<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [x]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[x] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
Seitel, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- -------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[x] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
[_] $500 per each party to the controversy pursuant to Exchange Act Rule 14a-
6(i)(3).
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
---------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
----------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
----------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
---------------------------------------------------------------------------
(5) Total fee paid:
---------------------------------------------------------------------------
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
----------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
SEITEL, INC.
----------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD THURSDAY
JULY 25, 1996
To Our Stockholders:
You are cordially invited to attend the Annual Meeting of Stockholders of
Seitel, Inc. (the "Company") to be held on Thursday, July 25, 1996, at 10:00
a.m. at the Company's Headquarters, 50 Briar Hollow Lane, 7th Floor West,
Houston, Texas 77027, for the following purposes:
1. To elect nine directors to serve until the 1997 Annual Meeting;
2. To approve certain amendments to the Seitel, Inc. 1993 Incentive Stock
Option Plan;
3. To approve the Seitel, Inc. Non-Employee Directors' Deferred
Compensation Plan;
4. To approve the appointment of Arthur Andersen LLP as independent
certified public accountants for the Company for the year ending
December 31, 1996; and
5. To transact such other business as may properly come before the meeting
or any adjournment of the meeting.
Only stockholders of record at the close of business on May 27, 1996, will
be entitled to notice of and to vote at the meeting.
Please sign, date and mail the enclosed proxy in the enclosed envelope,
which requires no postage if mailed in the United States, so that your shares
will be represented at the meeting.
By Order of the Board of Directors,
Debra D. Valice
Corporate Secretary
June 14, 1996
Houston, Texas
<PAGE>
SEITEL, INC.
50 BRIAR HOLLOW LANE, 7TH FLOOR WEST
HOUSTON, TX 77027
-------------------------
PROXY STATEMENT
-------------------------
The accompanying proxy is solicited on behalf of the Board of Directors of
the Company for use at the Annual Meeting of Stockholders to be held on
Thursday, July 25, 1996, and at any adjournment of the meeting. The proxy may
be revoked at any time before it is exercised by notice, in writing, to the
Secretary of the Company, or by a later dated proxy delivered to the Secretary
of the Company at any time before the voting, or by appearing at the meeting
and voting in person. The proxy, when properly executed and returned, will be
voted in accordance with the instructions contained therein. A proxy received
by management which does not withhold authority to vote or on which no
specifications have been indicated will be voted (i) in favor of the nominees
for members of the Board of Directors of the Company named in item 1 of the
proxy, (ii) for approval of the amendments to the Seitel, Inc. 1993 Incentive
Stock Option Plan, (iii) in favor of the adoption of the Seitel, Inc. Non-
Employee Directors' Deferred Compensation Plan, and (iv) for approval of the
appointment of Arthur Andersen LLP as the Company's independent public
accountants for the fiscal year ending December 31, 1996.
The Board of Directors has fixed the close of business on May 27, 1996, as
the record date for the meeting. On that date, the Company had outstanding
9,707,736 shares of Common Stock. Only stockholders of record at the close of
business on that date will be entitled to vote at the meeting or at any
adjournment of the meeting. Each such stockholder will be entitled to one vote
for each share held and may vote in person or by proxy authorized in writing.
The presence at the Annual Meeting, in person or by proxy, of the holders of
a majority of the outstanding shares of Common Stock is necessary to
constitute a quorum. The election of directors will require the favorable vote
of the holders of a plurality of the shares of Common Stock present, in person
or by proxy, at the Annual Meeting and entitled to vote thereon. Approval of
the amendments to the Seitel, Inc. 1993 Incentive Stock Option Plan, of the
Seitel, Inc. Non-Employee Directors' Deferred Compensation Plan, and of the
appointment of Arthur Andersen LLP as the Company's independent public
accountants for the fiscal year ending December 31, 1996, will require the
favorable vote of the holders of a majority of the shares of Common Stock
present, in person or by proxy, at the Annual Meeting and entitled to vote
thereon. Under Delaware law and the Company's Certificate of Incorporation and
Bylaws, abstentions and broker non-votes have no effect on the election of
directors since directors are elected by a plurality vote. With respect to the
other proposals to be decided at the meeting, abstentions are counted as a
vote against a proposal, and broker non-votes (and other limited proxies),
although considered present for quorum purposes, are not considered part of
the voting power present at the meeting with respect to that proposal. Thus,
broker non-votes have the effect of reducing the number of shares voted in
favor of such proposal (but not the percentage) that is required to approve
the proposal.
The principal executive offices of the Company are at 50 Briar Hollow Lane,
7th Floor West, Houston, Texas 77027. The proxy statement and form of proxy
are being sent to stockholders on or about June 18, 1996.
<PAGE>
ELECTION OF DIRECTORS
At the meeting, nine directors are to be elected to serve until the next
Annual Meeting of Stockholders or until their successors are elected and
qualified. The persons named in the enclosed form of proxy have advised that,
unless contrary instructions are received, they intend to vote for the nine
nominees named by the Board of Directors of the Company and listed below. If,
by reason of death or other unexpected occurrence, one or more of these
nominees is not available for election, the persons named in the form of proxy
have advised that they will vote for such substitute nominees as the Board of
Directors of the Company may propose.
<TABLE>
<CAPTION>
DIRECTOR
NAME AGE POSITION(S) WITH THE COMPANY SINCE
---- --- ---------------------------- --------
<S> <C> <C> <C>
Herbert M. Pearlman..... 63 Chairman of the Board of Directors 1982
Paul A. Frame........... 49 Chief Executive Officer, President and Director 1986
Horace A. Calvert....... 42 Chief Operating Officer, Executive Vice President and Director 1987
David S. Lawi........... 60 Chairman of the Executive Committee and Director 1982
Walter M. Craig, Jr. ... 42 Director 1987
William Lerner.......... 62 Director 1985
William L. Lurie........ 65 Director 1995
John E. Stieglitz....... 65 Director 1989
Debra D. Valice......... 39 Chief Financial Officer, Senior Vice President of Finance, 1995
Treasurer, Corporate Secretary and Director
</TABLE>
Herbert M. Pearlman has been Chairman of the Company's Board of Directors
since 1987 and served as Chief Executive Officer from 1987 through July 1992.
He has served as President, Chief Executive Officer and a Director of Helm
Resources, Inc. ("Helm"), an American Stock Exchange listed company with
equity interests in diverse businesses, since 1980, and in June 1984, he
became Helm's Chairman of the Board. Since March 1984, Mr. Pearlman has been
Chairman of Intersystems, Inc. ("Intersystems"), an American Stock Exchange
listed company engaged in providing services to the thermoplastic resins
industry, approximately 25% of the outstanding stock of which is owned by
Helm. Since June 1990, Mr. Pearlman has served as Chairman of Unapix
Entertainment, Inc. ("Unapix Entertainment"), a NASDAQ listed company engaged
in multi-media entertainment. Since August 1994, he has served as Chairman of
the Board of ABC Dispensing Technologies, Inc. ("ABC Dispensing"), a NASDAQ
listed company engaged in marketing and manufacture of computerized dispensing
equipment.
Paul A. Frame has been Chief Executive Officer of the Company since July
1992 and President since January 1987. He was appointed President of Seitel
Data, Ltd., the Company's seismic data subsidiary, and of Seitel Delaware,
Inc., a wholly-owned subsidiary of the Company which is the general partner of
Seitel Data, Ltd., in May 1996. Mr. Frame was Executive Vice President of the
Company from January 1985 until his appointment as President. He was hired by
the Company in August 1984 as Vice President of Marketing.
Horace A. Calvert has been Chief Operating Officer of the Company since July
1992 and Executive Vice President since January 1987. In March 1993, Mr.
Calvert was appointed President of DDD Energy, Inc., a wholly-owned subsidiary
of the Company engaged in the exploration and development of oil and gas
reserves. From January 1985 until his appointment as Vice President in May
1986, he was the Company's Chief Geophysicist.
David S. Lawi has been Chairman of the Company's Executive Committee since
March 1987. He also was Assistant Secretary of the Company from May 1986 until
June 1987 and from June 1989 until July 1993. Mr. Lawi has been Treasurer,
Corporate Secretary and a Director of Helm since 1980, and he was its
Executive Vice President from 1980 through 1992. Since March 1984, Mr. Lawi
has been a Director of Intersystems and, since 1985, he has been Chairman of
Intersystems' Executive Committee. Since June 1990, Mr. Lawi has been a
Director of Unapix Entertainment and, since January 1993, Chairman of its
Executive Committee, its Treasurer and Secretary.
2
<PAGE>
Walter M. Craig, Jr. has provided legal and business advice to the Company,
from time to time, since 1984. Since 1993, he has been President of the
Mezzanine Financial Fund, L.P., a limited partnership engaged in making asset
based loans available to small and mid-market companies. He has served as
Executive Vice President and Chief Operating Officer of Helm since August
1992. From 1984 to 1992, he was Senior Vice President of Business and Legal
Affairs of Helm. Since April 1993, Mr. Craig has been a Director of Unapix
Entertainment.
William Lerner is Chairman of the Company's Audit Committee and a member of
the Company's Compensation and Stock Option Committee. Since January 1990, Mr.
Lerner has been engaged in the private practice of law. From May 1990 until
December 1990, he was General Counsel to Hon Development Company, a California
real estate development company. From June 1986 until December 1989, Mr.
Lerner was Vice President and General Counsel of The Geneva Companies, Inc., a
financial services company engaged in counseling privately owned middle-market
companies. Since 1985, he has been a Director of Helm. Mr. Lerner is also a
Director of Rent-Way, Inc., a NASDAQ listed company headquartered in
Pennsylvania that operates a chain of rental-purchase stores; of Co-Counsel,
Inc., a NASDAQ listed company headquartered in Texas that provides temporary
lawyers and paralegals to law departments of large companies and law firms;
and of Micros-to-Mainframes, Inc., a NASDAQ listed company headquartered in
New York that is a single-source provider of advanced computer technology
solutions, communications products, and Internet development services.
William L. Lurie was elected as a director of the Company in November 1995.
He has been Co-Chairman of The Foundation for the Prevention & Early
Resolution of Conflicts since April 1996. He was President of Prevention and
Early Resolution of Conflicts, a consulting firm, from 1994 until April 1996.
Mr. Lurie has been a Director of Minerals Technologies, Inc. since 1993 and a
member of its Compensation Committee. He was Executive Consultant to the
Chairman of The Business Roundtable from 1993 to 1994 and President of The
Business Roundtable from 1984 to 1993. Prior to that time, Mr. Lurie was Vice
President-General Counsel of International Paper Company. He has been a
Director of Co-Counsel, Inc. since May 1995, and of Intersystems since
November 1995.
John E. Stieglitz is Chairman of the Company's Compensation and Stock Option
Committee and a member of the Company's Audit Committee. Since 1976, he has
been President of Conspectus, Inc., a privately held company engaged in
providing services in the area of executive recruitment. Mr. Stieglitz is also
a Director of Helm, Intersystems and ABC Dispensing.
Debra D. Valice, CPA, is the Company's Chief Financial Officer, Senior Vice
President of Finance, Treasurer and Corporate Secretary. From March 1986 until
February 1987, she was the Company's Chief Accounting Officer. Ms. Valice was
elected as a director of the Company in November 1995.
EXECUTIVE OFFICERS
All of the Company's executive officers are also directors. Officers serve
at the discretion of the Board.
BOARD OF DIRECTORS, COMMITTEES AND ATTENDANCE AT MEETINGS
During 1995, the Company's Board of Directors held three meetings. All of
the directors of the Company attended at least 75% of the total number of
meetings of the Board of Directors and of meetings held by all committees of
the Board on which he served during 1995, except for Messrs. Rives (who
resigned as director in November 1995) and Craig. Messrs. Rives and Craig
attended two of the Board's three meetings held during 1995 and were not
members of any committees during 1995.
The Board of Directors has a standing Audit Committee, Compensation and
Stock Option Committee, and Executive Committee. The Board of Directors does
not have a Nominating Committee.
3
<PAGE>
During 1995, the Audit Committee was comprised of Messrs. Stieglitz and
Lerner. The Audit Committee held one meeting during 1995. The functions of the
Audit Committee are to select the independent public accountants of the
Company, to review with them the Company's financial statements, to review the
Company's financial systems and controls and to oversee other matters relating
to the integrity of the Company's finances and financial statements as the
Committee may consider appropriate.
During 1995, Messrs. Pearlman, Frame, Calvert and Lawi acted as the
Executive Committee. The function of the Executive Committee is to act on an
interim basis for the full Board. The Executive Committee did not meet
officially separately from the entire Board of Directors during 1995.
During 1995, the Compensation and Stock Option Committee ("Compensation
Committee") was comprised of Messrs. Stieglitz and Lerner. The Compensation
Committee reviews and recommends to the Board of Directors the compensation,
promotion and employment agreements of officers of the Company, the terms of
any proposed employee benefit arrangements, and the granting of awards under
such arrangements. The Compensation Committee did not meet officially
separately from the entire Board of Directors during 1995; however, it did
authorize certain transactions through the execution of one unanimous written
consent during 1995.
James C. Rives, Jr., who resigned as a director of the Company in November
1995, failed to timely file two reports on Form 4, and thereby failed to
report on a timely basis four transactions in Company stock. Mr. Rives filed
the required Form 4 reporting transactions for the month of May 1995 in August
1995, and filed the required Form 4 reporting transactions for the month of
June 1995 in October 1995.
BENEFICIAL OWNERSHIP
The following table sets forth certain information regarding the beneficial
ownership of the Common Stock, as of May 28, 1996, by (i) persons known to the
Company to be beneficial owners of more than 5% of the Common Stock, (ii) each
of the Company's directors who owns shares of the Common Stock, (iii) the
Chief Executive Officer and each of the four other most highly compensated
executive officers (collectively, the "named executive officers"), and (iv)
all directors and executive officers of the Company as a group.
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF
BENEFICIAL PERCENTAGE
NAME AND ADDRESS OF BENEFICIAL OWNER OWNERSHIP(1)(2) OF CLASS
- ------------------------------------ --------------- ----------
<S> <C> <C>
Driehaus Capital Management, Inc..................... 831,900 8.6%
25 East Erie Street
Chicago, IL 60611
Horace A. Calvert.................................... 535,976(3) 5.3%
50 Briar Hollow Lane
7th Floor West
Houston, TX 77027
Paul A. Frame, Jr. .................................. 517,378(4) 5.1%
50 Briar Hollow Lane
7th Floor West
Houston, TX 77027
Herbert M. Pearlman.................................. 369,719(5) 3.7%
537 Steamboat Road
Greenwich, CT 06830
David S. Lawi........................................ 254,576(6) 2.6%
537 Steamboat Road
Greenwich, CT 06830
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF
BENEFICIAL PERCENTAGE
NAME AND ADDRESS OF BENEFICIAL OWNER OWNERSHIP(1)(2) OF CLASS
- ------------------------------------ --------------- ----------
<S> <C> <C>
Debra D. Valice.................................... 150,173(7) 1.5%
50 Briar Hollow Lane
7th Floor West
Houston, TX 77027
Jesse R. Marion.................................... 35,605(8) *
327 Tynebridge
Houston, TX 77024
Walter M. Craig, Jr................................ 30,981(9) *
2 Bridge Avenue
Redbank, NJ 07701
William Lerner..................................... 10,585(10) *
423 East Beau Street
Washington, PA 15301
John E. Stieglitz.................................. 6,000(10) *
Conspectus, Inc.
222 Purchase Street
Rye, NY 10580
William L. Lurie................................... 1,000 *
93 Taylor Lane
Harrison, NY 10528
All directors and executive officers as a group (9
persons).......................................... 1,876,388(11) 17.0%
</TABLE>
- --------
* Less than 1%
(1) Except as otherwise noted, each named holder has, to the best of the
Company's knowledge, sole voting and investment power with respect to the
shares indicated.
(2) Includes shares that may be acquired within 60 days by any of the named
persons upon exercise of any right.
(3) Includes 23,002 and 355,023 shares which may be acquired from the Company
within 60 days upon exercise of options and common stock purchase
warrants, respectively. The exercise prices of the options range from
$2.80 to $5.57 per share, and the exercise prices of the common stock
purchase warrants range from $11.25 to $24.00 per share.
(4) Includes 21,719 and 345,399 shares which may be acquired from the Company
within 60 days upon exercise of options and common stock purchase
warrants, respectively. The exercise prices of the options range from
$3.11 to $5.57 per share, and the exercise prices of the common stock
purchase warrants range from $13.05 to $24.00 per share.
(5) Includes 245,291 shares which may be acquired from the Company within 60
days upon exercise of common stock purchase warrants. The exercise prices
of the common stock purchase warrants range from $13.05 to $32.00 per
share.
(6) Includes 202,863 shares which may be acquired from the Company within 60
days upon exercise of common stock purchase warrants. The exercise prices
of the common stock purchase warrants range from $13.05 to $32.00 per
share.
(Footnotes continued on following page)
5
<PAGE>
(7) Includes 10,471 and 83,512 shares which may be acquired from the Company
within 60 days upon exercise of options and common stock purchase
warrants, respectively. The exercise prices of the options range from
$5.57 to $11.30 per share, and the exercise prices of the common stock
purchase warrants range from $11.25 to $24.00 per share.
(8) Includes 13,333 and 10,577 shares which may be acquired from the Company
within 60 days upon exercise of options and common stock purchase
warrants, respectively. The exercise prices of the options range from
$15.00 to $30.00 per share, and the exercise price of the common stock
purchase warrants is $24.00 per share. Mr. Marion resigned as a director
of the Company and as an officer of Seitel Delaware, Inc. and Seitel Data,
Ltd. effective May 31, 1996.
(9) Includes 30,652 shares which may be acquired from the Company within 60
days upon exercise of common stock purchase warrants. The exercise prices
of the common stock purchase warrants range from $30.13 to $32.00 per
share.
(10) Includes 6,000 shares which may be acquired from the Company within 60
days upon exercise of options. The exercise prices of the options range
from $30.00 to $30.50 per share.
(11) Includes an aggregate of 1,329,932 shares which may be acquired from the
Company within 60 days upon exercise of 67,192 options and 1,262,740
common stock purchase warrants, respectively, by the group of nine
persons which comprises all executive officers and directors. The
exercise prices of the options range from $2.80 to $30.50 per share, and
the exercise prices of the common stock purchase warrants range from
$11.25 to $32.00 per share. The amount listed does not include shares
owned by Jesse R. Marion.
6
<PAGE>
~EXECUTIVE COMPENSATION
The following table sets forth certain summary information concerning the
compensation awarded to, earned by or paid to the named executive officers for
the years indicated.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
--------------
ANNUAL COMPENSATION AWARDS
---------------------------------------- --------------
NAME AND PRINCIPAL OTHER ANNUAL STOCK OPTIONS/ ALL OTHER
POSITION YEAR SALARY($) BONUS($)(1) COMPENSATION($)(2) SARS(#) COMPENSATION($)
------------------ ---- --------- ----------- ------------------ -------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Paul A. Frame........... 1995 $139,870 $806,094 $766,456 58,992 $41,358(3)
Chief Executive Officer 1994 $136,193 $955,213 $684,006 292,728 $94,990
and President 1993 $132,612 $422,034 $390,262 212,709 $60,945
Horace A. Calvert....... 1995 $139,870 $806,094 $766,456 80,806 $41,358(3)
Chief Operating Officer 1994 $136,193 $955,213 $684,006 292,728 $94,990
and Executive Vice 1993 $132,612 $449,576 $390,262 212,709 $60,945
President
Herbert M. Pearlman..... 1995 $121,182 $815,712 -- 99,949 $41,358(3)
Chairman of the 1994 $115,569 $897,141 -- 251,740 $94,990
Board of Directors 1993 $112,861 $544,756 -- 165,677 $60,945
David S. Lawi........... 1995 $ 58,823 $407,856 -- 70,926 $41,358(3)
Chairman of the 1994 $ 56,098 $448,570 -- 166,884 $94,990
Executive Committee 1993 $ 54,784 $272,378 -- 123,249 $60,945
Jesse R. Marion......... 1995 $ 75,000 $ 2,381 $707,722 25,000 $ 3,000(4)
President of Seitel 1994 $ 75,000 $ 6,620 $932,644 30,577 $ 3,000
Delaware, Inc. and 1993 $ 40,000 $ 16,397 $630,122 10,000 $ 4,497
Seitel Data, Ltd.(5)
</TABLE>
- --------
(1) Includes bonuses based on the Company's pre-tax profits and, for each of
Messrs. Frame and Calvert, bonuses based on the Company's stock
performance of $316,667 in 1995.
(2) Includes commissions based on sales.
(3) Includes amounts paid pursuant to the program (the "Incentive Compensation
Program") pursuant to which between 2 1/2% and 5% of the revenue generated
annually by seismic creation programs that have fully recouped their
direct costs is distributed to certain officers and key employees, and
amounts contributed by the Company to its 401(k) Savings Plan (the "401(k)
Plan") on behalf of such named executive officers as discretionary and
matching contributions. Includes $36,738 contributed by the Company
pursuant to its Incentive Compensation Program, and $4,620 contributed by
the Company as 401(k) Plan matching contributions.
(4) Includes $3,000 contributed by the Company as 401(k) Plan matching
contributions.
(5) Resigned effective May 31, 1996.
7
<PAGE>
The following table sets forth certain information with respect to options
to purchase Common Stock granted during the year ended December 31, 1995 to
each of the named executive officers.
OPTION/SAR GRANTS IN 1995
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
------------------------------------------------
PERCENT POTENTIAL REALIZABLE VALUE
NUMBER OF OF TOTAL AT ASSUMED ANNUAL RATES OF
SECURITIES OPTIONS/SARS STOCK PRICE APPRECIATION
UNDERLYING GRANTED TO EXERCISE FOR OPTION TERM(4)
OPTIONS/SARS EMPLOYEES OR BASE EXPIRATION ---------------------------------------
NAME GRANTED(#) IN 1995 PRICE($/SH) DATE 0 PERCENT($) 5 PERCENT($) 10 PERCENT($)
---- ------------ ------------ ----------- ---------- ------------ ------------ -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Paul A. Frame........... 1,285(1) 0.2 $ 4.13 12/18/96 $ 29,714 $ 32,935 $ 36,297
1,285(1) 0.2 $ 4.13 12/18/97 $ 26,983 $ 30,382 $ 33,959
6,422(1) 0.9 $ 3.11 04/08/97 $141,353 $152,386 $ 163,701
50,000(2) 7.1 $25.13 11/29/05 -- $790,049 $2,002,139
Horace A. Calvert....... 1,027(1) 0.1 $ 2.80 01/27/96 $ 23,310 $ 24,619 $ 25,929
1,541(1) 0.2 $ 4.13 12/18/96 $ 35,634 $ 39,497 $ 43,528
9,624(1) 1.4 $11.25 02/27/96 $153,984 $167,097 $ 180,209
1,027(1) 0.1 $ 2.80 01/27/97 $ 22,925 $ 24,432 $ 25,959
1,541(1) 0.2 $ 4.13 12/18/97 $ 32,359 $ 36,434 $ 40,724
6,422(1) 0.9 $ 3.11 04/08/97 $141,353 $152,386 $ 163,701
9,624(1) 1.4 $11.25 02/27/97 $133,533 $148,797 $ 164,363
50,000(2) 7.1 $25.13 11/29/05 -- $790,049 $2,002,139
Herbert M. Pearlman..... 9,949(1) 1.4 $11.25 02/27/96 $159,184 $172,740 $ 186,295
40,000(3) 5.7 $32.00 12/10/97 -- $174,947 $ 364,826
50,000(2) 7.1 $25.13 11/29/05 -- $790,049 $2,002,139
David S. Lawi........... 5,926(1) 0.8 $11.25 02/27/96 $ 94,816 $102,890 $ 110,964
40,000(3) 5.7 $32.00 12/10/97 -- $174,947 $ 364,826
25,000(2) 3.6 $25.13 11/29/05 -- $395,024 $1,001,069
Jesse R. Marion......... 25,000(2) 3.6 $29.13 11/29/05 -- $295,024 $ 901,069
</TABLE>
- --------
(1) The expiration dates of the options listed were extended one year.
(2) These options were granted under the Company's 1993 Incentive Stock Option
Plan, as amended, and are exercisable starting 12 months after the grant
date of November 29, 1995, with 33% of the options granted becoming
exercisable at that time and with an additional 33% of the options
becoming exercisable on each successive anniversary date, with full
vesting occurring on the third anniversary date. The options were granted
for a term of 10 years, subject to certain events related to termination
of employment.
(3) These common stock purchase warrants were granted under the terms of the
Company's 1995 Warrant Reload Plan upon the exercise of 40,000 previously
granted warrants subject to the Warrant Reload Plan. The common stock
purchase warrants were fully exercisable on the date of grant, and will
expire on the expiration date of the exercised warrants, subject to
certain events related to termination of employment.
(4) The values shown are based on the indicated assumed annual rates of
appreciation compounded annually. The actual value an executive may
realize will depend on the extent to which the stock price exceeds the
exercise price of the options or warrants on the date the option or
warrant is exercised. Accordingly, the value, if any, realized by an
executive will not necessarily equal any of the amounts set forth in the
table above. These calculations are not intended to forecast possible
future appreciation, if any, of the price of the Company's Common Stock.
8
<PAGE>
The following table sets forth certain information with respect to the
exercise of options during the year ended December 31, 1995, and unexercised
options held at December 31, 1995, and the value thereof, by each of the named
executive officers.
AGGREGATED OPTION/SAR EXERCISES IN 1995
AND 12/31/95 OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED IN-
UNDERLYING UNEXERCISED THE
OPTIONS/SARS MONEY OPTIONS/SARS AT
SHARES AT 12/31/95(#) 12/31/95($)
ACQUIRED ON VALUE ------------------------- -------------------------
NAME EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Paul A. Frame........... -- -- 367,118 50,000 $7,481,438 $512,500
Horace A. Calvert....... -- -- 378,025 50,000 $7,755,071 $512,500
Herbert M. Pearlman..... 58,707 $1,189,423 245,291 50,000 $3,770,240 $512,500
David S. Lawi........... 50,305 $ 990,672 202,863 25,000 $3,287,621 $256,250
Jesse R. Marion......... 7,083 $ 111,869 20,994 41,667 $ 318,665 $419,583
</TABLE>
EMPLOYMENT ARRANGEMENTS
Agreements with Messrs. Frame, Calvert, Pearlman and Lawi
Effective as of January 1, 1991, the Company entered into employment
agreements with each of Messrs. Frame, Calvert, Pearlman and Lawi for service
in their respective capacities set forth in the listing of directors and
executive officers. During 1992, Mr. Pearlman passed the Chief Executive
Officer title and duties to Mr. Frame, and Mr. Calvert added the additional
title and duties of Chief Operating Officer to those he already held. The
employment agreements were not revised for these changes. Each agreement is
for a term of five years, renewable each year for an additional year unless
either party to the agreement gives notice to the contrary. In accordance with
these agreements, Messrs. Frame, Calvert, Pearlman and Lawi receive an annual
base salary of $139,870, $139,870, $121,182, and $58,823, respectively.
Additionally, each of Messrs. Frame and Calvert receive a 1% commission on the
first $12,000,000 in revenues for the year and 1/2% commission on revenues in
excess thereof, plus an additional 1/2% commission on revenues over
$12,000,000 if at least 40% of the Company's revenues are resale revenues,
plus a bonus of 4% of the Company's pre-tax profits (as defined therein). Each
of Messrs. Pearlman and Lawi receive an annual bonus of 5% and 2 1/2%,
respectively, of the Company's pre-tax profits (as defined).
Each of the agreements with Messrs. Frame and Calvert provide that if at any
time during the term of such agreement, (i) the employment agreements of
Messrs. Pearlman or Lawi are terminated by the Company prior to the stated
term thereof, or (ii) Messrs. Pearlman and Lawi resign from the Company's
Board of Directors prior to the expiration of the term of their employment
agreements, or (iii) the majority of the members of the Company's Board of
Directors is no longer nominated and supported by a majority of Messrs. Frame,
Calvert, Pearlman and Lawi (each a "Change in Control"), the employee shall
have the right to terminate the agreement immediately and receive from the
Company all compensation required to be paid during the unexpired term thereof
as well as the severance payment described below without any obligation to
perform consulting services as described below. The Company believes that the
Change in Control provisions in these agreements may tend to discourage
attempts to acquire a controlling interest in the Company and may also tend to
make the removal of management more difficult.
Each agreement provides that if it is not renewed, the Company will pay the
employee for two additional years' compensation including his then current
base salary plus the average of all commissions and bonuses paid to the
employee for the then prior three years. The severance payments are contingent
upon the employee remaining available to perform consulting services for the
benefit of the Company.
9
<PAGE>
Each agreement provides for certain noncompetition and nondisclosure
covenants of the employee and for certain Company-paid fringe benefits such as
an automobile allowance, disability insurance and inclusion in pension,
deferred compensation, profit sharing, stock purchase, savings,
hospitalization and other benefit plans in effect from time to time.
Bonuses Based On Stock Performance
On July 21, 1992, when the stock price was $5.375, the Compensation and
Stock Option Committee and the entire Board of Directors approved payment of a
one-time $2,500,000 special shareholder value bonus to be divided among
Messrs. Frame and Calvert and three other key employees upon the event of the
market price of the Company's stock maintaining or exceeding $20.00 per share
for at least 90 consecutive days (the "Target Date") at any time before July
21, 1997. The Target Date was achieved in June 1994. The bonus vests equally
over the 12 quarters following the Target Date, contingent upon continued
full-time employment, except in the event of termination without cause, death
or disability in which case the balance of the bonus will be due and payable
immediately.
On January 27, 1995, the Company's Board of Directors approved a shareholder
value incentive bonus under which a cash bonus aggregating $4,000,000 would be
paid to all salaried employees if the market price of the Company's stock
reaches $60 per share on or before April 30, 1998, and maintains that price
for at least 90 consecutive days. This bonus would be shared by all salaried
employees on a basis proportionate to their respective compensation ranking in
the Company, and it would vest and be paid out in escalating quarterly
installments over a three-year period, subject to continued employment with
the Company. This shareholder value incentive bonus was approved by Company
Shareholders at the 1995 annual meeting. As of May 28, 1996, the market price
of the Company's common stock was $26.625 per share.
DIRECTORS COMPENSATION
Outside directors receive an annual fee of $20,000 for serving on the board
and are reimbursed for out of pocket expenses for meeting attendance.
Directors who are also employees receive no separate compensation for their
services as directors.
Non-employee directors also participate in the Non-Employee Directors' Stock
Option Plan (the "Plan"), which was approved by Company Shareholders at the
1994 annual meeting. Under the terms of the Plan, each non-employee director
receives on the date of each annual meeting during the term of the Plan an
option to purchase 1,000 shares of Common Stock at an exercise price equal to
the fair market value of the Common Stock on the date of grant. In addition,
each non-employee director who is elected or appointed to the Board of
Directors for the first time is granted on the date of such election or
appointment an option to purchase 5,000 shares of Common Stock at an exercise
price equal to the fair market value of the Common Stock on the date of grant.
Options granted under the Plan become exercisable one year after the date of
grant. All options expire at the earlier of five years after the date of
grant, twelve months after the optionee ceases to serve as a director due to
death, disability, or retirement at or after age 65, or sixty days after the
optionee otherwise ceases to serve as a director of the Company. If a director
ceases to serve as such for any reason other than death, disability, or
retirement at or after age 65, the option may be exercised only if it was
exercisable at the date of such cessation of service. During 1995, William
Lerner and John E. Stieglitz were granted 1,000 options each, at an exercise
price of $30.00, and William L. Lurie was granted 5,000 options at an exercise
price of $25.00.
10
<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Company's Compensation and Stock Option Committee is composed of William
Lerner and John E. Stieglitz. In 1995, John Stieglitz invested as a general
partner in a partnership for which the Company's subsidiary DDD Energy, Inc.
acts as managing partner. See Item 13, Certain Relationships and Related
Transactions.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Company, which consists of two outside
directors, met with the entire Board of Directors in November 1995 to review
the Company's compensation policies and practices. Such a review is intended
to be conducted annually.
COMPENSATION PHILOSOPHY
The Compensation Committee, with the support of the entire Board of
Directors, has established performance-based criteria for the compensation of
CEO Paul A. Frame and for the other senior officers of the Company.
The compensation philosophy is to pay a low base salary and to provide
attractive incentives to earn additional income based on operating results,
plus the granting of stock options and warrants to reflect the importance that
the Company places on shareholder value. This compensation philosophy also
extends to all other officers and executives of the Company.
PERFORMANCE-BASED CASH COMPENSATION
As detailed under the Employment Arrangements section, Mr. Frame receives a
base salary, plus a commission based on revenue and a cash bonus based on pre-
tax profits. Similarly, the other senior officers each receive a base salary
plus commissions and/or bonuses based on operating results. Because of the
performance-based cash compensation and other competitive factors, the Board
of Directors resolved to enter in 1991 into a five year employment contract
with CEO Paul A. Frame, as well as with Chairman Herbert M. Pearlman, COO
Horace A. Calvert and Executive Committee Chairman David S. Lawi.
For the year ended December 31, 1995, Mr. Frame's total cash compensation
decreased 9% as compared to the total cash compensation he received for the
year ended December 31, 1994, excluding a bonus based on the Company's stock
performance, deferred compensation, Company matching 401(k) income and other
fringe benefits. This decrease in CEO compensation reflects the fact that the
Company had lower pretax profits in 1995 resulting from the discontinued gas
marketing operations; correspondingly, Mr. Frame's cash bonus decreased. Mr.
Frame earned increased commissions in 1995 versus 1994 due to the Company
having record revenues in 1995. Similarly, the total cash compensation for
Chairman Pearlman and Executive Committee Chairman Lawi decreased because of
decreased cash bonuses related to lower pre-tax profits, and the total cash
compensation for COO Calvert decreased because of decreased cash bonuses
related to lower pre-tax profits offset by increased commissions on increased
revenue.
BONUSES BASED ON STOCK PERFORMANCE
On January 27, 1995, the Compensation Committee recommended and the Board of
Directors approved a shareholder value incentive bonus under which a cash
bonus aggregating $4,000,000 would be paid to all salaried employees if the
market price of the Company's stock reaches $60.00 per share on or before
April 30, 1998, and maintains that price for at least 90 consecutive days.
This bonus would be shared by all salaried employees on a basis proportionate
to their respective compensation ranking in the Company, and it would vest and
be paid out in escalating quarterly installments over a three-year period,
subject to continued employment with the Company. As of May 28, 1996, the
market price of the Company's Common Stock was $26.625 per share.
11
<PAGE>
In 1992, when the Company's stock price was $5.375 per share, the Board of
Directors adopted a similar plan that provided for a one-time bonus of
$2,500,000 to be divided among Messrs. Frame and Calvert and three other key
employees if the Company's stock price reached $20 per share and maintained
that price for at least 90 consecutive days. The conditions of this bonus were
satisfied in June 1994, and the bonus is now being paid in 12 equal quarterly
payments contingent on the continued employment of the recipients. For the
year ended December 31, 1995, Messrs. Frame and Calvert each received $316,667
under this bonus plan.
STOCK OPTION AND COMMON STOCK PURCHASE WARRANTS PLANS
During 1995, the Company had only one stock option plan, the Seitel, Inc.
1993 Incentive Stock Option Plan (the "Option Plan"), under which options were
available for granting to officers and employees of the Company. Pursuant to
amendments to the Option Plan adopted by the Board of Directors effective
November 29, 1995, options granted under the Option Plan can be either
incentive stock options pursuant to Section 422 of the Internal Revenue Code
or non-qualified stock options. Options granted under the Option Plan have a
maximum term of 10 years, subject to certain events related to termination of
employment. Mr. Frame, as well as the other named executive officers, has been
granted stock options under previous non-qualified and incentive stock option
plans. Mr. Frame and other executive officers of the Company were granted
options under the Option Plan on November 29, 1995.
The Company also has issued common stock purchase warrants to Mr. Frame, as
well as to the other named executive officers and most other employees. These
warrants are designed to serve as incentives to all employees as to the
importance of their productivity related to the Company's financial
performance and shareholder value.
The Company's stock option plans and common stock purchase warrants are
designed to provide incentives based upon the Company's financial performance
and shareholder returns over time.
COMPLIANCE WITH INTERNAL REVENUE CODE SECTION 162(M)
Section 162(m) of the Internal Revenue Code, enacted in 1993, generally
disallows a tax deduction to public companies for compensation over $1,000,000
paid to the Chief Executive Officer and four other most highly compensated
executive officers of a company, as reported in that company's proxy
statement. Qualifying performance-based compensation is not subject to the
deduction limit if certain requirements are met. The Company believes it has
structured its executive compensation in a manner that complies with the
statue.
Respectfully submitted,
John E. Stieglitz, Chairman
William Lerner
12
<PAGE>
PERFORMANCE GRAPH
The following graph sets forth the cumulative total stockholder return for
the Company's Common Stock as compared to the Russell 2000 index, which covers
a broad cross-section of public companies including many which have relatively
small stock market capitalization; the Current Peer Group index; and the
Previous Peer Group index, both of which Peer Groups represent publicly traded
oil-service companies.
The companies that comprise Seitel, Inc.'s Current Peer Group are as
follows: Baker-Hughes Inc.; Daniel Industries, Inc.; Dresser Industries, Inc.;
Enterra Corp. (until October 1995 when it ceased to be publicly traded);
Global Marine Inc.; Halliburton Co., Helmerich & Payne, Inc.; Kaneb Services,
Inc.; McDermott International, Inc.; Parker Drilling Co.; Reading & Bates
Corp.; Rowan Companies, Inc.; Smith International, Inc.; Schlumberger Ltd.;
Tidewater Inc.; Varco International, Inc.; Western Atlas Inc. (which began to
be publicly traded in March 1994); and Western Co. of North America (until
April 1995 when it ceased to be publicly traded). The companies that comprise
Seitel, Inc.'s Previous Peer Group are the same as the Current Peer Group with
the exception of Western Atlas Inc. which was added to the Current Peer Group
to replace Western Co. of North America.
COMPARATIVE TOTAL RETURNS*
SEITEL, INC., RUSSELL 2000, AND PEER GROUPS
(Performance results through December 31, 1995)
<TABLE>
<CAPTION>
1990 1991 1992 1993 1994 1995
<S> <C> <C> <C> <C> <C> <C>
SEI $100.00 $101.18 $114.02 $139.36 $217.91 $358.54
Russell 2000 $100.00 $146.05 $172.94 $205.64 $201.90 $259.31
Current Peer Group** $100.00 $90.48 $89.70 $99.16 $91.18 $130.12
Previous Peer Group** $100.00 $90.48 $89.70 $99.16 $91.18 $130.66
</TABLE>
Assumes $100 invested at the close of trading on the last trading day preceding
the first day of the fifth preceding fiscal year in SEI common stock, Russell
2000 Index, Current Peer Group, and Previous Peer Group.
* Cumulative total return assumes reinvestment of dividends.
** The same symbol is used for both Current and Previous Peer Groups since the
numerical differences between the total returns for the two groups are too
small to appear in the performance graph.
13
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
On July 21, 1992, the Company granted ten year loans at an interest rate of
4% to most of its employees for purchases of the Company's common stock at the
then market price of $5.375 per share. The Company recorded compensation
expense of $56,000 related to these loans in 1995. Payments of 5% of the
original principal balance plus accrued interest are due annually on August 1,
with a balloon payment of the remaining principal and accrued interest due
August 1, 2002. The stock certificates are held by the Company as collateral
until payment is received. Loans in excess of $60,000 were made to Messrs.
Frame and Calvert and Ms. Valice, amounting to $537,500, $537,500 and
$134,375, respectively. The largest aggregate amounts of principal and
interest outstanding on such loans during 1995 were approximately $502,000,
$502,000 and $126,000, respectively. As of May 28, 1996, the aggregate amounts
of principal and interest outstanding on such loans were approximately
$471,000, $471,000 and $118,000, respectively.
The Company's wholly-owned subsidiary DDD Energy, Inc. ("DDD Energy"), which
acquires and develops non-operating interests in mineral properties, acts as
managing partner of a general partnership (the "1995 Partnership"). The 1995
Partnership was formed to permit officers, directors and employees of the
Company and its subsidiaries, and members of their immediate families, who are
accredited investors to invest in mineral interests as general partners
("Contributing General Partners") in the 1995 Partnership. The 1995
Partnership is a blind pool which invested partnership funds throughout the
year in mineral interests. Pursuant to the partnership agreement governing the
1995 Partnership, DDD Energy agreed to use its reasonable efforts to allow the
1995 Partnership to invest, along with DDD Energy, in all non-operating
mineral interests in which DDD Energy invested during 1995, and the 1995
Partnership was obligated to invest in all interests in which DDD Energy
invested (to the extent allowed by the sellers of such interests) until funds
of the 1995 Partnership allocated to acquisitions were exhausted. Pursuant to
the partnership agreement, the amount of the investment of the 1995
Partnership equals five percent of the total investment in each such mineral
interest made by the 1995 Partnership and DDD Energy. DDD Energy determines
the amount that it desires to invest in a particular mineral interest, and
then adds the amount to be invested by the 1995 Partnership to determine the
total level of investment by DDD Energy and the 1995 Partnership. Therefore,
DDD Energy does not forego any opportunity to invest in transactions by
allowing the 1995 Partnership to invest with DDD Energy. All sums required for
the 1995 Partnership to acquire such interests and pay costs related to such
interests thereafter are provided by the Contributing General Partners, and no
funds for the 1995 Partnership's investments are provided by DDD Energy or the
Company. During 1995, the Contributing General Partners contributed an
aggregate of $866,500 to the 1995 Partnership. Paul A. Frame, Horace A.
Calvert, Herbert M. Pearlman, David S. Lawi, Debra D. Valice, Jesse R. Marion,
John E. Stieglitz, Julia L. Pearlman (child of Herbert Pearlman), Lee R.
Pearlman (child of Herbert Pearlman), Lawrence Marolda (child of Herbert
Pearlman), Nicole E. Lawi (child of David Lawi) and Neil A. Lawi (child of
David Lawi) have 11.5%, 11.5%, 13.9%, 9.2%, 8.7%, 5.8%, 3.5%, 1.2%, 1.2%,
1.2%, 1.2% and 1.2% general partnership interests, respectively, in the 1995
Partnership.
DDD Energy acts as managing partner of a similar partnership relating to the
non-operating mineral interests in which it will invest in 1996 (the "1996
Partnership"). The amount of the investment of the 1996 Partnership will equal
three percent of the total investment in each such mineral interest made by
the 1996 Partnership and DDD Energy. Officers, directors and employees of the
Company and its subsidiaries, and members of their immediate families, have
contributed $702,000 to the 1996 Partnership. Paul A. Frame, Horace A.
Calvert, Herbert M. Pearlman, David S. Lawi, Debra D. Valice, William L.
Lurie, Sheryl Pearlman (wife of Herbert Pearlman), Julia L. Pearlman, Lee R.
Pearlman, Lawrence Marolda, Nicole E. Lawi and Neil A. Lawi have 14.3%, 14.3%,
13.5%, 11.4%, 10.7%, 7.1%, 3.6%, 1.4%, 1.4%, 1.4%, 1.4% and 1.4% general
partnership interests, respectively, in the 1996 Partnership.
14
<PAGE>
PROPOSAL TO APPROVE CERTAIN AMENDMENTS TO THE SEITEL, INC. 1993 INCENTIVE
STOCK OPTION PLAN
The Company in the past has used stock options for attracting, retaining and
motivating key employees and directors by providing them incentives to enhance
the growth and profitability of the Company. The Company believes that stock
options can be used to provide incentives to persons with experience and
ability so that they will remain in the employ of the Company or its
subsidiaries, and can be used to attract new employees whose services are
considered valuable to the Company or its subsidiaries, by encouraging a
proprietary interest by such persons in the development and financial success
of the Company.
On May 10, 1993, the Board of Directors adopted the Seitel, Inc. 1993
Incentive Stock Option Plan (the "Option Plan"), and on July 28, 1993, the
stockholders of the Company approved the Option Plan. As initially adopted,
the Option Plan provided for the issuance of incentive stock options to
purchase up to 295,000 shares of Common Stock. On May 25, 1995, with less than
43,000 shares remaining available for options to be granted under the Option
Plan, the Board of Directors approved an amendment to the Option Plan
increasing the number of shares available for options to be granted under the
Option Plan by 405,000 shares, to a total of 700,000 shares. At the same time,
the Board of Directors extended the date by which options can be granted for
the remaining shares available for issuance under the Option Plan to May 12,
2005, and made certain other technical amendments to the Option Plan. The
stockholders of the Company approved these amendments to the Option Plan on
July 18, 1995.
Effective November 29, 1995, the Board of Directors approved certain
additional technical amendments to the Option Plan (the "November Amendments")
that allow the Company to grant non-qualified stock options under the Option
Plan. In order that transactions under the Option Plan by Company officers and
directors continue to be exempt from the short-swing profit liability
provisions of Section 16(b) of the Securities Exchange Act of 1934, as
amended, under Rule 16b-3, stockholders are being asked to approve these
amendments, which are set forth on Exhibit A hereto.
On November 29, 1995, the Company granted a total of 330,000 options under
the Option Plan to certain officers, directors and key employees of the
Company. As a result, only 117,834 shares remained available for options to be
granted under the Option Plan as of April 1996. On April 22, 1996, the Board
of Directors approved the recommendation of the Company's Compensation
Committee to grant a total of 141,500 options under the Option Plan to certain
officers, directors and key employees of the Company. However, since only
117,834 shares remained available for granting options under the Option Plan,
the Board of Directors also approved an amendment to the Option Plan (the
"April Amendment") to increase the number of shares of Common Stock available
for issuance pursuant to options granted under the Option Plan by 450,000
shares. These additional shares available for granting options under the
Option Plan take into account not only the immediate need for additional
shares under the Option Plan but also anticipated continued growth of the
Company. This amendment, if approved by the stockholders, will increase the
total number of shares that could be purchased under the Option Plan to
1,150,000, of which 426,334 would currently be available for the granting of
new options under the Option Plan after taking into account the options
granted on April 22, 1996. If the amendment to the Option Plan is not approved
by stockholders, 23,666 of the options granted under the Option Plan on April
22, 1996 will be treated as non-qualified options not granted under the Option
Plan, and no additional options will be available to be granted under the
Option Plan. The April Amendment to the Option Plan is set forth on Exhibit B
hereto.
At May 28, 1996, without taking into account the April Amendment to the
Option Plan, a total of 700,000 shares of Common Stock were issuable or have
been issued pursuant to options granted under the Option Plan, and no shares
were available for additional options to be granted under the Option Plan. The
April Amendment will authorize the issuance of an additional 450,000 shares of
Common Stock pursuant to options to be granted and exercised under the Option
Plan, of which 23,666 have already been granted. The current market value of
the additional 450,000 shares of Common Stock, based on the closing price of
the Common Stock as reported by the New York Stock Exchange on May 28, 1996,
is $11,981,250.
15
<PAGE>
SUMMARY OF THE OPTION PLAN. Under the prior terms of the Option Plan, the
Company could grant options to purchase up to an aggregate of 700,000 shares
of Common Stock. Pursuant to the April Amendment to the Option Plan, this
number has been increased by 450,000 shares of Common Stock, to a total of
1,150,000 shares. Prior to the November Amendments to the Option Plan, all
options under the Option Plan were intended to be incentive stock options
within the meaning of Section 422 of the Internal Revenue Code of 1986, as
amended (the "Code"). Pursuant to the November Amendments, options granted
under the Option plan can be either incentive stock options or non-qualified
stock options, as designated at the time of grant of the options. If options
granted under the Plan are not designated as incentive stock options or non-
qualified stock options, they will be deemed to be incentive stock options to
the extent they comply with the requirements of the Code applicable for
incentive stock option treatment and as non-qualified options to the extent
that they do not satisfy such requirements.
The Compensation Committee or such other committee as may be appointed by
the Board (the "Committee") is empowered to administer the Option Plan. The
Option Plan is currently administered by the Compensation Committee. Under the
terms of the Option Plan, the Committee shall consist of at least two persons,
and all members shall be "disinterested persons" within the meaning of Rule
16b-3 (or any successor rule or regulation) promulgated under the Securities
Exchange Act of 1934.
Any employee of the Company or a subsidiary is eligible to receive grants of
options under the Option Plan. The Company currently has six persons serving
as directors who are also employees of the Company, and as of May 28, 1996,
had a total of 200 employees. Any employee-director is eligible to receive
plan awards, unless such person serves on the Committee. Actual participation
in the Option Plan will be determined in the sole discretion of the Committee.
The exercise price for incentive stock options under the Option Plan shall
be not less than 100% of the fair market value per share on the date of grant
of such option. In the event that an incentive stock option is granted under
the Option Plan to any person who, at the time such incentive stock option is
granted, owns more than 10% of the total combined voting power of classes of
shares of the Company or of any subsidiary of the Company (a "10%
Stockholder"), then the exercise price of the incentive stock options shall be
not less than 110% of the fair market value of the shares on the date such
option is granted. Fair market value as used in the Option Plan means the
closing sales price of Common Stock per share as reported in the Wall Street
Journal as of the date of the grant. Pursuant to the terms of the November
Amendments, there are no restrictions under the Option Plan applicable to the
exercise price of non-qualified stock options. Payment for the shares acquired
upon exercise of an option under the Option Plan shall be made in cash or
other property deemed acceptable by the Committee.
Any option granted under the Option Plan is exercisable at such times, under
such conditions (including, without limitation, performance criteria with
respect to the Company and/or the optionee), in such amounts and during such
period or periods as the Committee determines on the date of the grant of such
option. Such options, however, shall not be exercisable after the expiration
of ten years from the date such option is granted. In the case of an incentive
stock option granted to a 10% stockholder, such incentive stock options shall
not be exercisable after the expiration of five years from the date such
incentive stock options are granted.
The aggregate fair market value (determined as of the time an 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 the Option Plan and all of the Company's other plans, may
not exceed $100,000. In addition, the Company may not grant under the Option
Plan in any calendar year incentive stock options to purchase in excess of
100,000 shares of Common Stock to any single Participant. Pursuant to the
terms of the November Amendments, any options granted in excess of these
limits will be non-qualified options.
The Committee may establish procedures under the Option Plan for an
optionee: (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 exercise price; (2) to have
withheld from the total
16
<PAGE>
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 shares of common stock
already owned by such optionee in payment of the exercise price.
In general, if an optionee ceases to be an employee of the Company or its
subsidiaries for reasons other than disability (as defined in Section 22(e)(3)
of the Code) or death, he or she will have until the earlier of three months
from the date of such termination or the date the option expires to exercise
the option, to the extent the optionee was entitled to exercise the option on
the date of termination.
If an optionee is unable to continue to perform services for the Company or
any of its subsidiaries as a result of disability, he or she will have until
the earlier of twelve months from the date of such disability or the date the
option expires to exercise the option, in whole or in part, to the extent the
optionee was entitled to exercise the option on such date. In addition, the
optionee must have been an employee since the date of grant and must be an
employee on the date of disability to take advantage of this provision. These
same rules apply to the exercise of options in the event of the death of an
optionee.
An option granted under the Option Plan may not be sold, pledged, assigned,
hypothecated, transferred or disposed of in any manner other than by will or
by the laws of descent and distribution or pursuant to a qualified domestic
relations order as defined by the Code or Title I of the Employee Retirement
Income Security Act of 1974, as amended, or the rules thereunder, and is not
assignable by operation of law or subject to execution, attachment or similar
process.
Subject to any required action by the stockholders of the Company, the
number of shares covered by each outstanding option (as well as the exercise
price covered by any outstanding option) shall be proportionately adjusted for
any increase or decrease in the number of issued shares resulting from a stock
split, payment of a stock dividend with respect to the Common Stock or any
other increase or decrease in the number of issued shares of Common Stock
effected without receipt of consideration by the Company.
In the event the Company is a party to any merger, consolidation or
corporate reorganization, as the result of which the Company is the surviving
corporation, the rights and duties of the Participants and the Company will
not be affected in any manner. In the event the Company sells all or
substantially all of its assets or is a party to a merger, consolidation or
corporate reorganization, as a result of which the Company is not the
surviving organization, or in the event any other corporation makes a tender
or exchange offer for stock of the Company (the surviving corporation,
purchaser, or tendering corporation being hereinafter referred to as the
"purchaser," and the transaction being hereinafter referred to as the
"purchase"), then the Board 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 under the Option Plan; (ii) reach an agreement with
the purchaser that the purchaser will convert each outstanding option under
the Option Plan into an option of at least equal value as to stock of the
purchaser; or (iii) not later than thirty days prior to the effective date of
the purchase, notify all Participants that their options under the Option Plan
are accelerated and afford to each Participant a right for ten days after the
date of such notice to exercise any then unexercised portion of all options
held by him or her, whether or not such options shall then be exercisable
under the terms of the Option Plan or his or her option agreement.
The Option Plan will currently expire on May 12, 2005. The Board may
terminate the Option Plan at any time in its sole discretion. No options may
be granted under the Option Plan after it is terminated. The termination of
the Option Plan, or any amendment thereto, shall not affect any shares
previously issued to a Participant or any option previously granted under the
Option Plan.
The Option Plan is not qualified under the provisions of Section 401(a) of
the Code and is not subject to any of the provisions of the Employee
Retirement Income Security Act of 1974, as amended.
PARTICIPATION IN THE OPTION PLAN. The following table sets forth certain
information with respect to stock options granted pursuant to the Option Plan
during fiscal year 1995 to (i) the named executive officers, (ii) all current
executive officers as a group, and (iii) all employees, including all current
officers who are not
17
<PAGE>
executive officers, as a group. The options shown below are not necessarily
indicative of the number of options that may be granted in the future.
AMENDED PLAN BENEFITS
1993 SEITEL, INC. INCENTIVE STOCK OPTION PLAN
<TABLE>
<CAPTION>
NUMBER OF SHARES
OF COMMON STOCK
UNDERLYING
NAME OPTION GRANTED
---- ----------------
<S> <C>
Paul A. Frame
President and Chief Executive Officer.................. 50,000
Horace A. Calvert
Executive Vice President and Chief Operating Officer... 50,000
Herbert M. Pearlman
Chairman of the Board.................................. 50,000
David Lawi
Chairman of the Executive Committee.................... 25,000
Jesse R. Marion
President of Seitel Delaware, Inc...................... 25,000
All Executive Officers as a Group *..................... 200,000
All Non-Executive Officer Employees as a Group.......... 80,000
</TABLE>
- --------
* Does not include Jesse R. Marion, who resigned effective May 31, 1996.
FEDERAL INCOME TAX CONSEQUENCES. The following is a brief description of the
federal income tax consequences generally arising with respect to options that
may be granted under the Option Plan. This discussion is intended for the
information of stockholders considering how to vote at the Annual Meeting and
not as tax guidance to Participants.
INCENTIVE STOCK OPTIONS. Certain options to be granted under the Option Plan
are intended to be incentive stock options within the meaning of Section 422
of the Code. A Participant does not recognize taxable income upon the grant of
incentive stock options under the Option Plan. In addition, a Participant will
not recognize taxable income with respect to the excess of the fair market
value of stock received on exercise of an incentive stock option over the
exercise price under the Option Plan. The income tax treatment of any gain or
loss recognized upon a Participant's disposition of shares received upon
exercise of incentive stock options granted under the Option Plan depends on
the timing of the disposition. If the Participant holds the shares received
upon exercise of such incentive stock options for the longer of two years from
the date such incentive stock option was granted or one year from the date of
exercise, the difference (if any) between the amount realized from the sale of
such shares and the Participant's tax basis (i.e., generally the exercise
price) will be taxed as long-term capital gain or loss.
If a Participant disposes of the shares acquired upon exercise of an
incentive stock option before the end of the applicable holding periods
described above (i.e., he or she makes a "disqualifying disposition"), such
Participant may be deemed to be in receipt of taxable income in the year of
the disqualifying disposition, depending on the selling price. If the selling
price exceeds the fair market value of the stock on the date of exercise, the
excess of the fair market value on the date of exercise over the exercise
price is taxable to the Participant as ordinary income, and the excess of the
selling price over the fair market value on the date of exercise is taxable to
the Participant as capital gain. If the selling price exceeds the exercise
price but not the fair market value of the stock on the date of exercise, the
excess of the selling price over the exercise price is taxable to the
Participant as ordinary income. If the selling price is less than the exercise
price, the difference is treated as capital loss.
18
<PAGE>
The Company is not entitled to a deduction for federal income tax purposes
with respect to the grant or exercise of incentive stock options under the
Option Plan or the disposition of shares acquired upon exercise of incentive
stock options if the applicable holding periods have been met. In the event of
a disqualifying disposition, however, the Company is entitled to a federal
income tax deduction in an amount equal to the ordinary income recognized by
the Participant, to the extent it is reasonable compensation.
NON-QUALIFIED STOCK OPTIONS. Options to be granted under the Option Plan
that are not incentive stock options within the meaning of Section 422 of the
Code are non-qualified stock options. A Participant does not realize taxable
income upon the grant of non-qualified stock options under the Option Plan. A
Participant will recognize taxable ordinary income upon the exercise of non-
qualified stock options under the Option Plan equal to the amount that the
fair market value of the underlying stock on the date of exercise exceeds the
aggregate exercise price. The income tax treatment of any gain or loss
realized upon a Participant's disposition of shares received upon exercise of
non-qualified stock options granted under the Option Plan depends on the
timing of the disposition. If the Participant holds the shares received upon
exercise of such non-qualified stock options for at least one year from the
date of exercise, the difference (if any) between the amount realized from the
sale of such shares and the Participant's tax basis (i.e., generally the
exercise price plus the amount of ordinary income recognized by the
Participant on exercise of the option) will be taxed as long-term capital gain
or loss. If a Participant disposes of the shares acquired upon exercise of a
non-qualified stock option within one year from the date of exercise of the
option, such Participant will generally recognize short term capital gain or
loss.
The Company is entitled to a deduction for federal income tax purposes with
respect to the exercise of non-qualified stock options under the Option Plan,
but not the disposition of shares acquired upon exercise of such non-qualified
stock options, in an amount equal to the ordinary income recognized by the
Participant, to the extent it is reasonable compensation.
Certain Participants may be subject to alternative minimum tax which in
individual cases could reduce or eliminate any tax benefits to them under the
Option Plan.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THIS PROPOSAL.
PROPOSAL TO APPROVE THE NON-EMPLOYEE DIRECTORS' DEFERRED
COMPENSATION PLAN
On May 22, 1996, the Board of Directors of the Company adopted, subject to
shareholder approval, the Non-Employee Directors' Deferred Compensation Plan
(the "Directors' Plan"). The Directors' Plan is intended to assist the Company
in attracting and retaining highly qualified persons to serve as non-employee
Directors by providing such Directors with flexibility to defer the receipt of
Directors' fees, including the 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.
Acquisition of such options and deferred shares is intended to more closely
align such Directors' interests with the interests of shareholders of the
Company. The Directors' Plan will not affect and will be in addition to the
Company's other plan for non-employee Directors, the Non-Employee Directors'
Stock Option Plan, which provides for automatic annual grants of stock options
to non-employee Directors.
The following summary of the material terms of the Directors' Plan is
qualified in its entirety by reference to the full text of the Directors'
Plan, attached hereto as Exhibit C.
GENERAL. The Directors' Plan will permit 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.
The Plan will become effective at the 1996 Annual Meeting, if approved by
shareholders. In such case, any non-employee Director who is elected at that
Meeting and who has filed an election to participate in the Plan before that
Meeting will be able to participate immediately in the Plan.
19
<PAGE>
To participate, a non-employee Director must file an election to participate
prior to the beginning of a plan year, specifying the amount of director fees
to be received in the form of options or deferred in the form of deferred cash
or deferred shares. A plan year generally begins at the time of the Director's
election at an annual meeting of shareholders and continues through the next
annual meeting (a plan year will begin for a Director initially elected other
than at any annual meeting at the time of such initial election). If the
nominees for election as Directors named in this Proxy Statement are re-
elected, three Directors would qualify as non-employee Directors under the
Directors' Plan.
FEES PAID IN THE FORM OF OPTIONS. If and to the extent elected by a non-
employee Director, director fees, which are currently $20,000 per year, will
be paid in the form of a non-qualified stock option. Such option will have a
value, determined under the "Black-Scholes" option valuation model (or such
other recognized option valuation model that the Company uses in preparation
of the footnotes to its financial statements), equal to the amount of fees the
Director has elected to forgo. The option's exercise price per share will be
100% of the fair market value of a share on the date of grant. The option will
become exercisable as to 25% of the underlying shares on the last day of each
calendar quarter following the grant (i.e., September 30, December 31, March
31, and June 30), except if an option has not become fully exercisable but the
Director has served through the end of a plan year the option will become
fully exercisable. The option will expire ten years after the date of grant,
except that any part of the option not exercisable at the time a Director
ceases to serve as such will expire at that time, regardless of the reason for
the Director's termination. The exercise price of the option may be paid
either in cash or by surrender to the Company of previously acquired shares.
Thus, under the option valuation formula, the number of shares underlying an
option will be determinable only as of the date of grant. For example, assume
the Plan is approved by shareholders, and at the close of business on the day
of the 1996 Annual Meeting of Shareholders the closing price of Common Stock
is $26.625 (which was the actual closing price of Common Stock on the New York
Stock Exchange on May 28, 1996). If a non-employee Director had elected to be
paid the full amount of the annual director fee in the form of stock options,
he would forgo $20,000 and receive instead an option to purchase 1,189 shares
at an exercise price of $26.625 calculated under the Black-Scholes option
valuation model.
FEES PAID IN THE FORM OF DEFERRED CASH OR DEFERRED STOCK. A non-employee
Director may elect to defer receipt of annual directors fees (other than fees
paid in the form of options) by filing an election prior to the beginning of a
plan year.
If such fees are deferred in the form of cash, the Company will credit a
cash account established for the Director with the amount of fees deferred, at
the date such fees otherwise would be payable to the Director. Interest will
be credited to such account for a plan year at the prime interest rate in
effect at the date of the preceding annual meeting of shareholders.
If such fees are deferred in the form of deferred shares, the Company will
credit a deferral account established for the Director with a number of
deferred shares equal to the number of shares (including fractional shares)
having an aggregate fair market value as of the date of such credit equal to
the total amount of fees deferred in the form of deferred shares for such plan
year. Such deferred shares will initially be unvested and subject to
forfeiture, and shall vest and become nonforfeitable as to 25% of such shares
on the last day of each calendar quarter following the grant, except if all
such deferred shares have not become fully vested but the Director has served
through the end of a plan year, such shares will become fully vested and
nonforfeitable. Any deferred shares 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. Dividend equivalents equal to dividends
declared and paid on Common Stock will be credited on deferred shares then
credited to a Director's account (including deferred shares granted but not
yet vested), which amounts will be deemed to be reinvested in additional
deferred shares.
A Director's deferred cash account and deferred share account generally will
be settled, at such times, and in a lump sum or installments, as may have been
elected by the Director in his or her deferral election form, by distribution
of (i) cash equal to the balance in the deferred cash account and (ii) a
number of shares equal to the
20
<PAGE>
number of vested whole deferred shares credited to the deferred share account
(with cash in lieu of any fractional share). Distributions will be accelerated
in certain circumstances, including upon cessation of the participant's
service to the Company as a Director, the participant's death, and certain
transactions terminating the corporate existence of the Company. Rights
relating to deferred cash and vested deferred shares under the Directors' Plan
are nonforfeitable.
OTHER TERMS OF THE DIRECTORS' PLAN. A total of 30,000 shares of Common Stock
are reserved and available for issuance under the Directors' Plan. The current
market value of such 30,000 shares of Common Stock, based on the closing price
of the Common Stock as reported by the New York Stock Exchange on May 28,
1996, is $798,750. Such shares may be authorized and unissued shares, treasury
shares, or shares acquired for the account of a participant. If any stock
option expires without having been exercised in full, the shares subject to
the unexercised portion of the option will again be available for issuance
under the Directors' Plan. The aggregate number and kind of shares issuable
under the Directors' Plan, the number and kind of shares subject to
outstanding options and the exercise price thereof, and the number and kind of
shares to be issued in settlement of deferred shares will be appropriately
adjusted in the event of a recapitalization, reorganization, merger,
consolidation, spin-off, combination, repurchase, exchange of shares or other
securities of the Company, stock split or reverse split, stock dividend, other
extraordinary dividend, liquidation, dissolution, or other similar corporate
transaction or event affecting Common Stock, in order to prevent dilution or
enlargement of participants' rights under the Directors' Plan.
The Directors' Plan will be administered by the Board of Directors, provided
that any action by the Board shall be taken only if approved by vote of a
majority of the Directors who are not then eligible to participate in the
Directors' Plan. The Directors' Plan may be amended, altered, suspended,
discontinued or terminated by the Board without further shareholder approval,
unless such approval is required by law or regulation or under the rules of
the New York Stock Exchange. Thus, shareholder approval will not necessarily
be required for amendments which might increase the cost of the Directors'
Plan or broaden eligibility. Shareholder approval will not be deemed to be
required under laws or regulations that condition favorable treatment of
participants on such approval, although the Board may, in its discretion, seek
shareholder approval in any circumstance in which it deems such approval
advisable.
If a participant ceases to serve as a Director but is employed by the
Company or a subsidiary thereafter, he or she will be deemed to continue to
serve for purposes of the Directors' Plan, so that options will not expire and
deferral accounts will not be subject to early distribution.
Unless earlier terminated by the Board, the Directors' Plan will terminate
when no shares remain available under the Directors' Plan and the Company and
Directors have no further rights and obligations under the Directors' Plan, or
upon certain transactions terminating the corporate existence of the Company.
It is not possible at present to predict the number of options that will be
granted or the number of shares that will be issuable in settlement of
deferred shares under the Directors' Plan.
FEDERAL INCOME TAX CONSEQUENCES. The following is a brief description of the
federal income tax consequences generally arising with respect to options that
may be granted and deferrals of fees in the form of deferred cash or deferred
shares under the Directors' Plan. This discussion is intended for the
information of shareholders considering how to vote at the Annual Meeting and
not as tax guidance to Directors who may participate in the Directors' Plan.
The grant of an option to a Director in payment of director fees will create
no tax consequences for the Director or the Company. Upon exercise of an
option, the optionee must generally recognize ordinary income equal to the
fair market value of the Common Stock acquired on the date of exercise minus
the exercise price, and the Company will be entitled to a deduction equal to
the amount recognized as ordinary income by the optionee. A disposition of
shares acquired upon the exercise of an option generally will result in short-
term
21
<PAGE>
or long-term capital gain or loss measured by the difference between the sale
price and the participant's tax basis in such shares (the tax basis generally
will be the exercise price paid plus the amount recognized as ordinary
income). Generally, there will be no tax consequences to the Company in
connection with a disposition of option shares. Different rules may apply in a
case where an option is exercised by a Director less than six months after the
date of grant.
If a Director defers fees in the form of deferred cash or deferred shares,
he or she will not recognize ordinary income at the date the fees would
otherwise have been paid or as a result of the crediting of deferred cash or
deferred shares to his or her account (including interest credited to the cash
account or upon the deemed reinvestment of dividend equivalents in the
deferred share account). The Director will, however, at the date of settlement
of such accounts by payment of cash or issuance of Common Stock to the
Director, recognize ordinary income equal to the amount of cash and the fair
market value of the Common Stock received at that date.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THIS PROPOSAL.
INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has selected Arthur Andersen LLP as independent
auditors for the Company for the year ending December 31, 1996, which
appointment will be submitted for ratification at the meeting. Arthur Andersen
LLP has served as independent auditors to the Company since 1985. The Company
has been advised that representatives of Arthur Andersen LLP will attend the
Annual Stockholder Meeting. They will have an opportunity to make a statement
if they desire to do so and will be available to respond to appropriate
questions.
PROPOSALS BY STOCKHOLDERS
Proposals that stockholders wish to include in the Company's proxy statement
and form of proxy for presentation at the next Annual Meeting of Stockholders
to be held in 1997 must be received by the Company at 50 Briar Hollow Lane,
7th Floor West, Houston, Texas 77027, Attention Debra D. Valice, no later than
February 18, 1997.
MISCELLANEOUS
The Board of Directors knows of no other matters that are to be brought
before the meeting. However, if any other matters do come before the meeting,
the persons named on the enclosed form of proxy or their substitutes will vote
in accordance with their judgment in those matters.
The cost of solicitation of proxies, including expenses in connection with
preparing, assembling and mailing this proxy statement, will be borne by the
Company. The solicitation will be made by mail and may also be made by
officers or regular employees of the Company personally or by telephone or
telegram. The Company may reimburse brokers, custodians and nominees for their
expenses in sending proxies and proxy material to beneficial owners.
June 14, 1996
Houston, Texas
22
<PAGE>
EXHIBIT A
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 is granted, 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.
A-1
<PAGE>
EXHIBIT B
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.
B-1
<PAGE>
EXHIBIT C
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.
C-1
<PAGE>
(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
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.
C-2
<PAGE>
(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 that participant-directed 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.
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
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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.
(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
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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, 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
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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
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
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<PAGE>
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.
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SEITEL, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
JULY 25, 1996
The undersigned hereby appoints HERBERT M. PEARLMAN and PAUL A. FRAME, and
each of them, with full power of substitution, proxies to vote all stock of
Seitel, Inc. owned by the undersigned at the Annual Meeting of Stockholders July
25, 1996 and any adjournment of the meeting, on the items of business set forth
on the reverse side and on such other business as may properly come before the
meeting.
(TO BE SIGNED ON REVERSE SIDE)
See Reverse
Side
<PAGE>
[X] PLEASE MARK YOUR
VOTES AS IN THIS
EXAMPLE
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE FOLLOWING MATTERS:
1. To elect nine FOR WITHHELD NOMINEES: Herbert M. Pearlman
directors to [ ] [ ] Paul A. Frame
serve until the Horace A. Calvert
1997 Annual David S. Lawi
Meeting. Walter M. Craig, Jr.
William Lerner
To withhold authority to vote for any William L. Lurie
nominee(s), print names(s), below. John E. Stieglitz
Debra D. Valice
- --------------------------------------
FOR AGAINST ABSTAIN
2. Proposal for the approval of certain amendments [ ] [ ] [ ]
to the Seitel, Inc. 1993 Incentive Stock Option
Plan;
3. Proposal for the approval of the Seitel, Inc. [ ] [ ] [ ]
Non-Employee Directors' Compensation Plan;
4. Proposal for the selection of Arthur Andersen [ ] [ ] [ ]
LLP as the independent certified public
accountants for the year ending December 31,
1996; and
5. To transact such other business as may properly come before the meeting
or any adjournment of the meeting.
Check this box if duplicate Annual Reports to [ ]
Stockholders are sent to your address and you
do not need a personal copy sent to you.
This proxy is solicited on behalf of the Board of Directors. If the undersigned
fails to specify how the proxy is to be voted, it will be voted for the election
of these Directors and for Proposals 2, 3 and 4.
SIGNATURE(S) DATE
----------------------------------------------- ---------------
NOTE: (Please sign your name exactly as it appears on the proxy. When signing
as attorney, agent, executor, administrator, trustee, guardian or
corporate officer, please give full title as such. Each joint owner
should sign the proxy.)
