EXHIBIT 10.4

<PAGE>


                                  SEITEL, INC.
                      EMPLOYMENT AGREEMENT AMENDMENT NO. 2


         THIS EMPLOYMENT AGREEMENT AMENDMENT NO. 2 (this "Agreement") is between
Seitel, Inc. (the "Company"), a Delaware corporation with its principal place of
business in Houston,  Texas, and David S. Lawi (the "Employee," and collectively
with the Company, the "Parties"), and is an amendment to that certain Employment
Agreement  between the Company and the Employee dated effective  January 1, 1991
(the  "Original  Employment  Agreement",  as amended by that certain  Employment
Agreement  Amendment  dated  effective  as of  January  1,  1998  (the  Original
Employment  Agreement,  as so amended,  is referred to herein as the "Employment
Agreement").

                                    Recitals

         WHEREAS,  the  Company  and the  Employee  entered  into  the  Original
Employment  Agreement effective as of January 1, 1991 to govern the terms of the
Employee's employment by the Company;

         WHEREAS,  the Company and the Employee entered into an amendment to the
Original  Employment  Agreement effective January 1, 1998 to amend certain terms
of the Original Employment Agreement;

         WHEREAS,  the Company  gave notice to Employee on or about  October 27,
1999 that the Company was not renewing the term of the Employment Agreement,  so
that  the  Termination  Date  (as  such  term is  defined  in  Section  2 of the
Employment Agreement) will occur on December 31, 2003;

         WHEREAS,  the Employee and the Company are entering into this Agreement
to further amend the Employment Agreement as set forth herein;

         NOW, THEREFORE, the Parties do hereby agree as follows:

         1.   Resignation of Employee as Officer and Director. Immediately prior
to the execution of this Agreement, Employee shall have delivered to the Company
his written resignation as an officer and director of the Company and all of its
subsidiaries,  which  resignation shall have been effective upon delivery to the
Company.

         2.   Compensation.  Section 2 of the  Employment  Agreement  is  hereby
amended by deleting the following sentence:

         "If the Employment Period reaches the Termination  Date,  Employer will
         pay  Employee  for two  (2)  additional  years  the  compensation  then
         applicable,  which shall  include for purposes of this payment the Base
         Salary,  together  with  the  average  of all  bonus  payments  paid to
         Employee for the prior three (3) years (the Severance Payment)."

and replacing such sentence with the following sentence:

         "If the Employment Period reaches the Termination  Date,  Employer will
         pay  Employee  for two  (2)  additional  years  the  compensation  then
         applicable,  which shall  include for purposes of this payment the Base
         Salary in effect on such date (the Severance Payment)."

In  addition,  Section 2 of the  Employment  Agreement  is  further  amended  by
deleting the following sentence:

         "If  Employee  terminates  this  Agreement  during any renewal  period,
         Employer  will  pay  Employee  100% of his  then  current  Base  Salary
         (including bonus and/or commissions) for two additional years, provided
         Employee performs the Consulting Services (the Termination Payment)."

and replacing such sentence with the following sentence:

         "If  Employee  terminates  this  Agreement  during any renewal  period,
         Employer will pay Employee 100% of his then current Base Salary for two
         additional years,  provided  Employee performs the Consulting  Services
         (the Termination Payment)."

         3.   Compensation. Section  3 of the  Employment  Agreement  is  hereby
amended to eliminate the Pre-Tax  Profits Bonus payable  thereunder for the year
ending  December 31, 2000 and subsequent  years during the term of the Agreement
by deleting the existing Section 3 and replacing it with the following:

                  "3.      Compensation:

                           (a)  Base  Salary.   For  services  rendered  by  the
         Employee  under this  Agreement,  the Company shall pay the Employee an
         annual  base  salary  of  $214,217  in  twenty-four   (24)   bi-monthly
         installments (the "Base Salary").

                           (b)  Bonus  in  Lieu of  Pre-Tax  Profits  Bonus.  In
         consideration  of  Employee's   agreement  to  the  amendments  to  the
         Employment  Agreement set forth in Amendment  No. 2 to this  Employment
         Agreement,  the  Company  shall pay  Employee a bonus in the  aggregate
         amount of $3,728,367, which shall be payable as follows:

                           (i) The Company shall issue  Employee  125,000 shares
                  of restricted  common stock of the Company on the date hereof,
                  which  shall be valued at  $6.5875  per  share,  or a total of
                  $823,438  (which is  approximately  15% less than the  current
                  market  value of freely  tradable  common stock to reflect the
                  transfer restrictions  applicable to such shares of restricted
                  stock),  and shall pay to  Employee on the date hereof the sum
                  of $751,082,  subject to withholding as specified in paragraph
                  (vii) below, for a net cash payment of $200,000.

                           (ii) The  Company  shall pay  Employee  on January 2,
                  2001 the sum of $615,385,  subject to withholding as specified
                  in paragraph (vii) below, for a net cash payment of $400,000.

                           (iii) The  Company  shall pay  Employee on January 2,
                  2002 the sum of $615,385,  subject to withholding as specified
                  in paragraph (vii) below, for a net cash payment of $400,000.

                           (iv) The  Company  shall pay  Employee  on January 2,
                  2003 the sum of $615,385,  subject to withholding as specified
                  in paragraph (vii) below, for a net cash payment of $400,000.

                           (v) The Company shall pay Employee on January 2, 2004
                  the sum of $307,692,  subject to  withholding  as specified in
                  paragraph (vii) below, for a net cash payment of $200,000.

                           (vi) The payments in paragraphs (i) through (v) above
                  shall be contingent  on Employee  continuing to be an employee
                  of the  Company  on the date such  payments  are due,  and the
                  right to  receive  such  payments  shall not vest  until  such
                  dates; provided,  however, that if Employee is not an employee
                  of the  Company  on any such  date due to  termination  of his
                  employment  prior  to such  date as a result  of his  death or
                  disability,  the Company shall  continue to make such payments
                  to Employee or his estate on such dates.

                           (vii) The  payments  in  paragraphs  (i)  through (v)
                  above shall be subject to federal and state tax withholding at
                  the aggregate rate of 35%  (comprised of the minimum  required
                  for  federal   income  tax,   Medicare  and  Social   Security
                  withholding, and any balance of the 35% being withheld for New
                  York State  income  tax and  Connecticut  State  income tax as
                  directed by Employee). For the purpose of paragraph (a) above,
                  the  withholding  shall  be based  on the  amount  of the cash
                  payment and the $823,438 value  attributed to the stock issued
                  to Employee.

                           (c) Salary  Continuation  Benefits.  The Company will
         pay, so long as the Employee's Employment Agreement,  as amended, is in
         full  force and  effect  on the date of his  death,  a  monthly  salary
         continuation  amount  to the  Employee's  estate or his  designee,  for
         twelve  months  beginning on the date of his death.  The annual  salary
         continuation  amount will equal the Employee's  base salary at his date
         of death."

         4.   Duties.  Paragraph (a) of  Section 5 of the  Employment  Agreement
is hereby  amended by deleting the existing  paragraph (a) and replacing it with
the following:

                           "(a) The  Employee is employed as an assistant to the
         Chairman of the Board and the Chief  Executive  Officer of the Company.
         His duties shall be to advise and counsel the Chairman of the Board and
         the Chief Executive  Officer  regarding such matters as the Chairman of
         the Board or the Chief  Executive  Officer may request,  and to perform
         such other duties as the  Chairman of the Board or the Chief  Executive
         Officer may reasonably request,  such as (but not limited to) analyzing
         financing   proposals,   analyzing  market  data,   analyzing  proposed
         acquisitions,   analyzing  business  plans,  and  investor   relations.
         Employee shall not be required to relocate his residence to perform his
         duties under this Agreement."

         5.   Fringe  Benefits.  Section 9 of the Employment Agreement is hereby
amended by deleting the existing Section 9 and replacing it with the following:

                  "9.  Fringe  Benefits.  The  Employee  shall  be  entitled  to
         participate  on the same bases,  except where stated  otherwise in this
         Agreement, and subject to the same qualifications as other employees of
         the Employer, in any pension, profit sharing, stock purchase,  savings,
         hospitalization,  sick leave and other fringe  benefit  plans in effect
         from time to time with respect to  employees  of Employer  (the "Fringe
         Benefits").  Employer  agrees  that each of the Fringe  Benefits of the
         Employer  in  effect  on the date  hereof,  or at any time  during  the
         Employment  Period  shall not be  terminated  or modified in any manner
         which reduces the benefits of the Employee  without first obtaining the
         written consent of the Employee.

         6.   Termination.  Paragraph  (b)  of  Section  13  of  the  Employment
Agreement is hereby amended by deleting the existing paragraph (b) and replacing
it with the following:

                  A(b)  Termination for Employer's  Breach:  Employee shall have
         the  right to  terminate  this  Agreement  if the  Employer  materially
         breaches  any of the  provisions  hereof  and such  breach is not cured
         within thirty (30) days after the Employer receives written notice from
         Employee  thereof.  In  such  event,  or in  the  event  of a  wrongful
         termination of Employee, all monies due to Employee through the term of
         this  Agreement,  including  the  Severance  Payment,  shall be paid by
         Employer in a lump sum amount  within  thirty  (30) days of  Employee's
         termination.  Employee shall have no obligation to mitigate his loss or
         any occasioned damages as a result of such termination,  or perform any
         services to receive such payments.

         7.   Restriction on Transfer of Stock,  Registration  Rights.  Employee
agrees that he will not sell,  assign or otherwise  transfer the shares received
pursuant to Section 3(b)(i) of the Employment  Agreement as amended hereby for a
period of one year from the date of this Agreement.  The Employee shall have the
right to demand  that the Company  use its best  efforts to effect an  effective
registration under the Securities Act of 1933, as amended,  of Employee's resale
of such shares on one occasion not sooner than nine months after the date hereof
or later than  December 31,  2003.  The Company may grant  similar  registration
rights to other stockholders,  and upon any demand by any other such stockholder
for the  registration  of his shares,  the Company may also  include  Employee's
shares in such registration and such inclusion shall constitute the one required
registration  hereunder.  If requested by the Company,  Employee and the Company
shall enter into a customary form of registration  agreement  relating  thereto.
The Company  may  include  other  shares and  selling  shareholders  in any such
registration in its sole discretion.

         8.   Loans. Contemporaneously with the  execution  and delivery of this
Agreement,  the  Company  has made a loan to  Employee in the amount of $500,000
bearing  interest  at the prime  rate (the "New  Loan"),  and has  released  the
security previously granted by Employee to the Company (75,000 shares of Company
common stock) for amounts due under that certain  promissory  note dated October
2, 1998,  executed in connection with the Company's 1998 Employee Stock Purchase
Plan,  the balance of which as of the date hereof  (including  interest  through
such  date) was  $665,778  (the "ESPP  Loan").  The  principal  of the New Loan,
pursuant  to the terms  thereof,  is  payable  $100,000  on  January 2, 2001 and
$400,000  on  January  2,  2002.  The  payment  terms of the ESPP Loan have been
modified as of the date hereof to provide that the principal  thereof is payable
$65,778  on  January 2, 2001,  $400,000  on January 2, 2003,  and the  remaining
principal  balance of $200,000 on January 2, 2004.  As security for the New Loan
and as  replacement  security  for the ESPP  Loan,  Employee  hereby  grants the
Company an  express  contractual  right of offset  against  payments  due by the
Company to Employee  hereunder,  and the Company shall withhold from the amounts
payable to  Employee  hereunder  the  amounts of such loan  payments  (including
interest).

         9.   Representations  and  Warranties  of  Employee  Relating  to Stock
Issuance.  In  connection  with the  issuance of common  stock of the Company to
Employee hereunder, Employee represents and warrants to the Company as follows:

                  (a)  Acquisition  for Own Account.  Employee is acquiring  the
          common stock for his own account,  for  investment and not with a view
          to the sale or distribution  thereof or with any present  intention of
          distributing  or selling the same,  or dividing  the common stock with
          other persons.

                  (b)  Securities  Law   Restrictions.  Employee  will not sell,
          assign, transfer,  pledge or otherwise dispose of any of the shares of
          common stock except in  accordance  with the  provisions of applicable
          state and federal securities laws.

                  (c)  Investment  Risk.    Employee  has   such  knowledge  and
          experience  in  financial  and  business  matters  as to be capable of
          evaluating  the merits and risks of investment in the shares of common
          stock.

                  (d)  Accredited Investor. Employee is an "accredited investor"
          as said  term  is  defined  in  Rule  501 of  Regulation  D under  the
          Securities  Act,  in that he is an  individual  and  either (i) has an
          individual net worth, or joint net worth with his spouse, in excess of
          $1,000,000,  or (ii) had an individual income in excess of $200,000 in
          each of the two most recent  years or joint  income with his spouse of
          $300,000 in each of those years and has a  reasonable  expectation  of
          reaching the same level in the current year.

                  (e)  Legends, Etc.  Employee  acknowledges and agrees that (i)
          the certificates  representing the shares of common stock will contain
          a legend  substantially in the form of the following,  (ii) the shares
          of common stock are not  registered  under the  Securities  Act or any
          other Federal or state law, and (iii)  Employee must bear the economic
          risks  of his  investment  for an  indefinite  period  of time  and is
          capable of bearing such risk.

                  "The  securities  represented  hereby have not been registered
                  under  the  Securities  Act of  1933  and  may  not  be  sold,
                  assigned, transferred, pledged or otherwise disposed of except
                  in compliance with the  requirements of such Act and until the
                  Corporation shall have received the written opinion of counsel
                  to the holder of this certificate,  reasonably satisfactory to
                  the Corporation, to that effect."

                  (f)  Information  Provided.  Employee  has had  access  to the
          Company's  most recent  publicly  filed Annual Report on Form 10-K and
          Quarterly  Report  on Form  10-Q  and has had the  opportunity  to ask
          questions  of, and receive  satisfactory  answers  from the  executive
          management  of  the  Company  regarding  the  Company's  business  and
          prospects.  He has had  the  opportunity  to  obtain  the  information
          necessary to satisfy himself concerning the answers so obtained.

         10.  Extension of Term of  Agreement.   The term  of the  Agreement  is
hereby  extended  by two days so that the  Termination  Date will be  January 2,
2004.

         11.  Amendment of Employment  Agreement.  This Agreement is executed as
and shall  constitute  an amendment to the  Employment  Agreement,  and shall be
construed in connection with and as a part of the Employment  Agreement.  Except
as specifically  amended by this  Agreement,  all of the terms and provisions of
the Employment  Agreement shall remain in full force and effect. In the event of
any conflict between the terms of the Employment Agreement and the terms of this
Agreement, the terms of this Agreement shall apply.

         12.  Miscellaneous.

                  (a)  Controlling Law. The execution,  validity  interpretation
         and  performance of this Agreement  shall be determined and governed by
         the laws of the State of Texas,  and,  in any action by the  Company to
         enforce this Agreement, venue may be had in Harris County, Texas.

                  (b)  Entire Agreement. The Employment Agreement, as amended by
         this  Agreement,  contains the entire  agreement  of the  Parties.  The
         Employment Agreement and this Agreement may not be changed orally or by
         action or inaction,  but only by an agreement in writing  signed by the
         Party against whom  enforcement  of any waiver,  change,  modification,
         extension or discharge is sought.

                  (c)  Severability, Reinstatement of Bonus. If any provision of
         this  Agreement  is rendered or declared  illegal or  unenforceable  by
         reason of any existing or subsequently enacted legislation or by decree
         of a court  of  last  resort,  the  Parties  shall  promptly  meet  and
         negotiate substitute  provisions for those rendered or declared illegal
         or unenforceable,  but all remaining provisions of this Agreement shall
         remain  in full  force  and  effect.  If the  payment  of the  Bonus to
         Employee  under  Section  3(b) of the  Employment  Agreement as amended
         hereby is successfully  challenged by the Company, any person acting on
         behalf  of the  Company,  or any  third  party  and the  effect of such
         challenge  is that  Employee  is  required to return the amount of such
         Bonus to the Company,  then the bonus  provisions  under Paragraphs (b)
         and (c) of Section 3 of the Employment  Agreement as in effect prior to
         this Agreement shall be reinstated.

                  (d)  Execution.  This  Agreement  may be executed in  multiple
         counterparts,  each of  which  shall be deemed an  original  and all of
         which shall constitute one instrument.

         EXECUTED to be effective as of the 26th day of June, 2000.

                                                  SEITEL, INC.



                                                  By:  /s/ Paul A. Frame
                                                     ---------------------------
                                                     Paul A. Frame
                                                     President and CEO


                                                       /s/ David S. Lawi
                                                     ---------------------------
                                                     David S. Lawi