_







Exhibit 10.3


 

FIRST
AMENDED AND RESTATED


EMPLOYMENT AGREEMENT

 


AGREEMENT made and entered into as of
March 24, 2005 and amended and restated October 19, 2005, by and between SEITEL
INC., a Delaware corporation (together with its successors and assigns, the
"Company"), and Kevin P. Callaghan (the "Executive").

 


W I T N E S S E T H


 

WHEREAS, the Company desires to employ
the Executive and to enter into an agreement embodying the terms of such
employment (this "Agreement") and the Executive desires to enter into this
Agreement and to accept such employment, subject to the terms and provisions of
this Agreement;

 


NOW, THEREFORE, in consideration of the
premises and mutual covenants contained herein and for other good and valuable
consideration, the receipt of which is mutually acknowledged, the Company and
the Executive (individually a "Party" and together the "Parties") agree as
follows:

 

	
    1.
	
    
    Definitions.

     

	
     
	
    (a)
	
    
    "Affiliate" of a specified person or entity shall mean a person or
entity that, directly or indirectly, controls, is controlled by, or is under
common control with, the person or entity specified.  For the purposes of the
term "Affiliate," control with respect to a Person, means the possession,
directly or indirectly, of the power to (i) vote 10% or more of
the securities having ordinary voting power for the election of directors (or
comparable positions of such Person) or (ii) direct or cause the direction of the
management and policies of such Person, whether through voting of securities,
by contract, or otherwise, and the terms controlling and controlled have
meanings correlative to the foregoing.

     

	
     
	
    (b)
	
    "Base Salary" shall mean the
    annualized salary provided for in Section 4 below.

     

	
     
	
    (c)
	
    "Beneficial
    Owner" shall have the meaning ascribed to such term in Rule 13d-3 under the
    Securities Exchange Act of 1934 and any successor to such Rule.

     

	
     
	
    (d)
	
    "Board" shall mean the Board of
    Directors of the Company.

     

	
     
	
    (e)
	
    "Cause" shall mean:

     

	
     
	
     
	
    (i)
	
    willful
    misconduct or gross negligence by the Executive in the performance of his
    duties under this Agreement; 

     

	
     
	
     
	
    (ii)
	
    breach of a this
    Agreement by the Executive, which, if curable, is not substantially cured to
    the satisfaction of the Company determined by the Company in its sole
    discretion within ten (10) days after Executive's receipt of written notice
    from the Company of such breach;

     

	
     
	
     
	
    (iii)
	
    failure by the
    Executive to perform his duties, if not cured to the satisfaction of the
    Company determined by the Company within ten (10) days after Executive's
    receipt of written notice from the Company of such breach, other than a
    failure resulting from Executive's incapacity due to Disability;

     

	
     
	
     
	
    (iv)
	
    a material
    violation by the Executive of the Company's Code of Business Conduct or the
    Company's policies or procedures; or

     

	
     
	
     
	
    (v)
	
    conviction of the
    Executive of, or a plea of nolo contrendere to, a
felony, or his engagement in fraud or other willful misconduct which is
injurious to the business or reputation of the Company.

     

	
     
	
    (f)
	
    "Change in Control."  A
    "Change in Control" shall be deemed to have occurred if: 

     

	
     
	
     
	
    (i)
	
    
    any Person (other than the Company, any trustee or other fiduciary holding
    securities under any employee benefit plan of the Company, or any company
    owned, directly or indirectly, by the stockholders of the Company
    immediately prior to the occurrence with respect to which the evaluation is
    being made in substantially the same proportions as their ownership of the
    common stock of the Company) acquires securities of the Company and
    immediately thereafter is the Beneficial Owner (except that a Person shall
    be deemed to be the Beneficial Owner of all shares that any such Person has
    the right to acquire pursuant to any agreement or arrangement or upon
    exercise of conversion rights, warrants or options or otherwise, without
    regard to the sixty (60)-day period referred to in Rule 13d-3 under the
    Exchange Act), directly or indirectly, of securities of the Company
    representing 50% or more of the combined voting power of the Company's then
    outstanding securities (except that an acquisition of original issue
    securities directly from the Company shall not be deemed an acquisition for
    purposes of this clause (i));

     

	
     
	
     
	
    (ii)
	
    during any period
    of two consecutive years, individuals who at the beginning of such period
    constitute the Board, and any new director (other than a director designated
    by a person who has entered into an agreement with the Company to effect a
    transaction described in clause (i), (iii), or (iv) of this
paragraph) whose election by the Board or nomination for election by the
Company's stockholders was approved by a vote of at least two thirds of the
directors then still in office who either were directors at the beginning of
the two-year period or whose election or nomination for election was previously
so approved but excluding for this purpose any such new director whose initial
assumption of office occurs as a result of either an actual or threatened
election contest (as such terms are used in Rule 14a-11 of Regulation 14A
promulgated under the Exchange Act) or other actual or threatened solicitation
of proxies or consents by or on behalf of an individual, corporation,
partnership, group, associate or other entity or Person other than the Board,
cease for any reason to constitute at least a majority of the Board; 

     

	
     
	
     
	
    (iii)
	
    
    the consummation of a merger or consolidation of the Company with any other
    entity, other than (i) 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 or resulting entity) more than 50% of the combined voting power of
the surviving or resulting entity outstanding immediately after such merger or
consolidation or (ii) a merger or
consolidation in which no premium is intended to be paid to any shareholder
participating in the merger or consolidation;

     

	
     
	
     
	
    (iv)
	
    
    the stockholders of the Company approve a plan or agreement for the sale or
    disposition of all or substantially all of the consolidated assets of the
    Company (other than such a sale or disposition immediately after which such
    assets will be owned directly or indirectly by the stockholders of the
    Company, in substantially the same proportions as their ownership of the
    common stock of the Company immediately prior to such sale or disposition)
    in which case the Board shall determine the effective date of the Change in
    Control resulting therefrom; or

     

	
     
	
     
	
    (v)
	
    any other event
    occurs which the Board determines, in its discretion, would materially alter
    the structure of the Company or its ownership.

     

	
     
	
    (g)
	
    "Commencement Date" shall mean
    March 24, 2005.

     

	
     
	
    (h)
	
    "Date of Termination" shall mean:

     

	
     
	
     
	
    (i)
	
    if the
    Executive's employment is terminated by the Company, the date the Company
    informs the Executive that his employment is so terminated;

     

	
     
	
     
	
    (ii)
	
    if the Executive
    voluntarily resigns his employment, the date the Company receives notice
    from the Executive that Executive is terminating his employment;

     

	
     
	
     
	
    (iii)
	
    if the
    Executive's employment is terminated by reason of death, the date of death;
    or

     

	
     
	
     
	
    (iv)
	
    if the
    Executive's employment is terminated for any reason (voluntarily or
    involuntarily) after a Change in Control other than for Cause, the
    applicable of the date the Company informs the Executive he is terminated or
    the date the Executive provides notice to the Company of his termination.

     

	
     
	
    (i)
	
    "Disability"
    shall mean the Executive's inability, due to physical or mental incapacity,
    to substantially perform his duties and responsibilities for a period of
    ninety (90) days during any twelve-month period as determined by the
    Company.  The Executive agrees to submit to any examination that is
    necessary for a determination of Disability and agrees to provide any
    information necessary for a determination of Disability, including any
    information that is protected by the Health Insurance Portability and
    Accountability Act.

     

	
     
	
    (j)
	
    
    "Good Reason" shall mean the occurrence of any of the following during the
    Term without the Executive's consent: 

     

	
     
	
     
	
    (i)
	
    a material
    diminution in the Executive's title and duties as normally-associated with
    the position of COO of the Company (as defined in the first sentence of
    Section 3 below) without regard to the additional duties and positions to
    which he may be assigned from time to time with respect to affiliates or
    subsidiaries as described in the second sentence of Section 3 below;

     

	
     
	
     
	
    (ii)
	
    a reduction in the Executive's
    Base Salary; 

     

	
     
	
     
	
    (iii)
	
    a change in
    reporting structure so that the Executive  reports to someone other
    than the President of the Company; or

     

	
     
	
     
	
    (iv)
	
    the relocation of
    the Executive's principal place of employment to a location more than fifty
    (50) miles from his principal place of employment with the Company on the
    Commencement Date.

     

	 	 	
    Anything herein to the contrary notwithstanding, the Executive
shall not be entitled to resign for Good Reason unless the Executive gives the
Company written notice of the event constituting "Good Reason" within 60 days
of the occurrence of such event and the Company fails to cure such event within
30 days after receipt of such notice.

	
     
	
    (k)
	
    "Initial Term"
    shall mean the period beginning on the Commencement Date and ending at the
    close of business on the day before the second anniversary of the
    Commencement Date.

     

	
     
	
    (l)
	
    "Person" shall
    have the meaning ascribed to such term in Section 3(a)(9) of the Securities
    Exchange Act of 1934 and used in Sections 13(d) and 14(d) thereof, and shall
    include a "group" as defined in Section 13(d) thereof.

     

	
     
	
    (m)
	
    "Term" shall have the meaning
    ascribed to such term in Section 2 below.

     

	
    2.
	
    Term of
    Employment.

     

    The term of the Executive's employment
hereunder shall begin on the Commencement Date and end at the close of business
on the day before the second anniversary of the Commencement Date (the "Initial
Term"); provided, however, that the Initial Term shall thereafter be
automatically extended for additional one-year periods (the Initial Term and
any one-year extension of employment hereunder shall each be referred to
as the "Term") unless either the Company or the Executive gives the other
written notice at least thirty (30) days prior to the then-scheduled expiration
of the Team that such Party is electing not to so extend the Term.
Notwithstanding the foregoing, the Term shall end on the date on which the
Executive's employment is terminated by either Party in accordance with the
provisions herein.  The period from the Commencement Date through the Date of
Termination shall be the "Employment Period."

     

	
    3.
	
    Position;
    Duties and Responsibilities.

     

    During the Term, the Executive shall be
employed as the Chief Operating Officer ("COO") of the Company and shall
perform other duties and responsibilities as reasonably determined by the
President of the Company consistent with the duties and responsibilities
normally associated with such position in the Company.  In addition, Executive
from time to time may be assigned duties and hold positions or offices with
subsidiaries or affiliates of the Company as the President of the Company
and/or the Board may determine in their sole discretion.  The Executive, in
carrying out his duties under this Agreement, shall report to the President of
the Company.  The Executive shall devote all of his business time, energy and
best efforts to the business and affairs of the Company. Anything herein to the
contrary notwithstanding, nothing shall preclude the Executive from (i) subject
to the reasonable approval of the Board, serving on the boards of directors of
trade associations and/or charitable organizations, (ii) engaging in charitable
activities and community affairs and (iii) managing his personal investments
and affairs, provided that the activities described in the preceding clauses
(i) through (iii) do not interfere with the proper performance of his duties
and responsibilities for the Company or violate any term of this Agreement,
including but not limited to, Section 10.

     

	
    4.
	
    Base
    Salary.

     

    During the Term, the Executive shall be paid
an annualized Base Salary of $330,000 payable in accordance with the regular
payroll practices of the Company. During the Term, the Base Salary may be
increased, but not decreased, from time to time by the Board or its
Compensation Committee. The Executive shall not be entitled to any compensation
for service as a member of the Board or for service as an officer or member of
any board of directors of any Affiliate.

     

	
    5.
	

Bonus.

     


Beginning in calendar year 2005, the "Cash Bonus" for
Executive shall be determined under the annual incentive plan or program of the
Company and subject to the goals, terms and conditions of such plan or program
as determined by the Board or Compensation Committee of the Board (the
"Compensation Committee") in its sole discretion on a calendar year basis
during the Term. During the Initial Term, Executive will be eligible to receive
up to 120% of his Base Salary amount as a Cash Bonus. The Cash Bonus will be
payable when bonuses are paid under Company policies and procedures or as
determined by the Board or Compensation Committee. 

     

    
	
    6.
	

Stock Options
and Other Equity Compensation.

     


Executive shall receive in each calendar year
an award of stock options or other equity-based compensation under the
Company's 2004 Stock Option Plan, or any successor thereto (the "Plan") in an
amount equal to 60% of his Base Salary (the "Guaranteed Equity-Based Award"). 
Notwithstanding the prior sentence of this Section 6, for calendar year 2005
the Executive's Guaranteed Equity-Based Award shall be 160,000 shares of
Company common stock as restricted stock under the Plan (the "Restricted Stock
Grant").  If Executive meets the goals, terms and conditions to receive a Cash
Bonus, he shall receive an additional award of stock options or other
equity-based awards for such calendar year under the Plan in an amount equal to
60% of the Cash Bonus.

     


As soon as administratively possible after the
Commencement Date, the Company shall grant Executive the Restricted Stock
Grant, which shall vest as to 33.3% of such shares one year from date of grant
and an additional 33.3% of such shares two years from date of grant, and
Executive shall be 100% vested in such shares three years from the date of
grant.  The Restricted Stock Grant shall be subject to the terms and conditions
of the Plan and the agreement for the Restricted Stock Grant.  The Restricted
Stock Grant shall be deemed Executive's 2005 Guaranteed Equity-Based Award. 

     

    
	
    7.
	

Employee Benefit Programs.

     


During the Term, the Executive shall be
entitled to participate in all employee savings and welfare benefit plans and
other employee programs made available to the Company's senior-level
executives, as such plans or programs may be amended and as may be in effect
from time to time, including, without limitation, savings and other retirement
plans or programs, medical, dental, hospitalization, short-term and long-term
disability and life insurance plans, accidental death and dismemberment
protection, travel accident insurance, and any deferred compensation plans or
programs, provided that Executive's eligibility and participation shall be
subject to and governed by the terms and conditions of the applicable plan or
program.  Notwithstanding the foregoing, nothing contained herein shall require
the Company to establish any particular employee benefit plan or program.

     

    
	
    8.
	
    
    Reimbursement of Business and Other Expenses; Perquisites; Vacation.

     

	
     
	
    (a)
	
    During the Term,
    the Executive is authorized to incur reasonable and necessary business
    expenses in carrying out his duties and responsibilities under this
    Agreement and the Company shall promptly reimburse him for such expenses
    incurred in connection with carrying out the business of the Company,
    subject to documentation in accordance with the Company's policy.

     

	
     
	
    (b)
	
    The Executive shall be entitled
    to four (4) weeks paid vacation per year.

     

	
    9.
	
    Benefits
    Upon Termination of Employment.

     

	
     
	
    (a)
	

Termination
Without Cause by the Company or Resignation for Good Reason prior to a Change in
Control.


 

    In the event the
Executive's employment is terminated without Cause by the Company (other than
upon death or Disability) or the Executive resigns for Good Reason prior to a
Change in Control, the Executive shall be entitled to the following:

     

	
     
	
     
	
    (i)
	
    Base Salary earned and payable
    through the Date of Termination;

     

	
     
	
     
	
    (ii)
	
    any unpaid Cash
    Bonus earned and accrued with respect to any year preceding the Date of
    Termination and payable when bonuses for such year are paid to other Company
    executives subject to the terms or requirements of such bonus as may be
    established by the Board or Compensation Committee; 

     

	
     
	
     
	
    (iii)
	
    an amount equal
    to two times the Executive's annual Base Salary as in effect on the Date of
    Termination to be paid in a lump sum as soon as administratively feasible
    after the Date of Termination but in no event later than two and one-half
    months after the Date of Termination;

     

	
     
	
     
	
    (iv)
	
    outstanding stock
    option, equity and performance awards shall be vested and exercised in
    accordance with the applicable plan and award agreements;

     

	
     
	
     
	
    (v)
	
    continued
    participation for twelve (12) months by the Executive and his eligible
    dependents in the Company's group medical and dental benefits plan in which
    he and his eligible dependents were participating immediately prior to the
    Date of Termination, subject to the terms and conditions of the plans as
    such plans are amended from time to time.  The Executive shall be
    required to continue to pay the employee-paid portion of such coverage
    during the period of coverage.  Upon the earlier of twelve (12) months coverage or the date
the Executive becomes eligible for medical coverage under a subsequent
employer's plan, this coverage under the Company's plan shall cease and the
Executive and his dependents, if applicable, may elect group continuation
coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985, as
amended ("COBRA");

     

	
     
	
     
	
    (vi)
	
    any amounts earned, accrued or
    owing to the Executive but not yet paid under Section 8; and

     

	
     
	
     
	
    (vii)
	
    except as
    provided in 9(h) below, any payment and benefit in accordance with the
    applicable plans and programs of the Company.

     

	
     
	
    (b)
	

Termination
upon Death. 

     


In the event the Executive's employment is terminated upon
death, the Executive (or his estate or legal representative, as the case may
be) shall be entitled to:

     

	
     
	
     
	
    (i)
	
    Base Salary through the Date of
    Termination;

     

	
     
	
     
	
    (ii)
	
    any unpaid Cash
    Bonus earned and accrued with respect to any year preceding the Date of
    Termination and payable when bonuses for such year are paid to other Company
    executives subject to the terms and requirements of such bonus as may be
    established by the Board or Compensation Committee;

     

	
     
	
     
	
    (iii)
	
    outstanding stock
    options, equity and performance awards shall be vested and exercised in
    accordance with the applicable plan and award agreements;

     

	
     
	
     
	
    (iv)
	
    any amounts
    earned, accrued or owing to the Executive but not yet paid under Section 8
    above; and

     

	
     
	
     
	
    (v)
	
    any other payment and benefit in
    accordance with applicable plans or programs of the Company.

     

	
     
	
    (c)
	
    
    Termination Upon Disability.  

     

    In the event Executive is terminated on account of Disability,
the Executive (or his estate or legal representative) shall be entitled to:

     

	
     
	
     
	
    (i)
	
    an amount equal
    to the Base Salary and the Cash Bonus amount that would have been payable
    through the earlier of the end of the Term or one year
from the Date of Termination reduced by any disability insurance payments
payable to Executive from any policy, plan or program sponsored by the Company
or its Affiliates to be paid in a lump sum as soon as administratively feasible
after the Date of Termination but in no event later than two and one-half
months after the Date of Termination;

     

	
     
	
     
	
    (ii)
	
    any unpaid Cash
    Bonus earned and accrued with respect to any year preceding the Date of
    Termination and payable when bonuses for such year are paid to other Company
    executives subject to the terms and requirements of such bonus as may be
    established by the Board or Compensation Committee;

     

	
     
	
     
	
    (iii)
	
    outstanding stock
    options, equity and performance awards shall be vested and exercised in
    accordance with the applicable plan and award agreements; 

     

	
     
	
     
	
    (iv)
	
    any amounts earned, accrued or
    owing to the Executive but not yet paid under Section 8 above; and

     

	
     
	
     
	
    (v)
	
    except as
    provided in 9(h) below, any other payment and benefit in accordance with
    applicable plans or programs of the Company.

     

	
     
	
    (d)
	

Termination by
the Company for Cause or a Voluntary Resignation by the Executive. 

     


In the event the Company terminates the Executive's employment
for Cause or the Executive voluntarily resigns, the Executive shall be entitled
to:

     

	
     
	
     
	
    (i)
	
    Base Salary through the Date of
    Termination;

     

	
     
	
     
	
    (ii)
	
    outstanding stock
    options, equity and performance awards shall be vested and exercised in
    accordance with the applicable plan and award agreements; 

     

	
     
	
     
	
    (iii)
	
    any amounts earned, accrued or
    owing to the Executive but not yet paid under Section 8 above; and

     

	
     
	
     
	
    (iv)
	
    any other payment and benefit in
    accordance with the applicable plans or programs of the Company.

     

	
     
	
    (e)
	


Termination as a Result of an Election by Company Not to Extend the Term.
    

     


In the event the Company elects
not to extend the Term pursuant to Section 2 hereof, and the Executive
continues to be employed with the Company to the end of the Term, at the end of
the Term the Executive shall be entitled to:

     

    
	
     
	
     
	
    (i)
	
    Base Salary through the Date of
    Termination;

     

	
     
	
     
	
    (ii)
	
    any unpaid Cash
    Bonus earned and accrued with respect to any year preceding the Date of
    Termination and payable when bonuses for such year are paid to other Company
    executives subject to the terms and requirements of such bonus as may be
    established by the Board or Compensation Committee;

     

	
     
	
     
	
    (iii)
	
    outstanding stock
    options, equity and performance awards shall be vested and exercisable in
    accordance with the applicable plan and award agreement; 

     

	
     
	
     
	
    (iv)
	
    continued
    participation for twelve (12) months by the Executive and his eligible
    dependents in the Company's medical plan in which he and his eligible
    dependents were participating immediately prior to the Date of Termination,
    pursuant to the plan's terms as may be amended from time to time. 
    Executive shall be responsible for the payment of the employee-paid portion
    of any premiums for such coverage.  Upon the earlier of the end of the
twelve-month period or the date upon which the Executive is eligible for other
medical coverage with subsequent employer, this coverage shall cease and
Executive or his dependents may elect COBRA continuation coverage in accordance
with COBRA;

     

	
     
	
     
	
    (v)
	
    any amounts earned, accrued or
    owing to the Executive but not yet paid under Section 8 above;

     

	
     
	
     
	
    (vi)
	
    except as
    provided in 9(h) below, any payment and benefit in accordance with the
    applicable plans or programs of the Company; and

     

	
     
	
     
	
    (vii)
	
    a severance
    payment equal to one times the Executive's annual Base Salary, as in effect
    on the Date of Termination, to be paid in a lump sum as soon as
    administratively feasible after the Date of Termination but in no event
    later than two and one-half months after the Date of Termination.

     

	
     
	
    (f)
	
    
    Termination After a Change in Control.  In the event Executive's
    employment  is terminated, without Cause, voluntarily or involuntarily
    after a Change in Control, the Executive shall be entitled to do the
    following:

     

	
     
	
     
	
    (i)
	
    Base Salary earned and payable
    through the Date of Termination;

     

	
     
	
     
	
    (ii)
	
    any unpaid Cash
    Bonus earned and accrued with respect to any year preceding the Date of
    Termination and payable when bonuses for such year are paid to other Company
    executives subject to the terms and requirements of such bonus as may be
    established by the Board or Compensation Committee; 

     

	
     
	
     
	
    (iii)
	
    an amount equal
    to two times the Base Salary, as in effect on the Date of Termination, to be
    paid in a lump sum as soon as administratively feasible after Executive's
    Date of Termination but in no event later than two and one-half months after
    the Date of Termination;

     

	
     
	
     
	
    (iv)
	
    outstanding stock
    options, equity and performance awards shall be vested and exercised in
    accordance with the terms of the applicable plan and award agreements;

     

	
     
	
     
	
    (v)
	
    continued
    participation for twelve (12) months by the Executive and his eligible
    dependents in the Company's group medical and dental plan in which he and
    his eligible dependents were participating immediately prior to the Date of
    Termination, subject to the terms and conditions of the plans as such plans
    are amended from time to time.  The Executive shall be required to
    continue to pay the employee-paid portion of such coverage.  Upon the earlier of the
expiration of twelve (12) months or the date the Executive becomes eligible for
medical benefits with a subsequent employer, this coverage shall cease, and the
Executive and his dependents, if applicable, may elect group continuation
coverage under COBRA;

     

	
     
	
     
	
    (vi)
	
    any amounts earned, accrued or
    owing to the Executive but not yet paid under Section 8; and

     

	
     
	
     
	
    (vii)
	
    Except as
    provided in 9(h) below, any payment and benefit in accordance with the
    applicable plans and programs of the Company.

     

	
     
	
    (g)
	
    If any amount is
    payable to Executive under any one subsection of Section 9(a) though (f), no
    amounts shall be payable under any other subsection of this Section 9; for
    example, if any amount is payable to Executive under Section 9(f), no
    amounts shall be payable pursuant to Sections 9(a) - (e).

     

	
     
	
    (h)
	

Exclusivity of
Benefits; Release of Claims. 

     


Any payments provided pursuant to Section 9(a), (c), (e)
or (f) shall be in lieu of any salary continuation arrangements or any
other severance-type payments under any other severance program of the Company
or its Affiliates.  In order to be
entitled to the payments, rights and other entitlements in Section 9(a),
(c), (e) OR (f), the Executive shall be
required to execute and deliver a general release of claims against the Company
and its Affiliates and their officers, directors and employees and their
successors and assigns including, but not limited to, any claims under the Age
Discrimination Act, in the form and subject to such terms as provided to him by
the Company and Executive must execute the release and not revoke such general
release within the applicable time periods therein.

     

	
     
	
    (i)
	
    No Mitigation.  

     

    Executive shall not be required to mitigate the amount of any
payment provided for under this Agreement by seeking other employment and there
shall be no offset against amounts due to him on account of any remuneration or
benefits provided by any subsequent employment he may obtain, except as
expressly provided herein with respect to eligibility for medical benefits with
a subsequent employer.

     

	
     
	
    (j)
	

Resignation.
    


 

    Notwithstanding any other provision of this Agreement, upon
the termination of the Executive's employment for any reason, unless otherwise
requested by the Board, he shall immediately resign from the Board, from all
boards of directors of any Affiliate of the Company of which he may be a
member, and as a trustee of, or fiduciary to, any employee benefit plans of the
Company or any Affiliate. The Executive hereby agrees to execute any and all
documentation of such resignations upon request by the Company, but he shall be
treated for all purposes as having so resigned upon termination of his
employment, regardless of when or whether he executes any such documentation.

     

	
     
	
    (k)
	

Limitation on Amounts Payable.

     


If all or any portion of the amount of any payment or
continuation of benefits made on account of this Agreement or otherwise would
not be deductible for federal income tax purposes by the Company or its federal
income tax affiliates (or other person who made or is required to make such
payment under this Agreement) by reason of the application of Section 280G of
the Internal Revenue Code of 1986, as amended (the "Code") and the regulations
thereunder, the aggregate amount of such payment shall be reduced until (i) no portion of the total amount of all payments and continuation of benefits under
this Agreement is not deductible by a Company or its tax affiliates (or other
person who made or is required to make such payment) by reason of the
application of that section or (ii) the aggregate amount of such payment and
continuation of benefits is reduced to zero as determined by the Company's
independent tax counsel.

     

	
    10.
	
    
    Confidentiality, Assignment of Rights, Non-Competition and Non-Solicitation.

     

	
     
	
    (a)
	
    Confidentiality

     

	
     
	
     
	
    (i)
	
    Concurrent
    herewith and during the Employment Period, the Executive will create,
    receive and/or have access to trade secrets or proprietary or confidential
    information of the Company and its Affiliates consisting of written, oral,
    and visual material including, but not limited to, client lists, corporation
    and personal business contacts and relationships, corporation and personal
    business opportunities, memoranda, computer disks or files, rolodex cards or
    other lists of names, addresses or telephone numbers, financial information,
    projects, prospects, potential projects and prospects (including ideas and
    concepts for potential prospects) projects and prospects in development,
    business strategies, contracts, releases, and other documents, materials or
    writings that belong to the Company or its Affiliates including those which
    are prepared or created by Executive or come into the possession of
    Executive by any means or manner and which relate directly or indirectly to
    one or more of the parties which compromise Company or its Affiliates or any
    of them (all of the above collectively referred to herein as the
    "Confidential Information" or "Trade Secrets").

     

	
     
	
     
	
    (ii)
	
    The Confidential
    Information is, and at all times shall be and remain, private and
    confidential and the sole and exclusive property of, and owned and
    controlled by, the Company regardless whether said Confidential Information
    is in tangible or intangible form.

     

	
     
	
     
	
    (iii)
	
    Except to the
    extent required in connection with the performance of his duties for the
    conduction of the business of the Company, Executive shall not make copies
    of any Confidential Information, nor shall Executive remove any such
    Confidential Information from Company's office location without the prior
    express written consent of Company.  Any and all Confidential
    Information and any and all other property of Company that is in the
    possession or control of Executive shall be returned to Company forthwith
    upon the termination of Executive's employment by Company.

     

	
     
	
     
	
    (iv)
	
    Executive shall
    not, directly or indirectly, verbally or otherwise, either during the
    Employment Period or after the Employment Period, provide any person, firm
    or entity with any of the Confidential Information or cause, or permit, the
    same to be published, disseminated or disclosed (herein collectively
    "Disclosure") to any person, firm or entity whatsoever including, but not
    limited to, Company's business associates or competitors (herein
    collectively "Third Parties") and shall take any and all action possible to
    present such Disclosure to any Third Parties except for the sole purpose to
    conduct the Company's business.

     

	
     
	
     
	
    (v)
	
    Except as
    authorized by the foregoing for the conduction of the Company's business,
    Executive is aware that any Disclosure of Confidential Information by
    Executive to Third Parties will be, and is, a breach of Executive's
    employment, a breach of trust and confidence, a breach of fiduciary duty,
    invasion of privacy, a misappropriation of Company's trade secrets and/or
    exclusive property rights, and may constitute fraud and deceit.

     

	
     
	
     
	
    (vi)
	
    Except as
    authorized by the foregoing for the conduction of the Company's business,
    Executive is aware that Disclosure of any of the Confidential Information to
    Third Parties could cause Company to suffer major adverse economic
    consequences due to the fact that such disclosure could result in (a) the
    diversion of Company's business opportunities, and (b) the dilution or
    diminution in value of Company's business opportunities and (c) other
    adverse consequences in addition to those set forth above.

     

	
     
	
     
	
    (vii)
	
    In the event that
    Executive is compelled by subpoena or other similar compulsory means to
    testify or provide evidence in a manner that constitutes engaging in a
    prohibited Disclosure of Confidential Information, it shall be presumed that
    no violation of this Agreement has occurred with respect to that compulsory
    prohibited Disclosure if, immediately upon first learning that such
    prohibited Disclosure may be compelled, Executive notifies Company of all
    facts relative thereto and makes every effort to assert Company's trade
    secret privilege and all other privileges and rights of Company to keep the
    Confidential Information, including the prohibited Disclosure, secret and
    confidential.  However, under no circumstances shall Executive
    volunteer to engage in any such prohibited communication or Disclosure.

     

	
     
	
     
	
    (viii)
	
    The Executive
    hereby sells, assigns and transfers to the Company all of his right, title
    and interest in and to all inventions, discoveries, improvements and
    copyrightable subject matter (the "rights") which during the course of his
    employment are made or conceived by him, alone or with others, and which are
    within or arise out of any general field of the Company's business or arise
    out of any work he performs, or information he receives regarding the
    business of the Company, while employed by the Company. The Executive shall
    fully disclose to the Company as promptly as available all information known
    or possessed by him concerning the rights referred to in the preceding
    sentence, and upon request by the Company and without any further
    remuneration in any form to him by the Company, but at the expense of the
    Company, execute all applications for patents and for copyright
    registration, assignments thereof and other instruments and do all things
    which the Company may deem necessary to vest and maintain in it the entire
    right, title and interest in and to all such rights.

     

	
     
	
    (b)
	
    Non-Competition.

     

	
     
	
     
	
    (i)
	
    Executive
    acknowledges that he is currently an employee of the Company and Executive
    agrees in consideration of (x) Executive's employment as the COO pursuant to
    this Agreement of the Company and the Executive's receipt
of, access to and exposure to Confidential Information or Trade Secrets
herewith and (y) during the Employment Period the receipt of, access to and
exposure to Confidential Information or Trade Secrets and the Company's
provision of specialized training that during the Employment Period and for a
period of one year following Executive's Date of Termination with Company for
any reason, Executive shall not (1) compete or engage in any business, directly
or indirectly, with Company or its Affiliates in the seismic or similar
business of the Company or of its Affiliates in any geographical area where the
Company or its Affiliates have or solicited any business or at any time during
the two (2) years had any business preceding Date of Termination (the "Area of No-Compete")
as an individual, owner, investor, partner, shareholder, director, officer,
principal, agent, employee, trustee, consultant, or in any relationship or
capacity, (2) without limiting the foregoing, solicit or negotiate, or manage,
supervise or direct others in the solicitation or negotiation of, any contract
or agreement that constitutes or would constitute engaging in competition with
the seismic business in the portions of  the Area of No-Compete, or (3)
solicit, take away, attempt to solicit or take away, or do any act the
foreseeable consequences of which would lead to the solicitation or taking away
of any marketing prospects, projects or customers of Company's business in the
Area of No-Compete.

     

	
     
	
     
	
    (ii)
	
    For a period of
    one year following the Executive's Date of Termination with Company for any
    reason, Executive shall not, directly or indirectly, solicit for employment,
    employ or be in business in any form with, directly or indirectly, in the
    seismic or business of the Company, any employee (i) employed
by Company or Affiliates or who was so employed within the two-year period
immediately prior to such termination, or (ii) knowingly solicit or encourage
any employee to leave the employ of the Company or its Affiliates.

     

	
     
	
     
	
    (iii)
	
    The Executive
    agrees that for a period of one year following Date of Termination he will
    not solicit or encourage any customer of the Company or any of its
    Affiliates to reduce or cease its business with the Company or any such
    Affiliate or otherwise knowingly interfere with the relationship of the
    Company or any Affiliate with its customers.

     

	
     
	
    (c)
	
    Additional Covenants and
    Acknowledgments.

     

	
     
	
     
	
    (i)
	
    Executive hereby
    specifically acknowledges and agrees that the temporal, geographical and
    other restrictions contained in this Section 10 are reasonable and necessary
    to protect the Company's legitimate business interests, including but not
    limited to, the business, goodwill, Confidential Information or Trade
    Secrets and prospects of Company.

     

	
     
	
     
	
    (ii)
	
    Executive
    specifically agrees that the actual or threatened breach by Executive of the
    provisions in Section 10 of this Agreement will cause irreparable harm to
    Company causing damages and injuries that are not measurable or susceptible
    to calculation.  In the event of any breach or threatened breach of
    this Section 10 by the Executive, the Company shall be entitled to
    extraordinary or emergency relief, including, but not limited to, obtaining
    an ex parte restraining order, preliminary injunction and
permanent injunction and to recover the Company's attorney's fees, costs and
expenses related to Executive's breach or threatened breach.  Nothing contained
in this Agreement shall be construed as prohibiting the Company from pursuing
any other remedies available to it for breach or threatened breach by
Executive, including, without limitation, the recovery of money damages. 
    

     

	
     
	
     
	
    (iii)
	
    Executive further
    agrees that in the event either the length of time, geographical or any
    other restrictions, or portion thereof, set forth in this Section 10 is
    overly restrictive and unenforceable in any court proceeding, the court may
    reduce or modify such restrictions, but only to the extent necessary, to
    those which it deems reasonable and enforceable under the circumstances and
    the parties agree that the restrictions of this Section 10 will be enforced
    as reduced or modified.

     

	
     
	
     
	
    (iv)
	
    Executive further
    agrees that, in the event any provision of this Section 10 is held to be
    invalid, overbroad, void, or against public policy, the remaining provisions
    of this Section 10 and all other provisions of this Agreement shall not be
    affected thereby, and that the provision held invalid shall be reformed to
    the minimum extent necessary to validate such provision, consistent with the
    purpose and intent of this Agreement.

     

	
     
	
     
	
    (v)
	
    If the Company
    believes that Executive has violated any of the provisions of this Section
    10, all benefits and payments payable under this Agreement shall cease and
    the non-competition period shall be suspended and will not run in favor of
    the Executive from the time of the commencement of such breach until the
    time when the Executive cures the breach to the Company's satisfaction. 
    If the Executive does not cure the violation to the satisfaction of the
    Company, no further benefits or payments will be made and all rights of
    Executive to such payments lapse and become void and the Company may pursue
    any other remedies provided herein.

     

	
     
	
    (d)
	


Return of Materials.

     


Promptly upon the termination of Executive's employment for
any reason and in any event within five days after request by the Company,
Executive shall return all Confidential Information and all copies thereof to
the Company, and Executive shall destroy all extracts, memoranda, notes and any
other material prepared by Executive based upon Confidential Information.

     

	
    11.
	

Cooperation.

     


Following the Date of Termination, upon
reasonable request by the Company, the Executive shall cooperate with the
Company with respect to any litigation or other dispute relating to any matter
in which he was involved or had knowledge during his employment with the
Company. The Company shall reimburse the Executive for all reasonable and
necessary out-of-pocket costs, such as travel, hotel and meal expenses,
incurred by the Executive in providing any cooperation pursuant to this Section
11.

     

    
	
    12.
	

Assignability; Binding Nature.

     


This Agreement shall be binding upon and inure
to the benefit of the Parties and their respective successors, heirs (in the
case of the Executive) and assigns. For purposes of this Section 12, a
successor or assign of the Company shall include any type of successor or
assign of the Company upon a Change in Control and Executive's consent to the
assignment shall not be required.  No rights or obligations, benefits or
payments of the Executive under this Agreement may be assigned or transferred
by the Executive other than his rights to compensation and benefits, which may
be transferred only by will, operation of law or in accordance with Section 19
below.

     

    
	
    13.
	

Entire Agreement.


 

    This Agreement contains the entire
understanding and agreement between the Parties concerning the subject matter
hereof and supersedes all prior agreements, understandings, discussions,
negotiations and undertakings, whether written or oral, between the Parties
with respect thereto. In the event of any inconsistency between any provision
of this Agreement and any other provision of any other plan, policy or program
of, or other agreement with, the Company, the provisions of this Agreement
shall control.

     

    
	
    14.
	

Amendment or Waiver.

     


No provision in this Agreement may be amended
unless such amendment is agreed to in writing and signed by the Executive and
an authorized officer of the Company. No waiver by either Party of any breach
by the other Party of any condition or provision contained in this Agreement to
be performed by such other Party shall be deemed a waiver of a similar or
dissimilar condition or provision at the same or any prior or subsequent time.
Any waiver must be in writing and signed by the Party against whom it is being
enforced (either the Executive or an authorized officer of the Company, as the
case may be).

     

    
	
    15.
	

Severability.

     


In the event that any provision or portion of
this Agreement shall be determined to be invalid or unenforceable for any
reason, in whole or in part, the remaining provisions of this Agreement shall
be unaffected thereby and shall remain in full force and effect to the fullest
extent permitted by law.

     

    
	
    16.
	

Survivorship.

     


The respective rights and obligations of the
Parties hereunder, including, without limitation, Section 9 (termination of
employment), Section 10 (confidentiality, assignment of rights,
non-competition; non-solicitation, injunctive and other relief), Section 11
(cooperation), and Section 19 (resolution of disputes), shall survive any
termination of the Executive's employment to the extent necessary to the
intended preservation of such rights and obligations.

     

    
	
    17.
	

Beneficiaries/References.

     


The Executive shall be entitled, to the extent
permitted under applicable plans, agreements or law, to select and change a
beneficiary or beneficiaries to receive any benefit payable hereunder following
the Executive's death by giving the Company written notice thereof. In the
event of the Executive's death or a judicial determination of his incompetence,
reference in this Agreement to the Executive shall be deemed, where
appropriate, to refer to his beneficiary, estate or other legal representative.

     

    
	
    18.
	

Governing Law.

     


This Agreement shall be governed by and
construed and interpreted in accordance with the laws of Texas without
reference to principles of conflicts of law, except as preempted by applicable
federal law.

     

    
	
    19.
	
    Resolution of Disputes.

     

	
     
	
    (a)
	
    
Arbitration. All disputes and controversies of every kind and
nature between any parties hereto arising out of or in connection with this
Agreement or the transactions described herein as to the construction,
validity, interpretation or meaning, performance, non-performance, enforcement,
operation or breach, shall be submitted to arbitration pursuant to the
following procedures:

     

	
     
	
     
	
    (i)
	
    After a dispute
    or controversy arises, any party may, in a written notice delivered to the
    other parties to the dispute, demand such arbitration. Such notice shall
    designate the name of the arbitrator (who shall be an impartial person)
    appointed by such party demanding arbitration, together with a statement of
    the matter in controversy.

     

	
     
	
     
	
    (ii)
	
    Within thirty
    (30) days after receipt of such demand, the other parties shall, in a
    written notice delivered to the first party, name such parties' arbitrator
    (who shall be an impartial person). If such parties fail to name an
    arbitrator, then the second arbitrator shall be named by the American
    Arbitration Association (the "AAA"). The two arbitrators so selected shall
    name a third arbitrator (who shall be an impartial person) within thirty
    (30) days, or in lieu of such agreement on a third arbitrator by the two
    arbitrators so appointed, the third arbitrator shall be appointed by the
    AAA. If any arbitrator appointed hereunder shall die, resign, refuse or
    become unable to act before an arbitration decision is rendered, then the
    vacancy shall be filled by the method set forth in this Section for the
    original appointment of such arbitrator.

     

	
     
	
     
	
    (iii)
	
    Each party shall
    bear its own arbitration costs and expenses. The arbitration hearing shall
    be held in Houston, Texas at a location designated by a majority of the
    arbitrators. The Commercial Arbitration Rules of the American Arbitration
    Association shall be incorporated by reference at such hearing and the
    substantive laws of the State of Texas (excluding conflict of laws
    provisions) shall apply.

     

	
     
	
     
	
    (iv)
	
    The arbitration
    hearing shall be concluded within ten (10) days unless otherwise ordered by
    the arbitrators and the written award thereon shall be made within fifteen
    (15) days after the close of submission of evidence. An award rendered by a
    majority of the arbitrators appointed pursuant to this Agreement shall be
    final and binding on all parties to the proceeding, shall resolve the
    question of costs of the arbitrators and all related matters, and judgment
    on such award may be entered and enforced by either party in any court of
    competent jurisdiction.

     

	
     
	
     
	
    (v)
	
    Except as set
    forth in Section 19(b) and (c), the parties stipulate that the provisions of
    this Section shall be a complete defense to any suit, action or proceeding
    instituted in any federal, state or local court or before any administrative
    tribunal with respect to any controversy or dispute arising out of this
    Agreement or the transactions described herein. The arbitration provisions
    hereof shall, with respect to such controversy or dispute, survive the
    termination or expiration of this Agreement.

     

	
     
	
     
	
    No party to an
arbitration may disclose the existence or results of any arbitration hereunder
without the prior written consent of the other parties; nor will any party to
an arbitration disclose to any third party any confidential information
disclosed by any other party to an arbitration in the course of an arbitration
hereunder without the prior written consent of such other party.

     

	
     
	
    (b)
	
    
Emergency Relief. Notwithstanding anything in this Section 19(a)
to the contrary, any party may seek from a court any provisional remedy that
may be necessary to protect any rights or property of such party pending the
establishment of the arbitral tribunal or its determination of the merits of
the controversy or to enforce a party's rights under this Section 19.

     

	
     
	
    (c)
	
    
Emergency or Extraordinary Relief Related to Section 10. 
Notwithstanding the foregoing, the Company shall have right to seek emergency
or extraordinary relief, including but not limited to, a temporary restraining
order, injunctive relief or any relief described in Section 10, for Executive's
breach or threatened breach of any provision in Section 10 of this Agreement.

     

	
    20.
	

Notices.

     


Any notice given to a Party shall be in
writing and shall be deemed to have been given (i) when delivered personally,
(ii) three days after being sent by certified or registered mail, postage
prepaid, return receipt requested or (iii) two days after being sent by
overnight courier (provided that a written acknowledgement of receipt is
obtained by the overnight courier), with any such notice duly addressed to the
Party concerned at the address indicated below or to such other address as such
Party may subsequently give such notice of in accordance with this Section 20:

     

    
	
     
	
     
	

If to the Company:                                           
Seitel Inc.


                                                                       
10811 S. Westview Circle


                                                                        
Houston, Texas 77043


                                                                        
Attention: General Counsel

     




If to the Executive:                                            
Kevin P. Callaghan


                                                                        
5603 Peninsula Park


                                                                        
Houston, TX  77041

     

	
    21.
	

Withholding.

     


The Company may withhold or deduct from any
and all amounts payable under this Agreement (a) such federal, state, local and
other taxes or deductions as may be required to be withheld pursuant to
applicable law or regulation, (b) all other normal employee deductions made
with respect to the employee plans and programs in which Executive
participates.

     

    
	
    22.
	

General Assets.

     


All payments to Executive provided for under
this Agreement shall be paid in cash from the Company and no special or
separate funds shall be established and no segregation of assets shall be made
to assure payment.  To the extent that any person acquires a right to receive
payments from the Company hereunder, such right shall be no greater than the
right of an unsecured creditor of the Company.

     

    
	
    23.
	

Executive Acknowledgment.

     


Executive acknowledges that (a) he is knowledgeable and sophisticated as to business matters, including the subject matters of this
Agreement, (b) he has read this Agreement, (c) he has been advised by the Company to consult an independent attorney and he has consulted with and been
advised by his independent attorney, and (d) he understands the terms and conditions of this Agreement.  Executive represents that he is free to enter
into this Agreement and that he is not subject to another employment agreement
with the Company or covenant not to compete with the Company that would
conflict with this Agreement.

     

    
	
    24.
	

Headings.

     


The headings of the sections contained in this
Agreement are for convenience only and shall not be deemed to control or affect
the meaning or construction of any provision of this Agreement.

     

    
	
    25.
	

Certain Interpretive Matters.

     


The definitions contained in this Agreement are applicable
to the singular as well as plural form of such terms and to the masculine as
well as to the feminine and neuter genders of such term.

     

    
	
    26.
	

Code Section 409A.

     


The parties agree that this Agreement shall be operated
and amended at the Company's discretion to the extent necessary to comply with
or to be exempt from Section 409A of the Internal Revenue Code of 1986, as
amended (the "Code"), if the Company determines upon advice from counsel that
Code Section 409A applies to any of the provisions of this Agreement.

     

    
	
    27.
	

Counterparts.

     


This Agreement
may be executed in two or more counterparts.



 


              



IN WITNESS
WHEREOF, the undersigned have executed this Agreement as of
October 19, 2005.

 


  	SEITEL INC.     
      	THE EXECUTIVE 

	By:	/s/ Robert D. Monson               
      	By:	/s/ Kevin P. Callaghan                 
      
	 	
      Mr. Robert D. Monson

      President
	 	Mr. Kevin P. Callaghan