice to the other parties of the
new address.

     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized officers as of the day and year as provided
below, but effective as of the date first written above.

                                          SEITEL, INC.

                                          By: /s/ Debra D. Valice
                                              ----------------------------------
                                          Name:  [Debra D. Valice]
                                                 -------------------------------
                                          Title: Chief Financial Officer
                                                 -------------------------------

                                       -5-



                                                  TRUSTEES:

                                                  /s/ Debra D Valice
                                                  ------------------------------
                                                  DEBRA D. VALICE
                                                  19907 Parsons Green Court
                                                  Katy, Texas 77450

                                                  /s/ Paul A Frame
                                                  ------------------------------
                                                  PAUL A. FRAME
                                                  2912 Mid Lane
                                                  Houston, Texas 77027

                                                  /s/ Horace A Calvert
                                                  ------------------------------
                                                  HORACE A. CALVERT
                                                  7 Post Oak Drive
                                                  Dayton, Texas 77535

                                       -6-



THE STATE OF TEXAS  Section

COUNTY OF HARRIS    Section

     The foregoing instrument was acknowledged before me on this the 11th day of
MARCH, 1993, by DEBRA D. VALICE, CHIEF FINANCIAL OFFICER of SEITEL, INC., a
Texas corporation, on behalf of said corporation.

                                                /s/ [ILLEGIBLE]
                                                --------------------------------
                                                Notary Public in and for
                                                the State of Texas

THE STATE OF TEXAS  Section

COUNTY OF HARRIS    Section

     The foregoing instrument was acknowledged before me on this the 11 day of
March, 1993, by DEBRA D. VALICE.

                                                /s/ [ILLEGIBLE]
                                                --------------------------------
                                                Notary Public in and for
                                                the State of Texas

THE STATE OF TEXAS  Section

COUNTY OF HARRIS    Section

     The foregoing instrument was acknowledged before me on this the 11 day of
March, 1993, by PAUL A. FRAME.

                                                /s/ [ILLEGIBLE]
                                                --------------------------------
                                                Notary Public in and for
                                                the State of Texas

                                       -7-



THE STATE OF TEXAS  Section

COUNTY OF HARRIS    Section

     The foregoing instrument was acknowledged before me on this the 11 day of
March, 1993, by HORACE A. CALVERT.

                                                /s/ [ILLEGIBLE]
                                                --------------------------------
                                                Notary Public in and for
                                                the State of Texas

                                       -8-



                                    EXHIBIT A

                                  RATIFICATION

          By execution hereof, the undersigned Executive agrees to the terms
contained in the Incentive Compensation Agreement, effective December 30, 1990.

                                                ------------------------------

Designated Percentage:

- -------------------------

Applicable Funding Pool:

- -------------------------



                                    EXHIBIT B

                               NAMES OF EMPLOYEES

                                                        Designated Percentage
                                                        ---------------------

Funding Pool Iota

      Herbert M. Pearlman                                        12.00%
      David S. Lawi                                              12.00%
      Paul A. Frame, Jr.                                         12.00%
      Horace A. Calvert                                          12.00%

 Funding Pool Beta

       James C. Rives, Jr.                                    9.854168%
       Debra D. Valice                                        9.854168%

 Funding Pool Alpha

       Douglas J. Maier (pre-1992 programs)                       6.75%
       Robert J. Simon, Jr.                                       6.75%
       Walter M. Craig, Jr.                                       6.75%
       Robert T. Choate (post-1991 programs)                      6.75%
       Allana K. May                                              5.30%
       Joe E. Morgan, Jr.                                         5.30%
       David A. Wegner                                            5.30%



                                    EXHIBIT C

                               ZERO COST PROJECTS

                                (AS OF 1/1/93)

                                       SEL
                                       TERREBORNE II
                                       SLM
                                       TERREBORNE III
                                       TRP
                                       CEY
                                       SWP
                                       TTZ
                                       SEL II
                                       SLM II
                                       SLM III
                                       TERREBORNE IV
                                       NUECES CO.
                                       LTZ
                                       SEL III
                                       SEL -15l
                                       NUECES II
                                       NLA
                                       SPC
                                       SPC  20X
                                       HCP II
                                       NTR
                                       SEP
                                       SEP 105
                                       SEP 265
                                       CRP
                                       NLP
                                       SLM IV
                                       SLMTU 296
                                       MTZ
                                       MTZ 227
                                       MTZ 262-263
                                       MTZ 266-269
                                       VIP
                                       GTC
                                       CYP
                                       MBA
                                       ATC
                                       BMF
                                       TCF
                                       SPC II
                                       WMP
                                       EBR
                                       MOURA
                                       THP
                                       SEL V
                                       IPH
                                       STL
                                       WAP
                                       JOY
                                       MDY
                                       LOG
                                       SUP
                                       JOP
                                       ACA
                                       RAP

                                       TOP
                                       CANADIAN DATA
                                       TELEDYNE
                                       PHILLIPS
                                       ARKOMA
                                       LAKE DELADE
                                       GEO-SEISMIC
                                       GRANT-TENSLIP
                                       MAURICE 3D
                                       BLACK BAVOU 3D
                                       BALLARD DELARGE 3D

EX-10.37

                                                                   EXHIBIT 10.37

                                  SEITEL, INC.

                             NOTE PURCHASE AGREEMENT

                          DATED AS OF DECEMBER 28, 1995


          $25,000,000 7.17% SERIES A SENIOR NOTES DUE DECEMBER 30, 2001
          $27,500,000 7.17% SERIES B SENIOR NOTES DUE DECEMBER 30, 2002
             $22,500,000 SERIES C SENIOR NOTES DUE DECEMBER 30, 2002



                                TABLE OF CONTENTS



Section                                                                     Page
                                                                         
1.  AUTHORIZATION OF NOTES .............................................       1

2.  SALE AND PURCHASE OF NOTES .........................................       2

3.  CLOSINGS ...........................................................       2
    3.1     The Series A and B Closing .................................       2
    3.2     The Series C Closing .......................................       3
    3.3     Failure of the Company to Deliver ..........................       3
    3.4     Failure by You to Deliver ..................................       3

4.  YOUR CONDITIONS TO CLOSINGS ........................................       4
    4.1     Representations and Warranties .............................       4
    4.2     Performance; No Default ....................................       4
    4.3     Compliance Certificates ....................................       4
    4.4     Opinions of Counsel ........................................       4
    4.5     Purchases Permitted By
            Applicable Law, etc ........................................       5
    4.6     Sale of Other Notes ........................................       5
    4.7     Payment of Special Counsel Fees ............................       5
    4.8     Private Placement Number ...................................       5
    4.9     Changes in Corporate Structure .............................       5
    4.10    Subsidiary Guaranty ........................................       6
    4.11    Rating .....................................................       6
    4.12    Proceedings and Documents ..................................       6

4A. COMPANY'S CLOSING CONDITIONS .......................................       6
    4A.1       Representations and Warranties ..........................       6
    4A.2       Sales Permitted by Applicable Law, etc ..................       6

5.  REPRESENTATIONS AND WARRANTIES OF THE COMPANY ......................       7
    5.1     Organization; Power and Authority ..........................       7
    5.2     Authorization, etc .........................................       7
    5.3     Disclosure .................................................       8
    5.4     Organization and Ownership of Shares
            of Restricted Subsidiaries; Affiliates .....................       8
    5.5     Financial Statements .......................................       9
    5.6     Compliance with Laws, Other Instruments, etc ...............       9
    5.7     Governmental Authorizations, etc ...........................      10
    5.8     Litigation; Observance of Agreements,
            Statutes and Orders ........................................      10
    5.9     Taxes ......................................................      10
    5.10    Title to Property; Leases ..................................      11
    5.11    Licenses, Permits, etc .....................................      11
    5.12    Compliance with ERISA ......................................      11
    5.13    Private Offering by the Company ............................      12




                                                                       
    5.14    Use of Proceeds; Margin Regulations ........................      13
    5.15    Existing Debt; Future Liens ................................      13
    5.16    Foreign Assets Control Regulations, etc ....................      13
    5.17    Status under Certain Statutes ..............................      14
    5.18    Environmental Matters ......................................      14

6.  REPRESENTATIONS OF THE PURCHASER ...................................      14
    6.1     Purchase for Investment ....................................      14
    6.2     Legend .....................................................      15
    6.3     ERISA ......................................................      15
    6.4     Organization; Power and Authority;
            Compliance with Laws .......................................      16
    6.5     Authorization, etc .........................................      17

7.  INFORMATION AS TO COMPANY ..........................................      17
    7.1     Financial and Business Information .........................      17
    7.2     Officer's Certificate ......................................      21
    7.3     Inspection .................................................      21

8.  PREPAYMENT OF THE NOTES ............................................      22
    8.1     Required Prepayments .......................................      22
    8.2     Optional Prepayments with Make-Whole
            Amount; Rescission .........................................      22
    8.3     Allocation of Partial Prepayments ..........................      24
    8.4     Maturity; Surrender, etc ...................................      24
    8.5     Purchase of Notes ..........................................      24
    8.6     Make-Whole Amount ..........................................      24

9.  AFFIRMATIVE COVENANTS ..............................................      26
    9.1     Compliance with Law ........................................      26
    9.2     Insurance ..................................................      26
    9.3     Maintenance of Properties ..................................      26
    9.4     Payment of Taxes and Claims ................................      27
    9.5     Corporate Existence, etc ...................................      27
    9.6     Pari Passu .................................................      27
    9.7     Subsidiary Guaranty ........................................      28
    9.8     Application of Proceeds; Releases ..........................      28

10. NEGATIVE COVENANTS .................................................      29
    10.1     Net Worth .................................................      29
    10.2     Interest Coverage .........................................      29
    10.3     Debt Incurrence ...........................................      29
    10.4     Liens .....................................................      30
    10.5     Mergers and Consolidations ................................      32
    10.6     Sale of Assets ............................................      33
    10.7     Restricted Payments and Restricted
             Investments ...............................................      36
    10.8     Limitations on Certain Restricted
             Subsidiary Actions ........................................      37
    10.9     Affiliate Transactions ....................................      38
    10.10    Line of Business ..........................................      38

    



                                                                           
11. EVENTS OF DEFAULT ..................................................      38

12. REMEDIES ON DEFAULT, ETC ...........................................      40
    12.1     Acceleration ..............................................      40
    12.2     Other Remedies ............................................      40
    12.3     Rescission ................................................      41
    12.4     No Waivers or Election of Remedies,
             Expenses, etc .............................................      41

13. REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES ......................      41
    13.1     Registration of Notes .....................................      41
    13.2     Transfer and Exchange of Notes ............................      42
    13.3     Replacement of Notes ......................................      42

14. PAYMENTS ON NOTES ..................................................      43
    14.1     Place of Payment ..........................................      43
    14.2     Home Office Payment .......................................      43

15. EXPENSES, ETC ......................................................      43
    15.1     Transaction Expenses ......................................      43
    15.2     Survival ..................................................      44

16. SURVIVAL OF REPRESENTATIONS AND WARRANTIES;
    ENTIRE AGREEMENT ...................................................      44

17  AMENDMENT AND WAIVER ...............................................      44
    17.1     Requirements ..............................................      44
    17.2     Solicitation of Holders ...................................      45
    17.3     Binding Effect, etc .......................................      45
    17.4     Notes held by Company, etc ................................      45

18. NOTICES ............................................................      46

19. REPRODUCTION OF DOCUMENTS ..........................................      46

20. CONFIDENTIAL INFORMATION ...........................................      47

21. SUBSTITUTION OF PURCHASER ..........................................      48

22. MISCELLANEOUS ......................................................      48
    22.1     Successors and Assigns ....................................      48
    22.2     Payments Due on Non-Business Days .........................      48
    22.3     Severability ..............................................      48
    22.4     Construction ..............................................      49
    22.5     Counterparts ..............................................      49
    22.6     Governing Law .............................................      49
    22.7     Consent to Jurisdiction;
             Appointment of Agent ......................................      49
    22.8     Defeasance ................................................      50
    22.9     GAAP ......................................................      53
    22.10    Usury .....................................................      53





SCHEDULE A        --     INFORMATION RELATING TO PURCHASERS

SCHEDULE B        --     DEFINED TERMS

SCHEDULE 4.9      --     Changes in Corporate Structure

SCHEDULE 5.3      --     Disclosure Materials

SCHEDULE 5.4      --     Subsidiaries of the Company and Ownership of
                         Subsidiary Stock

SCHEDULE 5.5      --     Financial Statements

SCHEDULE 5.8      --     Certain Litigation

SCHEDULE 5.11     --     Patents, etc.

SCHEDULE 5.12     --     ERISA

SCHEDULE 5.15     --     Existing Debt

SCHEDULE 10.8     --     Certain Agreements by Restricted Subsidiaries

EXHIBIT 1A        --     Form of 7.17% Series A Senior Note due
                         December 30, 2001

EXHIBIT 1B        --     Form of 7.17% Series B Senior Note due
                         December 30, 2002

EXHIBIT 1C        --     Form of Series C Senior Note due December 30, 2002

EXHIBIT 4.4(a)    --     Form of Opinion of Special Counsel for the Company

EXHIBIT 4.4(b)    --     Form of Opinion of Special Counsel for the Purchasers

EXHIBIT 4.10      --     Form of Subsidiary Guaranty



                                  SEITEL, INC.
                            West Building, 7th Floor
                              50 Briar Hollow Lane
                              Houston, Texas 77027


          $25,000,000 7.17% SERIES A SENIOR NOTES DUE DECEMBER 30, 2001

          $27,500,000 7.17% SERIES B SENIOR NOTES DUE DECEMBER 30, 2002

             $22,500,000 SERIES C SENIOR NOTES DUE DECEMBER 30, 2002


                                                         As of December 28, 1995

Separately Addressed to each of the Purchasers Listed on Schedule A hereto:

Ladies and Gentlemen:

     SEITEL, INC., a Delaware corporation (together with any Person who succeeds
to all, or substantially all, of the assets and business of Seitel, Inc., the
"Company"), agrees with you as follows:

1.   AUTHORIZATION OF NOTES

     The Company will authorize the issue and sale of

     (a)  Twenty-Five Million Dollars ($25,000,000) aggregate principal amount
          of its seven and seventeen hundredths percent (7.17%) Series A Senior
          Notes due December 30, 2001 (the "Series A Notes," such term to
          include any such notes issued in substitution therefor pursuant to
          Section 13 of this Agreement or the Other Agreements (as hereinafter
          defined)),

     (b)  Twenty-Seven Million Five Hundred Thousand Dollars ($27,500,000)
          aggregate principal amount of its seven and seventeen hundredths
          percent (7.17%) Series B Senior Notes due December 30, 2002 (the
          "Series B Notes," such term to include any such notes issued in
          substitution therefor pursuant to Section 13 of this Agreement or the
          Other Agreements), and

     (c)  Twenty-Two Million Five Hundred Thousand Dollars ($22,500,000)
          aggregate principal amount of its Series C Senior Notes due December
          30, 2002 (the "Series C Notes," such term to include any such notes
          issued in substitution therefor pursuant to Section 13 of this
          Agreement or the Other Agreements).



The Series A Notes shall be substantially in the form set out in Exhibit 1A, the
Series B Notes shall be substantially in the form set out in Exhibit 1B, and the
Series C Notes shall be substantially in the form set out in Exhibit 1C, in each
case, with such changes therefrom, if any, as may be approved by you and the
Company. The Series A Notes, the Series B Notes and the Series C Notes are
herein referred to collectively as the "Notes," and individually as a "Note".
Certain capitalized terms used in this Agreement are defined in Schedule B;
references to a "Schedule" or an "Exhibit" are, unless otherwise specified, to a
Schedule or an Exhibit attached to this Agreement.

2.   SALE AND PURCHASE OF NOTES

     Subject to the terms and conditions of this Agreement, the Company will
issue and sell to you and you will purchase from the Company, in accordance with
the provisions hereof, at the Closings provided for in Section 3, Notes of the
Series and in the principal amounts specified opposite your name in Schedule A
at the purchase price of one hundred percent (100%) of the principal amount
thereof; provided, however, that you may change such information on Schedule A
(other than the aggregate principal amount of your commitment) by written notice
delivered to the Company prior to the relevant Closing (except that one or more
(but not more than three) of your Affiliates shall be the purchaser or
purchasers of the principal amount of the Notes specified opposite your name on
Schedule A). Contemporaneously with entering into this Agreement, the Company is
entering into separate Note Purchase Agreements (the "Other Agreements")
identical with this Agreement with each of the other purchasers named in
Schedule A (the "Other Purchasers"), providing for the sale at such Closing to
each of the Other Purchasers of Notes of the Series and in the principal amounts
specified opposite its name in Schedule A. Your obligation hereunder and the
obligations of the Other Purchasers under the Other Agreements are several and
not joint obligations and you shall have no obligation under any Other Agreement
and no liability to any Person for the performance or non-performance by any
Other Purchaser thereunder.

3.   CLOSINGS

     3.1  The Series A and B Closing

     The sale and purchase of the Series A Notes and the Series B Notes to be
purchased by the purchasers thereof (the "Series A Purchasers" and the "Series B
Purchasers," respectively) shall occur at the offices of Hebb & Gitlin, One
State Street, Hartford, Connecticut 06103, at 10:00 a.m., eastern standard time,
at a closing (the "Series A and B Closing") on December 28, 1995 (the "Series A
and B Closing Date"). At the Series A and B Closing the Company will deliver to
each Series A Purchaser and Series B Purchaser the Series A Notes or Series B
Notes, as the case may be, to be purchased by it in the form of, respectively, a
single Series A Note or a single Series B Note (or such greater number of Series
A Notes or Series B Notes in denominations of at least One Hundred Thousand
Dollars ($100,000) as such Series A Purchaser or Series B Purchaser,
respectively, may request), dated the Series A and B Closing Date and registered
in its name (or in the name of its nominee), against delivery by such Series A
Purchaser or Series B Purchaser, as the case may be, to the Company or its order
of immediately available funds in the amount of the purchase price therefor by
wire transfer of immediately available funds for the account of the Company to
account number 30052530 at Compass Bank-Houston, 24 Greenway Plaza, Houston,
Texas 77002, ABA # 113010547.



     3.2  The Series C Closing

          (a) Notice. Subsequent to the date hereof, the Company shall deliver
     to you and the Other Purchasers an irrevocable written notice specifying a
     date no later than June 28, 1996 as the date of purchase of the Series C
     Notes (the "Series C Closing Date," the Series A and B Closing Date and the
     Series C Closing Date being sometimes referred to herein, individually, as
     a "Closing Date"). Such notice shall be given not less than thirty (30) nor
     more than forty-five (45) days prior to the Series C Closing Date.

          (b) Interest Rate. The interest rate per annum on the Series C Notes
     (the "Series C Interest Rate") shall be equal to the sum of (i) one and
     forty-five hundredths percent (1.45%) plus (ii) the Relevant Treasury
     Yield.

          (c) The Series C Closing. The sale and purchase of the Series C Notes
     to be purchased by the purchasers thereof (the "Series C Purchasers") shall
     occur at the offices of Hebb & Gitlin, One State Street, Hartford,
     Connecticut 06103, at 10:00 a.m., eastern standard time, at a closing (the
     "Series C Closing," the Series A and B Closing and the Series C Closing
     being sometimes referred to herein collectively as the "Closings" and
     individually as a "Closing") on the Series C Closing Date. At the Series C
     Closing the Company will deliver to each of the Series C Purchasers the
     Series C Notes to be purchased by it, in the form of a single Series C Note
     (or such greater number of Series C Notes in denominations of at least One
     Hundred Thousand Dollars ($100,000) as such Series C Purchaser may
     request), dated the Series C Closing Date and registered in its name (or in
     the name of its nominee), against delivery by such Series C Purchaser to
     the Company or its order of immediately available funds in the amount of
     the purchase price therefor by wire transfer of immediately available funds
     for the account of the Company to the account number set forth in Section
     3.1.

     3.3  Failure of the Company to Deliver

     If on the Series A and B Closing Date or on the Series C Closing Date the
Company fails to tender to you the Notes to be acquired by you on such date or
if the conditions specified in Section 4 have not been fulfilled on either such
date, you may thereupon elect to be relieved of all further obligations under
this Agreement with respect to the Notes to be purchased by you on such date.
Nothing in this Section shall operate to relieve the Company from any of its
obligations under this Agreement or to waive any of your rights against the
Company.

     3.4  Failure by You to Deliver

     If on the Series A and B Closing Date or on the Series C Closing Date you
fail to deliver the full amount of funds to be delivered by you on such date or
if the conditions specified in Section 4A have not been fulfilled on either such
date, the Company may thereupon elect to return immediately any funds delivered
by you on such date and to be relieved of all further obligations under this
Agreement with respect to the Notes to be purchased by you on such date. Nothing
in this Section shall operate to relieve you from any of your obligations to the
Company under this Agreement or to waive any of the Company's rights against
you.



4.   YOUR CONDITIONS TO CLOSINGS

     Your obligation to purchase and pay for the Notes to be sold to you on each
Closing Date is subject to the fulfillment to your satisfaction, prior to or on
such Closing Date (except as otherwise specified), of the following conditions:

     4.1  Representations and Warranties

     The representations and warranties of the Company in this Agreement shall
be correct when made and on such Closing Date.

     4.2  Performance; No Default

     The Company shall have performed and complied with all agreements and
conditions contained in this Agreement required to be performed or complied with
by it prior to or on such Closing Date and after giving effect to the issue and
sale of the Notes (and the application of the proceeds thereof as contemplated
by Schedule 5.14), no Default or Event of Default shall have occurred and be
continuing.

     4.3  Compliance Certificates

          (a) Officer's Certificate. The Company shall have delivered to you an
     Officer's Certificate, dated such Closing Date, certifying that the
     conditions specified in Sections 4.1 and 4.2 have been fulfilled.

          (b) Company Secretary's Certificate. The Company shall have delivered
     to you a certificate, dated such Closing Date, signed by the Secretary or
     an Assistant Secretary of the Company, and certifying as to the
     resolutions, the bylaws and the certificate of incorporation attached
     thereto and as to other corporate proceedings relating to the
     authorization, execution and delivery of the Notes and the Agreements.

          (c) Secretary's Certificates of Restricted Subsidiaries. Each
     Restricted Subsidiary shall have delivered to you a certificate, dated such
     Closing Date, signed by the Secretary or an Assistant Secretary of such
     Restricted Subsidiary, and certifying as to the resolutions, the bylaws and
     the certificate or articles of incorporation attached thereto and as to
     other corporate proceedings relating to the authorization, execution and
     delivery of the Subsidiary Guaranty.

     4.4  Opinions of Counsel

     You shall have received from

          (a) Gardere Wynne Sewell & Riggs, L.L.P., counsel for the Company, and

          (b) Hebb & Gitlin, your special counsel, closing opinions, each dated
as of such Closing Date, substantially in the respective forms set forth in
Exhibits 4.4(a) and 4.4(b), and as to such other matters as you may reasonably
request. This Section 4.4 shall constitute direction by the Company to such
counsel named in the immediately preceding subsection (a) to deliver such
closing opinion to you.



     4.5  Purchases Permitted By Applicable Law, etc.

         On such Closing Date your purchase of Notes shall (a) be permitted by
the laws and regulations of each jurisdiction to which you are subject, without
recourse to provisions (such as Section 1405(a)(8) of the New York Insurance
Law) permitting limited investments by insurance companies without restriction
as to the character of the particular investment, (b) not violate any applicable
law or regulation (including, without limitation, Regulation G, T or X of the
Board of Governors of the Federal Reserve System) and (c) not subject you to any
tax, penalty or liability under or pursuant to any applicable law or regulation,
which law or regulation was not in effect on the date hereof. If requested by
you, you shall have received an Officer's Certificate certifying as to such
matters of fact as you may reasonably specify to enable you to determine whether
such purchase is so permitted.

     4.6  Sale of Other Notes

     Contemporaneously with such Closing the Company shall sell to the Other
Purchasers and the Other Purchasers shall purchase the Notes to be purchased by
them at such Closing as specified in Schedule A.

     4.7  Payment of Special Counsel Fees

     Without limiting the provisions of Section 15.1, the Company shall have
paid on or before such Closing the reasonable fees, charges and disbursements of
your special counsel referred to in Section 4.4(b) to the extent reflected in a
statement of such counsel rendered to the Company at least one (1) Business Day
prior to such Closing.

     4.8  Private Placement Numbers

     Private Placement numbers issued by Standard & Poor's CUSIP Service Bureau
(in cooperation with the Securities Valuation Office of the National Association
of Insurance Commissioners) shall have been obtained for each Series.

     4.9  Changes in Corporate Structure

     Except as specified in Schedule 4.9, the Company shall not have changed its
jurisdiction of incorporation or been a party to any merger or consolidation and
shall not have succeeded to all or any substantial part of the liabilities of
any other entity, at any time following the date of the most recent financial
statements referred to in Schedule 5.5.



     4.10 Subsidiary Guaranty; Consent

     You shall have received

          (a) the Guaranty, duly executed and delivered by each Restricted
     Subsidiary, substantially in the form of Exhibit 4.10 (the "Subsidiary
     Guaranty"), which Guaranty shall be in full force and effect; and

          (b) a consent, duly executed by Compass Bank (formerly Central Bank of
     the South), to the execution of the Subsidiary Guaranty by Seitel
     Geophysical, Inc.

     4.11 Rating

     You shall have received a copy of a letter from Duff & Phelps Credit Rating
Co. to the Company assigning a rating to the Notes of at least BBB and such
rating shall continue to be in force and effect (not having been withdrawn) as
of such Closing Date.

     4.12 Proceedings and Documents

     All corporate and other proceedings in connection with the transactions
contemplated by this Agreement and all documents and instruments incident to
such transactions shall be reasonably satisfactory to you and your special
counsel, and you and your special counsel shall have received all such
counterpart originals or certified or other copies of such documents as you or
they may reasonably request.

4A.  COMPANY'S CLOSING CONDITIONS

     The Company's obligation to sell the Notes to be purchased by you on each
Closing Date is subject to the fulfillment to the Company's satisfaction, prior
to or on such Closing Date (except as otherwise specified), of the following
conditions:

     4A.1 Representations and Warranties.

     The representations and warranties made by you in Section 6 shall be
correct when made and on such Closing Date.

     4A.2 Sales Permitted by Applicable Law, etc.

     On such Closing Date the Company's sale of the Notes and the granting of
the Subsidiary Guaranty by the Restricted Subsidiaries shall (a) be permitted by
the laws and regulations of each jurisdiction to which the Company and the
Restricted Subsidiaries are subject, and (b) not violate any applicable law or
regulation.



5.   REPRESENTATIONS AND WARRANTIES OF THE COMPANY

     The Company represents and warrants to you that:

     5.1  Organization; Power and Authority

          (a)  The Company

               (i) is a corporation duly organized, validly existing and in good
          standing under the laws of the State of Delaware;

               (ii) is duly qualified as a foreign corporation and is in good
          standing in each jurisdiction in which such qualification is required
          by law, other than those jurisdictions as to which the failure to be
          so qualified or in good standing could not, individually or in the
          aggregate, reasonably be expected to have a Material Adverse Effect;
          and

               (iii) has the corporate power and authority to own or hold under
          lease the properties it purports to own or hold under lease, to
          transact the business it transacts and proposes to transact, to
          execute and deliver this Agreement and the Other Agreements and the
          Notes and to perform the provisions hereof and thereof.

          (b)  Each Restricted Subsidiary

               (i) is a corporation duly organized, validly existing and in good
          standing under the laws of its jurisdiction of incorporation;

               (ii) is duly qualified as a foreign corporation and is in good
          standing in each jurisdiction in which such qualification is required
          by law, other than those jurisdictions as to which the failure to be
          so qualified or in good standing could not, individually or in the
          aggregate, reasonably be expected to have a Material Adverse Effect;
          and

               (iii) has the corporate power and authority to own or hold under
          lease the properties it purports to own or hold under lease, to
          transact the business it transacts and proposes to transact, to
          execute and deliver the Subsidiary Guaranty and to perform the
          provisions hereof and thereof.

     5.2  Authorization, etc.

          (a)  This Agreement and the Other Agreements and the Notes have been
     duly authorized by all necessary corporate action on the part of the
     Company, and this Agreement constitutes, and upon execution and delivery
     thereof each Note will constitute, a legal, valid and binding obligation of
     the Company enforceable against the Company in accordance with its terms,
     except as such enforceability may be limited by (i) applicable bankruptcy,
     insolvency, reorganization, moratorium or other similar laws affecting the
     enforcement of creditors' rights generally and (ii) general principles of
     equity (regardless of whether such enforceability is considered in a
     proceeding in equity or at law).



          (b)  The Subsidiary Guaranty has been duly authorized by all necessary
     corporate action on the part of each Restricted Subsidiary and constitutes
     a legal, valid and binding obligation of each Restricted Subsidiary
     enforceable against such Restricted Subsidiary in accordance with its
     terms, except as such enforceability may be limited by (i) applicable
     bankruptcy, insolvency, reorganization, moratorium or other similar laws
     affecting the enforcement of creditors' rights generally and (ii) general
     principles of equity (regardless of whether such enforceability is
     considered in a proceeding in equity or at law).

     5.3  Disclosure

     The Company, through its agent, Bear, Stearns & Co. Inc., has delivered to
you and each Other Purchaser a copy of a Confidential Private Placement
Memorandum, dated October 1995 (the "Memorandum"), relating to the transactions
contemplated hereby. The Memorandum fairly describes, in all material respects,
the general nature of the business and principal properties of the Company and
the Restricted Subsidiaries. Except as disclosed in Schedule 5.3, this
Agreement, the Memorandum, the documents, certificates or other writings
delivered to you by or on behalf of the Company in connection with the
transactions contemplated hereby and the financial statements listed in Schedule
5.5, taken as a whole, do not contain any untrue statement of a material fact or
omit to state any material fact necessary to make the statements therein not
misleading in light of the circumstances under which they were made. All
projections and forward-looking statements contained in the Memorandum are based
upon assumptions that the Company believes to be reasonable and were made in
good faith, although no assurances can be given that the results set forth in
such projections or forward-looking statements will be achieved. Except as
disclosed in the Memorandum or as expressly described in Schedule 5.3, or in one
of the documents, certificates or other writings identified therein, or in the
financial statements listed in Schedule 5.5, since December 31, 1994, there has
been no change in the financial condition, operations, business, properties or
prospects of the Company or any Restricted Subsidiary except changes that
individually or in the aggregate could not reasonably be expected to have a
Material Adverse Effect. There is no fact known to the Company that could
reasonably be expected to have a Material Adverse Effect that has not been set
forth herein or in the Memorandum or in the other documents, certificates and
other writings delivered to you by or on behalf of the Company specifically for
use in connection with the transactions contemplated hereby.

     5.4  Organization and Ownership of Shares of Restricted Subsidiaries;
          Affiliates

          (a)  Schedule 5.4 contains (except as noted therein) complete and
     correct lists of (i) the Restricted Subsidiaries, showing, as to each
     Restricted Subsidiary, the correct name thereof, the jurisdiction of its
     organization and the percentage of shares of each class of its outstanding
     capital stock or similar equity interests owned by the Company and each
     other Restricted Subsidiary, and (ii) the Company's Affiliates (other than
     Restricted Subsidiaries).



          (b)  All of the outstanding shares of capital stock or similar equity
     interests of each Restricted Subsidiary shown in Schedule 5.4 as being
     owned by the Company and the Restricted Subsidiaries have been validly
     issued, are fully paid and nonassessable and are owned by the Company or
     another Restricted Subsidiary free and clear of any Lien (except as
     otherwise disclosed in Schedule 5.4).

          (c)  Each Restricted Subsidiary identified in Schedule 5.4 is a
     corporation or other legal entity duly organized, validly existing and in
     good standing under the laws of its jurisdiction of organization, and is
     duly qualified as a foreign corporation or other legal entity and is in
     good standing in each jurisdiction in which such qualification is required
     by law, other than those jurisdictions as to which the failure to be so
     qualified or in good standing could not, individually or in the aggregate,
     reasonably be expected to have a Material Adverse Effect. Each such
     Restricted Subsidiary has the corporate or other power and authority to own
     or hold under lease the properties it purports to own or hold under lease
     and to transact the business it transacts and proposes to transact.

          (d)  No Restricted Subsidiary is a party to, or otherwise subject to
     any legal restriction or any agreement (other than this Agreement, the
     agreements listed on Schedule 5.4 and customary limitations imposed by
     corporate law statutes) restricting the ability of such Restricted
     Subsidiary to pay dividends out of profits or make any other similar
     distributions of profits to the Company or any of the Restricted
     Subsidiaries that owns outstanding shares of capital stock or similar
     equity interests of such Restricted Subsidiary.

     5.5  Financial Statements

     The Company has delivered to each Purchaser copies of the financial
statements of the Company and the Restricted Subsidiaries listed on Schedule
5.5. All of said financial statements (including in each case the related
schedules and notes) present fairly, in all material respects, the consolidated
financial position of the Company and the Restricted Subsidiaries as of the
respective dates specified in such Schedule and the consolidated results of
their operations and cash flows for the respective periods so specified and have
been prepared in accordance with GAAP consistently applied throughout the
periods involved except as set forth in the notes thereto (subject, in the case
of any interim financial statements, to normal year-end adjustments).

     5.6  Compliance with Laws, Other Instruments, etc.

     Neither the execution, delivery and performance by the Company of this
Agreement and the Notes, nor the execution, delivery and performance by any
Restricted Subsidiary of the Subsidiary Guaranty, will (a) contravene, result in
any breach of, or constitute a default under, or result in the creation of any
Lien in respect of any property of the Company or any Restricted Subsidiary
under, any indenture, mortgage, deed of trust, loan, purchase or credit
agreement, lease, corporate charter or by-laws, or any other agreement or
instrument to which the Company or any Restricted Subsidiary is bound or by
which the Company or any Restricted Subsidiary or any of their respective
properties may be bound or affected, (b) conflict with or result in a breach of
any of the terms, conditions or provisions of any order, judgment, decree, or
ruling of any court, arbitrator or Governmental Authority applicable to the
Company or any Restricted Subsidiary or (c) violate any provision of any statute
or other rule or regulation of any Governmental Authority applicable to the
Company or any Restricted Subsidiary.



     5.7  Governmental Authorizations, etc.

     No consent, approval or authorization of, or registration, filing or
declaration with, any Governmental Authority is required in connection with the
execution, delivery or performance (a) by the Company of this Agreement or the
Notes or (b) by any Restricted Subsidiary of the Subsidiary Guaranty.

     5.8  Litigation; Observance of Agreements, Statutes and Orders

          (a)  Except as disclosed in Schedule 5.8, there are no actions, suits
     or proceedings pending or, to the knowledge of the Company, threatened
     against or affecting the Company or any Restricted Subsidiary or any
     property of the Company or any Restricted Subsidiary in any court or before
     any arbitrator of any kind or before or by any Governmental Authority that,
     individually or in the aggregate, could reasonably be expected to have a
     Material Adverse Effect.

          (b)  Neither the Company nor any Restricted Subsidiary is in default
     under any term of any agreement or instrument to which it is a party or by
     which it is bound, or any order, judgment, decree or ruling of any court,
     arbitrator or Governmental Authority or is in violation of any applicable
     law, ordinance, rule or regulation (including without limitation
     Environmental Laws) of any Governmental Authority, which default or
     violation, individually or in the aggregate, could reasonably be expected
     to have a Material Adverse Effect.

     5.9  Taxes

     The Company and the Restricted Subsidiaries have filed all tax returns that
are required to have been filed in any jurisdiction, and have paid all taxes
shown to be due and payable on such returns and all other taxes and assessments
levied upon them or their properties, assets, income or franchises, to the
extent such taxes and assessments have become due and payable and before they
have become delinquent, except for any taxes and assessments (a) the amount of
which is not individually or in the aggregate Material or (b) the amount,
applicability or validity of which is currently being contested in good faith by
appropriate proceedings and with respect to which the Company or a Restricted
Subsidiary, as the case may be, has established adequate reserves in accordance
with GAAP. The Company knows of no basis for any other tax or assessment that
could reasonably be expected to have a Material Adverse Effect. The charges,
accruals and reserves on the books of the Company and the Restricted
Subsidiaries in respect of Federal, state or other taxes for all fiscal periods
are adequate. The Federal income tax liabilities of the Company and the
Restricted Subsidiaries have been determined by the Internal Revenue Service and
paid for all fiscal years up to and including the fiscal year ended December 31,
1989.



     5.10      Title to Property; Leases

     The Company and the Restricted Subsidiaries have good and sufficient title
to their respective properties that individually or in the aggregate are
Material, including all such properties reflected in the most recent audited
balance sheet referred to in Section 5.5 or purported to have been acquired by
the Company or any Restricted Subsidiary after said date (except as sold or
otherwise disposed of in the ordinary course of business), in each case free and
clear of Liens prohibited by this Agreement. All leases that individually or in
the aggregate are Material are valid and subsisting and are in full force and
effect in all material respects.

     5.11 Licenses, Permits, etc

     Except as disclosed in Schedule 5.11,

          (a) the Company and the Restricted Subsidiaries own or possess all
     licenses, permits, franchises, authorizations, patents, copyrights, service
     marks, trademarks and trade names, or rights thereto, with respect to the
     business of the Company and/or any Restricted Subsidiary as currently
     conducted, that individually or in the aggregate are Material, without
     known conflict with the rights of others;

          (b) to the best knowledge of the Company, no product of the Company or
     any Restricted Subsidiary infringes in any material respect upon any
     license, permit, franchise, authorization, patent, copyright, service mark,
     trademark, trade name or other right owned by any other Person; and

          (c) to the best knowledge of the Company, there is no violation by any
     Person of any right of the Company or any Restricted Subsidiary with
     respect to any patent, copyright, service mark, trademark, trade name or
     other right owned or used by the Company or any Restricted Subsidiary
     which, individually or in the aggregate, could reasonably be expected to
     have a Material Adverse Effect.

     5.12 Compliance with ERISA

          (a)  The Company and each ERISA Affiliate have operated and
     administered each Plan in compliance with all applicable laws except for
     such instances of noncompliance as have not resulted in and could not
     reasonably be expected to result in a Material Adverse Effect. Neither the
     Company nor any ERISA Affiliate has incurred any liability pursuant to
     Title I or IV of ERISA or the penalty or excise tax provisions of the Code
     relating to employee benefit plans (as defined in Section 3 of ERISA), and
     no event, transaction or condition has occurred or exists that could
     reasonably be expected to result in the incurrence of any such liability by
     the Company or any ERISA Affiliate, or in the imposition of any Lien on any
     of the rights, properties or assets of the Company or any ERISA Affiliate,
     in either case pursuant to Title I or IV of ERISA or to such penalty or
     excise tax provisions or to Section 401(a)(29) or 412 of the Code, other
     than such liabilities or Liens as would not be individually or in the
     aggregate Material.



          (b)  The present value of the aggregate benefit liabilities under each
     of the Plans (other than Multiemployer Plans), determined as of the end of
     such Plan's most recently ended plan year on the basis of the actuarial
     assumptions specified for funding purposes in such Plan's most recent
     actuarial valuation report, did not exceed the aggregate current value of
     the assets of such Plan allocable to such benefit liabilities. The term
     "benefit liabilities" has the meaning specified in section 4001 of ERISA
     and the terms "current value" and "present value" have the meaning
     specified in section 3 of ERISA.

          (c)  The Company and its ERISA Affiliates have not incurred withdrawal
     liabilities (and are not subject to contingent withdrawal liabilities)
     under section 4201 or 4204 of ERISA in respect of Multiemployer Plans that
     individually or in the aggregate are Material.

          (d)  The expected postretirement benefit obligation (determined as of
     the last day of the Company's most recently ended fiscal year in accordance
     with Financial Accounting Standards Board Statement No. 106, without regard
     to liabilities attributable to continuation coverage mandated by section
     4980B of the Code) of the Company and the Restricted Subsidiaries is not
     Material.

          (e)  The execution and delivery of this Agreement and the issuance and
     sale of the Notes hereunder will not involve any transaction that is
     subject to the prohibitions of section 406 of ERISA or in connection with
     which a tax could be imposed pursuant to section 4975(c)(1)(A)-(D) of the
     Code. The representation by the Company in the first sentence of this
     Section 5.12(e) is made in reliance upon and subject to the accuracy of
     your representation in Section 6.3 as to the sources of the funds used to
     pay the purchase price of the Notes to be purchased by you.

          (f)  Schedule 5.12 lists all ERISA Affiliates that are Restricted
     Subsidiaries and that maintain one or more Plans and any employee
     organizations in respect of any Multiemployer Plan or Plan. Schedule 5.12
     sets forth all ERISA Affiliates and all "employee benefit plans" with
     respect to which the Company or any "affiliate" of the Company is a
     "party-in-interest" or in respect of which the Notes could constitute an
     "employer security" ("employee benefit plan," "party-in-interest" and
     "employee organization" have the meanings specified in section 3 of ERISA,
     "affiliate" has the meaning specified in section 407(d) of ERISA and
     Section V of the Department of Labor Prohibited Transaction Exemption 95-60
     (60 FR 35925, July 12, 1995) and "employer security" has the meaning
     specified in section 407(d) of ERISA).

     5.13 Private Offering by the Company

     Neither the Company nor anyone acting on its behalf has offered the Notes
or any similar Securities for sale to, or solicited any offer to buy any of the
same from, or otherwise approached or negotiated in respect thereof with, any
Person other than you, the Other Purchasers and not more than fifty-four (54)
other Institutional Investors, each of which has been offered the Notes at a
private sale for investment. In reliance upon the accuracy of your
representations and warranties and the representations and warranties of the
Other Purchasers, neither the Company nor anyone acting on its behalf has taken,
or will take, any action that would subject the issuance or sale of the Notes to
the registration requirements of Section 5 of the Securities Act.



     5.14 Use of Proceeds; Margin Regulations

     The Company will apply the proceeds of the sale of the Notes to repay
existing Debt and for general corporate purposes (including, without limitation,
the repayment of certain accounts payable, as more fully described on Schedule
5.3, if an acceptable agreement with the payee is concluded). No part of the
proceeds from the sale of the Notes hereunder will be used, directly or
indirectly, for the purpose of buying or carrying any margin stock within the
meaning of Regulation G of the Board of Governors of the Federal Reserve System
(12 CFR 207), or for the purpose of buying or carrying or trading in any
Securities under such circumstances as to involve the Company in a violation of
Regulation X of said Board (12 CFR 224) or to involve any broker or dealer in a
violation of Regulation T of said Board (12 CFR 220). Margin stock does not
constitute more than one percent (1%) of the value of the consolidated assets of
the Company and the Restricted Subsidiaries and the Company does not have any
present intention that margin stock will constitute more than five percent (5%)
of the value of such assets. As used in this Section, the terms "margin stock"
and "purpose of buying or carrying" shall have the meanings assigned to them in
said Regulation G.

     5.15 Existing Debt; Future Liens

          (a) Except as described therein, Schedule 5.15 sets forth a complete
     and correct list of all outstanding Debt (in excess of $100,000
     outstanding) of the Company and the Restricted Subsidiaries as of December
     15, 1995, since which date there has been no material change in the
     amounts, interest rates, sinking funds, installment payments or maturities
     of the Debt of the Company or the Restricted Subsidiaries. Neither the
     Company nor any Restricted Subsidiary is in default, and no waiver of
     default is currently in effect, in the payment of any principal of or
     interest on any Debt of the Company or such Restricted Subsidiary and no
     event or condition exists with respect to any Debt of the Company or any
     Restricted Subsidiary that would permit (or that with notice or the lapse
     of time, or both, would permit) one or more Persons to cause such Debt to
     become due and payable before its stated maturity or before its regularly
     scheduled dates of payment.

          (b) Except as disclosed in Schedule 5.15, neither the Company nor any
     Restricted Subsidiary has agreed or consented to cause or permit in the
     future (upon the happening of a contingency or otherwise) any of its
     property, whether now owned or hereafter acquired, to be subject to a Lien
     not permitted by Section 10.4.

     5.16 Foreign Assets Control Regulations, etc.

     Neither the sale of the Notes by the Company hereunder nor its use of the
proceeds thereof will violate the Trading with the Enemy Act, as amended, or any
of the foreign assets control regulations of the United States Treasury
Department (31 CFR, Subtitle B, Chapter V, as amended) or any enabling
legislation or executive order relating thereto.



     5.17 Status under Certain Statutes

     Neither the Company nor any Restricted Subsidiary is subject to regulation
under the Investment Company Act of 1940, as amended, the Public Utility Holding
Company Act of 1935, as amended, the Transportation Acts (49 U.S.C.), as
amended, or the Federal Power Act, as amended.

     5.18 Environmental Matters

     Neither the Company nor any Restricted Subsidiary has knowledge of any
claim or has received any notice of any claim, and no proceeding has been
instituted raising any claim against the Company or any of the Restricted
Subsidiaries or any of their respective real properties now or formerly owned,
leased or operated by any of them or other assets, alleging any damage to the
environment or violation of any Environmental Laws, except, in each case, such
as could not reasonably be expected to result in a Material Adverse Effect.
Except as otherwise disclosed to you in writing,

          (a) neither the Company nor any of the Restricted Subsidiaries has
     knowledge of any facts which would give rise to any claim, public or
     private, of violation of Environmental Laws or damage to the environment
     emanating from, occurring on or in any way related to real properties now
     or formerly owned, leased or operated by any of them or to other assets or
     their use, except, in each case, such as could not reasonably be expected
     to result in a Material Adverse Effect;

          (b) neither the Company nor any of the Restricted Subsidiaries has
     stored any Hazardous Materials on real properties now or formerly owned,
     leased or operated by any of them or has disposed of any Hazardous
     Materials in a manner contrary to any Environmental Laws in each case in
     any manner that could reasonably be expected to result in a Material
     Adverse Effect; and

          (c) all buildings on all real properties now owned, leased or operated
     by the Company or any of the Restricted Subsidiaries are in compliance with
     applicable Environmental Laws, except where failure to comply could not
     reasonably be expected to result in a Material Adverse Effect.

6.   REPRESENTATIONS OF THE PURCHASER

     6.1  Purchase for Investment

     You represent that you are purchasing the Notes for your own account or for
one or more separate accounts maintained by you or for the account of one or
more pension or trust funds and not with a view to the distribution thereof or
with any present intention of offering or selling any of the Notes in a
transaction that would violate the Securities Act or the securities laws of any
State of the United States or any other applicable jurisdiction, provided that
the disposition of your or their property shall at all times be within your or
their control. You represent and warrant that you and any Person for whose
account you are purchasing the Notes are either a Qualified Institutional Buyer
or an Accredited Institution, in either case with such knowledge and experience
in financial and business matters as are necessary in order to evaluate the
merits and risks of an investment in the Notes. You also understand that the
Company and, for purposes of the opinions to be delivered to you pursuant to
Section 4.4, counsel to the Company and your special counsel, will rely upon the
accuracy and truth of the foregoing representations and you hereby consent to
such reliance. You understand that the Notes have not been registered under the
Securities Act and may be resold only if registered pursuant to the provisions
of the Securities Act or if an exemption from registration is available, except
under circumstances where neither such registration nor such an exemption is
required by law, and that the Company is not required to register the Notes.



     6.2  Legend

     You agree that the Notes shall contain the following legend:

     "THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
     AMENDED, AND MAY ONLY BE REOFFERED AND SOLD IN COMPLIANCE WITH THE
     REGISTRATION PROVISIONS OF SUCH ACT OR PURSUANT TO AN EXEMPTION THEREFROM."

The legend requirements imposed by this Section 6.2 shall cease and terminate as
to any particular Note if the Notes represented thereby have been:

          (a)  effectively registered under the Securities Act (the Company
     having no obligation to effect the registration of such Notes) and disposed
     of in accordance with the registration statement covering such Notes,

          (b)  distributed to the public  pursuant to Rule 144 (or any successor
     provision) under the Securities Act, or

          (c)  otherwise transferred in accordance herewith and the subsequent
     disposition of such Notes shall not require the registration or
     qualification of such Notes under the Securities Act or any similar state
     law then in force.

Whenever such restrictions shall terminate as to any Notes, the holder thereof
shall be entitled to receive from the Company, without expense to such holder
(except for stamp taxes or governmental charges, if any, payable in connection
with a transfer of such Notes, as required by Section 13.2), a new Note of like
tenor not bearing the legend set forth in this Section 6.2.

     6.3  ERISA.  You represent:

          (a) if you are acquiring the Notes for your own account with funds
     from or attributable to your general account, and in reliance upon the
     Company's representations set forth in Section 5.12 and the related
     disclosures set forth in Schedule 5.12, that the amount of the reserves and
     liabilities for the general account contracts (as defined by the annual
     statement for life insurance companies approved by the National Association
     of Insurance Commissioners (the "NAIC Annual Statement")) held by or on
     behalf of any Plan together with the amount of the reserves and liabilities
     for the general account contracts held by or on behalf of any other Plans
     maintained by the same employer (or affiliate thereof, as such term is
     defined in section V of DOL Prohibited Transaction Exemption 95-60 (60 FR
     35925, July 12, 1995)) or by the same employee organization (as defined in
     ERISA) in the general account do not exceed 10% of the total reserves and
     liabilities of the general account (exclusive of separate account
     liabilities) plus surplus as set forth in the NAIC Annual Statement filed
     with the state of domicile of the insurance company; for purposes of the
     percentage limitation in this clause (a), the amount of reserves and
     liabilities for the general account contracts held by or on behalf of a
     Plan shall be determined before reduction for credits on account of any
     reinsurance ceded on a coinsurance basis; or



          (b) if any part of the funds being used by you to purchase the Notes
     shall come from assets of an employee benefit plan (as defined in section 3
     of ERISA) or a plan (as defined in section 4975(e)(1) of the Code), that:

               (i) if such funds are  attributable  to a "separate  account" (as
          defined in section 3 of ERISA), then

                    (A) all requirements for an exemption under DOL Prohibited
               Transaction Exemption 90-1 (issued January 29, 1990) are met with
               respect to the use of such funds to purchase the Notes, or

                    (B) the employee benefit plans with an interest in such
               separate account have been identified in a writing delivered by
               you to the Company;

               (ii) if such funds are attributable to a "separate account" (as
          defined in section 3 of ERISA) that is maintained solely in connection
          with fixed contracted obligations of an insurance company, any amounts
          payable, or credited, to any employee benefit plan having an interest
          in such account and to any participant or beneficiary of such plan
          (including an annuitant) are not affected in any manner by the
          investment performance of the separate account;

               (iii) if such funds are attributable to an "investment fund"
          managed by a "qualified plan asset manager" (as such terms are defined
          in Part V of DOL Prohibited Transaction Exemption 84-14, issued March
          13, 1984), all requirements for an exemption under such Exemption are
          met with respect to the use of such funds to purchase the Notes; or

               (iv) such employee benefit plan is excluded from the provisions
          of section 406 of ERISA by virtue of section 4(b) of ERISA.

     6.4  Organization; Power and Authority; Compliance with Laws

     You represent and warrant that:

          (a) you are a corporation  duly organized,  validly  existing,  and in
     good standing under the laws of the state of your incorporation,



          (b) you have the corporate  power and authority to execute and deliver
     this Agreement and to perform the provisions hereof, and

          (c) the execution, delivery and performance of this Agreement by you
     will not violate any provision of any statute or other rule or regulation
     of any Governmental Authority applicable to you.

     6.5  Authorization, etc

     You represent and warrant that this Agreement has been duly authorized by
all necessary corporate action on your part, and this Agreement constitutes your
legal, valid and binding obligation enforceable against you in accordance with
its terms, except as such enforceability may be limited by (a) applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting the enforcement of creditors' rights generally and (b) general
principles of equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law).

7.   INFORMATION AS TO COMPANY

     7.1  Financial and Business Information

     The Company shall deliver to each holder that is an Institutional Investor:

          (a) Quarterly Statements -- within forty-five (45) days after the end
     of each quarterly fiscal period in each fiscal year of the Company (other
     than the last quarterly fiscal period of each such fiscal year), duplicate
     copies of,

               (i)   consolidated   balance   sheets  of  the  Company  and  its
          consolidated  Subsidiaries,  and of the  Company  and  its  Restricted
          Subsidiaries, as at the end of such quarter, and

               (ii) consolidated statements of operations, stockholders' equity
          and cash flows of the Company and its consolidated Subsidiaries, and
          of the Company and its Restricted Subsidiaries, for such quarter and
          (in the case of the second and third quarters) for the portion of the
          fiscal year ending with such quarter,

     setting forth in each case in comparative form the figures for the
     corresponding periods in the previous fiscal year, all in reasonable
     detail, prepared in accordance with GAAP applicable to quarterly financial
     statements generally, and certified by a Senior Financial Officer as fairly
     presenting, in all material respects, the financial position of the
     companies being reported on and their results of operations and cash flows,
     subject to changes resulting from year-end adjustments, provided that, so
     long as the Company shall not have any Unrestricted Subsidiaries, delivery
     within the time period specified above of copies of the Company's Quarterly
     Report on Form 10-Q prepared in compliance with the requirements therefor
     and filed with the Securities and Exchange Commission shall be deemed to
     satisfy the requirements of this Section 7.1(a);



               (b) Annual Statements -- within ninety (90) days after the end of
          each fiscal year of the Company, duplicate copies of,

                    (i)  consolidated  balance  sheets  of the  Company  and its
               consolidated Subsidiaries,  and of the Company and its Restricted
               Subsidiaries, as at the end of such year, and

                    (ii) consolidated statements of operations, stockholders'
               equity and cash flows of the Company and its consolidated
               Subsidiaries, and of the Company and its Restricted Subsidiaries,
               for such year,

          setting forth in each case in comparative form the figures for the
          previous fiscal year, all in reasonable detail, prepared in accordance
          with GAAP, and accompanied by

                    (A) an opinion thereon of independent certified public
               accountants of recognized national standing, which opinion shall
               state that such financial statements present fairly, in all
               material respects, the financial position of the companies being
               reported upon and their results of operations and cash flows and
               have been prepared in conformity with GAAP (except for the
               exclusion of Unrestricted Subsidiaries, if any, from the
               financial statements of the Company and the Restricted
               Subsidiaries), and that the examination of such accountants in
               connection with such financial statements has been made in
               accordance with generally accepted auditing standards, and that
               such audit provides a reasonable basis for such opinion in the
               circumstances, and

                    (B) a certificate of such accountants stating that they have
               reviewed this Agreement and stating further whether, in making
               their audit, they have become aware of any condition or event
               that then constitutes a Default or an Event of Default, and, if
               they are aware that any such condition or event then exists,
               specifying the nature and period of the existence thereof (it
               being understood that such accountants shall not be liable,
               directly or indirectly, for any failure to obtain knowledge of
               any Default or Event of Default unless such accountants should
               have obtained knowledge thereof in making an audit in accordance
               with generally accepted auditing standards or did not make such
               an audit),

          provided that, so long as the Company shall not have any Unrestricted
          Subsidiaries, the delivery within the time period specified above of
          the Company's Annual Report on Form 10-K for such fiscal year
          (together with the Company's annual report to shareholders, if any,
          prepared pursuant to Rule 14a-3 under the Exchange Act) prepared in
          accordance with the requirements therefor and filed with the
          Securities and Exchange Commission, together with the accountants'
          certificates described in clauses (A) and (B) above, shall be deemed
          to satisfy the requirements of this Section 7.1(b);

               (c) SEC  and  Other  Reports  --  promptly  upon  their  becoming
          available, one copy of



                    (i)  each financial statement, report, notice or proxy
               statement sent by the Company or any Restricted Subsidiary to
               public securities holders generally, and

                    (ii) (A) each regular or periodic report, each registration
               statement (without exhibits except as expressly requested by such
               holder), and each prospectus and all amendments thereto filed by
               the Company or any Restricted Subsidiary with the Securities and
               Exchange Commission and (B) by facsimile only, all press releases
               and other statements made available generally by the Company or
               any Restricted Subsidiary to the public concerning developments
               that are Material;

               (d) Audit Reports -- as soon as practicable after receipt thereof
          by the Company or any Subsidiary, a copy of each other report
          submitted to the Company or any Subsidiary by its independent
          accountants in connection with any interim or special audit made by
          them of the books of the Company or any Subsidiary;

               (e) Litigation -- within five (5) days after the Company obtains
          knowledge thereof, written notice of any pending or threatened (in
          writing) (i) litigation not fully covered by insurance or as to which
          an insurance company has not accepted liability or (ii) governmental
          proceeding, in each case against the Company or any Restricted
          Subsidiary, in which the damages sought exceed One Million Dollars
          ($1,000,000), individually or in the aggregate, or which otherwise
          could reasonably be expected to have a Material Adverse Effect;

               (f) Notice of Default or Event of Default -- promptly, and in any
          event within five (5) days after a Responsible Officer shall become
          aware of the existence of any Default or Event of Default or that any
          Person has given any notice or taken any action with respect to a
          claimed default hereunder or that any Person has given any notice or
          taken any action with respect to a claimed default of the type
          referred to in Section 11(f), a written notice specifying the nature
          and period of existence thereof and what action the Company is taking
          or proposes to take with respect thereto;

               (g) Oil and Gas Reserve Reports -- promptly, and in any event no
          later than April 1 in each year, engineering reports in form and
          substance reasonably satisfactory to the Required Holders, certified
          by Forrest A. Garb & Associates, Inc. (or any other nationally or
          regionally recognized independent consulting petroleum engineers) as
          fairly and accurately setting forth

                    (i) the proven and producing, shut-in, behind-pipe, and
               undeveloped oil and gas reserves (separately classified as such)
               of the Company and its Restricted Subsidiaries as of January 1 of
               the year for which such reserve reports are furnished,

                    (ii) the aggregate present value of the future net income
               with respect to such reserves discounted at a stated per annum
               annual discount rate,



                    (iii) projections of the annual rate of production, gross
               income, and net income with respect to such proven and producing
               reserves, and

                    (iv)  information   with  respect  to  the   "take-or-pay,"
               "prepayment,"  and  gas-balancing  liabilities of the Company and
               its Restricted Subsidiaries;

               (h) ERISA Matters -- promptly, and in any event within five (5)
          days after a Responsible Officer shall become aware of any of the
          following, a written notice setting forth the nature thereof and the
          action, if any, that the Company or an ERISA Affiliate proposes to
          take with respect thereto:

                    (i) with respect to any Plan, any reportable event, as
               defined in section 4043(b) of ERISA and the regulations
               thereunder, for which notice thereof has not been waived pursuant
               to such regulations as in effect on the date hereof; or

                    (ii) the taking by the PBGC of steps to institute, or the
               threatening by the PBGC of the institution of, proceedings under
               section 4042 of ERISA for the termination of, or the appointment
               of a trustee to administer, any Plan, or the receipt by the
               Company or any ERISA Affiliate of a notice from a Multiemployer
               Plan that such action has been taken by the PBGC with respect to
               such Multiemployer Plan; or

                    (iii) any event, transaction or condition that could result
               in the incurrence of any liability by the Company or any ERISA
               Affiliate pursuant to Title I or IV of ERISA or the penalty or
               excise tax provisions of the Code relating to employee benefit
               plans, or in the imposition of any Lien on any of the rights,
               properties or assets of the Company or any ERISA Affiliate
               pursuant to Title I or IV of ERISA or such penalty or excise tax
               provisions, if such liability or Lien, taken together with any
               other such liabilities or Liens then existing, could reasonably
               be expected to have a Material Adverse Effect;

               (i) Notices from Governmental Authority -- promptly, and in any
          event within thirty (30) days of receipt thereof, copies of any notice
          to the Company or any Subsidiary from any Federal or state
          Governmental Authority relating to any order, ruling, statute or other
          law or regulation that could reasonably be expected to have a Material
          Adverse Effect; and

               (j) Requested Information -- with reasonable promptness, such
          other data and information relating to the business, operations,
          affairs, financial condition, assets or properties of the Company or
          any of the Restricted Subsidiaries or relating to the ability of the
          Company to perform its obligations hereunder and under the Notes as
          from time to time may be reasonably requested by any such holder
          including, without limitation, information required by 17 C.F.R.
          ss.230.144A, as amended from time to time.



     7.2  Officer's Certificate

     Each set of financial statements delivered to a holder pursuant to Section
7.1(a) or Section 7.1(b) hereof shall be accompanied by a certificate of a
Senior Financial Officer setting forth:

          (a)  Covenant Compliance -- the information (including detailed
     calculations) required in order to establish whether the Company was in
     compliance with the requirements of Sections 10.1 through 10.7, inclusive,
     during the quarterly or annual period covered by the statements then being
     furnished (including with respect to each such Section, where applicable,
     the calculations of the maximum or minimum amount, ratio or percentage, as
     the case may be, permissible under the terms of such Sections, and the
     calculation of the amount, ratio or percentage then in existence); and

          (b)  Event of Default -- a statement that such officer has reviewed
     the relevant terms hereof and has made, or caused to be made, under his or
     her supervision, a review of the transactions and conditions of the Company
     and the Subsidiaries from the beginning of the quarterly or annual period
     covered by the statements then being furnished to the date of the
     certificate and that such review shall not have disclosed the existence
     during such period of any condition or event that constitutes a Default or
     an Event of Default or, if any such condition or event existed or exists
     (including, without limitation, any such event or condition resulting from
     the failure of the Company or any Subsidiary to comply with any
     Environmental Law), specifying the nature and period of existence thereof
     and what action the Company shall have taken or proposes to take with
     respect thereto.

     7.3  Inspection

     The Company shall permit the representatives of each holder that is an
Institutional Investor:

          (a) No Default -- if no Default or Event of Default then exists, at
     the expense of such holder and upon reasonable prior notice to the Company,
     to visit the principal executive office of the Company, to discuss the
     affairs, finances and accounts of the Company and the Subsidiaries with the
     Company's officers, and (with the consent of the Company, which consent
     will not be unreasonably withheld) its independent public accountants and
     its independent petroleum engineers, and (with the consent of the Company,
     which consent will not be unreasonably withheld) to visit the other offices
     and properties of the Company and each Subsidiary, all at such reasonable
     times as may be reasonably requested in writing, provided that you shall be
     permitted to make only two inspections per calendar year pursuant to the
     provisions of this subsection (a) (without limitation of the inspection
     rights of any Other Purchaser); and

          (b) Default -- if a Default or an Event of Default then exists, at the
     expense of the Company to visit and inspect any of the offices or
     properties of the Company or any Subsidiary, to examine all their
     respective books of account, records, reports and other papers, to make
     copies and extracts therefrom, and to discuss their respective affairs,
     finances and accounts with their respective officers, independent public
     accountants and independent petroleum engineers (and by this provision the
     Company authorizes said accountants and engineers to discuss the affairs,
     finances and accounts of the Company and the Subsidiaries), all at such
     times and as often as may be requested.



8.   PREPAYMENT OF THE NOTES

     8.1  Required Prepayments

     Regardless of the amount of the Notes which may be outstanding from time to
time, the Company shall prepay or, in the case of principal amounts due at the
maturity of any Note, pay, and there shall become due and payable on the
respective dates specified below, the respective aggregate principal amounts of
each Series of Notes hereinafter set forth opposite such dates (or such lesser
amount as would constitute payment in full of the Notes of such Series):



=========================== ========================== =========================== ==========================
                                 Principal Amount           Principal Amount            Principal Amount
                                 of Series A Notes          of Series B Notes           of Series C Notes
                                 to be prepaid or           to be prepaid or            to be prepaid or
          Date:                        paid:                      paid:                       paid:
=========================== ========================== =========================== ==========================
                                                                                 
      December 30,                 $          0               $   5,500,000               $   4,500,000
       1998
- --------------------------- -------------------------- --------------------------- --------------------------
      December 30,                 $  8,333,333               $   5,500,000               $   4,500,000
       1999
- --------------------------- -------------------------- --------------------------- --------------------------
      December 30,                 $  8,333,333               $   5,500,000               $   4,500,000
       2000
- --------------------------- -------------------------- --------------------------- --------------------------
      December 30,                 $  8,333,334               $   5,500,000               $   4,500,000
       2001
- --------------------------- -------------------------- --------------------------- --------------------------
      December 30,                 $          0               $   5,500,000               $   4,500,000
       2002
=========================== ========================== =========================== ==========================
Totals                             $ 25,000,000               $  27,500,000               $  22,500,000
=========================== ========================== =========================== ==========================


The principal amount of any Note remaining outstanding at the maturity thereof
shall be paid at such maturity. Each such prepayment or payment shall be at a
price of 100% of the principal amount prepaid or paid, together with interest
accrued thereon to (but not including) the date of prepayment or payment. No
Make-Whole Amount shall be payable in connection with any mandatory prepayment
or payment made pursuant to this Section 8.1.



     8.2  Optional Prepayments with Make-Whole Amount; Rescission

          (a) Optional Prepayments with Make-Whole Amount. The Company may, at
     its option, upon notice as provided below, prepay at any time all, or from
     time to time any part of, the Notes, in a principal amount of not less than
     (i) in the case of a partial prepayment other than a Contingent Optional
     Prepayment, Five Million Dollars ($5,000,000), or (ii) in the case of a
     partial prepayment which is a Contingent Optional Prepayment, Two Million
     Dollars ($2,000,000), or, in either case, such lesser amount as shall then
     be outstanding, at one hundred percent (100%) of the principal amount so
     prepaid, plus the Make-Whole Amount determined for the prepayment date with
     respect to such principal amount. The Company will give each holder written
     notice (an "Optional Prepayment Notice") of each optional prepayment under
     this Section 8.2 not less than thirty (30) days and not more than sixty
     (60) days prior to the date fixed for such prepayment (the "Optional
     Prepayment Date"). Each such Optional Prepayment Notice shall

               (i) specify the Optional Prepayment Date,

               (ii) state whether such prepayment is contingent upon the
          completion of an asset disposition by the Company or a Restricted
          Subsidiary or the consummation of a new credit facility with another
          creditor or group of creditors (a "Contingent Optional Prepayment")
          and describe in reasonable detail the terms thereof,

               (iii) specify the aggregate principal amount of each Series to be
          prepaid on such date,

               (iv)  specify the principal amount of each Note held by such
          holder to be prepaid (determined in accordance with Section 8.3),

               (v) specify the interest to be paid on the  prepayment  date with
          respect to such principal amount being prepaid, and

               (vi) be accompanied by a certificate of a Senior Financial
          Officer as to the estimated Make-Whole Amount due in connection with
          such prepayment (calculated as if the date of such notice were the
          date of the prepayment), setting forth the details of such
          computation.

     Two (2) Business Days prior to such prepayment, the Company shall deliver
     to each holder a certificate of a Senior Financial Officer specifying the
     calculation of such Make-Whole Amount as of the specified prepayment date.

          (b)  Rescission. In the event that the Company shall give an Optional
     Prepayment Notice of any Contingent Optional Prepayment pursuant to Section
     8.2(a), the Company thereafter shall have the right to rescind such
     Optional Prepayment Notice by giving each holder written notice of such
     rescission (a "Rescission Notice") not less than ten (10) Business Days
     prior to the Optional Prepayment Date specified in such Optional Prepayment
     Notice. Upon delivery of such Rescission Notice in accordance with this
     Section 8.2(b), the Company shall be relieved of any obligation to make the
     Contingent Optional Prepayment on the Optional Prepayment Date in respect
     of which such Rescission Notice was delivered.



     8.3  Allocation of Partial Prepayments

     All partial prepayments of the Series A Notes, the Series B Notes and the
Series C Notes pursuant to Section 8.1 shall be allocated to all outstanding
Notes of the relevant Series ratably in accordance with the unpaid principal
amounts thereof. All partial prepayments of the Notes pursuant to Section 8.2
shall be allocated to all outstanding Notes (without distinguishing among the
different Series) ratably in accordance with the unpaid principal amounts
thereof. Any partial prepayment of the Series A Notes, the Series B Notes and
the Series C Notes pursuant to Section 8.2 shall reduce the principal amount of
each required prepayment of such Series becoming due under Section 8.1 on and
after the date of such prepayment in the inverse order of the maturity thereof.

     8.4  Maturity; Surrender, etc.

     In the case of each prepayment of Notes pursuant to this Section 8, the
principal amount of each Note to be prepaid shall mature and become due and
payable on the date fixed for such prepayment, together with interest on such
principal amount accrued to such date and the applicable Make-Whole Amount, if
any. From and after such date, unless the Company shall fail to pay such
principal amount when so due and payable, together with the interest and
Make-Whole Amount, if any, as aforesaid, interest on such principal amount shall
cease to accrue. Any Note paid or prepaid in full shall be surrendered to the
Company and cancelled and shall not be reissued, and no Note shall be issued in
lieu of any prepaid principal amount of any Note.

     8.5  Purchase of Notes

     The Company will not and will not permit any Restricted Subsidiary or
Affiliate to purchase, redeem, prepay or otherwise acquire, directly or
indirectly, any of the outstanding Notes except upon the payment or prepayment
of the Notes in accordance with the terms of this Agreement and the Notes. The
Company will promptly cancel all Notes acquired by it or any Restricted
Subsidiary or Affiliate pursuant to any payment or prepayment of Notes pursuant
to any provision of this Agreement and no Notes may be issued in substitution or
exchange for any such Notes.

     8.6  Make-Whole Amount

     The term "Make-Whole Amount" means, with respect to any Series A Note,
Series B Note or Series C Note, an amount equal to the excess, if any, of the
Discounted Value of the Remaining Scheduled Payments with respect to the Called
Principal of such Note over the amount of such Called Principal, provided that
the Make-Whole Amount may in no event be less than zero. For the purposes of
determining the Make-Whole Amount, the following terms have the following
meanings:

          "Called Principal" means, with respect to any Series A Note, Series B
     Note, or Series C Note, the principal of such Note that is to be prepaid
     pursuant to Section 8.2 or has become or is declared to be immediately due
     and payable pursuant to Section 12.1, as the context requires.



          "Discounted Value" means, with respect to the Called Principal of any
     Series A Note, Series B Note, or Series C Note, the amount obtained by
     discounting all Remaining Scheduled Payments with respect to such Called
     Principal from their respective scheduled due dates to the Settlement Date
     with respect to such Called Principal, in accordance with accepted
     financial practice and at a discount factor (applied on the same periodic
     basis as that on which interest on the Notes is payable) equal to the
     Reinvestment Yield with respect to such Called Principal.

          "Reinvestment Yield" means, with respect to the Called Principal of
     any Series A Note, Series B Note, or Series C Note, the sum of one half
     percent (.5%) per annum plus the yield to maturity implied by (i) the
     yields reported, as of 10:00 a.m. (New York City time) on the second (2nd)
     Business Day preceding the Settlement Date with respect to such Called
     Principal, on the display designated as "Page 678" on the Telerate Access
     Service (or such other display as may replace Page 678 on the Telerate
     Access Service) for actively traded U.S. Treasury securities having a
     maturity equal to the Remaining Average Life of such Called Principal as of
     such Settlement Date, or (ii) if such yields are not reported as of such
     time or the yields reported as of such time are not ascertainable, the
     Treasury Constant Maturity Series Yields reported, for the latest day for
     which such yields have been so reported as of the second (2nd) Business Day
     preceding the Settlement Date with respect to such Called Principal, in
     Federal Reserve Statistical Release H.15 (519) (or any comparable successor
     publication) for actively traded U.S. Treasury securities having a constant
     maturity equal to the Remaining Average Life of such Called Principal as of
     such Settlement Date. Such implied yield will be determined, if necessary,
     by (a) converting U.S. Treasury bill quotations to bond-equivalent yields
     in accordance with accepted financial practice and (b) interpolating
     linearly between (1) the actively traded U.S. Treasury security with the
     duration closest to and greater than the Remaining Average Life and (2) the
     actively traded U.S. Treasury security with the duration closest to and
     less than the Remaining Average Life.

          "Remaining Average Life" means, with respect to any Called Principal,
     the number of years (calculated to the nearest one-twelfth year) obtained
     by dividing (i) such Called Principal into (ii) the sum of the products
     obtained by multiplying (a) the principal component of each Remaining
     Scheduled Payment with respect to such Called Principal by (b) the number
     of years (calculated to the nearest one-twelfth year) that will elapse
     between the Settlement Date with respect to such Called Principal and the
     scheduled due date of such Remaining Scheduled Payment.

          "Remaining Scheduled Payments" means, with respect to the Called
     Principal of any Series A Note, Series B Note, or Series C Note, all
     payments of such Called Principal and interest thereon that would be due
     after the Settlement Date with respect to such Called Principal if no
     payment of such Called Principal were made prior to its scheduled due date,
     provided that if such Settlement Date is not a date on which interest
     payments are due to be made under the terms of the Notes of such Series,
     then the amount of the next succeeding scheduled interest payment will be
     reduced by the amount of interest accrued to such Settlement Date and
     required to be paid on such Settlement Date pursuant to Section 8.2 or
     12.1.



          "Settlement Date" means, with respect to the Called Principal of any
     Series A Note, Series B Note, or Series C Note, the date on which such
     Called Principal is to be prepaid pursuant to Section 8.2 or has become or
     is declared to be immediately due and payable pursuant to Section 12.1, as
     the context requires.

9.   AFFIRMATIVE COVENANTS

     The Company covenants that so long as any of the Notes are outstanding:

     9.1  Compliance with Law

     The Company will and will cause each of the Subsidiaries to comply with all
laws, ordinances or governmental rules or regulations to which each of them is
subject, including, without limitation, Environmental Laws, and will obtain and
maintain in effect all licenses, certificates, permits, franchises and other
governmental authorizations necessary to the ownership of their respective
properties or to the conduct of their respective businesses, in each case to the
extent necessary to ensure that non-compliance with such laws, ordinances or
governmental rules or regulations or failures to obtain or maintain in effect
such licenses, certificates, permits, franchises and other governmental
authorizations could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.

     9.2  Insurance

     The Company will and will cause each of the Subsidiaries to maintain, with
financially sound and reputable insurers, insurance with respect to their
respective properties and businesses against such casualties and contingencies,
of such types, on such terms and in such amounts (including deductibles,
co-insurance and self-insurance, if adequate reserves are maintained with
respect thereto) as is customary in the case of entities of established
reputations engaged in the same or a similar business and similarly situated,
except to the extent that the failure to maintain such insurance could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.

     9.3  Maintenance of Properties

     The Company will and will cause each of the Subsidiaries to maintain and
keep, or cause to be maintained and kept, their respective properties in good
repair, working order and condition (other than ordinary wear and tear), so that
the business carried on in connection therewith may be properly conducted at all
times, provided that

          (a) no violation of this Section 9.3 shall be deemed to have occurred
     with respect to any property of the Company or any Subsidiary damaged or
     destroyed by a casualty occurrence, so long as the Company or such
     Restricted Subsidiary is proceeding diligently to repair or replace such
     property, and

          (b) this Section shall not prevent the Company or any Subsidiary from
     discontinuing the operation and the maintenance of any of its properties if
     such discontinuance is desirable in the conduct of its business and the
     Company has concluded that such discontinuance could not, individually or
     in the aggregate, reasonably be expected to have a Material Adverse Effect
     (which term shall not, for the purpose of this clause (b) only, include the
     discontinuance of the operation and maintenance of a Restricted
     Subsidiary's properties that would render such Restricted Subsidiary unable
     to perform its obligations under the Subsidiary Guaranty, and therefore
     result in a Material Adverse Effect only under clause (c) of the definition
     of such term).



     9.4  Payment of Taxes and Claims

     The Company will and will cause each of the Subsidiaries to file all tax
returns required to be filed in any jurisdiction and to pay and discharge all
taxes shown to be due and payable on such returns and all other taxes,
assessments, governmental charges, or levies imposed on them or any of their
properties, assets, income or franchises, to the extent such taxes and
assessments have become due and payable and before they have become delinquent
and all claims for which sums have become due and payable that have or might
become a Lien on properties or assets of the Company or any Subsidiary, provided
that neither the Company nor any Subsidiary need pay any such tax or assessment
or claims if (a) the amount, applicability or validity thereof is contested by
the Company or such Subsidiary on a timely basis in good faith and in
appropriate proceedings, and the Company or such Subsidiary has established
adequate reserves therefor in accordance with GAAP on the books of the Company
or such Subsidiary or (b) the nonpayment of all such taxes and assessments in
the aggregate could not reasonably be expected to have a Material Adverse
Effect.

     9.5  Corporate Existence, etc.

     The Company will at all times preserve and keep in full force and effect
its corporate existence. Subject to Sections 10.5 and 10.6, the Company will at
all times preserve and keep in full force and effect the corporate existence of
each of the Subsidiaries (unless merged into the Company or a Subsidiary) and
all rights and franchises of the Company and the Subsidiaries unless, in the
good faith judgment of the Company, the termination of or failure to preserve
and keep in full force and effect such corporate existence, right or franchise
could not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect (which term shall not (for the purpose of this Section
9.5 only) include, with respect to any Restricted Subsidiary, the termination of
or failure to preserve and keep in full force and effect such corporate
existence, right or franchise that would render such Restricted Subsidiary
unable to perform its obligations under the Subsidiary Guaranty, and therefore
result in a Material Adverse Effect only under clause (c) of the definition of
such term).

     9.6  Pari Passu

     The Company covenants that its obligations under the Notes and under this
Agreement and the Other Agreements do and will rank at least pari passu with all
its other present and future unsecured Senior Debt.



     9.7  Subsidiary Guaranty

     The Company will cause each Subsidiary which becomes a Restricted
Subsidiary after the Series A and B Closing Date to execute and deliver to the
holders a copy of the Joinder Agreement in the form attached to the Subsidiary
Guaranty as Annex 2, duly executed by such Subsidiary, together with an opinion
of counsel satisfactory to the Required Holders addressing with respect to such
Subsidiary the issues relating to Subsidiaries and the Subsidiary Guaranty in
the form of opinion attached hereto as Exhibit 4.4(a).

     9.8  Application of Proceeds; Releases

     The Company will

          (a) not later than December 29, 1995,

               (i) cause all Debt outstanding under the Revolving Facility and
          the DDD Facility to be paid in full with the proceeds of the sale of
          the Series A Notes and Series B Notes, and

               (ii) deliver to the holders of the Notes

                    (A) with respect to the Revolving Facility, copies of (I) a
               written statement, executed by the Revolving Facility Lenders,
               terminating the Revolving Facility, and (II) such UCC-3
               termination statements, executed by the Revolving Facility
               Lenders, and such other releases executed by the Revolving
               Facility Lenders, as shall be deemed necessary or appropriate by
               the Company to terminate the Revolving Facility Lenders' security
               interest in any and all properties of the Company and the
               Restricted Subsidiaries, and

                    (B) with respect to the DDD Facility, copies of (I) a
               written statement, executed by the DDD Facility Lenders,
               terminating the DDD Facility, and (II) a written statement,
               executed by the DDD Facility Lenders, providing further
               assurances to execute and deliver such acknowledgements, mortgage
               releases and other releases as shall be necessary to permit the
               Company to comply with the provisions of clause (b) of this
               Section 9.8,

          (b) not later than January 5, 1996, deliver to the holders of the
     Notes an acknowledgement by the Company of receipt of all stock of the
     Restricted Subsidiaries pledged as security to the Revolving Facility
     Lenders and the DDD Facility Lenders, and

          (c) not later than January 15, 1996, with respect to the DDD Facility,
     deliver to the holders of the Notes copies of such mortgage releases and
     such other releases executed by the DDD Facility Lenders as shall be deemed
     necessary or appropriate by the Company to terminate the DDD Facility
     Lenders' security interest in any and all properties of DDD.



10.  NEGATIVE COVENANTS

     The Company covenants that so long as any of the Notes are outstanding:

     10.1 Net Worth

     The Company will not, at any time, permit Consolidated Net Worth to be less
than the sum of (a) Ninety Million Dollars ($90,000,000), plus (b) an aggregate
amount equal to fifty percent (50%) of Consolidated Net Income (but, in each
case, only if a positive number) for each completed fiscal year of the Company
beginning with the fiscal year ending December 31, 1995.

     10.2 Interest Coverage

     The Company will not, at any time, permit (a) EBITDA for the period of four
consecutive fiscal quarters of the Company then most recently ended to be less
than (b) five hundred percent (500%) of Consolidated Interest Expense for such
period.

     10.3 Debt Incurrence

          (a) Company Debt. The Company will not, directly or indirectly,
     create, incur, assume, guarantee, or otherwise become directly or
     indirectly liable with respect to, any Debt (including, without limitation,
     any extension, renewal or refunding of Debt), unless on the date the
     Company becomes liable with respect to any such Debt and immediately after
     giving effect thereto and the concurrent retirement of any other Debt,

               (i) no Default or Event of Default exists, and

               (ii) Consolidated Debt does not exceed fifty percent (50%) of
          Total Capitalization.

          (b) Restricted Subsidiary Debt. The Company will not permit any of the
     Restricted Subsidiaries to, directly or indirectly, create, incur, assume,
     guarantee, or otherwise become directly or indirectly liable with respect
     to, any Debt (including, without limitation, any extension, renewal or
     refunding of Debt), unless on the date such Restricted Subsidiary becomes
     liable with respect to any such Debt and immediately after giving effect
     thereto and the concurrent retirement of any Debt,

               (i) no Default or Event of Default exists,

               (ii) the  aggregate  amount of Priority  Debt does not exceed ten
          percent (10%) of Consolidated Tangible Assets, and

               (iii) Consolidated Debt does not exceed fifty percent (50%) of
          Total Capitalization.




          (c) Time of Incurrence of Debt. For the purposes of this Section 10.3,
     any Person becoming a Restricted Subsidiary after the date hereof shall be
     deemed, at the time it becomes a Restricted Subsidiary, to have incurred
     all of its then outstanding Debt, and any Person extending, renewing or
     refunding any Debt shall be deemed to have incurred such Debt at the time
     of such extension, renewal or refunding.

     10.4 Liens

     The Company will not, and will not permit any of the Restricted
Subsidiaries to, directly or indirectly create, incur, assume or permit to exist
(upon the happening of a contingency or otherwise) any Lien on or with respect
to any property (including, without limitation, any document or instrument in
respect of goods or accounts receivable) of the Company or any Restricted
Subsidiary, whether now owned or held or hereafter acquired, or any income or
profits therefrom (whether or not provision is made for the equal and ratable
securing of the Notes in accordance with the last paragraph of this Section
10.4), or assign or otherwise convey any right to receive income or profits,
except:

          (a) Liens for taxes,  assessments  or other  governmental  charges the
     payment of which is not at the time required by Section 9.4;

          (b) statutory Liens of landlords and Liens of carriers, warehousemen,
     mechanics, materialmen and other similar Liens, in each case, incurred in
     the ordinary course of business for sums not yet due or the payment of
     which is not at the time required by Section 9.4;

          (c) Liens (other than any Lien imposed by ERISA) incurred or deposits
     made in the ordinary course of business (i) in connection with workers'
     compensation, unemployment insurance and other types of social security or
     retirement benefits, or (ii) to secure (or to obtain letters of credit that
     secure) the performance of tenders, statutory obligations, surety bonds,
     appeal and supersedeas bonds (not in excess of Two Million Dollars
     ($2,000,000)), bids, leases (other than Capital Leases), performance bonds,
     purchase, construction or sales contracts and other similar obligations, in
     each case not incurred or made in connection with the borrowing of money,
     the obtaining of advances or credit or the payment of the deferred purchase
     price of property;



          (d) leases or subleases granted to others, easements, rights-of-way,
     restrictions and other similar charges or encumbrances, in each case
     incidental to, and not interfering with, the ordinary conduct of the
     business of the Company or any of the Restricted Subsidiaries, provided
     that such Liens do not, in the aggregate, materially detract from the value
     of such property with respect to its then current use;

          (e)  Liens  on  property  of the  Company  or  any  of the  Restricted
     Subsidiaries  securing  Debt  owing  to the  Company  or to a  Wholly-Owned
     Restricted Subsidiary;

          (f) Liens existing on the date of this Agreement and securing the Debt
     of the Company and the Restricted Subsidiaries identified as secured Debt
     in Schedule 5.15, but not any refinancing of such Debt;

          (g) Liens on property acquired or constructed by the Company or any
     Restricted Subsidiary after the date of this Agreement to secure Debt of
     the Company or such Restricted Subsidiary incurred in connection with or
     related to such acquisition or construction, and Liens existing on such
     property at the time of acquisition thereof, provided that

               (i) no such Lien shall extend to or cover any property other than
          the property being acquired or constructed (including contractual and
          other rights related thereto and proceeds thereof),

               (ii) the amount of Debt secured by any such Lien shall not exceed
          an amount equal to the lesser of the total purchase or construction
          price or Fair Market Value (as determined in good faith by the Board
          of Directors or the board of directors of such Restricted Subsidiary)
          of the property being acquired or constructed, determined at the time
          of such acquisition or at the time of substantial completion of such
          construction,

               (iii) such Lien shall be created concurrently with or within
          twelve months after such acquisition or substantial completion of such
          construction, and

               (iv) no Default or Event of  Default  shall  exist at the time of
          creation, incurrence or assumption of such Lien;

          (h) Liens existing on property of a corporation at the time it becomes
     a Restricted Subsidiary or is merged or consolidated with the Company or a
     Restricted Subsidiary, provided that

               (i) no such Lien shall extend to or cover any property other than
          the property subject to such Lien at the time of any such transaction,

               (ii) the amount of Debt secured by any such Lien shall not exceed
          the Fair Market Value (as determined in good faith by the Board of
          Directors or the board of directors of such Restricted Subsidiary) of
          the property subject thereto, determined at the time of such
          transaction,

               (iii)  such Lien was not  created  in  contemplation  of any such
          transaction, and

               (iv) no Default or Event of  Default  shall  exist at the time of
          any such transaction;

          (i) Liens incidental to the conduct of the business referred to in
     Section 10.10 (including, without limitation, licenses, participation
     rights, rebate or revenue sharing obligations, or similar encumbrances),
     provided that such Liens have not arisen in connection with the incurrence
     of Debt; and



          (j) Liens, not otherwise permitted by the provisions of this Section
     10.4, on property of the Company or any Restricted Subsidiary, provided
     that on the date the Company or such Restricted Subsidiary becomes liable
     with respect to the Debt secured by such Liens, and immediately after
     giving effect thereto and the concurrent retirement of any other Debt
     constituting Priority Debt,

               (i) no Default or Event of Default exists, and

               (ii) the aggregate amount of Priority Debt does not exceed ten
          percent (10%) of Consolidated Tangible Assets.

     In case any property shall be subjected to a Lien in violation of this
Section 10.4, the Company will forthwith make or cause to be made, to the
fullest extent permitted by applicable law, provision whereby the Notes will be
secured equally and ratably as to such property with all other obligations
secured thereby pursuant to such agreements and instruments as shall be approved
by the Required Holders, and the Company will promptly cause to be delivered to
each holder of a Note an opinion, reasonably satisfactory to the Required
Holders, of Gardere Wynne Sewell & Riggs, L.L.P. or other independent counsel
satisfactory to the Required Holders to the effect that such agreements and
instruments are enforceable in accordance with their terms, and in any event the
Notes shall have the benefit, to the full extent that, and with such priority
as, the holders of Notes may be entitled under applicable law, of an equitable
Lien on such property (and any proceeds thereof) securing the Notes. Such
violation of this Section 10.4 will constitute an Event of Default hereunder,
whether or not any such provision is made or any equitable Lien is created
pursuant to this Section 10.4.

     10.5 Mergers and Consolidations

     The Company will not, and will not permit any of the Restricted
Subsidiaries to, consolidate with or merge with any other corporation or convey,
transfer, spin-off or lease substantially all of its assets in a single
transaction or series of transactions to any Person (except that a Restricted
Subsidiary may (x) consolidate with or merge with, or convey, transfer, spin-off
or lease substantially all of its assets in a single transaction or series of
transactions to, another Restricted Subsidiary or the Company and (y) convey,
transfer, spin-off or lease all of its assets in compliance with the provisions
of Section 10.6), provided that the foregoing restriction does not apply to the
consolidation or merger of the Company with, or the conveyance, transfer,
spin-off or lease of substantially all of the assets of the Company in a single
transaction or series of transactions to, any Person so long as:

          (a) the successor formed by such consolidation or the survivor of such
     merger or the Person that acquires by conveyance, transfer, spin-off or
     lease substantially all of the assets of the Company as an entirety, as the
     case may be (the "Successor Corporation"), shall be a solvent corporation
     organized and existing under the laws of the United States of America, any
     state thereof or the District of Columbia and shall conduct substantially
     all of its business in one or more of such jurisdictions;

          (b) if the Company is not the Successor Corporation, such corporation
     shall have executed and delivered to each holder its assumption of the due
     and punctual performance and observance of each covenant and condition of
     this Agreement and the Notes (pursuant to such agreements and instruments
     as shall be reasonably satisfactory to the Required Holders), and the
     Company shall have caused to be delivered to each holder an opinion,
     reasonably satisfactory to the Required Holders, of Gardere Wynne Sewell &
     Riggs, L.L.P. or other nationally recognized independent counsel
     satisfactory to the Required Holders, to the effect that all agreements or
     instruments effecting such assumption are enforceable in accordance with
     their terms and comply with the terms hereof;



          (c) immediately prior to, and immediately after giving effect to, such
     transaction, no Default or Event of Default would exist; and

          (d) immediately after giving effect to such transaction, the Successor
     Corporation would be permitted, pursuant to the provisions of Section 10.3,
     to incur at least One Dollar ($1) of additional Debt owing to a Person
     other than a Restricted Subsidiary of the Successor Corporation.

No such conveyance, transfer, spin-off or lease of substantially all of the
assets of the Company shall have the effect of releasing the Company or any
Successor Corporation from its liability under this Agreement or the Notes.

     10.6 Sale of Assets

          (a) Sale of Assets. The Company will not, and will not permit any of
     the Restricted Subsidiaries to, make any Transfer, provided that the
     foregoing restriction does not apply to a Transfer if:

               (i) the property that is the subject of such Transfer constitutes
          either (A) inventory held for sale, or (B) equipment, fixtures,
          supplies or materials no longer required in the operation of the
          business of the Company or such Restricted Subsidiary or that is
          obsolete, and, in the case of any Transfer described in clause (A) or
          clause (B), such Transfer is in the ordinary course of business (an
          "Ordinary Course Transfer");

               (ii) either

                    (A) such Transfer is from a Restricted Subsidiary to the
               Company or a Wholly-Owned Restricted Subsidiary, or



                    (B) such Transfer is from the Company to a Wholly-Owned
               Restricted Subsidiary,

          so long as immediately before and immediately after the consummation
          of such transaction, and after giving effect thereto, no Default or
          Event of Default exists or would exist (each such Transfer, an
          "Intergroup Transfer," and, collectively with any Ordinary Course
          Transfers, "Excluded Transfers"); or

               (iii) such Transfer is not an Excluded Transfer and all of the
          following conditions shall have been satisfied with respect thereto:

                    (A) such Transfer does not involve a Substantial Portion of
               the property of the Company and the Restricted Subsidiaries,

                    (B) in the good faith opinion of the Company, the Transfer
               is in exchange for consideration with a Fair Market Value at
               least equal to that of the property exchanged, and is in the best
               interests of the Company, and

                    (C) immediately after giving effect to such transaction no
               Default or Event of Default would exist.

          (b) Debt Prepayment Transfers and Reinvested Transfers.

               (i) Notwithstanding the provisions of Section 10.6(a), the
          determination of whether a Transfer involves a Substantial Portion of
          the property of the Company and the Restricted Subsidiaries, as
          provided in Section 10.6(a)(iii)(A), shall be made without taking into
          account the same proportion of the book value attributable to the
          property subject to such Transfer as shall be equal to the proportion
          of the Net Asset Sale Proceeds Amount (the "Designated Portion") to be
          applied to either a prepayment of the Notes pursuant to Section 8.2 (a
          "Prepayment Transfer") or the acquisition of assets similar to the
          assets which were the subject of such Transfer (a "Reinvested
          Transfer") within one hundred eighty (180) days of the consummation of
          such Transfer, as specified in an Officer's Certificate delivered to
          each holder prior to, or contemporaneously with, the consummation of
          such Transfer.

               (ii) If, notwithstanding the certificate referred to in the
          foregoing clause (i), the Company shall fail to apply the entire
          amount of the Designated Portion as specified in such certificate
          within the period stated in Section 10.6(b)(i), the computation of
          whether such Transfer involved a Substantial Portion of the property
          of the Company and the Restricted Subsidiaries shall be recomputed, as
          of the date of such Transfer, by taking into account the same
          proportion of the book value attributable to the property subject to
          such Transfer as shall be equal to the proportion of the Net Asset
          Sale Proceeds Amount actually applied to either a Prepayment Transfer
          or a Reinvested Transfer within such period. If, upon the
          recomputation provided for in the preceding sentence, such Transfer
          involved a Substantial Portion of the property of the Company and the
          Restricted Subsidiaries, an Event of Default shall be deemed to have
          existed as of the expiration of such period.

          (c)  Certain  Definitions.  The  following  terms  have the  following
     meanings:

               (i) Disposition  Value -- means, at any time, with respect to any
          Transfer of property,

                    (A) in the case of property that does not constitute capital
               stock of a Restricted Subsidiary, the book value thereof, valued
               at the amount taken into account (or which would be taken into
               account) in the consolidated balance sheet of the Company then
               most recently required to have been delivered to the holders
               pursuant to Section 7.1, and



                    (B) in the case of property that constitutes capital stock
               of a Restricted Subsidiary, an amount equal to that percentage of
               the book value of the assets of the Restricted Subsidiary that
               issued such capital stock as is equal to the percentage that the
               book value of such capital stock represents of the book value of
               all of the outstanding capital stock of such Restricted
               Subsidiary (assuming, in making such calculations, that all
               Securities convertible into such capital stock are so converted
               and giving full effect to all transactions that would occur or be
               required in connection with such conversion), determined as of
               the date of the balance sheet referred to in the foregoing clause
               (A).

               (ii)  Substantial  Portion -- means,  at any time,  any  property
          subject to a Transfer if

                    (A) the Disposition Value of such property, when added to
               the Disposition Value of all other property of the Company and
               the Restricted Subsidiaries that has been the subject of a
               Transfer (other than an Excluded Transfer and subject, with
               respect to both such property and all such other property, to the
               provisions of Section 10.6(b)) during the then current fiscal
               year of the Company, exceeds an amount equal to ten percent (10%)
               of Consolidated Total Assets as reflected (or as would be
               reflected) in the consolidated balance sheet of the Company then
               most recently required to have been delivered to the holders
               pursuant to Section 7.1, or

                    (B) the Disposition Value of such property, when added to
               the Disposition Value of all other property of the Company and
               the Restricted Subsidiaries that has been the subject of a
               Transfer (other than an Excluded Transfer and subject, with
               respect to both such property and all such other property, to the
               provisions of Section 10.6(b)) during the period beginning on the
               Series A and B Closing Date and ending on and including the date
               of the consummation of such Transfer, exceeds an amount equal to
               twenty percent (20%) of Consolidated Total Assets as reflected
               (or as would be reflected) in the consolidated balance sheet of
               the Company then most recently required to have been delivered to
               the holders pursuant to Section 7.1 hereof.

               (iii) Transfer -- means, with respect to any Person, any
          transaction in which such Person sells, conveys, transfers or leases
          (as lessor) any of its property, including, without limitation,
          capital stock of any other Person.



     10.7 Restricted Payments and Restricted Investments

          (a) Limitation. The Company will not, and will not permit any of the
     Restricted Subsidiaries to, directly or indirectly, declare, make or incur
     any liability to make any Restricted Payment or make or authorize any
     Restricted Investment unless immediately after giving effect to such
     action:

               (i) the sum of (x) the aggregate amount of outstanding Restricted
          Investments (valued immediately after such action), plus (y) the
          aggregate amount of Restricted Payments of the Company and the
          Restricted Subsidiaries declared or made during the period commencing
          on the Series A and B Closing Date, and ending on the date such
          Restricted Payment or Restricted Investment is declared or made,
          inclusive, would not exceed the sum of

                    (A) Ten Million Dollars ($10,000,000), plus

                    (B) fifty percent (50%) of Consolidated Net Income for the
               period commencing July 1, 1995 and ending on the date such
               Restricted Payment or such Restricted Investment is declared or
               made (or minus 100% of Consolidated Net Income for such period if
               Consolidated Net Income for such period is a loss), plus

                    (C) the aggregate  amount of Net Proceeds of Common Stock of
               the Company for such period; and

               (ii) the Company could incur, pursuant to Section 10.3, at least
          One Dollar ($1) of additional Debt owing to a Person other than a
          Restricted Subsidiary; and

               (iii) no Default or Event of Default would exist.

          (b) Time of Payment. The Company will not, nor will it permit any of
     the Restricted Subsidiaries to, authorize a Restricted Payment that is not
     payable within sixty (60) days of authorization.

          (c) Investments of Subsidiaries. Each Person which becomes a
     Restricted Subsidiary after the Series A and B Closing Date will be deemed
     to have made, on the date such Person becomes a Restricted Subsidiary, all
     Restricted Investments of such Person in existence on such date.
     Investments in any Person that ceases to be a Restricted Subsidiary after
     the Series A and B Closing Date (but in which the Company or another
     Restricted Subsidiary continues to maintain an Investment) will be deemed
     to have been made on the date on which such Person ceases to be a
     Restricted Subsidiary.



     10.8 Limitations on Certain Restricted Subsidiary Actions

     The Company will not, and will not permit any of the Restricted
Subsidiaries to, enter into any agreement which would restrict any Restricted
Subsidiary's legal ability or right to:

          (a) pay dividends or make any other distributions on its common stock;

          (b) pay any Debt owing to the Company or another Restricted Subsidiary
     (other than waivers of subrogation);

          (c)  make  any  Investment  in  the  Company  or  another   Restricted
     Subsidiary;

          (d) transfer its property to the Company or another Restricted
     Subsidiary (except that any such agreement may (i) prohibit the assignment
     of contractual rights, (ii) include grants of contractual rights of first
     refusal, and (iii) include similar contractual obligations not unusual in
     the course of such Restricted Subsidiary's business); or

          (e) Guaranty the Notes or any renewals or refinancings thereof;

provided, however, that

          (i) the restrictions of this Section 10.8 shall not apply to

               (A) any such agreement in existence on the Series A and B Closing
          Date and set forth in Schedule 10.8,

               (B) this Agreement, or

               (C) other agreements relating to the creation of Senior Debt
          incurred in accordance with the terms of this Agreement, and

          (ii) the restrictions of clause (d) of this Section 10.8 shall not
     apply to any agreement relating to the creation of Priority Debt or Debt of
     Restricted Subsidiaries secured by Liens permitted by Section 10.4(a) to
     Section 10.4(i), inclusive, to the extent that such restrictions limit the
     ability of any Restricted Subsidiary to transfer the Property that secures
     such Priority Debt or such other Debt;

provided further that, in the case of the foregoing clauses (i) and (ii), such
agreement does not impose any limitations on any Restricted Subsidiary's ability
to perform its obligations under the Subsidiary Guaranty.



     10.9 Affiliate Transactions

     The Company will not, and will not permit any of the Restricted
Subsidiaries to, enter into any transaction (other than transactions among the
Company and its wholly-owned Unrestricted Subsidiaries that are not,
individually or in the aggregate, Material), including, without limitation, the
purchase, sale or exchange of property or the rendering of any service, with any
Affiliate, except in the ordinary course of business of the Company or such
Restricted Subsidiary and upon fair and reasonable terms no less favorable to
the Company or such Restricted Subsidiary than it would obtain in a comparable
arm's-length transaction with a Person not an Affiliate.

     10.10 Line of Business

     The Company will not, and will not permit any of the Subsidiaries to,
engage in any business if, as a result, the Company and the Subsidiaries, taken
as a whole, would not be engaged primarily in the provision of (a) seismic data
services, (b) exploration for, and development and ownership of, gas and oil
reserves, (c) gas marketing and (d) businesses related to the foregoing
businesses.

11.  EVENTS OF DEFAULT

     An "Event of Default" shall exist if any of the following conditions or
events shall occur and be continuing:

          (a) the Company defaults in the payment of any principal of or
     Make-Whole Amount, if any, on any Note when the same becomes due and
     payable, whether at maturity or at a date fixed for prepayment or by
     declaration or otherwise; or

          (b) the Company defaults in the payment of any interest on any Note
     for more than five (5) Business Days after the same becomes due and
     payable; or

          (c) the Company defaults in the performance of or compliance with any
     term contained in Sections 10.1 through 10.9, inclusive, except as set
     forth in paragraph 11(d) below with respect to Section 10.4; or

          (d) the Company defaults in the performance of or compliance with any
     term contained herein (other than those referred to in paragraphs (a), (b)
     and (c) of this Section 11) or incurs at any time Liens of the types
     described in paragraphs (a), (b) and (c) of Section 10.4 for obligations
     then due aggregating less than Two Million Five Hundred Thousand Dollars
     ($2,500,000), and such default is not remedied within thirty (30) days
     after the earlier of (i) a Responsible Officer obtaining actual knowledge
     of such default and (ii) the Company receiving written notice of such
     default from any holder (any such written notice to be identified as a
     "notice of default" and to refer specifically to this Section 11(d)); or

          (e) any representation or warranty made in writing by or on behalf of
     the Company or any Restricted Subsidiary or by any officer of the Company
     or any Restricted Subsidiary in this Agreement or the Subsidiary Guaranty
     or in any writing furnished in connection with the transactions
     contemplated hereby proves to have been false or incorrect in any material
     respect on the date as of which made; or



          (f) (i) the Company or any Restricted Subsidiary is in default (as
     principal or as guarantor or other surety) in the payment of any principal
     of or premium or make-whole amount or interest on any one or more issues of
     outstanding Debt in an aggregate principal amount of at least Ten Million
     Dollars ($10,000,000) beyond any period of grace provided with respect
     thereto, or (ii) the Company or any Restricted Subsidiary is in default in
     the performance of or compliance with any term of any evidence of any one
     or more issues of Debt in an aggregate outstanding principal amount of at
     least Ten Million Dollars ($10,000,000) or of any mortgage, indenture or
     other agreement relating thereto or any other condition exists, and the
     effect of such default or condition is to cause, or the holder or holders
     of such obligation (or a trustee on behalf of such holder or holders) as a
     result of such default or condition actually cause, such obligation to
     become due prior to any originally stated maturity, or to be repurchased by
     the Company or any Restricted Subsidiary prior to any originally scheduled
     maturity; or

          (g) the Company or any Restricted Subsidiary (i) is generally not
     paying, or admits in writing its inability to pay, its debts as they become
     due, (ii) files, or consents by answer or otherwise to the filing against
     it of, a petition for relief or reorganization or arrangement or any other
     petition in bankruptcy, for liquidation or to take advantage of any
     bankruptcy, insolvency, reorganization, moratorium or other similar law of
     any jurisdiction, (iii) makes an assignment for the benefit of its
     creditors, (iv) consents to the appointment of a custodian, receiver,
     trustee or other officer with similar powers with respect to it or with
     respect to any substantial part of its property, (v) is adjudicated as
     insolvent or to be liquidated, or (vi) takes corporate action for the
     purpose of any of the foregoing; or

          (h) a court or governmental authority of competent jurisdiction enters
     an order appointing, without consent by the Company or any of the
     Subsidiaries, a custodian, receiver, trustee or other officer with similar
     powers with respect to it or with respect to any substantial part of its
     property, or constituting an order for relief or approving a petition for
     relief or reorganization or any other petition in bankruptcy or for
     liquidation or to take advantage of any bankruptcy or insolvency law of any
     jurisdiction, or ordering the dissolution, winding-up or liquidation of the
     Company or any of the Subsidiaries, or any such petition shall be filed
     against the Company or any of the Subsidiaries and such petition shall not
     be dismissed within sixty (60) days; or

          (i) a final judgment or judgments for the payment of money aggregating
     in excess of One Million Dollars ($1,000,000) are rendered against one or
     more of the Company and the Subsidiaries and such judgments are not, within
     forty-five (45) days after entry thereof, bonded, discharged or stayed
     pending appeal, or are not discharged within forty-five (45) days after the
     expiration of such stay; or

          (j)  (i) the Subsidiary Guaranty shall cease to be in full force and
     effect or shall be declared by a court or governmental authority of
     competent jurisdiction to be void, voidable or unenforceable against any
     Restricted Subsidiary,



          (ii) the validity or enforceability of the Subsidiary Guaranty against
     any Restricted Subsidiary shall be contested by such Restricted Subsidiary,
     the Company or any Affiliate, or

          (iii) any Restricted Subsidiary, the Company or any Affiliate shall
     deny that such Restricted Subsidiary has any further liability or
     obligation under the Subsidiary Guaranty.

12.  REMEDIES ON DEFAULT, ETC

     12.1 Acceleration

          (a) If an Event of Default with respect to the Company described in
     paragraph (g) or (h) of Section 11 (other than an Event of Default
     described in clause (i) of paragraph (g) or described in clause (vi) of
     paragraph (g) by virtue of the fact that such clause encompasses clause (i)
     of paragraph (g)) has occurred, all the Notes then outstanding shall
     automatically become immediately due and payable.

          (b) If any other Event of Default has occurred and is continuing, the
     Required Holders may at any time at its or their option, by notice or
     notices to the Company, declare all the Notes then outstanding to be
     immediately due and payable.

          (c) If any Event of Default described in paragraph (a) or (b) of
     Section 11 has occurred and is continuing, any holder or holders of Notes
     at the time outstanding affected by such Event of Default may at any time,
     at its or their option, by notice or notices to the Company, declare all
     the Notes held by it or them to be immediately due and payable.

     Upon any Notes becoming due and payable under this Section 12.1, whether
automatically or by declaration, such Notes will forthwith mature and the entire
unpaid principal amount of such Notes, plus (x) all accrued and unpaid interest
thereon and (y) the Make-Whole Amount determined in respect of such principal
amount (to the full extent permitted by applicable law), shall all be
immediately due and payable, in each and every case without presentment, demand,
protest or further notice, all of which are hereby waived. The Company
acknowledges, and the parties hereto agree, that each holder has the right to
maintain its investment in the Notes free from repayment by the Company (except
as herein specifically provided for) and that the provision for payment of a
Make-Whole Amount by the Company in the event that the Notes are prepaid or are
accelerated as a result of an Event of Default is intended to provide
compensation for the deprivation of such right under such circumstances.



     12.2 Other Remedies

     If any Default or Event of Default has occurred and is continuing, and
irrespective of whether any Notes have become or have been declared immediately
due and payable under Section 12.1, the holder of any Note at the time
outstanding may proceed to protect and enforce the rights of such holder by an
action at law, suit in equity or other appropriate proceeding, whether for the
specific performance of any agreement contained herein or in any Note, or for an
injunction against a violation of any of the terms hereof or thereof, or in aid
of the exercise of any power granted hereby or thereby or by law or otherwise.

     12.3  Rescission

     At any time after any Notes have been declared due and payable pursuant to
clause (b) or (c) of Section 12.1, the Required Holders, by written notice to
the Company, may rescind and annul any such declaration and its consequences if
(a) the Company has paid all overdue interest on the Notes, all principal of and
Make-Whole Amount, if any, on any Notes that are due and payable and are unpaid
other than by reason of such declaration, and all interest on such overdue
principal and Make-Whole Amount, if any, and (to the extent permitted by
applicable law) any overdue interest in respect of the Notes, at the Default
Rate, (b) all Events of Default and Defaults, other than non-payment of amounts
that have become due solely by reason of such declaration, have been cured or
have been waived pursuant to Section 17, and (c) no judgment or decree has been
entered for the payment of any monies due pursuant hereto or to the Notes. No
rescission and annulment under this Section 12.3 will extend to or affect any
subsequent Event of Default or Default or impair any right consequent thereon.

     12.4  No Waivers or Election of Remedies, Expenses, etc.

     No course of dealing and no delay on the part of any holder in exercising
any right, power or remedy shall operate as a waiver thereof or otherwise
prejudice such holder's rights, powers or remedies. No right, power or remedy
conferred by this Agreement or by any Note upon any holder thereof shall be
exclusive of any other right, power or remedy referred to herein or therein or
now or hereafter available at law, in equity, by statute or otherwise. Without
limiting the obligations of the Company under Section 15, the Company will pay
to each holder on demand such further amount as shall be sufficient to cover all
costs and expenses of such holder incurred in any enforcement or collection
under this Section 12, including, without limitation, reasonable attorneys'
fees, expenses and disbursements.

13.  REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES

     13.1  Registration of Notes

     The Company shall keep at its principal executive office a register for the
registration and registration of transfers of Notes. The name and address of
each holder of one or more Notes, each transfer thereof and the name and address
of each transferee of one or more Notes shall be registered in such register.
Prior to due presentment for registration of transfer, the Person in whose name
any Note shall be registered shall be deemed and treated as the owner and holder
thereof for all purposes hereof, and the Company shall not be affected by any
notice or knowledge to the contrary. The Company shall give to any holder that
is an Institutional Investor promptly upon request therefor, a complete and
correct copy of the names and addresses of all registered holders.



     13.2  Transfer and Exchange of Notes

     Upon surrender of any Note at the principal executive office of the Company
for registration of transfer or exchange (and in the case of a surrender for
registration of transfer, duly endorsed or accompanied by a written instrument
of transfer duly executed by the registered holder of such Note or his attorney
duly authorized in writing and accompanied by the address for notices of each
transferee of such Note or part thereof, and subject to compliance with all
restrictions on transfer set forth herein and in such Note), the Company shall
execute and deliver, at the Company's expense (except as provided below),
promptly and, in any event, within ten (10) days of the surrender of such Note
by the registered holder thereof, one or more new Notes (as requested by the
holder thereof) in exchange therefor, in an aggregate principal amount equal to
the unpaid principal amount of the surrendered Note. Each such new Note shall be
payable to such Person as such holder may request and shall be substantially in
the form of Exhibit 1A, Exhibit 1B or Exhibit 1C, as the case may be. Each such
new Note shall be dated and bear interest from the date to which interest shall
have been paid on the surrendered Note or dated the date of the surrendered Note
if no interest shall have been paid thereon. The Company may require payment of
a sum sufficient to cover any stamp tax or governmental charge imposed in
respect of any such transfer of Notes. Notes shall not be transferred in
denominations of less than One Hundred Thousand Dollars ($100,000), provided
that if necessary to enable the registration of transfer by a holder of its
entire holding of Notes, one Note may be in a denomination of less than One
Hundred Thousand Dollars ($100,000). Any transferee, by its acceptance of a Note
registered in its name (or the name of its nominee), shall be deemed to have
made the representations set forth in Section 6.1 (unless such transfer is
effected pursuant to a transaction in which the representation set forth in such
Section is not required in order to comply with the securities laws applicable
to such transfer) and Section 6.3.

     13.3  Replacement of Notes

     Upon receipt by the Company of evidence reasonably satisfactory to it of
the ownership of and the loss, theft, destruction or mutilation of any Note
(which evidence shall be, in the case of an Institutional Investor, notice from
such Institutional Investor of such ownership and such loss, theft, destruction
or mutilation), and

          (a) in the case of loss, theft or destruction, of indemnity reasonably
     satisfactory to it (provided that if a Qualified Institutional Buyer is the
     holder of such Note, the unsecured agreement of indemnity of such holder
     shall be deemed to be satisfactory), or

          (b) in the case of mutilation, upon surrender and cancellation
     thereof,

the Company at its own expense shall execute and, within ten (10) days after
such receipt, deliver, in lieu thereof, a new Note, dated and bearing interest
from the date to which interest shall have been paid on such lost, stolen,
destroyed or mutilated Note or dated the date of such lost, stolen, destroyed or
mutilated Note if no interest shall have been paid thereon.



14.  PAYMENTS ON NOTES

     14.1  Place of Payment

     The Company will punctually pay, or cause to be paid, the principal of and
interest (and Make-Whole Amount, if any) on the Notes, as and when the same
shall become due and payable according to the terms hereof and of the Notes.
Subject to Section 14.2, payments of principal, Make-Whole Amount, if any, and
interest becoming due and payable on the Notes shall be made at the principal
office of the Company. The Company may at any time, by notice to each holder,
change the place of payment of the Notes so long as such place of payment shall
be either the principal office of the Company in such jurisdiction or the
principal office of a bank or trust company in such jurisdiction.

     14.2 Home Office Payment

     So long as you or your nominee shall be the holder of any Note, and
notwithstanding anything contained in Section 14.1 or in such Note to the
contrary, the Company will pay all sums becoming due on such Note for principal,
Make-Whole Amount, if any, and interest by the method and at the address
specified for such purpose below your name in Schedule A, or by such other
method or at such other address as you shall have from time to time specified to
the Company in writing for such purpose, without the presentation or surrender
of such Note or the making of any notation thereon, except that upon written
request of the Company made concurrently with or reasonably promptly after
payment or prepayment in full of any Note, you shall surrender such Note for
cancellation, reasonably promptly after any such request, to the Company at its
principal executive office or at the place of payment most recently designated
by the Company pursuant to Section 14.1. Prior to any sale or other disposition
of any Note held by you or your nominee you will, at your election, either
endorse thereon the amount of principal paid thereon and the last date to which
interest has been paid thereon or surrender such Note to the Company in exchange
for a new Note or Notes pursuant to Section 13.2. The Company will afford the
benefits of this Section 14.2 to any Institutional Investor that is the direct
or indirect transferee of any Note purchased by you under this Agreement.

15.  EXPENSES, ETC

     15.1 Transaction Expenses

     Whether or not the transactions contemplated hereby are consummated, the
Company will pay all reasonable attorneys' fees of Hebb & Gitlin, special
counsel to you and the Other Purchasers, in connection with such transactions,
and will pay all costs and expenses (including reasonable attorneys' fees of a
special counsel and, if reasonably required, local or other counsel) incurred by
you and each Other Purchaser or holder in connection with the consideration,
evaluation, analysis, assessment, negotiation, preparation and/or execution of
any amendments, waivers or consents under or in respect of this Agreement or the
Notes (whether or not any such amendment, waiver or consent becomes effective),
or in connection with any controversy or potential controversy thereunder,
including, without limitation: (a) the costs and expenses incurred in enforcing
or defending (or determining whether or how to enforce or defend) any rights



under this Agreement or the Notes or in responding to any subpoena or other
legal process or informal investigative demand issued in connection with this
Agreement or the Notes, or by reason of being a holder, and (b) the costs and
expenses, including financial advisors' fees, incurred in connection with the
insolvency or bankruptcy of the Company or any Subsidiary or in connection with
any work-out or restructuring of the transactions contemplated hereby and by the
Notes. The Company will pay, and will save you and each other holder harmless
from, all claims in respect of any fees, costs or expenses if any, of brokers
and finders (other than those retained by you).

     15.2 Survival

     The obligations of the Company under this Section 15 will survive the
payment or transfer of any Note, the enforcement, amendment or waiver of any
provision of this Agreement or the Notes, and the termination of this Agreement.

16.   SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT

     All representations and warranties contained herein shall survive the
execution and delivery of this Agreement and the Notes, the purchase or transfer
by you of any Note or portion thereof or interest therein and the payment of any
Note (but not the payment in full of all of the Notes), and may be relied upon
by any subsequent holder of a Note, regardless of any investigation made at any
time by or on behalf of you or any other holder. All statements contained in any
certificate or other instrument delivered by or on behalf of the Company
pursuant to this Agreement shall be deemed representations and warranties of the
Company under this Agreement. Subject to the preceding sentence, this Agreement
and the Notes embody the entire agreement and understanding between you and the
Company and supersede all prior agreements and understandings relating to the
subject matter hereof.

17.  AMENDMENT AND WAIVER

     17.1 Requirements

     This Agreement and the Notes may be amended, and the observance of any term
hereof or of the Notes may be waived (either retroactively or prospectively),
with (and only with) the written consent of the Company and the Required
Holders, except that (a) no amendment or waiver of any of the provisions of
Section 1 to Section 6, inclusive, or Section 21, or any defined term as it is
used therein, will be effective as to you unless consented to by you in writing,
and (b) no such amendment or waiver may, without the written consent of the
holder of each Note at the time outstanding affected thereby, (i) subject to the
provisions of Section 12 relating to acceleration or rescission, change the
amount or time of any prepayment or payment of principal of, or reduce the rate
or change the time of payment or method of computation of interest or of the
Make-Whole Amount on, the Notes, (ii) change the percentage of the principal
amount of the Notes the holders of which are required to consent to any such
amendment or waiver, or (iii) amend any of Sections 8, 11(a), 11(b), 12, 17 or
20.



     17.2 Solicitation of Holders

          (a) Solicitation. The Company will provide each holder (irrespective
     of the amount of Notes then owned by it) with sufficient information,
     sufficiently far in advance of the date a decision is required, to enable
     such holder to make an informed and considered decision with respect to any
     proposed amendment, waiver or consent in respect of any of the provisions
     hereof or of the Notes. The Company will deliver executed or true and
     correct copies of each amendment, waiver or consent effected pursuant to
     the provisions of this Section 17 to each holder promptly following the
     date on which it is executed and delivered by, or receives the consent or
     approval of, the requisite holders.

          (b) Payment. The Company will not directly or indirectly pay or cause
     to be paid any remuneration, whether by way of supplemental or additional
     interest, fee or otherwise, or grant any security, to any holder as
     consideration for or as an inducement to the entering into by any holder of
     any waiver or amendment of any of the terms and provisions hereof unless
     such remuneration is concurrently paid, or security is concurrently
     granted, on the same terms, ratably to each holder then outstanding even if
     such holder did not consent to such waiver or amendment.

          (c) Scope of Consent. Any consent made pursuant to this Section 17.2
     by a holder of Notes that has transferred or has agreed to transfer its
     Notes to the Company, any Subsidiary or any Affiliate and has provided or
     has agreed to provide such written consent as a condition to such transfer
     shall be void and of no force and effect except solely as to such holder,
     and any amendments effected or waivers granted or to be effected or granted
     that would not have been or would not be so effected or granted but for
     such consent (and the consents of all other holders of Notes that were
     acquired under the same or similar conditions) shall be void and of no
     force and effect, retroactive to the date such amendment or waiver
     initially took or takes effect, except solely as to such holder.

     17.3 Binding Effect, etc.

     Any amendment or waiver consented to as provided in this Section 17 applies
equally to all holders and is binding upon them and upon each future holder of
any Notes and upon the Company without regard to whether such Note has been
marked to indicate such amendment or waiver. No such amendment or waiver will
extend to or affect any obligation, covenant, agreement, Default or Event of
Default not expressly amended or waived or impair any right consequent thereon.
No course of dealing between the Company and the holder of any Note nor any
delay in exercising any rights hereunder or under any Note shall operate as a
waiver of any rights of any holder of such Note. As used herein, the term "this
Agreement" and references thereto shall mean this Agreement as it may from time
to time be amended or supplemented.



     17.4 Notes held by Company, etc.

     Solely for the purpose of determining whether the holders of the requisite
percentage of the aggregate principal amount of Notes then outstanding have
approved or consented to any amendment, waiver or consent to be given under this
Agreement or the Notes, or have directed the taking of any action provided
herein or in the Notes to be taken upon the direction of the holders of a
specified percentage of the aggregate principal amount of Notes then
outstanding, Notes directly or indirectly owned by the Company, any Wholly-Owned
Restricted Subsidiary or any of the Company's Affiliates shall be deemed not to
be outstanding.

18.  NOTICES

     All notices and communications provided for hereunder shall be in writing
and sent (a) by telecopy if the sender on the same day sends a confirming copy
of such notice by a recognized overnight delivery service (charges prepaid), or
(b) by registered or certified mail with return receipt requested (postage
prepaid), or (c) by a recognized overnight delivery service (with charges
prepaid). Any such notice must be sent:

          (i) if to you or your nominee, to you or it at the address specified
     for such communications in Schedule A, or at such other address as you or
     it shall have specified to the Company in writing,

          (ii) if to any other holder, to such holder at such address as such
     other holder shall have specified to the Company in writing, or

          (iii) if to the Company, to the Company at its address set forth at
     the beginning hereof to the attention of the Company's Chief Financial
     Officer, or at such other address as the Company shall have specified to
     each of the holders in writing.

Notices under this Section 18 will be deemed given only when actually received.

19.  REPRODUCTION OF DOCUMENTS

     This Agreement and all documents relating thereto, including, without
limitation, (a) consents, waivers and modifications that may hereafter be
executed, (b) documents received by you at the Closings (except the Notes
themselves), and (c) financial statements, certificates and other information
previously or hereafter furnished to you, may be reproduced by you by any
photographic, photostatic, microfilm, microcard, miniature photographic or other
similar process and you may destroy any original document so reproduced. The
Company agrees and stipulates that, to the extent permitted by applicable law,
any such reproduction shall be admissible in evidence as the original itself in
any judicial or administrative proceeding (whether or not the original is in
existence and whether or not such reproduction was made by you in the regular
course of business) and any enlargement, facsimile or further reproduction of
such reproduction shall likewise be admissible in evidence. This Section 19
shall not prohibit the Company or any other holder from contesting any such
reproduction to the same extent that it could contest the original, or from
introducing evidence to demonstrate the inaccuracy of any such reproduction.



20.  CONFIDENTIAL INFORMATION

     For the purposes of this Section 20, "Confidential Information" means
information delivered to you by or on behalf of the Company or any Subsidiary in
connection with the transactions contemplated by or otherwise pursuant to this
Agreement that is proprietary in nature and that was clearly marked or labeled
or otherwise adequately identified when received by you as being confidential
information of the Company or such Subsidiary, provided that such term does not
include information that (a) was publicly known or otherwise known to you prior
to the time of such disclosure, (b) subsequently becomes publicly known through
no act or omission by you or any Person acting on your behalf, (c) otherwise
becomes known to you other than through disclosure by the Company or any
Subsidiary or (d) constitutes financial statements delivered to you under
Section 7.1 that are otherwise publicly available. You will maintain the
confidentiality of such Confidential Information in accordance with procedures
adopted by you in good faith to protect confidential information of third
parties delivered to you and will use such Confidential Information only for the
purposes of evaluating and administering your investment in the Notes, provided
that you may deliver or disclose Confidential Information to

          (i)  your directors, officers, employees, agents, attorneys and
     affiliates (to the extent such disclosure reasonably relates to the
     administration of the investment represented by your Notes),

          (ii) your financial advisors and other professional advisors who agree
     to hold confidential the Confidential Information substantially in
     accordance with the terms of this Section 20,

          (iii) any other holder,

          (iv) any Institutional Investor to which you sell or offer to sell
     such Note or any part thereof or any participation therein (if such Person
     has agreed in writing prior to its receipt of such Confidential Information
     to be bound by the provisions of this Section 20),

          (v) any Institutional Investor from which you offer to purchase any
     Security of the Company (if such Person has agreed in writing prior to its
     receipt of such Confidential Information to be bound by the provisions of
     this Section 20),

          (vi) any federal or state  regulatory  authority  having  jurisdiction
     over you,

          (vii) the National Association of Insurance Commissioners or any
     similar organization, or any nationally recognized rating agency that
     requires access to information about your investment portfolio, or

          (viii) any other Person to which such delivery or disclosure may be
     necessary or appropriate (w) to effect compliance with any law, rule,
     regulation or order applicable to you, (x) in response to any subpoena or
     other legal process, (y) in connection with any litigation to which you are



     a party or (z) if an Event of Default has occurred and is continuing, to
     the extent you may reasonably determine such delivery and disclosure to be
     necessary or appropriate in the enforcement or for the protection of the
     rights and remedies under your Notes and this Agreement.

Each holder, by its acceptance of a Note, will be deemed to have agreed to be
bound by and to be entitled to the benefits of this Section 20 as though it were
a party to this Agreement.

21.  SUBSTITUTION OF PURCHASER

     You shall have the right to substitute any one of your Affiliates as the
purchaser of the Notes that you have agreed to purchase hereunder, by written
notice to the Company, which notice shall be signed by both you and such
Affiliate, shall contain such Affiliate's agreement to be bound by this
Agreement and shall contain a confirmation by such Affiliate of the accuracy
with respect to it of the representations set forth in Section 6. Upon receipt
of such notice, wherever the word "you" is used in this Agreement (other than in
this Section 21), such word shall be deemed to refer to such Affiliate in lieu
of you. In the event that such Affiliate is so substituted as a purchaser
hereunder and such Affiliate thereafter transfers to you all of the Notes then
held by such Affiliate, upon receipt by the Company of notice of such transfer,
wherever the word "you" is used in this Agreement (other than in this Section
21), such word shall no longer be deemed to refer to such Affiliate, but shall
refer to you, and you shall have all the rights of an original holder under this
Agreement.

22.  MISCELLANEOUS


     22.1 Successors and Assigns

     All covenants and other agreements contained in this Agreement by or on
behalf of any of the parties hereto bind and inure to the benefit of their
respective successors and permitted assigns (including, without limitation, any
subsequent holder of a Note) whether so expressed or not.

     22.2 Payments Due on Non-Business Days

     If any payment due on, or with respect to, any Note shall fall due on a day
other than a Business Day, then such payment shall be made on the first (1st)
Business Day following the day on which such payment shall have so fallen due,
provided that if all or any portion of such payment shall consist of a payment
of interest, for purposes of calculating such interest, such payment shall be
deemed to have been originally due on such first (1st) following Business Day,
such interest shall accrue and be payable to (but not including) the actual date
of payment and the amount of the next succeeding interest payment shall be
adjusted accordingly.

     22.3 Severability

     Any provision of this Agreement that is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall (to the full extent permitted by law) not invalidate or
render unenforceable such provision in any other jurisdiction.



     22.4 Construction

     Each covenant contained herein shall be construed (absent express provision
to the contrary) as being independent of each other covenant contained herein,
so that compliance with any one covenant shall not (absent such an express
contrary provision) be deemed to excuse compliance with any other covenant.
Where any provision herein refers to action to be taken by any Person, or which
such Person is prohibited from taking, such provision shall be applicable
whether such action is taken directly or indirectly by such Person.

     22.5 Counterparts

     This Agreement may be executed in any number of counterparts, each of which
shall be an original but all of which together shall constitute one instrument.
Each counterpart may consist of a number of copies hereof, each signed by less
than all, but together signed by all, of the parties hereto.

     22.6 Governing Law

     THIS AGREEMENT SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, AND THE
RIGHTS OF THE PARTIES SHALL BE GOVERNED BY, THE LAW OF THE STATE OF NEW YORK
EXCLUDING CHOICE-OF-LAW PRINCIPLES OF THE LAW OF SUCH STATE THAT WOULD REQUIRE
THE APPLICATION OF THE LAWS OF A JURISDICTION OTHER THAN SUCH STATE.

     22.7 Consent to Jurisdiction; Appointment of Agent

          (a)  Consent to Jurisdiction. THE COMPANY HEREBY IRREVOCABLY AND
     UNCONDITIONALLY AGREES THAT ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF
     OR RELATING TO THIS AGREEMENT OR THE NOTES, OR ANY ACTION OR PROCEEDING TO
     EXECUTE OR OTHERWISE ENFORCE ANY JUDGMENT IN RESPECT OF ANY BREACH
     HEREUNDER OR THEREUNDER, BROUGHT BY ANY HOLDER OF NOTES AGAINST THE COMPANY
     OR ANY OF ITS PROPERTY, MAY BE BROUGHT BY SUCH HOLDER OF NOTES IN ANY
     FEDERAL DISTRICT COURT LOCATED IN NEW YORK CITY, NEW YORK OR ANY NEW YORK
     STATE COURT SITTING IN NEW YORK CITY, NEW YORK, AS SUCH HOLDER OF NOTES MAY
     IN ITS SOLE DISCRETION ELECT, AND BY THE EXECUTION AND DELIVERY OF THIS
     AGREEMENT, THE COMPANY IRREVOCABLY AND UNCONDITIONALLY SUBMITS TO THE
     NON-EXCLUSIVE IN PERSONAM JURISDICTION OF EACH SUCH COURT, AND THE COMPANY
     IRREVOCABLY WAIVES AND AGREES NOT TO ASSERT IN ANY PROCEEDING BEFORE ANY
     TRIBUNAL, BY WAY OF MOTION, AS A DEFENSE OR OTHERWISE, ANY CLAIM THAT IT IS
     NOT SUBJECT TO THE IN PERSONAM JURISDICTION OF ANY SUCH COURT. IN ADDITION,
     THE COMPANY HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
     LAW, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE



     IN ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS
     GUARANTY BROUGHT IN ANY SUCH COURT, AND HEREBY IRREVOCABLY WAIVES ANY CLAIM
     THAT ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN
     BROUGHT IN AN INCONVENIENT FORUM. NOTHING HEREIN SHALL IN ANY WAY BE DEEMED
     TO LIMIT THE ABILITY OR RIGHT OF ANY HOLDER OF NOTES TO OBTAIN JURISDICTION
     OVER THE COMPANY IN SUCH OTHER JURISDICTION AS MAY BE PERMITTED BY
     APPLICABLE LAW.

          (b) Agent for Service of Process. THE COMPANY HEREBY IRREVOCABLY AND
     UNCONDITIONALLY AGREES THAT PROCESS SERVED EITHER PERSONALLY OR BY
     REGISTERED MAIL SHALL CONSTITUTE, TO THE EXTENT PERMITTED BY LAW, ADEQUATE
     SERVICE OF PROCESS IN ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR
     RELATING TO THIS AGREEMENT OR THE NOTES, OR ANY ACTION OR PROCEEDING TO
     EXECUTE OR OTHERWISE ENFORCE ANY JUDGMENT IN RESPECT OF ANY BREACH
     HEREUNDER OR THEREUNDER, BROUGHT BY ANY HOLDER OF NOTES AGAINST THE COMPANY
     OR ANY OF ITS PROPERTY. RECEIPT OF PROCESS SO SERVED SHALL BE CONCLUSIVELY
     PRESUMED AS EVIDENCED BY A DELIVERY RECEIPT FURNISHED BY THE UNITED STATES
     POSTAL SERVICE OR ANY COMMERCIAL DELIVERY SERVICE. WITHOUT LIMITING THE
     FOREGOING, THE COMPANY HEREBY APPOINTS, IN THE CASE OF ANY SUCH ACTION OR
     PROCEEDING BROUGHT IN THE COURTS OF OR IN THE STATE OF NEW YORK:

                              CT CORPORATION SYSTEM
                                  1633 BROADWAY
                            NEW YORK, NEW YORK 10019

     TO RECEIVE, FOR IT AND ON ITS BEHALF, SERVICE OF PROCESS. THE COMPANY SHALL
     AT ALL TIMES MAINTAIN AN AGENT FOR SERVICE OF PROCESS IN NEW YORK CITY, NEW
     YORK AND MAY FROM TIME TO TIME APPOINT SUCCEEDING AGENTS FOR SERVICE OF
     PROCESS BY NOTIFYING EACH HOLDER OF NOTES OF SUCH APPOINTMENT, WHICH AGENTS
     SHALL BE ATTORNEYS, OFFICERS OR DIRECTORS OF THE COMPANY, OR CORPORATIONS
     WHICH IN THE ORDINARY COURSE OF BUSINESS ACT AS AGENTS FOR SERVICE OF
     PROCESS. NOTHING HEREIN SHALL IN ANY WAY BE DEEMED TO LIMIT THE ABILITY OR
     RIGHT OF ANY HOLDER OF NOTES TO SERVE ANY WRITS, PROCESS OR SUMMONSES IN
     ANY MANNER PERMITTED BY APPLICABLE LAW.

     22.8 Defeasance

          (a) Option of Company. Anything to the contrary contained herein
     notwithstanding, the Company may, in its sole discretion and at any time
     upon not less than thirty (30) days' prior written notice to all holders,
     elect to establish a trust (the "Trust"), solely in favor of all holders of
     the Notes then outstanding, and irrevocably and absolutely assign,
     transfer, and convey to, and deposit into, said Trust an amount of United
     States Governmental Securities having interest and principal payments
     sufficient to pay in full all remaining principal and interest payments
     and, if any principal is to be repaid on a date other than the date
     scheduled therefor in Section 8.1, together with the Make-Whole Amount, if
     any, as the same shall fall due, in respect of all Notes then outstanding.



          (b) Discharge. Provided that

               (i) the Trust, the trustee thereof, and the terms and conditions
          (as well as the form and substance) of the indenture whereby the Trust
          shall have been established shall be reasonably satisfactory to the
          Required Holders,

               (ii) the purchase price of the United States Governmental
          Securities to be deposited into the Trust shall have been fully paid
          by the Company, and such United States Governmental Securities shall
          have been so deposited into the Trust (and each holder shall have
          received written verification thereof by the trustee of the Trust) and
          shall, as so deposited, be unencumbered by any Lien and sufficient to
          pay all principal, interest and Make-Whole Amount, if any, to fall due
          on the Notes then outstanding as provided in Section 22.8(a) (and each
          holder shall have received written verification of such sufficiency by
          the independent certified public accountants of recognized national
          standing selected by the Company),

               (iii) the Company shall have (A) paid in full all fees, costs and
          expenses of the trustee of the Trust and of all holders incurred in
          connection with the preparation of the trust indenture and the
          establishment of the Trust, including, without limitation, all
          reasonable attorneys' fees and disbursements, and (B) prepaid in full
          any and all fees, costs and expenses of the trustee of the Trust for
          the entire term of the Trust (and the holders of the Notes shall have
          received written confirmation from the trustee confirming its receipt
          of the payments required to be made to it pursuant to this clause
          (iii)),

               (iv) the Company shall have no continuing legal or equitable
          interest in the Trust or the United States Governmental Securities
          deposited into the Trust (other than a reversionary interest in any
          such United States Governmental Securities or the proceeds therefrom,
          remaining after the full, final and indefeasible payment of the
          principal amount of the Notes and all interest and Make-Whole Amount,
          if any, thereon) and shall have no right to direct or instruct the
          trustee of the Trust, or to remove such trustee, or otherwise to
          require such trustee to take any action with respect to such United
          States Governmental Securities or otherwise,

               (v) no Event of Default  shall have occurred and be continuing at
          the time of such deposit,

               (vi) the Company shall have delivered the written notice referred
          to in Section 22.8(a) hereof to the holders and a legal opinion of
          Gardere Wynne Sewell & Riggs, L.L.P. or other independent counsel to
          the Company, reasonably satisfactory to the Required Holders stating,
          among other things which the Required Holders may reasonably request,
          that (A) the Trust is validly created and duly constituted and that
          the sole beneficiaries thereof are the holders, (B) the United States
          Governmental Securities deposited therein were validly contributed to
          the Trust and constitute a legal and valid res of the Trust, (C) the
          Company's actions in creating the Trust and contributing the United



          States Governmental Securities thereto were duly authorized and valid,
          (D) the Company, as the settlor of the Trust, has no right, title or
          interest in and to the Trust or the res thereof (other than a
          reversionary interest in any United States Governmental Securities, or
          the proceeds thereof, remaining after the full, final and indefeasible
          payment of the principal amount of the Notes and all interest and
          Make-Whole Amount, if any, thereon) and has no power of direction, or
          right of removal, with respect to the trustee of the Trust, (E) if any
          of the events described in clause (g) or clause (h) of Section 11 were
          to occur, the Trust and the res thereof would not be part of the
          estate of the Company and (F) the creation of the Trust and the
          depositing of the United States Governmental Securities therein shall
          not, for purposes of the Code with respect to any holder, result in a
          taxable event whereby (I) such holder may become liable to pay a tax
          on any gain deemed to have arisen with respect to such transaction or
          (II) such holder shall have been deemed to have suffered a loss with
          respect to such transaction,

               (vii) all principal, interest costs, expenses and other sums due
          and payable to the holders under the this Agreement, the Other
          Agreements and the Notes on the date the Trust is created shall have
          been paid in full, and

               (viii) either (A) the Company shall have delivered to the holders
          an opinion of independent certified public accountants of recognized
          national standing selected by the Company, reasonably satisfactory to
          the Required Holders, or (B) at the option of the Company at its
          expense (provided that the Company shall have the right to negotiate
          with such accountants regarding the cost of furnishing such opinion),
          the holders shall have received an opinion of independent certified
          public accountants of recognized national standing, reasonably
          satisfactory to the Required Holders, stating that under GAAP the
          creation of the Trust and the depositing of the United States
          Governmental Securities therein shall not result, with respect to any
          holder, in an exchange of the Note or Notes of such holder for all or
          part of such United States Governmental Securities which exchange
          would result in a gain or loss being realized by such holder under
          GAAP in respect of such transaction, then, and in that case, all
          obligations of the Company under this Agreement, the Other Agreements
          and the Notes shall be discharged; provided, however, if the
          contribution to the Trust of any United States Governmental Securities
          is invalidated, declared to be fraudulent or preferential, set aside,
          or if any such United States Governmental Securities are required to
          be returned or redelivered to the Company, or any custodian, trustee,
          receiver or any other Person under any bankruptcy act, state or
          federal law, common law or equitable cause, then, to the extent of
          such invalidation, return or redelivery, the obligations under this
          Agreement, the Other Agreements and the Notes (less any payments,
          which shall not have been themselves invalidated, returned or
          redelivered, made thereon from or in respect of the United States
          Governmental Securities so invalidated, returned or redelivered) shall
          be revived and restored.



     22.9 GAAP.

     Where the character or amount of any asset or liability or item of income
or expense, or any consolidation or other accounting computation is required to
be made for any purpose hereunder, it shall be done in accordance with GAAP as
in effect on the date of, or at the end of the period covered by, the financial
statements from which such asset, liability, item of income, or item of expense,
is derived, or, in the case of any such computation, as in effect on the date as
of which such computation is required to be determined, provided, that if any
term defined herein includes or excludes amounts, items or concepts that would
not be included in or excluded from such term if such term was defined with
reference solely to generally accepted accounting principles, such term will be
deemed to include or exclude such amounts, items or concepts as set forth
herein.

     22.10 Usury.

     It is the intention of the parties hereto to comply with all applicable
usury laws; accordingly, it is agreed that notwithstanding any provision to the
contrary herein or in the Notes, or in any of the documents securing payment
thereof or otherwise relating hereto, no such provision shall require the
payment or permit the collection of interest in excess of the highest rate
allowed by applicable law (the "Maximum Rate"). If any excess of interest in
such respect is provided for, or shall be adjudicated to be so provided for,
herein or in the Notes or in any of the documents securing payment thereof or
otherwise relating hereto, then in such event

          (a) the provisions of this Section 22.10 shall govern and control,

          (b) neither the Company, endorsers or Restricted Subsidiaries, nor
     their heirs, legal representatives, successors or assigns nor any other
     party liable for the payment on the Notes, shall be obligated to pay the
     amount of such interest to the extent that it is in excess of the Maximum
     Rate,

          (c) any such excess with respect to any such Note which may have been
     collected shall, at the election of the holder of such Note, be either
     applied as a credit against the then unpaid principal amount on such Note
     or refunded to the Company, and

          (d) the provisions hereof and of the Notes and any documents securing
     payment thereof shall be automatically reformed so that the effective rate
     of interest shall be reduced to the Maximum Rate. For the purpose of
     determining the Maximum Rate, all interest payments with respect hereto
     shall be amortized, prorated and spread throughout the full term of the
     Notes so that the effective rate of interest thereunder is uniform
     throughout the term thereof.

                       [Next page is the signature page.]



     If you are in agreement with the foregoing, please sign the form of
agreement on the accompanying counterpart of this Agreement and return it to the
Company, whereupon the foregoing shall become a binding agreement between you
and the Company.

                                   Very truly yours,

                                   SEITEL, INC.


                                   By   /s/ Debra D. Valice
                                        ---------------------------------------

                                        Name:  Debra D. Valice

                                        Title:  Senior Vice President-Finance
                                                and Chief Financial Officer


The foregoing is hereby agreed
to as of the date thereof.

PRINCIPAL MUTUAL LIFE INSURANCE COMPANY

By   /s/ Warren Shank
     ----------------------------------
   Name:  Warren Shank
  Title:  Counsel

By   /s/ Clint Woods
     ----------------------------------
   Name:  Clint Woods
  Title:  Counsel


MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY

By   /s/ Richard C. Morrison
     ----------------------------------
   Name:  Richard C. Morrison
  Title:  Vice President


JOHN ALDEN LIFE INSURANCE

By   /s/ Michael E. Halligan
     ----------------------------------
   Name:  Michael E. Halligan
  Title:  Vice President


THE MUTUAL LIFE INSURANCE COMPANY OF NEW YORK

By   /s/ Peter W. Oliver
     ----------------------------------
   Name:  Peter W. Oliver
  Title:  Managing Director


MONY LIFE INSURANCE COMPANY OF AMERICA

By   /s/ Peter W. Oliver
     ----------------------------------
   Name:  Peter W. Oliver
  Title:  Authorized Agent


UNITED OF OMAHA LIFE INSURANCE COMPANY

By   /s/ Victor N. Hanson
     ----------------------------------
   Name:  Victor N. Hanson
  Title:  First Vice President


PAN-AMERICAN LIFE INSURANCE COMPANY

By   /s/ F. Anderson Stone
     ----------------------------------
   Name:  F. Anderson Stone
  Title:  Vice President, Corporate Securities



                                  Schedule A-15

                                   SCHEDULE A
                       INFORMATION RELATING TO PURCHASERS

================================================================================
Purchaser Name                          PRINCIPAL MUTUAL LIFE INSURANCE COMPANY
================================================================================
Registered Name                         Principal Mutual Life Insurance Company
================================================================================
Note Registration Number; Principal     RA-1; $21,000,000
Amount
================================================================================
Method of Payment                       Federal Funds Wire Transfer
================================================================================
Account Information                     Norwest Bank Iowa, N.A.
                                        7th and Walnut Street
                                        Des Moines, IA 50304

                                        For credit to Principal Mutual Life
                                             Insurance Company
                                        General Account No. 014752
                                        Reference: Bond No. 1-B-60639
================================================================================
Accompanying                            Information Seitel, Inc.; 7.17% Series A
                                        Senior Notes due December 30, 2001 PPN:
                                        816074 A* 9; [due date and application
                                        (as among principal, Make-Whole Amount
                                        and interest) of the payment being made;
                                        [contact name at Company] and [telephone
                                        number]
================================================================================
Address/Fax # for Payment Notices       Principal Mutual Life Insurance Company
                                        711 High Street Des Moines, IA
                                        50392-0960
                                        ATTN: Investment Department - Securities
                                              Division
                                        Fax: 515-248-2643
================================================================================
Address/Fax # for Other Notices         Principal Mutual Life Insurance Company
                                        711 High Street Des Moines, IA 50392
                                        ATTN: Investment Department - Securities
                                              Division
                                        Fax: 515-248-2490
================================================================================
Other Instructions (if any)             2 signature lines required
================================================================================
Instructions re Delivery of Notes       Law Department of Purchaser
================================================================================
Tax Identification Number               42-0127290
================================================================================



================================================================================
Purchaser Name                          PRINCIPAL MUTUAL LIFE INSURANCE COMPANY
================================================================================
Registered Name                         Principal Mutual Life Insurance Company
================================================================================
Note Registration Number; Principal     RA-2; $4,000,000
Amount
================================================================================
Method of Payment                       Federal Funds Wire Transfer
================================================================================
Account Information                     Norwest Bank Iowa, N.A.
                                        7th and Walnut Street
                                        Des Moines, IA 50304

                                        For credit to Principal Mutual Life
                                             Insurance Company
                                        Separate Account No. 032395
                                        Reference: Bond No. 16-B-60639
================================================================================
Accompanying                            Information Seitel, Inc.; 7.17% Series A
                                        Senior Notes due December 30, 2001 PPN:
                                        816074 A* 9; [due date and application
                                        (as among principal, Make-Whole Amount
                                        and interest) of the payment being made;
                                        [contact name at Company] and [telephone
                                        number]
================================================================================
Address/Fax # for Payment Notices       Principal Mutual Life Insurance Company
                                        711 High Street
                                        Des Moines, IA 50392-0960
                                        ATTN: Investment - Accounting & Treasury
                                              - Securities
                                        Fax: 515-248-2643
================================================================================
Address/Fax # for Other Notices         Principal Mutual Life Insurance Company
                                        711 High Street
                                        Des Moines, IA 50392
                                        ATTN: Investment Department - Securities
                                              Division
                                        Fax: 515-248-2490
================================================================================
Other Instructions (if any)             2 signature lines required
================================================================================
Instructions re Delivery of Notes       Law Department of Purchaser
================================================================================
Tax Identification Number               42-0127290
================================================================================



================================================================================
Purchaser Name                          MASSACHUSETTS MUTUAL LIFE INSURANCE
                                             COMPANY
================================================================================
Registered Name                         Massachusetts Mutual Life Insurance
                                             Company
================================================================================
Note Registration Number; Principal     RB-1; $4,000,000
Amount                                  RC-1; $4,000,000
================================================================================
Method of Payment                       Federal Funds Wire Transfer
================================================================================
Account Information                     Chase Manhattan Bank, N.A.
                                        4 Chase MetroTech Center
                                        New York, NY 10081
                                        ABA No. 021000021

                         For MassMutual IFM Traditional
                             Account No. 910-1388131
================================================================================
Accompanying Information                Seitel, Inc.; 7.17% Series B Senior
                                             Notes due December 30, 2002
                                        PPN: 816074 A@ 7;

                                        Seitel, Inc.; Series C Senior Notes due
                                             December 30, 2002
                                        PPN:  816074 A# 5;

                                        [due date and application (as among
                                        principal, Make-Whole Amount and
                                        interest) of the payment being made;
                                        [contact name at Company] and [telephone
                                        number]
================================================================================
Address/Fax # for Payment Notices       Massachusetts Mutual Life Insurance
                                             Company
                                        1295 State Street
                                        Springfield, MA  01111
                                        ATTN: Securities Custody and Collection
                                              Department

                                        With telephone advice of payment to:
                                        Securities Custody and Collection
                                             Department at 413-744-3878
================================================================================
Address/Fax # for Other Notices         Massachusetts Mutual Life Insurance
                                             Company
                                        1295 State Street
                                        Springfield, MA  01111
                                        ATTN: Securities Investment Division,
                                              Richard C. Morrison,
                                              Vice President

                                        Telephone:   413-788-8411
                                        Fax:   413-744-6127
================================================================================
Other Instructions (if any)             [None]
================================================================================
Instructions re Delivery of Notes       Law Department of Purchaser
================================================================================
Tax Identification Number               04-1590850
================================================================================



================================================================================
Purchaser Name                          MASSACHUSETTS MUTUAL LIFE INSURANCE
                                             COMPANY
================================================================================
Registered Name                         Massachusetts Mutual Life Insurance
                                             Company
================================================================================
Note Registration Number; Principal     RB-2; $3,000,000
Amount                                  RC-2; $3,000,000
================================================================================
Method of Payment                       Federal Funds Wire Transfer
================================================================================
Account Information                     Chase Manhattan Bank, N.A.
                                        4 Chase MetroTech Center
                                        New York, NY 10081
                                        ABA No. 021000021

                       For MassMutual IFM Non-Traditional
                             Account No. 910-2509073
================================================================================
Accompanying Information                Seitel, Inc.; 7.17% Series B Senior
                                             Notes due December 30, 2002
                                        PPN: 816074 A@ 7;

                                        Seitel, Inc.; Series C Senior Notes due
                                             December 30, 2002
                                        PPN:  816074 A# 5;

                                        [due date and application (as among
                                        principal, Make-Whole Amount and
                                        interest) of the payment being made;
                                        [contact name at Company] and [telephone
                                        number]
================================================================================
Address/Fax # for Payment Notices       Massachusetts Mutual Life Insurance
                                             Company
                                        1295 State Street
                                        Springfield, MA  01111
                                        ATTN: Securities Custody and Collection
                                              Department

                                        With telephone advice of payment to:
                                        Securities Custody and Collection
                                             Department at 413-744-3878
================================================================================
Address/Fax # for Other Notices         Massachusetts Mutual Life Insurance
                                             Company
                                        1295 State Street
                                        Springfield, MA  01111
                                        ATTN: Securities Investment Division,
                                              Richard C. Morrison,
                                              Vice President

                                        Telephone:   413-788-8411
                                        Fax:   413-744-6127
================================================================================
Other Instructions (if any)             [None]
================================================================================
Instructions re Delivery of Notes       Law Department of Purchaser
================================================================================
Tax Identification Number               04-1590850
================================================================================



================================================================================
Purchaser Name                          MASSACHUSETTS MUTUAL LIFE INSURANCE
                                             COMPANY
================================================================================
Registered Name                         Massachusetts Mutual Life Insurance
                                             Company
================================================================================
Note Registration Number; Principal     RB-3; $3,000,000
Amount                                  RC-3; $3,000,000
================================================================================
Method of Payment                       Federal Funds Wire Transfer
================================================================================
Account Information                     Chase Manhattan Bank, N.A.
                                        4 Chase MetroTech Center
                                        New York, NY 10081
                                        ABA No. 021000021

                        For MassMutual Pension Management
                             Account No. 910-2594018
================================================================================
Accompanying Information                Seitel, Inc.; 7.17% Series B Senior
                                             Notes due December 30, 2002
                                        PPN: 816074 A@ 7;

                                        Seitel, Inc.; Series C Senior Notes due
                                             December 30, 2002
                                        PPN: 816074 A# 5;

                                        [due date and application (as among
                                        principal, Make-Whole Amount and
                                        interest) of the payment being made;
                                        [contact name at Company] and [telephone
                                        number]
================================================================================
Address/Fax # for Payment Notices       Massachusetts Mutual Life Insurance
                                             Company
                                        1295 State Street
                                        Springfield, MA  01111
                                        ATTN: Securities Custody and Collection
                                             Department

                                        With telephone advice of payment to:
                                        Securities Custody and Collection
                                             Department at 413-744-3878
================================================================================
Address/Fax # for Other Notices         Massachusetts Mutual Life Insurance
                                             Company
                                        1295 State Street
                                        Springfield, MA  01111
                                        ATTN: Securities Investment Division,
                                              Richard C. Morrison,
                                              Vice President

                                        Telephone:   413-788-8411
                                        Fax:   413-744-6127
================================================================================
Other Instructions (if any)             [None]
================================================================================
Instructions re Delivery of Notes       Law Department of Purchaser
================================================================================
Tax Identification Number               04-1590850
================================================================================



================================================================================
Purchaser Name                          JOHN ALDEN LIFE INSURANCE COMPANY
================================================================================
Registered Name                         Atwell & Co.
================================================================================
Note Registration Number; Principal     RB-4; $2,500,000
Amount
================================================================================
Method of Payment                       Federal Funds Wire Transfer
================================================================================
Account Information                     The Chase Manhattan Bank, N.A.
                                        ABA #021 000 021
                                        Chase Account No. 900-9-002206
                                        BBK: Chase Manhattan Bank, N.A.

                                        Account Name:   JALIC SPREAD PRODUCT
                                        Account No.:   89922410
================================================================================
Accompanying                            Information Seitel, Inc.; 7.17% Series B
                                        Senior Notes due December 30, 2002 PPN:
                                        816074 A@ 7; [due date and application
                                        (as among principal, Make-Whole Amount
                                        and interest) of the payment being made;
                                        [contact name at Company] and [telephone
                                        number]
================================================================================
Address/Fax # for Payment Notices       The Chase Manhattan Bank, N.A.
                                        770 Broadway
                                        New York, NY 10005-9598
                                        Attn:  Larry Seidel
                                        ABA #021 000 021
                                        Account Name:   JALIC SPREAD PRODUCT
                                        Account No.:   89922410
                                        Tax ID# 41-0999752
================================================================================
Address/Fax # for Other Notices         Investment Accounting
                                        John Alden Asset Management Company
                                        P.O. Box 020270 - 3rd Floor
                                        Miami, Florida 33102-0270
================================================================================
Other Instructions (if any)             Signature Block:

                        JOHN ALDEN LIFE INSURANCE COMPANY

                                        By
                            Name: Michael E. Halligan
                              Title: Vice President
================================================================================
Instructions re Delivery of Notes       The Chase Manhattan Bank, N.A.
                                        Securities Services & Trust Operations
                                        Two Chase Manhattan Plaza - Fourth Floor
                                             Securities Window
                                        New York, NY  10081

                         Reference: JALIC SPREAD PRODUCT
                         Reference: Account No. 89922410
                               Tax ID# 41-0999752
================================================================================
Tax Identification Number               ATWELL & CO.  13-6050547
================================================================================



================================================================================
Purchaser Name                          JOHN ALDEN LIFE INSURANCE COMPANY OF
                                             NEW YORK
================================================================================
Registered Name                         Atwell & Co.
================================================================================
Note Registration Number; Principal     RB-5; $2,500,000
Amount
================================================================================
Method of Payment                       Federal Funds Wire Transfer
================================================================================
Account Information                     The Chase Manhattan Bank, N.A.
                                        ABA #021 000 021
                                        Chase Account No. 900-9-002206
                                        BBK: Chase Manhattan Bank, N.A.

                                        Account Name:   JANY SPREAD PRODUCT
                                        Account No.:   89922403
================================================================================
Accompanying                            Information Seitel, Inc.; 7.17% Series B
                                        Senior Notes due December 30, 2002 PPN:
                                        816074 A@ 7; [due date and application
                                        (as among principal, Make-Whole Amount
                                        and interest) of the payment being made;
                                        [contact name at Company] and [telephone
                                        number]
================================================================================
Address/Fax # for Payment Notices       The Chase Manhattan Bank, N.A.
                                        770 Broadway
                                        New York, NY 10005-9598
                                        Attn:  Larry Seidel
                                        ABA #021 000 021
                                        Account Name:   JANY SPREAD PRODUCT
                                        Account No.:   89922403
                                        Tax ID# 13-6178234
================================================================================
Address/Fax # for Other Notices         Investment Accounting
                                        John Alden Asset Management Company
                                        P.O. Box 020270 - 3rd Floor
                                        Miami, Florida 33102-0270
================================================================================
Other Instructions (if any)             Signature Block:

                                        JOHN ALDEN LIFE INSURANCE COMPANY OF
                                             NEW YORK

                                        By
                            Name: Michael E. Halligan
                              Title: Vice President
================================================================================
Instructions re Delivery of Notes       The Chase Manhattan Bank, N.A.
                                        Securities Services & Trust Operations
                                        Two Chase Manhattan Plaza - Fourth Floor
                                             Securities Window
                                        New York, NY  10081

                                        Reference: JANY SPREAD PRODUCT
                                        Reference: Account No. 89922403
                                        Tax ID# 13-6178234
================================================================================
Tax Identification Number               ATWELL & CO.  13-6050547
================================================================================



================================================================================
Purchaser Name                          THE MUTUAL LIFE INSURANCE COMPANY OF
                                             NEW YORK
================================================================================
Registered Name                         The Mutual Life Insurance Company of
                                             New York
================================================================================
Note Registration Number; Principal     RB-6; $5,000,000
Amount
================================================================================
Method of Payment                       Federal Funds Wire Transfer
================================================================================
Account Information                     Chemical Bank
                                        ABA# 021000128

                                        For credit to:  The Mutual Life
                                                        Insurance Company of
                                                        New York's Security

                        Remittance Account No. 321-023803
================================================================================
Accompanying                            Information Seitel, Inc.; 7.17% Series B
                                        Senior Notes due December 30, 2002 PPN:
                                        816074 A@ 7; [due date and application
                                        (as among principal, Make-Whole Amount
                                        and interest) of the payment being made;
                                        [contact name at Company] and [telephone
                                        number]
================================================================================
Address/Fax # for Payment Notices       Telecopy Confirms and Notices:
                                                 (201) 907-6979
                                                 Attention: Securities Custody

                                        Mailing Confirms and Notices:
                                                  Glenpointe Marketing &
                                                  Operations Center - MONY
                                                  Glenpointe Center West
                                                  500 Frank W. Burr Blvd.
                                                  Teaneck, NJ 07666-6888
                                                  Attention: Securities Custody
================================================================================
Address/Fax # for Other Notices         The Mutual Life Insurance Company of
                                             New York
                                        1740 Broadway
                                        New York, NY 10019
                     Attention: MONY Capital Management Unit
                                Fax: 212-708-2491
================================================================================
Other Instructions (if any)             [None]
================================================================================
Instructions re Delivery of Notes       Law Department of Purchaser
================================================================================
Tax Identification Number               13-1632487
================================================================================



================================================================================
Purchaser Name                          THE MUTUAL LIFE INSURANCE COMPANY OF
                                             NEW YORK
================================================================================
Registered Name                         The Mutual Life Insurance Company of
                                             New York
================================================================================
Note Registration Number; Principal     RC-4; $5,000,000
Amount
================================================================================
Method of Payment                       Federal Funds Wire Transfer
================================================================================
Account Information                     Chemical Bank
                                        ABA# 021000128
                                        For credit to:  The Mutual Life
                                                        Insurance Company of
                                                        New York's Security
                        Remittance Account No. 321-023803
================================================================================
Accompanying                            Information Seitel, Inc.; Series C
                                        Senior Notes due December 30, 2002 PPN:
                                        816074 A# 5; [due date and application
                                        (as among principal, Make-Whole Amount
                                        and interest) of the payment being made;
                                        [contact name at Company] and [telephone
                                        number]
================================================================================
Address/Fax # for Payment Notices       Telecopy Confirms and Notices:
                                                 (201) 907-6979
                                                 Attention: Securities Custody

                                        Mailing Confirms and Notices:
                                                  Glenpointe Marketing &
                                                  Operations Center - MONY
                                                  Glenpointe Center West
                                                  500 Frank W. Burr Blvd.
                                                  Teaneck, NJ 07666-6888
                                                  Attention: Securities Custody
================================================================================
Address/Fax # for Other Notices         The Mutual Life Insurance Company of
                                             New York
                                        1740 Broadway
                                        New York, NY 10019
                     Attention: MONY Capital Management Unit
                                Fax: 212-708-2491
================================================================================
Other Instructions (if any)             [None]
================================================================================
Instructions re Delivery of Notes       Law Department of Purchaser
================================================================================
Tax Identification Number               13-1632487
================================================================================



================================================================================
Purchaser Name                          MONY LIFE INSURANCE COMPANY OF AMERICA
================================================================================
Registered Name                         MONY Life Insurance Company of America
================================================================================
Note Registration Number; Principal     RB-7; $2,500,000
Amount
================================================================================
Method of Payment                       Federal Funds Wire Transfer
================================================================================
Account Information                     Chemical Bank
                                        ABA# 021000128
                                        For credit to:  MONY Life Insurance
                                                        Company of America
                                        Account No. 323-161243
================================================================================
Accompanying                            Information Seitel, Inc.; 7.17% Series B
                                        Senior Notes due December 30, 2002 PPN:
                                        816074 A@ 7; [due date and application
                                        (as among principal, Make-Whole Amount
                                        and interest) of the payment being made;
                                        [contact name at Company] and [telephone
                                        number]
================================================================================
Address/Fax # for Payment Notices       Telecopy Confirms and Notices:
                                                 (201) 907-6979
                                                 Attention: Securities Custody

                                        Mailing Confirms and Notices:
                                                  Glenpointe Marketing &
                                                  Operations Center - MONY
                                                  Glenpointe Center West
                                                  500 Frank W. Burr Blvd.
                                                  Teaneck, NJ 07666-6888
                                                  Attention: Securities Custody
================================================================================
Address/Fax # for Other Notices         MONY Life Insurance Company of America
                                        c/o The Mutual Life Insurance Company of
                                             New York
                                        1740 Broadway
                                        New York, NY 10019
                     Attention: MONY Capital Management Unit
                                Fax: 212-708-2491
================================================================================
Other Instructions (if any)             [None]
================================================================================
Instructions re Delivery of Notes       Law Department of Purchaser
================================================================================
Tax Identification Number               86-0222062
================================================================================



================================================================================
Purchaser Name                          MONY LIFE INSURANCE COMPANY OF AMERICA
================================================================================
Registered Name                         MONY Life Insurance Company of America
================================================================================
Note Registration Number; Principal     RC-5; $2,500,000
Amount
================================================================================
Method of Payment                       Federal Funds Wire Transfer
================================================================================
Account Information                     Chemical Bank
                                        ABA# 021000128
                                        For credit to:  MONY Life Insurance
                                                        Company of America
                                        Account No.  323-161243
================================================================================
Accompanying                            Information Seitel, Inc.; Series C
                                        Senior Notes due December 30, 2002 PPN:
                                        816074 A# 5; [due date and application
                                        (as among principal, Make-Whole Amount
                                        and interest) of the payment being made;
                                        [contact name at Company] and [telephone
                                        number]
================================================================================
Address/Fax # for Payment Notices       Telecopy Confirms and Notices:
                                                  (201) 907-6979
                                                  Attention: Securities Custody

                                        Mailing Confirms and Notices:
                                                  Glenpointe Marketing &
                                                  Operations Center - MONY
                                                  Glenpointe Center West
                                                  500 Frank W. Burr Blvd.
                                                  Teaneck, NJ 07666-6888
                                                  Attention: Securities Custody
================================================================================
Address/Fax # for Other Notices         MONY Life Insurance Company of America
                                        c/o The Mutual Life Insurance Company of
                                             New York
                                             1740 Broadway
                                             New York, NY 10019
                     Attention: MONY Capital Management Unit
                                Fax: 212-708-2491
================================================================================
Other Instructions (if any)             [None]
================================================================================
Instructions re Delivery of Notes       Law Department of Purchaser
================================================================================
Tax Identification Number               86-0222062
================================================================================



================================================================================
Purchaser Name                          UNITED OF OMAHA LIFE INSURANCE COMPANY
================================================================================
Registered Name                         United of Omaha Life Insurance Company
================================================================================
Note Registration Number; Principal     RB-8; $3,500,000
Amount
================================================================================
Method of Payment                       Federal Funds Wire Transfer
================================================================================
Account Information                     FirsTier Bank - Omaha
                                        ABA #1040-0002-9
                                        17th & Farnam Streets
                                        Omaha, NE  68102

                                        For credit to United of Omaha Life
                                             Insurance Company
                                        Account #144-7-076
================================================================================
Accompanying                            Information Seitel, Inc.; 7.17% Series B
                                        Senior Notes due December 30, 2002 PPN:
                                        816074 A@ 7; [due date and application
                                        (as among principal, Make-Whole Amount
                                        and interest) of the payment being made;
                                        [contact name at Company] and [telephone
                                        number]
================================================================================
Address/Fax # for Payment Notices       United of Omaha Life Insurance Company
                                        Attention:  Investments / Securities
                                                    Accounting
                                        Mutual of Omaha Plaza
                                        Omaha, NE  68175
================================================================================
Address/Fax # for Other Notices         United of Omaha Life Insurance Company
                                        Attention: Investment Division
                                        Mutual of Omaha Plaza
                                        Omaha, NE  68175
================================================================================
Other Instructions (if any)             [None]
================================================================================
Instructions re Delivery of Notes       United of Omaha Life Insurance Company
                                        Attention:  Investments / Securities
                                                    Accounting
                                        Mutual of Omaha Plaza
                                        Omaha, NE  68175
================================================================================
Tax Identification Number               47-0322111
================================================================================



================================================================================
Purchaser Name                          UNITED OF OMAHA LIFE INSURANCE COMPANY
================================================================================
Registered Name                         United of Omaha Life Insurance Company
================================================================================
Note Registration Number; Principal     RC-6; $3,500,000
Amount
================================================================================
Method of Payment                       Federal Funds Wire Transfer
================================================================================
Account Information                     FirsTier Bank - Omaha
                                        ABA #1040-0002-9
                                        17th & Farnam Streets
                                        Omaha, NE  68102

                                        For credit to United of Omaha Life
                                             Insurance Company
                                        Account #144-7-076
================================================================================
Accompanying                            Information Seitel, Inc.; Series C
                                        Senior Notes due December 30, 2002 PPN:
                                        816074 A# 5; [due date and application
                                        (as among principal, Make-Whole Amount
                                        and interest) of the payment being made;
                                        [contact name at Company] and [telephone
                                        number]
================================================================================
Address/Fax # for Payment Notices       United of Omaha Life Insurance Company
                                        Attention:  Investments / Securities
                                                    Accounting
                                        Mutual of Omaha Plaza
                                        Omaha, NE  68175
================================================================================
Address/Fax # for Other Notices         United of Omaha Life Insurance Company
                                        Attention: Investment Division
                                        Mutual of Omaha Plaza
                                        Omaha, NE  68175
================================================================================
Other Instructions (if any)             [None]
================================================================================
Instructions re Delivery of Notes       United of Omaha Life Insurance Company
                                        Attention:  Investments / Securities
                                                    Accounting
                                        Mutual of Omaha Plaza
                                        Omaha, NE  68175
================================================================================
Tax Identification Number               47-0322111
================================================================================



================================================================================
Purchaser Name                          PAN-AMERICAN LIFE INSURANCE COMPANY
================================================================================
Registered Name                         Pan-American Life Insurance Company
================================================================================
Note Registration Number; Principal     RB-9; $1,500,000
Amount
================================================================================
Method of Payment                       Federal Funds Wire Transfer
================================================================================
Account Information                     First National Bank of Commerce
                                        210 Baronne Street
                                        New Orleans, LA  70112

                                        ABA No. 065-000-029

                                        For credit to Pan-American Life
                                             Insurance Company
                                        Account No. 1100-29496
================================================================================
Accompanying                            Information Seitel, Inc.; 7.17% Series B
                                        Senior Notes due December 30, 2002 PPN:
                                        816074 A@ 7; [due date and application
                                        (as among principal, Make-Whole Amount
                                        and interest) of the payment being made;
                                        [contact name at Company] and [telephone
                                        number]
================================================================================
Address/Fax # for Payment Notices       Pan-American Life Insurance Company
                                        Pan American Life Center
                                        601 Poydras Street
                                        New Orleans, LA  70130
                                        Attn:  Investment Department -
                                               28th Floor,
                                               Bond & Stock Accounting
================================================================================
Address/Fax # for Other Notices         Pan-American Life Insurance Company
                                        Pan American Life Center
                                        601 Poydras Street
                                        New Orleans, LA  70130
                                        Attn:  Investment Department -
                                               28th Floor,
                                               Fixed Income Securities
================================================================================
Other Instructions (if any)             [None]
================================================================================
Instructions re Delivery of Notes       Pan-American Life Insurance Company
                                        Pan American Life Center
                                        601 Poydras Street
                                        New Orleans, LA  70130
                                        Attn:  Marylyn Andree,
                                               Investment Department -
                                               28th Floor
================================================================================
Tax Identification Number               72-0281240
================================================================================



================================================================================
Purchaser Name                          PAN-AMERICAN LIFE INSURANCE COMPANY
================================================================================
Registered Name                         Pan-American Life Insurance Company
================================================================================
Note Registration Number; Principal     RC-7; $1,500,000
Amount
================================================================================
Method of Payment                       Federal Funds Wire Transfer
================================================================================
Account Information                     First National Bank of Commerce
                                        210 Baronne Street
                                        New Orleans, LA  70112

                                        ABA No. 065-000-029

                                        For credit to Pan-American Life
                                             Insurance Company
                                        Account No. 1100-29496
================================================================================
Accompanying                            Information Seitel, Inc.; Series C
                                        Senior Notes due December 30, 2002 PPN:
                                        816074 A# 5; [due date and application
                                        (as among principal, Make-Whole Amount
                                        and interest) of the payment being made;
                                        [contact name at Company] and [telephone
                                        number]
================================================================================
Address/Fax # for Payment Notices       Pan-American Life Insurance Company
                                        Pan American Life Center
                                        601 Poydras Street
                                        New Orleans, LA  70130
                                        Attn:  Investment Department -
                                               28th Floor,
                                               Bond & Stock Accounting
================================================================================
Address/Fax # for Other Notices         Pan-American Life Insurance Company
                                        Pan American Life Center
                                        601 Poydras Street
                                        New Orleans, LA  70130
                                        Attn:  Investment Department -
                                               28th Floor,
                                               Fixed Income Securities
================================================================================
Other Instructions (if any)             [None]
================================================================================
Instructions re Delivery of Notes       Pan-American Life Insurance Company
                                        Pan American Life Center
                                        601 Poydras Street
                                        New Orleans, LA  70130
                                        Attn:  Marylyn Andree,
                                               Investment Department -
                                               28th Floor
================================================================================
Tax Identification Number               72-0281240
================================================================================



                                   SCHEDULE B
                                  DEFINED TERMS

     As used herein, the following terms have the respective meanings set forth
below or set forth in the Section hereof following such term:

     Accredited Institution -- means any Person who is an "accredited investor"
within the meaning of such term set forth in Rule 501(a)(1), (2), (3) or (7)
under the Securities Act.

     Affiliate -- means, at any time,

          (a) with respect to any Person other than the Company, any other
     Person that at such time directly or indirectly through one or more
     intermediaries Controls, or is Controlled by, or is under common Control
     with, such Person, and

          (b) with respect to the Company, a Person (other than a Wholly-Owned
     Restricted Subsidiary),

               (i) that at such time directly or indirectly through one or more
          intermediaries Controls, or is Controlled by, or is under common
          Control with, the Company,

               (ii) that at such time beneficially owns or holds, directly or
          indirectly, ten percent (10%) or more of the Voting Stock of the
          Company, or

               (iii) ten percent (10%) or more of the Voting Stock of which is
          at such time beneficially owned or held by the Company or any one or
          more of the Subsidiaries.

As used in this definition, "Control" means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of a Person, whether through the ownership of voting Securities, by
contract or otherwise.

     Agreement -- is defined in Section 17.3.

     Board of Directors -- at any time means the board of directors of the
Company or any committee thereof which, in the instance, shall have the lawful
power to exercise the power and authority of such board of directors.

     Business Day -- means (a) for the purposes of Section 8.6 only, any day
other than a Saturday, a Sunday or a day on which commercial banks in New York,
New York are required or authorized to be closed, and (b) for the purposes of
any other provision of this Agreement, any day other than a Saturday, a Sunday
or a day on which commercial banks in Houston, Texas or New York, New York are
required or authorized to be closed.

     Capital Lease -- means a lease with respect to which the lessee is required
concurrently to recognize the acquisition of an asset and the incurrence of a
liability in accordance with GAAP.



     Capital Lease Obligation -- means, with respect to any Person and a Capital
Lease, the amount of the obligation of such Person as the lessee under such
Capital Lease which would, in accordance with GAAP, appear as a liability on a
balance sheet of such Person.

     Closing Date -- is defined in Section 3.2.

     Closings -- is defined in Section 3.2.

     Code -- means the Internal Revenue Code of 1986, as amended from time to
time, and the rules and regulations promulgated thereunder from time to time.

     Company -- is defined in the introductory paragraph of this Agreement.

     Confidential Information -- is defined in Section 20.

     Consolidated Debt -- means, as of any date of determination, the total of
all Debt of the Company and the Restricted Subsidiaries outstanding on such
date, after eliminating all offsetting debits and credits between the Company
and the Restricted Subsidiaries and all other items required to be eliminated in
the course of the preparation of consolidated financial statements of the
Company and the Restricted Subsidiaries in accordance with GAAP.

     Consolidated Interest Expense -- means, with respect to any period, the sum
(without duplication) of the following (in each case, eliminating all offsetting
debits and credits between the Company and the Restricted Subsidiaries and all
other items required to be eliminated in the course of the preparation of
consolidated financial statements of the Company and the Restricted Subsidiaries
in accordance with GAAP):

          (a) all interest in respect of Debt of the Company and the Restricted
     Subsidiaries (including imputed interest on Capital Lease Obligations)
     deducted in determining Consolidated Net Income for such period, and

          (b) all debt discount and expense amortized or required to be
     amortized in the determination of Consolidated Net Income for such period.

     Consolidated Net Income -- means, with reference to any period, the net
income (or loss) of the Company and the Restricted Subsidiaries for such period
(taken as a cumulative whole), as determined in accordance with GAAP, after
eliminating all offsetting debits and credits between the Company and the
Restricted Subsidiaries and all other items required to be eliminated in the
course of the preparation of consolidated financial statements of the Company
and the Restricted Subsidiaries in accordance with GAAP, provided that there
shall be excluded:

          (a) any gains resulting from any write-up of any assets (but not any
     loss resulting from any write-down of any assets),

          (b) the income (or loss) of any Person accrued prior to the date it
     becomes a Restricted Subsidiary or is merged into or consolidated with the
     Company or a Restricted Subsidiary, and the income (or loss) of any Person,
     substantially all of the assets of which have been acquired in any manner



     by the Company or any Restricted Subsidiary,  realized by such other Person
     prior to the date of acquisition,

          (c) in the case of a successor to the Company by consolidation or
     merger or as a transferee of its assets, any earnings of the successor
     corporation prior to such consolidation, merger or transfer of assets,

          (d) any aggregate net gain (but not any aggregate net loss) during
     such period arising from the sale, conversion, exchange or other
     disposition of capital assets (such term to include, without limitation,
     (i) all non-current assets and, without duplication, (ii) the following,
     whether or not current: all fixed assets, whether tangible or intangible,
     all inventory sold in conjunction with the disposition of fixed assets, and
     all securities),

          (e) any portion of such net income that cannot be freely converted
     into United States Dollars,

          (f) the income (or loss) of any Person (other than a Restricted
     Subsidiary) in which the Company or any Restricted Subsidiary has an
     ownership interest, except to the extent that any such income has been
     actually received by the Company or such Restricted Subsidiary in the form
     of cash dividends or similar cash distributions,

          (g) any gain arising from the acquisition of any security, or the
     extinguishment, under GAAP, of any Debt, of the Company or any Restricted
     Subsidiary,

          (h) any net income or gain or any net loss during such period from (i)
     any change in accounting principles in accordance with GAAP or (ii) any
     prior period adjustments resulting from any change in accounting principles
     in accordance with GAAP, and

          (i) any net income or gain (but not any net loss) during such period
     from (i) any extraordinary items or (ii) any discontinued operations or the
     disposition thereof.

     Consolidated Net Worth -- means, at any time, the total stockholders'
equity which would be shown in consolidated financial statements of the Company
and the Restricted Subsidiaries prepared at such time in accordance with GAAP.

     Consolidated Tangible Assets -- means, at any time, Consolidated Total
Assets at such time, minus

          (a) deferred assets, other than prepaid expenses which are refundable;

          (b) patents, copyrights, trademarks, trade names, service marks, brand
     names, franchises, goodwill, experimental expenses and other similar
     intangibles;

          (c) unamortized debt discount and expense; and

          (d) all other property which would be classified as intangible under
     GAAP.



     Consolidated Total Assets -- means, at any time, the amount at which the
total assets of the Company and the Restricted Subsidiaries would be shown in
consolidated financial statements of the Company and the Restricted Subsidiaries
prepared at such time in accordance with GAAP, after deduction of depreciation,
amortization and all other properly deductible valuation reserves.

     Contingent Optional Prepayment -- is defined in Section 8.2.

     DDD -- means DDD Energy, Inc., a Delaware corporation.

     DDD Facility -- means the Credit Agreement dated June 14, 1995, among DDD
and the DDD Facility Lenders, as amended.

     DDD Facility Lenders -- means Bank One, Texas, National Association, as
agent and as a lender, and Compass Bank-Houston, as a lender, in each case under
the DDD Facility.

     Debt -- means, with respect to any Person, without duplication,

          (a) its obligations for borrowed money;

          (b) its obligations in respect of banker's acceptances, other
     acceptances, letters of credit and other instruments serving a similar
     function issued or accepted by banks and other financial institutions for
     the account of such Person (whether or not incurred in connection with the
     borrowing of money);

          (c) its obligations that are evidenced by bonds, notes, debentures or
     similar instruments;

          (d) its obligations for the deferred purchase price of property
     acquired by such Person (excluding accounts payable arising in the ordinary
     course of business but including, without limitation, all obligations
     created or arising under any conditional sale or other title retention
     agreement with respect to any such property);

          (e) its Capital Lease Obligations;

          (f) its obligations in respect of all mandatorily redeemable preferred
     stock of such Person;

          (g) its obligations for borrowed money secured by any Lien with
     respect to any property owned by such Person (whether or not it has assumed
     or otherwise become liable for such obligations); and

          (h) any Guaranty of such Person with respect to liabilities of a type
     described in any of clauses (a) through (g) hereof.

Debt of any Person shall include all obligations of such Person of the character
described in clauses (a) through (h) to the extent such Person remains legally
liable in respect thereof notwithstanding that any such obligation is deemed to
be extinguished under GAAP.



     Default -- means an event or condition the occurrence or existence of which
would, with the lapse of time or the giving of notice or both, become an Event
of Default.

     Default Rate -- means the rate of interest for overdue payments as stated
in the first paragraph of the relevant Series of Notes.

     Designated Portion -- is defined in Section 10.6(b)(i).

     Disposition Value -- is defined in Section 10.6(c)(i).

     EBITDA -- means, in respect of any period, Consolidated Net Income for such
period minus

          (a) to the extent added in the computation of such Consolidated Net
     Income, each of the following:

               (i) extraordinary gains, net of extraordinary losses, and

               (ii) gains, net of losses, arising from the disposition of
          property other than in the ordinary course of business, plus

          (b) to the extent deducted in the computation of such Consolidated Net
     Income, each of the following:

               (i) Consolidated Interest Expense, net of interest and other
          investment income,

               (ii) taxes imposed on or measured by income or excess profits of
          the Company and the Restricted Subsidiaries,

               (iii) the amount of all depreciation, depletion and amortization
          allowances and other non-cash expenses of the Company and the
          Restricted Subsidiaries,

               (iv) extraordinary losses, net of extraordinary gains, and

               (v) losses, net of gains, arising from the disposition of
          property other than in the ordinary course of business.

     Environmental Laws -- means any and all Federal, state, local, and foreign
statutes, laws, regulations, ordinances, rules, judgments, orders, decrees,
permits, concessions, grants, franchises, licenses, agreements or governmental
restrictions relating to pollution and the protection of the environment or the
release of any materials into the environment, including but not limited to
those related to hazardous substances or wastes, air emissions and discharges to
waste or public systems.



     Equity Interest -- means

          (a) the outstanding Voting Stock of a corporation or other business
     entity,

          (b) the interest in the capital or profits of a corporation, limited
     liability company, partnership or joint venture, or

          (c) the beneficial interest in a trust or estate.

     ERISA -- means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the rules and regulations promulgated thereunder
from time to time in effect.

     ERISA Affiliate -- means any trade or business (whether or not
incorporated) that is treated as a single employer together with the Company
under section 414 of the Code.

     Event of Default -- is defined in Section 11.

     Exchange Act -- means the Securities Exchange Act of 1934, as amended.

     Excluded Transfer -- is defined in Section 10.6.

     Fair Market Value -- means, at any time and with respect to any property,
the sale value of such property that would be realized in an arm's-length sale
at such time between an informed and willing buyer and an informed and willing
seller (neither being under a compulsion to buy or sell, respectively).

     GAAP -- means accounting principles as promulgated from time to time in
statements, opinions and pronouncements by the American Institute of Certified
Public Accountants and the Financial Accounting Standards Board and in such
statements, opinions and pronouncements of such other entities with respect to
financial accounting of for-profit entities as shall be accepted by a
substantial segment of the accounting profession in the United States.

     Governmental Authority -- means

          (a) the government of

               (i) the United States of America or any State or other political
          subdivision thereof, or

               (ii) any jurisdiction in which the Company or any Subsidiary
          conducts all or any part of its business, or which asserts
          jurisdiction over any properties of the Company or any Subsidiary, or

          (b) any entity exercising executive, legislative, judicial, regulatory
     or administrative functions of, or pertaining to, any such government.



     Guaranty -- means, with respect to any Person, any obligation (except the
endorsement in the ordinary course of business of negotiable instruments for
deposit or collection) of such Person guaranteeing or in effect guaranteeing any
indebtedness, dividend or other obligation of any other Person in any manner,
whether directly or indirectly, including (without limitation) obligations
incurred through an agreement, contingent or otherwise, by such Person:

          (a) to purchase such indebtedness or obligation or any property
     constituting security therefor;

          (b) to advance or supply funds (i) for the purchase or payment of such
     indebtedness or obligation, or (ii) to maintain any working capital or
     other balance sheet condition or any income statement condition of any
     other Person or otherwise to advance or make available funds for the
     purchase or payment of such indebtedness or obligation;

          (c) to lease properties or to purchase properties or services
     primarily for the purpose of assuring the owner of such indebtedness or
     obligation of the ability of any other Person to make payment of the
     indebtedness or obligation; or

          (d) otherwise to assure the owner of such indebtedness or obligation
     against loss in respect thereof.

In any computation of the indebtedness or other liabilities of the obligor under
any Guaranty, the indebtedness or other obligations that are the subject of such
Guaranty shall be assumed to be direct obligations of such obligor.

     Hazardous Material -- means any and all pollutants, toxic or hazardous
wastes or any other substances that might pose a hazard to health or safety, the
removal of which may be required or the generation, manufacture, refining,
production, processing, treatment, storage, handling, transportation, transfer,
use, disposal, release, discharge, spillage, seepage, or filtration of which is
or shall be restricted, prohibited or penalized by any applicable law
(including, without limitation, asbestos, urea formaldehyde foam insulation and
polychlorinated biphenyls).

     holder -- means, at any time and with respect to any Note, the Person in
whose name such Note is registered at such time in the register maintained by
the Company pursuant to Section 13.1.

     Institutional Investor -- means (a) any original purchaser of a Note or an
Affiliate thereof, (b) any holder of more than five percent (5%) in aggregate
principal amount of the Notes then outstanding, and (c) any Accredited
Institution.

     Intergroup Transfer -- is defined in Section 10.6.

     Investment -- means any investment, made in cash or by delivery of
property, by the Company or any of the Subsidiaries in any Person, whether by
acquisition of stock, indebtedness or other obligation or Security (including,
without limitation, any interests in any partnership or joint venture), or by



loan, Guaranty, advance, capital contribution or otherwise; provided that
"Investment" does not include trade credit to the extent extended in the
ordinary course of business.

     Lien -- means, with respect to any Person, any mortgage, lien, pledge,
charge, security interest or other encumbrance, or any interest or title of any
vendor, lessor, lender or other secured party to or of such Person under any
conditional sale or other title retention agreement or Capital Lease, upon or
with respect to any property or asset of such Person (including in the case of
stock, stockholder agreements, voting trust agreements and all similar
arrangements).

     Make-Whole Amount -- is defined in Section 8.6.

     Material -- means material in relation to the business, operations,
affairs, financial condition, assets or properties of the Company and the
Restricted Subsidiaries taken as a whole.

     Material Adverse Effect -- means a material adverse effect on (a) the
business, operations, affairs, financial condition, assets or properties of the
Company and the Restricted Subsidiaries, taken as a whole, (b) the ability of
the Company to perform its obligations under this Agreement and the Notes, (c)
the ability of any Restricted Subsidiary to perform its respective obligations
under the Subsidiary Guaranty, or (d) the validity or enforceability of this
Agreement, the Subsidiary Guaranty or the Notes.

     Maximum Rate -- is defined in Section 22.10.

     Memorandum -- is defined in Section 5.3.

     Multiemployer Plan -- means any Plan that is a "multiemployer plan" (as
such term is defined in section 4001(a)(3) of ERISA).

     NAIC Annual Statement -- is defined in Section 6.3.

     Net Asset Sale Proceeds Amount -- means, with respect to any Transfer of
any property by any Person, an amount equal to the difference of

          (a) the aggregate amount of the consideration (valued at the Fair
     Market Value of such consideration at the time of the consummation of such
     Transfer) received by such Person in respect of such Transfer, minus

          (b) all ordinary and reasonable out-of-pocket costs and expenses
     actually incurred by such Person in connection with such Transfer.

     Net Proceeds of Common Stock -- means, with respect to any period, cash
proceeds (net of all costs and out-of-pocket expenses incurred in connection
therewith, including, without limitation, placement, underwriting and brokerage
fees and expenses) received by the Company and the Restricted Subsidiaries
during such period from the sale of all common stock of the Company, including
in such net proceeds:



          (a) the net amount paid upon issuance and exercise during such period
     of any right to acquire any common stock, or paid during such period to
     convert a convertible debt Security to common stock (but excluding any
     amount paid to the Company upon issuance of such convertible debt
     Security); and

          (b) any amount paid to the Company upon issuance of any convertible
     debt Security that is converted to common stock during such period.

     Notes -- is defined in Section 1.

     Officer's Certificate -- means a certificate of a Senior Financial Officer
or of any other officer of the Company whose responsibilities extend to the
subject matter of such certificate.

     Optional Prepayment Date -- is defined in Section 8.2.

     Optional Prepayment Notice -- is defined in Section 8.2.

     Ordinary Course Transfer -- is defined in Section 10.6.

     Other Agreements -- is defined in Section 2.

     Other Purchasers -- is defined in Section 2.

     PBGC -- means the Pension Benefit Guaranty Corporation referred to and
defined in ERISA or any successor thereto.

     Person -- means an individual, partnership, corporation, limited liability
company, association, trust, unincorporated organization, or a government or
agency or political subdivision thereof.

     Plan -- means an "employee benefit plan" (as defined in section 3(3) of
ERISA) that is or, within the preceding five years, has been established or
maintained, or to which contributions are or, within the preceding five years,
have been made or required to be made, by the Company or any ERISA Affiliate or
with respect to which the Company or any ERISA Affiliate may have any liability.

     Prepayment Transfer -- is defined in Section 10.6.

     Priority Debt -- means, without duplication, the sum of (a) all Debt of the
Company secured by a Lien permitted only by Section 10.4(j) and (b) all Debt of
Restricted Subsidiaries (except (i) Debt held by the Company or a Wholly-Owned
Restricted Subsidiary, (ii) Debt of a Restricted Subsidiary that is an unsecured
guaranty of Senior Debt and that ranks pari passu with the obligations of the
Restricted Subsidiaries under the Subsidiary Guaranty, and (iii) Debt of a
Restricted Subsidiary secured by a Lien permitted by the provisions of Section
10.4(a) through (i), inclusive).

     property or properties -- means, unless otherwise specifically limited,
real or personal property of any kind, tangible or intangible, choate or
inchoate.



     Purchaser -- means any Person that is a Series A Purchaser and/or a Series
B Purchaser and/or a Series C Purchaser.

     Qualified Institutional Buyer -- means you, each of the Other Purchasers,
and any Person who is a "qualified institutional buyer," within the meaning of
such term as set forth in Rule 144A(a)(1) under the Securities Act.

     Reinvested Transfer -- is defined in Section 10.6.

     Relevant Treasury Yield -- means the yield to maturity implied by

          (i) the yields reported, as of 10:00 A.M. (New York City time) on the
     fifth (5th) Business Day preceding the Series C Closing Date, on the
     display designated as "Page 678" on the Telerate Access Service (or such
     other display as may replace Page 678 on the Telerate Access Service) for
     actively traded U.S. Treasury securities having a maturity of five (5)
     years, or if such yields are not reported as of such time or the yields
     reported as of such time are not ascertainable,

         (ii) the Treasury Constant Maturity Series Yields reported, for the
     latest day for which such yields have been so reported as of the fifth
     (5th) Business Day preceding the Series C Closing Date, in Federal Reserve
     Statistical Release H.15 (519) (or any comparable successor publication)
     for actively traded U.S. Treasury securities having a constant maturity
     equal to five (5) years. Such implied yield will be determined, if
     necessary, by (a) converting U.S. Treasury bill quotations to
     bond-equivalent yields in accordance with accepted financial practice and
     (b) interpolating linearly between (1) the actively traded U.S. Treasury
     security with the duration closest to and greater than five (5) years and
     (2) the actively traded U.S. Treasury security with the duration closest to
     and less than five (5) years.

     Required Holders -- means, at any time, the holders of at least a majority
in principal amount of the Notes at the time outstanding (exclusive of Notes
then owned by the Company or any of its Affiliates).

     Rescission Notice -- is defined in Section 8.2.

     Responsible Officer -- means any Senior Financial Officer and any other
officer of the Company with responsibility for the administration of the
relevant portion of this agreement.

     Restricted Investments -- means all Investments except the following:

          (a) cash;

          (b) Investments in one or more Restricted Subsidiaries or any Person
     engaged in the business referred to in Section 10.10 that concurrently with
     such Investment becomes a Wholly-Owned Restricted Subsidiary;

          (c) Investments in United States Governmental Securities, provided
     that such obligations mature within 365 days from the date of acquisition
     thereof;



          (d) Investments in certificates of deposit or banker's acceptances
     issued by an Acceptable Bank, provided that such obligations mature within
     365 days from the date of acquisition thereof;

          (e) Investments in commercial paper given the highest rating by a
     credit rating agency of recognized national standing and maturing not more
     than 270 days from the date of creation thereof; and

          (f) Investments in money market mutual funds that invest solely in
     so-called "money market" instruments maturing not more than one year after
     the acquisition thereof, which funds have assets in excess of Five Hundred
     Million Dollars ($500,000,000).

For purposes of this Agreement, an Investment shall be valued at the lesser of
(i) cost and (ii) the value at which such Investment is to be shown on the books
of the Company and the Restricted Subsidiaries in accordance with GAAP.

As used in this definition of "Restricted Investments":

          Acceptable Bank -- means any bank or trust company (i) which is
     organized under the laws of the United States of America or any State
     thereof and (ii) which has capital, surplus and undivided profits
     aggregating at least Five Hundred Million Dollars ($500,000,000).

          Restricted Payment -- means

               (a) any Distribution in respect of the Company or any Restricted
          Subsidiary (other than on account of capital stock or other equity
          interests of a Restricted Subsidiary owned legally and beneficially by
          the Company or another Restricted Subsidiary), including, without
          limitation, any Distribution resulting in the acquisition by the
          Company of Securities which would constitute treasury stock; and

               (b) any payment, repayment, redemption, retirement, repurchase or
          other acquisition, direct or indirect, by the Company or any
          Restricted Subsidiary of, on account of, or in respect of, the
          principal of any Subordinated Debt (or any installment thereof) prior
          to the regularly scheduled maturity date thereof (as in effect on the
          date such Subordinated Debt was originally incurred).

For purposes of this Agreement, the amount of any Restricted Payment made in
property shall be the greater of (x) the Fair Market Value of such property (as
determined in good faith by the board of directors (or equivalent governing
body) of the Person making such Restricted Payment) and (y) the net book value
thereof on the books of such Person, in each case determined as of the date on
which such Restricted Payment is made.

     Distribution -- means, in respect of any corporation, association or other
business entity:



          (a) dividends or other distributions or payments on capital stock or
     other equity interest of such corporation, association or other business
     entity (except distributions in such stock or other equity interest); and

          (b) the redemption or acquisition of such stock or other equity
     interests or of warrants, rights or other options to purchase such stock or
     other equity interests (except when solely in exchange for such stock or
     other equity interests).

     Restricted Subsidiary -- means and includes each and every Subsidiary other
than any Subsidiary which, at the time of any determination hereunder, has been
designated by the Board of Directors and by written notice of the Company to all
of the holders to be an Unrestricted Subsidiary; provided, in any event, that
each of the following shall at all times constitute a Restricted Subsidiary:

          (a) each Subsidiary identified on Schedule 5.4; and

          (b) each Subsidiary which owns, directly or indirectly, more than
     fifty percent (50%) of the Equity Interest of a Restricted Subsidiary.

     Revolving Facility -- means the Restated Revolving Credit and Security
Agreement dated effective as of December 31, 1994, among the Company and certain
Restricted Subsidiaries, as borrowers, and the Revolving Facility Lenders, as
amended.

     Revolving Facility Lenders -- means Bank One, Texas, National Association,
as agent and as a lender, and Compass Bank-Houston, as a lender, in each case
under the Revolving Facility.

     Securities Act -- means the Securities Act of 1933, as amended from time to
time.

     Security -- means "security" as defined by section 2(1) of the Securities
Act.

     Senior Debt -- means any Debt of the Company that is not in any manner
subordinated in right of payment or security in any respect to the Debt
evidenced by the Notes or to any other Debt of the Company.

     Senior Financial Officer -- means the chief financial officer, principal
accounting officer, treasurer or comptroller of the Company.

     Series -- means any one or more of the series of Notes issued hereunder.

     Series A and B Closing -- is defined in Section 3.1.

     Series A and B Closing Date -- is defined in Section 3.1.

     Series A Notes -- is defined in Section 1.

     Series A Purchasers -- is defined in Section 3.1.



     Series B Notes -- is defined in Section 1.

     Series B Purchasers -- is defined in Section 3.1.

     Series C Closing -- is defined in Section 3.2.

     Series C Closing Date -- is defined in Section 3.2.

     Series C Interest Rate -- is defined in Section 3.2.

     Series C Notes -- is defined in Section 1.

     Series C Purchasers -- is defined in Section 3.2.

     Subordinated Debt -- mean any Debt of the Company other than Senior Debt.

     Subsidiary -- means, as to any Person, any corporation, limited liability
company, partnership, joint venture, trust or estate in which such Person or one
or more of the Subsidiaries or such Person and one or more of the Subsidiaries
own more than fifty percent (50%) of the Equity Interest. Unless the context
otherwise clearly requires, any reference to a "Subsidiary" is a reference to a
Subsidiary of the Company.

     Subsidiary Guaranty -- is defined in Section 4.10.

     Substantial Portion -- is defined in Section 10.6(c)(ii).

     Successor Corporation -- is defined in Section 10.5.

     Total Capitalization -- means, at any time, the sum of Consolidated Debt
plus Consolidated Net Worth, in each case at such time.

     Transfer -- is defined in Section 10.6(c)(iii).

     Trust -- is defined in Section 22.8.

     United States Governmental Security -- means any direct obligation of, or
obligation guaranteed by, the United States of America, or any agency controlled
or supervised by or acting as an instrumentality of the United States of America
pursuant to authority granted by the Congress of the United States of America,
so long as such obligation or guarantee shall have the benefit of the full faith
and credit of the United States of America which shall have been pledged
pursuant to authority granted by the Congress of the United States of America.

     Unrestricted Subsidiary -- means each Subsidiary other than a Restricted
Subsidiary.



     Voting Stock -- shall mean the capital stock or similar interest of any
class or classes (however designated) of a corporation or other business entity,
the holders of which are ordinarily, in the absence of contingencies, entitled
to vote for the election of the members of the board of directors (or Persons
performing similar functions) of a corporation or other business entity.

     Wholly-Owned Restricted Subsidiary -- means, at any time, any Restricted
Subsidiary one hundred percent (100%) of all of the Equity Interests (except
directors' qualifying shares) and voting interests of which are owned by any one
or more of the Company and the Company's other Wholly-Owned Restricted
Subsidiaries at such time.



                                 Schedule 4.9-1

                                  SCHEDULE 4.9

                         CHANGES IN CORPORATE STRUCTURE

                                      NONE



                                  SCHEDULE 5.3

                              DISCLOSURE MATERIALS

               SEE ATTACHED LETTER FROM SEITEL, INC. TO PURCHASERS
                             DATED DECEMBER 15, 1995



                                  SCHEDULE 5.4

                           SUBSIDIARIES OF THE COMPANY
                        AND OWNERSHIP OF SUBSIDIARY STOCK

A.

     I. Restricted Subsidiaries

Name of Restricted             Jurisdiction of
Subsidiary                      Incorporation          100% of Stock Owned By:
- -------------------------      ---------------         ------------------------
Seitel Data Corp.                 Delaware             Seitel, Inc.
Seitel Geophysical, Inc.          Delaware             Seitel, Inc.
DDD Energy, Inc.                  Delaware             Seitel, Inc.
Seitel Gas & Energy Corp.         Delaware             Seitel, Inc.
Seitel Power Corp.                Delaware             Seitel, Inc.
Seitel Natural Gas, Inc.          Delaware             Seitel Gas & Energy Corp.
Matrix Geophysical, Inc.          Delaware             Seitel, Inc.
Exsol, Inc.                       Delaware             Seitel, Inc.
Datatel, Inc.                     Delaware             Seitel Data Corp.
Seitel Offshore Corp.             Delaware             Seitel Data Corp.
Polymer Dynamics, Inc.            Delaware             Seitel, Inc.
Seitel International, Inc.        Cayman Islands       Seitel Data Corp.
African Geophysical, Inc.         Cayman Islands       Seitel Geophysical, Inc.
Geo-Bank, Inc.                    Texas                Seitel, Inc.
Alternative Communication
Enterprises, Inc.                 Texas                Seitel, Inc.

     II. Affiliates

     Affiliate Name                            Owner and Type of Interest Owned
- -----------------------------                  --------------------------------
TGC/SEI Joint Venture                           Seitel Data Corp. - 50%
                                                 Joint Venture Interest
SSC/SEI Joint Venture                           Seitel Data Corp. - 41%
                                                 Joint Venture Interest
Marsh Joint Venture                             Seitel Data Corp. - 50%
                                                 Joint Venture Interest
Digitel Data Joint Venture                      Seitel Offshore Corp. -
                                                 50% Joint Venture Interest
Spectrum/SII Joint Venture                      Seitel International, Inc. -
                                                 50% Joint Venture Interest
Redman/Smackover Joint Venture                  DDD Energy, Inc. - 38%
                                                 Joint Venture Interest

B.   All stock of the Restricted Subsidiaries is currently pledged as security
     under the DDD Facility described in Item 1 of Schedule 5.15 or the
     Revolving Facility described in Item 2 of Schedule 5.15, which loans shall
     be paid in full with the proceeds of the sale of the Series A Notes and
     Series B Notes immediately upon funding thereof. The DDD Facility and the
     Revolving Facility and all security interests granted in connection
     therewith, including but not limited to the pledges of such stock, will be
     terminated immediately upon receipt by such banks of such payments.

C.   Reference  is hereby made to each of the agreements described  in Items 1
     through 9 inclusive of Schedule 5.15 hereof.



                                  SCHEDULE 5.5

                              FINANCIAL STATEMENTS

1.   Financial  Statements  contained in the Company's  Form 10-K for the twelve
     months ended December 31, 1994.

2.   Financial Statements contained in the Company's Form 10-Q for the quarterly
     period ended June 30, 1995.

3.   Financial Statements contained in the Company's Form 10-Q for the quarterly
     period ended September 30, 1995.



                                  SCHEDULE 5.8

                               CERTAIN LITIGATION

                                      NONE



                                  SCHEDULE 5.11

                                  PATENTS, ETC.

                                      NONE



                                  SCHEDULE 5.12

                                      ERISA

A.   The following  Restricted  Subsidiaries  are ERISA Affiliates that maintain
     one or more Plans.  There are no employee  organizations  in respect of any
     Plan or Multiemployer Plan.

                    Datatel, Inc.

                    DDD Energy, Inc.

                    Matrix Geophysical, Inc.

                    Seitel Data Corp.

                    Seitel Gas & Energy Corp.

                    Seitel Geophysical, Inc.

B.   All of the Restricted Subsidiaries may be considered ERISA Affiliates. The
     following Plans constitute all "employee benefit plans" with respect to
     which the Company or any "affiliate" of the Company is a
     "party-in-interest" or in respect of which the Notes could constitute an
     "employer security." All plans apply to all ERISA Affiliates listed in A.
     above except as specifically set forth below.

                    Seitel, Inc. 401(k) Plan

                    Medical Insurance through New York Life Insurance Company

                    Dental Insurance through New York Life Insurance Company

                    Life Insurance through Guarantee Mutual Life Company (Seitel
                    Geophysical, Inc. does not participate in this insurance)

                    Accidental Death and Dismemberment Insurance through
                    Guarantee Mutual Life Company (Seitel Geophysical, Inc. does
                    not participate in this insurance)

                    Disability Insurance through Guarantee Mutual Life Company



                                  SCHEDULE 5.15

                       EXISTING DEBT IN EXCESS OF $100,000

1.   Credit Agreement dated June 14, 1995, between DDD Energy, Inc. as borrower
     and Bank One, Texas, N.A. and Compass Bank-Houston as lenders relating to a
     loan of up to $75 Million secured primarily by oil and gas interests and a
     pledge of the stock of DDD Energy, Inc., the outstanding balance of which
     as of December 15, 1995 was approximately $8.1 Million, and related
     agreements. Copies of these agreements have been provided to Purchasers'
     special counsel, Hebb & Gitlin. The credit facility evidenced by these
     agreements will be paid in full with the proceeds of the sale of the Series
     A Notes and Series B Notes immediately upon funding thereof, and this
     credit facility and all security interests granted in connection therewith
     will be terminated immediately upon receipt by such Banks of such payments.

2.   Restated  Revolving  Credit and Security  Agreement  dated  effective as of
     December 31, 1994, between Seitel, Inc., Seitel Geophysical, Inc., Exsol,
     Inc., Seitel Data Corp., and Seitel Offshore Corp. as borrowers and Compass
     Bank-Houston and Bank One, Texas, N.A. as lenders relating to a revolving
     line of credit of up to $25 Million secured primarily by accounts
     receivable, seismic data, and a pledge of the stock of all of the
     Restricted Subsidiaries other than DDD Energy, Inc., the outstanding
     balance of which as of December 15, 1995 was approximately $18.9 Million,
     and related agreements. Copies of these agreements have been provided to
     Purchasers' special counsel, Hebb & Gitlin. The credit facility evidenced
     by these agreements will be paid in full with the proceeds of the sale of
     the Series A Notes and Series B Notes immediately upon funding thereof, and
     this credit facility and all security interests granted in connection
     therewith will be terminated immediately upon receipt by such banks of such
     payments.

3.   Term Credit and  Security  Agreement  dated July 15, 1993,  between  Seitel
     Geophysical, Inc. and Compass Bank (formerly Central Bank of the South)
     relating to a term loan in the original principal amount of $4,300,000
     secured primarily by certain equipment, and related agreements. As of
     December 15, 1995, the outstanding balance of this debt was approximately
     $2.4 Million. The consent required by Section 4.10(b) amended certain
     covenants under the Term Credit and Security Agreement. Copies of these
     agreements have been provided to Purchasers' special counsel, Hebb &
     Gitlin.



4.   Master Equipment Lease Agreement dated May 20, 1994, and amendments
     thereto, between Seitel Geophysical, Inc. and METLIFE CAPITAL, Limited
     Partnership relating to the lease by Seitel Geophysical, Inc. of certain
     equipment. As of December 15, 1995, the outstanding balance under this
     lease was approximately $3.5 Million. Copies of these agreements have been
     provided to Purchasers' special counsel, Hebb & Gitlin.

5.   Master Equipment Lease Agreement dated February 2, 1994, and amendments
     thereto, between Seitel Geophysical, Inc. and Gelco Corporation, dba
     McCullagh Leasing, a unit of GE Capital Fleet Services, relating to the
     lease by Seitel Geophysical, Inc. of certain vehicles and related
     equipment. As of December 15, 1995, the outstanding balance under this
     lease was approximately $128,000.

6.   Master Equipment Lease Agreement dated March 4, 1994, and amendments
     thereto, between Seitel, Inc. and NationsBanc Leasing Corporation relating
     to the lease by Seitel, Inc. of certain geophysical computer processing
     equipment and related furniture and fixtures. As of December 15, 1995, the
     outstanding balance under this lease was approximately $210,000.

7.   Note and Security Agreement dated July 7, 1995, between DDD Energy, Inc.
     and CoreStates Bank, N.A. relating to a term loan in the original principal
     amount of $329,701.36 secured primarily by certain computer equipment, and
     related agreements. As of December 15, 1995, the outstanding balance of
     this debt was approximately $278,000.

8.   Note and Security Agreement dated November 29, 1995,  between Seitel,  Inc.
     and CoreStates Bank, N.A. relating to a term loan in the original principal
     amount of $386,663.62 secured primarily by a Marathon Coach Bus, and
     related agreements. As of December 15, 1995, the outstanding balance of
     this debt was approximately $375,000.

9.   Seitel,  Inc.  and Seitel Data  Corp.'s  accounts  payable  incurred in the
     ordinary course of business to PGS Exploration (U.S.), Inc. for PGS'
     services in connection with conducting 3D seismic surveys in the U.S. Gulf
     of Mexico, the current balance of which is approximately $19.4 Million, of
     which approximately $1.5 Million is secured by the seismic data acquired by
     one of such surveys. The Company currently intends to pay such payables in
     full with the proceeds of the sale of the Series A Notes and Series B
     Notes, as described in the letter attached to Schedule 5.3 hereof, and to
     obtain the release of such security interest in such seismic data.

10.  Seitel,  Inc. 9%  Convertible  Subordinated  Debentures due March 31, 2002,
     which are convertible into Seitel, Inc. common stock at a conversion rate
     of one share/$9.28. As of December 15, 1995, the outstanding balance due
     under these debentures is approximately $2.0 Million.



                                  SCHEDULE 10.8

                  CERTAIN AGREEMENTS BY RESTRICTED SUBSIDIARIES

Reference is hereby made to each of the agreements described in Items 1 through
9 inclusive of Schedule 5.15 hereof.



                                                                      EXHIBIT 1A

                          FORM OF SERIES A SENIOR NOTE

THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND MAY ONLY BE REOFFERED AND SOLD IN COMPLIANCE WITH THE REGISTRATION
PROVISIONS OF SUCH ACT OR PURSUANT TO AN EXEMPTION THEREFROM.

                                  SEITEL, INC.

                7.17% Series A Senior Note Due December 30, 2001

No.______                                                _________ , 19 __
$ ___________                                             PPN: 816074 A* 9

     SEITEL, INC. (the "Company"),  a Delaware corporation,  for value received,
hereby  promises to pay to_______ or  registered  assigns the  principal  sum of
______ DOLLARS  ($______) on December 30, 2001 and to pay interest  (computed on
the basis of a 360-day year of twelve 30-day months) on the unpaid principal
balance thereof from the date of this Note at the rate of seven and seventeen
hundredths percent (7.17%) per annum, semiannually on the thirtieth (30th) day
of June and December in each year, commencing on the later of June 30, 1996 or
the payment date next succeeding the date hereof, until the principal amount
hereof shall become due and payable; and to pay on demand interest on any
overdue principal (including any overdue prepayment of principal) and Make-Whole
Amount, if any, and (to the extent permitted by applicable law) on any overdue
installment of interest, at a rate equal to the lesser of (a) the highest rate
allowed by applicable law or (b) the greater of (i) nine and seventeen
hundredths percent (9.17%) per annum and (ii) two percent (2%) over the rate of
interest publicly announced by Morgan Guaranty Trust Company of New York in New
York, New York as its "base" or "prime" rate.

     Payments of principal, Make-Whole Amount, if any, and interest shall be
made in such coin or currency of the United States of America as at the time of
payment is legal tender for the payment of public and private debts to the
registered holder hereof at the address shown in the register maintained by the
Company for such purpose, in the manner provided in the Note Purchase Agreement
(defined below).

     This Note is one of an issue of Series A Notes of the Company issued in an
aggregate principal amount limited to Twenty-Five Million Dollars ($25,000,000)
pursuant to the Company's separate Note Purchase Agreements (collectively, the
"Note Purchase Agreement"), each dated as of December 28, 1995, with the
purchasers listed on Schedule A thereto, and is entitled to the benefits
thereof. Capitalized terms used herein and not otherwise defined herein have the
meanings specified in the Note Purchase Agreement. As provided in the Note



Purchase Agreement, this Note is subject to prepayment, in whole or in part, in
certain cases without a Make-Whole Amount and in other cases with a Make-Whole
Amount. The Company agrees to make required prepayments on account of such Notes
in accordance with the provisions of the Note Purchase Agreement.

     The Notes and all other obligations of the Company under the Note Purchase
Agreement have been unconditionally guarantied by the Restricted Subsidiaries
pursuant to the Guaranty, dated as of December 28, 1995, entered into by such
Restricted Subsidiaries.

     This Note is a registered Note and is transferable, subject to the
restrictions set forth in the Note Purchase Agreement and in the legend above,
only by surrender thereof at the principal office of the Company as specified in
the Note Purchase Agreement, duly endorsed or accompanied by a written
instrument of transfer duly executed by the registered holder of this Note or
his attorney duly authorized in writing.

     Under certain circumstances, as specified in the Note Purchase Agreement,
the principal of this Note (together with any applicable Make-Whole Amount) may
be declared due and payable in the manner and with the effect provided in the
Note Purchase Agreement.

     It is the intention of the parties hereto to comply with all applicable
usury laws; accordingly, it is agreed that notwithstanding any provision to the
contrary herein or in the Note Purchase Agreement, or in any of the documents
securing payment hereof or otherwise relating hereto, no such provision shall
require the payment or permit the collection of interest in excess of the
highest rate allowed by applicable law (the "Maximum Rate"). If any excess of
interest in such respect is provided for, or shall be adjudicated to be so
provided for, herein or in the Note Purchase Agreement or in any of the
documents securing payment hereof or otherwise relating hereto, then in such
event (a) the provisions of this paragraph shall govern and control, (b) neither
the Company, endorsers or Restricted Subsidiaries, nor their heirs, legal
representatives, successors or assigns nor any other party liable for the
payment hereof, shall be obligated to pay the amount of such interest to the
extent that it is in excess of the Maximum Rate, (c) any such excess which may
have been collected shall, at the election of the holder of this Note, be either
applied as a credit against the then unpaid principal amount hereof or refunded
to the Company, and (d) the provisions hereof and of the Note Purchase Agreement
and any documents securing payment hereof shall be automatically reformed so
that the effective rate of interest shall be reduced to the Maximum Rate. For
the purpose of determining the Maximum Rate, all interest payments with respect
hereto shall be amortized, prorated and spread throughout the full term hereof
so that the effective rate of interest hereunder is uniform throughout the term
hereof.

     THIS NOTE AND THE NOTE PURCHASE AGREEMENT ARE GOVERNED BY, AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, INTERNAL NEW YORK LAW.

                                 SEITEL, INC.


                                 By:

                                    Name:

                                    Title:



                                                                      EXHIBIT 1B

                          FORM OF SERIES B SENIOR NOTE

THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND MAY ONLY BE REOFFERED AND SOLD IN COMPLIANCE WITH THE REGISTRATION
PROVISIONS OF SUCH ACT OR PURSUANT TO AN EXEMPTION THEREFROM.

                                  SEITEL, INC.

                7.17% Series B Senior Note Due December 30, 2002

No._____                                                     ____________, 19__
$________                                                       PPN:816074 A@ 7

     SEITEL, INC. (the "Company"), a Delaware corporation, for value received,
hereby promises to pay to ______ or registered assigns the principal sum of
______ DOLLARS ($______) on December __, 2002 and to pay interest (computed on
the basis of a 360-day year of twelve 30-day months) on the unpaid principal
balance thereof from the date of this Note at the rate of seven and seventeen
hundredths percent (7.17%) per annum, semiannually on the thirtieth (30th) day
of June and December in each year, commencing on the later of June 30, 1996 or
the payment date next succeeding the date hereof, until the principal amount
hereof shall become due and payable; and to pay on demand interest on any
overdue principal (including any overdue prepayment of principal) and Make-Whole
Amount, if any, and (to the extent permitted by applicable law) on any overdue
installment of interest, at a rate equal to the lesser of (a) the highest rate
allowed by applicable law or (b) the greater of (i) nine and seventeen
hundredths percent (9.17%) per annum and (ii) two percent (2%) over the rate of
interest publicly announced by Morgan Guaranty Trust Company of New York in New
York, New York as its "base" or "prime" rate.

     Payments of principal, Make-Whole Amount, if any, and interest shall be
made in such coin or currency of the United States of America as at the time of
payment is legal tender for the payment of public and private debts to the
registered holder hereof at the address shown in the register maintained by the
Company for such purpose, in the manner provided in the Note Purchase Agreement
(defined below).

     This Note is one of an issue of Series B Notes of the Company issued in an
aggregate principal amount limited to Twenty-Seven Million Five Hundred Thousand
Dollars ($27,500,000) pursuant to the Company's separate Note Purchase
Agreements (collectively, the "Note Purchase Agreement"), each dated as of
December 28, 1995, with the purchasers listed on Schedule A thereto, and is
entitled to the benefits thereof. Capitalized terms used herein and not
otherwise defined herein have the meanings specified in the Note Purchase
Agreement. As provided in the Note Purchase Agreement, this Note is subject to
prepayment, in whole or in part, in certain cases without a Make-Whole Amount
and in other cases with a Make-Whole Amount. The Company agrees to make required
prepayments on account of such Notes in accordance with the provisions of the
Note Purchase Agreement.



     The Notes and all other obligations of the Company under the Note Purchase
Agreement have been unconditionally guarantied by the Restricted Subsidiaries
pursuant to the Guaranty, dated as of December 28, 1995, entered into by such
Restricted Subsidiaries.

     This Note is a registered Note and is transferable, subject to the
restrictions set forth in the Note Purchase Agreement and in the legend above,
only by surrender thereof at the principal office of the Company as specified in
the Note Purchase Agreement, duly endorsed or accompanied by a written
instrument of transfer duly executed by the registered holder of this Note or
his attorney duly authorized in writing.

     Under certain circumstances, as specified in the Note Purchase Agreement,
the principal of this Note (together with any applicable Make-Whole Amount) may
be declared due and payable in the manner and with the effect provided in the
Note Purchase Agreement.

     It is the intention of the parties hereto to comply with all applicable
usury laws; accordingly, it is agreed that notwithstanding any provision to the
contrary herein or in the Note Purchase Agreement, or in any of the documents
securing payment hereof or otherwise relating hereto, no such provision shall
require the payment or permit the collection of interest in excess of the
highest rate allowed by applicable law (the "Maximum Rate"). If any excess of
interest in such respect is provided for, or shall be adjudicated to be so
provided for, herein or in the Note Purchase Agreement or in any of the
documents securing payment hereof or otherwise relating hereto, then in such
event (a) the provisions of this paragraph shall govern and control, (b) neither
the Company, endorsers or Restricted Subsidiaries, nor their heirs, legal
representatives, successors or assigns nor any other party liable for the
payment hereof, shall be obligated to pay the amount of such interest to the
extent that it is in excess of the Maximum Rate, (c) any such excess which may
have been collected shall, at the election of the holder of this Note, be either
applied as a credit against the then unpaid principal amount hereof or refunded
to the Company, and (d) the provisions hereof and of the Note Purchase Agreement
and any documents securing payment hereof shall be automatically reformed so
that the effective rate of interest shall be reduced to the Maximum Rate. For
the purpose of determining the Maximum Rate, all interest payments with respect
hereto shall be amortized, prorated and spread throughout the full term hereof
so that the effective rate of interest hereunder is uniform throughout the term
hereof.



     THIS NOTE AND THE NOTE PURCHASE AGREEMENT ARE GOVERNED BY, AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, INTERNAL NEW YORK LAW.

                                  SEITEL, INC.


                                  By:

                                  Name:

                                  Title:



                                                                      EXHIBIT 1C

                          FORM OF SERIES C SENIOR NOTE

THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND MAY ONLY BE REOFFERED AND SOLD IN COMPLIANCE WITH THE REGISTRATION
PROVISIONS OF SUCH ACT OR PURSUANT TO AN EXEMPTION THEREFROM.

                                  SEITEL, INC.

                   Series C Senior Note Due December 30, 2002

No._____                                                     ____________, 19__
$_______                                                       PPN: 816074 A# 5

     SEITEL, INC. (the "Company"), a Delaware corporation, for value received,
hereby promises to pay to _______ or registered assigns the principal sum of
______ DOLLARS ($______) on December 30, 2002 and to pay interest (computed on
the basis of a 360-day year of twelve 30-day months) on the unpaid principal
balance thereof from the date of this Note at the rate of _____________________
percent (___%) per annum, semiannually on the thirtieth (30th) day of June and
December in each year, commencing on the later of June 30, 1996 or the payment
date next succeeding the date hereof, until the principal amount hereof shall
become due and payable; and to pay on demand interest on any overdue principal
(including any overdue prepayment of principal) and Make-Whole Amount, if any,
and (to the extent permitted by applicable law) on any overdue installment of
interest, at a rate equal to the lesser of (a) the highest rate allowed by
applicable law or (b) the greater of (i) ____________________ percent (___%) per
annum and (ii) two percent(2%) over the rate of interest publicly announced by
Morgan Guaranty Trust Company of New York in New York, New York as its "base" or
"prime" rate.

     Payments of principal, Make-Whole Amount, if any, and interest shall be
made in such coin or currency of the United States of America as at the time of
payment is legal tender for the payment of public and private debts to the
registered holder hereof at the address shown in the register maintained by the
Company for such purpose, in the manner provided in the Note Purchase Agreement
(defined below).

     This Note is one of an issue of Series C Notes of the Company issued in an
aggregate principal amount limited to Twenty-Two Million Five Hundred Thousand
Dollars ($22,500,000) pursuant to the Company's separate Note Purchase
Agreements (collectively, the "Note Purchase Agreement"), each dated as of
December 28, 1995, with the purchasers listed on Schedule A thereto, and is
entitled to the benefits thereof. Capitalized terms used herein and not
otherwise defined herein have the meanings specified in the Note Purchase



Agreement. As provided in the Note Purchase Agreement, this Note is subject to
prepayment, in whole or in part, in certain cases without a Make-Whole Amount
and in other cases with a Make-Whole Amount. The Company agrees to make required
prepayments on account of such Notes in accordance with the provisions of the
Note Purchase Agreement.

     The Notes and all other obligations of the Company under the Note Purchase
Agreement have been unconditionally guarantied by the Restricted Subsidiaries
pursuant to the Guaranty, dated as of December 28, 1995, entered into by such
Restricted Subsidiaries.

     This Note is a registered Note and is transferable, subject to the
restrictions set forth in the Note Purchase Agreement and in the legend above,
only by surrender thereof at the principal office of the Company as specified in
the Note Purchase Agreement, duly endorsed or accompanied by a written
instrument of transfer duly executed by the registered holder of this Note or
his attorney duly authorized in writing.

     Under certain circumstances, as specified in the Note Purchase Agreement,
the principal of this Note (together with any applicable Make-Whole Amount) may
be declared due and payable in the manner and with the effect provided in the
Note Purchase Agreement.

     It is the intention of the parties hereto to comply with all applicable
usury laws; accordingly, it is agreed that notwithstanding any provision to the
contrary herein or in the Note Purchase Agreement, or in any of the documents
securing payment hereof or otherwise relating hereto, no such provision shall
require the payment or permit the collection of interest in excess of the
highest rate allowed by applicable law (the "Maximum Rate"). If any excess of
interest in such respect is provided for, or shall be adjudicated to be so
provided for, herein or in the Note Purchase Agreement or in any of the
documents securing payment hereof or otherwise relating hereto, then in such
event (a) the provisions of this paragraph shall govern and control, (b) neither
the Company, endorsers or Restricted Subsidiaries, nor their heirs, legal
representatives, successors or assigns nor any other party liable for the
payment hereof, shall be obligated to pay the amount of such interest to the
extent that it is in excess of the Maximum Rate, (c) any such excess which may
have been collected shall, at the election of the holder of this Note, be either
applied as a credit against the then unpaid principal amount hereof or refunded
to the Company, and (d) the provisions hereof and of the Note Purchase Agreement
and any documents securing payment hereof shall be automatically reformed so
that the effective rate of interest shall be reduced to the Maximum Rate. For
the purpose of determining the Maximum Rate, all interest payments with respect
hereto shall be amortized, prorated and spread throughout the full term hereof
so that the effective rate of interest hereunder is uniform throughout the term
hereof.

     THIS NOTE AND THE NOTE PURCHASE AGREEMENT ARE GOVERNED BY, AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, INTERNAL NEW YORK LAW.

                                  SEITEL, INC.


                                  By:

                                     Name:

                                     Title:



                                                                  EXHIBIT 4.4(a)

               FORM OF OPINION OF SPECIAL COUNSEL FOR THE COMPANY

                         [Letterhead of Company Counsel]


                                                                  [Closing Date]

To the Persons Listed on
Annex 1 hereto

          Re:       Seitel, Inc. (the "Company")
                    Our File No. 979275/086

Ladies and Gentlemen:

     Reference is made to the separate Note Purchase Agreements, each dated as
of December 28, 1995 (collectively, the "Note Purchase Agreement"), between the
Company and each of the purchasers listed on Schedule A attached hereto (the
"Purchasers"), which provide, among other things, for the issuance and sale by
the Company of its

          (a) 7.17% Series A Senior Notes due December 30, 2001, in the
     aggregate principal amount of Twenty-Five Million Dollars ($25,000,000),

          (b) 7.17% Series B Senior Notes due December 30, 2002, in the
     aggregate principal amount of Twenty-Seven Million Five Hundred Thousand
     Dollars ($27,500,000), and

          (c) Series C Senior Notes due December 30, 2002, in the aggregate
     principal amount of Twenty-Two Million Five Hundred Thousand Dollars
     ($22,500,000).

The capitalized terms used herein and not defined herein have the meanings
specified in the Note Purchase Agreement.

     We have acted as special counsel to the Company in connection with the
transactions contemplated by Note Purchase Agreement. We advise you that we have
previously represented the Company and certain Restricted Subsidiaries only with
respect to specific matters referred to us. Consequently, there are matters of a
legal nature concerning the Company and the Restricted Subsidiaries of which we
have no knowledge. This opinion is delivered to you pursuant to Section 4.4(a)
of the Note Purchase Agreement. In acting as such counsel, we have examined:

          (a) the Note Purchase Agreement;



          (b) the Company's 7.17% Series A Senior Notes due December 30, 2001,
     dated the date hereof, in the form set forth in Exhibit 1A to the Note
     Purchase Agreement, and in the principal amounts, and with the registration
     numbers set forth on Schedule A to the Note Purchase Agreement (the "Series
     A Notes");

          (c) the Company's 7.17% Series B Senior Notes due December 30, 2002,
     dated the date hereof, in the form set forth in Exhibit 1B to the Note
     Purchase Agreement, and in the principal amounts, and with the registration
     numbers set forth on Schedule A to the Note Purchase Agreement (the "Series
     B Notes");

          (d) the Subsidiary Guaranty executed and delivered by each Restricted
     Subsidiary;

          (e) the compliance certificates of the Company and the Restricted
     Subsidiaries required by Section 4.3 of the Note Purchase Agreement (which
     compliance certificates, together with the Note Purchase Agreement, the
     Series A Notes, the Series B Notes, and the Subsidiary Guaranty, are
     referred to herein collectively as the "Documents");

          (f) the bylaws and minute books of the Company and each Restricted
     Subsidiary incorporated under the laws of any jurisdiction within the
     United States, and a certified copy of the certificate or articles of
     incorporation of the Company and each such Restricted Subsidiary, as in
     effect on the date hereof;

          (g) a long-form good standing certificate from the state of
     incorporation of the Company and each Restricted Subsidiary incorporated
     under the laws of any jurisdiction within the United States, and foreign
     good standing certificates for each of such corporations from each of the
     states set forth on Annex 2 hereto;

          (h) a letter to Hebb & Gitlin and Gardere Wynne Sewell & Riggs from
     Bear, Stearns & Co., Inc., describing the manner of the offering of the
     Notes (the "Offeree Letter");

          (i) the opinion of Hebb & Gitlin, counsel to the Purchasers, dated the
     date hereof;

          (j) certificate of officer of the Company and the Restricted
     Subsidiaries, a copy of which is attached hereto as Annex 3 (the "Officer's
     Certificate"); and

          (k) originals, or copies certified or otherwise identified to our
     satisfaction, of such other documents, records, instruments and
     certificates of public officials as we have deemed necessary or appropriate
     to enable us to render this opinion.

     In rendering our opinion, we have relied, to the extent we deem necessary
and proper, on:



          (a) warranties and representations as to factual matters contained in
     the Note Purchase Agreement and the Subsidiary Guaranty;

          (b) the Officer's Certificate;

          (c) the Offeree Letter; and

          (d) said opinion of Hebb & Gitlin with respect to all matters governed
     by New York law.

     We have no actual knowledge of any material inaccuracies in any of the
facts contained in the Note Purchase Agreement or the Subsidiary Guaranty. We
have made no independent investigations as to the accuracy or completeness of
any factual representation, warranty, data or other information, whether written
or oral, that may have been made by or on behalf of the parties to the
Documents. We have not made any examination of any accounting or financial
matters and express no opinion with respect thereto.

     By accepting this opinion, you are agreeing that in rendering this opinion
we may assume (i) the genuineness of all signatures (except for the signatures
of the Company and the Restricted Subsidiaries), (ii) the authenticity of all
documents submitted to us as originals and the conformity to original documents
of all documents submitted to us as certified or photostatic copies, (iii) the
correctness of all statements set forth in certificates or written documents of
governmental officials and certificates or written documents of the Company or
the Restricted Subsidiaries or representatives of the Company or the Restricted
Subsidiaries as to corporate proceedings, incumbency of officers and other
corporate matters (which statements, to our knowledge, are correct), (iv) that
none of the parties upon whom we have relied for purposes of this opinion has
perpetuated a fraud upon any of the parties to the transactions evidenced by the
Documents or any of the attorneys representing any of such parties, (v) that all
of the terms and conditions of, or relating to, the purchase and sale of the
Notes are correctly and completely embodied in the Note Purchase Agreement and
the Schedules thereto, (vi) that the Purchasers will comply with all the terms
and provisions of the Documents including, without limitation, the usury savings
clause contained therein, (vii) that no attorney representing any Purchaser has
any opinion regarding the subject matter of this letter which is contrary to or
inconsistent with any of the opinions expressed herein, and (viii) that the
Purchasers have disbursed or advanced the entire amount due upon issuance of the
Series A Notes and the Series B Notes to the account specified by the Company to
the Purchasers.

     Based on the foregoing, we are of the following opinions:

     1.   (a) The Company is a corporation duly incorporated, validly existing
          and in good standing under the laws of the State of Delaware and has
          all requisite corporate power and authority to own its property and
          carry on its business as currently conducted.



          (b) Each Restricted Subsidiary incorporated under the laws of any
          jurisdiction within the United States is a corporation duly
          incorporated, validly existing and in good standing under the laws of
          its state of incorporation and has all requisite corporate power and
          authority to own its property and carry on its business as currently
          conducted.

     2.   Each of the Company and the Restricted Subsidiaries that are
          incorporated under the laws of any jurisdiction within the United
          States has duly qualified and is in good standing as a foreign
          corporation in each jurisdiction where it is shown to be so qualified
          and in good standing in Annex 2 hereto, which jurisdictions, to our
          knowledge, are the only jurisdictions in which the character or
          location of the properties of each such entity (owned, leased or
          licensed) or the nature or conduct of its business makes such
          qualification necessary, except for where the failure to be so
          qualified or in good standing will not in the aggregate have a
          Material Adverse Effect on the Company and the Restricted Subsidiaries
          taken as a whole.

     3.   To the best of our knowledge, in reliance on the Officer's Certificate
          and after inquiry of the lawyers at this firm identified in the third
          from last paragraph of this letter, there is no judgment, order,
          action, suit, proceeding, inquiry, order or investigation, at law or
          in equity, before any court or Governmental Authority, arbitration
          board or tribunal, pending or threatened against the Company or any
          one or more of the Restricted Subsidiaries, except for the actions,
          suits, and proceedings listed on Annex 4 hereto.

     4.   (a) The Company has the requisite corporate power and authority to
          execute and deliver the Note Purchase Agreement, the Series A Notes,
          and the Series B Notes, and the Company's obligations under the Note
          Purchase Agreement, the Series A Notes and the Series B Notes may be
          performed in a manner which is within the Company's corporate power
          and authority.

          (b) Each Restricted Subsidiary incorporated under the laws of any
          jurisdiction within the United States has the requisite corporate
          power and authority to execute and deliver the Subsidiary Guaranty and
          each such Restricted Subsidiary's obligations under the Subsidiary
          Guaranty may be performed in a manner which is within such Restricted
          Subsidiary's corporate power and authority.

     5.   (a) Each of the Note Purchase Agreement, the Series A Notes and the
          Series B Notes has been duly authorized by all necessary corporate
          action on the part of the Company (no action on the part of the
          stockholders of the Company being required in respect thereof), has
          been executed and delivered by duly authorized officers of the
          Company, and constitutes a legal, valid and binding obligation of the
          Company, enforceable against the Company in accordance with its
          terms.1

          (b) The Subsidiary Guaranty has been duly authorized by all necessary
          corporate action on the part of each of the Restricted Subsidiaries
          incorporated under the laws of any jurisdiction within the United



          States (no action on the part of the stockholders of any such
          Restricted Subsidiary being required in respect thereof), has been
          executed and delivered by duly authorized officers of each Restricted
          Subsidiary, and constitutes a legal, valid and binding obligation of
          each Restricted Subsidiary, enforceable against each such Restricted
          Subsidiary in accordance with its terms.

     6.   (a) The execution and delivery of the Note Purchase Agreement, the
          Series A Notes and the Series B Notes, and the issue and sale of the
          Series A Notes and the Series B Notes, by the Company will not and the
          obligations of the Company thereunder may be performed in a manner
          which will not conflict with, constitute a violation of, result in a
          breach of any provision of, constitute a default under, or result in
          the creation or imposition of any Lien or encumbrance upon any of the
          property of the Company pursuant to, the certificate of incorporation
          or by-laws of the Company, any applicable statute, rule or regulation
          to which the Company is subject, or, to the best of our knowledge
          based on the Officer's Certificate, any agreement or instrument known
          to us to which the Company is a party or by which its properties may
          be bound, except for (i) such conflicts, violations, breaches,
          defaults or encumbrances under agreements and instruments as may have
          been waived by the other party thereto, or (ii) such conflicts,
          violations, breaches, defaults or encumbrances under agreements and
          instruments which would not have, alone or in the aggregate, a
          Material Adverse Effect on the Company and the Restricted Subsidiaries
          taken as a whole.

          (b) The execution and delivery of the Subsidiary Guaranty by each of
          the Restricted Subsidiaries that are incorporated under the laws of
          any jurisdiction within the United States will not, and the
          obligations of each such Restricted Subsidiary thereunder may be
          performed in a manner which will not, conflict with, constitute a
          violation of, result in a breach of any provision of, constitute a
          default under, or result in the creation or imposition of any Lien or
          encumbrance upon any of the property of any such Restricted
          Subsidiaries pursuant to the certificate or articles of incorporation
          or by-laws of any such Restricted Subsidiary, any applicable statute,
          rule or regulation to which any such Restricted Subsidiary is subject,
          or, to the best of our knowledge based on the Officer's Certificate,
          any agreement or instrument known to us to which any such Restricted
          Subsidiary is a party or by which its respective properties may be
          bound, except for (i) such conflicts, violations, breaches, defaults
          or encumbrances under agreements and instruments as may have been
          waived by the other party thereto, or (ii) such conflicts, violations,
          breaches, defaults or encumbrances under agreements and instruments
          which would not have, alone or in the aggregate, a Material Adverse
          Effect on the Company and the Restricted Subsidiaries taken as a
          whole.

     7.   All consents, approvals and authorizations of, and all designations,
          declarations, filings, registrations, qualifications and recordations
          with, Governmental Authorities required on the part of the Company and
          the Restricted Subsidiaries incorporated under the laws of any
          jurisdiction within the United States have been obtained in connection
          with the execution and delivery of the Note Purchase Agreement and the
          Subsidiary Guaranty and the issue and sale of the Series A Notes and
          the Series B Notes, except for such informational filings as may be
          required to be made after the issue and sale of the Series A Notes and
          the Series B Notes.



     8.   The offering, issuance and sale by the Company of the Series A Notes
          and the Series B Notes are exempt from the registration requirements
          under the Securities Act, and the Company is not required to qualify
          an indenture with respect thereto under the Trust Indenture Act of
          1939, as amended.2

     9.   Neither the issuance of the Series A Notes or the Series B Notes, nor
          the intended use of the proceeds of such Notes (as set forth in
          Section 5.14 of the Note Purchase Agreement), will violate Regulations
          G, T or X of the Federal Reserve Board.3

     10.  Neither the Company nor any Restricted Subsidiary

          (a) is an "investment company" within the meaning of the Investment
          Company Act of 1940, as amended, or

          (b) is a "holding company" or an "affiliate" of a "holding company,"
          or a "subsidiary company" of a "holding company," or a "public
          utility" within the meaning of the Public Utility Holding Company Act
          of 1935, as amended.

     11.  All of the outstanding shares of capital stock of each Restricted
          Subsidiary incorporated under the laws of any jurisdiction within the
          United States listed in Schedule 5.4 to the Note Purchase Agreement as
          being owned by the Company and the Restricted Subsidiaries have been
          validly issues and are fully paid and nonassessable. To the best of
          our knowledge in reliance on the Officer's Certificate, such shares
          are free and clear in each case of any perfected security interest or
          any other Lien, except as set forth in Schedule 5.4 to the Note
          Purchase Agreement.

          The foregoing opinions are subject to and are qualified in all respect
          by the following:

               (i)   The enforceability of the Documents may be limited by (a)
          bankruptcy, insolvency, reorganization, moratorium and similar laws
          from time to time in effect and affecting creditors' rights or the
          collection of debtors' obligations generally (including, without
          limitation, laws generally defining and restricting fraudulent
          conveyances), (b) principles of equity, (c) principles of public
          policy and (d) requirements of commercial reasonableness and good
          faith.

               (ii)  We express no opinion as to the availability or
          enforceability of certain provisions or remedies set forth in the
          Documents, including but not limited to those (a) that purport to
          provide access to or restrict legal or equitable remedies such as
          specific performance and the appointment of a receiver, (b) that
          purport to establish evidentiary standards, (c) that relate to



          waivers, or to delays or omissions of enforcement of remedies or
          severance, (d) that attempt to prohibit or restrict the transfer,
          alienation, mortgaging, encumbering or hypothecation of any property
          described in the Documents, (e) that relate to subrogation rights or
          the waiver thereof and (f) that attempt to establish proper venue for
          the filing and maintenance of any claim, suit or action with respect
          to the Documents; provided, however, that such limitations on the
          availability of remedies under the Documents or the legality,
          validity, binding effect or enforceability of the Documents will not,
          in our opinion, substantially interfere with the practical realization
          of the benefits expressed in the Documents except for the economic
          consequences of any procedural delay which may result from such laws.

               (iii) We express no opinion as to the enforceability of
          provisions in the Documents attempting to establish choice of laws.

               (iv)  We express no opinion as to whether the investment in the
          Notes complies with any statutory, regulatory or other loan limits
          applicable to any Purchaser or complies with any other statutes, laws,
          rules or regulations which prescribe permissible and lawful
          investments for the Purchasers (either as to type, amount, percentage
          of total investments or other).

               (v)   With respect to the opinion expressed in 8 above, we have
          specifically assumed (without limiting the generality of our
          assumptions elsewhere herein) that (A) in reliance on the
          representations and warranties of the Purchasers in the Note Purchase
          Agreement, each Purchaser is an "accredited investor" within the
          meaning of Regulation D promulgated by the Securities and Exchange
          Commission under the Securities Act, (B) in reliance on the Company's
          representations and warranties in the Note Purchase Agreement and on
          Bear, Stearns & Co. Inc.'s representations in the Offeree Letter, the
          Company and Bear, Stearns & Co. Inc. have complied, as applicable,
          with the requirements of paragraphs (b)(2)(v) and (c) of Rule 502 of
          Regulation D in connection with the issuance of the Notes, and (C) the
          issuance by the Company of the Notes will not be integrated with the
          offer or sale of any other securities.

     We acknowledge that this opinion is being issued at the request of the
Company pursuant to Section 4.4(a) of the Note Purchase Agreement and we agree
that the parties listed on Annex 1 hereto may rely and are relying hereon in
connection with the consummation of the transactions contemplated by the Note
Purchase Agreement. Hebb & Gitlin, special counsel to the Purchasers, may rely
on this opinion for the sole purpose of rendering their opinion to be rendered
pursuant to Section 4.4(b) of the Note Purchase Agreement.

     Our "knowledge" as to any matters in connection with this opinion is
limited to the actual knowledge of the lawyers in our firm who have participated
in the negotiation and preparation of the Documents and such other lawyers in
the firm who have represented the Company and the Restricted Subsidiaries that
the lawyer in charge of the matter reasonably believes should be consulted, and
does not include constructive or imputed knowledge.



     We are admitted to the Bar in the State of Texas. This opinion is limited
to United States federal law, laws of the State of Texas, and general corporate
law of the State of Delaware, all as now in effect, and we disclaim any
responsibility to inform you of any change thereto after the date hereof. No
opinion is expressed as to any matter that may be governed by the laws of any
other jurisdiction; provided, however, to the extent that the laws of any state
other than Texas govern the Documents, you may rely on our opinion to the extent
that the laws of such state or states are the same as the laws of the State of
Texas, as to which sameness we express no opinion.

     Subsequent holders of the Notes may rely on this opinion as if it were
addressed to them.

                                                   Very truly yours,



                                     ANNEX 1
                                   Addressees

Seitel, Inc.
50 Briar Hollow Lane, 7th Floor West
Houston, TX 77027

Principal Mutual Life Insurance Company
711 High Street
Des Moines, IA 50392

Massachusetts Mutual Life Insurance Company
1295 State Street
Springfield, MA  01111

John Alden Life Insurance Company
P.O. Box 020270 - 3rd Floor
Miami, Florida 33102-0270

John Alden Life Insurance Company of New York
P.O. Box 020270 - 3rd Floor
Miami, Florida 33102-0270

The Mutual Life Insurance Company of New York
1740 Broadway
New York, NY 10019

MONY Life Insurance Company of America
1740 Broadway
New York, NY 10019

United of Omaha Life Insurance Company
Mutual of Omaha Plaza
Omaha, NE  68175

Pan-American Life Insurance Company
Pan American Life Center
601 Poydras Street
New Orleans, LA  70130



                                     ANNEX 2
                       Foreign Good Standing Certificates

Corporation                   State
- -----------                   -----
Seitel, Inc.                  Alabama, Louisiana, Texas
Seitel Data Corp.             Louisiana, Texas
Seitel Geophysical, Inc.      Louisiana, Texas, Mississippi, Alabama
DDD Energy, Inc.              Louisiana, Texas, Alabama
Seitel Gas & Energy Corp.     Texas, Massachusetts, Connecticut, New Jersey,
                              Pennsylvania, New York
Seitel Offshore Corp.         Texas
Datatel, Inc.                 Colorado, Louisiana, Texas
Exsol, Inc.                   Texas



                                     ANNEX 3
                              Officer's Certificate

[To be provided.]



     1    For the second closing, reference would be made to the Series C Notes
          in this paragraph in lieu of the Series A Notes and the Series B
          Notes.

     2    For the second closing, reference would be made to the Series C Notes
          in this paragraph in lieu of the Series A Notes and the Series B
          Notes.

     3    For the second closing, reference would be made to the Series C Notes
          in this paragraph in lieu of the Series A Notes and the Series B
          Notes.



                                                                  EXHIBIT 4.4(b)

              FORM OF OPINION OF SPECIAL COUNSEL FOR THE PURCHASERS

                          [Letterhead of Hebb & Gitlin]

                                                                  [Closing Date]

To the Persons Listed on

Annex 1 hereto

       Re: Seitel, Inc. (the "Company")

Ladies and Gentlemen:

     Reference is made to the separate Note Purchase Agreements, each dated as
of December 28, 1995 (collectively, the "Note Purchase Agreement"), between the
Company and each of the purchasers listed on Schedule A attached thereto (the
"Purchasers"), which provide, among other things, for the issuance and sale by
the Company of its

          (a) 7.17% Series A Senior Notes due December 30, 2001, in the
     aggregate principal amount of Twenty-Five Million Dollars ($25,000,000),

          (b) 7.17% Series B Senior Notes due December 30, 2002, in the
     aggregate principal amount of Twenty-Seven Million Five Hundred Thousand
     Dollars ($27,500,000), and

          (c) Series C Senior Notes due December 30, 2002, in the aggregate
     principal amount of Twenty-Two Million Five Hundred Thousand Dollars
     ($22,500,000).

The capitalized terms used herein and not defined herein have the meanings
assigned to them by or pursuant to the terms of the Note Purchase Agreement.

     We have acted as special counsel to the Purchasers in connection with the
transactions contemplated by the Note Purchase Agreement. This opinion is
delivered to you pursuant to Section 4.4(b) of the Note Purchase Agreement. In
acting as such counsel, we have examined:

          (a) the Note Purchase Agreement;

          (b) the Company's 7.17% Series A Senior Notes due December 30, 2001,
     dated the date hereof, in the form set forth in Exhibit 1A to the Note
     Purchase Agreement, and in the principal amounts and with the registration
     numbers set forth on Schedule A to the Note Purchase Agreement (the "Series
     A Notes");



          (c) the Company's 7.17% Series B Senior Notes due December 30, 2002,
     dated the date hereof, in the form set forth in Exhibit 1B to the Note
     Purchase Agreement, and in the principal amounts and with the registration
     numbers set forth on Schedule A to the Note Purchase Agreement (the "Series
     B Notes");4

          (d) the Subsidiary Guaranty executed and delivered by each Restricted
     Subsidiary;

          (e) an Officer's Certificate of the Company, dated the date hereof;

          (f) a certificate of the Secretary of the Company, dated the date
     hereof;

          (g) a certificate of the Secretary of each Restricted Subsidiary
     incorporated under the laws of any state of the United States (each, a
     "U.S. Restricted Subsidiary"), dated the date hereof;

          (h) a letter to Hebb & Gitlin and Gardere Wynne Sewell & Riggs from
     Bear, Stearns & Co., Inc. dated the date hereof, making certain
     representations with respect the manner in which the Notes were offered
     (the "Offeree Letter");

          (i) the opinion of Gardere Wynne Sewell & Riggs, counsel to the
     Company and the U.S. Restricted Subsidiaries, dated the date hereof; and

          (j) originals, or copies certified or otherwise identified to our
     satisfaction, of such other documents, records, instruments and
     certificates of public officials as we have deemed necessary or appropriate
     to enable us to render this opinion.

     In rendering our opinion, we have assumed that all signatures are genuine,
that all documents submitted to us as originals are genuine, that all copies
submitted to us conform to the originals, that all natural Persons have legal
capacity, and as to documents executed by or on behalf of Persons other than the
Company and the Restricted Subsidiaries,

          (i) that each such Person executing documents had the power to enter
     into and perform its obligations under such documents, and

          (ii) that such documents have been duly authorized, executed and
     delivered by, and are binding upon and enforceable against, such Persons.



     In addition, we have assumed that each U.S. Restricted Subsidiary received
fair consideration and reasonably equivalent value in exchange for executing the
Subsidiary Guaranty.

     In rendering our opinion, we have relied, to the extent we deem necessary
and proper, on:

          (a) warranties and representations as to certain factual matters
     contained in the Note Purchase Agreement;

          (b) the Offeree Letter; and

          (c) said opinion of Gardere Wynne Sewell & Riggs with respect to all
     questions governed by Delaware law and with respect to all questions
     concerning the due incorporation, valid existence and good standing of, and
     the authorization, execution and delivery of instruments by, the Company
     and each U.S. Restricted Subsidiary (except that we have made an
     independent examination of a certified copy of the certificate or articles
     of incorporation of the Company and each U.S. Restricted Subsidiary, and
     certificates of officers of the Company and each U.S. Restricted Subsidiary
     setting forth their respective by-laws and corporate resolutions
     authorizing the participation by such entities in the transactions
     contemplated by the Note Purchase Agreement and the Subsidiary Guaranty);
     based on such investigation as we have deemed appropriate, said opinion is
     satisfactory in form and scope to us and in our opinion the Purchasers and
     we are justified in relying thereon. As to such opinion and the matters
     therein upon which we are relying, we incorporate herein the assumptions
     and qualifications to such opinion set forth therein.

     Based on the foregoing, we are of the following opinions:

     1.   (a) The Company is a corporation duly incorporated, validly existing
          and in good standing under the laws of the State of Delaware.

          (b) Each U.S. Restricted Subsidiary is a corporation duly
          incorporated, validly existing and in good standing under the laws of
          its jurisdiction of incorporation.

     2.   (a) The Company has all requisite corporate power and authority to
          execute and deliver the Note Purchase Agreement, the Series A Notes
          and the Series B Notes, to issue and sell the Series A Notes and the
          Series B Notes, and to perform its obligations set forth in each of
          the Note Purchase Agreement, the Series A Notes and the Series B
          Notes.5



          (b) Each U.S. Restricted Subsidiary has all requisite corporate power
          and authority to execute and deliver the Subsidiary Guaranty and to
          perform its obligations set forth in the Subsidiary Guaranty.6

     3.   (a) Each of the Note Purchase Agreement, the Series A Notes and the
          Series B Notes has been duly authorized by all necessary corporate
          action on the part of the Company, has been executed and delivered by
          duly authorized officers of the Company, and constitutes a legal,
          valid and binding obligation of the Company, enforceable against the
          Company in accordance with its terms.7

          (b) The Subsidiary Guaranty has been duly authorized by all necessary
          corporate action on the part of each of the U.S. Restricted
          Subsidiaries, has been executed and delivered by duly authorized
          officers of each U.S. Restricted Subsidiary, and constitutes a legal,
          valid and binding obligation of each U.S. Restricted Subsidiary,
          enforceable against such U.S. Restricted Subsidiary in accordance with
          its terms.

     4.   (a) The execution and delivery of the Note Purchase Agreement, the
          Series A Notes and the Series B Notes, and the issue and sale of the
          Series A Notes and the Series B Notes, by the Company and the
          performance by the Company of its obligations thereunder will not
          conflict with, result in a breach of any provision of, constitute a
          default under, or result in the creation or imposition of any Lien
          upon any of its properties pursuant to, the certificate of
          incorporation or bylaws of the Company.8



          (b) The execution and delivery of the Subsidiary Guaranty by each of
          the U.S. Restricted Subsidiaries, and the performance by each such
          U.S. Restricted Subsidiary of its obligations thereunder will not
          conflict with, result in a breach of any provision of, constitute a
          default under, or result in the creation or imposition of any Lien
          upon any of the properties pursuant to, the certificate or articles of
          incorporation or bylaws of such U.S. Restricted Subsidiary.9

     5.   No consents, approvals or authorizations of governmental authorities
          are required on the part of the Company under the laws of the United
          States of America or the State of New York in connection with the
          execution and delivery of each of the Note Purchase Agreement, the
          Series A Notes and the Series B Notes, and the offer, issue, sale and
          delivery of the Series A Notes and the Series B Notes.10 Our opinion
          in this paragraph 5 is based solely on a review of generally
          applicable laws of the United States of America and New York, and not
          on any search with respect to, or review of, any orders, decrees,
          judgments or other determinations specifically applicable to the
          Company.

     6.   Under existing law, the Series A Notes and the Series B Notes are not
          subject to the registration requirements under the Securities Act of
          1933, as amended or the "Blue Sky" laws of the State of New York, and
          the Company is not required to qualify an indenture with respect
          thereto under the Trust Indenture Act of 1939, as amended.11

     All opinions herein contained with respect to the enforceability of
     documents and instruments are qualified to the extent that:



     (a) the availability of equitable remedies, including without limitation,
     specific enforcement and injunctive relief, is subject to the discretion of
     the court before which any proceedings therefor may be brought; and

     (b) the enforceability of certain terms provided in the Note Purchase
     Agreement and the Notes may be limited by

          (i) applicable bankruptcy, reorganization, arrangement, insolvency,
          moratorium or similar laws affecting the enforcement of creditors'
          rights generally as at the time in effect, and

          (ii) common law or statutory requirements with respect to commercial
          reasonableness.

     We express no opinion as to the law of any jurisdiction other than the law
of New York, United States federal law and, in reliance on the opinion of
Gardere Wynne Sewell & Riggs, the law of Delaware and Texas. Gardere Wynne
Sewell & Riggs may rely on this opinion for the sole purpose of rendering their
opinion to be rendered pursuant to Section 4.4(a) of the Note Purchase
Agreement.

     Subsequent holders of the Notes may rely on this opinion as if it were
addressed to them.

                                            Very truly yours,



                                     ANNEX 1
                                   Addressees

Principal Mutual Life Insurance Company
711 High Street
Des Moines, IA 50392

Massachusetts Mutual Life Insurance Company
1295 State Street
Springfield, MA  01111

John Alden Life Insurance Company
P.O. Box 020270 - 3rd Floor
Miami, Florida 33102-0270

John Alden Life Insurance Company of New York
P.O. Box 020270 - 3rd Floor
Miami, Florida 33102-0270

The Mutual Life Insurance Company of New York
1740 Broadway
New York, NY 10019

MONY Life Insurance Company of America
1740 Broadway
New York, NY 10019

United of Omaha Life Insurance Company
Mutual of Omaha Plaza
Omaha, NE  68175

Pan-American Life Insurance Company
Pan American Life Center
601 Poydras Street
New Orleans, LA  70130



     4    Paragraphs (b) and (c) would be replaced by the following for the
          second closing:

               [the Company's ____ % Series C Senior Notes due December 30,
               2002, dated the date hereof, in the form set forth in Exhibit 1C
               to the Note Purchase Agreement, and in the principal amounts, and
               with the registration numbers set forth on Schedule A to the Note
               Purchase Agreement (the "Series C Notes")]

     5    Paragraph 2(a) would read as follows for the second closing:

               The Company had the requisite corporate power and authority to
               execute and deliver the Note Purchase Agreement at the time of
               its execution and delivery thereof. The Company has the requisite
               corporate power and authority to execute, deliver, issue and sell
               the Series C Notes, and to perform its obligations set forth in
               each of the Note Purchase Agreement and the Series C Notes.

     6    Paragraph 2(b) would read as follows for the second closing:

               Each U.S. Restricted Subsidiary had the requisite corporate power
               and authority to execute and deliver the Subsidiary Guaranty at
               the time of its execution and delivery thereof. Each U.S.
               Restricted Subsidiary has the requisite corporate power and
               authority to perform its obligations set forth in the Subsidiary
               Guaranty.

     7    For the second closing, reference would be made to the Series C Notes
          in this paragraph in lieu of the Series A Notes and the Series B
          Notes.

     8    Paragraph 4(a) would read as follows for the second closing:

               The execution and delivery of the Note Purchase Agreement, the
               Series A Notes and the Series B Notes by the Company did not, and
               the execution, delivery, issue and sale of the Series C Notes by
               the Company and the performance by the Company of its obligations
               under the Note Purchase Agreement and the Notes will not,
               conflict with, constitute a violation of, result in a breach of
               any provision of, constitute a default under, or result in the
               creation or imposition of any Lien or encumbrance upon any of the
               property of the Company pursuant to, the certificate of
               incorporation or by-laws of the Company.

     9    Paragraph 4(b) would read as follows for the second closing:

               The execution and delivery of the Subsidiary Guaranty by each
               U.S. Restricted Subsidiary did not, and the performance by each
               U.S. Restricted Subsidiary of its obligations thereunder will
               not, conflict with, constitute a violation of, result in a breach
               of any provision of, constitute a default under, or result in the
               creation or imposition of any Lien or encumbrance upon any of the
               property of such U.S. Restricted Subsidiary pursuant to, the
               certificate of incorporation or by-laws of such U.S. Restricted
               Subsidiary.

     10   For the second closing, reference would be made to the Series C Notes
          in this paragraph in lieu of the Series A Notes and the Series B
          Notes.

     11   For the second closing, reference would be made to the Series C Notes
          in this paragraph in lieu of the Series A Notes and the Series B
          Notes.



                                                                    EXHIBIT 4.10

                           FORM OF SUBSIDIARY GUARANTY

                                    GUARANTY

     THIS GUARANTY, dated as of December 28, 1995 (as amended or restated from
time to time, this "Guaranty"), by SEITEL DATA CORP., a Delaware corporation
(together with its successors and assigns, "SDC"), SEITEL GEOPHYSICAL, INC., a
Delaware corporation (together with its successors and assigns, "SG"), DDD
ENERGY, INC., a Delaware corporation (together with its successors and assigns,
"DDD"), SEITEL GAS & ENERGY CORP., a Delaware corporation (together with its
successors and assigns, "SG&E"), SEITEL POWER CORP., a Delaware corporation
(together with its successors and assigns, "SPC"), SEITEL NATURAL GAS, INC., a
Delaware corporation (together with its successors and assigns, "SNG"), MATRIX
GEOPHYSICAL, INC., a Delaware corporation (together with its successors and
assigns, "MG"), EXSOL, INC., a Delaware corporation (together with its
successors and assigns, "EXSOL"), DATATEL, INC., a Delaware corporation
(together with its successors and assigns, "DATATEL"), SEITEL OFFSHORE CORP., a
Delaware corporation (together with its successors and assigns, "SOC"), POLYMER
DYNAMICS, INC., a Delaware corporation (together with its successors and
assigns, "PD"), SEITEL INTERNATIONAL, INC., a Cayman Islands corporation
(together with its successors and assigns, "SI"), AFRICAN GEOPHYSICAL, INC., a
Cayman Islands corporation (together with its successors and assigns, "AG"),
GEO-BANK, INC., a Texas corporation (together with its successors and assigns,
"GB"), and ALTERNATIVE COMMUNICATION ENTERPRISES, INC., a Texas corporation
(together with its successors and assigns, "ACE" and ACE, SDC, SG, DDD, SG&E,
SPC, SNG, MG, Exsol, Datatel, SOC, PD, SI, AG and GB, and each other corporation
which becomes a party hereto, each a "Guarantor" and, collectively, the
"Guarantors"), in favor of each of the Noteholders (as such term is hereinafter
defined).

     1.   PRELIMINARY STATEMENT.

     1.1  SEITEL, INC. (together with its successors and assigns, the
"Company"), a Delaware corporation, has authorized the issuance of (i) its
Series A Senior Notes due December 30, 2001 (as may be amended or restated from
time to time, the "Series A Notes"), in the aggregate principal amount of
Twenty-Five Million Dollars ($25,000,000), (ii) its Series B Senior Notes due
December 30, 2002 (as may be amended or restated from time to time, the "Series
B Notes,"), in the aggregate principal amount of Twenty-Seven Million Five
Hundred Thousand Dollars ($27,500,000), and (iii) its Series C Senior Notes due
December 30, 2002 (as may be amended or restated from time to time, the "Series
C Notes," and, together with the Series A Notes and the Series B Notes, the
"Notes"), in the aggregate principal amount of Twenty-Two Million Five Hundred
Thousand Dollars ($22,500,000), pursuant to those certain Note Purchase
Agreements (collectively, as may be amended or restated from time to time, the
"Note Purchase Agreement"), each dated as of December 28, 1995, entered into
separately between the Company and, respectively, each of the purchasers of the
Notes named on Schedule A to the Note Purchase Agreement (the "Purchasers").



     1.2  In order to induce the Purchasers to purchase the Notes, the Company
has agreed, pursuant to the Note Purchase Agreement, that the Restricted
Subsidiaries (including each of the Guarantors) will be required to jointly and
severally guaranty unconditionally all of the obligations of the Company under
and in respect of the Notes and the Note Purchase Agreement pursuant to the
terms and provisions hereof.

     1.3  Each Guarantor will receive direct and indirect economic, financial
and other benefits from the indebtedness incurred under the Note Purchase
Agreement and the Notes by the Company, and under this Guaranty, and the
incurrence of such indebtedness is in the best interests of each Guarantor. The
Company and the Guarantors have explicitly induced the Purchasers to purchase
the Notes based upon and in reliance upon the consolidated financial condition
of the Company and its subsidiaries, including the Guarantors.

     1.4  All acts and proceedings required by law and by the certificate or
articles of incorporation, as the case may be, and by-laws of each Guarantor
necessary to constitute this Guaranty a valid and binding agreement for the uses
and purposes set forth herein in accordance with its terms have been done and
taken, and the execution and delivery hereof has been in all respects duly
authorized.

     2.   GUARANTY AND OTHER RIGHTS AND UNDERTAKINGS

     2.1  Guarantied Obligations.

     Each Guarantor, in consideration of the execution and delivery of the Note
Purchase Agreement and the purchase of the Notes by the Purchasers, hereby
irrevocably, unconditionally, absolutely, jointly and severally guarantees, on a
continuing basis, to each Noteholder, as and for the Guarantor's own debt, until
final and indefeasible payment has been made:

          (a) the due and punctual payment by the Company of the principal of,
     and interest, and the Make-Whole Amount (if any) on, the Notes at any time
     outstanding and the due and punctual payment of all other amounts payable,
     and all other indebtedness owing, by the Company to the Noteholders under
     the Note Purchase Agreement and the Notes, in each case when and as the
     same shall become due and payable, whether at maturity, pursuant to
     mandatory or optional prepayment, by acceleration or otherwise, all in
     accordance with the terms and provisions hereof and thereof; it being the
     intent of the Guarantors that the guaranty set forth herein shall be a
     continuing guaranty of payment and not a guaranty of collection; and

          (b) the punctual and faithful performance, keeping, observance, and
     fulfillment by the Company of all duties, agreements, covenants and
     obligations of the Company contained in the Note Purchase Agreement and the
     Notes.

All of the obligations set forth in subsection (a) and subsection (b) of this
Section 2.1 are referred to herein as the "Guarantied Obligations" and the
guaranty thereof contained herein is a primary, original and immediate
obligation of each Guarantor and is an absolute, unconditional, continuing and
irrevocable guaranty of payment and performance and shall remain in full force
and effect until the full, final and indefeasible payment of the Guarantied
Obligations.



     2.2  Performance Under the Note Purchase Agreement.

     In the event the Company fails to pay, perform, keep, observe, or fulfill
any Guarantied Obligation in the manner provided in the Notes or in the Note
Purchase Agreement, the Guarantors shall cause forthwith to be paid the moneys,
or to be performed, kept, observed, or fulfilled each of such obligations, in
respect of which such failure has occurred in accordance with the terms and
provisions of the Note Purchase Agreement and the Notes. In furtherance of the
foregoing, if an Event of Default shall exist, all of the Guarantied Obligations
shall, in the manner and subject to the limitations provided in the Note
Purchase Agreement for the acceleration of the Notes, forthwith become due and
payable without notice, regardless of whether the acceleration of the Notes
shall be stayed, enjoined, delayed or otherwise prevented.

     2.3  Undertakings in Note Purchase Agreement.

     The Guarantors will comply with each of the undertakings of the Company in
the Note Purchase Agreement in respect of which the Company undertakes to cause
the Guarantors (in their capacities, respectively, as a Guarantor and as a
Restricted Subsidiary) to comply with such undertakings, as if such undertakings
(as they apply to the Guarantors) were set forth at length herein as the
undertakings of the Guarantors.

     2.4  Releases.

     Each Guarantor consents and agrees that, without any notice whatsoever to
or by such Guarantor and without impairing, releasing, abating, deferring,
suspending, reducing, terminating or otherwise affecting the obligations of such
Guarantor hereunder, each Noteholder, by action or inaction, may:

          (a) compromise or settle, renew or extend the period of duration or
     the time for the payment, or discharge the performance of, or may refuse
     to, or otherwise not, enforce, or may, by action or inaction, release all
     or any one or more parties to, any one or more of the Notes, the Note
     Purchase Agreement, any other guaranty or agreement or instrument related
     thereto or hereto;

          (b) assign, sell or transfer, or otherwise dispose of, any one or more
     of the Notes;

          (c) grant waivers, extensions, consents and other indulgences of any
     kind whatsoever to the Company or any Other Guarantor in respect of any one
     or more of the Notes, the Note Purchase Agreement, any other guaranty or
     any agreement or instrument related thereto or hereto;

          (d) amend, modify or supplement in any manner whatsoever and at any
     time (or from time to time) any one or more of the Notes, the Note Purchase
     Agreement, any other guaranty or any agreement or instrument related
     hereto;

          (e) release or substitute any one or more of the endorsers or
     guarantors of the Guarantied Obligations whether parties hereto or not; and



          (f) sell, exchange, release, surrender or enforce, by action or
     inaction, any property at any time pledged or granted as security in
     respect of the Guarantied Obligations, whether so pledged or granted by the
     Company, such Guarantor or any Other Guarantor, or pursuant to any other
     guaranty or any agreement or instrument related hereto.

     2.5  Waivers.

          To the fullest extent permitted by law, each Guarantor does hereby
     waive:

               (a)  any notice of

                     (i)   acceptance of this Guaranty;

                     (ii)  any purchase of the Notes under the Note Purchase
               Agreement, or the creation, existence or acquisition of any of
               the Guarantied Obligations, or the amount of the Guarantied
               Obligations, subject to such Guarantor's right to make inquiry of
               each Noteholder to ascertain the amount of the Guarantied
               Obligations owing to such Noteholder at any reasonable time,
               provided that such Guarantor will look solely to the Company for
               the determination of the identities of the Noteholders;

                     (iii) any transfer of Notes from one Noteholder to another;

                     (iv)  any adverse change in the financial condition of the
               Company or any other fact that might increase, expand or affect
               such Guarantor's risk hereunder;

                     (v)   presentment for payment, demand, protest, and notice
               thereof as to the Notes or any other instrument;

                     (vi)  any Default or Event of Default; and

                     (vii) any kind or nature whatsoever to which such Guarantor
               might otherwise be entitled other than those specifically
               required to be given to such Guarantor pursuant to the terms of
               this Guaranty);

               (b) the right by statute or otherwise to require any Noteholder
          to institute suit against the Company or any Other Guarantor or to
          exhaust the rights and remedies of any Noteholder against the Company
          or any Other Guarantor;

               (c) the benefit of any stay (except in connection with a pending
          appeal), valuation, appraisal, redemption or extension law now or at
          any time hereafter in force which, but for this waiver, might be
          applicable to any sale of property of the Guarantor made under any
          judgment, order or decree based on this Guaranty, and the Guarantor
          covenants that it will not at any time insist upon or plead, or in any
          manner claim or take the benefit or advantage of such law;



               (d) any defense or objection to the absolute, primary, continuing
          nature, or the validity or enforceability of, or the amount guaranteed
          pursuant to, this Guaranty, including, without limitation, any defense
          based on (and the primary, continuing nature, and the validity,
          enforceability and amount, of this Guaranty shall be unaffected by),
          any of the following:

                     (i)     any change in future conditions;

                     (ii)    any change of law;

                     (iii)   any invalidity or irregularity with respect to the
               issuance or assumption of any obligations (including, without
               limitation, the Note Purchase Agreement, the Notes or any
               agreement or instrument related hereto) by the Company or any
               other Person;

                     (iv)    the execution and delivery of any agreement at any
               time hereafter (including, without limitation, the Note Purchase
               Agreement, the Notes or any agreement or instrument related
               hereto) by the Company or any other Person;

                     (v)     the genuineness, validity, regularity or
               enforceability of any of the Guarantied Obligations;

                     (vi)    any default, failure or delay, willful or
               otherwise, in the performance of any obligations by the Company
               or such Guarantor;

                     (vii)   any creditors' rights, bankruptcy, receivership or
               other insolvency proceeding of the Company or such Guarantor, or
               sequestration or seizure of any property of the Company or such
               Guarantor, or any merger, consolidation, reorganization,
               dissolution, liquidation or winding up or change in corporate
               constitution or corporate identity or loss of corporate identity
               of the Company or such Guarantor;

                     (viii)  any disability or other defense of the Company or
               such Guarantor to payment and performance of all Guarantied
               Obligations other than the defense that the Guarantied
               Obligations shall have been fully and finally performed and
               indefeasibly paid;

                     (ix)    the cessation from any cause whatsoever of the
               liability of the Company or such Guarantor in respect of the
               Guarantied Obligations;

                     (x)     impossibility or illegality of performance on the
               part of the Company or such Guarantor under the Note Purchase
               Agreement, the Notes or this Guaranty;



                     (xi)    any change of the circumstances of the Company,
               such Guarantor or any other Person, whether or not foreseen or
               foreseeable, whether or not imputable to the Company or such
               Guarantor, including, without limitation, impossibility of
               performance through fire, explosion, accident, labor disturbance,
               floods, droughts, embargoes, wars (whether or not declared),
               civil commotions, acts of God or the public enemy, delays or
               failure of suppliers or carriers, inability to obtain materials,
               economic or political conditions, or any other causes affecting
               performance, or any other force majeure, whether or not beyond
               the control of the Company or such Guarantor and whether or not
               of the kind hereinbefore specified;

                     (xii)   any attachment, claim, demand, charge, Lien, order,
               process, encumbrance or any other happening or event or reason,
               similar or dissimilar to the foregoing, or any withholding or
               diminution at the source, by reason of any taxes, assessments,
               expenses, indebtedness, obligations or liabilities of any
               character, foreseen or unforeseen, and whether or not valid,
               incurred by or against any Person, or any claims, demands,
               charges or Liens of any nature, foreseen or unforeseen, incurred
               by any Person, or against any sums payable under the Note
               Purchase Agreement or the Notes or any agreement or instrument
               related hereto so that such sums would be rendered inadequate or
               would be unavailable to make the payment as herein provided;

                     (xiii)  any change in the ownership of the equity
               securities of the Company, such Guarantor or any other Person
               liable in respect of the Notes; or

                     (xiv)   any other action, happening, event or reason
               whatsoever that shall delay, interfere with, hinder or prevent,
               or in any way adversely affect, the performance by the Company or
               such Guarantor of any of its obligations under the Note Purchase
               Agreement, the Notes or this Guaranty.

     2.6  Waivers of Subrogation, Reimbursement and Indemnity.

     No Guarantor shall have any right of subrogation, reimbursement or
indemnity whatsoever in respect of the Guarantied Obligations, or any right of
recourse to or with respect to any assets or property of the Company.

     2.7  Invalid Payments.

     To the extent the Company makes a payment or payments to any Noteholder,
which payment or payments or any part thereof are subsequently invalidated,
declared to be fraudulent or preferential, set aside or required, for any of the
foregoing reasons or for any other reason, to be repaid or paid over to a
custodian, trustee, receiver or any other party or officer under any bankruptcy,
reorganization, arrangement, insolvency, readjustment of debt, dissolution or
liquidation law of any jurisdiction, state or federal law, or any common law or
equitable cause, then to the extent of such payment or repayment, the obligation
or part thereof intended to be satisfied shall be revived and continued in full
force and effect as if said payment had not been made and each Guarantor shall
be primarily liable for such obligation.



     2.8  Marshaling.

     Neither any Noteholder nor any Person acting for the benefit of any
Noteholder shall be under any obligation to marshal any assets in favor of any
Guarantor or against or in payment of any or all of the Guarantied Obligations.

     2.9  Setoff, Counterclaim or Other Deductions.

     Except as otherwise required by law, each payment by any Guarantor shall be
made without setoff, counterclaim or other deduction.

     2.10 Election by Guarantors to Perform Obligations.

     Any election by the Guarantor to pay or otherwise perform any of the
obligations of the Company under the Notes, the Note Purchase Agreement or any
agreement or instrument related hereto shall not release the Company, the
Guarantor or any Other Guarantor from such obligations or any of such Person's
other obligations under the Notes, the Note Purchase Agreement or any agreement
or instrument related hereto.

     2.11 No Election of Remedies by Noteholders.

     To the extent provided in the Note Purchase Agreement, each Noteholder
shall, individually or collectively, have the right to seek recourse against
each Guarantor to the fullest extent provided for herein for such Guarantor's
obligations under this Guaranty in respect of the Guarantied Obligations. No
election to proceed in one form of action or proceeding, or against any party,
or on any obligation, shall constitute a waiver of such Noteholder's right to
proceed in any other form of action or proceeding or against other parties
(including, without limitation, any Other Guarantor) unless such Noteholder has
expressly waived such right in writing. Specifically, but without limiting the
generality of the foregoing, no action or proceeding by any Noteholder against
the Company or any Guarantor under any document or instrument evidencing
obligations of the Company or such Guarantor to such Noteholder shall serve to
diminish the liability of such Guarantor under this Guaranty, except to the
extent that such Noteholder finally and unconditionally shall have realized
payment by such action or proceeding in respect of the Guarantied Obligations.

     2.12 Separate Action; Other Enforcement Rights.

     Each of the rights and remedies granted under this Guaranty to each
Noteholder in respect of the Notes held by such Noteholder may be exercised by
such Noteholder without notice by such Noteholder to, or the consent of or any
other action by, any other Noteholder. Each Noteholder may proceed to protect
and enforce this Guaranty by suit or suits or proceedings in equity, at law or
in bankruptcy, and whether for the specific performance of any covenant or
agreement contained herein or in execution or aid of any power herein granted or
for the recovery of judgment for the obligations hereby guarantied or for the
enforcement of any other proper, legal or equitable remedy available under
applicable law.

     2.13 Noteholder Setoff.

     Each Noteholder shall have, to the fullest extent permitted by law and this
Guaranty, a right of set-off against any and all credits and any and all other
property of each or all of the Guarantors, now or at any time whatsoever, with
or in the possession of, such Noteholder, or anyone acting for such Noteholder,
to ensure the full performance of any and all obligations of the Guarantors
hereunder.



     2.14 Delay or Omission; No Waiver.

     No course of dealing on the part of any Noteholder and no delay or failure
on the part of any such Person to exercise any right hereunder shall impair such
right or operate as a waiver of such right or otherwise prejudice such Person's
rights, powers and remedies hereunder. Every right and remedy given by this
Guaranty or by law to any Noteholder may be exercised from time to time as often
as may be deemed expedient by such Person.

     2.15 Restoration of Rights and Remedies.

     If any Noteholder shall have instituted any proceeding to enforce any right
or remedy under this Guaranty or under any Note held by such Noteholder, and
such proceeding shall have been dismissed, discontinued or abandoned for any
reason, or shall have been determined adversely to such Noteholder, then and in
every such case each such Noteholder, the Company and each Guarantor shall,
except as may be limited or affected by any determination (including, without
limitation, any determination in connection with any such dismissal) in such
proceeding, be restored severally and respectively to its respective former
positions hereunder and thereunder, and thereafter, subject as aforesaid, the
rights and remedies of such Noteholders shall continue as though no such
proceeding had been instituted.

     2.16 Cumulative Remedies.

     No remedy under this Guaranty, the Note Purchase Agreement or the Notes is
intended to be exclusive of any other remedy, but each and every remedy shall be
cumulative and in addition to any and every other remedy given pursuant to this
Guaranty, the Note Purchase Agreement or the Notes.

     2.17 Limitation on Guarantied Obligations.

     It is the intention of each Guarantor and each Noteholder that the maximum
amount of the obligations of any Guarantor hereunder shall be equal to, but not
in excess of, the amount equal to the lesser of

     (a) the Guarantied Obligations, and

     (b) the maximum amount permitted by applicable law.

To that end, with respect to the determination of the "maximum amount permitted
by applicable law," but only to the extent such obligations would otherwise be
avoidable, the obligations of each Guarantor hereunder shall be limited to the
maximum amount that, after giving effect to the incurrence thereof, would not
render such Guarantor insolvent or unable to pay its debts (within the meaning
of Title 11 of the United States Code or as defined in the analogous applicable
law) as they mature or leave such Guarantor with an unreasonably small capital.
The need for any such limitation shall be determined, and any such needed
limitation shall be effective, at the time or times that such Guarantor is
deemed, under applicable law, to incur obligations hereunder. Any such
limitation shall be apportioned among the Guarantied Obligations owed to the
Noteholders pro rata. This Section 2.17 is intended solely to preserve the
rights of each Noteholder hereunder to the maximum extent permitted by
applicable law, and neither the Guarantors nor any other Person shall have any
rights under this Section 2.17 that it would not otherwise have under applicable
law. For the purposes of this Section 2.17, "insolvency", "unreasonably small
capital" and "inability to pay debts (as so defined) as they mature" shall be
determined in accordance with applicable law.



     2.18 Maintenance of Offices.

     The Guarantors will maintain an office at the address set forth in Section
5.3 where notices, presentations and demands in respect of this Guaranty may be
made upon them. Such office will be maintained at such address until such time
as any Guarantor shall notify the Noteholders of any change of location of such
office.

     2.19 Further Assurances.

     Each Guarantor will cooperate with the Noteholders and execute such further
instruments and documents as the Required Holders shall reasonably request to
carry out, to the reasonable satisfaction of the Required Holders, the
transactions contemplated by the Note Purchase Agreements, the Notes, this
Guaranty and the documents and instruments related thereto.

     2.20 Pari Passu.

     Each Guarantor covenants that its obligations under this Guaranty do and
will rank at least pari passu with all its other present and future unsecured
Senior Debt.

3.   INTERPRETATION OF THIS GUARANTY

     3.1  Terms Defined.

     As used in this Guaranty, the capitalized terms have the meaning specified
in the Note Purchase Agreement unless otherwise specified below or set forth in
the section of this Guaranty referred to immediately following such term (such
definitions, unless otherwise expressly provided, to be equally applicable to
both the singular and plural forms of the terms defined):

     AC&E -- has the meaning assigned to such term in the first paragraph
hereof.

     AG -- has the meaning assigned to such term in the first paragraph hereof.

     Company -- Section 1.1.

     Datatel -- has the meaning assigned to such term in the first paragraph
hereof.

     DDD -- has the meaning assigned to such term in the first paragraph hereof.

     Debt -- has the meaning assigned to such term in the Note Purchase
Agreement.

     Exsol -- has the meaning assigned to such term in the first paragraph
hereof.



     GB -- has the meaning assigned to such term in the first paragraph hereof.

     Guarantied Obligations -- Section 2.1.

     Guarantor -- has the meaning assigned to such term in the first paragraph
hereof.

     Guaranty, this -- has the meaning assigned to such term in the first
paragraph hereof.

     MG -- has the meaning assigned to such term in the first paragraph hereof.

     Note Purchase Agreement -- Section 1.1.

     Noteholder -- means, at any time, each Person that is the holder of any
Note at such time.

     Notes -- Section 1.1.

     Other Guarantors -- means, at any time with respect to any Guarantor, each
other Guarantor and all other guarantors of the Company's obligations under the
Note Purchase Agreement and the Notes at such time.

     PD -- has the meaning assigned to such term in the first paragraph hereof.

     Purchasers -- Section 1.1.

     SDC -- has the meaning assigned to such term in the first paragraph hereof.

     Senior Debt -- means, with respect to any Guarantor, any Debt of such
Guarantor that is not in any manner subordinated in right of payment or security
in any respect to the Debt evidenced by this Guaranty or to any other Debt of
such Guarantor.

     Series A Notes -- Section 1.1.

     Series B Notes -- Section 1.1.

     Series C Notes -- Section 1.1.

     SG -- has the meaning assigned to such term in the first paragraph hereof.

     SG&E -- has the meaning assigned to such term in the first paragraph
hereof.

     SI -- has the meaning assigned to such term in the first paragraph hereof.

     SNG -- has the meaning assigned to such term in the first paragraph hereof.

     SOC -- has the meaning assigned to such term in the first paragraph hereof.

     SPC -- has the meaning assigned to such term in the first paragraph hereof.



     3.2  Section Headings and Construction.

          (a) Section Headings, etc. The titles of the Sections appear as a
     matter of convenience only, do not constitute a part hereof and shall not
     affect the construction hereof. The words "herein," "hereof," "hereunder"
     and "hereto" refer to this Guaranty as a whole and not to any particular
     Section or other subdivision.

          (b) Construction. Each covenant contained herein shall be construed
     (absent an express contrary provision herein) as being independent of each
     other covenant contained herein, and compliance with any one covenant shall
     not (absent such an express contrary provision) be deemed to excuse
     compliance with one or more other covenants.

4.   WARRANTIES AND REPRESENTATIONS

     Each Guarantor represents and warrants to each Purchaser, as of the date of
effectiveness hereof, as follows:

     4.1  Generally.

          (a) Such Guarantor is fully aware of the financial condition of the
     Company. Such Guarantor delivers this Guaranty based solely upon its own
     independent investigation and in no part upon any representation or
     statement of any one or more Noteholders with respect thereto. Such
     Guarantor is in a position to obtain, and hereby assumes full
     responsibility for obtaining, any additional information concerning the
     financial condition of the Company as such Guarantor may deem material to
     its obligations hereunder, and such Guarantor is not relying upon, nor
     expecting, any Noteholder to furnish it any information concerning the
     financial condition of the Company.

          (b) As of the date of the execution and delivery of this Guaranty, the
     fair salable value of the assets of such Guarantor, taken as a whole,
     exceeds its liabilities, taken as a whole; such Guarantor is able to pay
     and discharge all of its debts (including, without limitation, its current
     liabilities) as they become due and after giving effect to the transactions
     contemplated by this Guaranty, such Guarantor will not become unable to pay
     and discharge such debts as they become due; there are no presently pending
     material court or administrative proceedings or undischarged judgments
     against such Guarantor; and no tax liens have been filed or threatened
     against such Guarantor, nor is such Guarantor in default or claimed default
     under any agreement for borrowed money.

          (c) Such Guarantor is a corporation duly organized and validly
     existing and in good standing under the laws of its jurisdiction of
     incorporation. Such Guarantor has the corporate power to own its properties
     and carry on its business as it is now being conducted. Such Guarantor has
     the valid authority and the corporate power to enter into and perform, and
     has taken all necessary action to authorize its entry into, and the
     performance and delivery of, this Guaranty and the transactions
     contemplated hereby.



          (d) This Guaranty has been duly authorized by all necessary action on
     the part of such Guarantor, has been duly executed and delivered by duly
     authorized officers of such Guarantor, and constitutes a legal, valid and
     binding obligation of such Guarantor.

          (e) The entry into and performance of this Guaranty and the
     transactions contemplated hereby do not and will not conflict with any
     applicable law or regulation or official or judicial order, conflict with
     the articles or certificate of incorporation, as the case may be, or
     by-laws, of such Guarantor, conflict with any agreement or document to
     which such Guarantor is a party or that is binding upon it or any of its
     properties, or result in the creation or imposition of any Lien on any of
     its properties pursuant to the provisions of any agreement or document.

     4.2  Nature of Business of Company and Restricted Subsidiaries.

          The Company and the Restricted Subsidiaries have sought and obtained
     the Note Purchase Agreement, the sale of the Notes and the related
     transactions based upon their consolidated financial position and the
     Company and the Restricted Subsidiaries understand that the Purchasers are
     relying upon the consolidated financial condition of the Company and the
     Restricted Subsidiaries in purchasing the Notes. Nothing herein shall be
     deemed to prohibit any transfer by the Company or any Restricted Subsidiary
     of any of its or a Subsidiary's stock otherwise permitted under the terms
     and provisions of the Note Purchase Agreement.

     4.3  Solvency.

          The fair value of the business and assets of each of the Company and
     the Guarantors exceeds the amount that will be required to pay its
     liabilities (including, without limitation, contingent, subordinated,
     unmatured and unliquidated liabilities on existing debts, as such
     liabilities may become absolute and matured), in each case after giving
     effect to the transactions contemplated by the Note Purchase Agreement, the
     Notes and this Guaranty, including, without limitation, the provisions of
     Section 2.17. None of the Guarantors nor the Company, after giving effect
     to the transactions contemplated by the Note Purchase Agreement, the
     Notes and this Guaranty, will be insolvent or will be engaged in any
     business or transaction, or about to engage in any business or transaction,
     for which such Person has unreasonably small assets or capital (within the
     meaning of the Uniform Fraudulent Transfer Act, the Uniform Fraudulent
     Conveyance Act and Section 548 of Title 11 of the United States Code), and
     none of the Guarantors nor the Company has any intent to hinder, delay or
     defraud any entity to which it is, or will become, on or after the date of
     the Closing, indebted or incur debts that would be beyond its ability to
     pay as they mature.

5.   MISCELLANEOUS

     5.1  Successors and Assigns.

          (a) Whenever any Guarantor or any of the parties to the Note Purchase
     Agreement is referred to, such reference shall be deemed to include the
     successors and assigns of such party, and all the covenants, promises and



     agreements contained in this Guaranty by or on behalf of such Guarantor
     shall bind the successors and assigns of such Guarantor and shall inure to
     the benefit of each of the Noteholders from time to time whether so
     expressed or not and whether or not an assignment of the rights hereunder
     shall have been delivered in connection with any assignment or other
     transfer of Notes.

          (b) Each Guarantor agrees to take such action as may be reasonably
     requested by any Noteholder to confirm such Guarantor's Guaranty of the
     Guarantied Obligations in connection with the transfer of the Notes of such
     Noteholder.

     5.2  Partial Invalidity.

          The unenforceability or invalidity of any provision or provisions
     hereof shall not render any other provision or provisions contained herein
     unenforceable or invalid.

     5.3  Communications.

          (a)  Method; Address. All communications hereunder shall be in
     writing, shall be delivered in the manner required by the Note Purchase
     Agreement, and shall be addressed, if to the Guarantors, at the address set
     forth on Annex 1 hereto, and if to any of the Noteholders:

               (A) if such Noteholder is a Purchaser, at the address set forth
          on Schedule A to the Note Purchase Agreement for such Noteholder, and
          further including any parties referred to on such Schedule A which are
          required to receive notices in addition to such Noteholder, and

               (B) if such Noteholder is not a Purchaser, at the address set
          forth in the register for the registration and transfer of Notes
          maintained pursuant to Section 13.1 of the Note Purchase Agreement for
          such Noteholder,

         or to any such party at such other address as such party may designate
         by notice duly given in accordance with this Section 5.3.

          (b)  When Given. Any communication addressed and delivered as herein
     provided shall be deemed to be received when actually delivered to the
     address of the addressee (whether or not delivery is accepted) or received
     by the telecopy machine of the recipient. Any communication not so
     addressed and delivered shall be ineffective.

     5.4  Governing Law.

          THIS GUARANTY SHALL BE CONSTRUED, INTERPRETED AND ENFORCED IN
     ACCORDANCE WITH, AND GOVERNED BY, THE INTERNAL LAWS OF THE STATE OF NEW
     YORK.

     5.5  Effective Date.

          This Guaranty shall be effective as of the date hereof.



     5.6  Benefits of Guaranty Restricted to Noteholders.

          Nothing express or implied in this Guaranty is intended or shall be
     construed to give to any Person other than the Guarantors and the
     Noteholders any legal or equitable right, remedy or claim under or in
     respect hereof or any covenant, condition or provision therein or herein
     contained, and all such covenants, conditions and provisions are and shall
     be held to be for the sole and exclusive benefit of the Guarantors and the
     Noteholders.

     5.7  Survival of Representations and Warranties; Entire Agreement.

          All representations and warranties contained herein or made in writing
     by the Guarantors in connection herewith shall survive the execution and
     delivery hereof.

     5.8  Expenses.

          (a) The Guarantors shall pay when billed the reasonable costs and
     expenses (including reasonable attorneys' fees) incurred by the Noteholders
     in connection with the consideration, negotiation, preparation or execution
     of any amendments, waivers, consents, standstill agreements and other
     similar agreements with respect hereto (whether or not any such amendments,
     waivers, consents, standstill agreements or other similar agreements are
     executed).

          (b) At any time when any one or more of the Company or the Guarantors
     and the Noteholders are conducting restructuring or workout negotiations in
     respect hereof, or a Default or Event of Default exists, the Guarantors
     shall pay when billed the reasonable costs and expenses (including
     reasonable attorneys' fees and the reasonable fees of professional
     advisors) incurred by the Noteholders in connection with the assessment,
     analysis or enforcement of any rights or remedies that are or may be
     available to the Noteholders.

          (c) If the Guarantors shall fail to pay when due any principal of, or
     Make-Whole Amount or interest on, any Note, the Guarantors shall pay to
     each Noteholder, to the extent permitted by law, such amounts as shall be
     sufficient to cover the costs and expenses, including but not limited to
     reasonable attorneys' fees, incurred by such Noteholder in collecting any
     sums due on such Notes.

     5.9  Amendment.

          This Guaranty may be amended only in a writing executed by the
     Guarantors and the Required Holders.

     5.10 Consent to Jurisdiction; Appointment of Agent.

          (a) Consent to Jurisdiction. EACH GUARANTOR HEREBY IRREVOCABLY AND
     UNCONDITIONALLY AGREES THAT ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF
     OR RELATING TO THIS GUARANTY, OR ANY ACTION OR PROCEEDING TO EXECUTE OR
     OTHERWISE ENFORCE ANY JUDGMENT IN RESPECT OF ANY BREACH HEREUNDER, BROUGHT
     BY ANY NOTEHOLDER AGAINST SUCH GUARANTOR OR ANY OF ITS PROPERTY, MAY BE
     BROUGHT BY SUCH NOTEHOLDER IN ANY FEDERAL DISTRICT COURT LOCATED IN NEW
     YORK CITY, NEW YORK OR ANY NEW YORK STATE COURT SITTING IN NEW YORK CITY,
     NEW YORK, AS SUCH NOTEHOLDER MAY IN ITS SOLE DISCRETION ELECT, AND BY THE



     EXECUTION AND DELIVERY OF THIS GUARANTY, SUCH GUARANTOR IRREVOCABLY AND
     UNCONDITIONALLY SUBMITS TO THE NON-EXCLUSIVE IN PERSONAM JURISDICTION OF
     EACH SUCH COURT, AND SUCH GUARANTOR IRREVOCABLY WAIVES AND AGREES NOT TO
     ASSERT IN ANY PROCEEDING BEFORE ANY TRIBUNAL, BY WAY OF MOTION, AS A
     DEFENSE OR OTHERWISE, ANY CLAIM THAT IT IS NOT SUBJECT TO THE IN PERSONAM
     JURISDICTION OF ANY SUCH COURT. IN ADDITION, SUCH GUARANTOR HEREBY
     IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION
     THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE IN ANY SUIT,
     ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS GUARANTY BROUGHT IN
     ANY SUCH COURT, AND HEREBY IRREVOCABLY WAIVES ANY CLAIM THAT ANY SUCH SUIT,
     ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN
     INCONVENIENT FORUM. NOTHING HEREIN SHALL IN ANY WAY BE DEEMED TO LIMIT THE
     ABILITY OR RIGHT OF ANY NOTEHOLDER TO OBTAIN JURISDICTION OVER SUCH
     GUARANTOR IN SUCH OTHER JURISDICTION AS MAY BE PERMITTED BY APPLICABLE LAW.

          (b) Agent for Service of Process. EACH GUARANTOR HEREBY IRREVOCABLY
     AND UNCONDITIONALLY AGREES THAT PROCESS SERVED EITHER PERSONALLY OR BY
     REGISTERED MAIL SHALL CONSTITUTE, TO THE EXTENT PERMITTED BY LAW, ADEQUATE
     SERVICE OF PROCESS IN ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR
     RELATING TO THIS GUARANTY, OR ANY ACTION OR PROCEEDING TO EXECUTE OR
     OTHERWISE ENFORCE ANY JUDGMENT IN RESPECT OF ANY BREACH HEREUNDER, BROUGHT
     BY ANY NOTEHOLDER AGAINST SUCH GUARANTOR OR ANY OF ITS PROPERTY. RECEIPT OF
     PROCESS SO SERVED SHALL BE CONCLUSIVELY PRESUMED AS EVIDENCED BY A DELIVERY
     RECEIPT FURNISHED BY THE UNITED STATES POSTAL SERVICE OR ANY COMMERCIAL
     DELIVERY SERVICE. WITHOUT LIMITING THE FOREGOING, SUCH GUARANTOR HEREBY
     APPOINTS, IN THE CASE OF ANY SUCH ACTION OR PROCEEDING BROUGHT IN THE
     COURTS OF OR IN THE STATE OF NEW YORK:

                           CT CORPORATION SYSTEM
                           1633 BROADWAY
                           NEW YORK, NEW YORK 10019

     TO RECEIVE, FOR IT AND ON ITS BEHALF, SERVICE OF PROCESS. EACH GUARANTOR
     SHALL AT ALL TIMES MAINTAIN AN AGENT FOR SERVICE OF PROCESS IN NEW YORK
     CITY, NEW YORK AND MAY FROM TIME TO TIME APPOINT SUCCEEDING AGENTS FOR
     SERVICE OF PROCESS BY NOTIFYING EACH NOTEHOLDER OF SUCH APPOINTMENT, WHICH
     AGENTS SHALL BE ATTORNEYS, OFFICERS OR DIRECTORS OF SUCH GUARANTOR, OR
     CORPORATIONS WHICH IN THE ORDINARY COURSE OF BUSINESS ACT AS AGENTS FOR
     SERVICE OF PROCESS. NOTHING HEREIN SHALL IN ANY WAY BE DEEMED TO LIMIT THE
     ABILITY OR RIGHT OF ANY NOTEHOLDER TO SERVE ANY WRITS, PROCESS OR SUMMONSES
     IN ANY MANNER PERMITTED BY APPLICABLE LAW.



     5.11 Survival.

          So long as the Guarantied Obligations and all payment obligations of
     the Guarantors hereunder shall not have been fully and finally performed
     and indefeasibly paid, the obligations of the Guarantors hereunder shall
     survive the transfer and payment of any Note and the payment in full of all
     the Notes.

     5.12 Entire Agreement.

          This Guaranty Agreement constitutes the final written expression of
     all of the terms hereof and is a complete and exclusive statement of those
     terms.

     5.13 Duplicate Originals, Execution in Counterpart.

          Two or more duplicate originals hereof may be signed by the parties,
     each of which shall be an original but all of which together shall
     constitute one and the same instrument. This Guaranty may be executed in
     one or more counterparts and shall be effective as to each party hereto
     when at least one counterpart shall have been executed by such party, and
     each set of counterparts that, collectively, show execution by each party
     hereto shall constitute one duplicate original.

     5.14 Additional Guarantors.

          In addition to SDC, SG, DDD, SG&E, SPC, SNG, MG, Exsol, Datatel, SOC,
     PD, SI, GB and AC&E, other Restricted Subsidiaries may become Guarantors
     hereunder in accordance with the terms of the Note Purchase Agreement, by
     execution of the form of Joinder Agreement attached hereto as Annex 2.

     5.15 Release of Guarantors.

          Without any action required of any Noteholder but subject to Section
     2.7, any Guarantor shall be released from its obligations under this
     Guaranty upon

               (a)  the designation of such Guarantor as an Unrestricted
          Subsidiary by the Company pursuant to the provisions of the Note
          Purchase Agreement, or

               (b)  the disposition of such Guarantor pursuant to the Section
          10.5 or Section 10.6 of the Note Purchase Agreement,

     provided that immediately after giving effect to such designation or
     disposition, as the case may be, no Default or Event of Default under the
     Note Purchase Agreement would exist. The Noteholders shall, at the expense
     of the Company or said Guarantor, execute and deliver such documents as may
     be reasonably necessary to evidence such release.

                         [Next page is signature page.]



          IN WITNESS WHEREOF, each Guarantor has caused this Guaranty to be
     executed on its behalf by one of its duly authorized officers.

                                  SEITEL DATA CORP.


                                  By

                                      Name:

                                      Title:


                                  SEITEL GEOPHYSICAL, INC.


                                  By

                                      Name:

                                      Title:

                                  DDD ENERGY, INC.


                                  By

                                      Name:

                                      Title:

                                  SEITEL GAS & ENERGY CORP.


                                  By

                                      Name:

                                      Title:



                                  SEITEL POWER CORP.


                                  By

                                      Name:

                                      Title:

                                  SEITEL NATURAL GAS, INC.


                                  By


                                      Name:

                                      Title:


                                  MATRIX GEOPHYSICAL, INC.


                                  By

                                      Name:

                                      Title:


                                  EXSOL, INC.


                                  By

                                      Name:

                                      Title:



                                  DATATEL, INC.


                                  By

                                      Name:

                                      Title:


                                  SEITEL OFFSHORE CORP.


                                  By

                                      Name:

                                      Title:


                                  POLYMER DYNAMICS, INC.


                                  By

                                      Name:

                                      Title:


                                  SEITEL INTERNATIONAL, INC.


                                  By

                                      Name:

                                      Title:



                                  AFRICAN GEOPHYSICAL, INC.


                                  By

                                      Name:

                                      Title:


                                  GEO-BANK, INC.


                                  By

                                      Name:

                                      Title:


                                  ALTERNATIVE COMMUNICATION
                                  ENTERPRISES, INC.


                                  By

                                      Name:

                                      Title:



                                     Annex 1

                              Address of Guarantors

The Address of each Guarantor is:

     50 Briar Hollow Lane
     West Building, 7th Floor
     Houston, Texas 77027



                                     Annex 2

                           [FORM OF JOINDER AGREEMENT]

                                                                          [DATE]

To each of the Noteholders (as defined in the Guaranty
          Agreement hereinafter referred to)

Ladies and Gentlemen:

     Reference is made to the Guaranty dated as of December 28, 1995 (as amended
or restated from time to time, the "Guaranty"), among SEITEL DATA CORP., a
Delaware corporation (together with its successors and assigns, "SDC"), SEITEL
GEOPHYSICAL, INC., a Delaware corporation (together with its successors and
assigns, "SG"), DDD ENERGY, INC., a Delaware corporation (together with its
successors and assigns, "DDD"), and SEITEL GAS & ENERGY CORP., a Delaware
corporation (together with its successors and assigns, "SG&E"), SEITEL POWER
CORP., a Delaware corporation (together with its successors and assigns, "SPC"),
SEITEL NATURAL GAS, INC., a Delaware corporation (together with its successors
and assigns, "SNG"), MATRIX GEOPHYSICAL, INC., a Delaware corporation (together
with its successors and assigns, "MG"), EXSOL, INC., a Delaware corporation
(together with its successors and assigns, "EXSOL"), DATATEL, INC., a Delaware
corporation (together with its successors and assigns, "DATATEL"), SEITEL
OFFSHORE CORP., a Delaware corporation (together with its successors and
assigns, "SOC"), POLYMER DYNAMICS, INC., a Delaware corporation (together with
its successors and assigns, "PD"), SEITEL INTERNATIONAL, INC., a Cayman Islands
corporation (together with its successors and assigns, "SI"), AFRICAN
GEOPHYSICAL, INC., a Cayman Islands corporation (together with its successors
and assigns, "AG"), GEO-BANK, INC., a Texas corporation (together with its
successors and assigns, "GB"), and ALTERNATIVE COMMUNICATION ENTERPRISES, INC.,
a Texas corporation (together with its successors and assigns, "ACE" and ACE,
SDC, SG, DDD, SG&E, SPC, SNG, MG, Exsol, Datatel, SOC, PD, SI, AG and GB, and
each other corporation which becomes a party hereto, each a "Guarantor" and,
collectively, the "Guarantors"), in favor of each of the Noteholders (as defined
in the Guaranty). Capitalized terms used herein and not otherwise defined have
the meanings ascribed to such terms in the Guaranty.

     [NEW GUARANTOR], a [jurisdiction of incorporation] corporation (the
"Company"), agrees with you as follows:

     1.   Guaranty. The Company hereby unconditionally and expressly agrees to
become a party to the Guaranty and to perform and observe each and every one of
the covenants, agreements, terms, conditions, obligations, duties and
liabilities of a Guarantor thereunder, and that all references to the Guarantors
in the Guaranty or any document, instrument or agreement executed and delivered
or furnished, or to be executed and delivered or furnished, in connection
therewith shall be deemed to be references which include the Company, as a
Guarantor.



     2.   Warranties and Representations. The Company hereby warrants and
represents that each of the warranties and representations set forth in Sections
4.1 through 4.3, inclusive, of the Guaranty, are true and correct with respect
to the Company as of the date hereof and such warranties and representations are
incorporated by reference herein in their entirety. Such representations and
warranties shall survive the execution and delivery hereof.

     3.   Further Assurances. The Company agrees to cooperate with the
Noteholders and execute such further instruments and documents as the Required
Holders shall reasonably request to effect, to the reasonable satisfaction of
the Required Holders, the purposes of this Agreement.

     4.   Amendment. This Agreement may be amended only in a writing executed by
the Company and the Required Holders.

     5.   Binding Effect. This Agreement shall be binding upon the Company and
shall inure to the benefit of the Noteholders and their respective successors
and assigns.

     6.   Governing Law; Submission to Jurisdiction; Agent for Service of
Process. This Agreement shall be construed, interpreted and enforced in
accordance with, and governed by, the internal laws of the State of New York.
The provisions of Section 5.10 of the Guaranty shall apply to this Agreement as
if each reference to "this Guaranty" therein was a reference to this Agreement.

     IN WITNESS WHEREOF, the Company has caused this Agreement to be executed on
its behalf by one of its duly authorized officers.

                                                  [NEW GUARANTOR]


                                                  By

                                                      Name:

                                                      Title:

EX-10.54

                                                                   EXHIBIT 10.54

                 STANDSTILL, FORBEARANCE AND AMENDMENT AGREEMENT

     This STANDSTILL, FORBEARANCE AND AMENDMENT AGREEMENT (this "Standstill
Agreement"), dated as of June 21, 2002, is among SEITEL, INC. (the "Company"), a
Delaware corporation, and each of the investors listed on the signature pages
hereto (together with successors and assigns of each, a "Noteholder," and
collectively, the "Noteholders"). Capitalized terms have the respective meanings
ascribed thereto in Section 1 hereof.

                              W I T N E S S E T H:

     WHEREAS, each of the 1995 Noteholders and the Company are party to those
certain separate Note Purchase Agreements dated as of December 28, 1995
(collectively, as amended, the "1995 Note Purchase Agreement"), providing for
the sale by the Company and the purchase by the 1995 Noteholders of the
Company's 7.17% Series B Senior Notes due December 30, 2002 (the "Series B
Notes") in the aggregate original principal amount of $27,500,000 and the
Company's 7.48% Series C Senior Notes due December 30, 2002 (the "Series C
Notes") in the aggregate original principal amount of $22,500,000; and

     WHEREAS, each of the 1999 Noteholders and the Company are party to those
certain separate Note Purchase Agreements dated as of February 12, 1999
(collectively, as amended, the "1999 Note Purchase Agreement"), providing for
the sale by the Company and the purchase by the 1999 Noteholders of the
Company's 7.03% Series D Senior Notes due February 15, 2004 (the "Series D
Notes") in the aggregate original principal amount of $20,000,000, the Company's
7.28% Series E Senior Notes due February 15, 2009 (the "Series E Notes") in the
aggregate original principal amount of $75,000,000 and the Company's 7.43%
Series F Senior Notes due February 15, 2009 (the "Series F Notes") in the
aggregate original principal amount of $43,000,000; and

     WHEREAS, each of the 2001 Noteholders and the Company are party to those
certain separate Note Purchase Agreements dated as of October 15, 2001
(collectively, the "2001 Note Purchase Agreement"), providing for the sale by
the Company and the purchase by the 2001 Noteholders of the Company's 7.04%
Series G Senior Notes due October 15, 2006 (the "Series G Notes") in the
aggregate original principal amount of $20,000,000, the Company's 7.19% Series H
Senior Notes due October 15, 2008 (the "Series H Notes") in the aggregate
original principal amount of $50,000,000 and the Company's 7.34% Series I Senior
Notes due October 15, 2011 (the "Series I Notes") in the aggregate original
principal amount of $37,000,000; and



     WHEREAS, the 1995 Note Purchase Agreement, the 1999 Note Purchase Agreement
and the 2001 Note Purchase Agreement are collectively referred to herein as the
"Note Purchase Agreements;" and

     WHEREAS, the Series B Notes, the Series C Notes, the Series D Notes, the
Series E Notes, the Series F Notes, the Series G Notes, the Series H Notes and
the Series I Notes are collectively referred to herein as the "Notes;" and

     WHEREAS, the obligations of the Company under the Note Purchase Agreements
and the Notes have been guaranteed by the Restricted Subsidiaries pursuant to
the Subsidiary Guaranties; and

     WHEREAS, on the date hereof, the Company's records indicate that each
Noteholder is the registered owner, in its own or its nominee's name, of one or
more of the Notes; and

     WHEREAS, certain Defaults or Events of Default have occurred and are
continuing; and

     WHEREAS, the Company acknowledges and agrees that the Noteholders currently
have the right under the Note Purchase Agreements to accelerate the Notes
immediately and otherwise exercise, or cause to be exercised, all rights and
remedies available to the Noteholders under the Note Purchase Agreements and
under law and in equity; and

     WHEREAS, the Company has requested that the Noteholders forbear from
exercising any rights and remedies in respect of any Existing Event of Default
during the Standstill Period and that the Noteholders provide certain other
accommodations to the Company as set forth herein; and

     WHEREAS, the Company has, in consideration of the accommodations referred
to in the immediately foregoing clause, agreed to comply with the terms and
conditions of this Standstill Agreement; and

     WHEREAS, the Company and each Noteholder are desirous of entering into this
Standstill Agreement on the terms and conditions hereinafter set forth.

     NOW, THEREFORE, in consideration of the matters referred to above, the
mutual covenants set forth herein, and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:

                                       2



1.   DEFINITIONS.

     The following terms listed below have the meanings set forth below.
Capitalized terms used and not otherwise defined herein shall have the meanings
assigned to them in the Note Purchase Agreements.

     "Company" has the meaning assigned to such term in the first paragraph
hereof.

     "Effective Date" has the meaning assigned to such term in Section 8.

     "Existing Event of Default" means an Event of Default listed on Exhibit A
hereto.

     "Financial Advisor" has the meaning assigned to such term in Section 5(c).

     "Financial Advisor Engagement Agreement" has the meaning assigned to such
term in Section 5(c).

     "Financing Documents" means, collectively, each of the separate Note
Purchase Agreements, as amended, the Notes, as amended, the Subsidiary
Guaranties, and each of the other documents executed in connection with any of
the foregoing, as any such documents may be amended from time to time.

     "Heller Debt" means the Debt of Seitel Data, Ltd. in favor of Heller
Financial Services, Inc. to the extent that the aggregate principal amount of
such Debt does not exceed $10,000,000.

     "1995 Note Purchase Agreement" has the meaning assigned to such term in the
first "whereas" clause of this Standstill Agreement.

     "1995 Noteholders" means the parties listed in Schedule A hereto.

     "1999 Note Purchase Agreement" has the meaning assigned to such term in the
second "whereas" clause of this Standstill Agreement.

     "1999 Noteholders" means the parties listed in Schedule B hereto.

     "Noteholders" has the meaning assigned to such term in the first paragraph
hereof.

     "Note Purchase Agreements" has the meaning assigned to such term in the
fourth "whereas" clause of this Standstill Agreement.

     "Notes" has the meaning assigned to such term in the fifth "whereas" clause
of this Standstill Agreement.

                                        3



     "Person" means and includes an individual, partnership, limited liability
company, joint venture, corporation, trust, unincorporated organization or any
government or any department or agency thereof.

     "Required Noteholders" shall mean the holders of a majority of the
principal amount of the Notes then outstanding issued under each of the 1995
Note Purchase Agreement, the 1999 Note Purchase Agreement and the 2001 Note
Purchase Agreement.

     "Series B Notes" has the meaning assigned to such term in the first
"whereas" clause hereof.

     "Series C Notes" has the meaning assigned to such term in the first
"whereas" clause of this Standstill Agreement.

     "Series D Notes" has the meaning assigned to such term in the second
"whereas" clause of this Standstill Agreement.

     "Series E Notes" has the meaning assigned to such term in the second
"whereas" clause of this Standstill Agreement.

     "Series F Notes" has the meaning assigned to such term in the second
"whereas" clause of this Standstill Agreement.

     "Series G Notes" has the meaning assigned to such term in the third
"whereas" clause of this Standstill Agreement.

     "Series H Notes" has the meaning assigned to such term in the third
"whereas" clause of this Standstill Agreement.

     "Series I Notes" has the meaning assigned to such term in the third
"whereas" clause of this Standstill Agreement.

     "Senior Officer" means with respect to any Person, any member of the board
of directors, the chief executive officer, the chief operating officer, the
chief financial officer, the president and any vice president or more senior
officer of such Person.

     "Standstill Agreement" has the meaning assigned to such term in the first
paragraph of this Standstill Agreement.

     "Standstill Period" means the period commencing on the Effective Date and
ending on the Termination Date.

     "Subsidiary Guarantors" means all of the Subsidiaries party to Subsidiary
Guaranties.

                                        4



       "Termination Date" means the earlier of

       (i)    July 17, 2002; and

       (ii)   the date of occurrence of a Termination Event.

       "Termination Event" means

       (i)    the failure by the Company to perform any covenant set forth in
              Section 5(b);

       (ii)   the failure of any representation or warranty in Section 6 to be
              true and correct;

       (iii)  the occurrence of any Default or Event of Default other than an
              Existing Event of Default;

       (iv)   on or after the Effective Date the Company or any Subsidiary is
              (A) in default (as principal or as guarantor or other surety) in
              payment of any principal of or premium or make-whole amount or
              interest on any Debt (other than the Heller Debt, the Winthrop
              Lease and the Notes) that is outstanding in an aggregate principal
              amount of at least $5,000,000 beyond any period of grace provided
              with respect thereto, or (B) in default in the performance of or
              compliance with any term of any evidence of any Debt in an
              aggregate outstanding principal amount of at least $5,000,000
              (other than the Heller Debt, the Winthrop Lease and the Notes) or
              of any mortgage, indenture or other agreement relating thereto or
              any other condition exists, and as a consequence of such default
              or condition such Debt has become, or has been declared (or one or
              more Persons are entitled to declare such Debt to be), due and
              payable before its stated maturity or before its regularly
              scheduled dates or payment; or

       (v)    as a consequence of the occurrence or continuation of any event or
              condition, (x) the Company or any Subsidiary has become or is
              obligated on or after the Effective Date to purchase or repay Debt
              (including, without limitation, the Heller Debt) before its
              regular maturity or before its regularly scheduled dates of
              payment in an aggregate outstanding principal amount of at least
              $5,000,000, or (y) one or more Persons have the right on or after
              the Effective Date to require the Company or any Subsidiary to
              purchase or repay Debt or other amounts (including, without
              limitation, the Heller Debt and amounts in respect of the Winthrop
              Lease) before its regular maturity or before its regularly
              scheduled dates or payment in an aggregate outstanding principal
              amount of at least $5,000,000.

                                        5



       "2001 Note Purchase Agreement" has the meaning assigned to such term in
the third "whereas" clause of this Standstill Agreement.

       "2001 Noteholders" means the parties listed in Schedule C hereto.

       "Winthrop Lease" means the Lease Agreement dated October 3, 2001 from
Winthrop Resources Corporation to Seitel, Inc. with respect to computer and
related equipment.

2.     STANDSTILL PERIOD.

       The Noteholders agree, during the Standstill Period, to forbear from
exercising any rights and remedies they may have under any or all of the Note
Purchase Agreements or any of the Notes or any of the other Financing Documents
solely as a result of the existence or occurrence of any Existing Event of
Default. The Company acknowledges that upon the termination of the Standstill
Period, such forbearance by the Noteholders shall terminate and the Noteholders
may immediately exercise, without further notice, any one or more of such rights
and remedies without notice or demand in respect of any Default, Event of
Default or Existing Event of Default. The Company has indicated that during the
Standstill Period it may identify asset sales or alternative financing that will
enable it to meet certain of its immediate cash needs, and the Company has
indicated that it will present for Noteholder approval any such proposed asset
sales or financing arrangements.

3.     AMENDMENTS.

       (a) Each of the Note Purchase Agreements and the Notes is hereby amended
to effect an increase in the interest rate payable on each Note of twenty-five
basis points (0.25%) per annum and to change each reference to the interest rate
applicable to any Note to such increased interest rate, in each case with
respect to the period from June 21, 2002 through and including July 17, 2002. No
other action on the part of the Company (including no physical notation on any
Note) shall be necessary to give effect to this amendment.

       (b) The 2001 Note Purchase Agreement and the Notes issued pursuant
thereto are hereby amended so that, in the case of each cross reference therein
to any of Sections or Schedules 5 to 22 inclusive, each such cross reference
shall be deemed to be a cross reference to Section or Schedule 6 to 23
inclusive, respectively.

4.     NOTICE OF TERMINATION EVENT.

       The Company shall give each of the Noteholders immediate written notice
of the occurrence of any Termination Event.

                                        6



5.     ADDITIONAL COVENANTS OF COMPANY.

       (a)   Override of Certain Financial Covenants. During the period from the
Effective Date through July 17, 2002, Sections 10.3 through 10.7 and Section
10.9 of the 1995 Note Purchase Agreement and the 1999 Note Purchase Agreement,
and Sections 11.3 through 11.7 and Section 11.9 of the 2001 Note Purchase
Agreement, shall be suspended and, in lieu thereof, the Company shall, and shall
cause its Subsidiaries to, comply with the provisions of Section 5(b) of this
Standstill Agreement.

       (b)   Supplemental Covenants of the Company. During the period from the
Effective Date through July 17, 2002, the Company shall not, and shall not
permit any Subsidiary (including, without limitation, any Subsidiary organized
under the laws of, or otherwise existing or domiciled in, Canada or any province
or other jurisdiction therein) to:

             (i)   make, directly or indirectly, any Restricted Payment
       (references to "Restricted Subsidiaries" in the definition of "Restricted
       Payment" being deemed to be references to "Subsidiaries" except for the
       second reference to "Restricted Subsidiaries" in the parenthetical
       expression in paragraph (a) of the definition of "Restricted Payment");

             (ii)  make, directly or indirectly, any Restricted Investment
       (provided that the Company and the Subsidiaries may make Restricted
       Investments constituting unsubordinated debt obligations of Unrestricted
       Subsidiaries in an aggregate amount not to exceed $1,500,000 during the
       period from June 24, 2002 through and including July 17, 2002);

             (iii) create, incur or assume any Debt;

             (iv)  effectuate any Transfer (including, without limitation, any
       Transfer involving the assets of DDD Energy, Inc.) except for (a)
       Transfers of inventory in the ordinary course of business, (b) Transfers
       to Unrestricted Subsidiaries permitted pursuant to clause (ii) above, (c)
       Transfers to Wholly-Owned Restricted Subsidiaries in the ordinary course
       of business, (d) Transfers to Affiliates that constitute joint ventures
       of the Company or its Subsidiaries with unrelated third parties, which
       Transfers are made in the ordinary course of business and pursuant to
       preexisting contractual obligations of the Company and the Subsidiaries
       and (e) Transfers that have been approved by the Required Noteholders in
       writing;

             (v)   settle, sell, compromise and/or discount any loans made to
       any officers, directors and/or employees of the Company or any
       Subsidiary;

                                        7



              (vi)   merge or consolidate with any other Person;

              (vii)  pay any bonuses or advances on commissions to any Senior
       Officer of the Company or any Subsidiary, other than payments
       previously-contracted for that are due and payable during the Standstill
       Period and are disclosed to the Noteholders in writing prior to the
       Effective Date; or

              (viii) create, incur or assume any Lien upon any of the property
       or assets of the Company or any Subsidiary, whether now owned or
       hereafter acquired, except for those Liens permitted by Section 10.4(a)
       through (i) of the 1995 Note Purchase Agreement and the 1999 Note
       Purchase Agreement, and Section 11.4(a) through (i) of the 2001 Note
       Purchase Agreement.

       (c)    Financial Advisor. The Company agrees to the hiring by the
Noteholders' special counsel of Crossroads, LLC to act as financial advisor (the
"Financial Advisor") to the Noteholders' special counsel and the Company agrees
to pay the fees and expenses of the Financial Advisor in accordance with that
engagement letter between Bingham Dana LLP (now Bingham McCutchen LLP) and the
Financial Advisor dated June 11, 2002 which engagement letter has been
acknowledged and agreed to by the Company (the "Financial Advisor Engagement
Agreement"). The Company shall provide the Financial Advisor with full onsite
access to its books and records and the opportunity to discuss the Company's
financial condition, performance, financial statements and other matters
pertinent to the Noteholders' investment in the Company with its officers,
directors, independent accountants and financial advisors to permit the
Financial Advisor to fully investigate any matter that arises during its review
of the financial information of the Company and its Subsidiaries. The Financial
Advisor shall have no duty to share its work product with, or accept
instructions from, the Company or any other Person working on its behalf.

6.     REPRESENTATIONS AND WARRANTEES.

       To induce the Noteholders to enter into this Standstill Agreement, the
Company represents and warrants, as of the Effective Date, as follows:

              (a)    the Company is a corporation duly organized, validly
       existing and in good standing under the laws of the state of Delaware;

              (b)    each of the Subsidiaries is an organization duly organized,
       validly existing and in good standing under the laws of the jurisdiction
       of its organization;

                                        8



          (c) the execution and delivery of this Standstill Agreement is within
     the corporate powers of the Company and each Subsidiary Guarantor, has been
     duly authorized by the Company and each Subsidiary Guarantor and constitute
     a valid and binding obligation of the Company and each Subsidiary
     Guarantor, enforceable in accordance with its terms, except that such
     enforceability may be limited by bankruptcy, insolvency, reorganization,
     moratorium or other similar laws affecting the enforceability of creditors'
     rights generally and except that such enforceability is subject to the
     availability of equitable remedies;

          (d) The execution and delivery of this Standstill Agreement does not
     conflict with, result in any breach of any of the provisions of, constitute
     a default under, or result in the creation of any Lien upon any property of
     the Company or any Subsidiary Guarantor under the provisions of, any
     agreement, charter instrument, bylaw or other instrument to which the
     Company or any Subsidiary Guarantor is a party or by which the Company, any
     of its Subsidiaries, or any of their respective properties may be bound;

          (e) each of the Notes, the Note Purchase Agreements and the other
     Financing Documents to which the Company and each Subsidiary Guarantor is a
     party, as modified by this Standstill Agreement, constitutes a valid and
     binding obligation of the Company and such Subsidiary Guarantor party
     thereto, enforceable in accordance with its terms, except that such
     enforceability may be limited by bankruptcy, insolvency, reorganization,
     moratorium or other similar laws affecting the enforceability of creditors'
     rights generally and except that such enforceability is subject to the
     availability of equitable remedies; and

          (f) except with respect to Existing Events of Default, there are, to
     the best present actual knowledge of the Company, no Defaults or Events of
     Default in existence on the Effective Date (although the Company continues
     its investigation and diligence into certain matters that may reveal the
     existence of additional Defaults or Events of Default).

7.   NONWAIVER AND NO AMENDMENT.

     Except as expressly set forth herein, the terms of this Standstill
Agreement shall not operate as a waiver by any of the Noteholders of, or
otherwise prejudice, the Noteholders' rights, remedies or powers under the
Notes, the Note Purchase Agreements, the other Financing Documents or applicable
law. With respect to any Event of Default under any of the Note Purchase
Agreements, as modified by this Standstill Agreement, other than any Existing
Event of Default, any of the Noteholders may exercise the rights, remedies and
powers provided in such Note Purchase Agreement and the other Financing
Documents in accordance with the terms of such documents regardless of whether
such Event of Default shall exist on

                                       9



the date hereof or come into existence during the Standstill Period. Except to
the extent expressly provided for herein, this Standstill Agreement shall not
operate to waive or otherwise prejudice any rights which the Noteholders may
have against the Company, any party to a Subsidiary Guaranty or any other Person
arising under the Note Purchase Agreements, the Notes, the other Financing
Documents or otherwise.

     Except as expressly provided herein, no terms or provisions of the Note
Purchase Agreements, the Notes or the other Financing Documents are modified or
changed by this Standstill Agreement, and all of the terms and provisions of the
Note Purchase Agreements, the Notes and the other Financing Documents shall
continue in full force and effect. The Company and the parties to the Subsidiary
Guaranties hereby acknowledge and reaffirm all of their respective obligations
and duties under each of the Note Purchase Agreements, the Notes and the other
Financing Documents to which each is a party, as each such Financing Document is
modified by this Standstill Agreement.

8.   EFFECTIVE DATE.

     The "Effective Date" shall be the first date on which the Company and the
Required Noteholders shall have executed and delivered this Standstill
Agreement.

9.   EXPENSES AND FEES.

     The Company hereby agrees to pay all reasonable costs and expenses of the
Noteholders (it being understood and agreed by the Company that the Noteholders
shall have wide latitude on the scope and depth of legal analysis they obtain
from their legal and financial advisors to evaluate, explore, and protect
Noteholder interests regarding the Company and the Notes in light of existing
defaults, accounting and executive officer irregularities, and related matters
affecting the Company's business plan, viability, and restructuring prospects),
including, without limitation, the fees and expenses of Bingham McCutchen LLP,
special counsel to the Noteholders, and Crossroads, LLC, the Noteholders'
Financial Advisor, and also including the reasonable out-of-pocket travel and
other expenses of the Noteholders incurred in connection with this Standstill
Agreement and the collection of any sum owed to any of the Noteholders by the
Company and in otherwise assessing, analyzing, evaluating, protecting,
asserting, defending or enforcing any rights or remedies which are or may be
available to the Noteholders, including, without limitation, representatives of
the Noteholders in any bankruptcy proceeding.

10.  HEADINGS.

     All headings and captions preceding the text of the several Sections of
this Standstill Agreement are intended solely for the convenience of reference
and shall

                                       10



not constitute a part of this Standstill Agreement nor shall they affect its
meaning, construction or effect.

11.  ENTIRE AGREEMENT.

     This Standstill Agreement, the Note Purchase Agreement, the Notes and the
other Financing Documents, as amended to the date hereof, embody the entire
agreement and understanding between the Noteholders, the Company and the parties
to the Subsidiary Guaranties and supersede all prior agreements and
understandings relating to the subject matter hereof and thereof.

12.  GOVERNING LAW.

     This Standstill Agreement shall be governed by, and construed in accordance
with, the internal laws of the State of New York.

13.  DIRECTLY OR INDIRECTLY.

     Where any provision in this Standstill Agreement refers to action to be
taken by any Person, or which such Person is prohibited from taking, such
provision shall be applicable whether such action is taken directly or
indirectly by such Person, including actions taken by or on behalf of any
partnership or limited liability company in which such Person is a general
partner or managing member, as applicable.

14.  COUNTERPARTS.

     This Standstill Agreement may be executed by the parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same agreement. An
executed copy of this Standstill Agreement sent by facsimile shall be effective
as an original.

15.  NOTICES.

     All communications under this Standstill Agreement shall be made in
accordance with the Note Purchase Agreements.

     [Remainder page intentionally left blank. Next page is signature page.]

                                       11



         IN WITNESS WHEREOF, the parties hereto have caused this Standstill
Agreement to be executed by their authorized officers as of the date first
written above.

                                         SEITEL, INC.

                                         By  /s/ Kevin Fiur
                                            ------------------------------------
                                         Name:  Kevin Fiur
                                         Title: President and Chief Executive
                                                Officer


                                         PRINCIPAL LIFE INSURANCE COMPANY
                                         By:  Principal Capital Management,
                                              LLC, a Delaware limited
                                              liability company, its
                                              authorized signatory


                                         By: /s/ Debra Svoboda Epp
                                            ------------------------------------
                                            Name:  Debra Svoboda Epp
                                            Title: Counsel


                                         By: /s/ Jon C. Henry
                                            ------------------------------------
                                            Name:  Jon C. Henry
                                            Title: Counsel


                                         PRINCIPAL LIFE INSURANCE COMPANY, ON
                                         BEHALF OF ONE OR MORE SEPARATE ACCOUNTS
                                         By:  Principal Capital Management,
                                              LLC, a Delaware limited
                                              liability company, its
                                              authorized signatory


                                         By: /s/ Debra Svoboda Epp
                                            ------------------------------------
                                            Name:  Debra Svoboda Epp
                                            Title: Counsel


                                         By: /s/ Jon C. Henry
                                            ------------------------------------
                                            Name:  Jon C. Henry
                                            Title: Counsel




                                        CGU LIFE INSURANCE COMPANY OF AMERICA,
                                        a Delaware corporation (formerly known
                                        as Commercial Union Life Insurance
                                        Company of America)


                                        By:   Principal Capital Management, LLC,
                                              a Delaware limited liability
                                              company, its attorney in fact


                                        By: /s/ Debra Svoboda Epp
                                           -------------------------------------
                                           Name:  Debra Svoboda Epp
                                           Title: Counsel


                                        By: /s/ Jon C. Henry
                                           -------------------------------------
                                           Name: Jon C. Henry
                                           Title: Counsel


                                        ALLSTATE LIFE INSURANCE COMPANY


                                        By /s/ unrecognizable signature
                                          ---------------------------------
                                        Name:  unknown
                                        Title: Authorized Signatory


                                        By /s/ unrecognizable signature
                                          ---------------------------------
                                        Name:  unknown
                                        Title: Authorized Signatory


                                        ALLSTATE LIFE INSURANCE COMPANY OF NEW
                                        YORK


                                        By /s/ unrecognizable signature
                                          ---------------------------------



                                 Name:  unknown
                                 Title: Authorized Signatory

                                 By /s/ unrecognizable signature
                                    ----------------------------
                                 Name:  unknown
                                 Title: Authorized Signatory

                                 MASSACHUSETTS MUTUAL LIFE
                                 INSURANCE COMPANY
                                 By:    David L. Babson & Company Inc.
                                        as Investment Adviser


                                 By /s/ Richard C. Morrison
                                    -------------------------------------------
                                 Name:  Richard C. Morrison
                                 Title: Managing Director

                                 C.M. LIFE INSURANCE COMPANY
                                 By:    David L. Babson and Company Inc.
                                        as Investment Sub-Adviser

                                 By /s/ Richard C. Morrison
                                    -------------------------------------------
                                 Name:  Richard C. Morrison
                                 Title: Managing Director

                                 MASSMUTUAL ASIA LIMITED
                                 By:    David L. Babson & Company Inc.
                                        as Investment Adviser

                                 By /s/ Richard C. Morrison
                                    -------------------------------------------
                                 Name:  Richard C. Morrison
                                 Title: Managing Director

                                 THE GUARDIAN INSURANCE & ANNUITY COMPANY, INC.


                                 By  /s/ Thomas M. Donohue
                                     ------------------------------------------
                                 Name:  Thomas M. Donohue
                                 Title: Managing Director

                                 FORT DEARBORN LIFE INSURANCE COMPANY
                                 By:    Guardian Investor Services LLC



                       By  /s/ Thomas M. Donohue
                           -----------------------------------------------------
                       Name:  Thomas M. Donohue
                       Title: Managing Director

                       THE GUARDIAN LIFE INSURANCE COMPANY OF AMERICA

                       By  /s/ Thomas M. Donohue
                           -----------------------------------------------------
                       Name:  Thomas M. Donohue
                       Title: Managing Director

                       BERKSHIRE LIFE INSURANCE COMPANY OF AMERICA

                       By  /s/ Thomas M. Donohue
                           -----------------------------------------------------
                       Name:  Thomas M. Donohue
                       Title: Managing Director

                       J. ROMEO & CO. AS NOMINEE FOR MONY LIFE INSURANCE COMPANY

                       By /s/ Barbara J. Walsh
                          --------------------------------------------------
                       Name:  Barbara J. Walsh
                       Title: Authorized Signatory

                       J. ROMEO & CO. AS NOMINEE FOR MONY LIFE INSURANCE
                       COMPANY OF AMERICA


                       By /s/ Barbara J. Walsh
                          --------------------------------------------------
                       Name:  Barbara J. Walsh
                       Title: Authorized Signatory

                       PHOENIX LIFE INSURANCE COMPANY

                       By /s/ Christopher M. Wilkos
                          --------------------------------------------------
                       Name:  Christopher M. Wilkos
                       Title: Senior Vice President, Corporate
                              Portfolio Management



                                    UNITED OF OMAHA LIFE INSURANCE COMPANY


                                    By /s/ Edwin H. Garrison, Jr.
                                       ----------------------------------------
                                    Name:  Edwin H. Garrison, Jr.
                                    Title: First Vice President

                                    RELIASTAR LIFE INSURANCE COMPANY
                                    By: ING Investment Management, LLC, as Agent


                                    By /s/ James V. Wittich
                                       -----------------------------------------
                                    Name:  James V. Wittich
                                    Title: Senior Vice President

                                    NORTHERN LIFE INSURANCE COMPANY
                                    By: ING Investment Management, LLC, as Agent


                                    By /s/ James V. Wittich
                                       -----------------------------------------
                                    Name:  James V. Wittich
                                    Title: Senior Vice President

                                    RELIASTAR LIFE INSURANCE COMPANY OF NEW YORK
                                    By: ING Investment Management LLC, as Agent


                                    By /s/ James V. Wittich
                                       -----------------------------------------
                                    Name:  James V. Wittich
                                    Title: Senior Vice President

                                    SECURITY CONNECTICUT LIFE INSURANCE COMPANY
                                    By: ING Investment Management LLC, as Agent


                                    By /s/ James V. Wittich
                                       -----------------------------------------
                                    Name:  James V. Wittich



                                     Title: Senior Vice President


Accepted and Agreed:

SEITEL DATA CORP.


By /s/ Kevin Fiur
   ---------------------------------
Name:  Kevin Fiur
Title: President and Chief Executive Officer


SEITEL DATA, LTD.
By: Seitel Delaware, Inc., general partner


By /s/ Kevin Fiur
   ---------------------------------
Name:  Kevin Fiur
Title: President and Chief Executive Officer

N360X, L.L.C.
By: Seitel Management, Inc.,
    managing member


By /s/ Kevin Fiur
   ---------------------------------
Name:  Kevin Fiur
Title: President and Chief Executive Officer


SEITEL MANAGEMENT, INC.


By /s/ Kevin Fiur
   ---------------------------------
Name:  Kevin Fiur
Title: President and Chief Executive Officer


SEITEL GEOPHYSICAL, INC.
DDD ENERGY, INC.
SEITEL GAS & ENERGY CORP.
SEITEL POWER CORP.
SEITEL NATURAL GAS, INC.
MATRIX GEOPHYSICAL, INC.
EXSOL, INC.
DATATEL, INC.
SEITEL OFFSHORE CORP.
SEITEL INTERNATIONAL, INC.
AFRICAN GEOPHYSICAL, INC.
GEO-BANK, INC.
ALTERNATIVE COMMUNICATION



 ENTERPRISES, INC.
SEITEL DELAWARE, INC.


By /s/ Kevin Fiur
   ---------------------------------
Name:  Kevin Fiur
Title: President and Chief Executive Officer



                                    EXHIBIT A
                           EXISTING EVENTS OF DEFAULT

1995 Note Purchase Agreement

1. The failure of the Company to comply with Section 10.2 for the period of four
consecutive fiscal quarters ended on March 31, 2002.

1999 Note Purchase Agreement

1. The failure of the Company to comply with Section 10.2 for the period of four
consecutive fiscal quarters ended on March 31, 2002.

2. The failure of the Company to comply with Section 10.7(a) by making
Restricted Payments and/or Restricted Investments during the fiscal quarter
ending on March 31, 2002 that exceeded the permissible amount under Section
10.7(a) by not more than $10,000,000.

2001 Note Purchase Agreement

1. The failure of the Company to comply with Section 11.2 for the period of four
consecutive fiscal quarters ended on March 31, 2002.



                                   SCHEDULE A
                                1995 NOTEHOLDERS

Massachusetts Mutual Life Insurance Company
SunAmerica Life Insurance Company
First SunAmerica Life Insurance Company
MONY Life Insurance Company
MONY Life Insurance Company of America
United of Omaha Life Insurance Company
Pan-American Life Insurance Company



                                   SCHEDULE B
                                1999 NOTEHOLDERS

Principal Life Insurance Company
Principal Life Insurance Company, on behalf of one or more separate accounts
CGU Life Insurance Company of America
Allstate Life Insurance Company
Allstate Life Insurance Company of New York
Provident Life and Accident Insurance Company
The Paul Revere Life Insurance Company
Massachusetts Mutual Life Insurance Company
C.M. Life Insurance Company
United of Omaha Life Insurance Company
Phoenix Life Insurance Company
Reliastar Life Insurance Company
Northern Life Insurance Company
Reliastar Life Insurance Company of New York
Security Connecticut Life Insurance Company
Trustmark Life Insurance Co.
Pan-American Life Insurance Company
Republic Western Insurance Company
Oxford Life Insurance Company
United Life Insurance Company



                                   SCHEDULE C
                                2001 NOTEHOLDERS

The Guardian Insurance & Annuity Company
Fort Dearborn Life Insurance Company
The Guardian Life Insurance Company of America
Berkshire Life Insurance Company of America
MONY Life Insurance Company
Nationwide Life Insurance Company
Nationwide Life and Annuity Insurance Company
Connecticut General Life Insurance Company
Life Insurance Company of North America
Massachusetts Mutual Life Insurance Company
C.M. Life Insurance Company
MassMutual Asia Limited
Allstate Life Insurance Company
Principal Life Insurance Company
Phoenix Life Insurance Company
American Investors Life Insurance Company

EX-10.56

                                                                   EXHIBIT 10.56

                               NOTEHOLDER CONSENT

     This NOTEHOLDER CONSENT (this "Consent"), dated as of July 15, 2002, is
among SEITEL, INC. (the "Company"), a Delaware corporation, and each of the
investors listed on the signature pages hereto (together with successors and
assigns of each, a "Noteholder," and collectively, the "Noteholders").
Capitalized terms have the respective meanings ascribed thereto in Section 1
hereof.

                              W I T N E S S E T H:

     WHEREAS, each of the 1995 Noteholders and the Company are party to those
certain separate Note Purchase Agreements dated as of December 28, 1995
(collectively, as amended, the "1995 Note Purchase Agreement"), providing for
the sale by the Company and the purchase by the 1995 Noteholders of the
Company's Series B Notes and Series C Notes; and each of the 1999 Noteholders
and the Company are party to those certain separate Note Purchase Agreements
dated as of February 12, 1999 (collectively, as amended, the "1999 Note Purchase
Agreement"), providing for the sale by the Company and the purchase by the 1999
Noteholders of the Company's Series D Notes, Series E Notes and Series F Notes;
and each of the 2001 Noteholders and the Company are party to those certain
separate Note Purchase Agreements dated as of October 15, 2001 (collectively,
the "2001 Note Purchase Agreement"), providing for the sale by the Company and
the purchase by the 2001 Noteholders of the Company's Series G Notes, Series H
Notes and Series I Notes;

     WHEREAS, the 1995 Note Purchase Agreement, the 1999 Note Purchase Agreement
and the 2001 Note Purchase Agreement are collectively referred to herein as the
"Note Purchase Agreements;" and

     WHEREAS, the Series B Notes, the Series C Notes, the Series D Notes, the
Series E Notes, the Series F Notes, the Series G Notes, the Series H Notes and
the Series I Notes are collectively referred to herein as the "Notes;" and

     WHEREAS, on the date hereof, the Company's records indicate that each
Noteholder is the registered owner, in its own or its nominee's name, of one or
more of the Notes; and

     WHEREAS, the DDD Energy, Inc., a Restricted Subsidiary, desires to Transfer
certain gas and oil properties and other assets held by it to Rising Star
Energy, L.L.C. (the "Purchaser") pursuant to that Purchase and Sale Agreement,



dated as of July 4, 2002, between DDD Energy, Inc and the Purchaser, a copy of
which is attached hereto as Exhibit A (the "PSA");

     WHEREAS, pursuant to the terms of the Note Purchase Agreements and that
Standstill, Forbearance and Amendment Agreement dated as of June 21, 2002 among
the Company and the Noteholders, the consent of the Required Holders under each
of the Note Purchase Agreements is a condition precedent to the proposed
Transfer of assets of DDD Energy, Inc.; and

     WHEREAS, the Company has requested that the Noteholders agree and consent
to such Transfer and, subject to the terms and conditions contained herein, the
Noteholders so agree and consent.

     NOW, THEREFORE, in consideration of the matters referred to above, the
mutual covenants set forth herein, and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:

1.   DEFINITIONS.

     The following terms listed below have the meanings set forth below.
Capitalized terms used and not otherwise defined herein shall have the meanings
assigned to them in the Note Purchase Agreements.

     "Company" has the meaning assigned to such term in the first paragraph of
this Consent.

     "Consent" has the meaning assigned to such term in the first paragraph of
this Consent.

     "1995 Note Purchase Agreement" has the meaning assigned to such term in the
first "whereas" clause of this Consent.

     "1999 Note Purchase Agreement" has the meaning assigned to such term in the
second "whereas" clause of this Consent.

     "Noteholders" has the meaning assigned to such term in the first paragraph
hereof.

     "Note Purchase Agreements" has the meaning assigned to such term in the
second "whereas" clause of this Consent.

     "Notes" has the meaning assigned to such term in the third "whereas" clause
of this Consent.

                                        2



     "PSA" - has the meaning assigned to such term in the fifth "whereas" clause
of this Consent.

     "Purchaser" - has the meaning assigned to such term in the fifth "whereas"
clause of this Consent.

     "Required Noteholders" shall mean the holders of a majority of the
principal amount of the Notes then outstanding issued under each of the 1995
Note Purchase Agreement, the 1999 Note Purchase Agreement and the 2001 Note
Purchase Agreement.

     "2001 Note Purchase Agreement" has the meaning assigned to such term in the
third "whereas" clause of this Consent.

2.   CONSENT.

     Each Noteholder hereby consents, with respect to the Notes held by it, to
the Transfer of (i) the "Acquired Assets" and, (ii) to the extent the Purchase
Option is exercised as provided for in Section 1.03 of the PSA, the "Excluded
Assets" (with all terms used but not defined in this Section II having the
meaning ascribed to such terms in the PSA) to the Purchaser, pursuant to the
terms of the PSA, in accordance with the following conditions:

     a.   Use of Proceeds.

          Up to $9,000,000.00 of the Purchase Price may be used by the Company
     in accordance with the Projected Cash Receipts & Disbursements (through
     September 27, 2002) dated June 20, 2002, a copy of which is attached hereto
     as Exhibit "A" as the same may be amended or updated, consistent, for the
     applicable period, with the "Standstill, Forbearance and Amendment
     Agreement" dated as of June 21, 2002 and executed on July 9, 2002, as may
     be extended and/or amended (the "Standstill Agreement").

     b.   Interest Payable Upon Closing

          An amount equal to the interest obligations due on the Notes (all
     series) through the Closing Date under the PSA shall be paid directly to
     the Noteholders (or an account or accounts to be designated by the
     Noteholders, for further distribution to the Noteholders) out of the
     Purchase Price at the Closing.

     c.   Escrow Remainder

          The remainder of the Purchase Price after giving effect to the
     provisions of paragraphs "a" and "b" above and, if applicable, the Option
     Price, shall be owned by the Company and held in an interest bearing escrow
     account ("Escrow") and not disbursed by the escrow agent ("Escrow Agent")

                                        3



     except upon the earlier of (i) twenty (20) days prior written notice (a
     "Notice") to the Noteholders (the "Notice Period") and (ii) the consent of
     the Noteholders, as provided below; such Notice to be delivered to the
     Noteholders by written notice given to Bingham McCutchen LLP, special
     counsel to the Noteholders, and Crossroads LLC, the Noteholders' Financial
     Advisors. In each such Notice, the Company shall provide the intended uses
     and respective amounts of the proposed expenditures out of the Escrow and
     shall state that such expenditure is consistent with the Standstill
     Agreement. The Noteholders shall have five (5) business days to provide
     written consent with respect to the proposed expenditures; in the event the
     Noteholders do not timely consent to any disbursement as requested, the
     Escrow Agent shall refrain from disbursing the objected-to amount until the
     expiration of the Notice Period.

                           (1) To the extent the Noteholders have procured a
                  binding order of a court of competent jurisdiction prior to
                  the expiration of the Notice Period prohibiting the
                  disbursement, the Escrow Agent and the Company shall be
                  prohibited from making such disbursement pending disposition
                  by written agreement with the Noteholders or court order.

                           (2) To the extent the Noteholders have not procured
                  such a binding order, then, upon expiration of the Notice
                  Period, the Escrow Agent and the Company shall be authorized
                  to make the disbursement provided for in that Notice, provided
                  however, that as a condition to such authorization and
                  disbursement, the Company shall pay to the Noteholders (or an
                  account or accounts to be designated by the Noteholders, for
                  further distribution to the Noteholders) no later than
                  coterminously with the disbursement, the amount of interest
                  due on the Notes (all series) through and including the
                  proposed disbursement date.

     d.           Two Month Interest Cycle

                  Notwithstanding the terms of the Note Purchase Agreements and
     the Notes, from and after the Closing Date, ratable interest on the Notes
     shall be paid every two (2) months on a common date commencing on the first
     business day of the third full month following the Closing on the PSA
     (e.g., if Closing is July 31, the first two month payment will be October 1
     for the period through and including September 30), and continuing on the
     first business day of every second month thereafter through the conclusion
     of the respective terms of the Notes as provided in the Note Purchase
     Agreement.

     e.           Calculation of Covenant Compliance

                                       4



                  In respect of the calculation for covenant compliance under
     the Note Purchase Agreements and the Notes, the Acquired Assets and
     Excluded Assets and the liabilities attributed to them shall be excluded in
     the calculation of covenant compliance.

     f.           Consent to be Delivered to Purchaser

                  The Noteholders specifically authorize the Company to deliver,
     in the Company's discretion, a copy of this Consent to the Purchaser.

3.   EXPENSES AND FEES.

     The Company agrees to pay all reasonable fees and expenses of the
Noteholders, including, without limitation, those of Bingham McCutchen LLP,
special counsel to the Noteholders, and Crossroads, LLC, the Noteholders'
Financial Advisor, incurred in connection with this Consent and the truncations
related thereto.

4.   REPRESENTATIONS OF THE COMPANY.

     The Company hereby represents and warrants to the Noteholders that the
Purchaser is not an Affiliate of the Company, and that there are no other
material agreements or arrangements between the Company and/or the Subsidiaries
on the one hand and the Purchaser on the other with respect to the sale of the
DDD Energy, Inc. assets.

5.   HEADINGS.

     All headings and captions preceding the text of the several Sections of
this Consent are intended solely for the convenience of reference and shall not
constitute a part of this Consent nor shall they affect its meaning,
construction or effect.

6.   COUNTERPARTS.

     This Consent may be executed by the parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same agreement. An
executed copy of this Consent sent by facsimile shall be effective as an
original.

     [Remainder page intentionally left blank. Next page is signature page.]

                                       5



         IN WITNESS WHEREOF, each party hereto has caused this Consent to be
executed by its authorized officers as of the date first written above.

                                      PRINCIPAL LIFE INSURANCE
                                      COMPANY
                                      By: Principal Capital
                                          Management, LLC, a
                                          Delaware limited liability
                                          company, its authorized signatory


                                      By: /s/ Debra Svoboda Epp
                                         ---------------------------------------
                                         Name:  Debra Svoboda Epp
                                         Title: Counsel


                                      By: /s/ Jon C. Henry
                                         ---------------------------------------
                                         Name:  Jon C. Henry
                                         Title: Counsel

                                      PRINCIPAL LIFE INSURANCE
                                      COMPANY, ON BEHALF OF ONE
                                      OR MORE SEPARATE ACCOUNTS
                                      By: Principal Capital
                                          Management, LLC, a
                                          Delaware limited liability
                                          company, its authorized signatory


                                      By: /s/ Debra Svoboda Epp
                                         ---------------------------------------
                                         Name:  Debra Svoboda Epp
                                         Title: Counsel


                                      By: /s/ Jon C. Henry
                                         ---------------------------------------
                                         Name:  Jon C. Henry
                                         Title: Counsel




                                       -2-

                                       CGU LIFE INSURANCE COMPANY OF AMERICA, a
                                       Delaware corporation (formerly
                                       known as Commercial
                                       Union Life Insurance Company of America)

                                       By: Principal Capital Management, LLC,
                                           a Delaware limited liability company,
                                           its attorney in fact


                                       By: /s/ Debra Svoboda Epp
                                          --------------------------------------
                                          Name:  Debra Svoboda Epp
                                          Title: Counsel


                                       By: /s/ Jon C. Henry
                                          --------------------------------------
                                          Name:  Jon C. Henry
                                          Title: Counsel


                                       ALLSTATE LIFE INSURANCE COMPANY


                                       By /s/ W.R. Schmidt
                                         ---------------------------------------
                                       Name:  W.R. Schmidt
                                       Title: Authorized Signatory


                                       By /s/ Pat Wilson
                                          --------------------------------------
                                       Name:  Pat Wilson
                                       Title: Authorized Signatory

                                       ALLSTATE LIFE INSURANCE COMPANY OF NEW
                                       YORK



                                       -3-

                                     By /s/ W.R. Schmidt
                                        ----------------------------------------
                                     Name:  W.R. Schmidt
                                     Title: Authorized Signatory

                                     By /s/ Pat Wilson
                                        ----------------------------------------
                                     Name:  Pat Wilson
                                     Title: Authorized Signatory


                                     MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY
                                     By: David L. Babson & Company Inc.
                                         as Investment Adviser

                                     By /s/ Richard C. Morrison
                                        ----------------------------------------
                                     Name:  Richard C. Morrison
                                     Title: Managing Director

                                     C.M. LIFE INSURANCE COMPANY
                                     By: David L. Babson and Company Inc.
                                         as Investment Sub-Adviser

                                     By /s/ Richard C. Morrison
                                        ----------------------------------------
                                     Name:  Richard C. Morrison
                                     Title: Managing Director

                                     MASSMUTUAL ASIA LIMITED
                                     By: David L. Babson & Company Inc.
                                         as Investment Adviser

                                     By /s/ Richard C. Morrison
                                        ----------------------------------------
                                     Name:  Richard C. Morrison
                                     Title: Managing Director

                                     THE GUARDIAN INSURANCE & ANNUITY COMPANY,
                                     INC.


                                     By /s/ Thomas M. Donohue
                                        ----------------------------------------
                                     Name:  Thomas M. Donohue



                                       -4-

                                  Title: Managing Director

                                  FORT DEARBORN LIFE INSURANCE COMPANY
                                  By: Guardian Investor Services LLC

                                  By  /s/ Thomas M. Donohue
                                      ------------------------------------------
                                  Name:  Thomas M. Donohue
                                  Title: Managing Director

                                  THE GUARDIAN LIFE INSURANCE COMPANY OF AMERICA

                                  By  /s/ Thomas M. Donohue
                                      ------------------------------------------
                                  Name:  Thomas M. Donohue
                                  Title: Managing Director

                                  BERKSHIRE LIFE INSURANCE COMPANY OF AMERICA

                                  By  /s/ Thomas M. Donohue
                                      ------------------------------------------
                                  Name:  Thomas M. Donohue
                                  Title: Managing Director

                                  J. ROMEO & CO. AS NOMINEE FOR
                                  MONY LIFE INSURANCE COMPANY

                                  By /s/ Barbara J. Walsh
                                     -------------------------------------------
                                  Name:  Barbara J. Walsh
                                  Title: Authorized Signatory

                                  J. ROMEO & CO. AS NOMINEE FOR
                                  MONY LIFE INSURANCE COMPANY OF AMERICA

                                  By /s/ Barbara J. Walsh
                                     -------------------------------------------
                                  Name:  Barbara J. Walsh



                                      -5-

                                   Title: Authorized Signatory

                                   PHOENIX LIFE INSURANCE COMPANY

                                   By /s/ Christopher M. Wilkos
                                     ------------------------------------------
                                   Name:  Christopher M. Wilkos
                                   Title: Senior Vice President, Corporate
                                          Portfolio Management

                                   UNITED OF OMAHA LIFE INSURANCE COMPANY

                                   By /s/ Edwin H. Garrison, Jr.
                                      -----------------------------------------
                                   Name:  Edwin H. Garrison, Jr.
                                   Title: First Vice President

                                   RELIASTAR LIFE INSURANCE COMPANY

                                   By: ING Investment Management,
                                       LLC, as Agent

                                   By /s/ James V. Wittich
                                      -----------------------------------------
                                   Name:  James V. Wittich
                                   Title: Senior Vice President

                                   NORTHERN LIFE INSURANCE COMPANY

                                   By: ING Investment Management, LLC,
                                       as Agent

                                   By /s/ James V. Wittich
                                      -----------------------------------------
                                   Name:  James V. Wittich
                                   Title: Senior Vice President

                                   RELIASTAR LIFE INSURANCE COMPANY OF NEW YORK

                                   By: ING Investment Management LLC, as Agent



                                       -6-

                                                By /s/ James V. Wittich
                                                   -----------------------------
                                                Name:  James V. Wittich
                                                Title: Senior Vice President

                                                SECURITY CONNECTICUT LIFE
                                                INSURANCE COMPANY

                                                By:    ING Investment
                                                       Management LLC, as Agent

                                                By /s/ James V. Wittich
                                                   -----------------------------
                                                Name:  James V. Wittich
                                                Title: Senior Vice President

Accepted and Agreed:

SEITEL, INC.

By /s/ Kevin Fiur
   ---------------------------------
Name:   Kevin Fiur
Title:  President and Chief Executive Officer

SEITEL DATA CORP.

By /s/ Kevin Fiur
   ---------------------------------
Name:   Kevin Fiur
Title:  President and Chief Executive Officer

SEITEL DATA, LTD.

By: Seitel Delaware, Inc., general partner

By /s/ Kevin Fiur
   ---------------------------------
Name:   Kevin Fiur
Title:  President and Chief Executive Officer

N360X, L.L.C.
By: Seitel Management, Inc.,
    managing member

By /s/ Kevin Fiur
   ---------------------------------
Name:   Kevin Fiur
Title:  President and Chief Executive Officer



                                       -7-

SEITEL MANAGEMENT, INC.

By /s/ Kevin Fiur
   ---------------------------------
Name:   Kevin Fiur
Title:  President and Chief Executive Officer

SEITEL GEOPHYSICAL, INC.
DDD ENERGY, INC.
SEITEL GAS & ENERGY CORP.
SEITEL POWER CORP.
SEITEL NATURAL GAS, INC.
MATRIX GEOPHYSICAL, INC.
EXSOL, INC.
DATATEL, INC.
SEITEL OFFSHORE CORP.
SEITEL INTERNATIONAL, INC.
AFRICAN GEOPHYSICAL, INC.
GEO-BANK, INC.
ALTERNATIVE COMMUNICATION
 ENTERPRISES, INC.
SEITEL DELAWARE, INC.

By /s/ Kevin Fiur
   ---------------------------------
Name:   Kevin Fiur
Title:  President and Chief Executive Officer

EX-10.57

                                                                   EXHIBIT 10.57

                          PURCHASE AND SALE AGREEMENT

     This PURCHASE AND SALE AGREEMENT (as amended, supplemented, restated or
otherwise modified from time to time in accordance with applicable provisions
hereof, this "Agreement") dated July 3, 2002, is between DDD ENERGY, INC., a
Delaware corporation ("Seller"), the address for which is 50 Briar Hollow Lane,
Seventh Floor West, Houston, Texas 77027, and RISING STAR ENERGY, L.L.C., a
Texas limited liability company ("Purchaser"), the address of which is 3141 Hood
Street, Suite 350, Dallas, Texas 75219.

     In consideration of the mutual agreements set forth herein, and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Seller and Purchaser hereby agree as follows:

                                    ARTICLE I
                                PURCHASE AND SALE

     Purchase and Sale. In accordance with the terms of this Agreement, Seller
agrees to sell all of the Seller's oil and gas properties and related assets
including without limitation all of the interests, rights, and property
(collectively, the "Acquired Assets") described in Section 1.01, excluding,
however, the Excluded Assets as defined below in Section 1.02 to Purchaser and
Purchaser agrees to purchase the Acquired Assets from Seller. As used herein,
the term "Working Interest" means, as to a Lease (as defined in Section 1.01),
the right to exploit, produce and operate the mineral rights covered by such
Lease and the obligation to bear the expense and cost associated with such
exploitation, production and operation, whether or not such rights or
obligations are derived from Record Title (as defined below in Section 1.01) or
Operating Rights (as defined below in Section 1.01). As used herein, the term
"Net Revenue Interest" means:

          (a)  as to a Lease, the ownership percentage of all Substances (as
     defined in Section 1.01) produced from the Lease to which it applies; and

          (b)  as to a Well (as defined in Section 3.01(h)), the ownership
     percentage of all Substances produced from the Well to which it applies.

     The Net Revenue Interest attributable to a Lease or Well that is pooled or
unitized shall be the percentage of Substances produced from the pool or unit
and allocated to the Lease or Well in question. Each Net Revenue Interest shall
be the relevant ownership percentage net of all royalties, overriding royalties,
production payments and other burdens measured by or payable out of Substances
produced from or attributable the relevant Lease, Well, pool or unit. The Net
Revenue Interest shall include overriding royalty interests owned by Seller
measured by or payable out of Substances produced from or attributable the
relevant Lease, Well, pool or unit. As used herein, the term "Record Title"
means the record title ownership of a Lease. As used herein, the term "Operating
Rights" means the interest created out of the record title ownership of a Lease
authorizing the holder of that right to enter upon the lands covered by the
Lease to conduct drilling and related operations, including production of oil or
gas from such lands, in accordance with the terms of the Lease, and the
obligation to bear the expense and cost associated with such operations.

                                                                    Page 5 of 50



     1.01 Acquired Assets. The following interests, rights, and property
comprise the Acquired Assets:

          (a)  the interests set forth in the attached Schedule 1-A in the oil
     and gas leases and lands described in such Schedule 1-A, including
     Operating Rights and Record Title, working, leasehold, mineral, royalty,
     overriding royalty, net revenue, net profits or reversionary interests,
     other mineral rights, and any other interests of a similar nature
     expressed, as a percentage, in such Schedule 1-A (collectively, the
     "Leases");

          (b)  all right, title, and interest of Seller in all Wells (including
     the interest of Seller in the Wells specifically described in Schedule
     1-A), equipment, fixtures, platforms, personal property and improvements
     (including materials, plants, pipelines, gathering and processing systems
     and salt water disposal systems) which are, as of the date of this
     Agreement, as of the Effective Time (as defined in Section 1.03) or as of
     the Closing Date (as defined in Section 7.01), as the case may be, located
     on, appurtenant to or used in connection with the Leases (the "Equipment");

          (c)  all right, title, and interest of Seller in all contracts,
     escrowed funds for the abandonment of the Acquired Assets, partnerships,
     joint ventures, limited liability companies and other entities, agreements,
     instruments, payout balances, commitments, licenses, permits, easements,
     rights-of-way, and other rights of Seller relating to the items described
     above in this Section 1.01, together with all rights, claims, and causes of
     action of Seller under such items existing or arising at or after the
     Effective Time, and the contracts specifically described in Schedule 1-B
     (all of the foregoing in this clause (c), collectively, the "Contracts");

          (d)  all right, title, and interest of Seller in oil, gas, condensate,
     related hydrocarbons, and other minerals produced from the Leases on or
     after the Effective Time, including all oil in storage as described in
     clause (i) of Section 2.04, ("Substances");

          (e)  all accounts, including the share of Seller in any gas imbalance,
     makeup obligation, abandonment escrow account, instrument, general
     intangible, lien, and security interest arising from the sale or other
     disposition of the items described in this Section 1.01 on or after the
     Effective Time ("Accounts"); and

          (f)  to the extent available and assignable pursuant to the terms of
     applicable law and third party agreements (without the payment of any funds
     or other consideration by Purchaser), all information, books, records,
     files, muniments of title, reports, documents and materials of Seller that
     are related to the portion of the Acquired Assets described in clauses
     (a)-(e) of this Section 1.01, including (i) all reservoir, land, lease,
     prospect, well, operation and production files, drilling reports,
     engineering reports and data and environmental reports, (ii) all seismic
     records, field notes, interpretations and programs, and all seismic records
     and data and other geological and geophysical information and libraries,
     together with all computers and other hardware and software used to

                                                                    Page 6 of 50



     interpret and analyze geological and geophysical data and all other
     proprietary information relating to the Acquired Assets ("Seismic Data"),
     (iii) maps, logs, core analyses, and formation tests; (iv) production
     records; and (v) title and contract files (collectively, with the Seismic
     Data, the "Records").

Notwithstanding the foregoing, the transfer of the Acquired Assets pursuant to
this Agreement shall not include the assumption of any obligations related to
the Acquired Assets unless Purchaser expressly assumes that obligation pursuant
to Section 9.06.

     1.02 Excluded Assets.  The assets of Seller specified in Schedule 1.02
(collectively, the "Excluded Assets") are excluded from the Acquired Assets and
shall remain the property of Seller after the closing, subject to the exercise
by Purchaser of the Purchase Option (as defined in Section 1.03 below).

     1.03 Option to Acquire the Excluded Assets. For a period of thirty (30)
days following the Closing, Seller grants to Purchaser, with respect to items
(a), (b) and (c) set forth in Schedule 1.03 and Endeavor grants to Purchaser
with respect to items (d) and (e) set forth in Schedule 1.03 (as used in this
Section 1.03, Seller and Endeavor are each referred to, individually or
collectively, as applicable, as "Optionor"), the right and option ("Purchase
Option") (i) to purchase any or all of such Excluded Assets at the Option Price
set forth in Section 2.02 or (ii) to enter into a joint venture arrangement with
Optionor (the "Joint Venture") pursuant to which all of the Excluded Assets will
be conveyed to Purchaser in accordance with the mutual agreement of the parties.
This Purchase Option is exercisable by Purchaser, in its sole discretion, at any
time during the thirty (30) day period following the Closing by delivering
written notice to Optionor which shall identify the Excluded Assets to be
purchased or require the parties to enter into the Joint Venture arrangement. If
Purchaser exercises the Purchase Option to enter into such an arrangement, the
Joint Venture may provide for the following, subject to the mutual agreement of
the parties:

          (a)  contribution by Optionor of all or a portion (or if made into a
     Joint Venture, all) of the Excluded Assets at Optionor's basis in, or other
     agreed value of, the Excluded Assets with the right of Purchaser to
     contribute certain other capital from time to time, resulting in adjustment
     of the capital accounts and sharing ratios associated with the Joint
     Venture; and

          (b)  a process requiring Purchaser to present an offer to Optionor to
     (i) purchase Optionor's interest in the Joint Venture for a per-unit price
     nominated by Purchaser or (ii) sell Purchaser's interest in the Joint
     Venture to Optionor for an amount equal to the exact same per-unit price
     specified in clause (i) of this Section 1.03(b). The consummation of the
     transactions contemplated by such sale or purchase, as determined by
     Optionor under this Section 1.03(b), shall occur at the offices of Jackson
     Walker L.L.P. no later than December 31, 2002.

     1.04 Effective Time. The purchase and sale of the Acquired Assets shall be
effective for all purposes as of June 1, 2002, at 12:01 a.m., local time (the
"Effective Time").

                                                                    Page 7 of 50



                                   ARTICLE II
                                 PURCHASE PRICE

     2.01 Purchase Price. The purchase price for the Acquired Assets (the
"Purchase Price") is Twenty-Five Million AND 00/100 DOLLARS ($25,000,000.00). In
accordance with Section 2.05 and Section 9.01 the Purchase Price, as adjusted
pursuant to the terms of this Agreement shall be paid to Seller.

     2.02 Option Price. Upon the exercise of the Purchase Option as described in
Section 1.03 above, Purchaser may purchase any or all of the Excluded Assets for
the purchase prices specified below (each a "Option Price"):

          (a)  The Option Price for the Lawson Field Asset shall be Nine Million
     Five Hundred Fifty Thousand Dollars ($9,550,000.00).

          (b)  The Option Price for the Norphlet Project Asset shall be One
     Million Dollars ($1,000,000.00).

          (c)  The Option Price for the West AA Prospect shall be One Million
     Dollars ($1,000,000.00).

          (d)  The Option Price for the Garfield and Magilla Prospects shall be
     One Million Two Hundred Thousand Dollars ($1,200,000.00).

          (e)  The Option Price for the Cox-Perkins Wells shall be One Million
     Nine Hundred Thousand Dollars ($1,900,000.00).

          (f)  The Option Price for the Wharton-Hunt Well shall be Three Hundred
     Fifty Thousand ($350,000.00).

     2.03 Escrow Deposit. Upon receipt of the Board Resolutions and Lender
Approval referred to in Section 8.01(f), Purchaser shall simultaneously deliver
One Million Eight Hundred and Seventy-Five Thousand and 00/100 ($1,875,000.00)
(the "Escrow Deposit") to JP Morgan Chase Bank (the "Escrow Agent"). The Escrow
Deposit shall be kept in an interest bearing escrow account in accordance with
the Escrow Agreement (the "Escrow Agreement") in the form attached hereto as
Schedule 2.03, and, disbursed pursuant to the Escrow Agreement Among Purchaser
or Seller. In accordance with the Escrow Agreement, the Escrow Deposit shall
either (i) be applied toward the payment of the Purchase Price, if the Closing
occurs, (ii) paid to Seller, if this Agreement is terminated as provided in
Section 8.02(a), or (iii) otherwise returned to Purchaser with interest, after
receipt of Purchaser's demand, if this Agreement is terminated or canceled or
the transaction is not consummated for any other reason whatsoever.

     2.04 Adjustments to Purchase Price. The Purchase Price shall be adjusted as
provided in this Section 2.04 and the resulting amount shall be referred to as
the "Adjusted Purchase Price." Not less than five (5) days prior to the Closing
Date, Seller shall deliver to Purchaser a preliminary closing statement (the
"Preliminary Closing Statement"), substantially in the form attached hereto as
Schedule 2.04, setting forth adjustments to the Purchase Price using the best
information then available and prepared in accordance with customary accounting
principles used in the oil and gas industry.

                                                                    page 8 of 50



          (a)  The Purchase Price shall be increased by the following:

               (i)    an amount equal to the quantity of merchantable oil
          produced from the Leases and in storage at the Effective Time, and not
          sold or disposed of prior to Closing (as defined in Section 7.01),
          multiplied by the market price (market price shall be deemed to be the
          amount the Seller would receive if the oil were marketed by the
          operator of the Lease) for such oil at the Effective Time, net of all
          taxes and gravity adjustments and transportation expenses necessary to
          market such production;

               (ii)   the amount of (A) the direct capital expenses for
          operations approved in accordance with Section 4.01 or otherwise made
          in accordance with applicable provisions of this Agreement, direct
          lease operating expenses charged under applicable operating
          agreements, and general and administrative charges, if any, payable to
          any third-party operator under applicable operating agreements, and
          (B) in respect of Leases for which Seller serves as operator, the
          direct capital expenses for operations approved in accordance with
          Section 4.01 or otherwise made in accordance with applicable
          provisions of this Agreement and direct lease operating expenses, in
          each instance that are: (1) attributable to the Acquired Assets during
          the period between the Effective Time and Closing, and (2) incurred
          and paid by Seller (whether before or after Closing);

               (iii)  the amount of premiums under insurance policies
          (including, as applicable, business interruption insurance)
          attributable to the Acquired Assets and the production therefrom for
          the period extending from the Effective Time to Closing;

               (iv)   an amount equal to the average daily market price of
          natural gas per mcf, (mmbtu adjusted) for delivery at the Houston Ship
          Channel for the month of May 31, 2002, as published in Inside FERC,
          representing the agreed value of the net undertaken Imbalances (as
          defined in Section 3.01(n)) as of the Effective Time, as such term is
          defined hereinafter; and

          (b)  The Purchase Price shall be decreased by the following:

               (i)  the amount of net proceeds or other value received by Seller
          for the sale or disposition of Substances, including net proceeds from
          the sale of liquids and other constituents removed in gas plants or
          other processing facilities, produced after the Effective Time;

               (ii) the amount of proceeds or other value received by Seller for
          the sale or disposition, after the Effective Time, of any portion of
          the Acquired Assets;

                                                                    Page 9 of 50




               (iii)  an amount equal to the aggregate of all Title Defect
          Amounts (as hereinafter defined) with respect to all uncured Title
          Defects as determined pursuant to the provisions of Section 5.08(a);

               (iv)   the amount of any downward adjustment to the Purchase
          Price on account of any Casualty Loss (as defined in Section 5.07)
          pursuant to the provisions of Section 5.07;

               (v)    the amount of any downward adjustment to the Purchase
          Price on account of any Environmental Laws (as defined in Section
          3.01(p) pursuant to the provisions of Section 5.09(b); and

               (vi)   the amount of any downward adjustment to the Purchase
          Price as a result of the exercise of any preferential rights by the
          holders thereof, as provided in Section 5.09(c).

     2.05 Payment of Adjusted Purchase Price. At Closing, Purchaser shall pay
Seller a cash amount, in immediately available funds, equal to the Adjusted
Purchase Price, as determined on the basis of the Preliminary Closing Statement,
less any amounts payable pursuant to the Escrow Agreement.

     2.05 Allocation of Purchase Price.

          (a)  The Purchase Price shall be allocated among tangibles and
     intangibles comprising the Acquired Assets as follows: (i) ninety percent
     (90%) of the Purchase Price shall be attributed to the Leases and
     associated Contracts; and (ii) ten (10%) of the Purchase Price shall be
     attributed to Equipment and other personal property. Purchaser and Seller
     agree: (i) to be bound by the allocation of the Purchase Price among
     tangibles and intangibles set forth herein for all purposes; (ii) to
     consistently report such allocations for all federal, state and local
     income tax purposes; and (iii) to file timely all reports required by the
     Internal Revenue Code of 1986, as amended (the "Code"), including Form 8594
     (Asset Acquisition Statement Under Section 1060), pursuant to the
     requirements of Section 1060 of the Code, concerning the Purchase Price
     allocation.

          (b)  A portion of the Purchase Price has been allocated to the various
     Acquired Assets in the manner and in accordance with the respective values
     set forth in Schedule 1-A. If any adjustment is made to the Purchase Price
     pursuant to Section 2.04, a corresponding adjustment shall be made to the
     portion of the Purchase Price allocated to the affected Acquired Asset in
     Schedule 1-A. In no event shall any negative adjustment with respect to any
     Acquired Asset exceed the portion of the Purchase Price allocated to such
     Acquired Asset as provided in Schedule 2.06(b).

                                  ARTICLE III
                         REPRESENTATIONS AND WARRANTIES

     3.01 Representations and Warranties by Seller. Seller represents and
warrants to Purchaser (which representations and warranties shall survive
Closing and the execution and

                                                                   Page 10 of 50



delivery of the documentation to be executed and delivered at Closing, to the
extent provided in Section 10.15) that:

          (a) Seller is a corporation duly organized, existing and in good
     standing under the laws of the State of Delaware and is qualified to do
     business in, and is in good standing under the laws of, the State of Texas
     and each jurisdiction in which the failure to so qualify would have a
     material adverse effect on the Seller. Seller is qualified under applicable
     laws and regulations to own the Acquired Assets. All prior assignments of
     interests in any of the Leases or other Acquired Assets that are pending
     approval by the United States of America, Department of Interior, Bureau of
     Land Management (the "BLM") are in proper form for approval by the BLM in
     accordance with the laws, rules, regulations and practices applicable
     thereto.

          (b) Seller has the full legal power, right and authority to carry on
     its business as presently conducted, to enter into this Agreement and to
     perform its obligations under this Agreement.

          (c) Subject to Section 6.01(g), the execution, delivery and
     performance by Seller of this Agreement and the documentation to be
     executed and delivered at Closing have been authorized by all necessary
     action, corporate and otherwise, on the part of Seller. Execution, delivery
     and performance by Seller of this Agreement do not and execution, delivery
     and performance by Seller of the documentation to be executed and delivered
     at Closing will not, and the consummation of the transactions contemplated
     by this Agreement will not, violate or be in conflict with any (i)
     agreement, instrument, judgment, order, decree, law or regulation
     applicable to Seller or the Acquired Assets or (ii) any provision of the
     articles of incorporation or bylaws of Seller.

          (d) Subject to laws and equitable principles affecting the rights of
     creditors, this Agreement is and the documentation to be executed and
     delivered at Closing will be, upon execution and delivery thereof, legal,
     valid and binding obligations of Seller enforceable according to their
     respective terms.

          (e) Except as set forth in Schedule 3.01(e), no suit, arbitration,
     inquiry, proceeding, audit, claim, demand or investigation is pending or,
     to the knowledge of Seller, threatened that might result in impairment or
     loss or diminution of the title of Seller to the Acquired Assets or
     otherwise adversely affect any of the Acquired Assets in any material
     respect. There are no bankruptcy or reorganization proceedings pending or,
     to the knowledge of Seller, threatened against Seller or any Affiliate of
     Seller.

          (f) Schedule 1-B sets forth a list of the following contracts,
     agreements or commitments to which the Acquired Assets are subject or by
     which Seller is bound with respect to the Acquired assets:

              (i) any written contract or agreement with Seller or any Affiliate
          of Seller relating to the provision of goods or services which will
          survive the Closing;

                                                                   Page 11 of 50



               (ii)  any contract, agreement or commitment that commits Seller
          and its assigns to aggregate expenditures with respect to the Acquired
          Assets of more than $100,000 in any calendar year, excluding (x) the
          Leases and any contracts or agreements creating interests or rights in
          the Acquired Assets, (y) joint operating agreements, and (z)
          unitization or pooling agreements;

               (iii) any contract, agreement or commitment that commits Seller
          and its assigns to sell, process, transport or market any Substances
          excluding (x) any such contract, agreement or commitment which expires
          within six months or can be terminated by Seller and its assigns upon
          not more than six months' notice without penalty, (y) joint operating
          agreements and (z) unitization or pooling agreements;

               (iv)  any contract, agreement or commitment that restricts Seller
          and its assigns, as owners of any of the Acquired Assets, from
          competing with any third party in any geographic region or line of
          business; and

               (v) any contract, agreement or commitment that warrants the
          volume of production of Substances to be delivered by Seller and its
          assigns from the Acquired Assets.

          (g)  To the extent Seller is responsible for payment thereof and
     otherwise to the knowledge of Seller, all rentals, royalties, shut-in
     royalties, overriding royalties, taxes and other payments due pursuant to
     or with respect to the Leases or the production of Substances therefrom or
     attributable thereto or revenue attributable to such production have been
     properly paid.

          (h)  To the knowledge of Seller, the Leases have been drilled,
     completed, operated, developed and produced in material compliance with all
     applicable judgments, orders, laws, rules and regulations. Except as set
     forth in Schedule 3.01(h), (i) all necessary certificates, consents,
     permits, licenses and other governmental authorizations affecting the
     Acquired Assets have been obtained and are in force, (ii) there are no
     outstanding violations of any applicable regulations, rules or orders of
     the Federal Energy Regulatory Commission, the BLM, or any other regulatory
     agency with respect to the Acquired Assets, (iii) the production status of
     each oil, gas, injection or disposal well included in the Acquired Assets
     (each a "Well") identified in Schedule 1-A as of the Effective Time and, to
     the best knowledge of Seller, as of the date of execution of this
     Agreement, is correctly reflected on such Schedule, and (iv) there are no
     wells included in the Acquired Assets or located on the Leases that (A)
     Seller is obligated, by applicable judgments, orders, laws, rules,
     regulations or contract, to currently plug and abandon or (B) are subject
     to exceptions to a requirement to plug and abandon issued by a governmental
     authority.

          (i)  Seller is not obligated, under a take-or-pay or similar
     arrangement, or by virtue of an election to non-consent or not participate
     in a past or current operation on the Leases pursuant to applicable
     operating agreements, to produce Substances, or allow Substances to be
     produced, without receiving full payment at

                                                                   Page 12 of 50



     the time of delivery in an amount that corresponds to the Net Revenue
     Interest described in Schedule 1-A.

          (j) Seller is timely receiving its share of proceeds from the sale of
     Substances produced from or allocable to the Leases without suspense,
     counterclaim or set-off. There has been no production of Substances from or
     allocable to the Leases in excess of the allowable production established
     pursuant to applicable state or federal law or regulation that would result
     in a restriction on production of Substances from or allocable to the
     Leases subsequent to the Effective Time.

          (k) Except for Casualty Losses after the date of execution of this
     Agreement, which are covered by the provisions of Section 5.07, since
     January 1, 2002 no event has occurred and no condition exists which has, or
     could reasonably be expected to, materially adversely affected the value of
     the Acquired Assets or the ability of Purchaser to own, hold, develop and
     operate the Acquired Assets, except for depletion through normal production
     changes in rates of production that occur in the ordinary course of
     operation, depreciation of the Equipment through ordinary wear and tear,
     and changes in general economic conditions and product pricing generally
     affecting the oil and gas industry

          (l) Seller has incurred no liability for brokers' or finders' fees
     related to the transactions contemplated by this Agreement for which
     Purchaser shall be liable.

          (m) Except as set forth in Schedule 3.01(m), there are no outstanding
     authorities for expenditures or any oral or written commitments or
     proposals to conduct operations on the Leases which are required to be
     approved by non-operators under the terms of the applicable joint operating
     agreement.

          (n) Except as set forth in Schedule 3.01(n), as of the Effective Time,
     no portion of the Acquired Assets is over produced, under produced, or
     otherwise subject to an imbalance or make-up obligation (collectively,
     "Imbalances") with respect to Substances produced from or allocated to the
     Acquired Assets, regardless of whether such Imbalances arise at the
     platform, wellhead, pipeline, gathering system or other level and
     regardless of whether such Imbalances arise under Contract or otherwise.

          (o) No consents or approvals of any third persons are required in
     connection with the transfer of the Acquired Assets from Seller to
     Purchaser other than the approval of the BLM and the consents listed in
     Schedule 3.01(o). Except as set forth in Schedule 3.01(o) there are no
     preference rights applicable to the sale of the Acquired Assets by Seller
     to Purchaser pursuant to this Agreement.

          (p) Seller has obtained all permits, licenses and other authorizations
     (collectively, "Environmental Permits") which are required under any law,
     ordinance, statute, code, rule, regulation, agreement, judgment, order, or
     decree of any federal, state or local governmental authority, applicable to
     the Acquired Assets, relating to pollution, the protection or regulation of
     human health, natural

                                                                   Page 13 of 50



     resources, or the environment, or the emission, discharge, release or
     threatened release of pollutants, contaminants, chemicals, or industrial,
     toxic or hazardous substances or waste into the environment, including
     ambient air, surface water, ground water or land or soil (collectively,
     "Environmental Laws"), and all of such Environmental Permits are in full
     force and effect and all fees and charges relating thereto have been paid.
     Seller is in compliance with all Environmental Laws and Environmental
     Permits applicable to the Acquired Assets, and the Acquired Assets are not
     subject to any material unfulfilled remedial obligations pursuant to
     Environmental Laws. Seller has not received notice of any violation or
     alleged violation that is continuing (or of any fact or circumstance which
     with notice or the passage of time or both would constitute a violation) of
     any Environmental Laws or Environmental Permits relating to the Acquired
     Assets or any investigation relating thereto.

          (q) Seller is not a nonresident alien of the United States.

          (r) Except as set forth on the Disclosure Schedule, (i) Seller owns or
     has the right to use without any limitations or restrictions (including
     without limitation restrictions related to transfers to, or use by, any
     individual, corporation, limited liability company, business trust,
     association, company, partnership, joint venture, governmental authority or
     other entity (each, a "Person")), the Seismic Data; (ii) the consummation
     of the transactions contemplated by this Agreement will not alter or impair
     any such rights or breach any agreements with third-party vendors or
     require payments of any additional sums to such Persons; and (iii) the
     manner in which Seller has actually used or copied such Seismic Data does
     not and has not infringed on the rights of any Person.

          (s) All books, records and files of Seller pertaining to the Acquired
     Assets, to Seller's knowledge, fairly and accurately reflect the ownership,
     use, enjoyment and operation by Seller of its assets.

          (t) The transfer of the Acquired Assets to the Purchaser is not being
     made with the actual intent to hinder, delay or defraud any creditor of
     Seller. The Purchase Price constitutes reasonably equivalent value in
     exchange for the sale of the Acquired Assets as such value has been
     determined on or prior to the Closing, will be determined by an
     independent, third party appraiser, selected by Seller prior to the Closing
     and Seller is not insolvent now and will not become insolvent on the
     Closing Date.

          (u) Seller has delivered to Purchaser a copy of the report prepared by
     Garb, Grubb & Harris dated December 31, 2001. To the knowledge of Seller,
     the factual information furnished by Seller to Garb, Grubb & Harris for
     purposes of such report (including, without limitation, production,
     volumes, decline curves, sales prices for production, reserve reports,
     contractual pricing provisions under oil or gas sales or marketing
     contracts under hedging arrangements, costs of operations and development,
     lease operating expenses, and working interest and net revenue information
     relating to Seller's ownership interests in properties) was true and
     correct in all material respects on the date of such reserve report;

                                                                   Page 14 of 50



     provided, however (i) the reserves included in such report are estimates
     only and should not be construed as exact quantities, (ii) such reserves
     may or may not be recovered and, if recovered, the revenues therefrom and
     the costs related thereto could be more or less than the estimated amounts,
     (iii) the sales rates, prices received for the reserves, and costs incurred
     in recovering such reserves may vary from assumptions included in such
     report due to governmental policies and uncertainties of supply and demand,
     and (iv) estimates of such reserves may increase or decrease as a result of
     future operations.

          (v) Seller has no knowledge of the breach of any representation,
     warranty, covenant or agreement hereunder by Purchaser or of the failure of
     Purchaser to perform an obligation hereunder, other than such as have been
     disclosed in writing to Purchaser.

     3.02 Representations and Warranties by Purchaser. Purchaser represents and
warrants to Seller (which representations and warranties shall survive Closing
and the execution and delivery of the documentation to be executed and delivered
at Closing) that:

          (a) Purchaser is a limited liability company organized, existing and
     in good standing under the laws of the State of Texas and is qualified to
     do business in, and is in good standing under the laws of the State of
     Texas, and as of the Closing will be qualified to do business in each
     jurisdiction in which the failure to so qualify would have a material
     adverse affect on the Purchaser.

          (b) Purchaser has the full legal power, right and authority to carry
     on its business as presently conducted, to enter into this Agreement and to
     perform its obligations under this Agreement. On or before the Closing,
     Purchaser will be qualified in accordance with applicable law, to own the
     Acquired Assets as a non-operator of such assets and will have complied
     with all necessary governmental bonding requirements required for its
     ownership of the Acquired Assets.

          (c) The execution, delivery and performance by Purchaser of this
     Agreement and the documentation to be executed and delivered at Closing
     have been authorized by all necessary action, corporate and otherwise, on
     the part of Purchaser. Execution, delivery and performance by Purchaser of
     this Agreement do not and execution, delivery and performance by Purchaser
     of the documentation to be executed and delivered at Closing will not, and
     the consummation of the transactions contemplated by this Agreement will
     not, violate or be in conflict with any (i) agreement, instrument,
     judgment, order, decree, law or regulation applicable to Purchaser or (ii)
     any provision of the articles or certificate of incorporation or bylaws of
     Purchaser.

          (d) Subject to laws and equitable principles affecting the rights of
     creditors, this Agreement is and the documentation to be executed and
     delivered by Purchaser at Closing will be, upon execution and delivery
     thereof, legal, valid and binding obligations of Purchaser enforceable
     according to their terms. There are no bankruptcy or reorganization
     proceedings pending or, to the knowledge of Purchaser, threatened against
     Purchaser.

                                                                   Page 15 of 50



          (e) Purchaser has incurred no liability for brokers' or finders' fees
     related to the transactions contemplated by this Agreement for which Seller
     shall be liable.

          (f) There are no pending suits, actions or other proceedings to which
     Purchaser is a party (or, to the knowledge of Purchaser, which have been
     threatened to be instituted against Purchaser) which affect the execution
     and delivery of this Agreement or the consummation of the transactions
     contemplated hereby. There are no bankruptcy or reorganization proceedings
     pending or to the knowledge of Purchaser threatened against Purchaser or
     any Affiliate of Purchaser.

          (g) Purchaser is a knowledgeable purchaser, owner and operator of oil
     and gas properties, has the ability to evaluate the Acquired Assets for
     purchase, and is acquiring the Acquired Assets for its own account and not
     with the intent to make a distribution in violation of the Securities Act
     of 1933 or any applicable state securities law.

          (h) Purchaser has no knowledge of the breach of any representation,
     warranty, covenant or agreement hereunder by Seller or of the failure of
     Seller to perform an obligation hereunder, other than such as have been
     disclosed in writing to Seller.

          (i) Purchaser has sufficient funds to purchase the Acquired Assets,
     close the subject transaction and pay the Purchase Price and all related
     fees and expenses of Purchaser, all in accordance with the terms of this
     Agreement.

                                   ARTICLE IV
                                    COVENANTS

     4.01 Covenants of Seller. Seller covenants and agrees with Purchaser as
follows:

          (a) Following execution of this Agreement and until Closing, Seller
     shall (i) continue to operate the Acquired Assets or cause the Acquired
     Assets to be operated, in a good and workmanlike manner; (ii) maintain or
     cause to be maintained the insurance now in force with respect to the
     Acquired Assets; (iii) notify Purchaser of any suit, arbitration, inquiry,
     proceeding, audit, claim, demand or investigation known to Seller which
     might adversely affect any of the Acquired Assets; (iv) pay or cause to be
     paid, in the ordinary course of business and consistent with past
     practices, all costs, taxes and expenses which Seller is obligated to pay
     in connection with the Acquired Assets as they become due; (v) pay or cause
     to be paid all rentals, capital contributions and other payments necessary
     to maintain the Leases and the Contracts in force according to their terms
     and comply with all express and implied covenants contained in the Leases
     or the Contracts or cause such to be complied with; (vi) exercise due
     diligence in safeguarding the Acquired Assets and maintaining the
     confidentiality of all data and other confidential or proprietary materials
     relating to the Acquired Assets; (vii) promptly notify Purchaser of all
     significant operations which are proposed with respect to the Acquired
     Assets and of any Casualty Loss; and (viii) use

                                                                   Page 16 of 50



     efforts, consistent with the standards expected of a reasonably prudent
     operator but without any obligation to pay money, to obtain any consents,
     waivers (including waiver of preferential purchase rights), and approvals
     required of third persons, governmental authorities or other entities in
     connection with consummation of the transactions contemplated by this
     Agreement.

          (b) Following execution of this Agreement, Seller shall not, without
     the consent of Purchaser (i) abandon any Well capable of commercial
     production or any platform, pipeline or other facility; (ii) release all or
     a portion of a Lease; (iii) commence or consent to an operation estimated
     to cost an amount in excess of the amount an operator is entitled to expend
     without non-operator approval under the applicable operating agreement(s)
     (excluding emergency operations and operations undertaken to avoid a
     penalty or forfeiture provision of any applicable agreement or order); (iv)
     create a lien, security interest or other encumbrance on any of the
     Acquired Assets; (v) sell or dispose of any of the Acquired Assets, other
     than Substances sold, consumed or produced or Equipment replaced, in either
     case the ordinary course of business; (vi) amend or waive a material right
     under a Lease or a Contract, compromise an Account or enter into new
     contracts affecting the Acquired Assets, other than those entered into in
     the ordinary course of business with a term of not more than 90 days; (vii)
     waive, compromise or settle any claim that diminishes or adversely burdens
     any Acquired Asset; or (viii) voluntarily relinquish the position of Seller
     as operator of any of the Acquired Assets.

          (c) Following the execution of this Agreement and until Closing,
     Seller shall provide Purchaser and its attorneys, employees, accountants,
     engineers, consultants and agents (collectively "representatives") access,
     during business hours, to (and the right to copy, at the expense of
     Purchaser) the Contracts and other records of Seller pertaining to the
     ownership and/or operation of the Acquired Assets (including title files,
     lease files, prospect files, division order files, production, severance
     and ad valorem tax records, and financial, accounting, engineering,
     geological and geophysical records), insofar as any of such are in the
     possession or control of Seller or insofar as Seller has access thereto,
     and to the extent, in each case, that Seller may do so without violating
     legal constraints or any legal obligation or waiving any attorney-client or
     attorney work product privilege, for the purpose of the conducting, by or
     at the direction of Purchaser, of due diligence reviews of the Acquired
     Assets. Subsequent to Closing, Seller shall not be obligated to furnish any
     updated abstracts, title opinions or additional title information which are
     not in the possession of Seller or title counsel to Seller, but shall
     cooperate with Purchaser in any efforts by Purchaser to obtain (at the
     expense of Purchaser) such additional title information as Purchaser may
     reasonably require.

          (d) Seller shall use its reasonable efforts to obtain before Closing
     all of the consents listed in Schedule 3.01(o) on terms reasonably
     satisfactory to Purchaser and, with respect to the transfer to Purchaser of
     engineering, geological and geophysical data included in the Records for
     which any third-party consents are conditioned upon payment of transfer
     fees, to obtain all such consents for the

                                                                   Page 17 of 50



lowest applicable transfer fees reasonably possible, which transfer fees shall
be payable by Purchaser.

     (e) Seller shall take or cause to be taken all reasonable actions within
its control as may be necessary or advisable to consummate and make effective
the purchase of the Acquired Assets and the transactions contemplated by this
Agreement and to assure that, as of the Closing Date, it will not be under any
material corporate, legal or contractual restriction that would prohibit or
delay the timely consummation of such transactions.

     (f) Seller shall take or cause to be taken all reasonable actions to cause
all the representations and warranties of Seller contained in this Agreement to
be true and correct on and as of the Closing Date, other than those as are made
as of a specific date. To the extent the conditions precedent to the obligations
of Purchaser are within the control of Seller, Seller shall cause such
conditions to be satisfied on or prior to the Closing Date and, to the extent
the conditions precedent to the obligations of Purchaser are not within the
control of Seller, Seller shall take or cause to be taken all such commercially
reasonable actions as may be necessary to cause such conditions to be satisfied
on or prior to the Closing Date.

     (g) Seller shall notify Purchaser promptly (i) upon learning of any change
in fact or circumstance that causes any representation or warranty of Seller
contained in this Agreement to no longer be accurate and complete or (ii) if
Seller fails to perform or comply with any covenant or agreement contained in
this Agreement or it is reasonably anticipated that Seller will be unable to
perform or comply with any covenant or agreement contained in this Agreement.

     (h) Not later than 5:00 p.m. CDT, July 15, 2002, Seller shall submit to
Purchaser revisions and supplements to the Disclosure Schedules (which amended
schedules shall replace for all purposes the Disclosures Schedules originally
delivered at the time of execution of this Agreement) and Purchaser shall have
until 5:00 p.m. CDT July 19, 2002 to object to any such revisions and
supplements to such Disclosure Schedules, subject however, to the provisions of
Section 8.01(c).

4.02 Covenants of Purchaser. Purchaser agrees with Seller as follows:

     (a) Until Closing, pursuant to the confidentiality agreement (the
"Confidentiality Agreement") contained in Paragraph 4 of Section II of the
Letter of Intent dated June 29, 2002, between Purchaser and Seller and
pertaining, collectively, to the Acquired Assets and certain other properties of
Seller, except as otherwise permitted in this Section 4.02(a), Purchaser shall
keep, and shall cause its representatives to keep, confidential all terms and
provisions of this Agreement, the transaction contemplated by this Agreement,
and all information and data concerning the Acquired Assets and certain other
properties of Seller or the business, financial condition, operations,
strategies and prospects of Seller; provided that after Closing nothing
contained in this Agreement or the Confidentiality Agreement shall restrict the
right of Purchaser, as between

                                                                   Page 18 of 50



Purchaser and Seller, to use or disclose information regarding the Acquired
Assets. Notwithstanding anything contained in this Section 4.02(a)) to the
contrary and insofar as it relates to the Acquired Assets, Purchaser may
disclose any of the information subject to the preceding sentence of this
Section 4.02(a) or covered by the Confidentiality Agreement to the extent (i)
necessary to enforce, or seek redress for breach of, this Agreement, (ii)
required by applicable law or the rules of a national securities exchange, (iii)
necessary for financing, reserve engineering or accounting purposes, (iv) to
comply with any law or legal process, or (v) otherwise previously made public or
independently received from a third party having a legitimate right to disclose
such information (without breach of the preceding sentence of this Section
4.02(a) or of the Confidentiality Agreement). In addition, Purchaser
acknowledges and agrees that without the prior written approval of Seller,
Purchaser shall not issue any press releases or make other public statements
with respect to this Agreement or the transactions contemplated by this
Agreement.

     (b) Purchaser shall qualify under applicable law and regulations to own and
operate the Acquired Assets and, in particular, Purchaser shall qualify pursuant
to the rules and regulations of the BLM to own and operate federal oil and gas
leases on land subject to the jurisdiction of the BLM and shall be, as of
Closing, in good standing with, and authorized and qualified by, all
governmental agencies with jurisdiction or cognizance over such land, to the
extent Purchaser is required by such agencies to so qualify and maintain good
standing for purposes of ownership and operation of the Acquired Assets.

     (c) Except as otherwise provided in this Agreement, Purchaser shall take or
cause to be taken all reasonable actions within its control as may be necessary
or advisable to consummate and make effective the purchase of the Acquired
Assets and the transactions contemplated by this Agreement and to assure that,
as of the Closing Date, it will not be under any material corporate, legal or
contractual restriction that would prohibit or delay the timely consummation of
such transactions.

     (d) Purchaser shall take or cause to be taken all reasonable actions to
cause all the representations and warranties of Purchaser contained in this
Agreement to be true and correct on and as of the Closing Date, other than such
as are made as of a specific date. To the extent the conditions precedent to the
obligations of Seller are within the control of Purchaser, Purchaser shall cause
such conditions to be satisfied on or prior to the Closing Date and, to the
extent the conditions precedent to the obligations of Seller are not within the
control of Purchaser, Purchaser shall take or cause to be taken all such
commercially reasonable actions as may be necessary to cause such conditions to
be satisfied on or prior to the Closing Date.

     (e) Purchaser shall notify Seller promptly (i) upon learning of any change
in fact or circumstance that causes any representation or warranty of Purchaser
contained in this Agreement to no longer be accurate and complete or (ii) if
Purchaser fails to perform or comply with any covenant or agreement contained in
this Agreement or it is reasonably anticipated that Purchaser will be

                                                                   Page 19 of 50



     unable to perform or comply with any covenant or agreement contained in
     this Agreement.

         (f) Upon learning of same, in accordance with the provisions of Section
     5.01, Purchaser agrees to notify Seller promptly of any Title Defect (as
     defined in Section 5.05).

     4.03 Employees of Seller. Purchaser is not obligated to hire any employees
employed by Seller on the Closing Date.

                                   ARTICLE V
             REVIEW BY PURCHASER AND TITLE AND ENVIRONMENTAL MATTERS

     5.01 Due Diligence. 1. Following execution of this Agreement and until the
Closing, Purchaser may conduct at its cost, further examinations and
investigations in respect of the Acquired Assets, including without limitation,
review of accounting, legal, corporate, engineering, reserve, title,
environmental and other data and information pertaining to the Acquired Assets.
If Purchaser undertakes an environmental assessment of the Acquired Assets, both
the consultant (if a consultant is employed) and the scope of the proposed
assessment, including testing protocols, must be acceptable to Seller before the
work may begin, such acceptance not to be unreasonably withheld or delayed by
Seller.

          (b) Title Defects. Should, as a result of examinations and
     investigations or otherwise, one or more matters come to the attention of
     Purchaser which constitute a Title Defect that Purchaser desires to assert
     as a basis to seek an adjustment of the Purchase Price and/or as a basis
     not to proceed with the Closing, Purchaser shall notify Seller in writing
     of such Title Defects no later than 5:00 p.m. CDT, July 23, 2002. Such
     notification (a "Title Defect Notice") shall include for each asserted
     Title Defect (i) a description of the Title Defect and the Acquired Asset
     to which it applies, (ii) an explanation of the basis for the claim of a
     Title Defect (including reasonable supporting documentation) and (iii) the
     Title Defect Amount (as defined in Section 5.09) claimed by Purchaser with
     respect thereto. Any matter, regardless of whether asserted in a Title
     Defect Notice, that could constitute a Title Defect shall be deemed to have
     been waived by Purchaser, for purposes of adjustments to the Purchase Price
     (but not for purposes of the special warranty of title made by Seller in
     the conveyance instruments or in any of the documents to be executed and
     delivered at Closing), in the event that Purchaser proceeds with Closing
     without such matter having been cured and without any adjustment to the
     Purchase Price as a result of such matter.

          (c) Environmental Defects. Purchaser shall deliver to Seller, within
     seven days of receipt of any of such by Purchaser and at the cost of
     Purchaser, copies of all final reports, results, data, and analyses of site
     visits, inspections, and assessments. If required by applicable law, Seller
     may disclose such reports, results, data, and analyses of site visits,
     inspections, and assessments delivered to Seller by Purchaser. Should, as a
     result of examinations and investigations or otherwise, one or more matters
     come to the attention of Purchaser which constitute an Environmental Defect
     that Purchaser desires to assert as a basis to

                                                                   Page 20 of 50



     seek an adjustment of the Purchase Price and/or as a basis not to proceed
     with the Closing, Purchaser shall notify Seller in writing of such
     Environmental Defect no later than the close of business of the fifth
     Business Day immediately preceding the Closing Date. Such notification (an
     "Environmental Defect Notice") shall include for each asserted
     Environmental Defect (i) a description of the Environmental Defect and the
     Acquired Asset to which it applies, (ii) an explanation of the basis for
     the claim of an Environmental Defect (including reasonable supporting
     documentation) and (iii) the Environmental Defect Amount (as defined in
     Section 5.09(b)) claimed by Purchaser with respect thereto. Any matter
     regardless of whether asserted in an Environmental Defect Notice, that
     could constitute an Environmental Defect shall be deemed to have been
     waived by Purchaser, for purposes of adjustments to the Purchase Price (but
     not for purposes of the representations of Seller made by Seller in Section
     3.01(p) or any of the provisions of Section Error! Reference source not
     found., in the event that Purchaser proceeds with Closing without such
     matter having been cured and without any adjustment to the Purchase Price
     as a result of such matter.

     5.02 Access to Acquired Assets. Following the execution of this Agreement
and until Closing, Seller shall provide Purchaser and its representatives access
to the Acquired Assets and the right to observe operations and inspect any and
all of the Acquired Assets, the Equipment and improvements and fixtures included
in the Acquired Assets, to the extent that Seller has the legal right to grant
such access and right. All visits by Purchaser or by others on behalf of
Purchaser to any facilities associated with any of the Leases shall be scheduled
by mutual consent of Purchaser and Seller, subject to Purchaser providing to
Seller reasonable advance notice of the locations that Purchaser wishes to visit
and the proposed times. Seller may accompany Purchaser and its representatives
during their site visits. Entry onto any Acquired Asset will (i) be subject to
valid third-party restrictions, if any, existing under the terms of the
Contracts, and to industrial safety, hygiene, and drug and alcohol requirements
of Seller or the relevant operator and (ii) be at the sole risk and expense of
Purchaser. Seller shall use reasonable efforts to arrange for Purchaser access
to, and the right to observe operations on and inspect, any Acquired Assets
requested by Purchaser with respect to which Seller alone does not have the
right to grant such access and rights. Seller shall use reasonable efforts to
identify for Purchaser, upon request, any third-party restrictions to which
Purchaser may be subject in exercising its rights to enter upon any of the
Acquired Assets. Purchaser agrees to protect, indemnify, defend and hold
harmless Seller and its co-owners, farmers and contractors, its and their
respective subcontractors, and its and their respective directors, managers,
officers, employees, agents, representatives and invitees from and against any
and all losses, claims and demands in connection with personal injuries,
including death, and property damage arising out of or relating to the access of
Purchaser and its representatives to the Acquired Assets, the Equipment and
improvements and fixtures included in the Acquired Assets.

     5.03 Environmental Defects. "Environmental Defect" means any irregularity
or defect existing or related to or arising or connection with an Acquired Asset
which, alone or in combination with other irregularities or defects, gives rise
to an Environmental Liability (as defined in Section 9.06 below) or causes the
Seller or such Acquired Asset to be in violation of Environmental Laws and with
respect to which the Environmental Defect Amount (as defined in Section 5.09(b))
is more than $10,000. Any dispute arising after the Closing with respect to any
unwaived Environmental Defect shall be resolved in accordance with the
provisions of Section 10.16.

                                                                   Page 21 of 50



     5.04 Imbalances. Upon the occurrence of Closing, but effective as of the
Effective Time, Purchaser shall succeed to and assume the position of Seller
with respect to all Imbalances related to the Acquired Assets and described in
Section 3.01(n). As a result of such succession, Purchaser shall be (i) entitled
to receive any and all benefits which Seller would have been entitled to receive
by virtue of such position (including rights to produce and receive volumes of
production in excess of volumes which it would otherwise be entitled to produce
and receive by virtue of ownership of the Acquired Assets and rights to receive
cash balancing payments), (ii) obligated to suffer any detriments which Seller
would have been obligated to suffer by virtue of such position (including the
obligation to deliver to others production volumes which would have otherwise
been attributable to its ownership of the Acquired Assets, to deliver production
to purchasers hereof without receiving full payment therefor, or to make cash
balancing payments or to repay take or pay payments) and (iii) responsible for
any and all royalty obligations with respect to such Imbalances (including any
of such arising out of royalties having been paid on an "entitlements" basis
rather than a "receipts" basis). Seller shall protect, defend indemnify and hold
Purchaser harmless from and against any obligations, losses or liabilities
arising out of any Imbalances that exist on the Effective Time, other than those
described in Section3.01(n).

     5.05 Title Defects. "Title Defect" means any encumbrance, irregularity or
defect in the title of Seller to an Acquired Asset which, alone or in
combination with other defects, causes the title of Seller to such Acquired
Asset to be less than Defensible Title and with respect to which the Title
Defect Amount (as defined in Section 5.09(a) below) is more than $10,000. A
Title Defect shall not include any of the following: (i) defects arising out of
lack of survey; (ii) defects arising out of lack of corporate authorization,
unless Purchaser provides affirmative evidence that such corporate action was
not authorized and results in another Person's superior claim of title to the
relevant interest or portion thereof; (iii) defects that have been cured by
applicable statutes of limitations or statutes of prescription; and (iv) defects
in the early chain of title consisting of the failure to recite marital status
in documents or omissions of heirship proceedings. Any dispute arising after the
Closing with respect to any unwaived Title Defect shall be resolved in
accordance with the provisions of Section 10.16.

     5.06 Defensible Title.

          (a) "Defensible Title" means such right, title and interest of Seller
     that, in each case (x) will entitle Purchaser, as the successor to Seller,
     to receive and retain without suspension, reduction or termination, not
     less than the relevant Net Revenue Interest described in Schedule 1-A of
     Substances produced under the terms of the Leases (or other property
     denominated in Schedule 1-A) through plugging, abandonment and salvage of
     all Wells comprising or included in such Acquired Assets and all Wells now
     or hereafter producing from or attributable to such Acquired Assets; (y)
     will obligate Purchaser, as the successor to Seller to bear a percentage of
     costs and expenses related to the maintenance, operation and development of
     the Leases (or other property denominated in Schedule 1-A) not greater than
     the relevant Working Interest shown in Schedule 1-A, through plugging,
     abandonment and salvage of all wells comprising or included in such
     Acquired Assets and all wells now or hereafter producing from or
     attributable to such Acquired Assets, unless the circumstances causing the
     Working Interest to be greater will cause the corresponding Net Revenue
     Interest to increase in the same proportion; and (z) is free of all claims,
     liens, security interests,

                                                                   Page 22 of 50



encumbrances, irregularities and defects, except for Permitted Encumbrances (as
defined below in this Section 5.06).

     (b)  "Permitted Encumbrances" are:

          (i)    lessor's royalties, overriding royalties, production payments,
     net profits interests, reversionary interests and similar burdens measured
     by or payable out of production of Substances or proceeds from the sale
     thereof that do not, and will not, reduce the relevant Net Revenue Interest
     of Purchaser, as the successor in title to Seller, below the relevant Net
     Revenue Interest shown in Schedule 1-A or increase Working Interest, as
     Seller's successor in title, above the relevant Working Interest of
     Purchaser shown in Schedule 1-A (unless the circumstance causing such
     Working Interest to increase will cause the corresponding Net Revenue
     Interest to increase at least in the same proportion);

          (ii)   preferential rights to purchase and third-party consents with
     respect to which, prior to Closing, (i) waivers or consents are obtained
     from the appropriate persons or entities or (ii) the time for asserting
     such rights has expired without exercise;

          (iii)  mechanics', materialmen's, operator's and non-operators', tax
     and similar liens or charges arising in the ordinary course of business
     related to an Acquired Asset, if such liens or charges secure payments not
     yet due;

          (iv)   all consents from, notices to, approvals by or other actions by
     any governmental authority in connection with the sale or transfer of the
     Acquired Assets by Seller to Purchaser pursuant to this Agreement if such
     matters are customarily and appropriately obtained after the sale or
     transfer;

          (v)    liens, security interests or other encumbrances that are
     released at or prior to Closing pursuant to the terms of releases and other
     instruments in form and substance reasonably satisfactory to Purchaser and
     executed, delivered and acknowledged by the owner and holder thereof;

          (vi)   rights of a governmental entity to control or regulate the
     Acquired Assets, together with all applicable laws, rules and regulations;

          (vii)  easements, rights-of-way, surface leases and other surface use
     restrictions if such restrictions will not materially adversely affect the
     use, value or operation of the Acquired Assets; and

          (viii) title matters waived or deemed to be waived by Purchaser
     pursuant to the provisions of Section 5.01;

          (ix)   liens for taxes not yet due and payable;

                                                                   Page 23 of 50



                  (x)  liens reserved in oil and gas leases, joint operating
          agreements and other similar documents and agreements which secure
          payments not yet due; and

                  (xi) the title matter described on Schedule 5.06(b)(xi)
          relating to the assignment of a production payment.

     5.07 Casualty Loss. If, subsequent to the execution of this Agreement but
prior to Closing, all or any portion of an Acquired Asset is damaged or
destroyed (each such instance a "Casualty Loss"), this Agreement shall remain in
full force and effect notwithstanding any such damage or destruction, except as
provided below in this Section 5.07. Either Purchaser or Seller shall have the
right to elect to terminate this Agreement on or before the Closing Date if the
value of all Acquired Assets affected by one or more Casualty Losses exceeds
$2,500,000, in the aggregate. Unless this Agreement is terminated by Purchaser
or Seller as provided in the preceding sentence, then Purchaser shall have the
option to (a) treat the Casualty Loss as a Title Defect and receive a downward
adjustment of the Purchase Price, if the damaged Acquired Assets are not
repaired, restored or replaced by Seller (in which case Seller shall be entitled
to receive and retain all insurance proceeds with respect to the relevant
Casualty Loss), or (b) to the extent insurance proceeds are not committed, used
or applied by Seller prior to the Closing Date to repair, restore or replace
such damaged Acquired Assets, require Seller, at the Closing, to (i) assign to
Purchaser the right of Seller to receive all insurance proceeds owed to Seller
by reason of such Casualty Loss, less any reasonable costs and expenses incurred
by Seller in collecting such proceeds and (ii) pay to Purchaser all insurance
proceeds theretofore paid to Seller by reason of such destruction, less any
reasonable costs and expenses incurred by Seller in collecting such proceeds.
Notwithstanding the foregoing, any insurance proceeds (or any rights thereto) by
reason of any Casualty loss which are held by or owed to Seller for the account
or benefit of any third party joint interest owners shall not be paid or
assigned by Seller to Purchaser pursuant to this Section 5.07 and shall instead
be transferred to the successor operator or other party responsible therefor
pursuant to the terms of the applicable operating or other agreement. Seller
shall not compromise or settle a Casualty Loss without the consent of Purchaser.

     5.08 Disposition of Title Defects and Environmental Defects. (a) In the
event that Purchaser gives Seller any Title Defect Notice:

                  (i)  Seller may (but shall not be obligated to) attempt to
          cure such Title Defect at its cost and expense until two Business Days
          prior to Closing; and

                  (ii) if Seller within such time fails to cure any Title
          Defects of which Purchaser has given timely written notice as required
          above and Purchaser does not execute a written waiver of the same on
          or before two Business Days prior to the Closing Date, the Acquired
          Asset or portion thereof affected by such uncured and unwaived Title
          Defect shall be a "Title Defect Property".

          (b)     In the event that Purchaser gives Seller any Environmental
     Defect Notice:

                                                                   Page 24 of 50



               (i)   Seller may (but shall not be obligated to) attempt to cure
           such Environmental Defect at its cost and expense until two Business
           Days prior to Closing; and

               (ii)  If Seller within such time fails to cure any Environmental
           Defects of which Purchaser has given timely written notice as
           required above and Purchaser does not execute a written waiver of the
           same on or before two Business Days prior to the Closing Date, the
           Acquired Asset or portion thereof affected by such uncured and
           unwaived Environmental Defect shall be an "Environmental Defect
           Property".

     5.09  Purchase Price Adjustments.

           (a) Title Defects. Purchaser shall be entitled to reduce the Purchase
     Price by the aggregate amount of Title Defect Amounts with respect to all
     Title Defect Properties; provided, however, Purchaser or Seller shall have
     the right to elect to terminate this Agreement if the sum of all Title
     Defect Amounts (including any Casualty Loss to be treated as a Title Defect
     pursuant to the provisions of Section 5.07) proposed by Purchaser in good
     faith in Title Defect Notices delivered by Purchaser to Seller pursuant to
     the provisions of Section 5.01(b), when added to Environmental Defect
     Amounts, exceed $2,500,000. "Title Defect Amount" shall mean, with respect
     to a Title Defect Property, the amount by which the value of such Title
     Defect Property is impaired as a result of the existence of one or more
     Title Defects, which amount shall be determined as follows:

               (i)   If the Title Defect results from Seller having a lesser Net
           Revenue Interest in such Title Defect Property than the Net Revenue
           Interest specified therefor in Schedule 1-A, the Title Defect Amount
           shall be equal to the product obtained by multiplying the portion of
           the Purchase Price allocated to such Title Defect Property in
           Schedule 1-A by a fraction, the numerator of which is the reduction
           in the Net Revenue Interest and the denominator of which is the Net
           Revenue Interest specified for such Title Defect Property in Schedule
           1-A.

               (ii)  If the Title Defect results from Seller having a greater
           Working Interest in a Title Defect Property than the Working Interest
           specified therefor in Schedule 1-A, the Title Defect Amount shall be
           equal to the present value (discounted at 10% compounded annually) of
           the increase in the costs and expenses reasonably forecasted as set
           forth in the Reserve Report prepared by Garb, Grubbs & Harris dated
           December 31, 2001, with respect to such Title Defect Property for the
           period from and after the Effective Time which is attributable to
           such increase in the Working Interest of Seller.

               (iii) If the Title Defect results from the existence of a lien,
           the Title Defect Amount shall be an amount sufficient to discharge
           such lien.

                                                                   Page 25 of 50



               (iv)   If the Title Defect results from any matter not described
           in paragraphs (i), (ii) or (iii) above, the Title Defect Amount shall
           be an amount equal to the difference between the value of the Title
           Defect Property affected by such Title Defect with such Title Defect
           and the value of such Title Defect Property without such Title Defect
           (taking into account the portion of the Purchase Price allocated in
           Schedule 1-A to such Title Defect Property).

               (v)    If a Title Defect is not effective or does not affect a
           Title Defect Property throughout the entire productive life of such
           Title Defect Property, such fact shall be taken into account in
           determining the Title Defect Amount.

               (vi)   The Title Defect Amount with respect to a Title Defect
           Property shall be determined without duplication of any costs or
           losses included in another Title Defect Amount hereunder and actually
           used to reduce the Purchase Price. For example, but without
           limitation, if a lien affects more than one Title Defect Property,
           the amount necessary to discharge such lien shall only be included in
           the Title Defect Amount for one Title Defect Property and only once
           in such Title Defect Amount, except that if such lien affects another
           Title Defect Property for which the Title Defect Amount, but for the
           application of paragraph (viii) below, would exceed the portion of
           the Purchase Price allocated to such other Title Defect Property,
           then the amount necessary to discharge such lien up to such excess
           may be included in another Title Defect Amount.

               (vii)  If a Title Defect affects only a portion of an Acquired
           Asset (as contrasted with an undivided interest in the entirety of
           such Acquired Asset) and a portion of the Purchase Price has not been
           allocated specifically to such portion of such Acquired Asset in
           Schedule 1-A, then for purposes of computing the Title Defect Amount,
           the portion of the Purchase Price allocated to such Acquired Asset
           shall be further allocated among the portions of such Acquired Asset
           in the proportion that the portion of such Acquired Asset affected by
           such Title Defect bears to the entire Acquired Asset.

               (viii) Except to the extent Purchaser could incur any liability
           therefor as a result of the transaction contemplated by this
           Agreement or the value of another part of the Acquired Assets could
           be impaired by such Title Defect, the Title Defect Amount
           attributable to a Title Defect Property or any portion thereof shall
           not exceed the portion of the Purchase Price allocated to such Title
           Defect Property or such portion in Schedule 1-A and giving effect to
           the provisions of paragraph (vii) above in this Section 5.09. For
           example, but without limitation, if Seller does not own 50% of the
           Net Revenue Interest specified in Schedule 1-A for a Title Defect
           Property and such unowned 50% interest is also burdened by a lien for
           which Purchaser will not incur any liability as a result of the
           transaction which is the subject of this Agreement, the Title Defect
           Amount for such Title Defect Property shall not exceed the portion of
           the

                                                                   Page 26 of 50



           Purchase Price allocable to such 50% interest notwithstanding that it
           may be affected by multiple Title Defects; however, if such lien
           affects another Title Defect Property the amount necessary to
           discharge such lien may be included in the Title Defect Amount for
           such other Title Defect Property as contemplated by paragraph (vi)
           above in this Section 5.09.

               (ix) No Title Defect Amount shall be allowed on account of and to
           the extent that an increase in the Working Interest of Seller in an
           Acquired Asset has the effect of increasing proportionately the Net
           Revenue Interest of Seller in such Acquired Asset.

           (b) Environmental Defects. Purchaser shall be entitled to reduce the
      Purchase Price by the aggregate amount of Environmental Defect Amounts
      with respect to all Environmental Defect Properties; provided, however,
      Purchaser or Seller shall have the right to elect to terminate this
      Agreement if the sum of all Environmental Defect Amounts proposed by
      Purchaser in good faith in Environmental Defect Notices delivered by
      Purchaser to Seller pursuant to the provisions of Section 5.01(c), when
      added to Title Defect Amounts, exceed $2,500,000. "Environmental Defect
      Amount" shall mean, with respect to an Environmental Defect Property, the
      amount by which the value of such Environmental Defect Property is
      impaired as a result of the existence of one or more Environmental
      Defects, which amount shall be determined as follows:

           The Environmental Defect Amount shall be an amount sufficient to cure
           and remediate such Environmental Liability to the standards necessary
           to comply with Environmental Laws as of the time of such Title Defect
           Notice, utilizing remediation methodologies reasonably required to
           remediate such Environmental Defect at the minimum cost necessary to
           comply with Environmental Laws as determined by taking the average
           estimate of two independent, nationally recognized environmental
           consulting firms, one of which has been selected by each of the
           parties.

           (c) Preference Rights. If a third party, who has been offered a
      property which constitutes a portion of the Acquired Assets with respect
      to which a portion of the Purchase Price is to be allocated and which is
      subject to preference rights in favor of such third party (a "Preference
      Property"), elects prior to Closing to purchase such Preference Property
      in accordance with the terms of such preference right, and Seller and
      Purchaser receive written notice of such election prior to the Closing,
      such Preference Property will be eliminated from the Acquired Assets and
      the Purchase Price shall be reduced by the portion of the Purchase Price
      allocated to such Preference Property. If a third party who has been
      offered a Preference Property or who has been requested to waive its
      preference right with respect to any Preference Property does not elect to
      purchase such Preference Property or waive such Preference Right with
      respect to the transactions contemplated by this Agreement prior to the
      Closing, such Preference Property shall be conveyed to Purchaser at
      Closing subject to such preference right, unless such Preference Property
      has been otherwise eliminated from the Acquired Asserts in accordance with
      other provisions of this Agreement. If a third party elects to purchase a
      Preference Property subject to a preference right

                                                                   Page 27 of 50



      and Closing has already occurred with respect to such Preference Property,
      Buyer shall be obligated to convey said Preference Property to such third
      party and shall be entitled to the consideration for the sale of such
      Preference Property. Purchaser acknowledges that Seller desires to sell
      all of the Acquired Assets and would not have entered into this Agreement
      but for Purchaser's agreement to purchase all of the Acquired Assets as
      herein provided. Accordingly, it is expressly understood and agreed that
      Seller does not desire to sell any Preference Property unless the sale of
      all of the Acquired Assets is consummated at the Closing in accordance
      with the terms of this Agreement. In furtherance of the foregoing,
      Seller's obligation hereunder to sell the Preference Proprieties to
      Purchaser is expressly conditioned upon the consummation at the Closing of
      the sale of all of the Acquired Assets in accordance with the terms of
      this Agreement, either by conveyance to Purchaser or conveyance pursuant
      to an applicable preference right; provided that, nothing herein is
      intended or shall operate to extend or apply any preference right to any
      portion of the Acquired Assets which is not otherwise burdened thereby.
      Time is of the essence with respect to the parties agreement to consummate
      the sale of the Acquired Assets at the time of the Closing.

      5.10 Deferred Claims and Disputes. In the event that Purchaser and Seller
have not agreed upon one or more adjustments to the Purchase Price claimed by
Purchaser for Title Defects or Environmental Defects pursuant to and in
accordance with the requirements of this Article V, any such claim (a "Deferred
Adjustment Claim") shall be settled pursuant to the provisions of this Section
5.10 and, except as otherwise provided in Sections 5.09(a) and 5.09(b), shall
not prevent or delay Closing. With respect to each potential Deferred Adjustment
Claim, Purchaser and Seller shall deliver to the other a written notice
describing each such potential Deferred Adjustment Claim, the amount in dispute
and a statement setting forth the facts and circumstances that support the
position of the party hereto delivering such written notice with respect to such
Deferred Adjustment Claim. Subject to the right of Purchaser to withhold Title
Defect Amounts, or Environmental Defect Amounts as provided below in this
Section 5.10, until a Deferred Adjustment Claim is resolved in accordance with
the provisions of this Section 5.10, the Purchase Price shall not be adjusted
and no other adjustments shall be made on account of such Deferred Adjustment
Claim and no effect shall be given to such Deferred Adjustment Claim. At
Closing, Purchaser shall deposit with the Escrow Agent that part of the
aggregate amount of Title Defect Amounts, or the Environmental Defect Amounts,
as applicable, claimed by Purchaser with respect to unresolved Deferred
Adjustment Claims (the "Withheld Amount"), and in such event the portion of the
Purchase Price which would otherwise be paid in cash by Purchaser to Seller at
Closing shall be held in escrow by the Escrow Agent in accordance with the terms
of the Escrow Agreement. On or prior to the 30/th/ day following the Closing
Date (the "Deferred Matters Date"), Seller and Purchaser shall attempt in good
faith to reach agreement on the Deferred Adjustment Claims and, ultimately, to
resolve by written agreement all disputes regarding the Deferred Adjustment
Claims. Any Deferred Adjustment Claims which are not so resolved on or before
the Deferred Matters Date shall be submitted to final and binding arbitration in
accordance with the provisions of Section 10.16. The amount of the Purchase
Price to which Purchaser becomes entitled under the final and binding written
decision of the board of arbitrators or the written agreement of Purchaser and
Seller shall be promptly paid by Escrow Agent to Purchaser. Any Withheld Amount
of the Purchase Price to which Seller becomes entitled under the final and
binding written decision of the board of arbitrators or the written agreement of
Purchaser and Seller shall be promptly paid by Escrow Agent to Seller.

                                                                   Page 28 of 50



     5.11  No Warranty of Merchantability or Fitness. Except as otherwise
specifically set forth in this Agreement, Seller makes no warranties, express or
implied, including the warranty of merchantability and the implied warranty of
fitness for a particular purpose, regarding the Acquired Assets and other like
personal property located on or included in the Acquired Assets and such are to
be sold on an "as is, where is", basis and condition.

     5.12  Waiver of Consumer Rights. PURCHASER WAIVES ITS RIGHTS UNDER THE
TEXAS DECEPTIVE TRADE PRACTICES-CONSUMER PROTECTION ACT, SECTION 17.41 ET SEQ.,
TEXAS BUSINESS & COMMERCE CODE, A LAW THAT GIVES CONSUMERS SPECIAL RIGHTS AND
PROTECTIONS. AFTER CONSULTATION WITH AN ATTORNEY SELECTED BY PURCHASER,
PURCHASER VOLUNTARILY CONSENTS TO THIS WAIVER. IN ORDER TO EVIDENCE ITS ABILITY
TO GRANT SUCH WAIVER, PURCHASER HEREBY REPRESENTS AND WARRANTS TO SELLER THAT
PURCHASER (I) IS IN THE BUSINESS OF SEEKING OR ACQUIRING, BY PURCHASE OR LEASE,
GOODS OR SERVICES FOR COMMERCIAL OR BUSINESS USE, (II) HAS KNOWLEDGE AND
EXPERIENCE IN FINANCIAL AND BUSINESS MATTERS THAT ENABLE IT TO EVALUATE THE
MERITS AND RISKS OF THE TRANSACTION CONTEMPLATED HEREBY AND (III) IS NOT IN A
SIGNIFICANTLY DISPARATE BARGAINING POSITION.

                                   ARTICLE VI
                              CONDITIONS TO CLOSING

     6.01  Conditions to Obligations of Seller. The obligations of Seller at
Closing are subject to the satisfaction, at or prior to Closing, of the
following conditions, which shall be deemed satisfied upon the occurrence of
Closing:

           (a) the representations and warranties of Purchaser set forth in this
     Agreement that are qualified as to materiality shall be true and correct
     and those that are not so qualified shall be true and correct in all
     material respects, in each case, as of the date hereof and (except to the
     extent such representations and warranties speak as of an earlier date) as
     of Closing as though made at and as of Closing;

           (b) Purchaser shall have performed in all material respects the
     covenants and agreements which Purchaser was required to perform or satisfy
     at or prior to Closing;

           (c) except for matters not customarily and appropriately obtained
     prior to Closing, Seller shall have received evidence, in form reasonably
     satisfactory to Seller and its counsel, that all permits, consents,
     approvals, licenses, qualifications and favorable orders required by
     governmental authorities or by the terms of the Acquired Assets to be
     obtained prior to Closing to consummate this Agreement have been obtained
     or waived, including the waiver or exercise of all preferential rights and
     similar rights of any joint venture partners that may arise in connection
     with the transactions contemplated by this Agreement;

                                                                   Page 29 of 50



          (d)  neither Purchaser nor Seller shall have elected to terminate this
     Agreement pursuant to the provisions of either Section 5.07 or Section
     5.09;

          (e)  no action or proceeding (excluding any such matter initiated by
     Seller or any of its Affiliates) shall be pending or threatened before a
     court, arbitrator or governmental authority seeking to restrain or prohibit
     the consummation of the transactions contemplated by this Agreement or to
     obtain substantial damages from Seller related to this Agreement and no
     effective injunction, writ, or temporary restraining order or any other
     order of any nature has been issued by a court or governmental agency of
     competent jurisdiction directing that the transactions contemplated by this
     Agreement not be consummated;

          (f)  Purchaser shall have caused an opinion of Jackson Walker L.L.P.
     to be delivered to Seller, dated the Closing Date, in the form attached
     hereto as Exhibit 6.01(f); and

          (g)  Seller shall have received (i) resolutions (the "Board
     Resolutions") of the Board of Directors of Seitel, Inc. ("Seitel"), which
     is the Seller's parent, approving the terms and provisions of this
     Agreement and (ii) a letter (the "Lender Approval") from Seitel's
     noteholders addressed to Seitel and Seller approving the sale of the
     Acquired Assets in accordance with the terms of this Agreement

     6.02 Conditions to Obligations of Purchaser. The obligations of Purchaser
at Closing are subject to the satisfaction, at or prior to Closing, of the
following conditions, which shall be deemed satisfied upon the occurrence of
Closing:

          (a)  the representations and warranties of Seller set forth in this
     Agreement that are qualified as to materiality shall be true and correct
     and those that are not so qualified shall be true and correct in all
     material respects, in each case, as of the date hereof and (except to the
     extent such representations and warranties speak as of an earlier date) as
     of Closing as though made at and as of Closing;

          (b)  Seller shall have performed in all material respects the
     covenants and agreements which Seller was required to perform or satisfy at
     or prior to Closing;

          (c)  except for matters not customarily and appropriately obtained
     prior to Closing, Purchaser shall have received evidence, in form
     reasonably satisfactory to Purchaser and its counsel, that all permits,
     consents, approvals, licenses, qualifications and favorable orders required
     by governmental authorities or by the terms of the Acquired Assets to be
     obtained prior to Closing to consummate this Agreement have been obtained
     or waived, including the waiver or exercise of all preferential rights and
     similar rights of any joint venture partners that may arise in connection
     with the transactions contemplated by this Agreement;

                                                                   Page 30 of 50



          (d)  neither Purchaser nor Seller shall have elected to terminate this
     Agreement pursuant to the provisions of either Section Section 5.07 or
     Section 5.09;

          (e)  there shall be no action or proceeding (excluding any such matter
     initiated by Purchaser or any of its Affiliates) pending or threatened
     before a court, arbitrator or governmental authority seeking to restrain or
     prohibit the consummation of the transactions contemplated by this
     Agreement, to obtain substantial damages from Purchaser related to this
     Agreement and there shall be no effective injunction, writ, or temporary
     restraining order or any other order of any nature has been issued by a
     court or governmental agency of competent jurisdiction directing that the
     transactions contemplated by this Agreement not be consummated;

          (f)  except for Casualty Losses covered by the provisions of Section
     5.07, since the date of this Agreement no event shall have occurred and no
     condition shall exist which has, or could reasonably be expected to,
     materially adversely affected the value of the Acquired Assets or the
     ability of Purchaser to own, hold, develop and operate the Acquired Assets,
     except for depletion through normal production, changes in rates of
     production that occur in the ordinary course of operation, depreciation of
     the Equipment through ordinary wear and tear, and changes in general
     economic conditions and product pricing generally affecting the oil and gas
     industry

          (g)  All consents and waivers necessary in order to permit Purchaser
     to use the Seismic Data without limitation and without additional payment
     by Purchaser and all other consents listed in Schedule 3.01(o) shall have
     been obtained on terms reasonably satisfactory to Purchaser;

          (h)  As a result of examinations, assessments, investigations, and
     other due diligence conducted by Purchaser (i) material adverse facts come
     to the attention of Purchaser which constitute a Material Discovery; (ii)
     Purchaser delivers a Material Discovery Notice to Seller; and (iii) Seller
     fails to satisfy, in the reasonable determination of Purchaser, Purchaser's
     concerns over such Material Discovery. For purposes of this Section
     6.02(h), the term "Material Discovery" means a discovery of facts or
     conditions which are discovered by Purchaser during the course of its due
     diligence other than those which constitute Title Defects, or Environmental
     Defects and which are not the subject of the representations and warranties
     of Seller set forth in Section 3.01 of this Agreement and which after the
     Closing would have or would be likely to have a material adverse impact on
     Purchaser in an amount of at least $250,000; the term "Material Discovery
     Notice" means a written notice from Purchaser delivered to Seller no later
     than July 11, 2002 setting forth the Material Discovery and including in
     such notice (i) a description of the Material Defect and Acquired Asset to
     which it applies, or if it is of a more general concern, so stating
     therein; (ii) an explanation of the basis for Purchaser's concerns; and
     (iii) the dollar amount by which Purchaser believes the Material Discovery
     would adversely affect the Purchaser.

                                                                   Page 31 of 50



          (i)  Seller shall have caused an opinion of Seller's (or Seitel's)
     in-house counsel to be delivered to Purchaser, dated the Closing Date, in
     the form attached hereto as Schedule 6.02(i).

                                   ARTICLE VII
                                     CLOSING

     7.01 Closing Date. Subject to applicable provisions of this Agreement, the
consummation of the transactions contemplated by this Agreement ("Closing")
shall occur at the office of Seller listed above (or at such other place and
time as the parties hereto may agree) on July 31, 2002 at 10:00 a.m. (any such
date being the "Closing Date").

     7.02 Closing Obligations. At Closing, the following shall occur, each being
a condition precedent to the others and each being deemed to have occurred
simultaneously:

          (a)  Seller shall execute and deliver to Purchaser assignments
     conveying the Acquired Assets to Purchaser in the forms attached to this
     Agreement as Exhibit B-1, Exhibit B-2 and/or Exhibit B-3. Seller shall also
     execute and deliver such other assignments on appropriate forms as may be
     required by governmental authorities, subject to the terms of the
     assignment forms attached as Exhibit B-1, Exhibit B-2 and/or Exhibit B-3
     and such other licenses, deeds, bills of sale and other conveyance
     instruments as shall be required to consummate the transactions
     contemplated by this Agreement; provided that the special warranty to be
     granted by the Seller in connection therewith shall be limited to a period
     of one (1) year from the date of granting thereof. The individual forms of
     assignment prepared by Seller, where relevant and appropriate, shall
     contain provisions regarding assumption of obligations required by the
     Contracts in the relevant chain of title.

          (b)  Seller and Purchaser shall execute and deliver to each other the
     Preliminary Closing Statement.

          (c)  Purchaser shall deliver the Adjusted Purchase Price to Seller by
     direct wire transfer, as directed by Seller by notice in writing to
     Purchaser delivered not less than two Business Days prior to the Closing
     Date.

          (d)  Seller shall transfer and deliver to Purchaser possession of the
     Acquired Assets.

          (e)  Seller shall execute transfer orders or letters-in-lieu on forms
     prepared by Purchaser, and reasonably satisfactory to Seller, directing
     purchasers of Substances produced on or after the Effective Time to make
     payment to Purchaser for such Substances as contemplated by this Agreement.

          (f)  Seller shall furnish Purchaser an affidavit stating the United
     States taxpayer identification number of Seller and that Seller is not a
     foreign person, pursuant to Section 1445(b)(2) of the Code.

          (g)  Seller shall deliver to Purchaser a certificate of the Secretary
     of Seller, dated the Closing Date, certifying (i) that a true and correct
     copy of the

                                                                   Page 32 of 50



     resolutions of the board of directors of Seller authorizing this Agreement
     and the transactions contemplated hereby are attached thereto and have been
     duly adopted and are in full force and effect and (ii) as to the incumbency
     and authorization of the officers of Seller executing, on behalf of Seller,
     this Agreement and the other documents to be executed and delivered by
     Seller at Closing.

          (h)  Purchaser shall deliver to Seller a certificate of the Secretary
     of Purchaser, dated the Closing Date, certifying (i) that a true and
     correct copy of the resolutions of the board of directors of Purchaser
     authorizing this Agreement and the transactions contemplated hereby are
     attached thereto and have been duly adopted and are in full force and
     effect and (ii) as to the incumbency and authorization of the officers of
     Purchaser executing, on behalf of Purchaser, this Agreement and the other
     documents to be executed and delivered by Purchaser at Closing.

          (i)  Seller shall execute and deliver to Purchaser designation of
     operator forms, as applicable, executed by Seller and, to the extent Seller
     has been able to arrange for such execution prior to Closing, each of the
     other owners of interests in the Leases from which such designations are
     required designating Purchaser as operator of the Leases.

          (j)  Seller and Purchaser shall each execute and deliver such other
     instruments and take such other actions as may be necessary to carry out or
     to evidence their obligations under this Agreement.

     7.03 Operatorship. Upon Closing, transfer of operatorship of each such
Lease shall occur and Purchaser shall assume full responsibility for the
completion of all such operations applicable to such Lease and all risk of loss
of or damage to any portion of the Acquired Assets attributable to ownership,
use or operation by Purchaser, including any Casualty Loss, shall pass to
Purchaser as of the Closing Date and all losses, costs, claims, suits,
judgments, awards or damages on account of bodily injury, illness, death or
property damage or loss suffered by any persons or entities other than Purchaser
arising out of or related to the performance of such operations on or after the
Closing Date shall pass to and be assumed by Purchaser as of the Closing Date.
Notwithstanding anything herein to the contrary, Seller does not represent to
Purchaser that Purchaser will succeed to operatorship of any of the Acquired
Assets other than those Leases owned solely by Seller. Purchaser acknowledges
and agrees that the parties hereto will be required to comply with the terms of
any applicable Contract relating to any elections or other selection procedures
in order for Purchaser to succeed Seller as operator thereunder. If all owners
of interests in any Lease have not executed and delivered, prior to the Closing,
all instruments necessary to designate Purchaser as operator of any Lease and
Purchaser elects to waive such condition to Closing, to the extent it is a
condition to Closing, Seller shall have no liability arising out of the failure
to obtain such instruments provided that Seller complies with its obligations
under Section 9.05.

                                  ARTICLE VIII
                                   TERMINATION

     8.01 Termination. This Agreement and the transactions contemplated by this
Agreement may be terminated prior to Closing in the following situations:

                                                                   Page 33 of 50



          (a)  by Seller or Purchaser, if Closing does not occur on or before
     August 31, 2002; provided, however, that neither party hereto shall be
     entitled to so terminate if it is in breach of any provision of this
     Agreement;

          (b)  by Seller, if the conditions contained in Section 6.01 are not
     satisfied or waived as of the Closing Date;

          (c)  by Purchaser, (i) if the conditions contained in Section 6.02 are
     not satisfied or waived as of the Closing Date or (ii) within three
     business days following Seller's delivery of the revised or supplemented
     Disclosure Schedules delivered pursuant to Section 4.01(h), if Purchaser in
     its sole reasonable discretion determines that any of the information set
     forth thereon that was not included in the original Disclosure Schedules
     makes it inadvisable to proceed with the proposed acquisition contemplated
     herein;

          (d)  by Seller, if Purchaser has provided notice to Seller of any
     circumstance that would give rise to indemnification by Seller under any
     applicable provision of this Agreement;

          (e)  by Seller and Purchaser pursuant to written agreement;

          (f)  by Purchaser, if Seller has not delivered to Purchaser, on or
     before 5:00 p.m. CDT, July 10, 2002 (i) the Board Resolutions approving the
     terms and provisions of this Agreement and (ii) the Lender Approval from
     Seitel's noteholders addressed to Seitel and Seller approving the sale of
     the Acquired Assets in accordance with the terms of this Agreement; and

          (g)  by Purchaser if Seller, Seitel or any of their Affiliates enters
     into any bankruptcy or insolvency proceedings of any kind, voluntary or
     involuntary.

     8.02 Liabilities Upon Termination.

          (a)  In the event Purchaser breaches this Agreement by failing or
     refusing to close the transaction contemplated hereby on the Closing Date
     and each of the conditions contained in Section 6.02 has been either
     fulfilled or waived, Seller, at its sole option, may (i) enforce specific
     performance of this Agreement or (ii) terminate this Agreement and the
     Escrow Deposit, including interest, shall be paid to the Seller in
     accordance with the terms and provisions of the Escrow Agreement. The
     Parties hereby acknowledge that the extent of damages to the Seller and its
     shareholder occasioned by such failure or refusal by Purchaser would be
     impossible or extremely impractical to ascertain and that the amount of the
     Escrow Deposit is a fair and reasonable estimate of the damages under the
     circumstances and the payment of the Escrow Deposit shall be Seller and its
     shareholder's sole and exclusive remedy in such event, all other remedies
     being expressly waived by Seller.

          (b)  In the event the Closing does not occur and the Escrow Deposit is
     not paid to the Seller pursuant to Section 8.02(a), the Escrow Deposit,
     including interest, shall be returned to Purchaser in accordance with the
     terms and provisions of the Escrow Agreement.

                                                                   Page 34 of 50



            (c)  Notwithstanding anything provided to the contrary in this
     Agreement, upon any failure of Seller to fulfill any undertaking or
     commitment provided for herein on the part of Seller that is required to be
     fulfilled on or prior to the Closing Date, Purchaser, at its sole option,
     may (i) enforce specific performance of this Agreement or (ii) terminate
     this Agreement and have the Escrow Deposit returned.

            (d)  NOTWITHSTANDING ANYTHING CONTAINED TO THE CONTRARY IN ANY OTHER
     PROVISION OF THIS AGREEMENT, SELLER AND PURCHASER AGREE THAT THE RECOVERY
     BY EITHER PARTY HERETO OF ANY DAMAGES SUFFERED OR INCURRED BY IT AS A
     RESULT OF ANY BREACH BY THE OTHER PARTY OF ANY OF ITS REPRESENTATIONS,
     WARRANTIES OR OBLIGATIONS UNDER THIS AGREEMENT SHALL BE LIMITED TO THE
     ACTUAL DAMAGES SUFFERED OR INCURRED BY THE NON-BREACHING PARTY AS A RESULT
     OF THE BREACH BY THE BREACHING PARTY OF ITS REPRESENTATIONS, WARRANTIES OR
     OBLIGATIONS HEREUNDER, AND IN NO EVENT SHALL THE BREACHING PARTY BE LIABLE
     TO THE NON-BREACHING PARTY FOR ANY INDIRECT, CONSEQUENTIAL, EXEMPLARY OR
     PUNITIVE DAMAGES SUFFERED OR INCURRED BY THE NON-BREACHING PARTY AS A
     RESULT OF THE BREACH BY THE BREACHING PARTY OF ANY OF ITS REPRESENTATIONS,
     WARRANTIES OR OBLIGATIONS HEREUNDER.

                                   ARTICLE IX
                            OBLIGATIONS AFTER CLOSING

     9.01   Post-Closing Adjustments. Seller and Purchaser acknowledge that the
amount of all adjustments to the Purchase Price under Section 2.04 may not be
available prior to Closing. As soon as practicable after Closing, but in any
event within 90 days after Closing, Seller shall prepare and submit to Purchaser
a statement containing adjustments to the Purchase Price contemplated by the
provisions of Section 2.04 that were not finally determined as of Closing (the
"Final Settlement Statement") and such supporting documentation as is reasonably
necessary to support the adjustments shown therein. Purchaser shall give
representatives of Seller reasonable access to its premises and to its books and
records for purposes of preparing the Final Settlement Statement and shall cause
appropriate personnel of Purchaser to assist Seller and representatives of
Seller, at no cost to Seller, in the preparation of the Final Settlement
Statement. Seller shall give representatives of Purchaser reasonable access to
its premises and to its books and records for purposes of reviewing the
calculation of any such adjustments and will cause appropriate personnel of
Seller to assist Purchaser and representatives of Purchaser, at no cost to
Purchaser, in verification of such calculations. The Final Settlement Statement
shall become final and binding on Seller and Purchaser as to the calculation of
the Adjusted Purchase Price 90 days following the date the Final Settlement
Statement is received by Purchaser, except to the extent that, prior to the
expiration of such 90 day period, Purchaser shall deliver to Seller notice, as
hereinafter required, of its disagreement with the contents of the Final
Settlement Statement. Such notice shall be in writing and set forth all
disagreements of Purchaser with respect to any portion of the Final Settlement
Statement, together with any changes thereto proposed by Purchaser, and shall
include an explanation in reasonable detail of, and such

                                                                   Page 35 of 50



supporting documentation as is reasonably necessary to support, such changes. If
Purchaser has timely delivered such a notice of disagreement to Seller, then,
upon written agreement between Purchaser and Seller resolving all disagreements
of Purchaser set forth in such notice, the Final Settlement Statement shall
become final and binding upon Purchaser and Seller as to the calculation of the
Adjusted Purchase Price. If the Final Settlement Statement has not become final
and binding by the 120th day following its receipt by Purchaser, then Purchaser
or Seller may submit to an independent public accounting firm mutually
satisfactory to Seller and Purchaser for resolution any unresolved disagreements
of Purchaser set forth in the notice from Purchaser to Seller. The fees and
expenses of such accounting firm in making such determination shall be shared
equally by Purchaser and Seller. Upon resolution of such unresolved
disagreements of Purchaser, the Final Settlement Statement (including any
revisions thereto as are so resolved or agreed) shall be conclusive, final and
binding upon Purchaser and Seller as to the calculation of the Adjusted Purchase
Price. Payment of any net amount due to Seller or Purchaser, as the case may be,
on the basis thereof shall be made within five days after the Final Settlement
Statement (as so resolved or agreed) becomes final and binding on the parties
hereto (the "Final Settlement Date").

     9.02   Subsequent Adjustments. Seller and Purchaser recognize that either
may receive funds or pay expenses after the Final Settlement Date which are
properly the property or obligation of the other. Upon receipt of net proceeds
or payment of net expenses due to or payable by the other party hereto,
whichever occurs first, Seller or Purchaser, as the case may be, shall submit a
statement to the other party hereto showing the relevant items of income and
expense. Payment of any net amount due by Seller or Purchaser, as the case may
be, on the basis thereof shall be made within ten days of receipt of the
statement.

     9.03   Reservation of Claims. Except as provided in this Agreement, Seller
is entitled to all claims related to the Acquired Assets prior to the Effective
Time regardless of when payment is made. Except as provided in this Agreement,
Purchaser is entitled to all claims related to the Acquired Assets which arise
after the Effective Time.

     9.04   Files and Records. Upon Closing, subject to the provisions of
Section 1.01(f), Seller shall permit Purchaser, at the expense of Purchaser, to
take possession of originals, or with respect to accounting records relating to
periods prior to the Closing Date, copies, of all Records in the possession or
control of Seller and relating to the Acquired Assets. Seller shall have the
right to copy (at the expense of Seller) and retain a copy of all such files,
records and data. Insofar as Seller reasonably believes such Records may be
needed or useful in connection with federal, state or local regulatory or tax
matters or resolution of existing disputes or contract compliance issues with
third parties or for any other appropriate purposes, Seller shall have the right
to make, at the expense of Seller, and retain copies of Records subsequent to
the delivery of such Records to Purchaser; provided, however, any such copies of
Records retained by Seller shall be confidential and proprietary to Purchaser to
the extent the relevant Records were theretofore maintained as such by Seller,
and to such extent and except as provided herein to the contrary, Seller may not
divulge any matters contained therein or any other information provided by
Purchaser to Seller pursuant to the terms of this Agreement, without the prior
express written consent of Purchaser, except (a) as required by Law, (b) as
required by order of any court, (c) to the extent otherwise previously made
public (other than by disclosure in breach of this Agreement) or (d) as is
necessary to enforce, or seek redress for breach of, this Agreement. Except as
may be otherwise required by any of the Contracts or applicable law, Purchaser
shall be obligated to maintain the Records for a period of seven years following
the Closing Date;

                                                                   Page 36 of 50



provided, however, Purchaser shall not be obligated to maintain any Records that
relate in all material respects to any of the Acquired Assets that cease to be
owned by Purchaser if Purchaser has obligated its successors and assigns of such
Records to maintain and allow access to such Records for the remainder of such
seven-year period; and provided further, however, Purchaser shall not be
required to retain any Records that it has offered to deliver to Seller.

     9.05   Further Assurances; Cooperation. After Closing, Seller, Endeavor and
Purchaser agree to execute and deliver such instruments and take such other
actions as may be necessary or advisable to carry out their obligations under
this Agreement or any other document delivered pursuant hereto. In particular,
Seller and Purchaser agree to execute and deliver such instruments and take such
other actions as may be necessary and advisable to (a) make all filings,
registrations, and recordings which must be made with respect to the Leases in
the records of all appropriate counties, parishes, and state and federal
agencies and offices in order that the records maintained by the appropriate
state and federal agencies and the appropriate records of the relevant parishes
and counties shall accurately reflect the transfer of the Acquired Assets to
Purchaser; (b) enable Seller to take promptly all actions over which Seller has
control to allow Purchaser to be designated as the operator with respect to
those Acquired Assets as to which Seller is the operator as of the Effective
Time; and (c) obtain prompt and unconditional approvals of transfers of the
Leases as applicable. To the extent required, Purchaser agrees to take promptly
any and all actions necessary to post any supplemental bonds and provide any and
all documentation that may be required to evidence the financial responsibility
of Purchaser under applicable federal regulations policies.

     9.06   Assumption and Indemnity.

            (a)  Upon Closing, Purchaser hereby assumes responsibility for and
     agrees to pay, perform and discharge the obligations as set forth below
     (the "Assumed Obligations"):

                 (i)  the prompt and complete payment, performance and discharge
            of all obligations and liabilities of Seller attributable to or
            arising out of any of the Leases and any of the Contracts listed on
            Schedule 1-B (the "Assumed Contracts") for the period from and after
            the Closing, to the extent such liabilities and obligations are (A)
            attributable to or arise out of the ownership, use or operation of
            the Acquired Assets; (B) attributable to the period of time on or
            after the Effective Time, and (C) are not the result of any default
            of or failure to perform by Seller under any of the Assumed
            Contracts as to any point in time prior to Closing (collectively,
            the "Assumed Contractual Obligations");

                 (ii) all costs, expenses, liabilities, claims and obligations
            arising out of or in connection with the ownership or operation of
            the Acquired Assets after the Closing Date, including all
            obligations regarding site clearance, plugging, abandoning, and
            removing all existing Wells, platforms, facilities and pipelines
            located on or used in connection with the Acquired Assets in
            accordance with the requirements of all applicable governmental
            authorities and the terms of all applicable Leases and Contracts
            (such obligations being the "Abandonment and Clean Up Obligations")
            and all Environmental Liabilities arising out of or in

                                                                   Page 37 of 50



      connection with the ownership or operation of the Acquired Assets after
      the Closing Date.

      provided, however, notwithstanding anything contained in clause (i) of
      this Section 0 to the contrary, Purchaser shall not assume and shall have
      no liability (contingent or otherwise) whatsoever with respect to the
      Retained Obligations or any matter with respect to which Seller has
      indemnified Purchaser pursuant to clause (ii) of Section 9.06(c).

      (b)  Seller shall retain responsibility for and agrees to pay, perform and
discharge, all of the following (collectively, the "Retained Obligations"),
including all indebtedness, liabilities or other obligations not expressly
assumed by the Purchaser pursuant to Section 9.06(a) above:

           (i)   the prompt and complete payment, performance and discharge of
      all obligations and liabilities of Seller attributable to or arising out
      of any of the Leases and any of the Assumed Contracts for the period prior
      to the Closing;

           (ii)  all costs, expenses, liabilities, claims and obligations
      arising out of or in connection with the ownership or operation of the
      Acquired Assets prior to the Closing Date, including all Abandonment and
      Clean-Up Obligations and all Environmental Liabilities arising out of or
      in connection with the ownership or operation of the Acquired Assets prior
      to the Closing Date and the proper accounting or payment to third parties
      for their interests therein insofar as such claims relate to periods of
      time prior to the Closing Date.

      The term "Environmental Liabilities," as used herein, shall mean all
      costs, expenses, liabilities, and obligations attributable to the Acquired
      Assets and arising out of or in connection with any violation of
      Environmental Laws or any Environmental Non-Violation of Laws Matters (as
      defined below in this Section 9.06(b). The term "Environmental
      Non-Violation of Laws Matters," as used herein, shall mean any cost,
      expense, liability or obligation with respect to the Acquired Assets (x)
      resulting from or attributable to actual, threatened, or alleged
      emissions, discharges, or releases of Hazardous Substances (as defined
      below in this Section 9.06(b) into ambient air, surface water, groundwater
      or land; (y) resulting from or attributable to the manufacture,
      processing, distribution, use, treatment, storage, disposal, transport, or
      handling of Hazardous Substances; or (z) otherwise arising under or
      related to Environmental Laws. The term "Hazardous Substances" shall have
      the meaning given such term in the Comprehensive Environmental, Response,
      Compensation, and Liability Act of 1980.

      (c)  In the event that Closing occurs, except as to matters waived in
writing by the party hereto against which the waiver is sought to be enforced,
(i) Purchaser shall protect, defend, release, indemnify and hold harmless Seller
and the shareholders, directors, officers, employees, and agents of Seller and
the

                                                                   Page 38 of 50



     heirs, personal representatives, successors, and assigns of any of the
     foregoing (each a "Seller Indemnified Party") from and against any and all
     damages, claims, losses, demands, fines, penalties, judgments (including
     interest), costs, expenses, environmental liabilities, and other
     liabilities, direct, contingent, or otherwise, including consultant and
     attorneys' fees and costs of court ("Damages") which may be alleged against
     any Seller Indemnified Party, arising or accruing with respect to (A) any
     representation or warranty made by Purchaser in or pursuant to this
     Agreement being untrue or incorrect in any material respect; (B) any
     failure by Purchaser to perform any covenant or agreement set forth in this
     Agreement or any other agreement or document executed by it in connection
     with the transactions contemplated hereby; or (C) the Assumed Obligations
     and (ii) Seller shall protect, defend, release, indemnify and hold harmless
     Purchaser and the shareholders, directors, officers, employees, and agents
     of Purchaser and the heirs, personal representatives, successors, and
     assigns of any of the foregoing (each a "Purchaser Indemnified Party") from
     any Damages not to exceed the amount of the Purchase Price which may be
     alleged against any Purchaser Indemnified Party, arising or accruing with
     respect to (A) any representation or warranty made by Seller in or pursuant
     to this Agreement being untrue or incorrect in any material respect; (B)
     any failure by Seller to perform any covenant or agreement set forth in
     this Agreement or any other agreement or document executed by it in
     connection with the transactions contemplated hereby; or (C) the Retained
     Obligations or any other indebtedness, liabilities or obligations of Seller
     not expressly assumed by Purchaser as an Assumed Obligation pursuant to
     Section 9.06. The term "Damages," as used in this Section 9.06, shall not
     include (x) any amount which was taken into account as an adjustment to the
     Purchase Price pursuant to any applicable provision of this Agreement; or
     (y) costs and expenses of either party hereto as described in Section
     10.02.

          (d)  Neither Party shall be entitled to indemnification under this
     Section 9.06 unless the aggregate of all amounts for which indemnity would
     otherwise be due to Seller Indemnified Parties or Purchaser Indemnified
     Parties, as the case may be, exceeds $250,000 in the aggregate, in which
     case Seller Indemnified Parties or Purchaser Indemnified Parties, as the
     case may be, shall be entitled to recover in full with respect to all such
     amounts. This threshold does not apply to (and shall not be satisfied by)
     Title Defect Amounts or Environmental Defects or defaults related to the
     payment of money or other liquidated amounts. NOTWITHSTANDING ANYTHING IN
     THIS AGREEMENT TO THE CONTRARY, IN NO EVENT SHALL PURCHASER OR SELLER BE
     LIABLE TO THE OTHER PARTY FOR ANY EXEMPLARY, PUNITIVE, SPECIAL, INDIRECT,
     CONSEQUEN-TIAL, INCIDENTAL, STATUTORY, REMOTE OR SPECULATIVE DAMAGES.

     9.07 Conspicuousness/Express Negligence. The defense, indemnification and
hold harmless provisions provided for in this Agreement shall be applicable
whether or not the Damages in question arose solely or in part from the active,
passive or concurrent negligence, or other fault (including strict liability),
of any Seller Indemnified Party or Purchaser Indemnified

                                                                   Page 39 of 50



Party. Purchaser and Seller acknowledge that this statement complies with the
express negligence rule and is conspicuous.

     9.08 Indemnification Procedure. All claims for indemnification under the
provisions of Section 9.06 shall be asserted and resolved pursuant to the
provisions of this Section 9.08. Any person or entity claiming indemnification
hereunder is hereinafter referred to as the "Indemnified Party" and any person
or entity against whom such claims are asserted hereunder is hereinafter
referred to as the "Indemnifying Party." In the event that any Damages are
asserted against or sought to be collected from an Indemnified Party by a third
party, such Indemnified Party shall, with reasonable promptness, provide to the
Indemnifying Party a written notice of claim specifying, in reasonable detail,
the specific nature of and specific basis of the Damages and the estimated
amount of such Damages and including a copy of all papers served with respect to
such claim (if any) and the basis of such claim for indemnification under the
provisions of Section 9.06 (each a "Claim Notice"). Notwithstanding the
preceding sentence, failure of an Indemnified Party to give notice hereunder
shall not release the Indemnifying Party from its obligations under the
provisions of Section 9.06, except to the extent the Indemnifying Party is
actually prejudiced by such failure to give notice; provided, that, the
Indemnifying Party shall not be obligated to defend, indemnify or otherwise hold
harmless an Indemnified Party with respect to a third party claim until a Claim
Notice meeting the foregoing requirements is furnished to the Indemnifying Party
by the party seeking indemnity hereunder. The Indemnifying Party shall have 30
days from the personal delivery or receipt of any Claim Notice (the "Notice
Period") in which to notify the Indemnified Party (a) whether or not it disputes
the liability of the Indemnifying Party to the Indemnified Party hereunder with
respect to such Damages; and/or (b) whether or not it desires, at the sole cost
and expense of the Indemnifying Party, to defend the Indemnified Party against
such Damages; provided, however, that any Indemnified Party is hereby authorized
prior to and during the Notice Period to file any motion, answer or other
pleading that it shall deem necessary or appropriate to protect its interests or
those of the Indemnifying Party (and of which it shall have given notice and
opportunity to comment to the Indemnifying Party) and not prejudicial to the
Indemnifying Party. If the Indemnifying Party fails to so notify the Indemnified
Party during the Notice Period, the Indemnifying Party shall be deemed to have
elected to dispute such liability and not to defend against such third party
claim. In the event that the Indemnifying Party notifies the Indemnified Party
within the Notice Period that it (x) does not dispute its liability to indemnify
the Indemnified Party under the provisions of Section 9.06 (or reserves the
right to dispute whether such claim is an indemnified claim under the provisions
of Section 9.06; and (y) elects to defend the Indemnified Party against such
Damages, the Indemnifying Party shall have the right to defend, at its sole cost
and expense, such third party claim by all appropriate proceedings, and with
counsel of its own choosing, which proceedings shall be promptly settled or
prosecuted by them to a final conclusion. If the Indemnified Party desires to
participate in, but not control, any such defense or settlement, it may do so at
its sole cost and expense. If requested by the Indemnifying Party, the
Indemnified Party agrees to cooperate with the Indemnifying Party and its
counsel in contesting any Damages that the Indemnifying Party elects to contest.
No claim may be settled or otherwise compromised without the prior written
consent of the Indemnifying Party. If the Indemnifying Party elects not to
assume the defense of a third party claim, or elects to assume the defense of a
third party claim, but reserves the right to dispute whether such claim is an
indemnified claim under the provisions of Section 9.06, the determination of
whether the Indemnified Party is entitled to indemnification under the
provisions of Section 9.06 shall be resolved pursuant to arbitration as provided
in Section 10.16.

                                                                   Page 40 of 50



     9.09  Allocation of Proceeds. Seller shall receive all proceeds from the
sale of Substances physically produced or allocable to the Acquired Assets prior
to the Effective Time. Purchaser shall receive all proceeds from the sale of
Substances physically produced or allocable to the Acquired Assets on or after
the Effective Time.

     9.10  Termination of Confidentiality Agreements. Effective on Closing, the
obligations of Purchaser under the Confidentiality Agreements, insofar and only
insofar as they relate to the Acquired Assets, are terminated.

                                    ARTICLE X
                                  MISCELLANEOUS

     10.01 Notices. All notices required or permitted under this Agreement shall
be effective upon receipt if personally delivered, if mailed by registered or
certified mail, postage prepaid, or if delivered by telegram, telecopy or
facsimile if directed to the relevant party hereto as follows:

     TO SELLER:                              TO PURCHASER:

     DDD Energy, Inc.                        Rising Star Energy, L.L.C.
     50 Briar Hollow Lane, Seventh Floor     3141 Hood Street, Suite 350
     West, Houston, Texas 77027              Dallas, Texas 75219
     Tel.: (713) 881-8940                    Tel.: (214) 522-0742
     Fax: (713) 881-8941                     Fax: (214) 522-0616
     Attn: Matthew S. Ramsey                 Attn: Mike K. Grimm

     With copy to:                           With copy to:

     Fulbright & Jaworski L.L.P.             Jackson Walker L.L.P.
     1301 McKinney, Suite 5100               1100 Louisiana, Suite 4200
     Houston, Texas 77010-3095               Houston, Texas 77002
     Tel.: (713) 651-3705                    Tel.: 713/752-4200
     Fax: (713) 651-5246                     Fax: 713/752-4221
     Attn: Michael P. Irvin                  Attn: Richard L. Burleson

Either party hereto may give written notice to the other, in the aforesaid
manner, of a change in the address or individual to whom delivery shall be made.

     10.02 Expenses. Except as otherwise provided in this Agreement, all fees,
costs and expenses incurred by either party hereto in negotiating this Agreement
or in consummating the transactions contemplated by this Agreement shall be paid
by the party hereto incurring them.

     10.03 Amendment. This Agreement may not be altered or amended, nor any
rights waived, except by a written instrument executed by the party hereto to be
charged with the amendment or waiver. No waiver of any provision of this
Agreement shall be construed as a continuing waiver of the same provision or of
any other provision of this Agreement.

     10.04 Assignment. Except as provided in the following sentence of this
Section 10.04, neither party hereto may assign or delegate any of its rights or
duties hereunder without the prior written consent of the other party hereto.
Purchaser shall have the right, without obtaining the

                                                                   Page 41 of 50



prior written consent of Seller, to assign the rights of Purchaser hereunder to
an Affiliate (as defined below in this Section 10.04) of Purchaser; provided
that no such assignment shall relieve Purchaser of its obligations or
liabilities under this Agreement. The term "Affiliate" as used herein shall
mean, as to the person or entity specified, any person or entity controlling,
controlled by or under common control with such specified person or entity. The
concept of control, controlling or controlled by as used in the aforesaid
context means the possession, directly or indirectly, of the power to direct or
cause the direction of the management and policies of another, whether through
the ownership of voting securities, by contract or otherwise. No person or
entity shall be deemed an Affiliate of any person or entity by reason of the
exercise or existence of rights, interests or remedies under this Agreement.

     10.05 Conditions. The inclusion in this Agreement of conditions to the
obligations of Seller or Purchaser at Closing shall not, in and of itself, be a
covenant of either party hereto to satisfy the conditions to the obligations of
the other party hereto at Closing.

     10.06 References. References in this Agreement to Schedule, Exhibit,
Article, or Section numbers shall be to Schedules, Exhibits, Articles, or
Sections of this Agreement, unless expressly stated to the contrary. References
in this Agreement to "hereby," "herein," "hereinafter," "hereinabove,"
"hereinbelow," "hereof," "hereunder" and words of similar import shall be to
this Agreement in its entirety and not only to the particular Schedule, Exhibit,
Article, or Section in which such reference appears. References in this
Agreement to "includes" or "including" shall mean "includes, without
limitation," or "including, without limitation," as the case may be. Except as
otherwise indicated, references in this Agreement to statutes, sections, or
regulations are to be construed as including all statutory or regulatory
provisions consolidating, amending, replacing, succeeding, or supplementing the
statute, section, or regulation referred to. References in this Agreement to
"writing" include printing, typing, lithography, facsimile reproduction, and
other means of reproducing words in a tangible visible form. References in this
Agreement to agreements and other contractual instruments shall be deemed to
include all exhibits and appendices attached thereto and all subsequent
amendments and other modifications to such instruments, but only to the extent
such amendments and other modifications are not prohibited by the terms of this
Agreement. References in this Agreement to persons or entities include their
respective successors and permitted assigns.

     10.07 Articles and Sections. This Agreement, for convenience only, has been
divided into Articles and Sections; and it is understood that the rights and
other legal relations of the parties hereto shall be determined from this
instrument as an entirety and without regard to the aforesaid division into
Articles and Sections and without regard to headings prefixed to such Articles
or Sections.

     10.08 Number and Gender. Whenever the context requires, reference herein
made to the single number shall be understood to include the plural; and
likewise, the plural shall be understood to include the singular. Definitions of
terms defined in the singular or plural shall be equally applicable to the
plural or singular, as the case may be, unless otherwise indicated. Words
denoting sex shall be construed to include the masculine, feminine and neuter,
when such construction is appropriate; and specific enumeration shall not
exclude the general but shall be construed as cumulative.

                                                                   Page 42 of 50



     10.09 Incorporation of Schedules and Exhibits. The Schedules and Exhibits
attached to this Agreement are incorporated herein and shall be considered a
part of this Agreement for all purposes.

     10.10 Counterparts. This Agreement may be executed in counterparts, each of
which shall be an original and which, taken together, shall constitute the same
instrument.

     10.11 Governing Law. Except to the extent the laws of another jurisdiction
mandatorily govern any aspect of the transactions contemplated by this
Agreement, this Agreement and the transactions contemplated by this Agreement
shall be governed and construed in accordance with the internal laws of the
State of Texas, without giving effect to any principles of conflict of laws.

     10.12 Integration. This Agreement and the documentation to be executed and
delivered at Closing constitute the entire understanding between Seller and
Purchaser concerning the subject matter of this Agreement and supersede all
negotiations, discussions, representations, prior agreements and understandings,
whether oral or written, except the Confidentiality Agreement.

     10.13 Parties in Interest. Except as otherwise expressly provided herein,
this Agreement is binding upon and shall inure to the benefit of Seller and
Purchaser and their respective successors, representatives, and permitted
assigns. Except as otherwise expressly provided herein, no other person or
entity is intended to have any benefits, rights or remedies under this Agreement
nor shall any person or entity other than Purchaser and Seller be entitled to
any claim, cause of action, remedy, or right of any kind under this Agreement.

     10.14 Severability. If any provision of this Agreement is found to be
illegal or unenforceable, the other terms of this Agreement shall remain in
effect and this Agreement shall be construed as if the illegal or unenforceable
provision had not been included.

     10.15 Survival. The covenants, agreements, representations, warranties and
indemnities contained in this Agreement shall survive Closing of the
transactions contemplated hereby; provided, however, except as to the
representations and warranties made by Seller in Sections 3.01(a) (other than
the last sentence thereof), (b), (c), (d), and (e) and by Purchaser in Section
3.02, the representations and warranties made by Seller and Purchaser in this
Agreement and indemnities by Seller and Purchaser associated therewith shall
survive Closing for eighteen months only.

     10.16 Arbitration.

          (a) Any and all claims, counterclaims, demands, cause of action,
     disputes, controversies, and other matters in question arising out of or
     relating to this Agreement, any provision hereof, the alleged breach of any
     such provision, or in any way relating to the subject matter of this
     Agreement or the relationship between the parties hereto created by this
     Agreement, involving the parties hereto and/or their respective
     representatives (all of which are referred to herein as "Claims"), even
     though some or all of such Claims allegedly are extra-contractual in
     nature, whether such Claims sound in contract, tort, or otherwise, at law
     or in equity, under state or federal law, whether provided by statute or
     the common law, for damages or any other relief, shall be resolved by
     binding arbitration.

                                                                   Page 43 of 50



          (b) The arbitration shall be conducted pursuant to the Federal
     Arbitration Act, as such Act is modified by this Agreement. The validity,
     construction, and interpretation of this Agreement to arbitrate, and all
     procedural aspects of the arbitration conducted pursuant to this agreement
     to arbitrate, including the determination of the issues that are subject to
     arbitration (i.e., arbitrability), the scope of the arbitrable issues,
     allegations of "fraud in the inducement" to enter into this Agreement or
     this arbitration provision, allegations of waiver, laches, delay or other
     defenses to arbitrability, and the rules governing the conduct of the
     arbitration (including the time for filing an answer, the time for the
     filing of counterclaims, the times for amending the pleadings, the
     specificity of the pleadings, the extent and scope of discovery, the
     issuance of subpoenas, the times for the designation of experts, whether
     the arbitration is to be stayed pending resolution of related litigation
     involving third parties not bound by this Agreement, the receipt of
     evidence, and the like), shall be decided by the arbitrators. Failing
     agreement upon the rules governing the conduct of the arbitration within 30
     days after appointment of the third arbitrator (as provided below in this
     Section 10.16), the arbitrators shall adopt the Commercial Arbitration
     Rules of the American Arbitration Association, but the arbitration shall
     not be under the supervision of, and no fee shall be paid to, the American
     Arbitration Association. In deciding the substance of any Claims in
     arbitration, except to the extent that it is mandatory that the law of some
     other jurisdiction wherein the Acquired Assets are located shall apply, the
     arbitrators shall refer to the substantive laws of the State of Texas for
     guidance (excluding choice-of-law principles of such laws that might call
     for the application of the law of some other state). Notwithstanding any
     other provision in this Section 10.16 to the contrary, the parties hereto
     expressly agree that the arbitrators shall have absolutely no authority to
     award consequential, statutory, treble, exemplary or punitive damages of
     any type under any circumstances, regardless of whether such damages may be
     available under the law of the State of Texas, the law of any other state,
     or federal law, or under the Federal Arbitration Act, or under the
     Commercial Arbitration Rules of the American Arbitration Association, the
     parties hereto hereby waiving their right, if any, to recover
     consequential, statutory, treble, exemplary or punitive damages in
     connection with any such Claims.

          (c) The arbitration proceeding shall be conducted in Houston, Texas.
     Within 30 days of the notice of initiation of the arbitration procedure,
     Seller shall select one arbitrator and Purchaser shall select one
     arbitrator. Each arbitrator shall be experienced in those aspects of the
     oil and gas industry relevant to the transactions contemplated by this
     Agreement. The two arbitrators shall select a third arbitrator, failing
     agreement on which within 90 days of the original notice, the parties
     hereto (or either of them) shall apply to any United States District Judge
     for the Southern District of Texas, Houston Division, who shall appoint the
     third arbitrator. While the third arbitrator shall be neutral, the two
     arbitrators appointed by the parties hereto are not required to be neutral
     and it shall not be grounds for removal of either of such arbitrators or
     for vacating the award of the arbitrators that either of such arbitrators
     has past or present minimal relationships with the party hereto that
     appointed such arbitrator.

                                                                   Page 44 of 50



          (d) Each party hereto shall pay the fees of the arbitrator appointed
     by it and all fees of the third arbitrator shall be borne equally by the
     parties hereto.

          (e) To the fullest extent permitted by law, the arbitration proceeding
     and the award of the arbitrators shall be maintained in confidence by the
     parties hereto.

          (f) The award of the arbitrators shall be final and binding on the
     parties of the arbitrators, and judgment thereon may be entered in a court
     of competent jurisdiction.

     10.17 Endeavor Exploration, LLC. Endeavor Exploration, LLC ("Endeavor") has
executed this Agreement solely to evidence the granting of the Purchase Option
as provided in Section 1.03. Reference source not found.. Endeavor agrees to
execute and deliver any and all instruments and take such other actions as may
be necessary or advisable to carry out its obligations under this Agreement or
any other document delivered pursuant hereto.

                  [Remainder of page intentionally left blank.]

                                                                   Page 45 of 50



     IN WITNESS WHEREOF, Purchaser and Seller have executed and delivered this
Agreement as of the date first set forth above.


                                SELLER:

                                DDD ENERGY, INC.


                                By: /s/ Matthew S. Ramsey
                                    ----------------------------------------
                                Name: Matthew S. Ramsey
                                     ---------------------------------------
                                Title: President
                                       -------------------------------------


                                PURCHASER:

                                RISING STAR ENERGY, L.L.C.


                                By: /s/ Michael K. Grimm
                                    ----------------------------------------
                                Name: Michael K. Grimm
                                     ---------------------------------------
                                Its: President
                                    ----------------------------------------

                                ENDEAVOR EXPLORATION, LLC


                                By: /s/ Matthew S. Ramsey
                                    ----------------------------------------
                                Name: Matthew S. Ramsey
                                     ---------------------------------------
                                Title: President
                                      --------------------------------------

                                                                   Page 46 of 50

EX-23.1

                                                                    Exhibit 23.1

                    CONSENT OF INDEPENDENT AUDITORS

We consent to the incorporation by reference in the following Registration
Statements, and any related Prospectuses, previously filed by Seitel, Inc. of
our report dated March 29, 2002 (except for the fourth paragraph of Note A and
for Note R, as to which the date is August 14, 2002), with respect to the
consolidated financial statements of Seitel, Inc. and subsidiaries included in
this Form 10-K/A (Amendment No. 3) for the year ended December 31, 2001:

                        
Form S-3 (No. 33-71968)    Seitel, Inc. 1992 Employee Stock Purchase Plan
Form S-3 (No. 33-78554)    Seitel, Inc. Contract Employment Warrants
Form S-3 (No. 33-80574)    $75 Million Debt Securities, Preferred Stock and Common Stock
Form S-3 (No. 33-89890)    Seitel, Inc. Debenture Warrants
Form S-3 (No. 333-71545)   355,733 Shares of Common Stock
Form S-3 (No. 333-85671)   $200 Million Seitel, Inc. Junior Subordinated Debt Securities,
                           Seitel, Inc. Capital Trust I & II Trust Preferred Securities
Form S-8 (No. 33-36914)    Seitel, Inc. Incentive Stock Option Plan and Non-Qualified Stock Option Plan
Form S-8 (No. 33-78560)    Seitel, Inc. 1993 Incentive Stock Option Plan
Form S-8 (No. 33-89934)    Seitel, Inc. 401(k) Plan and 1994 Warrant Plan
Form S-8 (No. 333-01271)   Seitel, Inc. 1993 Incentive Stock Option Plan and
                           1995 Warrant Reload Plan
Form S-8 (No. 333-12549)   Seitel, Inc. Incentive Stock Option Plan and Non-Employee Directors'
                           Deferred Compensation Plan
Form S-8 (No. 333-63383)   Seitel, Inc. 1998 Employee Stock Purchase Plan
Form S-8 (No. 333-64557)   1993 Seitel, Inc. Incentive Stock Option Plan, Non-Employee Directors'
                           Stock Option Plan, Executive Warrants, Departure Warrants, and Employment Warrants
Form S-8 (No. 333-51268)   Seitel, Inc. Amended and Restated 1998 Employee Stock Purchase Plan, Seitel, Inc.
                           2000 Stock Option Plan, Employment Agreement Amendments with Paul Frame,
                           Herbert Pearlman and David Lawi and Certain Compensation Warrants
Form S-8 (No. 333-69368)   Seitel, Inc. 2001 Inducement Stock Option Plan, Seitel, Inc. 2001 Non-Officer Stock
                           Option Plan, Seitel, Inc. 2001 Non-Employee Stock Option Plan and Employment
                           Warrants.

                                                          ERNST & YOUNG LLP




Houston, Texas
August 16, 2002