Document:

_

Exhibit 4.5

 

SEITEL, INC.

NONSTATUTORY STOCK OPTION AGREEMENT

THIS NONSTATUTORY STOCK OPTION AGREEMENT (this
"Agreement") is made and entered into by and between Seitel, Inc., a
Delaware corporation (the "Company"), and Fred S. Zeidman ("Grantee"),
a member of the board of directors of the Company (the "Board")
effective as of the Date of Grant as defined below.

WHEREAS, commencing July 2, 2004 Grantee shall
serve as a member of the Board of Directors of the Company (the "Board"), and
in connection with such service, the Board on behalf of the Company authorized
a grant to Grantee a nonstatutory stock option to purchase the Company's common
stock, par value $.01 per share (the "Common Stock"), effective
July 2, 2004, in the amount indicated below, which shall be subject to the
terms and conditions of this Agreement, with a view to increasing Grantee's
interest in the Company's welfare and growth; and

WHEREAS, Grantee desires to receive such a
nonstatutory option to purchase shares of Common Stock in connection with his services
on the Board.

NOW, THEREFORE, in consideration of the
premises, mutual covenants and agreements contained herein, and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto, intending to be legally bound hereby, agree
as follows:

1.                 
Grant of Nonstatutory Stock Option.  Subject to the restrictions,
forfeiture provisions and other terms set forth herein, the Company hereby
grants to the Grantee an option (the "Option" or "Stock Option") to purchase
100,000 full shares (the "Optioned Shares") of Common Stock at an "Option
Price" equal to $1.30 per share. The Date of Grant of this Stock Option
is July 2, 2004.

The "Option Period" shall commence on the Date
of Grant and shall expire on the date immediately preceding the tenth (10th)
anniversary of the Date of Grant.  This Stock Option is a Nonstatutory
Stock Option.

2.                 
Administration.  This Agreement and the grant of the Option are
subject to administration by and the rules and procedures established by the
"Committee" (as defined herein) to administer this Agreement.  The Committee
shall mean the members of the compensation committee of the Board who are
independent members of the compensation committee of the Board and who at least
constitute a majority thereof, or if no such members are available, a majority
of the independent members of the Board.  The Committee shall have the
authority to construe and interpret the terms of this Agreement and to provide
omitted terms or definitions of terms to carry out this Agreement.  The
Committee shall have the authority to take all actions that it deems advisable
for the administration of this Agreement.  Any decision of the Committee in
connection with this Agreement shall be final, binding and conclusive on the
parties hereto and any third parties, including any individual or entity. 
 

 

3.                 
Vesting: Time of Exercise.  Except as specifically provided in
this Agreement, the Stock Option shall be vested and exercisable with respect
to 100% of the total Optioned Shares on July 2, 2005, provided the Grantee is
providing services to the Company or a subsidiary of the Company on that date.

The Grantee shall also become 100% vested in
the total Optioned Shares hereunder on the day preceding an event which
constitutes a Change in Control.  For purposes of this Agreement, a "Change in
Control" shall mean the occurrence of any of the following events:

(a)               
any Person (other than the Company, any trustee or other fiduciary
holding securities under any employee benefit plan of the Company, or any
company owned, directly or indirectly, by the stockholders of the Company
immediately prior to the occurrence with respect to which the evaluation is
being made in substantially the same proportions as their ownership of the
common stock of the Company) acquires securities of the Company and immediately
thereafter is the Beneficial Owner (except that a Person shall be deemed to be
the Beneficial Owner of all shares that any such Person has the right to
acquire pursuant to any agreement or arrangement or upon exercise of conversion
rights, warrants or options or otherwise, without regard to the 60-day period
referred to in Rule 13d-3 under the Securities Exchange Act of 1934 (the
"Exchange Act"), directly or indirectly, of securities of the Company
representing 50% or more of the combined voting power of the Company's then
outstanding securities (except that an acquisition of original issue securities
directly from the Company shall not be deemed an acquisition for purposes of
this clause (a));

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

 

(c)               
the consummation of a merger or consolidation of the Company with any
other entity, other than (i)  a merger or consolidation which would result
in the voting securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being converted
into voting securities of the surviving or resulting entity) more than 50% of
the combined voting power of the surviving or resulting entity outstanding
immediately after such merger or consolidation or (ii) a merger or consolidation in which no premium is intended to be paid to any shareholder participating in
the merger or consolidation;

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

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

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

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

4.                 
Term; Forfeiture.  In the event of Grantee's termination of
services with the Company and its subsidiaries (a "Termination of Services")
for any reason other than Grantee's death or "Disability" (as defined in
Section 22(e)(3) of the Internal Revenue Code of 1986, as amended) then Grantee
shall immediately forfeit any Stock Options which are not vested unless the
Committee, in its sole discretion, determines that any or all of such unvested
Stock Options shall not be so forfeited.  The Stock Option outstanding on such
date of Termination of Services, to the extent vested on such date, may be
exercised by Grantee (or, in the event of Grantee's subsequent death, by
Grantee's "Heir" (as defined below)) within three months following such
Termination of Services, but not thereafter.  However, in no event shall the
Option be exercisable after the tenth (10th) anniversary of the Date
of Grant.  To the extent the Option is not vested on Grantee's date of
Termination of Services, the Option shall automatically lapse and be canceled
unexercised as of such date.   

 

In the event of Grantee's Termination of
Services by reason of death or Disability, the Option shall be fully vested on
such date of termination and may be exercised by Grantee or, in the event of
Grantee's death, by the person to whom Grantee's rights shall pass by will or
the laws of descent and distribution ("Heir"), at any time within the one-year
period beginning on Grantee's Termination of Services, but not thereafter. 
However, in no event shall the Option be exercisable after the tenth (10th)
anniversary of the Date of Grant.

5.                 
Who May Exercise. Subject to the terms and conditions set forth
in Sections 3 and 4 above, during the lifetime of the Grantee, the Stock Option
may be exercised only by the Grantee, or by the Grantee's guardian or personal
or legal representative (in the event of his or her Disability or by a broker
dealer subject to Section 7 below).  

 

6.                 
No Fractional Shares. The Stock Option may be exercised only with
respect to full shares, and no fractional share of stock shall be issued.

7.                 
Manner of Exercise. Subject to such administrative regulations as
the Committee may from time to time adopt, the Option may be exercised by the
delivery of written notice to the Committee or designated Company
representative setting forth the number of shares of Common Stock with respect
to which the Option is to be exercised, the date of exercise thereof (the
"Exercise Date") which shall be at least three (3) days after giving such
notice unless an earlier time shall have been mutually agreed upon. On the
Exercise Date, the Grantee shall deliver to the Company consideration with a
value equal to the total Option Price of the shares to be purchased, payable to
the Company in full in either: (i) in cash or its equivalent, or (ii) subject
to prior approval by the Committee in its discretion, by tendering previously
acquired shares of Common Stock having an aggregate fair market value at the
time of exercise equal to the total Option Price (provided that the shares of
Common Stock which are tendered must have been held by the Grantee for at least
six (6) months prior to their tender to satisfy the Option Price), or (iii)
subject to prior approval by the Committee in its discretion, by withholding
shares of Common Stock which otherwise would be acquired on exercise having an
aggregate fair market value at the time of exercise equal to the total Option
Price, or (iv) subject to prior approval by the Committee in its discretion, by
a combination of (i), (ii), and (iii) above.  Any payment in shares of Common
Stock shall be effected by the surrender of such shares to the Company in good
form for transfer and shall be valued at their fair market value on the date
when the Stock Option is exercised.  Unless otherwise permitted by the
Committee in its discretion, the Grantee shall not surrender, or attest to the
ownership of, shares of Common Stock in payment of the Option Price if such
action would cause the Company to recognize compensation expense (or additional
compensation expense) with respect to the Option for financial reporting
purposes.   

 

The Committee, in its discretion, also may
allow the Option Price to be paid with such other consideration as shall
constitute lawful consideration for the issuance of shares of Common Stock
(including, without limitation, effecting a "cashless exercise" with a broker
of the Option), subject to applicable securities law restrictions and tax
withholdings, or by any other means which the Committee determines to be
consistent with the Agreement's purpose and applicable law.  A "cashless
exercise" of an Option is a procedure by which a broker provides the funds to
the Grantee to effect an Option exercise, to the extent consented to by the
Committee in its discretion.  At the direction of the Grantee, the broker will
either (i) sell all of the shares of Common Stock received when the Option is
exercised and pay the Grantee the proceeds of the sale (minus the Option Price,
withholding taxes and any fees due to the broker) or (ii) sell enough of the
shares of Common Stock received upon exercise of the Option to cover the Option
Price, withholding taxes and any fees due the broker and deliver to the Grantee
(either directly or through the Company) a stock certificate for the remaining shares
of Common Stock.  Dispositions to a broker effecting a cashless exercise are
not exempt under Section 16 of the Exchange Act.  In no event will the
Committee allow the Option Price to be paid with a form of consideration,
including a loan or a "cashless exercise," if such form of consideration would
violate the Sarbanes-Oxley Act of 2002 as determined by the Committee in its
discretion.

As soon as practicable after receipt of a
written notification of exercise and full payment, the Company shall deliver,
or cause to be delivered, to or on behalf of the Grantee, in the name of the
Grantee or other appropriate recipient, share certificates for the number of
shares of Common Stock purchased under the Option.  Such delivery shall be
effected for all purposes when the Company or a stock transfer agent of the
Company shall have deposited such certificates in the United States mail, addressed to Grantee or other appropriate recipient.

If the Grantee fails to pay for any of the
shares of Common Stock specified in such notice or fails to accept delivery
thereof, then the Option, and right to purchase such shares of Common Stock may
be forfeited by the Company.

8.                 
Nonassignability.  The Stock Option is not assignable or
transferable by the Grantee except by will or by the laws of descent and
distribution or pursuant to a domestic relations order that would qualify as a
qualified domestic relations order as defined in Section 414(p) of the Code, if
such provision were applicable to the Stock Option.

9.                 
Rights as Stockholder. The Grantee will have no rights as a
stockholder with respect to any shares covered by the Stock Option until the
issuance of a certificate or certificates to the Grantee for the Optioned
Shares. The Optioned Shares shall be subject to the terms and conditions of
this Agreement regarding such shares. Except as otherwise provided in Section 10
hereof, no adjustment shall be made for dividends or other rights for which the
record date is prior to the issuance of such certificate or certificates.

10.             
Adjustment of Number of Optioned Shares and Related Matters.  In
the event that any dividend or other distribution (whether in the form of cash,
Common Stock, or other property), recapitalization, forward or reverse split,
reorganization, merger, consolidation, spin-off, combination, repurchase, share
exchange, liquidation, dissolution or other similar transaction or event
affects the Common Stock such that an adjustment is determined by the Committee
to be appropriate under this Agreement, then the Committee may make adjustments
to this Agreement and the Optioned Shares in accordance with applicable laws as
it may deem equitable.

11.             
Community Property. Each spouse individually is bound by, and
such spouse's interest, if any, in any share of Common Stock is subject to, the
terms of this Agreement. Nothing in this Agreement shall create a community
property interest where none otherwise exists.

12.             
Dispute Resolution.

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

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

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

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

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

(v)               
Except as set forth in Section 12(b) below, the parties stipulate
that the provisions of this Section shall be a complete defense to any suit,
action or proceeding instituted in any federal, state or local court or before
any administrative tribunal with respect to any controversy or dispute arising
out of this Agreement or the transactions described herein. The arbitration
provisions hereof shall, with respect to such controversy or dispute, survive
the termination or expiration of this Agreement.

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

(b)              
Emergency Relief. Notwithstanding anything in this Section 12 to
the contrary, any party may seek from a court any provisional remedy that may
be necessary to protect any rights or property of such party pending the
establishment of the arbitral tribunal or its determination of the merits of
the controversy or to enforce a party's rights under Section 12.

13.             
Grantee's Representations. Notwithstanding any of the provisions
hereof, the Grantee hereby agrees that he will not exercise the Stock Option
granted hereby, and that the Company will not be obligated to issue any shares
to the Grantee hereunder, if the exercise thereof or the issuance of such
shares of Common Stock shall constitute a violation by the Grantee or the
Company of any provision of any law or regulation of any governmental authority
or Company policies, or the rules of the stock exchange on which the Common
Stock is listed or traded.  Any determination in this connection by the Company
shall be final, binding, and conclusive. The obligations of the Company and the
rights of the Grantee are subject to all applicable laws, rules, and
regulations, rules of the stock exchange on which the Common Stock is listed or
traded and policies of the Company.

14.             
Investment Representation. The Grantee represents and warrants to
the Company that all Common Stock which may be purchased hereunder will be
acquired by the Grantee for investment purposes for his own account and not
with any intent for resale or distribution in violation of federal or state
securities laws.

15.             
Grantee's Acknowledgments. The Grantee represents that he or she
is familiar with the terms and provisions of this Agreement, and hereby accepts
this Option subject to all the terms and provisions thereof. The Grantee hereby
agrees to accept as binding, conclusive, and final all decisions or
interpretations of the Committee, the Company or the Board, as appropriate,
upon any questions arising under this Agreement.

16.             
Law Governing. This Agreement shall be governed by, construed,
and enforced in accordance with the laws of the State of Delaware (excluding
any conflict of laws rule or principle of Nevada law that might refer the
governance, construction, or interpretation of this agreement to the laws of
another state).

17.             
No Right to Continue Service or Employment. Nothing herein shall
be construed to confer upon the Grantee the right to be employed or to provide
services to the Company, its affiliates or any parent or subsidiary or their
affiliates, whether as an employee or as a consultant or as a director of the
Board, or interfere with or restrict in any way the right of the Company or any
of the other foregoing entities to discharge the Grantee as an employee,
consultant or director of the Board at any time.

18.             
Legal Construction. In the event that any one or more of the
terms, provisions, or agreements that are contained in this Agreement shall be
held by a court of competent jurisdiction to be invalid, illegal, or
unenforceable in any respect for any reason, the invalid, illegal, or
unenforceable term, provision, or agreement shall not affect any other term,
provision, or agreement that is contained in this Agreement and this Agreement
shall be construed in all respects as if the invalid, illegal, or unenforceable
term, provision, or agreement had never been contained herein.

19.             
Covenants and Agreements as Independent Agreements. Each of the
covenants and agreements that is set forth in this Agreement shall be construed
as a covenant and agreement independent of any other provision of this
Agreement. The existence of any claim or cause of action of the Grantee against
the Company, whether predicated on this Agreement or otherwise, shall not
constitute a defense to the enforcement by the Company of the covenants and
agreements that are set forth in this Agreement.

20.             
Entire Agreement. This Agreement supersedes any and all other
prior understandings and agreements, either oral or in writing, between the
parties with respect to the subject matter hereof and constitute the sole and
only agreements between the parties with respect to the said subject matter.
All prior negotiations and agreements between the parties with respect to the
subject matter hereof are merged into this Agreement. Each party to this
Agreement acknowledges that no representations, inducements, promises, or
agreements, orally or otherwise, have been made by any party or by anyone
acting on behalf of any party, which are not embodied in this Agreement and
that any agreement, statement or promise that is not contained in this
Agreement shall not be valid or binding or of any force or effect.

21.             
Parties Bound. The terms, provisions, and agreements that are
contained in this Agreement shall apply to, be binding upon, and inure to the benefit
of the parties and their respective heirs, executors, administrators, legal
representatives, and permitted successors and assigns, subject to the
limitation on assignment expressly set forth herein.  

 

22.             
Modification. No change or modification of this Agreement shall
be valid or binding upon the parties unless the change or modification is in
writing and signed by the parties.  

 

23.             
Headings. The headings that are used in this Agreement are used
for reference and convenience purposes only and do not constitute substantive
matters to be considered in construing the terms and provisions of this
Agreement.

24.             
Gender and Number. Words of any gender used in this Agreement
shall be held and construed to include any other gender, and words in the
singular number shall be held to include the plural, and vice versa, unless the
context requires otherwise.

25.             
Independent Legal and Tax Advice.  Grantee acknowledges that the
Company has advised Grantee to obtain independent legal and tax advice
regarding entering into this Agreement, the grant and exercise of the Option
and the disposition of any shares of Common Stock acquired thereby.

26.             
Notice. Any notice required or permitted to be delivered
hereunder shall be deemed to be delivered only when actually received by the
Company or by the Grantee, as the case may be, at the addresses set forth
below, or at such other addresses as they have theretofore specified by written
notice delivered in accordance herewith:

(a)               
Notice to the Company shall be addressed and delivered as follows:

  
    
      
        Seitel, Inc.

      
        10811 S. Westview Circle Drive,

      
        Suite 100,
Bldg. C

      
        Houston, Texas  77043

      
        Facsimile:  (713) 881-2815

      
        Attention: 
Secretary

    

  

(b)              
Notice to the Grantee shall be addressed and delivered as set forth on
the signature page.

27.             
Tax Requirements.

(a)               
Tax Withholding.  The Company shall have the power and the right
to deduct or withhold, or require the Grantee to remit to the Company, an
amount sufficient to satisfy the amount of federal, state, and local taxes,
domestic or foreign, required by law or regulation to be withheld with respect
to any taxable event arising as a result of the Agreement and this Option.

(b)              
Share Withholding.  With respect to tax withholding required upon
the exercise of Stock Options or upon any other taxable event arising as a
result of the Stock Option, Grantee may elect, subject to the approval of the
Committee in its discretion, to satisfy the withholding requirement, in whole
or in part, by having the Company withhold shares of Common Stock having a fair
market value on the date the tax is to be determined equal to the statutory
total tax which could be imposed on the transaction.  All such elections shall
be made in writing, signed by the Grantee, and shall be subject to any
restrictions or limitations that the Committee, in its discretion, deems
appropriate.  Any fraction of a share of Common Stock required to satisfy such
obligation shall be disregarded and the amount due shall instead be paid in
cash by the Grantee.  

[Signature Page
Follows]

 

IN WITNESS
WHEREOF, the Company has caused this Agreement to be executed by its duly
authorized officer, and the Grantee, to evidence his consent and approval of
all the terms hereof, has duly executed this Agreement, effective as of the
date specified in Section 1 hereof.

                                                                               

  	COMPANY:	 
	 	 
	SEITEL,
INC.	 

   

  	By:   	
      /s/ Robert D. Monson
	Name:    	
      Robert D. Monson
	Title:    	
      Chief Executive Officer

                                                                              

 

 

                                                                              
 

  	
      
      GRANTEE: 

      /s/ Fred S. Zeidman
	 
	
      Fred S. Zeidman
	 
      Address:  ______________________________________

	
      __________________________________________

Exhibit 4.6

 

[Form of Inducement Grant for Directors]

 

SEITEL, INC.

RESTRICTED STOCK AWARD
AGREEMENT FOR NON-EMPLOYEE DIRECTORS

THIS RESTRICTED STOCK AGREEMENT (this
"Agreement") is made and entered into by and between Seitel, Inc., a
Delaware corporation (the "Company"), and ___________________________
("Grantee"), a member of the board of directors of the Company (the "Board")
effective as of the grant date shown in Appendix A attached hereto.

WHEREAS, effective July 2, 2004 Grantee shall
serve as a member of the Board, and as a material inducement for such service,
the compensation committee of the Board on behalf of the Company authorized a
grant to Grantee a number of restricted shares of the Company's common stock,
par value $.01 per share (the "Common Stock"), effective July 21, 2004,
in the amount indicated on Appendix A and which shall be subject to the terms
and conditions of this Agreement, with a view to increasing Grantee's interest
in the Company's welfare and growth; and

WHEREAS, Grantee desires to receive shares of
the Common Stock as inducement stock.

NOW, THEREFORE, in consideration of the
premises, mutual covenants and agreements contained herein, and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto, intending to be legally bound hereby, agree
as follows:

1.                 
Grant of Common Stock.  Subject to the restrictions,
forfeiture provisions and other terms and conditions set forth herein (a) the
Company hereby grants to Grantee the number of shares of Common Stock
("Restricted Shares") as set out in Appendix A hereto, and (b) subject
to the terms hereof, Grantee shall have and may exercise rights and privileges
of ownership of such Restricted Shares, including, without limitation, the
voting rights of such shares and the right to receive dividends declared in
respect thereof.  This Agreement and the grant of Restricted Shares are subject
to administration by and the rules and procedures established by the
"Committee" (as defined herein) to administer this Agreement.  The Committee
shall mean the members of the compensation committee of the Board who are
independent members of the compensation committee of the Board and who at least
consitute a majority thereof, or if no such members are available, a majority
of the independent members of the Board.  The Committee shall have the
authority to construe and interpret the terms of this Agreement and to provide
omitted terms to carry out this Agreement.  The Committee shall have the
authority to take all actions that it deems advisable for the administration of
this Agreement.  Any decision of the Committee in connection with this
Agreement shall be final, binding and conclusive on the parties hereto and any
third parties, including any individual or entity.

2.                 
Transfer Restrictions; Vesting.  

(a)              
Generally.  Grantee shall not sell, assign, transfer,
exchange, pledge, encumber, gift, devise, hypothecate or otherwise dispose of
(collectively, "Transfer") any Restricted Shares prior to their vesting
in accordance with the Vesting Dates set out in Appendix A.  Further, even
after such Restricted Shares become vested, such vested Restricted Shares may
not be sold or otherwise disposed of in any manner which would constitute a
violation of any applicable federal or state securities laws or other
applicable law, rules of any exchange on which the Company's securities are
traded or listed, or Company rules or policies as determined by Company in its
sole discretion.  Restricted Shares shall vest as of each of the Vesting Dates
set out in Appendix A provided that Grantee remains a member of the Board
through the Vesting Date, except as may otherwise be provided herein.

(b)              
Dividends, etc.  If the Company (i) declares a dividend or
makes a distribution on Common Stock in shares of Common Stock or (ii)
subdivides or reclassifies outstanding shares of Common Stock into a greater
number of shares of Common Stock or (iii) combines or reclassifies outstanding
shares of Common Stock into a smaller number of shares of Common Stock, then the
number of shares of Grantee's Common Stock subject to the transfer restrictions
in this Agreement shall be proportionally increased or reduced as to prevent
enlargement or dilution of Grantee's rights and duties hereunder.  The
determination of the Company's Board of Directors regarding such adjustment
should be final and binding.

3.                 
Vesting on Change in Control.  Notwithstanding the
provisions in Section 2, on the date immediately preceding the date of a Change
in Control of the Company (as defined below), the Restricted Shares shall be
100% vested.  For purposes of this Agreement, a "Change in Control" shall mean
the occurrence of any of the following events:

(i)                 
any Person (other than the Company, any trustee or other fiduciary
holding securities under any employee benefit plan of the Company, or any
company owned, directly or indirectly, by the stockholders of the Company
immediately prior to the occurrence with respect to which the evaluation is
being made in substantially the same proportions as their ownership of the
common stock of the Company) acquires securities of the Company and immediately
thereafter is the Beneficial Owner (except that a Person shall be deemed to be
the Beneficial Owner of all shares that any such Person has the right to
acquire pursuant to any agreement or arrangement or upon exercise of conversion
rights, warrants or options or otherwise, without regard to the 60-day period
referred to in Rule 13d-3 under the Securities Exchange Act of 1934 (the
"Exchange Act"), directly or indirectly, of securities of the Company
representing 50% or more of the combined voting power of the Company's then
outstanding securities (except that an acquisition of original issue securities
directly from the Company shall not be deemed an acquisition for purposes of
this clause (i));

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

 

(iii)              
the consummation of a merger or consolidation of the Company with any
other entity, other than (i) a merger or consolidation which would result
in the voting securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being converted
into voting securities of the surviving or resulting entity) more than 50% of
the combined voting power of the surviving or resulting entity outstanding
immediately after such merger or consolidation or (ii) a merger or consolidation in which no premium is intended to be paid to any shareholder participating in
the merger or consolidation;

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

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

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

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

4.                 
Forfeiture.

(a)              
Termination of Service.  If Grantee's service as a member of
the Board of the Company is terminated by the Company or Grantee for any
reason, other than on account of Grantee's death or "Permanent Disability" (as
defined in Section 22(e)(3) of the Internal Revenue Code of 1986, as amended)
then Grantee shall immediately forfeit all Restricted Shares which are unvested
unless the Committee, in its sole discretion, determines that any or all of
such unvested Restricted Shares shall not be so forfeited.

(b)              
Death or Permanent Disability. 
In the event of Grantee's
death or Permanent Disability the Restricted Shares shall be 100% vested.

(c)               
Forfeited Shares.  Any Restricted Shares forfeited under this
Section 4 shall automatically revert to the Company and become canceled.  Any
certificate(s) representing Restricted Shares which include forfeited shares
shall only represent that number of Restricted Shares which have not been
forfeited hereunder.  Upon the Company's request, Grantee agrees for himself
and any other holder(s) to tender to the Company any certificate(s)
representing Restricted Shares which include forfeited shares for a new
certificate representing the unforfeited number of Restricted Shares.

5.                 
Issuance of Certificate.

(a)              
The Company shall cause to be issued a stock certificate, registered
in the name of the Grantee, evidencing the Restricted Shares upon receipt of a
stock power duly endorsed in blank with respect to such shares.  Each such
stock certificate shall bear the following legend:

THE
TRANSFERABILITY OF THIS CERTIFICATE AND THE SHARES OF STOCK REPRESENTED HEREBY
ARE SUBJECT TO THE RESTRICTIONS, TERMS AND CONDITIONS (INCLUDING FORFEITURE AND
RESTRICTIONS AGAINST TRANSFER) CONTAINED IN THE RESTRICTED STOCK AGREEMENT
ENTERED INTO BETWEEN THE REGISTERED OWNER OF SUCH SHARES AND SEITEL, INC. 
COPIES OF THE RESTRICTED STOCK AGREEMENT ARE ON FILE IN THE OFFICE OF THE
SECRETARY OF SEITEL, INC., LOCATED AT 10811 S. WESTVIEW CIRCLE DRIVE, SUITE 100, BLDG. C, HOUSTON, TEXAS  77043.
 

Such legend shall not be removed from the
certificate evidencing Restricted Shares until such time as the restrictions
thereon have lapsed.

(b)              
The certificate issued pursuant to this Section 5, together with the
stock powers relating to the Restricted Shares evidenced by such certificate,
shall be held by the Company.  The Company may issue to the Grantee a receipt
evidencing the certificates held by it which are registered in the name of the
Grantee.

6.                 
Miscellaneous.

(a)              
Certain Transfers Void.  Any purported transfer of Restricted
Shares in breach of any provision of this Agreement shall be void and
ineffectual, and shall not operate to transfer any interest or title in the
purported transferee.

(b)              
No Fractional Shares.  All provisions of this Agreement
concern whole shares of Common Stock.  If the application of any provision
hereunder would yield a fractional share, the value of such fractional share
shall be paid to the Grantee in cash.

(c)               
Not an Agreement for Continued Services.  This Agreement
shall not, and no provision of this Agreement shall be construed or interpreted
to, create any right of Grantee to continue as a member of the Board with the
Company, Company affiliates, parent, subsidiary or their affiliates. 
 

 

(d)              
Dispute Resolution.

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

(1)              
After a dispute or controversy arises, any party may, in a written
notice delivered to the other parties to the dispute, demand such arbitration.
Such notice shall designate the name of the arbitrator (who shall be an
impartial person) appointed by such party demanding arbitration, together with
a statement of the matter in controversy.

(2)              
Within 30 days after receipt of such demand, the other parties shall, in
a written notice delivered to the first party, name such parties' arbitrator
(who shall be an impartial person). If such parties fail to name an arbitrator,
then the second arbitrator shall be named by the American Arbitration
Association (the "AAA"). The two arbitrators so selected shall name a
third arbitrator (who shall be an impartial person) within 30 days, or in lieu
of such agreement on a third arbitrator by the two arbitrators so appointed,
the third arbitrator shall be appointed by the AAA. If any arbitrator appointed
hereunder shall die, resign, refuse or become unable to act before an
arbitration decision is rendered, then the vacancy shall be filled by the
method set forth in this Section for the original appointment of such
arbitrator.

(3)              
Each party shall bear its own arbitration costs and expenses. The
arbitration hearing shall be held in Houston, Texas at a location designated by
a majority of the arbitrators. The Commercial Arbitration Rules of the American
Arbitration Association shall be incorporated by reference at such hearing and
the substantive laws of the State of Texas (excluding conflict of laws
provisions) shall apply.

(4)              
The arbitration hearing shall be concluded within ten (10) days unless
otherwise ordered by the arbitrators and the written award thereon shall be
made within fifteen (15) days after the close of submission of evidence. An
award rendered by a majority of the arbitrators appointed pursuant to this
Agreement shall be final and binding on all parties to the proceeding, shall
resolve the question of costs of the arbitrators and all related matters, and
judgment on such award may be entered and enforced by either party in any court
of competent jurisdiction.

(5)              
Except as set forth in Section 6(d)(ii), the parties stipulate that the
provisions of this Section shall be a complete defense to any suit, action or
proceeding instituted in any federal, state or local court or before any
administrative tribunal with respect to any controversy or dispute arising out
of this Agreement or the transactions described herein. The arbitration
provisions hereof shall, with respect to such controversy or dispute, survive
the termination or expiration of this Agreement.

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

(ii)               
Emergency Relief. Notwithstanding anything in this Section 6(d)
to the contrary, any party may seek from a court any provisional remedy that
may be necessary to protect any rights or property of such party pending the
establishment of the arbitral tribunal or its determination of the merits of
the controversy or to enforce a party's rights under Section 6(d).

(e)               
Notices.  Any notice, instruction, authorization, request or
demand required hereunder shall be in writing, and shall be delivered either by
personal in-hand delivery, by telecopy or similar facsimile means, by certified
or registered mail, return receipt requested, or by courier or delivery
service, addressed to the Company at the address indicated beneath its
signature on the execution page of this Agreement, and to Grantee at his
address indicated herewith, or at such other address and number as a party
shall have previously designated by written notice given to the other party in
the manner herein set forth.  Notices shall be deemed given when received, if
sent by facsimile means (confirmation of such receipt by confirmed facsimile
transmission being deemed receipt of communications sent by facsimile means),
and when delivered and receipted for (or upon the date of attempted delivery
where delivery is refused), if hand-delivered, sent by express courier or
delivery service, or sent by certified or registered mail, return receipt
requested.

(f)                
Amendment and Waiver.  This Agreement may be amended,
modified or superseded only by written instrument executed by the Company and
Grantee.  Any waiver of the terms or conditions hereof shall be made only by a
written instrument executed and delivered by the party waiving compliance.  Any
amendment or waiver agreed to by the Company shall be effective only if
executed and delivered by a duly authorized executive officer of the Company. 
The failure of any party at any time or times to require performance of any
provisions hereof shall in no manner effect the right to enforce the same.  No
waiver by any party of any term or condition in this Agreement, or breach
thereof, in one or more instances shall be deemed a continuing waiver of any
such condition or breach, a waiver of any other condition, or the breach of any
other term or condition.

(g)              
Independent Legal and Tax Advice.  The Grantee has been
advised and Grantee hereby acknowledges that he has been advised to obtain
independent legal and tax advice regarding this grant of Restricted Shares and
the disposition of such shares, including, without limitation, the election
available under Section 83(b) of the Internal Revenue Code.

(h)              
Governing Law and Severability.  This Agreement shall be governed
by the internal laws, and not the laws of conflict, of the State of Delaware.  The invalidity of any provision of this Agreement shall not affect any other
provision of this Agreement which shall remain in full force and effect.

(i)                
Successors and Assigns.  Subject to the limitations which
this Agreement imposes upon transferability of Restricted Shares, this
Agreement shall bind, be enforceable by and inure to the benefit of the Company
and its successors and assigns, and Grantee, and, upon his death, on his estate
and beneficiaries thereof (whether by will or the laws of descent and
distribution).

(j)                
Community Property.   Each spouse individually is bound by,
and such spouse's interest, if any, in any shares is subject to, the terms of
this Agreement. Nothing in this Agreement shall create a community property
interest where none otherwise exists.

(k)              
Entire Agreement.  This Agreement supersedes any and all
other prior understandings and agreements, either oral or in writing, between
the parties with respect to the subject matter hereof and constitute the sole
and only agreements between the parties with respect to the said subject
matter. All prior negotiations and agreements between the parties with respect
to the subject matter hereof are merged into this Agreement. Each party to this
Agreement acknowledges that no representations, inducements, promises, or
agreements, orally or otherwise, have been made by any party or by anyone
acting on behalf of any party, which are not embodied in this Agreement and that
any agreement, statement or promise that is not contained in this Agreement
shall not be valid or binding or of any force or effect.

(l)                
Compliance with Other Laws and Regulations.  This Agreement,
the grant of Restricted Shares and issuance of Common Stock shall be subject to
all applicable federal and state laws, rules, regulations and applicable rules
and regulations of any exchanges on which such securities are traded or listed,
and Company rules or policies.  Any determination in this connection by the Committee
shall be final, binding and conclusive on the parties hereto and on any third
parties, including any individual or entity.

(m)            
Tax Requirements.  Grantee acknowledges that he is
responsible for all federal, state and local income or other taxes applicable
to Grantee in connection with this award under this Agreement and Grantee shall
report and include any taxable amount in connection with this Agreement in his
income for the tax year such amount is includable under applicable laws and
regulations.  The Company shall not be obligated to deliver any shares of
Common Stock to Grantee until, in the opinion of counsel, the amount of income
to Grantee represented thereby shall be deductible by the Company for tax
purposes.

Grantee shall provide the following information
and be responsible to notify the Company of any changes thereto:

            Grantee's
address of record is:       
________________________________ 

                                                               
________________________________              

                                                                                                                                                         

            Grantee's
Social Security Number is:  ______________________________

                                                                              

[Signature page follows]

 

IN WITNESS
WHEREOF, the parties have caused this Agreement to be executed on the date
first above written.

                                                                               

  	COMPANY:	 
	 	 
	SEITEL,
INC.	 

   

  	By:   	 
	Name:    	 
	Title:    	 
	 Address:
       
	
       

       

      
      Seitel,
Inc.

      
      10811 S. Westview Circle Drive,
      
      

      
      Suite 100, Bldg. C

      
      Houston, TX   77043

      
      Facsimile: 
(713) 881-2815

      
      Attention:
Secretary

                                                                              

 

 

                                                                              
 

  	
      
      GRANTEE: 

       
	 
	
      Signature
	 
       

	
      Printed Name

                                                                                                                                                               
 

                                                                         

 

APPENDIX
A TO

RESTRICTED STOCK
AGREEMENT

Grantee's Name:       ________________________

	
  
  
  Grant
  Date:

  	
  
  Number
  of

  
  
  Restricted
  Shares Granted

  
	
  July 21, 2004

  	
  
  7,692

  

Vesting Dates:

	
  
  
  Date

  	
  
  Number
  of

  
  
  Restricted
  Shares Granted

  
	
  July 21, 2007

  	
  
  100%

  

Note:  All vesting is subject to the terms and
conditions of the Agreement.

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