Document:

EXHIBIT 10.1

NEITHER THIS WARRANT NOR THE SHARES OF COMMON STOCK  ISSUABLE  UPON  EXERCISE OF
THIS WARRANT HAVE BEEN REGISTERED  UNDER THE SECURITIES ACT OF 1933, AND NEITHER
THIS  WARRANT  NOR THE SHARES OF COMMON  STOCK  ISSUABLE  UPON  EXERCISE OF THIS
WARRANT MAY BE SOLD, TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF
IN WHOLE OR IN PART IN THE ABSENCE OF AN EFFECTIVE  REGISTRATION STATEMENT UNDER
SUCH ACT OR AN OPINION OF COUNSEL IN FORM AND SUBSTANCE REASONABLY  SATISFACTORY
TO COUNSEL OF SEITEL,  INC., THAT AN EXEMPTION FROM REGISTRATION  UNDER SUCH ACT
OR THE RULES  AND  REGULATIONS  THEREUNDER  IS  AVAILABLE  WITH  RESPECT  TO THE
PROPOSED SALE, TRANSFER, PLEDGE, HYPOTHECATION OR OTHER DISPOSITION.

                                  Seitel, Inc.

                              Common Stock Purchase
                               Warrant Certificate
                               TO PURCHASE 90,000
                             SHARES OF COMMON STOCK

                      VOID AFTER 5:00 P.M., HOUSTON, TEXAS
                         LOCAL TIME ON November 15, 2009

Date of Grant:  November 15, 1999
Certificate No. KFEW  9915

         This Warrant Certificate certifies that Kevin S. Fiur is the registered
holder  ("Holder") of 90,000 Common Stock Purchase  Warrants (the "Warrants") to
purchase shares of the $.01 par value common stock,  ("Common Stock") of SEITEL,
INC., a Delaware corporation (the "Company").

         Each  Warrant  enables  the Holder to purchase  from the  Company  with
respect  to (a)  one-third  of the  shares  at any time on and  after  the first
anniversary  of the grant date set forth above,  (b) an additional  one-third of
the  shares on and  after the  second  anniversary  of the grant  date set forth
above,  and (c) an  additional  one-third  of the  shares on and after the third
anniversary  of the grant date set forth  above,  and until 5:00 p.m.,  Houston,
Texas, local time on November 15, 2009, one fully paid and non-assessable  share
of Common  Stock  ("Share")  upon  presentation  and  surrender  of this Warrant
Certificate and upon payment of the purchase price of $8.000 per Share.  Payment
shall be made in lawful money of the United States of America by certified check
payable to the Company at its  principal  office at 50 Briar Hollow Lane,  West,
7th Floor, Houston,  Texas, 77027. As hereinafter  provided,  the purchase price
and number of Shares  purchasable  upon the exercise of the Warrants are subject
to modification or adjustment upon the happening of certain events.

         FOR ALL OTHER PURPOSES  STATED  HEREIN,  THE COMPANY MAY DEEM AND TREAT
THE PERSON IN WHOSE NAME THIS WARRANT  CERTIFICATE IS REGISTERED AS THE ABSOLUTE
TRUE AND LAWFUL OWNER HEREOF FOR ALL PURPOSES WHATSOEVER.

         1.   Upon  surrender to the Company,  this Warrant  Certificate  may be
              exchanged for another Warrant Certificate or Warrant  Certificates
              evidencing a like  aggregate  number of Warrants.  If this Warrant
              Certificate  shall be  exercised  in  part,  the  Holder  shall be
              entitled  to  receive  upon  surrender   hereof  another   Warrant
              Certificate  or  Warrant  Certificates  evidencing  the  number of
              Warrants not exercised.
<PAGE>

         2.   No Holder shall be deemed to be the holder of  Common Stock or any
              other  securities of the Company that may at  any time be issuable
              on the  exercise  hereof  for  any  purpose   nor  shall  anything
              contained  herein be  construed  to confer  upon the Holder any of
              the rights of a  shareholder  of the Company  or any right to vote
              for the  election of  directors  or upon  any matter  submitted to
              shareholders  at any  meeting  thereof   or to  give  or  withhold
              consent to any corporate action (whether  upon any reorganization,
              issuance  of  stock,  reclassification   or  conversion  of stock,
              change  of  par  value,  consolidation,   merger,  conveyance,  or
              otherwise)  or to  receive  notice  of   meetings  or  to  receive
              dividends or  subscription  rights or   otherwise  until a Warrant
              shall have been exercised and the Common  Stock  purchasable  upon
              the exercise thereof shall have become issuable.

         3.   Each  Holder  consents  and agree  with the Company and any other
              Holder that:

              A.  this Warrant  Certificate is  exercisable in  whole or in part
                  by the Holder in person  or  by attorney  duly  authorized  in
                  writing at the principal office of the Company.

              B.  anything herein to the contrary  notwithstanding,  in no event
                  shall the Company be obligated to issue  Warrant  Certificates
                  evidencing  other  than a whole  number of  Warrants  or issue
                  certificates  evidencing  other than a whole  number of Shares
                  upon  the  exercise  of this  Warrant  Certificate;  provided,
                  however,  that the Company  shall pay with respect to any such
                  fraction  of a Share an amount of cash based upon the  current
                  public  market  value  (or book  value,  if there  shall be no
                  public  market  value) for Shares  purchasable  upon  exercise
                  hereof,  as determined in accordance  with  subparagraph  I of
                  Section 10 hereof; and

              C.  the Company  may deem and treat  the person in whose name this
                  Warrant  Certificate  is  registered  as the absolute true and
                  lawful owner hereof for all purposes whatsoever.

         4.       The  Company  shall  maintain    books  for the  transfer  and
                  registration of Warrants. Upon the   transfer of any Warrants,
                  the Company  shall issue and  register    the  Warrants in the
                  names of the new  Holders.  The  Warrants    shall  be  signed
                  manually by the Chairman,   Chief Executive Officer, President
                  or any  Vice  President  and    the  Secretary  (or  Assistant
                  Secretary) of the Company. The   Company shall transfer,  from
                  time to time, any outstanding    Warrants upon the books to be
                  maintained  by the Company for   such purpose  upon  surrender
                  thereof for transfer  properly    endorsed or  accompanied  by
                  appropriate  instructions for   transfer. Upon any transfer, a
                  new Warrant  Certificate  shall be   issued to the  transferee
                  and  the  surrendered  Warrants  shall    be  canceled  by the
                  Company.  Warrants  may   be  exchanged  at the  option of the
                  Holder,  when surrendered   at the office of the Company,  for
                  another   Warrant,    or     other   Warrants   of   different
                  denominations,   of  like  tenor  and    representing  in  the
                  aggregate  the right to    purchase  a like  number of Shares.
                  Subject to the terms of   this Warrant Certificate,  upon such
                  surrender  and payment of   the  purchase  price,  the Company
                  shall issue and deliver with   all  reasonable  dispatch to or
                  upon the written order of the   Holder of such Warrants and in
                  such  name  or  names  as    such  Holder  may  designate,   a
                  certificate or certificates   for the number of full Shares so
                  purchased   upon    the  exercise  of  such   Warrants.   Such
                  certificate  or  certificates  shall be  deemed   to have been
                  issued  and any  person   so  designated  to be named  therein
                  shall be deemed to have    become the holder of record of such
                  Shares as of the date of the    surrender of such Warrants and
                  payment of the purchase price;    provided,  however, that if,
                  at the date of surrender and   payment,  the transfer books of
                  the Shares shall be closed,    the certificates for the Shares
                  shall be  issuable  as of the date   on which such books shall
                  be opened and until such date the   Company  shall be under no
                  duty to deliver any certificate  for   such Shares;  provided,
                  further, however, that such transfer   books, unless otherwise
                  required  by  law or by  applicable    rule  of  any  national
                  securities exchange, shall not be   closed at any one time for
                  a  period  longer  than 20  days.  The    rights  of  purchase
                  represented  by the Warrants  shall be    exercisable,  at the
                  election of the Holders,  either as an   entirety or from time
                  to time for part only of the Shares.
<PAGE>

         5.   The Company will pay any documentary  stamp taxes  attributable to
              the initial  issuance of the Shares  issuable upon the exercise of
              the  Warrants;  provided,  however,  that the Company shall not be
              required  to pay any tax or taxes  which may be payable in respect
              of any  transfer  involved  in the  issuance  or  delivery  of any
              certificates for Shares in a name other than that of the Holder in
              respect of which  such  Shares  are  issued,  and in such case the
              Company shall not be required to issue or deliver any  certificate
              for Shares or any Warrant until the person requesting the same has
              paid to the Company the amount of such tax or has  established  to
              the Company's satisfaction that such tax has been paid.

         6.   In case the Warrant  Certificate shall be mutilated,  lost, stolen
              or  destroyed,  the  Company  may,  in its  discretion,  issue and
              deliver in exchange and substitution for and upon  cancellation of
              the mutilated Warrant Certificate,  or in lieu of and substitution
              for the Warrant  Certificate,  lost,  stolen or  destroyed,  a new
              Warrant  Certificate of like tenor and  representing an equivalent
              right or interest,  but only upon receipt of evidence satisfactory
              to  the  Company  of  such  loss,  theft  or  destruction  and  an
              indemnity, if requested, also satisfactory to it.

         7.   The Company warrants that there have been reserved,  and covenants
              that at all times in the future it shall keep reserved, out of the
              authorized   and  unissued   Common  Stock,  a  number  of  Shares
              sufficient  to provide for the  exercise of the rights or purchase
              represented by this Warrant  Certificate.  The Company agrees that
              all Shares issuable upon exercise of the Warrants shall be, at the
              time of  delivery of the  certificates  for such  Shares,  validly
              issued and outstanding, fully paid and non-assessable and that the
              issuance of such Shares will not give rise to preemptive rights in
              favor of existing shareholders.

         8.   As used herein, the term "Exercise Rate" shall mean the number and
              kind of shares of capital stock of the Company which the Holder of
              this  Warrant  shall be entitled  from time to time to receive for
              each $1,000.00 of warrant  exercise  payment.  Unless and until an
              adjustment thereof shall be required as hereinafter provided,  the
              Exercise Rate shall be 125.000 shares of Common Stock.

         9.   The term  "Exercise  Price"  shall  mean  the  price  obtained  by
              dividing  $1,000.00  by the  number  of  shares  constituting  the
              Exercise Rate in effect at the time for such amount.

         10.  The  Exercise  Rate in  effect  any   time  shall  be  subject  to
              adjustment as follows:

              A.  Whenever the Company  shall (i) pay a dividend on Common Stock
                  in shares of its Common Stock,  (ii) subdivide its outstanding
                  shares of Common Stock,  (iii) combine its outstanding  shares
                  of Common Stock into a smaller number of shares, or (iv) issue
                  by  reclassification  of its shares of Common Stock (including
                  any  reclassification  in connection with a  consolidation  or
                  merger in which the Company is the continuing corporation) any
                  shares,  the Exercise Rate in effect at the time of the record
                  date  for  such  dividend  or of the  effective  date  of such
                  subdivision,   combination   or   reclassification   shall  be
                  proportionately  adjusted  so that the Holder of this  Warrant
                  exercising it after such time shall be entitled to receive the
                  total number and kind of shares which bear the same proportion
                  to the  total  issued  and  outstanding  Common  Stock  of the
                  Company immediately after such time as the proportion he would
                  have owned and have been entitled to receive immediately prior
                  to such time.

              B.  Whenever the Company shall  issue  any shares  of Common Stock
                  other than:

                  (i) shares issued in a transaction described in subparagraph H
                      of this Paragraph 10; and
<PAGE>

                  (ii)shares issued upon exercise or conversion of securities of
                      the  type  referred  to in  subparagraphs  E and F of this
                      Paragraph 10 or shares  issued,  subdivided or combined in
                      transactions   described  in  subparagraph   (A)  of  this
                      Paragraph 10 if and to the extent that the  Exercise  Rate
                      shall have been previously  adjusted pursuant to the terms
                      of  this  subparagraph  (B) or  subparagraph  (A) of  this
                      Paragraph 10 as a result of the issuance,  subdivision  or
                      combination of such securities;

                  at a price per share  which is less  than the  current  public
                  market value of a share of Common Stock,  the Exercise Rate in
                  effect immediately prior to such issuance shall be adjusted by
                  multiplying such Exercise Rate by a fraction, the numerator of
                  which   shall  be  the  number  of  shares  of  Common   Stock
                  outstanding immediately prior to such issuance plus the number
                  of  additional  shares  of  Common  Stock so  issued,  and the
                  denominator  of which  shall be the number of Shares of Common
                  Stock outstanding  immediately prior to such issuance plus the
                  number of shares of Common  Stock  which the fair value of the
                  consideration  received by the Company for the total number of
                  additional shares so issued would purchase at a price equal to
                  the current public market value.

              C.  Whenever   the  Company   shall  pay  a  dividend  or  make  a
                  distribution  (other than in a transaction which results in an
                  equivalent  adjustment pursuant to other subparagraphs of this
                  Paragraph  10)  generally  to holders  of its Common  Stock or
                  evidences of its indebtedness or assets  (excluding  dividends
                  paid in, or  distributions  of cash to the  extent of  current
                  income or earned surplus of the Company), or securities of the
                  Company,  or rights to subscribe for or purchase securities of
                  the Company,  the Exercise Rate in effect immediately prior to
                  such  distribution  shall  be  adjusted  by  multiplying  such
                  Exercise  Rate by a fraction,  the numerator of which shall be
                  the then current public market value, if any, per share of the
                  Common Stock  receiving such dividend or  distribution  or, if
                  there shall be no such current  public market value,  then the
                  book  value per  share as of the close of the month  preceding
                  such  distribution,  and the denominator of which shall be the
                  numerator  less the fair  market  value of the  portion of the
                  assets,  or  the  evidences  of  indebtedness  or  rights,  so
                  distributed which is applicable to each such share;  provided,
                  however,  if as a result of such adjustment the Exercise Price
                  would be a negative figure,  such adjustment shall be modified
                  so that the Exercise  Price after such  adjustment is $.01 per
                  share.

              D.  Whenever the Company  shall issue by  reclassification  of its
                  shares of Common Stock any shares of stock,  the Exercise Rate
                  in  effect   immediately  prior  to  such  issuance  shall  be
                  proportionately  adjusted  so that the Holder of this  Warrant
                  exercising  it after such time shall be  entitled  to receive,
                  the number and kind of shares which,  when added to the number
                  of  shares of such kind  exercisable  hereunder  prior to such
                  issue,  would  entitle the Holder  hereof,  upon the  exercise
                  hereof in full,  to  purchase an amount of shares of such kind
                  which  bears  the same  proportion  to the  total  issued  and
                  outstanding  capital stock of the Company as the proportion he
                  would have owned and have been entitled to receive immediately
                  prior to such  issue.  In the  event  that at any  time,  as a
                  result of an adjustment  made  pursuant to this  paragraph 10,
                  the Holder of this Warrant shall become entitled upon exercise
                  thereof to receive any shares of the Company other than shares
                  of its Common Stock,  then thereafter the number of such other
                  shares so  receivable  upon  exercise of this Warrant shall be
                  subject  to  adjustment  from time to time in a manner  and on
                  terms as nearly  equivalent as  practicable  to the provisions
                  contained  in this  Paragraph  10 in the respect of the Common
                  Stock.
<PAGE>

              E.  For purposes of the adjustments  provided for in the foregoing
                  subparagraphs  of  this  Paragraph  10,  if at any  time,  the
                  Company shall issue any rights or options for the purchase of,
                  or stock or other  securities  convertible  into Common Stock,
                  (such convertible stock or securities being herein referred to
                  as  "Convertible  Securities")  the Company shall be deemed to
                  have  issued  at the time of the  issuance  of such  rights or
                  options or Convertible Securities the maximum number of shares
                  of Common Stock  issuable upon exercise or conversion  thereof
                  and to have received as consideration for the issuance of such
                  shares an amount equal to the amount of cash and fair value of
                  other  consideration,  if any, received by the Company for the
                  issuance of such rights or options or Convertible  Securities,
                  plus,  in the case of such  options  or  rights,  the  minimum
                  amounts of cash and fair value of other consideration, if any,
                  payable to the Company  upon the  exercise of such  options or
                  rights and, in the case of Convertible Securities, the minimum
                  amounts of cash and fair value of other consideration, if any,
                  payable, to the Company.

              F.  For purposes of the adjustment  provided for in subparagraph B
                  above,  if at any time the  Company  shall issue any rights or
                  options  for  the  purchase  of  Convertible  Securities,  the
                  Company  shall be  deemed  to have  issued  at the time of the
                  issuance  of such  rights or  options  the  maximum  number of
                  shares of Common Stock  issuable upon  conversion of the total
                  amount of  Convertible  Securities  covered by such  rights or
                  options and to have received as consideration for the issuance
                  of such  shares an amount  equal to the amount of cash and the
                  amount of fair value of other consideration,  if any, received
                  by the  Company  for the  issuance  of such rights or options,
                  plus the  minimum  amounts  of cash  and  fair  value of other
                  consideration,  if  any,  payable  to  the  Company  upon  the
                  exercise  of such rights or options and payable to the Company
                  on conversion of such Convertible Securities.

              G.  Anything  in  subparagraph  E  or  F  above  to  the  contrary
                  notwithstanding,  whenever the Company  shall issue any shares
                  (other than on exercise of this  Warrant) upon exercise of any
                  rights  or  options  or  upon  conversion  of any  Convertible
                  Securities and if the Exercise Rate shall not previously  have
                  been  adjusted  upon the issuance of such  rights,  options or
                  Convertible   Securities,   the   computation   described   in
                  subparagraph  B above  shall  be made  and the  Exercise  Rate
                  adjusted in accordance with the provisions thereof (the shares
                  so issued  being deemed for  purposes of such  computation  to
                  have been  issued at a price per share  equal to the amount of
                  cash and fair value of other  consideration,  if any, properly
                  attributable  to one such share  received by the Company  upon
                  issuance  and  exercise  of such rights or options or sale and
                  conversion of such  Convertible  Securities (and upon issuance
                  of any rights or options  pursuant  to which such  Convertible
                  Securities may have been sold).

              H.  Anything in this Paragraph 10 to the contrary notwithstanding,
                  no  adjustment in the Exercise Rate or Exercise Price shall be
                  made in connection with:

                  (i) Convertible  Securities  issued  pursuant to the Company's
                      qualified or non-qualified  Employee Stock Option Plans or
                      any other bona fide  employee  benefit  plan or  incentive
                      arrangement, adopted or approved by the Company's Board of
                      Directors or shares of Common Stock issued pursuant to the
                      exercise of any rights or options granted pursuant to said
                      plans or  arrangements  (but only to the  extent  that the
                      aggregate  number of shares excluded by the Clause (i) and
                      issued  after the date hereof  shall not exceed 15% of the
                      Company's Common Stock outstanding at the time of any such
                      issuance); and
<PAGE>

                  (ii)The issuance of any shares of Common Stock pursuant to the
                      exercise of Convertible  Securities  outstanding as of the
                      date hereof including without  limitation,  the conversion
                      of any Warrant  issued in the same placement of securities
                      pursuant to which this Warrant was issued by the Company.

              I.  For purposes of this  Paragraph 10, the current  public market
                  value of a share of Common  Stock on any date  shall be deemed
                  to be the  arithmetical  average of the  following  prices for
                  such of the thirty (30)  business days  immediately  preceding
                  such day as shall be  available:  (i) for any of the such days
                  on which  the  Common  Stock  shall be  listed  on a  national
                  securities  exchange,  the last sale  price on such day or, if
                  there shall have been no sale on such day,  the average of the
                  closing bid and asked prices on such  exchange on such day, or
                  (ii) for any of such days on which the Common  Stock shall not
                  be  listed  on a  national  securities  exchange  but shall be
                  included in the National  Association  of  Securities  Dealers
                  Automated  Quotation  System  ("NASDAQ"),  the  average of the
                  closing bid and asked prices on such day quoted by brokers and
                  dealers making a market in NASDAQ,  furnished by any member of
                  the New York Stock  Exchange  selected by the Company for that
                  purpose,  or (iii) for any of such  days on which  the  Common
                  Stock shall not be so listed on a national securities exchange
                  or  included  in NASDAQ  but shall be quoted by three  brokers
                  regularly   making   a   market   in   such   shares   in  the
                  over-the-counter  market,  the  average of the closing bid and
                  asked  prices on such day,  furnished by any member of the New
                  York Stock Exchange  selected by the Company for that purpose,
                  or (iv) for any days on which  the  information  described  in
                  items (i), (ii) or (iii) above is unavailable,  the book value
                  per share of the Common Stock as determined in accordance with
                  generally accepted accounting principles;  provided,  however,
                  in its discretion the Board may make an appropriate  reduction
                  in the "current public market value" based upon any applicable
                  trading restrictions to particular shares of Common Stock.

              J.  Anything in this Paragraph 10 to the contrary notwithstanding,
                  no adjustment  in the Exercise  Rate shall be required  unless
                  such  adjustment  would  require an increase or decrease of at
                  least 1% in such rate; provided, however, that any adjustments
                  which by reason of this  subparagraph J are not required to be
                  made shall be carried forward and taken into account in making
                  subsequent  adjustments.  All calculations under the Paragraph
                  10  shall  be  made  to the  nearest  cent  or to the  nearest
                  one-hundredth of a share, as the case may be.

              K.  No  adjustment in the Exercise Rate shall be made for purposes
                  of  subparagraphs  B  and  C of  this  Paragraph  10  if  such
                  adjustment  would result in an increase in such Exercise Price
                  or decrease in the Exercise  Rate except that,  in the case of
                  any  Convertible  Securities in respect of which an adjustment
                  has previously been made under  subparagraph B above and which
                  has expired or otherwise been canceled without exercise of the
                  rights or options evidenced thereby,  such previous adjustment
                  shall be reversed.

              L.  Before  taking  any action  which  could  cause an  adjustment
                  pursuant to this  Paragraph 10 reducing the Exercise Price per
                  share below the then par value (if any) of the shares  covered
                  hereby,  the Company will take any corporate  action which may
                  be necessary in order that the Company may validly and legally
                  issue at the  Exercise  Price as so  adjusted  shares that are
                  fully paid and non-assessable.

              M.  The  number  of  shares  of  capital   stock  of  the  Company
                  outstanding  at any given time shall not include  shares owned
                  or  held  by or for  the  account  of  the  Company,  and  the
                  disposition of any such shares shall be considered an issue or
                  sale of such shares for the purposes of this Paragraph 10.
<PAGE>

              N.  If any event occurs as to which the other  provisions  of this
                  Paragraph 10 are not strictly  applicable  but the lack of any
                  adjustment would not fairly protect the purchase rights of the
                  Holder of this Warrant in accordance with the basic intent and
                  principles of such provisions, or if strictly applicable would
                  not fairly  protect the purchase  rights of the Holder of this
                  Warrant in accordance  with the basic intent and principles of
                  such  provisions,  then the  Company  shall  appoint a firm of
                  independent  certified public  accountants (which shall not be
                  the regular  auditors of the Company) of  recognized  national
                  standing,  which shall give their opinion upon the adjustment,
                  if any,  on a basis  consistent  with  the  basic  intent  and
                  principles   established  in  the  other  provisions  of  this
                  Paragraph 10,  necessary to preserve,  without  dilution,  the
                  exercise rights of the registered Holder of this Warrant. Upon
                  receipt of such opinion,  the Company shall forthwith make the
                  adjustments  described therein. In taking any action or making
                  any  determination  pursuant to the provisions of this Section
                  10,  the  Company  and its Board of  Directors  shall,  at all
                  times, exercise reasonable judgment and act in good faith.

              O.  Upon any  adjustment  of any Exercise  Rate,  then and in each
                  such case, the Company shall promptly  deliver a notice to the
                  registered  Holder of this  Warrant,  which notice shall state
                  the  Exercise  Price and  Exercise  Rate  resulting  from such
                  adjustment and the increase or decrease, if any, in the number
                  of shares  purchasable at such price upon the exercise hereof,
                  setting forth in reasonable  detail the method of  calculation
                  and the facts upon which such calculation is based.

              P.  In the case of the  issuance  of  shares  of  Common  Stock or
                  Convertible  Securities  for a  consideration  in  whole or in
                  part, other than cash, the consideration other than cash shall
                  be deemed to be the fair market  value  thereof as  reasonably
                  determined  in good  faith by the  Board of  Directors  of the
                  Company   (regardless   of  accounting   treatment   thereof);
                  provided,  however, that if such consideration consists of the
                  cancellation  of debt issued by the Company the  consideration
                  shall be deemed to be the amount  the  Company  received  upon
                  issuance of such debt (gross  proceeds) plus accrued  interest
                  and,  in the case of  original  issue  discount or zero coupon
                  indebtedness, accreted value to the date of such cancellation,
                  but not  including  any  premium or discount at which the debt
                  may then be trading or which might  otherwise  be  appropriate
                  for such class of debt;

              Q.  The Company  shall not issue any shares of its  capital  stock
                  (other than  Common  Stock) at or for  consideration  which is
                  less than fair value  determined  by the Board of Directors of
                  the  Company in light of all  circumstances  surrounding  such
                  issuance.

         11. In  the case:

              A.  The Company  shall declare  any  dividend or  distribution  on
                  its Common Stock (or on  any other shares  which the Holder of
                  this  Warrant may become  entitled to  receive  upon  exercise
                  hereof); or

              B.  The  Company  shall  authorize  the issuance to holders of its
                  Common  Stock  (or on any other  shares  which  the  Holder of
                  this  Warrant may  become  entitled to receive  upon  exercise
                  hereof) any subscription rights or warrants; or

              C.  Of any subdivision,  combination or reclassification of shares
                  of Common  Stock of the  Company (or any shares of the Company
                  which  are  subject  to  this  Warrant),  or of  any  proposed
                  consolidation  or merger to which the Company is to be a party
                  and for which the approval of any  shareholders of the Company
                  is  required,  or of the  proposed  sale or transfer of all or
                  substantially all of the assets of the Company; or
<PAGE>

              D.  Of  the   proposed  voluntary   or  involuntary   dissolution,
                  liquidation, or winding up of the Company; or

              E.  The Company  proposes to  effect any transaction not specified
                  above which would  require an  adjustment of the Exercise Rate
                  pursuant to Paragraph 10 hereof;

              then the  Company  shall  cause to be  mailed to  Holders  of this
              Warrant,  at least ten (10) days prior to the applicable record or
              other  date  hereinafter   specified,  a  notice  describing  such
              transaction in reasonable detail, specifying the character, amount
              and  terms of all  securities  and the  amounts  of cash and other
              property, if any, involved in such transaction and stating (i) the
              date as of which the  holders  of Common  Stock (or any such other
              shares) of record to be  entitled  to receive  any such  dividend,
              distribution, rights, or warrants is to be determined, or (ii) the
              date of which any such subdivision, combination, reclassification,
              consolidation,  merger, sale, transfer, dissolution,  liquidation,
              winding up, or other  transaction is expected to become effective,
              and the date as of which it is  expected  that  holders  of Common
              Stock (or any such other  shares) of record  shall be  entitled to
              exchange  the  same for  securities  or  other  property,  if any,
              deliverable upon such transaction.

         12.The  Company  covenants  and  agrees  that  it  will  not  merge  or
              consolidate  with or into or  sell or  otherwise  transfer  all or
              substantially all of its assets to any other corporation or entity
              unless  at the  time of or prior to such  transaction  such  other
              corporation  or other  entity  shall  expressly  assume all of the
              liabilities  and obligations of the Company under this Warrant and
              (without limiting the generality of the foregoing) shall expressly
              agree that the Holder of this Warrant  shall  thereafter  have the
              right  (subject to subsequent  adjustment as nearly  equivalent as
              practicable  to the  adjustments  provided  for in Paragraph 10 of
              this  Warrant) to receive  upon the  exercise of this  Warrant the
              number  and kind of  shares  of stock  and  other  securities  and
              property  receivable  upon  such  transaction  by a Holder  of the
              number and kind of shares  which would have been  receivable  upon
              the   exercise  of  this   Warrant   immediately   prior  to  such
              transactions.

         13.  The Holder of this Warrant Certificate, each transferee hereof and
              any  holder  and  transferee  of any  Shares,  by  his  acceptance
              thereof,  agrees  that (i) no public  distribution  of Warrants or
              shares will be made in  violation of the Act, and (ii) during such
              period as the delivery of a prospectus with respect to Warrants or
              Shares  may be  required  by the Act,  no public  distribution  of
              Warrants or Shares will be made in a manner or on terms  different
              from those set forth in, or without delivery of, a prospectus then
              meeting  the  requirements  of  Section  10  of  the  Act  and  in
              compliance with all applicable  state  securities laws. The Holder
              of this Warrant  Certificate  and each  transferee  hereof further
              agrees that if any  distribution  of any of the Warrants or Shares
              is  proposed  to be made by them  otherwise  than by delivery of a
              prospectus meeting the requirements of Section 10 of the Act, such
              action shall be taken only after  submission  to the Company of an
              opinion of counsel,  reasonably satisfactory in form and substance
              to  the  Company's  counsel,  to  the  effect  that  the  proposed
              distribution  will not be in violation of the Act or of applicable
              state law. Furthermore, it shall be a condition to the transfer of
              the Warrants that any  transferee  thereof  deliver to the Company
              his written  agreement  to accept and be bound by all of the terms
              and conditions contained in this Warrant Certificate.

         14.  This  Warrant  Certificate  shall be  exercisable  only during the
              continuance  of the  Holder's  employment  at the  Company  or its
              subsidiaries, except that:

              a.  If the Holder  ceases to be an  employee  at the Company (or a
                  subsidiary  of the Company) for any reason other than by death
                  or disability,  this Warrant  Certificate  may be exercised by
                  Holder,  to the extent that it was  exercisable at the date of

<PAGE>

                  termination,  at any time within  three  months after the date
                  Holder  ceases to be an employee,  but not later than 11/15/09
                  except that,  in case of his death or  disability  within that
                  three-month  period, this Warrant Certificate may be exercised
                  as provided in subparagraph (b) below.

              b.  If the Holder dies or becomes  disabled  during  employment or
                  within the three-month  period referred to in subparagraph (a)
                  above,  this  Warrant  Certificate  may be  exercised,  to the
                  extent that it was exercisable by the Holder at the date of:

                  (i) death,  by the person or persons to whom  Holder's  rights
                      under this Warrant Certificate pass by will or by the laws
                      of descent and distribution or

                  (ii) disability, by the Holder's legal representative,

                  at any time  within one year  after the date of Holder's death
                  or disability, but not later than 11/15/09.

              The  determination  by the  Company's  Board of  Directors  of the
              reason for termination of the Holder's employment shall be binding
              and conclusive on the Holder.

         WITNESS the following signatures as of November 15, 1999.

                                          SEITEL, INC.

                                          By:  /s/ Paul A. Frame
                                               ---------------------------------
                                                   Paul A. Frame
                                                   Chief Executive Officer

         Accepted:

         --------------------------------
         Kevin S. Fiur

<PAGE>

                                  PURCHASE FORM

TO: SEITEL, INC.                                      DATE:
                                                            --------------------

         The  undersigned  hereby  irrevocably  elects to exercise  the attached
Warrant  Certificate No. KFEW 9915, to the extent of            shares of Common
                                                     ----------
Stock,  $.01 par value per share of SEITEL,  INC.,  and hereby makes  payment of
             in payment of the aggregate exercise price thereof.
------------

                   INSTRUCTIONS FOR REGISTRATION OF SECURITIES

Name:    Kevin S. Fiur

Address:
        -------------------------------

        -------------------------------

        -------------------------------

                                                    ----------------------------
                                                 By:
                                                    ----------------------------PARACELSUS HEALTHCARE CORPORATION

                              EMPLOYMENT AGREEMENT

To:      Robert L. Smith

This  Agreement  establishes  the  terms  of  your  employment  with  Paracelsus
Healthcare  Corporation,  a California  corporation (the "Company") and reflects
your employment as the Company's Chief Executive Officer ("CEO").

Employment and Duties              You and the Company agree to your  employment
                                   by the Company as the Company's CEO. In such
                                   position, you will report  directly to the
                                   Company's  Board of Directors (the  "Board").
                                   You agree to perform whatever  duties the
                                   Board may assign  you from time to time that
                                   are  consistent  with those of the CEO of a
                                   public  company.  During  your  employment,
                                   you agree to devote your full  business
                                   time, attention,  and energies to performing
                                   those duties (except as the Board otherwise
                                   agrees from time to time). On termination of
                                   your employment  under this Agreement,  you
                                   agree that you will promptly resign as an
                                   officer and director and from all other
                                   officer and director  positions at the
                                   Company and its subsidiaries and affiliates
                                   which you hold at that time.

                                   You   represent   as  a  condition   to  your
                                   employment  under this Agreement that you are
                                   not subject to any agreement or understanding
                                   with any other person  which might  adversely
                                   affect your  ability to perform  your work as
                                   the Company's CEO under this Agreement.

Term of Employment                 Your  employment  under this Agreement  shall
                                   begin no later than  _________,  2000 (the
                                   "Effective Date") and,  unless sooner
                                   terminated or extended,  shall end on
                                   December 31, 2001. Your employment term under
                                   this Agreement will be  automatically
                                   extended for the period of one additional
                                   year on December 31 of each year,  beginning
                                   with December 31, 2001 absent notice on or
                                   before October 1 of that year from  either
                                   you or the  Company  not to extend  such term
                                   for an  additional  year.  The period running
                                   from the Effective Date to December 31, 2001
                                   or, if extended,  to the last day of the
                                   calendar year of such extension shall be
                                   referred to in this Agreement as your "Term".

Compensation
      Base Salary                  The Company will pay you a monthly base
                                   salary (the "Monthly  Base  Salary")  while
                                   you are employed under this Agreement,  and
                                   your initial  Monthly Base Salary shall be
                                   $35,420 per month,  payable in accordance
                                   with the Company's  generally  applicable
                                   payroll  practices.  Future adjustments to
                                   your Monthly  Base  Salary  will be made in
                                   the  discretion  of the  Company's  Option
                                   and  Compensation Committee.  However,  no
                                   future  adjustments  will reduce your Monthly
                                   Base Salary below $35,420 per month.

     Benefits                      While you are employed  under this
                                   Agreement,  you will be eligible to
                                   participate in the employee benefit and
                                   fringe  benefit  plans and  programs
                                   generally  available  to the  Company's
                                   executive officers and such additional
                                   benefits as the Board may from time to time
                                   provide.  If a participant is required to
                                   make a contribution or pay a premium to
                                   participate in any such plan or program,  the
                                   Company will  reimburse you for up to $6,000
                                   in such  contributions  and premiums  which
                                   you make or pay each  calendar  year. In
                                   addition,  you will be entitled  while
                                   employed to the following  life insurance and
                                   disability coverages and fringe benefits:

                                    Life  Insurance.  The Company will  maintain
                                    (whether   through   individual   or   group
                                    coverage or both) for your benefit while you
                                    are employed life insurance  coverage with a
                                    face amount  equal to three times the amount
                                    of  your  annualized  initial  Monthly  Base
                                    Salary,  $1,000,000  or the face  amount  of
                                    coverage   which  can  be  purchased  for  a
                                    premium  of no  more  than  $6,000  a  year,
                                    whichever  is less.  You will have the right
                                    to name and to change  from time to time the
                                    beneficiary or beneficiaries under such life
                                    insurance  coverage.   Such  life  insurance
                                    coverage  will be in  addition  to any death
                                    benefits  that  may  be  payable  under  any
                                    accidental death and dismemberment plan, any
                                    separate business travel accident  coverage,
                                    or any  qualified or  nonqualified  deferred
                                    compensation   plan   in   which   you   may
                                    participate,  and such coverage will also be
                                    in addition to any life  insurance  that you
                                    purchase for yourself.

                                   Health  Insurance.  You agree to elect  COBRA
                                   coverage under your current  employer's group
                                   health plan.  The Company will  reimburse you
                                   for your  COBRA  premiums  while  your  COBRA
                                   coverage is in effect,  and the Company  will
                                   provide you, your wife and your children with
                                   a comprehensive  medical insurance and dental
                                   insurance  which shall be effective when your
                                   COBRA coverage terminates.

                                    Long-Term Disability. lf you become disabled
                                    (as defined in the long-term disability plan
                                    the Company  presently  maintains) while you
                                    are  employed,   you  will  be  eligible  to
                                    receive  disability  benefits  in an  amount
                                    equal to 60% of your then annualized Monthly
                                    Base Salary.  Any amount  payable  under any
                                    salary  continuation  plan or  disability or
                                    other plan  maintained  by the Company,  and
                                    any  amount   payable  to  you  or  to  your
                                    immediate  family (if timely applied for) as
                                    a  Social  Security  disability  benefit  or
                                    similar  benefit will be counted towards the
                                    Company's  fulfillment  of such  obligation.
                                    Disability  benefits will be payable monthly
                                    beginning 30 days following your  disability
                                    and will  continue  until  you are no longer
                                    disabled or, if earlier, until you reach age
                                    65 or die, whichever comes first.

                                   Liability  Coverage.  During your employment,
                                   you  will  be  insured  under  the  Company's
                                   general  liability  insurance  policy for all
                                   acts  done by you in good  faith  to the same
                                   extent as the Company  insures  other  senior
                                   officers of the Company.

                                    Vacations and Holidays. You will be entitled
                                    to five (5) weeks  paid  vacation  time each
                                    year,  which will vest and accrue on a month
                                    pro rata  basis  without  an  accrual  limit
                                    while  you are  employed  and  which  can be
                                    taken as  reasonably  agreed upon by you and
                                    the Option and Compensation  Committee.  You
                                    will be entitled  to all  holidays as listed
                                    annually in the Company's  official  holiday
                                    schedule.

                                    Tax Return  Preparation;  Financial  Advice.
                                    The  Company  while  you are  employed  will
                                    provide  you  with  the  assistance  of  its
                                    regular auditors for the preparation of your
                                    federal and state tax returns without charge
                                    to  you.  In  addition,   the  Company  will
                                    reimburse  you while you are  employed up to
                                    $5,000 per year for the reasonable costs you
                                    actually  incur  for  financial  and  estate
                                    planning services.

                                    Annual  Physical.  The Company while you are
                                    employed  will  reimburse  you  100%  of the
                                    reasonable   costs  you  actually  incur  in
                                    obtaining an annual,  comprehensive physical
                                    examination  to be  conducted by your choice
                                    of  physician,   clinic,  or  medical  group
                                    located  within a reasonable  distance  from
                                    your place of employment.

                                    Reimbursement  for business  expenses.  Your
                                    reimbursement    for   business    expenses,
                                    including  travel  and   entertainment   and
                                    monthly  country club dues,  will be limited
                                    to  reasonable  and  necessary  expenses you
                                    actually  incur on the  Company's  behalf in
                                    connection  with  performing  duties  on the
                                    Company's  behalf and  subject to (i) timely
                                    submission  of a properly  executed  Company
                                    expense    report   form    accompanied   by
                                    appropriate  supporting  documentation,  and
                                    (ii)  compliance  with Company  policies and
                                    procedures    governing   business   expense
                                    reimbursement   and  reporting   based  upon
                                    principles and guidelines  established  from
                                    time to time by the Board's Audit Committee,
                                    including  periodic  audits by the Company's
                                    Internal  Audit  Department  or the  Board's
                                    Audit Committee.

                                    Annual Performance Bonus. You shall have the
                                    opportunity  while you are  employed to earn
                                    an annual  performance bonus of up to 50% of
                                    your annualized Monthly Base Salary for each
                                    year if you achieve the specific performance
                                    goals  mutually  agreed  upon by you and the
                                    Option  and  Compensation  Committee.   Your
                                    annual  performance  bonus  will  be paid no
                                    later than 30 days after the  completion  of
                                    the  annual  audit  on  which  the  bonus is
                                    based.

                                   However,  if  you  fail  to  earn  an  annual
                                   performance  bonus for year 2000  equal to at
                                   least  25%  of  your   Monthly   Base  Salary
                                   actually  payable for calendar year 2000, you
                                   nevertheless  shall  receive a minimum  bonus
                                   for calendar  year 2000,  provided  that your
                                   employment has not terminated before December
                                   31, 2000,  equal to 25% of your total Monthly
                                   Base  Salary  payable for the  calendar  year
                                   2000.

                                   Long-term  Incentive.  When your  employment
                                   begins you shall receive a restricted  stock
                                   grant of 1,300,000 shares of the Company's
                                   common stock .

                                    This  grant  shall  vest  either  under  the
                                    general  vesting rule or the special vesting
                                    rule,  whichever  is more  favorable to you.
                                    Under the  general  vesting  rule this grant
                                    shall  vest  25%  (or  325,000   shares)  on
                                    January 1, 2001, 25% (or 325,000  shares) on
                                    January 1, 2002, 25% (or 325,000  shares) on
                                    January 1, 2003 and 25% (or 325,000  shares)
                                    on January 1, 2004.  However,  under  either
                                    the  general  vesting  rule  or the  special
                                    vesting  rule you shall  vest on a date only
                                    if you are still the  Company's  CEO on that
                                    date.  Alternatively  the option grant shall
                                    vest  under  the  special  vesting  rule  as
                                    follows:

                                   (i) If the  stock  price  hits $ 3.50  at any
                                   time in the  first  eighteen  (18)  months of
                                   your  employment  and closes for at least ten
                                   (10)  consecutive  trading days at or above $
                                   3.50,  35% (or  455,000) of the shares  shall
                                   become vested.

                                   (ii) If the  stock  price  hits $ 4.50 at any
                                   time in the first  twenty four (24) months of
                                   your  employment  and closes for at least ten
                                   (10)  consecutive  trading days at or above $
                                   4.50,  a  total  of 66% (or  858,000)  of the
                                   shares shall become vested.

                                   (iii) If the stock  price  hits $ 6.00 at any
                                   time in the first  thirty-six  (36) months of
                                   your  employment  and closes for at least ten
                                   (10)  consecutive  trading days at or above $
                                   6.00, 100% of the shares shall become vested.

                                   If  your  employment  is  terminated  by  the
                                   Company  without  Cause (as  defined  in this
                                   Agreement) and your right to your  restricted
                                   stock is less than 50% vested,  your right to
                                   such stock  shall  automatically  increase to
                                   vest 50% (or 650,000 shares).

                                   If your  employment is  terminated  for Cause
                                   (as  defined  in this  Agreement),  you  will
                                   forfeit all your unvested restricted stock.

                                   If  there  is a  change  of  control  in  the
                                   Company as a result of a change in  ownership
                                   of thirty  percent  (30%) or more or a change
                                   of three  (3) or more of the  members  of the
                                   Company's seven (7) member Board of Directors
                                   (or a proportionate  number of members if the
                                   total number of members exceeds seven (7)) in
                                   any annual  term (other than a change in such
                                   members  which was  approved by a majority of
                                   the  members  of the Board of  Directors  who
                                   were members at the beginning of such term or
                                   which  results  from  the  death,   voluntary
                                   resignation  or  mandatory  retirement  of  a
                                   member) and your employment terminates within
                                   the one (1) year period following such change
                                   of  control,  your  right to your  restricted
                                   stock will automatically vest 100%.

                                   All of the  foregoing  stock figures shall be
                                   adjusted  up or down  to  reflect  any  stock
                                   split or reverse stock split.

                                   Finally,   on   each   anniversary   of  this
                                   Agreement,  beginning on January 1, 2001, you
                                   will be granted an  additional  stock  option
                                   (if  you  are  still  the  Company's  CEO) to
                                   purchase  200,000  shares  of  the  Company's
                                   common stock (or an equivalent of that figure
                                   if there is a stock  split or  reverse  stock
                                   split  which   increases  or  decreases   the
                                   current number of shares of the Company),  no
                                   stated par value, at an exercise price at the
                                   fair market value of a share of such stock at
                                   that  time,  with a term of ten  (10)  years.
                                   These options become fully vested three years
                                   after  grant (if you are still the  Company's
                                   CEO).

                                    Excise  Tax.  If, as a result of a change of
                                    control,   any   option   vesting  or  other
                                    payments trigger a "golden  parachute excise
                                    tax" for you, such vesting may be delayed or
                                    such  payments  may be suspended or cut back
                                    to the extent required to avoid that tax.

                                    Car  Allowance.  You shall be entitled to
                                    receive an annual Car  Allowance  of $9,600,
                                    payable per the Company's generally
                                    applicable payroll practices.

Termination                        Subject to the  provisions  of this  section,
                                   you and the  Company  agree that the  Company
                                   may  terminate  your  employment,  or you may
                                   resign,  at any  time  with or  without  good
                                   reason  before the end of your  Term,  except
                                   that, if you resign, you agree to provide the
                                   Company  with 90 days' prior  written  notice
                                   (unless the Board has previously  waived such
                                   notice in  writing  or  authorized  a shorter
                                   notice period).

     For Cause                     The Company may terminate your employment for
                                   "Cause" if you:

                                    (i) act with willful disregard for the
                                    Company's best interests;  provided
                                    however,  that such act or action was not
                                    approved by the Board;

                                    (ii) seize an  opportunity to enhance or
                                    diversify the Company's  business for
                                    yourself  instead of offering such
                                    opportunity to the Company;

                                    (iii) are convicted of or plead guilty or no
                                    contest  to a felony,  or,  with  respect to
                                    your  employment,  commit  either a material
                                    dishonest   act  or  common   law  fraud  or
                                    intentionally  violate  any federal or state
                                    securities or tax laws; or

                                    (iv) violate the  Company's  code of conduct
                                   or materially breach any provision of this
                                   Agreement.

                                   Your  termination for Cause will be effective
                                   immediately  upon the  Company's  mailing  or
                                   transmission  of notice of such  termination.
                                   However,  before  terminating your employment
                                   for  Cause  for any  reason  (except  for the
                                   reason   described  in  clause  (iii)),   the
                                   Company  will  specify  in writing to you the
                                   nature  of the  act,  omission,  refusal,  or
                                   failure that it deems to constitute Cause and
                                   give  you 60  days  after  you  receive  such
                                   notice to  correct  the  situation  (and thus
                                   avoid a  termination  for Cause),  unless the
                                   Company  agrees  to  extend  the time for the
                                   correction.  You agree  that the  Board  will
                                   have the  reasonable  discretion to determine
                                   whether  the  situation  is  correctable  and
                                   whether  your  correction  is  sufficient  to
                                   eliminate  the  basis for a  termination  for
                                   Cause.  If your  employment is terminated for
                                   Cause,  the  Company  shall  have no  further
                                   obligations to you under this Agreement.

      Without Cause                The Company may terminate your employment
                                   under this Agreement at any time during your
                                   Term without Cause.  The termination  will
                                   take effect 60 days after the Company gives
                                   you written notice of such termination.  If
                                   the Company  terminates your employment
                                   without Cause during your Term, the Company
                                   shall pay you your then Monthly Base Salary
                                   for the month in which you  terminate  and
                                   shall pay you as severance pay an amount
                                   equal to  twenty-four  (24) months of your
                                   final Monthly Base Salary plus any Bonus
                                   earned but not yet paid in one lump sum.  The
                                   Company  thereafter  shall have no further
                                   obligations to you under this Agreement.
                                   Finally,  a failure by the Company to extend
                                   your Term, or a failure by the Company to
                                   renew or replace the surety bond described in
                                   the next paragraph  within 30 days prior to
                                   its  expiration  (unless such  deadline is
                                   extended in writing by Robert L. Smith),
                                   shall constitute a termination of your
                                   employment by the Company without Cause.

                                   The Company will establish a surety bond at a
                                   mutually  agreeable  insurance company for an
                                   amount of  $850,000  upon  execution  of this
                                   agreement  to satisfy in whole or in part the
                                   Company's  obligations,  if any,  under  this
                                   part of this Agreement.

      Resignation                  If you resign at any time during your Term,
                                   the Company  shall have no further
                                   obligations  to you under this Agreement.

                                   If your  employment is terminated,  you shall
                                   return  within  3  business  days any and all
                                   property  to the  Company  which  you have in
                                   your    possession   when   your   employment
                                   terminates   and  any   copies  of  any  such
                                   property.

Noncompetition                     You have disclosed to the Board, in writing,
and Secrecy                        all healthcare related interests,
                                   investments,  and business  activities,
                                   whether as proprietor, stockholder, partner,
                                   co-venturer,  director, officer,  employee,
                                   independent  contractor, agent,  consultant,
                                   or in any other capacity or  manner
                                   whatsoever.  You  shall  promptly
                                   notify the Board, in writing,  of any changes
                                   in or additions to such interests, activities
                                   or investments  within 15 days of such change
                                   or addition.

                                   Without the written consent of the Board, you
                                   may  not  engage  in  any  of  the  following
                                   actions  during the period  that is (a) prior
                                   to your  termination  of employment  with the
                                   Company   and  (b)   within   two  (2)  years
                                   following the  termination of your employment
                                   with the Company (the "Restricted Period"):

                                   (i) own, either  directly or indirectly,  any
                                   interest in any business  that  competes with
                                   the  "Primary  Business" in which the Company
                                   or any  subsidiary or affiliate is engaged at
                                   the time your employment terminates, within a
                                   radius of 35 miles  from any site,  facility,
                                   or  location  which  is  owned,   managed  or
                                   operated by or affiliated with the Company or
                                   any  of  its   subsidiaries   or  affiliates,
                                   including  physician  practices  of any  kind
                                   (except   with   respect  to  the   Company's
                                   Baytown,  Texas, facility,  where such radius
                                   shall  be 5  miles).  For  purposes  of  this
                                   Agreement,  the term Primary  Business  shall
                                   mean the  delivery of  integrated  healthcare
                                   services in markets  where the Company or its
                                   subsidiaries or affiliates own hospitals and/
                                   or  skilled  nursing  facilities,   with  the
                                   hospital  serving  as the  hub  of the  local
                                   delivery  system  in  conjunction   with  its
                                   physical   medical  staff.   In  addition  to
                                   inpatient  acute  care,  these  services  can
                                   include (a)  individual  physician  practices
                                   and/ or physician based organizations such as
                                   primary   care   and    specialty    clinics,
                                   physician-hospital  organizations  or medical
                                   service  organizations,  or physician medical
                                   groups    and   (b)    ambulatory    surgery,
                                   psychiatric services, occupational and sports
                                   medicine centers,  psychiatric after-care and
                                   day  care  programs,  and  other  diagnostic,
                                   rehabilitative  and treatment  services.  The
                                   Board  may  modify,  from  time to time,  the
                                   definition of Primary Business to include any
                                   additional  business  or service  activity in
                                   which the Company may engage during your Term
                                   or to  exclude  any  business  or  service in
                                   which the Company ceases to engage;

                                   (ii) participate or serve, either directly or
                                   indirectly,    whether   as   a   proprietor,
                                   stockholder, partner, co-venturer,  director,
                                   officer,  agent,  or in any other capacity or
                                   manner  whatsoever in any business or service
                                   activity   that  competes  with  the  Primary
                                   Business;

                                   (iii)  directly  or  indirectly,  solicit  or
                                   recruit  any   individual   employed  by  the
                                   Company,  its  subsidiaries or affiliates for
                                   the  purpose of being  employed  by you or by
                                   any competitor of the Company on whose behalf
                                   you are acting as an agent, representative or
                                   employee,    or   convey   any   confidential
                                   information  or trade  secrets  regarding the
                                   Company,  its  subsidiaries  or affiliates to
                                   any other person; or

                                   (iv)  directly or  indirectly,  influence  or
                                   attempt to influence customers of the Company
                                   or any of its  subsidiaries  or affiliates to
                                   direct their  business to any  competitor  of
                                   the Company.

                                   In  the  event  you   violate  any  of  these
                                   noncompetition  and  secrecy  provision,  you
                                   agree  to repay  any  severance  amount  paid
                                   pursuant to this Agreement and agree that you
                                   shall  forfeit  all  your  outstanding  stock
                                   options  held by you,  except for those stock
                                   options already vested.

                                   You further  expressly agree that the Company
                                   will or would  suffer  irreparable  injury if
                                   you were to compete  with the  Company or any
                                   subsidiary  or affiliate in violation of this
                                   Agreement  and  that  the  Company  would  by
                                   reason of such  competition  be  entitled  to
                                   preliminary or permanent injunctive relief in
                                   a court of appropriate jurisdiction,  and you
                                   further consent and stipulate to the entry of
                                   such  preliminary  or  permanent   injunctive
                                   relief in such a court  prohibiting  you from
                                   competing  with the Company or any subsidiary
                                   or  affiliate  of the Company in violation of
                                   this Agreement upon an appropriate finding by
                                   such  court  that  you  have   violated  this
                                   Agreement.

                                   You   acknowledge  and  agree  that  in  your
                                   employment  under  this  Agreement  you  will
                                   occupy and will continue to occupy a position
                                   of  trust  and  confidence.  You  shall  not,
                                   except as may be  required  to  perform  your
                                   duties under this Agreement or as required by
                                   applicable  law,  until the expiration of the
                                   Restricted  Period or until such  information
                                   shall have become  public  other than by your
                                   unauthorized    disclosure,    disclose   (or
                                   threaten  to  disclose)  to  others  or  use,
                                   whether directly or indirectly, and any trade
                                   secrets or confidential information regarding
                                   the Company, its subsidiaries and affiliates,
                                   and you  agree  that  the  Company  would  by
                                   reason  of  such   disclose   or   threatened
                                   disclosure  or other  failure to  comply,  be
                                   entitled   to    preliminary   or   permanent
                                   injunctive  relief in a court of  appropriate
                                   jurisdiction,  and you  further  consent  and
                                   stipulate to the entry of such preliminary or
                                   permanent  injunctive  relief in such a court
                                   prohibiting  you from  disclosing  any  trade
                                   secrets  or   confidential   information   in
                                   violation   of   this   Agreement   upon   an
                                   appropriate  finding  by such  court that you
                                   have violated this Agreement. You agree never
                                   to copy,  and to  deliver  or  return  to the
                                   Company, at the Company's request at any time
                                   or upon  termination  or  expiration  of your
                                   employment or as soon thereafter as possible,
                                   all  documents,  computer  tapes  and  disks,
                                   records, lists, data, drawings, prints, notes
                                   and  written  information  furnished  by  the
                                   Company,  its  subsidiaries  or affiliates or
                                   prepared  by you  during  the  term  of  your
                                   employment by the Company,  its  subsidiaries
                                   and affiliates.

                                   You agree  that you will hold in a  fiduciary
                                   capacity  for the  benefit of the Company and
                                   any subsidiary  and  affiliate,  and will not
                                   directly or indirectly  use or disclose,  any
                                   trade  secret  that  you  may  have  acquired
                                   during the term of your employment under this
                                   Agreement so long as such information remains
                                   a trade secret. The term "trade secret" shall
                                   mean information,  including, but not limited
                                   to,   technical  or   nontechnical   data,  a
                                   formula, a pattern, a compilation, a program,
                                   a device, a method, a technique, a drawing, a
                                   process,  financial  data,  financial  plans,
                                   product  plans,   or  a  list  of  actual  or
                                   potential  customers  or  suppliers  that (a)
                                   derives economic value,  actual or potential,
                                   from not being  generally  known to,  and not
                                   being  generally  readily   ascertainable  by
                                   proper means by, other persons who can obtain
                                   economic value from its disclosure or use and
                                   (b) is the subject to  reasonable  efforts by
                                   the Company and each subsidiary and affiliate
                                   to  maintain  its  secrecy.   This  provision
                                   regarding   trade   secrets  is  intended  to
                                   provide  rights to the  Company  which are in
                                   addition  to those  rights  the  Company  has
                                   under the common law or  applicable  statutes
                                   for the protection trade secrets.

                                    The term  "confidential  information"  under
                                   this   Agreement   shall  mean  any   secret,
                                   confidential or proprietary  information that
                                   the Company or a  subsidiary  or an affiliate
                                   (not otherwise  included in the definition of
                                   a trade secret under this Agreement) that has
                                   not become generally  available to the public
                                   by the  act of  one  who  has  the  right  to
                                   disclose such information  without  violating
                                   any right of the company or a  subsidiary  or
                                   an affiliate.

                                    You agree that your  obligations  under this
                                   section are  obligations  which will continue
                                   beyond the date your employment terminates.

                                   You  agree  that  you  were   separately  and
                                   adequately  compensated  for the  obligations
                                   described  in this  section,  and  that  they
                                   reasonably  reflect  the need for the Company
                                   to protect its business interests.

Assignment                         The Company may assign or otherwise  transfer
                                   this Agreement and any and all of its rights,
                                   duties, obligations,  or  interests  under it
                                   to any  subsidiary  or  affiliate  of the
                                   Company.  Upon such assignment or transfer,
                                   any such business  entity will be deemed to
                                   be substituted  for the Company
                                   for all purposes.  You agree that  assignment
                                   or transfer  does not entitle you to
                                   Severance.  This Agreement  binds  and
                                   benefits  the  Company  and its  assigns  and
                                   your  heirs  and the  personal
                                   representatives  of your estate.  Without the
                                   Board's prior written  consent,  you may not
                                   assign or delegate  your  obligations  under
                                   this  Agreement or any or all your rights,
                                   duties,  or interests under it.

Severability                       lf the final  determination  of an arbitrator
                                   or  a   court   of   competent   jurisdiction
                                   declares,  after the  expiration  of the time
                                   within which  judicial  review (if permitted)
                                   of such determination may be perfected,  that
                                   any term or  provision  of this  Agreement is
                                   invalid or unenforceable, the remaining terms
                                   and provisions  will be  unimpaired,  and the
                                   invalid or  unenforceable  term or  provision
                                   will  be  deemed   replaced   by  a  term  or
                                   provision that is valid and  enforceable  and
                                   that   comes   closest  to   expressing   the
                                   intention  of the  invalid  or  unenforceable
                                   term or provision.

Amendment; Waiver                  Neither  you  nor  the  Company  may
                                   modify,  amend,  or waive  the  terms of this
                                   Agreement other than by a written  instrument
                                   signed by you and a director  of the  Company
                                   duly authorized by the Board.  Either party's
                                   waiver of the other party's  compliance  with
                                   any  provision  of  this  Agreement  is not a
                                   waiver  of  any  other   provision   of  this
                                   Agreement or of any subsequent breach by such
                                   party of a provision of this Agreement.

No Other Agreements                 This Agreement  supercedes
                                    and  replaces  any and all prior  agreements
                                    and  understandings  regarding the terms and
                                    conditions  of  your  employment,  and  this
                                    Agreement  constitutes the entire  agreement
                                    between you and the Company  with respect to
                                    such terms and conditions.

Withholding                        The  Company  will  reduce  its  compensatory
                                   payments  to you  for  withholding  and  FICA
                                   taxes   and  any   other   withholdings   and
                                   contributions  required  by law or elected by
                                   you.

Governing Law                      The laws of the State of Texas (other than
                                   its conflict of laws provisions) govern this
                                   Agreement.

Notices                            Notices must be given in writing by personal
                                   delivery,  by certified mail, return receipt
                                   requested, by telecopy,  or by  overnight
                                   delivery.  You must send or deliver  your
                                   notices to the  Company's corporate
                                   headquarters.  The Company will send or
                                   deliver any notice given to you at your
                                   address as reflected on the Company's
                                   personnel records.  You and the Company may
                                   change the address for notice by like  notice
                                   to the others.  You and the Company  agree
                                   that notice is received on the date it is
                                   personally delivered,  the date it is
                                   received by certified mail, the date of
                                   guaranteed delivery by the overnight service,
                                   or the date the fax machine confirms
                                   effective transmission.

<PAGE>

lf you accept the terms of this  Agreement,  please sign in the space  indicated
below. We encourage you to consult before signing with any advisors you choose.

                                      PARACELSUS HEALTHCARE CORPORATION

                                      By:_______________________________________

                                      Name:____________________________________

                                    Title:_____________________________________

I accept and agree to the terms of employment set forth in this Agreement:

--------------------------------

Robert L. Smith

Dated: December___, 1999

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