Document:

RETENTION AND CHANGE OF CONTROL AGREEMENT

Exhibit
10.16 

 

RETENTION AND CHANGE OF CONTROL
AGREEMENT

 

This Retention and Change of
Control Agreement
("Agreement") is made and entered into as of
January 1, 2004 by and between Seitel, Inc., a Delaware corporation (the
"Company'), and Larry Lenig (the "Executive").

The board of directors of the
Company (the "Board"), has determined that it is in the best
interests of the Company to assure the Executive's services through the
successful completion of the Company's Chapter 11 reorganization process (as
measured by the effective date of the Company's amended plan of reorganization,
the "Effective Date").

The Company wishes to assure
itself of the services of the Executive for the period provided in this
Agreement and the Executive wishes to serve in the employ of the Company on the
terms and conditions hereinafter provided.

Now, therefore, in consideration
of the premises and the mutual covenants herein contained, the Company and the
Executive hereby agree as follows:

1.         Employment. Upon the terms and subject to the
conditions contained in this Agreement, the Executive agrees to continue to
provide services for the Company during the term of this Agreement.

2.         Duties. The Executive shall remain the
Chief Executive Officer of the Company. The duties of the Executive shall be
those duties assigned by the Board and shall be consistent with duties
typically assigned to Chief Executive Officers of companies similar in size and
scope to the Company. The Executive will report to the Board. The Executive's
duties may, from time to time, be changed or modified at the discretion of the
Board consistent with the Executive's position with the Company. The Executive
will comply with the lawful policies and standards that the Company may
establish or modify from time to time. The Company will provide Executive
appropriate and reasonable notice of such policies and standards.

3.         Employment Term. Subject to the terms and
conditions hereof, including the approval of this Agreement by the bankruptcy
court in which the Company currently has Chapter 11 bankruptcy cases pending (the date of such approval being referred to herein as the "Approval Date"), the Company agrees to continue the employ of the Executive
for a six month initial term (the "Initial Term") commencing
as of the date of this Agreement (the "Start Date") and continuing after the Initial Term on a month-to-month
basis, unless earlier terminated by one of the parties to this Agreement (the "Termination Date"). The period between the Start Date
and the Termination Date is referred to herein as the "Employment Term".

4.         Salary and Benefits. 

(a)        Base Salary. The Company shall, during the
Employment Term, pay the Executive an annual base salary of $420,000 (pro rated
for the period of the year that the Executive is actually employed by the
Company). Such salary shall be paid in accordance with the usual payroll procedures
of the Company, less applicable withholding and salary deductions.

(b)        Termination Payment. Upon the occurrence of (i) (A)
the Effective Date or (B) the expiration of this Agreement by its terms and
(ii) either (X) a determination by the Board to terminate the Executive's role
with the Company as Chief Executive Officer without Cause or (Y) the
resignation by the Executive after the Initial Term due to a determination by
the Executive (in his sole discretion) that his ability to work with the Board
after the Effective Date would be impaired (either of the two events referred
to in (X) or (Y) above, a "Termination"), the Company
shall at the Termination Date pay the Executive (x) a cash amount equal to
$250,000, payable in one lump sum plus (y) a cash payment payable in equal
monthly installments in an amount equal to $35,000 times each full and partial
month that the Executive was employed by the Company during the Employment Term
prior to the Termination. For the purposes of this Agreement, the Company shall
have "Cause" to terminate the Executive's employment hereunder
upon the continued willful failure by the Executive to perform his duties with
the Company (other than any such failure resulting from incapacity due to
physical or mental illness), after reasonable notice and opportunity to cure
any failure to perform or by the Executive.

(c)        Bonus. Within 10 days after the
Approval Date, the Company will pay to the Executive a cash bonus equal to
$200,000 based on his 2003 performance with the Company.

(d)        Reimbursement of
Expenses. The
Company shall reimburse the Executive for all reasonable out-of-pocket expenses
incurred by the Executive in the course of his duties, in accordance with its
normal policies.

(e)        Employee Benefits. The Executive shall be entitled
to participate in the employee benefit programs generally available to
employees of the Company. 

5.         Indemnification. The Executive will be
indemnified (including the payment on a current basis for costs of counsel) for
any claim made against him as an employee or officer of the Company as long as
the act for which the Executive seeks indemnification is not finally determined
to have been the result of willful or grossly negligent act on his part. 

6.         Miscellaneous
Provisions. 

(a)        Assignment. Neither party may assign its
rights or delegate its duties or obligations hereunder without the written
consent of the other party. 

(b)        Notice. For the purposes of this
Agreement, notices and all other communications provided for in the Agreement
shall be in writing and shall be deemed to have been duly given when delivered. 

(c)        Amendment; Waiver. No provisions of this Agreement
may be modified, waived or discharged unless such waiver, modification or
discharge is agreed to in writing signed
by the Executive and the Company. No agreements or representations, oral or
otherwise, express or implied, with respect to the employment of the Executive
by the Company have been made by either party that are not set forth expressly
in this Agreement. 

(d)        Invalid
Provisions. Should any portion of
this Agreement be adjudged or held to be invalid, unenforceable or void, such
holding shall not have the effect of invalidating or voiding the remainder of
this Agreement and the parties hereto agree that the portion so held invalid,
unenforceable or void shall, if possible, be deemed amended or reduced in
scope, or otherwise be stricken from this Agreement to the extent required for
the purposes of validity and enforcement thereof.

(e)        Governing Law. This Agreement shall be governed by and construed
under the laws of the State of Texas.

(f)        Approval. The Company will promptly file with the Bankruptcy Court any necessary
motion for approval of this Agreement and will thereafter use its reasonable
best efforts to obtain such approval not later than January 30, 2004 or as
promptly thereafter as may be permitted by the calendar of the Bankruptcy
Court.

 

	
  EXECUTIVE

   

  
	

  

  

	
  /s/
  Larry Lenig

  
	
  Larry
  Lenig

   

   

  
	

  

  

	
  SEITEL,
  INC.

   

  
	

  

  

	
  /s/
  Fred Zeidman

  
	
  Name:

  	
  Fred
  Zeidman

  
	
  Title:

  	
  Chairman
  of the Board of Directors_

Exhibit 10.20

 

SEITEL,
INC.

Summary of 2005
Non-Employee Director and Executive Officer

Compensation and
Incentive Arrangements

 

 

Non-Employee Director
Compensation

            For fiscal year 2005, non-employee directors of
Seitel, Inc. (the "Company") receive an annual fee of $30,000, annual
restricted stock awards valued at $20,000 (granted at the close of the first
trading date of the calendar year), $1,500 for each board meeting attended in
person and $500 for each board meeting attended by telephone conference,
including committee meetings attended.  In addition, the Chairman of the Board
receives $250,000 per year, the Lead Director receives $1,500 per day when
performing services on behalf of the Company, and annual fees are paid to each
committee chairman as follows: audit committee, $15,000; compensation
committee, $10,000; corporate governance and nominating committee $7,500. All
directors are entitled to reimbursement for their reasonable out-of-pocket
expenditures.  These arrangements were established in July 2004, soon after the
Company emerged from bankruptcy.  The Lead Director position was added in
October 2004.

Executive Officer Compensation

            The Company has the following compensatory
arrangements with each of its executive officers for fiscal year 2005:

	
  Name

  	
  Title

  	
  2005 Base Salary
  (1)

  	
  2005 Restricted
  Stock Grants (1)

  
	
  Robert D. Monson

  	
  President and Chief Executive Officer

  	
  $400,000

  	
  316,000 (2)(3)

  
	
  Marcia H. Kendrick

  	
  Senior Vice President, Acting Chief Financial Officer, Chief
  Accounting Officer and Acting Secretary

  	
  $200,000

  	
  40,000

  
	
  Kevin P. Callaghan

  	
  Executive Vice President
  and Chief Operating Officer

  	
  $330,000

  	
  160,000 (2)

  
	
  Robert J. Simon

  	
  President - Seitel Data,
  Ltd.

  	
  $260,000

  	
  126,000(2)

  

(1) Each executive officer is
also eligible for a cash bonus and a further equity award of shares of
restricted stock in a dollar amount equal to the participant's target
percentage multiplied by the participant's cash bonus amount, if any.  See
"Incentive Plan for 2005" below.

(2) Reflects restricted stock
granted pursuant to the Incentive Plan.  See "Incentive Plan for 2005" below.

(3) Included in the 1,000,000
shares of restricted stock awarded to Mr. Monson on December 15, 2005.

Incentive Plan for 2005

On January 24, 2005 the Compensation Committee
of the Company established the criteria to be used in determining cash bonuses
and certain incentive equity awards (the "Incentive Plan") for fiscal year
2005.  The Company's named executive officers and certain other executives
participate in the Incentive Plan, which is operated under the Company's 2004
Stock Option Plan (the "Plan").  The Plan was filed as Exhibit 10.1 to the
Company's Form S-4, Registration Statement No. 333-121476. The targets and
financial performance measures established under the Incentive Plan are described
below.  The Compensation Committee reserves the right to modify the targets and
financial performance measures at any time, or to grant cash bonuses or equity
awards to executive officers even if the performance goals are not met.  The
cash bonuses and Performance Equity Awards (defined below) are subject to
increase or decrease of up to 50% in the discretion of the Compensation
Committee.  In order to receive a cash bonus and incentive equity
award, if any, the participants must be employed by the Company on the date
such cash bonuses and incentive equity awards are paid. The Company expects to
pay 2005 cash bonuses and Performance Equity Awards, if any, in early 2006. 
The Compensation Committee reserves the right to modify the Incentive Plan for
subsequent fiscal years.

Cash Bonuses

The Incentive Plan provides for a target cash
bonus for each participant based upon a percentage of the participant's base
salary, with the opportunity to earn anywhere from 0% to 200% of the target
cash bonus.  The targets, as a percentage of base salary, for the Company's
named executive officers are as follows:

Robert D. Monson, 

   President and Chief Executive
Officer                                                    
90%

 

Kevin P. Callaghan, 

   Chief Operating Officer and
Executive Vice President                             60%

 

Robert J. Simon, 

   President-Seitel Data, Ltd.                                                                      60%

 

Marcia H. Kendrick, 

   Chief Accounting Officer,
Senior Vice President, 

   Acting Chief Financial Officer
and Acting Secretary                                 25%

The Compensation Committee established cash
margin, net of interest expense (80% weight) and client pre-funding percentage
(20% weight) as the financial performance measures under the Incentive Plan. 
Cash margin includes cash resales plus all other cash revenues other than from
data acquisitions, less cash selling, general and administrative expenses, and
cost of goods sold.  Cash resales result when the Company invoices customers
for purchases of licenses to data from the Company's library.  Other cash
revenues are primarily from the reproduction and delivery of seismic data. 
Client prefunding percentage is the average of all revenue pre-commitments for
each new survey as a percentage of the total cost of such survey.  Where the
level achieved under the financial performance measures falls between zero and
target level or target and maximum levels, the cash bonus is determined by
interpolation.

Incentive Equity Awards

The Incentive Plan includes two categories of
equity awards.  Robert D. Monson, Kevin P. Callaghan and Robert J. Simon are
the only executives currently eligible for the first category of equity award
("Key Executive Award(s)").  The 2005 Key Executive Awards have been made in
shares of the Company's restricted common stock, par value $.01 per share (the
"Common Stock"), under the Plan, which are reported herein or have been
previously reported on Forms 8-K dated December 20, 2004, February 16,
2005 and March 28, 2005, and are as follows:

	

  

  
	
  Shares

  	
  Award Date

  
	
  Robert D. Monson,

     President and Chief Executive Officer

  	
  316,000

  	
  December 15, 2004

  
	
  Kevin P. Callaghan,

     Chief Operating Officer and Executive Vice President

  	
  160,000

  	
  March
  24, 2005

  
	
  Robert J. Simon,

     President-Seitel Data, Ltd.

  	
  126,000

  	
  February 15, 2005

  

Mr. Monson's Key Executive Award of 316,000
shares of restricted Common Stock was included in the 1,000,000 shares of
restricted Common Stock awarded to him on December 15, 2004, and is subject to
increase.  He is entitled to a 2005 Key Executive Award of restricted Common
Stock in an amount equal to 90% of his base salary ($360,000) and has been
deemed to have received $316,000 of this amount with the 316,000 shares already
awarded.  The closing price of the Common Stock on the first trading day in
2006 will be divided into $44,000 to arrive at the number of additional
restricted Common Stock to be awarded to Mr. Monson.  Unless modified by the Compensation
Committee, Key Executive Awards in subsequent years will be made in shares of
restricted Common Stock in dollar amounts equal to the participant's target
percentage (Mr. Monson (90%), Mr. Callaghan (60%), and Mr. Simon (60%))
multiplied by the participant's base salary.  These subsequent year Key
Executive Awards, will be made based on the closing price of the Common Stock
on the first trading day of the year.

All
participants in the Incentive Plan are eligible for the second category of
equity awards ("Performance Equity Awards"), which will be made in shares of
restricted Common Stock in a dollar amount equal to the participant's target
percentage multiplied by the participant's cash bonus amount.  Performance
Equity Awards will be made only if the participant meets the performance
criteria to receive a cash bonus as described above.  The named executive
officers' target percentages for a Performance Equity Award are as follows:

Robert D.
Monson, 

   President
and Chief Executive Officer                                                     90%

 

Kevin P.
Callaghan, 

   Chief
Operating Officer and Executive Vice President                             60%

 

Robert J. Simon, 

   President-Seitel Data, Ltd.                                                                      60%

 

Marcia H. Kendrick, 

   Chief Accounting Officer,
Senior Vice President, 

   Acting Chief Financial Officer
and Acting Secretary                                 50%

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