Document:

EXHIBIT 10.5

SEITEL, INC.

2001 NON-OFFICER STOCK OPTION PLAN

Adopted June 5, 2001

1.          Purpose. The Plan is established as a compensatory plan to attract, retain and provide equity incentives to certain key employees whose employment is vital to the success of the Company.

2.          Definitions. As used herein, unless the context requires otherwise, the following terms shall have the meanings indicated below:

           (a)          Affiliate means (i) any corporation, partnership or other entity which owns, directly or indirectly, a majority of the voting equity securities of the Company, (ii) any corporation, partnership or other entity of which a majority of the voting equity securities or equity interest is owned, directly or indirectly, by the Company, and (iii) any other entity that is consolidated in the Company's financial statements.

           (b)          Board means the Board of Directors of the Company.

           (c)          Code means the Internal Revenue Code of 1986, as amended. Reference in the Plan to any section of the Code shall be deemed to include any amendments or successor provisions to such section and any regulations under such section.

           (d)          Common Stock means the Common Stock, $.0l par value per share, of the Company or the common stock that the Company may in the future be authorized to issue (as long as the common stock varies from that currently authorized, if at all, only in amount of par value).

           (e)          Company means Seitel, Inc., a Delaware corporation.

           (f)          Continuous Service means that the provision of services to the Company or an Affiliate in the capacity of Employee is not interrupted or terminated. Except as otherwise provided in the Option Agreement, service shall not be considered interrupted or terminated for this purpose in the case of (i) any approved leave of absence, (ii) transfers among the Company, any Affiliate, or any successor, in the capacity of Employee, or (iii) any change in status as long as the individual remains in the service of the Company or an Affiliate in any capacity of Employee. An approved leave of absence shall include sick leave, military leave, or any other authorized personal leave.

           (g)          Director means a voting member of the Board.

           (h)          Disability means the permanent and total disability of a person within the meaning of Section 22(e)(3) of the Code.

           (i)          Employee means any person, including an Officer or Director, who is an employee, whether full-time or part-time, of the Company or an Affiliate. The Company's or an Affiliate's providing compensation to a Director solely with respect to rendering services in the capacity of a Director, however, shall not be sufficient to constitute "employment" by the Company.

           (j)          Exchange Act means the Securities Exchange Act of 1934, as amended. Reference in the Plan to any section of the Exchange Act shall be deemed to include any amendments or successor provisions to such section and any rules and regulations relating to such section.

           (k)          Fair Market Value means, as of any date, the value of the Common Stock determined as follows:

                    (i)          If the Common Stock is listed on any established stock exchange or traded on the Nasdaq National Market or the Nasdaq SmallCap Market, the Fair Market Value of a share of Common Stock shall be the closing sales price for such stock (or the closing bid, if no sales were reported) as quoted on such exchange or market (or the exchange or market with the greatest volume of trading in the Common Stock) on the day of determination, as reported in The Wall Street Journal or such other source as the Board deems reliable.

                    (ii)          In the absence of any such established markets for the Common Stock, the Fair Market Value shall be determined in good faith by the Board.

           (l)          Non-Qualified Stock Option means an Option not intended to meet the requirements of Section 422 of the Code.

           (m)          Officer means a person who is an "officer" of the Company within the meaning of Rule 16a-1(f) promulgated under Section 16 of the Exchange Act (whether or not the Company is subject to the requirements of the Exchange Act) as it may be amended from time to time, and any successor to Rule 16a-1(f).

           (n)          Option means a Non-Qualified Stock Option granted pursuant to the Plan to purchase a specified number of shares of Common Stock.

           (o)          Option Agreement means the written agreement evidencing the grant of an Option executed by the Company and the Optionee, including any amendments thereto.

           (p)          Optionee means an individual to whom an Option has been granted under the Plan.

           (q)          Plan means this Seitel, Inc. 2001 Non-officer Stock Option Plan, as set forth herein and as it may be amended from time to time.

           (r)          Rule 16b-3" means Rule 16b-3 promulgated under the Exchange Act, as it may be amended from time to time, and any successor to Rule 16b-3.

           (s)          Section means a Section of the Plan unless otherwise stated or the context otherwise requires.

           (t)          Securities Act means the Securities Act of 1933, as amended. Reference in the Plan to any section of the Securities Act shall be deemed to include any amendments or successor provisions to such section and any rules and regulations relating to such section.

3.          Types of Options and Shares. Options granted under this Plan shall be Non-Qualified Stock Options. The shares of stock that may be purchased upon exercise of Options granted under this Plan are shares of Common Stock.

4.          Shares Subject to Plan. The aggregate number of shares that may be issued pursuant to Options granted under this Plan is 1,250,000 shares. If any Option expires or is terminated without being exercised in whole or in part, the unexercised or released shares of Common Stock from such Options will be available for future grant and purchase under this Plan. At all times during the term of this Plan, the Company will reserve and keep available such number of shares of Common Stock as will be required to satisfy the requirements of outstanding Options under this Plan.

5.          Eligibility. No person is eligible to receive a grant of an Option under this Plan unless such person is an Employee, and is not an Officer or Director of the Company or the beneficial owners of more than 5% of the outstanding Common Stock. Subject to the foregoing requirements, and the other provisions of the Plan, the Board may select the recipients of Options in the exercise of its sole discretion. Options granted to any eligible Employee shall continue to be valid notwithstanding that such Employee subsequently becomes an Officer or Director or the beneficial owner of more than 5% of the outstanding Common Stock. An Optionee may be granted more than one Option under this Plan. 

6.          Terms and Conditions of Options. The Board will determine the provisions, terms and conditions of each Option including, but not limited to, the vesting schedule, the number of shares of Common Stock subject to the Option, the exercise price of the Option, the period during which the Option may be exercised, repurchase provisions, rights of first refusal, forfeiture provisions, methods of payment, and all other terms and conditions of the Option, subject to the following:

           (a)          Form of Option Grant. Each Option granted under the Plan will be evidenced by a written Option Agreement in such form (which need not be the same for each Optionee) as the Board from time to time approves.

           (b)          Date of Grant. The date of grant of an Option will be the date on which the Board authorizes such Option unless otherwise specified by the Board. The Option Agreement evidencing the Option will be delivered to the Optionee with a copy of the Plan and other relevant Option documents, within a reasonable time after the date of grant.

           (c)          Exercise Price. The exercise price of an Option will be not less than 100% of the Fair Market Value of the shares of Common Stock on the date of grant of the Option.

           (d)          Exercise Period. Options will be exercisable within the time or times or upon the event or events determined by the Board and set forth in the Option Agreement; provided, however, that no Option will be exercisable before one year from the date of grant or after the expiration of ten (10) years from the date of grant of the Option.

           (e)          Transferability of Options. Options granted under the Plan, and any interest therein, will not be transferable or assignable by the Optionee, and may not be made subject to execution, attachment or similar process, otherwise than by will or by the laws of descent and distribution, and will be exercisable during the lifetime of the Optionee only by the Optionee, or by the Optionee's guardian or legal representative if the Optionee is legally incompetent; provided, that the Optionee may, however, designate persons who or which may exercise the Optionee's Options following the Optionee's death. Notwithstanding the preceding sentence, Options held by an Optionee may be transferred to such family members, family trusts and family partnerships as the Board, in its sole discretion, may approve at the time of the grant of such Option and as provided for in the Optionee's Option Agreement.

           (f)          cquisitions and Other Transactions. The Board may, from time to time, assume outstanding options granted by another company, whether in connection with an acquisition of such other company or otherwise, by either (i) granting an Option under the Plan in replacement of the option assumed by the Company, or (ii) treating the assumed option as if it had been granted under the Plan if the terms of such assumed option could be applied to an Option granted under the Plan. Such assumption will be permissible if the holder of the assumed option would have been eligible to be granted an Option hereunder if the other company had applied the rules of this Plan to such grant. Notwithstanding the foregoing provisions of Section 6(c), in the case of an Option issued or assumed pursuant to this Section 6(f), the exercise price for the Option shall be determined in accordance with the principles of section 424(a) of the Code.

7.          Exercise of Options.

           (a)          Notice. Options may be exercised only by delivery to the Company of a written exercise agreement approved by the Board (which need not be the same for each Optionee), stating the number of shares of Common Stock being purchased, the restrictions imposed on the shares of Common Stock, if any, and such representations and agreements regarding the Optionee's investment intent and access to information and other matters, if any, as may be required by the Company to comply with applicable securities laws, or as may be deemed appropriate by the Company in connection with the issuance of shares of Common Stock upon exercise of the Option, together with payment in full of the exercise price for the number of shares of Common Stock being purchased.

           (b)          Payment. Payment for the shares of Common Stock to be exercised under an Option may be made in cash (by check) or, where approved by the Board in its sole discretion at the time of grant and where permitted by law: (i) if a public market for the Common Stock exists, through a "same day sale" commitment from the Optionee and a broker-dealer that is a member of the National Association of Securities Dealers, Inc. (an "NASD Dealer") whereby the Optionee irrevocably elects to exercise the Option and to sell a portion of the shares of Common Stock so purchased to pay for the exercise price and whereby the NASD Dealer irrevocably commits upon receipt of such shares of Common Stock to forward the exercise price directly to the Company; (ii) if a public market for the Common Stock exists, through a "margin" commitment from the Optionee and an NASD Dealer whereby the Optionee irrevocably elects to exercise the Option and to pledge the shares of Common Stock so purchased to the NASD Dealer in a margin account as security for a loan from the NASD Dealer in the amount of the exercise price, and whereby the NASD Dealer irrevocably commits upon receipt of such shares of Common Stock to forward the exercise price directly to the Company; or (iii) by any combination of the foregoing.

           (c)          Withholding Taxes. Prior to issuance of the shares of Common Stock upon exercise of an Option, the Optionee will pay or make adequate provision acceptable to the Board for the satisfaction of the statutory minimum prescribed amount of any federal or state income or other tax withholding obligations of the Company, if applicable. Upon exercise of an Option, the Company shall withhold or collect from the Optionee an amount sufficient to satisfy such tax withholding obligations.

           (d)          Expiration. An Option may not be exercised after the expiration date set forth in the Option Agreement.

           (e)          Exercise of Option Following Termination of Continuous Service.

                    (i)          n Option may be exercised following the termination of an Optionee's Continuous Service only to the extent provided in the Option Agreement.

                    (ii)          Where the Option Agreement permits an Optionee to exercise an Option following the termination of the Optionee's Continuous Service for a specified period, the Option shall terminate to the extent not exercised on the last day of the specified period or the last day of the original term of the Option, whichever occurs first.

                    (iii)          The Board will have discretion to determine whether the Continuous Service of an Optionee has terminated and the effective date on which such Continuous Service terminated and whether the Optionee's Continuous Service terminated as a result of the Disability of the Optionee.

           (f)          Limitations on Exercise.

                    (i)          The Board may specify a reasonable minimum number of shares of Common Stock or a percentage of the shares subject to an Option that may be purchased on any exercise of an Option; provided, that such minimum number will not prevent Optionee from exercising the full number of shares of Common Stock as to which the Option is then exercisable.

                    (ii)          The obligation of the Company to issue any shares of Common Stock pursuant to the exercise of any Option will be subject to the condition that such exercise and the issuance and delivery of such shares pursuant thereto comply with the Securities Act, all applicable state securities laws and the requirements of any stock exchange or national market system upon which the shares of Common Stock may then be listed or quoted, as in effect on the date of exercise. The Company will be under no obligation to register any resale of shares of Common Stock with the Securities and Exchange Commission or to effect compliance with the registration, qualification or listing requirements of any state securities laws or stock exchange or national market system with respect to any such resale of the shares of Common Stock, and the Company will have no liability for any inability or failure to do so.

8.          Modification, Extension And Renewal of Options. The Board will have the power to modify, extend or renew outstanding Options and to authorize the grant of new Options in substitution therefor, provided that any such action may not, without the written consent of any Optionee, impair any rights under any Option previously granted to such Optionee.

9.          Privileges of Stock Ownership. No Optionee will have any of the rights of a stockholder with respect to any shares of Common Stock subject to an Option until such Option is properly exercised and the shares are issued and delivered to the Optionee, as evidenced by an appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company. No adjustment will be made for dividends or distributions or other rights for which the record date is prior to such date of issuance and delivery, except as provided in the Plan.

10.          djustment Upon Changes in Capitalization and Corporate Events.

           (a)          Capital Adjustments. The number of shares of Common Stock covered by each outstanding Option granted under the Plan and the Option price may be adjusted to reflect, as deemed appropriate by the Board, any increase or decrease in the number of shares of Common Stock resulting from a stock dividend, stock split, reverse stock split, combination, reclassification or similar change in the capital structure of the Company without receipt of consideration, subject to any required action by the Board or the stockholders of the Company and compliance with applicable securities laws; provided, however, that a fractional share will not be issued upon exercise of any Option, and either any fraction of a share of Common Stock that would have resulted will be cashed out at Fair Market Value or the number of shares of Common Stock issuable under the Option will be rounded up to the nearest whole number, as determined by the Board.

           (b)          Dissolution or Liquidation. The Board shall notify the Optionee at least twenty (20) days prior to any proposed dissolution or liquidation of the Company. Unless provided otherwise in an individual Option Agreement, to the extent that an Option has not been previously exercised, such Option shall terminate immediately prior to consummation of such dissolution or liquidation.

           (c)          Merger, Asset Sale and Change in Control. If, during the effectiveness of the Plan (i) the Company consummates a merger, consolidation, share exchange, or reorganization with another corporation or other legal entity and, as a result of such merger, consolidation, share exchange, or reorganization, less than a majority of the combined voting power of the outstanding securities of the surviving entity (whether the Company or another entity) immediately after such transaction is held in the aggregate by the holders of securities of the Company that were entitled to vote generally in the election of directors of the Company (or its successor) ("Voting Stock") immediately before such transaction, or (ii) when pursuant to a tender offer or exchange offer for securities of the Company, or in any other manner, any person or group within the meaning of the Exchange Act, as amended (excluding any employee benefit plan, or related trust, sponsored or maintained by the Company or any of its Affiliates), acquires beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of more than 50% of the Voting Stock (the surviving corporation or purchaser described in this Section 10(c), the "Purchaser", and any such event described in this Section 10(c) a "Change in Control"), the Purchaser shall either assume the obligations of the Company under the outstanding Options or convert the outstanding Options into options of at least equal value as to stock of the Purchaser.

In the event such Purchaser refuses to assume or substitute Options, as provided above, pursuant to a Change in Control event, each Option which is at the time outstanding under the Plan shall, (i) except as provided otherwise in an individual Option Agreement, automatically become fully vested and exercisable immediately prior to the specified effective date of such Change in Control, for all of the shares of Common Stock at the time represented by such Option, and (ii) notwithstanding any contrary terms in the Option Agreement, expire on a date at least twenty (20) days after the Board gives written notice to Optionees specifying the terms and conditions of such termination.

11.          Administration. This Plan shall be administered by the Board. As such, grants of Options hereunder are intended to qualify for exemption from Section 16 of the Securities Act pursuant to Rule 16b-3. The Board shall interpret the Plan and any Options granted pursuant to the Plan and shall prescribe such rules and regulations in connection with the operation of the Plan as it determines to be advisable for the administration of the Plan. The Board may rescind and amend its rules and regulations from time to time. The interpretation by the Board of any of the provisions of this Plan or any Option granted under this Plan will be final and binding upon the Company and all persons having an interest in any Option or any shares of Common Stock purchased pursuant to an Option.

12.          Effect of Plan. Neither the adoption of the Plan nor any action of the Board shall be deemed to give any person any right to be granted an Option to purchase Common Stock or any other rights except as may be evidenced by the Option Agreement, or any amendment thereto, duly authorized by the Board and executed on behalf of the Company, and then only to the extent and on the terms and conditions expressly set forth therein. The existence of the Plan and the Options granted hereunder shall not affect in any way the right of the Board or the stockholders of the Company to make or authorize any adjustment, recapitalization, reorganization or other change in the Company's capital structure or its business, any merger or consolidation of the Company, any issue of bonds, debentures, or shares of preferred stock ahead of or affecting the Common Stock or the rights thereof, the dissolution or liquidation of the Company or any sale or transfer of all or any part of the Company's assets or business, or any other corporate act or proceeding by or for the Company. Nothing contained in the Plan or in any Option Agreement or in other Option-related documents shall confer upon any Employee any right with respect to such person's Continuous Service or interfere or affect in any way with the right of the Company or an Affiliate to terminate such person's Continuous Service at any time, with or without cause.

13.          No Effect on Retirement and Other Benefit Plans. Except as specifically provided in a retirement or other benefit plan of the Company or an Affiliate, Options shall not be deemed compensation for purposes of computing benefits or contributions under any retirement plan of the Company or an Affiliate, and shall not affect any benefits under any other benefit plan of any kind or any benefit plan subsequently instituted under which the availability or amount of benefits is related to level of compensation. The Plan is not a "Retirement Plan" or "Welfare Plan" under the Employee Retirement Income Security Act of 1974, as amended.

14.          mendment or Termination of Plan. The Board in its discretion may at any time terminate or amend the Plan in any respect, including amendment of any form of Option Agreement, exercise agreement or instrument to be executed pursuant to the Plan. No Option may be granted after termination of the Plan. Any amendment or termination of the Plan shall not affect Options previously granted, and such Options shall remain in full force and effect as if the Plan had not been amended or terminated, unless mutually agreed otherwise in a writing signed by the Optionee and the Company.

15.          Effective Date and Term of Plan. The Plan shall become effective upon its adoption by the Board. It shall continue in effect for a term of ten (10) years from its adoption date, unless sooner terminated by action of the Board. Subject to the terms and conditions of this Plan and applicable laws, Options may be granted under the Plan upon its becoming effective.

16.          Severability and Reformation. The Company intends all provisions of the Plan to be enforced to the fullest extent permitted by law. Accordingly, should a court of competent jurisdiction determine that the scope of any provision of the Plan is too broad to be enforced as written, the court should reform the provision to such narrower scope as it determines to be enforceable. If, however, any provision of the Plan is held to be wholly illegal, invalid, or unenforceable under present or future law, such provision shall be fully severable and severed, and the Plan shall be construed and enforced as if such illegal, invalid, or unenforceable provision were never a part hereof, and the remaining provisions of the Plan shall remain in full force and effect and shall not be affected by the illegal, invalid, or unenforceable provision or by its severance.

17.          Governing Law. The Plan shall be construed and interpreted in accordance with the laws of the State of Delaware.

18.          Interpretive Matters. Whenever required by the context, pronouns and any variation thereof shall be deemed to refer to the masculine, feminine, or neuter, and the singular shall include the plural and visa versa. The term "including" does not denote or imply any limitation. The captions and headings used in the Plan are inserted for convenience and shall not be deemed a part of the Plan for construction or interpretation.

 

	
Award Number:
	
 

	
	

SEITEL, INC.

2001 NON-OFFICER STOCK OPTION PLAN

STOCK OPTION AGREEMENT

	
Optionee:
	

	
	

	
Address:
	

	
	

	
	

	
	

	
	

	
	

	
Total Shares Subject to Option
	

	
	

	
Exercise Price Per Share:
	

	
	

	
Date of Grant
	

	
	

	
Post-Termination Exercise Period:
	
[90 Days or other applicable period]

	
	

	
Expiration Date:
	

	
	

1.          Grant of Option. Seitel, Inc., a Delaware corporation (the "Company"), hereby grants to the Optionee named above an option (the "Option") to purchase the total number of shares of Common Stock set forth above (the "Shares") at the exercise price per share set forth above (the "Exercise Price"), in accordance with this Option Agreement and subject to the terms and conditions of the Seitel, Inc. 2001 Non-officer Stock Option Plan, as amended from time to time (the "Plan"), which are incorporated herein by reference. The Option is not intended to qualify as an "incentive stock option" within the meaning of Section 422 of the Code. Unless otherwise defined herein, capitalized terms used herein shall have the meanings ascribed to them in the Plan.

2.          Vesting. Subject to the terms and conditions of the Plan and this Option Agreement the Option shall vest and become exercisable in the following cumulative installments, as follows:

          [(a) One-third (1/3) of the Shares shall become exercisable at any time on or after the first anniversary of the date of grant set forth above (the "Date of Grant");

          (b) An additional one-third (1/3) of the Shares shall become exercisable at any time on or after the second anniversary of the Date of Grant; and

          (c) The remaining Shares shall become exercisable at any time on or after the third anniversary of the Date of Grant.]

If an installment covers a fractional Share, such installment will be rounded to the next highest Share, except the final installment, which will be for the balance of the total Shares; provided, that the Optionee shall in no event be entitled under the Option to purchase a number of shares of the Common Stock greater than the "Total Shares Subject to Option" indicated above.

3.          Exercise of Option.

          (a)          Right to Exercise. The Option shall be exercisable in accordance with the vesting provisions contained in Section 2 of this Option Agreement and with the other applicable provisions of the Plan and this Option Agreement. The Option shall be subject to the provisions of Section 10 of the Plan relating to the exercisability or termination of the Option in the event of a Change in Control or in the event of a dissolution or liquidation of the Company.

          (b)          Method of Exercise. The Option shall be exercisable only by delivery to the Company of an executed Stock Option Exercise Agreement (the "Exercise Agreement") in the form attached hereto as Exhibit A, or in such other form approved by the Board, which shall state the Optionee's election to exercise the Option, the whole number of Shares in respect of which the Option is being exercised, and such other provisions as may be required by the Board. The Exercise Agreement shall be signed by the Optionee and shall be delivered to the Company in person or by courier, by certified mail, or by such other method as may be permitted by the Board, accompanied (in any case) by payment of the Exercise Price for each Share covered by the Exercise Agreement, as described in Section 4 of this Option Agreement. The Option shall be deemed to be exercised upon receipt by the Company of such written Exercise Agreement accompanied by the Exercise Price.

          (c)          Issuance of Shares. If the Exercise Agreement and payment are in form and substance satisfactory to counsel for the Company and Optionee or any other person permitted to exercise the Option has complied with Section 5 of this Option Agreement, the Company shall issue or cause the issuance of, in the name of the Optionee or Optionee's legal representative, the Shares purchased by such exercise of the Option.

4.          Method of Payment. The Optionee's delivery of the signed Exercise Agreement to exercise the Option (in whole or in part) shall be accompanied by full payment of the Exercise Price for the Shares being purchased. Payment for the Shares may be made in cash (by check) or, at the election of the Optionee and where permitted by law: (i) if a public market for the Company's stock exists, through a "same day sale" commitment from the Optionee and a broker-dealer that is a member of the National Association of Securities Dealers (an "NASD Dealer") whereby the Optionee irrevocably elects to exercise the Option and to sell a portion of the Shares so purchased to pay for the exercise price and whereby the NASD Dealer irrevocably commits upon receipt of such Shares to forward the exercise price directly to the Company; (ii) if a public market for the Company's stock exists, through a "margin" commitment from the Optionee and an NASD Dealer whereby the Optionee irrevocably elects to exercise the Option and to pledge the Shares so purchased to the NASD Dealer in a margin account as security for a loan from the NASD Dealer in the amount of the exercise price, and whereby the NASD Dealer irrevocably commits upon receipt of such Shares to forward the exercise price directly to the Company; or (iii) by any combination of the foregoing.

5.          Tax Withholding Obligations. No Shares will be delivered to the Optionee or any other person permitted to exercise the Option pursuant to the exercise of the Option until the Optionee or such other person has made arrangements acceptable to the Board for the satisfaction of the minimum prescribed applicable income tax, employment tax, and social security tax withholding obligations, including obligations incident to the receipt of Shares. Upon exercise of the Option, the Company or the Optionee's employer may offset or withhold (from any amount owed by the Company or the Optionee's employer to the Optionee) or collect from the Optionee or such other person an amount sufficient to satisfy such tax obligations and/or the employer's withholding obligations.

6.          Expiration. Except as otherwise determined by the Board, the Option may be exercised no later than the Expiration Date set forth above or such earlier date as otherwise provided in this Option Agreement. If no earlier date within which the Option must exercised applies, the Option shall expire on the Expiration date

7.          Termination of Continuous Service. Except as set forth in paragraphs (a), (b), and (c) below, if an Optionee's Continuous Service terminates, the Optionee may exercise the Option to the extent he or she was otherwise entitled to exercise the Option on the date of termination of Continuous Service (the "Termination Date") only during the Post-Termination Exercise Period set forth above. 

          (a)          Termination for Cause. Unless the Board otherwise determines, if the Optionee's Continuous Service is terminated either (i) by the Company or an Affiliate for Cause, or (ii) by the Optionee without compliance with, or without having any right to do so under, the terms of any then effective written employment agreement between the Optionee and the Company or such Affiliate, then the Optionee's right to exercise the Option shall immediately terminate on the Termination Date. For purposes of this Option Agreement, the term "Cause" for termination by the Company or an Affiliate of the Optionee's Continuous Service shall have the meaning set forth in a then-effective written employment agreement between the Optionee and the Company or such Affiliate or, in the absence of such a definition in a then-effective written employment agreement (in the determination of the Board), shall mean the Optionee's (i) willful and continued failure to substantially perform his or her duties (other than as a result of a total or partial incapacity due to physical or mental illness); (ii) proven dishonesty in the performance of his or her duties; (iii) conviction or a plea of guilty or nolo contendere to a felony or crime of moral turpitude; or (iv) alcohol or drug abuse. The Board shall have discretion for the purposes of this Option Agreement to determine whether any termination of Continuous Service by the Optionee is in compliance with, or is in accordance with any right to terminate, under the terms of a then-effective written employment agreement.

          (b)          Disability of Optionee. If the Optionee's Continuous Service terminates as a result of his or her Disability, the Optionee may exercise the Option to the extent he or she was otherwise entitled to exercise it on the Termination Date for a period of twenty-four (24) months after the Termination Date (but in no event later than the Expiration Date).

          (c)          Death of Optionee. In the event of the termination of the Optionee's Continuous Service as a result of his or her death, or in the event of the Optionee's death during the Post-Termination Exercise Period or during the twenty-four (24)-month period following the Optionee's termination of Continuous Service as a result of his or her Disability, the Optionee's estate, or a person who acquired the right to exercise the Option by bequest or inheritance, may exercise the Option, but only to the extent the Optionee could exercise the Option at the date of his or her death, within twenty-four (24) months from the date of death (but in no event later than the Expiration Date).

If the Optionee is terminated for Cause, or if the Optionee does not exercise the Option during the Post-Termination Exercise Period, or if the Optionee does not exercise the option within the times specified in paragraphs (b) and (c) above, the Option shall terminate, respectively, on the Termination Date, or on the last day of the Post-Termination Exercise Period, or on the last day of the periods specified in paragraph (b) and (c) above, even though those dates are before the Expiration Date. The provisions of this Section 7 shall in no event extend the Expiration Date.

8.          Nontransferability of Option. The Option may not be transferred in any manner other than by will or by the law of descent and distribution and may be exercised during the lifetime of the Optionee only by the Optionee, or by the Optionee's guardian or legal representative if the Optionee is legally incompetent; provided, that the Optionee may, however, designate persons who or which may exercise the Option following the Optionee's death. In addition, the Optionee may transfer the Option without consideration to a member or members of the Optionee's immediate family and/or to a trust or partnership established for the benefit of an immediate family member or members. For this purpose, the term "immediate family member" means the Optionee's spouse, parents, children, stepchildren and grandchildren.

9.          Tax Consequences. Set forth below is a brief summary, as of the date of the Option Agreement, of some of the federal tax consequences of exercise of the Option and disposition of the Shares. THIS SUMMARY IS NECESSARILY INCOMPLETE, AND THE TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE. THE OPTIONEE SHOULD CONSULT A TAX ADVISER BEFORE EXERCISING THE OPTION OR DISPOSING OF THE SHARES.

          (a)          Exercise of Non-Qualified Stock Option. There may be a regular federal income tax liability upon the exercise of the Option. The Optionee will be treated as having received compensation income (taxable at ordinary income tax rates) equal to the excess, if any, of the Fair Market Value of the Shares on the date of exercise over the Exercise Price. If the Optionee is an Employee or former Employee, the Company will be required to withhold from the Optionee's compensation or collect from the Optionee and pay to the applicable taxing authorities an amount equal to a percentage of this compensation income at the time of exercise.

          (b)          Disposition of Shares. In the case of a Non-Qualified Stock Option, if the Shares are held for at least one year before disposition, any gain in excess of the Fair Market Value of the Shares on the date of exercise will be treated as long-term capital gain for federal income tax purposes.

10.           Entire Agreement, Governing Law. The Plan and the Option Agreement (with the exercise Agreement, if the Option is exercised) constitute the entire agreement of the Company and the Optionee (collectively the "Parties") with respect to the subject matter hereof and supersede in their entirety all prior undertakings and agreements of the Parties with respect to the subject matter hereof, and may not be modified adversely to the Optionee's interest except by means of a writing signed by the Parties. Nothing in the Plan and the Option Agreement (except as expressly provided therein or herein) is intended to confer any rights or remedies on any person other than the Parties. The Plan and the Option Agreement are to be construed in accordance with and governed by the internal laws of the State of Delaware without giving effect to any choice of law rule that would cause the application of the laws of any jurisdiction other than the internal laws of the State of Delaware, to the rights and duties of the Parties. Should any provision of the Plan or the Option Agreement be determined by a court of law to be illegal or unenforceable, such provision shall be enforced to the fullest extent allowed by law and the other provisions shall nevertheless remain effective and shall remain enforceable.

11.          Interpretive Matters. Whenever required by the context, pronouns and any variation thereof shall be deemed to refer to the masculine, feminine, or neuter, and the singular shall include the plural, and vice versa. The term "include" or "including" does not denote or imply any limitation. The term "business day" means any Monday through Friday other than such a day on which banks are authorized to be closed in the State of Texas. The captions and headings used in this Option Agreement are inserted for convenience and shall not be deemed a part of the Option or this Option Agreement for construction or interpretation.

12.          Dispute Resolution. The provisions of this Section 12 shall be the exclusive means of resolving disputes of the Parties (including any other persons claiming any rights or having any obligations through the Company or the Optionee) arising out of or relating to the Plan and this Option Agreement (including the Exercise Agreement, if the Option is exercised). The Parties shall attempt in good faith to resolve any disputes arising out of or relating to the Plan and this Option Agreement (including the Exercise Agreement, if the Option is exercised) by negotiation between individuals who have authority to settle the controversy. Negotiations shall be commenced by either Party by a written statement of the Party's position and the name and title of the individual who will represent the Party. Within thirty (30) days of the written notification, the Parties shall meet at a mutually acceptable time and place, and thereafter as often as they reasonably deem necessary, to resolve the dispute. If the dispute has not been resolved by negotiation, the Parties agree that any suit, action, or proceeding arising out of or relating to the Plan or this Option Agreement shall be brought in the United States District Court for the Southern District of Texas located in Houston, Texas (or should such court lack jurisdiction to hear such action, suit or proceeding, in a Texas state court in Harris County, Texas) and that the Parties shall submit to the jurisdiction of such court. The Parties irrevocably waive, to the fullest extent permitted by law, any objection a Party may have to the laying of venue for any such suit, action or proceeding brought in such court. THE PARTIES ALSO EXPRESSLY WAIVE ANY RIGHT THEY HAVE OR MAY HAVE TO A JURY TRIAL OF ANY SUCH SUIT, ACTION OR PROCEEDING. If any one or more provisions of this Section 12 shall for any reason be held invalid or unenforceable, it is the specific intent of the Parties that such provisions shall be modified to the minimum extent necessary to make it or its application valid and enforceable.

13.          Notice. Any notice or other communication required or permitted hereunder shall be given in writing and shall be deemed given, effective, and received upon prepaid delivery in person or by courier or upon the earliest of delivery or the third business day after deposit in the United States mail if sent by certified mail, with postage and fees prepaid, addressed to the other Party at its address as shown beneath its signature in this Option Agreement, or to such other address as such Party may designate in writing from time to time by notice to the other Party in accordance with this Section 13.

	
SEITEL, INC.

	
 
	
 

	
 
	
 

	
By:
	
 

	
	

	
Title:
	
 

	
	

	
Address:
	
 

	
	

THE OPTIONEE ACKNOWLEDGES AND AGREES THAT THE SHARES SUBJECT TO THE OPTION SHALL VEST, IF AT ALL, ONLY DURING THE PERIOD OF THE OPTIONEE'S CONTINUOUS SERVICE (NOT THROUGH THE ACT OF BEING HIRED OR BEING GRANTED THE OPTION OR ACQUIRING SHARES HEREUNDER). THE OPTIONEE FURTHER ACKNOWLEDGES AND AGREES THAT NOTHING IN THIS OPTION AGREEMENT OR THE PLAN SHALL CONFER UPON THE OPTIONEE ANY RIGHT WITH RESPECT TO FUTURE AWARDS OR CONTINUATION OF THE OPTIONEE'S CONTINUOUS SERVICE, NOR SHALL IT INTERFERE IN ANY WAY WITH THE OPTIONEE'S RIGHT OR THE COMPANY'S RIGHT TO TERMINATE OPTIONEE'S CONTINUOUS SERVICE, WITH OR WITHOUT CAUSE, AND WITH OR WITHOUT NOTICE. THE OPTIONEE ACKNOWLEDGES THAT UNLESS THE OPTIONEE HAS A WRITTEN EMPLOYMENT AGREEMENT WITH THE COMPANY TO THE CONTRARY, THE OPTIONEE'S STATUS IS AT WILL.

The Optionee acknowledges receipt of a copy of the Plan, and represents that he or she is familiar with the terms and provisions thereof, and hereby accepts this Option subject to all of the terms and provisions hereof and thereof. The Optionee has reviewed this Option Agreement, the Plan, and the Exercise Agreement in their entirety, has had an opportunity to obtain the advice of counsel prior to executing this Option Agreement, and fully understands all provisions of this Option Agreement, the Plan and the Exercise Agreement. The Optionee hereby agrees that all disputes arising out of or relating to this Option Agreement, the Plan and the Exercise Agreement shall be resolved in accordance with Section 12 of this Option Agreement. The Optionee further agrees to notify the Company upon any change in the residence address indicated in the Option Agreement. If the Optionee is married, the Optionee understands that his or her spouse must execute a consent in the form attached hereto as Exhibit B.

	
Dated:
	
 
	
 
	
Signed:
	
 

	
	
	
	
	

	
 
	
 
	
 
	
 
	
Optionee

	
 
	
 
	
 
	
Address
	
 

	
	
	
	
	

EXHIBIT A

SEITEL, INC.

2001 NON-OFFICER STOCK OPTION PLAN

STOCK OPTION EXERCISE AGREEMENT

This Exercise Agreement is made this _____ day of __________, 20_____ between Seitel, Inc. (the "Company"), and the optionee named below ("Optionee") pursuant to the Seitel, Inc. 2001 Non-officer Stock Option Plan (the "Plan"). Unless otherwise defined herein, the capitalized terms used in this Exercise Agreement shall have the meanings ascribed to them in the Plan and in the Option Agreement to which this Exercise Agreement relates.

	
Award Number:
	

	
	

	
Optionee:
	

	
	

	
Social Security Number:
	

	
	

	
Address:
	

	
	

	
	

	
	

	
	

	
	

	
Number of Shares Purchased:
	

	
	

	
Price Per Share:
	

	
	

	
Aggregate Purchase Price:
	

	
	

	
Date of Grant:
	

	
	

          Optionee hereby delivers to the Company the Aggregate Purchase Price set forth above, tothe extent permitted in the Option Agreement, as follows (as applicable, check and complete):

	
 
	
 
	
 
	
in cash in the amount of $__________ receipt of which is acknowledged by the Company;

	
	
	
	

	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
through a "same-day-sale" commitment, delivered herewith, from Optionee and the NASD 

	
	
	
	

	
 
	
 
	
 
	
Dealer named therein in the amount of $__________;

	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
through a "margin" commitment, delivered herewith, from Optionee and the NASD Dealer 

	
	
	
	

	
 
	
 
	
 
	
named therein in the amount of $__________.

The Company and Optionee hereby agree as follows:

1.          Purchase of Shares. On this date and subject to the terms and conditions of this Exercise Agreement, Optionee hereby exercises the Option granted in the Option Agreement between the Company and Optionee dated as of the Date of Grant set forth above, with respect to the Number of Shares Purchased set forth above of the Common Stock (the "Shares") at the Aggregate Purchase Price set forth above (the "Aggregate Purchase Price") equal to the Price Per Share set forth above (the "Purchase Price Per Share") multiplied by the Number of Shares Purchased set forth above. The term "Shares" refers to the Shares purchased under this Agreement and includes all securities received (a) in replacement of the Shares, and (b) as a result of stock dividends or stock splits in respect of the Shares.

2.          Representations of the Optionee. Optionee represents and warrants to the Company that Optionee has received, read and understood the Plan, the Option Agreement and this Exercise Agreement and agrees to abide by and be bound by their terms and conditions.

3.          Federal Restrictions on Transfer. Optionee understands that the Company is under no obligation to register any resale of the Shares and that an exemption may not be available or may not permit Optionee to resell or transfer any of the Shares in the amounts or at the times proposed by Optionee.

4.          Rights as Stockholder. Until the stock certificate evidencing the Shares is issued (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company), no right to vote or receive dividends or any other rights as a stockholder shall exist with respect to the Shares, notwithstanding the exercise of the Option. The Company shall issue (or cause to be issued) such stock certificate promptly after the Option is exercised. No adjustment will be made for a dividend or other right for which the record date is prior to the date the stock certificate is issued.

5.           Tax Withholding Obligations. The Optionee agrees to satisfy all applicable federal, state and local income, employment and other tax withholding obligations and herewith delivers to the Company the amount necessary, or has made arrangements acceptable to the Company, to satisfy such obligations as provided in the Plan and the Option Agreement.

6.          Tax Consequences. Optionee understands that optionee may suffer adverse tax consequences as a result of Optionee's purchase or disposition of the shares. Optionee represents that Optionee has consulted with any tax consultant(s) he or she deems advisable in connection with the purchase or disposition of the shares and that Optionee is not relying on the Company for any tax advice.

7.          Successors and Assigns. The Company may assign any of its rights under this Exercise Agreement, and this Exercise Agreement shall inure to the benefit of the successors and assigns of the Company. Subject to the restrictions on transfer herein set forth, this Exercise Agreement shall be binding upon the Optionee and his or her heirs, executors, administrators, successors and permitted assigns.

8.          Interpretive Matters. Whenever required by the context, pronouns and any variation thereof shall be deemed to refer to the masculine, feminine, or neuter, and the singular shall include the plural, and vice versa. The term "include" or "including" does not denote or imply any limitation. The captions and headings used in this Exercise Agreement are inserted for convenience and shall not be deemed a part of this Exercise Agreement for construction or interpretation.

9.          Dispute Resolution. The provisions of Section 12 of the Option Agreement shall be the exclusive means of resolving disputes arising out of or relating to this Exercise Agreement.

10.          Entire Agreement, Governing Law. This Exercise Agreement, with the Plan and the Option Agreement, constitute the entire agreement of the Parties with respect to the subject matter hereof and supersede in their entirety all prior undertakings and agreements of the Parties with respect to the subject matter hereof, and may not be modified adversely to the Optionee's interest except by means of a writing signed by the Parties. Nothing in this Exercise Agreement or in the Plan or the Option Agreement (except as expressly provided herein or therein) is intended to confer any rights or remedies on any person other than the Parties. This Exercise Agreement (like the Plan and the Option Agreement) is to be construed in accordance with and governed by the internal laws of the State of Delaware, without giving effect to any choice-of-law rule that would cause the application of the laws of any jurisdiction other than the internal laws of the State of Delaware to the rights and duties of the Parties. Should any provision of the Plan, the Option Agreement, or this Exercise Agreement be determined by a court of law to be illegal or unenforceable, such provision shall be enforced to the fullest extent allowed by law, and the other provisions shall nevertheless remain effective and shall remain enforceable.

11.          Notice. Any notice or other communication required or permitted hereunder shall be given in writing and shall be deemed given, effective, and received upon prepaid delivery in person or by courier or upon the earlier of delivery or the third business day after deposit in the United States mail if sent by certified mail, with postage and fees prepaid, addressed to the other Party at its address as shown beneath its signature in the Option Agreement, or to such other address as such Party may designate in writing from time to time by notice to the other Party in accordance with this Section 11.

12.          Further Instruments. Each Party agrees to execute such further instruments and to take such further action as may be necessary or reasonably appropriate to carry out the purposes and intent of this Exercise Agreement.

	
Submitted by:
	
 
	
 
	
Accepted by:
	
 

	
 
	
 
	
 
	
 
	
 

	
OPTIONEE:
	
 
	
 
	
SEITEL, INC.
	
 

	
 
	
 
	
 
	
 
	
 

	
	
	
	
	

	
 
	
Signature
	
 
	
By:
	
 

	
	
	
	
	

	
 
	
 
	
 
	
 
	
 

	
	
	
	
	

	
 
	
Print Name
	
 
	
Title:
	
 

	
	
	
	
	

	
 
	
 
	
 
	
 
	
 

	
Dated:
	
 
	
 
	
Dated:
	
 

	
	
	
	
	

	 	 	 	 	 

 

EXHIBIT B

SEITEL, INC.

2001 NON-OFFICER STOCK OPTION PLAN

CONSENT OF SPOUSE

I, ______________________________, spouse of ______________________________, have read and approve the foregoing Stock Option Agreement (the "Agreement"). In consideration of the Company's grant to my spouse of the right to purchase shares of Seitel, Inc. as set forth in the Agreement, I hereby appoint my spouse as my attorney-in-fact in respect to the exercise of any rights under the Agreement and agree to be bound by the provisions of the Agreement insofar as I may have any rights in said Agreement or any shares issued pursuant thereto under the applicable community property laws or similar laws relating to marital property in effect as of the date of the signing of the foregoing Agreement.

	
Dated:
	
 
	
 
	
 

	
	
	
	

	
	
	
	

	
 
	
 
	
 
	
Signature of Spouse

	
 
	
 
	
 
	
 

	
	
	
	

	
 
	
 
	
 
	
(Please print name)PURCHASE AGREEMENT

               Tractor Supply-Maryville, Tennessee

This AGREEMENT, entered into effective as of the 8th of May, 2001.

l.   PARTIES.  Seller  is  AEI  Real  Estate  Fund  85-A  Limited
Partnership  (herein called "Fund 85-A") which owns an  undivided
45.5847%  interest in the fee title to that certain real property
legally  described  in  the  attached Exhibit  "A"  (the  "Entire
Property").  Buyer is Donald B. Wood and Sue D. Wood, Trustees of
the Wood Family Trust dated 3/15/93, as amended 7/9/97 ("Buyer").
Seller wishes to sell and Buyer wishes to buy a portion as Tenant
in Common of Seller's interest in the Entire Property.

2. PROPERTY. The Property to be sold to Buyer in this transaction
consists    of   an   undivided   17.4026   percentage   interest
(hereinafter, simply the "Property") as Tenant in Common  in  the
Entire Property.

3.  PURCHASE  PRICE  .  The purchase price  for  this  percentage
interest in the Entire Property is $275,000.00 all cash.

4.  TERMS.  The purchase price for the Property will be  paid  by
Buyer as follows:

     (a)  When this agreement is executed, Buyer will pay  $5,000
     to Seller (which shall be deposited into escrow according to
     the  terms hereof) (the "First Payment"). The First  Payment
     will  be  credited against the purchase price  when  and  if
     escrow closes and the sale is completed.

     (b)  Buyer  will deposit the balance of the purchase  price,
     $270,000.00 (the "Second Payment") into escrow in sufficient
     time to allow escrow to close on the closing date.

5. CLOSING DATE.  Escrow shall close on or before May 18, 2001.

6.  DUE  DILIGENCE. Buyer will have until the expiration  of  the
fifth  business day (The "Review Period") after delivery of  each
of  following items, to be supplied by Seller, to conduct all  of
its  inspections  and due diligence and satisfy itself  regarding
each  item, the Property, and this transaction.  Buyer agrees  to
indemnify and hold Seller harmless for any loss or damage to  the
Entire  Property or persons caused by Buyer or its agents arising
out of such physical inspections of the Entire Property.

     (a)   The  original  and  one  copy  of  a  title  insurance
     commitment  for  an  Owner's  Title  insurance  policy  (see
     paragraph 8 below).

     (b)  A  copy  of  a Certificate of Occupancy or  other  such
     document  certifying completion and granting  permission  to
     permanently  occupy the improvements on the Entire  Property
     as are in Seller's possession.

Buyer Inital: /s/ DBW /s/ SDW
Purchase Agreement for Tractor Supply-Maryville, TN

     (c)  A  copy of an "as built" survey of the Entire  Property
     done concurrent with Seller's acquisition of the Property.

     (d) Lease (as further set forth in paragraph 11(a) below) of
     the Entire Property showing occupancy date, lease expiration
     date,  rent,  and  Guarantys, if any,  accompanied  by  such
     tenant  financial statements as may have been provided  most
     recently to Seller by the Tenant and/or Guarantors.

     It is a contingency upon Seller's obligations hereunder that
two  (2)  copies of the Co-Tenancy Agreement in the form attached
hereto duly executed by Buyer and AEI Real Estate Fund XV Limited
Partnership and dated on the escrow closing date be delivered  to
the Seller on the closing date.

      Buyer may cancel this agreement for ANY REASON in its  sole
discretion  by  delivering a cancellation notice, return  receipt
requested,  to Seller and escrow holder before the expiration  of
the  Review  Period. Such notice shall be deemed  effective  only
upon  receipt  by Seller.  If this Agreement is not cancelled  as
set forth above, the First Payment shall be non-refundable unless
Seller shall default hereunder.

      If  Buyer  cancels this Agreement as permitted  under  this
Section,  except  for  any  escrow  cancellation  fees  and   any
liabilities  under  the first paragraph  of  section  6  of  this
agreement  (which will survive), Buyer (after execution  of  such
documents   reasonably  requested  by  Seller  to  evidence   the
termination  hereof)  shall be returned its  First  Payment,  and
Buyer  will have absolutely no rights, claims or interest of  any
type  in  connection  with  the  Property  or  this  transaction,
regardless of any alleged conduct by Seller or anyone else.

      Unless this Agreement is canceled by Buyer pursuant to  the
terms  hereof, if Buyer fails to make the Second Payment,  Seller
shall   be  entitled  to  retain  the  First  Payment  and  Buyer
irrevocably will be deemed to be in default under this Agreement.
Seller  may, at its option, retain the First Payment and  declare
this Agreement null and void, in which event Buyer will be deemed
to  have canceled this Agreement and relinquish all rights in and
to  the  Property or Seller may exercise its rights under Section
14  hereof.   If  this Agreement is not canceled and  the  Second
Payment  is  made  when required, all of Buyer's  conditions  and
contingencies will be deemed satisfied.

7.  ESCROW. Escrow shall be opened by Seller and funds  deposited
in  escrow upon acceptance of this Agreement by both parties. The
escrow  holder  will  be a nationally-recognized  escrow  company
selected by Seller. A copy of this Agreement will be delivered to
the  escrow holder and will serve as escrow instructions together
with the escrow holder's standard instructions and any additional
instructions required by the escrow holder to clarify its  rights
and  duties  (and  the  parties agree to  sign  these  additional
instructions).  If  there  is any conflict  between  these  other
instructions and this Agreement, this Agreement will control.

Buyer Inital: /s/ DBW /s/ SDW
Purchase Agreement for Tractor Supply-Maryville, TN

8.   TITLE.  Closing will be conditioned on the  agreement  of  a
title  company selected by Seller to issue an Owner's  policy  of
title  insurance, dated as of the close of escrow, in  an  amount
equal  to  the  purchase  price, insuring  that  Buyer  will  own
insurable  title  to  the Property subject  only  to:  the  title
company's  standard exceptions;  current real property taxes  and
assessments;  survey  exceptions;  the  rights  of   parties   in
possession pursuant to the lease defined in paragraph  11  below;
all  matters of public record; and other items disclosed to Buyer
during the Review Period.

      Buyer shall be allowed five (5) days after receipt of  said
commitment  for examination and the making of any  objections  to
marketability thereto, said objections to be made in  writing  or
deemed  waived.  If any objections are so made, the Seller  shall
be  allowed eighty (80) days to make such title marketable or  in
the  alternative  to  obtain  a commitment  for  insurable  title
insuring over Buyer's objections.  If Seller shall decide to make
no  efforts to make title marketable, or is unable to make  title
marketable or obtain insurable title, (after execution  by  Buyer
of  such documents reasonably requested by Seller to evidence the
termination  hereof) Buyer's First Payment shall be returned  and
this Agreement shall be null and void and of no further force and
effect.  Seller has no obligation to spend any funds or make  any
effort to satisfy Buyer's objections, if any.

      Pending  satisfaction of Buyer's objections,  the  payments
hereunder  required shall be postponed, but upon satisfaction  of
Buyer's objections and within ten (10) days after written  notice
of  satisfaction of Buyer's objections to the Buyer, the  parties
shall perform this Agreement according to its terms.

9.   CLOSING COSTS.  Seller will pay one-half of escrow fees, the
cost  of  the  title  commitment and  any  brokerage  commissions
payable.   The  Buyer  will pay the cost of  issuing  a  Standard
Owners  Title Insurance Policy in the full amount of the purchase
price,  if  Buyer shall decide to purchase the same.  Buyer  will
pay  all  recording fees, transfer taxes and clerk's fees imposed
upon the recording of the deed, one-half of the escrow fees,  and
the cost of an update to the Survey in Sellers possession (if  an
update  is  required  by Buyer.)  Each party  will  pay  its  own
attorney's fees and costs to document and close this transaction.

10.  REAL ESTATE TAXES, SPECIAL ASSESSMENTS AND PRORATIONS.

     (a)  Because the Entire Property (of which the Property is a
     part) is subject to a triple net lease (as further set forth
     in  paragraph 11(a)(i), the parties acknowledge  that  there
     shall  be no need for a real estate tax proration.  However,
     Seller  represents  that to the best of its  knowledge,  all
     real  estate  taxes and installments of special  assessments
     due  and  payable in all years prior to the year of  Closing
     have been paid in full.  Unpaid real estate taxes and unpaid
     levied and pending special assessments existing on the  date
     of  Closing shall be the responsibility of Buyer and  Seller
     in   proportion  to  their  respective  Tenant   in   Common
     interests,  pro-rated, however, to the date of  closing  for
     the   period   prior  to  closing,  which   shall   be   the
     responsibility of Seller if Tenant shall not pay  the  same.
     Seller  and  Buyer  shall likewise pay  all  taxes  due  and
     payable   in   the  year  after  Closing  and   any   unpaid
     installments  of special assessments payable  therewith  and

Buyer Inital: /s/ DBW /s/ SDW
Purchase Agreement for Tractor Supply-Maryville, TN

     thereafter,  if  such  unpaid  levied  and  pending  special
     assessments and real estate taxes are not paid by any tenant
     of the Entire Property.

     (b)   All income and all operating expenses from the  Entire
     Property  shall be prorated between the parties and adjusted
     by them as of the date of Closing.  Seller shall be entitled
     to  all  income  earned  and shall be  responsible  for  all
     expenses  incurred prior to the date of Closing,  and  Buyer
     shall  be entitled to its proportionate share of all  income
     earned and shall be responsible for its proportionate  share
     of all operating expenses of the Entire Property incurred on
     and after the date of closing.

11.  SELLER'S REPRESENTATION AND AGREEMENTS.

     (a)  Seller represents and warrants as of this date that:

     (i)  Except for the Lease Agreement in existence between AEI
          Real  Estate Fund 85-A Limited Partnership and AEI Real
          Estate Fund XV Limited Partnership (as "Landlord")  and
          Tractor  Supply Company ("Tenant"), dated February  14,
          1996,  Seller  is  not  aware  of  any  leases  of  the
          Property.   The  above referenced lease agreement  also
          has a first right of refusal in favor of the Tenant  as
          set  forth in Article 34 of said lease agreement, which
          right  shall apply to any attempted disposition of  the
          property by Buyer after this transaction.

     (ii) It is not aware of any pending litigation or condemnation
          proceedings against the Property or Seller's interest in the
          Property.

     (iii)      Except  as previously disclosed to Buyer  and  as
          permitted in paragraph (b) below, Seller is not aware of any
          contracts Seller has executed that would be binding on Buyer
          after the closing date.

     (b)   Provided  that  Buyer performs  its  obligations  when
     required, Seller agrees that it will not enter into any  new
     contracts that would materially affect the Property  and  be
     binding  on  Buyer  after the Closing Date  without  Buyer's
     prior  consent,  which  will not be  unreasonably  withheld.
     However,  Buyer acknowledges that Seller retains  the  right
     both  prior to and after the Closing Date to freely transfer
     all or a portion of Seller's remaining undivided interest in
     the  Entire Property, provided such sale shall not  encumber
     the  Property being purchased by Buyer in violation  of  the
     terms hereof or the contemplated Co-Tenancy Agreement.

12.  DISCLOSURES.

     (a)   Seller  has not received any notice of  any  material,
     physical,  or  mechanical defects of  the  Entire  Property,
     including  without  limitation, the plumbing,  heating,  air
     conditioning, ventilating, electrical system. To the best of
     Seller's  knowledge without inquiry, all such items  are  in
     good  operating condition and repair and in compliance  with

Buyer Inital: /s/ DBW /s/ SDW
Purchase Agreement for Tractor Supply-Maryville, TN

     all  applicable  governmental, zoning, and  land  use  laws,
     ordinances,  regulations and requirements.  If Seller  shall
     receive any notice to the contrary prior to Closing,  Seller
     will inform Buyer prior to Closing.

     (b)   Seller  has not received any notice that the  use  and
     operation  of the Entire Property is not in full  compliance
     with  applicable building codes, safety, fire,  zoning,  and
     land use laws, and other applicable local, state and federal
     laws,  ordinances, regulations and requirements.  If  Seller
     shall  receive any notice to the contrary prior to  Closing,
     Seller will inform Buyer prior to Closing.

     (c)   Seller  knows  of no facts nor has  Seller  failed  to
     disclose  to  Buyer  any fact known to  Seller  which  would
     prevent  the  Tenant  from using and  operating  the  Entire
     Property after the Closing in the manner in which the Entire
     Property  has been used and operated prior to  the  date  of
     this  Agreement.  If Seller shall receive any notice to  the
     contrary prior to Closing, Seller will inform Buyer prior to
     Closing.

     (d)   Seller  has  not received any notice that  the  Entire
     Property is in violation of any federal, state or local law,
     ordinance, or regulations relating to industrial hygiene  or
     the  environmental conditions on, under, or about the Entire
     Property,   including,  but  not  limited  to,   soil,   and
     groundwater conditions.  To the best of Seller's  knowledge,
     there  is  no  proceeding  or inquiry  by  any  governmental
     authority   with  respect  to  the  presence  of   Hazardous
     Materials  on  the  Entire  Property  or  the  migration  of
     Hazardous Materials from or to other property.  Buyer agrees
     that  Seller will have no liability of any type to Buyer  or
     Buyer's  successors,  assigns, or affiliates  in  connection
     with  any  Hazardous Materials on or in connection with  the
     Entire  Property  either before or after the  Closing  Date,
     except such Hazardous Materials on or in connection with the
     Entire Property arising out of Seller's gross negligence  or
     intentional misconduct.  If Seller shall receive any  notice
     to  the contrary prior to Closing, Seller will inform  Buyer
     prior to Closing.

     (e)   BUYER AGREES THAT IT SHALL BE PURCHASING THE  PROPERTY
     IN  ITS  THEN PRESENT CONDITION, AS IS, WHERE IS, AND SELLER
     HAS  NO  OBLIGATIONS TO CONSTRUCT OR REPAIR ANY IMPROVEMENTS
     THEREON  OR TO PERFORM ANY OTHER ACT REGARDING THE PROPERTY,
     EXCEPT AS EXPRESSLY PROVIDED HEREIN.

     (f)    BUYER  ACKNOWLEDGES  THAT,  HAVING  BEEN  GIVEN   THE
     OPPORTUNITY  TO  INSPECT  THE  ENTIRE  PROPERTY   AND   SUCH
     FINANCIAL  INFORMATION ON THE LESSEE AND GUARANTORS  OF  THE
     LEASE AS BUYER OR ITS ADVISORS SHALL REQUEST, IF IN SELLER'S
     POSSESSION, BUYER IS RELYING SOLELY ON ITS OWN INVESTIGATION
     OF  THE  PROPERTY  AND  NOT ON ANY INFORMATION  PROVIDED  BY
     SELLER OR TO BE PROVIDED EXCEPT AS SET FORTH HEREIN.   BUYER
     FURTHER ACKNOWLEDGES THAT THE INFORMATION PROVIDED AND TO BE
     PROVIDED BY SELLER WITH RESPECT TO THE PROPERTY, THE  ENTIRE
     PROPERTY  AND  TO  THE LESSEE AND GUARANTORS  OF  LEASE  WAS
     OBTAINED  FROM A VARIETY OF SOURCES AND SELLER  NEITHER  (A)
     HAS  MADE INDEPENDENT INVESTIGATION OR VERIFICATION OF  SUCH
     INFORMATION,  OR  (B) MAKES ANY REPRESENTATIONS  AS  TO  THE
     ACCURACY  OR  COMPLETENESS  OF SUCH  INFORMATION  EXCEPT  AS

Buyer Inital: /s/ DBW /s/ SDW
Purchase Agreement for Tractor Supply-Maryville, TN

     HEREIN SET FORTH.  THE SALE OF THE PROPERTY AS PROVIDED  FOR
     HEREIN  IS  MADE  ON AN "AS IS" BASIS, AND  BUYER  EXPRESSLY
     ACKNOWLEDGES  THAT, IN CONSIDERATION OF  THE  AGREEMENTS  OF
     SELLER  HEREIN,  EXCEPT  AS OTHERWISE  SPECIFIED  HEREIN  IN
     PARAGRAPH 11(A) AND (B) ABOVE AND THIS PARAGRAPH 12,  SELLER
     MAKES NO WARRANTY OR REPRESENTATION, EXPRESS OR IMPLIED,  OR
     ARISING BY OPERATION OF LAW, INCLUDING, BUT NOT LIMITED  TO,
     ANY  WARRANTY  OF  CONDITION,  HABITABILITY,  TENANTABILITY,
     SUITABILITY  FOR  COMMERCIAL PURPOSES,  MERCHANTABILITY,  OR
     FITNESS  FOR  A  PARTICULAR  PURPOSE,  IN  RESPECT  OF   THE
     PROPERTY.

     The provisions (d) - (f) above shall survive Closing.

13.  CLOSING.

     (a)   Before  the  closing date, Seller  will  deposit  into
     escrow  an  executed special warranty deed warranting  title
     against  lawful  claims by, through, or under  a  conveyance
     from   Seller,  but  not  further  or  otherwise,  conveying
     insurable  title of the Property to Buyer,  subject  to  the
     exceptions contained in paragraph 8 above.

     (b)   On or before the closing date, Buyer will deposit into
     escrow:  the  balance  of the purchase price  when  required
     under  Section  4; any additional funds required  of  Buyer,
     (pursuant to this agreement or any other agreement  executed
     by  Buyer)  to  close escrow.  Both parties  will  sign  and
     deliver the Co-Tenancy Agreement, and deliver to the  escrow
     holder any other documents reasonably required by the escrow
     holder to close escrow.

     (c)   On  the  closing date, if escrow is in a  position  to
     close,  the  escrow  holder will: record  the  deed  in  the
     official  records  of  the  county  where  the  Property  is
     located;  cause  the title company to commit  to  issue  the
     title  policy; immediately deliver to Seller the portion  of
     the  purchase price deposited into escrow by cashier's check
     or  wire  transfer  (less debits and  prorations,  if  any);
     deliver  to  Seller  and Buyer a signed counterpart  of  the
     escrow  holder's certified closing statement  and  take  all
     other actions necessary to close escrow.

14.   DEFAULTS.  If Buyer defaults, Buyer will forfeit all rights
and  claims  and  Seller will be relieved of all obligations  and
will  be  entitled to retain all monies heretofore  paid  by  the
Buyer.   In  addition, Seller shall retain all remedies available
to Seller at law or in equity.

     If Seller shall default, Buyer irrevocably waives any rights
to file a lis pendens, a specific performance action or any other
claim,  action or proceeding of any type in connection  with  the
Property or this or any other transaction involving the Property,
and  will  not  do  anything to affect title to the  Property  or
hinder,  delay  or  prevent  any  other  sale,  lease  or   other
transaction involving the Property (any and all of which will  be
null  and void), unless: it has paid the First Payment, deposited
the  balance  of the Second Payment for the purchase  price  into
escrow, performed all of its other obligations and satisfied  all
conditions  under  this  Agreement, and unconditionally  notified
Seller  that it stands ready to tender full performance, purchase

Buyer Inital: /s/ DBW /s/ SDW
Purchase Agreement for Tractor Supply-Maryville, TN

the  Property and close escrow as per this Agreement,  regardless
of  any  alleged  default  or misconduct  by  Seller.   Provided,
however, that in no event shall Seller be liable for any  actual,
punitive, consequential or speculative damages arising out of any
default by Seller hereunder.

15.  BUYER'S REPRESENTATIONS AND WARRANTIES.

     a.  Buyer represents and warrants to Seller as follows:

     (i)   In  addition to the acts and deeds recited herein  and
     contemplated  to  be performed, executed, and  delivered  by
     Buyer, Buyer shall perform, execute and deliver or cause  to
     be  performed,  executed, and delivered at  the  Closing  or
     after  the  Closing,  any and all further  acts,  deeds  and
     assurances as Seller or the Title Company may require and be
     reasonable   in   order  to  consummate   the   transactions
     contemplated herein.

     (ii)   Buyer  has  all  requisite  power  and  authority  to
     consummate  the  transaction contemplated by this  Agreement
     and  has by proper proceedings duly authorized the execution
     and  delivery of this Agreement and the consummation of  the
     transaction contemplated hereby.

     (iii)   To  Buyer's  knowledge, neither  the  execution  and
     delivery  of  this  Agreement nor the  consummation  of  the
     transaction  contemplated  hereby  will  violate  or  be  in
     conflict with (a) any applicable provisions of law, (b)  any
     order  of  any  court or other agency of  government  having
     jurisdiction  hereof, or (c) any agreement or instrument  to
     which Buyer is a party or by which Buyer is bound.

16.  DAMAGES, DESTRUCTION AND EMINENT DOMAIN.

     (a)   If, prior to closing, the Property or any part thereof
     be  destroyed  or further damaged by fire, the elements,  or
     any cause, due to events occurring subsequent to the date of
     this Agreement to the extent that the cost of repair exceeds
     $10,000.00,  this Agreement shall become null and  void,  at
     Buyer's  option exercised, if at all, by written  notice  to
     Seller within ten (10) days after Buyer has received written
     notice  from Seller of said destruction or damage.   Seller,
     however,  shall  have  the right to  adjust  or  settle  any
     insured  loss  until  (i)  all contingencies  set  forth  in
     Paragraph 6 hereof have been satisfied, or waived; and  (ii)
     any  ten-day  period provided for above in this Subparagraph
     16a  for  Buyer  to  elect to terminate this  Agreement  has
     expired  or  Buyer has, by written notice to Seller,  waived
     Buyer's right to terminate this Agreement.  If Buyer  elects
     to  proceed  and  to  consummate the purchase  despite  said
     damage  or  destruction, there shall be no reduction  in  or
     abatement of the purchase price, and Seller shall assign  to
     Buyer the Seller's right, title, and interest in and to  all
     insurance  proceeds  (pro-rata in  relation  to  the  Entire
     Property) resulting from said damage or destruction  to  the
     extent  that the same are payable with respect to damage  to
     the  Property, subject to rights of any Tenant of the Entire
     Property.

Buyer Inital: /s/ DBW /s/ SDW
Purchase Agreement for Tractor Supply-Maryville, TN

     If  the cost of repair is less than $10,000.00, Buyer  shall
     be  obligated  to  otherwise  perform  hereinunder  with  no
     adjustment  to  the Purchase Price, reduction or  abatement,
     and  Seller shall assign Seller's right, title and  interest
     in and to all insurance proceeds pro-rata in relation to the
     Entire  Property,  subject to rights of any  Tenant  of  the
     Entire Property.

     (b)   If,  prior  to  closing, the  Property,  or  any  part
     thereof,  is  taken by eminent domain, this Agreement  shall
     become null and void, at Buyer's option.  If Buyer elects to
     proceed  and to consummate the purchase despite said taking,
     there  shall  be  no  reduction in,  or  abatement  of,  the
     purchase  price,  and  Seller  shall  assign  to  Buyer  the
     Seller's  right,  title, and interest in and  to  any  award
     made, or to be made, in the condemnation proceeding pro-rata
     in relation to the Entire Property, subject to rights of any
     Tenant of the Entire Property.

      In the event that this Agreement is terminated by Buyer  as
provided  above  in  Subparagraph 16a or 16b, the  First  Payment
shall  be immediately returned to Buyer (after execution by Buyer
of  such documents reasonably requested by Seller to evidence the
termination hereof).

17.  BUYER'S 1031 TAX FREE EXCHANGE.

      While  Seller  acknowledges that Buyer  is  purchasing  the
Property  as  "replacement property" to  accomplish  a  tax  free
exchange,   Buyer   acknowledges  that   Seller   has   made   no
representations,  warranties, or agreements to Buyer  or  Buyer's
agents  that  the transaction contemplated by the Agreement  will
qualify  for such tax treatment, nor has there been any  reliance
thereon by Buyer respecting the legal or tax implications of  the
transactions contemplated hereby.  Buyer further represents  that
it has sought and obtained such third party advice and counsel as
it  deems  necessary in regards to the tax implications  of  this
transaction.

      Buyer  wishes  to  novate/assign the ownership  rights  and
interest of this Purchase Agreement to American Exchange Services
who  will  act  as Accommodator to perfect the 1031  exchange  by
preparing  an  agreement  of exchange of  Real  Property  whereby
American  Exchange  Services will be an independent  third  party
purchasing the ownership interest in subject property from Seller
and  selling the ownership interest in subject property to  Buyer
under  the  same  terms  and conditions  as  documented  in  this
Purchase Agreement.  Buyer asks the Seller, and Seller agrees  to
cooperate  in  the  perfection of  such  an  exchange  if  at  no
additional  cost or expense to Seller or delay  in  time.   Buyer
hereby  indemnifies  and holds Seller harmless  from  any  claims
and/or  actions  resulting from said exchange.  Pursuant  to  the
direction  of  American Exchange Services, Seller will  deed  the
property to Buyer.

18.  CANCELLATION

     If  any party elects to cancel this Contract because of  any
     breach by another party or because escrow fails to close  by
     the  agreed date, the party electing to cancel shall deliver

Buyer Inital: /s/ DBW /s/ SDW
Purchase Agreement for Tractor Supply-Maryville, TN

     to escrow agent a notice containing the address of the party
     in  breach and stating that this Contract shall be cancelled
     unless  the  breach  is cured within 13 days  following  the
     delivery  of  the notice to the escrow agent.  Within  three
     days  after  receipt of such notice, the escrow agent  shall
     send it by United States Mail to the party in breach at  the
     address contained in the Notice and no further notice  shall
     be  required. If the breach is not cured within the 13  days
     following  the  delivery of the notice to the escrow  agent,
     this Contract shall be cancelled.

19.  MISCELLANEOUS.

     (a)  This Agreement may be amended only by written agreement
     signed by both Seller and Buyer, and all waivers must be  in
     writing  and signed by the waiving party.  Time  is  of  the
     essence.   This  Agreement  will not  be  construed  for  or
     against  a party whether or not that party has drafted  this
     Agreement.  If there is any action or proceeding between the
     parties relating to this Agreement the prevailing party will
     be  entitled to recover attorney's fees and costs.  This  is
     an  integrated  agreement containing all agreements  of  the
     parties  about the Property and the other matters described,
     and  it  supersedes any other agreements or  understandings.
     Exhibits  attached  to this Agreement are incorporated  into
     this Agreement.

     (b)  If this escrow has not closed by May 18, 2001,  through
     no  fault  of  Seller, Seller may either, at  its  election,
     extend the closing date or exercise any remedy available  to
     it by law, including terminating this Agreement.

     (c)  Funds to be deposited or paid by Buyer must be good and
     clear  funds in the form of cash, cashier's checks  or  wire
     transfers.

     (d)   All notices from either of the parties hereto  to  the
     other  shall be in writing and shall be considered  to  have
     been  duly  given or served if sent by first class certified
     mail,  return receipt requested, postage prepaid,  or  by  a
     nationally recognized courier service guaranteeing overnight
     delivery to the party at his or its address set forth below,
     or  to  such  other  address  as such  party  may  hereafter
     designate by written notice to the other party.

     If to Seller:

          AEI Real Estate Fund 85-A Limited Partnership
          1300 Minnesota World Trade Center
          30 E. 7th Street
          St. Paul MN 55101

     If to Buyer:

          Donald B. Wood, Trustee
          Sue D. Wood, Trustee

Buyer Inital: /s/ DBW /s/ SDW
Purchase Agreement for Tractor Supply-Maryville, TN

          280  Canon Drive
          Santa Barbara, CA 93105

      When  accepted, this offer will be a binding agreement  for
valid  and  sufficient consideration which will bind and  benefit
Buyer, Seller and their respective successors and assigns.  Buyer
is  submitting  this offer by signing a copy of  this  offer  and
delivering it to Seller.  Seller has five (5) business days  from
receipt within which to accept this offer.

      This  Agreement  shall be governed by, and  interpreted  in
accordance with, the laws of the state of Tennessee.

      IN WITNESS WHEREOF, the Seller and Buyer have executed this
Agreement effective as of the day and year above first written.

BUYER:    Donald  B. Wood and Sue D. Wood, Trustees of  The  Wood
          Family Trust dated 3/15/93, as amended 7/9/97

          By:  /s/ Donald B Wood
                   Donald B. Wood, Trustee

          WITNESS:

          /s/ Brae Glensky

              Brae Glensky
              (Print Name)

          By:  /s/ Sue D Wood
                   Sue B. Wood, Trustee

          WITNESS:

          /s/ Brae Glensky

              Brae Glensky
              (Print Name)

Buyer Inital: /s/ DBW /s/ SDW
Purchase Agreement for Tractor Supply-Maryville, TN

SELLER:    AEI  Real  Estate  Fund 85-A  Limited  Partnership,  a
           Minnesota limited partnership

           By: Net  Lease Management 85-A, Inc., its  corporate
               general partner

           By: /s/ Robert P Johnson

                   Robert P. Johnson,
                   President

           WITNESS:

          /s/ Heather A Garcia

              Heather A Garcia
               (Print Name)

Buyer Inital: /s/ DBW /s/ SDW
Purchase Agreement for Tractor Supply-Maryville, TN

                                EXHIBIT "A"

     SITUATED in District No. 19 of Blount County, Tennessee, and
     in  the 4th Ward of the City of Maryville, and being all  of
     Lot  No.  26 of LANE BUSINESS PARK as shown by plat of  said
     subdivision  of  record in Map File 1249B in the  Register's
     Office  for Blount County, Tennessee, to which reference  is
     hereby made for a more particularly description.

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