FORM 10-K/A
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Amendment No. 1
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X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
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EXCHANGE ACT OF 1934
For Fiscal Year Ended DECEMBER 31, 1998
OR
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
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EXCHANGE ACT OF 1934
[No Fee Required] 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
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(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification Number)
50 Briar Hollow Lane
West Building, 7th Floor
HOUSTON, TEXAS 77027
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(Address of principal (Zip Code)
executive offices)
(713) 881-8900
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(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(g) of the Act:
NONE
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(Title of Class)
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.
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Yes X No
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Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. X
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The aggregate market value of the voting stock held by non-affiliates of the
registrant at March 29, 1999 was approximately $321,985,638. For these purposes,
the term "affiliate" is deemed to mean officers and directors of the registrant.
On such date, the closing price of the common stock on the New York Stock
Exchange was $14.625 and there were a total of 23,810,852 shares of common stock
outstanding.
<PAGE>
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The executive officers and directors of the Company and their ages (as of
April 1, 1999) and positions with the Company are as follows:
Name Age Position(s) with the Company Director Since
- --------------------- ---- ------------------------------- ------------------
Herbert M. Pearlman 66 Chairman of the Board 1982
of Directors
Paul A. Frame 52 Chief Executive Officer, 1986
President and Director
Horace A. Calvert 45 Chief Operating Officer, 1987
Executive Vice President
and Director
David S. Lawi 63 Chairman of the Executive 1982
Committee and Director
Debra D. Valice 42 Chief Financial Officer, 1995
Executive Vice President
of Finance, Treasurer,
Corporate Secretary
and Director
Walter M. Craig, Jr. 44 Director 1987
William Lerner 65 Director 1985
John E. Stieglitz 67 Director 1989
Fred S. Zeidman 52 Director 1997
Herbert M. Pearlman, a co-founder of Seitel, Inc., has been a director of
the Company since 1982, and Chairman of the Company's Board of Directors since
1987. He has served as President, Chief Executive Officer and a Director of Helm
Resources, Inc. ("Helm"), a publicly-traded company with equity interests in
diverse businesses, since 1980, and in June 1984, he became Helm's Chairman of
the Board. Since March 1984, Mr. Pearlman has been Chairman of Intersystems,
Inc. ("Intersystems"), an American Stock Exchange listed company engaged in
providing services to the thermoplastic resins industry. Since June 1990, Mr.
Pearlman has served as Chairman of Unapix Entertainment, Inc. ("Unapix
Entertainment"), an American Stock Exchange listed company engaged in
multi-media entertainment.
Paul A. Frame has been Chief Executive Officer of the Company since July
1992 and President since January 1987. He was Executive Vice President of the
Company from January 1985 until his appointment as President. He was hired by
the Company in August 1984 as Vice President of Marketing. From December 1996 to
March 1999, Mr. Frame was a Director of Eagle Geophysical, Inc. ("Eagle"), a
NASDAQ listed company engaged in providing seismic data acquisitions services to
the oil and gas industry, and from August 1997 to March 1999, he was Chairman of
the Executive Committee of Eagle's board of directors.
Horace A. Calvert has been Chief Operating Officer of the Company since
July 1992 and Executive Vice President since January 1987. In March 1993, Mr.
Calvert was appointed President of DDD Energy, Inc., a wholly-owned subsidiary
of the Company engaged in the exploration and development of oil and gas
reserves. From January 1985 until his appointment as Vice President in May 1986,
he was the Company's Chief Geophysicist.
David S. Lawi has been Chairman of the Company's Executive Committee since
March 1987. He also was Assistant Secretary of the Company from May 1986 until
<PAGE>
June 1987 and from June 1989 until July 1993. Mr. Lawi has been a Director of
Helm since 1980, and Chairman of the Executive Committee since 1997. Since March
1984, Mr. Lawi has been a Director of Intersystems and, since 1985, he has been
Chairman of Intersystems' Executive Committee. Since June 1990, Mr. Lawi has
been a Director of Unapix Entertainment and, since January 1993, Chairman of its
Executive Committee.
Debra D. Valice, CPA, is the Company's Chief Financial Officer, Executive
Vice President of Finance, Treasurer and Corporate Secretary. Ms. Valice has
been the Company's Chief Financial Officer since February 1987, and was the
Company's Chief Accounting Officer from March 1986 until February 1987. Ms.
Valice was elected as a director of the Company in November 1995.
Walter M. Craig, Jr. provided legal and business advice to the Company,
from time to time, from 1984 through 1998. Since 1993, he has been President of
both the Mezzanine Financial Fund, L.P., and Core Capital, Inc. Both enterprises
are engaged in making capital available to small and mid-market companies based
on the value of their assets. He has served as Executive Vice President and
Chief Operating Officer of Helm since August 1992. From 1984 to 1992, he was
Senior Vice President of Business and Legal Affairs of Helm. Since April 1993,
Mr. Craig has been a Director of Unapix Entertainment.
William Lerner is Chairman of the Company's Audit Committee and Co-Chairman
of the Company's Compensation and Stock Option Committee. Since January 1990,
Mr. Lerner has been engaged in the private practice of law. From May 1990 until
December 1990, he was General Counsel to Hon Development Company, a California
real estate development company. From June 1986 until December 1989, Mr. Lerner
was Vice President and General Counsel of The Geneva Companies, Inc., a
financial services company engaged in counseling privately owned middle-market
companies. Since 1985, he has been a Director of Helm. Mr. Lerner is also a
Director of Rent-Way, Inc., a New York Stock Exchange listed company
headquartered in Pennsylvania that operates the second-largest chain of
rental-purchase stores in the United States, and Micros-to-Mainframes, Inc., a
NASDAQ listed company headquartered in New York that provides advanced
technology communications products and systems integration and internet services
to Fortune 2000 companies.
John E. Stieglitz is Co-Chairman of the Company's Compensation and Stock
Option Committee and a member of the Company's Audit Committee. He is Chairman
Emeritus of Conspectus, Inc., a privately held company, formed in 1976, engaged
in providing services in the area of executive recruitment. He served as
President of Conspectus, Inc. from 1976 to 1996. Mr. Stieglitz is also a
Director of Helm and Intersystems.
Fred S. Zeidman is a member of the Company's Audit Committee and
Compensation and Stock Option Committee. Mr. Zeidman has served as President,
Chief Executive Officer, and a Director of Intersystems since July 1993. He also
served as President of Interpak Terminals, Inc., a wholly-owned subsidiary of
Helm engaged in the packaging and distribution of thermoplastic resins, from
July 1993 until its sale in July 1997. Mr. Zeidman served as Chairman of Unibar
Energy Services Corporation, one of the largest independent drilling fluids
companies in the United States, from 1985 to 1991. From April 1992 to July 1993,
Mr. Zeidman served as President of Service Enterprises, Inc., which is primarily
engaged in plumbing, heating, air conditioning and electrical installation and
repair. From 1983 to 1993, Mr. Zeidman served as President of Enterprise Capital
Corporation, a federally licensed small business investment company specializing
in venture capital financing. Mr. Zeidman also serves as a Director of Heritage
Bank.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's officers, directors and persons who own
more than 10% of the Company's common stock to file reports of ownership and
changes in ownership concerning the common stock with the Securities and
Exchange Commission and to furnish the Company with copies of all Section 16(a)
forms they file. Based upon the Company's review of the Section 16(a) filings
that have been received by the Company, the Company believes that all filings
required to be made under Section 16(a) during 1998 were timely made.
<PAGE>
ITEM 11. EXECUTIVE COMPENSATION
The following table sets forth certain summary information concerning the
compensation awarded to, earned by or paid to the Chief Executive Officer of the
Company and each of the four most highly compensated executive officers of the
Company other than the Chief Executive Officer (collectively, the "named
executive officers") for the years indicated.
<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
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Annual Compensation Long-Term
------------------------------------------------------ Compensation
Other Awards
Eagle Annual --------------
Bonus Bonus Compensation Stock Options/ All Other
Name and Principal Position Year Salary ($) ($)(1)<F1> ($)(2)<F2> ($)(3)<F3> (SARs (#) Compensation($)
----------------------------- --------- ------------ ------------ ------------ ------------ -------------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
Paul A. Frame 1998 $444,878 $1,809,077 -- $1,180,450 1,190,798 $104,001 (4)<F4>
Chief Executive Officer 1997 $144,878 $905,099 $2,282,500 $1,301,809 932,160 $104,764
and President 1996 $141,898 $1,457,603 -- $1,204,334 148,600 $87,998
Horace A. Calvert 1998 $444,878 $1,809,077 -- $1,180,450 625,418 $104,001 (4)<F4>
Chief Operating Officer 1997 $144,878 $903,598 $1,455,811 $1,301,809 378,882 $104,764
and Executive Vice President 1996 $141,898 $1,457,603 -- $1,205,834 136,498 $87,998
Herbert M. Pearlman 1998 $428,437 $1,961,347 -- -- 690,582 $104,123 (4)<F4>
Chairman of the 1997 $128,438 $1,183,947 $1,819,763 -- 393,874 $104,764
Board of Directors 1996 $124,818 $1,486,168 -- -- 124,582 $88,654
David S. Lawi 1998 $214,219 $980,673 -- -- 505,726 $104,001 (4)<F4>
Chairman of the Executive 1997 $64,892 $591,975 $909,881 -- 293,874 $104,764
Committee 1996 $60,588 $749,085 -- -- 124,582 $87,998
Debra D. Valice 1998 $155,853 $437,064 -- -- 172,412 $69,449 (4<F4>
Executive Vice President 1997 $138,583 $270,833 $502,713 -- 142,762 $70,816
of Finance, Treasurer and 1996 $113,519 $358,332 -- -- 142,570 $58,861
Corporate Secretary
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<FN>
(1)<F1> Includes bonuses based on the Company's pre-tax profits and includes a
discretionary bonus for Ms. Valice of $312,064.
(2)<F2> Includes contractual bonuses based on the Company's pre-tax profits
related to the spin-off of Eagle in 1997 for Messrs. Frame, Calvert,
Pearlman, and Lawi, an additional bonus for Mr. Frame of $826,690
related to the spin-off of Eagle, and a discretionary bonus for Ms.
Valice of $502,713 related to the spin-off of Eagle.
(3)<F3> Includes commissions based on sales.
(4)<F4> Includes amounts paid pursuant to a program (the "Incentive
Compensation Program") whereby between 2-1/2% and 5% of the revenue
generated annually by seismic creation programs that have fully
recouped their direct costs is distributed to certain officers and key
employees, and amounts contributed by the Company to its 401(k)
Savings Plan (the "401(k) Plan") on behalf of such named executive
officers as discretionary and matching contributions. Includes
$101,623 contributed by the Company pursuant to its Incentive
Compensation Program for Messrs. Frame, Calvert, Pearlman and Lawi,
and $66,949 for Ms. Valice. Also includes 401(k) Plan matching
contributions made by the Company of $2,378 for Messrs. Frame, Calvert
and Lawi and $2,500 for Mr. Pearlman and Ms. Valice.
</FN>
</TABLE>
<PAGE>
The following table sets forth certain information with respect to options
to purchase common stock granted during the year ended December 31, 1998 to each
of the named executive officers.
<TABLE>
OPTION/SAR GRANTS IN 1998
<CAPTION>
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Individual Grants
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Percent Potential Realizable Value
Number of of Total at Assumed Annual Rates of
Securities Options/SARs Stock Price Appreciation
Underlying Granted to Exercise for Option Term (3)<F3>
Options/SARs Employees or Base Expiration -------------------------------------------
Name Granted (#) in 1998 Price($/Sh) Date 0 Percent($) 5 Percent($) 10 Percent($)
--------------------- ------------ ----------- ---------- ----------- ------------- ------------- ------------
<S> <C> > <C> <C> <C> <C> <C> <C>
Paul A. Frame 160,038 (1)<F1> 3.40 $12.0000 04/11/00 ($100,023.75) $36,291.03 $175,758.37
6,106 (2)<F2> 0.13 $13.9375 11/26/01 ($12,208.94) ($798.03) $11,741.60
3,242 (2)<F2> 0.07 $13.9375 11/27/01 ($6,482.37) ($417.73) $6,247.67
22,042 (2)<F2> 0.47 $13.9375 11/29/01 ($44,072.97) ($2,758.77) $42,659.87
30,442 (2)<F2> 0.65 $13.9375 12/02/01 ($60,868.77) ($3,641.46) $59,295.82
30,774 (2)<F2> 0.65 $13.9375 12/03/01 ($61,532.60) ($3,624.33) $60,070.17
5,994 (2)<F2> 0.13 $13.9375 12/04/01 ($11,984.99) ($694.85) $11,725.03
57,400 (2)<F2> 1.22 $13.9375 06/05/02 ($114,771.29) $12,992.27 $156,934.69
7,800 (2)<F2> 0.17 $13.9375 06/05/02 ($15,596.09) $1,765.50 $21,325.62
7,400 (2)<F2> 0.16 $13.9375 06/05/02 ($14,796.29) $1,674.96 $20,232.00
4,600 (2)<F2> 0.10 $13.9375 06/06/02 ($9,197.69) $1,049.90 $12,596.68
16,000 (2)<F2> 0.34 $13.9375 06/09/02 ($31,991.99) $3,742.74 $44,023.62
4,000 (2)<F2> 0.09 $13.9375 06/09/02 ($7,997.99) $935.69 $11,005.91
800 (2)<F2> 0.02 $13.9375 06/09/02 ($1,599.59) $187.14 $2,201.18
38,200 (2)<F2> 0.81 $13.9375 06/10/02 ($76,380.89) $9,008.16 $105,272.89
16,600 (2)<F2> 0.35 $13.9375 06/10/02 ($33,191.69) $3,914.54 $45,746.86
20,000 (2)<F2> 0.43 $13.9375 06/11/02 ($39,989.99) $4,754.21 $55,203.89
17,600 (2)<F2> 0.37 $13.9375 06/11/02 ($35,191.19) $4,183.71 $48,579.42
4,600 (2)<F2> 0.10 $13.9375 06/11/02 ($9,197.69) $1,093.47 $12,696.89
10,000 (2)<F2> 0.21 $13.9375 06/12/02 ($19,994.99) $2,396.05 $27,645.55
8,400 (2)<F2> 0.18 $13.9375 06/12/02 ($16,795.79) $2,012.69 $23,222.26
1,000 (2)<F2> 0.02 $13.9375 06/12/02 ($1,999.49) $239.61 $2,764.56
49,180 (2)<F2> 1.05 $13.9375 06/13/02 ($98,335.40) $11,877.00 $136,175.34
34,620 (2)<F2> 0.74 $13.9375 06/13/02 ($69,222.68) $8,360.75 $95,859.91
1,800 (2)<F2> 0.04 $13.9375 06/13/02 ($3,599.09) $434.70 $4,984.05
60,000 (2)<F2> 1.28 $13.9375 06/16/02 ($119,969.99) $14,831.27 $166,920.57
20,000 (2)<F2> 0.43 $13.9375 06/16/02 ($39,989.99) $4,943.76 $55,640.19
19,600 (2)<F2> 0.42 $13.9375 06/16/02 ($39,190.19) $4,844.88 $54,527.38
17,800 (2)<F2> 0.38 $13.9375 06/16/02 ($35,591.09) $4,399.94 $49,519.77
13,000 (2)<F2> 0.28 $13.9375 06/16/02 ($25,993.49) $3,213.44 $36,166.12
300,000 (2)<F2> 6.38 $13.9375 11/20/02 ($599,849.99) $164,405.93 $1,044,508.19
200,000 (2)<F2> 4.26 $13.9375 11/20/02 ($399,899.99) $109,603.96 $696,338.79
1,760 (2)<F2> 0.04 $13.9375 12/10/02 ($3,519.11) $1,032.76 $6,288.31
Horace A. Calvert 160,038 (1)<F1> 3.40 $12.0000 04/11/00 ($100,023.75) $36,291.03 $175,758.37
14,412 (2)<F2> 0.31 $13.9375 11/29/01 ($28,816.78) ($1,803.80) $27,892.84
32,650 (2)<F2> 0.69 $13.9375 12/02/01 ($65,283.66) ($3,905.58) $63,596.63
33,006 (2)<F2> 0.70 $13.9375 12/03/01 ($65,995.49) ($3,887.20) $64,426.99
6,430 (2)<F2> 0.14 $13.9375 12/04/01 ($12,856.77) ($745.39) $12,577.90
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<PAGE>
Individual Grants
-----------------------------------------------------
Percent Potential Realizable Value
Number of of Total at Assumed Annual Rates of
Securities Options/SARs Stock Price Appreciation
Underlying Granted to Exercise for Option Term (3)<F3>
Options/SARs Employees or Base Expiration -------------------------------------------
Name Granted (#) in 1998 Price($/Sh) Date 0 Percent($) 5 Percent($) 10 Percent($)
--------------------- ------------ ----------- ---------- ----------- ------------- ------------- ------------
Horace A. Calvert 200,000 (2)<F2> 4.26 $13.9375 11/20/02 ($399,899.99) $109,603.96 $696,338.79
(CONTINUED) 71,082 (2)<F2> 1.51 $13.9375 12/08/02 ($142,128.45) $41,434.78 $253,319.25
39,400 (2)<F2> 0.84 $13.9375 12/08/02 ($78,780.29) $22,966.86 $140,412.18
24,000 (2)<F2> 0.51 $13.9375 12/08/02 ($47,987.99) $13,989.97 $85,530.26
10,000 (2)<F2> 0.21 $13.9375 12/08/02 ($19,994.99) $5,829.15 $35,637.61
9,600 (2)<F2> 0.20 $13.9375 12/08/02 ($19,195.19) $5,595.99 $34,212.10
8,200 (2)<F2> 0.17 $13.9375 12/08/02 ($16,395.89) $4,779.90 $29,222.84
3,000 (2)<F2> 0.06 $13.9375 12/08/02 ($5,998.49) $1,748.75 $10,691.28
3,000 (2)<F2> 0.06 $13.9375 12/08/02 ($5,998.49) $1,748.75 $10,691.28
2,400 (2)<F2> 0.05 $13.9375 12/08/02 ($4,798.79) $1,399.00 $8,553.03
2,300 (2)<F2> 0.05 $13.9375 12/08/02 ($4,598.84) $1,340.70 $8,196.65
2,000 (2)<F2> 0.04 $13.9375 12/08/02 ($3,998.99) $1,165.83 $7,127.52
1,000 (2)<F2> 0.02 $13.9375 12/08/02 ($1,999.49) $582.92 $3,563.76
1,000 (2)<F2> 0.02 $13.9375 12/08/02 ($1,999.49) $582.92 $3,563.76
1,000 (2)<F2> 0.02 $13.9375 12/08/02 ($1,999.49) $582.92 $3,563.76
700 (2)<F2> 0.01 $13.9375 12/08/02 ($1,399.64) $408.04 $2,494.63
200 (2)<F2> 0.00 $13.9375 12/08/02 ($399.89) $116.58 $712.75
Herbert M. Pearlman 172,126 (1)<F1> 3.67 $12.0000 04/11/00 ($107,578.75) $39,032.17 $189,033.77
80,000 (2)<F2> 1.70 $13.9375 04/28/00 ($159,959.99) ($92,308.52) ($23,346.71)
2,762 (2)<F2> 0.06 $13.9375 11/26/01 ($5,522.61) ($360.98) $5,311.22
1,466 (2)<F2> 0.03 $13.9375 11/27/01 ($2,931.26) ($188.89) $2,825.13
9,964 (2)<F2> 0.21 $13.9375 11/29/01 ($19,923.01) ($1,247.08) $19,284.23
13,766 (2)<F2> 0.29 $13.9375 12/02/01 ($27,525.11) ($1,646.68) $26,813.82
13,914 (2)<F2> 0.30 $13.9375 12/03/01 ($27,821.03) ($1,638.68) $27,159.82
2,710 (2)<F2> 0.06 $13.9375 12/04/01 ($5,418.63) ($314.15) $5,301.11
20,000 (2)<F2> 0.43 $13.9375 07/17/02 ($39,989.99) $6,121.77 $58,358.01
13,700 (2)<F2> 0.29 $13.9375 07/17/02 ($27,393.14) $4,193.41 $39,975.24
6,154 (2)<F2> 0.13 $13.9375 07/17/02 ($12,304.91) $1,883.67 $17,956.76
946 (2)<F2> 0.02 $13.9375 07/17/02 ($1,891.52) $289.56 $2,760.33
8,700 (2)<F2> 0.19 $13.9375 07/22/02 ($17,395.64) $2,745.82 $25,577.32
10,000 (2)<F2> 0.21 $13.9375 07/23/02 ($19,994.99) $3,175.17 $29,443.29
1,400 (2)<F2> 0.03 $13.9375 07/23/02 ($2,799.29) $444.52 $4,122.06
100 (2)<F2> 0.00 $13.9375 07/23/02 ($199.94) $31.75 $294.43
9,800 (2)<F2> 0.21 $13.9375 07/29/02 ($19,595.09) $3,223.75 $29,113.83
30,000 (2)<F2> 0.64 $13.9375 07/30/02 ($59,984.99) $9,925.85 $89,256.45
7,500 (2)<F2> 0.16 $13.9375 08/22/02 ($14,996.24) $2,810.97 $23,078.22
10,074 (2)<F2> 0.21 $13.9375 08/25/02 ($20,142.95) $3,833.53 $31,132.99
2,500 (2)<F2> 0.05 $13.9375 08/25/02 ($4,998.74) $951.34 $7,726.07
1,900 (2)<F2> 0.04 $13.9375 08/25/02 ($3,799.04) $723.02 $5,871.82
500 (2)<F2> 0.01 $13.9375 08/26/02 ($999.74) $191.23 $1,547.44
12,700 (2)<F2> 0.27 $13.9375 08/28/02 ($25,393.64) $4,905.76 $39,417.93
2,000 (2)<F2> 0.04 $13.9375 08/29/02 ($3,998.99) $776.39 $6,216.45
9,500 (2)<F2> 0.20 $13.9375 09/02/02 ($18,995.24) $3,760.64 $29,697.36
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<PAGE>
Individual Grants
-----------------------------------------------------
Percent Potential Realizable Value
Number of of Total at Assumed Annual Rates of
Securities Options/SARs Stock Price Appreciation
Underlying Granted to Exercise for Option Term (3)<F3>
Options/SARs Employees or Base Expiration -------------------------------------------
Name Granted (#) in 1998 Price($/Sh) Date 0 Percent($) 5 Percent($) 10 Percent($)
--------------------- ------------ ----------- ---------- ----------- ------------- ------------- ------------
Herbert M. Pearlman 500 (2)<F2> 0.01 $13.9375 09/02/02 ($999.74) $197.93 $1,563.02
(CONTINUED) 10,000 (2)<F2> 0.21 $13.9375 09/03/02 ($19,994.99) $3,977.73 $31,304.95
35,900 (2)<F2> 0.76 $13.9375 09/04/02 ($71,782.04) $14,348.84 $112,544.78
200,000 (2)<F2> 4.26 $13.9375 11/20/02 ($399,899.99) $109,603.96 $696,338.79
David Lawi 87,270 (1)<F1> 1.86 $12.0000 04/11/00 ($54,543.75) $19,789.79 $95,842.45
80,000 (2)<F2> 1.70 $13.9375 04/28/00 ($159,959.99) ($92,308.52) ($23,346.71)
2,762 (2)<F2> 0.06 $13.9375 11/26/01 ($5,522.61) ($360.98) $5,311.22
1,466 (2)<F2> 0.03 $13.9375 11/27/01 ($2,931.26) ($188.89) $2,825.13
9,964 (2)<F2> 0.21 $13.9375 11/29/01 ($19,923.01) ($1,247.08) $19,284.23
13,766 (2)<F2> 0.29 $13.9375 12/02/01 ($27,525.11) ($1,646.68) $26,813.82
13,914 (2)<F2> 0.30 $13.9375 12/03/01 ($27,821.03) ($1,638.68) $27,159.82
2,710 (2)<F2> 0.06 $13.9375 12/04/01 ($5,418.63) ($314.15) $5,301.11
20,000 (2)<F2> 0.43 $13.9375 07/17/02 ($39,989.99) $6,121.77 $58,358.01
13,700 (2)<F2> 0.29 $13.9375 07/17/02 ($27,393.14) $4,193.41 $39,975.24
6,154 (2)<F2> 0.13 $13.9375 07/17/02 ($12,304.91) $1,883.67 $17,956.76
946 (2)<F2> 0.02 $13.9375 07/17/02 ($1,891.52) $289.56 $2,760.33
8,700 (2)<F2> 0.19 $13.9375 07/22/02 ($17,395.64) $2,745.82 $25,577.32
10,000 (2)<F2> 0.21 $13.9375 07/23/02 ($19,994.99) $3,175.17 $29,443.29
1,400 (2)<F2> 0.03 $13.9375 07/23/02 ($2,799.29) $444.52 $4,122.06
100 (2)<F2> 0.00 $13.9375 07/23/02 ($199.94) $31.75 $294.43
9,800 (2)<F2> 0.21 $13.9375 07/29/02 ($19,595.09) $3,223.75 $29,113.83
30,000 (2)<F2> 0.64 $13.9375 07/30/02 ($59,984.99) $9,925.85 $89,256.45
7,500 (2)<F2> 0.16 $13.9375 08/22/02 ($14,996.24) $2,810.97 $23,078.22
10,074 (2)<F2> 0.21 $13.9375 08/25/02 ($20,142.95) $3,833.53 $31,132.99
2,500 (2)<F2> 0.05 $13.9375 08/25/02 ($4,998.74) $951.34 $7,726.07
1,900 (2)<F2> 0.04 $13.9375 08/25/02 ($3,799.04) $723.02 $5,871.82
500 (2)<F2> 0.01 $13.9375 08/26/02 ($999.74) $191.23 $1,547.44
12,700 (2)<F2> 0.27 $13.9375 08/28/02 ($25,393.64) $4,905.76 $39,417.93
2,000 (2)<F2> 0.04 $13.9375 08/29/02 ($3,998.99) $776.39 $6,216.45
9,500 (2)<F2> 0.20 $13.9375 09/02/02 ($18,995.24) $3,760.64 $29,697.36
500 (2)<F2> 0.01 $13.9375 09/02/02 ($999.74) $197.93 $1,563.02
10,000 (2)<F2> 0.21 $13.9375 09/03/02 ($19,994.99) $3,977.73 $31,304.95
35,900 (2)<F2> 0.76 $13.9375 09/04/02 ($71,782.04) $14,348.84 $112,544.78
100,000 (2)<F2> 2.13 $13.9375 11/20/02 ($199,949.99) $54,801.98 $348,169.40
Debra D. Valice 7,650 (2)<F2> 0.16 $13.9375 12/05/01 ($15,296.16) ($872.68) $14,996.13
64,762 (2)<F2> 1.38 $13.9375 07/14/02 ($129,491.61) $19,453.07 $188,114.28
50,000 (2)<F2> 1.06 $13.9375 09/25/06 ($99,974.99) $176,921.54 $559,786.01
50,000 (2)<F2> 1.06 $13.9375 11/20/07 ($99,974.99) $227,505.09 $705,814.30
- ------------------------------------------------------------------------------------------------------------------------------------
<FN>
(1)<F1> The expiration dates of the common stock purchase warrants listed were
extended from April 11, 1999 to April 11, 2000.
<PAGE>
(2)<F2> On December 3, 1998, the Company's Board of Directors approved a
repricing of the company's then outstanding options and warrants
whereby all options and warrants held by employees with an exercise
price greater than $13.9375 ($2 above the market price of the
Company's common stock) were repriced to $13.9375. The vesting terms
and expiration dates of these options and warrants were not amended.
(3)<F3> The values shown are based on the indicated assumed annual rates of
appreciation compounded annually. The actual value an executive may
realize will depend on the extent to which the stock price exceeds the
exercise price of the options or warrants on the date the option or
warrant is exercised. Accordingly, the value, if any, realized by an
executive will not necessarily equal any of the amounts set forth in
the table above. These calculations are not intended to forecast
possible future appreciation, if any, of the price of the Company's
common stock.
</FN>
</TABLE>
The following table sets forth certain information with respect to the
exercise of options during the year ended December 31, 1998, and unexercised
options held at December 31, 1998, and the value thereof, by each of the named
executive officers.
<TABLE>
AGGREGATED OPTION/SAR EXERCISES IN 1998
AND 12/31/98 OPTION/SAR VALUES
<CAPTION>
Number of Securities
Underlying Unexercised Value of Unexercised In-the
Shares Options/SARs Money Options/SARs at
Acquired at 12/31/98 (#) 12/31/98 ($)
on Value ----------------------------- --------------------------------
Name Exercise(#) Realized ($) Exercisable Unexercisable Exercisable Unexercisable
- ------------------------- ----------- ------------ ----------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Paul A. Frame 0 $0 1,267,156 176,666 $392,127.87 $0
Horace A. Calvert 0 $0 967,156 176,666 $1,961,187.12 $0
Herbert M. Pearlman 0 $0 705,582 160,000 $126,867.63 $0
David S. Lawi 0 $0 550,726 80,000 $89,743.13 $0
Debra D. Valice 0 $0 241,539 56,666 $34,375.00 $0
</TABLE>
EMPLOYMENT ARRANGEMENTS
Agreements with Messrs. Frame, Calvert, Pearlman and Lawi
On November 20, 1997, the stockholders approved the 1998 Executive
Compensation Plan. The Company has employment agreements with Herbert M.
Pearlman, Paul A. Frame, Horace A. Calvert and David S. Lawi (the "Executives"),
for service in their respective capacities set forth in the listing of directors
and executive officers, that provide for compensation in accordance with the
1998 Executive Compensation Plan. Messrs. Pearlman, Frame, Calvert and Lawi
receive an annual base salary of $428,437, $444,878, $444,878, and $214,219,
respectively, under these employment agreements.
The agreements also provide for the Executives to receive bonus payments
based on the annual Pre-Tax Profits (the "PTP") of the Company and its
majority-owned subsidiaries ("Subsidiaries"). The PTP must exceed $10 million
for fiscal 1998 and each of the four years thereafter, $12 million for fiscal
<PAGE>
2003 and each of the four years thereafter, and $14 million for fiscal 2008 and
thereafter (the "PTP Threshold"). If the PTP exceeds the PTP Threshold, the
Executives will receive the following bonuses based on the annual PTP of the
Company and its Subsidiaries:
<TABLE>
<CAPTION>
Percentage up to Percentage above
$50 Million PTP $50 Million PTP
---------------- ----------------
<S> <C> <C>
Herbert M. Pearlman*<F1> 5.0% 5.3%
Paul A. Frame 4.0% 4.25%
Horace A. Calvert 4.0% 4.25%
David S. Lawi*<F1> 2.5% 2.65%
<FN>
*<F1> The annual bonus payments to Messrs. Pearlman and Lawi will be reduced
by $300,000 and $150,000, respectively.
</FN>
</TABLE>
The agreements further provide for Messrs. Frame and Calvert to receive
annual bonuses equal to 1% of the annual sales of the Company and its
Subsidiaries in excess of $30 million, provided that the PTP exceeds the PTP
Threshold.
Each of the agreements with Messrs. Frame and Calvert provide that if at
any time during the term of such agreement, (i) the employment agreements of
Messrs. Pearlman or Lawi are terminated by the Company prior to the stated term
thereof, or (ii) Messrs. Pearlman and Lawi resign from the Company's Board of
Directors prior to the expiration of the term of their employment agreements, or
(iii) the majority of the members of the Company's Board of Directors is no
longer nominated and supported by a majority of Messrs. Frame, Calvert, Pearlman
and Lawi (each a "Change in Control"), the employee shall have the right to
terminate the agreement immediately and receive from the Company all
compensation required to be paid during the unexpired term thereof as well as
the severance payment described below without any obligation to perform
consulting services as described below. The Company believes that the Change in
Control provisions in these agreements may tend to discourage attempts to
acquire a controlling interest in the Company and may also tend to make the
removal of management more difficult.
Each agreement is for a term of five years, renewable each year for an
additional year unless either party to the agreement gives notice to the
contrary. Each agreement provides that if it is not renewed, the Company will
pay the employee for two additional years' compensation including his then
current base salary plus the average of all bonuses paid to the employee for the
then prior three years. The severance payments are contingent upon the employee
remaining available to perform consulting services for the benefit of the
Company. Each agreement also provides for monthly salary continuation payments
for one year upon the employee's death, so long as the agreement is in full
force and effect at the time of the employee's death. The annual salary
continuation amount will equal the employee's base salary at his date of death
plus an average of the bonuses paid for the three previous calendar years.
Each agreement provides for certain noncompetition and nondisclosure
covenants of the employee and for certain Company-paid fringe benefits such as
an automobile allowance, disability insurance and inclusion in pension, deferred
compensation, profit sharing, stock purchase, savings, hospitalization and other
benefit plans in effect from time to time.
Agreement with Ms. Valice
Effective as of January 1, 1993, the Company entered into an employment
agreement with Ms. Valice for service in her capacities set forth in the listing
of directors and executive officers. In 1998, Ms. Valice received an annual
salary base of $155,853 under her employment agreement. The agreement also
provides for an annual bonus of 2% of the Company's pre-tax profits up to
$125,000, plus an additional amount as determined by the Board of Directors of
the Company.
<PAGE>
The agreement includes the same Charge in Control provision as described
above for the Frame and Calvert agreements, and is for a term of five years,
renewable each year for an additional year unless either party to the agreement
gives notice to the contrary. The agreement provides that if it is not renewed,
the Company will pay Ms. Valice for two additional years' compensation including
her then current base salary plus the average of all bonuses paid to her for the
then prior three years. The severance payments are contingent upon Ms. Valice
remaining available to perform consulting services for the benefit of the
Company. The agreement also provides for monthly salary continuation payments
for one year upon Ms. Valice's death, so long as the agreement is in full force
and effect at the time of her death. The annual salary continuation amount will
equal Ms. Valice's base salary at her date of death plus an average of the
bonuses paid for the three previous calendar years.
The agreement provides for certain noncompetition and nondisclosure
covenants of Ms. Valice and for certain Company-paid fringe benefits such as an
automobile allowance, disability insurance and inclusion in pension, deferred
compensation, profit sharing, stock purchase, savings, hospitalization and other
benefit plans in effect from time to time.
Option Repricing Upon Change in Control
In December 1998, the Board of Directors approved the repricing of all
employee options and warrants with an exercise price above $13.9375 per share to
$13.9375 per share. Options and warrants held by the Named Executive Officers to
purchase an aggregate of 2,605,464 shares of Company common stock were included
in this repricing. The terms of this repricing also provided that if the Company
is acquired by another company these options and warrants will be repriced to an
exercise price of $11.9375 per share.
Directors Compensation
Outside directors receive an annual fee of $30,000 for serving on the board
and are reimbursed for out of pocket expenses for meeting attendance. No
additional fees are paid for serving on committees, except that committee chairs
receive an additional $5,000 annually or 10,000 options to purchase the
Company's common stock. On July 25, 1996, the Company's Board of Directors
adopted the Non-Employee Directors' Deferred Compensation Plan which permits
each non-employee director to elect to receive annual director fees in the form
of stock options and to defer receipt of any directors' fees in a deferred cash
account or as deferred shares. As of December 31, 1998, 60,000 shares have been
reserved for issuance under this plan and directors (including former directors)
have accumulated 1,643 deferred shares in their accounts of which 328 shares
have been distributed and 1,315 will be distributed in annual equal installments
from January 1999 to January 2002. Directors who are also employees receive no
separate compensation for their services as directors.
Non-employee directors also participate in the Non-Employee Directors'
Stock Option Plan (the "Plan"), which was approved by Company Shareholders at
the 1994 annual meeting. Under the terms of the Plan, each non-employee director
receives on the date of each annual meeting during the term of the Plan an
option to purchase 2,000 shares of common stock at an exercise price equal to
the fair market value of the common stock on the date of grant. In addition,
each non-employee director who is elected or appointed to the Board of Directors
for the first time is granted on the date of such election or appointment an
option to purchase 10,000 shares of common stock at an exercise price equal to
the fair market value of the common stock on the date of grant. Options granted
under the Plan become exercisable one year after the date of grant. All options
expire at the earlier of five years after the date of grant, twelve months after
the optionee ceases to serve as a director due to death, disability, or
retirement at or after age 65, or sixty days after the optionee otherwise ceases
to serve as a director of the Company. If a director ceases to serve as such for
any reason other than death, disability, or retirement at or after age 65, the
option may be exercised only if it was exercisable at the date of such cessation
of service. During 1998, William Lerner and John E. Stieglitz were granted
12,000 options each (including 10,000 for chairing a board committee), at an
exercise price of $13.75. In addition, Fred S. Zeidman received 2,000 options at
an exercise price of $13.75.
<PAGE>
In December 1998, the Board of Directors adopted amendments to the Plan to
expand the circumstances under which grants of options can be made to
non-employee directors by permitting discretionary grants and to expand the
terms relating to previous grants of options. The amendments are subject to
stockholder approval at the 1999 Annual Meeting of Stockholders.
Following the adoption of the amendments in December 1998, the Board of
Directors approved option grants to Messrs. Craig, Lerner, Stieglitz and
Zeidman, non-employee directors, to purchase 20,000, 20,000, 20,000 and 15,000
shares of the Company's common stock, respectively. These options have an
exercise price of $11.9375 per share, which was the closing price for the shares
on the date of grant, vest on December 3, 1999 and expire December 3, 2003. The
Board of Directors also authorized a new exercise price of $13.9375 per share
for outstanding options for 26,000, 26,000 and 10,000 options previously granted
under the Plan to Messrs. Lerner, Stieglitz and Zeidman, respectively, and
extended by two years the expiration date of 38,000, 38,000 and 12,000 options
previously granted under the Plan to Messrs. Lerner, Stieglitz and Zeidman,
respectively.
Compensation Committee Interlocks and Insider Participation
The Company's Compensation and Stock Option Committee is composed of
William Lerner, John E. Stieglitz and Fred S. Zeidman.
No member of the Compensation Committee of the Board of Directors of the
Company was, during 1998, an officer or employee of the Company or any of its
subsidiaries, or was formerly an officer of the Company or any of its
subsidiaries, or had any relationship requiring disclosure pursuant to
applicable rules and regulations of the Securities and Exchange Commission.
During 1998, no executive officer of the Company served as (i) a member of the
compensation committee (or other board committee performing equivalent
functions) of another entity, one of whose executive officers served on the
Compensation Committee of the Company, (ii) a director of another entity, one of
whose executive officers served on the Compensation Committee of the Company, or
(iii) a member of the compensation committee (or other board committee
performing equivalent functions) of another entity, one of whose executive
officers served as a director of the Company.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the beneficial
ownership of the common stock, as of April 15, 1999, by (i) persons known to the
Company to be beneficial owners of more than 5% of the common stock, (ii) each
of the Company's directors, (iii) each of the named executive officers, and (iv)
all directors and executive officers of the Company as a group.
<PAGE>
<TABLE>
<CAPTION>
Name and Address Amount and Nature of
of Beneficial Owner Beneficial Ownership (1)<F2>(2)<F3> Percentage of Class
- ----------------------------------------------- ---------------------------------- -------------------------
<S> <C> <C>
Paul A. Frame, Jr. 1,715,086 (3)<F4> 6.8%
50 Briar Hollow Lane, 7th Floor West
Houston, TX 77027
Horace A. Calvert 1,511,750 (4)<F5> 6.1%
50 Briar Hollow Lane, 7th Floor West
Houston, TX 77027
Driehaus Capital Management, Inc. 1,241,170 5.2%
25 East Erie Street
Chicago, IL 60611
Herbert M. Pearlman 1,037,241 (5)<F6> 4.2%
537 Steamboat Road
Greenwich, CT 06830
<PAGE>
Name and Address Amount and Nature of
of Beneficial Owner Beneficial Ownership (1)<F2>(2)<F3> Percentage of Class
- ----------------------------------------------- ---------------------------------- -------------------------
David S. Lawi 690,287 (6)<F7> 2.8%
537 Steamboat Road
Greenwich, CT 06830
Debra D. Valice 371,785 (7)<F8> 1.5%
50 Briar Hollow Lane, 7th Floor West
Houston, TX 77027
Walter M. Craig, Jr. 74,820 (8)<F9> *<F1>
1011 HWY 7
Spring Lake, NJ 07762
William Lerner 35,170 (9)<F10> *<F1>
423 East Beau Street
Washington, PA 15301
John E. Stieglitz 34,085 (9)<F10> *<F1>
Conspectus, Inc.
222 Purchase Street
Rye, NY 10580
Fred S. Zeidman 19,000 (10)<F11> *<F1>
2104 Chilton
Houston, TX 77019
All directors and executive officers
as a group (9 persons) 5,489,224 (11)<F12> 19.9%
<FN>
* <F1> Less than 1%
(1)<F2> Except as otherwise noted, each named holder has, to the best of the
Company's knowledge, sole voting and investment power with respect to
the shares indicated.
(2)<F3> Includes shares that may be acquired within 60 days by any of the
named persons upon exercise of any right.
(3)<F4> Includes 278,384 and 1,005,438 shares which may be acquired from the
Company within 60 days upon exercise of options and common stock
purchase warrants, respectively. The exercise prices of the options
range from $2.78 to $13.94 per share, and the exercise prices of the
common stock purchase warrants range from $11.75 to $13.94 per share.
(4)<F5> Includes 443,404 and 540,418 shares which may be acquired from the
Company within 60 days upon exercise of options and common stock
purchase warrants, respectively. The exercise prices of the options
range from $2.78 to $13.94 per share, and the exercise prices of the
common stock purchase warrants range from $6.53 to $13.94 per share.
<PAGE>
(5)<F6> Includes 338,456 and 322,126 shares which may be acquired from the
Company within 60 days upon exercise of options and common stock
purchase warrants, respectively. The exercise prices of the options
range from $12.56 to $13.94, and the exercise prices of the common
stock purchase warrants range from $11.75 to $13.94 per share.
(6)<F7> Includes 288,456 and 187,270 shares which may be acquired from the
Company within 60 days upon exercise of options and common stock
purchase warrants, respectively. The exercise prices of the options
range from $12.56 to $13.94, and the exercise prices of the common
stock purchase warrants range from $11.75 to $13.94 per share.
(7)<F8> Includes 149,079 and 92,460 shares which may be acquired from the
Company within 60 days upon exercise of options and common stock
purchase warrants, respectively. The exercise prices of the options
range from $12.56 to $13.94 per share, and the exercise prices of the
common stock purchase warrants range from $11.75 to $13.56 per share.
(8)<F9> Includes 67,554 shares which may be acquired from the Company within
60 days upon exercise of common stock purchase warrants. The exercise
prices of the common stock purchase warrants range from $11.75 to
$13.94 per share.
(9)<F10> Includes 26,000 shares which may be acquired from the Company within
60 days upon exercise of options at an exercise price of $13.94 per
share.
(10)<F11> Includes 10,000 shares which may be acquired from the Company within
60 days upon exercise of options at an exercise price of $13.94 per
share.
(11)<F12> Includes an aggregate of 3,775,045 shares which may be acquired from
the Company within 60 days upon exercise of 1,559,779 options and
2,215,266 common stock purchase warrants, respectively, by the group
of nine persons which comprises all executive officers and directors.
The exercise prices of the options range from $2.78 to $13.94 per
share, and the exercise prices of the common stock purchase warrants
range from $6.53 to $13.94 per share.
</FN>
</TABLE>
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On July 21, 1992, the Company granted ten-year loans at an interest rate of
4% to most of its employees for the purchase of 800,000 shares of the Company's
common stock at the then market price of $2.6875 per share. Payments of 5% of
the original principal balance plus accrued interest are due annually on August
1, with a balloon payment of the remaining principal and accrued interest due
August 1, 2002. The Company recorded compensation expense due to the below
market interest rate on these loans of $40,000 in 1998. The stock certificates
are held by the Company as collateral until payment is received. Loans in excess
of $60,000 were made to Messrs. Frame and Calvert and Ms. Valice, amounting to
$537,500, $537,500 and $134,375, respectively. The largest aggregate amounts of
principal and interest outstanding on such loans during 1998 were approximately
$418,000, $418,000 and $105,000, respectively. As of April 15, 1999, the
aggregate amounts of principal and interest outstanding on such loans were
approximately $386,000, $386,000 and $97,000, respectively.
On October 2, 1998, the Company granted five-year loans at an interest rate
of 4% to most of its employees in an aggregate amount of $8,191,219 for the
purchase from the Company of 794,300 shares of the Company's common stock and
options to purchase a like number of shares of the Company's common stock at an
exercise price of $11.75 per share. Payment of 60% of the loan amount plus
accrued interest is being made in equal monthly, quarterly or annual payments,
as applicable, and a balloon payment of the remaining 40% is due on October 2,
<PAGE>
2003. The Company recorded compensation expense due to the below market interest
rate on these loans of $14,000 in 1998. The stock certificates are held by the
Company as collateral until payment is received. Loans in excess of $60,000 were
made to Messrs. Frame, Calvert, Pearlman and Lawi amounting to $773,438 each and
to Ms. Valice amounting to $515,625. The largest aggregate amounts of principal
and interest outstanding on such loans during 1998 were approximately $781,000
for each of Messrs. Frame, Calvert, Pearlman and Lawi and $521,000 for Ms.
Valice. As of April 15, 1999, the aggregate amounts of principal and interest
outstanding on such loans were approximately $759,000 for each of Messrs. Frame,
Calvert, Pearlman and Lawi and $506,000 for Ms. Valice.
The Company guarantees borrowings up to $750,000 made by Paul Frame under a
line of credit. The Company is only obligated to make payment in the event of
default by Mr. Frame. The Company has a contractual right of offset against any
salary, bonus, commission or other amounts due from the Company to Mr. Frame for
any amounts paid by the Company pursuant to this guaranty. At December 31, 1998,
$600,000 was outstanding on this line of credit, which represented the maximum
amount outstanding on this line of credit for the year. The Company did not make
any payments under this guaranty during 1998.
On August 11, 1997, the Company's wholly-owned seismic data acquisition
crew subsidiary, Eagle Geophysical, Inc., completed an initial public offering
("Offering") in which the Company sold 1,880,000 of its 3,400,000 shares of
Eagle common stock as a selling stockholder. As of April 15, 1999, the Company
has 17.3% ownership interest in Eagle. The Company owed Eagle and its
subsidiaries $27,117,000 at December 31, 1998, for seismic data acquisition
services provided to the Company and its subsidiaries subsequent to the Offering
date. The Company incurred charges of $79,900,000 for these services for the
year ended December 31, 1998. Costs incurred for these services were based on
agreed upon contractual amounts and terms similar to contracts with third party
contractors. The Company has declared a dividend of all of its shares of Eagle,
which will be paid as soon as practical to the Company's stockholders of record
as of April 26, 1999.
Paul Frame, the Chief Executive Officer, President and Director of the
Company, was a Director of Eagle and Chairman of the Executive Committee of
Eagle's Board of Directors until March 1999. In addition to his duties as a
director of Eagle, Mr. Frame was responsible for strategic planning, marketing,
and domestic and international growth of Eagle's business pursuant to a bonus
agreement with Eagle, which was terminated in March 1999 when he resigned as a
director of Eagle. The Board of Directors of the Company had agreed to allow Mr.
Frame to devote 20% of his time to Eagle until December 31, 1999. Pursuant to
the bonus agreement, Eagle paid Mr. Frame a bonus of $206,979 attributable to
1998, along with annual director fees and meeting fees as an outside director of
Eagle.
Certain employees and directors of the Company and immediate family members
of employees and directors contributed cash to partnerships in 1994 through 1997
which invested in the exploration and development of oil and gas properties on a
working interest basis along with DDD Energy, Inc. ("DDD Energy"). Each
partnership's working interest amounted to 2.5% of the total investment made by
such partnership and DDD Energy for the partnership formed in 1997, 3% for the
partnership formed in 1996 and 5% for the partnerships formed in 1995 and 1994.
Effective October 1, 1998, DDD Energy purchased the oil and gas interests owned
by each of the partnerships in exchange for shares of the Company's common
stock, cash in lieu of fractional shares and assumption of certain partnership
liabilities. The purchase price for the interests of each partnership was equal
to the greater of (i) the present value of future production of proved reserves
based on the independent reserve report dated January 1, 1998, adjusted by DDD
Energy to the effective date of the purchase to take into account production and
other reserve changes, plus 100% of costs attributable to unevaluated prospects,
or (ii) the partners' original capital contributions to the partnership. This
<PAGE>
purchase price determination was approved by an independent committee of the
Board of Directors of the Company consisting of Walter Craig, John Stieglitz and
Fred Zeidman. DDD Energy did not obtain a third-party appraisal of these
properties. The purchase prices for the assets of the 1994 partnership, the 1995
partnership, the 1996 partnership and the 1997 partnership were $1,102,306,
$2,889,238, $842,767 and $600,056, respectively, based on this purchase price
determination. The 1996 partnership and the 1997 partnership had paid $899,389
and $355,031, respectively, for its interests in the properties that were sold
to DDD Energy. Liabilities of the partnerships assumed by DDD Energy and
outstanding advances from DDD Energy on behalf of the partnerships, amounting to
$774,382, $578,129 and $168,352 for the 1994 partnership, the 1995 partnership
and the 1996 partnership, respectively, were deducted from these purchase
prices. DDD Energy paid the net purchase price to each partnership in shares of
Company common stock valued at $11.00 per share, plus cash for the fractional
shares that would have been distributed to the partners in the partnerships.
When the Company received its independent reserve report dated January 1, 1999,
DDD Energy paid additional cash consideration to the 1995 partnership, the 1996
partnership and the 1997 partnership of $707,687, $115,668 and $610,
respectively, based on the estimated present values of future production from
the properties as reflected in this reserve report and as adjusted to October 1,
1998.
The following officers and directors of the Company and family members of
officers and directors received the number of shares and dollar amounts listed
below in connection with these transactions as a result of their partnership
interests in these partnerships: Paul A. Frame, 35,682 shares and $98,452;
Horace A. Calvert, 45,169 shares and $98,559; Herbert M. Pearlman, 48,249 shares
and $114,138; David S. Lawi, 36,135 shares and $78,851; Debra D. Valice, 29,804
shares and $73,654; Sheryl Pearlman (wife of Herbert Pearlman), 4,554 shares and
$4,159; Julia L. Pearlman, 4,515 shares and $9,877; Lee R. Pearlman, 4,515
shares and $9,877; Lawrence Marolda, 4,515 shares and $9,877; Nicole E. Lawi,
4,515 shares and $9,877; and Neil A. Lawi, 4,515 shares and $9,877.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) DOCUMENTS FILED AS PART OF THIS REPORT
(3) Exhibits:
3.1 Certificate of Incorporation of the Company filed May 7,
1982 and Amendment to Certificate of Incorporation filed
April 25, 1984 (1)
3.2 Amendment to Certificate of Incorporation filed August 4,
1987 (3)
3.3 Amendment to Certificate of Incorporation filed January 18,
1989 (4)
3.4 Amendment to Certificate of Incorporation filed July 13,
1989 (5)
3.5 Amendment to Certificate of Incorporation filed August 3,
1993 (11)
3.6 Amendment to Certificate of Incorporation filed November 21,
1997 (23)
3.7 By-Laws of the Company (1)
3.8 Corporate Resolution reflecting an Amendment to the By-Laws
of the Company adopted January 6, 1989 (3)
3.9 Corporate Resolution reflecting an Amendment to the By-Laws
of the Company adopted May 19, 1986 (5)
4.1 Specimen of Common Stock Certificate (1)
4.2 Form of Warrant Certificate granted to certain employees and
one Director of the Company in December 1990 and expiring in
December 2000 (8)
4.3 Form of Promissory Note for Employee Stock Purchase dated
July 21, 1992 (10)
4.4 Form of Subscription Agreement for Employee Stock Purchase
dated July 21, 1992 (10)
4.5 Form of Pledge for Employee Stock Purchase dated July 21,
1992 (10)
4.6 Form of Warrant Certificate granted under the 1994 Warrant
Plans (14)
4.7 Form of Warrant Certificate granted under the 1995 Warrant
Reload Plan (17)
<PAGE>
(3) Exhibits, continued...
4.8 Form of Executive Warrant Certificate granted to certain
employees of the Company in November 1997 and expiring in
November 2002 (23)
4.9 Form of Bonus Warrant Certificate granted to an employee of
the Company in November 1997 and expiring in November 2002
(23)
4.10 Seitel, Inc. 1998 Employee Stock Purchase Plan including
Form of Common Stock Purchase Warrant (25)
4.11 Amendment No. 1 to the Seitel, Inc. 1998 Employee Stock
Purchase Plan (27)
4.12 Form of Departure Warrant granted to certain employees of
the Company in August 1997 (26)
4.13 Form of Employment Warrant granted to an employee of the
Company in April 1998 and expiring in April 2008 (26)
4.14 Form of Employment Warrant granted to an employee of the
Company in April 1998 and expiring in April 2008 (26)
10.1 Incentive Stock Option Plan of the Company (1)
10.2 Non-Qualified Stock Option Plan of the Company (1)
10.3 1993 Incentive Stock Option Plan of the Company (11)
10.4 Amendment No. 1 to the Seitel, Inc. 1993 Incentive Stock
Option Plan (16)
10.5 Statement of Amendments effective November 29, 1995, to the
Seitel, Inc. 1993 Incentive Stock Option Plan (19)
10.6 Statement of Amendments effective April 22, 1996, to the
Seitel, Inc. 1993 Incentive Stock Option Plan (19)
10.7 Amendment to the Seitel, Inc. 1993 Incentive Stock Option
Plan effective December 31, 1996 (21)
10.8 Amendment to Limit Options Granted to a Single Participant
under the Seitel, Inc. 1993 Incentive Stock Option Plan (23)
10.9 Amendment to Increase Number of Shares Available for
Granting Options under the Seitel, Inc. 1993 Incentive Stock
Option Plan (23)
10.10 Non-Employee Directors' Stock Option Plan of the Company
(13)
10.11 Amendment to the Seitel, Inc. Non-Employee Directors' Stock
Option Plan effective December 31, 1996 (21)
10.12 Seitel, Inc. Non-Employee Directors' Deferred Compensation
Plan (19)
<PAGE>
(3) Exhibits, continued...
10.13 Seitel, Inc. Amended and Restated 1995 Warrant Reload Plan
(20)
10.14 Amendment to the Seitel, Inc. Amended and Restated 1995
Warrant Reload Plan effective December 31, 1996 (21) (3)
Exhibits, continued...
10.15 Memorandum of Understanding between the Company and
Triangle Geophysical Company dated as of June 7, 1984 (1)
10.16 Lease Agreement by and between the Company and Commonwealth
Computer Advisors, Inc. (2)
10.17 The Company's 401(k) Plan adopted February 27, 1995 (14)
10.18 The Company's 401(k) Plan adopted January 1, 1998 (23)
10.19 Executive Services Agreement dated April 3, 1990 between
the Company and Helm Resources, Inc. (7)
10.20 Employment Agreement effective as of January 1, 1991
between the Company and Paul A. Frame, Jr. (9)
10.21 Amendment to Employment Agreement dated effective as of
January 1, 1998 between the Company and Paul A. Frame, Jr.
(23)
10.22 Employment Agreement effective as of January 1, 1991
between the Company and Horace A. Calvert (9)
10.23 Amendment to Employment Agreement dated effective as of
January 1, 1998 between the Company and Horace A. Calvert
(23)
10.24 Employment Agreement effective as of January 1, 1991
between the Company and Herbert M. Pearlman (9)
10.25 Amendment to Employment Agreement dated effective as of
January 1, 1998 between the Company and Herbert M. Pearlman
(23)
10.26 Employment Agreement effective as of January 1, 1991
between the Company and David S. Lawi (9)
10.27 Amendment to Employment Agreement dated effective as of
January 1, 1998 between the Company and David S. Lawi (23)
10.28 Employment Agreement effective as of January 1, 1993
between the Company and Debra D. Valice (12)
10.29 Amendment to Employment Agreement dated effective as of
January 1, 1998 between the Company and Debra D. Valice (23)
10.30 Amendment to Employment Agreement dated effective as of
June 10, 1998 between the Company and Debra D. Valice (24)
10.31 Joint Venture Agreement dated April 5, 1990 by and between
Seitel Offshore Corp., a wholly-owned subsidiary of the
Company, and Digicon Data Inc., a wholly-owned subsidiary of
Digicon Geophysical Corp. (6)
10.32 Loan and Security Agreement dated as of July 9, 1996,
between Seitel Geophysical, Inc. (Company's wholly-owned
subsidiary) and NationsBanc Leasing Corporation of North
Carolina (19)
<PAGE>
(3) Exhibits, continued...
10.33 Assumption and Consent dated December 31, 1996, among Seitel
Geophysical, Inc. (Company's wholly-owned subsidiary), Eagle
Geophysical, Inc. (Company's wholly-owned subsidiary),
NationsBanc Leasing Corporation of North Carolina, and
Seitel, Inc. (21)
10.34 Revolving Credit Agreement dated as of July 22, 1996, among
Seitel, Inc. and The First National Bank of Chicago (19)
10.35 First Amendment to Seitel, Inc. Revolving Credit Agreement
dated as of August 30, 1996 among the Company and The First
National Bank of Chicago (20)
10.36 Second Amendment to Revolving Credit Agreement dated as of
July 22, 1996, among Seitel, Inc. and The First National
Bank of Chicago (22)
10.37 Ratable Note in the amount of $20,000,000 among Seitel, Inc.
and Bank One, Texas, N.A. dated as of May 1, 1997 (22)
10.38 Ratable Note in the amount of $30,000,000 among Seitel, Inc.
and The First National Bank of Chicago dated as of May 1,
1997 (22)
10.39 Third Amendment to Revolving Credit Agreement dated as of
March 16, 1998 among Seitel, Inc. and The First National
Bank of Chicago (23)
10.40 Ratable Note in the amount of $40,000,000 among Seitel, Inc.
and The First National Bank of Chicago dated March 16, 1998
(23)
10.41 Ratable Note in the amount of $35,000,000 among Seitel, Inc.
and Bank One, Texas, N.A. dated as of March 16, 1998 (23)
10.42 Loan and Security Agreement dated as of February 6, 1997,
between Eagle Geophysical, Inc. (Company's wholly-owned
subsidiary), Seitel Geophysical, Inc., (Company's
wholly-owned subsidiary), and NationsBanc Leasing
Corporation of North Carolina (21)
10.43 Incentive Compensation Agreement (10)
10.44 Shareholder Value Bonus Agreement effective as of March 18,
1994 (13)
10.45 Amendment to Shareholder Value Bonus Agreement effective as
of March 18, 1994 (15)
10.46 Seitel, Inc. 1995 Shareholder Value Incentive Bonus Plan
(16)
10.47 Terms Agreement dated July 28, 1994, between the Company and
Bear, Stearns & Co., Inc. (13)
10.48 Note Purchase Agreement dated as of December 28, 1995,
between the Company and the Series A Purchasers, the Series
B Purchasers and the Series C Purchasers (18)
10.49 Revolving Credit Agreement dated as of December 11, 1998,
between the Company and Suntrust Bank, Atlanta *
10.50 Note Purchase Agreement dated as of February 12, 1999,
between the Company and the Series D Purchasers, the Series
E Purchasers and the Series F Purchasers *
<PAGE>
(3) Exhibits, continued...
10.51 Asset Purchase Agreement between DDD Energy, Inc. and The
DDD 1994 Oil & Gas Partnership **
10.52 Asset Purchase Agreement between DDD Energy, Inc. and The
DDD 1995 Oil & Gas Partnership **
10.53 Asset Purchase Agreement between DDD Energy, Inc. and The
DDD 1996 Oil & Gas Partnership **
10.54 Asset Purchase Agreement between DDD Energy, Inc. and The
DDD 1997 Oil & Gas Partnership **
10.55 Commercial Guaranty between Seitel, Inc. and Bank One,
Texas, N.A. for Paul A. Frame **
21.1 Subsidiaries of the Registrant *
23.1 Consent of Arthur Andersen LLP *
23.2 Consent of Forrest A. Garb & Associates, Inc.*
(b) Reports on Form 8-K filed during the quarter ended December 31,
1998:
NONE
------------------
* Filed with the Company's Annual Report on Form 10-K for the year
ended December 31, 1998.
** Filed herewith
(1) Incorporated by reference to the Company's Registration
Statement, as amended, on Form S-1, No. 2-92572 as filed with the
Securities and Exchange Commission on August 3, 1984.
(2) Incorporated by reference to Post-Effective Amendment No. 2 to
the Company's Registration Statement on Form S-2, File No.
33-32838, as filed with the Securities and Exchange Commission on
October 10, 1991.
(3) Incorporated by reference to the Company's Registration
Statement, as amended, on Form S-2, No. 33-21300 as filed with
the Securities and Exchange Commission on April 18, 1988.
(4) Incorporated by reference to the Company's Annual Report on Form
10-K for the year ended December 31, 1988.
(5) Incorporated by reference to the Company's Annual Report on Form
10-K for the year ended December 31, 1989.
(6) Incorporated by reference to the Company's Form 8 amending the
Company's Annual Report on Form 10-K for the year ended December
31, 1989.
(7) Incorporated by reference to the Company's Registration
Statement, as amended, on Form S-2, No. 33-34217 as filed with
the Commission on April 6, 1990.
<PAGE>
(8) Incorporated by reference to the Company's Annual Report on Form
10-K for the year ended December 31, 1990.
(9) Incorporated by reference to the Company's Form 10-Q for the
quarter ended June 30, 1991.
(10) Incorporated by reference to the Company's Annual Report on Form
10-K for the year ended December 31, 1992.
(11) Incorporated by reference to the Company's Form 10-Q for the
quarter ended June 30, 1993.
(12) Incorporated by reference to the Company's Form 10-Q for the
quarter ended September 30, 1993.
(13) Incorporated by reference to the Company's Form 10-Q for the
quarter ended June 30, 1994.
(14) Incorporated by reference to the Company's Registration Statement
on Form S-8, No. 33-89934 as filed with the Securities and
Exchange Commission on March 2, 1995.
(15) Incorporated by reference to the Company's Annual Report on Form
10-K for the year ended December 31, 1994.
(16) Incorporated by reference to the Company's Form 10-Q for the
quarter ended June 30, 1995.
(17) Incorporated by reference to the Company's Registration Statement
on Form S-8, No. 333-01271 as filed with the Securities and
Exchange Commission on February 28, 1996.
(18) Incorporated by reference to the Company's Annual Report on Form
10-K for the year ended December 31, 1995.
(19) Incorporated by reference to the Company's Form 10-Q for the
quarter ended June 30, 1996.
(20) Incorporated by reference to the Company's Form 10-Q for the
quarter ended September 30, 1996.
(21) Incorporated by reference to the Company's Annual Report on Form
10-K for the year ended December 31, 1996.
(22) Incorporated by reference to the Company's Form 10-Q for the
quarter ended March 31, 1997.
(23) Incorporated by reference to the Company's Annual Report on Form
10-K for the year ended December 31, 1997.
(24) Incorporated by reference to the Company's Form 10-Q for the
quarter ended June 30, 1998.
(25) Incorporated by reference to the Company's Registration Statement
on Form S-8, No. 333-63383 as filed with the Securities and
Exchange Commission on September 15, 1998.
<PAGE>
(26) Incorporated by reference to the Company's Registration Statement
on Form S-8, No. 333-64557 as filed with the Securities and
Exchange Commission on September 29, 1999.
(27) Incorporated by reference to Post Effective Amendment No. 2 to
the Company's Registration Statement on Form S-8, No. 333-63383
as filed with the Securities and Exchange Commission on October
2, 1998.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this amendment to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Houston, State of Texas,
on the 30 th of April, 1999.
SEITEL, INC.
By: /s/ Paul A. Frame
------------------------------------------
Paul A. Frame
President and Chief Executive Officer
<PAGE>
EXHIBIT
INDEX
- -------- -------------------------------------------------------- -----------
Page
Exhibit Title Number
- -------- -------------------------------------------------------- -----------
10.51 Asset Purchase Agreement between DDD Energy, Inc. and 24
The DDD 1994 Oil & Gas Partnership
10.52 Asset Purchase Agreement between DDD Energy, Inc. and 33
The DDD 1995 Oil & Gas Partnership
10.53 Asset Purchase Agreement between DDD Energy, Inc. and 42
The DDD 1996 Oil & Gas Partnership
10.54 Asset Purchase Agreement between DDD Energy, Inc. and 51
The DDD 1997 Oil & Gas Partnership
10.55 Commercial Guaranty between Seitel, Inc. and Bank One, 60
Texas, N.A. for Paul A. Frame
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (this "Agreement") is entered into effective
as of October 1, 1998 (the "Effective Date"), between DDD Energy, Inc., a
Delaware corporation ("DDD"), as purchaser, and the DDD 1994 Oil & Gas
Partnership, a Texas general partnership (the "Partnership"), as seller, acting
by and through its managing general partner, DDD. Seitel, Inc. ("Seitel"), the
parent corporation of DDD, joins herein solely with respect to Section 3 hereof.
RECITALS:
WHEREAS, the Partnership was formed to invest in non-operating working
interests in oil and gas properties acquired from third parties by DDD;
WHEREAS, DDD is the managing general partner of the Partnership;
WHEREAS, DDD has generally taken title to the non-operating working
interests acquired by the Partnership in its own name to hold in trust for the
Partnership;
WHEREAS, the Partners in the Partnership (other than DDD) have voted,
pursuant to the terms of the partnership agreement governing the Partnership, to
approve the sale of all of the Partnership's assets (other than cash) to DDD on
the terms set forth herein;
WHEREAS, a committee of disinterested directors of Seitel has approved the
purchase of such assets by DDD from the Partnership; and
WHEREAS, it is anticipated that the transfer of title to the assets of the
Partnership to DDD will not require any formal documentation other than this
Agreement;
NOW, THEREFORE, DDD and the Partnership agree to the purchase and sale of
the assets hereunder subject to the following terms and conditions:
1. ACQUIRED ASSETS. The Partnership hereby sells, transfers and conveys to
DDD, and DDD hereby acquires, all of the assets of the Partnership (other than
cash), including but not limited to those non-operating working interests in oil
and gas properties listed on Exhibit A hereto (the "Assets"), effective as of
October 1, 1998.
2. PURCHASE PRICE. Seitel has contributed shares of Seitel, Inc. Common
Stock, par value $0.01 per share (the "Stock") to DDD in a transaction intended
to qualify under Treasury regulation ss.1.1502-13(f)(6)(2) and DDD will use the
Stock as a portion of "Purchase Price" payable by DDD to the Partnership. The
"Purchase Price" for the Assets shall be $1,167,303.00 payable by DDD to the
Partnership in the form of 32,642 shares of Stock valued at $11.00 per share and
$115.93 in cash.
3. REGISTRATION RIGHTS. Seitel has granted certain registration rights to
the Partnership (which may be transferred to its partners upon distribution of
such Stock to the partners) as set forth in a Registration Rights Agreement
effective as of the date hereof.
<PAGE>
4. ASSUMED LIABILITIES. DDD hereby assumes the liability of the Partnership
to DDD of $808,125.07 for amounts advanced by DDD on behalf of the Partnership
prior to the Effective Date. DDD also assumes the liabilities disclosed on
Exhibit "B" hereto. Except as specifically set forth in this Section 3, DDD
assumes no obligations or liabilities of the Partnership.
5. COVENANTS, REPRESENTATIONS AND WARRANTIES.
(a) Conveyance of the Assets shall be with full substitution and
subrogation of DDD, its successors and assigns, in and to all covenants and
warranties heretofore given or made in respect of the rights, properties,
and assets conveyed and transferred hereby, or any part thereof. The
Partnership agrees to execute such further instruments and other documents
as may be reasonably necessary to more fully convey to DDD the Assets
conveyed or intended to be conveyed hereby.
(b) The Partnership warrants to DDD and its successors and assigns
title to the Assets against claims and demands of all persons whomsoever
may claim the same or any part thereof by, through and under the
Partnership, but not otherwise.
(c) The Partnership represents the following to DDD:
(i) The Partnership owns the Assets and has the full power and
right to sell and convey the same to DDD free of any lien, claim or
encumbrance by, through or under the Partnership;
(ii) The Partnership has complied, in all material respects, with
the provisions and requirements of all orders, regulations and rules
issued or promulgated by governmental authorities having jurisdiction
with respect to the Assets and has filed for and obtained all
governmental certificates, permits and other authorizations necessary
for current operation of the Assets other than permits, consents and
authorizations required for the sale and transfer of the Assets to DDD
which shall be the responsibility of DDD; and
(iii) The leases comprising the Assets are in full force and
effect.
(d) All ad valorem taxes regarding the Assets (i) for the years 1997
and before shall be borne and paid by the Partnership and (iii) for the
years 1998 and thereafter shall be borne and paid by DDD.
(e) The Partnership represents and warrants to DDD that the
Partnership has incurred no liability, contingent or otherwise, for
brokers' or finders' fees relating to the transactions contemplated by this
Agreement for which DDD shall have any responsibility whatsoever. DDD
represents and warrants to the Partnership that DDD has incurred no
liability, contingent or otherwise, for brokers' or finders' fees relating
to the transactions contemplated by this Agreement for which the
Partnership shall have any responsibility whatsoever.
<PAGE>
(f) The Partnership represents and warrants that each and every
partner in the Partnership is an accredited investor as defined in Rule 501
under the Securities Act of 1933, as amended.
(g) Investment Representations.
(i) The Partnership is acquiring the Stock for its own account
and the account of the partners therein for investment and not with a
view to, or for sale or other disposition in connection with, any
distribution of all or any part thereof (other than a distribution to
such partners pro rata), except pursuant to an applicable exemption
under the Securities Act or in an offering covered by an effective
registration statement under the Securities Act relating to the Stock.
In acquiring the Stock, neither the Partnership nor its partners are
offering or selling, nor will offer or sell, for Seitel or DDD in
connection with any distribution of the Stock, and neither the
Partnership nor any partner therein has a participation or will
participate in any such undertaking or in any underwriting of such an
undertaking, except in compliance with applicable federal and state
securities laws.
(ii) The Partnership acknowledges that it and its partners have
been furnished with substantially the same kind of information
regarding Seitel and its business, assets, results of operations and
financial condition as would be contained in a registration statement
prepared in connection with a public sale of the Stock. The
Partnership further represents that it and its partners have had an
opportunity to ask questions of and receive answers from Seitel
regarding Seitel and its business, assets, results of operations and
financial condition and the terms and conditions of the issuance of
the Stock.
(iii) The Partnership acknowledges that it and its partners are
able to fend for itself or themselves, can bear the economic risk of
its or their investment in the Stock, and have such knowledge and
experience in financial and business matters that it or they are
capable of evaluating the merits and risks of an investment in the
Stock.
(iv) The Partnership and its partners understand that the Stock,
when issued to the Partnership or subsequently to a partner therein,
will not have been registered pursuant to the Securities Act or any
applicable state securities laws, that the Stock will be characterized
as "restricted securities" under federal securities laws, and that
under such laws and applicable regulations the Stock cannot be sold or
otherwise disposed of without registration under the Securities Act or
an exemption therefrom. In this connection, the Partnership and its
partners represent that they are familiar with Rule 144 promulgated
under the Securities Act, as currently in effect, and understand the
resale limitations imposed thereby and by the Securities Act. Stop
transfer instructions may be issued accordingly to the transfer agent
for the Stock.
(v) It is agreed and understood by the Partnership and its
partners that the certificates representing the Stock shall each
conspicuously set forth on the face or back thereof, in addition to
any legends required by applicable law or other agreement, a legend in
substantially the following form:
<PAGE>
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED PURSUANT TO THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY
STATE SECURITIES LAWS. SUCH SHARES MAY NOT BE SOLD OR OTHERWISE
TRANSFERRED EXCEPT (i) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER SUCH ACT, OR (ii) IN ACCORDANCE WITH RULE 144 UNDER SUCH ACT,
UNLESS THE CORPORATION RECEIVES A WRITTEN OPINION OF COUNSEL, WHICH
OPINION AND COUNSEL ARE SATISFACTORY TO THE CORPORATION, TO THE EFFECT
THAT SUCH REGISTRATION IS NOT REQUIRED.
6. INDEMNITIES BY THE PARTNERSHIP AND DDD. As used in this paragraph and
the subparagraphs hereunder, "claims" shall include claims, demands, causes of
action, liabilities, damages, fines, penalties and judgments of any kind or
character, whether matured or unmatured, absolute or contingent, accrued or
unaccrued, liquidated or unliquidated or known or unknown, and all costs and
fees (including, without limitation, interest, attorneys' fees, costs of
experts, court costs and costs of investigation) in connection therewith.
(a) The Partnership (i) shall be responsible for all duties and
obligations express and implied with respect to the Assets accruing prior
to the Effective Date, including, without limitation, those accruing under
or by virtue of any lease, contract, agreement, document, permit, law,
statute or rule, regulation or order of any governmental authority, except
those expressly assumed by DDD pursuant to this Agreement, and (ii) SHALL
DEFEND, INDEMNIFY AND HOLD DDD HARMLESS FROM ANY AND ALL CLAIMS IN
CONNECTION THEREWITH.
(b) DDD (i) shall be responsible for all duties and obligations
express and implied with respect to the Assets accruing from and after the
Effective Date, including, without limitation, those accruing under or by
virtue of any lease, contract, agreement, document, permit, law, statute or
rule, regulation or order of any governmental authority, and (ii) SHALL
DEFEND, INDEMNIFY AND HOLD THE PARTNERSHIP HARMLESS FROM ANY AND ALL CLAIMS
IN CONNECTION THEREWITH.
(c) THE PARTNERSHIP SHALL DEFEND, INDEMNIFY AND HOLD DDD HARMLESS FROM
ANY AND ALL CLAIMS FOR DAMAGES, INCLUDING, WITHOUT LIMITATION, ECONOMIC
HARM, PERSONAL INJURY, DEATH OR DAMAGE TO PROPERTY OR ENVIRONMENT, OR FOR
ENVIRONMENTAL CLEANUP, REMEDIATION, OR COMPLIANCE, OR FOR ANY OTHER RELIEF
(COLLECTIVELY, "LOSSES"), ACCRUING PRIOR TO THE EFFECTIVE DATE DIRECTLY OR
INDIRECTLY FROM OR INCIDENT TO THE USE, OCCUPATION, OPERATION, MAINTENANCE
OR ABANDONMENT OF ANY OF THE ASSETS, OR THE CONDITION OF THE ASSETS, OR THE
PRODUCTION OR SALE OF HYDROCARBONS THEREFROM, WHETHER LATENT OR PATENT,
INCLUDING, WITHOUT LIMITATION, CONTAMINATION OF THE PROPERTY OR PREMISES
WITH NATURALLY OCCURRING RADIOACTIVE MATERIALS.
<PAGE>
(d) Any claim for indemnity under this paragraph or under any other
provision of this Agreement shall be made by written notice from the party
seeking indemnification (the "Indemnified Party") to the party required to
provide same (the "Indemnifying Party"), together with a written
description of any third-party claim against the Indemnified Party, stating
the nature and basis of such claim and, if ascertainable, the amount
thereof. The Indemnifying Party shall have a period of thirty (30) days
after receipt of such notice within which to respond thereto or, in the
case of a third party claim which requires a shorter time for response,
then within such shorter period as specified by the Indemnified Party in
such notice (the "Notice Period"). If the Indemnifying Party denies
liability or fails to respond to the notice within the Notice Period, the
Indemnified Party may defend or compromise the claim as it deems
appropriate without prejudice to any of the Indemnified Party's rights
hereunder, with no further obligation to inform the Indemnifying Party of
the status of the claim and no right of the Indemnifying Party to approve
or disapprove any actions taken in connection therewith by the Indemnified
Party. If the Indemnifying Party accepts liability, it shall so notify the
Indemnified Party within the Notice Period and elect either (a) to
undertake the defense or compromise of such third party claim with counsel
selected by the Indemnifying Party and reasonably approved by the
Indemnified Party or (b) to instruct the Indemnified Party to defend or
compromise such claim. If the Indemnifying Party undertakes the defense or
compromise of such third-party claim, the Indemnified Party shall be
entitled, at its own expense, to participate in such defense. No compromise
or settlement of any third-party claim shall be made without reasonable
notice to the Indemnified Party and, unless such compromise or settlement
includes a general release of the Indemnified Party in respect of the
matter with no admission of liability on the part of the Indemnified Party
and no constraints on the future conduct of its business, without the prior
written approval of the Indemnified Party.
THE INDEMNITIES CONTAINED IN THIS PARAGRAPH SHALL SURVIVE THE
EFFECTIVE DATE AND EXTEND TO THE INDEMNIFIED PARTY AND ITS OWNERS AND EACH
OF THEIR PRESENT AND FUTURE DIRECTORS, OFFICERS, EMPLOYEES,
REPRESENTATIVES, CONTRACTORS AND AGENTS, AND EACH OF THEIR HEIRS,
EXECUTORS, SUCCESSORS AND ASSIGNS (COLLECTIVELY, THE "INDEMNIFIED GROUP")
AND SHALL APPLY TO ALL OBLIGATIONS AND LIABILITIES DESCRIBED ABOVE,
INCLUDING THOSE BASED ON NEGLIGENCE, INCLUDING SOLE NEGLIGENCE, SIMPLE
NEGLIGENCE, CONCURRENT NEGLIGENCE, ACTIVE NEGLIGENCE, PASSIVE NEGLIGENCE,
GROSS NEGLIGENCE, STRICT LIABILITY OR FAULT OF THE INDEMNIFIED GROUP OR ANY
OTHER THEORY OF LIABILITY OR FAULT, WHETHER IN LAW (WHETHER COMMON OR
STATUTORY) OR EQUITY.
7. SEVERABILITY AND CHOICE OF LAW. If any one or more of the provisions of
this Agreement shall for any reason be held by a court of competent jurisdiction
to be invalid, illegal or unenforceable in any respect, such invalidity,
illegality or unenforceability shall not effect the remaining provisions of this
Agreement, and this Agreement shall be construed as if such invalid, illegal or
unenforceable provision had never been a part hereof. This Agreement shall be
construed in accordance with the laws of the State of Texas, without giving
effect to any conflict of law rules or provisions.
<PAGE>
8. ENTIRE AGREEMENT AND WAIVER. This Agreement constitutes the entire
agreement between the parties with respect to the subject matter hereof and
supersedes all previous communications, representations or agreements, whether
oral or written, with respect to the subject matter herein, and no agreement or
understanding varying or extending the terms hereof will be binding on either
party unless in writing and executed by an authorized representative of each
party. A benefit, right or duty provided by this Agreement shall be deemed
waived only when expressly agreed in writing between the parties. The waiver of
one instance of any act, omission, condition or requirement shall not constitute
a continuing waiver unless specifically so stated in the aforesaid written
waiver.
DDD ENERGY, INC.
By: /s/ HORACE A. CALVERT
----------------------------------------
HORACE A. CALVERT, President
DDD 1994 OIL & GAS PARTNERSHIP
By: DDD Energy, Inc., Managing Partner
By: /S/ HORACE A. CALVERT
----------------------------------------
HORACE A. CALVERT, President
SEITEL, INC.
(solely with respect to Section 3 hereof)
By: /S/ DEBRA D. VALICE
----------------------------------------
DEBRA D. VALICE, Executive Vice President
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (this "Agreement") is entered into effective
as of October 1, 1998 (the "Effective Date"), between DDD Energy, Inc., a
Delaware corporation ("DDD"), as purchaser, and the DDD 1995 Oil & Gas
Partnership, a Texas general partnership (the "Partnership"), as seller, acting
by and through its managing general partner, DDD. Seitel, Inc. ("Seitel"), the
parent corporation of DDD, joins herein solely with respect to Section 3 hereof.
RECITALS:
WHEREAS, the Partnership was formed to invest in non-operating working
interests in oil and gas properties acquired from third parties by DDD;
WHEREAS, DDD is the managing general partner of the Partnership;
WHEREAS, DDD has generally taken title to the non-operating working
interests acquired by the Partnership in its own name to hold in trust for the
Partnership;
WHEREAS, the Partners in the Partnership (other than DDD) have voted,
pursuant to the terms of the partnership agreement governing the Partnership, to
approve the sale of all of the Partnership's assets (other than cash) to DDD on
the terms set forth herein;
WHEREAS, a committee of disinterested directors of Seitel has approved the
purchase of such assets by DDD from the Partnership; and
WHEREAS, it is anticipated that the transfer of title to the assets of the
Partnership to DDD will not require any formal documentation other than this
Agreement;
NOW, THEREFORE, DDD and the Partnership agree to the purchase and sale of
the assets hereunder subject to the following terms and conditions:
1. ACQUIRED ASSETS. The Partnership hereby sells, transfers and conveys to
DDD, and DDD hereby acquires, all of the assets of the Partnership (other than
cash), including but not limited to those non-operating working interests in oil
and gas properties listed on Exhibit A hereto (the "Assets"), effective as of
October 1, 1998.
2. PURCHASE PRICE. Seitel has contributed shares of Seitel, Inc. Common
Stock, par value $0.01 per share (the "Stock") to DDD in a transaction intended
to qualify under Treasury regulation ss.1.1502-13(f)(6)(2) and DDD will use the
Stock as a portion of "Purchase Price" payable by DDD to the Partnership. The
"Purchase Price" for the Assets shall be $2,889,237.95 payable by DDD to the
Partnership in the form of 210,090 shares of Stock valued at $11.00 per share
and $118.74 in cash.
3. REGISTRATION RIGHTS. Seitel has granted certain registration rights to
the Partnership (which may be transferred to its partners upon distribution of
such Stock to the partners) as set forth in a Registration Rights Agreement
effective as of the date hereof.
<PAGE>
4. ASSUMED LIABILITIES. DDD hereby assumes the liability of the Partnership
to DDD of $578,129.21 for amounts advanced by DDD on behalf of the Partnership
prior to the Effective Date. DDD also assumes the liabilities disclosed on
Exhibit "B" hereto. Except as specifically set forth in this Section 3, DDD
assumes no obligations or liabilities of the Partnership.
5. COVENANTS, REPRESENTATIONS AND WARRANTIES.
(a) Conveyance of the Assets shall be with full substitution and
subrogation of DDD, its successors and assigns, in and to all covenants and
warranties heretofore given or made in respect of the rights, properties,
and assets conveyed and transferred hereby, or any part thereof. The
Partnership agrees to execute such further instruments and other documents
as may be reasonably necessary to more fully convey to DDD the Assets
conveyed or intended to be conveyed hereby.
(b) The Partnership warrants to DDD and its successors and assigns
title to the Assets against claims and demands of all persons whomsoever
may claim the same or any part thereof by, through and under the
Partnership, but not otherwise.
(c) The Partnership represents the following to DDD:
(i) The Partnership owns the Assets and has the full power and
right to sell and convey the same to DDD free of any lien, claim or
encumbrance by, through or under the Partnership;
(ii) The Partnership has complied, in all material respects, with
the provisions and requirements of all orders, regulations and rules
issued or promulgated by governmental authorities having jurisdiction
with respect to the Assets and has filed for and obtained all
governmental certificates, permits and other authorizations necessary
for current operation of the Assets other than permits, consents and
authorizations required for the sale and transfer of the Assets to DDD
which shall be the responsibility of DDD; and
(iii) The leases comprising the Assets are in full force and
effect.
(d) All ad valorem taxes regarding the Assets (i) for the years 1997
and before shall be borne and paid by the Partnership and (iii) for the
years 1998 and thereafter shall be borne and paid by DDD.
(e) The Partnership represents and warrants to DDD that the
Partnership has incurred no liability, contingent or otherwise, for
brokers' or finders' fees relating to the transactions contemplated by this
Agreement for which DDD shall have any responsibility whatsoever. DDD
represents and warrants to the Partnership that DDD has incurred no
liability, contingent or otherwise, for brokers' or finders' fees relating
to the transactions contemplated by this Agreement for which the
Partnership shall have any responsibility whatsoever.
<PAGE>
(f) The Partnership represents and warrants that each and every
partner in the Partnership is an accredited investor as defined in Rule 501
under the Securities Act of 1933, as amended.
(g) Investment Representations.
(i) The Partnership is acquiring the Stock for its own account
and the account of the partners therein for investment and not with a
view to, or for sale or other disposition in connection with, any
distribution of all or any part thereof (other than a distribution to
such partners pro rata), except pursuant to an applicable exemption
under the Securities Act or in an offering covered by an effective
registration statement under the Securities Act relating to the Stock.
In acquiring the Stock, neither the Partnership nor its partners are
offering or selling, nor will offer or sell, for Seitel or DDD in
connection with any distribution of the Stock, and neither the
Partnership nor any partner therein has a participation or will
participate in any such undertaking or in any underwriting of such an
undertaking, except in compliance with applicable federal and state
securities laws.
(ii) The Partnership acknowledges that it and its partners have
been furnished with substantially the same kind of information
regarding Seitel and its business, assets, results of operations and
financial condition as would be contained in a registration statement
prepared in connection with a public sale of the Stock. The
Partnership further represents that it and its partners have had an
opportunity to ask questions of and receive answers from Seitel
regarding Seitel and its business, assets, results of operations and
financial condition and the terms and conditions of the issuance of
the Stock.
(iii) The Partnership acknowledges that it and its partners are
able to fend for itself or themselves, can bear the economic risk of
its or their investment in the Stock, and have such knowledge and
experience in financial and business matters that it or they are
capable of evaluating the merits and risks of an investment in the
Stock.
(iv) The Partnership and its partners understand that the Stock,
when issued to the Partnership or subsequently to a partner therein,
will not have been registered pursuant to the Securities Act or any
applicable state securities laws, that the Stock will be characterized
as "restricted securities" under federal securities laws, and that
under such laws and applicable regulations the Stock cannot be sold or
otherwise disposed of without registration under the Securities Act or
an exemption therefrom. In this connection, the Partnership and its
partners represent that they are familiar with Rule 144 promulgated
under the Securities Act, as currently in effect, and understand the
resale limitations imposed thereby and by the Securities Act. Stop
transfer instructions may be issued accordingly to the transfer agent
for the Stock.
(v) It is agreed and understood by the Partnership and its
partners that the certificates representing the Stock shall each
conspicuously set forth on the face or back thereof, in addition to
any legends required by applicable law or other agreement, a legend in
substantially the following form:
<PAGE>
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED PURSUANT TO THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY
STATE SECURITIES LAWS. SUCH SHARES MAY NOT BE SOLD OR OTHERWISE
TRANSFERRED EXCEPT (i) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER SUCH ACT, OR (ii) IN ACCORDANCE WITH RULE 144 UNDER SUCH ACT,
UNLESS THE CORPORATION RECEIVES A WRITTEN OPINION OF COUNSEL, WHICH
OPINION AND COUNSEL ARE SATISFACTORY TO THE CORPORATION, TO THE EFFECT
THAT SUCH REGISTRATION IS NOT REQUIRED.
6. INDEMNITIES BY THE PARTNERSHIP AND DDD. As used in this paragraph and
the subparagraphs hereunder, "claims" shall include claims, demands, causes of
action, liabilities, damages, fines, penalties and judgments of any kind or
character, whether matured or unmatured, absolute or contingent, accrued or
unaccrued, liquidated or unliquidated or known or unknown, and all costs and
fees (including, without limitation, interest, attorneys' fees, costs of
experts, court costs and costs of investigation) in connection therewith.
(a) The Partnership (i) shall be responsible for all duties and
obligations express and implied with respect to the Assets accruing prior
to the Effective Date, including, without limitation, those accruing under
or by virtue of any lease, contract, agreement, document, permit, law,
statute or rule, regulation or order of any governmental authority, except
those expressly assumed by DDD pursuant to this Agreement, and (ii) SHALL
DEFEND, INDEMNIFY AND HOLD DDD HARMLESS FROM ANY AND ALL CLAIMS IN
CONNECTION THEREWITH.
(b) DDD (i) shall be responsible for all duties and obligations
express and implied with respect to the Assets accruing from and after the
Effective Date, including, without limitation, those accruing under or by
virtue of any lease, contract, agreement, document, permit, law, statute or
rule, regulation or order of any governmental authority, and (ii) SHALL
DEFEND, INDEMNIFY AND HOLD THE PARTNERSHIP HARMLESS FROM ANY AND ALL CLAIMS
IN CONNECTION THEREWITH.
(c) THE PARTNERSHIP SHALL DEFEND, INDEMNIFY AND HOLD DDD HARMLESS FROM
ANY AND ALL CLAIMS FOR DAMAGES, INCLUDING, WITHOUT LIMITATION, ECONOMIC
HARM, PERSONAL INJURY, DEATH OR DAMAGE TO PROPERTY OR ENVIRONMENT, OR FOR
ENVIRONMENTAL CLEANUP, REMEDIATION, OR COMPLIANCE, OR FOR ANY OTHER RELIEF
(COLLECTIVELY, "LOSSES"), ACCRUING PRIOR TO THE EFFECTIVE DATE DIRECTLY OR
INDIRECTLY FROM OR INCIDENT TO THE USE, OCCUPATION, OPERATION, MAINTENANCE
OR ABANDONMENT OF ANY OF THE ASSETS, OR THE CONDITION OF THE ASSETS, OR THE
PRODUCTION OR SALE OF HYDROCARBONS THEREFROM, WHETHER LATENT OR PATENT,
INCLUDING, WITHOUT LIMITATION, CONTAMINATION OF THE PROPERTY OR PREMISES
WITH NATURALLY OCCURRING RADIOACTIVE MATERIALS.
<PAGE>
(d) Any claim for indemnity under this paragraph or under any other
provision of this Agreement shall be made by written notice from the party
seeking indemnification (the "Indemnified Party") to the party required to
provide same (the "Indemnifying Party"), together with a written
description of any third-party claim against the Indemnified Party, stating
the nature and basis of such claim and, if ascertainable, the amount
thereof. The Indemnifying Party shall have a period of thirty (30) days
after receipt of such notice within which to respond thereto or, in the
case of a third party claim which requires a shorter time for response,
then within such shorter period as specified by the Indemnified Party in
such notice (the "Notice Period"). If the Indemnifying Party denies
liability or fails to respond to the notice within the Notice Period, the
Indemnified Party may defend or compromise the claim as it deems
appropriate without prejudice to any of the Indemnified Party's rights
hereunder, with no further obligation to inform the Indemnifying Party of
the status of the claim and no right of the Indemnifying Party to approve
or disapprove any actions taken in connection therewith by the Indemnified
Party. If the Indemnifying Party accepts liability, it shall so notify the
Indemnified Party within the Notice Period and elect either (a) to
undertake the defense or compromise of such third party claim with counsel
selected by the Indemnifying Party and reasonably approved by the
Indemnified Party or (b) to instruct the Indemnified Party to defend or
compromise such claim. If the Indemnifying Party undertakes the defense or
compromise of such third-party claim, the Indemnified Party shall be
entitled, at its own expense, to participate in such defense. No compromise
or settlement of any third-party claim shall be made without reasonable
notice to the Indemnified Party and, unless such compromise or settlement
includes a general release of the Indemnified Party in respect of the
matter with no admission of liability on the part of the Indemnified Party
and no constraints on the future conduct of its business, without the prior
written approval of the Indemnified Party.
THE INDEMNITIES CONTAINED IN THIS PARAGRAPH SHALL SURVIVE THE
EFFECTIVE DATE AND EXTEND TO THE INDEMNIFIED PARTY AND ITS OWNERS AND EACH
OF THEIR PRESENT AND FUTURE DIRECTORS, OFFICERS, EMPLOYEES,
REPRESENTATIVES, CONTRACTORS AND AGENTS, AND EACH OF THEIR HEIRS,
EXECUTORS, SUCCESSORS AND ASSIGNS (COLLECTIVELY, THE "INDEMNIFIED GROUP")
AND SHALL APPLY TO ALL OBLIGATIONS AND LIABILITIES DESCRIBED ABOVE,
INCLUDING THOSE BASED ON NEGLIGENCE, INCLUDING SOLE NEGLIGENCE, SIMPLE
NEGLIGENCE, CONCURRENT NEGLIGENCE, ACTIVE NEGLIGENCE, PASSIVE NEGLIGENCE,
GROSS NEGLIGENCE, STRICT LIABILITY OR FAULT OF THE INDEMNIFIED GROUP OR ANY
OTHER THEORY OF LIABILITY OR FAULT, WHETHER IN LAW (WHETHER COMMON OR
STATUTORY) OR EQUITY.
7. SEVERABILITY AND CHOICE OF LAW. If any one or more of the provisions of
this Agreement shall for any reason be held by a court of competent jurisdiction
to be invalid, illegal or unenforceable in any respect, such invalidity,
illegality or unenforceability shall not effect the remaining provisions of this
Agreement, and this Agreement shall be construed as if such invalid, illegal or
unenforceable provision had never been a part hereof. This Agreement shall be
construed in accordance with the laws of the State of Texas, without giving
effect to any conflict of law rules or provisions.
<PAGE>
8. ENTIRE AGREEMENT AND WAIVER. This Agreement constitutes the entire
agreement between the parties with respect to the subject matter hereof and
supersedes all previous communications, representations or agreements, whether
oral or written, with respect to the subject matter herein, and no agreement or
understanding varying or extending the terms hereof will be binding on either
party unless in writing and executed by an authorized representative of each
party. A benefit, right or duty provided by this Agreement shall be deemed
waived only when expressly agreed in writing between the parties. The waiver of
one instance of any act, omission, condition or requirement shall not constitute
a continuing waiver unless specifically so stated in the aforesaid written
waiver.
DDD ENERGY, INC.
By: /s/ HORACE A. CALVERT
----------------------------------------
HORACE A. CALVERT, President
DDD 1995 OIL & GAS PARTNERSHIP
By: DDD Energy, Inc., Managing Partner
By: /S/ HORACE A. CALVERT
----------------------------------------
HORACE A. CALVERT, President
SEITEL, INC.
(solely with respect to Section 3 hereof)
By: /S/ DEBRA D. VALICE
----------------------------------------
DEBRA D. VALICE, Executive Vice President
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (this "Agreement") is entered into effective
as of October 1, 1998 (the "Effective Date"), between DDD Energy, Inc., a
Delaware corporation ("DDD"), as purchaser, and the DDD 1996 Oil & Gas
Partnership, a Texas general partnership (the "Partnership"), as seller, acting
by and through its managing general partner, DDD. Seitel, Inc. ("Seitel"), the
parent corporation of DDD, joins herein solely with respect to Section 3 hereof.
RECITALS:
WHEREAS, the Partnership was formed to invest in non-operating working
interests in oil and gas properties acquired from third parties by DDD;
WHEREAS, DDD is the managing general partner of the Partnership;
WHEREAS, DDD has generally taken title to the non-operating working
interests acquired by the Partnership in its own name to hold in trust for the
Partnership;
WHEREAS, the Partners in the Partnership (other than DDD) have voted,
pursuant to the terms of the partnership agreement governing the Partnership, to
approve the sale of all of the Partnership's assets (other than cash) to DDD on
the terms set forth herein;
WHEREAS, a committee of disinterested directors of Seitel has approved the
purchase of such assets by DDD from the Partnership; and
WHEREAS, it is anticipated that the transfer of title to the assets of the
Partnership to DDD will not require any formal documentation other than this
Agreement;
NOW, THEREFORE, DDD and the Partnership agree to the purchase and sale of
the assets hereunder subject to the following terms and conditions:
1. ACQUIRED ASSETS. The Partnership hereby sells, transfers and conveys to
DDD, and DDD hereby acquires, all of the assets of the Partnership (other than
cash), including but not limited to those non-operating working interests in oil
and gas properties listed on Exhibit A hereto (the "Assets"), effective as of
October 1, 1998.
2. PURCHASE PRICE. Seitel has contributed shares of Seitel, Inc. Common
Stock, par value $0.01 per share (the "Stock") to DDD in a transaction intended
to qualify under Treasury regulation ss.1.1502-13(f)(6)(2) and DDD will use the
Stock as a portion of "Purchase Price" payable by DDD to the Partnership. The
"Purchase Price" for the Assets shall be $842,766.92 payable by DDD to the
Partnership in the form of 61,301 shares of Stock valued at $11.00 per share and
$103.86 in cash.
3. REGISTRATION RIGHTS. Seitel has granted certain registration rights to
the Partnership (which may be transferred to its partners upon distribution of
such Stock to the partners) as set forth in a Registration Rights Agreement
effective as of the date hereof.
<PAGE>
4. ASSUMED LIABILITIES. DDD hereby assumes the liability of the Partnership
to DDD of $168,352.06 for amounts advanced by DDD on behalf of the Partnership
prior to the Effective Date. DDD also assumes the liabilities disclosed on
Exhibit "B" hereto. Except as specifically set forth in this Section 3, DDD
assumes no obligations or liabilities of the Partnership.
5. COVENANTS, REPRESENTATIONS AND WARRANTIES.
(a) Conveyance of the Assets shall be with full substitution and
subrogation of DDD, its successors and assigns, in and to all covenants and
warranties heretofore given or made in respect of the rights, properties,
and assets conveyed and transferred hereby, or any part thereof. The
Partnership agrees to execute such further instruments and other documents
as may be reasonably necessary to more fully convey to DDD the Assets
conveyed or intended to be conveyed hereby.
(b) The Partnership warrants to DDD and its successors and assigns
title to the Assets against claims and demands of all persons whomsoever
may claim the same or any part thereof by, through and under the
Partnership, but not otherwise.
(c) The Partnership represents the following to DDD:
(i) The Partnership owns the Assets and has the full power and
right to sell and convey the same to DDD free of any lien, claim or
encumbrance by, through or under the Partnership;
(ii) The Partnership has complied, in all material respects, with
the provisions and requirements of all orders, regulations and rules
issued or promulgated by governmental authorities having jurisdiction
with respect to the Assets and has filed for and obtained all
governmental certificates, permits and other authorizations necessary
for current operation of the Assets other than permits, consents and
authorizations required for the sale and transfer of the Assets to DDD
which shall be the responsibility of DDD; and
(iii) The leases comprising the Assets are in full force and
effect.
(d) All ad valorem taxes regarding the Assets (i) for the years 1997
and before shall be borne and paid by the Partnership and (iii) for the
years 1998 and thereafter shall be borne and paid by DDD.
(e) The Partnership represents and warrants to DDD that the
Partnership has incurred no liability, contingent or otherwise, for
brokers' or finders' fees relating to the transactions contemplated by this
Agreement for which DDD shall have any responsibility whatsoever. DDD
represents and warrants to the Partnership that DDD has incurred no
liability, contingent or otherwise, for brokers' or finders' fees relating
to the transactions contemplated by this Agreement for which the
Partnership shall have any responsibility whatsoever.
<PAGE>
(f) The Partnership represents and warrants that each and every
partner in the Partnership is an accredited investor as defined in Rule 501
under the Securities Act of 1933, as amended.
(g) Investment Representations.
(i) The Partnership is acquiring the Stock for its own account
and the account of the partners therein for investment and not with a
view to, or for sale or other disposition in connection with, any
distribution of all or any part thereof (other than a distribution to
such partners pro rata), except pursuant to an applicable exemption
under the Securities Act or in an offering covered by an effective
registration statement under the Securities Act relating to the Stock.
In acquiring the Stock, neither the Partnership nor its partners are
offering or selling, nor will offer or sell, for Seitel or DDD in
connection with any distribution of the Stock, and neither the
Partnership nor any partner therein has a participation or will
participate in any such undertaking or in any underwriting of such an
undertaking, except in compliance with applicable federal and state
securities laws.
(ii) The Partnership acknowledges that it and its partners have
been furnished with substantially the same kind of information
regarding Seitel and its business, assets, results of operations and
financial condition as would be contained in a registration statement
prepared in connection with a public sale of the Stock. The
Partnership further represents that it and its partners have had an
opportunity to ask questions of and receive answers from Seitel
regarding Seitel and its business, assets, results of operations and
financial condition and the terms and conditions of the issuance of
the Stock.
(iii) The Partnership acknowledges that it and its partners are
able to fend for itself or themselves, can bear the economic risk of
its or their investment in the Stock, and have such knowledge and
experience in financial and business matters that it or they are
capable of evaluating the merits and risks of an investment in the
Stock.
(iv) The Partnership and its partners understand that the Stock,
when issued to the Partnership or subsequently to a partner therein,
will not have been registered pursuant to the Securities Act or any
applicable state securities laws, that the Stock will be characterized
as "restricted securities" under federal securities laws, and that
under such laws and applicable regulations the Stock cannot be sold or
otherwise disposed of without registration under the Securities Act or
an exemption therefrom. In this connection, the Partnership and its
partners represent that they are familiar with Rule 144 promulgated
under the Securities Act, as currently in effect, and understand the
resale limitations imposed thereby and by the Securities Act. Stop
transfer instructions may be issued accordingly to the transfer agent
for the Stock.
(v) It is agreed and understood by the Partnership and its
partners that the certificates representing the Stock shall each
conspicuously set forth on the face or back thereof, in addition to
any legends required by applicable law or other agreement, a legend in
substantially the following form:
<PAGE>
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED PURSUANT TO THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY
STATE SECURITIES LAWS. SUCH SHARES MAY NOT BE SOLD OR OTHERWISE
TRANSFERRED EXCEPT (i) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER SUCH ACT, OR (ii) IN ACCORDANCE WITH RULE 144 UNDER SUCH ACT,
UNLESS THE CORPORATION RECEIVES A WRITTEN OPINION OF COUNSEL, WHICH
OPINION AND COUNSEL ARE SATISFACTORY TO THE CORPORATION, TO THE EFFECT
THAT SUCH REGISTRATION IS NOT REQUIRED.
6. INDEMNITIES BY THE PARTNERSHIP AND DDD. As used in this paragraph and
the subparagraphs hereunder, "claims" shall include claims, demands, causes of
action, liabilities, damages, fines, penalties and judgments of any kind or
character, whether matured or unmatured, absolute or contingent, accrued or
unaccrued, liquidated or unliquidated or known or unknown, and all costs and
fees (including, without limitation, interest, attorneys' fees, costs of
experts, court costs and costs of investigation) in connection therewith.
(a) The Partnership (i) shall be responsible for all duties and
obligations express and implied with respect to the Assets accruing prior
to the Effective Date, including, without limitation, those accruing under
or by virtue of any lease, contract, agreement, document, permit, law,
statute or rule, regulation or order of any governmental authority, except
those expressly assumed by DDD pursuant to this Agreement, and (ii) SHALL
DEFEND, INDEMNIFY AND HOLD DDD HARMLESS FROM ANY AND ALL CLAIMS IN
CONNECTION THEREWITH.
(b) DDD (i) shall be responsible for all duties and obligations
express and implied with respect to the Assets accruing from and after the
Effective Date, including, without limitation, those accruing under or by
virtue of any lease, contract, agreement, document, permit, law, statute or
rule, regulation or order of any governmental authority, and (ii) SHALL
DEFEND, INDEMNIFY AND HOLD THE PARTNERSHIP HARMLESS FROM ANY AND ALL CLAIMS
IN CONNECTION THEREWITH.
(c) THE PARTNERSHIP SHALL DEFEND, INDEMNIFY AND HOLD DDD HARMLESS FROM
ANY AND ALL CLAIMS FOR DAMAGES, INCLUDING, WITHOUT LIMITATION, ECONOMIC
HARM, PERSONAL INJURY, DEATH OR DAMAGE TO PROPERTY OR ENVIRONMENT, OR FOR
ENVIRONMENTAL CLEANUP, REMEDIATION, OR COMPLIANCE, OR FOR ANY OTHER RELIEF
(COLLECTIVELY, "LOSSES"), ACCRUING PRIOR TO THE EFFECTIVE DATE DIRECTLY OR
INDIRECTLY FROM OR INCIDENT TO THE USE, OCCUPATION, OPERATION, MAINTENANCE
OR ABANDONMENT OF ANY OF THE ASSETS, OR THE CONDITION OF THE ASSETS, OR THE
PRODUCTION OR SALE OF HYDROCARBONS THEREFROM, WHETHER LATENT OR PATENT,
INCLUDING, WITHOUT LIMITATION, CONTAMINATION OF THE PROPERTY OR PREMISES
WITH NATURALLY OCCURRING RADIOACTIVE MATERIALS.
<PAGE>
(d) Any claim for indemnity under this paragraph or under any other
provision of this Agreement shall be made by written notice from the party
seeking indemnification (the "Indemnified Party") to the party required to
provide same (the "Indemnifying Party"), together with a written
description of any third-party claim against the Indemnified Party, stating
the nature and basis of such claim and, if ascertainable, the amount
thereof. The Indemnifying Party shall have a period of thirty (30) days
after receipt of such notice within which to respond thereto or, in the
case of a third party claim which requires a shorter time for response,
then within such shorter period as specified by the Indemnified Party in
such notice (the "Notice Period"). If the Indemnifying Party denies
liability or fails to respond to the notice within the Notice Period, the
Indemnified Party may defend or compromise the claim as it deems
appropriate without prejudice to any of the Indemnified Party's rights
hereunder, with no further obligation to inform the Indemnifying Party of
the status of the claim and no right of the Indemnifying Party to approve
or disapprove any actions taken in connection therewith by the Indemnified
Party. If the Indemnifying Party accepts liability, it shall so notify the
Indemnified Party within the Notice Period and elect either (a) to
undertake the defense or compromise of such third party claim with counsel
selected by the Indemnifying Party and reasonably approved by the
Indemnified Party or (b) to instruct the Indemnified Party to defend or
compromise such claim. If the Indemnifying Party undertakes the defense or
compromise of such third-party claim, the Indemnified Party shall be
entitled, at its own expense, to participate in such defense. No compromise
or settlement of any third-party claim shall be made without reasonable
notice to the Indemnified Party and, unless such compromise or settlement
includes a general release of the Indemnified Party in respect of the
matter with no admission of liability on the part of the Indemnified Party
and no constraints on the future conduct of its business, without the prior
written approval of the Indemnified Party.
THE INDEMNITIES CONTAINED IN THIS PARAGRAPH SHALL SURVIVE THE
EFFECTIVE DATE AND EXTEND TO THE INDEMNIFIED PARTY AND ITS OWNERS AND EACH
OF THEIR PRESENT AND FUTURE DIRECTORS, OFFICERS, EMPLOYEES,
REPRESENTATIVES, CONTRACTORS AND AGENTS, AND EACH OF THEIR HEIRS,
EXECUTORS, SUCCESSORS AND ASSIGNS (COLLECTIVELY, THE "INDEMNIFIED GROUP")
AND SHALL APPLY TO ALL OBLIGATIONS AND LIABILITIES DESCRIBED ABOVE,
INCLUDING THOSE BASED ON NEGLIGENCE, INCLUDING SOLE NEGLIGENCE, SIMPLE
NEGLIGENCE, CONCURRENT NEGLIGENCE, ACTIVE NEGLIGENCE, PASSIVE NEGLIGENCE,
GROSS NEGLIGENCE, STRICT LIABILITY OR FAULT OF THE INDEMNIFIED GROUP OR ANY
OTHER THEORY OF LIABILITY OR FAULT, WHETHER IN LAW (WHETHER COMMON OR
STATUTORY) OR EQUITY.
7. SEVERABILITY AND CHOICE OF LAW. If any one or more of the provisions of
this Agreement shall for any reason be held by a court of competent jurisdiction
to be invalid, illegal or unenforceable in any respect, such invalidity,
illegality or unenforceability shall not effect the remaining provisions of this
Agreement, and this Agreement shall be construed as if such invalid, illegal or
unenforceable provision had never been a part hereof. This Agreement shall be
construed in accordance with the laws of the State of Texas, without giving
effect to any conflict of law rules or provisions.
<PAGE>
8. ENTIRE AGREEMENT AND WAIVER. This Agreement constitutes the entire
agreement between the parties with respect to the subject matter hereof and
supersedes all previous communications, representations or agreements, whether
oral or written, with respect to the subject matter herein, and no agreement or
understanding varying or extending the terms hereof will be binding on either
party unless in writing and executed by an authorized representative of each
party. A benefit, right or duty provided by this Agreement shall be deemed
waived only when expressly agreed in writing between the parties. The waiver of
one instance of any act, omission, condition or requirement shall not constitute
a continuing waiver unless specifically so stated in the aforesaid written
waiver.
DDD ENERGY, INC.
By: /s/ HORACE A. CALVERT
----------------------------------------
HORACE A. CALVERT, President
DDD 1996 OIL & GAS PARTNERSHIP
By: DDD Energy, Inc., Managing Partner
By: /S/ HORACE A. CALVERT
----------------------------------------
HORACE A. CALVERT, President
SEITEL, INC.
(solely with respect to Section 3 hereof)
By: /S/ DEBRA D. VALICE
----------------------------------------
DEBRA D. VALICE, Executive Vice President
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (this "Agreement") is entered into effective
as of October 1, 1998 (the "Effective Date"), between DDD Energy, Inc., a
Delaware corporation ("DDD"), as purchaser, and the DDD 1997 Oil & Gas
Partnership, a Texas general partnership (the "Partnership"), as seller, acting
by and through its managing general partner, DDD. Seitel, Inc. ("Seitel"), the
parent corporation of DDD, joins herein solely with respect to Section 3 hereof.
RECITALS:
WHEREAS, the Partnership was formed to invest in non-operating working
interests in oil and gas properties acquired from third parties by DDD;
WHEREAS, DDD is the managing general partner of the Partnership;
WHEREAS, DDD has generally taken title to the non-operating working
interests acquired by the Partnership in its own name to hold in trust for the
Partnership;
WHEREAS, the Partners in the Partnership (other than DDD) have voted,
pursuant to the terms of the partnership agreement governing the Partnership, to
approve the sale of all of the Partnership's assets (other than cash) to DDD on
the terms set forth herein;
WHEREAS, a committee of disinterested directors of Seitel has approved the
purchase of such assets by DDD from the Partnership; and
WHEREAS, it is anticipated that the transfer of title to the assets of the
Partnership to DDD will not require any formal documentation other than this
Agreement;
NOW, THEREFORE, DDD and the Partnership agree to the purchase and sale of
the assets hereunder subject to the following terms and conditions:
1. ACQUIRED ASSETS. The Partnership hereby sells, transfers and conveys to
DDD, and DDD hereby acquires, all of the assets of the Partnership (other than
cash), including but not limited to those non-operating working interests in oil
and gas properties listed on Exhibit A hereto (the "Assets"), effective as of
October 1, 1998.
2. PURCHASE PRICE. Seitel has contributed shares of Seitel, Inc. Common
Stock, par value $0.01 per share (the "Stock") to DDD in a transaction intended
to qualify under Treasury regulation ss.1.1502-13(f)(6)(2) and DDD will use the
Stock as a portion of "Purchase Price" payable by DDD to the Partnership. The
"Purchase Price" for the Assets shall be $600,056.32 payable by DDD to the
Partnership in the form of 54,541 shares of Stock valued at $11.00 per share and
$105.32 in cash.
3. REGISTRATION RIGHTS. Seitel has granted certain registration rights to
the Partnership (which may be transferred to its partners upon distribution of
such Stock to the partners) as set forth in a Registration Rights Agreement
effective as of the date hereof.
<PAGE>
4. ASSUMED LIABILITIES. DDD hereby assumes the liability of the Partnership
to DDD of $0 for amounts advanced by DDD on behalf of the Partnership prior to
the Effective Date. DDD also assumes the liabilities disclosed on Exhibit "B"
hereto. Except as specifically set forth in this Section 3, DDD assumes no
obligations or liabilities of the Partnership.
5. COVENANTS, REPRESENTATIONS AND WARRANTIES.
(a) Conveyance of the Assets shall be with full substitution and
subrogation of DDD, its successors and assigns, in and to all covenants and
warranties heretofore given or made in respect of the rights, properties,
and assets conveyed and transferred hereby, or any part thereof. The
Partnership agrees to execute such further instruments and other documents
as may be reasonably necessary to more fully convey to DDD the Assets
conveyed or intended to be conveyed hereby.
(b) The Partnership warrants to DDD and its successors and assigns
title to the Assets against claims and demands of all persons whomsoever
may claim the same or any part thereof by, through and under the
Partnership, but not otherwise.
(c) The Partnership represents the following to DDD:
(i) The Partnership owns the Assets and has the full power and
right to sell and convey the same to DDD free of any lien, claim or
encumbrance by, through or under the Partnership;
(ii) The Partnership has complied, in all material respects, with
the provisions and requirements of all orders, regulations and rules
issued or promulgated by governmental authorities having jurisdiction
with respect to the Assets and has filed for and obtained all
governmental certificates, permits and other authorizations necessary
for current operation of the Assets other than permits, consents and
authorizations required for the sale and transfer of the Assets to DDD
which shall be the responsibility of DDD; and
(iii) The leases comprising the Assets are in full force and
effect.
(d) All ad valorem taxes regarding the Assets (i) for the years 1997
and before shall be borne and paid by the Partnership and (iii) for the
years 1998 and thereafter shall be borne and paid by DDD.
(e) The Partnership represents and warrants to DDD that the
Partnership has incurred no liability, contingent or otherwise, for
brokers' or finders' fees relating to the transactions contemplated by this
Agreement for which DDD shall have any responsibility whatsoever. DDD
represents and warrants to the Partnership that DDD has incurred no
liability, contingent or otherwise, for brokers' or finders' fees relating
to the transactions contemplated by this Agreement for which the
Partnership shall have any responsibility whatsoever.
<PAGE>
(f) The Partnership represents and warrants that each and every
partner in the Partnership is an accredited investor as defined in Rule 501
under the Securities Act of 1933, as amended.
(g) Investment Representations.
(i) The Partnership is acquiring the Stock for its own account
and the account of the partners therein for investment and not with a
view to, or for sale or other disposition in connection with, any
distribution of all or any part thereof (other than a distribution to
such partners pro rata), except pursuant to an applicable exemption
under the Securities Act or in an offering covered by an effective
registration statement under the Securities Act relating to the Stock.
In acquiring the Stock, neither the Partnership nor its partners are
offering or selling, nor will offer or sell, for Seitel or DDD in
connection with any distribution of the Stock, and neither the
Partnership nor any partner therein has a participation or will
participate in any such undertaking or in any underwriting of such an
undertaking, except in compliance with applicable federal and state
securities laws.
(ii) The Partnership acknowledges that it and its partners have
been furnished with substantially the same kind of information
regarding Seitel and its business, assets, results of operations and
financial condition as would be contained in a registration statement
prepared in connection with a public sale of the Stock. The
Partnership further represents that it and its partners have had an
opportunity to ask questions of and receive answers from Seitel
regarding Seitel and its business, assets, results of operations and
financial condition and the terms and conditions of the issuance of
the Stock.
(iii) The Partnership acknowledges that it and its partners are
able to fend for itself or themselves, can bear the economic risk of
its or their investment in the Stock, and have such knowledge and
experience in financial and business matters that it or they are
capable of evaluating the merits and risks of an investment in the
Stock.
(iv) The Partnership and its partners understand that the Stock,
when issued to the Partnership or subsequently to a partner therein,
will not have been registered pursuant to the Securities Act or any
applicable state securities laws, that the Stock will be characterized
as "restricted securities" under federal securities laws, and that
under such laws and applicable regulations the Stock cannot be sold or
otherwise disposed of without registration under the Securities Act or
an exemption therefrom. In this connection, the Partnership and its
partners represent that they are familiar with Rule 144 promulgated
under the Securities Act, as currently in effect, and understand the
resale limitations imposed thereby and by the Securities Act. Stop
transfer instructions may be issued accordingly to the transfer agent
for the Stock.
(v) It is agreed and understood by the Partnership and its
partners that the certificates representing the Stock shall each
conspicuously set forth on the face or back thereof, in addition to
any legends required by applicable law or other agreement, a legend in
substantially the following form:
<PAGE>
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED PURSUANT TO THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY
STATE SECURITIES LAWS. SUCH SHARES MAY NOT BE SOLD OR OTHERWISE
TRANSFERRED EXCEPT (i) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER SUCH ACT, OR (ii) IN ACCORDANCE WITH RULE 144 UNDER SUCH ACT,
UNLESS THE CORPORATION RECEIVES A WRITTEN OPINION OF COUNSEL, WHICH
OPINION AND COUNSEL ARE SATISFACTORY TO THE CORPORATION, TO THE EFFECT
THAT SUCH REGISTRATION IS NOT REQUIRED.
6. INDEMNITIES BY THE PARTNERSHIP AND DDD. As used in this paragraph and
the subparagraphs hereunder, "claims" shall include claims, demands, causes of
action, liabilities, damages, fines, penalties and judgments of any kind or
character, whether matured or unmatured, absolute or contingent, accrued or
unaccrued, liquidated or unliquidated or known or unknown, and all costs and
fees (including, without limitation, interest, attorneys' fees, costs of
experts, court costs and costs of investigation) in connection therewith.
(a) The Partnership (i) shall be responsible for all duties and
obligations express and implied with respect to the Assets accruing prior
to the Effective Date, including, without limitation, those accruing under
or by virtue of any lease, contract, agreement, document, permit, law,
statute or rule, regulation or order of any governmental authority, except
those expressly assumed by DDD pursuant to this Agreement, and (ii) SHALL
DEFEND, INDEMNIFY AND HOLD DDD HARMLESS FROM ANY AND ALL CLAIMS IN
CONNECTION THEREWITH.
(b) DDD (i) shall be responsible for all duties and obligations
express and implied with respect to the Assets accruing from and after the
Effective Date, including, without limitation, those accruing under or by
virtue of any lease, contract, agreement, document, permit, law, statute or
rule, regulation or order of any governmental authority, and (ii) SHALL
DEFEND, INDEMNIFY AND HOLD THE PARTNERSHIP HARMLESS FROM ANY AND ALL CLAIMS
IN CONNECTION THEREWITH.
(c) THE PARTNERSHIP SHALL DEFEND, INDEMNIFY AND HOLD DDD HARMLESS FROM
ANY AND ALL CLAIMS FOR DAMAGES, INCLUDING, WITHOUT LIMITATION, ECONOMIC
HARM, PERSONAL INJURY, DEATH OR DAMAGE TO PROPERTY OR ENVIRONMENT, OR FOR
ENVIRONMENTAL CLEANUP, REMEDIATION, OR COMPLIANCE, OR FOR ANY OTHER RELIEF
(COLLECTIVELY, "LOSSES"), ACCRUING PRIOR TO THE EFFECTIVE DATE DIRECTLY OR
INDIRECTLY FROM OR INCIDENT TO THE USE, OCCUPATION, OPERATION, MAINTENANCE
OR ABANDONMENT OF ANY OF THE ASSETS, OR THE CONDITION OF THE ASSETS, OR THE
PRODUCTION OR SALE OF HYDROCARBONS THEREFROM, WHETHER LATENT OR PATENT,
INCLUDING, WITHOUT LIMITATION, CONTAMINATION OF THE PROPERTY OR PREMISES
WITH NATURALLY OCCURRING RADIOACTIVE MATERIALS.
<PAGE>
(d) Any claim for indemnity under this paragraph or under any other
provision of this Agreement shall be made by written notice from the party
seeking indemnification (the "Indemnified Party") to the party required to
provide same (the "Indemnifying Party"), together with a written
description of any third-party claim against the Indemnified Party, stating
the nature and basis of such claim and, if ascertainable, the amount
thereof. The Indemnifying Party shall have a period of thirty (30) days
after receipt of such notice within which to respond thereto or, in the
case of a third party claim which requires a shorter time for response,
then within such shorter period as specified by the Indemnified Party in
such notice (the "Notice Period"). If the Indemnifying Party denies
liability or fails to respond to the notice within the Notice Period, the
Indemnified Party may defend or compromise the claim as it deems
appropriate without prejudice to any of the Indemnified Party's rights
hereunder, with no further obligation to inform the Indemnifying Party of
the status of the claim and no right of the Indemnifying Party to approve
or disapprove any actions taken in connection therewith by the Indemnified
Party. If the Indemnifying Party accepts liability, it shall so notify the
Indemnified Party within the Notice Period and elect either (a) to
undertake the defense or compromise of such third party claim with counsel
selected by the Indemnifying Party and reasonably approved by the
Indemnified Party or (b) to instruct the Indemnified Party to defend or
compromise such claim. If the Indemnifying Party undertakes the defense or
compromise of such third-party claim, the Indemnified Party shall be
entitled, at its own expense, to participate in such defense. No compromise
or settlement of any third-party claim shall be made without reasonable
notice to the Indemnified Party and, unless such compromise or settlement
includes a general release of the Indemnified Party in respect of the
matter with no admission of liability on the part of the Indemnified Party
and no constraints on the future conduct of its business, without the prior
written approval of the Indemnified Party.
THE INDEMNITIES CONTAINED IN THIS PARAGRAPH SHALL SURVIVE THE
EFFECTIVE DATE AND EXTEND TO THE INDEMNIFIED PARTY AND ITS OWNERS AND EACH
OF THEIR PRESENT AND FUTURE DIRECTORS, OFFICERS, EMPLOYEES,
REPRESENTATIVES, CONTRACTORS AND AGENTS, AND EACH OF THEIR HEIRS,
EXECUTORS, SUCCESSORS AND ASSIGNS (COLLECTIVELY, THE "INDEMNIFIED GROUP")
AND SHALL APPLY TO ALL OBLIGATIONS AND LIABILITIES DESCRIBED ABOVE,
INCLUDING THOSE BASED ON NEGLIGENCE, INCLUDING SOLE NEGLIGENCE, SIMPLE
NEGLIGENCE, CONCURRENT NEGLIGENCE, ACTIVE NEGLIGENCE, PASSIVE NEGLIGENCE,
GROSS NEGLIGENCE, STRICT LIABILITY OR FAULT OF THE INDEMNIFIED GROUP OR ANY
OTHER THEORY OF LIABILITY OR FAULT, WHETHER IN LAW (WHETHER COMMON OR
STATUTORY) OR EQUITY.
7. SEVERABILITY AND CHOICE OF LAW. If any one or more of the provisions of
this Agreement shall for any reason be held by a court of competent jurisdiction
to be invalid, illegal or unenforceable in any respect, such invalidity,
illegality or unenforceability shall not effect the remaining provisions of this
Agreement, and this Agreement shall be construed as if such invalid, illegal or
unenforceable provision had never been a part hereof. This Agreement shall be
construed in accordance with the laws of the State of Texas, without giving
effect to any conflict of law rules or provisions.
<PAGE>
8. ENTIRE AGREEMENT AND WAIVER. This Agreement constitutes the entire
agreement between the parties with respect to the subject matter hereof and
supersedes all previous communications, representations or agreements, whether
oral or written, with respect to the subject matter herein, and no agreement or
understanding varying or extending the terms hereof will be binding on either
party unless in writing and executed by an authorized representative of each
party. A benefit, right or duty provided by this Agreement shall be deemed
waived only when expressly agreed in writing between the parties. The waiver of
one instance of any act, omission, condition or requirement shall not constitute
a continuing waiver unless specifically so stated in the aforesaid written
waiver.
DDD ENERGY, INC.
By: /s/ HORACE A. CALVERT
----------------------------------------
HORACE A. CALVERT, President
DDD 1997 OIL & GAS PARTNERSHIP
By: DDD Energy, Inc., Managing Partner
By: /S/ HORACE A. CALVERT
----------------------------------------
HORACE A. CALVERT, President
SEITEL, INC.
(solely with respect to Section 3 hereof)
By: /S/ DEBRA D. VALICE
----------------------------------------
DEBRA D. VALICE, Executive Vice President
Borrower: Paul A. Frame Lender: Bank One, Texas, NA
2912 Mid Lane Houston Commercial
Houston, TX 77027 910 Travis
Houston, TX 77002
Grantor: Seitel, Inc.
50 Briar Hollow Lane West,
7th Floor
Houston, TX 77027
AMOUNT OF GUARANTY. The principal amount of this Guaranty is Seven Hundred Fifty
Thousand & 00/100 Dollars ($750,000.00).
LIMITED GUARANTY. For good and valuable consideration, SEITEL, INC.
("Guarantor") absolutely and unconditionally guarantees and promises to pay to
Bank One, Texas, N.A. ("Lender") or its order, in legal tender of the United
States of America, the Indebtedness (as that term is defined below) to PAUL A.
FRAME ("Borrower") to Lender on the terms and conditions set forth in this
Guaranty.
DEFINITIONS. The following words shall have the following meanings when used in
this Guaranty:
Borrower. The word "Borrower" means PAUL A. FRAME
Guarantor. The word "Guarantor" means SEITEL, INC.
Guaranty. The word "Guaranty" means this Guaranty made by Guarantor for the
benefit of Lender dated March 27, 1998.
Indebtedness. The word "Indebtedness" means (a) all principal owing under
the Note, (b) all accrued but unpaid interest owing under the Note, and (c)
all collection costs and expenses (including, without limitation,
reasonable attorneys' fees) relating to the Note or to any collateral for
the Note.
Lender. The word "Lender" means Bank One, Texas, N.A., its successors and
assigns.
Note. The word "Note" means the promissory note or credit agreement dated
March 27, 1998, in the original principal amount of $750,000.00 from
Borrower to Lender.
Related Documents. The words "Related Documents" mean and include without
limitation the Note and all credit agreements, loan agreements,
environmental agreements, guaranties, security agreements, mortgages, deeds
of trust, and all other instruments, agreements and documents, whether now
or hereafter existing, executed in connection with the Note.
MAXIMUM LIABILITY. The maximum liability of Guarantor under this Guaranty shall
not exceed at any one time the sum of the principal amount of $750,000.00, plus
all interest thereon, plus all of Lender's costs, expenses, and attorneys' fees
incurred in connection with or relating to (a) the collection of the
Indebtedness, (b) the collection and sale of any collateral for the Indebtedness
or this Guaranty, or (c) the enforcement of this Guaranty. Attorneys' fees
include, without limitation, attorneys' fees whether or not there is a lawsuit,
and if there is a lawsuit, any fees and costs for trial and appeals.
The above limitation on liability is not a restriction on the amount of
indebtedness owing by Borrow to Lender from time to time, either in the
aggregate or at any one time. If Lender presently holds one or more guaranties,
or hereafter receives additional guaranties from Guarantor, the rights of Lender
under all guaranties shall be cumulative. This Guaranty shall not (unless
specifically provided below to the contrary) affect or invalidate any such other
guaranties. The liability of Guarantor will be the aggregate liability of
Guarantor under the terms of this Guaranty and any such other unterminated
guaranties.
<PAGE>
NATURE OF GUARANTY. Guarantor intends to guarantee at all times the performance
and prompt payment when due, whether at maturity or earlier by reason of
acceleration or otherwise, of all indebtedness within the limits set forth in
the preceding section of this Guaranty.
DURATION OF GUARANTY: This Guaranty will take effect when received by Lender
without the necessity of any acceptance by Lender, or any notice to Guarantor or
to Borrower, and will continue in full force until all Indebtedness shall have
been fully and finally paid and satisfied and all other obligations of Guarantor
under this Guaranty shall have been performed in full. Release of any other
guarantor or termination of any other guaranty of the Indebtedness shall not
affect the liability of Guarantor under this Guaranty. This Guaranty is
irrevocable. A revocation received by Lender from any one or more Guarantors
shall not affect the liability of any remaining Guarantors under this Guaranty.
GUARANTOR'S AUTHORIZATION TO LENDER. Guarantor authorizes Lender, without notice
or demand and without lessening or otherwise affecting Guarantor's liability
under this Guaranty, from time to time: (a) to make one or more additional
secured or unsecured loans to Borrower, to lease equipment or other goods to
Borrower, or otherwise to extend additional credit to Borrower; (b) to alter,
compromise, renew, extend, accelerate, or otherwise change one or more times the
time for payment or other terms of the Indebtedness or any part of the
Indebtedness, including increases and decreases of the rate of interest on the
Indebtedness; extensions may be repeated and may be for longer than the original
loan term; (c) to take and hold security for the payment of this Guaranty or the
Indebtedness, and exchange, enforce, waive, fail or decide not to perfect, and
release any such security, with or without the substitution of new collateral;
(d) to release, substitute, agree not to sue, or deal with any one or more of
Borrower's sureties, endorsers, or other guarantors on any terms or in any
manner Lender may choose; (e) to determine how, when and what application of
payments and credits shall be made on the Indebtedness; (f) to apply such
security and direct the order or manner of sale thereof, including without
limitation, any nonjudicial sale permitted by the terms of the controlling
security agreement or deed of trust, as Lender in its discretion may determine;
(g) to sell, transfer, assign, or grant participations in all or any part of the
Indebtedness; and (h) to assign or transfer this Guaranty in whole or in part.
GUARANTOR'S REPRESENTATIONS AND WARRANTIES. Guarantor represents and warrants to
Lender that (a) no representations or agreements of any kind have been made to
Guarantor which would limit or qualify in any way the terms of this Guaranty;
(b) this Guaranty is executed at Borrower's request and not at the request of
Lender; (c) Guarantor has full power, right and authority to enter into this
Guaranty; (d) the provisions of this Guaranty do not conflict with or result in
a default under any agreement or other instrument binding upon Guarantor and do
not result in a violation of any law, regulation, court decree or order
applicable to Guarantor; (e) Guarantor has not and will not, without the prior
written consent of Lender, sell lease, assign, encumber, hypothecate, transfer,
or otherwise dispose of all or substantially all of Guarantor's assets, or any
interest therein; (f) Lender has made no representation to Guarantor as to the
creditworthiness of Borrower; (g) upon Lender's request, Guarantor will provide
to Lender financial and credit information in form acceptable to Lender, and all
such financial information provided to Lender is true and correct in all
material respects and fairly presents the financial condition of Guarantor as of
the dates thereof, and no material adverse change has occurred in the financial
condition of Guarantor since the date of the financial statements; and (h)
Guarantor has established adequate means of obtaining from Borrower on a
continuing basis information regarding Borrower's financial condition. Guarantor
agrees to keep adequately informed from such means of any facts, events or
circumstances which might in any way affect Guarantor's risks under this
Guaranty, and Guarantor further agrees that, absent a request for information,
Lender shall have no obligation to disclose to Guarantor any information or
documents acquired by Lender in the Course of its relationship with Borrower.
<PAGE>
GUARANTOR'S WAIVERS. Except as prohibited by applicable law, Guarantor waives
any right to require Lender (a) to continue lending money or to extend other
credit to Borrower; (b) to make any presentment, protest, demand, or notice of
any kind, including notice of any nonpayment of the Indebtedness or of any
nonpayment related to any collateral, or notice of any action or nonaction on
the part of Borrower, Lender, any surety, endorser, or other guarantor in
connection with the Indebtedness or in connection with the creation of new or
additional loans or obligations: (c) to resort for payment or to proceed
directly or at once against any person, including Borrower or any other
guarantor; (d) to proceed directly against or exhaust any collateral held by
Lender from Borrower, any other guarantor, or any other person; (e) to give
notice of the terms, time, and place of any public or private sale of personal
property security held by Lender from Borrower or to comply with any other
applicable provisions of the Uniform Commercial Code; (f) to pursue any other
remedy within Lender's power; or (g) to commit any act or omission of any kind,
or at any time, with respect to any matter whatsoever.
Guarantor waives all rights of Guarantor under, or the requirements imposed by,
Chapter 34 of the Texas Business and Commerce Code. Guarantor also waives any
and all rights or defenses arising by reason of (a) any "one action" or
"anti-deficiency" law or any other law which may prevent Lender from bringing
any action, including a claim for deficiency, against Guarantor, before or after
Lender's commencement or completion of any foreclosure action, either judicially
or by exercise of a power of sale, (b) any election of remedies by Lender which
destroys or otherwise adversely affects Guarantor's subrogation rights or
Guarantor's rights to proceed against Borrower to reimbursement, including
without limitation, any loss of rights Guarantor may suffer by reason of any law
limiting, qualifying, or discharging the Indebtedness; (c) any disability or
other defense of Borrower, of any other guarantor, or of any other person, or by
reason of the cessation of Borrower's liability from any cause whatsoever, other
than payment in full in legal tender, of the Indebtedness; (d) any right to
claim discharge of the Indebtedness on the basis of unjustified impairment of
any collateral for the Indebtedness; (e) any statute of limitations, if at any
time any action or suite brought by Lender against Guarantor is commenced there
is outstanding Indebtedness of Borrower to Lender which is not barred by any
applicable statute of limitations; or (f) any defenses given to guarantors at
law or in equity other than actual payment and performance of the Indebtedness.
If payment is made by Borrower, whether voluntarily or otherwise, or by any
third party, on the Indebtedness and thereafter Lender is forced to remit the
amount of that payment to Borrower's trustee in bankruptcy or to any similar
person under any federal or state bankruptcy law or law for the relief of
debtors, the Indebtedness shall be considered unpaid for the purpose of
enforcement of this Guaranty.
Guarantor further waives and agrees not to assert or claim at any time any
deductions to the amount guaranteed under the Guaranty for any claim of setoff,
counterclaim, counter demand, recoupment or similar right, whether such claim,
demand or right may be asserted by the Borrower, the Guarantor, or both.
GUARANTOR'S UNDERSTANDING WITH RESPECT TO WAIVERS. Guarantor warrant and agrees
that each of the waivers set forth above is made with Guarantor's full knowledge
of its significance and consequences and that, under the circumstances, the
waivers are reasonable and not contrary to public policy or law. If any such
waiver is determined to be contrary to any applicable law or public policy, such
waiver shall be effective only to the extent permitted by law or public policy.
SUBORDINATION OF BORROWER'S DEBTS TO GUARANTOR. Guarantor agrees that the
Indebtedness of Borrower to Lender, whether now existing or hereafter created,
shall be prior to any claim that guarantor may now have or hereafter acquire
against Borrower, whether or not Borrower becomes insolvent. Guarantor hereby
expressly subordinates any claim Guarantor may have against Borrower, upon any
account whatsoever, to any claim that Lender may now or hereafter have against
Borrower. In the event of insolvency and consequent liquidation of the assets of
Borrower, through bankruptcy, by an assignment for the benefit of creditors, by
voluntary liquidation, or otherwise, the assets of Borrower applicable to the
payment of the claims of both Lender and Guarantor shall be paid to Lender and
shall be first applied by Lender to the Indebtedness of Borrower to Lender.
Guarantor does hereby assign to Lender all claims which it may have or acquire
against Borrower or against any assignee or trustee in bankruptcy of Borrower;
provided however, that such assignment shall be effective only for the purpose
of assuring to Lender full payment in legal tender of the Indebtedness. If
Lender so requests, any notes or credit agreements now or hereafter evidencing
any debts or obligations of Borrower to Guarantor shall be marked with a legend
that the same are subject to this Guaranty and shall be delivered to Lender.
Guarantor agrees, and Lender hereby is authorized, in the name of Guarantor,
from time to time to execute and file financing statements and continuation
statements and to execute such other documents and to take such other actions as
Lender deems necessary or appropriate to perfect, preserve and enforce its
rights under this Guaranty.
<PAGE>
MISCELLANEOUS PROVISION.
Amendments. This Guaranty, together with any Related Documents, constitutes
the entire understanding and agreement of the parties as to the matters set
forth in this Guaranty. No alteration of or amendment to this Guaranty
shall be effective unless given in writing and signed by the party or
parties sought to be charged or bound by the alteration or amendment.
Applicable Law. This Guaranty has been delivered to Lender and accepted by
Lender in the State of Texas. If there is a lawsuit, and if the transaction
evidenced by this Guaranty occurred in Harris County, Guarantor agrees upon
Lender's request to submit to the jurisdiction of the courts of Harris
County, State of Texas. This Guaranty shall be governed by and construed in
accordance with the laws of the State of Texas and applicable Federal laws.
Attorneys' Fees. In addition to Guarantor's guaranty of Borrower's Note as
proved above, Lender may hire an attorney to help enforce this Guaranty if
Guarantor does not pay, and Guarantor will pay all of Lender's attorneys'
fees assessed by the court. Guarantor also will pay Lender all other
amounts actually incurred by Lender as court costs, lawful fees for filing,
recording, or releasing to any public office any instrument securing this
Guaranty; the reasonable cost actually expended for repossessing, storing,
preparing for sale, and selling any security; and fees for noting a lien on
or transferring a certificate of title to any motor vehicle offered as
security for this Guaranty.
Notices. All notices required to be given by either party to the other
under this Guaranty shall be in writing and shall be effective when
actually delivered or when deposited with a nationally recognized overnight
courier, or when deposited in the United States mail, first class postage
prepaid, addressed to the party to whom the notice is to be given at the
address shown above or to such other addresses as either party may
designate to the other in writing. If there is more than one Guarantor,
notice to any Guarantor will constitute notice to all Guarantors. For
notice purposes, Guarantor agrees to keep Lender informed at all times of
Guarantor's current address.
Interpretation. In all cases where there is more than one Borrower or
Guarantor, then all words used in this Guaranty in the singular shall be
deemed to have been used in the plural where the context and construction
so require; and where there is more than one Borrower named in this
Guaranty or when this Guaranty is executed by more than one Guarantor, the
words "Borrower" and "Guarantor" respectively shall mean all and any one or
more of them. The words "Guarantor", "Borrower", and "Lender" include the
heirs, successors, assigns, and transferees of each of them. Caption
headings in this Guaranty are for convenience purposes only and are not to
be used to interpret or define the provisions of this Guaranty. If a court
of competent jurisdiction finds any provision of this Guaranty to be
invalid or unenforceable as to any person or circumstances, such finding
shall not render that provision invalid or unenforceable as to any other
persons or circumstances, and all provisions of this Guaranty in all other
respects shall remain valid and enforceable. If any one or more of Borrow
or Guarantor are corporations or partnerships, it is not necessary for
Lender to inquire into the powers of Borrower or Guarantor or of the
officers, directors, partners, or agents acting or purporting got act on
their behalf, and any indebtedness made or created in reliance upon the
professed exercise of such powers shall be guaranteed under this Guaranty.
<PAGE>
Waiver. Lender shall not be deemed to have waived any rights under this
Guaranty unless such waiver is given in writing and signed by Lender. No
delay or omission on the part of Lender on exercising any right shall
operate as a waiver of such right or any other right. A waiver by Lender of
a provision of this Guaranty shall not prejudice or constitute a waiver of
Lender's right otherwise to demand strict compliance with that provision or
any other provision of this Guaranty. No prior waiver by Lender, nor any
course of dealing between Lender and Guarantor, shall constitute a waiver
of any of Lender's rights or of any of Guarantor's obligations as to any
future transactions. Whenever the consent of Lender is required under this
Guaranty, the granting of such consent by Lender in any instance shall not
constitute continuing consent to subsequent instances where such consent is
required in all cases such consent may be granted or withheld in the sole
discretion of Lender.
EACH UNDERSIGNED GUARANTOR ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS
GUARANTY AND AGREES TO ITS TERMS. IN ADDITION, EACH GUARANTOR UNDERSTANDS THAT
THIS GUARANTY IS EFFECTIVE UPON GUARANTOR'S EXECUTION AND DELIVERY OF THIS
GUARANTY TO LENDER AND THAT THE GUARANTY WILL CONTINUE UNTIL TERMINATED IN THE
MANNER SET FORTH IN THE SECTION TITLED "DURATION OF GUARANTY". NO FORMAL
ACCEPTANCE BY LENDER IS NECESSARY TO MAKE THIS GUARANTY EFFECTIVE. THIS GUARANTY
IS DATED MARCH 27, 1998.
GUARANTOR:
SEITEL, INC.
By: /s/ Debra D. Valice, CFO
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March 27, 1998
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