Document:

<PAGE>
                                                                    EXHIBIT 10.1

                              EMPLOYMENT AGREEMENT

     This Employment Agreement (this "Agreement") is made and entered into by
and between Input/Output, Inc., a Delaware corporation (hereinafter referred to
as "Employer"), and Robert P. Peebler, an individual currently resident in
Harris County, Texas (hereinafter referred to as "Employee"), effective as of
March 31, 2003 (the "Effective Date").

                              W I T N E S S E T H:

     WHEREAS, attendant to Employee's employment by Employer, Employer and
Employee wish for there to be a complete understanding and agreement between
Employer and Employee with respect to, among other terms, Employee's duties and
responsibilities to Employer; the compensation and benefits owed to Employee;
the fiduciary duties owed by Employee to Employer; Employee's obligation to
avoid conflicts of interest, disclose pertinent information to Employer, and
refrain from using or disclosing Employer's information; and the term of
Employee's employment;

     NOW, THEREFORE, in consideration of the mutual promises contained herein
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, Employer and Employee agree as follows:

Section 1.  General Duties of Employer and Employee.

          (a) Employer agrees to employ Employee and Employee agrees to accept
employment by Employer and to serve Employer in an executive capacity as its
President and Chief Executive Officer. Employee will report to the Employer's
Board of Directors (the "Board"). The powers, duties and responsibilities of
Employee as President and Chief Executive Officer include those duties that are
the usual and customary powers, duties and responsibilities of such office,
including those powers, duties and responsibilities specified in Employer's
Bylaws, and such other and further duties appropriate to such position as may
from time to time be assigned to Employee by the Board.

          (b) The parties hereto recognize that Employee is also Chairman of
Energy Virtual Partners, LP and Energy Virtual Partners, Inc., and in such
capacities, is required to devote a portion of his efforts to those entities.
While employed hereunder, Employee will devote at least eighty percent (80%) of
his time, efforts, skills and attention for the benefit of and with his primary
attention to the affairs of Employer in order that he may faithfully perform his
duties and obligations to Employer. The preceding sentence will not, however, be
deemed to restrict Employee from attending to matters or engaging in activities
not directly related to the business of Employer, provided that (i) such
activities or matters are reasonable in scope and time commitment and not
otherwise in violation of this Agreement, and (ii) Employee will not become a
director of any corporation or other entity (excluding charitable or other
non-profit organizations) without prior written disclosure to, and consent of,
Employer.

          (c) At the commencement of Employee's employment by Employer, Employee
will be based at Employer's executive offices located at Stafford, Texas (the
"Place of Employment").

<PAGE>

          (d) Employee agrees and acknowledges that during the term of this
Agreement, he owes a fiduciary duty of loyalty, fidelity and allegiance to act
at all times in the best interests of Employer and to do no act knowingly which
would injure Employer's business, its interests or its reputation.

Section 2.  Compensation and Benefits.

          (a) Employer will pay to Employee during the term of this Agreement a
base salary at the rate of $400,000 per annum (such base salary as increased by
the Compensation Committee of the Board as hereinafter provided is referred to
herein as the "Base Salary"). The Compensation Committee of the Board will
review the Base Salary from time to time and, during the term of this Agreement,
may increase, but may not decrease, the Base Salary. The Base Salary will be
paid to Employee in equal installments every two weeks or on such other schedule
as Employer may establish from time to time for its management personnel.

          (b) Employee has not been promised any bonus.

          (c) The Employee shall be granted a nonqualified stock option
effective March 31, 2003 to purchase 1,325,000 shares of common stock of the
Employer under the Input/Output, Inc. 2003 Stock Option Plan (the "Option Plan")
having an exercise price equal to $6.00 per share. This option will vest in
equal monthly installments over a three-year period beginning on the first
anniversary of the date of grant. This option will have a term of ten years and
will otherwise be subject to the standard terms and conditions of the Option
Plan and the terms set forth in this Agreement. Employer agrees to use
reasonable commercial efforts to obtain the consent of its shareholders to the
adoption of the Option Plan and shall register the options granted hereunder on
a Form S-8 or equivalent registration statement. In the event Employer cannot
obtain the consent of its shareholders to the adoption of the Option Plan,
Employer will offer to employee a substitute incentive compensation plan to
Employee that has a substantially equivalent value to the option grant. If after
good faith negotiations Employer and Employee cannot agree on a suitable
alternative with thirty (30) days of the shareholder vote, then Employee and
Employer shall submit the dispute to arbitration in accordance with Section 14
of this Agreement.

          (d) Effective on the date hereof, without any requirement to accrue,
Employee will be entitled to paid vacation of not less than four (4) weeks each
year. Vacation may be taken by Employee at the time and for such periods as may
be mutually agreed upon between Employer and Employee.

          (e) Employee will be reimbursed in accordance with Employer's normal
expense reimbursement policy for all of the actual and reasonable costs and
expenses incurred by him in the performance of his services and duties
hereunder, including, but not limited to, travel and entertainment expenses.
Employee will furnish Employer with all invoices and vouchers reflecting amounts
for which Employee seeks Employer's reimbursement.

          (f) Employee will be entitled to participate in all insurance and
retirement plans, incentive compensation plans (at a level appropriate to his
position) and such other benefit plans or programs as may be in effect from time
to time for the senior management employees of

                                      -2-
<PAGE>

Employer including, without limitation, those related to savings and thrift,
retirement, welfare, medical, dental, disability, salary continuance, accidental
death, travel accident, life insurance, incentive bonus, membership in business
and professional organizations, and reimbursement of business and entertainment
expenses. Specifically, Employee will be entitled to participate in the
Input/Output, Inc. Deferred Compensation Plan as long as it is made available to
other key management employees.

          (g) Employer, during the term of this Agreement and thereafter without
limit of time, will indemnify Employee for claims and expenses to the extent
provided in Employer's Certificate of Incorporation and Bylaws. Employer will
also provide Employee coverage under Employer's policies of directors' and
officers' liability insurance to the same extent as other executive officers of
Employer during the term of this Agreement.

          (h) All Base Salary, bonus and other payments made by Employer to
Employee pursuant to this Agreement will be subject to such payroll and
withholding deductions as may be required by law and other deductions applied
generally to employees of Employer for insurance and other employee benefit
plans in which Employee participates.

Section 3. Fiduciary Duty; Confidentiality.

          (a) In keeping with Employee's fiduciary duties to Employer, Employee
agrees that he will not knowingly take any action that would create a conflict
of interest with Employer, or upon discovery thereof, allow such a conflict to
continue. In the event that Employee discovers that such a conflict exists,
Employee agrees that he will disclose to the Board any facts which might involve
a conflict of interest that has not been approved by the Board.

          (b) As part of Employee's fiduciary duties to Employer, Employee
agrees to protect and safeguard Employer's information, ideas, concepts,
improvements, discoveries, and inventions and any proprietary, confidential and
other information relating to Employer or its business (collectively,
"Confidential Information") and, except as may be required by Employer, Employee
will not knowingly, either during his employment by Employer or thereafter,
directly or indirectly, use for his own benefit or for the benefit of another,
or disclose to another, any Confidential Information, except (i) with the prior
written consent of Employer; (ii) in the course of the proper performance of
Employee's duties under this Agreement; (iii) for information that becomes
generally available to the public other than as a result of the unauthorized
disclosure by Employee; (iv) for information that becomes available to Employee
on a nonconfidential basis from a source other than Employer or its affiliated
companies who is not bound by a duty of confidentiality to Employer; or (v) as
may be required by any applicable law, rule, regulation or order.

          (c) Upon termination of his employment with Employer, Employee will
immediately deliver to Employer all documents in Employee's possession or under
his control which embody any of Employer's Confidential Information.

                                      -3-
<PAGE>

          (d) In addition to the foregoing provisions of this Section 3, and
effective as of the Effective Date, Employee agrees to enter into an Employee
Confidentiality and Intellectual Property Agreement with Employer, a copy of
which is attached hereto as Exhibit B.

Section 4. Term.

     Employee's employment with Employer will commence on March 31, 2003, and
will continue for five (5) years (the "Term"), unless terminated earlier in
accordance with Section 5.

Section 5. Termination.

          (a) Employee's employment with Employer hereunder will terminate upon
the first to occur of the following:

               (1) The death or "Disability" (as defined in Section 5(b) hereof)
          of Employee;

               (2) Employer terminates such employment for "Cause" (as defined
          in Section 5(c) hereof);

               (3) Employee terminates such employment for "Good Reason" (as
          defined in Section 5(d) hereof);

               (4) Employer terminates such employment for any reason other than
          Cause, or for no reason at all;

               (5) Employee terminates such employment for any reason other than
          Good Reason, or for no reason at all; or

               (6) The expiration of the Term.

          (b) As used in this Agreement, "Disability" means permanent and total
disability (within the meaning of Section 22(e)(3) of the Internal Revenue Code
of 1986, as amended (the "Code"), or any successor provision) which has existed
for at least 180 consecutive days.

          (c) As used in this Agreement, "Cause" means:

               (1) the willful and continued failure by Employee to
          substantially perform his obligations under this Agreement other than
          any such failure resulting from his Disability) after a demand for
          substantial performance has been delivered to him by the Board which
          specifically identifies the manner in which the Board believes
          Employee has not substantially performed such provisions and Employee
          has failed to remedy such situation within thirty (30) days after such
          demand;

               (2) Employee's willfully engaging in conduct materially and
          demonstrably injurious to the property or business of Employer,
          including without

                                      -4-
<PAGE>

          limitation, fraud, misappropriation of funds or other property of
          Employer, other willful misconduct, gross negligence or conviction of
          a felony or any crime involving moral turpitude; or

               (3) Employee's other material breach of this Agreement, which
          breach has not been remedied by Employee within thirty (30) days after
          receipt by Employee of written notice from Employer that he is in
          material breach of the Agreement, specifying the particulars of such
          breach.

For purposes of this Agreement, no act, or failure to act, on the part of
Employee shall be deemed "willful" or engaged in "willfully" if it was due
primarily to an error in judgment or negligence, but shall be deemed "willful"
or engaged in "willfully" only if done, or omitted to be done, by Employee not
in good faith and without reasonable belief that his action or omission was in
the best interest of Employer. Notwithstanding the foregoing, Employee shall not
be deemed to have been terminated as a result of "Cause" hereunder unless and
until there shall have been delivered to Employee a copy of a resolution duly
adopted by the affirmative vote of not less than three-quarters of the Board
then in office at a meeting of the Board called and held for such purpose (after
reasonable notice to Employee and an opportunity for Employee, together with his
counsel, to be heard before the Board), finding that, in the good faith opinion
of the Board of Directors, Employee has committed an act set forth above in this
Section 5(c) and specifying the particulars thereof in detail. Nothing herein
shall limit the right of Employee or his legal representatives to contest the
validity or propriety of any such determination.

          (d) As used in this Agreement, "Good Reason" means:

               (1) Employer's failure to comply with any of the provisions of
          Section 2 of this Agreement (including, but not limited to, such
          failure resulting from any reduction in the Base Salary) which failure
          is not remedied within thirty (30) days after receipt of written
          notice from Employee specifying the particulars of such breach;

               (2) Employer's breach of any other material provision of this
          Agreement which is not remedied within thirty (30) days after receipt
          by Employer of written notice from Employee specifying the particulars
          of such breach;

               (3) the assignment to Employee of any duties materially
          inconsistent with Employee's position (including status, offices,
          titles, and reporting requirements), a removal from his current
          office, a material reduction in his duties, functions,
          responsibilities, or authority as contemplated by Section 1 of this
          Agreement, or other action by Employer that results in a diminution
          (other than an isolated, inconsequential or insubstantial diminution
          which is remedied by Employer promptly after receipt of written notice
          thereof given by Employee) in such office, position, duties,
          functions, responsibilities or authority;

                                       -5-
<PAGE>

               (4) the relocation of Employee's principal place of performance
          of his duties and responsibilities under this Agreement to a location
          more than thirty miles (30) miles from the Place of Employment; or

               (5) Any failure by Employer to comply with Section 11(c).

          (e) As used in this Agreement, "Date of Termination" means:

               (1) if Employee's employment with Employer is terminated for
          Disability, sixty (60) days after notice of termination is received by
          Employee or any later date specified therein, provided that within
          such sixty (60) day period Employee shall not have returned to
          full-time performance of Employee's duties;

               (2) if Employee's employment with Employer is terminated as a
          result of Employee's death, the date of death of Employee;

               (3) if Employee's employment with Employer is terminated for
          Cause, the date notice of termination, accompanied by a copy of the
          resolution satisfying Section 5(c), is received by Employee or any
          later date specified therein, provided that Employer may, in its
          discretion, condition Employee's continued employment upon such
          considerations or requirements as may be reasonable under the
          circumstances and place a reasonable limitation upon the time within
          which Employee will comply with such considerations or requirements;

               (4) if Employee's employment with Employer is terminated for any
          reason other than Employee's Disability, Employee's death, or Cause,
          or for no reason, the date that is fourteen (14) days after the date
          of receipt of the notice of termination.

Section 6. Effect of Termination.

          (a) Upon termination of Employee's employment by Employer for Cause,
or by Employee for no reason or any reason other than Good Reason, all
compensation and benefits will cease upon the Date of Termination other than:
(i) those benefits that are provided by retirement, deferred compensation and
benefit plans and programs specifically adopted and approved by Employer for
Employee that are earned and vested by the Date of Termination, including unused
vacation pay (ii) as provided in Section 10, (iii) Employee's Base Salary
through the Date of Termination; (iv) any incentive compensation due Employee
if, under the terms of the relevant incentive compensation arrangement, such
incentive compensation was due and payable to Employee on or before the Date of
Termination; and (v) medical and similar benefits the continuation of which is
required by applicable law or provided by the applicable benefit plan.

          (b) Upon termination of Employee's employment due to the death of
Employee or upon termination by Employer due to the Disability of Employee, all
compensation and benefits will cease upon the Date of Termination other than:
(i) those benefits that are provided by retirement, deferred compensation and
benefit plans and programs specifically adopted and approved by Employer for
Employee that are earned and vested by the Date of

                                      -6-
<PAGE>

Termination including unused vacation pay, (ii) as provided in Section 10, (iii)
Employee's Base Salary through the Date of Termination; provided, that in the
case of a termination resulting from Employee's Disability, Base Salary shall
continue until payment begins under the Employer's disability insurance program;
(iv) any incentive compensation due Employee if, under the terms of the relevant
incentive compensation arrangement, such incentive compensation was due and
payable to Employee on or before the Date of Termination; and (v) medical and
similar benefits the continuation of which is required by applicable law or
provided by the applicable benefit plan. In addition, in the event of
termination as a result of Employee's death, Employer shall pay to Employee's
widow, a death benefit equal to one year's Base Salary payable over the year
following Employee's death, as though Employee were still employed.

          (c) Upon termination of this Agreement due to the expiration of the
Term, Employee will continue to be employed by Employer as an employee at will.

          (d) Except as otherwise provided in Section 6(e), if Employee's
employment with Employer is terminated (i) by Employer for no reason or for any
reason other than Cause, the death or Disability of Employee, or the expiration
of the Term, or (ii) by Employee for Good Reason, the obligations of Employer
and Employee under Sections 1 and 2 will terminate as of the Date of
Termination, and Employer will pay or provide to Employee (subject to Section
2(h) hereof) the following:

               (1) Subject to Employee's compliance with Section 12 hereof, the
          Employer shall pay Employee (i) during the two-year period ending on
          the second anniversary of the Date of Termination, an aggregate amount
          equal to two times (2x) Employee's Base Salary, which payments will be
          paid to Employee in twenty-four (24) equal monthly installments during
          such two-year period, and (ii) a lump sum equal to 0.99 times
          Employee's Base Salary;

               (2) all incentive compensation then due Employee, if any, under
          the terms of the relevant incentive compensation arrangements then in
          effect and applicable to Employee.

Except as otherwise provided above and in Section 10, all other compensation and
benefits will cease upon the Date of Termination other than the following: (i)
those benefits that are provided by retirement, deferred compensation, and
benefit plans and programs specifically adopted and approved by Employer for
Employee that are earned and vested by the Date of Termination, (ii) any rights
Employee or his survivors may have under any grants of options to purchase
Employer's Common Stock made in accordance with Section 2(d) hereof; and (iii)
medical and similar benefits the continuation of which is required by applicable
law or as provided by the applicable benefit plan. As a condition to making the
payments and providing the benefits specified in this Section 6(d), Employer
will require that Employee execute a release of all claims Employee may have
against Employer at the time of Employee's termination. Such release will be in
substantially the same form as Exhibit C attached hereto.

          (e) If (i) a "Change in Control" (as defined in Section 6(g) hereof)
shall have occurred, and (ii) Employee's employment with Employer has continued
for for eighteen months following such Change of Control, Employee at his option
may during the immediately

                                      -7-
<PAGE>

following six (6) month period terminate his employment with Employer by giving
Employer a three (3) month prior notice of termination, and such termination
shall be treated as a termination for Good Reason in accordance with Section
6(d) above. The following shall occur immediately upon the occurrence of such
Change in Control:

                    (i)  each option to acquire Common Stock or other equity
                         securities of Employer held by Employee immediately
                         prior to such Change in Control issued to Employee in
                         conjunction with or after Employee accepted employment
                         with Employer shall accelerate and become fully vested
                         and exercisable, regardless of whether or not the
                         vesting conditions set forth in the relevant stock
                         option agreement have been satisfied, and shall remain
                         fully exercisable for a one-year period following the
                         Date of Termination consistent with Section 5(e)
                         hereof; and

                    (ii) all restrictions on any restricted Common Stock or
                         other equity securities of Employer granted to Employee
                         prior to such Change in Control shall be removed and
                         such Common Stock or other equity securities shall be
                         freely transferable (subject to applicable securities
                         laws), regardless of whether the conditions set forth
                         in the relevant restricted stock agreements have been
                         satisfied in full.

As a condition to making the payments and providing the benefits specified in
this Section 6(e), Employer will require that Employee execute a release of all
claims Employee may have against Employer at the time of Employee's termination,
with such release being in substantially the same form as Exhibit C attached
hereto.

          (f) For purposes of this Agreement, a "Change in Control" shall mean
the occurrence of any of the following after the Effective Date:

               (1) the acquisition by any individual, entity or group (within
          the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange
          Act of 1934, as amended from time to time (the "Exchange Act"), or any
          successor statute) (a "Covered Person") of beneficial ownership
          (within the meaning of Rule 13d-3 promulgated under the Exchange Act)
          of 51% or more of either (i) the then outstanding shares of Common
          Stock (the "Outstanding Company Common Stock"), or (ii) the combined
          voting power of the then outstanding voting securities of Employer
          entitled to vote generally in the election of directors (the
          "Outstanding Company Voting Securities"); provided, however, that for
          purposes of this Section 6(f)(1), the following acquisitions shall not
          constitute a Change in Control: (i) any acquisition directly from
          Employer, (ii) any acquisition by Employer, (iii) any acquisition by
          any employee benefit plan (or related trust) sponsored or maintained
          by Employer or any entity controlled by Employer, or

                                      -8-
<PAGE>

          (iv) any acquisition by any corporation pursuant to a transaction
          which complies with Section 6(f)(3)(i), (ii) or (iii); or

               (2) individuals who, as of the Effective Date, constitute the
          Board (the "Incumbent Board") cease for any reason to constitute at
          least a majority of the Board; provided, however, that any individual
          becoming a director subsequent to the Effective Date whose election,
          or nomination for election by Employer's stockholders, was approved by
          a vote of at least two-thirds of the directors then comprising the
          Incumbent Board shall be considered as though such individual were a
          member of the Incumbent Board, but excluding, for this purpose, any
          such individual whose initial assumption of office occurs as a result
          of an actual or threatened election contest with respect to the
          election or removal of directors or other actual or threatened
          solicitation of proxies or consents by or on behalf of a Covered
          Person other than the Board; or

               (3) consummation of (xx) a reorganization, merger, amalgamation,
          consolidation, sale or other form of business combination of Employer
          or any subsidiary of Employer, or (yy) a sale, lease, exchange,
          disposition or other transfer of all or substantially all of the
          assets of Employer (a "Business Combination"), in each case, unless,
          following such Business Combination, (i) all or substantially all of
          the individuals and entities who were the beneficial owners,
          respectively, of the Outstanding Company Common Stock and Outstanding
          Company Voting Securities immediately prior to such Business
          Combination beneficially own, directly or indirectly, more than 60%
          of, respectively, the then outstanding shares of common stock and the
          combined voting power of the then outstanding voting securities
          entitled to vote generally in the election of directors, as the case
          may be, of the corporation or entity resulting from such Business
          Combination (including, without limitation, a corporation or entity
          which as a result of such transaction owns Employer or all or
          substantially all of Employer's assets either directly or through one
          or more subsidiaries) in substantially the same proportions as their
          ownership immediately prior to such Business Combination of the
          Outstanding Company Common Stock and Outstanding Company Voting
          Securities, as the case may be, (ii) no Covered Person (excluding any
          employee benefit plan (or related trust) of Employer or such
          corporation resulting from such Business Combination) beneficially
          owns, directly or indirectly, 51% or more of, respectively, the then
          outstanding shares of common stock of the corporation resulting from
          such Business Combination or the combined voting power of the then
          outstanding voting securities of such corporation, except to the
          extent that such ownership existed prior to the Business Combination,
          and (iii) at least a majority of the members of the board of directors
          of the corporation resulting from such Business Combination, were
          members of the Incumbent Board at the time of the execution of the
          initial agreement, or of the action of the Board of Directors,
          providing for such Business Combination; or

               (4) approval by the stockholders of Employer of a complete
          liquidation or dissolution of Employer.

                                      -9-
<PAGE>

Section 7.  Excise Tax.

          (a) Anything in this Agreement to the contrary notwithstanding, in the
event it shall be determined that any payment or distribution by, or benefit
from, Employer or any of its affiliates to or for the benefit of Employee,
whether paid or payable or distributed or distributable pursuant to the terms of
this Agreement or otherwise (any such payments, distributions or benefits being
individually referred to herein as a "Payment," and any two or more of such
payments, distributions or benefits being referred to herein as "Payments"),
would be subject to the excise tax imposed by Section 4999 of the Code (such
excise tax, together with any interest thereon, any penalties, additions to tax,
or additional amounts with respect to such excise tax, and any interest in
respect of such penalties, additions to tax or additional amounts, being
collectively referred herein to as the "Excise Tax"), then Employee shall be
entitled to receive an additional payment or payments (individually referred to
herein as a "Gross-Up Payment" and any two or more of such additional payments
being referred to herein as "Gross-Up Payments") in an amount such that after
payment by Employee of all taxes (as defined in Section 7(k)) imposed upon the
Gross-Up Payment, Employee retains an amount of such Gross-Up Payment equal to
the Excise Tax imposed upon the Payments.

          (b) Subject to the provisions of Section 7(c) through (i), any
determination (individually, a "Determination") required to be made under this
Section 7(b), including whether a Gross-Up Payment is required and the amount of
such Gross-Up Payment, shall initially be made, at Employer's expense, by
nationally recognized tax counsel selected by Employer ("Tax Counsel"). Tax
Counsel shall provide detailed supporting legal authorities, calculations, and
documentation both to Employer and Employee within 15 business days of the
termination of Employee's employment, if applicable, or such other time or times
as is reasonably requested by Employer or Employee. If Tax Counsel makes the
initial Determination that no Excise Tax is payable by Employee with respect to
a Payment or Payments, it shall furnish Employee with an opinion reasonably
acceptable to Employee that no Excise Tax will be imposed with respect to any
such Payment or Payments. Employee shall have the right to dispute any
Determination (a "Dispute") within 15 business days after delivery of Tax
Counsel's opinion with respect to such Determination. The Gross-Up Payment, if
any, as determined pursuant to such Determination shall, at Employer's expense,
be paid by Employer to or for the benefit of Employee within five business days
of Employee's receipt of such Determination. The existence of a Dispute shall
not in any way affect Employee's right to receive the Gross-Up Payment in
accordance with such Determination. If there is no Dispute, such Determination
shall be binding, final and conclusive upon Employer and Employee, subject in
all respects, however, to the provisions of Section 7(c) through (i) below. As a
result of the uncertainty in the application of Sections 4999 and 280G of the
Code, it is possible that Gross-Up Payments (or portions thereof) which will not
have been made by Employer should have been made ("Underpayment"), and if upon
any reasonable written request from Employee or Employer to Tax Counsel, or upon
Tax Counsel's own initiative, Tax Counsel, at Employer's expense, thereafter
determines that Employee is required to make a payment of any Excise Tax or any
additional Excise Tax, as the case may be, Tax Counsel shall, at Employer's
expense, determine the amount of the Underpayment that has occurred and any such
Underpayment shall be promptly paid by Employer to or for the benefit of
Employee.

                                      -10-
<PAGE>

          (c) Employer shall defend, hold harmless, and indemnify Employee on a
fully grossed-up after tax basis from and against any and all claims, losses,
liabilities, obligations, damages, impositions, assessments, demands, judgments,
settlements, costs and expenses (including reasonable attorneys', accountants',
and experts' fees and expenses) with respect to any tax liability of Employee
resulting from any Final Determination (as defined in Section 7(j)) that any
Payment is subject to the Excise Tax.

          (d) If a party hereto receives any written or oral communication with
respect to any question, adjustment, assessment or pending or threatened audit,
examination, investigation or administrative, court or other proceeding which,
if pursued successfully, could result in or give rise to a claim by Employee
against Employer under this Section 7 ("Claim"), including, but not limited to,
a claim for indemnification of Employee by Employer under Section 7(c), then
such party shall promptly notify the other party hereto in writing of such Claim
("Tax Claim Notice").

          (e) If a Claim is asserted against Employee ("Employee Claim"),
Employee shall take or cause to be taken such action in connection with
contesting such Employee Claim as Employer shall reasonably request in writing
from time to time, including the retention of counsel and experts as are
reasonably designated by Employer (it being understood and agreed by the parties
hereto that the terms of any such retention shall expressly provide that
Employer shall be solely responsible for the payment of any and all fees and
disbursements of such counsel and any experts) and the execution of powers of
attorney.

          (f) Employer shall have the right to defend or prosecute, at the sole
cost, expense and risk of Employer, such Employee Claim by all appropriate
proceedings, which proceedings shall be defended or prosecuted diligently by
Employer to a Final Determination; provided, however, that (i) Employer shall
not, without Employee's prior written consent, enter into any compromise or
settlement of such Employee Claim that would adversely affect Employee, (ii) any
request from Employer to Employee regarding any extension of the statute of
limitations relating to assessment, payment, or collection of taxes for the
taxable year of Employee with respect to which the contested issues involved in,
and amount of, Employee Claim relate is limited solely to such contested issues
and amount, and (iii) Employer's control of any contest or proceeding shall be
limited to issues with respect to Employee Claim and Employee shall be entitled
to settle or contest, in his sole and absolute discretion, any other issue
raised by the Internal Revenue Service or any other taxing authority. So long as
Employer is diligently defending or prosecuting such Employee Claim, Employee
shall provide or cause to be provided to Employer any information reasonably
requested by Employer that relates to such Employee Claim, and shall otherwise
cooperate with Employer and its representatives in good faith in order to
contest effectively such Employee Claim. Employer shall keep Employee informed
of all developments and events relating to any such Employee Claim (including,
without limitation, providing to Employee copies of all written materials
pertaining to any such Employee Claim), and Employee or his authorized
representatives shall be entitled, at Employee's expense, to participate in all
conferences, meetings and proceedings relating to any such Employee Claim.

          (g) In the case of any Employee Claim that is defended or prosecuted
to a Final Determination pursuant to the terms of this Section 7(i), Employer
shall pay, on a fully

                                      -11-
<PAGE>

grossed-up after tax basis, to Employee in immediately available funds the full
amount of any taxes arising or resulting from or incurred in connection with
such Employee Claim that have not theretofore been paid by Employer to Employee,
together with the costs and expenses, on a fully grossed-up after tax basis,
incurred in connection therewith that have not theretofore been paid by Employer
to Employee, within ten calendar days after such Final Determination. In the
case of any Employee Claim not covered by the preceding sentence, Employer shall
pay, on a fully grossed-up after tax basis, to Employee in immediately available
funds the full amount of any taxes arising or resulting from or incurred in
connection with such Employee Claim at least ten calendar days before the date
payment of such taxes is due from Employee, except where payment of such taxes
is sooner required under the provisions of this Section 7(g), in which case
payment of such taxes (and payment, on a fully grossed-up after tax basis, of
any costs and expenses required to be paid under this Section 7(g)) shall be
made within the time and in the manner otherwise provided in this Section 7(g).

          (h) For purposes of this Agreement, the term "Final Determination"
shall mean (A) a decision, judgment, decree or other order by a court or other
tribunal with appropriate jurisdiction, which has become final and
non-appealable; (B) a final and binding settlement or compromise with an
administrative agency with appropriate jurisdiction, including, but not limited
to, a closing agreement under Section 7121 of the Code; (C) any disallowance of
a claim for refund or credit in respect to an overpayment of tax unless a suit
is filed on a timely basis; or (D) any final disposition by reason of the
expiration of all applicable statutes of limitations.

          (i) For purposes of this Agreement, the terms "tax" and "taxes" mean
any and all taxes of any kind whatsoever (including, but not limited to, any and
all Excise Taxes, income taxes, and employment taxes), together with any
interest thereon, any penalties, additions to tax, or additional amounts with
respect to such taxes and any interest in respect of such penalties, additions
to tax, or additional amounts.

Section 8. Expenses of Enforcement.

          Upon demand by Employee made to Employer, Employer shall reimburse
Employee for the reasonable expenses (including attorneys' fees and expenses)
incurred by Employee after a Change in Control in enforcing or seeking to
enforce the payment of any amount or other benefit to which Employee shall have
become entitled under this Agreement as a result of the termination of
Employee's employment with Employer within two (2) years after the Employee's
Date of Termination, including, but not limited to, those incurred in connection
with any arbitration concerning same initiated pursuant to Section 14
(regardless of the outcome of such arbitration). To the extent that any such
reimbursement would be subject to the Excise Tax, then Employee shall be
entitled to receive Gross-Up Payments in an amount such that after payment by
Employee of all taxes imposed on such Gross-Up Payments, Employee retains an
amount equal to the Excise Tax imposed upon the reimbursement, and the other
provisions of Section 7 hereof shall also apply to such circumstance unless the
context thereof otherwise indicates.

                                      -12-
<PAGE>

Section 9. No Obligation to Mitigate.

     Employee shall not be required to mitigate the amount of any payment or
other benefit required to be paid to Employee pursuant to this Agreement,
whether by seeking other employment or otherwise, nor shall the amount of any
such payment or other benefit be reduced on account of any compensation earned
by Employee as a result of employment by another person.

Section 10. No Effect on Other Rights.

     Nothing in this Agreement shall prevent or limit Employee's continuing or
future participation in any plan, program, policy or practice of or provided by
Employer or any of its affiliates and for which Employee may qualify, nor shall
anything herein limit or otherwise affect such rights as Employee may have under
any stock option or other agreements with Employer or any of its affiliates.
Amounts which are vested benefits or which Employee is otherwise entitled to
receive under any plan, program, policy or practice of or provided by, or any
other contract or agreement with, Employer or any of its affiliates at or
subsequent to the Date of Termination shall be payable or otherwise provided in
accordance with such plan, program, policy or practice or contract or agreement
except as explicitly modified by this Agreement.

Section 11. Successors; Binding Agreement.

          (a) This Agreement is personal to Employee and without the prior
written consent of Employer shall not be assignable by Employee otherwise than
by will or the laws of descent and distribution. This Agreement shall inure to
the benefit of and be enforceable by Employee's personal or legal
representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees.

          (b) This Agreement shall inure to the benefit of and be binding upon
Employer and its successors and assigns.

          (c) Employer will require any successor (whether direct or indirect,
by purchase, merger, amalgamation, consolidation or otherwise) to all or
substantially all of the business and/or assets of Employer, by agreement in
form and substance reasonably satisfactory to Employee, to expressly assume and
agree to perform this Agreement in the same manner and to the same extent that
Employer would be required to perform it if no such succession had taken place.
As used in this Agreement, "Employer" shall mean Employer as hereinbefore
defined and any successor to its business and/or assets as aforesaid which
assumes and agrees to perform this Agreement by execution and delivery of the
agreement provided for in this Section 11(c) or which otherwise becomes bound by
the terms and provisions of this Agreement by operation of law or otherwise.

Section 12. Non-Competition; Non-Solicitation; No Hire.

          (a) Employee agrees that, during his employment and for a period of
two (2) years following the termination of Employee's employment with Employer
(such applicable period being referred to herein as the "Non-Compete Period"),
Employee shall not, without the

                                      -13-
<PAGE>

prior written consent of Employer, directly or indirectly, anywhere in the
world, engage, invest, own any interest, or participate in, consult with, render
services to, or be employed by any business, person, firm or entity that is in
competition with the "Business" (as defined in Section 12(d)) of Employer or any
of its subsidiaries or affiliates, except for the account of Employer and its
subsidiaries and affiliates; provided, however, that during the Non-Compete
Period Employee may acquire, solely as a passive investment, not more than two
percent (2%) of the outstanding shares or other units of any security of any
entity subject to the requirements of Section 13 or 15(d) of the Exchange Act.
Employee acknowledges that a remedy at law for any breach or attempted breach of
this covenant not to compete will be inadequate and further agrees that any
breach of this covenant not to compete will result in irreparable harm to
Employer, and, accordingly, Employer shall, in addition to any other remedy that
may be available to it, be entitled to specific performance and temporary and
permanent injunctive and other equitable relief (without proof of actual damage
or inadequacy of legal remedy) in case of any such breach or attempted breach.
Employee acknowledges that this covenant not to compete is being provided as an
inducement to Employer to enter into this Agreement and that this covenant not
to compete contains reasonable limitations as to time, geographical area and
scope of activity to be restrained that do not impose a greater restraint than
is necessary to protect the goodwill or other business interest of Employer.
Whenever possible, each provision of this covenant not to compete shall be
interpreted in such a manner as to be effective and valid under applicable law
but if any provision of this covenant not to compete shall be prohibited by or
invalid under applicable law, such provision of this covenant not to compete
shall be prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remaining provisions of this covenant not to compete. If any
provision of this covenant not to compete shall, for any reason, be judged by
any court of competent jurisdiction to be invalid or unenforceable, such
judgment shall not affect, impair or invalidate the remainder of this covenant
not to compete but shall be confined in its operation to the provision of this
covenant not to compete directly involved in the controversy in which such
judgment shall have been rendered. In the event that the provisions of this
covenant not to compete should ever be deemed to exceed the time or geographic
limitations permitted by applicable laws, then such provision shall be reformed
to the maximum time or geographic limitations permitted by applicable law.

          (b) In addition to the restrictions set forth in Section 12(a),
Employee agrees that, during his employment and for a period of two (2) years
thereafter, Employee will not, either directly or indirectly, (i) make known to
any person, firm or entity that is in competition with the Business of Employer
or any of its subsidiaries or affiliates the names and addresses of any of the
suppliers or customers of Employer or any of its subsidiaries or affiliates,
potential customers of Employer or any of its subsidiaries or affiliates upon
whom Employer or any of its subsidiaries or affiliates has called upon in the
last two (2) years or contacts of Employer or any of its subsidiaries or
affiliates or any other information pertaining to such persons, unless such
information is publicly known, or (ii) for the purpose of engaging in any
Business, call on, solicit, or take away, or attempt to call on, solicit or take
away any of the suppliers or customers of Employer or any of its subsidiaries or
affiliates, whether for Employee or for any other person, firm or entity.

          (c) Effective as of the Effective Date and for a period that includes
the term of this Agreement and two (2) years thereafter, Employee will not,
either on his own account or for

                                      -14-
<PAGE>

any other person, firm, partnership, corporation, or other entity (i) solicit
any employee of Employer or any of its subsidiaries or affiliates to leave such
employment; or (ii) induce or attempt to induce any such employee to breach her
or his employment agreement with Employer or any of its subsidiaries or
affiliates.

          (d) As used in this Agreement, "Business" means the business engaged
in by Employer on the Date of Termination.

          (e) In the event that Employee violates any of the terms and
conditions of this Section 12 during the applicable period specified, then in
addition to the other rights and remedies available to Employer hereunder and
under Section 14 hereof, Employer's obligations to make any remaining payments
due and owing pursuant to Section 6(d) hereof shall cease and terminate.

Section 13. Miscellaneous.

          (a) All notices and other communications required or permitted
hereunder or necessary or convenient in connection herewith will be in writing
and will be delivered by hand or by registered or certified mail, return receipt
requested to the addresses set forth below in this Section 13(a):

          If to Employer, to:

               Input/Output, Inc.
               12300 Parc Crest Drive
               Stafford, Texas 77477
               Attention:  General Counsel

          If to Employee, to:

          Robert P. Peebler
          17 River Hollow
          Houston, Texas 77027

or to such other names or addresses as Employer or Employee, as the case may be,
designate by notice to the other party hereto in the manner specified in this
Section.

          (b) This Agreement (including the Exhibits attached hereto)
supersedes, replaces and merges all previous agreements and discussions relating
to the same or similar subject matters between Employee and Employer and
constitutes the entire agreement between Employee and Employer with respect to
the subject matter of this Agreement. This Agreement may not be modified in any
respect by any verbal statement, representation or agreement made by any
employee, officer, or representative of Employer or by any written agreement
unless signed by an officer of Employer who is expressly authorized by the Board
to execute such document.

                                      -15-
<PAGE>

          (c) If any provision of this Agreement or application thereof to
anyone or under any circumstances should be determined to be invalid or
unenforceable, such invalidity or unenforceability will not affect any other
provisions or applications of this Agreement which can be given effect without
the invalid or unenforceable provision or application. In addition, if any
provision of this Agreement is held by an arbitration panel or a court of
competent jurisdiction to be invalid, unenforceable, unreasonable, unduly
restrictive or overly broad, the parties intend that such arbitration panel or
court modify said provision so as to render it valid, enforceable, reasonable
and not unduly restrictive or overly broad.

          (d) The internal laws of the State of Texas will govern the
interpretation, validity, enforcement and effect of this Agreement without
regard to the place of execution or the place for performance thereof.

Section 14. Arbitration.

          (a) Employer and Employee agree to submit to final and binding
arbitration any and all disputes or disagreements concerning the interpretation
or application of this Agreement. Any such dispute or disagreement will be
resolved by arbitration in accordance with the National Rules for the Resolution
of Employment Disputes of the American Arbitration Association (the "AAA
Rules"). Arbitration will take place in Houston, Texas, unless the parties
mutually agree to a different location. Within 30 calendar days of the
initiation of arbitration hereunder, each party will designate an arbitrator.
The appointed arbitrators will then appoint a third arbitrator. Employee and
Employer agree that the decision of the arbitrators will be final and binding on
both parties. Any court having jurisdiction may enter a judgment upon the award
rendered by the arbitrators. In the event the arbitration is decided in whole or
in part in favor of Employee, Employer will reimburse Employee for his
reasonable costs and expenses of the arbitration (including reasonable
attorneys' fees); provided, however, that Employer shall reimburse Employee in
accordance with Section 8 for the reasonable expenses (including attorneys' fees
and expenses) incurred by Employee in enforcing or seeking to enforce in any
arbitration the payment of any amount or other benefit described in Section 8
regardless of the outcome of such arbitration. Regardless of the outcome of any
arbitration, Employer will pay all fees and expenses of the arbitrators and all
of Employer's costs of such arbitration.

          (b) Notwithstanding the provisions of Section 14(a), Employer may, if
it so chooses, bring an action in any court of competent jurisdiction for
injunctive relief to enforce Employee's obligations under Sections 3(b), 3(c),
3(d) or 12 hereof.

                                      -16-
<PAGE>

     IN WITNESS WHEREOF, the undersigned, intending to be legally bound, have
executed this Agreement as to be effective as of the Effective Date.

                                        EMPLOYER:

                                        INPUT/OUTPUT, INC.

                                        By:
                                           -------------------------------------

                                        EMPLOYEE:

                                        ----------------------------------------
                                        Robert P. Peebler

                                      -17-<PAGE>
                                                                   EXHIBIT 10.12

                              EMPLOYMENT AGREEMENT

         This Employment Agreement (this "Agreement") is made and entered into
by and between Input/Output, Inc., a Delaware corporation (hereinafter referred
to as "Employer"), and C. Robert Bunch, an individual currently resident in
Houston, Texas (hereinafter referred to as "Employee"), effective as of February
4, 2003 (the "Effective Date").

                                   WITNESSETH:

         WHEREAS, attendant to Employee's employment by Employer, Employer and
Employee wish for there to be a complete understanding and agreement between
Employer and Employee with respect to, among other terms, Employee's duties and
responsibilities to Employer; the compensation and benefits owed to Employee;
the fiduciary duties owed by Employee to Employer; Employee's obligation to
avoid conflicts of interest, disclose pertinent information to Employer, and
refrain from using or disclosing Employer's information;

         WHEREAS, Employer considers the establishment and maintenance of a
sound and vital management to be essential to protecting and enhancing its best
interests and the best interests of its stockholders;

         WHEREAS, the Board of Directors of Employer (the "Board") has
determined that appropriate steps should be taken to encourage the continued
attention and dedication of members of Employer's management; and

         WHEREAS, Employer and Employee wish to enter into this Agreement;

         NOW, THEREFORE, in consideration of the mutual promises contained
herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Employer and Employee agree as
follows:

Section 1. General Duties of Employer and Employee.

(a) Employer agrees to employ Employee and Employee agrees to accept employment
by Employer and to serve Employer in an executive capacity as its President and
Chief Operating Officer. At the commencement of this Agreement, Employee will
report to the Board of Directors of Employer. The powers, duties and
responsibilities of Employee as President and Chief Operating Officer include
those duties that are the usual and customary powers, duties and
responsibilities of such office, including those powers, duties and
responsibilities specified in Employer's Bylaws, and such other and further
duties appropriate to such position as may from time to time be assigned to
Employee by the Board.

(b) While employed hereunder, Employee will devote substantially all reasonable
and necessary time, efforts, skills and attention for the benefit of and with
Employee's primary attention to the affairs of Employer in order that he or she
may faithfully perform his or her duties and obligations. The preceding sentence
will not, however, be deemed to restrict Employee from attending to matters or
engaging in activities not directly related to the

                                      -1-
<PAGE>

business of Employer, provided that (i) such activities or matters are
reasonable in scope and time commitment and not otherwise in violation of this
Agreement, and (ii) Employee will not become a director or officer of (or hold
any substantially similar responsibility with) any corporation or other entity
(excluding charitable or other non-profit organizations) without prior written
disclosure to, and consent of, Employer.

(c) At the commencement of Employee's employment by Employer, Employee will be
based at Employer's corporate headquarters located at 12300 Parc Crest Drive,
Stafford, Texas 77008 (the "Place of Employment").

(d) Employee agrees and acknowledges that as an officer and employee of
Employer, and consistent with the terms hereof, he or she owes a fiduciary duty
of loyalty, fidelity and allegiance to act at all times in the best interests of
Employer and to do no act knowingly which would injure Employer's business, its
interests or its reputation.

Section 2. Compensation and Benefits.

(a) Employer will pay to Employee during the term of this Agreement a base
salary at the rate of $250,000 per annum (such base salary as increased by the
Compensation Committee of the Board as hereinafter provided is referred to
herein as the "Base Salary"). The Compensation Committee of the Board will
review the Base Salary from time to time and, during the term of this Agreement,
may increase, but may not decrease, the Base Salary. The Base Salary will be
paid to Employee in equal installments every two weeks or on such other schedule
as Employer may establish from time to time for its management personnel.

(b) Employee will be eligible to participate in Employer's Incentive
Compensation Plan for the fiscal year 2003 with a target of 75% and a maximum of
120% of Employee's Base Salary for such fiscal year. Any incentive earned in
fiscal year 2003 will be prorated based on Employee's actual period of
employment during such fiscal year. During each subsequent fiscal year during
the term of this Agreement, Employee will be eligible, in the Board's sole
discretion, to participate in that year's Incentive Compensation Plan or other
replacement incentive or bonus plan Employer establishes for its key executives.

(c) Employee will be eligible for option grants to purchase shares of Employer's
common stock, $.01 par value ("Common Stock"), or other equity securities of
Employer as provided under Employer's 2000 Long-Term Incentive Plan (or other
stock option plan or plans Employer establishes for its key executives); such
grants to be made in the sole discretion of the Board or a duly authorized
committee of the Board.

(d) Employee will be eligible to participate in Employer's Deferred Compensation
Plan (or any replacement deferred compensation plan Employer establishes for its
key executives);

(e) Employee will be entitled to paid vacation of not less than three (3) weeks
each year. Vacation may be taken by Employee at the time and for such periods as
may be mutually agreed upon between Employer and Employee.

                                      -2-
<PAGE>

(f) Employee will be reimbursed in accordance with Employer's normal expense
reimbursement policy for all of the actual and reasonable costs and expenses
incurred by him or her in the performance of his or her services and duties
hereunder, including, but not limited to, travel and entertainment expenses.
Employee will furnish Employer with all invoices and vouchers reflecting amounts
for which Employee seeks Employer's reimbursement.

(g) Employee will be entitled to participate in all insurance and retirement
plans, incentive compensation plans (at a level appropriate to his or her
position) and such other benefit plans or programs as may be in effect from time
to time for the key management employees of Employer including, without
limitation, those related to savings and thrift, retirement, welfare, medical,
dental, disability, salary continuance, accidental death, travel accident, life
insurance, incentive bonus, membership in business and professional
organizations, and reimbursement of business and entertainment expenses.
Specifically, Employee will be entitled to participate in the Input/Output, Inc.
Deferred Compensation Plan as long as it is made available to other key
management employees.

(h) Employer, during the term of this Agreement and thereafter without limit of
time, will indemnify Employee for claims and expenses to the extent provided in
Employer's Certificate of Incorporation and Bylaws. Employer will also provide
Employee coverage under Employer's policy or policies of directors' and
officers' liability insurance to the same extent as other executive officers of
Employer during the term of this Agreement.

(i) All Base Salary, bonus and other payments made by Employer to Employee
pursuant to this Agreement will be subject to such payroll and withholding
deductions as may be required by law and other deductions applied generally to
employees of Employer for insurance and other employee benefit plans in which
Employee participates.

Section 3. Fiduciary Duty; Confidentiality.

(a) In keeping with Employee's fiduciary duties to Employer, Employee agrees
that he or she will not knowingly take any action that would create a conflict
of interest with Employer, or upon discovery thereof, allow such a conflict to
continue. In the event that Employee discovers that such a conflict exists,
Employee agrees that he or she will disclose to the Board any facts which might
involve a conflict of interest that has not been approved by the Board.

(b) As part of Employee's fiduciary duties to Employer, Employee agrees to
protect and safeguard Employer's information, ideas, concepts, improvements,
discoveries, and inventions and any proprietary, confidential and other
information relating to Employer or its business (collectively, "Confidential
Information") and, except as may be required by Employer, Employee will not
knowingly, either during his or her employment by Employer or thereafter,
directly or indirectly, use for his or her own benefit or for the benefit of
another, or disclose to another, any Confidential Information, except (i) with
the prior written consent of Employer; (ii) in the course of the proper
performance of Employee's duties under this Agreement; (iii) for information
that becomes generally available to the public other than as a result of the
unauthorized disclosure by Employee; (iv) for information that becomes available
to Employee

                                      -3-
<PAGE>

on a nonconfidential basis from a source other than Employer or its affiliated
companies who is not bound by a duty of confidentiality to Employer; or (v) as
may be required by any applicable law, rule, regulation or order.

(c) Upon termination of his or her employment with Employer, Employee will
immediately deliver to Employer all documents in Employee's possession or under
his or her control which embody any of Employer's Confidential Information.

(d) In addition to the foregoing provisions of this Section 3, and effective as
of the Effective Date, Employee reaffirms the duties imposed upon Employee by
that certain Employee Proprietary Information Agreement dated as of November 1,
1999 by and between Employer and Employee.

(e) Employee will comply with Employer's Code of Ethics issued on January 17,
1994, and any amendments or replacement policies adopted by the Board (the "Code
of Ethics").

Section 4. Term of Agreement; At-Will Employment.

         The term of this Agreement will commence effective as of the Effective
Date, and, subject to the terms and conditions hereof, will continue for a
two-year period ending on February 4, 2005 and thereafter, the term will be
automatically extended for successive periods of one year unless prior to the
end of the original two-year period (or, if applicable, any such one-year
period), Employer gives Employee at least ninety (90) days prior written notice
that Employer has decided not to extend the term of this Agreement.
Notwithstanding any provision contained herein to the contrary, Employee
acknowledges that his or her employment with Employer is at will and that
Employer may terminate his or her employment at any time and for any reason or
for no reason at the discretion of Employer, but subject to any rights Employee
has under Sections 6 and 8 of this Agreement.

Section 5. Termination.

(a) Employee's employment with Employer hereunder will terminate upon the first
to occur of the following:

         (1) The death or "Disability" (as defined in Section 5(b) hereof) of
Employee;

         (2) Employer terminates such employment for "Cause" (as defined in
Section 5(c) hereof);

         (3) Employee terminates such employment for "Good Reason" (as defined
in Section 5(d) hereof);

         (4) Employer terminates such employment for any reason other than
Cause, or for no reason at all;

                                      -4-
<PAGE>

         (5) Employee terminates such employment for any reason other than Good
Reason, or for no reason at all; or

         (6) Employee's sixty-fifth (65th) birthday, at which time Employee will
continue to be employed by Employer as an employee at will.

(b) As used in this Agreement, "Disability" means permanent and total disability
(within the meaning of Section 22(e)(3) of the Internal Revenue Code of 1986, as
amended (the "Code"), or any successor provision) which has existed for at least
180 consecutive days.

(c) As used in this Agreement, "Cause" means:

         (1) the willful and continued failure by Employee to substantially
perform his or her obligations under this Agreement (other than any such failure
resulting from his Disability) after a demand for substantial performance has
been delivered to him or her by the Board which specifically identifies the
manner in which the Board believes Employee has not substantially performed such
provisions and Employee has failed to remedy the situation within ten (10) days
after such demand or a willful and material violation of the Employer's Code of
Ethics;

         (2) Employee's willfully engaging in conduct materially and
demonstrably injurious to the property or business of Employer, including
without limitation, fraud, misappropriation of funds or other property of
Employer, other willful misconduct, gross negligence or conviction of a felony
or any crime of moral turpitude; or

         (3) Employee's material breach of this Agreement which breach has not
been remedied by Employee within ten (10) days after receipt by Employee of
written notice from Employer that he or she is in material breach of the
Agreement, specifying the particulars of such breach.

For purposes of this Agreement, no act, or failure to act, on the part of
Employee shall be deemed "willful" or engaged in "willfully" if it was due
primarily to an error in judgment or negligence, but shall be deemed "willful"
or engaged in "willfully" only if done, or omitted to be done, by Employee not
in good faith and without reasonable belief that his action or omission was in
the best interest of Employer. Notwithstanding the foregoing, Employee shall not
be deemed to have been terminated as a result of "Cause" hereunder unless and
until there shall have been delivered to Employee a copy of a resolution duly
adopted by the affirmative vote of not less than three-quarters of the Board
then in office at a meeting of the Board called and held for such purpose (after
reasonable notice to Employee and an opportunity for Employee, together with his
or her counsel, to be heard before the Board), finding that, in the good faith
opinion of the Board of Directors, Employee has committed an act set forth above
in this Section 5(c) and specifying the particulars thereof in detail. Nothing
herein shall limit the right of Employee or his or her legal representatives to
contest the validity or propriety of any such determination.

(d) As used in this Agreement, "Good Reason" means:

                                      -5-
<PAGE>

         (1) Employer's failure to comply with any of the provisions of Section
2 of this Agreement (including, but not limited to, such a failure resulting
from any reduction in the Base Salary) which failure is not remedied within ten
(10) days after receipt of written notice from Employee specifying the
particulars of such breach;

         (2) Employer's breach of any other material provision of this Agreement
which is not remedied within ten (10) days after receipt by Employer of written
notice from Employee specifying the particulars of such breach;

         (3) the assignment to Employee of any duties materially inconsistent
with Employee's position, duties, functions, responsibilities or authority as
contemplated by Section 1 of this Agreement; or

         (4) the relocation of Employee's principal place of performance of his
or her duties and responsibilities under this Agreement to a location more than
fifty miles (50) miles from the Place of Employment;

         (5) Any failure by Employer to comply with Section 9(c); or

         (6) Any purported termination of Employee's employment by Employer
which is not effected pursuant to a Notice of Termination satisfying the
requirements of Section 5(e) hereof (and for purposes of this Agreement, no such
purported termination shall be effective).

(e) Any termination by Employer or Employee of Employee's employment with
Employer (other than any such termination occurring on Employee's sixty-fifth
(65th) birthday) shall be communicated by written notice (a "Notice of
Termination") to the other party that shall:

         (1) indicate the specific provision of this Agreement relied upon for
such termination;

         (2) indicate the specific provision of this Agreement pursuant to which
Employee is to receive compensation and other benefits as a result of such
termination; and

         (3) otherwise comply with the provisions of this Section 5(e) and
Section 11(a).

If a Notice of Termination states that Employee's employment with Employer has
been terminated as a result of Employee's Disability, the notice shall (i)
specifically describe the basis for the determination of Employee's Disability,
and (ii) state the date of the determination of Employee's Disability, which
date shall be not more than ten (10) days before the date such notice is given.
If the notice is from Employer and states that Employee's employment with
Employer is terminated by Employer as a result of the occurrence of Cause, the
Notice of Termination shall specifically describe the action or inaction of
Employee that Employer believes constitutes Cause and shall be accompanied by a
copy of the resolution satisfying Section 5(c). If the Notice of Termination is
from Employee and states that Employee's

                                      -6-
<PAGE>

employment with Employer is terminated by Employee as a result of the occurrence
of Good Reason, the Notice of Termination shall specifically describe the action
or inaction of Employer that Employee believes constitutes Good Reason. Any
purported termination by Employer of Employee's employment with Employer shall
be ineffective unless such termination shall have been communicated by Employer
to Employee by a Notice of Termination that meets the requirements of this
Section 5(e) and the provisions of Section 11(a).

(f) As used in this Agreement, "Date of Termination" means:

         (1) if Employee's employment with Employer is terminated for
Disability, sixty (60) days after Notice of Termination is received by Employee
or any later date specified therein, provided that within such sixty (60) day
period Employee shall not have returned to full-time performance of Employee's
duties;

         (2) if Employee's employment with Employer is terminated as a result of
Employee's death, the date of death of Employee;

         (3) if Employee's employment with Employer is terminated for Cause, the
date Notice of Termination, accompanied by a copy of the resolution satisfying
Section 5(c), is received by Employee or any later date specified therein,
provided that Employer may, in its discretion, condition Employee's continued
employment upon such considerations or requirements as may be reasonable under
the circumstances and place a reasonable limitation upon the time within which
Employee will comply with such considerations or requirements;

         (4) if Employee's employment with Employer is terminated upon the
occurrence of Employee's sixty-fifth (65th) birthday, the date of such birthday,
at which time Employee will continue to be employed by Employer as an employee
at will; or

         (5) if Employee's employment with Employer is terminated for any reason
other than Employee's Disability, Employee's death, Cause or the occurrence of
Employee's sixty-fifth (65th) birthday, or for no reason, the date that is
fourteen (14) days after the date of receipt of the Notice of Termination.

Section 6. Effect of Termination of Employment.

(a) Upon termination of Employee's employment by Employer for Cause, or by
Employee for no reason or any reason other than Good Reason, all compensation
and benefits will cease upon the Date of Termination other than: (i) those
benefits that are provided by retirement and benefit plans and programs
specifically adopted and approved by Employer for Employee that are earned and
vested by the Date of Termination, (ii) as provided in Section 8, (iii)
Employee's Base Salary through the Date of Termination; (iv) any incentive
compensation due Employee if, under the terms of the relevant incentive
compensation arrangement, such incentive compensation was due and payable to
Employee on or before the Date of Termination; and (v) medical and similar
benefits the continuation of which is required by applicable law or provided by
the applicable benefit plan.

                                      -7-
<PAGE>

(b) Upon termination of Employee's employment due to the death of Employee or
upon termination by Employer due to the Disability of Employee, all compensation
and benefits will cease upon the Date of Termination other than: (i) those
benefits that are provided by retirement and benefit plans and programs
specifically adopted and approved by Employer for Employee that are earned and
vested by the Date of Termination, (ii) as provided in Section 8, (iii)
Employee's Base Salary through the Date of Termination; (iv) any incentive
compensation due Employee if, under the terms of the relevant incentive
compensation arrangement, such incentive compensation was due and payable to
Employee on or before the Date of Termination; and (v) medical and similar
benefits the continuation of which is required by applicable law or provided by
the applicable benefit plan.

(c) Upon termination of this Agreement due to Employee's reaching his or her
sixty-fifth (65th) birthday, Employee will continue to be employed by Employer
as an employee at will.

(d) If Employee's employment with Employer is terminated (i) by Employer for no
reason or for any reason other than Cause, the death or Disability of Employee,
or Employee's reaching his or her sixty-fifth (65th) birthday, (ii) by Employee
for Good Reason, or (iii) by Employee for any reason or for no reason, if
Employer appoints any individual other than Employee as Chief Executive Officer
of Employer, and at any time during the ninety (90) day period commencing on the
ninetieth (90th) day following the effective date of such other individual's
appointment as Chief Executive Officer, Employee gives Employer a Notice of
Termination, then the obligations of Employer and Employee under Sections 1 and
2 will terminate as of the Date of Termination, and Employer will pay or provide
to Employee the following:

         (1) Employee's Base Salary through the Date of Termination;

         (2) incentive compensation due Employee, if any, under the terms of the
relevant incentive compensation arrangement, which, in the absence of any
agreement to the contrary, shall be the pro rata amount due to Employee based on
payments that would be due if Employee had remained employed by Employer for the
full fiscal year;

         (3) Employer shall pay to Employee an aggregate amount (the "Severance
Payment") equal to one and one-half (1 1/2) times Employee's Base Salary at the
highest annual rate in effect on or before the Date of Termination (but prior to
giving effect to any reduction therein which precipitated such termination),
which Severance Payment will be paid to Employee as follows: (i) two-thirds (66
2/3%) of the Severance Payment amount will be paid (to the extent practicable)
in equal monthly installments during the one-year period ending on the first
anniversary date of the Date of Termination, and (ii) the remainder of the
Severance Payment amount will be paid by Employer in a lump sum to Employee on
the first anniversary of the Date of Termination; provided however, that if
during such one-year period ending on the first anniversary of the Date of
Termination, there occurs any default or series of defaults by Employer or any
of its subsidiaries of any material obligation or indebtedness of Employer or
any of its subsidiaries having a face value, individually or in the aggregate,
of $5,000,000 or more, and such default(s) remain uncured for forty-five (45)
days or more, then on such 45th day, as the case may be, Employer shall pay to
Employee in a lump sum the remainder of the Severance Payment amount then
remaining unpaid;

                                      -8-
<PAGE>

         (4) if immediately prior to the Date of Termination, Employee (and, if
applicable, his or her spouse and/or dependents) was covered under Employer's
group medical, dental, health and hospital plan in effect at such time, then
Employer shall provide to Employee for eighteen (18) months after the Date of
Termination, and provided that Employee has timely elected under the
Consolidated Omnibus Budget Reconciliation Act of 1985, as amended ("COBRA"), to
continue coverage under such plan, Employer will, at no greater cost or expense
to Employee than was the case immediately prior to the Date of Termination,
maintain such continued coverage in full force and effect; and

         (5) on the Date of Termination, the restrictions on shares of
restricted Common Stock of Employer acquired by Employee in May 2000 under
Employer's matching share program shall automatically cease and terminate, and
such shares shall thereupon be freely transferable by Employee without
restriction (subject to limitations under applicable federal and state
securities laws), regardless of whether the conditions as to full vesting
contained in Employee's restricted stock award agreement(s) shall have been
satisfied.

Except as otherwise provided above and in Section 8, all other compensation and
benefits will cease upon the Date of Termination other than the following: (i)
those benefits that are provided by retirement and benefit plans and programs
specifically adopted and approved by Employer for Employee that are earned and
vested by the Date of Termination, (ii) any rights Employee or his survivors may
have under any grants of options to purchase Employer's Common Stock, restricted
stock grants, performance share grants, or other similar equity compensation
plans; and (iii) medical and similar benefits the continuation of which is
required by applicable law or as provided by the applicable benefit plan. As a
condition to making the payments and providing the benefits specified in this
Section 6(d), Employer will require that Employee execute a release of all
claims Employee may have against Employer at the time of Employee's termination.
Such release will be in substantially the same form as Exhibit A attached
hereto.

Section 7. No Obligation to Mitigate; No Rights of Offset.

(a) Employee shall not be required to mitigate the amount of any payment or
other benefit required to be paid to Employee pursuant to this Agreement,
whether by seeking other employment or otherwise, nor shall the amount of any
such payment or other benefit be reduced on account of any compensation earned
by Employee as a result of employment by another person.

(b) Subject to Section 10(e), Employer's obligation to make the payments
provided for in this Agreement 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 Employer may have against Employee
or others.

Section 8. No Effect on Other Rights.

         Nothing in this Agreement shall prevent or limit Employee's continuing
or future participation in any plan, program, policy or practice of or provided
by Employer or any of its

                                      -9-
<PAGE>

affiliates and for which Employee may qualify, nor shall anything herein limit
or otherwise affect such rights as Employee may have under any stock option or
other agreements with Employer or any of its affiliates. Amounts which are
vested benefits or which Employee is otherwise entitled to receive under any
plan, program, policy or practice of or provided by, or any other contract or
agreement with, Employer or any of its affiliates at or subsequent to the Date
of Termination shall be payable or otherwise provided in accordance with such
plan, program, policy or practice or contract or agreement except as explicitly
modified by this Agreement.

Section 9. Successors; Binding Agreement.

(a) This Agreement is personal to Employee and without the prior written consent
of Employer shall not be assignable by Employee otherwise than by will or the
laws of descent and distribution. This Agreement shall inure to the benefit of
and be enforceable by Employee's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees.

(b) This Agreement shall inure to the benefit of and be binding upon Employer
and its successors and assigns.

(c) Employer will require any successor (whether direct or indirect, by
purchase, merger, amalgamation, consolidation or otherwise) to all or
substantially all of the business and/or assets of Employer, by agreement in
form and substance reasonably satisfactory to Employee, to expressly assume and
agree to perform this Agreement in the same manner and to the same extent that
Employer would be required to perform it if no such succession had taken place.
As used in this Agreement, "Employer" shall mean Employer as hereinbefore
defined and any successor to its business and/or assets as aforesaid which
assumes and agrees to perform this Agreement by execution and delivery of the
agreement provided for in this Section 9(c) or which otherwise becomes bound by
the terms and provisions of this Agreement by operation of law or otherwise.

Section 10. Non-Competition; Non-Solicitation; No Hire.

(a) Employee agrees that, effective as of the Effective Date and for a period
that includes the term of this Agreement and twelve (12) months thereafter (such
applicable period being referred to herein as the "Non-Compete Period"),
Employee shall not, without the prior written consent of Employer, directly or
indirectly, anywhere in the world, engage, invest, own any interest, or
participate in, consult with, render services to, or be employed by any
business, person, firm or entity that is in competition with the "Business" (as
defined in Section 10(d)) of Employer or any of its subsidiaries or affiliates,
except for the account of Employer and its subsidiaries and affiliates;
provided, however, that during the Non-Compete Period Employee may acquire,
solely as a passive investment, not more than five percent (5%) of the
outstanding shares or other units of any security of any entity subject to the
requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as
amended. Employee acknowledges that a remedy at law for any breach or attempted
breach of this covenant not to compete will be inadequate and further agrees
that any breach of this covenant not to compete will result in

                                      -10-
<PAGE>

irreparable harm to Employer, and, accordingly, Employer shall, in addition to
any other remedy that may be available to it, be entitled to specific
performance and temporary and permanent injunctive and other equitable relief
(without proof of actual damage or inadequacy of legal remedy) in case of any
such breach or attempted breach. Employee acknowledges that this covenant not to
compete is being provided as an inducement to Employer to enter into this
Agreement and that this covenant not to compete contains reasonable limitations
as to time, geographical area and scope of activity to be restrained that do not
impose a greater restraint than is necessary to protect the goodwill or other
business interest of Employer. Whenever possible, each provision of this
covenant not to compete shall be interpreted in such a manner as to be effective
and valid under applicable law but if any provision of this covenant not to
compete shall be prohibited by or invalid under applicable law, such provision
of this covenant not to compete shall be prohibited by or invalid under
applicable law, such provision shall be ineffective to the extent of such
prohibition or invalidity, without invalidating the remaining provisions of this
covenant not to compete. If any provision of this covenant not to compete shall,
for any reason, be judged by any court of competent jurisdiction to be invalid
or unenforceable, such judgment shall not affect, impair or invalidate the
remainder of this covenant not to compete but shall be confined in its operation
to the provision of this covenant not to compete directly involved in the
controversy in which such judgment shall have been rendered. In the event that
the provisions of this covenant not to compete should ever be deemed to exceed
the time or geographic limitations permitted by applicable laws, then such
provision shall be reformed to the maximum time or geographic limitations
permitted by applicable law.

(b) In addition to the restrictions set forth in Section 10(a), Employee agrees
that, during the Non-Compete Period, Employee will not, either directly or
indirectly, (i) make known to any person, firm or entity that is in competition
with the Business of Employer or any of its subsidiaries or affiliates the names
and addresses of any of the suppliers or customers of Employer or any of its
subsidiaries or affiliates, potential customers of Employer or any of its
subsidiaries or affiliates upon whom Employer or any of its subsidiaries or
affiliates has called upon in the last twelve (12) months or contacts of
Employer or any of its subsidiaries or affiliates or any other information
pertaining to such persons, or (ii) call on, solicit, or take away, or attempt
to call on, solicit or take away any of the suppliers or customers of Employer
or any of its subsidiaries or affiliates, whether for Employee or for any other
person, firm or entity.

(c) Regardless of the reason for any termination of Employee's employment,
effective as of the Effective Date and for a period that includes the term of
this Agreement and twelve (12) months thereafter, Employee will not, either on
his or her own account or for any other person, firm, partnership, corporation,
or other entity (i) solicit any employee of Employer or any of its subsidiaries
or affiliates to leave such employment; or (ii) induce or attempt to induce any
such employee to breach her or his employment agreement with Employer or any of
its subsidiaries or affiliates.

(d) As used in this Agreement, "Business" means the business of design,
manufacture, marketing and sale of equipment for seismic acquisition, processing
and interpretation.

                                      -11-
<PAGE>

(e) In the event that Employee violates any of the terms and conditions of this
Section 10 during the Non-Compete Period, then in addition to the other rights
and remedies available to Employer hereunder and under Section 12 hereof,
Employer's obligations to make any remaining payments of the Severance Payment
amount otherwise then due and owing pursuant to Section 6(d)(3) hereof shall
cease and terminate.

Section 11. Miscellaneous.

(a) All notices and other communications required or permitted hereunder or
necessary or convenient in connection herewith will be in writing and will be
delivered by hand or by registered or certified mail, return receipt requested
to the addresses set forth below in this Section 11(a):

                  If to Employer, to:

                           Input/Output, Inc.
                           12300 Parc Crest Drive
                           Stafford, TX  77477
                           Attention:  General Counsel

                  If to Employee, to:

                           4234 B Drake
                           Houston, Texas 77005

or to such other names or addresses as Employer or Employee, as the case may be,
designate by notice to the other party hereto in the manner specified in this
Section.

(b) This Agreement (including the Exhibit(s) attached hereto) supersedes,
replaces and merges all previous agreements and discussions relating to the same
or similar subject matters between Employee and Employer and constitutes the
entire agreement between Employee and Employer with respect to the subject
matter of this Agreement, except for (i) the Employer Proprietary Information
Agreement referred to in Section 3(d) hereof, (ii) the Severance and Change of
Control Agreement dated ____________ by and between Employer and Employee, (iii)
the Indemnity Agreement dated March 23, 2002, between Employer and Employee, and
(iv) except as expressly modified by the terms of this Agreement, the stock
option, restricted stock award and other agreements of the nature contemplated
under Section 8 hereof, each of which shall remain in full force and effect.
This Agreement may not be modified in any respect by any verbal statement,
representation or agreement made by any employee, officer, or representative of
Employer or by any written agreement unless signed by an officer of Employer who
is expressly authorized by the Board to execute such document.

(c) If any provision of this Agreement or application thereof to any one or
under any circumstances should be determined to be invalid or unenforceable,
such invalidity or unenforceability will not affect any other provisions or
applications of this Agreement which can be given effect without the invalid or
unenforceable provision or application. In addition, if any provision of this
Agreement is held by an arbitration panel or a court of competent jurisdiction
to be invalid, unenforceable, unreasonable, unduly restrictive or overly broad,
the parties intend that

                                      -12-
<PAGE>

such arbitration panel or court modify said provision so as to render it valid,
enforceable, reasonable and not unduly restrictive or overly broad.

(d) The internal laws of the State of Texas will govern the interpretation,
validity, enforcement and effect of this Agreement without regard to the place
of execution or the place for performance thereof.

(e) The covenants, agreements, rights and obligations of Employer under this
Agreement, and the covenants, agreements, rights and obligations of Employee
under this Agreement, shall survive the termination of this Agreement for any
reason including, but not limited to, the termination of Employee's employment
with Employer. All covenants, agreements, indemnities, warranties, rights and
obligations contained herein shall continue for so long as necessary in order
for Employer and Employee to enforce their rights hereunder.

Section 12. Arbitration.

(a) Employer and Employee agree to submit to final and binding arbitration any
and all disputes or disagreements concerning the interpretation or application
of this Agreement. Any such dispute or disagreement will be resolved by
arbitration in accordance with the National Rules for the Resolution of
Employment Disputes of the American Arbitration Association (the "AAA Rules").
Arbitration will take place in Houston, Texas, unless the parties mutually agree
to a different location. Within 30 calendar days of the initiation of
arbitration hereunder, each party will designate an arbitrator. The appointed
arbitrators will then appoint a third arbitrator. Employee and Employer agree
that the decision of the arbitrators will be final and binding on both parties.
Any court having jurisdiction may enter a judgment upon the award rendered by
the arbitrators. In the event the arbitration is decided in whole or in part in
favor of Employee, Employer will reimburse Employee for his or her reasonable
costs and expenses of the arbitration (including reasonable attorneys' fees).

(b) Notwithstanding the provisions of Section 12(a), Employer may, if it so
chooses, bring an action in any court of competent jurisdiction for injunctive
relief to enforce Employee's obligations under Sections 3(b), 3(c), 3(d), 3(e)
and 10 hereof.

                        SIGNATURES TO FOLLOW ON NEXT PAGE

                                      -13-
<PAGE>

         IN WITNESS WHEREOF, the undersigned, intending to be legally bound,
have executed this Agreement as to be effective as of the Effective Date.

                                              EMPLOYER:

                                              INPUT/OUTPUT, INC.

                                              By: /s/ Brad Eastman
                                                  ------------------------------
                                                  Vice President

                                              EMPLOYEE:

                                              C. ROBERT BUNCH

                                              /s/ C. Robert Bunch
                                              ----------------------------------

                                      -14-

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00049-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00049-of-00352.parquet"}]]