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- --------------------------------------------------------------------------------
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
- -----
| X | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
- ----- EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1999
------------------
OR
- -----
| | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
- ----- EXCHANGE ACT OF 1934
For the transition period to .
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Commission File Number 0-14488
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SEITEL, INC.
(Exact name of registrant as specified in charter)
DELAWARE 76-0025431
-------- ----------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification Number)
50 Briar Hollow Lane
West Building, 7th Floor
HOUSTON, TEXAS 77027
-------------- -----
(Address of principal (Zip Code)
executive offices)
(713) 881-8900
--------------
(Registrant's telephone number, including area code)
NOT APPLICABLE
--------------
Former name, former address and former fiscal year,
if changed since last report.
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
----- -----
Yes | X | No | |
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As of November 12, 1999 there were 24,285,795 shares of the Company's common
stock, par value $.01 per share, outstanding.
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- --------------------------------------------------------------------------------
<PAGE>
INDEX
PART I. FINANCIAL INFORMATION Page
------
Item 1. Financial Statements
Consolidated Balance Sheets as of
September 30, 1999 (Unaudited) and December 31, 1998.............. 3
Consolidated Statements of Operations (Unaudited) for the
Three Months Ended September 30, 1999 and 1998.................... 4
Consolidated Statements of Operations (Unaudited) for the
Nine Months Ended September 30, 1999 and 1998..................... 5
Consolidated Statements of Stockholders' Equity (Unaudited)
for the Nine Months Ended September 30, 1999...................... 6
Consolidated Statements of Cash Flows (Unaudited) for the
Nine Months Ended September 30, 1999 and 1998..................... 7
Notes to Consolidated Interim Financial Statements (Unaudited).... 9
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations............................... 12
Item 3. Quantitative and Qualitative Disclosures
about Market Risk................................................. 17
PART II. OTHER INFORMATION................................................. 17
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
--------------------
SEITEL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share amounts)
<TABLE>
<CAPTION>
(Unaudited)
September 30, December 31,
1999 1998
--------- ---------
ASSETS
<S> <C> <C>
Cash and equivalents $ 5,386 $ 3,161
Receivables
Trade, net of allowance 54,771 59,244
Notes and other 509 581
Net data bank 323,325 262,950
Net oil and gas properties 148,612 148,977
Net other property and equipment 2,541 2,294
Investment in marketable securities 1,566 -
Investment in affiliate - 15,544
Prepaid expenses, deferred charges and other assets 4,786 3,016
--------- ---------
TOTAL ASSETS $ 541,496 $ 495,767
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable and accrued liabilities $ 42,494 $ 71,555
Income taxes payable 434 1,056
Debt
Senior Notes 203,000 65,000
Line of Credit 19,000 85,500
Term Loans 66 172
Obligations under capital leases 28 18
Contingent payables 274 274
Deferred income taxes 30,125 28,039
Deferred revenue 1,463 6,566
--------- ---------
TOTAL LIABILITIES 296,884 258,180
--------- ---------
CONTINGENCIES AND COMMITMENTS
STOCKHOLDERS' EQUITY
Preferred stock, par value $.01 per share; authorized
5,000,000 shares; none issued - -
Common stock, par value $.01 per share; authorized
50,000,000 shares; issued and outstanding
24,285,795 and 23,804,508 at September 30, 1999
and December 31, 1998, respectively 243 238
Additional paid-in capital 147,839 141,826
Retained earnings 107,186 107,102
Treasury stock, 175,818 shares at cost at September
30, 1999 and December 31, 1998 (2,977) (2,977)
Notes receivable from officers and employees (6,986) (8,651)
Accumulated other comprehensive income (loss) (693) 49
--------- ---------
TOTAL STOCKHOLDERS' EQUITY 244,612 237,587
--------- ---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 541,496 $ 495,767
========= =========
</TABLE>
The accompanying notes are an integral
part of these consolidated financial statements.
<PAGE>
SEITEL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
Three Months Ended
September 30,
---------------------------
1999 1998
--------- ---------
<S> <C> <C>
REVENUE $ 24,617 $ 38,332
EXPENSES:
Depreciation, depletion and amortization 11,792 19,551
Cost of sales 1,488 1,175
Selling, general and administrative expenses 6,549 6,453
--------- ---------
19,829 27,179
--------- ---------
INCOME FROM OPERATIONS 4,788 11,153
Interest expense, net (3,114) (1,516)
Equity in earnings of affiliate - 344
--------- ---------
Income before provision for income taxes 1,674 9,981
Provision for income taxes 850 3,693
--------- ---------
NET INCOME $ 824 $ 6,288
========= =========
Earnings per share:
Basic $ .03 $ .28
========= =========
Diluted $ .03 $ .28
========= =========
Weighted average number of common and common
equivalent shares:
Basic 24,110 22,634
========= =========
Diluted 24,489 22,818
========= =========
</TABLE>
The accompanying notes are an integral
part of these consolidated financial statements.
<PAGE>
SEITEL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
---------------------------
1999 1998
--------- ---------
<S> <C> <C>
REVENUE $ 96,625 $ 106,235
EXPENSES:
Depreciation, depletion and amortization 44,579 52,433
Cost of sales 3,967 3,654
Selling, general and administrative expenses 21,031 18,875
--------- ---------
69,577 74,962
--------- ---------
INCOME FROM OPERATIONS 27,048 31,273
Interest expense, net (8,137) (3,913)
Equity in earnings (loss) of affiliate (91) 469
Impairment due to dividend distribution of
affiliate stock (7,794) --
--------- ---------
Income before provision for income taxes 11,026 27,829
Provision for income taxes 4,577 10,307
--------- ---------
NET INCOME $ 6,449 $ 17,522
========= =========
Earnings per share:
Basic $ .27 $ .78
========= =========
Diluted $ .26 $ .76
========= =========
Weighted average number of common and
common equivalent shares:
Basic 23,850 22,593
========= =========
Diluted 24,361 22,960
========= =========
</TABLE>
The accompanying notes are an integral
part of these consolidated financial statements.
<PAGE>
SEITEL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(In thousands, except share amounts)
<TABLE>
<CAPTION>
Notes
Receivable Accumulated
Common Stock Additional Treasury Stock from Other
Comprehensive------------------ Paid-In Retained --------------- Officers & Comprehensive
Income Shares Amount Capital Earnings Shares Amount Employees Income
-------- ---------- ------ ------- ------- ------- ------ -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1997 22,548,408 $ 225 $128,406 $ 82,742 (175,818)$(2,977) $ (1,109) $ (14)
Net proceeds from
issuance
of common stock 106,067 1 983 - - - - -
Tax reduction from
exercise
of stock options - - 344 - - - - -
Sale of common stock to
officers and employees 794,300 8 8,183 - - - (8,191) -
Acquisition of oil and
gas properties 355,733 4 3,910 - - - - -
Payments received on
notes receivable from
officers and employees - - - - - - 649 -
Net income $ 24,360 - - - 24,360 - - - -
Foreign currency
translation
adjustments net of
income tax expense
of $67 63 - - - - - - - 63
--------
Comprehensive income $ 24,423
======== ---------- ------ ------- ------- ------- ------ -------- ----------
Balance, December 31, 1998 23,804,508 238 141,826 107,102 (175,818) (2,977) (8,651) 49
Net proceeds from
issuance
of common stock 481,287 5 5,134 - - - - -
Tax reduction from
exercise
of stock options - - 879 - - - - -
Payments received on
notes receivable from
officers and employees - - - - - - 1,665 -
Distribution of Eagle
Geophysical, Inc.
shares - - - (6,365) - - - -
Net income $ 6,449 - - - 6,449 - - - -
Foreign currency
translation
adjustments net of
income tax expense
of $17 12 - - - - - - - 12
Unrealized loss on
marketable securities
net of income tax
benefit of $754 (754) - - - - - - - (754)
--------
Comprehensive income $ 5,707
======== ---------- ------ ------- ------- ------- ------ -------- ----------
Balance, September 30, 1999
(unaudited) 24,285,795 $ 243 $147,839 $107,186 (175,818)$(2,977) $ (6,986) $ (693)
========== ====== ======= ======= ======= ====== ======== ==========
</TABLE>
The accompanying notes are an integral
part of these consolidated financial statements.
<PAGE>
SEITEL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(In thousands)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
---------------------------
1999 1998
--------- ---------
<S> <C> <C>
Cash flows from operating activities:
Cash received from customers $ 89,473 $ 108,661
Cash paid to suppliers and employees (26,631) (17,284)
Interest paid (6,215) (3,320)
Interest received 321 298
Income taxes paid (1,553) (2,535)
-------- --------
Net cash provided by operating activities 55,395 85,820
-------- --------
Cash flows from investing activities:
Cash invested in seismic data (111,636) (100,429)
Cash invested in oil and gas properties (25,440) (31,586)
Net proceeds from sale of oil and gas properties 11,657 -
Cash paid to acquire property and equipment (920) (681)
Cash from disposal of property and equipment - 17
Investment in marketable securities (3,043) -
-------- --------
Net cash used in investing activities (129,382) (132,679)
-------- --------
Cash flows from financing activities:
Borrowings under line of credit agreements 63,908 69,207
Principal payments under line of credit (130,408) (24,207)
Principal payments on term loans (106) (262)
Principal payments on capital lease obligations (23) (59)
Proceeds from issuance of senior notes 138,000 -
Proceeds from issuance of common stock 5,175 1,015
Costs of debt and equity transactions (2,038) (66)
Payments on receivables from officers and employees 1,665 76
-------- --------
Net cash provided by financing activities 76,173 45,704
-------- --------
Effect of exchange rate changes 39 79
-------- --------
Net increase (decrease) in cash and equivalents 2,225 (1,076)
Cash and cash equivalents at beginning of period 3,161 4,881
-------- --------
Cash and cash equivalents at end of period $ 5,386 $ 3,805
======== ========
</TABLE>
The accompanying notes are an integral
part of these consolidated financial statements.
<PAGE>
SEITEL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited), continued
(In thousands)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
---------------------------
1999 1998
--------- ---------
<S> <C> <C>
Reconciliation of net income to net cash provided by
operating activities:
Net income $ 6,449 $ 17,522
Adjustments to reconcile net income to net cash
provided by operating activities:
Impairment due to dividend distribution of
affiliate stock 7,794 -
Equity in loss (earnings) of affiliate 91 (469)
Depreciation, depletion and amortization 44,579 52,432
Deferred income tax provision 2,799 4,935
Non-cash sales (6,522) (1,140)
Gain on sale of property and equipment - (13)
Decrease in receivables 4,545 3,623
Decrease (increase) in other assets (40) 347
Increase (decrease) in other liabilities (4,300) 8,583
-------- ---------
Total adjustments 48,946 68,298
-------- ---------
Net cash provided by operating activities $ 55,395 $ 85,820
======== =========
Supplemental schedule of non-cash investing and
financing activities:
Dividend payable of affiliate stock $ 6,365 $ -
======== =========
Capital lease obligations incurred $ 33 $ -
======== =========
</TABLE>
The accompanying notes are an integral
part of these consolidated financial statements.
<PAGE>
SEITEL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED INTERIM FINANCIAL STATEMENTS (Unaudited)
September 30, 1999
NOTE A-BASIS OF PRESENTATION
The accompanying unaudited financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information and with the instructions of Regulation S-X. Accordingly, they do
not include all of the information and notes required by generally accepted
accounting principles for complete financial statements. In the opinion of
management, all adjustments (consisting of normal recurring accruals) considered
necessary for a fair presentation have been included. Certain reclassifications
have been made to the amounts in the prior year's financial statements to
conform to the current year's presentation. Operating results for the nine
months ended September 30, 1999 are not necessarily indicative of the results
that may be expected for the year ending December 31, 1999. For further
information, refer to the financial statements and notes thereto for the year
ended December 31, 1998 contained in the Company's Annual Report filed on Form
10-K with the Securities and Exchange Commission.
The Company accounts for its marketable equity securities in accordance
with Statement of Financial Accounting Standards (SFAS) No. 115, "Accounting for
Certain Investments in Debt and Equity Securities." Management determines the
appropriate classification of marketable securities at the time of purchase and
reevaluates such designation at each balance sheet date. The Company's
marketable securities are categorized as available-for-sale and are carried at
fair value, with unrealized holding gains and losses, net of taxes, reflected in
accumulated other comprehensive income included in stockholders' equity until
realized. For the purpose of computing realized gains and losses, cost is
identified on a specific identification basis.
NOTE B-EARNINGS PER SHARE
In accordance with SFAS No. 128, "Earnings per Share," basic earnings per
share is computed based on the weighted average shares of common stock
outstanding during the periods. Diluted earnings per share is computed based on
the weighted average shares of common stock plus the assumed issuance of common
stock for all potentially dilutive securities. Earnings per share computations
to reconcile basic and diluted net income for the three and nine months ended
September 30, 1999 and 1998 consist of the following (in thousands except per
share amounts):
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
------------------------- -------------------------
1999 1998 1999 1998
--------- ---------- ---------- ---------
<S> <C> <C> <C> <C>
Net income $ 824 $ 6,288 $ 6,449 $ 17,522
========= ========== ========== =========
Basic weighted average shares 24,110 22,634 23,850 22,593
Effect of dilutive securities: (1)<F1>
Options and warrants 379 184 511 367
--------- ---------- ---------- ---------
Diluted weighted average shares 24,489 22,818 24,361 22,960
========= ========== ========== =========
Per share income:
Basic $ .03 $ .28 $ .27 $ .78
Diluted $ .03 $ .28 $ .26 $ .76
- -------------------
<FN>
(1)<F1> During the third quarter of 1999 and 1998 and the first nine months of
1999 and 1998, a weighted average number of options and warrants to
purchase 4,543,000, 3,873,000, 4,072,000 and 2,563,000 shares of common
stock were outstanding, respectively, but were not included in the
computation of diluted per share income because their exercise prices
were greater than the average market price of the common shares.
</FN>
</TABLE>
<PAGE>
NOTE C-DATA BANK
Costs incurred in the creation of proprietary seismic data, including the
direct and incremental costs of Company personnel engaged in project management
and design, are capitalized. Substantially all (greater than 87%) of the costs
incurred to develop the Company's data bank have been for programs created by
the Company. The Company uses the income forecast method to amortize the costs
of seismic data programs it creates. Under the income forecast method, seismic
data costs are amortized in the proportion that revenue for a period relates to
management's estimate of ultimate revenues. Since inception, management has
established guidelines regarding its annual charge for amortization. Under these
guidelines, seismic data created by the Company is amortized in a set period of
time based on historical experience with both the timing and amount of revenue.
Management estimates that 90% of the costs incurred in the creation of seismic
data is amortized within five years of such data becoming available for resale
for two-dimensional seismic data and within seven years of such data becoming
available for resale for three-dimensional seismic data. If anticipated sales
fall below the benchmark guidelines, amortization is accelerated. The Company
also purchases existing seismic data programs from other companies. The costs of
purchased seismic data programs are generally amortized on a straight-line basis
over ten years; however, the costs of a significant purchase (greater than 5% of
the net book value of the data bank), are amortized using the greater of the
income forecast method or ten-year straight-line method. As of September 30,
1999, almost all (96%) of the net costs of the Company's data bank are fully
amortized within 10 years from when such data becomes available for resale.
In certain cases, the Company grants seismic licenses to third parties for
data to be used in their operations (not for resale) in exchange for exclusive
ownership of seismic data from the third party. The Company recognizes revenue
for the licenses granted and records a data library asset for the seismic data
acquired. These transactions are accounted for as non-monetary exchanges and are
valued at the fair market value of such licenses based on values realized in
cash transactions with other third parties for similar seismic data. During the
first nine months of 1999, the Company licensed seismic data valued at
$6,522,000 in exchange for the purchase of seismic data for its library.
NOTE D-OIL AND GAS PROPERTIES
The Company accounts for its oil and gas exploration and production
activities using the full-cost method of accounting. Under this method, all
costs associated with acquisition, exploration and development of oil and gas
reserves, including directly related overhead costs and interest costs related
to its unevaluated properties and certain properties under development which are
not currently being amortized, are capitalized. For the nine months ended
September 30, 1999 and 1998, general and administrative costs of $1,474,000 and
$1,276,000, respectively, have been capitalized to oil and gas properties. For
the nine months ended September 30, 1999 and 1998, interest costs of $2,343,000
and $1,790,000, respectively, have been capitalized to oil and gas properties.
On July 26, 1999, the Company sold its 18.75% working interest in 11 oil
and gas wells, one salt water disposal well and approximately 16,000 acres of
leasehold and options to lease for net proceeds of approximately $11.7 million.
The Company has announced its intentions to sell approximately 90% of its
ownership in DDD Energy, Inc. ("DDD Energy"), a wholly-owned subsidiary, through
an initial public offering expected to close during the first quarter of 2000.
In the event the sale is not completed, DDD Energy will continue to be a
wholly-owned subsidiary of the Company. The Company does not anticipate a loss
will be incurred on this transaction. Proceeds from the proposed offering will
be used to reduce debt and provide funds for seismic data library additions.
NOTE E-INVESTMENT IN EAGLE GEOPHYSICAL, INC.
On April 22, 1999, the Board of Directors of Seitel, Inc. declared to its
common stockholders a dividend consisting of the 1,520,000 shares of the common
stock of Eagle Geophysical, Inc. ("Eagle") owned by the Company. The dividend
was declared at the rate of approximately 0.064 shares of Eagle common stock for
each share of Seitel, Inc. common stock owned as of the close of business on the
record date of May 18, 1999.
The fair market value of the common stock of Eagle held by the Company
on the date this dividend was declared was lower than the carrying value of the
stock on the Company's balance sheet; therefore, a non-cash, non-recurring,
pre-tax impairment, net of bonus effect, of $7,794,000 was recorded for the nine
months ended September 30, 1999.
<PAGE>
NOTE F-INDUSTRY SEGMENTS
SFAS NO. 131, "Disclosures About Segments of an Enterprise and Related
Information," established standards for reporting information about operating
segments in annual financial statements and requires selected information in
interim financial reports. Selected financial information for the three and nine
months ended September 30, 1999 and 1998 is as follows (in thousands):
<TABLE>
<CAPTION>
Exploration
and Total
Seismic Production Segments
------------ ------------- -------------
Three months ended September 30, 1999
- -------------------------------------
<S> <C> <C> <C>
Revenue from external purchasers $ 19,804 $ 4,813 $ 24,617
Depreciation, depletion
and amortization 9,300 2,188 11,488
Cost of sales 96 1,392 1,488
Segment operating income 10,408 1,233 11,641
Capital expenditures (a)<F1> 18,795 3,845 22,640
Assets 379,784 154,867 534,651
Three months ended September 30, 1998
- -------------------------------------
Revenue from external purchasers $ 33,714 $ 4,618 $ 38,332
Depreciation, depletion
and amortization 16,009 3,323 19,332
Cost of sales 39 1,136 1,175
Segment operating income 17,666 159 17,825
Capital expenditures (a)<F1> 43,509 12,179 55,688
Assets (b)<F2> 317,292 156,623 473,915
Nine months ended September 30, 1999
- ------------------------------------
Revenue from external purchasers $ 83,266 $ 13,359 $ 96,625
Depreciation, depletion
and amortization 37,380 6,326 43,706
Cost of sales 227 3,740 3,967
Segment operating income 45,659 3,293 48,952
Capital expenditures (a)<F1> 97,998 17,970 115,968
Assets 379,784 154,867 534,651
Nine months ended September 30, 1998
- ------------------------------------
Revenue from external purchasers $ 91,807 $ 14,428 $ 106,235
Depreciation, depletion
and amortization 42,085 9,697 51,782
Cost of sales 151 3,503 3,654
Segment operating income 49,571 1,228 50,799
Capital expenditures (a)<F1> 106,841 33,761 140,602
Assets (b)<F2> 317,292 156,623 473,915
<FN>
(a)<F1> Includes other ancillary equipment.
(b)<F2> Balance as of December 31, 1998.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
----------------------------- -----------------------------
1999 1998 1999 1998
------------ ----------- ----------- ------------
<S> <C> <C> <C> <C>
Income from continuing operations before income taxes:
Total reportable segment operating income $ 11,641 $ 17,825 $ 48,952 $ 50,799
Selling general and administrative expense (6,549) (6,453) (21,031) (18,875)
Interest expense, net (3,114) (1,516) (8,137) (3,913)
Equity in earnings (loss) of affiliate - 344 (91) 469
Impairment due to dividend distribution of
affiliate stock - - (7,794) -
Eliminations and other (304) (219) (873) (651)
------------ ------------ ----------- ------------
Income from continuing operations before
income taxes $ 1,674 $ 9,981 $ 11,026 $ 27,829
============ =========== =========== ============
</TABLE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
-----------------------------------------------------------
OVERVIEW
The Company's income from core seismic marketing and exploration and
production operations was $824,000 for the third quarter of 1999 and $11,574,000
for the nine months ended September 30, 1999 as compared to $6,064,000 for the
third quarter of 1998 and $17,216,000 for the nine months ended September 30,
1998. Additionally, in the first nine months of 1999, the Company recorded a
non-cash, non-operating loss on the dividend distribution of affiliate stock
totaling $5,066,000, net of tax, along with equity in loss of affiliate of
$59,000, net of tax, bringing net income for the nine months ended September 30,
1999 to $6,449,000. In the third quarter and first nine months of 1998, the
Company recorded its equity in the earnings of affiliate of $224,000 and
$306,000, net of tax, respectively, bringing third quarter 1998 net income to
$6,288,000 and the first nine months of 1998 net income to $17,522,000.
RESULTS OF OPERATIONS
Total revenue was $24,617,000 and $38,332,000 in the third quarters of 1999
and 1998, respectively, and $96,625,000 and $106,235,000 in the first nine
months of 1999 and 1998, respectively. Revenue primarily consists of revenue
generated from the marketing of seismic data and oil and gas production.
Revenue from the marketing of seismic data was $19,804,000 in the third
quarter of 1999 compared to $33,714,000 in the third quarter of 1998 and was
$83,266,000 in the first nine months of 1999 compared to $91,807,000 in the
first nine months of 1998. During the third quarter of 1999, the Company
continued to focus on client interest in its existing data library versus the
new data creation market. The Company's existing data library available for
resale continued to increase significantly through the first quarter of 1999 due
to the creation of seismic data and the purchase of the Amoco Canada data
library in February 1999. As a result, revenue from the licensing of existing
data increased between the periods; however, such increase was offset by a
decrease in revenue from new data creation. Because of the current emphasis on
marketing existing data, the Company reduced the amount of expenditures made in
creating new seismic data in the second and third quarters of 1999 which
resulted in a decrease in revenue associated with the creation of new data.
Oil and gas revenue was $4,813,000 in the third quarter of 1999 compared to
$4,618,000 in the third quarter of 1998. The increase between periods was
primarily due to higher prices received by the Company for both its natural gas
and crude oil production during the third quarter of 1999, partially offset by a
decrease in natural gas production. Oil and gas revenue was $13,359,000 in the
first nine months of 1999 compared to $14,428,000 in the first nine months of
1998. The decrease in oil and gas revenue for the nine month period was
primarily caused by both lower natural gas production and prices during the
first nine months of 1999. The decrease in natural gas production between
periods was primarily due to production declines experienced on certain of the
Company's older wells. Additionally, in July 1999, the Company sold its interest
in 11 oil and gas wells, five of which were producing, whose production
partially offset these declines during the first six months of 1999. The Company
anticipates that wells that came on-line in the third quarter of 1999 and new
wells anticipated to come on-line in the fourth quarter of 1999 will offset most
<PAGE>
of this production decline. Net volume and price information for the Company's
oil and gas production for the third quarters and first nine months of 1999 and
1998 are summarized in the following table:
<TABLE>
<CAPTION>
Quarter Ended Nine Months Ended
September 30, September 30,
---------------------------- ----------------------------
1999 1998 1999 1998
---------- ----------- ---------- -----------
<S> <C> <C> <C> <C>
Natural gas volumes (mmcf) 1,150 1,622 4,226 4,543
Average natural gas price ($/mcf) $ 2.65 $ 2.20 $ 2.18 $ 2.35
Crude oil/condensate volumes (mbbl) 101 88 282 286
Average crude oil/condensate price ($/bbl) $ 16.50 $ 11.22 $ 13.73 $ 12.36
</TABLE>
Depreciation, depletion and amortization consists primarily of data bank
amortization and depletion of oil and gas properties. Data bank amortization was
$9,300,000 during the third quarter of 1999 compared to $16,009,000 during the
third quarter of 1998 and was $37,380,000 during the first nine months of 1999
compared to $42,085,000 during the first nine months of 1998. The amount of
seismic data amortization fluctuates based on the level of seismic marketing
revenue. As a percentage of revenue from licensing seismic data, data bank
amortization was 48% for the third quarters of 1999 and 1998 and was 46% for the
first nine months of 1999 and 1998. As of September 30, 1999, almost all (96%)
of the net costs of the Company's data bank are fully amortized within 10 years
from when such data becomes available for resale. See Note C for further
discussion of the Company's seismic data amortization policy.
Depletion of oil and gas properties was $2,188,000 for the third quarter of
1999 compared to $3,323,000 for the third quarter of 1998, which amounted to
$1.25 and $1.55, respectively, per mcfe of gas produced during such periods. For
the nine months ended September 30, 1999 and 1998, depletion of oil and gas
properties was $6,326,000 and $9,697,000, respectively, which amounted to $1.07
and $1.55, respectively, per mcfe of gas produced during such periods. The
decreases in the rate are due to the significant increase in the Company's
proved reserves as of January 1, 1999 as determined by the Company's independent
reserve engineers resulting from both new discoveries in 1998 and positive
revisions to previous reserve estimates. In the third quarter of 1999, this
decrease in rate was partially offset as a result of the sale of proved reserves
in connection with the sale of the Company's interest in 11 oil and gas wells in
July 1999.
Cost of sales consists of expenses associated with oil and gas production
and seismic resale support services. Oil and gas production costs amounted to
$1,392,000 or $.79 per mcfe of gas produced and $3,740,000 or $.63 per mcfe of
gas produced in the third quarter and first nine months of 1999, respectively.
This compares to $1,136,000 or $.53 per mcfe of gas produced and $3,503,000 or
$.56 per mcfe of gas produced in the third quarter and first nine months of
1998, respectively. The increase in this rate in the third quarter is primarily
due to (1) an increase in the per mcfe rate associated with lease operating
expenses as a result of the operating costs remaining relatively constant while
the production declined, (2) higher workover costs incurred and (3) higher
production taxes resulting from the higher prices received in the third quarter
of 1999. The increase in this rate for the nine month period is primarily due to
an increase in the per mcfe rate associated with lease operating expenses as a
result of the operating costs remaining relatively while the production
declined.
The Company's selling, general and administrative expenses were $6,549,000
and $21,031,000 during the third quarter and first nine months of 1999,
respectively, compared to $6,453,000 and $18,875,000 during the third quarter
and first nine months of 1998, respectively. The increase between periods is
primarily due to legal and other non-recurring expenses incurred in the third
quarter and first nine months of 1999 and an increase in costs resulting from
the Company's expansion in Canada. These increases were partially offset by a
reduction of variable expenses, including commissions on revenue and
compensation tied to pre-tax profits. As a percentage of revenue, total selling,
general and administrative expenses were 27% and 22% for the third quarter and
first nine months of 1999, respectively, and 17% and 18% for the third quarter
and first nine months of 1998, respectively.
Net interest expense was $3,114,000 and $8,137,000 in the third quarter and
first nine months of 1999, respectively, compared to $1,516,000 and $3,913,000
in the third quarter and first nine months of 1998, respectively. The increase
was primarily due to the addition of $138 million of senior notes on February
12, 1999 at an average interest rate of 7.3% partially offset by lower interest
expense on the Company's revolving line of credit due to lower amounts being
borrowed.
<PAGE>
On April 22, 1999, the Board of Directors of Seitel, Inc. declared a
dividend to its common stockholders consisting of the 1,520,000 shares of the
common stock of Eagle Geophysical, Inc. owned by the Company. The fair market
value of the common stock of Eagle held by the Company on the date this dividend
was declared was lower than the carrying value of the stock on the Company's
balance sheet; therefore, a non-cash, non-recurring, pre-tax impairment, net of
bonus effect, of $7,794,000 was recorded for the nine months ended September 30,
1999.
The Company's effective income tax rate was 51% and 42% for the third
quarter and first nine months of 1999, respectively, compared to 37% for both
the third quarter and first nine months of 1998. The increase in the effective
income tax rate for the third quarter of 1999 was due to the estimated effective
tax rate for the year increasing to 38.7% from 37.7% as estimated at June 30,
1999 as a result of Canadian operations reflecting a larger percentage of
pre-tax profits than had been originally estimated. The increase in the
effective income tax rate for the nine months ended September 30, 1999 was due
to the makeup of the income tax expense for the period. Income tax expense in
the first nine months of 1999 consisted of two items: (1) income tax expense on
income from core operations at the Company's estimated annual tax rate of 38.7%
offset by (2) income tax benefit on the non-recurring loss on dividend
distribution of affiliate stock at the tax rate of 35%. The net of these two
items resulted in the higher effective tax rate. The Company's effective tax
rate for the remainder of 1999 is estimated to be approximately 38.7%.
LIQUIDITY AND CAPITAL RESOURCES
The Company's cash flow from operating activities was $55,395,000, and
$85,820,000 for the nine months ended September 30, 1999 and 1998, respectively.
The decrease from 1998 to 1999 was primarily due to a decrease in collections
from customers caused by the Company's reduced level of revenue associated with
the creation of new data and timing differences in payments to suppliers and
employees.
The Company has a $75 million unsecured revolving line of credit facility
that matures on March 16, 2001. The facility bears interest at a rate determined
by the ratio of the Company's debt to cash flow from operations. Pursuant to the
interest rate pricing structure, funds can currently be borrowed at LIBOR plus 1
1/2%, the bank's prevailing prime rate, or the sum of the Federal Funds
effective rate for such day plus 1/2%. Certain restrictions exist that limit the
amount of borrowings that the Company can make under this facility. As of
November 12, 1999, the balance outstanding on the revolving line of credit
amounted to $18,000,000 bearing an average interest rate of 6.1875%.
On December 28, 1995, the Company completed a private placement of three
series of unsecured Senior Notes totaling $75 million. The Company
contemporaneously issued its Series A Notes and Series B Notes, which total
$52.5 million and bear interest at a fixed rate of 7.17%. On April 9, 1996, the
Company issued its Series C Notes, which total $22.5 million and bear interest
at a fixed rate of 7.48%. The Series A Notes mature on December 30, 2001, and
require annual principal payments of $8.3 million beginning December 30, 1999.
The Series B and Series C Notes mature on December 30, 2002, and require
combined annual principal payments of $10 million which began on December 30,
1998. Interest on all series of the notes is payable semi-annually on September
30 and December 30.
On February 12, 1999, the Company completed a private placement of three
series of unsecured Senior Notes totaling $138 million. The Series D Notes total
$20 million, bear interest at a fixed rate of 7.03% and mature on February 15,
2004, with no principal payments due until maturity. The Series E Notes total
$75 million, bear interest at a fixed rate of 7.28% and mature on February 15,
2009, with annual principal payments of $12.5 million beginning February 15,
2004. The Series F Notes total $43 million, bear interest at a fixed rate of
7.43% and mature on February 15, 2009, with no principal payments due until
maturity. Interest on all series of the notes is payable semi-annually beginning
on August 15, 1999. The Company used a majority of the proceeds to repay amounts
then outstanding under its revolving lines of credit and the remainder for
capital expenditures.
The Company may offer from time to time in one or more series (i) unsecured
debt securities, which may be senior or subordinated, (ii) preferred stock and
(iii) common stock or any combination of the foregoing, up to an aggregate of
$41,041,600 pursuant to an effective "shelf" registration statement filed with
the Securities and Exchange Commission ("SEC").
In addition, under another effective "shelf" registration statement filed
with the SEC, the Company may offer up to an aggregate of $200,000,000 of the
following securities, in any combination, from time to time on one or more
series: unsecured debt securities, which may be senior or unsubordinated;
preferred stock; common stock; and trust preferred securities.
From January 1, 1999, through November 12, 1999, the Company received
$5,175,000 from the exercise of common stock purchase warrants and options. In
connection with these exercises, the Company will also receive approximately
$879,000 in tax savings.
On July 26, 1999, the Company's wholly-owned subsidiary, DDD Energy, sold
its 18.75% working interest in 11 oil and gas wells, one salt water disposal
well and approximately 16,000 acres of leasehold and options to lease for net
proceeds of approximately $11.7 million.
The Company has announced its intentions to sell approximately 90% of its
ownership in DDD Energy, through an initial public offering expected to close
during the first quarter of 2000. In the event the sale is not completed, DDD
Energy will continue to be a wholly-owned subsidiary of the Company. The Company
does not anticipate a loss will be incurred on this transaction. Proceeds from
the proposed offering will be used to reduce debt and provide funds for seismic
data library additions.
During December 1997, the Company repurchased 175,000 shares of its common
stock in the open market at a cost of $2,973,000, pursuant to a stock repurchase
program authorized by the Board of Directors on December 12, 1997. The Board has
authorized expenditures of up to $25 million towards the repurchase of its
common stock.
During the first nine months of 1999, gross seismic data bank additions and
capitalized oil and gas exploration and development costs amounted to
$97,816,000 and $17,618,000 respectively. These capital expenditures, as well as
taxes, interest expenses, cost of sales and general and administrative expenses,
were funded by operations, proceeds from the sale of oil and gas properties,
proceeds from the exercise of common stock purchase warrants and options,
borrowings under the Company's revolving line of credit and proceeds from the
issuance of senior notes.
Currently, the Company anticipates capital expenditures for the remainder
of 1999 to total approximately $20 million. Such expenditures include
approximately $14 million for the creation of proprietary seismic data, and
approximately $6 million for oil and gas exploration and development efforts.
The Company believes its current cash balances, revenues from operating sources
and proceeds from the exercise of common stock purchase warrants and options,
combined with its available revolving line of credit, should be sufficient to
fund the remaining 1999 capital expenditures, along with expenditures for
operating and general and administrative expenses. If these sources are not
sufficient to cover the Company's anticipated expenditures or if the Company
were to increase its planned capital expenditures for 1999, the Company could
arrange for additional debt or equity financing during 1999; however, there can
be no assurance that the Company would be able to accomplish any such debt or
equity financing on satisfactory terms. If such debt or equity financing is not
available on satisfactory terms, the Company could reduce its current capital
budget or any proposed increases to its capital budget, and fund expenditures
with cash flow generated from operating sources.
Recent Accounting Pronouncements
In June 1998, the Financial Accounting Standards Board (FASB) issued SFAS
No. 133, "Accounting for Derivative Instruments and Hedging Activities." SFAS
No. 133, as amended, is required to be adopted on January 1, 2001, although
earlier adoption is permitted. The statement establishes accounting and
reporting standards requiring that every derivative instrument (including
certain derivative instruments embedded in other contracts) be recorded in the
balance sheet as either an asset or liability measured at its fair value. The
statement requires that changes in the derivative's fair value be recognized
currently in earnings unless specific hedge accounting criteria are met. Special
accounting for qualifying hedges allows a derivative's gains and losses to
offset related results on the hedged item in the income statement, and requires
that a company formally document, designate, and assess the effectiveness of
transactions that receive hedge accounting. The Company has not yet quantified
the impact of adopting Statement 133. However, the Company anticipates that
application of the statement will not have a material impact on the Company's
financial position or results of operations.
Year 2000
Many currently installed computer systems and software products are coded
to accept only two-digit entries in the date code field. Beginning in the year
2000, these date code fields will need to accept four-digit entries to
distinguish 21st century dates from 20th century dates. As a result, computer
systems and software used by many companies may need to be upgraded to comply
with such "Year 2000" requirements. Significant uncertainty exists concerning
the potential effects associated with such compliance, but systems that do not
properly recognize such information could generate erroneous data or cause a
system to fail.
Compliance Program. In order to address the Year 2000 issue, the Company
appointed the Chief Operating Officer ("COO") to assure that key automated
systems and related processors would remain functional through 2000. The COO and
the Company's Information Systems Manager addressed the project by reviewing the
information technology ("IT") and non-information technology systems to
determine whether they were Year 2000 compliant. Also, they prepared a formal
questionnaire for all significant suppliers, customers, and service providers to
determine the extent to which the Company was vulnerable to those third parties'
failure to remediate the Year 2000 problem.
Company's State of Readiness. A review and assessment of the information
technology and non-information technology systems was completed as of January
31, 1999 and did not identify any material systems which are not Year 2000
compliant. The Company prepared and sent a formal questionnaire to all
significant suppliers, customers and service providers to determine the extent
to which the Company is vulnerable to those third parties' failure to remediate
the Year 2000 problem. The Company requested that these companies respond no
later than June 30, 1999. As of November 12, 1999, the Company has received
written assurances of Year 2000 compliance from approximately 57% of its
suppliers, customers and service providers. Companies who have not responded
have been sent second requests to respond to the questionnaire. The Company has
received oral assurances of Year 2000 compliance from many of the third parties
with whom it has relationships. The Company believes that its operations will
not be significantly disrupted even if third parties with whom the Company has
relationships are not Year 2000 compliant.
<PAGE>
Costs to Address Year 2000 Compliance Issues. The Company believes that it
will not be required to make any material expenditures to address the Year 2000
problem as it relates to its existing systems. The Company estimates its total
costs already expended and to be expended will be less than $100,000. To date,
costs incurred to address Year 2000 compliance have been internal in nature and
have been charged to income as incurred. Such costs have been funded from cash
provided by operating activities. However, uncertainty exists concerning the
potential costs and effects associated with any Year 2000 compliance, and the
Company intends to continue to make efforts to ensure that third parties with
whom it has relationships are Year 2000 compliant. The Company is not aware of
any IT projects that have been delayed due to the Year 2000 compliance program.
Risk of Non-Compliance and Contingency Plan. The goal of the Year 2000
project has been to ensure that all of the critical systems and processes, which
are under the direct control of the Company, remain functional. However, because
certain systems and processes may be interrelated with systems outside of the
control of the Company, there can be no assurance that all implementations will
be successful. The principal area of risk to the Company is thought to be the
contracting of seismic acquisition crews and vessels. A likely worst case
scenario is that despite the Company's efforts, there could be a failure of the
global positioning system used by seismic acquisition crews and vessels that the
Company contracts which could result in the temporary cessation of the
acquisition of seismic data. However, the Company believes that the risk of such
occurrence is low based upon its discussions concerning Year 2000 compliance
with third party seismic contractors. As part of the Year 2000 project,
contingency plans will be developed to respond to any potential failures as they
may be identified. There can be no assurance that unexpected Year 2000
compliance problems of either the Company or its vendors, customers and service
providers would not materially and adversely affect the Company's business,
financial condition or operating results. The Company will continue throughout
1999 to consider the likelihood of a material business interruption due to the
Year 2000 issue.
Information Regarding Forward Looking Statements
This Quarterly Report on Form 10-Q includes forward looking statements
within the meaning of Section 27A of the Securities Act of 1933 and Section 21E
of the Securities Exchange Act of 1934. Although the Company believes that its
expectations are based on reasonable assumptions, it can give no assurance that
its goals will be achieved. Among the important factors that could cause actual
results to differ materially from those in the forward looking statements herein
include, but are not limited to, changes in the exploration budgets of the
Company's seismic data and related services customers, actual customer demand
for the Company's seismic data and related services, the extent of the Company's
success in acquiring oil and gas properties and in discovering, developing and
producing reserves, the timing and extent of changes in commodity prices for
natural gas, crude oil and condensate and natural gas liquids and conditions in
the capital markets and equity markets during the periods covered by the forward
looking statements. The foregoing and other risk factors are identified in the
Company's Annual Report on Form 10-K filed with the Securities and Exchange
Commission for the year ended December 31, 1998.
Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
----------------------------------------------------------
The Company is exposed to market risk, including adverse changes in
commodity prices, interest rates and foreign currency exchange rates. Refer to
the Company's Form 10-K for the year ended December 31, 1998 for a detailed
discussion of these risks. The following information discusses changes in the
Company's market risk exposures since December 31, 1998.
Commodity Price Risk
During 1999, the Company has entered into natural gas swaps in order to
hedge a portion of anticipated natural gas production. As of November 12, 1999,
the Company had open commodity price hedges totaling 2,595,000 MMbtu at an
average price of $2.52 per MMbtu.
Interest Rate Risk
In February 1999, the Company completed a private placement of three series
of unsecured Senior Notes totaling $138 million at an average interest rate of
7.3%. The Series D Notes total $20 million, bear interest at a fixed rate of
7.03% and mature on February 15, 2004, with no principal payments due until
maturity. The Series E Notes total $75 million, bear interest at a fixed rate of
7.28% and mature on February 15, 2009, with annual principal payments of $12.5
million beginning February 15, 2004. The Series F Notes total $43 million, bear
interest at a fixed rate of 7.43% and mature on February 15, 2009, with no
principal payments due until maturity. The carrying value and fair value of this
debt are the same.
<PAGE>
PART II - OTHER INFORMATION
Items 1., 2., 3. Not applicable.
- ---------------------------------
Item 4. Submission of Matters to a Vote of Security Holders.
- -------------------------------------------------------------
The Company's Annual Meeting of Stockholders was held on July 29, 1998.
Matters voted upon at the Annual Meeting, and the results of those votes are as
follows:
1. The election of nine directors to serve until the 2000 Annual Meeting.
Name No. of Votes For No. of Votes Withheld
- -------------------- -------------------------- -------------------------
Herbert M. Pearlman 21,931,489 674,081
Paul A. Frame 21,931,489 674,081
Horace A. Calvert 21,931,489 674,081
David S. Lawi 21,931,489 674,081
Debra D. Valice 21,931,489 674,081
Walter M. Craig, Jr. 21,931,489 674,081
William Lerner 21,931,089 674,481
John E. Stieglitz 21,931,289 674,281
Fred S. Zeidman 21,931,289 674,281
<PAGE>
2. Approval of proposed amendments to the Company's Non-Employee Directors'
Stock Option Plan.
No. of Votes For No. of Votes Against No. of Votes Abstained
- -------------------- -------------------------- -------------------------
5,789,492 10,585,152 121,720
3. Approval of the appointment of the public accounting firm of Arthur Andersen
LLP to act as the Company's independent Certified Public Accountants for the
year of 1999.
No. of Votes For No. of Votes Against No. of Votes Abstained
- -------------------- -------------------------- -------------------------
22,444,447 107,715 53,408
Item 5. Other Information.
- --------------------------
A shareholder who wishes to make a proposal at the 2000 Annual Meeting of
Shareholders without complying with the requirements of Rule 14a-8 under the
Securities Exchange Act of 1934, as amended (and therefore without including the
proposal in the Company's proxy materials) should notify the Company's
Secretary, at the Company's principal executive offices, of that proposal by May
8, 2000. If a shareholder fails to give that notice by that date, then the
persons named as proxies in the proxy cards solicited by the Company's Board of
Directors for that meeting will be entitled to vote the proxy cards held by them
regarding that proposal, if properly raised at the meeting, in their discretion.
Item 6. Exhibits and Reports on Form 8-K
- ------------------------------------------
(a) Exhibits
10.1 Non-Employee Directors' Retirement Plan
10.2 Amendment No. 2 to Seitel, Inc. 1998 Employee Stock Purchase
Plan
10.3 Amended and Restated 1998 Employee Stock Purchase Plan
10.4 Amendment No. 4, dated as of August 10, 1999, among Seitel,
Inc., a Delaware Corporation; the Lenders executing this
Agreement; and the First National Bank of Chicago, as Agent
for the Lenders
10.5 First Amendment, dated as of July 14, 1999, to the Separate
Note Purchase Agreements, dated as of February 12, 1999,
among Seitel, Inc. and the Noteholders
10.6 Second Amendment, dated as of July 14, 1999, to the Separate
Note Purchase Agreements, dated as of December 28, 1995,
among Seitel, Inc. and the Noteholders
(b) Not applicable
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
SEITEL, INC.
Dated: November 12, 1999 /s/ Paul A. Frame
-----------------------------------------
Paul A. Frame
President
Dated: November 12, 1999 /s/ Debra D. Valice
-----------------------------------------
Debra D. Valice
Chief Financial Officer
Dated: November 12, 1999 /s/ Marcia H. Kendrick
-----------------------------------------
Marcia H. Kendrick
Chief Accounting Officer
<PAGE>
EXHIBIT
INDEX
- ------- ---------------------------------------------------------- -----------
Exhibit Title Page
Number
- ------- ---------------------------------------------------------- -----------
10.1 Non-Employee Directors' Retirement Plan 21
10.2 Amendment No. 2 to Seitel, Inc. 1998 Employee
Stock Purchase Plan 32
10.3 Amended and Restated 1998 Employee Stock Purchase Plan 34
10.4 Amendment No. 4, dated as of August 10, 1999, among
Seitel, Inc., a Delaware Corporation; the Lenders
executing this Agreement; and the First National Bank of
Chicago, as Agent for the Lenders 62
10.5 First Amendment, dated as of July 14, 1999,
to the Separate Note Purchase Agreements,
dated as of February 12, 1999, among Seitel, Inc.
and the Noteholders 79
10.6 Second Amendment, dated as of July 14, 1999,
to the Separate Note Purchase Agreements,
dated as of December 28, 1995, among Seitel, Inc.
and the Noteholders 94
SEITEL, INC.
DIRECTOR RETIREMENT PLAN
ARTICLE I
PURPOSE; FINANCING PLAN BENEFITS
1.1 Purpose. The purposes of this Plan are to attract and retain the
best available personnel for service as Outside Directors (as defined herein) of
the Company, to provide additional incentive to the Outside Directors of the
Company to serve as Directors, and to encourage their continued service on the
Board.
1.2 Financing Plan Benefits. All Retirement Benefits under this Plan
shall be paid or provided directly by the Company. Such Retirement Benefits
shall be general obligations of the Company which shall not require the
segregation of any funds or property therefor. Notwithstanding the foregoing, in
the discretion of the Company, the Company's obligations hereunder may be
satisfied from a grantor trust established by the Company, the terms of which
will be substantially similar to the terms of the model trust issued by the
Internal Revenue Service in Revenue Procedure 92-64, or from an insurance
contract or contracts owned by the Company. The assets of any such trust and any
such insurance policy shall continue for all purposes to be a part of the
general funds of the Company, shall be considered solely a means to assist the
Company to meet its contractual obligations under this Plan and shall not create
a funded account or security interest for the benefit of any Participant under
this Plan. The Company intends that the Plan shall constitute an "unfunded plan"
for purposes of the Code and, to the extent applicable, Title I of ERISA, and
that in the event the Company is Insolvent any Participant or Beneficiary shall
have the status of an unsecured general creditor of the Company as to the Plan
and any trust fund that may be established by the Company, or asset identified
specifically by the Company, as a reserve for the discharge of its obligations
under the Plan.
ARTICLE II
DEFINITIONS
The following words and phrases when used in this Plan shall have the
respective meanings set forth below unless the context clearly indicates
otherwise:
2.1 "Account" means the separate bookkeeping account established with
respect to each Participant to which amounts representing his Retirement Benefit
are credited in accordance with Section 4.1 hereof.
2.2 "Beneficiary" means the person or persons designated in writing by a
Participant pursuant to Section 5.6 to receive his Benefits in the event of his
death.
2.3 "Board" means the Board of Directors of the Company.
2.4 "Change in Control" means the occurrence, on or after the date the Plan
is adopted, of any of the following:
(i) when any "person" or "group" of persons acting in concert,
as such terms are used in Sections 13(d) and 14(d) of the Securities
Exchange Act of 1934 (the "Act") (other than the Company, a subsidiary
of the Company or a Company employee benefit plan, including any
trustee of such plan acting as trustee) is or becomes the "beneficial
owner" (as defined in Rule 13d-3 under the Act), directly or
indirectly, of securities of the Company representing more than fifty
percent (50%) of the combined voting power of the Company's then
outstanding securities entitled to vote generally in the election of
Directors; provided that "person" shall not include any person (or any
person acting as a group) which, as of the date of the adoption of this
Plan, is the "beneficial owner" of securities of the Company
representing more than fifty percent (50%) of the combined voting power
of the Company's outstanding securities entitled to vote generally in
the election of Directors; or
(ii) a merger or consolidation of the Company with any other
corporation, other than a merger or consolidation which would result in
the voting securities of the Company outstanding immediately prior
thereto continuing to represent (either by remaining outstanding or by
being converted into voting securities of the surviving entity) at
least fifty percent (50%) of the total voting power represented by the
voting securities of the Company or such surviving entity outstanding
immediately after such merger or consolidation; or
(iii) a change in the composition of the Board, during any
twenty-four month period, as a result of which fewer than a majority of
the directors are Incumbent Directors. "Incumbent Directors" shall mean
Directors who either (A) are Directors of the Company as of the date
the Plan is adopted, or (B) are elected, or nominated for election, to
the Board with the affirmative votes of at least a majority of the
Incumbent Directors at the time of such election or nomination (but
shall not include an individual not otherwise an Incumbent Director
whose election or nomination is in connection with an actual or
threatened proxy contest relating to the election of directors to the
Company.)
2.5 "Code" means the Internal Revenue Code of 1986, as amended.
2.6 "Committee" means the committee, as constituted from time to time,
appointed by the Board to perform the duties and responsibilities allocated to
it pursuant to the terms hereof. The Committee shall consist of at least three
members who are not Participants and, subject to the limitations contained in
Section 6.3, shall be entitled to act with respect to any matter hereunder for
which it is responsible in accordance with the decision of a majority of its
members. If the Board does not appoint a Committee, the Committee shall mean the
Board.
2.7 "Common Stock" means the Common Stock, $.01 par value, of the Company.
2.8 "Company" means Seitel, Inc., a Delaware corporation.
2.9 "Continuous Status as a Director" means the absence of any interruption
or termination of service as a Director.
2.10 "Director" means a member of the Board.
2.11 "Disability" means a Participant's disability which, in the opinion of
a physician approved by the Company, renders the Participant unable to perform
his normal duties for the Company.
2.12 "Employee" means any person, including officers and Directors,
employed by the Company or any parent or subsidiary of the Company. The payment
of a Director's fee by the Company shall not be sufficient in and of itself to
constitute "employment" by the Company.
2.13 "Enrollment Form" means the form executed by each Participant under
the Plan pursuant to which the Participant enrolls in the Plan, designates a
Beneficiary and makes an election regarding the form in which Retirement
Benefits will be paid.
2.14 "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
2.15 "Fair Market Value" means, as of any date, the value of Common Stock
determined as follows:
(i) If the Common Stock is listed on any established stock
exchange or a national market system, including without limitation the
Nasdaq National Market of the National Association of Securities
Dealers, Inc. Automated Quotation ("NASDAQ") System, the Fair Market
Value of a Share of Common Stock shall be the closing sales price for
such stock (or the closing bid, if no sales were reported) as quoted on
such system or exchange (or the exchange with the greatest volume of
trading in Common Stock) on the date of determination, as reported in
The Wall Street Journal or such other source as the Board deems
reliable;
(ii) If the Common Stock is quoted on the NASDAQ System (but
not on the National Market thereof) or regularly quoted by a recognized
securities dealer but selling prices are not reported, the Fair Market
Value of a Share of Common Stock shall be the mean between the high bid
and low asked prices for the Common Stock on the date of determination,
as reported in The Wall Street Journal or such other source as the
Board deems reliable; or
(iii) In the absence of an established market for the Common
Stock, the Fair Market Value thereof shall be determined in good faith
by the Committee.
2.16 "Initial Participation Date" means the date on which a Participant
commences participation in the Plan pursuant to Section 3.1.
2.17 "Insolvent" means the Company being unable to pay its debts as they
mature or being subject to a pending proceeding as a debtor under the United
States Bankruptcy Code.
2.18 "Normal Retirement Age" means the date a Participant attains age 65.
2.19 "Outside Director" means a Director who is not an Employee.
2.20 "Participant" means an Outside Director who is eligible to participate
in the Plan pursuant to Article III hereof and who has commenced participation
by executing an Enrollment Form.
2.21 "Plan" means the Seitel, Inc. Director Retirement Plan, as set forth
herein and as it may be amended from time to time.
2.22 "Retirement Benefits" mean the vested portion of amounts credited to a
Participant's Account pursuant to Section 4.1 hereof.
ARTICLE III
ELIGIBILITY AND PARTICIPATION
3.1 Eligibility to Participate. Each Outside Director who has, as of
the effective date of the Plan, completed at least ten years Continuous Status
as a Director shall be eligible to participate in the Plan effective as of the
date such Outside Director returns a properly completed and executed Enrollment
Form to the Committee. Each other Outside Director shall be eligible to
participate in the Plan as of the later of (i) the first day of the month
following the month in which the Outside Director completes at least ten years
Continuous Status as a Director or (ii) the date such Outside Director returns a
properly completed and executed Enrollment Form to the Committee.
3.2 Cessation of Participation. A Participant will cease to be an
active Participant in the Plan as of the earlier of (i) the date on which the
Plan terminates or (ii) the date on which the Participant ceases to be an
Outside Director.
ARTICLE IV
RETIREMENT BENEFITS AND VESTING
4.1 Retirement Benefits. The Company shall credit amounts to a
Participant's Account as a Retirement Benefit in accordance with this Section
4.1 to be distributed, to the extent vested under Section 4.2 hereof, pursuant
to the provisions of Article V. On the Participant's Initial Participation Date,
the Company shall credit to the Participant's Account an amount equal to $5,000
times such Participant's years of continuous service as an Outside Director,
determined based on the twelve month periods commencing on the date the
Participant became an Outside Director and ending on the Participant's Initial
Participation Date. In addition, the Company shall credit to such Participant's
Account an amount equal to the increase, if any, in the Fair Market Value of a
share of the Common Stock on the last day of the fifth fiscal year of the
Company ending after the Participant's Initial Participation Date, or if
earlier, the date on which the Participant ceases to be an Outside Director,
over the Fair Market Value of a share of the Common Stock on the Participant's
Initial Participation Date, multiplied by 15,000.
4.2 Vesting. The Retirement Benefit credited to the Account of a
Participant under Section 4.1 hereof shall vest and become nonforfeitable at the
rate of 10% on the first day of each January after the Participant's Initial
Participation Date, if the Participant is an Outside Director on that date;
provided, however, that a Participant will become 100% vested in his Account
regardless of his period of participation as an Outside Director after his
Initial Participation Date in the event of (i) termination of his status as a
Director due to his death or his Disability, (ii) termination of his status as a
Director by reason of not being nominated by the Company to continue as a
Director or not being elected as a Director following such nomination, due, in
each case, to a reason other than his voluntary resignation as a Director, (iii)
a Change in Control, or (iv) termination of the Plan.
ARTICLE V
DISTRIBUTIONS
5.1 Payment of Benefits. The amount credited to a Participant's Account
pursuant to Section 4.1 hereof, to the extent vested pursuant to Section 4.2,
shall be payable to the Participant or, if applicable, to his Beneficiary in
accordance with the provisions of this Article V. Payment of any Retirement
Benefit under the Plan shall commence within 30 days, or as soon as thereafter
as administratively practicable, following the occurrence of the event causing
the Retirement Benefit to become payable.
5.2 Retirement, Disability, or Death. Upon termination of the
Participant's Continuous Status as a Director on or after his attainment of
Normal Retirement Age, or by reason of his Disability or death, the Company will
pay the value of his Account to him in the form he has elected pursuant to
Section 5.5 hereof (or if he has not elected, in the form of a single sum
payment). If such Participant is receiving installment payments hereunder and
dies prior to the payment of all monthly installments, the remaining portion of
the Participant's Benefits will continue to be paid in monthly installments to
his Beneficiary for the remaining installment period in the same amount and
manner as they would have been paid to the Participant.
5.3 Other Termination of Continuous Status as a Director. In the event
the Participant's Continuous Status as a Director terminates for any reason
other than retirement on or after Normal Retirement Age, death, or Disability,
the value of the vested portion of his Account as determined under Section 4.2
hereof will be paid in the form he has elected pursuant to Section 5.5 hereof
(or if he has not elected, in the form of a single sum payment) on the
Participant's attainment of his Normal Retirement Age or, if earlier, the
Participant's death. If such Participant is receiving installment payments
hereunder and dies but prior to the payment of all monthly installments, the
remaining portion of the Participant's Benefits will continue to be paid in
monthly installments to his Beneficiary for the remaining installment period in
the same amount and manner as they would have been paid to the Participant.
5.4 Timing of Certain Payments. Notwithstanding any other provision of
this Agreement to the contrary, the Participant's Retirement Benefit will be
payable upon the occurrence of a Change in Control, and the Committee shall have
the right to pay Retirement Benefits to Participants prior to the time such
Retirement Benefits otherwise would be payable hereunder if the Committee in
good faith determines that such payment is in the best interests of the Company
and the Participant due to the occurrence of a change in circumstances relating
to the operation of the Plan or the taxation of Participants, arising from a
change in the federal or applicable state tax or revenue laws, a published
ruling or similar announcement by the Internal Revenue Service, a regulation
issued by the Secretary of the Treasury, a change in securities laws or
regulations, the issuance of an advisory opinion, regulation or other published
position by the Department of Labor, or a change in accounting requirements
which causes (i) Participants to be taxable on their Retirement Benefits prior
to the time Retirement Benefits otherwise would be payable hereunder, (ii) the
Plan to be considered as funded for purposes of Title I of ERISA, or (iii) a
material change regarding the tax or financial accounting consequences of
maintaining the Plan to the Company.
5.5 Form of Payment. Each Participant may elect on his Enrollment Form
whether his Retirement Benefits will be paid in the form of a single sum payment
or substantially equal monthly installments over a period not exceeding 120
months. Such election may not be changed by the Participant during the one-year
period ending on the date on which payment of his Retirement Benefits commence
or at any time thereafter. Notwithstanding any other provision of this Article V
regarding the form in which Retirement Benefits will be paid to Participants, if
a Participant has not elected a form of payment for his Retirement Benefits
pursuant to this Section 5.5, the Company will pay the Participant's Retirement
Benefits in a single sum payment.
5.6 Designation of Beneficiary. Each Participant must designate a
Beneficiary to receive his Retirement Benefits in the event of his death, by
completing his Enrollment Form and filing it with the Committee. The Committee
will recognize the most recent written Beneficiary designation on file prior to
a Participant's death. If a designated Beneficiary is not living at the time of
the Participant's death, then the Committee will pay Participant's Retirement
Benefits to the Participant's personal representative, executor, or
administrator, as specified by the appropriate legal jurisdiction. Any such
payment to the Participant's Beneficiary or, if applicable, to his personal
representative, executor or administrator shall operate as a complete discharge
of all obligations of the Committee and the Company to the extent of the payment
so made.
ARTICLE VI
PLAN ADMINISTRATION
6.1 Authority of the Committee. The Committee shall have full power and
authority to interpret, construe and administer the Plan. The Committee's
interpretation and construction hereof, and actions hereunder, including any
determination of the amount or recipient of any payment to be made under the
Plan, shall be binding and conclusive on all persons and for all purposes. In
addition, the Committee may employ attorneys, accountants, and other
professional advisors to assist the Committee in its administration of the Plan.
The Company shall pay the reasonable fees of any such advisor employed by the
Committee.
6.2 Cost of Administration. The cost of this Plan and the expenses
of administering the Plan shall be paid by the Company.
6.3 Limitations on Plan Administration. Neither the Committee, nor any
other person to whom discretionary authority is granted hereunder shall vote or
act upon any matter involving his own rights, benefits or participation in the
Plan.
ARTICLE VI
AMENDMENT AND TERMINATION
7.1 Amendment. The Company shall have the right to amend this Plan at
any time and from time to time, including a retroactive amendment. Any such
amendment shall become effective upon the date stated therein; provided,
however, that no such action shall affect any Retirement Benefit adversely to
which a Participant would be entitled had his employment been terminated
immediately before such amendment was effective and no amendment may change the
provisions of Section 5.4 for a period of two years following the occurrence of
an event described in such Section.
7.2 Termination of the Plan. The Company has established this Plan with
the bona fide intention and expectation that from year to year it will deem it
advisable to continue it in effect. However, the Company, in its sole
discretion, reserves the right to terminate the Plan in its entirety at any
time; provided, however, that no such action shall affect any Retirement Benefit
adversely to which a Participant would be entitled had his employment been
terminated immediately before such termination was effective.
ARTICLE VIII
GENERAL PROVISIONS
8.1 Rights Against Company and Company's Shareholders. Nothing
contained in the Plan shall be deemed to give any Director the right to continue
as a Director or to interfere with the right of the Company, acting through the
Board, or the Company's shareholders to remove any Director at any time or to
fail to nominate or elect such Director in the future, without regard to the
effect such action may have on any rights under the Plan.
8.2 Action Taken in Good Faith. To the extent permitted by law, each
member of the Committee and each employee, officer and Director of the Company
who has duties and responsibilities with respect to the establishment or
administration of the Plan shall be fully protected with respect to any action
taken or omitted to be taken by such person in good faith.
8.3 Indemnification of Employees and Directors. The Company hereby
indemnifies each member of the Committee and each other employee, officer and
Director of the Company who are delegated administrative responsibilities under
the Plan against any and all liabilities and expenses, including attorney's
fees, actually and reasonably incurred by them in connection with any
threatened, pending or completed legal action or judicial or administrative
proceeding to which they may be a party, or may be threatened to be made a
party, by reason of membership on the Committee or other delegation of
administrative responsibilities, except with regard to any matters as to which
they shall be adjudged in such action or proceeding to be liable for gross
negligence or willful misconduct in connection therewith.
8.4 Payment Due an Incompetent. If the Committee shall find that any
person to whom any payment is due under the Plan is unable to care for his
affairs because of mental or physical illness, accident, or death, or is a
minor, any payment due (unless a prior claim therefor shall have been made by a
duly appointed guardian, committee or other legal representative) may be paid to
the spouse, a child, a parent, a brother or sister or any person deemed by the
Committee, in its sole discretion, to have incurred expenses for such person
otherwise entitled to payment, in such manner and proportions as the Committee
may determine. Any such payment shall be a complete discharge of the liabilities
of the Company under this Plan, and the Company shall have no further obligation
to see to the application of any money so paid.
8.5 Spendthrift Clause. No right, title or interest of any kind in the
Plan shall be transferable or assignable by any Participant or Beneficiary or be
subject to alienation, anticipation, encumbrance, garnishment, attachment,
execution or levy of any kind, whether voluntary or involuntary, nor subject to
the debts, contracts, liabilities, engagements, or torts of the Participant or
Beneficiary. Any attempt to alienate, anticipate, encumber, sell, transfer,
assign, pledge, garnish, attach or otherwise subject to legal or equitable
process or encumber or dispose of any interest in the Plan shall be void.
8.6 Severability. In the event that any provision of this Plan shall be
declared illegal or invalid for any reason, said illegality or invalidity shall
not affect the remaining provisions of this Plan but shall be fully severable
and this Plan shall be construed and enforced as if said illegal or invalid
provision had never been inserted herein.
8.7 Construction. The article and section headings and numbers are
included only for convenience of reference and are not to be taken as limiting
or extending the meaning of any of the terms and provisions of this Plan.
Whenever appropriate, words used in the singular shall include the plural or the
plural may be read as the singular. When used herein, the masculine gender
includes the feminine gender.
8.8 Governing Law. The validity and effect of this Plan, and the rights
and obligations of all persons affected hereby, shall be construed and
determined in accordance with the laws of the State of Texas unless superseded
by federal law.
AMENDMENT NO. 2 TO SEITEL, INC.
1998 EMPLOYEE STOCK PURCHASE PLAN
Seitel, Inc., a Delaware corporation (the "Company"), hereby amends the
Seitel, Inc. 1998 Employee Stock Purchase Plan, as such was previously amended
by Amendment No. 1 to Seitel, Inc. 1998 Employee Stock Purchase Plan (as
amended, the "Plan") effective as of January 1, 1999. As amended hereby, all of
the terms of the Plan shall remain in full force and effect.
1. Sections 6 of Article I of the Plan is hereby amended to read in its
entirety as follows:
(6) Eligible Employee shall mean any person who is employed by the
Company or a Subsidiary in a salaried position, including, but not limited
to, any employee who is also an officer and director of the Company or a
Subsidiary. With respect to the exercise of Warrants, the term "Eligible
Employee" shall also mean any person who is a director of the Company or
any Subsidiary of the Company who originally purchased such Warrants while
employed by the Company or a Subsidiary in a salaried position.
2. The Section entitled "Warrant Period" of Article V shall be amended to
read in its entirety as follows:
Warrant Period
Each Warrant shall expire on the earlier of (i) the date that is five
(5) years after the Closing Date (the "Stated Date"), (ii) the date that is
five business days after an Eligible Employee who originally purchased such
Warrant ceases to be an Eligible Employee for any reason other than for
death, disability or retirement after the age of 65, or (iii) the date that
is one year after the death, disability or retirement after age 65 of an
Eligible Employee who has purchased such Warrant if he ceases to be an
Eligible Employee because of his death, disability or retirement after age
65 (the earlier of (i), (ii) or (iii) being referred to herein as the
"Expiration Date"). As used herein, disability has the meaning used in
Section 22(e)(3) of the Code.
3. A new sentence shall be added to the end of Article VIII as follows:
For purposes of interpreting the Event of Default number 2 set forth
in the Promissory Note, "employment with the Payee" shall include serving
as a non-employee director of the Company or any Subsidiary of the Company.
4. This Amendment No. 2 is adopted as and shall constitute an amendment to
the Plan, and shall be construed in connection with and as a part of the Plan.
Except as specifically amended by this Amendment No. 2, all of the terms and
provisions of the Plan shall remain in full force and effect. In the event of
any conflict between the terms of the Plan and the terms of this Amendment No.
1, the terms of this Amendment No. 1 shall apply.
SEITEL, INC.
AMENDED AND RESTATED
1998 EMPLOYEE STOCK PURCHASE PLAN
Seitel, Inc., a Delaware corporation (the "Company"), hereby amends and
restates, effective as of May 10, 1999, the Seitel, Inc. 1998 Employee Stock
Purchase Plan, which was originally adopted effective as of September 14, 1998
and amended with Amendment No.1 effective as of September 30, 1998 and Amendment
No. 2 effective as of January 1, 1999 (as amended and restated, the "Plan"), as
follows:
I. PURPOSE
The Plan is intended as an employment incentive, to retain in the
employment of the Company and its subsidiaries persons of experience and
ability, to encourage the sense of proprietorship of such persons, and to
stimulate the active interest of such persons in the development and financial
success of the Company.
II. DEFINITIONS
As used in this Plan, the following words and phrases shall have the
following meanings:
(1) Board of Directors shall mean the Board of Directors of the Company.
(2) Closing Date shall mean the date designated by the Company on which
shares of Common Stock and Original Warrants are purchased by Eligible
Employees under the Plan. The Company shall not designate more than
one Closing Date.
(3) Code shall mean the Internal Revenue Code of 1986, as amended.
(4) Common Stock means the common stock, par value $0.01 per share, of the
Company.
(5) Company means Seitel, Inc. and any successor thereto by merger,
consolidation, liquidation or other reorganization which has made
provision for adoption of the Plan and the assumption of the Company's
obligations hereunder.
(6) Eligible Employee shall mean any person who is employed by the Company
or a Subsidiary in a salaried position, including, but not limited to,
any employee who is also an officer and director of the Company or a
Subsidiary. With respect to the exercise of Warrants, the term
"Eligible Employee" shall also mean any person who is a director of
the Company or any Subsidiary of the Company who originally purchased
such Warrants while employed by the Company or a Subsidiary in a
salaried position. With respect to the issuance and exercise of New
Warrants, the term "Eligible Employee" shall also mean any person who
is a director of the Company or any Subsidiary who was employed by the
Company or a Subsidiary in a salaried position when he or she
originally purchased the Original Warrants, the exercise of which
gives rise to the issuance of New Warrants.
(7) Expiration Date shall mean the Original Warrant Expiration Date, with
respect to the Original Warrants, or the New Warrant Expiration Date,
with respect to the New Warrants, as the case may be.
(8) Five-Day Warrant Share Sales shall have the meaning set forth in
Section VI hereof.
(9) New Warrants shall have the meaning set forth in Section VI hereof.
(10) New Warrant Expiration Date shall have the meaning set forth in
Section VI hereof.
(11) Original Warrant Expiration Date shall have the meaning set forth in
Section V hereof.
(12) Original Warrants shall have the meaning set forth in Section V
hereof.
(13) Pledge shall mean a pledge of the shares of Common Stock purchased by
an Eligible Employee as security for the Promissory Note in the form
of Exhibit D hereto.
(14) Promissory Note shall mean a promissory note in the form of Exhibit C
hereto executed by an Eligible Employee as payment for Common Stock
and Original Warrants purchased under the Plan.
(15) Purchase Price shall mean, with respect to one share of Common Stock
and one Original Warrant, the price equal to the closing price of a
share of Common Stock as reported on the New York Stock Exchange on
the day immediately preceding the Closing Date.
(16) Shares shall have the meaning set forth in Section IV hereof.
(17) Subscription Agreement shall mean a subscription agreement in the form
of Exhibit B hereto duly executed and delivered by an Eligible
Employee to the Company on or before the Closing Date as provided
herein.
(18) Subsidiary shall mean any corporation to which the Company is a
"parent corporation" as defined in Section 424(e) of the Code. (19)
Warrant Exercise Date shall have the meaning set forth in Section VI
hereof.
(20) Warrants shall mean the warrants to purchase shares of Common Stock
that may be purchased by Eligible Employees pursuant to the terms of
the Plan, in the form of Exhibit E hereto.
III. EMPLOYEE STOCK AND ORIGINAL WARRANT PURCHASES
Eligible Employees may, pursuant to the Plan, purchase from the Company on
the Closing Date shares of Common Stock and Original Warrants. An Eligible
Employee may purchase up to the maximum number of shares of Common Stock and
Original Warrants set forth on Exhibit A hereto based on such Eligible
Employee's maximum annual cash compensation from the Company and its
Subsidiaries for the 12 month period ended on December 31st of 1995, 1996 or
1997. If such Eligible Employee was first employed by the Company or any
Subsidiary after January 1, 1997, the maximum number of shares of Common Stock
and Original Warrants set forth on Exhibit A hereto shall be based on the
Company's reasonable estimate of such Eligible Employee's annual cash
compensation. Eligible Employees must purchase an equal number of shares of
Common Stock and Original Warrants, and Common Stock and Original Warrants must
be purchased in whole multiples of 50 with a minimum of 100. On or before the
Closing Date, any Eligible Employee who desires to purchase Common Stock and
Original Warrants shall complete and deliver to the Senior Vice President -
Finance of the Company a duly executed Subscription Agreement in the form of
Exhibit B hereto, a duly executed Promissory Note in the form of Exhibit C
hereto and a duly executed Pledge in the form of Exhibit D hereto.
IV. SHARES SUBJECT TO THE PLAN
A total of TWO MILLION THREE HUNDRED SEVENTY-NINE THOUSAND (2,379,000)
shares of Common Stock of the Company (the "Shares") shall be subject to the
Plan, which shall include shares of Common Stock that may be purchased by
Eligible Employees on the Closing Date and thereafter upon exercise of Warrants.
The Shares shall consist of unissued shares or previously issued shares
reacquired and held by the Company, and such number of shares shall be and is
hereby reserved for sale for such purpose. Until expiration or exercise of all
of the Warrants, the Company shall at all times reserve a sufficient number of
Shares to be issued upon exercise thereof.
V. ORIGINAL WARRANTS
The Warrants to be issued pursuant to Section III hereof (the "Original
Warrants") shall be in the form attached hereto as Exhibit E. The Original
Warrants shall provide as follows:
Exercise Price
The exercise price per Share of the Original Warrants shall equal one
hundred twelve and one-half percent (112-1/2%) of the Purchase Price rounded up
to the next one-quarter of one dollar.
Original Warrant Period
Each Original Warrant shall expire on the earlier of (i) the date that is
five (5) years after the Closing Date (the "Stated Date"), (ii) the date that is
five business days after an Eligible Employee who originally purchased such
Original Warrant ceases to be an Eligible Employee for any reason other than for
death, disability or retirement after the age of 65, or (iii) the date that is
one year after the death, disability or retirement after age 65 of an Eligible
Employee who originally purchased such Original Warrant if he ceases to be an
Eligible Employee because of his death, disability or retirement after age 65
(the earlier of (i), (ii) or (iii) being referred to herein as the "Original
Expiration Date"). As used herein, disability has the meaning used in Section
22(e)(3) of the Code.
Exercise of Original Warrants
Any Original Warrant may be exercised solely by the Eligible Employee or
permitted transferee during his lifetime, or after his disability by his legal
representative on his behalf, or after his death by the personal representative
of the Eligible Employee's estate or permitted transferee (in the event such
Original Warrant was transferred prior to the Eligible Employee's death) or the
person or persons entitled thereto under his will or under the laws of descent
and distribution.
The purchase price of the Shares as to which an Original Warrant is
exercised shall be paid in full in cash at the time of the exercise. An Eligible
Employee or permitted transferee shall not be or have any of the rights or
privileges of a stockholder of the Company in respect of any Shares purchasable
upon the exercise of any part of an Original Warrant unless and until
certificates representing such Shares shall have been issued by the Company to
such Eligible Employee or permitted transferee.
Limited Transferability of Warrants
Original Warrants shall not be transferable other than by will or by the
laws of descent and distribution, except that Original Warrants may be
transferred by an Eligible Employee to members of the Eligible Employee's
immediate family who are U.S. residents or to trusts or business entities formed
for the benefit of members of the Eligible Employee's immediate family who are
U.S. residents. As used herein, immediate family means a parent, child,
grandchild, or spouse. An Original Warrant may not be subsequently transferred
by the immediate family member of the Eligible Employee to whom the Original
Warrant is transferred other than by will or by the laws of descent and
distribution. If an Original Warrant is transferred to an immediate family
member, the Company may require investment representations upon exercise of the
Original Warrant and may impose such conditions upon the exercise of the
Original Warrant as may be required to comply with federal and state securities
laws, and the Shares of Common Stock issuable upon exercise of an Original
Warrant by such immediate family member may be "restricted shares" as such term
is defined in Rule 144 under the Securities Act of 1933, as amended, and may
contain such restrictive legends as may be deemed necessary by the Company.
VI. NEW WARRANTS
Upon the exercise of an Original Warrant, one new warrant (a "New Warrant")
shall be issued to the Eligible Employee who initially purchased such Original
Warrant from the Company (even if such Eligible Employee has transferred the
Original Warrant as permitted hereunder), provided that such person is an
Eligible Employee at the time such Original Warrant is exercised. No New
Warrants will be issued upon the exercise of an Original Warrant after an
Eligible Employee's death or disability. The New Warrants shall provide as
follows:
<PAGE>
Exercise Price
If a holder exercises an Original Warrant and sells the Shares received
upon such exercise on the day of such exercise, the exercise price of the New
Warrant issued upon the exercise of the Original Warrant shall equal the price
at which such Shares are sold. For all other New Warrants issued upon the
exercise of an Original Warrant, the exercise price shall be determined on the
date the Original Warrant is exercised (each a "Warrant Exercise Date") as
follows: (i) for any Warrant Exercise Date 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 Warrant Exercise Date
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 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 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 Warrant Exercise Date 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 Warrant
Exercise Date on which the information described in items (i), (ii) or (iii)
above is unavailable, the book value per share of the Common Stock on such day
as determined in accordance with generally accepted accounting principles.
New Warrant Period
Each New Warrant shall expire on the earlier of (i) the Stated Date, (ii)
the date that is five business days after termination of employment if the
Eligible Employee who originally received such New Warrant ceases to be an
Eligible Employee for any reason other than for death, disability or retirement
after the age of 65, or (iii) the date that is one year after the death,
disability or retirement after age 65 of an Eligible Employee who originally
received such New Warrant if he ceases to be an Eligible Employee because of his
death, disability or retirement after age 65 (the earlier of (i), (ii) or (iii)
being referred to herein as the "New Warrant Expiration Date"). As used herein,
disability has the meaning used in Section 22(e)(3) of the Code. Exercise of New
Warrants
A New Warrant may be exercised solely by the Eligible Employee or permitted
transferee during his lifetime, or after his disability by his legal
representative on his behalf, or after his death by the personal representative
of the Eligible Employee's estate or permitted transferee (in the event such New
Warrant was transferred prior to the Eligible Employee's death) or the person or
persons entitled thereto under his will or under the laws of descent and
distribution.
The purchase price of the Shares as to which a New Warrant is exercised
shall be paid in full in cash at the time of the exercise. An Eligible Employee
or permitted transferee shall not be or have any of the rights or privileges of
a stockholder of the Company in respect of any Shares purchasable upon the
exercise of any part of a New Warrant unless and until certificates representing
such Shares shall have been issued by the Company to such Eligible Employee or
permitted transferee.
Limited Transferability of New Warrants
New Warrants shall not be transferable other than by will or by the laws of
descent and distribution, except that New Warrants may be transferred by an
Eligible Employee to members of the Eligible Employee's immediate family who are
U.S. residents or to trusts or business entities formed for the benefit of
members of the Eligible Employee's immediate family who are U.S. residents. As
used herein, immediate family means a parent, child, grandchild, or spouse. A
New Warrant may not be subsequently transferred by the immediate family member
of the Eligible Employee to whom the New Warrant is transferred other than by
will or by the laws of descent and distribution. If a New Warrant is transferred
to an immediate family member, the Company may require investment
representations upon exercise of the New Warrant and may impose such conditions
upon the exercise of the New Warrant as may be required to comply with federal
and state securities laws, and the Shares of Common Stock issuable upon exercise
of a New Warrant by such immediate family member may be "restricted shares" as
such term is defined in Rule 144 under the Securities Act of 1933, as amended,
and may contain such restrictive legends as may be deemed necessary by the
Company.
Restrictions on Exercise
New Warrants may not be exercised prior to August 10, 1999. A New Warrant
may not be exercised at any time if, at any time prior to August 10, 1999, the
Five-Day Warrant Share Sales for the Eligible Employee to whom such New Warrant
is issued exceed the greater of (i) 3,000 or (ii) 25% of the total number of
Shares issuable upon the exercise of all Original Warrants purchased hereunder
by such Eligible Employee. An Eligible Employee's "Five-Day Warrant Share Sales"
shall be the total aggregate number of Shares that are sold by an Eligible
Employee and all of such Eligible Employee's permitted transferees during any
period of five trading days before August 10, 1999 to the extent such Shares
<PAGE>
were purchased upon the exercise of an Original Warrant on or after May 10,
1999. Any New Warrant shall include the following restrictive legend:
THIS WARRANT MAY NOT BE EXERCISED PRIOR TO AUGUST 10, 1999 AND IS
SUBJECT TO FURTHER RESTRICTIONS AS SET FORTH IN THE AMENDED AND
RESTATED 1998 SEITEL, INC. EMPLOYEE STOCK PURCHASE PLAN.
The Company may require written certification or other proof as to facts
relevant to the restrictions set forth in this paragraph prior to issuing any
Shares upon the exercise of a New Warrant.
VII. PURCHASE PRICE
Eligible Employees shall pay the Company the Purchase Price for each share
of Common Stock and Original Warrant purchased hereunder pursuant to the terms
hereof. The proceeds received by the Company from the sale of Shares (both on
the Closing Date and subsequently upon the exercise of Warrants) pursuant to
this Plan will be used for general corporate purposes.
VIII. PAYMENT TERMS
The consideration for Shares of Common Stock and Original Warrants
purchased under the Plan shall be payable pursuant to a Promissory Note in the
form of Exhibit C hereto. The Promissory Note will bear interest at 4.0% per
annum and be payable as follows: (i) 60 equal monthly payments of principal and
interest calculated so as to pay interest as it accrues and to reduce the
principal balance to 40% of the purchase price on the Stated Date, and (ii) all
outstanding principal and accrued but unpaid interest shall be due on the Stated
Date. Such payments shall be made by payroll deduction (one-half of such payment
twice per month for non-commission employees, or the full amount of such payment
monthly for commission employees). Notwithstanding the foregoing, (i) if an
Eligible Employee receives commissions quarterly rather than monthly, the
Eligible Employee may elect to defer monthly payments under the Promissory Note
and instead make quarterly payments of accrued interest and principal at the
time of payment of such quarterly commission, provided that such payment shall
in any event be due on or before each April 30, July 30, October 30 and January
30 prior to the Stated Date, and (ii) if an Eligible Employee is eligible to
receive an annual bonus from the Company pursuant to a written employment
contract between the Company and the Eligible Employee, the Eligible Employee
may elect to defer monthly payments under the Promissory Note and instead make
annual payments of accrued interest and principal at the time of payment of such
bonus, provided that such payment shall in any event be due on or before each
March 15 prior to the Stated Date. If the Expiration Date occurs prior to the
Stated Date, all amounts due under the Promissory Note shall become immediately
due and payable on the Expiration Date. The Promissory Note will be secured by
the Pledge, and the Company shall have an express contractual right of setoff
against any amounts otherwise due to an Eligible Employee for any payments due
under the Promissory Note, including any amounts due upon acceleration of the
maturity thereof. Notwithstanding any other provision hereof, in the event that
the amount of a paycheck, commission or bonus is not sufficient to discharge a
payment due under the Promissory Note, the Eligible Employee will be required to
pay any difference to the Company in cash at the time such payment is due. For
purposes of interpreting the Event of Default number 2 set forth in the
Promissory Note, "employment with the Payee" shall include serving as a
non-employee director of the Company or any Subsidiary of the Company.
IX. PLEDGE OF SHARES
The Promissory Note shall be secured by a pledge of the Shares of Common
Stock purchased by an Eligible Employee on the Closing Date pursuant to the
terms of Pledge in the form of Exhibit D hereto. Each Eligible Employee who
executes a Promissory Note shall also execute and deliver to the Company a
Pledge.
X. CHANGE OF CONTROL OF THE COMPANY
In the event the Company shall be a party to any merger, consolidation or
corporate reorganization, as the result of which the Company shall be the
surviving corporation, the rights and duties of the Eligible Employees and the
Company shall not be affected in any manner. In the event the Company shall sell
all or substantially all of its assets or shall be a party to any merger,
consolidation or corporate reorganization, as the result of which the Company
shall not be the surviving organization, or in the event any other corporation
may make a tender or exchange offer for stock of the Company (the surviving
corporation, purchaser, or tendering corporation being hereinafter collectively
referred to as the "purchaser," and the transaction being hereinafter referred
to as the "purchase"), then the Board of Directors may, at its election, (i)
reach an agreement with the purchaser that the purchaser will assume the
obligations of the Company as to all outstanding Warrants; (ii) reach an
agreement with the purchaser that the purchaser will convert each outstanding
Warrant into a Warrant of at least equal value as to stock of the purchaser; or
(iii) not later than thirty (30) days prior to the effective date of the
purchase, notify all Eligible Employees who hold Warrants of the proposed
purchase and afford to each such Eligible Employee the right prior to such
purchase to exercise any then unexercised portion of all Warrants held by him,
which exercise may be contingent upon consummation of the purchase.
XI. LIMITATION OF RIGHTS
Nothing in this Plan shall be construed to: (1) give an Eligible Employee
or permitted transferee any rights whatsoever with respect to Shares issuable
upon the exercise of Warrants until the Warrants are exercised and Shares are
issued to the Eligible Employee or permitted transferee; (2) give an Eligible
Employee or any person any interest in any fund or in any specific asset or
assets of the Company; (3) limit in any way the right of the Company or a
Subsidiary to terminate an Eligible Employee's employment with the Company or a
Subsidiary at any time; or (4) be evidence of any agreement or understanding,
express or implied, that the Company or a Subsidiary will employ an Eligible
Employee in any particular position or at any particular rate of remuneration.
The existence of outstanding Warrants shall not affect in any way the right
or power of the Company or its Subsidiaries or their stockholders to make or
authorize any or all adjustments, recapitalization, reorganization or other
changes in the capital structure of the Company or its Subsidiaries or their
businesses, or any merger or consolidation of the Company or its Subsidiaries or
any issue of bonds, debentures, preferred stock or the right to acquire any
thereof, or the dissolution or liquidation of the Company or its Subsidiaries,
or any sale or transfer of all or any part of their assets or business, or any
other corporate act or proceeding whether of a similar character or otherwise.
XII. GOVERNMENT REGULATIONS
The Plan, and the granting and exercise of Warrants hereunder, and the
obligation of the Company to sell and deliver Shares under such Warrants, shall
be subject to all applicable laws, rules and regulations, and to such approvals
by any governmental agencies or national securities exchanges as may be
required.
Purchase for Investment
Whether or not the Warrants and Shares covered by the Plan have been
registered under the Securities Act of 1933, as amended, each Eligible Employee
or permitted transferee exercising a Warrant may be required by the Company to
give a representation in writing that he is acquiring such Shares for his own
account for investment and not with a view to, or for sale in connection with,
the distribution of any part thereof.
Governing Law
The place of administration of the Plan shall be conclusively deemed to be
within the State of Texas; and the validity, construction, interpretation and
effect of the Plan and all rights of any of the persons having or claiming to
have any interest in the Plan shall be governed by the laws of the State of
Texas.
<PAGE>
Exhibit A
to
Seitel, Inc. 1998 Employee Stock Purchase Plan
Maximum Number of Shares of Common
Maximum Annual Compensation Stock and Original Warrants
- ------------------------------- -----------------------------------------
$2,000,001 and over 75,000/75,000
$750,001 to $2,000,000 50,000/50,000
$200,001 to $750,000 25,000/25,000
$100,001 to $200,000 12,500/12,500
$50,001 to $100,000 6,250/6,250
$25,001 to $50,000 3,000/3,000
under $25,001 1,000/1,000
<PAGE>
Exhibit B
to
Seitel, Inc. 1998 Employee Stock Purchase Plan
SUBSCRIPTION AGREEMENT
1. Subscription. Subject to the terms and conditions hereof and of the
Seitel, Inc. 1998 Employee Stock Purchase Plan, (the "Subscriber") hereby
irrevocably subscribes for and agrees to purchase shares of Common Stock, par
value $0.01 per share (the "Shares"), of Seitel, Inc., a Delaware corporation
(the "Company"), and warrants to purchase an equal number of shares of Common
Stock of the Company for $ _____ per share (the"Warrants") and agrees to become
a shareholder of the Company and to be bound by the terms of this Subscription
Agreement ("Agreement"). As consideration for the Shares and the Warrants, the
Subscriber hereby delivers to the Company a duly executed Promissory Note in the
amount of $________ (the "Purchase Price").
This Agreement shall not become binding unless this subscription is
accepted by the Company, the Purchase Price has been received and accepted by
the Company and such additional closing conditions as the Company, in its sole
discretion, shall require are satisfied. This subscription shall not be deemed
accepted by the Company until this Agreement is signed by a duly authorized
officer of the Company. If this subscription is accepted, this Agreement shall
become effective as between the Company and the Subscriber. If this subscription
is rejected, this Agreement and the Purchase Price will be returned to the
Subscriber as soon as reasonably practicable, and this subscription shall be
rendered void and of no further force or effect.
2. Acceptance of Subscription. The Subscriber acknowledges and agrees that
this subscription is made subject to the following terms and conditions:
(a) the Subscriber is committing to purchase the Shares and Warrants for
which he has subscribed upon executing this Agreement; and
(b) the Company shall have the right to reject this subscription, in whole
or in part, for any reason whatsoever.
3. Acknowledgments, Representations and Covenants of the Subscriber. The
Subscriber represents and warrants that:
(a) The Subscriber has been provided with a copy of the prospectus dated
September 14, 1998, and prospectus supplement dated _____________,
1998, relating to the Shares and the Warrants.
(b) The Subscriber understands that no federal or state agency has passed
on or made any recommendation or endorsement of the Shares or
Warrants.
<PAGE>
4. Other Matters.
(a) The Subscriber recognizes that the sale of the Shares to him is based
upon representations and warranties contained herein, and the
Subscriber agrees to indemnify the Company and its officers, directors
and shareholders and to hold each of them harmless against any
liability, costs or expenses (including reasonable attorneys' fees and
costs) arising by reason of or in connection with any
misrepresentation or any breach of such warranties by the Subscriber.
The covenants, warranties and representations contained herein shall
be for the benefit of the Company and its officers, directors and
shareholders and each of them shall be entitled to all of the rights
that such covenants, warranties and representations shall confer.
(b) The Subscriber agrees that, except as provided herein, this Agreement
or any agreement made hereunder or pursuant hereto may not be
canceled, terminated or revoked by him except upon the written consent
of the Company.
(c) The Subscriber agrees to execute any and all further documents
necessary or advisable, in the sole discretion of the Company, in
connection with his becoming a holder of the Shares or any portion
thereof.
(d) Any notice, consent, or other communication to be given under this
Agreement by any party to any other party shall be in writing and
shall be either (a) personally delivered, (b) mailed by registered or
certified mail, postage prepaid with return receipt requested, (c)
delivered by overnight express delivery service or same-day local
courier service, or (d) delivered by telex or facsimile transmission
to the address set forth beneath the signature of the parties, or at
such other address as may be designated by the parties from time to
time in accordance with this Section. Notices delivered personally, by
overnight express delivery service or by local courier service shall
be deemed given as of actual receipt. Mailed notices shall be deemed
given business days after mailing. Notices delivered by telex or
facsimile transmission shall be deemed given upon receipt by the
sender of the answerback (in the case of a telex) or transmission
confirmation (in the case of a facsimile transmission).
(e) The parties acknowledge and agree that this Agreement and the
obligations and undertakings of the parties hereunder will be
performable in Houston, Harris County, Texas. This Agreement shall be
governed by, and construed and enforced in accordance with, the laws
of the State of Texas. If any action is brought to enforce or
interpret this Agreement, venue for such action shall be in Harris
County, Texas.
(f) This Agreement constitutes the entire agreement among the parties
hereto with respect to the subject matter hereof, and may be amended
only by a writing executed by the party to be bound thereby.
<PAGE>
IN WITNESS WHEREOF, the Subscriber has hereby executed this Agreement as of
the date set forth below.
-----------------------------------------------------
Printed Name of Subscriber
-----------------------------------------------------
Subscriber's Street Address
-----------------------------------------------------
City State Zip Code
-----------------------------------------------------
Signature of Subscriber
-----------------------------------------------------
Title (if applicable)
-----------------------------------------------------
Subscriber's Social Security or Tax ID Number
Date:
---------------------------
Accepted:
---------------------------
SEITEL, INC.
By:
---------------------------
Name:
---------------------------
Title:
---------------------------
<PAGE>
Exhibit C
to
Seitel, Inc. 1998 Employee Stock Purchase Plan
PROMISSORY NOTE
$__________ September ___, 1998
________________________ (the "Maker"), for value received, hereby promises
to pay to the order of Seitel, Inc. (together with any successors or assigns,
the "Payee"), at the time and in the manner hereinafter provided, the principal
sum of ___________________Dollars ($__________ ), together with interest
computed thereon at the rate hereinafter provided. This Note shall be payable at
the office of the Payee at 50 Briar Hollow Lane West, Houston, Texas 77027, or
at such other address in Houston, Texas as the holder of this Note shall from
time to time designate. This Note is made and issued as consideration for the
purchase by the Maker of certain shares ("Shares") of common stock, par value
$0.01 per share, of Payee (the "Common Stock") and certain warrants to purchase
shares of Common Stock (the "Warrants") pursuant to the Payee's 1998 Employee
Stock Purchase Plan.
The outstanding principal amount of this Promissory Note shall bear
interest from the date hereof at four percent (4.0%) per annum and be payable as
follows: (i) 60 equal monthly payments of principal and interest of
$____________ and (ii) all outstanding principal and accrued but unpaid interest
shall be due on September ____, 2003 (the "Stated Date"). Such monthly payments
shall be made by payroll deduction (one-half of such payment twice per month for
non-commission employees, or the full amount of such payment monthly for
commission employees). Notwithstanding the foregoing, (i) if the Maker receives
commissions quarterly rather than monthly, the Maker may elect to defer monthly
payments under this Note and instead make quarterly payments of accrued interest
and principal at the time of payment of such quarterly commission, provided that
such payment shall in any event be due on or before each April 30, July 30,
October 30 and January 30 prior to the Stated Date, and (ii) if the Maker is
eligible to receive an annual bonus from the Payee pursuant to a written
employment contract with Payee, the Maker may elect to defer monthly payments
under this Note and instead make annual payments of accrued interest and
principal at the time of payment of such bonus, provided that such payment shall
in any event be due on or before each March 15 prior to the Stated Date.
Notwithstanding any other provision hereof, in the event that the amount of a
paycheck, commission or bonus is not sufficient to discharge a payment due
hereunder, the Maker shall be required to pay any difference to the Company in
cash at the time such payment is due. All payments hereunder shall be applied
first to accrued interest and the balance, if any, shall be applied to reduce
the principal amount hereof. If the period during which the Maker may exercise
the Warrants expires on a date (the"Expiration Date") prior to the Stated Date,
all amounts due under this Note shall become immediately due and payable on the
Expiration Date.
The Payee shall have an express contractual right of setoff against any
amounts otherwise due to the Maker for any payments due under this Promissory
Note, including any amounts due upon acceleration of the maturity hereof.
All sums of principal and interest past due under the terms of this Note
shall bear interest at a per annum interest rate equal to the maximum rate
allowed by law from the due date thereof until paid.
Any one or more of the following shall constitute an "Event of Default"
hereunder:
1. Failure by the Maker to pay any amount that has become due and
payable pursuant to any provision of this Note and such amount has
remained unpaid for a period of 10 days from the date of written
demand by the Payee;
2. Termination of the Maker's employment with the Payee for any
reason whatsoever, whether voluntary or involuntary, and whether
with or without cause;
3. A court of competent jurisdiction enters (i) a decree or order for
relief in respect of the Maker in an involuntary case or
proceeding under any applicable federal or state bankruptcy,
insolvency, reorganization or other similar law and such decree or
order remains in effect for a period of 60 days or (ii) a decree
or order adjudging the Maker a bankrupt or insolvent, or approving
as properly filed a petition seeking reorganization, arrangement,
adjustment or composition of or in respect of the Maker under any
applicable federal or state law, or appointing a custodian,
receiver, liquidator, assignee, trustee, sequestrator or other
similar official of the Maker or of any substantial part of the
property of the Maker and such decree or order remains in effect
for a period of 30 days; and
4. The Maker (i) commences a voluntary case or proceeding under any
applicable federal or state bankruptcy, insolvency, reorganization
or other similar law or any other case or proceeding to be
adjudicated a bankrupt or insolvent; (ii) files a petition, answer
or consent seeking reorganization or similar relief under any
applicable federal or state law; (iii) makes an assignment for the
benefit of creditors; or (iv) admits in writing its inability to
pay its debts generally as they become due.
In the event of a default hereunder or if this Note is placed in the hands
of an attorney for collection (whether or not suit is filed), or if this Note is
collected by suit or legal proceedings or through bankruptcy proceedings, the
Maker agrees to pay in addition to all sums then due hereon, including principal
and interest, all expenses of collection, including, without limitation,
reasonable attorneys' fees.
This Note may be prepaid in whole or in part from time to time, without
premium or penalty. Each prepayment of principal shall be accompanied by an
amount equal to the accrued interest on the principal amount prepaid to the date
of such prepayment.
The Payee shall be entitled to accelerate this Note and declare all sums
due hereunder immediately due and payable upon default by the Maker in any of
its obligations under the Seitel, Inc. 1998 Employee Stock Purchase Plan, any
agreement executed in connection therewith or this Note.
The Maker and any and all sureties, guarantors and endorsers of this Note
and all other parties now or hereafter liable hereon, severally waive grace,
demand, presentment for payment, notice of dishonor, protest and notice of
protest, notice of intention to accelerate, notice of acceleration, any other
notice and diligence in collecting and bringing suit against any party hereto
and agree (i) to all extensions and partial payments, with or without notice,
before or after maturity, (ii) to any substitution, exchange or release of any
security now or hereafter given for this Note, (iii) to the release of any party
primarily or secondarily liable hereon, and (iv) that it will not be necessary
for the holder hereof, in order to enforce payment of this Note, to first
institute or exhaust such holder's remedies against the Maker or any other party
liable therefor or against any security for this Note. No delay on the part of
the Payee in exercising any power or right under this Note shall operate as a
waiver of such power or right, nor shall any single or partial exercise of any
power of right preclude further exercise of that power or right.
A security interest in the Stock has been granted by Maker to the Payee to
secure the payment of this Note pursuant to the terms and conditions of that
certain Pledge by the Maker, dated as of the date hereof, and to secure the
payment of any costs and expenses incurred by the Payee in the collection and
enforcement hereof.
The Maker understands that this Note may be pledged to secure certain
obligations of the Payee and hereby consents to any such pledge.
All agreements between the Maker and the holder hereof, whether now
existing or hereafter arising and whether written or oral, are hereby expressly
limited so that in no contingency or event whatsoever, whether by reason of
acceleration of the maturity hereof, or otherwise, shall the amount paid, or
agreed to be paid, to the holder hereof for the use, forbearance or detention of
the funds advanced pursuant to this Note, or otherwise, or for the payment or
performance of any covenant or obligation contained herein or in any other
document or instrument evidencing, securing or pertaining to this Note exceed
the maximum amount permissible under applicable law. If from any circumstances
whatsoever fulfillment of any provision hereof or any other document or
instrument exceeds the maximum amount of interest prescribed by law, then ipso
facto, the obligation to be fulfilled shall be reduced to the limit of such
validity, and if from any such circumstances the holder hereof shall ever
receive anything of value deemed interest by applicable law, which would exceed
interest at the highest lawful rate, such amount which would be excessive
interest shall be applied to the reduction of the unpaid principal balance of
this Note or on account of any other principal indebtedness of the Maker to the
holder hereof, and not to the payment of interest, or if such excessive interest
exceeds the unpaid principal balance of this Note and such other indebtedness,
such excess shall be refunded to the Maker. All sums paid, or agreed to be paid,
by the Maker for the use, forbearance or detention of the indebtedness of the
Maker to the holder of this Note shall, to the extent permitted by applicable
law, be amortized, prorated, allocated and spread throughout the full term of
such indebtedness until payment in full so that the actual rate of interest on
account of such indebtedness is uniform throughout the term hereof. The terms
and provisions of this paragraph shall control and supersede every other
provision of all agreements between the Maker and the holder hereof.
This Note shall be governed by and construed in accordance with the laws of
the State of Texas.
All references to the Maker herein shall, and shall be deemed to, include
its successors and assigns, and all covenants, stipulations, promises and
agreements contained herein by or on behalf of the Maker shall be binding upon
its successors and assigns, whether so expressed or not.
-----------------------------------------------------
MAKER
<PAGE>
Exhibit D
to
Seitel, Inc. 1998 Employee Stock Purchase Plan
September ____, 1998
Seitel, Inc.
50 Briar Hollow Road West
7th Floor
Houston, Texas 77027
Re: 1998 Employee Stock Purchase
Ladies and Gentlemen:
I have on this date executed a promissory note in the principal amount of
$_________ (the "Note") as consideration for __________ shares (the "Shares") of
common stock, par value $0.01 per share, of Seitel, Inc. (the "Company"), and
warrants to purchase such Stock (the "Warrants," and together with the Stock,
the "Securities") purchased by me from the Company pursuant to the Seitel, Inc.
1998 Employee Stock Purchase Plan.
Pursuant to this letter, I hereby grant, assign, transfer and deliver to
the Company a security interest in the following property as security for all of
my obligations under the Note:
(i) the Shares;
(ii) stock powers executed in blank which are related to the Shares;
(iii) any and all stock rights, rights to subscribe, liquidating dividends,
cash dividends, stock dividends and dividends paid in stock, securities or other
property that I am or may hereafter become entitled to received on account of
the Shares, and in the event that I receive any such property, I will
immediately deliver same to the Company; provided, however, that I shall be
entitled to receive and retain any such property so long as no default shall
have occurred and be continuing under the Note; and
(iv) the proceeds of any and all property described in subparagraphs (i),
(ii) or (iii) above.
To perfect this security interest, I hereby agree to deliver with this
letter the certificate(s) representing the Stock, together with a stock power
executed in blank relating to the Stock, to the Chief Financial Officer of the
Company, as escrow agent, to hold until such time as the Note shall have been
paid in full.
In the event of a default under the Note, the Company is hereby fully
authorized and empowered, at any time thereafter and from time to time, to sell
or otherwise dispose of the Shares to satisfy the remaining unpaid amounts under
the Note and any expenses associated with such satisfaction. Any excess proceeds
from the sale shall be returned to me. I shall remain liable for any deficiency.
I understand that to the extent that the Note is repaid, the Company from
time to time upon my request will take all actions as may be necessary to
release some of the Shares from this security agreement and pledge so long as
both (i) the market value of the remaining Shares at the time of the release and
(ii) the average market price of the remaining Shares for the six months prior
thereto are equal to or not less than 100% of the outstanding balance under the
Note.
-----------------------------------------------------
Employee
ACCEPTED AND AGREED TO:
SEITEL, INC.
By:
---------------------------
Name:
---------------------------
Title:
---------------------------
<PAGE>
Exhibit E
to
Seitel, Inc. 1998 Employee Stock Purchase Plan
NEITHER THIS WARRANT NOR, IF THE WARRANT IS TRANSFERRED AS PERMITTED HEREIN, THE
SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF THIS WARRANT, HAVE BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AND NEITHER THIS WARRANT NOR THE
SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF THIS WARRANT MAY BE SOLD,
TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF IN WHOLE OR IN PART
IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT OR AN
OPINION OF COUNSEL REASONABLY SATISFACTORY TO COUNSEL TO SEITEL, INC., IN FORM
AND SUBSTANCE REASONABLY SATISFACTORY TO SEITEL, INC., THAT AN EXEMPTION FROM
REGISTRATION UNDER SUCH ACT OR THE RULES AND REGULATIONS THEREUNDER IS AVAILABLE
WITH RESPECT TO THE PROPOSED SALE, TRANSFER, PLEDGE, HYPOTHECATION OR OTHER
DISPOSITION.
SEITEL, INC.
COMMON STOCK PURCHASE WARRANT CERTIFICATE
TO PURCHASE [BLANK] SHARES OF COMMON STOCK
Certificate No. ESP-____
This Warrant Certificate certifies that [Employee Name, Address, and SSN]
is the registered holder ("Holder") of __________ Common Stock Purchase Warrants
(the "Warrants") to purchase shares of the $0.01 par value common stock ("Common
Stock") of SEITEL, INC., a Delaware corporation (the "Company"). Each Warrant
enables the Holder to purchase from the Company at any time until 5:00 p.m., New
York, New York, local time on _____________, 2003, subject to earlier
termination as specified in Section 10 herein, one fully paid and non-assessable
share of Common Stock ("Share") upon presentation and surrender of this Warrant
Certificate and upon payment of the Exercise Price per Share determined in
accordance with the terms hereof. Payment shall be made in lawful money of the
United States of America in cash delivered to the Company at its principal
office at 50 Briar Hollow Lane, 7th Floor West, Houston, Texas 77027. As
hereinafter provided, the Exercise Price and number of Shares purchasable upon
the exercise of the Warrants are subject to modification or adjustment upon the
happening of certain events.
THIS WARRANT IS NOT ASSIGNABLE OR TRANSFERABLE BY THE HOLDER EXCEPT BY WILL
OR THE LAWS OF DESCENT AND DISTRIBUTION UPON THE HOLDER'S DEATH OR, BY THE
ORIGINAL PURCHASER OF THIS WARRANT FROM THE COMPANY, TO AN IMMEDIATE FAMILY
MEMBER OR A TRUST OR BUSINESS ENTITY FORMED FOR THE BENEFIT OF AN IMMEDIATE
FAMILY MEMBER AS PROVIDED HEREIN.
1. Upon surrender to the Company, this Warrant Certificate may be exchanged
for another Warrant Certificate or Warrant Certificates evidencing a like
aggregate number of Warrants. If this Warrant Certificate shall be
exercised in part, the Holder shall be entitled to receive upon surrender
hereof another Warrant Certificate or Warrant Certificates evidencing the
number of Warrants not exercised. Subject to the provisions of Section 11
below, during the lifetime of the Holder, the Warrants may be exercised
only by the Holder. If the Holder dies or becomes disabled within the
meaning of Section 22(e)(3) of the Code prior to the termination date
specified herein without having exercised all of the Warrants, the
remaining Warrants may be exercised to the extent the Holder could have
exercised the Warrants on the date of his death or disability at any time
prior to the expiration hereof by (i) the Holder's estate or a person who
acquired the right to exercise the Warrants by bequest or inheritance or by
reason of the death of the Holder in the event of the Holder's death, or
(ii) the Holder or his personal representative in the event of the Holder's
disability, subject to the other terms of this Warrant Certificate and
applicable laws, rules and regulations. For purposes of this Warrant
Certificate, the Company shall determine the date of disability of the
Holder.
2. No Holder shall be deemed to be the holder of Common Stock or any other
securities of the Company that may at any time be issuable on the exercise
hereof for any purpose nor shall anything contained herein be construed to
confer upon the Holder any of the rights of a shareholder of the Company or
any right to vote for the election of directors or upon any matter
submitted to shareholders at any meeting thereof or to give or withhold
consent to any corporate action whether upon any reorganization, issuance
of stock, reclassification or conversion of stock, change of par value,
consolidation, merger, conveyance, or otherwise) or to receive notice of
meetings or to receive dividends or subscription rights or otherwise until
a Warrant shall have been exercised and the Common Stock purchasable upon
the exercise thereof shall have become issuable.
3. Each Holder consents and agrees with the Company and any other Holder that:
a. This Warrant Certificate is exercisable in whole or in part by the
Holder in person or by attorney duly authorized in writing at the
principal office of the Company.
b. The Company may deem and treat the person in whose name this Warrant
Certificate is registered as the absolute true and lawful owner
hereof for all purposes whatsoever.
c. Anything herein to the contrary notwithstanding, in no event shall the
Company be obligated to issue Warrant Certificates evidencing other
than a whole number of Warrants or issue certificates evidencing other
than a whole number of Shares upon the exercise of this Warrant
Certificate; provided, however, that the Company shall pay with
respect to any such fraction of a Share an amount of cash based upon
the current public market value (or book value, if there shall be no
public market value) for Shares purchasable upon exercise hereof. For
purposes of this Paragraph 3(c), the current public market value of a
share of Common Stock on any date shall be deemed to be the
arithmetical average of the following prices for such of the thirty
(30) business days immediately preceding such day as shall be
available: (i) for any of such days on which the Common Stock shall be
listed on a national securities exchange, the last sale price on such
day or, if there shall have been no sale on such day, the average of
the closing bid and asked prices on such exchange on such day, or (ii)
for any of such days on which the Common Stock shall not be listed on
a national securities exchange but shall be included in the National
Association of Securities Dealers Automated Quotation System
("NASDAQ"), the average of the closing bid and asked prices on such
day quoted by brokers and dealers making a market in NASDAQ, furnished
by any member of the New York Stock Exchange selected by the Company
for that purpose, or (iii) for any of such days on which the Common
Stock shall not be so listed on a national securities exchange or
included in NASDAQ but shall be quoted by three brokers regularly
making a market in such shares in the over-the-counter market, the
average of the closing bid and asked prices on such day, furnished by
any member of the New York Stock Exchange selected by the Company for
that purpose, or (iv) for any days on which the information described
in items (i), (ii) or (iii) above is unavailable, the book value per
share of the Common Stock as determined in accordance with generally
accepted accounting principles; provided, however, in its discretion
the Board of Directors may make an appropriate reduction in the
"current public market value" based upon any applicable trading
restrictions to particular shares of Common Stock.
d. The Warrants are not exercisable until the Promissory Note given by
the Holder in payment of a portion of the purchase price for the
Warrants shall have been paid in full.
4. The Exercise Price per Share for the Warrants shall equal $____ per Share.
5. The Company will pay any documentary stamp taxes attributable to the
initial issuance of the Shares issuable upon the exercise of the Warrants;
provided, however, that the Company shall not be required to pay any tax or
taxes which may be payable in respect of income or similar taxes of the
holder arising from such exercise or any transfer involved in the issuance
or delivery of any certificates for Shares in a name other than that of the
Holder in respect of which such Shares are issued, and in such case the
Company shall not be required to issue or deliver any certificate for
Shares or any Warrant until the person requesting the same has paid to the
Company the amount of such tax or has established to the Company's
satisfaction that such tax has been paid.
6. In case the Warrant Certificate shall be mutilated, lost, stolen or
destroyed, the Company may, in its discretion, issue and deliver in
exchange and substitution for and upon cancellation of the mutilated
Warrant Certificate, or in lieu of and substitution for the Warrant
Certificate, lost, stolen or destroyed, a new Warrant Certificate of like
tenor and representing an equivalent right or interest, but only upon
receipt of evidence satisfactory to the Company of such loss, theft or
destruction and an indemnity, if requested, also satisfactory to it.
7. The Company warrants that there have been reserved, and covenants that at
all times in the future it shall keep reserved, out of the authorized and
unissued Common Stock, a number of Shares sufficient to provide for the
exercise of the rights or purchase represented by this Warrant Certificate.
The Company agrees that all Shares issuable upon exercise of the Warrants
shall be, at the time of delivery of the certificates for such Shares,
validly issued and outstanding, fully paid and non assessable and that the
issuance of such Shares will not give rise to preemptive rights in favor of
existing shareholders.
8. The number of shares of Common Stock covered by this Warrant Certificate,
and the Exercise Price thereof, shall be subject to such adjustment as the
Board of Directors of the Company acting in good faith deems appropriate to
reflect any stock dividend, stock split, share combination, exchange of
shares, recapitalization, merger, consolidation, separation,
reorganization, liquidation or the like, of or by the Company. In the event
the Company shall be a party to any merger, consolidation or corporate
reorganization, as the result of which the Company shall be the surviving
corporation, the rights and duties of the Holder and the Company shall not
be affected in any manner. In the event the Company shall sell all or
substantially all of its assets or shall be a party to any merger,
consolidation or corporate reorganization, as the result of which the
Company shall not be the surviving corporation, or in the event any other
person or entity may make a tender or exchange offer for stock of the
Company (the surviving corporation, purchaser, or tendering corporation
being collectively referred to as the "Purchaser", and the transaction
being collectively referred to as the "Purchase"), then the Company may, at
its election, (a) reach an agreement with the Purchaser that the Purchaser
will assume the obligations of the Company under this Warrant Certificate;
(b) reach an agreement with the Purchaser that the Purchaser will convert
the Warrants represented by this Warrant Certificate into warrants of at
least equal value as to stock of the Purchaser; or (c) not later than
thirty (30) days prior to the effective date of the Purchase, notify the
Holder of the proposed Purchase and afford to the Holder the right prior to
such Purchase to exercise any then unexercised portion of the Warrants,
which exercise may be contingent upon consummation of the Purchase.
9. The Warrants may not be exercised in whole or in part and no cash or
certificates representing Shares shall be delivered if any requisite
approval or consent of any government authority of any kind having
jurisdiction over the exercise of the Warrants or of any stock exchange on
which the Common Stock is listed shall not have been secured or if such
exercise of delivery would cause any violation of any applicable laws,
regulations or stock exchange rules, including but not limited to
applicable Federal and State securities laws. The Holder of this Warrant
Certificate, each permitted transferee hereof and any holder and transferee
of any Shares, by his acceptance thereof, agrees that (i) no public
distribution of Warrants or Shares will be made in violation of the
Securities Act of 1933, as amended (the "Act"), and (ii) during such period
as the delivery of a prospectus with respect to Warrants or Shares may be
required by the Act, no public distribution of Warrants or Shares will be
made in a manner or on terms different from those set forth in, or without
delivery of, a prospectus then meeting the requirements of Section 10 of
the Act and in compliance with all applicable state securities laws. The
Holder of this Warrant Certificate and each permitted transferee hereof
further agrees that if any distribution of any of the Warrants or Shares is
proposed to be made by them otherwise than by delivery of a prospectus
meeting the requirements of Section 10 of the Act, such action shall be
taken only after submission to the Company of an opinion of counsel,
reasonably satisfactory in form and substance to the Company's counsel, to
the effect that the proposed distribution will not be in violation of the
Act or of applicable state law. Furthermore, it shall be a condition to the
transfer of the Warrants that any permitted transferee thereof deliver to
the Company his written agreement to accept and be bound by all of the
terms and conditions in this Warrant Certificate.
10. The Warrants shall terminate before the date specified on the first page of
this Warrant Certificate upon the earlier of (i) five business days after
the date of termination of employment if the original purchaser of the
Warrants from the Company (the "Original Purchaser") ceases to be an
employee of the Company or a Subsidiary of the Company for any reason other
than for death, disability (within the meaning of Section 22(e)(3) of the
Internal Revenue Code of 1986, as amended (the "Code")) or retirement after
age 65, or (ii) one year after the death, disability or retirement after
age 65 of the Original Purchaser if he ceases to be an employee of the
Company or a Subsidiary because of his death, disability or retirement
after age 65.
11. The Warrants shall not be transferable other than by will or by the laws of
descent and distribution, except that the Warrants may be transferred by
the Original Purchaser to members of the Original Purchaser's immediate
family who are U.S. residents or to trusts or business entities formed for
the benefit of members of the Original Purchaser's immediate family who are
U.S. residents. As used herein, immediate family means a parent, child,
grandchild, or spouse. A Warrant may not be subsequently transferred by the
immediate family member (or the trust or business entity formed for the
benefit of an immediate family member) of the Original Purchaser to whom
the Warrant is transferred other than by will or by the laws of descent and
distribution. If a Warrant is transferred to an immediate family member (or
a trust or business entity formed for the benefit of an immediate family
member), the Company may require investment representations upon exercise
of the Warrant and may impose such conditions upon the exercise of the
Warrant as may be required to comply with federal and state securities
laws, and the Shares of Common Stock issuable upon exercise of a Warrant by
such immediate family member (or such trust or business entity formed for
the benefit of an immediate family member) may be "restricted shares" as
such term is defined in Rule 144 under the Securities Act of 1933, as
amended, and may contain such restrictive legends as may be deemed
necessary by the Company.
12. In the event that the Original Purchaser transfers this Warrant to an
immediate family member, such transferee agrees and acknowledges that
neither this Warrant nor the shares of Common Stock issuable upon exercise
of this Warrant have been registered under the Securities Act of 1933, as
amended, and neither this Warrant nor the shares of Common Stock issuable
upon exercise of this Warrant may be sold, transferred, pledged,
hypothecated or otherwise disposed of in whole or in part in the absence of
an effective registration statement under such Act or an opinion of counsel
reasonably satisfactory to counsel to the Company in form and substance
reasonably satisfactory to the Company that an exemption from registration
under such Act or the rules and regulations thereunder is available with
respect to the proposed sale, transfer, pledge, hypothecation or other
disposition.
<PAGE>
WITNESS the following signatures as of this ___ day of September, 1998.
SEITEL, INC.
By: ______________________________________
PAUL A. FRAME, President
By: ______________________________________
DEBRA D. VALICE, Secretary
<PAGE>
PURCHASE FORM
TO: SEITEL, INC. DATE:
The undersigned hereby irrevocably elects to exercise the attached Warrant
Certificate, Certificate No. ESP- ____, to the extent of (number of shares)
Shares of Common Stock, $0.01 par value per share, of SEITEL, INC., and hereby
makes payment of $_________ in payment of the aggregate exercise price thereof.
INSTRUCTIONS FOR REGISTRATION OF SECURITIES
Name:
--------------------------------------
Address:
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--------------------------------------
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By:
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AMENDMENT NO. 4
This Amendment No. 4 dated as of August 10, 1999 ("Agreement") is among
Seitel, Inc., a Delaware corporation ("Borrower"); the Lenders (as defined
below) executing this Agreement; and The First National Bank of Chicago, as
agent for the Lenders ("Agent").
INTRODUCTION
A. The Borrower, the Lenders, and the Agent are parties to the Seitel, Inc.
Revolving Credit Agreement dated as of July 22, 1996, as amended by the First
Amendment dated as of August 30, 1996, the Second Amendment dated as of May 1,
1997, and the Third Amendment dated as of March 16, 1998 (as so amended, the
"Credit Agreement").
B. The Borrower, the Lenders, and the Agent desire to amend the Credit
Agreement in certain respects as set forth herein.
THEREFORE, the Borrower, the Lenders, and the Agent hereby agree as
follows:
Section 1. Definitions; References. Unless otherwise defined in this
Agreement, terms used in this Agreement which are defined in the Credit
Agreement shall have the meanings assigned to such terms in the Credit
Agreement.
Section 2. Amendments.
(a) In Article I of the Credit Agreement the following definitions are
amended in their entirety to read as follows or added in alphabetical order:
"Consolidated Debt" means, as of any date of determination, the total of
all Debt of the Borrower and the Restricted Subsidiaries outstanding on such
date, after eliminating all offsetting debits and credits between the Borrower
and the Restricted Subsidiaries and all other items required to be eliminated in
the course of the preparation of consolidated financial statements of the
Borrower and the Restricted Subsidiaries prepared in accordance with Agreement
Accounting Principles; provided that Consolidated Debt shall not include
Qualified Capital Obligations.
"Consolidated Net Worth" means, at any time, the sum, without duplication,
of (a) the total stockholders' equity which would be shown in consolidated
financial statements of the Borrower and the Restricted Subsidiaries prepared at
such time in accordance with Agreement Accounting Principles and (b) Qualified
Capital.
"Net Proceeds of Qualified Capital" means, with respect to any period, cash
proceeds (net of all costs and out-of-pocket expenses incurred in connection
therewith and in connection with the issuance and sale of any related Trust
Preferred Securities, including, without limitation, placement, underwriting and
brokerage fees and expenses) received by the Borrower during such period from
the sale of all Qualified Junior Subordinated Notes.
"Qualified Capital" means the total amount of capital in respect of
Qualified Junior Subordinated Notes and the Trust Preferred Securities related
thereto which would, on a consolidated basis, be shown in consolidated financial
statements of the Borrower and the Subsidiaries prepared at such time in
accordance with Agreement Accounting Principles, provided that in no event shall
the aggregate amount of Qualified Capital at any time exceed $125,000,000.
"Qualified Capital Obligations" means obligations of the Borrower in
respect of any Qualified Junior Subordinated Notes and Qualified Junior
Subordinated Guaranties.
"Qualified Junior Subordinated Guaranty" means, in respect of any issue of
Trust Preferred Securities, a Guaranty by the Borrower to the holders of such
Trust Preferred Securities of (a) the payment of all preferred cumulative cash
dividends accumulating thereon and (b) the payments due on liquidation or
redemption of such Trust Preferred Securities, but only in each case to the
extent of funds held by the Special Purpose Trust which shall have issued such
Trust Preferred Securities, and the obligations under which Guaranty shall be
unsecured and rank subordinate and junior in right of payment to all Senior Debt
(including, without limitation, all Debt of the Borrower under this Agreement,
the Loan Documents and the Notes) to the same extent and on the same terms as
the Qualified Junior Subordinated Notes issued by the Borrower to such Special
Purpose Trust are subordinated to Senior Debt.
"Qualified Junior Subordinated Notes" means any notes issued by the
Borrower to a Special Purpose Trust in a principal amount equal to the proceeds
received by such Special Purpose Trust from the issuance of Trust Preferred
Securities and paid by such Special Purpose Trust to the Borrower in
consideration for such notes, which notes shall (a) not mature, or otherwise
require the payment of any of the principal thereof, prior to June 1, 2029, (b)
be subject to the right of the Borrower to defer the payment of interest thereon
at any time or from time to time for a period of at least 20 consecutive
quarterly periods, during which deferral period the Borrower shall not pay any
dividends with respect to any of its capital stock or pay any principal,
interest or other amounts owing in respect of any Qualified Capital Obligations
or other Subordinated Debt, (c) be unsecured, (d) rank subordinate and junior in
right of payment to all Senior Debt (including, without limitation, all Debt of
the Borrower under this Agreement, the Loan Documents and the Notes) upon the
terms set forth in Exhibit A to the Amendment No. 4 dated as of August 10, 1999,
among the Borrower, the Lenders, and the Agent, and (e) when aggregated with all
other such notes, not exceed $125,000,000 in aggregate outstanding principal
amount.
"Special Purpose Trust" means a statutory business trust created under the
laws of the State of Delaware pursuant to the filing of a certificate of trust
with the Secretary of State of the State of Delaware, (a) the existence of which
shall be for the exclusive purpose of (i) issuing Trust Common Securities to the
Borrower and issuing and selling Trust Preferred Securities to investors, (ii)
using the proceeds from such Trust Preferred Securities to acquire Qualified
Junior Subordinated Notes and (iii) engaging in only those other activities
necessary or incidental to the foregoing, (b) the sole assets of which will be
such Qualified Junior Subordinated Notes and the proceeds thereof and (c) the
sole source of revenue of which will be payments under such Qualified Junior
Subordinated Notes. Notwithstanding anything else herein, any Special Purpose
Trust shall be deemed to be an Unrestricted Subsidiary.
"Subordinated Debt" means any Debt or other obligations of the Borrower
(including, without limitation, Qualified Capital Obligations) other than Senior
Debt.
"Trust Common Securities" means, in respect of a Special Purpose Trust,
securities issued by such Special Purpose Trust representing common undivided
beneficial interests in the assets of such Special Purpose Trust, 100% of which
securities shall be legally and beneficially owned by the Borrower.
"Trust Preferred Securities" means, in respect of a Special Purpose Trust,
securities issued by such Special Purpose Trust, having a stated par value and
liquidation value and entitling the holders thereof to the payment (unless
deferred) of preferred cumulative cash distributions at a fixed annual rate,
representing preferred undivided beneficial interests in the assets of such
Special Purpose Trust, provided that at the time of the initial issuance
thereof, the Senior Notes shall receive an investment grade rating from, or an
investment grade rating of the Senior Notes shall be confirmed by, a nationally
recognized rating agency.
(b) Paragraph (a) of Section 6.12 is amended in its entirety to read
as follows:
6.12 Restricted Payments and Restricted Investments.
(a) Limitation. The Borrower will not, and will not permit any of the
Restricted Subsidiaries to, directly or indirectly, declare, make or incur
any liability to make any Restricted Payment or make or authorize any
Restricted Investment unless immediately after giving effect to such
action:
(i) the sum of (x) the aggregate amount of outstanding Restricted
Investments (valued immediately after such action), plus (y) the
aggregate amount of Restricted Payments of the Borrower and the
Restricted Subsidiaries declared or made during the period commencing
on the date of this Agreement, and ending on the date such Restricted
Payment or Restricted Investment is declared or made, inclusive, would
not exceed the sum of
(A) $10,000,000, plus
(B) 50% of Consolidated Net Income for the period commencing
January 1, 1995 and ending on the date such Restricted Payment or
such Restricted Investment is declared or made (or minus 100% of
Consolidated Net Income for such period if Consolidated Net
Income for such period is a loss), plus
(C) the aggregate amount of Net Proceeds of Common Stock of
the Borrower for such period, plus
(D) the aggregate amount of Net Proceeds of Qualified
Capital for such period; and
(ii) the Borrower could incur, pursuant to Section 6.20, at least
$1 of additional Debt owing to a Person other than a Restricted
Subsidiary; and
(iii) no Default or Unmatured Default would exist.
Section 3. Representations and Warranties. The Borrowers represent and
warrant to the Agent and the Lenders that:
(a) the representations and warranties set forth in the Credit Agreement
are true and correct in all material respects as of the date of this Agreement,
except to the extent any such representation or warranty is stated to relate
solely to an earlier date, in which case such representation or warranty was
true and correct in all material respects as of such earlier date;
(b) (i) the execution, delivery, and performance of this Agreement have
been duly authorized by appropriate proceedings, and (ii) this Agreement
constitutes a legal, valid, and binding obligation of the Borrowers, enforceable
in accordance with its terms, except as limited by applicable bankruptcy,
insolvency, reorganization, moratorium, or similar laws affecting the rights of
creditors generally and general principles of equity; and
(c) as of the effectiveness of this Agreement, no Default or Event of
Default has occurred and is continuing.
Section 4. Effectiveness. This Agreement shall become effective and the
Credit Agreement shall be amended as provided in this Agreement upon the
occurrence of the following conditions precedent:
(a) the Borrowers, the Agent, and the Required Lenders shall have delivered
duly and validly executed originals of this Agreement to the Agent; and
(b) the representations and warranties in this Agreement shall be true and
correct in all material respects.
Section 5. Effect on Loan Documents.
(a) Except as amended herein, the Credit Agreement and the Loan Documents
remain in full force and effect as originally executed and amended heretofore.
Nothing herein shall act as a waiver of any of the Agent's or Lenders' rights
under the Loan Documents, as amended, including the waiver of any Default or
Unmatured Default, however denominated.
(b) This Agreement is a Loan Document for the purposes of the provisions of
the other Loan Documents. Without limiting the foregoing, any breach of
representations, warranties, and covenants under this Agreement may be a Default
or Unmatured Default under other Loan Documents.
Section 6. Assignment. Bank One, Texas, N.A. ("Bank One") hereby assigns
and delegates to The First National Bank of Chicago ("First Chicago") effective
as of the date hereof all of its rights and obligations under the Credit
Agreement, and First Chicago hereby accepts such assignment and delegation and
agrees to assume all of Bank One's obligations under the Credit Agreement. Bank
One's rights under Section 9.7 of the Credit Agreement shall survive this
assignment. The Borrower agrees, at First Chicago's request, to execute and
deliver a replacement Note to First Chicago in the amount of First Chicago's
Commitment after giving effect to this assignment.
Section 7. Choice of Law. This Agreement shall be governed by and construed
and enforced in accordance with the laws of the State of Illinois.
Section 8. Counterparts. This Agreement may be signed in any number of
counterparts, each of which shall be an original.
<PAGE>
EXECUTED as of the date first above written.
SEITEL, INC.
By: /s/Debra D. Valice
-----------------------------------------
Name: Debra D. Valice
Title: Chief Financial Officer
THE FIRST NATIONAL BANK OF
CHICAGO, individually and as Agent
By: /s/Helen A. Carr
-----------------------------------------
Name: Helen A. Carr
Title: First Vice President
BANK ONE, TEXAS, N.A.
By: /s/J.P. Garcia
-----------------------------------------
Name: J.P. Garcia
Title: Assistant Vice President
<PAGE>
ACKNOWLEDGMENT AND CONSENT BY SUBSIDIARY GUARANTORS
Each of the undersigned Subsidiary Guarantors (i) acknowledges its receipt
of a copy of and hereby consents to all of the terms and conditions of the
foregoing Amendment No. 4 and (ii) reaffirms its obligations under the
Subsidiary Guaranty dated as of July 22, 1996 in favor of The First National
Bank of Chicago, as agent.
SEITEL DATA CORP.
SEITEL DELAWARE, INC.
SEITEL MANAGEMENT, INC.
SEITEL GEOPHYSICAL, INC.
DDD ENERGY, INC.
SEITEL GAS & ENERGY CORP.
SEITEL POWER CORP.
SEITEL NATURAL GAS, INC.
MATRIX GEOPHYSICAL, INC.
EXSOL, INC.
DATATEL, INC.
SEITEL OFFSHORE CORP.
GEO-BANK, INC.
ALTERNATIVE COMMUNICATIONS
ENTERPRISES, INC.
SEITEL INTERNATIONAL, INC.
AFRICAN GEOPHYSICAL, INC.
By: /s/Debra D. Valice
-----------------------------------------
Name: Debra D. Valice
Title: Authorized Officer
SEITEL DATA LTD.
By: SEITEL DELAWARE, INC.,
its general partner
By: /s/Debra D. Valice
-----------------------------------------
Name: Debra D.Valice
Title: Vice President
<PAGE>
EXHIBIT A
Subordination Terms
Note: The term "Securities" refers to the instruments evidencing the
debt subordinated by the following provisions; the term "Holder"
refers to a holder of Securities.
SECTION [1.01]. Securities Subordinate to Senior Indebtedness
The Securities shall be subordinated to Senior Indebtedness as set forth in
this Article [One]. The Company covenants and agrees, and each Holder of a
Security of any series by such Holder's acceptance thereof likewise covenants
and agrees, that, to the extent and in the manner hereinafter set forth in this
Article [One], the indebtedness represented by the Securities of such series and
the payment of the principal amount, interest, premium (if any), and such other
amounts, if any, payable in respect of each and all of the Securities of such
series are hereby expressly made subordinate and subject in right of payment to
the prior payment in full of all Senior Indebtedness; provided, however, that no
provision of this Article [One] shall prevent the occurrence of any default or
Event of Default hereunder.
"Credit Agreement" means the Revolving Credit Agreement dated as of July
27, 1996 among The First National Bank of Chicago, as agent, the lenders party
thereto, and the Company, as amended and as the same may be further amended or
restated in whole or in part from time to time.
"Senior Notes" means, collectively, (i) (a) the Company's 7.17% Series A
Senior Notes due December 30, 2001 in the original aggregate principal amount of
$25,000,000, (b) the Company's 7.17% Series B Senior Notes due December 30, 2002
in the original aggregate principal amount of $27,500,000, and (c) the Company's
Series C Senior Notes due December 30, 2002 in the original aggregate principal
amount of $22,500,000, in each case, issued pursuant to separate Note Purchase
Agreements, dated as of December 28, 1995, as such notes and agreements may be
amended from time to time, and (ii) (a) the Company's 7.03% Series D Senior
Notes due February 15, 2004 in the original aggregate principal amount of
$20,000,000, (b) the Company's 7.28% Series E Senior Notes due February 15, 2009
in the original aggregate principal amount of $75,000,000, and (c) the Company's
Series F Senior Notes due February 15, 2009 in the original aggregate principal
amount of $43,000,000, in each case, issued pursuant to separate Note Purchase
Agreements, dated as of February 12, 1999, as such notes and agreements may be
amended from time to time.
"Senior Indebtedness" means the principal of (and premium or make-whole
amount, if any) and interest on (including interest, if any, accruing after the
filing of a petition initiating any proceeding pursuant to any Federal
bankruptcy law or any other applicable Federal or State law) and other amounts
due on or in connection with the Senior Notes, the Credit Agreement, and any
Indebtedness of the Company incurred, assumed or guaranteed by the Company,
whether outstanding on the date of the Indenture or thereafter incurred, assumed
or guaranteed and all renewals, extensions and refundings of any such
Indebtedness of the Company; provided, however, that the following will not
constitute Senior Indebtedness:
(a) any Indebtedness of the Company as to which, in the instrument creating
the same or evidencing the same or pursuant to which the same is outstanding, it
is expressly provided that such Indebtedness of the Company shall be
subordinated to or pari passu with the Securities;
(b) Indebtedness of the Company in respect of the Securities;
(c) any Indebtedness of the Company constituting trade accounts payable
arising in the ordinary course of business;
(d) any Indebtedness of the Company initially issued to any other [trust
which issues preferred securities or other securities similar to preferred
securities]; and
(e) any Indebtedness of the Company to any Subsidiary of the Company, other
than a trust referred to in the preceding clause (d).
SECTION [1.02]. Payment Over of Proceeds upon Dissolution, Etc.
Upon any distribution of assets of the Company in the event of
(a) any insolvency or bankruptcy case or proceeding, or any receivership,
liquidation, reorganization or other similar case or proceeding in connection
therewith, relative to the Company or to its creditors, as such, or to its
assets, or
(b) any liquidation, dissolution or other winding up of the Company,
whether voluntary or involuntary and whether or not involving insolvency or
bankruptcy, or
(c) any assignment for the benefit of creditors or any other marshalling of
assets and liabilities of the Company,
then and in such event:
(1) the holders of Senior Indebtedness shall be entitled to receive payment
in full of all amounts due or to become due on or in respect of all Senior
Indebtedness, or provision shall be made for such payment in cash, before the
Holders of the Securities of any series are entitled to receive any payment on
account of the principal amount, interest, premium (if any), or such other
amounts, if any, as may be provided for in respect of the Securities of such
series; and
(2) any payment or distribution of assets of the Company of any kind or
character, whether in cash, property or securities, by set-off or otherwise, to
which the Holders or the Trustee would be entitled but for the provisions of
this Article [One], including any such payment or distribution which may be
payable or deliverable by reason of the payment of any other Indebtedness of the
Company being subordinated to the payment of the Securities of such series,
shall be paid by the liquidating trustee or agent or other person making such
payment or distribution, whether a trustee in bankruptcy, a receiver or
liquidating trustee or otherwise, directly to the holders of Senior Indebtedness
or their representative or representatives or to the trustee or trustees under
any indenture under which any instruments evidencing any of such Senior
Indebtedness may have been issued, ratably according to the aggregate amounts
remaining unpaid on account of the principal of, and premium or make-whole
amount, if any, and interest on the Senior Indebtedness held or represented by
each, to the extent necessary to make payment in full of all Senior Indebtedness
remaining unpaid, after giving affect to any concurrent payment or distribution
to the holders of such Senior Indebtedness.
In the event that, notwithstanding the foregoing provisions of this Section
[1.02], the Trustee or the Holder of any Security of any series shall receive
any payment or distribution of assets of the Company of any kind or character,
whether in cash, property or securities, including any such payment or
distribution which may be payable or deliverable by reason of the payment of any
other Indebtedness of the Company being subordinated to the payment of the
Securities of such series, before all Senior Indebtedness is paid in full or
payment thereof provided for, and if such fact shall then have been made known
to the Trustee as provided in Section [1.11], or, as the case may be, such
Holder, then and in such event such payment or distribution shall be paid over
or delivered forthwith to the trustee in bankruptcy, receiver, liquidating
trustee, custodian, assignee, agent or other person making payment or
distribution of assets of the Company for application to the payment of all
Senior Indebtedness remaining unpaid, to the extent necessary to pay all Senior
Indebtedness in full, after giving effect to any concurrent payment or
distribution to or for the holders of Senior Indebtedness.
For purposes of this Article [One] only, the words "cash, property or
securities," or any combination thereof, shall be deemed not to include shares
of capital stock of the Company as reorganized or readjusted, or securities of
the Company or any other corporation provided for by a plan of reorganization or
readjustment the payment of which is subordinated, at least to the extent
provided in this Article [One] with respect to the Securities, to the payment of
all Senior Indebtedness which may at the time be outstanding and to any
securities issued to the holders of Senior Indebtedness in respect of the Senior
Indebtedness under any such plan of reorganization or readjustment.
SECTION [1.03]. Prior Payment to Senior Indebtedness upon Acceleration of
Securities.
In the event that any Securities of any series are declared due and payable
before their [Stated Maturity], then and in such event the holders of Senior
Indebtedness shall be entitled to receive payment in full of all amounts due or
to become due on or in respect of all Senior Indebtedness or provision shall be
made for such payment in cash, before the Holders of the Securities of such
series are entitled to receive any payment (including any payment which may be
payable by reason of the payment of any other indebtedness of the Company being
subordinated to the payment of the Securities of such series) by the Company on
account of the principal of (or premium or make-whole amount, if any) or
interest or other amounts on Securities of such series or on account of the
purchase or other acquisition of Securities of such series.
In the event that, notwithstanding the foregoing, the Company shall make
any payment to the Trustee or the Holder of any Securities of any series
prohibited by the foregoing provisions of this Section [1.03], and if such facts
then shall have been known or thereafter shall have been made known to the
Trustee (as provided in Section [1.11]) or to such Holder, as the case may be,
pursuant to the terms of this Indenture, then and in such event such payment
shall be paid over and delivered forthwith to the Company by or on behalf of the
person holding such payment for the benefit of the holders of Senior
Indebtedness.
The provisions of this Section [1.03] shall not apply to any payment with
respect to which Section [1.02] would be applicable.
SECTION [1.04]. Default in Senior Indebtedness.
In the event and during the continuation of any default by the Company in
the payment of principal, premium, if any, interest or any other payment due on
any Senior Indebtedness of the Company, as the case may be, beyond any
applicable grace period with respect thereto, or in the event that the maturity
of any Senior Indebtedness of the Company has been accelerated because of any
default, then, in any such case, no payment shall be made by the Company with
respect to the principal (including redemption payments, if any) of, premium or
make-whole amount, if any, or interest or other amounts on the Securities until
such default is cured or waived or ceases to exist or any such acceleration or
demand for payment has been rescinded.
In the event that, notwithstanding the foregoing, the Company shall make
any payment to the Trustee or the Holder of any Securities of any series
prohibited by the foregoing provisions of this Section [1.04], and if such facts
then shall have been known or thereafter shall have been made known to the
Trustee (as provided in Section [1.11]) or to such Holder, as the case may be,
pursuant to the terms of this Indenture, then and in such event such payment
shall be paid over and delivered forthwith to the Company by or on behalf of the
person holding such payment for the benefit of the holders of Senior
Indebtedness.
The provisions of this Section [1.04] shall not apply to any payment with
respect to which Section [1.02] would be applicable.
SECTION [1.05]. Limitations on Acceleration and Enforcement.
At any time when the Company may not make payments in respect of the
Securities as a result of the application of Section [1.04], no Holder of
Securities will:
(a) accelerate or cause or permit the acceleration of the maturity of any
of the Securities; or
(b) commence, cause the commencement of, participate in or support any
action or proceeding (whether at law or in equity) against the Company to
recover all or any part of the indebtedness represented by the Securities or any
action to commence or prosecute any bankruptcy or similar proceeding in respect
of the Company unless the holders of at least a majority in principal amount of
the Senior Notes at the time outstanding (exclusive of Senior Notes then owned
by the Company or any of its subsidiaries or affiliates) shall have agreed in
writing in advance to, and shall have joined in, such proceedings.
SECTION [1.06]. Payment Permitted if No Default.
Nothing contained in this Article [One] or elsewhere in this Indenture or
in any of the Securities shall prevent (a) the Company, at any time except
during the pendency of any case, proceeding, dissolution, liquidation or other
winding up, assignment for the benefit of creditors or other marshalling of
assets and liabilities of the Company referred to in Section [1.02] or under the
conditions described in Sections [1.03] or [1.04], from making payments at any
time of the principal amount, interest or such other amounts, if any, as may be
provided for in this Indenture, as the case may be, in respect of the
Securities, or (b) the application by the Trustee or the retention by any Holder
of any money deposited with it hereunder to the payment of or on account of the
principal amount, interest or such other amounts, if any, as may be provided for
in this Indenture, as the case may be, in respect of the Securities if the
Trustee did not have, at the time provided in the proviso to the first paragraph
of Section [1.11], notice that such payment would have been prohibited by the
provisions of this Article [One].
SECTION [1.07]. Subrogation Rights of Holders of Senior Indebtedness.
Subject to the payment in full of all Senior Indebtedness, the Holders of
the Securities of any series shall be subrogated to the extent of the payments
or distributions made to the holders of such Senior Indebtedness pursuant to the
provisions of this Article [One] to the rights of the holders of such Senior
Indebtedness to receive payments or distributions of cash, property or
securities applicable to the Senior Indebtedness until the principal amount,
interest or such other amounts, if any, as provided for in this Indenture, as
the case may be, in respect of the Securities of such series shall be paid in
full. For purposes of such subrogation, no payments or distributions to the
holders of the Senior Indebtedness of any cash, property or securities to which
the Holders of the Securities of such series or the Trustee would be entitled
except for the provisions of this Article [One], and no payments pursuant to the
provisions of this Article [One] to the Company or to the holders of Senior
Indebtedness by Holders of the Securities of such series or the Trustee, shall,
as between the Company, its creditors other than holders of Senior Indebtedness
and the Holders of the Securities of such series, be deemed to be a payment or
distribution by the Company to or on account of the Senior Indebtedness.
SECTION [1.08]. Provision Solely to Define Relative Rights.
The provisions of this Article [One] are and are intended solely for the
purpose of defining the relative rights of the Holders of the Securities of any
series, on one hand, and the holders of Senior Indebtedness, on the other hand.
Nothing contained in this Article [One] or elsewhere in this Indenture or in the
Securities of any series is intended to or shall:
(a) impair, as between the Company and the Holders of the Securities of
such series, the obligation of the Company, which is absolute and unconditional,
to pay to the Holders of the Securities of such series the principal amount,
interest or such other amounts, if any, as may be provided for in this
Indenture, as the case may be, in respect of the Securities of such series as
and when the same shall become due and payable in accordance with the terms of
the Securities of such series and this Indenture and which, subject to the
rights under this Article [One] of the holders of Senior Indebtedness, is
intended to rank equally with all other general obligations of the Company; or
(b) affect the relative rights against the Company of the Holders of the
Securities of such series and creditors of the Company other than holders of
Senior Indebtedness; or
(c) prevent the Trustee or the Holder of any Security of such series from
exercising all remedies otherwise permitted by applicable law upon default under
this Indenture, subject to the rights, if any, under this Article [One] of the
holders of Senior Indebtedness to receive cash, property or securities otherwise
payable or deliverable to the Trustee or such Holder.
SECTION [1.09]. Trustee to Effectuate Subordination.
Each Holder of a Security by such Holder's acceptance thereof authorizes
and directs the Trustee on such Holder's behalf to take such action as may be
necessary or appropriate to effectuate the subordination provided in this
Article [One] and appoints the Trustee such Holder's attorney-in-fact for any
and all such purposes.
SECTION [1.10]. No Waiver of Subordination Provision.
No right of any present or future holder of any Senior Indebtedness to
enforce subordination as herein provided shall at any time in any way be
prejudiced or impaired by any act or failure to act on the part of the Company
or by any act or failure to act, by any such holder, or by any noncompliance by
the Company with the terms, provisions and covenants of this Indenture,
regardless of any knowledge thereof any such holder may have or be otherwise
charged with.
Without in any way limiting the generality of the foregoing paragraph, the
holders of Senior Indebtedness may, at any time and from time to time, without
the consent of, or notice to, the Trustee or the Holders of the Securities of
any series, without incurring responsibility to the Holders of the Securities of
such series and without impairing or releasing the subordination provided in
this Article [One] or the obligations hereunder of the Holders of the Securities
of such series to the holders of Senior Indebtedness, do any one or more of the
following: (i) change the manner, place or terms of payment or extend the time
of payment of, or renew or alter, or increase the amount of, Senior
Indebtedness, or otherwise amend or supplement in any manner Senior Indebtedness
or any instrument evidencing the same or any agreement under which Senior
Indebtedness is outstanding; (ii) sell, exchange, release or otherwise dispose
of or deal with any property pledged, mortgaged or otherwise securing Senior
Indebtedness; (iii) release any person liable in any manner for the payment or
collection of Senior Indebtedness; (iv) exercise or refrain from exercising any
rights against the Company or any other person; and (v) apply any sums paid in
respect of Senior Indebtedness to Senior Indebtedness, regardless of who made
such payment or how such payment was realized.
SECTION [1.11]. Notice to Trustee.
The Company shall give prompt written notice to the Trustee of any fact
known to the Company which would prohibit the making of any payment to or by the
Trustee in respect of the Securities of any series. Failure to give such notice
shall not affect the subordination of the Securities of such series to Senior
Indebtedness. Notwithstanding the provisions of this Article [One] or any other
provision of this Indenture, the Trustee shall not be charged with knowledge of
the existence of any facts which would prohibit the making of any payment to or
by the Trustee in respect of the Securities of such series, unless and until the
Trustee shall have received written notice thereof in the manner prescribed by
this Indenture from the Company or a holder of Senior Indebtedness or from any
trustee or agent therefor; and, prior to the receipt of any such written notice,
the Trustee, subject to the provisions of Section [regarding the duties and
responsibilities of the Trustee], shall be entitled in all respects to assume
that no such facts exist; provided, however, that if the Trustee shall not have
received, at least three Business Days prior to the date upon which by the terms
hereof any money may become payable for any purpose (including, without
limitation, the payment of the principal amount, interest, or such other amounts
as may be provided for in this Indenture in respect of any Security), the notice
with respect to such money provided for in this Section [1.11], then, anything
herein contained to the contrary notwithstanding, the Trustee shall have the
full power and authority to receive such money and to apply the same to the
purpose for which such money was received and shall not be affected by any
notice to the contrary which may be received by it within three Business Days
prior to such date.
Subject to the provisions of Section [regarding the duties and
responsibilities of the Trustee], the Trustee shall be entitled to rely on the
delivery to it of a written notice by a person representing himself to be a
holder of Senior Indebtedness (or a trustee or agent on behalf of such holder)
to establish that such notice has been given by a holder of Senior Indebtedness
(or a trustee or agent on behalf of any such holder). In the event that the
Trustee determines in good faith that further evidence is required with respect
to the right of any person as a holder of Senior Indebtedness to participate in
any payment or distribution pursuant to this Article [One], the Trustee may
request such person to furnish evidence to the reasonable satisfaction of the
Trustee as to the amount of Senior Indebtedness held by such person, the extent
to which such person is entitled to participate in such payment or distribution
and any other facts pertinent to the rights of such person under this Article
[One], and if such evidence is not furnished, the Trustee may defer any payment
which it may be required to make for the benefit of such person pursuant to the
terms of this Indenture pending judicial determination as to the right of such
person to receive such payment.
SECTION [1.12]. Reliance on Judicial Order or Certificate of Liquidating
Agent.
Upon any payment or distribution of assets of the Company referred to in
this Article [One], the Trustee, subject to the provisions of Section [regarding
the duties and responsibilities of the Trustee], and the Holders of the
Securities of any series shall be entitled to rely upon any order or decree
entered by any court of competent jurisdiction in which such insolvency,
bankruptcy, receivership, liquidation, reorganization, dissolution, winding up
or similar case or proceeding is pending, or a certificate of the trustee in
bankruptcy, liquidating trustee, custodian, receiver, assignee for the benefit
of creditors, agent or other person making such payment or distribution,
delivered to the Trustee or to the Holders of Securities of such series, for the
purpose of ascertaining the persons entitled to participate in such payment or
distribution, the holders of Senior Indebtedness and other indebtedness of the
Company, the amount thereof or payable thereon, the amount or amounts paid or
distributed thereon and all other facts pertinent thereto or to this Article
[One].
SECTION [1.13]. Trustee Not Fiduciary for Holders of Senior Indebtedness.
The Trustee shall be deemed not to owe any fiduciary duty to the holders of
Senior Indebtedness. The Trustee shall not be charged with knowledge of the
existence of Senior Indebtedness (other than the Senior Notes) or of any facts
that would prohibit any payment hereunder unless the Trustee shall have received
notice thereof in the manner prescribed by this Indenture. With respect to the
holders of Senior Indebtedness, the Trustee undertakes to perform or to observe
only such of its covenants or obligation as are specifically set forth in this
Article [One] and no implied covenants or obligations with respect to holders of
Senior Indebtedness shall be read into this Indenture against the Trustee.
SECTION [1.14]. Rights of Trustee as Holder of Senior Indebtedness;
Preservation of Trustee=s Rights.
The Trustee in its individual capacity shall be entitled to all the rights
set forth in this Article [One] with respect to any Senior Indebtedness which
may at any time be held by it, to the same extent as any other holder of Senior
Indebtedness, and nothing in this Indenture shall deprive the Trustee of any of
its rights as such holder.
Nothing in this Article [One] shall apply to claims of, or payments to, the
Trustee under or pursuant to Section [concerning fees and expenses of the
Trustee].
SECTION [1.15]. Article [One] Applicable to Paying Agents.
The term "Trustee" as used in this Article [One] shall (unless the context
otherwise requires) be construed as extending to and including the Paying Agent
within its meaning as fully for all intents and purposes as if the Paying Agent
were named in this Article [One] in addition to or in place of the Trustee;
provided, however, that Sections [1.11] and [1.13] shall not apply to the
Company or any Affiliate of the Company if it or such Affiliate acts as Paying
Agent.
FIRST AMENDMENT TO NOTE PURCHASE AGREEMENT
THIS FIRST AMENDMENT, dated as of July 14, 1999 (the "Amendment"), to
the separate Note Purchase Agreements, dated as of February 12, 1999, is among
Seitel, Inc. (the "Company") and each of the institutions which is a signatory
to this Amendment (collectively, the "Noteholders").
RECITALS:
A. The Company and each of the Noteholders have heretofore entered into
separate Note Purchase Agreements dated as of February 12, 1999 (collectively,
as amended and in effect immediately prior to the effectiveness of this
Amendment, the "Existing Note Purchase Agreement"), pursuant to which the
Company issued: (a) $20,000,000 aggregate principal amount of its 7.03% Series D
Senior Notes due February 15, 2004 (the "Series D Notes"), (b) $75,000,000
aggregate principal amount of its 7.28% Series E Senior Notes due February 15,
2009 (the "Series E Notes"), and (c) $43,000,000 of its 7.43% Series F Senior
Notes due February 15, 2009 (the "Series F Notes", and together with the Series
D Notes and the Series E Notes, the "Notes").
B. Capitalized terms used herein shall have the respective meanings
ascribed thereto in the Existing Note Purchase Agreement unless herein defined
or the context shall otherwise require.
C. The Company and the Noteholders now desire to amend the Existing
Note Purchase Agreement in the respects, but only in the respects, hereinafter
set forth.
D. All requirements of law have been fully complied with and all other
acts and things necessary to make this Amendment a legal, valid and binding
instrument according to its terms for the purposes herein expressed have been
done or performed.
NOW, THEREFORE, for good and valuable consideration the receipt and
sufficiency of which are hereby acknowledged, the Company and the Noteholders do
hereby agree as follows:
SECTION 1. AMENDMENTS.
1.1 Amendment to Section 10.7(a). Section 10.7(a) of the Existing Note
Purchase Agreement is hereby amended and restated in its entirety as follows:
"10.7 Restricted Payments and Restricted Investments.
(a) Limitation. The Company will not, and will not
permit any of the Restricted Subsidiaries to, directly or
indirectly, declare, make or incur any liability to make any
Restricted Payment or make or authorize any Restricted
Investment unless immediately after giving effect to such
action:
(i) the sum of (x) the aggregate amount of
outstanding Restricted Investments (valued
immediately after such action), plus (y) the
aggregate amount of Restricted Payments of the
Company and the Restricted Subsidiaries declared or
made during the period commencing on the Closing
Date, and ending on the date such Restricted Payment
or Restricted Investment is declared or made,
inclusive, would not exceed the sum of
(A) Thirty-Five Million Dollars
($35,000,000), plus
(B) fifty percent (50%) of
Consolidated Net Income for the period
commencing January 1, 1999 and ending on the
date such Restricted Payment or such
Restricted Investment is declared or made
(or minus 100% of Consolidated Net Income
for such period if Consolidated Net Income
for such period is a loss), plus
(C) the aggregate amount of Net
Proceeds of Common Stock of the Company for
such period, plus
(D) the aggregate amount of Net
Proceeds of Qualified Capital for such
period; and
(ii) the Company could incur, pursuant to Section
10.3, at least One Dollar ($1) of additional Debt owing to a
Person other than a Restricted Subsidiary; and
(iii) no Default or Event of Default would exist."
<PAGE>
1.2 Amendment to Schedule B. Schedule B to the Existing Note Purchase
Agreement is hereby amended to modify in their entirety or add, each in their
proper alphabetical order, the following defined terms:
"Consolidated Debt -- means, as of any date of determination,
the total of all Debt of the Company and the Restricted Subsidiaries
outstanding on such date, after eliminating all offsetting debits and
credits between the Company and the Restricted Subsidiaries and all
other items required to be eliminated in the course of the preparation
of consolidated financial statements of the Company and the Restricted
Subsidiaries in accordance with GAAP, provided that Consolidated Debt
shall not include Qualified Capital Obligations."
"Consolidated Net Worth -- means, at any time, the sum,
without duplication, of (a) the total stockholders' equity which would
be shown in consolidated financial statements of the Company and the
Restricted Subsidiaries prepared at such time in accordance with GAAP
plus (b) Qualified Capital."
"Net Proceeds of Qualified Capital -- means, with respect to
any period, cash proceeds (net of all costs and out-of-pocket expenses
incurred in connection therewith and in connection with the issuance
and sale of any related Trust Preferred Securities, including, without
limitation, placement, underwriting and brokerage fees and expenses)
received by the Company during such period from the sale of all
Qualified Junior Subordinated Notes."
"Qualified Capital -- means the total amount of capital in
respect of Qualified Junior Subordinated Notes and the Trust Preferred
Securities related thereto which would, on a consolidated basis, be
shown in consolidated financial statements of the Company and the
Subsidiaries prepared at such time in accordance with GAAP, provided
that in no event shall the aggregate amount of Qualified Capital at any
time exceed One Hundred Twenty-Five Million Dollars ($125,000,000)."
"Qualified Capital Obligations -- means obligations of the
Company in respect of any Qualified Junior Subordinated Notes and
Qualified Junior Subordinated Guaranties."
"Qualified Junior Subordinated Guaranty -- means, in respect
of any issue of Trust Preferred Securities, a Guaranty by the Company
to the holders of such Trust Preferred Securities of (a) the payment of
all preferred cumulative cash dividends accumulating thereon and (b)
the payments due on liquidation or redemption of such Trust Preferred
Securities, but only in each case to the extent of funds held by the
Special Purpose Trust which shall have issued such Trust Preferred
Securities, and the obligations under which Guaranty shall be unsecured
and rank subordinate and junior in right of payment to all Senior Debt
(including, without limitation, all Debt of the Company under this
Agreement, the Other Agreements and the Notes) to the same extent and
on the same terms as the Qualified Junior Subordinated Notes issued by
the Company to such Special Purpose Trust are subordinated to Senior
Debt."
"Qualified Junior Subordinated Notes -- means any notes issued
by the Company to a Special Purpose Trust in a principal amount equal
to the proceeds received by such Special Purpose Trust from the
issuance of Trust Preferred Securities and paid by such Special Purpose
Trust to the Company in consideration for such notes, which notes shall
(a) not mature, or otherwise require the payment of any of the
principal thereof, prior to June 1, 2029, (b) be subject to the right
of the Company to defer the payment of interest thereon at any time or
from time to time for a period of at least twenty (20) consecutive
quarterly periods, during which deferral period the Company shall not
pay any dividends with respect to any of its capital stock or pay any
principal, interest or other amounts owing in respect of any Qualified
Capital Obligations or other Subordinated Debt, (c) be unsecured, (d)
rank subordinate and junior in right of payment to all Senior Debt
(including, without limitation, all Debt of the Company under this
Agreement, the Other Agreements and the Notes) upon the terms set forth
in Exhibit A to the First Amendment to Note Purchase Agreement, dated
as of July 14, 1999, among the Company and certain holders of Notes and
(e) when aggregated with all other such notes, not exceed One Hundred
Twenty-Five Million Dollars ($125,000,000) in aggregate outstanding
principal amount."
"Special Purpose Trust -- means a statutory business trust
created under the laws of the State of Delaware pursuant to the filing
of a certificate of trust with the Secretary of State of the State of
Delaware, (a) the existence of which shall be for the exclusive purpose
of (i) issuing Trust Common Securities to the Company and issuing and
selling Trust Preferred Securities to investors, (ii) using the
proceeds from such Trust Preferred Securities to acquire Qualified
Junior Subordinated Notes and (iii) engaging in only those other
activities necessary or incidental to the foregoing, (b) the sole
assets of which will be such Qualified Junior Subordinated Notes and
the proceeds thereof and (c) the sole source of revenue of which will
be payments under such Qualified Junior Subordinated Notes.
Notwithstanding anything else herein, any Special Purpose Trust shall
be deemed to be an Unrestricted Subsidiary."
<PAGE>
"Subordinated Debt -- means any Debt or other obligations of
the Company (including, without limitation, Qualified Capital
Obligations) other than Senior Debt."
"Trust Common Securities -- means, in respect of a Special
Purpose Trust, securities issued by such Special Purpose Trust
representing common undivided beneficial interests in the assets of
such Special Purpose Trust, one hundred percent (100%) of which
securities shall be legally and beneficially owned by the Company."
"Trust Preferred Securities -- means, in respect of a Special
Purpose Trust, securities issued by such Special Purpose Trust, having
a stated par value and liquidation value and entitling the holders
thereof to the payment (unless deferred) of preferred cumulative cash
distributions at a fixed annual rate, representing preferred undivided
beneficial interests in the assets of such Special Purpose Trust,
provided that at the time of the initial issuance thereof, the Notes
shall receive an investment grade rating from, or an investment grade
rating of the Notes shall be confirmed by, a nationally recognized
rating agency."
SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
To induce the Noteholders to execute and deliver this Amendment (which
representations shall survive such execution and delivery), the Company
represents and warrants to the Noteholders that:
(a) the Company is a corporation duly organized, validly existing
and in good standing under the laws of the state of Delaware;
(b) this Amendment has been duly authorized, executed and
delivered by the Company and this Amendment constitutes a legal, valid
and binding obligation, contract and agreement of the Company
enforceable against it in accordance with its terms, except as
enforcement may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws or equitable principles relating to or
limiting creditors' rights generally;
(c) the Existing Note Purchase Agreement, as amended by this
Amendment, constitutes the legal, valid and binding obligation,
contract and agreement of the Company enforceable against it in
accordance with its terms, except as enforcement may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws or
equitable principles relating to or limiting creditors' rights
generally;
(d) the execution, delivery and performance by the Company of
this Amendment (i) has been duly authorized by all requisite corporate
action and, if required, shareholder action, (ii) does not require the
consent or approval of any governmental or regulatory body or agency,
and (iii) will not (A) violate (1) any provision of law, statute, rule
or regulation or its certificate of incorporation or bylaws, (2) any
order of any court or any rule, regulation or order of any other
agency or government binding upon it, or (3) any provision of any
material indenture, agreement or other instrument to which it is a
party or by which its properties or assets are or may be bound, or (B)
result in a breach of or constitute (alone or with due notice or lapse
of time or both) a default under any indenture, agreement or other
instrument referred to in clause (iii)(A)(3) of this paragraph (d);
and
(e) as of the date hereof and after giving effect to this
Amendment, no Default or Event of Default has occurred which is
continuing.
SECTION 3. MISCELLANEOUS.
3.1 This Amendment shall be construed in connection with and as part of the
Existing Note Purchase Agreement, and except as modified and expressly amended
by this Amendment, all terms, conditions and covenants contained in the Existing
Note Purchase Agreement and the Notes are hereby ratified and shall be and
remain in full force and effect.
3.2 This Amendment constitutes a contract between the Company and the
Noteholders for the uses and purposes hereinabove set forth, and may be executed
in any number of counterparts, each executed counterpart constituting an
original, but all together only one agreement.
3.3 Whenever any of the parties hereto is referred to, such reference shall
be deemed to include the successors and assigns of such party, and all the
promises and agreements contained in this Amendment by or on behalf of the
Company and the Noteholders shall bind and inure to the benefit of the
respective successors and assigns of such parties, whether so expressed or not.
3.4 This Amendment constitutes the final written expression of all of the
terms hereof and is a complete and exclusive statement of those terms.
3.5 This Amendment shall be governed by and construed in accordance with
the internal laws of the State of New York.
3.6 This Amendment shall become effective at such time as it has been
executed by the Company and the Required Holders.
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Next page is signature page.]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused the execution of
this Amendment by duly authorized officers of each as of the date hereof.
SEITEL, INC.
By__________________________________
Debra D. Valice,
Executive Vice President - Finance
Accepted and Agreed to:
[NOTEHOLDER]
By____________________________________
Name:
Title:
<PAGE>
EXHIBIT A
Subordination Terms
Note:The term "Securities" refers to the instruments evidencing the debt
subordinated by the following provisions; the term "Holder" refers to
a holder of Securities.
SECTION [1.01]. Securities Subordinate to Senior Indebtedness
The Securities shall be subordinated to Senior Indebtedness as set
forth in this Article [One]. The Company covenants and agrees, and each Holder
of a Security of any series by such Holder's acceptance thereof likewise
covenants and agrees, that, to the extent and in the manner hereinafter set
forth in this Article [One], the indebtedness represented by the Securities of
such series and the payment of the principal amount, interest, premium (if any),
and such other amounts, if any, payable in respect of each and all of the
Securities of such series are hereby expressly made subordinate and subject in
right of payment to the prior payment in full of all Senior Indebtedness;
provided, however, that no provision of this Article [One] shall prevent the
occurrence of any default or Event of Default hereunder.
"Senior Notes" means, collectively, (i) (a) the Company's 7.17% Series
A Senior Notes due December 30, 2001 in the original aggregate principal amount
of $25,000,000, (b) the Company's 7.17% Series B Senior Notes due December 30,
2002 in the original aggregate principal amount of $27,500,000, and (c) the
Company's Series C Senior Notes due December 30, 2002 in the original aggregate
principal amount of $22,500,000, in each case, issued pursuant to separate Note
Purchase Agreements, dated as of December 28, 1995, as such notes and agreements
may be amended from time to time, and (ii) (a) the Company's 7.03% Series D
Senior Notes due February 15, 2004 in the original aggregate principal amount of
$20,000,000, (b) the Company's 7.28% Series E Senior Notes due February 15, 2009
in the original aggregate principal amount of $75,000,000, and (c) the Company's
Series F Senior Notes due February 15, 2009 in the original aggregate principal
amount of $43,000,000, in each case, issued pursuant to separate Note Purchase
Agreements, dated as of February 12, 1999, as such notes and agreements may be
amended from time to time.
"Senior Indebtedness" means the principal of (and premium or make-whole
amount, if any) and interest on (including interest, if any, accruing after the
filing of a petition initiating any proceeding pursuant to any Federal
bankruptcy law or any other applicable Federal or State law) and other amounts
due on or in connection with the Senior Notes and any Indebtedness of the
Company incurred, assumed or guaranteed by the Company, whether outstanding on
the date of the Indenture or thereafter incurred, assumed or guaranteed and all
renewals, extensions and refundings of any such Indebtedness of the Company;
provided, however, that the following will not constitute Senior Indebtedness:
<PAGE>
(a) any Indebtedness of the Company as to which, in the
instrument creating the same or evidencing the same or pursuant to
which the same is outstanding, it is expressly provided that such
Indebtedness of the Company shall be subordinated to or pari passu with
the Securities;
(b) Indebtedness of the Company in respect of the Securities;
(c) any Indebtedness of the Company constituting trade
accounts payable arising in the ordinary course of business;
(d) any Indebtedness of the Company initially issued to any
other [trust which issues preferred securities or other securities
similar to preferred securities]; and
(e) any Indebtedness of the Company to any Subsidiary of the
Company, other than a trust referred to in the preceding clause (d).
SECTION [1.02]. Payment Over of Proceeds upon Dissolution, Etc.
Upon any distribution of assets of the Company in the event of
(a) any insolvency or bankruptcy case or proceeding, or any
receivership, liquidation, reorganization or other similar case or
proceeding in connection therewith, relative to the Company or to its
creditors, as such, or to its assets, or
(b) any liquidation, dissolution or other winding up of the
Company, whether voluntary or involuntary and whether or not involving
insolvency or bankruptcy, or
(c) any assignment for the benefit of creditors or any other
marshalling of assets and liabilities of the Company,
then and in such event:
(1) the holders of Senior Indebtedness shall be entitled to
receive payment in full of all amounts due or to become due on or in
respect of all Senior Indebtedness, or provision shall be made for such
payment in cash, before the Holders of the Securities of any series are
entitled to receive any payment on account of the principal amount,
interest, premium (if any), or such other amounts, if any, as may be
provided for in respect of the Securities of such series; and
<PAGE>
(2) any payment or distribution of assets of the Company of
any kind or character, whether in cash, property or securities, by
set-off or otherwise, to which the Holders or the Trustee would be
entitled but for the provisions of this Article [One], including any
such payment or distribution which may be payable or deliverable by
reason of the payment of any other Indebtedness of the Company being
subordinated to the payment of the Securities of such series, shall be
paid by the liquidating trustee or agent or other person making such
payment or distribution, whether a trustee in bankruptcy, a receiver or
liquidating trustee or otherwise, directly to the holders of Senior
Indebtedness or their representative or representatives or to the
trustee or trustees under any indenture under which any instruments
evidencing any of such Senior Indebtedness may have been issued,
ratably according to the aggregate amounts remaining unpaid on account
of the principal of, and premium or make-whole amount, if any, and
interest on the Senior Indebtedness held or represented by each, to the
extent necessary to make payment in full of all Senior Indebtedness
remaining unpaid, after giving affect to any concurrent payment or
distribution to the holders of such Senior Indebtedness.
In the event that, notwithstanding the foregoing provisions of this
Section [1.02], the Trustee or the Holder of any Security of any series shall
receive any payment or distribution of assets of the Company of any kind or
character, whether in cash, property or securities, including any such payment
or distribution which may be payable or deliverable by reason of the payment of
any other Indebtedness of the Company being subordinated to the payment of the
Securities of such series, before all Senior Indebtedness is paid in full or
payment thereof provided for, and if such fact shall then have been made known
to the Trustee as provided in Section [1.11], or, as the case may be, such
Holder, then and in such event such payment or distribution shall be paid over
or delivered forthwith to the trustee in bankruptcy, receiver, liquidating
trustee, custodian, assignee, agent or other person making payment or
distribution of assets of the Company for application to the payment of all
Senior Indebtedness remaining unpaid, to the extent necessary to pay all Senior
Indebtedness in full, after giving effect to any concurrent payment or
distribution to or for the holders of Senior Indebtedness.
For purposes of this Article [One] only, the words "cash, property or
securities," or any combination thereof, shall be deemed not to include shares
of capital stock of the Company as reorganized or readjusted, or securities of
the Company or any other corporation provided for by a plan of reorganization or
readjustment the payment of which is subordinated, at least to the extent
provided in this Article [One] with respect to the Securities, to the payment of
all Senior Indebtedness which may at the time be outstanding and to any
securities issued to the holders of Senior Indebtedness in respect of the Senior
Indebtedness under any such plan of reorganization or readjustment.
SECTION [1.03].Prior Payment to Senior Indebtedness upon Acceleration of
Securities.
In the event that any Securities of any series are declared due and
payable before their [Stated Maturity], then and in such event the holders of
Senior Indebtedness shall be entitled to receive payment in full of all amounts
due or to become due on or in respect of all Senior Indebtedness or provision
shall be made for such payment in cash, before the Holders of the Securities of
such series are entitled to receive any payment (including any payment which may
be payable by reason of the payment of any other indebtedness of the Company
being subordinated to the payment of the Securities of such series) by the
Company on account of the principal of (or premium or make-whole amount, if any)
or interest or other amounts on Securities of such series or on account of the
purchase or other acquisition of Securities of such series.
In the event that, notwithstanding the foregoing, the Company shall
make any payment to the Trustee or the Holder of any Securities of any series
prohibited by the foregoing provisions of this Section [1.03], and if such facts
then shall have been known or thereafter shall have been made known to the
Trustee (as provided in Section [1.11]) or to such Holder, as the case may be,
pursuant to the terms of this Indenture, then and in such event such payment
shall be paid over and delivered forthwith to the Company by or on behalf of the
person holding such payment for the benefit of the holders of Senior
Indebtedness.
The provisions of this Section [1.03] shall not apply to any payment
with respect to which Section [1.02] would be applicable.
SECTION [1.04]. Default in Senior Indebtedness.
In the event and during the continuation of any default by the Company
in the payment of principal, premium, if any, interest or any other payment due
on any Senior Indebtedness of the Company, as the case may be, beyond any
applicable grace period with respect thereto, or in the event that the maturity
of any Senior Indebtedness of the Company has been accelerated because of any
default, then, in any such case, no payment shall be made by the Company with
respect to the principal (including redemption payments, if any) of, premium or
make-whole amount, if any, or interest or other amounts on the Securities until
such default is cured or waived or ceases to exist or any such acceleration or
demand for payment has been rescinded.
In the event that, notwithstanding the foregoing, the Company shall
make any payment to the Trustee or the Holder of any Securities of any series
prohibited by the foregoing provisions of this Section [1.04], and if such facts
then shall have been known or thereafter shall have been made known to the
Trustee (as provided in Section [1.11]) or to such Holder, as the case may be,
pursuant to the terms of this Indenture, then and in such event such payment
shall be paid over and delivered forthwith to the Company by or on behalf of the
person holding such payment for the benefit of the holders of Senior
Indebtedness.
The provisions of this Section [1.04] shall not apply to any payment
with respect to which Section [1.02] would be applicable.
SECTION [1.05]. Limitations on Acceleration and Enforcement.
At any time when the Company may not make payments in respect of the
Securities as a result of the application of Section [1.04], no Holder of
Securities will:
(a) accelerate or cause or permit the acceleration of the
maturity of any of the Securities; or
(b) commence, cause the commencement of, participate in or
support any action or proceeding (whether at law or in equity) against
the Company to recover all or any part of the indebtedness represented
by the Securities or any action to commence or prosecute any bankruptcy
or similar proceeding in respect of the Company unless the holders of
at least a majority in principal amount of the Senior Notes at the time
outstanding (exclusive of Senior Notes then owned by the Company or any
of its subsidiaries or affiliates) shall have agreed in writing in
advance to, and shall have joined in, such proceedings.
SECTION [1.06]. Payment Permitted if No Default.
Nothing contained in this Article [One] or elsewhere in this Indenture
or in any of the Securities shall prevent (a) the Company, at any time except
during the pendency of any case, proceeding, dissolution, liquidation or other
winding up, assignment for the benefit of creditors or other marshalling of
assets and liabilities of the Company referred to in Section [1.02] or under the
conditions described in Sections [1.03] or [1.04], from making payments at any
time of the principal amount, interest or such other amounts, if any, as may be
provided for in this Indenture, as the case may be, in respect of the
Securities, or (b) the application by the Trustee or the retention by any Holder
of any money deposited with it hereunder to the payment of or on account of the
principal amount, interest or such other amounts, if any, as may be provided for
in this Indenture, as the case may be, in respect of the Securities if the
Trustee did not have, at the time provided in the proviso to the first paragraph
of Section [1.11], notice that such payment would have been prohibited by the
provisions of this Article [One].
SECTION [1.07]. Subrogation Rights of Holders of Senior Indebtedness.
Subject to the payment in full of all Senior Indebtedness, the Holders
of the Securities of any series shall be subrogated to the extent of the
payments or distributions made to the holders of such Senior Indebtedness
pursuant to the provisions of this Article [One] to the rights of the holders of
such Senior Indebtedness to receive payments or distributions of cash, property
or securities applicable to the Senior Indebtedness until the principal amount,
interest or such other amounts, if any, as provided for in this Indenture, as
the case may be, in respect of the Securities of such series shall be paid in
full. For purposes of such subrogation, no payments or distributions to the
holders of the Senior Indebtedness of any cash, property or securities to which
the Holders of the Securities of such series or the Trustee would be entitled
except for the provisions of this Article [One], and no payments pursuant to the
provisions of this Article [One] to the Company or to the holders of Senior
Indebtedness by Holders of the Securities of such series or the Trustee, shall,
as between the Company, its creditors other than holders of Senior Indebtedness
and the Holders of the Securities of such series, be deemed to be a payment or
distribution by the Company to or on account of the Senior Indebtedness.
SECTION [1.08]. Provision Solely to Define Relative Rights.
The provisions of this Article [One] are and are intended solely for
the purpose of defining the relative rights of the Holders of the Securities of
any series, on one hand, and the holders of Senior Indebtedness, on the other
hand. Nothing contained in this Article [One] or elsewhere in this Indenture or
in the Securities of any series is intended to or shall:
(a) impair, as between the Company and the Holders of the
Securities of such series, the obligation of the Company, which is
absolute and unconditional, to pay to the Holders of the Securities of
such series the principal amount, interest or such other amounts, if
any, as may be provided for in this Indenture, as the case may be, in
respect of the Securities of such series as and when the same shall
become due and payable in accordance with the terms of the Securities
of such series and this Indenture and which, subject to the rights
under this Article [One] of the holders of Senior Indebtedness, is
intended to rank equally with all other general obligations of the
Company; or
(b) affect the relative rights against the Company of the
Holders of the Securities of such series and creditors of the Company
other than holders of Senior Indebtedness; or
(c) prevent the Trustee or the Holder of any Security of such
series from exercising all remedies otherwise permitted by applicable
law upon default under this Indenture, subject to the rights, if any,
under this Article [One] of the holders of Senior Indebtedness to
receive cash, property or securities otherwise payable or deliverable
to the Trustee or such Holder.
SECTION [1.09]. Trustee to Effectuate Subordination.
Each Holder of a Security by such Holder's acceptance thereof
authorizes and directs the Trustee on such Holder's behalf to take such action
as may be necessary or appropriate to effectuate the subordination provided in
this Article [One] and appoints the Trustee such Holder's attorney-in-fact for
any and all such purposes.
SECTION [1.10]. No Waiver of Subordination Provision.
No right of any present or future holder of any Senior Indebtedness to
enforce subordination as herein provided shall at any time in any way be
prejudiced or impaired by any act or failure to act on the part of the Company
or by any act or failure to act, by any such holder, or by any noncompliance by
the Company with the terms, provisions and covenants of this Indenture,
regardless of any knowledge thereof any such holder may have or be otherwise
charged with.
Without in any way limiting the generality of the foregoing paragraph,
the holders of Senior Indebtedness may, at any time and from time to time,
without the consent of, or notice to, the Trustee or the Holders of the
Securities of any series, without incurring responsibility to the Holders of the
Securities of such series and without impairing or releasing the subordination
provided in this Article [One] or the obligations hereunder of the Holders of
the Securities of such series to the holders of Senior Indebtedness, do any one
or more of the following: (i) change the manner, place or terms of payment or
extend the time of payment of, or renew or alter, or increase the amount of,
Senior Indebtedness, or otherwise amend or supplement in any manner Senior
Indebtedness or any instrument evidencing the same or any agreement under which
Senior Indebtedness is outstanding; (ii) sell, exchange, release or otherwise
dispose of or deal with any property pledged, mortgaged or otherwise securing
Senior Indebtedness; (iii) release any person liable in any manner for the
payment or collection of Senior Indebtedness; (iv) exercise or refrain from
exercising any rights against the Company or any other person; and (v) apply any
sums paid in respect of Senior Indebtedness to Senior Indebtedness, regardless
of who made such payment or how such payment was realized.
SECTION [1.11]. Notice to Trustee.
The Company shall give prompt written notice to the Trustee of any fact
known to the Company which would prohibit the making of any payment to or by the
Trustee in respect of the Securities of any series. Failure to give such notice
shall not affect the subordination of the Securities of such series to Senior
Indebtedness. Notwithstanding the provisions of this Article [One] or any other
provision of this Indenture, the Trustee shall not be charged with knowledge of
the existence of any facts which would prohibit the making of any payment to or
by the Trustee in respect of the Securities of such series, unless and until the
Trustee shall have received written notice thereof in the manner prescribed by
this Indenture from the Company or a holder of Senior Indebtedness or from any
trustee or agent therefor; and, prior to the receipt of any such written notice,
the Trustee, subject to the provisions of Section [regarding the duties and
responsibilities of the Trustee], shall be entitled in all respects to assume
that no such facts exist; provided, however, that if the Trustee shall not have
received, at least three Business Days prior to the date upon which by the terms
hereof any money may become payable for any purpose (including, without
limitation, the payment of the principal amount, interest, or such other amounts
as may be provided for in this Indenture in respect of any Security), the notice
with respect to such money provided for in this Section [1.11], then, anything
herein contained to the contrary notwithstanding, the Trustee shall have the
full power and authority to receive such money and to apply the same to the
purpose for which such money was received and shall not be affected by any
notice to the contrary which may be received by it within three Business Days
prior to such date.
Subject to the provisions of Section [regarding the duties and
responsibilities of the Trustee], the Trustee shall be entitled to rely on the
delivery to it of a written notice by a person representing himself to be a
holder of Senior Indebtedness (or a trustee or agent on behalf of such holder)
to establish that such notice has been given by a holder of Senior Indebtedness
(or a trustee or agent on behalf of any such holder). In the event that the
Trustee determines in good faith that further evidence is required with respect
to the right of any person as a holder of Senior Indebtedness to participate in
any payment or distribution pursuant to this Article [One], the Trustee may
request such person to furnish evidence to the reasonable satisfaction of the
Trustee as to the amount of Senior Indebtedness held by such person, the extent
to which such person is entitled to participate in such payment or distribution
and any other facts pertinent to the rights of such person under this Article
[One], and if such evidence is not furnished, the Trustee may defer any payment
which it may be required to make for the benefit of such person pursuant to the
terms of this Indenture pending judicial determination as to the right of such
person to receive such payment.
SECTION [1.12]. Reliance on Judicial Order or Certificate of
Liquidating Agent.
Upon any payment or distribution of assets of the Company referred to
in this Article [One], the Trustee, subject to the provisions of Section
[regarding the duties and responsibilities of the Trustee], and the Holders of
the Securities of any series shall be entitled to rely upon any order or decree
entered by any court of competent jurisdiction in which such insolvency,
bankruptcy, receivership, liquidation, reorganization, dissolution, winding up
or similar case or proceeding is pending, or a certificate of the trustee in
bankruptcy, liquidating trustee, custodian, receiver, assignee for the benefit
of creditors, agent or other person making such payment or distribution,
delivered to the Trustee or to the Holders of Securities of such series, for the
purpose of ascertaining the persons entitled to participate in such payment or
distribution, the holders of Senior Indebtedness and other indebtedness of the
Company, the amount thereof or payable thereon, the amount or amounts paid or
distributed thereon and all other facts pertinent thereto or to this Article
[One].
SECTION [1.13]. Trustee Not Fiduciary for Holders of Senior
Indebtedness.
The Trustee shall be deemed not to owe any fiduciary duty to the
holders of Senior Indebtedness. The Trustee shall not be charged with knowledge
of the existence of Senior Indebtedness (other than the Senior Notes) or of any
facts that would prohibit any payment hereunder unless the Trustee shall have
received notice thereof in the manner prescribed by this Indenture. With respect
to the holders of Senior Indebtedness, the Trustee undertakes to perform or to
observe only such of its covenants or obligation as are specifically set forth
in this Article [One] and no implied covenants or obligations with respect to
holders of Senior Indebtedness shall be read into this Indenture against the
Trustee.
SECTION [1.14]. Rights of Trustee as Holder of Senior Indebtedness;
Preservation of Trustee's Rights.
The Trustee in its individual capacity shall be entitled to all the
rights set forth in this Article [One] with respect to any Senior Indebtedness
which may at any time be held by it, to the same extent as any other holder of
Senior Indebtedness, and nothing in this Indenture shall deprive the Trustee of
any of its rights as such holder.
Nothing in this Article [One] shall apply to claims of, or payments to,
the Trustee under or pursuant to Section [concerning fees and expenses of the
Trustee].
SECTION [1.15]. Article [One] Applicable to Paying Agents.
The term "Trustee" as used in this Article [One] shall (unless the
context otherwise requires) be construed as extending to and including the
Paying Agent within its meaning as fully for all intents and purposes as if the
Paying Agent were named in this Article [One] in addition to or in place of the
Trustee; provided, however, that Sections [1.11] and [1.13] shall not apply to
the Company or any Affiliate of the Company if it or such Affiliate acts as
Paying Agent.
SECOND AMENDMENT TO NOTE PURCHASE AGREEMENT
THIS SECOND AMENDMENT, dated as of July 14, 1999 (the "Amendment"), to
the separate Note Purchase Agreements, dated as of December 28, 1995, is among
Seitel, Inc. (the "Company") and each of the institutions which is a signatory
to this Amendment (collectively, the "Noteholders").
RECITALS:
A. The Company and each of the Noteholders have heretofore entered
into separate Note Purchase Agreements dated as of December 28, 1995
(collectively, as amended and in effect immediately prior to the effectiveness
of this Amendment, the "Existing Note Purchase Agreement"), pursuant to which
the Company issued: (a) $25,000,000 aggregate principal amount of its 7.17%
Series A Senior Notes due December 30, 2001 (the "Series A Notes"), (b)
$27,500,000 aggregate principal amount of its 7.17% Series B Senior Notes due
December 30, 2002 (the "Series B Notes"), and (c) $22,500,000 of its Series C
Senior Notes due December 30, 2002 (the "Series C Notes", and together with the
Series A Notes and the Series B Notes, the "Notes").
B. Capitalized terms used herein shall have the respective meanings
ascribed thereto in the Existing Note Purchase Agreement unless herein defined
or the context shall otherwise require.
C. The Company and the Noteholders now desire to amend the Existing
Note Purchase Agreement in the respects, but only in the respects, hereinafter
set forth.
D. All requirements of law have been fully complied with and all other
acts and things necessary to make this Amendment a legal, valid and binding
instrument according to its terms for the purposes herein expressed have been
done or performed.
NOW, THEREFORE, for good and valuable consideration the receipt and
sufficiency of which are hereby acknowledged, the Company and the Noteholders do
hereby agree as follows:
SECTION 1. AMENDMENTS.
1.1 Amendment to Section 10.7(a). Section 10.7(a) of the Existing Note
Purchase Agreement is hereby amended and restated in its entirety as follows:
"10.7 Restricted Payments and Restricted Investments.
(a) Limitation. The Company will not, and will not
permit any of the Restricted Subsidiaries to, directly or
indirectly, declare, make or incur any liability to make any
Restricted Payment or make or authorize any Restricted
Investment unless immediately after giving effect to such
action:
(i) the sum of (x) the aggregate amount of
outstanding Restricted Investments (valued
immediately after such action), plus (y) the
aggregate amount of Restricted Payments of the
Company and the Restricted Subsidiaries declared or
made during the period commencing on the Series A and
B Closing Date, and ending on the date such
Restricted Payment or Restricted Investment is
declared or made, inclusive, would not exceed the sum
of
(A) Ten Million Dollars
($10,000,000), plus
(B) fifty percent (50%) of
Consolidated Net Income for the period
commencing July 1, 1995 and ending on the
date such Restricted Payment or such
Restricted Investment is declared or made
(or minus 100% of Consolidated Net Income
for such period if Consolidated Net Income
for such period is a loss), plus
(C) the aggregate amount of Net
Proceeds of Common Stock of the Company for
such period, plus
(D) the aggregate amount of
Net Proceeds of Qualified Capital for such
period; and
(ii) the Company could incur, pursuant to Section
10.3, at least One Dollar ($1) of additional Debt owing to a
Person other than a Restricted Subsidiary; and
(iii) no Default or Event of Default would exist."
1.2 Amendment to Schedule B. Schedule B to the Existing Note Purchase
Agreement is hereby amended to modify in their entirety or add, each in their
proper alphabetical order, the following defined terms:
"Consolidated Debt -- means, as of any date of determination,
the total of all Debt of the Company and the Restricted Subsidiaries
outstanding on such date, after eliminating all offsetting debits and
credits between the Company and the Restricted Subsidiaries and all
other items required to be eliminated in the course of the preparation
of consolidated financial statements of the Company and the Restricted
Subsidiaries in accordance with GAAP, provided that Consolidated Debt
shall not include Qualified Capital Obligations."
"Consolidated Net Worth -- means, at any time, the sum,
without duplication, of (a) the total stockholders' equity which would
be shown in consolidated financial statements of the Company and the
Restricted Subsidiaries prepared at such time in accordance with GAAP
plus (b) Qualified Capital."
"Net Proceeds of Qualified Capital -- means, with respect to
any period, cash proceeds (net of all costs and out-of-pocket expenses
incurred in connection therewith and in connection with the issuance
and sale of any related Trust Preferred Securities, including, without
limitation, placement, underwriting and brokerage fees and expenses)
received by the Company during such period from the sale of all
Qualified Junior Subordinated Notes."
"Qualified Capital -- means the total amount of capital in
respect of Qualified Junior Subordinated Notes and the Trust Preferred
Securities related thereto which would, on a consolidated basis, be
shown in consolidated financial statements of the Company and the
Subsidiaries prepared at such time in accordance with GAAP, provided
that in no event shall the aggregate amount of Qualified Capital at any
time exceed One Hundred Twenty-Five Million Dollars ($125,000,000)."
"Qualified Capital Obligations -- means obligations of the
Company in respect of any Qualified Junior Subordinated Notes and
Qualified Junior Subordinated Guaranties."
"Qualified Junior Subordinated Guaranty -- means, in respect
of any issue of Trust Preferred Securities, a Guaranty by the Company
to the holders of such Trust Preferred Securities of (a) the payment of
all preferred cumulative cash dividends accumulating thereon and (b)
the payments due on liquidation or redemption of such Trust Preferred
Securities, but only in each case to the extent of funds held by the
Special Purpose Trust which shall have issued such Trust Preferred
Securities, and the obligations under which Guaranty shall be unsecured
and rank subordinate and junior in right of payment to all Senior Debt
(including, without limitation, all Debt of the Company under this
Agreement, the Other Agreements and the Notes) to the same extent and
on the same terms as the Qualified Junior Subordinated Notes issued by
the Company to such Special Purpose Trust are subordinated to Senior
Debt."
"Qualified Junior Subordinated Notes -- means any notes
issued by the Company to a Special Purpose Trust in a principal amount
equal to the proceeds received by such Special Purpose Trust from the
issuance of Trust Preferred Securities and paid by such Special Purpose
Trust to the Company in consideration for such notes, which notes shall
(a) not mature, or otherwise require the payment of any of the
principal thereof, prior to June 1, 2029, (b) be subject to the right
of the Company to defer the payment of interest thereon at any time or
from time to time for a period of at least twenty (20) consecutive
quarterly periods, during which deferral period the Company shall not
pay any dividends with respect to any of its capital stock or pay any
principal, interest or other amounts owing in respect of any Qualified
Capital Obligations or other Subordinated Debt, (c) be unsecured, (d)
rank subordinate and junior in right of payment to all Senior Debt
(including, without limitation, all Debt of the Company under this
Agreement, the Other Agreements and the Notes) upon the terms set forth
in Exhibit A to the Second Amendment to Note Purchase Agreement, dated
as of July 14, 1999, among the Company and certain holders of Notes and
(e) when aggregated with all other such notes, not exceed One Hundred
Twenty-Five Million Dollars ($125,000,000) in aggregate outstanding
principal amount."
"Special Purpose Trust -- means a statutory business trust
created under the laws of the State of Delaware pursuant to the filing
of a certificate of trust with the Secretary of State of the State of
Delaware, (a) the existence of which shall be for the exclusive purpose
of (i) issuing Trust Common Securities to the Company and issuing and
selling Trust Preferred Securities to investors, (ii) using the
proceeds from such Trust Preferred Securities to acquire Qualified
Junior Subordinated Notes and (iii) engaging in only those other
activities necessary or incidental to the foregoing, (b) the sole
assets of which will be such Qualified Junior Subordinated Notes and
the proceeds thereof and (c) the sole source of revenue of which will
be payments under such Qualified Junior Subordinated Notes.
Notwithstanding anything else herein, any Special Purpose Trust shall
be deemed to be an Unrestricted Subsidiary."
"Subordinated Debt -- means any Debt or other obligations of
the Company (including, without limitation, Qualified Capital
Obligations) other than Senior Debt."
"Trust Common Securities -- means, in respect of a Special
Purpose Trust, securities issued by such Special Purpose Trust
representing common undivided beneficial interests in the assets of
such Special Purpose Trust, one hundred percent (100%) of which
securities shall be legally and beneficially owned by the Company."
"Trust Preferred Securities -- means, in respect of a Special
Purpose Trust, securities issued by such Special Purpose Trust, having
a stated par value and liquidation value and entitling the holders
thereof to the payment (unless deferred) of preferred cumulative cash
distributions at a fixed annual rate, representing preferred undivided
beneficial interests in the assets of such Special Purpose Trust,
provided that at the time of the initial issuance thereof, the Notes
shall receive an investment grade rating from, or an investment grade
rating of the Notes shall be confirmed by, a nationally recognized
rating agency."
SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
To induce the Noteholders to execute and deliver this Amendment (which
representations shall survive such execution and delivery), the Company
represents and warrants to the Noteholders that:
(a) the Company is a corporation duly organized,
validly existing and in good standing under the laws of the state of
Delaware;
(b) this Amendment has been duly authorized, executed and
delivered by the Company and this Amendment constitutes a legal, valid
and binding obligation, contract and agreement of the Company
enforceable against it in accordance with its terms, except as
enforcement may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws or equitable principles relating to or
limiting creditors' rights generally;
(c) the Existing Note Purchase Agreement, as amended by this
Amendment, constitutes the legal, valid and binding obligation,
contract and agreement of the Company enforceable against it in
accordance with its terms, except as enforcement may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws or
equitable principles relating to or limiting creditors' rights
generally;
(d) the execution, delivery and performance by the Company of
this Amendment (i) has been duly authorized by all requisite corporate
action and, if required, shareholder action, (ii) does not require the
consent or approval of any governmental or regulatory body or agency,
and (iii) will not (A) violate (1) any provision of law, statute, rule
or regulation or its certificate of incorporation or bylaws, (2) any
order of any court or any rule, regulation or order of any other agency
or government binding upon it, or (3) any provision of any material
indenture, agreement or other instrument to which it is a party or by
which its properties or assets are or may be bound, or (B) result in a
breach of or constitute (alone or with due notice or lapse of time or
both) a default under any indenture, agreement or other instrument
referred to in clause (iii)(A)(3) of this paragraph (d); and
(e) as of the date hereof and after giving effect to this
Amendment, no Default or Event of Default has occurred which is
continuing.
SECTION 3. MISCELLANEOUS.
3.1 This Amendment shall be construed in connection with and as part
of the Existing Note Purchase Agreement, and except as modified and expressly
amended by this Amendment, all terms, conditions and covenants contained in the
Existing Note Purchase Agreement and the Notes are hereby ratified and shall be
and remain in full force and effect.
3.2 This Amendment constitutes a contract between the Company and the
Noteholders for the uses and purposes hereinabove set forth, and may be executed
in any number of counterparts, each executed counterpart constituting an
original, but all together only one agreement.
3.3 Whenever any of the parties hereto is referred to, such reference
shall be deemed to include the successors and assigns of such party, and all the
promises and agreements contained in this Amendment by or on behalf of the
Company and the Noteholders shall bind and inure to the benefit of the
respective successors and assigns of such parties, whether so expressed or not.
3.4 This Amendment constitutes the final written expression of all
of the terms hereof and is a complete and exclusive statement of those terms.
3.5 This Amendment shall be governed by and construed in accordance
with the internal laws of the State of New York.
3.6 This Amendment shall become effective at such time as it has been
executed by the Company and the Required Holders.
[The remainder of this page is intentionally left blank.
Next page is signature page.]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused the execution of
this Amendment by duly authorized officers of each as of the date hereof.
SEITEL, INC.
By__________________________________
Debra D. Valice,
Executive Vice President - Finance
Accepted and Agreed to:
[NOTEHOLDER]
By____________________________________
Name:
Title:
<PAGE>
EXHIBIT A
Subordination Terms
Note:The term "Securities" refers to the instruments evidencing the debt
subordinated by the following provisions; the term "Holder" refers to
a holder of Securities.
SECTION [1.01]. Securities Subordinate to Senior Indebtedness
The Securities shall be subordinated to Senior Indebtedness as set
forth in this Article [One]. The Company covenants and agrees, and each Holder
of a Security of any series by such Holder's acceptance thereof likewise
covenants and agrees, that, to the extent and in the manner hereinafter set
forth in this Article [One], the indebtedness represented by the Securities of
such series and the payment of the principal amount, interest, premium (if any),
and such other amounts, if any, payable in respect of each and all of the
Securities of such series are hereby expressly made subordinate and subject in
right of payment to the prior payment in full of all Senior Indebtedness;
provided, however, that no provision of this Article [One] shall prevent the
occurrence of any default or Event of Default hereunder.
"Senior Notes" means, collectively, (i) (a) the Company's 7.17% Series
A Senior Notes due December 30, 2001 in the original aggregate principal amount
of $25,000,000, (b) the Company's 7.17% Series B Senior Notes due December 30,
2002 in the original aggregate principal amount of $27,500,000, and (c) the
Company's Series C Senior Notes due December 30, 2002 in the original aggregate
principal amount of $22,500,000, in each case, issued pursuant to separate Note
Purchase Agreements, dated as of December 28, 1995, as such notes and agreements
may be amended from time to time, and (ii) (a) the Company's 7.03% Series D
Senior Notes due February 15, 2004 in the original aggregate principal amount of
$20,000,000, (b) the Company's 7.28% Series E Senior Notes due February 15, 2009
in the original aggregate principal amount of $75,000,000, and (c) the Company's
Series F Senior Notes due February 15, 2009 in the original aggregate principal
amount of $43,000,000, in each case, issued pursuant to separate Note Purchase
Agreements, dated as of February 12, 1999, as such notes and agreements may be
amended from time to time.
"Senior Indebtedness" means the principal of (and premium or
make-whole amount, if any) and interest on (including interest, if any, accruing
after the filing of a petition initiating any proceeding pursuant to any Federal
bankruptcy law or any other applicable Federal or State law) and other amounts
due on or in connection with the Senior Notes and any Indebtedness of the
Company incurred, assumed or guaranteed by the Company, whether outstanding on
the date of the Indenture or thereafter incurred, assumed or guaranteed and all
renewals, extensions and refundings of any such Indebtedness of the Company;
provided, however, that the following will not constitute Senior Indebtedness:
(a) any Indebtedness of the Company as to which, in the
instrument creating the same or evidencing the same or pursuant to
which the same is outstanding, it is expressly provided that such
Indebtedness of the Company shall be subordinated to or pari passu with
the Securities;
(b) Indebtedness of the Company in respect of the Securities;
(c) any Indebtedness of the Company constituting trade
accounts payable arising in the ordinary course of business;
(d) any Indebtedness of the Company initially issued to any
other [trust which issues preferred securities or other securities
similar to preferred securities]; and
(e) any Indebtedness of the Company to any Subsidiary of the
Company, other than a trust referred to in the preceding clause (d).
SECTION [1.02]. Payment Over of Proceeds upon Dissolution, Etc.
Upon any distribution of assets of the Company in the event of
(a) any insolvency or bankruptcy case or proceeding, or any
receivership, liquidation, reorganization or other similar case or
proceeding in connection therewith, relative to the Company or to its
creditors, as such, or to its assets, or
(b) any liquidation, dissolution or other winding up
of the Company, whether voluntary or involuntary and whether or not
involving insolvency or bankruptcy, or
(c) any assignment for the benefit of creditors or any other
marshalling of assets and liabilities of the Company,
then and in such event:
(1) the holders of Senior Indebtedness shall be entitled to
receive payment in full of all amounts due or to become due on or in
respect of all Senior Indebtedness, or provision shall be made for such
payment in cash, before the Holders of the Securities of any series are
entitled to receive any payment on account of the principal amount,
interest, premium (if any), or such other amounts, if any, as may be
provided for in respect of the Securities of such series; and
(2) any payment or distribution of assets of the Company of
any kind or character, whether in cash, property or securities, by
set-off or otherwise, to which the Holders or the Trustee would be
entitled but for the provisions of this Article [One], including any
such payment or distribution which may be payable or deliverable by
reason of the payment of any other Indebtedness of the Company being
subordinated to the payment of the Securities of such series, shall be
paid by the liquidating trustee or agent or other person making such
payment or distribution, whether a trustee in bankruptcy, a receiver or
liquidating trustee or otherwise, directly to the holders of Senior
Indebtedness or their representative or representatives or to the
trustee or trustees under any indenture under which any instruments
evidencing any of such Senior Indebtedness may have been issued,
ratably according to the aggregate amounts remaining unpaid on account
of the principal of, and premium or make-whole amount, if any, and
interest on the Senior Indebtedness held or represented by each, to the
extent necessary to make payment in full of all Senior Indebtedness
remaining unpaid, after giving affect to any concurrent payment or
distribution to the holders of such Senior Indebtedness.
In the event that, notwithstanding the foregoing provisions of this
Section [1.02], the Trustee or the Holder of any Security of any series shall
receive any payment or distribution of assets of the Company of any kind or
character, whether in cash, property or securities, including any such payment
or distribution which may be payable or deliverable by reason of the payment of
any other Indebtedness of the Company being subordinated to the payment of the
Securities of such series, before all Senior Indebtedness is paid in full or
payment thereof provided for, and if such fact shall then have been made known
to the Trustee as provided in Section [1.11], or, as the case may be, such
Holder, then and in such event such payment or distribution shall be paid over
or delivered forthwith to the trustee in bankruptcy, receiver, liquidating
trustee, custodian, assignee, agent or other person making payment or
distribution of assets of the Company for application to the payment of all
Senior Indebtedness remaining unpaid, to the extent necessary to pay all Senior
Indebtedness in full, after giving effect to any concurrent payment or
distribution to or for the holders of Senior Indebtedness.
For purposes of this Article [One] only, the words "cash, property or
securities," or any combination thereof, shall be deemed not to include shares
of capital stock of the Company as reorganized or readjusted, or securities of
the Company or any other corporation provided for by a plan of reorganization or
readjustment the payment of which is subordinated, at least to the extent
provided in this Article [One] with respect to the Securities, to the payment of
all Senior Indebtedness which may at the time be outstanding and to any
securities issued to the holders of Senior Indebtedness in respect of the Senior
Indebtedness under any such plan of reorganization or readjustment.
SECTION [1.03]. Prior Payment to Senior Indebtedness upon Acceleration
of Securities.
In the event that any Securities of any series are declared due and
payable before their [Stated Maturity], then and in such event the holders of
Senior Indebtedness shall be entitled to receive payment in full of all amounts
due or to become due on or in respect of all Senior Indebtedness or provision
shall be made for such payment in cash, before the Holders of the Securities of
such series are entitled to receive any payment (including any payment which may
be payable by reason of the payment of any other indebtedness of the Company
being subordinated to the payment of the Securities of such series) by the
Company on account of the principal of (or premium or make-whole amount, if any)
or interest or other amounts on Securities of such series or on account of the
purchase or other acquisition of Securities of such series.
In the event that, notwithstanding the foregoing, the Company shall
make any payment to the Trustee or the Holder of any Securities of any series
prohibited by the foregoing provisions of this Section [1.03], and if such facts
then shall have been known or thereafter shall have been made known to the
Trustee (as provided in Section [1.11]) or to such Holder, as the case may be,
pursuant to the terms of this Indenture, then and in such event such payment
shall be paid over and delivered forthwith to the Company by or on behalf of the
person holding such payment for the benefit of the holders of Senior
Indebtedness.
The provisions of this Section [1.03] shall not apply to any payment
with respect to which Section [1.02] would be applicable.
SECTION [1.04]. Default in Senior Indebtedness.
In the event and during the continuation of any default by the Company
in the payment of principal, premium, if any, interest or any other payment due
on any Senior Indebtedness of the Company, as the case may be, beyond any
applicable grace period with respect thereto, or in the event that the maturity
of any Senior Indebtedness of the Company has been accelerated because of any
default, then, in any such case, no payment shall be made by the Company with
respect to the principal (including redemption payments, if any) of, premium or
make-whole amount, if any, or interest or other amounts on the Securities until
such default is cured or waived or ceases to exist or any such acceleration or
demand for payment has been rescinded.
In the event that, notwithstanding the foregoing, the Company shall
make any payment to the Trustee or the Holder of any Securities of any series
prohibited by the foregoing provisions of this Section [1.04], and if such facts
then shall have been known or thereafter shall have been made known to the
Trustee (as provided in Section [1.11]) or to such Holder, as the case may be,
pursuant to the terms of this Indenture, then and in such event such payment
shall be paid over and delivered forthwith to the Company by or on behalf of the
person holding such payment for the benefit of the holders of Senior
Indebtedness.
The provisions of this Section [1.04] shall not apply to any payment
with respect to which Section [1.02] would be applicable.
SECTION [1.05]. Limitations on Acceleration and Enforcement.
At any time when the Company may not make payments in respect of the
Securities as a result of the application of Section [1.04], no Holder of
Securities will:
(a) accelerate or cause or permit the acceleration of the
maturity of any of the Securities; or
(b) commence, cause the commencement of, participate in or
support any action or proceeding (whether at law or in equity) against
the Company to recover all or any part of the indebtedness represented
by the Securities or any action to commence or prosecute any bankruptcy
or similar proceeding in respect of the Company unless the holders of
at least a majority in principal amount of the Senior Notes at the time
outstanding (exclusive of Senior Notes then owned by the Company or any
of its subsidiaries or affiliates) shall have agreed in writing in
advance to, and shall have joined in, such proceedings.
SECTION [1.06]. Payment Permitted if No Default.
Nothing contained in this Article [One] or elsewhere in this Indenture
or in any of the Securities shall prevent (a) the Company, at any time except
during the pendency of any case, proceeding, dissolution, liquidation or other
winding up, assignment for the benefit of creditors or other marshalling of
assets and liabilities of the Company referred to in Section [1.02] or under the
conditions described in Sections [1.03] or [1.04], from making payments at any
time of the principal amount, interest or such other amounts, if any, as may be
provided for in this Indenture, as the case may be, in respect of the
Securities, or (b) the application by the Trustee or the retention by any Holder
of any money deposited with it hereunder to the payment of or on account of the
principal amount, interest or such other amounts, if any, as may be provided for
in this Indenture, as the case may be, in respect of the Securities if the
Trustee did not have, at the time provided in the proviso to the first paragraph
of Section [1.11], notice that such payment would have been prohibited by the
provisions of this Article [One].
SECTION [1.07]. Subrogation Rights of Holders of Senior Indebtedness.
Subject to the payment in full of all Senior Indebtedness, the Holders
of the Securities of any series shall be subrogated to the extent of the
payments or distributions made to the holders of such Senior Indebtedness
pursuant to the provisions of this Article [One] to the rights of the holders of
such Senior Indebtedness to receive payments or distributions of cash, property
or securities applicable to the Senior Indebtedness until the principal amount,
interest or such other amounts, if any, as provided for in this Indenture, as
the case may be, in respect of the Securities of such series shall be paid in
full. For purposes of such subrogation, no payments or distributions to the
holders of the Senior Indebtedness of any cash, property or securities to which
the Holders of the Securities of such series or the Trustee would be entitled
except for the provisions of this Article [One], and no payments pursuant to the
provisions of this Article [One] to the Company or to the holders of Senior
Indebtedness by Holders of the Securities of such series or the Trustee, shall,
as between the Company, its creditors other than holders of Senior Indebtedness
and the Holders of the Securities of such series, be deemed to be a payment or
distribution by the Company to or on account of the Senior Indebtedness.
SECTION [1.08]. Provision Solely to Define Relative Rights.
The provisions of this Article [One] are and are intended solely for
the purpose of defining the relative rights of the Holders of the Securities of
any series, on one hand, and the holders of Senior Indebtedness, on the other
hand. Nothing contained in this Article [One] or elsewhere in this Indenture or
in the Securities of any series is intended to or shall:
(a) impair, as between the Company and the Holders of the
Securities of such series, the obligation of the Company, which is
absolute and unconditional, to pay to the Holders of the Securities of
such series the principal amount, interest or such other amounts, if
any, as may be provided for in this Indenture, as the case may be, in
respect of the Securities of such series as and when the same shall
become due and payable in accordance with the terms of the Securities
of such series and this Indenture and which, subject to the rights
under this Article [One] of the holders of Senior Indebtedness, is
intended to rank equally with all other general obligations of the
Company; or
(b) affect the relative rights against the Company of the
Holders of the Securities of such series and creditors of the Company
other than holders of Senior Indebtedness; or
(c) prevent the Trustee or the Holder of any Security of such
series from exercising all remedies otherwise permitted by applicable
law upon default under this Indenture, subject to the rights, if any,
under this Article [One] of the holders of Senior Indebtedness to
receive cash, property or securities otherwise payable or deliverable
to the Trustee or such Holder.
SECTION [1.09]. Trustee to Effectuate Subordination.
Each Holder of a Security by such Holder's acceptance thereof
authorizes and directs the Trustee on such Holder's behalf to take such action
as may be necessary or appropriate to effectuate the subordination provided in
this Article [One] and appoints the Trustee such Holder's attorney-in-fact for
any and all such purposes.
SECTION [1.10]. No Waiver of Subordination Provision.
No right of any present or future holder of any Senior Indebtedness to
enforce subordination as herein provided shall at any time in any way be
prejudiced or impaired by any act or failure to act on the part of the Company
or by any act or failure to act, by any such holder, or by any noncompliance by
the Company with the terms, provisions and covenants of this Indenture,
regardless of any knowledge thereof any such holder may have or be otherwise
charged with.
Without in any way limiting the generality of the foregoing paragraph,
the holders of Senior Indebtedness may, at any time and from time to time,
without the consent of, or notice to, the Trustee or the Holders of the
Securities of any series, without incurring responsibility to the Holders of the
Securities of such series and without impairing or releasing the subordination
provided in this Article [One] or the obligations hereunder of the Holders of
the Securities of such series to the holders of Senior Indebtedness, do any one
or more of the following: (i) change the manner, place or terms of payment or
extend the time of payment of, or renew or alter, or increase the amount of,
Senior Indebtedness, or otherwise amend or supplement in any manner Senior
Indebtedness or any instrument evidencing the same or any agreement under which
Senior Indebtedness is outstanding; (ii) sell, exchange, release or otherwise
dispose of or deal with any property pledged, mortgaged or otherwise securing
Senior Indebtedness; (iii) release any person liable in any manner for the
payment or collection of Senior Indebtedness; (iv) exercise or refrain from
exercising any rights against the Company or any other person; and (v) apply any
sums paid in respect of Senior Indebtedness to Senior Indebtedness, regardless
of who made such payment or how such payment was realized.
SECTION [1.11]. Notice to Trustee.
The Company shall give prompt written notice to the Trustee of any
fact known to the Company which would prohibit the making of any payment to or
by the Trustee in respect of the Securities of any series. Failure to give such
notice shall not affect the subordination of the Securities of such series to
Senior Indebtedness. Notwithstanding the provisions of this Article [One] or any
other provision of this Indenture, the Trustee shall not be charged with
knowledge of the existence of any facts which would prohibit the making of any
payment to or by the Trustee in respect of the Securities of such series, unless
and until the Trustee shall have received written notice thereof in the manner
prescribed by this Indenture from the Company or a holder of Senior Indebtedness
or from any trustee or agent therefor; and, prior to the receipt of any such
written notice, the Trustee, subject to the provisions of Section [regarding the
duties and responsibilities of the Trustee], shall be entitled in all respects
to assume that no such facts exist; provided, however, that if the Trustee shall
not have received, at least three Business Days prior to the date upon which by
the terms hereof any money may become payable for any purpose (including,
without limitation, the payment of the principal amount, interest, or such other
amounts as may be provided for in this Indenture in respect of any Security),
the notice with respect to such money provided for in this Section [1.11], then,
anything herein contained to the contrary notwithstanding, the Trustee shall
have the full power and authority to receive such money and to apply the same to
the purpose for which such money was received and shall not be affected by any
notice to the contrary which may be received by it within three Business Days
prior to such date.
Subject to the provisions of Section [regarding the duties and
responsibilities of the Trustee], the Trustee shall be entitled to rely on the
delivery to it of a written notice by a person representing himself to be a
holder of Senior Indebtedness (or a trustee or agent on behalf of such holder)
to establish that such notice has been given by a holder of Senior Indebtedness
(or a trustee or agent on behalf of any such holder). In the event that the
Trustee determines in good faith that further evidence is required with respect
to the right of any person as a holder of Senior Indebtedness to participate in
any payment or distribution pursuant to this Article [One], the Trustee may
request such person to furnish evidence to the reasonable satisfaction of the
Trustee as to the amount of Senior Indebtedness held by such person, the extent
to which such person is entitled to participate in such payment or distribution
and any other facts pertinent to the rights of such person under this Article
[One], and if such evidence is not furnished, the Trustee may defer any payment
which it may be required to make for the benefit of such person pursuant to the
terms of this Indenture pending judicial determination as to the right of such
person to receive such payment.
SECTION [1.12].Reliance on Judicial Order or Certificate of Liquidating
Agent.
Upon any payment or distribution of assets of the Company referred to
in this Article [One], the Trustee, subject to the provisions of Section
[regarding the duties and responsibilities of the Trustee], and the Holders of
the Securities of any series shall be entitled to rely upon any order or decree
entered by any court of competent jurisdiction in which such insolvency,
bankruptcy, receivership, liquidation, reorganization, dissolution, winding up
or similar case or proceeding is pending, or a certificate of the trustee in
bankruptcy, liquidating trustee, custodian, receiver, assignee for the benefit
of creditors, agent or other person making such payment or distribution,
delivered to the Trustee or to the Holders of Securities of such series, for the
purpose of ascertaining the persons entitled to participate in such payment or
distribution, the holders of Senior Indebtedness and other indebtedness of the
Company, the amount thereof or payable thereon, the amount or amounts paid or
distributed thereon and all other facts pertinent thereto or to this Article
[One].
SECTION [1.13]. Trustee Not Fiduciary for Holders of Senior
Indebtedness.
The Trustee shall be deemed not to owe any fiduciary duty to the
holders of Senior Indebtedness. The Trustee shall not be charged with knowledge
of the existence of Senior Indebtedness (other than the Senior Notes) or of any
facts that would prohibit any payment hereunder unless the Trustee shall have
received notice thereof in the manner prescribed by this Indenture. With respect
to the holders of Senior Indebtedness, the Trustee undertakes to perform or to
observe only such of its covenants or obligation as are specifically set forth
in this Article [One] and no implied covenants or obligations with respect to
holders of Senior Indebtedness shall be read into this Indenture against the
Trustee.
SECTION [1.14]. Rights of Trustee as Holder of Senior Indebtedness;
Preservation of Trustee's Rights.
The Trustee in its individual capacity shall be entitled to all the
rights set forth in this Article [One] with respect to any Senior Indebtedness
which may at any time be held by it, to the same extent as any other holder of
Senior Indebtedness, and nothing in this Indenture shall deprive the Trustee of
any of its rights as such holder.
Nothing in this Article [One] shall apply to claims of, or payments
to, the Trustee under or pursuant to Section [concerning fees and expenses of
the Trustee].
SECTION [1.15]. Article [One] Applicable to Paying Agents.
The term "Trustee" as used in this Article [One] shall (unless the
context otherwise requires) be construed as extending to and including the
Paying Agent within its meaning as fully for all intents and purposes as if the
Paying Agent were named in this Article [One] in addition to or in place of the
Trustee; provided, however, that Sections [1.11] and [1.13] shall not apply to
the Company or any Affiliate of the Company if it or such Affiliate acts as
Paying Agent.
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> SEP-30-1999
<CASH> 5,386
<SECURITIES> 0
<RECEIVABLES> 56,388
<ALLOWANCES> 1,108
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 207,726<F2>
<DEPRECIATION> 56,573
<TOTAL-ASSETS> 541,496
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 222,094
0
0
<COMMON> 243
<OTHER-SE> 244,369
<TOTAL-LIABILITY-AND-EQUITY> 541,496
<SALES> 96,625
<TOTAL-REVENUES> 96,625
<CGS> 3,967
<TOTAL-COSTS> 3,967
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 8,137
<INCOME-PRETAX> 11,026
<INCOME-TAX> 4,577
<INCOME-CONTINUING> 6,449
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 6,449
<EPS-BASIC> .27<F3>
<EPS-DILUTED> .26
<FN>
<F1> The Company does not present a classified balance sheet; therefore, current
assets and current liabilities are not reflected in the Company's financial
statement.
<F2> PP&E does not include seismic data bank assets with a cost of $610,853,000
and related accumulated amortization of $287,528,000.
<F3> Reflects basic earnings per share.
</FN>
</TABLE>
