As filed with the Securities and Exchange Commission on September 29, 1998
Registration No. 333-_____
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------------------
Form S-8
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
---------------------------
SEITEL, INC.
(Exact name of registrant as specified in its charter)
Delaware 76-0025431
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
50 Briar Hollow Lane
7th Floor, West Bldg.
Houston, Texas 77027
(Address of registrant's principal executive offices, including zip code)
1993 SEITEL, INC. INCENTIVE STOCK OPTION PLAN,
NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN,
EXECUTIVE WARRANTS,
DEPARTURE WARRANTS
and
EMPLOYMENT WARRANTS
(Full Title of Plan)
---------------------------
PAUL A. FRAME
President and Chief Executive Officer
Seitel, Inc.
50 Briar Hollow Lane, 7th Floor, West Bldg.
Houston, Texas 77027
(713) 881-8900
(Name and address, including zip code, and telephone
number, including area code, of registrant's agent
for service)
Copy to:
William Mark Young
Gardere Wynne Sewell & Riggs, LLP
333 Clay, Suite 800
Houston, Texas 77002
Phone (713) 308-5500, Fax: (713) 308-5555
<TABLE>
CALCULATION OF REGISTRATION FEE
<CAPTION>
====================================================================================================================
Title of each class Proposed maximum Proposed maximum Amount of
of securities to be Amount to be offering price aggregate offering registration
registered registered(1)<F1> per share(2)<F2> price(2)<F2> fee(2)<F2>
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $.01 par value 3,218,483 shares $11.344 $36,510,471 $10,775
====================================================================================================================
<FN>
1.<F1>Pursuant to Rule 416 promulgated under the Securities Act of 1933, as
amended, this Registration Statement covers such additional shares of
Common Stock to be offered or issued pursuant to the applicable plans and
warrants to prevent dilution as a result of future stock splits, stock
dividends or similar transactions.
2.<F2>Calculated pursuant to Rule 457(h), based on the average of the high and
low prices for Common Stock on September 25, 1998, as reported on The New
York Stock Exchange.
</FN>
===================================================================================================================
</TABLE>
<PAGE>
EXPLANATORY NOTE
This Registration Statement contains two parts: the first part contains a
Prospectus on Form S-3 (in accordance with Section C of the General Instructions
to Form S-8) which covers re-offers and re-sales by the Selling Stockholders
listed, from time to time, in the Prospectus of shares of Common Stock of the
Company to be issued upon exercise of options granted under the Company's 1993
Incentive Stock Option Plan and upon exercise of the Executive Warrants.
The second part contains information required in the Registration Statement
pursuant to Part II of Form S-8.
Pursuant to Note to Part I of Form S-8, the Plan Information specified by Part I
is not being filed with the Securities and Exchange Commission, as such
information will be sent or given to each employee participant in accordance
with Rule 428 under the Securities Act of 1933, as amended (the "Securities
Act"). This information and the documents incorporated by reference into this
Registration Statement pursuant to Item 3 of Part II of this Registration
Statement, taken together, constitute a prospectus that meets the requirements
of Section 10(a) of the Securities Act.
<PAGE>
PROSPECTUS SEITEL, INC.
(Form S-3)
2,931,103 Shares
Common Stock
($.01 Par Value Per Share)
1993 INCENTIVE STOCK OPTION PLAN
EXECUTIVE WARRANTS
EMPLOYMENT WARRANTS
This Prospectus is being used in connection with the offering, from time to
time, by certain stockholders (the "Selling Stockholders") of Seitel, Inc. (the
"Company") of shares of common stock, $.01 par value per share (the "Common
Stock") which may be acquired upon exercise of options granted under the 1993
Incentive Stock Option Plan (the "Option Plan"), upon exercise of certain
warrants (the "Executive Warrants") granted to the Selling Stockholders as part
of the Company's 1997 Executive Compensation Plan (the "Executive Compensation
Plan"), and upon exercise of certain warrants (the "Employment Warrants")
granted to a Selling Stockholder in connection with his employment by the
Company.
The securities being registered hereby (the "Securities") may be sold, from time
to time, by the Selling Stockholders, directly or indirectly, through agents
designated from time to time, in one or more open market transactions, including
block trades, on the New York Stock Exchange, in privately negotiated
transactions, or in a combination of such methods of sale. Such sales may be
made through dealers or underwriters to be designated, on terms to be determined
at the time of sale, or at prices and at terms then prevailing or at prices
related to the then current market price. In effecting sales, brokers or dealers
engaged by the Selling Stockholders may arrange for other brokers or dealers to
participate. Brokers or dealers will receive commissions or discounts from
Selling Stockholders in amounts to be negotiated immediately prior to the sale.
Such brokers or dealers and any other participating brokers or dealers may be
deemed to be "underwriters" within the meaning of the Securities Act of 1933, as
amended (the "Securities Act"), in connection with such sales. To the extent
required, the specific securities sold, the name of the Selling Stockholders,
the purchase price, public offering price, name of any such agent, dealer or
underwriter, and any applicable discount or commission with respect to a
particular offer will be set forth by supplement to this Prospectus. In
addition, any securities covered by this Prospectus which qualify for sale
pursuant to Rule 144 may be sold under Rule 144 rather than pursuant to this
Prospectus. The Company will not receive any of the proceeds from the sale of
these shares, but will receive the aggregate exercise price of warrants
exercised under the Option Plan, the Executive Warrants and the Employment
Warrants. The Company's Common Stock is presently listed on the New York Stock
Exchange under the symbol "SEI." The closing price for the Common Stock on the
New York Stock Exchange on September 25, 1998, was $11.50.
SEE "RISK FACTORS" BEGINNING ON PAGE 4 OF THIS PROSPECTUS FOR CERTAIN
MATTERS TO BE CONSIDERED BY PROSPECTIVE INVESTORS
---------------------------
The date of this Prospectus is September 29, 1998.
<PAGE>
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
---------------------------
No person is authorized in connection with the offering made by this Prospectus
to give any information or to make any representations not contained or
incorporated by reference in this Prospectus, and any information or
representation not contained or incorporated by reference in this Prospectus
must not be relied upon as having been authorized by the Company. This
Prospectus is not an offer to sell, or a solicitation of an offer to buy, by any
person in any jurisdiction in which it is unlawful for that person to make an
offer or solicitation. Neither the delivery of this Prospectus or any sale made
under this Prospectus shall, under any circumstance, create any implication that
the information in this Prospectus is correct as of any time subsequent to the
date of this Prospectus.
---------------------------
AVAILABLE INFORMATION
Seitel, Inc. (the "Company") is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act") and, in
accordance therewith, files reports, proxy and information statements and other
information with the Securities and Exchange Commission (the "Commission"). The
reports, proxy statements and other information filed by the Company with the
Commission can be obtained by mail from the Public Reference Section of the
Commission at Judiciary Plaza, 450 Fifth Street, Room 1024, Washington, D.C.
20549, at prescribed rates. In addition, such reports, proxy statements and
information may be inspected and copied at the aforementioned public reference
facility and at the Commission's regional offices at Citicorp Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661-2511, and at 7 World Trade
Center, 13th Floor, New York, New York 10048. The Commission maintains a world
wide web site on the Internet at http://www.sec.gov that contains reports, proxy
and information statements and other information regarding registrants that file
electronically with the Commission. Such reports, proxy statements and other
information may also be inspected at the offices of the New York Stock Exchange,
20 Broad Street, New York, New York 10005.
The Company has filed with the Commission a Registration Statement under the
Securities Act with respect to the securities offered by this Prospectus. This
Prospectus does not contain all of the information set forth in the Registration
Statement, certain parts of which are omitted in accordance with the rules and
regulations of the Commission. Additional information concerning the securities
offered hereby is to be found in the Registration Statement, including various
exhibits thereto, which may be inspected at the Commission's office in
Washington, D.C.
<PAGE>
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company incorporates by reference into this Prospectus the following
documents and portions of documents:
1. The Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1997, as amended by Form 10-K/A dated April 28, 1998, as filed with
the Commission on April 29, 1998 and by Form 10-K/A dated June 10, 1998, as
filed with the Commission on June 12, 1998.
2. The Company's Quarterly Reports on Form 10-Q for the fiscal quarters
ended March 31 and June 30, 1998.
3. All other reports filed pursuant to Section 13(a) or 15(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), since December
31, 1997.
4. The description of the Company's Common Stock contained in the Company's
Registration Statement on Form 8-A, dated March 27, 1991 (Registration Number
0-14488).
All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or 15(d)
of the Exchange Act subsequent to the date of this Prospectus and prior to the
termination of the offering of the Common Stock contemplated hereby shall be
deemed to be incorporated by reference into this Prospectus and made a part
hereof from the respective dates of filing of such documents. Any statement
contained herein, or in a document incorporated or deemed incorporated by
reference herein, shall be deemed to be modified or superseded for purposes of
the Registration Statement and this Prospectus to the extent that a statement
contained herein or in any subsequently filed document which also is or is
deemed to be incorporated herein modifies or supersedes such statement. Any such
statements so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of the Registration Statement or this
Prospectus.
The Company will provide without charge to each person to whom this Prospectus
is delivered, upon written or oral request of that person, a copy of all other
documents incorporated by reference into the Registration Statement of which
this Prospectus is a part, other than exhibits to those documents. Requests
should be directed to Debra D. Valice, Seitel, Inc., 50 Briar Hollow Lane, West
Building, 7th Floor, Houston, Texas 77027 (telephone: (713) 881-8900).
<PAGE>
RISK FACTORS
Prospective purchasers of the Common Stock should carefully consider, in
addition to the other information contained in this Prospectus and any
accompanying Prospectus Supplement, the following risk factors.
Competition. Competition in the seismic data licensing industry and in the oil
and gas exploration and production industry is intense. A number of independent
oil-service companies create and market seismic data, and numerous oil and gas
companies create seismic data and maintain their own seismic data banks. Due to
difficult industry conditions in recent years, the number of independent seismic
companies has decreased, and oil and gas companies have acquired an increasing
portion of their seismic data from outside sources, including the Company. In
the oil and gas exploration and production business, there are numerous oil and
gas companies competing for the acquisition of mineral properties. Although the
Company has significant operating history in its seismic data licensing
operations, it has limited operating history in oil and gas exploration. Some of
the Company's competitors have longer operating histories, greater financial
resources and larger sales volumes than the Company. Although the Company
believes that its fully-integrated seismic resources and technical, geophysical
and marketing expertise will allow it to compete effectively in both the seismic
data industry and the oil and gas exploration and development industry, there
can be no assurance that this will be the case.
Industry Conditions. Demand for the Company's seismic data depends primarily
upon the level of spending by oil and gas companies for exploration, production
and development activities. These spending levels tend to increase and decrease
with increases and decreases in the commodity prices for oil and gas, so that
demand for the Company's seismic data is affected to some degree by market
prices for natural gas and crude oil, which have historically been very
volatile. Revenues generated by the Company's oil and gas exploration and
development business increase and decrease with increases and decreases in the
market prices of oil and gas. A substantial or extended decline in oil and gas
prices could have a material adverse effect on the Company's financial position.
In addition, if oil and gas prices decrease materially, the Company may be
unable to find partners willing to pay the relatively high costs of exploration
and development and grant the Company an interest in production in exchange for
seismic data. Further, as high quality 3D data becomes more widely available
from other sources, the Company may be unable to obtain the same level of
working interests in oil and gas properties in exchange for use of its 3D data.
Also, other factors beyond the Company's control may affect its oil and gas
operations. These factors include the level of supply of natural gas and oil,
the availability of adequate pipeline and other transportation and processing
facilities and the marketing of competitive fuels. See also "Compliance with
Governmental Regulations."
Operating Risks. The Company's oil and gas operations are subject to hazards
incident to the drilling of oil and gas wells, such as cratering, explosions,
uncontrollable flows of oil, gas or well fluids, fires, pollution, or other
environmental risks, as well as to the risk that no commercially productive
natural gas or oil reserves will be encountered. Some of these hazards can cause
personal injury and loss of life, severe damage to and destruction of property
and equipment, environmental damage and suspension of operations. In addition,
the cost of drilling, completing and operating wells is often uncertain, and
drilling operations may be curtailed, delayed or canceled as a result of a
variety of factors, including unexpected drilling conditions, pressure or
irregularities in formations, equipment failures or accidents, weather
conditions and shortages or delays in the delivery of equipment. These risks are
typically shared by the Company and its petroleum company partners. The Company
also seeks to reduce dry hole risks by utilizing 3D seismic data, where deemed
appropriate, to assist in the determination of where to drill. However, since
the Company does not act as operator in its oil and gas drilling business, it is
dependent upon its petroleum company partners to conduct operations in a manner
so as to minimize these operating risks. In accordance with industry practice,
the Company maintains insurance against some, but not all, of these operating
risks. There can be no assurance that adequate insurance will be available in
the future, or that the Company will be able to maintain adequate insurance on
terms and conditions it finds acceptable. As a result of the risks inherent in
oil and gas operations, there can be no assurance as to the success of the
Company's oil and gas exploration, development and production activities.
Holding Company Structure. The Company has no operations or significant assets
other than through its ownership of the capital stock of its subsidiaries.
Dividends and other permitted payments from such subsidiaries will be the
primary source of funds to pay dividends on the Common Stock. The rights of the
Company and its creditors to participate in the assets of any subsidiary upon
the latter's liquidation or reorganization will be subject to the prior claims
of the subsidiary's creditors except to the extent that the Company may itself
be a creditor with recognized claims against the subsidiary.
<PAGE>
Dependence on Key Personnel. The Company's operations are dependent upon a
relatively small group of management and technical personnel. The loss of one or
more of these individuals could have a material adverse effect on the Company.
The Company utilizes equity ownership and other incentives to attract and retain
its employees. In addition, the Company's President and Chief Executive Officer,
Paul A. Frame, Executive Vice President and Chief Operating Officer, Horace A.
Calvert, and Senior Vice President-Finance and Chief Financial Officer, Debra D.
Valice, all have employment agreements with the Company.
Geographic Concentration of Operations. Most of the Company's seismic data in
its seismic data library, as well as most of the Company's existing interests in
oil and gas properties, are located along the coast and offshore in the U.S.
Gulf of Mexico. Because of this concentration, any regional events that increase
costs, reduce availability of equipment or supplies, reduce demand or limit
production will impact the Company more adversely than if the Company were more
geographically diversified.
Compliance with Governmental Regulations. The oil and gas industry in general is
subject to extensive governmental regulation, which may be changed from time to
time in response to economic or political conditions. In particular, oil and gas
exploration and production is subject to federal and state regulations governing
environmental quality and pollution control, state limits on allowable rates of
production by well or proration unit, and other similar regulations. State and
federal regulations generally are intended to prevent waste of natural gas and
oil, protect rights to produce natural gas and oil between owners in a common
reservoir, control the amount of natural gas and oil produced by assigning
allowable rates of production and control contamination of the environment.
Also, the Company believes that the trend toward more expansive and stricter
environmental laws and regulations will continue. The implementation of new, or
the modification of existing, laws or regulations affecting the oil and gas
industry could have a material adverse impact on the Company.
Shares Eligible for Future Sale. No prediction can be made as to the effect, if
any, that future sales of shares of the Company's capital stock, or the
availability of shares of capital stock for future sale will have on the market
price of such stock prevailing from time to time. Almost all of the
approximately 4.6 million shares of Common Stock currently held by or issuable
pursuant to options, warrants and other rights granted prior to the date hereof
and exercisable within 60 days of the date hereof to the Company's directors and
executive officers are eligible for sale currently or immediately upon exercise.
Sales of substantial amounts of Common Stock (including shares issued upon the
exercise of stock options or warrants), or the perception that such sales could
occur, could adversely affect prevailing market prices for the Common Stock.
DISCLOSURE REGARDING FORWARD-LOOKING INFORMATION
This Prospectus includes "forward-looking statements" within the meaning of
Section 27A of the Securities Act and Section 21E of the Exchange Act. All
statements other than statements of historical facts included in this
Prospectus, including without limitation, statements regarding the Company's
financial position, business strategy, budgets, plans and objectives of
management for future operations are forward-looking statements. The words
"anticipate," "believe," "expect," "plan," "intend," "estimate," "project,"
"will," "could," "may," "predict" and similar terms and phrases are intended to
identify forward-looking statements. These statements involve risks and
uncertainties that may cause actual future activities and results of operations
to be materially different from those suggested or described in this Prospectus.
Although the Company believes that the expectations reflected in such
forward-looking statements are reasonable, it can give no assurance that such
expectations will prove to have been correct. Important factors that could cause
actual results to differ materially from the Company's expectations ("Cautionary
Statements") are disclosed under "Risk Factors" and elsewhere in this
Prospectus. Should one or more of these risks or uncertainties materialize, or
should underlying assumptions prove incorrect, actual results may vary
materially from those expected, estimated or projected. All subsequent written
and oral forward-looking statements attributable to the Company, or persons
acting on its behalf, are expressly qualified in their entirety by the
Cautionary Statements.
<PAGE>
THE COMPANY
The Company and its subsidiaries, located in Houston, Texas, are a leading
provider of seismic data and related geophysical services and expertise to the
petroleum industry. The Company has evolved into a diversified energy concern
with several niche operations, including one of the largest independent seismic
data libraries in the United States; three-dimensional seismic data processing
and interpretation technology; and direct participation in exploration,
development and ownership of natural gas and crude oil reserves.
Since its inception in 1982, the Company has been engaged in the development of
a proprietary library of seismic data, created by both the Company and others.
The Company's seismic data library is owned and marketed by Seitel Data, Ltd., a
Texas limited partnership of which wholly-owned Seitel subsidiaries constitute
all of the limited and general partners. Seitel Data, Ltd. markets the data
library, which consists of both two-dimensional ("2D") and three-dimensional
("3D") data, to oil and gas companies under license agreements. Seismic surveys
and the analysis of seismic data for the identification and definition of
underground geological structures are principal techniques used in oil and gas
exploration and development to determine the existence and location of
subsurface hydrocarbons.
The Company's integrated seismic data operations include its large 2D and 3D
seismic library, its seismic data processing center and computer software, and
the Company's geophysical application experience in interpreting 3D data.
In March 1993, the Company formed DDD Energy, Inc. ("DDD Energy"), a
wholly-owned subsidiary, to participate directly in petroleum exploration,
development and ownership of hydrocarbon reserves through cost and revenue
sharing relationships with oil and gas producers. The Company's objective is to
participate through DDD Energy in exploration and development programs which
combine the Company's 3D and 2D seismic resources and related geophysical
technologies with the geology and engineering expertise and land positions of
selected petroleum producers.
USE OF PROCEEDS
The Company will not receive any part of the proceeds from the sale of the
shares of Common Stock by the Selling Stockholders. The Company will, however,
receive the exercise price of options granted under the Option Plan, the
Executive Warrants and the Employment Warrants upon exercise thereof, which
options and warrants must be exercised before the Selling Stockholders can sell
the shares offered hereunder. The exercise price of the Executive Warrants is
$20.50 per share. The exercise price of the 915,064 options previously granted
under the amendments to the Option Plan to which this prospectus relates range
from $17.1875 per share to $21.50 per share, and the exercise price of the
784,936 options that may be granted in the future under the amendments to the
Option Plan to which this prospectus relates will determined at the time of
grant of such options. The Exercise Price of 81,103 of the Employment Warrants
is $15.875, and the exercise price of the remaining 150,000 Employment Warrants
will be determined at the time certain criteria are met. The Company intends to
use the proceeds from the exercise of such options and warrants for general
corporate purposes.
COMMON STOCK OFFERED BY THE SELLING STOCKHOLDERS
This Prospectus covers offers, from time to time, of a total of 2,931,103 shares
of Common Stock held or to be held by the employees of the Company pursuant to
the Company's (i) recently adopted amendments to the Option Plan, under which
amendments an additional 1,700,000 shares, which are registered hereunder, have
been reserved for issuance to employees of the Company upon exercise of options
granted under the Option Plan, (ii) Executive Warrants granted under the
Company's recently adopted Executive Compensation Plan, pursuant to which
certain officers and directors may purchase up to 1,000,000 shares of Common
Stock, and (iii) Employment Warrants, pursuant to which up to 231,103 shares of
Common Stock may be purchased.
<PAGE>
SELLING STOCKHOLDERS
1993 Incentive Stock Option Plan. As originally adopted in 1993, the Option Plan
provided for the Company to grant options to purchase up to 295,000 shares of
the Company's Common Stock. These 295,000 shares have previously been registered
on a Registration Statement on Form S-8, Registration No. 33-78560, filed with
the Commission on May 5, 1994. Effective May 12, 1995, the Company amended the
Option Plan to increase the number of shares for which options could be granted
under the Option Plan by 405,000 shares. These additional 405,000 shares have
previously been registered on a Registration Statement on Form S-8, Registration
No. 333-01271, filed with the Commission on February 28, 1996. Effective April
22, 1996, the Company further amended the Option Plan to increase the number of
shares for which options could be granted under the Option Plan by an additional
450,000 shares. These additional 450,000 shares have previously been registered
on a Registration Statement on Form S-8, Registration No. 333-12549, filed with
the Commission on September 24, 1996. Effective November 20, 1997, the Company
further amended the Option Plan to increase the number of shares for which
options could be granted under the Option Plan by an additional 850,000 shares
so that options to purchase up to an aggregate of 2,000,000 shares of Common
Stock of the Company could be granted under the Option Plan. The Company also
declared a two-for-one stock split in the form of a stock dividend for all
shares of stock outstanding on December 3, 1997. As a result, the additional
850,000 shares have become 1,700,000 shares, and the total number of shares that
can be issued upon exercise of options granted under the Option Plan is
4,000,000 shares. This Prospectus may be used by employees of the Company who
are deemed to be affiliates of the Company under the Securities Act for the
resale of any of such 1,700,000 shares of Common Stock issued to them upon
exercise of options granted under the Option Plan. As of the date hereof,
options to purchase 915,064 shares have been granted pursuant to this most
recent amendment to the Option Plan to employees who may be considered
affiliates of the Company. Set forth below is the name of each Selling
Stockholder, the number of shares of Common Stock owned of record by each
Selling Stockholder as of the date of this Prospectus, the number of shares of
Common Stock which may be offered by the Selling Stockholder pursuant to this
Prospectus, and the number of shares of Common Stock and percentage of the class
of Common Stock to be owned by each Selling Stockholder upon completion of the
offering if all Shares are sold. Any or all of the Shares registered hereunder
may be offered for sale by the Selling Stockholders from time to time. If and
when any of the remaining 784,936 shares of Common Stock are issued upon
exercise of additional options granted under the Option Plan and are sought to
be offered for resale by the Selling Stockholders, the number of shares of
Common Stock beneficially owned by each Selling Stockholder, the number of
shares acquired upon exercise of such options granted under the Option Plan and
the number of shares offered for resale pursuant to this Prospectus will be
indicated by Prospectus Supplement.
Executive Warrants. This Prospectus may be used by officers and directors of the
Company for the resale of up to 1,000,000 shares of Common Stock to be issued to
them upon exercise of the Executive Warrants granted under the Executive
Compensation Plan. Set forth below is the name of each Selling Stockholder, the
number of shares of Common Stock owned of record by each Selling Stockholder as
of the date of this Prospectus, the number of shares of Common Stock which may
be offered by the Selling Stockholder pursuant to this Prospectus, and the
number of shares of Common Stock and percentage of the class of Common Stock to
be owned by each Selling Stockholder upon completion of the offering if all
Shares are sold. Any or all of the Shares registered hereunder may be offered
for sale by the Selling Stockholders from time to time.
Employment Warrants. This Prospectus may be used by an officer of the Company
for the resale of up to 231,103 shares of Common Stock issuable upon exercise of
the Employment Warrants. Set forth below is the name of such Selling
Stockholder, the number of shares of Common Stock owned of record by such
Selling Stockholder as of the date of this Prospectus, the number of shares of
Common Stock which may be offered by the Selling Stockholder pursuant to this
Prospectus, and the number of shares of Common Stock and percentage of the class
of Common Stock to be owned by such Selling Stockholder upon completion of the
offering if all Shares are sold. Any or all of the Shares registered hereunder
may be offered for sale by the Selling Stockholder from time to time.
<PAGE>
<TABLE>
SELLING STOCKHOLDERS
<CAPTION>
Selling Stockholder Shares Owned Prior Shares Registered Shares Owned Percent of
to the Offering(1)<F2> Hereunder After the Class After the
Offering(2)<F3> Offering(2)<F3>
- ------------------------------------- --------------------- ------------------- ------------------ -----------------
<S> <C> <C> <C> <C>
Paul A. Frame, 1,636,919 600,360(3)<F4> 1,036,559 4.4%
President, Chief Executive Officer
and Director
Horace A. Calvert, 1,425,349 465,380(4)<F5> 959,969 4.1%
Executive Vice President, Chief
Operating Officer and Director
Herbert M. Pearlman, 1,006,105 438,456(5)<F6> 567,649 2.5%
Chairman of the Board
David S. Lawi, 642,485 338,456(6)<F7> 304,029 1.3%
Director
Russell Hoffman, 231,103 231,103(7)<F8> 0 *<F1>
Vice President of Corporate
Communications
Debra D. Valice, 223,477 72,412(8)<F9> 151,065 *<F1>
Executive Vice President, Chief
Financial Officer and Director
<FN>
*<F1> Less than 1.0%
(1)<F2> Assuming exercise of options and warrants exercisable within 60 days
of the date hereof and of all options and warrants pursuant to which
the shares registered hereunder may be acquired by the Selling
Stockholders and no other disposition or acquisition of Common Stock.
(2)<F3> Assuming no other disposition or acquisition of Common Stock and all
Shares included herein are sold.
(3)<F4> Includes 100,360 shares and 500,000 shares, respectively, issuable
upon exercise of options under the 1993 Option Plan and Executive
Warrants. The exercise prices of the options range from $19.50 to
$21.50 per share, and the exercise price of the warrants is $20.50 per
share.
(4)<F5> Includes 265,380 shares and 200,000 shares, respectively, issuable
upon exercise of options under the 1993 Option Plan and Executive
Warrants. The exercise prices of the options range from $17.1875 to
$20.50 per share, and the exercise price of the warrants is $20.50 per
share.
(5)<F6> Includes 238,456 shares and 200,000 shares, respectively, issuable
upon exercise of options under the 1993 Option Plan and Executive
Warrants. The exercise prices of the options range from $20.00 to
$21.50 per share, and the exercise price of the warrants is $20.50 per
share.
(6)<F7> Includes 238,456 shares and 100,000 shares, respectively, issuable
upon exercise of options under the 1993 Option Plan and Executive
Warrants. The exercise prices of the options range from $20.00 to
$21.50 per share, and the exercise price of the warrants is $20.50 per
share.
(7)<F8> Includes 231,103 shares issuable upon exercise of the Employment
Warrants. The exercise price of 81,103 of these warrants is $15.875
per share, and the exercise price of the remaining 150,000 warrants
will be determined upon the satisfaction of certain criteria.
(8)<F9> Includes 72,412 shares issuable upon exercise of options under the
1993 Option Plan at an exercise price of $20.00 per share.
</FN>
</TABLE>
<PAGE>
PLAN OF DISTRIBUTION
All Securities covered by this Prospectus are being offered for the accounts of
the Selling Stockholders. The Securities may be sold, from time to time, in one
or more transactions at a fixed offering price, which may be changed, at varying
prices determined at the time of sale, at terms then prevailing or at prices
related to the then current market price or at negotiated prices. The Securities
may be sold in one or more open market transactions on the New York Stock
Exchange or in privately negotiated transactions. The Securities may be sold by
various methods, including, but not limited to, one or more of the following: a
block trade in which the broker or dealer so engaged will attempt to sell
Securities as agent but may position and resell a portion of the block as
principal to facilitate the transaction, purchases by a broker or dealer as
principal and resale by the broker or dealer for its own account pursuant to
this Prospectus, a transaction on the New York Stock Exchange in accordance with
the rules of such exchange, and ordinary brokers transactions and transactions
in which the broker solicits the purchasers. Alternatively, the Selling
Stockholder may from time to time offer the securities through underwriters,
dealers or agents who may receive compensation in the form of underwriting
discounts, concessions, or commissions from the Selling Stockholders and/or
purchasers of Securities for whom they act as agents. In addition, any of the
Securities which qualify for sale pursuant to Rule 144 under the Securities Act,
or otherwise pursuant to an applicable exemption under the Securities Act, may
be sold other than pursuant to this Prospectus.
The Selling Stockholders and any such underwriters, dealers or agents that
participate in the distribution of Securities may be deemed to be underwriters,
and any profit on the sale of the Securities by them and any discounts,
commissions or concessions received by them may be deemed to be underwriting
discounts and commissions under the Securities Act. Brokers or dealers acting in
connection with the sale of the Securities contemplated by this Prospectus may
receive commissions in connection therewith.
At the time a particular offer of Securities is made, to the extent required, a
supplement to this Prospectus will be distributed which will identify the
Selling Stockholders, identify and set forth the aggregate amount of Securities
being offered and the terms of the offering, including the name or names of any
underwriters, dealers or agents, the purchase price paid by any underwriter for
Securities purchased from the Selling Stockholder, any discounts, commissions
and other items constituting compensation from the Selling Stockholder and any
discounts, commissions or concessions allowed or re-allowed or paid to dealers,
including the proposed selling price to the public. Such supplement to this
Prospectus and, if necessary, a post-effective amendment to the Registration
Statement of which the Prospectus is a part, will be filed with the Commission
to reflect the disclosure of additional information with respect to the
distribution of the Securities. The Company will pay all of the expenses
incident to the registration and certain other expenses related to this offering
of the Securities, other than underwriting commissions and discounts, normal
commission expenses and brokerage fees, applicable transfer taxes and attorneys'
fees of Selling Stockholders' counsel.
The Company intends to require the Selling Stockholders to enter into
indemnification agreements with the Company pursuant to which the Company will
be indemnified against failure by the Selling Stockholders to deliver a
Prospectus if required, as well as against certain civil liabilities, including
liabilities under the Securities Act or the Exchange Act, incurred in connection
with any untrue (or alleged untrue) statement of a material fact or omission of
a material fact in this Registration Statement pursuant to an applicable
Prospectus Supplement to the extent such liability relates to information
supplied by the Selling Stockholder for inclusion in the Registration Statement
pursuant to an applicable Prospectus Supplement.
In order to comply with certain states' securities laws, if applicable, the
Securities will be sold in such jurisdictions only through registered or
licensed brokers or dealers. In certain states, the Securities may not be sold
unless the Securities have been registered or qualified for sale in such state,
or unless an exemption from registration or qualification is available and is
obtained.
LEGAL MATTERS
The validity of the Securities will be passed upon for the Company by Gardere
Wynne Sewell & Riggs, L.L.P., Houston, Texas.
<PAGE>
EXPERTS
The financial statements incorporated by reference in this registration
statement have been audited by Arthur Andersen LLP, independent public
accountants, as indicated in their reports with respect thereto, and are
incorporated by reference herein in reliance upon the authority of said firm as
experts in giving said reports.
The estimate of natural gas reserves contained in the Company's Annual Report on
Form 10-K for the year ended December 31, 1997, was obtained from reserve
reports dated as of January 1, 1998 prepared by Miller and Lents, Ltd. and dated
January 1, 1998 prepared by Forrest A. Garb & Associates, Inc., and are
incorporated by reference herein in reliance upon the authority of said firms as
experts in such matters.
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3: Incorporation of Documents by Reference. The Company incorporates by
reference into this Registration Statement the following documents which
have been or will be filed by the Company with the Securities and Exchange
Commission (the "Commission"):
1. The Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1997, as amended by Form 10-K/A dated April 28, 1998, as filed
with the Commission on April 29, 1998, and as amended by Form 10-K/A dated
June 10, 1998, as filed with the Commission on June 12, 1998.
2. The Company's Quarterly Reports on Form 10-Q for the fiscal
quarters ended March 31 and June 30, 1998.
3. All other reports filed pursuant to Section 13(a) or 15(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), since
December 31, 1997.
4. The description of the Company's Common Stock contained in the
Company's Registration Statement on Form 8-A, dated March 27, 1991
(Registration Number 0-14488).
In addition, all documents subsequently filed by the Company pursuant to
Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act, prior to the
filing of a post-effective amendment which indicates that all securities
offered have been sold or which de-registers all securities then remaining
unsold, shall be deemed to be incorporated by reference in this
Registration Statement and to be a part hereof from the date of filing of
such documents.
Any statement contained in a document incorporated by reference herein
shall be deemed to be modified or superseded for purposes of this
Prospectus to the extent that a statement contained herein modifies or
supersedes such statement. Any such statement so modified or superseded
shall not be deemed, except as so modified or superseded, to constitute
part of this Prospectus.
Item 4: Description of Securities. Not applicable.
Item 5: Interests of Named Experts and Counsel. Not applicable.
Item 6: Indemnification of Directors and Officers. Section 145(a) of the General
Corporation Law of the State of Delaware (the "General Corporation Law")
provides, in general, that a corporation shall have the power to indemnify
any person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (other than an action by or in
the right of the corporation), by reason of the fact that he is or was a
director or officer of the corporation. Such indemnity may be against
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred in connection with such action,
suit or proceeding, if the indemnitee acted in good faith and in a manner
reasonably believed to be in or not opposed to the best interests of the
corporation and, with respect to any criminal action or proceeding, the
indemnitee must not have had reasonable cause to believe his conduct was
unlawful.
<PAGE>
Section 145(b) of the General Corporation Law provides, in general, that a
corporation shall have the power to indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action or suit by or in the right of the corporation to procure a
judgment in its favor by reason of the fact that he is or was a director or
officer of the corporation against expenses (including attorneys' fees)
actually and reasonably incurred by him in connection with the defense or
settlement of such action or suit if he acted in good faith and in a manner
he reasonably believed to be in or not opposed to the best interest of the
corporation; provided, however, that if the person is found to be liable to
the corporation, no indemnification shall be made except to the extent that
the court determines that indemnification is fair and reasonable under the
circumstances.
Section 145(g) of the General Corporation Law provides, in general, that a
corporation shall have power to purchase and maintain insurance on behalf
of any person who is or was a director or officer of the corporation
against any liability asserted against him or incurred by him in any
capacity, or arising out of his status as such, whether or not the
corporation would have the power to indemnify him against such liability
under the provisions of the law.
Article Eighth of the Registrant's Certificate of Incorporation and Section
Six of the Registrant's Bylaws give a director or officer the right to be
indemnified by the Registrant to the fullest extent permitted under
Delaware law.
Item 7: Exemption From Registration Claimed. [Not Applicable.]
Item 8: Exhibits:
5.1 Opinion of Gardere Wynne Sewell & Riggs, L.L.P., legal counsel to the
Company.*
10.1 Form of Departure Warrant.*
10.2 Form of Executive Warrant.*
10.3 Employment Warrant for 81,103 shares of common stock.*
10.4 Employment Warrant for 150,000 shares of common stock.*
23.1 Consent of Arthur Andersen LLP.*
23.2 Consent of Miller and Lents, Ltd.*
23.3 Consent of Forrest A. Garb & Associates, Inc.*
23.4 Consent of Gardere Wynne Sewell & Riggs, L.L.P. (included in Exhibit
5.1).
24.1 Power of Attorney (included on Signature Page).
* filed herewith
Item 9: Undertakings. The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or
in the aggregate, represent a fundamental change in the
information set forth in the registration statement.
Notwithstanding the foregoing, any increase or decrease in volume
of securities offered (if the total dollar value of securities
offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum
offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate,
the changes in volume and price represent no more than a 20%
change in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective
registration statement;
(iii)To include any material information with respect to the plan of
distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement.
provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if
the registration statement is on Form S-3 or Form S-8, and the
information required to be included in a post-effective amendment by
those paragraphs is contained in periodic reports filed by the
registrant pursuant to section 13 or section 15(d) of the Securities
Exchange Act of 1934 that are incorporated by reference in the
registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the
termination of the offering.
The undersigned registrant hereby undertakes that, for purposes of determining
any liability under the Securities Act of 1933, each filing of the registrant's
annual report pursuant to Section 13(a) or Section 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in the registration statement shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions or otherwise, the registrant has
been advised that in the opinion of the Securities and Exchange Commission, such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Houston, State of Texas, on this 29th day of
September, 1998.
SEITEL, INC.
BY: /s/ Paul A. Frame
-------------------------------------------
PAUL A. FRAME, President, Chief Executive
Officer and Director (principal
executive officer)
BY: /s/ Debra D. Valice
-------------------------------------------
DEBRA D. VALICE, Executive Vice President of
Finance, Chief Financial Officer and Director
(principal financial and accounting officer)
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed by the following individuals in the capacities and on
the date indicated. Each person whose signature appears below constitutes and
appoints Paul A. Frame and Debra D. Valice true and lawful attorneys-in-fact and
agents, each acting alone, with full powers of substitution and re-substitution,
for him and in his name, place and stead, in any and all capacities, to sign any
and all amendments (including post-effective amendments) to this Registration
Statement, and to file the same, with all exhibits thereto, and other documents
in connection therewith, with the Securities and Exchange Commission, granting
unto said attorneys-in-fact and agents, each acting alone, full powers and
authority to do and perform each and every act and thing requisite and necessary
to be done in and about the premises, as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, each acting alone, or his or her substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed by the following persons in the capacities indicated
on September 29, 1998.
Signature Title
--------- -----
/s/ Herbert M. Pearlman Chairman of the Board of Directors
- ------------------------
HERBERT M. PEARLMAN
/s/ Paul A. Frame President, Chief Executive Officer and
- ------------------------ Director
PAUL A. FRAME
/s/ Horace A. Calvert Executive Vice President, Chief Operating
- ------------------------ Officer and Director
HORACE A. CALVERT
/s/ Debra D. Valice Executive Vice President of Finance, Chief
- ------------------------ Financial Officer and Director
DEBRA D. VALICE
/s/ David S. Lawi Director
- ------------------------
DAVID S. LAWI
/s/ Walter M. Craig, Jr. Director
- ------------------------
WALTER M. CRAIG, JR.
/s/ Fred S. Zeidman Director
- ------------------------
FRED S. ZEIDMAN
/s/ John E. Stieglitz Director
- ------------------------
JOHN E. STIEGLITZ
/s/ William Lerner Director
- ------------------------
WILLIAM LERNER
<PAGE>
Index of Exhibits
Exhibit Document Page
5.1 Opinion of Gardere Wynne Sewell & Riggs, L.L.P., legal 18
counsel to the Company
10.1 Form of Departure Warrant 20
10.2 Form of Executive Warrant 26
10.3 Employment Warrant for 81,103 shares of common stock 35
10.4 Employment Warrant for 150,000 shares of common stock 49
23.1 Consent of Arthur Andersen LLP 63
23.2 Consent of Miller and Lents, Ltd. 65
23.3 Consent of Forrest A. Garb & Associates, Inc. 67
23.4 Consent of Gardere Wynne Sewell & Riggs, L.L.P. (included in
Exhibit 5.1).
24.1 Power of Attorney (included on Signature Page).
GARDERE WYNNE SEWELL & RIGGS, L.L.P.
333 Clay, Suite 800
Houston, Texas 77002-4086
(713) 308-5500
September 29, 1998
Seitel, Inc.
50 Briar Hollow Lane, 7th Floor West
Houston, Texas 77027
Gentlemen:
We have acted as counsel for Seitel, Inc. (the "Company") in connection
with the registration statement on Form S-8/S-3 of the Company (the
"Registration Statement"), which is being filed on or about the date hereof by
the Company with the Securities and Exchange Commission under the Securities Act
of 1933, as amended (the "Act"), for the registration under the Act of up to
3,218,483 shares (the "S-8 Shares") of common stock, par value $.01 per share,
of the Company to be issued by the Company upon exercise of warrants issued to
certain employees of a subsidiary of the Company prior to such subsidiary's
initial public offering of its common stock (the "Departure Warrants").
In the capacity as counsel for the Company, we have familiarized ourselves
with the Certificate of Incorporation of the Company, as amended, and the Bylaws
of the Company, as amended. We have examined all statutes and other records,
instruments and documents pertaining to the Company that we have deemed
necessary to examine for the purpose of this opinion.
Based upon and subject to the foregoing, we are of the opinion that, upon
completion of the proceedings being taken to permit such transactions to be
carried out in accordance with the securities laws of the various states where
required, the S-8 Shares acquired in accordance with the terms of the Departure
Warrants will be validly issued, fully paid, and non-assessable.
We are members of the Bar of the State of Texas and we do not express an
opinion herein concerning any other law other than the laws of the State of
Texas, the federal law of the United States, and the Delaware General
Corporation Law.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to us under the caption "Legal
Matters" in the Prospectus forming a part thereof.
Very truly yours,
GARDERE WYNNE SEWELL & RIGGS, L.L.P.
BY: /s/William Mark Young
-----------------------------------
William Mark Young
NEITHER THIS WARRANT NOR THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF
THIS WARRANT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AND NEITHER
THIS WARRANT NOR THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF THIS
WARRANT MAY BE SOLD, TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF
IN WHOLE OR IN PART IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER
SUCH ACT OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO COUNSEL TO SEITEL,
INC., IN FORM AND SUBSTANCE REASONABLY SATISFACTORY TO SEITEL, INC., THAT AN
EXEMPTION FROM REGISTRATION UNDER SUCH ACT OR THE RULES AND REGULATIONS
THEREUNDER IS AVAILABLE WITH RESPECT TO THE PROPOSED SALE, TRANSFER, PLEDGE,
HYPOTHECATION OR OTHER DISPOSITION.
SEITEL, INC.
COMMON STOCK PURCHASE WARRANT CERTIFICATE
TO PURCHASE Warrants_Exercisable SHARES OF COMMON STOCK
Certificate No. Warrant_Number
This Warrant Certificate certifies that First Last, Address, CityState,
(SS# SSN) is the registered holder ("Holder") of Warrants_Exercisable Common
Stock Purchase Warrants (the "Warrants") to purchase shares of the $.01 par
value common stock, ("Common Stock") of SEITEL, INC., a Delaware corporation
(the "Company"). Subject to Section 11 hereof, each Warrant enables the Holder
to purchase from the Company at any time until 5:00 p.m., Houston, Texas, local
time on the earlier of (i) three months after the Holder ceases to be an
employee, officer, or director of Eagle Geophysical, Inc., a Delaware
corporation ("Eagle") and any subsidiary of Eagle for any reason other than
death or disability (within the meaning of Section 22(e)(3) of the Internal
Revenue Code of 1986, as amended (the "Code")), (ii) one year after the Holder
ceases to be an employee, officer, or director of Eagle due to his or her death
or disability, and (iii) Expiration_Date, one fully paid and non-assessable
share of Common Stock ("Share") upon presentation and surrender of this Warrant
Certificate and upon payment of the Purchase Price per Share determined in
accordance with the terms hereof. Payment shall be made in lawful money of the
United States of America by certified check payable to the Company at its
principal office at 50 Briar Hollow Lane, 7th Floor West, Houston, Texas 77027.
As hereinafter provided, the Purchase Price and number of Shares purchasable
upon the exercise of the Warrants are subject to modification or adjustment upon
the happening of certain events.
THIS WARRANT IS NOT ASSIGNABLE OR TRANSFERABLE BY THE HOLDER EXCEPT BY WILL
OR THE LAWS OF DESCENT AND DISTRIBUTION UPON THE HOLDER'S DEATH.
1. Upon surrender to the Company, this Warrant Certificate may be
exchanged for another Warrant Certificate or Warrant Certificates
evidencing a like aggregate number of Warrants. If this Warrant
Certificate shall be exercised in part, the Holder shall be entitled
to receive upon surrender hereof another Warrant Certificate or
Warrant Certificates evidencing the number of Warrants not exercised.
During the lifetime of the Holder, the Warrants may be exercised only
by the Holder. If the Holder dies or becomes disabled within the
meaning of Section 22(e)(3) of the Code prior to the termination date
specified herein without having exercised all of the Warrants, the
remaining Warrants may be exercised to the extent the Holder could
have exercised the Warrants on the date of his death or disability at
any time prior to the expiration hereof by (i) the Holder's estate or
a person who acquired the right to exercise the Warrants by bequest or
inheritance or by reason of the death of the Holder in the event of
the Holder's death, or (ii) the Holder or his personal representative
in the event of the Holder's disability, subject to the other terms of
this Warrant Certificate and applicable laws, rules and regulations.
For purposes of this Warrant Certificate, the Company shall determine
the date of disability of the Holder.
2. No Holder shall be deemed to be the holder of Common Stock or any
other securities of the Company that may at any time be issuable on
the exercise hereof for any purpose nor shall anything contained
herein be construed to confer upon the Holder any of the rights of a
shareholder of the Company or any right to vote for the election of
directors or upon any matter submitted to shareholders at any meeting
thereof or to give or withhold consent to any corporate action whether
upon any reorganization, issuance of stock, reclassification or
conversion of stock, change of par value, consolidation, merger,
conveyance, or otherwise) or to receive notice of meetings or to
receive dividends or subscription rights or otherwise until a Warrant
shall have been exercised and the Common Stock purchasable upon the
exercise thereof shall have become issuable.
<PAGE>
3. Each Holder consents and agrees with the Company and any other Holder
that:
(a) This Warrant Certificate is exercisable in whole or in part by
the Holder in person or by attorney duly authorized in writing at
the principal office of the Company.
(b) The Company may deem and treat the person in whose name this
Warrant Certificate is registered as the absolute true and lawful
owner hereof for all purposes whatsoever.
(c) Anything herein to the contrary notwithstanding, in no event
shall the Company be obligated to issue Warrant Certificates
evidencing other than a whole number of Warrants or issue
certificates evidencing other than a whole number of Shares upon
the exercise of this Warrant Certificate; provided, however, that
the Company shall pay with respect to any such fraction of a
Share an amount of cash based upon the current public market
value (or book value, if there shall be no public market value)
for Shares purchasable upon exercise hereof. For purposes of this
Paragraph 3(c), the current public market value of a share of
Common Stock on any date shall be deemed to be the arithmetical
average of the following prices for such of the thirty (30)
business days immediately preceding such day as shall be
available: (i) for any of such days on which the Common Stock
shall be listed on a national securities exchange, the last sale
price on such day or, if there shall have been no sale on such
day, the average of the closing bid and asked prices on such
exchange on such day, or (ii) for any of such days on which the
Common Stock shall not be listed on a national securities
exchange but shall be included in the National Association of
Securities Dealers Automated Quotation System ("NASDAQ"), the
average of the closing bid and asked prices on such day quoted by
brokers and dealers making a market in NASDAQ, furnished by any
member of the New York Stock Exchange selected by the Company for
that purpose, or (iii) for any of such days on which the Common
Stock shall not be so listed on a national securities exchange or
included in NASDAQ but shall be quoted by three brokers regularly
making a market in such shares in the over-the-counter market,
the average of the closing bid and asked prices on such day,
furnished by any member of the New York Stock Exchange selected
by the Company for that purpose, or (iv) for any days on which
the information described in items (i), (ii) or (iii) above is
unavailable, the book value per share of the Common Stock as
determined in accordance with generally accepted accounting
principles; provided, however, in its discretion the board of
Directors of the Company may make an appropriate reduction in the
"current public market value" based upon any applicable trading
restrictions to particular shares of Common Stock.
4. The Purchase Price per Share for the Warrants shall be equal to the
following:
(a) In the event the Holder exercises the lc_option_warrant granted
to the Holder by the Company on OriginalGrant_Date to purchase
Warrants_Exercisable shares of Common Stock at an exercise price
of $OriginalPriceShare per share (the "Original Option_Warrant")
in full on a single date, the Purchase Price for the Warrants
shall equal the closing price of a Share of Common Stock on the
date of exercise in full of the Original Option_Warrant.
(b) In the event the Original Option_Warrant is exercised in full but
in several installments on different dates, the Purchase Price
for the number of Warrants equal to the number of shares of
Common Stock acquired upon each such exercise shall equal the
closing price of a Share of Common Stock on the date of each such
exercise of the Original Option_Warrant.
(c) In the event the Original Option Warrant is partially exercised,
the Purchase Price for the number of Warrants equal to the number
of shares of Common Stock acquired upon each such exercise shall
equal the closing price of a Share of Common Stock on the date of
each such exercise of the Original Option_Warrant, and the
Purchase Price for the number of Warrants equal to the
unexercised portion of the Original Option_Warrant shall equal
the greater of (i) $OriginalPriceShare or (ii) the closing price
of a Share of Common Stock on November 8, 1997.
(d) In the event the Holder does not exercise the Original
Option_Warrant, the Purchase Price for the Warrants shall equal
the greater of (i) $OriginalPriceShare or (ii) the closing price
of a Share of Common Stock on November 8, 1997.
<PAGE>
5. The Company will pay any documentary stamp taxes attributable to the
initial issuance of the Shares issuable upon the exercise of the
Warrants; provided, however, that the Company shall not be required to
pay any tax or taxes which may be payable in respect of any transfer
involved in the issuance or delivery of any certificates for Shares in
a name other than that of the Holder in respect of which such Shares
are issued, and in such case the Company shall not be required to
issue or deliver any certificate for Shares or any Warrant until the
person requesting the same has paid to the Company the amount of such
tax or has established to the Company's satisfaction that such tax has
been paid.
6. In case the Warrant Certificate shall be mutilated, lost, stolen or
destroyed, the Company may, in its discretion, issue and deliver in
exchange and substitution for and upon cancellation of the mutilated
Warrant Certificate, or in lieu of and substitution for the Warrant
Certificate, lost, stolen or destroyed, a new Warrant Certificate of
like tenor and representing an equivalent right or interest, but only
upon receipt of evidence satisfactory to the Company of such loss,
theft or destruction and an indemnity, if requested, also satisfactory
to it.
7. The Company warrants that there have been reserved, and covenants that
at all times in the future it shall keep reserved, out of the
authorized and unissued Common Stock, a number of Shares sufficient to
provide for the exercise of the rights or purchase represented by this
Warrant Certificate. The Company agrees that all Shares issuable upon
exercise of the Warrants shall be, at the time of delivery of the
certificates for such Shares, validly issued and outstanding, fully
paid and non assessable and that the issuance of such Shares will not
give rise to preemptive rights in favor of existing shareholders.
8. The number of shares of Common Stock covered by this Warrant
Certificate, and the Purchase Price thereof, shall be subject to such
adjustment as the Board of Directors of the Company acting in good
faith deems appropriate to reflect any stock dividend, stock split,
share combination, exchange of shares, recapitalization, merger,
consolidation, separation, reorganization, liquidation or the like, of
or by the Company. In the event the Company shall be a party to any
merger, consolidation or corporate reorganization, as the result of
which the Company shall be the surviving corporation, the rights and
duties of the Holder and the Company shall not be affected in any
manner. In the event the Company shall sell all or substantially all
of its assets or shall be a party to any merger, consolidation or
corporate reorganization, as the result of which the Company shall not
be the surviving corporation, or in the event any other person or
entity may make a tender or exchange offer for stock of the Company
(the surviving corporation, purchaser, or tendering corporation being
collectively referred to as the "Purchaser", and the transaction being
collectively referred to as the "Purchase"), then the Company may, at
its election, (a) reach an agreement with the Purchaser that the
Purchaser will assume the obligations of the Company under this
Warrant Certificate; (b) reach an agreement with the Purchaser that
the Purchaser will convert the Warrants represented by this Warrant
Certificate into warrants of at least equal value as to stock of the
Purchaser; or (c) not later than thirty (30) days prior to the
effective date of the Purchase, notify the Holder that his Warrants
are accelerated and afford to the Holder a right for ten (10) days
after the date of such notice to exercise any then unexercised portion
of the Warrants whether or not the Warrants shall then be exercisable
under the terms of this Warrant Certificate. Within such ten-day
period, the Holder may exercise any portion of the Warrants as he may
desire and deposit with the Company the requisite cash to purchase in
full and not in installments the Common Stock thereby exercised, in
which case the Company shall, prior to the effective date of the
Purchase, issue all Common Stock thus exercised, which shall be
treated as issued stock for purposes of the Purchase.
9. The Warrants may not be exercised in whole or in part and no cash or
certificates representing Shares shall be delivered if any requisite
approval or consent of any government authority of any kind having
jurisdiction over the exercise of the Warrants or of any stock
exchange on which the Common Stock is listed shall not have been
secured or if such exercise of delivery would cause any violation of
any applicable laws, regulations or stock exchange rules, including
but not limited to applicable Federal and State securities laws. The
Holder of this Warrant Certificate, each permitted transferee hereof
and any holder and transferee of any Shares, by his acceptance
thereof, agrees that (i) no public distribution of Warrants or Shares
will be made in violation of the Securities Act of 1933, as amended
(the "Act"), and (ii) during such period as the delivery of a
prospectus with respect to Warrants or Shares may be required by the
Act, no public distribution of Warrants or Shares will be made in a
manner or on terms different from those set forth in, or without
<PAGE>
delivery of, a prospectus then meeting the requirements of Section 10
of the Act and in compliance with all applicable state securities
laws. The Holder of this Warrant Certificate and each permitted
transferee hereof further agrees that if any distribution of any of
the Warrants or Shares is proposed to be made by them otherwise than
by delivery of a prospectus meeting the requirements of Section 10 of
the Act, such action shall be taken only after submission to the
Company of an opinion of counsel, reasonably satisfactory in form and
substance to the Company's counsel, to the effect that the proposed
distribution will not be in violation of the Act or of applicable
state law. Furthermore, it shall be a condition to the transfer of the
Warrants that any permitted transferee thereof deliver to the Company
his written agreement to accept and be bound by all of the terms and
conditions in this Warrant Certificate.
10. This Warrant Certificate is intended to be an Employee Benefit Plan
within the meaning of Rule 405 under the Securities Act.
11. Except only as specifically provided elsewhere in this Warrant
Certificate, the Warrants shall not be exercisable prior to the dates
set forth below except in the amounts set forth below:
(a) As of the date hereof and prior to 3/20/99, up to a total of
one-third of the total Warrants represented hereby may be
exercised.
(b) After 3/20/99 and prior to 3/20/00, up to a total of two-thirds
of the total Warrants represented hereby may be exercised
(including the Warrants previously exercisable hereunder).
(c) After 3/20/00, all of the total Warrants represented hereby may
be exercised.
If pursuant to the foregoing the Holder would be allowed to exercise with
respect to a fractional Warrant, such installment will be rounded off to
the next highest whole number of Warrants. In the event of the Holder's
termination of employment and directorship with Eagle for whatever cause
(including death or disability), the Warrants will be exercisable only to
the extent that the Holder could have exercised such Warrants on the date
of his termination of employment or directorship.]
WITNESS the following signatures as of this _______ day of __________,
1997.
SEITEL, INC.
By:
-----------------------------------------------------
PAUL A. FRAME, President
NEITHER THIS WARRANT NOR THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF
THIS WARRANT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AND NEITHER
THIS WARRANT NOR THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF THIS
WARRANT MAY BE SOLD, TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF
IN WHOLE OR IN PART IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER
SUCH ACT OR AN OPINION OF COUNSEL IN FORM AND SUBSTANCE REASONABLY SATISFACTORY
TO COUNSEL OF SEITEL, INC., THAT AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT
OR THE RULES AND REGULATIONS THEREUNDER IS AVAILABLE WITH RESPECT TO THE
PROPOSED SALE, TRANSFER, PLEDGE, HYPOTHECATION OR OTHER DISPOSITION.
SEITEL, INC.
COMMON STOCK PURCHASE
WARRANT CERTIFICATE
TO PURCHASE NUMBER
SHARES OF COMMON STOCK
VOID AFTER 5:00 P.M., HOUSTON, TEXAS
LOCAL TIME ON EXP_DATE
Certificate No. WARRANT_NO
This Warrant Certificate certifies that First_Name Last_Name is the
registered holder ("Holder") of NUMBER Common Stock Purchase Warrants (the
"Warrants") to purchase shares of the $.01 par value common stock, ("Common
Stock") of SEITEL, INC., a Delaware corporation (the "Company"). Subject to
Section 15 hereof, each Warrant enables the Holder to purchase from the Company
at any time, on and after DATE_GRANTED and until 5:00 p.m., Houston, Texas,
local time on EXP_DATE, one fully paid and non-assessable share of Common Stock
("Share") upon presentation and surrender of this Warrant Certificate and upon
payment of the purchase price of $PRICE per Share. Payment shall be made in
lawful money of the United States of America by certified check payable to the
Company at its principal office at 50 Briar Hollow Lane, West, 7th Floor,
Houston, Texas, 77027. As hereinafter provided, the purchase price and number of
Shares purchasable upon the exercise of the Warrants are subject to modification
or adjustment upon the happening of certain events.
FOR ALL OTHER PURPOSES STATED HEREIN, THE COMPANY MAY DEEM AND TREAT THE
PERSON IN WHOSE NAME THIS WARRANT CERTIFICATE IS REGISTERED AS THE ABSOLUTE TRUE
AND LAWFUL OWNER HEREOF FOR ALL PURPOSES WHATSOEVER.
1. Upon surrender to the Company, this Warrant Certificate may be
exchanged for another Warrant Certificate or Warrant Certificates
evidencing a like aggregate number of Warrants. If this Warrant
Certificate shall be exercised in part, the Holder shall be entitled
to receive upon surrender hereof another Warrant Certificate or
Warrant Certificates evidencing the number of Warrants not exercised.
2. No Holder shall be deemed to be the holder of Common Stock or any
other securities of the Company that may at any time be issuable on
the exercise hereof for any purpose nor shall anything contained
herein be construed to confer upon the Holder any of the rights of a
shareholder of the Company or any right to vote for the election of
directors or upon any matter submitted to shareholders at any meeting
thereof or to give or withhold consent to any corporate action
(whether upon any reorganization, issuance of stock, reclassification
or conversion of stock, change of par value, consolidation, merger,
conveyance, or otherwise) or to receive notice of meetings or to
receive dividends or subscription rights or otherwise until a Warrant
shall have been exercised and the Common Stock purchasable upon the
exercise thereof shall have become issuable.
<PAGE>
3. Each Holder consents and agrees with the Company and any other Holder
that:
A. this Warrant Certificate is exercisable in whole or in part by
the Holder in person or by attorney duly authorized in writing at
the principal office of the Company.
B. anything herein to the contrary notwithstanding, in no event
shall the Company be obligated to issue Warrant Certificates
evidencing other than a whole number of Warrants or issue
certificates evidencing other than a whole number of Shares upon
the exercise of this Warrant Certificate; provided, however, that
the Company shall pay with respect to any such fraction of a
Share an amount of cash based upon the current public market
value (or book value, if there shall be no public market value)
for Shares purchasable upon exercise hereof, as determined in
accordance with subparagraph I of Section 10 hereof; and
C. the Company may deem and treat the person in whose name this
Warrant Certificate is registered as the absolute true and lawful
owner hereof for all purposes whatsoever.
4. The Company shall maintain books for the transfer and registration of
Warrants. Upon the transfer of any Warrants, the Company shall issue
and register the Warrants in the names of the new Holders. The
Warrants shall be signed manually by the Chairman, Chief Executive
Officer, President or any Vice President and the Secretary (or
Assistant Secretary) of the Company. The Company shall transfer, from
time to time, any outstanding Warrants upon the books to be maintained
by the Company for such purpose upon surrender thereof for transfer
properly endorsed or accompanied by appropriate instructions for
transfer. Upon any transfer, a new Warrant Certificate shall be issued
to the transferee and the surrendered Warrants shall be canceled by
the Company. Warrants may be exchanged at the option of the Holder,
when surrendered at the office of the Company, for another Warrant, or
other Warrants of different denominations, of like tenor and
representing in the aggregate the right to purchase a like number of
Shares. Subject to the terms of this Warrant Certificate, upon such
surrender and payment of the purchase price, the Company shall issue
and deliver with all reasonable dispatch to or upon the written order
of the Holder of such Warrants and in such name or names as such
Holder may designate, a certificate or certificates for the number of
full Shares so purchased upon the exercise of such Warrants. Such
certificate or certificates shall be deemed to have been issued and
any person so designated to be named therein shall be deemed to have
become the holder of record of such Shares as of the date of the
surrender of such Warrants and payment of the purchase price;
provided, however, that if, at the date of surrender and payment, the
transfer books of the Shares shall be closed, the certificates for the
Shares shall be issuable as of the date on which such books shall be
opened and until such date the Company shall be under no duty to
deliver any certificate for such Shares; provided, further, however,
that such transfer books, unless otherwise required by law or by
applicable rule of any national securities exchange, shall not be
closed at any one time for a period longer than 20 days. The rights of
purchase represented by the Warrants shall be exercisable, at the
election of the Holders, either as an entirety or from time to time
for part only of the Shares.
5. The Company will pay any documentary stamp taxes attributable to the
initial issuance of the Shares issuable upon the exercise of the
Warrants; provided, however, that the Company shall not be required to
pay any tax or taxes which may be payable in respect of any transfer
involved in the issuance or delivery of any certificates for Shares in
a name other than that of the Holder in respect of which such Shares
are issued, and in such case the Company shall not be required to
issue or deliver any certificate for Shares or any Warrant until the
person requesting the same has paid to the Company the amount of such
tax or has established to the Company's satisfaction that such tax has
been paid.
<PAGE>
6. In case the Warrant Certificate shall be mutilated, lost, stolen or
destroyed, the Company may, in its discretion, issue and deliver in
exchange and substitution for and upon cancellation of the mutilated
Warrant Certificate, or in lieu of and substitution for the Warrant
Certificate, lost, stolen or destroyed, a new Warrant Certificate of
like tenor and representing an equivalent right or interest, but only
upon receipt of evidence satisfactory to the Company of such loss,
theft or destruction and an indemnity, if requested, also satisfactory
to it.
7. The Company warrants that there have been reserved, and covenants that
at all times in the future it shall keep reserved, out of the
authorized and unissued Common Stock, a number of Shares sufficient to
provide for the exercise of the rights or purchase represented by this
Warrant Certificate. The Company agrees that all Shares issuable upon
exercise of the Warrants shall be, at the time of delivery of the
certificates for such Shares, validly issued and outstanding, fully
paid and non-assessable and that the issuance of such Shares will not
give rise to preemptive rights in favor of existing shareholders.
8. As used herein, the term "Exercise Rate" shall mean the number and
kind of shares of capital stock of the Company which the Holder of
this Warrant shall be entitled from time to time to receive for each
$1,000.00 of warrant exercise payment. Unless and until an adjustment
thereof shall be required as hereinafter provided, the Exercise Rate
shall be EX_RATE shares of Common Stock.
9. The term "Exercise Price" shall mean the price obtained by dividing
$1,000.00 by the number of shares constituting the Exercise Rate in
effect at the time for such amount.
10. The Exercise Rate in effect any time shall be subject to adjustment as
follows:
A. Whenever the Company shall (i) pay a dividend on Common Stock in
shares of its Common Stock, (ii) subdivide its outstanding shares
of Common Stock, (iii) combine its outstanding shares of Common
Stock into a smaller number of shares, or (iv) issue by
reclassification of its shares of Common Stock (including any
reclassification in connection with a consolidation or merger in
which the Company is the continuing corporation) any shares, the
Exercise Rate in effect at the time of the record date for such
dividend or of the effective date of such subdivision,
combination or reclassification shall be proportionately adjusted
so that the Holder of this Warrant exercising it after such time
shall be entitled to receive the total number and kind of shares
which bear the same proportion to the total issued and
outstanding Common Stock of the Company immediately after such
time as the proportion he would have owned and have been entitled
to receive immediately prior to such time.
B. Whenever the Company shall issue any shares of Common Stock other
than:
(i) shares issued in a transaction described in subparagraph H
of this Paragraph 10; and
(ii) shares issued upon exercise or conversion of securities of
the type referred to in subparagraphs E and F of this
Paragraph 10 or shares issued, subdivided or combined in
transactions described in subparagraph (A) of this Paragraph
10 if and to the extent that the Exercise Rate shall have
been previously adjusted pursuant to the terms of this
subparagraph (B) or subparagraph (A) of this Paragraph 10 as
a result of the issuance, subdivision or combination of such
securities;
at a price per share which is less than the current public market
value of a share of Common Stock, the Exercise Rate in effect
immediately prior to such issuance shall be adjusted by
multiplying such Exercise Rate by a fraction, the numerator of
which shall be the number of shares of Common Stock outstanding
immediately prior to such issuance plus the number of additional
shares of Common Stock so issued, and the denominator of which
shall be the number of Shares of Common Stock outstanding
immediately prior to such issuance plus the number of shares of
Common Stock which the fair value of the consideration received
by the Company for the total number of additional shares so
issued would purchase at a price equal to the current public
market value.
<PAGE>
C. Whenever the Company shall pay a dividend or make a distribution
(other than in a transaction which results in an equivalent
adjustment pursuant to other subparagraphs of this Paragraph 10)
generally to holders of its Common Stock or evidences of its
indebtedness or assets (excluding dividends paid in, or
distributions of cash to the extent of current income or earned
surplus of the Company), or securities of the Company, or rights
to subscribe for or purchase securities of the Company, the
Exercise Rate in effect immediately prior to such distribution
shall be adjusted by multiplying such Exercise Rate by a
fraction, the numerator of which shall be the then current public
market value, if any, per share of the Common Stock receiving
such dividend or distribution or, if there shall be no such
current public market value, then the book value per share as of
the close of the month preceding such distribution, and the
denominator of which shall be the numerator less the fair market
value of the portion of the assets, or the evidences of
indebtedness or rights, so distributed which is applicable to
each such share; provided, however, if as a result of such
adjustment the Exercise Price would be a negative figure, such
adjustment shall be modified so that the Exercise Price after
such adjustment is $.01 per share.
D. Whenever the Company shall issue by reclassification of its
shares of Common Stock any shares of stock, the Exercise Rate in
effect immediately prior to such issuance shall be
proportionately adjusted so that the Holder of this Warrant
exercising it after such time shall be entitled to receive, the
number and kind of shares which, when added to the number of
shares of such kind exercisable hereunder prior to such issue,
would entitle the Holder hereof, upon the exercise hereof in
full, to purchase an amount of shares of such kind which bears
the same proportion to the total issued and outstanding capital
stock of the Company as the proportion he would have owned and
have been entitled to receive immediately prior to such issue. In
the event that at any time, as a result of an adjustment made
pursuant to this paragraph 10, the Holder of this Warrant shall
become entitled upon exercise thereof to receive any shares of
the Company other than shares of its Common Stock, then
thereafter the number of such other shares so receivable upon
exercise of this Warrant shall be subject to adjustment from time
to time in a manner and on terms as nearly equivalent as
practicable to the provisions contained in this Paragraph 10 in
the respect of the Common Stock.
E. For purposes of the adjustments provided for in the foregoing
subparagraphs of this Paragraph 10, if at any time, the Company
shall issue any rights or options for the purchase of, or stock
or other securities convertible into Common Stock, (such
convertible stock or securities being herein referred to as
"Convertible Securities") the Company shall be deemed to have
issued at the time of the issuance of such rights or options or
Convertible Securities the maximum number of shares of Common
Stock issuable upon exercise or conversion thereof and to have
received as consideration for the issuance of such shares an
amount equal to the amount of cash and fair value of other
consideration, if any, received by the Company for the issuance
of such rights or options or Convertible Securities, plus, in the
case of such options or rights, the minimum amounts of cash and
fair value of other consideration, if any, payable to the Company
upon the exercise of such options or rights and, in the case of
Convertible Securities, the minimum amounts of cash and fair
value of other consideration, if any, payable, to the Company.
F. For purposes of the adjustment provided for in subparagraph B
above, if at any time the Company shall issue any rights or
options for the purchase of Convertible Securities, the Company
shall be deemed to have issued at the time of the issuance of
such rights or options the maximum number of shares of Common
Stock issuable upon conversion of the total amount of Convertible
Securities covered by such rights or options and to have received
as consideration for the issuance of such shares an amount equal
to the amount of cash and the amount of fair value of other
consideration, if any, received by the Company for the issuance
of such rights or options, plus the minimum amounts of cash and
fair value of other consideration, if any, payable to the Company
upon the exercise of such rights or options and payable to the
Company on conversion of such Convertible Securities.
<PAGE>
G. Anything in subparagraph E or F above to the contrary
notwithstanding, whenever the Company shall issue any shares
(other than on exercise of this Warrant) upon exercise of any
rights or options or upon conversion of any Convertible
Securities and if the Exercise Rate shall not previously have
been adjusted upon the issuance of such rights, options or
Convertible Securities, the computation described in subparagraph
B above shall be made and the Exercise Rate adjusted in
accordance with the provisions thereof (the shares so issued
being deemed for purposes of such computation to have been issued
at a price per share equal to the amount of cash and fair value
of other consideration, if any, properly attributable to one such
share received by the Company upon issuance and exercise of such
rights or options or sale and conversion of such Convertible
Securities (and upon issuance of any rights or options pursuant
to which such Convertible Securities may have been sold).
H. Anything in this Paragraph 10 to the contrary notwithstanding, no
adjustment in the Exercise Rate or Exercise Price shall be made
in connection with:
(i) Convertible Securities issued pursuant to the Company's
qualified or non-qualified Employee Stock Option Plans or
any other bona fide employee benefit plan or incentive
arrangement, adopted or approved by the Company's Board of
Directors or shares of Common Stock issued pursuant to the
exercise of any rights or options granted pursuant to said
plans or arrangements (but only to the extent that the
aggregate number of shares excluded by the Clause (i) and
issued after the date hereof shall not exceed 15% of the
Company's Common Stock outstanding at the time of any such
issuance); and
(ii) The issuance of any shares of Common Stock pursuant to the
exercise of Convertible Securities outstanding as of the
date hereof including without limitation, the conversion of
any Warrant issued in the same placement of securities
pursuant to which this Warrant was issued by the Company.
I. For purposes of this Paragraph 10, the current public market
value of a share of Common Stock on any date shall be deemed to
be the arithmetical average of the following prices for such of
the thirty (30) business days immediately preceding such day as
shall be available: (i) for any of the such days on which the
Common Stock shall be listed on a national securities exchange,
the last sale price on such day or, if there shall have been no
sale on such day, the average of the closing bid and asked prices
on such exchange on such day, or (ii) for any of such days on
which the Common Stock shall not be listed on a national
securities exchange but shall be included in the National
Association of Securities Dealers Automated Quotation System
("NASDAQ"), the average of the closing bid and asked prices on
such day quoted by brokers and dealers making a market in NASDAQ,
furnished by any member of the New York Stock Exchange selected
by the Company for that purpose, or (iii) for any of such days on
which the Common Stock shall not be so listed on a national
securities exchange or included in NASDAQ but shall be quoted by
three brokers regularly making a market in such shares in the
over-the-counter market, the average of the closing bid and asked
prices on such day, furnished by any member of the New York Stock
Exchange selected by the Company for that purpose, or (iv) for
any days on which the information described in items (i), (ii) or
(iii) above is unavailable, the book value per share of the
Common Stock as determined in accordance with generally accepted
accounting principles; provided, however, in its discretion the
Board may make an appropriate reduction in the "current public
market value" based upon any applicable trading restrictions to
particular shares of Common Stock.
J. Anything in this Paragraph 10 to the contrary notwithstanding, no
adjustment in the Exercise Rate shall be required unless such
adjustment would require an increase or decrease of at least 1%
in such rate; provided, however, that any adjustments which by
reason of this subparagraph J are not required to be made shall
be carried forward and taken into account in making subsequent
adjustments. All calculations under the Paragraph 10 shall be
made to the nearest cent or to the nearest one-hundredth of a
share, as the case may be.
<PAGE>
K. No adjustment in the Exercise Rate shall be made for purposes of
subparagraphs B and C of this Paragraph 10 if such adjustment
would result in an increase in such Exercise Price or decrease in
the Exercise Rate except that, in the case of any Convertible
Securities in respect of which an adjustment has previously been
made under subparagraph B above and which has expired or
otherwise been canceled without exercise of the rights or options
evidenced thereby, such previous adjustment shall be reversed.
L. Before taking any action which could cause an adjustment pursuant
to this Paragraph 10 reducing the Exercise Price per share below
the then par value (if any) of the shares covered hereby, the
Company will take any corporate action which may be necessary in
order that the Company may validly and legally issue at the
Exercise Price as so adjusted shares that are fully paid and
non-assessable.
M. The number of shares of capital stock of the Company outstanding
at any given time shall not include shares owned or held by or
for the account of the Company, and the disposition of any such
shares shall be considered an issue or sale of such shares for
the purposes of this Paragraph 10.
N. If any event occurs as to which the other provisions of this
Paragraph 10 are not strictly applicable but the lack of any
adjustment would not fairly protect the purchase rights of the
Holder of this Warrant in accordance with the basic intent and
principles of such provisions, or if strictly applicable would
not fairly protect the purchase rights of the Holder of this
Warrant in accordance with the basic intent and principles of
such provisions, then the Company shall appoint a firm of
independent certified public accountants (which shall not be the
regular auditors of the Company) of recognized national standing,
which shall give their opinion upon the adjustment, if any, on a
basis consistent with the basic intent and principles established
in the other provisions of this Paragraph 10, necessary to
preserve, without dilution, the exercise rights of the registered
Holder of this Warrant. Upon receipt of such opinion, the Company
shall forthwith make the adjustments described therein. In taking
any action or making any determination pursuant to the provisions
of this Section 10, the Company and its Board of Directors shall,
at all times, exercise reasonable judgment and act in good faith.
O. Upon any adjustment of any Exercise Rate, then and in each such
case, the Company shall promptly deliver a notice to the
registered Holder of this Warrant, which notice shall state the
Exercise Price and Exercise Rate resulting from such adjustment
and the increase or decrease, if any, in the number of shares
purchasable at such price upon the exercise hereof, setting forth
in reasonable detail the method of calculation and the facts upon
which such calculation is based.
P. In the case of the issuance of shares of Common Stock or
Convertible Securities for a consideration in whole or in part,
other than cash, the consideration other than cash shall be
deemed to be the fair market value thereof as reasonably
determined in good faith by the Board of Directors of the Company
(regardless of accounting treatment thereof); provided, however,
that if such consideration consists of the cancellation of debt
issued by the Company the consideration shall be deemed to be the
amount the Company received upon issuance of such debt (gross
proceeds) plus accrued interest and, in the case of original
issue discount or zero coupon indebtedness, accreted value to the
date of such cancellation, but not including any premium or
discount at which the debt may then be trading or which might
otherwise be appropriate for such class of debt;
Q. The Company shall not issue any shares of its capital stock
(other than Common Stock) at or for consideration which is less
than fair value determined by the Board of Directors of the
Company in light of all circumstances surrounding such issuance.
<PAGE>
11. In the case:
A. The Company shall declare any dividend or distribution on its
Common Stock (or on any other shares which the Holder of this
Warrant may become entitled to receive upon exercise hereof); or
B. The Company shall authorize the issuance to holders of its Common
Stock (or on any other shares which the Holder of this Warrant
may become entitled to receive upon exercise hereof) any
subscription rights or warrants; or
C. Of any subdivision, combination or reclassification of shares of
Common Stock of the Company (or any shares of the Company which
are subject to this Warrant), or of any proposed consolidation or
merger to which the Company is to be a party and for which the
approval of any shareholders of the Company is required, or of
the proposed sale or transfer of all or substantially all of the
assets of the Company; or
D. Of the proposed voluntary or involuntary dissolution,
liquidation, or winding up of the Company; or
E. The Company proposes to effect any transaction not specified
above which would require an adjustment of the Exercise Rate
pursuant to Paragraph 10 hereof;
then the Company shall cause to be mailed to Holders of this Warrant,
at least ten (10) days prior to the applicable record or other date
hereinafter specified, a notice describing such transaction in
reasonable detail, specifying the character, amount and terms of all
securities and the amounts of cash and other property, if any,
involved in such transaction and stating (i) the date as of which the
holders of Common Stock (or any such other shares) of record to be
entitled to receive any such dividend, distribution, rights, or
warrants is to be determined, or (ii) the date of which any such
subdivision, combination, reclassification, consolidation, merger,
sale, transfer, dissolution, liquidation, winding up, or other
transaction is expected to become effective, and the date as of which
it is expected that holders of Common Stock (or any such other shares)
of record shall be entitled to exchange the same for securities or
other property, if any, deliverable upon such transaction.
12. The Company covenants and agrees that it will not merge or consolidate
with or into or sell or otherwise transfer all or substantially all of
its assets to any other corporation or entity unless at the time of or
prior to such transaction such other corporation or other entity shall
expressly assume all of the liabilities and obligations of the Company
under this Warrant and (without limiting the generality of the
foregoing) shall expressly agree that the Holder of this Warrant shall
thereafter have the right (subject to subsequent adjustment as nearly
equivalent as practicable to the adjustments provided for in Paragraph
10 of this Warrant) to receive upon the exercise of this Warrant the
number and kind of shares of stock and other securities and property
receivable upon such transaction by a Holder of the number and kind of
shares which would have been receivable upon the exercise of this
Warrant immediately prior to such transactions.
<PAGE>
13. The Holder of this Warrant Certificate, each transferee hereof and any
holder and transferee of any Shares, by his acceptance thereof, agrees
that (i) no public distribution of Warrants or shares will be made in
violation of the Act, and (ii) during such period as the delivery of a
prospectus with respect to Warrants or Shares may be required by the
Act, no public distribution of Warrants or Shares will be made in a
manner or on terms different from those set forth in, or without
delivery of, a prospectus then meeting the requirements of Section 10
of the Act and in compliance with all applicable state securities
laws. The Holder of this Warrant Certificate and each transferee
hereof further agrees that if any distribution of any of the Warrants
or Shares is proposed to be made by them otherwise than by delivery of
a prospectus meeting the requirements of Section 10 of the Act, such
action shall be taken only after submission to the Company of an
opinion of counsel, reasonably satisfactory in form and substance to
the Company's counsel, to the effect that the proposed distribution
will not be in violation of the Act or of applicable state law.
Furthermore, it shall be a condition to the transfer of the Warrants
that any transferee thereof deliver to the Company his written
agreement to accept and be bound by all of the terms and conditions
contained in this Warrant Certificate.
14. This Warrant Certificate shall be exercisable only during the
continuance of the Holder's employment at the Company or its
subsidiaries, except that:
A. If the Holder ceases to be an employee at the Company (or a
subsidiary of the Company) for any reason other than by death or
disability, this Warrant Certificate may be exercised by Holder,
to the extent that it was exercisable at the date of termination,
at any time within three months after the date Holder ceases to
be an employee, but not later than EXP_DATE except that, in case
of his death or disability within that three-month period, this
Warrant Certificate may be exercised as provided in subparagraph
(b) below.
B. If the Holder dies or becomes disabled during employment or
within the three-month period referred to in subparagraph (a)
above, this Warrant Certificate may be exercised, to the extent
that it was exercisable by the Holder at the date of:
(i) death, by the person or persons to whom Holder's rights
under this Warrant Certificate pass by will or by the laws
of descent and distribution or
(ii) disability, by the Holder's legal representative,
at any time within one year after the date of Holder's death or
disability, but not later than EXP_DATE.
The determination by the Company's Board of Directors of the
reason for termination of the Holder's employment shall be
binding and conclusive on the Holder.
<PAGE>
15. Except only as specifically provided elsewhere in this Warrant
Certificate, the Warrants shall not be exercisable prior to the dates
set forth below except in the amounts set forth below:
A. As of the date hereof, up to a total of 20% of the total warrants
represented hereby may be exercised.
B. The remaining 80% become exercisable on November 20, 2000, or if
earlier, in incremental installments of 20% of the total number
of warrants represented hereby for each two-point increase in the
market price of the Common Stock above PRICE which is maintained
or exceeded for 10 consecutive trading days.
WITNESS the following signatures as of FULL_GRANT_DATE.
SEITEL, INC.
By:
-----------------------------
Paul A. Frame
Chief Executive Officer
Accepted:
--------------------------------
First_Name Last_Name
NEITHER THIS WARRANT NOR THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF
THIS WARRANT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AND NEITHER
THIS WARRANT NOR THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF THIS
WARRANT MAY BE SOLD, TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF
IN WHOLE OR IN PART IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER
SUCH ACT OR AN OPINION OF COUNSEL IN FORM AND SUBSTANCE REASONABLY SATISFACTORY
TO COUNSEL OF SEITEL, INC., THAT AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT
OR THE RULES AND REGULATIONS THEREUNDER IS AVAILABLE WITH RESPECT TO THE
PROPOSED SALE, TRANSFER, PLEDGE, HYPOTHECATION OR OTHER DISPOSITION.
SEITEL, INC.
COMMON STOCK PURCHASE
WARRANT CERTIFICATE
TO PURCHASE 81,103
SHARES OF COMMON STOCK
VOID AFTER 5:00 P.M., HOUSTON, TEXAS
LOCAL TIME ON 4/23/08
Certificate No. EMPW-001
This Warrant Certificate certifies that Russell Hoffman is the registered
holder ("Holder") of 81,103 Common Stock Purchase Warrants (the "Warrants") to
purchase shares of the $.01 par value common stock, ("Common Stock") of SEITEL,
INC., a Delaware corporation (the "Company"). Subject to Section 15 hereof, each
Warrant enables the Holder to purchase from the Company at any time, on and
after 4/23/98 and until 5:00 p.m., Houston, Texas, local time on 4/23/08, one
fully paid and non-assessable share of Common Stock ("Share") upon presentation
and surrender of this Warrant Certificate and upon payment of the purchase price
of $15.875 per Share. Payment shall be made in lawful money of the United States
of America by certified check payable to the Company at its principal office at
50 Briar Hollow Lane, West, 7th Floor, Houston, Texas, 77027. As hereinafter
provided, the purchase price and number of Shares purchasable upon the exercise
of the Warrants are subject to modification or adjustment upon the happening of
certain events.
FOR ALL OTHER PURPOSES STATED HEREIN, THE COMPANY MAY DEEM AND TREAT THE
PERSON IN WHOSE NAME THIS WARRANT CERTIFICATE IS REGISTERED AS THE ABSOLUTE TRUE
AND LAWFUL OWNER HEREOF FOR ALL PURPOSES WHATSOEVER.
1. Upon surrender to the Company, this Warrant Certificate may be
exchanged for another Warrant Certificate or Warrant Certificates
evidencing a like aggregate number of Warrants. If this Warrant
Certificate shall be exercised in part, the Holder shall be entitled
to receive upon surrender hereof another Warrant Certificate or
Warrant Certificates evidencing the number of Warrants not exercised.
2. No Holder shall be deemed to be the holder of Common Stock or any
other securities of the Company that may at any time be issuable on
the exercise hereof for any purpose nor shall anything contained
herein be construed to confer upon the Holder any of the rights of a
shareholder of the Company or any right to vote for the election of
directors or upon any matter submitted to shareholders at any meeting
thereof or to give or withhold consent to any corporate action
(whether upon any reorganization, issuance of stock, reclassification
or conversion of stock, change of par value, consolidation, merger,
conveyance, or otherwise) or to receive notice of meetings or to
receive dividends or subscription rights or otherwise until a Warrant
shall have been exercised and the Common Stock purchasable upon the
exercise thereof shall have become issuable.
<PAGE>
3. Each Holder consents and agrees with the Company and any other Holder
that:
A. this Warrant Certificate is exercisable in whole or in part by
the Holder in person or by attorney duly authorized in writing at
the principal office of the Company.
B. anything herein to the contrary notwithstanding, in no event
shall the Company be obligated to issue Warrant Certificates
evidencing other than a whole number of Warrants or issue
certificates evidencing other than a whole number of Shares upon
the exercise of this Warrant Certificate; provided, however, that
the Company shall pay with respect to any such fraction of a
Share an amount of cash based upon the current public market
value (or book value, if there shall be no public market value)
for Shares purchasable upon exercise hereof, as determined in
accordance with subparagraph I of Section 10 hereof; and
C. the Company may deem and treat the person in whose name this
Warrant Certificate is registered as the absolute true and lawful
owner hereof for all purposes whatsoever.
4. The Company shall maintain books for the transfer and registration of
Warrants. Upon the transfer of any Warrants, the Company shall issue
and register the Warrants in the names of the new Holders. The
Warrants shall be signed manually by the Chairman, Chief Executive
Officer, President or any Vice President and the Secretary (or
Assistant Secretary) of the Company. The Company shall transfer, from
time to time, any outstanding Warrants upon the books to be maintained
by the Company for such purpose upon surrender thereof for transfer
properly endorsed or accompanied by appropriate instructions for
transfer. Upon any transfer, a new Warrant Certificate shall be issued
to the transferee and the surrendered Warrants shall be canceled by
the Company. Warrants may be exchanged at the option of the Holder,
when surrendered at the office of the Company, for another Warrant, or
other Warrants of different denominations, of like tenor and
representing in the aggregate the right to purchase a like number of
Shares. Subject to the terms of this Warrant Certificate, upon such
surrender and payment of the purchase price, the Company shall issue
and deliver with all reasonable dispatch to or upon the written order
of the Holder of such Warrants and in such name or names as such
Holder may designate, a certificate or certificates for the number of
full Shares so purchased upon the exercise of such Warrants. Such
certificate or certificates shall be deemed to have been issued and
any person so designated to be named therein shall be deemed to have
become the holder of record of such Shares as of the date of the
surrender of such Warrants and payment of the purchase price;
provided, however, that if, at the date of surrender and payment, the
transfer books of the Shares shall be closed, the certificates for the
Shares shall be issuable as of the date on which such books shall be
opened and until such date the Company shall be under no duty to
deliver any certificate for such Shares; provided, further, however,
that such transfer books, unless otherwise required by law or by
applicable rule of any national securities exchange, shall not be
closed at any one time for a period longer than 20 days. The rights of
purchase represented by the Warrants shall be exercisable, at the
election of the Holders, either as an entirety or from time to time
for part only of the Shares.
5. The Company will pay any documentary stamp taxes attributable to the
initial issuance of the Shares issuable upon the exercise of the
Warrants; provided, however, that the Company shall not be required to
pay any tax or taxes which may be payable in respect of any transfer
involved in the issuance or delivery of any certificates for Shares in
a name other than that of the Holder in respect of which such Shares
are issued, and in such case the Company shall not be required to
issue or deliver any certificate for Shares or any Warrant until the
person requesting the same has paid to the Company the amount of such
tax or has established to the Company's satisfaction that such tax has
been paid.
6. In case the Warrant Certificate shall be mutilated, lost, stolen or
destroyed, the Company may, in its discretion, issue and deliver in
exchange and substitution for and upon cancellation of the mutilated
Warrant Certificate, or in lieu of and substitution for the Warrant
Certificate, lost, stolen or destroyed, a new Warrant Certificate of
like tenor and representing an equivalent right or interest, but only
upon receipt of evidence satisfactory to the Company of such loss,
theft or destruction and an indemnity, if requested, also satisfactory
to it.
<PAGE>
7. The Company warrants that there have been reserved, and covenants that
at all times in the future it shall keep reserved, out of the
authorized and unissued Common Stock, a number of Shares sufficient to
provide for the exercise of the rights or purchase represented by this
Warrant Certificate. The Company agrees that all Shares issuable upon
exercise of the Warrants shall be, at the time of delivery of the
certificates for such Shares, validly issued and outstanding, fully
paid and non-assessable and that the issuance of such Shares will not
give rise to preemptive rights in favor of existing shareholders.
8. As used herein, the term "Exercise Rate" shall mean the number and
kind of shares of capital stock of the Company which the Holder of
this Warrant shall be entitled from time to time to receive for each
$1,000.00 of warrant exercise payment. Unless and until an adjustment
thereof shall be required as hereinafter provided, the Exercise Rate
shall be 62.992 shares of Common Stock.
9. The term "Exercise Price" shall mean the price obtained by dividing
$1,000.00 by the number of shares constituting the Exercise Rate in
effect at the time for such amount.
10. The Exercise Rate in effect any time shall be subject to adjustment as
follows:
A. Whenever the Company shall (i) pay a dividend on Common Stock in
shares of its Common Stock, (ii) subdivide its outstanding shares
of Common Stock, (iii) combine its outstanding shares of Common
Stock into a smaller number of shares, or (iv) issue by
reclassification of its shares of Common Stock (including any
reclassification in connection with a consolidation or merger in
which the Company is the continuing corporation) any shares, the
Exercise Rate in effect at the time of the record date for such
dividend or of the effective date of such subdivision,
combination or reclassification shall be proportionately adjusted
so that the Holder of this Warrant exercising it after such time
shall be entitled to receive the total number and kind of shares
which bear the same proportion to the total issued and
outstanding Common Stock of the Company immediately after such
time as the proportion he would have owned and have been entitled
to receive immediately prior to such time.
B. Whenever the Company shall issue any shares of Common Stock other
than:
(i) shares issued in a transaction described in subparagraph H
of this Paragraph 10; and
(ii) shares issued upon exercise or conversion of securities of
the type referred to in subparagraphs E and F of this
Paragraph 10 or shares issued, subdivided or combined in
transactions described in subparagraph (A) of this Paragraph
10 if and to the extent that the Exercise Rate shall have
been previously adjusted pursuant to the terms of this
subparagraph (B) or subparagraph (A) of this Paragraph 10 as
a result of the issuance, subdivision or combination of such
securities;
at a price per share which is less than the current public market
value of a share of Common Stock, the Exercise Rate in effect
immediately prior to such issuance shall be adjusted by
multiplying such Exercise Rate by a fraction, the numerator of
which shall be the number of shares of Common Stock outstanding
immediately prior to such issuance plus the number of additional
shares of Common Stock so issued, and the denominator of which
shall be the number of Shares of Common Stock outstanding
immediately prior to such issuance plus the number of shares of
Common Stock which the fair value of the consideration received
by the Company for the total number of additional shares so
issued would purchase at a price equal to the current public
market value.
<PAGE>
C. Whenever the Company shall pay a dividend or make a distribution
(other than in a transaction which results in an equivalent
adjustment pursuant to other subparagraphs of this Paragraph 10)
generally to holders of its Common Stock or evidences of its
indebtedness or assets (excluding dividends paid in, or
distributions of cash to the extent of current income or earned
surplus of the Company), or securities of the Company, or rights
to subscribe for or purchase securities of the Company, the
Exercise Rate in effect immediately prior to such distribution
shall be adjusted by multiplying such Exercise Rate by a
fraction, the numerator of which shall be the then current public
market value, if any, per share of the Common Stock receiving
such dividend or distribution or, if there shall be no such
current public market value, then the book value per share as of
the close of the month preceding such distribution, and the
denominator of which shall be the numerator less the fair market
value of the portion of the assets, or the evidences of
indebtedness or rights, so distributed which is applicable to
each such share; provided, however, if as a result of such
adjustment the Exercise Price would be a -------- -------
negative figure, such adjustment shall be modified so that the
Exercise Price after such adjustment is $.01 per share.
D. Whenever the Company shall issue by reclassification of its
shares of Common Stock any shares of stock, the Exercise Rate in
effect immediately prior to such issuance shall be
proportionately adjusted so that the Holder of this Warrant
exercising it after such time shall be entitled to receive, the
number and kind of shares which, when added to the number of
shares of such kind exercisable hereunder prior to such issue,
would entitle the Holder hereof, upon the exercise hereof in
full, to purchase an amount of shares of such kind which bears
the same proportion to the total issued and outstanding capital
stock of the Company as the proportion he would have owned and
have been entitled to receive immediately prior to such issue. In
the event that at any time, as a result of an adjustment made
pursuant to this paragraph 10, the Holder of this Warrant shall
become entitled upon exercise thereof to receive any shares of
the Company other than shares of its Common Stock, then
thereafter the number of such other shares so receivable upon
exercise of this Warrant shall be subject to adjustment from time
to time in a manner and on terms as nearly equivalent as
practicable to the provisions contained in this Paragraph 10 in
the respect of the Common Stock.
E. For purposes of the adjustments provided for in the foregoing
subparagraphs of this Paragraph 10, if at any time, the Company
shall issue any rights or options for the purchase of, or stock
or other securities convertible into Common Stock, (such
convertible stock or securities being herein referred to as
"Convertible Securities") the Company shall be deemed to have
issued at the time of the issuance of such rights or options or
Convertible Securities the maximum number of shares of Common
Stock issuable upon exercise or conversion thereof and to have
received as consideration for the issuance of such shares an
amount equal to the amount of cash and fair value of other
consideration, if any, received by the Company for the issuance
of such rights or options or Convertible Securities, plus, in the
case of such options or rights, the minimum amounts of cash and
fair value of other consideration, if any, payable to the Company
upon the exercise of such options or rights and, in the case of
Convertible Securities, the minimum amounts of cash and fair
value of other consideration, if any, payable, to the Company.
F. For purposes of the adjustment provided for in subparagraph B
above, if at any time the Company shall issue any rights or
options for the purchase of Convertible Securities, the Company
shall be deemed to have issued at the time of the issuance of
such rights or options the maximum number of shares of Common
Stock issuable upon conversion of the total amount of Convertible
Securities covered by such rights or options and to have received
as consideration for the issuance of such shares an amount equal
to the amount of cash and the amount of fair value of other
consideration, if any, received by the Company for the issuance
of such rights or options, plus the minimum amounts of cash and
fair value of other consideration, if any, payable to the Company
upon the exercise of such rights or options and payable to the
Company on conversion of such Convertible Securities.
<PAGE>
G. Anything in subparagraph E or F above to the contrary
notwithstanding, whenever the Company shall issue any shares
(other than on exercise of this Warrant) upon exercise of any
rights or options or upon conversion of any Convertible
Securities and if the Exercise Rate shall not previously have
been adjusted upon the issuance of such rights, options or
Convertible Securities, the computation described in subparagraph
B above shall be made and the Exercise Rate adjusted in
accordance with the provisions thereof (the shares so issued
being deemed for purposes of such computation to have been issued
at a price per share equal to the amount of cash and fair value
of other consideration, if any, properly attributable to one such
share received by the Company upon issuance and exercise of such
rights or options or sale and conversion of such Convertible
Securities (and upon issuance of any rights or options pursuant
to which such Convertible Securities may have been sold).
H. Anything in this Paragraph 10 to the contrary notwithstanding, no
adjustment in the Exercise Rate or Exercise Price shall be made
in connection with:
(i) Convertible Securities issued pursuant to the Company's
qualified or non-qualified Employee Stock Option Plans or
any other bona fide employee benefit plan or incentive
arrangement, adopted or approved by the Company's Board of
Directors or shares of Common Stock issued pursuant to the
exercise of any rights or options granted pursuant to said
plans or arrangements (but only to the extent that the
aggregate number of shares excluded by the Clause (i) and
issued after the date hereof shall not exceed 15% of the
Company's Common Stock outstanding at the time of any such
issuance); and
(ii) The issuance of any shares of Common Stock pursuant to the
exercise of Convertible Securities outstanding as of the
date hereof including without limitation, the conversion of
any Warrant issued in the same placement of securities
pursuant to which this Warrant was issued by the Company.
I. For purposes of this Paragraph 10, the current public market
value of a share of Common Stock on any date shall be deemed to
be the arithmetical average of the following prices for such of
the thirty (30) business days immediately preceding such day as
shall be available: (i) for any of the such days on which the
Common Stock shall be listed on a national securities exchange,
the last sale price on such day or, if there shall have been no
sale on such day, the average of the closing bid and asked prices
on such exchange on such day, or (ii) for any of such days on
which the Common Stock shall not be listed on a national
securities exchange but shall be included in the National
Association of Securities Dealers Automated Quotation System
("NASDAQ"), the average of the closing bid and asked prices on
such day quoted by brokers and dealers making a market in NASDAQ,
furnished by any member of the New York Stock Exchange selected
by the Company for that purpose, or (iii) for any of such days on
which the Common Stock shall not be so listed on a national
securities exchange or included in NASDAQ but shall be quoted by
three brokers regularly making a market in such shares in the
over-the-counter market, the average of the closing bid and asked
prices on such day, furnished by any member of the New York Stock
Exchange selected by the Company for that purpose, or (iv) for
any days on which the information described in items (i), (ii) or
(iii) above is unavailable, the book value per share of the
Common Stock as determined in accordance with generally accepted
accounting principles; provided, however, in its discretion the
Board may make an appropriate reduction in the "current public
market value" based upon any applicable trading restrictions to
particular shares of Common Stock.
<PAGE>
J. Anything in this Paragraph 10 to the contrary notwithstanding, no
adjustment in the Exercise Rate shall be required unless such
adjustment would require an increase or decrease of at least 1%
in such rate; provided, however, that any adjustments which by
reason of this subparagraph J are not required to be made shall
be carried forward and taken into account in making subsequent
adjustments. All calculations under the Paragraph 10 shall be
made to the nearest cent or to the nearest one-hundredth of a
share, as the case may be.
K. No adjustment in the Exercise Rate shall be made for purposes of
subparagraphs B and C of this Paragraph 10 if such adjustment
would result in an increase in such Exercise Price or decrease in
the Exercise Rate except that, in the case of any Convertible
Securities in respect of which an adjustment has previously been
made under subparagraph B above and which has expired or
otherwise been canceled without exercise of the rights or options
evidenced thereby, such previous adjustment shall be reversed.
L. Before taking any action which could cause an adjustment pursuant
to this Paragraph 10 reducing the Exercise Price per share below
the then par value (if any) of the shares covered hereby, the
Company will take any corporate action which may be necessary in
order that the Company may validly and legally issue at the
Exercise Price as so adjusted shares that are fully paid and
non-assessable.
M. The number of shares of capital stock of the Company outstanding
at any given time shall not include shares owned or held by or
for the account of the Company, and the disposition of any such
shares shall be considered an issue or sale of such shares for
the purposes of this Paragraph 10.
N. If any event occurs as to which the other provisions of this
Paragraph 10 are not strictly applicable but the lack of any
adjustment would not fairly protect the purchase rights of the
Holder of this Warrant in accordance with the basic intent and
principles of such provisions, or if strictly applicable would
not fairly protect the purchase rights of the Holder of this
Warrant in accordance with the basic intent and principles of
such provisions, then the Company shall appoint a firm of
independent certified public accountants (which shall not be the
regular auditors of the Company) of recognized national standing,
which shall give their opinion upon the adjustment, if any, on a
basis consistent with the basic intent and principles established
in the other provisions of this Paragraph 10, necessary to
preserve, without dilution, the exercise rights of the registered
Holder of this Warrant. Upon receipt of such opinion, the Company
shall forthwith make the adjustments described therein. In taking
any action or making any determination pursuant to the provisions
of this Section 10, the Company and its Board of Directors shall,
at all times, exercise reasonable judgment and act in good faith.
O. Upon any adjustment of any Exercise Rate, then and in each such
case, the Company shall promptly deliver a notice to the
registered Holder of this Warrant, which notice shall state the
Exercise Price and Exercise Rate resulting from such adjustment
and the increase or decrease, if any, in the number of shares
purchasable at such price upon the exercise hereof, setting forth
in reasonable detail the method of calculation and the facts upon
which such calculation is based.
<PAGE>
P. In the case of the issuance of shares of Common Stock or
Convertible Securities for a consideration in whole or in part,
other than cash, the consideration other than cash shall be
deemed to be the fair market value thereof as reasonably
determined in good faith by the Board of Directors of the Company
(regardless of accounting treatment thereof); provided, however,
that if such consideration consists of the cancellation of debt
issued by the Company the consideration shall be deemed to be the
amount the Company received upon issuance of such debt (gross
proceeds) plus accrued interest and, in the case of original
issue discount or zero coupon indebtedness, accreted value to the
date of such cancellation, but not including any premium or
discount at which the debt may then be trading or which might
otherwise be appropriate for such class of debt;
Q. The Company shall not issue any shares of its capital stock
(other than Common Stock) at or for consideration which is less
than fair value determined by the Board of Directors of the
Company in light of all circumstances surrounding such issuance.
11. In the case:
A. The Company shall declare any dividend or distribution on its
Common Stock (or on any other shares which the Holder of this
Warrant may become entitled to receive upon exercise hereof); or
B. The Company shall authorize the issuance to holders of its Common
Stock (or on any other shares which the Holder of this Warrant
may become entitled to receive upon exercise hereof) any
subscription rights or warrants; or
C. Of any subdivision, combination or reclassification of shares of
Common Stock of the Company (or any shares of the Company which
are subject to this Warrant), or of any proposed consolidation or
merger to which the Company is to be a party and for which the
approval of any shareholders of the Company is required, or of
the proposed sale or transfer of all or substantially all of the
assets of the Company; or
D. Of the proposed voluntary or involuntary dissolution,
liquidation, or winding up of the Company; or
E. The Company proposes to effect any transaction not specified
above which would require an adjustment of the Exercise Rate
pursuant to Paragraph 10 hereof;
then the Company shall cause to be mailed to Holders of this Warrant,
at least ten (10) days prior to the applicable record or other date
hereinafter specified, a notice describing such transaction in
reasonable detail, specifying the character, amount and terms of all
securities and the amounts of cash and other property, if any,
involved in such transaction and stating (i) the date as of which the
holders of Common Stock (or any such other shares) of record to be
entitled to receive any such dividend, distribution, rights, or
warrants is to be determined, or (ii) the date of which any such
subdivision, combination, reclassification, consolidation, merger,
sale, transfer, dissolution, liquidation, winding up, or other
transaction is expected to become effective, and the date as of which
it is expected that holders of Common Stock (or any such other shares)
of record shall be entitled to exchange the same for securities or
other property, if any, deliverable upon such transaction.
<PAGE>
12. The Company covenants and agrees that it will not merge or consolidate
with or into or sell or otherwise transfer all or substantially all of
its assets to any other corporation or entity unless at the time of or
prior to such transaction such other corporation or other entity shall
expressly assume all of the liabilities and obligations of the Company
under this Warrant and (without limiting the generality of the
foregoing) shall expressly agree that the Holder of this Warrant shall
thereafter have the right (subject to subsequent adjustment as nearly
equivalent as practicable to the adjustments provided for in Paragraph
10 of this Warrant) to receive upon the exercise of this Warrant the
number and kind of shares of stock and other securities and property
receivable upon such transaction by a Holder of the number and kind of
shares which would have been receivable upon the exercise of this
Warrant immediately prior to such transactions.
13. The Holder of this Warrant Certificate, each transferee hereof and any
holder and transferee of any Shares, by his acceptance thereof, agrees
that (i) no public distribution of Warrants or shares will be made in
violation of the Act, and (ii) during such period as the delivery of a
prospectus with respect to Warrants or Shares may be required by the
Act, no public distribution of Warrants or Shares will be made in a
manner or on terms different from those set forth in, or without
delivery of, a prospectus then meeting the requirements of Section 10
of the Act and in compliance with all applicable state securities
laws. The Holder of this Warrant Certificate and each transferee
hereof further agrees that if any distribution of any of the Warrants
or Shares is proposed to be made by them otherwise than by delivery of
a prospectus meeting the requirements of Section 10 of the Act, such
action shall be taken only after submission to the Company of an
opinion of counsel, reasonably satisfactory in form and substance to
the Company's counsel, to the effect that the proposed distribution
will not be in violation of the Act or of applicable state law.
Furthermore, it shall be a condition to the transfer of the Warrants
that any transferee thereof deliver to the Company his written
agreement to accept and be bound by all of the terms and conditions
contained in this Warrant Certificate.
14. This Warrant Certificate shall be exercisable only during the
continuance of the Holder's employment at the Company or its
subsidiaries, except that:
A. If the Holder ceases to be an employee at the Company (or a
subsidiary of the Company) for any reason other than by death or
disability, this Warrant Certificate may be exercised by Holder,
to the extent that it was exercisable at the date of termination,
at any time within three months after the date Holder ceases to
be an employee, but not later than 4/23/08 except that, in case
of his death or disability within that three-month period, this
Warrant Certificate may be exercised as provided in subparagraph
(b) below.
B. If the Holder dies or becomes disabled during employment or
within the three-month period referred to in subparagraph (a)
above, this Warrant Certificate may be exercised, to the extent
that it was exercisable by the Holder at the date of:
(i) death, by the person or persons to whom Holder's rights
under this Warrant Certificate pass by will or by the laws
of descent and distribution or
(ii) disability, by the Holder's legal representative,
at any time within one year after the date of Holder's death or
disability, but not later than 4/23/08.
The determination by the Company's Board of Directors of the reason
for termination of the Holder's employment shall be binding and
conclusive on the Holder.
<PAGE>
15. Except only as specifically provided elsewhere in this Warrant
Certificate, the Warrants shall not be exercisable prior to the dates
set forth below except in the amount set forth below:
A. After 4/23/99 and prior to 4/23/00, up to a total of one-third of
the total Warrants represented hereby may be exercised.
B. After 4/23/00 and prior to 4/23/01, up to a total of two-thirds
of the total Warrants represented hereby may be exercised
(including the Warrants previously exercisable hereunder).
C. After 4/23/01, all of the total Warrants represented hereby may
be exercised.
WITNESS the following signatures as of April 23, 1998.
SEITEL, INC.
By: /s/ Paul A. Frame
------------------------
Paul A. Frame
Chief Executive Officer
Accepted:
/s/ Russell Hoffman
--------------------------------
Russell Hoffman
NEITHER THIS WARRANT NOR THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF
THIS WARRANT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AND NEITHER
THIS WARRANT NOR THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF THIS
WARRANT MAY BE SOLD, TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF
IN WHOLE OR IN PART IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER
SUCH ACT OR AN OPINION OF COUNSEL IN FORM AND SUBSTANCE REASONABLY SATISFACTORY
TO COUNSEL OF SEITEL, INC., THAT AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT
OR THE RULES AND REGULATIONS THEREUNDER IS AVAILABLE WITH RESPECT TO THE
PROPOSED SALE, TRANSFER, PLEDGE, HYPOTHECATION OR OTHER DISPOSITION.
SEITEL, INC.
COMMON STOCK PURCHASE
WARRANT CERTIFICATE
TO PURCHASE 150,000
SHARES OF COMMON STOCK
VOID AFTER 5:00 P.M., HOUSTON, TEXAS
LOCAL TIME ON 4/23/08
Certificate No. EMPW-002
This Warrant Certificate certifies that Russell Hoffman is the registered
holder ("Holder") of 150,000 Common Stock Purchase Warrants (the "Warrants") to
purchase shares of the $.01 par value common stock, ("Common Stock") of SEITEL,
INC., a Delaware corporation (the "Company"). Subject to Section 15 hereof, each
Warrant enables the Holder to purchase from the Company at any time, on and
after 4/23/98 and until 5:00 p.m., Houston, Texas, local time on 4/23/08, one
fully paid and non-assessable share of Common Stock ("Share") upon presentation
and surrender of this Warrant Certificate and upon payment of the purchase
price. Payment shall be made in lawful money of the United States of America by
certified check payable to the Company at its principal office at 50 Briar
Hollow Lane, West, 7th Floor, Houston, Texas, 77027. As hereinafter provided,
the purchase price and number of Shares purchasable upon the exercise of the
Warrants are subject to modification or adjustment upon the happening of certain
events.
FOR ALL OTHER PURPOSES STATED HEREIN, THE COMPANY MAY DEEM AND TREAT THE
PERSON IN WHOSE NAME THIS WARRANT CERTIFICATE IS REGISTERED AS THE ABSOLUTE TRUE
AND LAWFUL OWNER HEREOF FOR ALL PURPOSES WHATSOEVER.
1. Upon surrender to the Company, this Warrant Certificate may be
exchanged for another Warrant Certificate or Warrant Certificates
evidencing a like aggregate number of Warrants. If this Warrant
Certificate shall be exercised in part, the Holder shall be entitled
to receive upon surrender hereof another Warrant Certificate or
Warrant Certificates evidencing the number of Warrants not exercised.
2. No Holder shall be deemed to be the holder of Common Stock or any
other securities of the Company that may at any time be issuable on
the exercise hereof for any purpose nor shall anything contained
herein be construed to confer upon the Holder any of the rights of a
shareholder of the Company or any right to vote for the election of
directors or upon any matter submitted to shareholders at any meeting
thereof or to give or withhold consent to any corporate action
(whether upon any reorganization, issuance of stock, reclassification
or conversion of stock, change of par value, consolidation, merger,
conveyance, or otherwise) or to receive notice of meetings or to
receive dividends or subscription rights or otherwise until a Warrant
shall have been exercised and the Common Stock purchasable upon the
exercise thereof shall have become issuable.
3. Each Holder consents and agrees with the Company and any other Holder
that:
A. this Warrant Certificate is exercisable in whole or in part by
the Holder in person or by attorney duly authorized in writing at
the principal office of the Company.
B. anything herein to the contrary notwithstanding, in no event
shall the Company be obligated to issue Warrant Certificates
evidencing other than a whole number of Warrants or issue
certificates evidencing other than a whole number of Shares upon
the exercise of this Warrant Certificate; provided, however, that
the Company shall pay with respect to any such fraction of a
Share an amount of cash based upon the current public market
value (or book value, if there shall be no public market value)
for Shares purchasable upon exercise hereof, as determined in
accordance with subparagraph I of Section 10 hereof; and
C. the Company may deem and treat the person in whose name this
Warrant Certificate is registered as the absolute true and lawful
owner hereof for all purposes whatsoever.
<PAGE>
4. The Company shall maintain books for the transfer and registration of
Warrants. Upon the transfer of any Warrants, the Company shall issue
and register the Warrants in the names of the new Holders. The
Warrants shall be signed manually by the Chairman, Chief Executive
Officer, President or any Vice President and the Secretary (or
Assistant Secretary) of the Company. The Company shall transfer, from
time to time, any outstanding Warrants upon the books to be maintained
by the Company for such purpose upon surrender thereof for transfer
properly endorsed or accompanied by appropriate instructions for
transfer. Upon any transfer, a new Warrant Certificate shall be issued
to the transferee and the surrendered Warrants shall be canceled by
the Company. Warrants may be exchanged at the option of the Holder,
when surrendered at the office of the Company, for another Warrant, or
other Warrants of different denominations, of like tenor and
representing in the aggregate the right to purchase a like number of
Shares. Subject to the terms of this Warrant Certificate, upon such
surrender and payment of the purchase price, the Company shall issue
and deliver with all reasonable dispatch to or upon the written order
of the Holder of such Warrants and in such name or names as such
Holder may designate, a certificate or certificates for the number of
full Shares so purchased upon the exercise of such Warrants. Such
certificate or certificates shall be deemed to have been issued and
any person so designated to be named therein shall be deemed to have
become the holder of record of such Shares as of the date of the
surrender of such Warrants and payment of the purchase price;
provided, however, that if, at the date of surrender and payment, the
transfer books of the Shares shall be closed, the certificates for the
Shares shall be issuable as of the date on which such books shall be
opened and until such date the Company shall be under no duty to
deliver any certificate for such Shares; provided, further, however,
that such transfer books, unless otherwise required by law or by
applicable rule of any national securities exchange, shall not be
closed at any one time for a period longer than 20 days. The rights of
purchase represented by the Warrants shall be exercisable, at the
election of the Holders, either as an entirety or from time to time
for part only of the Shares.
5. The Company will pay any documentary stamp taxes attributable to the
initial issuance of the Shares issuable upon the exercise of the
Warrants; provided, however, that the Company shall not be required to
pay any tax or taxes which may be payable in respect of any transfer
involved in the issuance or delivery of any certificates for Shares in
a name other than that of the Holder in respect of which such Shares
are issued, and in such case the Company shall not be required to
issue or deliver any certificate for Shares or any Warrant until the
person requesting the same has paid to the Company the amount of such
tax or has established to the Company's satisfaction that such tax has
been paid.
<PAGE>
6. In case the Warrant Certificate shall be mutilated, lost, stolen or
destroyed, the Company may, in its discretion, issue and deliver in
exchange and substitution for and upon cancellation of the mutilated
Warrant Certificate, or in lieu of and substitution for the Warrant
Certificate, lost, stolen or destroyed, a new Warrant Certificate of
like tenor and representing an equivalent right or interest, but only
upon receipt of evidence satisfactory to the Company of such loss,
theft or destruction and an indemnity, if requested, also satisfactory
to it.
7. The Company warrants that there have been reserved, and covenants that
at all times in the future it shall keep reserved, out of the
authorized and unissued Common Stock, a number of Shares sufficient to
provide for the exercise of the rights or purchase represented by this
Warrant Certificate. The Company agrees that all Shares issuable upon
exercise of the Warrants shall be, at the time of delivery of the
certificates for such Shares, validly issued and outstanding, fully
paid and non-assessable and that the issuance of such Shares will not
give rise to preemptive rights in favor of existing shareholders.
8. As used herein, the term "Exercise Rate" shall mean the number and
kind of shares of capital stock of the Company which the Holder of
this Warrant shall be entitled from time to time to receive for each
$1,000.00 of warrant exercise payment. Unless and until an adjustment
thereof shall be required as hereinafter provided, the Exercise Rate
shall be determined in accordance with Section 15 hereof.
9. The term "Exercise Price" shall mean the price obtained by dividing
$1,000.00 by the number of shares constituting the Exercise Rate in
effect at the time for such amount.
10. The Exercise Rate in effect any time shall be subject to adjustment as
follows:
A. Whenever the Company shall (i) pay a dividend on Common Stock in
shares of its Common Stock, (ii) subdivide its outstanding shares
of Common Stock, (iii) combine its outstanding shares of Common
Stock into a smaller number of shares, or (iv) issue by
reclassification of its shares of Common Stock (including any
reclassification in connection with a consolidation or merger in
which the Company is the continuing corporation) any shares, the
Exercise Rate in effect at the time of the record date for such
dividend or of the effective date of such subdivision,
combination or reclassification shall be proportionately adjusted
so that the Holder of this Warrant exercising it after such time
shall be entitled to receive the total number and kind of shares
which bear the same proportion to the total issued and
outstanding Common Stock of the Company immediately after such
time as the proportion he would have owned and have been entitled
to receive immediately prior to such time.
B. Whenever the Company shall issue any shares of Common Stock other
than:
(i) shares issued in a transaction described in subparagraph H
of this Paragraph 10; and
(ii) shares issued upon exercise or conversion of securities of
the type referred to in subparagraphs E and F of this
Paragraph 10 or shares issued, subdivided or combined in
transactions described in subparagraph (A) of this Paragraph
10 if and to the extent that the Exercise Rate shall have
been previously adjusted pursuant to the terms of this
subparagraph (B) or subparagraph (A) of this Paragraph 10 as
a result of the issuance, subdivision or combination of such
securities;
at a price per share which is less than the current public market
value of a share of Common Stock, the Exercise Rate in effect
immediately prior to such issuance shall be adjusted by
multiplying such Exercise Rate by a fraction, the numerator of
which shall be the number of shares of Common Stock outstanding
immediately prior to such issuance plus the number of additional
shares of Common Stock so issued, and the denominator of which
shall be the number of Shares of Common Stock outstanding
immediately prior to such issuance plus the number of shares of
Common Stock which the fair value of the consideration received
by the Company for the total number of additional shares so
issued would purchase at a price equal to the current public
market value.
<PAGE>
C. Whenever the Company shall pay a dividend or make a distribution
(other than in a transaction which results in an equivalent
adjustment pursuant to other subparagraphs of this Paragraph 10)
generally to holders of its Common Stock or evidences of its
indebtedness or assets (excluding dividends paid in, or
distributions of cash to the extent of current income or earned
surplus of the Company), or securities of the Company, or rights
to subscribe for or purchase securities of the Company, the
Exercise Rate in effect immediately prior to such distribution
shall be adjusted by multiplying such Exercise Rate by a
fraction, the numerator of which shall be the then current public
market value, if any, per share of the Common Stock receiving
such dividend or distribution or, if there shall be no such
current public market value, then the book value per share as of
the close of the month preceding such distribution, and the
denominator of which shall be the numerator less the fair market
value of the portion of the assets, or the evidences of
indebtedness or rights, so distributed which is applicable to
each such share; provided, however, if as a result of such
adjustment the Exercise Price would be a negative figure, such
adjustment shall be modified so that the Exercise Price after
such adjustment is $.01 per share.
D. Whenever the Company shall issue by reclassification of its
shares of Common Stock any shares of stock, the Exercise Rate in
effect immediately prior to such issuance shall be
proportionately adjusted so that the Holder of this Warrant
exercising it after such time shall be entitled to receive, the
number and kind of shares which, when added to the number of
shares of such kind exercisable hereunder prior to such issue,
would entitle the Holder hereof, upon the exercise hereof in
full, to purchase an amount of shares of such kind which bears
the same proportion to the total issued and outstanding capital
stock of the Company as the proportion he would have owned and
have been entitled to receive immediately prior to such issue. In
the event that at any time, as a result of an adjustment made
pursuant to this paragraph 10, the Holder of this Warrant shall
become entitled upon exercise thereof to receive any shares of
the Company other than shares of its Common Stock, then
thereafter the number of such other shares so receivable upon
exercise of this Warrant shall be subject to adjustment from time
to time in a manner and on terms as nearly equivalent as
practicable to the provisions contained in this Paragraph 10 in
the respect of the Common Stock.
E. For purposes of the adjustments provided for in the foregoing
subparagraphs of this Paragraph 10, if at any time, the Company
shall issue any rights or options for the purchase of, or stock
or other securities convertible into Common Stock, (such
convertible stock or securities being herein referred to as
"Convertible Securities") the Company shall be deemed to have
issued at the time of the issuance of such rights or options or
Convertible Securities the maximum number of shares of Common
Stock issuable upon exercise or conversion thereof and to have
received as consideration for the issuance of such shares an
amount equal to the amount of cash and fair value of other
consideration, if any, received by the Company for the issuance
of such rights or options or Convertible Securities, plus, in the
case of such options or rights, the minimum amounts of cash and
fair value of other consideration, if any, payable to the Company
upon the exercise of such options or rights and, in the case of
Convertible Securities, the minimum amounts of cash and fair
value of other consideration, if any, payable, to the Company.
<PAGE>
F. For purposes of the adjustment provided for in subparagraph B
above, if at any time the Company shall issue any rights or
options for the purchase of Convertible Securities, the Company
shall be deemed to have issued at the time of the issuance of
such rights or options the maximum number of shares of Common
Stock issuable upon conversion of the total amount of Convertible
Securities covered by such rights or options and to have received
as consideration for the issuance of such shares an amount equal
to the amount of cash and the amount of fair value of other
consideration, if any, received by the Company for the issuance
of such rights or options, plus the minimum amounts of cash and
fair value of other consideration, if any, payable to the Company
upon the exercise of such rights or options and payable to the
Company on conversion of such Convertible Securities.
G. Anything in subparagraph E or F above to the contrary
notwithstanding, whenever the Company shall issue any shares
(other than on exercise of this Warrant) upon exercise of any
rights or options or upon conversion of any Convertible
Securities and if the Exercise Rate shall not previously have
been adjusted upon the issuance of such rights, options or
Convertible Securities, the computation described in subparagraph
B above shall be made and the Exercise Rate adjusted in
accordance with the provisions thereof (the shares so issued
being deemed for purposes of such computation to have been issued
at a price per share equal to the amount of cash and fair value
of other consideration, if any, properly attributable to one such
share received by the Company upon issuance and exercise of such
rights or options or sale and conversion of such Convertible
Securities (and upon issuance of any rights or options pursuant
to which such Convertible Securities may have been sold).
H. Anything in this Paragraph 10 to the contrary notwithstanding, no
adjustment in the Exercise Rate or Exercise Price shall be made
in connection with:
(i) Convertible Securities issued pursuant to the Company's
qualified or non-qualified Employee Stock Option Plans or
any other bona fide employee benefit plan or incentive
arrangement, adopted or approved by the Company's Board of
Directors or shares of Common Stock issued pursuant to the
exercise of any rights or options granted pursuant to said
plans or arrangements (but only to the extent that the
aggregate number of shares excluded by the Clause (i) and
issued after the date hereof shall not exceed 15% of the
Company's Common Stock outstanding at the time of any such
issuance); and
(ii) The issuance of any shares of Common Stock pursuant to the
exercise of Convertible Securities outstanding as of the
date hereof including without limitation, the conversion of
any Warrant issued in the same placement of securities
pursuant to which this Warrant was issued by the Company.
I. For purposes of this Paragraph 10, the current public market
value of a share of Common Stock on any date shall be deemed to
be the arithmetical average of the following prices for such of
the thirty (30) business days immediately preceding such day as
shall be available: (i) for any of the such days on which the
Common Stock shall be listed on a national securities exchange,
the last sale price on such day or, if there shall have been no
sale on such day, the average of the closing bid and asked prices
on such exchange on such day, or (ii) for any of such days on
which the Common Stock shall not be listed on a national
securities exchange but shall be included in the National
Association of Securities Dealers Automated Quotation System
("NASDAQ"), the average of the closing bid and asked prices on
such day quoted by brokers and dealers making a market in NASDAQ,
<PAGE>
furnished by any member of the New York Stock Exchange selected
by the Company for that purpose, or (iii) for any of such days on
which the Common Stock shall not be so listed on a national
securities exchange or included in NASDAQ but shall be quoted by
three brokers regularly making a market in such shares in the
over-the-counter market, the average of the closing bid and asked
prices on such day, furnished by any member of the New York Stock
Exchange selected by the Company for that purpose, or (iv) for
any days on which the information described in items (i), (ii) or
(iii) above is unavailable, the book value per share of the
Common Stock as determined in accordance with generally accepted
accounting principles; provided, however, in its discretion the
Board may make an appropriate reduction in the "current public
market value" based upon any applicable trading restrictions to
particular shares of Common Stock.
J. Anything in this Paragraph 10 to the contrary notwithstanding, no
adjustment in the Exercise Rate shall be required unless such
adjustment would require an increase or decrease of at least 1%
in such rate; provided, however, that any adjustments which by
reason of this subparagraph J are not required to be made shall
be carried forward and taken into account in making subsequent
adjustments. All calculations under the Paragraph 10 shall be
made to the nearest cent or to the nearest one-hundredth of a
share, as the case may be.
K. No adjustment in the Exercise Rate shall be made for purposes of
subparagraphs B and C of this Paragraph 10 if such adjustment
would result in an increase in such Exercise Price or decrease in
the Exercise Rate except that, in the case of any Convertible
Securities in respect of which an adjustment has previously been
made under subparagraph B above and which has expired or
otherwise been canceled without exercise of the rights or options
evidenced thereby, such previous adjustment shall be reversed.
L. Before taking any action which could cause an adjustment pursuant
to this Paragraph 10 reducing the Exercise Price per share below
the then par value (if any) of the shares covered hereby, the
Company will take any corporate action which may be necessary in
order that the Company may validly and legally issue at the
Exercise Price as so adjusted shares that are fully paid and
non-assessable.
M. The number of shares of capital stock of the Company outstanding
at any given time shall not include shares owned or held by or
for the account of the Company, and the disposition of any such
shares shall be considered an issue or sale of such shares for
the purposes of this Paragraph 10.
N. If any event occurs as to which the other provisions of this
Paragraph 10 are not strictly applicable but the lack of any
adjustment would not fairly protect the purchase rights of the
Holder of this Warrant in accordance with the basic intent and
principles of such provisions, or if strictly applicable would
not fairly protect the purchase rights of the Holder of this
Warrant in accordance with the basic intent and principles of
such provisions, then the Company shall appoint a firm of
independent certified public accountants (which shall not be the
regular auditors of the Company) of recognized national standing,
which shall give their opinion upon the adjustment, if any, on a
basis consistent with the basic intent and principles established
in the other provisions of this Paragraph 10, necessary to
preserve, without dilution, the exercise rights of the registered
Holder of this Warrant. Upon receipt of such opinion, the Company
shall forthwith make the adjustments described therein. In taking
any action or making any determination pursuant to the provisions
of this Section 10, the Company and its Board of Directors shall,
at all times, exercise reasonable judgment and act in good faith.
<PAGE>
O. Upon any adjustment of any Exercise Rate, then and in each such
case, the Company shall promptly deliver a notice to the
registered Holder of this Warrant, which notice shall state the
Exercise Price and Exercise Rate resulting from such adjustment
and the increase or decrease, if any, in the number of shares
purchasable at such price upon the exercise hereof, setting forth
in reasonable detail the method of calculation and the facts upon
which such calculation is based.
P. In the case of the issuance of shares of Common Stock or
Convertible Securities for a consideration in whole or in part,
other than cash, the consideration other than cash shall be
deemed to be the fair market value thereof as reasonably
determined in good faith by the Board of Directors of the Company
(regardless of accounting treatment thereof); provided, however,
that if such consideration consists of the cancellation of debt
issued by the Company the consideration shall be deemed to be the
amount the Company received upon issuance of such debt (gross
proceeds) plus accrued interest and, in the case of original
issue discount or zero coupon indebtedness, accreted value to the
date of such cancellation, but not including any premium or
discount at which the debt may then be trading or which might
otherwise be appropriate for such class of debt;
Q. The Company shall not issue any shares of its capital stock
(other than Common Stock) at or for consideration which is less
than fair value determined by the Board of Directors of the
Company in light of all circumstances surrounding such issuance.
11. In the case:
A. The Company shall declare any dividend or distribution on its
Common Stock (or on any other shares which the Holder of this
Warrant may become entitled to receive upon exercise hereof); or
B. The Company shall authorize the issuance to holders of its Common
Stock (or on any other shares which the Holder of this Warrant
may become entitled to receive upon exercise hereof) any
subscription rights or warrants; or
C. Of any subdivision, combination or reclassification of shares of
Common Stock of the Company (or any shares of the Company which
are subject to this Warrant), or of any proposed consolidation or
merger to which the Company is to be a party and for which the
approval of any shareholders of the Company is required, or of
the proposed sale or transfer of all or substantially all of the
assets of the Company; or
D. Of the proposed voluntary or involuntary dissolution,
liquidation, or winding up of the Company; or
E. The Company proposes to effect any transaction not specified
above which would require an adjustment of the Exercise Rate
pursuant to Paragraph 10 hereof;
then the Company shall cause to be mailed to Holders of this Warrant,
at least ten (10) days prior to the applicable record or other date
hereinafter specified, a notice describing such transaction in
reasonable detail, specifying the character, amount and terms of all
securities and the amounts of cash and other property, if any,
involved in such transaction and stating (i) the date as of which the
holders of Common Stock (or any such other shares) of record to be
entitled to receive any such dividend, distribution, rights, or
warrants is to be determined, or (ii) the date of which any such
subdivision, combination, reclassification, consolidation, merger,
sale, transfer, dissolution, liquidation, winding up, or other
transaction is expected to become effective, and the date as of which
it is expected that holders of Common Stock (or any such other shares)
of record shall be entitled to exchange the same for securities or
other property, if any, deliverable upon such transaction.
<PAGE>
12. The Company covenants and agrees that it will not merge or consolidate
with or into or sell or otherwise transfer all or substantially all of
its assets to any other corporation or entity unless at the time of or
prior to such transaction such other corporation or other entity shall
expressly assume all of the liabilities and obligations of the Company
under this Warrant and (without limiting the generality of the
foregoing) shall expressly agree that the Holder of this Warrant shall
thereafter have the right (subject to subsequent adjustment as nearly
equivalent as practicable to the adjustments provided for in Paragraph
10 of this Warrant) to receive upon the exercise of this Warrant the
number and kind of shares of stock and other securities and property
receivable upon such transaction by a Holder of the number and kind of
shares which would have been receivable upon the exercise of this
Warrant immediately prior to such transactions.
13. The Holder of this Warrant Certificate, each transferee hereof and any
holder and transferee of any Shares, by his acceptance thereof, agrees
that (i) no public distribution of Warrants or shares will be made in
violation of the Act, and (ii) during such period as the delivery of a
prospectus with respect to Warrants or Shares may be required by the
Act, no public distribution of Warrants or Shares will be made in a
manner or on terms different from those set forth in, or without
delivery of, a prospectus then meeting the requirements of Section 10
of the Act and in compliance with all applicable state securities
laws. The Holder of this Warrant Certificate and each transferee
hereof further agrees that if any distribution of any of the Warrants
or Shares is proposed to be made by them otherwise than by delivery of
a prospectus meeting the requirements of Section 10 of the Act, such
action shall be taken only after submission to the Company of an
opinion of counsel, reasonably satisfactory in form and substance to
the Company's counsel, to the effect that the proposed distribution
will not be in violation of the Act or of applicable state law.
Furthermore, it shall be a condition to the transfer of the Warrants
that any transferee thereof deliver to the Company his written
agreement to accept and be bound by all of the terms and conditions
contained in this Warrant Certificate.
14. This Warrant Certificate shall be exercisable only during the
continuance of the Holder's employment at the Company or its
subsidiaries, except that:
A. If the Holder ceases to be an employee at the Company (or a
subsidiary of the Company) for any reason other than by death or
disability, this Warrant Certificate may be exercised by Holder,
to the extent that it was exercisable at the date of termination,
at any time within three months after the date Holder ceases to
be an employee, but not later than 4/23/08 except that, in case
of his death or disability within that three-month period, this
Warrant Certificate may be exercised as provided in subparagraph
(b) below.
B. If the Holder dies or becomes disabled during employment or
within the three-month period referred to in subparagraph (a)
above, this Warrant Certificate may be exercised, to the extent
that it was exercisable by the Holder at the date of:
(i) death, by the person or persons to whom Holder's rights
under this Warrant Certificate pass by will or by the laws
of descent and distribution or
(ii) disability, by the Holder's legal representative,
at any time within one year after the date of Holder's death or
disability, but not later than 4/23/08.
The determination by the Company's Board of Directors of the reason
for termination of the Holder's employment shall be binding and
conclusive on the Holder.
<PAGE>
15. Except only as specifically provided elsewhere in this Warrant
Certificate, the Warrants shall not be exercisable prior to the dates
set forth below except in the amounts set forth below:
A. 50,000 of the Warrants shall become exercisable upon an increase
in the price to earnings multiple of Seitel, Inc. common stock
(the "p/e multiple") of 5.0 or more over the base multiple of
15.119.
B. An additional 50,000 of the Warrants shall become exercisable
upon an increase in the p/e multiple of 10.0 or more over the
base multiple of 15.119.
C. An additional 50,000 of the Warrants shall become exercisable
upon an increase in the p/e multiple of 15.0 or more over the
base multiple of 15.119.
Such vesting will be effective as of January 2 of the year following
the year to which such multiple increase relates ("Vesting Date").
The purchase price of the vesting Warrants shall equal the closing
price of the Company's Common Stock on the Vesting Date.
At the end of each year, the closing price per share of Seitel, Inc.
common stock for the last ten trading days of each quarter will be
averaged (2nd, 3rd and 4th quarters only for 1998), and that average
price will be divided by the year's earnings per share (diluted)
before any extraordinary items or special items of a non-recurring
nature to determine that year's p/e multiple.
WITNESS the following signatures as of April 23, 1998.
SEITEL, INC.
By: /s/ Paul A. Frame
------------------------
Paul A. Frame
Chief Executive Officer
Accepted:
/s/ Russell Hoffman
--------------------------------
Russell Hoffman
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement of our report dated March 26, 1998,
included in the Seitel, Inc. Annual Report on Form 10-K for the year ended
December 31, 1997, and to all references to our Firm included in this
registration statement.
/s/ Arthur Andersen LLP
Houston, Texas
September 29, 1998
MILLER AND LENTS, LTD.
INTERNATIONAL OIL AND GAS CONSULTANTS
TWENTY-SEVENTH FLOOR
1100 LOUISIANA
HOUSTON, TEXAS 77002-5216
September 29, 1998
Ms. Debra D. Valice
Seitel, Inc.
50 Briar Hollow Lane, 7th Floor West
Houston, TX 77027
Dear Ms. Valice:
The firm of Miller and Lents, Ltd., consents to the use of its name and to the
incorporation by reference of its report dated March 26, 1998, regarding the DDD
Energy, Inc., Proved Reserves and Future Net Revenue, as of January 1, 1998, SEC
Case, in Seitel, Inc.'s Form S-8 Registration Statement.
Miller and Lents, Ltd., has no interest in Seitel, Inc., or DDD Energy, Inc., or
in any affiliated companies or subsidiaries and is not to receive any such
interest as payment for such reports and has no director, officer, or employee
otherwise connected with Seitel, Inc., or DDD Energy, Inc. We are not employed
by Seitel, Inc., on a contingent basis.
Yours very truly,
MILLER AND LENTS, LTD.
By: /s/James A. Cole
----------------------------
James A. Cole
Senior Vice President
FORREST A. GARB & ASSOCIATES, INC.
INTERNATIONAL PETROLEUM CONSULTANTS
5310 HARVEST HILL ROAD, SUITE 160 - LB 152
DALLAS, TEXAS 75230 - 5805
September 29, 1998
CONSENT OF EXPERT
Ms. Debra D. Valice
Seitel, Inc.
50 Briar Hollow Lane
7th Floor West
Houston, TX 77027
Dear Ms. Valice:
Forrest A. Garb & Associates, Inc., petroleum consultants, hereby consent to the
incorporation by reference in any registration statement or other document filed
with the Securities and Exchange Commission by Seitel, Inc., our reserve report
dated January 1, 1998, and to all references to our firm included therein.
Forrest A. Garb & Associates, Inc.
By: /s/Forrest A. Garb
------------------------------------
Name: Forrest A. Garb
----------------------------------
Title: Chairman of the Board
---------------------------------
Dallas, Texas
September 29, 1998
