Document:

Exhibit 10.1

 

SEITEL, INC.

RETENTION BONUS PROGRAM FOR KEY EMPLOYEES

 

The Board of Directors of Seitel, Inc., a
Delaware corporation (the "Company"), established the Strategic
Financial Alternatives Committee (the "SFA Committee") to evaluate
strategic alternatives available to the Company and to take action with respect
thereto, including actions regarding management compensation. Alternatives that
may be considered include a merger or other form of business combination
constituting a "Change in Control" (as defined below in Section 1(c))
of the Company.  The SFA Committee, in performing its functions has required
and will require the support of certain key members of management.  In light of
the distraction and additional effort that has been and will be required of
certain key employees of the Company in assisting the SFA Committee, the SFA
Committee has determined that it is in the best interests of the Company and
its stockholders to take action intended to ensure that the Company and its
subsidiaries will continue to receive the full, undistracted attention and
dedication of these key employees, notwithstanding the possibility of the
occurrence of a Change in Control.  Therefore, in order to retain such
employees and to diminish the extent to which the possibility of a Change in
Control would otherwise distract certain key employees of the Company and its
subsidiaries from the efficient discharge of their responsibilities to the
Company and its subsidiaries, the SFA Committee hereby adopts the Program
described below effective as of September 8, 2006 ("Effective Date").

1.             
Definitions.  In addition to the
definitions contained elsewhere herein, the following terms shall have the
meaning ascribed to them in this section.

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

(b)       "Cause"
shall mean:

(i)        willful
misconduct or gross negligence by a Key Employee in the performance of his
duties under his Employment Agreement with the Company or its subsidiaries, if
any ("Employment Agreement"):

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

(iii)      failure
by a Key Employee to perform his duties and responsibilities as an employee of
the Company or its subsidiaries, if not cured to the satisfaction of the
Company determined by the Company within ten (10) days after Key Employee's
receipt of written notice from the Company of such breach, other than a failure
resulting from Key Employee's incapacity due to Disability;

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

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

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

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

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

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

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

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

(d)       "Disability"
shall mean a Key Employee's inability, due to physical or mental incapacity, to
substantially perform his duties and responsibilities for a period of ninety
(90) days during any twelve (12) month period as determined by the Company. 
The Key Employee agrees to submit to any examination that is necessary for a
determination of Disability and agrees to provide any information necessary for
a determination of Disability, including any information that is protected by
the Health Insurance Portability and Accountability Act.

(e)       "Exchange
Act" means the Securities Exchange Act of 1934, as amended from time to
time, including rules thereunder and successor provisions and rules thereto.

(f)       "Good
Reason" shall mean the occurrence of any of the following before the termination
of the Program without the Key Employee's consent:

(i)        a
material diminution in a Key Employee's title, responsibilities and duties as
normally-associated with the position held with the Company or its subsidiaries
as of the Effective Date;

(ii)       a
reduction in a Key Employee's base salary;

(iii)      a
change in reporting structure so that a Key Employee who reports to the Board or President of the Company
no longer does so; or

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

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

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

(h)       "Program"
shall mean the Seitel, Inc. Retention Bonus Program for Key Employees established
hereby, as amended from time to time.

2.             
Employees Covered.  The Program
shall only cover the employees of the Company and its subsidiaries who are
listed on Exhibit "A" attached hereto (collectively, the "Key
Employees" and individually a "Key Employee").

3.             
Condition to Benefits Being Payable. 
Subject to additional conditions set forth in Section 4 below, no benefits
shall be payable under this Program to a Key Employee unless there shall have
been a Change in Control.

4.             
Benefits.  Except as provided in
Section 4(d) below:  

(a)      First Retention Bonus.  A Key Employee (i) who continues
as an employee of the Company or its subsidiaries through the occurrence of a
Change in Control, (ii) whose employment with the Company or its subsidiaries
is involuntarily terminated by the Company or its subsidiaries within sixty
(60) days before the occurrence of a Change in Control for any reason other
than for Cause, or (iii) whose employment with the Company or its subsidiaries
is terminated within sixty days (60) days before the occurrence of a Change in
Control on account of the Key Employee's death or Disability, shall receive,
and the Company shall pay in cash, in one lump sum, within sixty (60) days of
the first to occur of the Change in Control or termination of employment, the
amount set forth opposite such Key Employee's name under the column titled
"First Retention Bonus" on Exhibit "A".

(b)      Second Retention Bonus.  A Key Employee who continues as an
employee of the Company or its subsidiaries through the first anniversary of
the Change in Control shall receive, and the Company shall pay in cash, in one
lump sum, the amount set forth opposite such Key Employee's name on Exhibit
"A" under the column titled "Second Retention Bonus," and
such bonus shall be paid within sixty (60) days of the first anniversary of the
Change in Control. A Key Employee (i) who terminates his employment with the
Company or its subsidiaries for Good Reason 
after a Change in Control, but before such first
anniversary of the Change in Control, (ii) whose employment with the Company or
its subsidiaries is involuntarily terminated by the Company or its subsidiaries
after a Change in Control for any reason other than for Cause, but before such
first anniversary of the Change in Control, or (iii) whose employment with the
Company or its subsidiaries is terminated after the Change in Control, but
before the first anniversary of the Change in Control on account of the Key
Employee's death or Disability, shall receive, and the Company shall pay in
cash, in one lump sum, the amount set forth opposite such Key Employee's name
on Exhibit "A" under the column titled "Second Retention
Bonus,"  and such bonus shall be paid no earlier than the date which is
six (6) months following the date of Key Employee's termination of employment
described in clauses (i), (ii) or (iii) above but no later than eight (8)
months following the date of such termination of employment.

(c)      The amounts payable under this Section 4 shall be payable whether or not
the Key Employee secures new employment, and shall not be reduced or offset in
any manner. 

(d)      Notwithstanding anything herein to the contrary, if a Key Employee's
employment is terminated by the Company or its subsidiaries for Cause, the Key
Employee shall not be entitled to the payment of any of the benefits under this
Section 4.  

5.             
Non-Exclusivity of Rights.  Nothing in
this Program shall prevent or limit Key
Employee's continuing or future participation in any benefit, bonus, incentive
or other plan, program, arrangement or policy provided by the Company or any of
its subsidiaries and for which Key Employee and/or Key Employee's family may
qualify, nor shall anything herein limit or otherwise affect such rights as Key
Employee and/or Key Employee's family may have under any agreements with the
Company or any of its subsidiaries.  Amounts which are vested benefits or which
Key Employee and/or Key Employee's family is/are otherwise entitled to receive
under any plan, program, arrangement, or policy of the Company or any of its
subsidiaries shall be payable in accordance with such plan, program,
arrangement or policy.

6.             
No Offset or Mitigation. 
The Company's obligation to make the payments
provided for in this Program and otherwise to perform its obligations hereunder
shall not be affected by any set-off, counterclaim, recoupment, defense or
other claim, right or action which the Company may have against Key Employee or
others.  In no event shall Key Employee be obligated to seek other employment
or take any other action by way of mitigation of the amounts payable to Key
Employee under any of the provisions of this Program.

7.             
Notice to Key Employees.  All notices, reports and statements given, made,
delivered or transmitted to any person eligible to receive benefits under this
Program or to any person claiming eligibility under this Program shall be
deemed to have been duly given, made or transmitted when mailed by first class
mail with postage prepaid and addressed to such person at his address as last
known to the Company.  Any person may record any change of his address from
time to time by written notice filed with the Company.

8.             
Records.  The Company shall keep
or cause to be kept all books of account, records and other data as may be
necessary or advisable in its judgment for the administration of this Program. 

9.             
Controlling Law.  This Program
shall be construed and enforced according to the internal laws of the State of
Delaware to the extent not preempted by Federal law, which shall otherwise
control.

10.          
Amendments; Termination.  The Company reserves the right to amend, modify,
suspend or terminate the Program at any time; provided that no such amendment,
modification, suspension or termination after the occurrence of a Change in
Control that has the effect of reducing or diminishing the right of any Key
Employee shall be effective without the written consent of the Key Employee.  This Program shall terminate on the first anniversary
of the Effective Date if no Change in Control shall have occurred by that
date.  If a Change in Control shall have occurred prior to the first
anniversary of the Effective Date, this Program shall terminate on the second
anniversary of the Change in Control.

11.          
Assignability by the Company.  This
Program shall inure to the benefit of and be binding upon the Company and its
successors and assigns.  The Company shall require any corporation, entity,
individual or other person who is the successor (whether direct or indirect by
purchase, merger, consolidation, reorganization or otherwise) to all or
substantially all the business and/or assets of the Company to expressly assume
and agree to perform, by a written agreement in form and in substance
satisfactory to the Company, all of the obligations of the Company under this
Program.  As used in this Program, the term "Company" shall mean the
Company as hereinbefore defined and any successor to its business and/or assets
as aforesaid which assumes to perform this Program by operation of law, written
agreement or otherwise.

12.          
Assignability by Key Employees.  It is a condition of this Program, and all rights of each person eligible to
receive benefits under this Program shall be subject hereto, that no right or
interest of any such person in this Program shall be assignable or transferable
in whole or in part, except by operation of law, including, but not by way of
limitation, lawful execution, levy, garnishment, attachment, pledge,
bankruptcy, alimony, child support or qualified domestic relations order.

13.          
Withholding.  The Company may
withhold from any amount payable or benefit provided under this Program such
Federal, state, local, foreign and other taxes as are required to be withheld
pursuant to any applicable law or regulations.

14.          
Limitation of Rights.  A person
eligible to receive benefits under this Program shall have the right only to
the benefits described in this Program on the terms and conditions herein
provided.

15.          
Gender and Plurals.  Wherever
used in this Program document, words in the masculine gender shall include
masculine or feminine gender, and, unless the context otherwise requires, words
in the singular shall include the plural, and words in the plural shall include
the singular.

(signature page to
follow)      

           IN WITNESS WHEREOF, the undersigned has
executed and delivered these presents, thereunto directly authorized, this 8th
day of September, 2006.

                                                                             SEITEL,
INC.

                      

                                                                             /s/
Robert D. Monson                                   

                                                                             Robert
D. Monson

                                                                             President
and Chief Executive Officer

                                                                  

Exhibit
"A"

 

 

 

 

Seitel, Inc.

Retention Bonus
Program

For Key
Employees

 

 

Exhibit
"A"

 

		
			Key Employee Name 
			
	
			 
			First Retention Bonus
	
			 
			Second Retention Bonus

	
			Robert Monson         
			
	
			
			$758,000  
	
			$758,000

	
			William
			Restrepo    
	
			
			$283,500
	
			$283,500

	
			Kevin Callaghan 
			
	
			
			$444,000 
	
			$444,000

	
			Robert Simon 
			
	
			
			$349,500  
	
			$349,500

	
			Marcia Kendrick
	
			
			$178,500
	
			$178,500

	
			Garis Smith* 
	
			
			$211,000 
	
			$211,000

	
			R. Sides      
			
	
			
			$137,000  
	
			$137,000

	
			R. Kelvin  
			
	
			
			$137,000  
	
			$137,000

                              

*Amounts in Canadian dollarsExhibit 10.2

 

SECOND
AMENDMENT TO THE

EMPLOYMENT
AGREEMENT

OF

KEVIN P. CALLAGHAN

 

           This Second Amendment to the Employment
Agreement of Kevin P. Callaghan ("Second Amendment") is made and
entered into as of September 8, 2006 by and between SEITEL, INC., a Delaware
corporation (together with its successors and assigns, the
"Company"), and Kevin P. Callaghan (the "Executive").

WITNESSETH

           WHEREAS, the Company and Executive
entered into an Employment Agreement as of March 24, 2005, which was amended
and restated October 19, 2005 ("Employment Agreement"); and

           WHEREAS, in accordance with Section 14 of the
Employment Agreement, the Company and Executive desire to amend the Employment
Agreement.

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

            1.        Amendment.  Section 9(k) of
the Employment Agreement is hereby removed from the Employment Agreement in its
entirety, and the Parties shall have no further obligations or rights under
Section 9(k) the Employment Agreement.

            2.       
Miscellaneous.  The
Agreement, as amended hereby, remains in full force and effect on the date
hereof.  This amendment may be executed in multiple counterparts, each of which
shall be deemed an original and all of which shall be deemed to constitute one
and the same instrument.  All questions concerning the validity, operation and
interpretation of this amendment and the performance of the obligations imposed
upon the parties hereunder shall be governed by the laws of the State of Texas,
without giving effect to conflict of law rules or principles, except as
preempted by applicable federal law.  This amendment shall be effective on and
as of the date first above written.  

           IN WITNESS WHEREOF, the undersigned have
executed this Agreement as of September 8, 2006.

 

SEITEL, INC.                                                                      THE
EXECUTIVE

By:  /s/ Robert D. Monson______________                            
By:  /s/ Kevin P. Callaghan     

       Robert D. Monson                                                                  Kevin
P. Callaghan

       President and Chief Executive Officer

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