SEITEL, INC.

                            DIRECTOR RETIREMENT PLAN


                                    ARTICLE I

                        PURPOSE; FINANCING PLAN BENEFITS

         1.1  Purpose.  The  purposes of this Plan are to attract and retain the
best available personnel for service as Outside Directors (as defined herein) of
the Company,  to provide  additional  incentive to the Outside  Directors of the
Company to serve as Directors,  and to encourage their continued  service on the
Board.

         1.2 Financing  Plan Benefits.  All Retirement  Benefits under this Plan
shall be paid or provided  directly by the  Company.  Such  Retirement  Benefits
shall be  general  obligations  of the  Company  which  shall  not  require  the
segregation of any funds or property therefor. Notwithstanding the foregoing, in
the  discretion  of the Company,  the  Company's  obligations  hereunder  may be
satisfied from a grantor trust  established  by the Company,  the terms of which
will be  substantially  similar  to the terms of the model  trust  issued by the
Internal  Revenue  Service  in Revenue  Procedure  92-64,  or from an  insurance
contract or contracts owned by the Company. The assets of any such trust and any
such  insurance  policy  shall  continue  for all  purposes  to be a part of the
general funds of the Company,  shall be considered  solely a means to assist the
Company to meet its contractual obligations under this Plan and shall not create
a funded account or security  interest for the benefit of any Participant  under
this Plan. The Company intends that the Plan shall constitute an "unfunded plan"
for purposes of the Code and, to the extent  applicable,  Title I of ERISA,  and
that in the event the Company is Insolvent any Participant or Beneficiary  shall
have the status of an unsecured  general  creditor of the Company as to the Plan
and any trust fund that may be established by the Company,  or asset  identified
specifically  by the Company,  as a reserve for the discharge of its obligations
under the Plan.

                                   ARTICLE II

                                   DEFINITIONS

     The  following  words and  phrases  when used in this Plan  shall  have the
respective  meanings  set forth  below  unless  the  context  clearly  indicates
otherwise:

     2.1  "Account"  means the separate  bookkeeping  account  established  with
respect to each Participant to which amounts representing his Retirement Benefit
are credited in accordance with Section 4.1 hereof.

     2.2  "Beneficiary"  means the person or persons  designated in writing by a
Participant  pursuant to Section 5.6 to receive his Benefits in the event of his
death.

     2.3 "Board" means the Board of Directors of the Company.

     2.4 "Change in Control" means the occurrence, on or after the date the Plan
is adopted, of any of the following:

                  (i) when any "person" or "group" of persons acting in concert,
         as such terms are used in  Sections  13(d) and 14(d) of the  Securities
         Exchange Act of 1934 (the "Act") (other than the Company,  a subsidiary
         of the  Company  or a Company  employee  benefit  plan,  including  any
         trustee of such plan acting as  trustee) is or becomes the  "beneficial
         owner"  (as  defined  in  Rule  13d-3  under  the  Act),   directly  or
         indirectly,  of securities of the Company  representing more than fifty
         percent  (50%)  of the  combined  voting  power of the  Company's  then
         outstanding  securities  entitled to vote  generally in the election of
         Directors;  provided that "person" shall not include any person (or any
         person acting as a group) which, as of the date of the adoption of this
         Plan,  is  the   "beneficial   owner"  of  securities  of  the  Company
         representing more than fifty percent (50%) of the combined voting power
         of the Company's  outstanding  securities entitled to vote generally in
         the election of Directors; or

                  (ii) a merger or  consolidation  of the Company with any other
         corporation, other than a merger or consolidation which would result in
         the voting  securities  of the Company  outstanding  immediately  prior
         thereto continuing to represent (either by remaining  outstanding or by
         being  converted  into voting  securities of the  surviving  entity) at
         least fifty percent (50%) of the total voting power  represented by the
         voting  securities of the Company or such surviving entity  outstanding
         immediately after such merger or consolidation; or

                  (iii) a change in the  composition  of the  Board,  during any
         twenty-four month period, as a result of which fewer than a majority of
         the directors are Incumbent Directors. "Incumbent Directors" shall mean
         Directors  who either (A) are  Directors  of the Company as of the date
         the Plan is adopted, or (B) are elected, or nominated for election,  to
         the Board  with the  affirmative  votes of at least a  majority  of the
         Incumbent  Directors at the time of such  election or  nomination  (but
         shall not include an  individual  not  otherwise an Incumbent  Director
         whose  election  or  nomination  is in  connection  with an  actual  or
         threatened  proxy contest  relating to the election of directors to the
         Company.)

     2.5 "Code" means the Internal Revenue Code of 1986, as amended.

     2.6  "Committee"  means the committee,  as  constituted  from time to time,
appointed by the Board to perform the duties and  responsibilities  allocated to
it pursuant to the terms hereof.  The Committee  shall consist of at least three
members who are not Participants  and,  subject to the limitations  contained in
Section 6.3,  shall be entitled to act with respect to any matter  hereunder for
which it is  responsible  in  accordance  with the decision of a majority of its
members. If the Board does not appoint a Committee, the Committee shall mean the
Board.

     2.7 "Common Stock" means the Common Stock,  $.01 par value, of the Company.

     2.8 "Company" means Seitel, Inc., a Delaware corporation.

     2.9 "Continuous Status as a Director" means the absence of any interruption
or termination of service as a Director.

     2.10 "Director" means a member of the Board.

     2.11 "Disability" means a Participant's disability which, in the opinion of
a physician  approved by the Company,  renders the Participant unable to perform
his normal duties for the Company.

     2.12  "Employee"  means  any  person,  including  officers  and  Directors,
employed by the Company or any parent or subsidiary of the Company.  The payment
of a Director's  fee by the Company  shall not be sufficient in and of itself to
constitute "employment" by the Company.

     2.13 "Enrollment  Form" means the form executed by each  Participant  under
the Plan  pursuant to which the  Participant  enrolls in the Plan,  designates a
Beneficiary  and  makes an  election  regarding  the  form in  which  Retirement
Benefits will be paid.

     2.14 "ERISA" means the Employee  Retirement Income Security Act of 1974, as
amended.

     2.15 "Fair Market Value" means,  as of any date,  the value of Common Stock
determined as follows:

                  (i) If the  Common  Stock is listed on any  established  stock
         exchange or a national market system,  including without limitation the
         Nasdaq  National  Market  of the  National  Association  of  Securities
         Dealers,  Inc. Automated  Quotation  ("NASDAQ") System, the Fair Market
         Value of a Share of Common  Stock shall be the closing  sales price for
         such stock (or the closing bid, if no sales were reported) as quoted on
         such system or exchange  (or the exchange  with the greatest  volume of
         trading in Common Stock) on the date of  determination,  as reported in
         The Wall  Street  Journal  or such  other  source  as the  Board  deems
         reliable;

                  (ii) If the Common  Stock is quoted on the NASDAQ  System (but
         not on the National Market thereof) or regularly quoted by a recognized
         securities dealer but selling prices are not reported,  the Fair Market
         Value of a Share of Common Stock shall be the mean between the high bid
         and low asked prices for the Common Stock on the date of determination,
         as  reported  in The Wall  Street  Journal or such other  source as the
         Board deems reliable; or

                  (iii) In the absence of an  established  market for the Common
         Stock,  the Fair Market Value thereof shall be determined in good faith
         by the Committee.

     2.16  "Initial  Participation  Date" means the date on which a  Participant
commences participation in the Plan pursuant to Section 3.1.

     2.17  "Insolvent"  means the Company  being unable to pay its debts as they
mature or being  subject to a pending  proceeding  as a debtor  under the United
States Bankruptcy Code.

     2.18 "Normal Retirement Age" means the date a Participant attains age 65.

     2.19 "Outside Director" means a Director who is not an Employee.

     2.20 "Participant" means an Outside Director who is eligible to participate
in the Plan pursuant to Article III hereof and who has  commenced  participation
by executing an Enrollment Form.

     2.21 "Plan" means the Seitel,  Inc. Director  Retirement Plan, as set forth
herein and as it may be amended from time to time.

     2.22 "Retirement Benefits" mean the vested portion of amounts credited to a
Participant's Account pursuant to Section 4.1  hereof.

                                   ARTICLE III

                          ELIGIBILITY AND PARTICIPATION

         3.1  Eligibility to Participate.  Each Outside  Director who has, as of
the effective date of the Plan,  completed at least ten years Continuous  Status
as a Director  shall be eligible to  participate in the Plan effective as of the
date such Outside Director returns a properly completed and executed  Enrollment
Form to the  Committee.  Each  other  Outside  Director  shall  be  eligible  to
participate  in the  Plan as of the  later  of (i) the  first  day of the  month
following the month in which the Outside  Director  completes at least ten years
Continuous Status as a Director or (ii) the date such Outside Director returns a
properly completed and executed Enrollment Form to the Committee.

         3.2  Cessation  of  Participation.  A  Participant  will cease to be an
active  Participant  in the Plan as of the  earlier of (i) the date on which the
Plan  terminates  or (ii) the  date on which  the  Participant  ceases  to be an
Outside Director.

                                   ARTICLE IV

                         RETIREMENT BENEFITS AND VESTING

         4.1  Retirement  Benefits.  The  Company  shall  credit  amounts  to  a
Participant's  Account as a Retirement  Benefit in accordance  with this Section
4.1 to be distributed,  to the extent vested under Section 4.2 hereof,  pursuant
to the provisions of Article V. On the Participant's Initial Participation Date,
the Company shall credit to the Participant's  Account an amount equal to $5,000
times such  Participant's  years of continuous  service as an Outside  Director,
determined  based  on the  twelve  month  periods  commencing  on the  date  the
Participant  became an Outside Director and ending on the Participant's  Initial
Participation Date. In addition,  the Company shall credit to such Participant's
Account an amount equal to the  increase,  if any, in the Fair Market Value of a
share  of the  Common  Stock on the last  day of the  fifth  fiscal  year of the
Company  ending  after  the  Participant's  Initial  Participation  Date,  or if
earlier,  the date on which the  Participant  ceases to be an Outside  Director,
over the Fair Market Value of a share of the Common  Stock on the  Participant's
Initial Participation Date, multiplied by 15,000.

         4.2  Vesting.  The  Retirement  Benefit  credited  to the  Account of a
Participant under Section 4.1 hereof shall vest and become nonforfeitable at the
rate of 10% on the first day of each  January  after the  Participant's  Initial
Participation  Date,  if the  Participant  is an Outside  Director on that date;
provided,  however,  that a  Participant  will become 100% vested in his Account
regardless  of his  period of  participation  as an Outside  Director  after his
Initial  Participation  Date in the event of (i)  termination of his status as a
Director due to his death or his Disability, (ii) termination of his status as a
Director  by reason of not being  nominated  by the  Company  to  continue  as a
Director or not being elected as a Director  following such nomination,  due, in
each case, to a reason other than his voluntary resignation as a Director, (iii)
a Change in Control, or (iv) termination of the Plan.

                                    ARTICLE V

                                  DISTRIBUTIONS

         5.1 Payment of Benefits. The amount credited to a Participant's Account
pursuant to Section 4.1 hereof,  to the extent  vested  pursuant to Section 4.2,
shall be payable to the  Participant  or, if applicable,  to his  Beneficiary in
accordance  with the  provisions  of this Article V.  Payment of any  Retirement
Benefit under the Plan shall  commence  within 30 days, or as soon as thereafter
as administratively  practicable,  following the occurrence of the event causing
the Retirement Benefit to become payable.

         5.2  Retirement,   Disability,   or  Death.  Upon  termination  of  the
Participant's  Continuous  Status as a Director  on or after his  attainment  of
Normal Retirement Age, or by reason of his Disability or death, the Company will
pay the  value of his  Account  to him in the form he has  elected  pursuant  to
Section  5.5  hereof  (or if he has not  elected,  in the form of a  single  sum
payment).  If such Participant is receiving  installment  payments hereunder and
dies prior to the payment of all monthly installments,  the remaining portion of
the Participant's  Benefits will continue to be paid in monthly  installments to
his  Beneficiary  for the  remaining  installment  period in the same amount and
manner as they would have been paid to the Participant.

         5.3 Other Termination of Continuous Status as a Director.  In the event
the  Participant's  Continuous  Status as a Director  terminates  for any reason
other than  retirement on or after Normal  Retirement Age, death, or Disability,
the value of the vested  portion of his Account as determined  under Section 4.2
hereof  will be paid in the form he has  elected  pursuant to Section 5.5 hereof
(or if he  has  not  elected,  in the  form  of a  single  sum  payment)  on the
Participant's  attainment  of his  Normal  Retirement  Age or, if  earlier,  the
Participant's  death.  If such  Participant  is receiving  installment  payments
hereunder  and dies but prior to the  payment of all monthly  installments,  the
remaining  portion of the  Participant's  Benefits  will  continue to be paid in
monthly installments to his Beneficiary for the remaining  installment period in
the same amount and manner as they would have been paid to the Participant.

         5.4 Timing of Certain Payments.  Notwithstanding any other provision of
this Agreement to the contrary,  the  Participant's  Retirement  Benefit will be
payable upon the occurrence of a Change in Control, and the Committee shall have
the right to pay  Retirement  Benefits  to  Participants  prior to the time such
Retirement  Benefits  otherwise  would be payable  hereunder if the Committee in
good faith  determines that such payment is in the best interests of the Company
and the Participant due to the occurrence of a change in circumstances  relating
to the  operation  of the Plan or the taxation of  Participants,  arising from a
change in the  federal or  applicable  state tax or revenue  laws,  a  published
ruling or similar  announcement by the Internal  Revenue  Service,  a regulation
issued  by the  Secretary  of the  Treasury,  a  change  in  securities  laws or
regulations,  the issuance of an advisory opinion, regulation or other published
position by the  Department  of Labor,  or a change in  accounting  requirements
which causes (i) Participants to be taxable on their  Retirement  Benefits prior
to the time Retirement  Benefits otherwise would be payable hereunder,  (ii) the
Plan to be  considered  as funded for  purposes of Title I of ERISA,  or (iii) a
material  change  regarding  the tax or  financial  accounting  consequences  of
maintaining the Plan to the Company.

         5.5 Form of Payment.  Each Participant may elect on his Enrollment Form
whether his Retirement Benefits will be paid in the form of a single sum payment
or  substantially  equal  monthly  installments  over a period not exceeding 120
months.  Such election may not be changed by the Participant during the one-year
period ending on the date on which payment of his Retirement  Benefits  commence
or at any time thereafter. Notwithstanding any other provision of this Article V
regarding the form in which Retirement Benefits will be paid to Participants, if
a  Participant  has not  elected a form of payment for his  Retirement  Benefits
pursuant to this Section 5.5, the Company will pay the Participant's  Retirement
Benefits in a single sum payment.

         5.6  Designation  of  Beneficiary.  Each  Participant  must designate a
Beneficiary  to receive his  Retirement  Benefits in the event of his death,  by
completing his Enrollment  Form and filing it with the Committee.  The Committee
will recognize the most recent written Beneficiary  designation on file prior to
a Participant's death. If a designated  Beneficiary is not living at the time of
the Participant's  death,  then the Committee will pay Participant's  Retirement
Benefits   to  the   Participant's   personal   representative,   executor,   or
administrator,  as specified by the  appropriate  legal  jurisdiction.  Any such
payment to the  Participant's  Beneficiary  or, if  applicable,  to his personal
representative,  executor or administrator shall operate as a complete discharge
of all obligations of the Committee and the Company to the extent of the payment
so made.

                                   ARTICLE VI

                               PLAN ADMINISTRATION


         6.1 Authority of the Committee. The Committee shall have full power and
authority  to  interpret,  construe and  administer  the Plan.  The  Committee's
interpretation and construction  hereof,  and actions  hereunder,  including any
determination  of the amount or  recipient  of any  payment to be made under the
Plan,  shall be binding and  conclusive on all persons and for all purposes.  In
addition,   the  Committee  may  employ   attorneys,   accountants,   and  other
professional advisors to assist the Committee in its administration of the Plan.
The Company shall pay the  reasonable  fees of any such advisor  employed by the
Committee.

         6.2  Cost of  Administration.  The cost of this  Plan and the  expenses
of  administering  the Plan  shall be paid by the Company.

         6.3 Limitations on Plan Administration.  Neither the Committee, nor any
other person to whom discretionary  authority is granted hereunder shall vote or
act upon any matter  involving his own rights,  benefits or participation in the
Plan.

                                   ARTICLE VI

                            AMENDMENT AND TERMINATION


         7.1  Amendment.  The Company shall have the right to amend this Plan at
any time and from time to time,  including  a  retroactive  amendment.  Any such
amendment  shall  become  effective  upon the  date  stated  therein;  provided,
however,  that no such action shall affect any Retirement  Benefit  adversely to
which a  Participant  would  be  entitled  had his  employment  been  terminated
immediately  before such amendment was effective and no amendment may change the
provisions of Section 5.4 for a period of two years  following the occurrence of
an event described in such Section.

         7.2 Termination of the Plan. The Company has established this Plan with
the bona fide intention and  expectation  that from year to year it will deem it
advisable  to  continue  it  in  effect.  However,  the  Company,  in  its  sole
discretion,  reserves  the right to  terminate  the Plan in its  entirety at any
time; provided, however, that no such action shall affect any Retirement Benefit
adversely  to which a  Participant  would be entitled  had his  employment  been
terminated immediately before such termination was effective.

                                  ARTICLE VIII

                               GENERAL PROVISIONS

         8.1  Rights  Against  Company  and  Company's   Shareholders.   Nothing
contained in the Plan shall be deemed to give any Director the right to continue
as a Director or to interfere with the right of the Company,  acting through the
Board,  or the Company's  shareholders  to remove any Director at any time or to
fail to nominate or elect such  Director  in the future,  without  regard to the
effect such action may have on any rights under the Plan.

         8.2 Action Taken in Good Faith.  To the extent  permitted by law,  each
member of the Committee and each  employee,  officer and Director of the Company
who has  duties  and  responsibilities  with  respect  to the  establishment  or
administration  of the Plan shall be fully  protected with respect to any action
taken or omitted to be taken by such person in good faith.

         8.3  Indemnification  of Employees and  Directors.  The Company  hereby
indemnifies  each member of the Committee and each other  employee,  officer and
Director of the Company who are delegated administrative  responsibilities under
the Plan against any and all  liabilities  and  expenses,  including  attorney's
fees,   actually  and  reasonably  incurred  by  them  in  connection  with  any
threatened,  pending or  completed  legal  action or judicial or  administrative
proceeding  to  which  they may be a party,  or may be  threatened  to be made a
party,  by  reason  of  membership  on the  Committee  or  other  delegation  of
administrative  responsibilities,  except with regard to any matters as to which
they  shall be  adjudged  in such  action or  proceeding  to be liable for gross
negligence or willful misconduct in connection therewith.

         8.4 Payment Due an  Incompetent.  If the Committee  shall find that any
person  to whom any  payment  is due  under  the Plan is  unable to care for his
affairs  because of mental or  physical  illness,  accident,  or death,  or is a
minor,  any payment due (unless a prior claim therefor shall have been made by a
duly appointed guardian, committee or other legal representative) may be paid to
the spouse,  a child, a parent,  a brother or sister or any person deemed by the
Committee,  in its sole  discretion,  to have incurred  expenses for such person
otherwise  entitled to payment,  in such manner and proportions as the Committee
may determine. Any such payment shall be a complete discharge of the liabilities
of the Company under this Plan, and the Company shall have no further obligation
to see to the application of any money so paid.

         8.5 Spendthrift  Clause. No right, title or interest of any kind in the
Plan shall be transferable or assignable by any Participant or Beneficiary or be
subject  to  alienation,  anticipation,  encumbrance,  garnishment,  attachment,
execution or levy of any kind, whether voluntary or involuntary,  nor subject to
the debts, contracts,  liabilities,  engagements, or torts of the Participant or
Beneficiary.  Any attempt to alienate,  anticipate,  encumber,  sell,  transfer,
assign,  pledge,  garnish,  attach or  otherwise  subject to legal or  equitable
process or encumber or dispose of any interest in the Plan shall be void.

         8.6 Severability. In the event that any provision of this Plan shall be
declared illegal or invalid for any reason,  said illegality or invalidity shall
not affect the remaining  provisions  of this Plan but shall be fully  severable
and this Plan shall be  construed  and  enforced  as if said  illegal or invalid
provision had never been inserted herein.

         8.7  Construction.  The article and  section  headings  and numbers are
included only for  convenience  of reference and are not to be taken as limiting
or  extending  the  meaning  of any of the terms and  provisions  of this  Plan.
Whenever appropriate, words used in the singular shall include the plural or the
plural may be read as the  singular.  When used  herein,  the  masculine  gender
includes the feminine gender.

         8.8 Governing Law. The validity and effect of this Plan, and the rights
and  obligations  of  all  persons  affected  hereby,  shall  be  construed  and
determined in accordance  with the laws of the State of Texas unless  superseded
by federal law.